Document:

EXHIBIT 10.1

 

RBS CITIZENS, NATIONAL ASSOCIATION

 

LOAN AND SECURITY AGREEMENT

 

As of December 29, 2008

 

1.             SECURITY INTEREST. CUBIST PHARMACEUTICALS, INC., a Delaware
corporation (the “Borrower”), for
valuable consideration, receipt whereof is hereby acknowledged, hereby grants
to RBS Citizens, National Association,
the secured party hereunder (hereinafter called the “Bank”), a continuing security interest in and to, and assigns
to Bank the collateral described on Exhibit “A” attached hereto and
incorporated herein by this reference (the “Collateral”).

 

2.             OBLIGATIONS SECURED. The security interest
granted hereby is to secure payment and performance of the loans made hereunder
and as evidenced by the Revolving Credit Note (as hereinafter defined) and all
other debts, liabilities and obligations of Borrower to Bank, direct or
indirect, absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter arising, including, without limitation, all interest,
fees, charges and expenses arising out of or due to Bank in connection with
this Agreement (all hereinafter called “Obligations”).

 

3.             BORROWER’S PLACES OF BUSINESS, Borrower’s
principal executive office and the office where Borrower keeps its records
concerning its accounts, contract rights and other property, is that shown at
the end of this Agreement.

 

4.             BORROWER’S ADDITIONAL REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants, as to each
Borrower as applicable, that:

 

(a)               The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified and in good standing in every other
state in which it is doing business except in those states in which a failure
to qualify would not  have a material adverse
effect.

 

(b)              The execution, delivery and
performance of this Agreement, and any other document executed in connection
herewith, are within the Borrower’s powers, have been duly authorized, are not
in contravention of law or the terms of the Borrower’s by-laws or other
organizational papers, or of any indenture, agreement or undertaking to which
the Borrower is a party or by which it or any of its properties may be bound.

 

(c)               Borrower is the owner of the
Collateral and the same is free and clear of any lien, pledge, security
interest, charge, mortgage or encumbrance of any nature whatsoever, except
security interests in favor of Bank.

 

(d)           There is no action, suit, proceeding
or investigation pending or, to Borrower’s knowledge, threatened against or affecting
it or any of its assets before or by any court or other governmental authority
which, if determined adversely to it, would have a material adverse effect on
its financial condition, business or prospects or the value of any Collateral.

 

 

5.                                       LOANS AND OTHER FINANCIAL ACCOMMODATIONS.

 

(a)             Subject to the terms and provisions
of this Agreement, the Bank hereby establishes a discretionary revolving line
of credit in Borrower’s favor in the amount of the Credit Limit (as defined
below), as determined by Bank from time to time hereafter. Bank may make such
loans to Borrower, based upon such facts and circumstances existing at the time
of the request, as from time to time Bank elects to make which are secured by
the Collateral and the proceeds thereof. Without limiting the discretionary
nature of Bank’s decision to make loans hereunder, or the demand feature of any
loans that Bank does make hereunder, Borrower agrees that the aggregate unpaid
principal of all loans outstanding at any one time shall not exceed the Credit
Limit (as defined below).

 

(b)             Procedure For
Borrowing.  When making a request for
any loan hereunder, the Borrower shall deliver to the Bank an irrevocable
notice thereof on Borrower’s letterhead (the “Borrowing
Request”) addressed in accordance with Section 14(g) hereof
(which notice must be received by the Bank prior to 12:00 Noon, Boston,
Massachusetts time), (a) two (2) Business Days prior to the requested
borrowing date if a LIBOR Rate Loan and on the day of the requested borrowing
if a Prime Rate Loan, specifying (i) the amount to be borrowed, (ii) the
requested borrowing date (the “Borrowing Date”),
(iii) if applicable, the length of the LIBOR Interest Period (as that term
is defined in the Revolving Credit Note) therefor, (iv) a collateral
calculation evidencing that the Collateral described in Exhibit “A” is
valued at not less than One Hundred and Two (102%) Percent of the aggregate of (x) all
advances then outstanding hereunder and (y) the amount of the requested
advance contained in the Borrowing Request (the “Minimum
Collateral Value”), and (v) if necessary to reflect any change
in the Collateral being held by the Bank to secure the Obligations, a signed
amendment to this Agreement amending Exhibit “A” in the form attached
hereto as Exhibit “B”.  Each
borrowing hereunder shall be in the minimum amount of $1,000,000.00 and in
integral multiples of $1,000,000.00 in excess thereof.  Provided the Borrower is not in default
hereunder and the Bank has not otherwise made demand for payment such borrowing
will be made available to the Borrower by the Bank crediting Borrower’s loan
account with the Bank in the amount specified in the Borrowing Request on such
Borrowing Date.

 

(c)             All loans made by the Bank shall
bear interest, and at the option of the Bank, shall be evidenced by and
repayable in accordance with that certain Revolving Credit Note from Borrower
to the Bank, of even date (the “Revolving Credit Note”),
but in the absence of notes shall be conclusively evidenced by Bank’s records
of loans and repayments (absent demonstrable error) and shall be payable on
demand.

 

(d)             The term “Credit Limit”
as used herein shall mean an amount equal to Ninety Million and 00/100
($90,000,000.00) Dollars.

 

(e)             Borrower hereby authorizes and
directs Bank, in Bank’s sole discretion (provided, however, Bank shall have no
obligation to do so): to pay accrued interest as the same becomes due and
payable pursuant to this Agreement and to treat the same as a loan to Borrower,
which shall be added to Borrower’s loan balance pursuant to this Agreement.

 

2

 

(f)              Payment in Full on Termination.
ON DEMAND or termination of this Agreement pursuant to Section 13 or
acceleration of the obligations pursuant to Section 10, Borrower shall pay
to Bank the entire outstanding principal balance of all loans made hereunder.

 

6.             BANK’S REPORTS. After the end of each
month, Bank will render to Borrower a statement of Borrower’s loan account with
Bank hereunder, showing all applicable credits and debits. Each statement shall
be considered correct and to have been accepted by Borrower and shall be
conclusively binding upon Borrower in respect of all charges, debits and
credits of whatsoever nature contained therein under or pursuant to this
Agreement, and the closing balance shown therein, unless Borrower notifies Bank
in writing of any discrepancy within thirty (30) days of receipt by Borrower
from Bank of any such monthly statement.

