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EXHIBIT 10.11
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") amends
and restates, effective as of this 8th day of November, 2004, that certain
Employment Agreement made and entered into as of the 24th day of September, 2001
(the "ORIGINAL AGREEMENT") by and between Vertex Pharmaceuticals Incorporated, a
Massachusetts corporation (together with its successors and assigns, the
"COMPANY"), and Kenneth S. Boger (the "EXECUTIVE").
W IT N E S S E T H
WHEREAS, the Company has employed the Executive as the General Counsel
and a Senior Vice President of the Company since the date of the Original
Agreement; and
WHEREAS, the Company and the Executive desire to amend the Original
Agreement to extend certain terms of the Original Agreement beyond the Initial
Term, to add certain provisions regarding grants of restricted stock, which the
Company has begun issuing in addition to stock options since the date of the
Original Agreement, and to make certain other changes to clarify the meaning of
some provisions.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (each individually
a "PARTY", and together the "PARTIES") agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's base salary in accordance
with SECTION 4 below.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CAUSE" shall mean (i) the Executive is convicted of a crime
involving moral turpitude, or (ii) the Executive commits a material breach of
any provision of this Agreement, or (iii) the Executive, in carrying out his
duties, acts or fails to act in a manner which is determined, in the sole
discretion of the Board, to be (A) willful gross neglect or (B) willful gross
misconduct resulting, in either case, in material harm to the Company unless
such act, or failure to act, was believed by the Executive, in good faith, to be
in the best interests of the Company.
(d) "CHANGE OF CONTROL" shall be deemed to have occurred if:
(i) any "person" or "group" as such terms are used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the "ACT"), becomes
a beneficial owner, as such term is used in Rule 13d-3 promulgated under
the Act, of securities of the Company representing more than 50% of the
combined voting power of the outstanding securities of the Company,
having the right to vote in the election of directors (any such owner
being herein referred to as an "ACQUIRING PERSON");
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(ii) a majority of the Company's Board at any time during the Term
of this Agreement consists of individuals other than individuals
nominated or approved by a majority of the Disinterested Directors; or
(iii) all or substantially all the business or assets of the Company
are sold or disposed of, or the Company or a Subsidiary of the Company
combines with another company pursuant to a merger, consolidation, or
other similar transaction, other than (1) a transaction solely for the
purpose of reincorporating the company in a different jurisdiction or
recapitalizing or reclassifying the Company's stock, or (2) a merger or
consolidation in which the shareholders of the Company immediately prior
to such merger or consolidation continue to own at least a majority of
the outstanding voting securities of the Company or the surviving entity
immediately after the merger or consolidation.
(e) "COMMON STOCK" shall mean the common stock of the Company.
(f) "COMPETITIVE ACTIVITY" shall mean engagement directly or indirectly,
individually or through any corporation, partnership, joint venture, trust,
limited liability company or person, as an officer, director, employee, agent,
consultant, partner, proprietor, shareholder or otherwise, in any business
associated with the biopharmaceutical or pharmaceutical industry(other than a
business which is an independent general practice law firm which is so
"associated" only by reason of the business of one or more of its clients),
which, in the sole discretion of the Company, is determined to compete with the
business and/or interests or future interests of the Company, or any of its
affiliates, at any place in which it, or any such affiliate, is then conducting
its business, or at any place where products manufactured or sold by it, or any
such affiliate, are offered for sale, or any place in the United States or any
possessions or protectorates thereof, provided, however, that ownership of five
percent (5%) or less of the outstanding voting securities or equity interests of
any company shall not in itself be deemed to be competition with the Company.
(g) "DISABILITY" or "DISABLED" shall mean a disability as determined
under the Company's long-term disability plan or program in effect at the time
the disability first occurs, or if no such plan or program exists at the time of
disability, then a "disability" as defined under Internal Revenue Code Section
22(e)(3).
