Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is made and dated as of July 2, 2018 and is
entered into by and between MERRIMACK PHARMACEUTICALS, INC., a Delaware
corporation, and each of its Qualified Subsidiaries (collectively referred to as
“Borrower”), the several banks and other financial institutions or entities from
time to time parties to this Agreement (collectively, referred to as “Lender”)
and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as
administrative agent and collateral agent for itself and Lender (in such
capacity, “Agent”).

RECITALS

A. Borrower has requested Lender to make available to Borrower a loan or loans
in an aggregate principal amount of up to Twenty-Five Million Dollars
($25,000,000.00) (the “Term Loan”); and

B. Lender is willing to make the Term Loan on the terms and conditions set forth
in this Agreement.

AGREEMENT

NOW, THEREFORE, Borrower, Agent and Lender agree as follows:

SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION

1.1 Unless otherwise defined herein, the following capitalized terms shall have
the following meanings:

“Account Control Agreement(s)” means any agreement entered into by and among
Agent, Borrower and a third party Bank or other institution (including a
Securities Intermediary) in which Borrower maintains a Deposit Account or an
account holding Investment Property and which perfects Agent’s first priority
security interest in the subject account or accounts.

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially
the form of Exhibit G, which account numbers may be redacted for security
purposes if and when filed publicly by Borrower.

“Advance(s)” means a Term Loan Advance.

“Advance Date” means the funding date of any Advance.

“Advance Request” means a request for an Advance submitted by Borrower to Agent
in substantially the form of Exhibit A, which account numbers may be redacted
for security purposes if and when filed publicly by Borrower.

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“Affiliate” means (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question, (b) any
Person directly or indirectly owning, controlling or holding the power to vote
ten percent (10%) or more of the outstanding voting securities of another
Person, (c) any Person ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held by another
Person with power to vote such securities, or (d) any Person related by blood or
marriage to any Person described in subsection (a), (b) or (c) of this
paragraph. As used in the definition of “Affiliate,” the term “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

“Agent” has the meaning given to such term in the preamble to this Agreement.

“Agreement” means this Loan and Security Agreement, as amended from time to
time.

“Amortization Date” means February 1, 2020.

“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any
jurisdiction applicable to Borrower or any of its Affiliates from time to time
concerning or relating to bribery or corruption, including without limitation
the United States Foreign Corrupt Practices Act of 1977, as amended, the UK
Bribery Act 2010 and other similar legislation in any other jurisdictions.

“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to
terrorism or money laundering, including without limitation Executive Order
No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws
comprising or implementing the Bank Secrecy Act, and the laws administered by
OFAC.

“Assignee” has the meaning given to such term in Section 11.13.

“Blocked Person” means: (a) a Person listed in the annex to, or that is
otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person
owned or controlled by, or acting for or on behalf of, any Person that is listed
in the annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

“Borrower” has the meaning given to such term in the preamble to this Agreement.

“Borrower Products” means all products, technical data or technology currently
being developed, manufactured or sold by Borrower or which Borrower intends to
sell, manufacture, license, or distribute in the future including any products
or service offerings under development, collectively, together with all
products, technical data or technology that have been sold, developed, licensed
or distributed by Borrower since its incorporation.

 

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“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions in the State of California are closed for business.

“Cash” means all cash, cash equivalents and liquid funds.

“Change in Control” means any reorganization, recapitalization, consolidation or
merger (or similar transaction or series of related transactions) of Merrimack,
or sale or exchange of outstanding shares (or similar transaction or series of
related transactions) of Borrower, in each case in which the holders of
Merrimack’s outstanding shares immediately before consummation of such
transaction or series of related transactions do not, immediately after
consummation of such transaction or series of related transactions, retain
shares representing more than fifty percent (50%) of the voting power of the
surviving entity of such transaction or series of related transactions (or the
parent of such surviving entity if such surviving entity is wholly owned by such
parent), in each case without regard to whether Merrimack is the surviving
entity.

“Claims” has the meaning given to such term in Section 11.10.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means the property described in Section 3.

“Common Stock” means the common stock, $0.01 par value per share, of Borrower.

“Confidential Information” has the meaning given to it in Section 11.12.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
Indebtedness, lease, dividend, letter of credit or other obligation of another,
including any such obligation directly or indirectly guaranteed, endorsed,
co-made or discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit, corporate credit cards or
merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term “Contingent Obligation” shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.

 

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“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States of America, any State thereof, or of
any other country.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit.

“Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.

“Due Diligence Fee” means Twenty-Five Thousand Dollars ($25,000.00), which fee
is due to Lender on or prior to the Closing Date and shall be deemed fully
earned on such date regardless of the early termination of this Agreement.

“Eligible Foreign Subsidiary” means any Foreign Subsidiary whose execution of a
Joinder Agreement could not result in a material adverse tax consequence to
Borrower.

“End of Term Charge” has the meaning given to such term in Section 2.5.

“Equity Interests” means, with respect to any Person, the capital stock,
partnership or limited liability company interest, or other equity securities or
equity ownership interests of such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

“Event of Default” has the meaning given to such term in Section 9.

“Excluded Accounts” shall mean (i) one (1) account with XXXX ending in XXXX
(last four digits), provided that the amount in such account does not exceed One
Hundred Ten Thousand Dollars ($110,000.00) in the aggregate at any time and
(ii) one (1) account with XXXX ending in XXXX (last four digits) or an analogous
account at XXXX established for the same purpose, provided that the aggregate
amount in such account does not exceed Five Hundred Ninety-Five Thousand Dollars
($595,000.00) in the aggregate at any time.

“Excluded Taxes” shall mean (i) taxes imposed on or with respect to Lender’s
overall net or gross income or gross receipts, or franchise taxes imposed in
lieu of the foregoing, by any jurisdiction in which Lender is resident, has a
branch or otherwise has any other former or present connection (other than any
connection solely attributable to this Agreement), (ii) branch profits taxes,
(iii) any withholding taxes imposed on Lender with respect to the payments it is
entitled to receive hereunder pursuant to laws in effect on the date it becomes
a party to this Agreement (which in the case of any permitted assignee of
Lender, shall mean the date as of which Lender’s rights and obligations under
this Agreement are assigned to such Person), (iv) Taxes attributable to Lender’s
failure to comply with Sections 7.10(c) and 7.10(d), (v) any U.S. federal
withholding taxes imposed on Lender under FATCA, and (vi) any U.S. federal
backup withholding tax.

 

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“Facility Charge” means a fully, earned, non-refundable charge of Two Hundred
Fifty Thousand Dollars ($250,000.00), due on the Closing Date.

“FATCA” means Section 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code, and any applicable intergovernmental
agreement with respect thereto and applicable official implementing guidance
thereunder.

“Financial Statements” has the meaning given to such term in Section 7.1.

“First Draw Period” means the period of time commencing upon the occurrence of
Milestone Event 1, through the earlier to occur of (a) December 31, 2018 or
(b) an Event of Default.

“Foreign Subsidiary” means any Subsidiary other than a Subsidiary organized
under the laws of any state within the United States of America.

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time, provided that the parties agree that
GAAP as in effect on the date of this Agreement shall be applicable for the
interpretation of “capital lease obligations” in the definition of
“Indebtedness”, unless the parties otherwise agree in writing.

“Indebtedness” means indebtedness of any kind, including (a) all indebtedness
for borrowed money or the deferred purchase price of property or services
(excluding trade credit entered into in the ordinary course of business due
within ninety (90) days), including reimbursement and other obligations with
respect to surety bonds and letters of credit, (b) all obligations evidenced by
notes, bonds, debentures or similar instruments, (c) all capital lease
obligations, and (d) all Contingent Obligations.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of Borrower
under any Loan Document and (b) to the extent not otherwise described in (a),
Other Taxes.

“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents;
trade secrets, proprietary information (including preclinical, clinical and
other data) and inventions; mask works; Borrower’s applications therefor and
reissues, extensions, or renewals thereof; and Borrower’s goodwill associated
with any of the foregoing, together with Borrower’s rights to sue for past,
present and future infringement of Intellectual Property and the goodwill
associated therewith.

“Inventory” means “inventory” as defined in Article 9 of the UCC.

“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of any capital asset of
another Person.

 

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“Investment Policy” is that certain investment policy of Borrower, approved by
Borrower’s Board of Directors and effective on December 14, 2017, delivered to
Agent by Borrower prior to the date hereof.

“IPSEN Agreement” means that certain Asset Purchase and Sale Agreement by and
between Borrower and IPSEN S.A., dated as of January 7, 2017.

“Joinder Agreements” means for each Qualified Subsidiary, a completed and
executed Joinder Agreement in substantially the form attached hereto as Exhibit
F.

“Lender” has the meaning given to such term in the preamble to this Agreement.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests from a third party.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.

“Loan” means the Advances made under this Agreement.

“Loan Documents” means this Agreement, any Notes, the ACH Authorization, the
Account Control Agreements, the Joinder Agreements, all UCC Financing
Statements, any subordination agreement, and any other documents executed in
connection with the Secured Obligations or the transactions contemplated hereby,
as the same may from time to time be amended, modified, supplemented or
restated.

“Material Adverse Effect” means a material adverse effect upon: (i) the
business, operations, properties, assets or financial condition of Borrower and
its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or
pay the Secured Obligations in accordance with the terms of the Loan Documents,
or the ability of Agent or Lender to enforce any of its rights or remedies with
respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on
the Collateral or the priority of such Liens.

“Maximum Rate” has the meaning given to such term in Section 2.2.

“Merrimack” means Merrimack Pharmaceuticals, Inc.

“Milestone Event 1” means confirmation by Agent that, on or prior to
December 31, 2018, that Borrower has delivered to Agent, evidence satisfactory
to Agent in its sole but reasonable discretion, that Borrower has received
top-line data from a Phase 2 clinical study of MM-121 in patients with non-small
cell lung cancer (SHERLOC study) which, taken as a whole, is deemed to be
supportive of the continued development of Borrower’s MM-121 product.

“Milestone Event 2” means the satisfaction of all of the following events prior
to December 31, 2019: (i) no default or Event of Default shall have occurred or
is continuing, (ii) the Term B Loan Advance has been made to Borrower, and
(iii) Agent has confirmed that Borrower

 

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has received, after the Closing Date but on or prior to December 31, 2019,
unrestricted and unencumbered net cash proceeds in a minimum aggregate amount of
at least Fifty Million Dollars ($50,000,000.00) resulting from either (A) the
issuance and sale by Borrower of its equity securities, and/or (B) cash payments
in connection with strategic partnerships or other corporate transactions
(including cash payments received in connection with the IPSEN Agreement).

“Note(s)” means a Term Note.

“OCB” means in the ordinary course of business and shall include
(i) collaboration or licensing transactions, or options to enter into
collaboration or licensing transactions, that are customary in Borrower’s
industry, and (ii) arrangements to use Borrower’s research and development
capabilities to develop product candidates on behalf of third party
pharmaceutical companies.

“OFAC” means the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“Other Connection Taxes” means, with respect to any Lender, Taxes imposed as a
result of a present or former connection between such Lender and the
jurisdiction imposing such Tax (other than connections arising from such Lender
having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Advance or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement Borrower now holds or hereafter acquires any
interest.

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States of America or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States of America or any other country.

“Perfection Certificate” is that certain perfection certificate delivered by
Borrower to Agent, dated as of the date hereof.

 

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“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender
or Agent arising under this Agreement or any other Loan Document;
(ii) Indebtedness existing on the Closing Date which is disclosed in Schedule
1A; (iii) Indebtedness of up to One Million Dollars ($1,000,000.00) outstanding
at any time secured by a Lien described in clause (vii) of the defined term
“Permitted Liens,” provided such Indebtedness does not exceed the cost of the
Equipment financed with such Indebtedness; (iv) Indebtedness to trade creditors
incurred in the ordinary course of business, including Indebtedness incurred in
the ordinary course of business with corporate credit cards; (v) Indebtedness
that also constitutes a Permitted Investment; (vi) Subordinated Indebtedness;
(vii) reimbursement obligations in connection with letters of credit that are
secured by Cash and issued on behalf of Borrower or a Subsidiary thereof in an
amount not to exceed Seven Hundred Fifty Thousand Dollars ($750,000.00) at any
time outstanding, (viii) other unsecured Indebtedness in an amount not to exceed
Two Hundred Fifty Thousand Dollars ($250,000.00) at any time outstanding,
(ix) Contingent Obligations of up to Two Hundred Thousand Dollars ($200,000.00)
described in clause (iii) of the definition of Contingent Obligations entered
into to mitigate risk and not for speculative purposes; (x) Indebtedness among
Borrowers or of Borrower to any non-Borrower Subsidiary; provided such
Indebtedness owed by Borrower to any non-Borrower Subsidiary is Subordinated
Indebtedness, and (ix) extensions, refinancings and renewals of any items of
Permitted Indebtedness, provided that the principal amount is not increased or
the terms modified to impose materially more burdensome terms upon Borrower or
its Subsidiary, as the case may be..

