and his offices as President and Chief Executive Officer of the Company and shall resign from any other positions, offices and directorships he may have with the Company or any of its Immediate Affiliates.

(b)                                  During the term hereof, the Executive shall be employed by the Company on a full-time basis and shall perform the duties and responsibilities of his positions and offices and such other duties and responsibilities on behalf of the Company and its Affiliates, reasonably related to one or more of his positions and offices, as may be assigned to him from time to time by the Board or a designated committee thereof.

(c)                                   During the term hereof, the Executive shall devote his full business time, except as otherwise provided in this Section 3(c), and his best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company and its Affiliates and to the discharge of his duties and responsibilities hereunder.  The Executive may engage in the passive management of his personal and family investments and in charitable and community activities; provided that such activities, and any memberships on board of directors or other governing boards other than those Company and its Immediate Affiliates authorized by the Board, do not, individually or in the aggregate, give rise to a conflict of interest or otherwise materially interfere with his performance of his duties and responsibilities to the Company and its Affiliates under this Agreement or the time required for their performance or breach his obligations set forth in the agreement between the Company and the Executive entitled “Employee Non-Disclosure, Non-Competition and Inventions Agreement” of even date with this Agreement (the “ Employee Agreement ”).  The Executive represents and warrants that, as of the effective date of this Agreement, first written above, he has no existing obligations and has not undertaken any future obligations, except for duties as member and chairman of the board of directors of Shire plc (the “ Shire Board ”).  The Company acknowledges that the Executive has disclosed to the Board the likely time required by the Executive to fulfill his obligations to the Shire Board (the “ Shire Obligations ”) and the Company agrees that on this basis the Shire Obligations will not substantially interfere with the performance of the Executive’s duties and responsibilities to the Company and its Affiliates or the time required for their performance and further agrees that the Executive’s membership on, and position as chairman of, the Shire Board do not in themselves constitute a breach of the Employee Agreement.  It is agreed that, exclusive of his Shire Obligations, the Executive shall not accept membership on any board of directors or other governing board of any Person or engage in any other business activity without the prior express written approval of the Board or a designated committee thereof.

(d)                                  The Company agrees to propose to the shareholders of the Company at each appropriate Annual Meeting of such shareholders during the term hereof the election or reelection of the Executive as a member of the Board.

4.                                        Compensation and Benefits .  As compensation for all services performed by the Executive under and during the term hereof and subject to performance of the Executive’s duties and responsibilities and of his obligations to the Company and its Affiliates, pursuant to this Agreement, the Employee Agreement or otherwise:

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(a)                                   Base Salary .  During the term hereof, the Company shall pay the Executive a base salary at the rate of One Million, One Hundred Thousand Dollars ($1,100,000) per year, payable in accordance with the normal payroll practices of the Company for its executives and subject to increase from time to time in the sole discretion of the Board or a designated committee thereof.  Such base salary, as from time to time increased, is hereafter referred to as the “ Base Salary .”

(b)                                  Performance Bonus Compensation .  For each fiscal year completed during the term hereof, the Executive shall have the opportunity to earn an annual bonus (“ Annual Bonus ”) under the executive performance bonus plan then applicable to the Company’s executives generally, as in effect from time to time, based on target objectives determined by the Board or a designated committee thereof after consultation with the Executive.  The Executive’s target bonus opportunity (the “ Target Bonus ”) under the executive performance bonus plan shall be One Hundred and Fifteen Percent (115%) of the Base Salary, with the actual amount of each Annual Bonus being determined in the reasonable discretion of the Board or its designated committee based on the performance of the Executive and the Company against the target objectives. Except as otherwise provided in accordance with the applicable provision of Section 5 hereof in the event of termination of the Executive’s employment hereunder, the Executive, in order to be eligible to earn an Annual Bonus for any fiscal year occurring during the term hereof, must be employed on the date payment of annual bonuses for that fiscal year is made to Company executives generally, which shall generally occur not later than two and one-half months following the close of the fiscal year for which the Annual Bonus was earned.

