Document:

Exhibit 10.3

 

EXECUTION COPY

 

Confidential Treatment Requested.

 

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

with the Commission.

 

U.S.
$155,000,000

 

VERTEX
PHARMACEUTICALS INCORPORATED

 

SECURED
NOTES DUE 2012

 

NOTE PURCHASE AGREEMENT

 

September 30, 2009

 

OLMSTED PARK S.A. 

20, rue de la Poste

L-2346 Luxembourg

Attention: Board of Directors

 

Ladies and Gentlemen:

 

Vertex Pharmaceuticals
Incorporated, a Massachusetts corporation (together with its permitted successors
and assigns, the “Company”), hereby, upon the
terms and conditions set forth in this agreement (this “Agreement”),
issues and sells to you (together with your permitted successors and assigns,
the “Purchaser”) U.S. $155,000,000
in aggregate principal amount of its Secured Notes due October 31, 2012
(the “Notes”).  The Notes are to be issued pursuant to an
Indenture, dated as of September 30, 2009 (the “Indenture”),
among the Company and U.S. Bank National Association, as trustee (the “Trustee”). This Agreement is to confirm the agreement
concerning the purchase of the Notes from the Company by the Purchaser.  Certain capitalized terms used herein are
defined in Annex I attached hereto.

 

1.            Purchase of the Notes.  The Notes will be offered and sold to the
Purchaser without registration under the Securities Act of 1933, as amended
(the “Securities Act”), in reliance
on an exemption pursuant to Section 4(2) under the Securities Act.

 

The holders of the Notes
will also be entitled to the benefit of security interests in the Collateral
(as such term is defined in the Security Agreement) (the “Collateral”) granted under the Security Agreement
between the Company and the Trustee, as collateral agent thereunder (the “Collateral Agent”), dated as of September 30, 2009
(the “Security Agreement”).

 

2.            Representations, Warranties
and Agreements of the Company. 
The Company represents, warrants and covenants to the Purchaser, as of
the date of this Agreement, as follows:

 

(a)           The Notes are eligible for resale
pursuant to Rule 144A under the Securities Act and such Notes at the time
of initial issuance will not be of the same class (within the meaning of Rule 144A
under the Securities Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange
Act or that are quoted in a United States automated inter-dealer quotation
system.

 

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(b)           Assuming the truth and accuracy of
the Purchaser’s representations and warranties in Section 4 of this
Agreement, the purchase of the Notes pursuant hereto is exempt from the
registration requirements of the Securities Act.

 

(c)           Assuming the truth and accuracy of
the Purchaser’s representations and warranties in Section 4(f) of
this Agreement, no form of general solicitation or general advertising within
the meaning of Regulation D (including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising) was used by the Company, any of its Affiliates or any of
their respective representatives in connection with the offer and sale of the
Notes to the Purchaser.

 

(d)           Neither the Company nor any other
person acting on behalf of the Company has sold or issued any securities that
would be integrated with the offering of the Notes contemplated by this
Agreement pursuant to the Securities Act, the rules and regulations
thereunder or the interpretations thereof by the Commission.  The Company will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in the United
States or to any U.S. person (as defined in Rule 902 under the Securities
Act), of any Notes or any substantially similar security issued by the Company,
within six months subsequent to the date hereof, is made under restrictions and
other circumstances reasonably designed not to affect the status of the offer
and sale of the Notes pursuant to this Agreement as transactions exempt from
the registration provisions of the Securities Act.

 

(e)           No order or decree of any
Governmental Authority asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Securities Act
has been issued, and no proceeding for that purpose has commenced or is pending
before any Governmental Authority or, to the Knowledge of the Company is
contemplated.

 

(f)            The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts.  The Company
has all corporate powers and all licenses, authorizations, consents and
approvals of all Governmental Authorities required to carry on its business as
now conducted.  The Company 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 would reasonably be expected
to result, individually or in the aggregate, in an Adverse Effect.

 

(g)           The Company has all necessary
corporate power and authority to execute, issue, sell and perform its
obligations under the Notes.  The Notes
have been duly authorized by the Company and, when duly executed by the Company
in accordance with the terms of the Indenture, assuming due authentication of
the Notes by the Trustee, upon delivery to the Purchaser against payment
therefor in accordance with the terms of this Agreement and the Indenture, will
be validly issued and delivered and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally or general equitable
principles.  No qualification of the Indenture
under the Trust Indenture Act of 1939 (the

 

2

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

“Trust
Indenture Act”) is required in connection with the offer and
sale of the Notes contemplated hereby.

 

(h)           Except with respect to the Notes,
which are covered by the representations and warranties set forth in clause (g) above:
(i) the Company 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, and (ii) each of
the Transaction Documents has been duly authorized, executed and delivered by
the Company and each Transaction Document constitutes the legal, valid and
binding obligation of the Company enforceable against the Company 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.

 

(i)            The Security Agreement is effective
to create, and once executed and delivered, will create, in favor of the
Collateral Agent for the benefit of the Trustee and the holders of the Notes,
legal, valid and enforceable liens on or in all of the Collateral subject
thereto, and upon the filing of  UCC-1
financing statement (containing adequate descriptions of such Collateral) with
the office of the Secretary of the Commonwealth of Massachusetts, such liens
shall comprise a perfected first-priority security interest in such Collateral,
subject to no other Liens.

 

(j)            The issue and sale of the Notes, the
execution, delivery and performance by the Company of each of the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, will not: (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 respect, (A) any
statute, law, rule, ordinance or regulation of any Governmental Authority, or
any judgment, order, writ, decree, permit, authorization or license of any
Governmental Authority, to which the Company, 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 the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective assets or properties is bound or committed or (C) any
provisions of the articles of organization or by-laws (or other organizational
or constitutional documents) of the Company or any of its Subsidiaries; (ii) give
rise to any right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries; (iii) except as
provided in the Transaction Documents, result in the creation or imposition of
any Lien on the Pledged Interest or any other portion of the Collateral; 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 (provided,
however,
that neither the execution and delivery of any of the Transaction Documents nor
the performance or consummation of the transactions contemplated hereby and
thereby will prevent Janssen’s ability to terminate the Janssen Agreement under
Section 13.2 thereof), or accelerate the performance provided by, in any
respect, any provision of the Janssen Agreement; provided, however, that, in the case of
clause (i)(B) or clause (ii), such contravention, conflict, breach,
violation, default or acceleration would reasonably be expected to result,
individually or in the aggregate, in an Adverse Effect.

 

3

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(k)           The issue and sale of the Notes, the
execution and delivery by the Company of the Transaction Documents and the
performance by the Company of its obligations and the consummation by it 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
Person, except for (i) the filing of proper financing statements under the
UCC pursuant to the Security Agreement as described in clause (i) above, (ii) the
filing of a Current Report on Form 8-K with the Securities and Exchange
Commission and (iii) the Janssen Consent. 
The Company has obtained prior to its execution and delivery of this
Agreement the consent of Janssen required under Section 15.2 of the
Janssen Agreement with respect to the transactions contemplated by the
Transaction Documents (the “Janssen Consent”),
which consent is in full force and effect.

 

(l)            The historical consolidated
financial statements (including the related notes and supporting schedules)
included or incorporated by reference in the Exchange Act Reports present
fairly in all material respects the financial condition, results of operations
and cash flows of the Company and its consolidated Subsidiaries purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with GAAP applied on a consistent basis throughout the
periods involved.

 

(m)          The Company is the exclusive owner of
the entire right, title (legal and equitable) and interest in and to the Pledged
Interest, free and clear of all Liens.

 

(n)          Intellectual Property.

 

(i)            The Company has the right, whether
by ownership or license, to grant Janssen the rights and licenses to the
Company intellectual property rights described in the Janssen Agreement,
including the Vertex Patent Rights, the Vertex Know-How, and the Company’s
rights under Joint Patent Rights (as such terms are defined in the Janssen
Agreement), except where the failure to have such right to license would not
reasonably be expected to have, individually or in the aggregate, an Adverse
Effect and to the Knowledge of the Company, Janssen has full right and interest
in the Janssen intellectual property rights described in the Janssen Agreement,
including the Janssen Patent Rights, the Janssen Know-How (as such terms are
defined in the Janssen Agreement), and Janssen’s rights under Joint Patent
Rights, free and clear of all Liens, except where the failure to have full
right and interest or the existence of such Liens would not reasonably be expected
to have, individually or in the aggregate, an Adverse Effect;

 

(ii)           To the actual knowledge of any of the
Company employees or officers listed in the definition of “Knowledge” herein,
no third party owns any intellectual property rights that would necessarily be
infringed, misappropriated or otherwise violated by the development,
manufacture, use, sale or importation of a Compound, Product Candidate, or
Combination Product (as such terms are defined in the Janssen Agreement);

 

(iii)          Except for the Vertex Patent Rights,
Vertex Know-How, and the Company’s rights under Joint Patent Rights, the
Company does not own or control any intellectual property rights that would be
necessary to the achievement by Janssen of the

 

4

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

Milestone Events.  The Company does not own or control any
intellectual property or data resulting from Additional Development Activities
(as defined in the Janssen Agreement);

 

(iv)          No claims have been made or, to the
Knowledge of the Company, threatened against the Company since the “Effective
Date” of the Janssen Agreement that any Compound, Product Candidate, Product,
or Combination Product or the development, manufacture, use sale or importation
thereof, infringes, misappropriates, or otherwise violates any intellectual
property right of any third party, except where any such claim or claims would
not reasonably be expected to have, individually or in the aggregate, an
Adverse Effect;

 

(v)           To the Knowledge of the Company, no
claims have been made or threatened against Janssen since the “Effective Date”
of the Janssen Agreement that any Compound, Product Candidate, Product, or
Combination Product or any use thereof by Janssen, infringes, misappropriates,
or otherwise violates any intellectual property right of any third party,
except where any such claim or claims would not reasonably be expected to have,
individually or in the aggregate, an Adverse Effect;

 

(vi)          To the actual knowledge of any of the
Company employees or officers listed in the definition of “Knowledge” herein,
Janssen is currently not infringing, misappropriating, or otherwise violating
in any respect any of the Company’s intellectual property rights relating to
the Compound or Product Candidate;

 

(vii)         To the Knowledge of the Company, the
Vertex Patent Rights and the Company’s interest in any Joint Patent Rights are
valid and enforceable, and no third party is currently challenging, or has
challenged, the validity or enforceability of any Vertex Patent Rights, Vertex
Know-How, the Company’s rights under Joint Patent Rights, Janssen Patent
Rights, Janssen Know-How or Janssen’s rights under Joint Patent Rights in any
respect, except where any such invalidity, unenforceability or challenge to
validity or enforceability would not reasonably be expected to have,
individually or in the aggregate, an Adverse Effect; and

 

(viii)        All of the representations and
warranties made by the Company in the Janssen Agreement were accurate and
complete in all material respects as of the “Effective Date” of the Janssen
Agreement, in each case subject to any qualifiers set forth therein.

