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Exhibit 10.21    
    

        Execution Copy  

 FOURTH AMENDMENT TO CREDIT AGREEMENT  

        This FOURTH AMENDMENT TO CREDIT AGREEMENT dated as of February 2, 2004 by and among PRICE LEGACY CORPORATION (the "Borrower"), EXCEL LEGACY CORPORATION and
EXCEL LEGACY HOLDINGS, INC. (the "Guarantors"), each of the financial institutions party hereto and their assignees under §18 of the Credit Agreement (as defined below)(the
"Banks"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent (the "Agent") and the other parties thereto. 

        WHEREAS,
the Borrower, the Banks and the Agent are parties to that certain Credit Agreement dated as of September 19, 2001, as amended by that certain First Amendment to Credit
Agreement dated as of December 28, 2001, as further amended by that certain Second Amendment to Credit Agreement dated as of June 30, 2002, and as further amended by that certain Third
Amendment to Credit Agreement dated as of March 25, 2003 (as so amended, the "Credit Agreement"); 

        WHEREAS,
the Borrower, the Banks and the Agent desire to amend certain provisions of the Credit Agreement; 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows: 

        Section 1.    Specific Amendments to Credit Agreement.    

        (a)   The
Credit Agreement is hereby amended by deleting from §1 the definitions of Agent,  Agent's Head Office, Agent's Special
Counsel, Banks,  Commitment, Default Rate, Issuing
Bank,  Maturity Date and Revolving Credit Note in their entirety and substituting in their respective places
the following: 

         Agent.    Wells Fargo Bank, National Association acting as administrative agent for the Banks, and its successors and assigns. 

         Agent's Head Office.    The Agent's head office located at 2120 E. Park Place, Suite 100, El Segundo, California 90245, or at such other
location as the
Agent may designate from time to time by notice to the Borrower and the Banks. 

        Agent's Special Counsel.    Alston & Bird LLP, or such other counsel as may be approved by the Agent. 

         Banks.    Agent, the other lending institutions party to this Agreement, and any other Person who becomes an assignee of any rights of a
Bank pursuant
to §18 (but not including any Participant, as defined in §18). The Issuing Bank shall be a Bank, as applicable. 

        Commitment.    As to each Bank, such Bank's obligation to make Revolving Loans pursuant to §2.1 and to participate in Letters of
Credit
pursuant to §2.2(i), in an amount up to, but not exceeding the amount set forth for such Bank on its signature page hereto as such Bank's "Commitment Amount" or as set forth in the
applicable Assignment and Acceptance Agreement, as the same may be reduced from time to time pursuant to §2.10 or otherwise pursuant to the terms of this Agreement or as appropriate to
reflect any assignments to or by such Bank effected in accordance with §18. 

        Default Rate.    In respect of any principal of any Loan or any other Obligation that is not paid when due (whether at stated maturity, by
acceleration,
by optional or mandatory prepayment or otherwise), a rate per annum equal to four percent (4.0%) plus the Base Rate as in effect from time to time. 

         Issuing Bank.    Wells Fargo Bank, National Association, in its capacity as the Bank issuing the Letters of Credit. 

 

        Maturity Date.    June 30, 2004 or such earlier date on which the Loans shall become due and payable pursuant to the terms hereof.

         Revolving Credit Note.    A promissory note of the Borrower substantially in the form of  Exhibit A, payable to the order of a Bank in a principal amount equal to the amount of such Bank's Commitment as originally in effect and
otherwise duly completed. 

        (b)   The
Credit Agreement is hereby amended by adding to §1 the following new definitions in the appropriate alphabetical order location: 

         Applicable Law.    All applicable provisions of constitutions, statutes, rules, regulations and orders of all governmental bodies and all
orders and
decrees of all courts, tribunals and arbitrators. 

        Continue, Continuation and Continued.    Each refers to the continuation of a LIBOR Rate
Loan from one
Interest Period to another Interest Period pursuant to §2.7. 

         Convert, Conversion and Converted.    each
refers to the
conversion of a Revolving Loan of one Type into a Revolving Loan of another Type pursuant to §2.8. 

        Fees.    The fees and commissions provided for or referred to in §3.6 and any other fees payable by the Borrower hereunder or under
any
other Loan Document. 

         Governmental Authority.    Any national, state or local government (whether domestic or foreign), any political subdivision thereof or any
other
governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity (including, without limitation, the Federal Deposit Insurance Corporation,
the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law. 

        Internal Revenue Code.    The Internal Revenue Code of 1986, as amended. 

         Lending Office.    For each Bank and for each Type of Loan, the office of such Bank specified as such on its signature page hereto or in
the applicable
Assignment and Acceptance Agreement, or such other office of such Bank as such Bank may notify the Agent in writing from time to time. 

         Letter of Credit Collateral Account.    A special deposit account maintained by the Agent and under its sole dominion and control.

        Letter of Credit Documents.    With respect to any Letter of Credit, collectively, any application therefor, any certificate or other
document presented
in connection with a drawing under such Letter of Credit and any other agreement, instrument or other document governing or providing for (a) the rights and obligations of the parties concerned
or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations. 

         Letter of Credit Liabilities.    Without duplication, at any time and in respect of any Letter of Credit, the sum of (a) the Stated
Amount of
such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of the Borrower at such time due and payable in respect of all drawings made under such
Letter of Credit. For purposes of this Agreement, a Bank (other than the Bank then acting as Agent) shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation
interest under §2.2 in the related Letter of Credit, and the Bank then acting as Agent shall be deemed to hold a Letter of Credit Liability in an amount equal to its retained interest in
the related Letter of Credit after giving effect to the acquisition by the Banks (other than the Bank then acting as Agent of their participation interests under such Section). 

2

 

         Loan Party.    Each of the Borrower, each other Person who guarantees all or a portion of the Obligations and/or who pledges any
collateral to secure
all or a portion of the Obligations. 

         Regulatory Change.    With respect to any Bank, any change effective after the Agreement Date in Applicable Law (including without
limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks,
including such Bank, of or under any Applicable Law (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary
authority charged with the interpretation or administration thereof or compliance by any Bank with any request or directive regarding capital adequacy. 

         Reimbursement Obligation.    The absolute, unconditional and irrevocable obligation of the Borrower to reimburse the Agent for any drawing
honored by
the Agent under a Letter of Credit. 

        Revolving Loan.    A loan made by a Bank to the Borrower pursuant to §2.1(a). 

         Stated Amount.    The amount available to be drawn by a beneficiary under a Letter of Credit from time to time, as such amount may be
increased or
reduced from time to time in accordance with the terms of such Letter of Credit. 

         Taxes.    Has the meaning given that term in §3.9. 

        (c)   The
Credit Agreement is hereby amended by deleting §2, §3 and §4 of the Credit Agreement in their entirety and replacing such
Sections with the following: 

        §2    CREDIT FACILITY    

        §2.1    Revolving Loans.    

        (a)    Making of Revolving Loans.    Subject to the terms and conditions set forth in this Agreement, including
without limitation, §2.12. below, each Bank severally and not jointly agrees to make Revolving Loans to the Borrower during the period from and including the Closing Date to but excluding
the Maturity Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, such Bank's Commitment Percentage of the sum of (i) the Borrowing Base minus
(ii) the aggregate Letters of Credit outstanding (but in no event in excess of such Bank's Commitment).
Subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and reborrow Revolving Loans. 

        (b)    Requests for Revolving Loans.    Not later than 9:00 a.m. Pacific Time at least two (2) Business
Days prior to a borrowing of Base Rate Loans and not later than 9:00 a.m. Pacific Time at least three (3) Business Days prior to a borrowing of LIBOR Rate Loans, the Borrower shall
deliver to the Agent a written notice in the form of Exhibit C hereto (a "Notice of Borrowing"). Each Notice of Borrowing shall specify the
aggregate principal amount of the Revolving Loans to be borrowed, the date such Revolving Loans are to be borrowed (which must be a Business Day), the use of the proceeds of such Revolving Loans, the
Type of the requested Revolving Loans, and if such Revolving Loans are to be LIBOR Rate Loans, the initial Interest Period for such Revolving Loans. Each Notice of Borrowing shall be irrevocable once
given and binding on the Borrower. Prior to delivering a Notice of Borrowing, the Borrower may (without specifying whether a Revolving Loan will be a Base Rate Loan or a LIBOR Rate Loan) request that
the Agent provide the Borrower with the most recent LIBOR Rate available to the Agent. The Agent shall provide such quoted rate to the Borrower and to the Banks on the date of such request or as soon
as possible thereafter. 

        (c)    Funding of Revolving Loans.    Promptly after receipt of a Notice of Borrowing under the immediately preceding
subsection (b), the Agent shall notify each Bank by telex or telecopy, or 

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other
similar form of transmission of the proposed borrowing. Each Bank shall deposit an amount equal to the Revolving Loan to be made by such Bank to the Borrower with the Agent at the Agent's Head
Office, in immediately available funds not later than 9:00 a.m. Pacific Time on the date of such proposed Revolving Loans. Subject to fulfillment of all applicable conditions set forth herein,
the Agent shall make available to the Borrower at the Agent's Head Office, not later than 12:00 noon Pacific Time on the date of the requested borrowing of Revolving Loans, the proceeds of such
amounts received by the Agent. No Bank shall be responsible for the failure of any other Bank to make a Loan or to perform any other obligation to be made or performed by such other Bank hereunder,
and the failure of any Bank to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Bank to make any Loan or to perform
any other obligation to be made or performed by such other Bank. 

        (d)    Assumptions Regarding Funding by Banks.    With respect to Revolving Loans to be made after the Closing Date,
unless the Agent shall have been notified by any Bank that such Bank will not make available to the Agent a Revolving Loan to be made by such Bank, the Agent may assume that such Bank will make the
proceeds of such Revolving Loan available to the Agent in accordance with this Section and the Agent may (but shall not be obligated to), in reliance upon such assumption, make available to the
Borrower the amount of such Revolving Loan to be provided by such Bank. 

        §2.2    Letters of Credit.    

        (a)    Letters of Credit.    Subject to the terms and conditions of this Agreement, including without limitation,
§2.12., the Agent, on behalf of the Banks, agrees to issue for the account of the Borrower during the period from and including the Closing Date to, but excluding, the date 30 days
prior to the Maturity Date, one or more standby letters of credit (each a "Letter of Credit") up to a maximum aggregate Stated Amount at any one time outstanding not to exceed $10,000,000 as such
amount may be reduced from time to time in accordance with the terms hereof (the "L/C Commitment Amount"). 

        (b)    Terms of Letters of Credit.    At the time of issuance, the amount, form, terms and conditions of each Letter
of Credit, and of any drafts or acceptances thereunder, shall be subject to approval by the Agent and the Borrower. Notwithstanding the foregoing, in no event may (i) the expiration date of any
Letter of Credit extend beyond the Maturity Date, (ii) any Letter of Credit have an initial duration in excess of one year, or (iii) any Letter of Credit contain an automatic renewal
provision. The initial Stated Amount of each Letter of Credit shall be at least $500,000. 

        (c)    Requests for Issuance of Letters of Credit.    The Borrower shall give the Agent written notice at least 5
Business Days prior to the requested date of issuance of a Letter of Credit, such notice to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the transactions
or obligations proposed to be supported by such Letter of Credit, and in any event shall set forth with respect to such Letter of Credit the proposed (i) initial Stated Amount, (ii) the
beneficiary, and (iii) expiration date. The Borrower shall also execute and deliver such customary applications and agreements for standby letters of credit, and other forms as requested from
time to time by the Agent. Provided the Borrower has given the notice prescribed by the first sentence of this subsection and delivered such application and agreements referred to in the preceding
sentence, subject to the other terms and conditions of this Agreement, including the satisfaction of any applicable conditions precedent set forth in Article 11, the Agent shall issue the
requested Letter of Credit on the requested date of issuance for the benefit of the stipulated beneficiary but in no event prior to the date 5 Business Days following the date after which the Agent
has received all of the items required to be delivered to it under this subsection. Upon the written request of the Borrower, the Agent shall deliver to the Borrower a copy of (i) any Letter 

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of
Credit proposed to be issued hereunder prior to the issuance thereof and (ii) each issued Letter of Credit within a reasonable time after the date of issuance thereof. To the extent any term
of a Letter of Credit Document is inconsistent with a term of any Loan Document, the term of such Loan Document shall control. 

        (d)    Reimbursement Obligations.    Upon receipt by the Agent from the beneficiary of a Letter of Credit of any
demand for payment under such Letter of Credit, the Agent shall promptly notify the Borrower of the amount to be paid by the Agent as a result of such demand and the date on which payment is to be
made by the Agent to such beneficiary in respect of such demand. The Borrower hereby absolutely, unconditionally and irrevocably agrees to pay and reimburse the Agent for the amount of each demand for
payment under such Letter of Credit at or prior to the date on which payment is to be made by the Agent to the beneficiary thereunder, without presentment, demand, protest or other formalities of any
kind. Upon receipt by the Agent of any payment in respect of any Reimbursement Obligation, the Agent shall promptly pay to each Bank that has acquired a participation therein under the second sentence
of the immediately following subsection (i) such Bank's Commitment Percentage of such payment. 

        (e)    Manner of Reimbursement.    Upon its receipt of a notice referred to in the immediately preceding subsection
(d), the Borrower shall advise the Agent whether or not the Borrower intends to borrow hereunder to finance its obligation to reimburse the Agent for the amount of the related demand for payment and,
if it does, the Borrower shall submit a timely request for such borrowing as provided in the applicable provisions of this Agreement. If the Borrower fails to so advise the Agent, or if the Borrower
fails to reimburse the Agent for a demand for payment under a Letter of Credit by the date of such payment, then the Agent shall give each Bank prompt notice thereof and of the amount of the demand
for payment, specifying such Bank's Commitment Percentage of the amount of the related demand for payment and the provisions of subsection (j) of this Section shall apply. 

        (f)    Effect of Letters of Credit on Commitments.    Upon the issuance by the Agent of any Letter of Credit and until
such Letter of Credit shall have expired or been terminated, the Commitment of each Bank shall be deemed to be utilized for all purposes of this Agreement in an amount equal to the product of
(i) such Bank's Commitment Percentage and (ii) the sum of (A) the Stated Amount of such Letter of Credit plus (B) any related Reimbursement Obligations then outstanding. 

        (g)    Agent's Duties Regarding Letters of Credit; Unconditional Nature of Reimbursement Obligations.    In examining
documents presented in connection with drawings under Letters of Credit and making payments under such Letters of Credit against such documents, the Agent shall only be required to use the same
standard of care as it uses in connection with examining documents presented in connection with drawings under letters of credit in which it has not sold participations and making payments under such
letters of credit. The Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, neither the Agent nor any of the Banks shall be responsible for (i) the form, validity, sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance of or any drawing honored under any Letter of Credit even if such document should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit,
or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any Letter of
Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by
mail, cable, telex, telecopy or otherwise, whether or not they be in cipher; (v) errors in 

5

 

interpretation
of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit, or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any Letter of Credit, or of the proceeds of any drawing under any Letter of Credit; or (viii) any consequences arising from causes
beyond the control of the Agent or the Banks. None of the above shall affect, impair or prevent the vesting of any of the Agent's rights or powers hereunder. Any action taken or omitted to be taken by
the Agent under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create against the Agent any liability to the
Borrower or any Bank. In this connection, the obligation of the Borrower to reimburse the Agent for any drawing made under any Letter of Credit shall be absolute, unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement or any other applicable Letter of Credit Document under all circumstances whatsoever, including without limitation, the following
circumstances: (A) any lack of validity or enforceability of any Letter of Credit Document or any term or provisions therein; (B) any amendment or waiver of or any consent to departure
from all or any of the Letter of Credit Documents; (C) the existence of any claim, setoff, defense or other right which the Borrower may have at any time against the Agent, any Bank, any
beneficiary of a Letter of Credit or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or in the Letter of Credit Documents or any unrelated
transaction; (D) any breach of contract or dispute between the Borrower, the Agent, any Bank or any other Person; (E) any demand, statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein or made in connection therewith being untrue or inaccurate in any respect whatsoever;
(F) any non-application or misapplication by the beneficiary of a Letter of Credit or of the proceeds of any drawing under such Letter of Credit; (G) payment by the Agent
under the Letter of Credit against presentation of a draft or certificate which does not strictly comply with the terms of the Letter of Credit; and (H) any other act, omission to act, delay or
circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable defense to or discharge of the Borrower's Reimbursement Obligations. 

        (h)    Amendments, Etc.    The issuance by the Agent of any amendment, supplement or other modification to any Letter
of Credit shall be subject to the same conditions applicable under this Agreement to the
issuance of new Letters of Credit (including, without limitation, that the request therefor be made through the Agent), and no such amendment, supplement or other modification shall be issued unless
either (i) the respective Letter of Credit affected thereby would have complied with such conditions had it originally been issued hereunder in such amended, supplemented or modified form or
(ii) the Agent and Majority Banks shall have consented thereto. In connection with any such amendment, supplement or other modification, the Borrower shall pay the fees, if any, payable under
the last sentence of §3.6. 

        (i)    Banks' Participation in Letters of Credit.    Immediately upon the issuance by the Agent of any Letter of
Credit each Bank shall be deemed to have absolutely, irrevocably and unconditionally purchased and received from the Agent, without recourse or warranty, an undivided interest and participation to the
extent of such Bank's Commitment Percentage of the liability of the Agent with respect to such Letter of Credit and each Bank thereby shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and shall be unconditionally obligated to the Agent to pay and discharge when due, such Bank's Commitment Percentage of the Agent's liability under such Letter of
Credit. In addition, upon the making of each payment by a Bank to the Agent in respect of any Letter of Credit pursuant to the immediately following subsection (j), such Bank shall, automatically and
without any further action on the part of the Agent or such Bank, acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation owing to the Agent by the
Borrower in respect of such Letter of Credit and (ii) a participation in a percentage equal to such Bank's Commitment 

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Percentage
in any interest or other amounts payable by the Borrower in respect of such Reimbursement Obligation (other than the Fees payable to the Agent pursuant to the last sentence of
§3.6.(b). 

        (j)    Payment Obligation of Banks.    Each Bank severally agrees to pay to the Agent on demand in immediately
available funds in Dollars the amount of such Bank's Commitment Percentage of each drawing paid by the Agent under each Letter of Credit to the extent such amount is not reimbursed by the Borrower
pursuant to the immediately preceding subsection (d); provided, however, that in respect of any drawing under any Letter of Credit, the maximum amount that any Bank shall be required to fund, whether
as a Revolving Loan or as a participation, shall not exceed such Bank's Commitment Percentage of such drawing. Each Bank's obligation to make such payments to the Agent under this subsection, and the
Agent's right to receive the same, shall be absolute, irrevocable and unconditional and shall not be affected in any way by any circumstance whatsoever, including without limitation, (i) the
failure of any other Bank to make its payment under this subsection, (ii) the financial condition of the Borrower or any other Loan Party, (iii) the existence of any Default or Event of
Default, including any Event of Default described in §12.1(h), (i) or (j) or (iv) the termination of the Commitments. Each such payment to the Agent shall be made
without any offset, abatement, withholding or deduction whatsoever. 

        (k)    Information to Banks.    Promptly following any change in Letters of Credit outstanding, the Agent shall
deliver to each Bank and the Borrower a notice describing the aggregate amount of all Letters of Credit outstanding at such time. Upon the request of any Bank from time to time, the Agent shall
deliver any other information reasonably requested by such Bank with respect to each Letter of Credit
then outstanding. Other than as set forth in this subsection, the Agent shall have no duty to notify the Banks regarding the issuance or other matters regarding Letters of Credit issued hereunder. The
failure of the Agent to perform its requirements under this subsection shall not relieve any Bank from its obligations under the immediately preceding subsection (j). 

        §2.3.    Rates and Payment of Interest on Loans.    

        (a)    Rates.    The Borrower promises to pay to the Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period from and including the date of the making of such Loan to but excluding the date such Loan shall be paid in full, at the following per
annum rates: 

          (i)  during
such periods as such Loan is a Base Rate Loan, at the Base Rate (as in effect from time to time), plus the Applicable Margin for Base Rate Loans; and 

         (ii)  during
such periods as such Loan is a LIBOR Rate Loan, at LIBOR Rate for such Loan for the Interest Period therefor, plus the Applicable Margin for LIBOR Rate Loans. 

Notwithstanding
the foregoing, during the continuance of an Event of Default, the Borrower shall pay to the Agent for the account of each Bank interest at the Default Rate on the outstanding principal
amount of any Loan made by such Bank, on all Reimbursement Obligations and on any other amount payable by the Borrower hereunder or under the Notes held by such Bank to or for the account of such Bank
(including without limitation, accrued but unpaid interest to the extent permitted under Applicable Law). 

        (b)    Payment of Interest.    All accrued and unpaid interest on the outstanding principal amount of each Loan shall
be payable (i) monthly in arrears on the first day of each month, commencing with the first full calendar month occurring after the Closing Date and (ii) on any date on which the
principal balance of such Loan is due and payable in full (whether at maturity, due to acceleration or otherwise). Interest payable at the Default Rate shall be payable from time 

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to
time on demand. All determinations by the Agent of an interest rate hereunder shall be conclusive and binding on the Banks and the Borrower for all purposes, absent manifest error. 

        §2.4.    Number of Interest Periods.    

        There
may be no more than 8 different Interest Periods outstanding at the same time. 

        §2.5.    Repayment of Loans.    

        The
Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Revolving Loans on the Maturity Date. 

        §2.6.    Prepayments.    

        (a)    Optional.    Subject to §4.4, the Borrower may prepay any Loan at any time without premium or
penalty. The Borrower shall give the Agent at least 3 Business Days prior written notice of the prepayment of any Loan. 

        (b)    Mandatory.    

        (i)    Commitment Overadvance.    If at any time the aggregate principal amount of all outstanding Revolving Loans,
together with the aggregate amount of all Letter of Credit Liabilities, exceeds the aggregate amount of the Commitments, the Borrower shall immediately upon demand pay to the Agent for the account of
the Banks, the amount of such excess. 

        (ii)    Borrowing Base Overadvance.    If at any time the aggregate principal amount of all outstanding Revolving
Loans, together with the aggregate amount of all Letter of Credit Liabilities, exceeds the Borrowing Base, the Borrower shall within 5 days of the Borrower obtaining knowledge of the occurrence
of any such excess, deliver to the Agent for prompt distribution to each Bank a written plan acceptable to all of the Banks to eliminate such excess. If such excess is not eliminated within
15 days of the Borrower obtaining knowledge of the occurrence thereof, then the entire outstanding principal balance of all Loans, together with all accrued interest thereon, and an amount
equal to all Letter of Credit Liabilities for deposit into the Letter of Credit Collateral Account, shall be immediately due and payable in full. 

All
payments under this subsection (b) shall be applied to pay all amounts of excess principal outstanding on the applicable Loans and any applicable Reimbursement Obligations in accordance
with §3.2., and the remainder, if any, shall be deposited into the Letter of Credit Collateral Account for application to any Reimbursement Obligations as and when due. 

        §2.7.    Continuation.    

        So
long as no Default or Event of Default exists, the Borrower may on any Business Day, with respect to any LIBOR Rate Loan, elect to maintain such LIBOR Rate Loan or any portion thereof
as a LIBOR Rate Loan by selecting a new Interest Period for such LIBOR Rate Loan. Each new Interest Period selected under this Section shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by the Borrower giving to the Agent written notice in the form of  Exhibit G hereto (a "Notice of Continuation") not later than
9:00 a.m. on the third Business Day prior to the date of any such
Continuation. Such notice by the Borrower of a Continuation shall be by telecopy, electronic mail or other form of communication in the form of a Notice of Continuation, specifying (a) the
proposed date of such Continuation, (b) the LIBOR Rate Loan and portion thereof subject to such Continuation and (c) the duration of the selected Interest Period, all of which shall be
specified in such manner as is necessary to comply with all limitations on Loans outstanding hereunder. Each Notice of Continuation shall be irrevocable by and binding on the Borrower once 

8

 

given.
Promptly after receipt of a Notice of Continuation, the Agent shall notify each Bank by telecopy, electronic mail or other similar form of transmission of the proposed Continuation. If the
Borrower shall fail to select in a timely manner a new Interest Period for any LIBOR Rate Loan in accordance with this Section, such Loan will automatically, on the last day of the current Interest
Period therefor, Convert into a Base Rate Loan notwithstanding failure of the Borrower to comply with §2.8. 

        §2.8.    Conversion.    

        So
long as no Default or Event of Default exists, the Borrower may on any Business Day, upon the Borrower's giving of written notice in the form of  Exhibit H hereto (a "Notice of Conversion") to the
Agent, Convert all or a portion of a Loan of one Type into a Loan of another Type. Any
Conversion of a LIBOR Rate Loan into a Base Rate Loan shall be made on, and only on, the last day of an Interest Period for such LIBOR Rate Loan and, upon Conversion of a Base Rate Loan into a LIBOR
Rate Loan, the Borrower shall pay accrued interest to the date of Conversion on the principal amount so Converted. Each such Notice of Conversion shall be given not later than 9:00 a.m. one
Business Day prior to the date of any proposed Conversion into Base Rate Loans and three Business Days prior to the date of any proposed Conversion into LIBOR Rate Loans. Promptly after receipt of a
Notice of Conversion, the Agent shall notify each Bank by telecopy, electronic mail or other similar form of transmission of the proposed Conversion. Subject to the restrictions specified above, each
Notice of Conversion shall be by telecopy in the form of a Notice of Conversion specifying (a) the requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the
portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion is into a LIBOR Rate Loan, the requested duration of the
Interest Period of such Loan. Each Notice of Conversion shall be irrevocable by and binding on the Borrower once given. 

        §2.9.    Notes.    

        The
Revolving Loans made by each Bank shall, in addition to this Agreement, also be evidenced by a Revolving Credit Note, payable to the order of such Bank in a principal amount equal to
the amount of its Commitment as originally in effect and otherwise duly completed. 

        §2.10.    Voluntary Reductions of the Commitment.    

        The
Borrower may terminate or reduce the amount of the Commitments at any time and from time to time without penalty or premium upon not less than five (5) Business Days prior
notice to the Agent of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction and shall be irrevocable once given and effective
only upon receipt by the Agent ("Prepayment Notice"). Promptly after receipt of a Prepayment Notice the Agent shall notify each Bank by telecopy, or other similar form of transmission of the proposed
termination or Commitment reduction. The Commitments, once reduced pursuant to this Section, may not be increased. The Borrower shall pay all interest and fees, on the Loans accrued to the date of
such reduction or termination of the Commitments to the Agent for the account of the Banks, including but not limited to any applicable compensation due to each Bank in accordance with
§4.4 of this Agreement. 

        §2.11.    Expiration or Maturity Date of Letters of Credit Past Maturity Date.    

        If
on the date the Commitments are terminated (whether voluntarily, by reason of the occurrence of an Event of Default or otherwise), there are any Letters of Credit outstanding
hereunder, the Borrower shall, on such date, pay to the Agent an amount of money equal to the Stated Amount of such Letter(s) of Credit for deposit into the Letter of Credit Collateral Account. If a
drawing pursuant to any such Letter of Credit occurs on or prior to the expiration date of such Letter of Credit, the Borrower authorizes the Agent to use the monies deposited in the 

9

 

Letter
of Credit Collateral Account to make payment to the beneficiary with respect to such drawing or the payee with respect to such presentment. If no drawing occurs on or prior to the expiration
date of such Letter of Credit, the Agent shall pay to the Borrower (or to whomever else may be legally entitled thereto) the monies deposited in the Letter of Credit Collateral Account with respect to
such outstanding Letter of Credit on or before the date 30 days after the expiration date of such Letter of Credit. 

        §2.12.    Amount Limitations.    

        Notwithstanding
any other term of this Agreement or any other Loan Document, no Bank shall be required to make any Loan, and the Agent shall not be required to issue any Letter of Credit
if, immediately after the making of such Loan or issuance of such Letter of Credit the aggregate principal amount of all outstanding Loans, together with the aggregate amount of all Letter of Credit
Liabilities, would exceed either (a) the aggregate amount of the Commitments or (b) the Borrowing Base. 

        §3.    PAYMENTS, FEES AND OTHER GENERAL PROVISIONS    

        §3.1.    Payments.    

        Except
to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Borrower under this Agreement, the Notes or any other Loan
Document shall be made in Dollars, in immediately available funds, without setoff, deduction or counterclaim, to the Agent at the Agent's Head Office, not later than 11:00 a.m. Pacific Time on
the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). The Borrower shall, at the
time of making each payment under this Agreement or any other Loan Document, specify to the Agent the amounts payable by the Borrower hereunder to which such payment is to be applied. Each payment
received by the Agent for the account of a Bank under this Agreement or any Note shall be paid to such Bank by wire transfer of immediately available funds in accordance with the wiring instructions
provided by such Bank to the Agent from time to time, for the account of such Bank at the applicable Lending Office of such Bank. In the event the Agent fails to pay such amounts to such Bank within
one Business Day of receipt of such amounts, the Agent shall pay interest on such amount at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect. If the due date of
any payment under this Agreement or any other Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest shall
continue to accrue at the rate, if any, applicable to such payment for the period of such extension. 

        §3.2.    Pro Rata Treatment.    