(c)                                   Equity Participation .  The Board shall grant the Executive equity in accordance with the following:

(i)                                      On the Commencement Date, the Board shall grant the Executive a non-qualified option to purchase 549,000 shares of the common stock of the Company, with an exercise price equal to the fair market value on the date of grant (the “ Option ”), subject to the Executive’s signing of the agreement captioned Vertex Pharmaceuticals Incorporated Amended and Restated 2006 Stock and Option Plan Option Grant” (the “ Option Agreement ”) under which the Option is granted.  The shares subject to the Option shall vest quarterly during the four (4) year period following the date of grant in accordance with the terms and conditions of the plan captioned “Vertex Pharmaceuticals Incorporated Amended and Restated 2006 Stock and Option Plan” (the “ Stock and Option Plan ”) and the Option Agreement, provided that the Executive is employed by the Company on each vesting date.  Except as otherwise provided in this Agreement, the Option shall be subject to all terms and conditions of the Stock and Option Plan and the Option Agreement and to such Company securities trading policies generally applicable to Company executives and the equity granted to them, as in effect from time to time.

(ii)                                   On the Commencement Date, the Board shall grant the Executive 134,129 shares of restricted stock (the “ Restricted Stock ”), subject to the Executive’s signing of the agreement captioned “Vertex Pharmaceuticals Incorporated 2006 Stock and Option Plan Restricted Stock Award”

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(the “ Award Agreement ”)  under which the Restricted Stock is granted.  The Restricted Stock shall vest in its entirety on the third (3rd) anniversary of the date of grant, provided that the Executive is employed by the Company hereunder on the vesting date.  Except as otherwise provided in this Agreement, the Restricted Stock shall be subject to all terms and conditions of the Stock and Option Plan and the Award  Agreement and to such Company securities trading policies generally applicable to Company executives and the equity granted to them, as in effect from time to time.

(iii)                                The Executive shall be eligible for additional grants of equity compensation (by which is meant stock options, restricted stock and restricted stock units, if any, granted by the Company to employees) during the term hereof only to the extent expressly awarded to him individually in the discretion of the Board or its delegates.

(iv)                               In the event that (A) the Executive’s employment terminates on May 22, 2012 as a result of the expiration of the term hereof and without the Company having made an offer to the Executive to extend or renew this Agreement at least through February 5, 2013 or to otherwise continue his employment at least through February 5, 2013 on terms that in the aggregate are not materially less favorable to the Executive than those in effect on the May 22, 2012; or (B) the Executive’s employment with the Company terminates after May 22, 2012 but prior to February 5, 2013, (I) while he is employed by the Company on an at-will basis, and such termination is not initiated by the Company for “cause” as defined in section 12 of the Stock and Option Plan and is not the result of a voluntary quit by the Executive or (II) while he is employed under an extension or renewal of this Agreement or under another contract of employment with the Company; and such termination is not by the Company for cause or by the Executive without good reason (as “cause” and “good reason” are defined in the applicable contract of employment) and does not entitle the Executive to accelerated vesting of those shares subject to the Option that are then unvested; and provided that the Executive signs and returns the release of claims provided him by the Company within the time limitations specified therein, which release of claims shall be in the form set forth in Exhibit A hereto, mutatis mutandis, and continues to meet his obligations under the Employee Agreement in accordance with its terms; then, that portion of the Option that remains unvested on the Date of Termination shall vest and become exercisable on the later of the effective date of the release of claims and the date the release of claims, signed by the Executive, is received by the Company and shall remain exercisable until the end of the three (3) month period following the Date of Termination.   Notwithstanding the foregoing, however, a release of claims shall not be required in the event of termination resulting from the death of the Executive and, in that event, the unvested shares subject to the Option shall vest on the next business day following the date notice of the Executive’s death is received by the Company and shall remain exercisable until the end of the three (3) month period following the Date of Termination.  For the avoidance of doubt, the exercise period provided under clause (y) is that period between the date on which the Release of Claims has both been received by the Company and taken effect and the date which is the last day of the three (3) month period immediately following the

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Date of Termination.  Notwithstanding this Section 4(c)(iv), however, the terms of the Stock and Option Plan or the Option Agreement shall govern the acceleration of vesting hereunder except to the extent that the terms of this Agreement are more favorable to the Executive.