“Permitted Investment” means: (i) Investments existing on the Closing Date which
are disclosed in Schedule 1B; (ii) any Investments permitted by Borrower’s
Investment Policy, as amended from time to time, provided that such Investment
Policy (and any such amendment thereto) has been approved in writing by Agent;
(iii) repurchases of stock from former employees, directors, or consultants of
Borrower under agreements approved by Borrower’s Board of Directors in an
aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00)
in any fiscal year, provided that no Event of Default has occurred, is
continuing or could exist after giving effect to the repurchases;
(iv) Investments accepted in connection with Permitted Transfers;
(v) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business; (vi) Investments
consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary
course of business, provided that this subparagraph (vi) shall not apply to
Investments of Borrower in any Subsidiary; (vii) Investments consisting of loans
not involving the net transfer on a substantially contemporaneous basis of cash
proceeds to employees, officers or directors relating to the purchase of capital
stock of Borrower pursuant to employee stock purchase plans or other similar
agreements approved by Borrower’s Board of Directors; (viii) Investments
consisting of travel advances or moving expenses in the ordinary course of
business; (ix) Investments in existing or newly-formed Domestic Subsidiaries,
provided that each such Domestic Subsidiary has executed and delivered to Agent
a Joinder Agreement and such other documents as shall be reasonably requested by
Agent; (x) Investments in Foreign Subsidiaries approved in advance in writing by
Agent; (xi) joint ventures, collaboration agreements, strategic alliances and
similar arrangements in the OCB, provided that any cash Investments by Borrower
do not exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate in any
fiscal year; (xii) Investments consisting of the nonexclusive licensing of
technology, the development of technology, the providing of

 

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technical support and in-licensing of technology, provided that any cash
Investments by Borrower do not exceed One Hundred Thousand Dollars ($100,000.00)
in the aggregate in any fiscal year; (xiii) additional Investments that do not
exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate;
(xiv) Investments by Borrower in another Borrower; and (xv) additional
Investments that do not exceed Five Hundred Thousand Dollars ($500,000.00) in
the aggregate.

“Permitted Liens” means any and all of the following: (i) Liens in favor of
Agent or Lender; (ii) Liens existing on the Closing Date which are disclosed in
Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings; provided, that Borrower maintains adequate reserves
therefor in accordance with GAAP; (iv) Liens securing claims or demands of
materialmen, artisans, mechanics, carriers, warehousemen, landlords and other
like Persons arising in the ordinary course of Borrower’s business and imposed
without action of such parties; provided, that the payment thereof is not yet
required; (v) Liens arising from judgments, decrees or attachments in
circumstances which do not constitute an Event of Default hereunder; (vi) the
following deposits, to the extent made in the ordinary course of business:
deposits under worker’s compensation, unemployment insurance, social security
and other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds; (vii) Liens on Equipment or software or
other intellectual property, or other capital assets, constituting purchase
money Liens and Liens in connection with capital leases securing Indebtedness
permitted in clause (iii) of “Permitted Indebtedness”; (viii) Liens incurred in
connection with Subordinated Indebtedness; (ix) leasehold interests in leases or
subleases and licenses granted in the OCB and not interfering in any material
respect with the business of the licensor; (x) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of custom
duties that are promptly paid on or before the date they become due; (xi) Liens
on insurance proceeds securing the payment of financed insurance premiums that
are promptly paid on or before the date they become due (provided that such
Liens extend only to such insurance proceeds and not to any other property or
assets); (xii) statutory, common law and contractual rights of set-off and other
similar rights as to deposits of cash and securities in favor of banks, other
depository institutions and brokerage firms; (xiii) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business so long as they do not
materially impair the value or marketability of the related property; (xiv) (A)
Liens on Cash securing obligations permitted under clause (vii) of the
definition of Permitted Indebtedness and (B) security deposits in connection
with real property leases, the combination of (A) and (B) in an aggregate amount
not to exceed Seven Hundred Fifty Thousand Dollars ($750,000.00) at any time;
(xv) Liens in connection with operating leases in the Equipment that is the
subject of such leases; (xvi) Permitted Transfers; and (xvii) Liens incurred in
connection with the extension, renewal or refinancing of the Indebtedness
secured by Liens of the type described in clauses (i) through (xi) above;
provided, that any extension, renewal or replacement Lien shall be limited to
the property encumbered by the existing Lien and the principal amount of the
Indebtedness being extended, renewed or refinanced (as may have been reduced by
any payment thereon) does not increase.

 

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“Permitted Transfers” means (i) sales of Inventory in the OCB, (ii) licenses,
joint ventures, collaboration agreements, strategic alliances and similar
arrangements in the OCB providing for the licensing of Borrower’s technology or
Intellectual Property; provided that such licenses do not result in a legal
transfer of title of the licensed property, (iii) dispositions of worn-out,
obsolete or surplus Equipment in the OCB, (iv) use of cash in the OCB,
(v) Permitted Investments, (vi) Permitted Liens, (vii) dispositions of Copyright
rights in connection with publications in scientific journals, or (viii) other
Transfers of assets having a fair market value of not more than Two Hundred
Fifty Thousand Dollars ($250,000.00) in the aggregate in any fiscal year.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

“Preferred Stock” means at any given time any equity security issued by Borrower
that has any rights, preferences or privileges senior to Borrower’s Common
Stock.

“Prepayment Charge” has the meaning given to such term in Section 2.4.

“Prime Rate” means the “prime rate” as reported in the Wall Street Journal or
any successor publication thereto.

“Qualified Subsidiary” means any direct or indirect Domestic Subsidiary or
Eligible Foreign Subsidiary.

“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.

“Register” shall have the meaning assigned to such term in Section 11.7(b).

“Required Lenders” means at any time, the holders of more than fifty percent
(50.0%) of the sum of the aggregate unpaid principal amount of the Term Loans
then outstanding.

“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State, or by the United Nations Security Council, the European Union or any EU
member state, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person controlled by any such Person.

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

 

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“SEC” means the Securities and Exchange Commission.

“Second Draw Period” means the period of time commencing upon the occurrence of
Milestone Event 2, through the earlier to occur of (a) December 31, 2019 or
(b) an Event of Default.

“Secured Obligations” means Borrower’s obligations under this Agreement and any
Loan Document, including any obligation to pay any amount now owing or later
arising (including, without limitation, the End of Term Charge and the
Prepayment Charge).

“Securities Act” means the Securities Act of 1933, as amended.

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured
Obligations in amounts and on terms and conditions satisfactory to Agent in its
sole discretion and subject to a subordination agreement in form and substance
satisfactory to Agent in its sole discretion.

“Subsequent Financing” means any Borrower financing which becomes effective
after the Closing Date, in a single transaction or series of related
transactions not registered under the Securities Act of 1933, as amended, of
shares of its preferred stock, common stock or other equity security, or of any
instrument exercisable for or convertible into or otherwise representing the
right to acquire shares of Borrower preferred stock, common stock or other
equity security, to one or more investors for cash for financing purposes
(including, without limitation, any so-called PIPE transaction).

“Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which Borrower owns or controls fifty
percent (50.0%) or more of the outstanding voting securities, including each
entity listed on Schedule 1 hereto.

“Tax” and “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any governmental authority, including any interest,
additions to tax or penalties applicable thereto.

“Term A Loan Advance” has the meaning given to such term in Section 2.1(a).

“Term B Loan Advance” has the meaning given to such term Section 2.1(a).

“Term C Loan Advance” has the meaning given to such term in Section 2.1(a).

“Term Commitment” means as to any Lender, the obligation of such Lender, if any,
to make a Term Loan Advance to Borrower in a principal amount not to exceed the
amount set forth under the heading “Term Commitment” opposite such Lender’s name
on Schedule 1.1.

 

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“Term Loan” shall have the meaning assigned to such term in the preamble of this
Agreement.

“Term Loan Advance” and “Term Loan Advances” has the meaning given to such term
in Section 2.1(a).

“Term Loan Interest Rate” means for any day a floating per annum rate of
interest equal to the greater of (a) the sum of (i)(A) the Prime Rate minus
(B) five and one-quarter of one percent (5.25%) plus (ii) nine and one quarter
of one percent (9.25%), and (b) nine and one-quarter of one percent (9.25%).

“Term Loan Maturity Date” means August 1, 2021.

“Term Note” means a Secured Term Promissory Note in substantially the form of
Exhibit B.

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof.

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.

Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement. Unless otherwise specifically provided herein,
any accounting term used in this Agreement or the other Loan Documents shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC.

 

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SECTION 2. THE LOAN

2.1 Term Loan.

(a) Advances. Subject to the terms and conditions of this Agreement, Lender will
severally (and not jointly) make in an amount equal to its respective Term
Commitment, and Borrower agrees to draw, one (1) advance in a principal amount
of Fifteen Million Dollars ($15,000,000.00) (the “Term A Loan Advance”) on the
Closing Date. Subject to the terms and conditions of this Agreement, during the
First Draw Period, upon Borrower’s written request in accordance with this
Agreement, Lender will severally (and not jointly) make in an amount equal to
its respective Term Commitment, one (1) advance in a principal amount of Five
Million Dollars ($5,000,000.00) (the “Term B Loan Advance”). Subject to the
terms and conditions of this Agreement, during the Second Draw Period, upon
Borrower’s written request in accordance with this Agreement, Lender will
severally (and not jointly) make in an amount equal to its respective Term
Commitment, one (1) advance in a principal amount of Five Million Dollars
($5,000,000.00) (the “Term C Loan Advance”). The Term A Loan Advance, the Term B
Loan Advance, and the Term C Loan Advance shall hereinafter be referred to
individually as a “Term Loan Advance” and collectively as the “Term Loan
Advances”. The aggregate outstanding Term Loan Advances shall not exceed the
Term Loan. Proceeds of any Term Loan Advance shall be deposited into an account
that is subject to a first priority perfected security interest in favor of
Agent perfected by an Account Control Agreement.

(b) Advance Request. To obtain a Term Loan Advance, Borrower shall complete,
sign and deliver to Agent an Advance Request (at least three (3) Business Days
before any Advance Date other than the Closing Date, which shall be at least one
(1) Business Day). Lender shall fund the Term Loan Advance in the manner
requested by the Advance Request provided that each of the conditions precedent
in Section 4 of this Agreement applicable to such Term Loan Advance is satisfied
as of the requested Advance Date.

(c) Term Loan Interest Rate. The principal balance of each Term Loan Advance
shall bear interest thereon from such Advance Date at the Term Loan Interest
Rate based on a year consisting of 360 days, with interest computed daily based
on the actual number of days elapsed. The Term Loan Interest Rate will float and
change on the day the Prime Rate changes from time to time.

(d) Payment. Borrower will pay interest on each Term Loan Advance on the first
Business Day of each month, beginning the month after the Advance Date. Borrower
shall repay the aggregate Term Loan principal balance that is outstanding on the
day immediately preceding the Amortization Date, in equal monthly installments
of principal and interest (mortgage style) beginning on the Amortization Date
and continuing on the first Business Day of each month thereafter until the
Secured Obligations (other than inchoate indemnity obligations) are repaid. The
entire Term Loan principal balance and all accrued but unpaid interest
hereunder, shall be due and payable on the Term Loan Maturity Date. Borrower
shall make all payments under this Agreement without setoff, recoupment or
deduction (except as provided in Section 7.10(b)) and regardless of any
counterclaim or defense. Lender will initiate debit entries to Borrower’s
account as authorized on the ACH Authorization (i) on each payment date of all
periodic obligations payable to Lender under each Term Loan Advance and
(ii) out-of-

 

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pocket legal fees and costs incurred by Agent or Lender in connection with
Section 11.11 of this Agreement; provided that, with respect to clause
(i) above, in the event that Lender or Agent informs Borrower that Lender will
not initiate a debit entry to Borrower’s account for a certain amount of the
periodic obligations due on a specific payment date, Borrower shall pay to
Lender such amount of periodic obligations in full in immediately available
funds on such payment date; provided, further, that, with respect to clause
(i) above, if Lender or Agent informs Borrower that Lender will not initiate a
debit entry as described above later than the date that is three (3) Business
Days prior to such payment date, Borrower shall pay to Lender such amount of
periodic obligations in full in immediately available funds on the date that is
three (3) Business Days after the date on which Lender or Agent notifies
Borrower of such; provided, further, that, with respect to clause (ii) above, in
the event that Lender or Agent informs Borrower that Lender will not initiate a
debit entry to Borrower’s account for certain amount of such out-of-pocket legal
fees and costs incurred by Agent or Lender, Borrower shall pay to Lender such
amount in full in immediately available funds within three (3) Business Days.
Once repaid, a Term Loan Advance or any portion thereof may not be reborrowed.

