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                                  EXHIBIT 10.3

                       VERTEX PHARMACEUTICALS INCORPORATED

                           1996 STOCK AND OPTION PLAN

                 (as amended on September 14, 1999 and restated)

1.     DEFINITIONS

       Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Vertex Pharmaceuticals Incorporated 1996 Stock
and Option Plan, have the following meanings:

AFFILIATE means a corporation which, for purposes of Section 424 of the Code, is
a parent or subsidiary of the Company, direct or indirect.

BOARD OF DIRECTORS means the Board of Directors of the Company.

CODE means the United States Internal Revenue Code of 1986, as amended.

COMMITTEE means the Compensation Committee of the Board of Directors or any
successor thereto appointed by the Board of Directors pursuant to Section 4
hereof to administer this Plan.

COMMON STOCK means shares of the Company's common stock, $.01 par value.

COMPANY means Vertex Pharmaceuticals Incorporated, a Massachusetts corporation.

DISABILITY or DISABLED means permanent and total disability as defined in
Section 22(e)(3) of the Code.

EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.

FAIR MARKET VALUE of a Share of Common Stock on a particular date shall be the
mean between the highest and lowest quoted selling prices on such date (the
"valuation date") on the securities market where the Common Stock of the Company
is traded, or if there were no sales on the valuation date, on the next
preceding date within a reasonable period (as determined in the sole discretion
of the Committee) on which there were sales. In the event that there were no
sales in such a market within a reasonable period, the fair market value shall
be as determined in good faith by the Committee in its sole discretion. The Fair
Market Value as determined in this paragraph rounded down to the next lower
whole cent if the foregoing calculation results in fractional cents.

ISO means an option intended to qualify as an incentive stock option under Code
Section 422(b).

KEY EMPLOYEE means an employee of the Company or of an Affiliate (including,
without limitation, an employee who is also serving as an officer or director of
the Company or of an Affiliate), designated by the Committee to be eligible to
be granted one or more Stock Rights under the Plan.

NQSO means an option which is not intended to qualify as an ISO.

NON-EMPLOYEE DIRECTOR means a member of the Board of Directors who is not an
employee of the Company or any Affiliate.

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OPTION means an ISO or NQSO granted under the Plan.

PARTICIPANT means a Key Employee, Non-Employee Director, consultant or
advisor of the Company to whom one or more Stock Rights are granted under the
Plan. As used herein, "Participant" shall include "Participant's Survivors"
and a Participant's permitted transferees where the context requires.

PARTICIPANT'S SURVIVORS means a deceased Participant's legal representatives
and/or any person or persons who acquires the Participant's rights to a Stock
Right by will or by the laws of descent or distribution.

PLAN means this Vertex Pharmaceuticals Incorporated 1996 Stock and Option Plan,
as amended from time to time.

SHARES means shares of the Common Stock as to which Stock Rights have been or
may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of
Section 3 of the Plan. The Shares issued upon exercise of Stock Rights granted
under the Plan may be authorized and unissued shares or shares held by the
Company in its treasury, or both.

STOCK AGREEMENT means an agreement between the Company and a Participant
executed and delivered pursuant to the Plan, in such form as the Committee shall
approve.

STOCK AWARD means an award of Shares or the opportunity to make a direct
purchase of Shares of the Company granted under the Plan.

STOCK RIGHT means a right to Shares of the Company granted pursuant to the Plan
as an ISO, an NQSO or a Stock Award.

2.     PURPOSES OF THE PLAN

       The Plan is intended to encourage ownership of Shares by Key Employees,
Non-Employee Directors and certain consultants and advisors to the Company in
order to attract such persons, to induce them to work for the benefit of the
Company or of an Affiliate and to provide additional incentive for them to
promote the success of the Company or of an Affiliate. The Plan provides for the
granting of Stock Rights to Key Employees, Non-Employee Directors, consultants
and advisors of the Company.

3.     SHARES SUBJECT TO THE PLAN

       The number of Shares subject to this Plan as to which Stock Rights may be
granted from time to time shall be 4,500,000 plus the number of shares of Common
Stock previously reserved for the granting of options under the Vertex
Pharmaceuticals Incorporated 1991 Stock Option Plan and 1994 Stock and Option
Plan but not granted thereunder, or the equivalent of such number of Shares
after the Committee, in its sole discretion, has interpreted the effect of any
stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Section 17 of this Plan.

   If an Option granted hereunder or any option granted under the 1991 Stock
Option Plan or 1994 Stock and Option Plan ceases to be "outstanding", in whole
or in part, or if the Company shall reacquire any Shares issued pursuant to
Stock Awards, the Shares which were subject to such Option and any Shares so
reacquired by the Company shall also be available for the granting of other
Stock Rights under the Plan. Any Stock Right shall be treated as "outstanding"
until such Stock Right is exercised in full, or terminates or expires under the
provisions of the Plan, or by

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agreement of the parties to the pertinent Stock Agreement, without having been
exercised in full.

4.     ADMINISTRATION OF THE PLAN

       The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee is authorized to:

     a.  Interpret the provisions of the Plan or of any Option, Stock Award or
         Stock Agreement and to make all rules and determinations which it deems
         necessary or advisable for the administration of the Plan;

     b.  Determine which employees of the Company or of an Affiliate shall be
         designated as Key Employees and which of the Key Employees,
         Non-Employee Directors, consultants and advisors of the Company and its
         Affiliates shall be granted Stock Rights;

     c.  Determine the number of Shares and exercise price for which a Stock
         Right or Stock Rights shall be granted;

     d.  Specify the terms and conditions upon which a Stock Right or Stock
         Rights may be granted; and

     e.  In its discretion, accelerate the date of exercise of any installment
         of any Stock Right; provided that the Committee shall not, without the
         consent of the Option holder accelerate the exercise date of any
         installment of any Option granted to any Key Employee as an ISO (and
         not previously converted into an NQSO pursuant to Section 20) if such
         acceleration would violate the annual vesting limitation contained in
         Section 422(d) of the Code, as described in Section 6.2.3.

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Code Section 422 of those Options which are designated as ISOs and
shall be in compliance with any applicable provisions of Rule 16b-3 under the
Exchange Act. Subject to the foregoing, the interpretation and construction by
the Committee of any provisions of the Plan or of any Stock Right granted under
it shall be final, unless otherwise determined by the Board of Directors, if the
Committee is other than the Board of Directors.

         The Committee may employ attorneys, consultants, accountants or other
persons, and the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of such persons. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Company, all Participants, and
all other interested persons. No member or agent of the Committee shall be
personally liable for any action, determination, or interpretation made in good
faith with respect to this Plan or grants hereunder. Each member of the
Committee shall be indemnified and held harmless by the Company against any cost
or expense (including counsel fees) reasonably incurred by him or liability
(including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with this Plan
unless arising out of such member's own fraud or bad faith. Such indemnification
shall be in addition to any rights of indemnification the members of the
Committee may have as directors or otherwise under the by-laws of the Company,
or any agreement, vote of stockholders or disinterested directors, or otherwise.

5.     ELIGIBILITY FOR PARTICIPATION

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       The Committee shall, in its sole discretion, name the Participants in the
Plan, provided, however, that each Participant must be a Key Employee,
Non-Employee Director, consultant or advisor of the Company or of an Affiliate
at the time a Stock Right is granted. Notwithstanding the foregoing, the
Committee may authorize the grant of a Stock Right to a person not then an
employee, Non-Employee Director, consultant or advisor of the Company or of an
Affiliate; PROVIDED, HOWEVER, that the actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of execution of the Stock Agreement evidencing such Stock
Right. The granting of any Stock Right to any individual shall neither entitle
that individual to, nor disqualify him or her from, participation in other
grants of Stock Rights. Nothwithstanding anything to the contrary contained in
this Plan, no Stock Rights shall be granted to any director or officer of the
Company except in accordance with the applicable rules of the Nasdaq Stock
Market or other securities market where the Common Stock is traded.

6.     TERMS AND CONDITIONS OF OPTIONS

       6.1 GENERAL. Each Option shall be set forth in writing in a Stock
Agreement, duly executed by the Company and, to the extent required by law or
requested by the Company, by the Participant. The Committee may provide that
Options be granted subject to such conditions as the Committee may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto, PROVIDED,
HOWEVER, that the option price per share of the Shares covered by each Option
shall not be less than the Fair Market Value per share of the Common Stock on
the date of grant (or par value if greater). Each Stock Agreement shall state
the number of Shares to which it pertains, the date or dates on which it first
is exercisable and the date after which it may no longer be exercised. Option
rights may accrue or become exercisable in installments over a period of time,
or upon the achievement of certain conditions or the attainment of stated goals
or events. Exercise of any Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form satisfactory to the Committee
providing for certain protections for the Company and its other shareholders,
including requirements that the Participant's or the Participant's Survivors'
right to sell or transfer the Shares may be restricted, and the Participant or
the Participant's Survivors may be required to execute letters of investment
intent and to acknowledge that the Shares will bear legends noting any
applicable restrictions.

       6.2 ISOS. ISOs shall be issued only to Key Employees. In addition to the
minimum standards set forth in Section 6.1, ISOs shall be subject to the
following terms and conditions, with such additional restrictions or changes as
the Committee determines are appropriate but not in conflict with Code Section
422 and relevant regulations and rulings of the Internal Revenue Service:

              6.2.1 ISO OPTION PRICE: The Option price per Share of the Shares
subject to an ISO shall not be less than one hundred percent (100%) of the Fair
Market Value per share of the Common Stock on the date of grant of the ISO;
provided, however that the Option price per share of the Shares subject to an
ISO granted to a Participant who owns, directly or by reason of the applicable
attribution rules in Code Section 424(d), more than ten percent (10%) of the
total combined voting power of all classes of share capital of the Company or an
Affiliate, shall not be less than one hundred ten percent (110%) of the said
Fair Market Value on the date of grant.

              6.2.2 TERM OF ISO: Each ISO shall expire not more than ten (10)
years from the date of grant; provided, however, that an ISO granted to a
Participant who owns, directly or by reason of the applicable attribution rules
in Code Section 424(d), more than ten percent (10%) of the total combined voting
power of all classes of share capital of the Company or an Affiliate, shall
expire not more than five (5) years from the date of grant.

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              6.2.3 LIMITATION ON GRANT OF ISOS: No ISOs shall be granted after
December 8, 2004, the date which is ten (10) years from the earlier of the date
of the adoption of this Plan and the date of the approval of the Plan by the
shareholders of the Company.

       6.3 NON-EMPLOYEE DIRECTORS' OPTIONS. Each Non-Employee Director, upon
first being elected or appointed to the Board of Directors, shall be granted an
NQSO to purchase 20,000 Shares. Each such Option shall (i) have an exercise
price equal to the Fair Market Value (per share) on the date of grant of the
Option, (ii) have a term of ten (10) years, and (ii) shall become cumulatively
exercisable in sixteen (16) equal quarterly installments, upon completion of
each full quarter of service on the Board of Directors after the date of grant.
In addition, on June 1 of each year, each Non-Employee Director shall be granted
a NQSO to purchase 5,000 shares. Each such Option shall (i) have an exercise
price equal to the Fair Market Value (per share) on the date of grant of such
Option, (ii) have a term of ten (10) years, and (iii) be exercisable in full
immediately on the date of grant. Any director entitled to receive an Option
grant under this Section may elect to decline the Option. Notwithstanding the
provisions of Section 24 concerning amendment of the Plan, the provisions of
this Subsection shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security
Act, or the rules thereunder. Notwithstanding anything to the contrary contained
in any other provisions of this Plan, the Committee shall have no discretion to
vary the terms of Options granted under this Section 6.3 from those set forth
herein. The provisions of Sections 11, 13 and 14 below shall not apply to
Options granted pursuant to this Subsection.

       6.4 LIMITATION ON NUMBER OF OPTIONS GRANTED. Notwithstanding anything in
this Plan to the contrary, no Participant shall be granted Options in any
calendar year for the purchase of more than 200,000 Shares (subject to
adjustment pursuant to Section 17 to the extent consistent with Section 162(m)
of the Code).

7.     TERMS AND CONDITIONS OF STOCK AWARDS

       Each Stock Award shall be set forth in a Stock Agreement, duly executed
by the Company and, to the extent required by law or requested by the Company,
by the Participant. The Stock Agreement shall be in the form approved by the
Committee, with such changes and modifications to such form as the Committee, in
its discretion, shall approve with respect to any particular Participant or
Participants. The Stock Agreement shall contain terms and conditions which the
Committee determines to be appropriate and in the best interest of the Company;
PROVIDED, HOWEVER, that the purchase price per share of the Shares covered by
each Stock Award shall not be less than the par value per Share. Each Stock
Agreement shall state the number of Shares to which the Stock Award pertains,
the date prior to which the Stock Award must be exercised by the Participant,
and the terms of any right of the Company to reacquire the Shares subject to the
Stock Award, including the time and events upon which such rights shall accrue
and the purchase price therefor, and any restrictions on the transferability of
such Shares.

8.     EXERCISE OF STOCK RIGHTS AND ISSUANCE OF SHARES

       A Stock Right (or any part or installment thereof) shall be exercised by
giving written notice to the Company, together with provision for payment of the
full purchase price in accordance with this Section for the Shares as to which
such Stock Right is being exercised, and upon compliance with any other
condition(s) set forth in the Stock Agreement. Such written notice shall be
signed by the person exercising the Stock Right, shall state the number of
Shares with respect to which the Stock Right is being exercised and shall
contain any representation required by the Plan or the Stock Agreement.

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       Payment of the purchase price for the Shares as to which such Stock Right
is being exercised shall be made (a) in United States dollars in cash or by
check acceptable to the Committee, or (b) at the discretion of the Committee,
(i) through delivery of shares of Common Stock (which, in the case of shares
acquired from the Company, have been held by the Participant for at least six
(6) months) not subject to any restriction under any plan and having a fair
market value equal as of the date of exercise to the cash exercise price of the
Stock Right, determined in good faith by the Committee, or (ii) in accordance
with a cashless exercise program established with a securities brokerage firm,
and approved by the Company, or (iii) by any other means (excluding, however,
delivery of a promissory note of the Participant) which the Committee determines
to be consistent with the purpose of this Plan and applicable law, or (iv) by
any combination of the foregoing. Notwithstanding the foregoing, the Committee
shall accept only such payment on exercise of an ISO as is permitted by Section
422 of the Code.

       The Company shall then as soon as is reasonably practicable deliver the
Shares as to which such Stock Right was exercised to the Participant (or to the
Participant's Survivors, as the case may be). It is expressly understood that
the delivery of the Shares may be delayed by the Company in order to comply with
any law or regulation which requires the Company to take any action with respect
to the Shares prior to their issuance. The Shares shall, upon delivery, be fully
paid, non-assessable Shares.

9.     RIGHTS AS A SHAREHOLDER

       No Participant to whom a Stock Right has been granted shall have rights
as a shareholder with respect to any Shares covered by such Stock Right, except
after due exercise thereof and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.

10.    ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS

       ISOs and, except as otherwise provided by the Committee, NQSOs and Stock
Awards shall not be transferable by the Participant other than by will or by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act or the rules thereunder, PROVIDED, HOWEVER, that the designation of
a beneficiary of a Stock Right by a Participant shall not be deemed a transfer
prohibited by this Section. Except as provided in the preceding sentence or as
otherwise permitted under an NQSO or Stock Award Stock Agreement, a Stock Right
shall be exercisable, during the Participant's lifetime, only by such
Participant (or by his or her legal representative) and shall not be assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of
any Stock Right or of any rights granted thereunder contrary to the provisions
of this Plan, or the levy of any attachment or similar process upon a Stock
Right, shall be null and void.

11.    EFFECT OF TERMINATION OF SERVICE

       11.1 Except as otherwise provided in the pertinent Stock Agreement or as
otherwise provided in Sections 12, 13 or 14, if a Participant ceases to be an
employee, director, consultant or advisor with the Company and its Affiliates
(for any reason other than termination "for cause", Disability, or death) (a
"Termination of Service") before the Participant has exercised all Stock Rights,
the Participant may exercise any Stock Right granted to him or her to the extent
that the Stock Right is exercisable on the date of such Termination of Service,
but only within the originally prescribed term of the Stock Right.

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       11.2 The provisions of this Section, and not the provisions of Section 13
or 14, shall apply to a Participant who subsequently becomes disabled or dies
after the Termination of Service; provided, however, that in the case of a
Participant's death within three (3) months after the Termination of Service,
the Participant's Survivors may exercise the Stock Right within one (1) year
after the date of the Participant's death, but in no event after the date of
expiration of the term of the Stock Right.

       11.3 Notwithstanding anything herein to the contrary, if subsequent to a
Participant's Termination of Service, but prior to the exercise of a Stock
Right, the Committee determines that, either prior or subsequent to the
Participant's Termination of Service, the Participant engaged in conduct which
would constitute "cause" (as defined in Section 12), then such Participant shall
forthwith cease to have any right to exercise any Stock Right.

       11.4 Absence from work with the Company or an Affiliate because of
temporary disability or a leave of absence for any purpose, shall not, during
the period of any such absence in accordance with Company policies, be deemed,
by virtue of such absence alone, a Termination of Service, except as the
Committee may otherwise expressly provide.

       11.5 A change of employment or other service within or among the Company
and its Affiliates shall not be deemed a Termination of Service, so long as the
Participant continues to be an employee, director, consultant or advisor of the
Company or any Affiliate.

12.    EFFECT OF TERMINATION OF SERVICE FOR "CAUSE"

       Except as otherwise provided in the pertinent Stock Agreement, in the
event of a Termination of Service of a Participant "for cause" all outstanding
and unexercised Stock Rights as of the date the Participant is notified his or
her service is terminated "for cause" will immediately be forfeited.

