<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1996
REGISTRATION STATEMENT NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM F-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------
ELAN CORPORATION, PLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IRELAND 2834 NOT APPLICABLE
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
MONKSLAND, ATHLONE ELAN PHARMACEUTICAL
COUNTY WESTMEATH, RESEARCH CORP.
IRELAND 1300 GOULD DRIVE
(353) 902-95000 GAINESVILLE, GEORGIA
(ADDRESS, AND 30501
TELEPHONE NUMBER OF ATTENTION: WILLIAM F.
REGISTRANT'S PRINCIPAL DANIEL
EXECUTIVE OFFICES) (770) 534-8239
(NAME, ADDRESS AND
TELEPHONE NUMBER
OF AGENT FOR SERVICES)
---------------
COPIES TO:
THOMAS G. LYNCH WILLIAM M. HARTNETT, ESQ. THOMAS E. SPARKS, JR.,
CHIEF FINANCIAL CAHILL GORDON & REINDEL ESQ.
OFFICER 80 PINE STREET PILLSBURY MADISON &
ELAN CORPORATION, PLC NEW YORK, NEW YORK 10005 SUTRO LLP
MONKSLAND, ATHLONE (212) 701-3000 235 MONTGOMERY STREET
COUNTY WESTMEATH, SAN FRANCISCO,
IRELAND CALIFORNIA 94104
(353) 902-95000 (415) 983-1000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
Upon consummation of the Merger described herein.
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
AMOUNT PROPOSED PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF TO BE MAXIMUM OFFERING MAXIMUM OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(2) PRICE PER SHARE PRICE(3) FEE(4)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ordinary Shares of par value 4 Irish
pence each (1)............... 9,683,258 N/A $599,880,436 $206,856
</TABLE>
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(1) American Depositary Shares ("Elan ADSs") evidenced by American Depositary
Receipts issuable upon deposit of Ordinary Shares of par value 4 Irish
pence each (the "Ordinary Shares") of Elan Corporation, plc ("Elan") will
be registered on a separate registration statement. Each Elan ADS
represents one Elan Ordinary Share.
(2) Based on the product of (a) 32,757,976, the maximum number of shares of
Common Stock, par value $.01 per share (each an "Athena Share"), of Athena
Neurosciences, Inc. ("Athena") that would be outstanding immediately prior
to the merger (the "Merger") of Athena and a subsidiary of Elan, assuming
the exercise of all Athena stock options and warrants (whether or not
currently exercisable), and (b) a conversion ratio of .2956 Elan ADSs for
each Athena Share.
(3) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended
("Securities Act"), and computed pursuant to Rules 457(f)(1) and 457(c)
thereunder based on 18.3125, the average of the high and low sale prices
of Athena Shares on May 10, 1996 as reported on the Nasdaq National
Market, and 32,757,976, the maximum number of Athena Shares to be
exchanged in the Merger.
(4) The registration fee for all securities registered hereby $206,856 has
been calculated pursuant to Rule 457(f) of the Securities Act as follows:
one-twenty-ninth ( 1/29th) of one percent of $18.3125, the average of the
high and low sales prices of an Athena Share as reported by the Nasdaq
National Market on May 10, 1996, multiplied by 32,757,976, the maximum
number of Athena Shares to be exchanged in the Merger. A fee of $119,071
was paid on April 18, 1996 pursuant to Section 14(g)(1)(A) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
Rule 0-11 promulgated thereunder ("Rule 0-11") in connection with a filing
by Athena of preliminary proxy materials relating thereto. Pursuant to
Rule 457(b) promulgated under the Securities Act and Rule 0-11 and Section
14(g)(1)(B) of the Exchange Act the amount of such previously paid fee has
been credited against the registration fee in connection herewith.
Accordingly, as an additional fee of $87,785 is required to be paid with
this Registration Statement.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART I
ELAN CORPORATION, PLC
Cross Reference Sheet Pursuant to
Item 501(b) of Regulation S-K and Rule 404(a)
<TABLE>
<CAPTION>
FORM F-4 ITEM AND CAPTION LOCATION IN PROSPECTUS
------------------------- ----------------------
<C> <S>
A. Information About the Transaction
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus-
Proxy Statement............................ Cover Page of
Registration Statement;
Cross Reference Sheet;
Outside Front Cover Page
of Prospectus-Proxy
Statement
2. Inside Front and Outside Back Cover Pages
of Prospectus-Proxy Statement.............. Available Information;
Incorporation of Certain
Documents By Reference;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Summary; Risk Factors
4. Terms of the Transaction................... Summary; The Merger; The
Merger Agreement; Certain
Tax Consequences;
Description of Elan
Ordinary Shares;
Description of American
Depositary Receipts;
Comparative Rights of
Stockholders
5. Pro Forma Financial Information............ Summary; Unaudited Pro
Forma Combined Financial
Information
6. Material Contacts with the Company Being
Acquired................................... The Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed To
Be Underwriters............................ *
8. Interests of Named Experts and Counsel..... Interests of Certain
Persons in the Merger;
Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ *
B. Information About the Registrant
10. Information with Respect to F-3 Companies.. Available Information;
Incorporation of Certain
Documents by Reference;
Summary; Business of Elan
11. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain
Documents by Reference;
Summary
12. Information with Respect to F-2 or F-3
Registrants................................ *
13. Incorporation of Certain Information by
Reference.................................. *
14. Information with Respect to Foreign
Registrants other than F-2 or F-3
Registrants................................ *
C. Information about the Company Being Acquired
15. Information with Respect to S-3 Companies.. Incorporation of Certain
Documents by Reference
16. Information with Respect to
S-2 or S-3 Companies....................... *
17. Information with Respect to Foreign
Companies other than S-2 or S-3 Companies.. *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM F-4 ITEM AND CAPTION LOCATION IN PROSPECTUS
------------------------- ----------------------
<C> <S>
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations Are To Be Solicited ........ Outside Front Cover Page
of Prospectus-Proxy
Statement; Incorporation
of Certain Documents by
Reference; Summary;
Introduction; The Special
Meeting; The Merger; The
Merger Agreement;
Approval of the Amendment
to the Athena
Neurosciences, Inc. 1991
Long-Term Incentive Plan
19. Information if Proxies, Consents or
Authorizations Are Not To Be Solicited in
an Exchange Offer.......................... *
</TABLE>
- --------
* Omitted because not required, inapplicable or the answer is negative.
<PAGE>
May 17, 1996
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Athena Neurosciences, Inc. ("Athena") to be held at South San Francisco
Conference Center, 255 South Airport Boulevard, South San Francisco, California
on June 27, 1996, at 10:00 a.m., local time.
At the Special Meeting you will be asked to vote on a proposal to approve and
adopt an Agreement and Plan of Merger, dated as of March 18, 1996 (the "Merger
Agreement") providing for the merger (the "Merger") of Athena with a wholly-
owned subsidiary of Elan Corporation, plc ("Elan"). Upon consummation of the
Merger, (a) Athena will become a wholly-owned subsidiary of Elan and (b) Athena
stockholders (other than Elan) will be entitled to receive a number of American
Depositary Shares of Elan (an "Elan ADS," each Elan ADS representing one
Ordinary Share, par value 4 Irish pence per share, of Elan) for each share of
Athena common stock held by them determined pursuant to the share exchange
formula set forth in the Merger Agreement (the "Exchange Ratio").
At the Special Meeting you will also be asked to vote on a proposal to
approve an amendment to the Athena Neurosciences, Inc. 1991 Long-Term Incentive
Plan (the "1991 Incentive Plan") to increase the number of authorized shares
under the 1991 Incentive Plan by 202,500 shares to cover options granted to
employees and consultants of Athena on February 9, 1996.
The Board of Directors of Athena has carefully considered the terms and
conditions of the proposed Merger, including a written opinion from its
financial advisor, PaineWebber Incorporated ("PaineWebber"), to the effect that
the Exchange Ratio is fair, from a financial point of view, to the holders of
Athena common stock. A copy of PaineWebber's written opinion, which sets forth
a description of the assumptions made, matters considered and limits of its
review, is attached to the accompanying Prospectus-Proxy Statement as Annex B.
Athena stockholders are urged to read carefully the opinion in its entirety.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST
INTERESTS OF, ATHENA AND THE ATHENA STOCKHOLDERS. ACCORDINGLY, THE BOARD
RECOMMENDS THAT ATHENA STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE
---
MERGER AGREEMENT. THE BOARD OF DIRECTORS ALSO RECOMMENDS THAT YOU VOTE FOR
---
APPROVAL OF THE AMENDMENT TO THE 1991 INCENTIVE PLAN.
Approval of the Merger Agreement and the Merger requires the affirmative vote
of the holders of a majority of the outstanding shares of Athena common stock.
As of May 9, 1996, the executive officers and directors of Athena and certain
of their affiliates may be deemed to be beneficial owners of approximately
2.99% of the outstanding Athena common stock and each such person has advised
Athena that he, she or it intends to vote in favor of approving the Merger.
Approval of the amendment to the 1991 Incentive Plan requires the affirmative
vote of a majority of the shares of Athena common stock present in person or
represented by proxy at the Special Meeting and entitled to vote on the
proposal.
LOGO
<PAGE>
In view of the importance of the actions to be taken at this Special Meeting
of Athena stockholders, we urge you to review carefully the accompanying
Notice of Special Meeting of Stockholders and the Prospectus-Proxy Statement,
including the Annexes thereto, which include information on the Merger, the
Merger Agreement, Elan and Athena. Whether or not you expect to attend the
Special Meeting, please complete, sign and date the enclosed proxy and return
it as promptly as possible.
Sincerely,
John Groom
President and Chief Executive
Officer
2
<PAGE>
ATHENA NEUROSCIENCES, INC.
800 GATEWAY BOULEVARD
SOUTH SAN FRANCISCO, CALIFORNIA 94080
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Athena
Neurosciences, Inc., a Delaware corporation ("Athena"), will be held at South
San Francisco Conference Center, 255 South Airport Boulevard, South San
Francisco, California, on Thursday, June 27, 1996, at 10:00 a.m., local time,
for the following purposes:
(1) To consider and vote on a proposal (the "Merger Proposal") to approve
and adopt an Agreement and Plan of Merger, dated as of March 18, 1996 (the
"Merger Agreement") by and among Elan Corporation, plc ("Elan"), Elan
Acquisition Corp. ("Subco") and Athena, pursuant to which, among other
things, (a) Subco will be merged with and into Athena with the result that
Athena becomes a wholly-owned subsidiary of Elan (the "Merger"), and (b)
each outstanding share (other than shares held by Elan) of Athena Common
Stock will be converted into a number of American Depositary Shares of Elan
("Elan ADSs," each Elan ADS representing one Ordinary Share, par value 4
Irish pence per share, of Elan), as determined pursuant to the share
exchange formula set forth in the Merger Agreement (the "Exchange Ratio").
A copy of the Merger Agreement is attached as Annex A to the accompanying
Prospectus-Proxy Statement.
(2) To consider and vote on a proposal to approve an amendment to the
Athena Neurosciences, Inc. 1991 Long-Term Incentive Plan (the "1991
Incentive Plan") to increase the number of shares under the 1991 Incentive
Plan by 202,500 shares to cover options granted to employees and
consultants of Athena on February 9, 1996 (the "Plan Proposal").
(3) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on May 9, 1996, as
the record date for the determination of the holders of Athena Shares entitled
to notice of, and to vote at, the meeting and any adjournments or
postponements thereof. The Merger Proposal requires the affirmative vote of
the holders of a majority of the outstanding Athena Shares entitled to vote at
the meeting. The executive officers and directors of Athena and certain of
their affiliates have expressed an intention to vote in favor of the Merger
Proposal. Athena stockholders will not be entitled to dissenters' appraisal
rights under Delaware law or any other statute in connection with the Merger.
Approval of the Plan Proposal requires the affirmative vote of a majority of
the Athena Shares present in person or represented by proxy at the Special
Meeting and entitled to vote on the proposal.
Information regarding the Merger, the Merger Agreement, Athena, Elan and
related matters and the amendment to the 1991 Incentive Plan is contained in
the accompanying Prospectus-Proxy Statement and the Annexes thereto, which are
incorporated by reference herein and form a part of this Notice.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IT IS
IMPORTANT THAT YOUR INTERESTS BE REPRESENTED AT THE MEETING.
THE BOARD OF DIRECTORS OF ATHENA HAS UNANIMOUSLY DETERMINED THAT THE TERMS
OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO,
AND IN THE BEST INTERESTS OF, ATHENA AND THE ATHENA STOCKHOLDERS. ACCORDINGLY,
THE ATHENA BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. THE BOARD OF DIRECTORS ALSO RECOMMENDS THAT
YOU VOTE FOR APPROVAL OF THE AMENDMENT TO THE 1991 INCENTIVE PLAN.
By Order of the Board of Directors
Lisabeth F. Murphy, Secretary
South San Francisco, California
May 17, 1996
PLEASE DO NOT SEND ANY SHARE CERTIFICATES AT THIS TIME.
<PAGE>
PROSPECTUS-PROXY STATEMENT
-----------
ELAN CORPORATION, PLC
PROSPECTUS
-----------
[LOGO OF ELAN APPEARS HERE] [LOGO OF ATHENA NEUROSCIENCES APPEARS HERE]
ATHENA NEUROSCIENCES, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 1996
This Prospectus-Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Athena Neurosciences,
Inc., a Delaware corporation ("Athena"), for use at the Special Meeting of
Stockholders of Athena scheduled to be held on June 27, 1996, at 10:00 a.m.,
local time, at South San Francisco Conference Center, 255 South Airport
Boulevard, South San Francisco, California, and at any adjournments or
postponements thereof (the "Special Meeting").
At the Special Meeting, the Athena stockholders of record as of the close of
business on May 9, 1996 will be asked to consider and vote upon a proposal to
approve and adopt the Agreement and Plan of Merger, dated as of March 18, 1996
(the "Merger Agreement") by and among Elan Corporation, plc, a public limited
company incorporated under the laws of Ireland ("Elan"), Elan Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Elan ("Subco"),
and Athena. A copy of the Merger Agreement is attached as Annex A to this
Prospectus-Proxy Statement. Pursuant to the Merger Agreement, upon the terms
and conditions thereof, Subco will be merged with and into Athena (the
"Merger"), Athena as the surviving corporation (the "Surviving Corporation") in
the Merger will become a wholly-owned subsidiary of Elan, and each then
outstanding share of common stock, par value $.01 per share, of Athena ("Athena
Shares") (other than shares owned by Elan) will be converted into .2956
American Depositary Shares of Elan ("Elan ADSs," with each Elan ADS
representing one ordinary share, par value 4 Irish pence per share, of Elan (an
"Ordinary Share")) evidenced by American Depositary Receipts of Elan ("Elan
ADRs"); provided, however, if the record date of Elan's previously announced 2
for 1 stock split precedes the Effective Time (as defined herein) of the
Merger, the exchange ratio will be doubled to .5912 Elan ADSs for each
outstanding Athena Share. The exchange ratio could also be adjusted under
certain other limited circumstances. See "The Merger Agreement--Conditions." No
fractional Elan ADSs will be issued in the Merger; Athena stockholders will
receive cash in lieu thereof. See "The Merger Agreement--Conversion of Athena
Shares" and "--No Fractional Elan ADSs."
At the Special Meeting, stockholders of Athena also will be asked to consider
and vote upon a proposal to amend the Athena Neurosciences, Inc. 1991 Long-Term
Incentive Plan (the "1991 Incentive Plan") to increase the number of authorized
shares under the 1991 Incentive Plan by 202,500 shares to cover options granted
to employees and consultants of Athena on February 9, 1996.
This Prospectus-Proxy Statement also constitutes the prospectus of Elan filed
with the Securities and Exchange Commission (the "Commission") as part of a
Registration Statement on Form F-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the Elan
ADSs (and the Ordinary Shares represented thereby) to be issued to stockholders
of Athena upon the consummation of the Merger. All information concerning Elan
contained or incorporated by reference in this Prospectus-Proxy Statement has
been furnished by Elan and all information concerning Athena prior to the
Merger contained or incorporated by reference in this Prospectus-Proxy
Statement has been furnished by Athena.
A copy of this document, having attached thereto the documents specified
herein, has been delivered to the Registrar of Companies in Ireland for
registration.
Stockholders are urged to read and carefully consider the information
contained in this Prospectus-Proxy Statement. This Prospectus-Proxy Statement,
the letter to Athena stockholders, the Notice of Special Meeting of
Stockholders and the related form of proxy are first being mailed or delivered
to stockholders of Athena on or about May 17, 1996. Any stockholder of Athena
who has given his, her or its proxy may revoke it at any time prior to its use.
See "The Special Meeting--Record Date; Voting Rights; Voting at the Meeting"
and "--Voting of Proxies."
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 15 OF THIS PROSPECTUS-PROXY STATEMENT
FOR A DISCUSSION OF CERTAIN MATTERS STOCKHOLDERS SHOULD CONSIDER BEFORE VOTING
FOR OR AGAINST THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
-----------
THE ELAN ADSS (AND THE ORDINARY SHARES REPRESENTED THEREBY) TO BE ISSUED IN
THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS-PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus-Proxy Statement is May 17, 1996.
<PAGE>
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAWS
Elan is a public limited company incorporated in Ireland. Certain directors,
officers and controlling persons of Elan, as well as certain of the experts
named herein, reside outside the United States of America (the "U.S."), and
all or a substantial portion of their assets and the assets of Elan are
located outside the U.S. As a result, it may be difficult for investors to
effect service of process within the U.S. upon such persons or to enforce
against them judgments of courts of the U.S. predicated upon civil liabilities
under the U.S. federal securities laws. Elan has been advised by its Irish
counsel, McCann FitzGerald Solicitors, that there is doubt as to the
enforceability against such persons in Ireland, whether in original actions or
in actions for enforcement of judgments of U.S. courts, of liabilities
predicated solely upon the U.S. federal securities laws.
AVAILABLE INFORMATION
Each of Elan and Athena is subject to the information and reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), applicable to foreign private issuers and domestic issuers,
respectively, and in accordance therewith files reports and other information
with the Commission. The reports and other information filed by Elan and
Athena with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission located
at 7 World Trade Center, Room 1300, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such material can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. In addition, such material may be inspected
and copied at the offices of the New York Stock Exchange ("NYSE"), 20 Broad
Street, New York, New York 10005, on which exchange the Elan ADSs are listed.
In addition to the foregoing, Elan furnishes to registered holders of
Ordinary Shares, and to The Bank of New York, as Depositary ("Depositary")
under the Amended and Restated Deposit Agreement, dated as of July 9, 1990, as
amended July 31, 1990, among Elan, the Depositary and the holders from time to
time of the Elan ADRs (the "Deposit Agreement") for mailing to the record
holders of Elan ADRs, annual reports in English, which include a review of
operations and annual audited consolidated financial statements prepared in
conformity with generally accepted accounting principles in Ireland. Elan also
provides the Depositary with quarterly interim reports in English which
include unaudited interim consolidated financial information prepared in
conformity with generally accepted accounting principles in Ireland. Elan also
provides the Depositary, in English, with all notices of stockholders'
meetings and other reports and communications that are made generally
available to its stockholders. The Depositary arranges for the mailing of such
notices, reports and communications to such holders of record of Elan ADSs. As
a foreign private issuer, Elan is exempt from the rules under the Exchange Act
prescribing the furnishing and content of proxy statements.
This Prospectus-Proxy Statement does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Elan with the Commission
pursuant to the Exchange Act are incorporated herein by this reference:
(i) Elan's Annual Report on Form 20-F for the fiscal year ended March 31,
1995 ("Elan's 1995 Annual Report");
(ii) Elan's Reports on Form 6-K dated April 5, 1995; April 11, 1995;
April 11, 1995; May 12, 1995; June 21, 1995; July 18, 1995; July 18, 1995;
August 8, 1995; August 15, 1995; August 17, 1995; August 24,
ii
<PAGE>
1995; September 15, 1995; October 30, 1995; December 1, 1995; January 3,
1996; January 30, 1996; January 17, 1996; March 19, 1996; March 19, 1996;
March 19, 1996; April 1, 1996; and May 13, 1996; and
(iii) the descriptions of Elan's Ordinary Shares and Elan ADSs contained
in Elan's registration statements on Form 8-A filed with the Commission on
October 30, 1990, including any amendment or reports filed for purposes of
updating such descriptions.
The following documents previously filed by Athena with the Commission
pursuant to the Exchange Act (Commission File No. 0-19560) are incorporated
herein by this reference:
(i) The description of Athena Shares contained in Athena's Registration
Statement on Form 8-A filed with the Commission on September 30, 1991, and
any amendment or report filed for the purpose of updating such description;
(ii) Athena's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, filed with the Commission on March 28, 1996, as amended
on April 2, 1996 by Amendment No. 1 on Form 10-K/A ("Athena's 1995 Annual
Report");
(iii) Athena's Current Report on Form 8-K dated March 18, 1996; and
(iv) Athena's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996 filed with the Commission on May 1, 1996.
All documents filed by Elan or Athena pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
date of the Special Meeting shall be deemed to be incorporated by reference
herein and to be a part hereof from the date any such document is filed.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Prospectus-Proxy
Statement is qualified in its entirety by the information and consolidated
financial statements (including notes thereto) appearing in the documents
incorporated herein by reference, except to the extent set forth in the
immediately preceding statement.
Copies of documents incorporated by reference with respect to Elan and
Athena that are not presented herein or delivered herewith (not including
exhibits to such documents unless such exhibits are specifically incorporated
by reference in such documents or herein) are available without charge to any
person to whom this Prospectus-Proxy Statement is delivered upon written or
oral request to the following:
<TABLE>
<CAPTION>
ELAN DOCUMENTS ATHENA DOCUMENTS
-------------- ----------------
<C> <S>
Elan Corporation, plc Athena Neurosciences, Inc.
Monksland, Athlone 800 Gateway Boulevard
South San Francisco, California
County Westmeath, Ireland 94080
Attn: William F. Daniel Attn: Lisabeth F. Murphy, Secretary
+353-902-95000 (415) 877-0900
</TABLE>
In order to ensure timely delivery, any request for documents should be made
by June 20, 1996.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROSPECTUS-PROXY
STATEMENT OTHER THAN THOSE CONTAINED HEREIN OR IN THE DOCUMENTS INCORPORATED
BY REFERENCE HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ELAN, ATHENA OR ANY OTHER
PERSON. THIS PROSPECTUS-PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS-PROXY STATEMENT NOR ANY
DISTRIBUTION OF THE SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE ASSETS, PROPERTIES
OR AFFAIRS OF ELAN OR ATHENA SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THE DATE OF THE DOCUMENT THAT INCLUDES THE
INFORMATION INCORPORATED BY REFERENCE.
iii
<PAGE>
FINANCIAL INFORMATION AND CURRENCY TRANSLATIONS
The consolidated financial statements of Elan appearing or incorporated by
reference in this Prospectus-Proxy Statement are presented in Irish pounds
("IR(Pounds)"). References herein to "dollars" or "$" are to U.S. dollars.
Amounts stated in dollars, except with respect to the securities offered
hereby and except where otherwise specifically noted, are included solely for
convenience and are stated as a matter of arithmetical computation only, and
should not be construed as representations that the Irish pound amounts
actually represent or could be converted into dollars at the rates indicated.
Unless otherwise indicated, the translations of Irish pounds into dollars have
been made at a rate of $1.60 = IR(Pounds)1, the noon buying rate in New York
City for cable transfers of Irish pounds as certified for customs purposes by
the Federal Reserve Bank of New York (the "Noon Buying Rate") on December 31,
1995, the date of the most recent balance sheet herein of Elan. The Noon
Buying Rate for Irish pounds on March 31, 1996 was $1.5720 = IR(Pounds)1. See
"Comparative Market Price and Dividend Information--Exchange Rates" for
information regarding rates of exchange between the Irish pound and the dollar
from 1991 to the present.