2.2 Maximum Interest. Notwithstanding any provision in this Agreement, the
Notes, or any other Loan Document, it is the parties’ intent not to contract
for, charge or receive interest at a rate that is greater than the maximum rate
permissible by law that a court of competent jurisdiction shall deem applicable
hereto (which under the laws of the State of California shall be deemed to be
the laws relating to permissible rates of interest on commercial loans) (the
“Maximum Rate”). If a court of competent jurisdiction shall finally determine
that Borrower has actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows: first, to the payment of the
Secured Obligations consisting of the outstanding principal; second, after all
principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third, after
all Secured Obligations are repaid, the excess (if any) shall be refunded to
Borrower.

2.3 Default Interest. In the event any payment is not paid on the scheduled
payment date (other than due to an ACH failure; provided that Borrower had the
funds to make the payments when due), subject to applicable grace periods, if
any, an amount equal to four percent (4.0%) of the past due amount shall be
payable on demand. In addition, upon the occurrence and during the continuation
of an Event of Default hereunder, all Secured Obligations, including principal,
interest, compounded interest, and professional fees, shall bear interest at a
rate per annum equal to the rate set forth in Section 2.1(c) plus four percent
(4.0%) per annum. In the event any interest is not paid when due hereunder, such
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 2.1(c) or this
Section 2.3, as applicable.

 

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2.4 Prepayment. At its option, upon at least seven (7) Business Days prior
written notice to Agent, Borrower may prepay all, but not less than all, of the
outstanding Advances by paying the entire principal balance, all accrued and
unpaid interest thereon, together with a prepayment charge equal to the
following percentage of the Advance amount being prepaid: if such Advance
amounts are prepaid in any of the first twelve (12) months following the Closing
Date, three percent (3.0%); and thereafter, one percent (1.0%) (each, a
“Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable
calculation of Lender’s lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early repayment
of the Advances. Borrower shall prepay the outstanding amount of all principal
and accrued interest through the prepayment date and the Prepayment Charge upon
the occurrence of a Change in Control. Notwithstanding the foregoing, Agent and
Lender agree to waive the Prepayment Charge if Agent and Lender (in its sole and
absolute discretion) agree in writing to refinance the Advances prior to the
Term Loan Maturity Date.

2.5 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity
Date, (ii) the date that Borrower prepays the outstanding Secured Obligations
(other than any inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) in full, or
(iii) the date that the Secured Obligations become due and payable, Borrower
shall pay Lender a charge of five and fifty-five hundredths of one percent
(5.55%) of the Advances (the “End of Term Charge”). Notwithstanding the required
payment date of such charge, it shall be deemed earned by Lender as of the
Closing Date.

2.6 Notes. If so requested by Lender by written notice to Borrower, then
Borrower shall execute and deliver to Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of Lender pursuant to
Section 11.13) (promptly after Borrower’s receipt of such notice) a Term Note to
evidence Lender’s Loans.

2.7 Pro Rata Treatment. Each payment (including prepayment) on account of any
fee and any reduction of the Term Loans shall be made pro rata according to the
Term Commitments of the relevant Lender.

SECTION 3. SECURITY INTEREST

3.1 As security for the prompt and complete payment when due (whether on the
payment dates or otherwise) of all the Secured Obligations, Borrower grants to
Agent a security interest in all of Borrower’s right, title, and interest in, to
and under all of Borrower’s personal property and other assets including without
limitation the following (except as set forth herein) whether now owned or
hereafter acquired (collectively, the “Collateral”): (a) Receivables;
(b) Equipment; (c) Fixtures; (d) General Intangibles (other than Intellectual
Property); (e) Inventory; (f) Investment Property; (g) Deposit Accounts;
(h) Cash; (i) Goods; (j) license agreements; (k) franchise agreements,
(l) commercial tort claims; and all other tangible and intangible personal
property of Borrower whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Borrower and wherever located, and any of
Borrower’s property in the possession or under the control of Agent; and, to the
extent not otherwise included, all Proceeds of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of each of the foregoing. Notwithstanding any of the foregoing, the
Collateral shall not

 

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under any circumstances include, and no security interest is granted in
(i) Borrower’s owned Intellectual Property; provided, however, that the
Collateral shall include all Accounts and General Intangibles that consist of
rights to payment and proceeds from the sale, licensing or disposition of all or
any part, or rights in, the Intellectual Property (the “Rights to Payment”);
(ii) any equipment financed by capital leases or purchase money financing that
is subject to a Lien that is otherwise permitted by clause (vii) of the
definition of Permitted Lien hereunder if inclusion of such equipment would
constitute a breach by Borrower of its agreement with a third-party equipment
lessor or lender, provided, that upon the release of any such Lien such
equipment shall be deemed to be Collateral hereunder and shall be subject to the
security interest granted herein; and (iii) any deposit account and Cash
described in clause (vii) of the definition of Permitted Indebtedness.
Notwithstanding the foregoing, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in the Rights to Payment, then
the Collateral shall automatically, and effective as of the date of this
Agreement, include the Intellectual Property to the extent necessary to permit
perfection of Agent’s security interest in the Rights to Payment.

3.2 If this Agreement is terminated in accordance with its terms, Agent’s Lien
in the Collateral shall continue until the Secured Obligations (other than
inchoate indemnity obligations) are satisfied in full, and at such time Agent
shall, at Borrower’s sole cost and expense, authorize Borrower to terminate its
security interest in the Collateral and all rights therein shall automatically
revert to Borrower. Agent shall execute such documents and take such other steps
as are reasonably necessary for Borrower to accomplish the foregoing, all at
Borrower’s sole cost and expense.

SECTION 4. CONDITIONS PRECEDENT TO LOAN

The obligations of Lender to make the Loan hereunder are subject to the
satisfaction by Borrower of the following conditions:

4.1 Initial Advance. On or prior to the Closing Date, Borrower shall have
delivered to Agent the following:

(a) executed copies of the Loan Documents, Account Control Agreements, a legal
opinion of Borrower’s counsel, and all other documents and instruments
reasonably required by Agent to effectuate the transactions contemplated hereby
or to create and perfect the Liens of Agent with respect to all Collateral, in
all cases in form and substance reasonably acceptable to Agent;

(b) certified copy of resolutions of Borrower’s board of directors evidencing
approval of the Loan and other transactions evidenced by the Loan Documents;

(c) certified copies of the Certificate of Incorporation and the Bylaws, as
amended through the Closing Date, of Borrower;

 

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(d) a certificate of good standing for Borrower from its state of incorporation
and similar certificates from all other jurisdictions in which it does business
and where the failure to be qualified could have a Material Adverse Effect;

(e) payment of the Due Diligence Fee (if not paid prior to the Closing Date),
the Facility Charge and reimbursement of Agent’s and Lender’s current expenses
reimbursable pursuant to this Agreement, which amounts may be deducted from the
initial Advance;

(f) all certificates of insurance; and

(g) such other documents as Agent may reasonably request.

4.2 All Advances. On each Advance Date:

(a) Agent shall have received (i) an Advance Request for the relevant Advance as
required by Section 2.1(b), each duly executed by Borrower’s Chief Executive
Officer or Chief Financial Officer, and (ii) any other documents Agent may
reasonably request.

(b) The representations and warranties set forth in this Agreement shall be true
and correct in all material respects on and as of the Advance Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.

(c) Borrower shall be in compliance with all the terms and provisions set forth
herein and in each other Loan Document on its part to be observed or performed,
and at the time of and immediately after such Advance no Event of Default shall
have occurred and be continuing.

(d) Each Advance Request shall be deemed to constitute a representation and
warranty by Borrower on the relevant Advance Date as to the matters specified in
paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in
the Advance Request.

4.3 No Default. As of the Closing Date and each Advance Date, as applicable,
(i) no fact or condition exists that could (or could, with the passage of time,
the giving of notice, or both) constitute an Event of Default and (ii) no event
that has had or could reasonably be expected to have a Material Adverse Effect
has occurred and is continuing.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants that:

 

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5.1 Corporate Status. Merrimack is a corporation duly organized, legally
existing and in good standing under the laws of the State of Delaware, and is
duly qualified as a foreign corporation in all jurisdictions in which the nature
of its business or location of its properties require such qualifications and
where the failure to be qualified could reasonably be expected to have a
Material Adverse Effect. Borrower’s present name, former names (if any), owned
and leased locations, place of formation, tax identification number,
organizational identification number and other information are correctly set
forth in Exhibit C, as may be updated by Borrower in a written notice (including
any Compliance Certificate) provided to Agent after the Closing Date.

5.2 Collateral. Borrower owns the Collateral and the Intellectual Property, free
of all Liens, except for Permitted Liens. Borrower has the power and authority
to grant to Agent a Lien in the Collateral as security for the Secured
Obligations.

5.3 Consents. Borrower’s execution, delivery and performance of this Agreement
and all other Loan Documents and the Term Note, (i) have been duly authorized by
all necessary corporate action of Borrower, (ii) will not result in the creation
or imposition of any Lien upon the Collateral, other than Permitted Liens and
the Liens created by this Agreement and the other Loan Documents, (iii) do not
violate any provisions of Borrower’s Certificate of Incorporation, bylaws, or
any material law, regulation, order, injunction, judgment, decree or writ to
which Borrower is subject and (iv) except as described on Schedule 5.3, do not
violate any material contract or agreement or require the consent or approval of
any other Person which has not already been obtained. The individual or
individuals executing the Loan Documents on behalf of Borrower are duly
authorized to do so.

5.4 Material Adverse Effect. No event that has had or could reasonably be
expected to have a Material Adverse Effect has occurred and is continuing.
Borrower is not aware of any event likely to occur that is reasonably expected
to result in a Material Adverse Effect. 5.5 Actions Before Governmental
Authorities. Except as described on Scheduled 5.5, there are no actions, suits
or proceedings at law or in equity or by or before any governmental authority
now pending or, to the knowledge of Borrower, threatened against or affecting
Borrower or its property, that is reasonably expected to result in a Material
Adverse Effect.

5.6 Laws. Neither Borrower nor any of its Subsidiaries is in violation of any
material law, rule or regulation, or in default with respect to any judgment,
writ, injunction or decree of any governmental authority, where such violation
or default is reasonably expected to result in a Material Adverse Effect.
Borrower is not in default in any material respect under any provision of any
agreement or instrument evidencing material Indebtedness, or any other material
agreement to which it is a party or by which it is bound, which default could
reasonably be expected to have a Material Adverse Effect.

Neither Borrower nor any of its Subsidiaries is an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended. Neither Borrower nor any of its Subsidiaries is engaged as
one of its important activities in extending credit for margin stock (under
Regulations X, T and U of the Federal Reserve Board of Governors). Borrower and
each of its Subsidiaries has

 

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complied in all material respects with the Federal Fair Labor Standards Act.
Neither Borrower nor any of its Subsidiaries is a “holding company” or an
“affiliate” of a “holding company” or a “subsidiary company” of a “holding
company” as each term is defined and used in the Public Utility Holding Company
Act of 2005. Neither Borrower’s nor any of its Subsidiaries’ properties or
assets has been used by Borrower or such Subsidiary or, to Borrower’s Knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than in material compliance with applicable laws.
Borrower and each of its Subsidiaries has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all Governmental Authorities that are necessary to continue their respective
businesses as currently conducted, except to the extent that the failure to
obtain, make or give any of the foregoing could not reasonably be expected to
have a Material Adverse Effect.

None of Borrower, any of its Subsidiaries, or to Borrower’s knowledge any of
Borrower’s or its Subsidiaries’ Affiliates or any of their respective agents
acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law,
(ii) engaging in or conspiring to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding or attempts to violate, any of
the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked
Person. None of Borrower, any of its Subsidiaries, or to the knowledge of
Borrower and any of their Affiliates or agents, acting or benefiting in any
capacity in connection with the transactions contemplated by this Agreement,
(x) conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, or
(y) deals in, or otherwise engages in any transaction relating to, any property
or interest in property blocked pursuant to Executive Order No. 13224, any
similar executive order or other Anti-Terrorism Law. None of the funds to be
provided under this Agreement will be used, directly or indirectly, (a) for any
activities in violation of any applicable anti-money laundering, economic
sanctions and anti-bribery laws and regulations laws and regulations or (b) for
any payment to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in
an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

5.7 Information Correct and Current. No written information, report, Advance
Request, financial statement, exhibit or schedule furnished, by or on behalf of
Borrower to Agent in connection with any Loan Document or included therein or
delivered pursuant thereto contained, or, when taken as a whole, contains any
material misstatement of fact or, when taken together with all other such
information or documents, omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not materially misleading at the
time such statement was made or deemed made. Additionally, any and all financial
or business projections provided by Borrower to Agent, whether prior to or after
the Closing Date, shall be (i) provided in good faith and based on the most
current data and information available to Borrower, and (ii) the most current of
such projections provided to Borrower’s Board of Directors.

 

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5.8 Tax Matters. Except as described on Schedule 5.8 and except those being
contested in good faith with adequate reserves under GAAP, (a) Borrower has
filed all material federal, state and local tax returns that it is required to
file (or validly filed extensions thereof), (b) Borrower has duly paid or fully
reserved for all material taxes or installments thereof (including any interest
or penalties) as and when due, which have or may become due pursuant to such
returns, and (c) Borrower has paid or fully reserved for any material tax
assessment received by Borrower for the three (3) years preceding the Closing
Date, if any (including any taxes being contested in good faith and by
appropriate proceedings).

