Exhibit 10.3


 


Executed on February 5,
2009


 


Joshua
S. Boger


243
Old Pickard Road


Concord,
MA  01742


 


Re:
Transition Agreement


 


Dear
Dr. Boger:


 


This
letter follows up on the discussions we have had concerning your separation
from employment with Vertex Pharmaceuticals Incorporated (“Vertex” or
the “Company”).  The purpose of
our discussions and our agreement upon terms is to establish an amicable
arrangement for ending our employment relationship, to provide for a smooth
transition of your responsibilities, to release the Company from certain claims
and to permit you to receive certain severance pay and related benefits.  With this understanding, and in exchange for
your promises and those of the Company as set forth below, you and the Company
agree as follows (this “Agreement”).


 


1.                                      Employment
Status and Final Payments:


 


(a)                                  The
Employment Agreement between you and the Company dated November 1, 1994,
as amended May 12, 1995, November 8, 2004 and December 30, 2008
(as amended, the “Employment Agreement”) is acknowledged to be in full
force and effect as of the date hereof. 
The Employment Agreement is hereby amended to terminate on May 23,
2009 unless terminated earlier in accordance with the terms of the Employment
Agreement (the “Term”).  Except as
provided in this Agreement, the provisions of the Employment Agreement shall
apply and be in full force during the Term. 
All capitalized terms used herein without specific definition shall have
the meanings set forth in the Employment Agreement.


 


(b)                                 On
February 5, 2009, you will resign your position as the President of
Vertex.  You will continue to serve as
the Chief Executive Officer of the Company from February 5, 2009 until the
end of the Term.  All executive team
members will report directly to the new President, who shall report to you.


 


(c)                                  You
will devote your full time to the business of the Company and faithfully
perform such duties and responsibilities as the Board of Directors, or any of
its designees, may reasonably assign to you from time to time, including but
not limited to assisting the new 


 

















 


President with his transition to the Company and his
preparation to become the Chief Executive Officer of the Company on May 23,
2009.


 


(d)                                 You
will continue to receive the same level of compensation and other benefits
under the Employment Agreement until the expiration of the Term except that the
Company shall increase your base salary to the rate of $950,151 per annum
effective February 5, 2009.


 


(e)                                  Provided
that you remain employed with the Company until May 23, 2009, you agree
and acknowledge that (i) your employment shall immediately terminate on May 23,
2009, (ii) the Company thereafter shall have no further obligations to you
under the Employment Agreement except as provided below in Section 5 of
this Agreement, and (iii) your compensation and payments in connection
with such termination and for all future periods shall be governed solely by
this Agreement.   In the event that you die or become disabled
(within the meaning of the Employment Agreement) prior to May 23, 2009,
whether or not there has then been a Change in Control, your employment shall
be deemed to have terminated under this Section 1(e), and you agree and
acknowledge that the Company thereafter shall have no further obligations to
you under the Employment Agreement except as provided below in Section 5
of this Agreement, and your compensation and payments in connection with such
termination and for all future periods shall be governed solely by this
Agreement.


 


(f)                                    If
(i) (A) the Company terminates your employment without
Cause prior to May 23, 2009, or (B) you terminate your
employment for Good Reason in compliance with the Employment Agreement prior to
May 23, 2009, and (ii) a Change in Control (as defined in Section 7(f) below)
has not yet occurred, then you shall be eligible to receive the payments and
benefits set forth in this Agreement after any such employment termination, and
not under the Employment Agreement except as provided in Section 5 of this
Agreement.


 


(g)                                 If
your employment with the Company terminates prior to May 23, 2009, for any
reason not described in Section 1(e) or 1(f) above, then your
rights to any payments or compensation following any such employment
termination shall be governed solely by the terms of the Employment Agreement.


 


(h)                                 Other
than your position as a member of Class III of the Board of Directors of
the Company or any committee of the Board of Directors of the Company, you
shall not hold any positions or offices with the Company or any of its
subsidiaries upon the earlier of your employment termination or May 23,
2009 (the “Termination Date”), and all of your duties and obligations
associated with such positions or offices immediately shall cease on the
Termination Date.  Notwithstanding the
foregoing, for purposes of determining when payments and benefits shall be
provided to you under either Section 2 or Section 7 of this
Agreement, the Termination Date shall in no event be earlier than your “separation
from service” as determined under Section 409A of the Code and after
applying the presumptions set forth in Treasury Regulation Section 1.409A-1(h).


 


(i)                                     Regardless
of the reason for your employment termination with the Company, upon the
Termination Date you shall in all events be entitled to (i) all earned but
unpaid wages and all accrued but unused vacation time, subject to standard
payroll deductions and withholding, (ii) reimbursement for all reasonable,
business-related expenses incurred by you up 


 


2

















 


to and through the Termination Date, in accordance
with the Company’s expense reimbursement policy, provided that such
reimbursement shall be made no later than the calendar year following the
calendar year in which such expenses are incurred, and (iii) any rights
you have under the provisions of a Company-provided benefit plan, program,
contract or practice based on your employment up until the Termination Date.


