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Confidential

Exhibit 10

        CONFIDENTIAL TREATMENT
GTC Biotherapeutics, Inc. has requested that
the marked portions of this document be accorded
confidential treatment pursuant to Rule 24b-2
promulgated under the Securities Exchange Act

AGREEMENT

RELATING TO THE PRODUCTION

OF

CLARIFIED GOAT MILK CONTAINING

RECOMBINANT HUMAN ALPHA FETOPROTEIN

BY AND BETWEEN

GTC BIOTHERAPEUTICS, INC.
A MASSACHUSETTS CORPORATION

AND

MERRIMACK PHARMACEUTICALS, INC.
A MASSACHUSETTS CORPORATION

JUNE 27, 2003

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        THIS AGREEMENT (the "Agreement") is made this 27th day of June, 2003
(the "Effective Date"), by and between Merrimack Pharmaceuticals, Inc., a
Massachusetts corporation ("Merrimack") located at 101 Binney Street, Cambridge,
MA 02142 and GTC Biotherapeutics, Inc., a Massachusetts corporation ("GTC")
located at 175 Crossing Boulevard, Framingham, MA 01702. (GTC and Merrimack each
individually a "Party" and collectively the "Parties").

        WHEREAS, Merrimack, the successor-in-interest to Atlantic
Biopharmaceuticals, Inc. ("ABI"), is a biotechnology company actively involved
in the development of recombinant human alpha fetoprotein); and

        WHEREAS, GTC is a leader in the development of therapeutic proteins in
the milk of transgenic animals;

        WHEREAS, on May 11, 1999, ABI and GTC entered into an agreement under
which GTC was to conduct a mouse feasibility study of human alpha fetoprotein
(the "May 1999 Agreement"); and

        WHEREAS, on February 12, 2001, ABI and GTC entered into an agreement for
the generation of goats transgenic for human alpha fetoprotein expressed in milk
(the "February 2001 Agreement" and together with the May 1999 Agreement, the
"Initial Agreements"); and

        WHEREAS, in order to more fully exploit the opportunities for the
commercialization of rhAFP, Merrimack and GTC wish to enter into a strategic
alliance for the purpose of producing rhAFP in the milk of transgenic animals
for Merrimack's use in pre-clinical studies, clinical trials and commercial
distribution (the "Project"), to be implemented in three stages through a series
of Definitive Agreements between the Parties as more fully described below; and

        WHEREAS, Merrimack and GTC also wish to arrange for the production of
Clinical Grade AFP (as defined below) through the purification of Clarified Milk
by GTC, on terms set forth herein; and

        WHEREAS, all payments and compensation under this agreement shall be in
United States dollars ("USD").

        NOW THEREFORE, in consideration of the premises and agreements herein
contained, and intending to be bound hereby, the Parties hereto hereby agree as
set forth below.

        1.1    Prior Agreements.    Except as otherwise stated herein, the
Initial Agreements between the Parties are hereby terminated; provided however,
that such terms of these Initial Agreements that were intended to survive any
termination thereof shall remain in full force and effect. For the avoidance of
doubt, the provisions in the Initial Agreements relating to the payment of
royalties from Merrimack to GTC are terminated and replaced with the provisions
of Section § 9 of this Agreement. The Purification Agreement, dated December 27,
2002, between the Parties is hereby modified such that the provisions of the
Purification Agreement executed between the Parties and attached and
incorporated herein by reference as Appendix IV remain in full force and effect,
as modified, with all other provisions being terminated and replaced in their
entirety with the terms of this Agreement. In the event of any conflict the
terms and provisions of this Agreement are controlling.

        1.2    Exclusivity.    The Parties agree during the term of this
Agreement the commercial production of any rhAFP in the milk, other bodily fluid
or tissue of transgenic animals by or on behalf of Merrimack or its Affiliates,
will be done exclusively by GTC pursuant to this Agreement.

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        1.3    Definitions.    For purposes of this Agreement the following
terms shall have the meaning set forth below:

"Affiliate"   Shall mean any corporation that controls, is controlled by, or is
under common control with a Party hereto. A corporation shall be regarded as in
control of another corporation if it owns or directly or indirectly controls at
least fifty (50%) of the voting stock of the other corporation, or in the
absence of the ownership of at least fifty percent (50%) of the voting stock, if
it possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of the corporation.
"Biopharmaceutical"
 
Means any medicinal drug, therapeutic, vaccine or any medically useful
composition whose origin, synthesis, or manufacture involves the use of
microorganisms, recombinant animals (including, without limitation, chimeric or
transgenic animals), nuclear transfer, microinjection, or cell culture
techniques.
"Breeding Date"
 
Shall mean the date upon which GTC commenced breeding of the Founder Goats.
[*****].
"Business Day"
 
Shall mean any day on which the banks are open for commercial banking business
in the Commonwealth of Massachusetts.
"Cell Lines"
 
Shall mean the transfected cells used for the development of the transgenic
Founder Goats and containing the DNA sequence encoding rhAFP and/or the cells
derived from tissue samples from a transgenic goat containing the DNA sequence
encoding rhAFP.
"Change in Control"
 
Shall mean (i) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any person or group (within the meaning of the
Securities Exchange Act of 1934, as amended, and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 50% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of GTC, (ii) a merger or similar
combination after which 50% or more of the voting stock of the surviving
corporation is held by persons who were not stockholders of GTC immediately
prior to such merger or combination (iii) occupation of a majority of the seats
on the Board of Directors of GTC by persons who were neither (A) nominated by
the independent Directors of GTC or a committee thereof (as determined pursuant
to the rules of the securities exchange on which GTC's shares, as then in
effect) are listed nor (B) appointed by directors so nominated, or (iii) the
acquisition of the power to directly or indirectly direct or cause the direction
of the management or policies of GTC, whether through the ability to exercise
voting power, by contract or otherwise.

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*Confidential Treatment has been requested for the marked portion.
 
 
 
 
 

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"Characterization and Release Assays"
 
Shall mean [*****] techniques employed to evaluate the agreed upon attributes of
rhAFP in Clarified Milk, as described in Appendix III, and bulk rhAFP drug
substance as described in Appendix V.
"Clarified Milk"
 
Shall mean the milk of Transgenic Goats that contains [*****].
"Clarification Technology"
 
Shall mean technology, methods or Know-How for [*****]
"Clinical Grade rhAFP"
 
Shall mean rhAFP that has been produced by GTC pursuant to this Agreement and,
using the Characterization and Release Assays, is determined by the Parties to
be suitable for use by Merrimack in clinical trials including First in Man
Trials.
Commercialization.
 
Shall mean the date of first regulatory approval of a Transgenic rhAFP product
in either the United States or Europe.
"Concentration Assay"
 
Shall mean the Enzyme-Linked Immunosorbant Assay (ELISA) for the quantitative
measurement of alpha fetoprotein (AFP) using the [*****] or any other such assay
as mutually agreed by the parties in the future with appropriate calibration and
use of purified rhAFP reference standards as internal controls.
"Field of Interest"
 
Shall mean the production of rhAFP in a Clarified Milk product of a transgenic
animal and/or the means to process that Clarified Milk into a form of rhAFP
useful as a Biopharmaceutical.
"First in Man Trials"
 
Shall mean initial human clinical trials, conducted by Merrimack that are
approved by an institutional review board and performed in normal healthy
volunteers (or subjects) for purposes of establishing safety, pharmacokinetics
and/or pharmacodynamics of rhAFP administered by one or more routes of
administration.
"First Production Date"
 
Shall mean the date that is 90 days after the date upon which GTC completes the
production of a total of [*****] of rhAFP in Clarified Milk from the hormonal
induction and/or natural lactation of the Founder Goats, such quantity to be
determined using the Concentration Assay.
"Founder Goats"
 
Shall mean the two female Transgenic Goats produced by GTC pursuant to the
February 2001 Agreement, [*****].
"Hold Point Studies"
 
Shall mean those studies performed by GTC to establish a time period in which
rhAFP in Clarified Milk can be stored under defined conditions (as mutually
agreed by the parties) with substantially all of the rhAFP still meeting the
definition of Clinical Grade rhAFP when purified.
"Improvements"
 
Shall mean any improvement, enhancement or modification of a product or process
described in a patent or patent application owned, controlled licensed or
assigned to one of the Parties.
"Improvement Patents"
 
Any patents and/or patent applications relating to or claiming any Improvement.

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*Confidential Treatment has been requested for the marked portion.
 
 
 
 
 

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"Invention"
 
Includes any invention, discovery, work of authorship, software, information or
data, patentable or unpatentable, that is conceived, developed or reduced to
practice in the course of the services provided pursuant to this Agreement
specifically excluding, however, any of either Party's pre-existing assays,
techniques, compositions, methods or processes. A "Patentable Invention" for
purposes of this Agreement is an Invention that passes the tests of the 1952
Patent Code with regard to satisfying the key statutory legal tests of novelty,
utility and non-obviousness.
"Intellectual Property"
 
Shall mean any patent or patent application, Know-How, development or other
Confidential Information, including but not limited to ideas, concepts,
unpatented inventions, trade secrets, drawings, designs, models, specifications,
formulae, data, processes, procedures and techniques.
"Know-How"
 
Shall mean all technical information, unpatented inventions, manufacturing
secrets, practical experience, secret processes, formulae, manufacturing
procedures, methods and materials relating to the Field of Interest.
"Net Revenue"
 
Shall mean the gross amount received by Merrimack and/or its Affiliates from the
commercial sale of its rhAFP Product to a person or entity or the grant of
rights to sell or distribute its Transgenic rhAFP Product. These amounts shall
include all royalty payments to Merrimack or its Affiliates, milestone payments
received by Merrimack or its Affiliates or any other payments received by
Merrimack (except for payments for research and development activities) less the
following:
 
 
(i)
 
customary trade, quantity, or cash discounts to the extent actually allowed and
taken;
 
 
(ii)
 
amounts repaid or credited by reason of rejection or return;
 
 
(iii)
 
to the extent separately stated on purchase orders, invoices, or other documents
of sale, any taxes or other governmental charges levied on the production, sale,
transportation, delivery, or use of a Transgenic rhAFP Product which is paid by
or on behalf of Merrimack; and
 
 
(iv)
 
outbound transportation costs prepaid or allowed and costs of insurance in
transit.
 
 
Net Revenue may be received by Merrimack either before or after
Commercialization.
 
 
No deductions shall be made for commissions paid to individuals whether they are
with an independent sales agency or regularly employed by Merrimack and on its
payroll, or for cost of collections.          

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In the case of sales of a product that contains a Transgenic rhAFP Product and
at least one other essential functional component, (hereinafter, "Combination
Product"), Net Revenue mean the gross amount received by Merrimack and its
Affiliates on sales of the Combination Product, less the deductions set forth
above, multiplied by a pro-ration factor that is determined as follows:
 
 
(i)
 
If all components of the Combination Product are sold separately, the pro-ration
factor shall be determined by the formula [A/(A+B)], where A is the aggregate
gross sales price of an rhAFP product when sold separately from all other
essential functional components, and B is the aggregate gross sales price of the
other essential functional components when sold separately from the Transgenic
rhAFP Product; or
 
 
(ii)
 
If all components of the Combination Product are not sold separately, the
pro-ration factor shall be determined by the formula [V/(V+D)], where V is the
value of a Transgenic rhAFP Product, and D is the value of the other essential
functional components, each being determined by agreement in good faith by
Merrimack and GTC.
"Net Partner Sales"
 
Shall mean the gross amount or any other payment received by a Partner for the
sale of a Transgenic rhAFP Product to any person, firm or entity other than
Merrimack or an Affiliate of Merrimack or such Partner, less the following:
 
 
(i)
 
customary trade, quantity, or cash discounts to the extent actually allowed and
taken;
 
 
(ii)
 
amounts repaid or credited by reason of rejection or return;
 
 
(iii)
 
to the extent separately stated on purchase orders, invoices, or other documents
of sale, any taxes or other governmental charges levied on the production, sale,
transportation, delivery, or use of a Transgenic rhAFP Product which is paid by
or on behalf of such Partner; and
 
 
(iv)
 
outbound transportation costs prepaid or allowed and costs of insurance in
transit; and
 
 
(v)
 
any transfer price payable to GTC or any of its Affiliates for the purchase of a
Transgenic rhAFP Product by such Partner or any of its Affiliates.
 
 
No deductions shall be made for commissions paid to individuals whether they be
with independent sales agencies or regularly employed by such Partner and on its
payroll, or for cost of collections.
 
 
In the case of a Combination Product, Net Partner Sales shall be calculated in
the same manner as is used to calculate Net Revenues in connection with such
Combination Product.
"Nuclear Transfer Processes"
 
[*****]

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*Confidential Treatment has been requested for the marked portion.
 
