Exhibit 10.4

 

DECEMBER 13, 2005

 

BY HAND DELIVERY

First Name Last Name

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, MA  02421

 

RE:  RETENTION LETTER

 

Dear First Name:

 

You are a highly valuable employee of Cubist Pharmaceuticals, Inc. (including
any successor organizations, “Cubist”).  Cubist wishes to retain you as an
employee, and is therefore willing to make certain commitments in order to
induce you to remain an employee.  This letter will confirm the agreement
between you and Cubist (“Agreement”) in that regard.  The Agreement is as
follows:

 

1.                                       Definitions.  For the purposes of this
Agreement, the following definitions apply:

 

(a)                                  “Cause” means: (i) you commit of an act of
dishonesty, fraud or misrepresentation in connection with your employment;
(ii) you are convicted of, or plead nolo contendere to, a felony or a crime
involving moral turpitude; (iii) you breach any material obligation under your
Proprietary Information and Inventions Agreement or Cubist’s Code of Conduct and
Ethics; (iv) you engage in substantial or continuing inattention to or neglect
of your duties and responsibilities reasonably assigned to you by Cubist;
(v) you engage in substantial or continuing acts to the detriment of Cubist or
inconsistent with Cubist’s policies or practices; or (vi) you fail to carry out
the reasonable and lawful instructions of your supervisor or the Cubist Board of
Directors that are consistent with your duties.

 

(b)                                 “Good Reason” means: (i) the failure of
Cubist to employ you in your current or a substantially similar position,
without regard to title, such that your duties and responsibilities are
materially diminished without your consent (provided that you notify Cubist in
writing of such diminution of duties within 60 days of the diminution); (ii) a
reduction in your base salary rate and/or target annual bonus without your
consent (unless such reduction is in connection with a proportional reduction in
compensation to all or substantially all of Cubist’s employees); or (iii) a
relocation of your primary place of employment more than 35 miles from your
current site of employment without your consent.

 

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(c)                                  a “Change of Control” occurs: (i) when any
person or entity other than Cubist or one of its subsidiaries becomes the owner
of fifty percent (50%) or more of Cubist’s common stock or (ii) upon the
effective date of an agreement of acquisition, merger, or consolidation that has
been approved by Cubist’s stockholders and that contemplates that all or
substantially all of the business and/or assets of Cubist shall be owned or
otherwise controlled by another person or entity upon the effective date of such
agreement.

 

(d)                                 “Bonus” shall mean the greater of either
(i) the current year target annual bonus amount or (ii) the previous year’s
actual bonus amount.

 

2.                                       Severance.  (a) In the event that your
employment is terminated by Cubist for any reason other than for Cause, then,
following receipt by Cubist of your signed release, as more fully described in
Section 7 below, Cubist shall pay you an amount equal to eighteen (18) months of
your then-current base salary, with such payment to be made in twelve (12) equal
semi-monthly installments.

 

(b) In the event that, within twenty-four (24) months after a Change of Control,
your employment is terminated either (i) by Cubist for any reason other than for
Cause or (ii) by you for Good Reason, then Cubist shall make a one-time,
lump-sum payment to you equal to eighteen (18) months of your then current base
salary plus Bonus on the later of (i) your termination date or (ii) the eighth
day following receipt by Cubist of your signed release, as more fully described
in Section 7 below.

 

3.                                       Withholding.  All payments made by
Cubist under this Agreement shall be reduced by any tax or other amounts
required to be withheld by Cubist under applicable law.

 

4.                                       Medical and Dental Benefits.  In the
event that your employment is terminated by Cubist for any reason other than for
Cause, or by you for Good Reason within twenty four (24) months after a Change
of Control, then Cubist will maintain your medical and dental insurance coverage
for a period of up to eighteen (18) months after the month in which your
employment terminates, provided that you pay the employee portion for such
coverage by making a payment to Cubist during the first five (5) days of any
month in which you elect to continue such coverage.  Except for any right you
have to continue participation in Cubist’s group health and dental plans as
provided herein or under the federal law known as “COBRA,” all employee benefits
shall terminate in accordance with the terms of the applicable benefit plans as
of the date of termination of your employment. The “qualifying event” under
COBRA, which triggers your right to continue your health insurance post
employment, shall be deemed to have occurred on your termination date.

 

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5.                                       Acceleration of Options.  In the event
that, within twenty-four (24) months after a Change of Control, your employment
is terminated either (i) by Cubist for any reason other than for Cause or
(ii) by you for Good Reason, then all outstanding unvested stock options and/or
restricted stock awards granted to you under any Cubist stock option plan prior
to the Change of Control shall become exercisable and vested in full, and all
restrictions thereon shall lapse, notwithstanding any vesting schedule or other
provisions to the contrary in the agreements evidencing such options or awards,
and Cubist and you hereby agree that such stock option agreements and restricted
stock awards are hereby, and will be deemed to be, amended to give effect to
this provision.

 

6.                                       No Contract of Employment.  This
Agreement is not a contract of employment for a specific term, and your
employment is “At Will” and may be terminated by Cubist at any time.

 

7.                                       Employee Release.  Any obligation of
Cubist to provide you severance payments or other benefits under this Agreement
is expressly conditioned upon your reviewing and signing (and not revoking
during any applicable revocation period) a general release of claims in a form
reasonably satisfactory to Cubist.  Cubist shall provide you with the general
release promptly after the date on which you give or receive, as the case may
be, notice of termination of your employment.

 

8.                                       Assignment.  You shall not make any
assignment of this Agreement or any interest in it, by operation of law or
otherwise, without the prior written consent of Cubist.  Cubist may assign its
rights and obligations under this Agreement without your consent. This Agreement
shall inure to the benefit of and be binding upon you and Cubist, and each of
our respective successors, executors, administrators, heirs and permitted
assigns, including any organization involved in a Change of Control.

 

9.                                       Severability.  If any portion or
provision of this Agreement shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision hereof shall be valid
and enforceable to the fullest extent permitted by law.

 

10.                                 Miscellaneous.  This Agreement will commence
on the date hereof and will expire three (3) years from the hereof, unless
Cubist experiences a Change of Control prior to the expiration of the term of
this agreement, in which case this Agreement will expire on the later of:
(a) three (3) years from the date hereof or (b) two (2) years from the date of
the closing of such Change of Control.  This Agreement sets forth the entire
agreement

 

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between you and Cubist in connection with the subject matter hereof, and
replaces all prior and contemporaneous communications, agreements and
understandings, written or oral, with respect to the subject matter hereof any
obligations set forth in your employee confidentiality agreement with Cubist,
which obligations shall remain in full force and effect.  In consideration of
the benefits provided to you hereunder, you agree that, in the event of your
termination from Cubist, such benefits shall be in complete satisfaction of any
and all obligations that Cubist may have to you.  This Agreement may not be
modified or amended, and no breach shall be deemed to be waived, unless agreed
to in writing by you and an expressly authorized representative of Cubist.  This
Agreement may be executed in two counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.  This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without regard to its conflicts of laws principles, and all
disputes hereunder shall be adjudicated in the courts of the Commonwealth of
Massachusetts, to whose personal jurisdiction you hereby consent.

 

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If the foregoing is acceptable to you, please sign both copies of this letter in
the space provided, at which time this letter will take effect as a binding
agreement between you and Cubist.  Please keep one original for your records and
return one original to me.

 

 

Cubist Pharmaceuticals, Inc.

 

 

 

 

 

By:

 

 

 

Michael W. Bonney

 

President and Chief Executive Officer

 

 

Accepted and Agreed:

 

 

 

 

 

By:

 

 

 

Name:

 

Date:

 

 

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