Exhibit 10.5


 


ACORDA

Therapeutics


 


August 11, 2002


 


Dr. Ron Cohen

145 West 58th Street

New York, NY 10019


 


Dear Ron:


 


We are delighted to
present this letter agreement, setting out the terms of your continued
employment with Acorda Therapeutics, Inc. (the “Company”) as President,
Director and Chief Executive Officer. 
If these terms are acceptable, please sign and date the copy of this
letter provided herewith and return it to me at your first convenience.  If you accept the terms offered herein, this
Agreement shall be deemed to be effective as of January 1, 2002 (the “Effective
Date”).


 


1.                                      Employment.


 


You will be employed by
the Company, as President and Chief Executive Officer.  As President and Chief Executive Officer you
will have overall responsibility for all aspects of the Company’s
business.  You will report directly to
the Board of the Director’s of the Company (the “Board”).  You will also serve as a member of the Board.


 


2.                                      Base
Salary.


 


In consideration for your
services under this Agreement, you shall be paid an annual base salary of Two
Hundred and Eighty Thousand Dollars ($280,000), to be paid in accordance with
the Company’s standard payroll practices. Your base salary shall be reviewed
annually by the Board and any increase to your base salary shall be determined
by the Board based on your performance and the Company’s overall performance.


 


3.                                      Annual
Bonus.


 


You shall be eligible to
receive an annual bonus in an amount determined by the Board in its sole
discretion based on your performance.


 


4.                                      Benefits;
Perquisites; Reimbursement of Expenses.


 


In addition to those
payments set forth above, you shall be entitled to the following benefits and
payments:


 


(a)                                  Employee
Benefit Plans Generally.  You
shall be entitled to participate in all employee benefit plans which the
Company provides or may establish from time to time for the benefit of its
senior executives.


 


(b)                                 Vacation.  You shall be entitled to paid vacation in
accordance with the Company’s vacation policy as that policy may be amended from
time to time.


 

















 


(c)                                  Perquisites
and Reimbursement of Expenses. 
You shall be entitled to all perquisites offered to senior executives of
the Company.  In addition, you shall be
entitled to reimbursement for all ordinary and reasonable out-of-pocket business
expenses which are incurred by you in furtherance of the Company’s business, in
accordance with the policies adopted from time to time by the Company.


 


(d)                                 Insurance.  You shall be covered by a Directors and
Officers Liability Insurance policy that generally covers the directors and
officers of the Company, provided by the Company at its expense.  You shall cooperate in all respects with the
Company’s efforts to obtain and maintain key person life insurance on your
life.


 


(e)                                  Legal Fees.  The Company shall reimburse you for legal
fees incurred in connection with the negotiation and drafting of this
Agreement, up to a maximum of  Five
Thousand Five Dollars ($5,500).


 


5.                                      Stock
Options.


 


You shall be eligible to
receive annual performance-based stock option grants to purchase shares of the
Company’s common stock.  The number of
annual options granted shall be determined by the Board, based on the
achievement of individual performance objectives and the Company’s achievement
of its goals and objectives.  All such
options shall be granted pursuant to and in accordance with the terms of the
Acorda Therapeutics, Inc. 1999 Employee Stock Option Plan and/or any additional
or replacement plan adopted by the Board (the “Plan(s)”) except as such terms
may be specifically modified herein. 
Unless otherwise provided for in any option agreement, all options
granted to you shall vest in 16 equal quarterly installments, beginning with
the first day of the quarter next following the date the option is
granted.  Unless otherwise limited by
IRS rules governing the issuance of incentive options to principal stockholders
of the Company, all options shall be exercisable for 10 years following the
date of grant.  You shall be eligible to
exercise all options granted on a cashless basis, and otherwise in accordance
with the terms of the Plan(s).


 


6.                                      Term;
Termination.


 


(a)                                  Term.  The term of this Agreement shall continue
for a period of one year following the Effective Date, unless earlier
terminated as provided herein, and shall be automatically renewed for
successive one year terms unless the Company or you provide written notice of
its or your determination not to renew this Agreement at least 60 days prior to
the expiration of the then current term. A determination by you or the Company
not to renew this Agreement based upon Good Reason or Without Cause, as the
case may be, shall be deemed a termination of employment for purposes of
Section 6(c) and the terms thereof shall apply.


 


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(b)                                 Death or
Disability.  Your employment
with the Company shall terminate as of the date of your death or the date you
are determined to be “Disabled.”  Upon
such termination, the following shall apply:


 


(i)                                     The
Company shall pay to you or your estate, as the case may be, (A)  all amounts due and owing as of the date of
termination and (B) your base salary through the end of the third month
following the date your employment is terminated.


 


(ii)                                  If
you or your eligible spouse and dependents timely elect health care
continuation coverage (“COBRA Coverage”), the Company shall pay the monthly
premiums for such coverage for the duration of the applicable COBRA Coverage
period.


