Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

among

 

VERTEX PHARMACEUTICALS INCORPORATED,

 

and

 

UBS Securities LLC

 

as Dealer Manager

 

Dated February 13, 2004

 

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Resale Registration Rights Agreement (this “Agreement”), dated February 13,
2004, among Vertex Pharmaceuticals Incorporated, a Massachusetts corporation
(together with any successor entity, the “Issuer”), and UBS Securities LLC, as
Dealer Manager (the “Dealer Manager”).

 

Pursuant to the Dealer Manager Agreement, dated February 10, 2004, between the
Issuer and the Dealer Manager (the “Dealer Manager Agreement”), the Dealer
Manager has agreed to purchase from the Issuer $153,135,000 in aggregate
principal amount of 5¾% Convertible Senior Subordinated Notes due 2011 (the
“Notes”). The Notes will be convertible into fully paid, nonassessable common
stock, par value $.01 per share, of the Issuer (the “Common Stock”) on the
terms, and subject to the conditions, set forth in the Indenture (as defined
herein). To induce the Dealer Manager to purchase the Notes, the Issuer has
agreed to provide the registration rights set forth in this Agreement pursuant
to the Dealer Manager Agreement.

 

The parties hereby agree as follows:

 

1.                                      DEFINITIONS. As used in this Agreement,
the following capitalized terms shall have the following meanings:

 

AGREEMENT:  As defined in the preamble hereto.

 

ADVICE:  As defined in Section 4(c)(ii) hereof.

 

BUSINESS DAY:  A day other than a Saturday or Sunday or any federal holiday in
the United States.

 

COMMISSION:  Securities and Exchange Commission.

 

COMMON STOCK:  As defined in the preamble hereto.

 

DAMAGES PAYMENT DATE:  Each Interest Payment Date. For purposes of this
Agreement, if no Notes are outstanding, “DAMAGES PAYMENT DATE” shall mean each
February 15 and August 15.

 

DEALER MANAGER:  As defined in the preamble hereto.

 

DEALER MANAGER AGREEMENT:  As defined in the preamble hereto.

 

EFFECTIVENESS PERIOD:  As defined in Section 2(a)(iii) hereof.

 

EFFECTIVENESS TARGET DATE:  As defined in Section 2(a)(ii) hereof.

 

EXCHANGE ACT:  Securities Exchange Act of 1934, as amended.

 

HOLDER:  A Person who owns, beneficially or otherwise, Transfer Restricted
Securities.

 

INDENTURE:  The Indenture, dated as of February 13, 2004, between the Issuer and
U.S. Bank National Association, as trustee, pursuant to which the Notes are to
be issued, as such

 

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Indenture is amended, modified or supplemented from time to time in accordance
with the terms thereof.

 

INTEREST PAYMENT DATE:  As defined in the Indenture.

 

ISSUER:  As defined in the preamble hereto.

 

LIQUIDATED DAMAGES:  As defined in Section 3(a) hereof.

 

MAJORITY OF HOLDERS: Holders holding over 50% of the aggregate principal amount
of Notes outstanding; PROVIDED that, for purpose of this definition, a holder of
shares of Common Stock which constitute Transfer Restricted Securities and were
issued upon conversion of the Notes shall be deemed to hold an aggregate
principal amount of Notes (in addition to the aggregate principal amount of
Notes held by such Holder) equal to the aggregate principal amount of Notes
converted by such Holder into such shares of Common Stock.

 

NASD:  NASD, Inc.

 

NOTES:  As defined in the preamble hereto.

 

PERSON:  An individual, partnership, corporation, unincorporated organization,
trust, joint venture or a government or agency or political subdivision thereof.

 

PROSPECTUS:  The prospectus included in a Shelf Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

 

QUESTIONNAIRE DEADLINE:  As defined in Section 2(b) hereof.

 

RECORD HOLDER:  With respect to any Damages Payment Date, each Person who is a
Holder on the record date with respect to the Interest Payment Date on which
such Damages Payment Date shall occur. In the case of a Holder of shares of
Common Stock issued upon conversion of the Notes, “RECORD HOLDER” shall mean
each Person who is a Holder of shares of Common Stock which constitute Transfer
Restricted Securities on the February 1 or August 1 immediately preceding the
Damages Payment Date.

 

REGISTRATION DEFAULT:  As defined in Section 3(a) hereof.

 

SECURITIES ACT:  Securities Act of 1933, as amended.

 

SHELF FILING DEADLINE:  As defined in Section 2(a)(i) hereof.

 

SHELF REGISTRATION STATEMENT:  As defined in Section 2(a)(i) hereof.

 

SUSPENSION PERIOD:  As defined in Section 4(b)(i) hereof.

 

TIA: Trust Indenture Act of 1939, as in effect on the date the Indenture is
qualified under the TIA.

 

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TRANSFER RESTRICTED SECURITIES: Each Note and each share of Common Stock issued
upon conversion of Notes until the earlier of:

 

(i)                                     the date on which such Note or such
share of Common Stock issued upon conversion has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement;

 

(ii)                                  the date on which such Note or such share
of Common Stock issued upon conversion is transferred in compliance with Rule
144 under the Securities Act or may be sold or transferred pursuant to Rule
144(k) under the Securities Act (or any other similar provision then in force);
or

 

(iii)                               the date on which such Note or such share of
Common Stock issued upon conversion ceases to be outstanding (whether as a
result of redemption, repurchase and cancellation, conversion or otherwise).

 

UNDERWRITER:  As defined in Section 6(a) hereof.

 

UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in which
securities of the Issuer are sold to an underwriter for reoffering to the
public.