(h) "DISINTERESTED DIRECTOR" shall mean any member of the Company's Board
(i) who is not an officer or employee of the Company or any of their
subsidiaries, (ii) who is not an Acquiring Person or an affiliate or associate
of an Acquiring Person or of any such affiliate or associate and (iii) who was a
member of the Company's Board prior to the date of this Agreement or was
recommended for election or elected by a majority of the Disinterested Directors
on the Company's Board at the time of such recommendation or election.
(i) "EFFECTIVE DATE" shall mean the first date written above.
(j) "GOOD REASON" shall mean that, without the Executive's consent, one
or more of the following events occurs during the Term of this Agreement, and
the Executive, of his own initiative, terminates his employment:
(i) The Executive is assigned to any material duties or
responsibilities that are inconsistent, in any significant respect, with
the scope of duties and responsibilities customarily
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associated with the Executive's position and office as described in
SECTION 3, provided that such reassignment of duties or
responsibilities is not for Cause, or due to Executive's Disability,
and is not at the Executive's request;
(ii) The Executive suffers a reduction in the authorities, duties,
and responsibilities customarily associated with his position and office
as described in SECTION 3 on the basis of which Executive makes a
determination in good faith that Executive can no longer carry out such
position or office in the manner contemplated at the time this Agreement
was entered into, provided that such reduction in the authorities, duties
or responsibilities is not for Cause, or due to Executive's Disability,
and is not at the Executive's request;
(iii) The Executive's Base Salary is decreased;
(iv) The principal executive office of the Company, or the
Executive's own office location as assigned to him by the Company at the
Effective Date is relocated to a place thirty-five (35) or more miles
away, without the Executive's agreement; or
(v) Failure of the Company's successor, in the event of a Change of
Control, to assume all obligations and liabilities of this Agreement; or
(vi) The Company shall materially breach any of the terms of this
Agreement.
(k) "Pro-Rata Share of Restricted Stock" for any period shall mean, for
any grant of restricted stock as to which the Company's repurchase right lapses
ratably over a specified period (e.g. in equal annual increments over four
years), that number of shares as to which the Company's repurchase right with
respect to those shares would have lapsed if the Executive's employment by the
Company had continued for such period. For any other shares of restricted stock,
"Pro-Rata Share of Restricted Stock" shall mean, as to any shares of restricted
stock which were granted on the same date and as to which the Company's
repurchase right lapses on the same date, that portion of such shares calculated
by multiplying the number of shares by a fraction, the numerator of which is the
number of days that have passed since the date of grant, plus the number of days
in the period in question, and the denominator of which is the total number of
days from the date of the grant until the date (without regard to any provisions
for earlier vesting upon achievement of a specified goal) on which the Company's
repurchase right would lapse under the terms of the grant.
(l) "SEVERANCE PAY" shall mean an amount equal to the sum of the Base
Salary in effect on the date of termination of Executive's employment, plus the
amount of the Target Bonus for the Executive for the year in which the
Executive's employment is terminated, divided by twelve (12) (each of the 12
shares to constitute a "month's" Severance Pay); PROVIDED, HOWEVER, that in the
event Executive terminates his employment for Good Reason based on a reduction
in Base Salary, then the Base Salary to be used in calculating Severance Pay
shall be the Base Salary in effect immediately prior to such reduction in Base
Salary.
(m) "SUBSIDIARY" shall mean a corporation of which the Company owns 50%
or more of the combined voting power of the outstanding securities having the
right to vote in an election of directors, or any other business entity in which
the Company directly or indirectly has an ownership interest of 50% or more.
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(n) "TARGET BONUS" shall mean a bonus for which the Executive is eligible
on an annual basis, at a level consistent with his title and responsibilities,
under the Company's bonus program then in effect and applicable to the Company's
senior executives generally, in such amount as may be determined in the sole
discretion of the Board.
