Document:

Exhibit
10.2

 

August 11, 2008

 

BY HAND DELIVERY

Steven
Gilman, Ph.D.

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, MA 02421

 

Re:  Retention Letter

 

Dear  Steve:

 

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 (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

 

1

 

occur, 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, and Cubist will then have
30 days to remedy the condition, prior to the existence of such condition being
deemed to be “Good Reason.

 

(c)           a “Change of
Control” occurs: (i) when 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) 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) 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
receipt by Cubist of your signed release as more fully described in Section 7
below, Cubist shall pay you an amount equal to eighteen (18) 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 eighteen (18) 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.

 

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 (“Section 409A”), any payment or portion thereof, to which
you are entitled under this Section 2 which is not exempt from the
application of Section 409A’s “six month delay” provision (in Cubist’s
sole discretion), shall be withheld until the first business day of the seventh
month following your termination. At such time, you shall be paid the remaining
balance otherwise owed to you under this Section 2 in a lump sum.

 

2

 

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 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.             Equity Acceleration..  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 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 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 within the time period specified in
such release.  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

 

3

 

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 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 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.

 

4

 

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

  
	
   

  	
   

  	
   

  	
  Name:
  Michael W. Bonney

  
	
   

  	
   

  	
   

  	
  Date:
  August 11, 2008

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven C. Gilman

  	
   

  	
   

  	
   

  
	
  Name: Steven C. Gilman

  	
   

  	
   

  	
   

  
	
  Date: August 12, 2008

  	
   

  	
   

  	
   

  
					

 

5EXHIBIT
10.1

 

SUMMARY OF 2009 CASH INCENTIVE
AWARDS

 

The 2009 Cash Incentive Awards are based on
the following threshold, target and maximum performance goals for fiscal year
2009 and the weighting set forth next to the goals (Cano Petroleum, Inc. (“Cano”)
notes that these goals are part of Cano’s incentive program and do not
correspond to any financial or performance guidance that Cano has provided or
will provide and should not be considered as statements of Cano’s expectations
or estimates):

 

	
   

  	
   

  	
  Performance Goals

  	
   

  	
   

  	
   

  
	
  Performance Measure

  	
   

  	
  Threshold

  	
   

  	
  Target

  	
   

  	
  Maximum

  	
   

  	
  Weighting

  	
   

  
	
  Company Goals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Production*

  	
   

  	
  1,212 BOEPD

  	
   

  	
  1,346 BOEPD

  	
   

  	
  1,616 BOEPD

  	
   

  	
  55

  	
  %

  
	
  Proved Developed Producing Reserves

  	
   

  	
  11,400 MBOE

  	
   

  	
  12,667 MBOE

  	
   

  	
  15,200 MBOE

  	
   

  	
  15

  	
  %

  
	
  EBITDA

  	
   

  	
  $13,155,000

  	
   

  	
  $14,617,000

  	
   

  	
  $17,540,000

  	
   

  	
  15

  	
  %

  
	
  Finding & Development Costs

  	
   

  	
  $24.87 per BOE

  	
   

  	
  $22.38 per BOE

  	
   

  	
  $18.65 per BOE

  	
   

  	
  15

  	
  %

  

 

*Average
daily production for fiscal year 2009.

 

Cano calculates EBITDA as earnings before
interest, taxes, depreciation and amortization.

 

The 2009 Cash Incentive Awards potential
payout levels based on meeting the specified level of each of the performance
goals for the 2009 Cash Incentive Awards performance goals for each executive
officer are set forth below:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2009 Bonus Payout

  	
   

  
	
   

  	
   

  	
  Base Salary

  	
   

  	
  Target Bonus

  (% of Salary)

  	
   

  	
  Threshold

  (50% of

  Target)

  	
   

  	
  Target

  	
   

  	
  Maximum

  (150% of

  Target)

  	
   

  
	
  S. Jeffrey Johnson

  	
   

  	
  $

  	
  509,480

  	
   

  	
  75

  	
  %

  	
  $

  	
  191,055

  	
   

  	
  $

  	
  382,110

  	
   

  	
  $

  	
  573,165

  	
   

  
	
  Benjamin Daitch

  	
   

  	
  $

  	
  250,000

  	
   

  	
  75

  	
  %

  	
  $

  	
  93,750

  	
   

  	
  $

  	
  187,500

  	
   

  	
  $

  	
  281,250

  	
   

  
	
  Patrick McKinney

  	
   

  	
  $

  	
  250,000

  	
   

  	
  75

  	
  %

  	
  $

  	
  93,750

  	
   

  	
  $

  	
  187,500

  	
   

  	
  $

  	
  281,250

  	
   

  
	
  Michael J. Ricketts

  	
   

  	
  $

  	
  187,000

  	
   

  	
  50

  	
  %

  	
  $

  	
  46,750

  	
   

  	
  $

  	
  93,500

  	
   

  	
  $

  	
  140,250

  	
   

  
	
  Phillip Feiner

  	
   

  	
  $

  	
  170,000

  	
   

  	
  50

  	
  %

  	
  $

  	
  42,500

  	
   

  	
  $

  	
  85,000

  	
   

  	
  $

  	
  127,500

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]