Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”), dated as of July 18, 2017, is
entered into by and between Merrimack Pharmaceuticals, Inc., a Delaware
corporation with a place of business at One Kendall Square, Suite B7201,
Cambridge, Massachusetts 02139 (the “Company”), and Thomas E. Needham, Jr. (the
“Employee”).

RECITALS

WHEREAS, the Company desires to employ the Employee on the terms and conditions,
and for the consideration, hereinafter set forth, and the Employee desires to be
employed by the Company on such terms and conditions and for such consideration.

NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

1.Term of Employment.  Subject to the terms and conditions hereinafter set
forth, the Company hereby employs the Employee, and the Employee hereby enters
into the employment of the Company, for an employment term commencing on July
24, 2017 (the “Effective Date”) and, unless earlier terminated in accordance
with the provisions set forth in Section 7, continuing until December 31,
2017.  This Agreement shall renew automatically for successive one (1) year
terms, unless either party shall give the other notice of non-renewal in
accordance with Section 7. The initial term of this Agreement, together with any
annual renewal terms of this Agreement, shall be referred to as the “Term of
Employment.”  The Employee’s Base Salary (as defined below) for any renewal term
shall be as agreed by the parties, provided that (i) the Base Salary shall in no
event be less than the Base Salary the Employee received in the immediately
preceding term, and (ii) in the absence of an agreement otherwise, the
Employee’s Base Salary shall be the same as the Base Salary he received in the
immediately preceding term.

2.Position.  During the Term of Employment, the Employee shall serve as the
Chief Business Officer of the Company and in such additional position(s) as he
and the Company shall agree.

3.Scope of Employment.  During the Term of Employment, the Employee shall be
responsible for the performance of all financial, managerial and administrative
duties customarily performed by a Chief Business Officer, together with such
other duties as the Chief Executive Officer and the Employee shall agree.  The
Employee shall be accountable to the Chief Executive Officer and shall perform
and discharge, faithfully, diligently and to the best of his ability, his duties
and responsibilities hereunder.  The Employee shall devote his full working time
and efforts to the business and affairs of the Company and its affiliates.

4.Compensation.  As full compensation for all services to be rendered by the
Employee during the Term of Employment, the Company will provide to the
Employee, and the Employee will accept, the following:

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(a)Base Salary.  During the Term of Employment, the Employee shall receive a
base salary of $340,000 per calendar year, less all applicable taxes and
withholdings (the “Base Salary”), paid in installments in accordance with the
Company’s regularly established payroll procedure.  The Employee’s Base Salary
shall be reviewed annually by the Company’s Board of Directors (the “Board”) and
may be adjusted from time to time in accordance with normal business practices
and taking into account then-current market factors, but in no event shall the
Employee’s Base Salary be less than the Base Salary the Employee received from
the Company in the immediately preceding year.

(b)Annual Discretionary Bonus.  During the Term of Employment, the Employee
shall be eligible to receive a discretionary annual performance and retention
bonus of up to 35% of his then-current Base Salary, at a time and under
circumstances determined by the Board, in its sole discretion.  In order to
receive this bonus, the Employee must be an active employee of the Company on
the date any bonus is determined and no discretionary annual bonus shall be
considered earned before such date.  Such discretionary bonus, if any, shall be
paid no later than sixty (60) days following the date on which the Board
approves such bonus.  The Employee’s bonus for 2017 shall be prorated based on
the Effective Date.

(c)Stock Options; Equity Grants.  Subject to approval by the Board, the Company
will grant the Employee an option to purchase 450,000 shares of the Company’s
common stock (as adjusted for any stock splits or combinations), with an
exercise price equal to the fair market value per share on the date of the grant
of the stock option.  The stock option will vest over three years at the rate of
1/6th of the total number of shares granted on the six-month anniversary of the
Effective Date and an additional 1/12th of the total number of shares granted at
the end of each successive three month period following the six-month
anniversary of the Effective Date until fully exercisable, subject to the
Employee’s continued employment with the Company on the applicable vesting
date.  This stock option shall be subject to the terms and conditions of the
Company’s 2011 Stock Incentive Plan and the applicable Stock Option
Agreement.  The Employee shall be eligible to receive additional option grants
or other equity grants at times and under circumstances determined by the Board,
in its sole discretion.

(d)Paid Time Off.  The Employee shall be eligible for paid time off in
accordance with the Company’s Paid Time Off Policy contained within the
Company’s Employee Handbook, as amended and/or superseded from time to time.

(e)Insurance.  The Employee shall be entitled to participate in, and receive
benefits under, all Company sponsored insurance and benefit programs (i.e.,
health, dental, life, and disability) available to senior management employees
of the Company, subject to and on a basis consistent with the eligibility
requirements, terms, conditions and overall administration of such programs.

