Document:

EX-10.1

 Exhibit 10.1 

EXECUTION VERSION 
 ROYALTY
AGREEMENT 
 THIS AGREEMENT (“Agreement”) effective as of August 20, 2014, between EMISPHERE TECHNOLOGIES, INC., a
corporation organized and existing under the laws of the State of Delaware (“Company”) and (i) MHR Capital Partners Master Account LP, a limited partnership organized in Anguilla, British West Indies (“Master
Account”), (ii) MHR Capital Partners (100) LP, a Delaware limited partnership (“Capital Partners (100)”), (iii) MHR Institutional Partners II LP, a Delaware limited partnership (“Institutional
Partners II”) and (iv) MHR Institutional Partners IIA LP, a Delaware limited partnership (“Institutional Partners IIA”). Each of Master Account, Capital Partners (100), Institutional Partners II and Institutional
Partners IIA shall be referred to herein as a “MHR Fund” and collectively as the “MHR Funds”. 

BACKGROUND: 
 WHEREAS,
Company has rights to certain IP Rights (as hereinafter defined); 
 WHEREAS, the MHR Funds and Company have entered into that certain
senior secured loan agreement (the “Facility”) as of the date hereof to, among other things, finance the development, manufacturing, marketing and sales of Eligen® B12 and
related products; 
 WHEREAS, in connection with the entry into the Facility, the MHR Funds and the Company have amended and restated the
13% senior secured convertible notes (as so amended and restated, the “Convertible Notes”), the 13% senior secured promissory bridge notes (as so amended and restated, the “Bridge Notes”) and the promissory
reimbursement notes (as so amended and restated, the “Reimbursement Notes” and, together with the Convertible Notes and Bridge Notes, the “MHR Notes”); 

WHEREAS, in connection with the entry into the Facility and the amendment and restatement of the MHR Notes, Institutional Partners IIA and the
Company have amended that certain Pledge and Security Agreement, dated September 26, 2005, as amended, by and between the Company and Institutional Partners IIA (as so amended, the “Security Agreement”) to among other things,
secure the Reimbursement Notes as well as the payments due under this Agreement; 
 WHEREAS, it is a condition to the MHR Funds entering
into the Facility and amending and restating the MHR Notes that the Company enter into the Security Agreement and this Agreement providing for the payment by the Company to the MHR Funds of certain royalties on the terms and conditions set forth
herein; 
 NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as
follows: 
 ARTICLE I 

DEFINITIONS 
 1.1 As
used in this Agreement, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below: 

 (a) “Affiliate” means, with respect to any Person hereto, any corporation or
other business entity which directly or indirectly through stock ownership or through any other arrangement either controls, is controlled by or is under common control with, such Person. The term “control” shall mean the power to direct
the affairs of such Person by reason of ownership of voting stock or other equity interests, by contract or otherwise. 
 (b)
“Balance Sheet” means the consolidated balance sheet of the Company. 
 (c) “Business Day” shall mean any
day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are not required to be open. 
 (d)
“Cash Equivalents” means (i) Dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more than 6 months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of 6 months or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding 6 months and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500,000,000 and a Thompson Bank Watch Rating of
“B” or better, (iv) repurchase obligations with a term of not more than 7 days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group and in each case maturing within 6 months
after the date of acquisition and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i)—(v) of this definition. 

(e) “Contract” means any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation. 

(f) “Designated Product(s)” means an oral product for human use that includes SNAC and Vitamin B12 (in any and all dosages
and forms), any Related Products, and/or any line extension of any of the foregoing. 
 (g) “Dietary Supplement” shall have
the meaning as currently set forth in the federal Food, Drug, and Cosmetic Act, at 21 U.S.C. § 321(ff). 
 (h) “Effective
Date” means the date first set forth above. 
 (i) “Fiscal Quarter” means the respective periods of three
(3) consecutive calendar months ending on March 31, June 30, September 30 and December 31. 
 (j)
“Fiscal Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31. 

(k) “Governmental Authority” means any government, court, arbitrator, regulatory or administrative agency, commission or
authority or other governmental instrumentality, federal, state or local, domestic, foreign or multinational. 

  
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 (l) “Income Statement” means the consolidated statements of operations of the
Company. 
 (m) “IP Rights” means any and all Patent Rights and all Know-How. 

(n) “Know-How” means all scientific and technical information and know-how, trade secrets, data and technology, including
inventions (whether patentable or not), discoveries, trade secrets, specifications, instructions, processes, formulae, materials, expertise and other technology applicable to compounds, formulations, compositions, products or to their manufacture,
development, registration, use or commercialization or methods of assaying or testing them or processes for their manufacture, formulations containing them, compositions incorporating or comprising them and including all biological, chemical,
pharmacological, biochemical, toxicological, pharmaceutical, physical and analytical, safety, quality control, manufacturing, preclinical and clinical data, instructions, processes, formulae, expertise and information, regulatory filings and copies
thereof, that relate to or are directed to (i) SNAC, any other similar agent for improved or different bioavailability, (ii) the Company’s proprietary Eligen® technology or any
other technology owned or licensed by the Company or any of its Affiliates, (iii) the Designated Product or (iv) the manufacture and/or use of any of the foregoing. Know-How does not include Patent Rights or inventions claimed thereby.

 (o) “Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, security deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. 

(p) “Mandatory Redemption” shall have the meaning set forth in the Convertible Notes. 

(q) “Medical Food” shall have the meaning as currently set forth in the federal Food, Drug, and Cosmetic Act, at 21 U.S.C.
§ 360ee(b)(4). 
 (r) “MHR Approved Products” means those products or business opportunities of the Company as the MHR
Funds may approve from time to time in writing in its sole discretion, provided that any such written approval shall specifically reference this Agreement and indicate that such product or business opportunity shall be included as a MHR Approved
Product hereunder. 
 (s) “Net Sales” means, for any period, Revenues, plus any gross sales by any non-consolidated
Affiliate or sub-licensee, distributor or partner during such period, in each case with respect to all sales, transfers or other dispositions of Designated Products (whether to end-users, distributors or otherwise), less the following deductions, to
the extent reasonable and customary, not already deducted from Revenues or gross sales, as applicable, and incurred with respect to the applicable sale, transfer or other disposition of the Designated Product: (i) import, export, excise and
sales taxes (including duties or other governmental charges levied on, absorbed or otherwise imposed on the sale of Designated Product including, without limitation, value added taxes or other governmental charges otherwise measured by the billing
amount, when included in billing), (ii) custom duties, (iii) credits or allowances granted on returns of Designated Products actually sold, (iv) bad debt deductions actually written off during such period, and (v) trade, cash and
quantity discounts, allowances and credits. For purposes of calculating Net Sales under this Agreement, and subject to Section 2.3(e) hereof, all sales, transfers or other dispositions of Designated Product hereunder, whether made for cash or
otherwise, shall be deemed to be made for cash, at the applicable fair market value of the Designated Product. 

