Document:

Exhibit 4.5

 

Form of warrant to purchase shares of Common Stock issued by the Registrant

to HF Holding—ABI, MS Seed Capital Partners, LP and Wren Holdings LLC

 

	
Holder
    	
 
    	
Number of shares
    	
 
    
	
HF Holding—ABI
    	
 
    	
18,092
    	
 
    
	
MS Seed Capital Partners, LP
    	
 
    	
98,350
    	
 
    
	
Wren Holdings LLC
    	
 
    	
175,314
    	
 
    

 

 

MERRIMACK PHARMACEUTICALS, INC.

 

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

 

SECOND AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT

 

                    SHARES

 

DECEMBER 30, 2009

 

(originally issued on December 12, 2003 and

last amended and restated on December 26, 2006)

 

Merrimack Pharmaceuticals, Inc., a Massachusetts corporation (f/k/a Atlantic BioPharmaceuticals, Inc.), hereby certifies that, for value received,                 (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, up to                        shares of the Company’s Common Stock (the “Warrant Shares”), at a purchase price per share (the “Purchase Price”) of $2.47 per share.  The number and character of the Warrant Shares and the Purchase Price are subject to adjustment as provided herein.

 

This Second Amended and Restated Common Stock Purchase Warrant (the “Warrant”) amends and restates that certain Common Stock Purchase Warrant issued by the Company to the Holder on December 26, 2006 (the “First Amended and Restated Warrant”), which amended and restated that certain Common Stock Purchase Warrant issued by the Company to the Holder on December 12, 2003, as subsequently amended on March 3, 2006 (the “Original Warrant”).  The Original Warrant was issued pursuant to that certain Series C Convertible Preferred Stock Purchase Agreement dated as of December 10, 2003 (the “Stock Purchase Agreement”), a copy of which is on file at the principal office of the Company.  The Original Warrant and the First Amended and Restated Warrant, and any amendments thereto, shall have no further force or effect.  The terms of this Warrant shall be subject to all the terms and conditions set forth in the Stock Purchase Agreement to which the Original Warrant was subject.  Furthermore, the Common Stock issuable upon exercise of the Warrant Shares shall be subject to the provisions of the Restated Articles of Organization of the Company, as from time to time amended and/or restated (the “Articles of Organization”), to which Holder hereby assents.

 

 

1.                                      Definitions.

 

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

 

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

 

(b)           The term “Common Stock” shall mean the Company’s common stock, without par value.

 

(c)           The term “Market Price” shall mean, on any date specified herein, the amount per share of the Common Stock, equal to (i) the last reported sale price of such Common Stock, regular way, on such date or, in case no such sale takes place on such date, the average of the losing bid and asked prices thereof, regular way, on such date, in either case as officially reported on the principal national securities exchange on which such Common Stock is then listed or admitted for trading, or (ii) if such Common Stock is not then listed or admitted for trading on any national securities exchange but is designated as a national market system security by FINRA, the last reported trading price of the Common Stock on such date, or (iii) if there shall have been no trading on such date or if the Common Stock is not so designated, the average of the closing bid and asked prices of the Common Stock on such date as shown by the principal automated quotation system on which such Common Stock is quoted, or (iv) if such Common Stock is not then listed or admitted for trading on any national exchange or quoted in the over-the-counter market, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith by the Board of Directors of the Company.

 

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

 

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

 

2.                                      Exercise of Warrant.

 

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

 

2.2           Payment of Purchase Price.  Payment of the Purchase Price may be made as follows (or by any combination of the following):  (i) in United States currency by cash or delivery of a certified check or bank draft payable to the order of the Company or by wire

 

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transfer to the Company, (ii) by cancellation of such number of the shares of Common Stock otherwise issuable to the Holder upon such exercise as shall be specified in such Election to Purchase Shares, such that the excess of the aggregate current Market Price of such specified number of shares on the date of exercise over the portion of the Purchase Price attributable to such shares shall equal the Purchase Price attributable to the shares of Common Stock to be issued upon such exercise, in which case such amount shall be deemed to have been paid to the Company and the number of shares issuable upon such exercise shall be reduced by such specified number, or (iii) by surrender to the Company for cancellation of certificates representing shares of Common Stock of the Company owned by the Holder (properly endorsed for transfer in blank) having a current Market Price on the date of Warrant exercise equal to the Purchase Price.

