Document:

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                                  EXHIBIT 4.2
                     RESALE REGISTRATRION RIGHTS AGREEMENT

                                     among

                      VERTEX PHARMACEUTICALS INCORPORATED,

                                      and

                              MERRILL LYNCH & CO.
               MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
                    CREDIT SUISSE FIRST BOSTON CORPORATION,
                           ROBERTSON STEPHENS, INC.,
                             CHASE SECURITIES INC.,
                          J.P. MORGAN SECURITIES INC.
                              as Initial Purchasers

                            Dated September 19, 2000
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         Resale Registration Rights Agreement (this "Agreement"), dated
September 19, 2000, among Vertex Pharmaceuticals Incorporated, a Massachusetts
corporation (together with any successor entity, the "Issuer"), and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), Credit Suisse First Boston Corporation, Robertson Stephens, Inc., Chase
Securities Inc. and J.P. Morgan Securities Inc., as Initial Purchasers
(collectively, the "Initial Purchasers").

         Pursuant to the Purchase Agreement, dated September 13, 2000, between
the Issuer and the Initial Purchasers (the "Purchase Agreement"), the Initial
Purchasers have agreed to purchase from the Issuer $345,000,000 in aggregate
principal amount of 5% Convertible Subordinated Notes due September 2007 (the
"Notes"). The Notes will be convertible into fully paid, nonassessable common
stock, par value $.01 per share, of the Issuer (the "Common Stock") on the
terms, and subject to the conditions, set forth in the Indenture (as defined
herein). To induce the Initial Purchasers to purchase the Notes, the Issuer has
agreed to provide the registration rights set forth in this Agreement pursuant
to the Purchase Agreement.

         The parties hereby agree as follows:

          1. DEFINITIONS. As used in this Agreement, the following capitalized
terms shall have the following meanings:

         ADVICE:  As defined in Section 4(c)(ii) hereof.

          BUSINESS DAY: A day other than a Saturday or Sunday or any federal
holiday in the United States.

         COMMISSION:  Securities and Exchange Commission.

         COMMON STOCK:  As defined in the preamble hereto.

          DAMAGES PAYMENT DATE: Each Interest Payment Date. For purposes of this
Agreement, if no Notes are outstanding, "DAMAGES PAYMENT DATE" shall mean each
March 19 and September 19.

         EFFECTIVENESS PERIOD:  As defined in Section 2(a)(iii) hereof.

         EFFECTIVENESS TARGET DATE:  As defined in Section 2(a)(ii) hereof.

         EXCHANGE ACT:  Securities Exchange Act of 1934, as amended.

         HOLDER: A Person who owns, beneficially or otherwise, Transfer
Restricted Securities.

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         INDENTURE: The Indenture, dated as of September 19, 2000, between the
Issuer and State Street Bank and Trust Company, as trustee, pursuant to which
the Notes are to be issued, as such Indenture is amended, modified or
supplemented from time to time in accordance with the terms thereof.

         INITIAL PURCHASERS:  As defined in the preamble hereto.

         INTEREST PAYMENT DATE:  As defined in the Indenture.

         ISSUER:  As defined in the preamble hereto.

         LIQUIDATED DAMAGES:  As defined in Section 3(a) hereof.

         MAJORITY OF HOLDERS: Holders holding over 50% of the aggregate
principal amount of Notes outstanding; PROVIDED that, for purpose of this
definition, a holder of shares of Common Stock which constitute Transfer
Restricted Securities and were issued upon conversion of the Notes shall be
deemed to hold an aggregate principal amount of Notes (in addition to the
aggregate principal amount of Notes held by such Holder) equal to the aggregate
principal amount of Notes converted by such Holder into such shares of Common
Stock.

         NASD:  National Association of Securities Dealers, Inc.

         NOTES:  As defined in the preamble hereto.

          PERSON: An individual, partnership, corporation, unincorporated
organization, trust, joint venture or a government or agency or political
subdivision thereof.

         PROSPECTUS: The prospectus included in a Shelf Registration Statement,
as amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.

         QUESTIONNAIRE DEADLINE:  As defined in Section 2(b) hereof.

         RECORD HOLDER: With respect to any Damages Payment Date, each Person
who is a Holder on the record date with respect to the Interest Payment Date on
which such Damages Payment Date shall occur. In the case of a Holder of shares
of Common Stock issued upon conversion of the Notes, "RECORD HOLDER" shall mean
each Person who is a Holder of shares of Common Stock which constitute Transfer
Restricted Securities on the March 1 or September 1 immediately preceding the
Damages Payment Date.

         REGISTRATION DEFAULT:  As defined in Section 3(a) hereof.

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         SALE NOTICE:  As defined in Section 4(e) hereof.

         SECURITIES ACT:  Securities Act of 1933, as amended.

         SHELF FILING DEADLINE:  As defined in Section 2(a)(i) hereof.

         SHELF REGISTRATION STATEMENT:  As defined in Section 2(a)(i) hereof.

         SUSPENSION PERIOD:  As defined in Section 4(b)(i) hereof.

          TIA: Trust Indenture Act of 1939, as in effect on the date the
Indenture is qualified under the TIA.

          TRANSFER RESTRICTED SECURITIES: Each Note and each share of Common
Stock issued upon conversion of Notes until the earlier of:

                  (i) the date on which such Note or such share of Common Stock
         issued upon conversion has been effectively registered under the
         Securities Act and disposed of in accordance with the Shelf
         Registration Statement;

                  (ii) the date on which such Note or such share of Common Stock
         issued upon conversion is transferred in compliance with Rule 144 under
         the Securities Act or may be sold or transferred pursuant to Rule
         144(k) under the Securities Act (or any other similar provision then in
         force); or

                  (iii) the date on which such Note or such share of Common
         Stock issued upon conversion ceases to be outstanding (whether as a
         result of redemption, repurchase and cancellation, conversion or
         otherwise).

          UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Issuer are sold to an underwriter for reoffering to the
public.

          2. SHELF REGISTRATION.

         (a)  The Issuer shall:

                  (i) not later than 90 days after the date hereof (the "Shelf
         Filing Deadline"), cause to be filed a registration statement pursuant
         to Rule 415 under the Securities Act (the "Shelf Registration
         Statement"), which Shelf Registration Statement shall provide for
         resales of all Transfer Restricted Securities held by Holders that have
         provided the information required pursuant to the terms of Section 2(b)
         hereof;

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                  (ii) use its best efforts to cause the Shelf Registration
         Statement to be declared effective by the Commission as promptly as
         practicable, but in no event later than 150 days after the date hereof
         (the "Effectiveness Target Date"); and

                  (iii) use its best efforts to keep the Shelf Registration
         Statement continuously effective, supplemented and amended as required
         by the provisions of Section 4(b) hereof to the extent necessary to
         ensure that (A) it is available for resales by the Holders of Transfer
         Restricted Securities entitled to the benefit of this Agreement and (B)
         conforms with the requirements of this Agreement and the Securities Act
         and the rules and regulations of the Commission promulgated thereunder
         as announced from time to time for a period (the "Effectiveness
         Period") of:

                           (1) two years following the last date of original
                  issuance of Notes; or

                           (2) such shorter period that will terminate when (X)
                  all of the Holders of Transfer Restricted Securities are able
                  to sell all Transfer Restricted Securities immediately without
                  restriction pursuant to Rule 144(k) under the Securities Act
                  or any successor rule thereto, (Y) when all Transfer
                  Restricted Securities have ceased to be outstanding (whether
                  as a result of redemption, repurchase and cancellation,
                  conversion or otherwise) or (Z) all Transfer Restricted
                  Securities registered under the Shelf Registration Statement
                  have been sold.

         (b) No Holder may include any of its Transfer Restricted Securities in
the Shelf Registration Statement pursuant to this Agreement unless such Holder
furnishes to the Issuer in writing, prior to or on the 20th Business Day after
receipt of a request therefor (the "Questionnaire Deadline"), such information
as the Issuer may reasonably request for use in connection with the Shelf
Registration Statement or the Prospectus or preliminary Prospectus included
therein and in any application to be filed with or under state securities laws.
In connection with all such requests for information from Holders, the Issuer
shall notify such Holders of the requirements set forth in the preceding
sentence. No Holder shall be entitled to Liquidated Damages pursuant to Section
3 hereof unless such Holder shall have provided all such reasonably requested
information prior to or on the Questionnaire Deadline.