(f)Other Benefits.  The Employee shall be entitled to participate in, and
receive benefits under, all Company employee benefit plans and arrangements
(including but not limited to 401(k) and similar programs), available to senior
management employees of the Company, subject to and on a basis consistent with
the eligibility requirements, terms, conditions and overall administration of
such plans, policies and arrangements.

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5.Expenses.  The Employee shall be entitled to reimbursement by the Company for
all reasonable expenses actually incurred by him on the Company’s behalf in the
performance of his duties during the course of his employment by the Company,
upon the prompt presentation by the Employee, from time to time and in
accordance with the Company’s then-current reimbursement policies, of an
itemized account of such expenditures together with all supporting vouchers and
receipts.  All expense reimbursements shall be subject to the terms set forth in
Section 5 of Exhibit C.

6.Restrictive Covenants/Other Conditions to Employment.  Notwithstanding
anything to the contrary contained herein, the Employee’s employment hereunder
is subject to and conditioned on the Employee’s (i) completion of a background
check and drug screen analysis satisfactory to the Company, (ii) execution and
delivery to the Company of the Non-Disclosure, Developments, Non-Competition and
Non-Solicitation Agreement (the “Restrictive Covenants Agreement”) attached
hereto as Exhibit A, and (iii) timely providing proof of his right to work in
the United States.  The Employee further agrees that he shall sign all consents
necessary to the accomplishment of any of the foregoing, and that, should he not
satisfy the conditions set forth in this Section 6, he shall not commence
employment and this Agreement shall be null and void, with no obligations owed
to the Employee.

7.Early Termination.

(a)Death and Disability.  In the event of the Employee’s death during the Term
of Employment, this Agreement shall terminate immediately.  If, during the Term
of Employment, the Employee shall be unable for a period of more than any three
(3) consecutive months or for periods aggregating more than twenty-six (26)
weeks in a twelve (12) month period to perform the services provided for herein
as a result of any illness or disability, the Company may terminate the
Employee’s employment hereunder.  The Employee shall be considered unable to
perform the services provided for herein if and whenever the Company reasonably
determines, based upon the results of a medical examination performed by a
mutually agreed-upon professional, that he is mentally or physically incapable
of performing his duties hereunder.

(b)Termination for Cause.  The Employee may be terminated by the Company without
notice for “Cause.”  The following, as determined by the Board in its reasonable
judgment, shall constitute “Cause” for termination:

(i)Failure to Perform Duties.  The Employee’s material failure to perform (other
than by reason of illness or disability) his duties to the Company, or his
material negligence in the performance of his duties and/or responsibilities to
the Company, provided that the Employee shall have had prior written notice and
a reasonable opportunity of not less than thirty (30) days to correct any
deficiency in such performance;

(ii)Breach of Employment Agreement or Restrictive Covenants Agreement.  The
Employee’s material breach of this Agreement or the Restrictive Covenants
Agreement;

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(iii)Misconduct.  The Employee’s conviction for or plea of nolo contendere or
guilty to any crime involving fraud, embezzlement or moral turpitude or any
felony; or

(iv)Harmful Conduct.  Any conduct of the Employee that is materially harmful to
the business, interests or reputation of the Company, provided that the Employee
shall have had prior written notice and a reasonable opportunity of not less
than ten (10) days to correct any such conduct.

(c)Termination By Company Without Cause.  The Employee may be terminated by the
Company without “Cause” upon delivery of written notice to the Employee.  In the
event the Employee is terminated without “Cause,” the Employee shall be entitled
to receive the severance benefits set forth in Section 7(f) or 7(g), as
applicable.  The Company’s decision not to renew the Term of Employment shall
constitute a termination without “Cause.”

(d)Termination by the Employee for Good Reason.  This Agreement may be
terminated by the Employee for “Good Reason” (as defined below), upon thirty
(30) days’ prior written notice to the Company specifying any and all
circumstances the Employee believes to constitute the basis for Good Reason,
provided that the Company shall have the opportunity to cure the asserted Good
Reason within the thirty (30) day period.  The Employee shall have “Good Reason”
to terminate this Agreement in the event that the Company, without the express
written consent of the Employee: (i) causes a material diminution of the
Employee’s authority, duties or responsibilities; (ii) materially breaches this
Agreement, including, without limitation, by materially reducing the Employee’s
Base Salary; or (iii) relocates the Employee’s place of business by more than
thirty (30) miles from the Company’s current Cambridge, Massachusetts office.
Notwithstanding the foregoing, the Employee must give notice of his intention to
resign within ninety (90) days after the occurrence of the grounds for
termination for Good Reason, and resign within thirty (30) days after the
expiration of the Company’s thirty (30) day cure period referenced above, or
grounds for termination for Good Reason due to the circumstances specified in
the notice are irrevocably waived. In the event the Employee terminates his
employment for Good Reason, the Employee shall be entitled to the severance
benefits set forth in Section 7(f) or 7(g), as applicable.