  
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 (t) “Patent Rights” means any and all patents and patent applications (which for
the purposes of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention) which during the term of this Agreement are owned by the Company or any of its Affiliates or to which the Company or
any of its Affiliates through license or otherwise acquires rights, which: (i) have claims covering (x) SNAC, any other similar agent for improved or different bioavailability, the Company’s proprietary Eligen® technology or any other technology owned or licensed by the Company or any of its Affiliates, or (y) the Designated Product or (z) the manufacture and/or use of any of the foregoing; or
(ii) are divisions, continuations, continuations-in-part, patents of addition, reissues, renewals, extensions, registrations, confirmations, re-examinations, any provisional applications, supplementary protection certificates or the like of any
such patents and patent applications and foreign equivalents thereof. 
 (u) “Person” means any corporation, limited
liability company, natural person, firm, joint venture, partnership, trust, unincorporated association or Governmental Authority, or any political subdivision, department or agency of any Governmental Authority. 

(v) “Pro Forma Cash Balance” means the amount of cash and Cash Equivalents set forth on the Balance Sheet as of any
determination date, plus all cash expenditures made and cash expenses incurred during the rolling twelve month period preceding such determination date, in each case other than those cash expenditures and cash expenses relating to the
Designated Products, the Company’s general overhead expenses or any MHR Approved Products. 
 (w) “Related Product”
shall mean any Dietary Supplement, Medical Food or drug, whether available over-the-counter or by prescription, in any dosage form, strength or route or mode of administration, containing Vitamin B12, whether in combination with any other vitamin,
mineral, nutrient, Dietary Supplement, Medical Food, drug or active or inactive pharmaceutical ingredient or otherwise, and including SNAC or any other similar agent for improved or different bioavailability using the Company’s proprietary
Eligen® technology or any other technology owned or licensed by the Company or any of its Affiliates. 

(x) “Revenues” means the amount ascribed to “Revenues” in the Income Statement for the relevant period. 

(y) “SNAC” means the Company’s proprietary Eligen® technology
carrier as set forth on Exhibit A. 
 (z) “Special Committee” means the special committee of independent directors
of the Company, formed for the purpose of considering, negotiating and evaluating this Agreement, the Facility, the amendment and restatement of the Existing Notes (as such term is defined in the Facility), the amendment of the Security Agreement
and the transactions contemplated hereby and thereby. 

  
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 (aa) “Territory” means all of the countries in the world. 

(bb) “Third Party Payments” means any fee, lump-sum, milestone or other payment or consideration, received by Company or its
Affiliates in connection with the license, distribution or partnering of Designated Product or the IP Rights for the purpose of making, using, selling or distributing Designated Products, but excluding any payments that would constitute Net Sales
hereunder. 
 (cc) “Valid Patent Claim” means a claim of a patent application or an issued and unexpired patent included
within the Patent Rights, which has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not
been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise. 
 ARTICLE II 

ROYALTIES AND REPORTS 
 2.1
Royalties on Net Sales. In partial consideration for the MHR Funds entering into the Facility and the MHR Notes, the Company shall pay to the MHR Funds, subject to the terms and conditions of this Agreement, royalties in perpetuity,
commencing as of the Effective Date, in an amount equal to: twenty percent (20%) of all Net Sales during any Fiscal Year; provided that, from and after October 1, 2015, if no amount of indebtedness is outstanding under the Facility
(including indebtedness outstanding as a result of the principal amount of indebtedness being increased pursuant to Section 2.3(c) below) as a result of such indebtedness being repaid in accordance with the terms of the Facility (the
“Indebtedness Repayment Condition”), such amount shall be reduced to (i) five percent (5%) of all Net Sales (other than Net Sales described in subclause (ii) below) commencing with the first Fiscal Quarter immediately
following the Fiscal Quarter in which the Indebtedness Repayment Condition is satisfied, or (ii) two and one half percent (2.5%) of all Net Sales commencing with the first Fiscal Quarter immediately following the Fiscal Quarter in which
the Indebtedness Repayment Condition is satisfied, but only with respect to the Net Sales made in any country in which there was not a Valid Patent Claim and where generic entry of a competitive product not by the Company or its Affiliates that does
not infringe a Valid Patent Claim in such country has occurred, in each case as of the last day of such Fiscal Quarter. Once the royalty rate set forth in this Section 2.1 has been reduced to 5%, the rate shall not be reinstated to 20% even if
additional indebtedness is added to the Facility as a result of the penultimate sentence of Section 2.3(c) hereof. 
 2.2 Royalties
on Third Party Payments. In partial consideration for the MHR Funds entering into the Facility and the MHR Notes, the Company shall pay to the MHR Funds, subject to the terms and conditions of this Agreement, royalties in perpetuity, commencing
as of the Effective Date, in an amount equal to: twenty percent (20%) of all Third Party Payments received during any Fiscal Year; provided that, from and after October 1, 2015, if the Indebtedness Repayment Condition is satisfied, such
amount shall be reduced to five percent (5%) of all Third Party Payments commencing with the first Fiscal Quarter immediately following the Fiscal Quarter in which the Indebtedness Repayment Condition is satisfied. Once the royalty rate set
forth in this Section 2.2 has been reduced to 5%, the rate shall not be reinstated to 20% even if additional indebtedness is added to the Facility as a result of the penultimate sentence of Section 2.3(c) hereof. 

 

  
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 2.3 Reports; Method of Payment. 

(a) Subject to Sections 2.3(b) and 2.3(c) below, within thirty (30) days following the close of each Fiscal Year, the Company shall
furnish to the MHR Funds a written report for such Fiscal Year showing all Net Sales and Third Party Payments during such Fiscal Year and the royalties payable under this Agreement for such Fiscal Year (on a Fiscal Quarter by Fiscal Quarter basis).
Simultaneously with the submission of the written report, the Company shall pay to the MHR Funds a sum equal to the aggregate royalty due for such Fiscal Year calculated in accordance with this Agreement. 

(b) Notwithstanding anything to the contrary in Section 2.3(a) above, but subject to Section 2.3(c) below, if, during any Fiscal
Quarter ending on March 31, June 30 or September 30, the aggregate amount of royalties payable under this Agreement exceeds $3 million for such Fiscal Quarter, within thirty (30) days following the close of such Fiscal
Quarter, the Company shall furnish to the MHR Funds a written report for such Fiscal Quarter showing all Net Sales and Third Party Payments during such Fiscal Quarter and the royalties payable under this Agreement for such Fiscal Quarter.
Simultaneously with the submission of the written report, the Company shall pay to the MHR Funds a sum equal to the aggregate royalty due for such Fiscal Quarter calculated in accordance with this Agreement (such payment, the “Accelerated
Quarterly Payment”) and the amount of such Accelerated Quarterly Payment shall be deducted from the amount otherwise payable at the end of the Fiscal Year pursuant to Section 2.3(a) above. 