          3. LIQUIDATED DAMAGES.

          (a) If:

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                  (i) the Shelf Registration Statement is not filed with the
         Commission prior to or on the Shelf Filing Deadline;

                  (ii) the Shelf Registration Statement has not been declared
         effective by the Commission prior to or on the Effectiveness Target
         Date;

                  (iii) subject to the provisions of Section 4(b)(i) hereof, the
         Shelf Registration Statement is filed and declared effective but,
         during the Effectiveness Period, shall thereafter cease to be effective
         or fail to be usable for its intended purpose without being succeeded
         within five Business Days by a post-effective amendment to the Shelf
         Registration Statement or a report filed with the Commission pursuant
         to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act that cures
         such failure and, in the case of a post-effective amendment, is itself
         immediately declared effective; or

                  (iv) prior to or on the 45th or 60th day, as the case may be,
         of any Suspension Period, such suspension has not been terminated,

                  (each such event referred to in foregoing clauses (i) through
                  (iv), a "Registration Default"), the Issuer hereby agrees to
                  pay liquidated damages ("Liquidated Damages") with respect to
                  the Transfer Restricted Securities from and including the day
                  following the Registration Default to but excluding the day on
                  which the Registration Default has been cured:

                           (A) in respect of the Notes, to each Holder of Notes,
                  (x) with respect to the first 90-day period during which a
                  Registration Default shall have occurred and be continuing, in
                  an amount per year equal to an additional 0.25% of the
                  principal amount of the Notes and (y) with respect to the
                  period commencing on the 91st day following the day the
                  Registration Default shall have occurred and be continuing, in
                  an amount per year equal to an additional 0.50% of the
                  principal amount of the Notes; PROVIDED that in no event shall
                  Liquidated Damages accrue at a rate per year exceeding 0.50%
                  of the principal amount of the Notes; and

                           (B) in respect of any shares of Common Stock, to each
                  Holder of shares of Common Stock issued upon conversion of
                  Notes, (x) with respect to the first 90-day period in which a
                  Registration Default shall have occurred and be continuing, in
                  an amount per year equal to 0.25% of the principal amount of
                  the converted Notes and (y) with respect to the period
                  commencing the 91st day following the day the Registration
                  Default shall have occurred and be continuing, in an amount
                  per year equal to 0.50% of the principal amount of the
                  converted Notes; PROVIDED

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                  that in no event shall Liquidated Damages accrue at a rate
                  per year exceeding 0.50% of the principal amount of the
                  converted Notes.

         (b) All accrued Liquidated Damages shall be paid in arrears to Record
Holders by the Issuer on each Damages Payment Date by wire transfer of
immediately available funds or by federal funds check. Following the cure of all
Registration Defaults relating to any particular Note or share of Common Stock,
the accrual of Liquidated Damages with respect to such Note or share of Common
Stock will cease.

         All obligations of the Issuer set forth in this Section 3 that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such Transfer Restricted Security
shall have been satisfied in full.

         The Liquidated Damages set forth above shall be the exclusive monetary
remedy available to the Holders for such Registration Default.

          4. REGISTRATION PROCEDURES.

         (a) In connection with the Shelf Registration Statement, the Issuer
shall comply with all the provisions of Section 4(b) hereof and shall use its
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto, shall as expeditiously as
possible prepare and file with the Commission a Shelf Registration Statement
relating to the registration on any appropriate form under the Securities Act.

         (b) In connection with the Shelf Registration Statement and any
Prospectus required by this Agreement to permit the sale or resale of Transfer
Restricted Securities, the Issuer shall:

                  (i) Subject to any notice by the Issuer in accordance with
         this Section 4(b) of the existence of any fact or event of the kind
         described in Section 4(b)(iii)(D), use its best efforts to keep the
         Shelf Registration Statement continuously effective during the
         Effectiveness Period. Upon the occurrence of any event that would cause
         the Shelf Registration Statement or the Prospectus contained therein
         (A) to contain a material misstatement or omission or (B) not be
         effective and usable for resale of Transfer Restricted Securities
         during the Effectiveness Period, the Issuer shall file promptly an
         appropriate amendment to the Shelf Registration Statement or a report
         filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
         of the Exchange Act, in the case of clause (A), correcting any such
         misstatement or omission, and, in the case of either clause (A)

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         or (B), use its best efforts to cause any such amendment to be declared
         effective and the Shelf Registration Statement and the related
         Prospectus to become usable for their intended purposes as soon as
         practicable thereafter. Notwithstanding the foregoing, the Issuer may
         suspend the effectiveness of the Shelf Registration Statement by
         written notice to the Holders for a period not to exceed an aggregate
         of 45 days in any 90-day period (each such period, a "Suspension
         Period") if:

                           (x) an event occurs and is continuing as a result of
                  which the Shelf Registration Statement would, in the Issuer's
                  reasonable judgment, contain an untrue statement of a material
                  fact or omit to state a material fact required to be stated
                  therein or necessary to make the statements therein not
                  misleading; and

                           (y) the Issuer reasonably determines that the
                  disclosure of such event at such time would have a material
                  adverse effect on the business of the Issuer (and its
                  subsidiaries, if any, taken as a whole);

         PROVIDED that in the event the disclosure relates to a previously
         undisclosed proposed or pending material business transaction, the
         disclosure of which would impede the Issuer's ability to consummate
         such transaction, the Issuer may extend a Suspension Period from 45
         days to 60 days; PROVIDED, HOWEVER, that Suspension Periods shall not
         exceed an aggregate of 90 days in any 360-day period.

                  (ii) Prepare and file with the Commission such amendments and
         post-effective amendments to the Shelf Registration Statement as may be
         necessary to keep the Shelf Registration Statement effective during the
         Effectiveness Period; cause the Prospectus to be supplemented by any
         required Prospectus supplement, and as so supplemented to be filed
         pursuant to Rule 424 under the Securities Act, and to comply fully with
         the applicable provisions of Rules 424 and 430A under the Securities
         Act in a timely manner; and comply with the provisions of the
         Securities Act with respect to the disposition of all securities
         covered by the Shelf Registration Statement during the applicable
         period in accordance with the intended method or methods of
         distribution by the sellers thereof set forth in the Shelf Registration
         Statement or Prospectus supplement.

                  (iii) Advise the selling Holders that have furnished
         information pursuant to Section 4(d) hereof, Merrill Lynch, as
         representative of the Initial Purchasers, and the underwriter(s), if
         any, promptly (but in any event within five Business Days) and, if
         requested by such Persons, confirm such advice in writing:

                           (A) with respect to the Shelf Registration Statement
                  or any post-effective amendment thereto, when the same has
                  become effective, and

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                  when the Prospectus or any Prospectus supplement or post-
                  effective amendment has been filed,

                           (B) of any request by the Commission for amendments
                  to the Shelf Registration Statement or amendments or
                  supplements to the Prospectus or for additional information
                  relating thereto,

                           (C) of the issuance by the Commission of any stop
                  order suspending the effectiveness of the Shelf Registration
                  Statement under the Securities Act or of the suspension by any
                  state securities commission of the qualification of the
                  Transfer Restricted Securities for offering or sale in any
                  jurisdiction, or the initiation of any proceeding for any of
                  the preceding purposes, or

                           (D) of the existence of any fact or the happening of
                  any event, during the Effectiveness Period, that makes any
                  statement of a material fact made in the Shelf Registration
                  Statement or the Prospectus, any amendment or supplement
                  thereto, or any document incorporated by reference therein
                  untrue, or that requires the making of any additions to or
                  changes in the Shelf Registration Statement or the Prospectus
                  in order to make the statements therein not misleading.

         If at any time the Commission shall issue any stop order suspending the
         effectiveness of the Shelf Registration Statement, or any state
         securities commission or other regulatory authority shall issue an
         order suspending the qualification or exemption from qualification of
         the Transfer Restricted Securities under state securities or Blue Sky
         laws, the Issuer shall use its reasonable best efforts to obtain the
         withdrawal or lifting of such order at the earliest possible time.

