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Exhibit 10.1    
    

Confidential Treatment Requested. Confidential portions of this document have been redacted

and have been separately filed with the Commission  

EXCLUSIVE RESEARCH COLLABORATION,

LICENSE AND COMMERCIALIZATION AGREEMENT  

between  

MERCK & CO., INC.  

and  

VERTEX PHARMACEUTICALS INCORPORATED  

  EXCLUSIVE RESEARCH COLLABORATION, LICENSE AND

COMMERCIALIZATION AGREEMENT  

        This EXCLUSIVE RESEARCH COLLABORATION, LICENSE AND COMMERCIALIZATION AGREEMENT (this "Agreement") is effective as of June 21, 2004, (the "Effective Date")
and is entered into by and between Merck & Co., Inc., a New Jersey corporation ("Merck"), and Vertex Pharmaceuticals Incorporated, a Massachusetts corporation ("Vertex"). 

Background:  

	A.
	Vertex has undertaken a broad drug discovery program relating to Aurora kinases.

	B.
	Merck is interested in developing and commercializing drugs targeting such Aurora kinases.

	C.
	Vertex and Merck each believe that the other brings significant and complementary strengths to a potentially effective collaboration
targeting human Aurora kinase inhibitors, and desire to enter into a collaboration on the terms set out in this Agreement.

	D.
	Vertex has exclusive rights to VX-680, Existing Compounds, Compounds, Vertex Know-How and Patent Rights (as
hereinafter defined), and Merck desires to obtain a license to the same on the terms set out in this Agreement and Vertex desires to grant such a license. 

        NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the receipt and sufficiency which
are hereby acknowledged, the Parties agree as follows: 

ARTICLE 1: DEFINITIONS  

        Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth
below. 

	1.1
	"Affiliate" shall mean (i) any corporation or business entity of which fifty
percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by
Merck or Vertex; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds fifty percent (50%) (or the maximum ownership interest permitted by law) or
more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of Merck or Vertex; or (iii) any corporation
or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled
or held, directly or indirectly, by a corporation or business entity described in (i) or (ii).

	1.2
	"Aurora kinases" means members of the human Aurora kinase family, including Aurora A,
B, or C enzymes involved in chromosome segregation and cytokinesis during mitosis.

	1.3
	"Calendar Quarter" means the respective periods of three (3) consecutive
calendar months ending on March 31, June 30, September 30 and December 31.

	1.4
	"Calendar Year" means each successive period of twelve (12) months commencing on
January 1 and ending on December 31.

	1.5
	"Change of Control" means a transaction which results in (a) the voting
securities of Vertex immediately prior to such transaction ceasing to represent at least [***] of the combined voting power of the surviving entity immediately after such
transaction; (b) any Third Party (other than a trustee or other fiduciary holding securities under an employee benefit plan) becoming the 

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

 

beneficial
owner of [***] or more of the combined voting power of the outstanding securities of Vertex; or (c) a sale or other disposition to a Third Party of all or
substantially all of the assets or business of Vertex related to this Agreement. 

	1.6
	"Clinical Trial" means a Phase I Clinical Trial, Phase II Clinical Trial,
and Pivotal Registration Study.

	1.7
	"Collaboration Patent Rights" means all patents and patent applications, certificates
of invention and applications for certificates of invention, including divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection
certificates or the like or any of the foregoing and all foreign equivalents thereof that disclose and/or claim Joint Information and Inventions.

	1.8
	"Combination Product" means a Product which includes one or more therapeutically active
ingredients (other than Product Candidate) in combination with Product Candidate. All references to Product in this Agreement shall be deemed to include Combination Product.

	1.9
	"Compound" means (1) VX-680, (2) Existing Compounds,
(3) Merck AK Compounds, and (4) any small molecule chemical compound that is owned or Controlled by Vertex, or jointly by Vertex and Merck, including salts thereof, (i) whose
[***] activity is the inhibition of one or more Aurora kinases [***], and (ii) is synthesized or tested for Aurora kinase activity
[***] (including by screening) by Vertex (whether solely by Vertex or in collaboration with Merck) during the Research Program Term or during the [***]
period immediately following the expiration of the Research Program Term. For the avoidance of doubt, "Compounds" shall not include any compound that has greater activity against a
non-Aurora kinase target than its activity against an Aurora kinase, or any compound that has greater activity against a non-kinase target than its activity against an Aurora
kinase.

	1.10
	"Control," or "Controlled by" means the legal authority or right of a Party to grant a
license or sublicense of intellectual property to another Party without breaching the terms of any agreement with a Third Party, infringing the intellectual property rights of a Third Party, or
misappropriating the proprietary or trade secret information of a Third Party.

	1.11
	"Co-Promotion Territory" means Canada, the United States of America,
France, Italy, Germany, Spain and the United Kingdom.

	1.12
	"Deferred Candidate" is described in Section 3.7.

	1.13
	"Demonstration of Biologic Activity" means the demonstration to the reasonable
satisfaction of the JRC that a Product Candidate can be administered to a human at a concentration and for a duration that results in observed changes in the activity of a biomarker at the level that
is predicted to be efficacious in humans, based on preclinical models. The biomarker activity will be compared with baseline and derived through skin biopsy, blood, bone marrow or other appropriate
sampling methods.

	1.14
	"Development Candidate" means (1) a Compound that meets the Development
Candidate Criteria and is proposed by the JRC for formal preclinical development during the Research Program Term or during the Washout Period; (2) a Deferred Candidate that is selected by
Merck for development during the Research Program Term or the Washout Period; or (3) a Compound that has not been proposed to the JRC but is selected by Merck for development.

	1.15
	"Development Candidate Criteria" are the criteria set out in  Schedule 1.15, and as such
criteria may be subsequently revised by the JRC.

	1.16
	"Development Election" means the decision by Merck to select a Development Candidate
for formal development as a Product Candidate, pursuant to Section 3.6. 

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	1.17
	"Development Information" means all material information known to Vertex about a
Development Candidate, including analytical results and raw data, which Merck should reasonably require in order to decide whether to make the Development Election with respect to that Development
Candidate. An example of information that would constitute Development Information is listed in Schedule 1.17.

	1.18
	"Development Plan" is described in Section 3.5.

	1.19
	"Existing Compounds" means those compounds Controlled by Vertex (other than
VX-680) that have been synthesized by Vertex prior to the Effective Date and whose primary activity is the inhibition of one or more Aurora kinases, [***] including
those compounds specifically identified in Schedule 1.19.

	1.20
	"Field" means the use of Compounds (including, without limitation, Lead Compounds,
Development Candidates and Product Candidates) and Products for any and all purposes.

	1.21
	"Filing" of an NDA shall mean the acceptance by a Regulatory Authority of an NDA for
filing.

	1.22
	"First Commercial Sale" means, with respect to any Product, the first sale for end use
or consumption of such Product in a country, excluding, however, any sale or other distribution for use in a Clinical Trial.

	1.23
	"Follow-on Compound" means all Product Candidates other than a Lead
Compound.

	1.24
	"Full Time Equivalent" or "FTE" means
the equivalent of a full-time scientist's work time over a twelve-month period (including normal vacations, sick days and holidays) which equates to a total of
[***] weeks or [***] hours per year of work, on or directly related to the Research Program.

	1.25
	"Improvement" means any enhancement, whether or not patentable, in the formulation,
ingredients, preparation, presentation, means of delivery, or dosage of Compound, or Product discovered or developed during the Research Program Term or Wash-Out Period.

	1.26
	"Indication" means a separate and distinct disease or medical condition in humans that
a Product which is in Clinical Trial(s) is intended to treat, prevent and/or diagnose, or for which a Product has received Marketing Authorization, meaning that such Indication is contained in the
Product's labeling approved by a Regulatory Authority in a Major Market as part of the Marketing Authorization for such Product. For the purposes of this Agreement, the following medical conditions
and/or diseases in humans are "Indications":

	(a)
	the following solid tumor cancers: non-small cell lung cancer, prostate cancer, breast cancer and colo-rectal
cancer (each, a "Major Tumor Indication");

	(b)
	any cancer type in humans other than as set out in 1.26(a) (such other cancer Indications are collectively referred to as "Other
Oncology Indications");

	(c)
	any non-oncology diseases or medical conditions in humans ("Non-Oncology Indications"). 

As
used in Article 5, the term "Cancer Indication" shall refer to any Major Tumor Indication or any Other Oncology Indication. 

	1.27
	"Information" means any and all information and data, including without limitation all
Merck Know-How, all Vertex Know-How, and all other scientific, pre-clinical, clinical, regulatory, manufacturing, marketing, financial and commercial information or
data, whether communicated in writing or orally or by any other method, which is provided by one Party to the other Party in connection with this Agreement.

	1.28
	"Initiates" means, with respect to a Clinical Trial, the administration of the first
dose to a human in such Clinical Trial. 

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	1.29
	"Invention" means any process, method, composition of matter, article of manufacture,
discovery or finding that is conceived and/or reduced to practice in the course of the Research Program.

	1.30
	"Joint Information and Inventions" means all discoveries, Improvements, processes,
methods, protocols, formulas, data, Inventions, know-how and trade secrets, patentable or otherwise, arising from the Research Program developed or invented jointly by employees of Merck
and Vertex or others acting on behalf of Merck and Vertex.

	1.31
	"Joint Research Committee" and "JRC"
is defined in Section 2.4.

	1.32
	"Lead Compound" means that Product Candidate which is in the most advanced stage of
development. VX-680 shall be the Lead Compound on the Effective Date. If there is at any time no Product Candidate in development, then the Lead Compound shall mean the next Product
Candidate selected for development.

	1.33
	"Major Market" shall mean any one of the following countries:
[***].

	1.34
	"Marketing Authorization" means all approvals from the relevant Regulatory Authority
necessary to market and sell a Product in any country (including without limitation, all applicable pricing and governmental reimbursement approvals even if not legally required to sell Product in a
country).

	1.35
	"Merck AK Compounds" means any small molecule chemical compound that is owned or
Controlled by Merck, including salts thereof: (i) whose primary and selective activity is the inhibition of one or more Aurora kinases [***]; (ii) is synthesized
or tested for Aurora kinase activity in an in vitro biochemical binding assay (including by screening) by Merck (whether solely by Merck or in
collaboration with Vertex) during the Research Program Term [***] immediately following the expiration of the Research Program Term; and (iii) is developed by Merck as a
kinase inhibitor. For the avoidance of doubt, "Merck AK Compounds" shall not include any compound that has greater activity against a non-Aurora kinase target than its activity against an
Aurora kinase, or any compound that has greater activity against a non-kinase target than its activity against an Aurora kinase.

	1.36
	"Merck AK Compound Patent Rights" means any and all patents and patent applications in
the Territory (which for the purposes of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention) which during the term of this Agreement are
owned or Controlled by Merck, which: (i) claim or cover Merck AK Compounds, and/or Product and Improvements; or (ii) are divisions, continuations,
continuations-in-part, reissues, renewals, extensions, supplementary protection certificates, and the like of any such patents and patent applications and foreign equivalents
thereof.

	1.37
	"Merck Information and Inventions" means all protocols, formulas, data, Inventions,
know-how and trade secrets, patentable or otherwise, developed or invented solely by employees of Merck, or other persons not employed by Vertex acting on behalf of Merck, in the course of
its performance of the Research Program or the Invention of any Merck AK Compound.

	1.38
	"Merck Know-How" means any information and materials, including but not
limited to, discoveries, Improvements, processes, methods, protocols, formulas, data, inventions (including without limitation Merck Information and Inventions and Merck's rights in Joint Information
and Inventions), know-how and trade secrets, patentable or otherwise, which are (i) identified or conceived by Merck or its Affiliates in the course of its performance of the
Research Program under this Agreement, (ii) in Merck's Control, (iii) not generally known and (iv) necessary or useful to Vertex in the performance of Vertex's obligations under
the Research Program.

	1.39
	"Milestone" is defined in Section 5.3.

	1.40
	"Milestone Payment" is defined in Section 5.3. 

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	1.41
	"NDA" means a New Drug Application, Worldwide Marketing Application, Marketing
Application Authorization, or similar application or submission for Marketing Authorization of a Product filed with a Regulatory Authority to obtain marketing approval for a pharmaceutical product in
that country or in that group of countries.

	1.42
	"Net Sales" means the gross invoice price of Product sold by Merck or its Related
Parties to the first Third Party after deducting, if not previously deducted, from the amount invoiced or received:

	(a)
	trade and quantity discounts other than early pay cash discounts;

	(b)
	returns, rebates, chargebacks and other allowances;

	(c)
	retroactive price reductions that are actually allowed or granted;

	(d)
	the standard inventory cost of devices or delivery systems used for dispensing or administering Product; and

	(e)
	a fixed amount equal to [***] of the amount invoiced to cover bad debt, sales or excise taxes, early payment
cash discounts, transportation and insurance, custom duties, and other governmental charges. 

With
respect to sales of Combination Products, Net Sales shall be calculated [***].

If Product is sold only as a Combination Product, [***]. 

	1.43
	"Patent Rights" means any and all patents and patent applications in the Territory
(which for the purposes of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention) which during the term of this Agreement are owned or
Controlled by Vertex, including, but not limited to, those listed on Schedule 1.43, which: (i) claim or cover Compounds, and/or Product
(including without limitation (and for the avoidance of doubt) Development Candidates, Lead Compounds, Follow-On Compounds, Deferred Candidates and Product Candidates) and Improvements;
(ii) claim or cover Vertex Information and Inventions; or (iii) are divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary
protection certificates, and the like of any such patents and patent applications and foreign equivalents thereof.

	1.44
	"Party" means Merck or Vertex, and  "Parties" shall mean Merck and Vertex.

	1.45
	"Phase I Clinical Trial" means a human clinical trial in any country that would
satisfy the requirements of 21 CFR 312.21(a).

	1.46
	"Phase II Clinical Trial" means a human clinical trial in any country that
would satisfy the requirements of 21 CFR 312.21(b).

	1.47
	"Pivotal Registration Study" means 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 Product Candidate on sufficient numbers of human patients to generate safety and
efficacy data to support Marketing Authorization in the proposed therapeutic Indication, as more fully defined in 21 CFR 312.21(c), or (ii) equivalent Regulatory Agency submissions with similar
requirements in a Major Market other than the United States.

	1.48
	"Product(s)" means any pharmaceutical or biological preparation in final form
containing a Product Candidate (i) for sale by prescription, over-the-counter or any other method, or (ii) for administration to human patients in a Clinical
Trial, for any and all uses in the Field, including without limitation, any Combination Product.

	1.49
	"Product Candidate" means a Development Candidate that has been selected by Merck for
formal development, pursuant to exercise of its Development Election or otherwise. For the avoidance of doubt, VX-680 is a "Product Candidate." 

5

 

 

	1.50
	"Product Development Team" and "PDT"
is described in Section 3.5.

	1.51
	"Regulatory Authority" shall mean any applicable government regulatory authority
involved in granting approvals for the manufacturing, marketing, reimbursement and/or pricing of a Product in the Territory, including, in the United States, the United States Food and Drug
Administration, and any successor governmental authority having substantially the same function.

	1.52
	"Related Party" shall mean Merck, its Affiliates, and permitted sublicensees (which
term does not include distributors).

	1.53
	"Research Plan" is described in Section 2.1

	1.54
	"Research Program" means the research activities undertaken by the Parties as set
forth in Article 2 and Schedule 2.1.

	1.55
	"Research Program Term" means the two (2) year period starting on the Effective
Date and ending on the second anniversary of the Effective Date. The Parties may mutually agree to extend the Research Program Term for an additional period, and the initial two-year term
plus any agreed extension shall be referred to in this Agreement as the "Research Program Term."

	1.56
	"Subsequent MT" means a Major Tumor Indication being pursued with respect to a Product
Candidate that was initially developed (and for which a Milestone Payment was made) for an Other Oncology Indication.

	1.57
	"Territory" means all of the countries in the world, and their territories and
possessions.

	1.58
	"Third Party" means an entity other than Merck and its Related Parties, and Vertex and
its Affiliates.

	1.59
	"Third Party License" is defined in Section 5.17.

	1.60
	"Valid Patent Claim" means a claim of an issued and unexpired patent included within
the Patent Rights, Merck AK Compound Patent Rights, or Collaboration Patent Rights which claims any Product Candidate or Product as a composition of matter, which claim has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction (which decision is not appealable or has not been appealed within the time allowed for appeal),
and which claim has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise.

	1.61
	"Vertex Information and Inventions" shall mean all discoveries, Improvements,
processes, methods, protocols, formulas, data, Inventions, know-how and trade secrets, patentable or otherwise, discovered or developed, and Controlled by Vertex or its Affiliates, in the
course of its performance of the Research Program under this Agreement, and related to the inhibition by a small molecule of one or more Aurora kinases, solely by employees of Vertex or other persons
not employed by Merck acting on behalf of Vertex, provided, however, that the term "Vertex Information and Inventions" shall not apply to Vertex's general drug design technology whether in hardware or
software form, tangible or intangible.

	1.62
	"Vertex Know-How" shall mean all information and materials, including but
not limited to, discoveries, Improvements, processes, methods, protocols, formulas, data, inventions (including without limitation Vertex Information and Inventions and Vertex's rights in Joint
Information and Inventions), know-how and trade secrets, patentable or otherwise, which are (i) discovered, developed, conceived, used or applied, and (ii) Controlled by
Vertex or its Affiliates, either (x) in connection with the performance by Vertex of the Research Program, or (y) in connection with the conduct of a development program for a Product
Candidate, prior to the end of the Wash-Out Period, and that are necessary or useful to Merck in connection with Merck's obligations under this Agreement, including the research,
development, utilization, manufacture or use of 

6

 

Compounds,
Development Candidates, Product Candidates or Products (other than any such technology that is exclusive to kinases other than any of the Aurora kinases); provided, however, that the term
"Vertex Know-How" shall not apply to Vertex's general drug design technology whether in hardware or software form, tangible or intangible. 

	1.63
	"VX-680" is described in  Schedule 1.63.

	1.64
	"Washout Period" means the [***] period immediately following
the end of the Research Program Term. 

ARTICLE 2: RESEARCH PROGRAM  

	2.1
	Research Program—General. Vertex and Merck shall engage in the Research
Program upon the terms set out in this Agreement. The Research Plan shown in Schedule 2.1 sets out a detailed description of specific activities
to be undertaken during the first twenty-four months of the Research Program. The Research Plan may be amended from time to time upon the mutual written agreement by authorized
representatives of the Parties. The JRC will review and update the Research Plan annually. Subject to review and adjustment by the JRC, the Research Plan will set forth expectations with respect to
the relative contributions of each Party to the Research Program.

	2.2
	Conduct of Research. Vertex and Merck each shall conduct the Research Program in good
scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations and all applicable good laboratory practices to attempt to achieve their
objectives efficiently and expeditiously. Vertex and Merck each shall proceed diligently with the work set out in the Research Program by using their respective good faith efforts to allocate
sufficient time, effort, equipment and facilities to the Research Program and to use personnel with sufficient skills and experience as are required to accomplish the Research Program in accordance
with the terms of this Agreement and Schedule 2.1. 

Vertex
and Merck shall be entitled to utilize the service of Third Parties to perform their respective Research Program activities only upon the prior written consent of the other Party, or as
specifically set forth in Schedule 2.1. Each Party shall also be entitled to use the services of Third Parties that have been
pre-approved by the JRC to carry out routine Research Program activities, without the need for obtaining the other Party's prior written consent. Notwithstanding any such consent or
pre-approval, both Parties shall remain at all times fully liable for its respective responsibilities under the Research Program. 

	2.3
	Personnel Resources. Vertex shall devote to the Research Program
[***] during the period from the Effective Date through December 31, 2004. Thereafter until the end of the Research Program Term, Vertex will commit
[***] on an annualized basis. Merck will devote resources to the Research Program as provided in the Research Plan, and as that Research Plan may be periodically updated.

	2.4
	Joint Research Committ ee. The Parties will establish a Joint Research Committee (the
"JRC") with equal representation from Vertex and Merck to oversee the Research Program during the Research Program Term. The JRC will be formed as soon as practicable after the Effective Date and,
thereafter, will meet formally at least quarterly to:

	(a)
	coordinate and review Research Program activities and interactions between Merck and Vertex;

	(b)
	receive and review reports by Vertex and Merck concerning research being conducted under the Research Plan, including, but not limited
to the status of Compounds meeting Development Candidate Criteria; 

7

 

	(c)
	review any proposed Development Candidates and notify Merck each time a Compound meets the Development Candidate Criteria;

	(d)
	review, consider and approve revisions to the Research Plan;

	(e)
	periodically review the overall goals and strategy of the Research Program and consider whether redirection or termination of the
Research Program would be appropriate; and

	(f)
	discuss matters relating to Research Program intellectual property.

	2.4.1
	During the term of the Research Program Term (and, at Vertex's option, for the [***] period immediately
following the expiration of the Research Program Term), Vertex and Merck shall each appoint a representative to act as a Co-Chair of the JRC. The JRC Co-Chairs shall each have
authority to call meetings of the JRC, and shall each have responsibility for circulating agenda and performing administrative tasks required to assure efficient operation of the JRC. The JRC will act
by unanimous vote, with each of Merck and Vertex having one vote. The members of the JRC will attempt in good faith to reach consensus on all matters brought before the JRC. Any changes to the
Research Plan which would materially alter the allocation of research responsibilities between the Parties or the cost to Vertex of implementing the Research Plan, which would change in any material
respect the overall goals and strategy for the Research Program or which would provide for redirection or termination of the Research Program, will require the consent of both Parties. With respect to
other matters properly subject to decision by the JRC (including proposed amendments to the Development Candidate Criteria), if the JRC is deadlocked, the dispute will be subsequently referred for
resolution to the Sr. Vice President of Merck responsible for the Research Program, and the Sr. Vice President of Vertex responsible for the Research Program. Failing agreement at this level, the
dispute will be referred to the President of Merck Research Laboratories, and to the President of Vertex. If agreement cannot be reached by such representatives, Merck shall have the right to make the
final decision.

	2.4.2
	Meetings. The JRC shall meet in accordance with a schedule established by mutual
written agreement of the Parties, but no less frequently than once per Calendar Quarter, with the location for such meetings alternating between Vertex and Merck facilities (or such other locations as
is determined by the JRC). Alternatively, the JRC may meet by means of teleconference, videoconference or other similar communications equipment. Additional representatives or consultants may from
time to time, by mutual consent of the Parties, be invited to attend JRC meetings, subject to such representative's and consultant's written agreement to comply with the requirements of
Section 4.1. Each Party shall bear its own expenses related to the attendance of such meetings by its representatives.

 

	2.5
	Exchange of Information. Upon execution of this Agreement, and on an ongoing basis
during the Research Program Term, (a) Vertex shall disclose to Merck all Vertex Know-How not previously disclosed; and (b) Merck shall disclose to Vertex all Merck
Know-How not previously disclosed.

	2.6
	Records and Reports

	2.6.1
	Records. Each Party shall maintain records, in sufficient detail and in good
scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved in the performance of the Research Program. 

8

 

 

	2.6.2
	Copies and Inspection of Records. Each Party shall have the right, during normal
business hours and upon reasonable notice, to inspect and copy all such records of the other referred to in subsection 2.6.1. Each Party shall maintain such records and the information
disclosed therein in confidence in accordance with Section 4.1. Each Party shall have the right to arrange for its employees and/or consultants involved in the activities contemplated hereunder
to visit the offices and laboratories of the other Party during normal business hours and upon reasonable notice, and to discuss the Research Program work and its results in detail with the technical
personnel and consultants of the other Party. Upon request, each Party shall provide copies of the records described in subsection 2.6.1 to the other Party.

