CUBIST PHARMACEUTICALS INC
EXHIBIT 10.63
<DOCUMENT>
<TYPE>EX-10.63
<SEQUENCE>16
<FILENAME>a2042768zex-10_63.txt
<DESCRIPTION>EXHIBIT 10.63
<TEXT>

<PAGE>


                                                                   EXHIBIT 10.63


                             CONFIDENTIAL TREATMENT


       THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
SECURITY UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.


                          CUBIST PHARMACEUTICALS, INC.

               8.5% SENIOR CONVERTIBLE NOTE DUE SEPTEMBER 8, 2005

No. R-2                                                        September 8, 2000
$2,000,000

PPN 229678 A*

CUBIST PHARMACEUTICALS, INC., a corporation duly organized and existing under
the laws of Delaware (the "Company") for value received, hereby promises to pay
to JOHN HANCOCK LIFE INSURANCE COMPANY, or registered assigns, the principal sum
of Two Million Dollars ($2,000,000) on September 8, 2005 and to pay interest
thereon from the date hereof until this security (this "Security") together with
all other amounts due under the Operative Documents have been paid in full,
semi-annually on March 31 and September 31 in each year, commencing March 31,
2001, at the rate of 8.5% per annum, until the principal hereof is due, and at
the rate of 10.5% per annum on any overdue principal and premium, if any, and,
to the extent permitted by law, on any overdue interest. The interest so
payable, and punctually paid or duly provided for, on any interest payment date
will be paid to the person in whose name this Security (or one or more
predecessor securities) is registered at the close of business on the regular
record date for such interest, which shall be the March 1 or September 1
(whether or not a Business Day), as the case may be, next preceding such
interest payment date. Payment of the principal of (and premium, if any, on)
this Security shall be made upon the surrender of this Security to the Company,
at its office at 24 Emily Street, Cambridge, Massachusetts 02139 (or such other
office within the United States as shall be notified by the Company to the
holder hereof) (the "Designated Office"), in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, by transfer to a U.S. dollar account
maintained by the payee with a bank in the United States of America. Payment of
interest on this

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


Security shall be made by wire transfer to a U.S. dollar account maintained by
the payee with a bank in the United States of America, provided that if the
holder shall not have furnished wire instructions in -writing to the Company no
later than the record date relating to an interest payment date, such payment
may be made by U.S. dollar check mailed to the address of the person entitled
thereto as such address shall appear in the Company security register. This
Security will rank pari passu with all existing and future senior debt of the
Company.

       This Security is one of the Company's 8.5% Senior Convertible Notes due
September 8, 2005, limited to $39,000,000 aggregate principal amount, issued
pursuant to that certain Note Purchase Agreement dated September 8, 2000 (such
agreement, as amended, modified and supplemented from time to time, the "Note
Purchase Agreement") between the Company and the institutional investors named
therein, and the holder hereof is entitled to the benefits of the Note Purchase
Agreement, and may enforce the agreements contained herein and therein and
exercise the remedies provided for hereby and thereby or otherwise available in
respect hereof and thereof, all in accordance with the terms hereof and thereof.

       1. OPTIONAL REDEMPTION WITH PREMIUM. This Security is subject to
redemption upon not less than 30 nor more than 60 days' notice by mail, at any
time on or after September 8, 2003, as a whole or in part, (in any amount that
is an integral multiple of $1,000) at the election of the Company, at a
redemption price, paid in cash, of 103% of the principal amount thereof,
together with accrued interest to the redemption date, but interest installments
whose stated maturity is on or prior to such redemption date will be payable to
the holder of this Security, or one or more predecessor Securities, of record at
the close of business on the relevant record dates referred to on the face
hereof. The term "Conversion Price" on any day shall equal $1,000 divided by the
Conversion Rate in effect on each such day.

       2. Conversion.

            (a) The holder of this Security is entitled at any time that this
       Security is outstanding (or, in case this Security or a portion hereof is
       called for redemption or the holder hereof has exercised its right to
       require the Company to repurchase this Security or a portion hereof, then
       in respect of this Security or such portion hereof, as the case may be,
       until and including, but (unless the Company defaults in making the
       payment due upon redemption or repurchase, as the case may be) not after,
       the close of business on the redemption date or the Repurchase Date, as
       the case may be) to convert the outstanding principal amount of this
       Security (or any portion of the outstanding principal amount hereof that
       is an integral multiple of $1,000), into fully paid and nonassessable
       shares (calculated as to each conversion to the nearest 1/100 of a share)
       of Common Stock of the Company at the rate of one (1) share of Common
       Stock for each $63.8625 principal amount of Security (or at the current
       adjusted rate if an adjustment has been made as provided below) (the
       "Conversion Rate") by surrender of this Security, to the attorneys for
       the

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       Company at the office for the attorneys for the Company designated in
       writing and provided to the holder, accompanied by written notice to the
       Company that the holder hereof elects to convert this Security (or if
       less than the entire principal amount hereof is to be converted,
       specifying the portion hereof to be converted). Upon surrender of this
       Security for conversion, the holder will be entitled to receive the
       interest accruing on the principal amount of this Security then being
       converted from the interest payment date next preceding the date of such
       conversion to such date of conversion. No adjustment to the Conversion
       Rate is to be made on conversion for dividends on the Common Stock issued
       on conversion hereof. No fractions of shares or scrip representing
       fractions of shares will be issued on conversion, but instead of any
       fractional interest, the Company shall pay a cash adjustment, computed on
       the basis of the Closing Price of the Common Stock on the date of
       conversion, or, at its option, the Company shall round up to the next
       higher whole share. This Security shall be deemed to have been converted
       immediately prior to the close of business on the day of surrender hereof
       for conversion, in accordance with the foregoing provisions, and at such
       time the rights of the holder hereof, as a holder hereof, shall cease,
       and the person or persons entitled to receive the Common Stock issuable
       on conversion shall be treated by all Persons as the holder or holders of
       such Common Stock at such time. Upon any partial conversion of this
       Security, the Company, at its expense, will forthwith issue and deliver
       to, or upon the order of the holder hereof, a new Convertible Note or
       Convertible Notes in principal amount equal to the unconverted principal
       amount of such surrendered Convertible Note, such new Convertible Note or
       Convertible Notes to be dated and to bear interest from the date to which
       interest has been paid on such surrendered Convertible Note.

            As promptly as possible after the conversion of this Security, in
       whole or in part, and in any event within two (2) Business Days
       thereafter, the Company, at its expense, will issue and deliver a
       certificate or certificates, or if so requested in writing by the holder
       will enter or cause to be entered electronically by book entry such
       shares on the electronic system designated by the holder for the number
       of full shares of Common Stock issuable upon such conversion.

            (b) The Conversion Rate shall be subject to adjustments from time to
       time as follows:

                 (1) In case the Company shall pay or make a dividend or other
            distribution on any class of capital stock of the Company payable in
            shares of Common Stock, the Conversion Rate in effect at the opening
            of business on the day following the Determination Date for such
            dividend or other distribution shall be increased by dividing such
            Conversion Rate by a fraction of which the numerator shall be the
            number of shares of Common Stock outstanding at the close of
            business on such Determination Date and the denominator shall be the
            sum of such number of shares and the total number of shares
            constituting such dividend or other distribution, such increase to
            become effective immediately after the opening of

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            business on the day following such Determination Date. For the
            purposes of this paragraph (1), the number of shares of Common Stock
            at any .time outstanding shall not include shares held in the
            treasury of the Company but shall include shares issuable in respect
            of scrip certificates issued in lieu of fractions of shares of
            Common Stock. The Company will not pay any dividend or make any
            distribution on shares of Common Stock held in the treasury of the
            Company.

