=============================================================================== As filed with the Securities and Exchange Commission on April 7, 2003 REGISTRATION NO. 333 - UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- VERTEX PHARMACEUTICALS INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MASSACHUSETTS 04-3039129 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 130 WAVERLY STREET CAMBRIDGE, MASSACHUSETTS 01239-4242 (ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES) 1996 STOCK AND OPTION PLAN EMPLOYEE STOCK PURCHASE PLAN (FULL TITLES OF THE PLANS) JOSHUA S. BOGER, PH.D. CHAIRMAN AND CHIEF EXECUTIVE OFFICER VERTEX PHARMACEUTICALS INCORPORATED 130 WAVERLY STREET CAMBRIDGE, MASSACHUSETTS 02139-4242 (617) 444-6100 (NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) --------------- CALCULATION OF REGISTRATION FEE =============================== =================== ===================== =========================== =========================== Proposed Proposed Title of Amount to be Maximum Maximum Securities to be Registered Registered(1) Offering Price Aggregate Amount of Per Share (2) Offering Price (2) Registration Fee - ------------------------------- ------------------- --------------------- --------------------------- --------------------------- Common Stock, $.01 par value 945,000 shares $15.60 $14,742,000 $1193.00 5,655,000 shares $11.01 $62,261,550 $5037.00 ------------ --------- 6,600,000 shares $6230.00 =============================== =================== ===================== =========================== =========================== Rights to purchase Series A (3) (3) (3) None Junior Participating Preferred Stock =============================== =================== ===================== =========================== =========================== (1) The number of shares of common stock, par value $.01 per share ("Common Stock"), stated above consists of the aggregate number of shares which may be sold (i) upon the exercise of options which have been granted and/or may hereafter be granted under the 1996 Stock and Option Plan (the "Option Plan") and (ii) under the Employee Stock Purchase Plan (the "Purchase Plan" and together with the Option Plan, the "Plans"). The maximum number of shares which may be sold upon the exercise of such options granted under the Plans are subject to adjustment in accordance with certain anti-dilution and other provisions of the Plans. Accordingly, pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"), this Registration Statement covers, in addition to the number of shares stated above, an indeterminate number of shares which may be subject to grant or otherwise issuable after the operation of any such anti-dilution and other provisions. (2) This calculation is made solely for the purpose of determining the registration fee pursuant to the provisions of Rule 457(c) and (h) under the Securities Act as follows: (i) in the case of shares of Common Stock which may be purchased upon exercise of outstanding options, the fee is calculated on the basis of the price at which the options may be exercised; and (ii) in the case of shares of Common Stock for which options have not yet been granted and the option price of which is therefore unknown, the fee is calculated on the basis of the average of the high and low sale prices per share of the Common Stock on the Nasdaq Stock Market as of a date (April 1, 2003) within five business days prior to filing this Registration Statement. (3) No separate consideration will be received for the Rights. ===============================================================================

EXPLANATORY NOTE In accordance with the instructional Note to Part I of Form S-8 as promulgated by the Securities and Exchange Commission, the information specified by Part I of Form S-8 has been omitted from this Registration Statement on Form S-8 for offers of Common Stock pursuant to the Plans.

PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. - -------------------------------------------------------- The following documents filed by the Registrant with the Commission are incorporated herein by reference: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (filing date March 31, 2003). (b) The description of the Common Stock contained in the Registrant's Registration Statement on Form S-4 (Reg. No.333-61480) filed under the Securities Act of 1933, including any amendment or report filed for the purpose of updating such description. (c) The description of the Rights under the Registrant's Rights Agreement (which are currently transferred with the Registrant's Common Stock) contained in the Registrant's Registration Statement on Form S-4 (No. 333-61480) filed under the Securities Act of 1933, including any amendment or report filed for the purpose of updating such description. All reports and other documents filed by the Registrant after the date hereof pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be part hereof from the date of filing of such reports and documents. ITEM 4. DESCRIPTION OF SECURITIES. - ---------------------------------- Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. - ----------------------------------------------- Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. - -------------------------------------------------- Part D of Article 6 of the Restated Articles of Organization of the Registrant provides that no director of the Registrant shall be personally liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director. Such paragraph provides further, however, that, to the extent provided by applicable law, it will not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for distributions made in violation of the Registrant's Restated Articles of Organization or which are made when the Registrant is insolvent or which renders it insolvent, (iv) for loans made to officers or directors of the Registrant which are not repaid if the director has voted for such loans and they have not been approved or ratified as loans 1

reasonably expected to benefit the Registrant, by a majority of directors who are not recipients of such loans or the holders of a majority of voting shares, which holders are not recipients of such loans, and (v) for any transactions from which the director derived an improper personal benefit. Article V of the Registrant's By-laws provides that the Registrant shall indemnify each of its directors and officers (including persons who serve at the Registrant's request as a director, officer or trustee of another organization in which the Registrant has any interest, direct or indirect, as a stockholder, creditor or otherwise or who serve at the Registrant's request in any capacity with respect to any employee benefit plan) against all liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties and counsel fees reasonably incurred by such directors or officer in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which such director or officer may be involved or with which such person may be threatened, while in office or thereafter, by reason of such person's being or having been such a director, officer or trustee, except with respect to any matter as to which such director or officer shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that such director's or officer's action was in the best interest of the Registrant or, to the extent that such matter relates to service with respect to an employee benefit plan, in the best interest of the participants or beneficiaries of such employee benefit plan. As to any matter disposed of by a compromise payment by any such person, pursuant to a consent decree or otherwise, Article V of the Registrant's By-laws provides that no indemnification shall be provided to such person for such payment or for any other expenses unless such compromise has been approved as in the best interest of the Registrant, after notice that it involves such indemnification (i) by a disinterested majority of the directors then in office, (ii) by a majority of the disinterested directors then in office, provided there has been obtained an opinion in writing of independent legal counsel to the effect that such director or officer appears to have acted in good faith in the reasonable belief that such person's action was in the best interest of the Registrant, or (iii) by the holders of a majority of the outstanding stock at the time entitled to vote for directors, voting as a single class, exclusive of any stock owned by any interested director or officer. Article V of the Registrant's By-laws provides that expenses, including counsel fees, reasonably incurred by any director or officer in connection with the defense or disposition of any such action, suit or other proceeding may be paid from time to time by the Registrant at the discretion of a majority of the disinterested directors then in office, in advance of the final disposition thereof, upon receipt of an undertaking by such director or officer to repay the Registrant the amounts so paid if it is ultimately determined that indemnification for such expenses is not authorized under Article V of the By-laws, which undertaking may be accepted by the Registrant without reference to the financial ability of such director or officer to make repayment. Article V of the Registrant's By-laws gives the Board of Directors of the Registrant the power to authorize the purchase and maintenance of insurance, in such amounts as the Board of Directors may from time to time deem appropriate, on behalf of any person who is or was a director, officer or agent of the Registrant, or who is or was serving at the request of the Registrant as a director, officer or agent of another organization in which the Registrant has any interest, direct or indirect, as a shareholder, creditor or otherwise, or with respect to any employee benefit plan, against any liability incurred by such person in any such capacity, or arising out of such person's status as such agent, whether or not such person is entitled to indemnification by the Registrant pursuant to Article V or otherwise and whether or not the Registrant would have the power to indemnify the person against such liability. 2

Section 13(b)(1 1/2) of the Massachusetts Business Corporation Law, Chapter 156B of the General Laws of Massachusetts (the "MBCL") authorizes the provisions, described above, contained in Part D of Article 6 of the Restated Articles of Organization of the Registrant. Section 67 of the MBCL authorizes the provisions, described above, contained in Article V of the By-laws of the Registrant. Section 65 of the MBCL provides that performance by a director, officer or incorporator of such person's duties in good faith and in a manner such person reasonably believes to be in the best interest of the corporation, and with such care as an ordinary prudent person in a like position would use under similar circumstances, shall be a complete defense to any claim asserted against such director, officer or incorporator, except as otherwise expressly provided by statute, by reason of such person's being or having been a director, officer or incorporator of the corporation. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. - -------------------------------------------- Not applicable. ITEM 8. EXHIBITS. - ----------------- (4.1) Specimen Common Stock Certificate (filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-1, as amended, No. 33-40966, and incorporated herein by reference). (4.2) Restated Articles of Organization of the Registrant (filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-4, as amended, No. 333-61480, and incorporated herein by reference). (4.3) By-Laws of the Registrant, as amended and restated (filed as Exhibit 3.5 to Registrant's Registration Statement on Form S-4, as amended, No. 333-61480, and incorporated herein by reference). (4.4) Stockholder Rights Plan (filed as Exhibit 4.2 to Registrant's Registration Statement on Form S-1, as amended, No. 33-40966, and incorporated herein by reference). (4.5) First Amendment to Rights Agreement dated as of February 21, 1997 (filed as Exhibit 4.3 to Registrant's 1996 Annual Report on Form 10-K, file No. 000-19319, and incorporated herein by reference). (4.6) Second Amendment to Rights Agreement dated as of June 30, 2001 (filed as Exhibit 4.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, file No. 000-19319, and incorporated herein by reference). (5) Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. as to the legality of shares being registered. (23.1) Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in opinion of counsel filed as Exhibit 5). (23.2) Consent of Independent Accountants, PricewaterhouseCoopers LLP. 3