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS-PROXY STATEMENT CONTAINS CERTAIN FORWARD LOOKING STATEMENTS
WITH RESPECT TO THE FINANCIAL CONDITION AND BUSINESS OF ELAN FOLLOWING THE
MERGER INCLUDING STATEMENTS RELATING TO THE PROSPECTS OF ELAN FOLLOWING THE
MERGER. SEE "THE MERGER--ATHENA'S REASONS FOR THE MERGER; RECOMMENDATION OF
THE ATHENA BOARD OF DIRECTORS" AND "--ELAN'S REASONS FOR THE MERGER." THESE
FORWARD LOOKING STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS
THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY
SUCH FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING: (1) THE
FAILURE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE NEW PRODUCTS IN A TIMELY
MANNER, (2) THE FAILURE OF ELAN TO ACQUIRE ADDITIONAL PRODUCTS FROM THIRD
PARTIES ON FAVORABLE TERMS, (3) COSTS OR DIFFICULTIES IN INTEGRATING ELAN AND
ATHENA ARE GREATER THAN EXPECTED OR INVOLVE THE LOSS OF KEY PERSONNEL
RESULTING IN AN INABILITY OF ELAN TO CAPITALIZE ON ATHENA'S RESEARCH AND
MARKETING CAPABILITIES TO THE DEGREE CONTEMPLATED BY ELAN AND ATHENA, AND (4)
COMPETITIVE PRESSURES IN THE HEALTHCARE INDUSTRY. FURTHER INFORMATION ON THESE
AND OTHER RISKS WHICH COULD ADVERSELY AFFECT ELAN AFTER THE MERGER IS INCLUDED
HEREIN AND IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES FEDERAL SECURITIES
LAWS..................................................................... ii
AVAILABLE INFORMATION..................................................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... ii
FINANCIAL INFORMATION AND CURRENCY TRANSLATIONS........................... iv
FORWARD LOOKING STATEMENTS................................................ iv
SUMMARY................................................................... 1
RISK FACTORS.............................................................. 15
INTRODUCTION.............................................................. 17
THE SPECIAL MEETING....................................................... 17
General................................................................. 17
Matters To Be Considered at the Special Meeting......................... 17
Record Date; Voting Rights; Voting at the Meeting....................... 17
Voting of Proxies....................................................... 17
Solicitation of Proxies................................................. 18
THE MERGER................................................................ 19
Background of the Merger................................................ 19
Athena's Reasons for the Merger; Recommendation of the Athena Board of
Directors.............................................................. 20
Elan's Reasons for the Merger........................................... 21
Opinion of Athena's Financial Advisor................................... 21
Interests of Certain Persons in the Merger.............................. 25
Resales by Affiliates of Athena......................................... 27
Governmental Regulation................................................. 27
Accounting Treatment.................................................... 27
Certain Litigation Related to the Merger................................ 28
THE MERGER AGREEMENT...................................................... 29
The Merger.............................................................. 29
Effective Time and Effects of the Merger................................ 29
Conversion of Athena Shares............................................. 29
No Fractional Elan ADSs................................................. 29
Exchange of Share Certificates.......................................... 30
Treatment of Athena Stock Options, Warrants and Convertible Debt........ 30
Employee Benefits....................................................... 31
No Solicitation......................................................... 31
Representations, Warranties and Covenants............................... 32
Conditions.............................................................. 33
Termination............................................................. 34
Fees and Expenses....................................................... 35
Indemnification; Insurance.............................................. 36
Amendment............................................................... 36
Waivers; Consents....................................................... 36
Appraisal Rights........................................................ 36
CERTAIN TAX CONSEQUENCES.................................................. 37
General................................................................. 37
U.S. Federal Income Tax Consequences of the Merger...................... 37
U.S. Federal Income Tax Consequences After Merger....................... 38
Irish Tax Consequences After Merger..................................... 39
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION......................... 41
Comparative Market Price Information.................................... 41
Comparative Dividend Information........................................ 41
Exchange Rates.......................................................... 42
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION........................ 43
BUSINESS OF ELAN.......................................................... 49
General................................................................. 49
</TABLE>
v
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<TABLE>
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<S> <C>
Elan Technologies....................................................... 49
Products................................................................ 50
Marketing............................................................... 52
Strategic Relationships................................................. 52
Manufacturing and Facilities............................................ 54
Research and Development................................................ 55
Governmental Regulation................................................. 55
Patents and Patent Applications......................................... 57
Competition............................................................. 58
Litigation.............................................................. 58
BUSINESS OF ATHENA........................................................ 59
DESCRIPTION OF ELAN CAPITAL STOCK......................................... 59
Ordinary Shares......................................................... 59
Executive Shares and "B' Executive Shares............................... 61
DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS............................... 61
Deposit and Withdrawal of Shares........................................ 61
Dividends, Other Distributions and Rights............................... 62
Record Dates............................................................ 62
Voting of the Underlying Ordinary Shares................................ 63
Amendment and Termination of the Deposit Agreement...................... 63
Charges of Depositary................................................... 63
General................................................................. 64
COMPARATIVE RIGHTS OF STOCKHOLDERS........................................ 65
Voting Rights........................................................... 65
Actions by Written Consent.............................................. 65
Sources and Payment of Dividends........................................ 66
Rights of Purchase and Redemption....................................... 66
Special Meeting of Stockholders......................................... 67
Rights of Appraisal..................................................... 67
Preemptive Rights....................................................... 67
Amendment of Governing Instruments...................................... 67
Stockholders' Votes on Certain Reorganizations.......................... 68
Rights of Inspection.................................................... 69
Classification of the Board of Directors................................ 69
Removal of Directors.................................................... 69
Vacancies on the Board of Directors..................................... 70
Liability of Directors.................................................. 70
Indemnification of Directors and Officers............................... 70
Stockholders' Suits..................................................... 70
Certain Provisions Relating to Share Acquisition........................ 71
Disclosure of Interests................................................. 71
APPROVAL OF THE AMENDMENT TO THE ATHENA NEUROSCIENCES, INC. 1991 LONG-TERM
INCENTIVE PLAN........................................................... 72
Overview of the 1991 Incentive Plan .................................... 73
Administration and Eligibility.......................................... 74
Shares Subject to the Incentive Plan ................................... 74
Terms of Awards......................................................... 74
Non-Employee Directors.................................................. 75
U.S. Federal Income Tax Consequences.................................... 75
Amendment and Adjustment of Awards...................................... 75
Amendment and Termination of Plan....................................... 76
Compensation of Executive Officers and Directors of Athena.............. 77
Stock Options........................................................... 78
</TABLE>
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<TABLE>
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<S> <C>
Compensation Committee Interlocks and Insider Participation............. 79
Compensation of Directors............................................... 79
Employment Contracts, Termination of Employment and Change in Control
Arrangements........................................................... 79
Pension Plans........................................................... 79
LEGAL MATTERS............................................................. 79
EXPERTS................................................................... 80
IRISH PROSPECTUS INFORMATION.............................................. 80
Annex A--Agreement and Plan of Merger..................................... A-1
Annex B--Opinion of PaineWebber Incorporated.............................. B-1
</TABLE>
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<PAGE>
SUMMARY
The following is a summary of certain information contained in this
Prospectus-Proxy Statement. This summary does not contain a complete statement
of all material information relating to the Merger and the Merger Agreement and
is qualified in all respects by reference to the more detailed information and
financial statements contained elsewhere in this Prospectus-Proxy Statement or
incorporated by reference herein. Athena stockholders are urged to read and
consider carefully all of the information contained or incorporated by
reference in this Prospectus-Proxy Statement, including the Annexes.
GENERAL
This Prospectus-Proxy Statement relates to the proposed Merger of Subco with
and into Athena, pursuant to the Merger Agreement, a copy of which is attached
hereto as Annex A. In the Merger, Athena stockholders (other than Elan and its
affiliates) will receive, for each Athena Share, .2956 Elan ADSs (with each
Elan ADS representing one Elan Ordinary Share) evidenced by Elan ADRs (the
"Exchange Ratio"); provided, however, if the record date of Elan's previously
announced 2 for 1 stock split precedes the Effective Time of the Merger, the
Exchange Ratio will be doubled (i.e., .5912 Elan ADSs for each Athena Share).
The Exchange Ratio could also be adjusted under certain other limited
circumstances. See "The Merger Agreement--Conditions."
THE COMPANIES
<TABLE>
<C> <S>
ELAN CORPORATION, PLC Elan is a world leader in the development of
MONKSLAND, ATHLONE controlled-absorption drug delivery systems.
COUNTY WESTMEATH Elan manufactures, markets and licenses drug
IRELAND products based on such systems. Elan's drug
TELEPHONE: +353-902-95000 delivery technologies are designed to improve
and control the absorption and utilization by
the human body of active pharmaceutical
compounds, allowing these compounds to be
administered less frequently, with reduced
side effects and/or in reduced dosages. Elan
has developed technologies applicable to a
number of different controlled-absorption
drug delivery systems which address a wide
variety of delivery problems. These include a
broad range of oral delivery systems for
conventional drugs and for new and emerging
therapeutic agents, passive transdermal,
electrically-assisted transdermal and
transcutaneous systems, and long-acting
injectables. See "Business of Elan."
ATHENA NEUROSCIENCES, INC. Athena discovers, develops and markets
800 GATEWAY BOULEVARD therapeutic products and diagnostic services
SOUTH SAN FRANCISCO, for patients with neurological disorders.
CALIFORNIA 94080 Athena's focus is on Alzheimer's disease, and
TELEPHONE: (415) 877-0900 other neurological diseases including
epilepsy, multiple sclerosis and Parkinson's
disease.
See "Business of Athena."
<CAPTION>
THE SPECIAL MEETING
<S> <C>
Date, Time and Place........ The Special Meeting will be held at South San
Francisco Conference Center, 255 South Airport
Boulevard, South San Francisco, California, on
June 27, 1996, at 10:00 a.m., local time, for
the following purposes: (1) to consider and
vote on a proposal to approve the merger of
Athena with a subsidiary of Elan (the "Merger
Proposal"); (2) to consider and vote on a
proposal to amend the 1991 Incentive Plan to
increase the number of shares authorized under
the 1991 Incentive Plan by 202,500
</TABLE>
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<PAGE>
to cover options granted to employees and
consultants of Athena on February 9, 1996 (the
"Plan Proposal"); and (3) such other matters as may
properly come before the Special Meeting.
Exchange Ratio............ Upon consummation of the Merger, Athena
stockholders (other than Elan and its affiliates)
will be entitled to receive .2956 Elan ADSs for
each Athena Share held by them (the "Exchange
Ratio"); provided, however, if the record date of
Elan's previously announced 2 for 1 stock split
precedes the Effective Time of the Merger, the
Exchange Ratio will be doubled (i.e., .5912). The
Exchange Ratio may be increased by Elan if the
Average Market Value (as defined below) of an Elan
ADS falls below $50 per share. See "The Merger
Agreement--Conditions."
Recommendations of the
Athena Board of
Directors................ The Board of Directors of Athena has determined
unanimously that the terms of the Merger Agreement,
and the transactions contemplated thereby are fair
to, and in the best interests of, Athena and the
Athena stockholders. Accordingly, the Athena Board
of Directors recommends that Athena stockholders
vote FOR the approval and adoption of the Merger
Agreement. See "The Merger--Athena's Reasons for
the Merger; Recommendation of the Athena Board of
Directors." The Athena Board of Directors also
recommends that Athena stockholders vote FOR the
approval of the amendment to the 1991 Incentive
Plan.
Record Date............... Only Athena stockholders of record at the close of
business on May 9, 1996 (the "Record Date") will be
entitled to notice of and to vote at the Special
Meeting. On the Record Date, there were 27,772,945
Athena Shares outstanding held by approximately 714
holders of record. See "The Special Meeting--Record
Date; Voting Rights; Voting at the Meeting."
Required Vote............. The Merger Proposal requires the affirmative vote
of the holders of a majority of the Athena Shares
outstanding and entitled to vote thereon. As of the
Record Date, the directors and certain of their
affiliates and executive officers of Athena may be
deemed to be beneficial owners of approximately
2.99% of the outstanding Athena Shares and each
such person has advised Athena that he, she or it
intends to vote in favor of the Merger Proposal.
Approval of the Plan Proposal requires the
affirmative vote of a majority of the Athena Shares
present in person or represented by proxy at the
Special Meeting and entitled to vote on the Plan
Proposal. See "The Special Meeting--Record Date;
Voting Rights; Voting at the Meetings."
Revocability of Proxies... Any proxy given pursuant to this solicitation may
be revoked by (i) filing (including by telegram or
facsimile) with the Secretary of Athena, before the
taking of the vote at the Special Meeting, a
written notice of revocation bearing a later date
than the date of the proxy or any later-dated proxy
relating to the same shares, or (ii) attending the
Special Meeting and voting in person. Athena
stockholders who require assistance in changing or
revoking a proxy should contact Athena's proxy
solicitor, Skinner & Co., by mail at 660 Market
Street, Suite 204, San Francisco, California 94104
or by telephone at (415) 981-0970.
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<PAGE>
Appraisal Rights.......... Athena stockholders will not be entitled to any
appraisal rights in connection with the Merger. See
"The Merger Agreement--Appraisal Rights."
THE MERGER
Merger Terms.............. The Merger Agreement provides that, subject to the
requisite approval of Athena's stockholders and the
satisfaction or waiver (where permissible) of
certain other conditions, at the Effective Time of
the Merger, Subco will be merged with and into
Athena, the separate corporate existence of Subco
will cease and Athena as the Surviving Corporation
will become a direct wholly-owned subsidiary of
Elan. Upon consummation of the Merger, each Athena
Share issued and outstanding immediately prior to
the Effective Time of the Merger will be converted
into .2956 Elan ADSs, subject to adjustment under
certain circumstances (with each Elan ADS
representing one Elan Ordinary Share) evidenced by
Elan ADRs. No fractional Elan ADSs will be received
by Athena stockholders in the Merger. In lieu of
any such fractional Elan ADSs, each holder of
Athena Shares who otherwise would be entitled to
receive a fractional Elan ADS pursuant to the
Merger will be paid an amount in cash, without
interest, equal to such fraction multiplied by the
Market Value. "Market Value" shall mean, with
respect to Elan ADSs issued, the mean between the
high and low prices of the Elan ADSs as reported on
the NYSE Composite Tape on the NYSE trading day
immediately prior to the Effective Time. The
fractional share interests of each Athena
stockholder will be aggregated, and no Athena
stockholder will receive cash in an amount equal to
or greater than the value of one full Elan ADS. See
"The Merger Agreement--Conversion of Athena Shares"
and "--No Fractional Elan ADSs." With respect to
the treatment of options, warrants and convertible
debt of Athena, see "The Merger Agreement--
Treatment of Athena Stock Options, Warrants and
Convertible Debt."
Recommendation of the
Board of Directors of
Athena................... On March 17, 1996, the Board of Directors of Athena
unanimously approved the Merger Agreement and the
Merger as being in the best interests of Athena and
the Athena stockholders and resolved to recommend
that Athena stockholders vote in favor of approval
of the Merger Agreement. See "The Merger--Athena's
Reasons for the Merger; Recommendation of the
Athena Board of Directors."
Opinion of Athena's
Financial Advisor........ PaineWebber Incorporated ("PaineWebber") the
financial advisor to Athena, has delivered to the
Board of Directors of Athena its written opinion,
dated March 17, 1996, to the effect that, as of the
date of such opinion, the Exchange Ratio is fair,
from a financial point of view, to the Athena
stockholders (other than Elan and its affiliates).
The full text of the opinion of PaineWebber, which
sets forth the assumptions made, procedures
followed, matters considered and limitations on the
review undertaken, is attached as Annex B to this
Prospectus--Proxy Statement. STOCKHOLDERS OF ATHENA
ARE URGED TO
3
<PAGE>
READ SUCH OPINION CAREFULLY IN ITS ENTIRETY.
PaineWebber earned a fee of $750,000 for rendering
its opinion to Athena and if the Merger is
consummated, PaineWebber will receive an additional
fee equal to .75% of the transaction value less the
$750,000 previously earned in connection with
PaineWebber's opinion. See "The Merger--Opinion of
Athena's Financial Advisor."
Interests of Certain
Persons in the Merger.... In considering the recommendation of Athena's Board
of Directors with respect to the Merger Agreement,
Athena stockholders should be aware that certain
officers and directors (or their affiliates) of
Athena have interests in the Merger that are
different from and in addition to the interests of
Athena stockholders generally. These interests
include, but are not limited to, the fact that (i)
each of the executive officers and directors of
Athena currently holds Athena Options (as defined
below), which will be converted into Elan Exchange
Options (as defined below) in the Merger based on
the Exchange Ratio which applies to the Athena
Shares; (ii) the consummation of the Merger will
accelerate the vesting of approximately 774,000
Athena Options which are owned by executive
officers and directors of Athena; (iii) immediately
after the Effective Time, Elan will appoint John
Groom, President and Chief Executive Officer of
Athena, the President and Chief Operating Officer
of Elan and will appoint Mr. Groom and Dennis J.
Selkoe, M.D., currently directors of Athena,
directors of Elan; (iv) certain officers of Athena
who will become directly employed by Elan after the
Effective Time may enter into new employment
agreements with Elan; (v) each of the Athena
officers has entered into or will enter into a
severance agreement with Athena (other than one
officer who has a pre-existing agreement with a
wholly-owned subsidiary of Athena) that provides,
among other benefits, for the payment of two years'
Pay, in the case of the Chief Executive Officer,
and 12 to 18 months' Pay, depending on length of
service, in the case of all other executive
officers ("Pay" being defined to include base
salary plus the product of the base salary
multiplied by the average bonus percentage paid to
that officer over the two years preceding the
Effective Time), in the event that such officer's
employment with Athena is terminated for specified
reasons within 12 months after the Effective Time;
(vi) Elan has agreed, from and after the Effective
Time, to guarantee and cause the Surviving
Corporation to continue to indemnify present and
former officers and directors of Athena and to
continue to perform under indemnification
agreements currently in effect between Athena and
certain of its officers and directors, and has
agreed to cause the Surviving Corporation to
maintain in effect, for a period of three years
after the Effective Time, policies of directors'
and officers' liability insurance with
substantially the same coverage and containing
substantially similar terms and conditions as
Athena's current policies, in each case in respect
of acts, omissions or matters occurring prior to
the Effective Time and subject to certain
limitations; and (vii) Stelios Papadopoulos, a
director of Athena, is also a Managing Director of
PaineWebber, which acted as the financial advisor
to Athena with respect to the Merger.
4
<PAGE>
PaineWebber has earned a fee of $750,000 for the
rendering of its opinion to Athena and if the
Merger is consummated, PaineWebber will receive an
additional fee equal to .75% of the transaction
value less the $750,000 previously earned. See "The
Merger--Opinion of Athena's Financial Advisor." The
Board of Directors of Athena was aware of these
interests and took these interests into account in
approving the Merger Agreement and the Merger.
Certain U.S. Federal
Income Tax Consequences.. It is expected that the Merger will qualify as a
tax-free reorganization for U.S. federal income tax
purposes. Accordingly, subject to certain
exceptions, no gain or loss should be recognized by
Athena stockholders for U.S. federal income tax
purposes upon the conversion of Athena Shares into
Elan ADSs by reason of the Merger (except to the
extent such holders receive cash in lieu of
fractional Elan ADSs). See "Certain Tax
Consequences--U.S. Federal Income Tax Consequences
of the Merger." Athena stockholders may be subject
to the application of certain Internal Revenue
Service ("IRS") information reporting requirements
which carry penalties of 25% of the gain realized
by an Athena stockholder in the Merger for failure
to comply. See "Certain Tax Consequences--U.S.
Federal Income Tax Consequences of the Merger--U.S.
Information Reporting Requirements." Athena
stockholders are urged to consult their own tax
advisors as to the specific tax consequences to
them of the Merger.
Effective Time of the
Merger................... If the Merger Agreement is approved and adopted by
the requisite vote of Athena stockholders and the
other conditions to the Merger are satisfied or
(where permissible) waived, the Merger will be
consummated and become effective upon the filing of
a certificate of merger with the Secretary of State
of the State of Delaware (the time of such filing
being the "Effective Time") in accordance with the
General Corporation Law of the State of Delaware
("DGCL"). Assuming all other conditions of the
Merger are satisfied or (where permissible) waived,
the Merger is expected to become effective as
promptly as practicable after obtaining the
necessary approval of Athena stockholders. See "The
Merger Agreement--Effective Time and Effects of the
Merger."
Exchange Procedures....... If the Merger Proposal is approved and the Merger
is consummated, promptly after the Effective Time,
a letter of transmittal will be mailed or delivered
to each Athena stockholder to be used in forwarding
certificates evidencing such holder's Athena Shares
for surrender and exchange for certificates
evidencing Elan ADSs to which such holder has
become entitled and, if applicable, cash in lieu of
fractional Elan ADSs. After receipt of such letter
of transmittal, each holder of certificates
formerly representing Athena Shares should
surrender such certificates pursuant to and in
accordance with the instructions accompanying such
letter of transmittal, and each holder will receive
in exchange therefor certificates evidencing the
whole number of Elan ADSs to which he or she is
entitled and any cash which may be payable
5
<PAGE>
in lieu of fractional Elan ADSs. See "The Merger
Agreement--Exchange of Share Certificates." Such
letter of transmittal will be accompanied by
instructions specifying other details of the
exchange. ATHENA STOCKHOLDERS SHOULD NOT SEND IN
THEIR CERTIFICATES UNTIL THEY RECEIVE A LETTER OF
TRANSMITTAL.
Conditions to the Merger;
Termination.............. The obligations of Elan and Athena to effect the
Merger are subject to the satisfaction or waiver of
certain conditions set forth in the Merger
Agreement. See "The Merger Agreement--Conditions."
The Merger Agreement may be terminated (i) by
mutual consent of Elan and Athena, (ii) by either
party if the Merger is not consummated on or before
August 31, 1996, (iii) by either party if any court
of competent jurisdiction or other governmental
body shall have issued an order (other than a
temporary restraining order), decree or ruling or
taken any other action restraining, enjoining or
otherwise prohibiting the Merger, (iv) by either
party if the requisite stockholder approval of
either Elan or Athena has not been obtained at the
applicable stockholder meeting, (v) by either party
if the Average Market Value (as defined below) of
an Elan ADS is below $50 and Elan does not increase
the Exchange Ratio (vi) by Elan if the Board of
Directors of Athena fails to recommend the approval
of the Merger Agreement or the Merger, or
withdraws, amends or modifies its recommendation of
the Merger Agreement or the Merger in a manner
adverse to Elan, or makes or fails to make any
recommendation in respect of an Acquisition
Transaction (as defined in the section entitled
"The Merger Agreement--No Solicitation"), other
than a recommendation to reject such Acquisition
Transaction, or shall have resolved to take any of
the foregoing and publicly disclosed such
resolution, (vii) by Elan if Athena or its
representatives shall furnish or disclose non-
public information or negotiate, discuss, explore
or otherwise communicate in any way with a third
party with respect to any Acquisition Transaction,
or shall have resolved to do any of the foregoing
and publicly disclosed such resolution; provided,
however, that in such event Elan shall have no
right to terminate until the earlier of (a) May 31,
1996 or (b) the thirtieth calendar day after Athena
or its representatives first furnishes or discloses
non-public information to, or negotiates,
discusses, explores or otherwise communicates with
any third party with respect to an Acquisition
Transaction (such earlier date being referred to as
the "Trigger Date") and only if Athena has not
terminated all such activities prior to the Trigger
Date and (viii) by either party in certain other
situations. If the Merger Agreement is terminated,
each of Athena and Elan shall be responsible for
its respective expenses. However, if the Merger
Agreement is terminated because of a breach by one
of the parties, the non-breaching party will be
entitled to receive (a) up to $2.5 million as
reimbursement for documented fees and expenses and
(b) a fee of $5 million for liquidated damages.
Under certain circumstances, Elan may be entitled
to receive a termination fee of $25 million (less
the liquidated damages fee) and the payment of its
fees and expenses
6
<PAGE>
relating to the transaction. See "The Merger
Agreement--Termination" and "--Fees and Expenses."
Governmental and
Regulatory Matters....... The Merger is subject to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the rules and regulations
thereunder, which provide that certain transactions
may not be consummated until required information
and material have been furnished to the Antitrust
Division of the Department of Justice (the "Justice
Department") and the Federal Trade Commission (the
"FTC") and certain waiting periods have expired or
been terminated. Elan and Athena filed the required
information and material with the Justice
Department and the FTC on April 4, 1996. On April
22, 1996, early termination of the applicable
waiting period under the HSR Act was received
without the FTC or Justice Department taking any
action. No additional filings or waiting periods
are applicable with respect to the Merger pursuant
to the HSR Act and the rules promulgated
thereunder. The merger is also subject to the
Mergers Take-overs and Monopolies (Control) Act,
1978 (as amended) (the "Irish Mergers Act") of
Ireland which provides that certain transactions
may not be consummated until a notification has
been made to the Minister for Enterprise and
Employment (the "Enterprise Minister"), such
further information (if any) as he may require has
been furnished and either the Enterprise Minister
has issued a clearance for the proposed transaction
or the prescribed statutory period following
notification has expired without the Enterprise
Minister having prohibited the proposed
transaction. Elan and Athena have given
notification of the Merger to the Enterprise
Minister on April 11, 1996 and requested that the
Enterprise Minister issue a clearance in respect of
it. On May 8, 1996 the Enterprise Minister
requested further information, which was furnished
on May 10, 1996. See "The Merger--Governmental
Regulation."
