Document:

Exhibit 10.2

Confidential Treatment Requested

Confidential
portions of this document have been redacted and have been separately 

filed with the Commission

LICENSE, DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT

between

Vertex
Pharmaceuticals Incorporated

and

Mitsubishi
Pharma Corporation

TABLE OF CONTENTS

	
  ARTICLE I — DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II — LICENSE

  	
  9

  
	
   

  	
   

  
	
  2.1

  	
  Grant to MITSUBISHI

  	
  9

  
	
  2.2

  	
  Competing Product

  	
  10

  
	
  2.3

  	
  Grant to VERTEX

  	
  10

  
	
  2.4

  	
  Transfer of Know-How

  	
  11

  
	
  2.5

  	
  No Implied Rights

  	
  11

  
	
   

  	
   

  
	
  ARTICLE III — DEVELOPMENT

  	
  11

  
	
   

  	
   

  
	
  3.1

  	
  Joint Development Committee

  	
  11

  
	
  3.2

  	
  Development Plans

  	
  13

  
	
  3.3

  	
  Development Costs

  	
  15

  
	
  3.4

  	
  [***]

  	
  16

  
	
  3.5

  	
  Data Transfer

  	
  16

  
	
  3.6

  	
  Regulatory Matters

  	
  18

  
	
  3.7

  	
  Conduct of the Development Activities

  	
  19

  
	
  3.8

  	
  Ownership of Technology

  	
  20

  
	
   

  	
   

  
	
  ARTICLE IV — MANUFACTURE AND SUPPLY

  	
  20

  
	
   

  	
   

  
	
  4.1

  	
  Supply of Bulk Drug Substance and Drug Product for
  Development

  	
  20

  
	
  4.2

  	
  Supply of Bulk Drug Substance and Drug Product for
  Commercial Purposes

  	
  21

  
	
  4.3

  	
  Limitation on Supply Obligation

  	
  21

  
	
  4.4

  	
  Second Source of Supply for Bulk Drug Substance

  	
  22

  
	
  4.5

  	
  Manufacturing Technology

  	
  22

  
	
  4.6

  	
  Packaging

  	
  22

  
	
   

  	
   

  
	
  ARTICLE V — COMMERCIALIZATION

  	
  23

  
	
   

  	
   

  
	
  5.1

  	
  Global Marketing and Sales

  	
  23

  
	
  5.2

  	
  Co-Labeling

  	
  23

  
	
  5.3

  	
  Trademarks

  	
  23

  
	
  5.4

  	
  Due Diligence

  	
  23

  
	
   

  	
   

  
	
  ARTICLE VI — PAYMENTS

  	
  24

  
	
   

  	
   

  
	
  6.1

  	
  License Fee

  	
  24

  
	
  6.2

  	
  Milestone Payments by MITSUBISHI

  	
  24

  
	
  6.3

  	
  Commercial Supply of Drug Product

  	
  25

  
	
  6.4

  	
  Production of Bulk Drug Substance by MITSUBISHI

  	
  26

  
	
  6.5

  	
  Royalties on Net Sales of Drug Product; Sales
  Reports

  	
  27

  
	
  6.6

  	
  Withholding Tax

  	
  29

  
	
  6.7

  	
  Currency of Payment

  	
  29

  
	
   

  	
   

  
	
  ARTICLE VII — TECHNOLOGY

  	
  30

  
	
   

  	
   

  
	
  7.1

  	
  Ownership

  	
  30

  
	
  7.2

  	
  Patent Procurement and Maintenance

  	
  30

  
	
  7.3

  	
  Costs

  	
  31

  

 

[***]      Information redacted pursuant to a
confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 i
 

 

	
  7.4

  	
   

  	
  Infringement Claims by Third Parties

  	
  32

  
	
  7.5

  	
   

  	
  Infringement Claims against Third Parties

  	
  33

  
	
  7.6

  	
   

  	
  Patent Term Extensions

  	
  34

  
	
   

  	
   

  
	
  ARTICLE VIII — REPRESENTATIONS AND WARRANTIES

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Representations and Warranties of VERTEX

  	
  34

  
	
  8.2

  	
   

  	
  Representations and Warranties of MITSUBISH

  	
  35

  
	
   

  	
   

  
	
  ARTICLE IX — CONFIDENTIALITY

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Undertaking

  	
  35

  
	
  9.2

  	
   

  	
  Exceptions

  	
  36

  
	
  9.3

  	
   

  	
  Publicity

  	
  37

  
	
  9.4

  	
   

  	
  Survival

  	
  38

  
	
   

  	
   

  
	
  ARTICLE X — DISPUTE RESOLUTION

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Governing Law and Jurisdiction

  	
  38

  
	
  10.2

  	
   

  	
  Dispute Resolution Process

  	
  38

  
	
   

  	
   

  
	
  ARTICLE XI — TERM AND TERMINATION

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Term

  	
  39

  
	
  11.2

  	
   

  	
  Termination for Cause

  	
  40

  
	
  11.3

  	
   

  	
  Termination for Bankruptcy

  	
  40

  
	
  11.4

  	
   

  	
  Termination by MITSUBISHI

  	
  40

  
	
  11.5

  	
   

  	
  Effect of Termination

  	
  41

  
	
   

  	
   

  
	
  ARTICLE XII — INDEMNIFICATION

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Indemnification by VERTEX

  	
  42

  
	
  12.2

  	
   

  	
  Indemnification by MITSUBISHI

  	
  42

  
	
  12.3

  	
   

  	
  Claims Procedures

  	
  43

  
	
  12.4

  	
   

  	
  Limitation of Liability

  	
  44

  
	
  12.5

  	
   

  	
  Insurance

  	
  44

  
	
   

  	
   

  
	
  ARTICLE XIII — MISCELLANEOUS PROVISIONS

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Waiver

  	
  44

  
	
  13.2

  	
   

  	
  Force Majeure

  	
  44

  
	
  13.3

  	
   

  	
  Registration of License

  	
  45

  
	
  13.4

  	
   

  	
  Severability

  	
  45

  
	
  13.5

  	
   

  	
  Government Acts

  	
  45

  
	
  13.6

  	
   

  	
  Government Approvals

  	
  45

  
	
  13.7

  	
   

  	
  Assignment; Successors and Assigns

  	
  46

  
	
  13.8

  	
   

  	
  Export Controls

  	
  46

  
	
  13.9

  	
   

  	
  Affiliates

  	
  46

  
	
  13.10

  	
   

  	
  Counterparts

  	
  47

  
	
  13.11

  	
   

  	
  No Agency

  	
  47

  
	
  13.12

  	
   

  	
  Notice

  	
  47

  
	
  13.13

  	
   

  	
  Headings

  	
  47

  
	
  13.14

  	
   

  	
  Entire Agreement

  	
  47

  
	
  13.15

  	
   

  	
  Rules of Construction

  	
  48

  

 

[***]      Information redacted pursuant to a
confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 ii

LICENSE, DEVELOPMENT AND COMMERCIALIZATION
AGREEMENT

THIS LICENSE, DEVELOPMENT AND COMMERCIALIZATION
AGREEMENT (the “Agreement”) is made and entered
into as of June 11, 2004 between VERTEX PHARMACEUTICALS INCORPORATED
(hereinafter “VERTEX”), a Massachusetts
corporation with principal offices at 130 Waverly Street, Cambridge, MA
02139-4242, and MITSUBISHI PHARMA CORPORATION (hereinafter “MITSUBISHI”), a Japanese corporation with principal offices
at 6-9, Hiranomachi 2-Chome, Chuo-ku, Osaka 541-0046, Japan.  VERTEX and MITSUBISHI are sometimes referred
to herein individually as the “Party” and
collectively as the “Parties”.

INTRODUCTION

WHEREAS,
VERTEX has an ongoing antiviral drug discovery and development program
targeting the hepatitis C virus (HCV) NS3 4A protease; and

WHEREAS, VERTEX’s discovery and
development program has produced a clinical candidate known as VX-950 that is
currently in late preclinical development and a back-up compound VX-905 (the “Compounds”); and

WHEREAS, MITSUBISHI wishes to
obtain an exclusive license to develop and commercialize the Compounds in Japan
and certain Asian countries, and VERTEX is willing to grant such a license, all
on the terms and subject to the conditions set forth herein; and

NOW THEREFORE, in consideration
of the foregoing premises, the mutual covenants set forth herein, and other
good and valuable consideration, the Parties agree as follows:

ARTICLE I — DEFINITIONS

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

1.2          “Allocable
Overhead” shall mean costs incurred by a party or for its
account which are attributable to a party’s costs of supervisory services,
occupancy, payroll, information 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

systems, human
resources and purchasing, as allocated to company departments based on space
occupied, headcount or activity-based methods, in all cases as determined by
such party in accordance with its accounting standards, including International
Accounting Standards (IAS) and Generally Accepted Accounting Principles (GAAP),
applied on a consistent basis.  Without
limitation, Allocable Overhead shall not include the costs of general corporate
activities including, by way of example, executive management, investor
relations, business development, legal and finance.

1.3            “Bulk Drug Substance”
shall mean a Compound in bulk crystal, powder, solution or other form suitable
for incorporation in a Drug Product, which if required in order to stabilize
the Compound shall be formulated with stabilizing excipients.

1.4            “Combination Therapy”
shall mean a therapy in which for full treatment efficacy a Drug Product is clinically
and regulatorily required to be used together with one or more other anti-hepatitis
C virus (HCV) agents, such as interferon products.

1.5            “Commercial Supply Agreement”
shall have the meaning set forth in Section 4.2 hereof.

1.6            “Competing Product”
shall mean any pharmaceutical product in finished dosage form that contains [***] (i) that falls within one or more of the claims of the
published patent applications [***] in the
Territory as of the Effective Date, or (ii) that falls within one or more of
the claims of a patent application filed [***] having
the priority date of [***].

1.7            “Completion”
with respect to a Phase II Clinical Trial or a Phase III Clinical Trial shall
mean the finalization of the final report with respect to such clinical trial.

1.8            “Compound”
shall mean either of VX-950 or VX-905.

1.9            “Confidential Information”
shall have the meaning set forth in Section 9.1.

1.10         “Controlled”
shall mean the legal authority or right of a party to grant a license or
sublicense of intellectual property rights to another party, or to otherwise
disclose proprietary or trade secret information to such other party, without
breaching the terms of any agreement with a third party, misappropriating the
proprietary or trade secret information of a third party or incurring any
financial obligation or potential financial obligation to a third party.

1.11         “Core Development Activities” shall
mean:  [***]

1.12         “Core Development Plan” shall
have the meaning set forth in Section 3.2.3

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 2
 

hereof.

1.13         “Core Development Costs” shall
mean [***]

1.14         “Development Supply Agreement”
shall have the meaning set forth in Section 4.1 hereof.

1.15         “Drug Product” shall
mean a Compound in finished dosage form that is prepared from Bulk Drug
Substance and is ready for administration to the ultimate consumer as a
pharmaceutical product.

1.16         “Effective Date”
shall mean the effective date of this Agreement as set forth on the first page
hereof.

1.17         “FDA” shall
mean  the United States Food and
Drug Administration.

1.18         “Field of Use”
shall mean the treatment of any human condition, disorder or disease.

1.19         “First Commercial Sale” shall
mean the first sale of a Drug Product by MITSUBISHI or an Affiliate or
sublicensee of MITSUBISHI 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 sold in such country by MITSUBISHI or an Affiliate or sublicensee of
MITSUBISHI pursuant to a plan of commercial launch.

1.20         “IND” shall
mean the investigational new drug application relating to the Drug Product
filed with the FDA pursuant to 21 C.F.R. Part 312, including any amendments
thereto, and equivalent applications with similar requirements in countries other
than the United States.

1.21         “Indication”
shall mean a generally acknowledged disease, disorder or condition, a
significant manifestation of a disease, disorder or condition, or a symptom
associated with a disease, disorder or condition for which use of a Drug
Product is indicated, as would be identified in the Drug Product’s label under
applicable regulations of a Regulatory Authority.

1.22         “Infringement Claim”
shall have the meaning set forth in Section 7.4.1 hereof.

1.23         “Investigational Drug Product” shall have
the meaning set forth in Section 4.1 hereof.

1.24         “JDC” shall
have the meaning set forth in Section 3.1 hereof.

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 3
 

1.25         “Joint Know-How”
shall have the meaning set forth in Section 7.1
hereof.

1.26         “Joint Patents” shall
have the meaning set forth in Section 7.1 hereof.

1.27         “Joint
Steering Committee” shall
have the meaning set forth in Section 10.2.1 hereof.

1.28         “Know-How”
shall mean all data, technical information, know-how, inventions, discoveries,
trade secrets, processes, techniques, materials, compositions, methods,
formulas or improvements that relate to the research, development, manufacture,
use, sale, offer for sale or import of any Bulk Drug Substance, Compound, or
Drug Product; provided, however, that the term “Know-How” shall not include
VERTEX’s proprietary and confidential drug discovery platform or techniques.

1.29         “Manufacturing Cost”
shall mean the total of all costs incurred by or on behalf of VERTEX related to
the manufacture of a batch or lot of Bulk Drug Substance, Compound, Drug
Product, Investigational Drug Product or placebo, including direct material and
labor, quality assurance/quality control and analytical costs, depreciation, as
well as applicable Allocable Overhead and Third-Party costs relating to manufacturing,
shipping and handling, duty, and insurance. [***]

1.30         “MITSUBISHI Development Activities”
shall mean all non-clinical and clinical activities performed by or on behalf
of MITSUBISHI or its sublicensees in the Territory with respect to Bulk Drug
Substance, a Compound and/or Drug Product, including non-clinical studies,
clinical trials, formulation research, formulation development, process
research, process development, manufacturing scale-up, analytical method
development and validation, and regulatory activities, in order to obtain
Regulatory Approval from a Regulatory Authority for marketing the corresponding
Drug Product in the Territory for the Indications selected.

1.31         “MITSUBISHI Development Plan” shall
have the meaning set forth in Section 3.2.1 hereof.

1.32         “MITSUBISHI Know-How” shall
mean all Know-How Controlled by MITSUBISHI or any of its Affiliates, including
any such Know-How invented, discovered or developed in the conduct of the
MITSUBISHI Development Activities.

1.33         “MITSUBISHI Patents” shall
mean all Patents Controlled by MITSUBISHI or any of its Affiliates claiming
Bulk Drug Substance, a Compound or a Drug Product, or a method of making or
using Bulk Drug Substance, a Compound or a Drug Product, or an improvement 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 4
 

to the subject matter of a Patent covering
any of the foregoing that would be infringed by the research, development,
manufacture, use, sale, offer for sale or import of Bulk Drug Substance,
Compound(s) or Drug Product.  As of the
Effective Date, no MITSUBISHI Patents exist.  Schedule 1.33
hereto will be updated periodically to reflect additions thereto during the
term of this Agreement.

1.34         “MITSUBISHI Technology”
shall mean all MITSUBISHI Patents and all MITSUBISHI Know-How.

1.35         “Monotherapy”
shall mean a therapy in which the Drug Product is used as a sole anti-hepatitis
C virus (HCV) agent.

1.36         “Net Sales”
shall mean the aggregate amount obtained by totaling for all countries in the
Territory where Drug Products were sold in a given calendar quarter the Net
Sales Price or Prices in such country multiplied by the total number of units
of Drug Products sold in such country at such Net Sales Price or Prices.

1.37         “Net Sales Price” with
respect to a Drug Product shall mean the gross amount invoiced in a given
calendar quarter in a given country for such unit of the Drug Product sold to
Third Parties in bona fide, arms-length transactions by MITSUBISHI and any
MITSUBISHI Affiliate or its sublicensee, less (i) trade, quantity and/or
cash discounts from the invoice price which are actually allowed or taken; (ii)
freight, postage and insurance included in the invoice price; (iii) amounts
repaid or credited by reason of rejection or return of goods or because of
retroactive price reductions specifically identifiable to the Drug Product;
(iv) amounts payable resulting from governmental (or agency thereof) mandated
rebate programs; (v) Third-Party rebates to the extent actually allowed; (vi)
invoiced custom duties and sales and use taxes (excluding income taxes), if
any, actually paid and directly related to the sale; and (vii) any other
specifically identifiable amounts included in the Drug Product’s invoice price
that should be credited for reasons substantially equivalent to those listed
above; all as determined in accordance with MITSUBISHI’s usual and customary
accounting methods, which are in accordance with the Japanese equivalent of
Generally Accepted Accounting Principles in the United States (GAAP),
consistently applied.

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

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 5
 

(b)            In
the case of any sale or other disposal for value, such as barter or
counter-trade, of a Drug Product, or part thereof, other than in an arm’s-length
transaction exclusively for money, the Net Sales Price shall be calculated as
above on the higher of (i) the value of the consideration received for, or (ii)
the fair market price of, the Drug Product in the country of sale or disposal;

(c)            If
a 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 Price
of the Drug Product, for the purposes of determining payments hereunder, shall
be determined by multiplying the Net Sales Price (as defined above in this
Section) of the Combination Product by [***]; and

(d)            In the case of any sale which is not
invoiced, the Net Sales Price shall be calculated at the time of shipment or
when the Drug Product is paid for, if paid for before shipment, based on the
gross purchase price.

1.38         “Patents”
shall mean all existing Japanese and U.S. patents and patent applications; all
patent applications hereafter filed in Japan or the United States, 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 patent term
extension or 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.

1.39         “Person” shall
mean any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization or government or political
subdivision thereof.

1.40         “Phase I Clinical Trial”
shall mean an initial human clinical trial conducted for inclusion in (i) that
portion of the FDA submission and approval process which provides for initial
trials of a Compound in a small number of subjects to establish the safety
profile of the Compound and to collect initial data on its pharmacokinetics and
pharmacological effects, as more fully defined in 21 C.F.R. § 312.21(a),
and (ii) equivalent submissions with similar requirements in countries other
than the United States.