                  (iv) Furnish to each of the selling Holders that has furnished
         information pursuant to Section 4(d) hereof, each Initial Purchaser and
         each of the underwriter(s), if any, at least five Business Days before
         filing with the Commission, a copy of the Shelf Registration Statement
         and copies of any Prospectus included therein or any amendments or
         supplements to the Shelf Registration Statement or Prospectus (other
         than documents incorporated by reference after the initial filing of
         the Shelf Registration Statement), which documents will be subject to
         the review of such Holders, Initial Purchasers and underwriter(s), if
         any, for a period of five Business Days, and the Issuer will not file
         any Shelf Registration Statement or Prospectus or any amendment or
         supplement to the Shelf Registration Statement or Prospectus (other
         than documents incorporated by reference) to which a selling Holder of
         Transfer

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         Restricted Securities covered by the Shelf Registration Statement,
         Merrill Lynch, as representative of the Initial Purchasers, or the
         underwriter(s), if any, shall reasonably object. A selling Holder,
         Merrill Lynch, as representative of the Initial Purchasers, or an
         underwriter, if any, shall be deemed to have reasonably objected to
         such filing if the Shelf Registration Statement, amendment,
         Prospectus or supplement, as applicable, as proposed to be filed,
         contains a material misstatement or omission. Notwithstanding the
         foregoing, the Issuer shall not be required to furnish the selling
         Holders with any amendment or supplement to the Shelf Registration
         Statement or Prospectus filed solely to reflect changes to the
         amount of Notes held by any particular Holder at the request of such
         Holder or immaterial revisions to the information contained therein.

                  (v) Make available at reasonable times for inspection by one
         or more representatives of the selling Holders, designated in writing
         by a Majority of Holders whose Transfer Restricted Securities are
         included in the Shelf Registration Statement, any underwriter
         participating in any distribution pursuant to the Shelf Registration
         Statement and any attorney or accountant retained by such selling
         Holders or any of the underwriter(s), all financial and other records,
         pertinent corporate documents and properties of the Issuer as shall be
         reasonably necessary to enable them to exercise any applicable due
         diligence responsibilities, and cause the Issuer's officers, directors,
         managers and employees to supply all information reasonably requested
         by any such representative or representatives of the selling Holders,
         underwriter, attorney or accountant in connection with the Shelf
         Registration Statement after the filing thereof and before its
         effectiveness; PROVIDED, HOWEVER, that any information designated by
         the Issuer as confidential at the time of delivery of such information
         shall be kept confidential by the recipient thereof.

                  (vi) If requested by any selling Holders, Merrill Lynch, as
         representative of the Initial Purchasers, or the underwriter(s), if
         any, promptly incorporate in the Shelf Registration Statement or
         Prospectus, pursuant to a supplement or post-effective amendment if
         necessary, such information as such selling Holders, Merrill Lynch, as
         representative of the Initial Purchasers, and such underwriter(s), if
         any, may reasonably request to have included therein, including,
         without limitation: (1) information relating to the "Plan of
         Distribution" of the Transfer Restricted Securities, (2) information
         with respect to the principal amount of Notes or number of shares of
         Common Stock being sold to such underwriter(s), (3) the purchase price
         being paid therefor and (4) any other terms of the offering of the
         Transfer Restricted Securities to be sold in such offering; and make
         all required filings of such Prospectus supplement or post-effective
         amendment as soon as reasonably practicable after the Issuer is
         notified of the matters to be incorporated in such Prospectus
         supplement or post-effective

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         amendment. Notwithstanding the foregoing, following the effective
         date of the Shelf Registration Statement, the Issuer shall not be
         required to file more than one such supplement or post-effective
         amendment to reflect changes in the amount of Transfer Restricted
         Securities held by any Holders at the request of such Holders in any
         30-day period.

                  (vii) Furnish to each selling Holder, each Initial Purchaser
         and each of the underwriter(s), if any, without charge, at least one
         copy of the Shelf Registration Statement, as first filed with the
         Commission, and of each amendment thereto (and any documents
         incorporated by reference therein or exhibits thereto (or exhibits
         incorporated in such exhibits by reference) as such Person may
         request).

                  (viii) Deliver to each selling Holder, each Initial Purchaser
         and each of the underwriter(s), if any, without charge, as many copies
         of the Prospectus (including each preliminary prospectus) and any
         amendment or supplement thereto as such Persons reasonably may request;
         subject to any notice by the Issuer in accordance with this Section
         4(b) of the existence of any fact or event of the kind described in
         Section 4(b)(iii)(D), the Issuer hereby consents to the use of the
         Prospectus and any amendment or supplement thereto by each of the
         selling Holders and each of the underwriter(s), if any, in connection
         with the offering and the sale of the Transfer Restricted Securities
         covered by the Prospectus or any amendment or supplement thereto.

                  (ix) If an underwriting agreement is entered into and the
         registration is an Underwritten Registration, the Issuer shall:

                           (A) upon request, furnish to each selling Holder and
                  each underwriter, if any, in such substance and scope as they
                  may reasonably request and as are customarily made by issuers
                  to underwriters in primary underwritten offerings, upon the
                  date of closing of any sale of Transfer Restricted Securities
                  in an Underwritten Registration:

                                    (1) a certificate, dated the date of such
                           closing, signed by the Chief Financial Officer of the
                           Issuer and confirming, as of the date thereof, the
                           matters set forth in Section 5(c) of the Purchase
                           Agreement and such other matters as such parties may
                           reasonably request;

                                    (2) opinions, each dated the date of such
                           closing, of counsel to the Issuer covering such of
                           the matters set forth in the exhibits to the Purchase
                           Agreement referred to in Section 5(a)

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                           thereof as are customarily covered in legal opinions
                           to underwriters in connection with primary
                           underwritten offerings of securities; and

                                    (3) customary comfort letters, dated the
                           date of such closing, from the Issuer's independent
                           certified public accountants (and from any other
                           accountants whose report is contained or incorporated
                           by reference in the Shelf Registration Statement), in
                           the customary form and covering matters of the type
                           customarily covered in comfort letters to
                           underwriters in connection with primary underwritten
                           offerings of securities;

                           (B) set forth in full in the underwriting agreement,
                  if any, indemnification provisions and procedures which
                  provide rights no less protective than those set forth in
                  Section 6 hereof with respect to all parties to be
                  indemnified; and

                           (C) deliver such other documents and certificates as
                  may be reasonably requested by such parties to evidence
                  compliance with clause (A) above and with any customary
                  conditions contained in the underwriting agreement or other
                  agreement entered into by the selling Holders pursuant to this
                  clause (ix).

                  (x) Before any public offering of Transfer Restricted
         Securities, cooperate with the selling Holders, the underwriter(s), if
         any, and their respective counsel in connection with the registration
         and qualification of the Transfer Restricted Securities under the
         securities or Blue Sky laws of such jurisdictions as the selling
         Holders or underwriter(s), if any, may reasonably request and do any
         and all other acts or things necessary or advisable to enable the
         disposition in such jurisdictions of the Transfer Restricted Securities
         covered by the Shelf Registration Statement; PROVIDED, HOWEVER, that
         the Issuer shall not be required (A) to register or qualify as a
         foreign corporation or a dealer of securities where it is not now so
         qualified or to take any action that would subject it to the service of
         process in any jurisdiction where it is not now so subject or (B) to
         subject itself to taxation in any such jurisdiction if it is not now so
         subject.

                  (xi) Cooperate with the selling Holders and the
         underwriter(s), if any, to facilitate the timely preparation and
         delivery of certificates representing Transfer Restricted Securities to
         be sold and not bearing any restrictive legends (unless required by
         applicable securities laws); and enable such Transfer Restricted
         Securities to be in such denominations and registered in such names as

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         the Holders or the underwriter(s), if any, may request at least two
         Business Days before any sale of Transfer Restricted Securities made by
         such underwriter(s).

                  (xii) Use its best efforts to cause the Transfer Restricted
         Securities covered by the Shelf Registration Statement to be registered
         with or approved by such other U.S. governmental agencies or
         authorities as may be necessary to enable the seller or sellers thereof
         or the underwriter(s), if any, to consummate the disposition of such
         Transfer Restricted Securities.

                  (xiii) Subject to Section 4(b)(i) hereof, if any fact or event
         contemplated by Section 4(b)(iii)(D) hereof shall exist or have
         occurred, use its reasonable best efforts to prepare a supplement or
         post-effective amendment to the Shelf Registration Statement or related
         Prospectus or any document incorporated therein by reference or file
         any other required document so that, as thereafter delivered to the
         purchasers of Transfer Restricted Securities, the Prospectus will not
         contain an untrue statement of a material fact or omit to state any
         material fact required to be stated therein or necessary to make the
         statements therein not misleading.

                  (xiv) Provide CUSIP numbers for all Transfer Restricted
         Securities not later than the effective date of the Shelf Registration
         Statement and provide the Trustee under the Indenture with certificates
         for the Notes that are in a form eligible for deposit with The
         Depository Trust Company.

                  (xv) Cooperate and assist in any filings required to be made
         with the NASD and in the performance of any due diligence investigation
         by any underwriter that is required to be retained in accordance with
         the rules and regulations of the NASD.

