EXHIBIT 10.29
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 26th day of October, 2001
by and between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation
(together with its successors and assigns, the "Company"), and Xxx X. Xxxxx
(the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is being hired as the Chief Financial Officer of
the Company;
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 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 mean
(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
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the Act, of securities of the Company representing 51% or more
of the combined voting power of the outstanding securities of
the Company, as the case may be, 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;
(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).
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(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:
(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 below the minimum
level provided in SECTION 4;
(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) "Severance Pay" shall mean an amount equal to the Base Salary
in effect on the date of termination of the Executive's employment, plus a pro
rated Target Bonus Award which has been earned by the Executive but not paid
prior to the date of termination of employment, 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.
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(l) "Target Bonus" shall mean a bonus to be paid annually by the
Company under its Target Bonus program which shall be the product of a specified
percentage, as determined in the sole discretion of the Board, multiplied by the
Base Salary paid during the relevant performance period, and as otherwise
declared and authorized by the Compensation Committee.
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 shall be solely in the
discretion of the Board.
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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
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 various employee welfare and pension benefit plans, programs
and/or arrangements so offered by the Company and applicable to the Executive.
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.
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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;
(iv) all unexercisable and/or unvested stock options held by
the Executive as of the date of the termination under
this SECTION 10(a) shall be deemed to have been held by
the Executive for an additional 12 months, and any
unexercisable and/or unvested stock options which become
vested and 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; and
(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.
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 COMPANY OR THE
EXECUTIVE. In the
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event the Company terminates the Executive's employment for Cause, or if the
Executive terminates his employment without Good Reason, or if either Party
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;
(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
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 Company or 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; OR TERMINATION BY THE
EXECUTIVE FOR GOOD REASON. If the Executive's employment is terminated by the
Company without Cause (other than due to death, Disability or nonrenewal of the
Agreement), or is terminated by the Executive for Good Reason, 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);
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(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);
(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 unexercisable and/or unvested stock options held by
the Executive as of the date of the termination of his
employment under this SECTION 10(c) shall be deemed to
have been held by the Executive for an additional 18
months and any unexercisable and/or unvested 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 in the event
this Agreement is terminated at any time up through and
including the third anniversary of the Effective Date and
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)(vi) 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;
(vii) any amounts earned, accrued or owing to the Executive but
not yet paid under SECTIONS 5(b), 6, 7, 8, or 9 above;
and
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(viii) 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)(viii) 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)(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 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
(vii) of this SECTION 10(C) shall be paid to the Executive within 60 days of the
date his employment terminates.
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
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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 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.
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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.
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.
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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 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.
If to the Company: Vertex Pharmaceuticals Incorporated
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Chairman of the Board
with a copy to:
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If to the Executive: -----------------------------
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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.
(a) From the Effective Date of this Agreement, up through and
including the third anniversary of the Effective Date, 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 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
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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.
(b) Following the third anniversary of the Effective Date, and for
the remainder of the Term of this Agreement, anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that, as a result,
directly or indirectly, of the operation of any of the Company's existing stock
option plans, or any successor option or restricted stock plans (collectively
the "Option and Restricted Stock Acceleration"), either standing alone or taken
together with the receipt of any other payment or distribution by the Company to
or for the benefit of the Executive whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a "Payment")
the Executive would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the amount
payable to the Executive hereunder or as a result of the Option and Restricted
Stock Acceleration shall be reduced in an amount that would result in the
Executive being in the most advantageous net after-tax position (taking into
account both income taxes and any Excise Tax). For purposes of this
determination, the "base amount" as defined in Section 280G(b)(3)(A) of the Code
shall be allocated between the Option and restricted Stock Acceleration, on the
one hand, and Payments, on the other hand, in accordance with Section
280G(b)(3)(B) of the Code.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
Vertex Pharmaceuticals Incorporated
/s/ Xxxxx X. Xxxx
President
/s/ Xxx X. Xxxxx
Executive
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