 


(iii)                               65%
of all unvested stock options shall become immediately vested and shall remain
exercisable by you or your estate, as the case may be, for 48 months following
the termination date.


 


For these purposes, you
shall be considered to be Disabled if you are unable to perform the substantial
functions of your position for 180 consecutive days or more in a 12 month
period, unless a greater period is required by law.  A determination of disability shall be made jointly by a
physician of your choice and a physician of the Company’s choice.  If both physicians can not agree on whether
you are Disabled, a third physician chosen by the first two shall make the
final and binding determination.


 


(c)                                  Termination
of Your Employment by the Company Without Cause or Voluntary Termination by You
With Good Reason.  If the
Company terminates your employment without Cause or if you terminate your
employment with Good Reason the following shall apply:


 


(i)                                     The
Company shall pay to you your base salary for a period of one (1) year
following the date of such termination (the “Severance Period”).  You shall be under no obligation to secure
alternative employment during the Severance Period, and payment of your base
salary shall be made without regard to any subsequent employment you may
obtain.


 


(ii)                                  The
Company shall also pay you a bonus equal to the last annual bonus you received
multiplied by a fraction, the numerator of which shall be the number of days in
the calendar year elapsed as of the termination date and the denominator of
which shall be 365.


 


(iii)                               If
you or your eligible spouse and dependents timely elect COBRA Coverage, the
Company shall pay the monthly premiums for such coverage during the Severance
Period; provided that, if you elect coverage under a subsequent employer’s
group health insurance plan during the Severance Period, payment of such
premiums shall cease.


 


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(iv)                              All
stock options granted to you hereunder or under any other agreement shall
become immediately and fully vested as of the termination date, and shall
remain exercisable for 48 months following such date.


 


(d)                                 Termination
of Your Employment by the Company With Cause or by You Without Good Reason.  The Company may terminate your employment
with Cause or you may resign at any time. 
In such case, you shall be paid all amounts due for services rendered
under this Agreement up until the termination date.  Thereafter, no further payments shall be made to you under this
Agreement.  All stock options granted to
you hereunder or under any other agreement that are fully vested as of the date
of your termination shall remain exercisable for ninety (90) days from the
termination date.  If you dispute the
grounds for your termination, your vested options will remain exercisable until
ninety (90) day after the date the dispute is resolved.  All unvested options shall be forfeited.


 


(e)                                  Cause.  As used herein, “Cause” means that you have:


 


(i)                                     committed
gross negligence in connection with your duties as set forth herein or
otherwise with respect to the business and affairs of the Company, which gross
negligence has a material adverse effect on the business of the Company or your
ability to perform your duties under this Agreement;


 


(ii)                                  committed
fraud in connection with your duties as set forth herein or otherwise with
respect to the business and affairs of the Company;


 


(iii)                               engaged
in “willful misconduct” with respect to the business and affairs of the
Company.  For purposes of this
Agreement, “willful misconduct” means misconduct committed with actual
knowledge that your actions violate directions and instructions of the Board,
which directions and instructions are legal and consistent with the Agreement;


 


(iv)                              materially
breached your duties under this Agreement, which breach has a material adverse
effect on the business of the Company or your ability to perform your duties
under the Agreement; or


 


(v)                                 been
found by a court of competent jurisdiction to have committed or plead guilty to
an unlawful act whether or not related to the business of the Company if the
commission of such act has a material adverse effect either on (a) your ability
to perform your duties under the Agreement or (b) the reputation and goodwill
of the Company.


 


“Cause” shall be found only by a majority of the full
Board and only after you have received notice from the Board, have had an
opportunity to


 


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discuss the issues with the Board, have had an
opportunity to be heard generally and through counsel, and have been given a 30
day period to cure, where cure is feasible.


 


(f)                                    Good Reason.  As used herein, “Good Reason” means that:


 


(i)                                     the
Company has materially breached this Agreement;


 


(ii)                                  you
are removed or not appointed as a member the Board;


 


(iii)                               the
Company fails to acquire the assignment of this Agreement by an acquiring
entity;


 


(iv)                              your
position has been materially reduced or you have been assigned duties that are
materially inconsistent with your duties as set forth herein or which
materially impair your ability to perform the services contemplated hereunder;
or


 


(v)                                 the
Company relocates its offices more than 60 miles from Hawthorne, New York.


 


(vi)                              Termination
for Good Reason may occur only after you have given the Board notice and 30
days to cure, where cure is feasible.


 


7.                                      Change
in Control.


 


(a)                                  Subject
to the provisions of this Section 7, the vesting of your options upon a Change
of Control shall be governed by the terms of the Plans and your option
agreements, but in no event shall less than 65% of your then unvested stock
options become immediately vested and exercisable.


