This Employee Retention Agreement involves
Title: EMPLOYMENT AGREEMENT
Governing Law: Massachusetts Date: 8/11/2008
Industry: Biotechnology and Drugs Sector: Healthcare
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AGREEMENT, made and entered into as of June 18, 2008 by and between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (together with its successors and assigns, the " Company "), and Freda Lewis-Hall (the " Executive ").
WHEREAS, the Company has offered to employ the Executive as the Executive Vice President, Medicines Development;
WHEREAS, the Company and the Executive desire to enter into an employment agreement, which shall set forth the terms of such employment (this " Agreement "); and
WHEREAS, the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which mutually is acknowledged, the Company and the Executive (each individually a " Party ", and together the " Parties ") agree as follows:
" Base Salary " shall mean the Executive's base salary in accordance with Section 4 below.
" Board " shall mean the Board of Directors of the Company.
" Cause " shall mean:
the Executive is convicted of a crime involving moral turpitude;
the Executive's willful refusal or failure to follow a lawful directive or instruction of the Company's Board of Directors or the individual(s) to whom the Executive reports, provided that the Company shall have given the Executive prior written notice of the directive(s) or instruction(s) that the Executive failed to follow, and provided , further , that the Company shall have given the Executive, in good faith, 30 days to correct such failure and further provided that if the Executive corrects such failure, any termination of the Executive's employment on account of such failure shall not be treated for purposes of this Agreement as a termination of employment for "Cause;"
the Executive violates any of the Company's policies made known to the Executive regarding confidentiality, securities trading or insider information; or
the Executive, in carrying out the Executive's duties, commits (A) willful gross negligence 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.
" Change of Control " shall have the meaning set forth in the Change of Control Agreement.
" Change of Control Agreement " shall mean the Change of Control letter agreement between the Company and the Executive of even date herewith.
" Code " shall mean the Internal Revenue Code of 1986, as amended.
" Common Stock " shall mean the common stock of the Company.
" 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 Section 22(e)(3) of the Code.
" Effective Date " shall mean June 18, 2008.
" Good Reason " shall mean that, without the Executive's consent, one or more of the following events occurs, and the Executive, at the Executive's own initiative provides notice of termination within 30 days after such event:
the Executive's Base Salary is decreased or the target levels under the Company's target bonus program, or equity compensation program are reduced, unless each or any such reduction is part of an across-the-board proportionate reduction in the salaries, target bonuses, or target equity compensation, as applicable, provided, however, that it is expressly understood that payments or awards under any such program in amounts lower than the target amounts in accordance with any such program shall not constitute "Good Reason;"
the office to which the Executive is assigned is relocated to a place 35 or more miles away and such relocation is not at the Executive's request or with the Executive's prior agreement (and other than, for Executives assigned to the Company's principal executive offices, in connection with a change in location of the Company's principal executive offices); or
the Executive's duties are materially diminished to an extent that results in either (A) the Executive no longer being an "officer," as such term is defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934; or (B) the Executive ceases to be a member of the executive management team of the Company.
" Severance Payment " 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; provided, however, that if the Executive terminates the Executive's employment for Good Reason based on a reduction in Base Salary, then the Base Salary to be used in calculating the Severance Payment shall be the Base Salary in effect immediately prior to such reduction in Base Salary.
" Target Bonus " shall mean the target cash bonus for which the Executive is eligible on an annual basis, at a level consistent with the Executive's title and responsibilities, under the Company's bonus program then in effect and applicable to the Company's senior executives generally.
TERM OF EMPLOYMENT.
The Company hereby employs the Executive, and the Executive hereby accepts such employment, commencing on the Effective Date and continuing until termination in accordance with the terms of this Agreement. The period during which the Executive is employed hereunder is referred to in this Agreement as the " term of employment. "
POSITION, DUTIES AND RESPONSIBILITIES.
On the Effective Date, the Executive shall be employed as Executive Vice President, Medicines Development.
4. BASE SALARY.
The Executive's initial annualized Base Salary shall be $450,000, payable in accordance with the regular payroll practices of the Company. The Base Salary shall be reviewed no less frequently than annually, and any changes thereto (which shall thereafter be deemed the Executive's Base Salary) shall be solely within the discretion of the Board.
TARGET BONUS/INCENTIVE COMPENSATION PROGRAM.
(a) Target Bonus Program: The Executive shall participate in the Company's Target Bonus program (and other cash incentive compensation programs) applicable to the 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 $250,000 payable (with appropriate deductions as required by law) to the Executive at the first regular pay date applicable to the Executive after the Effective Date. If the Executive terminates this Agreement without Good Reason, and other than as a result of death or Disability, during the period commencing on the Effective Date and ending on the first anniversary of the Effective Date, the Executive shall repay the sign-on cash bonus to the Company within 30 days of such termination.
(c) Sign-On Stock Option Grant: The Executive shall be granted a stock option under the Company's 2006 Stock and Option Plan (the " Stock Plan "), to purchase 100,000 shares of the Company's common stock at a price equal to the Fair Market Value of Vertex's shares, as defined in the Stock Plan, on the Effective Date. The option will vest and become exercisable as to equal numbers of shares of stock quarterly in arrears over the four year period commencing on the Effective Date, and as otherwise specified herein and in the Stock Plan, and shall be subject to the other terms and conditions specified in a separate grant agreement.
(d) Sign-On Restricted Stock Grants:
The Executive will purchase, in accordance with the terms of a Restricted Stock Agreement executed and delivered to the Company by the Executive on the Effective Date (the " Grant Date "), 35,000 shares of the Company's Common Stock, at a purchase price per share of $0.01. The Company will retain the right to repurchase these shares at $0.01 per share purchase price should the Executive experience a termination of employment, as such term is used in the Stock Plan, but this repurchase right will lapse as to one quarter of the total number of shares on each of the first four anniversaries of the Grant Date, and as otherwise specified herein (including in Section 10(c)(v)) and in the Stock Plan, and shall be subject to the other terms and conditions specified in a separate grant agreement.
The Executive will purchase, in accordance with the terms of a Restricted Stock Agreement executed and delivered to the Company on the Grant Date, 10,000 shares of the Company's Common Stock, at a purchase price per share of $0.01. The Company will retain the right to repurchase these shares at a purchase price of $0.01 per share, should the Executive experience a termination of employment, as such term is used in the Stock Plan, but this repurchase right shall lapse as to equal number of shares of stock quarterly in arrears over the two (2) year period commencing on the Grant Date, and as otherwise specified herein and in the Stock Plan (including in Section 10(c)(v)) and shall be subject to the other terms and conditions specified in a separate grant agreement.
INCENTIVE COMPENSATION PROGRAMS.
During the term of employment, the Executive shall be eligible to participate in the Company's 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.
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 to its senior executives, as such plans, programs and arrangements may be amended from time to time, to the same extent and on the same terms applicable to other senior executives. Exhibit A to this Agreement lists and describes the Company's employee benefit plans as in effect on the date of this Agreement. Nothing in this section shall preclude the Company from amending or terminating any of its employee benefit plans, programs or arrangements.
During the term of employment, the Executive shall be entitled to not less than four weeks paid vacation days each calendar year in accordance with the Company's vacation policy then in effect.
The Executive will be reimbursed for relocation costs in accordance with the Company's relocation reimbursement policy currently in effect, except that the Executive shall be eligible for reimbursement of temporary living expenses for a period not to exceed six (6) months.
TERMINATION OF EMPLOYMENT.
(a) Termination in Connection with a Change of Control. To the extent the Executive is entitled, in connection with the Executive's termination of employment, to severance o