Exhibit 10.42

 

EMPLOYMENT AGREEMENT

 

AGREEMENT, made and entered into as of the 9th day of December by and between
Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (together with
its successors and assigns, the “Company”), and Nancy J. Wysenski (the
“Executive”).

 

W IT N E S S E T H

 

WHEREAS, the Company has offered to employ the Executive as the Executive Vice
President, Chief Commercial Officer;

 

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:

 

1. DEFINITIONS.

 

“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: (i) the Executive is convicted of a crime involving moral
turpitude; (ii) 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;” (iii) the Executive violates any of the Company’s policies made known
to the Executive regarding confidentiality, securities trading or insider
information; or (iv) 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.

 

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“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 December 9, 2009.

 

“Good Reason” shall mean one of the following events has occurred without the
Executive’s consent:

 

(i)                            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;”

 

(ii)                         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

 

(iii)                      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;

 

provided that Good Reason shall not exist unless and until within 90 days after
the event giving rise to Good Reason under (i), (ii) or (iii) above has
occurred, the Executive delivers a written termination notice to the Company
stating that an event giving rise to Good Reason has occurred and identifying
with reasonable detail the event that the Executive asserts constitutes Good
Reason under (i), (ii) or (iii) above and the Company fails or refuses to cure
or eliminate the event giving rise to Good Reason on or within 30 days after
receiving the Executive’s notice.  To avoid doubt, the termination of the
Executive’s employment would become effective at the close of business on the
thirtieth day after the Company receives the Executive’s termination notice,
unless the Company cures or eliminates the event giving rise to Good Reason
prior to such time.

 

“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

 

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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.

 

2. 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.”

 

3. POSITION, DUTIES AND RESPONSIBILITIES.

 

On the Effective Date, the Executive shall be employed as Executive Vice
President, Chief Commercial Officer.

 

4. BASE SALARY.

 

The Executive’s initial annualized Base Salary shall be $460,000, 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.

 

5. 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 $25,000 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 Grants:

 

(i)                             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
quarterly in arrears over the four year period commencing on the Effective Date,
and as otherwise specified herein and in

 

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the Stock Plan, and shall be subject to the other terms and conditions specified
in a separate grant agreement attached hereto as Exhibit A; and

 

(ii)                          the Executive shall be granted a stock option
under the Stock Plan to purchase 300,000 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, subject to the terms and conditions specified
in a separate grant agreement attached hereto as Exhibit B.

 

(d) Sign-On Restricted Stock Grant:  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”), 20,000 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.

 

6.  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.

 

7. EMPLOYEE BENEFIT PROGRAMS.

 

During the term of employment, the Executive shall be entitled to participate in
all employee welfare and pension benefit plans, programs and/or arrangements
offered by the Company 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 C 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.

 

8. VACATION.

 

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.

 

9.  RELOCATION REIMBURSEMENT.

 

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.

 

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10. 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 or other benefits under the Change of Control
Agreement, the Executive shall not be entitled to corresponding benefits under
this Section 10.

 

(b) Termination by the Company for Cause; or Termination by the Executive
without Good Reason.  If the Company terminates the Executive’s employment for
Cause, or if the Executive voluntarily terminates the Executive’s employment,
other than for Good Reason, death or Disability, the term of employment shall
end as of the date specified below, and the Executive shall be entitled to the
following:

 

(i)                             Base Salary earned by Executive but not paid
through the date of termination of Executive’s employment under this
Section 10(b); and

 

(ii)                          any amounts earned, accrued or owing to the
Executive but not yet paid under Sections 6, 7, or 8  above.

 

Termination by Company for Cause shall be effective as of the date noticed by
the Company.  Voluntary termination by Executive other than for Good Reason,
death or Disability shall be effective upon 90 days’ prior written notice to the
Company and shall not be deemed a breach of this Agreement.

 

If the Executive voluntarily terminates his or her employment 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 at
the rate of the Executive’s Base Salary for the notice period or for any
remaining portion thereof.

 

(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 or Disability), or is terminated by the
Executive for Good Reason, the Executive shall be entitled to the following
(provided that, with respect to (iii) and (v) such amounts shall be subject to
and in exchange for a general release by Executive of all claims against the
Company, its subsidiaries, and their officers, directors, agents and
representatives):

 

(i)                             Base Salary earned by Executive but not paid
through the date of termination of Executive’s employment under this
Section 10(c);

 

(ii)                          all incentive compensation awards earned by
Executive but not paid prior to the date of termination of Executive’s
employment under this Section 10(c);

 

(iii)                       a cash payment to the Executive in an amount equal
to the Severance Payment, payable within ten days after the execution of a
general release and expiration without revocation of any applicable revocation
periods under the general release;

 

(iv)                      any amounts earned, accrued or owing to the Executive
but not yet paid under Sections 6, 7 or 8 above;

 

(v)                         if COBRA coverage is elected by the Executive, the
Company shall pay the cost of COBRA continuation premiums on the Executive’s
behalf to continue standard medical, dental and life insurance coverage for the
Executive (or the cash

 

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equivalent of the same if the Executive is ineligible for continued coverage)
until the earlier of:

 

(A)              the date 12 months after the date the Executive’s employment is
terminated; or

 

(B)                the date, or dates, on which 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).