                  (xvi) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the Commission and all reporting
         requirements under the rules and regulations of the Exchange Act.

                  (xvii) Cause the Indenture to be qualified under the TIA not
         later than the effective date of the Shelf Registration Statement
         required by this Agreement, and, in connection therewith, cooperate
         with the trustee and the Holders of Notes to effect such changes to the
         Indenture as may be required for such Indenture to be so qualified in
         accordance with the terms of the TIA; and execute and use its best
         efforts to cause the trustee thereunder to execute all documents that
         may be required to effect such changes and all other forms and
         documents required to be filed with the Commission to enable such
         Indenture to be so qualified in a timely manner.

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                  (xviii) Cause all Transfer Restricted Securities covered by
         the Shelf Registration Statement to be listed or quoted, as the case
         may be, on each securities exchange or automated quotation system on
         which similar securities issued by the Issuer are then listed or
         quoted.

                  (xix) Provide promptly to each Holder upon written request
         each document filed with the Commission pursuant to the requirements of
         Section 13 and Section 15 of the Exchange Act after the effective date
         of the Shelf Registration Statement.

                  (xx) If requested by the underwriters, make appropriate
         officers of the Issuer available to the underwriters for meetings with
         prospective purchasers of the Transfer Restricted Securities and
         prepare and present to potential investors customary "road show"
         material in a manner consistent with new issuances of other securities
         similar to the Transfer Restricted Securities.

         (c) Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Issuer of the existence of any fact of
the kind described in Section 4(b)(iii)(D) hereof, such Holder will, and will
use its reasonable best efforts to cause any underwriter(s) in an Underwritten
Offering to, forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the Shelf Registration Statement until:

                  (i) such Holder has received copies of the supplemented or
         amended Prospectus contemplated by Section 4(b)(xiii) hereof; or

                  (ii) such Holder is advised in writing by the Issuer that the
         use of the Prospectus may be resumed, and has received copies of any
         additional or supplemental filings that are incorporated by reference
         in the Prospectus.

If so directed by the Issuer, each Holder will deliver to the Issuer (at the
Issuer's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice of
suspension.

         (d) Each Holder who intends to be named as a selling Holder in the
Shelf Registration Statement shall furnish to the Issuer in writing, prior to
or on the 20th Business Day after receipt of a request therefor as set forth
in a questionnaire, such information regarding such Holder and the proposed
distribution by such Holder of its Transfer Restricted Securities as the
Issuer may reasonably request for use in connection with the Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein. (The form of the questionnaire is attached hereto as Exhibit A.)
Holders that do

                                       13
<PAGE>

not complete the questionnaire and deliver it to the Issuer shall not be
named as selling securityholders in the Prospectus or preliminary Prospectus
included in the Shelf Registration Statement and therefore shall not be
permitted to sell any Transfer Restricted Securities pursuant to the Shelf
Registration Statement. Each Holder who intends to be named as a selling
Holder in the Shelf Registration Statement shall promptly furnish to the
Issuer in writing such other information as the Issuer may from time to time
reasonably request in writing. Each Holder as to which the Shelf Registration
Statement is being effected agrees to furnish promptly to the Issuer all
information required to be disclosed in order to make information previously
furnished to the Issuer by such Holder not materially misleading.

         (e) Upon the effectiveness of the Shelf Registration Statement, each
Holder shall notify the Issuer at least three Business Days prior to any
intended distribution of Transfer Restricted Securities pursuant to the Shelf
Registration Statement (a "Sale Notice"). Each Holder of this Security, by
accepting the same, agrees to hold any communication by the Issuer in response
to a Sale Notice in confidence.

          5. REGISTRATION EXPENSES.

         (a) All expenses incident to the Issuer's performance of or compliance
with this Agreement shall be borne by the Issuer regardless of whether a Shelf
Registration Statement becomes effective, including, without limitation:

                  (i) all registration and filing fees and expenses (including
         filings made by any Initial Purchasers, Holders or underwriters with
         the NASD);

                  (ii) all fees and expenses of compliance with federal
         securities and state Blue Sky or securities laws;

                  (iii) all expenses of printing (including printing of
         Prospectuses and certificates for the Common Stock to be issued upon
         conversion of the Notes), messenger and delivery services and
         telephone;

                  (iv) all fees and disbursements of counsel to the Issuer and,
         subject to Section 5(b) below, the Holders of Transfer Restricted
         Securities;

                  (v) all application and filing fees in connection with listing
         (or authorizing for quotation) the Common Stock on a national
         securities exchange or automated quotation system pursuant to the
         requirements hereof; and

                                       14
<PAGE>

                  (vi) all fees and disbursements of independent certified
         public accountants of the Issuer (including the expenses of any special
         audit and comfort letters required by or incident to such performance).

         The Issuer shall bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal, accounting or other duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Issuer.

         (b) In connection with the Shelf Registration Statement required by
this Agreement, the Issuer shall reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities being registered pursuant to the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, which shall be Debevoise &
Plimpton, or such other counsel as may be chosen by a Majority of Holders for
whose benefit the Shelf Registration Statement is being prepared.

          6. INDEMNIFICATION AND CONTRIBUTION.

         (a) The Issuer agrees to indemnify and hold harmless each Initial
Purchaser, each Holder and each Person who participates as an underwriter
(any such Person being an "Underwriter") and each Person, if any, who
controls any Initial Purchaser, Holder or Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act as
follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in any Shelf
         Registration Statement (or any amendment thereto), including all
         documents incorporated therein by reference, or the omission or alleged
         omission therefrom of a material fact required to be stated therein or
         necessary to make the statements therein not misleading, or arising out
         of any untrue statement or alleged untrue statement of a material fact
         contained in any Prospectus (or any amendment or supplement thereto) or
         the omission or alleged omission therefrom of a material fact necessary
         in order to make the statements therein, in the light of the
         circumstances under which they were made, not misleading;

                  (ii) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened,
         or of any claim whatsoever based upon any such untrue statement or
         omission, or any such alleged untrue statement or

                                       15
<PAGE>

         omission; PROVIDED that (subject to Section 6(d) below) any such
         settlement is effected with the written consent of the Issuer; and

                  (iii) against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel chosen by any
         indemnified party), reasonably incurred in investigating, preparing or
         defending against any litigation, or any investigation or proceeding by
         any governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue statement or omission, or any
         such alleged untrue statement or omission, to the extent that any such
         expense is not paid under subparagraph (i) or (ii) above;

PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Issuer by the Initial Purchasers, such Holder or such Underwriter expressly
for use in a Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto).

         (b) Each Holder, severally but not jointly, agrees to indemnify and
hold harmless the Issuer, the Initial Purchasers, each Underwriter and the
other selling Holders and each Person, if any, who controls the Issuer, the
Initial Purchasers, any Underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any and all loss, liability, claim, damage and expense described
in the indemnity contained in Section 6(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in any Shelf Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information with respect to such
Holder furnished to the Issuer by such Holder expressly for use in the Shelf
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); PROVIDED, HOWEVER, that no such Holder
shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Transfer Restricted
Securities pursuant to such Shelf Registration Statement.

         (c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder,
but failure so to notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of such action; PROVIDED, HOWEVER, that counsel to the
indemnifying party shall not (except with the

                                       16
<PAGE>

consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying party or parties be liable for the fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

         (d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

         (e) If the indemnification provided for in this Section 6 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

         The relative fault of the indemnifying party or parties on the one
hand and the indemnified party or parties on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or parties on the one hand or the indemnified party or parties on the

                                       17
<PAGE>

other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 6. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 6 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 6, no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Transfer Restricted Securities purchased by it were resold
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. The Holders' obligations to contribute as provided in this
Section 6(e) are several and not joint.

         No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.

         For purposes of this Section 6, each Person, if any, who controls an
Initial Purchaser, a Holder or an Underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Initial Purchaser, such Holder or such
Underwriter, and each director of the Issuer, and each Person, if any, who
controls the Issuer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Issuer.

                                       18
<PAGE>

         7. RULE 144A. In the event the Issuer is not subject to Section 13 or
15(d) of the Exchange Act, the Issuer hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding, to make available
to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.

         8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may
participate in any Underwritten Registration hereunder unless such Holder:

                  (i) agrees to sell such Holder's Transfer Restricted
         Securities on the basis provided in any underwriting arrangements
         approved by the Persons entitled hereunder to approve such arrangements
         and

                  (ii) completes and executes all reasonable questionnaires,
         powers of attorney, indemnities, underwriting agreements, lock-up
         letters and other documents required under the terms of such
         underwriting arrangements.