(e)Effect of Early Termination.  Except for a termination by the Company without
“Cause” or by the Employee for “Good Reason,” in the event of any early
termination of the Term of Employment, the Company’s obligations under this
Agreement shall immediately cease and the Employee shall be entitled to only the
Employee’s Base Salary and employment benefits which have accrued and to which
the Employee is entitled through the date of such termination, including any
bonus that may have been awarded but not yet paid.  These accrued salary and
benefits shall be paid on or about the date of termination, but in no event
later than thirty (30) day following the date of termination.  The Employee
shall not be entitled to any other compensation or consideration, including any
bonus not yet awarded that the Employee may have been eligible for had his Term
of Employment not ceased, except as otherwise set forth in this Section
7(e).  In the event of an early termination of the Term of Employment due to the
Employee’s death or disability, as set forth in Section 7(a), the Employee (or
his estate, in the event of his death) will be eligible to receive a pro rata
bonus determined in the manner set forth

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in the penultimate sentence of Section 7(f), which bonus shall be paid within
thirty (30) days following the date of the Employee’s termination.

(f)Severance Benefits Prior to a Change in Control.  If the Term of Employment
is terminated by the Company without “Cause” (as that term is defined in Section
7(b)) or by the Employee for “Good Reason” (as that term is defined in Section
7(d)), in each case prior to a Change in Control (as that term is defined in
Exhibit B), the Employee shall be entitled to receive his Base Salary and all
other employment benefits accrued through the effective date of such
termination, which shall be paid on or about the date of termination, but in no
event later than thirty (30) day following the date of termination.  In
addition, provided the Employee executes and allows to become binding a
severance agreement and release of claims drafted by the Company and
satisfactory to the Company and the Employee (the “Release”), then beginning on
the first regularly scheduled payroll date that is the later of sixty (60) days
following the date of termination and the date on which the Employee executes
and allows to become binding the Release (such date, the “Payment Commencement
Date”), for a period of twelve (12) months (the “Severance Period”), the Company
shall: (i) pay to the Employee as severance pay his Base Salary in accordance
with the Company’s regularly established payroll procedure and (ii) pay for
coverage under any medical benefit plans provided pursuant to Section 4(e),
provided the Employee is eligible for and elects to continue receiving such
benefits pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 et. seq., and
provided further that the Employee continues to pay the applicable share of the
premium for such coverage that is paid by active and similarly situated
employees who receive the same type of coverage.  In addition, the Company shall
pay to the Employee, on the Payment Commencement Date, a pro-rata bonus equal to
(A) the average of the Employee’s annual bonus payments over each of the three
(3) years prior to the year of termination (or, if the Employee is an executive
officer, such lesser period during which the Employee served as an executive
officer of the Company), or, if such termination occurs prior to the award of
the Employee’s first annual bonus for 2017, the Employee’s target annual bonus
for 2017, multiplied by (B) a fraction, the numerator of which is the number of
days during the year during which the Employee remained employed by the Company
and the denominator of which is 365.  The distribution of all severance benefits
under this Section 7(f) shall be subject to the provisions of Exhibit C.

(g)Severance Benefits After a Change in Control.  If the Term of Employment is
terminated by the Company without “Cause” (as that term is defined in Section
7(b)) or by the Employee for “Good Reason” (as that term is defined in Section
7(d)), in each case within the eighteen (18) month period following a Change in
Control (as that term is defined in Exhibit B), the Employee shall be entitled
to receive his Base Salary and all other employment benefits accrued through the
effective date of such termination, which shall be paid on or about the date of
termination, but in no event later than thirty (30) day following the date of
termination.  In addition, provided the Employee executes and allows to become
binding the Release, the Company shall: (i) pay to the Employee as severance pay
on the Payment Commencement Date a lump sum amount equal to thirty-six (36)
months of his Base Salary; (ii) pay to the Employee on the Payment Commencement
Date a bonus equal to (A) three (3) multiplied by (B) the average of the
Employee’s annual bonus payments over each of the three (3) years prior to the
year of termination (or, if the Employee is an executive officer, such lesser
period during which the Employee served as an executive officer of the Company),
or, if such termination occurs prior to the award of the Employee’s first annual
bonus for 2017, the

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Employee’s target annual bonus for 2017; (iii) accelerate the vesting of all
outstanding Company stock options, restricted stock or other equity awards
granted to the Employee; and (iv) pay for coverage under any medical benefit
plans provided pursuant to Section 4(e) for a period of eighteen (18) months
following the Employee’s date of termination, provided the Employee is eligible
for and elects to continue receiving such benefits pursuant to the federal
“COBRA” law, 29 U.S.C. § 1161 et. seq., and provided further that the Employee
continues to pay the applicable share of the premium for such coverage that is
paid by active and similarly situated employees who receive the same type of
coverage.  The distribution of all severance benefits under this Section 7(g)
shall be subject to the provisions of Exhibit C.

