Document:

Exhibit
10.1

 

July 7, 2010

 

Mr. Kendall
Young

7
Independence Court

Madison,
New Jersey 07940

 

Dear
Kendall:

 

We
are pleased to offer you the position of Executive Vice President at HCP, Inc.  This offer is subject to Board of Directors
and Compensation Committee approval. Your start date will be no later than September 13,
2010.  If you are unable to start by that
date, this offer will be withdrawn. This offer is also contingent upon the
satisfactory completion of a background check and other pre-employment
screenings.   An Authorization and
Disclosure Form is attached for your review and signature. We will notify
you once the pre-employment screenings have been completed.

 

Arrangements
of your employment are as follows:

 

1.               Your base annual
compensation will be $300,000 paid on a semi-monthly basis.  Your position is exempt.

 

2.               Your 2010 bonus will be
payable in cash and, unless you resign or are discharged for misconduct prior
to December 31, 2010, will be $235,000 which is a prorated amount based on
the actual number of days you will have worked during 2010. Thereafter, annual
bonuses are discretionary.   Since
discretionary bonuses are paid both for performance during a year and for
continued active service until the date the bonus is paid, no discretionary
bonus will be paid unless you are still actively employed at the time bonuses
are paid. Bonuses are typically awarded in the first quarter of the year
following the year for which performance is evaluated.

 

3.               Performance and compensation
evaluations are performed on an annual basis.

 

4.               You are eligible for 20 days
of vacation per year, which begin accruing upon employment.   Hours for your initial month will be
pro-rated based upon your start date. 
You will also be eligible to participate in all company programs (e.g.,
indemnification and change in control) generally available to other executive
vice presidents.

 

 

5.               Upon employment, 18,000
shares of restricted common stock will be awarded to you.  This is a “one-time” grant in the context of
joining HCP.  This stock is subject to a
pro rata five year annual vesting schedule.

 

6.               In the first quarter of
2011, you will be granted a combination of performance based restricted stock
units and stock options with a “value upon grant” of no less than $250,000.  Value upon grant means (i) for
restricted stock units, the closing price of HCP’s common stock on the date of
the grant times the number of shares granted plus (ii) for stock options,
the value as calculated by the Black—Scholes or other similar valuation method
times the number of options granted.  The
equity described in this paragraph is subject to a pro rata five year annual
vesting schedule.

 

7.               On the first of the month
following date of employment (or coincident with the date of employment if such
date is the first business day of the month) you will be eligible to contribute
to the 401(k) Plan and eligible for the following benefits to the extent
provided to regular employees of HCP: medical, dental, vision, life and
disability insurance.  Additionally, on
the first of the month following 90 days of employment, you will be eligible to
participate in the Section 125 Cafeteria Plan’s Health Care &
Dependent Care Flexible Spending Plan. You will become eligible to receive the
company matching contribution for the 40l (k) Plan on the first of the
month following three months of employment.

 

8.               HCP will reimburse you for
actual documented relocation costs as set forth in the attached addendum, but
not to exceed $175,000.  HCP will provide
a reasonable “gross-up” for tax purposes on relocation expenses and such “gross-up”
will not be subject to the $175,000 cap. 
If your employment with HCP terminates for good cause or you resign
within one and a half years of your employment start date, you will be required
to reimburse HCP for your relocation allowance. If not previously utilized,
relocation benefits will expire in their entirety after 18 months from your
start date.

 

You
understand that you will be an employee at will and that you may quit or be
transferred, reassigned, promoted, suspended, demoted and/or discharged at any
time with or without cause and with or without prior notice. No other promises
or representations have been made to you.

 

2

 

You
represent that by accepting and signing this offer letter and providing
services to HCP, you will not be in breach or violation of any contract or
legal obligation that you may owe to anyone, including any current or former
employer, and you have not and will not now or in the future, by reason of your
employment with HCP breach or violate any contract or legal obligation owed to
anyone, including any current or former employer. If for any reason any of the
foregoing representations are untrue or inaccurate, or become untrue or
inaccurate after your acceptance of this offer letter, then HCP shall have no
further obligations to you.

 

You
will also be required to sign an agreement that any employment dispute will be
subject to arbitration.  Attached is the
agreement for your review.

 

Kendall,
once you have had a chance to review the foregoing, please sign the enclosed
copy of this letter, and return under confidential cover to me.  This offer will expire on July 14, 2010,
if not earlier accepted.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Paul Gallagher

  
	
   

  	
  Paul
  Gallagher

  
	
   

  	
  Executive
  Vice President

  
	
   

  	
  Chief
  Investment Officer

  

 

 

I
agree to accept employment with HCP on this basis. I agree that no other
promises or representations have been made to me relating to my employment
other than those set forth in writing above.

 

	
  Accepted
  by:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
  7/12/2010

  	
   

  
	
   

  	
   

  
	
  Attachments

  	
   

  
				

 

3

 

Addendum to Offer Letter

Reimbursable Relocation Expenses

 

1.               Movement (packing,
unpacking, transportation and insurance) of household goods and personal
effects.  You may complete your move in 2
shipments provided it is completed within the 18 months from your start date.

 

2.               Transportation of up to two
automobiles.

 

3.               Temporary storage of
household goods and personal effects.

 

4.               To the extent and for the
period after you purchase a primary residence in Southern California, interest
payments and property taxes on your New Jersey residence for up to 12 months
until the earlier of the sale of your New Jersey residence or the date that is
18 months after your start date.  Temporary rental for up to 12 months or
until you acquire a primary residence in California.

