Exhibit 10.3


 


EXECUTION COPY


 


Confidential Treatment Requested.


 


Confidential portions of this document have been redacted and have been
separately filed

with the Commission.


 


U.S.
$155,000,000


 


VERTEX
PHARMACEUTICALS INCORPORATED


 


SECURED
NOTES DUE 2012


 


NOTE PURCHASE AGREEMENT


 


September 30, 2009


 


OLMSTED PARK S.A. 

20, rue de la Poste

L-2346 Luxembourg

Attention: Board of Directors


 


Ladies and Gentlemen:


 


Vertex Pharmaceuticals
Incorporated, a Massachusetts corporation (together with its permitted successors
and assigns, the “Company”), hereby, upon the
terms and conditions set forth in this agreement (this “Agreement”),
issues and sells to you (together with your permitted successors and assigns,
the “Purchaser”) U.S. $155,000,000
in aggregate principal amount of its Secured Notes due October 31, 2012
(the “Notes”).  The Notes are to be issued pursuant to an
Indenture, dated as of September 30, 2009 (the “Indenture”),
among the Company and U.S. Bank National Association, as trustee (the “Trustee”). This Agreement is to confirm the agreement
concerning the purchase of the Notes from the Company by the Purchaser.  Certain capitalized terms used herein are
defined in Annex I attached hereto.


 


1.            Purchase of the Notes.  The Notes will be offered and sold to the
Purchaser without registration under the Securities Act of 1933, as amended
(the “Securities Act”), in reliance
on an exemption pursuant to Section 4(2) under the Securities Act.


 


The holders of the Notes
will also be entitled to the benefit of security interests in the Collateral
(as such term is defined in the Security Agreement) (the “Collateral”) granted under the Security Agreement
between the Company and the Trustee, as collateral agent thereunder (the “Collateral Agent”), dated as of September 30, 2009
(the “Security Agreement”).


 


2.            Representations, Warranties
and Agreements of the Company. 
The Company represents, warrants and covenants to the Purchaser, as of
the date of this Agreement, as follows:


 


(a)           The Notes are eligible for resale
pursuant to Rule 144A under the Securities Act and such Notes at the time
of initial issuance will not be of the same class (within the meaning of Rule 144A
under the Securities Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange
Act or that are quoted in a United States automated inter-dealer quotation
system.


 

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


(b)           Assuming the truth and accuracy of
the Purchaser’s representations and warranties in Section 4 of this
Agreement, the purchase of the Notes pursuant hereto is exempt from the
registration requirements of the Securities Act.


 


(c)           Assuming the truth and accuracy of
the Purchaser’s representations and warranties in Section 4(f) of
this Agreement, no form of general solicitation or general advertising within
the meaning of Regulation D (including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising) was used by the Company, any of its Affiliates or any of
their respective representatives in connection with the offer and sale of the
Notes to the Purchaser.


 


(d)           Neither the Company nor any other
person acting on behalf of the Company has sold or issued any securities that
would be integrated with the offering of the Notes contemplated by this
Agreement pursuant to the Securities Act, the rules and regulations
thereunder or the interpretations thereof by the Commission.  The Company will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in the United
States or to any U.S. person (as defined in Rule 902 under the Securities
Act), of any Notes or any substantially similar security issued by the Company,
within six months subsequent to the date hereof, is made under restrictions and
other circumstances reasonably designed not to affect the status of the offer
and sale of the Notes pursuant to this Agreement as transactions exempt from
the registration provisions of the Securities Act.


 


(e)           No order or decree of any
Governmental Authority asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Securities Act
has been issued, and no proceeding for that purpose has commenced or is pending
before any Governmental Authority or, to the Knowledge of the Company is
contemplated.


 


(f)            The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts.  The Company
has all corporate powers and all licenses, authorizations, consents and
approvals of all Governmental Authorities required to carry on its business as
now conducted.  The Company is duly
qualified to do business as a foreign corporation and is in good standing in
every jurisdiction in which the failure to do so would reasonably be expected
to result, individually or in the aggregate, in an Adverse Effect.


 


(g)           The Company has all necessary
corporate power and authority to execute, issue, sell and perform its
obligations under the Notes.  The Notes
have been duly authorized by the Company and, when duly executed by the Company
in accordance with the terms of the Indenture, assuming due authentication of
the Notes by the Trustee, upon delivery to the Purchaser against payment
therefor in accordance with the terms of this Agreement and the Indenture, will
be validly issued and delivered and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally or general equitable
principles.  No qualification of the Indenture
under the Trust Indenture Act of 1939 (the


 


2

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


“Trust
Indenture Act”) is required in connection with the offer and
sale of the Notes contemplated hereby.


 


(h)           Except with respect to the Notes,
which are covered by the representations and warranties set forth in clause (g) above:
(i) the Company has all necessary corporate power and authority to enter
into, execute and deliver the Transaction Documents and to perform all of the
obligations to be performed by it hereunder and thereunder and to consummate
the transactions contemplated hereunder and thereunder, and (ii) each of
the Transaction Documents has been duly authorized, executed and delivered by
the Company and each Transaction Document constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its respective terms, subject, as to enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally or general equitable principles.


 


(i)            The Security Agreement is effective
to create, and once executed and delivered, will create, in favor of the
Collateral Agent for the benefit of the Trustee and the holders of the Notes,
legal, valid and enforceable liens on or in all of the Collateral subject
thereto, and upon the filing of  UCC-1
financing statement (containing adequate descriptions of such Collateral) with
the office of the Secretary of the Commonwealth of Massachusetts, such liens
shall comprise a perfected first-priority security interest in such Collateral,
subject to no other Liens.


 


(j)            The issue and sale of the Notes, the
execution, delivery and performance by the Company of each of the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, will not: (i) contravene, conflict with, result in a breach or
violation of, constitute a default (with or without notice or lapse of time, or
both) under, or accelerate the performance provided by, in any respect, (A) any
statute, law, rule, ordinance or regulation of any Governmental Authority, or
any judgment, order, writ, decree, permit, authorization or license of any
Governmental Authority, to which the Company, or any of its Subsidiaries or any
of their respective assets or properties may be subject or bound, (B) any
contract, agreement, commitment or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective assets or properties is bound or committed or (C) any
provisions of the articles of organization or by-laws (or other organizational
or constitutional documents) of the Company or any of its Subsidiaries; (ii) give
rise to any right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries; (iii) except as
provided in the Transaction Documents, result in the creation or imposition of
any Lien on the Pledged Interest or any other portion of the Collateral; or (iv) contravene,
conflict with, result in a breach or violation of, constitute a default (with
or without notice or lapse of time, or both) under, give to any other Person
the right to terminate (provided,
however,
that neither the execution and delivery of any of the Transaction Documents nor
the performance or consummation of the transactions contemplated hereby and
thereby will prevent Janssen’s ability to terminate the Janssen Agreement under
Section 13.2 thereof), or accelerate the performance provided by, in any
respect, any provision of the Janssen Agreement; provided, however, that, in the case of
clause (i)(B) or clause (ii), such contravention, conflict, breach,
violation, default or acceleration would reasonably be expected to result,
individually or in the aggregate, in an Adverse Effect.