 
 
 
 

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"Partner"
 
Shall mean a firm or entity with a contractual relationship with Merrimack or
any of its Affiliates, which contractual relationship provides for the Partner
to market, sell or distribute a Transgenic rhAFP Product anywhere in the world.
"Phase II Trials"
 
Shall mean clinical studies of rhAFP that are designed to explore and assess the
pharmacokinetics, pharmacodynamics, safety and/or efficacy of rhAFP in patients
with the disease or condition under study. Such trials, depending on design
features, may be considered adequate and well-controlled and a pivotal study.
"Phase III Trials"
 
Shall mean one or more adequate and well-controlled clinical trials, conducted
by Merrimack, that are designed to demonstrate efficacy of rhAFP and refine the
safety profile in the patient population to be treated.
"Pivotal Studies"
 
Shall mean one or more adequate and well-controlled clinical trials conducted by
Merrimack for purposes of establishing efficacy of rhAFP.
"Purification Technology"
 
Shall mean technology, Inventions, methods or Know-How for purifying rhAFP from
Clarified Milk.
"rhAFP"
 
Shall mean recombinant human non-glycosolated Alpha Fetoprotein.
"Stage 1 Activities"
 
The activities to be performed by the Parties during the first stage of the
Project ("Stage 1") as set forth in Section 2.1 hereof.
"Stage 2 Activities"
 
The activities to be performed by the Parties during the second stage of the
Project ("Stage 2") as set forth in Section 2.2 hereof.
"Stage 3 Activities"
 
The activities to be performed by the Parties during the third stage of the
Project ("Stage 3") as set forth in Section 2.3 hereof.
"Subordinated Debt"
 
Shall mean (i) debt of Merrimack which is subordinated in right of payment to
amounts owed to GTC under the provision of Section § 6.3 or under a promissory
note in favor of GTC, or (ii) debt with respect to accounts payable and accrued
expenses occurring in the normal course of business.
"Transgenic Bank"
 
Shall mean those genetic materials that can be used in establishing a continuous
source of the transgenic founder line including, but not limited to Cell Lines,
embryos and/or the semen of a limited number of highly characterized transgenic
goats, their offspring and transgenic goats that have had a series of tests to
confirm their genetic profiles and have been determined to carry in their genome
the DNA encoding rhAFP.
"Transgenic Goats"
 
Shall mean goats which carry the heterologous DNA encoding human alpha
fetoprotein.
"Transgenic rhAFP Product"
 
Shall mean any rhAFP produced using any of GTC's Intellectual Property and/or
originally derived or produced from the use of Improvements in the GTC
Intellectual Property.          

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"Transgenic Technology"
 
Shall mean Know-How, Intellectual Property and practices for the production of
recombinant proteins in the milk of transgenic animals and the development of
such animals, also included is enabling the production of a transgenic animal
such an animal being capable of producing a target recombinant protein in its
milk.
"Valid Claim"
 
Means with respect to the claim of a Patent Right licensed under this Agreement,
a claim that has not been held permanently invalid or otherwise unenforceable by
a court of competent jurisdiction whose holding is not appealable or is not
appealed within the time allowed for appeal.

        2.    Project Activities    The Parties shall undertake the Project in
three separate and distinct stages as follows. As of the Effective Date of this
exclusive Agreement, the Parties have agreed on Stage 1 Activities and the
consideration to be paid therefore. The Stage 2 Activities and Stage 3
Activities have not yet been finally agreed upon by the Parties. If the Parties
decide to extend the term of this Agreement in order to carry out the Stage 2
Activities and the Stage 3 Activities, the Parties shall agree on the activities
to be undertaken, the time frame within which to complete those activities and
the consideration to be paid. The Parties hereby agree to negotiate in good
faith regarding the establishment of mutually acceptable contracts for the
completion of Stage 2 and 3 activities.

        2.1    Stage 1 Activities.    In Stage 1, GTC and Merrimack each agree
to undertake the following activities primarily related to the production by GTC
of Clarified Milk containing rhAFP. If an event or milestone provided below has
been completed it will be so indicated.

        GTC will:

        2.1.1    Develop a bench scale milk clarification process for rhAFP
produced in the milk of Transgenic Goats (an activity which has previously been
completed by GTC) [*****];

        2.1.2    Develop the Concentration Assay protocol (including calibration
and use of purified rhAFP reference standards as internal control), as agreed to
by both Parties, to quantify rhAFP in Clarified Milk [*****];

        2.1.3    Establish and/or qualify appropriate Characterization and
Release Assays to support the development of a clarification process for rhAFP
in milk, as agreed to by both Parties as described in Appendix III [*****];

        2.1.4    Conduct Hold Point Studies to define a period of time during
which rhAFP in Clarified Milk can be stored in defined conditions, as agreed to
by the Parties;

        2.1.5    Induce the Founder Goats to lactate through hormonal
manipulation as contemplated by this Agreement [*****];

        2.1.6    Breed the Founder Goats [*****];

        2.1.7    On or before June 30, 2003, produce not less than [*****] grams
of rhAFP in Clarified Milk from the hormonal induction and/or natural lactation
of the Founder Goats, such quantity to be determined using the Concentration
Assay [*****];

        2.1.8    Produce for Merrimack an additional [*****] grams of rhAFP in
Clarified Milk from the natural lactation of the Founder Goats, such quantity to
be determined using the Concentration Assay;

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*Confidential Treatment has been requested for the marked portion.

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        2.1.9    Generate a herd of at least [*****] Transgenic Goats from the
selected Founder Goats through the Nuclear Transfer Process;

        2.1.10    Breed Female Transgenic Goats for the production of milk from
natural lactation;

        2.1.11    Produce the next [*****] grams of Clinical Grade rhAFP in
Clarified Milk from the natural lactation of the Founder Goats and Transgenic
Goats generated by the Nuclear Transfer Process, such quantity to be determined
using the Concentration Assay;

        2.1.12    Produce the next [*****] grams of Clinical Grade rhAFP in
Clarified Milk from the natural lactation of the Founder Goats and Transgenic
Goats generated by the Nuclear Transfer Process, such quantity to be determined
using the Concentration Assay.

        Merrimack will:

        2.1.15    Perform analytical studies as deemed necessary and appropriate
by Merrimack to support GTC's process development activities; and

        2.1.16    Perform First in Man Trials with Clinical Grade AFP [*****],
provided that GTC complies with its obligations set forth in Section § 2.1.7
above and in Appendix IV hereof. Merrimack will share all data with GTC on a
confidential basis and will acknowledge GTC as the source of the material used
in those trials.

        GTC and Merrimack will jointly:

        2.1.17    Prior to September 28, 2003 the Parties shall initiate good
faith negotiations regarding the establishment of a mutually acceptable
agreement that will finalize the terms under which the Stage 2 Activities will
be carried out;

        2.1.18    If the Parties agree to Stage 2 Activities and extend the
initial Term of this Agreement, within 90 days after treatment of the last
patient enrolled in Phase II Trials, the Parties will negotiate, in good faith
regarding the establishment of an agreement for Stage 3 Activities; and

        2.1.19    The Parties will establish a Steering Committee consisting of
at least three (3) members from each company to review the program on a
quarterly basis. Each company will be entitled to equal representation on such
committee, with the committee chairman selected by Merrimack.

        2.2    Stage 2 Activities    In Stage 2, it is contemplated that GTC and
Merrimack will undertake the following activities primarily related to the
production by GTC of rhAFP intended for use in clinical trials by Merrimack.

        GTC will:

        2.2.1    Develop and validate dedicated housing, milking and
clarification facilities and equipment for the production of rhAFP in Clarified
Milk;

        2.2.2    Scale-up and transfer the milk clarification process for rhAFP
in order to ensure that the process is suitable to meet the production
requirements applicable to Stage 2 of the Project; and

        2.2.3    Produce [*****] of rhAFP in Clarified Milk, such quantity to be
determined using the Concentration Assay. Production to be undertaken at
Merrimack's direction. Beginning in January 2004, Merrimack will provide GTC
with rolling 6 month estimates of production needs (six (6) month lead time on
production start, not delivery date). [*****] (see also § 6.7.4.1 and
Purification agreement sections §§ I(o) and II(s)).

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*Confidential Treatment has been requested for the marked portion.

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        Merrimack will:

        2.2.4    In the normal course of Merrimack's clinical development
activities relating to rhAFP, it shall use commercially reasonable efforts to
carry out Pivotal Studies and make a regulatory submission using Transgenic
rhAFP Product produced by GTC at the earliest possible date; and

        2.2.5    Provide GTC with six (6) month rolling production projections
as required by GTC for the purposes of scale-up and production planning.

        2.3    Stage 3 Activities.    In Stage 3, it is contemplated that GTC
and Merrimack will undertake the following activities primarily related to the
production by GTC of commercial quantities of rhAFP in Clarified Milk for
Merrimack.

        GTC will:

        2.3.1    Design, build and validate dedicated housing, milking and
clarification facilities and equipment;

        2.3.2    Scale-up and transfer the milk clarification process for
production of commercial quantities of rhAFP;

        2.3.3    Scale-up the female Transgenic Goat herd; and

        2.3.4    Produce commercial quantities of rhAFP in Clarified Milk
according to Merrimack's commercial product projections as provided by Merrimack
to GTC.

        2.4    Purification Activities.    In addition to the Project activities
set forth above, the Parties agree to carry out the purification activities set
forth in Appendix IV hereto.

        3.    Project Performance    

        3.1    General Provisions.    Merrimack and GTC shall use their
respective diligent efforts to complete each stage of the Project that is the
subject of a Definitive Agreement and to perform the tasks described herein.
Merrimack and GTC each recognize the importance of the objectives and overall
timing of the Project and the key transgenic development events as set forth in
Section 8 hereof and agree to use their respective diligent efforts to achieve
the objectives of the Project as set forth herein with one another. Throughout
the Project, Merrimack shall have the right to have one of its employees located
on GTC's premises in Framingham, Massachusetts in order to observe the progress
of the Project. Such person shall execute the appropriate Confidentiality
Agreements and shall comply with all reasonable directions of a GTC employee
designated to supervise such observation, and shall complete any necessary
training or safety education classes as determined by GTC, in its sole
discretion. Merrimack shall indemnify and hold GTC harmless from and against any
liabilities or damages caused by such Merrimack employee.

        3.2    Compliance with Laws; GMPs and GLPs.    Merrimack and GTC shall
work together in order to conduct the Project in conformance with the applicable
requirements of the FDA and otherwise in compliance with all laws, ordinances
and governmental rules or regulations pertaining thereto. All rhAFP produced and
processes developed by GTC hereunder will be developed and prepared in
accordance with all applicable current FDA Good Manufacturing Practices ("GMPs")
and Good Laboratory Practices ("GLPs"), as each may be in effect from time to
time.

        3.3    Preservation of Founder Goats, Transgenic Goats and Transgenic
Bank.    GTC shall use best reasonable efforts to preserve the rhAFP Founder
Goats, Transgenic Goats and Transgenic Bank through the term of the Project. GTC
has established general guidelines for herd health, biosecurity, semen
cryopreservation and disaster recovery [*****], which guidelines will be used by
GTC to manage the health, safety and viability of the Transgenic Goats during
the term of the

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*Confidential Treatment has been requested for the marked portion.

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Project. Key elements of the GTC herd health management guidelines are as
follows; i) maintaining a certified scrapie-free herd; ii) applying good
husbandry practices coupled with quality standards of traceability and audit;
iii) maintaining current biosecurity measures intended to help prevent ingress
of infectious viruses, bacteria, and prions, toxins and any other agents that
may adversely affect the health or well being of an animal; iv) disease
monitoring procedures to assure maintenance of health standards; v) regular
reviewing and modification (when appropriate) of herd health management systems.
During the Project, GTC shall also maintain and preserve elements of the
Transgenic Bank in separate locations as follows; [*****]. GTC shall also
separate the Transgenic Goats on site in at least two locations as is practical
during the early stages of the Project to minimize the risk of herd loss due to
unforeseen events. Transgenic Goat dispersal practices are defined in GTC's
Standard Farm Practice Manual. Additionally, upon development of a commercial
herd for the supply of rhAFP for commercial sale by Merrimack, GTC and Merrimack
shall agree to maintain a subset of the commercial herd, as determined to be
appropriate by GTC, in a location separate from the commercial production site.
Merrimack shall have reasonable access to the above guidelines and associated
documents.

        4.    Project Reports.    GTC will keep Merrimack advised of the status
of the Project through telephone conversations and meetings as the same may be
reasonably requested from time to time by Merrimack. In addition, GTC will
complete a final report relative to each stage of the Project within sixty
(60) days of the completion of the activities to be undertaken during each such
stage.

        5.    Project Records.    GTC will maintain records of the status and
progress of the Project that are accurate and appropriate for initiating,
scaling, and manufacturing a Biopharmaceutical for clinical studies, and as
applicable, commercial distribution. Copies of all correspondence or
documentation prepared by GTC in connection with GTC's compliance with any GMPs,
GLPs or any other applicable law, rule or regulation whether relating to the
Project or otherwise (collectively, the "Regulatory Documentation") will be
retained by GTC and made available for Merrimack's audit and review during
normal business hours at the offices of GTC at 175 Crossing Boulevard,
Framingham, Massachusetts, five (5) business days after GTC's receipt of a
written request to do so from Merrimack. Additionally, GTC shall make the
Regulatory Documentation available to Merrimack at Merrimack's request, in order
to allow Merrimack to complete any regulatory filings on its own behalf or in
connection with any assignment of this Agreement by GTC pursuant to Section §15
hereof. GTC will not destroy any records relating to the Project without
submitting written notice allowing Merrimack the opportunity to further maintain
such records.