 


2.                                      Consideration:


 


Provided that (i) your employment is terminated
under the circumstances set forth in either Section 1(e) or 1(f) of
this Agreement, (ii) you execute an update to the release provided in Section 6
below in substantially the form attached hereto as Exhibit A (the “Supplemental
Release”) within twenty-one (21) days after the Termination Date, and (iii) you
do not subsequently revoke such updated release as permitted under Section 16
below, the Company will provide the following payments and benefits in exchange
for, and in consideration of, your full execution of this Agreement:


 


(a)                                  On
the date that is six (6) months and one (1) day following the
Termination Date, the Company shall pay you a one-time, lump sum payment in the
amount of $2,850,453.


 


(b)                                 Upon
the Termination Date, you and your dependents may be eligible to continue your
group medical plan coverage under Company-sponsored plans pursuant to the
federal law known as COBRA.  If you are
eligible, and in the event you and your dependents elect COBRA continuation
coverage, the Company shall provide you a cash subsidy to pay the cost of COBRA
coverage properly and timely elected by you and your dependents for a period of
up to eighteen (18) months from the Termination Date.  This subsidy shall be paid monthly on your
behalf in an amount equal to the then current monthly charge for this COBRA
coverage; provided, however, that no amount shall be paid in excess of $16,500
during the first six months after your Termination Date.  Any monthly COBRA payment that cannot be paid
under the immediately preceding sentence shall be paid in a single lump sum
payment during the first payroll period immediately following such six month
period.  For purposes of COBRA, Section 4980B(f)(3)(B) of
the Code, the qualifying event associated with the termination of your
employment with the Company shall be the Termination Date.  You understand and acknowledge that it is
solely your responsibility to elect COBRA continuation coverage if you desire
such coverage, and that the cash payment under this Section 2(b) is
taxable to you.  You further understand and
acknowledge that the Company’s cash subsidy towards your COBRA coverage is a
taxable event to you, and that you shall be solely responsible for all taxes on
this benefit.  Your rights and
obligations under the Company’s group medical plans shall be governed by the
specific terms of the plans and COBRA. 
Information concerning COBRA rights, coverage and election will be sent
to you under separate cover.  In the
event you obtain comparable health insurance coverage through other employment
prior to the expiration of the eighteen-month period, the Company’s obligation
to continue to provide cash payments under this Section 2(b) shall
cease as of the effective date of such coverage.  Should you obtain such coverage, you agree to
promptly notify Director – Compensation and Benefits in writing, including the
effective date of such coverage.


 


(c)                                  The
Company will reimburse you for your reasonable fees and expenses of legal
counsel incurred in connection with negotiating this Agreement up to $80,000,
subject to the presentation of such documentation as Vertex may reasonably
require, provided that such 


 


3

















 


reimbursement shall be made no later than the calendar
year following the calendar year in which such fees and expenses are incurred.


 


(d)                                 Except
as otherwise specifically provided in this Agreement or, as applicable, the
Employment Agreement, you acknowledge and agree that you will not receive nor
are entitled to receive any additional compensation or benefits and that no
additional benefits are otherwise due or owing to you under any Company
employment agreement or policy or practice.


 


3.                                      Stock
Options:


 


(a)                                  Exhibit B
to this Agreement lists each stock option granted to you during your employment
with the Company as of the date of this Agreement that remains outstanding
(collectively, the “Stock Options”). 
Except as specifically set forth in this Section 3 and Section 7
below, all of your rights and obligations under each Stock Option, including
without limitation vesting, exercise and expiration, shall be governed by the
terms and conditions of the Equity Plan (as defined below) under which the
Company issued each Stock Option and the award agreement governing each Stock
Option.  The Company represents to you
that none of your actual award agreements contain any materially different
terms as compared to the form of award agreement for each Equity Plan that have
been publicly filed by the Company with the United States Securities and
Exchange Commission (the “SEC”).  For
purposes of this Plan, the “Equity Plans” are the Vertex Pharmaceuticals
Incorporated 1994 Stock and Option Plan, as amended, the Vertex Pharmaceuticals
Incorporated 1996 Stock and Option Plan, as amended and the Vertex
Pharmaceuticals Incorporated Amended and Restated 2006 Stock and Option Plan,
as amended (collectively, the “Equity Plans”).  Each of the Stock Options are listed on Exhibit B.


 


(b)                                 Provided
that you meet the requirements to receive payments and benefits as set forth in
Sections 2(i), 2(ii) and 2(iii) above, the Company shall add an
additional eighteen (18) months of service to your period of employment
effective as of May 23, 2009, solely  for purposes
of determining the vested percentage under each of the Stock Options.  The number of Stock Options that will become
vested on May 23, 2009 if you meet the requirements to receive payments
and benefits as set forth in Sections 2(i), 2(ii) and 2(iii) above is
set forth in Exhibit B.