 


3

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


(k)           The issue and sale of the Notes, the
execution and delivery by the Company of the Transaction Documents and the
performance by the Company of its obligations and the consummation by it of any
of the transactions contemplated hereunder and thereunder, do not require any
consent, approval, license, order, authorization or declaration from, notice
to, action or registration by or filing with any Governmental Authority or any
Person, except for (i) the filing of proper financing statements under the
UCC pursuant to the Security Agreement as described in clause (i) above, (ii) the
filing of a Current Report on Form 8-K with the Securities and Exchange
Commission and (iii) the Janssen Consent. 
The Company has obtained prior to its execution and delivery of this
Agreement the consent of Janssen required under Section 15.2 of the
Janssen Agreement with respect to the transactions contemplated by the
Transaction Documents (the “Janssen Consent”),
which consent is in full force and effect.


 


(l)            The historical consolidated
financial statements (including the related notes and supporting schedules)
included or incorporated by reference in the Exchange Act Reports present
fairly in all material respects the financial condition, results of operations
and cash flows of the Company and its consolidated Subsidiaries purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with GAAP applied on a consistent basis throughout the
periods involved.


 


(m)          The Company is the exclusive owner of
the entire right, title (legal and equitable) and interest in and to the Pledged
Interest, free and clear of all Liens.


 


(n)          Intellectual Property.


 


(i)            The Company has the right, whether
by ownership or license, to grant Janssen the rights and licenses to the
Company intellectual property rights described in the Janssen Agreement,
including the Vertex Patent Rights, the Vertex Know-How, and the Company’s
rights under Joint Patent Rights (as such terms are defined in the Janssen
Agreement), except where the failure to have such right to license would not
reasonably be expected to have, individually or in the aggregate, an Adverse
Effect and to the Knowledge of the Company, Janssen has full right and interest
in the Janssen intellectual property rights described in the Janssen Agreement,
including the Janssen Patent Rights, the Janssen Know-How (as such terms are
defined in the Janssen Agreement), and Janssen’s rights under Joint Patent
Rights, free and clear of all Liens, except where the failure to have full
right and interest or the existence of such Liens would not reasonably be expected
to have, individually or in the aggregate, an Adverse Effect;


 


(ii)           To the actual knowledge of any of the
Company employees or officers listed in the definition of “Knowledge” herein,
no third party owns any intellectual property rights that would necessarily be
infringed, misappropriated or otherwise violated by the development,
manufacture, use, sale or importation of a Compound, Product Candidate, or
Combination Product (as such terms are defined in the Janssen Agreement);


 


(iii)          Except for the Vertex Patent Rights,
Vertex Know-How, and the Company’s rights under Joint Patent Rights, the
Company does not own or control any intellectual property rights that would be
necessary to the achievement by Janssen of the


 


4

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


Milestone Events.  The Company does not own or control any
intellectual property or data resulting from Additional Development Activities
(as defined in the Janssen Agreement);


 


(iv)          No claims have been made or, to the
Knowledge of the Company, threatened against the Company since the “Effective
Date” of the Janssen Agreement that any Compound, Product Candidate, Product,
or Combination Product or the development, manufacture, use sale or importation
thereof, infringes, misappropriates, or otherwise violates any intellectual
property right of any third party, except where any such claim or claims would
not reasonably be expected to have, individually or in the aggregate, an
Adverse Effect;


 


(v)           To the Knowledge of the Company, no
claims have been made or threatened against Janssen since the “Effective Date”
of the Janssen Agreement that any Compound, Product Candidate, Product, or
Combination Product or any use thereof by Janssen, infringes, misappropriates,
or otherwise violates any intellectual property right of any third party,
except where any such claim or claims would not reasonably be expected to have,
individually or in the aggregate, an Adverse Effect;


 


(vi)          To the actual knowledge of any of the
Company employees or officers listed in the definition of “Knowledge” herein,
Janssen is currently not infringing, misappropriating, or otherwise violating
in any respect any of the Company’s intellectual property rights relating to
the Compound or Product Candidate;


 


(vii)         To the Knowledge of the Company, the
Vertex Patent Rights and the Company’s interest in any Joint Patent Rights are
valid and enforceable, and no third party is currently challenging, or has
challenged, the validity or enforceability of any Vertex Patent Rights, Vertex
Know-How, the Company’s rights under Joint Patent Rights, Janssen Patent
Rights, Janssen Know-How or Janssen’s rights under Joint Patent Rights in any
respect, except where any such invalidity, unenforceability or challenge to
validity or enforceability would not reasonably be expected to have,
individually or in the aggregate, an Adverse Effect; and


 


(viii)        All of the representations and
warranties made by the Company in the Janssen Agreement were accurate and
complete in all material respects as of the “Effective Date” of the Janssen
Agreement, in each case subject to any qualifiers set forth therein.


 


(o)           Janssen Agreement.


 


(i)            Other than the Janssen Agreement and
the Transaction Documents, there is no contract, agreement or other arrangement
(whether written or oral) to which either the Company or any of its
Subsidiaries is a party or by which any of their respective assets or
properties is bound or committed (i) that creates a Lien on the Pledged
Interest or (ii) the breach, nonperformance, cancellation or termination
of which would reasonably be expected to result, individually or in the
aggregate, in an Adverse Effect.