         9. SELECTION OF UNDERWRITERS. The Holders of Transfer Restricted
Securities covered by the Shelf Registration Statement who desire to do so
may sell such Transfer Restricted Securities in an Underwritten Offering. In
any such Underwritten Offering, the investment banker or investment bankers
and manager or managers that will administer the offering will be selected by
a Majority of Holders whose Transfer Restricted Securities are included in
such offering; PROVIDED, that such investment bankers and managers must be
reasonably satisfactory to the Issuer.

          10. MISCELLANEOUS.

         (a) REMEDIES. The Issuer acknowledges and agrees that any failure by
the Issuer to comply with its obligations under Section 2 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any
such failure, the Initial Purchasers or any Holder may obtain such relief as
may be required to specifically enforce the Issuer's obligations under
Section 2 hereof. The Issuer further agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.

         (b) ADJUSTMENTS AFFECTING TRANSFER RESTRICTED SECURITIES. The Issuer
shall not, directly or indirectly, take any action with respect to the
Transfer Restricted Securities as a class that would adversely affect the
ability of the Holders to include such Transfer Restricted Securities in a
registration undertaken pursuant to this Agreement.

                                       19
<PAGE>

         (c) NO INCONSISTENT AGREEMENTS. The Issuer will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. In addition, the Issuer shall
not grant to any of its security holders (other than the Holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in the Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities. The Issuer has not previously
entered into any agreement (which has not expired or been terminated) granting
any registration rights with respect to its securities to any Person which
rights conflict with the provisions hereof.

         (d) AMENDMENTS AND WAIVERS. This Agreement may not be amended, modified
or supplemented, and waivers or consents to or departures from the provisions
hereof may not be given, unless the Issuer has obtained the written consent of a
Majority of Holders.

         (e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

                 (i)  if to a Holder, at the address set forth on the records of
         the registrar under the Indenture or the transfer agent of the Common
         Stock, as the case may be; and

                 (ii) if to the Issuer:

                      Vertex Pharmaceuticals Incorporated
                      130 Waverly Street
                      Cambridge, Massachusetts 02139
                      Attention: Thomas G. Auchincloss, Jr.,
                                 Vice President of Finance

                                 With a copy to:

                      Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
                      One Financial Center
                      Boston, Massachusetts 02111
                      Attention: Michael Fantozzi, Esq.

         All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when

                                       20

<PAGE>

receipt acknowledged, if telecopied; and on the next Business Day, if timely
delivered to an air courier guaranteeing overnight delivery.

         (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; PROVIDED, HOWEVER, that
(i) this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless and to the extent such successor or
assign acquired Transfer Restricted Securities from such Holder and (ii) nothing
contained herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities, in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement.

         (g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         (h) SECURITIES HELD BY THE ISSUER OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held by the
Issuer or its "affiliates" (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.

         (i) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

         (j) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York, without regard to conflict
of laws principles thereof.

         (k) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.

                                       21

<PAGE>

         (l) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Issuer with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

                                       22

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                       VERTEX PHARMECEUTICALS
                                       INCORPORATED

                                       By /s/ Joshua Boger
                                          ----------------------------------
                                          Name:  Joshua Boger
                                          Title: President & CEO

                                       MERRILL LYNCH & CO.
                                       MERRILL LYNCH, PIERCE, FENNER & SMITH
                                                    INCORPORATED
                                       CREDIT SUISSE FIRST BOSTON
                                         CORPORATION,
                                       ROBERTSON STEPHENS, INC.
                                       CHASE SECURITIES INC.
                                       J.P. MORGAN SECURITIES INC.,
                                       as Initial Purchasers

                                       By: Merrill Lynch, Pierce, Fenner & Smith
                                             Incorporated

                                       By: /s/ Mark Robinson
                                           ---------------------------------
                                                 Authorized Signatory

<PAGE>

                                                                       Exhibit A

                      VERTEX PHARMACEUTICALS INCORPORATED

            FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned beneficial holder of 5% Convertible Subordinated Notes
due September 2007 (the "Notes") of Vertex Pharmaceuticals Incorporated (the
"Issuer"), or common stock, par value $.01 per share (the "Shares" and together
with the Notes, the "Transfer Restricted Securities"), of the Issuer understands
that the Issuer has filed, or intends to file, with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Shelf Registration
Statement"), for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the "Securities Act"), of the Transfer Restricted
Securities in accordance with the terms of the Registration Rights Agreement,
dated September 19, 2000 (the "Registration Rights Agreement"), between the
Issuer and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Credit Suisse First Boston Corporation, Robertson Stephens, Inc.,
Chase Securities Inc. and J.P. Morgan Securities Inc., as Initial Purchasers. A
copy of the Registration Rights Agreement is available from the Issuer upon
request at the address set forth below. All capitalized terms not otherwise
defined herein have the meaning ascribed thereto in the Registration Rights
Agreement.

         Each beneficial owner of Transfer Restricted Securities is entitled to
the benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Transfer Restricted Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Transfer Restricted Securities generally will
be required to be named as a selling securityholder in the related Prospectus,
deliver a Prospectus to purchasers of Transfer Restricted Securities and be
bound by those provisions of the Registration Rights Agreement applicable to
such beneficial owner (including certain indemnification provisions, as
described below). BENEFICIAL OWNERS THAT DO NOT COMPLETE THIS NOTICE AND
QUESTIONNAIRE WITHIN 20 BUSINESS DAYS OF RECEIPT HEREOF AND DELIVER IT TO THE
ISSUER AS PROVIDED BELOW WILL NOT BE NAMED AS SELLING SECURITYHOLDERS IN THE
PROSPECTUS AND THEREFORE WILL NOT BE PERMITTED TO SELL ANY TRANSFER RESTRICTED
SECURITIES PURSUANT TO THE SHELF REGISTRATION STATEMENT.

         Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the Shelf
Registration Statement and the related Prospectus.

                                      A-1

<PAGE>

                                    NOTICE

         The undersigned beneficial owner (the "Selling Securityholder") of
Transfer Restricted Securities hereby gives notice to the Issuer of its
intention to sell or otherwise dispose of Transfer Restricted Securities
beneficially owned by it and listed below in Item 3 (unless otherwise specified
under Item 3) pursuant to the Shelf Registration Statement. The undersigned, by
signing and returning this Notice and Questionnaire, understands that it will be
bound by the terms and conditions of this Notice and Questionnaire and the
Registration Rights Agreement.

         Pursuant to the Registration Rights Agreement, the undersigned has
agreed to indemnify and hold harmless the Issuer, the Initial Purchasers, any
Underwriter and the other selling holders and each person, if any, who controls
such persons within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against certain losses arising in
connection with statements concerning the undersigned made in the Shelf
Registration Statement or the related Prospectus in reliance upon the
information provided in this Notice and Questionnaire.

         The undersigned hereby provides the following information to the Issuer
and represents and warrants that such information is accurate and complete:

                                 QUESTIONNAIRE

1.       (a)      Full legal name of Selling Securityholder:

         (b)      Full legal name of registered holder (if not the same as (a)
                  above) through which Transfer Restricted Securities listed in
                  (3) below are held:

         (c)      Full legal name of DTC participant (if applicable and if not
                  the same as (b) above) through which Transfer Restricted
                  Securities listed in (3) are held:

2.       Address for notices to Selling Securityholders:

         Telephone:

         Fax:

         Contact Person:

                                      A-2

<PAGE>

3.       Beneficial ownership of Transfer Restricted Securities:

         (a)      Type of Transfer Restricted Securities beneficially owned, and
                  principal amount of Notes or number of shares of Common Stock,
                  as the case may be, beneficially owned:

         (b)      CUSIP No(s). of such Transfer Restricted Securities
                  beneficially owned:

4.       Beneficial ownership of the Issuer's securities owned by the Selling
         Securityholder:

         EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED IS NOT THE
         BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE ISSUER OTHER
         THAN THE TRANSFER RESTRICTED SECURITIES LISTED ABOVE IN ITEM (3)
         ("OTHER SECURITIES").

         (a)      Type and amount of Other Securities beneficially owned by the
                  Selling Securityholder:

         (b)      CUSIP No(s). of such Other Securities beneficially owned:

5.       Relationship with the Issuer

         Except as set forth below, neither the undersigned nor any of its
         affiliates, officers, directors or principal equity holders (5% or
         more) has held any position or office or has had any other material
         relationship with the Issuer (or their predecessors or affiliates)
         during the past three years.