(c) Notwithstanding anything to the contrary in this Agreement, the amount of any royalties payable under this Agreement in respect of any
Fiscal Year (in the case of any payments due under Section 2.3(a)) or Fiscal Quarter (in the case of any payments due under Section 2.3(b)), as applicable, shall only be payable in cash to the extent that such cash payments, if deducted
from the calculation of the Pro Forma Cash Balance as of the end of such Fiscal Year or Fiscal Quarter, as applicable, would not cause such Pro Forma Cash Balance to be less than $10 million (or $15 million following the Fiscal Quarter in which the
Indebtedness Repayment Condition has been satisfied but in no event prior to October 1, 2015). In the event that any royalty (or portion thereof) is prohibited from being paid in cash as a result of the application of the immediately preceding
sentence, such royalty shall be added to the principal amount of indebtedness outstanding under the Facility as of the date such royalty payment is due pursuant to this Agreement. This Section 2.3(c) shall terminate and have no further force
and effect upon following the occurrence of either of the following: (A) (i) the MHR Funds shall have assigned this Agreement (in whole or in part) to a third party and (ii) the earlier of March 30, 2022 or the date that the MHR
Notes shall have been paid off in full or (B) a default or Event of Default shall have occurred under the Facility or any of the MHR Notes. The Company shall not convert any cash or Cash Equivalents held by the Company or any of its
Subsidiaries to other assets for any purposes that include reducing the amounts otherwise payable in cash pursuant to this Section 2. 

  
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 (d) Cash payments to be made by Company to the MHR Funds under this Agreement shall be paid in
United States dollars by bank wire transfer in immediately available funds to such bank account as shall be designated in writing by the MHR Funds from time to time. 

(e) The Company agrees that, without the prior written consent of the MHR Funds, it shall not accept payment in any form other than cash, to
the extent such payment would constitute either Net Sales or Third Party Payments hereunder. 
 2.4 Maintenance of Records; Audits.
Company shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined. Upon the written request of the MHR Funds, the Company shall permit an independent certified public accounting firm of
nationally recognized standing selected by the MHR Funds and reasonably acceptable to Company, to have access during normal business hours to such of the records of Company as may be reasonably necessary to verify the accuracy of the royalty reports
hereunder. The review by such accounting firm shall be conducted in confidence, provided that a summary of the results of such review may be shared with the MHR Funds and the Company. If such accounting firm concludes that additional royalties were
owed with respect to such period, the Company shall pay the additional royalties within thirty (30) days of the date the MHR Funds delivers to the Company such accounting firm’s written report so concluding. The fees charged by such
accounting firm shall be paid by the MHR Funds unless such report identifies additional royalties owing, in which case the Company shall pay such fees. 

2.5 Income Tax Withholding. All payments under this Agreement shall be made without any deduction or withholding for or on account of
any tax, except as set forth in this Section 2.5. The parties agree to cooperate and will each use reasonable efforts to minimize under applicable law obligations for any and all income or other taxes required by applicable law to be withheld
or deducted from any of the royalty payments made by or on behalf of Company hereunder (“Withholding Taxes”). The Company (or the relevant Affiliate or sublicensee or distributor) shall, if required by applicable law, deduct from
any amounts that it is required to pay to the MHR Funds an amount equal to such Withholding Taxes, provided that the Company (or other paying person) shall give the MHR Funds reasonable advance notice prior to paying any such Withholding Taxes. Such
Withholding Taxes shall be paid to the proper governmental authority for the MHR Funds’ account and, if available, evidence of such payment shall be secured and sent to the MHR Funds within thirty (30) days of such payment. The Company (or
the relevant Affiliate or sublicensee or distributor) shall, at the MHR Funds’ cost and expense, as mutually agreed by the parties hereto, do all such lawful acts and things and sign all such lawful deeds and documents as such other party may
reasonably request to enable Company (or the relevant Affiliate or sublicensee or distributor) to avail itself of any applicable legal provision or any double taxation treaties with the goal of paying the sums due to the MHR Funds without deducting
any Withholding Taxes. 

  
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 ARTICLE III 

REPRESENTATIONS AND WARRANTIES 

3.1 Representations and Warranties of the Company. The Company hereby represents and warrants to the MHR Funds as follows: 

(a) Organization. The Company is (i) duly organized, validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate or similar power and authority to own and operate its properties and assets and to carry on its business as presently conducted, and (ii) qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification. 
 (b)
Due Authorization. The Company has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and its obligations hereunder have been duly authorized and have been approved by the board of directors of the Company upon the recommendation of the Special Committee and do not and will not constitute a breach or
violation, or constitute a default under, the organizational documents of the Company; and this Agreement and each other document or agreement to be executed by the Company in connection with the execution, delivery and performance of this Agreement
will each constitute the valid and legally binding obligation of the Company, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally. 
 (c) No Conflicts. The execution, delivery and
performance of this Agreement by the Company does not, and the performance by the Company of its obligations contemplated hereunder will not, (i) violate or contravene any provision of the Company’s certificate of incorporation, bylaws or
similar organizational documents of the Company; (ii) constitute or result in a breach or violation of, or a default under, the acceleration of any obligations of, or the creation of any Lien on the assets of, the Company or any of its
subsidiaries (with or without notice, lapse of time or both) pursuant to any Contract that is binding upon the Company or any of its subsidiaries, or any change in the rights or obligations of any party under any of such Contracts;
(iii) require the Company or any of its subsidiaries to obtain the consent, waiver, authorization or approval of any Person which has not already been obtained; or (iv) violate, contravene or conflict with any award, judgment, decree or
other order of any Governmental Authority, any statute, law, rule, regulation or other requirement of any Governmental Authority, or any permit, license, registration or other approval or authorization of any Governmental Authority. 

(d) Consents. Except as may be required under the MHR Notes or the Security Agreement, the Company is not required to obtain any
consent from, authorization or order of, or make any filing or registration with, any court, Governmental Authority or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations
under this Agreement in accordance with the terms hereof. 