       For purposes of this Section 12, "cause" shall include (and is not
limited to) dishonesty with respect to the Company and its Affiliates,
insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, conduct substantially
prejudicial to the business of the Company or any Affiliate, and termination
by the Participant in violation of an agreement by the Participant to remain
in the employ of the Company of an Affiliate. The determination of the
Committee as to the existence of cause will be conclusive on the Participant
and the Company. "Cause" is not limited to events which have occurred prior
to a Participant's Termination of Service, nor is it necessary that the
Committee's finding of "cause" occur prior to termination. If the Committee
determines, subsequent to a Participant's Termination of Service but prior to
the exercise of a Stock Right, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct which would
constitute "cause," then the right to exercise any Stock Right shall be
forfeited. Any definition in an agreement between a Participant and the
Company or an Affiliate which contains a conflicting definition of "cause"
for termination and which is in effect at the time of such termination shall
supersede the definition in this Plan with respect to that Participant.

13.    EFFECT OF TERMINATION OF SERVICE FOR DISABILITY

       Except as otherwise provided in the pertinent Stock Agreement, in the
event of a termination of service with the Company and its Affiliates by reason
of Disability, the Disabled Participant may exercise any Stock Right granted to
him or her to the extent exercisable but not exercised on the date of
Disability. A Disabled Participant may exercise such rights only within a period
of not more than one (1) year after the date that the Participant became
Disabled or, if earlier, within the originally prescribed term of the Stock
Right.

       The Committee shall make the determination both of whether Disability has
occurred and of the date of its occurrence (unless a procedure for such
determination is set forth in another

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agreement between the Company and such Participant, in which case such procedure
shall be used for such determination). If requested, the Participant shall be
examined by a physician selected or approved by the Committee, the cost of which
examination shall be paid for by the Company.

14.    EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT

       Except as otherwise provided in the pertinent Stock Agreement, in the
event of death of a Participant while the Participant is an employee, director,
consultant or advisor of the Company or of an Affiliate, any Stock Rights
granted to such Participant may be exercised by the Participant's Survivors to
the extent exercisable but not exercised on the date of death. Any such Stock
Right must be exercised within one (1) year after the date of death of the
Participant but in no event after the date of expiration of the term of the
Stock Right.

15.      PURCHASE FOR INVESTMENT

         Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Stock Right shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:

     a.  The person(s) who exercise such Stock Right shall warrant to the
         Company, at the time of such exercise or receipt, as the case may be,
         that such person(s) are acquiring such Shares for their own respective
         accounts, for investment, and not with a view to, or for sale in
         connection with, the distribution of any such Shares, in which event
         the person(s) acquiring such Shares shall be bound by the provisions of
         the following legend which shall be endorsed upon the certificate(s)
         evidencing their Shares issued pursuant to such exercise or such grant:

                  "The shares represented by this certificate have been taken
                  for investment and they may not be sold or otherwise
                  transferred by any person, including a pledgee, unless (1)
                  either (a) a Registration Statement with respect to such
                  shares shall be effective under the Securities Act of 1933, as
                  amended, or (b) the Company shall have received an opinion of
                  counsel satisfactory to it that an exemption from registration
                  under such Act is then available, and (2) there shall have
                  been compliance with all applicable state securities laws.

     b.  The Company shall have received an opinion of its counsel that the
         Shares may be issued upon such particular exercise in compliance with
         the 1933 Act without registration thereunder.

         The Company may delay issuance of the Shares until completion of any
action or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).

16.      DISSOLUTION OR LIQUIDATION OF THE COMPANY

         Upon the dissolution or liquidation of the Company (other than in
connection with a transaction subject to the provisions of Section 17.2), all
Stock Rights granted under this Plan which as of such date shall not have been
exercised will terminate and become null and void; provided, however, that if
the rights of a Participant have not otherwise terminated and expired, the
Participant will have the right immediately prior to such dissolution or
liquidation to exercise any Stock Right to the extent that such Stock Right is
exercisable as of the date immediately prior to such dissolution or liquidation.

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17.      ADJUSTMENTS

         Upon the occurrence of any of the following events, a Participant's
rights with respect to any Stock Right granted to him or her hereunder which
have not previously been exercised in full shall be adjusted as hereinafter
provided, unless otherwise specifically provided in the written agreement
between the Participant and the Company relating to such Stock Right or in any
employment agreement between a Participant and the Company or an Affiliate:

      17.1 STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of such Stock Right shall be appropriately increased or decreased,
and appropriate adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend.

      17.2 CONSOLIDATIONS OR MERGERS. In the event of a consolidation or merger
in which the Company is not the surviving corporation or which results in the
acquisition of substantially all the Company's outstanding stock by a single
person or entity or by a group of persons and/or entities acting in concert, or
in the event of the sale or transfer of substantially all the Company's assets
(any of the foregoing, an "Acquisition"), all then outstanding Options shall
terminate unless assumed pursuant to clause (i) below; provided, that either (i)
the Committee shall provide for the surviving or acquiring entity or an
affiliate thereof to assume the outstanding Options or grant replacement options
in lieu thereof, any such replacement to be upon an equitable basis as
determined by the Committee, or (ii) if there is no such assumption or
substitution, all outstanding Options shall become immediately and fully
exercisable immediately prior to the Acquisition, notwithstanding any
restrictions or vesting conditions set forth therein.

      17.3 RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in Section 17.2 above) pursuant to which securities of the Company or
of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising a Stock Right shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such Stock Right prior to such
recapitalization or reorganization.

      17.4 MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to Section 17.1, 17.2 or 17.3 with respect to ISOs shall be made
only after the Committee determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424(h) of the
Code) or would cause any adverse tax consequences for the holders of such ISOs.
If the Committee determines that such adjustments made with respect to ISOs
would constitute a modification of such ISOs, it may refrain from making such
adjustments, unless the holder of an ISO specifically requests in writing that
such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such "modification" on his or her income tax
treatment with respect to the ISO.

18.      ISSUANCES OF SECURITIES

         Except as expressly provided herein, no issuance (including for this
purpose the delivery of shares held in treasury) by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to Options. Except as expressly provided
herein, no adjustments shall be made for dividends paid in cash or in property
(including without limitation, securities) of the Company.

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19.      FRACTIONAL SHARES

         No fractional share shall be issued under the Plan and the person
exercising any Stock Right shall receive from the Company cash in lieu of any
such fractional share equal to the Fair Market Value thereof determined in good
faith by the Board of Directors.

20.      CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOS

       Any Options granted under this Plan which do not meet the requirements of
the Code for ISOs shall automatically be deemed to be NQSOs without further
action on the part of the Committee. The Committee, at the written request of
any Participant, may in its discretion take such actions as may be necessary to
convert such Participant's ISOs (or any portion thereof) that have not been
exercised on the date of conversion into NQSOs at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of
the Company or an Affiliate at the time of such conversion. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options. At the time of
such conversion, the Committee (with the consent of the Participant) may impose
such conditions on the exercise of the resulting NQSOs as the Committee in its
discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
Participant the right to have such Participant's ISOs converted into NQSOs, and
no such conversion shall occur until and unless the Committee takes appropriate
action. The Committee, with the consent of the Participant, may also terminate
any portion of any ISO that has not been exercised at the time of such
termination.

21.      WITHHOLDING

         In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("FICA") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise of a Stock Right or a Disqualifying Disposition (as defined in
Section 22), the Participant shall advance in cash to the Company, or to any
Affiliate of the Company which employs or employed the Participant, the amount
of such withholdings unless a different withholding arrangement, including the
use of shares of the Company's Common Stock, is authorized by the Committee (and
permitted by law), provided, however, that with respect to persons subject to
Section 16 of the Exchange Act, any such withholding arrangement shall be in
compliance with any applicable provisions of Rule 16b-3 promulgated under
Section 16 of the Exchange Act. For purposes hereof, the Fair Market Value of
any shares withheld for purposes of payroll withholding shall be determined in
the manner provided in Section 1 above, as of the most recent practicable date
prior to the date of exercise. If the Fair Market Value of the shares withheld
is less than the amount of payroll withholdings required, the Participant my be
required to advance the difference in cash to the Company or the Affiliate
employer. The Committee in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding. In no event shall shares be withheld from any award
in satisfaction of tax withholding requirements in an amount that exceeds the
minimum tax withholding requirements of law.

22.      NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION

         Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a "Disqualifying
Disposition" of any Shares acquired pursuant to the exercise of an ISO. A
Disqualifying Disposition is any disposition (as defined in Section 424(c) of
the Code) of such shares before the later of (a) two years from the date the Key
Employee was granted the ISO, or (b) one year after the date the Key Employee
acquired Shares

                                      -10-
<PAGE>

by exercising the ISO. If the Key Employee has died before such Shares are sold,
the notice provisions of this Section 22 shall not apply.

23.      EFFECTIVE DATE; TERMINATION OF THE PLAN

         The Plan shall be effective on December 12, 1996, the date of its
approval by the Board of Directors. The Plan will terminate on December 12,
2006. The Plan may be terminated at an earlier date by vote of the Board of
Directors; provided, however, that any such earlier termination will not affect
any Stock Rights granted or Stock Agreements executed prior to the effective
date of such termination.

24.      AMENDMENT OF THE PLAN; AMENDMENT OF STOCK RIGHTS

         The Plan may be amended by the stockholders of the Company. The Plan
may also be amended by the Board of Directors or the Committee, including,
without limitation, to the extent necessary to qualify any or all outstanding
Stock Rights granted under the Plan or Stock Rights to be granted under the Plan
for favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code, to the extent necessary to ensure that Stock Rights granted or to be
granted under the Plan are in accordance with Rule 16b-3 under the Exchange Act,
and to the extent necessary to qualify the shares issuable upon exercise of any
outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan
for listing on any national securities exchange or quotation in any national
automated quotation system of securities dealers. No modification or amendment
of the Plan shall adversely affect a Participant's rights under a Stock Right
previously granted to the Participant without such Participant's consent.

         In its discretion, the Committee may amend any term or condition of any
outstanding Stock Right, PROVIDED, (i) such term or condition as amended is
permitted by the Plan, (ii) if the amendment is adverse to the Participant, such
amendment shall be made only with the consent of the Participant, (iii) any such
amendment of any ISO shall be made only after the Committee determines whether
such amendment would constitute a "modification" of any Stock Right which is an
ISO (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holder of such ISO, and (iv) with respect to
any Stock Right held by any Participant who is subject to the provisions of
Section 16(a) of the Exchange Act, any such amendment shall be made only after
the Committee determines whether such amendment would constitute the grant of a
new Stock Right.

25.      EMPLOYMENT OR OTHER RELATIONSHIP

         Nothing in this Plan or any Stock Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a Participant, nor to prevent a Participant from terminating
his or her own employment, consultancy or director status or to give any
Participant a right to be retained in employment or other service by the Company
or any Affiliate for any period of time.

26.      GOVERNING LAW

         This Plan shall be construed and enforced in accordance with the law of
The Commonwealth of Massachusetts.

rev. 11/18/99/SPC

                                      -11-<PAGE>

                                  EXHIBIT 10.27
(WITH CERTAIN CONFIDENTIAL INFORMATION DELETED AND MARKED WITH BRACKETED
ASTERIKS)

                       Collaboration and Option Agreement

                                     BETWEEN

                       Vertex Pharmaceuticals Incorporated

                                       AND

                         Taisho Pharmaceutical Co., Ltd

                                November 30, 1999

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                        PAGE

<S>                                                                                                    <C>
INTRODUCTION.............................................................................................1

ARTICLE I -- DEFINITIONS..................................................................................1

ARTICLE II -- RESEARCH PROGRAM............................................................................4

2.1    Commencement......................................................................................4
2.2    Joint Research Committee..........................................................................4
2.3    Exchange of Information...........................................................................4
2.4    Redirection of Research Program...................................................................5
2.5    Taisho Research...................................................................................5
2.6    Improvement.......................................................................................5
2.7    Exclusivity.......................................................................................6

ARTICLE III -- PAYMENT BY TAISHO..........................................................................6

3.1    Reimbursements....................................................................................6
3.2    Research Payment..................................................................................7
3.3    Research Records; Expenditure Reports.............................................................7

ARTICLE IV -- LICENSE AND DEVELOPMENT OPTIONS.............................................................8

ARTICLE V -- CONFIDENTIALITY.............................................................................10

5.1    Undertaking......................................................................................10
5.2    Exceptions.......................................................................................11
5.3    Publicity........................................................................................11
5.4    Survival.........................................................................................11

ARTICLE VI -- PATENTS....................................................................................11

6.1    Preparation......................................................................................11
6.2    Cost Reimbursement...............................................................................12
6.3    Failure to Reimburse.............................................................................12
6.4    License to Formulations and Use Inventions.......................................................12

ARTICLE VII -- INFRINGEMENT..............................................................................12
</TABLE>

                  Collaboration and Option Agreement - Page 1
<PAGE>

                           TABLE OF CONTENTS (CON'T)

<TABLE>
<CAPTION>

                                                                                                       PAGE

<S>                                                                                                    <C>
ARTICLE VIII -- TERM AND TERMINATION....................................................................13

8.1    Term of Agreement................................................................................13
8.2    Termination of Research Program by Taisho for Cause..............................................13
8.3    Termination by Vertex For Cause..................................................................14
8.4    Termination......................................................................................14
8.5    Effect of Termination or Expiration..............................................................15

ARTICLE IX -- DISPUTE RESOLUTION.........................................................................15

9.1    Governing Law, and Jurisdiction..................................................................15
9.2    Arbitration......................................................................................15

ARTICLE X -- MISCELLANEOUS PROVISIONS....................................................................16

10.1   Official Language................................................................................16
10.2   Waiver...........................................................................................16
10.3   Force Majeure....................................................................................16
10.4   Severability.....................................................................................16
10.5   Government Acts..................................................................................17
10.6   Government Approvals.............................................................................17
10.7   Export Controls..................................................................................17
10.8   No Warranty......................................................................................17
10.9   Third Party Actions..............................................................................18
10.10  Tax .............................................................................................19
10.11  Assignment.......................................................................................19
10.12  Counterparts.....................................................................................19
10.13  No Agency........................................................................................19
10.14  Notice...........................................................................................19
10.15  Headings.........................................................................................20
10.16  Authority........................................................................................20
10.17  Entire Agreement.................................................................................20
</TABLE>

Schedule 1.4 -- [***]
Schedule 1.12 -- List of Vertex Patents
Schedule 1.13 -- List of Taisho Patents
Schedule 1.19 -- Summary of Research Activities
Schedule 1.20 -- Countries in the Territory
Schedule 2.2 -- Initial Members of Joint Research Committee
Schedule 3.3 -- Annual Report of Research Expenditures

                  Collaboration and Option Agreement - Page 2
<PAGE>

                       COLLABORATION AND OPTION AGREEMENT

AGREEMENT made and effective this 30th day of November, 1999, between VERTEX
PHARMACEUTICALS INCORPORATED, a corporation duly organized and existing under
the laws of the Commonwealth of Massachusetts with its principal place of
business at 130 Waverly Street, Cambridge, Massachusetts 02139-4242, U.S.A.
("Vertex"), and TAISHO PHARMACEUTICAL CO., LTD., a corporation duly organized
and existing under the laws of Japan with its principal place of business at
24-1, Takata 3-Chome, Toshima-ku, Tokyo 170-8633, Japan ("Taisho").

                                  INTRODUCTION

A.       Vertex is engaged in the discovery, development and commercialization
         of novel, small molecule pharmaceuticals using advanced biology,
         biophysics, chemistry and information technologies. The Company has
         been involved for some time in research aimed at designing certain
         caspase inhibitors for acute intervention in stroke and other
         therapeutic indications.

B.       Taisho is a diversified pharmaceutical company with substantial
         expertise in the areas of research, product development, the conduct of
         preclinical and clinical trials, sales and marketing, and is interested
         in the research, development, marketing and sale of pharmaceuticals for
         acute intervention in stroke and other therapeutic indications.

C.       Both  parties  desire to enter into a  collaboration  specifically
         targeting  an area in which  Vertex has been  working  for some time --
         the development  of small  molecule inhibitors of certain caspases --
         applying the complementary skills and strengths which each party brings
         to the transaction.

D.       The purpose of this Agreement is to set forth the terms upon which
         Vertex, together with Taisho, will attempt to design and develop novel,
         small molecule inhibitors of certain caspases for acute intervention in
         stroke and other therapeutic indications, with the financial and
         technical assistance of Taisho, for development, formulation, marketing
         and sale by Taisho and/or sublicensees in the Territory (as defined
         below) upon the terms set forth herein and in the License and
         Development Agreement attached as ExhibitA hereto.

In consideration of the mutual covenants set forth in this Agreement, and other
good and valuable consideration, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1      "AFFILIATE" shall mean, with respect to any Person, any other
                  Person which directly or indirectly, by itself or through one
                  or more intermediaries, controls, is controlled by or is under
                  direct or indirect common control with, such Person.

                  Collaboration and Option Agreement - Page 1

<PAGE>

                  The term "control" means the possession, direct or indirect,
                  of the power to direct or cause the direction of the
                  management and policies of a Person, whether through the
                  ownership of voting securities, by contract or otherwise.
                  Control will be presumed if one Person owns, either of record
                  or beneficially, fifty percent (50%) or more of the voting
                  stock of any other Person.

         1.2      "PERSON" shall mean any individual, corporation, partnership,
                  association, limited liability company, trust, unincorporated
                  organization or government or political subdivision thereof.

         1.3      "CASPASES" are
                  [*************************************************************
                   *************************************************************
                  ******************************************************].

         1.4      "COMPOUND" shall mean a small molecule inhibitor of a Caspase,
                  synthesized (a) by Vertex, prior to the Effective Date of this
                  Agreement in the course of its research program directed
                  toward the discovery of Caspase inhibitors; or (b) by Vertex,
                  Taisho, or Vertex together with Taisho, in the course of the
                  Research Program to which this Agreement relates. The term
                  "Compound" shall, however, exclude
                  [*************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  *************************************************]

         1.5      "CONTROLLED" shall mean the legal authority or right of a
                  party hereto to grant a license or sublicense of intellectual
                  property rights to another party hereto, or to otherwise
                  disclose or grant a right to use proprietary or trade secret
                  information to such other party, without breaching the terms
                  of any agreement with a Third Party, infringing upon the
                  intellectual property rights of a Third Party, or
                  misappropriating the proprietary or trade secret information
                  of a Third Party.

