Document:

EXHIBIT
10.1

 

FIFTH AMENDMENT TO

REAL ESTATE OPTION AGREEMENT

 

THIS FIFTH AMENDMENT  is
entered into between Freeport Area Economic
Development Foundation, an
Illinois not-for-profit Corporation, herein referred to as “Optionor,” and
Blackhawk Biofuels, LLC, herein
referred to as “Optionee.”

 

RECITALS

 

A.
Optionor and Optionee have previously entered into a Real Estate Option
Agreement; and Amendment to Real Estate Option Agreement; Second Amendment to
Real Estate Option Agreement, Third Amendment to Real Estate Option Agreement, and
Fourth Amendment to Real Estate Option Agreement, a copy of said documents are
attached hereto and incorporated herein by reference.

 

B. The parties desire to further extend the date for
the exercise of the Option as herein set forth.

 

AGREEMENT

 

NOW,
THEREFORE, the parties agree as follows:

 

1.
Paragraph 3(b) of the Real Estate Option Agreement is amended effective the date
hereof to read as follows:

 

This Option shall remain in effect until December 31, 2007. Optionee
may exercise this Option at any time prior to said date.

 

2.
Except as herein set forth, all other terms and conditions of the Real Estate Option
Agreement remain the same and in full force and effect.

 

IN
WITNESS WHEREOF, the parties have executed this Fifth Amendment.

 

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
  Dated: November 9, 2007.

  	
  FREEPORT
  AREA ECONOMIC

  
	
   

  	
  DEVELOPMENT
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  
	
   

  	
   

  	
  Robert
  Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
  Dated: November 9, 2007.

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/
  Ronald Mapes

  

 

This
Instrument Prepared by:

Attorney
Dan G. Fishburn

Snow,
Hunter, Whiton & Fishburn, Ltd.

8
East Stephenson Street

Freeport,
IL 61032 (815-235-2511)

 

 

REAL ESTATE OPTION AGREEMENT

 

THIS AGREEMENT entered into this 20th day of
June, 2006, between Freeport Area Economic
Development Foundation, an Illinois not-for-profit corporation,
herein referred to as “Optionor,” whose address is 27 W. Stephenson Street,
Freeport, Illinois 61032, and Blackhawk
Biofuels, LLC, herein referred to as “Optionee,” whose address is 22
S. Chicago Avenue, Freeport, Illinois 61032.

 

1.                                       Consideration and Grant of Option. In consideration of the payments herein set
forth from Optionee to Optionor, Optionor hereby grants to Optionee an option
to purchase Lot 7 in the Replat of Mill Race Industrial Park (a copy of the
draft of the Replat is attached hereto marked at Exhibit A) which is located in
the Stephenson County Economic Development area in Stephenson County, Illinois
(herein referred to as the “Property”), together with all easements and
appurtenances thereto, for the price and within the time specified herein. This
Real Estate Option Agreement is contingent upon Optionor obtaining all
necessary government approval and the filing of the Replat of Mill Race
Industrial Park in accordance with the Replat which is attached hereto. In the
event the Replat is not approved, this Option Agreement shall be null and void
and any monies paid to Optionor by Optionee shall be refunded to Optionee.

 

2.                                       Payment for Option. Optionee shall pay Optionor the sum of
Eight Hundred Twenty-five Dollars ($825.00) per month on the first of each
month commencing August 1, 2006, and on the first of each month thereafter. Said
payment shall be in consideration for the Option granted to Optionee. The payment
will not be applied to the purchase price in the event Optionee exercises this
Option. In the event Optionee fails to exercise the Option according to its
terms, Optionor shall retain all sums paid under the terms of this Option
Agreement.

 

3.                                       Exercise of Option. This option may be exercised by Optionee as
follows:

 

a.                                       By written notice from Optionee to Optionor,
at the address provided herein, which written notice shall provide for a date
for closing within 60 days of the date of the written notice.

 

b.                                      This option shall remain in effect until
December 31, 2006. Optionee may exercise this option at any time prior to said
date.

 

c.                                       If Optionee fails to exercise this option
within the time period set forth above, Optionee’s right to exercise the option
and purchase the Property shall automatically terminate and this agreement
shall be of no force and effect.

 

4.                                       Non-Exercise of Option. In the event Optionee does not exercise the
option to purchase the Property, the consideration paid to Optionor pursuant to
Paragraph 2 above shall be forfeited and remain the property of Optionor.