  
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 (e) No Brokers. No agent, broker, investment banker, Person or firm is or shall be
entitled to any broker’s or finder’s fee or any other commission or similar fee directly or indirectly in connection with the transactions contemplated by this Agreement based in any way on any arrangements, agreements or understandings
made by or on behalf of the Company or any of its Affiliates. 
 3.2 Representations and Warranties of the MHR Funds. Each MHR Fund
hereby represents and warrants to the Company, severally and not jointly, as follows: 
 (a) Organization. Such MHR Fund is duly
organized, validly existing, and in good standing under the respective laws of the jurisdiction of its formation. 
 (b) Due
Authorization. Such MHR Fund has all requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by such MHR
Fund of this Agreement and its obligations hereunder have been duly authorized, and this Agreement and each other document or agreement to be executed by such MHR Fund in connection with the execution, delivery and performance of this Agreement will
each constitute the valid and legally binding obligation of such MHR Fund, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally. 
 (c) No Conflicts. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby by such MHR Fund does not, and the performance by such MHR Fund of its obligations contemplated hereunder and thereunder will not (i) violate the organizational documents of
such MHR Fund, (ii) violate any material agreement to which such MHR Fund is a party or by which such MHR Fund or any of its property or assets is bound, or (iii) violate, contravene or conflict with any law, rule, regulation, judgment,
injunction, order or decree applicable to such MHR Fund. 
 (d) No Brokers. No agent, broker, investment banker, Person or firm is or
shall be entitled to any broker’s or finder’s fee or any other commission or similar fee directly or indirectly in connection with the transactions contemplated by this Agreement based in any way on any arrangements, agreements or
understandings made by or on behalf of such MHR Fund or any of its Affiliates. 
 ARTICLE IV 

TERM AND TERMINATION 

4.1 Term and Expiration. This Agreement shall be effective as of the Effective Date and shall continue in effect in perpetuity unless
terminated by the written consent of the Company and each of the MHR Funds. 
 4.2 Effect of Termination. Expiration or termination
of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. Any expiration of this Agreement shall be without prejudice to the rights of either party against the other accrued or accruing under
this Agreement prior to expiration. 

  
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 ARTICLE V 

MISCELLANEOUS 
 5.1
Assignment; Successors. This Agreement shall inure to the benefit of, be binding upon and be enforceable by and against the parties hereto and their respective successors and permitted assigns. This Agreement is not assignable by the Company
without the prior written consent of the MHR Funds, and any attempted assignment without such written consent shall be null and void; provided, however, that at any time that there are no amounts of principal or interest outstanding
under the Facility or the MHR Notes, the Company may assign this Agreement and its rights and obligations hereunder in connection with the transfer or sale of all rights to the Designated Product(s) or all or substantially all of the business of the
Company, whether by merger, sale of stock, sale of assets or otherwise, upon the prior written consent of the MHR Funds, which consent shall not be unreasonably withheld, delayed or conditioned. The MHR Funds may assign this Agreement in whole or in
part to any third party without the prior written consent of the Company. 
 5.2 Governing Law. This Agreement shall be governed
exclusively by, construed and enforced in accordance with, the laws of the State of New York. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements
or transactions contemplated hereby may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York and hereby expressly submits to the personal jurisdiction and venue of such courts for
the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit,
action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth in Section 5.7 hereof, such service to become effective ten (10) days after such mailing. 

5.3 Waiver. No failure or delay on the part of the MHR Funds in exercising any right hereunder shall operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right shall preclude any other or further exercise thereof or the exercise of any other right. No waiver of any such right or of any obligation of the Company shall be effective unless given
in writing and executed by the MHR Funds. No waiver of any such right shall be deemed a waiver of any other right hereunder. 
 5.4
Independent Relationship. Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the parties hereto or any of their agents or employees, or any other legal arrangement that
would impose liability upon one party for the act or failure to act of the other party. Neither party shall have any power to enter into any Contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other party, or to
bind the other party in any respect whatsoever. 
 5.5 Amendment. No terms or provisions of this Agreement shall be varied or
modified and no subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the parties unless reduced to writing and signed by an authorized officer of each party. 

  
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 5.6 Specific Performance. The MHR Funds and the Company agree that, in the event that
either of them were to violate any provision of this Agreement or fail to perform any obligation under this Agreement in accordance with its specific terms, the other party would suffer irreparable injury, for which there may be no adequate remedy
at law. Consequently, the MHR Funds and the Company agree that, in the event of a breach or threatened breach of this Agreement by any party hereto, the other party shall be entitled, in addition to any other remedies to which they may be entitled
at law, to equitable relief, including an injunction, to prevent any breaches and to enforce specifically this Agreement’s terms and provisions. The MHR Funds and the Company also agree that any such equitable relief may be sought without the
obligation of posting any bond or surety. 
 5.7 Notices. All notices and other communications given to any party hereto pursuant to
this Agreement shall be in writing and shall be delivered by hand, fax or email (and in the case of fax or email, receipt confirmed immediately via telephone), or mailed first class postage prepaid, registered or certified mail, addressed as
follows: 
 If to the Company, to: 

Emisphere Technologies, Inc. 
 4
Becker Farm Road, Suite 103 
 Roseland, NJ 07068 

Attention: Michael R. Garone, Chief Financial Officer 

Phone: (973) 532-8000 
 Fax:
(973) 422-0125 
 Email: mgarone@emisphere.com 

with a copy to: 
 Lowenstein
Sandler LLP 
 65 Livingston Avenue 

Roseland, NJ 07068 
 Attn: Michael
J. Lerner, Esq. 
 Phone:(973) 597-6394 

Fax: (973) 597-6395 
 Email:
mlerner@lowenstein.com 
 If to the MHR Funds, to: 

MHR Fund Management LLC 
 40 West
57th Street, 24th Floor 
 New York, NY 10019 

Fax number: (212) 262-9356 

Attention: Janet Yeung 
 Phone:
(212) 262-0005 
 Fax: (212) 262-9356 

Email: jyeung@mhrfund.com 
 with
a copy to: 

  
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 O’Melveny & Myers LLP 

7 Times Square 
 New York, NY
10036 
 Attn: David I. Schultz 

Phone: (212) 326-2000 
 Fax:
(212) 326-2061 
 Email: dschultz@omm.com 

Each such notice or other communication shall for all purposes be treated as being effective or having been given when delivered, if delivered
personally, by e-mail or facsimile with confirmation of receipt or if by overnight courier or, if sent by mail, upon actual receipt. 
 5.8
Further Assurances. The Company shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the MHR Funds may
reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. In furtherance of the foregoing, the Company shall allocate any payments due to the MHR
Funds under this Agreement among the MHR Funds as the MHR Funds will notify the Company. 
 5.9 Severability. If any provision of
this Agreement is declared invalid or unenforceable by a court having competent jurisdiction, it is mutually agreed that this Agreement shall endure except for the part declared invalid or unenforceable by order of such court. 

5.10 Counterparts. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall
bear the signatures of each of the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be an original as against either party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument. 
 [Signatures on following page] 

  
 12 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth
above. 
 EMISPHERE TECHNOLOGIES, INC. 
  

