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.