(23.3) Consent of Ernst & Young LLP, Independent Auditors. (23.4) Notice regarding Consent of Arthur Andersen LLP. (24) Power of Attorney to file future amendments (set forth on the signature page of this Registration Statement). (99.1) 1996 Stock and Option Plan, Amended and Restated as of July 17, 2002. (99.2) Employee Stock Purchase Plan. ITEM 9. UNDERTAKINGS. - --------------------- (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 4

(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 5

SIGNATURES THE REGISTRANT. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Cambridge, Massachusetts on April 7, 2003. VERTEX PHARMACEUTICALS INCORPORATED By /S/ JOSHUA S. BOGER ------------------------------------ JOSHUA S. BOGER CHIEF EXECUTIVE OFFICER Each person whose signature appears below constitutes and appoints Joshua S. Boger and Valerie L. Andrews, and each of them singly, his/her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution in each of them singly, for him/her and in his/her name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement on Form S-8 of Vertex Pharmaceuticals Incorporated, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting to the attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in or about the premises, as full to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that the attorneys-in-fact and agents or any of each of them or their substitute may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE /S/ JOSHUA S. BOGER Director, Chairman April 7, 2003 - ------------------------------------ and Chief Executive Officer Joshua S. Boger (principal executive officer) /S/ IAN F. SMITH Chief Financial Officer April 7, 2003 - ------------------------------------ (principal financial officer) Ian F. Smith /S/ JOHANNA MESSINA POWER Controller April 7, 2003 - --------------------------- (principal accounting officer) Johanna Messina Power /S/ BARRY M. BLOOM Director April 7, 2003 - ------------------------------------ Barry M. Bloom 6

/S/ ROGER W. BRIMBLECOMBE Director April 7, 2003 - --------------------------- Roger W. Brimblecombe /S/ STUART J. COLLINSON Director April 7, 2003 - ------------------------------------ Stuart J. Collinson /S/ DONALD R. CONKLIN Director April 7, 2003 - ------------------------------------ Donald R. Conklin /S/ BRUCE I. SACHS Director April 7, 2003 - ------------------------------------ Bruce I. Sachs /S/ CHARLES A. SANDERS Director April 7, 2003 - ------------------------------------ Charles A. Sanders /S/ ELAINE S. ULLIAN Director April 7, 2003 - ------------------------------------ Elaine S. Ullian 7

VERTEX PHARMACEUTICALS INCORPORATED INDEX TO EXHIBITS FILED WITH FORM S-8 REGISTRATION STATEMENT EXHIBIT NUMBER DESCRIPTION (4.1) Specimen Common Stock Certificate (filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-1, as amended, No. 33-40966, and incorporated herein by reference). (4.2) Restated Articles of Organization of the Registrant (filed as Exhibit 3.1 to Registrant's Registration Statement on Form S-4, as amended, No. 333-61480, and incorporated herein by reference). (4.3) By-Laws of the Registrant, as amended and restated (filed as Exhibit 3.5 to Registrant's Registration Statement on Form S-4, as amended, No. 333-61480, and incorporated herein by reference). (4.4) Stockholder Rights Plan (filed as Exhibit 4.2 to Registrant's Registration Statement on Form S-1, as amended, No. 33-40966, and incorporated herein by reference). (4.5) First Amendment to Rights Agreement dated as of February 21, 1997 (filed as Exhibit 4.3 to Registrant's 1996 Annual Report on Form 10-K, file No. 000-19319, and incorporated herein by reference). (4.6) Second Amendment to Rights Agreement dated as of June 30, 2001 (filed as Exhibit 4.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, file No. 000-19319, and incorporated herein by reference). (5) Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. as to the legality of shares being registered. (23.1) Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in opinion of counsel filed as Exhibit 5). (23.2) Consent of Independent Accountants, PricewaterhouseCoopers LLP. (23.3) Consent of Ernst & Young LLP, Independent Auditors. (23.4) Notice Regarding Consent of Arthur Andersen LLP. (24) Power of Attorney to file future amendments (set forth on the signature page of this Registration Statement). (99.1) 1996 Stock and Option Plan, Amended and Restated as of July 17, 2002. (99.2) Employee Stock Purchase Plan. 8

Exhibit 5 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, Massachusetts 02111 617 542 6000 617 542 2241 FAX April 3, 2003 Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, Massachusetts 02139-4242 Ladies and Gentlemen: We have acted as counsel to Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission of a Registration Statement on Form S-8 (the "Registration Statement"), pursuant to which the Company is registering the issuance under the Securities Act of 1933, as amended, of a total of 6,600,000 shares (the "Shares") of its common stock, $.01 par value per share (the "Common Stock). This opinion is being rendered in connection with the filing of the Registration Statement. All capitalized terms used herein and not otherwise defined shall have the respective meanings given to them in the Registration Statement. In connection with this opinion, we have examined the Company's Restated Articles of Organization and By-Laws, as amended and restated, both as currently in effect; such other records of the corporate proceedings of the Company and certificates of the Company's officers as we have deemed relevant; and the Registration Statement and the exhibits thereto. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. Based upon the foregoing, we are of the opinion that (i) the Shares have been duly and validly authorized by the Company and (ii) the Shares, when sold, will have been duly and validly issued, fully paid and non-assessable shares of the Common Stock, free of preemptive rights. BOSTON NEW YORK RESTON WASHINGTON NEW HAVEN

MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C. April 3, 2003 Page 2 Our opinion is limited to the General Corporation Laws of the State of Massachusetts and the reported judicial decisions interpreting those laws, and we express no opinion with respect to the laws of any other jurisdiction. No opinion is expressed herein with respect to the qualification of the Shares under the securities or blue sky laws of any state or any foreign jurisdiction. We understand that you wish to file this opinion as an exhibit to the Registration Statement, and we hereby consent thereto. Very truly yours, /s/ Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Exhibit 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated March 31, 2003 relating to the consolidated financial statements, which appears in Vertex Pharmaceuticals Incorporated's Annual Report on Form 10-K for the year ended December 31, 2002. PricewaterhouseCoopers LLP Boston, Massachusetts April 7, 2003

Exhibit 23.3 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement on Form S-8 pertaining to the Vertex Pharmaceuticals Incorporated 1996 Stock and Option Plan and Employee Stock Purchase Plan, of our report dated April 27, 2001, with respect to the consolidated financial statements of Aurora Biosciences Corporation included in the Vertex Pharmaceuticals Incorporated Annual Report Form 10-K for the year ended December 31, 2002, filed with the Securities and Exchange Commission. Ernst & Young LLP San Diego, California April 7, 2003




                                                                 Exhibit 23.4


                NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP


     Vertex Pharmaceuticals Incorporated ("Vertex") was unable after
reasonable efforts to obtain the written consent required by Section 7 of the
Securities Act of 1933, as amended (the "Securities Act") of Arthur Andersen
LLP ("Andersen"), PanVera Corporation's former independent public
accountants, to incorporate by reference the report of Andersen, dated
October 20, 2000, on the financial statements of PanVera Corporation for the
years ended September 30, 2000 and 1999. Such report appears in the Annual
Report on Form 10-K filed by Vertex with the Securities and Exchange
Commission on March 31, 2003. Rule 437a of the Securities Act permits Vertex
to dispense with the requirement to file the written consent of Andersen.
Accordingly, Vertex's stockholders may be unable to assert a claim against
Andersen under Section 11(a) of the Securities Act.




