Exhibit 10.42


 


November 12, 2008


 


Santosh J. Vetticaden, Ph.D., M.D.


 


Dear
Santosh,


 


It
is a great pleasure to offer you the position of Senior Vice President,
Clinical Development and Chief Medical Officer, with Cubist
Pharmaceuticals, Inc. reporting directly to me.  In this position you will be considered a Section 16
officer.


 


The
following summarizes the principal terms of our revised offer which supersedes all
previous offers, written or oral, including the written offer dated November 7,
2008:


 


Salary:  $ 370,000.00 / $ 15,416.67 Per Semi-Monthly
Pay Period.  Your first merit review will
be in January 2010 and will cover the performance period after your date
of hire.  Any first year merit increase
you receive will be pro-rated based on the number of months you are employed
during the review period, which is January 1, 2009 to December 31,
2009. This position is exempt, so you will not be eligible for overtime.


 


Performance Bonus:  You will be eligible for a bonus target for
2009 performance of 40% of your earned base salary.  This bonus will be based 65% on company
performance and 35% on individual performance. 
Any 2009 performance award will be pro-rated based upon your start date.


 


Stock Options and
Restricted Stock Units: 
A ten-year option to purchase 80,000 shares of Cubist Pharmaceuticals, Inc.
common stock.  The date of grant will be,
and the strike price will be determined by using the closing price on, the 15th
day of the month after your employment commences. If no trades were reported on
such date, the date of grant will be, and the strike price will be determined
by using the closing price on, the most recent trading day preceding the 15th
on which a trade occurred.  Contingent
upon employment, these options are exercisable in equal quarterly installments
over four years beginning on the grant date. 
Additionally, you will be granted Restricted Stock Units (RSUs)
equivalent in value to $150,000.  These RSUs
will be granted on the date that we make our annual year-end performance grants
to employees and executive officers, which is currently expected to be May 15,
2009, and will be calculated based on the closing price on the annual grant
date.  Example: value $150,000 / close
price $20.00 = 7,500 RSUs.  Contingent
upon employment, the RSUs will vest in equal annual installments over four
years beginning on the grant date.


 


Sign-on
bonus:  You will receive a one-time payment of $150,000.00
(grossed up for taxes). If you voluntarily resign from Cubist within one
(1) year of your start date or you are terminated by Cubist for cause (as
defined below) or misconduct within one (1) year of your start date, you
are required to repay Cubist for the total of such sign-on bonus amount
(excluding the tax gross-up) within one week of your termination date, and you
hereby authorize Cubist to deduct any sign-on bonus amounts owed to Cubist from
any amounts owed to you by Cubist as of your termination date, including your
last paycheck, any incentive compensation and/or expense report.   “Cause” means that: (i) you commit of an
act of dishonesty; (ii) you are convicted of, or plead nolo contendere to, a felony or a crime involving moral
turpitude; or (iii) you breach any material obligation under your
Proprietary Information and Inventions Agreement or Cubist’s Code of Conduct
and Ethics.


 

















 


Benefits:  Participation
in Cubist’s comprehensive benefit plan, including Health, Dental, Life and
Disability Insurance, 401(k) Plan, Employee Stock Purchase Plan, etc.  As part of your benefits package you will
receive three weeks of paid vacation. 
All paid time off, including vacation time, is prorated based on your
start date.   Please see the enclosed
benefits brochure for further details on the Cubist benefits plan.


 


Relocation:  As
detailed below and on Exhibit A to this letter (and subject
thereto), Cubist will provide you with financial assistance in connection with your
move from California to the Greater Boston, Massachusetts area. Cubist partners
with Coldwell Banker Relocation Services to coordinate relocation packages on
its behalf and a relocation consultant will be assigned to assist you during this
period.  Reimbursement and payment for
relocation expenses that Cubist has agreed to cover (as detailed on Exhibit A)
is subject to the terms of Exhibit A and your agreement to
coordinate your relocation activities with the relocation consultant assigned
to you.   Among other things. your
relocation consultant will help you determine the expenses that can be billed
directly to Cubist and the expenses that will be reimbursed by Cubist.


