Document:

exv4w2

Exhibit 4.2

 

 

WESTERN ALLIANCE BANCORPORATION,

Issuer,

to

WELLS FARGO BANK, NATIONAL ASSOCIATION,

Trustee

 

FIRST

SUPPLEMENTAL

INDENTURE

Dated as of

August 25, 2010

TO

SENIOR DEBT

INDENTURE

Dated as of

August 25, 2010

 

10.00% SENIOR NOTES DUE 2015

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	ARTICLE ONE DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	Section 1.01 Definition of Terms
	 	 	2	 
	 
	 	 	 	 
	ARTICLE TWO GENERAL TERMS AND CONDITIONS OF THE NOTES
	 	 	3	 
	 
	 	 	 	 
	Section 2.01 Designation and Principal Amount
	 	 	3	 
	Section 2.02 Form and Denomination of Notes
	 	 	3	 
	Section 2.03 Initial Limit on Amount of Series
	 	 	3	 
	Section 2.04 Ranking
	 	 	3	 
	Section 2.05 Further Issues Without Holders’ Consent
	 	 	3	 
	Section 2.06 Redemption; Sinking Fund
	 	 	4	 
	Section 2.07 Form and Payment
	 	 	4	 
	Section 2.08 Global Securities
	 	 	4	 
	Section 2.09 Place of Payment
	 	 	4	 
	Section 2.10 Non-Applicable Provisions
	 	 	4	 
	 
	 	 	 	 
	ARTICLE THREE ORIGINAL ISSUE OF NOTES
	 	 	4	 
	 
	 	 	 	 
	Section 3.01 Original Issue of Notes
	 	 	4	 
	 
	 	 	 	 
	ARTICLE FOUR COVENANTS
	 	 	5	 
	 
	 	 	 	 
	Section 4.01 Liens
	 	 	5	 
	Section 4.02 Provision of Financial Information
	 	 	6	 
	Section 4.03 Waiver of Covenants
	 	 	6	 
	 
	 	 	 	 
	ARTICLE FIVE MISCELLANEOUS
	 	 	6	 
	 
	 	 	 	 
	Section 5.01 Ratification of Indenture
	 	 	6	 
	Section 5.02 Trustee Not Responsible for Recitals
	 	 	6	 
	Section 5.03 Governing Law
	 	 	7	 
	Section 5.04 Separability
	 	 	7	 
	Section 5.05 Counterparts
	 	 	7	 
	i

 

 

     FIRST SUPPLEMENTAL INDENTURE, dated as of August 25, 2010 (this “Supplemental
Indenture”), between Western Alliance Bancorporation, a Nevada corporation having an address at
2700 West Sahara Avenue, Las Vegas, Nevada 89102 (hereinafter called the “Company,” which
term shall include any successors and assigns pursuant to the terms of this Supplemental
Indenture), and Wells Fargo Bank, National Association, a national banking association having an
address at MAC N9311-110, 625 Marquette Avenue, Minneapolis, MN 55479, Attn: Corporate Trust
Administration (hereinafter called the “Trustee”).

     WHEREAS, the Company executed and delivered the Senior Debt Indenture (the
“Indenture”), dated as of August 25, 2010, to the Trustee, to provide for the issuance of
the Company’s notes or other evidences of indebtedness (the “Securities”), to be issued in
one or more series;

     WHEREAS, pursuant to the terms of the Indenture, the Company desires to provide for the
establishment of a series of its notes under the Indenture to be known as its “10.00% Senior Notes
due 2015” (the “Notes”), the form and substance of and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this Supplemental Indenture;

     WHEREAS, the Board of Directors of the Company pursuant to resolutions duly adopted on April
27, 2010, and the Pricing Committee (as defined such resolutions) of the Board of Directors at its
meeting held on August 20, 2010, have duly authorized the issuance of the Notes and the other
amendments to the Indenture provided for in this Supplemental Indenture, and have authorized the
proper officers of the Company to execute any and all appropriate documents necessary or
appropriate to effect each such issuance;

     WHEREAS, this Supplemental Indenture is being entered into pursuant to the provisions of
Sections 301 and 901 of the Indenture;

     WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental
Indenture; and

     WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the
Company, in accordance with its terms, and to make each of the Notes, when executed by the Company
and authenticated and delivered by the Trustee or an authentication agent, the valid obligations of
the Company, have been performed, and the execution and delivery of this Supplemental Indenture has
been duly authorized in all respects.

     NOW THEREFORE, in consideration of the premises and the purchase and acceptance of the Notes
by the Holder thereof, and for the purpose of setting forth, as provided in the Indenture, the
forms and terms of the Notes, the Company covenants and agrees, with the Trustee, as follows:

1

 

ARTICLE ONE

DEFINITIONS

          Section 1.01 Definition of Terms.

     Unless the context otherwise requires:

               (a) each term defined in the Indenture has the same meaning when used in this Supplemental
Indenture;

               (b) the singular includes the plural and vice versa; and

               (c) headings are for convenience of reference only and do not affect interpretation.

     “Capital Stock” means, as to shares of a particular corporation, outstanding shares of stock
of any class whether now hereafter authorized, irrespective of whether such class shall be limited
to a fixed sum or percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation, dissolution or winding
up of such corporation.

     “Global Security” means, with respect to any series of Securities, a Security executed by the
Company and authenticated and delivered by the Trustee to the Depositary or pursuant to the
Depositary’s instruction, all in accordance with the Indenture and this Supplemental Indenture and
pursuant to a Company Order, which shall represent, and shall be denominated in an amount equal to
the aggregate principal amount of, all of the Outstanding Securities of such series or any portion
thereof, in either case having the same terms, including, without limitation, the same issue date,
date or dates on which principal is due, and interest rate or method of determining interest and
which, if the Securities of the series are Registered Securities, shall be registered in the name
of the Depositary, or its nominee.

     “Notes” has the meaning specified in the second whereas clause of the preamble.

     “Principal Subsidiary Bank” means (i) any of the Company’s Subsidiary Banks, the consolidated
assets of which constitute 40% or more of the consolidated assets of the Company and its
Subsidiaries or (ii) any other Subsidiary Bank designated as a Principal Subsidiary Bank pursuant
to a Board Resolution and set forth in an Officers’ Certificate delivered to the Trustee.

     “Subsidiary Bank” means any Subsidiary that is organized under the laws of the United States,
any State of the United States, the District of Columbia, any territory of the United States,
Puerto Rico, Guam, American Samoa or the Virgin Islands and either (i) accepts deposits that the
depositor has a legal right to withdraw on demand and engages in the business of making commercial
loans or (ii) is a trust company.

     “Voting Shares” means, as to shares of a particular corporation, outstanding shares of Capital
Stock of any class or classes having voting power under ordinary circumstances to elect at least a
majority of the board of directors.