        6.    Consideration    

        6.1    Consideration for work performed to prior to establishment of
Stage 1, Stage 2, Stage 3 or Purification Activities.    In full payment of all
amounts owed by Merrimack to GTC under the Initial Agreements and in
consideration of the Parties' mutual agreement to terminate the Initial
Agreements according to Section § 23 hereof, the Parties agree that:

        6.1.1    Pursuant to the terms of the February 2001 Agreement as
modified by the parties, and relating to the establishment by GTC of founder
goats for a total cost of [*****], Merrimack paid [*****] on September 27, 2002,
and has executed a promissory note in favor of GTC dated October 31, 2002,
attached hereto as Appendix I, in the amount of [*****], of which [*****] was
paid on December 27, 2002 and [*****] was paid on March 27, 2003;

        6.1.2    For initial delivery of Clarified Milk obtained from the
induced lactation of the Founder Goats, Merrimack paid [*****] on December 27,
2002. Merrimack will pay an additional [*****] on or before the later to occur
of (y) September 30, 2003, and (z) the date upon which GTC first delivers to
Merrimack Clarified Milk obtained from the natural lactation of the Founder
Goats.

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        6.2    Consideration for Stage 1 Project Activities and Capacity
Fees.    As consideration for GTC's agreement to undertake the Stage 1
Activities, and subject to Section 6.3 hereof, Merrimack agrees to pay GTC as
follows for Stage 1 Activities totaling $4.439 million:

        6.2.1    [*****], representing GTC's Stage 1 commercialization fee, the
payment of which has previously been deferred in accordance with Section § 6.3
hereof and effective November 6, 2002 (line A in Appendix VI);

        6.2.2    [*****], representing GTC's cost of allocating and dedicating
bench scale milk clarification equipment necessary in order to carry out its
required Stage 1 Project activities, the payment of which has previously been
deferred in accordance with Section § 6.3 hereof, and effective as of
November 6, 2002 (line P in Appendix VI);

        6.2.3    [*****] upon written notification by GTC to Merrimack of the
completion of a bench scale milk clarification process for Transgenic Goat's
milk containing rhAFP, its transfer to a pilot suite facility and delivery of a
Process Definition Report (line H in Appendix VI);

        6.2.4    [*****] upon written notification by GTC to Merrimack regarding
GTC's establishment of the Characterization and Release Assays detailed in
Appendix III; [*****] (line D in Appendix VI);

        6.2.5    [*****] upon written notification by GTC to Merrimack of the
completion of the Hold Point Studies (line F in Appendix VI);

        6.2.6    [*****] upon written notification by GTC to Merrimack of the
completion of production of the first [*****] grams of rhAFP in Clarified Milk
from the hormonal induction and/or natural lactation of the Founder Goats, such
quantity to be determined using the Concentration Assay [*****] (lines J and N
in Appendix VI);

        6.2.7    [*****] upon written notification by GTC to Merrimack of the
completion of production of the next [*****] grams of rhAFP in Clarified Milk
from the hormonal induction and/or natural lactation of the Founder Goats, such
quantity to be determined using the Concentration Assay [*****] (lines J and N
in Appendix VI);

        6.2.8    [*****] upon written notification by GTC to Merrimack of the
completion of production of the next [*****] grams of rhAFP in Clarified Milk
(production to include milk collection and clarification) from the natural
lactation of the Transgenic Goats, such quantity to be determined using the
Concentration Assay (lines BB and EE in Appendix VI);

        6.2.9    [*****] upon written confirmation by GTC to Merrimack of the
initiation of the Nuclear Transfer Process necessary for the generation of
[*****] female Transgenic Goats for the production of rhAFP in Clarified Milk
[*****] (line S in Appendix VI);

        6.2.10    [*****] upon written confirmation by GTC to Merrimack of the
production of the first [*****] Transgenic Goats. GTC will perform [*****]
analysis and provide to Merrimack written confirmation of transgenic status of
the first [*****] animals [*****] (line S in Appendix VI);

        6.2.11    [*****] upon written confirmation by GTC to Merrimack of the
production of an additional [*****] Transgenic Goats. GTC will perform [*****]
analysis and provide to Merrimack written confirmation of the next [*****]
transgenic animals (line S in Appendix VI);

        6.2.12    [*****] upon written notification by GTC to Merrimack of the
initial procurement of clarification equipment for processing milk from the out
bred Transgenic Goats (line OO in Appendix VI);

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        6.2.13    [*****] upon written notification by GTC to Merrimack of the
initiation of out-breeding activities for the female transgenic goats (lines PP
and QQ in Appendix VI);

        6.2.14    [*****] upon written notification by GTC to Merrimack of the
completion of scale up and transfer of clarification process to a pilot facility
(line Z in Appendix VI);

        6.2.15    [*****] to produce the next [*****] grams of rhAFP in
Clarified Milk from the natural lactation of the Transgenic Goats (production to
include milk collection and clarification), such quantity to be determined using
the Concentration Assay (lines CC and GG in Appendix VI), payable quarterly on a
per batch basis;

        6.2.16    [*****] to produce the next [*****] grams of rhAFP in
Clarified Milk from the natural lactation of the Transgenic Goats (production to
include milk collection and clarification), such quantity to be determined using
the Concentration Assay (lines CC and II in Appendix VI) payable quarterly on a
per batch basis; and

        6.2.17    As activities are completed pursuant to this Agreement, both
Parties agree that the amounts due and owing can be invoiced.

        6.3    Payment Deferral Rights.    Merrimack shall have the option to
elect to defer the payment of up to $4,000,000 (four million USD) of any amount
due and payable to GTC for the provision of various goods and services as
detailed in Section § 6.2 above, Section § 6.6 below and Appendix IV, provided
that any such payment obligation arises prior to October 31, 2003 and any
election to defer is made on or prior to such date. Merrimack hereby represents,
as a condition for such deferral, that it has raised a total of at least [*****]
through the sale of securities on terms previously disclosed to GTC, subsequent
to September 30, 2002.

        6.3.1    Payment.    In the event of the termination of this Agreement
by Merrimack, and pursuant to section § 13 below, any amount owing to GTC as of
the date of termination shall immediately become owed.

        6.4    Repayment Obligations.    If, in accordance with Section § 6.3
above, Merrimack shall elect to defer the payment of any amounts owed to GTC
under Section § 6.2 above or Section § 6.6 and Appendix IV below, all such
deferred payments shall be made by Merrimack to GTC, with interest thereon at a
rate of 6.75% per annum according to the following repayment schedule:

        6.4.1    [*****] of the deferred payments shall be payable by Merrimack
on the latest to occur of (x) the First Production Date, and (y) June 27, 2003;

        6.4.2    An additional [*****] of the deferred payments shall be payable
by Merrimack on the latest to occur of (x) the First Production Date, and
(y) September 26, 2003;

        6.4.3    An additional [*****] of the deferred payments shall be payable
by Merrimack on the latest to occur of (x) the First Production Date, and
(y) October 31, 2003;

        6.4.4    An additional [*****] of the deferred payments shall be payable
by Merrimack on the latest to occur of (x) the First Production Date, and
(y) November 30, 2003; and

        6.4.5    Any remaining deferred balance shall be payable by Merrimack on
the latest to occur of (x) the First Production Date, and (y) December 20, 2003.

        6.5    Merrimack's Assets.    Merrimack agrees that while any amounts
are owed to GTC pursuant to Merrimack's election to defer payments to GTC in
accordance with Section § 6.3 above, or pursuant to Merrimack's issuance of a
promissory note in favor of GTC as provided for in Section § 6.1 above,
Merrimack shall not make any pledge or assignment of its assets including,

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its intellectual property to any Third Party, nor will it assume or incur any
additional debt, other than Subordinated Debt.

        6.6    Additional Costs.    The amounts set forth in Section § 6.2 above
do not provide for the payment of the following additional costs which may arise
during the course of the Parties' performance of their respective obligations
hereunder. If Merrimack requests that GTC incur such costs, the Parties will
work together in good faith to establish mutually agreed upon and commercially
reasonable pricing thereof.

        6.6.1    Costs associated with quality assurance/regulatory activities
in order to support regulatory submissions for transgenically produced rhAFP.
Any such costs will be based on hourly FTE (fully burdened) rates on a per task
basis; and

        6.6.2    Costs associated with animal maintenance and facility holding
if this Agreement is terminated for any reason other than Merrimack's material
breach of the terms hereof in accordance with Section §13.2 hereof.

        6.7    Estimated Costs—Stage 2.    Contractual Terms for Stage 2
activities will be negotiated by the Parties in good faith. The Parties intend
to negotiate the activities, timing, and consideration, the estimates of which
are approximated hereunder and in Section § 8. The total estimated cost for
Stage 2 Activities is $5.550 million.

        6.7.1    [*****], representing a capacity fee to allocate and dedicate
housing, milking and clarification facilities and equipment sufficient for the
projected Phase III Clinical Trial production requirements of rhAFP. Payments to
include Facility Capacity Fees of [*****] per quarter for eight consecutive
quarters (total [*****]) and Phase II Equipment Fees of [*****] per quarter for
six consecutive quarters [*****];

        6.7.2    [*****], upon initiation of the scale up and transfer of the
milk clarification process;

        6.7.3    [*****], upon completion of the scale up and transfer of the
milk clarification process; and

        6.7.4    [*****], to produce and deliver to Merrimack [*****] of rhAFP
in Clarified Milk for use by Merrimack in Phase III Clinical Trials. To be paid
in three equal payments of [*****] upon delivery of the first [*****], the
second [*****] and the remaining [*****].

        6.7.4.1    Beginning in January 2004, Merrimack will provide GTC with
rolling six (6) month estimates of production needs (six (6) month lead time on
production start, not delivery date). [*****] (see also, § 2.2.3 hereof and
Purification Agreement sections §§ I(o) and II(s)).

        6.8    Estimated Costs—Stage 3.    Contractual Terms for Stage 3
activities will be negotiated by the Parties in good faith. The Parties intend
to negotiate the activities, timing, and consideration, the estimates of which
are approximated hereunder and in Section § 8. The total estimated cost for
Stage 3 Activities is $13.911 million, exclusive of those activities provided
under Sections §§ 6.8.6 and 6.8.7 below.

        6.8.1    An initial fee of [*****];

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        6.8.2    [*****] to design, build and validate a dedicated housing,
milking and clarification facility of sufficient capacity for the annual
production of [*****] of rhAFP in Clarified Milk;

        6.8.3    [*****] upon initiation of the scale-up and transfer of the
milk clarification process;

        6.8.4    [*****] upon completion of the scale up and transfer of the
milk clarification process;

        6.8.5    [*****] to generate a herd of Transgenic Goats of sufficient
size to produce [*****] of rhAFP in Clarified Milk, annually; and

        6.8.6    Transfer price based upon an annual production amount of rhAFP
in Clarified Milk as follows:

                    [*****]

        7.    Equity Agreements    

        7.1    Merrimack Warrants.    As consideration for GTC's agreement to
allow Merrimack to defer payments in accordance with Section 6.3 above,
Merrimack agrees, as a precondition to its election to defer any payments
thereunder, to issue to GTC, at the time of any deferment election, a warrant to
purchase a number of shares of Merrimack's Series B Preferred Stock equal to
([*****] of the amount of any such deferment) divided by [*****] and at a
per-share purchase price of [*****]. In addition, Merrimack agrees to issue to
GTC upon execution of this Agreement a warrant to purchase a number of shares of
Merrimack's Series B Preferred Stock equal to [*****] divided by [*****] and at
a per-share purchase price of [*****]. Any such warrants shall be substantially
in the form attached hereto as Appendix II. If Merrimack fails to make any of
the payments required to be made by it in accordance with Section § 6.1,
Section § 6.2 or Section § 6.4, following notice by GTC and a thirty (30) day
cure period, or immediately in the event of Merrimack's bankruptcy, Merrimack or
its successors in interest shall issue to GTC additional warrants to purchase a
number of shares of Merrimack's Series B Preferred Stock as shall equal [*****]
of the aggregate amount of all amounts elected to be deferred by Merrimack in
accordance with Section 6.3 above divided by [*****] and at a per-share purchase
price of [*****].

        7.2    Conversion Rights.    If after the Effective Date of this
Agreement and prior to [*****], Merrimack shall raise at least [*****] from the
sale of Merrimack's equity securities, at Merrimack's sole option, Merrimack may
elect to require GTC to convert up to an aggregate of [*****] of any amounts
owed by Merrimack to GTC hereunder into Merrimack's equity securities on the
same terms applicable to Merrimack's most recent round of equity financing of at
least [*****]. At GTC's sole option, GTC may elect at any time, to convert any
amounts owed by Merrimack to GTC hereunder into Merrimack equity securities on
the same terms applicable to Merrimack's most recent round of equity financing
of at least [*****].

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        8.    Estimated Timing.    The estimated date of completion (the
"Designated Completion Date") of the key transgenic development events of the
Project (each a "Milestone"), is as follows:

Stage 1

Begin herd scale up by Nuclear Transfer for by Phase III production.   [*****]
Development of Characterization and Release assays.
 
[*****]
Completion of a bench scale milk clarification process for rhAFP produced in the
milk of Transgenic Goats.
 
[*****]
Production of a total of [*****] of rhAFP in Clarified Milk from induction
and/or natural lactation of the Founder Goats. [*****]
 
[*****]
Perform Hold Point Studies.
 
[*****]
Complete production of the next [*****] of rhAFP in Clarified Milk.
 
[*****]
Generate [*****] female Transgenic Goats through the Nuclear Transfer Process.
 
[*****]
Complete production of the next [*****] of rhAFP in Clarified Milk
 
[*****]
Complete production of the next [*****] of rhAFP in Clarified Milk
 
[*****]

Stage 2

        The estimated timing relating to Stage 2 of the Project assumes the
timely and successful completion of Stage 1 of the Project, but the Parties
anticipate entering negotiations regarding the Stage 2 Agreement by
September 2003.

