exv10w2






Exhibit 10.2




FORM OF

INCENTIVE STOCK OPTION AGREEMENT




Under the Emisphere Technologies, Inc.

2007 Stock Award and Incentive Plan



     THIS AGREEMENT dated as of the [DAY] day of [MONTH], 20[ ], between Emisphere Technologies,
Inc., a Delaware Corporation (the “Company”), and [NAME] (the “Optionee”).



W I T N E S S E T H:




     In consideration of the mutual promises and covenants made herein and the mutual benefits to
be derived herefrom, the parties hereto agree as follows:



     1. Grant of Stock Option.



     Subject to the provisions of this Agreement and to the provisions of the Emisphere
Technologies, Inc. 2007 Stock Award and Incentive Plan (the “Plan”), the Company hereby grants to
the Optionee as of [DATE] (the “Grant Date”) the right and option (the “Stock Option”) to purchase
[NUMBER] shares of common stock of the Company, par value $.01 per share (“Common Stock”), at the
exercise price of [$] per share, the closing price of the Common Stock on [DATE]. The Stock Option
is intended to qualify as an Incentive Stock Option, within the meaning of Section 422 of the
Internal Revenue Code, as amended (the “Code”). Unless earlier terminated pursuant to the terms of
this Agreement, the Stock Option shall expire on the tenth anniversary of the date hereof.
Capitalized terms not defined herein shall have the meaning set forth in the Plan.



     The Company cannot guarantee that the special tax treatment described in Section 422 of the
Code will apply and may subject the Optionee to alternative minimum tax. The Optionee is advised
to consult with his personal tax advisor to determine his or her respective tax consequences. For
example, if the Optionee sells the Common Stock acquired pursuant to the exercise of the Stock
Option either within two years after the date of this Agreement or within one year after the date
the Stock Option (or any part thereof) is exercised, this special tax treatment will not apply.



     If the Stock Option (or any part thereof) does not qualify for Incentive Stock Option
treatment for any reason, then, to the extent of such nonqualification, the Stock Option (or such
portion thereof) shall be treated as a Nonqualified Stock Option granted under the Plan, provided
that the Stock Option (or such portion thereof) otherwise satisfies the terms and conditions of the
Plan generally relating to Nonqualified Stock Options.



 








 





     2. Exercisability of the Stock Option.



          (a) Vesting. Subject to remaining employed by the Company through the following dates, the
Stock Option shall become vested and exercisable with respect to:




	 	 	 	 	 
	 	 	% of Grant (or number of Shares)
	Date	 	Vested
	[INSERT DATE]

	 	 	25	%
	[INSERT DATE]

	 	 	25	%
	[INSERT DATE]

	 	 	25	%
	[INSERT DATE]

	 	 	25	%





Upon the Optionee’s termination of employment for any reason, the portion of the Stock Option that
is not vested as of such date, in accordance with the foregoing provisions of this Section 2, shall
cease vesting and terminate immediately.




          (b) Acceleration upon Change in Control. In the event of a Change in Control, any unvested
portions of this Stock Option shall immediately vest and remain exercisable for the remainder of
the originally scheduled term. For the purposes of this Agreement, a “Change in Control” means:
(a) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than any
individual, entity or group which, as of the date of this Agreement, beneficially owns more than
ten percent (10%) of the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of the then Outstanding Company Common Stock; provided, however,
that any acquisition by the Company or its subsidiaries, or any employee benefit plan (or related
trust) of the Company or its subsidiaries of 50% or more of Outstanding Company Common Stock shall
not constitute a Change in Control; and provided, further, that any acquisition by an entity with
respect to which, following such acquisition, more than 50% of the then outstanding equity
interests of such entity, is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock immediately prior to such acquisition of the Outstanding Company Common Stock,
shall not constitute a Change in Control; or (b) the consummation of (i) a reorganization, merger
or consolidation (any of the foregoing, a “Merger”), in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock immediately prior to such Merger do not, following such Merger, beneficially
own, directly or indirectly, more than 50% of the then outstanding shares of common stock of the
corporation resulting from Merger, or (ii) the sale or other




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disposition of all or substantially all of the assets of the Company, excluding (a) a sale or
other disposition of assets to a subsidiary of the Company; and (b) a sale or other disposition of
assets to any individual, entity or group which, as of the date of this Agreement, beneficially
owns more than ten percent (10%) of the then Outstanding Company Common Stock.




     3. Method of Exercise of the Stock Option.



          (a) The portion of the Stock Option as to which the Optionee is vested shall be exercisable by
delivery to the Company of a written or electronic notice stating the number of whole shares to be
purchased pursuant to this Agreement and accompanied by payment of the full purchase price of the
shares of Common Stock to be purchased. Fractional share interests shall be disregarded except
that they may be accumulated.




