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CBST > SEC Filings for CBST > Form 8-K on 27-Nov-2012All Recent SEC Filings




Entry into a Material Definitive Agreement, Creation of a Direct Finan

Item 1.01 Entry into a Material Definitive Agreement.

On November 20, 2012, Cubist Pharmaceuticals, Inc., a Delaware corporation (the "Company") entered into a credit agreement, by and among the Company, the lenders from time to time party thereto and Royal Bank of Canada as Administrative Agent (the "Credit Agreement"). The Credit Agreement, together with related security, guarantee and other agreements, is referred to as the "Credit Facility".

The Credit Facility provides for a three-year senior secured revolving credit facility of up to $150.0 million, including a sublimit for letters of credit. The obligations of the Company under the Credit Facility are guaranteed by the Company's existing and future domestic subsidiaries and are secured by substantially all of the assets of the Company and its subsidiary guarantors. The Credit Agreement contains affirmative and negative covenants that the Company believes are usual and customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on capital expenditures, asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the Company's affiliates. The Credit Agreement also requires the Company to maintain a maximum leverage ratio and minimum interest coverage ratio.

Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the Company's option, either (a) a base rate determined by reference to the highest of (1) the prime rate of Royal Bank of Canada, (2) the federal funds effective rate plus 0.50% and (3) a Eurodollar rate determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (b) a Eurodollar rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, in each case plus an applicable margin. The applicable margin varies based on the rate selected by the Company above and the Company's Total Leverage Ratio, as defined in the Credit Agreement. The applicable margin ranges from 2.25% to 2.75% for the Eurodollar rate and 1.25% to 1.75% for the base rate. During the continuance of an event of default, amounts owing under the Credit Facility will bear interest at a rate per annum equal to the rate otherwise applicable thereto plus an additional 2.0%.

In addition to paying interest on outstanding principal under the Credit Facility, the Company is required to pay a commitment fee in respect of the unutilized commitments thereunder of between 0.375% and 0.5% per annum based on the Company's Total Leverage Ratio.

This description is a summary and is qualified in its entirety by reference to the full text of the Credit Agreement, which will be filed with the Securities and Exchange Commission as an exhibit to the Company's Annual Report on Form 10-K for the period ending on December 31, 2012.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

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