Exhibit
10.3


EMPLOYMENT AGREEMENT


AGREEMENT,
made and entered into as of the 29th day of June, 2007, by and between Vertex
Pharmaceuticals Incorporated, a Massachusetts corporation (together with its
successors and assigns, the “Company”), and Kurt Graves (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 and Head, Strategic Development 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 (each 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 not involving the performance or nonperformance of duties, or (iii)
the Executive, in carrying out his duties, acts or fails to act in a manner
which is determined, in the sole discretion of the Board, after written notice
of any such act or failure to act and a reasonable opportunity to cure the
deficiency has been provided to the Executive, 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) a “Change
of Control” shall be deemed to have occurred if either:


(i)                            any
“person” or “group” as such terms are used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the “Act”), becomes a beneficial owner, as
such term is used in Rule 13d-3 promulgated under the Act, of securities of the
Company representing more than 50% of the combined voting power of the
outstanding securities of the Company having the right to vote in the election
of directors (any such owner being herein referred to as an “Acquiring
Person”);


(ii)                         a
majority of the Company’s Board at any time during the term of this Agreement
consists of individuals other than individuals nominated or approved by a
majority of the Disinterested Directors; or













(iii)                      all
or substantially all the business or assets of the Company are sold or disposed
of, or the Company or a Subsidiary of the Company combines with another company
pursuant to a merger, consolidation, or other similar transaction, other than
(1) a transaction solely for the purpose of reincorporating the company in a
different jurisdiction or recapitalizing or reclassifying the Company’s stock,
or (2) a merger or consolidation in which the shareholders of the Company
immediately prior to such merger or consolidation continue to own at least a
majority of the outstanding voting securities of the Company or the surviving
entity immediately after the merger or consolidation.


(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 materially competes with
the products then under development by, or being marketed, distributed or
licensed by, 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 possessions or protectorates
thereof, provided, however, that ownership of five percent (5%) or less of the outstanding
voting securities or equity interests of any company shall not in itself 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 (“Code”) Section 22(e)(3); provided
that, solely for purposes of determining whether any amount that is
payable other than upon termination of employment can be made as a result of
disability consistent with the provisions of Code Section 409A, the following
definition of “Disability” or “Disabled” shall apply:  an individual is “Disabled”  or has a “Disability” if he is unable
to engage in any substantial gainful activity because of any medically
determinable physical or mental impairment that can be expected to result in
death or last for a continuous period of no less than 12 months. Alternatively,
an individual is considered disabled if he is, because of any medically
determinable physical or mental impairment that can be expected to result in
death or last for a continuous period of at least 12 months, receiving income
replacement benefits for a period of not less than three months under the
Company’s long-term disability plan.


(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 on the Company’s Board at
the time of such recommendation or election.


(i) “Effective
Date” shall mean July 17, 2007.


(j) “Good
Reason” shall mean that, without the Executive’s consent, one or more of
the following events occurs during the term of this agreement, and the
Executive, of his own 



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initiative, terminates
his employment as a result of such event within 90 days of the first occurrence
of that event:


(i)                             The
Executive ceases to report solely to the Chief Executive Officer or is assigned
to any material duties or responsibilities that are inconsistent, in any
significant respect, with the scope of duties and responsibilities customarily
associated with the Executive’s position and office as described in Section 3,
provided that such reassignment of duties or responsibilities is not for Cause
or due to Executive’s Disability, and is not at the Executive’s request;


(ii)                          The
Executive’s title is changed from Executive Vice President, Chief Commercial
Officer and Head of Strategic Development, or the Executive suffers a reduction
in the authorities, duties, and responsibilities customarily associated with
his position as described in Section 3, on the basis of which Executive makes a
determination in good faith that Executive can no longer carry out such
position or office in the manner contemplated at the time this Agreement was
entered into, provided that such change in titles or reduction in the
authorities, duties or responsibilities is not (a) for Cause, (b) due to
Executive’s Disability, or (c) at the Executive’s request; provided, however,
that the Executive may not assert that he has Good Reason for termination due
to any reduction in duties or responsibilities that are due to a change in the
commercial prospects of any one or more of the Company’s product candidates
(including but not limited to telaprevir);