                                                                  Exhibit 99.1


                   VERTEX PHARMACEUTICALS INCORPORATED
                       1996 STOCK and OPTION PLAN
               (AS AMENDED ON JULY 17, 2002, AND RESTATED)

1. DEFINITIONS

     Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Vertex Pharmaceuticals Incorporated 1996
Stock and Option Plan, have the following meanings:

AFFILIATE means a corporation which, for purposes of Section 424 of the Code,
is a parent or subsidiary of the Company, direct or indirect.

BOARD of Directors means the Board of Directors of the Company.

CODE means the United States Internal Revenue Code of 1986, as amended.

COMMITTEE means the Compensation Committee of the Board of Directors or any
successor thereto appointed by the Board of Directors pursuant to Section 4
hereof to administer this Plan.

COMMON STOCK means shares of the Company's common stock, $.01 par value.

COMPANY means Vertex Pharmaceuticals Incorporated, a Massachusetts
corporation.

DISABILITY or DISABLED means permanent and total disability as defined in
Section 22(e)(3) of the Code.

EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.

FAIR MARKET VALUE of a Share of Common Stock on a particular date shall be
the mean between the highest and lowest quoted selling prices on such date
(the "valuation date') on the securities market where the Common Stock of the
Company is traded, or if there were no sales on the valuation date, on the
next preceding date within a reasonable period (as determined in the sole
discretion of the Committee) on which there were sales. In the event that
there were no sales in such a market within a reasonable period, the fair
market value shall be as determined in good faith by the Committee in its
sole discretion. The Fair Market Value as determined in this paragraph
rounded down to the next lower whole cent if the foregoing calculation
results in fractional cents.

ISO means an option intended to qualify as an incentive stock option under
Code Section 422(b).

KEY EMPLOYEE means an employee of the Company or of an Affiliate (including,
without limitation, an employee who is also serving as an officer or director
of the Company or of an Affiliate), designated by the Committee to be
eligible to be granted one or more Stock Rights under the Plan.

NQSO means an option which is not intended to qualify as an ISO.

NON-EMPLOYEE DIRECTOR means a member of the Board of Directors who is not an
employee of the Company or any Affiliate.

OPTION means an ISO or NQSO granted under the Plan.


                                      1





PARTICIPANT means a Key Employee, Non-Employee Director, consultant or
advisor of the Company to whom one or more Stock Rights are granted under the
Plan. As used herein, "Participant' shall include "Participant's Survivors'
and a Participant' s permitted transferees where the context requires.

PARTICIPANT'S SURVIVORS means a deceased Participant's legal representatives
and/or any person or persons who acquires the Participant's rights to a Stock
Right by will or by the laws of descent or distribution.

PLAN means this Vertex Pharmaceuticals Incorporated 1996 Stock and Option
Plan, as amended from time to time.

SHARES means shares of the Common Stock as to which Stock Rights have been or
may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of
Section 3 of the Plan. The Shares issued upon exercise of Stock Rights
granted under the Plan may be authorized and unissued shares or shares held
by the Company in its treasury, or both.

STOCK AGREEMENT means an agreement between the Company and a Participant
executed and delivered pursuant to the Plan, in such form as the Committee
shall approve.

STOCK AWARD means an award of Shares or the opportunity to make a direct
purchase of Shares of the Company granted under the Plan.

STOCK RIGHT means a right to Shares of the Company granted pursuant to the
Plan as an ISO, an NQSO or a Stock Award.

2. PURPOSES OF THE PLAN

     The Plan is intended to encourage ownership of Shares by Key Employees,
Non-Employee Directors and certain consultants and advisors to the Company in
order to attract such persons, to induce them to work for the benefit of the
Company or of an Affiliate and to provide additional incentive for them to
promote the success of the Company or of an Affiliate. The Plan provides for
the granting of Stock Rights to Key Employees, Non-Employee Directors,
consultants and advisors of the Company.

3. SHARES SUBJECT TO THE PLAN

     The number of Shares subject to this Plan as to which Stock Rights may
be granted from time to time shall be 22,000,000 plus the number of shares of
Common Stock previously reserved for the granting of options under the Vertex
Pharmaceuticals Incorporated 1991 Stock Option Plan and 1994 Stock and Option
Plan but not granted thereunder, or the equivalent of such number of Shares
after the Committee, in its sole discretion, has interpreted the effect of
any stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Section 17 of this Plan.

     If an Option granted hereunder or any option granted under the 1991
Stock Option Plan or 1994 Stock and Option Plan ceases to be "outstanding',
in whole or in part, or if the Company shall reacquire any Shares issued
pursuant to Stock Awards, the Shares which were subject to such Option and
any Shares so reacquired by the Company shall also be available for the
granting of other Stock Rights under the Plan. Any Stock Right shall be
treated as "outstanding' until such Stock Right is exercised in full, or
terminates or expires under the provisions of the Plan, or by agreement of
the parties to the pertinent Stock Agreement, without having been exercised
in full.


                                      2





4. ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Committee. Subject to the provisions of
the Plan, the Committee is authorized to:

     a. Interpret the provisions of the Plan or of any Option, Stock Award
        or Stock Agreement and to make all rules and determinations which it
        deems necessary or advisable for the administration of the Plan;

     b. Determine which employees of the Company or of an Affiliate shall
        be designated as Key Employees and which of the Key Employees,
        Non-Employee Directors, consultants and advisors of the Company and
        its Affiliates shall be granted Stock Rights;

     c. Determine the number of Shares and exercise price for which a Stock
        Right or Stock Rights shall be granted;

     d. Specify the terms and conditions upon which a Stock Right or Stock
        Rights may be granted; and

     e. In its discretion, accelerate the date of exercise of any
        installment of any Option; provided that the Committee shall not,
        without the consent of the Option holder accelerate the exercise date
        of any installment of any Option granted to any Key Employee as an ISO
        (and not previously converted into an NQSO pursuant to Section 20) if
        such acceleration would violate the annual vesting limitation
        contained in Section 422(d) of the Code, as described in Section
        6.2.3.

provided, however, that all such interpretations, rules, determinations,
terms and conditions shall be made and prescribed in the context of
preserving the tax status under Code Section 422 of those Options which are
designated as ISOs and shall be in compliance with any applicable provisions
of Rule 16b-3 under the Exchange Act. Subject to the foregoing, the
interpretation and construction by the Committee of any provisions of the
Plan or of any Stock Right granted under it shall be final, unless otherwise
determined by the Board of Directors, if the Committee is other than the
Board of Directors.

     The Committee may employ attorneys, consultants, accountants or other
persons, and the Committee, the Company and its officers and directors shall
be entitled to rely upon the advice, opinions or valuations of such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Company, all
Participants, and all other interested persons. No member or agent of the
Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to this Plan or grants
hereunder. Each member of the Committee shall be indemnified and held
harmless by the Company against any cost or expense (including counsel fees)
reasonably incurred by him or liability (including any sum paid in settlement
of a claim with the approval of the Company) arising out of any act or
omission to act in connection with this Plan unless arising out of such
member's own fraud or bad faith. Such indemnification shall be in addition to
any rights of indemnification the members of the Committee may have as
directors or otherwise under the by-laws of the Company, or any agreement,
vote of stockholders or disinterested directors, or otherwise.

5. ELIGIBILITY FOR PARTICIPATION

     The Committee shall, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
Non-Employee Director, consultant or advisor of the Company or of an
Affiliate at the time a Stock Right is granted. Notwithstanding the
foregoing, the Committee may


                                      3




authorize the grant of a Stock Right to a person not then an employee,
Non-Employee Director, consultant or advisor of the Company or of an
Affiliate; PROVIDED, HOWEVER, that the actual grant of such Stock Right shall
be conditioned upon such person becoming eligible to become a Participant at
or prior to the time of execution of the Stock Agreement evidencing such
Stock Right. The granting of any Stock Right to any individual shall neither
entitle that individual to, nor disqualify him or her from, participation in
other grants of Stock Rights. Nothwithstanding anything to the contrary
contained in this Plan, no Stock Rights shall be granted to any director or
officer of the Company except in accordance with the applicable rules of the
Nasdaq Stock Market or other securities market where the Common Stock is
traded.

