exv10w1






Exhibit 10.1



CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been omitted pursuant to a
request for confidential treatment and, where applicable, have been marked with an asterisk
(“[*****]”) to denote where omissions have been made. The confidential material has been filed
separately with the Securities and Exchange Commission.




June 8, 2010




MHR Fund Management, LLC

40 West 57th Street, 24th Floor

New York, NY 10019

Attn: Hal Goldstein





	 	Re:	 	Emisphere Technologies, Inc. — Letter Agreement





Dear Hal:




     Reference is hereby made to that certain Senior Secured Term Loan Agreement (as amended, the
“Loan Agreement”), by and between Emisphere Technologies, Inc. (“Emisphere”) and MHR Institutional
Partners IIA LP (together with its affiliates, “MHR”), and that certain Pledge and Security
Agreement by and between Emisphere and MHR (as amended, the “Pledge and Security Agreement”), each
dated as of September 26, 2005. Reference is also made to that certain Investment and Exchange
Agreement, dated September 26, 2005, among Emisphere, MHR and certain of MHR’s Affiliates (as
defined in the Pledge and Security Agreement) and the 11% Senior Secured Convertible Notes
(the “Notes” and together with the Investment and Exchange Agreement, the Loan Agreement and
the Pledge and Security Agreement and any related documents, the “MHR Loan Documents”).



     Reference is also made to certain agreements between Novartis Pharma AG (“Novartis”) and
Emisphere: (i) a Research Collaboration and Option Agreement, dated as of December 3, 1997, as
amended by the Amendment to Research Collaboration and Option Agreement, dated as of October 20,
2000 (the “CT Option”), and a License Agreement, dated as of March 8, 2000 (the “CT License”)
(collectively, the “CT Agreements”); (ii) a Research Collaboration License Agreement, dated as of
September 22, 2004, as extended and amended by the Letter Agreement, dated as of November 2, 2005
(the “hGH Agreement”); and (iii) a Research Collaboration Option and License Agreement, dated as of
December 1, 2004, which came into effect by Novartis’ exercise of its option on March 7, 2006 (the
“PTH Agreement” and, together with the CT Agreements and the hGH Agreement, collectively, the
“Existing Agreements”).



Background




     Pursuant to the MHR Loan Documents, MHR was granted a security interest in and over all of
Emisphere’s assets in respect of monies owed and other obligations secured. Emisphere and Novartis
have entered into a master agreement dated as of June 4, 2010 (the “Master Agreement”) which, among
other things, amends certain terms of the Existing Agreements. The Existing Agreements, as amended
by the Master Agreement, and the Master Agreement, including any additional compound license to be
entered into by Novartis and Emisphere
pursuant to Section 3.5 of the Master Agreement, are each hereinafter referred to as a
“Novartis Agreement” and collectively, as the “Novartis Agreements”).



 









 





     The effectiveness of the Master Agreement is conditioned upon (i) the entry into that certain
agreement by and among MHR, Emisphere and Novartis (the “MHR Agreement”) and (ii) the execution of
a license agreement by and between Novartis and MHR (the “License Agreement”), which License
Agreement shall be effective only after the full satisfaction of certain conditions precedent set
forth in Section 2 of the MHR Agreement.



     The effectiveness of the MHR Agreement is conditioned upon the entry into and the
effectiveness of the Master Agreement by Emisphere and Novartis.



     In connection with MHR’s (i) consent to Emisphere’s exection and performance of the Master
Agreement, as more fully described below, (ii) execution and delivery of the MHR Agreement and the
License Agreement in connection with the Master Agreement, and (iii) agreement to execute and
deliver a comparable agreement to the MHR Agreement and a comparable license agreement to [*****]
(“[*****]”) as described more fully below, Emisphere has agreed to grant to MHR the New Warrants on
terms set forth in a letter agreement, as amended and restated hereby (the “Letter Agreement”),
which Letter Agreement, as so amended and restated, shall become effective on the date hereof (the
“Effective Date”).



1. The New Warrants.


Effective on the Effective Date, Emisphere shall issue a warrant to purchase up to 865,000 shares
of common stock, par value $.01 per share, of the Company in the form set forth in Exhibit
A hereto allocated among MHR entities as set forth on
Exhibit B (the “New Warrants”).




2. Waiver of Adjustments



     MHR hereby agrees to waive any adjustments that otherwise would occur as the result of the
issuance of the New Warrants hereunder to any rate of conversion or exchange or to the exercise
price or conversion price of any of the Emisphere securities held by MHR and listed on Exhibit
C hereto.



3. MHR Agreements and Consents




	 	(a)	 	As of the Effective Date, MHR hereby agrees to use its reasonable best efforts
to negotiate with, execute and deliver to [*****] documents substantially similar to
the MHR Agreement and the License Agreement (the “[*****] Documents”) in respect of the
collaboration and/or license agreement currently being discussed between Emisphere and
[*****], provided that notwithstanding anything else contained in this Agreement, MHR
shall have no obligation to enter into the [*****] Documents if, in the sole judgment
of MHR, such documentation is less favorable to Emisphere or MHR than the MHR Agreement
and the License Agreement, and provided further that, nothing in this Letter Agreement
grants a consent on behalf of MHR under the MHR Loan Documents to (or otherwise
operates as a waiver by MHR of its right to consent under the MHR Loan
Documents to) any license and/or collaboration agreement between Emisphere and
[*****].




