Exhibit 10.1


 


July 17,
2009


 


Santosh
Vetticaden


Cubist
Pharmaceuticals, Inc.


65
Hayden Avenue


Lexington,
MA 02421


 


Re:  Retention Letter


 


Dear  Santosh:


 


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
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.


 


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 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.


 


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

  
	
   

  	
   

  	
  Michael
  W. Bonney

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
  Date:

  
	
   

  	
   

  
	
  Accepted
  and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Santosh Vetticaden

  	
   

  
	
  Name:

  	
  Santosh
  Vetticaden

  	
   

  
	
   

  	
  Senior
  Vice President, Clinical Development and Chief Medical Officer

  	
   

  
	
  Date: