Exhibit
10.23


 


THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NEITHER
THIS CONVERTIBLE PROMISSORY NOTE NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, OTHER THAN TO AFFILIATES, IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH CONVERTIBLE PROMISSORY
NOTE OR SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL WHO SHALL BE AND WHOSE
OPINION SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION STATING THAT SUCH
OFFER, SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT AND APPLICABLE STATE SECURITIES LAWS.


 


ACORDA
THERAPEUTICS, INC.


 


LIMITED
RECOURSE CONVERTIBLE PROMISSORY NOTE




	
  $5,000,000.00

  	
  New York, New
  York

  
	
   

  	
  January 22, 1997

  



 


FOR VALUE RECEIVED, Acorda Therapeutics, Inc., a
Delaware corporation (the “Company”), hereby promises to pay to Elan
International Services, Ltd., a Bermuda corporation (the “Holder”), the
principal sum of Five Million Dollars ($5,000,000.00), plus interest compounded
annually on the unpaid balance commencing to accrue from and after the first
anniversary of the date hereof ‘at a rate of three percent (3%) per annum
payable upon the earlier of the prepayment in accordance with Section 2 hereof
or on the Maturity Date (as defined below).


 


This Promissory Note is issued in connection with that
certain Series B and Series C Preferred Stock, Convertible Note and Warrant
Purchase Agreement, dated as of January 22, 1997 (the “Purchase Agreement”)
between the Company and the Holder, and that certain License and Supply
Agreement, dated as of January 22, 1997 (the “License Agreement”), between the
Company and Elan Corporation, plc.


 


Section
1.                      Payment.
If the Holder has not converted the outstanding principal hereunder into
Preferred. Stock in accordance with Section 3 hereof by the date which is the
first anniversary after the first Regulatory Approval (as defined below)(the
“Maturity Date”), the Company shall be obligated to pay the outstanding
principal sum remaining on this Promissory Note, together with all accrued and
unpaid interest thereon, to Holder in seven (7) equal installments, the first
of which shall be paid on the Maturity Date, and the balance of which shall be
paid on the six (6) successive anniversaries of the Maturity Date; provided,
however, that if the Committee (as defined in the License Agreement) reasonably
determines that such Regulatory Approval is unlikely to be obtained or shall
not be obtained in a timely manner and 


 

















 


provides
written notice (the “Notice”) thereof to the Company and the Holder (a “Committee
Termination”), then on the tenth day following receipt of the Notice, the
outstanding principal sum remaining on this Promissory Note, together with all
accrued and unpaid interest thereon, shall be canceled and not repayable and
shall result in the termination of this Promissory Note; provided, further,
that if the Company otherwise determines to terminate the License Agreement as
a result of its reasonable and good faith belief that the market for the
Products (as defined in the License Agreement) is not economically significant
and there is not at such time a material default by the Company thereunder,
which termination complies with the provisions of the License Agreement (a
“Company Termination”), then, subject to earlier conversion, the Company shall
be obligated to pay the outstanding principal sum remaining on this Promissory
Note to Holder, together with all accrued and unpaid interest thereon, in
fifteen (15) equal installments, the first of which shall be paid on the first
anniversary after the date of the Notice, and the balance of which shall be
paid on the fourteen (14) successive anniversaries of the date of the Notice.
“Regulatory Approval” shall mean (x) approval for the sale and marketing of one
or more of the Products by the United States Food and Drug Administration or
(y) approval for the sale and marketing of one or more of the Products by the
CPMP in the European Union and/or not more than one of the applicable
regulatory authorities in the United Kingdom, France or Germany denying such
approval.


 


All payments of principal and accrued interest made in
accordance with this Promissory Note are to be made at the address of the
Holder as indicated on the signature page hereto, or at such other address as
the Holder may designate from time to time by written notice to the Company.
Such payments may be made (i) by check or wire transfer in next day United
States funds, (ii) by delivery of certificates evidencing shares of the
Company’s Common Stock, if the Company is then a reporting issuer registered
under Section 12 of the Securities Exchange Act of ‘1934, as amended, or (iii)
any combination thereof. Where payment is made in shares of the Company’s
Common Stock, such stock will be valued for purposes hereof at 100% of its
Market Value if such shares have been registered under the Securities Act of
1933, as amended (the “1933 Act”), and freely tradeable by the Holder without
restriction under applicable federal or state securities laws, and will be
valued for purposes hereof at 80% of its Market Value if such shares are
“restricted securities” within the meaning of Rule 144 under the 1933 Act.
“Market Value” shall mean the average of the closing sales prices of the
Company’s Common Stock as reported by Nasdaq (or other principal securities exchange
on which the Company’s Common Stock may then be traded) for the fifteen (15)
trading days ending on the third day preceding the date of payment.