5.9 Intellectual Property Claims. Borrower is the sole owner of, or otherwise
has the right to use, the Intellectual Property material to its business. Except
as described on Schedule 5.9, (i) to Borrower’s knowledge, each of the material
issued Copyrights, Trademarks and Patents is valid and enforceable, (ii) no
material Intellectual Property of Borrower has been judged by a decision of a
court of competent jurisdiction, invalid or unenforceable, in whole or in part,
and (iii) no claim has been made in writing to Borrower that any material part
of the Intellectual Property of Borrower violates the material rights of any
third party. Schedule 5(a) to the Perfection Certificate is a true, correct and
complete list of each of Borrower’s Patents, registered Trademarks, registered
Copyrights, and material agreements under which Borrower licenses Intellectual
Property from third parties (other than shrink-wrap software licenses), together
with application or registration numbers, as applicable, owned by Borrower or
any Subsidiary, in each case as of the Closing Date. Borrower is not in material
breach of, nor has Borrower failed to perform any material obligations under,
any of the foregoing contracts, licenses or agreements and, to Borrower’s
knowledge, no third party to any such contract, license or agreement is in
material breach thereof or has failed to perform any material obligations
thereunder.

5.10 Intellectual Property. Except as described on Schedule 5.10, Borrower has
all material rights with respect to Intellectual Property necessary or material
in the operation or conduct of Borrower’s business as currently conducted and
proposed to be conducted by Borrower. Without limiting the generality of the
foregoing, other than in connection with Permitted Transfers, and in the case of
material in-bound Licenses, except for restrictions that are unenforceable under
Division 9 of the UCC, (i) and except as provided in Schedule 5.10, Borrower has
the right, to the extent required to operate Borrower’s business, to freely
transfer, license or assign Intellectual Property, without condition,
restriction or payment of any kind (other than license payments in the ordinary
course of business) to any third party, and (ii) no material in-bound License
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower’s interest in such License, except as described on the Schedule 5.10.
Borrower owns or has the right to use, pursuant to valid licenses, all software
development tools, library functions, compilers and all other third-party
software and other items that are material to Borrower’s business and used in
the design, development, promotion, sale, license, manufacture, import, export,
use or distribution of Borrower Products except customary covenants in inbound
license agreements and equipment leases where Borrower is the licensee or
lessee. For the avoidance of doubt, shrink-wrap licenses, click on license
agreements, open source code and other licenses available to the public without
customization shall not be considered a material License.

 

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5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual
Property owned by Borrower or Borrower Product has been or is subject to any
actual or, to the knowledge of Borrower, threatened (in writing) litigation,
proceeding (including any proceeding in the United States Patent and Trademark
Office or any corresponding foreign office or agency) or outstanding decree,
order, judgment, settlement agreement or stipulation that restricts in any
material respect Borrower’s use, transfer or licensing thereof or that may
affect the validity, use or enforceability thereof, in each case, which could
reasonably be expected to have a material adverse effect on Borrower’s business.
To Borrower’s knowledge, there is no decree, order, judgment, agreement,
stipulation, arbitral award or other provision entered into in connection with
any litigation or proceeding that obligates Borrower to grant licenses or
ownership interest in any future material Intellectual Property related to the
operation or conduct of the business of Borrower or Borrower Products. As of the
Closing Date, except as described on Schedule 5.11, Borrower has not received
any written notice or claim, or, to the knowledge of Borrower, oral notice or
claim, challenging or questioning Borrower’s ownership in any material
Intellectual Property (or written notice of any claim challenging or questioning
the ownership in any material licensed Intellectual Property of the owner
thereof) or suggesting that any third party has any claim of legal or beneficial
ownership with respect thereto. Except as described on Schedule 5.11, to
Borrower’s knowledge, neither Borrower’s use of its material Intellectual
Property nor the production and sale of Borrower Products infringes in any
material respect the Intellectual Property or other rights of others.

5.12 Financial Accounts. Exhibit D, as may be updated by Borrower in a written
notice provided to Agent after the Closing Date, is a true, correct and complete
list of (a) all banks and other financial institutions at which Borrower or any
Subsidiary maintains Deposit Accounts and (b) all institutions at which Borrower
or any Subsidiary maintains an account holding Investment Property, and such
exhibit correctly identifies in all material respects the name, address and
telephone number of each bank or other institution, the name in which the
account is held, a description of the purpose of the account, and the complete
account number therefor.

5.13 Employee Loans. Except as permitted as a Permitted Investment, Borrower has
no outstanding loans to any employee, officer or director of Borrower nor has
Borrower guaranteed the payment of any loan made to an employee, officer or
director of Borrower by a third party.

5.14 Capitalization and Subsidiaries. Borrower’s capitalization as of the
Closing Date is set forth on Schedule 5.14 annexed hereto. Borrower does not own
any stock, partnership interest or other securities of any Person, except for
Permitted Investments. Attached as Schedule 5.14, as may be updated by Borrower
in a written notice provided after the Closing Date, is a true, correct and
complete list of each Subsidiary.

 

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5.15 Foreign Subsidiary Voting Rights. No decision or action in any governing
document of any Foreign Subsidiary (other than an Eligible Foreign Subsidiary)
requires a vote of greater than fifty and one tenth of one percent (50.1%) of
the Equity Interests or voting rights of such Foreign Subsidiary.

SECTION 6. INSURANCE; INDEMNIFICATION

6.1 Coverage. Borrower shall cause to be carried and maintained commercial
general liability insurance, on an occurrence form, against risks customarily
insured against in Borrower’s line of business. Such risks shall include the
risks of bodily injury, including death, property damage, personal injury,
advertising injury, and contractual liability per the terms of the
indemnification agreement found in Section 6.3. Borrower must maintain a minimum
of Two Million Dollars ($2,000,000.00) of commercial general liability insurance
for each occurrence. Borrower has and agrees to maintain a minimum of Two
Million Dollars ($2,000,000) of directors’ and officers’ insurance for each
occurrence and Five Million Dollars ($5,000,000.00) in the aggregate. So long as
there are any Secured Obligations outstanding, Borrower shall also cause to be
carried and maintained insurance upon the Collateral, insuring against all risks
of physical loss or damage howsoever caused, in an amount not less than the full
replacement cost of the Collateral, provided that such insurance may be subject
to standard exceptions and deductibles.

6.2 Certificates. Borrower shall deliver to Agent certificates of insurance that
evidence Borrower’s compliance with its insurance obligations in Section 6.1 and
the obligations contained in this Section 6.2. Borrower’s insurance certificate
shall state Agent (shown as “Hercules Capital, Inc.”, as Agent”) is an
additional insured for commercial general liability, a loss payee for all risk
property damage insurance, subject to the insurer’s approval, and a loss payee
for property insurance and additional insured for liability insurance for any
future insurance that Borrower may acquire from such insurer. Attached to the
certificates of insurance will be additional insured endorsements for liability
and lender’s loss payable endorsements for all risk property damage insurance.
All certificates of insurance will provide for a minimum of thirty (30) days
advance written notice to Agent of cancellation (other than cancellation for
non-payment of premiums, for which ten (10) days’ advance written notice shall
be sufficient) or any other change adverse to Agent’s interests. Any failure of
Agent to scrutinize such insurance certificates for compliance is not a waiver
of any of Agent’s rights, all of which are reserved. Borrower shall provide
Agent with copies of each insurance policy (excluding D&O), and upon entering or
materially amending any insurance policy required hereunder, Borrower shall
provide Agent with copies of such policies (excluding D&O) and shall promptly
deliver to Agent updated insurance certificates with respect to such policies.

6.3 Indemnity. Borrower agrees to indemnify and hold Agent, Lender and their
officers, directors, employees, agents, in-house attorneys, representatives and
shareholders (each, an “Indemnified Person”) harmless from and against any and
all claims, costs, expenses, damages and liabilities (including such claims,
costs, expenses, damages and liabilities based on liability in tort, including
strict liability in tort), including

 

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reasonable attorneys’ fees and disbursements and other costs of investigation or
defense (including those incurred upon any appeal) (collectively,
“Liabilities”), that may be instituted or asserted against or incurred by such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents or the
administration of such credit, or in connection with or arising out of the
transactions contemplated hereunder and thereunder, or any actions or failures
to act in connection therewith, or arising out of the disposition or utilization
of the Collateral, excluding in all cases Liabilities to the extent resulting
from any Indemnified Person’s gross negligence or willful misconduct. Borrower
agrees to pay, and to save Agent and Lender harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
excise, sales or other similar taxes (excluding taxes imposed on or measured by
the net income of Agent or Lender) that may be payable or determined to be
payable with respect to any of the Collateral or this Agreement. In no event
shall any Indemnified Person be liable on any theory of liability for any
special, indirect, consequential or punitive damages (including any loss of
profits, business or anticipated savings). This Section 6.3 shall survive the
repayment of indebtedness under, and otherwise shall survive the expiration or
other termination of, this Agreement. This Section 6.3 shall not apply with
respect to Taxes other than any Taxes that represent losses, claims, damages,
etc. arising from any non-Tax claim.

SECTION 7. COVENANTS OF BORROWER

Borrower agrees as follows:

7.1 Financial Reports. Merrimack shall furnish to Agent the financial statements
and reports listed hereinafter (the “Financial Statements”):

(a) as soon as practicable (and in any event within thirty (30) days) after the
end of each month, unaudited financial statements as of the end of such month
(prepared on a consolidated basis, if applicable), including a summary balance
sheet and statement of income and, together with a Compliance Certificate in the
form of Exhibit E signed on behalf of Borrower by Merrimack’s Chief Executive
Officer or Chief Financial Officer;

(b) as soon as practicable (and in any event within 45 days) after the end of
each of the first three calendar quarters of each year, unaudited interim and
year-to-date financial statements as of the end of such calendar quarter
(prepared on a consolidated basis, if applicable), including balance sheet and
statements of income and cash flows, together with a Compliance Certificate in
the form of Exhibit E signed on behalf of Borrower by Merrimack’s Chief
Executive Officer or Chief Financial Officer;

(c) as soon as practicable (and in any event within ninety (90) days) after the
end of each fiscal year, audited financial statements as of the end of such year
(prepared on a consolidated basis, if applicable), including balance sheet and
related statements of income and cash flows, and setting forth in comparative
form the corresponding figures for the preceding fiscal year, accompanied by an
audit report that is unqualified as to scope of audit (other than a “going
concern” qualification due to a lack of liquidity) from PricewaterhouseCoopers
LLP or another firm of certified public accountants selected by Borrower and
reasonably acceptable to Agent, together with a Compliance Certificate in the
form of Exhibit E signed on behalf of Borrower by Merrimack’s Chief Executive
Officer or Chief Financial Officer;

 

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(d) as soon as practicable (and in any event within thirty (30) days) after the
end of each month, a report showing agings of accounts receivable, if
applicable, and accounts payable;

(e) promptly after the sending or filing thereof, as the case may be, copies of
any proxy statements, financial statements or reports that Borrower has made
available to holders of its Preferred Stock and copies of any regular, periodic
and special reports or registration statements that Borrower files with the
Securities and Exchange Commission or any governmental authority that may be
substituted therefor, or any national securities exchange;

(f) budgets promptly following their approval by Borrower’s Board of Directors,
and in any event, within 30 days after the end of Borrower’s fiscal year, as
well as budgets, operating plans and other financial information reasonably
requested by Agent (provided that Borrower shall not be obligated to disclosure
pursuant to this Section 7.1(f) any privileged attorney-client communication);
and

(g) immediate notice if Borrower or any Subsidiary has knowledge that Borrower,
or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or
(a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or
(d) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering.

Borrower shall not make any change in its fiscal years or fiscal quarters or,
without notice to Agent, any change in its accounting policies or reporting
practices other than those changes made in accordance with GAAP and accounting
guidance. The fiscal year of Borrower shall end on December 31.

The executed Compliance Certificate may be sent via email to Agent at XXXX. All
Financial Statements required to be delivered pursuant to clauses (a), (b) and
(c) shall be sent via e-mail to XXXX with a copy to XXXX provided, that if
e-mail is not available or sending such Financial Statements via e-mail is not
possible, they shall be faxed to Agent at: XXXX, attention Account Manager:
Merrimack Pharmaceuticals, Inc.

Notwithstanding the foregoing, documents required to be delivered under Sections
7.1(a), (b), (c) or (f) (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date on which
Borrower emails a link thereto to Agent; provided that Borrower shall directly
provide Agent all Financial Statements required to be delivered pursuant to
Section 7.1(b) and (c) hereunder.