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	 	(b)	 	Section 4.1(d) of the Pledge and Security Agreement prohibits Emisphere from
entering into any agreement or undertaking restricting the right or ability of
Emisphere or the Secured Party thereunder, on its own behalf and on behalf of the
Lenders (as such term is defined in the Loan Agreement), to sell, assign or transfer
any of the Collateral (as defined therein) without the prior written consent of the
Secured Party, except as permitted under the MHR Loan Documents and that, accordingly,
Emisphere requires MHR’s consent to the execution of the Master Agreement and any
Novartis Agreements contemplated by the Master Agreement. For purposes of Section
4.1(d) of the Pledge and Security Agreement, MHR hereby consents to Emisphere entering
into the Master Agreement (and the amendment of those Existing Agreements effected by
the Master Agreement concurrently therewith but not any other Novartis Agreement) and
acknowledges that Emisphere’s execution and performance of the Master Agreement (and
the amendment of those Existing Agreements effected by the Master Agreement
concurrently therewith), in each case, in accordance with its express terms as in
effect on June 4, 2010, does not constitute an Event of Default pursuant to the MHR
Loan Documents.





4. Reimbursement of Legal Fees




	 	(a)	 	Emisphere hereby agrees to reimburse MHR for its reasonable and documented fees
and expenses incurred for legal services in connection with the MHR Agreement and the
License Agreement and this Letter Agreement up to a maximum aggregate amount of
$500,000, against delivery of such documentation of expenses as may be reasonably
requested by Emisphere. Payment shall be made pursuant to, and subject to terms
contained in, Promissory Notes (each, a “Novartis Promissory Note”) to be issued by
Emisphere on the Effective Date in the form of Exhibit D hereto allocated among
MHR entities as set forth on Exhibit B.
	 
	 	(b)	 	Emisphere hereby agrees to reimburse MHR for its reasonable and documented fees
and expenses incurred for legal services in connection with the [*****] Documents up to
a maximum aggregate amount of $100,000, against delivery of such documentation of
expenses as may be reasonably requested by Emisphere. Payment shall be made pursuant
to, and subject to terms contained in Promissory Notes (each, an “[*****] Promissory
Note”) to be issued by Emisphere on the Effective Date in the form of Exhibit E
hereto, allocated among MHR entities as set forth on Exhibit B.





     5. Representations and Warranties




	 	(a)	 	Each party hereby represents and warrants to the other party that: (i) it has
all requisite power and authority to enter into this Letter Agreement and all other
agreements and documents contemplated hereby to which it is a party and to
consummate the transactions contemplated hereby and thereby; (ii) the execution and
delivery by it of this Letter Agreement and all other agreements and 




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	 	 	 	documents contemplated hereby to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate or limited partnership (as applicable) action; (iii) the
execution and delivery by it of this Letter Agreement and all other agreements and
documents contemplated hereby to which it is a party, and the consummation by it of
the transactions contemplated hereby and thereby, do not and will not (A) violate
any provision of any law or any governmental rule or regulation applicable to it,
its organizational documents or any order, judgment or decree of any court or other
agency of government binding upon it, (B) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any material
contract, indenture, agreement or other instrument or document to which it is a
party or by which its properties or assets are bound, (C) result in or require the
creation or imposition of any lien, charge or encumbrance upon any of its properties
or assets or (D) require it to obtain any approval, order, authorization, or consent
of, or the service of any notice to, or the taking of any other action with respect
to, any person, entity or governmental or regulatory authority that has not been
obtained, given or taken, as applicable; and (iv) this Letter Agreement and all
other agreements and documents contemplated hereby to which it is a party are
legally valid and binding obligations, enforceable against it in accordance with
their respective terms, subject to the effects of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors generally
and general principles of equity.






	 	(b)	 	Emisphere hereby represents and warrants to MHR that (i) the Board of Directors
of Emisphere has duly authorized the issuance of the securities described in Section 1
of this Letter Agreement, and (ii) all such securities, when issued and paid for in
accordance with the terms set forth herein, will be validly issued, fully paid and
nonassessable and will be issued free and clear of all liens or other restrictions.





     6. General




	 	(a)	 	Emisphere acknowledges and agrees that except as expressly set forth herein,
the MHR Loan Documents are unmodified and remain in full force and effect. Except as
expressly set forth herein, execution of this Letter Agreement does not and shall not
constitute a waiver of any rights or remedies to which MHR is entitled pursuant to the
MHR Loan Documents, nor shall the same constitute a waiver of any default or event of
default with respect to the MHR Loan Documents. Without limitation of the foregoing,
any amendments to the Novartis Agreements (other than the amendments that are being
effected by the Master Agreement on June 4, 2010), the entering into of any additional
compound license as contemplated by the Master Agreement, or the entering into of any
collaboration and/or license agreement with [*****], shall not take effect until such
time as MHR provides its written consent thereto.






	 	(b)	 	No failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise




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	 	 	 	of any right, remedy, or power hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, or power provided herein or by law or in
equity.






	 	(c)	 	The benefits of this Letter Agreement shall inure to the parties hereto, their
respective successors and assigns, and the obligations and liabilities assumed in this
Letter Agreement by the parties hereto shall be binding upon their respective
successors and assigns.
	 
	 	(d)	 	This Letter Agreement and the agreements referenced herein embody the entire
agreement and understanding of the parties hereto and supersedes any and all prior
agreements, arrangements and understanding relating to the matters provided for herein.
No waiver or amendment hereto shall be binding or effective unless the same is set
forth in writing signed by a duly authorized representative of each party.
	 