 


(ii)           The Company has provided the
Purchaser a redacted copy of the Janssen Agreement (with the Ancillary Janssen
Documents redacted) and a true, accurate and complete copy of each
confidentiality agreement relating thereto and the Janssen Consent. The
redacted copy of the Janssen Agreement 
provided by the Company to the Purchaser as described


 


5

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


above, together with
information that has been publicly disclosed by the Company or is otherwise
publicly available, in each case, prior to the Effective Date, contains all of
the material provisions of, and information contained in, the Janssen Agreement
with respect to the Pledged Interest. 
The redacted portions of the Janssen Agreement do not contain any
provisions that would reasonably be expected to (i) result in an Adverse
Effect or (ii) have a material adverse effect on the timing or likelihood
of achievement of the Milestone Events. The Janssen Agreement constitutes the
entire agreement between the Company and Janssen (and their respective
Affiliates) relating to the Pledged Interest.


 


(iii)          The Janssen Agreement is the legal,
valid and binding obligation of the Company and, to the Knowledge of the
Company, Janssen, enforceable against the Company and, to the Knowledge of the
Company, Janssen in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and general equitable principles.  The execution, delivery and performance of
the Janssen Agreement was and is within the corporate powers of the Company
and, to the Knowledge of the Company, Janssen. 
The Janssen Agreement was duly authorized by all necessary action on the
part of, and validly executed and delivered by, the Company and, to the Knowledge
of the Company, Janssen.  There is no
breach or default, and no event has occurred or circumstance exists that (with
or without notice or lapse of time, or both) would constitute or give rise to a
breach or default, in the performance of the Janssen Agreement by the Company
or, to the Knowledge of the Company, Janssen, which breach, default, event or
circumstance in either case would reasonably be expected to result,
individually or in the aggregate, in an Adverse Effect or a material adverse
effect on the timing or likelihood of achievement of the Milestone Events.  To the Knowledge of the Company, no event has
occurred or circumstance exists that (with or without notice or lapse of time,
or both) would give either Janssen or the Company the right to terminate the
Janssen Agreement (except pursuant to Section 13.2 thereof).


 


(iv)          The Company (i) has not waived
any rights or defaults under the Janssen Agreement and (ii) has not taken
any action or omitted to take any action under the Janssen Agreement, in each
case with respect to clause (i) and clause (ii), that materially adversely
affects the Purchaser’s rights under any of the Transaction Documents.


 


(v)           The Company has not received any
notice and has no Knowledge (A) of Janssen’s intention to terminate the
Janssen Agreement, in whole or in part, (B) of Janssen’s intention to
effectuate a Prohibited Amendment, (C) of Janssen’s or any other Person’s
or Governmental Authority’s (where applicable) intention to challenge the
validity or enforceability of the Janssen Agreement or the obligation of
Janssen to pay the Milestone Payments under the Janssen Agreement upon
achievement of the Milestone Events or (D) that the Company or Janssen is
in default of any of its material obligations under the Janssen Agreement.  The Company (A) has no intention of
terminating the Janssen Agreement and has not given Janssen any notice of
termination of the Janssen Agreement, in whole or in part, and (B) has no
intention to effectuate a Prohibited Amendment and has not given Janssen any
request to effectuate a Prohibited Amendment.


 


6

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


(vi)          Except as provided in Sections 9.9 and
13.4.1 of the Janssen Agreement, the Company is not a party to any agreement
providing for or permitting a sharing of, or Set-off against, the Milestone
Payments.


 


(vii)         The Company has all licenses,
authorizations, consents and approvals of all Governmental Authorities required
to exercise its rights and to perform its obligations under the Janssen
Agreement.  The pledge by the Company of
the Company’s right, title and interest in and to the Pledged Interest and the
other Collateral pursuant to the Transaction Documents will not require the
approval, consent, ratification, waiver, or other authorization of Janssen or
any other Person or Governmental Authority under the Janssen Agreement or
otherwise and will not constitute a breach of or default or event of default
under the Janssen Agreement or any other agreement or law.


 


(viii)        The Company has not consented to an
assignment (by operation of law or otherwise) by Janssen of any of Janssen’s
rights or obligations under the Janssen Agreement with respect to the Pledged
Interest, nor does the Company have Knowledge of any such assignment (by
operation of law or otherwise) by Janssen.


 


(ix)          Neither the Company nor Janssen has
made any claim of indemnification under the Janssen Agreement nor, to the
Knowledge of the Company, have there been any events or circumstances that
would give rise to a right of such claim by the Company or Janssen.


 


(x)           The Company received prior to the
date hereof payment in full from Janssen (without any Set-offs by Janssen) for
the milestone events numbered “1” through (and including) “5” set forth in the
table in Section 9.2.1 of the Janssen Agreement, in each case in the full
amount and within the time set forth in the Janssen Agreement.


 


(xi)          No portion of the Milestone Payments
was payable to the Company or received by the Company or any of its Affiliates
on or prior to the date of this Agreement.


 


(p)           There is no (i) action, suit,
arbitration proceeding, claim, investigation or other proceeding (whether
civil, criminal, administrative or investigative) pending or, to the Knowledge
of the Company, threatened by or against the Company or any of its Subsidiaries
or, to the Knowledge of the Company, pending or threatened by or against
Janssen, at law or in equity, or (ii) inquiry or investigation (whether
civil, criminal, administrative or investigative) by or before a Governmental
Authority pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries or, to the Knowledge of the Company, pending
or threatened against Janssen, which, in each case with respect to clause (i) or
clause (ii) above, (A) if adversely determined, would reasonably be
expected to have, individually or in the aggregate, an Adverse Effect, or (B) challenges,
or may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the transactions contemplated by any of the
Transaction Documents.  To the Knowledge
of the Company, no event has occurred or circumstance exists that may give rise
to or serve as a basis for the commencement of any such action, suit,
arbitration, claim, investigation, proceeding or inquiry.


 


7

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


(q)           None of the Company nor any of its
Subsidiaries is (i) in violation of, or has violated or has been given
notice of any violation, or, to the Knowledge of the Company, is under
investigation with respect to, or has been threatened to be charged with any
violation of, any law, rule, ordinance or regulation of, or any judgment,
order, writ, decree, permit or license granted, issued or entered by, any
Governmental Authority or (ii) subject to any judgment, order, writ,
decree, permit or license granted, issued or entered by any Governmental
Authority, in the case of both clause (i) and clause (ii) above, that
would reasonably be expected to have, individually or in the aggregate, an
Adverse Effect.  To the Knowledge of the
Company, no event has occurred or circumstance exists that (with or without
notice or lapse of time, or both) would constitute or result in a violation by
the Company or any of its Subsidiaries of, or a failure on the part of the
Company or any of its Subsidiaries to comply with, any such law, rule,
ordinance or regulation of, or any judgment, order, writ, decree, permit or
license granted, issued or entered by, any Governmental Authority, in each
case, that would reasonably be expected to result, individually or in the
aggregate, in an Adverse Effect.