 

2.                                      SHELF REGISTRATION.

 

(a)                                  The Issuer shall:

 

(i)                                     not later than 120 days after the date
hereof (the “Shelf Filing Deadline”), cause to be filed a registration statement
pursuant to Rule 415 under the Securities Act (the “Shelf Registration
Statement”), which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities held by Holders that have provided the
information required pursuant to the terms of Section 2(b) hereof;

 

(ii)                                  use its best efforts to cause the Shelf
Registration Statement to be declared effective by the Commission as promptly as
practicable, but in no event later than 210 days after the date hereof (the
“Effectiveness Target Date”); and

 

(iii)                               use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 4(b) hereof to the extent necessary to
ensure that (A) it is available for resales by the Holders of Transfer
Restricted Securities entitled to the benefit of this Agreement and (B) conforms
with the requirements of this Agreement and the Securities Act and the rules and
regulations of the Commission promulgated thereunder as announced from time to
time for a period (the “Effectiveness Period”) of:

 

(1)                                  two years following the last date of
original issuance of Notes; or

 

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(2)                                  such shorter period that will terminate
when (X) all of the Holders of Transfer Restricted Securities are able to sell
all Transfer Restricted Securities immediately without restriction pursuant to
Rule 144(k) under the Securities Act or any successor rule thereto, (Y) when all
Transfer Restricted Securities have ceased to be outstanding (whether as a
result of redemption, repurchase and cancellation, conversion or otherwise) or
(Z) all Transfer Restricted Securities registered under the Shelf Registration
Statement have been sold.

 

(b)                                 No Holder may include any of its Transfer
Restricted Securities in the Shelf Registration Statement pursuant to this
Agreement unless such Holder furnishes to the Issuer in writing, at least ten
Business Days prior to the effectiveness of the Shelf Registration Statement
(the “Questionnaire Deadline”), such information as the Issuer may reasonably
request for use in connection with the Shelf Registration Statement or the
Prospectus or preliminary Prospectus included therein and in any application to
be filed with or under state securities laws.  In connection with all such
requests for information from Holders, the Issuer shall notify such Holders of
the requirements set forth in the preceding sentence.

 

3.                                      LIQUIDATED DAMAGES.

 

(a)                                  If:

 

(i)                                     the Shelf Registration Statement is not
filed with the Commission prior to or on the Shelf Filing Deadline;

 

(ii)                                  the Shelf Registration Statement has not
been declared effective by the Commission prior to or on the Effectiveness
Target Date;

 

(iii)                               subject to the provisions of Section 4(b)(i)
hereof, the Shelf Registration Statement is filed and declared effective but,
during the Effectiveness Period, shall thereafter cease to be effective or fail
to be usable for its intended purpose without being succeeded within five
Business Days by a post-effective amendment to the Shelf Registration Statement
or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act that cures such failure and, in the case of a
post-effective amendment, is itself immediately declared effective; or

 

(iv)                              prior to or on the 45th or 60th day, as the
case may be, of any Suspension Period, such suspension has not been terminated,

 

(each such event referred to in foregoing clauses (i) through (iv), a
“Registration Default”), the Issuer hereby agrees to pay liquidated damages
(“Liquidated Damages”) with respect to the Transfer Restricted Securities from
and including the day following the Registration Default to but excluding the
day on which the Registration Default has been cured:

 

(A)                              in respect of the Notes, to each Holder of
Notes, (x) with respect to the first 90-day period during which a Registration
Default shall have occurred and be continuing, in an amount per year equal to an
additional 0.25% of the principal amount of the Notes and (y) with respect to

 

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the period commencing on the 91st day following the day the Registration Default
shall have occurred and be continuing, in an amount per year equal to an
additional 0.50% of the principal amount of the Notes; PROVIDED that in no event
shall Liquidated Damages accrue at a rate per year exceeding 0.50% of the
principal amount of the Notes; and

 

(B)                                in respect of any shares of Common Stock, to
each Holder of shares of Common Stock issued upon conversion of Notes, (x) with
respect to the first 90-day period in which a Registration Default shall have
occurred and be continuing, in an amount per year equal to 0.25% of the
principal amount of the converted Notes and (y) with respect to the period
commencing the 91st day following the day the Registration Default shall have
occurred and be continuing, in an amount per year equal to 0.50% of the
principal amount of the converted Notes; PROVIDED

 

that in no event shall Liquidated Damages accrue at a rate per year exceeding
0.50% of the principal amount of the converted Notes.

 

(b)                                 All accrued Liquidated Damages shall be paid
in arrears to Record Holders by the Issuer on each Damages Payment Date by wire
transfer of immediately available funds or by federal funds check. Following the
cure of all Registration Defaults relating to any particular Note or share of
Common Stock, the accrual of Liquidated Damages with respect to such Note or
share of Common Stock will cease.

 

All obligations of the Issuer set forth in this Section 3 that are outstanding
with respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such time as all
such obligations with respect to such Transfer Restricted Security shall have
been satisfied in full.

 

The Liquidated Damages set forth above shall be the exclusive monetary remedy
available to the Holders for such Registration Default.

 

4.                                      REGISTRATION PROCEDURES.

 

(a)                                  In connection with the Shelf Registration
Statement, the Issuer shall comply with all the provisions of Section 4(b)
hereof and shall use its best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and pursuant thereto, shall
as expeditiously as possible prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any appropriate form
under the Securities Act.

