Document:

Exhibit 10.1

 

CUBIST PHARMACEUTICALS, INC. 
 2014 SEVERANCE PLAN 
 AND SUMMARY PLAN DESCRIPTION

 

Effective December 8, 2014

 

1.                                      Establishment of This Plan. Cubist Pharmaceuticals, Inc. (“Cubist” and together with its subsidiaries, the “Company”), hereby establishes the Cubist Pharmaceuticals, Inc. 2014 Severance Plan, (the “Plan”), as an unfunded severance pay plan, which is intended to be a welfare benefit plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974 and its regulations, as amended (“ERISA”).  This Plan is effective December 8, 2014 (the “Effective Date”).

 

2.                                      Purpose.  This Plan is for the purpose of assisting each Eligible Employee (as defined below) who is involuntarily terminated for reasons other than for “Cause,” as defined herein.  The compensation and benefits described in this Plan are intended to assist Eligible Employees in making a transition to new employment and are not intended to be a reward for prior service.

 

3.                                      Plan Administrator.  The general administration of this Plan and the responsibility for carrying out its provisions shall be vested in the administrator of the Plan (the “Plan Administrator”), which shall be the Senior Vice President of Human Resources of Cubist or his or her designee.  The Plan Administrator shall be the Plan’s “administrator” within the meaning of Section 3(16) of ERISA.

 

4.                                      Eligibility.  Eligibility to participate in this Plan is limited to any “Eligible Employee,” defined as an individual who:

 

a.                                      on or after the Effective Date, is a regular full-time or part-time employee of the Company or ;

 

b.                                      has not voluntarily terminated his or her employment with the Company;

 

c.                                       has been involuntarily terminated without Cause from his or her position with the Company;

 

d.                                      has not been offered “Comparable Employment” (as defined herein) with the Company or a successor employer following a Change in Control (as defined herein);

 

e.                                       has not been terminated in connection with the failure to return from or expiration of a leave of absence, including by reason of a disability;

 

f.                                        has not entered into an individual agreement with the Company providing for benefits upon involuntary termination;

 

g.                                       is not listed on Schedule A by employee identification number; and

 

 

h.                                      has signed and returned a separation agreement and general release and waiver of claims in a form acceptable to the Company (the “Release”), by the deadline specified in such form, without revocation.

 

Notwithstanding the foregoing, an individual who has entered into an individual agreement with the Company providing for benefits upon involuntary termination but who would otherwise qualify as an Eligible Employee shall be an Eligible Employee solely for purposes of receiving  outplacement services described in Section 5(d) and on Schedule B, unless such individual agreement with the Company provides for an outplacement services benefit different from the outplacement services benefit for which the individual would be eligible under Schedule B.

 

For the purpose of this Plan, termination shall be considered for “Cause” if the Company terminates an employee’s employment as a result of (i) any act or omission by such employee which has a material adverse effect on the business of the Company, including without limitation the commission of any crime; (ii) material misconduct; (iii) refusal or substantial failure to perform material job responsibilities to the satisfaction of the Company; (iv) excessive unauthorized absenteeism; or (v) material breach of a written Company policy or a written agreement with the Company including confidentiality, non-solicitation or intellectual property protections.  In all cases, termination for Cause shall be determined in the sole discretion of the Plan Administrator.

 

For purposes of this Plan, “Comparable Employment” shall mean a position with (i) substantially similar responsibilities to the position held by the employee at the time of the Change in Control; (ii) a compensation level equal to at least 100% of employee’s total target cash compensation (base salary plus target incentive cash compensation at 100% performance) with the Company at the time of the Change in Control; (iii) no material change in the geographic location of employment at the time of the Change in Control, except with the employee’s consent; and (iv) similar number of total regular work hours as the position held by the employee at the time of the Change in Control.  For clarity, an individual who leaves employment by reason of being offered or assigned only employment that is not Comparable Employment shall not be excluded from eligibility under Section 4(b) or Section 4(d) above by reason of such offer or assignment and shall be regarded as having been involuntarily terminated under Section 4(c).

 

For the purpose of this Plan, only an Eligible Employee shall be deemed to be a “participant” as defined in Section 3(7) of ERISA.

 

5.                                      Severance Benefits.  Each Eligible Employee shall receive severance benefits (“Severance Benefits”) as described in this Section 5 based on his or her job title immediately prior to his or her termination date.  Severance Benefits shall be provided only after the Eligible Employee has executed and returned the Release, and after the revocation has period expired.

 

a.                                      Base Pay Component.  Each Eligible Employee shall receive a lump sum payment equal to the weekly base pay he or she would have received during the period of time set forth on Schedule A attached hereto.  Such period of time for each Eligible Employee shall be the Eligible Employee’s “Severance Period.”

 

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(i)                                     For a salaried Eligible Employee, weekly base pay for purposes of this Section 5(a) shall be limited to the Eligible Employee’s base weekly salary determined as of the date of termination of employment, and shall not include any other compensation.  For clarity, in the event an employee leaves employment by reason of being offered or assigned only employment that is not Comparable Employment, base pay will be determined by reference to the position held before such offer or assignment.

 

(ii)                                  For an hourly Eligible Employee, weekly base pay for purposes of this Section 5(a) shall be limited to the Eligible Employee’s base hourly rate as of  the date of employment termination multiplied by the number of hours actually worked each week on average during the twelve (12) weeks preceding termination, which number shall not exceed forty (40) hours, and shall not include any other compensation. If an Eligible Employee is on an approved leave of absence for any portion of the twelve (12) week period preceding termination of employment, the Plan Administrator may make appropriate adjustments to the method of calculation described above.

 

(iii)                               “Years of service” as referenced in Schedule A shall be calculated as of the Eligible Employee’s termination date and shall be the full complete years of service the Eligible Employee has worked continuously for the Company, provided, however that any period of time of at least six months that is not included in a full complete year described above shall be recognized as a completed year of service for purposes of this definition.

 

b.                                      Bonus Component.  Each Eligible Employee shall receive a pro rata portion of his or her target bonus for the year in which termination occurs.  Such portion shall be calculated by multiplying the Eligible Employee’s target bonus for the year in which termination occurs, as determined by the Plan Administrator in his or her sole discretion, by the quotient equal to (i) the number of days between January 1 and the earlier of the last day of the Severance Period and December 31, divided by (ii) 365 or 366 in the case of a leap year.  In the event that the a bonus plan does not have a pre-established target or the Company has not approved a bonus plan or a target bonus applicable to the Eligible Employee for the year in which termination occurs, the calculation will be made using, in the case of a bonus plan with no pre-established target, the Eligible Employee’s actual bonus for the year immediately preceding the year of termination and, in all other cases, the Eligible Employee’s target bonus for the year immediately preceding the year of termination.

 

This bonus component shall be added to the base pay component described in Section 5(a) and paid in one lump sum payment.