6. TERMS AND CONDITIONS OF OPTIONS

          6.1 GENERAL. Each Option shall be set forth in writing in
     a Stock Agreement, duly executed by the Company and, to the extent
     required by law or requested by the Company, by the Participant. The
     Committee may provide that Options be granted subject to such conditions
     as the Committee may deem appropriate including, without limitation,
     subsequent approval by the shareholders of the Company of this Plan or
     any amendments thereto, PROVIDED, HOWEVER, that the option price per
     share of the Shares covered by each Option shall not be less than the
     Fair Market Value per share of the Common Stock on the date of grant
     (or par value if greater). Each Stock Agreement shall state the number of
     Shares to which it pertains, the date or dates on which it first is
     exercisable and the date after which it may no longer be exercised.
     Option rights may accrue or become exercisable in installments over a
     period of time, or upon the achievement of certain conditions or the
     attainment of stated goals or events. Exercise of any Option may be
     conditioned upon the Participant's execution of a Share purchase
     agreement in form satisfactory to the Committee providing for certain
     protections for the Company and its other shareholders, including
     requirements that the Participant's or the Participant's Survivors'
     right to sell or transfer the Shares may be restricted, and the
     Participant or the Participant's Survivors may be required to execute
     letters of investment intent and to acknowledge that the Shares will bear
     legends noting any applicable restrictions.

               6.2 ISOs. ISOs shall be issued only to Key Employees. In
          addition to the minimum standards set forth in Section 6.1, ISOs
          shall be subject to the following terms and conditions, with such
          additional restrictions or changes as the Committee determines are
          appropriate but not in conflict with Code Section 422 and relevant
          regulations and rulings of the Internal Revenue Service:

                    6.2.1 ISO OPTION PRICE: The Option price per Share of the
                Shares subject to an ISO shall not be less than one hundred
                percent (100%) of the Fair Market Value per share of the
                Common Stock on the date of grant of the ISO; provided,
                however that the Option price per share of the Shares subject
                to an ISO granted to a Participant who owns, directly or by
                reason of the applicable attribution rules in Code Section
                424(d), more than ten percent (10%) of the total combined
                voting power of all classes of share capital of the Company or
                an Affiliate, shall not be less than one hundred ten percent
                (110%) of the said Fair Market Value on the date of grant.

                    6.2.2 TERM OF ISO: Each ISO shall expire not more than
                ten (10) years from the date of grant; provided, however, that
                an ISO granted to a Participant who owns, directly or by
                reason of the applicable attribution rules in Code Section
                424(d), more than ten percent (10%) of the total combined
                voting power of all classes of share capital of the Company
                or an Affiliate, shall expire not more than five (5) years
                from the date of grant.


                                      4





                    6.2.3 LIMITATION ON GRANT OF ISOs: No ISOs shall be
                granted after December 8, 2004, the date which is ten (10)
                years from the earlier of the date of the adoption of this
                Plan and the date of the approval of the Plan by the
                shareholders of the Company.

          6.3 NON-EMPLOYEE DIRECTORS' OPTIONS. Each Non-Employee Director,
     upon first being elected or appointed to the Board of Directors, shall be
     granted an NQSO to purchase 20,000 Shares. Each such Option shall (i)
     have an exercise price equal to the Fair Market Value (per share) on the
     date of grant of the Option, (ii) have a term of ten (10) years, and (ii)
     shall become cumulatively exercisable in sixteen (16) equal quarterly
     installments, upon completion of each full quarter of service on the
     Board of Directors after the date of grant. In addition, on June 1 of
     each year, each Non-Employee Director shall be granted a NQSO to purchase
     7,500 shares. Each such Option shall (i) have an exercise price equal to
     the Fair Market Value (per share) on the date of grant of such Option,
     (ii) have a term of ten (10) years, and (iii) be exercisable in full
     immediately on the date of grant. Any director entitled to receive an
     Option grant under this Section may elect to decline the Option.
     Notwithstanding the provisions of Section 24 concerning amendment of the
     Plan, the provisions of this Subsection shall not be amended more than
     once every six months, other than to comport with changes in the Code,
     the Employee Retirement Income Security Act, or the rules thereunder.
     Notwithstanding anything to the contrary contained in any other
     provisions of this Plan, the Committee shall have no discretion to
     vary the terms of Options granted under this Section 6.3 from
     those set forth herein. The provisions of Sections 11, 13 and 14 below
     shall not apply to Options granted pursuant to this Subsection.

          6.4 LIMITATION ON NUMBER OF OPTIONS GRANTED. Notwithstanding anything
     in this Plan to the contrary, no Participant shall be granted Options in
     any calendar year for the purchase of more than 400,000 Shares (subject
     to adjustment pursuant to Section 17 to the extent consistent with
     Section 162(m) of the Code).

7. TERMS AND CONDITIONS OF STOCK AWARDS

Each Stock Award shall be set forth in a Stock Agreement, duly executed by
the Company and, to the extent required by law or requested by the Company,
by the Participant. The Stock Agreement shall be in the form approved by the
Committee, with such changes and modifications to such form as the Committee,
in its discretion, shall approve with respect to any particular Participant
or Participants. The Stock Agreement shall contain terms and conditions which
the Committee determines to be appropriate and in the best interest of the
Company; provided, however, that the purchase price per share of the Shares
covered by each Stock Award shall not be less than the par value per Share.
Each Stock Agreement shall state the number of Shares to which the Stock
Award pertains, the date prior to which the Stock Award must be exercised by
the Participant, and the terms of any right of the Company to reacquire the
Shares subject to the Stock Award, including the time and events upon which
such rights shall accrue and the purchase price therefor, and any
restrictions on the transferability of such Shares. All Stock Awards shall be
subject to restrictions on transfer and a right of repurchase by the Company
and shall vest over a period of not less than three years from the date of
grant, or upon the later of one year after the date of grant or the
achievement of such performance objectives as shall be approved by the
Committee when granting the Stock Award. The Committee, in its discretion,
may accelerate the vesting of Stock Awards in the event of (a) death or
disability of the Participant, or (b) in connection with an Acquisition as
defined in Section 17.2.


                                      5





8. EXERCISE OF STOCK RIGHTS AND ISSUANCE OF SHARES

     A Stock Right (or any part or installment thereof) shall be exercised by
giving written notice to the Company, together with provision for payment of
the full purchase price in accordance with this Section for the Shares as to
which such Stock Right is being exercised, and upon compliance with any other
condition(s) set forth in the Stock Agreement. Such written notice shall be
signed by the person exercising the Stock Right, shall state the number of
Shares with respect to which the Stock Right is being exercised and shall
contain any representation required by the Plan or the Stock Agreement.

     Payment of the purchase price for the Shares as to which such Stock
Right is being exercised shall be made (a) in United States dollars in cash
or by check acceptable to the Committee, or (b) at the discretion of the
Committee, (i) through delivery of shares of Common Stock (which, in the case
of shares acquired from the Company, have been held by the Participant for at
least six (6) months) not subject to any restriction under any plan and
having a fair market value equal as of the date of exercise to the cash
exercise price of the Stock Right, determined in good faith by the Committee,
or (ii) in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Company, or (iii) by any other
means (excluding, however, delivery of a promissory note of the Participant)
which the Committee determines to be consistent with the purpose of this Plan
and applicable law, or (iv) by any combination of the foregoing.
Notwithstanding the foregoing, the Committee shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.

     The Company shall then as soon as is reasonably practicable deliver the
Shares as to which such Stock Right was exercised to the Participant (or to
the Participant's Survivors, as the case may be). It is expressly understood
that the delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation which requires the Company to take any
action with respect to the Shares prior to their issuance. The Shares shall,
upon delivery, be fully paid, non-assessable Shares.

9. RIGHTS AS A SHAREHOLDER

     No Participant to whom a Stock Right has been granted shall have rights
as a shareholder with respect to any Shares covered by such Stock Right,
except after due exercise thereof and tender of the full purchase price for
the Shares being purchased pursuant to such exercise and registration of the
Shares in the Company's share register in the name of the Participant.

10. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS

     ISOs and, except as otherwise provided by the Committee, NQSOs and Stock
Awards shall not be transferable by the Participant other than by will or by
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee Retirement
Income Security Act or the rules thereunder, provided, however, that the
designation of a beneficiary of a Stock Right by a Participant shall not be
deemed a transfer prohibited by this Section. Except as provided in the
preceding sentence or as otherwise permitted under an NQSO or Stock Award
Stock Agreement, a Stock Right shall be exercisable, during the Participant's
lifetime, only by such Participant (or by his or her legal representative)
and shall not be assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Stock Right or of any rights
granted


                                      6





thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.