Begin scale-up and transfer of milk clarification process.   TBD
Begin production of [*****] of rhAFP in Clarified Milk for use by Merrimack in
Phase III Trials.
 
TBD
Finalize scale and transfer of milk clarification process to GTC manufacturing
facility.
 
TBD
Complete production of first [*****] of rhAFP in Clarified Milk for use by
Merrimack in Phase III Trials.
 
TBD
Complete production of next [*****] of rhAFP in Clarified Milk for use by
Merrimack in clinical trials.
 
TBD

Stage 3

        The estimated timing hereunder in relation to Stage 3 of the project
assumes timely and successful completion of a Phase II clinical trial by
Merrimack. The Parties anticipate entering into discussions on

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the Stage 3 Commercial Agreement within 90 days of the treatment of the last
patient enrolled in the Phase II Trial.

Begin facility design and construction   [*****]
Complete facility design and construction
 
[*****]
Begin equipment design and fabrication
 
[*****]
Complete equipment design and fabrication
 
[*****]
Qualify equipment
 
[*****]
Validate facility
 
[*****]
Complete technical transfer of the clarification process
 
[*****]
Begin scale-up of the commercial goat herd
 
[*****]
Begin commercial production of rhAFP in Clarified Milk
 
[*****]

        9.    Royalty Payments.    

        9.1    Royalty.    In further consideration of the rights granted and
services provided to it hereunder, Merrimack hereby agrees to make royalty
payments to GTC equal to a royalty rate initially set at [*****] of Merrimack's
Net Revenues, subject to the other provisions of this section.

        9.2    Investment.    In the event that GTC invests [*****] ($USD) in
Merrimack stock prior to the Commercialization of a Transgenic rhAFP Product,
the Royalty payable to GTC will convert from [*****] of Merrimack's Net Revenues
to [*****] of Merrimack's Net Revenues plus [*****] of Net Partner Sales.

        9.3    Additional Payment.    After completion of the investment
described in Section 9.2 above, an additional payment of [*****] ($USD) to
Merrimack by GTC, either in cash or forgiveness of indebtedness or in such
combination of goods and/or services as may be agreed by Merrimack and GTC,
prior to the Commercialization of a Transgenic rhAFP Product, will result in the
conversion of the Royalty payable to GTC from [*****] of Merrimack's Net
Revenues plus [*****] Net Partner Sales to [*****] of Net Partner Sales. GTC
shall have the right to make this payment in cash or forgiveness of indebtedness
at any time prior to Commercialization of a Transgenic rhAFP Product; any
payment of this amount in goods and services (other than goods and services
provided under this Agreement) shall be subject to Merrimack's reasonable
agreement regarding the nature and value of such goods and/or services. Such
nature and value shall be made through a good faith determination by the
Parties.

        9.4    Terms of Investment.    Merrimack stock purchased under the
provisions of section § 9.2 (the "Investment Securities") shall be issued to GTC
at a [*****] premium relative to Merrimack's most recent equity financing as of
the date of such investment, but otherwise on the same terms as such equity
financing. Upon written notice from GTC that it wishes to purchase the
Investment Securities, Merrimack shall as promptly as is practicable use all
reasonable efforts to obtain such stockholder approvals as may be necessary to
authorize the issuance and sale of the Investment Securities to GTC, and the
Parties shall in good faith proceed to close the investment as promptly as is
practicable. The Parties acknowledge and agree that in no case shall any royalty
be due from GTC to Merrimack hereunder.

        9.5    Reporting.    For each calendar quarter after Commercialization,
Merrimack shall deliver to GTC, within sixty (60) business days after the end of
each calendar quarter, a written report setting forth Net Revenues and Net
Partner Sales of any Transgenic rhAFP Product during such calendar quarter, on a
country-by-country basis; provided that if Merrimack does not receive data

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from its Partner regarding Net Partner Sales for any calendar quarter within
forty five (45) business days after the end of such quarter, such sixty
(60) business day period shall be extended to a date which is fifteen
(15) business days after Merrimack receives such data. Each such report shall
also set forth an explanation of the calculation of the royalties, if any,
payable hereunder.

        9.6    Payment.    Simultaneously with the delivery of each report
required pursuant to Section § 9.5 above, Merrimack shall tender payment in USD
all royalties shown to be due therein based on exchange rates then in effect.
The basis for determining the exchange rates in effect for the purposes of this
Section § 9.6 shall be the "buy" rate for Dollars in such currency as published
in the Wall Street Journal on the Business Day immediately preceding the date
such payment is due.

        9.7    Blocked Payments.    If by law, regulation, or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds
of a convertible currency to USD is restricted or forbidden ("Blocked
Payments"), Merrimack shall give GTC prompt notice in writing and shall pay the
Blocked Payments through such means or methods as are lawful in such country as
GTC may reasonably designate. Failing the designation by GTC of such lawful
means or methods within thirty (30) days after such notice is given to GTC,
Merrimack shall deposit such Blocked Payments in local currency to the credit of
GTC in a recognized banking institution selected by Merrimack and identified in
a written notice to GTC, and such deposit shall fulfill all obligations of
Merrimack to GTC with respect to such Blocked Payments. So long as Merrimack
satisfies the provisions of this Section § 9.7, Merrimack shall not be
considered to have violated any of its payment obligations hereunder with
respect to any Blocked Payments.

        9.8    Taxes.    Any and all withholding or similar taxes imposed or
levied on account of the receipt of royalties payable under this Agreement which
are required to be withheld by Merrimack shall be paid by Merrimack on behalf of
GTC and shall be paid to the proper taxing authority. Proof of payment shall be
secured and sent to the GTC by Merrimack as evidence of such payment in such
form as required by the tax authorities having jurisdiction over Merrimack. Such
taxes shall be deducted from the royalty that would otherwise be remittable by
Merrimack.

        9.9    Books and Records.    Merrimack shall keep, and shall require all
Affiliates to keep, full, true and accurate books of accounts and other records
containing all information and data which may be necessary to ascertain and
verify the royalties payable hereunder relative to a Transgenic rhAFP Product
for a period of three (3) years from the calendar quarter to which such books
and records apply. For a period of three (3) years from the calendar quarter to
which such books and records apply, GTC shall have the right from time to time
(not to exceed once during each calendar year) during normal business hours to
have an independent agent, accountant or other representative audit in
confidence, such books, records and supporting data. The cost of such audit
shall be borne by GTC unless it is established by the audit that there has been
an error which has caused GTC to receive less than it is due by five percent
(5%) of more for the period under audit, in which case the cost of such audit
shall be borne by GTC.

        10.    Confidentiality    

        10.1 For a period of ten (10) years from the termination of this
Agreement, any Confidential Information (as defined below) disclosed by the
disclosing Party hereunder, directly or indirectly, to the receiving Party
hereunder, including information which forms the subject matter of this
Agreement which has been disclosed prior to the date hereof, shall be deemed
confidential, and shall not be disclosed by the receiving Party to third
Parties, except as set forth below. Access to such Confidential Information will
be limited to employees, agents, Affiliates (as defined below), consultants or
contractors of the receiving Party who reasonably require such Confidential
Information and who are bound to the receiving Party by similar obligations in
respect of confidentiality and use. The receiving Party will use such
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out its obligations or to exercise its rights hereunder and will not use such
Confidential Information for its own benefit or for the benefit of others or in
any way inconsistent with this Agreement.

        10.2 Nothing contained herein will in any way restrict or impair each
Party's right to use, disclose or otherwise deal with any Confidential
Information which:

        10.2.1    at the time of disclosure, is in the public domain;

        10.2.2    after disclosure, becomes part of the public domain by
publication or otherwise, except by breach of this Agreement by the receiving
Party;

        10.2.3    was demonstrably in the receiving Party's possession at the
time of such disclosure, and which was not acquired, directly or indirectly,
from the disclosing Party;

        10.2.4    the receiving Party receives from third Parties, provided such
Confidential Information was not obtained by such third Parties, directly or
indirectly, from the disclosing Party on a confidential basis;

        10.2.5    results from research and development of the receiving Party
demonstrably independent of such disclosure;

        10.2.6    is required to be disclosed by legal process; provided,
however, in each case the Party so disclosing Confidential Information timely
informs the other Party and uses reasonable efforts to limit the disclosure and
maintain confidentiality to the extent possible and permits the other Party to
attempt by appropriate legal means to limit such disclosure;

        10.2.7    pertains to the tax structure or tax treatment of the
transaction embodied in this Agreement; or

        10.2.8    the disclosing Party identifies in writing as being for public
disclosure.

        10.3 For purposes of this Agreement, the term "Confidential Information"
shall mean all of the data, information, technology, samples, DNA, specimens,
materials and any other information affecting the business operations of the
disclosing Party received by the receiving Party from the disclosing Party, and
data results, and information developed by GTC and Merrimack hereunder.

        10.4 In addition, neither Party shall originate any written publicity,
news release or other public announcement or statement relating to this
Agreement or to the performance hereunder or the existence of an arrangement
between the Parties without prior review and written approval of the other
Party, such approval not to be unreasonably withheld. Notwithstanding the
foregoing, either Party may make a public written disclosure if required by
applicable law provided that prior to making such written disclosure, the
disclosing Party shall provide the other Party with a copy of, and reasonable
opportunity to review, the materials to be disclosed. To the extent that the
non-disclosing Party requests that any information in the proposed disclosure be
deleted, the disclosing Party shall request confidential treatment of such
information pursuant to applicable law, so that there be omitted from the
materials that are publicly filed any information that the non-disclosing Party
requests to be deleted or redacted. Each Party shall be free at all times to
disclose the tax treatment and tax structure or the transaction embodied by this
Agreement.

        11.    Intellectual Property    

        11.1    Ownership.    

        11.1.1    All Intellectual Property relating to the rhAFP molecule or
its use shall be solely owned by Merrimack, regardless of the designation of
inventorship between the Parties and their employees;

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        11.1.2    All Intellectual Property relating to the Purification
Technology shall be solely owned by Merrimack, regardless of the designation of
inventorship between the Parties and their employees;

        11.1.3    All Intellectual Property relating to the Transgenic
Technology and the Clarification Technology shall be solely owned by GTC,
regardless of the designation of inventorship between the parties and their
employees;

        11.1.4    All transgenic animals expressing rhAFP which are generated by
GTC as part of the Project, including the Founder Goats, and all milk produced
by such transgenic animals shall be solely owned by Merrimack;

        11.1.5    All Cell Lines shall be solely owned by Merrimack; and

        11.1.6    All Intellectual Property not described above in this
Section 11 and invented pursuant to this Agreement, the Project and within the
Field of Interest shall be jointly owned by the Parties, regardless of the
designation of inventorship between the parties and their employees
(hereinafter, the "Joint Intellectual Property").

        11.2    Maintenance of GTC Intellectual Property    GTC shall have the
primary right, but not the obligation, to prepare, file, prosecute, and maintain
any of the Intellectual Property owned by it pursuant to Section 11.1 above (the
"GTC Intellectual Property") at its sole cost and expense, and Merrimack shall
cooperate with GTC with respect thereto.

        11.2.1    If GTC desires to abandon any patent or patent application
within the GTC Intellectual Property in the Field of Interest with at least one
Valid Claim specifically related to the production of rhAFP from Clarified Milk
in any country or to decline responsibility for the maintenance or prosecution
of any such patent or patent application in any country, GTC shall provide
Merrimack with sufficient prior written notice of such intended abandonment or
declination of responsibility such that Merrimack shall have the opportunity to
assume responsibility for such patent or patent application without the loss of
any rights therein, and Merrimack shall have the right, at its cost and expense,
to prepare, file, prosecute, and maintain the relevant patents and/or patent
applications in the relevant country or countries in the name of GTC to the
extent legally necessary. In such an event, GTC shall cooperate, and cause its
Affiliates to cooperate, with Merrimack with respect thereto. Should Merrimack
assume the responsibility for one or more patents or patent applications
included within the GTC Intellectual Property and thereafter proceed, maintain,
renew, revive or obtain any patent as a result of GTC's abandonment or
declination of responsibility as contemplated herein, Merrimack shall thereafter
have a fully paid-up, perpetual and sub-licensable non-exclusive license to any
such patent or patent applications, including all related divisionals,
continuations, national stage applications or patents filed under the Patent
Cooperation Treaty of 1978, reissues, renewals, extensions or additions.
Furthermore, if Merrimack exercises such right, it shall no longer owe GTC
royalties with respect to such patents and/or patent applications. Specifically
excluded from this provision are any rights for Merrimack with regard to the
Transgenic Technology and the Clarification Technology.

