Exhibit 10.3


 


December 13, 2005


 


BY HAND DELIVERY


Michael
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 (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 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,
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 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.


 


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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:

  	
  /s/
  Christine C. Ciotti

  	
   

  
	
   

  	
  Christine
  C. Ciotti

  
	
   

  	
  Vice
  President, Human Resources

  
	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Michael W. Bonney

  	
   

  	
   

  
	
  Name:

  	
  Michael W. Bonney

  	
   

  
	
  Date:

  	
  12/13/05

  	
   

  
							



 


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