 


(r)            Immediately after the consummation
of the issuance and sale of Notes and the other transactions contemplated by
the Transaction Documents, (i) the fair saleable value of the Company’s
assets will be greater than the sum of its debts and other obligations,
including contingent liabilities, (ii) the present fair saleable value of
the Company’s assets will be greater than the amount that would be required to
pay its probable liabilities on its existing debts and other obligations,
including contingent liabilities, as they become absolute and matured, (iii) the
Company will be able to realize upon its assets and pay its debts and other
obligations, including contingent obligations, as they mature, (iv) the
Company will not have unreasonably small capital with which to engage in its
business and (v) the Company will not incur, nor does it have present
plans or intentions to incur, debts or other obligations or liabilities beyond
its ability to pay such debts or other obligations or liabilities as they
become absolute and matured.


 


(s)           None of the transactions contemplated
by this Agreement (including, without limitation, the use of the proceeds from
the sale of the Notes), will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System.


 


3.             Purchase of the Notes by
the Purchaser.  The Company,
on the basis of the representations, warranties, covenants and agreements of
the Purchaser contained herein and subject to all the terms and conditions set
forth herein, hereby issues and sells to the Purchaser and, upon the basis of
the representations, warranties and agreements of the Company herein contained
and subject to all the terms and conditions set forth herein, the Purchaser
hereby purchases from the Company, at an aggregate purchase price of U.S.
$122,216,581, Notes with an aggregate principal amount of U.S. $155,000,000.


 


4.             Representations, Warranties
and Agreements of the Purchaser. 
The Purchaser represents, warrants and covenants to the Company, as of
the date of this Agreement, as follows:


 


(a)           The Purchaser is acquiring the Notes
for investment for its own account, not as a nominee or agent, and not with a
view to, or for resale, in connection with, any distribution thereof. The
Purchaser intends to hold the Notes for the account of the Purchaser,


 


8

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


and currently does not
intend, and does not have any agreement or understanding, at this time to
dispose of all or any part of the Notes. 
The Purchaser, however, reserves the right to sell all or part of the
Notes in accordance with the terms of the Indenture.


 


(b)           The Purchaser is a “qualified
institutional buyer” as such term is defined in Rule 144A under the
Securities Act.


 


(c)           The Purchaser (i) has experience
in independently evaluating and investing in businesses in the Company’s
industry which are at similar stage of development as the Company, (ii) has
such knowledge and experience in business matters so as to be fully capable of
independently evaluating the merits and risks of the investment in the Notes,
has the capacity to protect its own interests and can bear the economic risk of
an investment in the Notes, and (iii) has had an opportunity to discuss
the transactions contemplated by the Transaction Documents with its advisors,
including legal counsel and tax advisors, as it deemed necessary and
appropriate to adequately evaluate an investment in the Notes.


 


(d)           The Purchaser acknowledges that it is
familiar with the condition, financial and otherwise, of the Company and the
Notes and the security provided under the Security Agreement in connection with
the Notes and, to the extent deemed appropriate in making its investment
decision, has discussed with the Company and its advisors, the Notes, the
security therefore under the Security Agreement, the Company’s financial
condition and prospects and the Company’s current and proposed activities. The
Company has allowed the Purchaser access to such financial and other
information and personnel of the Company as the Purchaser has deemed necessary
in connection with the purchase of the Notes. The Company has provided the
Purchaser, during the course of the negotiations of the transactions
contemplated by this Agreement and prior to the sale of the Notes, the
opportunity to ask questions of, and receive answers from, the Company and its
advisors concerning the terms and conditions of the sale of the Notes and to obtain
any additional information necessary and appropriate in connection therewith.
The Purchaser has made such inquiry as it has believed to be desirable for its
purposes and has obtained such information it regards necessary, appropriate
and adequate from the Company and its representatives for its decision to
purchase the Notes.


 


(e)           The Purchaser acknowledges that
investing in securities of the Company, and therefore, the purchase of the
Notes, involves substantial risk, including, but not limited, to those risks
listed under “Risk Factors” in the Exchange Act Reports.


 


(f)            Neither the Purchaser, nor any of
its Affiliates, officers, employees, agents, shareholders, members or directors
has, either directly or indirectly including through a broker or finder, (i) been
presented with or solicited by any publicly issued or circulated form of
advertisement or general solicitation in connection with the offer, sale and
purchase of the Notes or (ii) engaged in any general solicitation  or published any advertisement in connection
with the offer and sale of the Notes. The Purchaser or its Affiliates,
officers, employees, agents, shareholders, members or directors have a
pre-existing business relationship with the Company and were contacted directly
by the Company or its agents regarding the opportunity to participate in the
offer, sale and purchase of the Notes.


 


9

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


(g)           The Purchaser acknowledges that the
Notes have not been registered under the Securities Act, that the Notes are
being issued pursuant to an exemption from the registration requirements of the
Securities Act, that the Notes are restricted securities under the Securities
Act insofar as they are being acquired from the Company in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations promulgated thereunder the Notes may be resold without registration
under the Securities Act only in certain limited circumstances.  The Purchaser is familiar with Rule 144A
and Rule 144 promulgated by the Commission, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act
and agrees to be bound by such limitations and not resell, pledge or otherwise
transfer the Notes except in compliance with such limitations and in accordance
with the terms of the Indenture.


 


(h)           The Purchaser acknowledges that
neither the Company nor its Affiliates, agents and advisors have made any
representation, warranty or agreement, express or implied, to the Purchaser
regarding the transactions contemplated by this Agreement, except for the
representations, warranties and agreements of the Company expressly set forth
in this Agreement and the other Transaction Documents, and the Purchaser
expressly acknowledges that it is not relying on any other information, written
or oral, or documents previously furnished to or discovered by the Purchaser or
any other representations, warranties or agreements, other than the
representations, warranties and agreements of the Company expressly set forth
in this Agreement and the other Transaction Documents in making its decision to
purchase the Notes and enter into the other transactions contemplated by this
Agreement.


 


(i)            The Purchaser acknowledges and
agrees that (i) the Company is entitled to rely upon the Purchaser’s
representations, warranties and agreements contained in this Agreement, and (ii) the
Notes are being sold by the Company to the Purchaser in reliance upon the truth
and accuracy of the Purchaser’s representations, warranties and agreements
contained in this Agreement.