2

 

ARTICLE TWO

GENERAL TERMS AND CONDITIONS OF THE NOTES

          Section 2.01 Designation and Principal Amount.

     There is hereby authorized and established a series of Securities under the Indenture,
designated as the “10.00% Senior Notes due 2015.”

          Section 2.02 Form and Denomination of Notes.

     The definitive form of the Notes and the Trustee’s Certificate of Authentication to be
endorsed thereon shall be substantially in the form set forth in Exhibit A attached hereto, which
is incorporated herein and made part hereof. The Notes shall bear interest and have such other
terms as are stated in the form of definitive Notes or in the Indenture. The Stated Maturity of
the Notes shall be September 1, 2015. The Notes shall be issued in denominations of $2,000 and
integral multiples of $1,000 in excess thereof.

          Section 2.03 Initial Limit on Amount of Series.

     The Notes shall initially be limited to U.S.$75,000,000 in aggregate principal amount.
Following the initial issuance of the Notes, the aggregate principal amount of Notes may be
increased as provided in Section 2.05.

          Section 2.04 Ranking.

     The Notes are unsecured and unsubordinated and shall rank equally among themselves and with
all of the Company’s other current and future unsecured and unsubordinated indebtedness. The Notes
will rank junior to all of the Company’s current and future secured indebtedness to the extent of
the value of the assets securing such indebtedness. The Notes will not be guaranteed by any of the
Company’s subsidiaries and will be structurally subordinated to all of the existing and future
liabilities of the Company’s subsidiaries.

          Section 2.05 Further Issues Without Holders’ Consent.

     The Company may, from time to time, without the consent of the Holders of the Notes, but in
compliance with the terms of the Indenture, issue additional Notes having the same ranking,
interest rate, maturity date and other terms as the Notes, except for the issue date, the issue
price and, if applicable, the first payment of interest on the additional Notes. Any such
additional Notes, together with the Notes herein provided for, will constitute a single series of
Securities under the Indenture; provided, however, that no additional Notes may be issued unless
they will be fungible with the Notes offered hereby for United States federal income tax and
securities law purposes; and provided, further, that the additional Notes have the same CUSIP
number as the Notes offered hereby. No additional Notes may be issued if any Event of Default has
occurred and is continuing with respect to the Notes.

3

 

          Section 2.06 Redemption; Sinking Fund.

     The Notes are not subject to redemption or repayment prior to the Stated Maturity and will not
be subject to any sinking fund. For the avoidance of doubt, Articles XI, XII and XIII contained in
the Indenture shall not be applicable to the Notes.

          Section 2.07 Form and Payment.

     Principal of and interest on the Notes shall be payable in U.S. dollars. For the avoidance of
doubt, Article XIV of the Indenture shall not be applicable to the Notes.

          Section 2.08 Global Securities.

     The Notes shall be issued as Registered Securities in the form of one or more Global
Securities, without coupons, registered in the name of Cede & Co. (the nominee of the Depositary,
which initially shall be The Depository Trust Company). Except as otherwise provided in Section
203 of the Indenture, the Global Securities described above may be transferred by the Depositary,
in whole but not in part, only to a nominee of the Depositary, or by a nominee of the Depositary to
the Depositary, or to a successor Depositary or to a nominee of such successor Depositary. For the
avoidance of doubt, all references contained in the Indenture to “Bearer Securities” and “Coupons”
do not apply to the Notes and shall be disregarded.

     Owners of beneficial interests in such Global Securities will not be considered the Holders
thereof for any purpose under the Indenture. The rights of owners of beneficial interests in such
Global Securities shall be exercised only through the Depositary.

          Section 2.09 Place of Payment.

     Notwithstanding anything contained in the Indenture to the contrary, the Place of Payment for
the Notes shall be the Corporate Trust Office and the Company shall not be required to maintain a
Place of Payment in New York City.

          Section 2.10 Non-Applicable Provisions.

     The Notes shall not (i) be convertible into and/or exchangeable for Common Stock or other
securities or property, (ii) be issuable upon the exercise of warrants, and (iii) be guaranteed by
any Person on the date of issuance. Company will not pay Additional Amounts on such Securities and
for the avoidance of doubt, Section 1004 of the Indenture shall not be applicable to the Notes.

ARTICLE THREE

ORIGINAL ISSUE OF NOTES

          Section 3.01 Original Issue of Notes.

4

 

     The Notes may, upon execution of this Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall, upon Company Order,
authenticate and deliver such Notes as in such Company Order provided.

ARTICLE FOUR

COVENANTS

     The Company shall comply with the following Covenants in addition to those Covenants set forth
in the Indenture:

          Section 4.01 Liens.

     As long as any of the Notes are Outstanding, the Company will not, and it will not permit any
Subsidiary to, pledge, mortgage or hypothecate or permit to exist any pledge, mortgage or
hypothecation or other lien upon Voting Shares of any Principal Subsidiary Bank to secure any
indebtedness for borrowed money without making effective provisions whereby any Notes then
Outstanding shall be equally and ratably secured with any and all such indebtedness; provided,
however, that this restriction shall not prevent the mortgage, pledge or hypothecation of, or the
establishment of a lien:

               (a) to secure indebtedness of the Company or a Subsidiary as part of the purchase price of
such Voting Shares, or incurred prior to, at the time of or within 120 days after acquisition
thereof for the purpose of financing all or any part of the purchase price thereof;

               (b) by the acquisition by the Company or any Subsidiary of any Voting Shares subject to
mortgages, pledges, hypothecations or other liens existing thereon at the time of acquisition
(whether or not the obligations secured thereby are assumed by the Company or such subsidiary);

               (c) by the assumption by the Company or a Subsidiary of obligations secured by mortgages on,
pledges or hypothecations of, or other liens on, any such Voting Shares, existing at the time of
the acquisition by the Company or such Subsidiary of such Voting Shares;

               (d) by the extension, renewal or refunding (or successive extensions, renewals or refundings),
in whole or in part, of any mortgage, pledge, hypothecation or other lien referred to in the
foregoing clauses (a), (b) and (c); provided, however, that the principal amount of any and all
other obligations and indebtedness secured thereby shall not exceed the principal amount not
secured at the time of each extension, renewal or refunding, and that such extension, renewal or
refunding shall be limited to all or a part of the Voting Shares that were subject to the mortgage,
pledge, hypothecation or other lien so extended, renewed or refunded;

               (e) to secure loans or other extensions of credit by a Subsidiary Bank subject to Section 23A
of the Federal Reserve Act or any successor or similar federal law or regulations promulgated
thereunder;

               (f) for taxes, assessments or other governmental charges or levies which are not yet due or
are payable without penalty or of which the amount, applicability or

5

 

validity is being contested by the Company or a Subsidiary in good faith by appropriate
proceedings and the Company or such Subsidiary shall have set aside on its books adequate reserves
with respect thereto (segregated to the extent required by generally accepted accounting
principles); or

               (g) with respect to any judgment, if such judgment shall not have remained undischarged, or
unstayed on appeal or otherwise, for more than 60 days.