 


If your employment with
Cubist terminates for any reason other than for cause or misconduct within the
first 6 months after your start date, you will not be required to repay any
relocation expenses.  If you voluntarily
resign during months 7 through 12 after your start date or you are terminated
by Cubist for cause (as defined above) or misconduct during the first 12 months
of your start date, you are required to repay Cubist for the total of such
relocation amounts within one week of your termination date. If you voluntarily
resign from Cubist during months 13 through 24 after your start date or you are
terminated by Cubist for cause (as defined above) or misconduct within months
13 through 24 after your start date, you are required to repay Cubist 50% of
such relocation amounts within one week of your termination date.  You will be required to sign a Relocation
Agreement evidencing this commitment with customary terms and conditions.  You additionally authorize Cubist to deduct
any relocation amounts from any amounts owed to you by Cubist as of your
termination date, including your last paycheck, any incentive compensation
and/or expense report.


 


Change
in Control: After 6
months of employment, you will be eligible to receive our standard form of
retention letter.   In the event that a
change in control occurs prior to the end of your initial six months of
employment, you will receive the same treatment as other Section 16
officers.


 


If
during the first 6 months of employment you leave the company for any reason
other than for cause (as defined above) or misconduct, Cubist will provide you
with 3 months of salary continuation beginning on your termination date.


 


Please note that this
offer is expressly conditioned upon you being legally authorized to work in the
United States, and is further conditioned on you signing the Cubist employee
confidentiality agreement.


 


Your employment at Cubist is at-will, which means that
either Cubist or you may end the relationship at any time for any reason. This
letter constitutes our entire offer regarding the terms and conditions of your
prospective employment with Cubist.  It supersedes any prior agreements, or other
promises or statements (whether oral or written) regarding the offered terms of
employment or any aspect of your anticipated employment.  The terms of your employment shall be
governed by the law of the Commonwealth
of Massachusetts. 
By accepting this offer of employment, you agree that any action,
demand, claim or counterclaim in connection with any aspect of your employment
with Cubist, or any separation
of employment (whether voluntary or involuntary) from Cubist, shall be resolved in a court of


 

















 


competent jurisdiction in
Massachusetts by a judge alone,
and you waive and forever renounce your right to a trial before a civil jury.


 


We
are very enthusiastic about your becoming a member of the Cubist team.


 


Sincerely,


 


	
  /s/ Michael W. Bonney

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Michael W. Bonney

  	
   

  	
   

  
	
  President and Chief
  Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  This offer expires on November 17, 2008.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Yes, I accept the terms
  and conditions of this offer.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed:

  	
  /s/ Santosh J.
  Vetticaden

  	
   

  	
  Date: 11/14/08

  
				



 

















 


Exhibit A


 


Relocation Expenses


 


Subject
to the terms of this Exhibit A, Cubist will cover the following relocation
expenses and you will be entitled to utilize the financial assistance for a
period of two years after your employment start date:


 


Temporary
Living/Duplicate Housing Assistance:   Cubist will cover temporary
living for you and your family in the greater Boston area or provide duplicate
housing assistance, as detailed below, for a period of 12 months after your
employment start date, subject to the following conditions:  (a) This assistance will terminate
earlier than 12 months after your employment start date in the event that you
have sold your California house and purchased a house in the greater Boston
area within the 12-month period, in which case both the temporary living and
duplicate housing assistance will terminate upon the later of these two events;
and (b) if you purchase a home in the greater Boston area within 12 months
after your employment start date but have not sold your house in California,
then, effective upon the date you purchase your house in the greater Boston
area, the assistance to be provided by Cubist under this section will convert
solely to duplicate housing assistance and you will no longer be entitled to
temporary living assistance.    Duplicate assistance consists of the payment
by Cubist of the lesser of your mortgage payments on the California house and
the house you purchase in the greater Boston area.


 


Additionally,
Cubist will cover one return trip home every other weekend during the first 12
months after your employment start date so long as you own your house in
California.


 


For
temporary living, our relocation provider will identify a furnished and
accessorized temporary apartment for you and your family to stay in if you
begin employment with Cubist before you are able to purchase a home in the
greater Boston area.


 


Home
Sale Closing Costs:  Our relocation provider will be in touch with
you to identify at least two approved real estate agencies and agents to
provide current market analyses of your property.  You are not required to list your property
with either of these agents.  We will
cover the following customary closing costs required to be paid by a home
seller, provided that the total home sale closing/settlement  costs that we will cover will not exceed 7%
of the sale price of your home:


 


·                  Brokerage commission


·                  Reasonable and customary legal fees and
expenses


·                  Recording fees, title expenses


·                  Transfer taxes


·                  Other seller expenses customary and in
accordance with local practice


·                  Expenses associated with one return trip to
settle on the sale of your residence — not to exceed three days


·                  Seller Incentive — If you sell and close on
your home within 90 days of its listing and you use a Coldwell Banker approved
Realtor, you will receive the higher of $10,000 or 2% gross of sales price for
your effort to complete your relocation as quickly as possible.  You will not be eligible for this benefit if
you choose your own realtor.