 


(c)                                  Each
of your outstanding and vested Stock Options shall in all events remain
exercisable until December 31, 2010, provided, however, that if a
Qualifying Change in Control Event (as defined in Section 7(a) of
this Agreement) occurs, and you are entitled to payments and vesting pursuant
to Section 7(a) below, all Stock Options held by you at the time of
such event shall remain exercisable for the period set forth in the applicable
Equity Plan (as if the termination of service under such Equity Plan took place
on the date of the Qualifying Change in Control Event), subject to the Company’s
right to extinguish the Stock Options under the Equity Plans on the Change in
Control (as defined in Section 7(f) of this Agreement).  Notwithstanding anything to the contrary, no
Stock Option the fair market value (as
determined using the arithmetic mean of the high and low prices on February 5,
2009)) of which exceeds the exercise price thereof as of the date hereof
shall be exercisable beyond the earlier of the latest date upon which such
Stock Option could have expired by its original terms under any circumstances
or the tenth anniversary of the original date of grant of the Stock Option.


 


4

















 


(d)                                 For
any period after the Termination Date that you continue in the service of the
Company in any capacity that provides eligibility under the applicable Equity
Plan and governing Stock Option award agreement, such that there shall not have
been a “termination of service” under the applicable Equity Plan and such award
agreement, each outstanding Stock Option shall continue to vest after your
Termination Date in accordance with the provisions of the applicable Equity
Plan and such award agreement.  Such
continued vesting will be in addition to the eighteen (18) months of additional
deemed service provided for in Section 3(b) above.


 


(e)                                  Notwithstanding
anything to the contrary, under Section 12 of each of the Equity Plans and
your award agreement governing each Stock Option, “cause” shall be limited to
events that have occurred prior to the Termination Date and, after the
Termination Date, “cause” shall be limited solely to your actions in your
capacity as, or as a result of your status as, a Class III Director of the
Company or if you breach the Non-competition Covenant or the Inventions Agreement
(both as defined below); provided, that you shall not be deemed to have been
terminated for “cause” based on your actions in your capacity as a Class III
Director of the Company if said actions were based on the advice of counsel to
the Company or its Board of Directors or if you are treated in a discriminatory
manner with respect to your Equity Awards from other Directors who are
similarly situated.


 


4.                                      Restricted
Stock:


 


(a)                                  Exhibit C
to this Agreement lists each share of restricted stock granted to you during
your employment with the Company as of the date of this Agreement that remains
subject to a Lapsing Repurchase Right (collectively, the “Restricted Stock”).  Except as specifically set forth in this Section 4
and Section 7 below, all of your rights and obligations under the
Restricted Stock shall be governed by the terms and conditions of the
applicable Equity Plan and your award agreement governing each share of
Restricted Stock (each, a “Restricted Stock Agreement”).  The Company represents to you that the none
of your actual award agreements contain any materially different terms as
compared to the form of award agreement for each Equity Plan that have been
publicly filed by the Company with the SEC. 
A “Lapsing Repurchase Right,” with respect to a share of
Restricted Stock, shall have the meaning set forth in the Restricted Stock
Agreement applicable to such share.


 


(b)                                 Provided
that you meet the requirements to receive payments and benefits as set forth in
Section 2(i), 2(ii) and 2(iii) above, the Company’s Lapsing
Repurchase Rights with respect to the Restricted Stock shall lapse with respect
to a “Pro-Rata Share of Restricted Stock” (as defined in the Second Amendment
to the Employment Agreement dated November 8, 2004) as of May 23,
2009.  The number of shares of Restricted
Stock with respect to which the Lapsing Repurchase Right lapses on May 23,
2009, pursuant to this Section 4(b) is set forth on Exhibit C.


 


(c)                                  For
any period after the Termination Date that you continue in the service of the
Company in any capacity that provides eligibility under the applicable Equity
Plan, such that there shall not have been a “termination of service” under the
applicable Equity Plan, each outstanding Restricted Stock award shall continue
to vest after your Termination Date in accordance with the provisions of the
applicable Equity Plan and governing Restricted Stock Agreement.  Such continued vesting will be in addition to
the lapse of a “Pro-Rata Share of 


 


5

















 


Restricted Stock” to occur on May 23, 2009 as provided for in Section 4(b) above.  Accordingly such Restricted Stock may also
vest after your Termination Date based on continued service as a Class III
director, other service, if any, that provides for continued eligibility under
the applicable Equity Plan and the Company’s subsequent performance.  Specifically, the date on which the remaining
unvested portion, if any, of the Restricted Stock (after application of Section 7(b) above)
is scheduled to vest based solely on providing continued services shall be
eighteen (18) months earlier than such otherwise scheduled date.  You shall also be entitled to accelerated
vesting on the remaining unvested portion, if any, of the Restricted Stock if
the Company meets the applicable performance criteria while you remain in
service as a Class III director or do not otherwise undergo a termination
of service under the applicable Equity Plan. 
For purposes of illustration only, if shares subject to a Restricted
Stock grant that is made on May 23, 2009 only vested in four years (on May 23,
2013) and you qualified for accelerated vesting under Section 4(b) above,
you would be immediately vested in 37.5% of the Restricted Stock on May 23,
2009, (18 months / 48 months) pursuant to Section 7(b) above, and you
would vest in the remaining portion of the Restricted Stock by either providing
services as a Class III director (or otherwise providing eligible
services, if any) for an additional thirty (30) months or remaining in service
as a director (or otherwise providing eligible services, if any) when the
Company meets the performance criteria applicable to the Restricted Stock.