 

5.                                       Assess to Property. During the option period, Optionee shall be
granted access to the property to perform any necessary due diligence as
required by Optionee. Provided however, Optionee shall respect the rights of
the current tenants on the premises and shall not disrupt or interfere with the
tenants or their business. Optionee shall return the Property to its original
condition after the completion of any tests, surveys or inspections. All costs
of due diligence studies shall be borne by Optionee.

 

6.                                       Purchase Price and Terms of Payment. The purchase price paid for the property
shall be $15,000.00 per surveyed acre. Optionor and Optionee agree that upon
the exercise of the Option, the

 

 

parties
shall sign an Agreement for Deed, prepared by Optionee’s attorney and approved
by Optionor’s attorney, the exercise of the option shall be contingent upon
both parties executing an Agreement for Deed which is acceptable to both
Optionor and Optionee. The purchase price shall be determined by survey, the
total purchase price shall be the number of surveyed acres times the price per
acre as hereinabove set forth.

 

7.                                       Notice. All notices provided for in this instrument, if not delivered in person,
shall be sent by U.S. Certified Mail, Return Receipt Requested, to the party at
the address given above, or to any other address either party may have
designated for receipt of such notices by written notice of a change of
address.

 

8.                                       Representations. Optionor and Optionee hereby warrant and
represent to each other that no real estate broker has participated in this
transaction and that this instrument contains the entire agreement of the
parties and that any prior discussions or negotiations not set forth in this
Agreement are of no further force and effect.

 

9.                                       Assignment. Optionor and Optionee agree that this Option may be assigned by
Optionee without the prior written consent of Optionor and that assignee of
Optionee shall have all rights of Optionee hereunder.

 

10.                                 Governing Law. This Agreement shall be governed by the
laws of the State of Illinois.

 

11.                                 Prior Agreement Void. Upon the execution of this Amended Real
Estate Option Agreement, the prior Real Estate Option Agreement between the
parties dated March 10, 2006, shall be null and void and of no further force
and effect.

 

IN
WITNESS WHEREOF, the parties have executed this Option the day and year first
above written.

 

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
   

  	
  FREEPORT
  AREA ECONOMIC DEVELOPMENT 

  
	
   

  	
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/  Robert J. Skurla

  
	
   

  	
   

  	
  Robert
  Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/  Ronald Mapes

  
	
   

  	
   

  	
  Member

  

 

Instrument
Prepared by:

Attorney
Dan G. Fishburn

Snow,
Hunter, Whiton & Fishburn, Ltd.

8
East Stephenson Street

Freeport,
IL  61032 (815-235-2511)

 

 

EXHIBIT A

 

[SURVEY] 

 

 

AMENDMENT TO

 

REAL ESTATE OPTION AGREEMENT

 

THIS AMENDMENT TO REAL ESTATE OPTION AGREEMENT is entered into this 27th day of
November, 2006, between Freeport Area
Economic Development Foundation, an Illinois not-for-profit corporation,
as Optionor, and Blackhawk Biofuels, LLC,
as Optionee.

 

1.                                       Extension of Option. Paragraph 3(b) of the Real Estate Option
Agreement dated June 20, 2006 (the “Option Agreement”) is hereby amended to
replace the date “December 31, 2006” with “March 31, 2007”.

 

2.                                       Other Terms of Option Agreement. Except as amended by paragraph 1 hereof,
all other terms of the Option Agreement shall remain in full force and effect
between the parties.

 

IN
WITNESS WHEREOF, the parties have executed this Amendment to Real Estate Option
Agreement the day and year first above written.

 

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
   

  	
  FREEPORT
  AREA ECONOMIC DEVELOPMENT 

  
	
   

  	
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  
	
   

  	
   

  	
  Robert
  Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/
  Ronald Mapes                        

  
	
   

  	
   

  	
  Chair

  

 

 

SECOND AMENDMENT TO

REAL ESTATE OPTION AGREEMENT

 

THIS SECOND AMENDMENT  is
entered into between Freeport Area Economic
Development Foundation, an Illinois not-for profit Corporation,
herein referred to as “Optionor,” and Blackhawk Biofuels, LLC, herein
referred to as “Optionee.”

 

RECITALS

 

A.           Optionor and Optionee have entered into a Real Estate Option Agreement
dated June 20, 2006, a copy of said Agreement is attached hereto marked Exhibit
A.