         1.6      "EFFECTIVE DATE" shall mean the effective date of this
                  Agreement as set forth on the first page hereof.

         1.7      "FIELD" shall mean the treatment or prevention of diseases in
                  humans using pharmaceutical products which inhibit one or more
                  Caspases.

         1.8      "LICENSE AGREEMENT" shall mean a License and Development
                  Agreement substantially in the form attached hereto as Exhibit
                  A which shall become effective as set forth in Article IV
                  hereof.

         1.9      "LICENSED COMPOUND" shall mean any Compound which becomes the
                  subject of Taisho's rights upon exercise of its license and
                  development option or is selected by the JDC (as defined in
                  Article IV (c)) in accordance with the provisions of Article
                  IV hereof.

                  Collaboration and Option Agreement - Page 2
<PAGE>

         1.10     "LICENSED PATENTS" shall mean any Vertex Patents which become
                  the subject of Taisho's rights upon exercise of its license
                  and development option or is selected by the JDC in accordance
                  with the provisions of Article IV hereof.

         1.11     "PATENTS" shall mean all existing patents and patent
                  applications and all patent applications hereafter filed,
                  including any continuations, continuations-in-part,
                  divisionals, provisionals or any substitute applications, any
                  patent issued with respect to any such patent applications,
                  any reissue, reexamination, renewal or extension (including
                  any supplemental patent certificate) of any such patent, and
                  any confirmation patent or registration patent or patent of
                  addition based on any such patent, and all foreign
                  counterparts of any of the foregoing.

         1.12     "VERTEX PATENTS" shall mean any Patents Controlled by Vertex
                  (or any of its Affiliates) claiming (i) a Compound or a method
                  of using a Compound (a "method of using" being deemed to
                  refer, here and hereafter in this Agreement, to a use patent),
                  or (ii) a Compound formulation or a manufacturing process or
                  packaging invention related to a Compound or (iii) an
                  improvement to the subject matter of a Patent covering a
                  Compound or a method of using a Compound or a manufacturing
                  process or packaging invention related to a Compound. A list
                  of Vertex Patents is appended hereto as Schedule 1.12 and will
                  be updated periodically to reflect additions thereto during
                  the course of this Agreement.

         1.13     "TAISHO PATENTS" shall mean any Patents Controlled by Taisho
                  (or any of its Affiliates), excluding patent applications or
                  patents which Taisho has assigned to Vertex under Section 2.6
                  hereof, claiming (i) a Compound or a method of using a
                  Compound or (ii) a Compound formulation or a manufacturing
                  process or packaging invention related to a Compound or (iii)
                  an improvement to the subject matter of a Patent covering a
                  Compound or a method of using a Compound or a manufacturing
                  process or packaging invention related to a Compound. A list
                  of Taisho Patents is appended hereto as Schedule 1.13 and will
                  be updated periodically to reflect additions thereto during
                  the course of this Agreement.

         1.14     "KNOW-HOW" shall mean all proprietary and confidential
                  material and information including data, technical
                  information, know-how, experience, inventions, discoveries,
                  trade secrets, compositions of matter and methods, whether
                  currently existing or developed or obtained during the course
                  of this Agreement and whether or not patentable, that are
                  Controlled by a party hereto or its Affiliates and that relate
                  to the development, utilization, manufacture or use of any
                  Compound, including but not limited to processes, techniques,
                  methods, products, materials and compositions.

         1.15     "VERTEX KNOW-HOW" shall mean all Know-How of Vertex.

         1.16     "TAISHO KNOW-HOW" shall mean all Know-How of Taisho.

         1.17     "VERTEX TECHNOLOGY" shall mean all Vertex Patents and Vertex
                  Know-How.

         1.18     "TAISHO TECHNOLOGY" shall mean all Taisho Patents and Taisho
                  Know-How.

                  Collaboration and Option Agreement - Page 3

<PAGE>

         1.19     "RESEARCH PROGRAM" shall mean research activities associated
                  with discovery or creation of Compounds hereunder, including
                  IN VITRO studies of Compounds, IN VIVO animal studies for
                  research purposes only (rather than for the generation of data
                  for regulatory submission), and related activities, as
                  described in the Summary of Research Activities attached
                  hereto as Schedule 1.19, as that Summary may be revised from
                  time to time by the Joint Research Committee.

         1.20     "TERRITORY" shall mean those countries listed in Schedule 1.2
                   hereto.

         1.21     "THIRD PARTY" shall mean any Person other than Vertex, Taisho
                  or their respective Affiliates or sublicensees of rights
                  conveyed under this Agreement.

                                   ARTICLE II

                                RESEARCH PROGRAM

         2.1      COMMENCEMENT. Vertex shall commence the Research Program
                  promptly upon the Effective Date and shall use its reasonable
                  best efforts to diligently conduct the Research Program during
                  the term of this Agreement in accordance with the provisions
                  hereof. The Research Program will continue for [*******] after
                  the Effective Date, and may be extended for a further period
                  by written agreement of the parties hereto.

         2.2      JOINT RESEARCH COMMITTEE. Upon the execution of this
                  Agreement, Vertex and Taisho will establish a Joint Research
                  Committee (the "JRC") under the leadership of Vertex which
                  shall consist of three (3) persons designated from time to
                  time by Vertex and three (3) persons designated from time to
                  time by Taisho, or such additional number as may be mutually
                  agreed. The initial members of the JRC shall be those persons
                  designated on Schedule 2.2 hereto. The JRC shall operate by
                  consensus and in accordance with agreed joint resolutions, but
                  in the event of disagreement which cannot be resolved by
                  discussion among the parties,
                  [*************************************************************
                   ******************]
                  The JRC shall meet formally at least semi-annually, or with
                  such other frequency, and at such time and location, as may be
                  established by the JRC, for the following purposes:

                  (a) To receive and review reports by Vertex (and by Taisho if
it is conducting activities under the Research Program), which shall be prepared
and submitted to the JRC on a quarterly basis within thirty (30) days after the
end of the quarter, setting forth in general terms the results of work performed
by the reporting party and its Affiliates and sublicensees during the preceding
calendar quarter under the Research Program, including any planned or filed
Patents covering Compounds;

                  (b) To advise Vertex and Taisho concerning research strategy,
goals and activities, and to consider whether redirection of the Research
Program should be recommended to Vertex and Taisho under Section 2.4 of this
Agreement;

                  Collaboration and Option Agreement - Page 4
<PAGE>

                  (c) To assist in coordinating scientific interactions between
Vertex and Taisho during the course of the Research Program;

                  (d) To discuss matters relating to Vertex Patents and Taisho
Patents (other than
[**********************************************************************
*****************************************************************************]

         2.3      EXCHANGE OF INFORMATION. Vertex and Taisho will meet
                  informally on a regular basis to discuss the Research Program,
                  and each party will freely share with the other party,
                  technical and commercial information Controlled by the
                  disclosing party which is relevant to the subject matter of
                  the Research Program and the license and development option
                  referenced in Article IV hereof. Vertex will provide quarterly
                  written reports on the progress of the Research Program,
                  including information regarding possible Compound candidates,
                  to Taisho and to the JRC, within thirty (30) days after the
                  end of each calendar quarter during the term of the Research
                  Program. Taisho will make similar reports if it has conducted
                  activities in connection with the Research Program during the
                  reporting period. Each party will enable any of the other
                  party's representatives on the JRC, or other authorized
                  representatives, to review the ongoing research being
                  conducted by it under the Research Program and to discuss that
                  research with its officers, all at such reasonable times and
                  as often as may be reasonably requested. Any representatives
                  of Vertex or Taisho receiving information from representatives
                  of the other party shall sign appropriate agreements ensuring
                  that information disclosed to them is held in confidence as
                  required under Article V, or shall be subject to similar
                  obligations of confidentiality and non-use which cover the
                  information disclosed. In the event that Taisho is required
                  under any provision hereof to disclose to or provide Vertex
                  with data or information generated by Taisho, or at its
                  direction, during the Research Program, concerning a Compound,
                  Taisho shall provide a summary of that data and information,
                  in English, sufficient for Vertex to understand the general
                  content and significance of that data and information,
                  [*************************************************************
                  **************************************************************
                  **************************************************************
                  ***********].

         2.4      REDIRECTION OF RESEARCH PROGRAM. The primary focus of the
                  Research Program is to design Compounds having activity in the
                  inhibition of Caspases, for [****************]. If at any time
                  during the term of this Agreement, the JRC shall determine in
                  good faith that the Research Program or any portion thereof
                  cannot be successfully completed, or if so completed will not
                  produce a Compound that is commercially viable, or that the
                  goal of the Research Program has been attained prior to the
                  end of its [******], the JRC may suggest revision or
                  reorientation of the Research Program to each party's own top
                  management, and upon mutual consent Vertex and Taisho shall
                  thereafter promptly modify their respective activities in
                  connection with the Research Program accordingly.

                  Collaboration and Option Agreement - Page 5
<PAGE>

         2.5      TAISHO RESEARCH. Taisho will not be obligated to conduct any
                  part of the Research Program, and
                  [*************************************************************
                  **************************************************************
                  **].
                  If Taisho is conducting activities under the Research Program
                  pursuant to the foregoing, Vertex will supply Taisho with such
                  amounts of bulk Compound as shall be reasonably necessary for
                  any small-scale preclinical activities being undertaken by
                  Taisho hereunder, at [**************************].

         2.6      IMPROVEMENT. Taisho shall use its reasonable best efforts to
                  keep Vertex promptly and fully informed of any Compounds
                  designed or discovered by Taisho or any of its Affiliates,
                  sublicensees and subcontractors as a result of work under the
                  Research Program ("Taisho Research Compounds"), and any
                  improvements other than the Formulation and Use Inventions
                  defined in Section 6.1 hereof, made by Taisho or its
                  Affiliates or sublicensees relating to Compounds and Know-How
                  during the term of the Research Program, whether patentable or
                  not ("Taisho Improvements"). Upon Vertex's written request
                  which shall be required to be made within three (3) months
                  from Taisho's notification, Taisho shall
                  [*************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  *****].
                  Vertex shall use its reasonable best efforts to keep Taisho
                  promptly and fully informed of any Compounds designed or
                  discovered by Vertex or any of its Affiliates, sublicensees
                  and subcontractors as a result of work under the Research
                  Program ("Vertex Research Compound"), and any improvements
                  made by Vertex or any of its Affiliates, sublicensees and
                  subcontractors relating to Compound and Know-How during the
                  term of the Research Program, whether patentable or not
                  ("Vertex Improvement"). Such Vertex Research Compound and
                  Vertex Improvement shall be subject to Taisho's rights under
                  Article IV hereof. [******************************************
                  **************************************************************
                  ****************************]. Vertex will not [**************
                  **************************************************************
                  **************************************************************
                  ***************************************].

         2.7      EXCLUSIVITY. During the term of this Agreement,
                  [*************************************************************
                  **************************************************************
                  ******************************************************]
                  other than under the terms of this Agreement. The foregoing
                  provision shall only be applicable to the research,
                  development, manufacture or sale of small molecule compounds,
                  or pharmaceutical products containing small molecule
                  compounds, for which Caspase inhibition is a principal mode of
                  therapeutic action. Notwithstanding the foregoing, this
                  Section 2.7 shall

                  Collaboration and Option Agreement - Page 6
<PAGE>

                  not apply to [******************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  ***************************************]

                                   ARTICLE III

                               PAYMENTS BY TAISHO

         3.1      REIMBURSEMENT. Taisho will make reimbursement to Vertex as
                  follows, on the dates referenced below, of certain of Vertex's
                  past research costs, in recognition of Vertex's research
                  program in the Field having achieved certain research
                  milestones through the Effective Date:

                  1.       Not more than fifteen (15)               [****]
                           business days after the later of
                           the Effective Date or the date
                           upon which the last party hereto
                           executes this Agreement:

                  2.       On the first anniversary of the          [****]
                                                                    ------
                           Effective Date: TOTAL                    [****]

         At Taisho's request Vertex will provide Taisho with documentation which
support characterization of the payments made by Taisho under this Section 3.1
as reimbursement for research expenditures made by Vertex.

         3.2      RESEARCH PAYMENT. Taisho will make research payment for
                  Vertex's research activities under the Research Program in the
                  form of the following payments to Vertex.

         Research Year 1.    October 1, 1999 - September 30, 2000   [****]

         Research Year 2.    October 1, 2000 - September 30, 2001   [****]

         Research Year 3.   October 1, 2001 - September 30, 2002    [****]
                                                                    ------
                            TOTAL                                   [****]

         The payments referenced in this paragraph shall be made in equal
quarterly installments of [***], each of which will be due not later than
[**********] the commencement of each three (3) month period (October 1, January
1, April 1 and July 1) during the referenced Research Year. The first payment
due for the period October 1 - December 31, 1999 shall be made not more than
[****************] the later of the Effective Date or the date upon which the
last party

                  Collaboration and Option Agreement - Page 7
<PAGE>

hereto executes this Agreement. A "business day" for purposes of this
Agreement shall mean a day that is not a weekend day or a legal holiday in
Boston, Massachusetts or Tokyo, Japan or is customarily specified as a holiday
by Vertex or Taisho. All payments shall be made by wire transfer in United
States dollars to the credit of such bank account as may be designated by Vertex
in writing to Taisho. Any payment which falls due on a date which is not a
business day may be made on the next succeeding business day. Taisho's
obligation to make any of the foregoing payments which are due and payable on
the effective date of any termination of this Agreement pursuant to Section 8.1
hereof shall survive termination.

         3.3      RESEARCH RECORDS; EXPENDITURE REPORTS. Each researcher
                  performing work under this Agreement, whether employed
                  directly by Vertex or Taisho or one of its Affiliates, or
                  subcontractors, shall keep and properly maintain a laboratory
                  notebook in which all work and experiments performed by him
                  are entered and kept separate and distinct from all other work
                  not related to this Agreement. Vertex shall provide to Taisho,
                  annually during the term of the Research Program, a research
                  expenditure report in the form attached hereto as Schedule
                  3.3, which shall be delivered to Taisho within ninety (90)
                  days following December 31 of each year of the Research
                  Program. The books and records of Vertex relating to such
                  research expenditures will be subject to inspection at all
                  reasonable times by Taisho with reasonable notice, for the
                  purpose of verifying the accuracy of the research expenditure
                  report referenced above. The books and records relating to a
                  reported research expenditure shall be retained by Vertex for
                  a period of not less than five (5) full fiscal years after the
                  year in which the research expenditure occurred.

                                   ARTICLE IV

                         LICENSE AND DEVELOPMENT OPTION

         Taisho has the exclusive license and development option to the
Compounds and by exercising its option may obtain an exclusive license to one or
more Licensed Compounds which Taisho is interested in developing, marketing and
selling in the Territory subject to the following terms and conditions.

                  (a)      (i) During the course of the Research Program
[**************** ******************] Vertex will notify Taisho in writing if
and when Vertex has selected a Compound for development in the Field outside the
Territory. Taisho shall have a period of [*************************************]
(an "Option Exercise Period") after receipt of such written notice from Vertex
in which to exercise its option to obtain a license and to develop that Compound
as a Licensed Compound under the License Agreement, by written notice to Vertex.
Taisho shall use good faith efforts to decide as early as possible within the
[****] Option Exercise Period whether to exercise its option in each case, and
will communicate that decision to Vertex as soon as it is made. Taisho's option
with respect to a particular Compound shall expire if the option is not
exercised within the associated Option Exercise Period.

                  Collaboration and Option Agreement - Page 8
<PAGE>

                           (ii) If during the term of the Research Program
Vertex does not designate any Compounds for development in the Field outside the
Territory, or if there are no Compounds under development outside the Territory
on the date the Research Program terminates, then Taisho shall have an option
exercisable during the [*******] after termination of the Research Program to
obtain a license and to develop any Compound as a Licensed Compound under the
License Agreement, whether or not thereafter selected by Vertex for development
outside the Territory, upon written notice to Vertex. Vertex shall not be
obligated in such event to develop that Compound, and if it chooses not to do
so, the full cost of development of that Compound in the Territory shall be
borne by Taisho.

                  (b)      Promptly upon exercise of any such option by notice
in writing from Taisho to Vertex, the parties shall execute a License Agreement
covering the Licensed Compound to which the option exercise was directed,
substantially identical in form and substance to the form of License Agreement
attached hereto as Exhibit A. Subsequent Licensed Compounds, if any, as to which
Taisho exercises its option shall be added to the License Agreement as
contemplated therein. Taisho will develop that Compound as a Licensed Compound
in the Territory in accordance with the terms of the License Agreement.

                  (c)      Taisho's option rights under this Article IV shall
expire upon the later of
[****************************************************************************]
provided that, even after [*****************] and so long as the option has
previously been exercised with respect to a Licensed Compound and development or
commercialization of that Licensed Compound is proceeding in accordance with the
terms of the License Agreement, Taisho may propose to the Joint Development
Committee (the "JDC," a committee established under the License Agreement,
details of which are provided in the License Agreement), at any time during the
[*************************************************************] that the JDC
select any other Compound for development under the License Agreement from among
those Compounds that were synthesized or had shown activity as Caspase
inhibitors in the Research Program. Any Compound so proposed by Taisho and
selected by the JDC will be developed by Taisho under the License Agreement,
except that Vertex shall not be obligated in such event to develop that
Compound, and if it chooses not to do so, the full cost of development of that
Compound in the Territory shall be borne by Taisho. Without reference to the
previously mentioned [*****] limitation or provisions of Article IV (d),
[*******************************************************************************
********************************************************************************
*******************]with
respect to a Licensed Compound shall be exercisable for a period ending ninety
(90) days after the earlier of termination of the development of that Licensed
Compound or [********** *******] in the Territory with respect to that Licensed
Compound. The option shall also continue to be exercisable,
[*******************************************************************************
********************************************************************************
***********************************]
with respect to that Licensed Compound, after which it will expire. For purposes
of the foregoing: (i) a [***** ******] shall mean a Phase II Clinical Trial
which contains one or more studies aimed at yielding preliminary data on the
efficacy of a Compound in a tested indication. ; (ii) a Designated Substitute
Compound for a Licensed Compound shall be those one or more Compounds

                  Collaboration and Option Agreement - Page 9
<PAGE>

(presumptively one Compound, but more than one upon a demonstration that more
than one is reasonably necessary) selected by the JDC which in the opinion of
the JDC are the Compound or Compounds, if any, most likely on a scientific and
commercial basis to be selected for development as substitutes for a Licensed
Compound if development of that Licensed Compound should be terminated prior to
regulatory approval in Japan for the sale of a Drug Product containing that
Licensed Compound. If the JDC is unable to reach consensus on whether a Compound
so proposed by Taisho should be selected for development, or whether a Compound
should be substituted for a Licensed Compound the development of which has been
terminated, or which if any Compound should be selected as Designated Substitute
Compound for a Licensed Compound,
[*******************************************************************************
********************************************************************************
********************].