(iii)                       The
Executive’s Base Salary is decreased;


(iv)                      The
Executive is assigned, without the Executive’s consent, to an office location
thirty-five (35) or more miles away from the Executive’s office location
immediately prior to such reassignment (other than in connection with a change
in location of the Company’s principal executive offices, unless the Executive’s
office location ceases to be at the Company’s principal executive offices);


(v)                         Failure
of the Company’s successor, in the event of a Change of Control, to assume all
obligations and liabilities of this Agreement; or


(vi)                      The
Company shall materially breach any of the terms of this Agreement.


(k) “Pro-Rata
Share of Restricted Stock” for any period shall mean, for any grant of
restricted stock as to which the Company’s repurchase right lapses ratably over
a specified time (e.g. in equal annual increments over four years), that number
of shares as to which the Company’s repurchase right with respect to those
shares would have lapsed if the Executive’s employment by the Company had
continued for such period.  For any other
shares of restricted stock, “Pro-Rata Share of Restricted Stock” shall mean, as
to any shares of restricted stock that were granted on the same date and as to
which the Company’s repurchase right lapses on the same date, that portion of
such shares calculated by multiplying the number of shares by a fraction, the
numerator of which is the number of days that have passed since the date of
grant, plus the number of days in the period in question, and the denominator
of which is the total number of days from the date of the grant until the date
(without regard to any provisions for earlier vesting upon achievement of a
specified goal) on which the Company’s repurchase right would lapse under the
terms of the grant.



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(l) “Severance
Pay” 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, divided by twelve (12)
(each of the 12 shares to constitute a “month’s” Severance Pay); provided,
however, that in the event Executive terminates his employment for Good Reason
based on a reduction in Base Salary, then the Base Salary to be used in
calculating Severance Pay shall be the Base Salary in effect immediately
prior to such reduction in Base Salary.


(m) “Subsidiary”
shall mean a corporation of which the Company owns 50% or more of the combined
voting power of the outstanding securities having the right to vote in an
election of directors, or any other business entity in which the Company
directly or indirectly has an ownership interest of 50% or more.


(n) “Target
Bonus” shall mean a bonus for which the Executive is eligible on an annual
basis, at a level consistent with his title and responsibilities, under the
Company’s bonus program then in effect and applicable to the Company’s senior
executives generally, in such amount as may be determined in the sole
discretion of the Board.


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 “term of employment” or the “term of this
agreement.”


3. POSITION, DUTIES AND
RESPONSIBILITIES.


On the Effective Date, the Executive shall be employed as the
Executive Vice President, Chief Commercial Officer and Head, Strategic
Development of the Company, and shall be responsible for strategic development,
business development, and commercial strategy and operations.  In
his capacity as head of strategic development, the  Executive will work within a matrix management system,
leading cross-functional product development teams, together with the heads of
medicines development, drug innovation and realization and other members of
senior management, to assess and advance molecules from the pre-clinical
development stage through successful launch and post-launch evaluation, and to
evaluate the Company’s chemical assets from a portfolio point of view.  As head of business development, the
Executive will be responsible for identifying and establishing channels for
value creation in the development and commercialization with third party
collaborators of assets within the Company’s then-current or projected
pipeline, and for investigation of in-licensing or acquisition opportunities
for products or product candidates to supplement the Company’s development and
commercial portfolio.  As the head of
commercial strategy and operations, the Executive will be responsible for
commercial launch of the Company’s drug candidates, including the creation and
maintenance of effective commercial relationships with the Company’s
collaborators for any of those drug candidates. 
The Executive will also be responsible for the initial conception and
establishment of a sustainable commercial strategy and vision for the Company,
and for executing on that strategy and vision for assets in the clinical
development stage onward. The Executive will be a member of the Company’s
senior management team, which is ultimately responsible for overseeing
the operation of the Company’s pharmaceutical business worldwide.  The Executive shall represent and serve the
Company faithfully, conscientiously and to the best of the 



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Executive’s
ability and shall promote the interests, reputation and current and long term
plans, objectives and policies of the Company, present and future. 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. The Executive, in
carrying out his duties under this Agreement, shall report to the Chief
Executive Officer of the Company.