 

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

 

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

 

3.                                      Delivery of Stock Certificates.

 

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

 

4.                                      Consolidation, Merger, etc.

 

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

 

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

 

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

 

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

 

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Common Stock then authorized by the Company’s Articles of Organization and available for the purpose of issue upon such exercise.

 

5.                                      Adjustments of Purchase Price and Number of Warrant Shares.

 

5.1           Adjustments For Stock Dividends and Stock Splits.  In the event that the Company shall (i) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock or (ii) subdivide or combine its outstanding shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect.

 

5.2           Adjustment of Number of Shares Issuable Pursuant to Warrant.  Upon each adjustment of the Purchase Price in accordance with the provisions of this Section 5, the number of Warrant Shares issuable upon exercise of the Warrant shall also be adjusted by multiplying the number of shares of Warrant Shares that would otherwise be issuable (but for the provisions of this Section 5) by a fraction of which (x) the numerator is the Purchase Price in effect immediately prior to the relevant adjustment and (y) the denominator is the Purchase Price as adjusted hereby.

 

5.3           Notice of Adjustment.  Upon any adjustment of the number of Warrant Shares issuable upon exercise of this Warrant or any adjustment of the Purchase Price, then and in such case the Company shall give notice thereof to the Holder, in accordance with Section 10.4 hereof, which notice shall state the number of Warrant Shares issuable upon exercise of this Warrant and the Purchase Price of such Warrant Shares resulting from such adjustment, setting forth in reasonable detail the method upon which such adjustment is based.

 

6.                                      Investment Representations.

 

6.1           Accredited Investor.  Holder is an “accredited investor” as such term is defined under Regulation D of the Securities Act of 1933, as amended (the “Act”).

 

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

 

7.                                      No Voting Rights.

 

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

 

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8.                                      Registration Rights.

 

Pursuant to that certain Third Amended and Restated Investor Rights Agreement, dated as of November 5, 2007, between Holder, the Company and the Investors listed therein, as from time to time amended and/or restated, Holder is entitled to certain registration rights with respect to the Warrant Shares.

 

9.                                      Termination of Warrant.

 

Holder’s right to exercise this Warrant shall expire as of 5:00 p.m., Eastern Time, on December 17, 2011 (the “Expiration Date”).

 

10.                               Miscellaneous.

 

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

 

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

 

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

 

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

 

	
to the Company:
    	
Merrimack   Pharmaceuticals, Inc.
    
	
 
    	
One Kendall   Square, Suite B7201
    
	
 
    	
Cambridge,   MA 02139
    
	
 
    	
Attention:   Robert J. Mulroy, President
    
	
 
    	
Fax:   (617) 441-1000
    

 

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with a copy to:
    	
Wilmer   Cutler Pickering Hale and Dorr LLP
    
	
 
    	
60 State Street
    
	
 
    	
Boston, MA 02109
    
	
 
    	
Attention: David E.   Redlick, Esq.
    
	
 
    	
Fax: (617) 526-5000
    
	
 
    	
 
    
	
to Holder:
    	
 
    
	
 
    	
 
    
	
 
    	
Attention:
    
	
 
    	
Fax:
    
	
 
    	
 
    
	
with a copy to:
    	
 
    
	
 
    	
 
    
	
 
    	
Attention:
    
	
 
    	
Fax:
    

 

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

 

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

 

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

 

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

 

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

 

10.9         Certain Tax Matters.  Each of the Company and the Holder reserve its rights to assert, at the time of the exercise of this Warrant or at other times, its position in its respective income tax filings and reporting as to the appropriate characterization of this Warrant for tax purposes, and the execution and delivery of this Warrant shall not be interpreted or construed as support for or against either party’s characterization of this Warrant.

