Exhibit
10.4


 


	
  

  	
   

  	
  VERTEX PHARMACEUTICALS
  INCORPORATED

  
	
   

  	
   

  	
  130 WAVERLY STREET · CAMBRIDGE, MA 02139-4242

  
	
   

  	
   

  	
  TEL. 617.444.6100 · FAX 617.444-6483

  
	
   

  	
   

  	
  http://www.vrtx.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  February 5, 2010

  



 


Amit
Sachdev


5218
Loughboro Road NW


Washington,
DC 20016


 


RE:          Amended
and Restated Change of Control Agreement


 


Dear Amit:


 


You are a key member of the senior management team of
Vertex Pharmaceuticals Incorporated (the “Company”).  As a result, the Company would like to
provide you with the following “change of control” benefits to help ensure that
if the Company becomes involved in a “change of control” transaction, there
will be no distraction from your attention to the needs of the Company.  This Amended and Restated Change of Control
Agreement (this “Agreement”) amends and restates, effective as of the
date written above, that certain Change of Control Agreement made and entered
into as of February 11, 2008 by and between you and the Company.


 


I.                                         Definitions.  For the purposes of this Agreement,
capitalized terms shall have the following meaning:


 


1.               “Cause” shall mean:


 


(a)                                  your
conviction of a crime of moral turpitude;


 


(b)                                 your
willful refusal or failure to follow a lawful directive or instruction of the
Company’s Board of Directors or the individual(s) to whom you report,
provided that you receive prior written notice of the directive(s) or
instruction(s) that you failed to follow, and provided further that the
Company, in good faith, gives you 30 days to correct such failure and further
provided if you correct the failure(s), any termination of your
employment on account of such failure shall not be treated for purposes of this
Agreement as a termination of employment for “Cause;”


 


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


 


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


 

















 


2.               “Change of Control”
shall mean that:


 


(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; or


 


(b)                                 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 (i) a transaction solely for the purpose
of reincorporating the Company or one of its subsidiaries in a different
jurisdiction or recapitalizing or reclassifying the Company’s stock; or (ii) 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.


 


3.               “Code” shall mean the
Internal Revenue Code of 1986, as amended.


 


4.               “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 Section 22(e)(3) of the Code.


 


5.               “Good Reason” shall
mean one of the following events has occurred without your consent:


 


(a)                                  you are assigned to any
duties or responsibilities that are inconsistent, in any significant respect,
with the scope of duties and responsibilities customarily associated with the
position and office of Senior Vice President, Public Policy and Government
Affairs, provided that such reassignment of duties or responsibilities is not
due to your Disability or performance, nor is at your request;


 


(b)                                 you suffer a reduction in
the authorities, duties, and responsibilities customarily associated with your
position as Senior Vice President, Public Policy and Government Affairs,
provided that such reassignment of authorities, duties and responsibilities is
not due to your Disability or your performance, and is not at your request or
with your prior agreement;


 


(c)                                  your annual base salary is
decreased below $350,000 per year;


 


(d)                                 the office to which you are
assigned (currently Washington, D.C.) is relocated to a place 35 or more miles
away; or


 


(e)                                  following a Change of Control, the Company’s successor fails to assume
the Company’s rights and obligations under both this Agreement and the
Employment Agreement, as it may be amended from time to time;


 


provided
that Good Reason shall not exist unless and until within 30 days after the
event giving rise to Good Reason under any of (a) through (e) above
has occurred, you deliver 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 you assert constitutes Good 


 


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Reason
under any of (a) through (e) 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 your notice.  To avoid
doubt, the termination of your employment would become effective at the close
of business on the thirtieth day after the Company receives your termination
notice, unless the Company cures or eliminates the event giving rise to Good
Reason prior to such time.


 


6.               “Termination Date”
shall mean the last day of your employment with the Company.


 


II.                                     Severance
Benefits upon Change of Control.  If:


 


(A)                     your employment is
terminated by the Company (except for termination for Cause or due to a
Disability) and the Termination Date is within 90 days prior to a Change of
Control or within 12 months after a Change of Control; or


 


(B)                       you, of your
own initiative, (i) terminate your employment for Good Reason (in
accordance with the notice and cure provisions set forth in Section I.5
above) and (ii) the event giving rise to Good Reason occurs within 90 days
prior to a Change of Control or within 12 months after a Change of Control;


 


then,
in exchange for a general release executed by you within 30 days of your
Termination Date of all claims against the Company, its subsidiaries, and its
and their officers, directors and representatives, in a form satisfactory to
the Company, you shall receive the following benefits:


 


1.                                  Severance
Payment. The Company shall make a cash payment (the “Severance Payment”)
to you in an amount equal to:


 


(a)                                  your annual
base salary (provided, however, that if you terminate your employment for Good
Reason based on a reduction in your annual base salary, then the annual base
salary to be used in calculating the Severance Payment shall be your annual
base salary in effect immediately prior to such reduction in annual base
salary) plus your target bonus under any bonus program applicable to you for
the year in which the Termination Date occurs; plus


 


(b)                                 a pro rata
portion of your target bonus for the year in which the Termination Date occurs
under any bonus program applicable to you; plus


 


(c)                                  all cash
incentive compensation awards earned by you but not paid prior to the
Termination Date; provided that, if a fiscal year has been completed and the
incentive award for such fiscal year has not been determined, the incentive
compensation for such completed fiscal year shall equal the target bonus for
such fiscal year.