 

7.             CAPITAL ADEQUACY. If after the date hereof,
Bank determines that (i) the adoption of any applicable law, rule, or
regulation regarding capital requirements for banks or bank holding companies
or the subsidiaries thereof, (ii) any change after the date hereof in the
interpretation or administration of any such law, rule or regulation by
any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or (iii) compliance by Bank or
its holding company with any request or directive of any such governmental
authority, central bank or comparable agency regarding capital adequacy
(whether or not having the force of law), has the effect of reducing the return
on Bank’s capital to a level below that which Bank could have achieved (taking
into consideration Bank’s and its holding company’s policies with respect to
capital adequacy immediately before such adoption, change, or compliance and
assuming that Bank’s capital was fully utilized prior to such adoption, change,
or compliance) but for such adoption, change, or compliance as a consequence of
Bank’s commitment to make advances pursuant hereto by any amount deemed by Bank
to be material:

 

(i)            Bank
shall promptly, and in any event within 30 days, after Bank’s determination of
such occurrence, give written notice thereof to Borrower; and

 

(ii)           Borrower
shall pay to Bank as an additional fee from time to time, on demand, such
amount as Bank certified to be the amount that will compensate Bank for such
reduction.  A certificate of Bank
claiming entitlement to compensation as set forth above will be conclusive in
the absence of manifest error. Such certificate will set forth the nature of
the occurrence giving rise to such compensation, the additional amount or
amounts to be paid to Bank, and the method by which such amounts were
determined.  In determining such amount,
Bank may use any reasonable averaging and attribution method.  Bank shall allocate such cost increase among
its customers in good faith and on an equitable basis.

 

8.                                       GENERAL AGREEMENTS OF BORROWER.

 

(a)           Except for Bank’s gross negligence or
willful misconduct, Borrower will indemnify and save Bank harmless from all
loss, costs, damage, liability or expenses (including, without limitation,
court costs and reasonable attorneys’ fees) that Bank may sustain or incur by
reason of defending or protecting this security interest or the priority
thereof or enforcing the Obligations, or in the prosecution or defense of any
action or proceeding concerning any matter growing out 

 

3

 

of or in connection
with this Agreement and/or any other documents now or hereafter executed in
connection with this Agreement and/or the Obligations and/or the Collateral.
This indemnity shall survive the repayment of the Obligations and the
termination of Bank’s agreement to make loans available to Borrower and the
termination of this Agreement.

 

(b)           All advances by Bank to Borrower
under this Agreement and under any other agreement relating to the loans made
hereunder constitute one general revolving fluctuating loan, and all
indebtedness of Borrower to Bank under this and under any such other agreement
constitute one general Obligation. Each advance to Borrower hereunder or
otherwise shall be made upon the security of all of the Collateral held and to
be held by Bank. It is distinctly understood and agreed that all of the rights
of Bank contained in this Agreement shall likewise apply, insofar as
applicable, to any modification of or supplement to this Agreement and to any
other agreements relating to the loans made hereunder between Bank and
Borrower. Any default of this Agreement by Borrower shall constitute, likewise,
a default by Borrower of any other agreement with Bank now existing or
hereinafter entered into relating to the loans made hereunder, and any default
by Borrower of any such other agreement with Bank shall constitute a default of
this Agreement.  The entire Obligation of
Borrower to Bank shall become due and payable when payments become due and
payable hereunder upon demand, termination or acceleration of this Agreement.

 

(c)           Borrower will, at its expense, upon
request of Bank promptly and duly execute and deliver such documents and
assurances and take such actions as may be necessary or desirable or as Bank
may reasonably request in order to correct any defect, error or omission which
may at any time be discovered or to more effectively carry out the intent and
purpose of this Agreement and to establish, perfect and protect Bank’s security
interest, rights and remedies created or intended to be created hereunder.
Without limiting the generality of the above, Borrower authorizes Bank to file
financing and continuation statements pursuant to the Uniform Commercial Code
or other notices appropriate under applicable Federal or state law in form
satisfactory to Bank if and when necessary to perfect Bank’s security interest
in the Collateral.

 

9.                                       BORROWER’S NEGATIVE COVENANTS. Borrower will not at any time:

 

(a)           (Disposition
of Collateral) sell, assign, exchange or otherwise dispose of the Collateral
except for the exchange or replacement of the Certificate of Deposit with other
collateral acceptable to Bank.; or

 

(c)           (Liens) create, permit to be created
or suffer to exist any lien, encumbrance or security interest of any kind (“Lien”) upon the Collateral.

 

10.                                 DEFAULT; RIGHTS AND REMEDIES UPON DEFAULT.

 

The Bank and
Borrower acknowledge and agree that any and all loans advanced hereunder are
payable ON DEMAND.  At the same time, the
Bank shall have the right to monitor financial statements of the Borrower on an
ongoing basis for purposes of monitoring the financial well being of the
Borrower.  Set forth below are Events of
Default, which are meant only to set forth examples of circumstances under
which the Bank may choose to make demand hereunder. 

 

4

 

However, nothing
contained in this section or elsewhere in this Agreement, including without
limitation any covenants or other terms or provisions which could otherwise be
construed as establishing standards of conduct, shall affect the demand nature
of such of the Obligations, including without limitation loans and advances
under this Agreement, as are by their terms, demand obligations. The occurrence
of an Event of Default shall not be a prerequisite for the Bank’s making demand
or requiring payments of such obligations.

 

Upon the
occurrence of any one or more of the following events (herein, “Events of Default”), any and all Obligations of the Borrower
to the Bank shall become immediately due and payable, at the option of the Bank
and without notice or demand.  The
occurrence of any such Event of Default shall also constitute, without notice
or demand, a default under all other agreements between the Bank and the
Borrower directly related to arrangements under which the Borrower incurs (or
has incurred) indebtedness or other similar obligations to the Bank and
instruments and papers given to the Bank by the Borrower that are directly
related to such indebtedness or other similar obligations, whether such
agreements, instruments, or papers now exist or hereafter arise, namely:

 

(i)            The
failure by the Borrower to pay upon demand (or when due, if not payable on
demand) any amount due under this Agreement.

 

(ii)           The
failure by the Borrower to promptly, punctually and faithfully perform, or
observe any term, covenant or agreement on its part to be performed or observed
pursuant to any of the provisions of this Agreement.

 

(iii)          The
occurrence of any event such that any indebtedness of the Borrower from any
lender other than Bank in excess of $10,000,000 could be accelerated,
notwithstanding that such acceleration has not taken place.

 

(iv)          The
occurrence of any event of default under any agreement between Bank and the
Borrower or instrument or paper given Bank by the Borrower relating to the
loans made hereunder, whether such agreement, instrument, or paper now exists
or hereafter arises (notwithstanding that Bank may not have exercised its
rights upon default under any such other agreement, instrument or paper).

 

(v)           Any
act by, against, or relating to the Borrower, or its property or assets, which
act constitutes the application for, consent to, or sufferance of the
appointment of a receiver, trustee or other person, pursuant to court action or
otherwise, over all, or any material part of the Borrower’s property.

 

(vi)          The
granting of any trust mortgage or execution of an assignment for the benefit of
the creditors of the Borrower, or the occurrence of any other voluntary or
involuntary liquidation or extension of debt agreement for the Borrower; the
failure by the Borrower to generally pay the debts of the Borrower as they
mature; adjudication of bankruptcy or insolvency relative to the Borrower; the
entry of an order for relief or similar order with respect to the Borrower in
any proceeding pursuant to Title 11 of the United States Code entitled “Bankruptcy”
(the “Bankruptcy Code”) or any other federal
bankruptcy law; the filing of any complaint, application, or petition by or
against the Borrower initiating any 

 

5

 

matter in which the Borrower is or may be
granted any relief from the debts of the Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure; the calling or sufferance of
a meeting of creditors of the Borrower; the meeting by the Borrower of a formal
or informal creditor’s committee; the offering by or entering into by the
Borrower of any composition, extension or any other arrangement seeking relief
or extension for the debts of the Borrower, or the initiation of any other
judicial or non-judicial proceeding or agreement by, against or including the
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors.