                  (d)      After the expiration of the [*****] period referenced
in (c) above, and so long as Taisho is developing or commercializing a Licensed
Compound in accordance with the terms of the License Agreement, Vertex will
attempt in good faith to negotiate with Taisho the terms under which Taisho
might obtain a license, to develop and commercialize in the Territory any
Compound in the Field, before Vertex shall license or otherwise transfer rights
to that Compound in the Territory to a Third Party. Notwithstanding the
foregoing, Vertex shall not license or otherwise transfer rights to any Compound
to a Third Party without adequate provisions to ensure that those Compounds
remain subject to Taisho's option or the JDC's option of substitution referenced
in (c) above, so long as that option is exercisable with respect to those
Compounds.

                  (e)      Upon exercise by Taisho or the JDC of the option
under Article IV to develop a Compound, Taisho will be entitled to the exclusive
right to that Compound in the Territory under the terms of the License
Agreement, which right includes [*****************
****************************************************************************].

                                    ARTICLE V

                                 CONFIDENTIALITY

         5.1      UNDERTAKING. During the term of this Agreement, each party
                  shall keep confidential, and other than as provided herein
                  shall not use or disclose, directly or indirectly, any trade
                  secrets, confidential or proprietary information (including
                  information embodied in sample materials), or any other
                  knowledge, information, documents or materials, owned,
                  developed or possessed by the other party, whether in tangible
                  or intangible form, the confidentiality of which such other
                  party takes reasonable measures to protect, including but not
                  limited to Vertex Technology and Taisho Technology. Each party
                  shall take any and all lawful measures to prevent the
                  unauthorized use and disclosure of such information, and to
                  prevent unauthorized persons or entities from obtaining or
                  using such information. Each party further agrees to refrain
                  from directly or indirectly taking

                  Collaboration and Option Agreement - Page 10
<PAGE>

                  any action which would constitute or facilitate the
                  unauthorized use or disclosure of such information. Each party
                  may disclose such information to its directors, officers,
                  employees, consultants and agents, and in the case of Vertex,
                  to its licensees and subcontractors in the Field outside the
                  Territory, and in case of Taisho, to sublicensees under the
                  License Agreement, if any, and to subcontractors in connection
                  with the research, development or manufacture of Compounds, to
                  the extent necessary to enable such parties to perform their
                  obligations or exercise their rights hereunder or under the
                  applicable sublicense or subcontract, as the case may be;
                  provided, that such directors, officers, employees,
                  consultants, agents, licensees, sublicensees and
                  subcontractors have entered into appropriate confidentiality
                  agreements for secrecy and non-use of such information which
                  by their terms shall be enforceable by injunctive relief at
                  the instance of the disclosing party. Each party shall be
                  liable for any unauthorized use and disclosure of such
                  information by its directors, officers, consultants, employees
                  and agents and any such licensees, sublicensees and
                  subcontractors. Taisho may also provide a copy of this
                  Agreement to the Bank of Japan, Japan's Ministry of Finance,
                  Ministry of Health and Welfare, National Tax Office and other
                  governmental agencies, all as and only to the extent required
                  under applicable Japanese laws or government regulations.

         5.2      EXCEPTIONS. Notwithstanding the foregoing, the provisions of
                  Section 5.1 hereof shall not apply to knowledge, information,
                  documents or materials which the receiving party can
                  conclusively establish: (i) have entered the public domain
                  without such party's breach of any obligation owed to the
                  disclosing party; (ii) have become known to the receiving
                  party prior to the disclosing party's disclosure of such
                  information to such receiving party; (iii) are permitted to be
                  disclosed by the prior written consent of the disclosing
                  party; (iv) have become known to the receiving party from a
                  source other than the disclosing party other than by breach of
                  an obligation of confidentiality owed to the disclosing party;
                  (v) are disclosed by the disclosing party to a Third Party
                  without restrictions on its disclosure; (vi) are independently
                  developed by the receiving party without breach of this
                  Agreement; or (vii) are required to be disclosed by the
                  receiving party to comply with applicable laws, to defend or
                  prosecute litigation or to comply with governmental
                  regulations, provided that the receiving party provides prior
                  written notice of such disclosure to the disclosing party and
                  takes reasonable and lawful actions to avoid or minimize the
                  degree of such disclosure.

         5.3      PUBLICITY. The timing and content of any press releases or
                  other public communications relating to the Agreement and the
                  transactions contemplated herein will, except as otherwise
                  required by law, be determined jointly by Taisho and Vertex.

         5.4      SURVIVAL. The provisions of this Article V shall survive the
                  termination of this Agreement.

                  Collaboration and Option Agreement - Page 11
<PAGE>

                                   ARTICLE VI

                                     PATENTS

         6.1      PREPARATION. Vertex will be responsible for the preparation,
                  filing, prosecution and maintenance of any and all Patents in
                  the Territory included in Vertex Patents,
                  [*************************************************************
                  **************************************************************
                  ***].
                  Taisho will be responsible for the preparation, filing,
                  prosecution and maintenance of any and all Patents in the
                  Territory included in the Taisho Patents
                  [*************************************************************
                  **************************************************************
                  ******************]
                  including without limitation any such Patents covering
                  formulations
                  [*************************************************************
                  *******************].
                  Vertex and Taisho shall each furnish to the other party copies
                  of significant documents relevant to any such preparation,
                  filing, prosecution or maintenance. Vertex and Taisho shall
                  cooperate fully in the preparation, filing, prosecution and
                  maintenance of all Vertex Patents and Taisho Patents,
                  executing all papers and instruments so as to enable the
                  responsible party to apply for, prosecute, and to maintain
                  patent applications and patents in its name in any country in
                  the Territory. The parties acknowledge the importance of
                  maintaining the confidentiality of any inventions or other
                  information relating to potential patent claims prior to the
                  filing of patent applications with respect thereto. Each party
                  shall provide to the other prompt notice as to all matters
                  which may affect the preparation, filing, prosecution or
                  maintenance of any such patent applications or patents.

         6.2      COST REIMBURSEMENT. Taisho shall reimburse Vertex for the
                  following direct costs with respect to Vertex Patents
                  [*************************************************************
                  *********************************************************],
                  for the preparation, filing, prosecution and maintenance of
                  Vertex Patents in the Territory. "General patent preparation
                  and maintenance costs" shall include the direct costs of
                  preparation, filing and prosecution of any patent application
                  contained in Vertex Patents from which a patent application
                  filed in any country of the Territory claims priority, and any
                  patent application filed under the Patent Cooperation Treaty
                  (PCT). Vertex shall notify Taisho in writing from time to time
                  of its plans with respect to the preparation, filing,
                  prosecution and maintenance of Vertex Patents in each country
                  in the Territory which are, or have not yet become, Licensed
                  Patents, together with Vertex's estimate of the costs of such
                  preparation, filing, prosecution and maintenance and an
                  estimate of Vertex's general patent preparation and
                  maintenance costs. Taisho shall reimburse Vertex for
                  [*************************************************************
                  ***************************************************]. In any
                  event, the provisions of Section 6.3 will apply to any patent
                  which is the object of the

                  Collaboration and Option Agreement - Page 12
<PAGE>

                  foregoing notice from Taisho and which Vertex continues to
                  prosecute or maintain.

         6.3      FAILURE TO REIMBURSE. If Taisho shall fail, without good
                  reason hereunder, to reimburse Vertex as required under
                  Section 6.2 above with respect to a patent application or
                  patent included within the Vertex Patents within sixty (60)
                  days after receipt of a written request for payment from
                  Vertex, Vertex may terminate Taisho's rights with respect to
                  that patent or patent application upon thirty (30) days
                  written notice thereof to Taisho, unless Taisho during such
                  30-day period shall have submitted payment pursuant to the
                  aforementioned request for payment.

         6.4      LICENSE TO FORMULATIONS AND USE INVENTIONS. The license to the
                  Formulations and Use Inventions granted to Vertex under
                  Section 8.2 of the License Agreement shall be effective
                  hereunder subject to the limitations set forth in Section 8.2
                  of the License Agreement.

                                   ARTICLE VII

                                  INFRINGEMENT

         Either party shall notify the other party promptly of any possible
infringements, imitations or unauthorized possession, knowledge or use of the
intellectual property embodied in any of the Vertex Technology by Third Parties
in any country in the Territory, of which it becomes aware. Either party shall
promptly furnish the other party with full details of such infringements,
imitations or unauthorized possession, knowledge or use, and shall assist in
preventing any recurrence thereof.

[*******************************************************************************
********************************************************************************
****************************].
Such suit may not be settled by Taisho without Vertex's consent, which shall not
be unreasonably withheld. Damages recovered in any actions referenced hereunder
shall be divided [*************] to Taisho and [********] to Vertex after
reimbursement to each party of their respective expenses in prosecuting such
actions as provided hereunder.

                                  ARTICLE VIII

                              TERM AND TERMINATION

         8.1      TERM OF AGREEMENT. This Agreement will extend until the later
                  of the expiration of Taisho's option rights or JDC's option
                  right under Article IV hereof, unless earlier terminated by
                  either party hereto in accordance with other applicable
                  provisions of this Agreement. Taisho may elect to extend the
                  term of the Research Program and this Agreement by written
                  notice given to Vertex not less than [*************] prior to
                  the expiration of the Research Program, upon

                  Collaboration and Option Agreement - Page 13
<PAGE>

                  terms and conditions to be negotiated in good faith and agreed
                  upon in writing by the parties.

         8.2      TERMINATION OF RESEARCH PROGRAM BY TAISHO FOR CAUSE. Upon
                  written notice to Vertex, Taisho may at its sole option
                  terminate the Research Program and this Agreement upon the
                  occurrence of any of the following events:

                  (a)      Vertex shall materially breach this Agreement, which
shall include a failure to use its reasonable best efforts to pursue the
Research Program diligently (provided, however, that this provision shall not be
construed as a guarantee by Vertex that the Research Program will be
successfully completed or any Compounds successfully developed), and such
material failure to perform shall not have been remedied or steps initiated to
remedy the same to Taisho's reasonable satisfaction, within [**********] days
after Taisho sends written notice of failure to perform to Vertex; or

                  (b)      Vertex shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by strike, labor dispute or any other events over which it has no control
(unless termination of this Agreement is permitted under Section 10.3 hereof);
or

                  (c)      A receiver for Vertex shall be appointed or applied
for, or a general assignment shall be made for the benefit of its creditors or
any proceeding involving Vertex shall be voluntarily commenced by it under any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute of the United States or any state thereof or such
proceedings shall be involuntarily instituted against it, and Vertex by any
action shall indicate its approval of or consent to, or acquiescence therein, or
the same shall remain undismissed for [*******].

                  In the event of any valid termination under this Section 8.2,
Taisho shall not be required to make any payments under Section 3.2 hereof which
are not due and payable prior to receipt by Vertex of the notice of failure to
perform referenced under Section 8.2(a), receipt by Vertex of the notice of
termination pursuant to Section 8.2(b), or the occurrence of the event
referenced in Section 8.2(c), as the case may be. Notwithstanding the foregoing,
any License Agreement then in effect under the provisions of Article IV of this
Agreement shall continue in effect in accordance with its terms.

         8.3      TERMINATION BY VERTEX FOR CAUSE. In addition to rights of
                  termination which may be granted to Vertex under other
                  provisions of this Agreement, upon written notice to Taisho,
                  Vertex may at its sole option terminate this Agreement upon
                  the occurrence of any of the following events:

                  (a)      Taisho shall materially breach this Agreement, and
such material failure to perform shall not have been remedied or steps initiated
to remedy the same to Vertex's reasonable satisfaction, within [**************]
after Vertex sends written notice of failure to perform to Taisho; or

                  Collaboration and Option Agreement - Page 14
<PAGE>

                  (b)      Taisho shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by strike, labor dispute or any other events over which it has no control
(unless termination of this Agreement is permitted under Section 10.3 hereof);
or

                  (c)      A receiver for Taisho shall be appointed or applied
for, or a general assignment shall be made for the benefit of its creditors or
any proceeding involving Taisho shall be voluntarily commenced by it under any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law of Japan or such proceedings shall be involuntarily instituted
against it, and Taisho by any action shall indicate its approval of or consent
to, or acquiescence therein, or the same shall remain undismissed for
[************].

         8.4      TERMINATION. If the parties shall determine in good faith (as
                  evidenced by a writing signed by each party), that there is no
                  further scientific basis to pursue research and development of
                  Compounds in the Field, and if either party shall propose, in
                  writing, to the JRC and the other party that the parties
                  consider redirection of the Research Program under Section 2.4
                  of this Agreement, and if within [*******] after such proposal
                  is received by the other party and the JRC, the Research
                  Program has not been redirected, then either party may
                  terminate this Agreement on [************] written notice to
                  the other party. On or after the effective date of any such
                  termination no further payments shall become due and payable
                  hereunder by one party to the other, except pursuant to
                  obligations which have accrued hereunder prior to the
                  effective date of such termination.

         8.5      EFFECT OF TERMINATION OR EXPIRATION. Termination of this
                  Agreement for any reason, or expiration of this Agreement,
                  will not affect: (i) obligations which have accrued as of the
                  date of termination or expiration, and (ii) obligations and
                  rights under the following provisions, which shall survive
                  termination or expiration of this Agreement: the last sentence
                  of both Sections 3.2 and 3.3; Articles IV(d), V and IX.

                                   ARTICLE IX

                               DISPUTE RESOLUTION

         9.1      GOVERNING LAW, AND JURISDICTION. This Agreement shall be
                  governed and construed in accordance with the
                  [********************************]. Both parties agree that
                  any legal proceedings between the parties relating to this
                  Agreement other than a proceeding to which Section 9.2 is
                  applicable, shall be brought in the state or prefecture of the
                  principal office of the defendant party; provided that a
                  proceeding to enforce an arbitration award may be brought in
                  the state or prefecture of the plaintiff's principal office,
                  and each party agrees to submit to personal jurisdiction and
                  to accept venue in the courts of such state or prefecture
                  solely for the purpose of enforcement of any such award.

                  Collaboration and Option Agreement - Page 15
<PAGE>

         9.2      ARBITRATION. In the event of any controversy or claim arising
                  out of or relating to any provision of this Agreement or the
                  breach thereof, the parties shall try to settle their
                  differences amicably between themselves. Any such controversy
                  or claim which the parties are unable to resolve shall, upon
                  the written request for arbitration of one party delivered to
                  the Secretariat of the International Court of Arbitration (the
                  "Court"), be submitted to and be settled by arbitration
                  [*************************************************************
                  *************************************************************]
                  in accordance with the Rules of Arbitration of the
                  International Chamber of Commerce (the "Rules") then in effect
                  (except as hereinafter stated), and enforcement of the award
                  rendered by the arbitrators may be entered in any court having
                  jurisdiction thereof and shall be final and conclusive upon
                  both parties hereto. Notwithstanding anything to the contrary
                  which may be contained in the Rules of the Court, the parties
                  further agree as follows:

         (i)      [*************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  ********************].

         (ii)     The arbitrators will consider the nature of the dispute, the
                  availability of information upon which resolution of the
                  dispute may be fairly based, and in view of those
                  considerations and such other facts and circumstances as they
                  may deem appropriate, shall determine the application of
                  discovery and, if decided it is applied, shall determine the
                  nature, scope and timing of any discovery which will be
                  permitted to the parties to any proceeding hereunder, and that
                  determination of the arbitrators shall be binding on such
                  parties. The costs of arbitration to each party will be
                  determined in accordance with Articles 30 and 31 of the Rules.

         (iii)    The arbitrators shall state the reasons upon which any award
                  is based. The arbitrators shall not be authorized to award
                  punitive damages to either party.

         (iv)     Upon receipt of the arbitrator's statement, either party will
                  have the right, within [***********] thereof, to apply to the
                  Secretariat for a correction and/or an interpretation of the
                  award, and the arbitrators thereupon will reconsider the
                  issues raised by said application and either confirm or alter
                  their decision, which will then be final and conclusive upon
                  both parties hereto.

                  Collaboration and Option Agreement - Page 16
<PAGE>

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

         10.1     OFFICIAL LANGUAGE. English shall be the official language of
                  this Agreement and the License Agreement, and all
                  communications between the parties hereto shall be conducted
                  in that language.

         10.2     WAIVER. Any waiver by either party of the breach of any term
                  or condition of this Agreement will not be considered as a
                  waiver of any subsequent breach of the same or any other term
                  or condition hereof.

         10.3     FORCE MAJEURE. Neither party will be in breach hereof by
                  reason of its delay in the performance of, or failure to
                  perform any of its obligations hereunder, if that delay or
                  failure is caused by strikes, acts of God or the public enemy,
                  riots, incendiaries, interference by civil or military
                  authorities, compliance with governmental priorities for
                  materials, or any fault beyond its control or without its
                  fault or negligence. In the event that any delay or failure to
                  perform by Vertex by reason of force majeure shall extend
                  [*************] Taisho may suspend any payment which would
                  otherwise become due and payable to Vertex during
                  [*************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  ************************************************************].