                 (2) Subject to the last sentence of paragraph (7) of this
            Section 2(b) and the last sentence of this paragraph 2(b)(2), in
            case the Company shall issue rights, options, warrants or
            convertible securities entitling the holders thereof to subscribe
            for or purchase shares of Common Stock at a price per share less
            than the current market price per share (determined as provided in
            paragraph (8) of this Section 2(b)) of the Common Stock on the
            Determination Date for such distribution, the Conversion Rate in
            effect at the opening of business on the day following such
            Determination Date shall be increased by dividing such Conversion
            Rate by a fraction of which the numerator shall be the number of
            shares of Common Stock outstanding at the close of business on such
            Determination Date plus the number of shares of Common Stock which
            the aggregate amount received by the Company upon the issuance of
            such rights, options, warrants or convertible securities of the
            offering price of the total number of shares of Common Stock so
            offered for subscription or purchase would -purchase at such current
            market price and the denominator shall be the number of shares of
            Common Stock outstanding at the close of business on such
            Determination Date plus the number of shares of Common Stock so
            offered for subscription or purchase, such increase to become
            effective immediately after the opening of business on the day
            following such Determination Date. For the purposes of this
            paragraph (2), the number of shares of Common Stock at any time
            outstanding shall not include shares held in the treasury of the
            Company but shall include shares issuable in respect of scrip
            certificates issued in lieu of fractions of shares of Common Stock.
            The Company will not issue any rights, options, warrants or
            convertible securities in respect of shares of Common Stock held in
            the treasury of the Company. Anything in this paragraph 2(b)(2) to
            the contrary notwithstanding, no adjustment to the Conversion Price
            shall be made, (i) in the case of the issuance of shares of Common
            Stock in a PIPE Transaction PROVIDED that the price per share for
            the shares of Common Stock issued or to be issued in connection with
            each PIPE Transaction is at least [ ]*% of the market price per
            share on the date such shares are issued or (ii) in connection with
            the acquisition of TerraGen Discovery, Inc. in accordance with the
            disclosure in the Note Purchase Agreement.

                 (3) In case outstanding shares of Common Stock shall each be
            subdivided into a greater number of shares of Common Stock, the
            Conversion Rate in effect at the opening of business on the day
            following

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            the day upon which such subdivision becomes effective shall be
            proportionately increased, and, conversely, in case outstanding
            shares of Common Stock shall each be combined into a smaller number
            of shares of Common Stock, the Conversion Rate in effect at the
            opening of business on the day following the day upon which such
            combination becomes effective shall be proportionately reduced, such
            increase or reduction, as the case may be, to become effective
            immediately after the opening of business on the day following the
            day upon which such subdivision or combination becomes effective.

                 (4) Subject to the last sentence of paragraph (7) of this
            Section 2(b), in case the Company shall, by dividend or otherwise,
            distribute evidences of its indebtedness, shares of any class of
            capital stock, or other property (including securities, but
            excluding (i) any rights, options, warrants or convertible security
            referred to in paragraph (2) of this Section 2(b), (ii) any dividend
            or distribution paid exclusively in cash, (iii) any dividend or
            distribution referred to in paragraph (1) of this Section 2(b) and
            (iv) any merger or consolidation to which Section 2(h) applies), the
            Conversion Rate shall be adjusted so that the same shall equal the
            rate determined by dividing the Conversion Rate in effect
            immediately prior to the close of business on the Determination Date
            for such distribution by a fraction of which the numerator shall be
            the current market price per share (determined as provided in
            paragraph (8) of this Section 2(b)) of the Common Stock on such
            Determination Date less the then fair market value (as determined in
            good faith by the Board of Directors of the Company) of the portion
            of the assets, shares or evidences of indebtedness so distributed
            applicable to one share of Common Stock and the denominator shall be
            such current market price per share of the Common Stock, such
            adjustment to become effective immediately prior to the opening of
            business on the day following such Determination Date. If the Board
            of Directors determines the fair market value of any distribution
            for purposes of this paragraph (4) by reference to the actual or
            when issued trading market for any securities comprising such
            distribution, it must in doing so consider the prices in such market
            over the same period used in computing the current market price per
            share pursuant to paragraph (8) of this Section 2(b).

                 (5) In case the Company shall, by dividend or otherwise, make a
            Cash Distribution, then, and in each such case, immediately after
            the close of business on the Determination Date for such Cash
            Distribution, the Conversion Rate shall be adjusted so that the same
            shall equal the rate determined by dividing the Conversion Rate in
            effect immediately prior to the close of business on such
            Determination Date by a fraction (a) the numerator of which shall be
            equal to the current market price per share (determined as provided
            in paragraph (8) of this Section 2(b)) of the Common Stock on such
            Determination Date less an amount equal to the

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            quotient of (1) the amount of such Cash Distribution divided by (2)
            the number of shares of Common Stock outstanding on such
            Determination Date, and (b) the denominator of which shall be equal
            to the current market price per share (determined as provided in
            paragraph (8) of this Section 2(b)) of the Common Stock on such
            Determination Date.

                 (6) In case the Company or any Subsidiary shall make an Excess
            Purchase Payment, then, and in each such case, immediately prior to
            the opening of business on the day after the tender offer in respect
            of which such Excess Purchase Payment is to be made expires, the
            Conversion Rate shall be adjusted so that the same shall equal the
            rate determined by dividing the Conversion Rate in effect
            immediately prior to the close of business on the Determination Date
            for such tender offer by a fraction (a) the numerator of which shall
            be equal to the current market price per share (determined as
            provided in paragraph (8) of this Section 2(b)) of the Common Stock
            on such Determination Date less an amount equal to the quotient of
            (A) the Excess Purchase Payment divided by (B) the number of shares
            of Common Stock outstanding (including any tendered shares) as of
            the Determination Date less the number of all shares validly
            tendered and not withdrawn as of the Determination Date and (b) the
            denominator of which shall be equal to the current market price per
            share (determined as provided in paragraph (8) of this Section 2(b))
            of the Common Stock as of such Determination Date.

                 (7) The reclassification of Common Stock into securities other
            than Common Stock (other than any reclassification upon a
            consolidation or merger to which Section 2(h) applies) shall be
            deemed to involve (a) a distribution of such securities other than
            Common Stock to all holders of Common Stock (and the effective date
            of such reclassification shall be deemed to be the Determination
            Date), and (b) a subdivision or combination, as the case may be, of
            the number of shares of Common Stock outstanding immediately prior
            to such reclassification into the number of shares of Common Stock
            outstanding immediately thereafter (and the effective date of such
            reclassification shall be deemed to be "the day upon which such
            subdivision becomes effective" or "the day upon which such
            combination becomes effective", as the case may be, and "the day
            upon which such subdivision or combination becomes effective" within
            the meaning of paragraph (3) of this Section 2(b). Rights, options,
            warrants or convertible securities issued by the Company entitling
            the holders thereof to subscribe for or purchase shares of Common
            Stock, which rights, options, warrants or convertible securities (i)
            are deemed to be transferred with such shares of Common Stock, (ii)
            are not exercisable and (iii) are also issued in respect of future
            issuances of Common Stock, in each case in clauses (i) through (iii)
            until the occurrence of a specified event or events ("Trigger
            Event"), shall for purposes of this Section 2(b) not be deemed
            issued until the occurrence of the earliest Trigger Event.

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


                 (8) For the purpose of any computation under paragraphs (2),
            (4), (5) or (6) of this Section 2(b) the current market price per
            share of Common Stock on any date shall be calculated by the Company
            and be deemed to be the average of the daily Closing Prices for the
            five (5) consecutive Trading Days selected by the Company commencing
            not more than ten (10) Trading Days before, and ending not later
            than, the earlier of the day in question and the day before the "ex
            date" with respect to the issuance or distribution requiring such
            computation PROVIDED that in the event the Company shall issue
            rights, options, warrants or convertible securities giving the
            holders thereof the right to receive shares of Common Stock at a
            price equal to the closing price on the date that such securities
            are issued under (i) any management or employee stock option plan or
            other equity incentive plan approved by the Board of Directors of
            the Company or (ii) in connection with a corporate acquisition
            transaction (such as the TerraGen Discovery, Inc. transaction)
            approved by the Board of Directors of the Company, then for purposes
            of paragraph (2) above, the market price shall equal the closing
            price on the Trading Day such securities are issued. For purposes of
            this paragraph, the term "ex date", when used with respect to any
            issuance or distribution, means the first date on which the Common
            Stock trades regular way in the applicable securities market or on
            the applicable securities exchange without the right to receive such
            issuance or distribution.