11. EFFECT OF TERMINATION OF SERVICE

     11.1 Except as otherwise provided in the pertinent Stock Agreement or as
otherwise provided in Sections 12, 13 or 14, if a Participant ceases to be an
employee, director, consultant or advisor with the Company and its Affiliates
(for any reason other than termination "for cause', Disability, or death) (a
"Termination of Service') before the Participant has exercised all Stock
Rights, the Participant may exercise any Stock Right granted to him or her to
the extent that the Stock Right is exercisable on the date of such
Termination of Service, but only within the originally prescribed term of the
Stock Right.

     11.2 The provisions of this Section, and not the provisions of Section
13 or 14, shall apply to a Participant who subsequently becomes disabled or
dies after the Termination of Service; provided, however, that in the case of
a Participant's death within three (3) months after the Termination of
Service, the Participant's Survivors may exercise the Stock Right within one
(1) year after the date of the Participant's death, but in no event after the
date of expiration of the term of the Stock Right.

     11.3 Notwithstanding anything herein to the contrary, if subsequent to a
Participant's Termination of Service, but prior to the exercise of a Stock
Right, the Committee determines that, either prior or subsequent to the
Participant's Termination of Service, the Participant engaged in conduct
which would constitute "cause' (as defined in Section 12), then such
Participant shall forthwith cease to have any right to exercise any Stock
Right.

     11.4 Absence from work with the Company or an Affiliate because of
temporary disability or a leave of absence for any purpose, shall not, during
the period of any such absence in accordance with Company policies, be
deemed, by virtue of such absence alone, a Termination of Service, except as
the Committee may otherwise expressly provide.

     11.5 A change of employment or other service within or among the Company
and its Affiliates shall not be deemed a Termination of Service, so long as
the Participant continues to be an employee, director, consultant or advisor
of the Company or any Affiliate.

12. EFFECT OF TERMINATION OF SERVICE FOR "CAUSE"

Except as otherwise provided in the pertinent Stock Agreement, in the event
of a Termination of Service of a Participant "for cause" all outstanding and
unexercised Stock Rights as of the date the Participant is notified his or
her service is terminated "for cause" will immediately be forfeited. For
purposes of this Section 12, "cause" shall include (and is not limited to)
dishonesty with respect to the Company and its Affiliates, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized disclosure of
confidential information, conduct substantially prejudicial to the business
of the Company or any Affiliate, and termination by the Participant in
violation of an agreement by the Participant to remain in the employ of the
Company of an Affiliate. The determination of the Committee as to the
existence of cause will be conclusive on the Participant and the Company.
"Cause" is not limited to events which have occurred prior to a Participant's
Termination of Service, nor is it necessary that the Committee's finding of
"cause" occur prior to termination. If the Committee determines, subsequent
to a Participant's Termination of Service but prior to the exercise of a
Stock Right, that either prior or


                                      7





subsequent to the Participant's termination the Participant engaged in
conduct which would constitute "cause," then the right to exercise any Stock
Right shall be forfeited. Any definition in an agreement between a
Participant and the Company or an Affiliate which contains a conflicting
definition of "cause" for termination and which is in effect at the time of
such termination shall supersede the definition in this Plan with respect to
that Participant.

13. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY

     Except as otherwise provided in the pertinent Stock Agreement, in the
event of a termination of service with the Company and its Affiliates by
reason of Disability, the Disabled Participant may exercise any Stock Right
granted to him or her to the extent exercisable but not exercised on the date
of Disability. A Disabled Participant may exercise such rights only within a
period of not more than one (1) year after the date that the Participant
became Disabled or, if earlier, within the originally prescribed term of the
Stock Right.

     The Committee shall make the determination both of whether Disability
has occurred and of the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a
physician selected or approved by the Committee, the cost of which
examination shall be paid for by the Company.

14. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT

     Except as otherwise provided in the pertinent Stock Agreement, in the
event of death of a Participant while the Participant is an employee,
director, consultant or advisor of the Company or of an Affiliate, any Stock
Rights granted to such Participant may be exercised by the Participant's
Survivors to the extent exercisable but not exercised on the date of death.
Any such Stock Right must be exercised within one (1) year after the date of
death of the Participant but in no event after the date of expiration of the
term of the Stock Right.

15. PURCHASE FOR INVESTMENT

     Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Stock Right shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:

     a. The person(s) who exercise such Stock Right shall warrant to the
        Company, at the time of such exercise or receipt, as the case may be,
        that such person(s) are acquiring such Shares for their own respective
        accounts, for investment, and not with a view to, or for sale in
        connection with, the distribution of any such Shares, in which event
        the person(s) acquiring such Shares shall be bound by the provisions
        of the following legend which shall endorsed upon the certificate(s)
        evidencing their Shares issued pursuant to such exercise or such
        grant:

             "The shares represented by this certificate have been taken for
             investment and they may not be sold or otherwise transferred by
             any person, including a pledgee, unless (1) either (a) a
             Registration Statement with respect to such shares shall be
             effective under the Securities Act of 1933, as amended, or (b)
             the Company shall have received an opinion of counsel


                                      8





             satisfactory to it that an exemption from registration under such
             Act is then available, and (2) there shall have been compliance
             with all applicable state securities laws.

     b. The Company shall have received an opinion of its counsel that the
        Shares may be issued upon such particular exercise in compliance with
        the 1933 Act without registration thereunder.

     The Company may delay issuance of the Shares until completion of any
action or obtaining of any consent which the Company deems necessary under
any applicable law (including, without limitation, state securities or "blue
sky" laws).

16. DISSOLUTION OR LIQUIDATION OF THE COMPANY

     Upon the dissolution or liquidation of the Company (other than in
connection with a transaction subject to the provisions of Section 17.2), all
Stock Rights granted under this Plan which as of such date shall not have
been exercised will terminate and become null and void; provided, however,
that if the rights of a Participant have not otherwise terminated and
expired, the Participant will have the right immediately prior to such
dissolution or liquidation to exercise any Stock Right to the extent that
such Stock Right is exercisable as of the date immediately prior to such
dissolution or liquidation.

17. ADJUSTMENTS

     Upon the occurrence of any of the following events, a Participant's
rights with respect to any Stock Right granted to him or her hereunder which
have not previously been exercised in full shall be adjusted as hereinafter
provided, unless otherwise specifically provided in the written agreement
between the Participant and the Company relating to such Stock Right or in
any employment agreement between a Participant and the Company or an
Affiliate:

          17.1 STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common
     Stock shall be subdivided or combined into a greater or smaller number
     of shares or if the Company shall issue any shares of Common Stock as a
     stock dividend on its outstanding Common Stock, the number of shares of
     Common Stock deliverable upon the exercise of such Stock Right shall be
     appropriately increased or decreased, and appropriate adjustments shall
     be made in the purchase price per share to reflect such subdivision,
     combination or stock dividend.

          17.2 CONSOLIDATIONS OR MERGERS. In the event of a consolidation
     or merger in which the Company is not the surviving corporation or which
     results in the acquisition of substantially all the Company's outstanding
     stock by a single person or entity or by a group of persons and/or
     entities acting in concert, or in the event of the sale or transfer
     of substantially all the Company's assets (any of the foregoing, an
     "Acquisition"), all then outstanding Options shall terminate unless
     assumed pursuant to clause (i) below; provided, that either (i) the
     Committee shall provide for the surviving or acquiring entity or an
     affiliate thereof to assume the outstanding Options or grant replacement
     options in lieu thereof, any such replacement to be upon an equitable
     basis as determined by the Committee, or (ii) if there is no such
     assumption or substitution, all outstanding Options shall become
     immediately and fully exercisable immediately prior to the Acquisition,
     notwithstanding any restrictions or vesting conditions set forth therein.

          17.3 RECAPITALIZATION OR REORGANIZATION. In the event of a
     recapitalization or reorganization of the Company (other than a
     transaction described in Section 17.2 above) pursuant to which securities


                                      9





     of the Company or of another corporation are issued with respect to the
     outstanding shares of Common Stock, a Participant upon exercising a Stock
     Right shall be entitled to receive for the purchase price paid upon such
     exercise the securities he or she would have received if he or she had
     exercised such Stock Right prior to such recapitalization or
     reorganization.