         10.4     SEVERABILITY. Should one or more provisions of this Agreement
                  be or become invalid, then the parties hereto shall attempt in
                  good faith to agree upon valid provisions in substitution for
                  the invalid provisions, which in their economic effect come so
                  close to the invalid provisions that it can be reasonably
                  assumed that the parties would have accepted this Agreement
                  with those new provisions. If the parties are unable to agree
                  on such valid provisions, the invalidity of such one or more
                  provisions of this Agreement shall nevertheless not affect the
                  validity of this Agreement as a whole.

         10.5     GOVERNMENT ACTS. In the event that any act, regulation,
                  directive, or law of a government within the Territory,
                  including its departments, agencies or courts, should make
                  impossible or prohibit, restrain, modify or limit any material
                  act or obligation of Taisho or Vertex under this Agreement,
                  the party, if any, not so affected, shall have the right, at
                  its option, to suspend or terminate this Agreement as to such
                  country, if good faith negotiations between the parties to
                  make such modifications herein as may be necessary to fairly
                  address the impact thereof, are not successful after a
                  reasonable period of time in producing mutually acceptable
                  modifications to this Agreement.

         10.6     GOVERNMENT APPROVALS. Taisho or its sublicensees will, if
                  necessary, obtain any government approval required in the
                  Territory to enable this Agreement to become effective, or to
                  enable any payment hereunder to be made, or any other

                  Collaboration and Option Agreement - Page 17
<PAGE>

                  obligation hereunder to be observed or performed. Taisho will
                  keep Vertex informed of progress in obtaining any such
                  government approval, and Vertex will cooperate with Taisho in
                  any such efforts.

         10.7     EXPORT CONTROLS. This Agreement is made subject to any
                  restrictions concerning the export of Compounds or Vertex
                  Technology from the United States which may be imposed upon or
                  related to either party to this Agreement from time to time by
                  the Government of the United States. Furthermore, Taisho will
                  not export, directly or indirectly, any Vertex Technology or
                  any Compounds utilizing such Technology to any countries for
                  which the United States Government or any agency thereof at
                  the time of export requires an export license or other
                  governmental approval, without first obtaining the written
                  consent to do so (of which Taisho will promptly inform Vertex)
                  from the Department of Commerce or other agency of the United
                  States Government when required by applicable statute or
                  regulation. As of the date hereof Vertex warrants that current
                  US export control regulations do not prohibit the disclosure
                  or delivery to Taisho of information, data, compounds, or
                  other materials required to be provided by Vertex to Taisho
                  hereunder, and if such regulations should become applicable,
                  Vertex will forthwith notify Taisho.

         10.8     NO WARRANTY. Vertex makes no warranty of any kind whatsoever,
                  either express or implied, to Taisho, or any customer of
                  Taisho, as to the ability of Taisho to understand and utilize
                  the Vertex Technology. Taisho makes no warranty of any kind
                  whatsoever, either express or implied, to Vertex, or to any
                  customer of Vertex, as to the ability of Vertex to understand
                  and utilize the Taisho Technology.
                  [****************************************************
                  **************************************************************
                  **************************************************************
                  **********].
                  Should a party becomes aware of any unexpected serious adverse
                  reactions to any Compounds, Licensed Compounds or Drug
                  Products administered to humans or animals, the party shall
                  promptly notify the other and/or make a report to the U.S.
                  Food and Drug Administration ("FDA") or the Japanese Ministry
                  of Health and Welfare as required by applicable governmental
                  regulations.

         10.9     THIRD PARTY ACTIONS. (a) To Vertex's knowledge
                  [*************************************************************
                  **************************************************************
                  *****************].
                  Nevertheless, each party will promptly notify the other in the
                  event any relevant Third Party patents come to its notice.
                  Neither party gives a warranty to the other regarding the
                  infringement of Third Party rights by the development,
                  manufacture, use or sale of the Licensed Compounds or the
                  practice of the Vertex Technology or the Taisho Technology,
                  and gives no indemnity against costs, damages, expenses or
                  other losses arising out of proceedings brought against the
                  other party or any other Person by any Third Party.

                  Collaboration and Option Agreement - Page 18
<PAGE>

         (b) In the event that the development of a Compound in any country
necessarily involves working within the scope of a Third Party's patent, which
would otherwise be infringed by the practice of a Vertex Patent in connection
with such development, then [***************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
***].
If the terms of a required license under a Third Party patent do not meet the
foregoing requirements and Vertex therefore elects not to assume its share of
any financial obligation, [***************************************
**************************************************************************]. If
the required license is either unavailable or its terms are unacceptable both to
Vertex and to Taisho, then Taisho may elect in its sole discretion to
discontinue sales of the Drug Product in such country or at its sole expense to
undertake the defense of a patent infringement action or the prosecution of a
declaratory judgment action with respect to the Third Party patents.

          (c) In the event Taisho is sued for infringement of any rights of any
Third Party in the course of its development of the Compounds or its use of
Vertex Technology in connection therewith, Vertex shall extend to Taisho good
faith assistance and support in defending such action, and may participate in
the conduct of, and in discussions regarding strategic and business responses
to, the suit. Damages and out-of-pocket legal fees and expenses (including legal
fees and expenses of Taisho and Vertex) arising from such a legal action shall
be borne [**********************************************************************
********************************************************************************
*************].

         10.10    TAX.[*********************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  ******************].

         10.11    ASSIGNMENT. This Agreement may not be assigned or otherwise
                  transferred by either party without the prior written consent
                  of the other party; PROVIDED, HOWEVER, that either party may
                  assign this Agreement, WITHOUT the consent of the other party,
                  (i) to any of its Affiliates, if the assigning party
                  guarantees the full performance of its Affiliates' obligations
                  hereunder, or (ii) in connection with the transfer or sale of
                  all or substantially all of its assets or business or in the
                  event of its merger or consolidation with another Person. Any
                  purported assignment in contravention of this section shall,
                  at the option of the nonassigning party, be null and void and
                  of no effect. No assignment shall release either party from
                  responsibility for the performance of any accrued obligations
                  of such party hereunder.

                  Collaboration and Option Agreement - Page 19
<PAGE>

         10.12    COUNTERPARTS. This Agreement may be executed in duplicate,
                  each of which shall be deemed to be original and both of which
                  shall constitute one and the same Agreement.

         10.13    NO AGENCY. Nothing in this Agreement shall be deemed to create
                  an agency, joint venture, amalgamation, partnership or similar
                  relationship between Vertex and Taisho. Notwithstanding any of
                  the provisions of this Agreement, neither party to this
                  Agreement shall at any time enter into, incur, or hold itself
                  out to Third Parties as having authority to enter into or
                  incur, on behalf of the other party, any commitment, expense,
                  or liability whatsoever, and all contracts, expenses and
                  liabilities in connection with or relating to the obligations
                  of each party under this Agreement shall be made, paid, and
                  undertaken exclusively by such party on its own behalf and not
                  as an agent or representative of the other.

         10.14    NOTICE. All communications between the parties with respect to
                  any of the provisions of this Agreement will be sent to the
                  addresses set out below or to other addresses as may be
                  designated by one party to the other by notice pursuant
                  hereto, by prepaid certified air mail (which shall be deemed
                  received by the other party on the seventh business day
                  following deposit in the mails), or by facsimile transmission
                  or other electronic means of communication (which shall be
                  deemed received when transmitted), with confirmation by first
                  class letter, postage pre-paid, given by the close of business
                  on or before the next following business day:

                  if to Taisho, at:     Taisho Pharmaceutical Co., Ltd.
                                        24-1, Takata 3-Chome
                                        Toshimaku, Tokyo, 170-8633, Japan
                                        Attention: General Manager, Licensing
                                        Division

                  with a copy to:

                                        General Manager, Legal Division

                  if to Vertex, at:     130 Waverly Street
                                        Cambridge, MA 02139-4242
                                        Attention:  Richard H. Aldrich
                                        Senior Vice President and Chief Business
                                        Officer
                                        cc:  Corporate Counsel

                  with a copy to:

                                        Kirkpatrick & Lockhart LLP
                                        75 State Street
                                        Boston, MA  02109
                                        Attention:  Kenneth S. Boger, Esquire
                                        Fax: 617-951-9151

         10.15    HEADINGS. The paragraph headings are for convenience only and
                  will not be deemed to affect in any way the language of the
                  provisions to which they refer.

                  Collaboration and Option Agreement - Page 20
<PAGE>

         10.16    AUTHORITY. The undersigned represent that they are authorized
                  to sign this Agreement on behalf of the parties hereto. The
                  parties each represent that no provision of this Agreement
                  will violate any other agreement that a party may have with
                  any Third Party. Each party has relied on that representation
                  in entering into this Agreement.

         10.17    ENTIRE AGREEMENT. This Agreement contains the entire
                  understanding of the parties relating to the matters referred
                  to herein, and may only be amended by a written document, duly
                  executed on behalf of the respective parties.

                  Collaboration and Option Agreement - Page 21
<PAGE>

                                   VERTEX PHARMACEUTICALS INCORPORATED

                                    By:
                                       ---------------------------------------
                                    Title:
                                          -------------------------------------
                                    Date of Signature:
                                                      --------------------------

                                    TAISHO PHARMACEUTICAL CO., LTD.

                                    By:
                                      -----------------------------------------
                                       Akira Uehara

                                    Title:     PRESIDENT
                                          -------------------------------------
                                    Date of Signature:
                                                      -------------------------

                  Collaboration and Option Agreement - Page 22
<PAGE>

                                  SCHEDULE 1.4

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         CONFIDENTIAL- DRAFT- Collaboration & Option Agreement- Page 1
<PAGE>

                                  SCHEDULE 1.12

                             LIST OF VERTEX PATENTS

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                  Research Agreement & License Option- Page ii
<PAGE>

                                  SCHEDULE 1.13

                             LIST OF TAISHO PATENTS

--------------------------------------------------------------------------------

                                      NONE

<PAGE>

                                  SCHEDULE 1.19

                         SUMMARY OF RESEARCH ACTIVITIES

--------------------------------------------------------------------------------

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<PAGE>

                                  SCHEDULE 1.20

                           COUNTRIES IN THE TERRITORY

--------------------------------------------------------------------------------

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<PAGE>

                                  SCHEDULE 2.2

                   INITIAL MEMBERS OF JOINT RESEARCH COMMITTEE

--------------------------------------------------------------------------------

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<PAGE>

                                  SCHEDULE 3.3

                     ANNUAL REPORT OF RESEARCH EXPENDITURES

--------------------------------------------------------------------------------

VERTEX/TAISHO CASPASE PROGRAM

[*******************************************************************************
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<PAGE>

                      EXHIBIT A TO COLLABORATION AND OPTION AGREEMENT

                        License and Development Agreement

                                     BETWEEN

                       Vertex Pharmaceuticals Incorporated

                                       AND

                         Taisho Pharmaceutical Co., Ltd

                                November 30, 1999

<PAGE>
<TABLE>
<CAPTION>

                   License and Development Agreement -  Page 1

                             TABLE OF CONTENTS                                                         Page

<S>                                                                                                     <C>
         Introduction....................................................................................1

         ARTICLE I -- Definitions........................................................................1

         ARTICLE II -- Rights and Licenses...............................................................5

         2.1      TAISHO RIGHTS..........................................................................5
                  2.1.1  EXCLUSIVE LICENSE...............................................................5
                  2.1.2  [**************]................................................................5
         2.2      IMPROVEMENT............................................................................6
         2.3      EXCLUSIVITY............................................................................6

         ARTICLE III -- Development......................................................................7

         3.1      JOINT DEVELOPMENT COMMITTEE............................................................7
         3.2      CORE DEVELOPMENT ACTIVITIES............................................................8
         3.3      DEVELOPMENT ACTIVITIES EXCLUSIVELY FOR THE TERRITORY...................................8
         3.4      DEVELOPMENT ACTIVITIES IN [****************************]...............................9
         3.5      INFORMATION TRANSFER...................................................................9
         3.6      BULK SUPPLY FOR DEVELOPMENT............................................................9
         3.7      REGULATORY APPROVALS...................................................................9
         3.8      DUE DILIGENCE.........................................................................10

         ARTICLE IV -- Milestone Payments...............................................................10

         ARTICLE V -- Supply Licensed Compound..........................................................11

         5.1      SUPPLY................................................................................11
         5.2      SUPPLY PRICE..........................................................................12
         5.3      FORECASTS AND ADJUSTMENTS.............................................................12
         5.4      SUPPLY AGREEMENT......................................................................13
         5.5      PRICE REVISION........................................................................13
         5.6      UNPATENTED PRODUCT....................................................................13
         5.7      TAXES.................................................................................13
         5.8      CO-LABELING...........................................................................13

         ARTICLE VI -- Reporting........................................................................14

         6.1      DEVELOPMENT REPORTS...................................................................14
         6.2      SALES REPORTS AND RECORDS.............................................................14
         6.3      PAYMENT DELAY.........................................................................14

                   License and Development Agreement -  Page ii
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                  Table Of Contents (con't)Page

<S>                                                                                                     <C>
         ARTICLE VII -- Confidentiality.................................................................14

         7.1      UNDERTAKING...........................................................................14
         7.2      EXCEPTIONS............................................................................15
         7.3      PUBLICITY.............................................................................15
         7.4      SURVIVAL..............................................................................15

         ARTICLE VIII -- Patents........................................................................15

         8.1      PREPARATION...........................................................................15
         8.2      LICENSE TO FORMULATION AND USE INVENTIONS.............................................16
         8.3      COST REIMBURSEMENT....................................................................16
         8.4      FAILURE TO REIMBURSE..................................................................17
         8.5      COST REIMBURSEMENT FOR THE PATENTS COVERING THE FORMULATION AND USE
                  INVENTIONS............................................................................17

         ARTICLE IX --Infringement......................................................................17

         ARTICLE X -- Term and Termination..............................................................18

         10.1     TERM..................................................................................18
         10.2     TERMINATION OF RESEARCH PROGRAM BY TAISHO FOR CAUSE...................................18
         10.3     TERMINATION BY VERTEX FOR CAUSE.......................................................19
         10.4     TERMINATION...........................................................................19
         10.5     EFFECT OF TERMINATION AND EXPIRATION..................................................19

         ARTICLE XI -- Dispute Resolution...............................................................20

         11.1     GOVERNING LAW, AND JURISDICTION.......................................................20
         11.2     ARBITRATION...........................................................................20

         ARTICLE XII -- Miscellaneous Provisions........................................................21

         12.1     NO WARRANTY...........................................................................21
         12.2     THIRD PARTY ACTIONS...................................................................21
         12.3     OFFICIAL LANGUAGE.....................................................................22
         12.4     TAX...................................................................................22
         12.5     WAIVER................................................................................23
         12.6     FORCE MAJEURE.........................................................................23
         12.7     SEVERABILITY..........................................................................23
         12.8     GOVERNMENT ACTS.......................................................................23

</TABLE>

                   License and Development Agreement -  Page iii
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                    <C>
         12.9     GOVERNMENT APPROVALS..................................................................23
         12.10    EXPORT CONTROLS.......................................................................23
         12.11    ASSIGNMENT............................................................................24
         12.12    COUNTERPARTS..........................................................................24
         12.13    NO AGENCY.............................................................................24
         12.14    NOTICE................................................................................24
         12.15    HEADINGS..............................................................................25
         12.16    AUTHORITY.............................................................................25
         12.17    ENTIRE AGREEMENT......................................................................25

</TABLE>

                   License and Development Agreement -  Page iii

         SCHEDULE 1.9 -- LICENSED COMPOUNDs

<PAGE>

                        LICENSE AND DEVELOPMENT AGREEMENT

         This Agreement is made and entered into as of ________________ between
VERTEX PHARMACEUTICALS INCORPORATED, a corporation duly organized and existing
under the laws of the Commonwealth of Massachusetts with its principal place of
business at 130 Waverly Street, Cambridge, Massachusetts 02139-4242, U.S.A.
(hereinafter "Vertex"), and TAISHO PHARMACEUTICAL CO., LTD., a corporation duly
organized and existing under the laws of Japan with its principal place of
business at 24-1, Takata 3-Chome, Toshima-ku, Tokyo 170-8633, Japan (hereinafter
"Taisho").

                                  INTRODUCTION

         WHEREAS, Vertex and Taisho are parties to the Collaboration Agreement
(as defined below) under which Vertex is engaged in the design and discovery of
certain novel small molecule inhibitors of caspases, with the financial and
technical assistance of Taisho; and

         WHEREAS, Taisho has exercised its option under the Collaboration
Agreement to develop and commercialize one or more Licensed Compounds in the
Territory.

         NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1.     "AFFILIATE" shall mean, with respect to any Person, any other
                  Person which directly or indirectly, by itself or through one
                  or more intermediaries, controls, is controlled by or is under
                  direct or indirect common control with, such Person. The term
                  "control" means the possession, direct or indirect, of the
                  power to direct or cause the direction of the management and
                  policies of a Person, whether through the ownership of voting
                  securities, by contract or otherwise. Control will be presumed
                  if one Person owns, either of record or beneficially, fifty
                  percent (50%) or more of the voting stock of any other Person.

         1.2.     "COLLABORATION AGREEMENT" shall mean that certain
                  Collaboration and Option Agreement dated November 30, 1999 by
                  and between Vertex and Taisho.

         1.3.     "CORE DEVELOPMENT PLAN," "CORE DEVELOPMENT ACTIVITIES" and
                  "CORE DEVELOPMENT COSTS" shall have the meanings ascribed to
                  them in Section 3.1 hereof.

         1.4.     "DEVELOPMENT PROGRAM" shall mean activities associated with
                  development of Licensed Compounds for sale as Drug Products in
                  the Territory, including but not limited to (a) formulation of
                  Licensed Compounds for use in preparation for

                   License and Development Agreement -  Page 1
<PAGE>

                  preclinical studies; (b) preclinical animal studies performed
                  in accordance with "Good Laboratory Practices" (or the
                  applicable equivalent) in preparation for the filing of an
                  Investigational New Drug Application (or the applicable
                  equivalent); (c) formulation and manufacture of Licensed
                  Compounds for preclinical and clinical studies; (d) planning,
                  implementation, evaluation and administration of human
                  clinical trials; (e) manufacturing process development and
                  scale-up for the manufacture of bulk Licensed Compound and
                  Drug Product; (f) preparation and submission of applications
                  for regulatory approval; and (g) post-market surveillance of
                  approved drug indications, as required or agreed as part of a
                  marketing approval by any governmental regulatory authority.