Comparative Rights of
Stockholders............. For a comparison of Delaware and Irish laws and of
the Restated Certificate of Incorporation and By-
laws of Athena and Memorandum and Articles of
Association of Elan governing the rights of Athena
stockholders and Elan stockholders, respectively,
see "Comparative Rights of Stockholders."
Certain Litigation........ On March 25 and 26, 1996, two purported class
action lawsuits were filed against Athena and its
Board of Directors alleging, among other things,
that the consideration that Athena stockholders
will receive pursuant to the Merger is inadequate.
See "The Merger--Certain Litigation Related to the
Merger."
7
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA OF ELAN
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following summary historical consolidated financial information of Elan
and its subsidiaries for each of the five years in the period ended March 31,
1995 has been derived from audited consolidated financial statements. The
information for the nine months ended December 31, 1994 and 1995 has been
derived from unaudited financial statements prepared in accordance with U.S.
generally accepted accounting principles, which include all adjustments,
consisting solely of normal recurring accruals, which Elan considers necessary
for a fair presentation of the financial condition and results of operations
for such periods. Results for the nine months ended December 31, 1995 are not
necessarily indicative of the results that may be expected for the full fiscal
year.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
-------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1995(1)
---------------- ---------------- ---------------- ---------------- ---------------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA:
Revenues:
Manufacturing and
distribution..... IR(Pounds)28,179 IR(Pounds)40,082 IR(Pounds)57,288 IR(Pounds)58,865 IR(Pounds)57,070 $92,454
Royalties and
fees............. 10,057 13,993 18,354 33,445 40,698 65,931
Research
revenues......... 3,755 8,249 14,129 14,713 21,131 34,232
---------------- ---------------- ---------------- ---------------- ---------------- --------
Total revenues.. 41,991 62,324 89,771 107,023 118,899 192,617
---------------- ---------------- ---------------- ---------------- ---------------- --------
Operating income
(loss)............ 7,182 10,501 19,764 (56,048)(2) 39,096 63,336
Income (loss) be-
fore taxation..... 6,541 13,531 22,522 (49,524)(2) 42,115 68,227
Net income (loss).. 6,587 13,150 21,381 (50,321)(2) 41,682 67,525
================ ================ ================ ================ ================ ========
Net income (loss)
per ordinary and
equivalent share.. IR(Pounds)0.27 IR(Pounds)0.43 IR(Pounds)0.67 IR(Pounds)(1.44)(2) IR(Pounds)1.17 $1.90
Weighted average
ordinary and
equivalent shares
outstanding....... 24,026 30,475 32,144 34,956 35,539 35,539
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
-----------------------------------------
1994 1995 1995(1)
---------------- ---------------- -------
(UNAUDITED)
<S> <C> <C> <C>
INCOME STATEMENT
DATA:
Revenues:
Manufacturing and
distribution..... IR(Pounds)43,027 IR(Pounds)39,907 $63,851
Royalties and
fees............. 28,050 38,513 61,621
Research
revenues......... 18,073 16,149 25,838
---------------- ---------------- -------
Total revenues.. 89,150 94,569 151,310
---------------- ---------------- -------
Operating income
(loss)............ 29,406 34,137 54,619
Income (loss) be-
fore taxation..... 31,281 38,711 61,936
Net income (loss).. 30,830 38,417 61,466
================ ================ =======
Net income (loss)
per ordinary and
equivalent share.. IR(Pounds)0.87 IR(Pounds)1.06 $1.69
Weighted average
ordinary and
equivalent shares
outstanding....... 35,511 36,412 36,412
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31,
------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1995(1)
---------------- ---------------- ----------------- ----------------- ----------------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
DATA:
Working capital. IR(Pounds)17,061 IR(Pounds)56,227 IR(Pounds)166,391 IR(Pounds)165,479 IR(Pounds)152,593 $206,938
Total assets.... 81,087 121,117 256,585 274,585 302,391 489,873
Long-term
obligations.... 11,752 172 95,707 104,593 98,252 159,168
Total
stockholders'
equity......... 51,371 106,450 137,879 149,442 184,430 298,777
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------
1994 1995 1995(1)
----------------- ----------------- --------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET
DATA:
Working capital. IR(Pounds)173,120 IR(Pounds)237,852 $380,563
Total assets.... 297,700 404,694 647,511
Long-term
obligations.... 101,573 103,968 166,349
Total
stockholders'
equity......... 176,225 282,031 451,250
</TABLE>
- -------
(1) Translated for convenience at the Noon Buying Rate on December 31, 1995 of
$1.60 = IR(Pounds)1.
(2) After a one-time charge of IR(Pounds)59,329,000 arising from the purchase
of in-process research in connection with the acquisition of Drug Research
Corporation, plc and a cash contribution of IR(Pounds)25,802,000 to
Advanced Therapeutic Systems, Limited.
8
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA OF ATHENA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following summary historical consolidated financial data with respect to
Athena's consolidated statements of operations for each of the four years in
the period ended December 31, 1995 and the consolidated balance sheets as of
December 31, 1993, 1994 and 1995 are derived from audited consolidated
financial statements which are included in Athena's annual reports on Form 10-K
and 10-K/A and current reports on Form 8-K and 8-K/A. The information for the
three months ended March 31, 1995 and 1996 has been derived from unaudited
financial statements prepared in accordance with U.S. generally accepted
accounting principles, which include all adjustments, consisting solely of
normal recurring adjustments, which Athena considers necessary for a fair
presentation of the financial condition and results of operations for such
periods. Results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the full fiscal year. The
consolidated balance sheet data as of December 31, 1991 and 1992 and March 31,
1996 and the consolidated statements of operations data for the year ended
December 31, 1991 have been derived from unaudited consolidated financial
statements.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Product sales........... $ -- $ 416 $ 6,289 $ 24,611 $ 34,573 $7,782 $10,680
Service revenue......... 2,399 3,983 6,507 7,621 9,032 1,856 2,434
Contract revenue........ 4,839 6,635 8,259 7,687 9,814 2,201 1,663
Other revenue........... -- -- 4,083 -- -- -- --
------- -------- -------- -------- -------- -------- -------
Total revenue....... 7,238 11,034 25,138 39,919 53,419 11,839 14,777
Operating costs and ex-
penses:
Cost of product sales. -- 357 4,189 12,243 15,096 3,558 4,187
Cost of service
revenue.............. 805 1,119 1,721 2,258 3,600 746 965
License amortization.. -- -- 1,719 2,292 2,292 573 573
Research and
development.......... 9,974 17,491 22,280 29,010 39,621 12,624 7,032
Marketing, general and
administrative....... 4,771 12,957 16,056 18,755 22,198 5,971 6,326
------- -------- -------- -------- -------- -------- -------
Total operating
costs and expenses. 15,550 31,924 45,965 64,558 82,807 23,470 19,083
------- -------- -------- -------- -------- -------- -------
Loss from operations.... (8,312) (20,890) (20,827) (24,639) (29,388) (11,631) (4,306)
Interest income (ex-
pense), net............ 1,112 3,590 680 576 (362) 200 (104)
------- -------- -------- -------- -------- -------- -------
Net loss................ $(7,200) $(17,300) $(20,147) $(24,063) $(29,750) $(11,431) $(4,410)
======= ======== ======== ======== ======== ======== =======
Net loss per share...... $ (0.60) $ (1.11) $ (1.13) $ (1.12) $ (1.21) $ (0.50) $ (0.16)
======= ======== ======== ======== ======== ======== =======
Shares used in computa-
tion of net loss per
share.................. 11,993 15,607 17,786 21,535 24,569 22,982 27,613
======= ======== ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------- ---------
1991 1992 1993 1994 1995 1996
------- ------- -------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash, cash equivalents and
short-term investments..... $71,412 $53,933 $ 61,082 $35,066 $46,289 $42,101
Working capital............. 69,767 51,093 50,074 19,609 43,735 39,741
Product license and other
intangibles, net........... 60 81 32,848 30,678 28,774 28,200
Total assets................ 74,521 59,423 102,963 77,725 88,174 84,491
Long-term obligations....... 203 120 8,443 335 19,148 18,817
Total stockholders' equity.. 71,749 54,801 78,815 56,404 58,056 54,050
</TABLE>
Information for 1991-1994 has been restated to reflect Athena's acquisition
by merger of Genica Pharmaceuticals Corporation ("Genica") in February 1995,
which merger has been accounted for as a pooling of interests. To date, Athena
has not paid cash dividends and it currently does not expect to pay any cash
dividends in the future.
9
<PAGE>
SUMMARY OF UNAUDITED
PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary unaudited pro forma combined financial data of Elan and Athena as
of December 31, 1995 has been derived from the combined pro forma financial
information included on pages 43-48 of this Prospectus-Proxy Statement.
The pro forma combined financial information has been prepared in accordance
with U.S. generally accepted accounting principles using the purchase method of
accounting.
The summary unaudited pro forma combined financial data is provided for
illustrative purposes only.
BALANCE SHEET
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
----------------------------------------------------------------------------------------
HISTORICAL COMBINED
----------------------------------- --------------------------------
ELAN ATHENA(I) ADJUSTMENT PRO FORMA PRO FORMA (I)
----------------- ---------------- ----------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equiva-
lents................ IR(Pounds)121,135 IR(Pounds)25,180 IR(Pounds)(10,000) IR(Pounds)136,315 $218,104
Marketable investment
securities........... 86,861 3,751 -- 90,612 144,979
Accounts receivable
and prepayments...... 30,328 4,044 -- 34,372 54,996
Inventories........... 15,939 1,216 -- 17,155 27,447
----------------- ---------------- ----------------- ----------------- --------
Total current as- 254,263 34,191 (10,000) 278,454 445,526
sets............... ----------------- ---------------- ----------------- ----------------- --------
Fixed assets:
Property, plant and
equipment (net)...... 57,219 2,934 -- 60,153 96,245
Other assets:
Investments........... 43,613 -- (7,500) 36,113 57,781
Intangible assets
(net)................ 49,599 17,984 47,875 115,458 184,733
----------------- ---------------- ----------------- ----------------- --------
150,431 20,918 40,375 211,724 338,759
----------------- ---------------- ----------------- ----------------- --------
Total assets............ IR(Pounds)404,694 IR(Pounds)55,109 IR(Pounds)30,375 IR(Pounds)490,178 $784,285
================= ================ ================= ================= ========
Liabilities and share-
holders' equity
Current liabilities:
Accounts payable and
accrued liabilities.. IR(Pounds)16,411 IR(Pounds)5,696 IR(Pounds)-- IR(Pounds)22,107 $35,372
Current portion of -- 1,160 -- 1,160 1,856
debt................. ----------------- ---------------- ----------------- ----------------- --------
Total current lia- 16,411 6,856 -- 23,267 37,228
bilities........... ----------------- ---------------- ----------------- ----------------- --------
Government grants....... 1,896 -- -- 1,896 3,034
Long-term debt.......... 103,968 11,968 (7,500) 108,436 173,497
Minority interests...... 388 -- -- 388 621
----------------- ---------------- ----------------- ----------------- --------
106,252 11,968 (7,500) 110,720 177,152
----------------- ---------------- ----------------- ----------------- --------
Share capital........... 1,503 172 323 1,826 2,922
(172)
Additional paid-in capi-
tal.................... 214,726 107,618 364,828 579,554 927,286
(107,618)
Equity adjustments from
foreign currency
translation............ (7,486) -- -- (7,486) (11,978)
Retained earnings (accu-
mulated deficit)....... 73,288 (71,505) (290,991) (217,703) (348,325)
71,505
----------------- ---------------- ----------------- ----------------- --------
Shareholders' equity.... 282,031 36,285 37,875 356,191 569,905
----------------- ---------------- ----------------- ----------------- --------
Total liabilities and IR(Pounds)404,694 IR(Pounds)55,109 IR(Pounds)30,375 IR(Pounds)490,178 $784,285
shareholders' equity... ================= ================ ================= ================= ========
</TABLE>
- --------
(i) Translated for convenience at the Noon Buying Rate on December 31, 1995 of
$1.60 = IR(Pounds)1.00.
10
<PAGE>
INCOME STATEMENT
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------------------
HISTORICAL COMBINED
----------------------------------- ------------------------------------
ELAN ATHENA(I) ADJUSTMENT PRO FORMA(II) PRO FORMA(II)(III)
---------------- ----------------- ---------------- ---------------- ------------------
Revenues:
<S> <C> <C> <C> <C> <C>
Product sales and
service revenues..... IR(Pounds)53,950 IR(Pounds)27,187 IR(Pounds)-- IR(Pounds)81,137 $129,819
Research revenue...... 19,208 6,119 -- 25,327 40,523
Royalties and fees.... 51,161 -- (2,031) 49,130 78,608
---------------- ----------------- ---------------- ---------------- --------
Total revenues...... 124,319 33,306 (2,031) 155,594 248,950
---------------- ----------------- ---------------- ---------------- --------
Cost and expenses:
Cost of goods and
services sold........ 41,481 13,086 3,436 58,003 92,804
Selling, general and
administrative....... 20,815 13,840 -- 34,655 55,448
Research and develop-
ment................. 18,193 24,703 (2,031) 40,865 65,383
---------------- ----------------- ---------------- ---------------- --------
Total operating ex-
penses............. 80,489 51,629 1,405 133,523 213,635
---------------- ----------------- ---------------- ---------------- --------
Operating income........ 43,830 (18,323) (3,436) 22,071 35,315
Interest and other in-
come................. 12,144 1,010 (563) 12,591 20,145
Interest expense...... (5,733) (1,236) 563 (6,406) (10,249)
Share of losses of as-
sociates............. (754) -- -- (754) (1,206)
Minority interest..... 60 -- -- 60 96
---------------- ----------------- ---------------- ---------------- --------
Income (loss) before
tax.................... 49,547 (18,549) (3,436) 27,562 44,101
Taxation................ (277) -- -- (277) (444)
---------------- ----------------- ---------------- ---------------- --------
Net income (loss)....... IR(Pounds)49,270 IR(Pounds)(18,549) IR(Pounds)(3,436) IR(Pounds)27,285 $43,657
================ ================= ================ ================ ========
Earnings (loss) per
ordinary, common and
equivalent share....... IR(Pounds)1.36 IR(Pounds)(0.75) (Pounds)0.60 $0.97
================ ================= ================ ========
Weighted average number
of ordinary, common and
equivalent shares
outstanding............ 36,223 24,569 8,986 45,209 45,209
================ ================= ================ ================ ========
</TABLE>
- --------
(i) Translated into IR(Pounds) at the average rate during calendar 1995, at the
rate of IR(Pounds)1.00 = $1.6039.
(ii) As a result of the acquisition, Elan will incur a one-time charge against
earnings representing the acquisition of in-process research and development
estimated at IR(Pounds)290,991,000. This charge is excluded from the pro
forma Combined Income Statement because it is a non-recurring item.
(iii) Translated for convenience at the Noon Buying Rate on December 31, 1995
of $1.60 = IR(Pounds)1.00.
11
<PAGE>
The following table presents Elan's and Athena's historical per share data
and unaudited pro forma per share data to reflect consummation of the Merger
based upon the historical financial results of Elan and Athena and the
conversion of each Athena Share into .2956 of an Elan ADS. The pro forma
information is not necessarily indicative of actual or future operating results
or of the financial position that would have occurred or will occur upon
consummation of the Merger. The information presented below should be read in
conjunction with "Unaudited Pro Forma Combined Financial Information" included
elsewhere in this Prospectus-Proxy Statement and the separate historical
consolidated financial statements of Elan and Athena which are incorporated
herein by reference. See "Unaudited Pro Forma Combined Financial Information."
COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
HISTORICAL
---------------------
ATHENA ATHENA
YEAR ENDED PRO FORMA EQUIVALENT EQUIVALENT
DECEMBER 31, 1995 ELAN ATHENA COMBINED PRO FORMA(I) PRO FORMA(I)(II)
- ----------------- -------------- ------ -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Net income (loss) per
ordinary, common and
equivalent share....... IR(Pounds)1.36 ($1.21) IR(Pounds)0.60 IR(Pounds)0.18 $0.29
Dividends............... IR(Pounds)0.00 $0.00 IR(Pounds)0.00 IR(Pounds)0.00 $0.00
Book value per ordinary,
common and equivalent
share.................. IR(Pounds)7.52 $2.11 IR(Pounds)7.81 IR(Pounds)2.31 $3.69
</TABLE>
- --------
(i) The equivalent pro forma per share amounts were calculated by multiplying
the pro forma income per share, pro forma dividends per share and pro forma
book value per share by the Exchange Ratio.
(ii) Translated for convenience at the Noon Buying Rate on December 31, 1995 of
$1.60=IR(Pounds)1.00.
12
<PAGE>
COMPARATIVE MARKET PRICE INFORMATION
Elan ADSs are traded on the NYSE, the principal trading market for Elan's
securities, under the symbol "ELN." Prior to January 3, 1995, the Elan ADSs
were listed and traded on the American Stock Exchange (the "ASE") under the
same symbol. Athena Shares are listed and traded on the Nasdaq National Market
under the symbol "ATHN." The following table sets forth the high and low per
share sale prices for the Elan ADSs and Athena Shares as reported on the
original ASE or NYSE trading tapes or the Nasdaq National Market, as the case
may be, for the periods indicated.
<TABLE>
<CAPTION>
ELAN ADSS ATHENA SHARES
--------------- ---------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
CALENDAR 1996
2nd Quarter (through May 10, 1996)......... $67 3/4 $61 1/2 $19 5/8 $17 1/8
1st Quarter................................ 64 5/8 48 3/8 18 3/4 10 1/2
CALENDAR 1995
4th Quarter................................ 51 38 1/4 12 5/8 8 1/2
3rd Quarter................................ 43 5/8 38 1/2 13 1/2 8 1/4
2nd Quarter................................ 41 3/8 32 7/8 9 1/8 6 1/2
1st Quarter................................ 39 33 1/4 9 3/4 5 3/8
CALENDAR 1994
4th Quarter................................ 40 1/8 32 1/2 7 5/8 5 1/4
3rd Quarter................................ 39 1/2 31 1/8 7 5/8 5 7/8
2nd Quarter................................ 38 30 1/8 8 3/4 6 1/8
1st Quarter................................ 47 7/8 32 1/2 11 1/4 6 3/4
CALENDAR 1993
4th Quarter................................ 44 1/8 30 3/8 13 7 1/2
3rd Quarter................................ 34 1/2 27 7/8 9 6 3/4
2nd Quarter................................ 36 29 5/8 9 5/8 6 3/4
1st Quarter................................ 37 7/8 25 5/8 9 3/4 6 1/2
</TABLE>
Elan's Ordinary Shares are also traded in Dublin on the Official List of the
Irish Stock Exchange Limited and in London on the Official List of the London
Stock Exchange Limited. The volume of trading in Elan's Ordinary Shares on such
markets is, however, limited.
On March 15, 1996, the last full day of trading before the issuance of a
press release by Elan and Athena announcing the proposed Merger, the reported
closing price per Elan ADS was $61.75 and the reported closing price per Athena
Share was $15.125. Based on the closing price of Elan ADSs on March 15, 1996,
the market value of .2956 Elan ADSs was $18.253. On May 10, 1996, the reported
closing prices of Elan ADSs and Athena Shares were $64.50 and $18.50,
respectively.
13
<PAGE>
RECENT DEVELOPMENTS
On May 2, 1996, Elan announced that its net income for the fiscal year ended
March 31, 1996 increased to IR(Pounds)56.4 million ($88.7 million) or
IR(Pounds)1.51 ($2.38) per share from IR(Pounds)41.7 million or IR(Pounds)1.17
per share for the fiscal year ended March 31, 1995. Total revenues for fiscal
1996 increased to IR(Pounds)141.7 million ($222.7 million) from IR(Pounds)118.9
million for fiscal 1995.
Manufacturing and distribution revenues, which include sales from contract
manufacturing activities for Elan's client companies and sales of Elan-marketed
products, increased to IR(Pounds)25.7 million ($40.3 million) for the fourth
quarter of fiscal 1996, compared to IR(Pounds)14.0 million for the fourth
quarter of fiscal 1995, due primarily to initial shipments of Naprelan (R) CR,
Herbesser (R) HP (a high potency once-daily formulation of diltiazem) and
Theodur (R) Sprinkle to the Wyeth-Ayerst division of American Home Products
Corporation ("AHP"), Tanabe Seiyaku Co. and to Mitsubishi Kasei Corporation,
respectively. For the fourth quarter of fiscal 1996, manufacturing and
distribution revenues (including royalties) comprised 70% of total revenues
compared with 65% in the fourth quarter of fiscal 1995. Royalties and fees for
the fourth quarter of fiscal 1996 increased to IR(Pounds)14.8 million ($23.3
million) compared to IR(Pounds)12.6 million in the fourth quarter of fiscal
1995. Royalty income increased by 37% over the fourth quarter of fiscal 1995,
primarily reflecting increased royalties from the sales of Cardizem (R) CD and
other marketed products in Europe and Asia. Research and development revenues,
reflecting reimbursement by client companies, increased to IR(Pounds)6.6
million ($10.4 million) for the fourth quarter of fiscal 1996 compared to
IR(Pounds)3.1 million in the fourth quarter of fiscal 1995. Research revenue
received from Advanced Therapeutic Systems, Limited ("ATS") was IR(Pounds)4.7
million ($7.4 million) for the fourth quarter of fiscal 1996. ATS is funding
the development of seven new drug delivery technologies and in excess of 15
products in varying stages of clinical development from pre-clinical through
Phase III clinical trials. Research and development expenditures, not otherwise
funded by Elan's clients, increased to IR(Pounds)7.1 million ($11.1 million) in
the fourth quarter of fiscal 1996 compared to IR(Pounds)5.0 million in the
fourth quarter of fiscal 1995. Cost of goods and services (primarily research)
sold increased to IR(Pounds)20.0 million ($31.4 million) in the fourth quarter
of fiscal 1996 compared to IR(Pounds)9.8 million in the fourth quarter of
fiscal 1995 reflecting (1) the cost associated with new product launches in the
United States and in Japan and (2) clinical trial costs on funded research
activities for which milestone payments pursuant to license agreements have yet
to be met. Operating income increased to IR(Pounds)14.7 million ($23.1 million)
in the fourth quarter of fiscal 1996 compared to IR(Pounds)9.7 million in the
fourth quarter of fiscal 1995. Net income before tax for the fourth quarter of
fiscal 1996 increased to IR(Pounds)18.1 million ($28.4 million) compared to
IR(Pounds)10.8 million in the fourth quarter of 1995, reflecting primarily
higher interest and similar income offset in part by a higher share of losses
of associate companies.
14
<PAGE>
RISK FACTORS
In addition to the other information regarding Elan, Athena and the Merger
contained in this Prospectus-Proxy Statement, Athena stockholders should
consider the following factors before voting FOR or AGAINST the Merger:
RISK FACTORS RELATING TO ELAN
No Assurance of Continued Successful Licensing and Marketing. Elan's
revenues are derived primarily from sales of its products, which are marketed
through agreements with third parties, by way of license agreements or
otherwise. There can be no assurance that such third party arrangements can
continue to be successfully negotiated or that any such arrangements will be
on commercially reasonable terms. Even if acceptable and timely marketing
arrangements are available, there can be no assurance that products developed
by Elan will be accepted in the marketplace or that, if initially accepted,
sales of such products will not thereafter decline. Additionally, since Elan's
clients or marketing partners in many cases make material marketing and other
commercialization decisions, a significant number of the variables that may
affect Elan's revenues and net income are not exclusively within Elan's
control.
Dependence on Significant Clients and Key Products. Elan's revenues are
dependent upon its relationships with the clients to which it licenses its
products. In fiscal 1995, ATS accounted for approximately 21% of Elan's total
revenues. ATS has limited resources and significant restrictions on its
ability to raise additional funds without Elan's consent. Elan also has an
option, which is currently exercisable, to purchase all of the outstanding
common shares of ATS at predetermined prices through April 30, 1998 (the
"Purchase Option"). In addition, agreements with AHP and Hoechst Marion
Roussel, Inc. ("HMR") accounted for approximately 20% and 17%, respectively,
of Elan's total revenues in fiscal 1995. The sudden loss of, or significant
reduction in, demand for Elan's products from one or more of such clients
could adversely affect Elan. See "Business of Elan--Strategic Relationships."