 


(b)                                 Voluntary
Termination by You After a Change in Control Without Good Reason.  If you voluntarily terminate your employment
following the effective date of the Change in Control the following shall
apply:


 


(i)                                     The
Company shall pay to you your base salary for a period of one (1) year
following the date of such termination (the “Change in Control Severance
Period”).  You shall be under no
obligation to secure alternative employment during the Change in Control
Severance Period, and payment of your base salary shall be made without regard
to any subsequent employment you may obtain;


 


(ii)                                  The
Company shall also pay you a bonus equal to the last annual bonus you received
multiplied by a fraction, the numerator of which shall be the number of days in
the calendar year elapsed as of the termination date and the denominator of
which shall be 365.  Should the Company
revise its compensation schedule, you will be paid a pro-rata bonus as
reasonably determined under the compensation system then in place;


 


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(iii)                               If
you or your eligible spouse and dependents timely elect COBRA Coverage, the
Company shall pay the monthly premiums for such coverage during the Change in
Control Severance Period; provided that, if you elect coverage under a
subsequent employer’s group health insurance plan during the Change in Control
Severance Period, payment of such premiums shall cease; and


 


(iv)                              65%
of all outstanding options shall vest as of the termination date and shall
remain exercisable for 48 months following such date.


 


(c)                                  If
you voluntarily terminate your employment after a Change in Control with Good
Reason, then Paragraph 6(c) shall apply in lieu of Paragraph 7(b).


 


(d)                                 Change in
Control Defined.  A Change in
Control shall be deemed to have occurred if:


 


(i)                                     there
is a consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation; or there is any other merger or
consolidation if, after such merger or consolidation shareholders of the
Company immediately prior to such merger or consolidation hold less than 50% of
the voting stock of the surviving entity;


 


(ii)                                  there
is a sale or transfer of all or substantially all of the assets of the Company
in one or a series of transactions or there is a complete liquidation or
dissolution of the Company; or


 


(iii)                               any
individual or entity or group acting in concert and affiliates thereof,
acquires, directly or indirectly, more than 50% of the outstanding shares of
voting stock of the Company; provided that this subsection (iii) shall not
apply to an underwritten public offering of the Company’s securities.


 


8.                                      Confidentiality/Noncompetition.


 


(a)                                  During
the term of your employment and for an additional period of five years after
you are no longer employed by the Company, you will not reveal, divulge or make
known to any individual, partnership, joint venture, corporation or other
business entity (other than the Company or its affiliates) or use for your own
account any customer lists, trade secrets or any confidential information of
any kind (“Protected Information”) used by the Company or any of its commonly
controlled affiliates in the conduct of the Company’s business and made known
to you by reason of your employment with the Company or any of its affiliates
(whether or not developed, devised or otherwise created in whole or in part by
your efforts); provided, that Protected Information shall not include
information that shall become known to the public or the trade without
violation of this Section 8(a); and provided, further, that you
shall not violate this Section 8(a) if Protected Information is disclosed by
you at the direction of the Company or if you are required to provide Protected
Information in any legal proceeding or by order of any court.


 


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(b)                                 During
the term of your employment and for an additional period of one  year
after you are no longer employed by the Company, you will not, directly or
indirectly, engage in a Competitive Business, including owning or controlling
an interest in (except as a passive investor owning less than two percent (2%)
of the equity securities of a publicly-owned company), or acting as director,
officer or employee of, or consultant to, any individual, partnership, joint
venture, corporation or other business entity known to you to be engaged in a
Competitive Business. “Competitive Business” shall mean the development of
therapeutics for spinal cord injuries, multiple sclerosis and other central
nervous system conditions for which the Company is actively seeking to develop
therapeutics during the term of this Agreement; provided, however, that
notwithstanding the aforesaid, you shall not be prohibited from acting in any
of the aforesaid capacities for or with respect to any subsidiary, division,
affiliate or unit (each, a “Unit”) of an entity if that Unit itself is not
engaged in a Competitive Business, irrespective of whether some other Unit of
such entity engages in such competition (as long as you do not engage in a
Competitive Business for such other Unit).


 


(c)                                  During
the term of your employment and for an additional period of one year after you
are no longer employed by the Company, you shall not knowingly employ or
solicit, encourage or induce any person (except your spouse, if applicable) who
at any time within 90 days prior to the termination of your employment shall
have been an employee of the Company or any of its commonly controlled
affiliates, to become employed by or associated with any individual,
partnership, joint venture, corporation or other business entity other than the
Company, and you shall not knowingly approach any such employee for such
purpose or authorize or knowingly approve the taking of such actions by any other
individual, partnership, joint venture, corporation or other business entity or
knowingly assist any such individual, partnership, joint venture, corporation
or other business entity in taking such action.