4. BASE SALARY.


The
Executive’s initial annualized Base Salary shall be not less than $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
increase thereto (which shall thereafter be deemed the Executive’s Base Salary)
shall be solely within the discretion of the Board.


5. TARGET BONUS/INCENTIVE
COMPENSATION PROGRAM.


(a) Target Bonus Program:  The Executive shall participate in the
Company’s Target Bonus program (and other 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 thirty (30) days of such termination.


(c) Sign-On Stock Option Grant:  The Executive shall be granted a stock option
under the Company’s existing stock option 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 Company’s 2006 Stock and Option 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 (4) year period commencing on the Effective Date, and as otherwise
specified herein and in the Company’s 2006 Stock and Option plan, and shall be
subject to the other terms and conditions specified in a separate grant
agreement.


(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, 30,000 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 $.01 per share purchase
price should the Executive experience a termination of employment, as such term
is used in the 2006 Stock and Option Plan, but this repurchase right will lapse
as to equal number of shares of stock annually in arrears over the four (4)
year period commencing on the Effective Date, and as otherwise specified herein
and in the Company’s 2006 Stock and Option 



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Plan and shall be
subject to the other terms and conditions specified in a separate grant
agreement.


(e)  Tax Return Preparation Costs:
The Executive will be entitled to reimbursement for all reasonable costs
incurred for professional assistance in the initial preparation and filing of
his individual income tax returns for the 2007 tax year, in the country or
countries, and any subdivisions thereof, for which any such returns are required.  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 to the Company any
such amounts previously reimbursed by the Company, within thirty (30) days of
his termination date.


6. LONG-TERM INCENTIVE
COMPENSATION PROGRAMS.


During
the term of employment, the Executive shall be eligible to participate in the Company’s
long-term 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, as amended, from time to time to its senior executives,
to the same extent and on the same terms applicable to other senior executives.
Nothing in this Section shall preclude the Company from amending or terminating
any of its employee benefit plans, programs or arrangements.


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. RELOCATION REIMBURSEMENT AND
RESTRICTED STOCK GRANT:


The
Executive will be reimbursed for relocation costs in accordance with the
Company’s relocation reimbursement policy currently in effect, with any
exceptions to be approved in advance by the Company’s Chief Executive
Officer.  In addition, the Executive will
purchase, in accordance with the terms of a Relocation Restricted Stock
Agreement executed and delivered to the Company by the Executive on the
Effective Date, 18,000 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 $.01 per share purchase
price should the Executive experience a termination of employment for Cause or
without Good Reason, as such terms are used in this Agreement, but this
repurchase right will lapse as to equal number of shares of stock quarterly in
arrears over the three (3) year period commencing on the Effective Date, and as
otherwise specified herein and in the Company’s 2006 Stock and Option Plan and
shall be subject to the other terms and conditions specified in a separate
grant agreement.



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10. 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.


11. TERMINATION OF
EMPLOYMENT.


(a)  Termination
Due to Death or Disability. If Executive’s employment is terminated
due to 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 Executive, his estate and/or beneficiaries, as the case may be,
shall be entitled to the following:


(i)                             Base
Salary earned by Executive but not paid through the date of termination under
this Section 11(a);


(ii)                          all
long-term incentive compensation awards earned by Executive but not paid prior
to the date of termination under this Section 11(a);


(iii)                       a
pro rata Target Bonus award for the year in which termination under this
Section 11(a) occurs as determined in its sole discretion by the Board;


(iv)                      all
stock options held by the Executive as of the date of termination under this
Section 11(a) that are not exercisable as of that date shall be deemed to have
been held by the Executive for an additional 12 months, for purposes of vesting
and exercise rights, and any stock options that are deemed exercisable as a
result thereof shall remain exercisable as provided in Section 11(a)(v) below;