          (b) The exercise price of the Stock Option shall be paid: (i) in cash or by certified check or
bank draft payable to the order of the Company; (ii) by exchange of shares of unrestricted Common
Stock of the Company already owned by the Optionee (that have been held by the Optionee for six (6)
months prior to exercise or which were acquired in the open market) and having an aggregate Fair
Market Value equal to the aggregate purchase price, provided, that the Optionee represents and
warrants to the Company that the Optionee has held the shares of Common Stock free and clear of
liens and encumbrances and has held the shares for at least six (6) months prior to exercise or
that such shares were acquired in the open market; (iii) by delivering, along with a properly
executed exercise notice to the Company, a copy of irrevocable instructions to a broker to deliver
promptly to the Company the aggregate exercise price and, if requested by the Optionee, the amount
of any applicable federal, state, local or foreign withholding taxes required to be withheld by the
Company, provided, however, that such exercise may be implemented solely under a program or
arrangement established and approved by the Company with a brokerage firm selected by the Company;
or (iv) by any other procedure approved by the Committee, or by a combination of the foregoing.




     4. Termination of Employment Other Than Due to Death or Disability.



          (a) Except as provided in Section 4(b) below with regard to the Optionee’s termination of
employment for cause or following an event that would be grounds for a termination of employment
for cause and Section 5 below with regard to the Optionee’s termination of employment due to death
or Disability, in the event of the Optionee’s termination of employment, the portion of the
Stock Option, if any, which is exercisable at the time of such termination may be exercised prior
to the first to occur of (a) the expiration of the ninety day (90) period which commences on the
date of termination or (b) the expiration date of the Stock Option.




          (b) In the event of the Optionee’s termination of employment for Cause, the Optionee’s entire
Stock Option (whether or not vested) shall be forfeited






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and canceled in its entirety upon such termination of employment. If the Optionee has
executed an employment agreement, the definition of “cause” contained therein, if any, shall
govern. If there is no definition of “cause” in the governing employment agreement or the Optionee
does not have an employment agreement, then the definition of cause shall be conduct by the
Optionee, as determined in the sole discretion of the Company’s Board of Directors, involving one
or more of the following: (a) gross misconduct or inadequate performance by the Optionee which is
injurious to the Company; or (b) the commission of an act of embezzlement, fraud or theft, which
results in economic loss, damage or injury to the Company; or (c) the unauthorized disclosure of
any trade secret or confidential information of the Company; or (d) the commission of an act which
constitutes unfair competition with the Company or which induces any customer or prospective
customer of the Company to breach a contract with the Company or to decline to do business with the
Company; or (e) the indictment or conviction of the Optionee for a felony or a serious misdemeanor;
or (f) the failure by the Optionee to perform in any material respect his or her employment, duties
and obligations.




          (c) Nothing in this Agreement or the Plan shall confer upon the Optionee any right to continue
in the employ of the Company or any of its subsidiaries or affiliates or interfere in any way with
the right of the Company or any such subsidiaries or affiliates to terminate the Optionee’s
employment at any time.




     5. Death or Disability of Optionee.



     In the event of the Optionee’s termination of employment due to death (or, in the event of the
Optionee’s death following termination of employment while the Stock Option remains exercisable)
the portion of the Stock Option, if any, which is exercisable at the time of death may be exercised
by the Optionee’s estate or by a person who acquired the right to exercise such Stock Option by
bequest or inheritance or otherwise by reason of the death of the Optionee at any time prior to the
first to occur of (a) twelve (12) months after the date of death or (b) the expiration date of the
Stock Option. In the event of the Optionee’s termination of employment due to Disability, the
portion of the Stock Option, if any, which is exercisable at the time of such termination of
employment for Disability may be exercised by the Optionee or the Optionee’s guardian or legal
representative at any time prior to the first to occur of (a) twelve (12) months after such
termination of employment or (b) the expiration date of the Stock Option.



     6. Nontransferability of the Stock Option.



     The Stock Option is non-transferable by the Optionee other than by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order, and the Stock Option may be
exercised, during the lifetime of the Optionee, only by the Optionee or by the Optionee’s guardian
or legal representative or any transferee described above.



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     7. Rights as a Stockholder.



          An Optionee or a transferee of the Stock Option shall have no rights as a stockholder with
respect to any shares covered by such Stock Option until the date when his or her purchase is
entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior to the date a stock certificate is
issued, except as provided in the Plan.




     8. Adjustment in the Event of Change in Stock.



     In accordance with Section 10(c) of the Plan, in the event of any change in Corporate
capitalization (including, but not limited to, a change in the number of shares of Common Stock
outstanding), and the number and kind of shares subject to the Stock Option and/or the exercise
price per share will be adjusted. The determination of the Committee regarding any adjustment will
be final and conclusive.



     9. No Guarantee of Continued Service.



     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING THE EMPLOYMENT OR BUSINESS RELATIONSHIP AT THE WILL OF THE
COMPANY (NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED EMPLOYMENT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE
RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.



     10. Other Restrictions.



     The exercise of the Stock Option shall be subject to the requirement that, if at any time the
Committee shall determine that (i) the listing, registration or qualification of the shares of
Common Stock subject or related thereto upon any securities exchange or under any state or federal
law, or (ii) the consent or approval of any government regulatory body or (iii) an agreement by the
Optionee with respect to the disposition of shares of Common Stock is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase of shares pursuant
thereto, then in any such event, such exercise shall not be effective unless such listing,
registration, qualification, consent, or approval or agreement shall have been effected or obtained
free of any conditions not acceptable to the Committee.