2. TERM OF EMPLOYMENT.
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, for the period commencing on the Effective Date and
ending on the fourth anniversary of the Effective Date, subject to earlier
termination in accordance with the terms of this Agreement. Thereafter, the Term
of Employment shall automatically renew on each anniversary of the Effective
Date for additional one-year period(s), UNLESS (i) the Company notifies the
Executive in writing in accordance with SECTION 23 below, at least 90 days prior
to the expiration of the then-current Term that it does not want the Term of
Employment to so renew, or (ii) the Executive has notified the Company in
writing in accordance with SECTION 23 below that Executive does not want the
Term of Employment to so renew. The initial four year Term of Employment
hereunder is referred to herein as the "INITIAL TERM", and the Initial Term plus
all additional one-year renewal periods (if any), are collectively referred to
herein as the "TERM OF EMPLOYMENT" or the "TERM OF THE AGREEMENT".
3. POSITION, DUTIES AND RESPONSIBILITIES.
On the Effective Date and continuing for the remainder of the Term of
Employment, the Executive shall be employed as the General Counsel and Senior
Vice President of the Company, and shall be responsible for duties customarily
associated with the position of chief legal officer of the Company. The
Executive shall represent and serve the Company faithfully, conscientiously and
to the best of the Executive's ability and shall promote the interests,
reputation and current and long term plans, objectives and policies of the
Company. The Executive shall devote all of the Executive's time, attention,
knowledge, energy and skills, during normal working hours, and at such other
times as the Executive's duties may reasonably require, to the duties of the
Executive's employment, provided, however, nothing set forth herein shall
prohibit the Executive from engaging in other activities to the extent such
activities do not impair the ability of the Executive to perform his duties and
obligations under this Agreement, nor are contrary to the interests, reputation,
current and long term plans, objectives and policies of the Company. The
Executive, in carrying out his duties under this Agreement, shall report to the
President of the Company.
4. BASE SALARY.
During the Term of this Agreement, the Executive shall be paid an
annualized Base Salary of $320,000, payable in accordance with the regular
payroll practices of the Company. The Base Salary shall be reviewed no less
frequently than annually, and any increase thereto (which shall thereafter be
deemed the Executive's Base Salary) shall be solely within the discretion of the
Board.
5. TARGET BONUS/INCENTIVE COMPENSATION PROGRAM.
a) TARGET BONUS PROGRAM: The Executive shall participate in the Company's
Target Bonus program (and other incentive compensation programs) applicable to
the
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Company's senior executives, as any such programs are established and modified
from time to time by the Board in its sole discretion, and in accordance with
the terms of such program.
b) SIGN-ON CASH BONUS: The Executive shall receive a sign-on cash bonus
in the amount of $70,000 payable to the Executive on the Effective Date. In the
event the Executive terminates this Agreement without "Good Reason" during the
period commencing on the Effective Date and ending on the first anniversary of
the Effective Date, then the Executive shall repay the sign-on cash bonus to the
Company within thirty (30) days of such termination.
c) SIGN-ON STOCK OPTION GRANT: An initial stock option grant shall be
awarded to the Executive pursuant to the terms of the Company's stock option
plan. The initial stock option grant shall be for 120,000 shares of Company
capital stock, the option for which will vest and become exercisable in equal
amounts quarterly over the five (5) year period commencing on the Effective
Date, and as otherwise specified herein and in the Company's stock option plan,
and shall be subject to the other terms and conditions specified in a separate
grant agreement.
6. LONG-TERM INCENTIVE COMPENSATION PROGRAMS.
During the Term of Employment, the Executive shall be eligible to
participate in the Company's long-term incentive compensation programs
applicable to the Company's senior executives, as such programs may be
established and modified from time to time by the Board in its sole discretion.
7. EMPLOYEE BENEFIT PROGRAMS.
During the Term of Employment, the Executive shall be entitled to
participate in all employee welfare and pension benefit plans, programs and/or
arrangements offered by the Company from time to time to its senior executives,
to the same extent and on the same terms applicable to other senior executives.
