Exhibit 10.1


 





 


 


October 9, 2007


 


BY HAND DELIVERY


Mike Bonney


Cubist Pharmaceuticals, Inc.


65 Hayden Avenue


Lexington, MA  02421


 


Re:  Retention
Letter


 


Dear  Mike:


 


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 


 


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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 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 twenty-four (24) 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 twenty-four (24) 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.


 


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.


 


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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 twenty four (24) 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 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.


 


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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/ David W.J. McGirr

  
	
   

  	
   

  	
  David W.J. McGirr

  
	
   

  	
  Date: October 10, 2007

  



 


Accepted and Agreed:


 


 


	
  By:

  	
  /s/ Michael W. Bonney

  	
   

  
	
  Name: Michael W. Bonney

  	
   

  
	
  Date:  October
  10, 2007

  	
   

  



 


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