 

(vii)         The
service of any process upon Bank seeking to attach by trustee process any funds
of the Borrower on deposit with Bank.

 

(viii)        The
termination of existence, dissolution, or liquidation of the Borrower or the
ceasing to carry on actively any substantial part of the Borrower’s current
business.

 

(ix)           This
Agreement shall, at any time after its execution and delivery and for any
reason, cease (A) to create a valid and perfected first priority security
interest in and to the Collateral; or (B) to be in full force and effect
or shall be declared null and void, or the validity or enforceability hereof
shall be contested by the Borrower or any guarantor of the Borrower denies it
has any further liability or obligation hereunder.

 

Upon the occurrence
of an Event of Default, Bank may declare any obligation Bank may have hereunder
to be cancelled, declare all Obligations of Borrower to be due and payable and
proceed to enforce payment of the Obligations and to exercise any and all of
the rights and remedies afforded to Bank by the Uniform Commercial Code or
under the terms of this Agreement or otherwise. 
Upon the occurrence of, and during the continuance of, an Event of
Default, the Borrower, as additional compensation to the Bank for its increased
credit risk, promises to pay interest on all Obligations (including, without
limitation, principal, whether or not past due, past due interest and any other
amounts past due under this Agreement) at a per annum rate of two (2%) percent
greater than the rate of interest then specified in the Revolving Credit Note.

 

11.           WAIVER OF JURY TRIAL. BORROWER AND BANK
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE
OR HEREAFTER HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. Borrower hereby
certifies that neither Bank nor any of its representatives, agents or counsel
has represented, expressly or otherwise, that Bank would not, in the event of
any such suit, action or proceeding, seek to enforce this waiver of right to
trial by jury. Borrower acknowledges that Bank has been induced to enter into
this Agreement by, among other things, this waiver. Borrower acknowledges that
it has read the provisions of this Agreement and in particular, this section;
has consulted legal counsel; understands the right it is granting in this
Agreement and is waiving in this section in particular; and makes the above
waiver knowingly, voluntarily and intentionally.

 

6

 

12.           CONSENT TO JURISDICTION. Borrower and Bank
agree that any action or  proceeding to
enforce or arising out of this Agreement may be commenced in any court of the
Commonwealth of Massachusetts sitting in the county of Suffolk, or in the District
Court of the United States for the District of Massachusetts, and Borrower
waives personal service of process and agrees that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and confer personal jurisdiction if served by registered or certified mail to
Borrower, or as otherwise provided by the laws of the Commonwealth of
Massachusetts or the United States of America.

 

13.           TERMINATION. This Agreement may be
terminated at any time by either party giving written notice of termination to
the other party; provided, however, that unless and until all loans made by the
Bank to the Borrower hereunder and all other Obligations or commitments of the
Bank under which an Obligation could arise, outstanding as of the time of giving
or receipt as the case may be, of such notice by the Bank have been paid in
full, such termination shall in no way affect the security interest or other
rights and powers herein granted to the Bank, and until such payment in full
the security interest of the Bank in the Collateral of the Borrower, whether
existing as of the time of such termination or thereafter arising, and all
rights and powers herein granted to the Bank in respect thereof shall remain in
full force and effect. Until all of the Obligations of Borrower to Bank have
been fully paid and satisfied and all commitments of the Bank under which an
Obligation could arise have expired, Borrower shall fully comply with the terms
and conditions of this Agreement as herein provided. Prior to such payment in
full of all of the Obligations of Borrower to Bank, this Agreement shall be a
continuing agreement in every respect.

 

14.                                 MISCELLANEOUS.

 

(a)               No delay or omission on the part
of Bank in exercising any rights shall operate as a waiver of such right or any
other right. Waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion. All Bank’s rights and
remedies, whether evidenced hereby or by any other agreement, instrument or
paper, shall be cumulative and may be exercised singularly or concurrently.

 

(b)              Bank is authorized to make loans
under the terms of this Agreement upon the request, either written or oral, in
the name of Borrower or any authorized person whose name appears at the end of
this Agreement or of any of the following named person, or persons, from time
to time, holding the following offices of Borrower: President, Treasurer, Chief
Financial Officer and such other officers and authorized signatories as may
from time to time be set forth in separate banking and borrowing resolutions.

 

(c)               This Agreement shall bind and
inure to the benefit of the respective successors and assigns of each of the
parties hereto; provided, however, that Borrower may not assign this
Agreement or any rights or duties hereunder without Bank’s prior written
consent and any prohibited assignment shall be absolutely void. No consent to
an assignment by Bank shall release Borrower from its Obligations. Upon no less
than 5 Business Days’ prior written notice to Borrower and with the consent of
Borrower, Bank may assign this Agreement and its rights and duties hereunder
unless an Event of Default shall have occurred and be continuing, in which
case, no consent or approval by Borrower is required in connection with any
such assignment. Bank reserves the right to sell, assign, transfer, negotiate
or grant participations in all or any part 

 

7

 

of, or any interest
in Bank’s rights and benefits hereunder. In connection with any assignment or
participation, Bank may disclose all documents and information which Bank now
or hereafter may have relating to Borrower or Borrower’s business, provided
that such potential assignee or participant, as the case may be, has signed a
confidentiality agreement, the terms of which shall be substantially the same
as those set forth herein. To the extent that Bank assigns its rights and
obligations hereunder to another party, Bank thereafter shall be released from
such assigned obligations upon delivery to Borrower of an assignment agreement
in form and substance reasonably satisfactory to Borrower and signed by Bank,
assignee and Borrower (unless not required as set forth above).

 

(d)              Subject to compliance with the
terms set forth herein for requesting and making of loans, Borrower agrees that
any and all loans made by Bank to Borrower or for its account under this
Agreement shall be conclusively deemed to have been authorized by Borrower and
to have been made pursuant to duly authorized requests therefore on its behalf.

 

(e)               Bank shall not, during or after the term of this
Agreement, without Borrower’s prior written approval (obtained in each
instance), disclose or otherwise make available to any other person, lender,
firm, corporation or entity any non-public information, whether acquired before
or during the continuance of this Agreement, relating to Borrower’s financial
condition, business or prospects.

 

(f)               Unless otherwise defined in this
Agreement, capitalized words shall have the meanings set forth in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts as of the
date of this Agreement.