 

(b)                                 In connection with the Shelf Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Issuer shall:

 

(i)                                     Subject to any notice by the Issuer in
accordance with this Section 4(b) of the existence of any fact or event of the
kind described in Section 4(b)(iii)(D), use its best efforts to keep the Shelf
Registration Statement continuously effective during the Effectiveness Period.
Upon the occurrence of any event that would cause the Shelf Registration
Statement or the Prospectus

 

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contained therein (A) to contain a material misstatement or omission or (B) not
be effective and usable for resale of Transfer Restricted Securities during the
Effectiveness Period, the Issuer shall file promptly an appropriate amendment to
the Shelf Registration Statement or a report filed with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case of clause
(A), correcting any such misstatement or omission, and, in the case of either
clause (A) or (B), use its best efforts to cause any such amendment to be
declared effective and the Shelf Registration Statement and the related
Prospectus to become usable for their intended purposes as soon as practicable
thereafter. Notwithstanding the foregoing, the Issuer may suspend the
effectiveness of the Shelf Registration Statement by written notice to the
Holders for a period not to exceed an aggregate of 45 days in any 90-day period
(each such period, a “Suspension Period”) if:

 

(x)                                   an event occurs and is continuing as a
result of which the Shelf Registration Statement would, in the Issuer’s
reasonable judgment, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and

 

(y)                                 the Issuer reasonably determines that the
disclosure of such event at such time would have a material adverse effect on
the business of the Issuer (and its subsidiaries, if any, taken as a whole);

 

PROVIDED that in the event the disclosure relates to a previously undisclosed
proposed or pending material business transaction, the disclosure of which would
impede the Issuer’s ability to consummate such transaction, the Issuer may
extend a Suspension Period from 45 days to 60 days; PROVIDED, HOWEVER, that
Suspension Periods shall not exceed an aggregate of 90 days in any 360-day
period.

 

(ii)                                  Prepare and file with the Commission such
amendments and post-effective amendments to the Shelf Registration Statement as
may be necessary to keep the Shelf Registration Statement effective during the
Effectiveness Period; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Securities Act in a timely manner; and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by the Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
sellers thereof set forth in the Shelf Registration Statement or Prospectus
supplement.

 

(iii)                               Advise the selling Holders that have
furnished information pursuant to Section 4(d) hereof, the Dealer Manager, and
the underwriter(s), if any, promptly (but in any event within five Business
Days) and, if requested by such Persons, confirm such advice in writing:

 

(A)                              with respect to the Shelf Registration
Statement or any post-effective amendment thereto, when the same has become

 

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effective, and when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed,

 

(B) of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto,

 

(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement under the Securities Act or of
the suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, or

 

(D) of the existence of any fact or the happening of any event, during the
Effectiveness Period, that makes any statement of a material fact made in the
Shelf Registration Statement or the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading.

 

If at any time the Commission shall issue any stop order suspending the
effectiveness of the Shelf Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Issuer shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.

 

(iv)                              Furnish to each of the selling Holders that
has furnished information pursuant to Section 4(d) hereof, the Dealer Manager
and each of the underwriter(s), if any, at least five Business Days before
filing with the Commission, a copy of the Shelf Registration Statement and
copies of any Prospectus included therein or any amendments or supplements to
the Shelf Registration Statement or Prospectus (other than documents
incorporated by reference after the initial filing of the Shelf Registration
Statement), which documents will be subject to the review of such Holders,
Dealer Manager and underwriter(s), if any, for a period of five Business Days,
and the Issuer will not file any Shelf Registration Statement or Prospectus or
any amendment or supplement to the Shelf Registration Statement or Prospectus
(other than documents incorporated by reference) to which a selling Holder of
Transfer Restricted Securities covered by the Shelf Registration Statement,
Dealer Manager, or the underwriter(s), if any, shall reasonably object. A
selling Holder, Dealer Manager, or an underwriter, if any, shall be deemed to
have reasonably objected to such filing if the Shelf Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission. Notwithstanding the foregoing, the
Issuer shall not be

 

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required to furnish the selling Holders with any amendment or supplement to the
Shelf Registration Statement or Prospectus filed solely to reflect changes to
the amount of Notes held by any particular Holder at the request of such Holder
or immaterial revisions to the information contained therein.

 

(v)                                 Make available at reasonable times for
inspection by one or more representatives of the selling Holders, designated in
writing by a Majority of Holders whose Transfer Restricted Securities are
included in the Shelf Registration Statement, any underwriter participating in
any distribution pursuant to the Shelf Registration Statement and any attorney
or accountant retained by such selling Holders or any of the underwriter(s), all
financial and other records, pertinent corporate documents and properties of the
Issuer as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the Issuer’s officers,
directors, managers and employees to supply all information reasonably requested
by any such representative or representatives of the selling Holders,
underwriter, attorney or accountant in connection with the Shelf Registration
Statement after the filing thereof and before its effectiveness; PROVIDED,
HOWEVER, that any information designated by the Issuer as confidential at the
time of delivery of such information shall be kept confidential by the recipient
thereof.

 

(vi)                              If requested by any selling Holders, the
Dealer Manager, or the underwriter(s), if any, promptly incorporate in the Shelf
Registration Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders, the Dealer
Manager, and such underwriter(s), if any, may reasonably request to have
included therein, including, without limitation: (1) information relating to the
“Plan of Distribution” of the Transfer Restricted Securities, (2) information
with respect to the principal amount of Notes or number of shares of Common
Stock being sold to such underwriter(s), (3) the purchase price being paid
therefor and (4) any other terms of the offering of the Transfer Restricted
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as reasonably
practicable after the Issuer is notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment. Notwithstanding the
foregoing, following the effective date of the Shelf Registration Statement, the
Issuer shall not be required to file more than one such supplement or
post-effective amendment to reflect changes in the amount of Transfer Restricted
Securities held by any Holders at the request of such Holders in any 30-day
period.

