Document:

Exhibit 10.5

 

ACORDA
THERAPEUTICS, INC.

 

2006
EMPLOYEE INCENTIVE PLAN

 

As Amended
as of January 13, 2006

 

SECTION 1. 
PURPOSE

 

The purpose of the Acorda Therapeutics, Inc.
2006 Employee Incentive 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.

 

This Plan
shall serve as the successor to the Company’s 1999 Employee Stock Option Plan,
as amended (the “Prior Plan”), and no further option grants or stock issuances
shall be made under the Prior Plan after the Effective Date, as determined
under Section 14 of this Plan.  The
adoption of this Plan as of the Effective Date 
shall not affect the terms of any option or restricted stock award under
the Prior Plan that was outstanding prior to the Effective Date and all such
options and restricted stock awards shall continue to be governed by the terms
of the Prior Plan.

 

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)           “Award” means any Stock Option, Stock
Appreciation Right or Restricted Stock.

 

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

 

(c)           “Cause” means (i) willful misconduct; (ii) willful
or gross neglect; (iii) failure to materially perform one’s job duties; (iv) insubordination;
(v) willful failure to materially comply with the Company’s policies and
practices; (vi) acts of moral turpitude, theft or dishonesty; (vii) a
felony conviction, or (viii) acts that are (or could be expected to be)
damaging or detrimental to the Company. 
Notwithstanding the foregoing, if a Grantee or Participant is a party to
an employment or similar agreement with the Company (or any parent corporation
or Subsidiary) and such agreement contains a definition of “Cause” or similar
term, such definition shall constitute the definition of “Cause” under the
Plan.

 

(d)           “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.

 

 

(e)           “Committee” shall mean the full Board,
Compensation Committee of the Board or such other committee as may be
designated by the Board. If and when the Common Stock is registered under Section 12
of the Securities Exchange Act of 1934, as amended (the “Act”), to the
extent necessary to comply with Rule 16b-3 under the Act with respect to
Option grants to officers and directors, each member of the Committee shall be
a “non-employee director” within the meaning of Rule 16b-3 and, to the
extent necessary to exclude Options granted under the Plan from the calculation
of the income tax deduction limit under Section 162(m) of  the Internal Revenue Code of 1986, as amended
(the “Code”), each member of the Committee shall be an “outside director”
within the meaning of Code Section 162(m). A majority of the Committee
shall constitute a quorum, and acts of the majority of members present at any
meeting at which a quorum is present shall be deemed the acts of the
Committee.  The Committee may also act by
instrument signed by all members of the Committee.

 

(f)            “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.

 

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

 

(h)           “Disability”
or “Disabled” shall mean
incapacity of a Grantee or Participant as a result of demonstrable illness
(including mental illness), injury, or disease that prevents the Grantee or
Participant from engaging in any occupation or performing any work for
remuneration or profit for which the Grantee or Participant is reasonably
qualified (or may reasonably become qualified) by reason of education, work, or
experience.  However, the term “Disability”
shall not include any illness, injury, or disease that resulted from or
consists of incapacity resulting from illegal drug use; was contracted,
suffered, or incurred while the Grantee or Participant was engaged in criminal
conduct; or was intentionally self-inflicted total and permanent disability as
defined in Section 22(e)(3) of the Code.

 

(i)            “Employee” shall mean any employee or any officer of the
Company or any of its Subsidiaries, or any other person 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.

 

(j)            “Executive
Officer” means an individual who is an “executive officer” of the
Company (as defined by Rule 3b-7 under the Exchange Act) or a “covered
employee” under Section 162(m) of the Code.

 

(k)           “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 NASDAQ Stock Market 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) or listed
as described in clause (iii), 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, or (iv) if so approved by the Committee for Awards
with a Granting Date taking effective as of the date on which the Company’s
stock is first publicly traded, the price at which the Company’s stock opened
for trading on that date.  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.