8. REIMBURSEMENT OF BUSINESS EXPENSES.
During the Term of Employment, the Executive is authorized to incur
reasonable business expenses in carrying out his duties and responsibilities
under this Agreement, and the Company shall reimburse him for all such
reasonable business expenses reasonably incurred in connection with carrying out
the business of the Company, subject to documentation in accordance with the
Company's policy.
9. VACATION.
During the Term of Employment, the Executive shall be entitled to paid
vacation days each calendar year in accordance with the Company's vacation
policy.
10. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH OR DISABILITY. In the event Executive's
employment is terminated due to Executive's death or Disability, the Term of
Employment shall end as of the date of the Executive's death or termination of
employment due to Disability, and Executive, his estate and/or beneficiaries, as
the case may be, shall be entitled to the following:
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(i) Base Salary earned by Executive but not paid through the date of
termination under this SECTION 10(a);
(ii) all long-term incentive compensation awards earned by Executive
but not paid prior to the date of termination under this SECTION 10(a);
(iii) a pro rata Target Bonus award for the year in which
termination under this SECTION 10(a) occurs, as determined in its sole
discretion by the Board of Directors;
(iv) all stock options held by the Executive as of the date of the
termination under this SECTION 10(a) that are not exercisable as of that
date shall be deemed to have been held by the Executive for an additional
12 months, for purposes of vesting and exercise rights, and any
unexercisable stock options which are deemed exercisable as a result
thereof shall remain exercisable as provided in SECTION 10(a)(v) below;
(v) all exercisable stock options held by the Executive as of the
date of termination under this SECTION 10(a) shall remain exercisable
until the earlier of (1) the end of the 1-year period following the date
of termination, or (2) the date the option would otherwise expire;
(vi) any amounts earned, accrued or owing to the Executive but not
yet paid under SECTIONS 6, 7, 8, or 9 above, and in the event of
termination due to Disability, benefits due to Executive under the
Company's then-current disability program;
(vii) six months of Severance Pay, commencing on the first day of
the month following the month in which termination under this SECTION
10(A) occurred; and
(viii) the Company's lapsing repurchase right with respect to shares
of restricted stock held by the Executive shall lapse with respect to the
Pro-Rata Share of Restricted Stock. The "period" referenced in the first
sentence of the definition of "Pro-Rata Share of Restricted Stock," and
the "period in question" referenced in the second sentence of that
definition shall be 12 months.
(b) TERMINATION BY THE COMPANY FOR CAUSE; TERMINATION BY THE EXECUTIVE
WITHOUT GOOD REASON; OR NONRENEWAL OF THE AGREEMENT BY THE EXECUTIVE. In the
event the Company terminates the Executive's employment for Cause, or if
Executive terminates his employment without Good Reason, or if the Executive
gives notice of nonrenewal of this Agreement, the Term of Employment shall end
as of the date specified below, and the Executive shall be entitled to the
following:
(i) Base Salary earned by Executive but not paid through the date of
termination of Executive's employment under this SECTION 10(b);
(ii) any amounts earned, accrued or owing to the Executive but not
yet paid under SECTIONS 6, 7, 8, or 9 above; and
(iii) a pro rata Target Bonus award for the year in which
termination under this SECTION 10(b) occurs, as determined in its sole
discretion by the Board of Directors.
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Termination by Company for Cause shall be effective as of the date
noticed by the Company. Termination by Executive without Good Reason shall be
effective upon 90 days' prior written notice to the Company, and shall not be
deemed a breach of this Agreement. In the event that the Executive gives notice
of non-renewal in accordance with SECTION 2 above, the Term of Employment shall
end on the last day of the then-current Term.