         State any exceptions here:

6.       Plan of Distribution

         Except as set forth below, the undersigned (including its donees or
         pledgees) intends to distribute the Transfer Restricted Securities
         listed above in Item (3) pursuant to the Shelf Registration Statement
         only as follows (if at all). Such Transfer Restricted Securities may be
         sold from time to time directly by the undersigned or, alternatively,
         through underwriters, broker-dealers or agents. If the Transfer
         Restricted Securities are sold through underwriters or broker-dealers,

                                      A-3

<PAGE>

         the Selling Securityholder will be responsible for underwriting
         discounts or commissions or agent's commissions. Such Transfer
         Restricted Securities may be sold in one or more transactions at fixed
         prices, at prevailing market prices at the time of sale, at varying
         prices determined at the time of sale, or at negotiated prices. Such
         sales may be effected in transactions (which may involve crosses or
         block transactions):

         (i)      on any national securities exchange or quotation service on
                  which the Transfer Restricted Securities may be listed or
                  quoted at the time of sale;

         (ii)     in the over-the-counter market;

         (iii)    in transactions otherwise than on such exchanges or services
                  or in the over-the-counter market; or

         (iv)     through the writing of options.

In connection with sales of the Transfer Restricted Securities or otherwise, the
undersigned may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the Transfer Restricted Securities and deliver
Transfer Restricted Securities to close out such short positions, or loan or
pledge Transfer Restricted Securities to broker-dealers that in turn may sell
such securities.

State any exceptions here:

Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Transfer Restricted Securities without the prior
agreement of the Issuer.

         The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder relating to stock manipulation, particularly Regulation M
thereunder (or any successor rules or regulations), in connection with any
offering of Transfer Restricted Securities pursuant to the Shelf Registration
Statement. The undersigned agrees that neither it nor any person acting on its
behalf will engage in any transaction in violation of such provisions.

         The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
as set forth therein.

         Pursuant to the Registration Rights Agreement, the Issuer has agreed
under certain circumstances to indemnify the Selling Securityholders against
certain liabilities.

                                      A-4

<PAGE>

         In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Issuer of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective. All notices hereunder and
pursuant to the Registration Rights Agreement shall be made in writing at the
address set forth below.

         By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related Prospectus. The undersigned understands that such information will be
relied upon by the Issuer in connection with the preparation or amendment of the
Shelf Registration Statement and the related Prospectus.

         IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.

Dated:

Beneficial Owner

By: ________________________________
    Name:
    Title:

Please return the completed and executed Notice and Questionnaire to Vertex
Pharmaceuticals Incorporated at:

                                 Vertex Pharmaceuticals Incorporated
                                 130 Waverly Street
                                 Cambridge, Massachusetts 02139
                                 Attention:  Sarah P. Cecil, Corporate Counsel

                                      A-5<PAGE>

                            REGISTRATION RIGHTS AGREEMENT

       THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made as of
this 18th day of October, 2000, by and among Digital:Convergence Corporation,
a Delaware corporation (the "COMPANY") and NeoMedia Technologies, Inc. (the
"INVESTOR").

                                     RECITALS

       WHEREAS, the Investor has been issued 1,415,760 shares (the "INITIAL
INVESTOR SHARES") of common stock, $0.01 par value per share (the "COMMON
STOCK"), of the Company;

       WHEREAS, the Investor and the Company have entered into a License
Agreement, dated as of even date herewith (the "LICENSE AGREEMENT");

       WHEREAS, pursuant to Section 3.5 of the License Agreement, the Company
may issue additional shares of the Common Stock to the Investor (all such
shares, the "ADDITIONAL INVESTOR SHARES," and, together with the Initial
Investor Shares, the "INVESTOR SHARES");

       WHEREAS, the Investor, and the Company desire to be granted and to
grant the rights created herein.

       NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the undersigned parties
hereto agree as follows:

       1.   CERTAIN DEFINITIONS.  As used in this Agreement, the following
terms shall have the following respective meanings:

            "COMMISSION" shall mean the Securities and Exchange Commission,
       or any other federal agency at the time administering the Securities Act.

            "COMMON STOCK" shall mean the Common Stock, $0.01 par value per
       share, of the Company, as constituted as of the date of this Agreement.

            "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
       amended, or any similar federal statute, and the rules and regulations of
       the Commission thereunder, all as the same shall be in effect at the
       time.

            "REGISTRATION EXPENSES" shall mean the expenses so described in
       SECTION 4.

            "RESTRICTED STOCK" shall mean the Investor Shares, excluding any
       such shares of Common Stock which have (a) been registered under the
       Securities Act pursuant to an effective registration statement filed
       thereunder and disposed of in accordance with the

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       registration statement covering them, (b) been sold, transferred or
       disposed pursuant to Rule 144 under the Securities Act or otherwise or
       (c) ceased to be outstanding.

            "SECURITIES ACT" shall mean the Securities Act of 1933, as
       amended, or any similar federal statute, and the rules and regulations of
       the Commission thereunder, all as the same shall be in effect at the
       time.

            "SELLING EXPENSES" shall mean the expenses so described in
       SECTION 4.

       2.   INCIDENTAL REGISTRATION.  If the Company at any time after the
Company's first firm commitment underwritten public offering proposes to
register any of its securities under the Securities Act for sale to the
public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Forms S-4,
S-8 or another form not available for registering the Restricted Stock for
sale to the public), each such time it will give written notice as promptly
as reasonably practicable to the Investor of its intention so to do.  Upon
the written request of the Investor, received by the Company within 30 days
after the receipt of any such notice, to register any of its Restricted
Stock, the Company will use its best efforts to cause the Restricted Stock as
to which registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be filed
by the Company, all to the extent requisite to permit the sale or other
disposition by the Investor of such Restricted Stock so registered. In the
event that any registration pursuant to this SECTION 2 shall be, in whole or
in part, an underwritten public offering of Common Stock and the managing
underwriter advises the Company that inclusion of all such Restricted Stock
would adversely affect the marketing of the offering, the Company shall
allocate the shares of Common Stock to be included in such registration as
follows:  (A) first, to the person(s) who initiated such registration for all
securities requested to be offered by such person(s), (B) second, to the
Investor and to any other holders of "piggyback" registration rights
requesting inclusion, pro rata on the basis of the number of shares of
Restricted Stock and/or Common Stock requested to be included in the
registration, (C) third, to the extent of any remaining shares to be included
in the registration, to the Company if the Company did not initiate such
registration for the sale of securities for its own account, and (D) fourth,
to the extent of any remaining shares to be included in the registration, to
all other persons requesting shares of Common Stock to be included in the
registration, pro rata on the basis of the number of shares of Common Stock
requested to be included in the registration.  Notwithstanding the foregoing
provisions, the Company may withdraw or cease proceeding with any
registration statement referred to in this SECTION 2 without thereby
incurring any liability to the Investor.

       2A.  REGISTRATION ON FORM S-3.  The Company shall use its reasonable
best efforts to qualify for registration on Form S-3 as soon as legally
possible and, thereafter, to maintain such qualification.  If at any time
after the Company's first firm commitment underwritten public offering (a)
the Investor requests that the Company file a registration statement on Form
S-3 or any successor form thereto for a public offering of all or any portion
of the shares of Restricted Stock held by the Investor, the aggregate
proposed offering price of which is not less than $10,000,000 for any such
registration, and (b) the Company is a registrant entitled to use Form S-3 or
any successor form thereto to register such shares for secondary sales, then
the Company

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shall use its best efforts to register under the Securities Act on Form S-3
or any successor thereto for public sale in accordance with the method of
disposition specified in such notice, the number of shares of Restricted
Stock specified in such notice.  Notwithstanding the immediately preceding
sentence, the required dollar amount for the aggregate proposed offering
price shall be reduced from $10,000,000 to $7,000,000 immediately, and
without further action by any of the parties hereto, upon the receipt by the
Company of the requisite consent to such reduction from the parties to the
Amended and Restated Registration Rights Agreement, dated as of April 26,
2000, by and among the Company and the securityholders party thereto.  There
shall be no limitation on the number of registrations on Form S-3 which may
be requested and obtained under this SECTION 2A; PROVIDED, HOWEVER, that in
the event that the Company has already effected a registration on Form S-3
pursuant to this SECTION 2A during any 12 month period, any additional
registration(s) on Form S-3 requested pursuant to this SECTION 2A during such
12 month period shall be at the expense of the Investor.

       If the method of disposition specified in such notice shall be an
underwritten public offering, the Investor may designate the managing
underwriter(s) of such offering,  subject to the approval of the Company,
which approval shall not be unreasonably withheld or delayed.