        Except
to the extent otherwise provided herein: (a) each borrowing from Banks under §2.1. shall be made from the Banks, each payment of the fees under §3.6
shall be made for the account of the Banks, and each termination or reduction of the amount of the Commitments under §2.10. shall be applied to the respective Commitments of the Banks, pro
rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of Revolving Loans by the Borrower shall be made for the account of the Banks pro rata
in accordance with the respective unpaid principal amounts of the Revolving Loans held by them, provided that if immediately prior to giving effect to any such payment in respect of any Revolving
Loans the outstanding principal amount of the Revolving Loans shall not be held by the Banks pro rata in accordance with their respective Commitments in effect at the time such Loans were made, then
such payment shall be applied to the Revolving Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Revolving Loans being held by the Banks pro
rata in accordance with their respective Commitments; (c) each payment of interest on 

10

 

Revolving
Loans by the Borrower shall be made for the account of the Banks pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Banks;
(d) the Conversion and Continuation of Revolving Loans of a particular Type (other than Conversions provided for by §5.1.) shall be made pro rata among the Banks according to the
amounts of their respective Revolving Loans and the then current Interest Period for each Bank's portion of each Revolving Loan of such Type shall be coterminous; and (e) the Banks'
participation in, and payment obligations in respect of, Letters of Credit under §2.2., shall be pro rata in accordance with their respective Commitments. 

        §3.3.    Sharing of Payments, Etc.    

        The
Borrower agrees that, in addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, the Agent, each Bank and each
Participant is hereby authorized by the Borrower, at any time or from time to time while an Event of Default exists, without notice to the Borrower or to any other Person, any such notice being hereby
expressly waived, but in the case of a Bank or a Participant subject to receipt of the prior written consent of the Agent exercised in its sole discretion, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or
owing by the Agent, such Bank or any affiliate of the Agent or such Bank, to or for the credit or the account of the Borrower against and on account of any of the Obligations, irrespective of whether
or not any or all of the Loans and all other Obligations have been declared to be, or have otherwise become, due and payable as permitted by §12.3 and although such obligations shall be
contingent or unmatured. If a Bank shall obtain payment of any principal of, or interest on, any Loan under this Agreement or shall obtain payment on any other Obligation owing by the Borrower or any
other Loan Party through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise or through voluntary prepayments directly to a Bank or other
payments made by the Borrower or any other Loan Party to a Bank not in accordance with the terms of this Agreement and such payment should be distributed to the Banks in accordance with
§3.2. or §12.4 such Bank shall promptly purchase from such other Banks participations in (or, if and to the extent specified by such Bank, direct interests in) the Loans made
by the other Banks or other Obligations owed to such other Banks in such amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Banks shall share the benefit of such payment (net of any reasonable expenses which may actually be incurred by such Bank in obtaining or preserving such benefit) in
accordance with the requirements of §3.2 or §12.4, as applicable. To such end, all the Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Borrower agrees that any Bank so purchasing a participation (or direct interest) in the Loans or other
Obligations owed to such other Banks may exercise all rights of set-off, banker's lien, counterclaim or similar rights with the respect to such participation as fully as if such Bank were
a direct holder of Loans in the amount of such participation. Nothing contained herein shall require any Bank to exercise any such right or shall affect the right of any Bank to exercise and retain
the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower. 

        §3.4.    Several Obligations.    

        No
Bank shall be responsible for the failure of any other Bank to make a Loan or to perform any other obligation to be made or performed by such other Bank hereunder, and the failure of
any Bank to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Bank to make any Loan or to perform any other
obligation to be made or performed by such other Bank. 

11

 

        §3.5.    Minimum Amounts.    

        (a)    Borrowings.    Each borrowing of Base Rate Loans shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $100,000 in excess thereof. Each borrowing of and Continuation of, and each Conversion of Base Rate Loans into, LIBOR Rate Loans shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $100,000 in excess of that amount. 

        (b)    Prepayments.    Each voluntary prepayment of Revolving Loans shall be in a minimum amount of $100,000. 

        (c)    Reductions of Commitments.    Each reduction of the Commitments under §2.11 shall be in an
aggregate minimum amount of $10,000,000 and integral multiples of $1,000,000 in excess thereof. 

        §3.6.    Fees.    

        (a)    Facility Fees.    During the period from the Closing Date to but excluding the Maturity Date, the Borrower
agrees to pay to the Agent for the account of the Banks an unused facility fee equal to the sum of the daily amount by which the Total Commitments exceeds the aggregate outstanding principal balance
of Revolving Loans and Letter of Credit Liabilities set forth in the table below multiplied by the corresponding per annum rate applicable to that portion: 

	Amount by Which Commitments Exceeds

Revolving Loans and Letter of Credit Liabilities
 
	 	Unused Fee
	 
	$0 to and including an amount equal to 50% of the aggregate amount of Commitments	 	0.25	%
	Greater than an amount equal to 50% of the aggregate amount of Commitments	 	0.15	%

        Such
fee shall be computed on a daily basis and payable quarterly in arrears on the first day of each January, April, July and October during the term of this Agreement and on the
Maturity Date or any earlier date of termination of the Commitments or reduction of the Commitments to zero. 

        (b)    Letter of Credit Fees.    The Borrower agrees to pay to the Agent for the account of each Bank a letter of
credit fee at a rate per annum equal to the Applicable Margin for LIBOR Rate Loans times the daily average Stated Amount of each Letter of Credit for the period from and including the date of issuance
of such Letter of Credit (x) to and including the date such Letter of Credit expires or is terminated or (y) to but excluding the date such Letter of Credit is drawn in full;  provided,
however, in no event shall the aggregate annual amount of such fee in respect of any Letter of
Credit be less than $1,000. In addition to such fees, the Borrower shall pay to the Agent solely for its own account, a fronting fee in respect of each Letter of Credit at the rate equal to
one-eighth of one percent (0.125%) per annum on the daily average Stated Amount of such Letter of Credit. The fees provided for in the immediately preceding two sentences shall be
nonrefundable and payable in arrears (i) quarterly on the last day of March, June, September and December, (ii) on the Maturity Date, (iii) on the date the Commitments are
terminated or reduced to zero and (iv) thereafter from time to time on demand of the Agent. The Borrower shall pay directly to the Agent from time to time on demand all commissions, charges,
costs and expenses in the amounts customarily charged by the Agent from time to time in like circumstances with respect to the issuance of each Letter of Credit, drawings, amendments and other
transactions relating thereto. 

        (c)    Administrative and Other Fees.    The Borrower agrees to pay the administrative and other fees of the Agent as
may be agreed to in writing from time to time. 

12

  

        §3.6.    Computations.    

        Unless
otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or other Obligations due hereunder shall be computed on the basis of a year of 360 days and
the actual number of days elapsed. 

        §3.7.    Usury.    

        In
no event shall the amount of interest due or payable on the Loans or other Obligations exceed the maximum rate of interest allowed by Applicable Law and, if any such payment is paid
by the Borrower or received by any Bank, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the respective Bank in writing that the Borrower elects to
have such excess sum returned to it forthwith. It is the express intent of the parties hereto that the Borrower not pay and the Banks not receive, directly or indirectly, in any manner whatsoever,
interest in excess of that which may be lawfully paid by the Borrower under Applicable Law. The parties hereto hereby agree and stipulate that the only charge imposed upon the Borrower for the use of
money in connection with this Agreement is and shall be the interest specifically described in §2.3.(a)(i) and (ii). Notwithstanding the foregoing, the parties hereto further agree
and stipulate that all agency fees, syndication fees, facility fees, letter of credit fees, underwriting fees, default charges, late charges, funding or "breakage" charges, increased cost charges,
attorneys' fees and reimbursement for costs and expenses paid by the Agent or any Bank to third parties or for damages incurred by the Agent or any Bank, are charges made to compensate the Agent or
any such Bank for underwriting or administrative services and costs or losses performed or incurred, and to be performed or incurred, by the Agent and the Banks in connection with this Agreement and
shall under no circumstances be deemed to be charges for the use of money. All charges other than charges for the use of money shall be fully earned and nonrefundable when due. 

        §3.8.    Statements of Account.    

        The
Agent will account to the Borrower monthly with a statement of Loans, Letters of Credit, accrued interest and Fees, charges and payments made pursuant to this Agreement and the other
Loan Documents, and such account rendered by the Agent shall be deemed conclusive upon the Borrower absent manifest error. The Agent will account to the Borrower on changes in Letters of Credit in
accordance with §2.2.(k). The failure of the Agent to deliver such a statement of accounts shall not relieve or discharge the Borrower from any of its obligations hereunder. 

        §3.9.    Taxes.    

        (a)    Taxes Generally.    All payments by the Borrower of principal of, and interest on, the Loans and all other
Obligations shall be made free and clear of and without deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes) that would not be imposed but for a
connection between the Agent or a Bank and the jurisdiction imposing such taxes (other than a connection arising solely by virtue of the activities of the Agent or such Bank pursuant to or in respect
of this Agreement or any other Loan Document), (iii) any taxes imposed on or measured by any Bank's assets, net income, receipts or branch profits and (iv) any taxes arising after the
Agreement Date solely as a result of or attributable to a Bank changing its designated Lending Office after the date such Bank becomes a party hereto (such non-excluded items being
collectively called "Taxes"). If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law, then the
Borrower will: 

          (i)  pay
directly to the relevant Governmental Authority the full amount required to be so withheld or deducted; 

13

 

         (ii)  promptly
forward to the Agent an official receipt or other documentation satisfactory to the Agent evidencing such payment to such Governmental Authority; and 

        (iii)  pay
to the Agent for its account or the account of the applicable Bank, as the case may be, such additional amount or amounts as is necessary to ensure that the net
amount actually received by the Agent or such Bank will equal the full amount that the Agent or such Bank would have received had no such withholding or deduction been required. 

        (b)    Tax Indemnification.    If the Borrower fails to pay any Taxes when due to the appropriate Governmental
Authority or fails to remit to the Agent, for its account or the account of the respective Bank, as the case may be, the required receipts or other required documentary evidence, the Borrower shall
indemnify the Agent and the Banks for any incremental Taxes, interest or penalties that may become payable by the Agent or any Bank as a result of any such failure. For purposes of this Section, a
distribution hereunder by the Agent or any Bank to or for the account of any Bank shall be deemed a payment by the Borrower. 

        (c)    Tax Forms.    Prior to the date that the Agent, if applicable, any Bank or Participant organized under the laws
of a jurisdiction outside the United States of America becomes a party hereto, such Person shall deliver to the Borrower and the Agent such certificates, documents or other evidence, as required by
the Internal Revenue Code or Treasury Regulations issued pursuant thereto (including Internal Revenue Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor
forms), properly completed, currently effective and duly executed by the Agent, if applicable, such Bank or Participant establishing that payments to it hereunder and under the Notes are
(i) not subject to United States Federal backup withholding tax and (ii) not subject to United States Federal withholding tax under the Code. The Agent, if applicable, each such Bank or
Participant shall (x) deliver further copies of such forms or other appropriate certifications on or before the date that any such forms expire or become obsolete and after the occurrence of
any event requiring a change in the most recent form delivered to the Borrower and (y) obtain such extensions of the time for filing, and renew such forms and certifications thereof, as may be
reasonably requested by the Borrower or the Agent. The Borrower shall not be required to pay any amount pursuant to last sentence of subsection (a) above to the Agent, if applicable, any Bank
or Participant that is organized under the laws of a jurisdiction outside of the United States of America or the Agent, if it is organized under the laws of a jurisdiction outside of the United States
of America, if such Bank, Participant or the Agent, as applicable, fails to comply with the requirements of this subsection. If the Agent, if applicable, any such Bank or Participant fails to deliver
the above forms or other documentation, then the Agent may withhold from such payment to itself or such Bank such amounts as are required by the Code. If any Governmental Authority asserts that the
Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of itself or any Bank, such Bank shall indemnify the Agent
therefor, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, and costs and expenses (including all fees and
disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel) of the Agent. The obligation of the Agent, if
applicable and the Banks under this Section shall survive the termination of the Commitments, repayment of all Obligations and the resignation or replacement of the Agent. 

        §4.    YIELD PROTECTION    

        §4.1.    Additional Costs; Capital Adequacy.    

        (a)    Additional Costs.    The Borrower shall promptly pay to the Agent for the account of a Bank from time to time
such amounts as such Bank may determine to be necessary to compensate such Bank for any costs incurred by such Bank that it determines are attributable to its making or 

14

 

maintaining
of any LIBOR Rate Loans or its obligation to make any LIBOR Rate Loans hereunder, any reduction in any amount receivable by such Bank under this Agreement or any of the other Loan
Documents in respect of any of such LIBOR Rate Loans or such obligation or the maintenance by such Bank of capital in respect of its LIBOR Rate Loans or its Commitment (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"), resulting from any Regulatory Change that: (i) changes the basis of taxation of any amounts payable to such Bank under
this Agreement or any of the other Loan Documents in respect of any of such LIBOR Rate Loans or its Commitment (other than taxes imposed on or measured by the overall net income of such Bank or of its
Lending Office for any of such LIBOR Rate Loans by the jurisdiction in which such Bank has its principal office or such Lending Office), or (ii) imposes or modifies any reserve, special deposit
or similar requirements (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System or other similar reserve requirement applicable to any other category
of liabilities or category of extensions of credit or other assets by reference to which the interest rate on LIBOR Rate Loans is determined) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities of, or other credit extended by, or any other acquisition of funds by such Bank (or its parent corporation), or any commitment of such Bank (including,
without limitation, the Commitment of such Bank hereunder) or (iii) has or would have the effect of reducing the rate of return on capital of such Bank to a level below that which such Bank
could have achieved but for such Regulatory Change (taking into consideration such Bank's policies with respect to capital adequacy). 

        (b)    Bank's Suspension of LIBOR Rate Loans.    Without limiting the effect of the provisions of the immediately
preceding subsection (a), if by reason of any Regulatory Change, any Bank either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of such Bank that includes deposits by reference to which the interest rate on LIBOR Rate Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank that includes LIBOR Rate Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may
hold, then, if such Bank so elects by notice to the Borrower (with a copy to the Agent), the obligation of such Bank to make or Continue, or to Convert Base Rate Loans into, LIBOR Rate Loans hereunder
shall be suspended until such Regulatory Change ceases to be in effect (in which case the provision of §4.5. shall apply). 

        (c)    Additional Costs in Respect of Letters of Credit.    Without limiting the obligations of the Borrower under the
preceding subsections of this Section (but without duplication), if as a result of any Regulatory Change or any risk-based capital guideline or other requirement heretofore or hereafter
issued by any Governmental Authority there shall be imposed, modified or deemed applicable any tax, reserve, special deposit, capital adequacy or similar requirement against or with respect to or
measured by reference to Letters of Credit and the result shall be to increase the cost to the Agent of issuing (or any Bank of purchasing participations in) or maintaining its obligation hereunder to
issue (or purchase participations in) any Letter of Credit or reduce any amount receivable by the Agent or any Bank hereunder in respect of any Letter of Credit, then, upon demand by the Agent or such
Bank, the Borrower shall pay immediately to the Agent for its account or the account of such Bank, as applicable, from time to time as specified by the Agent or a Bank, such additional amounts as
shall be sufficient to compensate the Agent or such Bank for such increased costs or reductions in amount. 

15

 

        §4.2.    Suspension of LIBOR Rate Loans.    

        Anything
herein to the contrary notwithstanding, if, on or prior to the determination of LIBOR Rate for any Interest Period: 

        (a)   the
Agent reasonably determines (which determination shall be conclusive) that quotations of interest rates for the relevant deposits referred to in the definition of
LIBOR Rate are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for LIBOR Rate Loans as provided herein or is otherwise unable to
determine LIBOR Rate, or 

        (b)   the
Agent reasonably determines (which determination shall be conclusive) that the relevant rates of interest referred to in the definition of LIBOR Rate upon the basis
of which the rate of interest for LIBOR Rate Loans for such Interest Period is to be determined are not likely to adequately cover the cost to any Bank of making or maintaining LIBOR Rate Loans for
such Interest Period; 

then
the Agent shall give the Borrower and each Bank prompt notice thereof and, so long as such condition remains in effect, the Banks shall be under no obligation to, and shall not, make additional
LIBOR Rate Loans, Continue LIBOR Rate Loans or Convert Loans into LIBOR Rate Loans and the Borrower shall, on the last day of each current Interest Period for each outstanding LIBOR Rate Loan, either
prepay such Loan or Convert such Loan into a Base Rate Loan. 

        §4.3.    Illegality.    

        Notwithstanding
any other provision of this Agreement, if any Bank shall determine (which determination shall be conclusive and binding) that it is unlawful for such Bank to honor its
obligation to make or maintain LIBOR Rate Loans hereunder, then such Bank shall promptly notify the Borrower thereof (with a copy of such notice to the Agent) and such Bank's obligation to make or
Continue, or to Convert Revolving Loans of any other Type into, LIBOR Rate Loans shall be suspended until such time as such Bank may again make and maintain LIBOR Rate Loans (in which case the
provisions of §4.5. shall be applicable). 

        §4.4.    Compensation.    

        The
Borrower shall pay to the Agent for account of each Bank, upon the request of such Bank through the Agent, such amount or amounts as shall be sufficient to compensate such Bank for
any loss, cost or expense that such Bank reasonably determines is attributable to: 

        (a)   any
payment or prepayment (whether mandatory or optional) of a LIBOR Rate Loan or Conversion of a LIBOR Rate Loan, made by such Bank for any reason (including, without
limitation, acceleration) on a date other than the last day of the Interest Period for such Loan; or 

        (b)   any
failure by the Borrower for any reason (including, without limitation, the failure of any of the applicable conditions precedent specified in Article 10 to be
satisfied) to borrow a LIBOR Rate Loan from such Bank on the date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Rate Loan or Continue a LIBOR Rate Loan on the requested date of such
Conversion or Continuation. 

Not
in limitation of the foregoing, such compensation shall include, without limitation, an amount equal to the then present value of (i) the amount of interest that would have accrued on such
LIBOR Rate Loan for the remainder of the Interest Period at the rate applicable to such LIBOR Rate Loan, less (ii) the amount of interest that would accrue on the same LIBOR Rate Loan for the
same period if LIBOR Rate were set on the date on which such LIBOR Rate Loan was 

16

 

repaid,
prepaid or Converted or the date on which the Borrower failed to borrow, Convert or Continue such LIBOR Rate Loan, as applicable, calculating present value by using as a discount rate LIBOR
Rate quoted on such date. Upon Borrower's request (made through the Agent), any Bank seeking compensation under this Section shall provide the Borrower with a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof. Any such statement shall be conclusive absent manifest error. 

        §4.5.    Treatment of Affected Loans.    

        If
the obligation of any Bank to make LIBOR Rate Loans or to Continue, or to Convert Base Rate Loans into, LIBOR Rate Loans shall be suspended pursuant to §4.1.,
§4.2., or §4.3. then such Bank's LIBOR Rate Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for LIBOR Rate
Loans (or, in the case of a Conversion required by §4.1. or §4.2. on such earlier date as such Bank may specify to the Borrower with a copy to the Agent) and, unless and until
such Bank gives notice as provided below that the circumstances specified in §4.1., §4.2., or §4.3. that gave rise to such Conversion no longer exist: 

        (a)   to
the extent that such Bank's LIBOR Rate Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Bank's LIBOR
Rate Loans shall be applied instead to its Base Rate Loans; and 

        (b)   all
Revolving Loans that would otherwise be made or Continued by such Bank as LIBOR Rate Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate
Loans of such Bank that would otherwise be Converted into LIBOR Rate Loans shall remain as Base Rate Loans. 

        If
such Bank gives notice to the Borrower (with a copy to the Agent) that the circumstances specified in §4.1. or §4.3. that gave rise to the Conversion of such
Bank's LIBOR Rate Loans pursuant to this Section no longer exist (which such Bank agrees to do promptly upon such circumstances ceasing to exist) at a time when LIBOR Rate Loans made by other Banks
are outstanding, then such Bank's Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Rate Loans, to the extent
necessary so that, after giving effect thereto, all Loans held by the Banks holding LIBOR Rate Loans and by such Bank are held pro rata (as to principal amounts, Types and Interest Periods) in
accordance with their respective Commitments. 

        §4.6.    Change of Lending Office.    

        Each
Bank agrees that it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate an alternate Lending Office with respect to
any of its Loans affected by the matters or circumstances described in §3.9., §4.1 or §4.3. to reduce the liability of the Borrower or avoid the results provided
thereunder, so long as such designation is not disadvantageous to such Bank as determined by such Bank in its sole discretion, except that such Bank shall have no obligation to designate a Lending
Office located in the United States of America. 

        §4.7.    Assumptions Concerning Funding of LIBOR Rate Loans.    

        Calculation
of all amounts payable to a Bank under this Article shall be made as though such Bank had actually funded LIBOR Rate Loans through the purchase of deposits in the relevant
market bearing interest at the rate applicable to such LIBOR Rate Loans in an amount equal to the amount of the LIBOR Rate Loans and having a maturity comparable to the relevant Interest Period;
provided, however, that each Bank may fund each of its LIBOR Rate Loans in any 

17

 

manner
it sees fit and the foregoing assumption shall be used only for calculation of amounts payable under this Article. 

        (d)   The
Credit Agreement is hereby amended by deleting §14.8 in its entirety and replacing it with the following: 

        §14.8    Agent as Bank.    In its individual capacity, Wells Fargo Bank, National Association, shall have
the same obligations and the same rights, powers and privileges in respect to its Commitment and the Loans made by it, and as the holder of any of the Notes as it would have were it not also the
Agent. 

        (e)   The
Credit Agreement is hereby amended by deleting §21 in its entirety and replacing it with the following: 

        §21.    GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE    

        THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF CALIFORNIA AND
SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN §19. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

        (f)    The
Credit Agreement is hereby amended by deleting all provisions relating to the Swing Loan facility set forth in §2.5 and all references to the "Swing
Loan", the "Swing Loan Bank", the "Swing Loan Commitment" and the "Swing Loan Note" throughout the Credit Agreement. 

        (g)   The
Credit Agreement is hereby amended by deleting Schedule 1 in its entirety and replacing it with Schedule 1 attached hereto. 

        (h)   The
Credit Agreement is hereby amended by deleting Exhibit A in its entirety and replacing it with Exhibit A attached hereto. 

        (i)    The
Credit Agreement is hereby amended by deleting Exhibit C in its entirety and replacing it with Exhibit C attached hereto. 

        (j)    The
Credit Agreement is hereby amended by deleting Exhibit E in its entirety and replacing it with Exhibit E attached hereto. 

        (k)   The
Credit Agreement is hereby amended by deleting Exhibit F in its entirety and replacing it with Exhibit F attached hereto. 

        Section 2.    Effectiveness of Amendments.    The effectiveness of Section 1 is subject to receipt by
the Agent of each of the following in form and substance satisfactory to the Agent: 

        (a)   Counterparts
of this Amendment executed by each of the parties hereto; 

        (b)   a
replacement Revolving Credit Note in the form of the Revolving Credit Note attached to this Amendment as  Exhibit A, duly executed by the Borrower in favor of Wells Fargo Bank; 

18

 

        (c)   Assignment
Agreements dated the date hereof signed by each of Fleet National Bank, U.S. Bank National Association, Comerica Bank and Keybank National Association whereby
each such Bank assigns its Commitments to Wells Fargo Bank, National Association. 

        (d)   a
resignation letter executed by Fleet National Bank, under which Fleet National Bank resigns as Agent under the Credit Agreement; 

        (d)   the
fee set forth in Section 9 hereof; and 

        (e)   such
other documents and instruments as the Agent may reasonably request. 

        Section 3.    Representations of the Borrower.    The Borrower represents and warrants to the Agent and the
Banks that: 

        (a)    Authorization.    The Borrower has the right and power, and has taken all necessary action to authorize it, to
execute and deliver this Amendment and to perform its obligations hereunder and under the Credit Agreement, as amended by this Amendment, in accordance with their respective terms. This Amendment has
been duly executed and delivered by a duly authorized officer of the Borrower and each of this Amendment and the Credit Agreement, as amended by this Amendment, is a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with its respective terms except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the
rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations contained herein or therein may be limited by equitable principles generally. 

        (b)    Compliance with Laws, etc.    The execution and delivery by the Borrower of this Amendment and the performance
by the Borrower of this Amendment and the Credit Agreement, as amended by this Amendment, in accordance with their respective terms, do not and will not, by the passage of time, the giving of notice
or otherwise: (i) require any Government Approval or violate any Applicable Law relating to the Borrower; (ii) conflict with, result in a breach of or constitute a default under the
Borrower's declaration of trust or any indenture, agreement or other instrument to which the Borrower is a party or by which it or any of its properties may be bound; or (iii) result in or
require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower other than in favor of the Agent for the benefit of the Banks. 

        (c)    Defaults.    No circumstance has occurred prior to the date hereof and is continuing which constitutes a
Default or an Event of Default under the Credit Agreement and the other Loan Documents. 

        Section 4.    Reaffirmation by Borrower.    The Borrower hereby repeats and reaffirms all representations and
warranties made by the Borrower to the Agent and the Banks in the Credit Agreement and the other Loan Documents to which it is a party on and as of the date hereof (and after giving effect to this
Amendment) with the same force and effect as if such representations and warranties were set forth in this Amendment in full and such representations and warranties are true as of the date hereof
except
to the extent of changes resulting from transactions contemplated or permitted by the Credit Agreement and the other Loan Documents and except to the extent that such representations and warranties
relate expressly to an earlier date. 

        Section 5.    Reaffirmation by Guarantors.    Each Guarantor hereby reaffirms its continuing obligations to the
Agent and the Banks under the Guaranty to which it is a party, and agrees that the transactions contemplated by this Amendment shall not in any way affect the validity and enforceability of such
Guaranty, or reduce, impair or discharge the obligations of such Guarantor thereunder. 

        Section 6.    Consent to Appointment of Agent.    The Borrower hereby consents to the resignation of Fleet
National Bank as Agent and the appointment of Wells Fargo Bank, National Association as successor Agent. 

19

 

        Section 7.    Pentagon.    The Agent and Bank acknowledge that, as of the date of effectiveness of this
Amendment the Unencumbered Borrowing Base Property known as "Pentagon" and located in Arlington, Virginia shall no longer be an Unencumbered Borrowing Base Property. The Borrower hereby covenants and
agrees that, upon the effectiveness of this Amendment and after giving effect to the removal of Pentagon as an Unencumbered Borrowing Base Property, the aggregate principal amount of all outstanding
Loans, together with the aggregate amount of all Letter of Credit Liabilities shall not exceed the lesser of (a) the aggregate amount of the Commitments or (b) the Borrowing Base. 

        Section 8.    Indemnification/Estoppel.    To the extent that the Borrower or any Guarantor has any offsets,
defenses, claims or counterclaims under the Credit Agreement or the other Loan Documents, each as in effect prior to the date hereof (respectively the "Original Credit Agreement" and the "Original
Loan Documents"), the Borrower and each Guarantor hereby agrees not to assert same as a defense to the Obligations under the Credit Agreement and the other Loan Documents as in effect after the date
hereof or any rights of the Agent thereunder. Each of the Borrower and Guarantors agree that they will forever forbear from instituting or prosecuting legal proceedings or in any other way making any
demand or claim against the Agent under the Credit Agreement or the Loan Documents on account of any offsets, defenses, claims or counterclaims which they may have under the Original Credit Agreement
and the Original Loan Documents. Nothing contained herein shall be construed as a release of any of the Borrower's and Guarantors' rights and claims, if any, against Fleet National Bank or the Banks
under the Original Credit Agreement. 

        Section 9.    References to the Credit Agreement.    Each reference to the Credit Agreement in any of the Loan
Documents (including the Credit Agreement) shall be deemed to be a reference to the Credit Agreement, as amended by this Amendment. 

        Section 10.    Fees.    On the date hereof, the Borrower agrees to pay to Agent an amendment fee (the "Fee") in
the amount of $31,250. In the event the Borrower enters into a credit facility with the Agent to refinance the Obligations owed by the Borrower under the Credit Agreement then, upon the closing of
such refinancing, the Fee paid hereunder shall be credited to any facility fees due to Agent at the time of the closing of such refinancing. 

        Section 11.    Benefits.    This Amendment shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. 

        Section 12.    GOVERNING LAW.    THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. 

        Section 13.    Effect.    Except as expressly herein amended, the terms and conditions of the Credit Agreement
and the other Loan Documents shall remain in full force and effect. 

        Section 14.    Effective Date.    This Amendment shall not be effective until its execution and delivery by all
of the parties hereto and satisfaction f the conditions set forth in Section 2, whereupon it shall be deemed effective as of the date first written above. 

        Section 15.    Counterparts.    This Amendment may be executed in any number of counterparts, each of which
shall be deemed to be an original and shall be binding upon all parties, their successors and assigns. 

        Section 16.    Definitions.    All capitalized terms not otherwise defined herein are used herein with the
respective definitions given them in the Credit Agreement. 

[Signatures
on Next Page] 

20

 

        IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to Credit Agreement to be executed as of the date first above written. 

	

 	
BORROWER:
	

 	

PRICE LEGACY CORPORATION
	

 	

By:	
 	

/s/  JEFFREY FISHER      
	 	 	 	
 Name: Jeffrey Fisher

Title: CFO
	

 	
GUARANTORS:
	

 	

EXCEL LEGACY CORPORATION
	

 	

By:	
 	

/s/  ROBERT SIORDIA      
	 	 	 	
 Name: Robert Siordia

Title: COO
	

 	

EXCEL LEGACY HOLDINGS, INC.
	