	 	(e)	 	For the convenience of the parties, any number of counterparts of this Letter
Agreement may be executed by the parties hereto. Each such counterpart shall be, and
shall be deemed to be, an original instrument, but all such counterparts taken together
shall constitute one and the same Letter Agreement. Delivery of a signed counterpart of
this Letter Agreement by facsimile transmission shall constitute valid and sufficient
delivery thereof.
	 
	 	(f)	 	The parties agree that the issuance of the New Warrants shall be treated as
additional interest under the MHR Loan Documents and the parties shall report
consistently therewith on all relevant tax returns.
	 
	 	(g)	 	This Letter Agreement will be governed by and construed and enforced according
to the domestic laws of the State of New York without giving effect to its conflicts of
law or choice of law principles (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other
than the State of New York. Each party hereto agrees that venue for any action to
enforce the provisions of this Letter Agreement shall be properly laid in any courts of
the State of New York or any federal court located therein. Each party hereto also
hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and any federal courts located therein for any
actions, suits or proceedings arising out of or relating to this Letter Agreement (and
agrees not to commence any action, suit or proceeding relating thereto except in such
courts), and further agrees that service of any process, summons, notice or document by
U.S. registered or certified mail to it at its address set forth in Section 10 of the
Form Warrant attached hereto as Exhibit A shall be effective service of
process for any action, suit or proceeding brought against it in any such court. Each
of the parties hereto
hereby irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Letter Agreement.




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     If the foregoing correctly sets forth our Letter Agreement, please sign the enclosed copy of
this letter in the space provided and return it to us.



	 	 	 	 	 
	 	Very truly yours,



EMISPHERE TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Michael V. Novinski
 	 
	 	 	Name:  	Michael V. Novinski 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 



Confirmed and agreed to

this 8th day of June 2010:




	 	 	 	 	 
	MHR INSTITUTIONAL PARTNERS IIA LP



By: MHR Institutional Advisors II LLC

its General Partner

 	 	 
	By:  	/s/ Hal Goldstein 	 	 
	 	Name:  	Hal Goldstein 	 	 
	 	Title:  	Vice President 	 	 



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Exhibit A




Form of New Warrant



EMISPHERE TECHNOLOGIES, INC.

WARRANT




			
	 	 	 
	Warrant No. ___
	 	Dated: _________, 2010






     Emisphere Technologies, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for value received, [MHR entity] or its registered assigns (the “Holder”), is entitled to purchase
from the Company up to a total of 865,000 shares of common stock, $0.01 par value per share (the
“Common Stock”), of the Company (as adjusted from time to time as provided in Section 7,
each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price
equal to $2.90 (as adjusted from time to time as provided in Section 7, the “Exercise
Price”), at any time and from time to time, in whole or in part, on or after the date hereof
through and including August 21, 2014 (the “Expiration Date”), and subject to the following terms
and conditions.



     1. Registration of Warrant. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder hereof from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.



     2. Registration of Transfers. The Company shall register the transfer of any portion
of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Transfer Agent or to the Company at
its address specified herein. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New
Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.



     3. Exercise and Duration of Warrant.



          (a) This Warrant shall be exercisable by the registered Holder at any time and from time, in
whole or in part, on or after the date hereof to and including the Expiration Date. At 5:00 P.M.,
New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto
shall be and become void and of no value.



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          (b) A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in
the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii)
payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being
exercised, and the date such items are delivered to the Company (as determined in accordance with
the notice provisions hereof) is an “Exercise Date.”



          (c) The Company shall have a sufficient number of authorized but unissued and otherwise
unreserved shares of Common Stock available to issue Warrant Shares upon exercise of the Warrant.



     4. Delivery of Warrant Shares.



          (a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than
three trading days after the Exercise Date) issue or cause to be issued and cause to be delivered
to or upon the written order of the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends. If
the Holder provides or previously provided the necessary account information to the Company, the
Company shall issue and deliver such Warrant Shares in a balance account of the Holder with the
Depository Trust Company through its Deposit Withdrawal Agent Commission System. The Holder, or
any person or entity so designated by the Holder to receive Warrant Shares, shall be deemed to have
become holder of record of such Warrant Shares as of the Exercise Date. The Company shall, upon
request of the Holder, use commercially reasonable efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established clearing corporation
performing similar functions.



          (b) This Warrant is exercisable on or after the date hereof, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.



          (c) In addition to any other rights available to the Holder, if the Company fails to deliver
to the Holder a certificate representing Warrant Shares by the third trading day after the date on
which delivery of such certificate is required by this Warrant, and if after such third trading
day, but prior to cure by the Company, the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall,
within three trading days after the Holder’s request and in the Holder’s discretion, either (i) pay
cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased less the aggregate Exercise Price
(the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to
issue such Common Stock), solely with respect to such exercise, shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates representing such
Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock, times (B) the closing price on
the date of the event giving rise to the



8









 







Company’s obligation to deliver such certificate.



          (d) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any
judgment against any person or entity or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder
or any other person or entity of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other person or entity, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of Warrant Shares. Nothing herein shall limit the Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as
required pursuant to the terms hereof.



     5. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue
or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect
of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for Warrant Shares or
Warrant in a name other than that of the Holder or an affiliate thereof. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.



     6. Reservation of Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable
and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (taking into account the adjustments of
Section 7). The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will
take all such action as may be necessary to assure that such shares of Common Stock may be issued
as provided herein without violation of any applicable law or regulation, or of any requirements of
any securities exchange or automated quotation system upon which the Common Stock may be listed.



     7. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this
Section 7.



          (a) Stock Dividends and Splits.