          17.4 MODIFICATION OF ISOs. Notwithstanding the foregoing, any
     adjustments made pursuant to Section 17.1, 17.2 or 17.3 with respect to
     ISOs shall be made only after the Committee determines whether such
     adjustments would constitute a "modification" of such ISOs (as that term
     is defined in Section 424(h) of the Code) or would cause any adverse tax
     consequences for the holders of such ISOs. If the Committee determines
     that such adjustments made with respect to ISOs would constitute a
     modification of such ISOs, it may refrain from making such adjustments,
     unless the holder of an ISO specifically requests in writing that such
     adjustment be made and such writing indicates that the holder has full
     knowledge of the consequences of such "modification" on his or her income
     tax treatment with respect to the ISO.

18. ISSUANCES OF SECURITIES

     Except as expressly provided herein, no issuance (including for this
purpose the delivery of shares held in treasury) by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.

19. FRACTIONAL SHARES

     No fractional share shall be issued under the Plan and the person
exercising any Stock Right shall receive from the Company cash in lieu of any
such fractional share equal to the Fair Market Value thereof determined in
good faith by the Board of Directors.

20. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs

     Any Options granted under this Plan which do not meet the requirements
of the Code for ISOs shall automatically be deemed to be NQSOs without
further action on the part of the Committee. The Committee, at the written
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant's ISOs (or any portion thereof) that
have not been exercised on the date of conversion into NQSOs at any time
prior to the expiration of such ISOs, regardless of whether the Participant
is an employee of the Company or an Affiliate at the time of such conversion.
Such actions may include, but not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
Options. At the time of such conversion, the Committee (with the consent of
the Participant) may impose such conditions on the exercise of the resulting
NQSOs as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan
shall be deemed to give any Participant the right to have such Participant's
ISOs converted into NQSOs, and no such conversion shall occur until and
unless the Committee takes appropriate action. The Committee, with the
consent of the Participant, may also terminate any portion of any ISO that
has not been exercised at the time of such termination.


                                      10





21. WITHHOLDING

     In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("FICA") withholdings or other
amounts are required by applicable law or governmental regulation to be
withheld from the Participant's salary, wages or other remuneration in
connection with the exercise of a Stock Right or a Disqualifying Disposition
(as defined in Section 22), the Participant shall advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company's Common Stock, is
authorized by the Committee (and permitted by law), provided, however, that
with respect to persons subject to Section 16 of the Exchange Act, any such
withholding arrangement shall be in compliance with any applicable provisions
of Rule 16b-3 promulgated under Section 16 of the Exchange Act. For purposes
hereof, the Fair Market Value of any shares withheld for purposes of payroll
withholding shall be determined in the manner provided in Section 1 above, as
of the most recent practicable date prior to the date of exercise. If the
Fair Market Value of the shares withheld is less than the amount of payroll
withholdings required, the Participant my be required to advance the
difference in cash to the Company or the Affiliate employer. The Committee in
its discretion may condition the exercise of an Option for less than the then
Fair Market Value on the Participant's payment of such additional
withholding. In no event shall shares be withheld from any award in
satisfaction of tax withholding requirements in an amount that exceeds the
minimum tax withholding requirements of law.

22. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION

     Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a "Disqualifying
Disposition" of any Shares acquired pursuant to the exercise of an ISO. A
Disqualifying Disposition is any disposition (as defined in Section 424(c) of
the Code) of such shares before the later of (a) two years from the date the
Key Employee was granted the ISO, or (b) one year after the date the Key
Employee acquired Shares by exercising the ISO. If the Key Employee has died
before such Shares are sold, the notice provisions of this Section 22 shall
not apply.

23. EFFECTIVE DATE; TERMINATION OF THE PLAN

     The Plan shall be effective on December 12, 1996, the date of its
approval by the Board of Directors. The Plan will terminate on December 12,
2006. The Plan may be terminated at an earlier date by vote of the Board of
Directors; provided, however, that any such earlier termination will not
affect any Stock Rights granted or Stock Agreements executed prior to the
effective date of such termination.

24. AMENDMENT OF THE PLAN; AMENDMENT OF STOCK RIGHTS

     The Plan may be amended by the stockholders of the Company. The Plan may
also be amended by the Board of Directors or the Committee, including,
without limitation, to the extent necessary to qualify any or all outstanding
Stock Rights granted under the Plan or Stock Rights to be granted under the
Plan for favorable federal income tax treatment (including deferral of
taxation upon exercise) as may be afforded incentive stock options under
Section 422 of the Code, to the extent necessary to ensure that Stock Rights
granted or to be granted under the Plan are in accordance with Rule 16b-3
under the Exchange Act, and to the extent necessary to qualify the shares
issuable upon exercise of any outstanding Stock Rights granted, or Stock
Rights to be granted, under the Plan for listing on any national securities
exchange or quotation in


                                      11





any national automated quotation system of securities dealers. No
modification or amendment of the Plan shall adversely affect a Participant's
rights under a Stock Right previously granted to the Participant without such
Participant's consent.

     In its discretion, the Committee may amend any term or condition of any
outstanding Stock Right, PROVIDED, (i) such term or condition as amended
is permitted by the Plan, (ii) if the amendment is adverse to the
Participant, such amendment shall be made only with the consent of the
Participant, (iii) any such amendment of any ISO shall be made only after the
Committee determines whether such amendment would constitute a "modification"
of any Stock Right which is an ISO (as that term is defined in Section 424(h)
of the Code) or would cause any adverse tax consequences for the holder of
such ISO, and (iv) with respect to any Stock Right held by any Participant
who is subject to the provisions of Section 16(a) of the Exchange Act, any
such amendment shall be made only after the Committee determines whether such
amendment would constitute the grant of a new Stock Right. Notwithstanding
the foregoing, the Committee may not reprice any Options, either directly
through a reduction of the exercise price or indirectly by cancellation of
outstanding Options in return for an immediate grant of Options with a lower
exercise price.

25. EMPLOYMENT OR OTHER RELATIONSHIP

     Nothing in this Plan or any Stock Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a Participant, nor to prevent a Participant from
terminating his or her own employment, consultancy or director status or to
give any Participant a right to be retained in employment or other service by
the Company or any Affiliate for any period of time.

26. GOVERNING LAW

     This Plan shall be construed and enforced in accordance with the law of
The Commonwealth of Massachusetts.


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Exhibit 99.2 VERTEX PHARMACEUTICALS INCORPORATED EMPLOYEE STOCK PURCHASE PLAN (amended and restated on September 25, 2002) ARTICLE 1 PURPOSE AND DEFINITIONS SECTION 1.1. PURPOSE. The purpose of the Vertex Pharmaceuticals Incorporated Employee Stock Purchase Plan is to provide employees with an opportunity to purchase Common Stock in the Company through payroll deductions, thereby encouraging employees to share in the economic growth and success of the Company through stock ownership. SECTION 1.2. DEFINITIONS. Whenever used in the Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings: (a) "BENEFICIARY" with respect to a Participant, means the beneficiary designated by the Participant under the group term life insurance plan maintained by the Company or such other beneficiary as may be designated by a Participant for purposes of this Plan. (b) "BOARD OF DIRECTORS" means the Board of Directors of the Company. (c) "CODE" means the Internal Revenue Code of 1986, as the same may be amended from time to time, and references thereto shall include the valid Treasury regulations issued thereunder. (d) "COMMITTEE" means the Compensation Committee of the Board of Directors. (e) "COMMON STOCK" means shares of the $.01 par value common stock of the Company and any other stock or securities resulting from the adjustment thereof or substitution therefor as described in Section 3.4. (f) "COMPANY" means Vertex Pharmaceuticals Incorporated or any successor by merger, purchase, or otherwise. (g) "COMPENSATION" means the cash compensation received by an Employee for services, including pre-tax employee compensation made to the Company's 401(k) savings plan, but not including overtime or bonuses. (h) "EFFECTIVE DATE" means July 1, 1992. (i) "ELECTION" means an election by a Participant to terminate an Offering Period on the first Purchase Date of such Offering Period, which election shall be made within such Offering Period and prior to such First Purchase Date and shall be in writing on a form furnished by the Company for such purpose and shall be made by having such Participant complete, sign and file such form with the Company in the manner prescribed by the Company. (j) "EMPLOYEE" means any person who receives a regular stated compensation from the Company or a Subsidiary other than a pension, severance pay, retainer, or fee under contract. (k) "FAIR MARKET VALUE" of a Share of Common Stock on a particular date shall be the mean between the highest and lowest quoted selling prices on such date (the "valuation date") on the securities market where the Common Stock of the Company is traded, or if there were no sales on the valuation date, on the next preceding date within a reasonable period (as determined in the sole discretion of the Committee) on which there were sales. In the event that there were no sales in such a market within a reasonable period, the fair market value shall be as determined in good faith by the Committee in its sole discretion. The Fair Market Value as determined in this paragraph rounded down to the next lower whole cent if the foregoing calculation results in fractional cents.