 

B.             Optionor and Optionee entered into an
Amendment to Real Estate Option Agreement dated November 27, 2006. The
Amendment extended the Real Estate Option Agreement until March 31, 2007. A
copy of said Amendment is attached hereto marked Exhibit B.

 

C.             The parties desire to further extend the date
for the exercise of the Option as set forth.

 

AGREEMENT

 

NOW,
THEREFORE, the parties agree as follows:

 

1.                                       Paragraph 3(b) of the Real Estate Option
Agreement is amended effective the date hereof to read as follows:

 

This Option shall remain in effect until June 30, 2007. Optionee may
exercise this Option at any time prior to said date.

 

2.                                       Except as herein set forth, all other terms
and conditions of the Real Estate Option Agreement remain the same and in full
force and effect.

 

IN
WITNESS WHEREOF, the parties have executed this Second Amendment.

 

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
  Dated:  March 20, 2007

  	
  FREEPORT
  AREA ECONOMIC 

  
	
   

  	
  DEVELOPMENT
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  	
   

  
	
   

  	
   

  	
  Robert
  Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
  Dated:  March 20, 2007

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/
  Ronald Mapes

  	
   

  
	
   

  	
   

  	
  Ronald
  Mapes, Chair

  
					

 

 

This
Instrument Prepared by:

Attorney
Dan G. Fishburn

Snow,
Hunter, Whiton & Fishburn, Ltd.

8
East Stephenson Street

Freeport,
IL 61032 (815-235-2511)

 

 

THIRD AMENDMENT TO

REAL ESTATE OPTION AGREEMENT

 

THIS THIRD AMENDMENT  is
entered into between Freeport Area Economic
Development Foundation, an
Illinois not-for-profit corporation, herein referred to as “Optionor,”
and Blackhawk Biofuels, LLC,
herein referred to as “Optionee.”

 

RECITALS

 

A.           Optionor and Optionee have previously entered into a Real Estate Option
Agreement; and Amendment to Real Estate Option Agreement; and a Second
Amendment to Real Estate Option Agreement, a copy of said documents are attached
hereto and incorporated by reference.

 

B.             The parties desire to further extend the date
for the exercise of the Option as herein set forth.

 

AGREEMENT

 

NOW,
THERFORE, the parties agree as follows:

 

1.               Paragraph 3(b) of the Real Estate Option
Agreement is amended effective the date hereof to read as follows:

 

This Option shall remain in effect until July 31, 2007. Optionee may
exercise this Option at any time prior to said date.

 

2.               Except as herein set forth, all other terms and
conditions of the Real Estate Option Agreement remain the same and in full
force and effect.

 

IN
WITNESS WHEREOF, the parties have executed this Second Amendment.

 

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
  Dated:  June 25, 2007.

  	
  FREEPORT
  AREA ECONOMIC

  
	
   

  	
  DEVELOPMENT
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  
	
   

  	
   

  	
  Robert
  Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
  Dated:  June 26, 2007.

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/
  Ronald Mapes                        

  

 

This
Instrument Prepared by:

Attorney
Dan G. Fishburn

Snow,
Hunter, Whiton & Fishburn, Ltd.

8
East Stephenson Street

Freeport,
IL 61032 (815-235-2511)

 

 

FOURTH AMENDMENT TO

REAL ESTATE OPTION AGRTEEMENT

 

THIS FOURTH AMENDMENT  is
entered into between Freeport Area Economic
Development Foundation, an
Illinois not-for-profit corporation, herein referred to as “Optionor,”
and Blackhawk Biofuels, LLC,
herein referred to as “Optionee.”

 

RECITALS

 

A.           Optionor and Optionee have previously entered
into a Real Estate Option Agreement; and Amendment to Real Estate Option
Agreement; and a Second Amendment to Real Estate Option Agreement, and a Third
Amendment to Real Estate Option Agreement, a copy of said documents are
attached hereto and incorporated by reference.

 

B.             The parties desire to further extend the date
for the exercise of the Option as herein set forth.

 

AGREEMENT

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                       Paragraph 3(b) of the Real Estate Option
Agreement is amended effective the date hereof to read as follows”

 

This Option shall remain in effect until September 30, 2007. Optionee
may exercise this Option at any time prior to said date.

