Exhibit 10.2


 


	
   

  	
  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


 


Dr. Peter
Mueller


45
Algonquian Drive


Natick,
MA  01760


 


	
  RE:

  	
  Amended and Restated
  Change of Control Agreement

  



 


Dear Peter:


 


Your expertise, reputation and position make you 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”
benefit to help ensure that in the event 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 the 7th day of March, 2003, as amended by that certain
Amendment to Change of Control Agreement entered into as of the 8th day of November, 2004, that
certain Second Amendment to Change of Control Agreement entered into as of the
11th day of February, 2008, and that
certain Amendment to Change of Control Agreement entered into as of the 27th day of December, 2008, by and
between you and the Company.


 


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


 


1.     “Base Salary”  shall mean your annual base salary in effect immediately
prior to a Change of Control (as such term is defined in Section I.4 below).


 


2.     “Cause”
shall mean:


 


(a)           your conviction of a felony
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 thirty (30) days to correct any problems
and further provided if you correct the problem(s) you
may not be terminated for Cause in that instance;


 


(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.


 


3.     “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 fifty
percent (50%) of the combined voting power of the outstanding securities of the
Company, as the case may be, 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.


 


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 under Internal Revenue Code Section 22(e)(3).


 


5.     “Good Reason”
shall mean that within ninety (90) days prior to a Change of Control, or within
twelve (12) months after a Change of Control, one of the following events
occurs without your consent:


 


(a)           You are assigned to material
duties or responsibilities that are inconsistent, in any significant respect,
with the scope of duties and responsibilities associated with your position and
office immediately prior to the Change of Control (provided that such
reassignment of duties or responsibilities is not for Cause, due to your
Disability or at your request);


 


(b)           You suffer a material
reduction in the authorities, duties, or job title and responsibilities
associated with your position and office immediately prior to the Change of
Control, on the basis of which you make a good faith determination that you can
no longer carry out your position or office in the manner contemplated before
the Change of Control (provided that such reduction in the authorities,
duties, 


 


2

















 


or job title and responsibilities
is not for Cause, due to your Disability or at your request);


 


(c)           your annual base salary is
decreased below the Base Salary;


 


(d)           the principal offices of the
Company, or the location of the office to which you are assigned at the time this Agreement is entered into,
is relocated to a place thirty-five (35) or more miles away, without your
agreement; or


 


(e)           following
a Change of Control, the Company’s successor fails to assume the Company’s
rights and obligations under this Agreement;


 


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
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:


 


3

















 


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 portion of 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 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 


 


4

















 


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 and (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 and period of exercisability of
such awards, 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 the cash equivalent of same if you are
ineligible for continued coverage) for a period of 18 months from 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; provided, that if the Company makes any other
severance payments to you under any other program or 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 


 


5

















 


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 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.


 


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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/Matthew
  Emmens

  
	
   

  	
   

  	
  By:

  	
  Matthew
  Emmens

  
	
   

  	
   

  	
   

  	
  President,
  Chairman and

  
	
   

  	
   

  	
   

  	
  Chief
  Executive officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACCEPTED
  AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/Peter Mueller

  	
   

  	
   

  
	
  Peter Mueller

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2/5/10

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  



 


6