Document:

Exhibit 10.2

 

LANCER CORPORATION

MANAGEMENT SEVERANCE AGREEMENT

 

THIS
AGREEMENT is made and entered into as of September 15, 2004, by and between
Lancer Corporation, a Texas corporation (“Lancer”), and Mark L. Freitas
(“Executive”);

 

WHEREAS,
Lancer recognizes Executive’s expertise in connection with Executive’s
employment by Lancer;

 

WHEREAS,
Lancer desires to provide for a severance payment in the event Executive’s
employment is terminated by Lancer without Cause or by Executive for Good
Reason.

 

NOW,
THEREFORE, in consideration of the following promises, mutual agreements and
covenants and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties, intending to be legally bound
hereby, agree as follows:

 

1.             Definition
of Terms.

 

“Cause” shall
mean any of the following:

 

(A) conviction for, or guilty plea to, a felony or a crime involving
moral turpitude, which shall include independently verified substance abuse
involving drugs or alcohol as specified in the Lancer Drug and Alcohol Policy;
or

 

(B) action or inaction, which in the reasonable judgment of a majority of
the Board of Directors of Lancer, constitutes willful dishonesty, larceny,
fraud or gross negligence by Executive in the performance of Executive’s duties
to Lancer, or willful misrepresentation to shareholders, directors or officers
of Lancer; or

 

(C) willful failure, after 10 business days notice, to materially follow
the written policies of Lancer.

 

“Change of Control” shall after the date hereof mean any of the following:

 

(A) the sale of all or substantially all of the assets of Lancer and its
subsidiaries; or

 

(B) the acquisition, directly or indirectly, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1933 (the “Exchange Act”) of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of securities
representing 40 percent or more of either (a) the then outstanding shares of
Common Stock (the “Outstanding Company Common Stock”) or (b) the combined
voting power of the then outstanding voting securities of Lancer entitled to
vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following acquisitions shall not
constitute a 

 

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Change
of Control:

 

(i)
any acquisition of voting securities directly from Lancer, or

 

(ii)
any acquisition of voting securities by Lancer, or

 

(iii)
any acquisition of voting securities by any employee benefit plan (or related
trust) sponsored or maintained by Lancer or by any corporation controlled by
Lancer, or

 

(iv)
any acquisition of voting securities by any corporation pursuant to a
reorganization, merger or consolidation which does not substantially change the
proportional ownership in the outstanding Lancer common stock and outstanding
Lancer voting securities prior to the reorganization.

 

“Effective Annual Salary” means the Executive’s annual base
salary (excluding any bonus paid or accrued, and any other payment made or
accrued for Executive’s services) for the current calendar year at the time of
the resignation, termination or Change of Control.

 

“Good Reason”
means either of the following:

 

(A) notice in writing is given to Executive of Executive’s relocation,
without Executive’s consent, to a place of business outside the San Antonio,
Texas area, or

 

(B) a substantial diminution of Executive’s base salary compensation from
the amount in effect on the date hereof.

 

“Term” means the earliest of the following to occur:

 

(A) five years from the date of this Agreement; or

 

(B) three years after a Change of Control.

 

2.             Severance
Payments. In the event that, any
time during the Term, Executive terminates his employment hereunder for Good
Reason or Executive’s employment is terminated hereunder without Cause, Lancer
shall make payment to Executive (or in the case of his death, the legal
representative of Executive’s estate or such other person or persons as Executive
shall have designated by written notice to Lancer) equal to the Executive’s
Effective Annual Salary for a period of one year from the date of termination
and Lancer shall also make payment to Executive, on a pro rata basis, any bonus
earned and declared by Lancer for the calendar year covering the time of the
termination. The bonus pro-rata computation shall be calculated to be the
product of (1) a fraction, the numerator of which is equal to the number of
days worked by Executive during the year in which Executive’s employment was
terminated and the denominator of which is equal to 365, and (2) the total
annual bonus which would have 

 

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been
applicable to Executive pursuant to the bonus plan which was effective at the
time of the employment termination. Additionally, any performance based
computations under the effective bonus plan shall be pro-rated, if possible, on
a similar pro-rata basis. The payments made pursuant to this Agreement shall be
made, at Lancer’s option, either (A) in a lump sum or (B) in a manner which is
substantially similar to the manner in which Executive was paid during his
employment as an Executive, or otherwise complies with Lancer’s current payment
procedures for Executives.

 

3.             Release
of Claims.  Executive agrees that acceptance of the severance
payment defined herein, shall fully and forever RELEASE,
AQUIT, and DISCHARGE
the Lancer, its affiliates, and all of such entities’ officers, directors,
shareholders, partners, agents, servants, employees, independent contractors,
attorneys, insurance companies and the successors and assigns of each from any
and all damages, claims, demands, causes of action, actions, rights, lawsuits,
grievances, complaints, arbitrations, charges, allegations, petitions, appeals,
pleas, challenges, hearings, trials, judgments and executions of any and every
kind or description whatsoever, in law and/or in equity, which he ever had,
claims to have had, or may now have, whether known or unknown, vested, contingent,
executory or otherwise, which relate, directly or indirectly to (1) Executive’s
employment with Lancer or its affiliates, (2) claims Executive may have to
employment and/or reinstatement in the future with Lancer or its affiliates;
(3) claims for wrongful discharge, negligence, civil theft, quantum meruit,
breach of contract, tortuous interference with contract, breach of any
covenants of good faith and fair dealing, emotional distress, loss of credit,
promissory estoppel, loss or interference with any type of third-party
relationship, violation of any federal or state constitutional rights, assault,
battery, invasion of privacy, defamation, libel, slander, fraud or
misrepresentation and any personal (physical, mental or emotional) and property
damages, losses and/or injuries, (4) claims of retaliation and/or
discrimination under any and all federal, state, county, and municipal
statutes, laws, regulations, rules and ordinances, including, but not limited
to: filing a worker’s compensation claim, race, religion, national origin, sex,
color, creed, sexual preference, whistleblower, handicap, disability and/or
age; (5) claims for and/or related to wages, salary, stock options,
compensation, commissions, bonuses, expenses, benefits, reimbursements, holidays,
vacations, insurance benefits and/or coverage (including COBRA, health,
medical, life, disability, social security, and/or unemployment compensation);
(6) claims that the parties being released have acted improperly, illegally,
unconscionably, or unethically in any manner whatsoever at any time prior to
the execution of this Release; provided, however, that nothing
contained in this Section 3, or anywhere else in this Agreement shall
release Lancer or its affiliates from any obligations, nor shall Executive give
up any rights under (a) any equity grant agreement (such as a stock option)
held by Executive at the time this release becomes effective, (b) any liability
insurance policies which cover Executive, or (c) any indemnification agreement
or provisions under which Executive is a party or is covered. Further,
Executive hereby agrees that Lancer shall not be obligated to make the
severance payments described herein unless Executive agrees to execute a final
release of claims, fairly restating the provisions contained in this
Section 3 after Executive’s employment is terminated, if Lancer should so
require such execution, in its sole discretion.

 

4.             Covenant
Not to Compete. As an
inducement for Lancer to enter into this Agreement and for good and valuable
consideration, including but not limited to access to confidential and
proprietary information and trade secrets provided to Executive by Lancer, the 

 

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receipt and sufficiency
of which is hereby acknowledged, Executive agrees as follows: during the period commencing on the date hereof
and ending one year from the date of termination of Executive’s employment,
Executive shall not,

 

(A)
be employed by or render any services to any person, firm or corporation
engaged in any business which is directly in competition with Lancer in the
design, engineering, manufacturing and/or marketing of fountain soft drink,
beer, milk, and citrus beverage dispensing systems or frozen beverage
dispensing systems (“Competitive Business”); or

 

(B)
engage in any Competitive Business for his or its own account; or

 

(C) be associated with or interested in any Competitive Business as an
individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity; or

 

(D) employ or retain, or have or cause any other person or entity to
employ or retain, any person who was employed or retained by Lancer while
Executive was employed by Lancer; or

 

(E) solicit, interfere with, or endeavor to entice away from Lancer, for
the benefit of a Competitive Business, any of its customers or other persons
with whom Lancer has a contractual relationship;

 

provided, however, that this Section 4
shall be effective if and only if the Executive’s termination (whether for Good
Reason, not for Good Reason, for Good Cause or not for Good Cause) occurs
during the Term.

 

Notwithstanding
the foregoing, this provision shall not preclude Executive from investing his
personal assets in the securities of any corporation or other business entity
which is engaged in a Competitive Business if such securities are traded on a
national stock exchange or in the over-the-counter market and if such
investment does not result in his beneficially owning, at any time, more than
1% of the publicly-traded equity securities of such Competitive Business.

 

5.             Amendment;
Waiver; Assignment.  This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by both
parties.  Any such modification,
amendment or waiver on the part of Lancer shall have been previously approved
by the Board.  The waiver by either party
of compliance with any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any other provision of this Agreement,
or of any subsequent breach by such party of any provision of this Agreement.
This Agreement shall be binding upon any successor to Lancer, by merger or
otherwise. Lancer may assign this Agreement to any of its affiliates. Executive
may not assign the Agreement.