       The Company's obligation to register Restricted Stock pursuant to
SECTION 2A shall not be deemed satisfied in respect of any registration: (i)
unless a registration statement covering at least 85% of the shares of
Restricted Stock specified in notice received as aforesaid, for sale in
accordance with the method of disposition specified by the Investor, shall
have become effective, (ii) if after a registration statement has become
effective, such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency
or court for any reason, resulting in a failure to consummate the offering of
Restricted Stock offered thereby, (iii) if after a registration statement has
become effective, the offering of Restricted Stock offered thereby is not
consummated due to factors beyond the control of the Investor, including,
without limitation, in the context of a proposed firm commitment
underwriting, the fact that the underwriters have advised the Investor that
such Restricted Stock cannot be sold at a net price equal to or above the net
price anticipated at the time of filing of the preliminary prospectus, or
(iv) if the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are
not satisfied through no fault of the Investor.  The Company shall be
entitled to include in any registration statement referred to in this SECTION
2A, for sale in accordance with the method of disposition specified by the
Investor, shares of Common Stock to be sold by the Company for its own
account.  In the event that any registration pursuant to this SECTION 2A
shall be, in whole or in part, an underwritten public offering of Common
Stock and the managing underwriter advises the Company that inclusion of all
such Restricted Stock would adversely affect the marketing of the offering,
the Company shall allocate the shares of Common Stock to be included in such
registration as follows:  (A) first, to the Investor, (B) second, to the
extent of any remaining shares to be included in the registration, to holders
of "piggyback" registration rights requesting inclusion, pro rata on the
basis of the number of shares of Common Stock requested to be included in the
registration, (C) third, to the extent of any remaining shares to be included
in the registration, to the Company, and (D) fourth, to the extent of any
remaining shares to be included in the registration, to all other persons
requesting shares of Common Stock

                                      -3-

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to be included in the registration, pro rata on the basis of the number of
shares of Common Stock requested to be included in the registration.

       3.   REGISTRATION PROCEDURES.  If and whenever the Company is required
by the provisions of SECTION 2 OR SECTION 2A to effect the registration of
any shares of Restricted Stock under the Securities Act, the Company will, as
expeditiously as possible:

            (a)   prepare and, within 90 days after the end of the period
within which requests for registration may be given to the Company or in any
event as soon thereafter as possible, file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for the period of
the distribution contemplated thereby (determined as hereinafter provided),
PROVIDED that, before filing such registration statement or any amendments
thereto, the Company will furnish copies of all such documents proposed to be
filed to counsel for the Investor;

            (b)   prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period;

            (c)   furnish to the Investor and to each underwriter, if any,
such number of copies of the registration statement and of each amendment and
supplement thereto (in each case including all exhibits) and the prospectus
included therein (including each preliminary prospectus) as such persons
reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;

            (d)   use its commercially reasonable efforts to register or
qualify the Restricted Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Investor or, in
the case of an underwritten public offering, the managing underwriter
reasonably shall request and to keep such registrations or qualifications in
effect for so long as such registration statement remains in effect, and take
any other action which may be reasonably necessary or advisable to enable the
Investor and the underwriter to consummate the disposition in such
jurisdictions of the securities; PROVIDED, HOWEVER, that the Company shall
not for any such purpose be required to qualify generally to transact
business as a foreign corporation in any jurisdiction where it is not so
qualified or to consent to general service of process in any such
jurisdiction;

            (e)   use its best efforts to list the Restricted Stock covered
by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;

            (f)   promptly notify the Investor and each underwriter under
such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the

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Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
then existing, and at the request of the Investor promptly prepare and
furnish to the Investor and to each underwriter, if any, a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

            (g)   if the offering is underwritten and at the request of the
Investor, use its best efforts to furnish on the date that Restricted Stock
is delivered to the underwriters for sale pursuant to such registration: (i)
an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to the
Investor, stating that such registration statement has become effective under
the Securities Act and that (A) to the knowledge of such counsel, no stop
order suspending the effectiveness thereof has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under
the Securities Act, (B) the registration statement, the related prospectus
and each amendment or supplement thereof comply as to form in all material
respects with the requirements of the Securities Act (except that such
counsel need not express any opinion as to financial statements, notes or
schedules thereto or other financial, statistical and accounting data or
information contained therein) and (C) to such other effects as reasonably
may be requested by counsel for the underwriters or by the Investor or its
counsel and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters and to the
Investor, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants,
the financial statements of the Company included in the registration
statement or the prospectus, or any amendment or supplement thereof, comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act, and such letter shall additionally cover
such other financial matters (including information as to the period ending
no more than five business days prior to the date of such letter) with
respect to such registration as such underwriters reasonably may request; and

            (h)   make available for inspection by the Investor, any
underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by the
Investor or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by the
Investor, underwriter, attorney, accountant or agent in connection with such
registration statement.

       For purposes of SECTIONS 3(a) and 3(b), the period of distribution of
Restricted Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of

                                      -5-

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Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 180 days
after the effective date thereof.

       In connection with each registration hereunder, the Investor will
furnish to the Company in writing such information with respect to themselves
and the proposed distribution by them as reasonably shall be necessary in
order to assure compliance with federal and applicable state securities laws.

       In connection with each registration pursuant to SECTION 2 OR SECTION
2A, covering an underwritten public offering: (x) the Company and the
Investor agree to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and
containing such provisions as are customary in the securities business for
such an arrangement between such underwriter and companies of the Company's
size and investment stature and (y) the Investor agrees that, upon receipt of
any notice (a "SUSPENSION NOTICE") from the Company of the happening of any
event rendering statements contained in such registration statement untrue or
misleading, the Investor shall forthwith discontinue disposition of
Restricted Stock until receipt by the Investor of the supplemented or amended
prospectus, or until it is advised in writing (the "ADVICE") by the Company
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, the Investor will deliver to
the Company all copies, other than permanent file copies then in the
possession of the Investor, of the prospectus covering such Restricted Stock
current at the time of receipt of such notice; provided, however, that in the
case of a public offering that is not underwritten such postponement of sales
of Restricted Stock by the holders shall not exceed ninety (90) days in the
aggregate during any one year period.  In the event the Company provides a
Suspension Notice, any relevant time period set forth in this Agreement shall
be extended by the number of days during the period from and including the
date of the giving of the Suspension Notice to and including the date when
each seller of Restricted Stock covered by such registration statement shall
have received the copies of the supplemented or amended prospectus or the
Advice.  The Company shall use its best efforts and take such actions as are
necessary to render the Advice as promptly as practicable.  In any event, the
Company shall not be entitled to deliver more than three (3) Suspension
Notices in any one year in the case of public offerings that are not
underwritten.

       4.   EXPENSES.  All expenses incurred by the Company in complying with
SECTION 2 OR SECTION 2A, including, without limitation, all registration and
filing fees, listing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars and
costs of insurance, but excluding any Selling Expenses, are called
"REGISTRATION EXPENSES."  All underwriting discounts, selling commissions and
any fees and disbursements of independent public accountants and counsel for
the Investor applicable to the sale of Restricted Stock are called "SELLING
EXPENSES".

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       The Company will pay all Registration Expenses in connection with each
registration statement under SECTION 2 OR SECTION 2A.  All Selling Expenses
in connection with each registration statement under SECTION 2 OR SECTION 2A,
shall be borne by the Investor.

       5.   INDEMNIFICATION AND CONTRIBUTION.

            (a)   In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Section 2 or Section 2A, the
Company will, and hereby does agree to,  indemnify and hold harmless the
Investor (including its officers and directors and partners), each
underwriter of such Restricted Stock thereunder and each other person, if
any, who controls the Investor or such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Investor or such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Section
2 or Section 2A, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or any violation or alleged violation by the Company of the
Securities Act, Exchange Act or applicable Ablue sky" laws, and will
reimburse the Investor, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
written information furnished by the Investor, any such underwriter or any
such controlling person specifically for use in such registration statement
or prospectus or arise from the Investor's (or any affiliate thereof) failure
to deliver a copy of the registration statement or prospectus or any
amendments thereafter the Company has furnished the Investor or affiliate.

       (b)   In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to SECTION 2 OR SECTION 2A, the Investor,
severally and not jointly, will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages, liabilities and expenses, joint or several, to which the
Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Section
2 or Section 2A, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or

                                      -7-

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necessary to make the statements therein not misleading, and will reimburse
the Company and each such officer, director, underwriter and controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Investor will be liable
hereunder in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with any written information pertaining to the
Investor, as such, furnished to the Company by the Investor specifically for
use in such registration statement or prospectus; and provided, further,
HOWEVER, that the liability of the Investor hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the shares sold by
the Investor under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to
exceed the proceeds received by the Investor from the sale of Restricted
Stock covered by such registration statement.