 	

By:	
 	

/s/  ROBERT SIORDIA      
	 	 	 	

	 	 	 	Name: Robert Siordia

Title: COO

[Signatures Continued on Next Page]

21

 
[Signature Page to First Amendment to Credit Agreement with Price Legacy Corporation]

	

 	

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Agent and as Bank
	

 	

By:	
 	

/s/  SUSAN ROSENBLATT      
	 	 	 	

	 	 	 	Name: Susan Rosenblatt

Title: V.P. and Team Leader
	

 	

Address for Notices:
	

 	

401 B Street, Suite 304

San Diego, CA 92101

Attn: Susan Rosenblatt

Telecopier: (619) 699-3105

Telephone: (619) 699-3171
	

 	
Commitment Amount:
	

 	

$25,000,000
	

 	
Commitment Percentage:
	

 	

100%

22

SCHEDULE 1  

BANKS AND COMMITMENTS  

	Name and Address:
 
	 	Commitment:
	 	Commitment Percentage:
	 
	Wells Fargo Bank,

National Association

401B Street, #304

San Diego, California 92101

Attn: Susan Rosenblatt	 	$	25,000,000	 	100	%
	

LIBOR Lending Office

Same as above	
 	
 	

 	
 	

 	
 

 
 

EXHIBIT A    
    
    FORM OF REVOLVING CREDIT NOTE    
    

	$25,000,000.00	 	                        ,
200            

        FOR VALUE RECEIVED, the undersigned PRICE LEGACY CORPORATION, a Maryland corporation, hereby promises to pay to WELLS FARGO BANK, NATIONAL ASSOCIATION or order,
in accordance with the terms of that certain Revolving Credit Agreement dated as of September 19, 2001 (the "Credit Agreement"), as from time to time in effect, among the undersigned, Fleet
National Bank, for itself and as Agent, and such other Banks as may be from time to time named therein, to the extent not sooner paid, on or before the Maturity Date the principal sum of TWENTY FIVE
MILLION AND NO/100 DOLLARS ($25,000,000.00), or such amount as may be advanced by the payee hereof under the Credit Agreement with daily interest from the date hereof, computed as provided in the
Credit Agreement, on the principal amount hereof from time to time unpaid, at a rate per annum on each portion of the principal amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit Agreement, and with interest on overdue principal and, to the extent permitted by applicable law, on overdue installments of interest and late
charges at the rates provided in the Credit Agreement. Interest shall be payable on the dates specified in the Credit Agreement, except that all accrued interest shall be paid at the stated or
accelerated maturity hereof or upon the prepayment in full hereof. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Credit Agreement. 

        Payments
hereunder shall be made to Wells Fargo Bank, National Association as Agent, at 120 E. Park Place, Suite 100, El Segundo, California 90245 or at such other address as Agent may
specify. 

        This
Note is one of one or more Notes evidencing borrowings under and is entitled to the benefits and subject to the provisions of the Credit Agreement. The principal of this Note may be
due and payable in whole or in part prior to the maturity date stated above and is subject to mandatory prepayment in the amounts and under the circumstances set forth in the Credit Agreement, and may
be prepaid in whole or from time to time in part, all as set forth in the Credit Agreement. 

        Notwithstanding
anything in this Note to the contrary, all agreements between the Borrower and the Banks and the Agent, whether now existing or hereafter arising and whether written or
oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any of the Obligations or otherwise, shall the interest contracted for, charged or received by
the Banks exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to the Banks in excess of the maximum lawful amount, the
interest payable to the Banks shall be reduced to the maximum amount permitted under applicable law; and if from any circumstance the Banks shall ever receive anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal balance of the Obligations and to the payment of
interest or, if such excessive interest exceeds the unpaid balance of principal of the Obligations, such excess shall be refunded to the Borrower. All interest paid or agreed to be paid to the Banks
shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Obligations (including the period of any renewal or extension thereof) so that the interest thereon for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all agreements between the Borrower and the Banks and the Agent. 

        In
case an Event of Default shall occur, the entire principal amount of this Note may become or be declared due and payable in the manner and with the effect provided in said Credit
Agreement. 

        This
Note shall be governed by and construed in accordance with the laws of the State of California (without giving effect to the conflict of laws rules of any jurisdiction). 

        The
undersigned maker and all guarantors and endorsers, hereby waive presentment, demand, notice, protest, notice of intention to accelerate the indebtedness evidenced hereby, notice of 

 

acceleration
of the indebtedness evidenced hereby and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, except as specifically
otherwise provided in the Credit Agreement, and assent to extensions of time of payment or forbearance or other indulgence without notice. 

        IN
WITNESS WHEREOF the undersigned has by its duly authorized officer executed this Note under seal as of the day and year first above written. 

	 	 	PRICE LEGACY CORPORATION,

a Maryland corporation
	

 	
 	

By:	

	 	 	Name:	

	 	 	Title:	

	 	 	 	[CORPORATE SEAL]

2

 
 

EXHIBIT C    
    
    FORM OF NOTICE OF BORROWING    
    

                        ,
200            

Wells
Fargo Bank, National Association

401 B Street, Suite 304

San Diego, CA 92101

Attention: Susan Rosenblatt 

Ladies
and Gentlemen: 

        Reference
is made to that certain Credit Agreement dated as of September 19, 2001 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), by and among Price Legacy Corporation (the "Borrower") each of the financial institutions party hereto and their assignees under §18 of the Credit Agreement (as defined
below)(the "Banks"), Wells Fargo, National Association, as Agent (the "Agent") and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective
meanings given them in the Credit Agreement. 

	1.
	Pursuant
to §2.1(b) of the Credit Agreement, the Borrower hereby requests that the Bank make a Loan to the Borrower in an aggregate amount equal to
$                        .

	2.
	The
Borrower requests that such Loan be made available to the Borrower on                        ,
200            .

	3.
	The
Borrower hereby requests that such Loan be of the following Type: 

[Check one box only]

	?
	Base
Rate Loan 
	?
	LIBOR
Loan, with an initial Interest Period for a duration of: 

[Check one box only]

	 	 	?	 	one month
	 	 	?	 	two months
	 	 	?	 	three months
	 	 	?	 	six months

	4.
	The
proceeds of such Loan will be used for the following: 

.

        The
Borrower hereby certifies to the Banks that as of the date hereof, as of the date of the making of the requested Loan, and after making such Loan, (a) no Default or Event of
Default exists or would exist, and the condition described in §2.12. would not exist; and (b) the representations and warranties made or deemed made by the Borrower and each other
Loan Party in the Loan Documents to which any of them is a party, are and shall be true and correct with the same force and effect as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and
except for changes in factual circumstances specifically and expressly permitted under the Loan Documents. In addition, the Borrower certifies to the Banks 

 

that
all conditions to the making of the requested Loan contained in Article 10 of the Credit Agreement will have been satisfied at the time such Loan is made. 

	 	 	PRICE LEGACY CORPORATION,

a Maryland corporation
	

 	
 	

By:	

	 	 	 	Chief Financial or Chief Accounting Officer

2

EXHIBIT E  

FORM OF

COMPLIANCE CERTIFICATE  

Wells
Fargo Bank, National Association

401 B Street, Suite 304

San Diego, CA 92101

Attention: Susan Rosenblatt 

Ladies
and Gentlemen: 

        Reference
is made to the Revolving Credit Agreement dated as of September 19, 2001 (the "Credit Agreement") by and among Price Legacy Corporation (the "Borrower") each of the
financial institutions party hereto and their assignees under §18 of the Credit Agreement (as defined below)(the "Banks"), Wells Fargo, National Association, as Agent (the "Agent") and the
other parties thereto. Terms defined in the Credit Agreement and not otherwise defined herein are used herein as defined in the Credit Agreement. 

        Pursuant
to the Credit Agreement, the Borrower is furnishing to you herewith (or have most recently furnished to you) the financial statements of the Borrower and its respective
Subsidiaries for the fiscal period ended                        (the "Balance Sheet Date"). Such financial statements have been
prepared in accordance with generally accepted accounting principles and
present fairly the financial position of the Borrower and the Subsidiaries covered thereby at the date thereof and the results of their operations for the periods covered thereby, subject in the case
of interim statements only to normal year-end audit adjustments. 

        This
certificate is submitted in compliance with requirements of §7.4(c), §7.5(d) and §10.10 of the Credit Agreement. If this certificate is provided
under a provision other than §7.4(c), the calculations provided below are made using the financial statements of the Borrower and its respective Subsidiaries as of the Balance Sheet Date
adjusted in the best good-faith estimate of the Borrower to give effect to the making of a Loan, acquisition or disposition of property or other event that occasions the preparation of
this certificate; and the nature of such event and the Borrower's estimate of its effects are set forth in reasonable detail in an attachment hereto. The undersigned officer is the chief financial or
chief accounting officer of the Borrower. 

        The
undersigned officer has caused the provisions of the Credit Agreement and the Guaranty to be reviewed and have no knowledge of any Default or Event of Default. (Note: If the signer
does have knowledge of any Default or Event of Default, the form of certificate should be revised to specify the Default or Event of Default, the nature thereof and the actions taken, being taken or
proposed to be taken by the Borrower with respect thereto.) 

        The
Borrower is providing the information set forth in the schedule attached hereto to demonstrate compliance as of the date hereof with the covenants described therein. 

        IN
WITNESS WHEREOF, the undersigned hereunto set its hand this    day of                        ,
200  . 

	 	 	PRICE LEGACY CORPORATION,

a Maryland corporation
	

 	
 	

By:	

	 	 	 	Chief Financial or Chief Accounting Officer

EXHIBIT F

 FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT  

        THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement")
dated                        ,            , by and between
                        ("Assignor"),
and                        ("Assignee"). 

W I T N E S S E T H:  

        WHEREAS, Assignor is a party to that certain revolving Credit Agreement dated as of September 19, 2001 (as
amended and in effect from time to time, the "Revolving Credit Agreement"), by and among Price Legacy Corporation (the "Borrower"), the lenders listed from time to time party thereto (collectively,
the "Banks") and Fleet National Bank, as Agent for the Banks (in such capacity, the "Agent"); and 

        WHEREAS, Assignor desires to transfer to Assignee a Commitment under the Revolving Credit Agreement and its rights under the Revolving
Credit Agreement with respect to the Commitment being assigned and its outstanding Loans with respect to the Commitment; 

        NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable considerations, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows: 

	(b)
	Definitions.    Terms defined in the Revolving Credit Agreement and used herein without definition shall have the respective
meanings assigned to such terms in the Revolving Credit Agreement.

	(c)
	Assignment.

	a.
	Subject
to the terms and conditions of this Agreement and in consideration of the payment to be made by Assignee to Assignor pursuant to Paragraph 5 of this Agreement, effective
as of the "Assignment Date" (as defined in Paragraph 6 below), Assignor hereby irrevocably sells, transfers and assigns to Assignee, without recourse, all of its Note (the "Note") in the amount
of $                        representing a
$                        Commitment, a    % percent Commitment Percentage and
a            % interest in and to all of the other rights and obligations under
the Revolving Credit Agreement, the other Loan Documents and the Intercreditor Agreement (as hereinafter defined) (the assigned interests being hereinafter referred to as the "Assigned Interests"),
including Assignor's share of all outstanding Loans with respect to the Assigned Interests and the right to receive interest and principal on and all other fees and amounts with respect to the
Assigned Interests, all from and after the Assignment Date, all as if Assignee were an original Bank under and signatory to the Revolving Credit Agreement and the Intercreditor Agreement having a
Commitment Percentage equal to such amount of the Assigned Interests.

	b.
	Assignee,
subject to the terms and conditions hereof, hereby assumes all obligations of Assignor with respect to the Assigned Interests from and after the Assignment Date as if
Assignee were an original Bank under and signatory to the Revolving Credit Agreement and the Intercreditor Agreement, which obligations shall include, but shall not be limited to, the obligation to
make Loans to the Borrower or participate in Letters of Credit with respect to the Assigned Interests and to indemnify the Agent as provided therein (such obligations, together with all other
obligations set forth in the Revolving Credit Agreement, the other Loan Documents and the Intercreditor Agreement are hereinafter collectively referred to as the "Assigned Obligations"). Assignor
shall have no further duties or obligations with respect to, and shall have no further interest in, the Assigned Obligations or the Assigned Interests. 

 

	(d)
	Representations and Requests of Assignor.

	a.
	Assignor
represents and warrants to Assignee (i) that it is legally authorized to, and has full power and authority to, enter into this Agreement and perform its obligations
under this Agreement; (ii) that as of the date hereof, before giving effect to the assignment contemplated hereby and other assignments to be made contemporaneously herewith, the principal face
amount of Assignor's Note is $            and the aggregate outstanding principal balance of the Loans made by it equals
$                        and (iii) that it has forwarded to the Agent the
Note held by Assignor. Assignor makes no representation or warranty, express or implied, and assumes no responsibility with respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality, validity, enforceability, genuineness or sufficiency of any Loan Document or any other instrument or document furnished pursuant thereto
or in connection with the Loan, the collectability of the Loans, the continued solvency of the Borrower or the Guarantors or the continued existence, sufficiency or value of any assets of the Borrower
or the Guarantors which may be realized upon for the repayment of the Loans, or the performance or observance by the Borrower or the Guarantors of any of their respective obligations under the Loan
Documents to which it is a party or any other instrument or document delivered or executed pursuant thereto or in connection with the Loan; other than that it is the legal and beneficial owner of, or
has the right to assign, the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim.

	b.
	Assignor
requests that the Agent obtain replacement notes for each of Assignor and Assignee as provided in the Revolving Credit Agreement.

	(e)
	Representations of Assignee.    Assignee makes and confirms to the Agent, Assignor and the other Banks all of the
representations, warranties and covenants of a Bank under Articles 14 and 18 of the Revolving Credit Agreement and in the Intercreditor Agreement. Without limiting the foregoing, Assignee
(a) represents and warrants that it is legally authorized to, and has full power and authority to, enter into this Agreement and perform its obligations under this Agreement;
(b) confirms that it has received a copy of the Loan Documents together with copies of the most recent financial statements delivered pursuant to the Revolving Credit Agreement and such other
documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (c) agrees that it has and will, independently and without
reliance upon Assignor, any other Bank or the Agent and based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in evaluating the
Loans, the Loan Documents, the creditworthiness of the Borrower or the Guarantors and the value of the assets of the Borrower or the Guarantors, and taking or not taking action under the Loan
Documents and any intercreditor agreement among the Banks and the Agent (the "Intercreditor Agreement"); (d) appoints and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers as are reasonably incidental thereto pursuant to the terms of the Loan Documents and the Intercreditor Agreement; (e) agrees that it will become a party to and will perform
in accordance with their terms all the obligations which by the terms of the Loan Documents and the Intercreditor Agreement are required to be performed by it as a Bank; (f) represents and
warrants that Assignee does not control, is not controlled by, is not under common control with and is otherwise free from influence or control by, the Borrower or the Guarantors,
(g) represents and warrants that Assignee is subject to control, regulation or examination by a state or federal regulatory agency (or if not, that Assignee shall take such steps as it may deem
necessary to avail itself of the protections afforded under the Massachusetts Usury statute), and (h) agrees that if Assignee is not 

2

 

incorporated
under the laws of the United States of America or any State, it has on or prior to the date hereof delivered to Borrower and Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. Assignee represents and warrants that it has a net worth as of the Assignment Date of not less than $500,000,000.00. 

	(f)
	Payments to Assignor.    In consideration of the assignment made pursuant to Paragraph 1 of this Agreement, Assignee
agrees to pay to Assignor on the Assignment Date, an amount equal to $                        representing the aggregate principal
amount outstanding of the Loans under the Revolving Credit Agreement and the
other Loan Documents with respect to the Assigned Interests. All outstanding LIBOR Rate Loans shall continue in effect for the remainder of their applicable Interest Periods and Assignee shall accept
the currently effective interest rates on its Assigned Interest of each LIBOR Rate Loan.

	(g)
	Effectiveness.

	a.
	The
effective date for this Agreement shall be                        ,
            (the "Assignment Date"). Following the execution of this Agreement, each party hereto shall deliver its
duly executed counterpart hereof to the Agent for acceptance and recording in the Register by the Agent.

	b.
	Upon
such acceptance and recording and from and after the Assignment Date, (i) Assignee shall be a party to the Revolving Credit Agreement and the Intercreditor Agreement and,
to the extent of the Assigned Interests, have the rights and obligations of a Bank thereunder, and (ii) Assignor shall, with respect to the Assigned Interests, relinquish its rights and be
released from its obligations under the Revolving Credit Agreement and the Intercreditor Agreement.

	c.
	Upon
such acceptance and recording and from and after the Assignment Date, the Agent shall make all payments in respect of the rights and interests assigned hereby accruing after the
Assignment Date (including payments of principal, interest, fees and other amounts) to Assignee.

	(h)
	Notices.    Assignee's address for notices and its Lending Office for all Loans is as set forth on its signature page to the
Credit Agreement.

	(i)
	Payment Instructions.    All payments to Assignee under the Revolving Credit Agreement shall be made as provided in the
Revolving Credit Agreement in accordance with the separate instructions provided to Agent by Assignee.

	(j)
	Law Governing.    THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT FOR ALL PURPOSES AND TO BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO CONFLICT OF LAWS).

	(k)
	Counterparts.    This Agreement may be executed in any number of counterparts which shall together constitute but one and the
same agreement.

	(l)
	Amendments.    This Agreement may not be amended, modified or terminated except by an agreement in writing signed by Assignor
and Assignee, and consented to by Agent.

	(m)
	Successors.    This Agreement shall inure to the benefit of the parties hereto and their respective successors and assigns as
permitted by the terms of Revolving Credit Agreement and the Intercreditor Agreement. 

3

 

        IN
WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, as of the
date first above written. 

	 	 	ASSIGNOR:
	

 	
 	

By:	

	 	 	Title:	

	

 	
 	

ASSIGNEE:
	

 	
 	

By:	

	 	 	Title:	

	

RECEIPT ACKNOWLEDGED AND

ASSIGNMENT CONSENTED TO BY:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent

	

By:	

	
 	

 
	Title:	
	 	 

4

EXHIBIT G  

FORM OF NOTICE OF CONTINUATION  

                        , 200  

Wells
Fargo Bank, National Association

401 B Street, Suite 304

San Diego, CA 92101

Attention: Susan Rosenblatt 

Ladies
and Gentlemen: 

        Reference
is made to that certain Credit Agreement dated as of September 19, 2001 (the "Credit Agreement") by and among Price Legacy Corporation (the "Borrower") each of the
financial institutions party hereto and their assignees under §18 of the Credit Agreement (as defined below)(the "Banks"), Wells Fargo, National Association, as Agent (the "Agent") and the
other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement. 

        Pursuant
to Section 2.7 of the Credit Agreement, the Borrower hereby requests a Continuation of a Loan under the Credit Agreement, and in that connection sets forth below the
information relating to such Continuation as required by such Section of the Credit Agreement: 

	1.
	The
requested date of such Continuation is                        ,
200            .

	2.
	The
aggregate principal amount of the Loan subject to the requested Continuation is $                        and the portion of such
principal amount subject to such Continuation is
$                        .

	3.
	The
current Interest Period of the Loan subject to such Continuation ends on                        ,
200            .

	4.
	The
duration of the Interest Period for the Loan or portion thereof subject to such Continuation is: 

[Check one box only]

	?
	one
month 
	?
	two
months 
	?
	three
months 
	?
	six
months 

        The
Borrower hereby certifies to the Banks that as of the date hereof, as of the proposed date of the requested Continuation, and after giving effect to such Continuation, no Default or
Event of Default exists or will exist. 

	 	 	PRICE LEGACY CORPORATION,

a Maryland corporation
	

 	
 	

By:	

	 	 	Name:	

	 	 	Title:	

EXHIBIT H  

FORM OF NOTICE OF CONVERSION  

                        , 200  

Wells
Fargo Bank, National Association

401 B Street, Suite 304

San Diego, CA 92101

Attention: Susan Rosenblatt 

Ladies
and Gentlemen: 

        Reference
is made to that certain Credit Agreement dated as of dated as of September 19, 2001 (the "Credit Agreement") by and among Price Legacy Corporation (the "Borrower") each
of the financial institutions party hereto and their assignees under §18 of the Credit Agreement (as defined below)(the "Banks"), Wells Fargo, National Association, as Agent (the "Agent")
and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement. 

        Pursuant
to §2.8 of the Credit Agreement, the Borrower hereby requests a Conversion of a Loan of one Type into a Loan of another Type under the Credit Agreement, and in that
connection sets forth below the information relating to such Conversion as required by such Section of the Credit Agreement: 

	1.
	The
requested date of such Conversion is                        ,
200            .

	2.
	The
Type of Loan to be Converted pursuant hereto is currently: 

[Check one box only]

	?
	Base
Rate Loan

	?
	LIBOR
Loan

	3.
	The
aggregate principal amount of the Loan subject to the requested Conversion is $                        and the portion of such
principal amount subject to such Conversion is
$                        .

	4.
	The
amount of such Loan to be so Converted is to be converted into a Loan of the following Type: 

[Check one box only]

	?
	Base
Rate Loan 
	?
	LIBOR
Loan, with an initial Interest Period for a duration of: 

[Check one box only]

	 	 	?	 	one month
	 	 	?	 	two months
	 	 	?	 	three months
	 	 	?	 	six months

 

        The
Borrower hereby certifies to the Banks that as of the date hereof, as of the proposed date of the requested Conversion, and after giving effect to such Conversion, no Default or
Event of Default exists or will exist. 

	 	 	PRICE LEGACY CORPORATION,

a Maryland corporation
	

 	
 	

By:	

	 	 	Name:	

	 	 	Title:	

2

QuickLinks

Exhibit 10.21

EXHIBIT A FORM OF REVOLVING CREDIT NOTE

EXHIBIT C FORM OF NOTICE OF BORROWING<Page>

                                                                   EXHIBIT 10.35

    (WITH CERTAIN CONFIDENTIAL INFORMATION DELETED AND MARKED WITH BRACKETED
                                    ASTERIKS]

                           FIRST REVISED AND RESTATED
                    RESEARCH AND EARLY DEVELOPMENT AGREEMENT

                                     BETWEEN

                       VERTEX PHARMACEUTICALS INCORPORATED

                                       AND

                               NOVARTIS PHARMA AG

<Page>

                    Research and Early Development Agreement

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                     Page Number
<S>                                                                                                           <C>
INTRODUCTION...................................................................................................1
   ARTICLE I - DEFINITIONS.....................................................................................2
   ARTICLE II -- RESEARCH PROGRAM..............................................................................7
   2.1.   Commencement.........................................................................................7
   2.2.   Term.................................................................................................7
   2.3.   Research Diligence...................................................................................8
   2.4.   Research Plan........................................................................................8
   2.5.   Joint Research Committee.............................................................................8
   2.6.   Joint Steering Committee............................................................................10
   2.7.   Exchange of Information.............................................................................10
   2.8.   [This section has been intentionally left blank.]...................................................11
   2.9.   Exclusivity.........................................................................................11

ARTICLE III -- PAYMENTS.......................................................................................12
   3.1.   Signature Payment by NOVARTIS.......................................................................12
   3.2.   Staffing and Research Support Payments..............................................................12
   3.3.   Development Loan Facility...........................................................................13
   3.4.   Records.............................................................................................13

ARTICLE IV --  LICENSE, DEVELOPMENT AND COMMERCIALIZATION RIGHTS..............................................14
   4.1.   Development Election................................................................................14
   4.2.   [This section has been intentionally left blank.]...................................................16
   4.3.   Extension of Exercise Period........................................................................16
   4.4.   Refused Candidate...................................................................................16
   4.5.   Back-up Compounds...................................................................................17
   4.6.   [This section has been intentionally left blank.]...................................................19
   4.7.   Clinical Trial Material.............................................................................19
   4.8.   Special Provisions Regarding VX-680, VX-528 and VX-608..............................................19

ARTICLE V --   CONFIDENTIALITY................................................................................21
   5.1.   Undertaking.........................................................................................21
   5.2.   Exceptions..........................................................................................22
   5.3.   Publicity...........................................................................................23
   5.4.   Survival............................................................................................23

ARTICLE VI --  PUBLICATION....................................................................................23

ARTICLE VII -- INDEMNIFICATION................................................................................24
   7.1.   Indemnification by VERTEX...........................................................................24
   7.2.   Indemnification by NOVARTIS.........................................................................25
   7.3.   Claims Procedures...................................................................................25
   7.4.   Compliance..........................................................................................26

ARTICLE VIII --  PATENTABLE INVENTIONS........................................................................27
   8.1.   Ownership...........................................................................................27
   8.2.   Preparation.........................................................................................27
   8.3.   Costs...............................................................................................27
</Table>

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page i

<Page>

                    Research and Early Development Agreement

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                     Page Number
<S>                                                                                                           <C>
ARTICLE IX --  TERM AND TERMINATION...........................................................................28
   9.1.   Term................................................................................................28
   9.2.   Termination of the Research Program by NOVARTIS for Cause...........................................28
   9.3.   Termination of the Research Program by VERTEX for Cause.............................................29
   9.4.   [This section has been intentionally left blank.]...................................................29
   9.5.   Termination for Scientific Cause....................................................................29
   9.6.   Effect of Termination...............................................................................29

ARTICLE X --   REPRESENTATIONS AND WARRANTIES.................................................................30
   10.1.  Representations and Warranties of VERTEX............................................................30
   10.2.  Representations and Warranties of NOVARTIS..........................................................31

ARTICLE XI --  DISPUTE RESOLUTION.............................................................................31
   11.1.  Governing Law, and Jurisdiction.....................................................................31
   11.2.  Dispute Resolution Process..........................................................................32

ARTICLE XII -- MISCELLANEOUS PROVISIONS.......................................................................33
   12.1.  Official Language...................................................................................33
   12.2.  Waiver..............................................................................................33
   12.3.  Force Majeure.......................................................................................33
   12.4.  Severability........................................................................................33
   12.5.  Government Acts.....................................................................................33
   12.6.  Government Approvals................................................................................34
   12.7.  Export Controls.....................................................................................34
   12.8.  Assignment..........................................................................................34
   12.9.  Affiliates..........................................................................................34
   12.10. Counterparts........................................................................................35
   12.11. No Agency...........................................................................................35
   12.12. Notice..............................................................................................35
   12.13. Headings............................................................................................36
   12.14. Authority...........................................................................................36
   12.15. Entire Agreement....................................................................................36
   12.16. Standstill..........................................................................................36
   12.17. Notice of Pharmaceutical Side-Effects...............................................................37
   12.18. Inflation Adjustment................................................................................37
   12.19. Invoice Requirement.................................................................................38
   12.20. Hardship............................................................................................38

Exhibit A        Form of License, Development and Commercialization Agreement
Exhibit B        Form of Invoice
Schedule 1.13    Excluded Compounds and Excluded Kinases
Schedule 2.4.3   Development Candidate Criteria
</Table>

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page ii
<Page>

                           FIRST REVISED AND RESTATED

                    RESEARCH AND EARLY DEVELOPMENT AGREEMENT

     First Revised and Restated Agreement made this 3rd day of February, 2004,
(as so revised and restated, the "Research Agreement"), revising and restating
that certain Research And Early Development Agreement dated May 8, 2000 (the
"Original Agreement"), between VERTEX PHARMACEUTICALS INCORPORATED ("VERTEX"), a
Massachusetts corporation with principal offices at 130 Waverly Street,
Cambridge, MA 02139-4242, and NOVARTIS PHARMA AG ("NOVARTIS"), a Swiss
corporation with principal offices at Lichtstrasse 35, CH-4056 Basel,
Switzerland.

     This Research Agreement is intended by the parties to replace and supercede
the rights and obligations of the parties under the Original Agreement with
respect to the subject matter thereof, except that the terms of the Original
Agreement shall be deemed to govern the rights and obligations of the parties
with respect to the Compounds known as VX-680 and VX-528, subject to the
provisions of Section 4.8(b) of this Research Agreement.

                                  INTRODUCTION

     WHEREAS, VERTEX has undertaken a broad drug discovery program with the
objective of designing novel, small-molecule compounds targeting the kinase
protein super-family;

     WHEREAS, NOVARTIS is also interested in developing and commercializing
drugs targeting kinase proteins and has particular expertise in developing,
registering, manufacturing, marketing and selling pharmaceuticals worldwide;

     WHEREAS, both parties desire to revise and restate the Original Agreement
to reflect agreed modifications to the original collaboration, which involve
among other things a redirection of VERTEX's efforts from the delivery of
compounds which have progressed through early clinical testing, to the delivery
of Development Candidates, at an earlier stage in the development process, which
target selected Kinases and meet certain pre-agreed Development Candidate
Criteria; and

     WHEREAS, NOVARTIS may elect to develop, market and sell any or all of those
Compounds as drugs upon the terms set forth herein and in a License, Development
and Commercialization Agreement identical in substance to EXHIBIT A hereto;

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

                                    ARTICLE I
                                   DEFINITIONS

For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings whether used in their singular or plural forms. Use of
the singular shall include the plural and vice versa, unless the context
requires otherwise:

                           First Revised and Restated
        Research and Early Development Agreement - Confidential - Page 1
<Page>

     1.1.      "AFFILIATE" shall mean, with respect to any Person, any other
Person which directly or indirectly, by itself or through one or more
intermediaries, controls, or is controlled by, or is under direct or indirect
common control with, such Person. The term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Control will be presumed if one Person
owns, either of record or beneficially, more than 50% of the voting stock of any
other Person. For the avoidance of any doubt, the Novartis Institute for
Functional Genomics, Inc. and The Friedrich Miescher Institute, as currently
operated, are not Affiliates of NOVARTIS for the purposes of this Research
Agreement.

               1.1.1.   "BACK-UP COMPOUND" shall mean, [***].

     1.2.      "BULK DRUG SUBSTANCE" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug Product.

     1.3.               "COMPOUND" shall mean any chemical compound, including
salts thereof, which affects a Kinase and which was or is synthesized and/or
tested (including by screening) by or under the direction of VERTEX or its
Affiliates during the term of the Research Program conducted under this Research
Agreement, or was synthesized or tested by VERTEX or its Affiliates prior to the
Effective Date in a program targeted toward Kinase modulation.

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

     1.5. (a)  "DEVELOPMENT CANDIDATE" shall mean a Compound that meets the
Development Candidate Criteria and which is either proposed by VERTEX, during
the term of the Research Program [***], for formal pre-clinical development, or
is selected by NOVARTIS on or before the Final Termination Date for formal
pre-clinical development pursuant to the provisions of Section 4.1 hereof.