 

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10.10       Entire Agreement.  This Warrant, together with the Stock Purchase Agreement, represents the entire agreement of the parties hereto with respect to the transactions contemplated hereby and supersedes all prior agreements and understandings.

 

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

 

	
 
    	
MERRIMACK PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
[HOLDER]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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EXHIBIT A

 

Election to Purchase Shares

 

To:  Merrimack Pharmaceuticals, Inc.

 

Date:

 

The undersigned hereby subscribes for                          shares of Common Stock of Merrimack Pharmaceuticals, Inc. (the “Company”), as such term is defined in the attached Warrant, evidenced by the attached Warrant and herewith:

 

(i)                                   makes payment of the Purchase Price, as defined in the attached Warrant, in the amount of $                                 by means of:

 

(a)           cash or delivery of a certified bank check or bank draft payable to the Company in the amount of $                         ; and/or

 

(b)           wire transfer of funds to the Company in the amount of $                           .

 

or

 

(ii)                                elects to make a cashless exercise pursuant to Section 2.2(ii) and/or 2.2(iii) of the attached Warrant, in which case                      shares of Common Stock shall be deemed payment of the Purchase Price, and/or to the extent a cashless exercise is pursuant to Section 2.2(iii), certificates representing                          shares of Common Stock have been surrendered herewith.

 

The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

 

	
 
    	
 
    
	
Signature
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Name   for Registration
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Mailing   AddressExhibit 4.6

 

Form of warrant to purchase shares of Common Stock issued by the Registrant

to General Electric Capital Corporation

 

	
Issue date
    	
 
    	
Number of shares
    	
 
    
	
11/22/2006
    	
 
    	
797
    	
 
    
	
11/22/2006
    	
 
    	
761
    	
 
    
	
11/22/2006
    	
 
    	
981
    	
 
    
	
11/22/2006
    	
 
    	
1,136
    	
 
    
	
11/22/2006
    	
 
    	
1,005
    	
 
    
	
  12/7/2006
    	
 
    	
859
    	
 
    
	
    2/7/2007
    	
 
    	
1,316
    	
 
    
	
    2/7/2007
    	
 
    	
1,167
    	
 
    
	
    2/7/2007
    	
 
    	
978
    	
 
    
	
    2/7/2007
    	
 
    	
795
    	
 
    
	
    2/7/2007
    	
 
    	
1,149
    	
 
    
	
    2/7/2007
    	
 
    	
907
    	
 
    
	
    2/7/2007
    	
 
    	
2,346
    	
 
    
	
    5/2/2007
    	
 
    	
691
    	
 
    
	
    5/2/2007
    	
 
    	
2,462
    	
 
    
	
    5/2/2007
    	
 
    	
1,405
    	
 
    
	
  6/29/2007
    	
 
    	
5,681
    	
 
    
	
  6/29/2007
    	
 
    	
831
    	
 
    
	
  6/29/2007
    	
 
    	
832
    	
 
    
	
  6/29/2007
    	
 
    	
846
    	
 
    
	
  6/29/2007
    	
 
    	
1,149
    	
 
    
	
  6/29/2007
    	
 
    	
843
    	
 
    
	
  6/29/2007
    	
 
    	
852
    	
 
    
	
  6/29/2007
    	
 
    	
1,048
    	
 
    
	
  6/29/2007
    	
 
    	
1,424
    	
 
    
	
  6/29/2007
    	
 
    	
1,686
    	
 
    

 

 

	
Issue date
    	
 
    	
Number of shares
    	
 
    
	
  9/21/2007
    	
 
    	
2,120
    	
 
    
	
  9/21/2007
    	
 
    	