 

(o)           Janssen Agreement.

 

(i)            Other than the Janssen Agreement and
the Transaction Documents, there is no contract, agreement or other arrangement
(whether written or oral) to which either the Company or any of its
Subsidiaries is a party or by which any of their respective assets or
properties is bound or committed (i) that creates a Lien on the Pledged
Interest or (ii) the breach, nonperformance, cancellation or termination
of which would reasonably be expected to result, individually or in the
aggregate, in an Adverse Effect.

 

(ii)           The Company has provided the
Purchaser a redacted copy of the Janssen Agreement (with the Ancillary Janssen
Documents redacted) and a true, accurate and complete copy of each
confidentiality agreement relating thereto and the Janssen Consent. The
redacted copy of the Janssen Agreement 
provided by the Company to the Purchaser as described

 

5

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

above, together with
information that has been publicly disclosed by the Company or is otherwise
publicly available, in each case, prior to the Effective Date, contains all of
the material provisions of, and information contained in, the Janssen Agreement
with respect to the Pledged Interest. 
The redacted portions of the Janssen Agreement do not contain any
provisions that would reasonably be expected to (i) result in an Adverse
Effect or (ii) have a material adverse effect on the timing or likelihood
of achievement of the Milestone Events. The Janssen Agreement constitutes the
entire agreement between the Company and Janssen (and their respective
Affiliates) relating to the Pledged Interest.

 

(iii)          The Janssen Agreement is the legal,
valid and binding obligation of the Company and, to the Knowledge of the
Company, Janssen, enforceable against the Company and, to the Knowledge of the
Company, Janssen 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 Janssen Agreement was and is within the corporate powers of the Company
and, to the Knowledge of the Company, Janssen. 
The Janssen Agreement was duly authorized by all necessary action on the
part of, and validly executed and delivered by, the Company and, to the Knowledge
of the Company, Janssen.  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) would constitute or give rise to a
breach or default, in the performance of the Janssen Agreement by the Company
or, to the Knowledge of the Company, Janssen, which breach, default, event or
circumstance in either case would reasonably be expected to result,
individually or in the aggregate, in an Adverse Effect or a material adverse
effect on the timing or likelihood of achievement of the Milestone Events.  To the Knowledge of the Company, no event has
occurred or circumstance exists that (with or without notice or lapse of time,
or both) would give either Janssen or the Company the right to terminate the
Janssen Agreement (except pursuant to Section 13.2 thereof).

 

(iv)          The Company (i) has not waived
any rights or defaults under the Janssen Agreement and (ii) has not taken
any action or omitted to take any action under the Janssen Agreement, in each
case with respect to clause (i) and clause (ii), that materially adversely
affects the Purchaser’s rights under any of the Transaction Documents.

 

(v)           The Company has not received any
notice and has no Knowledge (A) of Janssen’s intention to terminate the
Janssen Agreement, in whole or in part, (B) of Janssen’s intention to
effectuate a Prohibited Amendment, (C) of Janssen’s or any other Person’s
or Governmental Authority’s (where applicable) intention to challenge the
validity or enforceability of the Janssen Agreement or the obligation of
Janssen to pay the Milestone Payments under the Janssen Agreement upon
achievement of the Milestone Events or (D) that the Company or Janssen is
in default of any of its material obligations under the Janssen Agreement.  The Company (A) has no intention of
terminating the Janssen Agreement and has not given Janssen any notice of
termination of the Janssen Agreement, in whole or in part, and (B) has no
intention to effectuate a Prohibited Amendment and has not given Janssen any
request to effectuate a Prohibited Amendment.

 

6

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(vi)          Except as provided in Sections 9.9 and
13.4.1 of the Janssen Agreement, the Company is not a party to any agreement
providing for or permitting a sharing of, or Set-off against, the Milestone
Payments.

 

(vii)         The Company has all licenses,
authorizations, consents and approvals of all Governmental Authorities required
to exercise its rights and to perform its obligations under the Janssen
Agreement.  The pledge by the Company of
the Company’s right, title and interest in and to the Pledged Interest and the
other Collateral pursuant to the Transaction Documents will not require the
approval, consent, ratification, waiver, or other authorization of Janssen or
any other Person or Governmental Authority under the Janssen Agreement or
otherwise and will not constitute a breach of or default or event of default
under the Janssen Agreement or any other agreement or law.

 

(viii)        The Company has not consented to an
assignment (by operation of law or otherwise) by Janssen of any of Janssen’s
rights or obligations under the Janssen Agreement with respect to the Pledged
Interest, nor does the Company have Knowledge of any such assignment (by
operation of law or otherwise) by Janssen.

 

(ix)          Neither the Company nor Janssen has
made any claim of indemnification under the Janssen Agreement nor, to the
Knowledge of the Company, have there been any events or circumstances that
would give rise to a right of such claim by the Company or Janssen.

 

(x)           The Company received prior to the
date hereof payment in full from Janssen (without any Set-offs by Janssen) for
the milestone events numbered “1” through (and including) “5” set forth in the
table in Section 9.2.1 of the Janssen Agreement, in each case in the full
amount and within the time set forth in the Janssen Agreement.

 

(xi)          No portion of the Milestone Payments
was payable to the Company or received by the Company or any of its Affiliates
on or prior to the date of this Agreement.

 

(p)           There is no (i) action, suit,
arbitration proceeding, claim, investigation or other proceeding (whether
civil, criminal, administrative or investigative) pending or, to the Knowledge
of the Company, threatened by or against the Company or any of its Subsidiaries
or, to the Knowledge of the Company, pending or threatened by or against
Janssen, at law or in equity, or (ii) inquiry or investigation (whether
civil, criminal, administrative or investigative) by or before a Governmental
Authority pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries or, to the Knowledge of the Company, pending
or threatened against Janssen, which, in each case with respect to clause (i) or
clause (ii) above, (A) if adversely determined, would reasonably be
expected to have, individually or in the aggregate, an 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 the Company, 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.

 

7

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(q)           None of the Company nor any of its
Subsidiaries is (i) in violation of, or has violated or has been given
notice of any violation, or, to the Knowledge of the Company, is under
investigation with respect to, or has been threatened to be charged with 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 the case of both clause (i) and clause (ii) above, that
would reasonably be expected to have, individually or in the aggregate, an
Adverse Effect.  To the Knowledge of the
Company, no event has occurred or circumstance exists that (with or without
notice or lapse of time, or both) would constitute or result in a violation by
the Company or any of its Subsidiaries of, or a failure on the part of the
Company or any of its Subsidiaries to comply with, any such law, rule,
ordinance or regulation of, or any judgment, order, writ, decree, permit or
license granted, issued or entered by, any Governmental Authority, in each
case, that would reasonably be expected to result, individually or in the
aggregate, in an Adverse Effect.

 

(r)            Immediately after the consummation
of the issuance and sale of Notes and the other transactions contemplated by
the Transaction Documents, (i) the fair saleable value of the Company’s
assets will be greater than the sum of its debts and other obligations,
including contingent liabilities, (ii) the present fair saleable value of
the Company’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) the
Company will be able to realize upon its assets and pay its debts and other
obligations, including contingent obligations, as they mature, (iv) the
Company will not have unreasonably small capital with which to engage in its
business and (v) the Company 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.

 

(s)           None of the transactions contemplated
by this Agreement (including, without limitation, the use of the proceeds from
the sale of the Notes), will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System.

 

3.             Purchase of the Notes by
the Purchaser.  The Company,
on the basis of the representations, warranties, covenants and agreements of
the Purchaser contained herein and subject to all the terms and conditions set
forth herein, hereby issues and sells to the Purchaser and, upon the basis of
the representations, warranties and agreements of the Company herein contained
and subject to all the terms and conditions set forth herein, the Purchaser
hereby purchases from the Company, at an aggregate purchase price of U.S.
$122,216,581, Notes with an aggregate principal amount of U.S. $155,000,000.

 

4.             Representations, Warranties
and Agreements of the Purchaser. 
The Purchaser represents, warrants and covenants to the Company, as of
the date of this Agreement, as follows:

 

(a)           The Purchaser is acquiring the Notes
for investment for its own account, not as a nominee or agent, and not with a
view to, or for resale, in connection with, any distribution thereof. The
Purchaser intends to hold the Notes for the account of the Purchaser,

 

8

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

and currently does not
intend, and does not have any agreement or understanding, at this time to
dispose of all or any part of the Notes. 
The Purchaser, however, reserves the right to sell all or part of the
Notes in accordance with the terms of the Indenture.

 

(b)           The Purchaser is a “qualified
institutional buyer” as such term is defined in Rule 144A under the
Securities Act.

 

(c)           The Purchaser (i) has experience
in independently evaluating and investing in businesses in the Company’s
industry which are at similar stage of development as the Company, (ii) has
such knowledge and experience in business matters so as to be fully capable of
independently evaluating the merits and risks of the investment in the Notes,
has the capacity to protect its own interests and can bear the economic risk of
an investment in the Notes, and (iii) has had an opportunity to discuss
the transactions contemplated by the Transaction Documents with its advisors,
including legal counsel and tax advisors, as it deemed necessary and
appropriate to adequately evaluate an investment in the Notes.