 

c.                                       Benefit Continuation.

 

(i)                                     U.S. Employees.  With respect to an Eligible Employee who is employed in the U.S., the Eligible Employee’s eligibility for employee benefits

 

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under the Federal Consolidated Omnibus Budget Reconciliation Act statute (“COBRA”) shall commence the first day of the month beginning immediately after the termination of employment date.  To the extent the Eligible Employee elects COBRA continuation coverage and pays a portion of the required premium corresponding to the employee contribution rate most recently in effect for similarly situated active employees, he or she will be eligible to continue to receive medical and dental insurance coverage during the Severance Period at the same level of coverage as on the date of the Eligible Employee’s termination of employment, to the extent available under the plans with respect to which the Eligible Employee’s COBRA election applies; provided, however, that no coverage shall be provided following the Eligible Employee’s death or the effective date of the Eligible Employee’s coverage by a group health plan of a subsequent employer. Each Eligible Employee shall be required to notify the  Company immediately if the Eligible Employee becomes covered by a group health plan of a subsequent employer. No Eligible Employee shall be entitled to receive cash or other consideration in lieu of coverage.  At the end of the Severance Period, the Eligible Employee shall no longer have a right to receive contributions towards continued health plan coverage, which shall be continued only to the extent required by COBRA and only to the extent that Eligible Employee continues to timely pay the full COBRA amount required for continuation of health plan coverage.

 

(ii)                                  Non-U.S. Employees.  With respect to an Eligible Employee who is employed outside of the United States, such Eligible Employee will be eligible to continue to receive medical and dental insurance coverage during the Severance Period at the same level of coverage as on the date of the Eligible Employee’s termination of employment, to the extent available under the plans and consistent with applicable law.  Each Eligible Employee shall be required to notify the Company immediately if the Eligible Employee becomes covered by a group health plan of a subsequent employer.  No Eligible Employee shall be entitled to receive cash or other consideration in lieu of coverage.  At the end of the Severance Period, the Eligible Employee shall no longer have a right to receive contributions towards continued health plan coverage, which shall be continued only to the extent required by applicable law and only to the extent that Eligible Employee continues to timely pay the full amount required for continuation of health plan coverage.

 

d.                                      Outplacement Counseling Services.  Each Eligible Employee shall be entitled to outplacement counseling services at a frequency and cost as determined by the Plan Administrator in his or her sole discretion for a period of time as set forth on Schedule A.  An Eligible Employee may begin utilizing outplacement counseling services upon termination of employment, and in no event may begin utilizing such services more than four (4) weeks after the termination date.  If an Eligible Employee does not use all or any portion of the outplacement counseling services made available, the Eligible Employee shall not be entitled to receive cash or other consideration in lieu of such services.

 

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e.                                       Form of Benefit.  All cash Severance Benefits shall be paid to an Eligible Employee not more than 60 days after the date on which the Eligible Employee separates from service.  To the extent the Plan provides a Severance Benefit that constitutes a deferral of compensation as determined in accordance with Section 409A of the Internal Revenue Code (the “Code”) and regulations thereunder (collectively, “Code Section 409A”), the Plan shall be interpreted and administered to comply with the requirements of Code Section 409A.  For purposes of Code Section 409A, references to termination of employment shall be interpreted consistent with the definition of “separation from service” in Code Section 409A, and each installment in a series of payments shall be treated as a separate “payment.”  Notwithstanding anything to the contrary in this Plan, if at the time of an Eligible Employee’s termination of employment, the Eligible Employee is a “specified employee,” as defined below, any and all amounts payable under this Plan on account of such separation from service that are covered in (i) below would (but for this provision) be payable within six (6) months following the date of termination, shall  instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Eligible Employee’s death; except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by the Plan Administrator in his or her reasonable good faith discretion); (ii) benefits that qualify as excepted welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (iii) other amounts or benefits that are not subject to the requirements of Code Section 409A.

 

In the event of an Eligible Employee’s death before he or she receives Severance Benefits to which he or she otherwise would be entitled under the Plan, payment of his or her cash Severance Benefits shall be in a lump sum paid to his or her estate.

 

f.                                        Repayment of Severance Benefits.  Any Eligible Employee who accepts Severance Benefits under the Plan shall reimburse the Company, as applicable, for the full amount of any Severance Benefits he or she received under the Plan if the Eligible Employee (i) acts contrary to the terms of the Release, as determined by the Plan Administrator, including disclosing any trade secrets of the Company or (ii) violates any other written covenants between the Eligible Employee and the Company that survive the termination of employment.  In addition, any Eligible Employee described in the preceding sentence shall forfeit any right to Severance Benefits under the Plan which have not yet been provided.

 

6.                                      Funding.  All payments under this Plan shall be funded solely from the Company’s general assets, and there shall be no trust to fund this Plan.

 

7.                                      Duration of Plan.  This Plan is effective as of the Effective Date.  The provisions of this Plan relating to the provision of benefits to Eligible Employees who are entitled under the Plan to receive Severance Benefits after the termination of the Plan shall survive until such Severance Benefits have been provided in full.

 

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8.                                      Termination, Amendment and Assumption of Plan.

 

a.                                      This Plan may be amended, modified or terminated at any time, by action of Cubist; provided, in no event shall such amendment, modification or termination materially reduce or diminish an Eligible Employee’s right to receive any benefit accrued hereunder prior to the date of such amendment, modification or termination without the consent of the Eligible Employee.  Accrued for this purpose means the Eligible Employee has satisfied all conditions for receiving Severance Benefits.

 

b.                                      Notwithstanding Section 8(a) above, in the event of the consummation of a Change in Control, the Plan may not be adversely amended or terminated, in either case, for a period of 12 months following such Change in Control.

 

c.                                       In the event of a Change in Control, Cubist may require the purchaser/successor employer to expressly assume and agree to perform this Plan in the same manner and to the same extent that the Company would be required to perform it if no such Change in Control had taken place.  If the purchaser/successor employer adopts the Plan it shall execute a Company approved adoption form.

 

d.                                      For purposes of the Plan, “Change in Control” means the first to occur of any of the following events:

 

(i)                                     any acquisition of Cubist by a person not a Company affiliate, by means of merger or other form of corporate reorganization, in which the outstanding ownership interests of Cubist are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring person and in which the holders of Cubist’s ownership interests immediately before such acquisition hold less than 50 % of the ownership interests of the acquiring or surviving person (other than a mere reincorporation transaction),

 

(ii)                                  the closing of the transfer from existing Cubist stockholders, in one transaction or a series of related transactions, to a person or group (as used in Rule 13d of the Securities Exchange Act of 1934, as amended) of affiliated persons, of Cubist’s securities if, after such closing, such person or group of affiliated persons would hold more than 50% of the outstanding voting securities of Cubist, or

 

(iii)                               a sale of all or substantially all of the assets of Cubist to a Person not a Company affiliate.