8.Absence of Restrictions.  The Employee represents and warrants that he is not
a party to any commitment or undertaking by which he is subject to any
restriction or limitation upon his entering into this Agreement or performing
the services required of him hereunder.

9.Amendments.  Any amendment to this Agreement shall be made in writing and
signed by the parties hereto.

10.Applicable Law/Jury Trial Waiver.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(without reference to the conflict of laws provisions thereof).  Any action,
suit or other legal proceeding arising under or relating to any provision of
this Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within the
Commonwealth of Massachusetts), and the Company and the Employee each consents
to the jurisdiction of such a court.  THE COMPANY AND THE EMPLOYEE EACH HEREBY
IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER
LEGAL PROCEEDING ARISING UNDER OR RELATING TO ANY PROVISION OF THIS AGREEMENT.

11.Entire Agreement.  This Agreement, together with the Restrictive Covenants
Agreement attached hereto as Exhibit A and executed as a condition of the
Employee’s employment, constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of these agreements.

12.Successors and Assigns.  This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the
obligations of the Employee are personal and shall not be assigned by him.

13.Acknowledgment.  The Employee states and represents that he has had an
opportunity to fully discuss and review the terms of this Agreement with an
attorney.  The Employee further states and represents that he has carefully read
this Agreement, understands the contents herein, freely and voluntarily assents
to all of the terms and conditions hereof, and signs his name of his own free
act.

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14.Miscellaneous.

(a)No delay or omission by the Company in exercising any right under this
Agreement shall operate as a waiver of that or any other right.  A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar to or waiver of any right on any
other occasion.

(b)The captions of the sections of this Agreement are for convenience of
reference only and in no way define, limit or affect the scope or substance of
any section of this Agreement.

(c)In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.

 

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

COMPANY:

MERRIMACK PHARMACEUTICALS, INC.

By: /s/ Richard Peters

Richard Peters

President and Chief Executive Officer

 

EMPLOYEE:

/s/ Thomas E. Needham, Jr.

Thomas E. Needham, Jr.

 

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Exhibit A

Non-Disclosure, Developments, Non-Competition and Non-Solicitation Agreement

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NON-DISCLOSURE, DEVELOPMENTS, NON-COMPETITION

AND NON-SOLICITATION AGREEMENT

This Non-Disclosure, Developments, Non-Competition and Non-Solicitation
Agreement (the “Agreement”), dated as of July 24, 2017, is entered into by and
between Merrimack Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and Thomas E. Needham, Jr. (the “Employee”).

In consideration of the Employee’s employment with the Company and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Employee, the Employee hereby agrees as follows:

1.Condition of Employment.

The Employee acknowledges that his/her employment and the continuance of that
employment with the Company is contingent upon his/her agreement to sign and
adhere to the provisions of this Agreement.  The Employee further acknowledges
that the nature of the Company’s business is such that protection of its
proprietary and confidential information and goodwill with its customers and
partners is critical to its survival and success.

2.Confidential Information.

(a)The Employee agrees that all information and know-how, whether or not in
writing, of a private, secret or confidential nature concerning the Company and
its operations and business or financial affairs (collectively, “Confidential
Information”) is and shall be the exclusive property of the Company.  By way of
illustration, but not limitation, Confidential Information may include models,
systems, software and codes, or systems, software and codes in the course of
development, or planned or proposed systems, software or codes, customer,
prospect and supplier lists, contacts at or knowledge of customers or
prospective customers, customer accounts and other customer financial
information, strategic partners and/or collaborators, price lists and all other
pricing, marketing and sales information, projections, results relating to the
Company or any customer or supplier of the Company, databases, modules,
products, programs, product improvements, product enhancements and/or
developments, designs, specifications, processes, methods, techniques,
operations, projects, plans, chemical compounds, chemical or biological
materials, engineering data, clinical or technological data, research data,
financial data, personnel information, and other confidential agreements or
documents (including, without limitation, clinical trial protocols and
unpublished patent applications).  Except as otherwise permitted by Section 5,
the Employee will not disclose any Confidential Information to others outside
the Company or use the same for any unauthorized purposes without written
approval by an officer of the Company, either during or at any time after
his/her employment with the Company, unless and until such Confidential
Information has become public knowledge without fault by the Employee.  While
employed by the Company, the Employee will use the Employee’s best efforts to
prevent publication or disclosure of any Confidential Information.