 

(d)           The Purchaser acknowledges that it is
familiar with the condition, financial and otherwise, of the Company and the
Notes and the security provided under the Security Agreement in connection with
the Notes and, to the extent deemed appropriate in making its investment
decision, has discussed with the Company and its advisors, the Notes, the
security therefore under the Security Agreement, the Company’s financial
condition and prospects and the Company’s current and proposed activities. The
Company has allowed the Purchaser access to such financial and other
information and personnel of the Company as the Purchaser has deemed necessary
in connection with the purchase of the Notes. The Company has provided the
Purchaser, during the course of the negotiations of the transactions
contemplated by this Agreement and prior to the sale of the Notes, the
opportunity to ask questions of, and receive answers from, the Company and its
advisors concerning the terms and conditions of the sale of the Notes and to obtain
any additional information necessary and appropriate in connection therewith.
The Purchaser has made such inquiry as it has believed to be desirable for its
purposes and has obtained such information it regards necessary, appropriate
and adequate from the Company and its representatives for its decision to
purchase the Notes.

 

(e)           The Purchaser acknowledges that
investing in securities of the Company, and therefore, the purchase of the
Notes, involves substantial risk, including, but not limited, to those risks
listed under “Risk Factors” in the Exchange Act Reports.

 

(f)            Neither the Purchaser, nor any of
its Affiliates, officers, employees, agents, shareholders, members or directors
has, either directly or indirectly including through a broker or finder, (i) been
presented with or solicited by any publicly issued or circulated form of
advertisement or general solicitation in connection with the offer, sale and
purchase of the Notes or (ii) engaged in any general solicitation  or published any advertisement in connection
with the offer and sale of the Notes. The Purchaser or its Affiliates,
officers, employees, agents, shareholders, members or directors have a
pre-existing business relationship with the Company and were contacted directly
by the Company or its agents regarding the opportunity to participate in the
offer, sale and purchase of the Notes.

 

9

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(g)           The Purchaser acknowledges that the
Notes have not been registered under the Securities Act, that the Notes are
being issued pursuant to an exemption from the registration requirements of the
Securities Act, that the Notes are restricted securities under the Securities
Act insofar as they are being acquired from the Company in a transaction not
involving a public offering and that under the Securities Act and applicable
regulations promulgated thereunder the Notes may be resold without registration
under the Securities Act only in certain limited circumstances.  The Purchaser is familiar with Rule 144A
and Rule 144 promulgated by the Commission, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act
and agrees to be bound by such limitations and not resell, pledge or otherwise
transfer the Notes except in compliance with such limitations and in accordance
with the terms of the Indenture.

 

(h)           The Purchaser acknowledges that
neither the Company nor its Affiliates, agents and advisors have made any
representation, warranty or agreement, express or implied, to the Purchaser
regarding the transactions contemplated by this Agreement, except for the
representations, warranties and agreements of the Company expressly set forth
in this Agreement and the other Transaction Documents, and the Purchaser
expressly acknowledges that it is not relying on any other information, written
or oral, or documents previously furnished to or discovered by the Purchaser or
any other representations, warranties or agreements, other than the
representations, warranties and agreements of the Company expressly set forth
in this Agreement and the other Transaction Documents in making its decision to
purchase the Notes and enter into the other transactions contemplated by this
Agreement.

 

(i)            The Purchaser acknowledges and
agrees that (i) the Company is entitled to rely upon the Purchaser’s
representations, warranties and agreements contained in this Agreement, and (ii) the
Notes are being sold by the Company to the Purchaser in reliance upon the truth
and accuracy of the Purchaser’s representations, warranties and agreements
contained in this Agreement.

 

5.             Delivery of the Notes and
Payment Therefor.  Delivery to
the Purchaser of, and payment for, the Notes (the “Closing”)
shall be made on the date hereof (the “Closing
Date”) at the office of Akin Gump Strauss Hauer & Feld
LLP, One Bryant Park, New York, New York, 10036.

 

The Notes will be delivered
to the Purchaser against payment by or on behalf of the Purchaser of the
purchase price therefor by wire transfer of immediately available funds to an
account designated in writing by the Company on the date hereof.  The Notes will be evidenced by one or more
definitive notes in the form provided for in the Indenture.

 

6.             Agreements of the Company.  The Company agrees with the Purchaser as
follows:

 

(a)           So long as any of the Notes are
outstanding, the Company will, furnish at their expense to the Purchaser, and,
upon request, to the holders of the Notes and prospective purchasers of the
Notes the information required by Rule 144A(d)(4) under the
Securities Act.

 

(b)           Upon the request of the Purchaser,
the Company will use its reasonable best efforts, at the Company’s expense, to
permit the Notes to be eligible for clearance and

 

10

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

settlement through the
Depository Trust Company (“DTC”).  The Company agrees to comply with all the
terms and conditions set forth in the representation letters of the Company to
DTC relating to the approval of the Notes by DTC for “book entry” transfer.

 

(c)           The Company agrees not to sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would be integrated with the
sale of the Notes in a manner that would require the registration under the
Securities Act of the sale to the Purchaser of the Notes.

 

7.             Tax
Matters.         The Company and the Purchaser agree as
follows:

 

(a)           The
Purchaser shall indemnify and hold the Company harmless from any Indemnifiable
Tax.

 

(b)           The
Company agrees to give written notice (the “Initial Notice”) to the Purchaser of any notice received by the
Company which involves the assertion of any claim, or the commencement of any
audit, suit, action or proceeding relating to Indemnifiable Tax (an “Indemnifiable Tax Claim”) within 10 days of such receipt or such earlier
time as would allow the Purchaser to timely respond to such Indemnifiable Tax
Claim.  The Company will give the
Purchase such information with respect to the Indemnifiable Tax Claim as the
Purchaser may reasonably request. 
Failure to provide the Purchaser with notice and information with
respect to a Indemnifiable Tax Claim within a sufficient period of time and in
reasonably sufficient detail to allow the Purchaser to effectively contest such
Indemnifiable Tax Claim shall not affect the liability of the Purchaser to the
Company except to the extent that the Purchaser’s position is actually and
materially prejudiced as a result thereof.

 

(c)           The
Purchaser may, upon written notice to the Company given within 30 days of
receipt of the Initial Notice, assume and control the defense of any
Indemnifiable Tax Claim at its own cost and expense and with its own counsel
and may (i) pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any tax authority, or (ii) either
pay (A) the amount of Indemnifiable Taxes claimed and sue for a refund
where applicable law permits such refund suits or (B) contest, settle or
compromise the Indemnifiable Tax Claim in any permissible manner.

 

(d)           If
the Purchaser elects to exercise its right to control the defense of any
Indemnifiable Tax Claim pursuant to Section 7(c) of this Agreement, (i) the
Company, its employees and its affiliates shall (A) cooperate with the
Purchaser in connection with such defense of any Indemnifiable Tax Claim and
the pursuit of any related refund, (B) provide the Purchaser (and its
employees and other agents) with any applicable powers of attorney reasonably
requested and (C) take any actions reasonably requested by the Purchaser,
and (ii) the Purchaser shall (A) keep the Company reasonably informed
of all material developments and events relating to such Indemnifiable Tax
Claim, and permit the Company to participate in (but not to control) the
defense any such Indemnifiable Tax Claim (including participation in any
relevant meetings and conference calls) at its own cost and expense and with
its own counsel.

 

(e)           Any
Indemnifiable Tax Claim that the Purchaser does not elect to control pursuant
to Section 7(c) of this Agreement shall be controlled by the Company
and the Purchaser

 

11

 

Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.

 

agrees to
cooperate with the Company in pursuing such contest, provided,
however,
that (i) the Company shall keep the Purchaser informed of all material
developments and events relating to such Indemnifiable Tax Claim (including
promptly forwarding copies to the Purchaser of any related correspondence) and
shall use reasonable efforts to provide the Purchaser with an opportunity to
review and comment on any material correspondence before the Company sends such
correspondence to any tax authority and (ii) the Purchaser, at its own
cost and expense and with its own counsel, shall have the right to participate
in (including in any relevant meetings and conference calls) the defense of
such Indemnifiable Tax Claims.

 

(f)            The
Purchaser and the Company further agree to furnish or cause to be furnished to
each other, upon request, in a timely manner, such information (including
access to books and records) and assistance relating to the Company as is
reasonably necessary for the filing of any tax return relating to Indemnifiable
Taxes or for the defense of any Indemnifiable Tax Claim.

 

8.             Closing Deliverables of the
Company.  At the Closing the
Company shall deliver the following additional documents to the Purchaser:

 

(a)           A true and complete execution copy of
each of the Indenture and the Security Agreement, duly executed by all parties
thereto.

 

(b)           Evidence of filing of financing
statements (Form UCC-1, Form UCC-3 or such other financing statements
or similar notices as shall be required by local law) as are necessary or
desirable in order to evidence and perfect the Liens in favor of the Collateral
Agent in the Collateral, which financing statements shall be satisfactory in
form and substance to the Collateral Agent and shall comply in all respects
with the requirements of Section 3.02 of the Security Agreement.

 

(c)           Certificates of an executive officer
of the Company dated as of the date hereof: (i) attaching copies,
certified by such officer as true and complete, of resolutions of the board of
directors of the Company authorizing and approving the execution, delivery and
performance by the Company of the Transaction Documents and the transactions
contemplated herein and therein; (ii) setting forth the incumbency of the
officer or officers of the Company who have executed and delivered the
Transaction Documents, including therein a signature specimen of each officer
or officers; (iii) attaching copies, certified by such officer as true and
complete, of each of the articles of organization and by-laws of the Company as
in effect on the date hereof; and (iv) attaching copies, certified by such
officer as true and complete, of long form good standing certificates of the
appropriate Governmental Authority of the Company’s jurisdiction of
incorporation, stating that the Company is in good standing under the laws of
such jurisdiction.

 

(d)           The written opinion of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo PC, as transaction counsel to the Company,
addressed to the Purchaser, in the form of Exhibit A
hereto.

 

(e)           A copy of the Payment Direction (as
defined in the Security Agreement) executed by the Company.

 

12

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(f)            Certificates, agreements and other
documentation relating to corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the Notes,
the Indenture and the Security Agreement, and all other legal matters relating
to this Agreement and the transactions contemplated hereby in a form reasonably
satisfactory to counsel for the Purchaser.

 

(g)           Such further certificates and
documents of the Company as the Purchaser may reasonably request.