     1.5. (b)  "DEVELOPMENT CANDIDATE INFORMATION" will mean all material
information known to VERTEX about a Development Candidate, including analytical
results and raw data, which NOVARTIS reasonably needs in order to decide whether
to exercise the Development Election with respect to the Development Candidate.
The Development Candidate Information shall include any previously undisclosed
information with respect to VERTEX Kinase Technology which is important to a
scientific and commercial evaluation of the Development Candidate. Development
Candidate Information will also include comparable information known to VERTEX
concerning all Compounds which are Back-up Compounds, as defined herein, to the
specific Development Candidate which is the subject of the Development Candidate
Information. [***]

     1.5.(c)   "DEVELOPMENT CANDIDATE CRITERIA" shall mean (a) the criteria
set forth on Schedule 2.4.3 hereof and (b) such further, more specific criteria
to be determined by the JRC as soon as possible after the start of each research
project with respect to each particular Kinase

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 2
<Page>

target, each therapeutic application, special delivery forms, and the like, as
set forth in Section 2.5.3 hereof.

     1.6.      "DEVELOPMENT ELECTION" shall have the meaning set forth in
Section 4.1 hereof.

     1.7.      "DEVELOPMENT PROGRAM" shall mean activities associated with
development of a Drug Product Candidate as specified in the License Agreement.

     1.8.      [This section has been intentionally left blank.]

     1.9.      "DRUG PRODUCT" shall mean a finished dosage form which is
prepared from Bulk Drug Substance and is ready for administration to the
ultimate consumer as a pharmaceutical.

     1.10. (a) "DRUG PRODUCT CANDIDATE" shall mean a Development Candidate
which has been selected by NOVARTIS for development and commercialization under
the License Agreement, pursuant to exercise of its Development Election under
Section 4.1 hereof.

     1.10. (b) "DRUG PRODUCT CANDIDATE BACKUP CANDIDATE" shall mean any
Back-up Compound for which NOVARTIS has exercised its Development Election under
Section 4.5 hereof.

     1.11.     [This section has been intentionally left blank.]

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

     1.13.     "EXCLUDED COMPOUNDS" shall mean any chemical compounds the
therapeutic effect of which in humans is thought to be principally derived from
an effect on one or more Excluded Kinases. "Excluded Compounds" shall also
include the Compound known as [***]. An "analog" shall mean any compounds (or
salts thereof) which are claimed in [***] which NOVARTIS can demonstrate by
written record were synthesized by NOVARTIS before the Effective Date. "Excluded
Compounds" shall also include any Compounds directed toward modulation of a
Kinase which has been added to the list of Excluded Kinases by the operation of
Section 4.4 hereof; provided that in no event shall an Excluded Compound include
a Drug Product Candidate.

     1.14.     "EXCLUDED KINASES" shall mean the human kinases specifically
identified in Schedule 1.13 hereto. "Excluded Kinases" shall also include any
Kinase hereafter added to the list of Excluded Kinases pursuant to the
provisions of Section 4.4 hereof.

     1.15.     [This section has been intentionally left blank.]

     1.16.     "FIELD" shall mean the treatment or prevention of conditions or
diseases in humans, principally by affecting a Kinase other than an Excluded
Kinase.

     1.17.     "FINAL NOTICE PERIOD" shall have the meaning set forth in Section
4.1(d) hereof.

     1.17.1.   "FINAL REPORT" shall have the meaning set forth in Section 4.1(d)
hereof.

     1.17.2.   "FINAL REPORT PERIOD" shall have the meaning set forth in Section
4.1(d) hereof.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 3
<Page>

     1.17.3.   "FINAL TERMINATION DATE" shall have the meaning set forth in
Section 4.1(d) hereof.

     1.18.     "FTE" shall mean the equivalent of the work of one VERTEX
scientist or other project managerial professional, full time for one year,
which equates to a total of forty-seven (47) weeks or one thousand eight hundred
eighty (1880) hours per year of work, on or directly related to the Research
Program. Work in the Research Program can include, but is not limited to,
experimental laboratory work, project and research management, activities
directed toward evaluation of the commercial potential of a possible Drug
Candidate, recording and writing up results, reviewing literature and
references, holding scientific discussions, attending appropriate seminars and
symposia, and carrying out Joint Research Committee duties. FTE's shall include
equivalent scientific work in the Research Program delegated to and carried out
by contractors, under the general direction of VERTEX scientists; provided, that
the nature and quantity (as a percentage of total program FTE's) of the
delegated work shall not be such that the most substantial parts of the overall
Research Program, in terms of projected value creation, have been delegated to
Third Parties. FTE's which result from work delegated to and carried out by
contractors will be separately identified by VERTEX on its invoices provided to
NOVARTIS under Section 12.19 hereof.

     1.19.     [This section has been intentionally left blank.]

     1.20.     [This section has been intentionally left blank.]

     1.21.     "JOINT RESEARCH COMMITTEE" OR "JRC" shall have the meaning
ascribed to it in Section 2.5 of this Research Agreement.

     1.22.     "JOINT STEERING COMMITTEE" OR "JSC" shall have the meaning
ascribed to it in Section 2.6 of this Research Agreement.

     1.23.     "KINASE" shall mean a human enzyme that catalyzes the transfer of
a phosphate group from a nucleoside triphosphate to a protein.

     1.24.     "KINASE TECHNOLOGY" shall mean all data, technical information,
know-how, experience, inventions (whether or not patented) trade secrets,
processes and methods discovered, developed or applied (with the consent of its
owner) and Controlled by either party or its Affiliates, in connection with
performance by either party under the Research Program, or in connection with
the conduct of a Development Program under the License Agreement prior to
termination of the Research Program, that relate to the research, development,
utilization, manufacture or use of Compounds, Development Candidates, Drug
Product Candidates or Drug Products (other than any such technology which is
exclusive to Excluded Kinases); provided, however, that the term Kinase
Technology shall not apply to VERTEX's general drug design technology whether in
hardware or software form, tangible or intangible.

     1.25.     "KNOW-HOW" means all Kinase Technology other than inventions
which are the subject of Patents; and "LEAD PERIOD" shall have the meaning set
forth in Section 4.5(a) hereof.

     1.26.     "LICENSE AGREEMENT" shall mean the License, Development and
Commercialization Agreement, identical in substance to EXHIBIT A to this
Research Agreement, to be executed by VERTEX and NOVARTIS with respect to each
Drug Product Candidate; and "NOTICE PERIOD" shall have the meaning set forth in
Section 4.1(b) hereof.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 4
<Page>

     1.27.     "NOVARTIS KNOW-HOW" shall mean all Know-How of NOVARTIS.

     1.28.     "NOVARTIS PATENTS" shall mean any Patents controlled by NOVARTIS
or its Affiliates claiming Kinase Technology.

     1.29.     "NOVARTIS KINASE TECHNOLOGY" shall mean all NOVARTIS Patents and
NOVARTIS Know-How.

     1.30.     "PATENTS" means all existing patents and patent applications and
all patent applications hereafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing.

     1.31.     "PERSON" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.

     1.32.     [This section has been intentionally left blank.]

     1.33.     [This section has been intentionally left blank.]

     1.34.     "REFUSED CANDIDATE" shall have the meaning set forth in Section
4.4 hereof.

     1.35.     "REPLACEMENT CANDIDATE" shall have the meaning set forth in
Section 4.5(b) hereof.

     1.36.     "RESEARCH PLAN" shall have the meaning set forth in Section 2.4.1
hereto.

     1.37. (a) "RESEARCH PROGRAM" shall mean all research activities
undertaken under this Research Agreement associated with the identification and
design of Compounds and Development Candidates as provided herein; including but
not limited to identification and initial testing of Compounds; the conduct of
activities referenced in the Development Candidate Criteria with respect to
Compounds; and selection of Development Candidates from Compounds.

     1.37. (b) "RESEARCH TERMINATION DATE" shall mean the earlier of April
30, 2006 or the date upon which the Research Program is terminated under
Sections 9.2, 9.3 or 9.5 hereof.

     1.38.     "RESEARCH YEAR" means a twelve-month period during the term of
the Research Program commencing on May 1, and ending on April 30 of each year.
The first Research Year hereunder shall be deemed to have commenced on May 1,
2000.

     1.39.     [This space has been intentionally left blank.]

     1.40.     "TECHNOLOGY" shall mean NOVARTIS Kinase Technology and VERTEX
Kinase Technology.

     1.41.     "THIRD PARTY" shall mean any person or entity which is not a
party or an Affiliate of any party to this Research Agreement.

     1.42.     "THIRD PARTY REFERRAL" shall mean the procedure for resolution of
certain disputes hereunder which is set forth in Section 11.2(b) hereof.

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

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 5
<Page>

     1.44.     "VERTEX PATENTS" shall mean any Patents Controlled by VERTEX or
its Affiliates claiming Kinase Technology.

     1.45.     "VERTEX KINASE TECHNOLOGY" shall mean all VERTEX Patents and
VERTEX Know-How.

Capitalized terms used but not otherwise defined herein which are defined in the
License Agreement shall have the meaning ascribed to them therein.

                                   ARTICLE II
                                RESEARCH PROGRAM

     2.1.          COMMENCEMENT.
            The Research Program originally commenced on May 1, 2000. VERTEX has
principal responsibility for the conduct of the Research Program and NOVARTIS
provides consultation, advice and such research effort as may be deemed
appropriate by the JRC and accepted by NOVARTIS. The JRC shall review and
coordinate all of the parties' efforts with respect to the Research Program.

     2.2.          TERM.
            The Research Program will conclude on May 1, 2006, unless earlier
terminated in accordance with the provisions hereof. At the request of either
party made during the fourth Research Year, the parties will discuss whether,
and upon what basis, the Research Program might be extended on comparable terms
beyond its initial 6 year term.

     2.3.          RESEARCH DILIGENCE.
            The common objective of the parties is to identify Development
Candidates as soon as practicable for selection by NOVARTIS as Drug Product
Candidates and for worldwide development and marketing under the terms of the
License Agreement. VERTEX will work diligently and use all reasonable efforts,
consistent with prudent business judgment, to identify Development Candidates
for acceptance by NOVARTIS as Drug Product Candidates. VERTEX intends to
dedicate to the Research Program at least that level of staffing referenced in
Section 3.2 hereof, and expects to employ an optimal combination of experience
and training in the Field. As a matter of corporate strategy, VERTEX has chosen
to dedicate a significant amount of its overall research efforts to work in the
Field, and will not change that overall strategy during the term of the Research
Program without prior notice to and approval by NOVARTIS.

     2.4.          RESEARCH PLAN; EARLY DEVELOPMENT PLAN.
            2.4.1. General. VERTEX originally prepared an overall research
plan for the Research Program which it submitted to the JRC for its review and
comment at the first meeting of the JRC after the Effective Date. The research
plan has been and will be revised, updated and submitted to the JRC at least
annually for its review and comment (as so revised, updated and submitted, the
"Research Plan").

            2.4.2. [This section has been intentionally left blank.]

            2.4.3. Plan Review. In developing the Research Plan, VERTEX
will take into account the intention of the parties to produce Compounds which
meet the Development

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 6
<Page>

Candidate Criteria. VERTEX shall not perform any work under this Research
Agreement with respect to Excluded Compounds or Excluded Kinases. The Research
Plan will be reviewed as necessary at each meeting of the JRC, and at any other
time upon the request of either party, and shall be modified as appropriate to
reflect material scientific or commercial developments. Any disagreements among
the parties with respect to these matters may be referred by either party to the
Joint Steering Committee for resolution. Notwithstanding the foregoing, VERTEX
shall have the final say with respect to the Research Plan.

     2.5.          JOINT RESEARCH COMMITTEE.
            2.5.1. Composition and Purposes. VERTEX and NOVARTIS have
established and will continue to participate in a Joint Research Committee
("JRC") consisting of at least eight (8) representatives (as may be increased or
decreased by the JRC), half of whom shall be designated from time to time by
each party. If the JRC chooses to designate a Committee Chair, the Chair will be
appointed from among the members of the Committee designated by VERTEX. The JRC
shall meet formally at least quarterly, or with such other frequency, and at
such time and location, as may be established by the Committee, for the
following purposes:

                     (i)   To receive and review reports by VERTEX and its
project teams, which shall be prepared and submitted to the JRC on a quarterly
basis within fifteen (15) days after the end of each calendar quarter, such
reports summarizing progress during the preceding quarter under the Research
Plan; and to review information with respect to the Compounds under
investigation (which VERTEX shall provide in form and content at least as
extensive as customarily provided to the JRC under the Original Agreement);

                     (ii)  To review a proposal by either party that specified
Excluded Compounds or Excluded Kinases be included in the Research Program, or
that a Kinase be added to the list of Excluded Kinases; provided that the JRC
shall have no authority to include or exclude any Compound or Kinase from the
Research Program, and that any such action must be the subject of a formally
adopted amendment to this Research Agreement;

                     (iii) To define as soon as possible the further, more
specific Development Criteria (x) for ongoing projects, after the signature of
this Research Agreement, or (y) for new projects, after the start of such new
research project;

                     (iv)  To review Development Candidates proposed by VERTEX
and to assess whether a given Development Candidate proposed by VERTEX meets the
Development Criteria;

                     (v)   To review the Research Plan and any proposed
revisions thereto;

                     (vi)  [This subsection has been intentionally left blank.];
and

                     (vii) To discuss matters relating to Patents, as may be
presented to the JRC by VERTEX or NOVARTIS.

            The party hosting a particular JRC meeting shall prepare and deliver
to the members of the JRC, within thirty (30) days after the date of each
meeting, minutes of such

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 7
<Page>

meeting setting forth, INTER ALIA, all decisions of the JRC, and including a
report on the progress of work performed. In case the JRC meets by means of
telephone or video conferences, this responsibility shall lie with VERTEX.

            2.5.2. Decision-Making.

                     (i)   Each of VERTEX and NOVARTIS shall have one vote on
the JRC. The objective of the JRC shall be to reach agreement by consensus on
all matters within the scope of the Research Plan. However, in the event of a
deadlock with respect to any action (which shall be deemed to have occurred if
either party shall request a vote of the JRC on a matter and that vote shall
either not be taken within thirty (30) days of the request or if taken shall
result in a tie vote) and subject to the procedure set forth in subsection (ii)
below as to certain matters, the vote of VERTEX, rendered after reasonable and
open discussion among the members of the JRC, shall be final and controlling.

                     (ii)  Notwithstanding the foregoing, with respect to JRC
decisions (x) as to the nature and extent of any additional Development
Candidate Criteria referenced in Section 2.5.3 hereof, any disagreement between
the parties that cannot be resolved within forty-five (45) days by the JRC (as
that period may be extended under (iii) below) shall be referred to the JSC for
resolution and if not resolved within seven (7) business days after referral,
shall be referred for final resolution in good faith by the Chief Executive
Officer of VERTEX and the Chief Executive Officer of NOVARTIS, and failing final
resolution, there will be no change to the Development Candidate Criteria; or
(y) as to whether or not Development Candidate Information provided by VERTEX,
pursuant to subsection (iii) below, is complete or as to whether or not a given
Compound proposed by VERTEX as a Development Candidate meets the Development
Criteria, the matter shall be referred as provided in subsection (x) above to
the JRC and the JSC and, failing agreement, the matter shall be referred for
final resolution under the provisions of Section 11.2(b) of this Research
Agreement.

                     (iii) In the event that NOVARTIS's representatives on the
JRC reasonably believe that the Development Candidate Information with respect
to a particular Development Candidate proposed by VERTEX to the JRC is
incomplete, NOVARTIS shall provide written notice thereof to VERTEX within
fifteen (15) business days after receipt of the Development Candidate
Information, and VERTEX shall undertake reasonable efforts to furnish the
requested additional Development Candidate Information within fifteen (15)
business days after receipt of NOVARTIS's notice hereunder. The 45-day period
provided for action by the JRC under subsection (ii) above shall be extended by
the amount of time required for VERTEX to provide the requested information, but
in any event not in excess of thirty (30) days.

                     (iv)  Notwithstanding any of the foregoing, if VERTEX and
NOVARTIS deadlock on any other matters being considered by the JRC which might
have a significant impact on the time or likely success of the Research Program,
the matter shall be referred to the JSC for resolution in accordance with
Section 2.6 hereof.

                     (v)   Each party shall retain the rights, powers, and
discretion granted to it under this Research Agreement, and the JRC shall not be
delegated or vested with any such rights, powers or discretion except as
expressly provided in this Research Agreement.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 8
<Page>

The JRC shall not have the power to amend or modify this Research Agreement,
which may only be amended or modified as provided in Section 12.15.

            2.5.3. ADDITIONAL DEVELOPMENT CANDIDATE CRITERIA. The parties
acknowledge that it may be necessary or appropriate to adopt additional
Development Candidate Criteria which more specifically define the
pre-development characteristics of Compounds which the parties believe may be
suitable for development and commercialization under the License Agreement,
based upon the Kinase targeted by a specific project under the Research Program
and the particular disease indication or indications thought to be addressed by
Compounds modulating the Kinase which is the subject of that project. [***] Any
disagreements with respect to the selection of additional Development Candidate
Criteria hereunder will be addressed as provided in Section 2.5.2(ii).

     2.6.          JOINT STEERING COMMITTEE.
            2.6.1. Composition and Purposes. VERTEX and NOVARTIS have
established and will continue to participate in a Joint Steering Committee
("JSC") which shall consist of an equal number of senior executives as may be
designated by each party from time to time. The JSC shall initially have four
(4) members. If the JSC chooses to designate a Committee Chair, the Chair will
be appointed from among the members of the JSC designated by NOVARTIS. The JSC
shall meet annually, or with such other frequency, and at such time and
location, as may be established by the Committee, for the following purposes:

                     (i)   General oversight of the entire collaboration between
VERTEX and NOVARTIS, including the Research Program and any development and
commercialization of a Drug Product Candidate under the License Agreement;

                     (ii)  Periodically review the overall goals and strategy of
the Research Program;

                     (iii) Discuss and attempt to resolve any deadlocked issues
submitted to it by the JRC, although the vote of VERTEX's representatives shall
prevail if the JSC is unable to reach a consensus on any matter other than
matters submitted to the JSC under Section 2.5.2(ii).

     2.7.          EXCHANGE OF INFORMATION.
            2.7.1. VERTEX, and at its sole discretion NOVARTIS, will share
information with the JRC, as soon as it is available, necessary to facilitate
mutual understanding of the status of the Research Program and decision-making
in connection therewith.

            2.7.2. Neither VERTEX nor NOVARTIS shall use Kinase Technology
disclosed by the other party (excluding information which is no longer subject
to confidentiality restrictions under Article V by reason of the exceptions set
forth in Section 5.2) for any purpose, including the filing of patent
applications containing such information, without the other party's consent,
other than for carrying out the Research Program or discharging its
responsibilities under the License Agreement, or as otherwise permitted under
the Research Agreement or the License Agreement.

            2.7.3. [This section has been intentionally left blank.]

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 9
<Page>

            2.7.4. [***]

     2.8.          [This section has been intentionally left blank.]

     2.9.          FREEDOM-OF-ACTION AND EXCLUSIVITY

            2.9.1. [***]

            2.9.2. [***]

            2.9.3. [This section has been intentionally left blank.]

            2.9.4. [This section has been intentionally left blank.]

            2.9.5. [This section has been intentionally left blank.]

            2.9.6. [This section has been intentionally left blank.]

                                   ARTICLE III
                                    PAYMENTS

     3.1.          SIGNATURE PAYMENT BY NOVARTIS.
            Upon the Effective Date of this Research Agreement NOVARTIS made an
initial non-refundable payment of $15,000,000 to VERTEX.

     3.2.          STAFFING AND RESEARCH SUPPORT PAYMENTS.
            NOVARTIS has made or will make the payments specified below to
VERTEX during each Research Year in support of the Research Program under this
Research Agreement. The required payments are based upon the following
assumptions: (a) the average number of FTE's which VERTEX will have employed in
the Research Program during a Research Year will be approximately equal to the
FTE Level listed in the third column below; and (b) the annual rate per FTE is
approximately [***]. If the average FTE level for any Research Year is less than
the level specified below for that year (the difference being referred to in
this section as an "FTE Shortfall"), then the amount of funding specified below
for that Research Year shall be reduced by an amount (the "FTE Shortfall
Amount") which bears the same relation to the total funding specified below for
that Research Year as the FTE Shortfall bears to the projected FTE Level for
that Year. The FTE Shortfall Amount shall be carried over from year to year and
applied to compensate VERTEX for FTE Levels in subsequent Research Years which
exceed the level for those Years as specified below. In any such subsequent
Research Year, VERTEX shall be entitled to receive out of any remaining FTE
Shortfall Amount a payment equal to the value (computed with reference to the
inflation-adjusted FTE rate specified above) of any FTE's actually employed
during that Research Year in excess of the FTE Level specified for that year
("Excess FTE's"). Notwithstanding the foregoing, the FTE Shortfall Amount will
not be applied to compensate VERTEX on account of more than 20 Excess FTE's in
any one Research Year.

<Table>
<Caption>
       RESEARCH YEAR                    FUNDING                 FTE LEVEL
             <S>                         <C>                      <C>
             1                           [***]                    [***]
             2                           [***]                    [***]
             3                           [***]                    [***]
</Table>

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 10
<Page>

<Table>
<Caption>
       RESEARCH YEAR                    FUNDING                 FTE LEVEL
             <S>                         <C>                      <C>
             4                           [***]                    [***]
             5                           [***]                    [***]
             6                           [***]                    [***]
</Table>

     Research Year 1 will be deemed to have commenced on May 1, 2000. Payments
due for each Research Year shall be made quarterly in advance on or before
May 1, August 1, November 1 and February 1 of each Research Year except that the
quarterly payment due May 1, 2000 was made within thirty business days after the
Effective Date of this Research Agreement. All payments shall be made without
deduction for withholding or other similar taxes, in United States dollars to
the credit of such bank account as may be designated by VERTEX in writing to
NOVARTIS. Any payments which fall due on a date which is a legal holiday in the
Commonwealth of Massachusetts may be made on the next following day which is not
a legal holiday in the Commonwealth.

     3.3.          DEVELOPMENT LOAN FACILITY.
            The existing development loan facility is hereby terminated. All
currently outstanding loans made under the facility will be repaid by VERTEX on
or before the earlier of: May 7, 2008, as specified in Section 3.3.3 of the
Original Agreement; or the first anniversary of the effective date of any
termination of this Research Agreement by NOVARTIS for cause under Section 9.2
hereof. Notwithstanding the foregoing, the provisions of Section 4.8 of this
Research Agreement will apply as specified therein to repayment of development
loans advanced on account of the Compounds known as VX-680 and VX-528.

     3.4.          RECORDS.
            VERTEX shall keep accurate records and books of accounts containing
all data reasonably required for the calculation and verification of FTE's
employed by VERTEX in the Research Program.

            At NOVARTIS's request, VERTEX shall make those records available, no
more than once a year, during reasonable working hours, for review by a
recognized independent accounting firm acceptable to both parties, at NOVARTIS's
expense, for the sole purpose of verifying the accuracy of those records in the
calculation of Research Program FTE's. VERTEX shall not, however, be required to
retain or make available to NOVARTIS or its accountants, any such records or
books of account for any Research Year, beyond thirty-six (36) months from the
conclusion of that Research Year. NOVARTIS shall cause the accounting firm to
retain all such information in confidence.

            In the event of a negative difference between the average number of
FTE's stated to be involved in the Research Program and the number of FTE's
actually employed, the amount previously advanced to VERTEX and attributable to
any such negative difference shall be due and payable to NOVARTIS without delay.
If the negative difference is more than [***] in any Research Year, then VERTEX
shall also pay the reasonable costs of the independent accountant employed by
NOVARTIS in the review. Interest at the rate of [***], assessed from the end of

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 11
<Page>

the Research Year to which the negative difference relates, shall be due from
VERTEX upon prior written notice.

                                   ARTICLE IV
                LICENSE, DEVELOPMENT AND COMMERCIALIZATION RIGHTS

     4.1.          DEVELOPMENT ELECTION.
               (a) NOVARTIS shall have the exclusive right (the "Development
Election") to develop and commercialize, under the terms and conditions set
forth in the License Agreement and for any and all Indications, (i) each Drug
Product Candidate proposed to it by VERTEX as set forth below, and related
Back-up Compounds as provided in Section 4.5 hereof and selected by NOVARTIS,
and (ii) any Compound or Compounds selected by NOVARTIS, as provided in Section
4.1(d) hereof, from Compounds which have met the Development Candidate Criteria,
whether or not any such Compound or Compounds have been proposed as Development
Candidates by VERTEX. While the Development Election is in effect, VERTEX will
not grant to any Third Party rights to VERTEX Kinase Technology which are
inconsistent with the grant of the Development Election to NOVARTIS hereunder.
NOVARTIS's right to exercise Development Elections will expire and NOVARTIS
shall no longer have the right to select Drug Candidates hereunder upon the
first to occur of:

               (1) The Final Termination Date as defined below;

               (2) Termination of the Research Program by VERTEX under
                   Section 9.3 hereof;

               (3) Termination of the Research Program by either party
                   hereto for Scientific Cause under Section 9.5 hereof.

               If NOVARTIS validly terminates the Research Program for cause
               under Section 9.2 hereof, the Development Election may
               nonetheless be exercised for the one-year period after the
               effective date of the termination for cause, but only with
               respect to Compounds which have met the Development Candidate
               Criteria prior to the effective termination date.

               (b) VERTEX shall notify NOVARTIS and the JRC each time VERTEX has
identified a Compound that, in the reasonable exercise of its scientific and
business judgment, is a suitable Development Candidate and meets the Development
Candidate Criteria. The corresponding notice shall be accompanied by the
Development Candidate Information relating to the Development Candidate and its
Back-up Compounds, provided that information concerning Compound structures
shall be handled as specified in Section 5.1 hereof. NOVARTIS may, at its sole
discretion, exercise its Development Election and accept the Development
Candidate as a Drug Product Candidate by delivery of written notice to VERTEX
[***]. The total period of time from receipt of notice from VERTEX through [***]
shall be referred to as the "Notice Period". Notwithstanding any other
provisions of this Research Agreement, the Development Election with respect to
any Development Candidate will not expire until the end of the Notice Period
with respect to that Development Candidate.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 12
<Page>

               (c) [This subsection has been intentionally left blank.]

               (d) VERTEX will submit a final report (the "Final Report") to
NOVARTIS covering the period beginning on the Research Termination Date [***]
(the "Final Report Period"). The Final Report will contain Development Candidate
Information for any Compound that VERTEX believes, in the reasonable exercise of
its scientific and business judgment, meets the Development Candidate Criteria
[***], along with information with respect to relevant Back-up Compounds. The
procedure whereby NOVARTIS may exercise its Development Election and accept any
Development Candidate identified in the Final Report, for further development as
a Drug Product Candidate, will be the same as that described in subsection (b)
above, and the time period from receipt of the Final Report from VERTEX through
the end of the 90-day period referenced in that subsection (b) shall be called
the "Final Notice Period".

               In addition, [***] If NOVARTIS, based on this information,
               concludes that a given Compound does meet the Development
               Candidate Criteria, a formal Development Election procedure
               pursuant to Section 4.1(b) will be initiated for such Compound.
               If VERTEX disagrees with NOVARTIS's judgment that a given
               Compound meets the Development Candidate Criteria, the dispute
               resolution provisions in Section 2.5.2(ii) shall apply.

               The date upon which the Final Report Period, as and if extended
               by the parties as provided for in Section 4.3 hereof, expires
               shall be called the "Final Termination Date."

               (e) [***]

               (f) Promptly following exercise by NOVARTIS of its Development
Election, the parties will execute a License Agreement substantially identical
to the license agreement attached hereto as Exhibit A. NOVARTIS will develop and
commercialize the Drug Product Candidate under the provisions of the License
Agreement. If the Development Election has previously been exercised with
respect to another Drug Product Candidate and a License Agreement is in effect,
then the License Agreement will be amended to reflect the addition of another
Drug Product Candidate. Development of each Drug Product Candidate shall proceed
immediately after the Development Election is exercised, in accordance with the
terms of the License Agreement.

     4.2.          [This section has been intentionally left blank.]

     4.3.          EXTENSION OF NOTICE PERIOD AND FINAL NOTICE PERIOD.

            NOVARTIS may propose to VERTEX by written notice delivered during
[***] the Notice Period with respect to a particular Development Candidate, or
the Final Notice Period, with specific reference to one or more Compounds
included in the Final Report and meeting the Development Candidate Criteria,
that the Notice Period or the Final Notice Period, as the case may be, for a
specific Development Candidate or Compound be extended for good reason for a
specified time to permit NOVARTIS, at its expense and under its direction, to
conduct such additional studies of that Development Candidate or Compound as may
be specified in the notice. VERTEX shall discuss this request with NOVARTIS and
the parties shall attempt in

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 13
<Page>

good faith to reach mutual agreement with respect to the requested extension
period and the conduct of additional studies, but failing agreement the
applicable Notice Period or Final Notice Period shall expire as specified
herein.

     4.4.   REFUSED CANDIDATE.

            4.4.1. If NOVARTIS does not exercise its Development Election within
the Notice Period or the Final Notice Period, as applicable, specified in
Section 4.1, with respect to a particular Development Candidate proposed by
VERTEX, then the Development Election will expire with respect to that
Development Candidate (a "Refused Candidate"), and (a) NOVARTIS will relinquish
all rights under this Research Agreement and the License Agreement [***] (b)
VERTEX may thereafter develop and commercialize the Refused Candidate and any
such Excluded Compounds at its expense free of any further obligation to
NOVARTIS with respect thereto; and [***], shall be considered Excluded Compounds
under the provisions of this Section 4.4.1.