 

6.             Withholding.  Payments
to Executive of all compensation contemplated under this Agreement shall be
subject to all applicable legal requirements with respect to the withholding of
taxes and similar deductions. Additionally, if Executive owes any moneys to 

 

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Lancer
on the Severance Date, Executive’s signature below constitutes Executive’s
written consent to deduct from any Severance Pay amounts that Executive owes
Lancer.

 

7.             Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF
LAWS.

 

8.             Supersedes
Previous Agreements.  This Agreement supersedes all previously
executed employment agreements, prior or contemporaneous negotiations,
commitments, agreements and writings with respect to the subject matter hereof
except the Lancer Corporation Employee Agreement (Coverage Inventions,
Discoveries, Copyrightable Material and Confidential Matter), Lancer Policies
and Procedures, and Lancer Code of Business Conduct shall remain in full force
and effect.  All such other negotiations,
commitments, agreements and writings shall have no further force or effect, and
the parties to any such other negotiation, commitment, agreement or writing
shall have no further rights or obligations thereunder.

 

9.             Voluntary
Agreement.  Executive understands the significance and
consequences of this Agreement and acknowledges that Lancer has not coerced
Executive’s acceptance thereof, and has signed this Agreement only after full
reflection and analysis.  Executive
expressly confirms that the Agreement is to be given full force and effect
according to all of its terms. Executive was advised to seek legal counsel
prior to signing the Agreement.

 

10.          Confidentiality.  Executive agrees that the
following matters are and shall remain strictly confidential and he will not,
during the employment relationship and for a period of five (5) years after the
employment relationship terminates, except as may be required by law, subpoena,
court order or other legal process or as described below, broadcast, publicize,
disclose or disseminate or cause, knowingly permit or authorize the
broadcasting, publication, disclosure or dissemination to any person, firm,
organization, or entity of any and every type, public or private, for any
reason, at any time, without the prior written consent of Lancer, any of the
following information: (1) any financial, proprietary or personnel related
information of any of the Lancer entities, (2) any strategic or management decisions
made by any of the Lancer entities, (3) the existence or outcome of any
investigation regarding the activities of any shareholder, partner, officer,
director, employee, agent or servant conducted by the management or board of
directors of any of the Lancer entities, (4) the existence, or outcome of, any
governmental, professional or business entity investigation of the activities
of any shareholder, partner, officer, director, employee, agent or servant of
any of the Lancer entities, (5) any fact or information obtained by Executive
because of or by virtue of his employment with Lancer. Notwithstanding anything
to the contrary contained in this Section 10, Executive shall not
be prohibited from disclosing any information (a) in furtherance of Executive’s
employment with Lancer when Executive believes in good faith that such
disclosure is in the best interest of Lancer and/or its affiliates, (b) which
may be required pursuant to agreement with Lancer or its affiliates and any
third party, or (c) which becomes generally available to the public other than
as a result of a disclosure by Executive.

 

5

 

11.          Non-Dispraragement.
Executive shall refrain, both during the employment relationship and for a
period of five (5) years after the employment relationship terminates, from
publishing any oral or written statements, to any person or entity (other than,
during the employment relationship, to Lancer or any of its affiliates, or any
of such entities’ officers, employees, agents, or representatives) that damage
or disparage the reputation of any of Lancer or its affiliates, or any of such
entities’ officers, employees, agents or representatives.

 

12.          Legal Remedy.  Executive acknowledges that money damages may
not be a sufficient remedy for any violation of the prohibitions set forth in Sections
10 and 11 of this Agreement. Therefore, Lancer shall be entitled to
specific performance and injunctive relief, without bond, as remedies for any
breach or threatened breach of those prohibitions. Such remedies shall not be
deemed to be the exclusive remedies for a breach of this Agreement, but shall
be in addition to all other remedies available at law or equity.

 

13.          Severability.
Whenever possible, each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by law or invalid, then such
provision or term will be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement. If any of the covenants set forth in this Agreement are held by
a court of competent jurisdiction to contain limitations as to time,
geographical area or scope of activity to be restrained that are not reasonable
and impose a greater restraint than is necessary to protect the goodwill or
other business interest of Lancer or its affiliates, the court shall reform the
covenants to the extent necessary to cause the limitations contained in the
covenants as to time, geographical area and scope of activity to be restrained
to be reasonable and to impose a restraint that is not greater than necessary
to protect the goodwill or other business interest of Lancer or its affiliates
and enforce the covenants as reformed.

 

 

IN
WITNESS WHEREOF, this Agreement has been executed by a duly authorized officer
of Lancer and by Executive in Executive’s individual capacity as of the date
first written above.

 

 

	
  Lancer:

  	
  LANCER
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STONEWALL J.
  FISHER, III

  	
   

  
	
   

  	
  Name:

  	
  Stonewall J. Fisher

  	
   

  
	
   

  	
  Title:

  	
  Vice President - Legal
  Affairs

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executive:

  	
  /s/
  MARK L. FREITAS

  	
   

  
	
   

  	
  Mark
  L. Freitas

  	
   

  
						

 

6Exhibit 10.1

 

EXECUTION COPY

 

 

Dated
September 13, 2004

 

 

VERTEX PHARMACEUTICALS INCORPORATED

and

UBS SECURITIES LLC

 

 

DEALER MANAGER AGREEMENT

 

 

UBS Securities LLC

677 Washington Boulevard

Stamford, CT  06901

 

Ladies and Gentlemen:

 

1                                         Exempted
Exchanges

 

Vertex Pharmaceuticals
Incorporated, a corporation organized under the laws of Massachusetts (the “Company”),
proposes to exchange with certain holders of its 5% Convertible Subordinated
Notes due September 19, 2007 (the “Existing Notes”) a new series of its 53⁄4%
Convertible Senior Subordinated Notes due 2011 (the “New Notes”), to be issued
pursuant to the terms of an indenture to be entered into between the Company
and US Bank National Association (the “Trustee”), as trustee (the “New Notes Indenture”)
(such exchanges, including all related incidental acts and transactions, are
herein referred to collectively as “Exempted Exchanges”).  The New Notes will be issued in book-entry
form and will be issued to Cede & Co. as nominee of The Depository Trust
Company (“DTC”).  The New Notes will be convertible into
shares of common stock, par value $0.01 per share (the “Common Stock”), of the
Company at the conversion price set forth in the New Notes Indenture.  The Exempted Exchanges will be made on the
terms and subject to the conditions set forth in the Company’s Offering
Memorandum (including all documents incorporated therein by reference, the “Offering
Memorandum”) and the related letter of transmittal (the “Letter of
Transmittal”) attached hereto as Exhibit A-1 and Exhibit A-2,
respectively.

 

The Exempted Exchanges
are expected to be commenced by the Company on or about September 13, 2004
(the “Commencement
Date”). In connection with the Exempted exchanges, no more than
eight (8) holders of Existing Notes will be approached and no more than
$79.3138 million principal amount of Existing Notes will be exchanged for New
Notes.  Holders of the New Notes will be
entitled to the benefits of a Registration Rights Agreement to be dated as of
the Closing Date (the “Registration Rights Agreement”), pursuant
to which the Company will agree to register the resale of the New Notes under
the U.S. Securities Act of 1933, as amended (the “Securities Act”) subject to
the terms and conditions therein specified.

 

The Exempted Exchanges
will be made without registration of the New Notes or the Common Stock issuable
upon conversion thereof under the Securities Act in reliance upon exemptions
from the registration requirements of the Securities Act.

 

2                                         Appointment
as Dealer Manager

 

The Company hereby
engages and appoints UBS Securities LLC as sole and exclusive dealer manager in
connection with the Exempted Exchanges (the “Dealer Manager”) and
authorizes the Dealer Manager to act as such, and you hereby agree to act as
Dealer Manager, in each case on the terms and conditions set forth herein. On
the basis of the representations, warranties, agreements and covenants of the
Company in, and subject to the terms and conditions of, this Dealer Manager
Agreement (this  “Agreement”), you agree, as Dealer Manager,
to use your commercially reasonable efforts to effect the Exempted Exchanges
and perform other services in connection with the Exempted

 

 

Exchanges as are
customarily performed by investment banks of international standing acting in such
roles in connection with exchange transactions of like nature, including, but
not limited to, assisting the Company with respect to the timing, pricing and
structure of the Exempted Exchanges, assisting the Company in the preparation
of the Offering Memorandum, identifying and contacting certain holders of the
Existing Notes with respect to the Exempted Exchanges and participating in
negotiations with such holders of the Existing Notes and communicating
generally regarding the Exempted Exchanges with brokers, dealers, commercial
banks and trust companies and other nominees or holders of the Existing Notes,
both of record and beneficial. The duties or responsibilities of the Dealer
Manager will not include: (i) providing tax, legal, regulatory, accounting or
other specialist or technical advice or services, (ii) providing general
financial and strategic advice, or (iii) assuming any responsibility for the
verification of the information in the Offering Memorandum or any ancillary
documents other than the UBS Information (as defined in Section 8.21). In
effecting Exempted Exchanges and generally in connection with the Exempted
Exchanges, you, as Dealer Manager, are acting as an independent contractor and
shall not be deemed to be acting as the agent of the Company, and the Company
shall not be deemed to act as your agent.