 

9.             Notices, etc.  All notices, consents, waivers and
communications hereunder given by any party hereto to the other party hereto
shall be in writing, signed by the party hereto giving such notice and 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,
however,
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 email if sent during regular business
hours on a Business Day (and, if not, then on the next succeeding Business
Day), provided,
however,
that a copy is mailed by a nationally recognized overnight delivery service (provided, however, that
delivery will not be deemed effective unless the addressee provides written
confirmation of receipt by facsimile or return email (automatic email responses
do not constitute confirmation)), in each case, to the applicable addresses,
facsimile numbers and/or email addresses set forth below:

 

If to the Purchaser to:

 

Olmsted Park S.A.

20, rue de la Poste

L-2346 Luxembourg 

Attention: Board of Directors

 

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

 

Akin Gump Strauss Hauer &
Feld LLP

One Bryant Park

New York, NY 10036

Attention: Stuart E. Leblang

Facsimile: (212) 872-1002

Email: sleblang@akingump.com

 

If to the Company to:

 

Vertex Pharmaceuticals
Incorporated

130 Waverly Street

Cambridge, MA 02139

Attention:  Philippe Tinmouth
                 Head, Business Development &
Licensing

13

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

Facsimile:  617-444-6632

Email:  phil_tinmouth@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:  617-444-7117

Email:  ken_boger@vrtx.com

 

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

 

10.           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. 
The Company shall not be entitled to assign, directly or indirectly, any
of its obligations and rights under any of this Agreement, including by
operation of law or otherwise, without the prior written consent of the
Purchaser; provided,
however,
that the Company may, without the consent of the Purchaser, assign any of its
obligations or rights under this Agreement to any other Person with which it
may merge or consolidate or to which it may sell all or substantially all of
its assets, provided,
further, however, that
the assignee under such assignment agrees to be bound by the terms of this
Agreement and furnishes a written agreement to the Purchaser in form and
substance reasonably satisfactory to the Purchaser to that effect.  The Purchaser may assign all or any portion
of its obligations and rights hereunder, without restriction and without the
consent of the Company, provided,
however,
that the Purchaser shall give notice of any such assignment to the Company
after the occurrence thereof.  The
Company 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.

 

11.           Survival.  The respective representations, warranties
and agreements of the Company and the Purchaser contained in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
survive the execution and delivery of this Agreement and shall continue to
survive until the earlier of October 31, 2012 or the repayment by the
Company in full of the Notes (the “Survival Date”); provided, however, that
the representations and warranties contained in Sections 2(a) through (e),
2(j), 2(k) and 2(o) shall survive until the date that is one year
after the Survival Date; provided, further, however, that the representations and warranties contained
in Sections 2(f) through (i) and 2(m) shall survive
indefinitely; provided,
further, however, that it
is understood and agreed that, notwithstanding the survival provisions of this Section 11,
all of the representations and warranties made by the parties hereto are made
only as of the date of this Agreement.

 

14

 

Information redacted
pursuant to a confidential treatment request. 
An unredacted version

of this exhibit has been filed separately with the Commission.

 

12.           Specific Performance.  Each of the parties hereto acknowledges that
the other party hereto may have no adequate remedy at law if it fails to
perform any of its obligations under this Agreement.  In such event, each of the parties hereto
agrees that the other party hereto 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. Neither party hereto shall have any right to terminate this
Agreement as a result of any breach by the other party hereto hereof, but
instead shall have the rights set forth in this Agreement.

 

13.           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 hereto 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 hereto hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that 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 Section 13(b).  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 hereto irrevocably
consents to service of process in the manner provided for notices in Section 9.  Nothing in this Agreement will affect the
right of any party hereto to serve process in any other manner permitted by
law.

 

14.           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 HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO

 

15

 

Information redacted
pursuant to a confidential treatment request. 
An unredacted version

of this exhibit has been filed separately with the Commission.

 

HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.

 

15.           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 this
Agreement shall be interpreted as if such provision were so excluded and shall
remain in full force and effect and 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.

 

16.           Counterparts.  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.

 

17.           Amendments; No Waivers.

 

(a)           Neither this Agreement nor any term
or provision hereof may be amended, supplemented, altered, 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 hereto against
whom such waiver is sought to be enforced.

 

(b)           No failure or delay by either party
hereto 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.

 

18.           Entire Agreement.  This Agreement, together with the Schedules,
Annexes and Exhibits hereto (which are incorporated herein by reference), and
the other Transaction Documents constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the parties hereto with respect to the subject matter of this
Agreement.  No representation,
inducement, promise, understanding, condition or warranty not set forth herein
(or in the Schedules, Annexes or Exhibits 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.

 

19.           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

 

16

 

Information redacted
pursuant to a confidential treatment request. 
An unredacted version

of this exhibit has been filed separately with the Commission.

 

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
Annexes and Exhibits refer to the Annexes and 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 hereto 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,
however,
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.

 

(d)           The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

 

[Signature
page follows]

 

17

 

If
the foregoing correctly sets forth the agreement among the Company and the
Purchaser, please indicate your acceptance in the space provided for that
purpose below.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTEX PHARMACEUTICALS

  
	
   

  	
  INCORPORATED.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew W. Emmens

  
	
   

  	
  Name: 

  	
  Matthew W. Emmens

  
	
   

  	
  Title: 

  	
  Chairman, President and CEO

  

 

Accepted:

 

	
  OLMSTED
  PARK S.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Hille-Paul Schut

  	
   

  
	
  Name:

  	
  Hille-Paul
  Schut

  	
   

  
	
  Title:
  

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Julia Vogelweith

  	
   

  
	
  Name:

  	
  Julia
  Vogelweith

  	
   

  
	
  Title:
  

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Xavier de Cillia

  	
   

  
	
  Name:

  	
  Xavier
  de Cillia

  	
   

  
	
  Title:
  

  	
  Director

  	
   

  

 

 

Annex I 

Certain Defined Terms

 

The following terms, as used
in this Agreement, shall have the following meanings:

 

“Adverse
Effect” shall mean (i) an adverse effect on: (a) the
legality, validity or enforceability of any of the Transaction Documents, the
Janssen Agreement or the security interest granted in the Collateral under the
Security Agreement; (b) the amount of the Milestone Payments; or (c) the
timing of the payment of the Milestone Payments after achievement of the
corresponding Milestone Event; or (ii) a material adverse effect on: (a) the
right or ability of the Company (or any permitted successor or assignee) to perform
any of its obligations under any of the Transaction Documents or to consummate
the transactions contemplated hereunder or thereunder; (b) the rights or
remedies of the Purchaser under any of the Transaction Documents; or (c) the
right or ability of Janssen (or any permitted successor or assignee) to perform
any of its obligations under the Janssen Agreement that are related, directly
or indirectly, to the achievement of the Milestone Events.

 

“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” (or its derivatives) shall mean the possession, direct or
indirect, of the power or ability to direct or cause the direction of the
management and policies of a Person, whether through ownership of equity,
voting securities or beneficial interest, by contract or otherwise.

 

“Ancillary
Janssen Documents” means the “Global Development Plan,” the “Supply
Agreement” and the “Pharmacovigilance Agreement” as such terms are defined in
Sections 1.41, 1.106 and 5.7, respectively, of the Janssen Agreement.

 

“Business
Day” shall mean any day other than a Saturday, a Sunday, any day
that is a legal holiday under the laws of the State of New York, The
Commonwealth of Massachusetts or Luxembourg, or any day on which banking
institutions located in the State of New York, The Commonwealth of
Massachusetts or Luxembourg are authorized or required by law or other governmental
action to close.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended.

 

“Exchange
Act Reports” shall mean the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008 as filed with the Commission on February 17,
2009 and all subsequent documents filed with the Commission pursuant to Section 13(a),
13(c) or 15(d) of the Exchange Act on or prior to the date hereof.

 

“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time, including those set forth in (1) the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and (2) the statements and
pronouncements of the Financial Accounting Standards Board.

 

A-1

 

Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.

 

“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).

 

“Indemnifiable
Tax” shall mean any United States federal, state of local
withholding tax (including interest and penalties thereon) that, pursuant to a
final administrative decision, a judicial decision or an agreement by the
Purchaser pursuant to Section 7(c) or the Company pursuant to Section 7(e),
is determined to be payable by the Company as a result of its failure to
withhold from payments on the Notes.

 

“Indemnifiable Tax Claim”
shall have the meaning set forth in Section 7(b).

 

“Initial Notice”
shall have the meaning set forth in Section 7(b).

 

“Janssen”
shall mean Janssen Pharmaceutica, N.V., a Belgium corporation, including its
successors and assigns.

 

“Janssen
Agreement” shall mean the License, Development, Manufacturing
and Commercialization Agreement by and between the Company and Janssen
effective as of June 30, 2006, as such agreement is amended and in effect
on the date hereof, together with the Janssen Consent and the Ancillary Janssen
Documents, as each may be amended and/or restated from time to time after the
date hereof in accordance with the terms of the Indenture and any new,
substitute or amended agreement by and between the Company and Janssen relating
to the Milestone Payments made after the date hereof in accordance with the
terms of the Indenture.

 

“Janssen
Consent” shall have the meaning set forth in Section 2(k).

 

“Knowledge”
shall mean, with respect to the Company, the knowledge of any of the following
officers or employees of the Company: the Chief Executive Officer; the Chief
Medical Officer; the General Counsel; the Chief Scientific Officer; the Chief
Financial Officer; the Chief Commercial Officer; the Vice President and
Corporate Controller; the Head, Business Development & Licensing; and
the Deputy General 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 would be expected
to discover or otherwise become aware of such fact or other matter in the
course of his or her responsibilities in his or her capacity as an officer or
employee of the Company or in the course of conducting a reasonably diligent
review concerning the existence thereof with any employee of the Company or any
of its Subsidiaries who, as of 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, the Company will be deemed to have
knowledge of any fact or matter that is the subject of, or referred to within,
any written notice it or any of its Subsidiaries has received (whether in hard
copy, digital or electronic format).