            4.4.2. [This section has been intentionally left blank.]

     4.5.          BACK-UP COMPOUNDS.
            The following provisions will apply with respect to Back-up
Compounds to any Drug Product Candidate.

               (a) VERTEX RESTRICTIONS ON NOMINATION AND DEVELOPMENT. So long as
NOVARTIS is using commercially reasonable efforts with respect to the
development of a particular Drug Product Candidate or the commercialization of a
particular Drug Product, VERTEX will not (i) propose a Compound for development
under the License Agreement which is a Back-up Compound with respect to that
Drug Product Candidate or Drug Product, or (ii) until after the period starting
on the date on which NOVARTIS has exercised its Development Election for a
particular Drug Product Candidate and ending [***] (the "Lead Period"), commence
development of that Back-up Compound either directly or together with or through
an Affiliate or a Third Party.

               (b) TERMINATION OF DEVELOPMENT OR COMMERCIALIZATION. If, prior to
the end of the Lead Period with respect to a particular Drug Product or Drug
Product Candidate, NOVARTIS ceases to use commercially reasonable efforts to
develop or commercialize that Drug Product Candidate or Drug Product, then the
restrictions on nomination and development referenced in subsection (a) above
will no longer apply with respect to Back-up Compounds for that Drug Product
Candidate or Drug Product unless NOVARTIS, without delay, commences another
Development Program under the License Agreement with another Compound (a
"Replacement Candidate") targeting the same Kinase, which Replacement Candidate
is a Back-up Compound associated with the discontinued Drug Product Candidate or
Drug Product, and NOVARTIS shall have the right to select for this purpose any
such Back-up Compound by providing VERTEX with notice of its Development
Election in this regard. Any such Back-up Compound for which NOVARTIS has
exercised its Development Election under this subsection (b) shall hereafter be
a Drug Product Candidate subject to the terms and conditions of the License
Agreement.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 14
<Page>

               (c) TERMINATION OF RIGHTS TO BACK-UP COMPOUNDS. A Back-up
Compound will no longer be subject to NOVARTIS's Development Election under the
Research Agreement after the end of the Lead Period applicable to that Back-up
Compound, except for Back-up Compounds which (i) subject to subsection (a)
above, VERTEX has proposed for development on or before the Final Termination
Date, and as to which NOVARTIS has exercised its Development Election hereunder;
or (ii) have been or will be selected by NOVARTIS for development before the end
of the applicable Lead Period under the provisions of subsection (b) above, or
(iii) for which NOVARTIS has exercised or will exercise its Development Election
before the end of the applicable Lead Period under the provisions of subsection
(d) below.

               (d) NOVARTIS RIGHTS TO LICENSE BACK-UP COMPOUNDS. Anytime prior
to the expiry of the Lead Period with respect a particular Drug Product
Candidate, NOVARTIS may also, by paying in each case the Back-up Election Fee
provided under Section 6.1 of the License Agreement, exercise its Development
Election with respect to any one or more Back-up Compounds associated with that
Drug Product Candidate, provided that Drug Product Candidate, or a Back-up
Compound selected pursuant to the provisions of subsection (b) above, is still
in active development. Any such Back-up Compound for which NOVARTIS has
exercised its Development Election under this subsection (d) shall become a
"Drug Product Candidate Back-up Candidate" subject to the terms and conditions
of the License Agreement.

               (e) NOVARTIS OBLIGATIONS WITH RESPECT TO DRUG PRODUCT CANDIDATE
BACK-UP CANDIDATES. So long as NOVARTIS is using commercially reasonable
efforts, pursuant to the provisions of Sections 3.6 and 5.6 of the License
Agreement, with respect to the development of a particular Drug Product
Candidate or the commercialization of a particular Drug Product, NOVARTIS shall
have no obligation to develop any of the Drug Product Candidate Back-up
Candidates associated with that Drug Product Candidate or Drug Product. As soon
as NOVARTIS ceases the development of a particular Drug Product Candidate,
NOVARTIS's obligations to use diligent, commercially reasonable efforts will
immediately shift from the discontinued Drug Product Candidate to an associated
Drug Product Candidate Back-up Compound. If NOVARTIS ceases the development of a
particular Drug Product Candidate and does not commence development of a Drug
Product Candidate Back-up Compound pursuant to the foregoing, the license to the
Drug Product Candidate and its Back-up Compounds under the License Agreement
will expire and the license rights will revert to VERTEX.

     4.6.   [This section has been intentionally left blank.]

     4.7.   DRUG SUBSTANCE.

            As soon as practicable after the exercise of its Development
Election with respect to a Drug Product Candidate, VERTEX will deliver to
NOVARTIS, if so requested by NOVARTIS, all drug substance for that Candidate in
VERTEX's possession, if any, to the extent it is usable in connection with
development of that Candidate. NOVARTIS will reimburse VERTEX for the
Manufacturing Cost (as such term is defined in the License Agreement) of that
material within thirty (30) days of receipt of VERTEX's invoice therefor.

     4.8.   SPECIAL PROVISIONS REGARDING VX-680, VX-528 AND VX-608.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 15
<Page>

            The parties acknowledge that VERTEX is currently pursuing three
Development Candidates which have been designated as VX-608, VX-680 and VX-528.

               (a) VX-608. VX-608 will be governed by this Research Agreement
and will be subject to the Development Election. The Notice Period with respect
to VX-608 shall be deemed to have commenced on the later of (i) the date on
which this Research Agreement is entered into, or (ii) the date by which
NOVARTIS is in possession of the Development Candidate Information. If NOVARTIS
exercises its Development Election with respect to VX-608 during the Notice
Period, that Compound will become a Drug Product Candidate hereunder, and
NOVARTIS will undertake all future development of VX-608 under the terms of the
License Agreement. The Development Election Payment will be made to VERTEX and
[***]. If NOVARTIS fails to exercise its Development Election with respect to
VX-608 during the Notice Period, then VX-608 will become a Refused Candidate
hereunder and the provisions of Section 4.4 will be applicable thereafter. Any
outstanding development loan will be repaid in accordance with Section 3.3
hereof.

               (b) VX-680 AND VX-528. The Compounds designated by VERTEX as
VX-680 and VX-528 are in early development under the provisions of the Original
Agreement, and the terms of the Original Agreement shall continue to govern the
rights and obligations of VERTEX and NOVARTIS with respect to VX-680 and VX-528
only, with the following modifications: [***]

               At its sole discretion exercisable by notice in writing from
               VERTEX to NOVARTIS delivered on or before [***], VERTEX may elect
               to consider VX-680 and VX-528 as Development Candidates which
               have become Refused Candidates under the Research Agreement, and
               the terms and conditions of the Research Agreement as they apply
               to any Refused Candidate shall thereafter apply in the case of
               VX-680 and VX-528. Contemporaneously with the aforementioned
               notice, VERTEX shall repay to NOVARTIS that portion of the total
               amount of any development loan previously advanced by NOVARTIS to
               VERTEX on account of either Compound, which is unspent and
               uncommitted as of the notice date. The balance of any development
               loan shall be repaid as provided in Section 3.3 hereof.

                                    ARTICLE V
                                 CONFIDENTIALITY

     5.1.   UNDERTAKING.
            During the term of this Research Agreement, each party shall keep
confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Kinase Technology and NOVARTIS
Kinase Technology.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 16
<Page>

                (a) Each party shall take any and all lawful measures to prevent
the unauthorized use and disclosure of such information, and to prevent
unauthorized persons or entities from obtaining or using such information.

                (b) Each party further agrees to refrain from directly or
indirectly taking any action which would constitute or facilitate the
unauthorized use or disclosure of such information. Each party may disclose such
information to its officers, employees and agents, to authorized licensees and
sublicensees, and to subcontractors in connection with the development or
manufacture of Drug Candidates, Drug Product Candidates or Drug Products, to the
extent necessary to enable such parties to perform their obligations hereunder
or under the applicable license, sublicense or subcontract, as the case may be;
provided, that such officers, employees, agents, licensees, sublicensees and
subcontractors have entered into appropriate confidentiality agreements for
secrecy and non-use of such information which by their terms shall be
enforceable by injunctive relief at the instance of the disclosing party.

                (c) Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees and agents and any
such sublicensees and subcontractors.

            (d) NOVARTIS will ensure that information with respect to the
                chemical structure of any Development Candidate which is
                delivered to NOVARTIS under Section 4.1(b) hereof as part of the
                Development Candidate Information with respect to that
                Development Candidate and its associated Back-up Compounds will
                be distributed or otherwise made known only to [***] The
                foregoing limitation on distribution of information will cease
                being applicable at such time as NOVARTIS exercises its
                Development Election with respect to that Development Candidate.

     5.2.   EXCEPTIONS.
            Notwithstanding the foregoing, the provisions of Section 5.1 hereof
shall not apply to knowledge, information, documents or materials which the
receiving party can conclusively establish:

                (a) have entered the public domain without such party's breach
of any obligation owed to the disclosing party;

                (b) are permitted to be disclosed by the prior written consent
of the disclosing party;

                (c) have become known to the receiving party from a source other
than the disclosing party, other than by breach of an obligation of
confidentiality owed to the disclosing party;

                (d) are disclosed by the disclosing party to a Third Party
without restrictions on its disclosure;

                (e) are independently developed by the receiving party without
breach of this Research Agreement; or

                           First Revised and Restated
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                (f) are required to be disclosed by the receiving party to
comply with applicable laws or regulations, to defend or prosecute litigation or
to comply with governmental regulations, provided that the receiving party
provides prior written notice of such disclosure to the disclosing party and
takes reasonable and lawful actions to avoid or minimize the degree of such
disclosure.

            Either VERTEX or NOVARTIS may at any time, by notice in writing to
the other party, waive any or all of the confidentiality obligations to which
the other party is subject hereunder, for any length of time or with respect to
any specific information.

     5.3.   PUBLICITY.
            The parties will agree upon the timing and content of any initial
press release or other public communications relating to this First Revised and
Restated Agreement and the transactions contemplated herein.

                (a) Except to the extent already disclosed in that initial press
release or other public communication, no public announcement concerning the
existence or the terms of this Research Agreement or concerning the transactions
described herein shall be made, either directly or indirectly, by VERTEX or
NOVARTIS, except as may be legally required by applicable laws, regulations, or
judicial order, without first obtaining the approval of the other party and
agreement upon the nature, text, and timing of such announcement, which approval
and agreement shall not be unreasonably withheld.

                (b) The party desiring to make any such public announcement
shall provide the other party with a written copy of the proposed announcement
in sufficient time prior to public release to allow such other party to comment
upon such announcement, prior to public release.

     5.4.   SURVIVAL.
            The provisions of this Article V shall survive the termination of
this Research Agreement and shall extend for a period of five (5) years
thereafter.

                                   ARTICLE VI
                                   PUBLICATION

     Each of NOVARTIS and VERTEX reserves the right to publish or publicly
present the results (the "Results") of the Research Program, subject to the
following terms and conditions. The party proposing to publish or publicly
present the Results (the "publishing party") will submit a draft of any proposed
manuscript or speech to the other party (the "non-publishing party") for
comments at least thirty (30) days prior to submission for publication or oral
presentation. The non-publishing party shall notify the publishing party in
writing within fifteen (15) days of receipt of such draft whether such draft
contains (i) information of the non-publishing party which it considers to be
confidential under the provisions of Article V hereof, (ii) information that if
published would have an adverse effect on a patent application covering the
subject matter of this Research Agreement which the non-publishing party intends
to file, or (iii) information which the non-publishing party reasonably believes
would be likely to have a material adverse impact on the development or
commercialization of a Drug Product Candidate. In any such notification, the
non-publishing party shall indicate with specificity its suggestions

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regarding the manner and degree to which the publishing party may disclose such
information. In the case of item (ii) above, the non-publishing party may
request a delay and the publishing party shall delay such publication, for a
period not exceeding ninety (90) days, to permit the timely preparation and
filing of a patent application or an application for a certificate of invention
on the information involved. In the case of item (i) above, no party may publish
confidential information of the other party without its consent in violation of
Article V of this Research Agreement. In the case of item (iii) above, if the
publishing party shall disagree with the non-publishing party's assessment of
the impact of the publication, then the issue shall be referred to the JSC for
resolution. If the JSC is unable to reach agreement on the matter within thirty
(30) days after such referral, the matter shall be referred by the JSC to the
Chief Executive Officer of NOVARTIS and the Chief Executive Officer of VERTEX
who shall attempt in good faith to reach a fair and equitable resolution of this
disagreement. If the disagreement is not resolved in this manner within two (2)
weeks of referral by the JSC as aforesaid, then the decision of the publishing
party as to publication of any information generated by it, subject always to
the confidentiality provisions of Article V hereof, shall be final, provided
that such decision shall be exercised with reasonable regard for the interests
of the non-publishing party. The parties agree that authorship of any
publication will be determined based on the customary standards then being
applied in the relevant scientific journal. The parties will use their best
efforts to gain the right to review proposed publications relating to the
subject matter of the Research Program by consultants or contractors.

     This Article VI shall terminate with the termination of this Research
Agreement, but the provisions of Article V hereof shall continue to govern the
disclosure by one party, whether by publication or otherwise, of Confidential
Information of the other, during the period set forth in Section 5.4.

                                   ARTICLE VII
                                 INDEMNIFICATION

     7.1.   INDEMNIFICATION BY VERTEX.
            VERTEX will indemnify and hold NOVARTIS and its Affiliates, and
their employees, officers and directors harmless against any loss, damages,
action, suit, claim, demand, liability, expense, bodily injury, death or
property damage (a "Loss"), that may be brought, instituted or arise against or
be incurred by such persons to the extent such Loss is based on or arises out
of:

                (a) the development, manufacture, use, sale, storage or handling
of a Compound, a Development Candidate, a Drug Product Candidate or a Drug
Product by VERTEX or its Affiliates or their representatives, agents, authorized
sublicensees or subcontractors under this Research Agreement, or any actual or
alleged violation of law resulting therefrom (with the exception of Losses based
on infringement or misappropriation of intellectual property rights); or

                (b) the breach by VERTEX of any of its covenants,
representations or warranties set forth in this Research Agreement; and

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                (c) provided however, that the foregoing indemnification shall
not apply to any Loss to the extent such Loss is caused by the negligent or
willful misconduct of NOVARTIS or its Affiliates.

     7.2.   INDEMNIFICATION BY NOVARTIS.
            NOVARTIS will indemnify and hold VERTEX, and its Affiliates, and
their employees, officers and directors harmless against any Loss that may be
brought, instituted or arise against or be incurred by such persons to the
extent such Loss is based on or arises out of:

                (a) the development, manufacture, use, sale, storage or handling
of a Compound, a Development Candidate, a Drug Product Candidate or a Drug
Product by NOVARTIS or its Affiliates or their representatives, agents,
authorized sublicensees or subcontractors under this Research Agreement, or any
actual or alleged violation of law resulting therefrom (with the exception of
Losses based on infringement or misappropriation of intellectual property
rights); or

                (b) the breach by NOVARTIS of any of its covenants,
representations or warranties set forth in this Research Agreement; and

                (c) provided that the foregoing indemnification shall not apply
to any Loss to the extent such Loss is caused by the negligent or willful
misconduct of VERTEX or its Affiliates.

     7.3.   CLAIMS PROCEDURES.
            Each Party entitled to be indemnified by the other Party (an
"Indemnified Party") pursuant to Section 7.1 or 7.2 hereof shall give notice to
the other Party (an "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any threatened or asserted claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; provided:

                (a) That counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld) and the Indemnified Party may participate in such defense at such
party's expense (unless (i) the employment of counsel by such Indemnified Party
has been authorized by the Indemnifying Party; or (ii) the Indemnified Party
shall have reasonably concluded that there may be a conflict of interest between
the Indemnifying Party and the Indemnified Party in the defense of such action,
in each of which cases the Indemnifying Party shall pay the reasonable fees and
expenses of one law firm serving as counsel for the Indemnified Party, which law
firm shall be subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and

                (b) The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Research Agreement to the extent that the failure to give notice did
not result in harm to the Indemnifying Party.

                (c) No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each Indemnified Party which
approval shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which (i)

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would result in injunctive or other relief being imposed against the Indemnified
Party; or (ii) does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.

                (d) Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.

     7.4.   COMPLIANCE.
            The parties shall comply fully with all applicable laws and
regulations in connection with their respective activities under this Research
Agreement.

                                  ARTICLE VIII
                              PATENTABLE INVENTIONS

     8.1.   OWNERSHIP.
            All inventions made and all Know-How generated exclusively by either
party or its Affiliates (directly or through others acting on its behalf) prior
to and during the term of this Research Agreement shall be owned by the party
making the invention or generating the Know-How claimed, or if such invention is
made jointly (a "Joint Invention"), shall be owned jointly, all as determined in
accordance with United States laws of inventorship.

     8.2.   PREPARATION.
            VERTEX shall take responsibility for the preparation, filing,
prosecution and maintenance of all VERTEX Patents, and any patents and patent
applications claiming Joint Inventions, and NOVARTIS shall take responsibility
for the preparation, filing, prosecution and maintenance of all NOVARTIS
Patents. VERTEX shall provide the JRC with periodic reports listing, by name,
Patents filed by VERTEX in the United States and other jurisdictions, along with
a general summary of the claims made and the jurisdictions of filing. In good
time, before the deadline for foreign filing of any patent application filed in
the United States, VERTEX will notify NOVARTIS whether it intends to foreign
file such patent application, and if it intends to do so, in what countries it
proposes to foreign file. Upon timely written notice from NOVARTIS, VERTEX will
file in such additional countries -- all being countries in which NOVARTIS would
customarily file its own cases dealing with similar subject matter -- as
NOVARTIS shall request.

     8.3.   COSTS.
            (a) During the Research Program. NOVARTIS shall reimburse VERTEX for
[***]. If the full amount of any reimbursement commitment is not applied in any
Research Year, the unused balance may be carried over from year to year during
the Research Program.

            (b) After the Research Program. Upon expiration of the Research
Program, the parties shall determine which Patents covering Drug Product
Candidates and Drug Products, and Development Candidates and Back-up Compounds
as to which the Development Election is still applicable (until it expires), are
included in the Kinase Technology, and thereafter [***]. Either party may at any
time thereafter elect, by written notice to the other party, to discontinue
support for one or more such Patents (a "Discontinued Patent") and shall not be
responsible for any costs

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relating to a Discontinued Patent which are incurred more than sixty (60) days
after receipt of that notice by the other party. In such case, the other party
may elect at its sole discretion to continue preparation, filing, prosecution or
maintenance of the Discontinued Patent at its sole expense. The party so
continuing shall own any such Patent, and if the party electing to discontinue
support is the owner of the Discontinued Patent, it shall execute such documents
of transfer or assignment and perform such acts as may be reasonably necessary
to transfer ownership of the Discontinued Patent to the other party and enable
that party to file or to continue prosecution or maintenance, if the other party
elects to do so. Discontinuance may be on a country-by-country basis or for a
Patent series in total.

                                   ARTICLE IX
                              TERM AND TERMINATION

     9.1.   TERM.
            9.1.1. This Research Agreement shall have retroactive effect
to the Effective Date, replacing and superceding the rights and obligations of
the parties under the Original Agreement, except that the terms of the Original
Agreement shall be deemed to govern the rights and obligations of the parties
with respect to the Compounds known as VX-680 and VX-528, pursuant to the
provisions of Section 4.8 of this Research Agreement. This Research Agreement
will extend until the Final Termination Date as defined herein, unless earlier
terminated by either party hereto in accordance with this Research Agreement, or
unless extended by mutual agreement of the parties; provided that the Agreement
will be deemed to continue in effect with respect to any Drug Product Candidate
during the Lead Period with respect to that Candidate, but only insofar as
necessary to enable NOVARTIS to exercise its Development Election under Section
4.5 hereof with respect to any Back-up Compounds for that Drug Product
Candidate.

     9.2.   TERMINATION OF THE RESEARCH PROGRAM BY NOVARTIS FOR CAUSE.
            Upon written notice to VERTEX, NOVARTIS may at its sole discretion
unilaterally terminate the Research Program and this Research Agreement upon the
occurrence of any of the following events:

                (a) VERTEX shall materially breach any of its material
obligations, such as its obligations under Section 3.2 hereof, under this
Research Agreement or the License Agreement, and such material breach shall not
have been remedied or steps initiated to remedy the same to NOVARTIS's
reasonable satisfaction, within sixty (60) days after NOVARTIS sends written
notice of breach to VERTEX; or

                (b) VERTEX shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by Force Majeure, strike, labor dispute or any other events over which it
has no control.

            In the event of any valid termination under this Section 9.2,
NOVARTIS shall not be required to make any payments under Section 3.2 hereof
which are not due and payable prior to receipt by VERTEX of the notice of breach
referenced under Section 9.2(a) or receipt by VERTEX of the notice of
termination pursuant to Section 9.2(b), as the case may be. Notwithstanding the
foregoing, any License Agreement then in effect shall continue in effect unless
it is expressly terminated in accordance with its terms.

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     9.3.   TERMINATION OF THE RESEARCH PROGRAM BY VERTEX FOR CAUSE.
            VERTEX may at its sole discretion terminate this Research Agreement
upon written notice to NOVARTIS upon the occurrence of any of the following
events:

                (a) NOVARTIS shall materially breach any of its material
obligations under this Research Agreement or the License Agreement and such
material breach shall not have been remedied or steps initiated to remedy the
same to VERTEX's reasonable satisfaction, within sixty (60) days after VERTEX
sends written notice of breach to NOVARTIS; or

                (b) NOVARTIS shall cease to function as a going concern by
suspending or discontinuing its business for any reason except for interruptions
caused by Force Majeure, strike, labor dispute or any other events over which it
has no control.

            Notwithstanding the foregoing, any License Agreement then in effect
shall continue in effect unless it is expressly terminated in accordance with
its terms.

     9.4.   [This section has been intentionally left blank.]

     9.5.   TERMINATION FOR SCIENTIFIC CAUSE.

            Either party may terminate this Research Agreement upon six months'
prior written notice to the other party, if the terminating party can
demonstrate to the reasonable satisfaction of the other party that, by reason of
scientific developments unknown on the Effective Date, the Research Program is
unlikely to produce any Compounds that can achieve a commercially viable
therapeutic effect through an effect on a Kinase target.

     9.6.   EFFECT OF TERMINATION.
                (a) Except where explicitly provided elsewhere herein,
termination of this Research Agreement for any reason, or expiration of this
Research Agreement, will not affect: (i) obligations which have accrued as of
the date of termination or expiration, and (ii) obligations and rights which,
expressly or from the context thereof, are intended to survive termination or
expiration of this Research Agreement, including obligations of confidentiality
under Article V hereof, the indemnification provisions of Article VII hereof and
the rights and obligations of the parties during the Lead Period under Sections
4.1 and 4.5 with respect to a particular Drug Product Candidate and related
Back-up Compounds.

                (b) Upon termination or expiration of this Research Agreement,
NOVARTIS and VERTEX will retain exclusive rights to their respective Kinase
Technology (including intellectual property), except NOVARTIS shall hold those
rights to VERTEX Technology provided in any License Agreement in effect on the
Final Termination Date covering Drug Product Candidates selected by NOVARTIS,
and shall hold those rights to Back-up Compounds and Drug Product Candidate
Back-up Compounds provided in Sections 4.1(e) and 4.5.

                                    ARTICLE X
                         REPRESENTATIONS AND WARRANTIES

    10.1.   REPRESENTATIONS AND WARRANTIES OF VERTEX.
            VERTEX represents and warrants to NOVARTIS as follows:

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                (a) Authorization. This Research Agreement has been duly
executed and delivered by VERTEX and constitutes the valid and binding
obligation of VERTEX, enforceable against VERTEX in accordance with its terms
except as enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, bankruptcy, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable principles. The
execution, delivery and performance of this Research Agreement have been duly
authorized by all necessary action on the part of VERTEX, its officers and
directors.

                (b) No Third Party Rights. VERTEX owns or possesses adequate
licenses or other rights to use all VERTEX Kinase Technology relating to the
Field and to grant the licenses herein. The granting of the Development Election
to NOVARTIS hereunder does not violate any right known to VERTEX of any Third
Party.

                (c) Third Party Patents. Except as disclosed in writing between
the parties to this Research Agreement or their respective agents, VERTEX is not
aware of any issued patents or pending patent applications that, if issued,
would be infringed by the development, manufacture, use or sale of any Compound,
Development Candidate or Drug Product Candidate pursuant to this Research
Agreement.

    10.2.   REPRESENTATIONS AND WARRANTIES OF NOVARTIS.
            NOVARTIS represents and warrants to VERTEX as follows:
                (a) Authorization. This Research Agreement has been duly
executed and delivered by NOVARTIS and constitutes the valid and binding
obligation of NOVARTIS, enforceable against NOVARTIS in accordance with its
terms except as enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, bankruptcy, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this Research Agreement
have been duly authorized by all necessary action on the part of NOVARTIS, its
officers and directors.

                (b) Third Party Rights. NOVARTIS owns or possesses adequate
licenses or other rights to use all NOVARTIS Kinase Technology relating to the
Field in accordance with the provisions of this Research Agreement.

                (c) Third Party Patents. Except as disclosed in writing between
the parties to this Research Agreement or their respective agents, NOVARTIS is
not aware of any issued patents or pending patent applications that, if issued,
would be infringed by the development, manufacture, use or sale of any Compound,
Development Candidate or Drug Product Candidate pursuant to this Research
Agreement.

                                   ARTICLE XI
                               DISPUTE RESOLUTION

    11.1.   GOVERNING LAW, AND JURISDICTION.
            This Research Agreement shall be governed and construed in
accordance with the internal laws of the State of New York.

    11.2.   DISPUTE RESOLUTION PROCESS.

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                (a) General. Except as set forth in (b) below or as otherwise
explicitly provided herein, in the event of any controversy or claim arising out
of or relating to any provision of this Research Agreement, or the collaborative
effort contemplated hereby, the parties shall, and either party may, initially
refer such dispute to the JSC, and failing resolution of the controversy or
claim within thirty (30) days after such referral, the matter shall be referred
to the Chief Executive Officer of VERTEX and the Chief Executive Officer of
NOVARTIS who shall, as soon as practicable, attempt in good faith to resolve the
controversy or claim. If such controversy or claim is not resolved within sixty
(60) days of the date of initial referral of the matter to the JSC, either party
shall be free to initiate proceedings in any court having requisite
jurisdiction.

                (b) Third Party Referral. Any dispute or claim relating to the
"Referral Matters" as defined below which the parties are unable to resolve
pursuant to the other dispute resolution mechanisms provided in this Research
Agreement (other than litigation) shall, upon the written request of one party
delivered to the other party, be submitted to and settled by a panel of Third
Parties (a "Third Party Panel") appointed by VERTEX and NOVARTIS as provided
below. The "Referral Matter" shall consist solely of disagreements concerning
whether a particular Compound has satisfied all of the applicable Development
Candidate Criteria. Within thirty (30) days after delivery of the
above-referenced written request, each party will appoint one person who is not
an Affiliate of the party appointing that person, and who is knowledgeable in
the areas of pharmaceutical science, business and commercial aspects of drug
development and sale, or the clinical development of pharmaceuticals, to hear
and determine the dispute. The two persons so chosen will select another
impartial Third Party and their majority decision will be final and conclusive
upon the parties hereto. If either party fails to designate its appointee within
the thirty (30) day period referenced above, then the appointee who has been
designated by the other party will serve as the sole member of the Third Party
Panel and will be deemed to be the single, mutually approved party to resolve
the dispute. Each party will bear its own costs in the Third Party Referral
process, and the parties will split equally the costs of the Third Party Panel
members. The Third Party Panel will, upon the request of either party, issue its
final determination in writing.

                                   ARTICLE XII
                            MISCELLANEOUS PROVISIONS

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

    12.2.   WAIVER.
            No provision of this Research Agreement may be waived except in
writing by both parties hereto. No failure or delay by either party hereto in
exercising any right or remedy hereunder or under applicable law will operate as
a waiver thereof, or a waiver of any right or remedy on any subsequent occasion.

    12.3.   FORCE MAJEURE.

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            Neither party will be in breach hereof by reason of its delay in the
performance of or failure to perform any of its obligations hereunder, if that
delay or failure is caused by strikes, acts of God or the public enemy, riots,
incendiaries, interference by civil or military authorities, compliance with
governmental priorities for materials, or any fault beyond its control or
without its fault or negligence.

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

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

    12.6.   GOVERNMENT APPROVALS.
            Each party will obtain any government approval required in its
country of domicile to enable this Research Agreement to become effective, or to
enable any payment hereunder to be made, or any other obligation hereunder to be
observed or performed. Each party will keep the other informed of progress in
obtaining any such government approval, and will cooperate with the other party
in any such efforts.

    12.7.   EXPORT CONTROLS.
            This Research Agreement is made subject to any restrictions
concerning the export of materials and Technology from the United States which
may be imposed upon or related to either party to this Research Agreement from
time to time by the Government of the United States. Furthermore, NOVARTIS will
not export, directly or indirectly, any VERTEX Kinase Technology or any Bulk
Drug Substance, Drug Product Candidates or Drug Products utilizing such
Technology to any countries for which the United States Government or any agency
thereof at the time of export requires an export license or other governmental
approval, without first obtaining the written consent to do so from the
Department of Commerce or other agency of the United States Government when
required by applicable statute or regulation.