                 (9) No adjustment in the Conversion Rate shall be required
            unless such adjustment (plus any adjustments not previously made by
            reason of this paragraph (9)) would require an increase or decrease
            of at least one percent in such rate; PROVIDED, HOWEVER, that any
            adjustments which by reason of this paragraph (9) are not required
            to be made shall be carried forward and taken into account in any
            subsequent adjustment. All calculations under this Section 2 shall
            be made to the nearest cent or to the nearest one-hundredth of a
            share, as the case may be.

                 (10) The Company may make such increases in the Conversion
            Rate, for the remaining term of the Securities or any shorter term,
            in addition to those required by paragraphs (1), (2), (3), (4), (5)
            and (6) of this Section 2(b) as it considers to be advisable in
            order to avoid or diminish any income tax to any holders of shares
            of Common Stock resulting from any dividend or distribution of stock
            or issuance of rights, options, warrants or convertible securities
            to purchase or subscribe for stock or from any event treated as such
            for income tax purposes.

            (c) Whenever the Conversion Rate is adjusted as provided in Section
       2(b), the Company shall compute the adjusted Conversion Rate in
       accordance with Section 2(b) and shall prepare a certificate signed by
       the Senior Financial Officer of the Company setting forth the adjusted
       Conversion Rate and showing in reasonable detail the facts upon which
       such adjustment is based, and shall

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       promptly deliver such certificate to the holder of this Security. If the
       Majority Convertible Note Holders and the Company cannot agree in writing
       as to the adjusted Conversion Rate in accordance with Section 2(b), the
       holders of the Convertible Notes and the Company shall determine the
       adjusted Conversion Rate in accordance with the following procedure. The
       Majority Convertible Note Holders and the Company shall each appoint one
       registered securities broker, licensed with the Securities and Exchange
       commission to sell securities to the public, which broker shall be a
       senior vice president, managing director or equivalent of a major
       securities brokerage company with offices in Boston, Massachusetts. Each
       of such brokers shall have no less than ten (10) years experience in such
       field, shall be unaffiliated with, and their employer securities
       brokerage company shall be unaffiliated with, the holders of the
       Convertible Notes and the Company and shall not have previously
       participated in any underwriting of the Company's Common Stock in any
       public offering or provided any material investment banking or corporate
       advisory services to the Company. The Majority Convertible Note Holders
       and the Company shall make their appointments promptly and, in any event,
       within thirty (30) days from the date of the Conversion Rate Certificate.
       The two brokers shall meet in person or have a meeting by telephone and
       shall be instructed to render a determination of the adjusted Conversion
       Rate to the holders of the Convertible Notes and the Company within sixty
       (60) days of the date of the Conversion Rate Certificate. If the two
       brokers cannot agree, then each broker shall render their independent
       determination and the two brokers shall simultaneously therewith provide
       the name of a third broker acceptable to the two brokers meeting the
       criteria set forth above. The third broker shall be instructed to render
       a determination of the adjusted Conversion Rate within thirty (30) days
       of his or her appointment. The two closest determinations of the adjusted
       Conversion Rate shall be averaged and shall constitute the adjusted
       Conversion Rate. If the two brokers cannot agree upon a third broker, the
       selection of a third broker shall be submitted to binding arbitration in
       Boston, Massachusetts under the rules of the American Arbitration
       Association. In the event that the difference between the Company's
       calculation of the adjusted Conversion Rate and the calculation of the
       adjusted Conversion Rate determined by the foregoing process is five
       percent (5%) or greater then the costs and expenses of the . brokers and
       any arbitration shall be paid by and be the obligation of the Company and
       in the event that such difference is less than five percent (5%) then the
       costs and expenses of the brokers and any arbitration shall be paid by
       the holders of the Convertible Notes (as a group on a pro rata basis).

            (d) In case:

                 (1) the Company shall declare a dividend or other distribution
            on its Common Stock payable (i) otherwise than exclusively in cash
            or (ii) exclusively in cash in an amount that would require any
            adjustment pursuant to Section 2(b); or

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


                 (2) the Company shall authorize the granting to the holders of
            its Common Stock of rights, options, warrants or convertible
            securities to subscribe for or purchase any shares of capital stock
            of any class or of any other rights; or

                 (3) of any reclassification of the Common Stock of the Company,
            or of any consolidation, merger or share exchange to which the
            Company is a party and for which approval of any shareholders of the
            Company is required, or of the conveyance, sale, transfer or lease
            of all or substantially all of the assets of the Company; or

                 (4) of the voluntary or involuntary dissolution, liquidation or
            winding up of the Company; or

                 (5) the Company or any Subsidiary shall commence a tender offer
            for all or a portion of the Company's outstanding shares of Common
            Stock (or shall amend any such tender offer);

       then the Company shall cause to be delivered to the holder of this
       Security, at least twenty (20) days (or ten (10) days in any case
       specified in clause (1) or (2) above) prior to the applicable record,
       expiration or effective date hereinafter specified, a notice stating (x)
       the date on which a record is to be taken for the purpose of such
       dividend, distribution, rights, options, warrants or convertible
       securities or, if a record is not to be taken, the date as of which the
       holders of Common Stock of record to be entitled to such dividend,
       distribution, rights, options, warrants or convertible securities are to
       be determined, (y) the date on which the right to make tenders under such
       tender offer expires or (z) the date on which such reclassification,
       consolidation, merger, share exchange, conveyance, transfer, sale, lease,
       dissolution, liquidation or winding up is expected to become effective,
       and the date as of which it is expected that holders of Common Stock of
       record shall be entitled to exchange their shares of Common Stock for
       securities, cash or other property deliverable upon such
       reclassification, consolidation, merger, share exchange, conveyance,
       transfer, sale, lease, dissolution, liquidation or winding up. Neither
       the failure to give such notice nor any defect therein shall affect the
       legality or validity of the proceedings described in clauses (1) through
       (5) of this Section 2(d).

            (e) The Company shall at all times reserve and keep available, free
       from preemptive rights, out of its authorized but unissued Common Stock,
       for the purpose of effecting the conversion of the Security, the full
       number of shares of Common Stock then issuable upon the conversion of
       this Security.

            (f) Except as provided in the next sentence, the Company will pay
       any and all taxes and duties that may be payable in respect of the issue
       or delivery of shares of Common Stock on conversion of this Security. The
       Company shall not, however, be required to pay any tax or duty which may
       be payable in respect of

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       any transfer involved in the issue and delivery of shares of Common Stock
       in a name other than that of the holder of this Security, and no such
       issue or delivery shall be made unless and until the person requesting
       such issue has paid to the Company the amount of any such tax or duty, or
       has established to the satisfaction of the Company that such tax or duty
       has been paid.

            (g) The Company agrees that all shares of Common Stock which may be
       delivered by actual certificates or by electronic book entry upon
       conversion of the Security, upon such delivery, will have been duly
       authorized and validly issued and will be fully paid and nonassessable
       (and shall be issued out of the Company's authorized but unissued Common
       Stock) and, except as provided in the second sentence of Section 2(f),
       the Company will pay all taxes, liens and charges with respect to the
       issue thereof.

            (h) In case of any consolidation of the Company with any other
       person, any merger of the Company into another person or of another
       person into the Company (other than a merger which does not result in any
       reclassification, conversion, exchange or cancellation of outstanding
       shares of Common Stock of the Company) or any conveyance, sale, transfer
       or lease of all or substantially all of the properties and assets of the
       Company, the person formed by such consolidation or resulting from such
       merger or which acquires such properties and assets, as the case may be,
       shall execute and deliver to the holder of this Security a supplemental
       agreement providing that such holder has the right, during the period
       this Security shall be convertible as specified in Section 2(a), to
       convert this Security only into the kind and amount of securities, cash
       and other property receivable upon such consolidation, merger,
       conveyance, sale, transfer or lease (including any Common Stock
       retainable) by a holder of the number of shares of Common Stock of the
       Company into which this Security might have been converted immediately
       prior to such consolidation, merger, conveyance, sale, transfer or lease,
       assuming such holder of Common Stock of the Company (1) is not a person
       with which the Company consolidated, into which the Company merged or
       which merged into the Company or to which such conveyance, sale, transfer
       or lease was made, as the case may be (a "Constituent Person"), or an
       Affiliate of a Constituent Person and (2) failed to exercise his rights
       of election, if any, as to the kind or amount of securities, cash and
       other property receivable upon such consolidation, merger, conveyance,
       sale, transfer or lease (PROVIDED that if the kind or amount of
       securities, cash and other property receivable upon such consolidation,
       merger, conveyance, sale, transfer, or lease is not the same for each
       share of Common Stock of the Company held immediately prior to such
       consolidation, merger, conveyance, sale, transfer or lease by others than
       a Constituent Person or an Affiliate thereof and in respect of which such
       rights of election shall not have been exercised ("Non-electing Share"),
       then for the purpose of this Section 2(h) the kind and amount of
       securities, cash and other property receivable upon such consolidation,
       merger, conveyance, sale, transfer or lease by the holders of each
       Non-electing Share shall be deemed to be the kind and amount so
       receivable per share by a plurality of the Nonelecting Shares).