 

“Lien”
shall mean any lien, hypothecation, charge, instrument, license, preference,
priority, security agreement, security interest, mortgage, option, right of
first refusal, privilege, pledge, 

 

I-2

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

liability, covenant or
order, or any encumbrance, restriction, right or claim of any other Person or
Governmental Authority 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, other than any of
the above created solely in favor of the Purchaser by the Transaction
Documents.

 

[***].

 

[***].

 

[***].

 

[***].

 

“Milestone
Payments” shall mean collectively [***];  (ii) (a) all additional amounts added to any of
the milestone payments described above in clauses (i)(a) and (b) under
any provision of the Janssen Agreement, including any interest assessed in
connection with a delay in the payment by Janssen of the milestone payments
described above in clauses (i)(a) and (b) pursuant to Section 9.10
of the Janssen Agreement and (b) the Purchaser’s Pro Rata Portion of all
additional amounts added to the milestone payment described above in clause (i)(c) under
any provision of the Janssen Agreement, including any interest assessed in
connection with a delay in the payment by Janssen of the milestone payment
described above in clause (i)(c) pursuant to Section 9.10 of the
Janssen Agreement; (iii) all accounts (as defined under the UCC)
evidencing the rights to the payments and amounts described in clauses (i) and
(ii) above; and (iv) all proceeds (as defined under the UCC) of the
foregoing.

 

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

 

“Pledged
Interest” shall mean collectively (i) an undivided
100% interest in the right to receive the Milestone Payments and (ii) the
right to enforce directly against Janssen the right to payment of all or any
portion of the Milestone Payments represented by the Pledged Interest when
earned upon achievement of the Milestone Events pursuant to the Janssen
Agreement.

 

“Prohibited
Amendment” shall mean any amendment, modification, restatement
or supplement of any provision of the Janssen Agreement that changes in any way
(i) the event underlying any of the Milestone Events, (ii) the amount
of any of the Milestone Payments or (iii) the timing of the payment of any
of the Milestone Payments by Janssen after achievement of the applicable
Milestone Event by Janssen.  For
avoidance of doubt, any termination of the Janssen Agreement shall not be deemed
a Prohibited Amendment.

 

“Pro
Rata Portion” shall mean, with respect to the Purchaser, [***] and, with respect to the Company, [***].

 

“Purchaser”
shall have the meaning set forth in the preamble and shall include its
successors and assigns.

 

I-3

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

“Set-off”
shall mean any set-off, rescission, counterclaim, defense, reduction or
deduction of any kind.  Without limiting
the generality of the foregoing, the term Set-off shall include the right by
Janssen to reduce the amount of any of the Milestone Payments for any reason,
including without limitation in connection with (i) a breach by the Company
of the Janssen Agreement, (ii) any anti stacking or similar rights with
respect to payments to third parties for access to intellectual property rights
or data, (iii) any discounted payment obligations in connection with third
party sales of generic competitive products, (iv) any rights to credit
against any payment obligations  any
costs, expenses or liabilities of Janssen under the Janssen Agreement,
including with respect to (A) Global Development Costs (as defined in the
Janssen Agreement), (B) any costs and expenses of patent prosecution,
maintenance or enforcement, or (C) defense of third party infringement
claims, or (v) any amounts paid or payable pursuant to any indemnification
rights or obligations of the Company or Janssen under the Janssen 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 is 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.

 

“Survival
Date” shall have the meaning set forth in Section 11.

 

“Transaction
Documents” shall mean, collectively, the Notes, this Agreement,
the Indenture and the Security Agreement.

 

“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York; 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 Purchaser’s security interests in the
Pledged Interest pursuant to the Security Agreement, is governed by the Uniform
Commercial Code as in effect in a jurisdiction of the United States other than
the State of New York, then “UCC” shall mean the Uniform Commercial Code as in
effect from time to time 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.

 

I-4Exhibit 10.4

 

EXECUTION COPY

 

Confidential
Treatment Requested.

 

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

with the Commission.

 

 

SECURITY AGREEMENT

 

Dated as of September 30, 2009

 

between

 

VERTEX PHARMACEUTICALS INCORPORATED

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Collateral Agent

 

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Definition of Terms Used Herein

  	
  1

  
	
  Section 1.02

  	
  Definition of Certain Terms Used Herein

  	
  2

  
	
  Section 1.03

  	
  Rules of Interpretation

  	
  4

  
	
   

  	
   

  
	
  ARTICLE II SECURITY INTEREST

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
  Security Interest

  	
  4

  
	
  Section 2.02

  	
  No Assumption of Liability

  	
  5

  
	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Title and Authority

  	
  5

  
	
  Section 3.02

  	
  Filings

  	
  5

  
	
  Section 3.03

  	
  Validity and Perfection of Security Interest

  	
  5

  
	
  Section 3.04

  	
  Absence of Other Liens

  	
  5

  
	
  Section 3.05

  	
  UCC Representations and Warranties

  	
  5

  
	
   

  	
   

  
	
  ARTICLE IV COVENANTS

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Change of Name; Location of Collateral; Records; Place of
  Business

  	
  6

  
	
  Section 4.02

  	
  Creation and Perfection of Liens Securing Collateral;
  Further Assurances

  	
  6

  
	
  Section 4.03

  	
  Taxes; Encumbrances

  	
  7

  
	
  Section 4.04

  	
  Assignment of Security Interest in Milestone Payments

  	
  7

  
	
  Section 4.05

  	
  Limitation on Disposition of Collateral and Liens on
  Collateral

  	
  7

  
	
  Section 4.06

  	
  Marking of Books and Records

  	
  8

  
	
   

  	
   

  
	
  ARTICLE V PAYMENTS

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Payment Direction; Payment Account

  	
  8

  
	
  Section 5.02

  	
  Power of Attorney

  	
  9

  
	
   

  	
   

  
	
  ARTICLE VI REMEDIES

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Remedies Upon Default

  	
  10

  
	
  Section 6.02

  	
  Application of Proceeds

  	
  11

  
	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Notices

  	
  11

  
	
  Section 7.02

  	
  Security Interest Absolute

  	
  12

  
	
  Section 7.03

  	
  Survival of Agreement

  	
  12

  
	
  Section 7.04

  	
  Binding Effect

  	
  12

  
	
  Section 7.05

  	
  Successors and Assigns

  	
  12

  
	
  Section 7.06

  	
  Collateral Agent’s Fees and Expenses; Indemnification

  	
  12

  
	
  Section 7.07

  	
  GOVERNING LAW

  	
  13

  
	
  Section 7.08

  	
  Waivers; Amendment

  	
  13

  
				

 

i

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

	
  Section 7.09

  	
  WAIVER OF JURY TRIAL

  	
  14

  
	
  Section 7.10

  	
  Severability

  	
  14

  
	
  Section 7.11

  	
  Entire Agreement

  	
  14

  
	
  Section 7.12

  	
  Counterparts

  	
  14

  
	
  Section 7.13

  	
  Jurisdiction

  	
  14

  
	
  Section 7.14

  	
  Termination

  	
  15

  
	
  Section 7.15

  	
  Headings and Recitals

  	
  15

  
	
  Section 7.16

  	
  Limitation on Duties of Collateral Agent

  	
  15

  

 

Exhibits:

 

Exhibit A:               Payment
Direction

 

Schedules:

 

Schedule
3.05:       UCC Representations and Warranties

Schedule
5.01(c):  Trustee Account Information

 

ii

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

SECURITY AGREEMENT (this “Agreement”)
dated as of September 30, 2009, between VERTEX PHARMACEUTICALS
INCORPORATED (the “Company” or the “Grantor”), a Massachusetts corporation, and U.S.
Bank National Association, having its principal corporate trust office at One
Federal Street, Boston, Massachusetts 02110 (together with any successor or
successors in such capacity, the “Collateral Agent”)
for the benefit of the Trustee (as defined below) and the Holders (as defined
below).

 

Reference is made to the Secured Notes due 2012
of the Company (as amended, restated, supplemented or modified from time to
time, the “Notes”), in the original
aggregate principal amount at maturity of $155,000,000 issued pursuant to the
Indenture, dated as of September 30, 2009 (as amended, restated, amended
and restated, modified or supplemented from time to time and including any
agreement extending the maturity of, refinancing or otherwise amending,
amending and restating or otherwise modifying or restructuring all or any
portion of the obligations of the Company under the Notes or such agreement or
any successor agreement, the “Indenture”)
among the Company, the Collateral Agent and U.S. Bank National Association, as
trustee (together with any successor or successors in such capacity, the “Trustee”).

 

The Company will materially benefit from the
issuance of the Notes and it is a condition to the issuance of the Notes that
the Company execute and deliver this Agreement.

 

The Indenture requires the Company to secure its
obligations under the Notes and the Indenture by a first priority security
interest in the Collateral (as hereinafter defined).

 

Accordingly, the Company and the Collateral
Agent, on behalf of itself and each Secured Party (and each of their respective
successors or assigns), hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01         Definition of Terms Used Herein

 

Unless the context otherwise requires, all capitalized terms used but
not defined herein shall have the meanings set forth in the Indenture, all
references to the Uniform Commercial Code or “UCC” shall mean the Uniform
Commercial Code in effect in the State of New York as of the date hereof and
any uncapitalized terms used herein which are defined in the UCC have the
respective meanings provided in the UCC; provided, however, that
if a term is defined in Article 9 of the Uniform Commercial Code
differently than in another Article thereof, the term shall have the
meaning set forth in Article 9, and provided, further, that
if by reason of mandatory provisions of law, perfection, or the effect of
perfection or non-perfection, of the Security Interest in any Collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, “Uniform Commercial Code”
or “UCC” means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection or availability of such remedy, as
the case may be.

 

1

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

Section 1.02         Definition of Certain Terms Used
Herein

 

As used herein, the
following terms shall have the following meanings:

 

“Accounts”
shall mean “accounts” as defined in the UCC, and all right, title and interest
of the Grantor to payment for goods and services sold or leased, including any
such right evidenced by Chattel Paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future.

 

“Bankruptcy Code”
shall mean the United States Bankruptcy Code, 11 U.S.C. Section 101 et
seq., as amended from time to time.

 

“Books and Records”
shall mean all instruments, files, records, ledger sheets and documents
covering or relating to any of the Collateral.

 

“Chattel Paper”
shall have the meaning given that term in the UCC.