 

(l)            “Good
Reason” shall mean the
Participant’s title, position or
job responsibilities have been materially reduced or the Participant has been
assigned duties that are materially inconsistent with his or her duties prior
to the Reorganization Event or which materially impair his or her ability to
perform his or her duties as required prior to the Reorganization Event.
Notwithstanding the foregoing, if a Grantee or Participant is a party to an
employment or similar agreement with the Company (or any parent corporation or
Subsidiary) and such agreement contains a definition of “Good Reason” or
similar term, such definition shall constitute the definition of “Good Reason”
under the Plan.

 

(m)          “Grantee” shall mean a Participant granted a Stock
Option.

 

(n)           “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 Participant.

 

(o)           “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.

 

(p)           “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.

 

(q)           “Participant” shall mean a person
selected by the Committee or its delegee to receive an Award under the Plan.

 

(r)            “Performance
Objective” means a performance objective or goal that must be
achieved before an Award, or a feature of an Award, becomes nonforfeitable.

 

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

 

(t)            “Reorganization
Event” means: (i) any merger or consolidation of the Company
with or into another entity as a result of which all of the capital stock of
the Company is converted into or exchanged for the right to receive cash,
securities or other property; or, if there 

 

 

is any other merger or consolidation, after such merger or
consolidation shareholders of the Company immediately prior to such event hold
less than 50% of the voting stock of the surviving entity; (ii) any
exchange of all of the capital stock of the Company for cash, securities or
other property pursuant to a share exchange transaction; (iii) 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 (iv) 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 (iv) shall
not apply to an underwritten public offering of the Company’s securities or to
a private transaction resulting in new investors owning more than 50% of the
Company’s stock if those investors purchased that stock at a
lower valuation of the Company than in the preceding round of financing.

 

(u)           “Restricted Period” shall mean the
period of time selected by the Committee during which shares subject to a
Restricted Stock Award may be repurchased by or forfeited to the Company.

 

(v)           “Restricted Stock” shall mean shares of
Common Stock awarded to a Participant under Section 15.

 

(w)          “Retired” or “Retirement” shall mean a Grantee’s or Participant’s voluntary
termination of employment with the Company after having attained (i) age
65 or (ii) age 55 with ten or more years of service with the Company.

 

(x)            “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.

 

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

 

(z)            “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.

 

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

 

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

 

SECTION 3. 
SHARES OF STOCK SUBJECT TO THE PLAN

 

(a)           Subject
to increase under Section 3(b) of the Plan and adjustment under Section 10
of the Plan, the number of shares of Stock reserved for issuance pursuant to
Awards made under the Plan shall be a number of shares equal to 3,000,000 shares of Stock.  All numbers 

 

 

referring to shares of Stock set forth in this Plan reflect a 1-for-1.3
reverse stock split of the Stock of the Company effected on January 11,
2006.

 

(b)           The
total number of shares of Stock available for issuance under this Plan,
including shares of Stock subject to then outstanding Awards, shall
automatically increase on January 1 of each year during the term of this
Plan, beginning 2007, by a number of shares of Stock equal to 4% of the
outstanding shares of Stock on that date, unless otherwise determined by the
Board. Shares delivered under the Plan may be authorized and unissued shares or
issued shares held by the Company in its treasury.  The total number of shares of Stock available
for issuance under this Plan shall also be increased by the number of shares of
Stock, if any, subject to outstanding
awards as of the Effective Date under the Prior Plan, but only if and to the
extent that such shares are surrendered before exercise, lapse, are terminated
without being exercised or are forfeited for any reason after the Effective
Date.  If any Awards under this
Plan expire or terminate without having been exercised, the shares of Stock
covered by such Award shall become available again for the grant of Awards
hereunder. Similarly, if any Awards are surrendered for cash pursuant to the
provisions of Section 7, the shares of Stock covered by such Awards shall
also become available again for the grant of Awards hereunder. Shares of Stock
covered by Awards surrendered for Stock pursuant to Section 7, however,
shall not become available again for the grant of Awards hereunder.

 

(c)           Notwithstanding anything to the contrary set
forth in the Prior Plan, the total number of shares of Stock available for
issuance under the Prior Plan shall not be increased, automatically or
otherwise, on or after January 1, 2006 by the 4% increase set forth in
Amendment No. 2 to the Prior Plan and, to the extent necessary to effect
such limitation, this Section 3(c) shall constitute an amendment to
the Prior Plan.