In the event of termination by Executive without Good Reason, the Company
may elect to waive the period of notice, or any portion thereof, and, if the
Company so elects, the Company will pay the Executive his Base Salary for the
notice period or for any remaining portion thereof.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE; TERMINATION BY THE
EXECUTIVE FOR GOOD REASON OR NONRENEWAL OF THE AGREEMENT BY THE COMPANY. If the
Executive's employment is terminated by the Company without Cause (other than
due to death or Disability), is terminated by the Executive for Good Reason, or
if the Company gives notice of nonrenewal of this Agreement, the Executive shall
be entitled to the following:
(i) Base Salary earned by Executive but not paid through the date of
termination of Executive's employment under this SECTION 10(c);
(ii) all long-term incentive compensation awards earned by Executive
but not paid prior to the date of termination of Executive's employment
under this SECTION 10(c);
(iii) Twelve months of Severance Pay, commencing on the first day of
the month following the month during which the Executive's employment is
terminated under this SECTION 10(c); PROVIDED, HOWEVER, that if the
Executive dies while receiving benefits under this Section, all payments
shall immediately cease, but in no event shall the Executive or his
estate or beneficiaries receive less than a total of six months of
Severance Pay.
(iv) a pro rata Target Bonus award for the year in which the
termination of the Executive's employment occurs under this SECTION
10(c), as determined in its sole discretion by the Board of Directors;
(v) all exercisable stock options held by the Executive as of the
date of the termination of his employment under this SECTION 10(c) shall
remain exercisable until the earlier of (1) the end of the one-year
period following the date of the termination of his employment or (2) the
date the stock option would otherwise expire;
(vi) all stock options held by the Executive as of the date of the
termination under this SECTION 10(c) that are not exercisable as of that
date shall be deemed to have been held by the Executive for an additional
18 months, for purposes of vesting and exercise rights, and any stock
options which become exercisable as a result thereof shall remain
exercisable as provided in SECTION 10(c)(v) above;
(vii) any amounts earned, accrued or owing to the Executive but not
yet paid under SECTIONS 6, 7, 8, or 9 above;
(viii) continued participation, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization and life
insurance plans in which Executive
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participated on the date of termination of employment under this SECTION
10(c), until the earlier of:
(A) the end of the period during which Severance Pay is payable
under SECTION 10(D)(III) above; or
(B) the date, or dates, the Executive receives equivalent
coverage and benefits under the plans, programs and/or arrangements
of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage or benefit-by-benefit basis);
PROVIDED, HOWEVER, THAT:
(C) if the Executive is (i) precluded from continuing his
participation in medical, dental, hospitalization and life insurance
plans as provided in SECTION 10(c)(viii) because Executive is not an
employee of the Company, and (ii) not receiving equivalent coverage
and benefits through a subsequent employer, Executive shall be
provided with the after-tax economic equivalent of the benefits
provided under the plan, program or arrangement in which Executive
is unable to participate for the period specified in SECTION
10(c)(viii). The economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by the
Executive in obtaining an equivalent benefit himself on an
individual basis. Payment of such after tax economic equivalent
shall be made quarterly in advance; and
(ix) the Company's lapsing repurchase right with respect to shares
of restricted stock held by the Executive shall lapse with respect to the
Pro-Rata Share of Restricted Stock . The "period" referenced in the first
sentence of the definition of "Pro-Rata Share of Restricted Stock," and
the "period in question" referenced in the second sentence of that
definition shall be 18 months.
Notwithstanding anything to the contrary in this Section 10, the terms of
any Option Agreement or Restricted Stock Agreement shall govern the
acceleration, if any, of vesting or lapsing of the Company's repurchase rights,
as applicable, except to the extent that the terms of this Employment Agreement
are more favorable to the Executive.
If the Company gives notice of nonrenewal in accordance with Section 2
above, the Term of Employment shall end on the last day of the then current
term.
11. MITIGATION.
In the event of any termination of this Agreement, Company is hereby
authorized to offset against any Severance Pay due the Executive during the
period for which Severance Pay is due under SECTION 10 any remuneration earned
by the Executive during that period and attributable to any subsequent
employment or engagement that the Executive may obtain. Executive shall provide
Company written notice of subsequent employment or engagement no later than five
(5) business days after commencement by Executive of such employment or
engagement.