          Section 4.02 Provision of Financial Information.

     Irrespective of whether the Company is subject to Section 13 or 15(d) of the Exchange Act, the
Company will cause to be filed with the Commission the annual reports, quarterly reports and other
documents which the Company would be required to file pursuant to Section 13 or 15(d) of the
Exchange Act on or prior to the respective dates by which the Company is, or would be, required to
file such documents if the Company was so subject. The Company will also (i) file with the Trustee
copies of the annual reports, quarterly reports, and other documents that the Company is, or would
be, required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act within
15 days of the date by which such documents are required to be filed by the Company with the
Commission; and (ii) if filing such documents with the Commission is not permitted under the
Exchange Act, promptly upon written request and payment of the reasonable cost of duplication and
delivery, supply copies of such documents to any Holder of the Notes.

          Section 4.03 Waiver of Covenants.

     The Company may omit to comply with any covenant or condition set forth in this Article Four,
if before or after the time for such compliance the Holders of at least a majority in principal
amount of the Notes then Outstanding shall, by Act of such Holders of Securities, either waive such
compliance in each instance or generally waive compliance with such covenant or condition, with a
copy of such waiver delivered to the Trustee, but no such waiver shall extend to or affect each
covenant or condition except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.

ARTICLE FIVE

MISCELLANEOUS

          Section 5.01 Ratification of Indenture.

     The Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and
confirmed, and this Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided; provided that the provisions of this Supplemental
Indenture apply solely with respect to the Notes. To the extent there is a conflict between the
Indenture and this Supplemental Indenture with respect to the Notes, the terms of this Supplemental
Indenture shall govern.

          Section 5.02 Trustee Not Responsible for Recitals.

6

 

     The recitals herein contained are made by the Company and not by the Trustee, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee makes no representation as to
the validity or sufficiency of this Supplemental Indenture.

          Section 5.03 Governing Law.

     This Supplemental Indenture and the Notes shall be governed by and construed in accordance
with the laws of the State of New York.

          Section 5.04 Separability.

     In case any one or more of the provisions contained in this Supplemental Indenture, the Notes
shall for any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions of this
Supplemental Indenture or of the Notes, but this Supplemental Indenture and the Notes shall be
construed as if such invalid or illegal or unenforceable provision had never been contained herein
or therein.

          Section 5.05 Counterparts.

     This Supplemental Indenture may be executed in any number of counterparts each of which shall
be an original; but such counterparts shall together constitute but one and the same instrument.
This Supplemental Indenture shall be effective when one or more counterparts has been signed by the
parties hereto and delivered (including by electronic transmission) to the other parties.

7

 

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed, as of the day and year first above written.

	 	 	 	 	 
	 	WESTERN ALLIANCE BANCORPORATION

 	 
	 	By:  	/s/ Randall S. Theisen
 	 
	 	Name:  	 	Randall S. Theisen 	 
	 	Title:  	 	Senior Vice President, General
Counsel and Assistant Secretary 	 
	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Trustee

 	 
	 	By:  	/s/ Richard Prokosch	 
	 	Name:  	 	Richard Prokosch 	 
	 	Title:  	 	Vice President 	 
	 

1

 

EXHIBIT A

FORM OF NOTE

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. EXCEPT AS OTHERWISE PROVIDED IN
SECTION 203 OF THE INDENTURE, THIS SECURITY MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO A
NOMINEE OF THE DEPOSITARY, OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY, OR TO A SUCCESSOR
DEPOSITARY OR TO A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE
OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY IS NOT A DEPOSIT OR OTHER OBLIGATION OF A DEPOSITORY INSTITUTION AND IS NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

 

 

WESTERN ALLIANCE BANCORPORATION

10.00% Senior Notes due 2015

No.: 1

CUSIP: 957638AB5

ISIN: US95763AB57

     WESTERN ALLIANCE BANCORPORATION, a Nevada corporation (hereinafter called the “Company”, which
term includes any successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of Seventy
Five Million Dollars ($75,000,000), or such other principal amount as may be set forth in the
records of the Depositary or the Securities Registrar hereinafter referred to in accordance with
the Indenture, on September 1, 2015 (the “Stated Maturity Date”). The Company further promises to
pay interest on said principal sum from August 25, 2010 or from the most recent interest payment
date on which interest has been paid or duly provided for, semi-annually in arrears on March 1 and
September 1 of each year (each such date, an “Interest Payment Date”), commencing March 1, 2011, at
the rate of 10.00% per annum until the principal hereof is paid or duly provided for or made
available for payment. In the event that any date, other than the Stated Maturity Date, on which
interest is payable on this Security is not a Business Day, then a payment of the interest payable
on such date will be made on the next succeeding Business Day (and without any interest or other
payment in respect of any such delay). In the event that the Stated Maturity Date is not a
Business Day, the payment of interest and principal will be made on the next succeeding Business
Day, and no interest on this Security or such payment will accrue for the period from and after the
Stated Maturity Date in respect of such delay. A “Business Day” shall mean any day other than a
Saturday, Sunday, or any other day on which banking institutions and trust companies in New York,
New York or the Place of Payment are permitted or required by law, regulation or executive order to
close. The interest installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest installment, which shall be the fifteenth (15th)
calendar day preceding the relevant Interest Payment Date whether or not such day is a Business
Day. Any such interest installment not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.

     Payment of the principal of and interest on this Security will be made at the Corporate Trust
Office of the Trustee, in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided, however, that

 

 

at the option of the Company payment of interest may be made by check mailed to Holders of
Registered Securities entitled thereto as such Holders shall appear in the Securities Register.

     Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.

[Signature on next page]

 

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

	 	 	 	 	 
	 	WESTERN ALLIANCE BANCORPORATION

 	 
	 	By:  	Randall S. Theisen
 	 
	 	 	Name:  	Randall S. Theisen 	 
	 	 	Title:  	Senior Vice President, General Counsel
and Assistant Secretary 	 
	 
	 	 	 
	 	By:  	                                              /s/ Linda Mahan
 	 
	 	 	Name:  	Linda Mahan 	 
	 	 	Title:  	Secretary 	 
	 

Attest:

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION,

Not in its individual capacity but solely as Trustee

 	 
	 	By:  	/s/ Richard Prokosch
 	 
	 	 	AUTHORIZED OFFICER 	 
	 	
Dated: August 25, 2010	 
	 

 

 

[Reverse of Security]

     This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under a Senior Notes Indenture,
dated as of August 25, 2010, as supplemented by that First Supplemental Indenture, dated as of
August 25, 2010 (herein called the “Indenture”), between the Company and Wells Fargo Bank, National
Association, as Trustee (herein called the “Trustee”, which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Trustee, the Company and the Holders of the Securities, and to which Indenture
reference is hereby made for a statement of the terms upon which the Securities of this series are,
and are to be, authenticated and delivered. By the terms of the Indenture, the Securities are
issuable in series that may vary as to amount, date of maturity, rate of interest, rank and in any
other respect provided in the Indenture.

