Termination And Assignment Agreement for MS Research and Development

Exhibit 10.7


Execution Copy


TERMINATION AND ASSIGNMENT AGREEMENT


ELAN CORPORATION, PLC


ELAN INTERNATIONAL SERVICES, LTD.


ACORDA THERAPEUTICS, Inc.


MS RESEARCH AND DEVELOPMENT CORPORATION


INDEX


CLAUSE 1

DEFINITIONS


CLAUSE 2

TERMINATION OF THE MS R&D AGREEMENTS


CLAUSE 3

ASSIGNMENTS


CLAUSE 4

REPRESENTATIONS, WARRANTIES, COVENANTS, CONFIRMATIONS AND INDEMNITIES


CLAUSE 5

INTELLECTUAL PROPERTY


CLAUSE 6

RIGHTS RELATED TO SECURITIES


CLAUSE 7

SALE OF EIS SHARES AND COMPLETION


CLAUSE 8

CONFIDENTIALITY


CLAUSE 9

WAIVER OF ACCRUED RIGHTS/MUTUAL RELEASES


CLAUSE 10

GENERAL


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THIS TERMINATION AND ASSIGNMENT AGREEMENT made this day of September 2003 (this " Agreement")


AMONG:-


(1) ELAN CORPORATION, PLC , a public limited company incorporated under the laws of Ireland and having its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland (" Elan Corp");


(2) ELAN INTERNATIONAL SERVICES, LTD., an exempted limited liability company incorporated under the laws of Bermuda, and having its registered office at Clarendon House, 2 Church St., Hamilton, Bermuda, a wholly owned subsidiary of Elan Corp, ("EIS" );


(3) ACORDA THERAPEUTICS, Inc., a Delaware corporation having its principal place of business at 15 Skyline Drive, Hawthorne, NY 10532, United States of America ("Acorda" ); and


(5) MS RESEARCH AND DEVELOPMENT CORPORATION , a Delaware corporation having its principal place of business at 15 Skyline Drive, Hawthorne, NY 10532, United States of America ("MS R&D" ).


RECITALS


A. Certain of the Parties entered into various agreements whereby Elan Corp, EIS and Acorda established MS R&D, and Elan Corp and Acorda each licensed certain intellectual property to MS R&D for a specified field of use. Specifically:


(i) EIS, Acorda and MS R&D entered into a Subscription and Stockholders' Development Agreement dated as of April 21, 1998 (the " SSDA");


(ii) Elan Corp, Acorda and MS R&D entered into a License and Supply Agreement dated as of April 21, 1998 (the " Elan License Agreement");


(iii) Acorda, EIS and MS R&D entered into an Agreement dated as of April 21, 1998 (the " MS R&D License Agreement");


(iv) EIS, Acorda and MS R&D entered into a Registration Rights Agreement dated as of April 21, 1998 (the " MS R&D Registration Rights Agreement").


B. The SSDA and, the MS R&D License Agreement are together defined in this Agreement as the " MS R&D Agreements".


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C. The Parties wish to (i) terminate in full the MS R&D Agreements, (ii) assign the Elan License Agreement and the MS R&D Intellectual Property to Acorda, and (ii) set forth their agreement in relation to certain other matters, as set forth below.


D. Simultaneously with the execution of this Agreement:


(i) Acorda, Elan and EIS are entering into an Agreement (the "Securities Amendment Agreement" ) to set forth their agreement in relation to certain matters relating to: (i) the securities of Acorda held by Elan, (ii) Elan's obligations (or lack thereof) with respect to future payments to or in respect of its relationship with Acorda and MS R&D, (iii) amendments to certain finance documents entered into between the Parties; and (iv) Board observation rights in favor of EIS; and


(ii) immediately following the effectiveness of the Assignment, Elan Corp and Acorda are entering into (i) an Amended and Restated License Agreement and (ii) a Supply Agreement, pursuant to which, among other things, the parties thereto are amending and restating the Elan License Agreement (collectively the "Restated Elan License" ).


IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, IT IS HEREBY AGREED AS FOLLOWS:


1 DEFINITIONS


Capitalized terms used in this Agreement shall have the same meanings assigned to them in the MS R&D Agreements, unless such terms are expressly defined to the contrary in this Agreement.


" Acorda Know-How" shall mean Acorda Know-How and Acorda Project Know-How (as such terms are defined in the MS R&D License Agreement).