 

3                                         No
Liability for Acts of Dealers, Banks and Trust Companies

 

Neither you nor any of
your affiliates, directors, agents, employees or controlling persons shall have
any liability (in tort, contract or otherwise) to the Company or to any other
person for any losses, claims, damages, liabilities or expenses arising out of
any act or omission on the part of any broker, dealer (other than yourself to
the extent set forth below), depositary, commercial bank or trust company or
any other person, and neither you nor any of your affiliates, directors,
agents, employees or controlling persons shall have any liability (in tort,
contract or otherwise) to the Company or any other person asserting claims on
behalf of or in right of the Company for any losses, claims, damages,
liabilities or expenses arising from your own acts or omissions in performing
your obligations hereunder or otherwise in connection with the proposed
Exempted Exchanges, except for any such losses, claims, damages, liabilities or
expenses which are determined, in a final judgment by a court of competent
jurisdiction, to have resulted from (i) your gross negligence or willful
misconduct in performing the services that are the subject of this Agreement or
(ii) a breach by the Dealer Manager of Section 9.20(ii).

 

4                                         The
Offering Memorandum; Early Termination

 

4.1.                            The
Company agrees to furnish you with as many copies as you may reasonably request
of the Offering Memorandum, any amendments and supplements thereto and the
related Letter of Transmittal (collectively, as amended or supplemented from
time to time, and in each and every case including any and all information or
documents incorporated therein by reference, the “Exchange Materials”) to be
used by the Company in connection with the Exempted Exchanges. You are
authorized to use copies of the Exchange Materials in accordance with the terms
and conditions of this Agreement. You and your representatives may not forward
written materials other than the Exchange Materials or any publicly filed
documents to the holders of the Existing Notes in connection with the Exempted

 

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Exchange without the
Company’s consent. The Company agrees that, at a reasonable time prior to using
or filing with any federal or other governmental agency or instrumentality any
Exchange Materials, it will first submit copies of such materials to you and
will not use any such Exchange Materials without your prior approval, which
shall not be unreasonably withheld. During the period from the commencement of
the Exempted Exchanges and the Closing Date, the Company will inform you
promptly after it receives notice or becomes aware of the happening of any
event, or the discovery of any fact, which it believes would require the making
of any material change in any Exchange Materials then being used or would
affect the truth, accuracy or completeness of any representation or warranty
contained in this Agreement as if such representation or warranty were being
made immediately after the happening of such event or the discovery of such
fact.

 

4.2.                            In
the event that (i) the Company uses or permits the use of any document in
connection with the Exempted Exchanges which you shall not have approved or
(ii) the Company shall have breached, in any material respect, any of its
representations, warranties, agreements or covenants herein, then you shall be
entitled to withdraw as Dealer Manager in connection with the Exempted
Exchanges without any liability or penalty to you or any other party who may be
indemnified pursuant to the terms of Section 10 hereof (it being agreed
that such withdrawal shall not affect the indemnity provisions contained in
Section 10 hereof, which shall remain in full force and effect) and
without loss of any right to the payment of all expenses payable hereunder
which have been incurred to the date of such withdrawal. Notwithstanding
anything to the contrary contained herein, it is hereby agreed that, in the event
of any withdrawal by you pursuant to this Section 4.2, the expenses, if
any, payable hereunder which are reasonably incurred through the date of such
withdrawal shall be paid or reimbursed to you reasonably promptly after the
date of such withdrawal.

 

5                                         Consideration

 

As consideration for your
services as dealer manager hereunder, the Company shall pay to you in cash, by
wire transfer of immediately available funds to an account designated therefor
by you, a fee equal to 1.75% of the principal amount of the Existing Notes
exchanged by the Company, unless (x) the exchange ratio of New Notes to
Existing Notes is more than $1,000 principal amount of New Note for $1,000
principal amount of Existing Note or (y) the principal amount of the Existing
Notes exchanged is less than $75 million (or such lower amount as the Company
may approve), in which case the Company shall pay a fee equal to 1.50% of the
principal amount of the Existing Notes exchanged by the Company (the Dealer
Manager’s fee shall be referred to in this Agreement as the “Fee”).

 

The Fee shall be payable
in full on the date of the successful completion of the Exempted
Exchanges.  The date of the successful
completion of the Exempted Exchanges is hereby referred to as the “Closing Date”.

 

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6                                         Expenses
of Dealer Manager and Others

 

The Company shall pay all
fees and expenses relating to the preparation, printing, mailing and publishing
of the Exchange Materials.  The Company
will also reimburse you for all reasonable fees and expenses (including the
reasonable fees and expenses of your counsel) incurred by you in connection
with the performance of your services as Dealer Manager under this
Agreement.  The Company shall perform
its obligations set forth in this Section 6 and Section 10 hereof
whether or not the Exempted Exchanges are commenced, except in the event that
the Exempted Exchanges are withdrawn, terminated or cancelled, in which case
the Company’s obligations to pay such expenses shall extend only to expenses
accrued as of the date of such withdrawal, termination or cancellation. All
payments to be made by the Company pursuant to this Section 6 shall be
made reasonably promptly after the expiration, completion, termination,
withdrawal or cancellation of the Exempted Exchanges.

 

7                                         Noteholder
Lists

 

The Company shall, to the
extent available to the Company after having made commercially reasonable
efforts to obtain, provide you with lists or other records in such form as you
may reasonably request in reasonable quantities or copies thereof showing the
names and addresses of, and principal amounts of Existing Notes held by, the
holders of Existing Notes, and will use its commercially reasonable efforts to
advise you or cause the Trustee and DTC to advise you from day to day during
the period between the Commencement Date and the Closing Date as to any
transfers of record of Existing Notes. You agree to use such information only
in connection with the Exempted Exchanges and, unless such information becomes
publicly available (other than by breach by the Dealer Manager of the following
undertaking), not to furnish such information to any other person except in
connection with the Exempted Exchanges or as required by law or upon request of
any governmental or regulatory agency or any securities exchange having
jurisdiction with respect to the Dealer Manager or the Exempted Exchanges.

 

8                                         Representations
and Warranties of the Company

 

The Company represents
and warrants to you, and agrees with you, where applicable, that:

 

8.1.                            the
Company has been duly organized, is validly existing as a corporation under the
laws of Massachusetts and has the corporate power and authority to own its
property and to conduct its business as described in the Exchange Materials and
is duly qualified in or licensed by, and is in good standing (or other similar
concept that may exist in the applicable jurisdiction) in, each jurisdiction in
which the nature of its business requires such qualification, except where the
failure, individually or in the aggregate, to be so licensed or qualified could
not reasonably be expected to have a material adverse effect on the business,
operations, prospects, properties or condition (financial or otherwise) or
results of operations of the Company and its subsidiaries, taken as a whole (a
“Material
Adverse Effect”); each of the subsidiaries of the Company has been
duly

 

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organized or formed, is
validly existing as a corporation, limited liability company or limited
partnership, as the case may be, in good standing, if applicable, under the
laws of the jurisdiction in which it is chartered or  organized, and is duly qualified in or licensed by, and is in
good standing (or, if applicable, other similar concept that may exist in the
applicable jurisdiction) in, each jurisdiction in which the nature of its
business requires such qualification, except where the failure, individually or
in the aggregate, to be so licensed or qualified could reasonably be expected
to have a Material Adverse Effect;

 

8.2.                            none
of the Company, its affiliates, or any person acting on its or their behalf
(other than the Dealer Manager or persons acting on its behalf, as to whom the
Company makes no representation) has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy, any security under
circumstances that would require the registration of the New Notes or the
Common Stock issuable upon conversion thereof under the Securities Act;

 

8.3.                            none
of the Company, its affiliates, or any person acting on its or their behalf
(other than the Dealer Manager or persons acting on its behalf, as to whom the
Company makes no representation) has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the Exempted Exchanges with respect to the New Notes or the
Common Stock issuable upon conversion thereof;

 

8.4.                            the
New Notes satisfy the eligibility requirements of Rule 144A(d)(3) under the
Securities Act;

 

8.5.                            the
Company has been advised by the NASD’s PORTAL Market that the New Notes have
been designated PORTAL-eligible securities in accordance with the rules and
regulations of the NASD;

 

8.6.                            subject
to compliance by the Dealer Manager with the representations and warranties
sets forth in Section 9.20 hereof, no registration under the Securities
Act of the New Notes is required in connection with the Exempted Exchanges in
the manner contemplated herein and in the Offering Memorandum;

 

8.7.                            [Intentionally
omitted].

