Document:

Exhibit

Exhibit 10.13

FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of February 9, 2017 (this “Amendment”), modifies that certain Credit Agreement, dated as of October 13, 2016 (as amended, restated, amended and restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”), among VERTEX PHARMACEUTICALS INCORPORATED, a Massachusetts corporation (the “Borrower”), certain Subsidiaries of the Borrower party thereto from time to time as Subsidiary Guarantors, the Lenders party thereto from time to time, and Bank of America, N.A., as Administrative Agent, Swingline Lender and an L/C Issuer.  Capitalized terms used herein and not defined shall have the meaning assigned to such terms in the Credit Agreement.  
RECITALS
WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders agree to amend certain of the terms and provisions of the Credit Agreement, as specifically set forth in this Amendment to account for certain unanticipated accounting treatment resulting from the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 730; and
WHEREAS, the undersigned Lenders and the Administrative Agent are prepared to amend the Credit Agreement on the terms, subject to the conditions and in reliance on the representations set forth herein.
NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto hereby agree as follows:
		
	Section 1.
	Amendments to Credit Agreement.

(a)Section 1.01 (Defined Terms) of the Credit Agreement is hereby amended by adding the following new defined terms in the appropriate alphabetical order:

“ “CFFT” means Cystic Fibrosis Foundation Therapeutics Incorporated”

“ “CFFT Amendment” means that certain Amendment #7 to the CFFT R&D Agreement, dated as of October 13, 2016, by and among the Borrower and CFFT, and any agreements ancillary thereto. 

“ “CFFT R&D Agreement” means that certain Research, Development and Commercialization Agreement dated May 24, 2004  between the Borrower and CFFT, as amended.”

“ “CFFT Royalty Payments” means royalty payments paid pursuant to the CFFT R&D Agreement (as amended by the CFFT Amendment) by the Borrower to CFFT, if any, on net sales of compounds.”

“ “Quarterly Reimbursement Payments” means non-refundable quarterly reimbursements of certain of the Borrower’s research and development expenses.”

“ “Specified CFFT Payments” means the following amounts paid or payable by CFFT to the Borrower pursuant to the CFFT Amendment: (i) the $75 million non-refundable upfront payment and (ii) Quarterly Reimbursement Payments.”

(b)Section 1.01 (Defined Terms) of the Credit Agreement is hereby amended by amending the definition of Consolidated Funded Indebtedness by inserting the following new sentence immediate following the last period (“.”) of such definition:

“To the extent Specified CFFT Payments qualify as Consolidated Funded Indebtedness, such Specified CFFT Payments shall nonetheless be excluded from Consolidated Funded Indebtedness in an aggregate amount up to $75,000,000.”

(c)Section 1.01 (Defined Terms) of the Credit Agreement is hereby amended by amending the last paragraph of the definition of “Consolidated EBITDA” by (i) deleting the ”and” between subclauses (I) and (II) of clause (1) thereof, (ii) and inserting the following new subclause (III)  immediately following the text “, and” appearing at the end of subclause (II) thereof:

“(III) notwithstanding any accounting principles or standards to the contrary, including Accounting Standards Codification Topic 730 and related pronouncements, for the purposes of calculating Consolidated EBITDA, the (a) CFFT Royalty Payments shall be characterized as a royalty expense and (b) Quarterly Reimbursement Payments shall be characterized as a reduction to research and development expense, and”
Section 2.    Condition Precedent.  This Amendment shall become effective as of the date first written above (the “Effective Date”) upon the satisfaction of the following conditions precedent:
(a)    Documentation.  Administrative Agent shall have received all of the following, in form and substance satisfactory to Administrative Agent:
(i)    a fully-executed Amendment by the Borrower, the Subsidiary Guarantors, the Administrative Agent and the Required Lenders; and
(iii)    such additional documents, instruments and information as Administrative Agent may reasonably request to effect the transactions contemplated hereby.
(b)     No Default.  On the Effective Date and after giving effect to this Amendment, no event shall have occurred and be continuing that would constitute a Default or an Event of Default.
Section 3.    Representations and Warranties; Reaffirmation of Grant.  Each Loan Party hereby represents and warrants to the Administrative Agent and the Lenders that, as of the 

date hereof and immediately after giving effect to this Amendment, (a) the representations and warranties of the Borrower and each other Loan Party contained in Article V of the Credit Agreement are (i) with respect to representations and warranties that contain a materiality qualification, true and correct on and as of the date hereof and (ii) with respect to representations and warranties that do not contain a materiality qualification, true and correct in all material respects on and as of the date hereof, except that for purposes of hereof, the representations and warranties contained in Section 5.05(b) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Section 6.01(b) of the Credit Agreement, (b) no Default or Event of Default has occurred and is continuing, (c) the Credit Agreement (as amended by this Amendment) and all other Loan Documents are and remain legally valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (d) except as expressly contemplated under any Loan Document, the provisions of the Collateral Documents to which such Loan Party is a party are effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable first priority Lien (subject to Permitted Liens) on all right, title and interest of the respective Loan Parties in the Collateral described therein to the extent required to be perfected therein, except as to enforcement, as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).  Each Loan Party that is a party to the Security Agreement or any of the other Collateral Documents hereby reaffirms its grant of a security interest in the Collateral to the Administrative Agent for the ratable benefit of the Secured Parties, as collateral security for the prompt and complete payment and performance when due of the Secured Obligations, as set forth therein.