1.41         “Phase Ib Clinical Trial”
shall mean an initial repeated dose, dose escalation Phase I Clinical Trial
conducted in a small number of patients infected with the hepatitis C virus
(HCV) to establish the safety profile of the Compound and to collect additional
data on its pharmacokinetics and pharmacological effects, including antiviral
activity.

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 6
 

1.42         “Phase II Clinical Trial”
shall mean a human clinical trial conducted for inclusion in (i) that portion
of the FDA submission and approval process which provides for trials of a
Compound on a limited number of patients for the purposes of collecting data on
dosages, evaluating safety and collecting preliminary information regarding
efficacy in the proposed therapeutic Indication, as more fully defined in 21
C.F.R. §312.21(b), and (ii) equivalent submissions with similar requirements in
countries other than the United States.

1.43         “Phase IIa Clinical Trial” shall
mean an initial Phase II Clinical Trial in any therapeutic Indication  that is designed to evaluate safety and to demonstrate a
meaningful trend of efficacy in patients who have the disease or condition that
the Compound is intended to treat.

1.44         “Phase IIb Clinical Trial” shall mean a Phase II Clinical Trial in any
therapeutic Indication that is designed to determine the doses to be used in
the Phase III Clinical Trials and to evaluate the efficacy/safety properties of
the Compound.

1.45         “Phase III Clinical Trial”
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 Compound on sufficient numbers of patients to generate safety and
efficacy data to support Regulatory Approval in the proposed therapeutic
Indication, as more fully defined in 21 C.F.R. § 312.21(c), and (ii)
equivalent submissions with similar requirements in countries other than the
United States.

1.46         “Regulatory Approval”
shall mean, with respect to any country, all authorizations by a Regulatory
Authority or other appropriate governmental entity or entities necessary for
commercial marketing and sale of a Drug Product in that country including,
where applicable, approval of labeling, price, reimbursement and manufacturing.

1.47         “Regulatory Authority”
shall mean (i) the FDA or (ii) any regulatory body with similar regulatory
authority in any other jurisdiction anywhere in the world.

1.48         “Start” shall
mean the first dosing of the first patient with respect to a Phase II Clinical
Trial or Phase III Clinical Trial, or the starting date set forth in the final
protocol for the applicable study with respect to non-clinical studies.

1.49         “Territory”
shall mean all countries identified on Schedule
1.49 hereto.

1.50         “Third Party”
shall mean any Person that is not a Party or an Affiliate of any Party.

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 7
 

1.51         “Valid Patent Claim” shall
mean either (i) a claim of an issued and unexpired Patent which has not lapsed,
been revoked or abandoned 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 disclaimed, denied or admitted to be invalid or unenforceable through
reissue, reexamination, disclaimer or otherwise, or (ii) 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 refilling
of said application.

1.52         “VERTEX Development Activities”
shall mean all non-clinical and clinical activities performed by or on behalf
of VERTEX or a VERTEX Licensee in the VERTEX Territory with respect to Bulk
Drug Substance, a Compound, and/or Drug Product, including non-clinical
studies, clinical trials, formulation research, formulation development,
process research, process development, manufacturing scale-up, analytical
method development and validation, and regulatory activities, in order to
obtain Regulatory Approval from a Regulatory Authority for marketing the
corresponding Drug Product in the VERTEX Territory for the Indications
selected.  For the avoidance of doubt,
the Core Development Activities set forth in Section 1.11 shall be included in
the VERTEX Development Activities.

1.53         “VERTEX Development Plan” shall
have the meaning set forth in Section 3.2.2 hereof.

1.54         “VERTEX Know-How” shall
mean all Know-How Controlled by VERTEX or any of its Affiliates, including any
such Know-How invented, discovered or developed in the conduct of the VERTEX
Development Activities.

1.55         “VERTEX Licensee” shall
mean any Person other than MITSUBISHI to which VERTEX grants a license under the
VERTEX Technology.

1.56         “VERTEX Patents”
shall mean all Patents Controlled by VERTEX or any of its Affiliates claiming
Bulk Drug Substance, a Compound or a Drug Product, or a method of making or
using Bulk Drug Substance, a Compound or a Drug Product, or an improvement to
the subject matter of a Patent covering any of the foregoing that would be
infringed by the research, development, manufacture, use, sale, offer for sale or
import of Bulk Drug Substance, Compound(s) or Drug Product.  A list of VERTEX Patents in the Territory is
appended hereto as Schedule 1.56 and
will be updated periodically to reflect additions thereto during the term of
this Agreement.  Notwithstanding the
foregoing, any Third-Party patent under which VERTEX 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 8
 

obtains a license pursuant to Section 7.4.2 hereof
shall not be deemed to be a VERTEX Patent.

1.57         “VERTEX Technology”
shall mean all VERTEX Patents and all VERTEX Know-How.

1.58         “VERTEX Territory” shall
mean all countries of the world except for the countries of the Territory.

1.59         “VX-905” shall
mean the compound identified on Schedule 1.59
hereto.

1.60         “VX-950” shall
mean the compound identified on Schedule 1.60
hereto.

ARTICLE II — LICENSE

2.1            Grant to MITSUBISHI.

2.1.1       License.  Subject to the other provisions of this
Agreement, VERTEX hereby grants to MITSUBISHI an exclusive license (or
sublicense, as appropriate) in the Territory under the VERTEX Technology, with
the right to sublicense, to exercise its rights and fulfill its obligations
under this Agreement and to develop, manufacture, have manufactured, use, sell,
have sold, offer to sell and import Drug Products and to import Bulk Drug
Substance and use Bulk Drug Substance to manufacture Drug Products, in each
case solely in the Field of Use. 
Notwithstanding the foregoing VERTEX shall retain the right to
manufacture and have manufactured the Drug Product in the Territory for
development, use, or sale of the Drug Product in the VERTEX Territory and for
sale of the Drug Product to MITSUBISHI pursuant to this Agreement.  In addition, in the event that pursuant to
discussions in the JDC it is determined that VERTEX may conduct clinical trials
of the Drug Product in the Territory, notwithstanding the foregoing license
grant, VERTEX shall be allowed to conduct such clinical trials.  Further, subject to the other provisions of
this Agreement, VERTEX hereby grants to MITSUBISHI a non-exclusive license (or
sublicense, as appropriate) in the VERTEX Territory under the VERTEX Technology,
with the right to sublicense, to manufacture and/or have manufactured the Drug
Product for development, use or sale of the Drug Product in the Territory.

2.1.2       Sublicensees and Subcontractors.  MITSUBISHI shall notify VERTEX in writing of
any sublicense it intends to grant pursuant to Section 2.1.1 [***]. 
Notwithstanding the foregoing, MITSUBISHI may sublicense its rights
under the license granted in Section 2.1.1 to any of its Affiliates, with prior
notice to but without the consent of VERTEX. 
MITSUBISHI shall 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 9
 

guarantee and be responsible to VERTEX for the performance of any of
its sublicensees or subcontractors under any sublicense or other agreement with
respect to the rights granted to MITSUBISHI by VERTEX and the obligations
assumed by MITSUBISHI hereunder.  MITSUBISHI
shall not permit any subcontractors or sublicensees to use VERTEX Technology
without provisions safeguarding confidentiality equivalent to those provided in
this Agreement.  MITSUBISHI shall ensure
that any such provisions allow VERTEX the right to directly enforce the
obligations of confidentiality with respect to VERTEX Technology in the
possession of the subcontractor or sublicensee.

2.2            Competing Product.  In the event that VERTEX intends to license
rights to develop and/or commercialize a Competing Product solely in the
Territory (rather than as part of a worldwide license), VERTEX shall discuss
with MITSUBISHI in good faith the terms and conditions for such a license prior
to negotiating terms and conditions for such a license with any Third Party.

2.3            Grant to VERTEX.

2.3.1      License.  Subject to the other provisions of this
Agreement, MITSUBISHI hereby grants to VERTEX, in the VERTEX Territory and in
those countries in the Territory where VERTEX may conduct clinical trials of
the Drug Product or where VERTEX may manufacture and have manufactured Drug
Product for development, use, or sale in the VERTEX Territory and for sale to
MITSUBISHI pursuant to this Agreement, a royalty-free, non-exclusive license
(or sublicense, as appropriate) under the MITSUBISHI Technology, with the right
to sublicense, to exercise its rights and fulfill its obligations under this
Agreement and, to the extent not inconsistent with MITSUBISHI’s exclusive
rights in the Territory, to research, develop, manufacture, have manufactured,
use, sell, have sold, offer to sell and import Bulk Drug Substance, Compounds
and Drug Products in the Field of Use.

2.3.2       Sublicensees
and Subcontractors.  VERTEX shall
notify MITSUBISHI in writing in advance of granting any sublicenses pursuant to
Section 2.3.1.  VERTEX shall guarantee
and be responsible to MITSUBISHI for the performance of any of its sublicensees
or subcontractors under any sublicense or other agreement with respect to the
rights granted to VERTEX by MITSUBISHI and the obligations assumed by VERTEX
hereunder.  VERTEX shall not permit any
subcontractors or sublicensees to use MITSUBISHI Technology without provisions
safeguarding confidentiality equivalent to those provided in this Agreement.  VERTEX will ensure that any such provisions
will allow MITSUBISHI the right to directly enforce the obligations of
confidentiality with respect to MITSUBISHI Technology in the possession of 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 10
 

the
subcontractor or sublicensee.

2.4            Transfer of Know-How.  Each Party shall deliver to the other all
Know-How Controlled by it or its Affiliates and requested by the other Party
from time to time, pursuant to the exercise by such other Party of any of the
licenses granted hereunder.  The Know-How
shall be delivered in a form that reasonably facilitates the use of such
Know-How and shall also include copies of all MITSUBISHI Patents in the VERTEX Territory
or all VERTEX Patents in the Territory, as applicable, and all other
manifestations of the intellectual property licensed hereunder embodied in the
Bulk Drug Substance, Compounds or Drug Products, whether in human or machine
readable form.

2.5            No Implied Rights.  Except as expressly provided in this
Agreement, no right or license to use any intellectual property of either Party
is granted hereunder by implication or otherwise.

ARTICLE III — DEVELOPMENT

3.1            Joint Development Committee.

3.1.1       Formation
and Responsibilities.  As soon as
practicable after the Effective Date, VERTEX and MITSUBISHI will establish a
Joint Development Committee (the “JDC”)
made up of equal numbers of VERTEX and MITSUBISHI personnel to be designated
from time to time by each Party.  Each of
VERTEX and MITSUBISHI shall have one vote on the JDC.  The objective of the JDC shall be to reach
agreement by consensus on all matters falling within its authority hereunder
within the scope of this Agreement.  The
Chairperson of the JDC shall be designated by MITSUBISHI.  Meetings of the JDC other than regularly
scheduled quarterly meetings may be held only if a quorum of [***] representatives of each Party participates; except
that lack of a quorum shall not prevent the scheduling and conduct of a meeting
by either Party after that Party has made good faith but unsuccessful attempts
for more than ninety (90) days to schedule and convene the meeting.  Semi-annually, the JDC shall meet
face-to-face, alternating between the offices of the Parties, unless otherwise
agreed.   There shall be a
telephonic or video conference meeting of the JDC in each calendar quarter in
which a face-to-face meeting is not held.  
The JDC shall meet as described above, or with such other frequency, and
at such time and location, as may be established by the JDC, for the following
purposes, among others:

(i)            To
review and comment on the MITSUBISHI Development Plan 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 11
 

as set forth in Section 3.2.1 below;

(ii)           To
review and comment on the Core Development Plan and the VERTEX Development Plan
as set forth in Sections 3.2.2 and 3.2.3 below;

(iii)         To
receive and review reports by MITSUBISHI, which shall be prepared and submitted
to VERTEX and the JDC no less than [***] days
before each semi-annual face-to-face meeting,
setting forth in reasonable detail, with supporting data, the
results of work performed during the preceding six months under the MITSUBISHI
Development Plan;

(iv)          To
receive and review reports by VERTEX, which shall be prepared and submitted to
MITSUBISHI and the JDC no less than [***] days
before each semi-annual face-to-face meeting,
setting forth in reasonable detail, with supporting data, the
results of work performed during the preceding six months under the Core
Development Plan and the VERTEX Development Plan;

(v)            To
assist in coordinating scientific interactions and resolving disagreements between
VERTEX and MITSUBISHI with respect to the development of Compounds;

(vi)          To
discuss matters relating to Patents claiming Bulk Drug Substance, the Compounds
or Drug Products, methods of using or making the same, or improvements to the
subject matter of a Patent covering any of the foregoing, including issues of
inventorship and decisions relating to the filing, prosecution and maintenance
of those Patents;

(vii)         To
discuss the budget for the Core Development Activities to be conducted pursuant
to the Core Development Plan in the context of the standards in the pharmaceutical
industry;

(viii)        In
the event VERTEX has notified the JDC in writing that VERTEX wishes to conduct
clinical trials in the Territory, to discuss and approve (with such approval
not to be unreasonably withheld or delayed) VERTEX’s conducting such clinical
trials in the Territory; and

(ix)          To
perform such other functions as appropriate to further the purposes of this
Agreement as mutually determined by the Parties.

MITSUBISHI will prepare
the initial draft of an agenda for each JDC meeting and will submit the draft
to VERTEX for comments a reasonable period before the scheduled meeting 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 12
 

date.  The Party
hosting a particular JDC meeting shall prepare and deliver to the members of
the JDC, within [***] days after
the date of each meeting, minutes of such meeting setting forth, among other
things, all decisions of the JDC, and including a summary of the status of
development activities as reported to the JDC. 
The Party not preparing the minutes may suggest changes or amendments to
the minutes, and may provide a supplement addressing activities at the meeting that
are not reported in the minutes, which shall be distributed to the Parties and
filed with the meeting minutes.  In case
the JDC meets by means of telephone or video conferences, the responsibility
for preparing minutes shall lie with MITSUBISHI.

3.1.2       Retention
of Rights.  Notwithstanding the
foregoing, each Party shall retain the rights, powers, and discretion expressly
granted to it under this Agreement, and the JDC shall not be delegated or
vested with any such rights, powers or discretion except as expressly provided
in this Agreement.  The JDC shall not
have the power to amend or modify this Agreement, which may only be amended or
modified as provided in Section 13.14 hereof.

3.1.3       Decision
Making.  If the JDC cannot reach
consensus on a matter arising in connection with the Territory, such matter
shall be referred to the Joint Steering Committee for resolution in accordance
with the terms of Section 10.2.1.  If the
Joint Steering Committee is unable to resolve such matter, then MITSUBISHI
shall have final authority to make the ultimate decision with respect thereto.  If the JDC cannot reach consensus on a matter
arising in connection with the VERTEX Territory, except for the matters set
forth in Section 3.2.3, such matter shall be referred to the Joint Steering
Committee for resolution in accordance with the terms of Section 10.2.1.  If the Joint Steering Committee is unable to
resolve such matter, then VERTEX shall have final authority to make the
ultimate decision with respect thereto. 
If the JDC cannot reach consensus on any other matters, including the
matters set forth in Section 3.2.3, such matters shall be referred to the Joint
Steering Committee for resolution in accordance with the terms of Sections
10.2.1 and 10.2.2.

3.2            Development Plans.

3.2.1       MITSUBISHI
Development Plan.  As soon as
practicable after the Effective Date, MITSUBISHI will prepare a development
plan for the conduct of the MITSUBISHI Development Activities in the Territory (the
“MITSUBISHI  Development Plan”), and will provide a copy
of such Plan to the JDC.  The MITSUBISHI
Development Plan will be updated by MITSUBISHI annually thereafter to describe
the MITSUBISHI Development Activities that MITSUBISHI then intends will be
conducted during the subsequent year and the remainder of the development
period.  Such MITSUBISHI Development Plan
will be provided to 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 13
 

the JDC within
[***] days of
the date that the JDC will conduct one of its quarterly or semi-annual
meetings.  The MITSUBISHI Development
Plan will be considered Confidential Information of MITSUBISHI subject to the
confidentiality obligations of Article IX. 
The JDC shall have the opportunity to review and comment on the MITSUBISHI
Development Plan within [***] days of
its receipt.

3.2.2       VERTEX
Development Plan.  As soon as
practicable after the Effective Date, VERTEX will prepare a development plan
for the conduct of the VERTEX Development Activities in the VERTEX Territory,
other than the Core Development Activities (the “VERTEX  Development Plan”),
and will provide a copy of such Plan to the JDC.  The VERTEX Development Plan will be updated
by VERTEX annually thereafter to describe the VERTEX Development Activities
(other than Core Development Activities) that VERTEX then intends will be
conducted during the subsequent year and the remainder of the development
period.  Such VERTEX Development Plan
will be provided to the JDC within [***] days of
the date that the JDC will conduct one of its quarterly or semi-annual
meetings.  The VERTEX Development Plan
will be considered Confidential Information of VERTEX subject to the
confidentiality obligations of Article IX. 
The JDC shall have the opportunity to review and comment on the VERTEX
Development Plan within [***] days of
its receipt.