          (i) If the Company, at any time while this Warrant is outstanding, (A) pays a



9









 




stock dividend on its Common Stock or otherwise makes a distribution on any class of capital
stock that is payable in shares of Common Stock, (B) subdivides outstanding shares of Common Stock
into a larger number of shares, or (C) combines outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (A) of this paragraph shall
become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause (B) or (C) of this
paragraph shall become effective immediately after the effective date of such subdivision or
combination.




          (ii) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraph (a)(i) of this Section, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.



          (b) Adjustment for Reclassification, Exchange and Substitution. If at any time while
this Warrant is outstanding, the Common Stock issuable upon exercise of this Warrant is changed
into the same or a different number of shares of any class or classes of stock, this Warrant will
thereafter represent the right to acquire such number and kind of securities as would have been
issuable as a result of exercise of this Warrant and the Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment in this Section 7.



          (c) Adjustments for Other Dividends and Distributions. In the event the Company, at
any time or from time to time while this Warrant is outstanding, shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Company (other than shares of Common Stock) or in
cash or other property (other than cash out of earnings or earned surplus, determined in accordance
with generally accepted accounting principles), then and in each such event provision shall be made
so that the Holder shall receive upon exercise hereof, in addition to the number of shares of
Common Stock issuable hereunder, the kind and amount of securities of the Company and/or cash and
other property which the Holder would have been entitled to receive had this Warrant been exercised
into Common Stock on the date of such event and had the Holder thereafter, during the period from
the date of such event to and including the Exercise Date, retained any such securities receivable,
giving application to all adjustments called for during such period under this Section 7
with respect to the rights of the Holder.



          (d) Adjustment for Mergers or Reorganizations, etc. Any reorganization,
recapitalization, reclassification, consolidation, merger, sale of all or substantially all of the
Company’s assets or other transaction involving the Company in which the Common Stock is converted
into or exchanged for securities, cash or other property while this Warrant is outstanding (other
than a transaction covered by Sections 7(a) or (c)) is referred to herein as an “Organic Change”.
Prior to the consummation of any such Organic Change, the Company shall make appropriate provision
(as determined in good faith by the Board of Directors of the



10









 




Company and the Holder) to ensure that the Holder shall have the right to receive, in lieu of
or in addition to (as the case may be) such shares of Common Stock immediately acquirable and
receivable upon exercise of this Warrant, the kind and amount of securities, cash or other property
as may be issued or payable with respect to or in exchange for the number of shares of Common Stock
immediately acquirable and receivable upon exercise of this Warrant had such Organic Change not
taken place. In such case, appropriate adjustment (as determined in good faith by the Board of
Directors of the Company and the Holder) shall be made with respect to the Holder’s rights and
interests to ensure that the provisions of this Section 7 shall thereafter be applicable to
the Warrant (including, in the case of any Organic Change where the successor entity or purchasing
entity is other than the Company, an immediate reduction to the Exercise Price to the value of the
Common Stock reflected by the terms of the Organic Change and a corresponding increase in the
number of shares of Common Stock acquirable and receivable upon exercise of this Warrant, if the
value so reflected is less than the Exercise Price then in effect immediately prior to such Organic
Change). The Company shall not effect any reorganization, recapitalization, consolidation or
merger unless, prior to the consummation thereof, the successor entity (if other than the Company)
resulting from the consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance satisfactory to the Holder) the obligation to deliver to the
Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions,
the Holder may be entitled to acquire; provided, that any assumption shall not relieve the
Company of its obligations hereunder.




          (e) Adjustments to the Conversion Prices for Certain Dilutive Issuances.



          (i) Special Definitions. For purposes of this Section 7(e), the following
definitions apply:



               (A) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or,
pursuant to Section 7(e)(iii), deemed to be issued) by the Company after the original
issue date of this Warrant other than shares of Common Stock issued or issuable:



                    (1) to officers, directors or employees of, or consultants to, the Company pursuant to stock
option or stock purchase plans or agreements in effect on or prior to September 26, 2005 and on
terms approved by the Company’s Board of Directors and granted, sold or awarded in the ordinary
course of business and consistent with past practice;



                    (2) for an aggregate consideration (determined pursuant to Section 7(e)(v) hereof) of
not more than $10,000,000 during any 24-month period;



                    (3) for which adjustment of the Exercise Price is made pursuant to Section 7(e)(iv).



               (B) “Convertible Securities” shall mean any evidences of indebtedness, shares or other
securities convertible into or exchangeable for Common Stock.



               (C) “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise
acquire either Common Stock or Convertible Securities.



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          (ii) No Adjustment of Exercise Price. Any provision herein to the contrary
notwithstanding, no adjustment to the Exercise Price shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share (determined pursuant to
Section 7(e)(v) hereof) for an Additional Share of Common Stock issued or deemed to be
issued by the Company is less than the Exercise Price in effect on the date of, and immediately
prior to, such issue.



          (iii) Deemed Issuance of Additional Shares of Common Stock. In the event the Company,
at any time or from time to time while this Warrant is outstanding, shall issue any Options or
Convertible Securities or shall fix a record date for the determination of holders of any class of
securities then entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard to any provisions
contained therein designed to protect against dilution) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issuance or, in case such a record date shall have been fixed, as of
the close of business on such record date, provided further that in any such case in which
Additional Shares of Common Stock are deemed to be issued:



               (A) no further adjustments to the Exercise Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;



               (B) if such Options or Convertible Securities by their terms provide, with the passage of time
or otherwise, for any increase in the consideration payable to the Company, or decrease in the
number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Exercise Price computed upon the original issue thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such Convertible Securities
(provided, however, that no such adjustment of the Exercise Price shall effect Common Stock
previously issued upon conversion of the Company’s preferred stock); and



               (C) no readjustment pursuant to clause (A) or (B) above shall have the effect of increasing
the Exercise Price to an amount which exceeds the lower of (i) the Exercise Price on the original
adjustment date or (ii) the Exercise Price that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date and such readjustment date.



