Document:

Exhibit
10.1

 

ACORDA
THERAPEUTICS, INC.

 

1999
EMPLOYEE STOCK OPTION PLAN

 

SECTION 1.                            PURPOSE

 

The purpose of the Acorda Therapeutics, Inc. 1999
Employee Stock Option Plan (the “Plan”) is to provide an additional incentive
to directors, key employees, independent contractors, agents and consultants of
Acorda Therapeutics, Inc. (the “Company”) and its subsidiaries, to aid in
attracting and retaining directors, employees, independent contractors, agents
and consultants of outstanding ability, and to align their interests with those
of shareholders.

 

SECTION 2.                            DEFINITIONS

 

Unless the context clearly indicates otherwise, the
following terms, when used in this Plan, shall have the meanings set forth in
this Section 2.

 

(a)                                  
“Board”
shall mean the Board of Directors of the Company.

 

(b)                                 “Change in
Control”.  A change in
control of the Company shall be deemed to have occurred if, over the initial
opposition of the then-incumbent Board (whether or not such Board ultimately
acquiesces therein), (i) any person or group of persons shall acquire, directly
or indirectly, stock of the Company having at least 25% of the combined voting
power of the Company’s then-outstanding securities, or (ii) any shareholder or
group of shareholders shall elect a majority of the members of the Board in
each case after the closing of the initial public offering of the Stock.

 

(c)                                  “Code”
shall mean the Internal Revenue Code of 1986 and the rules and regulations
thereunder, as it or they may be amended from time to time.

 

(d)                                 “Committee”
shall mean the full Board, Compensation Committee of the Board or such other
committee as may be designated by the Board. 
If less than the full Board, the Committee shall consist of two or more
members of the Board who are not eligible to participate in the Plan, and who
otherwise are “non-employee directors” under Rule 16b-3.

 

(e)                                  “Date of
Exercise” shall mean the earlier of the date on which written notice
of exercise, together with payment in full, is received at the office of the
Secretary of the Company or the date on which such notice and payment are
mailed to the Secretary of the Company at its principal office by certified or
registered mail.

 

(f)                                    “Director” shall
mean a member of the Board of Directors.

 

(g)                                 “Employee” shall
mean any employee or any officer of the Company or any of its Subsidiaries, or
any other person, who is an independent contractor, agent or consultant of the
Company or any of its Subsidiaries, and excluding any director of the Company
who is not

 

 

otherwise an employee of the Company. 
For the purposes of any provision of this Plan relating to Incentive
Stock Options, the term “Employee” shall be limited to mean any employee (as
that term is defined under Code Section 3401(c)) or officer of the Company or
any of its Subsidiaries, but not any person who is merely an independent
contractor, agent or consultant of the Company or any of its subsidiaries.

 

(h)                                 “Fair Market
Value” of the Stock means, for all purposes of the Plan unless
otherwise provided (i) the mean between the high and low sales prices of the
Stock as reported on the National Market System or Small Cap Market of the
National Association of Securities Dealers, Inc., Automated Quotation System,
or any similar system of automated dissemination of quotations of securities prices
then in common use, if so quoted, or (ii) if not quoted as described in clause
(i), the mean between the high bid and low asked quotations for the Stock as
reported by a the National Quotation Bureau Incorporated or such other source
as the Committee shall determine, or (iii) if the Stock is listed or admitted
for trading on any national securities exchange, the mean between the high and
low sales price, or the closing bid price if no sale occurred, of the Stock on
the principal securities exchange on which the Stock is listed.  In the event that the method for determining
the Fair Market Value of the Stock provided for above shall either be not
applicable or not be practical, in the opinion of the Committee, then the Fair
Market Value shall be determined by such other reasonable method as the
Committee, in its discretion, shall select and apply.

 

(i)                                     “Grantee”
shall mean an Employee granted a Stock Option.

 

(j)                                     “Granting
Date” shall mean the date on which the Committee authorizes the
issuance of a Stock Option for a specified number of shares of Stock to a
specified Employee.

 

(k)                                  “Incentive
Stock Option” shall mean a Stock Option granted under the Plan which
is properly qualified under the provisions of Section 422 of the Code.

 

(l)                                     “Nonstatutory
Stock Option” shall mean a Stock Option granted within the Plan
which is not an Incentive Stock Option or otherwise qualified under similar tax
provisions.

 

(m)                               “Progressive
Stock Options” shall mean either Incentive Stock Options or
Nonstatutory Stock Options granted pursuant to Section 5(j) of this Plan.