 

2.                                       Except as herein set forth, all other terms
and conditions of the Real Estate Option Agreement remain the same and in full
force and effect.

 

IN
WITNESS WHEREOF, the parties have executed this Third Amendment.

 

	
   

  	
  OPTIONOR:

  
	
   

  	
   

  
	
  Dated:  July 31, 2007.

  	
  FREEPORT
  AREA ECONOMIC

  
	
   

  	
  DEVELOPMENT
  FOUNDATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Robert J. Skurla

  
	
   

  	
   

  	
  Robert
  Skurla, Executive Director

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
  Dated:  July 31, 2007.

  	
  BLACKHAWK
  BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /S/
  Ronald MapesEXHIBIT 10.1

 

	
  

  	
  Short-Term Incentive Plan (STI Plan)

  Terms and Conditions

  
	
   

  	
   

  

 

Compensation Philosophy

 

Cubist’s compensation philosophy is to attract, motivate, retain and
reward employees with base pay, short-term and long-term incentives, and
benefits that competitively target the market. 
Cubist’s compensation programs provide employees with the opportunity to
earn increased compensation — based on Cubist’s and the employee’s achievement
of pre-established performance targets.

 

Plan Overview

 

Cubist’s Short-Term Incentive Plan (“STI Plan”) is a bonus plan for all
Cubist employees (“Participants”) which is designed to reward them  for their roles in the achievement of Cubist’s
annual goals, as established by the Company (“Annual Goals”).  STI Plan awards (“Plan Awards”) are
determined on an annual basis, based on whether and to what extent Cubist
achieves its Annual Goals and each Participant achieves the Participant’s
individual goals for the relevant calendar year (the “Performance Period”).

 

Plan Objective

 

The intent of the STI Plan is to provide highly competitive total cash
compensation through an annual variable pay program that reflects Cubist’s
performance and the Participant’s performance against goals and
objectives.  The STI Plan is an important
variable component of the total compensation package for all employees.

 

Eligibility

 

All employees of Cubist are eligible to participate in the STI
Plan.  Participation in the STI Plan in
one year does not automatically guarantee participation in a future year.  Compliance with all Cubist policies,
guidelines and all applicable laws  is a
prerequisite to receiving an STI award. A determination that an employee is not
eligible to receive an STI award due to his or her failure to demonstrate
compliant behavior may be made by the CEO and Chief Compliance Officer.

 

Performance Periods

 

Each calendar year, beginning on January 1 of each year, constitutes a
separate Performance Period.

 

Financial Measures

 

Prior to the beginning of each Performance Period, the Company will
establish financial measures and weightings for each of the Company’s Annual
Goals. Cubist needs to achieve at least 70% of its Annual Goals for any
Participant to be eligible for a Plan Award. For 2007, company achievement will
be capped at a 200% payout.  In addition
to achievement of Annual Goals, Plan Awards are also determined on the basis of
individual performance and achievement of objectives.

 

Individual Objectives

 

As part of Cubist’s
annual (or in the case of Participants who join the Company after the
commencement of a Performance Period, ongoing) goal setting process, each
Participant should propose individual objectives for his or her manager’s
approval. Each Participant will be measured by his or her manager against these
objectives, and the manager shall make a recommendation to the CEO as to
whether the Participant should receive a Plan Award, and, if so, the amount of
such Plan Award (assuming Cubist’s Annual Goals have been achieved to the
requisite level noted above).

 

 

 

Funding

 

After the end of each Performance Period, the CEO shall determine the
aggregate amount available for Plan Awards (if any) based on the Company’s
performance relative to the Annual Goals (the “Pool”).  The Pool will be funded based on the Company’s
performance.  Assuming the Company has
achieved the requisite performance level, the CEO shall then determine the
award and amount of any Plan Awards to 
Participants in accordance with the STI Target Percentages noted below;
provided that the Compensation Committee of the Company’s Board of Directors
shall make such determinations with respect to the CEO’s bonus and shall
approve the CEO’s recommendations with respect to the Executive Officers
bonuses.

 

Calculating the Amount of Any Target Award

 

Each Participant is eligible for Plan Awards at a
target percentage of base salary (“Target Percentage”) as listed in Figure 1
below. The “Target Award” is the Participant’s target percentage, multiplied by
his or her base salary for the Performance Period. The Target Award will be
pro-rated based on the portion of the performance period worked by the
Participant if the Participant (a) commenced employment with Cubist after the
commencement of the Performance Period, (b) worked part-time during the
Performance Period, or (c) took a leave of absence during the Performance
Period.  Examples of calculations are
included in Figure 2 below.