          (iv) Adjustment of Exercise Price Upon Issuance of Additional Shares of Common
Stock. (a) Subject to the last sentence of subsection (b) below, in the event the Company, at
any time while this Warrant is outstanding, shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to Section
7(e)(iii) without consideration or for consideration per share less than the closing price per
Share of Common Stock as reported on a publicly traded exchange (“Market Price”) on the last full
trading day immediately prior to such issue, then the Exercise Price shall be reduced,



12









 




concurrently with such issue, to a price (calculated to the nearest cent) determined by
multiplying the Exercise Price then in effect, by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue plus the number of
shares of Common Stock which the aggregate consideration received by the Company for the total
number of Additional Shares of Common Stock so issued would purchase at the Market Price in effect
immediately prior to such issuance, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares
of Common Stock so issued. For the purpose of the above calculation, the number of shares of
Common Stock outstanding immediately prior to such issue shall be calculated on a fully diluted
basis, as if all Convertible Securities had been fully converted into shares of Common Stock and
any outstanding Options bearing an exercise price which is lower than the price at which the
Additional Shares of Common Stock were issued had been fully exercised (and the resulting
securities fully converted into shares of Common Stock, if so convertible) as of such date.




          Upon each adjustment of the Exercise Price as a result of the calculations made in this
Section 7(e) (including those resulting from issuances of Additional Shares of Common Stock
deemed to be issued pursuant to Section 7(e)(iii)), the number of Warrant Shares shall be
adjusted by multiplying such number of Warrant Shares by a fraction, the numerator of which shall
be the Exercise Price in effect immediately prior to such adjustment and the denominator of which
shall be the Exercise Price in effect after giving effect to such adjustment.



          (b) In the event the Company, at any time while this Warrant is outstanding, shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 7(e)(iii)) with a purchase price, conversion price or exercise price,
respectively, that is less than the Exercise Price in effect immediately prior to the time of such
issuance or sale, then and in each such case the then-existing Exercise Price shall be reduced, as
of the close of business on the effective date of such issuance or sale, to the lowest purchase
price, conversion price or exercise price at which any Additional Shares of Common Stock were
issued or sold. In the event that both subsections (iv)(a) and (iv)(b) hereof may apply to any
issuance, sale or deemed issuance or sale, then only this section (b) shall be deemed to apply to
such transaction.



          (v) Determination of Consideration. For purposes of this Section 7(e), the
consideration received by the Company in connection with the issuance of any Additional Shares of
Common Stock shall be computed as follows:



               (A) Cash and Property. Such consideration shall:




(i) insofar as it consists of cash, be computed at the aggregate
amount of cash received by the Company, excluding amounts paid or
payable for accrued interest or accrued dividends;




(2) insofar as it consists of property other than cash, be computed
at the fair value thereof at the time of such issuance, as determined
by the Board of Directors in good faith; and



13









 






(3) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the
Company for consideration which covers both cash and property, be the
proportion of such consideration so received, computed as provided in
clauses (I) and (2) above, as determined by the Board of Directors in
good faith.



               (B) Options and Convertible Securities. The consideration per share received by the
Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section
7(e)(iii) relating to Options and Convertible Securities shall be determined by dividing:




(i) the total amount, if any, received or receivable by the Company
as consideration for the issuance of such Options or Convertible
Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed to protect
against dilution) payable to the Company upon the exercise of such
Options or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the exercise of
such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by




(ii) the maximum number of shares of Common Stock (as set forth in
the instruments relating thereto, without regard to any provision
contained therein designed to protect against the dilution) issuable
upon the exercise of such Options or conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities.



          (f) Other Events. If any event occurs that would adversely affect the Holder’s rights
but not expressly provided for by this Section 7 (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or other rights with equity features),
then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and
number of Warrant Shares subject to this Warrant so as to protect the Holder’s rights;
provided, however, that no such adjustment will increase the Exercise Price or
decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this
Section 7.



          (g) Calculations. All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.



          (h) Notice of Adjustments. Upon the occurrence of each adjustment pursuant



14









 




to this Section 7, the Company at its expense will promptly compute such adjustment in
accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares
or other securities issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts upon which such
adjustment is based. Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company’s Transfer Agent.




          (i) Notice of Corporate Events; Termination. If the Company (i) declares a dividend
or any other distribution of cash, securities or other property in respect of its Common Stock,
including without limitation any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating, or solicits. stockholder approval for any merger, sale or similar
transaction pursuant to which Common Stock is converted or exchanged for cash, securities or
property or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of
the Company, then the Company shall deliver to the Holder a notice describing the material terms
and conditions of such transaction at least 15 calendar days prior to the applicable record or
effective date on which a person would need to hold Common Stock in order to participate in or vote
with respect to such transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such
time so as to participate in or vote with respect to such transaction; provided, however, that the
failure to deliver such notice or any defect therein shall not affect the validity of the corporate
action required to be described in such notice.