 

8.8.                            the
Company has not paid or agreed to pay to any person any compensation for
soliciting another to purchase or sell any securities of the Company (except as
contemplated in this Agreement);

 

8.9.                            the
Company has not taken, directly or indirectly, any action designed to or that
has constituted or that might reasonably be expected to cause or result, under
the U.S. Securities Exchange Act of 1934, as amended (the “1934 Act”) or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the Exempted Exchanges;

 

8.10.                     all
the outstanding shares of capital stock or other applicable ownership interests
of each subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable and, except as otherwise set forth in the Offering 

 

5

 

Memorandum, all
outstanding shares of capital stock or other applicable ownership interests of
the subsidiaries are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any security interest, claim, lien or
encumbrance;

 

8.11.                     the
Company’s authorized equity capitalization is as set forth in the Exchange
Materials; the capital stock of the Company conforms in all material respects
to the description thereof contained in the Offering Memorandum; the
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable; the shares of Common Stock initially
issuable upon conversion of the New Notes have been duly authorized and, when
issued upon conversion of the New Notes against payment of the conversion
price, will be validly issued, fully paid and nonassessable; the Board of
Directors of the Company has duly and validly adopted resolutions reserving
such shares of Common Stock for issuance upon conversion of the New Notes; the
holders of outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the New Notes or the shares of
Common Stock issuable upon conversion thereof; and, except as set forth in or
contemplated by the Offering Memorandum, no options, warrants or other rights
to purchase, agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital stock of or
ownership interests in the Company are outstanding;

 

8.12.                     the
statements in the Offering Memorandum under the headings “Certain U.S. Federal
Income Tax Consequences”, “The Exempted Exchanges”, “Description of the New
Notes” and “Description of Common Stock” fairly summarize the matters therein
described;

 

8.13.                     all
necessary action (corporate and other) has been duly taken by the Company to
authorize the execution, delivery and performance of this Agreement, the
Company has all requisite power and authority to consummate the transactions
contemplated hereby, and this Agreement has been duly executed and delivered by
the Company and is a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except, in each
case, as rights to indemnification and contribution hereunder may be limited by
public policy considerations and except as enforcement thereof may be limited
by or subject to (x) any bankruptcy, insolvency, reorganization, fraudulent
conveyance, fraudulent transfer, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally, and (y) general equitable
principles or the availability of equitable remedies;

 

8.14.                     all
necessary action (corporate and other) has been duly taken by the Company to
authorize the Exempted Exchanges, the execution, delivery and performance of
the New Notes Indenture and the execution, delivery and performance of the
Registration Rights Agreement, the Company has all requisite power and
authority to consummate the transactions contemplated thereby, and each of the
New Notes Indenture and the Registration Rights Agreement, when executed and
delivered by the Company (and in the case of the New Notes Indenture, on the

 

6

 

Closing Date when the
Existing Notes are exchanged for the New Notes), will be a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except, in the case of the Registration Rights Agreement, as
rights to indemnification and contribution thereunder may be limited by public
policy considerations and  except, in each case, as enforcement
thereof may be limited by or subject to (x) any bankruptcy, insolvency,
reorganization, fraudulent conveyance, fraudulent transfer, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally, and (y)
general equitable principles or the availability of equitable remedies;

 

8.15.                     the
New Notes have been duly authorized and, when executed and authenticated and
delivered in accordance with the provisions of the New Notes Indenture, will be
entitled to the benefits of the New Notes Indenture, and will be valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by or
subject to (x) any bankruptcy, insolvency, reorganization, fraudulent
conveyance, fraudulent transfer, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally, and (y) general equitable
principles or the availability of equitable remedies;

 

8.16.                     no
consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the Exempted
Exchanges and the transactions contemplated herein, in the New Notes Indenture
or in the Registration Rights Agreement, except such as may be required under
the blue sky laws of any jurisdiction in which the Exempted Exchanges occurs
and, in the case of the Registration Rights Agreement, such as will be obtained
under the Securities Act, the U.S. Trust Indenture Act of 1939, as amended (the
“Trust
Indenture Act”) and pursuant to the rules of the Nasdaq National
Market;

 

8.17.                     the
Exempted Exchanges and all other actions of the Company contemplated in the
Exchange Materials and the execution, delivery and performance of this
Agreement, the New Notes Indenture and the Registration Rights Agreement will
comply in all material respects with (i) all applicable requirements of law,
including, without limitation, applicable regulations of the U.S. Securities
and Exchange Commission (the “Commission”) and (ii) all other
governmental, regulatory, administrative, stock exchange or similar authority
having jurisdiction over the Company and its subsidiaries or its respective
businesses, operations or assets;

 

8.18.                     except
as disclosed in the Offering Memorandum (exclusive of any amendment or supplement
thereto), there are no actions, suits, stop orders, restraining orders, claims,
investigations or proceedings pending or, to the best knowledge of the Company,
threatened, before any court or governmental agency or other regulatory or
administrative authority or any arbitrator, to which the Company or any of its
subsidiaries is a party or to which the Company, any of its subsidiaries or any
of their licenses, concessions or other properties and assets is subject, that,
individually or in the aggregate, could reasonably be expected to have a
Material

 

7

 

Adverse Effect; and no
actions, suits, claims, investigations or proceedings pending or, to the
knowledge of the Company, threatened, before any court or governmental agency
or other regulatory or administrative authority challenging or could otherwise
be reasonably expected to have a material adverse effect on the making of the
Exempted Exchanges or any other transactions contemplated herein;

 

8.19.                     neither
the Company, nor any of its subsidiaries, is in breach of, or in default under
(nor has any event occurred which with notice, lapse of time or both would
constitute a breach of, or default by the Company or any of its subsidiaries
under), (A) any provision of the charter or bylaws (or similar organizational
documents) of the Company or any of its subsidiaries or (B) except as could not
reasonably be expected to individually or in the aggregate have a Material
Adverse Effect, the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject,
or under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its subsidiaries
or any of its or their property; the Exempted Exchanges, all other actions of
the Company contemplated in the Exchange Materials, the execution, delivery and
performance of this Agreement, and the performance of the New Notes Indenture
and the Registration Rights Agreement will not conflict with, or result in any
breach of or constitute a default under (nor constitute any event which with
notice, lapse of time or both would constitute a breach of, or default by the
Company or any of its subsidiaries under), (X) any provision of the charter or
bylaws of the Company or any of its subsidiaries, (Y) any provision of the
Existing Notes Indenture pursuant to which the Existing Notes were issued (in
each case, as supplemented or amended from time to time) and any agreements
entered into by the Company for the benefit of the holders of the Existing
Notes, or (Z) without prejudice to the foregoing, and except as could not
reasonably be expected to individually or in the aggregate have a Material
Adverse Effect, the terms of any indenture, contract, lease, mortgage, deed of
trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
subsidiaries is a party or bound or to which its or their property is subject;

 

8.20.                     the
terms of the New Notes, the New Notes Indenture and the Registration Rights
Agreement will conform in all material respects to the descriptions thereof
contained in the Offering Memorandum;

 

8.21.                     the
Exchange Materials do not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading; provided, however,  that no representation is
made with respect to any statements contained in, or any matter omitted from,
the Exchange Materials in reliance upon and in conformity with information
relating to UBS Securities LLC

 

8

 

furnished by you in
writing to the Company expressly for use therein, which information consists
solely of the name of the entity listed as the Dealer Manager on the cover of
the Offering Memorandum and the third sentence of the first paragraph under the
heading “The exempted exchanges—New notes are a new issue of securities” in the
Offering Memorandum (the “UBS Information”);

 

8.22.                     as
of the date hereof and at all times subsequent hereto up to the Closing Date,
the Company is subject to the reporting requirements of Section 13 or Section 15(d)
of the 1934 Act and has complied and will continue to comply, in all material
respects, with the 1934 Act, and the rules and regulations thereunder, the
Trust Indenture Act, and the rules and regulations thereunder, and the various
state securities or “blue sky” laws and the applicable laws, rules and
regulations of each jurisdiction in which any of the Existing Notes are listed
and in which the New Notes will be listed and any authority therein, in
connection with the Exempted Exchanges;

 

8.23.                     since
the respective dates as of which information is given in the Exchange
Materials, there has not been any material change in the business, operations,
prospects, properties or condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole, whether or
not arising in the ordinary course of business;

 

8.24.                     all
documents incorporated by reference into the Exchange Materials or from which
information is so incorporated by reference, when they were filed with or
submitted to the Commission, complied in all material respects with the
requirements of the 1934 Act and the rules and regulations promulgated
thereunder; and any documents so filed or submitted and incorporated by
reference subsequent to the date of this Agreement and prior to or on the
Closing Date, when they are filed with or submitted to the Commission, shall
conform in all material respects with the requirements of the 1934 Act and the
rules and regulations thereunder;

 

8.25.                     the
financial statements and related schedules and notes thereto of the Company set
forth or incorporated by reference in the Exchange Materials present fairly in
all material respects the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates indicated and the results of
operations and cash flows of the Company and its consolidated subsidiaries for
the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles in the United States;
all other financial data set forth in the Exchange Materials are fairly
presented in all material respects and prepared on a basis consistent with the
financial statements contained in the Exchange Materials or incorporated by
reference and the books and records of the Company and its subsidiaries; and
the assumptions used in preparing the pro forma financial information included
in the Exchange Materials provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect

 

9

 

the proper application of
those adjustments to the corresponding historical financial statement amounts;

 

8.26.                     PricewaterhouseCoopers
LLP, which has certified the financial statements of the Company and its
subsidiaries, are independent accountants, within the meaning of the Securities
Act and the rules and regulations thereunder;

 

8.27.                     there
are no stamp or other issuance or transfer taxes or duties or other similar
fees or charges required to be paid in connection with the execution and
delivery of this Agreement or the consummation of the Exempted Exchanges or
upon the issuance of Common Stock upon the conversion of the New Notes;