 

(g)              Paragraph and section headings
used in this Agreement are for convenience only, and shall not effect the
construction of this Agreement. If one or more provisions of this Agreement (or
the application thereof) shall be invalid, illegal or unenforceable in any
respect in any jurisdiction, the same shall not, invalidate or render illegal
or unenforceable such provision (or its application) in any other jurisdiction
or any other provision of this Agreement (or its application). This Agreement
is the entire agreement of the parties with respect to the subject matter
hereof and supersedes any prior written or verbal communications or instruments
relating thereto. Unless otherwise provided in this Agreement, all notices or
demands by any party

 

(h)              Unless otherwise provided in this
Agreement, all notices or demands by any party relating to this Agreement or
any other loan document shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by registered or
certified mail (postage

 

prepaid, return
receipt requested), overnight courier, or telefacsimile to Borrower or to Bank,
as the case may be, at its address set forth below:

 

	
  If to Bank:

  	
   

  	
  RBS Citizens, National Association

  
	
   

  	
   

  	
  28 State Street MS1465

  
	
   

  	
   

  	
  Boston, MA 02109

  
	
   

  	
   

  	
  Attn: Scott Haskell, Senior Vice President

  
	
   

  	
   

  	
  Telephone: (617) 994-7129

  
	
   

  	
   

  	
  Telecopier: (617) 742-9548

  

 

8

 

	
  With a Copy to:

  	
   

  	
  Eckert Seamans Cherin & Mellott,
  LLC

  
	
   

  	
   

  	
  One International Place

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
  Attn: Todd H. Whilton, Esquire

  
	
   

  	
   

  	
  Telephone: (617) 342-6800

  
	
   

  	
   

  	
  Telecopier: (617) 642- 6899

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  CUBIST Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  65 Hayden Avenue

  
	
   

  	
   

  	
  Lexington, Massachusetts 02421

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  	
  Telephone: (781) 860-8660

  
	
   

  	
   

  	
  Telecopier: (781) 860-1426

  
	
   

  	
   

  	
   

  
	
  With a Copy to:

  	
   

  	
  CUBIST Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  65 Hayden Avenue

  
	
   

  	
   

  	
  Lexington, Massachusetts 02421

  
	
   

  	
   

  	
  Attn.: General Counsel

  
	
   

  	
   

  	
  Telephone: (781) 860-8660

  
	
   

  	
   

  	
  Telecopier: (781) 860-1407

  

 

The parties hereto may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other. All notices or demand sent in accordance
with this section shall be deemed received on the earlier of the date of actual
receipt or three (3) days after the deposit thereof in the mail.

 

(h)             Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against Bank or Borrower, whether under any rule of construction
or otherwise. On the contrary, this Agreement has been reviewed by all parties
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all
parties hereto.

 

(i)              Each
provision of this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal enforceability of any
specific provision.

 

(j)              This
Agreement, together with the other documents and instruments executed  concurrently herewith represent the entire and final understanding of the
parties with respect to the transactions contemplated hereby and shall not be
contradicted or qualified by evidence of any prior, contemporaneous or
subsequent other agreement, oral or written, before the date hereof.

 

(k)                 This Agreement can only be amended
by a writing signed by both Bank and Borrower.

 

(l)                  The laws of Massachusetts
shall govern the construction of this Agreement and the rights and duties of
the parties hereto.

 

(m)                This Agreement shall take effect
as a sealed instrument.

 

9

 

	
  Witnessed
  by:

  	
   

  	
  CUBIST
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Benjamin S. Harshbarger

  	
   

  	
  By:

  	
  /s/ David
  W.J. McGirr

  
	
   

  	
   

  	
  Name:
  David W.J. McGirr

  
	
   

  	
   

  	
  Title:
  Senior Vice President, Finance and Chief

  Financial
  Officer

  
	
   

  	
   

  	
  Address:

  	
  65 Hayden
  Avenue

  
	
   

  	
   

  	
   

  	
  Lexington,
  MA 02421

  
	
   

  	
   

  	
   

  
	
  RBS
  CITIZENS, NATIONAL ASSOCIATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Scott
  Haskell

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Scott
  Haskell

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  	
   

  
	
   

  	
  Address:

  	
  28 State
  Street, Boston, MA 02109

  	
   

  	
   

  
							

 

10

 

EXHIBIT “A”

 

TO BE
COMPLETED IN CONNECTION WITH THE MAKING OF THE FIRST LOAN –

 

The
Collateral with either consist of a Certificate of Deposit issued by RBS
Citizens, National Association or a money market account held at  RBS Citizens, National Association.

 

11

 

EXHIBIT “B”

 

AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

Amendment to Loan
and Security Agreement dated
                                    
(the “Credit Agreement”) is by and between RBS Citizens, National
Association, with a usual place of business at 28 State Street,
Boston, Massachusetts 02109 (the “Bank”) and Cubist
Pharmaceuticals, Inc. having a usual place of business at 65 Hayden Avenue,
Lexington, Massachusetts 02421 (the “Borrower”).  Any capitalized term used herein that is not
otherwise defined herein shall have the meaning ascribed to such term in the
Credit Agreement.

 

NOW THEREFORE, in consideration of
One ($1.00) Dollar and other valuable consideration, the receipt and sufficiency
of which is herewith acknowledged, it is agreed that the Credit Agreement be
amended as follows:

 

1.             The
Credit Agreement is hereby amended by deleting Exhibit A in its entirety
and inserting the attached Exhibit A in lieu thereof.

 

2.             Borrower
hereby represents and warrants that, to its knowledge, Borrower has no
defenses, offsets, setoffs, claims or counterclaims to the payment of any
amount due under the Revolving Credit Note or the Credit Agreement as of the
date hereof and to the extent Borrower has, to its knowledge, any such
defenses, setoffs, claims or counterclaims as of the date hereof, Borrower
irrevocably waives and releases the same. 
By signing below, the Borrower ratifies and affirms the terms of the
Credit Agreement (as amended hereby) and all other loan documents executed in
connection with the Credit Agreement and confirms and represents that each
remains in full force and effect and that no Event of Default has occurred
thereunder.

 

3.             Executed
as a sealed instrument as of the         
day of
                  ,
            .

 

	
  Witnessed
  by:

  	
   

  	
  CUBIST
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RBS
  CITIZENS, NATIONAL ASSOCIATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Scott
  Haskell

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  	
   

  

 

12EXHIBIT
10.2

 

REVOLVING
CREDIT NOTE

 

	
  $90,000,000.00

  	
   

  	
  December 29,
  2008

  

 

FOR VALUE RECEIVED, CUBIST PHARMACEUTICALS, INC., a Delaware corporation with an
address of 65 Hayden Avenue, Lexington, Massachusetts 02421 (the “Borrower”) promises to pay to the order of

 

RBS
CITIZENS, NATIONAL ASSOCIATION

(together with its successors
and assigns, the “Bank”)

 

at 28 State Street, Boston, Massachusetts 02109, or at such other place
as the holder of this Note may from time to time designate in writing, the
principal sum of Ninety Million and 00/100 ($90,000,000.00) Dollars, or, if
less, the aggregate of all funds advanced to the Borrower by the Bank under the
Loan and Security Agreement of even date herewith between the Bank and the
Borrower (as it may be amended, modified, substituted or replaced, the “Loan Agreement”) with interest only payable on the
applicable Interest Payment Date on the unpaid outstanding principal balance of
the loans made under the Loan Agreement in arrears at the rate hereinafter
provided until paid in full, commencing on March 31, 2009 and on the last
day of each succeeding third month thereafter (except as expressly provided in Rider
A attached hereto, entitled “RBS Citizens Standard
LIBOR Provisions” with regard to certain LIBOR Rate Loans, as
defined in Rider A), with the entire unpaid balance of principal and
interest due within 3 Business Days of DEMAND (the “Maturity
Date”).  Any capitalized term
used herein without definition shall have the definition assigned to such term
in the Loan Agreement and Rider  A.