 


5.             Delivery of the Notes and
Payment Therefor.  Delivery to
the Purchaser of, and payment for, the Notes (the “Closing”)
shall be made on the date hereof (the “Closing
Date”) at the office of Akin Gump Strauss Hauer & Feld
LLP, One Bryant Park, New York, New York, 10036.


 


The Notes will be delivered
to the Purchaser against payment by or on behalf of the Purchaser of the
purchase price therefor by wire transfer of immediately available funds to an
account designated in writing by the Company on the date hereof.  The Notes will be evidenced by one or more
definitive notes in the form provided for in the Indenture.


 


6.             Agreements of the Company.  The Company agrees with the Purchaser as
follows:


 


(a)           So long as any of the Notes are
outstanding, the Company will, furnish at their expense to the Purchaser, and,
upon request, to the holders of the Notes and prospective purchasers of the
Notes the information required by Rule 144A(d)(4) under the
Securities Act.


 


(b)           Upon the request of the Purchaser,
the Company will use its reasonable best efforts, at the Company’s expense, to
permit the Notes to be eligible for clearance and


 


10

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


settlement through the
Depository Trust Company (“DTC”).  The Company agrees to comply with all the
terms and conditions set forth in the representation letters of the Company to
DTC relating to the approval of the Notes by DTC for “book entry” transfer.


 


(c)           The Company agrees not to sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would be integrated with the
sale of the Notes in a manner that would require the registration under the
Securities Act of the sale to the Purchaser of the Notes.


 


7.             Tax
Matters.         The Company and the Purchaser agree as
follows:


 


(a)           The
Purchaser shall indemnify and hold the Company harmless from any Indemnifiable
Tax.


 


(b)           The
Company agrees to give written notice (the “Initial Notice”) to the Purchaser of any notice received by the
Company which involves the assertion of any claim, or the commencement of any
audit, suit, action or proceeding relating to Indemnifiable Tax (an “Indemnifiable Tax Claim”) within 10 days of such receipt or such earlier
time as would allow the Purchaser to timely respond to such Indemnifiable Tax
Claim.  The Company will give the
Purchase such information with respect to the Indemnifiable Tax Claim as the
Purchaser may reasonably request. 
Failure to provide the Purchaser with notice and information with
respect to a Indemnifiable Tax Claim within a sufficient period of time and in
reasonably sufficient detail to allow the Purchaser to effectively contest such
Indemnifiable Tax Claim shall not affect the liability of the Purchaser to the
Company except to the extent that the Purchaser’s position is actually and
materially prejudiced as a result thereof.


 


(c)           The
Purchaser may, upon written notice to the Company given within 30 days of
receipt of the Initial Notice, assume and control the defense of any
Indemnifiable Tax Claim at its own cost and expense and with its own counsel
and may (i) pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any tax authority, or (ii) either
pay (A) the amount of Indemnifiable Taxes claimed and sue for a refund
where applicable law permits such refund suits or (B) contest, settle or
compromise the Indemnifiable Tax Claim in any permissible manner.


 


(d)           If
the Purchaser elects to exercise its right to control the defense of any
Indemnifiable Tax Claim pursuant to Section 7(c) of this Agreement, (i) the
Company, its employees and its affiliates shall (A) cooperate with the
Purchaser in connection with such defense of any Indemnifiable Tax Claim and
the pursuit of any related refund, (B) provide the Purchaser (and its
employees and other agents) with any applicable powers of attorney reasonably
requested and (C) take any actions reasonably requested by the Purchaser,
and (ii) the Purchaser shall (A) keep the Company reasonably informed
of all material developments and events relating to such Indemnifiable Tax
Claim, and permit the Company to participate in (but not to control) the
defense any such Indemnifiable Tax Claim (including participation in any
relevant meetings and conference calls) at its own cost and expense and with
its own counsel.


 


(e)           Any
Indemnifiable Tax Claim that the Purchaser does not elect to control pursuant
to Section 7(c) of this Agreement shall be controlled by the Company
and the Purchaser


 


11














 


Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.


 


agrees to
cooperate with the Company in pursuing such contest, provided,
however,
that (i) the Company shall keep the Purchaser informed of all material
developments and events relating to such Indemnifiable Tax Claim (including
promptly forwarding copies to the Purchaser of any related correspondence) and
shall use reasonable efforts to provide the Purchaser with an opportunity to
review and comment on any material correspondence before the Company sends such
correspondence to any tax authority and (ii) the Purchaser, at its own
cost and expense and with its own counsel, shall have the right to participate
in (including in any relevant meetings and conference calls) the defense of
such Indemnifiable Tax Claims.


 


(f)            The
Purchaser and the Company further agree to furnish or cause to be furnished to
each other, upon request, in a timely manner, such information (including
access to books and records) and assistance relating to the Company as is
reasonably necessary for the filing of any tax return relating to Indemnifiable
Taxes or for the defense of any Indemnifiable Tax Claim.


 


8.             Closing Deliverables of the
Company.  At the Closing the
Company shall deliver the following additional documents to the Purchaser:


 


(a)           A true and complete execution copy of
each of the Indenture and the Security Agreement, duly executed by all parties
thereto.


 


(b)           Evidence of filing of financing
statements (Form UCC-1, Form UCC-3 or such other financing statements
or similar notices as shall be required by local law) as are necessary or
desirable in order to evidence and perfect the Liens in favor of the Collateral
Agent in the Collateral, which financing statements shall be satisfactory in
form and substance to the Collateral Agent and shall comply in all respects
with the requirements of Section 3.02 of the Security Agreement.


 


(c)           Certificates of an executive officer
of the Company dated as of the date hereof: (i) attaching copies,
certified by such officer as true and complete, of resolutions of the board of
directors of the Company authorizing and approving the execution, delivery and
performance by the Company of the Transaction Documents and the transactions
contemplated herein and therein; (ii) setting forth the incumbency of the
officer or officers of the Company who have executed and delivered the
Transaction Documents, including therein a signature specimen of each officer
or officers; (iii) attaching copies, certified by such officer as true and
complete, of each of the articles of organization and by-laws of the Company as
in effect on the date hereof; and (iv) attaching copies, certified by such
officer as true and complete, of long form good standing certificates of the
appropriate Governmental Authority of the Company’s jurisdiction of
incorporation, stating that the Company is in good standing under the laws of
such jurisdiction.