Revenues from the sale and manufacture of Cardizem(R) SR, Cardizem CD and
Verelan(R) for the United States and Canadian markets accounted for an
aggregate of 35% of Elan's total revenues in fiscal 1995. Continued growth in
Elan's revenues will depend on continued market demand for such products, as
well as the successful introduction and marketing of new products. There can
be no assurance that Elan will continue to be successful in developing new
products or that Elan's products will be accepted in the marketplace.
Government Regulation. The design, development, testing, manufacturing and
marketing of pharmaceutical compounds, medical nutrition and diagnostic
products and medical devices are subject to regulation by governmental
authorities, including the United States Food and Drug Administration (the
"FDA"), and comparable regulatory authorities in other countries. The approval
process is generally lengthy, expensive and subject to unanticipated delays.
Currently, Elan is actively pursuing marketing approval for a number of its
products from regulatory authorities, including the FDA. Continued growth in
Elan's revenues and profits will depend, in part, on the successful
introduction and marketing of some or all of such products. There can be no
assurance as to when or whether such approvals from regulatory authorities
will be received.
All facilities and manufacturing techniques used for the manufacturing of
products for clinical use or for sale in the United States must be operated in
conformity with current Good Manufacturing Practices ("GMP") regulations, the
FDA regulations governing the production of pharmaceutical products. Elan's
facilities are subject to scheduled periodic regulatory inspections to ensure
compliance with GMP regulations. On July 13, 1995 and September 26, 1995, Elan
received "warning letters" from the FDA which referenced previous inspections
of Elan's Athlone, Ireland manufacturing facility (the "Athlone Letter") and
Gainesville, Georgia manufacturing facility (the "Gainesville Letter" and,
together with the Athlone Letter, the "Warning Letters"). The Warning Letters
identified certain conditions which the FDA considered to be deviations from
GMP regulations at such facilities. As a result of discussions with the FDA
following such inspections, Elan implemented a number of corrective actions
and is intensifying its GMP compliance procedures in order to address the
issues raised by the FDA. The Warning Letters have not had, and Elan does not
believe that the Warning Letters will have, a material adverse effect on Elan
and its operations. Elan believes that its facilities are in substantial
compliance with GMP regulations. However, a determination by the FDA that Elan
is not in
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substantial compliance with such regulations could have a material adverse
effect on Elan. See "Business of Elan--Governmental Regulation."
Competition. In recent years, a large number of pharmaceutical companies
have become increasingly interested in the development and commercialization
of products incorporating advanced or novel drug delivery systems. Certain
pharmaceutical products developed by Elan may face significant competition
from brand name and generic products during the next several years. Two of
Elan's products, Verelan and Cardizem CD, which accounted for an aggregate of
29% of Elan's total revenues in fiscal 1995, use delivery systems which are
patent protected until 2007 and 2011, respectively. In addition, HMR also
holds patents over Cardizem CD which expire in 2011. Other forms of sustained-
release diltiazem and verapamil are reported to be in various stages of
development by other companies. Elan cannot predict the impact of future
competition on the sales of its products. See "Business of Elan--Litigation."
Uncertainty of Third Party Reimbursement; Pricing Pressure. Elan's ability
to earn sufficient returns on its products may depend, in part, on the
availability of reimbursement from third party payors, such as government
health administration authorities, private health insurers and other
organizations. Third party payors are increasingly challenging the price and
cost-effectiveness of medical products and services. There can be no assurance
that adequate third party reimbursement will be available to enable Elan to
achieve or maintain price levels sufficient to realize an appropriate return
on its investment in product development.
In addition, global efforts to contain health care costs, particularly among
managed care organizations, continue to exert downward pressure on product
pricing. Further, a number of regulatory and legislative proposals aimed at
changing the health care industry in the United States and other countries
have been proposed. There can be no assurance that private sector reform or
governmental health care reform measures, if adopted, will not have a negative
impact upon Elan and its operations.
Proprietary Technology; Unpredictability of Patent Protection. Elan's
success, competitive position and amount of royalty income will depend, in
part, on its ability to obtain patents in various jurisdictions on its current
and future technologies and products, to defend its patents and protect its
trade secrets and to operate without infringing on the proprietary rights of
others. Elan has filed, and expects to continue to file, patent applications
seeking to protect its technologies and products. There can be no assurance,
however, that Elan's existing patent applications will mature into issued
patents, or, if issued, that they will be enforceable. In addition, there can
be no assurance that Elan's patents will not be challenged by third parties
and, if challenged, will be held valid, or that any technologies or products
developed by Elan will not infringe upon patents held by third parties. The
expense involved in litigation regarding patent protection or a challenge
thereto can be significant and cannot be estimated by Elan. Finally, if Elan
relies on unpatented, proprietary technology, there can be no assurance that
others will not independently develop or obtain similar products or
technologies. See "Business of Elan--Patents and Patent Applications" and
"Business of Elan--Competition." Elan is presently engaged in litigation
relating to its once-daily formulation of diltiazem. See "Business of Elan--
Litigation."
Advanced Therapeutic Systems, Limited. If Elan elects to exercise the
Purchase Option to acquire all of ATS's issued and outstanding common shares,
the purchase price will be between approximately $141.2 million and $239.3
million, depending upon the date of exercise. Such purchase price is payable
in cash, in Elan ADSs or Ordinary Shares, or in any combination of the
foregoing, at Elan's sole discretion. If such payment is made in Elan ADSs or
Ordinary Shares, or if Elan ADSs or Ordinary Shares are issued to fund the
acquisition of the ATS shares for cash, there may be a significant dilution in
earnings per share and in net tangible book value per share to Elan's present
stockholders and investors acquiring Elan ADSs upon exchange of the Athena
Shares. In addition, under U.S. generally accepted accounting principles, if
Elan were to exercise its Purchase Option, Elan would be required to record a
one-time charge on its income statement for any in-process research and
development acquired, which one-time charge could be expected to be material.
RISK FACTORS RELATED TO ATHENA
For a discussion of risk factors relating to Athena see "Business--Risk
Factors" in Athena's 1995 Annual Report which is incorporated by reference in
this Prospectus--Proxy Statement.
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INTRODUCTION
This Prospectus-Proxy Statement constitutes the proxy statement of Athena
relating to the solicitation of proxies from Athena's stockholders by the
Board of Directors of Athena for use at the Special Meeting and any
adjournment or postponement thereof. This Prospectus-Proxy Statement also
constitutes the prospectus of Elan filed with the Commission as part of the
Registration Statement under the Securities Act relating to the Elan ADSs (and
the Ordinary Shares represented thereby) to be issued to Athena stockholders
upon the consummation of the Merger.
THE SPECIAL MEETING
GENERAL
This Prospectus-Proxy Statement is being furnished to Athena stockholders in
connection with the solicitation of proxies by the Board of Directors of
Athena for use at the Special Meeting of Stockholders to be held on June 27,
1996, at South San Francisco Conference Center, 255 South Airport Boulevard,
South San Francisco, California 94080, commencing at 10:00 a.m., local time,
and at any adjournment or postponement thereof.
This Prospectus-Proxy Statement, the Letter to Athena stockholders, the
Notice of Special Meeting of Stockholders and the form of proxy for use at the
Special Meeting are first being mailed to Athena stockholders on or about May
17, 1996.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, Athena stockholders will consider and vote on:
(1) The Merger Proposal;
(2) The Plan Proposal; and
(3) Such other business as may properly come before the Special Meeting.
RECORD DATE; VOTING RIGHTS; VOTING AT THE MEETING
The Board of Directors of Athena has fixed May 9, 1996 as the Record Date
for determination of Athena stockholders entitled to notice of and to vote at
the Special Meeting. Accordingly, only holders of record of Athena Shares at
the close of business on May 9, 1996 will be entitled to notice of and to vote
at the Special Meeting. Each holder of record of Athena Shares on the Record
Date is entitled to cast one vote per share, exercisable in person or by a
properly executed proxy, at the Special Meeting. As of the Record Date, there
were 27,772,945 Athena Shares outstanding and entitled to vote which were held
by approximately 714 holders of record.
Pursuant to Athena's Certificate of Incorporation, as amended and restated
(the "Athena Certificate"), Athena's by-laws (the "Athena By-laws") and
applicable law, the affirmative vote of the holders of a majority of the
Athena Shares outstanding and entitled to vote thereon is required to approve
and adopt the Merger Proposal. As of the Record Date, the directors and
certain of their affiliates and executive officers of Athena may be deemed to
be beneficial owners of 2.99% of the outstanding Athena Shares and each such
person has advised Athena that such person intends to vote in favor of the
Merger Proposal. Approval and adoption of the Plan Proposal requires the
affirmative vote of a majority of the Athena Shares present in person or
represented by proxy at the Special Meeting and entitled to vote on the Plan
Proposal.
VOTING OF PROXIES
All Athena stockholders who are entitled to vote and are represented at the
Special Meeting by properly executed proxies received prior to or at such
meeting and not revoked will be voted at such meeting in
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accordance with the instructions indicated in such proxies. If no instructions
are indicated, such proxies will be voted FOR approval and adoption of the
Merger Proposal and FOR approval and adoption of the Plan Proposal.
If any other matters are properly presented at the Special Meeting for
consideration, including, among other things, consideration of a motion to
adjourn such meeting to another time or place (including, without limitation,
for the purpose of soliciting additional proxies), the persons named in the
enclosed form of proxy, and acting thereunder, will have discretion to vote on
such matters in accordance with their best judgment (unless authorization to
use such discretion is withheld). Athena is not aware of any matters expected
to be presented at its meeting other than as described in its Notice of
Special Meeting of Stockholders.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of Athena (including by telegram or facsimile), before the
taking of the vote at the Special Meeting, a written notice of revocation
bearing a later date than the date of the proxy or by giving notice of
revocation in open meeting, (ii) duly executing a later-dated proxy relating
to the same shares and delivering (including by telegram or facsimile) it to
the Secretary of Athena before the taking of the vote at the relevant meeting,
or (iii) attending the Special Meeting and voting in person. In order to vote
in person at the Special Meeting, Athena stockholders must attend the meeting
and cast their votes in accordance with the voting procedures established for
such meeting. Attendance at the Special Meeting will not in and of itself
constitute a revocation of a proxy. Any written notice of revocation or
subsequent proxy must be sent to: Athena Neurosciences, Inc., 800 Gateway
Boulevard, South San Francisco, California 94080 (facsimile (415) 875-3620),
Attention: Secretary. Athena stockholders who require assistance in changing
or revoking a proxy should contact Athena's Proxy Solicitor, Skinner & Co., at
660 Market Street, Suite 204, San Francisco, California 94104 or by telephone
at (415) 981-0970.
Athena Shares held of record by a broker which are present in person or
represented by proxy are counted for purposes of determining a quorum. If,
however, under rules applicable to brokers, a broker does not have
discretionary voting authority to vote on any matter at the Special Meeting in
the absence of instructions from the beneficial owners, then such shares
(although present for quorum purposes) will not be considered entitled to vote
on such matter ("broker non-votes"). Broker non-votes and abstaining votes
will not be counted in favor of the Merger Proposal. Since the Merger Proposal
requires the affirmative vote of a majority of the outstanding Athena Shares,
abstentions and broker non-votes will have the same effect as votes against
such proposal. Broker non-votes will not be considered as shares entitled to
vote on the Plan Proposal and therefore will have no effect on the approval of
the Plan Proposal. Since the Plan Proposal requires the affirmative vote of a
majority of the Athena Shares present in person or represented by proxy at the
Special Meeting and entitled to vote on the proposal, abstentions are treated
as shares present or represented and entitled to vote on that matter and thus
have the same effect as negative votes.
SOLICITATION OF PROXIES
The expenses of the solicitations for the Special Meeting, including the
cost of printing and distributing this Prospectus-Proxy Statement and the
forms of proxy, will be borne by Elan. In addition to solicitation by mail,
proxies may be solicited by directors, officers and employees of Athena in
person or by telephone, telegram or other means of communication. These
persons will receive no additional compensation for solicitation of proxies,
but may be reimbursed for reasonable out-of-pocket expenses in connection with
such solicitation. Athena has retained Skinner & Co. at an estimated cost of
$6,000, plus reimbursement of expenses, to assist in its solicitation of
proxies from brokers, nominees, institutions and individuals. Arrangements
will also be made by Athena with custodians, nominees and fiduciaries for
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such custodians, nominees and fiduciaries, and Athena will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith.
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THE MERGER
BACKGROUND OF THE MERGER
Since January 1990, Elan and Athena have had various discussions regarding
potential collaborations and manufacturing and distribution arrangements with
respect to various products. In December 1994, Athena entered into a non-
exclusive distribution agreement for Elan's Hearty Balance(TM) nutritional
products for patients with Parkinson's disease.
In March 1995, Athena, Elan and Elan's affiliates entered into an option
agreement (the "Option Agreement") that provided for the joint development of
certain neurological products. Athena paid Elan an initial fee of $3.0 million
for the Option Agreement, which amount could be offset against certain future
royalties from the sale of products, if any, utilizing the technology and
product rights provided in the Option Agreement. Also in March 1995, Elan and
Athena entered into a development agreement for a new liquid formulation of
carbidopa/levodopa, Atamet(R) LQ for the treatment of Parkinson's disease. As
a result of the Atamet LQ collaboration, Athena paid to Elan approximately
$325,000 and is obligated, subject to the attainment of future milestones, to
make further payments under this development agreement of up to $875,000. No
other development agreements have been entered into pursuant to the Option
Agreement.
Concurrently with entering into the Option Agreement Elan loaned Athena $12
million under a five year, unsecured, convertible, subordinated promissory
note. The note bears interest at 10% per annum and is convertible at any time
into Athena Shares at an initial conversion price of $10 per share. The
conversion price increases over the term of the loan. Elan also received
warrants to purchase 400,000 Athena Shares, exercisable beginning in June 1996
at a price of $10 per share.
In October 1995, Elan purchased 300,000 Athena Shares issued as part of an
Athena public offering of Athena Shares. Elan continues to hold such Athena
Shares.
Shortly before Athena's regularly scheduled Board of Directors meeting on
February 9, 1996, representatives of Elan and Athena discussed how Elan and
Athena might expand their strategic relationship. At the February meeting,
after being advised of Athena's initial discussions with Elan, the Athena
Board reaffirmed its determination that Athena was not for sale and that any
business combination with a third party must be consistent with and in
furtherance of Athena's long-term strategic objectives. The Athena Board did
however authorize Athena's management to continue discussing various forms of
strategic collaborations or other arrangements that might be mutually
beneficial.
On February 17, 1996, a senior representative of Athena met with senior
representatives of Elan and it was agreed at this meeting that both Elan and
Athena were interested in continuing to explore the possibility of expanding
their strategic relationship, including, among other things, a possible
business combination of the two companies, and that priority should be placed
on the conducting of due diligence by both sides. On February 23, 1996, Elan
and Athena executed a standstill and confidentiality agreement. Throughout the
remainder of February representatives of Elan and thereafter in early March
representatives of Athena conducted a due diligence review of each other's
business and operations.
On March 10, 1996, the executive committee of the Board of Directors of Elan
was informed by representatives of Elan of the status of the discussions with
Athena regarding the possible expansion of the strategic relationship between
Elan and Athena. Following discussions as to various possible forms of
strategic collaboration, the executive committee of Elan authorized the
representatives of Elan to enter into merger negotiations. Prior to the March
10, 1996, executive committee meeting, no discussions regarding a possible
expansion of the strategic relationship between Elan and Athena had been held
at a meeting of the Board of Directors of Elan or any committee thereof,
although certain members of Elan's executive committee had been a part of, or
kept apprised of, earlier discussions.
In mid-March 1996, representatives of Elan, Athena and their respective
financial advisors met to discuss valuation issues. At such time the parties
were unable to agree on the valuation of Athena. Representatives of
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each of Elan and Athena and the respective legal advisors continued to
negotiate the non-financial terms of a draft merger agreement which had been
previously distributed by Elan's legal advisors and continued their due
diligence of each other's businesses.
On March 14, 1996, the Athena Board held a telephonic special meeting to
discuss the status of negotiations. Brian H. Dovey, Chairman of the Athena
Board, and Brook H. Byers and Anthony B. Evnin, Ph.D., both members of the
Athena Board, were appointed members of an executive committee to assist John
Groom, Athena's President and Chief Executive Officer, with future
negotiations. Until the next Athena Board meeting Mr. Groom, in consultation
with members of the executive committee, continued to discuss with senior
management of Elan the detailed terms, provisions and conditions of the draft
Merger Agreement.
On March 14, 1996, the Elan Board at its regular quarterly meeting discussed
the status of the merger negotiations. At such meeting the Board approved the
general terms of the merger and authorized the executive committee to conduct
final negotiations of the key financial provisions.
After the close of business on Friday, March 15, 1996, the terms of the
Exchange Ratio, the protection to be afforded to the Athena stockholders in
the event of a substantial decline in the price of Elan ADSs prior to the
closing, the amount and nature of break-up fees, and other key financial
provisions were negotiated.
By March 16, 1996, Elan, Athena and their respective advisors had finalized
most major business terms of the Merger Agreement, subject to the approval of
each company's board of directors. On March 17, 1996, Athena's Board of
Directors held a special meeting in which the directors discussed and reviewed
the terms of the proposed Merger Agreement. At that meeting, the Athena Board
received detailed reports of the status of continuing negotiations with Elan
and the terms and provisions of the Merger Agreement. In addition, the Athena
Board received presentations from Athena's financial and legal advisors, and
the written opinion of PaineWebber to the effect that, as of such date, the
Exchange Ratio was fair, from a financial point of view, to Athena
stockholders (other than Elan and its affiliates). The Athena Board then
determined that the terms of the Merger Agreement were fair to, and in the
best interests of, Athena and the Athena stockholders, and accordingly the
Athena Board unanimously approved the Merger Agreement and resolved to
recommend that the Athena stockholders vote for the approval and adoption of
the Merger Agreement at a special meeting of Athena stockholders to be held
for that purpose. See "--Athena's Reasons for the Merger; Recommendation of
the Athena Board of Directors." On March 18, 1996, the Merger Agreement was
executed, and the parties issued a joint press release announcing the Merger.
On March 25 and March 26, 1996, two purported class action lawsuits were
filed against Athena and its Board of Directors, alleging, among other things,
that the consideration that the Athena stockholders will receive pursuant to
the Merger is inadequate. See "--Certain Litigation Related to the Merger."
ATHENA'S REASONS FOR THE MERGER;
RECOMMENDATION OF THE ATHENA BOARD OF DIRECTORS
The Athena Board of Directors, in the course of reaching its decision to
approve the Merger Agreement and the transactions contemplated thereby,
considered a number of factors, including among others: (i) the Athena Board's
view that the Merger will result in a combined biopharmaceutical and drug
development entity with substantially greater resources and a more diversified
product base, development pipeline, manufacturing capabilities, and
international presence, (ii) the Athena Board's view that Elan will be able to
provide Athena with the capital and resources necessary in order for Athena to
continue its research into Alzheimer's disease and other neurological
disorders, and to have more flexibility in addressing scientific and business
aspects of these programs, (iii) the terms and conditions of the Merger,
including the premium to be paid by Elan and the U.S. federal income tax-free
nature of the transaction to Athena stockholders, (iv) the presentation and
written opinion of PaineWebber to the effect that the Exchange Ratio was fair,
from a financial point of view, to the Athena stockholders (other than Elan
and its affiliates), (v) information regarding historical market prices and
other information with respect to the Athena Shares and the Elan ADSs, and the
financial performance and condition, assets, liabilities, business operations,
and prospects of each of Athena and Elan and their projected
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future values and prospects as separate entities and on a combined basis, (vi)
the Athena Board's view that Elan's strengths in the testing, registration,
manufacture and technology for delivery of pharmaceutical products will
complement Athena's own strengths in basic research, sales and marketing and
distribution, allowing Athena to more efficiently deliver products to market,
(vii) the Athena Board's view that the Merger will allow continued expansion
by the combined companies into other territories and other areas of neurology,
with the acquisition of additional products developed by third parties on
favorable terms becoming a viable method of enhancing near-term revenues;
(viii) the compatibility of management of the two companies, and the proposed
integration of certain officers and directors of Athena into Elan management;
(ix) the status of Athena's current research collaborations and other
commercial relationships and (x) the Athena Board's assessment of Athena's
strategic alternatives to the Merger, including remaining an independent
company, licensing or otherwise transferring its rights to future discoveries,
and merging or consolidating with a party other than Elan.
The foregoing discussion of the factors considered by the Athena Board is
not intended to be exhaustive. In view of the wide variety of factors
considered in connection with its evaluation of the Merger, the Athena Board
did not find it practicable to, and did not, quantify or otherwise attempt to
assign relative weights to the specific factors considered in reaching its
determinations.
THE BOARD OF DIRECTORS OF ATHENA HAS DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE
BEST INTERESTS OF, ATHENA AND THE ATHENA STOCKHOLDERS. ACCORDINGLY, THE ATHENA
BOARD OF DIRECTORS RECOMMENDS THAT ATHENA STOCKHOLDERS VOTE FOR THE APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT.
ELAN'S REASONS FOR THE MERGER
Elan believes that the businesses of both Elan and Athena will be enhanced
by their combination by being better positioned to capitalize on the market
opportunities created by the continued consolidation of the pharmaceutical
industry. Following the Merger, Elan will be an integrated drug delivery and
bio-pharmaceutical company with expanded capabilities in the discovery,
development and marketing of treatments for diseases or conditions of the
central nervous system. The Merger with Athena adds research, marketing, sales
and distribution capabilities to Elan's expertise in drug delivery and
development. Elan will be able to take advantage of Athena's access to
neurologists and market presence in the U.S. to introduce its own products.
The Merger will enable Elan to capitalize on Athena's research in the central
nervous system area which is expected to strengthen Elan's existing multiple
sclerosis program. After the Merger, Elan will have access to Athena's leading
research in Alzheimer's disease and other neurological research with marketed
products for the treatment of epilepsy and Parkinson's disease. The Merger can
significantly enhance the value of the combined companies through product
acquisitions, research partnerships and expanded distribution and marketing
capabilities.
OPINION OF ATHENA'S FINANCIAL ADVISOR
THE FULL TEXT OF THE OPINION OF PAINEWEBBER, DATED MARCH 17, 1996, WHICH
SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX B TO THIS
PROSPECTUS-PROXY STATEMENT. ATHENA STOCKHOLDERS ARE URGED TO READ SUCH OPINION
CAREFULLY IN ITS ENTIRETY. THE SUMMARY OF THE PAINEWEBBER OPINION SET FORTH IN
THIS PROSPECTUS-PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FULL TEXT OF SUCH OPINION.
Athena retained PaineWebber as its exclusive financial advisor in connection
with the Merger. In connection with such engagement, Athena requested
PaineWebber to render an opinion as to whether or not the Exchange Ratio
offered by Elan is fair, from a financial point of view, to the Athena
stockholders (other than Elan and its affiliates).
In connection with the Athena Board of Directors' consideration of the
Merger Agreement, PaineWebber delivered its written opinion (the "PaineWebber
Opinion"), to the effect that, as of March 17, 1996, and based on its review
and assumptions and subject to the limitations summarized below, the Exchange
Ratio is fair, from
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a financial point of view, to the Athena stockholders (other than Elan and its
affiliates). The PaineWebber Opinion was prepared at the request and for the
information of the Board of Directors of Athena and does not constitute a
recommendation to any Athena Stockholder as to how any such stockholder should
vote with respect to the Merger.
In arriving at its opinion, PaineWebber, among other things: (i) reviewed,
among other public information, Athena's Annual Reports, Forms 10-K and
related financial information for the four fiscal years ended December 31,
1994 and Athena's draft Form 10-K (containing preliminary unaudited financial
information) for the fiscal year ended December 31, 1995; (ii) reviewed, among
other public information, Elan's Annual Reports, Forms 20-F and related
financial information for the five fiscal years ended March 31, 1995 and
Elan'sForms 6-K and the related unaudited financial information for the nine
months ended December 31, 1995; (iii) reviewed certain information, including
financial forecasts, relating to the respective businesses, earnings, cash
flows, assets and prospects of Athena and Elan, furnished to PaineWebber by
Athena and Elan, respectively; (iv) conducted discussions with members of
senior management of Athena and Elan concerning their respective businesses
and prospects; (v) reviewed the historical market prices and trading activity
for Athena Shares and Elan ADSs and compared such prices and trading histories
with those of certain other publicly traded companies which PaineWebber deemed
to be relevant; (vi) compared the financial positions and results of
operations of Athena and Elan with those of certain other publicly traded
companies which PaineWebber deemed to be relevant; (vii) compared the
financial terms of the Merger with the financial terms of certain other
business combinations which PaineWebber deemed to be relevant; (viii) reviewed
the potential pro forma effects of the Merger; (ix) reviewed the draft Merger
Agreement in the form presented to the Athena Board of Directors; and (x)
reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as PaineWebber deemed
appropriate.
