Exhibit 10.1
EXCHANGE AGREEMENT
This Exchange Agreement (this "Agreement") is made as of the later of the dates
set forth opposite the parties' signatures (the "Agreement Date") by and between
Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (the
"Company"), and Akanthos Arbitrage Master Fund, L.P., a Cayman Islands exempted
limited partnership (the "Investor").
WHEREAS:
The Company originally issued $345,000,000 in aggregate principal
amount of 5% Convertible Subordinated Notes due 2007 (the "Notes");
WHEREAS:
The Investor is the holder of the Notes described in Section 2(b) (the
"Exchange Notes"); and
WHEREAS:
The Investor has indicated to the Company its desire to exchange the
Exchange Notes for Common Stock of the Company (the "Common Stock") and, after
negotiation between the parties hereto, such parties have agreed to affect such
exchange on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained and other valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the parties hereto agree as follows:
Section 1.
Agreement to Exchange Securities
(A)
EXCHANGE OF SECURITIES.
ON THE TERMS AND SUBJECT TO THE
CONDITIONS SET FORTH HEREIN, THE INVESTOR AGREES TO TRANSFER, OR CAUSE TO BE
TRANSFERRED, TO THE COMPANY ALL OF ITS RIGHT, TITLE AND INTEREST IN AND TO THE
EXCHANGE NOTES ON THE FOLLOWING BASIS: IN EXCHANGE FOR THE EXCHANGE NOTES, A
NUMBER OF SHARES OF FREELY TRADABLE COMMON STOCK (THE "EXCHANGED SHARES") EQUAL
TO (I) 99% OF THE PRINCIPAL AMOUNT OF THE EXCHANGE NOTES PLUS 100% OF THE
ACCRUED AND UNPAID INTEREST ON THE EXCHANGE NOTES, DIVIDED BY (II) THE
DETERMINATION PRICE.
(B)
DETERMINATION PRICE.
THE DETERMINATION PRICE SHALL BE EQUAL TO
93% OF THE LESSER OF (I) THE ARITHMETIC AVERAGE OF THE CLOSING BID PRICES OF THE
COMMON STOCK ON THE AGREEMENT DATE AND FOR THE 9 CONSECUTIVE TRADING DAYS
IMMEDIATELY PRECEDING THE AGREEMENT DATE, AND (II) THE CLOSING BID PRICE OF THE
COMMON STOCK ON THE AGREEMENT DATE.
(C)
FRACTIONAL SHARES.
IN LIEU OF ISSUING FRACTIONAL SHARES, THE
COMPANY SHALL ISSUE THE HIGHEST WHOLE NUMBER OF EXCHANGED SHARES ACCORDING TO
THE FORMULA SET FORTH IN SECTION 1.1(A) PLUS CASH IN AN AMOUNT EQUAL TO THE
FRACTION OF AN EXCHANGED SHARE TO WHICH THE INVESTOR WOULD OTHERWISE BE ENTITLED
MULTIPLIED BY THE DETERMINATION PRICE.
(D)
CLOSING.
THE COMPLETION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT (THE "CLOSING") SHALL TAKE PLACE AS SOON AS PRACTICAL AND, IN ANY
EVENT, NO LATER THAN SEPTEMBER 9, 2005, OR SUCH OTHER DATE AS IS AGREED UPON BY
THE PARTIES (THE "CLOSING DATE"), AS FOLLOWS:
(i)
The Investor shall deliver or cause to be delivered the Exchange
Notes to the Company or the Company's agent in such manner as shall be
acceptable to the Company and effective to convey all right, title and interest
of the Investor in the Exchange Notes
to the Company against delivery of the Exchanged Shares by the Company through
the Depositary Trust Company to Morgan Stanley & Co, DTC # 050, FFC: Akanthos
Arbitrage