    12.8.   ASSIGNMENT.

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            This Research Agreement may not be assigned or otherwise transferred
by either party without the prior written consent of the other party; provided,
however, that either party may assign this Research Agreement, without the
consent of the other party, (i) to any of its Affiliates, if the assigning party
guarantees the full performance of its Affiliates' obligations hereunder, or
(ii) in connection with the transfer or sale of all or substantially all of its
assets or business or in the event of its merger or consolidation with another
company. Any purported assignment in contravention of this Section 12.8 shall,
at the option of the non-assigning party, be null and void and of no effect. No
assignment shall release either party from responsibility for the performance of
any accrued obligation of such party hereunder. This Research Agreement shall be
binding upon and enforceable against the successor to or any permitted assignees
from either of the parties hereto.

    12.9.   AFFILIATES.
            Each party may perform its obligations hereunder personally or
through one or more Affiliates, although each party shall nonetheless be solely
responsible for the performance of its Affiliates. Neither party shall permit
any of its Affiliates to commit any act (including any act or omission) which
such party is prohibited hereunder from committing directly. The use of
subcontractors by either party shall not increase the financial obligations of
the other party hereunder in any respect.

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

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

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

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            if to NOVARTIS, at:

                NOVARTIS PHARMA AG
                Business Development and Licensing
                P.O. Box
                CH-4002
                Basel, Switzerland
                Attention: Victor A. Hartmann, Vice President

            with a copy to: Legal Services, at the address referenced above

            if to VERTEX, at:
                Vertex Pharmaceuticals Incorporated
                130 Waverly Street
                Cambridge, MA U.S.A. 02139-4211
                Attention:  President

                 with a copy to: Legal Department
                Attention:  General Counsel

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

   12.14.   AUTHORITY.
            The undersigned represent that they are authorized to sign this
Research Agreement on behalf of the parties hereto. The parties each represent
that no provision of this Research Agreement will violate any other agreement
that such party may have with any other person or company. Each party has relied
on that representation in entering into this Research Agreement.

   12.15.   ENTIRE AGREEMENT.
            This Research Agreement, together with the Original Agreement
insofar as it remains applicable, as set forth in the Recitals, in Section 4.8
and elsewhere herein, with respect to VX-680 and VX-528 only, and the respective
License Agreements thereto, contains the entire understanding of the parties
relating to the matters referred to herein, and may only be amended by a written
document, duly executed on behalf of the respective parties.

   12.16.   STANDSTILL.
            [***]

   12.17.   NOTICE OF PHARMACEUTICAL SIDE-EFFECTS.
            During the term of this Research Agreement, the parties shall keep
each other promptly and fully informed and will promptly notify appropriate
authorities in accordance with applicable law, after receipt of information with
respect to any serious adverse event (as defined by the ICH Harmonized
Tripartite Guideline on Clinical Safety Data Management), directly or indirectly
attributable to the use or application of Compounds, a Development Candidate,
Bulk Drug Substance, a Drug Product Candidate or a Drug Product.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 28
<Page>

   12.18.   INFLATION ADJUSTMENT.
            All payments required to be made to VERTEX hereunder (except any
royalty payments required to be made under the provisions of Section 6.3 of the
License Agreement) shall be adjusted at the beginning of each Research Year
(commencing at the beginning of Research Year 2) to reflect the impact of
inflation since the Effective Date of the Agreement, as measured by the biotech
worker inflation rate defined and reported in the Radford Survey (Radford/AON
Consulting Inc., San Francisco, CA), or other mutually acceptable index.
Notwithstanding the foregoing, no adjustment shall be required in any Research
Year in which the appropriate inflation adjustment, if applied, would result in
a change of less than [***] in the relevant payment amount.

   12.19.   INVOICE REQUIREMENT.
            Any amounts payable to VERTEX hereunder (except any royalty payments
required to be made under the provisions of Section 6.3 of the License
Agreement) shall be made within thirty days after receipt by NOVARTIS, or its
nominee designated for that purpose in advance by NOVARTIS in writing to VERTEX,
of an invoice covering such payment, which invoice shall conform to the extent
reasonably practicable to the form of invoice contained in Exhibit B to this
Research Agreement.

   12.20.   HARDSHIP.
            If as a result of unforeseen events or developments relating to the
subject matter of this Research Agreement, the performance of this Research
Agreement shall cause inequitable economic hardship for one party which runs
counter to the objectives of this Research Agreement and which the other party
cannot reasonably and in good faith expect the first party to bear unrelieved,
the parties will meet and seek in good faith to find equitable means of amending
this Research Agreement to reestablish a fair and reasonable economic balance
under this Research Agreement between the parties hereto.

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 29
<Page>

                               VERTEX PHARMACEUTICALS INCORPORATED

                               By: /s/ Kenneth S. Boger
                                  ---------------------------------------------
                                      Kenneth S. Boger
                               Title: Senior Vice President and General Counsel

                               NOVARTIS PHARMA AG

                               By: /s/ Stephanie Lassarat
                                  ----------------------------------------------
                               Title: Senior Legal Counsel
                                     -------------------------------------------

                               By: /s/ W. Steiger
                                  ----------------------------------------------
                               Title: Head of Administration, NIBR Basil
                                     -------------------------------------------

                           First Revised and Restated
       Research and Early Development Agreement -- Confidential -- Page 30
<Page>

                                  SCHEDULE 1.13

                     EXCLUDED COMPOUNDS AND EXCLUDED KINASES

        Excluded Kinases

                                          SWISSPROT Designation

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

        Excluded Compounds

        [***]

                           First Revised and Restated
             Research and Early Develoment Agreement - Confidential
                                  Schedule 1.13
<Page>

                                 SCHEDULE 2.4.3

                         DEVELOPMENT CANDIDATE CRITERIA

[***]

                           First Revised and Restated
             Research and Early Develoment Agreement - Confidential
                             Schedule 2.4.3 - Page 1
<Page>

                                    EXHIBIT A

          FORM OF LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

                           First Revised and Restated
             Research and Early Develoment Agreement - Confidential
                                    Exhibit A
<Page>

                                    EXHIBIT B

                                 FORM OF INVOICE

                              [COMPANY Letterhead]

[Date]

Novartis Pharma AG
Zentraler Faktureneingang
Attn: Ms. R. Aschwanden
Lichtstrasse 35
CH - 4002 Basel
Switzerland

Dear Ms. Aschwanden

Re: [COMPANY] License Agreement for [PRODUCT]

This is an invoice requesting payment in connection the above-captioned
Agreement between [COMPANY] and Novartis Pharma AG.

Novartis Contract Code N DEG.:       [will be assigned within Novartis following
                                     execution]

Novartis Cost Centre:                630926 / 393120

SPECIFICATION:                       [PLEASE SPECIFY THE EVENT FOR WHICH THE
                                     INVOICE IS DUE, AND ADD ANY COPIES OF
                                     INVOICES FROM THIRD PARTIES IN CASE
                                     REIMBURSEMENT FOR THIRD PARTY WORK IS
                                     AGREED TO]

Amount and Currency:                 [self-explanatory]

Bank address and Account N DEG.:     [insert the name and address of the bank to
                                     which the payment should be sent and the
                                     account number to which it should be
                                     credited]

Sincerely yours,
[COMPANY]

                           First Revised and Restated
             Research and Early Develoment Agreement - Confidential
                                    Exhibit B
<Page>

                                    EXHIBIT A

              LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

                                     BETWEEN

                       VERTEX PHARMACEUTICALS INCORPORATED

                                       AND

                               NOVARTIS PHARMA AG
<Page>

<Table>
<S>                                                                                                              <C>
ARTICLE I -- DEFINITIONS..........................................................................................2

ARTICLE II --  LICENSE...........................................................................................10
    2.1    Grant to NOVARTIS.....................................................................................10
    2.2    Grant to VERTEX.......................................................................................11
    2.3    Information Transfer..................................................................................11

ARTICLE III -- DEVELOPMENT.......................................................................................12
    3.1    Commencement of Development Program...................................................................12
    3.2    International Project Team............................................................................13
    3.3    Development Responsibility and Costs..................................................................14
    3.4    Regulatory Approvals..................................................................................15
    3.5    Assistance Rights.....................................................................................16
    3.6    Reasonable Efforts in Development.....................................................................17

ARTICLE IV --  MANUFACTURING AND SUPPLY..........................................................................17
    4.1    Supply of Bulk Drug Substance and Drug Product........................................................17
    4.2    [This section has been intentionally left blank.].....................................................17
    4.3    Formulation and Packaging.............................................................................18

ARTICLE V --   COMMERCIALIZATION.................................................................................18
    5.1    Marketing and Promotion...............................................................................18
    5.2    Global Brand Team.....................................................................................18
    5.3    [This section has been intentionally left blank.].....................................................19
    5.4    [This section has been intentionally left blank.].....................................................19
    5.5    Co-labeling...........................................................................................20
    5.6    Due Diligence.........................................................................................20

ARTICLE VI --  PAYMENTS..........................................................................................21
    6.1    Development Election Payment..........................................................................21
    6.2    Development Milestone Payments by NOVARTIS............................................................21
    6.3    Royalties.............................................................................................23
    6.4    [This section has been intentionally left blank.].....................................................24
    6.5    Sales Reports.........................................................................................24
    6.6    Withholding Tax.......................................................................................26

ARTICLE VII -- BACK-UP COMPOUNDS.................................................................................26

ARTICLE VIII -- INTELLECTUAL PROPERTY............................................................................27
    8.1    Patentable Inventions and Know-How....................................................................27
    8.2    Infringement Claims by Third Parties..................................................................28
    8.3    Infringement Claims Against Third Parties.............................................................30
    8.4    Notice of Certification...............................................................................31
    8.5    Patent Term Extensions................................................................................31

ARTICLE IX --  REPRESENTATIONS AND WARRANTIES....................................................................32
    9.1    Representations and Warranties of VERTEX..............................................................32
    9.2    Representations and Warranties of NOVARTIS............................................................33

ARTICLE X --   CONFIDENTIALITY...................................................................................34
    10.1   Undertaking...........................................................................................34
</Table>

      License, Development and Commercialization Agreement -- Confidential
<Page>

<Table>
<S>                                                                                                              <C>
    10.2   Exceptions............................................................................................35
    10.3   Publicity.............................................................................................36
    10.4   Survival..............................................................................................36

ARTICLE XI --  PUBLICATIONS......................................................................................36

ARTICLE XII -- DISPUTE RESOLUTION................................................................................38
    12.1   Governing Law, and Jurisdiction.......................................................................38
    12.2   Dispute Resolution Process............................................................................38

ARTICLE XIII -- TERM AND TERMINATION.............................................................................38
    13.1   Term..................................................................................................38
    13.2   Termination For Cause.................................................................................39
    13.3   Termination for Bankruptcy............................................................................39
    13.4   Termination by NOVARTIS...............................................................................39
    13.5   Effect of Termination.................................................................................40

ARTICLE XIV -- INDEMNIFICATION...................................................................................40
    14.1   Indemnification by VERTEX.............................................................................40
    14.2   Indemnification by NOVARTIS...........................................................................41
    14.3   Claims Procedures.....................................................................................41
    14.4   Compliance............................................................................................43
    14.5   Insurance.............................................................................................43

ARTICLE XV --  MISCELLANEOUS PROVISIONS..........................................................................43
    15.1   Notice of Pharmaceutical Side-Effects.................................................................43
    15.2   Waiver................................................................................................43
    15.3   Force Majeure.........................................................................................43
    15.4   Registration of License...............................................................................44
    15.5   Severability..........................................................................................44
    15.6   Government Acts.......................................................................................44
    15.7   Government Approvals..................................................................................44
    15.8   Assignment............................................................................................45
    15.9   Affiliates............................................................................................45
    15.10  Counterparts..........................................................................................45
    15.11  No Agency.............................................................................................45
    15.12  Notice................................................................................................46
    15.13  Headings..............................................................................................46
    15.14  Authority.............................................................................................47
    15.15  Entire Agreement......................................................................................47
    15.16  Inflation Adjustment..................................................................................47
    15.17  Invoice Requirement...................................................................................47
    15.18  Hardship..............................................................................................47

SCHEDULES
Schedule 1.12 -- List of Drug Product Candidates
Schedule 1.25 -- List of Major Markets
Schedule 1.29 -- NOVARTIS Patents
Schedule 1.44 -- VERTEX Patents
</Table>

      License, Development and Commercialization Agreement -- Confidential
<Page>

              LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

     This Agreement is made and entered into as of ________, _____ ( the
"Effective Date") between Vertex Pharmaceuticals Incorporated (hereinafter
"VERTEX"), a Massachusetts corporation with principal offices at 130 Waverly
Street, Cambridge, MA 02139-4242, and NOVARTIS PHARMA AG (hereinafter
"NOVARTIS"), a Swiss corporation with principal offices at Lichtstrasse 35,
CH-4056 Basel, Switzerland.

                                  INTRODUCTION

     WHEREAS, VERTEX and NOVARTIS are parties to a certain First Revised and
Restated Research Agreement dated January __, 2004 (the "Research Agreement")
which revised and restated a certain Research and Early Development Agreement
dated May 8, 2000 (the "Original Agreement"), under which VERTEX is attempting
to design novel, small-molecule compounds targeting the Kinase protein
superfamily; and

     WHEREAS, NOVARTIS may elect to develop and commercialize compounds proposed
by VERTEX under the Research Agreement; and

     WHEREAS, in accordance with the Research Agreement NOVARTIS has elected to
develop and commercialize the Drug Product Candidates designated on SCHEDULE
1.12 hereto, and the parties therefore wish to execute this License, Development
and Commercialization Agreement, which is identical in substance to the
agreement attached as Exhibit A to the Research Agreement, to memorialize the
provisions specific to development and commercialization of Drug Product
Candidates;

     WHEREAS, the parties have special rights and obligations with respect to
Back-up Compounds to the Drug Product Candidates (as defined in the Research
Agreement); and

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

                                    ARTICLE I
                                   DEFINITIONS

For purposes of this Agreement, the terms defined in this Article 1 shall have
the following meanings whether used in their singular or plural forms. Use of
the singular shall include the plural and vice versa, unless the context
requires otherwise:

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

 License, Development and Commercialization Agreement -- Confidential -- Page 1
<Page>

by, or is under direct or indirect common control with, such Person. The term
"control" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. Control will be
presumed if one Person owns, either of record or beneficially, more than 50% of
the voting stock of any other Person. For the avoidance of any doubt, the
Novartis Institute for Functional Genomics, Inc. and The Friedrich Miescher
Institute, as currently operated, are not Affiliates of NOVARTIS for the
purposes of this Agreement.

               1.1.1.    "CHANGE OF CONTROL" shall mean (a) a transaction which
results in the voting securities of VERTEX immediately prior to such transaction
ceasing to represent more than fifty percent (50%) of the combined voting power
of the surviving entity immediately after such transaction; (b) any Third Party
(other than any trustee or other fiduciary holding securities under an employee
benefit plan, or any corporation or other entity owned directly or indirectly by
the stockholders of such party in substantially the same portion as their
ownership of stock of such party) becoming the beneficial owner of more than
fifty percent (50%) of the combined voting power of the outstanding securities
of VERTEX; or (c) a sale to a Third Party of all or substantially all of the
business of VERTEX necessary for VERTEX's performance under this Agreement.

     1.2.      "GLOBAL BRAND TEAM" OR "GBT" shall have the meaning set forth in
Section 5.2 hereof; and "Back-up Compound" shall have the meaning set forth in
Section 1.1.1 of the Research Agreement.

     1.3.      [This section has been intentionally left blank.]

     1.4.      "BULK DRUG SUBSTANCE" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug Product.

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

     1.6.      [This section has been intentionally left blank.]

     1.7.      (a) "DEVELOPMENT CANDIDATE" shall have the meaning ascribed to it
in the Research Agreement.

               (b) "DEVELOPMENT ELECTION FEE" and "BACK-UP ELECTION FEE" shall
               each have the meaning ascribed to it in Section 6.1 hereof.

     1.8.      "DEVELOPMENT PLAN" shall have the meaning ascribed to it in
Section 3.2.2 hereof.

     1.9.      "DEVELOPMENT PROGRAM" shall mean activities associated with
development of a Drug Product Candidate which are conducted by or at the
direction of NOVARTIS after the Development Election has been exercised with
respect to that Drug Product Candidate, including but not limited to (a)
manufacture and formulation of Drug Product Candidates for use in pre-clinical,
non-clinical and clinical studies; (b) pre-clinical and non-clinical animal
studies

 License, Development and Commercialization Agreement -- Confidential -- Page 2
<Page>

performed in accordance with GLP (or the applicable equivalent); (c)planning,
implementation, evaluation and administration of human clinical trials; (d)
manufacturing process development, scale-up and commercial manufacture of Drug
Product; (e) preparation and submission of applications for Regulatory Approval;
and (f) post-market surveillance of approved drug indications, as required or
agreed as part of a marketing approval by any governmental regulatory authority.

     1.10.     [This Section has been intentionally left blank.]

     1.11.     "Drug Product" shall mean a finished dosage form which is
prepared from Bulk Drug Substance and is ready for administration to the
ultimate consumer as a pharmaceutical.

     1.12.     "DRUG PRODUCT CANDIDATE" shall mean any Development Candidate or
Drug Product Candidate Back-up Candidate listed from time to time on Schedule
1.12 hereof, as to which NOVARTIS has exercised the Development Election under
the Research Agreement and which has become a subject of this License Agreement
in accordance with the provisions thereof; and "Drug Product Candidate Back-up
Candidate" shall have the meaning set forth in Section 7.4 of this Agreement.

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

     1.14.     [This section has been intentionally left blank.]

     1.15.     "FIELD" shall mean the treatment or prevention of conditions or
diseases in humans, principally by affecting a Kinase other than an Excluded
Kinase.

     1.16.     "FIRST COMMERCIAL SALE" shall mean the first sale of a Drug
Product by NOVARTIS or an Affiliate or sublicensee of NOVARTIS in a country in
the Territory following Regulatory Approval of the Drug Product in that country
or, if no such Regulatory Approval or similar marketing approval is required,
the date upon which the Drug Product is first commercially launched in such
country.

     1.17.     "FILING OUTSIDE THE U.S." shall mean any application or
regulatory filing to be made hereunder with a regulatory authority outside the
United States, for approval to manufacture and sell Drug Product(s) outside the
U.S., and any correspondence, approvals or governmental licenses relating
thereto.

     1.18.     [This section has been intentionally left blank.]

     1.19.     "GMP" shall mean the current Good Manufacturing Practice
regulations promulgated by the FDA, published at 21 CFR Part 210 et seq., as
such regulations may from time to time be amended, and such equivalent
regulations or standards of countries outside the United States as may be
applicable to activities conducted hereunder; and "GLP" shall mean the current
Good Laboratory Practices regulations promulgated by the FDA, published at 21
CFR Part 58, as such regulations may be from time to time amended, and such
equivalent regulations or standards of countries outside the United States as
may be applicable to activities conducted hereunder.

 License, Development and Commercialization Agreement -- Confidential -- Page 3
<Page>

     1.20.     "INDICATION" shall mean a recognized disease or condition, an
important manifestation of a disease or condition, or symptom associated with a
disease or syndrome for which use of a Drug Product is indicated, as would be
identified in the Drug Product's label under applicable FDA regulations or the
foreign equivalent thereof.

     1.21.     "IND" shall mean the investigational new drug application
relating to a Drug Product Candidate filed with the FDA pursuant to 21 CFR Part
312, including any amendments thereto. References herein to IND shall include,
to the extent applicable, any comparable Filing(s) Outside the U.S. (such as a
CTX in the European Union).

     1.22.     "INTERNATIONAL PROJECT TEAM" or "IPT" shall have the meaning set
forth in Section 3.2.1 hereof.

     1.23.     "JOINT STEERING COMMITTEE" or "JSC" shall have the meaning set
forth in Section 2.6 of the Research Agreement.

     1.24.     "KNOW-HOW" means all proprietary material and information
including data, technical information, know-how, experience, inventions,
discoveries, trade secrets, compositions of matter and methods, whether
currently existing or developed or obtained during the course of this Agreement
and whether or not patentable or confidential, that are now Controlled by a
Party or its Affiliates and that relate to the development, utilization,
manufacture or use of any Drug Product Candidate or Drug Product, including but
not limited to processes, techniques, methods, products, materials and
compositions; provided however, that for the purposes of the definition of
VERTEX Know-How only, the term "Know-How" shall not include VERTEX's general
drug design technology, whether in software or hardware, tangible or intangible,
form; and "Lead Period" shall mean the period starting on date this Agreement is
effective with respect to a particular Drug Product Candidate and ending on the
second anniversary thereafter.

     1.25.     "MAJOR MARKETS" shall mean those countries listed on Schedule
1.25 hereto.

     1.26.     "MANUFACTURING COST" shall mean [***].

     1.27.     "NET SALES" with respect to any Drug Product shall mean the gross
amount invoiced by NOVARTIS and any NOVARTIS Affiliate, licensee or sublicensee
for that Drug Product sold to Third Parties in bona fide, arms-length
transactions, less [***]; all as determined in accordance with NOVARTIS' usual
and customary accounting methods, which are in accordance with generally
accepted accounting principles (GAAP).

               1.27.1. In the case of any sale or other disposal of a Drug
Product between or among NOVARTIS and its Affiliates, licensees and
sublicensees, for resale, Net Sales shall be calculated as above only on the
value charged or invoiced on the first arm's-length sale thereafter to a Third
Party;

               1.27.2. In the case of any sale which is not invoiced or is
delivered before invoice, Net Sales shall be calculated at the time of shipment
or when the Drug Product is paid for, if paid for before shipment or invoice;

               1.27.3. In the case of any sale or other disposal for value,
such as barter or counter-trade, of any Drug Product, or part thereof, other
than in an arm's length transaction

 License, Development and Commercialization Agreement -- Confidential -- Page 4
<Page>

exclusively for money, Net Sales shall be calculated as above on the value of
the consideration received or the fair market price (if higher) of the Drug
Product in the country of sale or disposal;

               1.27.4. In the event the Drug Product is sold in a finished
dosage form containing the Drug Product in combination with one or more other
active ingredients (a "Combination Product"), the Net Sales of the Drug Product,
for the purposes of determining royalty payments, shall be determined by [***].

     1.28.     "NOVARTIS KNOW-HOW" shall mean all Know-How of NOVARTIS.

     1.29.     "NOVARTIS PATENTS" shall mean any Patents Controlled by NOVARTIS
or any of its Affiliates claiming Bulk Drug Substance, a Drug Product Candidate
or a Drug Product, or a formulation or prodrug thereof, discovered or identified
by NOVARTIS or its Affiliates during the course of the Research Program or a
Development Program, or a method of making or using Bulk Drug Substance, a Drug
Product Candidate or a Drug Product, or a prodrug thereof, or an improvement to
the subject matter of a Patent covering any of the foregoing. A list of NOVARTIS
Patents is appended hereto as Schedule 1.29 and will be updated periodically to
reflect additions thereto during the term of this Agreement. NOVARTIS shall keep
VERTEX periodically informed in writing of all NOVARTIS Patents.

     1.30.     "NOVARTIS TECHNOLOGY" shall mean all NOVARTIS Patents and all
NOVARTIS Know-How which is applied by NOVARTIS to the development, manufacture
or use of Bulk Drug Substance, a Drug Product Candidate or a Drug Product.

     1.31.     "PATENTS" means all existing patents and patent applications and
all patent applications hereafter filed, including any continuation,
continuation-in-part, division, provisional or any substitute applications, any
patent issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplementary protection
certificate) of any such patent, and any confirmation patent or registration
patent or patent of addition based on any such patent, and all foreign
counterparts of any of the foregoing.

     1.32.     "PERSON" shall mean any individual, corporation, partnership,
association. joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.

     1.33.     "PIVOTAL REGISTRATION STUDY" shall mean a human clinical trial
conducted for inclusion in (i) that portion of the FDA submission and approval
process which provides for the continued trials of a Drug Candidate on
sufficient numbers of patients to generate safety and efficacy data to support
Regulatory Approval in the proposed therapeutic indication, as more fully
defined in 21 CFR. Section 312.21(c), and (ii) equivalent submissions with
similar requirements in other countries.

     1.34.     "REGULATORY APPROVAL" shall mean, with respect to any country,
all authorizations by the appropriate governmental entity or entities necessary
for commercial sale of a Drug Product in that country including, without
limitation and where applicable, approval of labeling, price, reimbursement and
manufacturing. "Regulatory Approval" in the United States shall mean final
approval of a new drug application pursuant to 21 CFR Section 314, permitting
marketing of the applicable Drug Product in interstate commerce in the United
States. "Regulatory Approval" in the European Union shall mean final approval of
a Marketing

 License, Development and Commercialization Agreement -- Confidential -- Page 5
<Page>

Authorization Application pursuant to Council Directive 75/319/EEC, as amended,
or Council Regulation 2309/93/EEC, as amended.

     1.35.     "RESEARCH AGREEMENT" shall mean that certain First Revised and
Restated Research and Early Development Agreement between VERTEX and NOVARTIS
dated February 3, 2004.

     1.36.     [This section has been intentionally left blank.]

     1.37.     [This section has been intentionally left blank.] =

     1.38.     "Technology" shall mean VERTEX Technology and NOVARTIS
Technology.

     1.39.     "Territory" shall mean all the countries in the world.

     1.40.     "Third Party" shall mean any person or entity which is not a
party or an Affiliate of any party to this Agreement.

     1.41.     [This section has been intentionally left blank.]

     1.42.     "VALID PATENT CLAIM" shall mean either (a) a claim of an issued
and unexpired Patent which has not been revoked or held permanently
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer or otherwise, or (b) a claim of a pending patent
application which claim was filed in good faith and has not been abandoned or
finally disallowed without the possibility of appeal or refiling of said
application.

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

     1.44.     "VERTEX PATENTS" shall mean any Patents Controlled by VERTEX or
any of its Affiliates claiming Bulk Drug Substance, a Drug Product Candidate or
a Drug Product, or a formulation or prodrug thereof, discovered or identified by
VERTEX or its Affiliates during the course of the Research Program and the
Development Program, or a method of making or using Bulk Drug Substance, a Drug
Product Candidate or a Drug Product, or a prodrug thereof, or an improvement to
the subject matter of a Patent covering any of the foregoing. A list of VERTEX
Patents is appended hereto as Schedule 1.44 and will be updated periodically to
reflect additions thereto during the term of this Agreement.

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

     1.46.     The term "European Union" shall mean those countries which are
now or later become members of the European Union.

Capitalized terms used but not otherwise defined herein which are defined in the
Research Agreement shall have the meaning ascribed to them therein.

                                   ARTICLE II
                                     LICENSE

     2.1.      GRANT TO NOVARTIS.

 License, Development and Commercialization Agreement -- Confidential -- Page 6
<Page>

                  (a) Subject to the other provisions of this Agreement, VERTEX
hereby grants to NOVARTIS an exclusive worldwide license under VERTEX Technology
to the extent useful to permit NOVARTIS to carry out its rights and obligations
set forth in this Agreement and to develop, manufacture, have manufactured,
market, use, sell and import for sale, as provided herein, Bulk Drug Substance,
Drug Product Candidates and Drug Products worldwide. NOVARTIS shall have the
right to sublicense under this Agreement. Subject to the provisions of this
Agreement, VERTEX shall have the right to use VERTEX Technology to discharge its
obligations and exercise its rights under this Agreement. VERTEX retains all
rights to VERTEX Technology except to the extent explicitly granted to NOVARTIS
hereunder.

                  (b) NOVARTIS may subcontract its rights to manufacture Bulk
Drug Substance, Drug Product Candidates, and Drug Product and may contract with
reputable organizations to conduct or assist in the conduct of human clinical
trials and the evaluation of trials data, after prior notice to, but without the
consent of, VERTEX. NOVARTIS shall be responsible to VERTEX for the performance
of any of its sublicensees or subcontractors under any provisions of this
Agreement for which NOVARTIS is responsible. NOVARTIS shall not permit any
subcontractors or sublicensees to use VERTEX Technology without provisions
safeguarding confidentiality at least equivalent to those provided in this
Agreement. Any such provisions will allow VERTEX the right to directly enforce
the obligations of confidentiality with respect to VERTEX Technology in
possession of the Third Party.

                  (c) [***]

     2.2.      GRANT TO VERTEX. Subject to the other provisions of this
Agreement, NOVARTIS hereby grants to VERTEX a non-exclusive, worldwide license
or (as appropriate) sublicense under NOVARTIS Technology, only to the extent
necessary to permit VERTEX to carry out the activities which it is permitted to
undertake in this Agreement. VERTEX shall not sublicense such license to the
NOVARTIS Technology without the consent of NOVARTIS (which shall not be
unreasonably withheld). Any permitted sublicense will contain provisions
safeguarding confidentiality at least equivalent to those provided in this
Agreement, which will allow NOVARTIS the right to directly enforce the
obligations of confidentiality with respect to NOVARTIS Technology in possession
of the Third Party. NOVARTIS retains all rights to NOVARTIS Technology except to
the extent explicitly granted to VERTEX hereunder.

     2.3.      Information Transfer.
                  (a)  [***]

                  (b)  [***]

                  (c)  [***]

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                                   ARTICLE III
                                   DEVELOPMENT

     3.1.      COMMENCEMENT OF DEVELOPMENT PROGRAM. NOVARTIS shall promptly and
diligently commence and pursue a Development Program with respect to each Drug
Product Candidate as soon as practicable after exercise by NOVARTIS of its
Development Election with respect to that Drug Product Candidate.