     All terms used in this Security that are defined in the Indenture and not otherwise defined
herein shall have the meanings assigned to such terms in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the Company, when
authorized by a Board Resolution, and the Trustee at any time to enter into a supplemental
indenture or indentures for the purpose of adding any provisions to or changing in any manner or
eliminating any provisions of the Indenture or modifying in any manner the rights and obligations
of the Holders of the Securities of each such series under the Indenture, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding Securities of all series
(voting as one class) to be affected by such supplemental indenture. The Indenture also contains
provisions permitting Holders of a specified percentage in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the Indenture, if an Event of Default with
respect to the Securities of this series at the time Outstanding occurs and is continuing, then and
in every such case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of this series may declare the principal amount of all the Securities of
this series to be due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders).

     No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of, premium (if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in the Securities
Register, upon presentment of this Security for registration of transfer at the office or agency of
the

 

 

Company maintained under Section 305 of the Indenture duly endorsed by, or accompanied by a
written instrument of transfer substantially in the form attached hereto duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities
of this series, of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall be made for any such
registration of transfer or exchange, but, subject to certain exceptions set forth in the
Indenture, the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee shall treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

     The Securities of this series are issuable only in registered form without coupons in
denominations of $2,000 and any integral multiples of $1,000 in excess thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of such series of a different
authorized denomination, as requested by the Holder surrendering the same.

     THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

 

[FORM OF TRANSFER NOTICE]

To assign this Security, fill in the form below:

(I) or (we) assign and transfer this Note to:

(Insert assignee’s legal name)

(Insert assignee’s soc. Sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint                                          to transfer this Security on the books of the Company.
The agent may substitute another to act for him.

     Date:                                         

Your signature:                                         

(Sign exactly as your name appears on the face of this Security)

     Signature Guarantee*:                                         

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).exv4w1

Exhibit 4.1

FORM OF WARRANT

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

EMISPHERE TECHNOLOGIES, INC.

WARRANT

			
	 	 	 
	Warrant No. A-[XX]
	 	Original Issue Date: August 25, 2010

     EMISPHERE TECHNOLOGIES, INC., a Delaware corporation (the “Company”), hereby certifies
that, for value received, [NAME OF HOLDER] or its permitted registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of [NUMBER] shares of
Common Stock (as defined below) of the Company (each such share, a “Warrant Share” and all
such shares, the “Warrant Shares”) at an
exercise price equal to $1.26 per
share (as adjusted from time to time as provided herein, the “Exercise Price”), at any time
and from time to time on or after the Original Issue Date and through and including the Expiration
Date (as defined below), and subject to the following terms and conditions:

     This Warrant is one of a series of warrants issued pursuant to that certain Securities
Purchase Agreement dated August 25, 2010 (the “Subscription Date”), by and between the
Company and each the purchasers identified therein (the “Purchase Agreement”). All such
warrants are referred to herein, collectively, as the “Warrants.”

     1. Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given to such terms in
Section 19.

     2. List of Warrant Holders. 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 (which shall include the initial Holder or, as the case may be, any registered
assignee to which this Warrant is permissibly assigned hereunder 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.

     3. List of Transfers; Restrictions on Transfer.

     (a) This Warrant may be offered for sale, sold, transferred or assigned without the consent of
the Company, except as may otherwise be required by Section 2(g) of the Purchase Agreement.

     (b) The Company shall register any such transfer of all or 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 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 (in
accordance with Section 3(e)), 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 in respect of the new Warrant that the Holder has in respect of this Warrant.

     (c) This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Warrant or Warrants (in accordance with Section 3(e)) representing
in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant,
and each such new Warrant will represent the right to purchase such portion of such Warrant Shares
as is designated by the Holder at the time of such surrender; provided, however, no warrants for
fractional shares of Common Stock shall be given.

     (d) If, but only if, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the Holder is an affiliate of the Company, and transfer of this Warrant
shall not be registered pursuant to an effective registration statement under the Securities Act
and under applicable state securities or blue sky laws, the Company may require, as a condition of
allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be,
furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the effect that such
transfer may be made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company
an investment letter in form and substance acceptable to the Company and (iii) that the transferee
be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

     (e) Whenever the Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as
indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to this Section 3 or Section 7,
the Warrant Shares designated by the Holder which, when added to the
number of shares of Common Stock underlying the other new Warrants issued in connection with
such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii)
shall

2

 

have an issuance date, as indicated on the face of such new Warrant which is the same as the
Original Issue Date, and (iv) shall have the same rights and conditions as this Warrant

     4. Exercise and Duration of Warrants.

     (a) All or any part of this Warrant shall be exercisable by the registered Holder in any
manner permitted by Section 3 of this Warrant at any time and from time to time on or after the
Original Issue Date and through and including the Expiration Date. Subject to Section 11 hereof,
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 and this Warrant shall be terminated and no
longer outstanding. In addition, if cashless exercise would be permitted under Section 4(c) of
this Warrant, then all or part of this Warrant may be exercised by the registered Holder utilizing
such cashless exercise provisions at any time, or from time to time, on or after the Original Issue
Date and through and including the Expiration Date.

     (b) The Holder may exercise this Warrant by delivering to the Company an exercise notice, in
the form attached hereto (the “Exercise Notice”), completed and duly signed. If such
Holder is not utilizing the cashless exercise provisions set forth in this Warrant, within one (1)
Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to
the Company of an amount equal to the Exercise Price for the number of Warrant Shares as to which
this Warrant is being exercised (the “Aggregate Exercise Price”). The date the Exercise
Notice is delivered to the Company (as determined in accordance with the notice provisions hereof)
is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing
the right to purchase the remaining number of Warrant Shares. Additionally, at the request of the
Holder, if this Warrant shall have been exercised in part and the Holder shall have surrendered
this Warrant certificate, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.

     (c) Notwithstanding anything contained herein to the contrary (other than Section 11 below),
if at the time of exercise hereof, but not prior to six months after the Original Issue Date, a
Registration Statement (as defined in the Registration Rights Agreement (as defined in the Purchase
Agreement)) is not effective (or the prospectus contained therein is not available for use) for the
resale by the Holder of all of the Warrant Shares, then the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise
Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock
determined according to the following formula (a “Cashless Exercise”):

	 	 	 

	Net Number = 
	(A x B) - (A x C)	 
	 
	B	 

3

 

For purposes of the foregoing formula:

	 	A= 	 	 the total number of shares with respect to which this Warrant
is then being exercised.
	 
