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Sample Business Contracts

Employment Agreement - Cubist Pharmaceuticals Inc. and Francis P. Tally

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                                           January 20, 2003

BY HAND DELIVERY

Francis P. Tally, M.D.
Executive Vice President, Scientific Affairs
  & Chief Scientific Officer
Cubist Pharmaceuticals, Inc.
65 Hayden Avenue
Lexington, MA 02421

     RE: RETENTION LETTER

Dear Frank:

     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 aggregate base salary and
               potential 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

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               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.

     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, then,
          within five (5) days of the date of your termination, Cubist shall
          make a one-time, lump-sum payment to you equal to twelve (12) months
          of your then-current base salary.

     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 twelve (12) 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.

     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.

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     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 with the exception of your obligations set forth in your
          Proprietary Information and Inventions 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/ Scott M. Rocklage
                                            ------------------------------------
                                                Scott M. Rocklage, Ph.D.
                                                Chairman and CEO

Accepted and Agreed:


By: /s/ Francis P. Tally
    ---------------------------------
Name: Francis P. Tally
Date:

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