         1.5.     "DRUG PRODUCT" shall mean a product prepared from bulk
                  Licensed Compound in finished dosage form ready for
                  administration to the ultimate consumer as a

                  pharmaceutical.

         1.6.     "COMMENCEMENT DATE" shall mean, with respect to the
                  application of this Agreement to a Licensed Compound, the date
                  on which Taisho exercises its option under Article IV of the
                  Collaboration Agreement with respect to that Licensed
                  Compound.

         1.7.     "CASPASES" are[***********************************************
                  *************************************************************
                  **************************************************].

         1.8.     "FIELD" shall mean the treatment or prevention of diseases in
                  humans using pharmaceutical products which inhibit one or more
                  Caspases.

         1.9.     "LICENSED COMPOUNDS" shall mean any Compounds as to which the
                  option rights granted under Article IV of the Collaboration
                  Agreement have been exercised in accordance therewith by
                  Taisho as identified on Schedule 1.9 hereto, as Schedule 1.9
                  may be updated from time to time by reason of the subsequent
                  exercise by Taisho or the JDC of such option rights with
                  respect to additional Compounds. "Compounds" shall have the
                  meaning ascribed to it in the Collaboration Agreement, and the
                  "JDC" shall have the meaning ascribed to it in Section 3.1
                  hereof.

         1.10.    "LICENSED PATENTS" shall mean any Vertex Patents which become
                  the subject of Taisho's rights under Article II of this
                  Agreement upon exercise of its license and development option
                  or selection by the JDC in accordance with the provisions of
                  Article IV of the Collaboration Agreement.

                  1.11. "PATENTS" shall mean all existing patents and patent
                  applications and all patent applications hereafter filed,
                  including any continuations, continuations-in-part,
                  divisionals, provisionals or any substitute applications, any
                  patent issued with respect to any such patent applications,
                  any reissue reexamination, renewal or extension (including any
                  supplemental patent certificate) of any such patent, and

                   License and Development Agreement -  Page 2
<PAGE>

                  any confirmation patent or registration patent or patent of
                  addition based on any such patent, and all foreign
                  counterparts of any of the foregoing.

         1.12.    "VERTEX PATENTS" shall mean any Patents Controlled by Vertex
                  (or any of its Affiliates) claiming (i) a Compound or a method
                  of using a Compound (a "method of using" being deemed to
                  refer, here and hereafter in this Agreement, to a use patent),
                  or (ii) a method of formulating, manufacturing, process
                  development or packaging related to a Compound or (iii) an
                  improvement to the subject matter of a Patent covering a
                  Compound or a method of using a Compound or a method of
                  manufacturing, process development or packaging related to a
                  Compound. A list of Vertex Patents is appended hereto as
                  Schedule 1.12 and will be updated periodically to reflect
                  additions thereto during the course of this Agreement.

         1.13.    "TAISHO PATENTS" shall mean any Patents Controlled by Taisho
                  (or any of its Affiliates) excluding patent applications or
                  patents which Taisho has assigned to Vertex under Section 2.6
                  of the Collaboration Agreement, claiming (i) a Compound or a
                  method of using a Compound or (ii) a method of formulating,
                  manufacturing, process development or packaging related to a
                  Compound or (iii) an improvement to the subject matter of a
                  Patent covering a Compound or a method of using a Compound or
                  a method of manufacturing, process development or packaging
                  related to a Compound. A list of Taisho Patents is appended
                  hereto as Schedule 1.13 and will be updated periodically to
                  reflect additions thereto during the course of this Agreement.

         1.14.    "KNOW-HOW" shall mean all proprietary and confidential
                  material and information including data, technical
                  information, know-how, experience, inventions, discoveries,
                  trade secrets, compositions of matter and methods, whether
                  currently existing or developed or obtained during the course
                  of this Agreement, and whether or not patentable, that are
                  controlled by a party hereto or its Affiliates and that relate
                  to the development, utilization, manufacture or use of any
                  Compound, including but not limited to processes, techniques,
                  methods, products, materials and compositions.

         1.15.    "VERTEX KNOW-HOW" shall mean all Know-How of Vertex.

         1.16.    "TAISHO KNOW-HOW" shall mean all Know-How of Taisho.

         1.17.    "VERTEX TECHNOLOGY" shall mean all Vertex Patents and Vertex
                  Know-How.

         1.18.    "TAISHO TECHNOLOGY" shall mean all Taisho Patents and Taisho
                  Know-How.

         1.19.    "NET SALES" shall mean, with respect to a Drug Product, the
                  gross amount invoiced by Taisho and any Taisho Affiliate,
                  sublicensee or marketing partner to Third Party customers for
                  the Drug Product, less:

[******************************************************************************

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                   License and Development Agreement -  Page 3
<PAGE>

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         1.20.    "RESEARCH PROGRAM" shall have the meaning ascribed to it in
                  the Collaboration Agreement.

         1.21.    "PERSON" shall mean any individual, corporation, partnership,
                  association, limited liability company, trust, unincorporated
                  organization or government or political subdivision thereof.

         1.22.    "PHASE II CLINICAL TRIALS" shall mean human clinical trials
                  conducted for inclusion in (i) that portion of the FDA
                  submission and approval process which provides for trials of a
                  Drug Product on a limited number of patients for the purposes
                  of collecting data on dosage, evaluating safety and collecting
                  preliminary information regarding efficacy in the proposed
                  therapeutic indication, as more fully defined in 21 C.F.R.
                  Section 312.21(b), and (ii) equivalent submissions with
                  similar requirements in other countries in the Territory.

         1.23.    "PHASE III CLINICAL TRIALS" shall mean human clinical trials
                  conducted for inclusion in (i) that portion of the FDA
                  submission and approval process which provides for the
                  continued trials of a Drug Product on sufficient numbers of
                  patients to generate safety and efficacy data to support
                  Regulatory Approval in the proposed therapeutic indication, as
                  more fully defined in 21 C.F.R. Section 312.21(c), and (ii)
                  equivalent submissions with similar requirements in other
                  countries in the Territory.

         1.24.    "REGULATORY APPROVAL" shall mean, with respect to a country in
                  the Territory, all authorizations by the appropriate
                  governmental entity or entities necessary for commercial sale
                  of a Drug Product in that country including, without
                  limitation and where applicable, approval of labeling, price,
                  reimbursement and manufacturing.

         1.25.    "THIRD PARTY" shall mean any Person other than Vertex, Taisho
                  or their respective Affiliates or sublicensees of rights
                  conveyed under this Agreement.

         1.26.    "LIVE CLAIM" shall mean a claim of any issued, unexpired
                  Patent which shall not have been withdrawn, canceled or
                  disclaimed, nor held invalid or unenforceable by a court of
                  competent jurisdiction in an unappealed or unappealable
                  decision.

                   License and Development Agreement -  Page 4
<PAGE>

         1.27.    "GMP" shall mean the current Good Manufacturing Practice
                  regulations promulgated by the FDA, published at 21 CFR Part
                  210 et seq., as such regulations may be amended, and such
                  equivalent foreign regulations or standards as may be
                  applicable with respect to bulk Licensed Compound or Drug
                  Product(s) manufactured or sold outside the United States.

         1.28.    "FIRST COMMERCIAL SALE" shall mean the first shipment of a
                  Drug Product to a Third Party by Taisho or an Affiliate or
                  sublicensee of Taisho in a country in the Territory following
                  applicable Regulatory Approval of the Drug Product in such
                  country.

         1.29.    "TERRITORY" shall mean those countries listed in Schedule 1.29
                  hereof.

                                   ARTICLE II

                               RIGHTS AND LICENSES

         2.1.     TAISHO RIGHTS.

         2.1.1.   EXCLUSIVE LICENSE. Subject to the other provisions of this
                  Agreement (including the rights of Vertex under Articles III
                  and V hereof), Vertex grants to Taisho an -----------------
                  exclusive license, with the right to sublicense, under the
                  Vertex Technology to develop, use, sell, have sold, export
                  (within the Territory) and import the Licensed Compounds and
                  to develop, make, have made, use, market, sell, have sold,
                  export (within the Territory) and import for sale Drug
                  Products in each country in the Territory, except in
                  [******************]. Vertex hereby grants to Taisho a
                  semi-exclusive license (exclusive except as to Vertex or
                  Vertex's other permitted licensees hereunder) under the Vertex
                  Technology in [**********************] as set forth in Section
                  2.1.2 below. The foregoing licenses shall not extend to the
                  sale of Licensed Compounds in bulk form for purposes other
                  than manufacturing Drug Product. Taisho shall have the right
                  to grant sublicenses as stated above in each country in the
                  Territory, under terms not inconsistent with this Agreement,
                  and subject in each case to prior written notification to
                  Vertex. Any such sublicense shall be entered into by Taisho
                  and the sublicensee on an arms-length basis. In the event the
                  sublicensee breaches the sublicense, Taisho shall promptly
                  take all reasonable steps to enforce the same. In the event of
                  a continuing breach Taisho shall, if so requested by Vertex,
                  terminate that sublicense in accordance with the procedures
                  prescribed therein.

         2.1.2.   [**********]. Vertex and Taisho shall have semi-exclusive
                  rights in [*********************] under the Vertex Technology
                  to develop, make, have made, use, market and sell, have sold,
                  export (within the Territory) and import for sale Drug
                  Products. Vertex and Taisho each may further license its
                  semi-exclusive rights in [****************], to not more than
                  one licensee (in the case of Taisho, such license being a
                  sublicense subject to the terms and conditions

                   License and Development Agreement -  Page 5
<PAGE>

                  of this Agreement governing sublicensees). Either party shall
                  notify the other party of its grant of any such license in
                  advance, together with the name and address of any such
                  licensee.

         2.2.     IMPROVEMENTS. Taisho shall use its reasonable best efforts to
                  keep Vertex promptly and fully informed of any improvements
                  (other than improvements made solely by Taisho which are
                  Formulation and Use Inventions under Section 8.1 hereof)
                  relating to Licensed Compounds, made by Taisho or its
                  Affiliates or sublicensees during the term of the Development
                  Program, whether those improvements are patentable or not
                  ("Taisho Improvements"). Upon Vertex's written request which
                  shall be required to be made within three (3) months from
                  Taisho's notification, Taisho shall
                  [************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  ******************************************************].
                  Vertex shall use its reasonable best efforts to keep Taisho
                  promptly and fully informed of any improvement relating to
                  Licensed Compounds, made by Vertex or any of its Affiliates,
                  sublicensees and subcontractors as a result of activities
                  hereunder, and such improvement shall be included in the
                  Vertex Technology and shall be subject to Taisho's rights
                  under Section 2.1 hereof. [****
                  *************************************************************
                  **********].                Vertex         will          not
                  [************************************************************
                  *************************************************************
                  *******************].

         2.3.     EXCLUSIVITY. During the period ending
                  [************************************************************
                  *************************************************************
                  *************************************************************
                  **************] other than under the terms of this Agreement.
                  [************************************************************
                  *************************************************************
                  ******]. The foregoing provisions shall only be applicable to
                  small molecule compounds, or pharmaceutical products
                  containing small molecule compounds, for which Caspase
                  inhibition is a principal mode of therapeutic action, and
                  [******************
                  ******************************************************]. If
                  this Agreement is validly terminated by Vertex under Section
                  10.3 hereof, then Taisho and its Affiliates will refrain from
                  any of the foregoing activity for a period of [*******] after
                  such termination.

                   License and Development Agreement -  Page 6
<PAGE>

                                   ARTICLE III

                                   DEVELOPMENT

         3.1.     JOINT DEVELOPMENT COMMITTEE. As soon as practicable after the
                  Commencement Date with respect to a Licensed Compound, Vertex
                  and Taisho shall establish a Joint Development Committee (the
                  "JDC") comprised of an equal number of representatives. The
                  JDC shall coordinate the development efforts of both parties
                  with respect to development of a Licensed Compound, will
                  review the Core Development Plan submitted by Vertex as
                  specified below, and will review and approve the Taisho
                  Development Plan. When appropriate, Vertex and Taisho will
                  seek to form a committee or other group, with members
                  representing each party, to coordinate the development
                  activities, worldwide, being conducted with respect to
                  Licensed Compounds by Vertex, Taisho and any of its or their
                  Affiliates, licensees or sublicensees. The JDC shall operate
                  by consensus and in accordance with agreed joint resolutions,
                  but in the event of disagreement which cannot be resolved by
                  discussions among the parties, decisions shall be made as
                  follows:

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         3.2.     CORE DEVELOPMENT ACTIVITIES. Vertex and/or its licensees, if
                  any, will be undertaking development activities, including
                  preclinical and clinical studies and process development,
                  which Vertex deems necessary or appropriate in order to
                  obtain Regulatory Approval for the sale of Drug Products
                  outside the Territory from the U.S. FDA and the EMEA of
                  the European Union (the "Core Development Activities").
                  Vertex expects the Core Development Activities will be
                  undertaken applying standards which will allow the
                  results of those activities to be used by Taisho in its
                  regulatory filings in the Territory. If drug development
                  standards and practices in the Territory are substantially at
                  variance with usual and customary practices in the United
                  States or the European Union in connection with Core
                  Development Activities proposed to be conducted by Vertex,
                  Taisho shall so inform Vertex on a timely basis. Vertex shall
                  create a development plan for Core Development Activities with
                  respect to Licensed Compounds (the "Core

                   License and Development Agreement -  Page 7
<PAGE>

                  Development Plan"), which shall be provided to the JDC and
                  Taisho in advance for its review and comment. **
                  [************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  **********************************]

         3.3.     DEVELOPMENT ACTIVITIES EXCLUSIVELY FOR THE TERRITORY. Taisho
                  and/or its sublicensees, if any, will be responsible for and,
                  except as otherwise provided below with ** respect to
                  development activities by Vertex in [********************],
                  shall bear the cost of the Development Program for Licensed
                  Compound(s) in the Territory. The Taisho Development Program
                  shall be conducted in accordance with a development plan (the
                  "Taisho Development Plan") provided in advance to and reviewed
                  and approved by the JDC. The Taisho Development Plan shall
                  include, without limitation, the design and conduct of all
                  preclinical and clinical studies required to obtain regulatory
                  approval for Drug Products in the Territory that are not
                  otherwise required as part of the Core Development Plan
                  outside the Territory. The Taisho Development Plan may provide
                  for the conduct of development activities in countries outside
                  the Territory, as may be reasonably necessary or appropriate
                  in connection with Regulatory Approval in the Territory, so
                  long as those activities have been coordinated and are
                  consistent with the Core Development Plan and have been
                  approved by the JDC.[****************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *].

         3.4.     DEVELOPMENT ACTIVITIES IN [**************]. Vertex and Taisho
                  will attempt to coordinate their respective development
                  activities in [***] but shall have the right to pursue
                  development of Licensed Compounds independently [*********] if
                  effective coordination is not achieved. Absent any agreement
                  to the contrary, each party will bear the cost of its own
                  activities which are undertaken exclusively for Regulatory
                  Approval in [*****]. Either party shall be free to use any
                  data and information generated by the other party and its
                  sublicensees, as permitted by law,

                   License and Development Agreement -  Page 8
<PAGE>

                  in connection with development activities in the Field for
                  Licensed Compounds [******] for the purpose of developing
                  Licensed Compounds in their respective territory.

         3.5.     INFORMATION TRANSFER. Vertex shall deliver to Taisho all
                  information (including raw data from clinical studies of
                  Licensed Compounds conducted by Vertex and its other licensees
                  outside the Territory) which is necessary or useful for
                  further development of the Licensed Compound, and for
                  manufacture, commercial exploitation and distribution of the
                  Drug Product in the Territory, to the extent that such
                  information is not subject to restrictions imposed by a Third
                  Party on disclosure to or use by the other party. Such
                  information shall include a summary of all material written
                  communications (copies of which Vertex will provide to Taisho
                  at Taisho's request and expense) between Vertex or (to the
                  extent available to Vertex) its other licensees and the U.S.
                  FDA concerning Licensed Compounds. This information shall also
                  include copies of all patents, patent applications,
                  copyrights, copyright registrations and applications therefor
                  and all other manifestations of the intellectual property
                  embodied in the Licensed Compounds, whether in human or
                  machine readable form.

         3.6.     BULK SUPPLY FOR DEVELOPMENT. Vertex will provide Taisho with
                  bulk Licensed Compound for development in the Territory,
                  [******************************]. For purposes hereof
                  [************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************].

         3.7.     REGULATORY APPROVALS. Taisho will be responsible for all
                  required Regulatory Approvals in the Territory, including all
                  interaction with Koseisho (Ministry of Health and Welfare) in
                  Japan. All filings with Koseisho will be made by Taisho and
                  approvals will be held in the name of Taisho. Taisho will keep
                  Vertex informed about the substance of all material written
                  communication between Taisho and Koseisho (copies of which
                  communications Taisho will provide to Vertex at Vertex's
                  request and expense) and may at Vertex's request attend
                  meetings between Taisho and Koseisho representatives. Taisho
                  shall have the right to cross-reference information and
                  regulatory filings arising out of development work which has
                  been conducted by Vertex and its Affiliates, licensees and
                  sublicensees outside the Territory, for the purpose of
                  regulatory filings in the Territory. Vertex and its licensees
                  shall have the reciprocal right to cross reference all
                  information and regulatory filings arising out of development
                  work conducted by Taisho and its Affiliates and sublicensees
                  hereunder. Taisho will supply Vertex at its request with data
                  based on all raw data from clinical

                   License and Development Agreement -  Page 9
<PAGE>

                  studies conducted by Taisho and any of its sublicensees with
                  respect to Licensed Compounds. In the event that Taisho is
                  required subject to any provision hereof to disclose or
                  provide Vertex with data or information generated by it during
                  the Development Program, concerning a Licensed Compound or a
                  Drug Product, Taisho shall provide a summary of that data and
                  information, in English, sufficient for Vertex to understand
                  the general content and significance of that data and
                  information, [***********************************************
                  *************************************************************
                  ********************************************].