 

	2.7
	Research Program Information and Inventions. The entire right, title and interest in:

	2.7.1
	Vertex Information and Inventions and Patent Rights shall be owned solely by Vertex;

	2.7.2
	Merck Information and Inventions and Merck AK Compound Patent Rights shall be owned solely by Merck; and

	2.7.3
	Joint Information and Inventions and Collaboration Patent Rights shall be owned jointly by Vertex and Merck. 

Vertex
shall promptly disclose to Merck the development, making, conception or reduction to practice of Vertex Information and Inventions and Joint Information and Inventions. Merck shall promptly
disclose to Vertex the development, making, conception or reduction to practice of Merck Information and Inventions and Joint Information and Inventions. Inventorship will be determined in accordance
with the United States laws of inventorship. 

	2.8
	Exclusive Efforts. During the [***], neither Vertex nor Merck
or any of their Affiliates will [***], other than pursuant to the terms of this Agreement, of [***]. Nothing in this Agreement prohibits either Party
from counter-screening other compounds directed at other targets against Aurora kinase. If Merck begins development or commercialization of a Merck AK Compound at any time prior to the
[***] of the expiration of the Washout Period, Merck shall be obligated to pay Vertex any and all applicable Milestone Payments and royalties (and any other amounts, such as
interest penalties) due under Article 5 of this Agreement for such Merck AK Compound (subject to the exception set forth in Section 5.9). 

ARTICLE 3: LICENSE; EXCHANGE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION  

	3.1
	License Grant

	3.1.1
	Subject to the terms and conditions of this Agreement (including Section 8.5), Vertex hereby grants to Merck a perpetual,
exclusive license (even as to Vertex) in the Territory in the Field under Patent Rights and Vertex's rights under Collaboration Patent Rights, with a right to sublicense, to VX-680,
Compounds and Products (including without limitation (and for the avoidance of doubt), Development Candidates, Lead Compounds, Follow-On Compounds, Deferred Candidates and Product
Candidates), for any and all uses, including but not limited to: (i) to discharge its obligations and exercise its rights under the Research Program and Development Plan; and (ii) to
develop, make, have made, use, offer to sell, sell or import VX-680, Compounds, and Products (including without limitation (and for the avoidance of doubt), Development Candidates, Lead
Compounds, Follow-On Compounds, Deferred Candidates and Product Candidates).

	3.1.2
	Subject to the terms and conditions of this Agreement (including Section 8.5), Vertex hereby grants to Merck (a) a
perpetual, non-exclusive license under all Vertex Know-How (excluding Vertex Information and Inventions and Vertex's rights in Joint Information and Inventions); 

9

 

and
(b) a perpetual, co-exclusive license (together with Vertex) under Vertex Information and Inventions and Vertex's rights under Joint Information and Inventions, in the Territory
in the Field, with the right to sublicense, solely to: (i) discharge its obligations and exercise its rights under the Research Program and Development Plan; and (ii) develop, make, have
made, use, offer to sell, sell or import VX-680, Compounds and Products (including without limitation (and for the avoidance of doubt), Development Candidates, Lead Compounds,
Follow-On Compounds, Deferred Candidates and Product Candidates). 

	3.1.3
	Notwithstanding the foregoing, Vertex shall retain rights under the Patent Rights, Vertex Know-How, Vertex Information
and Inventions, Vertex's rights in Joint Information and Inventions and Vertex's rights in Collaboration Patent Rights to the extent necessary or useful for the term of the Research Program, to
discharge its obligations and exercise its rights under this Agreement.

	3.1.4
	Merck hereby grants to Vertex a non-exclusive license under all Merck Know-How, Merck Information and
Inventions, Merck's rights under the Collaboration Patent Rights, and Joint Information and Invention, for the period of the Research Program Term and the [***] after
termination of the Research Program Term, to discharge Vertex's obligations and exercise its rights under this Agreement.

 

	3.2
	Non-Exclusive License Grant. If the making, having made, use, offer for
sale, sale or import by Merck, or Merck's Related Parties of Compound(s), Product Candidates or Product(s) otherwise permitted under this Agreement would infringe during the term of this Agreement a
claim of issued letters patent which Vertex Controls and which patents are not covered by the grant in Section 3.1, Vertex hereby grants to Merck, to the extent Vertex is legally able to do so,
a non-exclusive, sublicensable, royalty-free license in the Territory under such issued letters patent solely for Merck to develop, make, have made, use, sell, offer for sale
or import Compound(s) and Product(s) in the Territory.

	3.3
	Development and Commercialization. As soon as practicable after the Effective Date,
Merck will commence a Development Plan with respect to VX-680. With respect to each Product Candidate, Merck shall use reasonable efforts, consistent with the usual practice followed by
Merck in pursuing the development, commercialization and marketing of its other pharmaceutical products of a similar commercial value, to develop, commercialize and market such Product Candidate in
such countries in the Territory where in Merck's reasonable opinion it is commercially viable to do so. In the event that Merck elects not to commercialize any Product Candidate in the United States
and at least four of the other Major Markets (i.e., [***]) as a result of the Product Candidate's projected commercial returns, Merck agrees to promptly inform Vertex of
such election. Vertex is entitled to propose to Merck, and Merck shall discuss in good faith with Vertex, commercial terms for a buyout of such Product Candidate by Vertex for development by Vertex,
provided, however, that Merck shall have no obligation to agree to grant Vertex rights to any Product Candidate, if such grant would in Merck's sole discretion, negatively impact any product being
developed or commercialized by Merck.

	3.4
	Excused Performance. The obligations of Merck with respect to any Product under
Section 3.3 are expressly conditioned upon the continuing absence of any material adverse condition or event relating to the safety or efficacy of the Product, and the obligation of Merck to
develop or market any such Product shall be delayed or suspended so long as in Merck's opinion any such condition or event exists. Merck shall be obligated to take commercially reasonable and
appropriate steps to investigate and attempt to resolve any such adverse condition or event. If, in Merck's opinion, such material adverse condition or event arises, Merck shall promptly inform
Vertex, and will provide Vertex with an explanation for any decision to delay or to suspend the development or marketing 

10

 

of
the Product, together with a description of actions planned by Merck to resolve (where commercially reasonable) the underlying cause of such delay or suspension. 

	3.5
	Product Development Teams. As soon as practicable following the Effective Date, Merck
will establish a Product Development Team ("PDT"), which shall include, at Vertex's option, [***] representatives designated by Vertex,  provided that [***]. Additional Product Development Teams, which
shall also include [***]Vertex
representatives, at Vertex's option, may be established from time to time in connection with the development of additional Product Candidates. The PDT will be the principal organization through which
the development of a Product Candidate is planned, administered, evaluated and completed, subject to appropriate review and approval at senior management levels as required by Merck from time to time.
In addition to the Vertex representatives, the PDT will typically have members from the various Merck functional groups (e.g., research, preclinical, safety, clinical, regulatory, and
marketing) which are or which will be expected to be involved in developing and obtaining regulatory approval for the Product Candidate and Product. Merck will appoint each PDT Chair. The PDT will be
responsible for the preparation, implementation of the Development Plan (described below) with respect to each Product Candidate.

	3.5.1
	Development Plan. The PDT shall prepare and oversee the implementation of the overall
Development Plan for each Product Candidate. The Development Plan shall, among other things, detail, schedule and fully describe the proposed toxicology studies, Clinical Trials, clinical material
requirements for each Product Candidate, and will outline the key elements involved in obtaining Regulatory Approval in each Major Market. Vertex's representatives on the PDT (or Vertex, if Vertex has
no representative on the PDT) will receive all documents and information distributed or communicated to members to the PDT generally (or to any one or more members of the PDT in connection with the
discharge of his or her duties on the PDT).

	3.5.2
	Development Responsibility and Costs. Merck shall have sole responsibility for, and
bear the cost of implementing, the Development Plan with respect to each Product Candidate.

	3.5.3
	Regulatory Approvals. Merck shall be solely responsible for preparing and submitting
registration dossiers for Regulatory Approval of Products in the Territory. All Regulatory Approvals shall be held by and in the name of Merck, and Merck shall own all submissions in connection
therewith. Merck shall have sole discretion as to the regulatory strategy and decision making for any Product Candidate or Product; provided,  however, that
Merck shall provide Vertex with an opportunity to review Merck's general regulatory strategy and decision-making either by participating
in the PDT or other approach mutually agreed-upon by the Parties.

 

	3.6
	Development Election. During the Research Program Term and the Washout Period, Merck
shall have the exclusive right to select Compounds for further development and commercialization. The JRC will notify Merck each time a Compound meets the Development Candidate Criteria. The notice
will be accompanied by the Development Information with respect to that Development Candidate. Merck may exercise its Development Election and accept the Development Candidate as a Product Candidate
by delivery to Vertex, within [***] after receipt by Merck of the Development Information, of an exercise notice specifying the Development Candidate as to which the
Development Election is being exercised. Notwithstanding the foregoing, if Merck shall at any time commence a Phase I Clinical Trial on a Compound without having formally exercised its
Development Election, Merck shall be deemed to have exercised its Development Election with respect to such Compound.

	3.7
	Deferred Candidates. Any Development Candidate with respect to which Merck
(1) elects not to accept as a Product Candidate; or (2) fails to exercise its Development Election within the [***] 

11

 

period
referenced in Section 3.6, shall be a "Deferred Candidate." If, during the Research Program Term, Merck ceases to be actively engaged in the development of a Product Candidate, Vertex
may propose a Deferred Candidate to Merck for Development Election. 

During
the Research Program Term and Washout Period, Merck shall be entitled, in its sole discretion, to exercise its Development Election with respect to any (1) Compounds not previously
presented to it as a Development Candidate; and (2) Deferred Candidates. Vertex shall not grant to any Third Party rights which are inconsistent with the grant of the Development Election to
Merck under this Agreement. Upon expiration of the Research Program Term and Washout Period, the rights of the Parties with respect to any Compounds and Deferred Candidates shall be as set forth in
Section 8.5 of this Agreement. 

	3.8
	No Implied Licenses. Except as specifically set forth in this Agreement, neither Party
shall acquire any license or other intellectual property interest, by implication or otherwise, in any Information disclosed to it under this Agreement or under any patents or patent applications
owned or Controlled by the other Party or its Affiliates. In addition, Vertex shall not acquire any right, title or intellectual property interest to any Merck AK Compounds or Merck AK Patent Rights,
except for such rights to financial compensation, if any, with respect to Merck AK Compounds in accordance with Section 2.8 and Article 5 of this Agreement.

	3.8.1
	To the extent it is contractually able to do so, Vertex agrees to review with Merck during the Research Program Term the potential
for further collaboration directed to kinases studied by Vertex which are believed to have a potential role in oncology therapeutics.

 

	3.9
	Use of Vertex Logo. Where not prohibited by law or regulation, and subject to any
required Regulatory Approval, which Merck shall use reasonable efforts to obtain, Vertex's name and logo will be carried on all Product packaging, packaging inserts, labels, containers and printed
material related thereto with a prominence substantially equivalent to that of Merck's name and logo, provided, however that such requirement shall no longer apply in the event of a Change of Control
of Vertex. Any trademark for a Product will be selected by, and will be the property of, Merck.

	3.10
	Supply of Bulk Drug Substance For Clinical Trials. Vertex shall promptly provide Merck
with its existing inventory of clinical trial material for VX-680. Vertex shall also promptly provide Merck with Information in its possession relative to the manufacturing, formulation,
and packaging of VX-680. Merck will be responsible for the manufacture of all bulk drug substance and clinical drug formulations of all Product Candidates, and for all manufacturing
activities relating to the production, formulation and manufacture of commercial supplies of Products.

	3.11
	Co-Promotion by Vertex. Not less than [***] before
the projected market introduction of any Product in a country within the Co-Promotion Territory, Vertex is entitled to give notice and propose to Merck, and Merck shall discuss in good
faith with Vertex the feasibility of a co-promotion plan for Products on a fee-for-detail basis within the Co-Promotion Territory (including minimum
co-promotion sales force size) and in accordance with the conditions set out in Schedule 3.11. If the Parties jointly decide to
implement such a plan, Vertex and Merck shall initiate good faith negotiations and seek to enter into a mutually acceptable definitive written agreement ("Co-Promotion Agreement")
regarding Specialist Detailing (as described in Schedule 3.11) on a country-by-country basis no later than
[***] before the projected market introduction of a Product in a country within the Co-Promotion Territory. Notwithstanding the foregoing, if Merck determines at
the time of completion of [***] that earlier notice from Vertex of its intention to enter into a Co-Promotion Agreement would be desirable in order to optimally
plan and execute a Product launch, the Parties will agree on a revised schedule for the negotiation and execution of the Co-Promotion Agreement consistent with the opinion of Merck's
regulatory experts about the anticipated Regulatory Authority review time for the corresponding NDA. Furthermore, if the Parties enter into a Co-Promotion Agreement on this revised
schedule, the 

12

 

Parties
recognize that Vertex [***], and Merck will take this into account in determining the minimum number of representatives Vertex will provide at launch,
[***] the Co-Promotion Agreement, in a timely manner as agreed to by both Parties. 

	3.11.1
	The Co-Promotion Agreement shall be subject to the terms and conditions set forth in  Schedule 3.11. In the event that Merck elects to
outsource sales of any Product Candidate or Product in the Major Markets to a Third Party with
which it does not have a pre-existing business relationship, it shall promptly inform Vertex of such election and shall negotiate in good faith with Vertex with respect to sales of such
Product Candidate or Product. 

ARTICLE 4: CONFIDENTIALITY AND PUBLICATION  

	4.1
	Nondisclosure Obligation. All Information disclosed by one Party to the other Party
shall be maintained in confidence by the receiving Party and shall not be disclosed to a non-Party or used for any purpose except as set forth herein without the prior written consent of
the disclosing Party, except to the extent that such Information:

	4.1.1
	is known by receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by
the receiving Party's contemporaneous business records;

	4.1.2
	is properly in the public domain;

	4.1.3
	is subsequently disclosed to the receiving Party by a Third Party who may lawfully do so and is not under an obligation of
confidentiality to the disclosing Party;

	4.1.4
	is developed by the receiving Party independently of Information received from the disclosing Party, as documented by the receiving
Party's contemporaneous business records;

	4.1.5
	is disclosed to governmental or other regulatory agencies to comply with applicable law or regulations, provided the receiving Party
provides to the disclosing Party prompt prior written notice of its obligation to make such disclosure and take reasonable and lawful actions to avoid or minimize the degree of such disclosure;

	4.1.6
	is disclosed to governmental or other regulatory agencies to obtain patents or to gain or maintain approval to conduct clinical
trials or to market Product, but such disclosure may be only to the extent reasonably necessary to obtain patents or authorizations; and

	4.1.7
	is deemed necessary by Merck in the reasonable exercise of its judgment to be disclosed to Related Parties, agents, consultants,
and/or other Third Parties for any and all purposes Merck and its Affiliates deem necessary or advisable for the research and development, manufacturing and/or marketing of the Product (or for such
entities to determine their interest in performing such activities) in accordance with this Agreement on the condition that such Third Parties agree to be bound by confidentiality and
non-use obligations that are substantially no less stringent than those confidentiality and non-use provisions contained in this Agreement;  provided the term of confidentiality for such Third Parties
shall be no less than [***]. 

Any
combination of features or disclosures shall not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the
rightful possession of the receiving Party unless the combination itself and principle of operation are published or available to the general public or in the rightful possession of the receiving
Party. 

If
a Party is required by judicial or administrative process to disclose Information that is subject to the non-disclosure provisions of this Section 4.1 or Section 4.2, such
Party shall promptly inform 

13

 

the
other Party of the disclosure that is being sought in order to provide the other Party an opportunity to challenge or limit the disclosure obligations. Information that is disclosed by judicial or
administrative process shall remain otherwise subject to the confidentiality and non-use provisions of this Section 4.1 and Section 4.2, and the Party disclosing Information
pursuant to law or court order shall take all steps reasonably necessary, including without limitation obtaining an order of confidentiality, to ensure the continued confidential treatment of such
Information. 

	4.2
	Vertex Know-How. Subject to the provisions of Section 4.3, Vertex
agrees to keep all Vertex Know-How confidential subject to the exceptions set forth in Sections 4.1.2, 4.1.5, 4.1.6 and 4.1.7 (substituting Vertex's judgment and disclosure for
Merck's) and to Vertex's contractual obligations arising prior to the Effective Date.

	4.3
	Publication.

	(a)
	Merck and Vertex each acknowledge the other Party's interest in publishing the results of its research in order to obtain recognition
within the scientific community and to advance the state of scientific knowledge. Authorship of any publication shall be determined based on the accepted standards used in peer-reviewed,
academic journals at the time of the proposed publication. Each Party also recognizes the mutual interest in obtaining valid patent protection and in protecting business interests and trade secret
information. Consequently, except for disclosures permitted pursuant to Section 4.1, if either Party, its employees or consultants wishes to publish or publicly present, during the Research
Program Term and/or the Washout Period, results of the Research Program or any information about a Compound, Product Candidate, Product, or the results of any program to discover or develop any of the
above, it shall deliver to the other Party a copy of the proposed written publication or an outline of an oral disclosure at least [***] prior to submission for publication or
presentation. The reviewing Party shall notify the other Party within [***] of receipt of such proposed publication whether such draft publication contains
(i) Information that is confidential to the reviewing Party, or (ii) information that if published would have an adverse effect on a patent application covering the subject matter of this
Agreement. The reviewing Party shall have the right to (a) propose modifications to the publication or presentation for patent reasons, trade secret reasons, confidentiality reasons or business
reasons or (b) request a reasonable delay in publication or presentation in order to protect patentable information. If the reviewing Party requests a delay to protect patentable information, the
publishing Party shall delay submission or presentation for a period not to exceed [***] to enable patent applications protecting each Party's rights in such information to be
filed in accordance with Article 7. Upon expiration of such [***] the publishing Party shall be free to proceed with the publication or presentation. If the reviewing Party
reasonably requests modifications to the publication or presentation to prevent disclosure of trade secret or proprietary business information, the publishing Party shall edit such publication to
prevent the disclosure of such information prior to submission of the publication or presentation. For the avoidance of doubt, neither Party shall be entitled publish Information of the other in
violation of Section 4.1.

	(b)
	After the expiration of the Research Program and the Washout Period, the Parties shall continue to be obligated to adhere to the
guidelines set out in Section 4.3(a), but solely with respect to publications or public presentations containing information about a Development Candidate, Product Candidate, and/or a Product, except
that if Merck, its employees or consultants wishes to publish or publicly present clinical data or clinical information about a Development Candidate, Product Candidate, or Product being developed by
Merck pursuant to this Agreement, it shall be obligated deliver to Vertex a copy of the proposed written publication or an outline of an oral disclosure at least [***] prior to
submission for publication or presentation. Vertex shall notify Merck within [***] of receipt of such proposed publication whether such draft publication contains (i)
Information that is confidential to Vertex, or 

14

 

 

(ii)
information that if published would have an adverse effect on a patent application covering the subject matter of this Agreement. If Vertex reasonably requests modifications to the publication or
presentation to prevent disclosure of trade secret or proprietary business information, Merck shall edit such publication to prevent the disclosure of such information prior to submission of the
publication or presentation. If Vertex requests a delay to protect patentable information, Merck shall delay submission or presentation for a period not to exceed [***] to
enable patent applications protecting each Party's rights in such information to be filed in accordance with Article 7. Upon expiration of such [***], Merck shall be
free to proceed with the publication or presentation. 

	(c)
	This Section 4.3 shall terminate with the termination of this Agreement, but the provisions of Section 4.1 shall continue
to govern the disclosure by one Party, by publication or otherwise, of Information of the other, during the period set forth in Section 8.6.

 

	4.4
	Publicity/Use of Names. Merck and Vertex shall agree upon the timing and content of an
initial press release relating to this Agreement and the transactions contemplated herein. Except to the extent already disclosed in that initial press release, no disclosure of the existence of this
Agreement, its subject matter or its terms may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news
release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by applicable laws, regulations, or
judicial order. The Party desiring to make any such public announcement shall provide the other Party with a written copy of the proposed announcement in sufficient time prior to public release to
allow such other Party to comment upon such announcement, prior to public release. 

In
addition to the foregoing restrictions on public disclosure, if either Party concludes that a copy of this Agreement must be filed with the Securities and Exchange Commission, such Party shall
provide the other Party with a copy of this Agreement showing any sections as to which the Party proposes to request confidential treatment, will provide the other Party with an opportunity and a
reasonable time period to comment on any such proposal and to suggest additional portions of the Agreement for confidential treatment and will take such Party's reasonable comments into consideration
before filing the Agreement. If the filing Party disagrees with the other Party's additional confidential treatment request, the Parties shall have an opportunity to discuss such matter in good faith
before the Agreement is filed. 

ARTICLE 5: PAYMENTS; ROYALTIES AND REPORTS  

	5.1
	Research Program Funding. In consideration for Vertex's performance of its obligations
under the Research Program (including its FTE staffing obligations pursuant to Section 2.3), upon the terms and conditions contained herein, Merck shall pay Vertex:

	(a)
	[***] for the period from the Effective Date through December 31, 2004, such payment to be made by Merck
in two equal installments of [***], the first of which will be paid within [***] and the second of which will be paid [***]; and

	(b)
	additional research support thereafter at an annual rate of [***] for the balance of the Research Program Term
(the "Annual Research Fees"), such payments to be made in equal payments of US [***] per Calendar Quarter, payable in advance, with the first such quarterly payment due on or
before [***]. 

The
required payments are based upon the following assumptions: (a) the [***] of FTEs which Vertex will have employed in the Research Program for the portion of the
Research Program that ends on [***] (the "Early Period") will be [***]; (b) the [***] of FTEs which Vertex will have
employed in the Research Program for the portion of the Research Program beginning on 

15

 

January 1,
2005 and ending upon the termination of the Research Program Term [***]; and (c) the annual rate per FTE is [***]. If the
average FTE level for any of the Early Period, Calendar Year 2005, or the remainder of the Research Program Term after Calendar Year 2005 is less than the level specified above for that period (the
difference being referred to in this section as an "FTE Shortfall"), then the amount of funding specified above for that period shall be reduced by an amount (the "FTE Shortfall Amount") that bears
the same relation to the total funding specified for that period as the FTE Shortfall bears to the projected FTE level for that period. The FTE Shortfall Amount shall be carried over from period to
period and applied to compensate Vertex for FTE levels in subsequent periods that exceed the level for those periods as specified above. In any such subsequent period, Vertex shall be entitled to
receive out of any remaining FTE Shortfall Amount a payment equal to the value (computed with reference to the FTE rate specified in (c) above) of any FTEs employed in the Research Period in
excess of the FTE level specified above for such period. 

	5.2
	Consideration for License. In consideration for the licenses granted pursuant to
Article 3 and the research obligations set forth herein, upon the terms and conditions contained herein, Merck shall pay to Vertex a one-time payment of twenty million dollars (US
$20,000,000) within five (5) business days of the Effective Date.