Section 4.    Survival of Representations and Warranties.  All representations and warranties made in this Amendment shall survive the execution and delivery of this Amendment, and no investigation by the Administrative Agent or the Lenders shall affect the representations and warranties or the right of the Administrative Agent and the Lenders to rely upon them.

Section 5.    Amendment as Loan Document.  This Amendment constitutes a “Loan Document” under the Credit Agreement.

Section 6.    Costs and Expenses.  The Borrower shall pay on demand all reasonable out-of-pocket expenses incurred by the Administrative Agent (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent) incurred in connection with the preparation, negotiation, execution and delivery of this Amendment, in each case, in accordance with Section 11.04(a) of the Credit Agreement.

Section 7.    Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK 

(WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER STATE).

Section 8.    Execution.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Amendment by telecopier (or electronic mail (including in PDF format)) shall be effective as delivery of a manually executed counterpart of this Amendment.

Section 9.    Limited Effect.  This Amendment relates only to the specific matters expressly covered herein, shall not be considered to be an amendment or waiver of any rights or remedies that the Administrative Agent or any Lender may have under the Credit Agreement, under any other Loan Document (except as expressly set forth herein) or under Law, and shall not be considered to create a course of dealing or to otherwise obligate in any respect the Administrative Agent or any Lender to execute similar or other amendments or waivers or grant any amendments or waivers under the same or similar or other circumstances in the future.

Section 10.    Ratification by Subsidiary Guarantors.  Each of the Guarantors acknowledges that its consent to this Amendment is not required, but each of the undersigned nevertheless does hereby agree and consent to this Amendment and to the documents and agreements referred to herein.  Each of the Guarantors agrees and acknowledges that (i) notwithstanding the effectiveness of this Amendment, such Guarantor’s Guaranty shall remain in full force and effect without modification thereto and (ii) nothing herein shall in any way limit any of the terms or provisions of such Guarantor’s Guaranty or any other Loan Document executed by such Guarantor (as the same may be amended from time to time), all of which are hereby ratified, confirmed and affirmed in all respects.  Each of the Guarantors hereby agrees and acknowledges that no other agreement, instrument, consent or document shall be required to give effect to this Section 10.  Each of the Guarantors hereby further acknowledges that the Borrower, the Administrative Agent and any Lender may from time to time enter into any further amendments, modifications, terminations and/or amendments of any provisions of the Loan Documents without notice to or consent from such Guarantor and without affecting the validity or enforceability of such Guarantor’s Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of such Guarantor’s Guaranty.

[Remainder of page intentionally blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date first above written.
BORROWER:
VERTEX PHARMACEUTICALS INCORPORATED
	
		
	By:
	/s/ Ian Smith

	Name:
	Ian Smith

	Title:
	Executive Vice President, COO & CFO

SUBSIDIARY GUARANTORS:
	
		
	By:
	/s/ Ian Smith

	Name:
	Ian Smith

	Title:
	Director

VERTEX HOLDINGS, INC. 
	
