Exhibit 10.32
Form of Change of Control Agreement
March 7, 2003
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RE: Vertex Pharmaceuticals Incorporated
Change of Control Agreement
Dear ____________:
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.
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
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March 7, 2003
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(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
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, or job title and responsibilities is not for
Cause, due to your Disability or at your request);
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(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.
6. "TERMINATION DATE" shall mean the last day of your employment with the
Company.
II. SEVERANCE BENEFITS UPON CHANGE OF CONTROL. In the event your employment is
terminated (EXCEPT for termination for Cause or due to a Disability) within
ninety (90) days prior to a Change of Control or within twelve (12) months
after a Change of Control; or if you, of your own initiative, terminate
your employment within ninety (90) days prior to a Change of Control or
within twelve (12) months after a Change of Control for Good Reason, in
exchange for a general release of all claims, you shall receive the
following benefits:
1. SEVERANCE PAYMENT - The Company shall make a lump sum payment to you
equal to:
(a) Your annual Base Salary (PROVIDED, HOWEVER, that in the event you
terminate your 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); and
(b) any unpaid portion of a bonus award actually awarded but not yet
paid to you under any bonus program applicable to the Company's
senior executives and in effect prior to the Change of Control,
pro rated in the event the Termination Date is prior to the end of
the bonus plan year.
The Severance Payment shall be made in cash within ten (10) days of the
execution of a general release and expiration without revocation of any
applicable revocation periods under the general release.
2. ACCELERATED VESTING - Stock options for the purchase of the Company's
securities held by you as of the Termination Date and not then
exercisable shall be deemed to have been held by you for an additional
18-months, for purposes of calculating the number of options which are
exercisable on the Termination Date. 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
Termination Date, or (b) the date the stock option(s) would otherwise
expire.
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3. CONTINUED INSURANCE COVERAGE - If COBRA coverage is elected by you, the
Company shall pay the cost of COBRA continuation premiums on your
behalf to continue standard medical, dental and life insurance coverage
for you (or the cash equivalent of same in the event you are ineligible
for continued coverage) for a period of 18-months from the Termination
Date.
You shall not be required to mitigate the amount of the Severance
Payment or any other benefit provide 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 by offset against any amount claimed to be owed by you to
the Company or otherwise.
III. MISCELLANEOUS.
1. EMPLOYEE'S OBLIGATIONS. Upon the termination of employment, you shall
promptly deliver to the Company all property of the Company and all
material documents, statistics, account records, programs and other
similar tangible items which may by in your possession or under your
control and which relate in a material way to the business or affairs
of the Company or its subsidiaries, and no copies of any such documents
or any part thereof shall be retained by you.
2. ENTIRE AGREEMENT. This Agreement 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. 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.
Vertex Pharmaceuticals Incorporated
By:
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ACCEPTED AND AGREED:
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Signature
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Date