 

If Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the
Code, any payment of “nonqualified deferred compensation” (as defined under
Section 409A of the Code and related guidance) attributable to a “separation
from service” (as defined under Section 409A of the Code and related guidance)
shall not commence until the first full business day that is more than 6 months
after the applicable separation from service (“Deferred Payment Date”).  Any
payments that would otherwise have been made between the separation from service
and the Deferred Payment Date, but for this paragraph, shall be made in a lump
sum on the Deferred Payment Date.  Payments that, in any case, are scheduled to
be made after the Deferred Payment Date shall continue according to the
applicable payment schedule.  To the extent that the termination of the
Executive’s employment does not constitute a separation of service under
Section  409A(a)(2)(A)(i) of the Code (as the result of further services that
reasonably are anticipated to be provided by the Executive to the Company at the
time the Executive’s employment is terminated), the payment of any nonqualified
deferred compensation will be further delayed until the date that is the first
full business day that is more than six months after the date of a subsequent
event constituting a separation of service under Section 409A(a)(2)(A)(i) of the
Code.

 

11. CONFIDENTIALITY; ASSIGNMENT OF RIGHTS, NONCOMPETITION; NONSOLICITATION.

 

On the Effective Date, the Executive shall enter into the Company’s standard
“Employee Non-Disclosure, Non-Competition & Inventions Agreement,” which is
attached hereto as Exhibit D.

 

12. 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.

 

13. REPRESENTATIONS.

 

The Company represents and warrants that it is fully authorized and empowered to
enter into this Agreement, and to make the awards provided for herein under the
terms of the

 

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applicable plans, that all equity grants provided for herein have been duly
authorized, 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 her and any other person, firm or organization that would be violated by
the performance of the Executive’s obligations under this Agreement.

 

14.  INDEMNIFICATION; INSURANCE.

 

The Executive shall at all times be indemnified and eligible for advancement of
expenses on the same basis as is provided for the Company’s other executive
officers and in accordance with the provisions of the Company’s charter and
by-laws then in effect.  The Executive shall also be covered under all of the
Company’s policies of liability insurance maintained for the benefit of its
directors and officers on the same basis as is provided for its other executive
officers.

 

15. ENTIRE AGREEMENT; TERMINATION.

 

This Agreement, and the agreements referenced herein, contain 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.  Subject to the terms of this Agreement, the Company shall be
entitled to terminate the Executive’s employment at any time, and the Executive
may terminate the Executive’s employment by the Company, at any time, in each
case by written notice provided in accordance with Section 22 of this Agreement.

 

16. 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.

 

17. SEVERABILITY.

 

If 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.

 

18. 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.

 

19. 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

 

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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
the Executive’s incompetence, reference in this Agreement to the Executive shall
be deemed, where appropriate, to refer to the Executive’s beneficiary, estate or
other legal representative.

 

20. 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.

 

21. 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 that 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.

 

22. 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: Chief Executive Officer

with copies to:

the General Counsel; and

the Senior Vice President of Human Resources

 

If to the Executive:                                                      at the
Executive’s home address listed in the Company 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.

 

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23. 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.

 

24. COUNTERPARTS.

 

This Agreement may be executed in two or more counterparts.

 

25. SECTION 409A COMPLIANCE.

 

It is the intention of the Company and the Executive that this Agreement and the
payments provided for herein meet the requirements of Section 409A of the Code,
to the extent applicable to this Agreement and such payments.  The Company and
the Executive agree to cooperate in good faith in preparing and executing, at
such time as sufficient guidance is available under Section 409A and from time
to time thereafter, such amendments to this Agreement, if any, as the Executive
may reasonably request solely for the purpose of assuring that this Agreement
and the payments provided hereunder meet the requirements of Section 409A. 
Nothing in this Section 25 shall require the Company to increase the Executive’s
compensation or make the Executive whole for any requested changes.

 

26. TAX WITHHOLDING; NO GUARANTEE OF ANY TAX CONSEQUENCES.

 

All payments hereunder shall be subject to all applicable withholding for any
federal, state or local income taxes including any excise taxes under the Code.
 Notwithstanding any other provision of this Agreement to the contrary or other
representation, the Company does not in any way guarantee the tax consequences
of any payment or compensation under this Agreement including, without
limitation, under Section 409A of the Code.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

 

 

Vertex Pharmaceuticals Incorporated

 

 

 

 

 

/s/ Matthew W. Emmens

 

Matthew W. Emmens

 

President, Chairman, & Chief Executive Officer

 

 

 

 

 

Executive

 

 

 

 

 

/s/ Nancy J. Wysenski

 

Nancy J. Wysenski

 

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