Exhibit 10.66

 

Amendment No. 1

to

Amended and Restated Employment Agreement

 

This Amendment No. 1 to the Amended and Restated Employment Agreement, dated
November 8, 2004 (the “Agreement”), between Vertex Pharmaceuticals Incorporated,
a Massachusetts corporation (together with its successors and assigns, the
“Company”), and Ian F. Smith (the “Executive”) is entered into by the parties on
December 29, 2008.  The parties hereby agree that the Agreement shall be amended
as follows:

 

1.                                      Section 1(g) shall be amended by adding
the following thereto:

 

“Notwithstanding the foregoing, to the extent that any payments under this
Agreement that are payable upon disability constitute nonqualified deferred
compensation subject to Section 409A of the Code, “DISABILTY” or “DISABLED”
shall mean, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, the Executive is either
(a) unable to engage in any substantial gainful activity or (b) receiving income
replacement benefits for a period of not less than three months under any
disability plan covering employees of the Company.  For purposes of the
immediately foregoing sentence, the existence of a disability will be determined
in all respects in accordance with the provisions of Section 409A (a)(2)(C) of
the Code.”

 

2.                                      Section 8 shall be amended by inserting
the following language at the end of the current language, as follows:

 

“Any reimbursement in one calendar year shall not affect the amount that may be
reimbursed in any other calendar year, and a reimbursement (or right thereto)
may not be exchanged or liquidated for another benefit or payment.  Any expense
reimbursements subject to Section 409A of the Code shall be made no later than
the end of the calendar year following the calendar year in which such business
expense is incurred by the Executive.”

 

3.                                      Section 10(a)(vii) shall be amended in
its entirety to read as follows:

 

“(vii)       six months of Severance Pay, payable in accordance with the regular
payroll practices of the Company, commencing on the first day of the month
following the month in which termination under this SECTION 10(a) occurred;”

 

4.                                      Section 10(b) shall be amended to delete
the second to last paragraph thereof in its entirety.

 

5.                                      The first phrase of
Section 10(c)(iii) shall be amended to read as follows:

 

“(iii)        Twelve months of Severance Pay, payable in accordance with the
regular payroll practices of the Company, commencing on the first day of the
month following the month during which the Executive’s employment is terminated
under this SECTION 10(c);”

 

6.                                      Section 10(c)(ix) shall be amended in
its entirety as follows:

 

“(ix)         until the earlier of (a) the expiration of the term of the
Severance Pay paid under Section 10(c)(iii) above or (b) the date the Executive
receives equivalent coverage and benefits under the plan of a subsequent
employer, the Company shall provide the Executive with medical, dental and
hospitalization insurance benefits substantially similar to those which the
Executive was

 

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receiving immediately prior to the termination of his employment, including any
employer paid portion of the premium, subject to the Executive’s election of
benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) in accordance with the applicable plan procedures.  During such time
that the Executive is receiving such continued medical, dental and
hospitalization benefits from the Company, the Company shall also provide
Executive with life insurance benefits substantially similar to those which the
Executive was receiving immediately prior to the termination of his employment.”

 

7.                                      Section 10 shall be amended by adding
the following at the end of the final paragraph thereof:

 

“For purposes of clarification, any portion of any payment hereunder that
constitutes nonqualified deferred compensation under Section 409A of the Code
payable as a result of a termination of employment may only be paid upon a
“separation from service” under Section 409A(a)(2)(A)(i) of the Code.  For
purposes of clarification, the foregoing sentence shall not cause any forfeiture
of benefits on the part of the Executive, but shall only act as a delay until
such time as a “separation from service” occurs.”

 

8.                                      Section 26 is amended by adding the
following provision to the end thereof:

 

“Notwithstanding the foregoing, no payments under this Section 26 from the
Company to Executive shall be made after the end of the calendar year
immediately following the calendar year in which the Executive remits the
related taxes to the applicable taxing authority.”

 

9.                                      The Agreement shall be amended by adding
the following new Section 27:

 

“27.  409A COMPLIANCE.

 

Any severance payment to the Executive under this Agreement shall be bifurcated
into two portions, consisting of a portion that does not constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code and a portion, if any, that does constitute nonqualified deferred
compensation. If the Executive is a “specified employee” as defined in Treasury
Reg. §1.409A-1(i), the commencement of the delivery of any such payments that
constitute nonqualified deferred compensation payable upon a “separation from
service” under Section 409A(a)(2)(A)(i) of the Code (determined after applying
the presumptions set forth in Treasury Reg. §1.409A-1(h)(1)) will be delayed
until the later of (i) the first business day that is more than six months after
the employment termination date and (ii) the date such payments would otherwise
be payable hereunder. The determination of whether, and the extent to which, any
of the payments to be made to the Executive hereunder are nonqualified deferred
compensation shall be made after the application of all applicable exclusions,
including those set forth under Treasury Reg. §1.409A-1(b)(9). Any payments that
are intended to qualify for the exclusion for separation pay due to involuntary
separation from service set forth in Treasury Reg. §1.409A-1(b)(9)(iii) must be
paid no later than the last day of the second taxable year following the taxable
year in which the employment termination date occurs.  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 are reasonably anticipated to be provided by the Executive to the
Company at the time the Executive’s employment is terminated, determined after
applying the presumptions set forth in Treasury Reg. §1.409A-1(h)(1)), the
payment of any non-qualified deferred compensation will be further delayed until
the later of (i) date the first business day that is more than six months after
the date of a subsequent event constituting a separation of service under
Section 409A(a)(2)(A)(i) of the Code and (ii) the date such payments would
otherwise be payable hereunder.  Any portion of a payment that constitutes
nonqualified deferred compensation under Section 409A of the Code payable as a
result of a termination of employment may only be paid upon a “separation from

 

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service” under Section 409A(a)(2)(A)(i) of the Code.  For purposes of
clarification, the foregoing sentence shall not cause any forfeiture of benefits
on the part of the Executive, but shall only act as a delay until such time as a
“separation from service” occurs.”

 

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As so amended, the Amended and Restated Employment Agreement shall remain in
full force and effect.  Executed as of the date set forth above:

 

 

 

VERTEX PHARMACEUTICALS INCORPORATED

 

 

 

 

 

 

 

 

 

 

By:

/s/ Kenneth S. Boger

 

 

 

Kenneth S. Boger

 

 

 

Senior Vice President and General Counsel

 

 

 

 

 

 

 

 

 

 

 

/s/ Ian F. Smith

 

 

 

Ian F. Smith

 

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