Exhibit 10.2


 


REGISTRATION RIGHTS AGREEMENT


 


among


 


VERTEX PHARMACEUTICALS INCORPORATED,


 


and


 


UBS Securities LLC


 


as Dealer Manager


 


Dated February 13, 2004


 

















 


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 53⁄4% 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


 


5

















 


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


 


6

















 


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


 


7

















 


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).


 


8

















 


(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


 


9

















 


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.


 


11

















 


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

















 


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

















 


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

















 


(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

















 


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

















 


(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

















 


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

















 


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

















 


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

















 


Exhibit A


 


VERTEX PHARMACEUTICALS INCORPORATED


 


FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE


 


The undersigned beneficial holder of 53⁄4% 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

















 


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

















 


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

















 


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.


 


A-4

















 


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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