In preparing the PaineWebber Opinion, PaineWebber relied on the accuracy and
completeness of all information that was publicly available, supplied or
otherwise communicated to PaineWebber by or on behalf of Athena and Elan and
PaineWebber did not independently verify such information. PaineWebber assumed
that the financial forecasts examined by it were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the respective managements of Athena and Elan as to the future performance of
Athena and Elan. PaineWebber also assumed, with the consent of Athena, that
(i) the strategic and operating benefits contemplated by the senior
managements of Athena and Elan will be realized as a result of the Merger and
(ii) all material liabilities (contingent or otherwise, known or unknown) of
Athena and Elan are as set forth in the consolidated financial statements of
Athena and Elan, respectively. PaineWebber did not make an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Athena or Elan, nor was PaineWebber furnished with any such evaluations or
appraisals. The PaineWebber Opinion is based upon economic, monetary and
market conditions existing on the date thereof. Furthermore, PaineWebber
expressed no opinion as to the price or trading range at which the Athena
Shares or Elan ADSs will trade after the date thereof. The PaineWebber Opinion
does not address the relative merits of the Merger and any other transactions
or business strategies discussed by the Athena Board as alternatives to the
Merger, or the decision of the Athena Board to proceed with the Merger. The
Exchange Ratio was determined by Athena and Elan in arm's-length negotiations.
PaineWebber did not, and was not requested to, make any recommendations as to
the form or amount of consideration to be paid pursuant to the Merger
Agreement. Athena did not place any limitations upon PaineWebber with respect
to the procedures followed or factors considered in rendering the PaineWebber
Opinion.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant quantitative methods of financial analyses
and the application of those methods to the particular circumstances and,
therefore, such an opinion is not readily susceptible to partial analysis or
summary description. Accordingly, PaineWebber believes that its analysis must
be considered as a whole and that considering any portion of such analysis and
of the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the
PaineWebber Opinion. In its analyses, PaineWebber made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Athena and Elan.
Any estimates contained in these analyses are not necessarily indicative of
actual values or predictive of future results or values, which may be
significantly
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more or less favorable than as set forth therein. In addition, analyses
relating to the value of businesses do not purport to be appraisals or to
reflect the prices at which businesses may actually be sold.
The following paragraphs summarize the significant analyses performed by
PaineWebber in arriving at the PaineWebber Opinion.
Stock Trading History. PaineWebber reviewed the history of the trading
prices and volume for the Athena Shares and the Elan ADSs, both separately and
in relation to market indices and comparative company indices. The Athena
comparative company indices represented (i) an index of the following eleven
companies: Alkermes, Inc.; Cambridge Neuroscience, Inc.; Cephalon, Inc.;
CoCensys, Inc.; Cortex Pharmaceuticals, Inc.; CytoTherapeutics, Inc.; Dura
Pharmaceuticals, Inc.; Interneuron Pharmaceuticals, Inc.; Neurex Corporation;
Neurogen Corporation; and Regeneron Pharmaceuticals, Inc. (collectively, the
"Athena Comparative Companies") and (ii) an index of 92 biotechnology
companies. The Elan comparative company index represented an index of the
following six specialized pharmaceutical companies: Alza Corporation; Forest
Laboratories, Inc.; IVAX Corporation; R.P. Scherer Corporation; Roberts
Pharmaceutical Corporation; and TEVA Pharmaceutical Industries Limited
(collectively, the "Elan Comparative Companies"). In addition, PaineWebber
reviewed the historical implied exchange ratio between Athena Shares and Elan
ADSs and compared this to the Exchange Ratio. PaineWebber noted that the
historical implied exchange ratio consistently fell below the Exchange Ratio.
Selected Comparative Public Company Analysis. Using publicly available
information, PaineWebber compared selected historical and projected financial,
operating and stock market performance data of Athena and Elan to the
corresponding data of the Athena Comparative Companies and the Elan
Comparative Companies, respectively. Because Athena and the Athena Comparative
Companies are in the development stage and do not have meaningful revenues or
earnings, PaineWebber believed that a quantitative analysis based on a
comparison between Athena and the Athena Comparative Companies would not be
meaningful. Therefore PaineWebber did not derive a range of equity values for
Athena based on the selected comparative public company analysis. However,
certain financial information pertaining to the Athena Comparative Companies
was presented to the Athena Board including market value (stock price
multiplied by shares outstanding) as of March 14, 1996, latest publicly
available twelve months research and development expenditures and latest
publicly available cash and cash equivalents balance.
With respect to Elan and the Elan Comparative Companies, PaineWebber
compared multiples of total enterprise value (market value plus total debt
less cash and cash equivalents) to latest twelve month ("LTM") revenue,
earnings before interest, taxes, depreciation and amortization ("EBITDA") and
earnings before interest and taxes ("EBIT"). PaineWebber also compared
multiples of market value to LTM net income. Elan's LTM ended December 31,
1995 multiples of revenue, EBITDA, EBIT and net income as of March 14, 1996
were 11.5x, 27.0x, 32.6x and 31.1x, respectively. As of March 14, 1996 the
Elan Comparative Companies' LTM median multiples of revenue, EBITDA, EBIT and
net income were 3.2x, 16.8, 21.1x and 29.8x, respectively. PaineWebber
believed Alza Corporation to be the most relevant comparative public company
which as of March 14, 1996 traded at LTM revenue, EBITDA, EBIT and net income
multiples of 8.6x, 20.8x, 23.6x and 38.8x, respectively. PaineWebber applied
the above-derived Alza Corporation multiples to Elan's LTM revenue, EBITDA,
EBIT and net income and compared the results to Elan's public market price of
$61.75 per Elan ADS on March 14, 1996, to confirm its use of such market price
in assessing the value of the Exchange Ratio to Athena stockholders.
Selected Comparative Mergers and Acquisitions Analysis. PaineWebber reviewed
publicly available financial information for selected mergers and acquisitions
involving biotechnology and pharmaceutical companies. PaineWebber analyzed (i)
acquisitions by pharmaceutical companies of biotechnology companies
("Pharma/Bio acquisitions") including (acquiror/target) Eli Lilly and
Co./Hybritech Incorporated; Bristol-Myers Company/Genetic Systems Corporation;
Ethyl Corporation/Nelson Research & Development Company; American Cyanamid
Company/Praxis Biologics, Inc.; Chugai Pharmaceutical Co., Ltd./Gen-Probe
Incorporated; Genzyme Corporation/Biosurface Technology, Inc.; Eli Lilly and
Co./Sphinx Pharmaceuticals Corporation;
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Amgen Inc./Synergen, Inc.; Glaxo plc/Affymax N.V.; Chiron Corporation/Viagene,
Inc.; Marion Merrell Dow Inc./Selectide Corporation; Sandoz Ltd./Genetic
Therapy, Inc.; Johnson & Johnson/GynoPharma, Inc.; and Rhone-Poulenc Rorer
Inc./Applied Immune Sciences, Inc.; and (ii) acquisitions by pharmaceutical
companies of pharmaceutical companies ("Pharma/Pharma acquisitions") including
(acquiror/target) Monsanto Company/G.D. Searle & Co.; Solvay Pharmaceuticals,
Inc./Reid-Rowell, Inc.; Schering-Plough Corporation/Key Pharmaceuticals, Inc.;
Eastman Kodak Company/Sterling Drug Inc.; Institut Merieux International
S.A./Connaught Biosciences Inc.; The Dow Chemical Company/Marion Laboratories,
Inc.; Bristol-Myers Company/Squibb Corporation; Fujisawa Pharmaceutical Co.
Ltd./Lyphomed, Inc.; IVAX Corporation/McGaw, Inc.; Roche Holdings Ltd./Syntex
Corporation; American Home Products Corporation/American Cyanamid Company;
Glaxo plc/Wellcome plc; Hoechst Aktiengesellschaft/Marion Merrell Dow Inc.;
and Pharmacia Aktiebolag/The Upjohn Company. PaineWebber compared purchase
price per share premiums over historical stock prices for the Pharma/Bio and
Pharma/Pharma acquisitions to such premiums represented by the Exchange Ratio.
For the Pharma/Bio acquisitions, PaineWebber calculated median and stripped
mean (excludes highest and lowest data points in the mean calculation)
purchase price per share premiums to (i) the target's closing stock price one
day prior to announcement (58.3% and 62.5%, respectively); (ii) the target's
initial public offering price (13.1% and 34.6%, respectively); and (iii) the
target's all-time high closing stock price ((33.8)% and (48.5)%,
respectively). For the Pharma/Pharma acquisitions, PaineWebber calculated
median and stripped mean purchase price per share premiums to the target's
closing stock price one day prior to announcement (39.9% and 34.7%,
respectively). Based on the premiums paid to initial public offering price and
all-time high closing stock price in the Pharma/Bio acquisitions, PaineWebber
derived equity value ranges for Athena of $13.50 to $16.00 and $9.50 to $12.00
per fully diluted share, respectively. These equity value ranges per fully
diluted share implied exchange ratio ranges of 0.2186x to 0.2591x and 0.1538x
to 0.1943x, respectively. PaineWebber applied the premium paid to the target's
closing stock price one day prior to announcement in the Pharma/Bio
acquisitions to Athena's stock price on March 15, 1996 of $14.88 ("Athena's
latest price") and Athena's 30-day average stock price ended March 15, 1996 of
$13.85 ("Athena's 30-day average price") and derived equity value ranges of
$23.50 to $24.00 and $22.00 to $22.50 per fully diluted share, respectively.
These equity value ranges per fully diluted share implied exchange ratio
ranges of 0.3806x to 0.3887x and 0.3563x to 0.3644x, respectively. PaineWebber
also applied the premium paid to the target's closing stock price one day
prior to announcement in the Pharma/Pharma acquisitions to Athena's latest
price and Athena's 30-day average price and derived equity value ranges of
$20.00 to $21.00 and $18.50 to $19.50 per fully diluted share, respectively.
These equity value ranges per fully diluted share implied exchange ratio
ranges of 0.3239x to 0.3401x and 0.2996x to 0.3158x. PaineWebber noted that
the Exchange Ratio fell within the overall range of implied exchange ratios of
0.1538x to 0.3887x and above the middle of this overall range (0.2713x).
Discounted Cash Flow Analysis. PaineWebber analyzed Athena based on an
unleveraged discounted cash flow analysis of the projected financial
performance of Athena. Such projected financial performance was based upon
five-year forecasts for Athena provided by Athena management. The discounted
cash flow analysis determined the discounted present value of the unleveraged
after-tax cash flows generated over the five-year period and then added a
terminal value based upon a range of revenue multiples from 3.0x to 6.0x and a
range of EBIT multiples from 18.0x to 24.0x. The unleveraged after-tax cash
flows and terminal value were discounted using a range of discount rates from
30.0% to 37.5%. Based on this analysis, PaineWebber derived an equity value
range for Athena of $11.00 to $15.00 per fully diluted share, which implied an
exchange ratio range of 0.1781x to 0.2429x. PaineWebber noted that the
Exchange Ratio fell above the implied range.
In addition, to assess the public market valuation of Elan, PaineWebber
analyzed Elan based on an unleveraged discounted cash flow analysis of the
projected financial performance of Elan. Such projected financial performance
was based upon five-year forecasts for Elan provided by Elan management. The
discounted cash flow analysis determined the discounted present value of the
unleveraged after-tax cash flows generated over the five-year period and then
added a terminal value based upon a range of revenue multiples from 6.0x to
9.0x and a range of EBIT multiples from 24.0x to 30.0x. The unleveraged after-
tax cash flows and terminal value were discounted using a range of discount
rates from 15.0% to 22.5%. Based on this analysis, PaineWebber derived an
equity value range for Elan of $70.00 to $100.00 per fully diluted share.
PaineWebber noted that the
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range exceeded Elan's market price of $61.75 on March 15, 1996. PaineWebber
also analyzed Elan with an unleveraged discounted cash flow analysis using
Elan's projections but adjusted by Athena for Athena's internal estimate of
Elan's future performance. Utilizing the same assumptions as outlined above,
PaineWebber derived an equity value range for Elan of $60.00 to $80.00 per
fully diluted share. PaineWebber noted that the majority of the range exceeded
Elan's market price of $61.75 on March 15, 1996.
Pro Forma Merger Analysis. PaineWebber performed an analysis of the
potential pro forma effect of the Merger on Elan's earnings per share ("EPS")
for the years ending December 31, 1996 through December 31, 2000, which
assumed that the Merger was consummated on June 30, 1996. In performing this
analysis, PaineWebber assumed (i) the Merger will provide 0.2956 of a share of
Elan ADSs in exchange for each Athena Share; (ii) the Merger would be
accounted for under the purchase method of accounting; and (iii) certain cost
savings and incremental revenues would be achieved as a result of the Merger
based on Athena management's estimates. PaineWebber combined the projected
operating results of Athena (provided by Athena management) with the
corresponding projected pro forma operating results of Elan (provided by Elan
management and as adjusted by Athena management) to arrive at the combined
company projected net income. PaineWebber divided these results by the pro
forma shares outstanding to arrive at a combined company EPS. PaineWebber then
compared the combined company EPS to Elan's projected stand-alone EPS
(provided by Elan management and as adjusted by Athena Management) to
determine the pro forma impact on Elan's EPS. This analysis suggested that the
Merger should result in dilution to Elan's EPS in 1996 and 1997 with such
dilution declining in each year and should result in accretion to Elan's EPS
thereafter.
Athena selected PaineWebber to be its financial advisor in connection with
the Merger because PaineWebber is a prominent investment banking and financial
advisory firm with experience in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate purposes.
Pursuant to an engagement letter between Athena and PaineWebber dated March
7, 1996 PaineWebber has earned a fee of $750,000 for the rendering of the
PaineWebber Opinion. In addition, PaineWebber will receive a fee payable upon
completion of the Merger equal to 0.75% of the purchase price (including the
fair market value of securities issued) received by Athena or its stockholders
(approximately $4.3 million based on the closing price of Elan ADSs on May 13,
1996) less the $750,000 earned as provided above. PaineWebber will not be
entitled to any additional fees or compensation in the event the Merger is not
approved or otherwise consummated. Athena also agreed, under separate
agreement, to indemnify PaineWebber, its affiliates and each of its directors,
officers, agents and employees and each person, if any, controlling
PaineWebber or any of its affiliates against certain liabilities, including
liabilities under federal securities laws.
In the past, PaineWebber and its affiliates have provided financial advisory
services and financing services for Athena, including acting as lead manager
in connection with a public offering of Athena Shares in October 1995, and
have received fees for the rendering of these services. PaineWebber may
provide financial advisory services to, and may act as underwriter or
placement agent for, the combined company in the future. In the ordinary
course of PaineWebber's business, PaineWebber may actively trade the
securities of Athena and Elan for its own account and for the accounts of its
customers and, accordingly, may at any time hold long or short positions in
such securities. Among other securities of Athena which PaineWebber may hold
for its own account from time to time, an affiliate of PaineWebber holds
warrants to purchase up to 1,000,000 shares of Athena Shares each with an
exercise price of $8.20 per share, up to 500,000 of which are subject to
future adjustment. In addition, Stelios Papadopoulos Ph.D., a representative
of PaineWebber, is a member of the Board of Directors of Athena.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Athena Board with respect to the
Merger Agreement, Athena stockholders should be aware that certain officers
and directors (or their affiliates) of Athena have interests in the Merger
that are different from and in addition to the interests of Athena
stockholders generally. The Board of
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Directors of Athena was aware of these interests and took these interests into
account in approving the Merger Agreement and the transactions contemplated
thereby.
Athena Options. Pursuant to the Merger Agreement Elan has agreed to cause
each unexpired option (collectively, the "Athena Options") to purchase Athena
Shares that is outstanding under (i) the 1989 Stock Plan of Athena, (ii) the
1991 Incentive Plan, and (iii) the Genica Pharmaceuticals Corporation 1989
Stock Option Plan immediately prior to the Effective Time to be automatically
converted at the Effective Time into an option to purchase Elan ADSs, based
upon the Exchange Ratio (each, an "Elan Exchange Option"). See "The Merger
Agreement--Treatment of Athena Stock Options, Warrants and Convertible Debt."
Pursuant to the terms of the stock option agreements under which the Athena
Options were issued, the unvested portion of each Athena Option will vest upon
consummation of the Merger. As of the Record Date, 1,728,784 Athena Shares
were issuable to executive officers and directors of Athena, including the
approximately 774,000 Athena Shares which will vest upon consummation of the
Merger, upon the exercise of outstanding Athena Options granted to such
executive officers and directors of Athena. Such options, given the Exchange
Ratio of .2956 Elan ADSs per Athena Share, will be converted to become
approximately 511,028 Elan Exchange Options at the Effective Time.
Athena and Elan Management. Following the Effective Time, the Athena Board
will consist of Donal J. Geaney and Thomas G. Lynch. Immediately following the
Effective Time, John Groom and Dennis J. Selkoe, M.D., both currently members
of the Athena Board, will be appointed to Elan's Board. In addition, John
Groom, who will remain President and Chief Executive Officer of Athena, will
be appointed President and Chief Operating Officer of Elan.
Employment Arrangements. In connection with the Merger, certain officers of
Athena who will become directly employed by Elan after the Effective Time are
expected to enter into employment agreements (the "New Employment Agreements")
with Elan. The terms of the New Employment Agreements have not been finalized
as of the date of this Prospectus-Proxy Statement.
Severance Agreements with Officers. Each of the officers of Athena has
entered into, or prior to the Effective Time is expected to enter into, a
severance agreement (a "Severance Agreement") with Athena (other than one
officer who has a pre-existing agreement with a wholly-owned subsidiary of
Athena). Each Severance Agreement provides, subject to certain restrictions,
for the payment of benefits to those persons who are officers of Athena on the
day preceding the Effective Time and who are terminated from the employ of
Athena within one year of the Effective Time because of (i) involuntary
termination without cause (as the term "cause" is defined in the Severance
Agreements), (ii) resignation after demotion in title, material reduction in
authority or responsibility, or material reduction in compensation or
benefits, or (iii) resignation in response to proposed relocation. The
benefits to be paid under each Severance Agreement consist of a lump sum
payment equal to (I) in the case of the Chief Executive Officer, two years'
Pay ("Pay" being defined in the Severance Agreements to include base salary
plus the product of base salary multiplied by the average bonus percentage
paid to that officer over the two years preceding the Effective Time), and
(II) in the case of officers other than the Chief Executive Officer, 12
months' Pay plus one month's Pay for each full year of service with Athena in
excess of one year, but in no event more than 18 months' Pay. In addition, the
Surviving Corporation will continue, for each officer so terminated, medical,
dental and life insurance benefits for not more than 12 months after the
Effective Time. Finally, the Severance Agreements provide for outplacement
services at a cost not to exceed $10,000 per person. In the event that an
officer becomes subject to the excise tax described in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), the Surviving
Corporation will make an additional payment to the officer to hold him or her
harmless, on an after-tax basis, against such excise tax.
Indemnification; Insurance. Elan has agreed to indemnify present and former
directors and officers of Athena and to continue in effect for a period of
three years following the Merger a directors' and officers' liability
insurance policy substantially equivalent to that which Athena currently
maintains for directors and officers. See "The Merger Agreement--
Indemnification; Insurance."
Relationship with Athena's Financial Advisor. Stelios Papadopoulos Ph.D., a
director of Athena, is also a Managing Director and Head of the Health Care
Investment Banking Group at PaineWebber, which acted as financial advisor to
Athena with respect to the Merger. See "--Opinion of Athena's Financial
Advisor."
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RESALES BY AFFILIATES OF ATHENA
None of the Elan ADSs received by the Athena stockholders in connection with
the Merger will be subject to restrictions on transfer under the Securities
Act, except that Elan ADSs (and the related Ordinary Shares) (collectively,
the "Restricted Shares") received by persons who are deemed to be "affiliates"
(as such term is defined in Rule 144 under the Securities Act) of Athena prior
to the Merger may be resold by them only pursuant to an effective registration
under the Securities Act or in transactions permitted by the resale provisions
of Rule 145(d) or, in the case of Ordinary Shares, Regulation S under the
Securities Act (or, in the case of any such persons who become affiliates of
Elan, Rule 144 under the Securities Act) or another applicable exemption from
the registration requirements under the Securities Act.
GOVERNMENTAL REGULATION
Antitrust. Certain acquisition transactions, including the Merger, may not
be consummated until certain information has been furnished to the Justice
Department and the FTC pursuant to the HSR Act, and certain waiting period
requirements thereunder have been satisfied. Elan and Athena filed the
required information and material with the Justice Department and the FTC with
respect to the Merger Agreement on April 4, 1996. On April 22, 1996, early
termination of the applicable waiting period under the HSR Act was received
without the FTC or Justice Department taking any action. No additional filings
or waiting periods are applicable with respect to the Merger pursuant to the
HSR Act and the rules promulgated thereunder.
At any time before or after the Effective Time, the Justice Department or
the FTC or a private person or entity could seek under the antitrust laws,
among other things, to enjoin the Merger or to cause Elan to divest itself, in
whole or in part, of Athena or of other businesses conducted by Elan. There
can be no assurance that a challenge to the Merger will not be made or that,
if such a challenge is made, Elan and Athena will prevail. The obligations of
Elan and Athena to consummate the Merger are subject to the condition that
there be no preliminary or permanent injunction or other order by any court or
governmental or regulatory authority of competent jurisdiction prohibiting
consummation of the Merger. Each party has agreed to use commercially
reasonable efforts to have any such injunction or order lifted.
Certain transactions, including the Merger, may not be consummated until,
pursuant to the Irish Mergers Act, a notification has been made to the
Enterprise Minister, such further information (if any) as he may require has
been furnished, and either the Enterprise Minister has issued a clearance for
the proposed transaction or a prescribed period following notification has
expired without the Enterprise Minister having prohibited the proposed
transaction. The prescribed period consists of the three months following the
date of notification or, where the Enterprise Minister requests further
information, the date of receipt by him of such information. Elan and Athena
have given notification of the Merger to the Enterprise Minister on April 11,
1996 and requested that the Enterprise Minister issue a clearance in respect
of it. On May 8, 1996, the Enterprise Minister requested further information,
which was furnished on May 10, 1996.
ACCOUNTING TREATMENT
Elan will account for the Merger by the acquisition method of accounting
under generally accepted accounting principles in Ireland ("Irish GAAP"). The
transaction will be accounted for by the purchase method of accounting under
generally accepted accounting principles applicable in the United States
("U.S. GAAP"). Both Irish and U.S. GAAP require the consideration to be
allocated to the net assets acquired at their fair value at the date of
acquisition, with the difference between the consideration and the fair value
of the net assets acquired treated as goodwill. In the allocation of
consideration, Irish GAAP requires an allocation of purchase consideration to
intangible assets which are separable from the business. U.S. GAAP requires an
allocation of consideration to identifiable intangible assets whether
separable or not. Under Irish GAAP, Elan proposes to write off the goodwill
arising on the consolidation against stockholders' equity at the date of
acquisition. Under U.S. GAAP, the goodwill, if any, arising on the
consolidation will be amortized over its expected useful life, estimated at 20
years, and charged against income. An allocation under U.S. GAAP to in-process
research and development will be written off against income at the time of the
Merger.
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CERTAIN LITIGATION RELATED TO THE MERGER
On March 25 and March 26, 1996, two alleged stockholders of Athena filed
suit in the Superior Court in San Francisco, California against Athena and
individual members of Athena's Board of Directors. The plaintiffs, who purport
to represent a class of all Athena stockholders, allege that the consideration
which Athena stockholders would receive pursuant to the Merger is inadequate
and that the Athena directors have therefore breached their fiduciary duties
owed to the Athena stockholders. The complaints allege the Merger
consideration is below the fair or inherent value of Athena and the defendants
have not considered other potential purchasers of Athena or its stock. The
complaints further allege that there has been inadequate disclosure of
material facts concerning the business and prospects of Athena as they relate
to the Merger. The suits seek an injunction against the Merger, rescission of
the Merger if consummated, unspecified damages, attorneys' fees and other
relief.
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THE MERGER AGREEMENT
The following description of certain provisions of the Merger Agreement is
only a summary and does not purport to be complete. This description is
qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which is incorporated herein by reference and attached as
Annex A hereto.