 

9.                                      Plan Administration.  Severance Benefits under the Plan will be provided only if the Plan Administrator (or its delegate) decides in his or her discretion that the individual applying for benefits is entitled to them.  Any decision made by the Plan Administrator in good faith is final and binding on all persons.  The Plan Administrator has full discretionary authority to interpret the Plan and control and manage the operation and administration of the Plan in all its details, to decide all questions concerning the Plan and determine all matters relating to eligibility, coverage or benefits under the Plan.  Any determination by the Plan Administrator

 

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shall be final and binding, in the absence of clear and convincing evidence that the Plan Administrator acted arbitrarily and capriciously.

 

The Plan Administrator shall have such powers as are necessary to discharge his or her duties, including, but not limited to, interpretation and construction of this Plan, the determination of all questions of eligibility, participation and benefits, and all other related or incidental matters.  The Plan Administrator shall decide all such questions in accordance with the terms of the controlling legal documents and applicable law, and his or her decision will be binding on the Company or successor employer, as applicable, the Eligible Employee, the Eligible Employee’s spouse or other dependent or beneficiary and all other interested parties.

 

The Plan Administrator may make rulings; make regulations and prescribe procedures; gather needed information; prescribe documents for Eligible Employees to sign; exercise all of the power and authority contemplated by ERISA with respect to the Plan; employ or appoint persons to help or advise in any administrative functions; appoint service providers; recoup overpayments; and generally do anything needed to operate, manage and administer the Plan.

 

The Plan Administrator may require each Eligible Employee to submit, in such form as he or she shall deem reasonable and acceptable, proof of any information which the Plan Administrator finds necessary or desirable for the administration of this Plan.  The Plan Administrator may also require, as a condition to the receipt of any benefit hereunder, that the Eligible Employee release the Company or successor employer, as applicable, their directors,  officers and employees, and the Plan Administrator from any and all claims, liabilities and causes of action arising with respect to this Plan, as legally permissible.

 

The Plan Administrator shall maintain such records as are necessary to carry out the provisions of this Plan and to comply with ERISA.  The Plan Administrator shall also make all disclosures and file all reports which are required by ERISA.

 

10.                               Claims Procedure.

 

a.                                      Claim for Benefits:  Routine applications relating to benefit payments and inquiries relating to the operation of the Plan are not claims to be resolved under the procedures set forth in this Section 10.  However, an individual who wishes to dispute a determination resulting from such routine processing may file a claim as described.

 

(i)                                     Any person claiming benefits under this Plan (“Claimant”) may be file a claim in writing, together with such other documents and information as the Claimant considers appropriate or as the Plan Administrator may require (a “Claim”).

 

(ii)                                  Within ninety (90) days following receipt of the Claim, the Plan Administrator’s authorized delegate reviewing the claim will furnish the Claimant with written notice of the decision rendered with respect to the Claim.

 

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(iii)                               Should special circumstances require an extension of time for processing the claim, written notice of the extension will be furnished to the Claimant prior to the expiration of the initial ninety (90) day period.

 

(1)                                 The notice will indicate the special circumstances requiring an extension of time and the date by which a final decision is expected to be rendered.

 

(2)                                 In no event will the period of the extension exceed ninety (90) days from the end of the initial ninety (90) day period.

 

b.                                      Content of Denial:  In the case of a denial of a Claim, the written notice will set forth:

 

(i)                                     The specific reasons for the denial;

 

(ii)                                  References to this Plan provisions upon which the denial is based;

 

(iii)                               A description of any additional information or material necessary for perfection of the Claim (together with an explanation of why the material or information is necessary); and

 

(iv)                              An explanation of this Plan’s claim review procedure, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse determination on review.

 

c.                                       Appeals:

 

(i)                                     In order to appeal the decision rendered with respect to his or her Claim or with respect to the amount of his or her benefit, the Claimant must follow the procedures set forth in this Section 10.

 

(ii)                                  The appeal must be made, in writing, within 90 days or within 180 days if an extension was requested.

 

(iii)                               Upon appeal, the Claim must be given full and fair review by the Plan Administrator.  The Claimant may review all pertinent documents and submit issues and comments in writing in connection with the appeal.

 

(iv)                              The decision of the Plan Administrator will be made promptly, and not later than sixty (60) days after the Plan Administrator’s receipt of a request for review, unless special circumstances require an extension of time for processing.  In such a case, a decision will be rendered as soon as possible, but not later than one hundred and twenty (120) days after receipt of the request for review.

 

(v)                                 The decision on review will be in writing and will include specific reasons for the decision, written in a manner designed to be understood by the

 

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Claimant, with specific references to the pertinent Plan provisions upon which the decision is based, and a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.

 

Severance Benefits will be provided under the Plan only if the Plan Administrator determines in his or her discretion that the Claimant is entitled to them. No action at law or in equity shall be brought to recover under this Plan until the mandatory appeal procedures herein provided have been exhausted and the Severance Benefits requested in such appeal have been denied in whole or in part.  No lawsuit shall be brought against the Plan, the Company, or the Plan Administrator after 90 days from receipt of the final decision on a claim appeal.

 

11.                               Tax and Other Withholdings; Code Section 280G.

 

a.                                      The Company or successor employer may withhold from any payment under this Plan any non-U.S., federal, state, provincial, or local income or employment taxes required by law to be withheld with respect to such payment and such sum as the Company (or successor employer) may reasonably estimate is necessary to cover any taxes for which the Company (or successor employer) may be liable and which may be assessed with regard to such payment.

 

b.                                      Notwithstanding any provision of this Plan to the contrary:

 

(i)                                     If at any time is determined that payment of the Severance Benefits, together with any other payments and benefits payable to an Eligible Employee or for an Eligible Employee’s benefit (together with the Severance Benefits, the “Total Benefits”), would subject an Eligible Employee to an excise tax under Section 4999 of the Code and the regulations thereunder (“Code Section 4999”), and that a reduction in the amount of the unpaid Severance Benefits would result in the amount of the Total Benefits, net of all federal, state and local income taxes on the Total Benefits and any taxes on the Total Benefits under Code Section 4999 (such amount, the “Net After-Tax Receipts”), being equal to or greater than the Net After-Tax Receipt that would result from payment of the unpaid Severance Benefits without reduction, then the aggregate amount of any unpaid Severance Benefits shall be reduced to the smallest amount that results in the Net After-Tax Receipts being equal to or greater than the Net After-Tax  Receipt that would result if the unpaid Severance Benefits were reduced to any other amount.

 

(ii)                                  In the event that an Eligible Employee receives payments or benefits that should not have been paid under this Section 11, the Eligible Employee must repay or reimburse the Company promptly upon receiving notice that an overpayment has been made.

 

(iii)                               Nothing in this Section 11 shall cause the Company to be responsible for, or to have any liability or obligation with respect to, any excise tax liability under Code Section 4999.