984
    	
 
    
	
10/29/2007
    	
 
    	
1,973
    	
 
    
	
    2/8/2008
    	
 
    	
931
    	
 
    
	
    2/8/2008
    	
 
    	
2,322
    	
 
    
	
    2/8/2008
    	
 
    	
1,767
    	
 
    
	
    2/8/2008
    	
 
    	
1,155
    	
 
    
	
  3/24/2008
    	
 
    	
947
    	
 
    
	
  3/24/2008
    	
 
    	
1,226
    	
 
    
	
  6/30/2008
    	
 
    	
1,150
    	
 
    
	
  6/30/2008
    	
 
    	
1,228
    	
 
    

 

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NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

WARRANT TO PURCHASE            SHARES OF COMMON STOCK

 

[Issue Date]

 

THIS CERTIFIES THAT, for value received, General Electric Capital Corporation (“Holder”) is entitled to subscribe for and purchase                shares of the fully paid and nonassessable Common Stock (the “Shares” or the “Stock”) of Merrimack Pharmaceuticals, Inc., a Massachusetts corporation (the “Company”), at the Warrant Price (as hereinafter deemed), subject to the provisions and upon the terms and conditions hereinafter set forth.

 

1.  Warrant Price. The Warrant Price shall initially be One and 889/1000 dollars ($1.889) per share, subject to adjustment as provided in Section 7 below.

 

2.  Conditions to Exercise. The purchase right represented by this Warrant may be exercised at any time, or from time to time, in whole or in part during the term commencing on the date hereof and ending at 5:00 P.M. Pacific time on the fifth anniversary of the date of this Warrant.

 

3.  Method of Exercise; Payment; Issuance of Shares; Issuance of New Warrant.

 

(a)  Cash Exercise. Subject to Section 2 hereof, the purchase right represented by this Warrant may be exercised by the Holder hereof, in whole or in part, by the surrender of this Warrant (with a duly executed Notice of Exercise in the form attached hereto) at the principal office of the Company (as set forth in Section 18 below) and by payment to the Company, by check, of an amount equal to the then applicable Warrant Price per share multiplied by the number of shares then being purchased.  In the event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be in the name of, and delivered to, the Holder hereof, or as such Holder may direct (subject to the terms of transfer contained herein and upon payment by such Holder hereof of any applicable transfer taxes).  Such delivery shall be made within 30 days after exercise of the Warrant and at the Company’s expense and, unless this Warrant has been fully exercised or expired, a new Warrant having terms and conditions substantially identical to this Warrant and representing the portion of the Shares, if any, with respect to which this Warrant shall not have been exercised, shall also be issued to the Holder hereof within 30 days after exercise of the Warrant.

 

(b)  Net Issue Exercise.  Holder may also elect to receive shares equal to the value of this Warrant (or of any portion thereof remaining unexercised) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the

 

 

Company shall issue to Holder the number of shares of the Company’s Common Stock computed using the following formula:

 

X = Y(A-B)

           A

 

Where X = the number of shares of Stock to be issued to Holder.

Y = the number of shares of Stock purchasable under this Warrant (at the date of such calculation).

A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation).

B = Warrant Price (as adjusted to the date of such calculation).

 

(c) Fair Market Value. For purposes of this Section 3, Fair Market Value of one share of the Company’s Stock shall mean:

 

(i)                                     In the event of an exercise in connection with an Initial Public Offering, the per share Fair Market Value for the Stock shall be the Offering Price at which the underwriters initially sell Common Stock to the public multiplied by the number of shares of Stock; or

(ii)    The average of the closing bid and asked prices of Common Stock quoted in the Over-The-Counter Market Summary, the last reported sale price quoted on the Nasdaq National Market (“NNM”) or on any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of the Wall Street Journal for the ten (10) trading days prior to the date of determination of Fair Market Value, multiplied by the number of shares of; or

(iii)    In the event of an exercise in connection with a merger, acquisition or other consolidation in which the Company is not the surviving entity, the per share Fair Market Value for the Stock shall be the value to be received per share of Common Stock by all holders of the Common Stock in such transaction as determined by the Board of Directors; or

(iv)    In any other instance, the per share Fair Market Value for the Stock shall be as determined in good faith by the Company’s Board of Directors.