(v)                         all
exercisable stock options held by the Executive as of the date of termination
under this Section 11(a) shall remain exercisable until the earlier of (1) the
end of the one-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 (including any amounts for
which the sole remaining condition to payment is that the Executive be employed
by the Company on the scheduled payment date) but not yet paid under Sections
6, 7, 8, or 9 above, and in the event of termination due to Disability,
benefits due to Executive under the Company’s then-current disability program;


(vii)                   six
months of Severance Pay, commencing on the first day of the month following the
month in which termination under this Section 11(a) occurred; and


(viii)                the Company’s repurchase
right with respect to shares of restricted stock held by the Executive shall
lapse with respect to the Pro-Rata Share of Restricted Stock.  The “period” referenced in the first sentence
of the definition of “Pro-Rata Share of Restricted Stock,” and the “period in
question” referenced in the second sentence of that definition shall be 12
months.


(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 Executive
voluntarily terminates his employment, other than for Good Reason, death or 



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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 11(b); and


(ii)                          any
amounts earned, accrued or owing to the Executive but not yet paid under
Sections 6, 7, 8, or 9 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.


In the
event of termination by 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 at the rate of his 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:


(i)                             Base
Salary earned by Executive but not paid through the date of termination of
Executive’s employment under this Section 11(c);


(ii)                          all
long-term incentive compensation awards earned by Executive but not paid prior
to the date of termination of Executive’s employment under this Section 11(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
11(c); provided, however, that if the Executive dies while
receiving benefits under this Section, all payments shall immediately cease,
provided that the Executive or his estate or beneficiaries shall have received
no 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 11(c), as determined in its
sole discretion by the Board of Directors;


(v)                         all
exercisable stock options held by the Executive as of the date of the
termination of his employment under this Section 11(c) (except for a
termination described in the proviso in Section 11(c)(vi) below with respect to
a Change of Control) shall remain exercisable until the earlier of (i) the end
of the one-year period following the date of the termination of his employment
and (ii) the date the stock option would otherwise expire;


(vi)                      all
stock options held by the Executive as of the date of termination under this
Section 11(c) that are not exercisable as of that date shall be deemed to have
been 



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held by
the Executive for an additional 18 months, for purposes of vesting and exercise
rights, and any stock options that become exercisable as a result thereof shall
remain exercisable as provided in Section 11(c)(v) above, PROVIDED, HOWEVER, that
if such termination (1) is by the Company without Cause or by the Executive for
Good Reason, and (2) takes place within (90) days prior to a Change in Control
or within twelve (12) months after a Change in Control, then all unexercisable
and/or unvested stock options held by the Executive as of the date of the
termination under this Section 11(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 6, 7, 8, or 9 above;


(viii)                continued participation,
as if the Executive were still an employee, in the Company’s medical, dental,
hospitalization and life insurance plans in which Executive participated on the
date of termination of employment under this Section 11(c), until the earlier
of:


(A)              the end of the
period during which Severance Pay is payable under Section 11(c)(iii) above; 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);


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 this Section 11(c)(viii) because
Executive is not an employee of the Company, and (ii) not receiving equivalent
coverage and benefits through a subsequent employer, Executive shall be
provided with the after-tax economic equivalent of the benefits provided under
the plan, program or arrangement in which Executive is unable to participate
for the period specified in this Section 11(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 an equivalent benefit himself on an
individual basis. Payment of such after-tax economic equivalent shall be made
quarterly in advance; and


(ix)                        the
Company’s repurchase right with respect to shares of restricted stock held by
the Executive shall lapse with respect to the Pro-Rata Share of Restricted
Stock.  The “period” referenced in the
first sentence of the definition of “Pro-Rata Share of Restricted Stock,” and
the “period in question” referenced in the second sentence of that definition
shall be 18 months.  Notwithstanding the
foregoing, if such termination (1) is by the Company without Cause or by the
Executive for Good Reason, and (2) takes place within (90) days prior to a
Change of Control or within 



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twelve
(12) months after a Change of Control, then the Company’s lapsing repurchase
right with respect to all shares of restricted stock held by the Executive
shall lapse.