" Acorda Patents" shall mean Acorda Patent Rights and Acorda Project Patent Rights (as such terms are defined in the MS R&D License Agreement).


" Affiliate" shall mean any corporation or entity controlling, controlled or under the common control of any other corporation or entity. For the purpose of this definition, (i) "control" shall mean direct or indirect ownership of fifty percent (50%) or more of the equity, partnership interest or voting stock of another entity; and (ii) MS R&D shall not be an Affiliate of Elan Corp, EPIL II or EIS.


"Assignments" shall mean the assignments provided for under Clause 3.


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"Assignment Consideration" shall mean the amount set forth in Clause 3.


" Balance Sheet" shall mean the unaudited balance sheet of MS R&D as of the Balance Sheet Date, as set forth in Schedule 4.3.


" Balance Sheet Date" shall mean June 30, 2003.


"Distribution" shall mean the pro-rata distribution of the Assignment Consideration to be declared and paid by MS R&D ratably to the stockholders thereof in accordance with Schedule 4.10.


" Effective Date" shall mean the date of this Agreement.


"EIS Shares" shall mean the 1,279 shares of MS R&D Common Stock owned by EIS as of the Effective Date.


"Elan" shall mean Elan Corp and its Affiliates.


"Elan Know-How" shall have the meaning set forth in the Restated Elan License.


"Elan Patents" shall mean "Elan Patent Rights" (as such term is defined in the Restated Elan License).


"EPIL II" shall mean Elan Pharmaceuticals Investment II, Ltd. an exempted limited liability company incorporated under the laws of Bermuda, a qualified special purpose entity of Elan Corp.


"EPIL Shares" shall mean the 2,985 shares of MS R&D Common Stock owned by EPIL II as of the Effective Date.


" Force Majeure" shall mean causes beyond a Party's reasonable control, including, without limitation, acts of God, fires, strikes, acts of war, or intervention of a governmental authority.


" MS R&D Common Stock" shall mean the common stock, par value $0.001 per share, of MS R&D.


"MS R&D Debt" shall mean the estimated outstanding amount of indebtedness owed by MS R&D to Acorda as of the Effective Date and incurred subsequent to the Balance Sheet Date pursuant to the SSDA, as set forth on Schedule 2.4.


" MS R&D Intellectual Property" shall mean Newco Know How and Newco Patent Rights as defined in the MS R&D License Agreement.


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" Party" shall mean Elan Corp, EIS, Acorda or MS R&D, as the case may be, and " Parties" shall mean all such parties together.


"Pro Forma Balance Sheet" shall mean the unaudited pro forma balance sheet attached as Schedule 4.3, giving pro forma effect as of the Balance Sheet Date to the purchase of the EIS Shares and the MS R&D Debt .


" Project" shall have the meaning set forth in the Elan License Agreement.


"Regulatory Filings" shall mean the regulatory filings as set out in Schedule3.6.


" Rush" shall mean Rush-Presbyterian-St. Luke's Medical Center.


" Rush Agreements" shall mean (i) the License Agreement by and between Acorda and Rush dated as of the Effective Date and (ii) the Side Agreement dated as of the Effective Date by and among Elan Corp, Acorda and Rush and (iii) the Rush Payment Agreement.


" Rush Payments Agreement" shall mean the Rush Payments Agreement dated as of the Effective Date by and among Elan Corp and Acorda.


"Territory" shall mean all of the countries of the world.


"United States Dollar" and "US$" and "$" shall mean the lawful currency of the United States of America.


2. TERMINATION OF THE MS R & D AGREEMENTS


2.1. Subject to the provisions of Clause 2.2 and 2.3 hereof, the Parties hereby agree to terminate the MS R&D Agreements, including without limitation, those provisions expressly stated to survive termination, in each case with effect from the Effective Date.


All the provisions of the MS R&D Agreements shall terminate forthwith with effect from the Effective Date and be of no further legal force or effect.


2.2 Notwithstanding anything contained herein to the contrary, the Parties acknowledge that:


(i) the provisions originally set forth in Clause 4.5 of the SSDA (the "Co-sale Rights" ), as now set out in full in Schedule 2.2, shall continue in full force and effect as between EPIL II and Acorda as holders of certain shares in MS R&D;


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(ii) if and to the extent (A) Elan becomes the owner of shares of MS R&D Common Stock and (B) Acorda is "the party who is not the Selling Stockholder" for purposes of Clause 4.4 of the SSDA, the provisions originally set forth in Clause 4.4 of the SSDA (the " Rights of First Offer"), as now set out in full in Schedule 2.2, shall continue in full force and effect with respect to any proposed Transfer (as now defined in Schedule 2.2) of such shares of MS R&D Common Stock by Elan; and


(iii) the Parties agree that EPIL II is a third party beneficiary of this Clause 2.2 solely as it relates to the Co-Sale Rights, as the holder of the EPIL Shares.