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

  

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth
above. 
 MHR CAPITAL PARTNERS MASTER ACCOUNT LP 
  

					
		 	 By:
	 	MHR Advisors LLC,
		 		 	its General Partner 

  

					
			
		 	By:	 	/s/ Janet Yeung
		 	 Name:
	 	Janet Yeung
		 	 Title:
	 	Authorized Signatory

 MHR CAPITAL PARTNERS (100) LP 

 

					
		 	 By:
	 	MHR Advisors LLC,
		 		 	its General Partner 

  

					
			
		 	By:	 	/s/ Janet Yeung
		 	 Name:
	 	Janet Yeung
		 	 Title:
	 	Authorized Signatory

 MHR INSTITUTIONAL PARTNERS II LP 

 

					
		 	 By:
	 	MHR Institutional Advisors II LLC,
		 		 	its General Partner 

  

					
			
		 	By:	 	/s/ Janet Yeung
		 	 Name:
	 	Janet Yeung
		 	 Title:
	 	Authorized Signatory

 MHR INSTITUTIONAL PARTNERS IIA LP 

 

					
		 	 By:
	 	MHR Institutional Advisors II LLC,
		 		 	its General Partner 

  

					
			
		 	By:	 	/s/ Janet Yeung
		 	 Name:
	 	Janet Yeung
		 	 Title:
	 	Authorized Signatory

  

 EXHIBIT AExhibit 4.9

 

CHINA CORD BLOOD CORPORATION

(incorporated in the Cayman Islands with limited liability)

 

 

 

 

 

RULES OF THE

RESTRICTED SHARE UNIT SCHEME

 

 

 

 

 

Adopted by a resolution of the shareholders of

China Cord Blood Corporation on February 18, 2011 and

as amended by the Board of Directors on August 21, 2014

 

 

CONTENTS

 

	
 
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions and   Interpretation
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Purpose, Duration and   Administration of this Scheme
    	
3
    
	
 
    	
 
    	
 
    
	
3.
    	
Grant of Awards
    	
4
    
	
 
    	
 
    	
 
    
	
4.
    	
Vesting
    	
5
    
	
 
    	
 
    	
 
    
	
5.
    	
Maximum Number of Shares   Underlying the RSUs
    	
6
    
	
 
    	
 
    	
 
    
	
6.
    	
Transferability
    	
7
    
	
 
    	
 
    	
 
    
	
7.
    	
Cancellation
    	
7
    
	
 
    	
 
    	
 
    
	
8.
    	
Reorganisation of Capital   Structure
    	
8
    
	
 
    	
 
    	
 
    
	
9.
    	
Share Capital
    	
8
    
	
 
    	
 
    	
 
    
	
10.
    	
Disputes
    	
9
    
	
 
    	
 
    	
 
    
	
11.
    	
Alteration of this Scheme
    	
9
    
	
 
    	
 
    	
 
    
	
12.
    	
Termination
    	
9
    
	
 
    	
 
    	
 
    
	
13.
    	
Miscellaneous
    	
9
    

 

Page i

 

CHINA CORD BLOOD CORPORATION

(incorporated in the Cayman Islands with limited liability)

 

RULES OF THE RESTRICTED SHARE UNIT SCHEME

 

1.            DEFINITIONS AND INTERPRETATION

 

1.1         In this Scheme, unless the context otherwise requires, the following expressions have the meanings set out below:

 

Adoption Date means February 18, 2011, being the date on which this Scheme is adopted by a resolution of the Shareholders;

 

Auditors means the auditors of the Company from time to time;

 

Award means an award of RSUs granted to a Participant pursuant to this Scheme;

 

Board means the board of Directors from time to time or a duly authorised committee of the Board or such other committee as the Board may authorise;

 

Business Day means any day on which the Stock Exchange is open for the business of dealing in securities;

 

Cause means, with respect to a Grantee, such event which will entitle the Company and/or any of its subsidiaries to terminate the employment or service of the Grantee with immediate notice without compensation under the relevant employment or service agreement or, if it is not otherwise provided for in the relevant employment or service agreement, (a) the commission of an act of theft, embezzlement, fraud, dishonesty, ethical breach or other similar acts or commission of a criminal offence, (b) a material breach of any agreement or understanding between the Grantee and the Company and/or any of its subsidiaries, including any applicable invention assignment, employment, non-competition, confidentiality or other similar agreement, (c) misrepresentation or omission of any material fact in connection with his employment agreement or service agreement, (d) a material failure to perform the customary duties as an employee of the Company and/or any of its subsidiaries, to obey the reasonable directions of a supervisor or to abide by the policies or codes of conduct of the Group or (e) any conduct that is materially adverse to the name, reputation or interests of the Group;

 

Companies Law means the Companies Law (2013 Revision) of the Cayman Islands, as amended and restated from time to time;

 

Company means China Cord Blood Corporation, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Stock Exchange;

 

Company Nominee means any nominee or trust designated by the Company as the holding vehicle for Shares, to be held for and on behalf of the eligible Participants (as a class) from time to time;

 

Competitor means any governmental unit, corporation, partnership, joint venture, trust, individual proprietorship, firm or other enterprise (including any of their respective affiliates) that carries on activities for profit or is engaged in or is about to become engaged in any activity of any nature that competes with a product, process, technique, procedure, device or service of the Company or any of its subsidiaries;

 

Page 1

 

Designated Nominee means any nominee or trust designated by a Grantee as the holding vehicle for any Award (or any Shares derived therefrom) granted to a Grantee which either (i) accepts an Award or any interest therein for and on behalf of a Grantee, or (ii) to which any Award or any interest therein has been transferred or assigned by a Grantee;

 

Director means a director of the Company;

 

Disability means a disability, whether temporary or permanent, partial or total as determined by the Board in its absolute discretion;

 

Family Member means the Grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, a trust in which these persons have more than 50 per cent. of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets and any other entity in which these persons (or the Grantee) own more than 50 per cent. of the voting interests;

 

Grant means the offer of the grant of an Award made in accordance with paragraph 3;

 

Group means the Company and its Subsidiaries;

 

Grantee means any Participant as specifically identified in any Notice of Grant who accepts a Grant in accordance with the terms of this Scheme or, where the context so permits, (i) any person entitled to any such Award in consequence of the death of the original Grantee or the legal personal representative of such person, or (ii) any Designated Nominee of such Participant;

 

New Approval Date has the meaning ascribed to it in paragraph 5.2;

 

Notice of Grant has the meaning ascribed to it in paragraph 3.3;

 

Participants means the Directors (including executive Directors, non-executive Directors and independent non-executive Directors), the directors of the Company’s subsidiaries and the employees of the Group who the Board considers, in its absolute discretion, have contributed or will contribute to the Group;

 

RSU means a contingent right to receive a Share granted to a Participant pursuant to this Scheme;

 

Scheme means this restricted share unit scheme in its present form or as amended from time to time in accordance with the provisions hereof;

 

Scheme Mandate Limit means the total number of Shares that may underlie the RSUs granted pursuant to this Scheme, being (a) 10 per cent. of the Shares in issue on the Adoption Date or (b) 10 per cent. of the Shares in issue as at the New Approval Date (as the case may be);

 

Shareholder(s) means holder(s) of Shares;

 

Shares means ordinary shares with a nominal value of US$0.0001 each in the share capital of the Company or, if there has been a sub-division, reduction, consolidation, reclassification or reconstruction of the share capital of the Company, the shares forming part of the ordinary share capital of the Company of such nominal amount as shall result from any such sub-division, reduction, consolidation, reclassification or reconstruction;

 

Page 2

 

Stock Exchange means the New York Stock Exchange, Inc.;

 

Subsidiary has the meaning ascribed to it in the Listing Rules of the Stock Exchange;

 

Term has the meaning ascribed to it in paragraph 2.4;

 

Vest means, with respect to a Grantee, the time when the Grantee becomes entitled to receive all or such proportion of the Shares underlying the RSUs granted and in accordance with the terms of the relevant Award; and

 

Vesting date means, with respect to an RSU granted to a Grantee, the date on which the RSU vests.