THE MERGER
The Merger Agreement provides that, subject to the approval of the Merger
Agreement by the stockholders of Athena (under Delaware law, a majority of the
outstanding Athena Shares must vote in favor of the Merger Agreement) and Elan
and the satisfaction or waiver of other conditions to the Merger, Subco will
be merged with and into Athena, with Athena continuing as the Surviving
Corporation and as a direct wholly-owned subsidiary of Elan.
EFFECTIVE TIME AND EFFECTS OF THE MERGER
If the Merger Agreement is approved by the stockholders of Athena and Elan,
and the other conditions to the Merger are satisfied or waived, the Effective
Time will occur at the time of filing of a certificate of merger, in the form
required by and executed in accordance with the DGCL, with the Secretary of
State of the State of Delaware. It is presently contemplated that the
Effective Time will occur as promptly as practicable after the Merger
Agreement has been approved by the stockholders of Athena and Elan. At the
Effective Time, the Athena Certificate and Athena By-laws, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and by-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law. The directors of
Subco immediately prior to the Effective Time will be the directors of the
Surviving Corporation, and the officers of Athena immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation, in
each case until their successors are duly elected or appointed and qualify in
the manner provided in the certificate of incorporation and by-laws of the
Surviving Corporation, or as otherwise provided by law.
CONVERSION OF ATHENA SHARES
The Merger Agreement provides that, as of the Effective Time, by virtue of
the Merger and without any action on the part of any Athena stockholder, (i)
each remaining Athena Share issued and outstanding immediately prior to the
Effective Time (except for shares, if any, owned by Athena as treasury stock
or owned by any subsidiary of Athena or owned by Elan or any subsidiary of
Elan) shall be converted into the right to receive .2956 Elan ADSs (provided,
however, that if the record date for the 2 for 1 stock split announced on
March 15, 1996 by Elan occurs prior to the Effective Time, the Exchange Ratio
will be doubled to .5912); and (ii) each issued and outstanding share of
common stock of Subco immediately prior to the Effective Time shall be
converted into such number of newly issued shares of common stock of the
Surviving Corporation as shall equal the sum of the number of Athena Shares
outstanding immediately prior to the Effective Time; and (iii) the number of
Athena Shares underlying options, warrants, calls, subscriptions or other
rights or other agreements or commitments of Athena shall be assumed by Elan.
In the event the Average Market Value (as defined under "--Conditions") of an
Elan ADS, is below $50.00, the Exchange Ratio may be increased. See "--
Conditions." At the Effective Time all Athena Shares shall automatically be
canceled as a result of the consummation of the Merger.
In the event the Exchange Ratio is increased, Athena will promptly issue a
press release announcing the increase and the Exchange Ratio as adjusted.
Athena Stockholders who have any questions regarding whether an increase has
been made, the calculation of the Exchange Ratio or about executing, changing
or revoking a proxy, should contact Skinner & Co., 660 Market Street, Suite
204, San Francisco, California 94104, (415) 981-0970. The foregoing $50.00
trigger price assumes the previously announced 2 for 1 stock split will not
precede the Effective Time. If the stock split does precede the Effective Time
the trigger price will be appropriately adjusted.
NO FRACTIONAL ELAN ADSS
No fractional Elan ADSs will be issued in the Merger. In lieu of any such
fractional Elan ADSs, each holder of Athena Shares who otherwise would be
entitled to receive a fractional Elan ADS pursuant to the Merger will be paid
an amount in cash, without interest, equal to such fraction multiplied by the
Market Value. "Market Value" shall mean, with respect to Elan ADSs issued, the
mean between the high and low prices of the Elan
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ADSs as reported on the NYSE Composite Tape on the NYSE trading day
immediately prior to the Effective Time. The fractional share interests of
each Athena stockholder will be aggregated, and no Athena stockholder will
receive cash in an amount equal to or greater than the value of one full Elan
ADS.
EXCHANGE OF SHARE CERTIFICATES
Promptly after the Effective Time, transmittal forms will be mailed to each
holder of record of Athena Shares to be used in forwarding his or her
certificates evidencing such shares for surrender and exchange for Elan ADRs
evidencing the Elan ADSs to which he or she has become entitled and, if
applicable, cash in lieu of a fractional Elan ADS. After receipt of such
transmittal form, each holder of certificates formerly representing Athena
Shares should surrender such certificates to the Exchange Agent, and each such
holder will receive in exchange therefor Elan ADRs evidencing the whole number
of Elan ADSs to which he or she is entitled and any cash which may be payable
in lieu of a fractional Elan ADS. Such transmittal forms will be accompanied
by instructions specifying other details of the exchange. ATHENA STOCKHOLDERS
SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.
After the Effective Time, each certificate evidencing Athena Shares, until so
surrendered and exchanged, will be deemed, for all purposes, to evidence the
right to receive the number of Elan ADSs into which the Athena Shares
evidenced by such certificate have been converted and the right to receive any
cash payment in lieu of a fractional Elan ADS, except that the holder of such
unexchanged certificate will not be entitled to receive any dividends or other
distributions payable by Elan until the certificate is surrendered. Such
dividends and distributions, if any, will be accumulated and, at the time of
such surrender, all such unpaid dividends and distributions, together with any
cash payment in lieu of a fraction of an Elan ADS, will be paid, without
interest. Until surrendered as contemplated by the Merger Agreement, each
certificate evidencing Athena Shares will, at and after the Effective Time, be
deemed to represent only the right to receive, upon surrender of such
certificate, the Elan ADR representing the appropriate number of Elan ADSs,
cash in lieu of fractional Elan ADSs and dividends and other distributions
thereon, if any, declared on and payable to holders of record of Elan ADSs
after the Effective Time.
TREATMENT OF ATHENA STOCK OPTIONS, WARRANTS AND CONVERTIBLE DEBT
As of the Effective Time, by virtue of the Merger and without any action on
the part of the participants therein, Elan shall assume all of the obligations
of Athena under each of the Athena Plans (as defined below), with the effect
that each option to purchase Athena Shares that is outstanding under the 1989
Stock Plan of Athena, the 1991 Incentive Plan and the Genica Pharmaceuticals
Corporation 1989 Stock Option Plan (together, the "Athena Plans") immediately
prior to the Effective Time, whether or not exercisable, shall be assumed by
Elan in such a manner that each such option shall be exercisable upon the same
terms and conditions as under the applicable Athena Plan and the applicable
option agreement issued thereunder, except that (i) each such option shall be
exercisable for that number of Elan ADSs equal to the number of Athena Shares
subject to such option multiplied by the Exchange Ratio, and (ii) the option
price per share of Elan ADSs shall be an amount equal to the option price per
Athena Share subject to such option in effect immediately prior to the
Effective Time divided by the Exchange Ratio. Pursuant to the terms of the
stock option agreements under which the Athena Options were issued, the
unvested portion (an aggregate of 2,335,923 Athena Shares) of each Athena
Option will vest upon consummation of the Merger. As of the Record Date,
4,254,991 Athena Shares were issuable upon the exercise of outstanding Athena
Options, which options, given the Exchange Ratio of .2956 Elan ADSs per Athena
Share, will be converted to become approximately 1,257,775 Elan Exchange
Options at the Effective Time. Assuming the exercise of all Elan Exchange
Options immediately after the Effective Time, the holders thereof would hold
approximately 3.3% of all Elan Ordinary Shares issued and outstanding
immediately after the Effective Time (not including any Elan Ordinary Shares
otherwise held by such holders). The weighted average exercise price per share
of all Athena Options outstanding as of the Record Date is $7.91 per share.
Following the Merger and assuming an Exchange Ratio of .2956, the weighted
average exercise price per share of Elan Exchange Options will be
approximately $26.76 per Elan ADS.
Elan has agreed to file at the Effective Time a Form S-8 or other
appropriate form under the Securities Act to register the Elan ADSs issuable
upon exercise of the Elan Exchange Options and to use its reasonable efforts
to cause such registration statement to remain effective until the exercise or
expiration of all such options.
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As of the Effective Time, each warrant to purchase Athena Shares ("Athena
Warrant") then outstanding shall remain outstanding and shall be deemed to be
a warrant to purchase, in place of the purchase of Athena Shares previously
subject to such Athena Warrant, that number of Elan ADSs equal to the product
of the number of Athena Shares subject to such Athena Warrant, and not
exercised prior to the Effective Time, multiplied by the Exchange Ratio (the
"Elan Exchange Warrants"). The exercise price per share shall be equal to the
exercise price per share under the Athena Warrant divided by the Exchange
Ratio. As of the Record Date, 730,040 Athena Shares were issuable upon the
exercise of outstanding and vested Athena Warrants (excluding Athena Warrants
held by Elan), which will be converted, at the Exchange Ratio, to become
approximately 215,800 Elan Exchange Warrants at the Effective Time. The
weighted average exercise price per Athena Share of all Athena Warrants
(excluding Athena Warrants held by Elan) outstanding and vested as of the
Record Date is $7.61. Following the Merger and assuming an Exchange Ratio of
.2956, the weighted average exercise price of all Elan Exchange Warrants will
be approximately $25.74 per Elan ADS. As of the Effective Time, any existing
right to convert debt payable by Athena into Athena Shares shall remain
effective and shall be deemed to be a right to convert such debt into that
number of Elan ADSs as is equal to the product of the number of Athena Shares
into which such debt could have been converted prior to the Effective Time,
and was not so converted, multiplied by the Exchange Ratio, with the
conversion price being divided by the Exchange Ratio. As of the Record Date,
500,000 Athena Shares were issuable upon the conversion of convertible debt
obligations of Athena (excluding Athena convertible debt held by Elan)
("Athena Convertible Debt"), which will be modified, at the Effective Time
using the Exchange Ratio, to become convertible into approximately 147,800
Elan ADSs. The Athena Convertible Debt by its terms is not convertible until
June 1997 unless Athena exercises its option to prepay such debt. Following
the Merger and assuming an Exchange Ratio of .2956, the conversion price per
share of all Elan ADSs issuable upon conversion of Athena Convertible Debt
will be approximately $33.83 per Elan ADS. Elan will assume all registration
obligations applicable to Athena Warrants and Athena Convertible Debt.
EMPLOYEE BENEFITS
Under the Merger Agreement, Elan has agreed, with certain limited
exceptions, that it will cause the Surviving Corporation and its subsidiaries
to offer compensation and benefits to their respective employees that are
substantially equivalent to the compensation and benefits that such employees
enjoyed before the Effective Time.
NO SOLICITATION
Pursuant to the terms of the Merger Agreement, Athena has agreed that, prior
to the Effective Time, it shall not, and shall not authorize or permit any of
its subsidiaries or any of its subsidiaries' directors, officers, employees,
agents or representatives to, directly or indirectly, solicit, initiate,
facilitate or encourage (including by way of furnishing or disclosing non-
public information) any inquiries or the making of any proposal with respect
to any merger, consolidation or other business combination involving Athena or
its subsidiaries or acquisition of any kind of material portion of the assets
or capital stock of Athena and its subsidiaries taken as a whole (an
"Acquisition Transaction") or negotiate, explore or otherwise communicate in
any way with any third party with respect to any Acquisition Transaction or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other transactions
contemplated by the Merger Agreement; provided, however, that Athena may, in
response to an unsolicited, bona fide, written proposal from a third party
regarding a Superior Proposal (as defined below) furnish information to,
engage in discussions and negotiate with such third party, but only if the
Board of Directors of Athena determines in good faith by a majority vote that
taking such action is reasonably likely to lead to an Acquisition Transaction
that is more favorable to the Athena stockholders than the Merger and that
failing to take such action would constitute a breach of the Board's fiduciary
duties, having received prior to such determination (i) advice of outside
legal counsel of Athena that failing to take such action would constitute a
breach of the fiduciary duties of the Board of Directors and (ii) the advice
of a financial advisor of nationally recognized reputation (including, without
limitation, PaineWebber) that the Superior Proposal would provide greater
value to Athena and the Athena stockholders than the Merger. As used herein,
"Superior Proposal" means a bona fide, written and unsolicited offer made by
any financially responsible third party (other than Elan) with respect to an
Acquisition Transaction for which any required financing is committed in
writing by reputable financing sources.
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REPRESENTATIONS, WARRANTIES AND COVENANTS
Elan, Athena and Subco have made certain customary representations and
warranties to each other relating, among other things, to corporate
organization, standing and power; capital structure; corporate power and
authority to enter into the Merger Agreement; non-contravention of existing
agreements, judgments, orders, decrees or laws; compliance with securities
laws; accuracy of information supplied for inclusion in this Prospectus-Proxy
Statement; absence of material changes or events; absence of undisclosed
liabilities; absences of material litigation; financial statements; and
brokers. Athena has also made certain customary representations and warranties
relating to the fairness opinion of Athena's financial advisors; the
inapplicability of state anti-takeover statutes; the identification of
affiliates; compliance with laws; employee benefit plans; taxes; environmental
matters; labor matters; insurance; contracts and commitments; and patents and
trademarks. None of the representations and warranties of the parties shall
survive the Closing (as defined in the Merger Agreement).
Each of Elan and Athena has agreed, pursuant to the Merger Agreement, that,
prior to the Effective Time, the operations of Elan, Athena and their
subsidiaries will be conducted in the ordinary and usual course of business
and consistent with past practices. The Merger Agreement further provides that
Elan, Athena and their respective subsidiaries will each use commercially
reasonable efforts to preserve intact their business organizations, to keep
available the services of their officers and employees and to maintain
satisfactory relationships with suppliers, distributors, customers and others
having business relationships with them and will take no action which would
adversely affect their ability to consummate the Merger or the other
transactions contemplated thereby. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in the Merger Agreement,
prior to the Effective Time, neither Athena nor any of its subsidiaries nor
Elan nor any of its subsidiaries will, without the prior written consent of
Elan or Athena, as applicable: (i) amend its Restated Certificate of
Incorporation (or other applicable charter document) or By-laws except, with
respect to Elan, the proposed two-for-one stock split announced on March 15,
1996 (the "Elan Stock Split"); (ii) split (except with respect to the Elan
Stock Split), combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof, other than, in the case of Elan,
consistent with past practice) in respect of its capital stock, except
dividends to wholly-owned subsidiaries or purchase, redeem or otherwise
acquire any shares of its own capital stock or that of any of its subsidiaries
or purchased, otherwise acquired, or agreed to purchase or otherwise acquire,
any shares of its capital stock or of any of its subsidiaries; (iii) maintain
its books and records in a manner not in the ordinary course of business and
substantially consistent with past practice; (iv) except in the case of Elan
as otherwise disclosed in the Merger Agreement, institute any change in its
accounting methods, principles or practices or revalue any of its respective
assets, including, without limitation, writing down the value of inventory or
writing off notes or accounts receivables; or (v) agree to do any of the
foregoing.
With respect solely to Athena, neither Athena nor any of its subsidiaries
will, without the prior written consent of Elan: (i) authorize for issuance,
issue, sell, deliver, grant any options for, or otherwise agree or commit to
issue, sell or deliver any shares of any class of capital stock of Athena or
its subsidiaries or any securities convertible into or exchangeable or
exercisable for shares of any class of capital stock of Athena or its
subsidiaries, other than pursuant to and in accordance with and subject to the
limitations set forth in (a) the Employee Stock Purchase Plan (as defined in
the Merger Agreement) or (b) the terms of Elan Common Stock Equivalents (as
defined in the Merger Agreement); (ii)(a) create or incur indebtedness for
borrowed money, except in the ordinary course of business and consistent with
past practice; (b) assume, guarantee, endorse or otherwise as an accommodation
become liable or responsible for the obligations of any other individual, firm
or corporation or make any loans or advances to any other individual, firm or
corporation; (c) enter into any commitment or transaction material to Athena
and its subsidiaries taken as a whole; or (d) incur any liabilities except for
liabilities which, individually and in the aggregate, would not have a
Material Adverse Effect (as defined in the Merger Agreement); (iii) except in
the ordinary course of business or as otherwise contemplated by the Merger
Agreement (a) increase in any manner the compensation of any of Athena's or
its subsidiaries' directors or officers or employees; (b) pay or agree to pay
any pension, retirement allowance or other employee benefit, or enter into any
contract, agreement or understanding with any of Athena's or its subsidiaries'
past or present employees relating to any such pension, retirement allowance
or other employee benefit, except as
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required under agreements, plans or arrangements existing as of December 31,
1995; (c) grant any severance or termination pay to, or enter into any
employment, consulting or severance agreement with, any person; (d) enter into
any contract, agreement or understanding with any of Athena's or its
subsidiaries' past or present employees; and (e) except as may be required to
comply with applicable law, become obligated under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan, benefit arrangement,
or similar plan or arrangement which was not in existence prior to
December 31, 1995, including any bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other benefit plan, contract, agreement or
understanding or for the benefit of any person, or amend any such plans,
contracts, agreements or understandings in existence prior to December 31,
1995; (iv) except as otherwise expressly contemplated by the Merger Agreement,
sell, transfer, lease, license, pledge, mortgage, or otherwise dispose of, or
encumber, or agree to sell, transfer, lease, license, pledge, mortgage or
otherwise dispose of or encumber, any material properties, real, personal or
mixed; (v) except in the ordinary course of business or as otherwise expressly
contemplated by the Merger Agreement, grant or acquire any material licenses
to use any Intellectual Property Rights (as defined in the Merger Agreement)
or unpatented inventions set forth in the Merger Agreement; provided Athena
and its subsidiaries shall not grant any material licenses to use any material
Intellectual Property Rights or unpatented inventions set forth in the Merger
Agreement without the prior written consent of Elan, which consent shall not
be unreasonably withheld; (vi) except as otherwise expressly contemplated by
the Merger Agreement, enter into any other agreements, commitments or
contracts, except agreements, commitments or contracts for the purchase, sale
or lease of goods or services in the ordinary course of business and
consistent with past practice; (vii) authorize, recommend, propose or announce
an intention to authorize, recommend or propose, or enter into any agreement
in principle or an agreement with any other person with respect to, any plan
of liquidation or dissolution, any acquisition of a material amount of assets
or securities, any disposition of a material amount of assets or securities or
any material change in its capitalization, or any entry into a material
contract or any amendment or modification of any material contract or any
release or relinquishment of any material contract rights not in the ordinary
course of business and consistent with past practice except as expressly
contemplated by the Merger Agreement; (viii) except as previously approved by
the Board of Directors of Athena prior to the date of the Merger Agreement and
as identified to Elan prior to the date of the Merger Agreement, authorize or
commit to make capital expenditures in excess of $500,000; (ix) permit any
insurance policy naming Athena as a beneficiary or a loss payee to be
canceled, terminated or materially altered, except in the ordinary course of
business and consistent with past practice and following written notice to
Elan; (x) enter into any hedging, option, derivative or other similar
transaction; (xi) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of liabilities (including accounts payable)
in the ordinary course of business and consistent with past practice, or
collect, or accelerate the collection of, any amounts owed (including accounts
receivable) other than the collection in the ordinary course of business;
(xii) exercise its technology purchase option pursuant to its Purchase Option
Agreement with PaineWebber R&D Partners III, L.P.; or (xiii) agree to do any
of the foregoing.
CONDITIONS
In addition to the requisite approval of the Merger Agreement by the
stockholders of Athena and Elan, the respective obligations of Elan and Athena
to consummate the Merger are subject to the satisfaction or (where
permissible) waiver of the following conditions, among others: (i) the Elan
ADSs issuable in the Merger have been authorized for listing on the NYSE upon
official notice of issuance; (ii) the Registration Statement of which this
Prospectus-Proxy Statement forms a part has become effective under the
Securities Act, and no stop order is in effect with respect thereto; (iii) no
governmental entity or court of competent jurisdiction has enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) which prohibits the consummation of the Merger or limits the
exercise by Elan and the Surviving Corporation of full rights to own and
operate the business of Athena and its subsidiaries; (iv) any waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated and no action shall have been taken under the Irish
Mergers Act prohibiting the Merger and the relevant period under the Irish
Mergers Act for objection shall have expired or terminated; (v) all
authorizations, orders, consents, licenses, confirmations, clearances,
permissions and approvals which may be
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required in any foreign jurisdiction for the purposes of applicable antitrust,
competition, takeover or similar legislation in connection with the
consummation of the Merger and the other transactions contemplated hereby
shall have been received and shall remain in full force and effect; (vi) the
receipt by Elan and Athena of an opinion of Cahill Gordon & Reindel and the
receipt by Athena of an opinion of Pillsbury Madison & Sutro LLP, each to the
effect that, among other things, the Merger constitutes a tax-free
reorganization; and (vii) the Average Market Value (as defined below) of an
Elan ADS shall be equal to or greater than $50; provided, however, that this
condition will be satisfied if Elan increases the Exchange Ratio so that the
product of (a) a fraction of an Elan ADS corresponding to the increased
Exchange Ratio and (b) the Average Market Value of an Elan ADS is equal to or
greater than $14.875. "Average Market Value" shall mean the arithmetic average
of the closing price per share of an Elan ADS as reported on the NYSE
Composite Tape for the five consecutive trading days ending with the last
trading day prior to the Closing.
In the event Elan elects to increase the Exchange Ratio, Athena will
promptly issue a press release announcing such increase and the Exchange Ratio
as adjusted. Athena Stockholders who have any questions regarding whether an
increase has been made, the calculation of the Exchange Ratio or about
executing, changing or revoking a proxy, should contact Skinner & Co., 660
Market Street, Suite 204, San Francisco, California 94104, (415) 981-0970. In
the event the Average Market Value of an Elan ADS is below $50.00 and Elan
does not elect to increase the Exchange Ratio, Athena intends to either
terminate the Merger Agreement or resolicit the Athena Stockholders. The
foregoing $50.00 trigger price assumes the previously announced 2-for-1 stock
split will not precede the Effective Time. If the stock split does precede the
Effective Time the trigger price will be appropriately adjusted.
The obligations of Athena to effect the Merger are further subject to the
satisfaction or (where permissible) waiver of the following conditions, among
others: (i) the representations and warranties of Elan and Subco are true and
correct in all material respects as of the Effective Time as if made at and as
of the Effective Time (except to the extent they relate to a particular date);
(ii) Elan and Subco have performed in all material respects their agreements
under the Merger Agreement; (iii) Athena shall have received certificates of
certain officers of Elan and Subco evidencing compliance with the conditions
set forth in the Merger Agreement; (iv) there shall not have occurred since
March 31, 1995 any material adverse change in the general affairs, management,
business, operations, assets, condition (financial or otherwise) or prospects
of Elan and its subsidiaries taken as a whole; (v) Athena shall have received
the opinion of Cahill Gordon & Reindel, counsel to Elan, substantially to the
effect as set forth in the Merger Agreement; and (vi) all necessary consents
and approvals of, and notifications and disclosures to, and filings and
registration with, any United States or any other governmental authority or
any other third party required on the part of Elan and Subco for the
consummation of the Merger and the other transactions contemplated by the
Merger Agreement shall have been obtained or accomplished.
The obligations of Elan and Subco to effect the Merger are further subject
to the satisfaction or (where permissible) waiver of the following conditions:
(i) the representations and warranties of Athena are true and correct in all
material respects as of the Effective Time as if made at and as of the
Effective Time (except to the extent they relate to a particular date); (ii)
Athena shall have performed in all material respects its agreements under the
Merger Agreement; (iii) Elan and Subco shall have received certificates of
certain officers of Athena evidencing compliance with the conditions set forth
in the Merger Agreement; (iv) there shall not have occurred since December 31,
1995 any material adverse change in the general affairs, management, business,
operations, assets, conditions (financial or otherwise) or prospects of Athena
and its subsidiaries taken as a whole (including loss of a significant portion
of the employees in Athena's therapeutic research department); (v) Elan shall
have received the opinions of Pillsbury Madison & Sutro LLP, counsel to
Athena, and Lisabeth F. Murphy, General Counsel to Athena, each substantially
to the effect as set forth in the Merger Agreement; and (vi) all the consents,
approvals, notifications, disclosures, filings and registrations required by
the Merger Agreement shall have been obtained.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of Elan or Athena:
(i) by mutual consent of the Boards of Directors of Elan and Athena; (ii) by
either Elan or Athena if, without fault of such terminating party, the Merger
shall not have been consummated on or before August 31, 1996, which date may
be extended by mutual consent of the parties
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thereto; (iii) by either Elan or Athena, if any court of competent
jurisdiction or other governmental body shall have issued an order (other than
a temporary restraining order), decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger, and such order,
decree, ruling or other action shall have become final and nonappealable; or
(iv) by either Elan or Athena, if the requisite approvals of the stockholders
of either Elan or Athena are not obtained at the meeting of stockholders duly
called and held therefor.