 

Until an Event of Default or the Maturity
Date, the Borrower may borrow, repay and reborrow under this Note.

 

Borrower shall have the option of electing
between the Floating Rate Option and the LIBOR Loan Option (as those terms are
defined below).  Thereafter, by notice
given to the Bank on or before the Interest Payment Date, Borrower shall have
the option of changing the interest rate option previously selected.  Interest shall be determined in all instances
based upon a 360 day year and actual day months.

 

1.             PRIME RATE OPTION.  Advances made under the Prime Rate loan
option (the “Floating Rate Option”), shall
accrue interest on the unpaid outstanding principal balance due hereunder at
the floating rate equal to the Prime Rate (as such terms are defined in Rider
A).

 

2.             LIBOR LOAN
OPTION.  During such periods of time as
the Borrower shall have elected the London Inter Bank Offered Rate option (“LIBOR Loan Option”), interest shall accrue at a fixed rate
of interest for each Interest Period equal to the LIBOR Rate (for such Interest
Period) plus the LIBOR Rate Margin (as such terms are defined in Rider A
)

 

 

During an Event of Default or after the
Maturity Date, interest on any and all outstanding principal balances due to
the Bank shall, at the Bank’s sole discretion (and without prior notice to the
Borrower), accrue and be payable at two (2.0%) percent above the interest rate
which would otherwise be in effect (the “Default Rate”).

 

All LIBOR Rate Loans shall be subject to and
further governed by the terms and conditions set forth in Rider A.  In the event of a conflict between the terms
hereof and Rider A, Rider A shall control.

 

In the event that the LIBOR Rate cannot be
determined pursuant to the provisions of Rider A for any reason, all
outstanding  loans made by Bank to
Borrower under the Loan Agreement shall accrue interest at a variable per annum
rate equal to the Prime Rate (as that term is defined in Rider A).

 

This Note evidences borrowings under, and is
entitled to the benefits of, and is subject to the provisions of, the Loan
Agreement, which is incorporated herein by reference and which sets forth
further terms and conditions (each an “Event of Default”)
upon which the entire unpaid principal hereof and all interest hereon may
become due and payable prior to the Maturity Date and generally as to further
rights of the Bank and duties of the Borrower with respect hereto.  Upon (i) the Maturity Date, or (ii) at
the option of the Bank, during any Event of Default, all advances outstanding
hereunder, together with accrued interest thereon, shall upon written notice
become immediately due and payable and any obligation of the Bank to make
advances hereunder or under the Loan Agreement shall terminate without further
demand or notice of any kind.  Failure to
make demand upon the occurrence of an Event of Default shall not constitute a
waiver of the right to make demand in the event of any subsequent Event of
Default

 

Principal amounts, or any part thereof,
outstanding under this Note may be prepaid at any time without penalty or
premium.

 

The Borrower represents to the Bank that the
proceeds of this Note will not be used for personal, family or household
purposes or for the purpose of purchasing or carrying margin stock or margin
securities within the meaning of Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224, as amended or
replaced.

 

After an Event of Default, while such Event
of Default is continuing, or on the Maturity Date, the Bank may apply or set
off the  pledged Collateral .  The rights afforded under this Paragraph are
cumulative to, and not exclusive of, any other right that the Bank has with respect
to such Collateral  or applicable
principles of law.  The Bank shall have
no duty to take steps to preserve rights against prior parties as to the
Collateral.

 

Except as expressly provided herein, the
Borrower waives presentment, demand, notice, protest, and all other demands or
notices in connection with the delivery, acceptance, endorsement, performance,
default or enforcement of this Note, assents to any and all extensions or
postponements of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral and/or to the addition or
release of any other party or person primarily or 

 

2

 

secondarily liable, generally waives all suretyship defenses and
defenses in the nature thereof, and agrees to be bound by all the terms and
conditions contained in this Note, the Loan Agreement and in any other loan
document executed in connection herewith, and in all other instruments now or
hereafter executed evidencing or governing all or any portion of the
Collateral.

 

The Borrower will pay all costs and expenses
of collection, including reasonable attorneys’ fees actually incurred or paid
by the Bank in enforcing this Note or the obligations hereby evidenced, to the
extent permitted by law.

 

During an Event of Default, the Borrower
shall indemnify, defend and hold the Bank harmless against any claim brought or
threatened against the Bank by any third party 
(as well as from reasonable attorney’s fees and expenses incurred by
Bank in connection therewith) on account of the Bank’s relationship with the
Borrower concerning the loan evidenced in part by this Note or other documents
related to the loan evidenced hereby, each of which may be defended,
compromised, settled or pursued by the Bank with counsel of the Bank’s
selection, but at the expense of the Borrower. 
The Borrower shall not be required to so indemnify the Bank against the
Bank’s gross negligence and/or misconduct or for any claims brought by the
Borrower against the Bank in which a final judgment is rendered in favor of the
Borrower.

 

No delay or omission of the Bank in
exercising any right or remedy hereunder shall constitute a waiver of any such
right or remedy.  Acceptance by the Bank
of any payment after acceleration shall not be deemed a waiver of such acceleration.  A waiver on one occasion shall not operate as
a bar to or waiver of any such right or remedy on any future occasion.

 

Time is of the essence of this Note.

 

If any provision of this Note is held to be
invalid or unenforceable by a court of competent jurisdiction, such provision
shall be deemed modified to the extent necessary to be enforceable, or if such
modification is not practicable, such provision shall be deemed deleted from
this Note, and the other provisions of this Note shall remain in full force and
effect, and shall be construed in favor of Bank.  Subject to the foregoing provisions of this
paragraph, it is the express intention of Borrower and Bank to conform strictly
to any applicable usury laws. 
Accordingly, all agreements between Borrower and Bank, whether now
existing or hereafter arising, and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of the maturity of this Note or otherwise, shall the
amount paid or agreed to be paid to Bank for the use, forbearance or detention
of the money loaned pursuant hereto or otherwise, or for the payment or
performance of any covenant or obligation contained herein or in any other
document executed in connection herewith, exceed the maximum amount permissible
under applicable law.  If, from any
circumstance or contingency whatsoever, fulfillment of any provision hereof or
of any other document executed in connection herewith, at the time performance
of such provision shall be due, shall involve transcending the limit of
validity prescribed by law, then ipso  facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if from any such
circumstance or contingency Bank shall ever receive as interest or otherwise an
amount which would exceed the maximum rate of interest permitted by applicable
law, the amount of such excess shall be applied as of the 

 

3

 

date received by Bank to a
reduction of the indebtedness evidenced by this Note, and not to the payment of
interest (and in such event the proper amount of interest payable shall be
re-determined accordingly), and if such excessive interest exceeds such
indebtedness, the amount of such excessive interest shall be refunded to Borrower
together with any overpaid interest resulting from such re-determination.