	5.3
	Milestone Payments. In addition to the payments set out in Sections 5.1 and 5.2,
the following amounts (each, a "Milestone Payment") shall be payable only once if (and only if) the corresponding milestones with regard to a Product are satisfied (each a "Milestone"):

	5.4
	Lead Compound Milestones for First Cancer Indication  

	(a)[***]	 	$[***]
	(b) Demonstration of Biologic Activity	 	$7,500,000
	(c) Merck Initiates first Phase II Clinical Trial	 	$10,000,000
	(d) Merck Initiates first Pivotal Registration Study	 	$25,000,000
	(e)[***]	 	$[***]
	(f)[***]	 	$[***]
	
5.5	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	
5.6	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	
5.7	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]

16

 

	5.8	 	 
	 	[***]	 	 
	 	
5.8A	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	(d)[***]	 	$[***]
	 	
5.8B	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	(d)[***]	 	$[***]
	
5.9	
 	

 
	 	[***]	 	 
	(a) Development Election for 1st Follow-On Compound	 	$12,000,000
	(b) Development Election for 2nd Follow-On Compound	 	$9,000,000
	(c)[***]	 	$[***]
	 	[***]	 	 
	 	[***]	 	 
	
5.10 Milestones for Follow-On Compounds	
 	

 
	 	
5.10A	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	(d)[***]	 	$[***]
	(e)[***]	 	$[***]
	 	
5.10B	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	 	
5.10C	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	 	
5.10D	
 	

 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	
5.11	
 	

 
	 	[***]	 	 

17

 

	5.11A	 	 
	 	[***]	 	 
	(a)[***]	 	$[***]
	(b)[***]	 	$[***]
	(c)[***]	 	$[***]
	(d)[***]	 	$[***]
	 	
5.11B	
 	

 
	 	[***]	 	 
	 	(a)[***]	 	$[***]
	 	(b)[***]	 	$[***]
	 	(c)[***]	 	$[***]
	 	(d)[***]	 	$[***]

	5.12
	Milestone Payments—General. (a) [***] Merck shall
notify Vertex in writing within thirty (30) days upon the achievement (or deemed achievement) of each Milestone, and shall make the appropriate Milestone Payment within
[***] of the achievement (or deemed achievement) of such Milestone.

	(b)
	Once
a Product achieves a Milestone for a particular Indication, it will be deemed to have achieved all earlier Milestones for such Indication, and any Milestone Payment for such
earlier Milestone shall become due and payable to the extent it has not already been previously paid.

	(c)
	[***]

	(d)
	Each
Milestone Payment shall be payable upon achievement of such Milestone by action of any of Merck or a Related Party.

 

	5.13
	Royalties

	5.13.1
	Royalties Payable By Merck. Subject to the terms and conditions of this Agreement,
Merck shall pay to Vertex royalties on a country-by-country basis as set out in this Section 5.13.

	5.13.2
	Patent Royalties  

Subject
to the provisions of this Agreement, including Section 5.13.3, Merck shall pay Vertex royalties in an amount equal to the following percentages of Net Sales of Products by Merck or its
Related Parties, provided that the sale of Product would infringe a Valid Patent Claim in the country of sale: 

	•
	For
Calendar Year Net Sales in the Territory between [***]:                        : [***]

	•
	For
those incremental Calendar Year Net Sales in the Territory [***]: [***]

	•
	For
those incremental Calendar Year Net Sales in the Territory greater than [***]: [***] 

Royalties
on each Product at the Patent royalty rates set forth above shall continue on a country-by-country basis until the later of (a) [***]
from the date of First Commercial Sale of such Product in such country, or (b) the expiration of the last-to-expire Valid Patent Claim in effect in such country that
would be infringed by the sale of such Product. This Section 5.13.2 shall apply to sales of Products in any country where such sale would infringe a Valid Patent Claim at any time, even if such
Valid Patent Claim subsequently expires before the [***] of the date of First Commercial Sale of such Product in such country. 

	5.13.3
	Know-How Royalty.

 
	(a)
	If the sale of Product would infringe a Valid Patent Claim in the United States and at least [***] of the other Major Markets
(i.e., [***]) ("Major Markets Condition"), in any countries 

18

 

where
the sale of Product by Merck or its Related Parties would not infringe a Valid Patent Claim and royalties would not be due under Section 5.13.2 (each, a "Non-Patent Country"),
Merck shall pay royalties to Vertex at the applicable royalty rate determined according to Section 5.13.2. Merck shall pay Vertex royalties at such rates for [***] from
the date of First Commercial Sale of a Product in each such Non-Patent Country (the "Know-How License Term"), on a Product-by-Product and
country-by-country basis. Notwithstanding the above, if at any time during the Know-How License Term applicable to a particular Non-Patent Country, a
Third Party sells a pharmaceutical product which is a "generic version" of a Product being sold in that country (a "Third Party Product")—where "generic version" means
[***], the royalties payable to Vertex by Merck on Net Sales of such Product in such country for such period shall be [***] of the applicable royalty
rate determined according to Section 5.13.2. 

	(b)
	Notwithstanding
the provisions of Section 5.13.2, and except as set forth in Section 5.13.3(a), in countries where the sale of Product by Merck or its Related Parties
would not infringe a Valid Patent Claim and royalties would not be payable under Section 5.13.2, Merck shall pay royalty rates that shall be set at [***] of the
applicable royalty rate determined according to Section 5.13.2 (the "Know-How Royalty Rate"). Such royalties shall be calculated after first calculating royalties under
Section 5.13.2. Merck shall pay Vertex royalties at the Know-How Royalty rate from the date of First Commercial Sale of a Product, for [***], on a
Product-by-Product and country-by-country basis.

	5.13.4
	Royalty tiers pursuant to 5.13.2 and 5.13.3 shall be calculated based on Net Sales of each Product in the Territory, provided that
the determination of whether the royalty shall be calculated under 5.13.2 or 5.13.3 shall be determined on a country-by-country basis. All royalties are subject to the
following conditions:

	(x)
	that only one royalty shall be due with respect to the same unit of Product;

	(y)
	that no royalties shall be due upon the sale or other transfer among Merck or its Related Parties, but in such cases the royalty shall
be due and calculated upon Merck's or its Related Party's Net Sales to the first independent Third Party; and

	(z)
	no royalties shall accrue on the disposition of Product without consideration in reasonable quantities by Merck or its Related Parties
as samples (promotion or otherwise) or as donations (for example, to non-profit institutions or government agencies for a non-commercial purpose).

 

	5.14
	Change in Sales Practices. The Parties acknowledge that during the term of this
Agreement, Merck's sales practices for the marketing and distribution of Product may change to the extent that the calculation of the payment for royalties on Net Sales may become impractical or even
impossible. In such event, the Parties agree to meet and discuss in good faith new ways of compensating Vertex to the extent currently contemplated under Section 5.13.

	5.15
	Royalties for Bulk Compound. In those cases where Merck sells bulk Compound rather
than Product in packaged form to an independent Third Party, such sale shall be made in an arm's length transaction and the royalty obligations of Section 5.13 shall be applicable to the bulk
Compound.

	5.16
	Compulsory Licenses. If a compulsory license required under applicable law is granted
to a Third Party with respect to Product in any country in the Territory with a royalty rate lower than the royalty rate provided by Section 5.13, then the royalty rate to be paid by Merck on
Net Sales in that country under Section 5.13 shall be reduced to the rate paid by the compulsory licensee.

	5.17
	Third Party Licenses. If one or more patent licenses from other Third Parties are
required by Merck or its Related Parties in order to make, have made, use, offer to sell, sell or import Product 

19

 

Candidate
or Product(s) (hereinafter "Third Party Patent Licenses"), or in the absence of such Third Party Patent License, the use by Merck of the Patent Rights, Vertex Know-How or Vertex
Information and Inventions would infringe Third Party patents rights, then [***] of the consideration actually paid under such Third Party Patent Licenses by Merck or its
Related Parties for sale of such Product in a country for a Calendar Quarter shall be creditable against the royalty payments due Vertex by Merck with respect to the sale of such Products in a
country; provided, that the royalty payment to Vertex on account of sales in that country for such Calendar Quarter shall not be reduced by more than
[***] the monies otherwise owed to Vertex; and any amounts not able to be reduced due to the immediately foregoing limitation shall be carried forward to future Calendar
Quarters for crediting against future royalties in such country. [***] 

	5.18
	Reports; Payment of Royalty. During the term of this Agreement following the First
Commercial Sale of a Product, Merck shall furnish to Vertex a quarterly written report for the Calendar Quarter showing (i) the Net Sales of all Products subject to royalty payments sold by
Merck and its Related Parties in the Territory during the reporting period; and (ii) the royalties payable under this Agreement. Reports shall be due on the [***] day
following the close of each Calendar Quarter, although Merck shall use its commercially reasonable efforts to also provide Vertex with a "flash" report of estimated Net Sales, only, within
[***] days after the end of each calendar month. Royalties shown to have accrued by each royalty report shall be due and payable on the date such royalty report is due. Merck
shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined and to be verified by Vertex's accounting firm pursuant to Section 5.19.

	5.19
	Audits. Upon the written request of Vertex and not more than once in each Calendar
Year, Merck shall permit an independent certified public accounting firm of nationally recognized standing selected by Vertex and reasonably acceptable to Merck, at Vertex's expense, to have access
during normal business hours to such of the records of Merck as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than
[***] prior to the date of such request. The accounting firm shall disclose to Vertex only whether the royalty reports are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be provided to Vertex. 

If
such accounting firm correctly identifies a discrepancy made during such period, the appropriate Party shall pay the other Party the amount of the discrepancy within [***]
of the date Vertex delivers to Merck such accounting firm's written report so correctly concluding, or as otherwise agreed upon by the Parties. The fees charged by such accounting firm shall be paid
by Vertex. 

Merck
shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to Merck, to keep and maintain records of sales made pursuant to
such sublicense and to grant access to such records by Vertex's independent accountant to the same extent required of Merck under this Agreement. 

Upon
the expiration of [***] following the end of any Calendar Year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon Vertex,
and Merck and its Related Parties shall be released from any liability or accountability with respect to royalties for such Calendar Year. 

Vertex
shall treat all financial information subject to review under this Section 5.19 or under any sublicense agreement in accordance with the confidentiality and non-use
provisions of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with Merck and/or its Related Parties obligating it to retain all such
information in confidence pursuant to such confidentiality agreement. 

20

 

 

	5.20
	Payment Exchange Rate. All payments to be made by Merck to Vertex under this Agreement
shall be made in United States dollars and may be paid by check made to the order of Vertex or bank wire transfer in immediately available funds to such bank account in the United States designated in
writing by Vertex from time to time. In the case of sales outside the United States, the rate of exchange to be used in computing the amount of currency equivalent in United States dollars due Vertex
shall be made at the rate of exchange utilized by Merck in its worldwide accounting system, prevailing on the third to the last business day of the month prior to the month in which such sales are
recorded by Merck.

	5.21
	Income Tax Withholding. If laws, rules or regulations require withholding of income
taxes or other taxes imposed upon payments set forth in this Article 5, Merck shall make such withholding payments as required and subtract such withholding payments from the payments set forth
in this Article 5. Merck shall submit appropriate proof of payment of the withholding taxes to Vertex within a reasonable period of time.

	5.22
	Interest Penalty. In case of any delay in payment by Merck to Vertex not occasioned by
Force Majeure (as described in Section 9.3), interest at the monthly rate of [***], assessed from the thirty-first day after the due date of the payment, shall be due
from Merck. 

ARTICLE 6: REPRESENTATIONS AND WARRANTIES  

	6.1
	Vertex Representation and Warranty. Vertex represents and warrants to Merck that as of
the Effective Date:

	6.1.1
	to Vertex's knowledge, the Patent Rights and Vertex Know-How exist and are not invalid or unenforceable, in whole or in
part;

	6.1.2
	it has the full corporate right, power and authority to enter into this Agreement, to perform the Research Program and to grant the
licenses granted hereunder;

	6.1.3
	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. 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;

	6.1.4
	it has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in VX-680,
the Existing Compounds, Patent Rights or Vertex Know-How;

	6.1.5
	to Vertex's knowledge, it is the sole and exclusive owner of VX-680, the Existing Compounds, the Patent Rights and Vertex
Know-How, all of which are (and shall be, in the case of Vertex Information and Inventions) free and clear of any liens, charges and encumbrances, and no other person, corporate or other
private entity, or governmental entity or subdivision thereof, has or shall have any claim of ownership whatsoever with respect to the VX-680, Existing Compounds, Patent Rights and Vertex
Know-How;

	6.1.6
	to Vertex's knowledge, the exercise of the license granted to Merck under the Patent Rights and Vertex Know-How,
including without limitation the development, manufacture, use, sale and import of Compounds, Product Candidates and Products do not interfere with or infringe any intellectual property rights owned
or possessed by any Third Party;

	6.1.7
	there are no claims known to Vertex, and no judgments or settlements against or owed by Vertex or pending or threatened claims or
litigation relating to the Patent Rights and Vertex Know-How;

	6.1.8
	to Vertex's knowledge, Schedules 1.19 and 1.63 together set forth all small molecule compounds Controlled by Vertex
[***]; and 

21

 

	6.1.9
	Vertex has disclosed to Merck all reasonably relevant information known to Vertex regarding the Patent Rights and Vertex
Know-How licensed under this Agreement.

 

	6.2
	Merck Representation and Warranty. Merck represents and warrants to Vertex that as of
the Effective Date:

	6.2.1
	it has the full corporate right, power and authority to enter into this Agreement, and perform its obligations hereunder; and

	6.2.2
	this Agreement has been duly executed and delivered by Merck and constitutes the valid and binding obligation of Merck, enforceable
against Merck in accordance with its terms. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary action on the part of Merck, its officers and
directors. 

ARTICLE 7: PATENT PROVISIONS  

	7.1
	Filing, Prosecution and Maintenance of Patents. Vertex agrees to file, prosecute and
maintain in the Territory, upon appropriate consultation with Merck, the Patent Rights licensed to Merck under this Agreement. Merck shall have the first right to file, prosecute and maintain in the
Territory Collaboration Patent Rights. With respect to Vertex Information and Inventions, Vertex may elect not to file, prosecute and maintain patent applications directly thereto and if so, Merck
shall have the right to file, prosecute and maintain such patent applications. In such event, Vertex shall execute such documents and perform such acts at Vertex's expense as may be reasonably
necessary to effect an assignment of such Patent Rights to Merck in a timely manner to allow Merck to continue such preparation and prosecution or maintenance. In each case, the filing Party shall
give the non-filing Party an opportunity to review the text of the application before filing, shall consult with the non-filing Party with respect thereto, and shall supply the
non-filing Party with a copy of the application as filed, together with notice of its filing date and serial number. Vertex shall keep Merck advised of the status of the actual and
prospective patent filings and upon the request of Merck, provide advance copies of any papers related to the filing, prosecution and maintenance of such patent filings. Vertex shall promptly give
notice to Merck of the grant, lapse, revocation, surrender, invalidation or abandonment of any Patent Rights licensed to Merck for which Vertex is responsible for the filing, prosecution and
maintenance. With respect to all filings hereunder, the filing Party shall be responsible for payment of all costs and expenses related to such filings.

	7.2
	Option to Prosecute and Maintain Patents.

 
	(a)
	Merck Option. Vertex shall give notice to Merck of any desire to cease prosecution
and/or maintenance of Patent Rights on a country by country basis in the Territory and, in such case, shall permit Merck, at its sole discretion, to continue prosecution or maintenance of such Patent
Rights at its own expense. If Merck elects to continue prosecution or maintenance or to file based on Vertex's election not to file pursuant to Section 7.1, Vertex shall execute such documents
and perform such acts at Vertex's expense as may be reasonably necessary to effect an assignment of such Patent Rights to Merck in a timely manner to allow Merck to continue such prosecution or
maintenance. Any patents or patent applications so assigned shall not be considered Patent Rights.

	(b)
	Vertex Option. Merck shall give notice to Vertex of any desire to cease prosecution
and/or maintenance of Collaboration Patent Rights on a country by country basis in the Territory and, in such case, shall permit Vertex, at its sole discretion, to continue prosecution or maintenance
of such Collaboration Patent Rights at its own expense. If Vertex elects to continue prosecution or maintenance or to file based on Merck's election not to file pursuant to Section 7.1, Merck
shall execute such documents and perform such acts at Merck's expense as may be reasonably necessary to effect an assignment of such Collaboration Patent Rights to 

22

 

Vertext
in a timely manner to allow Vertex to continue such prosecution or maintenance. Any patents or patent applications so assigned shall not be considered Collaboration Patent Rights. 

	7.3
	Interference, Opposition, Reexamination and Reissue.

	7.3.1
	Vertex shall, within ten (10) days of learning of such event, inform Merck of any request for, or filing or declaration of,
any interference, opposition, or reexamination relating to Patent Rights. Merck and Vertex shall thereafter consult and cooperate fully to determine a course of action with respect to any such
proceeding. Merck shall have the right to review and approve any submission to be made in connection with such proceeding.

	7.3.2
	Vertex shall not initiate any reexamination, interference or reissue proceeding relating to Patent Rights without the prior written
consent of Merck, which consent shall not be unreasonably withheld.

	7.3.3
	In connection with any interference, opposition, reissue, or reexamination proceeding relating to Patent Rights and Collaboration
Patent Rights, Merck and Vertex will cooperate fully and will provide each other with any information or assistance that either may reasonably request. Vertex shall keep Merck informed of developments
in any such action or proceeding, including, to the extent permissible by law, consultation and approval of any settlement, the status of any settlement negotiations and the terms of any offer related
thereto.

	7.3.4
	Vertex shall bear the expense of any interference, opposition, reexamination, or reissue proceeding relating to Patent Rights. The
Parties shall share equally the expense of any interference, opposition, reexamination or re-issue proceeding relating to the Collaboration Patent Rights.

 

	7.4
	Enforcement and Defense

	7.4.1
	Vertex shall give Merck notice of either (i) any infringement of Patent Rights, or (ii) any misappropriation or misuse
of Vertex Know-How, that may come to Vertex's attention. Merck and Vertex shall thereafter consult and cooperate fully to determine a course of action, including but not limited to the
commencement of legal action by either or both Merck and Vertex, to terminate any infringement of Patent Rights or any misappropriation or misuse of Vertex Know-How. However, Vertex, upon
notice to Merck, shall have the first right to initiate and prosecute such legal action at its own expense and in the name of Vertex and Merck, or to control the defense of any declaratory judgment
action relating to Patent Rights or Vertex Know-How. Vertex shall promptly inform Merck if it elects not to exercise such first right and Merck shall thereafter have the right to either
initiate and prosecute such action or to control the defense of such declaratory judgment action in the name of Merck and, if necessary, Vertex. Each Party shall have the right to be represented by
counsel of its own choice.

	7.4.2
	If Vertex elects not to initiate and prosecute an action as provided in Section 7.4.1, and Merck elects to do so, the costs of
any agreed-upon course of action to terminate infringement of Patent Rights or misappropriation or misuse of Vertex Know-How, including without limitation the costs of any
legal action commenced or the defense of any declaratory judgment, shall be shared equally by Vertex and Merck. 

23

 

	7.4.3
	For any action to terminate any infringement of Patent Rights or any misappropriation or misuse of Vertex Know-How, in
the event that Merck is unable to initiate or prosecute such action solely in its own name, Vertex will join such action voluntarily and will execute and cause its Affiliates to execute all documents
necessary for Merck to initiate litigation to prosecute and maintain such action. In connection with any action, Merck and Vertex will cooperate fully and will provide each other with any information
or assistance that either may reasonably request. Each Party shall keep the other informed of developments in any action or proceeding, including, to the extent permissible by law, the consultation
and approval of any settlement negotiations and the terms of any offer related thereto.

	7.4.4
	Any recovery obtained by either or both Merck and Vertex in connection with or as a result of any action contemplated by this
Section, whether by settlement or otherwise, shall be shared in order as follows:

	(i)
	the Party which initiated and prosecuted the action shall recoup all of its costs and expenses incurred in connection with the action;

	(ii)
	the other Party shall then, to the extent possible, recover its costs and expenses incurred in connection with the action; and

	(iii)
	the amount of any recovery remaining shall then be allocated between the Parties on a pro rata basis taking into consideration the
relative economic losses suffered by each Party.

 

	7.4.5
	Vertex shall inform Merck of any certification regarding any Patent Rights it has received pursuant to either 21 U.S.C.
§§355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or its successor provisions or any similar provisions in a country in the Territory other than the United States and shall provide
Merck with a copy of such certification within five (5) days of receipt. Vertex's and Merck's rights with respect to the initiation and prosecution of any legal action as a result of such
certification or any recovery obtained as a result of such legal action shall be as defined in subsections 7.4.1 through 7.4.4; provided, however, the Vertex shall exercise its first right to
initiate and prosecute any action and shall inform Merck of such decision within ten (10) days of receipt of the certification, after which time Merck shall have the right to initiate and
prosecute such action.

	7.4.6
	Patent Term Restoration. The Parties hereto shall cooperate with each other in
obtaining patent term restoration or supplemental protection certificates or their equivalents in any country in the Territory where applicable to Patent Rights. In the event that elections with
respect to obtaining such patent term restoration are to be made, Merck shall have the right to make the election and Vertex agrees to abide by such election. 

ARTICLE 8: TERM AND TERMINATION  

	8.1
	Term and Expiration. This Agreement shall be effective as of the Effective Date and
unless terminated earlier pursuant to Sections 8.2 or 8.3, this Agreement shall continue in effect until expiration of all royalty obligations under Article 5. Upon expiration of this
Agreement, Merck's licenses pursuant to Section 3.1 and 3.2 shall become fully paid-up, perpetual licenses.

	8.2
	Termination by Merck. Notwithstanding anything contained herein to the contrary, after
June 30, 2005, Merck shall have the right to terminate this Agreement at any time in its sole discretion by giving ninety (90) days' advance written notice to Vertex; provided, however
(a) during the second (2nd) year of the Research Program Term, Merck shall provide [***] advance written notice to Vertex; and (b) if a Product has received a
Marketing Authorization in a Major Market and such termination is for a reason other than a Valid Safety Issue, [***] advance written notice shall be 

24

 

required.
Not later than thirty (30) days after the date of such termination, each Party shall return or cause to be returned to the other Party all Information in tangible form received from
the other Party and all copies thereof, except that each Party may retain one copy in its confidential files for records purposes. In the event of termination under this Section 8.2:
(i) Merck shall pay Vertex all amounts then due and owing as of the termination date; and (ii) except for the surviving provisions set forth in Section 8.6, the rights and
obligations of the Parties under this Agreement shall terminate as of the date of such termination. For the purposes of this Agreement, a "Valid Safety Issue" shall mean [***]. 

	8.3
	Cause for Termination. This Agreement may be terminated at any time during the term of
this Agreement:

	8.3.1.
	upon written notice by either Party if the other Party is in breach of its material obligations hereunder by causes and reasons
within its control and has not cured such breach within ninety (90) days after notice requesting cure of the breach; provided, however, in the event of a good faith dispute with respect to the
existence of a material breach, the ninety (90) day cure period shall be tolled until such time as the dispute is resolved pursuant to Section 9.8;

	8.3.2.
	by either Party upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an
assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided, however, in the case of any involuntary bankruptcy proceeding such right to terminate shall
only become effective if the Party consents to the involuntary bankruptcy or such proceeding is not dismissed within ninety (90) days after the filing thereof.

 

	8.4
	Effect of Termination for Cause on License

	8.4.1
	If Merck terminates this Agreement under Section 8.3.1, then (i) Merck's licenses pursuant to Sections 3.1 and
3.2 shall become fully paid-up (except that the financial provisions of Sections 5.3 through 5.20 of this Agreement shall continue), exclusive, perpetual licenses; (ii) Merck
shall have the right to offset against any monies owed to Vertex (pursuant to Sections 5.3 through 5.20 of this Agreement) all of its costs, losses and expenses incurred as a result of Vertex's
breach as set forth in Section 8.3.1 of this Agreement; and (iii) Vertex shall, within thirty (30) days after such termination return or cause to be returned to Merck all Merck
Information in tangible form, and all substances or compositions delivered or provided by Merck, as well as any other material provided by Merck in any medium. If Vertex terminates this Agreement
under Section 8.3, Merck's licenses pursuant to Sections 3.1 and 3.2 shall terminate as of such termination date and Merck shall, within thirty (30) days after such termination,
return or cause to be returned to Vertex all Vertex Information in tangible form, and all substances or compositions delivered or provided by Vertex, as well as any other material provided by Vertex
in any medium.