 


(d)                                 Notwithstanding
anything to the contrary, under Section 12 of each of the Equity Plans and
your award agreement governing each share of Restricted Stock, “cause” shall be
limited to events that have occurred prior to the Termination Date and, after
the Termination Date, “cause” shall be limited solely to your actions in your
capacity as, or as a result of your status as, a Class III Director of the
Company or if you breach the Non-competition Covenant or the Inventions
Agreement (both as defined below); provided, that you shall not be deemed to
have been terminated for “cause” based on your actions in your capacity as a Class III
Director of the Company if said actions were based on the advice of counsel to
the Company or its Board of Directors or if you are treated in a discriminatory
manner with respect to your Equity Awards from other Directors who are
similarly situated.


 


5.                                      Excise
Tax Gross-Up:


 


Subject to Section 7 below, you will remain entitled to the excise
tax gross-up contained in Sections 7.1.5 and 7.1.6 of the Employment Agreement,
and the Company shall bear the costs associated with the calculation of the tax
gross-up, if any.  Notwithstanding
anything to the contrary contained in the Employment Agreement, for purposes of
determining the amount of the gross-up payment, you shall be deemed to pay
federal income taxes at the actual rate of federal income taxation applicable
to you in the calendar year in which the gross-up payment is to be made and
state and local income taxes at the actual rates of taxation applicable to you
and as are in effect in the state and locality of your residence in the
calendar year in which the gross-up payment is to be made, net of the maximum
reduction in federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account any limitations applicable to you.  At the request of the Company, you shall
provide information necessary from your accountants and financial advisors to
determine your actual rates for federal, state and local income taxes.  For the avoidance of doubt, you shall continue
to be entitled to reimbursement from the Company of any reasonable expenses
incurred in connection with a tax audit to the 


 


6

















 


extent attributable to the application of Section 4999 of the Code
to any payment or benefit provided to you.


 


6.                                      Limited
Release:


 


In
exchange for the benefits to be provided to you hereunder, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, you and your representatives, estate, heirs, successors and
assigns, hereby absolutely and unconditionally release, remise, discharge,
indemnify and hold harmless the Company Releasees (defined to include the
Company and any of its parents, subsidiaries or affiliates, predecessors,
successors or assigns, and its and their respective current and former
partners, directors, shareholders, officers, employees, attorneys and agents,
all both individually and in their official capacities), from any and all
actions or causes of action, suits, claims, complaints, contracts, liabilities,
agreements, promises, torts, debts, damages, controversies, judgments, rights
and demands, whether existing or contingent, known or unknown, suspected or
unsuspected, up to and including the date you sign this Agreement
(collectively, “Claims”), concerning (1) Claims of breach of the
Employment Contract; (2) Claims concerning the manner or means of your
separation of employment from the Company, including without limitation Claims
for alleged wrongful termination or constructive discharge, discrimination, retaliation,
intentional or negligent infliction of emotional distress, negligent
misrepresentation, intentional misrepresentation, fraud, defamation or
violation of public policy; and (3) Claims concerning actions taken (or
not taken) by any Company Releasee relating to your separation of employment.


 


Notwithstanding
any contrary provisions of this Agreement, you are not releasing and will not,
as of the Termination Date, be releasing the Company Releasees from: (1) Claims
relating to any vested rights under any company benefit plan; (2) any
Claims for indemnification by the Company pursuant to applicable law and/or the
Company’s Amended and Restated By-Laws; or (3) any claims to enforce the
terms of this Agreement.


 


7.                                      Qualifying
Change in Control Event:


 


(a)                                  You
may become entitled to additional payments and vesting in Stock Options and
Restricted Stock as described in this Section 7 if you meet the
requirements to receive payments and benefits as set forth in Sections 2(i), 2(ii) and
2(iii) above, and you satisfy a Change in Control vesting condition that
shall occur if (i) the Company experiences a Change in Control (as defined
in Section 7(f) below) prior to December 31, 2010, (ii) the
Company has entered into, on or after the date hereof, a binding agreement to
effect a transaction that directly results in a Change in Control, subject to
satisfaction of customary closing conditions, prior to December 31, 2010,
and a Change in Control takes place thereafter pursuant to the terms of such
agreement, or (iii) the Company experiences a Change in Control, the
consummation of which gives rise to an obligation on the part of the Company to
pay money to a third party pursuant to the terms of a binding agreement to
which reference is made in the immediately preceding clause.  For purposes of this Agreement, a “Qualifying
Change in Control Event” is a Change in Control described in either
paragraph (i), (ii) or (iii) if you had previously met the
requirements to receive payments and benefits as set forth in Sections 2(i), 2(ii) and
2(iii) above.


