Exhibit 10.5


 


RESTRICTED STOCK AGREEMENT


 


VERTEX PHARMACEUTICALS INCORPORATED


 


AGREEMENT
made as of the 24th day of January, 2007 (the “Grant Date”)
between Vertex Pharmaceuticals
Incorporated (the “Company”), a Massachusetts corporation having its principal place of business
in Cambridge, Massachusetts, and
                          
(the “Participant”).


 


WHEREAS,
the Company has adopted the Vertex
Pharmaceuticals Incorporated 2006 Stock and Option Plan (the “Plan”)
to promote the interests of the Company by providing an incentive for
employees, directors and consultants of the Company or its Affiliates;


 


WHEREAS,
pursuant to the provisions of the Plan, the Company desires to offer for sale
to the Participant shares of the Company’s common stock, $0.01 par value per share (“Common
Stock”), in accordance with the provisions of the Plan, all on the terms
and conditions hereinafter set forth;


 


WHEREAS,
Participant wishes to accept said offer; and


 


WHEREAS,
the parties agree that any terms used and not defined herein have the meanings
ascribed to such terms in the Plan.


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:


 


1.                                       Definitions.


 


1.1                                 “Cause” shall mean:


 


(a)                                  conviction of the Participant of a crime of
moral turpitude;


 


(b)                                 the Participant’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 Participant reports provided that the
Participant received prior written notice of the directive(s) or instruction(s)
that the Participant failed to follow, and provided  further that
the Participant did not correct any such problems within thirty (30) days after
receiving notice in good faith from the Company;


 


(c)                                  the Participant commits (i) willful gross
negligence, or (ii) willful gross misconduct in carrying out the Participant’s
duties, resulting in either case in material harm to the Company, unless such
act, or failure to act, was believed by the Participant, in good faith, to be
in the best interests of the Company; or


 


(d)                                 the Participant’s violation of the Company’s
policies made known to the Participant regarding confidentiality, securities
trading or inside information.


 


1.2                                 a “Change of
Control” shall be deemed to have occurred if:


 


(a)                                  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”);


 


(b)                                 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


 


(c)                                  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.


 


1.3                                 “Disability” 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).


 


1.4                                 “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.


 


1.5                                 “Good Reason” shall mean that, without
the Participant’s consent, one or more of the following events occurs, and the
Participant, of his or her own initiative, terminates his or her employment by the
Company or an affiliate within ninety (90) days of such event:


 


(i)                                     The Participant is assigned to any duties or
responsibilities that are inconsistent, in any significant respect, with the
scope of the Participant’s duties and responsibilities on the date hereof,
provided that such reassignment of duties or responsibilities is not due to the
Participant’s Disability or the Participant’s performance, nor is at the
Participant’s request;


(ii)                                  The Participant suffers a reduction in the
authorities, duties and responsibilities associated with the Participant’s
position and office on the date hereof, provided that such reduction is not due
to the Participant’s Disability or the Participant’s performance, nor is at the
Participant’s request;


(iii)                               The Participant’s base salary is decreased below the level on the date
hereof, other than a reduction which is part of an across-the-board
proportionate reduction in the salaries of the senior management team;


(iv)                              The Participant is assigned, without Participant ‘s consent, to an
office location thirty-five (35) or more miles away from Participant’s office 


 


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                                                location immediately prior to such
reassignment (other than in connection with a relocation of the Company’s
principal executive offices); or


(v)                                 Following a Change of
Control, the Company’s successor fails to assume the Company’s rights and
obligations under this Agreement.


 


2.                                       Terms of Purchase. The Participant hereby accepts the offer of
the Company to issue to the Participant, in accordance with the terms of the
Plan and this Agreement, 20,000 shares
of the Company’s Common Stock (such shares, subject to adjustment pursuant to
Section 17 of the Plan and Subsection 3(g) hereof, the “Granted Shares”)
at a purchase price per share of $0.01 (the “Purchase Price”), receipt
of which is hereby acknowledged by the Company.