 

5.               Commuting (between New
Jersey and Southern California) for 1 one-way trip for your family and up to 4
round-trip flights for you or your wife until the earlier of eighteen months
after your start date or 10 days after the sale of your primary residence.

 

6.               Normal closing costs of
buying and selling primary residences (including broker’s commission, legal,
title, transfer taxes/documentary stamps, survey, recording, notary, credit
report, appraisal and loan origination fees).Exhibit 10.1

 

 

October 27,
2010

 

BY
HAND DELIVERY

Michael W. 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 Employee Confidentiality
Agreement/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.  For the
avoidance of doubt, “Cause” does not include a termination of employment due to
your death or disability.

 

(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 

 

1

 

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 purportedly occur, in order to be able to terminate your employment
for “Good Reason” hereunder:  (x) 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, (y) Cubist
will then have 30 days to remedy the purported condition, and (z) if
Cubist fails to remedy such condition, you must separate from service not later
than 60 days following the end of such thirty-day period.

 

(c)                                  “Change of Control” means the first to occur of the following: (i) 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) the
consummation of a sale of all or substantially all of the business and/or
assets of Cubist to another person or entity pursuant to an agreement of
acquisition, merger, or consolidation that has been approved by Cubist’s
stockholders.

 

(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,
and subject to, receipt by Cubist of your signed and effective release of
claims as more fully described in Section 7 below (and your not revoking
such release during any applicable revocation period), Cubist shall pay you
starting sixty (60) days following the date of your employment termination, 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, with
the first payment retroactive to the day immediately following the date your
employment terminated.

 

(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, following, and subject to, receipt by Cubist of your signed and effective
release of claims as more fully described in Section 7 below (and your not
revoking such release during any applicable revocation period), 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 sixtieth (60th) day following
the termination of your employment.

 

2

 

(c)  In the event that you become entitled to
severance payments under Section 2(a) or 2(b) of this Agreement,
subject to (i) your having timely elected continuation coverage under the
federal law known as “COBRA”, (ii) your timely payment of the full monthly
COBRA premium for each month during the period described below and (iii) such
continuation coverage not having terminated, for a period of up to twenty-four
(24) months beginning on the first day of the month after the month in which
your employment terminates or, if earlier, until such time as your COBRA
coverage terminates, Cubist shall pay to you in each such month, within ten (10) days
of the first day of such month, an amount equal to the full monthly COBRA
premium for such month minus the active employee monthly cost of such coverage.

 

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, as
amended and the regulations thereunder (“Section 409A”), if any amount or
benefit to be paid to you pursuant to this Agreement as a result of your
termination of employment constitutes “deferred compensation” within the
meaning of,  and subject to, Section 409A,
if you are a “specified employee” (as determined by Cubist in its sole
discretion and as defined below) on the date of your termination of employment,
any payment or benefit or portion thereof, if any, that is scheduled to be paid
or provided to you hereunder during the first six (6) months following the
date of your termination of employment shall not be paid until the date which
is the first business day of the seventh month following your termination.  For purposes of the preceding sentence, the
term “specified employee” means an individual who is determined by Cubist to be
a specified employee under Treasury regulation Section 1.409A-1(i).  Cubist may, but need not, elect in writing,
subject to the applicable limitations under Section 409A of the Code, any
of the special elective rules prescribed in Section 1.409A-1(i) of
the Treasury Regulations for purposes of determining “specified employee”
status.  Any such written election shall
be deemed part of this Agreement.  For
purposes of the Treasury Regulations under Section 409A, each payment
described in this Section shall be treated as a separate payment.

 

For purposes of this Agreement, references to
termination of employment, separation from service and similar or correlative
terms mean a “separation from
service” (as defined at Section 1.409A-1(h) of the Treasury
Regulations) from Cubist and from all other corporations and trades or
businesses, if any, that would be treated as a single “service recipient” with
Cubist under Section 1.409A-1(h)(3) of the Treasury Regulations.  A termination of employment for Good Reason
or by Cubist for any reason other than for Cause under this Agreement is
intended to satisfy the meaning of “involuntary separation from service” (as
defined in Section 1.409A-1(n) of the Treasury Regulations).

 

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 

 

3

 

applicable
law.

 

4.                                       Medical
and Dental Benefits.  Except for any right you have to continue
participation in Cubist’s group health and dental plans under 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 you become
entitled to severance payments under Section 2(b) of this Agreement,
then all outstanding unvested equity-based compensation 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 awards, and Cubist and you hereby agree that any
agreements covering such 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 (which
in all events shall be no later than the fiftieth (50th) calendar day following
the date on which your employment terminates). 
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.

 

4

 

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/Proprietary Information and
Inventions Agreement with Cubist, which obligations shall remain in full force
and effect.  In consideration of the
payments and benefits provided to you hereunder, you agree that, in the event
your employment with Cubist terminates, such payments and benefits shall be in
complete satisfaction of any and all obligations that Cubist may have to you,
including under any severance guidelines, practices or policies that Cubist may
have in place during your employment or at or after your employment terminates.  Any severance amounts due to you under this
Agreement shall be reduced by any notice or pay in lieu thereof that Cubist is
required to give under the federal law known as “WARN” or any similar state
statute.  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.

 

5

 

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/
  Kenneth M. Bate

  
	
   

  	
   

  	
   

  	
  Kenneth
  M. Bate, Lead Director

  
	
   

  	
   

  	
  Date:
  October 28, 2010

  
	
   

  	
   

  	
   

  
	
  Accepted
  and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Michael W. Bonney

  	
   

  	
   

  
	
  Name:

  	
  Michael W. Bonney

  	
   

  	
   

  
	
  Date:

  	
  November
  1, 2010

  	
   

  	
   

  

 

6

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