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     The Company may, but will in no event be obligated to, register any securities issuable upon
the exercise of all or any portion of the Stock Option pursuant to the Securities Act of 1933 (as
now in effect or as hereafter amended) or to take any other affirmative action in order to cause
the exercise of the Stock Option or the issuance of shares pursuant thereto to comply with any law
or regulation of any governmental authority. The certificates representing shares issued to
Optionee hereunder shall bear such legends as Company determines appropriate referring to
restrictions on the transfer of such shares imposed by this Agreement and such other legends as are
required or appropriate under applicable law.



     11. Disqualifying Disposition. The Optionee agrees and covenants that if he disposes
of any of the Common Stock in a “disqualifying disposition,” as described in Section 422 of the
Code, he will immediately contact the Company to inform it of such event.



     12. Taxes and Withholding.



     No later than the date of exercise of the Stock Option granted hereunder, the Optionee shall
pay to the Company or make arrangements satisfactory to the Committee regarding payment of any
federal, state or local taxes of any kind required by law to be withheld upon the exercise of such
Stock Option and the Company shall, to the extent permitted or required by law, have the right to
deduct from any payment of any kind otherwise due to the Optionee, federal, state and local taxes
of any kind required by law to be withheld upon the exercise of such Stock Option. The Optionee
should consult with a tax advisor before exercising this Option or disposing of the Shares to
obtain advice as to the consequences of such exercise or disposition.



     13. Notices.



     All notices and other communications under this Agreement shall be in writing and shall be
given by hand delivery to the other party or by facsimile, overnight courier, or registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:



     If to the Optionee, at the address provided on the signature page hereto.



     If to the Company:


Attn: Michael R. Garone, Chief Financial Officer

Emisphere Technologies, Inc.

240 Cedar Knolls Road, Suite 200

Cedar Knolls, NJ 07927

Telephone: (973) 532-8000

Facsimile: (973) 532-8121




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or to such other address or facsimile number as any party shall have furnished to the other in
writing in accordance with this Section 13. Notice and communications shall be effective when
actually received by the addressee.



     14. Effect of Agreement.



     Except as otherwise provided hereunder, this Agreement shall be binding upon and shall inure
to the benefit of any successor or successors of the Company, and to any transferee or successor of
the Optionee pursuant to Section 6.



     15. Laws Applicable to Construction.



     The interpretation, performance and enforcement of this Agreement shall be governed by the
laws of the State of Delaware without reference to principles of conflict of laws, as applied to
contracts executed in and performed wholly within the State of Delaware.



     16. Severability.



     The invalidity or enforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If the final judgment of a
court of competent jurisdiction declares that any provision of this Agreement is invalid or
unenforceable, the parties hereto agree that the court making the determination of invalidity or
unenforceability shall have the power, and is hereby directed, to reduce the scope, duration or
area of the provision, to delete specific words or phrases and to replace any invalid or
unenforceable provision with a provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable provision and this Agreement shall be
enforceable as so modified.



     17. Conflicts and Interpretation.



     This Agreement is subject to all the terms, conditions and provisions of the Plan. In the
event of any conflict between this Agreement and the Plan, the Plan shall control. In the event of
any ambiguity in this Agreement, any term which is not defined in this Agreement, or any matters as
to which this Agreement is silent, the Plan shall govern including, without limitation, the
provisions thereof pursuant to which the Committee has the power, among others, to (i) interpret
the Plan, (ii) prescribe, amend and rescind rules and regulations relating to the Plan and (iii)
make all other determinations deemed necessary or advisable for the administration of the Plan.



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     18. Headings.



     The headings of Sections herein are included solely for convenience of reference and shall not
affect the meaning or interpretation of any of the provisions of this Agreement.



     19. Amendment.



     This Agreement may not be modified, amended or waived except by an instrument in writing
signed by both parties hereto. The waiver by either party of compliance with any provision of this
Agreement shall not operate or be construed as a waiver of any other provision of this Agreement,
or of any subsequent breach by such party of a provision of this Agreement.



     20. Term.



     The term of this Agreement is ten years from the Grant Date, unless terminated prior to such
date in accordance with the provisions herein.



     21. Counterparts.



     This Agreement may be executed in counterparts, which together shall constitute one and the
same original.



[signature page follows]




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     IN WITNESS WHEREOF, as of the date first above written, the Company has caused this Agreement
to be executed on its behalf by a duly authorized officer and the Optionee has hereunto set the
Optionee’s hand.



	 	 	 	 	 
	 	 	EMISPHERE TECHNOLOGIES, INC.

 	 
	 	  	 	 
	 	 	By:  	 	 
	 	 	Title:  	 	 
	 
	 	 	OPTIONEE:

 	 
	 	  	 	 
	 	 	[Name of Optionee] 	 
	 
	 	 	Address: 	 
	 




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