3.2.3       Core
Development Plan.  As soon as
practicable after the Effective Date, VERTEX will prepare a development plan
for the conduct of the Core Development Activities (the “Core Development Plan”), including an
accompanying budget, and will provide a copy of such Plan to the JDC.  The Core Development Plan will be updated by
VERTEX annually thereafter to describe the Core Development Activities that
VERTEX then intends will be conducted during the subsequent year and the
remainder of the development period. 
Such Core Development Plan will be provided to the JDC within [***] days of the date that the JDC will conduct one of its
quarterly or semi-annual meetings.  The
Core Development Plan will be considered Confidential Information of VERTEX
subject to the confidentiality obligations of Article IX.  The JDC shall have the right to review and
comment on the Core Development Plan within [***]
days of its receipt.  Within such [***] day period, the JDC shall also (i) confirm that the
Core Development Activities described therein fall within the scope of such
definition and (ii) agree upon the protocols for non-clinical studies, which
agreement shall not be unreasonably withheld or delayed.  In the event that the JDC cannot reach
consensus with respect to a matter described in either clause (i) or (ii) above,
such matter shall be referred to the Joint Steering Committee for resolution in
accordance with the terms of Sections 10.2.1 and 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 14
 

10.2.2.  In the event that the JDC does not agree upon
the protocol for a particular non-clinical study, VERTEX shall also have the
right to conduct such study independently and either (i) not to refer such
dispute to the Joint Steering Committee for resolution, in which case MITSUBISHI
may also not refer such dispute to the Joint Steering Committee and such study
shall no longer be considered a Core Development Activity subject to cost
sharing by MITSUBISHI pursuant to Section 3.3 below, or (ii) to refer such
dispute to the Joint Steering Committee for resolution, and if the resolution
process does not approve the protocol for such non-clinical study, such study
shall not be considered a Core Development Activity subject to cost sharing by
MITSUBISHI pursuant to Section 3.3 below, but if the resolution process does
approve such protocol, then such study shall be considered a Core Development
Activity subject to such cost sharing by MITSUBISHI.

3.3            Development Costs.

3.3.1       MITSUBISHI
Cost-Sharing Obligations.  MITSUBISHI
will bear the cost of the MITSUBISHI Development Activities in the
Territory.  In addition to the above
obligation, MITSUBISHI will pay to VERTEX [***] of the Core
Development Costs incurred by or on behalf of VERTEX or a VERTEX Licensee.  For the avoidance of doubt, MITSUBISHI shall
have no obligation under this Section 3.3.1 to pay [***].
 Not later than [***]
after the end of each calendar quarter, VERTEX will submit to MITSUBISHI a
summary of the Core Development Costs incurred during the calendar quarter just
ended (with appropriate supporting information including a description of the
time expended on the related Core Development Activities [***],
provided, however, that if the first invoice submitted under this
Section 3.3.1 to MITSUBISHI reflects costs for activities that are subsequently
not confirmed by the JDC to be Core Development Activities, then MITSUBISHI
shall receive a credit for such costs against the next invoice submitted under
this Section 3.3.1.  The summary and
supporting information shall be considered to be Confidential Information of
VERTEX subject to the confidentiality obligations of Article IX.  The books and records of VERTEX or a VERTEX
Licensee relating to Core Development Costs will be subject to inspection by
MITSUBISHI once in any calendar year upon reasonable notice, for the purpose of
verifying the accuracy of the summary of Core Development Costs delivered
hereunder.  The books and records
relating to a reported Core Development Cost shall be retained by VERTEX or a
VERTEX Licensee for a period of not less than [***]
after the year in which such cost was incurred.

3.3.2       Limitations
on MITSUBISHI Cost-Sharing Obligations. 
MITSUBISHI’S obligation to share Core Development Costs incurred by or
on behalf of VERTEX or a VERTEX 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 15
 

Licensee from
the Effective Date through the Completion of Phase II Clinical Trials within
the Core Development Activities and to pay VERTEX therefor shall be [***].  Upon [***] the  Parties
shall begin to discuss in good faith the maximum amount of MITSUBISHI’s cost-sharing
obligation relating to Core Development Costs incurred by or on behalf of
VERTEX or a VERTEX Licensee for the conduct of Phase III Clinical Trials.  [***]  This amount shall be payable in accordance
with the terms and conditions set forth in Sections 3.3.1 and 3.3.3.

3.3.3       Timing
and Method of Payments.  All amounts
payable under this Section 3.3 shall be made on or before the [***] following MITSUBISHI’s receipt of invoices from VERTEX
with respect thereto.  All payments shall
be made by wire transfer in U.S. dollars to the credit of such bank account as
may be designated by VERTEX in writing to MITSUBISHI from time to time.

3.4            [***].  In the event
that MITSUBISHI decides to file for Regulatory Approval for the Drug Product
for a [***] in the Territory [***] then MITSUBISHI shall [***].  The Parties shall discuss in good
faith and agree [***].  For the purpose of this Section 3.4 [***],  In addition,
in the event that MITSUBISHI determines that it will not file for Regulatory
Approval for the Drug Product in the Territory for [***]
but instead will file for Regulatory Authority for the Drug Product in the
Territory for [***] then MITSUBISHI shall notify
VERTEX of such decision no later than [***] and the
parties shall discuss in good faith and agree upon the terms [***] which agreement in any event shall be reached prior to
[***].

3.5            Data Transfer.

3.5.1       Preclinical and Non-clinical Data.

(a)           MITSUBISHI shall provide to VERTEX all
relevant preclinical and non-clinical data, assays and associated materials,
protocols, methods, processes, techniques, commercial assessments of potential
Indications, and any other relevant information or materials with respect to a
Compound, that are Controlled by and in the possession of MITSUBISHI or its
Affiliates and produced in the performance of the MITSUBISHI Development
Activities during the term of this Agreement. 
Available information and materials shall be delivered by MITSUBISHI to
the JDC, at MITSUBISHI’s expense, within thirty (30) days after the end of each
calendar quarter during the term of this Agreement in an orderly fashion and in
a manner such that the value of the delivered information and materials is
preserved in all material respects.  Such
information and materials shall be deemed Confidential Information of
MITSUBISHI subject to the terms and conditions set forth in Article IX.  MITSUBISHI shall enter 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 16
 

into customary agreements with its sublicensees that
provide that such sublicensees shall supply MITSUBISHI with relevant
preclinical and non-clinical data, assays and associated materials, protocols,
methods, processes, techniques, commercial assessments of potential
Indications, and any other relevant information or materials with respect to a
Compound produced in the performance of the MITSUBISHI Development Activities.

(b)           VERTEX shall provide to MITSUBISHI all
relevant preclinical and non-clinical data, assays and associated materials,
protocols, methods, processes, techniques, commercial assessments of potential
Indications, and any other relevant information or materials with respect to a
Compound, that are Controlled by and in the possession of VERTEX or its
Affiliates and produced in the performance of the VERTEX Development Activities
before and during the term of this Agreement. 
Available information and materials shall be delivered by VERTEX to the
JDC, at VERTEX’s expense, within thirty (30) days after the end of each
calendar quarter during the term of this Agreement in an orderly fashion and in
a manner such that the value of the delivered information and materials is
preserved in all material respects.  Such
information and materials shall be deemed Confidential Information of VERTEX
subject to the terms and conditions set forth in Article IX.  VERTEX shall enter into customary agreements
with the VERTEX Licensees that provide that the VERTEX Licensees shall supply
VERTEX with relevant preclinical and non-clinical data, assays and associated
materials, protocols, methods, processes, techniques, commercial assessments of
potential Indications, and any other relevant information or materials with
respect to a Compound produced in the performance of the VERTEX Development
Activities.

3.5.2       Clinical Data.

(a)           MITSUBISHI shall provide to VERTEX
all relevant materials, data and regulatory information that are Controlled by
and in the possession of MITSUBISHI or its Affiliates and related to or
generated in connection with any clinical trials of a Compound conducted, sponsored
or funded by MITSUBISHI and/or its sublicensees (including
investigator-sponsored trials and post-marketing clinical trials) pursuant to
the performance of the MITSUBISHI Development Activities during the term of
this Agreement, whether written or electronic, including all relevant clinical
safety and efficacy data and all regulatory data and information related to the
use and sale of a Drug Product for any Indication.  Such materials, data and information shall be
delivered to the JDC by MITSUBISHI, at MITSUBISHI’s cost, promptly after
completion of the analysis of such clinical trial data and information in an
orderly fashion and in a manner such that the value of the accessed information
is preserved in all 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 17
 

material respects.  Such
information and materials shall be deemed Confidential Information of
MITSUBISHI subject to the terms and conditions set forth in Article IX.  MITSUBISHI shall enter into customary
agreements with its sublicensees that provide that such sublicensees shall
supply MITSUBISHI with relevant materials, data and regulatory information
related to or generated in connection with any clinical trials of a Compound
conducted, sponsored or funded by such sublicensees pursuant to the performance
of the MITSUBISHI Development Activities.

(b)           VERTEX shall provide to MITSUBISHI
all relevant materials, data and regulatory information that are Controlled by
and in the possession of VERTEX or its Affiliates and related to or generated
in connection with any clinical trials of a Compound conducted, sponsored or
funded by VERTEX and/or its VERTEX Licensees (including investigator-sponsored
trials and post-marketing clinical trials) pursuant to the performance of the VERTEX
Development Activities before and during the term of this Agreement, whether
written or electronic, including all relevant clinical safety and efficacy data
and all regulatory data and information related to the use and sale of a Drug
Product for any Indication.  Such
materials, data and information shall be delivered to the JDC by VERTEX, at
VERTEX’s cost, promptly after completion of the analysis of such clinical trial
data and information in an orderly fashion and in a manner such that the value
of the accessed information is preserved in all material respects.  Such information and materials shall be
deemed Confidential Information of VERTEX subject to the terms and conditions
set forth in Article IX.  VERTEX shall
enter into customary agreements with the VERTEX Licensees that provide that the
VERTEX Licensees shall supply VERTEX with relevant materials, data and
regulatory information related to or generated in connection with any clinical
trials of a Compound conducted, sponsored or funded by such VERTEX Licensees
pursuant to the performance of the VERTEX Development Activities.

3.6            Regulatory Matters.

3.6.1       Regulatory
Approvals.  Unless otherwise required
by law in the relevant jurisdiction or set forth in this Agreement, MITSUBISHI
shall have the sole right to obtain Regulatory Approvals in the Territory,
which shall be held by and in the name of MITSUBISHI, and MITSUBISHI, its
Affiliates or sublicensees shall own all submissions in connection therewith.

3.6.2       Interaction
with Regulatory Authorities. 
MITSUBISHI, its Affiliates or sublicensees will be the principal contact
for and will otherwise take the lead role in all 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 18
 

interactions
with Regulatory Authorities concerning a Drug Product in the Territory.  VERTEX, its Affiliates or VERTEX Licensees will
be the principal contact for and will otherwise take the lead role in all
interactions with Regulatory Authorities concerning Bulk Drug Substance or a
Drug Product in the VERTEX Territory.  Each
Party will provide the other Party with prompt notice of all material
correspondence and filings with a Regulatory Authority regarding Bulk Drug
Substance or a Drug Product and, at the other Party’s request and at its
expense, with copies of all such correspondence and filings.

3.6.3       Right
of Cross Reference.  MITSUBISHI hereby
grants VERTEX and its Affiliates or VERTEX Licensees the right to cross
reference, in their regulatory filings made in the VERTEX Territory or in the
Territory, if any, covering Bulk Drug Substance, a Compound or Drug Product,
all regulatory filings, and information contained therein, made in the
Territory by MITSUBISHI or its Affiliates or sublicensees relative to such Bulk
Drug Substance, Compounds or Drug Products. 
VERTEX hereby grants MITSUBISHI and its Affiliates or sublicensees the
right to cross reference, in their regulatory filings made in the Territory
covering a Compound or Drug Product, all regulatory filings, and information
contained therein, made in the VERTEX Territory or in the Territory, if any, by
VERTEX or its Affiliates or VERTEX Licensees relative to such Compounds or Drug
Products.

3.6.4       Regulatory
Reporting.  During the term of this
Agreement, in order to comply with applicable regulations of applicable
Regulatory Authorities, the Parties agree that they shall establish procedures
for reporting to such Regulatory Authorities any adverse events, technical
complaints or other reportable events that may occur with respect to the
manufacture, supply, use, sale or clinical testing of Bulk Drug Substance, a
Compound or Drug Product hereunder. 
Details of such procedures shall be agreed upon by the Parties prior to
the initiation of Phase I Clinical Trials by or on behalf of MITSUBISHI.

3.7            Conduct of the Development Activities.

3.7.1       Standards.  MITSUBISHI and VERTEX agree to perform the
MITSUBISHI Development Activities and the VERTEX Development Activities,
respectively, in accordance with the terms and conditions of this Agreement and
in conformity with generally accepted standards of good laboratory practices
and good clinical practices and with all applicable national, state, regional
and local laws, guidelines, rules and regulations.

3.7.2       Records.  MITSUBISHI and VERTEX shall prepare and
maintain, or have prepared and maintained, complete and accurate written
records, accounts, notes, reports and 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 19
 

data with
respect to all laboratory work conducted in the performance of the MITSUBISHI
Development Activities and the VERTEX Development Activities,
respectively.  MITSUBISHI and VERTEX shall
prepare and maintain, or have prepared and maintained, complete and accurate
written records, data and information with respect to all clinical trials
performed in the conduct of the MITSUBISHI Development Activities and the VERTEX
Development Activities, respectively, as required by all applicable national,
state, regional and local laws, guidelines, rules and regulations.

3.8            Ownership of Technology.

3.8.1       No
Ownership by Employees.  All
employees of MITSUBISHI who are expected to perform the MITSUBISHI Development
Activities have signed, or before any such performance will sign, agreements
with MITSUBISHI regarding proprietary information and inventions in a form
reasonably considered by MITSUBISHI and its counsel to assure MITSUBISHI’s
Control of any intellectual property invented, discovered or developed by such
employees.  All employees of VERTEX who
are expected to perform the VERTEX Development Activities have signed, or
before any such performance will sign, agreements with VERTEX regarding
proprietary information and inventions in a form reasonably considered by VERTEX
and its counsel to assure VERTEX’s Control of any intellectual property
invented, discovered or developed by such employees.

3.8.2       Ownership by Agents or Licensees.  MITSUBISHI shall enter into customary
agreements with its agents and sublicensees that provide that all of such
agents’ or sublicensees’ right, title and interest in, to and under any
intellectual property invented, discovered or developed by such agents or
sublicensees in the performance of the MITSUBISHI Development Activities shall
be assigned or licensed to MITSUBISHI. 
VERTEX shall enter into customary agreements with its agents and VERTEX
Licensees that provide that all of such agents’ or VERTEX Licensees’ right,
title and interest in, to and under any intellectual property invented,
discovered or developed by such agents or VERTEX Licensees in the performance
of the VERTEX Development Activities shall be assigned or licensed to VERTEX.

ARTICLE IV— MANUFACTURE AND SUPPLY

4.1            Supply of Bulk Drug Substance and
Drug Product for Development.  Subject
to Section 6.4, VERTEX shall be responsible for the manufacture and supply of
all Bulk Drug Substance, and MITSUBISHI will be responsible for preparing the
Drug Product from Bulk 

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 20
 

Drug Substance, in each case as necessary for
the conduct of the MITSUBISHI Development Activities in the Territory.  Notwithstanding the above but subject to
Section 6.4, at MITSUBISHI’s request and upon no less than [***], VERTEX agrees to supply that amount of Drug Product
required for MITSUBISHI to conduct the Phase I Clinical Trials, Phase II
Clinical Trials and Phase III Clinical Trials in the Territory (“Investigational Drug Product”).  VERTEX will supply such Bulk Drug Substance and
Investigational Drug Product to MITSUBISHI at the [***].  Supply of Bulk Drug Substance and
Investigational Drug Product for development purposes shall be undertaken
pursuant to the provisions of a supply agreement for the conduct of the MITSUBISHI
Development Activities (the “Development Supply
Agreement”), including such customary representations, warranties,
covenants and conditions as are necessary or appropriate for transactions of
this type, not inconsistent with the terms and conditions hereof and
satisfactory in form and substance to the Parties and their legal advisors.  Within [***] after the
Effective Date, the Parties will negotiate in good faith and separately enter
into the Development Supply Agreement.

4.2            Supply of Bulk Drug Substance and
Drug Product for Commercial Purposes.  Subject
to Section 6.4,  VERTEX will supply
and MITSUBISHI shall purchase from VERTEX all of MITSUBISHI’s requirements for
Bulk Drug Substance for manufacture of Drug Product sold in the Territory
pursuant to the provisions of a supply agreement for Bulk Drug Substance for commercial
purposes (the “Commercial Supply Agreement”),
including such customary representations, warranties, covenants and conditions
as are necessary or appropriate for transactions of this type, not inconsistent
with the terms and conditions hereof and satisfactory in form and substance to
the Parties and their legal advisors. 
Promptly after the Start of the first Phase III Clinical Trial by
MITSUBISHI, the Parties will commence good faith negotiations and separately
enter into the Commercial Supply Agreement. 
MITSUBISHI shall purchase such Bulk Drug Substance from VERTEX in
accordance with the terms of Section 6.3 hereof.  VERTEX may contract with any Third Party as a
manufacturing subcontractor.

4.3            Limitation on Supply Obligation.  Notwithstanding Sections 4.1 or 4.2 hereof,
VERTEX shall have no obligation to supply Bulk Drug Substance or
Investigational Drug Product to MITSUBISHI with respect to a Drug Product
unless VERTEX is developing or commercializing such Drug Product; provided,
however, that if VERTEX has so supplied Bulk Drug Substance to MITSUBISHI
for commercial purposes before VERTEX ceased development or commercialization
of the corresponding Drug Product, then VERTEX shall be obligated to continue
the supply of such Bulk Drug Substance to MITSUBISHI pursuant to the terms set
forth

[***]                 Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 21

in Section 6.4 hereof; provided
further, however, that in any other case where MITSUBISHI wishes to develop
or commercialize a Drug Product that VERTEX is not itself developing or
commercializing,  VERTEX shall grant to
MITSUBISHI a nonexclusive license (or sublicense, as appropriate) under the
VERTEX Technology, with the right to sublicense, to manufacture and have
manufactured Bulk Drug Substance with respect to such Drug Product to the
extent required to use, sell, have sold, offer to sell and import such Drug
Product in the Territory in the Field of Use. 
In such event, at MITSUBISHI’s expense, VERTEX will also deliver to
MITSUBISHI such VERTEX Technology as may then exist (if any) and provide to
MITSUBISHI any applicable technical support in connection therewith that is
reasonably necessary to enable MITSUBISHI to manufacture Bulk Drug Substance in
compliance with any and all current Regulatory Approvals in the Territory.  Such VERTEX Technology shall be delivered to
MITSUBISHI in such a way as to communicate it to MITSUBISHI promptly,
effectively and economically.