 

(n)                                 “Rule 16b-3”
shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, or any rule in
replacement thereof.

 

(o)                                 “Stock”
shall mean the Common Stock, par value $0.001 per share, of the Company.

 

(p)                                 “Stock
Appreciation Right” shall mean a right granted pursuant to the Plan
to receive Stock, cash, or a combination thereof, upon the surrender of the
right to purchase all or part of the shares of Stock covered by a Stock Option.

 

(q)                                 “Stock
Option” shall mean an Incentive Stock Option or Nonstatutory Stock
Option granted pursuant to the Plan to purchase shares of Stock.

 

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(r)                                    “Subsidiary”
shall mean any subsidiary corporation as defined in Section 424(f) of the Code.

 

SECTION 3.                            SHARES OF STOCK SUBJECT TO
THE PLAN

 

Subject to adjustment pursuant to Section 9,
17,558,163 shares of Stock shall be reserved for issuance upon the exercise of
Stock Options granted pursuant to this Plan. 
Shares delivered under the Plan may be authorized and unissued shares or
issued shares held by the Company in its treasury.  If any Stock Options expire or terminate without having been
exercised, the shares of Stock covered by such Stock Option shall become
available again for the grant of Stock Options hereunder.  Similarly, if any Stock Options are
surrendered for cash pursuant to the provisions of Section 7, the shares of
Stock covered by such Stock Options shall also become available again for the
grant of Stock Options hereunder. 
Shares of Stock covered by Stock Options surrendered for Stock pursuant
to Section 7, however, shall not become available again for the grant of Stock
Options hereunder.

 

SECTION 4.                            ADMINISTRATION OF THE PLAN

 

(a)                                  The
Plan shall be administered by the Committee. 
Subject to the express provisions of the Plan, the Committee shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of Stock
Option grants, and to make all other determinations necessary or advisable for
the administration of the Plan.

 

(b)                                 It
is intended that the Plan and any transaction hereunder meet all of the
requirements of Rule 16b-3 promulgated by the Securities and Exchange
Commission, as such rule is currently in effect or as hereafter modified or
amended, and all other applicable laws. 
If any provision of the Plan or any transaction would disqualify the
Plan or such transaction under, or would not comply with, Rule 16b-3 or other
applicable laws, such provision or transaction shall be construed or deemed
amended to conform to Rule 16b-3 or such other applicable laws or otherwise
shall be deemed to be null and void, in each case to the extent permitted by
law and deemed advisable by the Committee.

 

(c)                                  Any
controversy or claim arising out of or related to this Plan shall be determined
unilaterally by and at the sole discretion of the Committee.

 

SECTION 5.                            GRANTING OF STOCK OPTIONS

 

(a)                                  Directors,
key Employees, independent contractors, agents and consultants to the Company
shall be eligible to receive Stock Options under the Plan.  Only Employees shall be eligible to receive
Incentive Stock Options under the Plan.

 

(b)                                 The
option price of each share of Stock subject to an Incentive Stock Option shall
be at least 100% of the Fair Market Value of a share of the Stock on the
Granting Date.

 

(c)                                  The
option price of each share of Stock subject to a Nonstatutory Stock Option
shall be 100% of the Fair Market Value of a share of the Stock on the Granting
Date, or such other price either greater than or less than the Fair Market
Value (but in no event less than the

 

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par value of the Stock) as the Committee shall determine appropriate to
the purposes of the Plan and to the Company’s total compensation program.

 

(d)                                 The
Committee shall determine and designate from time to time those persons who are
to be granted Stock Options and whether the particular Stock Options are to be
Incentive Stock Options or Nonstatutory Stock Options, and shall also specify
the number of shares covered by and the option price per share of each Stock
Option.  Each Stock Option granted under
the Plan shall be clearly identified as to its status as a Nonstatutory Stock
Option or an Incentive Stock Option.

 

(e)                                  The
aggregate Fair Market Value (determined at the time the Stock Option is
granted) of the Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year
(under all plans of the individual’s employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.

 

(f)                                    A
Stock Option shall be exercisable during such period or periods and in such
installments as shall be fixed by the Committee at the time the Stock Option is
granted or in any amendment thereto; but each Stock Option shall expire not
later than ten years from the Granting Date.