(b)The Employee agrees that all Company Property (as defined below), whether
created by the Employee or others, that shall come into the Employee’s custody
or possession

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shall be and is the sole and exclusive property of the Company to be used only
in the performance of the Employee’s duties for the Company.  “Company Property”
means any and all written, photographic or any other record containing
Confidential Information and shall include, but not be limited to, all
agreements, notes, disks, files, letters, memoranda, reports, records, lists,
data, drawings, sketches, notebooks, program listings, specifications, software
programs, software code, computers and other electronic equipment,
documentation, or other equipment or materials of any nature and in any form,
containing Confidential Information.  Upon the earliest of the Employee’s
termination or a request from the Company, the Employee will return to the
Company any and all Company Property in the Employee’s custody or possession
without retaining any copies thereof (including, without limitation, any
electronic copy) and without using or allowing others to improperly use such
Company Property.

(c)The Employee acknowledges that the Employee’s obligations with regard to
Confidential Information that are set out in Sections 2(a) and (b) extend to all
information, know-how, records and tangible property of customers of the Company
or suppliers to the Company or of any third party who may have disclosed or
entrusted the same to the Company or to the Employee in the course of the
Company’s business.

3.Developments.

(a)The Employee will make full and prompt disclosure to the Company of all
inventions, ideas, concepts, improvements, discoveries, methods, techniques,
tools, formula, developments, enhancements, modifications, databases, processes,
software and works of authorship, whether patentable or not, that are created,
made, conceived or reduced to practice by the Employee or under the Employee’s
direction or jointly with others during the Employee’s employment with the
Company, whether or not during normal working hours or on the premises of the
Company (all of which are collectively referred to in this Agreement as
“Developments”).

(b)The Employee agrees to assign and does hereby assign to the Company (or any
person or entity designated by the Company) all of the Employee’s right, title
and interest in and to all Developments and all related intellectual property
rights.  Except as, and solely to the extent that, it may be necessary for the
Employee to perform the Employee’s duties and fulfill the Employee’s obligations
in the course of the Employee’s employment with the Company, the Company does
not grant the Employee, and the Employee agrees that he/she will not receive,
any license or right to use any Development or related intellectual property
right.  The Employee hereby also waives all claims to moral rights in any
Developments.  However, this Section 3(b) shall not apply to Developments that
do not relate to the present or planned business or research and development of
the Company and that are made and conceived by the Employee not during normal
working hours, not on the Company’s premises and not using the Company’s tools,
devices, equipment or Confidential Information.  This Section 3(b) also shall
not apply to any inventions that the Employee conceived of prior to the
Employee’s employment with the Company, which invention(s) the Employee shall
disclose on Exhibit A attached hereto.  IF THERE ARE ANY SUCH INVENTIONS TO BE
EXCLUDED UNDER THIS AGREEMENT, THE EMPLOYEE SHALL INITIAL HERE; OTHERWISE IT
WILL BE DEEMED THAT THERE ARE NO SUCH EXCLUSIONS. ____  The Employee understands
that, to the extent this Agreement shall be construed in accordance with the
laws of any state that precludes the requirement in an employee agreement to
assign certain classes of inventions made

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by an employee, this Section 3(b) shall be interpreted not to apply to any
invention that a court rules and/or the Company agrees falls within such
classes.  To the extent allowed by law, the Employee hereby grants to the
Company an exclusive (even unto the Employee), irrevocable, fully paid up,
worldwide license to make, use and sell any and all inventions for which
assignment cannot be effected.

(c)The Employee agrees to cooperate fully with the Company, both during and
after the Employee’s employment with the Company, with respect to the
procurement, maintenance and enforcement of all copyrights, trademarks, patents
and other intellectual property rights (both in the United States and foreign
countries) relating to any Development.  The Employee shall sign all papers,
including, without limitation, copyright applications, patent applications,
declarations, oaths, formal assignments, assignment of priority rights and
powers of attorney, that the Company may deem necessary or desirable in order to
protect and enforce its rights and interests in any Development.  The Employee
further agrees that if the Company is unable, after reasonable effort, to secure
the signature of the Employee on any such papers, any executive officer of the
Company shall be entitled to execute any such papers as the agent and the
attorney-in-fact of the Employee, and the Employee hereby irrevocably designates
and appoints each executive officer of the Company as the Employee’s agent and
attorney-in-fact for all countries worldwide to execute any such papers on the
Employee’s behalf, and to take any and all actions as the Company may deem
necessary or desirable in order to protect its rights and interests in any
Development, under the conditions described in this sentence.  Should the
Company engage in litigation to enforce any such intellectual property rights,
the Employee agrees to appear and testify at no charge, but at the Company’s
expense.