4.4            Second Source of
Supply for Bulk Drug Substance.  Within
two (2) years after the receipt of Regulatory Approval for a Drug Product in
the United States, VERTEX agrees to have at least [***]manufacturing
sites, in different geographical locations, approved by the Regulatory
Authorities for the supply of the corresponding Bulk Drug Substance to
MITSUBISHI pursuant to the Commercial Supply Agreement.

4.5            Manufacturing
Technology.  Manufacturing technology
which is Controlled by one Party and which would be useful to the other Party
in discharging its manufacturing obligations hereunder shall be made available
to the manufacturing Party for that purpose, subject to negotiation of a
reasonable compensation arrangement.  If
either Party (a “Contracting Party”)
engages an Affiliate or a Third Party to provide assistance to the Contracting
Party in the development of processes useful for the manufacture of Bulk Drug
Substance or Drug Product, the Contracting Party will make reasonable efforts
to provide that any processes belonging to that Affiliate or Third Party and
made available to the Contracting Party will also be made available to the
other Party on the same terms offered to the Contracting Party.

4.6            Packaging.  MITSUBISHI will be responsible for packaging
the Drug Product and Investigational Drug Product for development purposes and
for commercial sale in the Territory.

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been
filed separately with the Commission.

 22
 

ARTICLE V — COMMERCIALIZATION

5.1            Global Marketing and
Sales.  MITSUBISHI will prepare a
marketing plan in reasonable detail for the launch of any Drug Product in each
country of the Territory, and will provide the plan to VERTEX not later than
ninety (90) days after submission of the initial application for Regulatory
Approval of the Drug Product to a Regulatory Authority in such country of the
Territory.

5.2            Co-Labeling.  The labels, packaging and inserts for the
Drug Product packaged for sale in the Territory, and any promotional materials
therefor, will bear the company names and logos of both MITSUBISHI and VERTEX
with such relative prominence and in such language as are permitted by the
applicable laws, rules, regulations and custom of such country, with the
preference that wherever possible such names and logos shall be of equal
prominence and VERTEX’s name shall be written in the English language.  MITSUBISHI will permit VERTEX to review all
material regulatory filings in the Territory that relate to product labeling,
and all proposed labels, packaging, package inserts and promotional materials
required under the foregoing provisions to bear VERTEX’s name and logo, prior
to the filing of any such material with any Regulatory Authority.

5.3            Trademarks.  Each Party shall have the right to register
and use its own trademark for a Drug Product, respectively.  Notwithstanding the foregoing, in the event
MITSUBISHI wishes to use VERTEX’s trademark for a Drug Product, VERTEX hereby
grants to MITSUBISHI an exclusive, royalty-free license to use VERTEX’s
trademark for a Drug Product for the advertising, promotion, marketing,
distribution and sale of the Drug Product in the Field of Use in the
Territory.  MITSUBISHI shall have the
right to grant sublicenses under the foregoing exclusive license to its
sublicensees pursuant to Section 2.1.2 hereof.

5.4            Due Diligence.  Following the First Commercial Sale of a
Drug Product and until the expiration of this Agreement, MITSUBISHI shall use
diligent and commercially reasonable efforts to keep the Drug Product
reasonably available to the public in the Territory, devoting the same degree
of attention and diligence to such efforts that it devotes to such activities
for other of its products of comparable commercial potential.  MITSUBISHI shall promptly notify VERTEX if it
shall determine that the marketing and sale of the Drug Product in any country
in the Territory is not commercially reasonable or economically profitable or
if for other unforeseen reasons further commercial support of the Drug Product
in any country is no longer prudent or practical.  Within [***] of the
receipt of such notice, VERTEX shall notify MITSUBISHI whether it wishes the
marketing and sale of the Drug Product in such country in the Territory to
continue.  If VERTEX notifies MITSUBISHI
that it does not wish such marketing

[***]      Information redacted pursuant to a
confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 23
 

and sale to continue, then MITSUBISHI
may immediately stop the marketing and sale of the Drug Product in such country
in the Territory.  If VERTEX notifies
MITSUBISHI that it does wish such marketing and sale to continue, then
MITSUBISHI shall continue to market and sell the Drug Product in such country
in the Territory for up to [***]
from the date of MITSUBISHI’s initial notice to VERTEX or such earlier date
upon which VERTEX or a VERTEX Licensee begins to market and sell the Drug
Product in such country.  Upon the
termination of MITSUBISHI’s marketing and sale of the Drug Product in a
country, this Agreement shall be deemed to be amended to delete such country
from the Territory, all rights with respect to such country under this
Agreement shall revert to VERTEX, and the rights and licenses granted by VERTEX
to MITSUBISHI pursuant to this Agreement shall terminate with respect to such
country.  At such time MITSUBISHI, at the
request of VERTEX, shall also assign or otherwise transfer to VERTEX all INDs,
Regulatory Approvals, or applications therefor, with respect to a Compound or
Drug Product in such country, and VERTEX shall have an irrevocable, fully
paid-up nonexclusive license, with the right to sublicense, in such country
under the MITSUBISHI Technology to develop, manufacture, have manufactured,
use, sell, have sold, offer to sell and import Bulk Drug Substance, Compound
and Drug Product.  In addition, at the
request of VERTEX, MITSUBISHI shall assign to VERTEX free of charge all of its
or its Affiliates’ right, title and interest in and to any trademarks used for
a Drug Product in such country, and shall execute, or cause its Affiliates to
execute, such documents of transfer or assignment and perform, or cause its
Affiliates to perform, such acts as may be reasonably necessary to transfer
ownership of such trademarks to VERTEX and to enable VERTEX to continue to
maintain such trademarks at VERTEX’s expense.

ARTICLE VI — PAYMENTS

6.1            License Fee.  In consideration of the grant of the
license set forth in Section 2.1 hereof and in recognition of VERTEX’s
investment in the Compounds prior to the Effective Date, MITSUBISHI will pay to
VERTEX [***] on or before [***].

6.2            Milestone Payments by MITSUBISHI.

6.2.1       Payments.  In consideration of the grant of the license
set forth in Section 2.1 hereof, MITSUBISHI will make the following payments to
VERTEX upon the achievement of any of the following milestones with respect to
a Compound, upon the further terms and conditions set forth below.

[***]      Information redacted pursuant to a
confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 24
 

 

	
  Milestone

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
  1.  First dosing of the first Compound in
  a patient in a Phase Ib Clinical Trial in the VERTEX Territory

  	
   

  	
  US $4,000,000

  
	
  2.  First dosing of the Compound in a
  human in a Phase I Clinical Trial in the Territory

  	
   

  	
  US $3,000,000

  
	
  3.  First  [***]

  	
   

  	
  US $[***]

  
	
  4.  First  [***]

  	
   

  	
  US $[***]

  
	
  5.  First  [***]

  	
   

  	
  US $[***]

  
	
  6.  First  [***]

  	
   

  	
  US $[***]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  US $[***]

  

 

6.2.2       Payments to be Made
Only Once.  Milestone payments are
payable only once with respect to a Compound, but shall be payable with respect
to each Compound that is developed.  If
any milestone is achieved with respect to the development of a Compound, any
previously unpaid lower numbered milestone for the Compound will become
immediately due and payable.  Notwithstanding
the foregoing, if one Compound is replaced in development by the other Compound
after any one or more milestone payments have been paid with respect to the
first Compound, then no comparable milestone payment shall be payable hereunder
with respect to the replacement Compound if that milestone payment has already
been paid with respect to the first Compound.

6.2.3       Timing and Method of
Payments.  Milestone payments shall
be made on or before the [***] following
the occurrence of the event giving rise to the milestone payment obligation
hereunder.  All payments shall be made by
wire transfer in U.S. dollars to the credit of such bank account as may be
designated by VERTEX in writing to MITSUBISHI from time to time.  Any payment which falls due on a date which
is a Saturday, Sunday, MITSUBISHI’s non-working day or a legal holiday in Japan
may be made on the next succeeding day which is not a Saturday, Sunday,
MITSUBISHI’s non-working day or a legal holiday in Japan.

6.3            Commercial Supply of
Drug Product.

6.3.1       Purchase of Bulk
Drug Substance.  Except as otherwise
provided herein,

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 25
 

VERTEX shall supply and MITSUBISHI, its Affiliates and sublicensees
shall purchase from VERTEX pursuant to the Commercial Supply Agreement all of
their respective requirements of Bulk Drug Substance for manufacture of Drug
Product for sale in the Territory.

6.3.2       Supply Price.  In the Commercial Supply Agreement, the
Parties shall determine the percentage of the Net Sales Price(s) for Drug
Product(s) that shall be attributed to the price for Bulk Drug Substance
supplied by VERTEX for the manufacture of such Drug Product(s) sold in the
Territory.

6.3.3       Payment.  Payments due to VERTEX for the supplied Bulk
Drug Substance shall be made by MITSUBISHI within [***]
of receipt from VERTEX of an invoice for the Bulk Drug Substance purchased by
MITSUBISHI under the terms of the Commercial Supply Agreement, and annual
adjustments shall be made within such time periods and applying such procedures
as the Parties may agree to reflect the actual Net Sales Price(s) for the
corresponding Drug Product(s) for each country for that year.  Any net adjustments shall be remitted within [***] of determination to the Party to whom the adjustment
is due.

6.4            Production of Bulk
Drug Substance by MITSUBISHI.  If
VERTEX determines at any time that it does not wish to supply Bulk Drug
Substance or Investigational Drug Product to MITSUBISHI, its Affiliates and
sublicensees, VERTEX shall provide MITSUBISHI (i) [***]
prior written notice of such determination if VERTEX has any Affiliate,
subcontractor, or VERTEX Licensee that manufactures Bulk Drug Substance or
Investigational Drug Product and agrees to supply Bulk Drug Substance or
Investigational Drug Product to MITSUBISHI [***]  [***], or (ii) in a case other than the case set forth in
clause (i) above, [***] prior
written notice; provided, however, that, in the case of clause (ii) set
forth above, VERTEX shall stock sufficient Bulk Drug Substance to permit
MITSUBISHI to manufacture Drug Products or to permit VERTEX to manufacture
Investigational Drug Product for MITSUBISHI for a [***]
and shall supply such Bulk Drug Substance or Investigational Drug Product to
MITSUBISHI for such [***] at a
price equal to [***], but otherwise pursuant to
the terms and conditions of the Commercial Supply Agreement or the Development
Supply Agreement, as applicable. 
Following the expiration of VERTEX’s obligation to supply Bulk Drug
Substance or Investigational Drug Product to MITSUBISHI, the Commercial Supply
Agreement or the Development Supply Agreement, as applicable, shall
terminate.  Upon VERTEX’s notice pursuant
to this Section 6.4 of its determination to discontinue supply, MITSUBISHI
shall have the sole right and responsibility, at its expense, for the
manufacture of all Bulk Drug Substance to meet its, its Affiliates’ and
sublicensees’ requirements in connection with the development and commercial
sale of the

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 26
 

Drug Product in the Territory; provided,
however, that VERTEX shall have the right to so manufacture and supply Bulk
Drug Substance pursuant to its obligation set forth in this Section 6.4.  Upon providing such notice to MITSUBISHI,
VERTEX shall grant to MITSUBISHI a nonexclusive license (or sublicense, as appropriate)
under the VERTEX Technology, with the right to sublicense, to manufacture and
have manufactured Bulk Drug Substance to the extent required to use, sell, have
sold, offer to sell and import Drug Products in the Territory in the Field of
Use.  In such event, at MITSUBISHI’s
expense, VERTEX will also deliver to MITSUBISHI the VERTEX Technology and
provide to MITSUBISHI the technical support in connection therewith reasonably
necessary to enable MITSUBISHI to manufacture Bulk Drug Substance in compliance
with any and all current Regulatory Approvals in the Territory.  Such VERTEX Technology shall be delivered to
MITSUBISHI in such a way as to communicate it to MITSUBISHI promptly,
effectively and economically.

6.5            Royalties on Net Sales
of Drug Product; Sales Reports.

6.5.1       Royalties.  MITSUBISHI shall pay to VERTEX annual
royalties at the rates set forth below, including the percentage of the Net
Sales Price(s) for Drug Product(s) that shall be attributed to the supply price
for Bulk Drug Substance determined by the Parties pursuant to Section 6.3.2:

(a)             [***]

(b)             [***]

(c)             [***]

6.5.2       Royalties  in the Event of Manufacture of Bulk Drug
Substance Pursuant to Sections 4.3 or 6.4.  Notwithstanding Section 6.5.1, in the
event that Bulk Drug Substance is manufactured and supplied pursuant to Sections
4.3 or 6.4 hereof, the rates of the annual royalties to be paid by MITSUBISHI
to VERTEX under this Agreement shall be changed from the rates set forth in
Section 6.5.1 to the rates set forth below:

(a)             [***] ([***]%) of the
first $[***] of annual Net Sales;

(b)             [***] ([***]%) of the
annual Net Sales over $[***] and less
than or equal to $[***]; and

(c)             [***] ([***]%) of the
annual Net Sales over $[***].

6.5.3       Discussion of
Royalty Rate Reduction.  (i) At least [***]
prior to the expiration in a country in the Territory of all VERTEX Patents or
(ii) upon [***]  [***]

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 27
 

6.5.4       Reports.  During the term of this Agreement and after
the First Commercial Sale of a Drug Product in the Territory, MITSUBISHI shall
furnish or cause to be furnished to VERTEX on a quarterly basis a written
report covering such calendar quarter showing (i) the Net Sales Price(s) and
total Net Sales in each country in the Territory during such calendar quarter;
(ii) amounts due VERTEX under Sections 6.5.1 or 6.5.2 hereof with respect to such
Net Sales, and the basis for calculating those amounts due; (iii) withholding
taxes, if any, required by law to be deducted in respect of any such sales or
payments, and evidence of payment thereof; and (iv) dispositions of the Drug
Product other than pursuant to sales for cash. 
With respect to the Net Sales Price(s) of the Drug Product or Net Sales
received in a currency other than U.S. dollars, the Net Sales Price(s) or Net
Sales shall be expressed in the domestic currency of the party making the sale,
together with the U.S. dollar equivalent of the amount, calculated using the
rate reported in the Wall Street Journal
for the purchase of U.S. dollars with such currency on the last business day
for the calendar quarter for which the report is being prepared.  The foregoing quarterly reports shall be due
on or before the forty-fifth (45th)
day following the close of each calendar quarter.  MITSUBISHI will also provide VERTEX, within
ten (10) business days after the end of each calendar quarter, with a report
showing MITSUBISHI’s best estimate of total Net Sales for that calendar quarter
based on information available to MITSUBISHI at the time of the report.

6.5.5       Audit.  MITSUBISHI shall keep and shall cause to be
kept accurate records in sufficient detail to enable the amounts due hereunder
to be determined and to be verified by VERTEX. 
Upon the written request of VERTEX, at VERTEX’s expense and not more
than once in any calendar year, MITSUBISHI shall permit an independent
accountant of national prominence selected by VERTEX, and approved by
MITSUBISHI, to have access during normal business hours to those records of
MITSUBISHI as may be reasonably necessary to verify the accuracy of the sales
reports furnished by MITSUBISHI pursuant to this Section 6.5, in respect of any
calendar year ending not more [***] prior to
the date of such notice.  Such accountant
shall not disclose any information except that which should properly be
contained in a sales report required under this Agreement.  MITSUBISHI 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 three (3) years
following the end of any calendar year, the calculation of amounts payable with
respect to such calendar year,

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 28
 

unless then in dispute, shall be binding and conclusive upon VERTEX,
and MITSUBISHI and its Affiliates and 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 MITSUBISHI
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, MITSUBISHI shall remit or shall
cause its Affiliates or sublicensees to remit to VERTEX within thirty (30) days
after MITSUBISHI’ receipt of such report, (i) the amount of such underpayment
and (ii) if such underpayment exceeds five percent (5%) of the total amount
owed for the calendar year then being 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.

6.5.6       Interest.  In case of any delay in payment by one Party
to the other hereunder, interest at [***] shall be
assessed from the [***] day after
the due date of the payment until the date paid, and shall be due from such
Party upon prior written notice from the other Party.  The applicable [***]
shall be the rate in effect on the [***] day after
the payment is due.

6.6            Withholding Tax.  If during the term of this Agreement,
withholding tax is required by law to be deducted from any payments required to
be made by MITSUBISHI to VERTEX hereunder, (i) such tax will be deducted from
the otherwise remittable royalty after applying for tax rate reduction under
the applicable treaties for avoidance of double taxation, (ii) such tax will be
paid to the proper tax authorities, and (iii) a certificate of tax will be sent
to VERTEX promptly after receipt from the competent tax authority.

6.7            Currency of Payment.  All payments hereunder shall be made in U.S.
dollars.  If at any time legal
restrictions prevent the prompt remittance of any payments with respect to any
country of the Territory where a Drug Product is sold, MITSUBISHI or its
Affiliates or 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.

