EXHIBIT 10.1

SENIOR SECURED PROMISSORY NOTE

 

$1,400,000   October 17, 2012

1. FOR VALUE RECEIVED, the undersigned, Emisphere Technologies, Inc., a Delaware
corporation (“Maker”), unconditionally promises to pay to the order of MHR
Institutional Partners IIA LP, MHR Institutional Partners II LP, MHR Capital
Partners Master Account LP and MHR Capital Partners (100) LP (together, the
“Creditor”), an amount equal to the unpaid principal amount of all Advances (as
hereinafter defined) made by Creditor to Maker hereunder plus any interest
accrued on the unpaid principal amount of all Advances in accordance with
Section 3 hereof on demand or, if earlier, upon acceleration in accordance with
Section 4 or Section 7 hereof; provided that no demand shall be made prior to
January 17, 2013, provided further that if Creditor in its reasonable discretion
determines that Maker has made sufficient progress toward the consummation of an
equity financing transaction with anticipated gross proceeds in excess of
$5,000,000 in the aggregate (the “Equity Financing”) by January 17, 2013 then no
demand may be made prior to February 17, 2013 (the date of such demand or
earlier acceleration in accordance with Section 4 or Section 7 hereof, is
referred to herein as the “Maturity Date”). The Maturity Date is subject to
adjustment as set forth below. The obligations under this Note are secured by a
security interest in substantially all the assets of the Maker pursuant to a
Pledge and Security Agreement, dated as of September 26, 2005, as amended
through the date hereof (the “Security Agreement”) by and between Maker and MHR
Institutional Partners IIA LP, as secured party, other than, to the extent
provided in the Security Agreement, the Excluded Collateral and the 2012 Bridge
Loan Excluded Collateral, as such terms are defined in the Security Agreement.

2. So long as no Event of Default has occurred and is continuing (or would
result from the making of an advance hereunder), Creditor shall make advances
(“Advances”) to the Maker as follows: (i) in the aggregate principal amount of
$700,000 on the date hereof and (ii) in the aggregate principal amount of
$700,000 on November 17, 2012.

3. Except as otherwise provided herein, the unpaid principal balance (including
the principal amount of all Advances) of this promissory note (the “Note”)
outstanding from time to time shall bear interest at a rate of thirteen percent
(13%) per annum. Interest and fees shall be calculated on the basis of a 360-day
year times the actual number of days elapsed.

4. The unpaid principal amount of this Note and any interest thereon may be
prepaid by Maker at any time in whole or from time to time in part. The unpaid
principal amount of this Note and interest accrued thereon shall be paid in its
entirety and the Maturity Date correspondingly accelerated to the closing date
of the Equity Financing. As used herein, “Business Day” means any day that is
not a Saturday, a Sunday or a day on which banks are required or permitted to be
closed in the State of New York. After the Maturity Date (whether by
acceleration after an Event of Default or otherwise), interest shall be payable
on the unpaid principal balance from time to time outstanding at a rate equal to
sixteen percent (16%) per annum, calculated on the basis of a 360-day year times
the actual number of days elapsed, until paid in full. Creditor may, at its
option, apply the amount of any payment of principal or interest on account of
this Note as consideration for the purchase of any securities that may, from
time to time, be issued by the Maker to the Creditor for value.

 

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5. All payments shall first be applied to any interest then due, with the
balance remaining applied to principal. Notwithstanding any provision contained
herein or contained in any other instrument or agreement now or hereafter
executed in connection with this Note, the maximum amount of interest and other
charges in the nature thereof contracted for, or payable hereunder or
thereunder, shall not exceed the maximum amount which may be lawfully contracted
for, charged and received in this transaction, all as determined by the final
judgment of a court of competent jurisdiction, including all appeals therefrom,
and in the event the interest rate is determined to be unlawful, such interest
rate shall be computed at the highest rate permitted by applicable law. To the
extent any interest received by Creditor exceeds the maximum amount permitted,
such payment shall be credited to principal, and any excess remaining after full
payment of principal shall be refunded to Maker. The Maker agrees to pay on
demand all costs and expenses incurred by the holder hereof, including, without
limitation, all reasonable attorneys’ fees and all court costs, for the
collection and enforcement of this Note and the indebtedness evidenced hereby.
If the Maturity Date is a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day.