	8.4.2
	If this Agreement is terminated by Merck pursuant to subsection 8.3.2 due to the rejection of this Agreement by or on behalf
of Vertex under Section 365 of the United States Bankruptcy Code (the "Code"), all licenses and rights to licenses granted under or pursuant to this Agreement by Vertex to Merck are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the Code, licenses of rights to "intellectual property" as defined under Section 101(35A) of the Code. The Parties agree that
Merck, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Code, and that upon commencement of a bankruptcy proceeding by
or against Vertex under the Code, Merck shall be entitled to a complete duplicate of or complete access to (as Merck deems appropriate), any such intellectual property and all embodiments of such
intellectual property. Such intellectual property and all embodiments thereof shall be promptly delivered to Merck (i) upon any such commencement of a bankruptcy proceeding upon 

25

 

 

written
request therefore by Merck, unless Vertex elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection
of this Agreement by or on behalf of Vertex upon written request therefore by Merck. 

	8.4.3
	The foregoing provisions of subsection 8.4.2 are without prejudice to any rights Merck may have arising under the Code or
other applicable law.

 

	8.5
	Rights Upon Expiration of Research Program Term and Washout Period

Upon
expiration or termination of the Research Program Term and Washout Period: 

	(a)
	Subject to the provisions of Section 8.5(c) of this Agreement, Merck's licenses pursuant to Sections 3.1 and 3.2 shall
continue as to any Products, Product Candidates and Development Candidates then existing; provided,  however, that with respect to any Development Candidate,
 such licenses shall terminate if Merck does not make its Development Election with respect to
such Development Candidate within the [***] period set forth in Section 3.6;

	(b)
	Subject to the provisions of Section 8.5(c) of this Agreement, Merck's licenses pursuant to Sections 3.1 and 3.2 shall
terminate as to all Compounds and Deferred Candidates, excluding, however, any such Compounds and Deferred Candidates that have become Products, Product Candidates or Development Candidates covered by
Section 8.5(a) immediately above; and

	(c)
	Notwithstanding the provision of Sections 8.5(b), Merck shall have the right to designate [***]
additional Compounds or Deferred Candidates in which Merck may have a continued interest in developing ("ROFO Compounds"). For a period of [***] from the expiration of the
Washout Period, Vertex shall not (i) enter into discussions or negotiations with any Third Party regarding any business arrangement for the development, marketing or sale of any ROFO Compound;
or (ii) commence or continue its own internal development, marketing or sale program with regard to any ROFO Compound, unless Vertex first offers in good faith and in writing any such ROFO
Compound to Merck for development and commercialization as a Product Candidate pursuant to the terms and conditions of this Agreement. Merck must accept in writing within [***]
of the delivery of such offer in order to accept such offer. If Merck rejects such offer in writing, or fails to accept within such period, Vertex may enter into discussions with Third Parties
regarding such a business arrangement or conduct its own internal development, marketing or sale program with respect to such ROFO Compound.

 

	8.6
	Effect of Expiration or Termination; Survival    Expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the
rights of either Party against the other accrued or accruing under this Agreement prior to expiration or termination, including without limitation the obligation to pay royalties for Product(s) sold
prior to such expiration or termination. The provisions of Section 4.1 shall survive the expiration or termination of this Agreement and shall continue in effect for
[***]. In addition, the provisions of Article 1, Sections 2.8, 4.3, 4.4 and 5.19, shall indefinitely survive any expiration or termination of this Agreement.

	8.7
	Effect of Vertex Change of Control    If (a) a Change of Control of
Vertex occurs and (b) the Change of Control party is a pharmaceutical or biotechnology company or other health care company, or group of health care companies acting in concert, with
(i) a market capitalization of more than [***], and/or (ii) total 

26

 

annual
sales of pharmaceutical products (including sales by all affiliates of such company or companies) prior to such acquisition in excess of [***], then: 

	(a)
	the financial provisions of Article 5 shall continue and be payable to the Change of Control party; and

	(b)
	Merck may, at its election effect any or all of the following changes to the terms of this Agreement:

	(i)
	[***]

	(ii)
	all co-promotion rights of Vertex as set forth in Section 3.11 [***] Indication as the
Product

	(iii)
	Merck's obligation to provide royalty reports pursuant to Section 5.18 shall be limited to reporting Merck's total worldwide
royalty obligations on a regional basis for the following three regions (a) the United States; (b) the European Union; and (c) the rest of the world;

	(iv)
	to the extent that provisions of the Agreement require Merck to provide Merck Information and Inventions, Merck Know-How,
materials and Information to Vertex, such provisions shall be automatically amended to no longer impose such an obligation on Merck; provided, however,
that the audit rights under Article 5 remain in place and the Vertex auditor shall have access to all information required to be reported under Section 5.19 absent this Change of Control
provision;

	(v)
	Vertex shall adopt procedures to be agreed upon in writing by Merck to prevent the disclosure of Merck Information and Inventions,
Merck Know-How, Merck Information and materials (collectively "Sensitive Information") beyond those Vertex personnel with access to and knowledge of Sensitive Information prior to the
Change of Control and Vertex shall adopt procedures approved in writing by Merck to control the dissemination of Sensitive Information that Merck may disclose after the Change of Control. The purposes
of such procedures shall be to strictly limit such disclosures to only those personnel having a need to know Sensitive Information in order for Vertex to perform its obligations;

	(vi)
	Merck's rights as set forth in this Agreement continue, including, but not limited to, its licenses pursuant to Sections 3.1
and 3.2 (subject to Section 8.5); and

	(vii)
	If there is a Change in Control during the Research Program Term, at any time within the first 90 days after a Change in
Control, Merck shall be entitled, by written notice to Vertex, to elect to review the status of the Research Program, including but not limited to the scientific details of all Compounds in
development that have not at that time met the Development Candidate Criteria or been presented to the JRC, solely for the purpose of allowing Merck to make an informed decision with regard to its
election right under Section 8.7(b)(i) of this Agreement. 

ARTICLE 9: MISCELLANEOUS  

	9.1
	Indemnification
	(a)
	Except to the extent due to the negligence or willful misconduct of Merck, Vertex shall indemnify, defend and hold Merck and its
Affiliates, and their respective directors, officers, employees and agents, harmless from and against any claims of damages (except to the extent arising from any claim of intellectual property
infringement), bodily injury, death, or property damage made by a Third Party (a "Third Party Claim") to the extent arising from: (i) the 

27

 

negligence
or willful misconduct of Vertex under this Agreement; (ii) the material breach by Vertex of any warranty, representation or obligation of Vertex under this Agreement; or
(iii) the development, synthesis, testing, use, storage or handling by Vertex or its representatives or agents under this Agreement of any Compound, Development Candidate, Deferred Candidate,
Follow-on Compound, Product Candidate or Product. 

	(b)
	Except to the extent due to the negligence or willful misconduct of Vertex, Merck shall indemnify, defend and hold Vertex and its
Affiliates, and their respective directors, officers, employees and agents, harmless from and against any Third Party Claim resulting from (i) the negligence or willful misconduct of Merck
under this Agreement; (ii) the material breach by Merck of any obligation of Merck under this Agreement; or (iii) the development, testing, synthesis, use, storage, handling, manufacture
or commercialization by Merck or its representatives or agents under this Agreement of any Compound, Merck AK Compound, Development Candidate, Deferred Candidate, Follow-on Compound,
Product Candidate or Product.

	(c)
	If a Party (the "Indemnitee") intends to claim indemnification under this Section, it shall promptly notify the other Party (the
"Indemnitor") in writing of any Third Party Claim for which the Indemnitee intends to claim such indemnification. The failure of the Indemnitee to deliver written notice to the Indemnitor within a
reasonable time after the commencement of any such action shall relieve the Indemnitor of any obligation to the Indemnitee under this Section with respect to any such action. The Indemnitee shall
permit the Imdemnitor to control the litigation and/or settlement of such Third Party Claim, and cooperate fully with Indemnitor in all matters related thereto, provided that unless agreed by
Indemnitee (i) counsel appointed by Imdemnitor to defend Indemnitee shall not take any position which if sustained would cause Indemnitee not to be indemnified by Indemnitor and (ii) no
settlement will involve any terms binding on Indemnitee except payment of money to by paid by Indemnitor.

	(d)
	Neither Party shall be liable to the other for indirect, consequential, special or punitive damages under this Agreement.

 

	9.2
	Merck agrees that during the Standstill Term (defined below), neither Merck nor any of its Affiliates will, without the prior written
consent of Vertex (i) acquire, or participate as part of a group which in the aggregate acquires, securities representing more than [***] of the voting power of the
outstanding voting securities of Vertex, or (ii) make, or in any way participate in, directly or indirectly, any "solicitation" of "proxies" (as such terms are used in the rules of the United
States Securities and Exchange Commission).

	9.2.1
	"Standstill Term" shall mean the [***].

	9.2.2
	The foregoing provisions of this Section 9.2 shall no longer apply (i) if Vertex announces publicly that (a) it
is seeking, or considering seeking, purchasers for Vertex or (b) is otherwise exploring, or considering exploring, strategic options in this regard; (ii) upon the commencement by a Third
Party of a tender or exchange offer for more than [***] of voting power of the outstanding voting securities of Vertex; (iii) if a Third Party acquires beneficial
ownership of [***] or more of the outstanding common stock of Vertex; (iv) if Vertex publicly announces a transaction, or an intention to effect any transaction, which
would result in (a) the sale by Vertex or one or more of its subsidiaries or assets representing [***]or more of the consolidated earning power or assets of Vertex;
(b) the common shareholders of Vertex immediately prior to such transaction owning less than [***]of the outstanding common stock of the acquiring entity or, in the case
of a merger transaction, the surviving corporation (or, if the surviving corporation is a subsidiary of a parent company, the parent company); or (c) a 

28

 

Third
Party acquiring beneficial ownership [***] or more of the outstanding common stock of Vertex. 

	9.3
	Force Majeure. Neither Party shall be held liable to the other Party nor be deemed to
have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement when such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party including, but not limited to, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other
labor disturbances, fire, floods, or other acts of God, or acts, omissions or delays in acting by any governmental authority or the other Party. The affected Party shall notify the other Party of such
force majeure circumstances as soon as reasonably practical, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.

	9.4
	Assignment. Except as provided in this Section 9.4, this Agreement may not be
assigned or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party without the consent of the other Party. Merck may, without Vertex's consent,
assign this Agreement and its rights and obligations hereunder in whole or in part to a Merck Affiliate, if Merck guarantees the full performance of its Affiliate's obligations hereunder. Any
permitted assignee shall assume all obligations of its assignor under this Agreement and shall be subject to all of the provisions of this Agreement. Any attempted assignment not in accordance with
this Section shall be void. Notwithstanding the above, Vertex may, without Merck's consent, assign this Agreement and its rights and obligations hereunder in the event of a Change of Control of Vertex
to the Change of Control party, subject to the provisions of this Agreement, including Section 8.7.

	9.5
	Severability. If any one or more of the provisions contained in this Agreement is held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless
the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties. The Parties shall in such an instance use their best efforts to replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

	9.6
	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, return receipt requested, addressed as follows: 

	if to Vertex, to:	 	Vertex Pharmaceuticals Incorporated

130 Waverly Street

Cambridge, MA 02139
	 	 	Attn: Office of Business Development

Facsimile No: (617) 444-6632
	

and:	
 	
Attn: General Counsel

Facsimile No.: (617) 444-7117
	

if to Merck, to:	
 	

Merck & Co., Inc.

One Merck Drive

P.O. Box 100 (WS 3A-65)

Whitehouse Station, NJ 08889-0100
	

 	
 	

 
	 	 	Attn: Office of Secretary
 Facsimile No.: (908) 735-1246

29

 

	

And	
 	

Merck & Co., Inc.

One Merck Drive (WS 2A-30)

P.O. Box 100

Whitehouse Station, NJ 08889-0100
	

 	
 	
Attn: Chief Licensing Officer
 Facsimile: (908)735-1214

or
to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. 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. 

	9.7
	Applicable Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and the patent laws of the United States without reference to any rules of conflict of laws or renvoi. The United Nations Convention on the Sale of Goods shall not
apply.

	9.8
	Dispute Resolution
	9.8.1
	The Parties shall negotiate in good faith and use reasonable efforts to settle any dispute, controversy or claim arising from or
related to this Agreement or the breach thereof. If the Parties do not fully settle, and a Party wishes to pursue the matter, each such dispute, controversy or claim that is not an "Excluded Claim"
shall be finally resolved by binding arbitration in accordance with the Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes of the American Arbitration Association
("AAA"), and judgment on the arbitration award may be entered in any court having jurisdiction thereof.

	9.8.2
	The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business. Within 30 days
after initiation of arbitration, each Party shall select one person to act as arbitrator and the two Party-selected arbitrators shall select a third arbitrator within 30 days of their
appointment. If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the third arbitrator shall be appointed by the AAA. The place of arbitration shall be New
York, New York, and all proceedings and communications shall be in English.

	9.8.3
	Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is
otherwise resolved. Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights
or property of that Party pending the arbitration award. The arbitrators shall have no authority to award punitive or any other type of damages not measured by a Party's compensatory damages. Each
Party shall bear its own costs and expenses and attorneys' fees and an equal share of the arbitrators' and any administrative fees of arbitration.

	9.8.4
	Except to the extent necessary to confirm an award or as may be required by law, neither a Party nor an arbitrator may disclose the
existence, content, or results of an arbitration without the prior written consent of both Parties. In no event shall an arbitration be initiated after the date when commencement of a legal or
equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

	9.8.5
	The Parties agree that, in the event of a dispute over the nature or quality of performance under this Agreement, neither Party may
terminate this Agreement until final resolution of the dispute through arbitration or other judicial determination. The Parties further agree that 

30

 

any
payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due. 

	9.8.6
	As used in this Section, the term "Excluded Claim" shall mean a dispute, controversy or claim that concerns (a) the validity
or infringement of a patent, trademark or copyright; or (b) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory.

 

	9.9
	Entire Agreement; Amendments. This Agreement, together with the Schedules hereto,
contains the entire understanding of the Parties with respect to the subject matter hereof and supercedes and cancels all previous express or implied agreements and understandings, negotiations,
writings and commitments, either oral or written, in respect to the subject matter hereof. The Schedules to this Agreement are incorporated herein by reference and shall be deemed a part of this
Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of both Parties.

	9.10
	Headings. The captions to the several Articles, Sections and subsections hereof are
not a part of this Agreement, but are merely for convenience to assist in locating and reading the several Articles and Sections hereof.

	9.11
	Independent Contractors. It is expressly agreed that Vertex and Merck shall be
independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither Vertex nor Merck shall have the authority to make any
statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party.

	9.12
	Waiver. The waiver by either Party hereto of any right hereunder, or the failure of
the other Party to perform, or a breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature
or otherwise.

	9.13
	Cumulative Remedies. No remedy referred to in this Agreement is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law.

	9.14
	Waiver of Rule of Construction. Each Party has had the opportunity to consult with
counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting
Party shall not apply.

	9.15
	Certain Conventions. Any reference in this Agreement to an Article, Section,
subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a reference to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit, of or to, as the case may be, this
Agreement, unless otherwise indicated. Unless the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as "herein", "hereof",
and "hereunder" refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular shall include the plural, and vice versa,
and (d) the words "include," "includes" and "including" shall be deemed to be followed by the phrase "but not limited to", "without limitation", "inter alia" or words of similar import.

	9.16
	Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same instrument. 

[Signature Page Follows]

31

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above. 

	MERCK & CO., INC.	 	VERTEX PHARMACEUTICALS INCORPORATED
	

By:	

/s/  PETER S. KIM      
	
 	

By:	

/s/  VICKI L. SATO      

	 	Name:	 	Peter Kim	 	 	Name:	 	Vicki L. Sato
	 	Title:	 	President, MRL	 	 	Title:	 	President
	

 	

June 21, 2004
 Date	
 	

 	

June 21, 2004
 Date

32

 
 
 

SCHEDULES    
    

	SCHEDULE 1.15	 	Development Criteria
	
SCHEDULE 1.17	
 	

Development Information
	
SCHEDULE 1.19	
 	

Existing Compounds
	
SCHEDULE 1.43	
 	

Patent Rights
	
SCHEDULE 1.63	
 	

Description of VX-680
	
SCHEDULE 2.1	
 	

Research Program
	
SCHEDULE 3.11	
 	

Co-Promotion Rights
	
SCHEDULE 5.17	
 	

Certain Third Party Patent Applications

33

 

 

 
 

Schedule 1.15
  
    Development Criteria    
    

        [***] 

34

 

 

 
 

Schedule 1.17
  
    Development Information    
    

        [***] 

35

 

 

 
 

Schedule 1.19
  
    Existing Compounds    
    

        [***] 

36

 

 

 
 

Schedule 1.43
  
    Patent Rights    
    

        [***] 

        VP1/00
-130- 3 US UNITED STATES 10/0 25,164 12/19/2001 US 6,664,247    ISSUED 12/16/03 

        [***]

37

 

 

 
 

Schedule 1.63
  
    Description of VX-680    
    

	Compound name:	 	Cyclopropane carboxylic acid {4-[4-(4-methyl- piperazin-1-yl)-6-(5-methyl-2H- pyrazol-3-ylamino)- pyrimidin-2-ylsulphanyl]-phenyl}-amide
	

Structure:	
 	

VX-680 is a kinase inhibitor based on a pyrimidine scaffold, appended with a 4-aminopyrazole, a 2-thiophenyl and a 6-methyl-piperazine unit.
	

 	
 	

 
	

Laboratory Code:	
 	

VX-680
	

[***]	
 	

 
	

Empirical formula:	
 	

C23H28N8OS
	

Molecular Weight:	
 	

464.6
	

Physical Appearance:	
 	

Colorless solid
	

[***]	
 	

 
	

[***]	
 	

 
	

[***]	
 	

 
	

[***]	
 	

 

38

 

 

 
 

Schedule 2.1
  
    Research Program    
    

        [***] 

39

 

 

 
 

SCHEDULE 3.11
  
    CO-PROMOTION    
    

        [***] 

40

 

 

 
 

SCHEDULE 5.17
  
    Certain Third Party Patent Applications    
    

        [***] 

41

QuickLinks

Exhibit 10.1

SCHEDULES

Schedule 1.15 Development Criteria

Schedule 1.17 Development Information

Schedule 1.19 Existing Compounds

Schedule 1.43 Patent Rights

Schedule 1.63 Description of VX-680

Schedule 2.1 Research Program

SCHEDULE 3.11 CO-PROMOTION

SCHEDULE 5.17 Certain Third Party Patent ApplicationsQuickLinks
 -- Click here to rapidly navigate through this document

 

 
 

Exhibit 10.2    
    

EXECUTED
DOCUMENT 

PURCHASE
AGREEMENT 

Dated
as of May 30, 2008 

by
and between 

VERTEX
PHARMACEUTICALS INCORPORATED 

and

FOSAMPRENAVIR
ROYALTY, L.P. 

 

  TABLE OF CONTENTS  

	 
	 
	 	Page

	ARTICLE I

DEFINITIONS	 	 
	

Section 1.01.	

Definitions	
 	

1
	ARTICLE II

PURCHASE AND SALE OF THE PURCHASED INTEREST	 	 
	

Section 2.01.	

Purchase and Sale	
 	

6
	Section 2.02.	Entitlement to Payments	 	6
	Section 2.03.	Purchase Price	 	7
	Section 2.04.	No Assumed Obligations	 	7
	Section 2.05.	Excluded Assets	 	7
	

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF VERTEX	
 	

 
	

Section 3.01.	

Organization	
 	

8
	Section 3.02.	Corporate Authorization	 	8
	Section 3.03.	Governmental and Third Party Authorization	 	8
	Section 3.04.	Ownership	 	8
	Section 3.05.	Solvency	 	8
	Section 3.06.	No Litigation	 	9
	Section 3.07.	Compliance with Laws	 	9
	Section 3.08.	No Conflicts	 	10
	Section 3.09.	Broker's Fees	 	10
	Section 3.10.	Patent Rights	 	10
	Section 3.11.	Regulatory Approval, Manufacturing and Marketing	 	11
	Section 3.12.	Subordination	 	12
	Section 3.13.	License Agreement and Pfizer Agreement	 	12
	Section 3.14.	Set-off and Other Sources of Royalty Reduction	 	13
	Section 3.15.	UCC Representations and Warranties	 	14
	Section 3.16.	Taxes	 	14
	Section 3.17.	Field of Use	 	14
	Section 3.18.	Disclosure	 	14
	

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER	
 	

 
	

Section 4.01.	

Organization	
 	

14
	Section 4.02.	Authorization	 	14
	Section 4.03.	Governmental and Third Party Authorization	 	15
	Section 4.04.	Broker's Fees	 	15
	Section 4.05.	No Conflicts	 	15
	Section 4.06.	Access to Information	 	15
	Section 4.07.	No Litigation	 	15
	Section 4.08.	Funds Available	 	16

i

 

	

ARTICLE V

COVENANTS	
 	

 
	

Section 5.01.	

Books and Records	
 	

16
	Section 5.02.	Confidentiality; Public Announcement	 	16
	Section 5.03.	Quarterly Certificates	 	17
	Section 5.04.	Best Efforts; Further Assurance	 	18
	Section 5.05.	Payments to Vertex on Account of the Purchased Interest	 	18
	Section 5.06.	License Agreement and Pfizer Agreement	 	19
	Section 5.07.	Termination of License Agreement	 	22
	Section 5.08.	Audits	 	22
	Section 5.09.	Notice	 	23
	Section 5.10.	Sale of HIV Protease Inhibitor	 	23
	

ARTICLE VI

THE CLOSING; CONDITIONS TO CLOSING	
 	

 
	

Section 6.01.	

Closing	
 	

23
	Section 6.02.	Conditions Applicable to the Purchaser in Closing	 	24
	Section 6.03.	Conditions Applicable to Vertex in Closing	 	25
	

ARTICLE VII

TERMINATION	
 	

 
	

Section 7.01.	

Termination Date	
 	

25
	Section 7.02.	Effect of Termination	 	25
	

ARTICLE VIII

MISCELLANEOUS	
 	

 
	

Section 8.01.	

Survival	
 	

26
	Section 8.02.	Specific Performance	 	26
	Section 8.03.	Notices	 	26
	Section 8.04.	Successors and Assigns	 	28
	Section 8.05.	Indemnification	 	28
	Section 8.06.	Independent Nature of Relationship	 	30
	Section 8.07.	Tax	 	30
	Section 8.08.	Entire Agreement	 	31
	Section 8.09.	Governing Law	 	31
	Section 8.10.	Waiver of Jury Trial	 	31
	Section 8.11.	Severability	 	32
	Section 8.12.	Counterparts; Effectiveness	 	32
	Section 8.13.	Amendments; No Waivers	 	32
	Section 8.14.	Interpretation	 	32

ii

 
EXHIBITS AND SCHEDULES  

EXHIBITS  

	Exhibit A	—	 	Form of Bill of Sale
	Exhibit B	—	 	Form of Legal Opinion of Vertex's Counsel
	Exhibit C	—	 	Form of GSK Direction
	Exhibit D	—	 	Form of GSK/Pfizer Instruction
	
SCHEDULES	

 	
 	

 
	

Schedule 3.10(a)	

—	
 	

Patent Rights
	Schedule 3.10(d)	—	 	Patent Rights—Interference, Opposition, Invalidity or Nullity Proceedings
	Schedule 3.10(f)	—	 	Patent Rights—Infringement
	Schedule 3.11(b)	—	 	Fosamprenavir Regulatory Approvals
	Schedule 3.13(e)	—	 	Waiver of Rights or Defaults under the License Agreement or the Pfizer Agreement

iii

  PURCHASE AGREEMENT  

        PURCHASE AGREEMENT (this "Agreement") is made and entered into as
of May 30, 2008 by and between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation ("Vertex"), and Fosamprenavir
Royalty, L.P., a Delaware limited partnership (the "Purchaser"). 