 

8.28.                     the
Company has filed all non-U.S., U.S. federal, state and local tax returns that
are required to be filed or has requested extensions thereof (except in any
case in which the failure so to file could not reasonably be expected to have a
Material Adverse Effect and except as set forth in or contemplated in the
Offering Memorandum (exclusive of any amendment or supplement thereto)) and has
paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such tax, assessment, fine or penalty that is currently
being contested in good faith or as could not reasonably be expected to have a
Material Adverse Effect and except as set forth in or contemplated in the
Offering Memorandum (exclusive of any amendment or supplement thereto);

 

8.29.                     no
labor problem or dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company’s knowledge, is threatened, imminent or
pending, except as set forth in or contemplated in the Offering Memorandum
(exclusive of any amendment or supplement thereto);

 

8.30.                     the
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are engaged; all
policies of insurance and fidelity or surety bonds insuring the Company or any
of its subsidiaries or their respective businesses, assets, employees, officers
and directors are in full force and effect; the Company and its subsidiaries
are in compliance with the terms of such policies and instruments; except with
respect to the pending securities class actions, there are no claims by the
Company or any of its subsidiaries under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any of its subsidiaries
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at
a cost that could not reasonably be expected to have a Material Adverse Effect
except as set forth in or contemplated in the Offering Memorandum (exclusive of
any amendment or supplement thereto);

 

8.31.                     No
subsidiary of the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any loans or

 

10

 

advances to such
subsidiary from the Company or from transferring any of such subsidiary’s
property or assets to the Company or any other subsidiary of the Company,
except as described in or contemplated in the Offering Memorandum (exclusive of
any amendment or supplement thereto;

 

8.32.                     the
Company and its subsidiaries possess all licenses, certificates, permits and
other authorizations issued by the appropriate U.S. federal, state or non-U.S.
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such licenses, certificates, permits and
authorizations, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect and neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, could reasonably be expected to have a Material Adverse
Effect, except as set forth in or contemplated in the Offering Memorandum
(exclusive of any amendment or supplement thereto);

 

8.33.                     except
for matters governed by Environmental Laws which are addressed in Sections 8.41
and 8.42, and except as disclosed in the Offering Memorandum (exclusive of any
amendment or supplement thereto), the Company and each of its subsidiaries is
in compliance with all applicable laws, statutes, ordinances, rules and
regulations of the Federal Food and Drug Administration (the “FDA”)
and OSHA, and has filed all applications and has obtained all licenses, permits
and approvals or other regulatory authorizations of the FDA and OSHA
(including, without limitation, all FDA approvals necessary for marketing the
products the Company and each of its subsidiaries currently markets), except
where such noncompliance, failure to file such applications or failure to
obtain such licenses, permits, approvals or authorizations could not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect;

 

8.34.                     except
for matters governed by Environmental Laws which are addressed in Sections 8.41
and 8.42, and except as disclosed in the Offering Memorandum (exclusive of any
amendment or supplement thereto), the FDA has not commenced, or, to the best of
the Company’s knowledge, threatened to initiate, any action to withdraw its
approval of any product of the Company or its subsidiaries or commenced or, to
the best of the Company’s knowledge, threatened to initiate any action to
withdraw its approval of any facility of the Company or its subsidiaries;

 

8.35.                     the
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded

 

11

 

accountability for assets
is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences;

 

8.36.                     the
Company has not taken any action or omitted to take any action (such as issuing
any press release relating to any New Notes without an appropriate legend)
which may result in the loss by the Dealer Manager of the ability to rely on
any stabilization safe harbor provided by the Financial Services Authority
under the Financial Services and Markets Act 2000 (the “FSMA”). The Company has been
informed of the guidance relating to stabilization provided by the Financial
Services Authority, in particular in Section MAR 2 Annex 2G of the
Financial Services Handbook;

 

8.37.                     none
of the Company, its subsidiaries or, to the knowledge of the Company, any
director, officer, agent, employee or Affiliate of the Company or any of its
subsidiaries is aware of or has taken any action, directly or indirectly, that
would result in a violation by such Persons of Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder (the “FCPA”),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and the Company, its
subsidiaries and, to the knowledge of the Company, its Affiliates have
conducted their businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith;

 

8.38.                     subsequent
to the respective dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), neither the
Company nor any of its subsidiaries has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, in each case, that has had, or could
reasonably be expected to have, a Material Adverse Effect;

 

8.39.                     each
of the Company and its subsidiaries, owns or possesses, or can acquire on
reasonable terms, adequate patents, patent licenses, trademarks, service marks,
trade names, know-how and other intellectual property necessary to carry on its
businesses as presently conducted, and except as described in the Exchange
Materials, neither the Company nor any of its subsidiaries has received any
notice of infringement of or conflict with asserted rights of others with
respect to any patents, patent licenses, trademarks, service marks, trade
names, know-how or other intellectual property that in the aggregate could
reasonably be expected to have a Material Adverse Effect; the patent
applications filed by or on behalf of the Company described in the Exchange
Materials have been properly prepared and filed on behalf of the Company; each
such patent applications and patents described in the Exchange Materials is,
except as set forth or contemplated in the

 

12

 

Exchange Materials,
assigned or licensed to the Company, and, except as set forth in the Exchange
Materials, to the Company’s knowledge, no other entity or individual has any
right or claim in any such patent, patent application or any patent to be
issued therefrom; and to the knowledge of the Company, each such patent
application discloses potentially patentable subject matter;

 

8.40.                     to
the best of the Company’s knowledge, the human clinical trials conducted by the
Company, on behalf of the Company or in which the Company has participated that
are described in the Exchange Materials, or the results of which are referred
to in the Exchange Materials, were and, if still pending, are being, conducted
in accordance with applicable regulatory requirements; to the best of the
Company’s knowledge, the descriptions of the results of such studies, tests and
trials contained in the Exchange Materials are accurate in all material
respects; the Company has no knowledge of any other studies or tests conducted
by the Company, on behalf of the Company or in which the Company has
participated, the results of which discredit the results described in the
Exchange Materials; the Company has not received any notice or correspondence
from the FDA or any other governmental agency requiring the termination or
suspension of any clinical trials conducted by, or on behalf of, the Company or
in which the Company has participated that are described in the Exchange
Materials or the results of which are referred to in the Exchange Materials;

 

8.41.                     the
Company and its subsidiaries (i) are in compliance with any and all applicable
federal, state, local and foreign laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals could not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect;

 

8.42.                     there
are no pending or, to the best of the Company’s knowledge, threatened,
administrative, regulatory or judicial actions, suits, demand letters, claims,
liens, written notices of noncompliance or violation, investigations or
proceedings pursuant to any Environmental Laws against the Company or any of
its subsidiaries which would, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and, to the best of the Company’s
knowledge, there are no events or circumstances at the Company’s owned or
leased properties that could reasonably be expected to form the basis of a
governmental order for clean-up or remediation of hazardous or toxic
substances, wastes, pollutants or contaminants regulated under Environmental
Laws, or an action, suit or proceeding by any private party or governmental
body or agency, against the Company or any of its subsidiaries pursuant to
Environmental Laws; and

 

13

 

8.43.                     the
Company is not, and after giving effect to the Exempted Exchanges and the other
transactions contemplated hereby, will not be, an “investment company” as such
term is defined in the U.S. Investment Company Act of 1940, as amended.

 

9                                         Covenants

 

9.1.                            Prior
to and during the period up to the Closing Date, the Company shall advise you
promptly of (i) the occurrence of any event or the discovery of any fact which
is likely to cause or which causes the Company to fail to commence, withdraw,
rescind or terminate the Exempted Exchanges or would reasonably be expected to
permit the Company to exercise any right not to accept the Existing Notes to be
exchanged thereunder, (ii) any proposal or requirement to modify, amend or
supplement any of the Exchange Materials, (iii) the commencement or threat in
writing of any lawsuit or government proceeding in connection with the Exempted
Exchanges and (iv) any other information relating to the Exempted Exchanges
which you may from time to time reasonably request.

 

9.2.                            The
Company and you each agree to keep the other reasonably informed as to the
progress of the Exempted Exchange during the period between the Commencement
Date and the Closing Date, including providing information as to the number and
amount of Existing Notes that have agreed to be exchanged.

 

9.3.                            The
Company covenants that the Exempted Exchanges and all other actions of the
Company contemplated in the Exchange Materials and this Agreement will comply
in all material respects with all applicable requirements of law, including,
without limitation, the 1934 Act and the rules and regulations thereunder
(other than broker-dealer regulations), and the various state securities or
“blue sky” laws and the applicable listing laws, rules and regulations of each
jurisdiction in which any of the Existing Notes are listed.