		
	By:
	/s/ Ian Smith

	Name:
	Ian Smith

	Title:
	Director

VERTEX PHARMACEUTICALS (DISTRIBUTION) INCORPORATED
	
		
	By:
	/s/ Ian Smith

	Name:
	Ian Smith

	Title:
	Director

VERTEX PHARMACEUTICALS (DELAWARE) LLC
	
		
	By:
	/s/ Ian Smith

	Name:
	Ian Smith

	Title:
	Director

VERTEX PHARMACEUTICALS (PUERTO RICO) LLC
	
		
	By:
	/s/ Ian Smith

	Name:
	Ian Smith

	Title:
	Treasurer

BANK OF AMERICA, N.A., as  
Administrative Agent
	
		
	By:
	/s/ Angela Larkin

	Name:
	Angela Larkin

	Title:
	Assistant Vice President

BANK OF AMERICA, N.A., as a Lender, Swingline Lender, and an L/C Issuer 
	
		
	By:
	/s/ Linda Alto

	Name:
	Linda Alto

	Title:
	Senior Vice President

SUNTRUST BANK, as a Lender
	
		
	By:
	/s/ Katherine Bass

	Name:
	Katherine Bass

	Title:
	Director

BARCLAYS BANK PLC, as a Lender
	
		
	By:
	/s/ Evan Moriarty

	Name:
	Evan Moriarty

	Title:
	Assistant Vice President

CITIZENS BANK N.A., as a Lender
	
		
	By:
	/s/ Prasanna Manyem

	Name:
	Prasanna Manyem

	Title:
	Vice President

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Lender
	
		
	By:
	/s/ Teuta Ghilaga

	Name:
	Teuta Ghilaga

	Title:
	Director

CITIBANK, N.A., as a Lender
	
		
	By:
	/s/ Laura Fogarty

	Name:
	Laura Fogarty

	Title:
	Vice President

KEYBANK NATIONAL ASSOCIATION, as a Lender
	
		
	By:
	/s/ Neil Buitening

	Name:
	Neil Buitening

	Title:
	Senior Vice President

HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender
	
		
	By:
	/s/ Elise M. Russo

	Name:
	Elise M. Russo

	Title:
	Senior Vice PresidentExhibit

Exhibit 10.40

EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is made and entered into as of this 14th day of November, 2015, by and between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (together with its successors and assigns, the “Company”), and Michael Parini (the “Executive”).  
W IT N E S S E T H 
WHEREAS, the Company is employing the Executive as the Company’s Executive Vice President, Chief Legal Officer; and
WHEREAS, the Executive has been designated as a member of the Executive and Management Committees of the Company; 
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 of even date herewith.
“Code” shall mean the Internal Revenue Code of 1986, as amended.   
“Common Stock” shall mean the common stock of the Company. 

Exhibit 10.40

“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 January 4, 2015. 
“Good Reason” shall mean that, without the Executive’s consent, one or more of the following events occurs: 
		
	(i)
	 the Executive’s duties are materially diminished to an extent that results in either (A) the Executive no longer being an “officer,” as such term is defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934; or (B) the Executive ceases to be a member of the executive management team of the Company; or

		
	(ii)
	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

		
	(iii)
	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 either (i) or (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 either (i) or (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. 

Exhibit 10.40

“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.”
3. POSITION. 
On the Effective Date, the Executive is employed as the Company’s Executive Vice President, Chief Legal Officer, reporting to the Company’s President & Chief Executive Officer. 
4. BASE SALARY. 
The Executive’s annualized Base Salary as of the date of this Agreement is $500,000, 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/SIGN-ON AWARDS. 
(a)  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. 
 (b)   Sign-On Cash Bonus: The Executive shall receive a sign-on cash bonus in the amount of $250,000 payable (with appropriate deductions as required by law) to the Executive at the first regular pay date applicable to the Executive after the Effective Date.  If the Executive terminates this Agreement without Good Reason, and other than as a result of death or Disability, during the period commencing on the Effective Date and ending on the first anniversary of the 

Exhibit 10.40

Effective Date, the Executive shall repay the sign-on cash bonus to the Company within 30 days of such termination. 
(c)     Sign-On Restricted Stock Grant:  The Executive will purchase, in accordance with the terms of a Restricted Stock Award agreement executed and delivered to the Company by the Executive on the Effective Date (the “Grant Date”), 13,800 shares of the Company’s Common Stock, at a purchase price per share of $0.01.  This grant, including but not limited to the vesting schedule and the Company’s right to repurchase these shares, shall be subject to the other terms and conditions specified in a separate Restricted Stock Award agreement attached hereto as Exhibit A.  
(d)    Sign-On Stock Option Grant:  The Executive shall be granted a stock option under the Company’s 2013 Stock and Option Plan (the “Stock Plan”) to purchase 68,000 shares of the Company’s common stock at a price equal to the Fair Market Value of Vertex’s shares, as defined in the Stock Plan, on the Effective Date.  The option will vest and become exercisable as to equal numbers of shares quarterly in arrears over the four year period commencing on the Effective Date, and as otherwise specified herein and in the Stock Plan, and shall be subject to the other terms and conditions specified in a separate agreement attached hereto as Exhibit B. 
      
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, 

Exhibit 10.40

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 of all claims against the Company, its subsidiaries, and their officers, directors, agents and representatives, which is executed by Executive and becomes enforceable and non-revocable within 60 days of the date of termination): 
		
	(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 provided that if the 60-day period during which the release is required to become effective and irrevocable begins in one calendar year and ends in another calendar year, the Severance Payment shall not be made before the first day of the second calendar year; 

		
	(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 

Exhibit 10.40

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 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 six 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 six 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 

Exhibit 10.40

violate any agreement between it and any other person, firm or organization. The Executive represents and warrants that no agreement exists between her 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 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 subject to the provisions of Section 9(b) of this Agreement, 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 provided that the Company may, without the Executive’s consent, unilaterally adopt amendments that may be required so that this Agreement continues to comply with applicable law or regulations, including without limitation Section 409A of the Code, provided such amendments do not adversely affect the benefits to the Executive under this Agreement.  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 

Exhibit 10.40

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 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. 

Exhibit 10.40

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
50 Northern Avenue
Boston, MA 02210
Attn: Chief Executive Officer
        
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.    
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 

Exhibit 10.40

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.

Exhibit 10.40

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above. 
Vertex Pharmaceuticals Incorporated
	
	
	/s/ Jeffrey M. Leiden

	Jeffrey M. Leiden, M.D., Ph.D.

	Chairman, President & Chief Executive Officer

    
Executive 
	
	
	/s/ Michael Parini

	Michael Parini

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