        11.3    Maintenance of Merrimack Intellectual Property.    Merrimack
shall have the primary right, but not the obligation, to prepare, file,
prosecute, and maintain the Intellectual Property owned by it pursuant to
Section § 11.1 above (the "Merrimack Intellectual Property") Merrimack
Intellectual Property at its sole cost and expense and GTC shall cooperate, and
cause its Affiliates to cooperate, with Merrimack with respect thereto. If
Merrimack desires to abandon any patent or patent application covering the
Purification Technology as it relates to Biopharmaceuticals other than rhAFP (a
"Purification Technology Patent") in any country or to decline responsibility
for the maintenance or prosecution of any such patent application in any
country, Merrimack shall provide

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GTC with sufficient prior written notice of such intended abandonment or
declination of responsibility so that GTC shall have the opportunity to assume
responsibility for such patent or patent application without the loss of any
rights therein, and GTC shall have the right, at its cost and expense, to
prepare, file, prosecute, and maintain the relevant patents and patent
applications in the relevant country or countries in the name of Merrimack to
the extent legally necessary. In such an event, Merrimack shall cooperate, and
cause its Affiliates to cooperate, with GTC with respect thereto, at GTC's cost
and expense. Should GTC assume the responsibility for one or more such patents
or Inventions and thereafter proceed, maintain, renew, revive or obtain any
patent as a result of Merrimack's abandonment or declination of responsibility
as contemplated herein, GTC shall thereafter have a fully paid-up, perpetual and
sub-licensable non-exclusive license to any such patent or patent applications,
including all related divisionals, continuations, continuations-in-part,
national stage applications or patents filed under the Patent Cooperation Treaty
of 1978, reissues, renewals, extensions or additions. Furthermore, if GTC
exercises such right, it shall not owe Merrimack any royalties with respect to
such patents and/or patent applications.

        11.4    Joint Intellectual Property.    With regard to Joint
Intellectual Property, GTC shall have the right and authority to prepare, file,
prosecute and maintain such intellectual property and/or patent application at
its sole expense. Such authority shall also enable GTC to select the country or
countries where potential patent applications may be filed and to use patent
counsel to further this purpose that are reasonably satisfactory to both the
Parties. The Parties hereby agree that Byron Olsen, the Associate General
Counsel of GTC Biotherapeutics is a satisfactory patent attorney for the
management and prosecution of any patent application or other Joint Intellectual
Property developed pursuant to this agreement.

        11.5    License Grants    

        11.5.1    The Parties grant to each other, solely for the purpose of
carrying out their respective responsibilities under this Agreement and any
Definitive Agreements covering Stage 2 and Stage 3 of the Project as may be
entered into in the future, a non-exclusive, paid-up, royalty-free license to
practice any Invention pertaining to the Field of Interest including without
limitation Intellectual Property related to the production of rhAFP from
Clarified Milk, assays and/or analytical techniques useful in the measurement or
characterization of rhAFP in Clarified Milk or the purification of rhAFP from
Clarified Milk developed pursuant to this Agreement, with a right to grant
sublicenses. Notwithstanding any provision herein to the contrary the breadth of
such a license shall be only as it pertains to rhAFP. Moreover, and for the sake
of clarity, this grant does not in any way include or provide to Merrimack or
any other third party, sublicense, assignee, contractor, or consultant, any
license, right-to-use, shop right or assignment with regard to GTC's Transgenic
Technology at all, or separately to any of GTC's proprietary Clarification
Technology not within the Field of Interest.

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        11.5.2    Merrimack hereby grants to GTC a perpetual, exclusive,
paid-up, royalty-free license to any rights it has in or to the Purification
Technology outside of the Field of Interest.

        11.5.3    GTC hereby grants to Merrimack a perpetual, non-exclusive,
paid-up, royalty-free license to practice the Clarification Technology within
the Field of Interest.

        11.6    Licensing.    Each Party shall consult with the other, in good
faith, regarding commercialization or third party licensing of any Joint
Intellectual Property that may result from this Agreement.

        11.7    Cooperation    GTC will, upon request by Merrimack, cooperate in
the drafting of any and all patent applications, assignments and other
instruments which Merrimack deems are necessary or useful for the protection of
any and all such Merrimack Intellectual Property. With regard to GTC
Intellectual Property, or Joint Intellectual Property, which will be filed or
prepared at GTC's cost and expense, Merrimack agrees to cooperate in the
drafting of any and all patent applications, assignments and other instruments
which GTC deems are necessary or useful for the protection of any and all such
GTC Intellectual Property or Joint Intellectual Property.

        11.8    Notification of Patent Issuances.    GTC and Merrimack shall
notify each other of the issuance of each patent included within the GTC
Intellectual Property, Joint Intellectual Property and the Merrimack
Intellectual Property that have at least one claim within the Field of Interest,
giving the date of issue and the patent number for each such patent. Such notice
shall be given promptly, but in any event within thirty (30) Business Days after
receipt of such notice from an appropriate oversight authority.

        11.9    Patent Applications.    The Parties will promptly furnish to
each other a written disclosure of any Intellectual Property within the Field of
Interest, the assays or analytical techniques developed and validated by
Merrimack or GTC for the purification or processing of rhAFP under this
Agreement or Joint Intellectual Property conceived and/or reduced to practice
during the term of this Agreement. The Parties shall advise each other on all
communications concerning such Intellectual Property and will promptly supply to
the other Party full and complete copies of all papers received and filed in
connection with the prosecution and/or allowance thereof before the United
States Patent and Trademark Office or other equivalent foreign office.

        11.10    Reservation of Rights    Except as expressly provided in this
Section 11, neither Party grants to the other whether implicitly, by estoppel,
or otherwise, any right or license in or to any of its intellectual property
rights, Know-How or Inventions. Each Party also represents and warrants that it
has not entered into any agreement with any other government entity or third
Party, nor shall it do so, which would give any such government entity or third
Party any claim or right to any inventions or discoveries arising under or in
connection with this Agreement.

        11.11    Reports.    GTC and Merrimack designated personnel will
communicate at least on a quarterly basis regarding the GTC Intellectual
Property, Joint Intellectual Property and the Merrimack Intellectual Property
developed pursuant to this Agreement. Each Party will provide a written report
to the other Party detailing the timing and payment status of necessary annuity
payments, maintenance fees, outstanding actions, appeals, new filings,
oppositions, interferences filed, to be filed with or under the jurisdiction of
an appropriate oversight authority (such as United States and Trademark Office
with regard to patent applications and other matters pending before it in the
United States of America) for which such Party is responsible hereunder. The
first such communication shall take place within thirty (30) days of the
Effective Date of this Agreement. The Parties shall keep complete and accurate
records of the status and progress of their respective Intellectual Property
licensed to the other Party hereunder. Each Party shall retain and will not
destroy such records without giving the other Parties prior written notice and
the opportunity to archive at least one copy of such records, which such records
shall be treated as Confidential Information.

        12.    Indemnification    Merrimack and GTC shall each defend, indemnify
and hold the other and its affiliates the respective directors, officers,
employees and agents and affiliates, harmless from and against any and all
losses, damages, liabilities, claims, demands, judgements, settlements costs and
expenses (including, without limitation, reasonable attorneys' fees and other
costs of defense) arising out of, relating to or resulting from the breach of
any of their respective representations, warranties

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and covenants contained within this Agreement or their respective negligence or
willful misconduct in the conduct of their obligations or activities hereunder.

        12.1    Notice of Indemnification    A Party seeking indemnification
pursuant to this Section 12 (an "Indemnified Party") from or against the
assertion of any claim by a third person (a "Third Person Assertion") shall give
prompt notice to the Party from whom indemnification is sought (the
"Indemnifying Party"); provided, however, that failure to give prompt notice
shall not relieve the Indemnifying Party of any liability hereunder (except to
the extent the Indemnifying Party has suffered actual material prejudice by such
failure).

        12.2    Assumption of Defense.    Within thirty (30) business days of
receipt of notice from the Indemnified Party pursuant to Section 12 hereof, the
Indemnifying Party shall have the right exercisable by written notice to the
Indemnified Party, to assume the defense of a Third Person Assertion. If the
Indemnifying Party assumes such defense, the Indemnifying Party may select
counsel, which shall be reasonably acceptable to the Indemnified Party.

        12.3    Failure to Defend.    If the Indemnifying Party (i) does not
assume the defense of any Third Person Assertion in accordance with
Section § 12.2 hereof; or (ii) having so assumed such defense, unreasonably
fails to defend against such Third Person Assertion, then, upon ten (10) days'
written notice to the Indemnifying Party, the Indemnified Party may assume the
defense of such Third Person Assertion. In such event, the Indemnified Party
shall be entitled under this Section § 12.3 as part of its damages to
indemnification for the costs of such defense.

        12.4    Conflicts of Interest.    If one of the Parties has been
advised, by the written opinion of counsel made available to both Parties, that
the use of the same counsel to represent both the Indemnified Party and the
Indemnifying Party would present a conflict of interest, then the Indemnified
Party may select its own counsel to represent it in the defense of the matter
and the costs of such defense shall be borne by the Indemnifying Party. The
Indemnifying Party shall be entitled to continue to handle its own
representation in such matter through its own counsel.

        12.5    Settlement.    The Party controlling the defense of a Third
Person Assertion shall have the right to consent to the entry of judgment with
respect to, or otherwise settle, such Third Person Assertion with the prior
written consent of the other Party, which consent shall not be unreasonably
withheld.

        12.6    Participation.    The Indemnifying Party and the Indemnified
Party shall cooperate, in the defense or prosecution of any Third Person
Assertion. The Indemnified Party shall have the right to participate, at its own
expense, in the defense or settlement of any Third Person Assertion.

        13.    Term and Termination    

        13.1    Term    The initial term of this Agreement (the "Initial Term")
shall commence on the Effective Date and, unless extended by the Parties, shall
terminate on the earlier to occur of: (i) June 30, 2005; or (ii) the date the
Agreement is terminated in accordance with the provisions of Section § 13.2
below. If the Parties agree to extend the Initial Term in order to complete the
Stage 2 Activities, the term of this Agreement shall be extended until the
earlier to occur of (i) December 31, 2006; or (ii) the date the Agreement is
terminated in accordance with the provisions of Section §13.2 below.

        13.2    Early Termination    This Agreement may be terminated at any
time upon mutual agreement of the Parties. In addition, either Party may
terminate this Agreement:

        13.2.1    Upon sixty (60) days written notice in the event the other
Party fails to make any payments due pursuant to this Agreement, unless such
failure is remedied within such sixty (60) Business Day notice period;

        13.2.2    Upon sixty (60) days written notice in the event the other
Party is in material breach of any other obligation hereunder and such other
Party or its Affiliate shall fail to remedy any such breach within sixty
(60) days after written notice of such breach;

        13.2.3    Immediately upon written notice to the other Party, in the
event that the other Party has ceased conducting business in the ordinary course
(it being agreed that for this

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purpose the conduct of research and development activities shall be deemed to
constitute the conduct of business); or

        13.2.4    Immediately upon written notice if one or more of the
following circumstances remains uncorrected for more than ninety (90) days:
(a) entry of an order for relief by or against the other Party under Title 11 of
the United States Code or any foreign bankruptcy code; (b) the making by the
other Party of a general assignment to the benefit of creditors; (c) the
appointment of a general receiver or trustee in bankruptcy of the other Party's
business or property; or (d) action by the other Party under any insolvency or
similar law for the purpose of its bankruptcy, reorganization, or liquidation.

        13.3    Effect of Termination or Expiration    

        13.3.1    In General.    Upon termination or expiration of this
Agreement, neither Party will have any further obligations under this Agreement,
except (i) the liabilities accrued through the date of termination, including
compensation for costs incurred through the date of termination; (ii) payment of
actual or committed costs incurred to date towards any milestones in process as
of the time of termination or expiration; and (iii) the obligations which
expressly survive this Agreement as set forth in Section § 24 hereof. Upon
termination, GTC will, if requested to do so by Merrimack, dispose of any rhAFP
and/or any Transgenic Goats generated by GTC pursuant to the Project in
accordance with Merrimack's instructions and at Merrimack's expense. At
Merrimack's written request, GTC shall maintain the Founder Goats and any
progeny, at Merrimack's expense, that have been generated on Merrimack's behalf
for a reasonable time not to exceed one hundred and twenty (120) days after
Termination until such time as Merrimack is prepared to receive and properly
care for the Transgenic Goats.

        13.3.2    License Rights.    Subject to Sections §§ 14 and 15 below,
upon a termination of this Agreement by GTC under Section §13.2 above, the
license rights granted to Merrimack under Section §11.5 above shall terminate.
Upon a termination of this Agreement by Merrimack under Section § 13.2 above,
the license rights granted to GTC under Section § 11.5 above shall terminate. In
addition, the license rights granted by GTC to Merrimack under Section § 11.5
above shall terminate if this Agreement is terminated after Commercialization as
a result of either Merrimack's failure to renew this agreement or failure to
proceed to the next Definitive Agreement contemplated by this Agreement, and the
following conditions have been met:

        13.3.2.1    GTC shall at the time be capable of continuing to supply
Transgenic rhAFP to Merrimack and its Partners in the quantity necessary for the
commercial sale of the product; and

        13.3.2.2    GTC shall have offered to renew the Agreement and to
continue to supply Transgenic rhAFP to Merrimack or its Partner on substantially
the terms then in effect under this Agreement, subject to a price adjustment
that complies with the following subsection; and

        13.3.2.3    In the event of an increase in the transfer price for a
given renewal term, the transfer price offered by GTC for that renewal term
would provide GTC with the same operating margin with respect to sales to
Merrimack and its Partners as was in effect during the then-current term, and
Merrimack shall have received a certificate to that effect from GTC's
independent public accountants. Such certificate available only upon written
request of a Party.

        13.3.2.4    Notwithstanding the foregoing, Merrimack may cause the
license rights granted to it by GTC under this Agreement to survive any
termination of this Agreement in which they would otherwise terminate as a
result of provisions of Section 13.3.2 by agreeing to pay, in addition to the
then current royalty requirements under Section 9 of this Agreement, an
additional royalty equal to 2% of Net Partner Sales, on the terms set forth in
Section 9.