In the event of 3(c)(iii) or 3(c)(iv), above, the Company’s Board of Directors shall prepare a certificate, to be signed by an authorized officer of the Company, setting forth in reasonable detail the basis for and method of determination of the per share Fair Market Value of the Stock. The Board will also certify to the Holder that this per share Fair Market Value will be applicable to all holders of the Company’s Common Stock. Such certification must be made to Holder at least thirty (30) business days prior to the proposed effective date of the merger, consolidation, sale, or other triggering event as defined in 3(c)(iii) or 3(c)(iv).

 

(d) Automatic Exercise. To the extent this Warrant is not previously exercised, it shall be automatically exercised in accordance with Sections 3(b) and 3(c) hereof (even if not surrendered) immediately before its expiration, involuntary termination or cancellation.

 

4. Representations and Warranties of Holder and the Company

 

(a) Representations and Warranties by Holder. The Holder represents and warrants to the Company with respect to this purchase as follows:

 

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(i)  The Holder has substantial experience in evaluating and investing in private placement transactions of securities of companies similar to the Company so that the Holder is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its interests.

 

(ii)    Except for transfers to a Holder’s affiliates, the Holder is acquiring the Warrant   and the Shares of Stock issuable upon exercise of the Warrant (collectively the “Securities”) for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  The Holder understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Act”) by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

 

(iii)  The Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. The Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

(iv) The Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

(v)    The Holder has had an opportunity to discuss the Company’s business,  management and financial affairs with its management and an opportunity to review the Company’s facilities. The Holder understands that such discussions, as well as the written information issued by the Company, were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material but were not necessarily a thorough or exhaustive description.

 

(b)   Company hereby represents and warrants to Holder that, [except as set forth in the schedule attached to this Warrant as Exhibit A (the “Disclosure Schedule”)], the statements in the following paragraphs of this Section 4(b) are true and correct (a) as of the date hereof and (b) except where any such representation and warranty relates specifically to an earlier date, as of the date of any exercise of this Warrant.

 

(i)                                     Corporate Organization and Authority.  Company (a) is a corporation   duly organized, validly existing, and in good standing in its jurisdiction of incorporation, (b) has the corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted; and (c) is qualified as a foreign corporation in all jurisdictions where such qualification is required.

 

(ii)                                  Corporate Power.  Company has all requisite legal and corporate power and authority to execute, issue and deliver the Warrant, to issue the Common Stock issuable upon exercise or conversion of the Warrant, and to carry out and perform its obligations under the Warrant and any related agreements.

 

(iii)                               Authorization; Enforceability.  All corporate action on the part of Company, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of its obligations under this Warrant and for the authorization, issuance and delivery of the Warrant and Stock issuable upon exercise of the Warrant has been taken and

 

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this Warrant constitutes the legally binding and valid obligation of Company enforceable in accordance with its terms.

 

(iv)                              Valid Issuance of Warrant and Common Stock.  The Warrant has been validly issued and is free of restrictions on transfer other than restrictions on transfer set forth herein and under applicable state and federal securities laws. The Common Stock issuable upon conversion of this Warrant, when issued, sold and delivered in accordance with the terms of this Warrant for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Warrant and under applicable state and federal securities laws. Subject to applicable restrictions on transfer, the issuance and delivery of the Warrant and the Common Stock issuable upon conversion of the Warrant are not subject to any preemptive or other similar rights or any liens or encumbrances except as specifically set forth in Company’s Certificate of Incorporation or this Warrant.  The offer, sale and issuance of the Warrant and Common Stock, as  contemplated by this Warrant, are exempt from the prospectus and registration requirements of applicable United States federal and state security laws, and neither Company nor any authorized agent acting on its behalf has or will take any action hereafter that would cause the loss of such exemption.

