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EXHIBIT 10.13
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 26th day of October, 2001
(the "ORIGINAL AGREEMENT") by and between Vertex Pharmaceuticals Incorporated, a
Massachusetts corporation (together with its successors and assigns, the
"COMPANY"), and Ian F. Smith (the "EXECUTIVE").
W I T N E S S E T H
WHEREAS, the Company has employed the Executive as the Chief Financial
Officer 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 (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 such 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 51% or more 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");
(ii) a majority of the Company's Board during any 12-month period,
is replaced at a Company Board meeting or a Company shareholders'
meeting, with individuals other than individuals nominated or approved by
a majority of the Disinterested Directors;
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(iii) all or substantially all the business of the Company is
disposed of pursuant to a merger, consolidation or other transaction
(other than a merger, consolidation or other transaction with a company
of which 50% or more of the combined voting power of the outstanding
securities having a right to vote at the election of directors is owned,
directly or indirectly, by the Company both before and immediately after
the merger, consolidation or other transaction) in which the Company is
not the surviving corporation or is materially or completely liquidated;
or
(iv) the Company combines with another company and is the surviving
corporation (other than a merger, consolidation or other transaction with
a company of which 50% or more of the combined voting power of the
outstanding securities having a right to vote at the election of
directors is owned, directly or indirectly, by the Company both before
and immediately after the merger, consolidation or other transaction)
but, immediately after the combination, the shareholders of the Company
hold, directly or indirectly, less than 50% of the total outstanding
securities of the combined company having the right to vote in the
election of directors.
(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, 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
possession or protectorates thereof, provided, however, that ownership of five
percent (5%) or less of the outstanding stock of any company whose shares trade
on any national exchange or market shall not 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
then on the Company's Board.
(i) "EFFECTIVE DATE" shall mean October 26, 2001.
(j) "GOOD REASON" shall mean that, without the Executive's consent, one
or more of the following events occurs and the Executive, of his own initiative,
terminates his employment:
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(i) The Executive is assigned to any duties or responsibilities that
are inconsistent, in any significant respect, with the scope of duties
and responsibilities currently performed in his positions and offices as
described in SECTION 3, provided that such reassignment of duties or
responsibilities is not due to the Executive's Disability or the
Executive's performance, nor is at the Executive's request;
(ii) The Executive suffers a reduction in the authorities, duties,
and responsibilities associated with his positions and offices as
described in SECTION 3 on the basis of which the Executive makes a
determination in good faith that the Executive can no longer carry out
such positions or offices in the manner contemplated at the time this
Agreement was entered into, provided that such reassignment of duties or
responsibilities is not due to the Executive's Disability or the
Executive's performance, nor is at the Executive's request;
(iii) The Executive's Base Salary is decreased;
(iv) The Executive's own office location as assigned to him by the
Company is relocated thirty-five (35) or more miles from Cambridge,
Massachusetts; or
(v) Failure of any entity, in the event of a Change of Control to
assume all obligations and liabilities of this Agreement.
(k) "PRO-RATA SHARE OF RESTRICTED STOCK" shall mean 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 the 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 the 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) "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.
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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 third anniversary of the Effective Date, subject to earlier
termination in accordance with the terms of this Agreement. Absent such earlier
termination, 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 anniversary of the Effective Date 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 the
Executive does not want the Term of employment to so renew.
3. POSITION, DUTIES AND RESPONSIBILITIES.
On the Effective Date and continuing for the remainder of the Term of
employment, as extended or renewed, the Executive shall be employed as the Chief
Financial Officer of the Company, and shall be responsible for duties reasonably
associated with such position. 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.
4. BASE SALARY.
During the Term of this Agreement, the Executive shall be paid an
annualized Base Salary of $300,000, 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 (or other incentive compensation program) applicable to
executives, as 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 $150,000. Two-thirds ($100,000) of the sign-on cash bonus will
be paid to the Executive on the Effective Date, and the remaining one-third
($50,000) which is hereby deemed accrued and owed to the Executive will be paid
to the Executive upon the one-year anniversary of the Effective Date, regardless
of whether the executive is employed by the Company on the one year anniversary
of the effective date; PROVIDED, HOWEVER, that in the event the Executive
terminates this Agreement without "Good Reason" during the period commencing on
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the Effective Date and ending on the first anniversary of the Effective Date,
then the Executive shall repay to the Company within thirty (30) days of such
termination the sign-on cash bonus previously paid to the Executive.
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 110,000 shares of Company
capital stock and shall be subject to the 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 applicable long-term incentive compensation
programs, as 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 so 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 the Executive's
employment is terminated due to the 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 the Executive shall be entitled to the
following:
(i) Base Salary earned by the Executive but not paid through the
date of termination under this SECTION 10(a);
(ii) all long-term incentive compensation awards earned by the
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;
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(iv) all stock options held by the Executive as of the date of the
termination under this SECTION 10(a) that are not exercisable or vested
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 until the earlier of (1) the end of the
of the 90-day period following the date of termination, or (2) the date
the stock option would otherwise expire;
(v) all exercisable and/or vested 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 5(b), 6, 7, 8, or 9 above, and in the event of
termination due to Disability, benefits due to the Executive under the
Company's then-current disability program;
(vii) six month's 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
"period in question" referenced in the second sentence of that definition
shall be 12 months.
Any and all payments due under SUBSECTIONS (i), (ii), (iii) and (vi) of
this SECTION 10(a) shall be paid, in the case of the Executive's death, to his
estate and/or beneficiaries within 60 days of his death and, in the case of
Disability, to the Executive within 60 days of his termination due to
Disability.