2.3 For the avoidance of doubt and without prejudice to the generality of the foregoing Clause 2.1, the Parties hereby acknowledge and agree as follows as of the Effective Date:


2.3.1 EIS Director :


(a) by prior agreement of the Parties, the EIS Director, Mike Sember, previously resigned from the board of directors of MS R&D;


(b) by prior agreement of the Parties, EIS forfeited the right to designate a director to the board of directors of MS R&D and thereafter no longer had designees on, or the right to designate a director to, the board of directors of MS R&D; and


(c) for the avoidance of doubt, EIS confirms that prior to the Effective Date, it did not at any time assign the right to designate a director to the board of directors of MS R&D.


2.3.2 the nominees of Elan on the Committee (as defined in the Elan License Agreement) have been removed from the Committee by Elan and Elan shall no longer have the right to designate a member of the Committee;


2.3.3 with effect from the Effective Date, Elan shall not have any rights in or to the Acorda Patents, the Acorda Know-How, and/or any other patents, know-how or any other intellectual property rights whatsoever of Acorda;


2.3.4 Elan shall terminate or shall cause to be terminated any and all research and development work being conducted under the MS R&D Agreements;


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2.3.5 Elan shall terminate or cause to be terminated any and all technical services and assistance being conducted under the MS R&D Agreements;


2.3.6 For the avoidance of doubt, the Parties agree that Elan shall not have any obligation to provide Additional Funding, working capital, research or development funding, or other funding or financing of any nature to MS R&D, whether under the MS R&D Agreements, the Elan License Agreement, or otherwise;


2.3.7 For the further avoidance of doubt, the Parties agree that Elan has had no obligation to provide Additional Funding, working capital, research or development funding, or other funding, or other financing or financing of any nature to MS R&D following 30 June 2002;


2.3.8 Elan shall not have any obligation to pay any milestone payment or make any milestone investment to or in MS R&D or Acorda or any of their Affiliates whether relating to the Project , the achievement of any objectives set forth therein or otherwise, except as set forth in the Rush Payments Agreement.


2.4 Monies owing by MS R&D to Acorda and Elan


2.4.1 Each of the Parties acknowledges and agrees with the other Parties that, as of the Effective Date, no monies are owed or are refundable by any of the Parties to any other Party pursuant to the MS R&D Agreements or the Elan License Agreement, other than the MS R&D Debt and the amount owing to Elan as set forth on Schedule 2.4.


2.4.2 The Parties acknowledge and agree that MS R&D shall pay to Elan the amount owing to Elan (as set out in Schedule 2.4) prior to the Effective Date.


2.4.3 As of the Effective Date, the MS R&D Debt shall be hereby deemed forgiven and extinguished in all respects by Acorda.


2.5 Franchise Taxes


Each of the Parties further acknowledges and agrees with the other Parties that from and after the Effective Date, MS R&D shall be solely responsible for all fees and taxes, including without limitation, franchise taxes owing to the State of Delaware, and all service fees, including without limitation, corporate service fees for corporate filings or


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representation as agent for service of process within or without of the State of Delaware.


3 ASSIGNMENTS


In consideration of the payment of $11,541,347 by Acorda to MS R&D (the "Assignment Consideration" ), the receipt of which is hereby acknowledged by MS R&D, the following Assignments shall occur with effect from the Effective Date:


3.1 Assignment of MS R&D Intellectual Property and Regulatory Filings


MS R&D, as legal and beneficial owner, hereby irrevocably absolutely and unconditionally assigns, transfers and conveys to Acorda, and Acorda hereby accepts from MS R&D, all of MS R&D's right, title and interest in and to the MS R&D Intellectual Property including the MS R&D Patent Rights, and the Regulatory Filings.


3.2 Assignment and assumption of Elan License


MS R & D hereby irrevocably, absolutely and unconditionally assigns, transfers and conveys to Acorda, and Acorda hereby accepts from MS R & D, the Elan License Agreement and all of MS R & D's rights and interest throughout the Territory in and under the Elan License Agreement. Acorda agrees with Elan and MS R&D to assume the rights, interest, obligations, duties and liabilities of MS R&D under the Elan License Agreement.