 

1.2         Paragraph headings are inserted for convenience of reference only and shall be ignored in the interpretation of this Scheme. References herein to “paragraphs” are to the paragraphs of this Scheme.  Words importing the singular include the plural and vice versa, words importing a gender or the neuter include both genders and the neuter references to persons include bodies corporate or unincorporate.

 

1.3         References in this Scheme to any document are to that document as amended, consolidated, supplemented, novated or replaced from time to time.

 

1.4         References (express or implied) in this Scheme to ordinances and to statutory and regulatory provisions shall be construed as references to those ordinances or statutory and regulatory provisions as respectively amended or re-enacted or as their application is modified by other provisions (whether before or after the date hereof) from time to time and shall include any provisions of which there are re-enactments (whether with or without modification) and any orders, regulations, instruments, other subordinate legislation or practice notes under the relevant ordinance, statutory or regulatory provision.

 

1.5         In construing this Scheme:

 

(a)                               the rule known as the ejusdem generis rule shall not apply and accordingly, general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things; and

 

(b)                              general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words.

 

2.            PURPOSE, DURATION AND ADMINISTRATION OF THIS SCHEME

 

2.1         The purpose of this Scheme is to attract skilled and experienced personnel, to incentivise them to remain with the Group and to motivate them to strive for the future development and expansion of the Group by providing them with the opportunity to own equity interests in the Company.

 

2.2         This Scheme shall be subject to the administration of the Board whose decision as to all matters arising in relation to this Scheme or its interpretation or effect shall (save as otherwise provided herein) be final and binding on all parties. The Board shall have the right to (a) interpret and construe the provisions of this Scheme, (b) determine the persons (if any) who will be granted Awards pursuant to this Scheme, the terms on which Awards are granted, when the RSUs granted pursuant to this Scheme may vest and the number of Shares underlying the RSUs granted, (c) subject to paragraphs 8 and 11, make such adjustments to the terms of the Awards granted pursuant to this Scheme to the relevant Grantee as the Board deems necessary and shall notify the relevant Grantee of such adjustment by written notice and (d) make such other decisions or determinations as it shall deem appropriate in relation to the Awards and/or the administration of this Scheme provided that the same are not inconsistent with the provisions of this Scheme.

 

Page 3

 

2.3         This Scheme shall take effect on the Adoption Date.

 

2.4         Subject to paragraph 12, this Scheme shall be valid and effective for a period of 10 years commencing on the Adoption Date (the Term), after which period no further Awards shall be offered or granted but the provisions of this Scheme shall remain in full force and effect in all other respects. Awards granted during the life of this Scheme shall continue to be valid in accordance with their terms of grant after the end of the Term.

 

2.5         No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board nor for any mistake of judgment made in good faith in relation to the administration or interpretation of this Scheme, and the Company shall indemnify on demand and hold harmless each employee or officer of the Company or any Director to whom any duty or power relating to the administration or interpretation of this Scheme may be allocated or delegated, against any cost or expense (including legal fees) or liability (including any sum paid in settlement of a claim with the approval of the Board) arising out of any act or omission to act in connection with this Scheme unless arising out of such person’s own negligence, fraud or bad faith.

 

3.            GRANT OF AWARDS

 

3.1         On and subject to the terms of this Scheme, the Board shall be entitled (but shall not be bound) at any time during the Term to make a Grant to any Participant, as the Board may in its absolute discretion select.

 

3.2         Awards may be granted on such terms as the Board, at its absolute discretion, may determine, provided such terms shall not be inconsistent with any other terms and conditions of this Scheme.  Such terms may include, among other things, (a) a minimum period before an RSU will vest in whole or in part, (b) a performance target that must be reached before an RSU will vest in whole or in part, (c) that any Award granted to a Grantee may be accepted by, or transferred or assigned to, a Designated Nominee for and on behalf of such Grantee; and/or (d) any other terms, all of which may be imposed (or not imposed) either on a case-by-case basis or generally.

 

3.3         A Grant shall be made to a Participant by a letter (the Notice of Grant) in such form as the Board may from time to time determine requiring the Participant to undertake to hold the Award (or any Shares derived therefrom) on the terms on which it is to be granted and to be bound by the terms of this Scheme and shall remain open for acceptance by the Participant for such time to be determined by the Board, provided that no such Grant shall be open for acceptance after the expiry of the Term or after this Scheme has been terminated in accordance with the terms of this Scheme or after the Participant to whom the Grant is made has ceased to be a Participant.

 

3.4         No Grant shall be made to any Participant at a time when such Participant would be prohibited from trading in the Shares pursuant to the Company’s guidelines regarding trading while in possession of material non-public information, unless the Grant does not vest until such time as such prohibition would no longer be applicable to such Participant.

 

Page 4

 

3.5       A Grant is deemed to be accepted when the Company receives from the Grantee the duplicate Notice of Grant duly signed by the Grantee and a remittance of the sum of US$1.00 or such other amount in any other currency as may be determined by the Board as consideration for the grant of the Award.  Such remittance is not refundable in any circumstances.

 

3.6       Any Grant to any Director, chief executive or substantial shareholder of the Company, or any of their respective associates, shall be subject to the prior approval of the independent non-executive Directors (excluding the independent non-executive Director who is the proposed Grantee of the Awards in question).

 

4.         VESTING

 

4.1       Subject to the terms of this Scheme and the specific terms applicable to each Award, an RSU shall vest on the vesting date in respect of all or such proportion of the Shares underlying the Award.  If the vesting of an RSU is subject to the satisfaction of performance or other conditions and such conditions are not satisfied, the RSU shall be cancelled automatically on the date on which such conditions are not satisfied.

 

The Company shall allot and issue Shares (credited as fully paid) to the Company Nominee, up to the Scheme Mandate Limit, as soon as practicable after the Adoption Date and each New Approval Date (as the case may be). The Company Nominee shall hold such Shares for and on behalf of the eligible Participants (as a class) from time to time.  RSUs which have vested shall be satisfied by the Company Nominee, upon receiving written instructions from the Board, transferring such relevant number of Shares to the Grantee and the Company issuing to the Grantee (or his Designated Nominee or custodian agent) share certificates in respect of the Shares so transferred.

 

Notwithstanding the foregoing, if the Company, Company Nominee and/or any Grantee would or might be prohibited from dealing in the Shares by any applicable laws, regulations or rules within the period specified above, the date on which the relevant Shares shall be allotted and issued or transferred (as the case may be) to the Company Nominee and/or Grantee shall occur as soon as possible after the date when such dealing is permitted by any applicable laws, regulations or rules.