 

This Note evidences a revolving line of
credit.  Advances under this Note may be
requested orally by Borrower or as provided in this paragraph.  Bank may, but need not, require that all oral
requests be confirmed in writing.  All
communications, instructions, or directions by telephone or otherwise to Bank
are to be directed to Bank’s office shown above.  Borrower agrees to be liable for all sums
either; (a) advanced in accordance with the instructions of an authorized
person or (b) credited to any of Borrower’s accounts with Bank.  The unpaid balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Bank’s internal
records, including daily computer printouts. 
Bank will have no obligation to advance funds under this Note if:  (a) Borrower is in default under the
terms of this Note or the Loan Agreement ; (b) Borrower ceases doing
business or is insolvent; (c) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Bank; or (d) Bank
in good faith deems itself to be undersecured under this Note or the Loan
Agreement.

 

After the end of each monthly billing cycle,
or other billing cycle from time to time determined by the Bank, the Bank will
render to the Borrower a statement of Borrower’s borrowings from the Bank and
obligations to the Bank under this Note and/or loan account(s) established
by the Bank with the Borrower evidenced by this Note, showing all applicable
loan advances, charges, credits and debits. 
Each statement shall be considered correct and to have been accepted by
the Borrower and any guarantor and shall be conclusively binding upon the
Borrower and any guarantor in respect of all loan advances, charges, debits and
credits of whatsoever nature contained therein and the closing balance shown
therein, unless the Borrower notifies the Bank in writing sent by email or
certified mail return receipt requested to the Bank at the address of the Bank
first above mentioned of any discrepancy within thirty (30) days of Borrower’s
receipt of the mailing from the Bank to the Borrower of any such monthly or
other statement.

 

All loans and advances made pursuant to the
Loan Agreement shall be due and payable upon the expiration or earlier
termination of the Loan Agreement.  Bank
may delay or forego enforcing any of its rights or remedies under this Note
without losing them.  Borrower and any
other person who signs, guarantees or endorses this Note, to the extent allowed
by law, waive presentment, demand for payment, protest and notice of
dishonor.  Upon any change in the terms
of this Note, and unless otherwise expressly stated in writing, no party who
signs this Note, whether as maker, guarantor, accommodation make or endorser,
shall be released from liability.  To the
extent permitted by applicable law, all such parties agree that Bank may renew
or extend (repeatedly and for any length of time) this Note, or release any party
or guarantor or Collateral; or impair, fail to realize upon or perfect Bank’s
security interest in the Collateral; and take any other action deemed necessary
by Bank without the consent of or notice to anyone.  All such parties also agree that Bank may
modify this Note without the consent of or notice to anyone other than the
party with whom the modification is made.

 

4

 

EACH OF THE BORROWER AND BANK HEREBY
VOLUNTARILY, KNOWINGLY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY RIGHT TO TRIAL
BY JURY THEY MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR EQUITY, IN
CONNECTION WITH, RELATED TO OR ARISING FROM THIS NOTE, ANY DOCUMENT, INSTRUMENT
OR AGREEMENT, EVIDENCING, GOVERNING OR SECURING THIS NOTE, OR UNDER ANY OTHER
LOAN DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS, VERBAL
OR WRITTEN OR ANY ACTION BY ANY PARTY IN RESPECT OF ANY LITIGATION ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS NOTE. 
THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT
OF LITIGATION SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION.  THE BORROWER ACKNOWLEDGES
THAT BANK HAS BEEN INDUCED TO ENTER INTO BANK’S LENDING RELATIONSHIP WITH THE
BORROWER BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS PARAGRAPH.

 

This Note shall be deemed delivered to the
Bank in Boston, Massachusetts and shall be governed by the laws of The
Commonwealth of Massachusetts and shall take effect as a sealed instrument.

 

 

	
  WITNESSES:

  	
   

  	
  CUBIST PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Benjamin S. Harshbarger

  	
   

  	
  By:

  	
  David W.J. McGirr

  
	
  Name:

  	
   

  	
  Name:   David W.J. McGirr

  
	
   

  	
   

  	
  Title:   
  Senior Vice President, Finance and Chief 

  Financial Officer

  

 

5

 

RIDER A

 

RBS
CITIZENS STANDARD LIBOR PROVISIONS

 

1.             Certain Definitions.

 

“Adjusted LIBOR Rate”
means, relative to any LIBOR Rate Loan to be made, continued or maintained as,
or converted into, a LIBOR Rate Loan for any LIBOR Interest Period, a rate per
annum determined by dividing (x) the LIBOR Rate for such LIBOR Interest
Period by (y) a percentage equal to one hundred percent (100%) minus the
LIBOR Reserve Percentage.

 

“Business Day” means:

 

any day which is neither a Saturday or Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed in The Commonwealth of
Massachusetts;

 

when such term is used to describe a day on which a borrowing, payment,
prepaying, or repaying is to be made in respect of any LIBOR Rate Loan, any day
which is: (i) neither a Saturday or Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed in New York City; and (ii) a
London Banking Day; and

 

when such term is used to describe a day on which an interest rate
determination is to be made in respect of any LIBOR
Rate Loan, any day which is a London Banking Day.

 

“Hedging Contracts”
means, interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements, or any other agreements or arrangements entered into
between the Borrower and the Bank and designed to protect the Borrower against
fluctuations in interest rates or currency exchange rates.

 

“Hedging Obligations”
means, with respect to the Borrower, all liabilities of the Borrower to the Bank
under Hedging Contracts.

 

“Interest Payment Date”
means,  relative to any (i) LIBOR
Rate Loan having an LIBOR Interest Period of three months or less, the last
Business Day of such LIBOR Interest Period, and as to any LIBOR Rate Loan
having an LIBOR Interest Period longer than three months, each Business Day
which is three months, or a whole multiple thereof, after the first day of such
LIBOR Interest Period and the last day of such LIBOR Interest Period and (ii) Prime
Rate Loan, quarterly on the last day of each calendar quarter.

 

“LIBOR Rate” means,
relative to any LIBOR Interest Period, the offered rate for deposits of U.S.
Dollars in an amount approximately equal to the amount of the requested LIBOR
Rate Loan for a term coextensive with the designated LIBOR Interest Period
which the British Bankers’ Association fixes as its LIBOR rate as of 11:00 a.m.
London time on the day which is two London Banking Days prior to the beginning
of such LIBOR Interest Period.  If such
day is not a London Banking Day, the LIBOR Rate shall be determined on the next
preceding day which is a London Banking Day. 
If for any reason the Bank cannot determine such offered rate by the
British Bankers’ Association, the Bank may, in its 

 

6

 

discretion, select a replacement index based
on the arithmetic mean of the quotations, if any, of the interbank offered rate
by first class banks in London or New York for deposits in comparable amounts
and maturities.