6. All payments of principal, interest, fees and other amounts due hereunder
shall be made by the Maker in U.S. Dollars by wire transfer to the account
designated by the Creditor or by any other method approved in advance in writing
by the Creditor.

7. Notwithstanding anything to the contrary contained herein, (a) this Note
shall become immediately due and payable upon the occurrence of (and the
Maturity Date shall be correspondingly accelerated to the date of such
occurrence) any of the events described in paragraphs (i) and (ii) below and
(b) any Creditor may declare this Note to be immediately due and payable upon
the occurrence of (and the Maturity Date shall be correspondingly accelerated to
the date of such occurrence) any of the events described in paragraph
(iii) below (each of the following events described in clauses (i), (ii) and
(iii) below, an “Event of Default”):

(i) (A) A court enters a decree or order for relief with respect to the Maker in
an involuntary case under the U.S. Bankruptcy Code, which decree or order is not
stayed or other similar relief is not granted under any applicable federal or
state law; or (B) the continuance of any of the following events for 45 days
unless dismissed, bonded or discharged: (x) an involuntary case is commenced
against the Maker, under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect; or (y) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Maker, or over all or a substantial part
of its property, is entered; or (z) a receiver, trustee or other custodian is
appointed without the consent of the Maker, for all or a substantial part of the
property of the Maker;

(ii) (A) The Maker commences a voluntary case under the U.S. Bankruptcy Code, or
consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or (B) the Maker
makes any assignment for the benefit of creditors; or (C) the Board of Directors
of the Maker adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this paragraph; or

 

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(iii) (A) During any 12 month-period following the date hereof, individuals who
at the beginning of such period constituted the Board of Directors (and any new
members of the Board of Directors whose election by the Board of Directors or
whose nomination for election by the Maker’s shareholders was approved by (x) a
vote of a majority of the members of the Board of Directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved or (y) the Permitted
Holders), cease for any reason to constitute a majority of the Board of
Directors; (B) any person (as defined in Section 13(d)(3) or Section 14(d)(2) of
the Securities Exchange Act of 1934 (the “Exchange Act”), other than one or more
Permitted Holders, becomes the beneficial owner (as the term “beneficial owner”
is defined under Rule 13d-3 under the Exchange Act) of a majority of the
combined voting power of the Maker’s common stock; or (C) the Maker sells or
otherwise disposes of all or a substantial part of its assets or ceases to
conduct all or a substantial part of its business as now conducted, or merges or
consolidates with any other person or entity without the prior written consent
of the Creditor. For purposes of this paragraph (iii): “Permitted Holders” means
MHR Fund Management LLC (and any successor thereto) and any Related Party or
affiliate of MHR Fund Management LLC (and any successor thereto); and “Related
Party” means (1) any controlling stockholder, controlling member, general
partner, majority owned subsidiary, or spouse or immediate family member (in the
case of an individual) of any Permitted Holder, (2) any estate, trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or persons holding a controlling interest of which consist
solely of one or more Permitted Holders and/or such other persons referred to in
the immediately preceding clause (1), (3) any executor, administrator, trustee,
manager, director or other similar fiduciary of any person referred to in the
immediately preceding clause (2) acting solely in such capacity, (4) any
investment fund or other entity controlled by, or under common control with, MHR
Fund Management LLC or the principals that control MHR Fund Management LLC, or
(5) upon the liquidation of any entity of the type described in the immediately
preceding clause (4), the former partners or beneficial owners thereof to the
extent any voting stock may still be held by such entity.

8. The obligations of the Maker to make the payments provided for in this Note
are absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment or adjustment whatsoever. The Maker hereby:
(a) waives presentment, demand, protest, suretyship defenses and defenses in the
nature thereof; (b) waives any defenses based upon and specifically assents to
any and all extensions and postponements of the time for payment, changes in
terms and conditions and all other indulgences and forbearances which may be
granted by the holder to any party now or hereafter liable hereunder; and
(c) agrees to be bound by all of the terms contained in this Note.

9. ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, U.S.A. This Note is executed as, and shall have the effect
of, a sealed instrument.

10. In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part or
in any respect, or in the event

 

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that any one or more of the provisions of this Note operates to invalidate this
Note, then and in either of those events, such provision or provisions only
shall be deemed null and void and shall not affect any other provision of this
Note, and the remaining provisions of this Note shall remain operative and in
full force and effect and shall in no way be affected, prejudiced or disturbed
thereby.