 


7

















 


(b)                                 At
such time, if any, before a Qualifying Change in Control Event, that you
experience a “termination of service” under the Equity Plans, all Stock Options
that are then unvested and shares of Restricted Stock that remain subject to a
Lapsing Repurchase Right will be suspended. 
For avoidance of doubt, a suspension means that you will not be able to
exercise any unvested Stock Options or sell any of the shares of Restricted Stock
that are subject to a Lapsing Repurchase Right, nor will the Company be
entitled to have you forfeit any of these awards.  If at any time after December 31, 2010
it becomes clear that there is no possibility that there will be a Qualifying
Change in Control Event, then you shall forfeit any Stock Options or Restricted
Stock that had previously been suspended.


 


(c)                                  Upon
a Qualifying Change in Control Event, the Company will pay you a cash payment
equal to the amount that would be determined under Section 7.1.2 of the
Employment Agreement (assuming that you were employed on the Qualifying Change
in Control Event, were receiving salary at a rate of $950,151 per annum and the
last two annual bonuses paid to you were the bonuses paid in 2008 and 2009),
less the amount, if any, previously paid under Section 2(a) of this
Agreement if your Termination Date occurred before the Qualifying Change in
Control Event.


 


(d)                                 Upon
a Qualifying Change in Control Event, the Company will pay a cash amount to you
equal to the cost, determined as of the Qualifying Change in Control Event, of
providing you with life, disability, accident and health insurance benefits for
three years less any amounts previously paid to you or on your behalf under Section 2(b) above.


 


(e)                                  Upon
a Qualifying Change in Control Event, all Stock Options and Restricted Stock,
including those that were suspended under Section 7(b) above, shall
immediately vest.  and shall remain
exercisable for the period set forth in the applicable Equity Plan (as if the
termination of service under such Equity Plan took place on the date of the
Qualifying Change in Control Event), subject to the Company’s right to
extinguish the Stock Options under the Equity Plans on the Change in Control
(as defined in Section 7(f) of this Agreement).


 


(f)                                    A
“Change in Control” for purposes of this Agreement shall mean a Change
in Control as defined under the Employment Agreement.


 


(g)                                 Notwithstanding
anything to the contrary in this Section 7, you shall not be entitled to,
and the Company shall have no obligation to provide, any of the payments or
additional vesting set forth in Section 5 or this Section 7 of this
Agreement if you Actively
Participate in the transaction or series of transactions that
constitute a Qualifying Change in Control Event.  For purposes of
this Section 7(g), “Actively Participate” means that
you alone or in concert with one or more other persons, initiate, direct or
materially assist the acquiring person or entity in connection with a
transaction or series of transactions that result in a Qualifying Change in
Control Event, without the approval of the Company’s Board of Directors. 
For purposes of interpreting the phrase “Actively Participate” the principles of law governing
the definition of “person” or “group” as such terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 shall apply.  For the avoidance of doubt, neither your
employment by the Company or a successor entity after a Qualifying Change in
Control Event nor your providing of information to others in the
performance of, and in compliance with, 


 


8

















 


your duties as an executive officer or director of the
Company shall, by itself, be deemed as your having Actively
Participated in a Change in Control.


 


8.                                      Accord
and Satisfaction:


 


The
payments and benefits set forth above in Sections 1, 2 and 7, and the
amendments set forth above in Sections 3 and 4 shall be complete and
unconditional payment, settlement, accord and/or satisfaction with respect to
all obligations and liabilities of the Company Releasees to you, including,
without limitation, all claims for back wages, salary, vacation pay, draws,
incentive pay, bonuses, stock and stock options, commissions, severance pay,
reimbursement of expenses, any and all other forms of compensation or benefits,
attorney’s fees, or other costs or sums, under the Employment Agreement or
otherwise.


 


9.                                      Waiver
of Rights and Claims Under the ADEA:


 


Since you are 40
years of age or older, you are being informed that you have or may have
specific rights and/or claims under the Age Discrimination in Employment Act of
1967 (“ADEA”), as amended, and you agree that:


 


(a)                                  in
consideration for the rights provided in this Agreement, a portion of which you
are not otherwise entitled to receive, you specifically and voluntarily waive
such rights and/or claims you might have against the Company Releasees under
the ADEA (as amended) to the extent such rights and/or claims arose prior to
the date this Agreement was executed;


 


(b)                                 you
are advised that you have at least twenty-one (21) days within which to
consider the terms of this Agreement and to consult with or seek advice from an
attorney of your choice or any other person of your choosing prior to executing
this Agreement;


 