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        13.3.2.5    At any time prior to Commercialization, Merrimack may choose
to transfer the manufacturing process for rhAFP out of GTC, notwithstanding the
fact that GTC has substantially performed under the then existing Definitive
Agreement. In such event, the licenses granted to Merrimack to GTC under
Section 11.5 shall survive termination of this Agreement and the royalties paid
to GTC shall remain at the then current levels set forth in any Agreement,
provided however that GTC shall retain the right to exercise its equity purchase
options set forth in Section § 9 of this Agreement without the associated
increase in GTC's royalty position as provided in that section.

        14    Special Protections.    

        14.1    Change in Control at GTC.    If, after a Change in Control,
GTC's successor in interest commits a willful breach of this Agreement, then
upon written notice from Merrimack, Merrimack shall be entitled to each of the
following remedies at its sole option, which remedies are not intended to be
exclusive of any other remedies available to Merrimack at law or equity upon a
willful breach of this Agreement:

        14.1.1    At Merrimack's option, the Agreement with GTC's successor in
interest may be cancelled by written notice;

        14.1.2    Merrimack shall have a fully-paid, perpetual, assignable
license to use the GTC Intellectual Property within the Field of Interest for
the sole purpose of producing Clinical Grade rhAFP from a Clarified Milk
product, with right to sublicense;

        14.1.3    GTC's successor in interest shall reimburse Merrimack for all
amounts paid by Merrimack to GTC or its successor pursuant to this Agreement, up
to a maximum dollar value of [*****];

        14.1.4    Merrimack shall be entitled to take, upon 10 days written
notice, possession of all animals transgenic for rhAFP that are in GTC's
possession, and GTC's successor in interest

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*Confidential Treatment has been requested for the marked portion.

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shall transport such animals at its expense to any facility designated by
Merrimack that is located in the United States and within [*****]; and

        14.1.5    GTC's successor shall be obligated to (i) provide Merrimack
the know-how and technical support necessary to permit Merrimack to continue
production of Clinical Grade rhAFP from a Clarified Milk product for up to one
year after a Change in Control and to (ii) take all reasonably necessary steps
in order allow access to Merrimack, under the reasonable control of GTC and/or
its successor in interest, to the physical facilities used in the breeding and
maintenance of the Transgenic Goats produced under this Agreement including to
the barn housing the rhAFP Transgenic Goats if needed and/or a portion of the
surrounding farmland suitable for the breeding and maintenance of the Transgenic
Goats if needed, as well as the conveyance to Merrimack of all facilities solely
dedicated to the maintenance of goats producing rhAFP in their milk.

        14.1.6    The above provisions apply only to a successor in interest to
GTC.

        14.2    Partnering Protection.    The Parties agree that in negotiating
a renewal of this Agreement covering the Stage 2 and 3 Activities, they shall
negotiate in good faith a provision whereby GTC would receive [*****] if
Merrimack terminates its relationship with GTC in order to enter into into an
arrangement with a Partner pursuant to which [*****].

        15.    Protections for GTC Rights in Bankruptcy.    

        15.1    Notice.    Merrimack shall notify GTC in writing promptly after:
(i) the filing by or against Merrimack of any petition in bankruptcy or similar
filing seeking relief from creditors; (ii) receipt by Merrimack of any notice of
foreclosure and/or default that could be reasonably foreseen to have the effect
of preventing GTC from practicing the licenses granted to it hereunder.

        15.2    Representation and Warranty.    Merrimack hereby represents,
warrants, and covenants that of the Effective Date it has no knowledge of any
bankruptcy, insolvency, reorganization, or liquidation, notices of foreclosure
and/or default, or other filing or proceedings with respect to Merrimack that
would affect its promises hereunder or preclude GTC from practicing the licenses
granted to it hereunder throughout the term of this Agreement.

        15.3    License.    As of the Effective Date hereto Merrimack hereby
grants GTC a limited, fully paid up, non-royalty bearing, sublicenseable license
to the Merrimack Intellectual Property within the Field of Interest to the
extent required to make, have made, import, export, use, sell and otherwise
produce rhAFP as contemplated by this Agreement and Stages I through III. This
right is assignable and will flow to GTC's successor in interest, or Affiliate
at GTC's sole option. However this license shall not become effective, and
neither GTC nor any successor in interest, transferee or Affiliate of GTC, shall
be entitled to practice the inventions covered by such license, unless and until
six (6) months after Merrimack initiates or becomes subject to one or more of
the following circumstances: (i) seek the entry of an order for relief from or
against GTC or any other party under Title 11 of the United States Code or any
foreign bankruptcy code; (ii) making a general assignment to the benefit of its
creditors; (iii) make or be required to accept the appointment of a general
receiver or trustee in bankruptcy of its business or property; or (iv) taking
action by Merrimack under any insolvency or similar law for the purpose of its
bankruptcy, reorganization, or liquidation. Collectively the above
circumstances (i) through (iv) shall be referenced as "Failure by Merrimack."

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*Confidential Treatment has been requested for the marked portion.

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        15.4    Possession.    In addition to the license granted pursuant to
Section §15.3 above, upon any Failure by Merrimack GTC shall be entitled to take
possession of and ownership in all animals transgenic for rhAFP and/or the all
of the Cell Lines.

        15.5    Legal Compliance.    The Parties intend that the license and
protections granted pursuant to this section § 15 shall be effective and fully
compliant with 11 USC §365(n) and 11 USC § 362 of the United States Bankruptcy
code such that GTC can exercise and otherwise utilize the license granted
hereunder.

        15.6    Time Restriction; Termination.    

        15.6.1    If actions taken by GTC directly cause Merrimack to file for
bankruptcy prior to September 30, 2004, then any license and/or covenant given
by this Section §15 are voided.

        15.6.2    This Section § 15 shall terminate and be of no further force
or effect upon payment to GTC of all amounts owed to it as a result of
Merrimack's election to defer payments under Section § 6.3 hereof provided that
such payment occurs within the six (6) month cure period called out in
section § 15.3 above.

        16.    Assignability.    This Agreement, and the rights and obligations
hereunder, may not be assigned or transferred by either Party without the prior
written consent of the other Party, such consent not to be unreasonably
withheld. Notwithstanding the foregoing, either Party may assign this Agreement,
without the other's consent, to an Affiliate or in connection with (i) the
merger or consolidation of such Party with or into another person firm or
entity; or (ii) the sale by such Party of all or substantially all of the
business that is the subject matter of this Agreement; provided that in any such
case the assignee agrees in writing to be bound by the provisions of this
Agreement. This Agreement shall be binding on the successors and assigns of the
Parties hereto. Violation of this provision shall be considered a material
breach.

        17.    Publication.    Any publication or presentation relating to the
Project must first be approved in writing by both Parties, such approval not to
be unreasonably withheld. Each Party agrees to submit, for review, any proposed
publication (including any writing to be presented orally) relating to the
Project at least forty-five (45) days prior to submission for publication or
presentation. Either Party may request a delay in publication or presentation if
any of the information to be published or presented is reasonably deemed by the
requesting Party to represent patentable information. If such a delay is
requested, the other Party agrees to delay the publication or presentation, for
a period of ninety (90) days from the date of such request. Such period may be
extended, if necessary, for an additional period mutually acceptable to the
Parties. Notwithstanding the foregoing, both Parties agree that: (i) no
publication or presentation shall contain Confidential Information with respect
to which it has confidentiality obligations pursuant to Section §10 hereof and
(ii) GTC's approval of a publication by Merrimack shall be required only if and
to the extent a proposed publication relates to Transgenic Technology or
Clarification Technology.

        18.    Governing Law and Entirety.    The validity, interpretation and
performance of this Agreement shall be governed and construed in accordance with
the laws of the Commonwealth of Massachusetts, U.S.A. This document along with
any separate confidentiality agreements between the Parties, constitutes the
full understanding of the Parties with respect to the subject matter hereof, and
a complete and exclusive statement of the terms of their agreement, and no
terms, conditions understanding or agreement purporting to modify or vary the
terms of this Agreement shall be binding unless made in writing and signed by
the Party to be bound.

        19.    Dispute Resolution.    The Parties hereto hereby agree to perform
the terms of this Agreement in good faith, and to attempt to resolve any
controversy, claim or dispute arising hereunder in good faith. Any dispute
regarding the validity, construction, interpretation or performance of this
Agreement (other than any provisions, hereof relating to any intellectual
property rights, or the

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confidentiality obligations contained in Section § 10 hereof) shall be submitted
to binding arbitration in Boston, Massachusetts, to be conducted in accordance
with the Arbitration Rules of the American Arbitration Association ("AAA"). In
connection with the foregoing, the Parties hereto hereby submit to the
jurisdiction of the Federal and state courts of the Commonwealth of
Massachusetts. Any arbitration hereunder shall be submitted to an arbitration
tribunal made up of three (3) members, one of whom shall be selected by
Merrimack, one of whom shall be selected by GTC, and one of whom shall be
selected by the other two arbitrators. The order or award of the arbitrators
shall be final and may be enforced in any court of competent jurisdiction in the
United States. The prevailing Party in any legal or arbitration action brought
by one Party against the other shall be entitled, in addition to any other
rights and remedies it may have, to reimbursement for its expenses incurred
thereby, including court costs and reasonable attorneys' fees. The Parties shall
have the right of limited pre-hearing discovery, including (i) exchange of
witness lists, (ii) exchange of documentary evidence and reasonably related
documents, (iii) written interrogatories, and (iv) subject to the reasonable
discretion of the arbitrators and upon good cause shown depositions under oath
of any witnesses who are to be called to testify at the arbitration hearing. As
soon as the discovery is concluded, the arbitrators shall hold a hearing in
accordance with the aforesaid shall hold a hearing in accordance with the
aforesaid AAA rules.

        20.    No Waiver.    No waiver of any term or condition of this
Agreement shall be valid or binding on either Party unless agreed in writing by
the Party to be charged. The failure of each Party to enforce at any time any of
the provisions of this Agreement, or the failure to require at any time
performance by the other Party of any of the provisions of this Agreement, shall
in no way be construed to be a present or future waiver of such provisions, nor
in any way affect the validity of either Party to enforce each and every such
provision thereafter.

        21.    Counterparts.    This Agreement may be executed in two
counterparts, each of which shall be deemed an original and both of which
together shall constitute one instrument.

        22.    Independent Contractors    The relationship of Merrimack and GTC
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to: (i) give either Party the
power to direct or control the day-to-day activities of the other;
(ii) constitute the Parties as partners, joint venturers, co-owners or otherwise
as participants in a joint or common undertaking; or (iii) allow a Party to
create or assume any obligation on behalf of the other Party for any purpose
whatsoever. Nothing in this Agreement will give rise to the creation of any
labor relation by and between either Party or any employees of the other Party.

        23.    The Initial Agreements.    As evidenced by their execution
hereof, the Parties hereto expressly acknowledge that each of the Initial
Agreements, other than the portions of those agreements which were intended to
survive termination have been superceded and replaced as a result of the mutual
agreement of the Parties hereto, and that neither Party will have any further
obligations thereunder except as expressly set forth in this Agreement.

        24.    Survival.    The provisions of Sections §§ 1.1, 6.1, 6.2, 6.4, 9,
10 (for a period of ten (10) years), 11 through 15, 17 and this section § 24
shall survive the termination of this Agreement.

        25.    Notices.    Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been sufficiently
given for all purposes hereof, if mailed by first class, certified or registered
mail, postage prepaid, addressed to the Party to be notified and its address or
such other addresses have been furnished in writing to the notifying Party.
Unless otherwise specified in writing, the mailing address shall be as follows:

     

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To Merrimack:   Merrimack Pharmaceuticals, Inc.
101 Binney Street
Cambridge, Massachusetts 02142
Attention: Robert Mulroy, President & CEO
Fax:        (617) 354-8391
with a copy to:
 
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Lawrence S. Wittenberg, Esq.
Fax:        (617) 248-7100
To GTC:
 
GTC Biotherapeutics Inc
175 Crossing Boulevard
Framingham, MA 01701
USA
Attention: Chairman, President & CEO
Facsimile:        (508) 370-3797
with a copy to:
 
GTC Biotherapeutics Inc
175 Crossing Boulevard
Framingham, MA 01701
USA
Attention: Sr. Vice President & General Counsel
Facsimile:        (508) 370-3797

        26.    No Other Rights.    Except as expressly set forth in this
Section, no other rights, express or implied, are granted hereunder to either
Party under any Patent Rights, Transgenic Technology or Know How of the other
Party. Except as otherwise expressly provided in this Section, under no
circumstances shall either Party, as a result of this Agreement, obtain any
ownership interest in or other right to the Patent Rights or Know How of the
other Party, including intellectual property owned, controlled or developed by
or licensed to the other Party prior to or any time during the term of this
Agreement.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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30

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        27.    Insurance.    Each Party shall maintain insurance, including
product liability insurance and workers compensation or an insurance product
with a similar purpose, with respect to its activities hereunder. Such insurance
shall be in such amounts and subject to such deductibles as the Parties may
agree based upon standards prevailing in the industry at the time. Each Party
may satisfy its obligations under this Section § 27 through self-insurance to
the same extent.

        28.    Severability.    If any provision or condition of this Agreement
is determined to be invalid, illegal or unenforceable, the remaining provisions
and conditions of this Agreement shall remain in full force and effect and the
Parties hereby acknowledge and agree that they would have executed the remaining
portion hereof without including the portion so declared invalid, void or
unenforceable. In the event of any such determination, the Parties agree to
negotiate in good faith to modify this Agreement to fulfill as closely as
possible the original intent and purpose hereof. To the extent permitted by law,
the Parties hereby, to the same extent, waive any provision of law that renders
any provision hereof prohibited or unenforceable in any respect.