Notwithstanding
anything to the contrary in this Section 11, the terms of any option agreement
or restricted stock agreement shall govern the acceleration, if any, of vesting
or lapsing of the Company’s repurchase rights, as applicable, except to the
extent that the terms of this Employment Agreement are more favorable to the
Executive.  If Executive is a “specified
employee” under Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986,
as amended (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 since the applicable separation from service (“Deferred
Payment Date”).  Any payments which
would have otherwise been made between a 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
which, in any case, are scheduled to be made after the Deferred Payment Date
shall continue according to the applicable payment schedule.


12. MITIGATION.


In the
event of any termination of this Agreement, the Company hereby is authorized to
offset against any Severance Pay due the Executive during the period for which
Severance Pay is due under Section 11 any remuneration earned by the Executive
during that period and attributable to any subsequent employment or engagement
that the Executive may obtain. Executive shall provide Company written notice
of subsequent employment or engagement no later than five (5) business days
after commencement by Executive of such employment or engagement.


13. CONFIDENTIALITY;
ASSIGNMENT OF RIGHTS.


(a)
During the term of employment and thereafter, the Executive shall not disclose
to anyone or make use of any trade secret or proprietary or confidential
information of the Company, including such trade secret or proprietary or
confidential information of any customer of the Company or other entity that
has provided such information to the Company, that Executive acquires during
the term of employment, 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 13(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 Executive performs or information 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 



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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.


14. NONCOMPETITION;
NONSOLICITATION.


(a)
Notwithstanding any of the provisions herein to the contrary, if the Executive’s
employment with the Company is terminated for any reason other than due to
Executive’s death or termination by Executive for Good Reason, the Executive
shall not engage in Competitive Activity for a period that is the lesser of (i)
12 months from the date of termination under such applicable provision listed
above or (ii) the maximum length of time allowed under then current
Massachusetts law. The Company may, at its election, waive its rights of
enforcement under this Section 14(a).


(b) The
Parties acknowledge that in the event of a breach or threatened breach of
Sections 13 or 14(a), the Company shall not have an adequate remedy at law.
Accordingly, in the event of any breach or threatened breach of Sections 13 or
14(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 13 or 14(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 13 or 14(a) including the recovery of damages.


15. 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.


16. 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 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 him and any other person, firm or organization that would be violated
by the performance of his obligations under this Agreement.



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17. 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.


18. ENTIRE AGREEMENT;
TERMINATION.


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. 
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 his employment by the Company, at any time, in each case by written
notice provided in accordance with Section 25 of this Agreement.


19. 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.


20. 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.


21. 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.


22.
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.



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23. 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.


24. 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.


25. NOTICES.


All
notices which 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:

  	
   

  
	
   

  	
   

  	
  General Counsel

  	
   

  
	
   

  	
   

  	
  Vice President of Human Resources

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If to the Executive:

  	
   

  	
  Kurt Graves

  	
   

  
	
   

  	
   

  	
  at his home
  address then listed in

  	
   

  
	
   

  	
   

  	
  the Company’s
  payroll records

  	
   

  



 


Any
such notice shall be deemed to have been given: (a) when delivered if
personally delivered or sent by facsimile on a business day; (b) on the
business day after dispatch if sent by nationally-recognized overnight courier;
and/or (c) on the fifth business day following the date of mailing if sent by
mail.


26. 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.



 13
 









27. COUNTERPARTS.


This
Agreement may be executed in two or more counterparts.


28. 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 28 shall require the
Company to increase the Executive’s compensation or make the Executive whole
for any requested changes.


29. 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/ Joshua S.
  Boger

  	
   

  
	
   

  	
  Joshua S. Boger

  
	
   

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
  /s/ Kurt Graves

  	
   

  
	
   

  	
  Kurt Graves

  



 



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