     3.2.      INTERNATIONAL PROJECT TEAM.

               3.2.1.  FORMATION AND RESPONSIBILITIES. As soon as practicable
                       after the exercise by NOVARTIS of its Development
                       Election with respect to a Drug Product Candidate,
                       NOVARTIS will establish an International Project Team
                       ("IPT") which shall include one representative designated
                       by VERTEX from time to time; provided, however, an IPT
                       shall no longer include a representative designated by
                       VERTEX in case of a Change of Control of VERTEX.
                       Additional IPT's, which shall also include one VERTEX
                       representative, may be established from time to time in
                       connection with the development of additional Drug
                       Product Candidates. The IPT (or its successor
                       organization, as designated by NOVARTIS) will be the
                       principal organization through which the development of a
                       Drug Product Candidate is planned, administered,
                       evaluated and completed, subject to appropriate review
                       and approval at senior management levels as required by
                       NOVARTIS from time to time. In addition to the VERTEX
                       member, the IPT will typically have members from the
                       various functional groups (e.g., research, preclinical
                       safety, clinical, regulatory, marketing) which are or
                       will be expected to be involved in development and launch
                       of the Drug Product Candidate and Drug Product. NOVARTIS
                       will appoint the IPT Chair. The IPT will typically meet
                       every four to six weeks, depending on the level of
                       current development activity, and will be responsible for
                       preparation and implementation of the Development Plan
                       described in Section 3.2.2 below with respect to each
                       Drug Product Candidate.

               3.2.2.  DEVELOPMENT PLAN. The IPT shall prepare and oversee the
                       implementation of the overall Development Plan for each
                       Drug Product Candidate. The Development Plan shall, among
                       other things, detail, schedule and fully describe the
                       proposed toxicology studies, clinical trials, regulatory
                       plans, clinical trial and commercial material
                       requirements, and process development and manufacturing
                       plans for each Drug Product Candidate, along with
                       relevant budget information for the described items, and
                       will outline the key elements involved in obtaining
                       Regulatory Approval in each country where the Drug
                       Product is to be marketed. The parties expect that
                       development tasks will be advanced in parallel rather
                       than serially where practicable and appropriate, if doing
                       so would be likely to advance the ultimate date of
                       Regulatory Approval and launch and is otherwise
                       commercially reasonable.

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               3.2.3.  MEETING MATERIALS. The IPT will consider all information
                       that is material to an assessment of the status,
                       direction and progress of the Development Program,
                       including all clinical trials protocols, data and
                       reports. The IPT Leader will ensure that full and
                       complete minutes are prepared and distributed to each
                       member of the IPT promptly after each meeting. Those
                       minutes shall contain a full report on the activities of
                       the IPT during its meeting. VERTEX's representative on
                       the IPT will receive all documents and information
                       distributed or communicated to members of the IPT
                       generally, and may review copies of all other information
                       relative to the development of a Drug Product Candidate
                       unless the IPT Leader denies access to that information
                       for good reason.

               3.2.4.  [This section has been intentionally left blank.]

     3.3.      DEVELOPMENT RESPONSIBILITY AND COSTS. Except as provided in
Section 3.5 below, NOVARTIS will have sole responsibility for, and bear the cost
of conducting, the Development Program with respect to each Drug Product
Candidate.

     3.4.      REGULATORY APPROVALS. NOVARTIS shall be solely responsible for
preparing and submitting registration dossiers for Regulatory Approval of Drug
Product Candidates in the Territory.

               3.4.1.  NOVARTIS OWNERSHIP. All Regulatory Approvals shall be
                       held by and in the name of NOVARTIS, and NOVARTIS shall
                       own all submissions in connection therewith, provided
                       that VERTEX shall have a right of reference to all or any
                       part of the submissions if the "Assistance Rights" become
                       effective under Section 3.5 hereof.

               3.4.2.  PRINCIPAL INTERFACE. All formulary or marketing approvals
                       shall also be obtained by and in the name of NOVARTIS,
                       and NOVARTIS will be the principal interface with and
                       will otherwise handle all interactions with regulatory
                       agencies concerning any Drug Product including, to the
                       extent legally possible, being the sole contact with such
                       agencies, subject to the rights of VERTEX under Section
                       3.4.3.

               3.4.3.  REGULATORY MEETINGS. To the extent not prohibited by law
                       or regulation, VERTEX shall have the right, after
                       consultation with NOVARTIS and unless VERTEX's presence
                       would impede the regulatory approval process, to have one
                       representative participate in all material meetings
                       between representatives of NOVARTIS and any of the FDA,
                       the EMEA and Koseisho (MHW Japan).

                   (a) NOVARTIS will undertake to provide VERTEX with
information reasonably in advance of the meeting sufficient to ensure that the
VERTEX representative is adequately informed about the issues to be presented at
any such meeting.

                   (b) VERTEX may request NOVARTIS to provide VERTEX with a
copy of any correspondence between the FDA, the EMEA and Koseisho that relates
to any material issues involving Regulatory Approval of a Drug Product
Candidate, and NOVARTIS shall provide that information upon request, unless
NOVARTIS has good reason to withhold any such correspondence, in which case it
will notify VERTEX of that reason promptly.

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                   (c) Notwithstanding the foregoing, NOVARTIS will have sole
discretion as to the regulatory strategy and decision-making for any Drug
Product Candidate or Drug Product.

     3.5.      Assistance Rights. [***]

               3.5.1.  [***]

               3.5.2.  If VERTEX pursues its Assistance Rights:

                   (a) REGULATORY ACTIONS. NOVARTIS will continue to make any
necessary and appropriate regulatory filings with respect to the Development
Work and will, if required for VERTEX to exercise its Assistance Rights
effectively, transfer to VERTEX at VERTEX's expense any IND material (or
equivalents thereof) relevant to such Development Work.

                   (b) MANUFACTURE OF CLINICAL SUPPLY OF DRUG PRODUCT
CANDIDATE. NOVARTIS will supply VERTEX (for up to two years) with the necessary
clinical supply of Drug Product Candidate required to perform such Development
Work in accordance with NOVARTIS' then current scale of manufacturing at
NOVARTIS' Manufacturing Cost and upon such other reasonable and customary terms
as to shipment, delivery and similar matters as may be agreed.

                   (c) MILESTONES. If NOVARTIS elects to resume the Development
Program for a Drug Product Candidate, it will provide VERTEX with ninety (90)
days prior notice thereof, and will reimburse VERTEX for the actual direct cost
of the Development Work of good quality, if such work conforms with the
requirements of the relevant Development Plan. NOVARTIS will pay VERTEX interest
on the reimbursable costs incurred by VERTEX in the conduct of the Development
Work, at a rate compounded quarterly equal to the thirty-day London InterBank
Offered Rate ("LIBOR") for the local currency in which payment is made, as
quoted in THE FINANCIAL TIMES as determined on the date the Development Work is
first undertaken by VERTEX and on the last Business Day of each calendar quarter
thereafter.

     3.6.      REASONABLE EFFORTS IN DEVELOPMENT. NOVARTIS will use diligent,
commercially reasonable efforts consistent with those used by NOVARTIS for its
own compounds of similar commercial potential to develop Drug Product Candidates
into Drug Products. NOVARTIS will promptly notify VERTEX in writing if it should
determine that development of any Drug Product Candidate or Drug Product is not
technically feasible or commercially justifiable, specifying in reasonable
detail the reasons for that determination.

                                   ARTICLE IV
                            MANUFACTURING AND SUPPLY

     4.1.      Supply of Bulk Drug Substance and Drug Product. NOVARTIS will be
responsible for manufacturing and supply of all Bulk Drug Substance, Drug
Product Candidates and Drug Product as necessary for the conduct of the
Development Plan and for all commercial purposes in the Territory. Pursuant to
the provisions of Section 4.7 of the Research Agreement, the parties will agree
on reasonable and appropriate measures by which manufacturing previously being
undertaken by VERTEX shall be transitioned to NOVARTIS following the exercise of
its Development Election with respect to a particular Drug Product Candidate.
The objective of both parties will be to accomplish a smooth and timely
transition. Any Bulk Drug

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Substance provided to NOVARTIS during the transition period will be supplied at
VERTEX's reasonable Manufacturing Cost.

     4.2.      [This section has been intentionally left blank.]
                                                                   =

     4.3.      FORMULATION AND PACKAGING. In all events, NOVARTIS will be
responsible for formulation and packaging of Drug Products.

                                    ARTICLE V
                                COMMERCIALIZATION

     5.1.      MARKETING AND PROMOTION. NOVARTIS shall have exclusive rights to
market, sell and distribute all Drug Products in the Territory. NOVARTIS will
book all sales of Drug Products and will report those sales to VERTEX as
specified in Section 6.5 of this Agreement.

     5.2.      GLOBAL BRAND TEAM. Not later than six months prior to the
commencement of Phase III Clinical Trials for any Drug Product Candidate,
NOVARTIS will form a Global Brand Team ("GBT"), which will include one
representative designated by VERTEX; provided, however, [***]. Additional GBT's,
which shall also include one VERTEX representative, may be established from time
to time in connection with the marketing of additional Drug Product Candidates.
The GBT (or its successor organization, as designated by NOVARTIS) will be the
principal organization through which the marketing of a Drug Product is planned,
administered, evaluated and effected, subject to appropriate review at senior
management levels as required by NOVARTIS. NOVARTIS will appoint the chair of
the GBT, who will normally be the Brand Director. The GBT will periodically meet
as necessary, depending on the level of marketing activity at the time.

               5.2.1.  MARKETING PLANS. The Global Brand Team will prepare and
                       oversee the implementation of a detailed marketing plan
                       (a "Marketing Plan") for the launch of each Drug Product,
                       addressing the overall branding and branding elements as
                       well as the key promotional product claims. The GBT will
                       select an external agency or agencies which will be
                       charged with the execution of some components of the
                       Marketing Plan. The Marketing Plan will contain among
                       other things budgets, schedules, product positioning,
                       pricing, market research plans and results and other
                       customary planning and marketing material with respect to
                       marketing and launch of the Drug Product. The Marketing
                       Plan will be periodically updated to reflect changes in
                       market information, sales performance and forecasts,
                       sales force deployment, communication plans and
                       information concerning competition and competitors.

               5.2.2.  LOCAL PRODUCT TEAMS. Local Product Teams will be
established in each country to prepare and execute the product launch for a Drug
Product within the framework of the Marketing Plan. .

               5.2.3.  CAMPAIGNS AND PROMOTIONAL MATERIALS. The GBT will review
                       all general product campaigns (including target audience
                       and principal messages) and may from time to time review
                       the principal promotional material to be used in
                       connection with the marketing and sale of a Drug Product.

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               5.2.4.  [This section has been intentionally left blank.]

     5.3.      [This section has been intentionally left blank.]

     5.4.      [This section has been intentionally left blank.]

     5.5.      CO-LABELING. To the extent not prohibited by law or regulation
and subject to any required Regulatory Approval, Drug Products (including
labels, packaging and inserts) and all promotional materials for the same, sold
in North America, the countries of the European Union and Japan will bear both
NOVARTIS' and VERTEX's company names and logos with equal prominence (including
equal sized type face), or if equal prominence is prohibited by law, with such
prominence as may otherwise be permitted by law. To the extent not prohibited by
law or regulation and subject to any required Regulatory Approval, Drug Products
(including labels, packaging and inserts) and all promotional materials for the
same, sold in the rest of the world will include VERTEX's company name (in the
English alphabet) and logo with the designation: "under license from"; provided,
however, that this provision shall no longer apply in case of a Change of
Control of VERTEX. Any trademark for a Drug Product will be selected by, and
will be the property of, NOVARTIS.

               5.5.1.  REVIEW OF REGULATORY FILINGS. NOVARTIS will permit VERTEX
                       to review all material regulatory filings which relate to
                       product labeling, and all proposed labels, packaging,
                       package inserts, and promotional materials required under
                       the Agreement to bear VERTEX's name, if permitted by law,
                       prior to the filing of any such materials with any
                       regulatory authority; provided, however, that this
                       provision shall no longer apply in case of a Change of
                       Control of VERTEX.

               5.5.2.  REGULATORY COMMUNICATIONS.

                   (a) NOVARTIS will permit VERTEX to participate with NOVARTIS
in material communications with regulatory officials which concern the matters
referenced in this Section 5.5; provided, however, [***].

                   (b) NOVARTIS will immediately inform VERTEX of any material
regulatory communications received by NOVARTIS which might operate to restrict
VERTEX's rights under this Section 5.5.2, and will cooperate with any reasonable
request of VERTEX aimed at facilitating approval by a regulatory authority for
co-labeling consistent with this provision.

     5.6.      DUE DILIGENCE. NOVARTIS shall use diligent and commercially
reasonable efforts consistent with the requirements of the Development Program
and sound and reasonable business practices and judgment to effect introduction
of Drug Products into Major Markets as soon as reasonably practicable, devoting
the same degree of attention and diligence to such efforts that it devotes to
such activities for other of its products of comparable market potential.
Following the First Commercial Sale of a Drug Product and until the expiration
of this Agreement, NOVARTIS shall endeavor to keep Drug Products reasonably
available to the public in each of the Major Markets. NOVARTIS shall promptly
notify VERTEX if it shall determine that the marketing and sale of a Drug
Product in any country is not commercially reasonable or economically profitable
or if for other unforeseen reasons further commercial support of the Drug
Product in certain territories is no longer prudent or practical. In determining
whether NOVARTIS is in compliance with the foregoing provisions, there shall be
taken into account the

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normal course of assertive drug development programs in the pharmaceutical
industry conducted with sound and reasonable business practices and judgment.

                                   ARTICLE VI
                                    PAYMENTS

     6.1.      DEVELOPMENT ELECTION PAYMENT. NOVARTIS will pay to VERTEX a
milestone payment in the amount of [***] (a "Development Election Fee") each
time NOVARTIS exercises its Development Election with respect to a Development
Candidate. Each time NOVARTIS exercises its Development Election under Section
4.1 of the Research Agreement with respect to a Compound which is a Back-up
Compound to a Drug Product Candidate, NOVARTIS will pay to VERTEX a milestone
payment in the amount of [***] (the "Back-up Election Fee"); [***]

     6.2.      Development Milestone Payments by NOVARTIS.

               6.2.1.  NOVARTIS will make the following payments to VERTEX upon
                       the achievement of any of the following milestones with
                       respect to a Drug Product Candidate:

                                [***]                  [***]
                       ---------------------------------------------
                       [***]                                 [***]
                       ---------------------------------------------
                       [***]                                 [***]
                       ---------------------------------------------
                       [***]                                 [***]
                       ---------------------------------------------
                       [***]                                 [***]
                       ---------------------------------------------
                       [***]                                 [***]
                       ---------------------------------------------

               6.2.2.  [This section has been intentionally left blank.]

               6.2.3.  All payments shall be made by wire transfer in United
                       States dollars ("Dollars") to the credit of such bank
                       account as may be designated by VERTEX in writing to
                       NOVARTIS. Any payment which falls due on a date which is
                       a Saturday, Sunday or a legal holiday in the Commonwealth
                       of Massachusetts may be made on the next succeeding day
                       which is not a Saturday, Sunday or a legal holiday in the
                       Commonwealth.

               6.2.4.  If a Drug Product Candidate is abandoned during the term
of this Agreement for any scientific or medical reasons after any one or more of
the foregoing milestone payments are made, and if a Back-up Compound to that
Drug Product Candidate is developed to replace the abandoned Drug Product
Candidate for the same Indications, then no milestone

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payment shall be required with respect to the Back-up Compound to the extent
that that milestone payment has already been made with respect to the abandoned
Drug Product Candidate.

     6.3.      ROYALTIES.  NOVARTIS  shall pay to VERTEX the  following  annual
royalties on Net Sales of each Drug Product in the Territory.
               [***]

               6.3.1.  Third Party Royalties: If NOVARTIS is required to pay
                       royalties to any Third Party in order to exercise its
                       rights to sell a Drug Product in a country, then
                       [***]payable to such Third Party in any calendar quarter
                       for such Drug Product in such country shall be deductible
                       from the royalties payable to VERTEX under this Agreement
                       in respect of sales of that Drug Product in such country
                       for the same calendar quarter, provided that in no event
                       shall the net royalty rate payable fall below [***], as a
                       result of the application of this Sections 6.3.1 and
                       6.3.2.

               6.3.2.  Unlicensed Competition: If in any country a Third Party
                       sells a pharmaceutical product which is a "generic
                       version" of a Drug Product being sold in that country (a
                       "Third Party Product") -- where "generic version" means a
                       pharmaceutical product (other than a product originally
                       sold as a Drug Product) that includes the same active
                       ingredient as that used in a Drug Product -- then for the
                       period in which the sales of such Third Party Product in
                       such country are at least [***], the royalties payable to
                       VERTEX by NOVARTIS on sales of such Product in such
                       country for such period shall be [***] in Section 6.3 ,
                       but in no event shall the royalties owed for such Drug
                       Product in such country, when combined with any royalty
                       reduction provided under Section 6.3.1 hereof, reduce the
                       royalties payable on Net Sales of such Drug Product in
                       that country by more than [***]

     6.4.      [This section has been intentionally left blank.]

     6.5.      SALES REPORTS.
               (a)     During the term of this Agreement and after the First
Commercial Sale of a Drug Product, NOVARTIS shall furnish or cause to be
furnished to VERTEX on a quarterly basis a written report or reports covering
each calendar quarter (each such calendar quarter being sometimes referred to
herein as a "reporting period") showing (i) the Net Sales of each Drug Product
in each country in the world during the reporting period by NOVARTIS and each
Affiliate and sublicensee; (ii) the royalties, payable in Dollars, which shall
have accrued under Section 6.3 hereof in respect of such sales and the basis of
calculating those royalties; (iii) withholding taxes, if any, required by law to
be deducted in respect of any such sales; (iv) the exchange rates used in
converting into Dollars, from the currencies in which sales were made, any
payments due which are based on Net Sales; and (v) dispositions of Drug Products
other than pursuant to sale for cash. With respect to sales of Drug Products
invoiced in Dollars, the Net Sales amounts and the amounts due to VERTEX
hereunder shall be expressed in Dollars. With respect to sales of Drug Products
invoiced in a currency other than Dollars, the Net Sales

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and amounts due to VERTEX hereunder shall be expressed in the domestic currency
of the party making the sale, together with the Dollar equivalent of the amount
payable to VERTEX, calculated using NOVARTIS' then-current standard exchange
rate methodology for the translation of foreign currency sales into U.S.
dollars. In each report the methodology will be disclosed, will be identical to
that employed by NOVARTIS, generally, in its external financial reporting, as
reviewed and approved by its independent auditors and will be in conformity with
NOVARTIS' usual and customary general accounting principles consistently
applied. If any sublicensee makes any sales invoiced in a currency other than
its domestic currency, the Net Sales shall be converted to its domestic currency
in accordance with the sublicensee's normal accounting principles. NOVARTIS
shall furnish to VERTEX appropriate evidence of payment of any tax or other
amount required by applicable laws or regulations to be deducted from any
royalty payment, including any tax or withholding levied by a foreign taxing
authority in respect of the payment or accrual of any royalty. Reports shall be
due on the thirtieth (30th) day following the close of each reporting period,
although NOVARTIS shall also provide VERTEX with a "flash" report of Net Sales,
only, within ten (10) business days after the end of each month. NOVARTIS shall
keep accurate records in sufficient detail to enable the amounts due hereunder
to be determined and to be verified by VERTEX.

               (b)     Amounts shown to have accrued by each sales report
provided for under subsection 6.5(a), above, shall be due and payable on the
date such sales report is due.

               (c)     All payments shall be made in Dollars. If at any time
legal restrictions prevent the prompt remittance of any payments with respect to
any country of the Territory where Drug Products are sold, NOVARTIS or its
sublicensees shall have the right and option to make such payments by depositing
the amount thereof in local currency to VERTEX's account in a bank or depository
in such country.

               (d)     Upon the written request of VERTEX, at VERTEX's expense
and not more than once in or in respect of any calendar year, NOVARTIS shall
permit an independent accountant of national prominence selected by VERTEX, to
have access during normal business hours to those records of NOVARTIS as may be
reasonably necessary to verify the accuracy of the sales reports furnished by
NOVARTIS pursuant to this Section 6.5, in respect of any calendar year ending
not more than thirty-six (36) months prior to the date of such notice. NOVARTIS
shall include in each sublicense entered into by it pursuant to this Agreement a
provision requiring the sublicensee to keep and maintain adequate records of
sales made pursuant to such sublicense and to grant access to such records by
the aforementioned independent accountant for the reasons specified in this
Section 6.5. Upon the expiration of thirty-six (36) months following the end of
any calendar year, the calculation of amounts payable with respect to such
fiscal year shall be binding and conclusive upon VERTEX, and NOVARTIS and its
sublicensees shall be released from any liability or accountability with respect
to payments for such year. The report prepared by such independent accountant, a
copy of which shall be sent or otherwise provided to NOVARTIS by such
independent accountant at the same time it is sent or otherwise provided to
VERTEX, shall contain the conclusions of such independent accountant regarding
the audit and will specify that the amounts paid to VERTEX pursuant thereto were
correct or, if incorrect, the amount of any underpayment or overpayment. If such
independent accountant's report shows any underpayment, NOVARTIS shall remit or
shall cause its sublicensees to remit to VERTEX within thirty (30) days after
NOVARTIS' receipt of such report, (i) the amount of such underpayment and (ii)
if such underpayment exceeds [***] owed for the calendar year then being

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audited, the reasonable and necessary fees and expenses of such independent
accountant performing the audit, subject to reasonable substantiation thereof.
Any overpayments shall be fully creditable against amounts payable in subsequent
payment periods. VERTEX agrees that all information subject to review under this
Section 6.5 or under any sublicense agreement is confidential and that VERTEX
shall retain and cause its accountant to retain all such information in
confidence.

               (e)     In case of any delay in payment by NOVARTIS to VERTEX not
occasioned by Force Majeure, interest at the rate of [***], assessed from the
thirty-first day after the due date of the payment, shall be due from NOVARTIS
upon prior written notice.

     6.6.      WITHHOLDING TAX. If during the term of this Agreement,
withholding tax should be required by law to be deducted from any payments
required to be made by NOVARTIS to VERTEX hereunder, the parties will agree upon
an equitable division of liability for any sum which is withheld and for which
VERTEX is not compensated or reimbursed by way of usable tax credits or
otherwise. In that connection VERTEX at NOVARTIS' request shall sign a usual and
customary exemption application and in addition shall apply for a tax refund at
the request of NOVARTIS from any tax authority to which NOVARTIS has paid
withholding tax on account of any payments made by NOVARTIS to VERTEX hereunder.

                                   ARTICLE VII
                                BACK-UP COMPOUNDS

               Notwithstanding the provisions under the Research Agreement
with respect to Back-up Compounds and for the sake of clarity, it is reminded
that the parties agreed the following with respect to Back-up Compounds in
Section 4.5 of the Research Agreement.

7.1  VERTEX RESTRICTIONS ON NOMINATION AND DEVELOPMENT. So long as NOVARTIS is
     using commercially reasonable efforts with respect to the development of a
     particular Drug Product Candidate or the commercialization of a particular
     Drug Product, pursuant to Sections 3.6 and 5.6 hereof, VERTEX will not (i)
     propose a Compound for development under the License Agreement which is a
     Back-up Compound with respect to that Drug Product Candidate or Drug
     Product, or (ii) until after the period starting on the date on which
     NOVARTIS has exercised its Development Election for a particular Drug
     Product Candidate and ending [***] (the "Lead Period"), commence
     development of that Back-up Compound either directly or together with or
     through an Affiliate or a Third Party.

7.2  TERMINATION OF DEVELOPMENT OR COMMERCIALIZATION. If, prior to the end of
     the Lead Period with respect to a particular Drug Product or Drug Product
     Candidate, pursuant to Sections 3.6 and 5.6 hereof, NOVARTIS ceases to use
     commercially reasonable efforts to develop or commercialize that Drug
     Product Candidate or Drug Product, then the restrictions on nomination and
     development referenced in Section 7.1 above will no longer apply with
     respect to Back-up Compounds for that Drug Product Candidate or Drug
     Product unless NOVARTIS, without delay, commences another Development
     Program under the License Agreement with another Compound (a "Replacement
     Candidate") targeting the same Kinase, which Replacement Candidate is a
     Back-up Compound

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     associated with the discontinued Drug Product Candidate or Drug Product,
     and NOVARTIS shall have the right to select for this purpose any such
     Back-up Compound by providing VERTEX with notice of its Development
     Election in this regard. Any such Back-up Compound for which NOVARTIS has
     exercised its Development Election under this Section 7.2 shall hereafter
     be a Drug Product Candidate subject to the terms and conditions of this
     Agreement.

7.3. TERMINATION OF RIGHTS TO BACK-UP COMPOUNDS. A Back-up Compound will no
     longer be subject to NOVARTIS' Development Election under the Research
     Agreement after the end of the Lead Period applicable to that Back-up
     Compound, except for Back-up Compounds which (i) subject to Section 7.1
     above, VERTEX has proposed for development on or before the Final
     Termination Date, and as to which NOVARTIS has exercised its Development
     Election hereunder; or (ii) have been or will be selected by NOVARTIS for
     development before the end of the applicable Lead Period under the
     provisions of Section 7.2 above, or (iii) for which NOVARTIS has exercised
     or will exercise its Development Election before the end of the applicable
     Lead Period under the provisions of Section 7.4 below.

7.4  NOVARTIS RIGHTS TO LICENSE BACK-UP COMPOUNDS. Anytime prior to the expiry
     of the Lead Period with respect a particular Drug Product Candidate,
     NOVARTIS may also, by paying in each case the Back-up Election Fee provided
     under Section 6.1 of the this Agreement, exercise its Development Election
     with respect to any one or more Back-up Compounds associated with that Drug
     Product Candidate, provided that Drug Product Candidate, or a Back-up
     Compound selected pursuant to the provisions of Section 7.2 above, is still
     in active development. Any such Back-up Compound for which NOVARTIS has
     exercised its Development Election under Section 7.4 shall become a "Drug
     Product Candidate Back-up Candidate" subject to the terms and conditions of
     this Agreement.

7.5  NOVARTIS OBLIGATIONS WITH RESPECT TO DRUG PRODUCT CANDIDATE BACK-UP
     CANDIDATES. So long as NOVARTIS is using commercially reasonable efforts,
     pursuant to the provisions of Sections 3.6 and 5.6 of this Agreement, with
     respect to the development of a particular Drug Product Candidate or the
     commercialization of a particular Drug Product, NOVARTIS shall have no
     obligation to develop any of the Drug Product Candidate Back-up Candidates
     associated with that Drug Product Candidate or Drug Product. As soon as
     NOVARTIS ceases the development of a particular Drug Product Candidate,
     NOVARTIS' obligations to use diligent, commercially reasonable efforts will
     immediately shift from the discontinued Drug Product Candidate to an
     associated Drug Product Candidate Back-up Compound. If NOVARTIS ceases the
     development of a particular Drug Product Candidate and does not commence
     development of a Drug Product Candidate Back-up Compound pursuant to the
     foregoing, the license to the Drug Product Candidate and its Back-up
     Compounds under this Agreement will expire and the license rights will
     revert to VERTEX.

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                                  ARTICLE VIII
                              INTELLECTUAL PROPERTY

     8.1.      PATENTABLE INVENTIONS AND KNOW-HOW.

               8.1.1.  Ownership. Any inventions made and all Know-How generated
                       by either party or its Affiliates during the term of this
                       Agreement, and Controlled by such party, relating to the
                       manufacture or use of Bulk Drug Substance, a Drug Product
                       Candidate or a Drug Product, or a prodrug thereof, will
                       be disclosed to the other party promptly after the
                       disclosing party recognizes the significance thereof. All
                       patents and technology shall be owned by the party making
                       the invention claimed or contained therein or, if such
                       invention is made jointly, shall be owned jointly, all as
                       determined in accordance with U.S. laws of inventorship.

               8.1.2.  Patent Prosecution. VERTEX shall be responsible for the
                       preparation, filing, prosecution and maintenance of all
                       patents and patent applications included in VERTEX
                       Patents and all patents and patent applications included
                       in Patents claiming inventions jointly owned with
                       NOVARTIS. NOVARTIS shall be responsible for the
                       preparation, filing, prosecution and maintenance of all
                       patents and patent applications included in NOVARTIS
                       Patents. In each case the responsible party shall consult
                       from time to time with the other party with respect
                       thereto. VERTEX shall provide NOVARTIS with periodic
                       reports listing the jurisdictions in which the VERTEX
                       Patents licensed hereunder have been filed. Subject to
                       the next succeeding sentences, VERTEX will file patent
                       applications with respect to those VERTEX Patents in such
                       other countries as NOVARTIS shall request in writing, all
                       such other countries being countries in which NOVARTIS
                       would customarily file its own cases dealing with similar
                       subject matters. The party initially responsible for
                       preparation, filing, prosecution and maintenance of a
                       particular Patent (the "Initial Responsible Party") shall
                       give thirty (30) days advance notice (the "Discontinuance
                       Election") to the other party of any decision to cease
                       preparation, filing, prosecution and maintenance of that
                       Patent in any jurisdiction (a "Discontinued Patent"). In
                       such case, the other party may elect at its sole
                       discretion to continue preparation, filing and
                       prosecution or maintenance of the Discontinued Patent at
                       its sole expense. The party so continuing shall own any
                       such Patent; and the Initial Responsible Party shall
                       execute such documents and perform such acts as may be
                       reasonably necessary for the other party to file or to
                       continue prosecution or maintenance, including assigning
                       ownership of such Patent to such electing party.
                       Discontinuance may be on a country-by-country basis or
                       for a patent application or patent series in total.

               Each party will consult the other party with respect to its
choice of patent counsel and will keep that party continuously informed of all
matters relating to the preparation, filing, prosecution and maintenance of
Patents covered by this Agreement. Each party shall endeavor

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in good faith to coordinate its efforts with those of the other party to
minimize or avoid interference with the prosecution of the other party's patent
applications.

               8.1.3.   Costs.  Costs incurred in the  preparation,  prosecution
and maintenance of Patents shall be borne by each party as set forth in Section
8.3 of the Research Agreement.