 


The Holder expressly acknowledges that all payments of
principal and accrued interest under this Promissory Note shall be derived from
the sales of the Products as described below in this paragraph. In the event
that in any fiscal year of the Company, the Company’s Gross Margin (as defined
below) is less than $5 million, then, in such event, notwithstanding the other
provisions of this Promissory Note, the Company shall be obligated to pay to
the Holder in respect of payment of principal and accrued interest next due and
payable following the end of such fiscal year an amount equal to the lesser of
(x) the amount of principal and accrued interest otherwise payable hereunder
for each year or (y) an amount equal to 50% of such Gross Margin; provided,
that in the event that clause (y) above is applicable, the difference between
the amount described in clause (x) above and the amount described in clause (y)
above in respect of such fiscal year shall be deferred and carried forward
until such succeeding fiscal year or fiscal years


 


2

















 


of the Company in
respect of which there is any excess of the amount of the Gross Margin over the
amount otherwise payable under this Promissory Note (i.e., without regard to
this paragraph), in which case, such excess amount described in this proviso
shall be applied to pay such deferred and carried forward amount; provided,
further, that the maximum number of fiscal years during which any amount of
principal and interest may be deferred hereunder shall not exceed two, after
which period the Company’s obligation to pay such deferred principal and
interest shall resume. “Gross Margin” for each fiscal year of the Company shall
be determined by an audit in accordance with generally accepted accounting
principles consistently applied and shall mean the difference between the net
revenues derived from the Products and the cost of sales in respect thereof
(including, without limitation, all direct costs such as materials, insurance,
freight, discounts and similar costs) and an appropriate allocation of
corporate overhead (but excluding research and development expenses) as
reasonably determined by the Company.


 


If action is instituted to collect on this Promissory
Note, the Company promises to pay all costs and expenses, including reasonable
attorneys’ fees, incurred in connection with such action. The Company also
agrees to pay on demand all costs and expenses of the Holder, including
reasonable attorneys’ fees, in connection with the enforcement or attempted
enforcement of, and preservation of any rights under, this Promissory Note.


 


Interest payable under this Promissory Note shall be
calculated on the basis of actual number of days elapsed over a year of 365
days. All payments received by the Holder hereunder will be applied first to
costs of collection and other costs and expenses owing hereunder or in
connection herewith, if any, then to interest and the balance to principal.


 


No delay or omission on the part of the Holder in
exercising any right hereunder shall operate as a waiver of such right or any
other right of the Holder, nor shall any delay, omission or waiver of any one
occasion be deemed a bar to or waiver of the same or any other right or any
other occasion. The Company and every endorser and guarantor of this Promissory
Note regardless of the time, order or place of signing hereby waives
presentment, demand, protest and notice of every kind, and assents to any
extension or postponement of the time for payment or any other indulgence, to
any substitution, exchange or release of collateral, and to the addition or
release of any other party or person or entity primarily or secondarily liable.


 


Section
2.                      Prepayment.
The Company, at its option, may at any time on or after the date hereof prepay
in whole or in part, without penalty, the principal balance of this Promissory
Note, together with accrued interest to the date of payment, by giving written
notice to the Holder at least thirty (30) days prior to the date of such
prepayment; provided, however, that during such thirty (30) day period, the
Holder shall be entitled to convert the principal balance of this Promissory
Note in accordance with the provisions of Section 3 hereof.


 


Section
3.                      Conversion.


 


3.1                                 Voluntary
Conversion into Series D Preferred Stock. The Holder has the
right and option, upon written notice and prior to the payment in full of the
principal balance of this Promissory Note, to convert the then unpaid principal
amount of this Promissory Note (but not accrued and unpaid interest), in
accordance with the provisions of Section 3.2 hereof, in whole or in part, into
fully paid and nonassessable shares of the Series D Preferred Stock of the


 


3

















 


Company (the
“Series D Preferred”) at a rate which shall be equal to the quotient obtained
by dividing:


 


(x)                                   the
principal amount of this Promissory Note to be converted, by


 


(y)                                 $12.50.


 


The right and option of the Holder to convert the
unpaid principal amount of this Promissory Note into Series D Preferred shall
terminate upon the first to occur of: (i) the termination of this Promissory
Note as a result of a Committee Termination; or (ii) the payment (or
prepayment) by the Company of all amounts owing under this Promissory Note
(subject to the notice requirements of Section 2 hereof). For purposes of this
Note, “Series D Preferred” shall be deemed to include the Common Stock of the
Company upon the automatic conversion of all of the outstanding Preferred of
the Company in accordance with the provision of the Company’s Certificate of
Incorporation.


 


3.2                                 Mechanics
and Effect of Conversion. No fractional shares of Preferred will
be issued upon any conversion of this Promissory Note. In lieu of any
fractional share to which the Holder would otherwise be entitled, the Company
will pay to the Holder that amount of the unconverted principal balance of this
Promissory Note in cash. Upon any conversion of this Promissory Note pursuant
to this Section 3, the Holder shall surrender this Promissory Note, duly
endorsed, together with a written notice of election to convert, at the
principal offices of the Company or any transfer agent for the Company. At its
expense, the Company will, as soon as practicable thereafter, issue and deliver
to the Holder, a certificate or certificates for the number of shares of Series
D Preferred to which the Holder is entitled upon such conversion, together with
a check for immediately available funds payable to the Holder for any cash
amounts payable to Holder. Upon any conversion of the entire principal amount
of this Promissory Note, the Company will be forever released from all of its
obligations and liabilities under this Promissory Note with regard to the
entire principal amount, including, without limitation, the obligation to pay
such principal amount.