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       Such supplemental agreement shall provide for adjustments which, for
       events subsequent to the effective date of such supplemental agreement,
       shall be as nearly equivalent as may be practicable to the adjustments
       provided for in this Section 2. The above provisions of this Section 2(h)
       shall similarly apply to successive consolidations, mergers, conveyances,
       sales, transfers or leases. In this paragraph, "securities of the kind
       receivable" upon such consolidation, merger, conveyance, transfer, sale
       or lease by a holder of Common Stock means securities that, among other
       things, are registered and transferable under the Securities Act, and
       listed and approved for quotation in all securities markets, in each case
       to the same extent as such securities so receivable by a holder of Common
       Stock.

            (i) The Company (1) will effect all registrations with, and obtain
       all approvals by, all governmental authorities that may be necessary
       under any United States Federal or state law (including the Securities
       Act, the Exchange Act and state securities and Blue Sky laws) for the
       shares of Common Stock issuable upon conversion of this Security to be
       lawfully issued and delivered as provided herein, and thereafter publicly
       traded (if permissible under the Securities Act) and qualified or listed
       as contemplated by clause (2) (it being understood that the Company shall
       not be required to register the Common Stock issuable on conversion
       hereof under the Securities Act, except pursuant to the Registration
       Rights Agreement between the Company and the Purchasers (as defined in
       the Note Purchase Agreement), subject to the transfer restriction set
       forth in Section 6; and (2) will list the shares of Common Stock required
       to be issued and delivered upon conversion of Securities, prior to such
       issuance or delivery, on each national securities exchange on which
       outstanding Common Stock is listed or quoted at the time of such
       delivery, or if the Common Stock is not then listed on any securities
       exchange, to qualify the Common Stock for quotation on the Nasdaq
       National Market or such other interdealer quotation system, if any, on
       which the Common Stock is then quoted.

            (j) For purposes hereof: (references to Sections shall mean Sections
       of this Security unless otherwise specified)

            "AFFILIATE" of any specified person means any other person directly
       or indirectly controlling or controlled by or under direct or indirect
       common control with such specified person. For the purposes of this
       definition, "control", when used with respect to any specified person,
       means the power to direct the management and policies of such person,
       directly or indirectly, whether through the ownership of voting
       securities, by contract or otherwise; and the terms "controlling" and
       "controlled" have meanings correlative to the foregoing.

            "ASSIGNMENT OF LEASES AND RENTS" shall mean the Assignment of Leases
       and Rents dated September 8, 2000 made by the Company in favor of the
       Trustee.

            "BUSINESS DAY" means any day other than a Saturday, a Sunday or
       other day which shall be in Boston, Massachusetts on a legal holiday or a
       day on which

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       commercial banks in Boston, Massachusetts are required or authorized to
       be closed.

            "CASH DISTRIBUTION" means the distribution by the Company to holders
       of its Common Stock of cash, other than any cash that is distributed upon
       a merger or consolidation to which Section 2(h) applies or as part of a
       distribution referred to in paragraph (4) of Section 2(b).

            "CHANGE OF CONTROL" is defined in Section 3(f)(2).

            "CLOSING" is defined in Section 1 of the Note Purchase Agreement.

            "CLOSING PRICE" means, with respect to the Common Stock of the
       Company, for any day, the reported closing sale price per share on the
       Nasdaq National Market, or, if no closing price is so reported, the last
       sale price per share on the Nasdaq National Market, or, if the Common
       Stock is not admitted to trading on the Nasdaq National Market on the
       principal national securities exchange or inter-dealer quotation system
       on which the Common Stock is listed or admitted to trading, or if not
       admitted to trading on the Nasdaq National Market or listed or admitted
       to trading on any national securities exchange or inter-dealer quotation
       system, the average of the closing bid and asked prices per share in the
       over-the-counter market as furnished by any New York Stock Exchange
       member firm selected from time to time by the Company for that purpose.

            "CODE" means the Internal Revenue Code of 1986, as amended from time
       to time, and the rules and regulations promulgated thereunder from time
       to time.

            "COMMON STOCK" means the Common Stock, par value $.01 per share, of
       the Company authorized at the date of this instrument as originally
       executed. Subject to the provisions of Section 2(h), shares issuable on
       conversion or repurchase of this Security shall include only shares of
       Common Stock or shares of any class or classes of common stock resulting
       from any reclassification or reclassifications thereof; PROVIDED,
       HOWEVER, that if at any time there shall be more than one such resulting
       class, the shares so issuable on conversion of this Security shall
       include shares of all such classes, and the shares of each such class
       then so issuable shall be substantially in the proportion which the total
       number of shares of such class resulting from all such reclassifications
       bears to the total number of shares of all such classes resulting from
       all such reclassifications.

            "CONVERTIBLE NOTES" shall mean one or more of the Company's 8.5%
       Senior Convertible Notes due September 8, 2005.

            "CONVERSION PRICE" is defined in Section 1.

            "CONVERSION RATE" is defined in Section 2(a).

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            "DEFAULT" means an event or condition the occurrence or existence of
       which would, with the lapse of time or the giving of notice or both,
       become an Event of Default.

            "DESIGNATED OFFICE" is defined in the Preamble.

            "DETERMINATION DATE" means, in the case of a dividend or other
       distribution, including the issuance of rights, options, warrants or
       convertible securities, to shareholders, the date fixed for the
       determination of shareholders entitled to receive such dividend or other
       distribution and, in the case of a tender offer, the last time that
       tenders could have been made pursuant to such tender offer, provided that
       if no date is fixed for the determination of holders entitled to receive
       such rights, options, warrants or convertible securities, then the
       Determination Date shall be the date of issuance of such rights, options,
       warrants or convertible securities.

            "ENVIRONMENTAL INDEMNITY" shall mean that Environmental Indemnity
       Agreement dated September 8, 2000 made by the Company in favor of the
       Trustee and the holders.

            "ENVIRONMENTAL LAWS" means any and all Federal, state and local
       laws, regulations, ordinances, rules, judgments, orders, decrees,
       permits, concessions, grants, franchises, licenses, agreements or
       governmental restrictions relating to pollution and the protection of the
       environment or the release of any materials into the environment,
       including but not limited to those related to hazardous substances or
       wastes, air emissions and discharges to waste or public systems.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
       as amended from time to time, and the rules and regulations promulgated
       thereunder from time to time in effect.

            "ERISA AFFILIATE" means any trade or business (whether or not
       incorporated) that is treated as a single employer together with the
       Company under section 414 of the Code.

            "EXCESS PURCHASE PAYMENT" means the product of (1) the excess, if
       any, of (a) the amount of cash plus the fair market value (as determined
       in good faith by the Company's Board of Directors) of any non-cash
       consideration required to be paid with respect to one share of Common
       Stock acquired or to be acquired in a tender offer made by the Company or
       any Subsidiary of the Company for all or any portion of the Common Stock
       over (b) the current market price per share as of the last time that
       tenders could have been made pursuant to such tender offer and (2) the
       number of shares validly tendered and not withdrawn as of the
       Determination Date in respect of such tender offer.

            "EVENT OF DEFAULT" is defined in the preamble to Section 4.

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
       amended, or any successor Federal statute, and the rules and regulations
       of the Securities and Exchange Commission promulgated thereunder, all as
       the same shall be in effect from time to time.

            "GAAP" means generally accepted accounting principles as in effect
       from time to time in the United States of America.

            "HOLDERS " means, with respect to this Security or any other
       Convertible Note, the Person in whose name it is registered in the
       register to be maintained by the Company pursuant to Section 6(d).