 


Except with respect to any portion of the
Severance Payment that is delayed as set forth in this paragraph, the Severance
Payment shall be made in cash within ten days after the 


 


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execution by you of the general release
referred to above and expiration without revocation of any applicable
revocation periods under such general release (or, if the Change of Control
resulting in your becoming entitled to such benefits occurs after such
execution and expiration, within ten days after the Change of Control).  The Severance Payment shall be divided into
two portions, consisting of a portion that does not constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code and
a portion, if any, that does constitute nonqualified deferred compensation. If
you are a “specified employee” as defined in Section 409A(a)(2)(B)(i) of
the Code, the commencement of the delivery of any such payments that constitute
nonqualified deferred compensation payable upon a “separation from service”
under Section 409A(a)(2)(A)(i) of the Code will be delayed until the
first business day that is more than six months after your Termination
Date.  The determination of whether, and
the extent to which, any of the payments to be made to you hereunder are
nonqualified deferred compensation shall be made after the application of all
applicable exclusions, including those set forth under Treasury Reg. §
1.409A-1(b)(9). Any payments that are intended to qualify for the exclusion for
separation pay due to involuntary separation from service set forth in
Reg. §1.409A-1(b)(9)(iii) must be paid no later than the last day of
the second taxable year following the taxable year in which the Termination
Date occurs.  To the extent that the
termination of your 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 are reasonably anticipated to be provided by you to the Company
at the time your employment is terminated), the payment of any non-qualified
deferred compensation will be further delayed until the first business day that
is more than six months after the date of a subsequent event constituting a
separation of service under Section 409A(a)(2)(A)(i) of the Code.


 


2.                                  Accelerated
Vesting.


 


(a)                   Stock options for the
purchase of the Company’s securities held by you as of the Termination Date and
not then exercisable shall immediately become exercisable in full.  The options to which this accelerated vesting
applies shall remain exercisable until the earlier of (a) the end of the
90-day period immediately following the later of (i) the Termination Date
or (ii) the date of the Change of Control or (b) the date the stock
option(s) would otherwise expire; and


 


(b)                  the Company’s lapsing
repurchase right with respect to shares of restricted stock held by you shall
lapse in full (subject to your making satisfactory arrangements with the
Company providing for the payment to the Company of all required withholding
taxes).


 


Notwithstanding
anything to the contrary in this Agreement, 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 Agreement are more favorable to you.


 


3.                                  Continued
Insurance Coverage. If COBRA
coverage is elected by you, the Company shall pay the cost of insurance
continuation premiums on your behalf (whether or not covered by COBRA) to
continue standard medical, dental and life insurance coverage for you (or 


 


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the cash equivalent of same if you are ineligible
for continued coverage) for a maximum of 12 months after the
Termination Date.


 


4.                                  No
Mitigation.  You shall not
be required to mitigate the amount of the Severance Payment or any other
benefit provided under this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this Agreement
be reduced by any compensation earned by you as the result of other employment,
by retirement benefits, or be offset against any amount claimed to be owed by
you to the Company or otherwise (except for any required withholding taxes);
provided, that if the Company makes any other severance payments to you under
any other program or agreement, including any payments under the Employment
Agreement, such amounts shall be offset against the payments the Company is
obligated to make pursuant to this Agreement.


 


III.                                 Miscellaneous.


 


1.                                  Employee’s
Obligations.  Upon the
termination of employment, you shall promptly deliver to the Company all
property of the Company and all material documents, statistics, account
records, programs and other similar tangible items which may by in your
possession or under your control and which relate in a material way to the
business or affairs of the Company or its subsidiaries, and no copies of any
such documents or any part thereof shall be retained by you.


 


2.                                  Entire
Agreement.  This
Agreement, the Employment Agreement, and the “Employee
Non-Disclosure, Non-Competition & Inventions Agreement”
previously executed by you covers the entire understanding of the parties as to
the subject matter hereof, superseding all prior understandings and agreements
related hereto. No modification or amendment of the terms and conditions of
this Agreement shall be effective unless in writing and signed by the parties
or their respective duly authorized agents.


 


3.                                  Governing
Law.  This Agreement shall be
governed by the laws of The Commonwealth of Massachusetts, as applied to
contracts entered into and performed entirely in Massachusetts by Massachusetts
residents.


 


4.                                  Successors
and Assigns.  This
Agreement may be assigned by the Company upon a sale, transfer or
reorganization of the Company.  Upon a
Change of Control, the Company shall require the successor to assume the Company’s
rights and obligations under this Agreement. 
The Company’s failure to do so shall constitute a material breach of
this Agreement.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors, permitted assigns, legal representatives and heirs.


 


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Kindly
indicate your acceptance of the forgoing by signing and dating this Agreement
as noted below, and returning one fully executed original to my attention.


 


	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Vertex
  Pharmaceuticals Incorporated

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/Matthew
  W. Emmens

  
	
   

  	
   

  	
   

  	
  Matthew
  W. Emmens

  
	
   

  	
   

  	
   

  	
  President,
  Chairman and

  
	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  ACCEPTED
  AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/Amit
  Sachdev

  	
   

  	
   

  
	
  Amit
  Sachdev

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3/1/10

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  



 


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