 

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7.2 Management Rights. Borrower shall permit any representative that Agent or
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of Borrower at reasonable times and upon reasonable notice during normal
business hours; provided, however, that so long as no Event of Default has
occurred and is continuing, such examinations shall be limited to no more often
than once in any twelve month period. In addition, any such representative shall
have the right to meet with management and officers of Borrower to discuss such
books of account and records. In addition, Agent or Lender shall be entitled at
reasonable times and intervals to consult with and advise the management and
officers of Borrower concerning significant business issues affecting Borrower.
Such consultations shall not unreasonably interfere with Borrower’s business
operations. The parties intend that the rights granted Agent and Lender shall
constitute “management rights” within the meaning of 29 C.F.R.
Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or
participation by Agent or Lender with respect to any business issues shall not
be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender
of, control over Borrower’s management or policies.

7.3 Further Assurances. Borrower shall from time to time execute, deliver and
file, alone or with Agent, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Agent’s Lien on the Collateral. Borrower
shall from time to time procure any instruments or documents as may be
reasonably requested by Agent, and take all further action that may be
necessary, or that Agent may reasonably request, to perfect and protect the
Liens granted hereby and thereby. In addition, and for such purposes only,
Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower
and to file such financing statements (including an indication that the
financing statement covers “all assets or all personal property” of Borrower in
accordance with Section 9-504 of the UCC), collateral assignments, notices,
control agreements, security agreements and other documents without the
signature of Borrower either in Agent’s name or in the name of Agent as agent
and attorney-in-fact for Borrower. Borrower shall in its reasonable business
judgment protect and defend Borrower’s title to the Collateral and Agent’s Lien
thereon against all Persons claiming any interest adverse to Borrower or Agent
other than Permitted Liens.

7.4 Indebtedness. Borrower shall not create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness or take any
actions which impose on Borrower an obligation to prepay any Indebtedness, at
any time before any applicable maturity date, except for (a) the conversion of
Indebtedness into equity securities and the payment of cash in lieu of
fractional shares in connection with such conversion, (b) purchase money
Indebtedness pursuant to its then applicable payment schedule, (c) prepayments
and actions that impose an obligation to prepay the convertible notes disclosed
on Schedule 1A, (d) prepayment by any Subsidiary of (i) inter-company
Indebtedness owed by such Subsidiary to any Borrower, or (ii) if such Subsidiary
is not a Borrower, intercompany Indebtedness owed by such Subsidiary to another
Subsidiary that is not a Borrower or (d) as otherwise permitted hereunder or
approved in writing by Agent.

 

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7.5 Collateral. Borrower shall at all times keep the Collateral, the
Intellectual Property and all other material property and material assets used
in Borrower’s business or in which Borrower now or hereafter holds any interest
free and clear from any legal process or Liens whatsoever (except for Permitted
Liens), and shall give Agent prompt written notice of any legal process
affecting the Collateral, the Intellectual Property, such other material
property and material assets, or any Liens thereon, provided however, that the
Collateral and such other material property and material assets may be subject
to Permitted Liens except that there shall be no Liens whatsoever on
Intellectual Property. Borrower shall not agree with any Person other than Agent
or Lender not to encumber its material property (including Intellectual
Property). Borrower shall not enter into or suffer to exist or become effective
any agreement that prohibits or limits the ability of any Borrower to create,
incur, assume or suffer to exist any Lien upon any of its material property
(including Intellectual Property), whether now owned or hereafter acquired, to
secure its obligations under the Loan Documents to which it is a party other
than (a) this Agreement and the other Loan Documents, and (b) any agreements
governing any purchase money Liens or capital lease obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the material assets financed thereby) and in connection with
any Permitted Liens or Permitted Transfers. Borrower shall cause its
Subsidiaries to protect and defend such Subsidiary’s title to its material
assets from and against all Persons claiming any interest adverse to such
Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such
Subsidiary’s material property and material assets free and clear from any legal
process or Liens whatsoever (except for Permitted Liens, provided however, that
there shall be no Liens whatsoever on Intellectual Property), and shall give
Agent prompt written notice of any legal process affecting such Subsidiary’s
material assets.

7.6 Investments. Borrower shall not directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.

7.7 Distributions. Borrower shall not, and shall not allow any Subsidiary to,
(a) repurchase or redeem any class of stock or other Equity Interest other than
pursuant to employee, director or consultant repurchase plans or other similar
agreements, provided, however, in each case the repurchase or redemption price
does not exceed the original consideration paid for such stock or Equity
Interest in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000.00), or (b) declare or pay any cash dividend or make a cash
distribution on any class of stock or other Equity Interest, except that a
Subsidiary may pay dividends or make distributions to Borrower, or (c) lend
money to any employees, officers or directors or guarantee the payment of any
such loans granted by a third party other than Permitted Investments.

7.8 Transfers. Except for Permitted Transfers, Permitted Investments and
Permitted Liens, Borrower shall not, and shall not allow any Subsidiary to,
voluntarily or involuntarily transfer, sell, lease, license, lend or in any
other manner convey any equitable, beneficial or legal interest in any material
portion of its assets (including cash).

 

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7.9 Mergers or Acquisitions. Borrower shall not merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of (a) a Subsidiary which is
not a Borrower into another Subsidiary or into Borrower or (b) a Borrower into
another Borrower), or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another Person.
Borrower may dissolve any Subsidiary (that is not a party to this Agreement) as
long as the assets of that Subsidiary are distributed to such Subsidiary’s
shareholders and Borrower provides prompt notice to Agent.

7.10 Taxes.

(a) Borrower and its Subsidiaries shall pay when due all material taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Agent, Lender
or the Collateral or upon Borrower’s ownership, possession, use, operation or
disposition thereof or upon Borrower’s rents, receipts or earnings arising
therefrom (other than Excluded Taxes).

(b) Any and all payments by or on account of any obligation of Borrower under
any Loan Document shall be made without deduction or withholding for any Taxes,
except as required by applicable law. If any applicable law requires the
deduction or withholding of any Tax from any such payment, then Borrower (or
applicable withholding agent) shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant governmental authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased
as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums
payable under this Section 7.10(b)), the applicable Lender receives an amount
equal to the sum it would have received had no such deduction or withholding
been made.

(c) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to
Borrower and Agent, at the time or times reasonably requested by Borrower or
Agent, such properly completed and executed documentation reasonably requested
by Borrower or Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. In addition, Lender, if reasonably
requested by Borrower or Agent, shall deliver such other documentation
prescribed by applicable law or reasonably requested by Borrower or Agent as
will enable Borrower and Agent to determine whether or not Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than Internal Revenue
Service Form W-9 or the relevant Internal Revenue Service Form W-8) shall not be
required if in Lender’s reasonable judgment such completion, execution or
submission would subject Lender to any material unreimbursed cost or expense or
would materially prejudice the legal or commercial position of Lender.

 

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(d) Without limiting the generality of the foregoing, if a payment made to a
Lender would be subject to U.S. federal withholding Tax imposed by FATCA if
Lender were to fail to comply with the applicable reporting requirements of
FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), Lender shall deliver to Borrower and Agent at the time or times
prescribed by law and at such time or times reasonably requested by Borrower or
Agent such documentation prescribed by applicable law (including as prescribed
by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by Borrower or Agent as may be necessary for Borrower and
Agent to comply with its obligations under FATCA and to determine that Lender
has complied with Lender’s obligations under FATCA or to determine the amount to
deduct and withhold from such payment. Solely for purposes of this clause (c),
“FATCA” shall include any amendments made to FATCA after the date hereof.

(e) Borrower shall file on or before the due date therefor all personal property
tax returns (or validly filed extensions) in respect of the Collateral.
Notwithstanding the foregoing, Borrower may contest, in good faith and by
appropriate proceedings, taxes for which Borrower maintains adequate reserves
therefor in accordance with GAAP.

7.11 Corporate Changes. Neither Borrower nor any Subsidiary shall change its
corporate name, legal form or jurisdiction of formation without twenty
(20) days’ prior written notice to Agent. Neither Borrower nor any Subsidiary
shall suffer a Change in Control. Neither Borrower nor any Subsidiary shall
relocate its chief executive office or its principal place of business unless:
(i) it has provided prior written notice to Agent; and (ii) such relocation
shall be within the continental United States of America. Neither Borrower nor
any Qualified Subsidiary shall relocate any item of Collateral (other than
(u) Borrower Products, including compounds and raw materials used to manufacture
biopharmaceuticals or which are used for preclinical testing or clinical trials,
in the OCB, (v) Permitted Transfers, (w) sales of Inventory in the ordinary
course of business, (y) relocations of Equipment having an aggregate value of up
to Two Hundred Thousand Dollars ($200,000.00) in any fiscal year,
(y) relocations of Equipment located outside of the United States of America,
and (z) relocations of Collateral from a location described on Exhibit C to
another location described on Exhibit C) unless (i) it has provided prompt
written notice to Agent, (ii) such relocation is within the continental United
States of America and, (iii) if such relocation is to a third party bailee, and
the Collateral has a value in excess of Two Hundred Thousand Dollars
($200,000.00), it has delivered a bailee agreement in form and substance
reasonably acceptable to Agent.

7.12 Deposit Accounts. Neither Borrower nor any Qualified Subsidiary shall
maintain any Deposit Accounts (other than the Excluded Accounts), or accounts
holding Investment Property, except with respect to which Agent has an Account
Control Agreement, if applicable.

7.13 Joinder. Borrower shall notify Agent of each Subsidiary formed subsequent
to the Closing Date and, within 15 days following such formation, shall cause
any such Qualified Subsidiary to execute and deliver to Agent a Joinder
Agreement.

7.14 Notification of Event of Default. Borrower shall notify Agent immediately
of the occurrence of any Event of Default.

 

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7.15 Use of Proceeds. Borrower agrees that the proceeds of the Loans shall be
used solely to pay related fees and expenses in connection with this Agreement
and for working capital and general corporate purposes. The proceeds of the
Loans Credit will not be used in violation of Anti-Corruption Laws or applicable
Sanctions.

7.16 Foreign Subsidiary Voting Rights. Borrower shall not, and shall not permit
any Subsidiary, to amend or modify any governing document of any Foreign
Subsidiary of Borrower (other than an Eligible Foreign Subsidiary) the effect of
which is to require a vote of greater than fifty and one-tenth of one percent
(50.1%) of the Equity Interests or voting rights of such entity for any decision
or action of such entity.

7.17 Compliance with Laws.

Borrower shall maintain, and shall cause its Subsidiaries to maintain,
compliance in all material respect with all applicable laws, rules or
regulations (including any law, rule or regulation with respect to the making or
brokering of loans or financial accommodations), and shall, or cause its
Subsidiaries to, obtain and maintain all required governmental authorizations,
approvals, licenses, franchises, permits or registrations reasonably necessary
in connection with the conduct of Borrower’s business.

Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of
its Subsidiaries permit, to Borrower’s knowledge, any Affiliate to, directly or
indirectly, knowingly enter into any documents, instruments, agreements or
contracts with any Person listed on the OFAC Lists. Neither Borrower nor any of
its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit,
to Borrower’s knowledge, any Affiliate to, directly or indirectly, (i) conduct
any business or engage in any transaction or dealing with any Blocked Person,
including, without limitation, the making or receiving of any contribution of
funds, goods or services to or for the benefit of any Blocked Person, (ii) deal
in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224 or any
similar executive order or other Anti-Terrorism Law, or (iii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in Executive Order No. 13224 or other Anti-Terrorism Law.

Borrower has implemented and maintains in effect policies and procedures
designed to ensure material compliance by Borrower, its Subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption Laws
and applicable Sanctions, and Borrower, its Subsidiaries and their respective
officers and employees and to the knowledge of Borrower its directors and
agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in
all material respects.

None of Borrower, any of its Subsidiaries or any of their respective directors,
officers or employees, or to the knowledge of Borrower, any agent for Borrower
or its Subsidiaries that will act in any capacity in connection with or benefit
from the credit facility established hereby, is a Sanctioned Person. No Loan,
use of proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.

 

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7.18 Intellectual Property.

(a) Borrower shall use commercially reasonable efforts to (i) protect, defend
and maintain the validity and enforceability of its Intellectual Property;
(ii) promptly advise Agent in writing of material infringements of its
Intellectual Property of which it is aware; and (iii) not allow any Intellectual
Property material to Borrowers’ business to be abandoned, forfeited or dedicated
to the public without Agent’s written consent.

(b) Borrower shall provide written notice to Agent within ten (10) days of
entering or becoming bound by any material in-bound License (other than
over-the-counter software that is commercially available to the public).
Borrower shall take such commercially reasonable steps as Agent reasonably
requests to obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for (i) any material in-bound License to be deemed
“Collateral” and for Agent to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such
material in-bound License, whether now existing or entered into in the future,
and (ii) Agent to have the ability in the event of a liquidation of any
Collateral to dispose of such Collateral in accordance with Agent’s rights and
remedies under this Agreement and the other Loan Documents.