 

4.2       In the event a general offer by way of takeover or otherwise (other than by way of scheme of arrangement pursuant to paragraph 4.3 below) is made to all the Shareholders (or all such Shareholders other than the offeror and/or any person controlled by the offeror and/or any person acting in association or concert with the offeror) and such offer becomes or is declared unconditional prior to the vesting date of any RSU, the Board shall, prior to the offer becoming or being declared unconditional, determine at its absolute discretion whether such RSU shall vest and the period within which such RSU shall vest. If the Board determines that such RSU shall vest, it shall notify the Grantee that the RSU shall vest and the period within which such RSU shall vest.

 

4.3       In the event a general offer for Shares by way of scheme of arrangement is made by any person to all the Shareholders and has been approved by the necessary number of Shareholders at the requisite meetings prior to the vesting date of any RSU, the Board shall, prior to such meetings, determine at its absolute discretion whether such RSU shall vest and the period within which such RSU shall vest. If the Board determines that such RSU shall vest, it shall notify the Grantee that the RSU shall vest and the period within which such RSU shall vest.

 

Page 5

 

4.4       If, pursuant to the Companies Law, a compromise or arrangement between the Company and the Shareholders and/or the creditors of the Company is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies prior to the vesting date of any RSU, the Board shall determine at its absolute discretion whether such RSU shall vest and the period within which such RSU shall vest. If the Board determines that such RSU shall vest, it shall notify the Grantee that the RSU shall vest and the period within which such RSU shall vest.

 

4.5       In the event a notice is given by the Company to the Shareholders to convene a general meeting for the purpose of considering and, if thought fit, approving a resolution to voluntarily wind-up the Company prior to the vesting date of any RSU, the Board shall determine at its absolute discretion whether such RSU shall vest and the period within which such RSU shall vest. If the Board determines that such RSU shall vest, it shall notify the Grantee that the RSU shall vest and the period within which such RSU shall vest.

 

4.6       A Grantee shall not be entitled to any dividends or distributions in respect of any Shares underlying the RSUs granted until such Shares have been transferred to the Grantee.  Subject to the foregoing, the Shares to be allotted and issued or transferred (as the case may be) pursuant to this Scheme shall be subject to all the provisions of the memorandum of association and bye-laws of the Company for the time being in force and shall rank pari passu in all respects with, and shall have the same voting, dividend, transfer and other rights (including those rights arising on a liquidation of the Company) as, the existing fully paid Shares in issue on the date on which those Shares are allotted and issued or transferred (as the case may be) and, without prejudice to the generality of the foregoing, shall entitle the holder(s) to participate in all dividends or other distributions paid or made on or after the date on which Shares are allotted and issued or transferred (as the case may be), other than any dividends or distributions previously declared or recommended or resolved to be paid or made if the record date thereof shall be before the date on which the Shares are allotted and issued or transferred (as the case may be).

 

5.         MAXIMUM NUMBER OF SHARES UNDERLYING THE RSUS

 

5.1       At any time during the Term, the maximum aggregate number of Shares that may underlie the RSUs granted pursuant to this Scheme shall be calculated in accordance with the following formula:

 

X  =  A  –  B

 

where:

 

X             =    the maximum aggregate number of Shares that may underlie the RSUs granted pursuant to this Scheme;

 

A             =    the Scheme Mandate Limit; and

 

B              =    the maximum aggregate number of Shares underlying the RSUs already granted pursuant to this Scheme.

 

Shares underlying the RSUs cancelled in accordance with the terms of this Scheme will not be counted for the purposes of determining the maximum aggregate number of Shares that may underlie the RSUs granted pursuant to this Scheme.

 

Page 6

 

5.2       The Scheme Mandate Limit may be renewed subject to prior Shareholders’ approval, but in any event, the total number of Shares that may underlie the RSUs granted following the date of approval of the renewed limit (the New Approval Date) under the limit as renewed must not exceed 10 per cent. of the Shares in issue as at the New Approval Date.  Shares underlying the RSUs granted pursuant to this Scheme (including those outstanding, cancelled or vested RSUs) prior to the New Approval Date will not be counted for the purpose of determining the maximum aggregate number of Shares that may underlie the RSUs granted following the New Approval Date under the limit as renewed. For the avoidance of doubt, Shares issued to the Company Nominee pursuant to this Scheme, which correspond to  RSUs which have already been vested prior to the New Approval Date, will be counted for the purpose of determining the number of Shares in issue as at the New Approval Date.

 

6.         TRANSFERABILITY

 

6.1       An Award shall be personal to the Grantee and shall not be assignable or transferable by the Grantee, provided that:

 

(a)                               during the validity period of the Award, any Grantee may transfer RSUs (or any Shares derived from vested RSUs which are held by the Company Nominee on behalf of the Grantee) to his Family Members by gift or pursuant to a court order relating to the settlement of marital property rights; and/or

 

(b)                              subject to paragraph 7.3 below, following any Grantee’s death, RSUs (or any Shares derived from vested RSUs which are held by the Company Nominee on behalf of the Grantee) may be transferred by will or by the laws of testacy and distribution; and/or

 

(c)                               during the validity period of the Award, any Grantee may transfer RSUs to, and have RSUs accepted and/or held by, a Designated Nominee.

 

The terms of this Scheme and the Notice of Grant shall be binding upon the executors, administrators, legal personal representatives, heirs, successors and permitted assigns and transferees of the Grantee.

 

6.2       Subject to paragraph 6.1, a Grantee shall not in any way sell, transfer, charge, mortgage, encumber or create any interests in favour of any third party over or in relation to any RSU and/or any Shares derived from vested RSUs which are held by the Company Nominee on behalf of the Grantee.

 

7.         CANCELLATION

 

7.1       An unvested RSU shall be cancelled automatically upon the earliest of:

 

(a)                               the date of the termination of the Grantee’s employment or service by the Company or any of its Subsidiaries for Cause;

 

(b)                              the date the Grantee:

 

(i)                                  becomes an officer, director, employee, consultant, adviser, partner of, or a stockholder or other proprietor owning more than a 5 per cent. interest in, any Competitor; or

 

(ii)                              knowingly performs any act that may confer any competitive benefit or advantage upon any Competitor;

 

(c)                               the date on which the Grantee commits a breach of paragraph 6; and

 

(d)                              the date on which the condition(s) to vesting are not satisfied.

 

Page 7

 

7.2       The Board shall have the right to determine what constitutes Cause, whether the Grantee’s employment has been terminated for Cause, the effective date of such termination for Cause and whether someone is a Competitor, and such determination by the Board shall be final and conclusive.