4.Non-Competition and Non-Solicitation.

(a)While the Employee is employed by the Company and for a period of twelve (12)
months following the Employee’s termination or cessation of employment for any
reason (voluntarily or involuntarily), the Employee will not, directly or
indirectly:

(i)engage in any business or enterprise (whether as an owner, partner, officer,
employee, director, investor, lender, consultant, independent contractor or
otherwise, except as the holder of not more than 1% of the combined voting power
of the outstanding stock of a publicly held company) that is competitive with
the Company’s business, including, without limitation, any business or
enterprise that develops, designs, produces, markets or sells any product or
service competitive with any product or service developed, designed, produced,
marketed or sold or planned to be developed, designed, produced, marketed or
sold by the Company while the Employee was employed by the Company;

(ii)either alone or in association with others, recruit, solicit, hire or engage
as an independent contractor, or attempt to recruit, solicit, hire or engage as
an independent contractor, any person who was employed by the Company or engaged
as an independent contractor for the Company at any time during the period of
the Employee’s employment with the Company, except for an individual whose
employment with or service for the Company has been terminated for a period of
six (6) months or longer; and/or

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(iii)either alone or in association with others, service, solicit, divert or
take away, or attempt to service, solicit, divert or take away, the business or
patronage of any of the clients, customers or accounts, or prospective clients,
customers or accounts, of the Company that were contacted, solicited or served
by the Employee while the Employee was employed by the Company or about which
the Employee had access to Confidential Information in the course of his/her
employment with the Company.

(b)The geographic scope of this Section 4 shall extend to anywhere the Company
or any of its subsidiaries is doing business, has done business or has plans to
do business during the Employee’s employment with the Company.

(c)If any restriction set forth in this Section 4 is found by any court of
competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

(d)The Employee agrees that during the non-competition and non-solicitation
period, the Employee will give notice to the Company of each new job, contract
assignment or other work (either as an employee, contractor or otherwise) the
Employee plans to undertake a reasonable amount of time prior to beginning any
such activity.  The notice shall state the name and address of the individual,
corporation, association or other entity or organization (the “Entity”) for whom
such activity is undertaken and the Employee’s proposed business relationship or
position with the Entity.  The Employee further agrees to provide the Company
with other pertinent non-confidential information concerning such business
activity as the Company may reasonably request in order to determine the
Employee’s continued compliance with his/her obligations under this
Agreement.  During the non-competition and non-solicitation period, the Employee
agrees to provide a copy of this Agreement to all person and Entities with whom
the Employee seeks to be hired or do business before accepting employment or
engagement with any of them.

(e)If the Employee violates any of the provisions of this Section 4, the
Employee shall continue to be held by the restrictions set forth in this Section
4 until a period equal to the period of restriction has expired without any
violation.

5.Scope of Disclosure Restrictions.

Nothing in this Agreement prohibits the Employee from communicating with
government agencies about possible violations of federal, state or local laws or
otherwise providing information to government agencies or participating in
government agency investigations or proceedings.  The Employee is not required
to notify the Company of any such communications; provided, however, that
nothing herein authorizes the disclosure of information the Employee obtained
through a communication that was subject to the attorney-client
privilege.  Further, notwithstanding the Employee’s confidentiality and
nondisclosure obligations, the Employee is hereby advised as follows pursuant to
the Defend Trade Secrets Act: “An individual shall not be held criminally or
civilly liable under any Federal or State trade secret law for the disclosure of
a trade secret that (A) is made (i) in confidence to a Federal, State, or local
government official,

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either directly or indirectly, or to an attorney; and (ii) solely for the
purpose of reporting or investigating a suspected violation of law; or (B) is
made in a complaint or other document filed in a lawsuit or other proceeding, if
such filing is made under seal.  An individual who files a lawsuit for
retaliation by an employer for reporting a suspected violation of law may
disclose the trade secret to the attorney of the individual and use the trade
secret information in the court proceeding, if the individual (A) files any
document containing the trade secret under seal; and (B) does not disclose the
trade secret, except pursuant to court order.”

6.Other Agreements.

The Employee hereby represents that, except as the Employee has disclosed in
writing to the Company, the Employee is not bound by the terms of any
restrictive covenant agreement with any previous employer or other party
relating to the non-disclosure of trade secret or confidential or proprietary
information, non-competition and/or non-solicitation of customers, clients,
employees or others.  The Employee further represents that the Employee’s
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any such restrictive covenant agreement, and the
Employee will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.