7.19 Transactions with Affiliates. Borrower shall not and shall not permit any
Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction of any kind with any Affiliate of Borrower or such Subsidiary on
terms that are less favorable to Borrower or such Subsidiary, as the case may
be, than those that might be obtained in an arm’s length transaction from a
Person who is not an Affiliate of Borrower or such Subsidiary other than
(a) transactions, arrangements and contracts otherwise permitted pursuant to
Sections 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 and 7.11 and (b) transaction between (i) a
Borrower and another Borrower, or (ii) a Qualified Subsidiary and another
Qualified Subsidiary which are not party to this Agreement.

7.20 Post-Closing Deliverables. Borrower shall deliver to Agent within
(i) thirty (30) Business Days after the Closing Date, endorsements to Borrower’s
property and liability policies, which endorsements shall name Agent as lender
loss payee or additional insured, as applicable and provide that Agent shall
receive prior notice of cancellation of such property and liability policies,
and (ii) five (5) Business Days, a duly executed Securities Account Control
Agreement from Silicon Valley Bank.

SECTION 8. RIGHT TO INVEST

8.1 For a period of twelve (12) months following the Closing Date, Lender or its
assignee or nominee shall have the right, in its discretion, to participate in
any one or more Subsequent Financings in an aggregate amount, for all such
Subsequent Financings in which Lender and/or its assignee(s) or nominee(s)
participate, of up to One Million Dollars ($1,000,000.00), on the same terms,
conditions and pricing afforded to others participating in any such Subsequent
Financing. To the extent Lender is offered the opportunity to participate in one
or more Subsequent Financings in an amount of at least One Million Dollars
($1,000,000.00) in the aggregate, the requirements of this Section 8.1 shall be
satisfied and Lender’s right to participate in any future Subsequent Financing
shall terminate.

 

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SECTION 9. EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall be an Event of
Default:

9.1 Payments. Borrower fails to pay any amount due under this Agreement or any
of the other Loan Documents on the due date; provided, however, that an Event of
Default shall not occur on account of a failure to pay due solely to an
administrative or operational error of Agent or Lender or Borrower’s bank if
Borrower had the funds to make the payment when due and makes the payment within
three (3) Business Days following Borrower’s knowledge of such failure to pay;
or

9.2 Covenants. Borrower breaches or defaults in the performance of any covenant
or Secured Obligation under this Agreement, or any of the other Loan Documents
or any other agreement among Borrower, Agent and Lender, and (a) with respect to
a default under any covenant under this Agreement (other than under Sections 6,
7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16, 7.17, 7.18(b), and 7.20) any
other Loan Document or any other agreement among Borrower, Agent and Lender,
such default continues for more than ten (10) days after the earlier of the date
on which (i) Agent or Lender has given notice of such default to Borrower and
(ii) Borrower has actual knowledge of such default or (b) with respect to a
default under any of Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16,
7.17, 7.18(b), and 7.20 the occurrence of such default; or

9.3 Material Adverse Effect. A circumstance has occurred that could reasonably
be expected to have a Material Adverse Effect; provided that solely for the
purposes of this Section 9.3, the occurrence of adverse results or delays in any
nonclinical or clinical trial, including without limitation, the failure to
demonstrate the desired safety or efficacy of any of Borrower’s clinical assets
shall not, in and of itself, constitute a Material Adverse Effect; or

9.4 Representations. Any representation or warranty made by Borrower in any Loan
Document shall have been false or misleading in any material respect when made
or when deemed made; or

9.5 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be unable to pay its debts as they become due, or be
unable to pay or perform under the Loan Documents, or shall become insolvent; or
(iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any
petition, answer, or document seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation pertinent to such
circumstances; or (v) shall seek or consent to or acquiesce in the appointment
of any trustee, receiver, or liquidator of Borrower or of all or any substantial
part (i.e., 33-1/3% or more) of the assets or property of Borrower; or
(vi) shall cease operations of its business as its business has normally been
conducted, or terminate substantially all of its

 

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employees; or (vii) Borrower or its directors or majority shareholders shall
take any action initiating any of the foregoing actions described in clauses (i)
through (vi); or (B) either (i) forty-five (45) days shall have expired after
the commencement of an involuntary action against Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation,
without such action being dismissed or all orders or proceedings thereunder
affecting the operations or the business of Borrower being stayed; or (ii) a
stay of any such order or proceedings shall thereafter be set aside and the
action setting it aside shall not be timely appealed; or (iii) Borrower shall
file any answer admitting or not contesting the material allegations of a
petition filed against Borrower in any such proceedings; or (iv) the court in
which such proceedings are pending shall enter a decree or order granting the
relief sought in any such proceedings; or (v) forty-five (45) days shall have
expired after the appointment, without the consent or acquiescence of Borrower,
of any trustee, receiver or liquidator of Borrower or of all or any substantial
part of the properties of Borrower without such appointment being vacated; or

9.6 Attachments; Judgments. Any portion of Borrower’s assets is attached or
seized, or a levy is filed against any such assets, or a judgment or judgments
is/are entered for the payment of money (not covered by independent third party
insurance as to which liability has not been rejected by such insurance
carrier), individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000.00), and remains unstayed, unbonded and unsatisfied for more
than ten (10) days, or Borrower is enjoined or in any way prevented by court
order from conducting any part of its business; or

9.7 Other Obligations. The occurrence of any default under any agreement or
obligation of Borrower involving any Indebtedness in excess of One Hundred
Thousand Dollars ($100,000.00).

9.8 Stop Trade. At any time, an SEC stop trade order or NASDAQ market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a public market, provided that Borrower
shall not have been able to cure such trading suspension within thirty (30) days
of the notice thereof or list the Common Stock on another public market within
sixty (60) days of such notice.

SECTION 10. REMEDIES

10.1 General. Upon and during the continuance of any one or more Events of
Default, (i) Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the Secured Obligations
together with a Prepayment Charge and declare them to be immediately due and
payable (provided, that upon the occurrence of an Event of Default of the type
described in Section 9.5, all of the Secured Obligations shall automatically be
accelerated and made due and payable, in each case without any further notice or
act), (ii) Agent may, at its option, sign and file in Borrower’s name any and
all collateral assignments, notices, control agreements, security agreements and
other documents it deems necessary or appropriate to perfect or protect the
repayment of the Secured Obligations, and in furtherance thereof, Borrower
hereby grants Agent an

 

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irrevocable power of attorney coupled with an interest, and (iii) Agent may
notify any of Borrower’s account debtors to make payment directly to Agent,
compromise the amount of any such account on Borrower’s behalf and endorse
Agent’s name without recourse on any such payment for deposit directly to
Agent’s account. Agent may, and at the direction of the Required Lenders shall,
exercise all rights and remedies with respect to the Collateral under the Loan
Documents or otherwise available to it under the UCC and other applicable law,
including the right to release, hold, sell, lease, liquidate, collect, realize
upon, or otherwise dispose of all or any part of the Collateral and the right to
occupy, utilize, process and commingle the Collateral. All Agent’s rights and
remedies shall be cumulative and not exclusive.

10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of
any Event of Default, Agent may, and at the direction of the Required Lenders
shall, at any time or from time to time, apply, collect, liquidate, sell in one
or more sales, lease or otherwise dispose of, any or all of the Collateral, in
its then condition or following any commercially reasonable preparation or
processing, in such order as Agent may elect. Any such sale may be made either
at public or private sale at its place of business or elsewhere. Borrower agrees
that any such public or private sale may occur upon ten (10) calendar days’
prior written notice to Borrower. Agent may require Borrower to assemble the
Collateral and make it available to Agent at a place designated by Agent that is
reasonably convenient to Agent and Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be
applied by Agent in the following order of priorities:

First, to Agent and Lender in an amount sufficient to pay in full Agent’s and
Lender’s reasonable costs and professionals’ and advisors’ fees and expenses as
described in Section 11.11;

Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in
such order and priority as Agent may choose in its sole discretion; and

Finally, after the full and final payment in Cash of all of the Secured
Obligations (other than inchoate obligations), to any creditor holding a junior
Lien on the Collateral, or to Borrower or its representatives or as a court of
competent jurisdiction may direct.

Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.

10.3 Account Control Agreements. Agent agrees not to issue a notice of exclusive
control or any other instruction with respect to control or disposition of funds
under any Account Control Agreement unless an Event of Default has occurred and
is continuing.

10.4 No Waiver. Agent shall be under no obligation to marshal any of the
Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Agent to marshal any Collateral.

 

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10.5 Cumulative Remedies. The rights, powers and remedies of Agent hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of or election
of remedies with respect to any other rights, powers and remedies of Agent.

SECTION 11. MISCELLANEOUS

11.1 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

11.2 Notice. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by electronic transmission or hand delivery or delivery by an overnight express
service or overnight mail delivery service; or (ii) the third calendar day after
deposit in the United States of America mails, with proper first class postage
prepaid, in each case addressed to the party to be notified as follows:

(a) If to Agent:

HERCULES CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Bryan Jadot

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Email: XXXX

Telephone: XXXX

(b) If to Lender:

HERCULES CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Telephone: XXXX

 

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(c) If to Borrower:

MERRIMACK PHARMACEUTICALS, INC.

One Kendall Square, Suite B7201

Cambridge, MA 02139

Attention: Jean Franchi

Facsimile: XXXX

Email: XXXX

Telephone: XXXX

With a copy (that shall not constitute notice) to:

Merrimack Pharmaceuticals, Inc.

One Kendall Square, Suite B7201

Cambridge, MA 02139

Attention: Jeff Munsie, General Counsel

Email: XXXX

Telephone: XXXX

and to:

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

Attention: Jamie Class

Email: XXXX

Telephone: XXXX

or to such other address as each party may designate for itself by like notice.

11.3 Entire Agreement; Amendments.

(a) This Agreement and the other Loan Documents constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the
subject matter hereof or thereof (including Agent’s proposal letter dated
June 11, 2018).

(b) Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.3(b). The Required Lenders and Borrower party to
the relevant Loan Document may, or, with the written consent of the Required
Lenders, Agent and Borrower party to the relevant Loan Document may, from time
to time, (i) enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
Lenders or of Borrower hereunder or thereunder or (ii) waive, on such terms and
conditions as the Required Lenders or Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the other Loan
Documents or any default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (A) forgive the principal amount or extend

 

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the final scheduled date of maturity of any Loan, extend the scheduled date of
any amortization payment in respect of any Term Loan Advance, reduce the stated
rate of any interest or fee payable hereunder) or extend the scheduled date of
any payment thereof, in each case without the written consent of each Lender
directly affected thereby; (B) eliminate or reduce the voting rights of any
Lender under this Section 11.3(b) without the written consent of such Lender;
(C) reduce any percentage specified in the definition of Required Lenders,
consent to the assignment or transfer by Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release a Borrower from its obligations
under the Loan Documents, in each case without the written consent of all
Lenders; or (D) amend, modify or waive any provision of Section 11.17 without
the written consent of Agent. Any such waiver and any such amendment, supplement
or modification shall apply equally to each Lender and shall be binding upon
Borrower, Lender, Agent and all future holders of the Loans.

11.4 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

11.5 No Waiver. The powers conferred upon Agent and Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Agent or
Lender to exercise any such powers. No omission or delay by Agent or Lender at
any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by Borrower at
any time designated, shall be a waiver of any such right or remedy to which
Agent or Lender is entitled, nor shall it in any way affect the right of Agent
or Lender to enforce such provisions thereafter.

11.6 Survival. All agreements, representations and warranties contained in this
Agreement and the other Loan Documents or in any document delivered pursuant
hereto or thereto shall be for the benefit of Agent and Lender and shall survive
the execution and delivery of this Agreement. Sections 6.3, 8.1 and 11.14 shall
survive the termination of this Agreement.

11.7 Successors and Assigns.

(a) The provisions of this Agreement and the other Loan Documents shall inure to
the benefit of and be binding on Borrower and its permitted assigns (if any).
Borrower shall not assign its obligations under this Agreement or any of the
other Loan Documents without Agent’s express prior written consent, and any such
attempted assignment shall be void and of no effect. Agent and Lender may
assign, transfer, or endorse its rights hereunder (except for Section 8.1, which
may not be assigned without Borrower written consent) and under the other Loan
Documents to an Assignee (defined in Section 11.13) without prior notice to
Borrower, and all of such rights shall inure to the benefit of Agent’s and
Lender’s successors and assigns; provided that as long as no Event

 

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of Default has occurred and is continuing, neither Agent nor any Lender may
assign, transfer or endorse its rights hereunder or under the Loan Documents to
any party that is a direct competitor of Borrower (as reasonably determined by
Agent) without the prior consent of Borrower, which shall not be unreasonably
withheld conditioned or delayed; provided however Borrower’s consent shall not
be required if such assignment occurs following an Event of Default that is
continuing or in connection with the a sale or disposition of Agent or Lender or
all or a portion of a Lender’s loan portfolio, or any merger, acquisition or
corporate reorganization affecting a Lender. In addition to the foregoing, in
all cases, any transfer to an Affiliate of any Lender or Agent shall be allowed.