     8. Payment of Exercise Price. The Holder shall pay the Exercise Price by (i) paying
to the Company cash in immediately available funds or (ii) providing a written notice to the
Company that the Holder is exercising this Warrant on a “cashless” exercise basis by authorizing
the Company to withhold from issuance a number of shares of Common Stock issuable upon such
exercise of this Warrant which, when multiplied by the Fair Market Value of the Common Stock is
equal to the aggregate Exercise Price (and such withheld shares shall no longer be issuable under
this Warrant). For purposes hereof, “Fair Market Value” means:



          (a) If the security is traded on a securities exchange or through the NASDAQ National Market,
the Fair Market Value shall be deemed to be the average of the closing prices of the securities on
such exchange or quotation system, or, if there has been no sales on any such exchange or quotation
system on any day, the average of the highest bid and lowest asked prices on such exchange or
quotation system as of 4:00 p.m., New York time, or, if on any day such security is not traded on
an exchange or quoted in the NASDAQ Stock Market System, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated or any similar successor organization, in each such case averaged
over a period of ten (10) business days consisting of the business day as of which Fair Market
Value is being determined and the nine (9) consecutive business days prior to such day; or



          (b) If at any time such security is not listed on any securities exchange or quoted in the
NASDAQ Stock Market System or the over-the-counter market, the Fair Market Value shall be the fair
value thereof, as determined jointly by the Board of Directors and the



15









 




Holder. If such parties are unable to reach agreement within a reasonable period of time,
such fair value shall be determined by an independent appraiser experienced in valuing securities
jointly selected by the Company’s Board of Directors and the Holder. The determination of the
appraiser shall be final and binding upon the parties and the Company shall pay the fees and
expenses of such appraiser.




     9. Fractional Shares. The Company shall not be required to issue or cause to be
issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant
Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant,
the number of Warrant Shares to be issued will be rounded up to the nearest whole share.



     10. Notices. Any and all notices or other communications or deliveries hereunder
(including without limitation any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section prior to 5:00 p.m. (New
York City time) on a trading day, (ii) the next trading day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number specified in this
Section on a day that is not a trading day or later than 5:00 p.m. (New York City time) on any
trading day, (iii) the trading day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required
to be given.


(a) If to the Company, to:



240 Cedar Knolls Road

Suite 200

Cedar Knolls, NJ 07927

Attention: Chief Executive Officer

Phone: (973) 532-8000

Fax: (973) 532-8115

Email: mnovinski@emisphere.com



with a copy to:



Brown Rudnick LLP

One Financial Center

Boston, MA 02111

Attn: Timothy C. Maguire, Esq.

Phone: (617) 856-8377

Fax: (617) 289-0413

Email: tmaguire@brownrudnick.com



(b) If to the Holder, to:



[MHR entity]

c/o MHR Fund Management LLC




16









 







40 West 57th Street, 24th Floor

New York, NY 10019

Fax number: (212) 262-9356

Attention: Hal Goldstein

Phone: (212) 262-0005

Fax: (212) 262-9356

Email: hgoldstein@mhrfund.com



with a copy to:



Dechert LLP

Avenue of the Americas

New York, NY 10036

Attn: Charles Weissman, Esq.

          Derek Winokur, Esq

Phone: (212) 698-3500

Fax: (212) 698-3599

Email: Charles.Weissman@Dechert.com

          Derek.Winokur@Dechert.com




     11. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon
30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.



     12. Loss, Theft or Destruction of Warrant. In the event that the Holder notifies the
Company that this Warrant has been lost, stolen or destroyed, then a replacement Warrant, identical
in all respects to the original Warrant (except for any adjustment pursuant hereto to the Exercise
Price or number of Warrant Shares issuable hereunder, if different from the numbers shown on the
original Warrant) shall be delivered to the Holder by the Company, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by the Company in connection with such Warrant.



     13. Miscellaneous.



          (a) This Warrant may be assigned by the Holder. This Warrant may be amended only in writing
signed by the Company and the Holder and their successors and assigns.



          (b) The Company will not, by amendment of its governing documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of



17









 







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 against impairment. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount
payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant, and (iii) will not close its shareholder books or
records in any mariner which interferes with the timely exercise of this Warrant.



          (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THE PURCHASE
AGREEMENT), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE
OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A
COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO
SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.



          (d) The headings herein are for convenience only, do not constitute a part of this Warrant and
shall not be deemed to limit or affect any of the provisions hereof.



          (e) In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.



18









 





[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]




19









 








     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.



	 	 	 	 	 
	 	EMISPHERE TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




20











 





FORM OF EXERCISE NOTICE



(To be executed by the Holder to exercise the right to purchase shares of Common Stock under the
foregoing Warrant)



To: Emisphere Technologies, Inc.



The undersigned is the Holder of Warrant No.            (the “Warrant”) issued by Emisphere
Technologies, Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and not
otherwise defined have the respective meanings set forth in the Warrant.





	 	1.	 	The Warrant is currently exercisable to purchase a total of            Warrant Shares.
	 
	 	2.	 	The undersigned Holder hereby exercises its right to purchase                      Warrant
Shares pursuant to the Warrant.
	 
	 	3.	 	The holder shall pay the sum of $                     to the Company or hereby exercises the
Warrant on a “cashless exercise” basis in accordance with the terms of the Warrant.
	 
	 	4.	 	Pursuant to this exercise, the Company shall deliver to the
holder
           Warrant Shares in
accordance with the terms of the Warrant.
	 
	 	5.	 	Following this exercise, the Warrant shall be exercisable to purchase a total of
Warrant Shares.





	 	 	 	 	 
	Dated:                          ,            	Name of Holder



(Print  

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	
(Signature must conform in all respects to name of

holder as specified on the face of the Warrant) 








 









 








FORM OF ASSIGNMENT




[To be completed and signed only upon transfer of Warrant]




     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                         the right represented by the within Warrant to purchase                     
shares
of Common Stock of Emisphere Technologies, Inc. to which the within Warrant relates and appoints
                                         attorney to transfer said right on the books of Emisphere Technologies,
Inc. with full power of substitution in the premises.