The Merger Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of Elan, at any time prior to the Effective
Time, before or after the approval by the Athena stockholders, if (i) Athena
shall have failed to comply in any material respect with any of the covenants
or agreements contained in certain articles of the Merger Agreement to be
complied with or performed by Athena at or prior to such date of termination,
(ii) there exists a breach or breaches of any representation or warranty of
Athena contained in the Merger Agreement such that the closing condition
relating to the accuracy of the representations and warranties of Athena would
not be satisfied; provided, however, that if such breach or breaches are
capable of being cured prior to the Effective Time, such breaches shall not
have been cured within 30 days of delivery to Athena of written notice of such
breach or breaches, (iii) the Board of Directors of Athena (a) fails to
recommend the approval of the Merger Agreement and the Merger to the Athena
stockholders, (b) withdraws, amends or modifies in a manner adverse to Elan
its recommendation or approval in respect of the Merger Agreement or the
Merger, (c) makes any recommendation with respect to an Acquisition
Transaction (including making no recommendation or stating an inability to
make a recommendation), other than a recommendation to reject such Acquisition
Transaction, or the Board of Directors of Athena shall have resolved to take
any of the foregoing actions referred to in this clause and publicly disclosed
such resolution; or (iv) Athena or its representatives shall furnish or
disclose non-public information or negotiate, discuss, explore or otherwise
communicate in any way with a third party with respect to any Acquisition
Transaction, or the Board of Directors of Athena shall have resolved to take
any of the foregoing actions referred to in this clause and publicly discloses
such resolution; provided, however, that in such event Elan shall have no
right to terminate pursuant to this clause (iv) until the earlier of (a) May
31, 1996 or (b) the thirtieth calendar day after Athena or its representatives
first furnishes or discloses non-public information to, or negotiates,
discusses, explores or otherwise communicates with any third party with
respect to an Acquisition Transaction (such earlier date being referred to as
the "Trigger Date") and only if Athena has not terminated all such activities
prior to the Trigger Date.
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, before or after the approval by the
Athena stockholders, by action of the Board of Directors of Athena, if (i)
Elan or Subco shall have failed to comply in any material respect with any of
the covenants or agreements contained in certain articles of the Merger
Agreement to be complied with or performed by Elan or Subco at or prior to
such date of termination, (ii) there exists a breach or breaches of any
representation or warranty of Elan or Subco contained in the Merger Agreement
such that the closing condition relating to the accuracy of the
representations and warranties of Elan would not be satisfied; provided,
however, that if such breach or breaches are capable of being cured prior to
the Effective Time, such breaches shall not have been cured within 30 days of
delivery to Elan of written notice of such breach or breaches.
FEES AND EXPENSES
Each of Athena and Elan shall be responsible for the payment of its
respective costs, fees and expenses related to the Merger Agreement and the
transactions contemplated thereby.
If the Merger Agreement is terminated by Athena pursuant to the third
paragraph of "--Termination" above then Elan shall within two business days of
such termination pay Athena by wire transfer or immediately available funds to
an account specified by Athena (i) up to $2.5 million to reimburse Athena for
its documented fees and expenses (including the fees and expenses of counsel,
accountants, consultants and advisors) incurred in connection with the Merger
Agreement and the transactions contemplated thereby and (ii) a fee of $5
million as liquidated damages. If the Merger Agreement is terminated by Elan
pursuant to the second paragraph of""--Termination" above, then Athena shall
within two business days of such termination pay Elan by wire
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transfer or immediately available funds to an account specified by Elan (a) up
to $2.5 million to reimburse Elan for its documented fees and expenses
(including the fees and expenses of counsel, accountants, consultants and
advisors) incurred in connection with the Merger Agreement and the
transactions contemplated thereby and (b) a fee of $5 million as liquidated
damages.
If the Merger Agreement is terminated (i) pursuant to the first paragraph of
"--Termination" above (except clause (i)) and prior to such termination any
financially capable person shall have expressed a bona fide interest in an
Acquisition Transaction with Athena or the Athena stockholders, or (ii) by
Elan pursuant to clause (iii) or (iv) of the second paragraph of "--
Termination" above, then, in any such case, Athena shall within two business
days pay Elan by wire transfer of immediately available funds to an account
specified by Elan up to $2.5 million to reimburse Elan for its documented fees
and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby and if terminated by Elan pursuant to clause
(iii) or (iv) an additional fee of $25 million (less any fee previously paid
as liquidated damages pursuant to the Merger Agreement), and if an additional
fee has not already become payable and within twelve months after such
termination Athena or any of its subsidiaries enters into a definitive
agreement with a third party with respect to, or consummates, an Acquisition
Transaction, then Athena, prior to the earlier of entering into any such
definitive agreement and consummating an Acquisition Transaction shall pay
Elan by wire transfer of immediately available funds to an account specified
by Elan, an additional fee of $25 million (less any fee previously paid as
liquidated damages pursuant to the Merger Agreement).
INDEMNIFICATION; INSURANCE
Elan shall (i) guarantee and (ii) shall cause the Surviving Corporation to
maintain and perform in the same manner Athena's existing indemnification
provisions with respect to present and former directors and officers of Athena
for all losses, claims, damages, expenses or liabilities arising out of
actions or omissions or alleged actions or omissions occurring at or prior to
the Effective Time to the extent permitted or required under applicable law
and the Athena Certificate and Athena By-laws in effect as of the date of the
Merger Agreement.
For a period of three years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Athena (provided
that the Surviving Corporation may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are no
less advantageous) with respect to claims arising from facts or events which
occurred before the Effective Time; provided, however, that the Surviving
Corporation shall not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 150% of the annual premiums paid
as of the date of the Merger Agreement by Athena for such insurance.
AMENDMENT
Subject to applicable law, the Merger Agreement may be amended, modified or
supplemented only by written agreement of Elan, Subco and Athena at any time
prior to the Effective Time with respect to any of the terms contained
therein; provided, however, that, after the Merger Agreement is adopted by the
Athena stockholders, no such amendment or modification shall change the amount
or form of the consideration to be paid pursuant to the Merger Agreement.
WAIVERS; CONSENTS
Any failure of Elan or Subco, on the one hand, or Athena, on the other hand,
to comply with any obligation, covenant, agreement or condition in the Merger
Agreement may be waived by Elan, Subco and Athena, respectively, only by a
written instrument signed by the party granting such waiver, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever the Merger Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing pursuant to the terms of the Merger Agreement.
APPRAISAL RIGHTS
In accordance with Section 262(b) of the DGCL, no holder of Athena Shares
shall be entitled to appraisal rights.
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CERTAIN TAX CONSEQUENCES
GENERAL
The following discussion of certain U.S. federal income tax consequences of
the Merger and certain U.S. federal income tax and Irish tax consequences of
ownership of Elan ADSs is included for general information purposes only and
does not purport to be a complete description of all potential tax
consequences affecting the decision whether to vote to approve the Merger. The
discussion applies only to Athena stockholders who hold their Athena Shares as
capital assets within the meaning of Section 1221 of the Code and does not
address all potential tax effects that may be relevant to Athena stockholders
subject to special federal income tax treatment, including foreign persons,
persons who own (actually or constructively) 5% or more of either the total
voting power or total value of all capital stock of Elan before or immediately
after the Merger, persons who are residents of Ireland or engaged in a trade
or business in Ireland through a permanent establishment, insurance companies,
tax-exempt organizations, retirement plans and persons who acquired their
Athena Shares pursuant to the exercise of employee stock options or otherwise
as compensation. The following discussion does not address the effect of
applicable state, local or foreign (other than Irish) tax laws.
This summary is based on the Code, regulations and rulings in effect at the
date of this Prospectus-Proxy Statement, administrative rulings and practice
and judicial precedent, all of which are subject to change. Any such change,
which may or may not be retroactive, could alter the tax consequences
discussed herein. This discussion is also based on certain representations
made by Elan, Athena and certain Athena stockholders. If any of these
representations is inaccurate, the tax consequences of the Merger could differ
from those described herein.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Special Federal Income Tax Rules Applicable to the Merger. Special federal
income tax rules will apply to the Merger because Elan is a foreign
corporation. Under section 367 of the Code and the regulations thereunder, the
receipt of Elan ADSs by an Athena stockholder could be taxable,
notwithstanding qualification of the Merger as a reorganization for federal
income tax purposes, unless all of the following conditions are satisfied.
(i) In the Merger, Athena's U.S. stockholders receive no more than 50% of
either the voting power or value of the stock of Elan;
(ii) Immediately following the Merger, no more than 50% of either the
voting power or value of the stock of Elan is owned by U.S. persons who are
either Athena officers or directors or Athena stockholders that own
(directly or indirectly) 5% or more of the total voting power or value of
the stock of Athena immediately before the Merger;
(iii) Immediately prior to the Merger, Elan or an affiliate has been
engaged in an active trade or business for at least three years and that
trade or business is substantial in comparison to Athena's trade or
business;
(iv) The Athena stockholder does not own (directly or indirectly) 5% or
more of the total voting power or value of the stock of Elan immediately
following the Merger; and
(v) Athena files the requisite statement describing the Merger with its
federal income tax return for the taxable year of the Merger.
Elan has agreed in the Merger Agreement to cause Athena to file the
statement described in item (v) above.
General Consequences of the Merger. Athena believes, based on the advice of
Pillsbury Madison & Sutro LLP which in turn, is based on certain
representations made by Elan, Athena, and certain Athena stockholders, that
the Merger will constitute a reorganization under Section 368(a) of the Code.
Based on that conclusion and
37
<PAGE>
satisfaction of the conditions described above under the caption "--Special
Federal Income Tax Rules Applicable to the Merger," Athena further believes
that for federal income tax purposes:
(i) No gain or loss will be recognized with respect to the Elan ADSs
received in the Merger by those Athena stockholders owning (directly or
indirectly) less than 5% of the total voting power or value of the stock of
Elan immediately following the Merger;
(ii) The tax basis of the Elan ADSs received by any such Athena
stockholder in the Merger will be equal to the tax basis of the Athena
Shares exchanged therefor, reduced by any amount of basis allocable to
fractional share interests for which cash is received;
(iii) The holding period of the Elan ADSs received by such Athena
stockholders in the Merger will include the holding period of the Athena
Shares exchanged therefor; and
(iv) The receipt of cash in lieu of a fractional Elan ADS by any such
Athena stockholder pursuant to the Merger will result in taxable capital
gain or loss to such stockholder based on the difference between the amount
of cash received by such stockholder and such stockholder's basis in such
fractional share.
NOTWITHSTANDING THE GENERAL TAX-FREE NATURE OF THE REORGANIZATION, ATHENA'S
U.S. STOCKHOLDERS MAY NONETHELESS BE SUBJECT TO A PENALTY OF 25% OF THE AMOUNT
OF GAIN ON THEIR ATHENA SHARES IF THEY DO NOT COMPLY WITH THE U.S. INFORMATION
REPORTING REQUIREMENTS DISCUSSED BELOW.
U.S. Information Reporting Requirements. Due to a recent change in the
treasury regulations, Section 6038B of the Code requires that all of Athena's
U.S. stockholders (including stockholders who own less than 5% of all
outstanding Ordinary Shares of Elan after the Effective Time) file an IRS Form
926 attaching a statement setting forth the following information:
(i) The name, address and U.S. taxpayer identification number of the
Athena stockholder;
(ii) The name, address, country of incorporation and U.S. taxpayer
identification number (if any) of Elan;
(iii) A description of the Elan ADSs received in exchange for Athena
Shares; and
(iv) A description of the Athena Shares surrendered in the Merger
(including adjusted basis and estimated fair market value) and the name,
address, place of incorporation and U.S. taxpayer identification number of
Athena.
The statement attached to IRS Form 926 should also include the following
statement: "Section 367(a)(1) of the Code does not apply to the transfer of
Athena Shares to Elan described herein because the Merger falls within the
exception set forth in Temporary Income Tax Regulations section 1.367-3T(c)."
FAILURE TO FILE A TIMELY AND COMPLETE IRS FORM 926, INCLUDING THE REQUIRED
SUPPLEMENTAL INFORMATION, MAY LEAD TO IMPOSITION OF A PENALTY EQUAL TO 25% OF
THE AMOUNT OF GAIN ON THE ATHENA SHARES SURRENDERED IN THE MERGER. IRS Form
926 and its required attachments must be filed with the Athena stockholder's
U.S. federal income tax return for the taxable year in which the Merger takes
place. Elan has agreed to provide Athena stockholders with certain information
necessary to permit compliance with the above described information reporting
requirements under Section 6038B of the Code. The necessary form and
attachments will be provided with the transmittal forms provided for the
forwarding of Athena Shares for exchange and cancellation. Athena stockholders
should consult their own tax advisors with respect to the filing requirement
described above.
U.S. FEDERAL INCOME TAX CONSEQUENCES AFTER MERGER
General. U.S. holders of Elan ADSs are treated as the owners of the
underlying Ordinary Shares for purposes of the Code and for purposes of the
U.S.-Ireland double taxation convention relating to income and gains (the
"Income Tax Convention") and to estate taxes (the "Estate Tax Convention").
Taxation of Elan. Under the Income Tax Convention, Elan will not be subject
to U.S. federal income tax (other than withholding tax imposed on U.S. source
dividends and certain interest) unless it engages in a trade or business in
the U.S. through a permanent establishment in the U.S. Elan's ownership of its
U.S. subsidiaries
38
<PAGE>
(including Athena, if the Merger is consummated) does not, in itself,
constitute a permanent establishment. Elan expects to be able to conduct its
activities in a manner that will not result in it being considered to be
engaged in a trade or business or to have a permanent establishment in the
U.S. and Elan's management anticipates that Elan will not be deemed to be
engaged in a trade or business or to have a permanent establishment in the
U.S. for U.S. income tax purposes. The law is unclear, however, as to what
constitutes being engaged in a trade or business or a U.S. permanent
establishment, so there can be no assurance that Elan will not be held to be
engaged in a trade or business or to have a U.S. permanent establishment (in
which case Elan would generally be subject to U.S. federal income tax on such
of its net income as is effectively connected to the permanent establishment).
Elan's U.S. subsidiaries, as U.S. corporations, are subject to U.S. taxation.
Taxation of Dividends. Dividends paid by Elan, if any, will not qualify for
the dividends received deduction otherwise available to U.S. corporate
shareholders.
U.S. Gift and Estate Tax. An individual U.S. holder of Elan ADSs will be
subject to U.S. gift and estate taxes with respect to the Elan ADSs in the
same manner and to the same extent as with respect to other types of personal
property.
Backup Withholding and Information Reporting. A holder of Elan ADSs may,
under certain circumstances, be subject to certain information reporting
requirements and backup withholding tax at the rate of 31% with respect to
dividends paid on the Elan ADSs or the proceeds of sale of the Elan ADSs,
unless such holder (i) is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact or (ii) provides a
correct taxpayer identification number ("T.I.N."), certifies that such holder
is not subject to backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. A non-U.S. holder must complete
and provide Elan or its agent with a Form W-8 ("Certificate of Foreign
Status"), certifying that such person is an exempt foreign person. A holder of
Elan ADSs who does not provide a correct T.I.N. or Certificate of Foreign
Status may be subject to penalties imposed by the IRS. Any amount withheld
under these rules will be creditable against the holder's U.S. federal income
tax liability.
IRISH TAX CONSEQUENCES AFTER MERGER
Irish Taxation of Elan. Elan is a public limited company incorporated, and
resident for tax purposes, in Ireland. A company is resident for tax purposes
in the country in which it is managed and controlled and, as this is a
question of fact, there can be no certainty that Elan will continue to be
regarded as resident in Ireland.
The Irish Finance Act of 1973 provides that a company resident in Ireland
and which is not resident elsewhere shall be entitled to have any income from
a qualifying patent disregarded for taxation purposes. The legislation does
not provide a termination date for the relief. A qualifying patent means a
patent in relation to which the research, planning, processing, experimenting,
testing, devising, designing, developing or similar activities leading to the
invention which is the subject of the patent was carried out in Ireland.
Income from a qualifying patent means any royalty or other sum paid in respect
of the user of the invention to which the qualifying patent relates including
any sum paid for the grant of a license to exercise rights under such patent,
where that royalty or other sum is paid, for the purpose of activities which
would be regarded under Irish law as the manufacture of goods, or by a person
who is not connected with Elan. Accordingly, Elan's income from such
qualifying patents is disregarded for taxation purposes in Ireland. Any Irish
manufacturing income of Elan and its subsidiaries is taxable at the rate of
10% in Ireland until December 31, 2010. Any income of Elan which does not
qualify for the patent exemption or the 10% rate of tax will be taxable at the
Irish corporation tax rate of 38%.
Taxation of Dividends. Dividends paid by Elan, if any, are not subject to
Irish withholding tax. No Irish income tax will be payable on dividends paid
by an Irish resident company, such as Elan, to stockholders who are not
resident or ordinarily resident in Ireland. A charge to Irish social security
taxes and other levies can arise for individuals. However, under the Social
Welfare Agreement between Ireland and the U.S., an individual who is liable
for U.S. Social Security contributions can normally claim exemption from these
taxes and levies.
39
<PAGE>
Taxation of Capital Gains. A person who is neither resident nor ordinarily
resident in Ireland and who does not carry out a trade in Ireland through a
branch or agency will not be subject to Irish capital gains tax on the
disposal of Elan ADSs so long as the Elan ADSs (or the shares they represent)
are quoted on an exchange.
Irish Capital Acquisitions Tax. A gift or inheritance of Elan Ordinary
Shares will be within the charge to Irish capital acquisition tax ("CAT"). CAT
is charged on a sliding scale of rates ranging in the case of gifts from 15%
to 30% and in the case of inheritances from 20% to 40% on amounts above a tax
free threshold. This tax free threshold is determined by the amount of the
current benefit and of previous benefits within the charge to CAT and the
relationship between the donor and the successor or donee. Gifts and
inheritances between spouses are not subject to CAT. In addition, the Finance
Act, 1933, introduced a 2% probate tax on the estates of deceased persons. To
the extent that they pass under a will or on intestacy, Elan Ordinary Shares
and Elan ADSs would be included within this tax notwithstanding that the
deceased was domiciled outside Ireland.
The Estate Tax Convention generally provides for CAT paid on inheritances in
Ireland to be credited against tax payable in the United States and for tax
paid in the United States to be credited against tax payable in Ireland, based
on priority rules set forth in the Estate Tax Convention, in a case where an
Elan ADS is subject to both Irish CAT with respect to inheritance and U.S.
federal estate tax. The Estate Tax Convention does not apply to CAT paid on
gifts.
Irish Stamp Duty. Under current Irish law no stamp duty will be payable on
the acquisition of Elan ADSs by persons purchasing such Elan ADSs or on any
subsequent transfer of an Elan ADS. A transfer of Elan Ordinary Shares,
whether on sale, in contemplation of a sale or by way of gift, will be subject
to duty at the rate of 1% on the consideration given, or where the purchase
price is inadequate or unascertainable, on the market value of the shares.
Transfers of Elan Ordinary Shares which are not liable for duty at the rate of
1% will be subject to a fixed duty of IR(Pounds)10 unless the transfer is by
way of security in which event there is a potential maximum charge of
IR(Pounds)500.
The person accountable for payment of stamp duty is the transferee or, in
the case of a transfer by way of gift or for a consideration less than the
market value, all parties to the transfer. Stamp duty is normally payable
within 30 days after the date of execution of the transfer. Late or inadequate
payment of stamp duty will result in liability for interest, penalties and
fines.
THE FOREGOING SUMMARY OF U.S. AND IRISH TAX CONSEQUENCES IS BASED ON THE
INCOME TAX CONVENTION, ESTATE TAX CONVENTION, U.S. LAW, IRISH LAW, AND
REGULATIONS, ADMINISTRATIVE RULINGS AND PRACTICES OF THE U.S. AND IRELAND, ALL
AS THEY EXIST AS OF THE DATE OF THIS PROSPECTUS-PROXY STATEMENT. THIS SUMMARY
DOES NOT DISCUSS ALL ASPECTS THAT MAY BE RELEVANT TO ATHENA STOCKHOLDERS IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES. IN PARTICULAR, IT DOES NOT ADDRESS
THE CONSEQUENCES TO ATHENA STOCKHOLDERS RESIDENT OR ORDINARILY RESIDENT OR
DOMICILED IN IRELAND OR DOING BUSINESS IN IRELAND. ATHENA STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISERS WITH RESPECT TO THEIR OWN PARTICULAR
CIRCUMSTANCES AND WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER
TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN
TAX LAWS, ESTATE TAX LAWS AND PROPOSED CHANGES IN APPLICABLE LAWS.
40
<PAGE>
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION
COMPARATIVE MARKET PRICE INFORMATION
Elan ADSs are traded on the NYSE, the principal trading market for Elan's
securities, under the symbol "ELN." Prior to January 3, 1995, the Elan ADSs
were listed and traded on the American Stock Exchange (the "ASE") under the
same symbol. Athena Shares are listed and traded on the Nasdaq National Market
under the symbol "ATHN." The following table sets forth the high and low per
share sale prices for the Elan ADSs and Athena Shares as reported on the
original ASE or NYSE trading tapes or the Nasdaq National Market,
respectively, as the case may be, for the periods indicated.
<TABLE>
<CAPTION>
ELAN ADSS ATHENA SHARES
--------------- ---------------
HIGH LOW HIGH LOW
------- ------- ------- -------
<S> <C> <C> <C> <C>
CALENDAR 1996
2nd Quarter (through May 10, 1996)....... $67 3/4 $61 1/2 $19 5/8 $17
1st Quarter.............................. 64 5/8 48 3/8 18 3/4 10 1/2
CALENDAR 1995
4th Quarter.............................. 51 38 1/4 12 5/8 8 1/2
3rd Quarter.............................. 43 5/8 38 1/2 13 1/2 8 1/4
2nd Quarter.............................. 41 3/8 32 7/8 9 1/8 6 1/2
1st Quarter.............................. 39 33 1/4 9 3/4 5 3/8
CALENDAR 1994
4th Quarter.............................. 40 1/8 32 1/2 7 5/8 5 1/4
3rd Quarter.............................. 39 1/2 31 1/8 7 5/8 5 7/8
2nd Quarter.............................. 38 30 1/8 8 3/4 6 1/8
1st Quarter.............................. 47 7/8 32 1/2 11 1/4 6 3/4
CALENDAR 1993
4th Quarter.............................. 44 1/8 30 3/8 13 7 1/2
3rd Quarter.............................. 34 1/2 27 7/8 9 6 3/4
2nd Quarter.............................. 36 29 5/8 9 5/8 6 3/4
1st Quarter.............................. 37 7/8 25 5/8 9 3/4 6 1/2
</TABLE>
Elan's Ordinary Shares are also traded in Dublin on the Official List of the
Irish Stock Exchange Limited and in London on the Official List of the London
Stock Exchange Limited. The volume of trading in Elan's Ordinary Shares on
such markets is, however, very limited.
On March 15, 1996, the last full day of trading before the issuance of a
press release by Elan and Athena announcing the proposed Merger, the reported
closing price per Elan ADS was $61.75 and the reported closing price per
Athena Share was $15.125. Based on the closing price of Elan ADSs on March 15,
1996, the market value of .2956 Elan ADSs was $18.253. On May 10, 1996, the
reported closing prices of Elan ADSs and Athena Shares were $64.50 and $18.50,
respectively.
COMPARATIVE DIVIDEND INFORMATION
Elan has not paid cash dividends regularly on its Ordinary Shares in the
past. The declarations of any cash dividends will be at the recommendation of
Elan's Board of Directors. The Board of Directors' recommendations will depend
upon the earnings, capital requirements and financial condition of Elan and
other relevant factors. Although Elan does not anticipate that it will pay any
cash dividends on its Ordinary Shares in the foreseeable future, Elan expects
that its Board of Directors will review Elan's dividend policy on a regular
basis. Dividends may be paid on Elan's Executive Shares or "B" Executive
Shares at a time when no dividends are being paid on the Ordinary Shares. For
additional information relating to the Executive Shares and "B" Executive
Shares, see "Description of Elan Capital Stock" and Note 14 to the
Consolidated Financial Statements included in Elan's 1995 Annual Report
incorporated herein by reference.
41
<PAGE>
Athena has never paid dividends on its capital stock and there are
restrictions upon Athena's ability to declare cash dividends under certain of
Athena's credit agreements.
EXCHANGE RATES
Fluctuations in the exchange rate between the Irish pound and the dollar may
affect Elan's earnings, the book value of its assets and shareholders' equity
as expressed in Irish pounds and dollars, and, consequently, may affect the
market price for the Elan ADSs. See "Financial Information and Currency
Translations."