 


3.                                       Company’s Lapsing Repurchase Right.


 


(a)                                  Lapsing Repurchase Right. Except as set forth in Subsection 3(b)
hereof, and subject to subsections (i) and (ii) below, if for any reason the
Participant no longer is an employee, director or consultant of the Company or
an affiliate prior to May 6, 2010, the Company (or its designee) shall have the
option, but not the obligation, to purchase from the Participant, and, in the
event the Company exercises such option, the Participant shall be obligated to
sell to the Company (or its designee), at a price per Granted Share equal to the Purchase Price, all or any part of
the Granted Shares as set forth in clauses (i) and (ii)  below (the “Lapsing Repurchase Right”).
The Company’s Lapsing Repurchase Right shall be valid for a period of one year
commencing with the date of such termination of employment or service. Notwithstanding
any other provision hereof, if the Company is prohibited during such one year
period from exercising its Lapsing Repurchase Right by applicable law, then the time period during which such Lapsing
Repurchase Right may be exercised shall be extended until the later of (a) the
end of such one-year period or (b) 30 days after the Company is first not so
prohibited. Notwithstanding the foregoing,


 


(i)                                     the Company’s Lapsing Repurchase Right shall
lapse with respect to 5,000 of the Granted Shares on May 6, 2008, if the
Participant continues to serve as an employee, director or consultant of the
Company on that date; and


 


(ii)                                  the Company’s Lapsing Repurchase Right shall
lapse with respect to 15,000 of the Granted Shares on May 6, 2010, if the Participant continues to
serve as an employee, director or consultant of the Company on that date.


 


(b)                                 Effect of Termination by the Company Without
Cause, by the Participant for Good Reason, or Upon Disability or Death. The Company’s Lapsing Repurchase Right
shall terminate, and the Participant’s ownership of all Granted Shares then
owned by the Participant shall become vested, if the Company or an affiliate
terminates the Participant’s employment or service other than for Cause, if the
Participant terminates his or her employment for Good Reason, or if the Participant
ceases to be an employee, director or consultant of the Company by reason of
Disability or death.


 


(c)                                  Closing. If the Company exercises the Lapsing Repurchase Right, the Company
shall notify the Participant, or, in the case of the Participant’s death, his
or her survivor, in writing of its intent to repurchase the Granted Shares. Such
notice may be mailed by the Company up to and including the last day of the
time period provided for above for exercise of the Lapsing Repurchase Right. The
notice shall specify the place, time and date for payment of the repurchase
price (the “Closing”) and the number of Granted Shares with respect to
which the Company is exercising the Lapsing Repurchase Right. The Closing shall
be not less than ten days nor more than 60 days from the date of mailing of the
notice, and the Participant or the Participant’s survivor with respect to the
Granted Shares which the Company elects to repurchase shall have no further
rights as the owner thereof from and after the date specified in the notice. At
the Closing, the repurchase price shall be delivered to the Participant or the
Participant’s 


 


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survivor
and the Granted Shares being repurchased, duly endorsed for transfer, shall, to
the extent that they are not then in the possession of the Company, be
delivered to the Company by the Participant or the Participant’s survivor.


 


(d)                                 Escrow. All Granted Shares that are subject to the Lapsing Repurchase Right,
together with any securities distributed in respect thereof such as through a
stock split or other recapitalization, shall be held by the Company in escrow
until such time as the Granted Shares have vested. The Company promptly shall
release Granted Shares from escrow upon termination of the Lapsing Repurchase
Right with respect to those Granted Shares.


 


(e)                                  Prohibition on Transfer. The Participant recognizes and agrees that
all Granted Shares that are subject to the Lapsing Repurchase Right may not be
sold, transferred, assigned, hypothecated, pledged, encumbered or otherwise
disposed of, whether voluntarily or by operation of law, other than to the
Company (or its designee). However, the Participant, with the approval of the
Committee, may transfer the Granted Shares for no consideration to or for the
benefit of the Participant’s Immediate Family (including, without limitation,
to a trust for the benefit of the Participant’s Immediate Family or to a
partnership or limited liability company for one or more members of the
Participant’s Immediate Family), subject to such limits as the Committee may
establish, and the transferee shall remain subject to all the terms and
conditions applicable to this Agreement prior to such transfer and each such
transferee shall so acknowledge in writing as a condition precedent to the
effectiveness of such transfer. The term “Immediate Family” shall mean the
Participant’s spouse, former spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers, nieces and nephews and grandchildren (and,
for this purpose, shall also include the Participant). The Company shall not be
required to transfer any Granted Shares on its books which shall have been
sold, assigned or otherwise transferred in violation of this Subsection 3(e),
or to treat as the owner of such Granted Shares, or to accord the right to vote
as such owner or to pay dividends to, any person or organization to which any
such Granted Shares shall have been so sold, assigned or otherwise transferred,
in violation of this Subsection 3(e).