Dated:                          ,           




	 	 	 	 	 
	 	 	 
	 	
 	 
	 	(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)

 	 
	 	


 
Address of  Transferee


 


 
 	 
	 



In the presence of:




 








 









 








Exhibit B




Allocation



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Novartis	 	[*****]
	 	 	New	 	Promissory	 	Promissory
	Holder	 	Warrant	 	Note	 	Note
	MHR Capital Partners (100) LP
	 	 	23,820	 	 	$	14,000	 	 	$	2,800	 
	MHR Capital Partners Master
Account LP
	 	 	174,183	 	 	$	100,500	 	 	$	20,100	 
	MHR Institutional Partners II LP
	 	 	189,525	 	 	$	109,500	 	 	$	21,900	 
	MHR Institutional Partners IIA LP
	 	 	477,472	 	 	$	276,000	 	 	$	55,200	 






 









 






Exhibit C




Emisphere Securities Held by MHR



Convertible Notes held by MHR:



11% Senior Secured Convertible Notes issued on various dates by Emisphere to MHR




Warrants held by MHR:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Equivalent	 	Adjusted
	Warrant	 	 	 	Issue	 	Expiration	 	Shares	 	Exercise
	No.	 	Holder	 	Date	 	Date	 	Outstanding	 	Price
	A-12

	 	MHR Institutional
Partners IIA LP
	 	9/21/2006
	 	9/26/2011
	 	 	37,030	 	 	$	3.76	 
	A-13

	 	MHR Institutional
Partners II LP
	 	9/21/2006
	 	9/26/2011
	 	 	14,698	 	 	$	3.76	 
	A-14

	 	MHR Capital
Partners (100) LP
	 	9/21/2006
	 	9/26/2011
	 	 	68,809	 	 	$	3.76	 
	A-15

	 	MHR Capital
Partners Master
Account LP
	 	9/21/2006
	 	9/26/2011
	 	 	496,674	 	 	$	3.76	 
	A-21

	 	MHR Institutional
Partners II LP
	 	8/22/2007
	 	8/21/2012
	 	 	25,878	 	 	$	3.948	 
	A-22

	 	MHR Institutional
Partners IIA LP
	 	8/22/2007
	 	8/21/2012
	 	 	65,195	 	 	$	3.948	 
	A-25

	 	MHR Capital
Partners Master
Account LP
	 	8/21/2009
	 	8/21/2014
	 	 	748,673	 	 	$	0.70	 
	A-26

	 	MHR Capital
Partners (100) LP
	 	8/21/2009
	 	8/21/2014
	 	 	101,821	 	 	$	0.70	 
	A-27

	 	MHR Institutional
Partners II LP
	 	8/21/2009
	 	8/21/2014
	 	 	818,011	 	 	$	0.70	 
	A-28

	 	MHR Institutional
Partners IIA LP
	 	8/21/2009
	 	8/21/2014
	 	 	2,060,818	 	 	$	0.70	 






24









 






Exhibit D




Form of Novartis Promissory Note



PROMISSORY NOTE



			
	 	 	 
	$[500,000]
	 	June      , 2010





FOR VALUE RECEIVED, the undersigned, Emisphere Technologies, Inc., a Delaware corporation
(“Maker”), unconditionally promises to pay to the order of [MHR entity] (“Creditor”), the principal
sum of [five hundred thousand] dollars ($500,000), with the entire principal balance due and
payable on June      , 2012 (the “Maturity Date”). The principal amount and the Maturity Date are
subject to adjustment as set forth below.




     Except as otherwise provided herein, the unpaid principal balance of this promissory note (the
“Note”) outstanding from time to time shall bear no interest.



     The unpaid principal amount of this Note may be prepaid by Maker at any time in whole or from
time to time in part. The unpaid principal amount of this Note shall be paid in its entirety and
the Maturity Date correspondingly accelerated to the date that is two (2) Business Days (as
hereinafter defined) following the receipt from and after the date hereof by Maker in cash of an
aggregate of at least $20,000,000 in payments in connection with any or all of the Novartis
Agreements (as defined in the MHR Agreement) and the agreement entered into between Emisphere and
[*****], if any, as contemplated by Section 3(a) of that certain Letter Agreement between Maker
and Creditor of even date herewith (the “Letter Agreement”). The outstanding principal amount of
this Note shall be reduced by an amount equal to the difference between (i) $[500,000] and (ii) the
reasonable and documented fees and expenses incurred by Creditor for legal services in connection
with the negotiation of the MHR Agreement and the License Agreement (each as defined in the Letter
Agreement) and the Letter Agreement . In connection therewith and upon the request of Maker,
Creditor shall provide such documentation as may be reasonably requested to verify and confirm the
amount described in (ii) above. 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 default or otherwise), interest
shall be payable on the unpaid principal balance from time to time outstanding at a rate equal to
ten percent (10%) per annum, calculated on the basis of a 360-day year times the actual number of
days elapsed, until paid in full.



     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 event the interest rate is determined to be
unlawful, such interest rate shall be computed at the highest rate permitted by



25









 




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.




     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.