12. CONFIDENTIALITY; ASSIGNMENT OF RIGHTS.
(a) During the Term of Employment and thereafter, the Executive shall not
disclose to anyone or make use of any trade secret or proprietary or
confidential information of the
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Company, including such trade secret or proprietary or confidential information
of any customer of the company or other entity that has provided such
information to the Company, which Executive acquires during the Term of
Employment, including but not limited to records kept in the ordinary course of
business, except (i) as such disclosure or use may be required or appropriate in
connection with his work as an employee of the Company, (ii) when required to do
so by a court of law, by any governmental agency having supervisory authority
over the business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information, or (iii) as to such
confidential information that becomes generally known to the public or trade
without violation of this SECTION 12(a).
(b) The Executive hereby sells, assigns and transfers to the Company all
of his right, title and interest in and to all inventions, discoveries,
improvements and copyrightable subject matter (the "rights") which during the
Term of Employment are made or conceived by him, alone or with others, and which
are within or arise out of any general field of the Company's business or arise
out of any work Executive performs or information Executive receives regarding
the business of the Company while employed by the Company. The Executive shall
fully disclose to the Company as promptly as available all information known or
possessed by him concerning the rights referred to in the preceding sentence,
and upon request by the Company and without any further remuneration in any form
to him by the Company, but at the expense of the Company, execute all
applications for patents and for copyright registration, assignments thereof and
other instruments and do all things which the Company may deem necessary to vest
and maintain in it the entire right, title and interest in and to all such
rights.
13. NONCOMPETITION; NONSOLICITATION.
(a) Notwithstanding any of the provisions herein to the contrary, in the
event that the Executive's employment with the Company is terminated for any
reason other than due to Executive's death or termination by Executive for Good
Reason, the Executive shall not engage in Competitive Activity for a period not
to exceed the lesser of 12 months from the date of termination under such
applicable provision listed above or the maximum length of time allowed under
then current Massachusetts State law. The Company may, at its election, waive
its rights of enforcement under this SECTION 13(a).
(b) The Parties acknowledge that in the event of a breach or threatened
breach of SECTIONS 12 or 13(a), the Company shall not have an adequate remedy at
law. Accordingly, in the event of any breach or threatened breach of SECTIONS 12
OR 13(a), the Company shall be entitled to such equitable and injunctive relief
as may be available to restrain the Executive and any business, firm,
partnership, individual, corporation or entity participating in the breach or
threatened breach from the violation of the provisions of SECTIONS 12 or 13(a)
above. Nothing in this Agreement shall be construed as prohibiting the Company
from pursuing any other remedies available at law or in equity for breach or
threatened breach of SECTIONS 12 or 13(a) including the recovery of damages.
14. ASSIGNABILITY; BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that
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such rights or obligations may be assigned or transferred pursuant to a merger
or consolidation in which the Company is not the continuing entity, or the sale
or liquidation of all or substantially all of the assets of the Company;
PROVIDED, HOWEVER, that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law.
15. REPRESENTATIONS.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. The Executive represents and warrants
that no agreement exists between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
16. ENTIRE AGREEMENT.
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
17. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
18. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
19. SURVIVORSHIP.
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment to the extent necessary to
the intended preservation of such rights and obligations.
20. BENEFICIARIES/REFERENCES.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's death
or a judicial determination of his incompetence, reference in this
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Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
21. GOVERNING LAW/JURISDICTION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts without reference
to principles of conflict of laws.