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 29
 

ARTICLE VII — TECHNOLOGY

7.1            Ownership.  All Know-How invented, discovered or
developed exclusively by either Party or its Affiliates (directly or through
others acting on its behalf) shall be owned and Controlled by such Party,
subject to the provisions of this Agreement. 
All Patents claiming Bulk Drug Substance, a Compound or a Drug Product,
or a method of making or using the same or an improvement to a Patent covering
any of the foregoing, invented by either Party or its Affiliates (directly or
through others acting on its behalf) shall be owned and Controlled by such Party,
subject to the provisions of this Agreement. 
All Know-How and Patents claiming Bulk Drug Substance, a Compound or a
Drug Product, or a method of making or using the same or an improvement to a
Patent covering any of the foregoing, invented, discovered, or developed, as
applicable, jointly by the Parties or their Affiliates (directly or through
others acting on their behalf) shall be owned and Controlled jointly.  Such Know-How that is owned and Controlled
jointly by the Parties or their Affiliates shall be “Joint Know-How,” and such Patents that are owned and
Controlled jointly by the Parties or their Affiliates shall be “Joint Patents.”  For the avoidance of doubt, either Party
shall have the right, including the right to sublicense, to practice and use
the Joint Know-How and the Joint Patents worldwide without any payment to the
other Party.

7.2            Patent Procurement and
Maintenance.  VERTEX shall be
responsible for the preparation, filing, prosecution and maintenance of all
VERTEX Patents and any Joint Patents, and MITSUBISHI shall be responsible for
the preparation, filing, prosecution and maintenance of all MITSUBISHI
Patents.  VERTEX, with the advice of
MITSUBISHI, shall determine the countries in the Territory in which patent applications
for VERTEX Patents will be filed. 
MITSUBISHI, with the advice of VERTEX, shall determine the countries in
the VERTEX Territory in which patent applications for MITSUBISHI Patents will
be filed.  The Parties shall discuss and
determine the countries in the Territory in which patent applications for Joint
Patents will be filed.  If VERTEX decides
not to prosecute, and maintain any VERTEX Patent filed in a country in the
Territory, without first having filed a substitute therefor, VERTEX shall assign
its right, title and interest in and to such VERTEX Patent in such country to
MITSUBISHI free of charge, if MITSUBISHI so desires, and shall execute such
documents of transfer or assignment and perform such acts as may be reasonably
necessary to transfer sole ownership of such VERTEX Patent to MITSUBISHI and to
enable MITSUBISHI to continue prosecution or maintenance of such VERTEX
Patent.  In such case, such VERTEX
Patents shall not be

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 30
 

deemed to be VERTEX Patents
thereafter with respect to such country. 
If MITSUBISHI decides not to prosecute, and maintain any MITSUBISHI
Patent filed in a country in the VERTEX Territory, without first having filed a
substitute therefor, MITSUBISHI shall assign its right, title and interest in
and to such MITSUBISHI Patent in such country to VERTEX free of charge, if VERTEX
so desires, and shall execute such documents of transfer or assignment and
perform such acts as may be reasonably necessary to transfer sole ownership of
such MITSUBISHI Patent to VERTEX and to enable VERTEX to continue prosecution
or maintenance of such MITSUBISHI Patent. 
In such case, such MITSUBISHI Patents shall not be deemed to be
MITSUBISHI Patents with respect to such country.  VERTEX shall provide draft applications for
Joint Patents to MITSUBISHI sufficiently in advance of filing for MITSUBISHI to
have the opportunity to comment thereon. 
VERTEX shall furnish MITSUBISHI with copies of all substantive
communications between VERTEX and applicable patent offices regarding the Joint
Patents.  VERTEX and MITSUBISHI shall
each provide the JDC with periodic reports listing, by name, any VERTEX Patents
or MITSUBISHI Patents, respectively, filed by it in the Territory or the VERTEX
Territory, respectively, along with a general summary of the claims made and
the jurisdictions of filing in the Territory or the VERTEX Territory,
respectively.  Each Party will provide
such assistance as the other Party may reasonably request in order to protect
the other Party’s rights to the Patents for which it is responsible under this
Section 7.2.

7.3            Costs.  VERTEX shall be responsible for paying its
costs incurred for preparation, filing, prosecution and maintenance of the VERTEX
Patents worldwide and of the Joint Patents in the VERTEX Territory.  MITSUBISHI shall be responsible for paying
its costs incurred for preparation, filing, prosecution and maintenance of the
MITSUBISHI Patents worldwide and of the Joint Patents in the Territory.  Either Party may at any time elect, by
written notice to the other Party, to discontinue support for one or more Joint
Patents (a “Discontinued Patent”)
and shall not be responsible for any costs 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
Discontinued Patent, and the Party electing to discontinue support shall
execute such documents of transfer or assignment and perform such acts as may
be reasonably necessary to transfer sole ownership of the Discontinued Patent
to the other Party and enable that Party to file or to continue prosecution or
maintenance of the

[***]                   Information redacted pursuant to a
confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 31
 

Discontinued Patent, if the
other Party elects to do so. 
Discontinuation may be on a country-by-country basis or for a Patent
series in total.

7.4            Infringement Claims by
Third Parties.

7.4.1       Notice.  If the manufacture, import, use, offer to
sell or sale of Bulk Drug Substance, a Compound and/or a Drug Product results
in a claim or reasonable apprehension of a claim against a Party 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.  The Parties shall discuss how to respond to
such Infringement Claim.

7.4.2        Third-Party
Licenses.  If practicing the VERTEX
Technology in connection with the import, use, offer to sell or sale of a
Compound and/or a Drug Product in any country in the Territory would require a
license under a Third Party’s patent, then VERTEX will use reasonable efforts
to obtain a license, with a right to sublicense to MITSUBISHI, under the Third
Party’s patent, under terms reasonably acceptable to both VERTEX and MITSUBISHI.  VERTEX shall grant a sublicense to MITSUBISHI
under such Third Party’s patent, subject to the financial obligation set forth
in this Section 7.4.2.  VERTEX and
MITSUBISHI will equally bear any financial obligation payable pursuant to the
license of a Third-Party patent in the Territory; provided, however,
that VERTEX shall not be required to bear any financial obligation under any
license of such Third-Party patents that together with any other such license
and with any financial obligation pursuant to any voluntary final disposition
of an action under Section 7.4.3 would effectively result in an aggregate
reduction of the royalties on the Net Sales of Drug Products in the country or
countries in the Territory to which such licenses relate by [***].

7.4.3       Discontinued Sales,
License or Defense of Suit.  If the
required license is either unavailable or its terms are unacceptable to either
VERTEX or MITSUBISHI, then MITSUBISHI may elect in its sole discretion to
discontinue sales of the Drug Product in such country in the Territory or to
undertake the defense of an Infringement Claim or the prosecution of a
declaratory judgment action with respect to the Third-Party patents.  The Parties shall share equally all
out-of-pocket costs and expenses incurred in conducting the defense of such
Infringement Claims or the prosecution of such declaratory judgment actions,
including the investigation and settlement thereof; provided, however,
no settlement or consent judgment or other voluntary final disposition of a
suit under this Section 7.4.3 may be entered into without

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 32
 

the joint consent of
VERTEX and MITSUBISHI (which consent shall not be unreasonably withheld).  If MITSUBISHI is conducting the defense of an
Infringement Claim or the prosecution of a declaratory judgment action, and
VERTEX is a party to the action, then VERTEX ‘s defense costs shall be reported
to MITSUBISHI and credited against VERTEX’s share of overall defense
costs.  VERTEX and MITSUBISHI will
equally bear any financial obligation payable pursuant to a settlement, consent
judgment or other voluntary final disposition of an action pursuant to this Section
7.4.3; provided, however, that VERTEX shall not be required to bear any
financial obligation under any such voluntary final disposition of an action
under this Section 7.4.3 that together with any other such voluntary final
dispositions and any licenses of Third-Party patents pursuant to Section 7.4.2
would effectively result in an aggregate reduction of the royalties on the Net
Sales of Drug Products in the country or countries in the Territory to which
such licenses relate [***]

7.5            Infringement Claims
against Third Parties.

7.5.1       Protection of
Technology.  VERTEX and MITSUBISHI
each agree to take reasonable actions to protect the VERTEX Technology and the
MITSUBISHI Technology, respectively, from infringement and from unauthorized
possession or use.

7.5.2       Infringement of
Technology.  If any VERTEX Patents,
MITSUBISHI Patents or Joint Patents are infringed or claimed to be invalid or
VERTEX Know-How, MITSUBISHI Know-How or Joint Know-How is misappropriated, as
the case may be, by a Third Party, the Party first having knowledge of such
infringement, claim or misappropriation, or knowledge of a reasonable
probability of such infringement, claim or misappropriation, shall promptly
notify the other in writing.  The notice
shall set forth the facts of such infringement, claim or misappropriation in
reasonable detail.  The owner of the
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, claimed invalidity or misappropriation of such
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 Party having the primary right or responsibility to institute,
prosecute, and control such action or proceeding fails to do so within a period
of ninety (90) days after receiving notice of the infringement, claim or
misappropriation, the other Party shall have the right to bring and control any
such action or proceeding by counsel of its own choice; provided, however,
that such right shall only apply to MITSUBISHI with respect to VERTEX
Technology, Joint Patents and/or Joint Know-How in the Territory and such right
shall only apply to VERTEX

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 33
 

with respect to MITSUBISHI Technology in the VERTEX Territory.  In such circumstances, the Party which had
the primary responsibility shall have the right, at its own expense, to be
represented in any such action or proceeding 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.  In any case the second Party shall provide
all reasonable cooperation to the first Party in connection with such action or
proceeding.  The costs and expenses of
all suits brought by a Party under this Section 7.5.2 shall be reimbursed to
such Party and to the other Party, if it participates in or provides
cooperation with respect to such suit, pro rata, out
of any damages or other monetary awards recovered therein in favor of VERTEX or
MITSUBISHI.  If any balance remains, the
Party taking such actions shall retain such balance.  No settlement or consent judgment or other
voluntary final disposition of a suit under this Section 7.5.2 may be entered
into without the joint consent of VERTEX and MITSUBISHI (which consent shall
not be unreasonably withheld).

7.6            Patent Term
Extensions.  The Parties shall
cooperate in good faith with each other in gaining patent term extension in the
Territory to VERTEX Patents, Joint Patents and MITSUBISHI Patents covering a
Compound or Drug Product.  MITSUBISHI 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, and by VERTEX for Joint Patents.

ARTICLE VIII — REPRESENTATIONS
AND WARRANTIES

8.1            Representations and
Warranties of VERTEX.  As of the
Effective Date, VERTEX represents and warrants to MITSUBISHI as follows:

(a)           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.  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.  The execution, delivery and performance of
this Agreement does not breach, violate, contravene or constitute a default
under any contracts, arrangements or commitments to which VERTEX is a party or
by which it is bound nor does the execution, delivery and performance of this
Agreement by VERTEX violate any order, law or

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 34
 

regulation of any court, governmental body or
administrative or other agency having authority over it.

(b)            No Third-Party
Rights.  VERTEX owns or possesses
adequate licenses or other rights to use the VERTEX Technology in the Field of
Use in the Territory and to grant the licenses and rights herein.

(c)            Third-Party Patents.  Except as disclosed in writing between the Parties,
VERTEX is not aware of any issued patents or pending patent applications that,
if issued, would be infringed by the development, manufacture, use, import,
offer to sell or sale of any Compound, Bulk Drug Substance or Drug Product in
the Territory pursuant to this Agreement.

(d)            Chiron Patents.  VERTEX’s research activities that produced
the Compounds are covered by a license granted to VERTEX by Chiron Corporation
under certain intellectual property with respect to the hepatitis C virus (HCV).
 Vertex is not aware of any further
license that would be required from Chiron Corporation to permit MITSUBISHI to
develop and commercialize the Compounds and the Drug Products pursuant to this
Agreement.

8.2          Representations and
Warranties of MITSUBISHI.  As of the
Effective Date, MITSUBISHI represents and warrants to VERTEX that this Agreement
has been duly executed and delivered by MITSUBISHI and constitutes the valid
and binding obligation of MITSUBISHI, enforceable against MITSUBISHI 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.  The execution,
delivery and performance of this Agreement have been duly authorized by all
necessary action on the part of MITSUBISHI, its officers and directors.  The execution, delivery and performance of
this Agreement does not breach, violate, contravene or constitute a default
under any contracts, arrangements or commitments to which MITSUBISHI is a party
or by which it is bound nor does the execution, delivery and performance of
this Agreement by MITSUBISHI violate any order, law or regulation of any court,
governmental body or administrative or other agency having authority over it.

ARTICLE IX — CONFIDENTIALITY

9.1            Undertaking.  Each Party shall keep confidential, and
other than as provided herein, shall not use or disclose, directly or
indirectly, any trade secrets, other knowledge, information, documents or
materials, owned or Controlled by the other Party, which have been

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 35
 

disclosed (in tangible or
electronic form or as evidenced by meeting minutes or similar materials) to
such Party after the Effective Date and designated confidential by the
disclosing Party (any such information, “Confidential
Information”).  All VERTEX
Know-How and VERTEX Patents shall be deemed Confidential Information of VERTEX;
all MITSUBISHI Know-How and MITSUBISHI Patents shall be deemed Confidential
Information of MITSUBISHI; and all Joint Know-How and Joint Patents shall be
deemed Confidential Information of both Parties.  Neither VERTEX nor MITSUBISHI shall use such
Confidential Information of the other Party or jointly owned by the Parties for
any purpose, including the filing of patent applications containing such
information, without the other Party’s consent (which shall not be unreasonably
withheld), other than for conducting the MITSUBISHI Development Activities or
VERTEX Development Activities or as otherwise permitted under this Agreement.

9.1.1       Nondisclosure and Nonuse.  Each Party shall take any and all lawful
measures to prevent the unauthorized use and disclosure of Confidential
Information of the other Party or jointly owned by the Parties, and to prevent
unauthorized Persons from obtaining or using such Confidential Information.

9.1.2       Disclosure to Affiliates
and Agents.  Each Party will refrain
from directly or indirectly taking any action which would constitute or
facilitate the unauthorized use or disclosure of Confidential Information of
the other Party or jointly owned by the Parties.  Each Party may disclose Confidential
Information of the other Party or jointly owned by the Parties to its
Affiliates, its and their officers, employees and agents, to authorized
licensees and sublicensees and to subcontractors in connection with the
development of a Compound or the manufacture of Bulk Drug Substance or a Drug
Product, but only 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
Confidential Information, which by their terms shall be enforceable by
injunctive relief at the request of the disclosing Party.

9.1.3       Liability.  Each Party shall be liable for any
unauthorized use and disclosure of Confidential Information of the other Party
or jointly owned by the Parties by its Affiliates, its and their officers,
employees and agents and any licensees, sublicensees and subcontractors.

9.2            Exceptions.  Notwithstanding the foregoing, the provisions
of Section 9.1

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 36
 

hereof shall not apply to
Confidential Information which the receiving Party can conclusively establish:

(i)            has entered the public
domain without such Party’s or its Affiliates’ breach of any obligation owed to
the disclosing Party;

(ii)           is permitted to be
disclosed by the prior written consent of the disclosing Party;

(iii)          has become known to the
receiving Party or any of its Affiliates from a source other than the
disclosing Party, other than by breach of an obligation of confidentiality owed
to the disclosing Party;

(iv)           is disclosed by the
disclosing Party to a Third Party without restrictions on its disclosure;

(v)            is independently
developed by the receiving Party or its Affiliates without use of or reference
to the Confidential Information, as evidenced by contemporary written records;

(vi)           is required to be
disclosed by the receiving Party to seek Regulatory Approval pursuant to this
Agreement, provided that the receiving Party takes reasonable and lawful
actions to avoid or minimize the degree of such disclosure and to have
confidential treatment accorded to any Confidential Information disclosed; or

(vii)         is required to be
disclosed by the receiving Party to comply with applicable laws or regulations,
or to defend or prosecute litigation, provided that the receiving Party takes
reasonable and lawful actions to avoid or minimize the degree of such
disclosure, to have confidential treatment accorded to any Confidential
Information disclosed and provides prior written notice to the disclosing Party
within a time period sufficiently prior to such disclosure to permit the
disclosing Party to apply for a protective order or take other appropriate
action to restrict disclosure.  The
receiving Party shall fully cooperate with the disclosing Party in connection
with the disclosing Party’s efforts to obtain any such remedy.

9.3            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.  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 MITSUBISHI, except as may be required by applicable
laws, regulations, or judicial order, without first obtaining the approval of
the other Party and

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 37
 

agreement upon the nature,
text, and timing of such announcement, which approval and agreement shall not
be unreasonably withheld.

9.4            Survival.  The provisions of this Article IX shall
survive the termination of this Agreement and shall extend for a period of five
(5) years thereafter.

ARTICLE X — DISPUTE RESOLUTION

10.1         Governing Law and
Jurisdiction.  This Agreement shall
be governed by and construed in accordance with the internal laws of the State
of New York and of the United States of America, without giving effect to the
doctrine of conflict of laws.

10.2         Dispute Resolution
Process.

10.2.1     Joint Steering
Committee.  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, refer such
dispute to the JDC, and failing resolution of the controversy or claim within
thirty (30) days after such referral, the matter shall be referred to a joint
steering committee (the “Joint Steering
Committee”) established by the Parties comprising one (1)
representative of each Party, who shall be appointed (and may be replaced at
any time) by such Party on notice to the other Party in accordance with this
Agreement.  Any matters originating with
the JDC on which it is unable to reach consensus within thirty (30) days after the
initial discussion thereof shall also be referred to the Joint Steering
Committee.  Each Party’s representative
to the Joint Steering Committee shall be an executive officer of the respective
Party.  The Joint Steering Committee will
meet as needed and agreed by the Joint Steering Committee to resolve
controversy or claims referred to it by the JDC and to conduct such other
activities as the Joint Steering Committee may deem appropriate.  Each member of the Joint Steering Committee
shall have one vote in decisions, with decisions made by unanimous vote.  If the Joint Steering Committee is unable to
resolve the controversy or claim within thirty (30) days of its referral to it,
then those matters with respect to which MITSUBISHI or VERTEX have final decision
making authority as described in Section 3.1.3 shall be referred to the
applicable Party for decision.  All other
matters shall be referred to the Chief Executive Officer of VERTEX and the
Chief Executive Officer of MITSUBISHI for resolution pursuant to Section 10.2.2
hereof.