 

7.3       If the Grantee’s employment or service with the Company or any of its Subsidiaries is terminated for any reason other than for Cause (including by reason of resignation, retirement, death, Disability or non-renewal of the employment or service agreement upon its expiration for any reason other than for Cause), the Board shall determine at its absolute discretion and shall notify the Grantee whether any unvested RSU granted to such Grantee shall vest and the period within which such RSU shall vest.  If the Board determines that such RSU shall not vest, such RSU shall be cancelled automatically with effect from the date on which the Grantee’s employment or service is terminated.

 

7.4       The Board may at any time cancel any unvested RSUs granted to a Grantee.  Where the Company cancels unvested RSUs and makes a Grant of new RSUs to the same Grantee, such Grant may only be made with available RSUs to the extent not yet granted (excluding the cancelled RSUs) within the limits prescribed by paragraph 5.

 

8.         REORGANISATION OF CAPITAL STRUCTURE

 

8.1       In the event of an alteration in the capital structure of the Company whilst any RSU has not vested by way of a capitalisation of profits or reserves, bonus issue, rights issue, open offer, subdivision or consolidation of shares or reduction of the share capital of the Company in accordance with legal requirements and requirements of the Stock Exchange (other than any alteration in the capital structure of the Company as a result of an issue of Shares as consideration in a transaction to which the Company or any of its subsidiaries is a party or in connection with any share option, restricted share or other equity incentive schemes of the Company), such corresponding adjustments (if any) shall be made to the number or nominal amount of Shares underlying the RSU so far as unvested, provided that any such adjustments give a Grantee the same proportion of the share capital of the Company as that to which that Grantee was previously entitled.

 

9.         SHARE CAPITAL

 

9.1       The RSUs do not carry any right to vote at general meetings of the Company, or any dividend, transfer or other rights (including those arising on the liquidation of the Company).

 

9.2       No Grantee shall enjoy any of the rights of a Shareholder by virtue of the grant of an RSU pursuant to this Scheme, unless and until the Shares underlying the RSU are actually transferred to the Grantee.

 

9.3       Notwithstanding anything in this Scheme to the contrary, and regardless of whether any of the relevant RSUs have vested, the Company Nominee shall take instructions from the Board in relation to any and all rights (including but not limited to voting, dividend, transfer and other rights) it may have as a Shareholder of any and all the Shares held by it, so long as such Shares have not been transferred to any Grantee. The Board may consult with the Grantees from time to time regarding various voting matters, and shall provide instructions to the Company Nominee.

 

Page 8

 

10.       DISPUTES

 

10.1     Any disputes arising in connection with this Scheme shall be referred to the decision of the Auditors or the independent financial adviser to the Company (as the case may be) who shall act as experts and not as arbitrators and whose decision shall, in the absence of manifest error, be final and binding on the Company and the Grantee.  The costs of the Auditors or the independent financial adviser to the Company (as the case may be) shall be shared equally between the Company and the relevant Grantee.

 

11.       ALTERATION OF THIS SCHEME

 

11.1     Save as provided in this Scheme, the Board may alter any of the terms of this Scheme at any time.

 

12.       TERMINATION

 

12.1     The Company by ordinary resolution in general meeting or the Board may at any time terminate this Scheme and in such event, no further RSUs may be granted but in all other respects the provisions of this Scheme shall remain in full force and effect in respect of RSUs which are granted during the life of this Scheme and which remain unvested immediately prior to the termination of the operation of this Scheme.

 

13.       MISCELLANEOUS

 

13.1     The Company shall bear the costs of establishing and administering this Scheme.

 

13.2     A Grantee shall be entitled to receive copies of all notices and other documents sent by the Company to the Shareholders.

 

13.3     Any notice or other communication between the Company and a Grantee may be given by sending the same by prepaid post or personal delivery to, in the case of the Company, its principal place of business in the Hong Kong SAR or such other address as notified to the Grantee from time to time and, in the case of the Grantee, his address as notified to the Company from time to time.

 

13.4     Any notice or other communication served by post:

 

(a)                               by the Company shall be deemed to have been served 48 hours after the same was put in the post; and

 

(b)                              by the Grantee shall not be deemed to have been received until the Company shall have received the same.

 

Any notice or other communication served by either party by hand shall be deemed to be served when delivered.

 

13.5     Any liability of a Grantee to tax or social security contributions in respect of an Award shall be for the account of the Grantee.

 

Page 9

 

13.6     All allotments and issues and/or transfers of Shares will be subject to all necessary consents under any relevant legislation for the time being in force in the Cayman Islands and such other jurisdictions where a Grantee is located, resident or employed.  A Grantee shall be responsible for obtaining any governmental or other official consent and going through any other governmental or other official procedures that may be required by any country or jurisdiction for the grant or vesting of his RSU.  A Grantee shall pay all tax and discharge all other liabilities to which he may become subject to as a result of his participation in this Scheme, the vesting of any RSU or any transfer of Shares by the Company Nominee to the Grantee.  The Company Nominee, Company or any of its Subsidiaries may coordinate or assist a Grantee in complying with such applicable requirements and taking any other actions as may be required by any applicable laws, regulations or rules, however, neither the Company Nominee, Company nor any of its Subsidiaries shall be responsible for any failure by a Grantee to obtain any such consent or for any tax or other liability to which a Grantee may become subject as a result of his participation in this Scheme. A Grantee shall, on demand, indemnify the Company Nominee and Company in full against all claims and demands which may be made against the Company (whether alone or jointly with other party or parties) for or in respect of or in connection with any failure on the part of the Grantee to obtain any necessary consent referred to above or to pay tax or other liabilities referred to above and against all incidental costs and expenses which may be incurred by the Company and/or Company Nominee.

 

13.7     The Board shall have the power from time to time to make or vary regulations for the administration and operation of this Scheme, provided that the same are not inconsistent with the other provisions of this Scheme. The Board shall also have the power to delegate its powers to grant Awards to Participants to any of the Directors or any duly authorised committee of the Board from time to time.

 

13.8     This Scheme shall not form part of any contract of employment or engagement of services between the Company or any of its Subsidiaries and any Participant and the rights and obligations of any Participant under the terms of his office, employment or engagement in services shall not be affected by the participation of the Participant in this Scheme or any right which he may have to participate in it and this Scheme shall afford such Participant no additional rights to compensation or damages in consequence of the termination (howsoever caused) of such office, employment or engagement for any reason (whether lawful or unlawful).

 

13.9     The Board shall be entitled to establish such arrangements as it deems reasonably necessary with respect to the mechanisms to implement the vesting of RSUs and the related registration, recordation and reporting matters to ensure that the Grantees, Company Nominee, and the Company can comply with all applicable securities, foreign exchange and tax regulations of all relevant jurisdictions, including without limitation, the Cayman Islands.  Each Grantee shall authorise the Company to establish all necessary brokerage and other accounts on the Grantee’s behalf and shall provide to the Company such information as the Board deems necessary in connection with the Company’s and the Grantee’s compliance with the foregoing obligations.

 

13.10   This Scheme and all RSUs granted hereunder shall be governed by and construed in accordance with the laws of the Cayman Islands.

 

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