 

Figure 1: Target Percentage by Level

 

	
  Eligibility Group

  	
   

  	
  2007 Target

  Percentage (as %

  of base salary)

  	
   

  
	
  CEO

  	
   

  	
  80

  	
  %

  
	
  Chief Financial
  Officer

  	
   

  	
  50

  	
  %

  
	
  Executive Vice
  President

  	
   

  	
  50

  	
  %

  
	
  Senior Vice
  President

  	
   

  	
  40

  	
  %

  
	
  Vice President,
  Sales & Marketing

  	
   

  	
  40

  	
  %

  
	
  Vice President

  	
   

  	
  35

  	
  %

  
	
  Executive
  Director

  	
   

  	
  25

  	
  %

  
	
  Senior Director

  	
   

  	
  25

  	
  %

  
	
  Director

  	
   

  	
  20

  	
  %

  
	
  Senior Manager/
  equivalent individual contributor

  	
   

  	
  15

  	
  %

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  10

  	
  %

  
	
  Employee

  	
   

  	
  5

  	
  %

  

 

Figure 2: Target Award Calculation
Examples

 

 

	
  Level

  	
   

  	
  Full-time or

  Part-Time

  	
   

  	
  Base Salary

  	
   

  	
  Target

  Percentage

  	
   

  	
  Pro-Ration

  Factor

  	
   

  	
  Target Award

  	
   

  
	
  Manager

  	
   

  	
  Part Time

  (20 hours/wk)

  	
   

  	
  $

  	
  75,000

  	
   

  	
  10

  	
  %

  	
  50

  	
  %

  	
  ($75,000 x 10% x 50%)=

  $3,750

  	
   

  
	
  Senior

  Manager

  	
   

  	
  Full Time

  	
   

  	
  $

  	
  90,000

  	
   

  	
  15

  	
  %

  	
  100

  	
  %

  	
  ($90,000 x 15% x 100%)=

  $13,500

  	
   

  

 

 

Calculating Actual Awards

A Participant’s Actual
Award is calculated in two portions, which are then added to form the Actual
Award.  The first portion is tied to
company results, while the second portion is tied to the Participant’s
performance against goals as

 

 

2

 

assessed by the
participant’s Manager.  As the
Participant’s level of responsibility in the organization increases, the
portion tied to company results increases and the portion tied to individual
results decreases, as listed in Figure 3 below. 
Actual Awards are subject to approval by the CEO.  In addition, Actual Awards for Executive
Officers are subject to approval by the Compensation Committee.

 

 

 

Calculation
of portion tied to company results:

The Participant’s Target
Award is multiplied by the portion (percentage) tied to company results as
listed in Figure 3 for the Participant’s eligibility group.  That number is then multiplied by Cubist’s
achievement against the Annual Goals.

 

Calculation
of portion tied to individual results:

The Participant’s Target
Award is multiplied by the portion (percentage) tied to individual results as
listed in Figure 3 for the participant’s eligibility group.  That number is then multiplied by the
percentage of individual goals met by the Participant as assessed by the
Participant’s Manager.

 

Calculation
of Actual Plan Award:

The Actual Award is the
sum of the portion tied to company results and the portion tied to individual
results.

 

Figure 3: Portions Tied to Company and Individual
Results

 

	
  Eligibility Group

  	
   

  	
  2007 Portion Tied

  to Company

  Results

  	
   

  	
  2007 Portion Tied

  to Individual

  Results

  	
   

  
	
  CEO

  	
   

  	
  100

  	
  %

  	
  Board discretion

  	
   

  
	
  Chief Financial
  Officer

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Executive Vice
  President

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Senior Vice
  President

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Vice President,
  Sales & Marketing

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Vice President

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  Executive
  Director

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Senior Director

  	
   

  	
  40

  	
  %

  	
  60

  	
  %

  
	
  Director

  	
   

  	
  30

  	
  %

  	
  70

  	
  %

  
	
  Senior Manager/
  equivalent individual contributor

  	
   

  	
  20

  	
  %

  	
  80

  	
  %

  
	
  Manager/
  equivalent individual contributor

  	
   

  	
  10

  	
  %

  	
  90

  	
  %

  
	
