EXHIBIT 10.2

 

AUGUST 11, 2008

 

BY HAND DELIVERY

Steven Gilman, Ph.D.

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, MA 02421

 

RE:  RETENTION LETTER

 

Dear Steve:

 

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 (ii) a material reduction in your total target cash compensation 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; provided however, if any
of these conditions

 

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occur, you are required to provide notice of any such condition to Cubist’s
Board of Directors within 60 days of the initial occurrence of the condition,
and Cubist will then have 30 days to remedy the condition, prior to the
existence of such condition being deemed to be “Good Reason.

 

(c)           a “Change of Control” occurs: (i) when any person or entity other
than Cubist or one of its subsidiaries becomes the owner more than fifty percent
(50%) 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) Except as set forth in Section 2(b) below, 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.

 

Notwithstanding any other provision with respect to the timing of payments under
this Section 2, in order to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986 (“Section 409A”), any payment or portion thereof,
to which you are entitled under this Section 2 which is not exempt from the
application of Section 409A’s “six month delay” provision (in Cubist’s sole
discretion), shall be withheld until the first business day of the seventh month
following your termination. At such time, you shall be paid the remaining
balance otherwise owed to you under this Section 2 in a lump sum.

 

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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.

 

5.             Equity Acceleration..  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 equity 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 within the time period specified in such release.  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

 

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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 date 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 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, other than 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:

/s/ Michael W. Bonney

 

 

 

Name: Michael W. Bonney

 

 

 

Date: August 11, 2008

 

 

 

 

Accepted and Agreed:

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Steven C. Gilman

 

 

 

Name: Steven C. Gilman

 

 

 

Date: August 12, 2008

 

 

 

 

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