Lock-Up Agreement
August 16, 2007
THINKEQUITY PARTNERS LLC
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned understands that you, as Placement Agent, propose to enter into the Placement
Agency Agreement (the “Placement Agency Agreement”) with Emisphere Technologies, Inc., a
Delaware corporation (the “Company”), providing for the offering (the “Offering”)
of shares (the “Shares”) of common stock, par value $0.01 per share (the “Common
Stock”), of the Company. Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Placement Agency Agreement.
In consideration of the foregoing, and in order to induce you to participate in the Offering,
and for other good and valuable consideration receipt of which is hereby acknowledged, the
undersigned hereby agrees that, without your prior written consent (which consent may be withheld
in your sole and reasonable discretion), the undersigned will not, during the period (the
“Lock-Up Period”) beginning on the date hereof and ending on the date 90 days after the
date of the final prospectus (including the final prospectus supplement) to be used in confirming
the sale of the Shares (the “Final Prospectus”), (1) offer, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, or file (or participate in the filing of) a registration statement with
the Securities and Exchange Commission (the “SEC”) in respect of, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for shares of Common Stock (including
without limitation, shares of Common Stock which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations of the SEC and securities which may be
issued upon exercise of a stock option or warrant), (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of the shares of
Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by
delivery of shares of Common Stock or such other securities, in cash or otherwise, (3) make any
demand for or exercise any right with respect to, the registration of any shares of Common Stock or
any security convertible into or exercisable or exchangeable for shares of Common Stock, or (4)
publicly announce an intention to effect any transaction specific in clause (1), (2) or (3) above.
Notwithstanding the foregoing, the restrictions set forth in clause (1) and (2) above shall
not apply to (a) transfers (i) as a bona fide gift or gifts, whether by gift, will, or intestate
succession, provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the trustee of the trust
agrees to be bound in writing by the restrictions set forth herein, and provided further that any
such transfer shall not involve a disposition for value, (iii) with your prior written consent,
(iv) effected pursuant to any exchange of “underwater” options with the Company, (v) to an
affiliate (as such term is defined in Rule 144(a) under the Securities Act of 1933, as amended) of
the undersigned, provided that
the transferee or transferees thereof agree to be bound in writing by the restrictions set
forth herein, or (vi) pursuant to a sale of 100% of the outstanding Common Stock, whether pursuant
to a merger, consolidation or otherwise, to a third party or group of third parties, provided that
the third party or group of third parties agree to be bound in writing by the restrictions set
forth herein until such time as such third party or group of third parties have acquired 100% of
the outstanding Common Stock, (b) the acquisition or exercise of any stock option issued pursuant
to the Company’s existing stock option plan, including any exercise effected by the delivery of
shares of Common Stock of the Company held by the undersigned, (c) the purchase or sale of the
Company’s securities pursuant to a plan, contract or instruction that satisfies all of the
requirements of Rule 10b5-1(c)(1)(i)(B) under the Securities Exchange Act of 1934, as amended, that
was in effect prior to the date hereof, (d) transactions relating to Shares of Common Stock or
other securities acquired in open market transactions after completion of the Offering, or (e) any
transactions in which the undersigned lends or borrows any shares of Common Stock (including any
securities convertible into or exercisable or exchangeable for shares of Common Stock) to brokers,
banks or other financial institutions for the purpose of effecting any margin transactions,
including any transactions effecting or resulting in any pledge or other encumbrance (in existence
or hereinafter created) over such shares of Common Stock (including any securities convertible into
or exercisable or exchangeable for shares of Common Stock) in the ordinary course of business. For
purposes of this Lock-Up Agreement, “immediate family” shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin. In addition, notwithstanding the
foregoing, if the undersigned is (i) a corporation, the corporation may Transfer the Common Stock
(including any securities convertible into or exercisable or exchangeable for shares of Common
Stock) to any wholly-owned subsidiary of such corporation or (ii) a partnership or limited
liability company (an “LLC”), the partnership or LLC, as the case may be, may Transfer the Common
Stock (including any securities convertible into or exercisable or exchangeable for shares of
Common Stock) to a partner or partners of such partnership or to a member or members of such LLC,
as applicable; provided, however, that in each such case, it shall be a condition to the Transfer
that the transferee execute an agreement stating that the transferee is receiving and holding such
securities subject to the provisions of this Lock-Up Agreement and there shall be no further
Transfer of such Common Stock (including any securities convertible into or exercisable or
exchangeable for shares of Common Stock) except in accordance with this Lock-Up Agreement, and
provided further, that any such Transfer shall not involve a disposition for value. None of the
restrictions set forth in this Lock-Up Agreement shall apply to shares of Common Stock acquired in
open market transactions.