 

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12.                               Agent for Service of Legal Process.  Legal process with respect to claims under this Plan may be served on the Plan Administrator.

 

13.                               Expenses.  All costs and expenses incurred in administering this Plan, including the expenses of the Plan Administrator, shall be borne by the Company or successor employer, as applicable.

 

14.                               Plan Not an Employment Contract.  This Plan is not a contract between the Company or any successor employer and any employee, nor is it a condition of employment of any employee.  Nothing contained in this Plan gives, or is intended to give, any employee the right to be retained in the service of the Company or any successor employer, or to interfere with the right of the Company or any successor employer to discharge or terminate the employment of any employee at any time and for any reason.  No employee, spouse or beneficiary shall have any right or claim to benefits beyond those expressly provided in this Plan.  All rights and claims are limited as set forth in this Plan.

 

15.                               Indemnification.  To the extent permitted by law, the Plan Administrator and all employees of the Company or any successor employer working under the supervision or direction of the Plan Administrator shall be indemnified by the Company or successor employer, as applicable, and saved harmless against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of this Plan except to the extent that such claims arise from gross negligence, willful neglect or willful misconduct of the Plan Administrator or others covered by this indemnification.  However, the Company and any successor employer will have the right to select counsel and to control the prosecution or defense of the suit.  Also, the Company and any successor employer will not be required to indemnify any person for any amount incurred through any settlement unless the Company or successor employer, as applicable, consents to the settlement.

 

16.                               Separability.  In case any one or more of the provisions of this Plan (or part thereof) shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions hereof, and this Plan shall be construed as if such invalid, illegal or unenforceable provisions (or part thereof) never had been contained herein.

 

17.                               Non-Assignability by Eligible Employee.  No right or interest of any Eligible Employee in this Plan shall be assignable or transferable in whole or in part either directly or by operation of law or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge or bankruptcy involving such Eligible Employee.

 

18.                               Integration with Other Pay or Benefits Requirements.  Severance Benefits provided for in this Plan are the maximum benefits that the Company will provide, except (a) to the extent required by applicable law or, (b) if applicable, under the terms of the Optimer US Amended and Restated Severance Benefit Plan.  To the extent any agreement between an Eligible Employee and the Company requires the Company to provide benefits of any kind to such Eligible Employee because of such Eligible Employee’s involuntary termination, the Severance Benefits provided under this Plan shall be reduced as determined by the Plan

 

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Administrator to the extent of any such other benefits.  To the extent that any non-U.S., federal, state, provincial, or local law, including, without limitation, so-called “plant closing” laws, or the Worker Adjustment and Retraining Notification act (“WARN Act”), requires the Company to provide benefits of any kind to an Eligible Employee because of that Eligible Employee’s involuntary termination or similar event, the Severance Benefits provided under this Plan shall be reduced as determined by the Plan Administrator to the extent of any such other benefits.  The Company intends for the Severance Benefits provided under this Plan to satisfy any and all statutory obligations which may arise out of an employee’s involuntary termination for the foregoing reasons (including for the avoidance of doubt notice or pay-in-lieu of notice), and the Plan Administrator shall so construe and implement the terms of this Plan.

 

19.                               Governing Law.  This Plan and the rights of all persons under this Plan shall be construed in accordance with and under applicable provisions of ERISA, and the regulations thereunder, and the laws of the Commonwealth of Massachusetts to the extent not preempted by federal law.

 

20.                               Gender and Number.  Except where otherwise indicated by the context, any masculine gender used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural, and vice versa.

 

21.                               Acceptance, Cooperation.  If Severance Benefits are accepted under this Plan, the Eligible Employee shall be considered to have accepted the Plan’s terms, and the Eligible Employee agrees to perform any act and to execute any documents which may be necessary or desirable to carry out the terms of this Plan.

 

22.                               Facility of Payment.  When an Eligible Employee is under a legal disability or, in the opinion of the Plan Administrator is in any way incapacitated so as to be unable to manage his or her financial affairs, the Plan Administrator may make payments of cash Severance Benefits to the Eligible Employee’s legal representative.  If there is no legal representative, the Plan may make cash Severance Benefit payments to a relative or close friend of the Eligible Employee for the Eligible Employee’s benefit.  Any payment made in accordance with this provision will be a full and complete discharge of any liability for such payment under the Plan.

 

23.                               Statement of ERISA Rights.  As an Eligible Employee in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).  ERISA provides that all plan participants shall be entitled to:

 

a.                                      Receive Information About Your Plan and Benefit.

 

(i)                                     Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the plan, and a copy of the latest annual report (Form 5500 Series) filed by the plan with  the U. S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

 

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(ii)                                  Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the plan, and copies of the latest annual report (Form 5500 Series) and updated summary plan description.  The Plan Administrator may make a reasonable charge for the copies.

 

(iii)                               Receive a summary of the plan’s annual financial report.  The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.

 

b.                                      Prudent Actions by Plan Fiduciaries.  In addition to creating rights for plan participants ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan.  The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries.  No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

 

c.                                       Enforce Your Rights.  If your claim for a severance benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

 

Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within 30 days, you may file suit in a Federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state of Federal court.  If it should happen that you are discriminated against for asserting your rights, you may seek assistance from the U. S. Department of Labor, or you may file suit in a Federal court.  The court will decide who should pay court costs and legal fees.  If you are successful the court may order the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

 

d.                                      Assistance with Your Questions.  If you have any questions about your plan, you should contact the Plan Administrator.  If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents form the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration.  U. S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D. C. 20210.  You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration at 800.998.7542.

 

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IN WITNESS WHEREOF, Cubist Pharmaceuticals, Inc. has caused this instrument to be executed in its name and on its behalf by its officer thereunto duly authorized, on this 7th day of December, 2014.

 

 

	
 
    	
By:
    	
CUBIST   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Thomas J.   DesRosier
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
Thomas J.   DesRosier
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
Executive Vice   President, Chief Legal and Administrative Officer
    

 

 

MISCELLANEOUS INFORMATION

 

1.                                      PLAN NAME:

 

Cubist Pharmaceuticals, Inc. 2014 Severance Plan

 

2.                                      EMPLOYER (PLAN SPONSOR):

 

Cubist Pharmaceuticals, Inc.

 

ADDRESS:                                                          65 Hayden Avenue

Lexington, Massachusetts 02421

 

TELEPHONE:                                         (781) 860-8660

 

3.                                      EMPLOYER IDENTIFICATION NUMBER:  22-3192085

 

4.                                      PLAN NUMBER:  503

 

5.                                      PLAN YEAR:  calendar year, January 1 — December 31

 

6.                                      PLAN ADMINISTRATOR AND AGENT FOR SERVICE OF LEGAL PROCESS:

 

Senior Vice President of Human Resources

Cubist Pharmaceuticals, Inc.