(b) TERMINATION BY THE COMPANY FOR CAUSE; TERMINATION BY THE EXECUTIVE
WITHOUT GOOD REASON; OR NONRENEWAL OF AGREEMENT BY THE EXECUTIVE. In the event
the Company terminates the Executive's employment for Cause, or if the 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 the Executive but not paid through the
date of termination of the 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;
(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;
(iv) any amount not yet paid under SECTION 5(b); PROVIDED, HOWEVER,
that payments under SECTION 5(b) shall not be made by the Company in the
event the Executive terminates this Agreement without "Good Cause" during
the period
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commencing on the Effective Date and ending on the first anniversary of
the Effective Date; and
(v) the Executive shall retain any rights associated with his stock
options consistent with his grant agreement and the applicable stock
option plan.
Termination by Company for Cause shall be effective as of the date
noticed by the Company. Termination by the 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 the 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.
Any and all payments due under this SECTION 10(b) shall be paid to the
Executive within 60 days of the date his employment terminates.
(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 the Executive but not paid through the
date of termination of the Executive's employment under this SECTION
10(c);
(ii) all long-term incentive compensation awards earned by the
Executive but not paid prior to the date of termination of the
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) 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, with the period referenced in the
first sentence of the definition of "Pro-Rata Share of Restricted Stock"
and "period in question" referenced in the second sentence of that
definition being 18 months), PROVIDED, HOWEVER, that if such termination
(1) is by
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the Company without Cause or by the Executive for Good Reason, and (2)
takes place within (90) days prior to a Change in Control or within
twelve (12) months after a Change in Control, then the Company's lapsing
repurchase right with respect to all shares of restricted stock held by
the Executive shall lapse;
(vi) all exercisable and/or vested 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 90-day period following the date of the termination of his
employment or (2) the date the stock option would otherwise expire;
(vii) all stock options held by the Executive as of the date of the
termination of his employment 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 and any stock options which become
exercisable as a result thereof shall remain vested and exercisable until
the earlier of (1) the end of the 90-day period following the date of the
termination or (2) the date the stock option would otherwise expire;
PROVIDED, HOWEVER, that if such termination (1) is by the Company without
Cause or by the Executive for Good Reason, and (2) takes place within
(90) days prior to a Change in Control or within twelve (12) months after
a Change in Control, then all unexercisable and/or unvested stock options
held by the Executive as of the date of the termination under this
SECTION 10(c)(vii) shall be deemed exercisable, and any unexercisable
and/or unvested stock options which become exercisable as a result
thereof shall remain exercisable until the earlier of (a) the end of the
90-day period following the date of the termination or (b) the date the
stock option would otherwise expire;
(viii) any amounts earned, accrued or owing to the Executive but not
yet paid under SECTIONS 5(b), 6, 7, 8, or 9 above; and
(ix) continued participation, as if the Executive were still an
employee, in the Company's medical, dental, hospitalization and life
insurance plans in which the Executive participated on the date of
termination of employment, until the earlier of:
(A) exhaustion of Severance Pay; 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)(ix) because the Executive is not
an employee of the Company, and (ii) not receiving equivalent
coverage and benefits through a subsequent employer, the Executive
shall be provided with the after-tax economic equivalent of the
benefits provided under the plan, program or arrangement in which
the Executive is unable to participate for the period specified in
SECTION 10(c)(ix). The economic equivalent of any benefit foregone
shall be deemed to be the lowest cost that would be incurred by the
Executive in obtaining
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such benefit himself on an individual basis. Payment of such after
tax economic equivalent shall be made quarterly in advance.
Any and all payments due under subsections (i), (ii), (iv) and (viii) of
this SECTION 10(C) shall be paid to the Executive within 60 days of the date his
employment terminates.
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.
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.
11. MITIGATION.
In the event of any termination of this Agreement, the Executive shall be
obligated to seek other employment, and the Company is hereby authorized to
offset against Severance Pay due the Executive under SECTION 10 any Base Salary
attributable to any subsequent employment or engagement that the Executive may
obtain. The Executive shall provide Company written notice of subsequent
employment or engagement no later than five (5) business days after commencement
by the Executive of such employment or engagement.
12. CONFIDENTIALITY; ASSIGNMENT OF RIGHTS.
(a) During the Term of employment, as extended or renewed, and
thereafter, the Executive shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of the 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
the Executive acquires during the Term of employment, as extended or renewed,
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 the Executive performs or information the 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
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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 the Executive's death or termination by the 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 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 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.
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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 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
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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:
If to the Executive: At the Participant's home address then
listed in the Company's payroll records
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.
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 the 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 the Executive an additional amount in cash (the "Additional
Amount") equal to the amount necessary to cause the aggregate payments and
benefits received by the 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 the Executive would have received, excluding
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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.
Following the termination of the Executive's employment, the 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
the 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 the Executive and the Company. The Company will pay to the
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 the Executive of the Additional Amount, the
Executive's liability for the excise tax imposed by Section 4999 of the Code on
the payments and benefits received by the 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 the
Executive of the Additional Amount, the Executive's liability for the excise tax
imposed by Section 4999 of the Code on the payments and benefits received by the
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 tax, the
Company shall promptly pay to or for the benefit of the Executive an 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/ JOSHUA S. BOGER
---------------------------------------
Joshua S. Boger
Chairman and Chief Executive Officer
/s/ IAN F. SMITH
---------------------------------------
Ian F. Smith
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