 

9.4.                            At
all times subsequent to the date hereof up to the Closing Date, the Exchange
Materials, including any information and documents incorporated by reference
therein, will comply in all material respects with all applicable requirements
of law, including, without limitation, the 1934 Act, and the Exchange Materials
(as amended or supplemented from time to time), including any information and
documents incorporated by reference therein, will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; provided that
this covenant shall not extend to any statements contained in, or any matter
omitted from, the Exchange Materials in reliance upon and conformity with the
UBS Information; provided, further, that  notwithstanding the
foregoing, if at any time during the period beginning on the date hereof and
ending on the Closing Date any event shall occur or condition shall exist as a
result of which the Exchange Materials, including any information and documents
incorporated by reference therein, will not comply in all material respects
with all applicable requirements of law, or such Exchange Materials (as amended
or supplemented from time to time), including any information and documents
incorporated by reference 

 

14

 

therein, will contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, then the
Company shall either (i) promptly prepare such amendment or supplement to the
Exchange Materials, or any filing with or submission to the Commission with
respect to any such information or document incorporated by reference therein,
as may be necessary in order to correct such false or misleading statement or
omission, and take such action to make the Exchange Materials, including any
information or document incorporated by reference therein, comply with the
requirements of law, and distribute such amendment or supplement to holders of
Existing Notes involved in the Exempted Exchanges if it shall be necessary or
desirable to so distribute such amendment or supplement to comply with the
requirements of law, and provide such number of copies of such amendment or
supplement as the Dealer Manager shall request, or (ii) withdraw from, cancel,
rescind or otherwise terminate the Exempted Exchanges.

 

9.5.                            Between
the Commencement Date and the Closing Date, the Company agrees that a
reasonable time prior to using or permitting the use of the Exchange Materials
in connection with the Exempted Exchanges and to filing or submitting any
document with the Commission or publicly disseminating any statements relating
to the Company, it shall submit copies of such documents to the Dealer Manager
and shall give reasonable consideration to the Dealer Manager’s comments and
those of the Dealer Manager’s counsel with respect thereto.

 

9.6.                            The
Company agrees that, except as required by applicable law, any reference to the
Dealer Manager in any Exchange Materials or any other document or communication
prepared, approved or authorized by the Company in connection with the Exempted
Exchanges is subject to the prior approval of the Dealer Manager, provided that
if such reference to the Dealer Manager is required by applicable law, the
Company agrees to notify the Dealer Manager within a reasonable time prior to
such use.

 

9.7.                            The
Company will pay the Fee to the Dealer Manager for soliciting, on the Company’s
behalf, holders to enter into the Exempted Exchanges and will provide each such
holder with copies of the Offering Memorandum, the Letter of Transmittal and
any other Exchange Materials.

 

9.8.                            Neither
the Company, nor any subsidiary or affiliate thereof shall publicly disclose or
refer to any advice rendered by the Dealer Manager to the Company without the
Dealer Manager’s prior written consent, except as may be required by law,
regulation, legal process or regulatory authority and in any action, suit or
proceeding to which the Company is a party involving the Exempted Exchanges;
provided, that, the Company shall provide the Dealer Manager with prompt
written notice, at the Dealer Manager’s address for notice set forth in
Section 16 hereto, of any such requirement so that the Dealer Manager may
seek a protection order or any other appropriate remedy.

 

15

 

9.9.                            As
soon as practicable before the Commencement Date, the Company will make
appropriate arrangements, to the extent applicable, with DTC to allow for the
book-entry movement of the exchanged Existing Notes between DTC participants
and the Dealer Manager, and will use its reasonable best efforts to permit the
New Notes to be eligible for clearance and settlement through DTC.

 

9.10.                     The
Company will not, and will not permit any of its affiliates to, resell any New
Notes or Shares of Common Stock issued upon conversion thereof that have been
acquired by any of them.

 

9.11.                     None
of the Company, its affiliates, or any person acting on its or their behalf
will, directly or indirectly, make offers or sales of any security, or solicit
offers to buy any security, under circumstances that would require the
registration of the New Notes or Common Stock issuable upon conversion thereof
under the Securities Act.

 

9.12.                     So
long as any of the New Notes or the Common Stock issuable upon the conversion
thereof are “restricted securities” within the meaning of Rule 144(a)(3) under
the Securities Act, the Company, or any successor thereto, will, during any
period in which it is not subject to and in compliance with Section 13 or
15(d) of the 1934 Act,  provide to each holder of such restricted
securities and to each prospective purchaser (as designated by such holder) of
such restricted securities, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule 144A(d)(4) under the
Securities Act.  This covenant is
intended to be for the benefit of the holders, and the prospective purchasers
designated by such holders, from time to time of such restricted securities.

 

9.13.                     Any
information provided by the Company to publishers of publicly available
databases about the terms of the New Notes shall include a statement that the
New Notes have not been registered under the Securities Act and are subject to
restrictions under Rule 144A under the Securities Act.

 

9.14.                     [Intentionally
omitted].

 

9.15.                     The
Company will reserve and keep available at all times, free of pre-emptive
rights, the full number of shares of Common Stock issuable upon conversion of
the New Notes.

 

9.16.                     None
of the Company, its affiliates, or any person acting on its or their
behalf  will engage in any form of
general solicitation or general advertising (within the meaning of Regulation
D) in connection with the Exempted Exchanges.

 

9.17.                     Between
the date hereof and the Closing Date, the Company will not do or authorize any
act or thing that would result in an adjustment of the conversion price of the
Existing Notes or  New Notes.

 

9.18.                     The
Company will not take, directly or indirectly, any action designed to or which
has constituted or which might reasonably be expected to cause or result, under

 

16

 

the 1934 Act or
otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the New Notes.

 

9.19.                     The
Dealer Manager acknowledges that the New Notes and the Common Stock issuable
upon conversion thereof have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to,
or for the account or benefit of, U.S. persons, except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act.

 

9.20.                     The
Dealer Manager represents and warrants to and agrees with the Company that:

 

(i)                                     it
has not solicited or made any Exempted Exchanges within the United States or
to, or for the account or benefit of, U.S. persons (x) as part of their
distribution at any time or (y) otherwise until one year after the later of the
commencement of the offering and the date of closing of the offering except to
those it reasonably believes to be “qualified institutional buyers” (as defined
in Rule 144A under the Securities Act);

 

(ii)                                  it
and any person acting on its behalf will not solicit more than eight (8)
holders of Existing Notes in connection with the Exempted Exchanges and will
not exchange more than $79.3138 million principal amount of Existing Notes;

 

(iii)                               neither
it nor any person acting on its behalf has solicited or will solicit any
Exempted Exchanges in the United States by means of any form of general
solicitation or general advertising (within the meaning of Regulation D) in the
United States;

 

(iv)                              in
connection with any solicitation of Exempted Exchanges, it has taken or will
take reasonable steps to ensure that the acquirer of such New Notes is aware
that such sale is being made in transactions exempt from the registration
requirements of the Securities Act;

 

(v)                                 it
has not offered or sold and  will not
offer or sell any New Notes to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or as agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995.

 

10                                  Indemnification

 

Notwithstanding any other
provision of this Agreement, in the event that the Dealer Manager becomes
involved in any capacity other than as a noteholder in any action, claim, suit,
proceeding, investigation or inquiry (including without limitation any

 

17

 

shareholder, noteholder
or derivative action or arbitration proceeding) (collectively a “Proceeding”)
in connection with any matter in any way relating to, or referred to in this
Agreement or arising out of, or alleged to arise out of, the matters
contemplated by this Agreement, including, without limitation, matters which
arise out of, or are alleged to arise out of, or are based upon (i) a breach of
any of the representations, warranties and agreements made by the Company
herein or a failure by the Company to comply with the covenants contained herein;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any Exchange Materials (other than UBS Information) or any other
document used by the Company in connection with the Exempted Exchanges; (iii)
any omission or alleged omission to state any material fact required to be
stated in any Exchange Materials or any other document used by the Company in
connection with the Exempted Exchanges or necessary to make the statements
therein not misleading (other than UBS Information); (iv) any action or failure
to act by the Company, or any of its officers, directors or affiliates in
connection with the Exempted Exchanges; or (v) any services rendered by the
Dealer Manager pursuant to this Agreement, the Company will indemnify and reimburse
the Dealer Manager promptly upon request for its reasonable legal and other
expenses (including the reasonable cost of any investigation and preparation)
as they are reasonably incurred by the Dealer Manager in connection therewith;
provided, however, that with respect to any untrue statement, or alleged untrue
statement or omission of material fact or alleged omission of material fact
made in the Exchange Materials, the indemnity agreement contained in this
Section shall not inure to the benefit of the Dealer Manager to the extent
that any such legal and other expenses occur under the circumstances where it
shall have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (w) the Company had previously furnished to the
Dealer Manager a reasonable amount of Exchange Materials and in a sufficient
quantity, (x) the untrue statement or alleged untrue statement or omission of
material fact or alleged omission of material fact was corrected in such
Exchange Materials and (z) there was not sent or given to the party initiating
the Proceeding the corrected Exchange Materials.  Notwithstanding
anything herein to the contrary, the Company shall not, however, as to any
person seeking indemnification or contribution hereunder, be responsible for
any losses, claims, damages, liabilities or expenses pursuant to this
Section 10 which have been finally judicially determined to result from
(i) willful misconduct or gross negligence on the part of any such person, or
(ii) a breach by the Dealer Manager of Section 9.20(ii).  The foregoing indemnity shall be in addition
to any liability the Company might otherwise have to the Dealer Manager at
common law or otherwise.  The Company
agrees to notify the Dealer Manager promptly of the assertion of any such
Proceeding against the Company, or any of its officers, directors, employees or
agents or any person who controls any of the foregoing within the meaning of
Section 20(a) of the 1934 Act.  In
the event that it is judicially determined that the Dealer Manager was not
entitled to receive payments for such expenses or losses hereunder, the Dealer
Manager shall promptly return to the Company all sums that have been advanced
pursuant hereto.

