Exhibit 10.5
SEVERANCE
AGREEMENT
This Agreement is entered into as of
the 9th day of January, 2009 (the “ Effective
Date ”) by and between ImmunoGen, Inc., a
Massachusetts corporation (the “ Company
”) and Gregory D. Perry (the “ Executive
”).
WHEREAS, the Company recognizes that
the Executive’s service to the Company is very important to
the future success of the Company;
WHEREAS, the Executive desires to
enter into this Agreement to provide the Executive with certain
financial protection in the event that his employment terminates
under certain conditions following a change in control of the
Company; and
WHEREAS the Board of Directors of
the Company (the “ Board ”) has
determined that it is in the best interests of the Company to enter
into this Agreement.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Executive hereby agree as
follows:
1.
Definitions
.
(a)
Cause . For purposes of this
Agreement, “ Cause ” shall mean that the
Executive has (i) intentionally committed an act or omission
that materially harms the Company; (ii) been grossly negligent
in the performance of the Executive’s duties to the Company;
(iii) willfully failed or refused to follow the lawful and
proper directives of the Board or the CEO; (iv) been convicted
of, or pleaded guilty or nolo contendre , to a felony;
(v) committed an act involving moral turpitude;
(vi) committed an act relating to the Executive’s
employment or the Company involving, in the good faith judgment of
the Board, material fraud or theft; (vii) breached any
material provision of this Agreement or any nondisclosure or
non-competition agreement between the Executive and the Company, as
all of the foregoing may be amended prospectively from time to
time; or (viii) breached a material provision of any code of
conduct or ethics policy in effect at the Company, as all of the
foregoing may be amended prospectively from time to
time.
(b)
Change in Control
. For purposes of this
Agreement, a “ Change in Control ” shall
mean the occurrence of any of the following events; provided
that “Change in Control” shall be interpreted in
a manner, and limited to the extent necessary, so that it will not
cause adverse tax consequences for either party with respect to
Section 409A of the Internal Revenue Code of 1986, as amended
(the “ Code ”), and Treasury
Regulations 1.409A-3(i)(5), and any successor statute,
regulation and guidance thereto:
(i)
Ownership. Any
“Person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becomes the “Beneficial Owner”
(as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more
of the total voting power represented by the Company’s
then
Executive Severance Agreement
(18)
outstanding voting securities
(excluding for this purpose any such voting securities held by the
Company or its Affiliates (as defined in the Company’s 2006
Employer, Director and Consultant Equity Incentive Plan) or by any
employee benefit plan of the Company) pursuant to a transaction or
a series of related transactions which the Board does not approve;
or
(ii)
Merger/Sale of Assets.
(A) A merger or consolidation of the Company whether or not
approved by the Board, other than a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or the parent of such corporation) at least
50% of the total voting power represented by the voting securities
of the Company or such surviving entity or parent of such
corporation, as the case may be, outstanding immediately after such
merger or consolidation; or (B) the stockholders of the
Company approve an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets;
or
(iii)
Change in Board Composition. A
change in the composition of the Board, as a result of which fewer
than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of November 11, 2006,
or (B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection
with an actual or threatened proxy contest relating to the election
of directors to the Company).
(c)
Disability
. For
purposes of this Agreement, “ Disability ” shall mean that the
Executive (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than
twelve (12) months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three (3) months under a Company-sponsored group
disability plan. Whether the Executive has a Disability will
be determined by a majority of the Board based on evidence provided
by one or more physicians selected by the Board and approved by the
Executive, which approval shall not be unreasonably
withheld.
(d)
Good
Reason . For purposes of this
Agreement, “ Good
Reason ” shall mean the
occurrence of one or more of the following without the
Executive’s consent: (i) a change in the principal
location at which the Executive performs his duties for the Company
to a new location that is at least forty (40) miles from the
prior location; (ii) a material change in the
Executive’s authority, functions, duties or responsibilities
as an executive of the Company, which would cause his position with
the Company to become of less responsibility, importance or scope
than his highest position with the Company at any time from the
date of this Agreement to immediately prior to the Change in
Control, provided , however , that such material
change is not in connection with the termination of the
Executive’s employment by the Company for Cause or death or
Disability and further provided that it shall not be considered a
material change if the Company becomes a subsidiary of another
entity and the Executive continues to hold a position in the
subsidiary that is at least as high as the highest position he held
with the Company at any time from the date of this Agreement
to
2
immediately prior to the
Change in Control; (iii) a material reduction in the
Executive’s annual base salary or (iv) a material
reduction in the Executive’s target annual bonus as compared
to the target annual bonus set for the previous fiscal
year.
2.
Term of
Agreement . The term of this
Agreement (the “Term”) shall commence on the Effective
Date and shall continue in effect for two (2) years;
provided , however , that commencing on second
anniversary of the Effective Date and continuing each anniversary
thereafter, the Term shall automatically be extended for
one (1) additional year unless, not later than
nine (9) months before the conclusion of the Term, the
Company or the Executive shall have given notice not to extend the
Term; and further provided , however , that if
a Change in Control shall have occurred during the Term, the Term
shall expire on the last day of the twenty-fourth (24
th
) month
following the month in which such Change in Control occurred.
Notice of termination or termination of this Agreement shall not
constitute Cause or Good Reason (both terms as defined
above).
3.
Termination;
Notice; Severance Compensation .
(a)
In the event that
within a period of two (2) months before or
two (2) years following the consummation of a Change in
Control the Company elects to terminate the Executive’s
employment other than for Cause (but not including termination due
to the Executive’s Disability), then the Company shall give
the Executive no less than sixty (60) days advance notice of
such termination (the “Company’s Notice Period”);
provided that the Company may elect to require the
Executive to cease performing work for the Company so long as the
Company continues the Executive’s full salary and benefits
during the Company’s Notice Period.
(b)
In the event that
within a period of two (2) months before or
two (2) years following the consummation of a Change in
Control the Executive elects to terminate his employment for Good
Reason, then the Executive shall give the Company no less than
thirty (30) days and no more than sixty (60) days advance
notice of such termination (the “Executive’s Notice
Period”); provided that the Company may elect
to require the Executive to cease performing work for the Company
so long as the Company continues the Executive’s
full
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