 

(vii)                           Furnish to each selling Holder, the Dealer
Manager and each of the underwriter(s), if any, without charge, at least one
copy of the Shelf Registration Statement, as first filed with the Commission,
and of each amendment thereto (and any documents incorporated by reference
therein or exhibits thereto (or exhibits incorporated in such exhibits by
reference) as such Person may request).

 

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(viii)                        Deliver to each selling Holder, the Dealer Manager
and each of the underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; subject to any notice
by the Issuer in accordance with this Section 4(b) of the existence of any fact
or event of the kind described in Section 4(b)(iii)(D), the Issuer hereby
consents to the use of the Prospectus and any amendment or supplement thereto by
each of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto.

 

(ix)                                If an underwriting agreement is entered into
and the registration is an Underwritten Registration, the Issuer shall:

 

(A)                              upon request, furnish to each selling Holder
and each underwriter, if any, in such substance and scope as they may reasonably
request and as are customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of closing of any sale of Transfer
Restricted Securities in an Underwritten Registration:

 

(1)                                  a certificate, dated the date of such
closing, signed by either the Chief Financial Officer or the Chief Executive
Officer of the Issuer and confirming, as of the date thereof, the matters set
forth in Section 12.5 of the Dealer Manager Agreement and such other matters as
such parties may reasonably request;

 

(2)                                  opinions, each dated the date of such
closing, of counsel to the Issuer covering such of the matters set forth in the
exhibits to the Dealer Manager Agreement referred to in Section 12.4(A) thereof
as are customarily covered in legal opinions to underwriters in connection with
primary underwritten offerings of securities; and

 

(3)                                  customary comfort letters, dated the date
of such closing, from the Issuer’s independent certified public accountants (and
from any other accountants whose report is contained or incorporated by
reference in the Shelf Registration Statement), in the customary form and
covering matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings of securities;

 

(B) set forth in full in the underwriting agreement, if any, indemnification
provisions and procedures which provide rights no less protective than those set
forth in Section 6 hereof with respect to all parties to be indemnified; and

 

(C) deliver such other documents and certificates as may be reasonably requested
by such parties to evidence compliance with

 

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clause (A) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the selling Holders pursuant to
this clause (ix).

 

(x)                                   Before any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the underwriter(s),
if any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or Blue
Sky laws of such jurisdictions as the selling Holders or underwriter(s), if any,
may reasonably request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Shelf Registration Statement; PROVIDED,
HOWEVER, that the Issuer shall not be required (A) to register or qualify as a
foreign corporation or a dealer of securities where it is not now so qualified
or to take any action that would subject it to the service of process in any
jurisdiction where it is not now so subject or (B) to subject itself to taxation
in any such jurisdiction if it is not now so subject.

 

(xi)                                Cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends (unless required by applicable securities laws);
and enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any, may
request at least two Business Days before any sale of Transfer Restricted
Securities made by such underwriter(s).

 

(xii)                             Use its best efforts to cause the Transfer
Restricted Securities covered by the Shelf Registration Statement to be
registered with or approved by such other U.S. governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities.

 

(xiii)                          Subject to Section 4(b)(i) hereof, if any fact
or event contemplated by Section 4(b)(iii)(D) hereof shall exist or have
occurred, use its reasonable best efforts to prepare a supplement or
post-effective amendment to the Shelf Registration Statement or related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.

 

(xiv)                         Provide CUSIP numbers for all Transfer Restricted
Securities not later than the effective date of the Shelf Registration Statement
and provide the Trustee under the Indenture with certificates for the Notes that
are in a form eligible for deposit with The Depository Trust Company.

 

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(xv)                            Cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence investigation
by any underwriter that is required to be retained in accordance with the rules
and regulations of the NASD.

 

(xvi)                         Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and all reporting
requirements under the rules and regulations of the Exchange Act.

 

(xvii)                      Cause the Indenture to be qualified under the TIA
not later than the effective date of the Shelf Registration Statement required
by this Agreement, and, in connection therewith, cooperate with the trustee and
the Holders of Notes to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use its best efforts to cause the trustee thereunder to execute
all documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such Indenture
to be so qualified in a timely manner.

 

(xviii)                   Cause all Transfer Restricted Securities covered by
the Shelf Registration Statement to be listed or quoted, as the case may be, on
each securities exchange or automated quotation system on which similar
securities issued by the Issuer are then listed or quoted.

 

(xix)                           Provide promptly to each Holder upon written
request each document filed with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act after the effective date of the
Shelf Registration Statement.

 

(xx)                              If requested by the underwriters, make
appropriate officers of the Issuer available to the underwriters for meetings
with prospective purchasers of the Transfer Restricted Securities and prepare
and present to potential investors customary “road show” material in a manner
consistent with new issuances of other securities similar to the Transfer
Restricted Securities.

 

(c)                                  Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Issuer of
the existence of any fact of the kind described in Section 4(b)(iii)(D) hereof,
such Holder will, and will use its reasonable best efforts to cause any
underwriter(s) in an Underwritten Offering to, forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the Shelf Registration Statement,
and hold the content of such notice from the Company in confidence, until:

 

(i)                                     such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section 4(b)(xiii) hereof; or

 

(ii)                                  such Holder is advised in writing by the
Issuer that the use of the Prospectus may be resumed, and has received copies of
any additional or supplemental filings that are incorporated by reference in the
Prospectus.