(d)                                  Vacations .  During the term hereof, the Executive shall be entitled to earn vacation at the rate of  four (4) weeks per year, to be taken at such times and intervals as shall be determined by the Executive, subject to the reasonable business needs of the Company and its Immediate Affiliates.  Vacation shall otherwise be governed by the policies of the Company as applicable to its executives generally, as in effect from time to time.

(e)                                   Other Benefits .  During the term hereof, the Executive shall be entitled to participate in any and all Employee Benefit Plans from time to time in effect for executives of the Company generally, except to the extent any such Employee Benefit Plan is in a category of benefit provided to the Executive under this Agreement ( e.g ., a severance pay plan) or otherwise provided the Executive by the Company or any of its Immediate Affiliates; provided, however, that, if a benefit provided the Executive other than under this Agreement disqualifies the Executive from participating in an Employee Benefit Plan for which he would otherwise be eligible, the Company will provide the Executive notice of such disqualification.  Such participation shall be subject to the terms of the applicable plan documents and generally applicable Company policies.  For purposes of this Agreement, “ Employee Benefit Plan ” shall have the meaning ascribed to such term in Section 3(3) of ERISA, as amended from time to time.

(f)                                     Business Expenses .

(i)                                      The Company shall pay or reimburse the Executive for all reasonable and customary business expenses incurred or paid by the Executive in the performance of his duties and responsibilities hereunder, subject to any maximum annual limit and other restrictions on such expenses set by the Board as applicable to executives of the Company generally and to such reasonable substantiation and documentation as may be specified by the Company from time to time.  If the Executive elects to pilot his own airplane during business travel, he shall be entitled to reimbursement of actual expenses not to exceed the cost of a first class flight and with the understanding and agreement that no director or employee of the Company or any of its Affiliates may accompany him on his personal airplane for business purposes.

(ii)                                   Any reimbursement of expenses that would constitute nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code and the regulations promulgated thereunder, each as amended, (“ Section 409A ”) shall be subject to the following additional rules:  (A) no reimbursement of any such expense shall affect the Executive’s right to reimbursement of any other such expense in any other taxable year; (B) reimbursement of the expense shall be made, if at all, not later than the end of the calendar year following the calendar year in which the expense was incurred; and (C) the right to reimbursement shall not be subject to liquidation or exchange for any other benefit.

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(g)                                  Relocation Expenses .  The Company shall reimburse the reasonable relocation expenses incurred by the Executive in relocating to the greater Cambridge, Massachusetts area, in accordance with the terms and conditions of the Vertex Pharmaceuticals Incorporated Relocation Program, Level 3, as in effect at the time such expenses are incurred, except that the Executive shall not be eligible for reimbursement of temporary housing expenses and will not be eligible for benefits under the relocation policy that are redundant or inconsistent with the benefits provided him under Section 4(h) hereof.

(h)                                  Assistance with Sale of Residence .  In connection with the Executive’s relocation to the greater Cambridge, Massachusetts area, the Company will engage Coldwell Banker and pay its fees for the Coldwell Banker Residential Brokerage Relocation Services Home Sale Programs (the “ Programs ”), as described herein, for the sale of the Executive’s Pennsylvania residence  under terms of those Programs, except as revised herein  with respect to the length of time provided the Executive to make his election to sell his Pennsylvania residence under the Programs as provided herein.  On the Commencement Date, the Executive will be eligible to concurrently participate in the following:  (1)  the Programs’ “Appraised Value Program” and “Amended Value Sale”, provided, however, the Executive shall have  up to six months to accept the appraised offer, which shall be conducted as soon as administratively practicable after the Executive starts participating in the Programs; and (2) the Programs’ “Buyer Value Option” for a period of up to six months or, if sooner, until the Executive either sells his Pennsylvania residence to a third party for an offer that is higher than the appraised value, provided, however that a guaranteed offer to purchase and appraisals will be made pursuant to the “Appraised Value Program”.  The Executive shall have six months to make his election to sell his Pennsylvania residence  under the Appraised Value Program or the Amended Value Sale Program, whichever is applicable.