7.Employment At Will.

The Employee acknowledges that this Agreement does not constitute a contract of
employment for any period of time and does not modify the at-will nature of the
Employee’s employment with the Company, pursuant to which both the Company and
the Employee may terminate the employment relationship at any time, for any or
no reason, with or without notice.

8.General Provisions.

(a)Equitable Relief.  The Employee acknowledges that the restrictions contained
in this Agreement are necessary for the protection of the business and goodwill
of the Company and are considered by the Employee to be reasonable for such
purpose.  The Employee agrees that any breach or threatened breach of this
Agreement may cause the Company substantial and irrevocable damage that is
difficult to measure.  Therefore, in the event of any such breach or threatened
breach, the Employee agrees that the Company, in addition to such other remedies
that may be available, shall have the right to seek specific performance and
injunctive relief without posting a bond, as well as its reasonable attorneys’
fees incurred as a result of any such breach or threatened breach.  The Employee
hereby waives the adequacy of a remedy at law as a defense to such relief.

(b)Change in Terms/Conditions of Employment.  The Employee agrees that
his/her  obligations under this Agreement shall continue in full force and
effect in the event that the Employee’s job title, responsibilities, reporting
structure, work location, compensation or other conditions of his/her employment
with the Company change subsequent to the execution of this Agreement, without
the need to execute a new agreement.

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(c)No Conflict.  The Employee represents that the execution and performance by
the Employee of this Agreement does not and will not conflict with or breach the
terms of any other agreement by which the Employee is bound.

(d)Severability.  The invalidity or unenforceability of any provision of this
Agreement shall not affect or impair the validity or enforceability of any other
provision of this Agreement.

(e)Waiver.  No delay or omission by the Company in exercising any right under
this Agreement will operate as a waiver of that or any other right.  A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.  Any waiver of any provision hereof shall be in writing and
signed by the Company.

(f)Successors and Assigns.  This Agreement shall be binding upon and inure to
the benefit of both parties and their respective successors and assigns,
including, without limitation, any corporation or entity with which or into
which the Company may be merged or which may succeed to all or substantially all
of its assets or business; provided, however, that the obligations of the
Employee are personal and shall not be assigned by the Employee.

(g)Governing Law, Forum and Jurisdiction/Jury Trial Waiver.  This Agreement
shall be governed by and construed as a sealed instrument under and in
accordance with the laws of the Commonwealth of Massachusetts without regard to
conflict of laws provisions.  Any action, suit or other legal proceeding that is
commenced to resolve any matter arising under or relating to any provision of
this Agreement shall be commenced only in a court of the Commonwealth of
Massachusetts (or, if appropriate, a federal court located within
Massachusetts), and the Company and the Employee each consents to the
jurisdiction of such a court.  The Employee and the Company hereby expressly
waive the right to a jury trial for any claim relating to his/her/its rights or
obligations under this Agreement, or otherwise relating to the Employee’s
employment or separation from employment with the Company.

(h)Captions.  The captions of the sections of this Agreement are for convenience
of reference only and in no way define, limit or affect the scope or substance
of any section of this Agreement.

(i)Entire Agreement.  This Agreement supersedes all prior agreements, written or
oral, between the Employee and the Company relating to the subject matter of
this Agreement.  This Agreement may not be amended, modified, changed or
discharged in whole or in part, except by an agreement in writing signed by the
Employee and the Company.

THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

 

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

COMPANY:

MERRIMACK PHARMACEUTICALS, INC.

By: /s/ Richard Peters

Richard Peters

President and Chief Executive Officer

 

EMPLOYEE:

/s/ Thomas E. Needham, Jr.

Thomas E. Needham, Jr.

 

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Exhibit A

List of Prior Inventions and Original Works of Authorship

Title

Date

Identifying Number or Brief Description

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Sheets Attached

Signature of Employee:

Printed Name of Employee:

Date:________________________

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Exhibit B

Definition of Change in Control

A “Change in Control” shall occur upon any of the following events, provided, in
each case, that such event constitutes a “change in control event” within the
meaning of Treasury Regulation Section 1.409A-3(i)(5)(i):

(A)the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 under the Exchange Act) 50% or more of either (x) the
then-outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (A), the following acquisitions shall not
constitute a Change in Control: (1) any acquisition directly from the Company or
(2) any acquisition by any corporation pursuant to a Business Combination (as
defined below) which complies with clauses (x) and (y) of subsection (C) of this
definition;

(B)a change in the composition of the Board that results in the Continuing
Directors (as defined below) no longer constituting a majority of the Board (or,
if applicable, the Board of Directors of a successor corporation to the
Company), where the term “Continuing Director” means at any date a member of the
Board (x) who was a member of the Board on the date of this Agreement or (y) who
was nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from
this clause (y) any individual whose initial assumption of office occurred as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board; or