 


(f)                                    Failure to Deliver Granted Shares to be
Repurchased. If the Granted
Shares to be repurchased by the Company under this Agreement are not in the
Company’s possession pursuant to Subsection 3(d) above or otherwise and the
Participant or the Participant’s survivor fails to deliver such Granted Shares
to the Company (or its designee), the Company may elect (i) to establish a
segregated account in the amount of the repurchase price, such account to be
turned over to the Participant or the Participant’s survivor upon delivery of
such Granted Shares, and (ii) immediately to take such action as is appropriate
to transfer record title of such Granted Shares from the Participant to the
Company (or its designee) and to treat the Participant and such Granted Shares
in all respects as if delivery of such Granted Shares had been made as required
by this Agreement. The Participant hereby irrevocably grants the Company a
power of attorney which shall be coupled with an interest for the purpose of
effectuating the preceding sentence.


 


(g)                                 Adjustments. The Plan contains provisions covering the treatment of Granted Shares
in a number of contingencies such as stock splits and mergers. Provisions in
the Plan for adjustment with respect to the Granted Shares and the related
provisions with respect to successors to the business of the Company are hereby
made applicable hereunder and are incorporated herein by reference.


 


3.                                       Legend. In addition to any legend required pursuant to the Plan, all
certificates representing the Granted Shares to be issued to the Participant
pursuant to this Agreement shall have endorsed thereon a legend substantially
as follows:


 


“The
shares represented by this certificate are subject to restrictions set forth in
a Restricted Stock Agreement dated as of January 24, 2007 with the Company, a 


 


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copy
of which Agreement is available for inspection at the offices of the Company or
will be made available upon request.”


 


4.                                       Incorporation of the Plan. The Participant specifically understands
and agrees that the Granted Shares issued under the Plan are being sold to the
Participant pursuant to the Plan, a copy of which Plan the Participant
acknowledges he or she has read and understands and by which Plan he or she
agrees to be bound. The provisions of the Plan are incorporated herein by
reference.


 


5.                                       Tax Liability of the Participant and Payment
of Taxes. The Participant
acknowledges and agrees that any income or other taxes due from the Participant
with respect to the Granted Shares issued pursuant to this Agreement,
including, without limitation, the Lapsing Repurchase Right, shall be the
Participant’s responsibility. The Participant agrees and acknowledges that (i)
the Company promptly will withhold from the Participant’s pay the amount of
taxes the Company is required to withhold upon the lapsing of any Lapsing
Repurchase Right on the part of the Company pursuant to this Agreement, and
(ii) the Participant shall make immediate payment to the Company in the amount
of any tax required to be withheld by the Company in excess of the Participant’s
pay available for such withholding.


 


6.                                       Equitable Relief. The Participant specifically acknowledges
and agrees that in the event of a breach or threatened breach of the provisions
of this Agreement or the Plan, including the attempted transfer of the Granted
Shares by the Participant in violation of this Agreement, monetary damages may
not be adequate to compensate the Company, and, therefore, in the event of such
a breach or threatened breach, in addition to any right to damages, the Company
shall be entitled to equitable relief in any court having competent
jurisdiction. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedies available to it for any such breach or threatened
breach.


 


7.                                       No Obligation to Maintain Relationship. The Company is not by the Plan or this
Agreement obligated to continue the Participant as an employee, director or
consultant of the Company or an affiliate. The Participant acknowledges:  (i) that the Plan is discretionary in nature
and may be suspended or terminated by the Company at any time; (ii) that the
grant of the Granted Shares is a one-time benefit which does not create any
contractual or other right to receive future grants of shares, or benefits in
lieu of shares; (iii) that all determinations with respect to any such future
grants, including, but not limited to, the times when shares shall be granted,
the number of shares to be granted, the purchase price, and the time or times
when each share shall be free from a lapsing repurchase right, will be at the
sole discretion of the Company; (iv) that the Participant’s participation in
the Plan is voluntary; (v) that the value of the Granted Shares is an extraordinary
item of compensation which is outside the scope of the Participant’s employment
contract, if any; and (vi) that the Granted Shares are not part of normal or
expected compensation for purposes of calculating any severance, resignation,
redundancy, end of service payments, bonuses, long-service awards, pension or
retirement benefits or similar payments.


 


9.                                       Notices. Any notices required or permitted by the terms of this Agreement or
the Plan shall be given by recognized courier service, facsimile, registered or
certified mail, return receipt requested, addressed as follows:


 


If
to the Company:


 


Vertex
Pharmaceuticals Incorporated


130
Waverly Street


Cambridge,
MA 02139


Attention:
Legal Department-Corporate


 


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If
to the Participant:


 


At
the Participant’s home address then


listed
in the Company’s payroll records


 


or to such other address or addresses of
which notice in the same manner has previously been given. Any such notice
shall be deemed to have been given on the earliest of receipt, one business day
following delivery by the sender to a recognized courier service, or three
business days following mailing by registered or certified mail.


 


10.                                 Benefit of Agreement. Subject to the provisions of the Plan and
the other provisions hereof, this Agreement shall be for the benefit of and
shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.