     8.2.      Infringement Claims by Third Parties.

               8.2.1.  Notice. If the manufacture, use or sale of Bulk Drug
                       Substance and/or Drug Product results in a claim against
                       a party hereto for patent infringement or for inducing or
                       contributing to patent infringement ("Infringement
                       Claim"), the party first having notice of an Infringement
                       Claim shall promptly notify the other in writing. The
                       notice shall set forth the facts of the Infringement
                       Claim in reasonable detail.

               8.2.2.  Third Party Licenses. In the event that practicing the
                       Technology in connection with the manufacture, use or
                       sale of a Drug Product in any country would infringe a
                       Third Party's patent, then VERTEX will use reasonable
                       efforts to obtain a license under the Third Party's
                       patents with a right to sublicense to NOVARTIS, under
                       terms reasonably acceptable to both VERTEX and NOVARTIS,
                       [***]

               8.2.3.  Discontinued Sales, License or Defense of Suit. If the
required license is either unavailable or its terms are unacceptable both to
VERTEX and to NOVARTIS, then NOVARTIS may elect in its sole discretion to
discontinue sales of the Drug Product in such country or to undertake the
defense of a patent infringement action or the prosecution of a declaratory
judgment action with respect to the Third Party patents. [***] Provided that
NOVARTIS is conducting the defense of the Infringement Claim or the prosecution
of such declaratory judgment actions, [***]. The costs and expenses of all suits
brought by a party under this Section 8.2.3 shall be reimbursed to such party
and then to the other party, if it participates in such suit, PRO RATA, out of
any damages or other monetary awards recovered therein in favor of VERTEX or
NOVARTIS. [***] No settlement or consent judgment or other voluntary final
disposition of a suit under this Section 8.2 may be entered into without the
joint consent of VERTEX and NOVARTIS (which consent shall not be unreasonably
withheld).

     8.3.      Infringement Claims Against Third Parties.

               8.3.1.  VERTEX and NOVARTIS each agree to take reasonable actions
                       to protect their respective patents and technology from
                       infringement and from unauthorized possession or use.

               8.3.2.  If any VERTEX Patents or NOVARTIS Patents are infringed
or VERTEX Know-How or NOVARTIS Know-How is misappropriated, as the case may be,
by a Third Party, the party to this Agreement first having knowledge of such
infringement or misappropriation, or knowledge of a reasonable probability of
such infringement or misappropriation, shall promptly notify the other in
writing. The notice shall set forth the facts of such infringement or
misappropriation in reasonable detail. The owner of the patent or technology, or
VERTEX, in the case of joint ownership between the parties hereto, shall have
the primary right, but not the obligation, to institute, prosecute, and control
with its own counsel any action or proceeding with respect to infringement or
misappropriation of such patent or technology and the other party shall have the
right, at its own expense, to be represented in such action by its own counsel.
If the

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party having the primary right or responsibility to institute, prosecute, and
control such action or prosecution fails to do so within a period of one hundred
twenty (120) days after receiving notice of the infringement, the other party
shall have the right to bring and control any such action by counsel of its own
choice, and the other shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. If one party brings
any such action or proceeding, the second party may be joined as a party
plaintiff and, in case of joining, the second party agrees to give the first
party reasonable assistance and authority to file and to prosecute such suit.
The costs and expenses of all suits brought by a party under this Section 8.3.2
shall be reimbursed to such party and to the other party, if it participates in
such suit, PRO RATA, out of any damages or other monetary awards recovered
therein in favor of VERTEX or NOVARTIS. [***] No settlement or consent judgment
or other voluntary final disposition of a suit under this Section 8.3 may be
entered into without the joint consent of VERTEX and NOVARTIS (which consent
shall not be unreasonably withheld).

     8.4.      NOTICE OF CERTIFICATION. VERTEX and NOVARTIS each shall
immediately give notice to the other of any certification filed under the U.S.
"Drug Price Competition and Patent Term Restoration Act of 1984" claiming that a
VERTEX Patent or a NOVARTIS Patent is invalid or that any infringement will not
arise from the manufacture, use or sale of any product by a third party. If
VERTEX decides not to bring infringement proceedings against the entity making
such a certification, VERTEX shall give notice to NOVARTIS of its decision not
to bring suit within twenty-one (21) days after receipt of notice of such
certification. NOVARTIS may then, but is not required to, bring suit against the
party that filed the certification. Any suit by NOVARTIS or VERTEX shall either
be in the name of NOVARTIS or in the name of VERTEX, or jointly by NOVARTIS and
VERTEX, as may be required by law. For this purpose, the party not bringing suit
shall execute such legal papers necessary for the prosecution of such suit as
may be reasonably requested by the party bringing suit.

     8.5.      PATENT TERM EXTENSIONS. The parties shall cooperate in good faith
with each other in gaining patent term extension wherever applicable to VERTEX
Patents and NOVARTIS Patents covering Drug Product Candidates or Drug Products.
NOVARTIS and VERTEX shall mutually determine which patents shall be extended.
All filings for such extension shall be made by the party who owns the patent,
provided, however, that in the event that the party who owns the patent elects
not to file for an extension, such party shall (i) inform the other party of its
intention not to file and (ii) grant the other party the right to file for such
extension.

                                   ARTICLE IX
                         REPRESENTATIONS AND WARRANTIES

     9.1.      REPRESENTATIONS AND WARRANTIES OF VERTEX.  VERTEX represents and
warrants to NOVARTIS as follows:

               9.1.1.  AUTHORIZATION. This Agreement has been duly executed and
                       delivered by VERTEX and constitutes the valid and binding
                       obligation of VERTEX, enforceable against VERTEX in
                       accordance with its terms except as enforceability may be
                       limited by bankruptcy, fraudulent conveyance, insolvency,
                       reorganization, moratorium and other laws relating to or
                       affecting creditors' rights generally and by general
                       equitable principles.

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                       The execution, delivery and performance of this Agreement
                       have been duly authorized by all necessary action on the
                       part of VERTEX, its officers and directors.

               9.1.2.  NO THIRD PARTY RIGHTS. Except as previously disclosed in
                       writing to NOVARTIS on or before the date set forth on
                       the first page hereof, (a) VERTEX owns or possesses
                       adequate licenses or other rights to use all VERTEX
                       Technology, and to grant the licenses herein; and (b) the
                       granting of the licenses to NOVARTIS hereunder does not
                       violate any right known to VERTEX of any Third Party.

               9.1.3.  NO THIRD PARTY PATENTS. Except as disclosed in writing by
                       VERTEX to NOVARTIS or its agents, to VERTEX's knowledge
                       and based on its current understanding of the Drug
                       Product Candidate(s) and its use, the development,
                       manufacture, use or sale of any Bulk Drug Substance, Drug
                       Product Candidates or Drug Products pursuant to this
                       Agreement will not infringe or conflict with any Third
                       Party right or patent, and VERTEX is not aware of any
                       issued patent or pending patent application that, if
                       issued, would be infringed by the development,
                       manufacture, use or sale of any Bulk Drug Substance, Drug
                       Product Candidates or Drug Products pursuant to this
                       Agreement.

               9.1.4.  MAINTENANCE OF PATENTS AND LICENSES. Subject to the
                       provisions of Section 8.1.2 with respect to Discontinued
                       Patents, VERTEX will take all reasonable steps to obtain
                       any consent required for and to maintain in effect,
                       including by means of extension, any license, sublicense,
                       patent or patent application applicable to the Field for
                       which it has granted rights to NOVARTIS hereunder.

     9.2.     REPRESENTATIONS AND WARRANTIES OF NOVARTIS.  NOVARTIS represents
and warrants to VERTEX as follows:

               9.2.1.  AUTHORIZATION. This Agreement has been duly executed and
                       delivered by NOVARTIS and constitutes the valid and
                       binding obligation of NOVARTIS, enforceable against
                       NOVARTIS in accordance with its terms, except as
                       enforceability may be limited by bankruptcy, fraudulent
                       conveyance, insolvency, reorganization, moratorium and
                       other laws relating to creditors' rights generally and by
                       general equitable principles. The execution, delivery and
                       performance of this Agreement have been duly authorized
                       by all necessary action on the part of NOVARTIS, its
                       officers and directors.

               9.2.2.  NO THIRD PARTY RIGHTS. Except as previously disclosed in
                       writing to VERTEX on or before the date set forth on the
                       first page hereof, (a) NOVARTIS owns or possesses
                       adequate licenses or other rights to use all NOVARTIS
                       Technology, and to grant the licenses herein; and (b) the
                       granting of the licenses to VERTEX hereunder does not
                       violate any right known to NOVARTIS of any Third Party.

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               9.2.3.  NO THIRD PARTY PATENTS. Except as disclosed in writing by
                       NOVARTIS to VERTEX or its agents, to NOVARTIS' knowledge
                       and based on its current understanding of the Drug
                       Product Candidate(s) and its use, the manufacture, use or
                       sale of any Bulk Drug Substance, Drug Product Candidates
                       or Drug Products pursuant to this Agreement will not
                       infringe or conflict with any Third Party right or
                       patent, and NOVARTIS is not aware of any issued patent or
                       pending patent application that, if issued, would be
                       infringed by the development, manufacture, use or sale of
                       any Bulk Drug Substance, Drug Product Candidates or Drug
                       Products pursuant to this Agreement.

               9.2.4.  MAINTENANCE OF PATENTS AND LICENSES. Subject to the
                       provisions of Section 8.1.2 with respect to Discontinued
                       Patents, NOVARTIS will take all reasonable steps to
                       obtain any consent required for and to maintain in
                       effect, including by means of extension, any license,
                       sublicense, patent or patent application applicable to
                       the Field for which it has granted rights to VERTEX
                       hereunder.

                                    ARTICLE X
                                 CONFIDENTIALITY

     10.1.     UNDERTAKING. During the term of this Agreement, each party shall
keep confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Technology and NOVARTIS Technology.

               10.1.1. Each party shall take any and all lawful measures to
                       prevent the unauthorized use and disclosure of such
                       information, and to prevent unauthorized persons or
                       entities from obtaining or using such information.

               10.1.2. Each party further agrees to refrain from directly or
                       indirectly taking any action which would constitute or
                       facilitate the unauthorized use or disclosure of such
                       information. Each party may disclose such information to
                       its officers, employees and agents, to authorized
                       licensees and sublicensees, and to subcontractors in
                       connection with the development or manufacture of Bulk
                       Drug Substance, Drug Product Candidates or Drug Products,
                       to the extent necessary to enable such parties to perform
                       their obligations hereunder or under the applicable
                       license, sublicense or subcontract, as the case may be;
                       provided, that such officers, employees, agents,
                       licensees, sublicensees and subcontractors have entered
                       into appropriate confidentiality agreements for secrecy
                       and non-use of such information which by their terms
                       shall be enforceable by injunctive relief at the instance
                       of the disclosing party.

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               10.1.3. Each party shall be liable for any unauthorized use and
                       disclosure of such information by its officers, employees
                       and agents and any such sublicensees and subcontractors.

     10.2.     EXCEPTIONS.  Notwithstanding the foregoing, the provisions
of Section 10.1 hereof shall not apply to knowledge, information, documents or
materials which the receiving party can conclusively establish:

               10.2.1. have entered the public domain without such party's
                       breach of any obligation owed to the disclosing party;

               10.2.2. are permitted to be disclosed by the prior written
                       consent of the disclosing party;

               10.2.3. have become known to the receiving party from a source
                       other than the disclosing party, other than by breach of
                       an obligation of confidentiality owed to the disclosing
                       party;

               10.2.4. are disclosed by the disclosing party to a Third Party
                       without restrictions on its disclosure;

               10.2.5. are independently developed by the receiving party
                       without breach of this Agreement; or

               10.2.6. are required to be disclosed by the receiving party to
                       comply with applicable laws or regulations, to defend or
                       prosecute litigation or to comply with governmental
                       regulations, provided that the receiving party provides
                       prior written notice of such disclosure to the disclosing
                       party and takes reasonable and lawful actions to avoid or
                       minimize the degree of such disclosure.

     10.3.     PUBLICITY.  The  parties  will agree  upon the  timing and
content of any initial press release or other public communications relating to
this Agreement and the transactions contemplated herein.

               10.3.1. Except to the extent already disclosed in that initial
                       press release or other public communication, no public
                       announcement concerning the existence or the terms of
                       this Agreement or concerning the transactions described
                       herein shall be made, either directly or indirectly, by
                       VERTEX or NOVARTIS, except as may be legally required by
                       applicable laws, regulations, or judicial order, without
                       first obtaining the approval of the other party and
                       agreement upon the nature, text, and timing of such
                       announcement, which approval and agreement shall not be
                       unreasonably withheld.

               10.3.2. The party desiring to make any such public announcement
shall provide the other party with a written copy of the proposed announcement
in sufficient time prior to public release to allow such other party to comment
upon such announcement, prior to public release.

     10.4.     SURVIVAL.  The  provisions of this Article X shall survive the
termination of this Agreement and shall extend for a period of five (5) years
thereafter.

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                                   ARTICLE XI
                                   PUBLICATION

     NOVARTIS reserves the sole right to publish or publicly present the results
of the Development Program and information concerning Drug Product Candidates
and Back-up Compounds (collectively, the "Results"), subject to the following
terms and conditions. NOVARTIS will submit a draft of any proposed manuscript or
speech to VERTEX for comments at least thirty (30) days prior to submission for
publication or oral presentation. VERTEX shall notify NOVARTIS in writing within
fifteen (15) days of receipt of such draft whether such draft contains (i)
information of VERTEX which it considers to be confidential under the provisions
of Article IX hereof, or (ii) information that if published would have an
adverse effect on a patent application covering the subject matter of this
Agreement which VERTEX intends to file,. In any such notification, VERTEX shall
indicate with specificity its suggestions regarding the manner and degree to
which NOVARTIS may disclose such information. In the case of item (ii) above,
VERTEX may request a delay and NOVARTIS shall delay such publication, for a
period not exceeding ninety (90) days, to permit the timely preparation and
filing of a patent application or an application for a certificate of invention
on the information involved. In the case of item (i) above, NOVARTIS may not
publish confidential information of VERTEX without its consent in violation of
Article IX of this Agreement. The parties agree that authorship of any
publication will be determined based on the customary standards then being
applied in the relevant scientific journal.

     This Article XI shall terminate with the termination of this Agreement, but
the provisions of Article X hereof shall continue to govern the disclosure by
one party, whether by publication or otherwise, of Confidential Information of
the other, during the period set forth in Section 10.4.

                                   ARTICLE XII
                               DISPUTE RESOLUTION

     12.1.     GOVERNING  LAW, AND  JURISDICTION.  This  Agreement shall be
governed and construed in accordance with the internal laws of the State of New
York.

     12.2.     DISPUTE RESOLUTION PROCESS. Except as otherwise explicitly
provided herein, in the event of any controversy or claim arising out of or
relating to any provision of this Agreement, or the collaborative effort
contemplated hereby, the parties shall, and either party may, initially refer
such dispute to the Joint Steering Committee, and failing resolution of the
controversy or claim within thirty (30) days after such referral, the matter
shall be referred to the Chief Executive Officer of VERTEX and the Chief
Executive Officer of NOVARTIS who shall, as soon as practicable, attempt in good
faith to resolve the controversy or claim. If such controversy or claim is not
resolved within sixty (60) days of the date of initial referral of the matter to
the JSC, either party shall be free to initiate proceedings in any court having
requisite jurisdiction.

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                                  ARTICLE XIII

                              TERM AND TERMINATION

     13.1.     TERM. The term of this Agreement shall extend with respect to a
Drug Product in a particular country until the later of: (a) the last to expire
of any VERTEX Patents containing a Valid Patent Claim covering the Drug Product
or its use or manufacture in that country; or (b) if there is no such Valid
Patent Claim under a VERTEX Patent in a particular country, ten (10) years from
the earlier of the date Regulatory Approval is received in that country for sale
of the Drug Product, or the date of First Commercial Sale of the Drug Product in
that country.

     13.2.     TERMINATION FOR CAUSE. In addition to rights of termination which
may be granted to either party under other provisions of this Agreement, either
party may terminate this Agreement upon sixty (60) days prior written notice to
the other party upon the material breach by such other party of any of its
obligations under this Agreement, provided that such termination shall become
effective only if the breaching party shall fail to remedy or cure the breach
within such sixty (60) day period.

     13.3.     TERMINATION FOR BANKRUPTCY. If at any time during the term of
this Agreement, an Event of Bankruptcy (as defined below) relating to either
party (the "Bankrupt Party") occurs, the other party (the "Other Party") shall
have, in addition to all other legal and equitable rights and remedies available
hereunder, the option to terminate this Agreement upon 30 days' written notice
to the Bankrupt Party. It is agreed and understood that if the Other Party does
not elect to terminate this Agreement upon the occurrence of an Event of
Bankruptcy, except as may otherwise be agreed with the trustee or receiver
appointed to manage the affairs of the Bankrupt Party, the Other Party shall
continue to make all payments required of it under this Agreement as if the
Event of Bankruptcy had not occurred, and the Bankrupt Party shall not have the
right to terminate any license granted herein. As used above, the term "Event of
Bankruptcy" shall mean (a) dissolution, termination of existence, liquidation or
business failure of either party; (b) the appointment of a custodian or receiver
for either party who has not been terminated or dismissed within 90 days; (c)
the institution by either party of any proceeding under national, federal or
state bankruptcy, reorganization, receivership or other similar laws affecting
the rights of creditors generally or the making by either party of a composition
or any assignment or trust mortgage for the benefit of creditors or under any
national, federal or state bankruptcy, reorganization, receivership or other
similar law affecting the rights of creditors generally, which proceeding is not
dismissed within 90 days of filing.

     13.4.     TERMINATION BY NOVARTIS.  [***]

     13.5.     EFFECT OF TERMINATION.

                  (a) Termination of this Agreement for any reason, or
expiration of this Agreement, will not affect: (i) obligations, including the
payment of any royalties and any supply price payments, which have accrued as of
the date of termination or expiration, and (ii) rights and obligations which,
from the context thereof, are intended to survive termination or expiration of
this Agreement.

                  (b) For each country, at the end of the Agreement term as
provided in Section 13.1 hereof in respect of a Drug Product, NOVARTIS shall
have a perpetual, nonexclusive, transferable, paid-up, royalty-free license
under VERTEX Technology, in each case which is in

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existence at the end of such Agreement term, to use, make, have made and sell
that Drug Product in that country and to make or have made Drug Product for use
and sale in that country.

                                   ARTICLE XIV
                                 INDEMNIFICATION

     14.1.     INDEMNIFICATION BY VERTEX. VERTEX will indemnify and hold
NOVARTIS and its Affiliates, and their employees, officers and directors
harmless against any loss, damages, action, suit, claim, demand, liability,
expense, bodily injury, death or property damage (a "Loss"), that may be
brought, instituted or arise against or be incurred by such persons to the
extent such Loss is based on or arises out of:

               14.1.1. the development, manufacture, use, storage or handling of
                       a Drug Product Candidate or a Drug Product by VERTEX or
                       its Affiliates or their representatives, agents or
                       subcontractors under this Agreement, or any actual or
                       alleged violation of law resulting therefrom (with the
                       exception of Losses based on infringement or
                       misappropriation of intellectual property rights); or

               14.1.2. the breach by VERTEX of any of its covenants,
                       representations or warranties set forth in this
                       Agreement; and

               14.1.3. provided however, that the foregoing indemnification
shall not apply to any Loss to the extent such Loss is caused by the negligent
or willful misconduct of NOVARTIS or its Affiliates.

     14.2.     INDEMNIFICATION BY NOVARTIS. NOVARTIS will indemnify and hold
VERTEX, and its Affiliates, and their employees, officers and directors harmless
against any Loss that may be brought, instituted or arise against or be incurred
by such persons to the extent such Loss is based on or arises out of:

               14.2.1. the development, manufacture, use, sale, storage or
                       handling of a Drug Product Candidate or a Drug Product by
                       NOVARTIS or its Affiliates or their representatives,
                       agents or subcontractors under this Agreement, or any
                       actual or alleged violation of law resulting therefrom
                       (with the exception of Losses based on infringement or
                       misappropriation of intellectual property rights); or

               14.2.2. the breach by NOVARTIS of any of its covenants,
                       representations or warranties set forth in this
                       Agreement; and

               14.2.3. provided that the foregoing indemnification shall not
apply to any Loss to the extent such Loss is caused by the negligent or willful
misconduct of VERTEX or its Affiliates.

     14.3.     CLAIMS PROCEDURES. Each Party entitled to be indemnified by the
other Party (an "Indemnified Party") pursuant to Section 14.1 or 14.2 hereof
shall give notice to the other Party (an "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any threatened or asserted claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom;

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provided: That counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such party's expense
(unless (i) the employment of counsel by such Indemnified Party has been
authorized by the Indemnifying Party; or (ii) the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in the defense of such action, in
each of which cases the Indemnifying Party shall pay the reasonable fees and
expenses of one law firm serving as counsel for the Indemnified Party, which law
firm shall be subject to approval, not to be unreasonably withheld, by the
Indemnifying Party); and

               14.3.1. The failure of any Indemnified Party to give notice as
                       provided herein shall not relieve the Indemnifying Party
                       of its obligations under this Agreement to the extent
                       that the failure to give notice did not result in harm to
                       the Indemnifying Party.

               14.3.2. No Indemnifying Party, in the defense of any such claim
                       or litigation, shall, except with the approval of each
                       Indemnified Party which approval shall not be
                       unreasonably withheld, consent to entry of any judgment
                       or enter into any settlement which (i) would result in
                       injunctive or other relief being imposed against the
                       Indemnified Party; or (ii) does not include as an
                       unconditional term thereof the giving by the claimant or
                       plaintiff to such Indemnified Party of a release from all
                       liability in respect to such claim or litigation.

               14.3.3. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.

     14.4.     COMPLIANCE. The parties shall comply fully with all applicable
laws and regulations in connection with their respective activities under this
Agreement.

     14.5.     INSURANCE. Each party shall use all commercially reasonable
efforts to maintain insurance, including product liability insurance, with
respect to its activities hereunder.

               14.5.1. Such insurance shall be in such amounts and subject to
                       such deductibles as the parties may agree based upon
                       standards prevailing in the industry at the time.

               14.5.2. Either party may satisfy its obligations under this
                       Section through self-insurance to the same extent.

               14.5.3. At such time as a Drug Product is being manufactured by a
party for commercial sale, that party shall name the other party as an
additional insured on any such policies.

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                                   ARTICLE XV
                            MISCELLANEOUS PROVISIONS

     15.1.     NOTICE OF PHARMACEUTICAL SIDE-EFFECTS. During the term of this
Agreement, each of the parties will notify appropriate authorities in accordance
with applicable law, and the other party, promptly after receipt of information
with respect to any serious adverse event (as defined by the ICH Harmonized
Tripartite Guideline on Clinical Safety Data Management), directly or indirectly
attributable to the use or application of a Development Candidate, Bulk Drug
Substance, a Drug Product Candidate or a Drug Product.

     15.2.     WAIVER. No provision of the Agreement may be waived except in
writing by both parties hereto. No failure or delay by either party hereto in
exercising any right or remedy hereunder or under applicable law will operate as
a waiver thereof, or a waiver of a particular right or waiver of any right or
remedy on any subsequent occasion.

     15.3.     FORCE MAJEURE. Neither party shall be held liable or responsible
to the other party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement, other than an obligation to make a payment, when such failure or
delay is caused by or results from fire, floods, embargoes, government
regulations, prohibitions or interventions, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts,
acts of God, or any other cause beyond the reasonable control of the affected
party.

     15.4.     REGISTRATION OF LICENSE. NOVARTIS may, at its expense, register
the license granted under this Agreement in any country where the use, sale or
manufacture of a Drug Product in such country would be covered by a Valid Patent
Claim. Upon request by NOVARTIS, VERTEX agrees promptly to execute any "short
form" licenses submitted to it by NOVARTIS in order to effect the foregoing
registration in such country, but such licenses shall in no way alter or affect
the obligations of the parties hereunder.

     15.5.     SEVERABILITY. It is the intention of the parties to comply with
all applicable laws domestic or foreign in connection with the performance of
its obligations hereunder. In the event that any provision of this Agreement, or
any part hereof, is found invalid or unenforceable, the remainder of this
Agreement will be binding on the parties hereto, and will be construed as if the
invalid or unenforceable provision or part thereof had been deleted, and the
Agreement shall be deemed modified to the extent necessary to render the
surviving provisions enforceable to the fullest extent permitted by law.

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

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     15.7.     GOVERNMENT APPROVALS. NOVARTIS will use reasonable efforts to
obtain any government approval required to enable this Agreement to become
effective, or to enable any payment hereunder to be made, or any other
obligation hereunder to be observed or performed. Each party will keep the other
informed of progress in obtaining any such approvals.

     15.8.     ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party without the prior written consent of the other
party; provided, however, that either party may assign this Agreement, without
the consent of the other party, (i) to any of its Affiliates, if the assigning
party guarantees the full performance of its Affiliates' obligations hereunder,
or (ii) in connection with the transfer or sale of all or substantially all of
its assets or business or in the event of its merger or consolidation with
another company. Any purported assignment in contravention of this Section 15.8
shall, at the option of the non-assigning party, be null and void and of no
effect. No assignment shall release either party from responsibility for the
performance of any accrued obligation of such party hereunder. This Agreement
shall be binding upon and enforceable against the successor to or any permitted
assignee from either of the parties hereto.

     15.9.     AFFILIATES. Each party may perform its obligations hereunder
personally or through one or more Affiliates, although each party shall
nonetheless be solely responsible for the performance of its Affiliates. Neither
party shall permit any of its Affiliates to commit any act (including any act of
omission) which such party is prohibited hereunder from committing directly. The
use of subcontractors by either party shall not increase the financial
obligations of the other party hereunder in any respect.

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

     15.11.    NO AGENCY. Nothing herein contained shall be deemed to create an
agency, joint venture, amalgamation, partnership or similar relationship between
NOVARTIS and VERTEX. Notwithstanding any of the provisions of this Agreement,
neither party shall at any time enter into, incur, or hold itself out to third
parties as having authority to enter into or incur, on behalf of the other
party, any commitment, expense, or liability whatsoever, and all contracts,
expenses and liabilities undertaken or incurred by one party in connection with
or relating to the development, manufacture or sale of Bulk Drug Substance, Drug
Product Candidates or Drug Products shall be undertaken, incurred or paid
exclusively by that party, and not as an agent or representative of the other
party.

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

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<Page>

               If to NOVARTIS, at:

                     NOVARTIS PHARMA AG
                     Business Development and Licensing
                     P.O. Box
                     CH-4002
                     Basel, Switzerland
                     Attention:  Victor A. Hartmann, Vice President

                   with a copy to: Legal Services, at the address referenced
               above and

               if to VERTEX, at:
                     Vertex Pharmaceutical Incorporated
                     130 Waverly Street
                     Cambridge, MA U.S.A. 02139-4211
                     Attention:  President

               with a copy to:
                     Legal Department
                     Attention: General Counsel

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

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

     15.15.    ENTIRE AGREEMENT. This Agreement, including the Schedules
appended hereto, contains the entire understanding of the parties relating to
the matters referred to herein, except as matters referenced herein are also
addressed in the Research Agreement, and may only be amended by a written
document, duly executed on behalf of the respective parties.

     15.16.    INFLATION ADJUSTMENT. All payments required to be made to VERTEX
hereunder (except any royalty payments required to be made under the provisions
of Section 6.3 hereof) shall be adjusted at the beginning of each calendar year
to reflect the impact of inflation since the date of execution of the Revised
and Restated Research Agreement, as measured by the biotech worker inflation
rate defined and reported in the Radford Survey (Radford/AON Consulting Inc.,
San Francisco, CA), or other mutually acceptable index. Notwithstanding the
foregoing, no adjustment shall be required in any calendar year in which the
appropriate inflation adjustment, if applied, would result in a change of less
than [***].

     15.17.    INVOICE REQUIREMENT. Any amounts payable to VERTEX hereunder
(except any royalty payments required to be made under the provisions of Section
6.3 hereof) shall be made within thirty days after receipt by NOVARTIS, or its
nominee designated for that purpose in advance by NOVARTIS in writing to VERTEX,
of an invoice covering such payment, which

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<Page>

invoice shall conform to the extent reasonably practicable to the form of
invoice contained in Exhibit B to the Research Agreement.

     15.18.    HARDSHIP. If as a result of unforeseen events or developments
relating to the subject matter of this Agreement, the performance of this
Agreement shall cause inequitable economic hardship for one party which runs
counter to the objectives of this Agreement and which the other party cannot
reasonably and in good faith expect the first party to bear unrelieved, the
parties will meet and seek in good faith to find equitable means of amending
this Agreement to reestablish a fair and reasonable economic balance under this
Agreement between the parties hereto.

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<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

                                VERTEX PHARMACEUTICALS INCORPORATED

                                By:
                                   ---------------------------------------------

                                       Kenneth S. Boger
                                Title: Senior Vice President and General Counsel

                                NOVARTIS PHARMA AG

                                By:
                                   ---------------------------------------------

                                Title:
                                      ------------------------------------------

                                By:
                                   ---------------------------------------------

                                Title:
                                      ------------------------------------------

 License, Development and Commercialization Agreement -- Confidential -- Page 32
<Page>

                                  SCHEDULE 1.12

                         LIST OF DRUG PRODUCT CANDIDATES

                                 To be supplied

       License, Development and Commercialization Agreement -- Confidential
<Page>

                                  SCHEDULE 1.25

                              LIST OF MAJOR MARKETS

         [***]

       License, Development and Commercialization Agreement -- Confidential
<Page>

                                  SCHEDULE 1.29

                                NOVARTIS PATENTS

      License, Development and Commercialization Agreement -- Confidential
<Page>

                                  SCHEDULE 1.44

                                 VERTEX PATENTS

       License, Development and Commercialization Agreement -- Confidential

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