 


The
following home sale closing/settlement charges will not be covered:


 


·                  Real estate taxes due


·                  Insurance or seller concessions (including
buyer’s points and/or closing costs, property repairs)


·                  Home warranties


 

















 


Home
Purchase Closing Costs:  Cubist will cover all normal and customary
non-recurring home purchase closing costs incurred with the purchase of your
primary residence in the greater Boston area and will cover up to $6,000
towards mortgage points to buy down your mortgage interest rate.  The following costs will not be covered:


 


·                  Attorney’s fees over $800.00


·                  Owner’s title insurance (only Lender’s title
insurance is covered)


·                  Property Tax escrows


·                  Hazard Insurance


 


House
hunting Trips:  Two house hunting trips of up to seven (7) nights
total with your family, minivan rental, airfare or mileage, lodging, and meals
up to $90 per day per person will be covered by Cubist.


 


Miscellaneous
Expense Allowance:  Recognizing that you may incur costs
associated with your relocation that are not expressly addressed here, Cubist
will additionally provide you with $8,500 less applicable taxes processed
through payroll to assist you with any additional expenses.  This allowance will be disbursed once your
official relocation process begins and you have signed the Relocation
Agreement.


 


Household
Goods Shipment:  Our relocation provider will facilitate your
obtaining two estimates from our preferred van lines.  These estimates must be approved in advance
by Cubist and our relocation provider. 
These costs will be billed directly to Cubist.  Additionally, the cost of transporting two
automobiles will be covered by Cubist, and up to 12 months of storage will be
covered if it is necessary to move your household goods prior to closing on a
property in the new location.


 


Tax
Consequences:  Please note that corporate relocation can
have personal tax implications.  Please
contact your tax advisor for more information related to the tax implications
of relocation. Cubist will pay the estimated federal, state and FICA tax
liability (gross up) that arises from taxable Company reimbursed expenses
associated with your relocation as detailed on Exhibit B.  As noted on this Exhibit A and Exhibit B,
you will not be grossed up for the miscellaneous expense allowance or the
amount of the tax gross up that you receive from the Company.   The amount of the tax gross up will be
remitted by Cubist directly to the appropriate revenue agency and reported as
withheld taxes on your W-2 Wage and Tax Statement.


 

















 


Exhibit B


Tax Consequences


 


	
  Policy

  	
   

  	
  Tax Situation

  
	
   

  	
   

  	
   

  
	
  Household Goods

  ·      Storage (1st 30 days only)

  ·      Moving Extras

  	
   

  	
  Excludable/Deductible

  Excludable/Deductible

  Excludable/Deductible

  
	
   

  	
   

  	
   

  
	
  Final Move Expenses

  ·      Transportation

  ·      Lodging

  ·      Meals

  	
   

  	
  Excludable/Deductible

  Excludable/Deductible

  Excludable/Deductible

  TAXABLE

  
	
   

  	
   

  	
   

  
	
  Home Sale Assistance

  ·      Pre-marketing / advance marketing

  	
   

  	
  Non-event

  Non-event

  
	
   

  	
   

  	
   

  
	
  Selling Costs

  Temporary Living

  Return Trips Home

  House Hunting Trips

  Tax Assistance / Gross Up

  New Home Purchase Costs

  Misc. Expense Allowance

  Mortgage Interest Differential

  Cost of-living Allowance

  Mortgage Program

  Incentives — Bonuses

  Tax Counseling (if paid by
  employer)

  Per Diem Allowance

  Lease Breaking Costs

  Legal Costs

  Special Assistance

  	
   

  	
  TAXABLE

  TAXABLE

  TAXABLE

  TAXABLE

  TAXABLE (not grossed up)

  TAXABLE

  TAXABLE (not grossed up)

  TAXABLE

  TAXABLE

  Non-event

  TAXABLE

  TAXABLE

  TAXABLE

  TAXABLE

  TAXABLE

  TAXABLE