 

(v)                                 No Conflict with Other Instruments.  The execution, delivery, and performance of this Warrant will not result in any violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice (a) any provision of Company’s Certificate of Incorporation or by-laws; (b) any provision of any judgment, decree, or order to which Company is a party or by which it is bound or an event which results in the creation of any material lien, charge or encumbrance upon any material assets of Company; (c) any contract, obligation, or commitment to which Company is a party or by which it is bound; or (d) any statute, rule, or governmental regulation applicable to Company.

 

(vi)                              Capitalization.  As of recent date, the authorized capital stock of  Company consists of                shares of Common Stock,             par value, of which             were issued and outstanding, [and                shares of Preferred Stock,               par value, of which                were issued and outstanding].  The outstanding shares have been duly authorized and validly issued (including, without limitation, issued in compliance with applicable federal and state securities laws), are fully paid and nonassessable [and have been issued in compliance with the registration and prospectus delivery requirements of the Securities Act and the registration and qualification requirements of all applicable state securities laws, or in compliance with applicable exemptions therefrom].  Company has reserved                 shares of Common Stock for issuance upon exercise of this Warrant. Except as set forth in Section 4(b) of the Disclosure Schedule, there are no outstanding warrants, options, conversion privileges, preemptive rights or other rights or agreements to purchase or otherwise acquire or issue any equity securities or convertible Securities of Company, nor has the issuance of any of the aforesaid rights to acquire securities of Company been authorized.

 

(vii)                           Governmental Consents.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of Company is required in connection with the offer, sale or issuance of the Warrant (and the Stock issuable upon the exercise of this Warrant), or the consummation of any other transaction contemplated hereby, except for the following: (a) the filing of a notice on Form D under the Act and b) the compliance with other applicable state

 

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securities laws, which compliance will have occurred within the appropriate time periods therefore.  The offer, sale and issuance of the Warrant and the shares of Stock in conformity with the terms of this Warrant are exempt from the registration requirements of the Act and any applicable state laws.

 

5  Legends.

 

(a)                                  Each certificate representing the Securities shall be endorsed with the following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER    SAID ACT, A “NO ACTION” LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR (IF REASONABLY REQUIRED BY THE COMPANY) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

The Company need not enter into its stock records a transfer of Securities unless the conditions specified in the foregoing legend are satisfied. The Company may also instruct its transfer agent not to allow the transfer of any of the Shares unless the conditions specified in the foregoing legend are satisfied.

 

(b)  Removal of Legend and Transfer Restrictions.  The legend relating to the Act endorsed on a certificate pursuant to paragraph 5(a) of this Warrant shall be removed and the Company shall issue a certificate without such legend to the Holder of the Securities if (i) the Securities are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available or (ii) the Holder provides to the Company an opinion of counsel for the Holder reasonably satisfactory to the Company, a no-action letter or interpretive opinion of the staff of the SEC reasonably satisfactory to the Company, or other evidence reasonably satisfactory to the Company, to the effect that public sale, transfer or assignment of the Securities may be made without registration and without compliance with any restriction such as Rule 144.

 

6.  Condition of Transfer or Exercise of Warrant.  It shall be a condition to any transfer or exercise of this Warrant that at the time of such transfer or exercise, the Holder shall provide the Company with a representation in writing that the Holder or transferee is acquiring this Warrant and the shares of Stock to be issued upon exercise for investment purposes only and not with a view to any sale or distribution, or will provide the Company with a statement of pertinent facts covering any proposed distribution.  As a further condition to any transfer of this Warrant or any or all of the shares of Stock issuable upon exercise of this Warrant, other than a transfer registered under the Act, the Company may request a legal opinion, in form and substance satisfactory to the Company and its counsel, reciting the pertinent circumstances surrounding the proposed transfer and stating that such transfer is exempt from the registration and prospectus delivery requirements of the Act.  The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder. Each certificate evidencing the shares issued upon exercise of the Warrant or upon any transfer of the shares (other than a transfer registered under the Act or any subsequent transfer of shares so registered) shall, at the Company’s option,