 


(d)                                 You
acknowledge that the provisions of this Section 8 are reasonable and necessary
for the protection of the Company and that each provision, and the period or
periods of time and types and scope of restrictions on the activities specified
herein are, and are intended to be divisible. 
In the event that any provision of this Agreement, including any
sentence, clause or part hereof, shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the
remaining provisions shall not be affected, but shall, subject to the
discretion of such court, remain in full force and effect and any invalid and
unenforceable provisions shall be deemed, without further action on the part of
the parties hereto, modified, amended and limited to the extent necessary to render
the same valid and enforceable.


 


(e)                                  You
acknowledge that the Company will be irrevocably damaged if the covenants
contained herein are not specifically enforced.  Accordingly, you agree that, in addition to any other relief to
which the Company may be entitled, the Company shall be entitled to seek and
obtain injunctive relief from a court of competent jurisdiction for the
purposes of restraining you from any actual or threatened breach of such
covenants.


 


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9.                                      Miscellaneous
Provisions.


 


(a)                                  Notices.  All notices and other communications
hereunder between you and the Company shall be in writing, shall be addressed
to the receiving party’s address of record (or to such other address as a party
may designate by notice hereunder), and shall be either (i) delivered by hand,
(ii) made by telecopy, (iii) sent by overnight courier, or (iv) sent by
certified mail, return receipt requested, postage prepaid.


 


(b)                                 Modifications
and Amendments.  The terms
and provisions of this Agreement may be modified or amended only by written
agreement executed by the parties hereto.


 


(c)                                  Waivers and
Consents.  The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by written document executed by the party entitled to
the benefits of such terms or provisions. 
No such waiver or consent shall be deemed to be or shall constitute a
waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar.  Each
such waiver or consent shall be effective only in the specific instance and for
the purpose for which it was given, and shall not constitute a continuing
waiver or consent.


 


(d)                                 Assignment.  This Agreement shall inure to the benefit of
and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees.  This Agreement  may not be assigned or pledged by you.  In the event of the merger or consolidation of the Company (whether
or not the Company is the surviving or resulting corporation), the transfer of
all or substantially all the assets of the Company, or the voluntary or
involuntary dissolution of the Company, the surviving or resulting corporation
or the transferee or transferees of the Company’s assets shall be bound by this
and the Company shall take all actions necessary to ensure that such
corporation, transferee or transferees assume and are bound by its provisions.


 


(e)                                  Severability.  The parties intend this Agreement to be
enforced as written.  However, if any
portion or provision of this Agreement shall to any extent be declared illegal
or unenforceable by a duly authorized court of proper jurisdiction, then the
remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted
by law.


 


(f)                                    Choice of
Law.  This Agreement and the
rights and obligations of the parties hereunder shall be construed in
accordance with and governed by the law of the State of New York, without
giving effect to the conflict of law principles thereof.


 


(g)                                 Entire
Agreement.  This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings of
the parties hereto, oral or written, with respect to the subject matter hereof.
Notwithstanding the preceding sentence, the provisions of the Acorda
Therapeutics, Inc. Restricted Stock Purchase Agreement (dated March 1995) and
the Series A Preferred Stock Purchase Agreement shall remain in effect pursuant
to their respective terms


 


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(h)                                 Arbitration.  Any dispute or controversy between you and
the Company,  arising out of or relating
to this Agreement or the breach of this Agreement, shall be settled by
arbitration administered by the American Arbitration Association (“AAA”) in
accordance with its Employment Disputes Arbitration Rules then in effect, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.  Any arbitration
shall be held before a single arbitrator who shall be selected by the mutual
agreement of you and the Company, unless the parties are unable to agree to an
arbitrator, in which case, the arbitrator will be selected under the procedures
of the AAA.  The arbitrator shall have
the authority to award any remedy or relief that a court of competent
jurisdiction could order or grant, including, without limitation, the issuance
of an injunction.  However, either party
may, without inconsistency with this arbitration provision, apply to any court
having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award
is rendered or the controversy is otherwise resolved.  Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, to obtain interim relief,
as required by law, or the party’s immediate family and legal and financial
advisors, neither a party nor an arbitrator may disclose the existence, content
or results of any arbitration hereunder without the prior written consent of
you and the Company. The Company shall pay all costs and fees associated with
such arbitration, including all arbitration fees, the arbitrator’s fees, attorneys’
fees and all costs.


 


If the terms of this
Agreement are acceptable to you please sign where indicated below.  It is understood and acknowledged that a fax
signature will be considered to be valid as an original.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  Acorda
  Therapeutics, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Pinney

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to and accepted:

  	
   

  
	
   

  	
   

  
	
  /s/ Ron Cohen

  	
   

  	
   

  
	
   

  	
   

  
	
  Dr. Ron Cohen

  	
   

  
	
   

  	
   

  
	
  Date:  

  	
  8/12/02

  	
   

  	
   

  
						



 


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