 

“Collateral”
shall mean (i) the Pledged Interest and (ii) any and all Proceeds of
the Pledged Interest.

 

“Debtor Relief Laws”
shall mean the Bankruptcy Code, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.

 

“Documents”
shall have the meaning given that term in the UCC.

 

“Financing Statement”
shall have the meaning given that term in the UCC.

 

“General Intangibles”
shall mean “general intangibles” as defined in the UCC.

 

“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).

 

“Holders”
shall mean the holders from time to time of the Notes.

 

“Indemnitee”
shall have the meaning given that term in Section 7.06(b) of
this Agreement.

 

“Indenture”
shall have the meaning given to that term in the preliminary statement of this
Agreement.

 

“Instruments”
shall have the meaning given that term in the UCC.

 

“Janssen”
shall mean Janssen Pharmaceutica, N.V., a Belgium corporation, including its
successors and assigns.

 

2

 

Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.

 

“Janssen Agreement”
shall mean the License, Development, Manufacturing and Commercialization
Agreement by and between the Grantor and Janssen effective as of June 30,
2006, as such agreement is amended and in effect on the date hereof, together
with the Janssen Consent, as each may be amended and/or restated from time to
time after the date hereof in accordance with the terms of the Indenture and
any new, substitute or amended agreement by and between the Grantor and Janssen
relating to the Milestone Payments to be made after the date hereof in
accordance with the terms of the Indenture.

 

“Janssen Consent”
shall have the meaning given that term in Section 2(k) of the Note
Purchase Agreement.

 

“Laws” shall
mean, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directives, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

[***].

 

[***].

 

[***].

 

[***].

 

“Milestone
Payments” shall mean collectively [***] and (ii) (a) all additional amounts added to
any of the milestone payments described above in clauses (i)(a) and (b) under
any provision of the Janssen Agreement, including any interest assessed in
connection with a delay in the payment by Janssen of the milestone payments
described above in clauses (i)(a) and (b) pursuant to Section 9.10
of the Janssen Agreement and (b) the Collateral Agent’s Pro Rata Portion
of all additional amounts added to the milestone payment described above in
clause (i)(c) under any provision of the Janssen Agreement, including any
interest assessed in connection with a delay in the payment by Janssen of the
milestone payment described above in clause (i)(c) pursuant to Section 9.10
of the Janssen Agreement.

 

“Note Documents”
shall mean the Indenture, the Notes and the Collateral Documents, in each case
including all exhibits and schedules thereto, and all other agreements,
documents and instruments relating to the Notes, in each case as the same may
be amended, modified or supplemented from time to time in accordance with the
provisions thereof.

 

“Obligations” shall mean the Note Obligations (as
defined in the Indenture).

 

“Payment Account”
shall have the meaning given that term in Section 5.01(c).

 

“Payment Direction”
shall have the meaning given that term in Section 5.01(a).

 

3

 

Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.

 

“Payment Intangible”
shall have the meaning given that term in the UCC.

 

“Person”
shall mean an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization of any kind, including a
Governmental Authority.

 

“Pledged Interest”
shall mean collectively (i) an undivided 100% interest in the right to
receive the Milestone Payments and (ii) the right to enforce directly
against Janssen the right to payment of all or any portion of the Milestone
Payments represented by the Pledged Interest when earned upon achievement of
the Milestone Events pursuant to the Janssen Agreement.

 

“Proceeds”
shall mean “proceeds” as defined in the UCC.

 

“Pro Rata Portion” shall mean, with
respect to the Collateral Agent[***] and, with
respect to the Grantor[***].

 

“Secured Parties”
shall mean

 

(i)            the Collateral Agent;

 

(ii)           the Trustee;

 

(iii)          the Holders; and

 

(iv)          the successors and assigns of each of
the foregoing.

 

“Security Interest”
shall have the meaning given that term in Section 2.01.

 

Section 1.03         Rules of Interpretation The rules of
interpretation specified in Section 1.03 of the Indenture shall be
applicable to this Agreement.

 

ARTICLE II

SECURITY INTEREST

 

Section 2.01         Security Interest As security for
the payment or performance, as the case may be, in full of the Obligations, the
Grantor hereby pledges to the Collateral Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of the Grantor’s right, title and interest
in, to and under the Collateral (the “Security
Interest”).  Without limiting
the foregoing, the Grantor hereby designates the Collateral Agent as the
Grantor’s true and lawful attorney, exercisable by the Collateral Agent or its
nominee or custodian whether or not an Event of Default exists, with full power
of substitution, at the Collateral Agent’s option, to file one or more
Financing Statements and continuation statements as it determines reasonably
necessary for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by the Grantor, without the signature
of the Grantor (the Grantor hereby appointing the Collateral Agent as its
attorney to sign its name to any such Financing Statement or continuation
statement, whether or not an

 

4

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

Event of Default exists), and naming the
Grantor as debtor and the Collateral Agent as secured party.

 

Section 2.02         No Assumption of Liability No Assumption
of Liability.  The Security Interest is
granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of the Grantor with respect to or arising out of the Collateral.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

The Grantor represents and warrants to
the Collateral Agent and the Secured Parties, as of the date of this Agreement,
that:

 

Section 3.01         Title and Authority The Grantor has
good and valid rights in and title to the Collateral and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person other than any consent or approval which has been obtained
and is in full force and effect.

 

Section 3.02         Filings A Financing
Statement or other appropriate filings, recordings or registrations containing
a description of the Collateral have been delivered to the Collateral Agent or
its nominee or custodian for filing in the central-filing office specified in Schedule
3.05 hereto, which Financing Statement constitutes all the filings and
recordings that are necessary to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the ratable benefit of
the Secured Parties) in respect of all Collateral in which the security
interest may be perfected by filing or recording, and no further or subsequent
filing, refiling, recording or rerecording is necessary, except as provided
under applicable law.

 

Section 3.03         Validity and Perfection of Security
Interest The Security Interest constitutes a legal and valid
Lien (prior and superior in right and interest to any other Person) in all the
Collateral securing the payment and performance of the Obligations, and,
subject to the filings described in Section 3.02 above, a perfected
Lien (prior and superior in right and interest to any other Person) in all Collateral
in which a security interest may be perfected by filing or recording a
Financing Statement or analogous document pursuant to the Uniform Commercial
Code or other applicable Law.  No amounts
payable under or in connection with the Collateral are evidenced by any
Instrument or Chattel Paper.

 

Section 3.04         Absence of Other Liens To the extent
that the Collateral currently exists, the Collateral is owned by the Grantor
free and clear of any Lien.  The Grantor
has not filed or consented to the filing of any Financing Statement or
analogous document under the Uniform Commercial Code or any other applicable
laws covering any Collateral.

 

Section 3.05         UCC Representations and Warranties The Grantor’s
exact legal name is, and for the immediately preceding ten (10) years has
been, “Vertex Pharmaceuticals Incorporated”. 
The principal place of business and chief executive office of the
Grantor for the 

 

5

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

immediately preceding ten (10) years and
the office where it keeps its books and records relating to the Collateral are
located at the address(es) set forth on Schedule 3.05 attached hereto.  The Grantor’s Massachusetts organizational
identification number and Federal Employer Identification Number are as set
forth on Schedule 3.05 attached hereto.

 

ARTICLE
IV

COVENANTS

 

Section 4.01         Change of Name; Location of Collateral;
Records; Place of Business

 

(a)           The
Grantor agrees to furnish to the Collateral Agent at least thirty (30) days’
(or such shorter period of time as may be agreed to by the Collateral Agent)
prior written notice of any change (i) in its name, (ii) in its
organizational structure (including its status as a corporation incorporated
under the laws of The Commonwealth of Massachusetts) or (iii) in its
Federal Taxpayer Identification Number or state organizational number.  The Grantor agrees not to effect or permit
any change referred to above in this Section 4.01
unless all filings have been made under the Uniform Commercial Code or
otherwise that are required or advisable in order for the Collateral Agent to
continue at all times following such change to have a valid, legal and
perfected Lien (prior and superior in right and interest to any other Person)
in all the Collateral.

 

(b)           The Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral as
is consistent with its current practices and in accordance with such prudent
and standard practices used in industries that are the same as or similar to
those in which the Grantor is engaged, but in any event to include complete
accounting records with respect to any part of the Collateral.

 

Section 4.02         Creation and Perfection of Liens
Securing Collateral; Further Assurances

 

(a)           On or prior to the date of this Agreement, the Grantor
shall have granted, created and perfected the security interests and other
Liens created or intended to be created pursuant to this Agreement in the
Collateral in favor of the Collateral Agent.

 

(b)           The Grantor shall, and shall cause each of the Guarantors
to, execute any and all further documents, Financing Statements, agreements and
instruments, and take all further action that may be required under applicable
law, or that the Collateral Agent may reasonably request, in order to grant,
create, preserve, enforce, protect and perfect the validity and priority of the
security interests and other Liens created by this Agreement in the Collateral.

 

(c)           The Grantor shall, and shall cause each of the Guarantors
to, do or cause to be done all acts and things that may be required, or that
the Collateral Agent from time to time may reasonably request, to assure and
confirm that the Collateral Agent holds, for the benefit of the Secured
Parties, duly created and enforceable and perfected Liens upon the Collateral
(including any property or assets that are acquired or otherwise become
Collateral after the date of this Agreement), in each case, as contemplated by,
and with the lien priority required under, this Agreement.

 

6

 

Information
redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(d)           Upon request of the Collateral Agent at any time after an
Event of Default has occurred and is continuing, the Grantor shall, and shall
cause each of the Guarantors to, and shall cause the Subsidiaries to, (i) permit
the Collateral Agent or any advisor, auditor, consultant, attorney or
representative acting for the Collateral Agent, upon reasonable notice to the
Grantor and during normal business hours, to make extracts from and copy the
books and records of the Grantor and its Subsidiaries relating to the
Collateral, and to discuss any matter pertaining to the Collateral with the
officers and employees of the Grantor and its Subsidiaries, and (ii) deliver
to the Collateral Agent such reports relating to any such property or any Lien
thereon as the Collateral Agent may reasonably request.  The Grantor shall promptly reimburse the
Collateral Agent for all reasonable costs and expenses incurred by the
Collateral Agent in connection therewith, including all reasonable fees and
charges of any advisors, auditors, consultants, attorneys or representatives
acting for the Collateral Agent.