 

“LIBOR Interest Period”
means, relative to any LIBOR Rate Loan:

 

(i)    initially, the period
beginning on (and including) the date on which such LIBOR Rate Loan is made or
continued as, or converted into, a LIBOR Rate Loan as provided herein in these
Standard LIBOR Provisions and ending on (but excluding) the day which
numerically corresponds to such date one, two, three or six months thereafter
(or, if such month has no numerically corresponding day, on the last Business
Day of such month), in each case as the Borrower may select in its notice; and

 

(ii)   thereafter, each period
commencing on the last day of the next preceding LIBOR Interest Period
applicable to such LIBOR Rate Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the Bank not
less than two Business Days prior to the last day of the then current Interest
Period with respect thereto;

 

provided, however, that

 

(a)          at no time may
there be more than three (3) LIBOR Interest Periods in effect with respect
to the LIBOR Rate Loans;

 

(b)         LIBOR Interest Periods commencing on the same date for LIBOR Rate Loans
comprising part of the same advance under this agreement shall be of the same
duration;

 

(c)          LIBOR Interest Periods for LIBOR Rate Loans in connection with which the
Borrower has or may incur Hedging Obligations with the Bank shall be of the
same duration as the relevant periods set under the applicable Hedging
Contracts;

 

(d)         if such LIBOR Interest Period would otherwise end on a day which is not a
Business Day, such LIBOR Interest Period shall end on the next following
Business Day unless such day falls in the next calendar month, in which case
such LIBOR Interest Period shall end on the first preceding Business Day; and

 

(e)          no LIBOR Interest Period may end later than the termination of this  Note.

 

“LIBOR Rate Loan”
means any loan or advance the rate of interest applicable to which is based
upon the LIBOR Rate.

 

“LIBOR Rate Margin”
means one-half (0.50%) percent.

 

“LIBOR Reserve Percentage”
means, relative to any day of any LIBOR Interest Period, the maximum aggregate
(without duplication) of the rates (expressed as a decimal fraction) of reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements) under any regulations of the Board
of Governors of the Federal Reserve System (the “Board”) or other governmental
authority having jurisdiction with respect thereto as issued from time to time
and then applicable to assets or liabilities consisting of “Eurocurrency
Liabilities”, as currently defined in 

 

7

 

Regulation D of the Board, having a term
approximately equal or comparable to such LIBOR Interest Period.

 

“London Banking Day”
means a day on which dealings in US dollars deposits are transacted in the
London interbank market.

 

“Prime Rate” shall
mean a rate per annum equal to the rate of interest announced by Bank in
Boston, Massachusetts from time to time as its “Prime Rate.”  Any change in the Prime Rate shall be
effective immediately from and after such change in the Prime Rate. Interest
accruing by reference to the Prime Rate shall be calculated on the basis of
actual days elapsed and a 360-day year. 
The Borrower acknowledges that the Bank may make loans to its customers
above, at or below the Prime Rate.

 

“Prime Rate Loan”
means any loan for the period(s) when the rate of interest applicable to
such Loan is calculated by reference to the Prime Rate.

 

2.             Borrowing
Procedures.

 

LIBOR Loan Request.  By delivering a borrowing request to the Bank
on or before  12:00 Noon Boston,
Massachusetts [Note: this is what is in the Loan Agreement]
time, on a Business Day, the Borrower may from time to time irrevocably
request, on not less than two nor more than five Business Days’ notice, that a
LIBOR Rate Loan be made in a minimum amount of $1,000,000.00 and integral
multiples of $1,000,000.00, with a LIBOR Interest Period of one, two, three or
six months.  On the terms and subject to
the conditions of this Note, each LIBOR Rate Loan shall be made available to
the Borrower no later than 12:00 Noon Boston, Massachusetts time on the first
day of the applicable LIBOR Interest Period by deposit to the account of the
Borrower as shall have been specified in its borrowing request.

 

Continuation and Conversion
Elections.  By
delivering a conversion notice to the Bank on or before 12:00 Noon., Boston,
Massachusetts  time, on a Business Day,
the Borrower may from time to time irrevocably elect, on not less than two nor
more than five Business Days’ notice, that all or any portion of (i) any
Prime Rate Loan in an aggregate minimum amount and integral multiples of
$1,000,000.00, be converted into a LIBOR Rate Loan, (ii) ) any LIBOR Rate
Loan, in an aggregate minimum amount of $1,000,000.00 and integral multiples of
$1,000,000.00, be converted on the last day of a LIBOR Interest Period into a
Prime Rate Loan or (iii) any LIBOR Rate Loan, in an aggregate minimum
amount of $1,000,000.00 and integral multiples of $1,000,000.00, be converted
on the last day of a LIBOR Interest Period into a LIBOR Rate Loan with a
different LIBOR Interest Period; provided,  however, that no
portion of the outstanding principal amount of any Prime Rate Loan or LIBOR
Rate Loan may be converted to, or be continued as, a LIBOR Rate Loan when any
Event of Default has occurred and is continuing, and no portion of the
outstanding principal amount of any LIBOR Rate Loan may be converted to LIBOR
Rate Loan of a different duration if such LIBOR Rate Loan relates to any
Hedging Obligation.  In the absence of
delivery of a conversion notice with respect to any LIBOR Rate Loan at least
two Business Days before the last day of the then current LIBOR Interest Period
with respect thereto, such LIBOR Rate Loan shall, on such last day,
automatically continue as a LIBOR Rate Loan with the same LIBOR Interest
Period.

 

3.             Repayments,
Prepayments and Interest.

 

Repayments Continuations and
Conversions.  LIBOR Rate Loans
shall mature and become payable in full on the last day of the LIBOR Interest
Period relating to such LIBOR Rate Loan. 
Upon maturity, a LIBOR Rate Loan may be continued for an additional
LIBOR Interest Period or may be converted to a Prime Rate Loan.

 

8

 

Voluntary Prepayment of
LIBOR Rate Loans.  LIBOR Rate
Loans may be prepaid upon the terms and conditions set forth herein.  For LIBOR Rate Loans in connection with which
the Borrower has or may incur Hedging Obligations, additional obligations may
be associated with prepayment, in accordance with the terms and conditions of
the applicable Hedging Contracts.   The
Borrower shall give the Bank, no later than 12:00 Noon Boston, Massachusetts
time, at least two (2) Business Days notice of any proposed prepayment of
any LIBOR Rate Loans, specifying the proposed date of payment of such LIBOR
Rate Loans, and the principal amount to be paid.  Each partial prepayment of the principal
amount of LIBOR Rate Loans shall be in an integral multiple of $1,000,000.00
and accompanied by the payment of all charges outstanding on such LIBOR Rate
Loans (including the LIBOR Breakage Fee) and of all accrued interest on the
principal repaid to the date of payment.