            "LIEN" means, with respect to any Person, any mortgage, lien,
       pledge, charge, security interest or other encumbrance, or any interest
       or title of any vendor, lessor, lender or other secured party to or of
       such Person under any conditional sale or other title retention agreement
       or capital lease (as such term is defined by GAAP), upon or with respect
       to any property or asset of such Person (including in the case of stock,
       stockholder agreements, voting trust agreements and all similar
       arrangements).

            "MAJORITY CONVERTIBLE NOTE HOLDERS", as applied to describe the
       requisite holder or holders of the Convertible Notes, shall mean, at any
       date, the holder or holders of 66-2/3% or more in interest in the
       Convertible Notes at the time outstanding (excluding Convertible Notes at
       the time owned by the Company or any Affiliate of the Company).

            "MAKE-WHOLE AMOUNT" is defined in Section 4(g).

            "MATERIAL" means material in relation to the business, operations,
       affairs, financial condition, assets, properties, or prospects of the
       Company and its Subsidiaries taken as a whole.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on (A) the
       business, operations, affairs, financial condition, assets, properties or
       prospects of the Company and its Subsidiaries taken as a whole, or (B)
       the ability of the Company to perform its obligations under the Note
       Purchase Agreement, the Registration Rights Agreement and the Convertible
       Notes, or (C) the validity or enforceability of the Note Purchase
       Agreement or the Convertible Notes.

            "MORTGAGE" shall mean shall mean the Mortgage, Assignment of Leases
       and Rents and Security Agreement dated September8, 2000 made by the
       Company in favor of the Trustee.

            "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan"
       (as such term is defined in section 4001(a)(3) of ERISA).

            "NOTE PURCHASE AGREEMENT" is defined in the Preamble.

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            "OPERATIVE DOCUMENTS" shall mean the Convertible Notes, the Note
       Purchase Agreement, the Registration Rights Agreement, the Mortgage, the
       Assignment of Leases and Rents, the Trust Agreement, the Environmental
       Indemnity, and each of the other agreements, documents and instruments
       executed in connection herewith and therewith, each as it may from time
       to time be amended, modified or supplemented.

            "PBGC" means the Pension Benefit Guaranty Corporation referred to
       and defined in ERISA or any successor thereto.

            "PERSON" means an individual, partnership, corporation, limited
       liability company, association, trust, unincorporated organization, or a
       government or agency or political subdivision thereof.

            "PIPE TRANSACTION" shall mean a so called "private investment,
       public equity" private placement transaction which uses a procedure in
       which investors agree to purchase securities in a private offering
       conditioned upon or otherwise requiring the filing of a registration
       statement covering the securities so purchased.

            "PLAN" means an "employee benefit plan" (as defined in section 3(3)
       of ERISA) that is or, within the preceding five years, has been
       established or maintained, or to which contributions are or, within the
       preceding five years, have been made or required to be made, by the
       Company or any ERISA Affiliate or with respect to which the Company or
       any ERISA Affiliate may have any liability.

            "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
       Agreement dated as of the date hereof among the holders and the Company.

            "REPURCHASE DATE" is defined in Section 3(a).

            "REPURCHASE PRICE" is defined in Section 3(a).

            "RESPONSIBLE OFFICER" means any Senior Financial Officer and any
       other senior officer of the Company with responsibility for the
       administration of the relevant covenants in this Security or in the Note
       Purchase Agreement.

            "RETURNED AMOUNT" shall have the meaning given such term in the Note
       Purchase Agreement.

            "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
       or any successor Federal statute, and the rules and regulations of the
       Securities and Exchange Commission promulgated thereunder, all as the
       same shall be in effect from time to time.

            "SECURITY" is defined in the preamble hereof.

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            "SENIOR FINANCIAL OFFICER" means the chief financial officer,
       principal accounting officer, treasurer or comptroller of the Company.

            "SUBSIDIARY" means, as to any Person, any corporation, association
       or other business entity in which such Person or one or more of its
       Subsidiaries or such Person and one or more of its Subsidiaries owns
       sufficient equity or voting interests to enable it or them (as a group)
       ordinarily, in the absence of contingencies, to elect a majority of the
       directors (or Persons performing similar functions) of such entity, and
       any partnership or joint venture if more than a 50% interest in the
       profits or capital thereof is owned by such Person or one or more of its
       Subsidiaries or such Person and one or more of its Subsidiaries (unless
       such partnership can and does ordinarily take major business actions
       without the prior approval of such Person or one or more of its
       Subsidiaries). Unless the context otherwise clearly requires, any
       reference to a "Subsidiary" is a reference to a Subsidiary of the
       Company.

            "TRADING DAY" means (1) if the Common Stock is admitted to trading
       on the Nasdaq National Market or any other system of automated
       dissemination of quotations of securities prices, a day on which trades
       may be effected through such system; (2) if the Common Stock is listed or
       admitted for trading on the New York Stock Exchange or any other national
       securities exchange, a day on which such exchange is open for business;
       or (3) if the Common Stock is not admitted to trading on the Nasdaq
       National Market or listed or admitted for trading on any national
       securities exchange or any other system of automated dissemination of
       quotation of securities prices, a day on which the Common Stock is traded
       regular way in the over-the-counter market and for which a closing bid
       and a closing asked price for the Common Stock are available.

            "TRUST AGREEMENT" shall mean that certain Collateral Trust Agreement
       dated September 8, 2000 to which the Company, the holders and the Trustee
       are parties, as amended, modified or supplemented from time to time.

            "TRUSTEE" shall mean Fleet National Bank, together with its
       successors and assigns and any substitute and/or additional entity from
       time to time serving as Trustee under the Trust Agreement.

       3. Right to Require Repurchase.

            (a) In the event that a Change in Control shall occur, then the
       holder of this Security shall have the right, at such holder's option, to
       require the Company to repurchase, and upon the exercise of such right
       the Company shall repurchase, this Security, or any portion of the
       principal amount hereof that is equal to $1,000 or any integral multiple
       thereof, on the date (the "Repurchase Date") that is twenty (20) Trading
       Days after the date on which the Company gives notice to the holder of
       this Security that a Change in Control has occurred, at a purchase price
       equal to 100% of the principal amount of this Security to be repurchased
       plus

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       interest accrued to the Repurchase Date (such principal plus interest
       hereinafter referred to as the "Repurchase Price"); PROVIDED, HOWEVER,
       that installments of interest on this Security whose stated maturity is
       on or prior to the Repurchase Date shall be payable to the holder of this
       Security, or one or more predecessor Securities, registered as such on
       the relevant Record Date according to their terms. The Company agrees to
       give the holder of this Security notice of any Change in Control, by
       facsimile transmission confirmed in writing by overnight courier service,
       promptly and in any event within two (2) Trading Days of the occurrence
       thereof.

            (b) To exercise a repurchase right, the holder shall deliver to the
       Company on or before the fifth (5th) Trading Day prior to the Repurchase
       Date, together with this Security, written notice of the holder's
       exercise of such right, which notice shall set forth the name of the
       holder, the number of shares of Common Stock then owned by such holder
       and its affiliates, the principal amount of this Security to be
       repurchased (and, if this Security is to be repurchased in part, the
       portion of the principal amount thereof to be repurchased and the name of
       the person in which the portion thereof to remain outstanding after such
       repurchase is to be registered) and a statement that an election to
       exercise the repurchase right is being made thereby. Such written notice
       shall be irrevocable, except that the right of the holder to convert this
       Security (or the portion hereof with respect to which the repurchase
       right is being exercised) shall continue until the close of business on
       the Repurchase Date.

            (c) In the event a repurchase right shall be exercised in accordance
       with the terms hereof, the Company shall pay or cause to be paid to the
       holder the Repurchase Price in cash, provided, however, that installments
       of interest that mature on or prior to the Repurchase Date shall be
       payable in cash, to the holders of this Security, or one or more
       predecessor Securities, registered as such at the close of business on
       the relevant regular record date.

            (d) If this Security (or portion thereof) is surrendered for
       repurchase and is not so paid on or prior to the Repurchase Date, the
       principal amount of this Security (or such portion hereof, as the case
       may be) shall, until paid, bear interest to the extent permitted by
       applicable law from the Repurchase Date at the rate per annum borne by
       this Security, and shall remain convertible into Common Stock until the
       principal of this Security (or portion thereof, as the case may be) shall
       have been paid or duly provided for.