 

(d)           In any year, no individual Grantee or
Participant shall be granted Options or SARs with respect to more than five
million (5,000,000) shares.

 

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 Award grants, and to make all
other determinations necessary or advisable for the administration of the
Plan.  Neither the Committee nor any Director
or Executive Officer shall be liable for any act, omission, interpretation,
construction, or determination made in good faith in connection with the Plan
or any Award Agreement.

 

(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)           To the extent permitted by Applicable Law,
the Board may delegate to one or more Executive Officers of the Company the
power to grant Awards to Participants and to exercise such other powers under
the Plan as the Board may determine, provided that the Committee shall fix the
terms of the Awards to be granted by such executive officers (including the
exercise price of such Awards) and the maximum number of Shares subject to
Awards that the Executive Officers may grant; provided, however, that no
Executive Officer shall be authorized to grant Awards to any “executive officer”
of the Company (as defined by Rule 3b-7 under the Exchange Act or to any “officer”
of the Company (as defined by Rule 16a-1 under the Exchange Act).

 

(d)           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, 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 exercise 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 exercise 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
par value of the Stock) as the Committee shall determine, following
consideration of potential tax implications, 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, incident to a divorce (to the extent permitted by the applicable
regulations governing Incentive Stock Options), 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
(e.g., by limiting transferability to family members).

 

(h)           Stock Options may be granted to a Grantee 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 exercisable 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 exercise price per share equal to one
hundred percent (100%) of the Fair Market Value of a share of Stock 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)           Each option shall be exercisable as provided
in the applicable option agreement.

 

 

(b)           The Grantee shall pay the exercise 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)           With respect to non-Employee Participants,
the Board shall determine and specify in the applicable option agreement the
consequences, if any, of the termination of the Participant’s relationship with
the Company.

 

(d)           The exercise of options by Grantees is
subject to the provisions of Section 9.

 

(e)           If approved by the Committee, and except to
the extent that the Option is an Option to purchase Restricted Stock,
consideration may be paid by the Participant’s (i) irrevocable
instructions to the Company to deliver the Shares issuable upon exercise of the
Option promptly to a broker (acceptable to the Company) for the Participant’s
account, and (ii) an irrevocable instructions letter to such broker to
sell Shares sufficient to pay the exercise price and upon such sale to deliver
the exercise price to the Company, provided that, at the time of such exercise,
this form of exercise would not subject the Participant to liability under Section 16(b) of
the Exchange Act or would be exempt pursuant to Rule 16b-3 promulgated
under the Exchange Act or any other exemption from such liability.  The Company shall deliver an acknowledgement
to the broker upon receipt of instructions to deliver the Shares, and the
Company shall deliver the Shares to such broker upon the settlement date.  Upon receipt of the Shares from the Company,
the broker shall deliver to the Company cash sale proceeds sufficient to cover
the exercise price.  Shares acquired by a
cashless exercise shall be deemed to have a Fair Market Value on the Option
exercise date equal to the gross sales price at which the broker sold the
Shares to pay the exercise price.

 

SECTION 7. 
STOCK APPRECIATION RIGHTS

 

(a)           The Committee may grant to any Participant
Stock Appreciation Rights in connection with any 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. 
PERFORMANCE OBJECTIVES

 

(a)           The Committee may make any Awards under this
Plan contingent upon Performance Objectives. 
Any Performance Objective shall relate to the Participant’s performance
for the Company or to the Company’s business activities or organizational
goals, and shall be sufficiently specific that a third party having knowledge
of the relevant facts could determine whether the Performance Objective is
achieved.  The Performance Objectives
with respect to any Award may be one or more of the General Financial and/or
Operational Objectives set forth on Schedule A of this Plan.

 

(b)           (i) All Awards Stock that are intended
to qualify as “performance-based compensation” under Section 162(m) of the
Code shall comply with the provisions of Section 8(b)(i) - (v), in
addition to those of Section 8(a).