(C)the consummation of a merger, consolidation, reorganization, recapitalization
or share exchange involving the Company or a sale or other disposition of all or
substantially all of the assets of the Company (a “Business Combination”),
unless, immediately following such Business Combination, each of the following
two conditions is satisfied: (x) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of
the Company’s assets either directly or through one or more subsidiaries) (such
resulting or acquiring

 

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corporation is referred to herein as the “Acquiring Corporation”) in
substantially the same proportions as their ownership of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively,
immediately prior to such Business Combination and (y) no Person (excluding any
employee benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50%
or more of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding securities
of such corporation entitled to vote generally in the election of directors
(except to the extent that such ownership existed prior to the Business
Combination).

 

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Exhibit C

Payments Subject to Section 409A

Subject to this Exhibit C, severance payments or benefits under this Agreement
shall begin only on or after the date of the Employee’s “separation from
service” (determined as set forth below), which occurs on or after the
termination of the Employee’s employment.  The following rules shall apply with
respect to distribution of the payments and benefits, if any, to be provided to
the Employee under this Agreement:

1.It is intended that each installment of the payments provided under this
Agreement shall be treated as a separate “payment” for purposes of Section 409A
of the Internal Revenue Code and the guidance issued thereunder (“Section
409A”).  Neither the Company nor the Employee shall have the right to accelerate
or defer the delivery of any such payments or benefits except to the extent
specifically permitted or required by Section 409A.

2.If, as of the date of the Employee’s “separation from service” from the
Company, the Employee is not a “specified employee” (within the meaning of
Section 409A), then each installment of the severance payments and benefits
shall be made on the dates and terms set forth in this Agreement.

3.If, as of the date of the Employee’s “separation from service” from the
Company, the Employee is a “specified employee” (within the meaning of Section
409A), then:

(a)Each installment of the severance payments and benefits due under this
Agreement that, in accordance with the dates and terms set forth herein, will in
all circumstances, regardless of when the Employee’s separation from service
occurs, be paid within the Short-Term Deferral Period (as defined under Section
409A) shall be treated as a short-term deferral within the meaning of Treasury
Regulation Section 1.409A- l(b)(4) to the maximum extent permissible under
Section 409A and shall be paid at the time set forth in this Agreement; and

(b)Each installment of the severance payments and benefits due under this
Agreement that is not described in this Exhibit C, Section 3(a) and that would,
absent this subsection, be paid within the six (6) month period following the
Employee’s “separation from service” from the Company shall not be paid until
the date that is six (6) months and one (1) day after such separation from
service (or, if earlier, the Employee’s death), with any such installments that
are required to be delayed being accumulated during the six (6) month period and
paid in a lump sum on the date that is six (6) months and one (1) day following
the Employee’s separation from service and any subsequent installments, if any,
being paid in accordance with the dates and terms set forth in this Agreement;
provided, however, that the preceding provisions of this sentence shall not
apply to any installment of severance payments and benefits if and to the
maximum extent that such installment is deemed to be paid under a separation pay
plan that does not provide for a deferral of compensation by reason of the
application of Treasury Regulation 1.409A-l(b)(9)(iii) (relating to separation
pay upon an involuntary separation from service).  Any installments that qualify
for the exception under Treasury Regulation Section 1.409A-l(b)(9)(iii) must be
paid no later than the last day of the Employee’s second taxable year following
the taxable year in which the separation from service

 

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occurs.

4.The determination of whether and when the Employee’s separation from service
from the Company has occurred shall be made in a manner consistent with, and
based on the presumptions set forth in, Treasury Regulation Section
1.409A-l(h).  Solely for purposes of this Exhibit C, Section 4, “Company” shall
include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Internal Revenue Code.

5.All reimbursements and in-kind benefits provided under this Agreement shall be
made or provided in accordance with the requirements of Section 409A to the
extent that such reimbursements or in-kind benefits are subject to Section 409A,
including, where applicable, the requirement that (i) any reimbursement is for
expenses incurred during the Employee’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred and (iv) the right to reimbursement is
not subject to set off or liquidation or exchange for any other benefit.

6.The Company makes no representation or warranty and shall have no liability to
the Employee or to any other person if any of the provisions of this Agreement
(including this Exhibit C) are determined to constitute deferred compensation
subject to Section 409A but that do not satisfy an exemption from, or the
conditions of, that section.

7.The Company may withhold (or cause to be withheld) from any payments made
under this Agreement, all federal, state, city or other taxes as shall be
required to be withheld pursuant to any law or governmental regulation or
ruling.