65 Hayden Avenue

Lexington, Massachusetts 02421

(781) 860-8660

 

7.                                      TYPE OF PLAN:

 

The Plan is an employee welfare benefit plan under ERISA offering severance benefits.

 

13

 

SCHEDULE A

 

 

SCHEDULE B

 

	
Level of Employment
    	
 
    	
Severance Period
    	
 
    	
Outplacement Period
    
	
U.S. VP and above and Non-U.S. EVP and SVP
    	
 
    	
As provided in individual  agreements
    	
 
    	
12 months
    
	
Non-U.S. VP
    	
 
    	
52 weeks
    	
 
    	
12 months
    
	
Sr. Director
    	
 
    	
22 weeks plus two weeks for every year of service  to a maximum of   52 weeks
    	
 
    	
12 months
    
	
Director/Associate

Director/Principal Scientist
    	
 
    	
19 weeks plus two weeks for every year of service  to a maximum of   52 weeks
    	
 
    	
6 months
    
	
Sr. Manager/Sr. Scientist
    	
 
    	
16 weeks plus two weeks for every year of service  to a maximum of   52 weeks
    	
 
    	
6 months
    
	
Manager/Scientist
    	
 
    	
14 weeks plus two weeks for every year of service  to a maximum of   52 weeks
    	
 
    	
6 months
    
	
Below Manager
    	
 
    	
12 weeks plus two weeks for every year of service  to a maximum of   52 weeks
    	
 
    	
6 months
    

 

15ex10-5.htm

Exhibit 10.5

 

NORTH BAY RESOURCES INC.

MASTER LOAN AND SECURITY AGREEMENT

THIS MASTER LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of December  5, 2014 by and between NORTH BAY RESOURCES INC., a Delaware corporation (the “Debtor”), and TANGIERS INVESTORS, LP, a Delaware limited partnership (“Secured Party”).

 

RECITALS

 

WHEREAS, commencing on December 29, 2011, through April 29, 2014, the Secured Party has provided the Debtor with certain loans, for which the Debtor has issued to the Secured Party a total of nine (9) convertible promissory notes (the “Notes”);

 

WHEREAS, the current total principal amount of the loans provided by the Secured Party to the Debtor under the Notes is $794,322.53, plus accrued interest as of September 30, 2014 in the amount of $133,210 (collectively, the “Loans”);

 

WHEREAS, the Notes include a convertible promissory note with an effective date of October 2, 2012, pursuant to which the Secured Party may, but is not obligated to, lend up to $750,000 to the Debtor (the “Active Note”), of which the Secured Party has heretofore lent to the Debtor the total principal amount of $496,122.53, less a total of $76,800 which the Secured Party has elected to convert into shares of the Debtor’s common stock;

 

WHEREAS, the Maturity Date (as such term is defined in the Notes) for each of the Notes has now passed and the Notes are in default and the Secured Party has not agreed not to take any foreclosure or collection action against the Debtor in exchange for the agreements set forth herein; and

 

WHEREAS, the parties have agreed that the Debtor shall grant  the Secured Party with a security interest in all of its unencumbered property as collateral for the Loans so that the Debtor’s obligations to repay the Notes be secured by all of the assets of the Debtor, that the Debtor shall pay the Secured Party a forbearance fee and that the Debtor shall reduce the conversion price on a portion of the balance of the Notes.

 

AGREEMENT

 

In consideration of the loans made by the Secured Party, the Secured Party’s forbearance and for other good and valuable consideration, the Debtor hereby agrees with the Secured Party as follows:

 

1. Acknowledgement of Debt and Additional Expenses.  Secured Party hereby confirms its previous advance of approximately $794,321.53 under the Notes to Debtor. The Debtor acknowledges and agrees:

 

(a) That it has received such advances in multiple installments and that Secured Party has the right to demand repayment of portions thereof at any time after March 15, 2013;

 

(b) That the Maturity Date of all of the Notes has expired and it is in default under the Notes;

 

  

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(c) The Secured Party has heretofore elected not to foreclose on any of the Notes nor take any collection action against the Debtor whatsoever;

 

(d) That as a result of such forebearnce, the Secured Party has incurred additional costs, expenses and losses; and

 

(e) In consideration for the Secured Party’s advances, forbearance, expenses and losses, and for the Secured Party’s agreement to extend the Maturity Date of the Notes an additional twelve (12) months as set forth in Section 3 below, Debtor hereby agrees as follows:

 

(i) to grant to the Secured Party a senior security interest in all of Debtor’s assets as set forth in Section 2 below, subject to all of the terms and conditions of this Agreement;

 

(ii) to pay to the Secured Party a forebearnce fee in the amount of $150,000, which shall be and hereby is deemed to be added to the principal balance of the Active Note; and

 

(iii) the term “Conversion Price” as such term is used in the Notes and is applied to the first principal amount of $100,000 of any of the Notes that the Secured Party elects to convert into shares of the Debtor’s common stock following the date hereof, is hereby amended as follows:

 

“Conversion Price” shall be equal to 70% of the of the lowest VWAP of the Company’s common stock during the twenty (20) consecutive trading days prior to the date on which Holder elects to convert all or part of the Note.  If the Company is placed on “chilled” status with The Depository Trust Company (“DTC”), the discount shall be increased by 10% until such chill is remedied. If the Company is not Deposits and Withdrawal at Custodian (“DWAC”) eligible through their Transfer Agent and DTC’s Fast Automated Securities Transfer (“FAST”) system, the discount will be increased by 5%. In the case of both, the discount shall be a cumulative 15%. 

2. Grant of Security Interest.  To secure the Debtor’s full and timely performance of all of the Debtor’s obligations and liabilities to the Secured Party pursuant to the Notes (including, without limitation, Debtor’s obligation to timely pay the principal amount of, and interest on, the Notes) (the “Obligations”), the Debtor hereby grants to the Secured Party a senior, continuing security interest (the “Security Interest”) in and to all of the property described on Exhibit A to this Agreement, plus any and all other real property, equipment, licenses, permits, intellectual property, bank accounts, prepaid accounts, personal property, rights, interests and assets of the Debtor, whether currently owned by the Debtor or obtained subsequent to the date hereof (the “Collateral”).  The Security Interest shall be a first and prior security interest in all of the Collateral.

 

3. Extension of Maturity Date. The parties hereto agree that the Maturity Date set forth in each of the Notes is hereby extended to November 30, 2015.

 

4. Covenants.  The Debtor covenants and agrees with the Secured Party that, from and after the date of this Agreement until the Obligations are paid in full:

 

(a) Deliveries Upon Execution. Upon execution of this Agreement, Debtor shall deliver to the Secured Party (i) a duly executed copy of this Agreement; and (ii) the Collateral Assignments and the UCC-1 financing Statement envisioned by Section 2 and this Section 4.