 

5

 

if the Shares are not freely saleable under Rule 144(k) under the Act, contain a legend in form and substance satisfactory to the Company and its counsel, restricting the transfer of the shares to sales or other dispositions exempt from the requirements of the Act.  As further condition to each transfer, at the request of the Company, the Holder shall surrender this Warrant to the Company and the transferee shall receive and accept a Warrant, of like tenor and date, executed by the Company.

 

7.   Adjustment for Certain Events. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows:

 

(a)  Reclassification or Merger.  In case of any reclassification or change of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the acquiring and the surviving corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the Holder a new Warrant (in form and substance satisfactory to the Holder of this Warrant), or the Company shall make appropriate provision without the issuance of a new Warrant, so that the Holder shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, merger or sale by a Holder of the number of shares of Stock then purchasable under this Warrant, or in the case of such a merger or sale in which the consideration paid consists all or in part of assets other than securities of the successor or purchasing corporation, at the option of the Holder, the securities of the successor or purchasing corporation having a value at the time of the transaction equivalent to the value of the Stock purchasable upon exercise of this Warrant at the time of the transaction.  Any new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 7.  The provisions of this subparagraph (a) shall similarly apply to successive reclassifications, changes, mergers and transfers.

 

(b)  Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of Common Stock, the Warrant Price shall be proportionately decreased and the number of Shares issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant Price shall be proportionately increased and the number of Shares issuable hereunder shall be proportionately decreased in the case of a combination.

 

(c)  Stock Dividends and Other Distributions. If the Company at any time while this Warrant is outstanding and unexpired shall (i) pay a dividend with respect to Common Stock payable in Common Stock, then the Warrant Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the

 

6

 

denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Common Stock (except any distribution specifically provided for in Sections 7(a) and 7(b)), then, in each such case, provision shall be made by the Company such that the Holder of this Warrant shall receive upon exercise of this Warrant a proportionate share of any such dividend or distribution as though it were the Holder of the Common Stock as of the record date fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution.

 

(d)  Adjustment of Number of Shares.  Upon each adjustment in the Warrant Price, the number of Shares purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the Warrant Price immediately thereafter.

 

8.  Notice of Adjustments. Whenever any Warrant Price or the kind or number of securities issuable under this Warrant shall be adjusted pursuant to Section 7 hereof, the Company shall prepare a certificate signed by an officer of the Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and number or kind of shares issuable upon exercise of the Warrant after giving effect to such adjustment, and shall cause copies of such certificate to be mailed (by certified or registered mail, return receipt required, postage prepaid) within thirty (30) days of such adjustment to the Holder of this Warrant as set forth in Section 17 hereof.

 

9.  Transferability of Warrant. This Warrant is transferable on the books of the Company at its principal office by the registered Holder hereof upon surrender of this Warrant properly endorsed, subject to compliance with Section 6 and applicable federal and state securities laws. The Company shall issue and deliver to the transferee a new Warrant representing the Warrant so transferred. Upon any partial transfer, the Company will issue and deliver to Holder a new Warrant with respect to the Warrant not so transferred.  Holder shall not have any right to transfer any portion of this Warrant to any direct competitor of the Company.

 

10.  Registration Rights.  The Company grants registration rights to the Holder of this Warrant for any Common Stock of the Company obtained upon exercise of this Warrant in parity to the registration rights granted to other holders of the Common Stock and agrees that the Holder of this Warrant shall be added as a party to that certain                         dated as of                     of the Company (the “Registration Rights Agreement”), and that the Shares shall be made “Registrable Securities” under the Registration Rights Agreement.

