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Exhibit 10.16
CUTERA, INC.
CHANGE OF CONTROL AND SEVERANCE AGREEMENT
This Change of Control And Severance Agreement (the "Agreement")
is made and entered into by and between Ronald J. Santilli
("Executive") and Cutera, Inc., a Delaware corporation (the
"Company"), effective as of December 12, 2008 (the
"Effective Date").
RECITALS
1. The Company may from time to time consider the possibility of
an acquisition by another company or other change of control, or
may terminate Executive’s employment without cause or may
cause Executive to resign his or employment for good reason. The
Compensation Committee of the Board of Directors of the Company
(the "Committee") recognizes that the risk of such events occurring
can be a distraction to Executive and can cause Executive to
consider alternative employment opportunities. The Committee has
determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued
dedication and objectivity of Executive, notwithstanding the
possibility that such events may occur.
2. The Committee believes that it is in the best interests of
the Company and its stockholders to provide Executive with an
incentive to continue his or her employment.
3. The Committee believes that it is imperative to provide
Executive with certain severance benefits in certain instances upon
Executive’s termination of employment. These benefits will
provide Executive with enhanced financial security and incentive
and encouragement to remain with the Company notwithstanding the
possibility that certain events may occur that lead to the
termination of Executive’s employment.
4. Certain capitalized terms used in the Agreement are defined
in Section 5 below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
1. Term of Agreement . This Agreement will have an
initial term of three (3) years commencing on the Effective
Date (the "Initial Term"). On the third anniversary of the
Effective Date, this Agreement will renew automatically for an
additional one (1) year term (the "Additional Term") unless
either party provides the other party with written notice of
non-renewal at least sixty (60) days prior to the date of
automatic renewal. Notwithstanding the foregoing sentence, if a
Change of Control occurs at any time during either the Initial Term
or an Additional Term, the term of this Agreement will extend
automatically through the date that is twelve (12) months
following the effective date of the Change of Control. If Executive
becomes entitled to benefits under Section 3 during the term
of this Agreement, the Agreement will not terminate until all of
the obligations of the parties hereto with respect to this
Agreement have been satisfied.
2. At-Will Employment . The Company and Executive
acknowledge that Executive’s employment is and will continue
to be at-will, as defined under applicable law. If
Executive’s employment terminates for any reason, including
(without limitation) any termination prior to or following a Change
of Control as provided herein, Executive will not be entitled to
any payments, benefits, damages, awards or
compensation other than as provided by this
Agreement or as provided in any employment agreement entered into
between the Company and Executive, and the payment of accrued but
unpaid wages, as required by law, and any unreimbursed reimbursable
expenses.
3. Severance Benefits .
(a) Termination without Cause or Resignation for Good Reason
Not in Connection with a Change of Control . If the Company
terminates Executive’s employment with the Company without
Cause or if Executive resigns from such employment for Good Reason,
and such termination occurs either prior to three (3) months
before, or after twelve (12) months following, a Change of
Control, and Executive signs and does not revoke a release of
claims with the Company (in a form reasonably acceptable to the
Company) and provided that such release of claims becomes effective
no later than sixty (60) days following the termination date
(such deadline, the "Release Deadline"), then subject to this
Section 3, Executive will receive the following:
(i) Severance Payment . Executive will receive a lump-sum
payment equal to one hundred percent (100%) of
Executive’s annual base salary as in effect immediately prior
to Executive’s termination date.
(ii) Continued Employee Benefits . If Executive elects
continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") for Executive and
Executive’s eligible dependents, within the time period
prescribed pursuant to COBRA, the Company will reimburse Executive
for the COBRA premiums for such coverage (at the coverage levels in
effect immediately prior to Executive’s termination) until
the earlier of (A) a period of twelve (12) months from
the last date of employment of the Executive with the Company, or
(B) the date upon which Executive and/or Executive’s
eligible dependents becomes covered under similar plans. The
reimbursements will be made by the Company to Executive consistent
with the Company’s normal expense reimbursement policy.
(iii) Accrued Compensation . The Company will pay
Executive all accrued but unpaid vacation, expense reimbursements,
wages, and other benefits due to Executive under any
Company-provided plans, policies, and arrangements.
(b) Termination without Cause or Resignation for Good Reason
in Connection with a Change of Control . If the Company
terminates Executive’s employment with the Company without
Cause or if Executive resigns from such employment for Good Reason,
and such termination occurs within the period beginning three
(3) months before, and ending twelve (12) months
following, a Change of Control, and Executive signs and does not
revoke a release of claims with the Company (in a form reasonably
acceptable to the Company) and provided that such release of claims
becomes effective no later than the Release Deadline, then subject
to this Section 3, Executive will receive the following:
(i) Severance Payment . Executive will receive a lump-sum
payment equal to the sum of (A) one hundred percent
(100%) of Executive’s annual base salary as in effect
immediately prior to Executive’s termination date or, if
greater, at the level in effect immediately prior to the Change of
Control, and (B) one hundred percent (100%) of
Executive’s annual target bonus for the fiscal year of
Executive’s termination or, if greater, Executive’s
annual target bonus in effect immediately prior to the Change of
Control.
(ii) Vesting Acceleration of Equity Awards . One hundred
percent (100%) of Executive’s then outstanding and
unvested equity awards as of the date of the Change of Control will
become vested and otherwise will remain subject to the terms and
conditions of the applicable equity award agreement.