        29.    Force Majeure.    If the performance of this Agreement or any
obligation hereunder is prevented, restricted or interfered with by reason of
fire or other casualty or accident, strikes or labor disputes, inability to
procure raw materials, power or supplies, terrorist act or other violence, any
law, order, proclamation, regulation, ordinance, demand or requirement of any
government agency, or any other act or condition whatsoever beyond the control
of a Party hereto, the Party so affected, upon giving prompt notice to the other
Party, shall be excused from such performance to the extent of such prevention,
restriction or interference; provided, however, that the Party so affected shall
use reasonable efforts to avoid or remove such causes of non-performance and
shall continue performance hereunder with the utmost dispatch whenever such
causes are removed.

        30.    Diligence    Under the terms of this Agreement GTC and Merrimack
each agree to use commercially reasonable efforts to meet the Estimated Timing
outlined in Section 8 hereof. Both Parties agree to be flexible and to work
together in good faith to optimally coordinate the desired outcomes for this
Project.

GTC Biotherapeutics, Inc.
175 Crossing Boulevard, Suite 410
Framingham, MA 01702
Attn: Chairman, President & CEO   Merrimack Pharmaceuticals, Inc.
101 Binney Street
Cambridge, MA 02142
Attn: President & CEO

31

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        IN WITNESS WHEREOF, duly-authorized representatives of the Parties have
signed this Agreement as a document under seal as of the Effective Date.

GTC BIOTHERAPEUTICS, INC.   MERRIMACK PHARMACEUTICALS, INC.
By:
/s/  GEOFFREY F. COX      

--------------------------------------------------------------------------------

 
By:
/s/  ROBERT J. MULROY      

--------------------------------------------------------------------------------

Print Name:
GEOFFREY F. COX

--------------------------------------------------------------------------------

 
Print Name:
ROBERT J. MULROY

--------------------------------------------------------------------------------

Title:
Chairman, President & Chief Executive Officer

--------------------------------------------------------------------------------

 
Title:
President & Chief Executive Officer

--------------------------------------------------------------------------------

Date:
June 27, 2003

--------------------------------------------------------------------------------

 
Date:
June 29, 2003

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APPENDIX I

PROMISSORY NOTE

November     , 2002
[*****]    

        FOR VALUE RECEIVED, the undersigned, a Massachusetts corporation (the
"Borrower"), hereby promises to pay to the order of GTC Biotherapeutics, Inc.
(the "Holder"), a Massachusetts corporation, the principal sum of [*****] as
follows:

[*****] on or before December 27, 2002
[*****] on or before March 25, 2003

together with interest from the date hereof on the unpaid principal at the prime
rate (as reported in the Wall Street Journal) plus 2.5%.

        This Note may be prepaid from time to time in whole or in part without
permission or penalty.

        For the security of the Holder hereof, the undersigned Borrower
covenants that so long as any part of the principal or interest on this note is
outstanding and unpaid, it will not grant any security interest to any third
Party upon its property, or create any lien whatsoever thereon, without also
thereby including therein this note equally with every other evidence of debt,
secured by any of the undersigned's property. If the Borrower breaks this
covenant, the Holder may make this note due and payable in full on demand upon
proper written notice. This remedy will be deemed cumulative and in addition to
any other remedy available to the Holder hereof.

        The undersigned agrees to pay all costs, including reasonable attorney's
fees, incurred by the Holder in enforcing payment hereof.

        This Note shall be construed in accordance with, and governed by the
laws of the Commonwealth of Massachusetts.

Agreed and accepted:

Merrimack Pharmaceuticals, Inc. (Borrower)
100 Binney Street
Cambridge, MA 02142

By its duly authorized officer

Name            

--------------------------------------------------------------------------------

    Title:            

--------------------------------------------------------------------------------

    Date:            

--------------------------------------------------------------------------------

   

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*Confidential Treatment has been requested for the marked portion.

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APPENDIX II

MERRIMACK PHARMACEUTICALS, INC.

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.

SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT

[            ] Shares

[                            ], 200[    ]

        Merrimack Pharmaceuticals, Inc., a Massachusetts corporation f/k/a
Atlantic BioPharmaceuticals, Inc. hereby certifies that, for value received,
[                        ] (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company, up to [            ] shares of the
Company's Series B Convertible Preferred Stock (the "Warrant Shares"), at a
purchase price (the "Purchase Price") of [*****] per share. The number and
character of the Warrant Shares and the Purchase Price are subject to adjustment
as provided herein.

        This Series B Convertible Preferred Stock Purchase Warrant (the
"Warrant") is issued pursuant to a certain term sheet by and between the Company
(as defined below) and the Holder whereby the Parties contemplate entering into
and performing a certain Agreement relating to the production of recombinant
human alpha fetoprotein in Clarified Milk, a copy of which is on file at the
principal office of the Company. The Series B Convertible Preferred Stock
issuable upon exercise of the Warrant Shares shall be subject to the provisions
of the Restated Articles of Organization of the Company (the "Charter"), as from
time to time amended, to which Holder hereby assents.

1.    Definitions.    

        As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

        (a)   The term "Company" shall mean Merrimack Pharmaceuticals, Inc., a
Massachusetts corporation (f/k/a Atlantic BioPharmaceuticals, Inc.) and any
corporation that shall succeed to or assume the obligations of Merrimack
Pharmaceuticals, Inc. hereunder.

        (b)   The term "Common Stock" shall mean the Company's common stock,
without par value.

        (c)   The term "Market Price" shall mean, on any date specified herein,
fair market value of the Preferred Stock as of such date determined in good
faith by the Board of Directors of the Company.

        (d)   The term "Other Securities" shall mean any stock (other than
Preferred Stock) and other securities of the Company or any other person
(corporate or otherwise) which Holder at any time shall be entitled to receive,
or shall have received, upon exercise of this Warrant, in lieu of or in addition
to Preferred Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of the Preferred Stock.

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        (e)   The term "Person" shall mean an individual, firm, partnership,
association, unincorporated organization, trust, corporation, or any other
entity.

        (f)    The term "Preferred Stock" shall mean the Series B Convertible
Preferred Stock, without par value, of the Company.

2.    Exercise of Warrant.    

        2.1.    Exercise Procedure.    This Warrant may be exercised by the
Holder hereof, in whole or in part, at any time or from time to time prior to
the Expiration Date (as defined in Section 8), by surrendering to the Company at
its principal office this Warrant, with the form of Election to Purchase Shares
attached hereto as Exhibit A duly executed by the Holder and accompanied by
payment of the Purchase Price for the number of shares of Preferred Stock
specified in such form.

        2.2.    Payment of Purchase Price.    Payment of the Purchase Price may
be made as follows (or by any combination of the following): (i) in United
States currency by cash or delivery of a certified check or bank draft payable
to the order of the Company or by wire transfer to the Company, or (ii) by
cancellation of such number of the shares of Preferred Stock otherwise issuable
to the Holder upon such exercise as shall be specified in such Election to
Purchase Shares, such that the excess of the aggregate current Market Price of
such specified number of shares on the date of exercise over the portion of the
Purchase Price attributable to such shares shall equal the Purchase Price
attributable to the shares of Preferred Stock to be issued upon such exercise,
in which case such amount shall be deemed to have been paid to the Company and
the number of shares issuable upon such exercise shall be reduced by such
specified number.

        2.3.    Effective Date of Exercise.    Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the business day on which this Warrant shall have been surrendered to, and
the Purchase Price shall have been received by, the Company as provided in
Section 2.1, and at such time the person or persons in whose name or names any
certificate of certificates for shares of Preferred Stock shall be issuable upon
such exercise as provided in Section 3 shall be deemed to have become the holder
or holders of record thereof for all purposes.

        2.4.    Fractional Shares.    In no event shall any fractional share of
Preferred Stock be issued upon any exercise of this Warrant. If, upon exercise
of this Warrant, Holder would, except as provided in this Section 2.4, be
entitled to receive a fractional share of Preferred Stock, then the Company
shall issue the next higher round number of full shares of Preferred Stock,
issuing a full share with respect to such fractional share.

3.    Delivery of Stock Certificates.    

        As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within 3 business days thereafter, the Company at its
expense (including the payment by it of any applicable taxes) will cause to be
issued in the name of and delivered to Holder (or its designee), a certificate
or certificates for the number of fully paid and nonassessable shares of
Preferred Stock (or Other Securities) to which Holder shall be entitled on such
exercise, together with any other stock or other securities and property
(including cash, where applicable) to which Holder is entitled upon such
exercise pursuant to Section 2 or otherwise. As used in this Warrant the term
"business day" shall mean any day other than a Saturday or a Sunday on which
commercial banking industries in the Commonwealth of Massachusetts are
authorized to be closed.

4.    Consolidation, Merger, etc.    

        4.1    Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc.    In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing

35

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or surviving Person but, in connection with such consolidation or merger, the
Preferred Stock shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (c) shall transfer all or
substantially all of its properties or assets to any other Person, or (d) shall
effect a capital reorganization or reclassification of the Preferred Stock,
then, and in the case of each such transaction, proper provision shall be made
so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant, upon the exercise hereof at any time after
the consummation of such transaction, shall be entitled to receive (at the
aggregate Purchase Price in effect at the time of such consummation for all
Preferred Stock issuable upon such exercise immediately prior to such
consummation), in lieu of the Preferred Stock issuable upon such exercise prior
to such consummation, the highest amount of securities, cash or other property
to which such Holder would actually have been entitled as a shareholder upon
such consummation if such Holder had exercised this Warrant immediately prior
thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in Section 5, provided
that if a purchase, tender or exchange offer shall have been made to and
accepted by the holders of more than 50% of the outstanding voting securities of
the Company, and if the Holder so designates in a notice given to the Company on
or before the date immediately preceding the date of the consummation of such
transaction, the Holder of such Warrant shall be entitled to receive the highest
amount of securities, cash or other property to which it would actually have
been entitled as a shareholder if the Holder of such Warrant had exercised such
Warrant prior to the expiration of such purchase, tender or exchange offer and
accepted such offer, subject to adjustments (from and after the consummation of
such purchase, tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in Sections 3 and 4.

        4.2    Assumption of Obligations.    Notwithstanding anything contained
in this Warrant, the Company shall not effect any of the transactions described
in clauses (a) through (d) of Section 4.1 unless, prior to the consummation
thereof, each Person (other than the Company) which may be required to deliver
any stock, securities, cash or property upon the exercise of this Warrant as
provided herein shall assume any obligations of the Company under this Warrant
(and if the Company shall survive the consummation of such transaction, such
assumption shall be in addition to and shall not release the Company from, any
continuing obligations under this Warrant), and (b) the obligation to deliver to
the Holder such shares of stock, securities, cash or property as, in accordance
with the foregoing provisions of this Section 4, the Holder may be entitled to
receive.

        4.3    No Dilution or Impairment.    The Company shall not, by amendment
of its Charter or through any consolidation, merger, reorganization, transfer of
the assets, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company
(a) shall not permit the par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (b) shall take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Preferred Stock upon exercise of this Warrant and issue
fully paid and nonassessable shares of Common Stock upon conversion of the
Warrant Shares received upon exercise of this Warrant, and (c) shall not take
any action which results in the total number of shares of Preferred Stock
issuable upon the exercise of this Warrant exceeding the total number of shares
of Preferred Stock then authorized by the Company's Charter and available for
the purpose of issue upon such exercise.

5.    Adjustments For Stock Dividends and Stock Splits.    

        In the event that the Company shall (i) issue additional shares of stock
as a dividend or other distribution on outstanding Preferred Stock or
(ii) subdivide or combine its outstanding shares of

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Preferred Stock, then, the number of Warrant Shares issuable upon exercise of
this Warrant immediately prior to such subdivision or to the issuance of such
stock dividend shall be proportionately increased, and the Purchase Price shall
be proportionately decreased, and in the event that the Company shall at any
time combine the outstanding shares of Preferred Stock, the number of shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Purchase Price shall be
proportionately increased, effective at the close of business on the date of
such subdivision, stock dividend or combination, as the case may be, provided
however, that there shall be no decrease in the Purchase Price pursuant to this
Section 5 if such decrease would cause the Purchase Price to be equal to an
amount that is less than the par value of the Preferred Stock.

6.    Investment Representations.    

        6.1    Accredited Investor.    Holder is an "accredited investor" as
such term is defined under Regulation D of the Act.

        6.2    Investment Purpose.    This Warrant and the right to purchase
shares of Preferred Stock upon the exercise thereof, are being acquired for
investment purposes only and not with a view towards, or for sale in connection
with, the distribution thereof, and Holder has no present intention of
distributing or selling the same except pursuant to an applicable registration
or exemption under the Act.

7.    No Voting Rights.    

        This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company.

8.    Termination of Warrant.    

        Holder's right to exercise this Warrant shall expire upon the earlier of
(i) 5:00 p.m., Eastern Time, on [                            ], 200[    FIVE
YEARS FROM ISSUANCE], or (ii) immediately prior to the declaration by the
Securities and Exchange Commission of the effectiveness of a registration
statement relating to the Company's Qualified Initial Public Offering (the
"Expiration Date"). For purposes of the foregoing sentence, a "Qualified Initial
Public Offering" is an underwritten public offering of the Common Stock with a
per share offering price equal to or greater than [*****] (subject to adjustment
for stock splits, stock dividends and the like), which results in aggregate net
proceeds to the Company of at least [*****] and a pre-money valuation of the
Company of at least [*****].