(c)                                  you
are advised that, notwithstanding any other contrary provision of this
Agreement, consistent with the provisions of the ADEA (as amended) and other
federal discrimination laws, nothing in this Agreement shall be deemed to
prohibit you from challenging the validity of the Release under Section 6
or the Supplemental Release provided pursuant to Section 2 (together the “Releases”)
under the federal age or other discrimination laws (the “Federal
Discrimination Laws”) or from filing a charge or complaint of age or other
employment related discrimination with the Equal Employment Opportunity
Commission (“EEOC”), or from participating in any investigation or
proceeding conducted by the EEOC. 
Further, nothing in the Releases or this Agreement shall be deemed to
limit the Company’s right to seek immediate dismissal of such charge or
complaint on the basis that your signing of this Agreement constitutes a full
release of any individual rights under the Federal Discrimination Laws, or to
seek restitution to the extent permitted by law of the economic benefits
provided to you under this Agreement if you successfully challenge the validity
of either or both of the Releases and prevail in any claim under the Federal
Discrimination Laws;


 


(d)                                 you
have carefully read and fully understand all of the provisions of this
Agreement, and you knowingly and voluntarily agree to all of the terms set
forth in this Agreement; and


 


9

















 


(e)                                  in
entering into this Agreement you are not relying on any representation, promise
or inducement made by the Company or its attorneys with the exception of those
promises described in this document.


 


10.                               Acknowledgements:


 


(a)                                  You
acknowledge that you were informed and understand that you have twenty-one (21)
days to review this Agreement and consider its terms before signing it.  The 21-day review period will not be affected
or extended by any revisions, whether material or immaterial, that might be
made to this Agreement.


 


(b)                                 You
further acknowledge that, while this Agreement is intended to comply with Section 409A
of the Code, and shall be so interpreted, any tax liability incurred by you
under Section 409A of the Code is solely your responsibility.


 


11.                               Company
Files, Documents and Other Property:


 


You
agree that on or before the Termination Date you will return to the Company all
Company property and materials, including but not limited to, (if applicable)
personal computers, laptops, Blackberries, fax machines, scanners, copiers, Company
credit cards and telephone charge cards, manuals, building keys and passes,
courtesy parking passes, diskettes, intangible information stored on diskettes,
software programs and data compiled with the use of those programs, software
passwords or codes, tangible copies of trade secrets and confidential
information, sales forecasts, names and addresses of Company customers and
potential customers, customer lists, customer contacts, sales information,
sales forecasts, memoranda, sales brochures, business or marketing plans,
reports, projections, and any and all other information or property previously
or currently held or used by you that is or was related to your employment with
the Company (“Company Property”), provided, however, that you may retain
Company Property that is necessary to carry out your duties as a member of the
Board of Directors.  Notwithstanding the
foregoing, Company Property does not include any personal documents or data
compiled not related to the business of the Company that you may have created
using commercially available third-party software licensed by the Company.  You agree that in the event that you discover
any other Company Property in your possession after the Termination Date of this
Agreement you will immediately return such property to the Company.  Upon the termination of your service as a
member of the Board of Directors, you will immediately return to the Company
all remaining Company Property in your possession.


 


The Company agrees that
it will maintain your Company email account for the period of thirty (30) days
immediately following the Termination Date and shall automatically forward a
copy of all emails sent to you at the Company during such period to your home
email address; provided that, you immediately return or delete any and all
correspondence containing Company trade secrets or confidential information, as
referenced above, and any and all correspondence that is not of a personal
nature to you, unless the information or correspondence is necessary for you to
carry out your duties as a member of the Board of Directors, in which case you
may permissibly retain such information and correspondence, so long as you
delete such information and correspondence upon the termination of your service
on the Board of Directors.  In addition,
the Company agrees that it will maintain your Company voicemail account for the
period of thirty


 


10
















 


(30) days immediately
following the Termination Date, and you and the Company agree that your current
executive assistant shall be given access to your voicemail account and shall
be instructed to communicate to you on a regular basis all personal messages
left on your voicemail as well as all other communication.


 


12.                               Future
Conduct:


 


(a)                                  Mutual
Nondisparagement:  You will not make
disparaging, critical or otherwise detrimental comments to any person or entity
concerning the Company, its officers, directors, employees, stockholders or
business partners; the products, services or programs provided or to be
provided by the Company; the business affairs, operation, management or the
financial condition of the Company; or the circumstances surrounding your employment
and/or separation of employment from the Company.  Likewise, the Company will not, and will take
actions designed to ensure that its executive officers and members of its Board
of Directors will not, make disparaging, critical or otherwise detrimental
comments to any person or entity concerning you or the circumstances
surrounding your employment and/or separation of employment from the
Company.  The Company shall instruct all
the executive officers and members of its Board of Directors of their respective
obligations under this Section 12(a). 
Your and the Company’s sole remedy in enforcing the terms of this Section 12(a) shall
be injunctive relief and/or the recovery of damages as determined by a court of
competent jurisdiction.  Except as
ordered by a court of competent jurisdiction (provided the Company cannot off
set any nonqualified deferred compensation under Section 409A of the
Code), the Company shall not have the right to set off the amount of such
damages, if any, against any payment or benefit otherwise due to you from the
Company pursuant to this Agreement or your Employment Agreement, nor shall your
violation of the provisions of this Section 12(a) vitiate or limit
any of the Company’s obligations under this Agreement or the Employment Agreement.