 


(d)           The written opinion of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo PC, as transaction counsel to the Company,
addressed to the Purchaser, in the form of Exhibit A
hereto.


 


(e)           A copy of the Payment Direction (as
defined in the Security Agreement) executed by the Company.


 


12

















 


Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


(f)            Certificates, agreements and other
documentation relating to corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the Notes,
the Indenture and the Security Agreement, and all other legal matters relating
to this Agreement and the transactions contemplated hereby in a form reasonably
satisfactory to counsel for the Purchaser.


 


(g)           Such further certificates and
documents of the Company as the Purchaser may reasonably request.


 


9.             Notices, etc.  All notices, consents, waivers and
communications hereunder given by any party hereto to the other party hereto
shall be in writing, signed by the party hereto giving such notice and be
deemed to have been duly given when (i) delivered by hand, (ii) sent
by facsimile (with written confirmation of receipt) if sent during regular
business hours on a Business Day (and, if not, then on the next succeeding
Business Day), provided,
however,
that a copy is mailed by registered mail, return receipt requested, (iii) received
by the addressee, if sent by nationally recognized overnight delivery service
(receipt requested), or (iv) sent by email if sent during regular business
hours on a Business Day (and, if not, then on the next succeeding Business
Day), provided,
however,
that a copy is mailed by a nationally recognized overnight delivery service (provided, however, that
delivery will not be deemed effective unless the addressee provides written
confirmation of receipt by facsimile or return email (automatic email responses
do not constitute confirmation)), in each case, to the applicable addresses,
facsimile numbers and/or email addresses set forth below:


 


If to the Purchaser to:


 


Olmsted Park S.A.

20, rue de la Poste

L-2346 Luxembourg 

Attention: Board of Directors


 


with a copy (which shall not
constitute notice) to:


 


Akin Gump Strauss Hauer &
Feld LLP

One Bryant Park

New York, NY 10036

Attention: Stuart E. Leblang

Facsimile: (212) 872-1002

Email: sleblang@akingump.com


 


If to the Company to:


 


Vertex Pharmaceuticals
Incorporated

130 Waverly Street

Cambridge, MA 02139

Attention:  Philippe Tinmouth
                 Head, Business Development &
Licensing




13

















 


Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


Facsimile:  617-444-6632

Email:  phil_tinmouth@vrtx.com


 


with a copy (which shall not
constitute notice) to:


 


Vertex Pharmaceuticals
Incorporated

130 Waverly Street

Cambridge, MA 02139

Attention: Kenneth S. Boger, Esq.
                 Senior Vice President and
General Counsel

Facsimile:  617-444-7117

Email:  ken_boger@vrtx.com


 


or to such other address or
addresses, facsimile number or numbers or email address or addresses as the
Purchaser or the Company may from time to time designate by notice as provided
herein, except that notices of such changes shall be effective only upon
receipt.


 


10.           Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. 
The Company shall not be entitled to assign, directly or indirectly, any
of its obligations and rights under any of this Agreement, including by
operation of law or otherwise, without the prior written consent of the
Purchaser; provided,
however,
that the Company may, without the consent of the Purchaser, assign any of its
obligations or rights under this Agreement to any other Person with which it
may merge or consolidate or to which it may sell all or substantially all of
its assets, provided,
further, however, that
the assignee under such assignment agrees to be bound by the terms of this
Agreement and furnishes a written agreement to the Purchaser in form and
substance reasonably satisfactory to the Purchaser to that effect.  The Purchaser may assign all or any portion
of its obligations and rights hereunder, without restriction and without the
consent of the Company, provided,
however,
that the Purchaser shall give notice of any such assignment to the Company
after the occurrence thereof.  The
Company shall be under no obligation to reaffirm any representations,
warranties or covenants made in this Agreement or any of the other Transaction
Documents or take any other action in connection with any such assignment by
the Purchaser.


 


11.           Survival.  The respective representations, warranties
and agreements of the Company and the Purchaser contained in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
survive the execution and delivery of this Agreement and shall continue to
survive until the earlier of October 31, 2012 or the repayment by the
Company in full of the Notes (the “Survival Date”); provided, however, that
the representations and warranties contained in Sections 2(a) through (e),
2(j), 2(k) and 2(o) shall survive until the date that is one year
after the Survival Date; provided, further, however, that the representations and warranties contained
in Sections 2(f) through (i) and 2(m) shall survive
indefinitely; provided,
further, however, that it
is understood and agreed that, notwithstanding the survival provisions of this Section 11,
all of the representations and warranties made by the parties hereto are made
only as of the date of this Agreement.


 


14

















 


Information redacted
pursuant to a confidential treatment request. 
An unredacted version

of this exhibit has been filed separately with the Commission.


 


12.           Specific Performance.  Each of the parties hereto acknowledges that
the other party hereto may have no adequate remedy at law if it fails to
perform any of its obligations under this Agreement.  In such event, each of the parties hereto
agrees that the other party hereto shall have the right, in addition to any
other rights it may have (whether at law or in equity), to specific performance
of this Agreement. Neither party hereto shall have any right to terminate this
Agreement as a result of any breach by the other party hereto hereof, but
instead shall have the rights set forth in this Agreement.


 


13.           Governing Law.


 


(a)           This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to the principles of conflicts of law thereof.


 


(b)           Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
exclusive jurisdiction of the Supreme Court of the State of New York sitting in
New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court
or, to the extent permitted by law, in such federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.


 


(c)           Each of the parties hereto hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in Section 13(b).  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.


 


(d)           Each party hereto irrevocably
consents to service of process in the manner provided for notices in Section 9.  Nothing in this Agreement will affect the
right of any party hereto to serve process in any other manner permitted by
law.


 


14.           Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO


 


15

















 


Information redacted
pursuant to a confidential treatment request. 
An unredacted version

of this exhibit has been filed separately with the Commission.


 


HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.


 


15.           Severability.  If one or more provisions of this Agreement
are held to be invalid or unenforceable by a court of competent jurisdiction,
such provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
remain in full force and effect and be enforceable in accordance with its
terms.  Any provision of this Agreement
held invalid or unenforceable only in part or degree by a court of competent
jurisdiction shall remain in full force and effect to the extent not held
invalid or unenforceable.


 


16.           Counterparts.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by the other
party hereto.  Any counterpart may be
executed by facsimile signature and such facsimile signature shall be deemed an
original.