 

(ii)           The list of possible Performance Objectives
set forth in Schedule A and the other material terms of Awards of
Restricted Stock that are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, shall be subject to
reapproval by the Company’s stockholders at the first stockholder meeting that
occurs in           (1).  No Award of Restricted Stock that is intended
to qualify as “performance-based compensation” under Section 162(m) of the
Code shall be made after that meeting unless stockholders have reapproved the
list of Performance Objectives and other material terms of such Awards, or
unless the vesting of the Award is made contingent on stockholder approval of
the Performance Objectives and other material terms of such Awards.

 

(iii)          The Committee shall, at the time it
establishes the Performance Objectives, specify the period over which the
Performance Objectives relate.  The
establishment of the actual Performance Objectives and, if an Award of
Restricted Stock is based on more than one Performance Objective, the relative
weighting of such criteria, shall be at the sole discretion of the Committee; provided, however,
that with respect to any Award, the Performance Objectives shall be set forth
in writing no later than 90 days after commencement of the period to which the
Performance Objective(s) relate(s) (or before 25% of such period has elapsed if
the period to which the Performance Objectives relate is less than six months
long) and at a time when achievement of the Performance Objectives is
substantially uncertain.  Such writing
shall also 

 

(1)  The first meeting of stockholders at which directors are
to be elected that occurs after the close of the third calendar year following
the calendar year in which the IPO occurs. 

 

 

include the period for measuring achievement
of the Performance Objectives, which shall be no greater than five consecutive
years, as established by the Committee. 
Once established by the Committee, the Performance Objective(s) may not
be changed to accelerate the settlement of an Award or to accelerate the lapse
or removal of restrictions on Restricted Stock that otherwise would be due upon
the attainment of the Performance Objective(s).

 

(iv)          Prior to settlement of any Award that is
contingent on achievement of one or more Performance Objectives, the Committee
shall certify in writing that the applicable Performance Objective(s) and any
other material terms of the Award were in fact satisfied.  For purposes of this Section 8(d),
approved minutes of the Committee shall be adequate written certification.

 

(v)           The Committee may reduce, but may not
increase, the number of Shares deliverable or the amount payable under any
Award after the applicable Performance Objectives are satisfied.

 

SECTION 9. 
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)           except as provided in Sections 9(c) and (d) and
subject to the provisions of Section 9(e), 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 9(d),
if termination is (i) by reason of Retirement, 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 the expiration date of the Stock Option and
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 9(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 9(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 10. 
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 11. 
TENDER OFFER; CHANGE IN CONTROL

 

(a)           Upon the occurrence of a Reorganization
Event, subject to subsection (b) below, each outstanding Award
(excluding grants of Restricted Stock as to which the Participant has elected
at the time of grant not to have acceleration upon a Reorganization Event)
shall, upon consummation of such Reorganization Event, either be assumed or an
equivalent exercisable or unrestricted award substituted by the successor
corporation or a parent corporation or Subsidiary of the successor
corporation.  If any such Award is
assumed in accordance with this subsection (a) and, within eighteen
(18) months after the Reorganization Event, the Participant is involuntarily
terminated from employment with the Company without Cause or leaves the Company
With Good Reason, than such assumed Award shall become exercisable in full (or
free from restrictions) as of the date of such termination or diminution.

 

(b)                   In the event that the successor corporation
does not assume the Award or an equivalent Award is not substituted, then the
Committee shall, upon written or electronic notice to each Participant, provide
that one of the following will occur with respect to each outstanding Award: (i) some
or all Awards will become exercisable in full (or free from restrictions) as of
a specified time prior to the Reorganization Event and will terminate
immediately prior to the consummation of such Reorganization Event, except to
the extent exercised or sold by the Participants prior to the consummation of
the Reorganization Event; or (ii) all outstanding Awards will terminate
upon consummation of such Reorganization Event and each Participant will
receive, in exchange therefor, a cash payment equal to the amount (if any) by
which (x) the amount payable in the Reorganization Event with respect to a
share of Stock multiplied by the number of shares of Stock subject to such
outstanding Awards exceeds (y) the aggregate exercise price of such Awards, or (iii) if
the Company’s stock is still publicly traded, the Awards shall remain in place
unchanged.