 


(b)                                 Disclosures:  Nothing herein shall prohibit or bar you or
the Company from providing truthful testimony in any legal proceeding or in
communicating with any governmental agency or representative or from making any
truthful disclosure required, authorized or permitted under law; provided,
however, that in providing such testimony or making such disclosures or
communications, you and the Company agree to use reasonable efforts to ensure
that this Section is complied with to the maximum extent possible.  Notwithstanding the foregoing, nothing in
this Agreement shall bar or prohibit you from contacting, seeking assistance
from or participating in any proceeding before any federal or state
administrative agency to the extent permitted by applicable federal, state
and/or local law.  However, you
nevertheless will be prohibited to the fullest extent authorized by law from
obtaining monetary damages in any agency proceeding in which you do so
participate.


 


(c)                                  No
Agency Relationship.  From and after
the Termination Date, unless otherwise expressly authorized in writing by the
Company’s Board of Directors, and except in those circumstances where you are
acting pursuant to your duties as a member of the Board of Directors, you shall
no longer be the agent of the Company and shall no longer have the power or
authority to, and you shall no longer attempt to, (i) bind the Company, (ii) incur
any liability or obligation on behalf of the Company, or (iii) hold
yourself out as authorized to act on behalf of the Company, including, without
limitation, participating in any investor calls or communicating with the media
regarding the Company.


 


11

















 


(d)                                 Litigation
Cooperation.  During your continued
employment with the Company and after the Termination Date, you agree to
cooperate fully with the Company in any action, proceeding, charge or lawsuit
in which the Company is a party as reasonably requested by the Company from
time to time or as required by law or legal process.  After the Termination Date, you agree to
provide such litigation assistance at such times that are mutually agreeable to
you and the Company, and that do not unreasonably interfere with employment,
service on boards of directors, or volunteering in which you may be
engaged.  For the twelve month period immediately following the
Termination Date, you agree to provide such litigation assistance without
further compensation than the agreements of the Company in this Agreement and
reimbursement of reasonable expenses directly incurred by you in connection
with such litigation assistance.  After
the twelve-month anniversary of the Termination Date, the Company shall pay you
$500 per hour in connection with any such litigation assistance (other than
your participation as a witness or deponent pursuant to a deposition notice,
subpoena, summons or other legal process) and reimburse you for reasonable
expenses directly incurred by you in connection with such litigation
assistance.  For purposes of this
paragraph, the term “expenses” shall not include attorneys’ fees.


 


(e)                                  Indemnification.  During your continued employment with the
Company and after the Termination Date, you shall be eligible for
indemnification to the fullest extent permitted under the Company’s Amended and
Restated By-Laws, and for coverage under the Company’s Directors and Officers
Liability Insurance Policy in accordance with the terms and conditions set
forth therein, provided that the Company continues to maintain such insurance
coverage.


 


13.                               Employee
Nondisclosure and Inventions Agreement; Agreement Not to Compete:


 


You hereby acknowledge the existence and continued
validity of the Employee Non-Disclosure and Inventions Agreement that you
previously executed (the “Inventions Agreement”) and the “Non-competition”
covenant set forth in Section 8 (the “Non-competition Covenant”) of
the Employment Agreement, for the period of time set forth in the
Non-competition Covenant.  You agree to
abide by your obligations contained in the Inventions Agreement and the
Non-competition Covenant for the periods set forth therein.


 


14.                               Tax
Withholding and Reporting.


 


The Company shall withhold any taxes that are required
to be withheld from the payments and benefits provided under this
Agreement.  If you do not make
withholding arrangements in advance of the payment of compensation or benefits
under this Agreement that are reasonably satisfactory to the Company, the
Company shall be entitled to withhold amounts from such payments and benefits
in any reasonable manner as it determines its sole discretion.  You acknowledge that the Company’s sole
liability regarding taxes is to forward any amounts withheld to each
appropriate taxing authority.  Further,
the Company shall satisfy all applicable reporting requirements.


 


15.                               Representations
and Governing Law:


 


(a)                                  This
Agreement sets forth the complete and sole agreement between the parties and
supersedes any and all other agreements or understandings, whether oral or
written, except 


 


12

















 


the Employment Agreement to the extent it applies to
the period of time prior to the Termination Date as expressly set forth in Section 1
of this Agreement, the Inventions Agreement, the Noncompetition Covenant and
the stock option and restricted stock agreements as modified to the extent
referenced in Sections 3 and 4, each of which shall remain in full force and
effect in accordance with their respective terms and as modified by this
Agreement.  This Agreement may not be
changed, amended, modified, altered or rescinded except upon the express
written consent of the Company and you.


 


(b)                                 If
any provision of this Agreement, or part thereof, is held invalid, void or
voidable as against public policy or otherwise, the invalidity shall not affect
other provisions, or parts thereof, which may be given effect without the
invalid provision or part.  To this
extent, the provisions and parts thereof of this Agreement are declared to be
severable.  Any waiver of any provision
of this Agreement shall not constitute a waiver of any other provision of this
Agreement unless expressly so indicated otherwise.  The language of all parts of this Agreement
shall in all cases be construed according to its fair meaning and not strictly
for or against either of the parties.