10.2.2     Chief Executive
Officer Resolution and Arbitration. 
Any matter that the

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

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Joint Steering Committee is unable to resolve pursuant to Section
10.2.1 that is not subject to resolution pursuant to Section 3.1.3 shall be
referred to the Chief Executive Officer of VERTEX and the Chief Executive
Officer of MITSUBISHI 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 [***] of the date of initial referral of the dispute to the
JDC or the initial discussion of the disputed matter by the JDC, as applicable,
such controversy or claim shall be finally settled by arbitration in accordance
with the rules of Conciliation and Arbitration of the International Chamber of
Commerce (the “Rules”).  Either Party may initiate such arbitration
proceeding.  Such arbitration shall be conducted
in Cambridge, Massachusetts if such arbitration is requested by MITSUBISHI, or in
Tokyo, Japan if such arbitration is requested by VERTEX, in either case, in
English by a tribunal of three independent and impartial arbitrators, one of
which will be appointed by each of VERTEX and MITSUBISHI, and the third of
which shall have had both training and experience as a mediator of
pharmaceutical industry licensing and other general commercial matters.  If the parties to this Agreement cannot agree
on the third arbitrator, then the third arbitrator will be selected in
accordance with the Rules and the criteria set forth in the preceding
sentence.  Any award ordered by the
tribunal must be rendered in a writing, which writing must include an
explanation of the reasons for such award. 
All fees, costs and expenses of the arbitrators, and all other costs and
expenses of the arbitration, will be shared equally by the Parties unless the
tribunal in the award assesses such costs and expenses against one of the
Parties or allocates such costs and expenses other than equally between such
Parties.  Pending the award of the
arbitration tribunal, the Parties shall continue to perform their respective
obligations under this Agreement. 
Notwithstanding the foregoing, either Party may, on good cause shown,
seek a temporary restraining order and/or a preliminary injunction from a court
of competent jurisdiction, to be effective pending the institution of the
arbitration process or the deliberation and award of the arbitration tribunal.

ARTICLE XI — TERM AND TERMINATION

11.1         Term.  The term of this Agreement shall extend
with respect to a Drug Product in a particular country from the Effective Date
until the later of:  (a) the last to
expire or be invalidated or abandoned of any VERTEX Patents containing a Valid
Patent Claim covering the Drug Product, a Compound included in a Drug Product
or a method of making or using the same in that country; or (b) ten (10) years
from the date of First Commercial Sale of the Drug Product in that country,
unless the Agreement is terminated at an earlier date pursuant to

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 39
 

Sections 11.2, 11.3 or 11.4
hereof.

11.2         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 breach by such other Party of any of its material
obligations under this Agreement, provided that such termination shall become
effective only if the breaching Party shall fail to remedy or cure the breach,
or to initiate steps to remedy the same to the other Party’s reasonable
satisfaction, within such sixty (60) day period.

11.3         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 thirty (30)
days’ prior 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 ninety (90) days of such
appointment; (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 ninety (90) days
of filing.

11.4         Termination by
MITSUBISHI.  MITSUBISHI may terminate
this Agreement at any time upon sixty (60) days’ prior written notice to VERTEX.  MITSUBISHI’s obligation of sharing the Core
Development Costs incurred by or on behalf of VERTEX or a VERTEX Licensee pursuant
to Section 3.3 shall not apply to any non-clinical or clinical studies which
Start after the date of such notice and [***]   In the event of such termination, MITSUBISHI,
at the request of VERTEX, shall assign or otherwise transfer to VERTEX all
INDs, Regulatory

[***]                   Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

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Approvals, or applications
therefor, with respect to a Compound or Drug Product, and VERTEX shall have an
irrevocable, worldwide, fully paid-up nonexclusive license, with the right to
sublicense, under the MITSUBISHI Technology to develop, manufacture, have
manufactured, use, sell, have sold, offer to sell and import Bulk Drug
Substance, Compound and Drug Product.  In
addition, at the request of VERTEX, MITSUBISHI shall assign to VERTEX free of
charge all of its or its Affiliates’ right, title and interest in and to any
trademarks used for a Drug Product in the Territory, and shall execute, or
cause its Affiliates to execute, such documents of transfer or assignment and
perform, or cause its Affiliates to perform, such acts as may be reasonably
necessary to transfer ownership of such trademarks to VERTEX and to enable
VERTEX to continue to maintain such trademarks at VERTEX’s expense.

11.5         Effect of
Termination.  If this Agreement is
not terminated at an earlier date, then upon its expiration in accordance with
Section 11.1 hereof in a given country MITSUBISHI shall have an irrevocable,
fully paid-up nonexclusive license, with the right to sublicense, in such
country under the VERTEX Know-How to develop, manufacture, have manufactured,
use, sell, have sold, offer to sell and import the Bulk Drug Substance, Compound
and Drug Product.  If this Agreement is
not terminated at an earlier date, then upon its expiration in accordance with
Section 11.1 hereof in all countries in the Territory, MITSUBISHI shall have an
irrevocable, fully paid-up nonexclusive license, with the right to sublicense,
in the Territory under the VERTEX Know-How to develop, manufacture, have
manufactured, use, sell, have sold, offer to sell and import the Bulk Drug
Substance, Compound and Drug Product.  If
this Agreement is not terminated at an earlier date, then upon its expiration
in accordance with Section 11.1 hereof, VERTEX shall have an irrevocable,
worldwide fully paid-up nonexclusive license, with the right to sublicense,
under the MITSUBISHI Know-How to develop, manufacture, have manufactured, use,
sell, have sold, offer to sell and import the Bulk Drug Substance, Compound and
Drug Product.  Upon any termination of
this Agreement pursuant to Sections 11.2 or 11.3 hereof, MITSUBISHI shall have
the right to sell its inventory of Drug Product for a period of six (6) months
from the date of termination provided MITSUBISHI complies with the provisions
of Sections 6.5 through 6.7 hereof.  If
the license granted to MITSUBISHI under Section 2.1 hereof is terminated for
any reason, at VERTEX’s election, following good faith discussion with such
sublicensee, any of MITSUBISHI’s sublicensees at such time (other than an
Affiliate of MITSUBISHI) shall continue to have the rights and license set
forth in their sublicense agreements; provided, however, that such
sublicensee agrees in writing that VERTEX is entitled to enforce all relevant
terms and conditions of such sublicense agreement

[***]      Information redacted pursuant to a
confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 41

directly against such
sublicensee.  Termination of this
Agreement for any reason, or expiration of this Agreement, will not affect: (i)
obligations, including the obligation for payment of any supply payments or
royalties, 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 including obligations
pursuant to Articles VI, VII, IX, X, XI, XII and XIII, to the extent applicable.  Any right to terminate this Agreement shall
be in addition to and not in lieu of all other rights or remedies that the
Party giving notice of termination may have at law or in equity or otherwise.

ARTICLE XII — INDEMNIFICATION

12.1                             Indemnification
by VERTEX.  VERTEX shall indemnify
and hold MITSUBISHI,  its Affiliates, and
their employees, officers, directors and agents harmless from and against any
loss, damage, action, suit, claim, demand, liability, judgment, cost or expense
(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, importation, offer to sell, storage or
handling of Bulk Drug Substance, a Compound or a Drug Product by VERTEX,  its Affiliates, the VERTEX Licensees or their
representatives, agents, sublicensees 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

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

provided,
however, that the foregoing indemnification and hold
harmless obligation shall not apply to any Loss to the extent such Loss is
caused by the negligent or willful misconduct of MITSUBISHI, its Affiliates, or
their employees, officers, directors, agents, representatives, licensees,
sublicensees or subcontractors.

12.2                             Indemnification
by MITSUBISHI.  MITSUBISHI shall
indemnify and hold VERTEX, [***], their
Affiliates, and their and their Affiliates’ employees, officers, directors and
agents, harmless from and 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, importation, offer to sell,

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 42
 

storage or handling of Bulk Drug Substance, a
Compound or a Drug Product by MITSUBISHI, its Affiliates or their
representatives, agents, licensees, sublicensees 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

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

provided,
however, that the foregoing indemnification and hold
harmless obligation shall not apply to any Loss to the extent such Loss is
caused by the negligent or willful misconduct of VERTEX, its Affiliates the
VERTEX Licensees or their employees, officers, directors, agents,
representatives, sublicensees or subcontractors; and provided further,
however, that [***].

12.3                             Claims
Procedures.  Each Party entitled to
be indemnified by the other Party (an “Indemnified
Party”) pursuant to Section 12.1 or 12.2 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 or demand as to which indemnity may be sought, and shall permit
the Indemnifying Party to assume the defense of any such claim or demand or any
litigation resulting therefrom; provided that:

(a)                       Counsel for
the Indemnifying Party, who shall conduct the defense of such claim, demand 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 all Indemnified Parties, which law firm shall
be subject to approval, not to be unreasonably withheld, by the Indemnifying
Party);

(b)                       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;

(c)                     No
Indemnifying Party, in the defense of any such claim. demand 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 

[***]      Information redacted
pursuant to a confidential treatment request. 
An unredacted version of this exhibit has been filed separately with the
Commission.

 43
 

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.  The Indemnified Party shall have no right to
settle or compromise any such claim, demand or litigation without the
Indemnifying Party’s prior written consent; and

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

12.4                             Limitation
of Liability.  Except with respect to
Third-Party actions, suits, claims or demands subject to indemnification
pursuant to Sections 12.1 and 12.2 above, neither Party shall be liable to the
other for indirect, incidental, special, punitive, exemplary or consequential
damages arising out of or resulting from this Agreement.

12.5                             Insurance.  Each Party shall maintain and keep in force
for the term of this Agreement insurance that shall be adequate to cover its
indemnification obligations hereunder and that is commensurate with the
insurance that such Party maintains with respect to other comparable
pharmaceutical or biotechnology products it is developing and/or
commercializing.  It is understood that
such insurance shall not be construed to limit a Party’s liability with respect
to such indemnification obligations. 
Such insurance shall be placed with a first class insurance carrier with
at least a BBB rating by Standard & Poor.

ARTICLE XIII— MISCELLANEOUS PROVISIONS

13.1                             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 that or any other right or remedy on any subsequent occasion.

13.2                             Force
Majeure.  Neither Party will be in
breach hereof by reason of its delay in the performance of or failure to
perform any of its obligations hereunder, if that delay or failure is caused by
fire, floods, embargoes, war, terrorism, insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, sabotage, acts of
God, omissions or delays in acting by any governmental authority, acts of a
government or agency thereof or judicial orders or decrees, or any similar
cause beyond its control and without its fault or negligence; provided,
however, the Party claiming force majeure shall promptly notify the other Party
of the existence 

[***]      Information redacted
pursuant to a confidential treatment request. 
An unredacted version of this exhibit has been filed separately with the
Commission.

 44
 

of such force majeure, shall
use its best efforts to avoid or remedy such force majeure and shall continue
performance hereunder with the utmost dispatch whenever such force majeure is
avoided or remedied.

13.3                             Registration
of License.  MITSUBISHI may, at its
expense, register the license granted under this Agreement in any country where
the use, sale, importation, offer to sell or manufacture of a Drug Product in
such country would be covered by a Valid Patent Claim.  Upon request by MITSUBISHI, VERTEX agrees
promptly to execute any “short form” licenses submitted to it by MITSUBISHI 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.

13.4                             Severability.  Should one or more provisions of this
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 Agreement with
those new provisions.  If the Parties are
unable to agree on such valid provisions, the invalidity of such one or more
provisions of this Agreement shall nevertheless not affect the validity of the
Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it may be reasonably presumed that the
Parties would not have entered into this Agreement without the invalid
provisions.

13.5                             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 MITSUBISHI 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 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 Agreement.

13.6                             Government
Approvals.  Each Party will obtain
any government approval required in its country of domicile, or under any
treaties or international agreements to which its country of domicile is a
signatory, 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 government approval, and will
cooperate with the other Party in any such efforts.

[***]      Information redacted
pursuant to a confidential treatment request. 
An unredacted version of this exhibit has been filed separately with the
Commission.

 45
 

13.7                             Assignment;
Successors and Assigns.  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 the assets and business to which this Agreement relates or in the event of
its merger or consolidation with another company.  To the extent any rights and/or obligations
of a Party are held by an Affiliate of such Party then any business
transaction, change in control of a majority of the voting power or other event
that, in each case, causes such Affiliate to cease to be an Affiliate of the Party,
shall be deemed an assignment of the rights and/or obligations held by such
former Affiliate and require prior written consent of the other Party.  Any purported assignment in contravention of
this Section 13.7 shall, at the option of the nonassigning Party, be null and
void and of no effect.  No assignment
shall release either Party from responsibility for the performance of any of
its accrued obligations hereunder.  This Agreement shall be binding
upon and enforceable against the successor to or any permitted assignee of
either of the Parties hereto.

13.8                             Export
Controls.  This Agreement is made
subject to any restrictions concerning the export of materials and technology
from the United States which may be imposed upon either Party to this Agreement
from time to time by the United States Government.  In the event any such restrictions are
imposed after the Effective Date and thereby render any provisions of this
Agreement invalid or unenforceable, the provisions of Section 13.4 of this
Agreement shall be applicable to those provisions.  MITSUBISHI will not export, directly or
indirectly, any VERTEX Technology or any Bulk Drug Substance, Compounds or Drug
Products utilizing such technology to any countries for which the United States
Government or any agency thereof at the time of such 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 applicable agency of
the United States Government in accordance with the applicable statute or
regulation.

13.9                             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.

[***]      Information redacted
pursuant to a confidential treatment request. 
An unredacted version of this exhibit has been filed separately with the
Commission.

 46
 

13.10                      Counterparts.  This Agreement may be signed in any
number of counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such counterparts together
shall constitute the same agreement.

13.11                      No Agency.  Nothing herein contained shall be deemed to
create an agency, joint venture, amalgamation, partnership or similar
relationship between MITSUBISHI 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 in connection with or relating to the obligations of each Party
under this Agreement shall be made, undertaken, incurred or paid exclusively by
that Party on its own behalf, and not as an agent or representative of the
other Party.

13.12                      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 air courier (which shall be deemed received
by the other Party on the second (2nd) business day following deposit with the
air courier company), or by facsimile transmission, or other electronic means
of communication (which shall be deemed received when transmitted), with
confirmation by air courier, sent by the close of business on or before the
next following business day:

If to MITSUBISHI, at:

Mitsubishi Pharma
Corporation

6-9, Hiranomachi 2 Chome,
Chuo-ku

Osaka 541-0046, Japan

Fax:  81-6-6227-4702

Attention:  General Manager of Corporate Licensing
Department

If to VERTEX, at:

Vertex Pharmaceutical Incorporated

130 Waverly Street

Cambridge, MA U.S.A. 02139-4211

Fax: 
617-444-7117

Attention:  General Counsel

13.13                      Headings.  The article, section and paragraph headings
are for convenience of reference only and will not be deemed to affect in any
way the language of the provisions to which they refer.

13.14                      Entire
Agreement.  This Agreement, including
the Schedules appended hereto,

[***]      Information redacted
pursuant to a confidential treatment request. 
An unredacted version of this exhibit has been filed separately with the
Commission.

 47
 

contains the entire
understanding of the Parties relating to the matters referred to herein and may
only be amended by a written document referencing this Agreement, duly executed
on behalf of the respective Parties.

13.15                      Rules of
Construction.  The use in this
Agreement of the terms “include” or “including” means “include, without
limitation” or “including, without limitation,” respectively.

[Signature Page Follows]

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 48
 

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

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTEX
  PHARMACEUTICALS INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Joshua S. Boger

  	
   

  
	
   

  	
  Name: Joshua S.
  Boger, Ph.D.

  
	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Witness

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Vicki L. Sato

  	
   

  
	
   

  	
  Name: Vicki L.
  Sato, Ph.D.

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MITSUBISHI
  PHARMA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Teruo Kobori

  	
   

  
	
   

  	
  Name: Teruo
  Kobori

  
	
   

  	
  Title: President
  & Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Witness

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Akihiro Tobe

  	
   

  
	
   

  	
  Name: Akihiro
  Tobe, Ph.D.

  
	
   

  	
  Title: Managing
  Executive Officer, Division Manager, Strategic Planning Division

  
								

 

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 49
 

Schedule 1.33

MITSUBISHI Patents

None as of the Effective Date.