(b) The Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain a copy of each assignment and assumption delivered to it and a register
for the recordation of the names and addresses of the Lender, and the
commitments of, and principal amounts (and stated interest) of the Term Loans
owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive absent manifest
error, and the Borrower, the Agent and the Lender shall treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of the Loan Documents. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

11.8 Governing Law. This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and Lender in the State of California, and
shall have been accepted by Agent and Lender in the State of California. Payment
to Agent and Lender by Borrower of the Secured Obligations is due in the State
of California. This Agreement and the other Loan Documents shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.

11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent
that the reference requirement of Section 11.10 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents (except as
expressly provided otherwise in any other Loan Document) shall be brought in any
state or federal court located in the county of San Francisco or Santa Clara, in
the state of California. By execution and delivery of this Agreement, each party
hereto generally and unconditionally: (a) submits and consents to exclusive
jurisdiction in such courts except that Agent may bring suit or take legal
action in any other jurisdiction to realize on the Collateral or any other
security for the Obligations or as provided in any other Loan Document;
(b) waives any objection as to lack of jurisdiction or improper venue or forum
non conveniens; and (c) irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement or the other Loan Documents. Service
of process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if given in accordance with the requirements for
notice set forth in Section 11.2, and shall be deemed effective and received as
set forth in Section 11.2.

11.10 Mutual Waiver of Jury Trial / Judicial Reference.

 

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(a) Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF BORROWER, AGENT AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER OR THEIR
RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST
BORROWER. This waiver extends to all such Claims, including Claims that involve
Persons other than Agent, Borrower and Lender; Claims that arise out of or are
in any way connected to the relationship among Borrower, Agent and Lender; and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement, any other
Loan Document.

(b) If the waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of the Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.

(c) In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.9, any prejudgment order, writ or
other relief and have such prejudgment order, writ or other relief enforced to
the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.

11.11 Professional Fees. Borrower promises to pay Agent’s and Lender’s fees and
expenses necessary to finalize the loan documentation, including but not limited
to reasonable attorneys fees, UCC searches, filing costs, and other
miscellaneous expenses. In addition, Borrower promises to pay any and all
reasonable attorneys’ and other professionals’ fees and expenses incurred by
Agent and Lender after the Closing Date in connection with or related to:
(a) the Loan; (b) the administration, collection, or enforcement of the Loan;
(c) the amendment or modification of the Loan Documents; (d) any waiver,
consent, release, or termination under the Loan Documents; (e) the protection,
preservation, audit, field exam, sale, lease, liquidation, or disposition of
Collateral or the exercise of remedies with respect to the Collateral; (f) any
legal, litigation, administrative, arbitration, or out of court proceeding in
connection with or related to Borrower or the Collateral, and any appeal or
review thereof; and (g) any bankruptcy, restructuring, reorganization,
assignment for the benefit of creditors, workout, foreclosure, or other action
related to Borrower, the Collateral, the Loan Documents, including representing
Agent or Lender in any adversary proceeding or contested matter commenced or
continued by or on behalf of Borrower’s estate, and any appeal or review
thereof.

 

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11.12 Confidentiality. Agent and Lender acknowledge that certain items of
Collateral and information provided to Agent and Lender by Borrower are
confidential and proprietary information of Borrower, if and to the extent such
information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the
“Confidential Information”). Accordingly, Agent and Lender agree that any
Confidential Information it may obtain in the course of acquiring,
administering, or perfecting Agent’s security interest in the Collateral shall
not be disclosed to any other Person or entity in any manner whatsoever, in
whole or in part, without the prior written consent of Borrower, except that
Agent and Lender may disclose any such information: (a) to its own directors,
officers, employees, accountants, counsel and other professional advisors and to
its Affiliates if Agent or Lender in their sole discretion determines that any
such party should have access to such information in connection with such
party’s responsibilities in connection with the Loan or this Agreement and,
provided that such recipient of such Confidential Information either (i) agrees
to be bound by the confidentiality provisions of this paragraph or (ii) is
otherwise subject to confidentiality restrictions that reasonably protect
against the disclosure of Confidential Information; (b) if such information is
generally available to the public without any disclosure by Agent or Lender or
breach of this Section 11.12; (c) if required or appropriate in any report,
statement or testimony submitted to any governmental authority having or
claiming to have jurisdiction over Agent or Lender; (d) if required or
appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Agent’s or Lender’s
counsel; (e) to comply with any legal requirement or law applicable to Agent or
Lender; (f) to the extent reasonably necessary in connection with the exercise
of any right or remedy under any Loan Document, including Agent’s sale, lease,
or other disposition of Collateral after default and during the continuation of
an Event of Default; (g) to any participant or assignee of Agent or Lender or
any prospective participant or assignee; provided, that such participant or
assignee or prospective participant or assignee agrees in writing to be bound by
this Section prior to disclosure; or (h) otherwise with the prior consent of
Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of Borrower or any of its Affiliates or any
guarantor under this Agreement or the other Loan Documents. Agent’s and Lender’s
obligations under this Section 11.12 shall supersede all of their respective
obligations under any non-disclosure agreement.

11.13 Assignment of Rights. Borrower acknowledges and understands that Agent or
Lender may, subject to Section 11.7, sell and assign all or part of its interest
hereunder and under the Loan Documents to any Person or entity (an “Assignee”),
provided that no such assignment shall be made to a direct competitor of
Borrower without the prior written consent of Borrower, which shall not be
unreasonably withheld conditioned or delayed; provided however Borrower’s
consent shall not be required if such assignment occurs following an Event of
Default that is continuing or in connection with the a sale or disposition of
Agent or Lender or all or a portion of a Lender’s loan portfolio, or any merger,
acquisition or corporate reorganization affecting a Lender. After such
assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean
and include such Assignee, and such Assignee shall be vested with all rights,
powers and remedies of Agent and Lender hereunder with respect to the interest
so assigned; but with

 

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respect to any such interest not so transferred, Agent and Lender shall retain
all rights, powers and remedies hereby given. No such assignment by Agent or
Lender shall relieve Borrower of any of its obligations hereunder. Lender agrees
that in the event of any transfer by it of the Term Note (if any), it will
endorse thereon a notation as to the portion of the principal of the Term
Note(s), which shall have been paid at the time of such transfer and as to the
date to which interest shall have been last paid thereon.

11.14 Revival of Secured Obligations. This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against Borrower for liquidation or reorganization, if
Borrower becomes insolvent or makes an assignment for the benefit of creditors,
if a receiver or trustee is appointed for all or any significant part of
Borrower’s assets, or if any payment or transfer of Collateral is recovered from
Agent or Lender. The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Agent, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
except to the extent of the full, final, and indefeasible payment to Agent or
Lender in Cash.

11.15 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, Lender and Borrower unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely among Agent, Lender and Borrower.

11.17 Agency.

(a) Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its
behalf as Agent hereunder and under the other Loan Documents and authorizes
Agent to take such actions on its behalf and to exercise such powers as are
delegated to Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.

 

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(b) Lender agrees to indemnify Agent in its capacity as such (to the extent not
reimbursed by Borrower and without limiting the obligation of Borrower to do
so), according to its respective Term Commitment percentage (based upon the
total outstanding Term Loan Commitments) in effect on the date on which
indemnification is sought under this Section 11.17, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time be
imposed on, incurred by or asserted against Agent in any way relating to or
arising out of, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.

(c) Agent in Its Individual Capacity. The Person serving as Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not Agent and the term
“Lender” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each such Person serving as Agent hereunder in its
individual capacity.

(d) Exculpatory Provisions. Agent shall have no duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, Agent shall not:

 

  (i) be subject to any fiduciary or other implied duties, regardless of whether
any default or any Event of Default has occurred and is continuing;

 

  (ii) have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by Lender, provided that Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose Agent to liability or that is contrary to any Loan Document or
applicable law; and

 

  (iii) except as expressly set forth herein and in the other Loan Documents,
have any duty to disclose, and Agent shall not be liable for the failure to
disclose, any information relating to Borrower or any of its Affiliates that is
communicated to or obtained by any Person serving as Agent or any of its
Affiliates in any capacity.

(e) Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of Required Lenders or as Agent shall believe in
good faith shall be necessary, under the circumstances or (ii) in the absence of
its own gross negligence or willful misconduct.

(f) Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or

 

41

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other document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the
occurrence of any default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to Agent.

(g) Reliance by Agent. Agent may rely, and shall be fully protected in acting,
or refraining to act, upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties. In the absence of its gross negligence or willful misconduct, Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to Agent
and conforming to the requirements of the Loan Agreement or any of the other
Loan Documents. Agent may consult with counsel, and any opinion or legal advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, not taken or suffered by Agent hereunder or under
any Loan Documents in accordance therewith. Agent shall have the right at any
time to seek instructions concerning the administration of the Collateral from
any court of competent jurisdiction. Agent shall not be under any obligation to
exercise any of the rights or powers granted to Agent by this Agreement, the
Loan Agreement and the other Loan Documents at the request or direction of
Lenders unless Agent shall have been provided by Lender with adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it in compliance with such request or direction.

11.18 Publicity. None of the parties hereto nor any of its respective member
businesses and Affiliates shall, without the other parties’ prior written
consent (which shall not be unreasonably withheld or delayed), publicize or use
(a) the other party’s name (including a brief description of the relationship
among the parties hereto), logo or hyperlink to such other parties’ web site,
separately or together, in written and oral presentations, advertising,
promotional and marketing materials, client lists, public relations materials or
on its web site (together, the “ Publicity Materials”); (b) the names of
officers of such other parties in the Publicity Materials; and (c) such other
parties’ name, trademarks, servicemarks in any news or press release concerning
such party; provided however, notwithstanding anything to the contrary herein,
no such consent shall be required (i) to the extent necessary to comply with the
requests of any regulators, legal requirements or laws applicable to such party,
including pursuant to any listing agreement with any national securities
exchange (so long as such party provides prior notice to the other party hereto
to the extent reasonably practicable) and (ii) to comply with Section 11.12.

(SIGNATURES TO FOLLOW)

 

42

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IN WITNESS WHEREOF, Borrower, Agent and Lender have duly executed and delivered
this Loan and Security Agreement as of the day and year first above written.

 

      BORROWER:       MERRIMACK PHARMACEUTICALS, INC.       Signature:   

/s/ Jean M. Franchi

      Print Name:    Jean M. Franchi       Title:    Chief Financial Officer
Accepted in Palo Alto, California:                AGENT:          HERCULES
CAPITAL, INC.       Signature:   

/s/ Zhuo Huang

      Print Name:    Zhuo Huang       Title:    Associate General Counsel      
LENDER:          HERCULES CAPITAL, INC.       By:   

/s/ Zhuo Huang

      Name:    Zhuo Huang       Its:    Associate General Counsel

 

43

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Table of Exhibits and Schedules

 

Exhibit A:   

Advance Request

Attachment to Advance Request

Exhibit B:    Term Note Exhibit C:    Name, Locations, and Other Information for
Borrower Exhibit D:    Borrower’s Deposit Accounts and Investment Accounts
Exhibit E:    Compliance Certificate Exhibit F:    Joinder Agreement Exhibit G:
   ACH Debit Authorization Agreement Schedule 1    Subsidiaries Schedule 1.1   
Commitments Schedule 1A    Existing Permitted Indebtedness Schedule 1B   
Existing Permitted Investments Schedule 1C    Existing Permitted Liens
Schedule 5.3    Consents, Etc. Schedule 5.5    Actions Before Governmental
Authorities Schedule 5.8    Tax Matters Schedule 5.9    Intellectual Property
Claims Schedule 5.10    Intellectual Property Schedule 5.11    Borrower Products
Schedule 5.14    Capitalization

 

44

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EXHIBIT A

ADVANCE REQUEST

 

To:  Agent:

      Date:                    , 2018

Hercules Capital, Inc. (“Agent”)

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

email: XXXX

Attn:

Merrimack Pharmaceuticals, Inc. (“Borrower”) hereby requests from Hercules
Capital, Inc. (“Lender”) an Advance in the amount of              Dollars
($            ) on             , 2018 (the “Advance Date”) pursuant to the Loan
and Security Agreement among Borrower, each of its Qualified Subsidiaries, Agent
and Lender (the “Agreement”). Capitalized words and other terms used but not
otherwise defined herein are used with the same meanings as defined in the
Agreement.

Please:

 

  (a) Issue a check payable to Borrower ________

or

 

  (b) Wire Funds to Borrower’s account ________

 

Bank:

 

 

 

Address:

 

 

   

 

 

ABA Number:

 

 

 

Account Number:

 

 

 

Account Name:

 

 

 

Contact Person:

 

 

 

Phone Number

   

To Verify Wire Info:

 

 

 

Email address:

 

 

 

Borrower represents that the conditions precedent to the Advance set forth in
the Agreement are satisfied and shall be satisfied upon the making of such
Advance, including but not limited to: (i) that no event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred and is
continuing; (ii) that the representations and warranties set forth in the
Agreement are and shall be true and correct in all material respects on and as
of the Advance Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date; (iii) that Borrower is in compliance in all material respects with
all the terms and provisions set forth in each Loan Document on its part to be
observed or performed; and (iv) that as of the Advance Date, no fact or
condition exists that could (or could, with the passage of time, the giving of
notice, or both)

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

constitute an Event of Default under the Loan Documents. Borrower understands
and acknowledges that Agent has the right to review the financial information
supporting this representation and, based upon such review in its sole
discretion, Lender may decline to fund the requested Advance.

