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