(l) "OFFERING" means the offering of shares of Common Stock to Participants pursuant to this Plan. (m) "OFFERING DATE" means each April 1 and October 1 after the Effective Date and prior to October 1, 2007, provided that the first Offering Date will be the Effective Date. If any such date shall fall other than on a business day, then the Offering Date shall be the next succeeding business day. (n) "OFFERING PERIOD" means either (i) the period from an Offering Date through the second Purchase Date following such Offering Date or (ii) if a Participant validly exercises an Election, the period from an Offering Date through the first Purchase Date following such Offering Date. (o) "PARTICIPANT" means an Employee who has elected to participate in the Plan. (p) "PURCHASE DATE" means each March 31 and September 30. (q) "PLAN" means the Vertex Pharmaceuticals Incorporated Employee Stock Purchase Plan, an "employee stock purchase plan" within the meaning of Section 423(b) of the Code, together with any and all amendments thereto. (r) "STOCK PURCHASE ACCOUNT", with respect to a Participant, means the account established on the books and records of the Company or a Subsidiary for such Participant representing the payroll deductions credited to such account in accordance with the provisions of the Plan. (s) "SUBSIDIARY" means any corporation, fifty percent (50%) or more of the total combined voting power of all classes of stock of which is beneficially owned, directly or indirectly, by the Company. ARTICLE II PARTICIPATION SECTION 2.1. PARTICIPATION REQUIREMENTS. (a) COMMENCEMENT OF PARTICIPATION. Subject to Section 2.2 and Section 3.2(b), each person who is an Employee on the Effective Date may elect, pursuant to Article IV, to become a Participant in the Plan on such date. Each person who becomes an Employee after the Effective Date may become a Participant in the Plan on the Offering Date next following the date on which such person becomes an Employee. (b) ELIGIBILITY OF FORMER PARTICIPANTS. If a person terminates employment with the Company after becoming a Participant and subsequently resumes employment with the Company, such person will again become eligible to participate on the Offering Date next following such resumption of employment with the Company. SECTION 2.2. EXCLUSIONS. Notwithstanding any provision of the Plan to the contrary, in no event shall the following persons be eligible to participate in the Plan: (a) Any Employee whose customary employment is twenty (20) hours or less per week; (b) Any Employee whose customary employment is for not more than five (5) months in any calendar year; or (c) Any Employee who, as of the beginning of an Offering Period, owns (or under Section 423(b)(3) of the Code would be deemed to own) stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or a Subsidiary.

ARTICLE III OFFERING OF COMMON STOCK SECTION 3.1. RESERVATION OF COMMON STOCK. The Board of Directors shall reserve 724,576 shares of Common Stock for issuance under the Plan after May 17, 2002, subject to adjustment in accordance with Section 3.4. SECTION 3.2. OFFERING OF COMMON STOCK. (a) GENERAL. Subject to Section 3.2(b), each Participant in the Plan on an Offering Date shall be entitled to purchase shares of Common Stock on each Purchase Date within the Offering Period that begins with such Offering Date with the amounts deducted from such Participant's Compensation during such Offering Period pursuant to Article IV, provided, however, that a Participant shall not participate in more than one Offering Period simultaneously. The purchase price for such shares of Common Stock shall be determined under Section 3.3. (b) LIMITATIONS. Notwithstanding Section 3.2(a), no employee may accrue rights to purchase shares of Common Stock attributable to an Offering Period in excess of $25,000 of fair market value of such shares (measured as of the relevant Offering Date) for each calendar year during which such rights are outstanding. For any year, this limit shall be further reduced by the fair market value of stock (measured as of the relevant Offering Date for such stock) purchasable under any prior outstanding rights relating to such calendar year under this Plan and all other Code section 423 employee stock purchase plans of the Company or any Subsidiary. This paragraph is intended to be consistent with the limitation of Code section 423(b)(8) and shall be interpreted accordingly. SECTION 3.3. DETERMINATION OF PURCHASE PRICE FOR OFFERED COMMON STOCK. The purchase price per share of the shares of Common Stock to be acquired by a Participant on a Purchase Date pursuant to an Offering shall be equal to eighty-five (85%) of the lesser of: (a) the Fair Market Value of a share of Common Stock on the Offering Date for such Offering Period; or (b) the Fair Market Value of a share of Common Stock on such Purchase Date; provided, however, in no event shall the purchase price be less than the par value of a share of Common Stock. SECTION 3.4. EFFECT OF CERTAIN TRANSACTIONS. The number of shares of Common Stock reserved for the Plan pursuant to Section 3.1, the maximum number of shares of Common Stock offered pursuant to Section 3.2(b), and the determination under Section 3.3 of the purchase price per share of the shares of Common Stock offered to Participants pursuant to an Offering shall be appropriately adjusted to reflect any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, a consolidation of shares, the payment of a stock dividend, or any other capital adjustment affecting the number of issued shares of Common Stock. In the event that the outstanding shares of Common Stock shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or another corporation, whether through reorganization, recapitalization, merger, consolidation, or otherwise, then there shall be substituted for each share of Common Stock reserved for issuance under the Plan but not yet purchased by Participants, the number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or for which each such share shall be exchanged. ARTICLE IV PAYROLL DEDUCTIONS SECTION 4.1. PAYROLL DEDUCTION ELECTIONS. Any Employee eligible to participate in the Plan may elect to have the Company deduct from the Compensation

payable to such Employee during each Offering Period any amount between one percent (1%) and fifteen percent (15%) of such Participant's Compensation, in whole multiples of one percent (1%). Such election shall be made during the thirty day period preceding the Offering Period to which it first relates. Such election shall become effective as of the first day of such Participant's first pay period that begins on or after the first day of such Offering Period and shall remain effective for each successive pay period and for each subsequent Offering until changed or terminated pursuant to this Article IV. The percentage deduction specified by the Participant will be deducted from each payment of compensation made to the Participant. SECTION 4.2. ELECTION TO INCREASE OR DECREASE PAYROLL DEDUCTIONS. Subject to Section 4.4, a Participant who has a payroll deduction election in effect under Section 4.1 may prospectively increase or decrease during an Offering Period the percentage amount of the deductions being made by the Company from such Participant's Compensation (including a decrease to zero) by delivering to the Company written direction to make such change. Such change shall become effective as soon as practicable after the Company's receipt of such written direction and shall remain in effect until changed or terminated pursuant to this Article IV. A Participant shall be permitted to increase or decrease the percentage amount of the deductions being made from such Participant's Compensation only once during each of the portions of an Offering Period that ends on a Purchase Date; provided, however, a Participant may terminate the deductions being made from such Participant's Compensation at any time during such Offering Period. If a Participant terminates deductions, such Participant cannot resume deductions during that Offering Period. SECTION 4.3. TERMINATION OF ELECTION UPON TERMINATION OF EMPLOYMENT. The termination of employment of a Participant for any reason shall automatically terminate the election of such Participant to have amounts deducted from such Participant's Compensation pursuant to this Article IV that is then in effect. Such termination shall be effective immediately following the pay period during which such termination of employment occurs, but shall not affect the deduction from Compensation for that pay period. SECTION 4.4. FORM OF ELECTIONS. Except as otherwise permitted by the Company, any election by a Participant regarding participation in or withdrawal from the Plan or deductions from Compensation pursuant to this Article IV shall be in writing on a form furnished by the Company for such purpose and shall be made by having such Participant file such form with the Company in the manner prescribed from time to time by the Company. ARTICLE V STOCK PURCHASE ACCOUNTS AND PURCHASE OF COMMON STOCK SECTION 5.1. STOCK PURCHASE ACCOUNTS. A Stock Purchase Account shall be established and maintained on the books and records of the Company for each Participant. Amounts deducted from a Participant's Compensation pursuant to Article IV shall be credited to such Participant's Stock Purchase Account. No interest or other increment shall accrue or be payable to any Participant with respect to any amounts credited to such Stock Purchase Accounts. All amounts credited to such Stock Purchase Accounts shall be withdrawn, paid, or applied toward the purchase of Common stock pursuant to the provisions of this Article V. SECTION 5.2. PURCHASE OF COMMON STOCK. (a) GENERAL. As of each Purchase Date, the amount to the credit of a Participant in such Participant's Stock Purchase Account shall be used to purchase from the Company on such Participant's behalf the largest number of whole shares of Common Stock which can be purchased at the price determined under Section 3.3 with the amount then credited to such Participant's Stock Purchase Account, subject to the limitations set forth in Article III on the maximum number of shares of Common Stock such Participant may purchase. As of such date, such Participant's Stock Purchase Account shall be charged with the aggregate purchase price of the shares of Common Stock purchased on such Participant's behalf. No brokerage or other fees are to be charged upon a purchase. Stock transfer taxes, if any, shall be paid by the Company. The remaining balance, if any, credited to such Participant's Stock Purchase Account