	 	B=  	 	as applicable: (i) the Closing Sale Price of the Common Stock
on the Trading Day immediately preceding the date of the applicable Exercise
Notice if such Exercise Notice is (1) both executed and delivered pursuant to
Section 4 hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 4 hereof on a Trading Day prior to the opening of
“regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 4 hereof and (iii) the Closing Sale Price of the
Common Stock on the date of the applicable Exercise Notice if the date of such
Exercise Notice is a Trading Day and such Exercise Notice is both executed and
delivered pursuant to Section 4 hereof after the close of “regular trading
hours” on such Trading Day.
	 
	 	C= 	 	 the Exercise Price then in effect for the applicable Warrant
Shares at the time of such exercise.

     (d) In the case of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the number of Warrant Shares to be issued pursuant to the terms hereof, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 16.

     5. Delivery of Warrant Shares.

     (a) On or before the first (1st) Trading Day following the date on which the
Company has received an Exercise Notice, the Company shall transmit by facsimile an acknowledgment
of confirmation of receipt of such Exercise Notice, to the Holder and the Company’s transfer agent
(the “Transfer Agent”). On or before the third (3rd) Trading Day following the
date on which the Company has received such Exercise Notice, the Company shall (X) provided that
the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program and the Warrant Shares can be issued without restrictive legends,
upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with
DTC through its Deposit/Withdrawal at Custodian system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program or the Warrant Shares cannot be
issued without restrictive legends, issue and deliver to the Holder or, at the Holder’s instruction
pursuant to the Exercise Notice, the Holder’s agent or designee, in each case, sent by reputable
overnight courier to the address as specified in the applicable Exercise Notice, a certificate,
registered in the Company’s share register in the name of the Holder or its

4

 

designee (as indicated
in the applicable Exercise Notice), for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed
for all corporate purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited
to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant
Shares (as the case may be). The Holder, or any Person permissibly so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares
as of the Exercise Date. Notwithstanding the foregoing, except in the case where an exercise of
this Warrant is validly made pursuant to a cashless exercise, the Company’s failure to deliver
Warrant Shares to the Holder on or prior to the later of (x) the close of the third Trading Day
after delivery of an Exercise Notice and (y) the Trading Day in which the Company’s receives the
Aggregate Exercise Price (such later date, the “Share Delivery Deadline”) shall not be
deemed to be a breach of this Warrant.

     (b) If by the Share Delivery Deadline, the Company fails to deliver to the Holder a
certificate representing the required number of Warrant Shares in the manner required pursuant to
Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares,
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 which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company shall, within three Trading
Days after the Holder’s request and in the Holder’s sole discretion, either (1) pay in cash to the
Holder an amount equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate
or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates
representing such shares of Common Stock or credit the Holder’s balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise
hereunder (as the case may be) 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 Sale Price of the Common Stock on the Trading Day immediately preceding the date of the
applicable Exercise Notice.

     (c) To the extent permitted by law, 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 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 of any obligation to the Company or
any violation or alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance that might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. Nothing herein shall limit a 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 the
Warrant as required pursuant to the terms hereof.

5

 

     6. 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 that may be payable in
respect of any transfer involved in the registration of any certificates for Warrant Shares or
Warrants in a name other than that of the Holder. 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.

     7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a new Warrant (in accordance
with Section 3(e)) , but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reasonable indemnity (which shall not include a
surety bond), if requested. Applicants for a new Warrant under such circumstances shall also
comply with such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a new Warrant is requested as a result of a
mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as
a condition precedent to the Company’s obligation to issue the new Warrant.

     8. 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 that 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
and restrictions of Section 9). 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. If,
notwithstanding the foregoing, and not in limitation thereof, at any time while any of the Warrants
remain outstanding the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the
Warrants at least a number of shares of Common Stock equal to the number of shares of Common Stock
as shall from time to time be necessary to effect the exercise of all of the Warrants then
outstanding (the “Required Reserve Amount”, and such reservation failure, an
“Authorized Share Failure”),
then the Company shall promptly take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve
Amount for all the Warrants then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its board of directors
to recommend to the stockholders that they approve such proposal.

6

 

     9. 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
9.

     (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a 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, (ii) subdivides (by any stock
split, stock dividend, recapitalization or otherwise) outstanding shares of Common Stock into a
larger number of shares, or (iii) combines (by combination, reverse stock split or otherwise)
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 (i) 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 (ii) or (iii) of this paragraph shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

     (b) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after
the date of the Purchase Agreement until the six (6) month anniversary of the Original Issue Date,
(I) the Company issues or sells, or in accordance with this Section 9 is deemed to have issued or
sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or
held by or for the account of the Company) for a consideration per share (the “New Issuance
Price”) less than a price equal to the Exercise Price in effect immediately prior to such issue
or sale or deemed issuance or sale (such Exercise Price then in effect is referred to as the
“Applicable Price”) (the foregoing a “Dilutive Issuance”), (II) as a result of any
Dilutive Issuance, any conversion price or any exercise price (as the case may be) of any MHR
Securities is actually reduced or otherwise decreased or lowered (such a resulting Dilutive
Issuance is referred to as an “MHR Dilutive Issuance” and such reduced, decreased or
lowered (as the case may be) MHR conversion price or exercise price (as the case may be) is
referred to herein as the “New MHR Issuance Price”) and (III) such New MHR Issuance Price
is less than the Applicable Price, then immediately after such Dilutive Issuance, the Exercise
Price then in effect shall be reduced to an amount equal to
the New MHR Issuance Price. For purposes of determining the adjusted Exercise Price under this
Section 9(b), the following shall be applicable:

     (i) Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is issuable upon
the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the granting or sale of such Option for such price per
share. For purposes of this Section 9(b)(i), the “lowest price per share for which one share
of Common Stock is issuable upon the exercise of

7

 

any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such
Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any one share
of Common Stock upon the granting or sale of such Option, upon exercise of such Option and
upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of
such Option and (y) the lowest exercise price set forth in such Option for which one share
of Common Stock is issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option
minus (2) the sum of all amounts paid or payable to the holder of such Option (or any
affiliate or designee of such holder) upon the granting or sale of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of such Option (or any
affiliate or designee of such holder). Except as contemplated by Section 9(b)(iii) below,
the actual issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities shall not be deemed to be an
issuance or sale of Common Stock for purposes of clause (I) of Section 9(b) that may trigger
an adjustment hereunder.