9.    Miscellaneous.    

        9.1    Transfer of Warrant.    Subject to Holder's compliance with
applicable Federal and state securities laws, this Warrant may be transferred by
Holder in whole or in part. Upon surrender of this Warrant for transfer,
properly endorsed, to the Company, the Company at its expense will issue and
deliver a new Warrant or Warrants of the same denomination and terms, in the
name of Holder's transferee(s).

        9.2    Replacement of Warrants.    On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor; provided,
however, if any Warrant is lost, stolen or destroyed, the affidavit of an
officer of Holder setting forth the circumstances with respect to such loss,
theft or destruction shall be accepted as satisfactory evidence thereof, and no
indemnity bond or other security shall be required as a condition to the
execution and delivery by the Company of a new Warrant in replacement of such
lost, stolen or destroyed Warrant.

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        9.3    Remedies.    The Company stipulates that the remedies at law of
Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

        9.4    Notices.    Any notice or other communication required or which
may be given hereunder shall be in writing and shall be delivered personally,
sent by facsimile transmission (with a copy by mail) or sent by certified,
registered or express mail (including Federal Express or other established
overnight delivery service), postage prepaid, as follows:

    to the Company:   Merrimack Pharmaceuticals, Inc.
101 Binney Street
Cambridge, Massachusetts 02142
Attention: Robert Mulroy, President & CEO
Fax: (617) 354-8391
 
 
with a copy to:
 
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Lawrence S. Wittenberg, Esq.
Fax: (617) 248-7100
 
 
to Holder:
 
[Insert name and address]
 
 
with a copy to:
 
[insert any person to receive a copy]

The Parties may from time to time amend the above addresses and names by written
notice given the other Party.

        9.5    Significance of Captions.    The captions of the Articles,
Sections and subsections of this Warrant are for convenience of reference only
and shall not affect the meaning or interpretation of any of the provisions
hereof.

        9.6    Benefit and Binding Effect.    This Warrant shall inure to the
benefit of the respective personal representatives, successors and assigns of
the Parties hereto.

        9.7    Governing Law.    This Warrant shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts.

        9.8    Reservation of Stock.    The Company shall at all times reserve
and keep available, solely for issuance and delivery upon exercise of this
Warrant, the number of shares of Preferred Stock, from time to time issuable
upon exercise of this Warrant and the total number of shares of Common Stock
which may be issued upon the conversion of the Warrant Shares, at any time
outstanding. All shares of Preferred Stock issuable upon exercise of this
Warrant and all shares of Common Stock issuable upon conversion of the Warrant
Shares shall be duly authorized and, when issued upon such exercise or
conversion, as appropriate, shall be validly issued and, in the case of shares,
fully paid and nonassessable. All Warrant Certificates surrendered upon the
exercise of the rights thereby evidenced shall be canceled, and such canceled
Warrants shall constitute sufficient evidence of the number of shares of stock
which have been issued upon the exercise of such Warrants. Subsequent to the
Expiration Date, no shares of Preferred Stock and Common Stock need to be
reserved in respect of any unexercised Warrant.

        9.9    Entire Agreement.    This Warrant represents the entire agreement
of the Parties hereto with respect to the transactions contemplated hereby and
supersedes all prior agreements and understandings.

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        IN WITNESS WHEREOF, the Parties have executed this Warrant under seal as
of the day and year first written above.

    MERRIMACK PHARMACEUTICALS, INC.
 
 
 
 
      By:       

--------------------------------------------------------------------------------

    Name:       

--------------------------------------------------------------------------------

    Title:       

--------------------------------------------------------------------------------

 
 
 
 
      GTC BIOTHERAPEUTICS, INC.
 
 
 
 
      By:       

--------------------------------------------------------------------------------

    Name:       

--------------------------------------------------------------------------------

    Title:       

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39

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APPENDIX III

Characterization and Release Assays for Clarified Milk

Assays* (rhAFP in Clarified Milk)

1)[*****] for recovering microorganisms

2)[*****] assay for detection of Bacterial Endotoxin

3)Concentration Assay

4)Assays for detection of adventitious viruses using three indicator cell lines:

i.[*****]

[*****]

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APPENDIX IV

Purification Agreement

I.     Activities

        1)    Merrimack and GTC agree as follows:    

a.GTC and Merrimack will collaborate on defining appropriate purification
processes for rhAFP produced in the milk of transgenic goats and clarified by
[*****]. The assumption for the purposes of this Agreement is that a [*****]
purification process for rhAFP from clarified milk will be used;

b.GTC will develop in collaboration with Merrimack appropriate assays to support
purification process development, Purified Bulk release, and stability
monitoring;

c.GTC will apply the purification process to purify rhAFP from clarified milk
from hormonal induction and natural lactation for pre-clinical and early stage
human clinical studies by Merrimack; and

d.GTC will perform stability studies on Purified Bulk and the finished Drug
Product as agreed by both parties.

        2)    GTC will perform the following activities:    

a.GTC will, in collaboration with Merrimack, optimize and define a bench scale
process for the purification of rhAFP from clarified milk (starting material)
produced by hormonal induction of the F0 female Founder Goats [*****];

b.GTC will develop a bench scale process for the purification of rhAFP from
clarified milk (starting material) produced from natural lactation of the
Founder Goats and the Transgenic Goats generated by [*****];

c.GTC will purchase, calibrate and qualify purification equipment; purchase and
release raw materials and shall generate documentation sufficient to support
manufacturing rhAFP for early stage human clinical studies by Merrimack. GTC
will devise a plan for process scale up including: calibrating equipment,
optimizing the purification process and generating the process documentation for
early stage human clinical studies by Merrimack;

e.GTC, in collaboration with Merrimack, will optimize and qualify appropriate
assays to support purification process development, stability studies and the
release of Purified Bulk;

f.GTC will perform and/or manage a preliminary [*****] study that will include a
study on the [*****];

g.GTC shall perform and/or manage a [*****] study for [*****], to be determined
by the Parties;

h.GTC, in collaboration with Merrimack, will perform [*****] studies for
monitoring Purified Bulk and Finished Drug Product produced by [*****];

i.GTC will process [*****] in clarified milk from hormonal induction lactation
for pre-clinical studies by Merrimack [*****];

j.GTC will process [*****] in clarified milk from hormonal induction and natural
lactation using [*****], intended for early stage human clinical studies by
Merrimack [*****];

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k.GTC will process [*****] in clarified milk from natural lactation using
[*****], intended for pre-clinical studies by Merrimack [*****];

l.GTC will process the next [*****] in clarified milk from natural lactation
using [*****], intended for early stage human clinical studies by Merrimack
[*****];

n.GTC will process the next [*****] in clarified milk from natural lactation
using [*****], intended for early stage human clinical studies by Merrimack
([*****]; The first of these runs may be classified as an "Engineering Run"
depending on purification results);

o.As part of the Stage 2 agreement, Merrimack and GTC will negotiate in good
faith regarding terms for the purification of the next [*****] of AFP in
clarified milk produced in Stage 2

p.GTC, in collaboration with Merrimack, will set product specifications and
perform lot release testing, specifically not including a potency assay; and

q.GTC shall provide a deliverables list including development reports,
quantities of purified bulk material, and viral clearance reports.

II.    Compensation for Purification Activities Performed

1)Merrimack agrees to compensate GTC through the purification program as
follows:

a.[*****] upon execution of this Initial Collaboration Agreement as payment
towards the following activities [*****].

i)[*****] project management fees upon processing of [*****]rhAFP in clarified
milk (line C in Appendix VI);

ii)[*****] to develop/optimize [*****] (line I in Appendix VI); and,

iii)[*****] to develop/optimize analytical methods as described in Appendix V
(line E in Appendix VI).

b.[*****] prior to January 31, 2003 as further payment towards i), ii) and iii)
above [*****];

c.[*****] upon completion of processing of [*****] of rhAFP or by April 30,2003
whichever is earlier as further payment towards i) above and as payment towards
the following activities [*****];

i)[*****] to conduct a preliminary viral clearance study (nanofiltration) for
[*****] (line L in Appendix VI);

ii)[*****] to process clarified milk containing [*****] rhAFP intended for
pre-clinical studies by Merrimack. (line K in Appendix VI);

iii)[*****] to transfer the process to the GTC pilot purification facility
(line M in Appendix VI);

iv)[*****] to process clarified milk containing [*****] rhAFP intended for early
stage human clinical studies by Merrimack [*****] (line O in Appendix VI);

v)[*****] toward utilization of pilot scale purification equipment [*****]
(line Q in Appendix VI); and,

vi)[*****] to conduct product stability studies (line G in Appendix VI).

d.[*****] by July 31, 2003 or within [*****] business days of Merrimack closing
new Series C venture capital financing whichever is earlier as payment towards
[*****] above.

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e.[*****] by September 30, 2003 or within five (5) business days of Merrimack
closing new [*****] venture capital financing whichever is earlier as payment
towards [*****].

f.[*****] project management fees payable over six (6) consecutive quarters for
clarification and purification activities (line T in Appendix VI).

g.[*****] upon written notification by GTC to Merrimack of the completion of the
development of [*****] (line W in Appendix VI);

h.[*****] upon written notification by GTC to Merrimack of the completion of
qualification and transfer of analytical methods to support clinical
manufacturing and release of Purified Bulk (line U in Appendix VI);

i.Cost for conducting viral clearance study for [*****] to be determined (line X
in Appendix VI);

j.[*****] upon the initiation of the utilization of purification equipment for
[*****]. (line R in Appendix VI);

k.[*****] upon initiation of the procurement of columns and resins for [*****]
(line MM in Appendix VI);

l.[*****] upon written notification by GTC to Merrimack of the completion of the
transfer of [*****], to GTC pilot purification facility (line Y in Appendix VI);

m.[*****] upon the initiation of the utilization of purification equipment for
[*****] (line NN in Appendix VI);

n.[*****] upon written notification by GTC to Merrimack of the completion of the
transfer of [*****], to GTC pilot purification facility (line AA in
Appendix VI);

o.[*****] upon written notification by GTC to Merrimack of the completion of
processing clarified milk containing [*****] rhAFP intended for preclinical
studies by Merrimack [*****] (line FF in Appendix VI);

p.[*****] to process [*****] rhAFP, payable quarterly on a per batch basis,
intended for early stage human clinical studies by Merrimack [*****] (line HH in
Appendix VI);

r.[*****] to process [*****] rhAFP, payable quarterly on a per batch basis,
intended for early stage human clinical studies by Merrimack [*****] (line JJ in
Appendix VI);

s.As part of the Stage 2 agreement, Merrimack and GTC will negotiate in good
faith regarding terms for the purification of the next [*****] of AFP in
clarified milk produced in Stage 2

t.[*****] to conduct stability studies on Purified Bulk and Finished Drug
Product produced by [*****], payable over 6 consecutive quarters (line V in
Appendix VI).

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*Confidential Treatment has been requested for the marked portion.

43

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III.  Timing

        The estimated timing of the purification program is provided below and
is regarded by GTC as the most likely for this project. The key approximate time
points are as follows:

[*****]defined   [*****]
Analytical methods developed
 
[*****]
Manufacturing to produce rhAFP for [*****] ([*****] rhAFP in clarified milk
processed at [*****])
 
[*****]
[*****]transferred to Pilot facility
 
[*****]
Preliminary viral clearance study for [*****] completed
 
[*****]
Manufacturing to produce rhAFP for early stage clinical trials [*****] in
clarified milk processed at [*****])
 
[*****]
[*****] defined
 
[*****]
[*****]transferred to pilot facility
 
[*****]
Manufacturing to produce rhAFP for [*****]([*****] rhAFP in clarified milk
processed at [*****])
 
[*****]
Manufacturing to produce rhAFP for early stage clinical trials ([*****] rhAFP in
clarified milk processed at [*****])
 
[*****]
[*****] transferred to pilot facility
 
[*****]
Manufacturing to produce rhAFP for clinical trials ([*****])
 
[*****]
Stability studies
 
[*****]

IV.    Exclusions

        Specifically not included in the services to be provided by GTC in this
Agreement are the following procedural elements:

1)Finished Drug Product lot release.

2)Formulation development.

3)Clinical and regulatory support. Costs associated with QA/regulatory
activities to support regulatory submissions for transgenically-produced rhAFP
shall be determined by the Parties. These costs will be based on hourly FTE
(fully burdened) rates on a per task basis to be agreed between the Parties.

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*Confidential Treatment has been requested for the marked portion.

44

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APPENDIX V

Characterization and Release Assays for rhAFP* (Purified Bulk rhAFP)

1)Quality

i.[*****]

2)Potency

i.[*****]

3)Purity

i.[*****]

4)Identity

i.[*****]

*Note: Specifications for each test to be discussed and agreed upon by both
parties. AFP must meet requirements for use in clinical trials.

^ To be done by third party contract lab.

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*Confidential Treatment has been requested for the marked portion.

45

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APPENDIX VI

[*****]

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*Confidential Treatment has been requested for the marked portion.

46

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QuickLinks

Exhibit 10

APPENDIX I

PROMISSORY NOTE

APPENDIX II

MERRIMACK PHARMACEUTICALS, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT

APPENDIX III

Characterization and Release Assays for Clarified Milk

APPENDIX IV

Purification Agreement

APPENDIX V

APPENDIX VI