     Notwithstanding anything to the contrary contained herein, 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 following:



     (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



     (iii) (A) Individuals who, as of the date of this Note, constitute the Board of Directors
(the “Board”) of the Maker (the “Incumbent Directors”) cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a director subsequent to the date of
this Note whose election or nomination for election was approved by a vote of a majority of the
Incumbent Directors then on the Board shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Maker as a result of an actual or
threatened election contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person other than the Board
shall be deemed to be an Incumbent Director; (B) any “person” (as such term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than the
Creditor and its affiliates becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Maker representing 50% or more of



26









 




the combined voting power of the Maker’s then outstanding securities eligible to vote
generally in the election of directors; and (C) the Maker sells or otherwise disposes of all or a
substantial part of its assets in one transaction or in a series of related transactions 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.




     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.



     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.



     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 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.



     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.



     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.



     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



27









 




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.




     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: mnovinski@emisphere.com




with a copy to:




Brown Rudnick LLP

One Financial Center

Boston, MA 02111

Attn: Timothy C. Maguire, Esq.

Phone: (617) 856-8377

Fax: (617) 289-0413

Email: tmaguire@brownrudnick.com




(b) If to the Creditor, to:




[MHR entity]

c/o MHR Fund Management LLC

40 West 57th Street, 24th Floor

New York, NY 10019

Fax number: (212) 262-9356

Attention: Hal Goldstein

Phone: (212) 262-0005

Fax: (212) 262-9356

Email: hgoldstein@mhrfund.com




with a copy to:




Dechert LLP



28









 






Avenue of the Americas

New York, NY 10036

Attn: Charles Weissman, Esq.

         Derek Winokur, Esq

Phone: (212) 698-3500

Fax: (212) 698-3599

Email: Charles.Weissman@Dechert.com

            Derek.Winokur@Dechert.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]






29









 








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



	 	 	 	 	 
	 	MAKER: EMISPHERE TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Michael V. Novinski 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 




30









 





Exhibit E




Form of [*****] Promissory Note



PROMISSORY NOTE



			
	 	 	 
	$[100,000]
	 	June      , 2010






     FOR VALUE RECEIVED, the undersigned, Emisphere Technologies, Inc., a Delaware corporation
(“Maker”), unconditionally promises to pay to the order of [MHR entity] (“Creditor”), the principal
sum of [one hundred thousand] dollars ($100,000), with the entire principal balance due and payable
on June      , 2012 (the “Maturity Date”). The principal amount and the Maturity Date are subject to
adjustment as set forth below.



     Except as otherwise provided herein, the unpaid principal balance of this promissory note (the
“Note”) outstanding from time to time shall bear no interest.



     The unpaid principal amount of this Note may be prepaid by Maker at any time in whole or from
time to time in part. The unpaid principal amount of this Note shall be paid in its entirety and
the Maturity Date correspondingly accelerated to the date that is two (2) Business Days (as
hereinafter defined) following the receipt from and after the date hereof by Maker in cash of an
aggregate of at least $20,000,000 in payments in connection with any or all of the Novartis
Agreements (as defined in the MHR Agreement) and the agreement entered into between Emisphere and
[*****], if any, as contemplated by Section 3(a) of that certain Letter Agreement between Maker
and Creditor of even date herewith (the “Letter Agreement”). The outstanding principal amount of
this Note shall be reduced by an amount equal to the difference between (i) $[100,000] and (ii) the
reasonable and documented fees and expenses incurred by Creditor for legal services in connection
with the negotiation of the [*****] Documents (as defined in the Letter Agreement). In connection
therewith and upon the request of Maker, Creditor shall provide such documentation as may be
reasonably requested to verify and confirm the amount described in (ii) above. 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 default or otherwise), interest shall be payable on the unpaid principal balance
from time to time outstanding at a rate equal to ten percent (10%) per annum, calculated on the
basis of a 360-day year times the actual number of days elapsed, until paid in full.



     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 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



31









 




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.




     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.



     Notwithstanding anything to the contrary contained herein, 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 following:



     (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



     (iii) (A) Individuals who, as of the date of this Note, constitute the Board of Directors (the
“Board”) of the Maker (the “Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent to the date of this
Note whose election or nomination for election was approved by a vote of a majority of the
Incumbent Directors then on the Board shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Maker as a result of an actual or
threatened election contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person other than the Board
shall be deemed to be an Incumbent Director; (B) any “person” (as such term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than the
Creditor and its affiliates becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Maker representing 50% or more of the
combined voting power of the Maker’s then outstanding securities eligible to vote generally



32









 




in the election of directors; and (C) the Maker sells or otherwise disposes of all or a
substantial part of its assets in one transaction or in a series of related transactions 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.




     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.



     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.



     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 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.



     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.



     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.



     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



33









 




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.




     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: mnovinski@emisphere.com




with a copy to:




Brown Rudnick LLP

One Financial Center

Boston, MA 02111

Attn: Timothy C. Maguire, Esq.

Phone: (617) 856-8377

Fax: (617) 289-0413

Email: tmaguire@brownrudnick.com




(b) If to the Creditor, to:




[MHR entity]

c/o MHR Fund Management LLC

40 West 57th Street, 24th Floor

New York, NY 10019

Fax number: (212) 262-9356

Attention: Hal Goldstein

Phone: (212) 262-0005

Fax: (212) 262-9356

Email: hgoldstein@mhrfund.com




with a copy to:




Dechert LLP

Avenue of the Americas



34









 






New York, NY 10036

Attn: Charles Weissman, Esq.

         Derek Winokur, Esq

Phone: (212) 698-3500

Fax: (212) 698-3599

Email: Charles.Weissman@Dechert.com

           Derek.Winokur@Dechert.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]






35









 








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



	 	 	 	 	 
	 	MAKER: EMISPHERE TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Michael V. Novinski 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 




36