(i)                                      Reimbursement of Legal Fees .  The Company shall reimburse the Executive’s legal fees and expenses incurred in the negotiation of the terms and conditions of his employment with the Company under this Agreement and the Employee Agreement, to a maximum total reimbursement not to exceed Twenty Thousand Dollars ($20,000), subject to such reasonable substantiation, documentation and submission deadlines as may be specified by the Company.

5.                                        Termination of Employment and Severance Benefits .  Notwithstanding the provisions of Section 2 hereof, the Executive’s employment hereunder shall terminate prior to the expiration of the term hereof under the following circumstances:

(a)                                   Death .  In the event of the Executive’s death during the term hereof, the Executive’s employment hereunder shall immediately and automatically terminate on that date. In such event, following the “ Date of Termination ” (as defined in Section 9 hereof), the Company shall pay to the Executive’s estate any “ Final Compensation ” (as also defined in Section 9) that is due; shall pay the Executive’s estate any Annual Bonus earned for the fiscal year immediately preceding that in which the Executive’s death occurs, if unpaid on the Date of Termination, which Annual Bonus shall be paid to his estate on the date annual bonuses for that immediately preceding fiscal year are paid to Company executives generally; and shall pay to the

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Executive’s estate any “ Final Pro-Rated Bonus ” that is due (determined in accordance with the definition set forth in Section 9 hereof), payable on the date annual bonuses for that fiscal year are paid to Company executives generally.  Any equity granted the Executive pursuant to Section 4(c) hereof shall be governed by that Section 4(c) and by the Stock and Option Plan or any successor plan, any applicable agreements and any applicable Company securities trading policies.  The Company shall have no obligation or liability to the Executive or his estate under this Agreement, other than as set forth expressly in this Section 5(a).

(b)                                  Disability .

(i)                                      The Company may terminate the Executive’s employment hereunder, upon notice to the Executive, in the event that the Executive becomes disabled during the term hereof through any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform all or substantially all of his duties and responsibilities hereunder for one hundred and eighty (180) days during any period of three hundred and sixty-five (365) consecutive calendar days. In the event of such termination, the Company shall provide the Executive any Final Compensation due; shall pay the Executive any Annual Bonus earned for the fiscal year immediately preceding that in which termination of the Executive’s employment occurs, if unpaid on the Date of Termination, which Annual Bonus shall be paid on the date annual bonuses for that immediately preceding fiscal year are paid to Company executives generally; and shall pay the Executive any Final Pro-Rated Bonus due for the fiscal year in which the Date of Termination occurs, payable on the date annual bonuses for that fiscal year are paid to Company executives generally.  Any equity granted the Executive pursuant to Section 4(c) hereof shall be governed by that Section 4(c) and by the Stock and Option Plan or any successor plan, any applicable agreements and any applicable Company securities trading policies.  The Company shall have no obligation or liability to the Executive under this Agreement other than as expressly set forth in this Section 5(b)(i).

(ii)                                   The Board may designate another employee to act in the Executive’s place during any period of the Executive’s disability.  Notwithstanding any such designation, the Executive shall continue to receive the Base Salary in accordance with Section 4(a) hereof and shall continue participation in the Employee Benefit Plans of the Company in accordance with Section 4(e) to the extent permitted by the then-current terms of the applicable Employee Benefit Plans, until the Executive becomes eligible for disability income benefits under any disability income plan in which the Executive is participating through his employment with the Company or until the termination of his employment, whichever shall occur first.  While receiving disability income benefits under any such disability income plan, the Executive shall not be entitled to receive any Base Salary under Section 4(a) hereof, but shall be entitled to continue to participate in the Company’s Employee Benefit Plans in accordance with Section 4(e) to the extent permitted by the then-current terms of the Employee Benefit Plans until the termination of his employment.

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(iii)                                If any question shall arise as to whether during any period the Executive is disabled through any illness, injury, accident or condition of either a physical or psychological nature so as to be unable to perform all or substantially all of his duties and responsibilities hereunder, the Executive may, and at the request of the Company shall, submit to a medical examination by a physician selected by the Company to whom the Executive or his duly appointed guardian, if any, has no reasonable objection to determine whether the Executive is so disabled and such