     (ii) Issuance of Convertible Securities. If the Company in any manner issues or
sells any Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this Section 9(b)(ii),
the “lowest price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the Convertible Security
and upon
conversion, exercise or exchange of such Convertible Security and (y) the lowest
conversion price set forth in such Convertible Security for which one share of Common Stock
is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any affiliate or designee of
such holder) upon the issuance or sale of such Convertible Security plus the value of any
other consideration received or receivable by, or benefit conferred on, the holder of such
Convertible Security (or any affiliate or designee of such holder). Except as contemplated
by Section 9(b)(iii) below, the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities shall not be deemed to be an
issuance or sale of Common Stock for purposes of Section 9(b)(i) that may trigger an
adjustment hereunder, and any such issue or sale of such Convertible Securities made upon
exercise of any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 9(b), except as contemplated below, shall not
be deemed to be an issuance or sale of Common Stock for purposes of clause (I) of Section
9(b) hereunder that may trigger an adjustment hereunder.

8

 

     (iii) Change in Option Price or Rate of Conversion. If the purchase or exercise
price provided for in any Options, the additional consideration, if any, payable upon the
issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or exercisable or exchangeable for shares of
Common Stock decreases at any time, then for purposes of this Section 9(b) the shares of
Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such decrease. .

     (iv) Calculation of Consideration Received. If any Option or Convertible
Security is issued in connection with the issuance or sale or deemed issuance or sale of any
other securities of the Company, together comprising one integrated transaction, (x) such
Option or Convertible Security (as applicable) will be deemed to have been issued for
consideration equal to the Black Scholes Consideration Value thereof and (y) the other
securities issued or sold or deemed to have been issued or sold in such integrated
transaction shall be deemed to have been issued for consideration equal to the difference of
(I) the aggregate consideration received by the Company minus (II) the Black Scholes
Consideration Value of each such Option or Convertible Security (as applicable). If any
 shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor will be deemed to be
the net amount of consideration received by the Company therefor. If any shares of Common
Stock, Options or Convertible Securities are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company will be the fair value of
such consideration, except where such consideration consists of publicly traded securities,
in which case the amount of consideration received by the Company for such securities will
be the arithmetic average of the VWAPs of such security for each of the five (5) Trading
Days immediately preceding the date of receipt. If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair
value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five (5) Trading
Days after the tenth (10th) day following such Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the Holder. The determination of
such appraiser shall be final and binding upon all parties absent manifest error and the
fees and expenses of such appraiser shall be borne by the Company.

     (v) Waiver. For the avoidance of doubt, and notwithstanding anything contained
in this Section 9(b) to the contrary, the Holder acknowledges that (1) MHR has the right, in
its sole discretion, to waive (whether or not for consideration) any anti-dilution,
conversion price and/or exercise price adjustments under the MHR Securities, and (2)
determination of whether and to what extent, if any, the Exercise Price shall be adjusted in
accordance with the terms of this Section 9(b) shall be determined only after giving full
effect to any such waiver.

9

 

     (c) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock covered by Section
9(a)), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset
(in each case, “Distributed Property”), then, upon any exercise of this Warrant that occurs
after the record date fixed for determination of stockholders entitled to receive such
distribution, the Holder shall be entitled to receive, in addition to the Warrant Shares otherwise
issuable upon such exercise (if applicable) (without regard to any limitations on exercise hereof,
including without limitation, the Maximum Percentage), the Distributed Property that such Holder
would have been entitled to receive in respect of such number of Warrant Shares had the Holder been
the record holder of such Warrant Shares immediately prior to such record date (provided, however,
to the extent that the issuance of any Distributed Property would result in the Holder exceeding
the Maximum Percentage, then the Holder shall not be entitled to receive such Distributed Property
to such extent (or the beneficial ownership of any such shares of Common Stock as a result of
issuance of Distributed Property to such extent) and the Holder’s right to receive such Distributed
Property to such extent shall be held in abeyance for the benefit of the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage).

     (d) Fundamental Transactions.

     (i) Prior to the consummation of each Fundamental Transaction pursuant to which holders
of shares of Common Stock are entitled to receive securities or other assets with respect to
or in exchange for shares of Common Stock (a “Corporate Event”), the
Company shall make appropriate provision to insure that the Holder will thereafter have
the right to receive upon an exercise of this Warrant at any time after the consummation of
the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the
 shares of the Common Stock (or other securities, cash, assets or other property (except such
items  still issuable under Sections 9(c) above, which shall
continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription rights) which the
Holder would have been entitled to receive upon the happening of the applicable Fundamental
Transaction had this Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant). Provision
made pursuant to the preceding sentence shall be in a form and substance reasonably
satisfactory to the Holder.

     (ii) Notwithstanding anything to the contrary, in the event of a Change of Control that
(i) occurs at any time during the period commencing on the date of the Purchase Agreement
and ending on the six (6) month anniversary of the Original Issue Date and (ii) is (1) an
all cash transaction or (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the
Exchange Act, then the Company or any Successor Entity (as defined below) shall, at the
Holder’s option, exercisable at any time concurrently with, or within 30 days after, the
consummation of the applicable Change of

10

 

Control, and in lieu of any other consideration
which such Holder would have been entitled to receive in respect of such Warrant (and any
underlying Common Stock) in the applicable Change of Control, purchase this Warrant from the
Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the
remaining unexercised portion of this Warrant on the date of the consummation of the
applicable Change of Control.

     (iii) The provisions of this Section 9(d) shall apply similarly and equally to
successive Corporate Events and shall be applied as if this Warrant (and any such subsequent
warrants) were fully exercisable and without regard to any limitations on the exercise of
this Warrant (provided that the Holder shall continue to be entitled to the benefit of the
Maximum Percentage, applied however with respect to shares of capital stock registered under
the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other
warrant)).

     (e) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraphs (a) and (b) of this Section 9, 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 adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to
such adjustment.

     (f) Calculations. All calculations under this Section 9 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.

     (g) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will, at the written request of the Holder, 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.

     (h) Notice of Events. The Company will give written notice to the Holder (i) at least
two (2) days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common Stock, or (B) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or liquidation and (iii) at
least two (2) Trading Days prior to the consummation of any Change of Control. Notwithstanding the
foregoing, the failure deliver such notice or any defect therein shall not affect the validity of
the corporate action required to be described in such notice. To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information regarding the Company
(including its subsidiaries), the Company shall simultaneously file such notice with the SEC (as
defined in the Purchase Agreement) pursuant to a Current Report on Form 8-K. It is expressly
understood and agreed that the time of execution specified by the Holder in each Exercise Notice
shall be definitive and may not be disputed or challenged by the Company.

11

 

     10. Payment of Exercise Price. The Holder shall pay the Exercise Price by delivering
immediately available funds to the Company unless the Holder has specified a “Cashless Exercise” in
the applicable Exercise Notice.

