Document:

Exhibit 10.5

 

August
6, 2004

 

BY HAND DELIVERY

 

David W.J. McGirr

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, MA  02421

 

Re:  Retention Letter

 

Dear David:

 

You are a highly valuable
employee of Cubist Pharmaceuticals, Inc. (“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 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;  (iv) you engage in substantial or continuing
inattention to or neglect of your duties and responsibilities reasonably
assigned to you by Cubist; or (v) you engage in substantial or continuing acts
to the detriment of Cubist or you engage in substantial or continuing acts
inconsistent with Cubist’s policies or practices.

 

(b)                                 “Good Reason”
means: (i) the failure of Cubist to employ you in your current or a
substantially similar position such that your duties and responsibilities are
materially diminished without your consent; (ii) a reduction in your base
salary rate and potential 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 20 miles from your current site of
employment without your consent.

 

(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 

 

1

 

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.

 

2.                                       Severance. 
In the event that your employment is terminated by Cubist for any reason
other than for Cause, or by you for Good Reason, Cubist shall make a one-time,
lump-sum payment to you equal to eighteen (18) months of your then-current base
salary 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, 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.                                       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.

 

2

 

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.

 

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 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 and
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.

 

3

 

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

  
	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David W. J. McGirr

  	
   

  	
   

  
	
  Name: David W. J. McGirr

  	
   

  
	
  Date: 8/11/04

  	
   

  
						

 

4Exhibit
10.6

 

August
6, 2004

 

BY HAND DELIVERY

 

Christopher D.T. Guiffre

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, MA  02421

 

Re:  Retention Letter

 

Dear Chris:

 

You are a highly valuable
employee of Cubist Pharmaceuticals, Inc. (“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 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;  (iv) you engage in substantial or continuing
inattention to or neglect of your duties and responsibilities reasonably
assigned to you by Cubist; or (v) you engage in substantial or continuing acts
to the detriment of Cubist or you engage in substantial or continuing acts
inconsistent with Cubist’s policies or practices.

 

(b)                                 “Good Reason”
means: (i) the failure of Cubist to employ you in your current or a
substantially similar position such that your duties and responsibilities are
materially diminished without your consent; (ii) a reduction in your base
salary rate and potential 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 20 miles from your current site of employment
without your consent.

 

(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 

 

1

 

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.

 

2.                                       Severance. 
In the event that your employment is terminated by Cubist for any reason
other than for Cause, or by you for Good Reason, Cubist shall make a one-time,
lump-sum payment to you equal to eighteen (18) months of your then-current base
salary 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, 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.                                       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.

 

2

 

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.

 

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 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 and
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.

 

3

 

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

  
	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Christopher D. T. Guiffre

  	
   

  	
   

  
	
  Name: Christopher D. T. Guiffre

  	
   

  
	
  Date: 8/11/04

  	
   

  
						

 

4

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