        WHEREAS, Vertex has the right to receive royalties based on Net Sales of the Products in the Territory under the License Agreement; and 

        WHEREAS, Vertex wishes to sell, assign, convey and transfer to the Purchaser, and the Purchaser wishes to purchase, acquire and accept
from Vertex, the Purchased Interest, upon and subject to the terms and conditions hereinafter set forth; 

        NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties set forth herein, the parties hereto
agree as follows: 

ARTICLE I

DEFINITIONS  

 Section 1.01.    Definitions.  

        The following terms, as used herein, shall have the following meanings: 

        "Adverse Effect" shall have the meaning set forth in Section 3.07. 

        "Affiliate" shall mean any Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under
common control with another Person. For purposes of this definition, "control" shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. 

        "Agreement" shall have the meaning set forth in the preamble. 

        "Bankruptcy Event" shall mean the occurrence of any of the following: 

          (i)  Vertex
or any of its Subsidiaries shall commence any case, proceeding or other action (a) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, relief of debtors or the like, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (b) seeking
appointment of a receiver, trustee, custodian or other similar official for it or for all or any portion of its assets, or Vertex or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or 

         (ii)  there
shall be commenced against Vertex or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which remains
undismissed, undischarged or unbonded for a period of ninety (90) calendar days; or 

        (iii)  there
shall be commenced against Vertex or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against (a) all or any substantial portion of its assets and/or (b) the Royalties, which results in the entry of an order for any such relief which shall not
have been vacated, discharged, stayed, satisfied or bonded pending appeal within forty-five (45) calendar days from the entry thereof; or 

        (iv)  Vertex
or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii) or (iii) above. 

        "Bill of Sale" shall mean the Bill of Sale pursuant to which Vertex shall sell, assign, transfer and convey to the Purchaser all of its
rights, title and interests in and to the Purchased Interest purchased, acquired and accepted hereunder, which Bill of Sale shall be substantially in the form of  Exhibit A. 

        "Business Day" shall mean any day other than a Saturday, a Sunday, any day which is a legal holiday under the laws of the State of New
York or The Commonwealth of Massachusetts, or any day 

 

on
which banking institutions located in the State of New York or The Commonwealth of Massachusetts are authorized or required by law or other governmental action to close. 

        "Closing" shall have the meaning set forth in Section 6.01. 

        "Closing Date" shall have the meaning set forth in Section 6.01. 

        "Confidential Information" shall mean, as it relates to Vertex and its Affiliates, the Products and the Patent Rights, all information
(whether written or oral, or in electronic or other form) furnished after the date of this Agreement concerning, or relating in any way, directly or indirectly, to the Purchased Interest or the
Royalties, including, without limitation, (i) any license, sublicense, assignment, product development, royalty, sale, supply or other agreements (including, without limitation, the License
Agreement and the Pfizer Agreement) involving or relating in any way, directly or indirectly, to the Purchased Interest, the Royalties or the intellectual property, compounds or Products giving rise
to the Purchased Interest, and including all terms and conditions thereof and the identities of the parties thereto, (ii) any reports, data, materials or other documents of any kind relating in
any way, directly or indirectly, to Vertex, the Purchased Interest, the Royalties or the intellectual property, compounds or products giving rise to the Purchased Interest, and including reports,
data, materials or other documents of any kind delivered pursuant to or under any of the agreements referred to in clause (i), and (iii) any inventions, devices, improvements,
formulations, discoveries, compositions, ingredients, patents, patent applications, know-how, processes, trial results, research, developments or any other intellectual property, trade
secrets or information involving or relating in any way, directly or indirectly, to the Purchased Interest or the compounds or products giving rise to the Purchased Interest. Notwithstanding the
foregoing definition, Confidential Information shall not include information that is (i) already in the public domain at the time the information is disclosed, (ii) lawfully obtainable
from other sources, (iii) required to be disclosed in any document to be filed with any Governmental Authority or (iv) required to be disclosed by court or administrative order or under
securities laws, rules and regulations applicable to Vertex or the Purchaser or their respective Affiliates, as the case may be, or pursuant to the rules and regulations of any stock exchange or stock
market on which securities of Vertex or the Purchaser or their respective Affiliates may be listed for trading. 

        "Defaulting Party" shall have the meaning set forth in Section 5.06(d). 

        "Discrepancy" shall have the meaning set forth in Section 2.02(b). 

        "Dispute" or "Disputes" shall have the meaning set forth in Section 3.10(e). 

        "EMEA" shall mean the European Medicines Agency, or any successor agency. 

        "Excluded Liabilities and Obligations" shall have the meaning set forth in Section 2.04. 

        "FDA" shall mean the United States Food and Drug Administration and any successor agency thereto. 

        "Field" shall have the meaning set forth in the License Agreement. 

        "Governmental Authority" shall mean any government, court, regulatory or administrative agency or commission, or other governmental
authority, agency or instrumentality, whether foreign, federal, state or local (domestic or foreign), including each Patent Office, the FDA, the EMEA and any other government authority in any country. 

        "GSK" shall mean SmithKline Beecham Corporation (an Affiliate of GlaxoSmithKline plc), a North Carolina corporation, including its
successors, assigns and Affiliates. 

        "GSK Direction" shall have the meaning set forth in Section 6.02(h). 

        "GSK/Pfizer Instruction" shall have the meaning set forth in Section 6.02(h). 

2

 

        "Indenture" shall mean the Indenture, dated as of May 30, 2008, by and between the Purchaser and U.S. Bank National Association, as
initial Trustee of the Notes described therein. 

        "Information Memorandum" shall mean the Confidential Information Memorandum of Vertex dated May 29, 2008. 

        "Knowledge" shall mean, with respect to Vertex, the knowledge of any of the following officers or employees of Vertex: the Chief Executive
Officer; the Chief Medical Officer; the General Counsel; the Chief Scientific Officer; the Chief Financial Officer; the Chief Commercial Officer; the Chief Patent Counsel; the Vice President and
Corporate Controller; the Vice President, Business and Corporate; the Deputy General Counsel; and the Assistant Chief Patent Counsel. An individual will be deemed to have "knowledge" of a particular
fact or other matter if (i) such individual has or at any time had actual knowledge of such fact or other matter or (ii) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a reasonably diligent review concerning the existence thereof with each employee of Vertex or any of its Subsidiaries who, at the
date of this Agreement, reports directly to such individual and who (x) has responsibilities or (y) would reasonably be expected to have actual knowledge of circumstances or other
information, in each case, that would reasonably be expected to be pertinent to such fact or other matter. Notwithstanding anything in this definition to the contrary, Vertex will be deemed to have
knowledge of any fact or matter of which it has received written notice (whether in hard copy, digital or electronic format). 

        "License Agreement" shall mean the HIV Protease Program License Agreement between Vertex and Burroughs Wellcome Co. (now GSK)
effective December 16, 1993, as amended by a written amendment executed by Vertex and GSK effective as of October 21, 2003, together with (i) the Side Agreement and
(ii) except as otherwise expressly set forth herein, any new, substitute or amended agreement relating to the Licensed Products, the Patent Rights or other intellectual property rights of
Vertex relating to the Licensed Products; provided, however, that solely for purposes of definitions in
this Agreement which are incorporated by reference from the License Agreement, references to the License Agreement shall refer to the License Agreement as in effect on the date hereof. The term
"License Agreement" shall include all rights that arise therefrom and relate thereto. 

        "Licensed Product" shall have the meaning set forth in the License Agreement. 

        "Lien" shall mean any lien, hypothecation, charge, instrument, license, preference, priority, security agreement, security interest,
mortgage, option, privilege, pledge, liability, covenant or order, or any encumbrance, right or claim of any other Person of any kind whatsoever whether choate or inchoate, filed or unfiled, noticed
or unnoticed, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown; provided,  however, that this term shall not
include (i) the licenses granted by Vertex to GSK and by GSK to Vertex pursuant to the License Agreement, as in
existence on the date hereof, and (ii) the license granted by Monsanto Company and G.D. Searle & Co. (collectively, now Pfizer) to each of Vertex and GSK pursuant to the Pfizer
Agreement, as in effect on the date hereof. 

        "Losses" shall mean, collectively, any and all claims, damages, losses, judgments, liabilities, costs and expenses (including reasonable
expenses of investigation and reasonable attorneys' fees and expenses), excluding punitive damages, except to the extent punitive damages are paid to a third party. 

        "Material Adverse Effect" shall mean a material adverse effect on (i) the legality, validity or enforceability of any of the
Transaction Documents, the License Agreement, the Pfizer Agreement or the back-up security interest granted pursuant to Section 2.01(d); (ii) the right or ability of Vertex
(or any permitted assignee) to perform any of its obligations under any of the Transaction Documents, the License Agreement, the Pfizer Agreement or the Side Agreement or to consummate the
transactions contemplated hereunder or thereunder; (iii) the rights or remedies of the Purchaser under any of the 

3

 

Transaction
Documents; (iv) the right or ability of the Purchaser to receive any Royalties or the timing, amount or duration of such Royalties; (v) the Purchased Interest; or
(vi) the Patent Rights. 

        "Net Sales" shall have the meaning set forth in the License Agreement. 

        "New Arrangement" shall have the meaning set forth in Section 5.07(a). 

        "Patent Office" shall mean the applicable patent office, including the United States Patent and Trademark Office and any comparable
foreign patent office, for any Patent Rights. 

        "Patent Rights" shall mean the patents and patent applications licensed by Vertex to GSK under the License Agreement that generically or
specifically claim and cover a Product or that are otherwise necessary or useful in the manufacture, use, sale or importation of a Product. 

        "Permitted Amendment" shall mean any amendment or amendments to the License Agreement which only (i) deletes all or a part of
Section 13.16 therefrom, and/or (ii) excludes from the coverage of the License Agreement and the license rights under the granting clause thereof (a) products that do not
constitute Products, and (b) any intellectual property that is neither necessary nor useful in connection with the manufacture, marketing, use, sale or importation of a Product. 

        "Permitted Set-off " shall mean any Set-off expressly permitted under Section 5.3.5 of the
License Agreement or paragraph five of the Side Agreement. 

        "Person" shall mean an individual, corporation, partnership, limited liability company, association, trust or other entity or
organization, but not including a Governmental Authority. 

        "Pfizer" shall mean Pfizer, Inc., a Delaware corporation, and its successors and assigns. 

        "Pfizer Account" shall have the meaning set forth in Section 5.05(h). 

        "Pfizer Agreement" shall mean the License Agreement among Vertex, Glaxo Wellcome, Inc. (now GSK), Monsanto Company and G.D.
Searle & Co. (collectively, now Pfizer) dated as of June 28, 1996, as in effect on the date of this Agreement. 

        "Pfizer Party" or "Pfizer Parties" shall mean Monsanto Company and G.D.
Searle & Co. (collectively, now Pfizer), and their respective Affiliates. 

        "Products" shall mean amprenavir and fosamprenavir. 

        "Purchased Interest" shall mean, collectively, (i) an undivided 100% interest in the right to receive all of the Royalties and
(ii) to the extent transferable or assignable by Vertex, without the consent of GSK, pursuant to the terms of the License Agreement, as in existence on the date hereof, (A) the right to
sue third parties for actual or threatened infringement of the Patent Rights, (B) the right to transfer or assign entitlement to the Royalties to third parties and (C) the right to
disapprove of an assignment of the License Agreement by GSK. 

        "Purchase Price" shall have the meaning set forth in Section 2.03. 

        "Purchaser" shall have the meaning set forth in the preamble. 

        "Purchaser Account" shall have the meaning set forth in Section 5.05(c). 

        "Purchaser Indemnified Party" shall have the meaning set forth in Section 8.05(a). 

        "Regulatory Agency" shall mean a Governmental Authority with responsibility for the approval of the marketing and sale of pharmaceuticals
in any country or other regulation of pharmaceuticals. 

        "Regulatory Approvals" shall mean, collectively, all regulatory approvals, registrations, certificates, authorizations, permits and
supplements thereto, as well as associated materials (including the product dossier) pursuant to which the Products may be marketed, sold and distributed in a jurisdiction, issued by the appropriate
Regulatory Agency. 

4

 

        "Royalty" or "Royalties" shall mean (i) all amounts due or paid to Vertex or any of
its Affiliates as a result of the sale of any and all Products in the Territory, and attributable to the period commencing on the Royalties Commencement Date (after payment of all amounts owing to
Pfizer pursuant to the Pfizer Agreement in accordance with the GSK/Pfizer Instruction), including, without limitation, all amounts due or paid to Vertex or any of its Affiliates in lieu thereof and
all payments due or paid to Vertex or any of its Affiliates under Section 5.3 (whether based upon sales of the Products in the Territory or otherwise), Section 5.5 and Section 5.6
of the License Agreement, in any case, with respect to the period commencing on the Royalties Commencement Date; (ii) all indemnity payments, recoveries, damages or award or settlement amounts
paid to Vertex or any of its Affiliates by any third party and arising out of or relating to the Patent Rights or the Vertex Technical Information in the Field or as a result of a breach by any Person
of the License Agreement, the Pfizer Agreement or the Side Letter with respect thereto, including pursuant to Section 5.06(c), (d) or (e); (iii) all amounts paid or payable to
Vertex or any of its Affiliates by one or more third party licensees or sublicensees under any New Arrangement; (iv) all other amounts paid by GSK, any Pfizer Party, any Sublicensee or any
other Person arising out of or related to or resulting from the Patent Rights; (v) all accounts (as defined under the New York Uniform Commercial Code) evidencing the rights to the payments and
amounts described herein; and (vi) all proceeds (as defined under the New York Uniform Commercial Code) of any of the foregoing. Notwithstanding the foregoing, "Royalty" or "Royalties" shall
not include (i) expense reimbursements under Section 8.2 of the License Agreement; (ii) product liability indemnity payments made under Section 12.2(i) of the License
Agreement or (iii) any Permitted Set-off, solely to the extent that such Permitted Set-off arises out of or relates to any events occurring or actions taken after the
Royalties Commencement Date. 

        "Royalties Commencement Date" shall mean April 1, 2008. 

        "Section 5.4 Report" shall have the meaning set forth in Section 5.03. 

        "Set-off " shall mean any set-off, rescission, counterclaim, reduction, deduction or defense. 

        "Side Agreement" shall mean the letter agreement, entitled "Re: Settlement of G.D. Searle & Co. Matter, and Revisions to the
License Agreement (as hereinafter defined)", between Vertex and GSK, dated June 28, 1996. 

        "Sublicensee" shall mean any sublicensee of GSK under the License Agreement. 

        "Subsidiary" or "Subsidiaries" shall mean with respect to any Person (i) any
corporation of which the outstanding capital stock having at least a majority of votes entitled to be cast in the election of directors (or, if there are no such voting interests, 50% or more of the
equity interests) under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or by another subsidiary of such Person or (ii) any other Person of which at
least a majority voting interest (or, if there are no such voting interests, 50% or more of the equity interests) under ordinary circumstances is at the time owned, directly or indirectly, by such
Person or by another subsidiary of such Person. 

        "Termination Notice" shall have the meaning set forth in Section 5.07(a). 

        "Territory" shall have the meaning set forth in the License Agreement. 

        "Transaction Documents" shall mean, collectively, this Agreement, the Bill of Sale, the GSK Direction and the GSK/Pfizer Instruction. 

        "UCC" shall mean the Uniform Commercial Code as in effect from time to time in The Commonwealth of Massachusetts;  provided, however, that, if, with respect to any financing statement or by reason of any provisions of
law, the perfection or the effect of perfection or non-perfection of the back-up security interest granted pursuant to Section 2.01(d) is governed by the Uniform
Commercial Code as in effect in a jurisdiction of the United States other than The Commonwealth of Massachusetts, then "UCC" shall mean the Uniform
Commercial Code as in effect from time to time 

5

 

in
such other jurisdiction for purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection. 

        "Vertex" shall have the meaning set forth in the preamble and shall, when used with respect to the definitions of Net Sales, Royalty,
Royalties, Patent Rights and other similar terms, include its Subsidiaries and joint ventures. 

        "Vertex Account" has the meaning set forth in Section 5.05(f). 

        "Vertex Indemnified Party" shall have the meaning set forth in Section 8.05(b). 

        "Vertex Technical Information" shall have the meaning set forth in the License Agreement. 

ARTICLE II

PURCHASE AND SALE OF THE PURCHASED INTEREST  

 Section 2.01.    Purchase and Sale.  

        (a)   Subject
to the terms and conditions of this Agreement, on the Closing Date Vertex shall sell, assign, transfer and convey to the Purchaser and the Purchaser shall
purchase, acquire and accept all of Vertex's right, title and interest in and to the Purchased Interest free and clear of any and all Liens, other than those created in favor of the Purchaser by the
Transaction Documents. 

        (b)   Vertex
and the Purchaser intend and agree that the sale, assignment, transfer and conveyance of the Purchased Interest under this Agreement shall be, and is, a true,
absolute and irrevocable assignment and sale by Vertex to the Purchaser of the Purchased Interest and that such assignment and sale shall provide the Purchaser with the full benefits of ownership of
the Purchased Interest. Neither Vertex nor the Purchaser intends the transactions contemplated hereunder to be, or for any purpose characterized as, a loan from the Purchaser to Vertex. Vertex waives
any right to contest or otherwise assert that this Agreement is other than a true, absolute, and irrevocable sale and assignment by Vertex to the Purchaser of the Purchased Interest under applicable
law, which waiver shall be enforceable against Vertex in any bankruptcy or insolvency proceeding relating to Vertex. 

        (c)   Vertex
hereby consents to the Purchaser recording and filing, at the Purchaser's sole cost and expense, financing statements in the appropriate filing offices under the
UCC (and continuation statements with respect to such financing statements when applicable) meeting the requirements of applicable law in such manner and in such jurisdictions as are necessary or
appropriate to evidence the purchase, acquisition and acceptance by the Purchaser of the Purchased Interest and to perfect the
security interest in the Purchased Interest granted by Vertex to the Purchaser pursuant to Section 2.01(d). 

        (d)   Notwithstanding
that Vertex and the Purchaser expressly intend for the sale, transfer, assignment and conveyance of the Purchased Interest to be a true and absolute sale
and assignment, Vertex hereby grants, conveys, pledges and assigns to the Purchaser, as security for its obligations created hereunder in the event that the transfer contemplated by this Agreement is
held not to be a sale, a first priority security interest in and to all of Vertex's right, title and interest in, to and under the Purchased Interest. 

 Section 2.02.    Entitlement to Payments.  

        The Purchaser shall be entitled to receive the following transfers and payments in respect of the Purchased Interest: 

        (a)   Vertex
agrees that the Purchaser is entitled to the Purchased Interest and may enforce such entitlement directly against GSK pursuant to the License Agreement and,
notwithstanding any claim or Set-off which Vertex may have against the Purchaser or which GSK may have against Vertex, Vertex agrees and will use its best efforts to ensure (including
taking such actions as the 

6

 

Purchaser
shall reasonably request) that GSK remits all payments GSK is required to pay to Vertex under the License Agreement with respect to the Purchased Interest directly to the Purchaser (and/or
to an assignee of the Purchaser), pursuant to the GSK Direction. The Purchaser acknowledges and agrees that the payments to be made by GSK with respect to the Purchased Interest will not include the
amounts required to be paid to Pfizer under the terms of the Pfizer Agreement (or, in lieu thereof, such lesser amounts which shall be required to be paid to Pfizer pursuant to any amendment or
supplement thereto or any agreement substituted therefor), which amounts shall be deducted from the amounts payable to Vertex and shall be paid directly to Pfizer pursuant to the GSK/Pfizer
Instruction. 

        (b)   Except
as set forth in Section 2.02(c), for avoidance of doubt, the parties understand and agree that if GSK fails to pay any Royalties when Vertex or the
Purchaser reasonably believes such Royalties are due under the License Agreement (each such unpaid amount, a "Discrepancy"), and if such Discrepancy is
not the result of a default or breach by Vertex under the License Agreement, then Vertex shall not be obligated to pay to the Purchaser or otherwise compensate or make the Purchaser whole with respect
to any such Discrepancy so long as Vertex is in compliance with the provisions of this Agreement; provided,  however, that nothing in this Section 2.02
(b) shall limit or affect in any respect the rights of any Purchaser Indemnified Party under
Section 8.05. 

        (c)   Vertex
agrees that it will promptly pay to the Purchaser the amount of any Permitted Set-off by GSK against any Royalties to the extent that such Permitted
Set-off arises out of or relates to any period prior to the Royalties Commencement Date or to any events occurring or actions taken prior to the Royalties Commencement Date. 

 Section 2.03.    Purchase Price.  

        In full consideration for the sale, assignment, transfer and conveyance of the Purchased Interest, and subject to the terms and conditions set forth herein,
including the conditions set forth in Article VI, the Purchaser shall pay to Vertex, or its designee, on the Closing Date, the sum of U.S. $160 million, by wire transfer to an account
designated in writing by Vertex at least two (2) Business Days prior to the Closing Date (the "Purchase Price"). 

 Section 2.04.    No Assumed Obligations.  

        Notwithstanding any provision in this Agreement or any other writing to the contrary, the Purchaser is purchasing, acquiring and accepting only the Purchased
Interest and is not assuming any liability or obligation of Vertex or any of its Affiliates of whatever nature, whether presently in existence or arising or asserted hereafter, whether under the
License Agreement, the Pfizer Agreement (including any obligation to pay any amounts to, or accept any Set-off (other than a Permitted Set-off) by, any Pfizer Party, GSK or any
of its Affiliates), or any Transaction Document or otherwise, except as expressly provided in Section 5.05(d). All such liabilities and obligations shall be retained by and remain obligations
and liabilities of Vertex or its Affiliates (the "Excluded Liabilities and Obligations"). 

 Section 2.05.    Excluded Assets.  

        The Purchaser does not, by purchase, acquisition or acceptance of the rights granted hereunder or otherwise pursuant to any of the Transaction Documents,
purchase, acquire or accept any assets or contract rights of Vertex under the License Agreement or the Pfizer Agreement, other than the Purchased Interest, or any other assets of Vertex. 

7

 

  ARTICLE III

REPRESENTATIONS AND WARRANTIES OF VERTEX  

        Vertex hereby represents and warrants to the Purchaser as of the date first written above and the Closing Date, the following: 

 Section 3.01.    Organization.  

        Vertex is a corporation duly incorporated, validly existing and in good standing under the laws of The Commonwealth of Massachusetts, and has all corporate powers
and all licenses, authorizations, consents and approvals of all Governmental Authorities required to carry on its business as now conducted and to execute and deliver, and perform its obligations
under the Transaction Documents and to exercise its rights and to perform its obligations under the License Agreement. Vertex is duly qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the failure to do so could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect. Neither the Purchaser nor any of
its partners, members or controlling Persons, is an Affiliate of Vertex or any Subsidiary of Vertex. 

 Section 3.02.    Corporate Authorization.  