 


17.           Amendments; No Waivers.


 


(a)           Neither this Agreement nor any term
or provision hereof may be amended, supplemented, altered, changed or modified
except with the written consent of the parties hereto.  No waiver of any right hereunder shall be
effective unless such waiver is signed in writing by the party hereto against
whom such waiver is sought to be enforced.


 


(b)           No failure or delay by either party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.


 


18.           Entire Agreement.  This Agreement, together with the Schedules,
Annexes and Exhibits hereto (which are incorporated herein by reference), and
the other Transaction Documents constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the parties hereto with respect to the subject matter of this
Agreement.  No representation,
inducement, promise, understanding, condition or warranty not set forth herein
(or in the Schedules, Annexes or Exhibits or other Transaction Documents) has
been made or relied upon by either party hereto.  Neither this Agreement, nor any provision
hereof, is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.


 


19.           Interpretation.


 


(a)           Except as otherwise provided or
unless the context otherwise requires, whenever used in this Agreement, (i) any
noun or pronoun shall be deemed to include the plural and the singular, (ii) the
use of masculine pronouns shall include the feminine and neuter, (iii) the
terms “include” and “including” shall be deemed to be followed by the phrase “without
limitation”, (iv) the word “or” shall be inclusive and not exclusive, (v) all
references to Sections


 


16

















 


Information redacted
pursuant to a confidential treatment request. 
An unredacted version

of this exhibit has been filed separately with the Commission.


 


refer to the Sections of
this Agreement, all references to Schedule refer to the Schedule attached
hereto or delivered with this Agreement, as appropriate, and all references to
Annexes and Exhibits refer to the Annexes and Exhibits attached to this
Agreement, each of which is made a part of this Agreement for all purposes, and
(vi) each reference to “herein” means a reference to “in this Agreement”.


 


(b)           The provisions of this Agreement
shall be construed according to their fair meaning and neither for nor against
any party hereto irrespective of which party hereto caused such provisions to
be drafted.  Each of the parties hereto
acknowledges that it has been represented by an attorney in connection with the
preparation and execution of this Agreement.


 


(c)           Unless expressly provided otherwise,
the measure of a period of one month or one year for purposes of this Agreement
shall be that date of the following month or year corresponding to the starting
date, provided,
however,
that, if no corresponding date exists, the measure shall be that date of the
following month or year corresponding to the next day following the starting
date.  For example, one month following February 18th
is March 18th, and one month following March 31 is May 1.


 


(d)           The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.


 


[Signature
page follows]


 


17

















 


If
the foregoing correctly sets forth the agreement among the Company and the
Purchaser, please indicate your acceptance in the space provided for that
purpose below.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTEX PHARMACEUTICALS

  
	
   

  	
  INCORPORATED.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew W. Emmens

  
	
   

  	
  Name: 

  	
  Matthew W. Emmens

  
	
   

  	
  Title: 

  	
  Chairman, President and CEO

  



 


Accepted:


 


	
  OLMSTED
  PARK S.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Hille-Paul Schut

  	
   

  
	
  Name:

  	
  Hille-Paul
  Schut

  	
   

  
	
  Title:
  

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Julia Vogelweith

  	
   

  
	
  Name:

  	
  Julia
  Vogelweith

  	
   

  
	
  Title:
  

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Xavier de Cillia

  	
   

  
	
  Name:

  	
  Xavier
  de Cillia

  	
   

  
	
  Title:
  

  	
  Director

  	
   

  



 

















 


Annex I 

Certain Defined Terms


 


The following terms, as used
in this Agreement, shall have the following meanings:


 


“Adverse
Effect” shall mean (i) an adverse effect on: (a) the
legality, validity or enforceability of any of the Transaction Documents, the
Janssen Agreement or the security interest granted in the Collateral under the
Security Agreement; (b) the amount of the Milestone Payments; or (c) the
timing of the payment of the Milestone Payments after achievement of the
corresponding Milestone Event; or (ii) a material adverse effect on: (a) the
right or ability of the Company (or any permitted successor or assignee) to perform
any of its obligations under any of the Transaction Documents or to consummate
the transactions contemplated hereunder or thereunder; (b) the rights or
remedies of the Purchaser under any of the Transaction Documents; or (c) the
right or ability of Janssen (or any permitted successor or assignee) to perform
any of its obligations under the Janssen Agreement that are related, directly
or indirectly, to the achievement of the Milestone Events.


 


“Affiliate”
shall mean any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with
another Person.  For purposes of this
definition, “control” (or its derivatives) shall mean the possession, direct or
indirect, of the power or ability to direct or cause the direction of the
management and policies of a Person, whether through ownership of equity,
voting securities or beneficial interest, by contract or otherwise.


 


“Ancillary
Janssen Documents” means the “Global Development Plan,” the “Supply
Agreement” and the “Pharmacovigilance Agreement” as such terms are defined in
Sections 1.41, 1.106 and 5.7, respectively, of the Janssen Agreement.


 


“Business
Day” shall mean any day other than a Saturday, a Sunday, any day
that is a legal holiday under the laws of the State of New York, The
Commonwealth of Massachusetts or Luxembourg, or any day on which banking
institutions located in the State of New York, The Commonwealth of
Massachusetts or Luxembourg are authorized or required by law or other governmental
action to close.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended.


 


“Exchange
Act Reports” shall mean the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008 as filed with the Commission on February 17,
2009 and all subsequent documents filed with the Commission pursuant to Section 13(a),
13(c) or 15(d) of the Exchange Act on or prior to the date hereof.


 


“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time, including those set forth in (1) the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and (2) the statements and
pronouncements of the Financial Accounting Standards Board.


 


A-1

















 


Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.


 


“Governmental
Authority” shall mean any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether foreign, federal, state or local (domestic or
foreign).


 


“Indemnifiable
Tax” shall mean any United States federal, state of local
withholding tax (including interest and penalties thereon) that, pursuant to a
final administrative decision, a judicial decision or an agreement by the
Purchaser pursuant to Section 7(c) or the Company pursuant to Section 7(e),
is determined to be payable by the Company as a result of its failure to
withhold from payments on the Notes.


 


“Indemnifiable Tax Claim”
shall have the meaning set forth in Section 7(b).


 


“Initial Notice”
shall have the meaning set forth in Section 7(b).


 


“Janssen”
shall mean Janssen Pharmaceutica, N.V., a Belgium corporation, including its
successors and assigns.