 

If such indemnification
is unavailable or insufficient (other than as a result of the failure to give
notice required by the next paragraph), to contribute to any such losses,
claims, damages and liabilities involved in such proportion that is appropriate
to reflect the

 

18

 

relative benefits of the
Company and its affiliates on the one hand, and the Dealer Manager on the
other, in the matters contemplated by this Agreement or (B) if the allocation
provided by clause (A) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (A) above but also the relative fault of the Company, on the one hand
and of the Dealer Manager on the other hand in connection with the action,
inaction, statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations.  For purposes of clauses
(A) and (B) in the immediately foregoing sentence, the relative benefits received
by the Company, on the one hand, and the Dealer Manager, on the other hand, in
connection with the Exempted Exchanges shall be deemed to be in the same
proportion as the aggregate principal amount of Notes exchanged pursuant to the
Exempted Exchanges bears to the fees actually received by the Dealer Manager
hereunder, and the relative fault of the Company, on the one hand, and the
Dealer Manager, 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 Company, on the one hand, or by the Dealer Manager,
on the other hand, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Dealer Manager agree that it would not be just and
equitable if contribution pursuant to this Section 10 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.

 

If any litigation or
proceeding is brought against the Dealer Manager in respect of which
indemnification may be sought against the Company pursuant to this
Section 10, the Dealer Manager shall promptly notify the Company in
writing of the commencement of such litigation or proceeding. Failure to so
notify the Company shall not, however, relieve the Company from any liability
which it may have on account of this indemnity or otherwise, unless such
failure materially prejudices the ability of the Company to exercise
substantial rights and defenses. In case any such litigation or proceeding
shall be brought against the Dealer Manager, the Company shall be entitled to
participate in such litigation or proceeding and, to the extent the Company may
wish, after written notice from the Company to the Dealer Manager, to assume
the defense of such litigation or proceeding with counsel of its choice at its
expense; provided,
however, that such counsel shall be satisfactory to the Dealer
Manager in the exercise of its reasonable judgment. Notwithstanding the
election of the Company to assume the defense of such litigation or proceeding,
the Dealer Manager shall have the right to employ separate counsel and to
participate in the defense of such litigation or proceeding, and the Company
shall bear the reasonable fees, costs and expenses of such separate counsel and
shall pay such fees, costs and expenses (provided that, with respect to any single
litigation or proceeding or with respect to several litigations or proceedings
involving substantially similar legal claims, the Company shall not be required
to bear the fees, costs and expenses of more than one such counsel other than
one local counsel) if (i) the Dealer Manager shall have been advised by its
counsel in writing (with a copy to the counsel appointed by the Company, so
long as such delivery could not reasonably be expected to result in the loss of
any privilege) that there may be legal defenses available to it that are
different from or

 

19

 

additional to those
available to the Company, such that it would render representation by counsel
to the Company inappropriate or inadvisable for the Dealer Manager, (ii) the
Company shall not have employed counsel satisfactory to the Dealer Manager in
the exercise of the Dealer Manager’s reasonable judgment to represent the
Dealer Manager within a reasonable time after notice of the institution of such
litigation or proceeding or (iii) the Company shall authorize in writing the
Dealer Manager to employ separate counsel at the expense of the Company.  After
notice from the Company to the Dealer Manager of the Company’s election so to
assume the defense thereof and approval by the Dealer Manager of the Company’s
counsel appointed to defend such action, the Company will not be liable to the
Dealer Manager under this Section 10 for (A) any legal or other expenses,
unless the Dealer Manager shall have employed separate counsel in accordance
with the immediately preceding sentence, and/or (B) the costs and expenses of
any settlement, compromise or consent to the entry of any judgment in respect
of any pending or threatened claim, action, suit or proceeding effected by the
Dealer Manager without the consent of the Company, which consent shall not be
unreasonably withheld or delayed. In any action or proceeding the defense of
which the Company so assumes, the Dealer Manager shall have the right to
participate in such litigation and retain its own counsel at the Dealer
Manager’s own expense. Without the prior written consent of the Dealer Manager,
which shall not be unreasonably withheld or delayed, the Company will not
settle, compromise or consent to the entry of any judgment in respect of any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification would reasonably likely be sought hereunder (whether or not the
Dealer Manager is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent (x) includes an unconditional release of
the Dealer Manager from all liability arising out of such claim, action, suit
or proceeding and (y) does not impose any actual or potential liability upon
the Dealer Manager and does not contain any factual or legal admission by or
with respect to the Dealer Manager or any adverse statement with respect to the
character, professionalism, due care, loyalty, expertise or reputation of the
Dealer Manager or any action or inaction by the Dealer Manager. Pursuant to the
terms of this Section 10, the Company and the Dealer Manager agree to
notify each other promptly of the assertion of any claim against it, any of
their respective officers or directors or any entity or person who controls
either the Company or the Dealer Manager within the meaning of
Section 20(a) of the 1934 Act in connection with the Exempted Exchanges.
For purposes of this Section 10, the term Dealer Manager shall include UBS
Securities LLC, its affiliates, officers, directors, employees and agents, and
any person controlling the Dealer Manager or any of such affiliates (within the
meaning of Section 20(a) of the 1934 Act).  The foregoing agreement shall be in addition to any rights that
any indemnified party may have at common law or otherwise.

 

11                                  Indemnification
and Reimbursement; Representations and Warranties to Remain Operative

 

The indemnity,
reimbursement and contribution agreements contained in Section 10 hereof
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (a)
any failure to commence, or the withdrawal, rescission, termination or
consummation of, the Exempted

 

20

 

Exchanges or the
termination or assignment of this Agreement, (b) any investigation made by or
on behalf of any party entitled to indemnification pursuant to the terms of
Section 10 hereof and (c) any withdrawal by you pursuant to
Section 4.2 hereof.

 

12                                  Conditions
to Obligations of Dealer Manager

 

Your obligations
hereunder shall at all times be subject, in your reasonable discretion, to the
satisfaction of the following conditions:

 

12.1.                     all
representations, warranties and other statements of the Company contained
herein at all times during the period beginning and including the date hereof
and ending on, and including, the Closing Date, will be true and correct;

 

12.2.                     the
Company, at all times during the period between the date hereof and the Closing
Date, shall have performed all of its obligations hereunder and under the New
Notes Indenture and the Registration Rights Agreement  to be performed;

 

12.3.                     no
stop order, restraining order or denial of an application for approval shall
have been issued and no litigation shall have been commenced or threatened in
writing before any regulatory authority or other public body or court of any
jurisdiction with respect to the Exempted Exchanges which you, in good faith,
believe makes it inadvisable for you to continue to act hereunder;

 

12.4.                     the
Company shall have delivered to you opinions addressed to you dated as of the
Closing Date, of the Company’s counsel and internal intellectual property
counsel, substantially in the form of Exhibits B-1 and B-2, and a letter from
the Vice President of Regulatory Affairs of the Company in the form of Exhibit
B-3; and (B) Cleary, Gottlieb, Steen & Hamilton shall have delivered to you
opinions addressed to you dated as of the Closing Date in form and substance
satisfactory to you;

 

12.5.                     the
Company shall have delivered to you as of the Closing Date, a certificate,
dated the date of its delivery, signed by either its Chief Executive Officer or
its Chief Financial Officer, to the effect that (i) the signatory of such
certificate has carefully examined the Exchange Materials and no event has
occurred as a result of which it is necessary to amend or supplement the
Exchange Materials in order to make the statements therein not untrue or
misleading in any material respect and there has been no document required to
be filed or submitted under the 1934 Act and the rules and regulations
thereunder that upon such filing or submission would be deemed to be
incorporated by reference into the Exchange Materials that has not been so
filed; (ii) each of the representations and warranties of the Company (as
applicable with respect to the relevant certificate) contained in this
Agreement are, at the time such certificate is delivered, true and correct on
the Closing Date, with the same effect as if made on the Closing Date,
provided, however, that if any such representation or warranty is already
qualified as to materiality, such representation or warranty, as so qualified,
is true and correct in all respects on the Closing Date; and (iii) each of the
covenants required herein to be performed by the Company (as applicable with
respect to the relevant certificate) on or prior to the delivery of such
certificate has been duly, timely and

 

21

 

fully performed and each
condition herein required to be complied with by the Company (as applicable
with respect to the relevant certificate) on or prior to the date of such
certificate has been duly, timely and fully complied with;

 

12.6.                     on
the date hereof and the Closing Date, the Company shall have furnished to you a
“comfort letter” of PricewaterhouseCoopers LLP, dated as of the date hereof or
the Closing Date, as the case may be, addressed to you, in form and substance
satisfactory to you, your counsel and PricewaterhouseCoopers LLP, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” with respect to financial statements and certain financial
information contained in the Offering Memorandum; provided that the letter
delivered on the Closing Date shall use a “cut-off” date not earlier than two
days before the Closing Date;

 

12.7.                     The
New Notes shall have been designated as PORTAL-eligible securities in
accordance with the rules and regulations of the NASD and the New Notes shall
be eligible for clearance and settlement through DTC;

 

12.8.                     The
Company shall have caused the shares of Common Stock initially issuable upon
conversion of the New Notes to be approved for quotation, subject to issuance,
on the Nasdaq Stock Market.