 

[Company agrees to provide the registration rights to Holder as stated in the Annex A]

 

11.  No Fractional Shares.  No fractional share of Common Stock will be issued in connection with any exercise hereunder, but in lieu of such fractional share the Company shall make a cash payment therefore upon the basis of the Warrant Price then in effect.

 

12. Charges, Taxes and Expenses.  Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder for any United States or state

 

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of the United States documentary stamp tax or other incidental expense with respect to the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder.

 

13.  No Shareholder Rights Until Exercise. This Warrant does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.

 

14.  Registry of Warrant. The Company shall maintain a registry showing the name and address of the registered Holder of this Warrant. This Warrant may be surrendered for exchange or exercise, in accordance with its terms, at such office or agency of the Company, and the Company and Holder shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

 

15.  Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft, or destruction, of indemnity reasonably satisfactory to it, and, if mutilated, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant, having terms and conditions substantially identical to this Warrant, in lieu hereof.

 

16.  Miscellaneous.

 

(a) Issue Date. The provisions of this Warrant shall be construed and shall be given effect in all respect as if it had been issued and delivered by the Company on the date hereof.

 

(b) Successors. This Warrant shall be binding upon any successors or assigns of the Company.

 

(c) Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Connecticut.

 

(d) Headings. The headings used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.

 

(e) Saturdays, Sundays. Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday in the State of Connecticut, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

 

(f) Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Warrant or the Shares.

 

(g) Attorney’s Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorney’s fees.

 

17.  No Impairment.  The Company will not, by amendment of its Certificate of Incorporation or

 

8

 

any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder hereof against impairment.

 

18.  Addresses. Any notice required or permitted hereunder shall be in writing and shall be mailed by overnight courier, registered or certified mail, return receipt required, and postage prepaid, or otherwise delivered by hand or by messenger, addressed as set forth below, or at such other address as the Company or the Holder hereof shall have furnished to the other party.

 

	
If to the Company:
    	
Merrimack   Pharmaceuticals, Inc.
    
	
 
    	
One   Kendall Square, bldg 700, 2nd Floor
    
	
 
    	
Cambridge,   MA 02139
    
	
 
    	
Attn:
    
	
 
    	
 
    
	
If to the Holder:
    	
General   Electric Capital Corporation
    
	
 
    	
83   Wooster Heights Road
    
	
 
    	
Danbury,   CT 06810
    
	
 
    	
Attn:   Credit Manager
    

 

IN WITNESS WHEREOF, Merrimack Pharmaceuticals, Inc. has caused this Warrant to be executed by its officers thereunto duly authorized.

 

Dated as of                          .

 

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

9

 

NOTICE OF EXERCISE

TO:

 

The undersigned Warrantholder (“Holder”) elects to acquire shares of Stock (the “Common Stock”) of Merrimack Pharmaceuticals, Inc., (the “Company”), pursuant to the terms of the Stock Purchase Warrant dated                                    (the “Warrant”).

 

1.                                       The Holder exercises its rights under the Warrant as set forth below:

 

o                                    The Holder elects to purchase                    shares of Common Stock as provided in Section 3(a) and tenders herewith a check in the amount of $                       as payment of the purchase price.

 

o                                    The Holder elects to convert the purchase rights into shares of Common Stock as provided in Section 3(b) of the Warrant.

 

2.                                       The Holder surrenders the Warrant with this Notice of Exercise.

 

The Holder represents that it is acquiring the aforesaid shares of Common Stock for investment and not with a view to or for resale in connection with distribution and that the Holder has no present intention of distributing or reselling the shares.

 

Please issue a certificate representing the shares of the Common Stock in the name of the Holder or in such other name as is specified below:

 

	
Name:
    	
 
    
	
Address:
    	
 
    
	
 
    	
 
    
	
Taxpayer   I.D.:
    	
 
    

 

	
 
    	
 
    
	
 
    	
(Holder)
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:

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