For the purpose of allowing you to comply with FINRA Rule 2711(f)(4), if (1) during the last
17 days of the Lock-Up Period, the Company releases earnings results or publicly announces other
material news or a material event relating to the Company or (2) prior to the expiration of the
Lock-Up Period, the Company announces that it will release earnings results during the 16-day
period beginning on the last day of the Lock-Up Period, then in each case the Lock-Up Period will
be extended until the expiration of the 18-day period beginning on the date of release of the
earnings results or the public announcement regarding the material news or material event, as
applicable, unless you waive, in writing, such extension, and you shall so notify the Company in
writing of the extension of such restrictions imposed herein. The Company agrees not to accelerate
the vesting of any option or warrant or the lapse of any repurchase right prior to the expiration
of the Lock-Up Period. In furtherance of the foregoing, the Company, and any duly appointed
transfer agent or depositary for the registration or transfer of the securities described herein,
are hereby authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Lock-Up Agreement.
The foregoing restrictions are expressly agreed to preclude the undersigned from engaging in
any hedging or other transaction which is designed to or reasonably expected to lead to or result
in a sale or disposition of the shares of Common Stock even if such securities would be disposed of
by someone other than the undersigned. Such prohibited hedging or other transactions would include
without limitation any short sale or any purchase, sale or grant of any right (including without
limitation any put option or put equivalent position or call option or call equivalent position)
with respect to any of the shares of Common Stock or with respect to any security that includes,
relates to, or derives any significant part of its value from such shares of Common Stock.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.
The undersigned also agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar or depositary against the transfer of the undersigned’s
shares of Common Stock except in compliance with the foregoing restrictions.
This Lock-Up Agreement shall automatically terminate and the undersigned shall be released
from all obligations hereunder (i) if the Placement Agency Agreement does not become effective, or
(ii) upon the earliest to occur, if any, of (a) the termination of the Placement Agency Agreement
(other than the provisions thereof which survive termination) prior to payment for and delivery of
the Shares to be sold thereunder, (b) the date the Company determines not to proceed with the
public offering of the Shares, or (c) if the Offering is not consummated on or prior to September
7, 2007.
This Lock-Up Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of laws principles thereof.
Very truly yours, | ||||||
MHR CAPITAL PARTNERS MASTER ACCOUNT LP | ||||||
By: MHR ADVISORS LLC, its General Partner | ||||||
By: | /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx | ||||||
Title: Vice President | ||||||
MHR CAPITAL PARTNERS (100) LP | ||||||
By: MHR ADVISORS LLC, its General Partner | ||||||
By: | /s/ Xxx Xxxxxxxxx
|
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Name: Xxx Xxxxxxxxx | ||||||
Title: Vice President | ||||||
MHR INSTITUTIONAL PARTNERS II LP | ||||||
By: MHR INSTITUTIONAL ADVISORS II LLC, its General Partner | ||||||
By: | /s/ Xxx Xxxxxxxxx
|
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Name: Xxx Xxxxxxxxx | ||||||
Title: Vice President | ||||||
MHR INSTITUTIONAL PARTNERS IIA LP | ||||||
By: MHR INSTITUTIONAL ADVISORS II LLC, its General Partner | ||||||
By: | /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx | ||||||
Title: Vice President | ||||||
Xxxx X. Xxxxxxxx, M.D. | ||||||
/s/ Xxx Xxxxxxxxx, as Attorney in Fact | ||||||