Borrower hereby represents that Borrower’s corporate status and location of its
chief executive office address have not changed since the date of the Agreement
or, if the Attachment to this Advance Request is completed, are as set forth in
the Attachment to this Advance Request.

Borrower agrees to notify Agent promptly before the funding of the Loan if any
of the matters which have been represented above shall not be true and correct
on the Borrowing Date and if Agent has received no such notice before the
Advance Date then the statements set forth above shall be deemed to have been
made and shall be deemed to be true and correct as of the Advance Date.

Executed as of [            ], 2018.

 

BORROWER: MERRIMACK PHARMACEUTICALS, INC. SIGNATURE:________________________
TITLE:_____________________________ PRINT NAME:______________________

 

2

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ATTACHMENT TO ADVANCE REQUEST

Dated: _______________________

Borrower hereby represents and warrants to Agent that Borrower’s current name
and organizational status is as follows:

 

Name:

   MERRIMACK PHARMACEUTICALS, INC.

Type of organization:

   Corporation

State of organization:

   Delaware

Organization file number:

   4833458

Borrower hereby represents and warrants to Agent that the street addresses,
cities, states and postal codes of its current locations are as follows:

One Kendall Square, Suite B7201, Cambridge, MA 02139

 

3

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EXHIBIT B

SECURED TERM PROMISSORY NOTE

 

$[    ],000,000    Advance Date:             ,     20[    ]    Maturity Date:
            ,     20[    ]

FOR VALUE RECEIVED, MERRIMACK PHARMACEUTICALS, INC., a Delaware corporation, for
itself and each of its Qualified Subsidiaries (“Borrower”) hereby promises to
pay to the order of Hercules Capital, Inc., a Maryland corporation, or the
holder of this Note (“Lender”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA
94301 or such other place of payment as the holder of this Secured Term
Promissory Note (this “Promissory Note”) may specify from time to time in
writing, in lawful money of the United States of America, the principal amount
of [ ] Million Dollars ($[ ],000,000) or such other principal amount as Lender
has advanced to Borrower, together with interest at a rate as set forth in
Section 2.2(c) of the Loan Agreement based upon a year consisting of 360 days,
with interest computed daily based on the actual number of days in each month.

This Promissory Note is the Note referred to in, and is executed and delivered
in connection with, that certain Loan and Security Agreement dated [    ], 2018,
by and among Borrower, each of its Qualified Subsidiaries, Hercules Capital,
Inc., a Maryland corporation (“Agent”) and the several banks and other financial
institutions or entities from time to time party thereto as lender (as the same
may from time to time be amended, modified or supplemented in accordance with
its terms, the “Loan Agreement”), and is entitled to the benefit and security of
the Loan Agreement and the other Loan Documents (as defined in the Loan
Agreement), to which reference is made for a statement of all of the terms and
conditions thereof. All payments shall be made in accordance with the Loan
Agreement. All terms defined in the Loan Agreement shall have the same
definitions when used herein, unless otherwise defined herein. An Event of
Default under the Loan Agreement shall constitute a default under this
Promissory Note.

Borrower waives presentment and demand for payment, notice of dishonor, protest
and notice of protest under the UCC or any applicable law. Borrower agrees to
make all payments under this Promissory Note without setoff, recoupment or
deduction and regardless of any counterclaim or defense. This Promissory Note
has been negotiated and delivered to Lender and is payable in the State of
California. This Promissory Note shall be governed by and construed and enforced
in accordance with, the laws of the State of California, excluding any conflicts
of law rules or principles that would cause the application of the laws of any
other jurisdiction.

BORROWER FOR ITSELF AND

ON BEHALF OF ITS QUALIFIED SUBSIDIARIES:

 

MERRIMACK PHARMACEUTICALS, INC. By:  

 

Title:  

 

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

EXHIBIT C

NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER

1. Borrower represents and warrants to Agent that Borrower’s current name and
organizational status as of the Closing Date is as follows:

 

Name:    MERRIMACK PHARMACEUTICALS, INC. Type of organization:    Corporation
State of organization:    Delaware Organization file number:    4833458

2. Borrower represents and warrants to Agent that for five (5) years prior to
the Closing Date, Borrower did not do business under any other name or
organization or form except the following:

Name: Merrimack Pharmaceuticals, Inc.

Used during dates of: Five (5) years prior to the Closing Date

Type of Organization: Corporation

State of organization: Delaware

Organization file Number: 4833458

Borrower’s fiscal year ends on December 31

Borrower’s federal employer tax identification number is: 04-3210530

3. Borrower represents and warrants to Agent that its chief executive office is
located at One

Kendall Square, Suite B7201, Cambridge, MA 02139.

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

EXHIBIT D

BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

 

Bank Name

  

Account Number

  

Branch Address

  

Company/Subsidiary

XXXX    XXXX    XXXX    Merrimack Pharmaceuticals, Inc. XXXX    XXXX    XXXX   
Merrimack Pharmaceuticals, Inc. XXXX    XXXX    XXXX    Merrimack
Pharmaceuticals, Inc.

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

EXHIBIT E

COMPLIANCE CERTIFICATE

Hercules Capital, Inc. (as “Agent”)

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Reference is made to that certain Loan and Security Agreement dated July 2, 2018
and the Loan Documents (as defined therein) entered into in connection with such
Loan and Security Agreement all as may be amended from time to time (hereinafter
referred to collectively as the “Loan Agreement”) by and among Merrimack
Pharmaceuticals, Inc. (the “Company”) as Borrower, each of its Qualified
Subsidiaries, the several banks and other financial institutions or entities
from time to time party thereto (collectively, the “Lender”) and Hercules
Capital, Inc., as agent for the Lender (the “Agent”). All capitalized terms not
defined herein shall have the same meaning as defined in the Loan Agreement.

The undersigned is an Officer of the Company, knowledgeable of all Company
financial matters, and is authorized to provide certification of information
regarding the Company; hereby certifies, in such capacity, that in accordance
with the terms and conditions of the Loan Agreement, the Company is in
compliance for the period ending              of all covenants, conditions and
terms and hereby reaffirms that all representations and warranties contained
therein are true and correct on and as of the date of this Compliance
Certificate with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an earlier
date, after giving effect in all cases to any standard(s) of materiality
contained in the Loan Agreement as to such representations and warranties or
except as otherwise disclosed below. Attached are the required documents
supporting the above certification. The undersigned further certifies that these
are prepared in accordance with GAAP (except for (1) the absence of footnotes
with respect to unaudited financial statements, (2) subject to normal year-end
adjustments and (3) with respect to the financial statements provided pursuant
to Section 7.1(a) of the Loan Agreement) and are consistent from one period to
the next except as explained below.

 

REPORTING REQUIREMENT    REQUIRED   

CHECK IF

ATTACHED

Interim Financial Statements    Monthly within 30 days    Interim Financial
Statements    Quarterly within 45 days    Audited Financial Statements    FYE
within 90 days   

Disclosures regarding representations and warranties:

 

 

 

 

 

 

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

The undersigned hereby also confirms the below disclosed accounts represent all
depository accounts and securities accounts presently open in the name of each
Borrower or Borrower Subsidiary/Affiliate, as applicable.

 

            Depository
AC #      Financial
Institution      Account Type
(Depository /
Securities)      Last Month
Ending
Account
Balance      Purpose of
Account   BORROWER Name/Address:         1                       2              
        3                       4                       5                      
6                       7                  BORROWER SUBSIDIARY / AFFILIATE
COMPANY Name/Address         1                       2                       3  
                    4                       5                       6           
           7                 

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

Very Truly Yours,

MERRIMACK PHARMACEUTICALS, INC.

By:  

 

Name:  

 

Its:  

 

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EXHIBIT F

FORM OF JOINDER AGREEMENT

This Joinder Agreement (the “Joinder Agreement”) is made and dated as of
[                ], 20[    ], and is entered into by and between
                    ., a                     corporation (“Subsidiary”), and
HERCULES CAPITAL, INC., a Maryland corporation (as “Agent”).

RECITALS

A. Subsidiary’s Affiliate, MERRIMACK PHARMACEUTICALS, INC. (“Company”) has
entered into that certain Loan and Security Agreement dated July 2, 2018, with,
among others, the several banks and other financial institutions or entities
from time to time party thereto as lender (collectively, the “Lender”) and the
Agent, as such agreement may be amended (the “Loan Agreement”), together with
the other agreements executed and delivered in connection therewith;

B. Subsidiary acknowledges and agrees that it will benefit both directly and
indirectly from Company’s execution of the Loan Agreement and the other
agreements executed and delivered in connection therewith;

AGREEMENT

NOW THEREFORE, Subsidiary and Agent agree as follows:

 

1. The recitals set forth above are incorporated into and made part of this
Joinder Agreement. Capitalized terms not defined herein shall have the meaning
provided in the Loan Agreement.

 

2. By signing this Joinder Agreement, Subsidiary shall be bound by the terms and
conditions of the Loan Agreement the same as if it were the Borrower (as defined
in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided
however, that (a) with respect to (i) Section 5.1 of the Loan Agreement,
Subsidiary represents that it is an entity duly organized, legally existing and
in good standing under the laws of [                ], (b) neither Agent nor
Lender shall have any duties, responsibilities or obligations to Subsidiary
arising under or related to the Loan Agreement or the other Loan Documents,
(c) that if Subsidiary is covered by Company’s insurance, Subsidiary shall not
be required to maintain separate insurance or comply with the provisions of
Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Company
satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary
shall not have to provide Agent separate Financial Statements. To the extent
that Agent or Lender has any duties, responsibilities or obligations arising
under or related to the Loan Agreement or the other Loan Documents, those
duties, responsibilities or obligations shall flow only to Company and not to
Subsidiary or any other Person or entity. By way of example (and not an
exclusive list): (i) Agent’s providing notice to Company in accordance with the
Loan Agreement or as otherwise agreed among Company, Agent and Lender shall be
deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to Company
shall be deemed an Advance to Subsidiary; and (iii) Subsidiary shall have no
right to request an Advance or make any other demand on Lender.

 

3. Subsidiary agrees not to certificate its equity securities without Agent’s
prior written consent, which consent may be conditioned on the delivery of such
equity securities to Agent in order to perfect Agent’s security interest in such
equity securities.

 

4. Subsidiary acknowledges that it benefits, both directly and indirectly, from
the Loan Agreement, and hereby waives, for itself and on behalf on any and all
successors in interest (including without limitation any assignee for the
benefit of creditors, receiver, bankruptcy trustee or itself as
debtor-in-possession under any bankruptcy proceeding) to the fullest extent
provided by law, any and all claims, rights or defenses to the enforcement of
this Joinder Agreement on the basis that (a) it failed to receive adequate
consideration for the execution and delivery of this Joinder Agreement or
(b) its obligations under this Joinder Agreement are avoidable as a fraudulent
conveyance.

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

5. As security for the prompt, complete and indefeasible payment when due
(whether on the payment dates or otherwise) of all the Secured Obligations,
Subsidiary grants to Agent a security interest in all of Subsidiary’s right,
title, and interest in and to the Collateral.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

[SIGNATURE PAGE TO JOINDER AGREEMENT]

 

SUBSIDIARY:

                                                                                
                       .   By:   Name:   Title:   Address:   Telephone:
 __________   email:  _____________

AGENT:

 

HERCULES CAPITAL, INC.

  By:____________________________________  
Name: _________________________________  
Title: __________________________________   Address:   400 Hamilton Ave., Suite
310   Palo Alto, CA 94301 email: XXXX   Telephone: XXXX

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

EXHIBIT G

ACH DEBIT AUTHORIZATION AGREEMENT

Hercules Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Re: Loan and Security Agreement dated July 2, 2018 (the “Agreement”) by and
among Merrimack Pharmaceuticals, Inc. (“Borrower”), each of its Qualified
Subsidiaries, the several banks and other financial institutions or entities
from time to time party thereto (collectively, the “Lender”), and Hercules
Capital, Inc., as agent (“Company”)

In connection with the above referenced Agreement, the Borrower hereby
authorizes the Company to initiate debit entries for (i) the periodic payments
due under the Agreement and (ii) out-of-pocket legal fees and costs incurred by
Agent or Lender pursuant to Section 11.11 of the Agreement to the Borrower’s
account indicated below. The Borrower authorizes the depository institution
named below to debit to such account.

[IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES] [Borrower to
complete table below]

 

DEPOSITORY NAME    BRANCH CITY    STATE AND ZIP CODE TRANSIT/ABA NUMBER   
ACCOUNT NUMBER

This authority will remain in full force and effect so long as any amounts are
due under the Agreement.

Merrimack Pharmaceuticals, Inc.

 

 

(Borrower)(Please Print)

By: _________________________________________
Date: ________________________________________