 


11.                                 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts, without giving effect to the
conflict of law principles thereof. For the purpose of litigating any dispute
that arises under this Agreement, whether at law or in equity, the parties
hereby consent to exclusive jurisdiction in Massachusetts and agree that such litigation shall be conducted in
the courts of Boston, Massachusetts
or the federal courts of the United States for the District of Massachusetts.


 


12.                                 Severability. If any provision of this Agreement is held
to be invalid or unenforceable by a court of competent jurisdiction, then such
provision or provisions shall be modified to the extent necessary to make such
provision valid and enforceable, and to the extent that this is impossible, then
such provision shall be deemed to be excised from this Agreement, and the
validity, legality and enforceability of the rest of this Agreement shall not
be affected thereby.


 


13.                                 Entire Agreement. This Agreement, together with the Plan,
constitutes the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersedes all prior oral or
written agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement not expressly set
forth in this Agreement shall affect or be used to interpret, change or
restrict the express terms and provisions of this Agreement provided, however,
in any event, this Agreement shall be subject to and governed by the Plan.


 


14.                                 Modifications and Amendments; Waivers and
Consents. The terms and
provisions of this Agreement may be modified or amended as provided in the Plan.
Except as provided in the Plan, the terms and provisions of this Agreement may
be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.


 


15.                                 Consent of Spouse. If the Participant is married as of the
date of this Agreement, the Participant’s spouse shall execute a Consent of
Spouse in the form of Exhibit A hereto, effective as of the date hereof.
Such consent shall not be deemed to confer or convey to the spouse any rights
in the Granted Shares that do not otherwise exist by operation of law or the
agreement of the parties. If the Participant marries or remarries subsequent to
the date hereof, the Participant shall, not later than 60 days thereafter, obtain
his or her new spouse’s acknowledgement of and consent to the existence and
binding effect of all restrictions contained in this Agreement by such spouse’s
executing and delivering a Consent of Spouse in the form of Exhibit A.


 


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16.                                 Counterparts. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.


 


17.                                 Data Privacy. By entering into this Agreement, the
Participant:  (i) authorizes the Company
and each affiliate, and any agent of the Company or any affiliate administering
the Plan or providing Plan record keeping services, to disclose to the Company
or any of its affiliates such information and data as the Company or any such
affiliate shall request in order to facilitate the grant of Granted Shares and
the administration of the Plan; (ii) waives any data privacy rights he or she may
have with respect to such information; and (iii) authorizes the Company and
each affiliate to store and transmit such information in electronic form.


 


[Signature page follows]


 


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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.


 


	
   

  	
  VERTEX
  PHARMACEUTICALS

  
	
   

  	
   

  
	
   

  	
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Joshua
  S. Boger

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


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EXHIBIT A


 


CONSENT OF SPOUSE


 


I,
                           ,
spouse of
                    ,
acknowledge that I have read the RESTRICTED STOCK AGREEMENT dated as of January
24, 2007 (the “Agreement”) to which this Consent is attached as Exhibit A and
that I know its contents. Capitalized terms used and not defined herein shall
have the meanings assigned to such terms in the Agreement. I am aware that by
its provisions the Granted Shares granted to my spouse pursuant to the Agreement
are subject to a Lapsing Repurchase Right in favor of VERTEX
PHARMACEUTICALS INCORPORATED (the “Company”) and that,
accordingly, the Company has the right to repurchase up to all of the Granted
Shares of which I may become possessed as a result of a gift from my spouse or
a court decree and/or any property settlement in any domestic litigation.


 


I
hereby agree that my interest, if any, in the Granted Shares subject to the
Agreement shall be irrevocably bound by the Agreement and further understand and
agree that any community property interest I may have in the Granted Shares
shall be similarly bound by the Agreement.


 


I
agree to the Lapsing Repurchase Right described in the Agreement and I hereby
consent to the repurchase of the Granted Shares by the Company and the sale of
the Granted Shares by my spouse or my spouse’s legal representative in
accordance with the provisions of the Agreement. Further, as part of the
consideration for the Agreement, I agree that at my death, if I have not
disposed of any interest of mine in the Granted Shares by an outright bequest
of the Granted Shares to my spouse, then the Company shall have the same rights
against my legal representative to exercise its rights of repurchase with
respect to any interest of mine in the Granted Shares as it would have had
pursuant to the Agreement if I had acquired the Granted Shares pursuant to a
court decree in domestic litigation.


 


I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN
THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL
GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH
GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT
I WILL WAIVE SUCH RIGHT.


 


Dated
as of the
                 
day of                                ,
2007.


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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