            (e) If this Security is to be repurchased only in part, it shall be
       surrendered to the Company at the Designated Office (with, if the Company
       so requires, due endorsement by, or a written instrument of transfer in
       form satisfactory to the Company duly executed by, the holder hereof or
       his attorney duly authorized in writing), and the Company shall execute
       and make available for delivery to the holder without service charge, a
       new Security or Securities, containing identical terms and conditions,
       each in an authorized denomination in

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       aggregate principal amount equal to and in exchange for the unrepurchased
       portion of the principal of the Security so surrendered.

            (f) For purposes of this Section 3.

                 (1) the term "beneficial owner" shall be determined in
            accordance with Rule 13d-3 promulgated by the Securities and
            Exchange Commission pursuant to the Exchange Act; and

                 (2) a "Change in Control" shall be deemed to have occurred at
            the time, after the original issuance of this Security, of:

                      (a) the acquisition by any person of beneficial ownership,
                 directly or indirectly, through a purchase, merger or other
                 acquisition transaction or series of transactions, of shares of
                 capital stock of the Company entitling such person to exercise
                 more than 30% of the total voting power of all shares of
                 capital stock of the Company entitled to vote generally in the
                 election of directors (any shares of voting stock of which such
                 person is the beneficial owner that are not then outstanding
                 being deemed outstanding for purposes of calculating such
                 percentage) other than any such acquisition by the Company or
                 any employee benefit plan of the Company; or

                      (b) any consolidation or merger of the Company with or
                 into, any other person, any merger of another person with or
                 into the Company, or any conveyance, transfer, sale, lease or
                 other disposition of all or substantially all of the assets of
                 the Company to another person (other than (i) any such
                 transaction (x) which does not result in any reclassification,
                 conversion, exchange or cancellation of outstanding shares of
                 Common Stock and (y) pursuant to which holders of Common Stock
                 immediately prior to such transaction have the entitlement to
                 exercise, directly or indirectly, more than 30% of the total
                 voting power of all shares of capital stock entitled to vote
                 generally in the election of directors of the continuing or
                 surviving person immediately after such transaction and (ii)
                 any merger which is effected solely to change the jurisdiction
                 of incorporation of the Company and results in a
                 reclassification, conversion or exchange of outstanding shares
                 of Common Stock into solely shares of common stock.

       4. Events of Default.

            (a) "EVENT of DEFAULT", wherever used herein, means any one of the
       following events (whatever the reason for such Event of Default and
       whether it shall be voluntary or involuntary or be effected by operation
       of law or pursuant to

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       any judgment, decree or order of any court or any order, rule or
       regulation of any administrative or governmental body):

                 (1) (a) default in the payment of any principal or premium, if
            any, upon this Security when the same becomes due and payable,
            whether at maturity or at a date fixed for prepayment or by
            declaration or otherwise, including, without limitation, the failure
            to pay the Returned Amount when the Returned Amount is required to
            be paid under the Note Purchase Agreement or (b) default in the
            payment of any interest upon this Security when it becomes due and
            payable, and continuance of such default for a period of five (5)
            business days; or

                 (2) default by the Company in the performance of-its
            obligations in respect of any conversion of this Security (or any
            portion hereof) in accordance with Section 2; or

                 (3) failure by the Company to give any notice of a Change of
            Control required to be delivered in accordance with Section 3(a); or

                 (4) default in the performance, or breach, of any other
            covenant of the Company herein, in the Note Purchase Agreement, or
            in the Registration Rights Agreement (other than a covenant default
            for which the performance or breach is specifically dealt with
            elsewhere in this Section 4(a) and continuance of such default or
            breach for a period of 30 days;

                 (5) any representation or warranty made in writing by or on
            behalf of the Company or by any officer of the Company furnished in
            connection with the transactions contemplated hereby proves to have
            been false or incorrect in any material respect on the date as of
            which made;

                 (6) aggregating in excess of $[ ]* are rendered against one or
            more of the Company and its Subsidiaries and which judgments are
            not, within sixty (60) days after entry thereof, bonded, discharged
            or stayed pending appeal, or are not discharged within sixty (60)
            days after the expiration of such stay; or

                 (7) a default under any bond, debenture, note or other evidence
            of indebtedness for money borrowed by the Company, or under any
            agreement, mortgage, indenture or instrument under which there may
            be issued or by which there may be secured or evidenced any
            indebtedness for money borrowed by the Company, with a principal
            amount then outstanding in excess of $[ ]* whether such indebtedness
            now exists or shall hereafter be created, which default shall
            constitute a failure to pay the principal of such indebtedness (in
            whole or in any part greater than $[ ]* when due and payable or
            shall have resulted in such indebtedness (in whole or in any part
            greater than $[ ]* becoming or being declared

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            due and payable prior to the date on which it would otherwise have
            become due and payable; or

                 (8) if (i) any Plan shall fail to satisfy the minimum funding
            standards of ERISA or the Code for any plan year or part thereof or
            a waiver of such a final judgment or judgments for the payment of
            money standards or extension of any amortization period is sought or
            granted under section 412 of the Code, (ii) a notice of intent to
            terminate any Plan shall have been or is reasonably expected to be
            filed with the PBGC or the PBGC shall have instituted proceedings
            under ERISA section 4042 to terminate or appoint a trustee to
            administer any Plan or the PBGC shall have notified the Company or
            any ERISA Affiliate that a Plan may become a subject of any such
            proceedings, (iii) the aggregate "amount of unfunded benefit
            liabilities" (within the meaning of section 4001(a)(18) of ERISA)
            under all Plans, determined in accordance with Title IV of ERISA,
            shall exceed $[ ]*, (iv) the Company or any ERISA Affiliate shall
            have incurred or is reasonably expected to incur any liability
            pursuant to Title I or IV of ERISA or the penalty or excise tax
            provisions of the Code relating to employee benefit plans, (v) the
            Company or any ERISA Affiliate withdraws from any Multiemployer
            Plan, or (vi) the Company or any Subsidiary establishes or amends
            any employee welfare benefit plan that provides post-employment
            welfare benefits in a manner that would increase the liability of
            the Company or any Subsidiary thereunder; and any such event or
            events described in clauses (i) through (vi) above, either
            individually or together with any other such event or events, could
            reasonably be expected to have a Material Adverse Effect.

                 As used in Section 4(a)(8), the terms "employee benefit plan"
            and "employee welfare benefit plan" shall have the respective
            meanings assigned to such terms in section 3 of ERISA.

                 (9) the entry by a court having jurisdiction in the premises of
            (i) a decree or order for relief in respect of the Company in an
            involuntary case or proceeding under any applicable Federal or State
            bankruptcy, insolvency, reorganization or other similar law or (ii)
            a decree or order adjudging the Company a bankrupt or insolvent, or
            approving as properly filed a petition seeking reorganization,
            arrangement, adjustment or composition of or in respect of the
            Company under any applicable Federal or State law, or appointing a
            custodian, receiver, liquidator, assignee, trustee, sequestrator or
            other similar official of the Company or of any substantial part of
            its property, or ordering the winding up or liquidation of its
            affairs, and the continuance of any such decree or order for relief
            or any such other decree or order unstayed and in effect for a
            period of 60 consecutive days;

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


                 (10) the commencement by the Company of a voluntary case or
            proceeding under any applicable Federal or State bankruptcy,
            insolvency, reorganization or other similar law or of any other case
            or proceeding to be adjudicated a bankrupt or insolvent, or the
            consent by it to the entry of a decree or order for relief in
            respect of the Company in an involuntary case or proceeding under
            any applicable Federal or State bankruptcy, insolvency,
            reorganization or other similar law or to the commencement of any
            bankruptcy or insolvency case or proceeding against it, or the
            filing by it of a petition or answer or consent seeking
            reorganization or similar relief under any applicable Federal or
            State law, or the consent by it to the filing of such petition or to
            the appointment of or taking possession by a custodian, receiver,
            liquidator, assignee, trustee, sequestrator or other similar
            official of the Company or of any substantial part of its property,
            or the making by it of an assignment for the benefit of creditors,
            or not paying its debts as they become due or the admission by it in
            writing of its inability to pay its debts generally as they become
            due, or the taking of corporate action by the Company in furtherance
            of any such action; or

                 (11) the occurrence of any Event of Default (as defined in the
            Mortgage) under the Mortgage, or the occurrence of any Event of
            Default (as defined in the Assignment of Leases and Rents) under the
            Assignment of Leases and Rents or any default under the
            Environmental Indemnity.