 

  

2

  

 

(b) Other Liens.  Except for the Security Interest, the Debtor is and during the time that this Agreement is in full force and effect shall be the owner of the Collateral and shall be the owner of the Collateral hereafter acquired free from any adverse lien, security interest or encumbrance (other than Permitted Liens), and the Debtor will defend the Collateral against the claims and demands of all persons at any time claiming the same or any interest therein.  “Permitted Liens” means (i) liens for taxes or other governmental charges not at the time delinquent or that are being contested in good faith and appropriately reserved for in accordance with GAAP; (ii) statutory liens of carriers, warehousemen, mechanics, materialmen, and vendors arising by operation of law for sums not overdue; (iii) non-exclusive licenses and sublicenses granted in the ordinary course of the Debtor’s business and any interest or title of a licensor or under any license or sublicense;  (iv) purchase money security interests that will be discharged upon Debtor’s payment of the purchase price for the applicable property; (v) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; (vi) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (vii) customary rights of set-off, revocation, refund or chargeback under deposit agreements or under the Uniform Commercial Code or common law of banks or other financial institutions where the Debtor maintains deposits (other than deposits intended as cash collateral) in the ordinary course of business; (viii) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Borrower and its Subsidiaries taken as a whole; and (ix) any liens existing on the date of this Security Agreement as set forth on the schedule attached to this Agreement as Exhibit B.

 

(c) Further Documentation.  At any time and from time to time, upon the written request of the Secured Party, and at the sole expense of the Debtor, the Debtor will promptly and duly execute and deliver such further instruments and documents and take such further action as the Secured Party may reasonably request for the purpose of implementing the terms and conditions of this Agreement, as well as obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, filing any collateral assignments, financing statements or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the liens created hereby.  The Debtor also hereby authorizes the Secured Party to file any such financing or continuation statement without the signature of the Debtor to the extent permitted by applicable law.  A reproduction of this Agreement shall be sufficient as a financing statement or as exhibit to a financing statement on form UCC-1 for filing in any jurisdiction.

 

(d) Indemnification.  The Debtor agrees to defend, indemnify and hold harmless the Secured Party against any and all liabilities, costs and expenses (including, without limitation, legal fees and expenses): (i) with respect to, or resulting from, any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral, (ii) with respect to, or resulting from, any delay in complying with any law, rule, regu­lation or order of any governmental authority applicable to any of the Collateral or (iii) in connection with any of the transactions contemplated by this Agreement.

 

(e)  Maintenance of Records.  The Debtor will keep and maintain at its own cost and expense reasonably satisfactory and materially complete records of the Collateral.

 

(f) Inspection Rights.  The Secured Party shall have full access during normal business hours, and upon reasonable prior notice, but not more than twice in any 12-month period unless an Event of Default has occurred, to all the books, corre­spondence and other records of the Debtor relating to the Collateral, and the Secured Party or their repre­sentatives may examine such records and make photocopies or otherwise take extracts from such records.  The Debtor agrees to render to the Secured Party, at the Debtor’s expense, such clerical and other assistance as may be reasonably requested with regard to the exercise of its rights pursuant to this paragraph.

 

  

3

  

 

(g) Compliance with Laws, etc.  The Debtor will comply in all material respects with all laws, rules, regulations and orders of any governmental authority applicable to any part of the Collateral or to the operation of the Debtor’s business; provided, however, that the Debtor may contest any such law, rule, regulation or order in any reasonable manner which does not, in the reasonable opinion of the Debtor, adversely affect the Secured Party’s rights or the priority of their liens on the Collateral.

 

(h) Payment of Obligations.  The Debtor will pay promptly when due all taxes, assessments and governmental charges or levies imposed upon the Collateral or with respect to any of its income or profits derived from the Collateral, as well as all claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if (i) the validity of such charge is being contested in good faith by appropriate pro­ceedings, (ii) such proceedings do not involve any material danger of the sale, forfeiture or loss of any of the Collateral or any interest in the Collateral and (iii) such charge is adequately reserved against on the Debtor’s books in accordance with generally accepted accounting principles.

 

(i) Limitation on Liens on Collateral.  The Debtor will not create, incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any lien or claim on or to the Collateral, other than the Security Interest and Permitted Liens, and will defend the right, title and interest of the Secured Party in and to any of the Collateral against the claims and demands of all other persons.

 

(j) Limitations on Dispositions of Collateral.  The Debtor will not sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so (collectively, a “Transfer”), except for: (i) Transfers of inventory in the ordinary course of business; (ii) Transfers of worn-out or obsolete equipment; or (iii) a grant of a license to its products and related documentation in the ordinary course of business.

 

(k) Further Identification of Collateral.  The Debtor will furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Secured Party may reasonably request, all in reasonable detail.

 

5. Secured Parties’ Appointment as Attorney-in-Fact.

 

(a) Powers. The Debtor hereby appoints the Secured Party, and any officer or agent of the Secured Party, with full power of substitution, as its attorney-in-fact with full irrevocable power and authority in the place of the Debtor and in the name of the Debtor or in their own name, from time to time in the Secured Party’ discretion so long as an Event of Default has occurred and is continuing, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any instrument which may be necessary or desirable to accomplish the purposes of this Agreement.  Without limiting the foregoing, so long as an Event of Default has occurred and is continuing, the Secured Party shall have the right, without notice to, or the consent of, the Debtor, to do any of the following on the Debtor’s behalf:

 

(i) to pay or discharge any taxes or liens levied or placed on or threatened against the Collateral;

 

  

4

  

 

(ii) to direct any party liable for any payment under any of the Collateral to make payment of any and all amounts due or to become due thereunder directly to the Secured Party or as the Secured Party directs;

 

(iii) to ask for or demand, collect, and receive payment of and receipt for, any payments due or to become due at any time in respect of or arising out of any Collateral;

 

(iv) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to enforce any right in respect of any Collateral;

 

(v) to defend any suit, action or proceeding brought against the Debtor with respect to any Collateral;

 

(vi) to settle, compromise or adjust any suit, action or proceeding described in subsection (v) above and, to give such discharges or releases in connection therewith as the Secured Party may deem appropriate;

 

(vii) to assign any patent right included in the Collateral of Debtor (along with the goodwill of the business to which any such patent right pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Secured Party shall in their sole discretion determine; and

 

(viii) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral, and to take, at the Secured Party’ option and the Debtor’s expense, any actions which the Secured Party deem necessary to pro­tect, preserve or realize upon the Collateral and the Secured Party’ liens on the Collateral and to carry out the intent of this Agreement, in each case to the same extent as if the Secured Party were the absolute owner of the Collateral for all purposes.

 

The Debtor hereby ratifies whatever actions the Secured Party shall lawfully do or cause to be done in accordance with this Section 5.  This power of attorney shall be a power coupled with an interest and shall be irrevocable.