 

(c)                   For the purposes of this Section 11, the
Award shall be considered assumed if, following consummation of the
Reorganization Event, the Award confers the right to purchase or receive, for
each share of Stock subject to the Award immediately prior to the
Reorganization 

 

 

Event, the consideration (whether stock, cash, or other securities or
property) received in the Reorganization Event by holders of Stock for each
share of Stock held immediately prior to the consummation of the Reorganization
Event (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Stock immediately prior to consummation of the Reorganization Event).  If such consideration received in the
Reorganization Event is not solely common stock of the successor corporation or
a parent corporation or Subsidiary thereof, then the Committee may, with the consent
of the successor corporation, provide for the consideration to be received upon
the exercise of the Award for each share of Stock subject to the Award to be
solely common stock of the successor corporation or a parent corporation or
Subsidiary thereof equal in fair market value to the per share consideration
received by holders of Stock in the Reorganization Event, and in such case such
Awards shall be considered assumed for the purposes of this Section 11.

 

(d)                   The Committee shall also have full power and
authority, exercisable either at the time the Award is granted or at any time
while the Award remains outstanding, to structure such Award so that the shares
subject to that Award that automatically vest and become free of all
restrictions on an accelerated basis as provided in Section 11(a) shall,
upon a Qualifying Termination of Employment remain exercisable until the earlier
of (i) the expiration of the Award term or (ii) the expiration of up
to a one (1)-year period measured from the effective date of the termination of
employment of the Employee, at the Committee’s discretion.  For this purpose, a Qualifying Termination of
Employment shall mean an involuntary termination of the Employee’s employment
by the successor corporation or a parent corporation or Subsidiary thereof,
other than for Cause, within a designated period (not to exceed eighteen (18)
months) following the effective date of any Reorganization Event.

 

SECTION 12. 
GENERAL PROVISIONS

 

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

 

(b)           The granting of an Award in any year shall
not give the Participant 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 13. 
AMENDMENT AND TERMINATION

 

(a)           The Plan shall terminate on the date that is
ten (10) years after the date described in Section 14 and no Award 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 Awards may be granted (except as contemplated by the provisions
of Sections 3 and 10), (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 Participant to whom an Award shall theretofore have
been granted, adversely affect the rights of such Participant under such Award.

 

SECTION 14. 
EFFECTIVE DATE

 

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

 

SECTION 15.  RESTRICTED STOCK

 

(a)           The Committee may grant Restricted Stock
Awards entitling recipients to acquire shares of Stock, subject to the right of
the Company to repurchase all or part of such shares at their purchase price or
at another price specified in the Award (or to require forfeiture of such
shares if purchased at no cost) from the recipient in the event that conditions
specified by the Committee in the applicable Award are not satisfied prior to
the end of the applicable Restricted Period or Restricted Periods established
by the Committee for such Award. 
Conditions for repurchase (or forfeiture) may be based on continuing
employment or service or achievement of pre-established performance or other
goals and objectives.

 

(b)           Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as permitted by
the Committee during the applicable Restricted Period.  Shares of Restricted Stock shall be evidenced
in such manner as the Committee may determine. 
Any certificates issued in respect of shares of Restricted Stock shall
be registered in the name of the Participant and, unless otherwise determined
by the Committee, deposited by the Participant, together with a stock power
endorsed in blank, with the Company (or its designee).  At the expiration of the Restricted Period,
the Company (or such designee) shall deliver such certificates to the
Participant or if the Participant has died, to the Participants’ designated
beneficiary.

 

 

(c)           Restricted Stock shall be issued for no cash
consideration or such minimum consideration as may be required by applicable
law.

 

(d)           The Committee may at any time accelerate the
expiration of the Restricted Period applicable to all, or any particular,
outstanding shares of Restricted Stock.

 

(e)           A Restricted Stock Award is subject to
adjustment on the same terms set forth under Section 10 of the Plan.

 

(f)            Grants of
Restricted Stock shall accelerate upon a Reorganization Event unless the
Participant elects at the time of grant that the grant not accelerate.Exhibit
10.37

 

EXECUTION
COPY

 

NOTE
MODIFICATION AND AMENDMENT

 

                This
NOTE MODIFICATION AND AMENDMENT is made
this       day of December, 2005, by and
between Acorda Therapeutics, Inc., a Delaware corporation (the “Maker”),
and Elan Pharma International Limited a private limited company incorporated
under the laws of Ireland (the “Holder”).