 


(c)                                  This
Agreement and any claims arising out of this Agreement (or any other claims
arising out of the relationship between the parties) shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts and shall
in all respects be interpreted, enforced and governed under the internal and
domestic laws of Massachusetts, without giving effect to the principles of
conflicts of laws of such state.  Any
claims or legal actions by one party against the other shall be commenced and
maintained in state or federal court located in Massachusetts, and you and the
Company hereby submit to the jurisdiction and venue of any such court.


 


(d)                                 You
may not assign any of your rights or delegate any of your duties under this Agreement;
provided, however, that any unpaid benefits, whether or not due from the
Company at such time, shall inure to the benefit of your heirs and estate.  The rights and obligations of the Company
shall inure to the benefit of, and shall be binding upon, the Company’s
successors and assigns.


 


16.                               Revocation
Period:  You may revoke this
Agreement at any time during the seven-day period immediately following your
execution hereof.  As a result, this
Agreement shall not become effective or enforceable until the seven-day
revocation period has expired.


 


If
this letter correctly states the agreement and understanding we have reached,
please indicate your acceptance by countersigning the enclosed copy and
returning it to me.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTEX PHARMACEUTICALS INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHARLES A. SANDERS

  
	
   

  	
   

  	
  CHARLES A. SANDERS

  
				



 


13

















 


I
REPRESENT THAT I HAVE HAD AN OPPORTUNITY TO FULLY DISCUSS AND REVIEW THE TERMS
OF THIS AGREEMENT WITH AN ATTORNEY OF MY CHOOSING, AND THAT I HAVE CAREFULLY
READ THIS AGREEMENT, FULLY UNDERSTAND ITS TERMS AND CONDITIONS AND KNOWINGLY
AND VOLUNTARILY SIGN MY NAME OF MY OWN FREE ACT.  IN ENTERING INTO THIS AGREEMENT, I DO NOT
RELY ON ANY REPRESENTATION, PROMISE OR INDUCEMENT MADE BY THE COMPANY OR ITS
REPRESENTATIVES WITH THE EXCEPTION OF THE CONSIDERATION DESCRIBED IN THIS
DOCUMENT.


 


Accepted
and Agreed to:


 


	
  /s/ Joshua S. Boger

  	
   

  
	
   

  	
   

  
	
  Joshua S. Boger

  	
   

  
	
   

  	
   

  
	
  Date:
  

  	
  February 5,
  2009

  	
   

  
			



 


14

















 


IF YOU DO NOT WISH TO USE THE 21-DAY PERIOD,


PLEASE CAREFULLY REVIEW AND SIGN THIS DOCUMENT


 


I, Joshua S. Boger, acknowledge that I was informed and understand that
I have 21 days within which to consider the attached Transition Agreement and
Release, have been advised of my right to consult with an attorney regarding
such Agreement and have considered carefully every provision of the Agreement,
and that after having engaged in those actions, I prefer to and have requested
that I enter into the Agreement prior to the expiration of the 21-day period.


 


 


	
  Dated:

  	
  February
  5, 2009

  	
   

  	
  /s/
  Joshua S. Boger

  
	
   

  	
   

  	
   

  	
  Joshua
  S. Boger

  



 


15

















 


Exhibit A


 


Supplemental Release


 


In
exchange for the benefits to be provided to you hereunder, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, you and your representatives, estate, heirs, successors and
assigns, hereby absolutely and unconditionally release, remise, discharge, indemnify
and hold harmless the Company Releasees (defined to include the Company and any
of its parents, subsidiaries or affiliates, predecessors, successors or
assigns, and its and their respective current and former partners, directors,
shareholders, officers, employees, attorneys and agents, all both individually
and in their official capacities), from any and all actions or causes of
action, suits, claims, complaints, contracts, liabilities, agreements,
promises, torts, debts, damages, controversies, judgments, rights and demands,
whether existing or contingent, known or unknown, suspected or unsuspected, up
to and including the date you sign this Agreement (collectively, “Claims”),
concerning (1) Claims of breach of the Employment Contract; (2) Claims
concerning the manner or means of your separation of employment from the
Company, including without limitation Claims for alleged wrongful termination
or constructive discharge, discrimination, retaliation, intentional or
negligent infliction of emotional distress, negligent misrepresentation,
intentional misrepresentation, fraud, defamation or violation of public policy;
and (3) Claims concerning actions taken (or not taken) by any Company
Releasee relating to your separation of employment.


 


Notwithstanding any contrary provisions of this Agreement, you are not
releasing and will not, as of signing this Supplemental Release, be releasing
the Company Releasees from: (1) Claims relating to any vested rights under
any company benefit plan; (2) any Claims for indemnification by the
Company pursuant to applicable law and/or the Company’s Amended and Restated
By-laws; or (3) any claims to enforce the terms of this Supplemental
Release.


 

















 


Exhibit B


 


Stock
Options


 


17

















 


Exhibit C


 


Restricted
Stock


 


18