 

(b) No Duty on Secured Party’s Part.  The powers conferred on the Secured Party by this Section 5 are solely to protect the Secured Party’s interests in the Collateral and shall not impose any duty upon it to exercise any such powers.  The Secured Party shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Secured Party nor its general partner or any of the general partner’s managers, officers, directors, employees or agents shall, in the absence of willful misconduct or gross negligence, be responsible to the Debtor for any act or failure to act pursuant to this Section 5.

 

6. Performance by Secured Party’s of Debtor’s Obligations.  If the Debtor fails to per­form or comply with any of its agreements or covenants contained in this Agreement and the Secured Party, after giving notice of its intention to do so to the Debtor, perform or comply, or otherwise cause performance or compliance, with such agreement or covenant in accordance with the terms of this Agreement, then the reasonable expenses of the Secured Party incurred in connection with such performance or compliance shall be payable by the Debtor to the Secured Party on demand and shall constitute Obligations secured by this Agreement.

 

  

5

  

 

7. Representation and Warranties.  Each of the parties represents and warrants to the other parties as follows, acknowledging that the other party is relaying on such representations and warranties in consenting to and entering into this Agreement:

 

(a) The party has the authority to enter into this Agreement and to perform all of the party’s obligations and duties hereunder. The person signing this Agreement on behalf of the party has full authority to do so. The party has obtained all authorizations and consents necessary for the party to enter into and perform its duties and obligations hereunder, including all consents and authorizations required by its organizational and charter documents, by law or by any contact to which it is a party or by which it is bound or in any legal proceedings to which it is a party.

 

(b) The party has carefully read this Agreement, understands the content and the consequences of this Agreement and enters into this Agreement as the party’s free act, with advice of legal counsel or the waiver of the opportunity to obtain such advice. In entering into this Agreement, the party is relying on the party’s own judgment, belief and knowledge, and not by any representation or agreements not set forth herein regarding the contents of this Agreement by any parties or anyone representing them.

 

(c) Neither the party’s entry into this Agreement nor its performance of its duties and obligations under this Agreement will constitute a breach of or violate its Articles of Incorporation or bylaws or constitute a breach of or an event of default under any agreement or instrument to which such party is a party or by which it or any of its material assets are bound, or constitute a breach of any law applicable to such party or any governmental or court order by which such party or any of its material assets are bound or to which it or they are subject.

 

(d) Debtor has good, valid and marketable title to all of its material assets, free and of all claims, liens and encumbrances not listed on the attached Exhibit B, and all of such assets are in good order and repair and/or are otherwise suitable for the use to which they are currently put and are proposed to be put in the operation of Debtor’s business.

 

(e) Debtor is not a party to any pending arbitration proceeding, lawsuit or governmental investigation or proceeding or any other similar proceeding and knows of no reasonable basis for any such proceeding.

 

8. Remedies.  If an Event of Default has occurred and is continuing, the Secured Party may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement relating to the Obli­gations, all rights and remedies of a secured party under the California Uniform Commercial Code, as amended from time to time (the “Code”).  Without limiting the foregoing, the Secured Party, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon the Debtor or any other person (all of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances collect, receive, appropriate and realize upon any or all of the Collateral, and/or may sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver any or all of the Collateral (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of a Secured Party or elsewhere upon such terms and conditions as the Secured Party may deem advisable, for cash or on credit or for future delivery without assumption of any credit risk.  The Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase all or any part of the Collateral so sold, free of any right or equity of redemption in the Debtor, which right or equity is hereby waived or released.  The Secured Party shall apply the net proceeds of any such collection, recov­ery, receipt, appropriation, realization or sale, after deducting all reasonable expenses incurred therein or connection with the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Party under this Agreement (including, without limitation, reasonable attorneys’ fees and expenses) to the payment in whole or in part of the Obligations, in such order as the Secured Party may elect, and only after such application and after the payment by the Secured Party of any other amount required by any provision of law, need the Secured Party account for the surplus, if any, to the Debtor.  To the extent permitted by applicable law, the Debtor waives all claims, damages and demands it may acquire against the Secured Party arising out of the exercise by the Secured Party of any of their rights hereunder.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.  The Debtor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys employed by the Secured Party to collect such deficiency.

 

  

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9. Limitation on Duties Regarding Preservation of Collateral.  The sole duty of a Secured Party with respect to the custody, safekeeping and preservation of the Collateral, under Sec­tion 9-207 of the Code or otherwise, shall be to deal with it in the same manner as such Secured Party deals with similar property for its own account.  Neither the Secured Party nor its general partner nor any of its general partner’s managers, any of their directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Debtor or otherwise.

 

10. Powers Coupled with an Interest.  All authorizations and agencies contained in this Agreement with respect the Collateral are irrevocable and powers coupled with an interest.

 

11. No Waiver; Cumulative Remedies.  The Secured Party shall not by any act (except by a written instrument pursuant to Section 12(a) hereof), delay, indulgence, and omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default under the Notes or in any breach of any of the terms and conditions of this Agreement.  No failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Secured Party of any right or remedy under this Agreement on any one occasion shall not be construed as a bar to any right or remedy, which the Secured Party would otherwise have on any subsequent occasion.  The rights and remedies provided in this Agreement are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law.

 

12. Miscellaneous.

 

(a) Amendments and Waivers. Any term of this Agreement may be amended with the written consent of the Debtor and of the Secured Party.  Notwithstanding the foregoing or any other provision of this Agreement, no amendment or waiver that adversely affects a Secured Party in a manner different from all of the Secured Party may be effected without the written consent of such Secured Party.  Any amendment or waiver effected in accordance with this Section 12(a) shall be binding upon the parties and their respective successors and assigns.

 

(b) Transfer; Successors and Assigns.  The terms and conditions of this Agreement shall be binding upon the Debtor and its successors and assigns and inure to the benefit of each Secured Party and its successors and assigns.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

  

7

  

 

(c) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California in all respects as such laws are applied to agreements among California residents entered into and performed entirely within California, without regard to the conflict of laws principles thereof.  Any legal proceeding brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts, located in San Diego or in the federal courts located in Los Angeles, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such courts. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such Service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. THE PARTIES TO THIS AGREEMENT HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY WITH RESPECT TO DISPUTES ARISING UNDER THIS AGREEMENT AND THE RELATED AGREEMENTS AND CONSENT TO A BENCH TRIAL WITH THE APPROPRIATE JUDGE ACTING AS THE FINDER OF FACT.

 

(d) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

 

(e) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

(f) Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Debtor or the Secured Party at their respective address set forth below or at such other address or electronic mail address as the Debtor or such Secured Party may designate by ten (10) days advance written notice to the other parties hereto.

 

To Secured Party:

 

Tangiers Investors, LP

c/o Robert Papiri

501 W Broadway, Suite 800

San Diego, CA 92101

Email: admin@tangierscapital.com

Facsimile: 619-566-2011

To Debtor:

North Bay Resources Inc.