 

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If so directed by the Issuer, each Holder will deliver to the Issuer (at the
Issuer’s expense) all copies, other than permanent file copies then in such
Holder’s possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice of suspension.

 

(d)                                 (1)                                  Not
less than 30 calendar days prior to the effectiveness of the Shelf Registration
Statement, the Company shall mail the a questionnaire to each Holder of Transfer
Restricted Securities.  Each Holder who intends to be named as a selling Holder
in the Shelf Registration Statement shall furnish to the Issuer in writing by
the Questionnaire Deadline, as set forth in the questionnaire, such information
regarding such Holder and the proposed distribution by such Holder of its
Transfer Restricted Securities as the Issuer may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein.  The form of the questionnaire is attached hereto
as Exhibit A.  Each Holder who intends to be named as a selling Holder in the
Shelf Registration Statement shall promptly furnish to the Issuer in writing
such other information as the Issuer may from time to time reasonably request in
writing. Each Holder as to which the Shelf Registration Statement is being
effected agrees to furnish promptly to the Issuer all information required to be
disclosed in order to make information previously furnished to the Issuer by
such Holder not materially misleading.  The Company shall take action to name
each Holder that furnishes to the Issuer the requested information by the
Questionnaire Deadline so that such Holder is named as a selling securityholder
in the Shelf Registration Statement at the time of its effectiveness and is
permitted to deliver the Prospectus forming a part thereof as of such time to
purchasers of such Holder’s Transfer Restricted Securities in accordance with
applicable law.  Holders that do not complete the questionnaire and deliver it
to the Issuer shall not be named as selling securityholders in the Prospectus or
preliminary Prospectus included in the Shelf Registration Statement and
therefore shall not be permitted to sell any Transfer Restricted Securities
pursuant to the Shelf Registration Statement.

 

(2)                                  After the Shelf Registration Statement has
become effective, the Company shall, upon the request of any Holder of Transfer
Restricted Securities, promptly send a questionnaire to such Holder.  From and
after the date on which the Shelf Registration Statement has become effective,
the Company shall (i) as promptly as is practicable after the date a completed
and signed questionnaire is delivered to the Company prepare and file with the
Securities Exchange Commission (x) a supplement to the Prospectus or, if
required by applicable law, a post-effective amendment to the Shelf Registration
Statement and (y) any other document required by applicable law, so that the
Holder delivering such questionnaire is named as a selling securityholder in the
Shelf Registration Statement and is permitted to deliver the Prospectus to
purchasers of such Holder’s Transfer Restricted Securities in accordance with
applicable law, and (ii) if the Company shall file a post-effective amendment to
the Shelf Registration Statement, use its reasonable best efforts to cause such
post-effective amendment to become effective under the Act as promptly as is
practicable;  provided, however, that if a questionnaire is delivered to the
Company during a Suspension Period, the Company shall not be obligated to take
the actions set forth in clauses (i) and (ii) until the termination of such
Suspension Period.

 

12

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5.                                      REGISTRATION EXPENSES.

 

(a)                                  All expenses incident to the Issuer’s
performance of or compliance with this Agreement shall be borne by the Issuer
regardless of whether a Shelf Registration Statement becomes effective,
including, without limitation:

 

(i)                                     all registration and filing fees and
expenses (including filings made by the Dealer Manager, Holders or underwriters
with the NASD);

 

(ii)                                  all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws;

 

(iii)                               all expenses of printing (including printing
of Prospectuses and certificates for the Common Stock to be issued upon
conversion of the Notes), messenger and delivery services and telephone;

 

(iv)                              all fees and disbursements of counsel to the
Issuer and, subject to Section 5(b) below, the Holders of Transfer Restricted
Securities;

 

(v)                                 all application and filing fees in
connection with listing (or authorizing for quotation) the Common Stock on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and

 

(vi)                              all fees and disbursements of independent
certified public accountants of the Issuer (including the expenses of any
special audit and comfort letters required by or incident to such performance).

 

The Issuer shall bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal, accounting
or other duties), the expenses of any annual audit and the fees and expenses of
any Person, including special experts, retained by the Issuer.

 

(b)                                 In connection with the Shelf Registration
Statement required by this Agreement, the Issuer shall reimburse the Dealer
Manager and the Holders of Transfer Restricted Securities being registered
pursuant to the Shelf Registration Statement, as applicable, for the reasonable
fees and disbursements of not more than one counsel, which shall be Cleary,
Gottlieb, Steen & Hamilton, or such other counsel as may be chosen by a Majority
of Holders for whose benefit the Shelf Registration Statement is being prepared.

 

6.                                      INDEMNIFICATION AND CONTRIBUTION.

 

(a)                                  The Issuer agrees to indemnify and hold
harmless the Dealer Manager, each Holder and each Person who participates as an
underwriter (any such Person being an “Underwriter”) and each Person, if any,
who controls the Dealer Manager, any Holder or any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act as follows:

 

(i)                                     against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any Shelf
Registration Statement (or any

 

13

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amendment or supplement thereto), including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of any untrue statement or alleged untrue statement
of a material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

 

(ii)                                  against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; PROVIDED that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Issuer; and

 

(iii)                               against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by any
indemnified party), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under subparagraph (i)
or (ii) above;

 

PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Issuer by the
Dealer Manager, such Holder or such Underwriter expressly for use in a Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).