 

LIBOR Breakage Fee.  Upon: (i) any default by Borrower in
making any borrowing of, conversion into or continuation of any LIBOR Rate Loan
following Borrower’s delivery of a borrowing request or continuation/conversion
notice hereunder or (ii) any prepayment of a LIBOR Rate Loan on any day
that is not the last day of the relevant LIBOR Interest Period (regardless of
the source of such prepayment and whether voluntary, by acceleration or
otherwise), the Borrower shall pay an amount (“LIBOR Breakage Fee”), as
customarily calculated by the Bank, equal to the amount of any losses, expenses
and liabilities (including without limitation any loss of margin and
anticipated profits) that Bank may sustain as a result of such default or
payment.  The Borrower understands,
agrees and acknowledges that: (i) the Bank does not have any obligation to
purchase, sell and/or match funds in connection with the use of the LIBOR Rate
as a basis for calculating the rate of interest on a LIBOR Rate Loan, (ii) the
LIBOR Rate may be used merely as a reference in determining such rate, and (iii) the
Borrower has accepted the LIBOR Rate as a reasonable and fair basis for
calculating the LIBOR Breakage Fee and other funding losses incurred by the
Bank.  Borrower further agrees to pay the
LIBOR Breakage Fee and other funding losses, if any, whether or not the Bank
elects to purchase, sell and/or match funds.

 

Interest Provisions.  Interest on the outstanding principal amount
of each loan, when classified as a: (i) LIBOR Rate Loan, shall accrue
during each LIBOR Interest Period at a rate per annum equal to the sum of the
Adjusted LIBOR Rate for such LIBOR Interest Period plus the LIBOR Rate Margin,
and be due and payable on each Interest Payment Date and on the Maturity Date,
and (ii) Prime Rate Loan, shall accrue at a rate per annum equal to
the  Prime Rate, and be due and payable
on each Interest Payment Date and on the Maturity Date.

 

4.             Miscellaneous
LIBOR Rate Loan Terms.

 

LIBOR Rate Lending Unlawful.  If the Bank shall determine (which
determination shall, upon notice thereof to the Borrower be conclusive and
binding on the Borrower) that the introduction of or any change in or in the
interpretation of any law, rule, regulation or guideline after the date hereof,
(whether or not having the force of law) makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for the Bank to
make, continue or maintain any LIBOR Rate Loan as, or to convert any loan into,
a LIBOR Rate Loan of a certain duration, the obligations of the Bank to make,
continue, maintain or convert into any such LIBOR Rate Loans shall, upon such
determination, forthwith be suspended until the Bank shall notify the Borrower
that the circumstances causing such suspension no longer exist, and all LIBOR Rate
Loans of such type shall automatically convert into Prime Rate Loans at the end
of the then current LIBOR Interest Periods with respect thereto or sooner, if
required by such law or assertion.

 

Unavailability of LIBOR
Rate.  In the event that Borrower shall
have requested a LIBOR Rate Loan in accordance with the terms of this Note and
the Bank, in its sole discretion, shall have determined that U.S. dollar
deposits in the relevant amount and for the relevant LIBOR Interest Period are
not available to the Bank in 

 

9

 

the London interbank market; or by reason of
circumstances affecting the Bank in the London interbank market, adequate and
reasonable means do not exist for ascertaining the LIBOR Rate applicable to the
relevant LIBOR Interest Period; or the LIBOR Rate no longer adequately and
fairly reflects the Bank’s cost of funding loans; upon notice from the Bank to
the Borrower, the obligations of the Bank hereunder to make or continue any
loans as, or to convert any loans into, LIBOR Rate Loans of such duration shall
forthwith be suspended until the Bank shall notify the Borrower that the
circumstances causing such suspension no longer exist.

 

Increased Costs.  If, on or after the date hereof, the adoption
of any applicable law, rule or regulation or guideline (whether or not
having the force of law), or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency: (a) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System of
the United States) against assets of, deposits with or for the account of, or
credit extended by, the Bank or shall impose on the Bank or on the London
interbank market any other condition affecting its LIBOR Rate Loans or its
obligation to make LIBOR Rate Loans; or (b) shall impose on the Bank any
other condition affecting its LIBOR Rate Loans or its obligation to make LIBOR
Rate Loans, and the result of any of the foregoing is to increase the cost to
the Bank of making or maintaining any LIBOR Rate Loan, or to reduce the amount
of any sum received or receivable by the Bank under this agreement with respect
thereto, by an amount deemed by the Bank to be material, then, within 15 days
after demand by the Bank, the Borrower shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction.

 

Increased Capital Costs.  If after the date
hereof, Bank determines that (i) the adoption of any applicable law, rule,
or regulation regarding capital requirements for banks or bank holding
companies or the subsidiaries thereof, (ii) any change after the date hereof
in the interpretation or administration of any such law, rule or
regulation by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or (iii) compliance
by Bank or its holding company with any request or directive of any such
governmental authority, central bank or comparable agency regarding capital adequacy (whether or not having the force of law),
has the effect of reducing the return on Bank’s capital to a level below that
which Bank could have achieved (taking into consideration Bank’s and its
holding company’s policies with respect to capital adequacy immediately before
such adoption, change, or compliance and assuming that Bank’s capital was fully
utilized prior to such adoption, change, or compliance) but for such adoption,
change, or compliance as a consequence of Bank’s commitment to make advances
pursuant hereto by any amount deemed by Bank to be material:

 

(i)            Bank shall
promptly, and in any event within 30 days, after Bank’s determination of such
occurrence, give written notice thereof to Borrower; and

 

(ii)           Borrower shall pay
to Bank as an additional fee from time to time, on demand, such amount as Bank
certified to be the amount that will compensate Bank for such reduction.  A certificate of Bank claiming entitlement to
compensation as set forth above will be conclusive in the absence of manifest
error. Such certificate will set forth the nature of the occurrence giving rise
to such compensation, the additional amount or amounts to be paid to Bank, and
the method by which such amounts were determined.  In determining such amount, Bank may use any
reasonable averaging and attribution method. 
Bank shall allocate such cost increase among its customers in good faith
and on an equitable basis.

 

10

 

Taxes.  All payments by the Borrower of principal of,
and interest on, LIBOR Rate Loans and all other amounts payable hereunder shall
be made free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
the Bank’s net income or receipts (such non-excluded items being called “Taxes”).  In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation,
then the Borrower will

 

(a)          pay directly to the relevant
authority the full amount required to be so withheld or deducted; provided that
any such taxes need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if Borrower
shall have set aside on its books adequate reserves with respect thereto;

 

(b)         promptly forward to the Bank an
official receipt or other documentation satisfactory to the Bank evidencing
such payment to such authority; and

 

(c)          pay to the Bank such additional
amount or amounts as is necessary to ensure that the net amount actually
received by the Bank will equal the full amount the Bank would have received
had no such withholding or deduction been required.

 

Moreover, if any Taxes are
directly asserted against the Bank with respect to any payment received by the
Bank hereunder, the Bank may pay such Taxes and the Borrower will promptly pay
such additional amount (including any penalties, interest or expenses) as is necessary
in order that the net amount received by the Bank after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
the Bank would have received had not such Taxes been asserted.

 

If the Borrower fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Bank the required receipts or other required documentary evidence, the Borrower
shall indemnify the Bank for any incremental Taxes, interest or penalties that
may become payable by the Bank as a result of any such failure after taking
into account the proviso in clause (a) above..

 

11

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