11. This Note may not be amended, supplemented, modified or terminated orally,
but only by an agreement in writing signed by the Maker and the Creditor. This
Note shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. The Maker may not assign any of its
rights or obligations under this Note without the prior written consent of the
Creditor. The Creditor may assign all or a portion of its rights or obligations
under this Note without the prior written consent of the Maker.

12. For purposes of any action or proceeding involving this Note, Maker hereby
expressly consents to the exclusive jurisdiction of all federal and state courts
located in the State of New York and consents that any order, process, notice of
motion or other application to or by any of said courts or a judge thereof may
be served within or without such court’s jurisdiction by registered mail or by
personal service, provided a reasonable time for appearance is allowed (but not
less than the time otherwise afforded by any law or rule), and waives any right
to contest the appropriateness of any action brought in any such court based
upon lack of personal jurisdiction, improper venue or forum non conveniens. THE
MAKER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF THIS NOTE OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT TO THIS NOTE, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE MAKER AND THE CREDITOR.

13. No delay or omission on the part of the holder in exercising any right
hereunder (or any right under any instrument or agreement executed in connection
herewith or which is given or may be given to secure the indebtedness evidenced
hereby) shall operate as a waiver of such right, or of any other right, of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed to
be a bar to, or waiver of, the same or of any other right on any future
occasion.

 

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14. All notices and other communications given to any party hereto pursuant to
this Note shall be in writing and shall be delivered by hand, fax or email (and
in the case of fax or email, receipt confirmed immediately via telephone), or
mailed first class postage prepaid, registered or certified mail, addressed as
follows:

(a) If to the Maker, to:

Emisphere Technologies, Inc.

240 Cedar Knolls Road Suite 200

Cedar Knolls, NJ 07927

Attention: Chief Executive Officer

Phone: (973) 532-8000

Fax: (973) 532-8115

Email: arubino@emisphere.com

with a copy to:

Pierce Atwood LLP

100 Summer Street #2250

Boston, MA 02110

Attn: Timothy C. Maguire, Esq.

Phone: (617) 488-8140

Fax: (617) 824-2020

Email: tmaguire@pierceatwood.com

(b) If to the Creditor, to:

MHR Institutional Partners IIA LP

40 West 57th Street, 24th Floor

New York, NY 10019

Fax number: (212) 262-9356

Attention: Janet Yeung

Phone: (212) 262-0005

Fax: (212) 262-9356

Email: jyeung@mhrfund.com

with a copy to:

O’Melveny & Myers LLP

Times Square Tower

7 Times Square

New York, New York 10036

Phone: (212) 728.5977

Fax: (212) 326-2061

Email: dschultz@omm.com

Each such notice or other communication shall for all purposes be treated as
being effective or having been given when delivered, if delivered personally, by
e-mail or facsimile with confirmation of receipt or if by overnight courier or,
if sent by mail, upon actual receipt.

[Signature Page Follows]

 

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WITNESS the hand and seal of the undersigned on the day and year first above
written.

 

MAKER: EMISPHERE TECHNOLOGIES, INC. By:  

/s/ Michael R. Garone

  Name:   Michael R. Garone   Title:   Chief Financial Officer

Acknowledged and Agreed to (solely as to Section 2 of this Note):

CREDITOR:

 

MHR INSTITUTIONAL PARTNERS IIA LP By:   MHR Institutional Advisors II LLC, its
general partner By  

/s/ Janet Yeung

Name:   Janet Yeung Title:   Authorized Signatory

 

MHR INSTITUTIONAL PARTNERS II LP By:   MHR Institutional Advisors II LLC, its
general partner By  

/s/ Janet Yeung

Name:   Janet Yeung Title:   Authorized Signatory MHR CAPITAL PARTNERS MASTER
ACCOUNT LP By:   MHR Advisors LLC, its general partner By  

/s/ Janet Yeung

Name:   Janet Yeung Title:   Authorized Signatory

 

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MHR CAPITAL PARTNERS (100) LP By:   MHR Advisors LLC, its general partner By  

/s/ Janet Yeung

Name:   Janet Yeung Title:   Authorized Signatory

 

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