            (b) If an Event of Default (other than an Event of Default specified
       in Section 4(a)(9) or 4(a)(10)) occurs and is continuing, then in every
       such case the holder of this Security may declare the principal hereof to
       be due and payable immediately, by a notice in writing to the Company,
       and upon any such declaration such principal and all accrued interest
       thereon shall become immediately due and payable without presentment,
       demand, protest or other notice of any kind, all of which are hereby
       expressly waived, and the Company shall forthwith upon any such
       acceleration pay to the holder of this Security(, the entire principal of
       and interest accrued on this Security, and ii in addition, to the extent
       permitted by applicable law, an amount equal to the Make-Whole Amount, as
       liquidated damages and not as a penalty; and, in case of the occurrence
       of an Event of Default of the character described in subdivisions 4(a)(9)
       and 4(a)(10) the principal of and accrued interest on this Security, IPSO
       FACTO shall become immediately due and payable without any declaration or
       other act of the holder of this Security and without presentment, demand,
       protest or other notice of any kind, all of which are hereby expressly
       waived, and the Company shall forthwith upon any such acceleration pay to
       the holder of this Security (x) the entire principal of and interest
       accrued on this Security and (y) in addition, if such Event of Default is
       "Voluntary" (as hereinafter defined), to the extent permitted by
       applicable law, an amount equal to the Make-Whole Amount, as liquidated
       damages and not as a penalty.

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            For purposes of this section 4(b), "Voluntary" shall mean an Event
       of Default of the character described in subdivisions 4(a)(9) or 4(a)(10)
       which shall have been (x procured by the Company or any officer,
       director, stockholder or Affiliate of the Company or (y) primarily the
       result of action or inaction by the Company or by any officer, director,
       stockholder or Affiliate of the Company.

            (c) In case any one or more of the Events of Default specified in
       Section 4(a) shall have occurred, and irrespective of whether this
       Security has become or has been declared immediately due and payable
       under Section 4(a), the holder of this Security may proceed to protect
       and enforce its rights either by suit in equity or by action at law, or
       both. The Company stipulates that the remedies at law of the holder of
       this Security in the event of any Default or threatened Default by the
       Company in the performance of or compliance with any covenant or
       agreement in this Security, the Note Purchase Agreement, the Registration
       Rights Agreement or the other Operative Documents are not and will not be
       adequate and that, to the fullest extent permitted by law, such terms may
       be specifically enforced by a decree for the specific performance
       thereof, whether by an injunction against a violation thereof or
       otherwise.

            (d) No remedy conferred in this Security, the Note Purchase
       Agreement, the Registration Rights Agreement or the other Operative
       Documents is intended to be exclusive of any other remedy, and each and
       every such remedy shall be cumulative and shall be in addition to every
       other remedy given hereunder or thereunder or now or hereafter existing
       at law or in equity or by statute or otherwise.

            (e) No course of dealing between the Company and any of its
       Subsidiaries, on the one hand, and the holder of this Security, on the
       other hand, and no delay by any such holder in exercising any rights
       hereunder or under the Note Purchase Agreement, the Registration Rights
       Agreement or the other Operative Documents shall operate as a waiver of
       any rights of such holder.

            (f) In case any one or more of the Events of Default specified in
       Section 4(a) shall have occurred, all amounts to be applied to the
       prepayment or payment of this Security shall be applied, after the
       payment of all related costs and expenses incurred by the holder of this
       Security (including, without limitation, compensation to any and all
       trustees, liquidators, receivers or similar officials and reasonable
       fees, expenses and disbursements of counsel) in such order of priority as
       is determined by the holder of this Security.

            (g) The term "Make-Whole Amount" means, with respect to this
       Security, an amount equal to the excess, if any, of the Discounted Value
       of the Remaining Scheduled Payments with respect to the Called Principal
       of this Security over the amount of such Called Principal, PROVIDED that
       the Make-Whole Amount may in no event be less than zero. For the purposes
       of determining the Make-Whole Amount, the following terms have the
       following meanings:

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


            "Called Principal" means, with respect to this Security, the
       principal of this Security that has become or is declared to be
       immediately due and payable pursuant to Section 4(b).

            "Discounted Value" means, with respect to the Called Principal of
       this Security, the amount obtained by discounting all Remaining Scheduled
       Payments with respect to such Called Principal from their respective
       scheduled due dates to the Settlement Date with respect to such Called
       Principal, in accordance with accepted financial practice and at a
       discount factor (applied on the same periodic basis as that on which
       interest on this Security is payable) equal to the Reinvestment Yield
       with respect to such Called Principal.

            "Reinvestment Yield" means, with respect to the Called Principal of
       this Security, the yield to maturity implied by (1) the yields reported,
       as of 10:00 A.M. (New York City time) on the second Business Day
       preceding the Settlement Date with respect to such Called Principal, on
       the display designated as "PX-1" of the Bloomberg Financial Markets
       Services Screen for actively traded U.S. Treasury securities having a
       maturity equal to the Remaining Average Life of such Called Principal as
       of such Settlement Date, or (2) if such yields are not reported as of
       such time or the yields reported as of such time are not ascertainable,
       the Treasury Constant Maturity Series Yields reported, for the latest day
       for which such yields have been so reported as of the second Business Day
       preceding the Settlement Date with respect to such Called Principal, in
       Federal Reserve Statistical Release H.15 (519) (or any comparable
       successor publication) for actively traded U.S. Treasury securities
       having a constant maturity equal to the Remaining Average Life of such
       Called Principal as of such Settlement Date. Such implied yield will be
       determined, if necessary, by (a) converting U.S. Treasury bill quotations
       to bond-equivalent yields in accordance with accepted financial practice
       and (b) interpolating linearly between (i) the actively traded U.S.
       Treasury security with the duration closest to and greater than the
       Remaining Average Life and (ii) the actively traded U.S, Treasury
       security with the duration closest to and less than the Remaining Average
       Life.

            "Remaining Average Life" means, with respect to any Called
       Principal, the number of years (calculated to the nearest one-twelfth
       year) obtained by dividing (1)such Called Principal into (2) the sum of
       the products obtained by multiplying (a) the principal component of each
       Remaining Scheduled Payment with respect to such Called Principal by (b)
       the number of years (calculated to the nearest one-twelfth year) that
       will elapse between the Settlement Date with respect to such Called
       Principal and the scheduled due date of such Remaining Scheduled Payment.

            "Remaining Scheduled Payment" means, with respect to the Called
       Principal of this Security, all payments of such Called Principal and
       interest thereon that would be due after the Settlement Date with respect
       to such Called Principal if no payment of such Called Principal were made
       prior to its scheduled

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       due date, PROVIDED that if such Settlement Date is not a date on which
       interest payments are due to be made under the terms of this Security,
       then the amount of the next succeeding scheduled interest payment will be
       reduced by the amount of interest accrued to such Settlement Date.

            "Settlement Date" means, with respect to the Called Principal of
       this Security, the date on which such Called Principal has become or is
       declared to be immediately due and payable pursuant to Section 4(b), as
       the context requires.