  Employee

  	
   

  	
  10

  	
  %

  	
  90

  	
  %

  

 

Figure 4: Actual STI Plan Award Calculation Examples

 

	
  Level

  	
   

  	
  Target

  Award from

  Figure 2

  	
   

  	
  Company

  Results

  	
   

  	
  Individual

  Results

  	
   

  	
  Portion tied to

  Company

  Results

  	
   

  	
  Portion tied to

  Individual

  Results

  	
   

  	
  Actual STI Plan

  Award

  
	
  Manager

  	
   

  	
  $

  	
  3,750

  	
   

  	
  100% of

  target

  	
   

  	
  100% of

  goals met

  	
   

  	
  $3,750 x 10% x

  100% = $375

  	
   

  	
  $3,750 x 90% x

  100% of goal =

  $3,375

  	
   

  	
  $375 + $3,375 =

  $3,750

  
	
  Senior

  Manager

  	
   

  	
  $

  	
  13,500

  	
   

  	
  125% of

  target

  	
   

  	
  100% of

  goals met

  	
   

  	
  $13,500 x 20% x

  125% = $3,375

  	
   

  	
  $13,500 x 80% x

  100% of goal =

  $10,800

  	
   

  	
  $3,375 = $10,800 =

  $14,175

  

 

 

3

 

Employment Changes

 

•                  New Hires:

•                  If a Participant is hired during a Performance Period, his or her award
will be pro-rated to reflect the portion of the year actually worked with
Cubist, subject to the pro-ration guidelines as described below

 

•                  Changes in Eligibility:

•                  If a Participant changes from one eligibility group to another, the
amount of any Plan Award will be determined by calculating the amount of time
worked in each eligible position—subject to the pro rata guidelines noted
below.

 

•                  Part-time:

•                  If a Participant is not a full-time
employee, any Plan Award to the Participant shall be pro-rated based on the
Participant’s regular scheduled work hours or percentage of time worked. If a
Participant has a change in regular scheduled work hours during a Performance
Period, the Participant’s Plan Award shall be pro-rated in accordance with the
pro rata guidelines below.

 

•                  Pro-rata Guidelines:

•                  All pro-rata adjustments occur on a whole calendar month basis

•                  Changes occurring prior to the 16th of the month will be effective
on the first day of the month

•                  Changes occurring on or after the 16th of the month will be
effective on the first day of the following month

 

•                  Departure or
Termination:

•                  If a Participant’s employment terminates prior to the end of a
Performance Period, the Participant shall not be entitled to a Plan Award
unless such termination is as a result of Participant’s death or retirement, or
a Participant becomes disabled, in which case the Participant, or the
Participant’s estate (as the case may be) shall be eligible for a pro-rated
Plan Award payable on the standard payment date for the Performance Period (as
opposed to an earlier date).

•                  If a Participant’s employment terminates after the completion of the
Performance Period but prior to the date that Plan Award payments are made (the
“Payment Date”), a Participant shall be eligible for a Plan Award, unless such
termination is as a result of an involuntary termination for cause or
misconduct.

 

 

STI award Payout Process

 

STI Plan Awards are paid
out following the end of the Performance Period and after the measurement of
Cubist’s achievement of Annual Goals has been completed.  Plan Awards will generally be paid out in the
first quarter following the end of the relevant Performance Period. Applicable
taxes other withholdings will be deducted from the Plan Award, as appropriate
for each jurisdiction. In the United States, individual contributions to the
401(k) Plan as well as applicable taxes will be deducted from the award
payment.

 

Glossary of Key Terms

 

Actual
Award: the Plan
Award based on the sum of the portion of the Plan Award tied to company results
and the portion tied to individual results

 

Payment
Date: the date that payments, if any, will be made
to Participants under the STI Plan

 

Performance
Period:  the twelve month period
beginning on January 1 of each calendar year

 

Target Award: 
the
Participant’s Target Percentage multiplied by his or her base salary for the
Performance Period

 

 

4

 

Target
Percentage: the
maximum amount of a Participant’s Plan Award eligibility expressed as a
percentage of such Participant’s base salary

 

The Company reserves the right to amend or discontinue the Plan at any
time without prior notice. In no event does this STI Plan alter the “employment-at-will”
relationship between Cubist and its employees. Cubist and its employees are
free to terminate the employment relationship at any time, without cause or
notice.

 

 

5

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