 

(g)                                 The
Committee shall have the authority to grant both transferable Stock Options and
nontransferable Stock Options, and to amend outstanding nontransferable Stock
Options to provide for transferability. 
Each nontransferable Stock Option intended to qualify under Rule 16b-3 or
otherwise shall provide by its terms that it is not transferable otherwise than
by will or the laws of descent and distribution or, except in the case of
Incentive Stock Options, pursuant to a “qualified domestic relations order” as
defined by the Code, and is exercisable, during the Grantee’s lifetime, only by
the Grantee.  Each transferable Stock
Option may provide for such limitations on transferability and exercisability
as the Committee may designate at the time a Stock Option is granted or is
otherwise amended to provide for transferability.

 

(h)                                 Stock
Options may be granted to an Employee or Director who has previously received
Stock Options or other options whether such prior Stock Options or other
options are still outstanding, have previously been exercised or surrendered in
whole or in part, or are canceled in connection with the issuance of new Stock
Options.

 

(i)                                     Without
in any way limiting the authority of the Committee to make grants of Stock
Options under the Plan, and in order to induce persons to retain ownership of
Stock, the Committee shall have the authority (but not the obligation) to
include within any agreement reflecting a Stock Option a provision entitling
the Grantee of such a Stock Option to a further Stock Option (a “Progressive
Stock Option”) in the event the Grantee exercises such Stock Option evidenced
by such agreement, in whole or in part, by surrendering other shares of Stock
in accordance with this Plan and the terms and conditions of such agreement.  Any such Progressive Stock Option shall be
for a number of shares of Stock equal to the number of surrendered shares,
shall become exerciseable no sooner than six months after the Granting Date of
the Stock Option or such longer period as the Committee may establish, shall have
an option price per share equal to one hundred percent (100%) of the Fair
Market Value of a share of Stock

 

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on the Granting Date of the Progressive Stock Option, and shall be
subject to such other terms and conditions as the Committee may determine.

 

(j)                                     Notwithstanding
the foregoing, the option price of an Incentive Stock Option in the case of a
Grantee who owns more than ten percent of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries, will not be
less than one-hundred-ten percent (110%) of the Fair Market Value of the Stock
at the Granting date and in the case of such a Grantee, the Incentive Stock
Option may be exercised no more than five years after the Granting Date.

 

SECTION 6.                            EXERCISE OF STOCK OPTIONS

 

(a)                                  Except
as provided in Section 8, no Stock Option may be exercised at any time unless
the Grantee is an Employee on the Date of Exercise and, in the case of holders
of Incentive Stock Options, has been an Employee at all times during the period
beginning on the Granting Date and ending on the day 3 months before the date
of such exercise.

 

(b)                                 The
Grantee shall pay the option price in full on the Date of Exercise of a Stock
Option in cash, by check, or by delivery of full shares of Stock of the
Company, duly endorsed for transfer to the Company with signature
guaranteed,  by any combination thereof
or by such other mode of payment as the Committee may approve, including
payment through a broker in accordance with procedures permitted by rules and
regulations of the Federal Reserve Board. 
Stock will be accepted at its Fair Market Value on the Date of Exercise.

 

(c)                                  Subject
to the approval of the Committee, or of such person to whom the Committee may
delegate such authority (“its designee”), and subject further to the applicable
regulations of any governmental authority, the Company may loan to the Grantee
a sum equal to an amount which is not in excess of 100% of the purchase price
of the shares of Stock acquired upon exercise of a Stock Option, such loan to
be evidenced by the execution and delivery of a promissory note.  Interest shall be paid on the unpaid balance
of the promissory note at such times and at such rate as shall be determined by
the Committee or its designee.  Such
promissory note shall be secured by the pledge to the Company of shares of
Stock having an aggregate purchase price on the date of purchase equal to or
greater than the amount of such note.  A
Grantee shall have, as to such pledged shares of Stock, all rights of ownership
including the right to vote such shares of Stock and to receive dividends paid
on such shares of Stock, subject to the security interest of the Company.  Such shares of Stock shall not be released
by the Company from the pledge unless the proportionate amount of the note
secured thereby has been repaid to the Company; provided, however that shares
of Stock subject to a pledge may be used to pay all or part of the purchase
price of any other option granted hereunder or under any other stock incentive
plan of the Company under the terms of which the purchase price of an option
may be paid by the surrender of shares of Stock, subject to the terms and
conditions of this Plan relating to the surrender of shares of Stock in payment
of the exercise price of an option.  In
such event, that number of the newly purchased shares of Stock equal to the
shares of Stock previously pledged shall be immediately pledged as substitute
security for the pre-existing debt of the Grantee to the Company, and thereupon
shall be subject to the provisions hereof relating to pledged shares of
Stock.  All notes executed hereunder
shall be payable at such times and in such amounts and shall contain such other
terms as shall be specified by the Committee or its designee

 

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or stated in the option agreement; provided, however, that such terms
shall conform to requirements contained in any applicable regulations which are
issued by any governmental authority.