 

12.9.                     The
Company shall have duly authorized, executed and delivered the New Notes
Indenture and the Registration Rights Agreement, each of which shall be in the
form satisfactory to the Dealer Manager.

 

12.10.              subsequent
to the Commencement Date and prior to the Closing Date,

 

(i)                                     there
shall not have occurred any downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the rating
accorded any of the Company’s securities by any “nationally recognized
statistical rating organization,” as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and

 

(ii)                                  there
shall not have occurred any change, or any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings,
prospects, business or operations, of the Company and its subsidiaries, taken
as a whole, from that set forth in the Exchange Materials (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
that, in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to proceed with the Exchange Transaction in the manner
contemplated in the Exchange Materials; and

 

12.11.              the
Company shall have furnished to you such certificates or other documents, in
addition to those specifically mentioned herein, as you or your counsel may
have reasonably requested.

 

22

 

12.12.              In
the event that at any time during the period between the date hereof and the
Closing Date any representation, warranty or other statement ceases to be true
and correct, the Company shall promptly use its best efforts to seek to cause
such representation, warranty or other statement to be true and correct.

 

12.13.              You
shall have a reasonable period of time after discovering or being informed of a
breach in any of the foregoing conditions up to and including the Closing Date
to elect whether to continue to act as Dealer Manager. Your resignation as
Dealer Manager as a result of a breach of the foregoing conditions shall be
without prejudice to your entitlement to expenses under Section 4.2
hereof.

 

13                                  Publications

 

The Company agrees that
the Dealer Manager has the right to place advertisements in financial and other
newspapers and journals at its own expense describing its services to the
Company hereunder, provided such advertisements are provided to and approved in
writing by the Company prior to their use.

 

14                                  Confidentiality

 

Any advice or opinions
provided by you in connection with or related to this Agreement will not be
disclosed or referred to publicly or to any third party (other than attorneys
and accountants of the Company who agree to keep such advice or opinions
confidential) by the Company or any of its affiliates except in accordance with
your prior written consent, which shall not be unreasonably withheld or delayed
or as may be required by applicable laws or except as may be required by law,
regulation, legal process or regulatory authority or in any action, suit or
proceeding to which the Company is a party involving the Exempted Exchanges;
provided that the Company shall provide the Dealer Manager with prompt written
notice of any such requirement so that the Dealer Manager may seek a protection
order or other appropriate remedy.

 

15                                  Termination

 

This Agreement shall
terminate upon the expiration, termination or withdrawal of the Exempted
Exchanges or upon the withdrawal by you as Dealer Manager pursuant to
Section 4.2 hereof. In addition, your services as Dealer Manager may be
terminated by you or by the Company upon 10 days prior written notice to the
other party without liability or continuing obligation of the Company or the
Dealer Manager. In the event your services as Dealer Manager are terminated by
the Company, the Dealer Manager shall be entitled to any Fee payable pursuant
to Section 5 hereof in accordance with the terms thereof (but the Dealer
Manager shall not be entitled to any Fee hereunder if (a) the Company shall
have terminated such services with cause, including a breach by the Dealer
Manager of Section 9.20(ii) or (b) the Dealer Manager shall otherwise have
acted in bad faith or in a grossly negligent manner or (c) there has occurred
any material adverse change in the financial markets in the United States or
the international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to

 

23

 

make it, in the
reasonable judgment of the Dealer Manager, impracticable or inadvisable to
proceed with the Exempted Exchanges, or (d) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the
Nasdaq National Market, or if trading generally on the American Stock Exchange
or the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any
other governmental authority, in each case the effect of which is such as to
make it, in the reasonable judgment of the Dealer Manager, impracticable or
inadvisable to proceed with the Exempted Exchanges or (e) if a banking
moratorium has been declared by either Federal or New York authorities, the
effect of which is such as to make it, in the reasonable judgment of the Dealer
Manager, impracticable or inadvisable to proceed with the Exempted Exchanges),
and further, all reasonable expenses incurred by the Dealer Manager as a result
of services rendered prior to the date of the termination shall become
immediately payable in full. In the event you terminate your services as Dealer
Manager hereunder, the Dealer Manager shall be entitled to all reasonable
expenses incurred by the Dealer Manager as a result of services rendered prior
to the date of termination, which shall become immediately due and payable in
full, but shall not be entitled to any Fee hereunder unless the Dealer Manager
shall have terminated such services with cause or the Company shall otherwise
have acted in bad faith, in which case the Dealer Manager shall be entitled to
any Fee payable pursuant to Section 5 hereof in accordance with the terms
thereof. The provisions of Sections 3, 5, 6, 8, 9, 10, 11, 14, 15, 17, 18, 19,
20 and 22 hereof shall survive the termination of this Agreement for any reason
whatsoever. Unless this Agreement has been terminated pursuant to clause (a) or
(b) of this paragraph, the Dealer Manager shall be entitled to payment in full
of the Fee payable under Section 5 if at any time prior to the expiration
of 6 months after the termination of this Agreement, the Company consummates,
or enters into a definitive agreement that subsequently results in the
consummation of, the Exempted Exchanges or any similar transaction. For the
avoidance of doubt, in the event that the Exempted Exchanges do not proceed,
the Dealer Manager shall be entitled only to all expenses as contemplated in
Section 6 hereof.

 

16                                  Notices

 

All notices and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
to the parties hereto as follows:

 

If to you:

 

UBS Securities LLC

677 Washington Boulevard

Stamford, CT  06901

Attention: Liability Management Group

Facsimile: 1(203) 719-1620

 

24

 

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

 

UBS Securities LLC

677 Washington Boulevard

Stamford, CT  06901

Attention: Legal and Compliance Department

Facsimile: 1 (203) 719-0680

 

If to the Company:

 

Vertex Pharmaceuticals
Incorporated

130 Waverly Street

Cambridge, Massachusetts 02139-4242

Attention: Kenneth S. Boger

Facsimile: (617) 444-7117

 

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

 

Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.

One Financial Center

Boston, Massachusetts  02111

Attention:  Michael L. Fantozzi

Facsimile:  (617) 542-2241

 

17                                  Successors
and Assigns

 

This Agreement, including
any right to indemnity or contribution hereunder, shall inure to the benefit of
and be binding upon the Company and you and such other parties entitled to indemnification
pursuant to the terms of Section 10 hereof, and the respective successors
and assigns of such parties. Except as provided in Section 9.12, nothing
in this Agreement is intended, or shall be construed, to give to any other
person or entity any right hereunder or by virtue hereof.

 

18                                  Governing
Law

 

This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to the principles thereof relating to conflict of laws.

 

19                                  Waiver
of Jury Trial

 

EACH OF THE COMPANY AND
THE DEALER MANAGER HEREBY AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
PROCEEDINGS OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING, WITHOUT
LIMITATION, THE EXCHANGE OFFER AND THE CONSENT SOLICITATION).

 

25

 

20                                  Entire
Agreement

 

This Agreement
constitutes the entire agreement among the parties hereto and supersedes all
prior agreements, understandings and arrangements, oral or written, among the
parties hereto with respect to the subject matter hereof and thereof.

 

21                                  Counterparts;
Severability

 

This Agreement may be
executed in two or more separate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.

 

22                                  Amendment

 

This Agreement may not be
amended except in writing signed by each party to be bound thereby.

 

26

 

Please indicate your willingness
to act as Dealer Manager on the terms set forth herein and your acceptance of
the foregoing provisions by signing in the space provided below for that
purpose and returning to us a copy of this letter so signed, whereupon this
letter and your acceptance shall constitute a binding agreement among us.

 

Very truly yours,

 

VERTEX PHARMACEUTICALS INCORPORATED

 

 

	
  By:

  	
  /s/ Kenneth S. Boger

  	
   

  
	
   

  	
  Name: Kenneth S. Boger

  
	
   

  	
  Title: Senior Vice
  President & General Counsel

  

 

 

Accepted as of the date

first set forth above:

 

UBS SECURITIES LLC

 

 

	
  By:

  	
  /s/ Chris Hite

  	
   

  
	
   

  	
  Name: Chris Hite

  	
   

  
	
   

  	
  Title: Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Aradhana Sarin

  	
   

  
	
   

  	
  Name: Aradhana Sarin

  	
   

  
	
   

  	
  Title: Director

  	
   

  

 

 

Exhibit A-1

Offering
Memorandum

 

 

Exhibit A-2

Letter of
Transmittal

 

 

Exhibit B-1

Opinion
of Company Counsel

 

 

Exhibit B-2

Opinion
of Internal Intellectual Property Counsel

 

 

Exhibit B-3

Letter
from the Vice President of Regulatory Affairs

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