       5. CONSOLIDATION, MERGER, ETC.

            (a) The Company shall not consolidate with or merge into any other
       person or, directly or indirectly, convey, transfer, sell or lease all or
       substantially all of its properties and assets to any person, and the
       Company shall not permit any person to consolidate with or merge into the
       Company or, directly or indirectly, convey, transfer, sell or lease all
       or substantially all of its properties and assets to the Company, unless:

                 (1) in case the Company shall consolidate with or merge into
            another person or convey, transfer, sell or lease all or
            substantially all of its properties and assets to any person, the
            person formed by such consolidation or into which the Company is
            merged or the person which acquires by conveyance, transfer or sale,
            or which leases, all or substantially all the properties and assets
            of the Company shall be a corporation, limited liability company,
            partnership or trust, shall be organized and validly existing under
            the laws of the United States of America, any State thereof or the
            District of Columbia and shall expressly assume, by an agreement
            supplemental hereto, executed and delivered to the holder of this
            Security in form satisfactory to the holder, the due and punctual
            payment of the principal of (and premium, if any) and interest on
            this Security and the performance or observance of every covenant of
            this Security on the part of the Company to be performed or
            observed, including the conversion rights provided herein (which
            shall thereafter relate to common stock of such successor, on a
            basis reasonably designed to preserve the economic value to the
            holder of this Security of such conversion rights);

                 (2) immediately after giving effect to such transaction and
            treating any indebtedness which becomes an obligation of the Company
            or a Subsidiary of the Company as a result of such transaction as
            having been incurred by the Company or such Subsidiary of the
            Company at the time of such transaction, no Event of Default, and no
            event which, after notice or lapse of time or both, would become an
            Event of Default, shall have happened and be continuing;

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


                 (3) the Company has delivered to the holder of this Security an
            officers' certificate stating that such consolidation, merger,
            conveyance, transfer, sale or lease and, if a supplemental agreement
            is required in connection with such transaction, such supplemental
            agreement, comply with this Section and that all conditions
            precedent herein provided for relating to such transaction have been
            complied with; and

                 (4) counsel for the Company or any successor thereto has
            delivered to the holder of this Security an opinion of such counsel
            with respect to such consolidation, merger, conveyance, transfer,
            sale or lease, and if a supplemental agreement is required in
            connection with such transaction, such supplemental agreement, which
            opinion shall be, in form and substance, reasonably acceptable to
            such holder and its counsel.

            (b) Upon any consolidation of the Company with, or merger of the
       Company into, any other person or any conveyance, transfer, sale or lease
       of all or substantially all of the properties and assets of the Company
       in accordance with Section 5(a), the successor person formed by such
       consolidation or into which the Company is merged or to which such
       conveyance, transfer, sale or lease is made shall succeed to, and be
       substituted for, and may exercise every right and power of, the Company
       under this Security with the same effect as if such successor person had
       been named as the Company herein, and thereafter, except in the case of a
       lease, the predecessor person shall be relieved of all obligations and
       covenants under this Security.

       6. OTHER.

            (a) No provision of this Security shall alter or impair the
       obligation of the Company,- which is absolute and unconditional, to pay
       the principal of, premium, if any, and interest on this Security in cash
       at the times; places and rate, and in the coin or currency, herein
       prescribed or to convert this Security as herein provided.

            (b) The Company will give prompt written notice to the holder of
       Security of any change in the location of the Designated Office.

            (c) (i) Subject to clause (ii) below, the transfer of this Security
       is registrable on the Security Register of the Company upon surrender of
       this Security for registration of transfer at the Designated Office, duly
       endorsed by, or accompanied by a written instrument of transfer in form
       satisfactory to the Company duly executed by, the holder hereof or his
       attorney duly authorized in writing, and thereupon one or more new
       Securities, of authorized denominations and for the same aggregate
       principal amount, will be issued to the designated transferee or
       transferees. Such Securities are issuable only in registered form without
       coupons in denominations of the lesser of (x) $1,000,000 and (y) the
       outstanding principal amount of any Security then being registered. No
       service

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       charge shall be made for any such registration of transfer, but the
       Company may require payment of a sum sufficient to recover any tax or
       other governmental charge payable in connection therewith. Prior to due
       presentation of this Security for registration of transfer, the Company
       and any agent of the Company may treat the person in whose name this
       Security is registered as the owner thereof for all purposes, whether or
       not this Security be overdue, and neither the Company nor any such agent
       shall be affected by notice to the contrary.

                 (ii) Any sale, assignment, transfer or other disposition of
            this Security (or any portion hereof) by any holder of this Security
            shall be made in compliance with all applicable securities laws.

            (d) The Company shall keep at the Designated Office a register for
       the registration and registration of transfers of Convertible Notes. The
       name and address of each holder of one or more Convertible Notes, each
       transfer thereof and the name and address of each transferee of one or
       more Convertible Notes shall be registered in such register. Prior to due
       presentment for registration of transfer, the Person in whose name any
       Convertible Note shall be registered shall be deemed and treated as the
       owner and holder thereof for all purposes hereof, and the Company shall
       not be affected by any notice or knowledge to the contrary. The Company
       shall give to any holder of a Convertible Note promptly upon request
       therefor, a complete and correct copy of the names and addresses of all
       registered holders of Convertible Notes.

            (e) Upon surrender of any Convertible Note at the Designated Office
       for registration of transfer or exchange (and in the case of a surrender
       for registration of transfer, duly endorsed or accompanied by a written
       instrument of transfer duly executed by the registered holder of such
       Convertible Note or his attorney duly authorized in writing and
       accompanied by the address for notices of each transferee of such
       Convertible Note or part thereof), the Company shall execute and deliver,
       at the Company's expense (except as provided below), one or more new
       Convertible Notes (as requested by the holder thereof) in exchange
       therefor, in an aggregate principal amount equal to the unpaid principal
       amount of the surrendered Convertible Note. Each such new Convertible
       Note shall be payable to such Person as such holder may request and shall
       be substantially in the form of this Security. Each such new Convertible
       Note shall be dated and bear interest from the date to which interest
       shall have been paid on the surrendered Convertible Note or dated the
       date of the surrendered Convertible Note if no interest shall have been
       paid thereon. The Company may require payment of a sum sufficient to
       cover any stamp tax or governmental charge imposed in respect of any such
       transfer of this Security. Convertible Notes shall not be transferred in
       denominations of less than $100,000, PROVIDED that if necessary to enable
       the registration of transfer by a holder of its entire holding of
       Convertible Notes, one Convertible Note may be in a denomination of less
       than $100,000. Any transferee, by its acceptance of a Convertible Note
       registered in its name (or the

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


       name of its nominee), shall be deemed to have made the representation set
       forth in section 3 of the Note Purchase Agreement.

            (f) Upon receipt by the Company of a written request from the
       holder, and

                 (1) in the case of loss, theft or destruction, of an unsecured
            agreement of indemnity, or

                 (2) in the case of mutilation, upon surrender and cancellation
            thereof,

       the Company at its own expense shall execute and deliver, in lieu
       thereof, a new Convertible Note, dated and bearing interest from the date
       to which interest shall have been paid on such lost, stolen, destroyed or
       mutilated Convertible Note or dated the date of such lost, stolen,
       destroyed or mutilated Convertible Note if no interest shall have been
       paid thereon.

            (g) This Security shall be governed by and construed in accordance
       with the laws of the Commonwealth of Massachusetts, United States of
       America.

            (h) So long as you or your nominee shall be holder of this Security
       and notwithstanding anything in this Security to the contrary, the
       Company will pay all sums becoming due hereunder for principal,
       Make-Whole Amount, if any, and interest by the method and at the address
       specified for such purpose below your name in Schedule 1, or by such
       other method provided in the Preamble or at such other address as you
       shall have from time to time specified to the Company in writing for such
       purpose, without the presentation or surrender of this Security, or the
       making of any notation thereon, except that upon written request of the
       Company made concurrently with or reasonably promptly after payment in
       full of this Security, you shall surrender this Security for
       cancellation, reasonably promptly after any such request to the Company
       at its principal executive office or at the place of payment most
       recently designated by the Company. Prior to any sale or other
       disposition of this Security you will, at your election, either endorse
       thereon the amount of principal paid thereon and the last date to which
       interest has been paid thereon or surrender this Security to the Company
       in exchange for a new Convertible Note pursuant to the terms hereof. The
       Company will afford the benefits of this Section to any institutional
       investor that is the direct or indirect transferee of this Security.

*Confidential treatment requested: Material has been omitted and filed with the
Commission.

<PAGE>


                  [SIGNATURE PAGE FOR SENIOR CONVERTIBLE NOTE]

       IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.

Dated: September 8, 2000                   CUBIST PHARMACEUTICALS, INC.

                                           By: /s/ THOMAS A. SHEA
                                              --------------------------------

Attest:

     /s/ JOSEPH GILDAY
-------------------------------
Name:
Title:







*Confidential treatment requested: Material has been omitted and filed with the
Commission.
</TEXT>
</DOCUMENT>