        Vertex has all necessary corporate power and authority to enter into, execute and deliver the Transaction Documents and to perform all of the obligations to be
performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. The Transaction Documents have been, or will be, when executed, duly authorized,
executed and delivered by Vertex and each Transaction Document constitutes, or will constitute, when executed, the legal, valid and binding obligation of Vertex, enforceable against Vertex in
accordance with its respective terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or general
equitable principles. 

 Section 3.03.    Governmental and Third Party Authorization.  

        The execution and delivery by Vertex of the Transaction Documents, and the performance by Vertex of its obligations and the consummation of any of the
transactions contemplated hereunder and thereunder, do not require any consent, approval, license, order, authorization, or declaration from, notice to, action or registration by, or filing with any
Governmental Authority or any other Person, except for the filing of proper financing statements under the UCC and the filing of a Current Report on Form 8-K with the Securities and
Exchange Commission. 

 Section 3.04.    Ownership.  

        Vertex is the exclusive owner of the entire right, title (legal and equitable) and interest in and to the Purchased Interest, the Royalties and the Patent Rights,
including the right to sue and recover for past and future infringement of the Patent Rights, free and clear of all Liens. Vertex has duly and legally filed or applied for registration for its
ownership interest in the patents included in the Patent Rights in the appropriate agencies in the jurisdictions set forth on Schedule 3.10(a),
and Vertex is the exclusive "owner of record" of the Patent Rights in each such jurisdiction. Upon the sale, assignment, transfer and conveyance by Vertex of the Purchased Interest to the Purchaser,
the Purchaser will acquire good and marketable title to the Purchased Interest free and clear of all Liens, other than Liens in favor of the Purchaser. 

 Section 3.05.    Solvency.  

        Upon consummation of the transactions contemplated by the Transaction Documents (i) the fair saleable value of Vertex's assets will be greater than the sum
of its debts and other obligations, 

8

 

including
contingent liabilities, (ii) the present fair saleable value of Vertex's assets will be greater than the amount that would be required to pay its probable liabilities on its existing
debts and other obligations, including contingent liabilities, as they become absolute and matured, (iii) Vertex will be able to realize upon its assets and pay its debts and other obligations,
including contingent obligations, as they mature, (iv) Vertex will not have unreasonably small capital with which to engage in its business, and (v) Vertex will not incur, nor does it
have present plans or intentions to incur, debts or other obligations or liabilities beyond its ability to pay such debts or other obligations or liabilities as they become absolute and matured. 

 Section 3.06.    No Litigation.  

        Except as otherwise disclosed in the Schedules to Section 3.10 hereof, there is no (i) action, suit, arbitration proceeding, claim, investigation or
other proceeding (whether civil, criminal, administrative, investigative, or informal) pending or, to the Knowledge of Vertex, threatened by or against Vertex or any of its Subsidiaries or, to the
Knowledge of Vertex, pending or threatened by or against GSK or any of its Sublicensees, at law or in equity, or (ii) inquiry or investigation (whether civil, criminal, administrative,
investigative, or informal) by or before a Governmental Authority pending or, to the Knowledge of Vertex, threatened against Vertex or any of its Subsidiaries or, to the Knowledge of Vertex, pending
or threatened against GSK or any of its Sublicensees, which, in each case with respect to clause (i) or (ii), (A) if adversely determined, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or (B) challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by any of the Transaction Documents. To the Knowledge of Vertex, and other than with respect to the matters included within Section 3.10, as to which specific
representations and warranties have been negotiated (the intent of the parties being that any matter within the scope of Section 3.10 is not to be covered by the representation and warranty
made in this sentence), no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such action, suit, arbitration, claim, investigation,
proceeding or inquiry. 

 Section 3.07.    Compliance with Laws.  

        None of Vertex or any of its Subsidiaries is (i) in violation of, or has violated, or to the Knowledge of Vertex, is under investigation with respect to,
or has been threatened to be charged with or been given notice of any violation of, any law, rule, ordinance or regulation of, or any judgment, order, writ, decree, permit or license granted, issued
or entered by, any Governmental Authority or (ii) subject to any judgment, order, writ, decree, permit or license granted, issued or entered by any Governmental Authority, in each case, that
could reasonably be expected to, individually or in the aggregate, adversely affect, in any respect, (A) the legality, validity or enforceability of any of the Transaction Documents, the
License Agreement, the Pfizer Agreement, the Side Agreement or the back-up security interest granted pursuant to Section 2.01(d), (B) the right or ability of Vertex (or any
permitted assignee) to perform any of its obligations under any of the Transaction Documents, the License Agreement, the Pfizer Agreement or the Side Letter or to consummate the transactions
contemplated hereunder or thereunder, (C) the rights or remedies of the Purchaser under any of the Transaction Documents, (D) the right or ability of the Purchaser to receive any
Royalties or the timing, amount or duration of such Royalties, (E) the Purchased Interest or (F) the Patent Rights (an "Adverse Effect").
To the Knowledge of Vertex, and other than with respect to any matters within the scope of Section 3.10 or Section 3.11, as to which specific representations and warranties have been
negotiated (the intent of the parties being that any matter within the scope of either Section 3.10 or Section 3.11 is not to be covered by the representation and warranty made in this
sentence), no event has occurred or circumstance exists that (with or without notice or lapse of time, or both) may constitute or result in a violation by Vertex or any of its Subsidiaries of, or a
failure on the part of Vertex or any of its Subsidiaries to comply with, any such law, rule, ordinance or regulation of, or any judgment, order, 

9

 

writ,
decree, permit or license granted, issued or entered by, any Governmental Authority, in each case, that could reasonably be expected to result, individually or in the aggregate, in an Adverse
Effect. 

 Section 3.08.    No Conflicts.  

        (a)   Neither
the execution and delivery of any of the Transaction Documents nor the performance or consummation of the transactions contemplated hereby and thereby will:
(i) contravene, conflict with, result in a breach or violation of, constitute a default (with or without notice or lapse of time, or both) under, or accelerate the performance provided by, in
any respects, (A) any statute, law, rule, ordinance or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any Governmental Authority, to which
Vertex or any of its Subsidiaries or any of their respective assets or properties may be subject or bound, (B) any contract, agreement, commitment or instrument to which Vertex or any of its
Subsidiaries is a party or by which Vertex or any of its Subsidiaries or any of their respective assets or properties is bound or committed, other than the License Agreement, the
Pfizer Agreement and the Side Agreement, or (C) any provisions of the certificate of incorporation or by-laws (or other organizational or constitutional documents) of Vertex or any
of its Subsidiaries; (ii) give rise to any additional right of termination, cancellation or acceleration of any right or obligation of Vertex or any of its Subsidiaries or any other Person or
Governmental Authority; (iii) except as provided in the Transaction Documents, result in the creation or imposition of any Lien on the Patent Rights, the Products, the License Agreement, the
Pfizer Agreement, the Side Agreement, the Royalties or the Purchased Interest; or (iv) contravene, conflict with, result in a breach or violation of, constitute a default (with or without
notice or lapse of time, or both) under, give to any other Person the right to terminate (except pursuant to Section 11.2 of the License Agreement), or accelerate the performance provided by,
in any respects, any provision of the License Agreement, the Pfizer Agreement or the Side Agreement; provided,  however, that, in the case of
clause (i)(B), such contravention, conflict, breach, violation, default or acceleration could reasonably be
expected to result, individually or in the aggregate, in a Material Adverse Effect. 

        (b)   Vertex
has not granted, nor does there exist, any Lien on the License Agreement, the Pfizer Agreement, the Side Agreement, the Patent Rights or the Purchased Interest.
Except for the license granted by Vertex to GSK under the License Agreement, there are no licenses, sublicenses, or other rights under the Patent Rights that have been granted to any other Person or
Governmental Authority. 

 Section 3.09.    Broker's Fees.

        Vertex
has not taken any action that would entitle any Person other than Morgan Stanley & Co. Incorporated (whose fees shall be paid by Vertex) to any commission or
broker's fee in connection with the transactions contemplated by the Transaction Documents. 

 Section 3.10.    Patent Rights.  

        (a)   Schedule 3.10(a) sets forth an accurate and complete list of all Patent Rights. For each of the Patent Rights
listed on Schedule 3.10(a), Vertex has indicated (i) the countries in which such patents are pending, allowed, granted or issued,
(ii) the patent number, and (iii) the scheduled expiration date of the issued patents. 

        (b)   To
the Knowledge of Vertex, each issued claim and each claim that has been allowed or granted by the appropriate Patent Office included in the relevant Patent Rights
that covers a Licensed Product and generates the Royalties is valid and enforceable. 

        (c)   There
are no unpaid maintenance or renewal fees payable by Vertex to any third party that currently are overdue for any of the Patent Rights. No Patent Rights have
lapsed or been 

10

 

abandoned,
cancelled or expired. To the Knowledge of Vertex, each individual associated with the filing and prosecution of the Patent Rights, including the named inventors of the Patent Rights, has
complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office, including any duty to disclose to any Patent Office all information known to be
material to the patentability of each of the Patent Rights (including any relevant prior art), in those jurisdictions where such duties exist. 

        (d)   Subsequent
to the issuance of the Patent Rights, neither Vertex nor, to the Knowledge of Vertex, GSK has filed any disclaimer or made or permitted any other voluntary
reduction in the scope of the Patent Rights. No allowable or allowed subject matter of the Patent Rights is subject to any competing conception claims of allowable or allowed subject matter of any
patent applications or patents of any third party and have not been the subject of any interference, re-examination or opposition proceedings, except as set forth in  Schedule 3.10(d). 

        (e)   Except
as set forth in Schedule 3.10(d), to the Knowledge of Vertex, there is no pending or threatened opposition,
interference, reexamination, injunction, claim, lawsuit, proceeding, hearing, investigation, complaint, arbitration, mediation, demand, International Trade Commission investigation, decree, or any
other dispute, disagreement, or claim (each, a "Dispute" and collectively, the "Disputes") challenging
the legality, validity, enforceability or ownership of any of the Patent Rights or which could give rise to a credit against the payments due to Vertex under the License Agreement for the use of the
related Patent Rights. To the Knowledge of Vertex, there are no Disputes by any third party against Vertex involving any Product. To the Knowledge of Vertex, the Patent Rights are not subject to any
outstanding injunction, judgment, order, decree, ruling, change, settlement or other disposition of a Dispute. 

        (f)    Except
as otherwise disclosed on Schedule 3.10(f), to the Knowledge of Vertex, there is no pending or threatened,
and no event has occurred or circumstance exists that (with or without notice or lapse of time, or both) could reasonably be expected to give rise to or serve as a basis for any, action, suit, or
proceeding, or any investigation or claim by any Person or Governmental Authority to which Vertex or, to the Knowledge of Vertex, to which GSK or any of its Affiliates or Sublicensees is or could be a
party that claims that the marketing, sale or distribution of either Product by GSK or any of its Affiliates or Sublicensees pursuant to the License Agreement does or could infringe on any patent or
other intellectual property rights of any other Person or Governmental Authority. To the Knowledge of Vertex, there are no pending United States, international or foreign patent applications owned by
any third party that, if issued, would limit or prohibit, in any material respect, the manufacture, use or sale of either Product by Vertex, GSK or any of their respective sublicensees. 

        (g)   Amprenavir
and fosamprenavir are Licensed Products. 

        (h)   To
the Knowledge of Vertex, there is no third party infringing any Patent Rights, nor has Vertex received any notice under the License Agreement of infringement of any
of the Patent Rights. 

 Section 3.11.    Regulatory Approval, Manufacturing and Marketing.  

        (a)   To
the Knowledge of Vertex, GSK has complied with its obligations to develop the Products and seek and obtain Regulatory Approval for the Products pursuant to the
License Agreement. 

        (b)   To
the Knowledge of Vertex, the Product fosamprenavir has received Regulatory Approval for marketing and distribution in the countries listed on  Schedule 3.11(b). 

11

 

 Section 3.12.    Subordination.  

        The claims and rights of the Purchaser created by any Transaction Document in and to the Purchased Interest are not and shall not, at any time, be subordinated to
any creditor of Vertex or any other Person or Governmental Authority. 

 Section 3.13.    License Agreement and Pfizer Agreement.  

        (a)   Other
than the License Agreement, the Pfizer Agreement and the Transaction Documents, there is no contract, agreement or other arrangement (whether written or oral) to
which either Vertex or any of its Subsidiaries is a party or by which any of their respective assets or properties is bound or committed (i) which creates a Lien on, affects or otherwise
relates to the Purchased Interest, the License Agreement, the Pfizer Agreement, the Royalties or the Patent Rights, or (ii) for which breach, nonperformance, cancellation or failure to renew
could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect. 

        (b)   Vertex
has provided to the Purchaser an accurate and complete copy of each of the License Agreement, the Pfizer Agreement, the Side Agreement and each confidentiality
agreement relating to any of the foregoing. 

        (c)   The
Pfizer Agreement is the legal, valid and binding obligation of Vertex and, to the Knowledge of Vertex, GSK and the Pfizer Parties, enforceable against Vertex and, to
the Knowledge of Vertex, GSK and the Pfizer Parties in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general equitable principles. The execution, delivery and performance of the Pfizer Agreement was and is within the corporate powers of Vertex and, to the
Knowledge of Vertex, GSK and the Pfizer Parties. The Pfizer Agreement was duly authorized by all necessary action on the part of, and validly executed and delivered by Vertex and, to the Knowledge of
Vertex, GSK and the Pfizer Parties. There is no breach or default, or event or circumstance which upon notice or the passage of time, or both, could (i) give rise to any breach or default, in
the performance of the Pfizer Agreement by Vertex or, to the Knowledge of Vertex, GSK or the Pfizer Parties or (ii) give to GSK or the Pfizer Parties the right to terminate the Pfizer
Agreement. 

        (d)   The
License Agreement is the legal, valid and binding obligation of Vertex and, to the Knowledge of Vertex, GSK, enforceable against Vertex and, to the Knowledge of
Vertex, GSK in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and
general equitable principles. The execution, delivery and performance of the License Agreement was and is within the corporate powers of Vertex and, to the Knowledge of Vertex, GSK. The License
Agreement was duly authorized by all necessary action on the part of, and validly executed and delivered by, Vertex and, to the Knowledge of Vertex, GSK. Except as set forth on  Schedule 3.13(e),
there is no breach or default, and no event has occurred or circumstance exists that (with or without notice or lapse of time,
or both) could (i) constitute or give rise to a breach or default, in the performance of the License Agreement by Vertex or, to the Knowledge of Vertex, GSK or (ii) give to GSK the right
to terminate the License Agreement (except pursuant to Section 11.2 thereof). 

        (e)   Except
as set forth on Schedule 3.13(e), Vertex has not waived any rights or defaults under the License Agreement
or the Pfizer Agreement that adversely affects the Purchaser's rights and obligations under any of the Transaction Documents. 

        (f)    Vertex
has not received any notice of GSK's, any Pfizer Party's or any other Person's or Governmental Authority's (where applicable) intention to terminate the License
Agreement or the 

12

 

Pfizer
Agreement, in whole or in part, or challenging the validity or enforceability of the License Agreement or the Pfizer Agreement or the obligation to pay the Royalties under the License
Agreement, or that any of Vertex, GSK, or the Pfizer Parties is in default of its obligations under the License Agreement or the Pfizer Agreement. Vertex has no intention of terminating the License
Agreement or the Pfizer Agreement and has not given GSK or the Pfizer Parties any notice of termination of the License Agreement or the Pfizer Agreement, in whole or in part, including, without
limitation, under Section 2.4(b) of the License Agreement. 

        (g)   Except
as provided in the License Agreement and the Pfizer Agreement, Vertex is not a party to any agreement providing for or permitting a sharing of, or
Set-off against, the Royalties payable under the License Agreement to Vertex. 

        (h)   The
sale by Vertex of the Purchased Interest to the Purchaser will not require the approval, consent, ratification, waiver, or other authorization of GSK or any other
Person or Governmental Authority under the License Agreement or the Pfizer Agreement or otherwise and will not constitute a breach of or default or event of default under the License Agreement or the
Pfizer Agreement or any other agreement or law applicable thereto. 

        (i)    All
amounts required to be paid to any Pfizer Party under the Pfizer Agreement have been paid to such Pfizer Party, and no amount is required to be paid by Vertex to any
Pfizer Party under the Pfizer Agreement. 

        (j)    Vertex
has not received a notice under the License Agreement stating that GSK has sublicensed any of its rights under the License Agreement. 

        (k)   Vertex
has not consented to (i) an assignment by GSK of any of GSK's rights or obligations under the License Agreement or the Pfizer Agreement or (ii) an
assignment by any or all of the Pfizer Parties of any of such Pfizer Party's rights or obligations under the Pfizer Agreement, nor does Vertex have Knowledge of any such assignment by GSK or a Pfizer
Party. 

        (l)    Neither
Vertex nor GSK has made any claim of indemnification under the License Agreement. 

        (m)  Vertex
has not exercised its rights to conduct an audit under Section 5.5 of the License Agreement. 

        (n)   GSK
has not made, or attempted to make, any demonstration to Vertex that its profit margin on sales of Licensed Products is materially and unusually low, under the
provisions of Section 5.3.1 of the License Agreement addressing the obligation to pay Enhanced Royalties (as defined therein). 

        (o)   To
Vertex's Knowledge, Vertex has received all amounts owed to it under Article V of the License Agreement. 

 Section 3.14.    Set-off and Other Sources of Royalty Reduction.  

        Except for Permitted Set-offs, GSK has no right of Set-off under any contract or other agreement against the Royalties or any other
amounts payable to Vertex under the License Agreement. GSK has not exercised, and to Vertex's Knowledge, GSK has not had the right to exercise, and to Vertex's Knowledge, no event or condition exists
that, upon notice or passage of time or both, would reasonably be expected to permit GSK to exercise, any Set-off against the Royalties or any other amounts payable to Vertex under the
License Agreement, except pursuant to paragraph five of the Side Agreement. To the Knowledge of Vertex, there are no third party patents that would provide a basis for a reduction in the royalties due
to Vertex pursuant to the License Agreement, other than the patents licensed pursuant to the Pfizer Agreement, and the royalties payable thereunder. There are no compulsory licenses granted or, to the
Knowledge of Vertex, threatened with respect to the Patent Rights and there 

13

 

is
no basis for GSK to claim a royalty reduction under Section 5.3.6 of the License Agreement with respect thereto. Neither Vertex nor, to the Knowledge of Vertex, GSK, has taken any of the
actions described in Section 13.16(b) or Section 13.16(c) of the License Agreement, as applicable. 

 Section 3.15.    UCC Representations and Warranties.  

        Vertex's exact legal name is, and for the immediately preceding 10 years has been, "Vertex Pharmaceuticals Incorporated," and Vertex's principal place of
business and jurisdiction of incorporation is, and for the past 10 years has been, located in The Commonwealth of Massachusetts. 

 Section 3.16.    Taxes.  

        No deduction or withholding for or on account of any tax has been made, or was required under applicable law to be made, from any payment to Vertex under the
License Agreement. 

 Section 3.17.    Field of Use.  

        The Products are the only Licensed Products that currently have any established value in the Field. Other than the Products, no Licensed Product is under
development in the Field by Vertex or any of its Affiliates or, to the Knowledge of Vertex, GSK or any of its Affiliates. 

 Section 3.18.    Disclosure.

        The
Information Memorandum (excluding Section 5 ("L.E.K. Report") and Section 11 ("Opinions
Regarding Vertex Patents and Commercialization") thereof), taken as a whole, does not contain any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the circumstances under which they were made. Vertex makes no representation or warranty, express or implied, with respect to the
matters disclosed in Section 5 ("L.E.K. Report"); Section 7 ("Proposed Forms of Debt Documentation"); Section 8
("Proposed Form of Partnership Agreement"); and Section 11 ("Opinions Regarding Vertex Patents and
Commercialization") of the Information Memorandum; provided, however, that,
notwithstanding the foregoing, any and all information provided or made available by or on behalf of Vertex or any of its Affiliates to the third parties which prepared the aforementioned Sections of
the Information Memorandum was, on the date so provided or made available, and is, in each case true and correct in all material respects. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER  

        The Purchaser hereby represents and warrants to Vertex as of the date first written above and the Closing Date, the following: 

 Section 4.01.    Organization.  

        The Purchaser is a Delaware limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware, and has all
partnership powers and all licenses, authorizations, consents and approvals of any Governmental Authority required to carry on its business as now conducted. 

 Section 4.02.    Authorization.  

        The Purchaser has all necessary partnership power and authority to enter into, execute and deliver the Transaction Documents and to perform all of the obligations
to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. The Transaction Documents have been, or will be when executed, duly authorized,
executed and delivered 

14

 

by
the Purchaser and each Transaction Document constitutes, or will constitute when executed, the legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance
with its respective terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally or general equitable
principles. 

 Section 4.03.    Governmental and Third Party Authorization.  

        The execution and delivery by the Purchaser of the Transaction Documents, and the performance by the Purchaser of its obligations and the consummation of any of
the transactions contemplated hereunder and thereunder, do not require any consent, approval, license, order, authorization, or declaration from, notice to, action or registration by, or filing with
any Governmental Authority or any other Person. 

 Section 4.04.    Broker's Fees.

        The
Purchaser has not taken any action that would entitle any Person to any commission or broker's fee in connection with the transactions contemplated by the Transaction Documents. 

 Section 4.05.    No Conflicts.  

        Neither the execution and delivery of any of the Transaction Documents nor the performance or consummation of the transactions contemplated hereby or thereby
will: (i) contravene, conflict with, result in a breach or violation of, constitute a default (with or without notice or lapse of time, or both) under, or accelerate the performance provided
by, in any material respects any provisions of (A) any statute, law, rule or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any
Governmental Authority, to which the Purchaser or any of its assets or properties may be subject or bound, or (B) any contract, agreement, commitment or instrument to which the Purchaser is a
party or by which the Purchaser or any of its assets or properties is bound or committed; or (ii) contravene, conflict with, result in a breach or violation of, constitute a default (with or
without notice or lapse of time, or both) under, or accelerate the performance provided by, any provisions of any organizational or constitutional documents of the Purchaser. 

 Section 4.06.    Access to Information.  

        The Purchaser acknowledges that it has (i) reviewed the License Agreement and such other documents and information relating to the Products and
(ii) has had the opportunity to ask such questions of, and to receive answers from, representatives of Vertex concerning the License Agreement and the Products, in each case, as it deemed
necessary to make an informed decision to purchase, acquire and accept the Purchased Interest in accordance with the terms of this Agreement. The Purchaser has such knowledge, sophistication and
experience in financial and business matters that it is capable of evaluating the risks and merits of purchasing, acquiring and accepting the Purchased Interest in accordance with the terms of this
Agreement. 

 Section 4.07.    No Litigation.  

        There is no (i) action, suit, arbitration proceeding, claim, investigation or other proceeding pending, or, to the knowledge of the Purchaser, threatened
against the Purchaser, at law or in equity or (ii) inquiry by a Governmental Authority pending or, to the knowledge of the Purchaser, threatened against the Purchaser, which in each case with
respect to clauses (i) and (ii) above, if adversely determined, would prevent the consummation of the transactions contemplated by this Agreement. 

15

 

 Section 4.08.    Funds Available.  

        The Purchaser has sufficient funds on hand or binding and enforceable commitments to provide it with sufficient funds to satisfy its obligations, in each case to
pay the Purchase Price, and the Purchaser has no reason to believe, and has not been provided with oral or written notice that any of its investors are not required or do not intend, for any reason,
to satisfy their obligations under such commitments. The Purchaser acknowledges and agrees that its obligations under this Agreement are not contingent on obtaining financing. 

ARTICLE V

COVENANTS  

        The parties covenant and agree as follows: 

 Section 5.01.    Books and Records.  