 

                1.             Reference is made to (i) that
certain Limited Recourse Convertible Promissory Note, in the original principal
amount of $5,000,000 made by the Maker in favor of the Holder, dated
January 22, 1997 (as heretofore amended, supplemented or otherwise
modified, the “Limited Recourse Note”) and (ii)  that certain Full
Recourse Convertible Promissory Note, in the original principal amount of
$2,500,000 made by the Maker in favor of the Holder, dated January 22,
1997 (as heretofore amended, supplemented or otherwise modified, the “Full
Recourse Note”; and, together with the Limited Recourse Note, referred to
herein as the “Notes”). Capitalized terms used herein without definition
shall have the meanings provided therefor in the respective Notes.

 

                2.             The Maker has requested, and the
Holder has agreed, that the terms of Section 4 of the Full Recourse Note
be amended as follows:

 

                                (i)            the text “; and” preceding “(iii)”
therein shall be deleted and replaced by “,”; and

 

                                (ii)           immediately prior to the “.” at the
end of clause (iii)  thereof, the following shall be inserted; “,and
(iv)  any obligations owing by the Company, including in respect of sales
or other transfers by the Company of percentage interests in the gross or net
revenues derived from the sale, licensing or other transfer of its products
which relate to tizanidine hydrochloride, whether or not the same shall be
reflected as debt on the Company’s financial statements or tax reporting,
pursuant to the Revenue Interests Assignment Agreement between the Company and
an affiliate of Paul Royalty Fund II, L.P. (“PRF”) dated on or about
December 20, 2005, provided that the amounts that may be received by the
Company from PRF shall not exceed Twenty-Five Million Dollars ($25,000,000).”

 

                3.             The Maker has requested, and the
Holder has agreed, that the terms of Section 4 of the Limited Recourse
Note be amended as follows:

 

                                (i)            the text “; and” preceding “(iii)”
therein shall be deleted and replaced by “;”; and

 

                                (ii)           immediately prior to the “.” at the
end of clause (iii) thereof, the following shall be inserted: “; and
(iv) any obligations owing by the Company, including in respect of sales
or other transfers by the Company of percentage interests in the gross or net
revenues derived from the sale, licensing or other transfer of its products
which relate to tizandine hydrochloride, whether or not the same shall be reflected
as debt on the Company’s financial statements or tax reporting, pursuant to the
Revenue Interests Assignment Agreement between the Company and an affiliate of
Paul Royalty Fund II, L.P. (“PRF”) dated on or about December 20,
2005,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

provided that the amounts
that may be received by the Company from PRF shall not exceed Twenty-Five
Million Dollars ($25,000,000).”

 

                4.             The Holder hereby represents that
it has not sold or otherwise transferred any interest in the Notes to any other
person or entity (except that the Holder has agreed, pursuant to a Purchase
Agreement dated October 26, 2005 to sell the Notes to Saints
Capital IV, L.P. and Saints Capital V, L.P.) and the Holder hereby
covenants and agrees to provide a copy of this Note Modification and Amendment
to any such transferee in the future (prior to such transfer taking place).

 

                5.             Except as modified hereby, the
terms and provisions of the Notes (as in effect prior to this Note Modification
and Amendment) shall remain in full force and effect and the Holder, in
agreeing to the terms hereof, reserves all of its rights in connection
therewith.

 

                6.             This Note Modification and
Amendment may be executed by the Holder and the Maker in two or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument. This Note Modification and Amendment
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other party hereto. Any counterpart may be executed by
facsimile or pdf signature and such facsimile or pdf signature shall be deemed
an original.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

                IN WITNESS WHEREOF, the parties have duly executed this Note
Modification and Amendment as of the date first above written.

 

	
   

  	
  ACORDA THERAPEUTICS, INC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ron Cohen

  
	
   

  	
  Name:

  	
   

  	
  Ron Cohen

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  ELAN PHARMA INTERNATIONAL
  LIMITED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Kevin Insley

  
	
   

  	
  Name:

  	
   

  	
  Kevin Insley

  
	
   

  	
  Title:

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

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