 


4

















 


Section
4.                      Senior
Indebtedness. The Company agrees that it shall not, after the date
hereof, incur any Senior Indebtedness to this Promissory Note and the
indebtedness evidenced hereby. “Senior Indebtedness” shall mean the principal
of and unpaid interest on any secured or other indebtedness of the Company
which purports to provide for a preference or priority in payment to this
Promissory Note and the indebtedness evidenced hereby; provided, however, that
this term shall exclude (i) the principal of and unpaid interest on any amounts
borrowed or to be borrowed from, or owing to, a bank, trust company, insurance
company or other financial institution regularly engaged in the business of
lending money, whether secured or unsecured; (ii) amounts owed or to be owed to
equipment lessors pursuant to equipment lease lines (so long as recourse is
limited to the specific item of equipment); and (iii) amounts owed or to be
owed to trade creditors in the ordinary course of business, in accordance with
reasonable and customary business practices.


 


Section
5.                      Miscellaneous.


 


5.1                                 Titles
and Subtitles. The titles and subtitles used herein are for
convenience only and are not to be considered in construing or interpreting
this Promissory Note.


 


5.2                                 Notices.
Unless otherwise provided, any notice required or permitted under this
Promissory Note shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified, upon delivery by facsimile
transmission, or upon the fifth business day after deposit with the United
States Post Office, postage prepaid and addressed to the party to be notified
at the address indicated for such party on the signature page hereof, or at
such other address as such party may designate by ten (10) days advance written
notice to the other party.


 


5.3                                 Highest
Lawful Rate. Anything in this Promissory Note to the contrary
notwithstanding, the Company shall never be required to pay interest on this
Promissory Note at a rate in excess of the Highest Lawful Rate (as hereinafter
defined), and if the effective rate of interest which would otherwise be
payable under this Promissory Note would exceed the Highest Lawful Rate, or if
the maturity of this Promissory Note is accelerated for any reason before the
Maturity Date, or in the event of voluntary prepayment by the Company hereof,
or if the Holder shall otherwise receive any unearned interest or shall receive
monies that are deemed to constitute interest which would increase the
effective rate of interest payable under this Promissory Note to a rate in
excess of the Highest Lawful Rate, then (a) the amount of interest which would
otherwise be payable under this Promissory Note shall be reduced to the amount
allowed under applicable law, and (b) any interest paid by the Company or any
interest paid by the Company in excess of the Highest Lawful Rate shall be
credited to the principal of this Promissory Note. It is further agreed that,
without limitation of the foregoing, all calculations of the rate of interest
contracted for, charged or received by the Holder under this Promissory Note
that are made for the purpose of determining whether such rate exceeds the
Highest Lawful Rate shall be made, to the extent permitted by applicable usury
laws (now or hereafter enacted), by amortizing, prorating and spreading in
equal parts during the period of the full stated term of this Promissory Note
all interest at any time contracted for, charged or received by the Holder in
connection herewith. “Highest Lawful Rate” shall mean the maximum rate of
interest which the Holder is permitted by applicable law to contract for,
charge or receive and as to which the Company could not successfully assert a
claim or defense of usury.


 


5

















 


5.4                                 Amendments
and Waivers. Any term of this Promissory Note may be amended and
the observance of any term of this Promissory Note may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder.


 


5.5                                 Severability.
If one or more provisions of this Promissory Note are held to be unenforceable
under applicable law, such provision shall be excluded from this Promissory
Note, and the remaining provisions of this Promissory Note shall be interpreted
as if such provision were so excluded and shall be enforceable in accordance
with their terms, with the effect of the excluded provision being taken into
consideration and the remaining terms construed in accordance with the intent
of this Promissory Note.


 


5.6                                 Governing
Law. This Promissory Note shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, without
giving effect to principles governing conflicts of laws.


 


5.7                                 Non-Transferability,.
This Promissory Note may not be transferred or assigned by the Holder without
the prior written consent of the Company; provided, however, that no consent of
the Company shall be required for any transfer or assignment of this Promissory
Note to an affiliate (within the meaning of the Securities Act of 1933, as
amended) of the Holder.


 


[Remainder of Page
Intentionally Left Blank]


 


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IN
WITNESS WHEREOF, this Limited Recourse Convertible Promissory
Note has been duly executed and delivered as of the date first above written.


 


	
  ACORDA
  THERAPEUTICS, INC.

  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Ron Cohen, M.D.

  	
   

  
	
   

  	
  President and
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  Address:

  	
  145 West 58th
  Street

  	
   

  
	
   

  	
  New York, New York
  10019

  	
   

  
						



 


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