        (a)   After
receipt by Vertex of notice of any action, claim, demand, dispute, investigation, arbitration or proceeding (commenced or threatened) relating to the transactions
contemplated by any Transaction Document, the Purchased Interest, the License Agreement, the Pfizer Agreement or the Side Agreement, or any default or termination by any Person under the License
Agreement, the Pfizer Agreement or the Side Agreement, Vertex (i) shall promptly inform the Purchaser in writing of the receipt of such notice and the substance thereof and (ii) shall,
if such notice is in writing, promptly furnish the Purchaser with a copy of such notice and any related materials with respect thereto; provided,  however,
that, with respect to this clause (ii), for so long as the disclosure by Vertex to the Purchaser of any portion of such information
would constitute a breach by Vertex of any confidentiality obligation to GSK or any other Person pursuant to the License Agreement, as in effect on the date hereof, or the Pfizer Agreement, Vertex may
withhold and shall have no obligation to disclose or furnish to the Purchaser solely such portion of such information. 

        (b)   Vertex
shall keep and maintain, or cause to be kept and maintained, at all times full and accurate books and records adequate to reflect accurately all financial
information it has received from GSK with respect to the Royalties, and all amounts paid and/or payable to Pfizer with respect to the Pfizer Agreement. 

        (c)   Promptly
after receipt by Vertex of any written notice, certificate, offer, proposal, correspondence, report or other communication relating to the License Agreement,
the Pfizer Agreement, the Side Agreement, the Royalties, the Patent Rights, the Purchased Interest or the Products, Vertex shall (i) inform the Purchaser in writing of such receipt,
(ii) provide to the Purchaser in writing a reasonably detailed description of the substance thereof and (iii) furnish the Purchaser with a copy of such notice, certificate, offer,
proposal, correspondence, report or other communication; provided, however, that (i) this
paragraph (c) shall not apply to any such communication solely with respect to Permitted Amendments; provided that, upon any such Permitted
Amendment becoming legally binding or effective, Vertex shall promptly provide the Purchaser with written notice thereof and a copy of such Permitted Amendment and (ii) with respect to
clauses (ii) and (iii) of this paragraph (c), for so long as the disclosure by Vertex to the Purchaser of any portion of such information would constitute a breach by Vertex of
any confidentiality obligation to GSK or any other Person pursuant to the License Agreement, as in effect on the date hereof, or the Pfizer Agreement, Vertex may withhold and shall have no obligation
to disclose or furnish to the Purchaser solely such portion of such information. 

 Section 5.02.    Confidentiality; Public Announcement.  

        (a)   Except
as otherwise required by law or the rules and regulations of any securities exchange or trading system or the FDA or any other Governmental Authority with similar 

16

 

regulatory
authority and except as otherwise set forth in this Section 5.02, all Confidential Information furnished by Vertex to the Purchaser, as well as the terms, conditions and provisions
of this Agreement and any other Transaction Document, shall be kept confidential by the Purchaser, and shall be used by the Purchaser only in connection with this Agreement and any other Transaction
Document and the transactions contemplated hereby and thereby. Notwithstanding the foregoing, the Purchaser may disclose such information to its actual and potential partners, directors, employees,
managers, officers, agents, investors (including any holder of debt securities of the Purchaser and its agents and representatives), co-investors, insurers and insurance brokers,
underwriters, financing parties, equity holders, brokers, advisors, lawyers, bankers, trustees and representatives; provided that such Persons
(i) shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential pursuant to obligations of confidentiality no less onerous than
those set out herein or (ii) shall have executed and delivered the Resale Confidentiality Undertaking attached as Exhibit B to the Indenture. 

        (b)   Vertex
and the Purchaser acknowledge that each party will, after execution of this Agreement, make a public announcement of the transactions contemplated by the
Transaction Documents. Vertex and the Purchaser agree that after the Closing, public announcements may be issued in the form of one or more press releases, in each case subject to the Purchaser or
Vertex having a reasonable prior opportunity to review such public announcement, and which announcement shall be in a form mutually acceptable to the Purchaser and Vertex; and either party may
thereafter disclose any information contained in such press release at any time without the consent of the other party. 

 Section 5.03.    Quarterly Certificates.  

        Vertex shall, within fifteen (15) calendar days following the receipt by Vertex of the reports required under Section 5.4 of the License Agreement
(each, a "Section 5.4 Report"), deliver to the Purchaser a report of the Controller (or equivalent officer) of Vertex certifying as to
(i) the aggregate amount (in U.S. dollars) that should have been received by the Purchaser in respect of the quarterly period covered by such Section 5.4 Report and (ii) all other
information set forth in such Section 5.4 Report; provided, however, that, with respect to this
clause (ii), for so long as the disclosure by Vertex to the Purchaser of any portion of such information would constitute a breach by Vertex of any confidentiality obligation to GSK or any
other Person pursuant to the License Agreement, as in effect on the date hereof, or the Pfizer Agreement, Vertex may withhold and shall have no obligation to disclose or furnish to the Purchaser
solely such portion of such information. 

17

 

 

 Section 5.04.    Best Efforts; Further Assurance.  

        (a)   Subject
to the terms and conditions of this Agreement, each party hereto will use its best efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by the Transaction Documents. The Purchaser and Vertex agree to execute and deliver such
other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable, or reasonably requested by the other, in order to consummate or implement
expeditiously the transactions contemplated by any Transaction Document and to vest and maintain in the Purchaser good, valid and marketable rights and interests in and to the Purchased Interest free
and clear of all Liens. 

        (b)   Vertex
and the Purchaser shall cooperate and provide assistance as reasonably requested by the other party, at the expense of such other party (except as otherwise
provided herein), in connection with any litigation, arbitration or other proceeding (whether threatened, existing, initiated, or contemplated prior to, on or after the date hereof) to which the other
party hereto, any of its Affiliates or controlling Persons or any of their respective officers, directors, shareholders, members, controlling persons, managers, agents or employees is or may become a
party or is or may become otherwise directly or indirectly affected or as to which any such Persons have a direct or indirect interest, in each case relating to any Transaction Document, the Purchased
Interest or the transactions described herein or therein but in all cases excluding any litigation brought by Vertex against the Purchaser or brought by the Purchaser against Vertex. 

 Section 5.05.    Payments to Vertex on Account of the Purchased Interest.  

        (a)   Notwithstanding
the terms of the GSK Direction, if GSK, any Pfizer Party, any Sublicensee or any other Person makes any payment to Vertex or any of its Subsidiaries on
account of the Purchased
Interest, then Vertex promptly, and in any event no later than three (3) Business Days following the receipt by Vertex or such Subsidiary of such payment, shall remit such payment to the
Purchaser Account pursuant to Section 5.05(c). 

        (b)   All
payments made to Vertex on account of the Purchased Interest shall be held by Vertex in trust for the benefit of the Purchaser until remitted to the Purchaser
Account pursuant to Section 5.05(c) and Vertex shall have no right, title or interest whatsoever in such amounts and shall not create or suffer to exist any Lien thereon. 

        (c)   Vertex
shall make all payments to be made by Vertex pursuant to this Agreement by wire transfer of immediately available funds, without Set-off, to the
following account (or to such other account as the Purchaser shall notify Vertex in writing from time to time) (the "Purchaser Account"): 

Bank
Name: U.S. Bank National Association

ABA #: 091-000-022

Account #: 173103321092 Account Name: Fosamprenavir 123490000

Attention: Josh Tripi 

        (d)   If
GSK, any Pfizer Party, any Sublicensee or any other Person makes any payment to the Purchaser of Royalties relating to (i) periods prior to the Royalties
Commencement Date; or (ii) amounts owed to Pfizer under the Pfizer Agreement, then the Purchaser promptly, and in any event no later than five (5) Business Days following the receipt by
the Purchaser of such payment, shall remit such payment to the Vertex Account pursuant to Section 5.05(f), or to the Pfizer Account pursuant to Section 5.05(h), as applicable. 

        (e)   All
payments made to the Purchaser on account of Royalties relating to periods prior to the Royalties Commencement Date shall be held by the Purchaser in trust for the
benefit of 

18

 

Vertex
until remitted to the Vertex Account pursuant to Section 5.05(f) and the Purchaser shall have no right, title or interest whatsoever in such amounts. 

        (f)    The
Purchaser shall make all payments in respect of Royalties relating to periods prior to the Royalties Commencement Date to be made by the Purchaser pursuant to this
Agreement by wire transfer of immediately available funds, without Set-off, to the following account (or to such other account as Vertex shall notify the Purchaser in writing from time to
time) (the "Vertex Account"): 

Bank
Name: Bank of America

ABA #: 026009593

Account #: 0009954309

Account Name: Vertex Pharmaceuticals Inc.

SWIFT Code: BOFAUS3N 

        (g)   All
payments made to the Purchaser on account of amounts owing to Pfizer under the Pfizer Agreement shall be held by the Purchaser in trust for the benefit of Pfizer
until remitted to the Pfizer Account pursuant to Section 5.05(h) and the Purchaser shall have no right, title or interest whatsoever in such amounts. 

        (h)   The
Purchaser shall make all payments in respect of amounts owed to Pfizer under the Pfizer Agreement to be made by the Purchaser pursuant to this Agreement by wire
transfer of immediately available funds, without Set-off, to the following account (or to such other account as Vertex shall notify the Purchaser in writing from time to time) (the
"Pfizer Account"): 

Bank
Name: Bank of America

ABA #: 026009593

Account #: 4622832034

Account Name: Vertex Pharmaceuticals Inc. f/b/o Pfizer, Inc.

SWIFT Code: BOFAUS3N 

 Section 5.06.    License Agreement and Pfizer Agreement.  

        (a)   Vertex
shall comply with its obligations under the provisions of the License Agreement, the Pfizer Agreement and the Side Letter and, without the prior written consent
of the Purchaser, shall not (i) forgive, release or compromise any amount owed to or becoming owing to Vertex under the License Agreement related to the Royalties or the Purchased Interest,
(ii) waive, amend, cancel, terminate or, except as otherwise expressly set forth in this Article V, fail to exercise, any rights constituting or involving the right to receive the
Royalties, (iii) create or permit to exist any Lien on the Purchased Interest, the Royalties or the Patent Rights, (iv) challenge or assist in a challenge of the legality, validity or
enforceability of any of the Patent Rights, (v) amend, modify, restate, cancel, supplement, terminate or waive the Pfizer Agreement, the Side Agreement or any provision of the Pfizer Agreement
or the Side Agreement, or grant any consent under or with respect to the Pfizer Agreement or the Side Agreement, (vi) other than a Permitted Amendment, amend, modify, restate, cancel,
supplement or terminate the License Agreement or any provision of the License Agreement, (vii) grant any consent or waiver under or with respect to any provision of the License Agreement that
could reasonably be expected to, individually or in the aggregate, result in an Adverse Effect or (viii) agree to do any of the foregoing, including entering into any agreement with GSK under
the provisions of the License
Agreement. Vertex covenants that for so long as Section 13.16(c) of the License Agreement remains in effect, Vertex shall not take any action giving rise to GSK's right to terminate Vertex's
rights to further Royalties, pursuant to the terms of Section 13.16(c) of the License Agreement. 

        (b)   Vertex
shall promptly provide to the Purchaser copies of any notices, reports or other information given or prepared by GSK or any other Person and received by Vertex
after the date 

19

 

of
this Agreement pursuant to the License Agreement, the Pfizer Agreement, the Side Agreement or hereunder which relate to the Royalties or the Purchased Interest;  provided, however, that for so long as the disclosure by Vertex to the Purchaser of any portion of such
information would constitute a breach by Vertex of any confidentiality obligation to GSK or any other Person pursuant to the License Agreement, as in effect on the date hereof, or the Pfizer
Agreement, Vertex may withhold and shall have no obligation to disclose or furnish to the Purchaser solely such portion of such information. 

        (c)   Promptly
after (i) receiving notice from GSK, any Pfizer Party or any other Person, (A) terminating the License Agreement, the Pfizer Agreement or the Side
Agreement (in each case, in whole or in part), (B) alleging any breach of or default under the License Agreement, the Pfizer Agreement or the Side Agreement by Vertex or (C) asserting
the existence of any facts, circumstances or events which alone or together with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of
time or both) to give rise to a breach of or default under the License Agreement, the Pfizer Agreement or the Side Agreement or the right to terminate the License Agreement, the Pfizer Agreement or
the Side Agreement (in each case, in whole or in part) by GSK (except pursuant to Section 11.2 of the License Agreement), any Pfizer Party or any other Person or (ii) Vertex otherwise
has Knowledge of any fact, circumstance or event which alone or together with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of time
or both) to give rise to a breach of or default under the License Agreement, the Pfizer Agreement or the Side Agreement by Vertex or give GSK, any Pfizer Party or any other Person the right to
terminate the License Agreement, the Pfizer Agreement or the Side Agreement (except pursuant to Section 11.2 of the License Agreement), in each case, Vertex shall (x) promptly give a
written notice to the Purchaser describing in reasonable detail the relevant breach or default, including a copy of any written notice received from GSK, any Pfizer Party or the other relevant Person,
and, in the case of any breach or default or alleged breach or default by Vertex, describing in reasonable detail any corrective action Vertex proposes to take and (y) use its best efforts to
cure such breach or default and shall give written notice to the Purchaser upon curing such breach or default; provided,  however, that, if Vertex fails to
cure such breach or default promptly, the Purchaser shall, to the extent permitted under the License Agreement, the
Pfizer Agreement and the Side Agreement, be entitled to take any and all actions the Purchaser deems reasonably necessary to cure such breach or default promptly, and Vertex shall promptly reimburse
the Purchaser for all costs and expenses incurred in connection therewith. 

        (d)   Promptly
after Vertex obtains Knowledge of a breach of or default or alleged breach or default under the License Agreement, the Pfizer Agreement or the Side Agreement by
GSK, any Pfizer Party or any other Person (each, a "Defaulting Party") or of the existence of any facts, circumstances or events which alone or together
with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of time or both) to give rise to a breach of or default under the License
Agreement, the Pfizer Agreement or the Side Agreement by a Defaulting Party, or a right to terminate the License Agreement, the Pfizer Agreement or the Side Agreement by Vertex, in each case, Vertex
shall (i) promptly give a written notice to the Purchaser describing in reasonable detail the relevant breach, default or termination event, and (ii) as and when requested in writing by
the Purchaser, proceed in consultation with the Purchaser and take such permissible actions (including commencing legal action against the Defaulting Party to the License Agreement, the Pfizer
Agreement or the Side Agreement) as the Purchaser may in writing instruct with respect to such breach, default or termination event or alleged breach, default or termination event (including the
selection of legal counsel reasonably satisfactory to the Purchaser) to enforce compliance by the Defaulting Party with the relevant provisions of the License Agreement, the Pfizer Agreement or the
Side Agreement and to exercise any or all of Vertex's rights and remedies, whether under the License Agreement, the Pfizer 

20

 

Agreement
or the Side Agreement or by operation of law, with respect thereto. The reasonable fees and expenses of Vertex's outside legal counsel (which counsel shall be reasonably satisfactory to the
Purchaser) incurred by Vertex in commencing and pursuing such action against the Defaulting Party shall be borne solely by the Purchaser (unless such breach or default results from or is caused by,
directly or indirectly, a breach or default by Vertex, in which case such fees and expenses shall be borne solely by Vertex) and the Purchaser shall reimburse Vertex for all of such fees and expenses
so reimbursable by the Purchaser upon demand. Notwithstanding the foregoing, the Purchaser acknowledges that GSK has not provided Vertex under the License Agreement with any marketing reports, updates
to schedules, or Net Sales or royalty information on a country-by-country basis, and the Purchaser agrees that such failure and any continued failure by GSK to provide any such
marketing reports, updates or information will not constitute, as between Vertex and the Purchaser, a breach of or default under the License Agreement by GSK. Provided that to do so will not affect in
an adverse manner the maintenance by Vertex of any applicable attorney-client privilege, unless other arrangements can be effected to preserve such privilege, including, without limitation, a joint
defense agreement (and Vertex and the Purchaser agree to negotiate in good faith to promptly execute and deliver a mutually satisfactory joint defense agreement), the Purchaser shall have the right,
at its sole expense, to participate in and control, with counsel appointed by it, any meeting, discussion, litigation or other proceeding relating to any such breach, default or termination event or
alleged breach, default or termination event, including, but not limited to, any counterclaim, settlement discussions or meetings; provided that the
fees and expenses of the Purchaser's counsel in connection therewith shall be borne by the Purchaser (unless such breach, default or termination event or alleged breach, default or termination event
results from, or is caused by, directly or indirectly, a breach or default by Vertex, in which case such fees and expenses shall be borne solely by Vertex). 

        (e)   Subject
to Section 8.3(a) of the License Agreement and to compliance by Vertex with Section 5.06(f), to the extent permitted pursuant to the License
Agreement, Vertex shall (i) to the extent "commercially reasonable" (as determined below) to do so, take any and all actions, and prepare, execute, deliver and file any and all agreements,
documents and instruments that are reasonably necessary or desirable to diligently maintain the Patent Rights, at the sole expense of Vertex (which expenses may be reimbursable to Vertex by GSK under
the License Agreement), and (ii) diligently defend (and enforce) the Patent Rights against infringement or interference by any other Persons, and against any claims of
invalidity or unenforceability, in any jurisdiction (including by bringing any legal action for infringement or defending any counterclaim of invalidity or action of a third party for declaratory
judgment of non-infringement or non-interference), with counsel reasonably satisfactory to the Purchaser and whose reasonable fees and expenses shall be borne by the Purchaser.
Vertex and the Purchaser agree that, for purposes of this Section 5.06(e), the determination of what actions are "commercially reasonable" shall be made in the context of actions that would be
commercially reasonable for an owner and licensor of the Patent Rights, entitled to the full economic benefit thereof, without regard to any other business of, or assets owned by, such owner and
licensor of the Patent Rights. Vertex shall not disclaim or abandon, or fail to take any action necessary or desirable to prevent the disclaimer or abandonment of, the applicable Patent Rights. The
Purchaser, at its sole option and expense, shall have the right (but not the obligation) to participate in and control any action, suit or proceeding involving the infringement, legality, validity, or
enforceability of the Patent Rights or the License Agreement, through counsel of its own choosing, to the same extent that Vertex has such rights under the License Agreement, and Vertex shall exercise
and enforce such rights on its own behalf (and on behalf of the Purchaser) to the fullest extent under the terms of the License Agreement; provided
that, Vertex's exercise and enforcement of such rights shall not result in a breach of this Agreement or a Material Adverse Effect. 

21

 

        (f)    During
the term of this Agreement, Vertex (i) will not make a request under Section 8.3(a) of the License Agreement that patent prosecution and maintenance
with respect to a Product be discontinued, (ii) will give prompt written notice to the Purchaser of any request by GSK under Section 8.3(a) of the License Agreement, and will consent or
withhold consent to such request as directed by the Purchaser (provided that if consent is withheld, the Purchaser will be responsible for all reasonable costs and expenses incurred by Vertex
resulting from such maintenance and preservation) and (iii) Vertex shall refrain from disposing of or encumbering the Patent Rights. 

 Section 5.07.    Termination of License Agreement.  

        (a)   Without
limiting the provisions of Section 5.06, if GSK or Vertex terminates or provides written notice of termination of the License Agreement, and at such time
the Patent Rights remain economically valuable, then Vertex shall provide assistance to and cooperate with the Purchaser, at the Purchaser's sole discretion, cost and expense (including the
Purchaser's payment of Vertex's reasonable attorneys' fees in connection therewith, if any), in such efforts as the Purchaser shall undertake in connection with the negotiation of a license of the
Patent Rights, to become effective not earlier than the effective date of termination of the License Agreement, which shall include terms no less favorable to Vertex than those contained in the
License Agreement with respect to obligations and costs imposed on Vertex, disclaimers of Vertex's liability, intellectual property ownership and control,
commercialization diligence and indemnification of Vertex (any such license, a "New Arrangement"). Should the Purchaser identify any New Arrangement,
Vertex agrees to duly execute and deliver such New Arrangement that satisfies the foregoing requirements promptly upon the written request of the Purchaser. In the event Vertex enters into a New
Arrangement, Vertex agrees to comply with the provisions of this Agreement in connection with the New Arrangement and references herein to the Purchased Interest and the License Agreement shall be
deemed to be references to any new purchased interest and any new license agreement constructed under the New Arrangement, and references to GSK shall be deemed to be references to the other party to
such new license agreement and that other party's Affiliates and sublicensees. If, at any time after the effective date of termination of the License Agreement, the Purchaser determines that it is no
longer interested in or ceases to use commercially reasonable efforts to pursue a New Arrangement, it shall, no later than 60 days after the date thereof, give Vertex written notice of such
determination or ceasing (a "Termination Notice"). 

        (b)   If
there occurs a merger or consolidation of Vertex, on the one hand, and GSK or its Affiliates, on the other hand, and GSK shall terminate the License Agreement in
connection with any such merger or consolidation, Vertex shall pay the Purchaser royalties on the Net Sales of Products for the term of the License Agreement on the same basis as if the License
Agreement had continued and the Purchaser's rights with respect to the Purchased Interest and the covenants of Vertex under this Agreement shall continue to apply on the same basis as if the License
Agreement was in place between Vertex and GSK. 

 Section 5.08.    Audits.  

        Vertex shall not, without the prior written consent of the Purchaser, and Vertex shall, upon the written request of the Purchaser, cause an inspection or audit of
GSK's books and records to be conducted pursuant to, and in accordance with Section 5.5 of the License Agreement; provided,  however, that in no event
shall the Purchaser request such examination prior to the six-month anniversary of the Closing Date; and  provided, further, however, that Vertex shall retain the
exclusive right to inspect and audit GSK's books and records at any time and from time to time at its sole discretion for payments that are paid or payable to Vertex pursuant to the License Agreement
with respect to Net Sales and Royalties attributable to the period prior to the Royalties Commencement Date. For the purposes of exercising the Purchaser's rights pursuant to this Section 5.08,
Vertex shall 

22

 

select
such public accounting firm as the Purchaser shall recommend for such purpose. Vertex and the Purchaser agree that all the expenses of any inspection or audit carried out for the benefit of the
Purchaser that would otherwise be borne by Vertex pursuant to the License Agreement shall instead be borne by the Purchaser, including such fees and expenses of such public accounting firm as are to
be borne by Vertex pursuant to Section 5.5 of the License Agreement together with Vertex's reasonable out-of-pocket costs incurred in connection with such examination or
audit. To the extent that disclosure of an inspection or audit report prepared by such public accounting firm is permitted pursuant to the License Agreement, Vertex will furnish such inspection or
audit report to the Purchaser. To the extent that disclosure of such inspection or audit report is not permitted by the License Agreement, Vertex shall deliver to the Purchaser a certificate signed by
an authorized signatory of Vertex and such public accounting firm certifying whether or not the results of such inspection or audit uncovered a discrepancy between the amounts paid to the Purchaser in
respect of the Purchased Interest and the amounts that should have been paid to the Purchaser in respect of the Purchased Interest and the amount of any such discrepancy and any other information
permitted to be disclosed pursuant to the License Agreement. The Purchaser shall have the right to require Vertex, in writing, at the sole expense of the Purchaser, to exercise Vertex's rights under
the License Agreement to cause GSK to cure such discrepancy in accordance with the License Agreement. 

 Section 5.09.    Notice.  