     11. Limitations on Exercise. Notwithstanding anything to the contrary contained in
this Warrant, this Warrant shall not be exercisable by the Holder hereof to the extent (but only to
the extent) that the Holder or any of its affiliates would beneficially own in excess of 4.9% (the
“Maximum Percentage”) of the Common Stock. To the extent the above limitation applies, the
determination of whether this Warrant shall be exercisable (vis-à-vis other convertible,
exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which
such securities shall be exercisable (as among all such securities owned by the Holder) shall,
subject to such Maximum Percentage limitation, be determined on the basis of the first submission
to the Company for conversion, exercise or exchange (as the case may be). No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of exercisability. For
the purposes of this paragraph, beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of percentage ownership) shall be
determined in accordance with Section 13(d) of the 1934 Act (as defined in the Purchase Agreement)
and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be
implemented in a manner otherwise than in strict conformity with the
terms of this paragraph to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation
herein contained or to make changes or supplements necessary or desirable to properly give effect
to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply to a
successor Holder of this Warrant. The holders of Common Stock shall be third party beneficiaries of
this paragraph and the Company may not waive this paragraph without the consent of holders of a
majority of its Common Stock. For any reason at any time, upon the written or oral request of the
Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding, including by virtue of any prior conversion
or exercise of convertible or exercisable securities into Common Stock, including, without
limitation, pursuant to this Warrant or securities issued pursuant to the Purchase Agreement. For
any reason at any time, upon the written or oral request of the Holder, the Company shall within
one (1) Business Day confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without limitation, pursuant to this Warrant
or securities issued pursuant to the Purchase Agreement.

     12. No Fractional Shares. No fractional Warrant Shares will be issued in connection
with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be
issuable, the Company shall pay cash equal to the product of such fraction multiplied by the
Closing Bid Price of one Warrant Share on the applicable Exercise Date.

     13. 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 at or

12

 

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. The addresses for such notices or communications shall be: if to the Company, to
Emisphere Technologies, Inc., 240 Cedar Knolls Road, Suite 200, Cedar Knolls, New Jersey 07927.
Attention: Chief Financial Officer, Facsimile No.: (973) 532-8121 (or such other address as the
Company shall indicate in writing in accordance with this Section) or (ii) if to the Holder, to the
address or facsimile number appearing on the Warrant Register (or such other address as the Company
shall indicate in writing in accordance with this Section).

     14. 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.

     15. Noncircumvention. The Company hereby covenants and agrees that the Company will
not, by amendment of its Articles of Incorporation (as defined in the Purchase Agreement), Bylaws
(as defined in the Purchase Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect,
(ii) shall take all such actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of
this Warrant, and (iii) shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of effecting the exercise of the Warrants, the maximum number of shares of
Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on exercise).

     16. Dispute Resolution. In the case of a dispute as to the determination of the
Exercise Price, the Closing Bid Price, the Closing Sale Price, the Bid Price or fair market value
or the arithmetic calculation of the number of Warrant Shares (as the case may be), the Company or
the Holder (as the case may be) shall submit the disputed determinations or arithmetic calculations
(as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable
notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no
notice gave rise to such dispute, at any time after the Holder learned of the

13

 

circumstances giving
rise to such dispute. If the Holder and the Company are unable to agree upon such determination or
calculation (as the case may be) of the Exercise Price, the Closing Bid Price, the Closing Sale
Price, the Bid Price or fair market value or the number of Warrant Shares (as the case may be)
within three (3) Business Days of such disputed determination or arithmetic calculation being
submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2)
Business Days submit via facsimile (a) the disputed determination of the Exercise Price, the
Closing Bid Price, the Closing Sale Price, the Bid Price or fair market value (as the case may be)
to an independent, reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of the number of Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause the investment bank or the accountant (as
the case may be) to perform the determinations or calculations (as the case may be) and notify the
Company and the Holder of the results no later than ten (10) Business Days from the time it
receives such disputed determinations or calculations (as the case may be). Such investment bank’s
or accountant’s determination or calculation (as the case may be) shall be binding upon all parties
absent demonstrable error. If a disputed determination or arithmetic calculation is submitted to
the investment bank or the accountant (as the case may be) pursuant to this Section 16, then the
prevailing party in such determination or calculation shall be reimbursed by the other party for
its costs and expenses (including any and all fees and expenses charged by the investment back or
accountant) incurred in connection with the determination or calculation (as the case may be).

     17. Remedies, Characterization, Other Obligations, Breaches and Injunctive Relief. The
remedies provided in this Warrant shall be cumulative and in addition to all other remedies
available under this Warrant and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual damages for any failure by the Company to comply with the
terms of this Warrant. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, exercises and the like (and the computation thereof) shall be
the amounts to be received by the Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction restraining any breach,
without the necessity of showing economic loss and without any bond or other security being
required. The Company shall provide all information and documentation to the Holder that is
requested by the Holder that is reasonably necessary to enable the Holder to confirm the Company’s
compliance with the terms and conditions of this Warrant. The issuance of shares and certificates
for shares as contemplated hereby upon the exercise of this Warrant shall be made without charge to
the Holder or such shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than the Holder or its
agent on its behalf.

14

 

     18. Miscellaneous.

     (a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder any legal or
equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in
writing signed by the Company and the Holder, or their successors and assigns. No waiver shall be
effective unless it is in writing and signed by an authorized representative of the waiving party.

     (b) This Warrant shall be governed by and construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance of this Warrant
shall be governed by, the internal laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than the
State of New York. The parties 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, 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 brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. THE
PARTIES HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     (c) If any provision of this Warrant is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise
be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability of such provision
shall not affect the validity of the remaining provisions of this Warrant so long as this Warrant
as so modified continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or
reciprocal obligations of the parties or the practical realization of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to
replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect
of which comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).

     (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

15

 

commercially
reasonable substitute therefore, and upon so agreeing, shall incorporate such substitute provision
in this Warrant.

     (f) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by being a
Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

     19. Certain Definitions. For purposes of this Warrant, the following terms shall have
the following meanings:

     (a) “Bid Price” means, for any security as of the particular time of determination, the bid
price for such security on the Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of
determination, or if the foregoing does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg
as of such time of determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market makers for such security
as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.)
as of such time of determination. If the Bid Price cannot be calculated for a security as of the
particular time of determination on any of the foregoing bases, the Bid Price of such security
as of such time of determination shall be the fair market value as mutually determined by the
Company and the Holder. If the Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in accordance with the procedures in
Section 16. All such determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

     (b) “Black Scholes Consideration Value” means the value of the applicable Option or
Convertible Security (as the case may be) as of the date of issuance thereof calculated using the
Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect
to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of
such Option or Convertible Security (as the case may be) as of the date of issuance of such Option
or Convertible Security (as the case may be) and (iii) an expected volatility equal to the greater
of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of
issuance of such Option or Convertible Security (as the case may be).