         3.8.     DUE DILIGENCE. Promptly upon exercise of its option with
                  respect to a Compound, Taisho shall commence the Development
                  Program in the Territory with respect to that Licensed
                  Compound and shall use its reasonable best efforts to effect
                  introduction of the Drug Product into the commercial market in
                  the Territory as soon as practicable, consistent with the
                  requirements of the Development Program and sound and
                  reasonable business practices and judgment. After the date of
                  the first Regulatory Approval for the sale of the Drug
                  Product(s) in the Territory, Taisho shall use reasonable best
                  efforts to effect introduction of the Drug Product(s) into
                  commercial use in the other countries of the Territory, and
                  following initial product introduction in each country shall
                  keep the Drug Product(s) reasonably available to the public
                  therein. In the normal course of development, a certain
                  Licensed Compound may be dropped from development and replaced
                  within a reasonable time with another Licensed Compound, and
                  such occurrence in the Development Program shall not
                  constitute a failure of due diligence. After Regulatory
                  Approval thereof and until the expiration of this Agreement,
                  Taisho shall endeavor to keep Drug Products reasonably
                  available to the public throughout the commercial market in
                  the Territory.

                                   ARTICLE IV

                               MILESTONE PAYMENTS

         Taisho shall make the following milestone payments with respect to each
Licensed Compound developed hereunder. Milestone payments shall be payable
[******************************************************************************
*******************************************************************************
*************].If two (2) (or more) Licensed Compounds are being developed at
the same time, the milestones specified below will be applicable to each such
Licensed Compound; PROVIDED, that [********************************************
*******************]. On the date any one of the milestone payments set forth
below is earned with respect to a particular Licensed Compound, any of the other
lower numbered milestones which have not yet been earned with respect to that
Licensed Compound shall be deemed to have been achieved and therefore payable
with respect to that Licensed Compound.

                   License and Development Agreement -  Page 10
<PAGE>

[******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************]

                                    ARTICLE V

                            SUPPLY LICENSED COMPOUND

         5.1.     SUPPLY. Vertex shall manufacture or have manufactured and
                  supply Taisho, its Affiliates and its sublicensees with their
                  entire commercial requirements for bulk Licensed Compound in
                  the Territory. Taisho shall purchase all of the requirements
                  (including those of its Affiliates and sublicensees) of bulk
                  Licensed Compound from Vertex for manufacture of Drug Products
                  containing the Licensed Compounds for sale in the Territory.
                  If Vertex shall be in material default of its supply
                  obligations hereunder, it will immediately meet with Taisho at
                  Taisho's request, and the parties shall agree on an
                  alternative supply arrangement, which shall include
                  manufacture of bulk Licensed Compound by Taisho, and shall
                  consider whether that arrangement shall apply for the long
                  term or until such time as the causes for Vertex's default
                  have been cured.

         5.2.     SUPPLY PRICE. The supply price for a unit of bulk Licensed
                  Compound supplied by Vertex for the manufacture of a Drug
                  Product sold in the Territory shall be determined [*****
                  *************************************************************
                  ********].

[******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************

                   License and Development Agreement -  Page 11
<PAGE>

*******************************************************************************
*******************************************************************************
*****************************************************************]

         5.3.     FORECASTS AND ADJUSTMENTS.
                        [******************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *********]

         5.4.     SUPPLY AGREEMENT. All bulk Licensed Compound supplied by
                  Vertex to Taisho hereunder shall be provided under the terms
                  of a supply agreement containing terms and ** conditions, in
                  addition to those provided herein, which are usual and
                  customary in the trade, as shall be agreed in good faith
                  between the parties hereto.

         5.5.     PRICE REVISION. If Taisho produces and submits to Vertex
                  supportive materials that show, with reference to market
                  pricing and/or cost factors (as appropriate), that Taisho is
                  unable to achieve a reasonable margin on sales of a Drug
                  Product, then it will notify Vertex and the parties shall meet
                  to discuss the matter. If it ** appears, as a result of those
                  discussions, that the cost to Vertex of producing the Licensed
                  Compound being sold to Taisho is significantly low in relation
                  to the ** supply price to Taisho under the circumstances of
                  this Agreement, then Vertex will consider reducing the supply
                  price. Similarly, Taisho shall consider upward ** revisions of
                  the supply price in the event that Vertex produces and submits
                  to Taisho supportive materials that show, with reference to
                  market pricing and/or cost ** factors (as appropriate), that
                  Vertex is unable to obtain a reasonable margin on sales of
                  Licensed Compound to Taisho.

         5.6.     UNPATENTED PRODUCT. In the event that [**********************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  ***********] Vertex shall reduce the Applicable Percentage of
                  Net Sales, for Net Sales in that country, that is used to
                  compute the supply price under Section 5.2 above for the **
                  Licensed Compound which is incorporated in the Drug Product,
                  by [****************].

                   License and Development Agreement -  Page 12
<PAGE>

         5.7.     TAXES. The amounts payable under this Article V are net of any
                  applicable duties, government charges, or similar items, if
                  any, all of which shall be paid by ** Taisho.

         5.8.     CO-LABELING. All Drug Products sold in the Territory shall
                  bear reference to Taisho's and Vertex's logos and trademarks
                  with equal prominence or to the extent not ** prohibited by
                  local law. Vertex's name, where it shall appear, will be
                  written in the English language.

                                  ARTICLE VI **

                                  REPORTING **

         6.1.     DEVELOPMENT REPORTS. Taisho shall prepare and submit to
                  Vertex, on a quarterly basis, reports which set forth in
                  reasonable detail the progress of the Development ** Program
                  in the Territory and the results of work performed thereunder
                  during the preceding quarter. Vertex shall also report to
                  Taisho on a quarterly basis the ** results of any development
                  work which it may have undertaken with respect to Licensed
                  Compounds during the preceding quarter.

         6.2.     SALES REPORTS AND RECORDS. During the term of this Agreement
                  and after the First Commercial Sale of a Drug Product, Taisho
                  shall deliver to Vertex within forty five (45) days after the
                  end of each calendar quarter a written report showing actual
                  Net Sales of Drug Products by Taisho, its Affiliates and
                  sublicensees in each ** country in the Territory during such
                  calendar quarter, and any revision of the supply price for
                  bulk Licensed Compound to be recommended by Taisho, based on
                  the ** information in that report. All Net Sales shall be
                  divided in each such report into sales by Taisho and each
                  Affiliate and sublicensee, as well as on a **
                  country-by-country basis, shall be stated in U.S. dollars, and
                  shall state the rates of exchange used to convert the amounts
                  into United States dollars from the ** currency in which such
                  amounts are received by Taisho, using Taisho's then-current
                  standard exchange rate methodology applied in its external
                  reporting for the ** translation of foreign currency sales
                  into U.S. dollars. Taisho will keep complete, true and
                  accurate books of account and records for the purpose of
                  showing the ** derivation of Net Sales and all amounts payable
                  to Vertex under this Agreement. Such books and records will be
                  kept at Taisho's principal place of business for at ** least
                  three (3) years following the end of the calendar quarter to
                  which they pertain, and will be open at all reasonable times
                  and agreed by Taisho for inspection ** and copying by
                  representatives of Vertex for the purpose of verifying
                  Taisho's sales reports, or Taisho's compliance in other
                  respects with this Agreement. Such ** inspections shall be at
                  the expense of Vertex, unless a variation or error exceeding
                  [***********] or the equivalent, is discovered in the course
                  of any such ** inspection, whereupon the costs relating
                  thereto shall be for the account of Taisho. Taisho will
                  promptly pay to Vertex the full amount of any

                   License and Development Agreement -  Page 13
<PAGE>

                  underpayment, together with interest thereon at the rate of
                  [**************] assessed from the date payment was due.

         6.3.     PAYMENT DELAY. In case of a delay in any payments due from
                  Taisho to Vertex hereunder not occasioned by force majeure,
                  interest at the rate of [*******************], assessed
                  from the thirty-first day after the due date of the said
                  payment, shall be due by Taisho without any special notice.

                                 ARTICLE VII

                               CONFIDENTIALITY

         7.1.     UNDERTAKING. During the term of this Agreement, each party
                  shall keep confidential, and other than as provided herein
                  shall not use or disclose, directly or indirectly, any
                  trade secrets, confidential or proprietary information
                  (including information embodied in sample materials), or any
                  other knowledge, information, documents or materials,
                  owned, developed or possessed by the other party, whether in
                  tangible or intangible form, the confidentiality of which such
                  other party takes reasonable measures to protect, including
                  but not limited to Vertex Technology and Taisho Technology.
                  Each party shall take any and all lawful measures to prevent
                  the unauthorized use and disclosure of such information,
                  and to prevent unauthorized persons or entities from obtaining
                  or using such information. Each party further agrees to
                  refrain from directly or indirectly taking any action which
                  would constitute or facilitate the unauthorized use or
                  disclosure of such information. Each party may disclose such
                  information to its directors, officers, employees, consultants
                  and agents, (and in the case of Vertex, to its licensees in
                  the Field outside the Territory, and in case of Taisho, to
                  sublicensees under this Agreement, if any), and to
                  subcontractors in connection with the development or
                  manufacture of Licensed Compounds and Drug Products, to the
                  extent necessary to enable such parties to perform their
                  obligations hereunder or under the applicable sublicense or
                  subcontract, as the case may be; provided, that such
                  directors, officers, employees, consultants, agents,
                  licensees, sublicensees and subcontractors have entered
                  into appropriate confidentiality agreements for secrecy and
                  non-use of such information which by their terms shall be
                  enforceable by injunctive relief at the instance of the
                  disclosing party. Each party shall be liable for any
                  unauthorized use and disclosure of such information by its
                  directors, officers, consultants, employees and agents and
                  any such sublicensees and subcontractors. Taisho may also
                  provide a copy of this Agreement to the Bank of Japan, Japan's
                  Ministry of Finance, Ministry of Health and Welfare,
                  National Tax Office and other governmental agencies, all as
                  and only to the extent required under applicable Japanese laws
                  or government regulations.

         7.2.     EXCEPTIONS. Notwithstanding the foregoing, the provisions of
                  section 7.1 hereof shall not apply to knowledge, information,
                  documents or materials which the

                   License and Development Agreement -  Page 14
<PAGE>

                  receiving party can conclusively establish: (i) have entered
                  the public domain without such party's breach of any
                  obligation owed to the disclosing party; (ii) have become
                  known to the receiving party prior to the disclosing party's
                  disclosure of such information to such receiving party; (iii)
                  are permitted to be disclosed by the prior written consent
                  of the disclosing party; (iv) have become known to the
                  receiving party from a source other than the disclosing party
                  other than by breach of an obligation of confidentiality
                  owed to the disclosing party; (v) are disclosed by the
                  disclosing party to a Third Party without restrictions on its
                  disclosure; (vi) are independently developed by the receiving
                  party without breach of this Agreement; or (vii) are required
                  to be disclosed by the receiving party to comply with
                  applicable laws, to defend or prosecute litigation or to
                  comply with governmental regulations, provided that the
                  receiving party provides prior written notice of such
                  disclosure to the other party and takes reasonable and lawful
                  actions to avoid or minimize the degree of such disclosure.

         7.3.     PUBLICITY. The timing and content of any press releases or
                  other public communications relating to the Agreement and the
                  transactions contemplated herein will, ** except as otherwise
                  required by law, be determined jointly by Vertex and Taisho.

         7.4.     SURVIVAL. The provisions of this Article VII shall survive the
                  termination of this Agreement.

                                 ARTICLE VIII

                                   PATENTS

         8.1.     PREPARATION. Vertex will be responsible for the preparation,
                  filing, prosecution and maintenance of any and all Patents in
                  the Territory included in Vertex Patents,[*******************
                  *******************************************************].
                  Taisho will be responsible for the preparation, filing,
                  prosecution and maintenance of any and all Patents in the
                  Territory included in the Taisho Patents
                  [************************************************************
                  *************************************************************
                  *************************************************************
                  **********] including without limitation any such Patents
                  covering formulations [**************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  **************************] Vertex and Taisho shall each
                  furnish to the other party copies of significant documents
                  relevant to any such preparation, filing, prosecution or
                  maintenance. Vertex and Taisho shall cooperate fully in the
                  preparation, filing, prosecution and maintenance of all Vertex
                  Patents and Taisho

                   License and Development Agreement -  Page 15
<PAGE>

                  Patents, executing all papers and instruments so as to
                  enable the responsible party to apply for, to prosecute and to
                  maintain patent applications and patents in its name in any
                  country in the Territory. The parties acknowledge the
                  importance of maintaining the confidentiality of any
                  inventions or other information relating to potential patent
                  claims prior to the filing of patent applications with
                  respect hereto. Each party shall provide to the other prompt
                  notice as to all matters which may affect the preparation,
                  filing, prosecution or maintenance of any such patent
                  applications or patents.

         8.2.     LICENSE TO FORMULATION AND USE INVENTIONS. Taisho shall use
                  its reasonable best efforts to keep Vertex promptly (but not
                  before filing of any planned patent application) and fully
                  informed, of any Formulation and Use Inventions. Upon Vertex's
                  written request which shall be required to be made within
                  three (3) months from Taisho's notice to Vertex, Vertex shall
                  have, and Taisho hereby grants to Vertex, a royalty-free,
                  exclusive license (with the right to sublicense) under
                  Patents covering the Formulation and Use Inventions to
                  make, have made, use, import for sale, sell and have sold,
                  Compounds and pharmaceutical products incorporating Compounds
                  worldwide outside the Territory. The foregoing license will
                  continue following expiration or termination (excluding the
                  case of Section 10.2) of this Agreement, and will extend
                  thereafter to the Territory. Provided, however, Vertex may
                  license or otherwise transfer its rights to apply the
                  Formulation and Use Inventions to the development and sale
                  in the Field of a Compound in the Territory, only after any
                  and all Taisho's rights to that Compound hereunder have
                  terminated.

         8.3.     COST REIMBURSEMENT. Taisho shall reimburse Vertex for the
                  following patent direct costs with respect to Vertex Patents
                  [************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *******] for the preparation, filing, prosecution and
                  maintenance of Vertex Patents in the Territory. "General
                  patent preparation and maintenance direct costs" shall include
                  the costs of preparation, filing and prosecution of any patent
                  application from which a patent application filed in any
                  country of the Territory claims priority, and any patent
                  application filed under the Patent Cooperation Treaty (PCT).
                  Vertex shall notify Taisho in writing from time to time of its
                  plans with respect to the preparation, filing, prosecution and
                  maintenance of Vertex Patents in each country in the
                  Territory, together with its estimate of the costs of such
                  preparation, filing, prosecution and maintenance and an
                  estimate of Vertex's general patent preparation and
                  maintenance costs. Taisho shall reimburse Vertex for
                  [************************************************************
                  *************************************************************
                  **********************************************************].
                  In any event, the provisions of Section 8.3 will apply to any
                  patent which is the object of the

                   License and Development Agreement -  Page 16
<PAGE>

                  foregoing notice from Taisho and which Vertex continues to
                  prosecute or maintain.

         8.4.     FAILURE TO REIMBURSE. If Taisho shall fail, without good
                  reason hereunder, to reimburse Vertex as required under
                  Section 8.3 above with respect to a patent application or
                  patent included within the Vertex Patents within sixty (60)
                  days after receipt of a written request for payment from
                  Vertex, Vertex may terminate Taisho's rights with respect to
                  that patent or patent application upon thirty (30) days
                  written notice thereof to Taisho, unless Taisho during such
                  thirty (30) day period shall have submitted payment pursuant
                  to the aforementioned request for payment.

         8.5.     COST REIMBURSEMENT FOR THE PATENTS COVERING THE FORMULATION
                  AND USE INVENTIONS. In the event that Vertex is granted a
                  license to the Patents covering the Formulation and Use
                  Inventions under Section 8.2, Vertex shall reimburse Taisho
                  for the following patent direct costs with respect to such
                  licensed Formulation and Use Inventions: (a) two-thirds (2/3)
                  of all of Taisho's "general patent preparation and maintenance
                  direct costs;" and (b) all of the reasonable expenses (other
                  than "general patent prosecution and maintenance" costs) which
                  Taisho has incurred, or may in the future incur, for the
                  preparation, filing, prosecution and maintenance of the
                  Patents covering the Formulation and Use Inventions outside
                  the Territory. Taisho shall notify Vertex in writing from time
                  to time of its plans with respect to the preparation, filing,
                  prosecution and maintenance of the Patents covering the
                  Formulation and Use Inventions in each country outside the
                  Territory, together with its estimate of the costs of such
                  preparation, filing, prosecution and maintenance and an
                  estimate of general patent preparation and maintenance costs
                  of the Patents covering the Formulation and Use Inventions.
                  Section 8.4 shall be applied mutatis mutandis to this Section
                  8.5

                                   ARTICLE IX

                                  INFRINGEMENT

         Either party shall notify the other party promptly of any possible
infringements, imitations or unauthorized possession, knowledge or use of the
intellectual property embodied in any of the Licensed Patents and Vertex
Know-How or Taisho Know-How related to the manufacture or use of Licensed
Compounds and Drug Products by Third Parties in any country in the Territory, of
which it becomes aware. Either party shall promptly furnish the other party with
full details of such infringements, imitations or unauthorized possession,
knowledge or use, and shall assist in preventing any recurrence thereof.
[******************************************************************************
*******************************************************************************
*******************************************************************************
*********] Such suit may not be settled by Taisho without Vertex's consent,
which shall not be unreasonably withheld. Damages recovered in any actions
referenced hereunder shall be

                   License and Development Agreement -  Page 17
<PAGE>

divided [*************] to Taisho and [**************] to Vertex after
reimbursement to each party of their respective expenses in prosecuting such
actions as provided hereunder.

                                    ARTICLE X

                              TERM AND TERMINATION

         10.1.    TERM. The term of this Agreement with respect to any Licensed
                  Compound or Drug Product incorporating that Licensed Compound
                  shall extend in each country of the Territory until the later
                  of the last to expire in that country of any substance Patent
                  or use Patent which are Licensed Patents covering the Licensed
                  Compound or Drug Product, or [*****] from the date of First
                  Commercial Sale of the Drug Product in that country .