        (a)   In
addition to, and not in limitation of, the other provisions of this Agreement, Vertex shall provide the Purchaser with written notice as promptly as practicable (and
in any event within five (5) Business Days) after becoming aware of any of the following: 

        (1)   the
occurrence of a Bankruptcy Event; 

        (2)   any
material breach or default by Vertex of any covenant, agreement or other provision of this Agreement or any other Transaction Document; or 

        (3)   any
representation or warranty made by Vertex in any of the Transaction Documents or in any certificate delivered to the Purchaser pursuant hereto shall prove to be
untrue, inaccurate or incomplete in any respect on the date as of which made. 

        (b)   Vertex
shall notify the Purchaser in writing not less than 30 days prior to any change in, or amendment or alteration of, Vertex's (i) legal name;
(ii) form or type of organization or corporate structure; or (iii) jurisdiction of organization. 

 Section 5.10.    Sale of HIV Protease Inhibitor.  

        In the event Vertex consummates or concludes a Permitted Amendment as contemplated in clause (ii) of the definition of such term, then from the date of
such Permitted Amendment until May 28, 2013, Vertex covenants and agrees that neither it, nor any of its Subsidiaries or licensees, shall make a commercial sale in the Territory, as defined in
the License Agreement, of any HIV protease inhibitor that incorporates any product or intellectual property that is excluded from the coverage of the License Agreement pursuant to such Permitted
Amendment. 

ARTICLE VI

THE CLOSING; CONDITIONS TO CLOSING  

 Section 6.01.    Closing.  

        Subject to the closing conditions set forth in Sections 6.02 and 6.03, the closing of the transactions contemplated hereby (the
"Closing") shall take place on May 30, 2008, or such other date as the parties shall mutually agree (the "Closing
Date") at the offices of Pillsbury Winthrop Shaw Pittman LLP located at 1540 Broadway, New York, NY 10036, or such other place as the parties mutually agree. 

23

 

 Section 6.02.    Conditions Applicable to the Purchaser in Closing.  

        The obligations of the Purchaser to effect the Closing, including the requirement to pay the Purchase Price pursuant to Section 2.03, shall be subject to
the satisfaction of each of the following conditions, on the Closing Date, any of which may be waived by the Purchaser in its sole discretion: 

        (a)    Accuracy of Representations and Warranties.    The representations and warranties of Vertex set forth in the
Transaction Documents that are qualified as to materiality or by Material Adverse Effect shall be true, correct and complete, and those representations and warranties of Vertex not so qualified shall
be true, correct and complete in all material respects, in each case as of the date hereof and as of the Closing Date. 

        (b)    No Adverse Circumstances.    There shall not have occurred any change, effect, event, occurrence, state of
facts, development or condition that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 

        (c)    Litigation.    No action, suit, litigation, proceeding or investigation shall have been instituted, be pending
or, to the Knowledge of Vertex, threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit the Purchaser's
purchase, acquisition and acceptance or future receipt of any or all of the Purchased Interest. 

        (d)    Bill of Sale and Receipt.    A Bill of Sale in the form set forth in  Exhibit A, and a receipt in respect of that
Bill of Sale in a form reasonably acceptable to the Purchaser, shall have been executed and delivered
by Vertex to the Purchaser, and the Purchaser shall have received the same. 

        (e)    Legal Opinion.    The Purchaser shall have received the opinion of Dewey & LeBoeuf LLP,
transaction counsel to Vertex, in form and substance satisfactory to the Purchaser and its counsel to the effect set forth in Exhibit B. 

        (f)    Corporate Documents of Vertex.    The Purchaser shall have received certificates of an executive officer of
Vertex (the statement made in which shall be true and correct on and as of the Closing Date): (i) attaching copies, certified by such officer as true and complete, of resolutions of the board
of directors of Vertex authorizing and approving the execution, delivery and performance by Vertex of the Transaction Documents and the transactions contemplated herein and therein;
(ii) setting forth the incumbency of the officer or officers of Vertex who have executed and delivered the Transaction Documents including therein a signature specimen of each officer or
officers; and (iii) attaching copies, certified by such officer as true and complete, of long form good standing certificates of the appropriate Governmental Authority of Vertex's jurisdiction
of incorporation, stating that Vertex is in good standing under the laws of such jurisdiction. 

        (g)    Covenants.    Vertex shall have complied in all material respects with its covenants set forth in the
Transaction Documents. 

        (h)    GSK Direction and GSK/Pfizer Instruction.    Copies of (x) the irrevocable direction to GSK to pay the
Royalties evidenced by the Purchased Interest directly to the Purchaser Account in the form set forth in Exhibit C (the
"GSK Direction") and (y) the irrevocable standing instruction to GSK under paragraph five of the Side Agreement to pay all amounts required to be
paid under the Pfizer Agreement directly to Pfizer in the form set forth in Exhibit D (the "GSK/Pfizer
Instruction") shall have been signed and delivered by Vertex to the Purchaser, and the Purchaser shall have received the same. 

        (i)    Other Documents and Financing Statements.    The Purchaser shall have received such other certificates,
documents and financing statements as the Purchaser may reasonably request, 

24

 

including
a financing statement satisfactory to the Purchaser to create, evidence and perfect the sale of the Purchased Interest pursuant to Section 2.01(c) and the back-up security
interest granted pursuant to Section 2.01(d). 

 Section 6.03.    Conditions Applicable to Vertex in Closing.  

        The obligations of Vertex to effect the Closing shall be subject to the satisfaction of each of the following conditions, on the Closing Date, any of which may be
waived by Vertex in its sole discretion: 

        (a)    Accuracy of Representations and Warranties.    The representations and warranties of the Purchaser set forth in
the Transaction Documents that are qualified as to materiality shall be true, correct and complete, and those representations and warranties of the Purchaser not so qualified shall be true,
correct and complete in all material respects, in each case as of the date hereof and as of the Closing Date. 

        (b)    Litigation.    No action, suit, litigation, proceeding or investigation shall have been instituted, be pending
or, to the knowledge of the Purchaser, threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit the
Purchaser's purchase, acquisition and acceptance or future receipt of any or all of the Purchased Interest. 

        (c)    Covenants.    The Purchaser shall have complied in all material respects with its covenants set forth in the
Transaction Documents. 

        (d)    Purchase Price.    Vertex shall have received payment of the Purchase Price in accordance with
Section 2.03. 

ARTICLE VII

TERMINATION  

 Section 7.01.    Termination Date.  

        After the Closing, this Agreement shall terminate on the later of (i) the date on which Purchaser's right to receive Royalties pursuant to the License
Agreement shall have terminated; (ii) the 60th day after the date, if any, on which the Purchaser would be required to deliver a Termination Notice pursuant to Section 5.07(a);
and (iii) if a New Arrangement is entered into by Vertex, the date on which such New Arrangement expires or is terminated in accordance with its terms. 

 Section 7.02.    Effect of Termination.  

        In the event of the termination of this Agreement pursuant to Section 7.01, this Agreement shall become void and of no further force and effect, except for
those rights and obligations that have
accrued prior to the date of such termination or relate to any period prior thereto, including the payment in accordance with the terms hereof of any Royalty relating to the period commencing on the
Royalties Commencement Date and ending on the date of such termination. Notwithstanding the foregoing, Articles VII and VIII and Sections 5.02, 5.04(b), 5.05 (with respect to any Royalty
relating to any period prior to the date of such termination), 5.06 (with respect to the period commencing on the Royalties Commencement Date and ending on the date of such termination), 5.07 and 5.08
(to the extent then available pursuant to the License Agreement), shall survive such termination and there shall be no liability on the part of any party hereto, any of its Affiliates or controlling
Persons or any of their respective officers, directors, shareholders, members, controlling persons, managers, agents or employees, other than as set forth in this Section 7.02,
Section 5.02 and Article VIII, each of which shall survive any termination as set forth in Section 8.01. Nothing contained in this Section 7.02 shall relieve any party from
liability for any breach of this Agreement that occurs prior to such termination. 

25

 

  ARTICLE VIII

MISCELLANEOUS  

 Section 8.01.    Survival.  

        All representations and warranties made herein and in any other Transaction Document or any certificates delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall continue to survive until the date that is three (3) years after the Closing Date;  provided, however, that the representations and warranties contained in Sections 3.01, 3.02,
3.04, 3.08, 3.09, 3.10, 3.11, 3.12, 3.13 and 3.14 shall survive until the date that is six (6) months after the termination of this Agreement;  provided, further, however, that it is understood and
agreed that, notwithstanding the survival provisions of this Section 8.01, all of the representations and warranties made by the parties are made only as of the date of this Agreement and the
Closing Date as provided in Articles III and IV and Sections 6.02 and 6.03. The obligations of (i) Vertex to indemnify and hold harmless any Purchaser Indemnified Party under
Section 8.05 and (ii) the Purchaser to indemnify and hold harmless any Vertex Indemnified Party under Section 8.05, in each case shall terminate (i) when the applicable
representation or warranty terminates pursuant to this Section 8.01, with respect to claims made pursuant to Sections 8.05(a)(i) and 8.05(b)(i), as applicable, (ii) ninety
(90) days after the date on which the rights and obligations of Vertex or the Purchaser, as the case may be, under a particular covenant or agreement contained in this Agreement are terminated
or expire pursuant to the terms hereof, with respect to claims made under Section 8.05(a)(ii) or 8.05(b)(ii), as the case may be, (iii) 60 days after the expiration of the
applicable statute of limitations (or waivers or extensions thereof), with respect to claims made pursuant to Section 8.05(a)(iii), 8.05(a)(iv) and 8.05(b)(iii);  provided, however, that, in each case, such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which a Purchaser Indemnified Party or a Vertex Indemnified Party shall have, before the expiration of the applicable period, previously notified the
indemnifying party pursuant to Section 8.05. 

 Section 8.02.    Specific Performance.  

        Each of the parties hereto acknowledges that the other party will have no adequate remedy at law if it fails to perform any of its obligations under any of the
Transaction Documents. In such event, each of the parties agrees that the other party shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific
performance of this Agreement. 

 Section 8.03.    Notices.  

        All notices, consents, waivers and communications hereunder given by any party to the other shall be in writing, signed by the party giving such notice, and shall
be deemed to have been duly given when (i) delivered by hand; (ii) sent by facsimile (with written confirmation of receipt) if sent during regular business hours on a Business Day (and,
if not, then on the next succeeding Business Day), provided that a copy is mailed by registered mail, return receipt requested; (iii) received by the addressee, if sent by nationally recognized
overnight delivery service (receipt requested); or (iv) sent by e-mail if sent during regular business hours on a Business Day (and, if not, then on the next succeeding Business
Day), provided that a copy is mailed by registered mail, return receipt requested (provided, however, that delivery will not be deemed effective unless the addressee provides written confirmation of
receipt by facsimile or return e-mail (automatic e-mail responses do not constitute confirmation), in each case, to the applicable addresses, facsimile numbers and/or
e-mail addresses set forth below: 

26

 

        If
to the Purchaser to: 

Fosamprenavir
Royalty, L.P.

c/o Richards, Layton & Finger, P.A.

One Rodney Square

920 North King Street

Wilmington, DE 19801

Attention: William J. Haubert

Facsimile: (302) 498-7559

E-mail: haubert@rlf.com

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

Fosam
Investors, L.P.

c/o Cowen Healthcare Royalty Partners, L.P.

177 Broad Street, Suite 1101

Stamford, CT 06901

Attention: Clarke B. Futch

Facsimile No: (646) 562-1293

E-mail: clarke.futch@cowen.com 

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

Cahill
Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

Attention: Christopher T. Cox

Facsimile No.: (212) 269-5420

E-mail: ccox@cahill.com 

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

U.S.
Bank National Association

One Federal Street, 3rd Floor

Boston, MA 02110

Attention: Corporate Trust Services (Fosamprenavir Royalty, L.P.).

Facsimile No.: (617) 603-6683 

        If
to Vertex to: 

Vertex
Pharmaceuticals Incorporated

130 Waverly Street

Cambridge, MA 02139

Attention: Kerry K. Reinertsen, Ph.D.

                  Vice President, Business and Corporate Development

Facsimile No.: (617) 444-6632

E-Mail: kerry_reinertsen@vrtx.com 

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

Vertex
Pharmaceuticals Incorporated

130 Waverly Street

Cambridge, MA 02139

Attention: Kenneth S. Boger, Esq.

                  Senior Vice President and General Counsel

Facsimile No.: (617) 444-7117

E-Mail: ken_boger@vrtx.com 

27

 

or
to such other address or addresses, facsimile number or numbers or e-mail address or addresses as the Purchaser or Vertex may from time to time designate by notice as provided herein,
except that notices of such changes shall be effective only upon receipt. 

 Section 8.04.    Successors and Assigns.  

        The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
Vertex shall not be entitled to assign any of its obligations and rights under any of the Transaction Documents, the License Agreement, the Pfizer Agreement or the Side Letter without the prior
written consent of the Purchaser; provided, however, that Vertex may, without the consent of the
Purchaser, assign any of its obligations or rights under the Transaction Documents, the License Agreement, the Pfizer Agreement or the Side Letter to any other Person with which it may merge or
consolidate or to which it may sell all or substantially all of its assets or all of its assets related to the Products, provided that the assignee
under such assignment agrees to be bound by the terms of the Transaction Documents, the License Agreement, the Pfizer Agreement or the Side Letter, as applicable, and furnish a written agreement to
the Purchaser in form and substance reasonably satisfactory to the Purchaser to that effect. The Purchaser may assign any of its obligations and rights hereunder, without restriction and without the
consent of Vertex. The Purchaser shall give notice of any such assignment to Vertex after the occurrence thereof. Vertex shall be under no obligation to reaffirm any representations, warranties or
covenants made in this Agreement or any of the other Transaction Documents or take any other action in connection with any such assignment by the Purchaser. 

 Section 8.05.    Indemnification.  

        (a)   Vertex
hereby indemnifies and holds each of the Purchaser and its Affiliates and any and all of their respective partners, directors, managers, members, officers,
employees, agents and controlling Persons (each, a "Purchaser Indemnified Party") harmless from and against, and will pay to each Purchaser Indemnified
Party the amount of, any and all Losses incurred or suffered by such Purchaser Indemnified Party arising out of: (i) any breach of any representation, warranty or certification made by Vertex
in any of the Transaction Documents or certificates given by Vertex in writing pursuant hereto or thereto, (ii) any breach of or default under any covenant or agreement by Vertex pursuant to
any Transaction Document or the License Agreement, (iii) any Excluded Liabilities and Obligations, and (iv) any fees, expenses, costs, liabilities or other amounts incurred or owed by
Vertex to any brokers, financial advisors or comparable other Persons retained or employed by it in connection with the transactions contemplated by this Agreement. Any amounts due to any Purchaser
Indemnified Party hereunder shall be payable by Vertex to such Purchaser Indemnified Party promptly upon demand. 

        (b)   The
Purchaser hereby indemnifies and holds each of Vertex and its Affiliates and any and all of their respective partners, directors, managers, members, officers,
employees and agents (each, a "Vertex Indemnified Party") harmless from and against, and will pay to each Vertex Indemnified Party the amount of, any
and all Losses incurred or suffered by such Vertex Indemnified Party arising out of: (i) any breach of any representation, warranty or certification made by the Purchaser in any of the
Transaction Documents or certificates given by the Purchaser in writing pursuant hereto or thereto, (ii) any breach of or default under any covenant or agreement by the Purchaser pursuant to
any Transaction Document and (iii) any fees, expenses, costs, liabilities or other amounts incurred or owed by the Purchaser to any brokers, financial advisors or comparable other Persons
retained or employed by it in connection with the transactions contemplated by this Agreement. Any amounts due to any Vertex Indemnified Party hereunder shall be payable by the Purchaser to such
Vertex Indemnified Party upon demand. 

28

 

        (c)   If
any claim, demand, action, or proceeding (including any investigation by any Governmental Authority) shall be brought or alleged against an indemnified party in
respect of which indemnity is to be sought against an indemnifying party pursuant to the preceding paragraphs, the indemnified party shall, promptly after receipt of notice of the commencement of any
such claim, demand, action or proceeding, notify the indemnifying party in writing of the commencement of such claim, demand, action or proceeding, enclosing a copy of all papers served, if any;  provided that, the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 8.05 unless, and only to the extent that, such omission results in the forfeiture of, or have a material adverse effect on the
exercise
or prosecution of, substantive rights or defenses by the indemnifying party. In case any such action is brought against an indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled, at the indemnifying party's sole cost and expense, to participate therein and, to the extent that it may wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 8.05 for
any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, an indemnified
party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has assumed the defense of such proceeding and has failed within a reasonable
time to retain counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of counsel to
the indemnifying party. It is agreed that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any Loss by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or
discharge of any claim or pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement, compromise or discharge, as the case may be, (i) includes an unconditional written release of such indemnified party, in form and substance reasonably
satisfactory to the indemnified party, from all liability on claims that are the subject matter of such claim or proceeding, (ii) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any indemnified party and (iii) does not impose any continuing material obligation or restrictions on any indemnified party. 

        (d)   Except
in the case of fraud or intentional breach, following Closing, the indemnification afforded by this Section 8.05 shall be the sole and exclusive remedy for
any and all Losses sustained or incurred by a party hereto in connection with the transactions contemplated by the Transaction Documents, including with respect to any breach of any representation,
warranty or certification made by a party hereto in any of the Transaction Documents or certificates given by a party in writing pursuant hereto or thereto or any breach of or default under any
covenant or 

29

 

agreement
by a party pursuant to any Transaction Document. Notwithstanding anything in this Agreement to the contrary, (i) in the event of any breach or failure in performance of any covenant
or agreement contained in any Transaction Document, the non-breaching party shall be entitled to specific performance, injunctive or other equitable relief pursuant to Section 8.02
hereof; and (ii) in no event shall Losses include consequential damages; provided, however, that
any indemnified party shall be entitled to recover for profits lost or otherwise not realized following the Royalties Commencement Date with respect to the Purchased Interest solely to the extent that
such profits are reasonably foreseeable in connection with the breach, default or violation that is the subject of the indemnification claim. For clarity, neither party shall have any right to
terminate this Agreement or any other Transaction Document after the Closing as a result of any breach by the other party hereof or thereof, but instead shall have the rights set forth in this
Section 8.05 and Section 8.02. 

 Section 8.06.    Independent Nature of Relationship.  

        (a)   The
relationship between Vertex and the Purchaser is solely that of seller and purchaser, and neither the Purchaser nor Vertex has any fiduciary or other special
relationship with the other or any of their respective Affiliates. Nothing contained herein or in any other Transaction Document shall be deemed to constitute Vertex and the Purchaser as a
partnership, an association, a joint venture or other kind of entity or legal form. 

        (b)   No
officer or employee of the Purchaser will be located at the premises of Vertex or any of its Affiliates. 

        (c)   None
of Vertex and/or any of its Affiliates shall at any time obligate the Purchaser, or impose on the Purchaser any obligation, in any manner or with respect to any
Person not a party hereto. 

 Section 8.07.    Tax.  

        (a)   Notwithstanding
the accounting treatment thereof, for United States federal, state and local tax purposes, Vertex and the Purchaser shall treat the transactions
contemplated by the Transaction Documents as a sale for United States federal, state and local tax purposes. 

        (b)   All
payments to the Purchaser under this Agreement shall be made without any deduction or withholding for or on account of any tax payable by Vertex, provided that if
deduction or withholding of any tax is required from any such payment under this Agreement or from any payment under the License Agreement by reason of Vertex's being a party to the License Agreement,
the sum payable shall be increased and paid by Vertex as necessary so that after making all required deductions and withholdings, the Purchaser receives an amount equal to the amount that it would
have received had no such deductions or withholdings been made. 

        (c)   The
parties hereto agree not to take any position that is inconsistent with the provisions of this Section 8.07 on any tax return or in any audit or other
administrative or judicial proceeding unless (i) the other party to this Agreement has consented to such actions, or (ii) the party that contemplates taking such an inconsistent position
has been advised by nationally recognized tax counsel in writing that there is no "reasonable basis" (within the meaning of Treasury Regulation Section 1.6662-3(b)(3)) for the
position specified in this Section 8.07. If there is an inquiry by any Governmental Authority of Vertex or the Purchaser related to this Section 8.07, the parties shall cooperate with
each other in responding to such inquiry in a reasonable manner consistent with this Section 8.07. 

30

 

 Section 8.08.    Entire Agreement.  

        This Agreement, together with the Exhibits and Schedules hereto (which are incorporated herein by reference), and the other Transaction Documents constitute the
entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth
herein (or in the Exhibits, Schedules or other Transaction Documents) has been made or relied upon by either party hereto. Neither this Agreement, nor any provision hereof, is intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder. 

 Section 8.09.    Governing Law.  

        (a)   This
Agreement shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to the principles of conflicts of law
thereof. 

        (b)   Each
of the parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New
York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 

        (c)   Each
of the parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 

        (d)   Each
party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.03. Nothing in this Agreement will affect
the right of any party to this Agreement to serve process in any other manner permitted by law. 

 Section 8.10.    Waiver of Jury Trial.  

        EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

31

 

 Section 8.11.    Severability.  

        If one or more provisions of this Agreement are held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall remain in full force and effect be enforceable in accordance with its terms. Any
provision of this Agreement held invalid or unenforceable only in part or degree by a court of competent jurisdiction shall remain in full force and effect to the extent not held invalid or
unenforceable. 

 Section 8.12.    Counterparts; Effectiveness.  

        This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. Any counterpart may be executed by
facsimile signature and such facsimile signature shall be deemed an original. 

 Section 8.13.    Amendments; No Waivers.  

        (a)   Neither
this Agreement nor any term or provision hereof may be amended, changed or modified except with the written consent of the parties hereto. No waiver of any right
hereunder shall be effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced. 

        (b)   No
failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law. 

 Section 8.14.    Interpretation.  

        (a)   Except
as otherwise provided or unless the context otherwise requires, whenever used in this Agreement, (i) any noun or pronoun shall be deemed to include the
plural and the singular; (ii) the use of masculine pronouns shall include the feminine and neuter, (iii) the terms "include" and "including" shall be deemed to be followed by the phrase
"without limitation"; (iv) the word "or" shall be inclusive and not exclusive; (v) all references to Sections refer to the Sections of this Agreement, all references to Schedule refer to
the Schedule attached hereto or delivered with this Agreement, as appropriate, and all references to Exhibits refer to the Exhibits attached to this Agreement, each of which is made a part of this
Agreement for all purposes; and (vi) each reference to "herein" means a reference to "in this Agreement". 

        (b)   The
provisions of this Agreement shall be construed according to their fair meaning and neither for nor against any party hereto irrespective of which party caused such
provisions to be drafted. Each of the parties hereto acknowledges that it has been represented by an attorney in connection with the preparation and execution of this Agreement. 

        (c)   Unless
expressly provided otherwise, the measure of a period of one month or one year for purposes of this Agreement shall be that date of the following month or year
corresponding to the starting date,
provided that if no corresponding date exists, the measure shall be that date of the following month or year corresponding to the next day following the starting date. For example, one month following
February 18th is March 18th, and one month following March 31 is May 1. 

[Signature
page follows] 

32

  
        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written. 

	 	 	VERTEX PHARMACEUTICALS

INCORPORATED
	

 	
 	

By:	

/s/ Ian F. Smith

	 	 	 	Name: Ian F. Smith
	 	 	 	Title:   Executive Vice President and Chief Financial Officer

	 

	 	 	FOSAMPRENAVIR ROYALTY, L.P.
	

 	
 	

By:	

Fosamprenavir Royalty GP, L.L.C.,

as its general partner
	

 	
 	

By:	

Cowen Healthcare Royalty GP, LLC,

as its sole member
	

 	
 	

By:	

/s/ Clarke B. Futch

	 	 	 	Name: Clarke B. Futch
	 	 	 	Title:   Authorized Signatory

QuickLinks

Exhibit 10.2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}]]