       (c)   Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to such indemnified party other than under this SECTION 5
and shall only relieve it from any liability which it may have to such
indemnified party under this SECTION 5 if and to the extent the indemnifying
party is prejudiced by such omission.  In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled
to participate in and, to the extent it shall wish, to assume and undertake
the defense thereof with counsel reasonably satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified
party of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
SECTION 5 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; PROVIDED, HOWEVER,
that (i) if such defense is not assumed by the indemnifying party as
permitted hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its
consent (but such consent will not be unreasonably withheld) and (ii) if such
defense is assumed by the indemnifying party pursuant to the provisions
hereof, such indemnifying party shall not settle or otherwise compromise the
applicable claim unless (x) such settlement or compromise contains a full and
unconditional release of the indemnified party or (y) the indemnified party
otherwise consents in writing; and PROVIDED, FURTHER, HOWEVER, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different
from or additional to those available to the indemnifying party or if the
interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party (together with
all other indemnified parties which may be represented without conflict by
one counsel) shall have the right to select  one separate counsel and to
assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable expenses and fees of such separate

                                      -8-

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counsel and other reasonable expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

       (d)  In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) the
Investor when exercising rights under this Agreement, or any controlling
person of the Investor, makes a claim for indemnification pursuant to this
SECTION 5 but it is judicially determined that such indemnification may not
be enforced in such case notwithstanding the fact that this SECTION 5
provides for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of the Investor or any such
controlling person in circumstances for which indemnification is provided
under this SECTION 5; then, and in each such case, the Company and the
Investor will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the holder
on the one hand and of the Company on the other in connection with the
statements or omissions that resulted in such loss, claim, damage, or
liability as well as any other relevant equitable considerations.  The
relative fault of the Investor and of the Company shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Investor or by the Company and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such statement or omission; PROVIDED, HOWEVER, that, in any such
case, (A) the Investor will not be required to contribute any amount in
excess of the public offering price of all such Restricted Stock offered by
it pursuant to such registration statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.

       6.   CHANGES IN COMMON STOCK.  If, and as often as, there is any
change in the Common Stock by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as
so changed.

       7.   RULE 144 REPORTING.  With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time
permit the sale of the Restricted Stock to the public without registration,
at all times after 90 days after the effective date of the first registration
statement covering a public offering of securities of the Company under the
Securities Act, the Company agrees to:

            (a)   make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;

            (b)   use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and

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            (c)   furnish to the Investor forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of such Rule 144 and of the Securities Act and the Exchange Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession
of or reasonably obtainable by the Company as the Investor may reasonably
request in availing itself of any rule or regulation of the Commission
allowing the Investor to sell any such securities without registration.

       8.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company
represents and warrants to you as follows:

            (a)   The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action
and will not violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation or By-laws of the
Company or any provision of any indenture, agreement or other instrument to
which it or any or its properties or assets is bound, conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.

            (b)   This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.

       9.   MISCELLANEOUS.

            (a)   No party may assign any of its rights or obligations
hereunder by operation of law or otherwise without the prior written consent
of the other party.

            (b)   All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by telecopier
or telex, addressed to the address of such party set forth on the signature
pages hereto, or, in any case, at such other address or addresses as shall
have been furnished in writing to the Company (in the case of the Investor)
or to the Investor (in the case of the Company) in accordance with the
provisions of this paragraph.

            (c)   This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

            (d)   This Agreement may not be amended or modified and no
provision thereof may be waived, without the written consent of the Company
and the Investor.

            (e)   This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

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            (f)   If requested in writing by the underwriters, for the
initial underwritten public offering of Common Stock of the Company, the
Investor shall agree not to distribute or sell publicly any shares of
Restricted Stock or any other shares of Common Stock (other than shares of
Restricted Stock or other shares of Common Stock being registered in such
offering), without the consent of such underwriters, for a period of not more
than 180 days following the effective date of the registration statement
relating to such offering; PROVIDED, HOWEVER, that all persons entitled to
registration rights with respect to shares of Common Stock who are not
parties to this Agreement, all other persons selling shares of Common Stock
in such offering, all persons holding in excess of 1% of the capital stock of
the Company on a fully diluted basis and all executive officers and directors
of the Company shall also have agreed not to sell publicly their Common Stock
under the circumstances and pursuant to the terms set forth in this SECTION
9(f).

            (g)   Except for registration statements of the Company on Forms
S-4, S-8 or any successor thereto or except as described in clause (f)
immediately above, or unless the managing underwriter otherwise consents or
agrees, the Company agrees, and the Company agrees, in connection with any
underwritten registration, to use its reasonable best efforts to cause its
affiliates to agree, not to effect any public sale or private offer or
distribution of any Common Stock during the ten business days prior to the
effectiveness under the Securities Act of any underwritten registration and
during such time period after the effectiveness under the Securities Act of
any underwritten registration (not to exceed 120 days) (except, if
applicable, as part of such underwritten registration) as the Company and the
managing underwriter agree.

            (h)   Notwithstanding the provisions of Section 2, Section 2A, or
Section 3(a), the Company's obligation to file a registration statement, or
cause such registration statement to become and remain effective, shall be
suspended for a period not to exceed 105 days if (i) at the time the Company
is obligated to file a registration statement, the Company or any of its
affiliates are engaged in confidential negotiations or other confidential
business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration
statement were not filed), and the Board of Directors of the Company
determines in good faith that such disclosure would be materially detrimental
to the Company and its stockholders or would have a material adverse effect
on any such confidential negotiations or other confidential business
activities, or (ii) prior to receiving a request to file a registration
statement, the Board of Directors had determined to effect a registered
underwritten public offering of the Company's securities for the Company's
account and the Company had taken substantial steps (including, but not
limited to, selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering.  A deferral of
the filing of a registration statement pursuant to this Section 9(h) shall be
lifted, and the requested registration statement shall be filed forthwith,
if, in the case of a deferral pursuant to clause (i) of the preceding
sentence, the negotiations or other activities are disclosed or terminated,
or, in the case of a deferral pursuant to clause (ii) of the preceding
sentence, the proposed registration for the Company's account is abandoned.
In order to defer the filing of a registration statement pursuant to this
Section 9(h), the Company shall promptly (but in any event within 10 days),
upon determining to seek such deferral, deliver to the Investor a certificate
signed by an

                                      -11-

<PAGE>

executive officer of the Company stating that the Company is deferring such
filing pursuant to this Section 9(h) and a general statement of the reason
for such deferral and an approximation of the anticipated delay.

            (i)   If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.

            (j)   This Agreement shall terminate upon the earlier to occur of
(i) such date on or after the closing of the Company's first firm commitment
underwritten public offering as all shares of Restricted Stock held may
immediately be sold pursuant to Rule 144 under the Securities Act during any
90-day period or (ii) the twelfth anniversary of this Agreement.

            (k)   ENTIRE AGREEMENT.   This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein.  This
Agreement supersedes all prior agreements and understandings with respect to
such subject matter.

            (l)   HEADINGS.  The headings in this Agreement are for
convenience and reference only and shall not limit or otherwise affect the
meaning hereof.

                   [Remainder of this page intentionally left blank]

                                      -12-

<PAGE>

       IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above.

                                    COMPANY

                                    DIGITAL:CONVERGENCE CORPORATION

                                    By: /s/ J. Jovan Philyaw
                                       -----------------------------------
                                    Name:   J. Jovan Philyaw
                                    Title:  Chairman & C.E.O.

                                    Address:  9101 N. Central Expressway
                                              6th Floor
                                              Dallas, Texas 75231
                                              Attention: Chief Financial Officer
                                              Telephone: (214) 292-6000
                                              Telecopy:  (214) 292-6914

                   [REGISTRATION RIGHTS AGREEMENT - SIGNATURE PAGE]

<PAGE>

                                    INVESTOR

                                    NEOMEDIA TECHNOLOGIES, INC.

                                    By: /s/ Charles W. Fritz
                                       --------------------------------------
                                    Name:   Charles W. Fritz
                                    Title:  Chairman and CEO

                                    Address:  2201 Second St., Ste. 600
                                              Ft. Myers, FL 33901
                                              Telephone: (941) 337-3434
                                              Telecopy:  (941) 337-3361

                   [REGISTRATION RIGHTS AGREEMENT - SIGNATURE PAGE]

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