 

(b)                                 Each Holder, severally but not jointly,
agrees to indemnify and hold harmless the Issuer, the Dealer Manager, each
Underwriter and the other selling Holders and each Person, if any, who controls
the Issuer, the Dealer Manager, any Underwriter or any other selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 6(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in any Shelf Registration Statement (or any
amendment or supplement thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
with respect to such Holder furnished to the Issuer by such Holder expressly for
use in the Shelf Registration Statement (or any amendment thereto) or such
Prospectus (or any amendment or supplement thereto); PROVIDED, HOWEVER, that no
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Transfer Restricted
Securities pursuant to such Shelf Registration Statement.

 

14

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(c)                                  Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure so to notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of such action; PROVIDED, HOWEVER, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

 

(d)                                 If at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated by Section 6(a)(ii) effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.

 

(e)                                  If the indemnification provided for in this
Section 6 is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and the indemnified party or parties on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

 

The relative fault of the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the indemnifying party or parties on the one hand or
the indemnified party or parties on the other hand and the parties’

 

15

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relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 6. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 6 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 6, no Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Transfer Restricted Securities purchased by it were resold exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. The Holders’ obligations to contribute as provided in this Section
6(e) are several and not joint.

 

No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 6, each Person, if any, who controls the Dealer
Manager, a Holder or an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Initial Purchaser, such Holder or such Underwriter, and
each director of the Issuer, and each Person, if any, who controls the Issuer
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Issuer.

 

7.                                      RULE 144A.  In the event the Issuer is
not subject to Section 13 or 15(d) of the Exchange Act, the Issuer hereby agrees
with each Holder, for so long as any Transfer Restricted Securities remain
outstanding, to make available to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchaser of such Transfer Restricted Securities from such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.

 

8.                                      PARTICIPATION IN UNDERWRITTEN
REGISTRATIONS.  No Holder may participate in any Underwritten Registration
hereunder unless such Holder:

 

(i)                                     agrees to sell such Holder’s Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and

 

16

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(ii)                                  completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.

 

9.                                      SELECTION OF UNDERWRITERS.  The Holders
of Transfer Restricted Securities covered by the Shelf Registration Statement
who desire to do so may sell such Transfer Restricted Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by a Majority of Holders whose Transfer Restricted Securities
are included in such offering; PROVIDED, that such investment bankers and
managers must be reasonably satisfactory to the Issuer.

 

10.                               MISCELLANEOUS.

 

(a)                                  REMEDIES. The Issuer acknowledges and
agrees that any failure by the Issuer to comply with its obligations under
Section 2 hereof may result in material irreparable injury to the Dealer Manager
or the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Dealer Manager or any Holder may obtain such relief as
may be required to specifically enforce the Issuer’s obligations under Section 2
hereof. The Issuer further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

 

(b)                                 ADJUSTMENTS AFFECTING TRANSFER RESTRICTED
SECURITIES. The Issuer shall not, directly or indirectly, take any action with
respect to the Transfer Restricted Securities as a class that would adversely
affect the ability of the Holders to include such Transfer Restricted Securities
in a registration undertaken pursuant to this Agreement.

 

(c)                                  NO INCONSISTENT AGREEMENTS. The Issuer will
not, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof. In
addition, the Issuer shall not grant to any of its security holders (other than
the Holders of Transfer Restricted Securities in such capacity) the right to
include any of its securities in the Shelf Registration Statement provided for
in this Agreement other than the Transfer Restricted Securities. The Issuer has
not previously entered into any agreement (which has not expired or been
terminated) granting any registration rights with respect to its securities to
any Person which rights conflict with the provisions hereof.

 

(d)                                 AMENDMENTS AND WAIVERS. This Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given, unless the Issuer has
obtained the written consent of a Majority of Holders.

 

(e)                                  NOTICES. All notices and other
communications provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail (registered or

 

17

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certified, return receipt requested), telex, telecopier, or air courier
guaranteeing overnight delivery:

 

(i)                                     if to a Holder, at the address set forth
on the records of the registrar under the Indenture or the transfer agent of the
Common Stock, as the case may be; and

 

(ii)                                  if to the Issuer:

 

Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, Massachusetts
02139
Attention: Investor Relations

 

With a copy to:

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston,
Massachusetts 02111
Attention: Michael Fantozzi, Esq.

 

All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next Business Day,
if timely delivered to an air courier guaranteeing overnight delivery.

 

(f)                                    SUCCESSORS AND ASSIGNS. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties, including without limitation and without the need for an
express assignment, subsequent Holders of Transfer Restricted Securities;
PROVIDED, HOWEVER, that (i) this Agreement shall not inure to the benefit of or
be binding upon a successor or assign of a Holder unless and to the extent such
successor or assign acquired Transfer Restricted Securities from such Holder and
(ii) nothing contained herein shall be deemed to permit any assignment, transfer
or other disposition of Transfer Restricted Securities in violation of the terms
of the Indenture. If any transferee of any Holder shall acquire Transfer
Restricted Securities, in any manner, whether by operation of law or otherwise,
such Transfer Restricted Securities shall be held subject to all of the terms of
this Agreement, and by taking and holding such Transfer Restricted Securities
such person shall be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement.

 

(g)                                 COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

 

(h)                                 SECURITIES HELD BY THE ISSUER OR ITS
AFFILIATES. Whenever the consent or approval of Holders of a specified
percentage of Transfer Restricted Securities is required hereunder, Transfer
Restricted Securities held by the Issuer or its “affiliates” (as such

 

18

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term is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.

 

(i)                                     HEADINGS. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.

 

(j)                                     GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with, the law of the State of New York,
without regard to conflict of laws principles thereof.

 

(k)                                  SEVERABILITY. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.