2120 Bethel Road

Lansdale, PA 19446

Email:                                                      

Facsimile:                                               

 

  

8

  

 

(g) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith in order to maintain the economic position enjoyed by each party as close as possible to that under the provision rendered unenforceable.  In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

 

(h) Entire Agreement. This Agreement, and the documents referred to herein constitute the entire agreement between the parties hereto pertaining to the subject matter hereof as a complete and final integration hereof, and any and all other written or oral agreements existing between the parties hereto concerning such subject matter are expressly canceled.

 

The Debtor and Secured Parties have caused this Master Loan and Security Agreement to be duly executed and delivered as of the date first above written.

 

 

DEBTOR:

NORTH BAY RESOURCES INC.

By: /s/ Perry Leopold                                                              

Name: Perry Leopold

Title:  CEO

SECURED PARTY:

TANGIERS INVESTORS, LP a

Delaware limited partnership

 

 

By:/s/ Michael Sobeck___________________

Name: TANGIERS CAPITAL, LLC,

a Delaware limited liability company

Its: General Partner

 

  

9

  

 

EXHIBIT A

 

DESCRIPTION OF COLLATERAL

 

All undefined terms used in this Exhibit A shall have the meaning ascribed thereto in the Master Loan and Security Agreement to which this Exhbit A is attached.

 

The Collateral shall consist of all personal property of Debtor, whether presently existing or hereafter created, written, produced or acquired, including, but not limited to:

 

(a) All goods and equipment now owned or hereafter acquired, including without limitation, all machinery, equipment, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

 

(b) All inventory, now owned or hereafter acquired, including without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Debtor’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Debtor’s books relating to any of the foregoing;

 

(c) All contract rights and general intangibles now owned or hereafter acquired, including, without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, software, computer source code, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment of any kind;

 

(d) All now existing and hereafter arising accounts, accounts receivable, contract rights, royalties, license rights, mining rights, drilling rights, property leases, and all other forms of obligations and/or rights owing to Debtor arising out of the sale or lease of goods, or property, the licensing of technology or the rendering of services by Debtor, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Debtor and Debtor’s books relating to any of the foregoing;

 

(e) All documents, cash, deposit accounts, securities, letters of credit, certificates of deposit, instruments and chattel paper now owned or hereafter acquired and Debtor’s books relating to the foregoing;

 

(f) All patents and patent applications, domestic or foreign, including but not limited to patent rights, all licenses relating to any of the foregoing and all income and royalties with respect to any licenses, all rights to sue for past, present or future infringement thereof, all rights arising therefrom and pertaining thereto and all reissues, divisions, continuations, renewals, extensions and continuations in-part thereof; all copyrights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; all trade secret rights, including all rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or hereafter acquired; all mask work or similar rights available for the protection of semiconductor devices, now owned or hereafter acquired; all claims for damages by way of any past, present and future infringement of any of the foregoing;

 

  

A-1

  

 

(g) Any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof; and

 

(h) Without limiting any of the foregoing, the collateral shall also include all of the Debtor’s rights and interests in the following:

 

(i) The Debtor’s right and interests in (x) the joint venture known as the Ruby Gold JV created pursuant to that certain Joint Venture Agreement dated January 9, 2014, and entered into by and between the Debtor and Ruby Gold, Inc., a California corporation; (y) as the Fraser River Project located near Lytton, British Columbia; and (z) the Faser River Project JV; and

 

(iii)           All of the following mining properties:

 

	
Core Tenure #

	
Property Name

	
Location

	
Map Number

	
Good To Date

	
966629

	
MT WASHINGTON

	
Vancouver Island, BC

	
092F

	
2016/jul/18

	
603844

	
CORONATION

	
Slocan, BC

	
082F

	
2015/may/25

	
1016826

	
MONTE CRISTO

	
Lillooet River, BC

	
092G

	
2015/jan/09

	
575965

	
TULAMEEN PLATINUM

	
Tulameen, BC

	
092H

	
2016/jul/06

	
545980

	
FRASER RIVER PROJECT

	
Lytton, BC

	
092I

	
2022/feb/20

	
689765

	
ZEBALLOS GOLD

	
Vancouver Island, BC

	
092E

	
2016/jun/15

	
837557

	
RACHEL

	
Salmo, BC

	
082F

	
2015/feb/10

	
941210

	
GOLD HILL

	
Salmo. BC

	
082F

	
2015/mar/28

	
542206

	
WILLA

	
Slocan, BC

	
082F

	
2018/jan/30

	
1018506

	
CRESCENT REE

	
Crescent Valley, BC

	
082F

	
2018/apr/17

	
759842

	
CHERRY GOLD

	
Cherryville, BC

	
082L

	
2015/feb/17

	
938569

	
LYNX

	
Vernon, BC

	
082L

	
2015/feb/17

	
1026292

	
TOR

	
Tulameen, BC

	
092H

	
2015/feb/26

	
1018120

	
TRUAX

	
Gold Bridge, BC

	
092J

	
2015/mar/28

	
992322

	
LOUGHBOROUGH GOLD

	
Loughborough Inlet, BC

	
092K

	
2015/jun/01

	
1021498

	
PINNACLE GOLD

	
Pilldolla Creek, BC

	
092K

	
2015/feb/06

	
611903

	
LANCERS MOUNTAIN

	
Lancers Mountain, BC

	
092N

	
2015/jan/25

	
695204

	
ARGO GOLD

	
Tatlayako Lake, BC

	
092N

	
2015/jan/06

	
623083

	
PINE VANADIUM

	
Pine River Valley, BC

	
093O

	
2015/feb/23

	
674404

	
ZIPPA MTN

	
Iskut, BC

	
104B

	
2015/jan/05

	
843389

	
NEW ESKAY CREEK

	
Eskay Creek, BC

	
104B

	
2015/jan/03

 

provided however, that notwithstanding the foregoing, the Collateral shall not include (i) any of the equipment or property located at the Debtor’s offices and leased premises, which property and equipment is owned by the owner of the leased premises, (ii) any intent-to-use United States trademark application for which an amendment to allege use or statement of use has not been filed and accepted by the United States Patent and Trademark Office (provided that each such intent-to-use application shall be considered Collateral immediately and automatically upon such filing and acceptance), or (iii) any contract, license, permit or other general intangible which by its terms cannot be pledged, transferred or assigned, or to the extent that granting a security interest therein would result in a breach or default under the contract, license, permit or general intangible (in each case after giving effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the Uniform Commercial Code (or any successor provision or provisions) or any other applicable law).

 

  

A-2

  

EXHIBIT B

 

Permitted Liens

 

 

1.           Mortgage granted against the Ruby Mine in favor of Ruby Development Company, a California partnership.

 

 

 

 

  

B-1

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