Exhibit 10.5
ACORDA
Therapeutics
August 11, 2002
Dr. Ron Cohen
145 West 58 th 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 a