22. RESOLUTION OF DISPUTES.
Any disputes arising under or in connection with this Agreement may, at
the election of the Executive or the Company, be resolved by binding
arbitration, to be held in Massachusetts in accordance with the Rules and
Procedures of the American Arbitration Association. If arbitration is elected,
the Executive and the Company shall mutually select the arbitrator. If the
Executive and the Company cannot agree on the selection of an arbitrator, each
Party shall select an arbitrator and the two arbitrators shall select a third
arbitrator, and the three arbitrators shall form an arbitration panel which
shall resolve the dispute by majority vote. Judgment upon the award rendered by
the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof. Costs of the arbitrator or arbitrators and other similar costs in
connection with an arbitration shall be shared equally by the Parties; all other
costs, such as attorneys' fees incurred by each Party, shall be borne by the
Party incurring such costs.
23. NOTICES.
All notices that are required or permitted hereunder shall be in writing
and sufficient if delivered personally, sent by facsimile (and promptly
confirmed by personal delivery, registered or certified mail or overnight
courier), sent by nationally-recognized overnight courier or sent by registered
or certified mail, postage prepaid, addressed as follows:
If to the Company: Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA 02139-4242
Attn: Chairman of the Board
with a copy to:
Vice President of HR
If to the Executive: Kenneth S. Boger
200 Church Street Rear
Newton, MA 02458
Any such notice shall be deemed to have been given: (a) when delivered if
personally delivered or sent by facsimile on a business day: (b) on the business
day after dispatch if sent by nationally-recognized overnight courier; and/or
(c) on the fifth business day following the date of mailing if sent by mail.
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24. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
25. COUNTERPARTS.
This Agreement may be executed in two or more counterparts.
26. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
If any payment or benefit received by Executive pursuant to this
Agreement, but determined without regard to any additional payments required
under this Agreement, would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest
or penalties are incurred by the Executive with respect to such excise tax, the
Company will pay to Executive an additional amount in cash (the "Additional
Amount") equal to the amount necessary to cause the aggregate payments and
benefits received by Executive, including such Additional Amount (net of all
federal, state, and local income and payroll taxes and all taxes payable as a
result of the application of Sections 280G and 4999 of the Code and including
any interest and penalties with respect to such taxes) to be equal to the
aggregate payments and benefits Executive would have received, excluding such
Additional Amount (net of all federal, state and local income and payroll taxes)
as if Sections 280G and 4999 of the Code (and any successor provisions thereto)
had not been enacted into law.
If the Company and the Executive do not agree on the calculation of the
amount of any such Additional Amount, Executive may submit to the Company a
written opinion (the "Opinion") of a nationally recognized accounting firm,
employment consulting firm, or law firm selected by Executive setting forth a
statement and a calculation of the Additional Amount. The determination of such
firm concerning the extent of the Additional Amount (which determination need
not be free from doubt), shall be final and binding on both Executive and the
Company. The Company will pay to Executive the Additional Amount not later than
ten (10) business days after such firm has rendered the Opinion. The Company
agrees to pay the reasonable fees and expenses of such firm in preparing and
rendering the Opinion.
If, following the payment to Executive of the Additional Amount,
Executive's liability for the excise tax imposed by Section 4999 of the Code on
the payments and benefits received by Executive is finally determined (at such
time as the Internal Revenue Service is unable to make any further adjustment to
the amount of such liability) to be less than the amount thereof set forth in
the Opinion, the Executive shall promptly file for a refund with respect
thereof, and the Executive shall promptly pay to the Company the amount of such
refund when received (together with any interest paid or credited thereon after
taxes applicable thereto). If, following the payment to Executive of the
Additional Amount, Executive's liability for the excise tax imposed by Section
4999 of the Code on the payments and benefits received by Executive is finally
determined (at such time as the Internal Revenue Service is unable to make any
further adjustment to the amount of such liability) to be more than the amount
thereof set forth in the Opinion and the Executive thereafter is required to
make a further payment of any such excise
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tax, the Company shall promptly pay to or for the benefit of the Executive an
additional Additional Amount in respect of such underpayment.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
VERTEX PHARMACEUTICALS INCORPORATED
/s/ VICKI L. SATO
-----------------------------------------
Vicki L. Sato, President
/s/ KENNETH S. BOGER
-----------------------------------------
Kenneth S. Boger