 

SECTION 7.                            STOCK APPRECIATION RIGHTS

 

(a)                                  The
Committee may grant to any Employee, Stock Appreciation Rights in connection
with any Stock Option.  Stock
Appreciation Rights may be granted at the time the related Stock Option is
granted or at any time thereafter up to six months prior to the expiration of
the related Stock Option.

 

(b)                                 Stock
Appreciation Rights shall be exercisable at such times and to the extent that
the related Stock Option shall be exercisable and only to the extent the Stock Appreciation
Right has a positive value, unless the Committee specifies a more restrictive
period.

 

(c)                                  Upon
the exercise of a Stock Appreciation Right, the Grantee shall surrender the
related Stock Option or a portion thereof and shall be entitled to receive
payment of an amount determined by multiplying the number of shares as to which
the Stock Option rights are surrendered by the difference obtained by
subtracting the exercise price per share of the related Stock Option from the
Fair Market Value of a share of Stock on the Date of Exercise of the Stock
Appreciation Right.

 

(d)                                 Payment
of the amount determined under Section 7(c) shall be made in Stock, in cash, or
partly in cash and partly in Stock as the Committee shall determine in its sole
discretion.

 

(e)                                  Except
as provided in Section 10(b), the exercise of a Stock Appreciation Right for
cash may be made only during the period beginning on the third business day
following the release of quarterly or annual financial data and ending on the
twelfth business day following such date.

 

SECTION 8.                            TERMINATION OF EMPLOYMENT

 

Except as otherwise provided by the Committee at the
time the Stock Option is granted or any amendment thereto, if a Grantee ceases
to be an Employee then:

 

(a)                                  if
termination of employment is voluntary or involuntary without cause, the
Grantee may exercise each Stock Option held by the Grantee within three months
after such termination (but not after the expiration date of the Stock Option)
to the extent of the number of shares subject to the Stock Option which are
purchasable pursuant to its terms at the date of termination;

 

(b)                                 if
termination is for cause, all Stock Options held by the Grantee shall be
canceled as of the date of termination;

 

(c)                                  subject
to the provisions of Section 8(d), if termination is (i) by reason of
retirement at a time when the Grantee is entitled to the current receipt of
benefits under any retirement plan maintained by the Company or any Subsidiary,
or (ii) by reason of disability, each Stock Option held by the Grantee may be
exercised by the Grantee at any time (but not after

 

6

 

the expiration date of the Stock Option) (within one year of
termination in the case of Incentive Stock Options) to the extent of the number
of shares subject to the Stock Option which were purchasable pursuant to its
terms at the date of termination;

 

(d)                                 if
termination is by reason of the death of the Grantee, or if the Grantee dies
after retirement or disability as referred to in Section 8(c), each Stock
Option held by the Grantee may be exercised by the Grantee’s estate, or by any
person who acquires the right to exercise the Stock Option by reason of the
Grantee’s death, at any time within a period of three years after death (but
not after the expiration date of the Stock Option) to the extent of the total
number of shares subject to the Stock Option which were purchasable pursuant to
its terms at the date of termination; or

 

(e)                                  if
the Grantee should die within three months after voluntary termination of
employment or involuntary termination without cause, as contemplated in Section
8(a), each Stock Option held by the Grantee may be exercised by the Grantee’s
estate, or by any person who acquires the right to exercise by reason of the Grantee’s
death, at any time within a period of one year after death (but not after the
expiration date of the Stock Option) to the extent of the number of shares
subject to the Stock Option which were purchasable pursuant to its terms at the
date of termination.

 

SECTION 9.                            ADJUSTMENTS

 

In the event of any merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or other change
in the corporate structure or capitalization affecting the Stock, there shall
be an appropriate adjustment made by the Committee in the number and kind of
shares that may be granted in the aggregate and to Grantees under the Plan, the
number and kind of shares subject to each outstanding Stock Option and Stock
Appreciation Right and the option prices.