3.3 Elan consent to Assignments


Elan consents to and accepts the assignment referred to in Clauses 3.1 and 3.2 by MS R&D to Acorda and the assumption by Acorda of MS R&D's rights, interest, obligations, duties and liabilities under the Elan License Agreement.


3.4 Restated Elan License


The Parties acknowledge and agree that immediately following the Assignments, Elan Corp and Acorda will execute and deliver the Restated Elan License, at which time the Elan License Agreement will be superceded by the Restated Elan License.


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3.5 Advisory Fees


Each of the Parties confirms to the other that such Party has not incurred nor shall become liable for any advisory, appraisal or other fee or commission in connection with the transactions contemplated by this Agreement, except that MS R & D intends to pay a fee to Standard & Poor's Corporate Value Consulting, a division of the McGraw-Hill Companies, Inc..


4 REPRESENTATIONS, WARRANTIES, COVENANTS, CONFIRMATIONS AND INDEMNITIES


4.1 MS R&D Capitalization :


The Parties confirm that, as of the Effective Date, the capitalization of MS R&D is as set out in Schedule 4.1.


4.2 Sub-licenses:


MS R&D represents and warrants to the other Parties that it has not granted any sub-licenses or any other rights of any nature to any third parties pursuant to the Elan License Agreement or the MS R&D License Agreement.


4.3 Balance Sheet:


4.3.1 MS R&D and Acorda represent and warrant to Elan that the Balance Sheet is accurate and that, since the Balance Sheet Date, there has been no material adverse change in the financial position or prospects of MS R&D except for the MS R&D Debt which amount is to be forgiven as of the Effective Date as set out in Clause 2.4 above.


4.3.2 MS R&D and Acorda represent and warrant to Elan that there are no other liabilities of MS R&D other than as reflected or reserved against on the Balance Sheet and other than as described in Clause 4.3.1 above.


4.3.3 MS R&D and Acorda represent and warrant to Elan that the Pro Forma Balance Sheet accurately reflects the pro forma effect on the Balance Sheet as of the Balance Sheet Date of the purchase of the EIS Shares and the MS R&D Debt.


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4.4 Third party agreements / Orders / Claims:


4.4.1 Each of the Parties confirms to the other Parties hereto that, as of the Effective Date, to its actual knowledge, MS R&D is not a party to, or bound by, any judgment, order, decree or other directive of or stipulation with any court or any governmental or regulatory authority.


4.4.2 Each of the Parties confirms to the other Parties that MS R&D is not a party to, or bound by, nor is Acorda, or any of its Affiliates, on behalf of MS R&D, nor is Elan or any of its Affiliates, on behalf of MS R&D, a party to or bound by, any agreement with any third party, except for the MS R&D Agreements, other than as set out in Schedule 4.4.2 (" MS R&D Third Party Agreement(s)").


4.4.3 Each of the Parties confirms to the other Parties hereto that, as of the Effective Date, to its actual knowledge, there are no claims, suits or proceedings pending or threatened against MS R&D.


4.4.4 Elan represents and warrants to MS R&D and Acorda that none of Elan, EIS nor any of their Affiliates has any agreement with EPIL that is in conflict with or inconsistent with this Agreement or the transactions contemplated hereby.


4.5 EIS Shares


4.5.1 Each of Elan and EIS represent, warrant and confirm to the other Parties that:


(1) EIS is the legal and beneficial owner of the EIS Shares;


(2) EIS has good and valid title to all of the EIS Shares free and clear of all pledges, liens, encumbrances or other claims or charges; and


(3) EIS has the unrestricted power and authority to transfer the EIS Shares to Acorda in accordance with the terms of this Agreement.


4.5.2 For the avoidance of doubt, the Parties agree that the EIS Shares and the EPIL Shares represent all of the equity or securities of MS R & D to which Elan or any of its Affiliates was or, as of the Effective Date, is entitled to under any of the MS R & D Agreements.


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4.6 Regulatory Applications :


Each of the Parties confirms to the other Parties that, prior to and as of the Effective Date, no Regulatory Filings have been filed by MS R&D or by any Party with any government authority in any part of the world for any product in relation to the Project (as defined in the Elan License Agreement), except as set out in Schedule 4.6.


4.7 Exclusion of warranties / liability :


EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL OTHER WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED BY THE PARTIES.


NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (W ...