shall be carried forward and used to purchase shares of Common Stock on the next succeeding Purchase Date; provided that any excess balance remaining in a Participant's Stock Purchase Account after the application of the limitations in Section 3.2 shall be refunded to the Participant. (b) ISSUANCE OF COMMON STOCK. The shares of Common Stock purchased for a Participant as of a Purchase Date shall be deemed to have been issued by the Company for all purposes as of the close of business on such date. Prior to such date, none of the rights and privileges of a shareholder of the Company shall exist with respect to such shares of Common Stock. As soon as practicable after such a Purchase Date the Company shall issue and deliver, or shall cause its stock transfer agent to issue and deliver, a certificate for the number of shares of Common Stock purchased for a Participant, which certificate shall be issued in the Participant's name or, if so specified by the Participant, in the name of the Participant and such other person as the Participant shall designate as joint tenants with right of survivorship. In lieu of issuing a certificate, the Company may elect to deliver to the Participant a statement which shall indicate the number of shares of Common Stock purchased for such Participant and the aggregate number of shares of Common Stock held on behalf of such Participant under the Plan. (c) INSUFFICIENT COMMON STOCK AVAILABLE. If, as of any Purchase Date, the aggregate Stock Purchase Accounts available for the purchase of shares of Common Stock pursuant to Section 5.2(a) would purchase a number of shares of Common Stock in excess of the number of shares of Common Stock then available for purchase under the Plan, (i) the number of shares of Common Stock which would otherwise be purchased for each Participant on such date shall be reduced proportionately to the extent necessary to eliminate such excess, (ii) the remaining balance to the credit of each Participant in each such Participant's Stock Purchase Accounts shall be distributed to each such Participant, and (iii) the Plan shall terminate automatically upon the distribution of the remaining balance in such Stock Purchase Accounts. SECTION 5.3. WITHDRAWAL FROM PLAN PRIOR TO PURCHASE OF COMMON STOCK. In the event (i) a Participant elects in writing for any reason to withdraw from the Plan during an Offering Period or (ii) a Participant's employment with the Company terminates for any reason prior to the end of an Offering Period, and such Participant (or, if such Participant is deceased, such Participant's Beneficiary) elects in writing to withdraw from the Plan, then the entire amount remaining to the credit of Such Participant in such Participant's Stock Purchase Account shall be distributed to such Participant (or, if such Participant is deceased, to such Participant's Beneficiary) as soon as administratively practicable after such termination of employment or withdrawal (as the case may be). If a Participant (or, if such Participant is deceased, such Participant's Beneficiary) with the right to do so does not elect in writing to withdraw from the Plan, the amount to the credit of such Participant in such Participant's Stock Purchase Account shall be used to purchase shares of Common Stock for such Participant as of the last day of such Offering Period to the extent provided in Section 5.2(a), and the remaining balance in such Participant's Stock Purchase Account shall be distributed to such Participant as soon as administratively practicable. ARTICLE VI COMMITTEE SECTION 6.1. POWERS OF THE COMMITTEE. The Committee shall administer the Plan. The Committee shall have all powers necessary to enable it to carry out its duties under the Plan properly. Not in limitation of the foregoing, the Committee shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The decision of the Committee upon all matters within the scope of its authority shall be final and conclusive on all persons, except to the extent otherwise provided by law. SECTION 6.2. INDEMNIFICATION OF THE COMMITTEE. The Company agrees to indemnify and hold harmless the members of the Committee against any liabilities, loss, costs, or damage that they may incur in acting as such members and to assume the defense of any and allocations, suits, or proceedings against the members of the Committee, to the extent permitted by applicable law.

ARTICLE VII AMENDMENT AND TERMINATION SECTION 7.1. AMENDMENT OF THE PLAN. The Company expressly reserves the right, at any time and from time to time, to amend in whole or in part any of the terms and provisions of the Plan; provided, however, no amendment may without the approval of the shareholders of the Company increase the number of shares of Common Stock reserved under the Plan. SECTION 7.2. TERMINATION OF PLAN. The Company expressly reserves the right, at any time and for whatever reason it may deem appropriate, to terminate the Plan. If not sooner terminated (i) pursuant to the preceding sentence or (ii) pursuant to Section 5.2(c), the Plan shall continue in effect through October 1, 2007. Upon any termination of the Plan, the entire amount credited to the Stock Purchase Account of each Participant shall be distributed to each such Participant. SECTION 7.3. PROCEDURE FOR AMENDMENT OR TERMINATION. Any amendment to the Plan or termination of the Plan may be retroactive to the extent not prohibited by applicable law. Any amendment to the Plan or termination of the Plan shall be made by the Company by resolution of the Board of Directors (subject to Section 7.1) and shall not require the approval or consent of any Participant or Beneficiary in order to be effective. ARTICLE VIII MISCELLANEOUS SECTION 8.1. ADOPTION BY A SUBSIDIARY. A Subsidiary may, with the approval of the Board of Directors and the board of directors of such Subsidiary, elect to adopt the Plan as of a date mutually agreeable to the Board of Directors and the board of directors of such Subsidiary. Any such adoption of the Plan by a Subsidiary shall be evidenced by an appropriate instrument of adoption executed by such Subsidiary. SECTION 8.2. AUTHORIZATION AND DELEGATION TO THE BOARD OF DIRECTORS. Each Subsidiary which is or hereafter adopts the Plan authorizes the Board of Directors (i) to amend or terminate the Plan without further action by said Subsidiary as provided in Article VII and (ii) to perform such other acts and to do such other things as the Board of Directors is expressly directed, authorized, or permitted to perform or do as provided herein. SECTION 8.3. TRANSFERABILITY OF RIGHTS. Rights under the Plan are not transferable by a Participant other than by will or the laws of descent and distribution and are exercisable during a Participant's lifetime only by the Participant. SECTION 8.4. NO EMPLOYMENT RIGHTS. Participation in the Plan shall not give any employee of the Company or any Subsidiary any right to remain employed or, upon termination of employment, any right or interest in the Plan, except as expressly provided herein. SECTION 8.5. COMPLIANCE WITH LAW. No shares of Common Stock shall be issued under the Plan prior to compliance by the Company to the satisfaction of its counsel with any applicable laws. SECTION 8.6. APPROVAL OF PLAN. The effectiveness of this Plan is subject to its approval and ratification on or before December 31, 1992 by the stockholders of the Company. In the event that the Plan is not so approved, all amounts deducted from the Compensation of Participants and credited to each Participant's Stock Purchase Account shall be refunded to each such Participant without interest as soon as administratively practicable. SECTION 8.7. CONSTRUCTION. Article, Section, and paragraph headings have been inserted in the Plan for convenience of reference only and are to be ignored in any construction of the provisions hereof. If any provision of the Plan shall be invalid or unenforceable, the remaining provisions shall nevertheless be valid, enforceable, and fully effective. It is the intent that the Plan shall at all times constitute an

"employee stock purchase plan" within the meaning of Section 423(b) of the Code, and the Plan shall be construed, and interpreted to remain such. The Plan shall be construed, administered, regulated, and governed by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the Commonwealth of Massachusetts. Without limiting the foregoing, all Participants for an Offering Period shall have the same rights and privileges with respect to their rights to acquire Common Stock under the Plan for such period, subject to the express terms hereof.