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 50
 

Schedule 1.49

Territory

[***]

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 51
 

Schedule 1.56

VERTEX
Patents

	
  DOCKET NO

  	
   

  	
  SERIAL NO

  	
   

  	
  PATENT NO

  	
   

  	
  TITLE

  	
   

  	
  COUNTRY

  	
   

  	
  STATUS

  	
   

  	
  FILED

  	
   

  	
  ISSUED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 CN

  	
   

  	
  01815055.1

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE 

  INHIBITORS

  	
   

  	
  CHINA

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 EA

  	
   

  	
  200300318

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  EURASIA

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 HK

  	
   

  	
  Awaiting 

  confirmation

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  HONG KONG

  	
   

  	
  PENDING

  	
   

  	
  Awaiting
  confirmation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 ID

  	
   

  	
  W-00
  200300420

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  INDONESIA

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 JP

  	
   

  	
  2002-523884

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  JAPAN

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 KR

  	
   

  	
  10-2003-700-

  2880

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  SOUTH KOREA

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 MY

  	
   

  	
  PI20014137

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  MALAYSIA

  	
   

  	
  PENDING

  	
   

  	
  9/3/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 PH

  	
   

  	
  1-2003-500074

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  PHILIPPINES

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 SG

  	
   

  	
  200300451-2

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  SINGAPORE

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 TH

  	
   

  	
  068019

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  THAILAND

  	
   

  	
  PENDING

  	
   

  	
  8/30/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 TW

  	
   

  	
  90121629

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  TAIWAN

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/00-131 VN

  	
   

  	
  1-2003-00183

  	
   

  	
   

  	
   

  	
  PEPTIDOMIMETIC
  PROTEASE INHIBITORS

  	
   

  	
  VIET NAM

  	
   

  	
  PENDING

  	
   

  	
  8/31/01

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/96-11 CN

  	
   

  	
  97180151.7

  	
   

  	
   

  	
   

  	
  INHIBITORS
  OF SERINE PROTEASES, PARTICULARLY HEPATITIS C VIRUS NS3 PROTEASE

  	
   

  	
  CHINA

  	
   

  	
  ALLOWED

  	
   

  	
  10/17/1997

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VPI/96-11 EA

  	
   

  	
  199900388

  	
   

  	
  001915

  	
   

  	
  INHIBITORS
  OF SERINE PROTEASES, PARTICULARLY HEPATITIS 

  C VIRUS NS3 PROTEASE

  	
   

  	
  EURASIAN PATENT OFFICE

  	
   

  	
  ISSUED

  	
   

  	
  10/17/1997

  	
   

  	
  10/22/01

  

 

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 52
 

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 53
 

Schedule 1.59

VX-905[***]

[***]

[***]      Information
redacted pursuant to a confidential treatment request.  An unredacted version of this exhibit has
been filed separately with the Commission.

 54
 

Schedule 1.60

VX-950

[***]      Information redacted pursuant to a confidential treatment
request.  An unredacted version of this
exhibit has been filed separately with the Commission.

 55Exhibit
10.3

EMPLOYMENT AGREEMENT

AGREEMENT,
made and entered into as of the 29th day of June, 2007, by and between Vertex
Pharmaceuticals Incorporated, a Massachusetts corporation (together with its
successors and assigns, the “Company”), and Kurt Graves (the “Executive”).

W IT N E
S S E T H

WHEREAS,
the Company has offered to employ the Executive as the Executive Vice
President, Chief Commercial Officer and Head, Strategic Development of the
Company;

WHEREAS,
the Company and the Executive desire to enter into an employment agreement,
which shall set forth the terms of such employment (this “Agreement”);
and

WHEREAS,
the Executive desires to enter into this Agreement and to accept such
employment, subject to the terms and provisions of this Agreement.

NOW, THEREFORE,
in consideration of the promises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (each individually a “Party”,
and together the “Parties”) agree as follows:

1. DEFINITIONS.

(a) “Base
Salary” shall mean the Executive’s base salary in accordance with Section 4
below.

(b) “Board”
shall mean the Board of Directors of the Company.

(c) “Cause”
shall mean (i) the Executive is convicted of a crime involving moral turpitude,
or (ii) the Executive commits a material breach of any provision of this
Agreement not involving the performance or nonperformance of duties, or (iii)
the Executive, in carrying out his duties, acts or fails to act in a manner
which is determined, in the sole discretion of the Board, after written notice
of any such act or failure to act and a reasonable opportunity to cure the
deficiency has been provided to the Executive, to be (A) willful gross neglect
or (B) willful gross misconduct resulting, in either case, in material harm to
the Company unless such act, or failure to act, was believed by the Executive,
in good faith, to be in the best interests of the Company.

(d) a “Change
of Control” shall be deemed to have occurred if either:

(i)                            any
“person” or “group” as such terms are used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the “Act”), becomes a beneficial owner, as
such term is used in Rule 13d-3 promulgated under the Act, of securities of the
Company representing more than 50% of the combined voting power of the
outstanding securities of the Company having the right to vote in the election
of directors (any such owner being herein referred to as an “Acquiring
Person”);

(ii)                         a
majority of the Company’s Board at any time during the term of this Agreement
consists of individuals other than individuals nominated or approved by a
majority of the Disinterested Directors; or

(iii)                      all
or substantially all the business or assets of the Company are sold or disposed
of, or the Company or a Subsidiary of the Company combines with another company
pursuant to a merger, consolidation, or other similar transaction, other than
(1) a transaction solely for the purpose of reincorporating the company in a
different jurisdiction or recapitalizing or reclassifying the Company’s stock,
or (2) a merger or consolidation in which the shareholders of the Company
immediately prior to such merger or consolidation continue to own at least a
majority of the outstanding voting securities of the Company or the surviving
entity immediately after the merger or consolidation.

(e) “Common
Stock” shall mean the common stock of the Company.

(f) “Competitive
Activity” shall mean engagement directly or indirectly, individually or
through any corporation, partnership, joint venture, trust, limited liability
company or person, as an officer, director, employee, agent, consultant,
partner, proprietor, shareholder or otherwise, in any business associated with
the biopharmaceutical or pharmaceutical industry which materially competes with
the products then under development by, or being marketed, distributed or
licensed by, the Company, or any of its affiliates, at any place in which it,
or any such affiliate, is then conducting its business, or at any place where
products manufactured or sold by it, or any such affiliate, are offered for
sale, or any place in the United States or any possessions or protectorates
thereof, provided, however, that ownership of five percent (5%) or less of the outstanding
voting securities or equity interests of any company shall not in itself be
deemed to be competition with the Company.

(g) “Disability” or “Disabled”
shall mean a disability as determined under the Company’s long-term disability
plan or program in effect at the time the disability first occurs, or if no
such plan or program exists at the time of disability, then a “disability” as
defined under Internal Revenue Code (“Code”) Section 22(e)(3); provided
that, solely for purposes of determining whether any amount that is
payable other than upon termination of employment can be made as a result of
disability consistent with the provisions of Code Section 409A, the following
definition of “Disability” or “Disabled” shall apply:  an individual is “Disabled”  or has a “Disability” if he is unable
to engage in any substantial gainful activity because of any medically
determinable physical or mental impairment that can be expected to result in
death or last for a continuous period of no less than 12 months. Alternatively,
an individual is considered disabled if he is, because of any medically
determinable physical or mental impairment that can be expected to result in
death or last for a continuous period of at least 12 months, receiving income
replacement benefits for a period of not less than three months under the
Company’s long-term disability plan.

(h) “Disinterested
Director” shall mean any member of the Company’s Board (i) who is not an
officer or employee of the Company or any of their subsidiaries, (ii) who is
not an Acquiring Person or an affiliate or associate of an Acquiring Person or
of any such affiliate or associate and (iii) who was a member of the Company’s
Board prior to the date of this Agreement or was recommended for election or
elected by a majority of the Disinterested Directors on the Company’s Board at
the time of such recommendation or election.

(i) “Effective
Date” shall mean July 17, 2007.

(j) “Good
Reason” shall mean that, without the Executive’s consent, one or more of
the following events occurs during the term of this agreement, and the
Executive, of his own 

 2
 

initiative, terminates
his employment as a result of such event within 90 days of the first occurrence
of that event:

(i)                             The
Executive ceases to report solely to the Chief Executive Officer or is assigned
to any material duties or responsibilities that are inconsistent, in any
significant respect, with the scope of duties and responsibilities customarily
associated with the Executive’s position and office as described in Section 3,
provided that such reassignment of duties or responsibilities is not for Cause
or due to Executive’s Disability, and is not at the Executive’s request;

(ii)                          The
Executive’s title is changed from Executive Vice President, Chief Commercial
Officer and Head of Strategic Development, or the Executive suffers a reduction
in the authorities, duties, and responsibilities customarily associated with
his position as described in Section 3, on the basis of which Executive makes a
determination in good faith that Executive can no longer carry out such
position or office in the manner contemplated at the time this Agreement was
entered into, provided that such change in titles or reduction in the
authorities, duties or responsibilities is not (a) for Cause, (b) due to
Executive’s Disability, or (c) at the Executive’s request; provided, however,
that the Executive may not assert that he has Good Reason for termination due
to any reduction in duties or responsibilities that are due to a change in the
commercial prospects of any one or more of the Company’s product candidates
(including but not limited to telaprevir);

(iii)                       The
Executive’s Base Salary is decreased;

(iv)                      The
Executive is assigned, without the Executive’s consent, to an office location
thirty-five (35) or more miles away from the Executive’s office location
immediately prior to such reassignment (other than in connection with a change
in location of the Company’s principal executive offices, unless the Executive’s
office location ceases to be at the Company’s principal executive offices);

(v)                         Failure
of the Company’s successor, in the event of a Change of Control, to assume all
obligations and liabilities of this Agreement; or

(vi)                      The
Company shall materially breach any of the terms of this Agreement.

(k) “Pro-Rata
Share of Restricted Stock” for any period shall mean, for any grant of
restricted stock as to which the Company’s repurchase right lapses ratably over
a specified time (e.g. in equal annual increments over four years), that number
of shares as to which the Company’s repurchase right with respect to those
shares would have lapsed if the Executive’s employment by the Company had
continued for such period.  For any other
shares of restricted stock, “Pro-Rata Share of Restricted Stock” shall mean, as
to any shares of restricted stock that were granted on the same date and as to
which the Company’s repurchase right lapses on the same date, that portion of
such shares calculated by multiplying the number of shares by a fraction, the
numerator of which is the number of days that have passed since the date of
grant, plus the number of days in the period in question, and the denominator
of which is the total number of days from the date of the grant until the date
(without regard to any provisions for earlier vesting upon achievement of a
specified goal) on which the Company’s repurchase right would lapse under the
terms of the grant.

 3
 

(l) “Severance
Pay” shall mean an amount equal to the sum of the Base Salary in effect on
the date of termination of Executive’s employment, plus the amount of the
Target Bonus for the Executive for the
year in which the Executive’s employment is terminated, divided by twelve (12)
(each of the 12 shares to constitute a “month’s” Severance Pay); provided,
however, that in the event Executive terminates his employment for Good Reason
based on a reduction in Base Salary, then the Base Salary to be used in
calculating Severance Pay shall be the Base Salary in effect immediately
prior to such reduction in Base Salary.

(m) “Subsidiary”
shall mean a corporation of which the Company owns 50% or more of the combined
voting power of the outstanding securities having the right to vote in an
election of directors, or any other business entity in which the Company
directly or indirectly has an ownership interest of 50% or more.

(n) “Target
Bonus” shall mean a bonus for which the Executive is eligible on an annual
basis, at a level consistent with his title and responsibilities, under the
Company’s bonus program then in effect and applicable to the Company’s senior
executives generally, in such amount as may be determined in the sole
discretion of the Board.

2. TERM OF EMPLOYMENT.

The
Company hereby employs the Executive, and the Executive hereby accepts such
employment, commencing on the Effective Date and continuing until termination
in accordance with the terms of this Agreement. 
The period during which the Executive is employed hereunder is referred
to in this Agreement as “term of employment” or the “term of this
agreement.”

3. POSITION, DUTIES AND
RESPONSIBILITIES.

On the Effective Date, the Executive shall be employed as the
Executive Vice President, Chief Commercial Officer and Head, Strategic
Development of the Company, and shall be responsible for strategic development,
business development, and commercial strategy and operations.  In
his capacity as head of strategic development, the  Executive will work within a matrix management system,
leading cross-functional product development teams, together with the heads of
medicines development, drug innovation and realization and other members of
senior management, to assess and advance molecules from the pre-clinical
development stage through successful launch and post-launch evaluation, and to
evaluate the Company’s chemical assets from a portfolio point of view.  As head of business development, the
Executive will be responsible for identifying and establishing channels for
value creation in the development and commercialization with third party
collaborators of assets within the Company’s then-current or projected
pipeline, and for investigation of in-licensing or acquisition opportunities
for products or product candidates to supplement the Company’s development and
commercial portfolio.  As the head of
commercial strategy and operations, the Executive will be responsible for
commercial launch of the Company’s drug candidates, including the creation and
maintenance of effective commercial relationships with the Company’s
collaborators for any of those drug candidates. 
The Executive will also be responsible for the initial conception and
establishment of a sustainable commercial strategy and vision for the Company,
and for executing on that strategy and vision for assets in the clinical
development stage onward. The Executive will be a member of the Company’s
senior management team, which is ultimately responsible for overseeing
the operation of the Company’s pharmaceutical business worldwide.  The Executive shall represent and serve the
Company faithfully, conscientiously and to the best of the 

 4
 

Executive’s
ability and shall promote the interests, reputation and current and long term
plans, objectives and policies of the Company, present and future. The
Executive shall devote all of the Executive’s time, attention, knowledge,
energy and skills, during normal working hours, and at such other times as the
Executive’s duties may reasonably require, to the duties of the Executive’s
employment, provided, however, nothing set forth herein shall prohibit the
Executive from engaging in other activities to the extent such activities do
not impair the ability of the Executive to perform his duties and obligations
under this Agreement, nor are contrary to the interests, reputation, current
and long term plans, objectives and policies of the Company. The Executive, in
carrying out his duties under this Agreement, shall report to the Chief
Executive Officer of the Company.

4. BASE SALARY.

The
Executive’s initial annualized Base Salary shall be not less than $450,000,
payable in accordance with the regular payroll practices of the Company. The
Base Salary shall be reviewed no less frequently than annually, and any
increase thereto (which shall thereafter be deemed the Executive’s Base Salary)
shall be solely within the discretion of the Board.

5. TARGET BONUS/INCENTIVE
COMPENSATION PROGRAM.

(a) Target Bonus Program:  The Executive shall participate in the
Company’s Target Bonus program (and other incentive compensation programs)
applicable to the Company’s senior executives, as any such programs are
established and modified from time to time by the Board in its sole discretion,
and in accordance with the terms of such program.

(b) Sign-On Cash Bonus: The Executive shall
receive a sign-on cash bonus in the amount of $250,000 payable (with
appropriate deductions as required by law) to the Executive at the first
regular pay date applicable to the Executive after the Effective Date.  If the Executive terminates this Agreement
without “Good Reason,” and other than as a result of death or Disability,
during the period commencing on the Effective Date and ending on the first
anniversary of the Effective Date, the Executive shall repay the sign-on cash
bonus to the Company within thirty (30) days of such termination.

(c) Sign-On Stock Option Grant:  The Executive shall be granted a stock option
under the Company’s existing stock option plan to purchase 100,000 shares of
the Company’s common stock at a price equal to the Fair Market Value of Vertex’s
shares, as defined in the Company’s 2006 Stock and Option Plan, on the Effective
Date.  The option will vest and become
exercisable as to equal numbers of shares of stock quarterly in arrears over
the four (4) year period commencing on the Effective Date, and as otherwise
specified herein and in the Company’s 2006 Stock and Option plan, and shall be
subject to the other terms and conditions specified in a separate grant
agreement.

(d) Sign-On Restricted Stock Grant: The
Executive will purchase, in accordance with the terms of a Restricted Stock
Agreement executed and delivered to the Company by the Executive on the
Effective Date, 30,000 shares of the Company’s Common Stock, at a purchase
price per share of $0.01.  The Company
will retain the right to repurchase these shares at $.01 per share purchase
price should the Executive experience a termination of employment, as such term
is used in the 2006 Stock and Option Plan, but this repurchase right will lapse
as to equal number of shares of stock annually in arrears over the four (4)
year period commencing on the Effective Date, and as otherwise specified herein
and in the Company’s 2006 Stock and Option 

 5
 

Plan and shall be
subject to the other terms and conditions specified in a separate grant
agreement.

(e)  Tax Return Preparation Costs:
The Executive will be entitled to reimbursement for all reasonable costs
incurred for professional assistance in the initial preparation and filing of
his individual income tax returns for the 2007 tax year, in the country or
countries, and any subdivisions thereof, for which any such returns are required.  If the Executive terminates this Agreement
without “Good Reason,” and other than as a result of death or Disability,
during the period commencing on the Effective Date and ending on the first
anniversary of the Effective Date, the Executive shall repay to the Company any
such amounts previously reimbursed by the Company, within thirty (30) days of
his termination date.

6. LONG-TERM INCENTIVE
COMPENSATION PROGRAMS.

During
the term of employment, the Executive shall be eligible to participate in the Company’s
long-term incentive compensation programs applicable to the Company’s senior
executives, as such programs may be established and modified from time to time
by the Board in its sole discretion.

7. EMPLOYEE BENEFIT
PROGRAMS.

During
the term of employment, the Executive shall be entitled to participate in all
employee welfare and pension benefit plans, programs and/or arrangements
offered by the Company, as amended, from time to time to its senior executives,
to the same extent and on the same terms applicable to other senior executives.
Nothing in this Section shall preclude the Company from amending or terminating
any of its employee benefit plans, programs or arrangements.

8. REIMBURSEMENT OF
BUSINESS EXPENSES.

During
the term of employment, the Executive is authorized to incur reasonable
business expenses in carrying out his duties and responsibilities under this
Agreement, and the Company shall reimburse him for all such reasonable business
expenses reasonably incurred in connection with carrying out the business of
the Company, subject to documentation in accordance with the Company’s policy.