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(iii) Continued Employee Benefits . If
Executive elects continuation coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") for
Executive and Executive’s eligible dependents, within the
time period prescribed pursuant to COBRA, the Company will
reimburse Executive for the COBRA premiums for such coverage (at
the coverage levels in effect immediately prior to
Executive’s termination) until the earlier of (A) a
period of twelve (12) months from the last date of employment
of the Executive with the Company, or (B) the date upon which
Executive and/or Executive’s eligible dependents becomes
covered under similar plans. The reimbursements will be made by the
Company to Executive consistent with the Company’s normal
expense reimbursement policy.
(iv) Accrued Compensation . The Company will pay
Executive all accrued but unpaid vacation, expense reimbursements,
wages, and other benefits due to Executive under any
Company-provided plans, policies, and arrangements.
(c) Timing of Payments .
(i) If the release of claims does not become effective by the
Release Deadline, Executive will forfeit any rights to severance or
benefits under this Agreement. In no event will severance payments
or benefits be paid or provided until the release of claims becomes
effective and irrevocable.
(ii) Unless otherwise required by Section 3(g), the Company
will pay any severance payments set forth in Section 3(a)(i)
and Section 3(b)(i) in a lump-sum payment payable within
thirty (30) days following Executive’s termination date;
provided, however, that no severance or other benefits, other than
the accrued compensation set forth in Section 3(a)(i) and
Section 3(b)(i), will be paid or provided until the release of
claims discussed in Section 3(a) and Section 3(b) becomes
effective and irrevocable, and such severance amounts or benefits
otherwise payable between Executive’s termination date and
the date such release becomes effective and irrevocable will be
paid on the date the release becomes effective and irrevocable. If
Executive should die before all of the severance amounts have been
paid, such unpaid amounts will be paid in a lump-sum payment
promptly following such event to Executive’s designated
beneficiary, if living, or otherwise to the personal representative
of Executive’s estate.
(d) Voluntary Resignation; Termination for Cause . If
Executive’s employment with the Company terminates
(i) voluntarily by Executive (other than for Good Reason) or
(ii) for Cause by the Company, then Executive will not be
entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company’s then
existing severance and benefits plans and practices or pursuant to
other written agreements with the Company.
(e) Disability; Death . If the Company terminates
Executive’s employment as a result of Executive’s
Disability, or Executive’s employment terminates due to his
or her death, then Executive will not be entitled to receive any
other severance or other benefits except for those (if any) as may
then be established under the Company’s then existing written
severance and benefits plans and practices or pursuant to other
written agreements with the Company.
(f) Exclusive Remedy . In the event of a termination of
Executive’s employment as set forth in Section 3(a) and
Section 3(b) of this Agreement, the provisions of this
Section 3 are intended to be and are exclusive and in lieu of
any other rights or remedies to which Executive or the Company
otherwise may be entitled, whether at law, tort or contract, in
equity, or under this Agreement (other than the payment of accrued
but unpaid wages, as required by law, and any unreimbursed
reimbursable expenses). Executive will be entitled to no benefits,
compensation or other payments or rights upon a termination of
employment prior to or following a Change of Control other than
those benefits expressly set forth in Section 3 of this
Agreement.
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(g) Section 409A .
(i) Notwithstanding anything to the contrary in this Agreement,
no severance payable to Executive, if any, pursuant to this
Agreement, when considered together with any other severance
payments or separation benefits that are considered deferred
compensation under Section 409A of the Internal Revenue Code
of 1986, as amended (the "Code"), and the final regulations and any
guidance promulgated thereunder ("Section 409A") (together, the
"Deferred Compensation Separation Benefits") will be payable until
Executive has a "separation from service" within the meaning of
Section 409A.
(ii) Any severance payments or benefits under this Agreement
that would be considered Deferred Compensation Severance Benefits
will be paid on, or, in the case of installments, will not commence
until, the sixtieth (60 th
) day following Executive’s separation
from service, or, if later, such time as required by
Section 3(g)(iii). Any installment payments that would have
been made to Executive during the sixty (60) day period
immediately following Executive’s separation from service but
for the preceding sentence will be paid to Executive on the
sixtieth (60 th ) day following Executive’s separation from service
and the remaining payments shall be made as provided in this
Agreement.
(iii) Notwithstanding anything to the contrary in this
Agreement, if Executive is a "specified employee" within the
meaning of Section 409A at the time of Executive’s
termination (other than due to death), then the Deferred
Compensation Separation Benefits that are payable within the first
six (6) months following Executive’s separation from
service, will become payable on the first payroll date that occurs
on or after the date six (6) months and one (1) day
following the date of Executive’s separation from service.
All subsequent Deferred Compensation Separation Benefits, if any,
will be payable in accordance with the payment schedule applicable
to each payment or benefit. Notwithstanding anything herein to the
contrary, if Executive dies following Executive’s separation
from service but prior to the six (6) month anniversary of the
separation, then any payments delayed in accordance with this
paragraph will be payable in a lump sum as soon as administratively
practicable after the date of Executive’s death and all other
Deferred Compensation Separation Benefits will be payable in
accordance with the payment schedule applicable to each payment or
benefit. Each payment and benefit payable under this Agreement is
intended to constitute separate payments for purposes of
Section 1.409A-2(b)(2) of the Treasury Regulations.
(iv) Any amount paid under this Agreement that satisfies the
requirements of the "sho
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