 

(e)           The provisions of this Section 4.02 shall
apply only to the security interests and other Liens on the Collateral in favor
of the Collateral Agent, and shall not impose or be interpreted as imposing any
duty on the Grantor or any Guarantor to act in a manner that preserves the
Collateral (including without limitation Janssen’s obligation to make the
Milestone Payments or the amount of any Milestone Payment or the date on which
a Milestone Payment is due) or to refrain from acting in a manner that
adversely impacts the Collateral (including without limitation Janssen’s
obligation to make the Milestone Payments or the amount of any Milestone
Payment or the date on which a Milestone Payment is due); provided, however,
that the foregoing provisions of this sentence shall not limit the Grantor’s
obligations under Section 4.12 of the Indenture.

 

Section 4.03         Taxes; Encumbrances At its option,
the Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and which the Grantor is not diligently contesting by
appropriate proceedings or actions, and may pay for the preservation of the
Collateral to the extent the Grantor fails to do so as required by the
Indenture or this Agreement, and the Grantor agrees to reimburse the Collateral
Agent on demand for any payment made or any expense reasonably incurred by the
Collateral Agent pursuant to the foregoing authorization;  provided, however, that nothing in this Section 4.03 shall be interpreted as
excusing the Grantor from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any covenants or
other promises of the Grantor with respect to taxes, assessments, charges,
fees, Liens, security interests or other encumbrances and preservation as set
forth herein or in the other Note Documents.

 

Section 4.04         Assignment of Security Interest in
Milestone Payments If at any time the Grantor
shall take a security interest in any property of Janssen or any other Person
to secure payment and performance of a Milestone Payment or otherwise in
respect of the Milestone Payments, the Grantor shall promptly assign such
security interest to the Collateral Agent.

 

Section 4.05         Limitation on Disposition of
Collateral and Liens on Collateral The Grantor shall not (i) directly
or indirectly, sell, transfer, assign, lease, license, sublicense, convey or
otherwise directly or indirectly dispose of any of the Collateral or any
interest therein or (ii) except for the Security Interest in the
Collateral granted to the Collateral

 

7

 

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redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

Agent for the benefit of the
Secured Parties by this Agreement, cause or suffer to exist or become effective
any Lien of any kind on or with respect to any of the Collateral or any
interest therein, or, in each case, enter into any agreement to do any of the
foregoing, provided, however, that in no event shall the
termination of the Janssen Agreement for any reason be a violation or breach of
this Section 4.05 or any other term of this Agreement or the
Indenture.

 

Section 4.06         Marking of Books and Records To the extent
that the Collateral Agent may reasonably request, in order to perfect the
Security Interest or to enable the Collateral Agent to exercise its rights and
remedies hereunder, the Grantor shall mark its Books and Records relating to
the Collateral and documents evidencing or pertaining thereto with an
appropriate reference to the fact that the Milestone Payments have been
assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.

 

ARTICLE V

PAYMENTS

 

Section 5.01         Payment
Direction; Payment Account

 

(a)           On or prior to the date hereof, the
Grantor shall (i) direct Janssen to pay all Milestone Payments and other
payments on account of the Pledged Interest, in each case when due and payable
under the Janssen Agreement, to the Payment Account by wire transfer of
immediately available funds in accordance with the Payment Direction; and (ii) deliver
to the Collateral Agent and the Trustee an executed copy of the irrevocable
direction addressed to Janssen to pay the Milestone Payments evidenced by the
Pledged Interest directly to the Payment Account in the form attached as Exhibit A
hereto (the “Payment Direction”).

 

(b)           Notwithstanding the foregoing and the
terms of the Payment Direction, if Janssen or any other Person makes any
payment on account of the Pledged Interest to the Grantor or any of its
Subsidiaries or Affiliates, then the Grantor promptly, and in any event no
later than three (3) Business Days following the receipt by the Grantor or
such Subsidiary or Affiliate of such payment, shall remit such payment to the
Payment Account pursuant to Section 5.01(c).  All payments made to the Grantor (or any of
its Subsidiaries or Affiliates) on account of the Pledged Interest shall be
held by the Grantor (or such Subsidiary or Affiliate) in trust for the benefit
of the Collateral Agent and the other Secured Parties until remitted to the
Payment Account pursuant to Section 5.01(c) for
application pursuant to the terms of the Note Documents.

 

(c)           All payments by Janssen pursuant to Section 5.01(a) and the
Grantor pursuant to Section 5.01(b) of this Agreement shall be
made by wire transfer of immediately available funds, without set-off, to the
Trustee at the account set forth on Schedule 5.01(c) hereto (or to such
other account as the Trustee shall specify by written notice to the Grantor
from time to time) (the “Payment Account”).

 

(d)           In the event the Grantor redeems
Notes pursuant to clause (ii) of Section 3.08(b) of the
Indenture on a date before Janssen delivers the applicable Milestone Payment to
the Trustee that otherwise would have been used by the Trustee to redeem such
Notes, the Grantor shall be entitled to any amounts subsequently paid by
Janssen with respect to such 

 

8

 

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redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

Milestone Payment and, in
furtherance of the foregoing, (i) the Collateral Agent on behalf of the
Trustee and the Holders shall assign their respective rights to receive such
Milestone Payment from Janssen to the Grantor and, notwithstanding the terms of
Section 5.01(a) and the Payment Direction, shall instruct
Janssen in writing to pay such Milestone Payment directly to the Grantor, (ii) such
amount owed or paid by Janssen shall not be used by the Trustee to redeem any
portion of the Notes under Section 3.08 of the Indenture nor shall such
amount be considered Collateral under this Agreement or the Indenture and (iii) if
Janssen pays any such amounts with respect to such Milestone Payment to the
Trustee or the Collateral Agent pursuant to Section 5.01(a) hereof
and the Payment Direction, the Trustee or the Collateral Agent shall promptly
turn over such amount to the Grantor by wire transfer of immediately available
funds to an account designated by the Grantor.

 

Section 5.02         Power of Attorney The Grantor
irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as such
Grantor’s true and lawful agent and attorney-in-fact, and in such capacity the
Collateral Agent shall have the right, with power of substitution for the
Grantor and in the Grantor’s name or otherwise, for the use and benefit of the
Collateral Agent and the Secured Parties, (i) at any time, whether or not
a Default or Event of Default has occurred, to take actions required to be
taken by the Grantor under Section 2.01 of this Agreement, (ii) upon
the occurrence and during the continuance of an Event of Default, (A) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment comprising or evidencing the
Collateral or any part thereof; (B) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (C) to sign the name of the Grantor on any proof of claim in
bankruptcy against Janssen; (D) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral;
and (E) to sell, assign, transfer, pledge, make any agreement with respect
to or otherwise deal with all or any of the Collateral, as fully and completely
as though the Collateral Agent were the absolute owner of the Collateral for
all purposes, and (iii) to notify or to require the Grantor to notify
Janssen to make payment directly to the Collateral Agent (or its nominee or
custodian) in a manner other than as specified in the Payment Direction; provided,
however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any inquiry as
to the nature or sufficiency of any payment received by the Collateral Agent or
any Secured Party, or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby, and no action
taken or omitted to be taken by the Collateral Agent or any Secured Party with
respect to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of the Grantor or to any claim or action
against the Collateral Agent or any Secured Party other than arising out of the
gross negligence or willful misconduct of the Collateral Agent or any such
Secured Party (as determined by a court of competent jurisdiction by a final
and nonappealable judgment); and provided, further, however,
that nothing contained in this Section 5.02 shall entitle the
Collateral Agent or any of the Secured Parties to the rights of Grantor under
the Janssen Agreement other than the right to payment of the Collateral.  It is understood and agreed that the appointment
of the Collateral Agent as the agent and attorney-in-fact of the Grantor for
the purposes set forth above is coupled with an interest and is
irrevocable.  The provisions of this Section shall
in no event relieve the 

 

9

 

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of this exhibit has been filed separately with the Commission.

 

Grantor of any of its obligations hereunder
or under any other Note Document with respect to the Collateral or any part
thereof or impose any obligation on the Collateral Agent or any Secured Party
to proceed in any particular manner with respect to the Collateral or any part
thereof, or in any way limit the exercise by the Collateral Agent or any
Secured Party of any other or further right which it may have on the date of
this Agreement or hereafter, whether hereunder, under any other Note Document,
by law or otherwise.

 

ARTICLE VI

REMEDIES

 

Section 6.01         Remedies Upon Default Upon the
occurrence and during the continuance of an Event of Default, it is agreed that
the Collateral Agent shall have in any jurisdiction in which enforcement hereof
is sought, in addition to all other rights and remedies, the rights and
remedies of a secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) or other applicable Law.  The rights and remedies of the Collateral
Agent shall include, without limitation, the right to take any or all of the
following actions at the same or different times:

 

(a)           With respect to any Collateral
consisting of Accounts, General Intangibles (including Payment Intangibles),
Instruments, Chattel Paper, and Documents, the Collateral Agent may collect the
Collateral with or without the taking of possession of any of the Collateral.

 

(b)           The Grantor agrees that the
Collateral Agent shall have the right, subject to applicable Law, to sell or
otherwise dispose of all or any part of the Collateral, at public or private
sale, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate.  Each purchaser
at any such sale shall hold the property sold absolutely, free from any claim
or right on the part of the Grantor.

 

(c)           The Collateral Agent shall give the
Grantor 10 days’ prior written notice, by authenticated record, of the time and
place of any proposed sale.  Any such
notice shall (i) in the case of a public sale, state the time and place
fixed for such sale, (ii) in the case of a private sale, state the day
after which such sale may be consummated, (iii) contain the information
specified in Section 9-613 of the UCC, (iv) be authenticated and (v) be
sent to the parties required to be notified pursuant to Section 9-611(c) of
the UCC; provided that, if the Collateral
Agent fails to comply with this sentence in any respect, its liability for such
failure shall be limited to the liability (if any) imposed on it as a matter of
law under the UCC.  The Grantor agrees
that such written notice shall satisfy all requirements for notice to the
Grantor which are imposed under the UCC or other applicable Law with respect to
the exercise of the Collateral Agent’s rights and remedies hereunder upon
default.  The Collateral Agent shall not
be obligated to make any sale or other disposition of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale or
other disposition of such Collateral shall have been given.  The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.