9. RELOCATION REIMBURSEMENT AND
RESTRICTED STOCK GRANT:

The
Executive will be reimbursed for relocation costs in accordance with the
Company’s relocation reimbursement policy currently in effect, with any
exceptions to be approved in advance by the Company’s Chief Executive
Officer.  In addition, the Executive will
purchase, in accordance with the terms of a Relocation Restricted Stock
Agreement executed and delivered to the Company by the Executive on the
Effective Date, 18,000 shares of the Company’s Common Stock, at a purchase
price per share of $0.01.  The Company
will retain the right to repurchase these shares at $.01 per share purchase
price should the Executive experience a termination of employment for Cause or
without Good Reason, as such terms are used in this Agreement, but this
repurchase right will lapse as to equal number of shares of stock quarterly in
arrears over the three (3) year period commencing on the Effective Date, and as
otherwise specified herein and in the Company’s 2006 Stock and Option Plan and
shall be subject to the other terms and conditions specified in a separate
grant agreement.

 6
 

10. VACATION.

During
the term of employment, the Executive shall be entitled to not less than four
weeks’ paid vacation days each calendar year in accordance with the Company’s
vacation policy then in effect.

11. TERMINATION OF
EMPLOYMENT.

(a)  Termination
Due to Death or Disability. If Executive’s employment is terminated
due to Executive’s death or Disability, the term of employment shall end as of
the date of the Executive’s death or termination of employment due to
Disability, and Executive, his estate and/or beneficiaries, as the case may be,
shall be entitled to the following:

(i)                             Base
Salary earned by Executive but not paid through the date of termination under
this Section 11(a);

(ii)                          all
long-term incentive compensation awards earned by Executive but not paid prior
to the date of termination under this Section 11(a);

(iii)                       a
pro rata Target Bonus award for the year in which termination under this
Section 11(a) occurs as determined in its sole discretion by the Board;

(iv)                      all
stock options held by the Executive as of the date of termination under this
Section 11(a) that are not exercisable as of that date shall be deemed to have
been held by the Executive for an additional 12 months, for purposes of vesting
and exercise rights, and any stock options that are deemed exercisable as a
result thereof shall remain exercisable as provided in Section 11(a)(v) below;

(v)                         all
exercisable stock options held by the Executive as of the date of termination
under this Section 11(a) shall remain exercisable until the earlier of (1) the
end of the one-year period following the date of termination, or (2) the date
the option would otherwise expire;

(vi)                      any
amounts earned, accrued or owing to the Executive (including any amounts for
which the sole remaining condition to payment is that the Executive be employed
by the Company on the scheduled payment date) but not yet paid under Sections
6, 7, 8, or 9 above, and in the event of termination due to Disability,
benefits due to Executive under the Company’s then-current disability program;

(vii)                   six
months of Severance Pay, commencing on the first day of the month following the
month in which termination under this Section 11(a) occurred; and

(viii)                the Company’s repurchase
right with respect to shares of restricted stock held by the Executive shall
lapse with respect to the Pro-Rata Share of Restricted Stock.  The “period” referenced in the first sentence
of the definition of “Pro-Rata Share of Restricted Stock,” and the “period in
question” referenced in the second sentence of that definition shall be 12
months.

(b) Termination by the Company for Cause; or Termination
by the Executive without Good Reason.  If
the Company terminates the Executive’s employment for Cause, or if Executive
voluntarily terminates his employment, other than for Good Reason, death or 

 7
 

Disability, the term of
employment shall end as of the date specified below, and the Executive shall be
entitled to the following:

(i)                             Base
Salary earned by Executive but not paid through the date of termination of
Executive’s employment under this Section 11(b); and

(ii)                          any
amounts earned, accrued or owing to the Executive but not yet paid under
Sections 6, 7, 8, or 9 above.

Termination
by Company for Cause shall be effective as of the date noticed by the
Company.  Voluntary termination by
Executive other than for Good Reason, death or Disability shall be effective
upon 90 days’ prior written notice to the Company and shall not be deemed a
breach of this Agreement.

In the
event of termination by Executive without Good Reason, the Company may elect to
waive the period of notice, or any portion thereof, and, if the Company so
elects, the Company will pay the Executive at the rate of his Base Salary for
the notice period or for any remaining portion thereof.

(c) Termination by the Company Without Cause; or
Termination by the Executive for Good Reason. 
If the Executive’s employment is terminated by the Company
without Cause (other than due to death or Disability), or is terminated by the
Executive for Good Reason, the Executive shall be entitled to the following:

(i)                             Base
Salary earned by Executive but not paid through the date of termination of
Executive’s employment under this Section 11(c);

(ii)                          all
long-term incentive compensation awards earned by Executive but not paid prior
to the date of termination of Executive’s employment under this Section 11(c);

(iii)                       Twelve
months of Severance Pay, commencing on the first day of the month following the
month during which the Executive’s employment is terminated under this Section
11(c); provided, however, that if the Executive dies while
receiving benefits under this Section, all payments shall immediately cease,
provided that the Executive or his estate or beneficiaries shall have received
no less than a total of six months of Severance Pay;

(iv)                      a
pro rata Target Bonus award for the year in which the termination of the
Executive’s employment occurs under this Section 11(c), as determined in its
sole discretion by the Board of Directors;

(v)                         all
exercisable stock options held by the Executive as of the date of the
termination of his employment under this Section 11(c) (except for a
termination described in the proviso in Section 11(c)(vi) below with respect to
a Change of Control) shall remain exercisable until the earlier of (i) the end
of the one-year period following the date of the termination of his employment
and (ii) the date the stock option would otherwise expire;

(vi)                      all
stock options held by the Executive as of the date of termination under this
Section 11(c) that are not exercisable as of that date shall be deemed to have
been 

 8
 

held by
the Executive for an additional 18 months, for purposes of vesting and exercise
rights, and any stock options that become exercisable as a result thereof shall
remain exercisable as provided in Section 11(c)(v) above, PROVIDED, HOWEVER, that
if such termination (1) is by the Company without Cause or by the Executive for
Good Reason, and (2) takes place within (90) days prior to a Change in Control
or within twelve (12) months after a Change in Control, then all unexercisable
and/or unvested stock options held by the Executive as of the date of the
termination under this Section 11(c)(vi) shall be deemed exercisable, and any
unexercisable and/or unvested stock options which become exercisable as a
result thereof shall remain exercisable until the earlier of (a) the end of the
90-day period following the date of the termination or (b) the date the stock
option would otherwise expire;

(vii)                   any
amounts earned, accrued or owing to the Executive but not yet paid under
Sections 6, 7, 8, or 9 above;

(viii)                continued participation,
as if the Executive were still an employee, in the Company’s medical, dental,
hospitalization and life insurance plans in which Executive participated on the
date of termination of employment under this Section 11(c), until the earlier
of:

(A)              the end of the
period during which Severance Pay is payable under Section 11(c)(iii) above; or

(B)                the date, or dates, on
which the Executive receives equivalent coverage and benefits under the plans,
programs and/or arrangements of a subsequent employer (such coverage and
benefits to be determined on a coverage-by-coverage or benefit-by-benefit
basis);

provided,
however, that:

(C)                if the Executive is (i)
precluded from continuing his participation in medical, dental, hospitalization
and life insurance plans as provided in this Section 11(c)(viii) because
Executive is not an employee of the Company, and (ii) not receiving equivalent
coverage and benefits through a subsequent employer, Executive shall be
provided with the after-tax economic equivalent of the benefits provided under
the plan, program or arrangement in which Executive is unable to participate
for the period specified in this Section 11(c)(viii). The economic equivalent
of any benefit foregone shall be deemed to be the lowest cost that would be
incurred by the Executive in obtaining an equivalent benefit himself on an
individual basis. Payment of such after-tax economic equivalent shall be made
quarterly in advance; and

(ix)                        the
Company’s repurchase right with respect to shares of restricted stock held by
the Executive shall lapse with respect to the Pro-Rata Share of Restricted
Stock.  The “period” referenced in the
first sentence of the definition of “Pro-Rata Share of Restricted Stock,” and
the “period in question” referenced in the second sentence of that definition
shall be 18 months.  Notwithstanding the
foregoing, if such termination (1) is by the Company without Cause or by the
Executive for Good Reason, and (2) takes place within (90) days prior to a
Change of Control or within 

 9
 

twelve
(12) months after a Change of Control, then the Company’s lapsing repurchase
right with respect to all shares of restricted stock held by the Executive
shall lapse.

Notwithstanding
anything to the contrary in this Section 11, the terms of any option agreement
or restricted stock agreement shall govern the acceleration, if any, of vesting
or lapsing of the Company’s repurchase rights, as applicable, except to the
extent that the terms of this Employment Agreement are more favorable to the
Executive.  If Executive is a “specified
employee” under Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986,
as amended (the “Code”), any payment of “nonqualified deferred
compensation” (as defined under Section 409A of the Code and related guidance)
attributable to a “separation from service” (as defined under Section 409A of
the Code and related guidance) shall not commence until the first full business
day that is more than 6 months since the applicable separation from service (“Deferred
Payment Date”).  Any payments which
would have otherwise been made between a separation from service and the
Deferred Payment Date, but for this paragraph, shall be made in a lump sum on
the Deferred Payment Date.  Payments
which, in any case, are scheduled to be made after the Deferred Payment Date
shall continue according to the applicable payment schedule.

12. MITIGATION.

In the
event of any termination of this Agreement, the Company hereby is authorized to
offset against any Severance Pay due the Executive during the period for which
Severance Pay is due under Section 11 any remuneration earned by the Executive
during that period and attributable to any subsequent employment or engagement
that the Executive may obtain. Executive shall provide Company written notice
of subsequent employment or engagement no later than five (5) business days
after commencement by Executive of such employment or engagement.

13. CONFIDENTIALITY;
ASSIGNMENT OF RIGHTS.

(a)
During the term of employment and thereafter, the Executive shall not disclose
to anyone or make use of any trade secret or proprietary or confidential
information of the Company, including such trade secret or proprietary or
confidential information of any customer of the Company or other entity that
has provided such information to the Company, that Executive acquires during
the term of employment, including but not limited to records kept in the
ordinary course of business, except (i) as such disclosure or use may be
required or appropriate in connection with his work as an employee of the
Company, (ii) when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information, or (iii) as to such confidential information that becomes
generally known to the public or trade without violation of this Section 13(a).

(b) The
Executive hereby sells, assigns and transfers to the Company all of his right,
title and interest in and to all inventions, discoveries, improvements and
copyrightable subject matter (the “rights”) which during the term of
employment are made or conceived by him, alone or with others, and which are
within or arise out of any general field of the Company’s business or arise out
of any work Executive performs or information Executive receives regarding the
business of the Company while employed by the Company. The Executive shall
fully disclose to the Company as promptly as available all information known or
possessed by him concerning the 

 10
 

rights referred to in
the preceding sentence, and upon request by the Company and without any further
remuneration in any form to him by the Company, but at the expense of the
Company, execute all applications for patents and for copyright registration,
assignments thereof and other instruments and do all things which the Company
may deem necessary to vest and maintain in it the entire right, title and
interest in and to all such rights.

14. NONCOMPETITION;
NONSOLICITATION.

(a)
Notwithstanding any of the provisions herein to the contrary, if the Executive’s
employment with the Company is terminated for any reason other than due to
Executive’s death or termination by Executive for Good Reason, the Executive
shall not engage in Competitive Activity for a period that is the lesser of (i)
12 months from the date of termination under such applicable provision listed
above or (ii) the maximum length of time allowed under then current
Massachusetts law. The Company may, at its election, waive its rights of
enforcement under this Section 14(a).

(b) The
Parties acknowledge that in the event of a breach or threatened breach of
Sections 13 or 14(a), the Company shall not have an adequate remedy at law.
Accordingly, in the event of any breach or threatened breach of Sections 13 or
14(a), the Company shall be entitled to such equitable and injunctive relief as
may be available to restrain the Executive and any business, firm, partnership,
individual, corporation or entity participating in the breach or threatened
breach from the violation of the provisions of Sections 13 or 14(a) above.
Nothing in this Agreement shall be construed as prohibiting the Company from
pursuing any other remedies available at law or in equity for breach or
threatened breach of Sections 13 or 14(a) including the recovery of damages.

15. ASSIGNABILITY;
BINDING NATURE.

This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs (in the case of the Executive) and assigns.
No rights or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company; provided, however,
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law.

16. REPRESENTATIONS.

The Company
represents and warrants that it is fully authorized and empowered to enter into
this Agreement, and to make the awards provided for herein under the terms of
the applicable plans, that all equity grants provided for herein have been duly
authorized, and that the performance of its obligations under this Agreement
will not violate any agreement between it and any other person, firm or
organization. The Executive represents and warrants that no agreement exists
between him and any other person, firm or organization that would be violated
by the performance of his obligations under this Agreement.

 11
 

17. INDEMNIFICATION;
INSURANCE.

The
Executive shall at all times be indemnified and eligible for advancement of
expenses on the same basis as is provided for the Company’s other executive
officers and in accordance with the provisions of the Company’s charter and
by-laws then in effect.  The Executive
shall also be covered under all of the Company’s policies of liability
insurance maintained for the benefit of its directors and officers on the same
basis as is provided for its other executive officers.

18. ENTIRE AGREEMENT;
TERMINATION.

This
Agreement contains the entire understanding and agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, between the parties with respect thereto. 
Subject to the terms of this Agreement the Company shall be entitled to
terminate the Executive’s employment at any time, and the Executive may
terminate his employment by the Company, at any time, in each case by written
notice provided in accordance with Section 25 of this Agreement.

19. AMENDMENT OR WAIVER.

No
provision in this Agreement may be amended unless such amendment is agreed to
in writing and signed by the Executive and an authorized officer of the
Company. No waiver by either party of any breach by the other party of any
condition or provision contained in this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Executive or an authorized officer of the Company, as
the case may be.

20. SEVERABILITY.

If any
provision or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, in whole or in part, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.

21. SURVIVORSHIP.

The
respective rights and obligations of the parties hereunder shall survive any
termination of the Executive’s employment to the extent necessary to the
intended preservation of such rights and obligations.

22.
BENEFICIARIES/REFERENCES.

The
Executive shall be entitled, to the extent permitted under any applicable law,
to select and change a beneficiary or beneficiaries to receive any compensation
or benefit payable hereunder following the Executive’s death by giving the
Company written notice thereof. In the event of the Executive’s death or a
judicial determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.

 12
 

23. GOVERNING
LAW/JURISDICTION.

This Agreement
shall be governed by and construed and interpreted in accordance with the laws
of The Commonwealth of Massachusetts without reference to principles of
conflict of laws.

24. RESOLUTION OF
DISPUTES.

Any
disputes arising under or in connection with this Agreement may, at the
election of the Executive or the Company, be resolved by binding arbitration,
to be held in Massachusetts in accordance with the Rules and Procedures of the
American Arbitration Association. If arbitration is elected, the Executive and
the Company shall mutually select the arbitrator. If the Executive and the
Company cannot agree on the selection of an arbitrator, each Party shall select
an arbitrator and the two arbitrators shall select a third arbitrator, and the
three arbitrators shall form an arbitration panel that shall resolve the
dispute by majority vote. Judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof. Costs of
the arbitrator or arbitrators and other similar costs in connection with an
arbitration shall be shared equally by the Parties; all other costs, such as
attorneys’ fees incurred by each Party, shall be borne by the Party incurring
such costs.

25. NOTICES.

All
notices which are required or permitted hereunder shall be in writing and
sufficient if delivered personally, sent by facsimile (and promptly confirmed
by personal delivery, registered or certified mail or overnight courier), sent
by nationally-recognized overnight courier or sent by registered or certified
mail, postage prepaid, addressed as follows:

	
  If to the Company:

  	
   

  	
  Vertex Pharmaceuticals Incorporated

  	
   

  
	
   

  	
   

  	
  130 Waverly Street

  	
   

  
	
   

  	
   

  	
  Cambridge, MA 02139-4242

  	
   

  
	
   

  	
   

  	
  Attn: Chief Executive Officer

  	
   

  
	
   

  	
   

  	
  with copies to:

  	
   

  
	
   

  	
   

  	
  General Counsel

  	
   

  
	
   

  	
   

  	
  Vice President of Human Resources

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If to the Executive:

  	
   

  	
  Kurt Graves

  	
   

  
	
   

  	
   

  	
  at his home
  address then listed in

  	
   

  
	
   

  	
   

  	
  the Company’s
  payroll records

  	
   

  

 

Any
such notice shall be deemed to have been given: (a) when delivered if
personally delivered or sent by facsimile on a business day; (b) on the
business day after dispatch if sent by nationally-recognized overnight courier;
and/or (c) on the fifth business day following the date of mailing if sent by
mail.

26. HEADINGS.

The
headings of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

 13
 

27. COUNTERPARTS.

This
Agreement may be executed in two or more counterparts.

28. SECTION 409A
COMPLIANCE.

It is
the intention of the Company and the Executive that this Agreement and the
payments provided for herein meet the requirements of Section 409A of the Code,
to the extent applicable to this Agreement and such payments.  The Company and the Executive agree to
cooperate in good faith in preparing and executing, at such time as sufficient
guidance is available under Section 409A and from time to time thereafter, such
amendments to this Agreement, if any, as the Executive may reasonably request
solely for the purpose of assuring that this Agreement and the payments
provided hereunder meet the requirements of Section 409A.  Nothing in this Section 28 shall require the
Company to increase the Executive’s compensation or make the Executive whole
for any requested changes.

29. TAX WITHHOLDING; NO
GUARANTEE OF ANY TAX CONSEQUENCES.

All
payments hereunder shall be subject to all applicable withholding for any
federal, state or local income taxes including any excise taxes under the
Code.  Notwithstanding any other
provision of this Agreement to the contrary or other representation, the
Company does not in any way guarantee the tax consequences of any payment or
compensation under this Agreement including, without limitation, under Section
409A of the Code.

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

	
  

  	
  Vertex Pharmaceuticals
  Incorporated

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Joshua S.
  Boger

  	
   

  
	
   

  	
  Joshua S. Boger

  
	
   

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
  /s/ Kurt Graves

  	
   

  
	
   

  	
  Kurt Graves

  

 

 14

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