         10.2.    TERMINATION OF RESEARCH PROGRAM BY TAISHO FOR CAUSE. Upon
                  written notice to Vertex, Taisho may at its sole option
                  terminate this Agreement with respect to a Licensed Compound
                  upon the occurrence of any of the following events:

                  (a)      Vertex shall materially breach this Agreement, which
shall include a failure to use its reasonable best efforts to pursue the
Development Program diligently (provided, however, that this provision shall not
be construed as a guarantee by Vertex that the Development Program will be
successfully completed or any Licensed Compounds successfully developed), and
such material failure to perform shall not have been remedied or steps initiated
to remedy the same to Taisho's reasonable satisfaction, within [************]
after Taisho sends written notice of failure to perform to Vertex; or

                  (b)      Vertex shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by strike, labor dispute or any other events over which it has no control
(unless termination of this Agreement is permitted under Section 12.6 hereof);
or

                  (c)      A receiver for Vertex shall be appointed or applied
for, or a general assignment shall be made for the benefit of its creditors or
any proceeding involving Vertex shall be voluntarily commenced by it under any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute of the United States or any state thereof or such
proceedings shall be involuntarily instituted against it, and Vertex by any
action shall indicate its approval of or consent to, or acquiescence therein, or
the same shall remain undismissed for [***********].

                  In the event of any valid termination under this Section 10.2,
Taisho shall not be required to make any payments under Article IV hereof which
are not due and payable prior to receipt by Vertex of the notice of failure to
perform referenced under Section 10.2(a), receipt by Vertex of the notice of
termination pursuant to Section 10.2(b), or the occurrence of the event
referenced in Section 10.2(c), as the case may be. Notwithstanding the
foregoing, any License

                   License and Development Agreement-Page 18

<PAGE>

Agreement then in effect covering another Licensed
Compound shall continue in accordance with its terms.

         10.3.    TERMINATION BY VERTEX FOR CAUSE. In addition to rights of
                  termination which may be granted to Vertex under other
                  provisions of this Agreement with respect to a Licensed
                  Compound, upon written notice to Taisho, Vertex may at its
                  sole option terminate this Agreement upon the occurrence of
                  any of the following events:

                  (a)      Taisho shall materially breach this Agreement, and
such material failure to perform shall not have been remedied or steps initiated
to remedy the same to Vertex's reasonable satisfaction, [*************] after
Vertex sends written notice of failure to perform to Taisho; or

                  (b)      Taisho shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by strike, labor dispute or any other events over which it has no control
(unless termination of this Agreement is permitted under Section 12.6 hereof);
or

                  (c)      A receiver for Taisho shall be appointed or applied
for, or a general assignment shall be made for the benefit of its creditors or
any proceeding involving Taisho shall be voluntarily commenced by it under any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law of Japan or such proceedings shall be involuntarily instituted
against it, and Taisho by any action shall indicate its approval of or consent
to, or acquiescence therein, or the same shall remain undismissed for
[**********].

         10.4.    TERMINATION. If the parties shall determine in good faith (as
                  evidenced by a writing signed by each party), that there is no
                  further scientific basis to pursue research and development of
                  a Licensed Compound in the Field, and if either party shall
                  thereafter propose, in writing, to the JDC and the other party
                  that the parties consider redirection of the Development
                  Program for such Licensed Compound, and if within
                  [***************] after such proposal is received by the other
                  party and the JDC, the Development Program has not been
                  redirected, then either party may terminate the License
                  Agreement regarding such Licensed Compound on [***********]
                  written notice to the other party. On or after the effective
                  date of any such termination no further payments shall become
                  due and payable hereunder by one party to the other, except
                  pursuant to obligations which have accrued hereunder prior to
                  the effective date of such termination.

         10.5.    EFFECT OF TERMINATION AND EXPIRATION. Termination of this
                  Agreement for any reason, or expiration of this Agreement,
                  will not affect: (i) obligations, including the payment of any
                  milestones or royalties, which have accrued as of the date of
                  termination or expiration, and (ii) rights and obligations
                  under the following provisions of this Agreement, which shall
                  survive termination or expiration of this Agreement: the last
                  sentence of Section 2.3, and Articles VII, XI and the last

                   License and Development Agreement-Page 19

<PAGE>

                  sentence of Section 12.4. Following termination of this
                  Agreement under Section 10.1 hereof with respect to a
                  particular country, Taisho shall have a fully paid license
                  under the Vertex Technology to make, have made, use, sell,
                  have sold, and import for sale the Licensed Compound and Drug
                  Product in that country in the Territory.

                                   ARTICLE XI

                               DISPUTE RESOLUTION

         11.1.    GOVERNING LAW, AND JURISDICTION. This Agreement shall be
                  governed and construed in accordance with the
                  [**********************************]. Both parties agree that
                  any legal proceedings between the parties relating to this
                  Agreement other than a proceeding to which Section 9.2 is
                  applicable, shall be brought in the state or prefecture of the
                  principal office of the defendant party; provided that a
                  proceeding to enforce an arbitration award may be brought in
                  the state or prefecture of the plaintiff's principal office,
                  and each party agrees to submit to personal jurisdiction and
                  to accept venue in the courts of such state or prefecture
                  solely for the purpose of enforcement of any such award.

         11.2.    ARBITRATION. In the event of any controversy or claim arising
                  out of or relating to any provision of this Agreement or the
                  breach thereof, the parties shall try to settle their
                  differences amicably between themselves. Any such controversy
                  or claim which the parties are unable to resolve shall, upon
                  the written request for arbitration of one party delivered to
                  the Secretariat of the International Court of Arbitration (the
                  "Court"), be submitted to and be settled by arbitration
                  [************************************************************
                  ******************************************] in accordance with
                  the Rules of Arbitration of the International Chamber of
                  Commerce (the "Rules") then in effect (except as hereinafter
                  stated), and enforcement of the award rendered by the
                  arbitrators may be entered in any court having jurisdiction
                  thereof and shall be final and conclusive upon both parties
                  hereto. Notwithstanding anything to the contrary which may be
                  contained in the rules of the Court, the parties further agree
                  as follows:

         (i)

                  [*************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************

                   License and Development Agreement-Page 20

<PAGE>

                  *************************************************************
                  *************************************************************
                  *************************************************************
                  *************************************************************]

         (ii)     The arbitrators will consider the nature of the dispute, the
                  availability of information upon which resolution of the
                  dispute may be fairly based, and in view of those
                  considerations and such other facts and circumstances as they
                  may deem appropriate, shall determine the application of
                  discovery and, if decided it is applied, shall determine the
                  nature, scope and timing of any discovery which will be
                  permitted to the parties to any proceeding hereunder, and that
                  determination of the arbitrators shall be binding on such
                  parties. The costs of arbitration to each party will be
                  determined in accordance with Articles 30 and 31 of the Rules.

         (iii)    The arbitrators shall state the reasons upon which any award
                  is based. The arbitrators shall not be authorized to award
                  punitive damages to either party.

         (iv)     Upon receipt of the arbitrator's statement, said written
                  opinion, either party will have the right, within
                  [***********] thereof, to apply to the Secretariat for a
                  correction and/or an interpretation of the award, and the
                  arbitrators thereupon will reconsider the issues raised by
                  said application and either confirm or alter their decision,
                  which will then be final and conclusive upon both parties
                  hereto.

                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS

         12.1.    NO WARRANTY. Vertex makes no warranty of any kind whatsoever,
                  either express or implied, to Taisho, or any customer of
                  Taisho, as to the ability of Taisho to understand and utilize
                  the Vertex Technology. Taisho makes no warranty of any kind
                  whatsoever, either express or implied, to Vertex, or to any
                  customer of Vertex, as to the ability of Vertex to understand
                  and utilize the Taisho Technology.           [****************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  **************************************************************
                  ****]. Should a party becomes aware of any unexpected serious
                  adverse reactions to any Licensed Compounds or Drug Products
                  administered to humans or

                   License and Development Agreement-Page 21

<PAGE>

                  animals, the party shall promptly notify the other and/or make
                  a report to U.S. FDA or MHW as required by applicable
                  governmental regulations.

         12.2.    THIRD PARTY ACTIONS. (a) To Vertex's knowledge, [*************
                  ************************************************************].
                  Nevertheless, each party will promptly notify the other in the
                  event any relevant Third Party patents come to its notice.
                  Neither party gives a warranty to the other regarding the
                  infringement of Third Party rights by the development,
                  manufacture, use or sale of the Licensed Compounds or the
                  practice of the Vertex Technology or the Taisho Technology,
                  and gives no indemnity against costs, damages, expenses or
                  other losses arising out of proceedings brought against the
                  other party or any other Person by any Third Party.

                  (b) In the event that the development of a Licensed Compound
or the sale of a Drug Product in any country necessarily involves working within
the scope of a Third Party's patent, which would otherwise be infringed by the
practice of a Vertex Patent in connection with such development or sale, [******
********************************************************************************
********************************************************************************
********************************************************************************
********************************].
If the terms of a required license under a Third Party patent do not meet the
foregoing requirements and Vertex therefore elects not to assume its share of
any financial obligation, [*****************************************************
************************************]. If the required license is either
unavailable or its terms are unacceptable both to Vertex and to Taisho, then
Taisho may elect in its sole discretion to discontinue sales of the Drug Product
in such country or at its sole expense to undertake the defense of a patent
infringement action or the prosecution of a declaratory judgment action with
respect to the Third Party patents.

                  (c)  In the event Taisho is sued for infringement of any
rights of any Third Party in the course of its development, manufacture,
marketing and sale of Licensed Compounds or Drug Products or its use of Vertex
Technology in connection therewith, Vertex shall extend to Taisho good faith
assistance and support in defending such action, and may participate in the
conduct of, and in discussions regarding strategic and business responses to,
the suit. Damages and out-of-pocket legal fees and expenses (including legal
fees and expenses of Taisho and Vertex) arising from such a legal action shall
be borne
[******************************************************************************
*******************************************************************************
****************************]

         12.3.    OFFICIAL LANGUAGE. English shall be the official language of
                  this Agreement and the License Agreement, and all
                  communications between the parties hereto shall be conducted
                  in that language

                   License and Development Agreement-Page 22

<PAGE>

         12.4.    TAX.  [*******************************************************
                  **************************************************************
                  **************************************************************
                  ****************************]. At Taisho's request Vertex will
                  provide Taisho with such documentation as may be reasonably
                  available to it which support characterization of the payments
                  made by Taisho

         12.5.    WAIVER. Any waiver by either party of the breach of any term
                  or condition of this Agreement will not be considered as a
                  waiver of any subsequent breach of the same or any other term
                  or condition hereof.

         12.6.    FORCE MAJEURE. Neither party will be in breach hereof by
                  reason of its delay in the performance of or failure to
                  perform any of its obligations hereunder, if that delay or
                  failure is caused by strikes, acts of God or the public enemy,
                  riots, incendiaries, interference by civil or military
                  authorities, compliance with governmental priorities for
                  materials, or any fault beyond its control or without its
                  fault or negligence. In the event that any delay or failure to
                  perform by Vertex by reason of force majeure shall extend
                  beyond six (6) months, Taisho may terminate this Agreement
                  upon notice in writing to Vertex; provided that Taisho's right
                  to terminate hereunder shall end, if not exercised, at such
                  time as Vertex shall have eliminated any material delay or
                  failure to perform giving rise to the Taisho's termination
                  right under this Section 12.5, if Taisho does not exercise its
                  right to terminate this Agreement under this Section 10.3
                  within fifteen (15) days after the conclusion of the twelve
                  (12) month period.

         12.7.    SEVERABILITY. Should one or more provision of this Agreement
                  be or become invalid, then the parties hereto shall attempt in
                  good faith to agree upon valid provisions in substitution for
                  the invalid provisions, which in their economic effect come so
                  close to the invalid provisions that it can be reasonably
                  assumed that the parties would have accepted this Agreement
                  with those new provisions. If the parties are unable to agree
                  on such valid provisions, the invalidity of such one or more
                  provisions of this Agreement shall nevertheless not affect the
                  validity of the Agreement as a whole, unless the invalid
                  provisions are of such essential importance for this Agreement
                  that it may be reasonably presumed that the parties would not
                  have entered into this Agreement without the invalid
                  provisions.

         12.8.    GOVERNMENT ACTS. In the event that any act, regulation,
                  directive, or law of a government within the Territory,
                  including its departments, agencies or courts, should make
                  impossible or prohibit, restrain, modify or limit any material
                  act or obligation of Taisho or Vertex under this Agreement,
                  the party, if any, not so affected, shall have the right, at
                  its option, to suspend or terminate this Agreement as to such
                  country, if good faith negotiations between the parties to
                  make such modifications herein as may be necessary to fairly
                  address the impact thereof, after a reasonable period of time
                  are not successful in producing mutually acceptable
                  modifications to this Agreement.

                   License and Development Agreement-Page 23

<PAGE>

         12.9.    GOVERNMENT APPROVALS. Taisho or its sublicensees will, if
                  necessary, obtain any government approval required in the
                  Territory to enable this Agreement to become effective, or to
                  enable any payment hereunder to be made, or any other
                  obligation hereunder to be observed or performed. Taisho will
                  keep Vertex informed of progress in obtaining any such
                  government approval, and Vertex will cooperate with Taisho in
                  any such efforts.

         12.10.   EXPORT CONTROLS. This Agreement is made subject to any
                  restrictions concerning the export of Licensed Compounds or
                  Vertex Technology from the United States which may be imposed
                  upon or related to either party to this Agreement from time to
                  time by the Government of the United States. Furthermore,
                  Taisho will not export, directly or indirectly, any Vertex
                  Technology or any Licensed Compounds utilizing such Technology
                  to any countries for which the United States Government or any
                  agency thereof at the time of export requires an export
                  license or other governmental approval, without first
                  obtaining the written consent to do so (of which Taisho will
                  promptly inform Vertex) from the Department of Commerce or
                  other agency of the United States Government when required by
                  applicable statute or regulation.

         12.11.   ASSIGNMENT. This Agreement may not be assigned or otherwise
                  transferred by either party without the prior written consent
                  of the other party; PROVIDED, HOWEVER, that either party may
                  assign this Agreement, WITHOUT the consent of the other party,
                  (i) to any of its Affiliates, if the assigning party
                  guarantees to full performance of its Affiliates' obligations
                  hereunder, or (ii) in connection with the transfer or sale of
                  all or substantially all of its assets or business or in the
                  event of its merger or consolidation with another company. Any
                  purported assignment in contravention of this section shall,
                  at the option of the nonassigning party, be null and void and
                  of no effect. No assignment shall release either party from
                  responsibility for the performance of any accrued obligations
                  of such party hereunder.

         12.12.   COUNTERPARTS. This Agreement may be executed in duplicate,
                  each of which shall be deemed to be original and both of which
                  shall constitute one and the same Agreement.

         12.13.   NO AGENCY. Nothing in this Agreement shall be deemed to create
                  an agency, joint venture, amalgamation, partnership or similar
                  relationship between Vertex and Taisho Notwithstanding any of
                  the provisions of this Agreement, neither party to this
                  Agreement shall at any time enter into, incur, or hold itself
                  out to Third Parties as having authority to enter into or
                  incur, on behalf of the other party, any commitment, expense,
                  or liability whatsoever, and all contracts, expenses and
                  liabilities in connection with or relating to the obligations
                  of each party under this Agreement shall be made, paid, and
                  undertaken exclusively by such party on its own behalf and not
                  as an agent or representative of the other.

                   License and Development Agreement-Page 24

<PAGE>

         12.14.   NOTICE. All communications between the parties with respect to
                  any of the provisions of this Agreement will be sent to the
                  addresses set out below or to other addresses as may be
                  designated by one party to the other by notice pursuant
                  hereto, by prepaid certified air mail (which shall be deemed
                  received by the other party on the seventh business day
                  following deposit in the mails), or by facsimile transmission
                  or other electronic means of communication (which shall be
                  deemed received when transmitted), with confirmation by first
                  class letter, postage pre-paid, given by the close of business
                  on or before the next following business day:

                  if to Taisho, at:     Taisho Pharmaceutical Co., Ltd.
                                        24-1, Takata 3-Chome
                                        Toshimaku, Tokyo, 170-8633, Japan
                                        Attention: General Manager, Licensing
                                          Division

                  with a copy to:

                                        General Manager, Legal Division

                  if to Vertex, at:     130 Waverly Street
                                        Cambridge, MA 02139-4242
                                        Attention:  Richard H. Aldrich
                                        Senior Vice President and Chief Business
                                          Officer
                                        cc:  Corporate Counsel

                  with a copy to:

                                        Kirkpatrick & Lockhart LLP
                                        75 State Street
                                        Boston, MA  02109
                                        Attention:  Kenneth S. Boger, Esquire
                                        Fax: 617-951-9151

         12.15.   HEADINGS. The paragraph headings are for convenience only and
                  will not be deemed to affect in any way the language of the
                  provisions to which they refer.

         12.16.   AUTHORITY. The undersigned represent that they are authorized
                  to sign this Agreement on behalf of the parties hereto. The
                  parties each represent that no provision of this Agreement
                  will violate any other agreement that a party may have with
                  any Third Party . Each party has relied on that representation
                  in entering into this Agreement.

                   License and Development Agreement-Page 25

<PAGE>

         12.17.   ENTIRE AGREEMENT. This Agreement contains the entire
                  understanding of the parties relating to the matters referred
                  to herein, and may only be amended by a written document, duly
                  executed on behalf of the respective parties.

                                    VERTEX PHARMACEUTICALS INCORPORATED

                                    By:_________________________________________

                                    Title:______________________________________

                                    Date of Signature:__________________________

                                    TAISHO PHARMACEUTICAL CO., LTD.

                                    By:_________________________________________

                                    Title:______________________________________

                                    Date of Signature:__________________________

                   License and Development Agreement-Page 26

<PAGE>

                                  SCHEDULE 1.9

                               LICENSED COMPOUNDS

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