Exhibit 10.5


 


AMENDED AND RESTATED
EMPLOYMENT AGREEMENT


 


This
Amended and Restated Employment Agreement (this “Agreement”) amends and
restates, effective as of the 5th day of February, 2010, that certain Employment
Agreement made and entered into as of the 11th day of February, 2008, as amended by that
certain Amendment to Employment Agreement entered into as of the 29th day of December, 2008
(collectively, the “Original Agreement”) by and between Vertex
Pharmaceuticals Incorporated, a Massachusetts corporation (together with its
successors and assigns, the “Company”), and Lisa Kelly-Croswell (the “Executive”).


 


W IT N E S S E T H


 


WHEREAS,
the Company is employing the Executive as the Company’s Senior Vice President,
Human Resources;


 


WHEREAS,
the Company and the Executive desire amend the Original 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 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 the Executive’s duties, acts or fails
to act in a manner that 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.


 


“Change
of Control” shall have the meaning set forth in the Change of Control
Agreement.


 


“Change
of Control Agreement” shall mean the Change of Control letter agreement
between the Company and the Executive dated July 12, 2007.


 


“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 February 11, 2008.


 


“Good
Reason” shall mean that, without the Executive’s consent, one or more of
the following events occurs:


 


(i)                             the
Executive’s Base Salary is decreased unless such reduction is part of an
across-the-board proportionate reduction in the salaries of the Company’s
senior management team; or


 


(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);


 


provided that Good Reason shall not exist
unless and until within 30 days after the event giving rise to Good Reason
under any of (i) through (ii) 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 any of (i) through
(ii) 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 such
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
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, 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.”


 


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3. POSITION.


 


On
the Effective Date, the Executive shall be employed as the Company’s Senior
Vice President, Human Resources.


 


4.
BASE SALARY.


 


The
Executive’s annualized Base Salary as of the date of this Agreement is
$298,700.00, 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 PROGRAM.


 


During
the term of employment, the Executive shall be eligible to 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.


 


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.
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 paid vacation days
each calendar year in accordance with the Company’s vacation policy then in
effect.


 


9.
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 9.


 


(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, 


 


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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 9(b); and


 


(ii)                          any
amounts earned, accrued or owing to the Executive but not yet paid under
Sections 5, 6, or 7  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.


 


(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 (in accordance with the notice
and cure provisions set forth in the definition of “Good Reason” above), 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 executed by Executive within 30 days of the date of termination
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 9(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 9(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 5, 6 or 7 above;


 


(v)                         if
COBRA coverage is elected by the Executive, the Company shall pay the cost of
insurance continuation premiums on the Executive’s behalf (whether or not
covered by COBRA) to continue standard medical, dental and life insurance
coverage for the Executive (or the cash equivalent of same in the event 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


 


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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 6 months after the date of a subsequent event
constituting a separation of service under Section 409A(a)(2)(A)(i) of
the Code.


 


10.
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.


 


11. REPRESENTATIONS.


 


The
Company represents and warrants that it is fully authorized and empowered to
enter into this Agreement, and that the performance of its obligations under
this Agreement will not violate any agreement between it and any other person,
firm or organization. The Executive represents and warrants that no agreement
exists between him and any other person, firm or organization that would be
violated by the performance of the Executive’s obligations under this
Agreement.


 


12.  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.


 


13.
ENTIRE AGREEMENT; TERMINATION.


 


This
Agreement, the agreements referenced herein, and the Employee Non-Disclosure,
Non-Competition & Inventions Agreement between the Executive and the
Company, contain the entire understanding and agreement between the Parties
concerning the subject matter hereof and


 


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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 20
of this Agreement.


 


14.
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.


 


15.
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.


 


16.
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.


 


17.
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 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.


 


18.
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.


 


19.
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 


 


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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.


 


20.
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

  
	
   

  	
   

  	
   

  
	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.


 


21.
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.


 


22.
COUNTERPARTS.


 


This
Agreement may be executed in two or more counterparts.


 


23. 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 23 shall require
the Company to increase the Executive’s compensation or make the Executive
whole for any requested changes.


 


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24.
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 and

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/Lisa Kelly-Croswell

  
	 
	Lisa Kelly-Croswell




 
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