 

SECTION 10.                     TENDER OFFER; CHANGE IN CONTROL

 

(a)                                  A
Stock Option shall become immediately exercisable to the extent of the total
number of shares subject to the Stock Option in the event of (i) a tender offer
by a person or persons other than the Company for all or any part of the
outstanding Stock if, upon consummation of the purchases contemplated, the
offeror or offerors would own, beneficially or of record, an aggregate of more
than 25% of the outstanding Stock, or (ii) a Change in Control of the Company.

 

(b)                                 The
Committee may authorize the payment of cash upon the exercise of a Stock
Appreciation Right during a period (i) beginning on the date on which a tender
offer as described in (a), above, is first published or sent or given to
holders of Stock and ending on the date which is seven days after its
termination or expiration, or (ii) beginning on the date on which a Change in
Control of the Company occurs and ending on the twelfth business day following
such date.

 

SECTION 11.                     GENERAL PROVISIONS

 

(a)                                  Each
Stock Option shall be evidenced by a written instrument containing such terms
and conditions, not inconsistent with this Plan, as the Committee shall
approve.

 

7

 

(b)                                 The
granting of a Stock Option in any year shall not give the Grantee any right to
similar grants in future years or any right to be retained in the employ of the
Company or any Subsidiary or interfere in any way with the right of the Company
or such Subsidiary to terminate an Employee’s employment at any time.

 

(c)                                  The
Company shall have the right to deduct from any payment or distribution under
the Plan any federal, state or local taxes of any kind required by law to be
withheld with respect to such payments or to take such other action as may be
necessary to satisfy all obligations for the payment of such taxes.  In case distributions are made in shares of
Stock, the Company shall have the right to retain the value of sufficient
shares of Stock to equal the amount of tax to be withheld for such
distributions or require a recipient to pay the Company for any such taxes
required to be withheld on such terms and conditions prescribed by the
Committee.

 

(d)                                 No
Grantee shall have any of the rights of a shareholder by reason of a Stock
Option until it is exercised.

 

(e)                                  This
Plan shall be construed and enforced in accordance with the laws of the State
of Delaware (without regard to the legislative or judicial conflict of laws
rules of any state), except to the extent superseded by federal law.

 

SECTION 12.                     AMENDMENT AND TERMINATION

 

(a)                                  The
Plan shall terminate on June 18, 2009 and no Stock Option shall be granted
hereunder after that date, provided that the Board may terminate the Plan at
any time prior thereto.

 

(b)                                 The
Board may amend the Plan at any time without notice, provided however, that the
Board may not, without prior approval by the shareholders, (i) increase the
maximum number of shares of Stock for which Stock Options may be granted
(except as contemplated by the provisions of Section 9), (ii) materially
increase the benefits accruing to participants under the Plan or (iii)
materially modify the requirements as to eligibility for participation in the
Plan.

 

(c)                                  No
termination or amendment of the Plan may, without the consent of a Grantee to whom
a Stock Option shall theretofore have been granted, adversely affect the rights
of such Grantee under such Stock Option.

 

SECTION 13.                     EFFECTIVE DATE

 

The Plan shall become
effective as of the date it is approved by the Company’s stockholders.

 

8Exhibit
10.2

 

PROPOSED
AMENDMENT

TO 1999 EMPLOYEE STOCK OPTION PLAN

 

 

This amendment (this “Amendment”) dated September
    , 2003 amends the 1999 Employee Stock Option Plan (the
“Stock Option Plan”) of Acorda Therapeutics, Inc. (the “Company”).

 

WITNESSETH:

 

WHEREAS, the Company intends to complete an
initial public offering (the “IPO”); and

 

WHEREAS, the Company wishes to amend the
terms of the Stock Option Plan as described below;

 

NOW, THEREFORE, the Stock Option Plan is
amended as follows:

 

 

1.                 Section 3 of the
1999 Employee Stock Option Plan shall be amended in its entirety to read as
follows:

 

“Subject to adjustment pursuant to Section 9, 34,958,163 shares of
Stock shall be reserved for issuance upon the exercise of Stock Options granted
pursuant to this Plan.  On the first day
of each fiscal year, the Stock reserve shall automatically be increased by a
number of shares equal to the least of (i) 2.5% of the then outstanding shares
of Stock, (ii) 7,765,812 shares, or (iii) a number determined by the Board.  Any shares of Stock from increases in
previous years that are not actually issued will continue to be included in the
aggregate number of shares available for future issuance.”

 

2.                 Effectiveness.
This Amendment shall be deemed effective immediately prior to the consummation
of the IPO.

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