 

10

 

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redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

(d)           Any public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice of such sale.  At any sale or other disposition, the
Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine.  If any
of the Collateral is sold, leased, or otherwise disposed of by the Collateral
Agent on credit, the Obligations shall not be deemed to have been reduced as a
result thereof unless and until payment in full is received thereon by the
Collateral Agent.  In the event that the
purchaser fails to pay for the Collateral, the Collateral Agent may resell the
Collateral and apply the proceeds from such resale in accordance with the terms
of Section 6.02 of this Agreement.

 

(e)           At any public (or, to the extent
permitted by applicable Law, private) sale made pursuant to this Section 6.01, the Collateral Agent, if so
directed by the Holders of a majority in aggregate principal amount of the then
outstanding Notes, shall, or any other Secured Party may bid for or purchase,
free (to the extent permitted by applicable Law) from any right of redemption,
stay, valuation or appraisal on the part of the Grantor, the Collateral or any
part thereof offered for sale, and the Collateral Agent (but not any other
Secured Party unless the Holders of a majority in aggregate principal amount of
the then outstanding Notes shall otherwise agree in writing) may (or shall, if
so directed by the Holders of a majority in aggregate principal amount of the
then outstanding Notes) make payment on account thereof by using any or all of
the Obligations (or, in the case of any such bid or purchase by any other
Secured Party, any or all of the Obligations then due and payable to such other
Secured Party) as a credit against the purchase price, and the Collateral Agent
or such other Secured Party may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to the Grantor
therefor.

 

(f)            As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.

 

(g)           To the extent permitted by applicable
Law, the Grantor hereby waives all rights of demand, redemption, stay, valuation
and appraisal which the Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.

 

Section 6.02         Application of Proceeds After the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall apply the proceeds of any collection or sale of the Collateral, as
well as any Collateral consisting of cash, in accordance with the provisions of
Section 6.10 of the Indenture.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.01         Notices All
communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 13.02 of
the Indenture.

 

11

 

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of this exhibit has been filed separately with the Commission.

 

Section 7.02         Security Interest Absolute All rights of
the Collateral Agent hereunder, the Security Interest and all obligations of the
Grantor hereunder shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Indenture, any other Note Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any
departure from the Indenture, any other Note Document or any other agreement or
instrument, (iii) any exchange, release or non-perfection of any Lien on
other collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, (iv) the existence of any claim, set-off or other right which
the Grantor may have at any time against the Collateral Agent, any other
Secured Party, or any other Person, whether in connection herewith or any
unrelated transaction; provided, that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim or (v) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, the Grantor in respect of the Obligations or this Agreement.

 

Section 7.03         Survival of Agreement All covenants,
agreements, representations and warranties made by the Grantor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the Holders or other Secured Parties and shall survive the issuance of the
Notes, regardless of any investigation made by any of the Holders or on their
behalf,  and shall continue in full force
and effect until this Agreement shall terminate.

 

Section 7.04         Binding Effect This Agreement
shall become effective as to the Grantor when a counterpart hereof executed on
behalf of the Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon the Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of the
Grantor, the Collateral Agent and the other Secured Parties and their
respective successors and assigns, except that the Grantor shall not have the
right to assign or transfer its rights or obligations hereunder or any interest
herein or in the Collateral (and any such assignment or transfer shall be void)
except as expressly contemplated by this Agreement or the Indenture.

 

Section 7.05         Successors and Assigns Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Grantor or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective successors and assigns.

 

Section 7.06         Collateral
Agent’s Fees and Expenses; Indemnification  

 

(a)           Without limitation of its
indemnification obligations under the other Note Documents, the Grantor agrees
to pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, disbursements and other charges of its
counsel and of any experts or agents, which the Collateral Agent may incur in
connection with (i) the administration of this Agreement (including the
customary fees and charges of the Collateral Agent), (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii)

 

12

 

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of this exhibit has been filed separately with the Commission.

 

the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of the Grantor to perform or observe any of the provisions hereof.

 

(b)           Without limitation of its
indemnification obligations under the other Note Documents, the Grantor agrees
to indemnify the Collateral Agent, its partners, directors, officers,
employees, agents and advisors (each an “Indemnitee”)
against, and hold each of them harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable fees,
disbursements and other charges of counsel, asserted against or reasonably
incurred by any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Agreement, the other
Collateral Documents, or any claim, litigation, investigation or proceeding
relating hereto, thereto or to the Collateral, whether or not any Indemnitee is
a party thereto; provided, that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.

 

(c)           Any such amounts payable as provided
hereunder shall be additional Obligations secured hereby and by the other
Collateral Documents.  The provisions of
this Section 7.06 shall remain
operative and in full force and effect regardless of the termination of this
Agreement, the Indenture or any other Note Document, the consummation of the
transactions contemplated hereby, the repayment of any of the Notes, the
invalidity or unenforceability of any term or provision of this Agreement, the
Indenture or any other Note Document, or any investigation made by or on behalf
of the Collateral Agent or any Holder. 
All amounts due under this Section 7.06
shall be payable on written demand therefor.

 

Section 7.07         GOVERNING LAW THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK (EXCEPT FOR THE CONFLICT OF LAWS RULES THEREOF, BUT
INCLUDING GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402).

 

Section 7.08         Waivers; Amendment         (a)  No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power.  The rights and
remedies of the Collateral Agent hereunder and of the Collateral Agent, the Trustee,
the Holders and the other Secured Parties under the other Note Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provisions of this Agreement, the Indenture or any other Note Document or
consent to any departure by the Grantor therefrom shall in any event be
effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  No notice to or demand on the
Grantor in any case shall entitle the Grantor to any other or further notice or
demand in similar or other circumstances.

 

(b)           Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the

 

13

 

Information redacted pursuant to
a confidential treatment request.  An
unredacted version

of this exhibit has been filed separately with the Commission.

 

Collateral Agent and the
Grantor, subject to any consent required in accordance with Article IX of
the Indenture.

 

Section 7.09         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 IN WHICH THE
GRANTOR AND THE COLLATERAL AGENT ARE PARTIES AND WHICH, DIRECTLY OR INDIRECTLY,
ARISES OUT OF OR RELATES TO THIS AGREEMENT, ANY OTHER NOTE DOCUMENT 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 ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 7.10         Severability In the event any one or more of the
provisions contained in this Agreement should be 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 (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction).  The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

 

Section 7.11         Entire Agreement This Agreement, together with the
Exhibits hereto (which are incorporated herein by reference), and the other
Transaction Documents constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties hereto 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
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 and the Secured Parties any rights or remedies hereunder.

 

Section 7.12         Counterparts This Agreement
may be executed in two or more counterparts, each of which shall constitute an
original but all of which when taken together shall constitute but one
contract, and shall become effective as provided in Section 7.04.  Delivery of an executed signature page to
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.

 

Section 7.13         Jurisdiction    (a)      The
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive 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

 

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of this exhibit has been filed separately with the Commission.

 

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. 
Nothing in this Agreement shall affect any right that the Collateral
Agent, the Trustee, any Holder or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement, the Indenture or any
other Note Document against the Grantor or its properties in the courts of any
jurisdiction.

 

(b)           The Grantor 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,
the Indenture or any other Note Document in any court referred to in paragraph (a) 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.

 

Section 7.14         Termination This Agreement
and the Security Interest shall terminate when all the Obligations have been
indefeasibly paid in full in accordance with the terms and conditions of the
Indenture (other than contingent indemnification obligations with respect to
then unasserted claims which, pursuant to the terms of this Agreement or the
other Note Documents survive the termination of this Agreement or the other
Note Documents), at which time the Collateral Agent shall promptly deliver to
the Grantor written authority to terminate, at the Grantor’s request and
expense, all Financing Statements and similar documents which the Grantor shall
reasonably request to evidence such termination.  Any execution and delivery of termination
statements or documents pursuant to this Section 7.14
shall be without recourse to or warranty by the Collateral Agent.

 

Section 7.15         Headings and Recitals The recitals at
the beginning of this Agreement and the headings of the sections and
subsections hereof are provided for convenience only and shall not be construed
as representations made by the Grantor, and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

Section 7.16         Limitation on Duties of Collateral
Agent Beyond the exercise of reasonable care in the
custody and preservation thereof, the Collateral Agent will not have any duty
as to any Collateral in its possession or control or in the possession or
control of any sub agent or bailee or any income therefrom or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.  The Collateral Agent will be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession or control if such Collateral is accorded
treatment substantially equal to that which it accords its own property, and will
not be liable or responsible for any loss or damage to any Collateral, or for
any diminution in the value thereof, by reason of any act or omission of any
sub agent or bailee selected by the Collateral Agent in good faith or by reason
of any act or omission such sub-agent or bailee selected by the Collateral
Agent pursuant to instructions from the Collateral Agent, except to the extent
that such liability arises from the Collateral Agent’s gross negligence, bad 

 

15

 

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of this exhibit has been filed separately with the Commission.

 

faith or willful misconduct.  The Collateral Agent shall not be responsible
for the existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Liens in any of the
Collateral, whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder, except to the extent such action or
omission constitutes gross negligence, bad faith or willful misconduct on the
part of the Collateral Agent, for the validity or sufficiency of the Collateral
or any agreement or assignment contained therein, for the validity of the title
of the Company to the Collateral, for insuring the Collateral or for the
payment of taxes, charges, assessments or Liens upon the Collateral or
otherwise as to the maintenance of the Collateral.

 

[Signature page follows.]

 

16

 

Information redacted pursuant to a confidential treatment request.  An unredacted version

of this exhibit has been filed separately with the Commission.

 

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

 

	
   

  	
  VERTEX PHARMACEUTICALS

  
	
   

  	
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew W. Emmens

  
	
   

  	
  Name:

  	
  Matthew W. Emmens

  
	
   

  	
  Title:

  	
   Chairman, President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Karen Beard

  
	
   

  	
  Name:

  	
  Karen Beard

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]