 

(l)                                     ENTIRE AGREEMENT. This Agreement is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuer with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

 

19

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

 

VERTEX PHARMACEUTICALS

 

INCORPORATED

 

 

 

 

 

By:     /s/ Ian Smith

 

 

 

 

 

Name:  Ian Smith

 

 

Title:  Senior Vice President & Chief Financial Officer

 

 

 

 

UBS Securities LLC

 

 

as Dealer Manager

 

 

 

 

 

By:     /s/ David Lessen

 

 

 

 

 

By:     /s/ Aradhana Sarin

 

 

 

 

 

Authorized Signatory

 

 

20

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Exhibit A

 

VERTEX PHARMACEUTICALS INCORPORATED

 

FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

 

The undersigned beneficial holder of 5¾% Convertible Subordinated Notes due
February 15, 2011 (the “Notes”) of Vertex Pharmaceuticals Incorporated (the
“Issuer”), or common stock, par value $.01 per share issued upon conversion of
the Notes (the “Shares” and together with the Notes, the “Transfer Restricted
Securities”), of the Issuer understands that the Issuer has filed, or intends to
file, with the Securities and Exchange Commission (the “Commission”) a
registration statement (the “Shelf Registration Statement”), for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the “Securities Act”), of the Transfer Restricted Securities in accordance with
the terms of the Registration Rights Agreement, dated February 13, 2004 (the
“Registration Rights Agreement”), between the Issuer and UBS Securities LLC, as
Dealer Manager. A copy of the Registration Rights Agreement is available from
the Issuer upon request at the address set forth below. All capitalized terms
not otherwise defined herein have the meaning ascribed thereto in the
Registration Rights Agreement.

 

Each beneficial owner of Transfer Restricted Securities is entitled to the
benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Transfer Restricted Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Transfer Restricted Securities generally will
be required to be named as a selling securityholder in the related Prospectus,
deliver a Prospectus to purchasers of Transfer Restricted Securities and be
bound by those provisions of the Registration Rights Agreement applicable to
such beneficial owner (including certain indemnification provisions, as
described below).

 

Beneficial owners that do not complete this Notice and Questionnaire and deliver
it to the Issuer as provided below will not be named as selling securityholders
in the prospectus and will not be permitted to sell any Transfer Restricted
Securities pursuant to the Shelf Registration Statement.  Beneficial owners are
encouraged to complete and deliver this Notice and Questionnaire on or before
the tenth business day prior to the effectiveness of the Shelf Registration
Statement so that such beneficial owners may be named as selling securityholders
in the related prospectus at the time the Shelf Registration Statement becomes
effective.  Upon receipt of a completed Notice and Questionnaire from a
beneficial owner following the effectiveness of the Shelf Registration
Statement, the Issuer will, as promptly as practicable, make filings with the
Commission as are necessary to permit such beneficial owner to deliver such
prospectus to purchasers of Transfer Restricted Securities, subject to certain
limitations set forth in the Registration Rights Agreement.  The Issuer has
agreed to pay liquidated damages pursuant to the Registration Rights Agreement
under certain circumstances as set forth therein.

 

Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and the related Prospectus. Accordingly,
holders and beneficial owners of Transfer Restricted Securities are advised to
consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and the related Prospectus.

 

A-1

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NOTICE

 

The undersigned beneficial owner (the “Selling Securityholder”) of Transfer
Restricted Securities hereby gives notice to the Issuer of its intention to sell
or otherwise dispose of Transfer Restricted Securities beneficially owned by it
and listed below in Item 3 (unless otherwise specified under Item 3) pursuant to
the Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.

 

Pursuant to the Registration Rights Agreement, the undersigned has agreed to
indemnify and hold harmless the Issuer, the Dealer Manager, any Underwriter and
the other selling holders and each person, if any, who controls such persons
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against certain losses arising in connection with
statements concerning the undersigned made in the Shelf Registration Statement
or the related Prospectus in reliance upon the information provided in this
Notice and Questionnaire.

 

The undersigned hereby provides the following information to the Issuer and
represents and warrants that such information is accurate and complete:

 

QUESTIONNAIRE

 

1.                                       (a)                                 
Full legal name of Selling Securityholder:

 

(b)                                 Full legal name of registered holder (if not
the same as (a) above) through which Transfer Restricted Securities listed in
(3) below are held:

 

(c)                                  Full legal name of DTC participant (if
applicable and if not the same as (b) above) through which Transfer Restricted
Securities listed in (3) are held:

 

(d)                                 Taxpayer identification or social security
number of Selling Securityholder:

 

2.  Address for notices to Selling Securityholders:

 

Telephone:

 

Fax:

 

Email:

 

Contact Person:

 

3.                                       Beneficial ownership of Transfer
Restricted Securities:

 

(a)                                  Type of Transfer Restricted Securities
beneficially owned, and principal amount of Notes or number of shares of Common
Stock, as the case may be, beneficially owned:

 

(b)                                 CUSIP No(s). of such Transfer Restricted
Securities beneficially owned:

 

A-2

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4.                                       Beneficial ownership of the Issuer’s
securities owned by the Selling Securityholder:

 

EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS NOT THE
BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE ISSUER OTHER THAN THE
TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3) (“OTHER SECURITIES”).

 

(a)                                  Type and amount of Other Securities
beneficially owned by the Selling Securityholder:

 

(b)                                 CUSIP No(s). of such Other Securities
beneficially owned:

 

5.                                       Relationship with the Issuer

 

Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (5% or more) has held any
position or office or has had any other material relationship with the Issuer
(or their predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

6.                                       Nature of the Selling Securityholder:

 

(a)                                  Is the Selling Securityholder a reporting
company under the Securities Exchange Act, a majority owned subsidiary of a
reporting company under the Securities Exchange Act, or a registered investment
company under the Investment Company Act?  If so, please state which one.