     (c) “Black Scholes Value” means the value of the unexercised portion of this Warrant based on
the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined
as of the day of consummation of the applicable Change of Control for pricing purposes and
reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the time between the date of the public announcement of the applicable Change of Control and the
Expiration Date, (B) an expected volatility equal to the

16

 

greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public
announcement of the applicable Change of Control, (C) the underlying price per share used in such
calculation shall be the sum of the price per share being offered in cash, if any, plus the value
of any non-cash consideration, if any, being offered in such Change of Control and (D) a remaining
option time equal to the time between the date of the public announcement of the applicable Change
of Control and the Expiration Date.

     (d) “Bloomberg” means Bloomberg, L.P.

     (e) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.

     (f) “Change of Control” means at any time while this Warrant is outstanding (i) the Company,
directly or indirectly, effects any merger or consolidation with or into another Person, in which
the shareholders of the Company as of immediately prior to the transaction own less than a majority
of the outstanding stock of the surviving entity, (ii) the Company, directly or indirectly, effects
any sale of all or substantially all of its assets in one or a series of related transactions,
(iii) any purchase, tender or exchange offer (whether by the Company or any other Person) that is
accepted by the holders of more than 50% of the outstanding shares of Voting
Stock of the Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (iv) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property.

     (g) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing trade price (as
the case may be) then the last bid price or last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price
or the Closing Sale Price (as the case may be) of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be
resolved in accordance with the procedures in Section 16. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.

17

 

     (h) “Common Stock” means (i) the Company’s shares of common stock, $0.01 par value per share,
and (ii) any capital stock into which such common stock shall have been changed or any share
capital resulting from a reclassification of such common stock.

     (i) “Convertible Securities” means any stock or other security (other than Options) that is at
any time and under any circumstances, directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common
Stock.

     (j) “Eligible Market” means The New York Stock Exchange, the NYSE Amex, the Nasdaq Global
Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the Principal Market.

     (k) “Expiration Date” means the date that is the fifth (5th) anniversary of the
Original Issue Date or, if such date falls on a day other than a Business Day or on which trading
does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

     (l) “Fundamental Transaction” means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions, (1)
consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the
surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or assets to any other
Person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted
by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the Person or Persons making or party
to, or associated or affiliated with the Persons making or party to, such purchase, tender or
exchange offer), or (4) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with any other Person whereby such other Person acquires more than 50% of the
outstanding shares of Voting Stock of the Company (not including any shares of Voting Stock of the
Company held by the other Person or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share purchase agreement or other business
combination), or (5) (I) reorganize, recapitalize or reclassify the Common Stock, or (II) effect or
consummate a stock combination, reverse stock split or other similar transaction involving the
Common Stock, or (ii) any “person” or “group” (as these terms are used for purposes of Sections
13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall
become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding
Voting Stock of the Company (other than MHR).

     (m) “MHR” means, collectively, MHR Fund Management, LLC and any of its affiliated investment
funds and controlled accounts.

     (n) “MHR Securities” means (i) the MHR Notes and (ii) the MHR Warrants.

     (o) “MHR Notes” means those certain 11% Senior Secured Convertible Notes from

18

 

time to time
outstanding in the name of MHR Capital Partners (100) LP, MHR Capital Partners Master Account LP,
MHR Institutional Partners II LP and/or MHR Institutional Partners IIA LP.

     (p) “MHR Warrants” means, collectively, the following (x) warrants of the Company dated as of
September 21, 2006: (i) Warrant No. 

A-12 issued to MHR Institutional Partners IIA LP; (ii) Warrant
No. A-13 issued to MHR Institutional Partners II LP; (iii) Warrant No. A-14 issued to MHR Capital
Partners (100) LP; and (iv) Warrant No. A-15 issued to MHR Capital Partners Master Account LP and
(y) warrants issued by the Company to MHR and the MHR Purchasers (as defined in the Purchase
Agreement) in connection with the Concurrent Offering (as defined in the Purchase Agreement).

     (q) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

     (r) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

     (s) “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity or a government or any
department or agency thereof.

     (t) “Principal Market” means the OTC Bulletin Board.

     (u) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected
by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered
into.

     (v) “Trading Day” means any day on which the Common Stock is traded on the Principal Market,
or, if the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder and the Company.

     (w) “Voting Stock” of a Person means capital stock of such Person of the class or classes
pursuant to which the holders thereof have the general voting power to elect, or the general power
to appoint, at least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital stock of any other class or classes shall have
or might have voting power by reason of the happening of any contingency).

19

 

     (x) “VWAP” means, for any security as of any date, the dollar volume-weighted average price
for such security on the Principal Market (or, if the Principal Market is not the principal trading
market for such security, then on the principal securities exchange or securities market on which
such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price”
function or, if the foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for such security during
the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the “pink sheets” by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.). If VWAP cannot be calculated for such
security on such date on any of the foregoing bases, the VWAP of such security on such date shall
be the fair market value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 16. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

20

 

     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:  	/s/
Michael R. Garone	 
	 	Name:  	Michael R. Garone 	 
	 	Title:  	Chief Financial Officer 	 

21

 

	 	 	 	 	 

EXERCISE NOTICE

EMISPHERE TECHNOLOGIES, INC.

WARRANT
NO. A-[XX] DATED AUGUST 25, 2010

Ladies and Gentlemen:

     (1) Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

                               a “Cash Exercise” with respect to                      Warrant
Shares; and/or

                               a “Cashless Exercise” with respect to                      Warrant
Shares.

     In the event that the Holder has elected a Cashless Exercise with respect to some or all of
the Warrant Shares to be issued pursuant hereto, the Holder hereby represents and warrants that (i)
this Exercise Notice was executed by the Holder at                      [a.m.][p.m.] on the date set forth
below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice
was $                    .

     (2) Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
shall pay the Aggregate Exercise Price in the sum of $                                         to the Company in
accordance with the terms of the Warrant.

     (3) Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee
or agent as specified below,                      Warrant Shares in accordance with the terms of the Warrant.
Delivery shall be made to Holder, or for its benefit, to the following address:

 

 

 

 

     (4) Limitations on Exercise. By its delivery of this Exercise Notice, the undersigned
represents and warrants to the Company that in giving effect to the exercise evidenced hereby the
Holder will not beneficially own in excess of the number of shares of Common Stock (as determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned
under Section 11 of this Warrant to which this notice relates.

	 	 	 	 	 

	 

	 	HOLDER
	 	 
	 
	 	 	 	 
	 
	 

	 	 	 	 
	 

	 	(Print name)	 	 

	 	 	 	 	 	 	 

	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

22

 

WARRANT
ORIGINALLY ISSUED AUGUST 25, 2010

WARRANT NO. A-[XX]

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 to which the within Warrant relates and appoints                                          attorney to transfer said
right on the books of the Company with full power of substitution in the premises.

	 	 	 	 	 	 	 	 	 

	Dated:	 	 	 	TRANSFEROR:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	(Print name)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	TRANSFEREE:	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	(Print name)	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	(Address of Transferee)	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	In the presence of:	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

23

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