 


“Janssen
Agreement” shall mean the License, Development, Manufacturing
and Commercialization Agreement by and between the Company and Janssen
effective as of June 30, 2006, as such agreement is amended and in effect
on the date hereof, together with the Janssen Consent and the Ancillary Janssen
Documents, as each may be amended and/or restated from time to time after the
date hereof in accordance with the terms of the Indenture and any new,
substitute or amended agreement by and between the Company and Janssen relating
to the Milestone Payments made after the date hereof in accordance with the
terms of the Indenture.


 


“Janssen
Consent” shall have the meaning set forth in Section 2(k).


 


“Knowledge”
shall mean, with respect to the Company, the knowledge of any of the following
officers or employees of the Company: the Chief Executive Officer; the Chief
Medical Officer; the General Counsel; the Chief Scientific Officer; the Chief
Financial Officer; the Chief Commercial Officer; the Vice President and
Corporate Controller; the Head, Business Development & Licensing; and
the Deputy General Counsel.  An
individual will be deemed to have “knowledge” of a particular fact or other
matter if (i) such individual has or at any time had actual knowledge of
such fact or other matter or (ii) a prudent individual would be expected
to discover or otherwise become aware of such fact or other matter in the
course of his or her responsibilities in his or her capacity as an officer or
employee of the Company or in the course of conducting a reasonably diligent
review concerning the existence thereof with any employee of the Company or any
of its Subsidiaries who, as of the date of this Agreement, reports directly to
such individual and who (x) has responsibilities or (y) would
reasonably be expected to have actual knowledge of circumstances or other information,
in each case, that would reasonably be expected to be pertinent to such fact or
other matter.  Notwithstanding anything
in this definition to the contrary, the Company will be deemed to have
knowledge of any fact or matter that is the subject of, or referred to within,
any written notice it or any of its Subsidiaries has received (whether in hard
copy, digital or electronic format).


 


“Lien”
shall mean any lien, hypothecation, charge, instrument, license, preference,
priority, security agreement, security interest, mortgage, option, right of
first refusal, privilege, pledge, 


 


I-2

















 


Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


liability, covenant or
order, or any encumbrance, restriction, right or claim of any other Person or
Governmental Authority of any kind whatsoever, whether choate or inchoate,
filed or unfiled, noticed or unnoticed, recorded or unrecorded, contingent or
non-contingent, material or non-material, known or unknown, other than any of
the above created solely in favor of the Purchaser by the Transaction
Documents.


 


[***].


 


[***].


 


[***].


 


[***].


 


“Milestone
Payments” shall mean collectively [***];  (ii) (a) all additional amounts added to any of
the milestone payments described above in clauses (i)(a) and (b) under
any provision of the Janssen Agreement, including any interest assessed in
connection with a delay in the payment by Janssen of the milestone payments
described above in clauses (i)(a) and (b) pursuant to Section 9.10
of the Janssen Agreement and (b) the Purchaser’s Pro Rata Portion of all
additional amounts added to the milestone payment described above in clause (i)(c) under
any provision of the Janssen Agreement, including any interest assessed in
connection with a delay in the payment by Janssen of the milestone payment
described above in clause (i)(c) pursuant to Section 9.10 of the
Janssen Agreement; (iii) all accounts (as defined under the UCC)
evidencing the rights to the payments and amounts described in clauses (i) and
(ii) above; and (iv) all proceeds (as defined under the UCC) of the
foregoing.


 


“Person”
shall mean an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization of any kind, but not
including a Governmental Authority.


 


“Pledged
Interest” shall mean collectively (i) an undivided
100% interest in the right to receive the Milestone Payments and (ii) the
right to enforce directly against Janssen the right to payment of all or any
portion of the Milestone Payments represented by the Pledged Interest when
earned upon achievement of the Milestone Events pursuant to the Janssen
Agreement.


 


“Prohibited
Amendment” shall mean any amendment, modification, restatement
or supplement of any provision of the Janssen Agreement that changes in any way
(i) the event underlying any of the Milestone Events, (ii) the amount
of any of the Milestone Payments or (iii) the timing of the payment of any
of the Milestone Payments by Janssen after achievement of the applicable
Milestone Event by Janssen.  For
avoidance of doubt, any termination of the Janssen Agreement shall not be deemed
a Prohibited Amendment.


 


“Pro
Rata Portion” shall mean, with respect to the Purchaser, [***] and, with respect to the Company, [***].


 


“Purchaser”
shall have the meaning set forth in the preamble and shall include its
successors and assigns.


 


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Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.


 


“Set-off”
shall mean any set-off, rescission, counterclaim, defense, reduction or
deduction of any kind.  Without limiting
the generality of the foregoing, the term Set-off shall include the right by
Janssen to reduce the amount of any of the Milestone Payments for any reason,
including without limitation in connection with (i) a breach by the Company
of the Janssen Agreement, (ii) any anti stacking or similar rights with
respect to payments to third parties for access to intellectual property rights
or data, (iii) any discounted payment obligations in connection with third
party sales of generic competitive products, (iv) any rights to credit
against any payment obligations  any
costs, expenses or liabilities of Janssen under the Janssen Agreement,
including with respect to (A) Global Development Costs (as defined in the
Janssen Agreement), (B) any costs and expenses of patent prosecution,
maintenance or enforcement, or (C) defense of third party infringement
claims, or (v) any amounts paid or payable pursuant to any indemnification
rights or obligations of the Company or Janssen under the Janssen Agreement.


 


“Subsidiary”
or “Subsidiaries” shall mean with
respect to any Person (i) any corporation of which the outstanding capital
stock having at least a majority of votes entitled to be cast in the election
of directors (or, if there are no such voting interests, 50% or more of the
equity interests) under ordinary circumstances is at the time be owned,
directly or indirectly, by such Person or by another subsidiary of such Person
or (ii) any other Person of which at least a majority voting interest (or,
if there are no such voting interests, 50% or more of the equity interests)
under ordinary circumstances is at the time owned, directly or indirectly, by
such Person or by another subsidiary of such Person.


 


“Survival
Date” shall have the meaning set forth in Section 11.


 


“Transaction
Documents” shall mean, collectively, the Notes, this Agreement,
the Indenture and the Security Agreement.


 


“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York; provided, however, that, if, with respect to any financing statement
or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the Purchaser’s security interests in the
Pledged Interest pursuant to the Security Agreement, is governed by the Uniform
Commercial Code as in effect in a jurisdiction of the United States other than
the State of New York, then “UCC” shall mean the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the provisions
of this Agreement and any financing statement relating to such perfection or
effect of perfection or non-perfection.


 


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