 

If the entity is a majority owned subsidiary of a reporting company, identify
the majority stockholder that is a reporting company.

 

If the entity is not any of the above, identify the natural person or persons
having voting and investment control over the Company’s securities that the
entity owns.

 

(b)                               Is the Selling Securityholder is a registered
broker-dealer?

 

Yes             No        

 

If yes, state whether the Selling Securityholder received the Transfer
Restricted Securities as compensation for underwriting activities and, if so,
provide a brief description of the transaction(s) involved.

 

State whether the Selling Securityholder is an affiliate of a broker-dealer and
if so, list the name(s) of the broker-dealer affiliate(s).  For purposes of this
Item 6(b), an “affiliate” of a broker-dealer includes any company that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such broker-dealer, and does not include
individuals employed by any such broker-dealers or by any of their affiliates.

 

A-3

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Yes             No        

 

If the answer is “Yes,” you must answer the following:

 

If the Selling Securityholder is an affiliate of a registered broker-dealer, the
Selling Securityholder purchased the Transfer Restricted Securities (i) in the
ordinary course of business and (ii) at the time of the purchase of the Transfer
Restricted Securities, had no agreements or understandings, directly or
indirectly, with any person to distribute the Transfer Restricted Securities.

 

Yes             No        

 

If the answer is “No”, state any exceptions here:

 

If the answer is “No,” this may affect your ability to be included in the Shelf
Registration Statement.

 

7.                                       Plan of Distribution

 

Except as set forth below, the undersigned (including its donees, pledges,
transferees and other successors in interest) intends to distribute the Transfer
Restricted Securities listed above in Item (3) pursuant to the Shelf
Registration Statement only as follows (if at all). Such Transfer Restricted
Securities may be sold from time to time directly by the undersigned or,
alternatively, through underwriters, broker-dealers or agents. If the Transfer
Restricted Securities are sold through underwriters or broker-dealers, the
Selling Securityholder will be responsible for underwriting discounts or
commissions or agent’s commissions. Such Transfer Restricted Securities may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at varying prices determined at the time of sale, or at
negotiated prices. Such sales may be effected in transactions (which may involve
crosses or block transactions):

 

(i)                                     on any national securities exchange or
quotation service on which the Transfer Restricted Securities may be listed or
quoted at the time of sale;

 

(ii)                                  in the over-the-counter market;

 

(iii)                               in transactions otherwise than on such
exchanges or services or in the over-the-counter market; or

 

(iv)                              through the writing of options.

 

In connection with sales of the Transfer Restricted Securities or otherwise, the
undersigned may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the Transfer Restricted Securities and deliver
Transfer Restricted Securities to close out such short positions, or loan or
pledge Transfer Restricted Securities to broker-dealers that in turn may sell
such securities.

 

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State any exceptions here:

 

Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Transfer Restricted Securities without the prior
agreement of the Issuer.

 

8.                                       (Optional) Submissions After the Shelf
Registration Statement Becomes Effective:

 

If you are unable to trace your securities back to an individual or entity
listed as a selling securityholder in the Shelf Registration Statement, we may
need to file a post-effective amendment to the Shelf Registration Statement. 
This could result in additional delay in your ability to resell your securities
pursuant to the Shelf Registration Statement.  In order to allow us to determine
whether your securities can be traced back to an individual or entity listed as
a selling stockholder in the Shelf Registration Statement, please indicate from
whom the Transfer Restricted Securities were acquired:

 

__________________________________________________________________________________________________________

 

__________________________________________________________________________________________________________

 

__________________________________________________________________________________________________________

 

The undersigned acknowledges that it understands its obligation to comply with
the provisions of the Exchange Act and the rules and regulations promulgated
thereunder relating to stock manipulation, particularly Regulation M thereunder
(or any successor rules or regulations), in connection with any offering of
Transfer Restricted Securities pursuant to the Shelf Registration Statement. The
undersigned agrees that neither it nor any person acting on its behalf will
engage in any transaction in violation of such provisions.

 

The Selling Securityholder hereby acknowledges its obligations under the
Registration Rights Agreement to indemnify and hold harmless certain persons as
set forth therein.

 

Pursuant to the Registration Rights Agreement, the Issuer has agreed under
certain circumstances to indemnify the Selling Securityholders against certain
liabilities.

 

In accordance with the undersigned’s obligation under the Registration Rights
Agreement to provide such information as may be required by law for inclusion in
the Shelf Registration Statement, the undersigned agrees to promptly notify the
Issuer of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof at any time while the Shelf Registration
Statement remains effective. All notices hereunder and pursuant to the
Registration Rights Agreement shall be made in writing at the address set forth
below.

 

By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to items (1) through (8) above and the inclusion
of such information in the Shelf Registration Statement and the related
Prospectus. The undersigned understands that such information will be relied
upon by the Issuer in connection with the preparation or amendment of the Shelf
Registration Statement and the related Prospectus.

 

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IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

 

Dated:

 

Beneficial Owner

 

By:

 

 

Name:

Title:

 

Please return the completed and executed Notice and Questionnaire to Vertex
Pharmaceuticals Incorporated at:

 

Vertex Pharmaceuticals Incorporated

130 Waverly Street

Cambridge, Massachusetts 02139
Attention:  Valerie Andrews, Senior Counsel

Facsimile:  (617) 444-7117

 

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