The following table sets forth, for the periods and dates indicated, certain
information concerning the exchange rate of dollars for Irish pounds expressed
in dollars per Irish pound at the Noon Buying Rate.
<TABLE>
<CAPTION>
FISCAL YEAR PERIOD
ENDED MARCH 31, AVERAGE(1) HIGH LOW END
- --------------- ---------- ------ ------ ------
<S> <C> <C> <C> <C>
1991.......................................... 1.6944 1.8390 1.5635 1.5735
1992.......................................... 1.5939 1.7580 1.4585 1.6160
1993.......................................... 1.6806 1.9028 1.4407 1.5122
1994.......................................... 1.4362 1.5553 1.3550 1.4380
1995.......................................... 1.5432 1.6360 1.4075 1.6200
1996.......................................... 1.5707 1.6055 1.5585 1.5720
</TABLE>
- --------
(1) The average of the Noon Buying Rates on the last business day of each
month during the relevant period.
On March 31, 1996, the Noon Buying Rate was $1.5720 = IR(Pounds)1.
For additional information regarding the currency translation policies of
Elan, see Note 1 to the Consolidated Financial Statements included in Elan's
1995 Annual Report incorporated herein by reference.
42
<PAGE>
UNAUDITED PRO FORMA
COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information (the "Pro
Forma Combined Financial Information") is based on the historical financial
statements of Elan and Athena and has been prepared to illustrate the effects
of the Merger. The Pro Forma Combined Financial Information and accompanying
notes should be read in conjunction with the historical financial statements
of Elan and Athena incorporated herein by reference. The pro forma combined
statements of income for the year ended December 31, 1995 give effect to the
Merger as if it had occurred on January 1, 1995. The historical statement of
operations of Athena, which is prepared in U.S. dollars, has been converted
into Irish pounds at the average rate during calendar 1995 between $ and
IR(Pounds), as calculated by the Central Bank of Ireland at $1.6039. The pro
forma combined balance sheet as of December 31, 1995 has been prepared as if
the Merger had occurred on that date. The historical balance sheet of Athena,
as of December 31, 1995, which is prepared in U.S. dollars, is converted at an
Irish pound rate of $1.60, the Noon Buying Rate on December 31, 1995. The Pro
Forma Combined Financial Information has been prepared in accordance with U.S.
GAAP using the purchase method of accounting. The Pro Forma Combined Financial
Information does not contain any adjustment to reflect any restatement of the
net assets of Athena to conform with Elan's accounting policies or the costs,
benefits or synergies resulting from the integration of Elan and Athena
following the Merger. The Pro Forma Combined Financial Information is not
necessarily indicative of any future results of operations or the results that
might have occurred if the Merger had been consummated on the indicated dates.
The Merger will be accounted for using the purchase method of accounting.
The total purchase cost of the Merger will be allocated to tangible and
intangible assets and liabilities acquired based upon the reflected fair
market values. Any allocation relating to in process research and development
will be written off at the time of the Merger. The allocation of the aggregate
purchase price reflected in the Pro Forma Combined Financial Information is
preliminary. The final allocation of the purchase price is contingent upon
final appraisals of the acquired assets.
43
<PAGE>
UNAUDITED
PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
--------------------------------------------------------------------------------------------
HISTORICAL COMBINED
----------------------------------- -------------------------------
ELAN ATHENA(I) ADJUSTMENT NOTE PRO FORMA PRO FORMA(I)
----------------- ---------------- ----------------- ---- ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents.......... IR(Pounds)121,135 IR(Pounds)25,180 IR(Pounds)(10,000) 2 IR(Pounds)136,315 $218,104
Marketable investment
securities........... 86,861 3,751 -- 90,612 144,979
Accounts receivable
and prepayments...... 30,328 4,044 -- 34,372 54,996
Inventories........... 15,939 1,216 -- 17,155 27,447
----------------- ---------------- ----------------- ----------------- --------
Total current
assets............. 254,263 34,191 (10,000) 278,454 445,526
----------------- ---------------- ----------------- ----------------- --------
Fixed assets:
Property, plant and
equipment (net)...... 57,219 2,934 -- 60,153 96,245
Other assets:
Investments........... 43,613 -- (7,500) 1 36,113 57,781
Intangible assets
(net)................ 49,599 17,984 47,875 2 115,458 184,733
----------------- ---------------- ----------------- ----------------- --------
150,431 20,918 40,375 211,724 338,759
----------------- ---------------- ----------------- ----------------- --------
Total assets............ IR(Pounds)404,694 IR(Pounds)55,109 IR(Pounds)30,375 IR(Pounds)490,178 $784,285
================= ================ ================= ================= ========
Liabilities and
shareholders' equity
Current liabilities:
Accounts payable and
accrued liabilities.. IR(Pounds)16,411 IR(Pounds)5,696 IR(Pounds)-- IR(Pounds)22,107 $35,372
Current portion of
debt................. -- 1,160 -- 1,160 1,856
----------------- ---------------- ----------------- ----------------- --------
Total current
liabilities........ 16,411 6,856 -- 23,267 37,228
----------------- ---------------- ----------------- ----------------- --------
Government grants....... 1,896 -- -- 1,896 3,034
Long-term debt.......... 103,968 11,968 (7,500) 1 108,436 173,497
Minority interests...... 388 -- -- 388 621
----------------- ---------------- ----------------- ----------------- --------
106,252 11,968 (7,500) 110,720 177,152
----------------- ---------------- ----------------- ----------------- --------
Share capital........... 1,503 172 323 2 1,826 2,922
(172)
Additional paid-in
capital................ 214,726 107,618 364,828 2 579,554 927,286
(107,618)
Equity adjustments from
foreign currency
translation............ (7,486) -- -- (7,486) (11,978)
Retained earnings....... 73,288 (71,505) (290,991) 2 (217,703) (348,325)
71,505
----------------- ---------------- ----------------- ----------------- --------
Shareholders' equity.. 282,031 36,285 37,875 356,191 569,905
----------------- ---------------- ----------------- ----------------- --------
Total liabilities and
shareholders' equity... IR(Pounds)404,694 IR(Pounds)55,109 IR(Pounds)30,375 IR(Pounds)490,178 $784,285
================= ================ ================= ================= ========
</TABLE>
- --------
(i) Translated for convenience at the Noon Buying Rate on December 31, 1995 of
$1.60 = IR(Pounds)1.00.
44
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED BALANCE SHEET
1. Reflects the elimination of a $12 million 10% convertible subordinated loan
(IR(Pounds)7,500,000), advanced by Elan to Athena in March 1995.
2. The Merger is expected to result in the issuance of 8,087,438 Elan Ordinary
Shares resulting in an increase in share capital and additional paid-in
capital of IR(Pounds)323,000 and IR(Pounds)364,828,000, respectively. In
addition, Athena has options, warrants and convertible debt which are
expected to be exercisable for, or convertible into 5,583,615 Athena
Shares, excluding any such instruments held by Elan. Under the Merger
Agreement the holders of the options, warrants and convertible debt of
Athena, will receive similar rights in Elan, adjusting the number of shares
to which these instruments are entitled and the exercise/conversion price
for the Exchange Ratio. The amount by which the quoted market value of the
Elan ADSs exceeds the exercise price is included in additional paid-in
capital and included in the purchase price. The share price used for the
purpose of this calculation is that of the close of business on April 12,
1996 ($64.25). This was converted into Irish Pounds at the rate of $1.60
equals IR(Pounds)1.00, the noon buying rate in New York City on December
31, 1995. The total resulting purchase price approximates
IR(Pounds)375,151,000 including transaction expenses of
IR(Pounds)10,000,000. The purchase price is allocated as follows:
<TABLE>
<S> <C>
Increase in fair value of intangible
assets............................. IR(Pounds)47,875,000(a)
In-process research and development. 290,991,000(b)
Net assets of Athena per balance 36,285,000
sheet at December 31, 1995......... --------------------
375,151,000
====================
</TABLE>
- --------
(a) Reflects an increase in the carrying value of
intangible assets to their estimated fair value.
(b) Reflects a one-time charge against earnings,
representing the acquisition of in-process
research and development activities estimated at
IR(Pounds)290,991,000. This charge is excluded
from the unaudited pro forma combined income
statement as it is non-recurring.
3. In certain circumstances the Company may use the resulting cash and cash
equivalents to acquire Elan ADSs in the open market subsequent to the
consummation of the Merger.
45
<PAGE>
UNAUDITED
PRO FORMA STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------------------------
HISTORICAL COMBINED
----------------------------------- -------------------------------------
ELAN ATHENA(I) ADJUSTMENT NOTE PRO FORMA(II) PRO FORMA (II)(III)
---------------- ----------------- ---------------- ---- ---------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales and
service revenues.. IR(Pounds)53,950 IR(Pounds) 27,187 IR(Pounds) -- IR(Pounds)81,137 $129,819
Research revenue... 19,208 6,119 -- 25,327 40,523
Royalties and fees. 51,161 -- (2,031) 1 49,130 78,608
---------------- ----------------- ---------------- ---------------- --------
Total revenues... 124,319 33,306 (2,031) 155,594 248,950
---------------- ----------------- ---------------- ---------------- --------
Cost and expenses:
Cost of goods and
services sold..... 41,481 13,086 3,436 2 58,003 92,804
Selling, general
and
administrative.... 20,815 13,840 -- 34,655 55,448
Research and
development....... 18,193 24,703 (2,031) 1 40,865 65,383
---------------- ----------------- ---------------- ---------------- --------
Total operating
expenses........ 80,489 51,629 1,405 133,523 213,635
---------------- ----------------- ---------------- ---------------- --------
Operating income..... 43,830 (18,323) (3,436) 22,071 35,315
Interest and other
income............ 12,144 1,010 (563) 1 12,591 20,145
Interest expense... (5,733) (1,236) 563 1 (6,406) (10,249)
Share of losses of
associates........ (754) -- -- (754) (1,206)
Minority interest.. 60 -- -- 60 96
---------------- ----------------- ---------------- ---------------- --------
Income (Loss) before
tax................. 49,547 (18,549) (3,436) 27,562 44,101
Taxation............. (277) -- -- (277) (444)
---------------- ----------------- ---------------- ---------------- --------
Net Income (Loss).... IR(Pounds)49,270 IR(Pounds)(18,549) IR(Pounds)(3,436) IR(Pounds)27,285 $ 43,657
================ ================= ================ ================ ========
Earnings per
ordinary, common and IR(Pounds)1.36 IR(Pounds)(0.75) IR(Pounds)0.60 $0.97
equivalent share.... ================ ================= ================ ========
Weighted average
number of ordinary,
common and
equivalent shares
outstanding......... 36,223 24,569 8,986 45,209 45,209
================ ================= ================ ================ ========
</TABLE>
- --------
(i) Translated into IR(Pounds) at the average rate during calendar 1995 at the
rate of IR(Pounds)1.00=$1.6039.
(ii) As a result of the acquisition, Elan will incur a one-time charge against
earnings representing the acquisition of in-process research and
development estimated at IR(Pounds)290,991,000. This charge is excluded
from the pro forma Combined Income Statement as it is a non-recurring
item.
(iii) Translated for convenience at the Noon Buying Rate on December 31, 1995
of $1.60 = IR(Pounds)1.00.
46
<PAGE>
NOTES TO UNAUDITED PRO FORMA
STATEMENTS OF INCOME
1. Reflects the research transactions between Elan and Athena in the year
ended December 31, 1995 and interest charged by Elan to Athena pursuant to
a US$12 million 10% convertible subordinated loan advanced in March 1995.
2. Reflects the effect of increased amortization following the revaluation of
Athena assets at their estimated fair value. The intangible assets will be
amortized on a straight line basis over their expected useful lives,
estimated at 15 years.
47
<PAGE>
COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
HISTORICAL
---------------------
ATHENA ATHENA
YEAR ENDED PRO FORMA EQUIVALENT EQUIVALENT
DECEMBER 31, 1995 ELAN ATHENA COMBINED PRO FORMA(I) PRO FORMA(I)(II)
- ----------------- -------------- ------ -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Net income (loss) per
ordinary, common and
equivalent share....... IR(Pounds)1.36 ($1.21) IR(Pounds)0.60 IR(Pounds)0.18 $0.29
Dividends............... IR(Pounds)0.00 $0.00 IR(Pounds)0.00 IR(Pounds)0.00 $0.00
Book value per ordinary,
common and equivalent
share.................. IR(Pounds)7.52 $2.11 IR(Pounds)7.81 IR(Pounds)2.31 $3.69
</TABLE>
- --------
(i) The equivalent pro forma per share amounts were calculated by multiplying
the pro forma income per share, pro forma dividends per share and pro forma
book value per share by the Exchange Ratio.
(ii) Translated for convenience at the Noon Buying Rate on December 31, 1995 of
$1.60=IR(Pounds)1.00.
48
<PAGE>
BUSINESS OF ELAN
GENERAL
Elan is a world leader in the development of controlled-absorption drug
delivery systems. Elan manufactures, markets and licenses drug products based
on such systems. Elan's drug delivery technologies are designed to improve and
control the absorption and utilization by the human body of active
pharmaceutical compounds, allowing these compounds to be administered less
frequently, with reduced side effects and/or in reduced dosages. In addition
to providing the potential for increasing the medical benefits and efficacy of
active drug compounds, Elan's drug delivery systems provide its client
pharmaceutical companies with the opportunity to improve the commercial
prospects for existing drugs. One of Elan's principal objectives is to be the
"Preferred Industry Partner" to certain leading pharmaceutical and
biotechnology companies with respect to the development of drug delivery
technologies applicable to a full range of pharmaceutical products.
Elan has developed technologies applicable to a number of different
controlled-absorption drug delivery systems which address a wide variety of
delivery problems. These include a broad range of oral delivery systems for
conventional drugs and for new and emerging therapeutic agents, passive
transdermal, electrically-assisted transdermal and transcutaneous systems and
long-acting injectables. Elan devotes significant resources to the refinement
and improvement of its existing drug delivery systems, as well as to the
development of next-generation technologies, with particular applicability to
the delivery of new chemical entities, including macromolecules and other
complex biotechnology products. Elan believes that its technologies and its
drug delivery expertise provide the basis for a steady flow of innovative and
improved products.
ELAN TECHNOLOGIES
Elan's approach to technology development focuses on identifying delivery
problems relating to specific pharmaceutical compounds and developing the most
effective delivery system for each such compound. In doing so, Elan further
develops its delivery systems and technologies which have widespread
application to a large number of existing drugs, as well as to new chemical
entities under development. In addition, Elan devotes significant resources to
the development of next-generation technologies.
<TABLE>
<CAPTION>
TECHNOLOGY DESCRIPTION
---------- -----------
<C> <S>
SODAS(R) Technology......... Oral controlled-absorption drug delivery
technology utilizing microspheroidal beads which
precisely controls the release and absorption
rate of a wide variety of pharmaceutical
compounds.
IPDAS(TM) Technology........ Oral controlled-release drug delivery technology
utilizing a specialized multiparticulate high-
density bead system which minimizes the adverse
gastro-intestinal effects commonly encountered
with certain irritant pharmaceutical compounds,
principally non-steroidal, anti-inflammatory
drugs.
INDAS(R) Technology......... Oral controlled-release drug delivery technology
which creates a stable, high energy form for
pharmaceutical compounds displaying very poor
solubility characteristics and, combined with a
unique matrix technology, allows controlled
absorption over a 24-hour period.
MODAS(TM) Technology........ Oral controlled-release drug delivery system
which consists of a tablet core surrounded by a
differentially permeable membrane which controls
the delivery of pharmaceutical compounds. MODAS
is particularly suited for highly water soluble
drugs.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
TECHNOLOGY DESCRIPTION
---------- -----------
<C> <S>
PharmaZome(R) Technology.... Liquid oral drug delivery technology which
incorporates minute polymer micro-matrices which
are encoded with active pharmaceutical
compounds. These micro-matrices control the
release of active ingredients and are small
enough to be easily suspended in a liquid
medium. PharmaZome also has the ability to mask
unpleasant odors and/or tastes.
EFVDAS(TM) Technology....... Effervescent technology developed for use with a
variety of over-the-counter and prescription
drugs. EFVDAS provides effective taste masking
of active pharmaceutical compounds and may
provide for superior and/or faster absorption of
a drug.
DERMAFLEX(R) Technology..... Passive transdermal patch employing a hydrogel
matrix in which a pharmaceutical compound is
incorporated. Regulates both the availability
and the absorption of pharmaceutical compounds
in a manner which allows for controlled and
efficient delivery.
ETDAS(R) Technology*........ Electronically-assisted delivery system which
facilitates the controlled administration of
drugs, either transdermally or transcutaneously.
BEODAS(TM) Technology*...... Oral drug delivery technology designed for the
delivery of macromolecules and based upon
entrapping active pharmaceutical compounds
through a biodegradable polymer matrix in a
range of sub-micron-sized particles. BEODAS has
the potential for targeted delivery and enhanced
absorption of pharmaceutical compounds which are
not normally capable of oral administration.
MIDAS(TM) Technology*....... Incorporates a drug into a biodegradable polymer
microparticle which can then be injected
subcutaneously or intramuscularly to provide a
defined release-rate of the drug for a period of
up to three months or more.
</TABLE>
- --------
* Currently being developed by Elan for ATS. See "--Strategic Relationships."
PRODUCTS
Current Products
The primary Elan-developed products currently being marketed are as follows:
DILTIAZEM: Elan has developed both a once-daily and a twice-daily,
controlled-release formulation of diltiazem, a calcium channel blocker,
utilizing Elan's SODAS technology. The once-daily formulation is used in the
treatment of hypertension and angina and is marketed in the United States and
Canada as Cardizem CD by HMR, as Herbesser(R) in Japan by Tanabe Seiyaku and
by other licensees in certain other countries. The twice-daily formulation,
which is used in the treatment of hypertension, is manufactured by Elan and is
marketed by HMR in the United States and Canada as Cardizem SR and by other
licensees in certain other countries.
VERAPAMIL: Elan has developed a once-daily, controlled-release formulation
of verapamil, a calcium channel blocker which is indicated for the treatment
of hypertension. Verapamil, which incorporates Elan's SODAS technology, is
manufactured by Elan and marketed in the United States and Canada by AHP as
Verelan and by other licensees in certain other countries.
NAPROXEN: Naproxen is a non-steroidal anti-inflammatory drug used in the
treatment of osteo-arthritis and rheumatoid-arthritis. Elan has developed a
once-daily, controlled-release formulation of naproxen sodium utilizing Elan's
IPDAS technology. Naproxen is manufactured by Elan and marketed by Roche as
Naprosyn(TM) SR in the United Kingdom and South Africa. In addition, licensing
and marketing arrangements have been finalized with AHP for the marketing in
the United States of Naprelan(R) (naproxen sodium) Controlled-Release tablets.
AHP commenced shipping Naprelan to distributors in early April, 1996.
50
<PAGE>
NIFEDIPINE: Elan has developed a controlled-release, once-daily formulation
of nifedipine, a calcium channel blocker which is indicated for the treatment
of hypertension. Nifedipine utilizes Elan's INDAS technology and is
manufactured by Elan and marketed as Nifensar(TM) XL in the United Kingdom and
Ireland by Rhone-Poulenc Rorer, Inc., as Corinfar Uno in Germany by Asta
Medica GmbH and by other licensees in certain other countries.
NICOTINE PATCH: Elan has developed a nicotine transdermal product utilizing
Elan's DERMAFLEX technology, which is used as a smoking cessation aid. The
nicotine patch is manufactured by Elan and marketed as Prostep(R) in the
United States by AHP and in Canada by Boehringer Ingelheim and by other
licensees in certain other countries.
Products under Development
Elan is conducting research and clinical trials on the application of its
delivery systems and technologies to a number of other pharmaceutical products
and compounds. These projects are in various stages of development and cover a
wide range of technologies. In addition to internal development projects, a
number of projects on behalf of clients are underway.
Elan has a number of novel therapeutic agents under development.
Neurelan(TM), a controlled-release form of fampridine proposed for use in the
symptomatic treatment of multiple sclerosis, has been formulated using Elan's
proprietary drug delivery technology. Initial Phase II clinical trials have
been completed. Elan expects that Phase III trials will begin in calendar
1996. See "--Governmental Regulation."
Elan is also investigating a compound, code-named EL 530, for use in the
treatment of prostate cancer under a cooperative Research and Development
Agreement with the U.S. National Cancer Institute (the "NCI"). Phase I
clinical trials have been completed and Elan's research to date indicates that
EL 530 is well tolerated. Phase II trials have commenced under the direction
of the NCI. Elan is also conducting development work on a compound closely
related to EL 530, code-named EL 532. Elan believes that EL 532 may be useful
in the treatment of certain anemias, particularly sickle cell anemia. Phase I
clinical trials on EL 532 are nearing completion.
Elan is conducting development work on Captelan(TM), a once-daily
formulation of captopril, utilizing Elan's SODAS technology. Captelan is an
angiotensin converting enzyme inhibitor used in the treatment of hypertension
and congestive heart failure. Phase II/III clinical trials are scheduled for
calendar 1996.
Elan is also developing Morphelan(TM), a once-daily formulation of morphine,
used in pain management therapy. Elan believes that Morphelan is effective in
minimizing "breakthrough" pain over a 24-hour period. Morphelan is entering
Phase III clinical trials.
Elan is conducting development work on a wide range of controlled-release
drug delivery devices utilizing Elan's ETDAS technology, including
Panoject(TM), Panoderm(R) and Medipad(TM), which deliver a variety of drugs
using low-powered electrical stimulus. Among the drug groups to which the
ETDAS technology is being applied are complex macromolecules, antiemetic,
antimigraine and anticancer compounds, analgesics and anticoagulants.
Elan is also engaged in projects utilizing Elan's microparticulate
technologies. Elan's EFVDAS technology is being employed to develop
effervescent formulations of cimetidine, acetaminophen and ibuprofen.
Elan has a number of oral controlled-release compounds which will enter into
pivotal clinical trials in calendar 1996.
51
<PAGE>
Elan is pursuing a number of projects which have relatively short
development cycles. Each of these projects involves the filing of an
Abbreviated New Drug Application (an "ANDA"), whereby a bioequivalent match to
an innovator product is developed. These projects are being carried out
primarily for four clients (including Athena) under single or multi-product
agreements. Elan expects that ANDAs will be filed on behalf of clients in
calendar 1996.
During calendar 1996, Elan expects to continue development work on the
application of its technologies to a variety of novel therapeutic agents as a
result of recently signed agreements with pharmaceutical industry partners.
See "--Strategic Relationships."
Other Products. In fiscal 1995, Elan reorganized its nutrition and
diagnostics divisions, integrating these businesses into a single entity
organized on a divisional basis with a stronger marketing focus. Now called
the Medical Technologies Division, this division markets advanced medical
nutrition products and other products used by the critically ill, through its
own sales force and through distributors, to hospitals, nursing homes and the
home health care segment in the United States, Canada and Mexico. These
products include enteral feeding formulas, enteral pumps, plastics and other
enteral devices and the Hearty Balance range of nutritional supplements. In
addition, the Medical Technologies Division manufactures diagnostic products
and automated diagnostic instruments in the United States and markets such
products in the Unites States, Europe and the Middle East.
MARKETING
Elan aggressively commercializes its technologies on a world-wide basis by
focusing its activities on products that fit the needs of major pharmaceutical
companies, both in the United States and in the other pharmaceutical markets
of the world. Elan applies product- and market-specific approaches to its
licensing activities, actively screening products and new chemical entities to
identify opportunities where Elan's technologies can significantly enhance a
drug's therapeutic efficacy and application, provide line extensions for a
drug approaching patent expiration, improve a drug's market acceptability and
open new markets for a drug.
Elan's strategy is to capitalize on its development expertise by working
with what it considers to be the optimal partner for the development and
marketing of particular products and selecting the appropriate development
stage at which to license such products. Elan generally licenses its products
at a late stage in development, thereby enhancing the products' value and
optimizing the products' return to Elan.
Elan has entered into marketing and/or manufacturing contracts in respect of
the sale and manufacture of many of its products. These long-term contracts
provide, among other things, for the receipt by Elan of royalties based on net
sales of its products in their respective markets. They also provide for
certain manufacturing rights for Elan at its facilities in Athlone, Ireland
and Gainesville, Georgia. In addition, consistent with its strategy to
establish international commercialization capabilities, Elan has formed joint
ventures in the United Kingdom, Ireland, Sweden, Spain, the Philippines, China
and Taiwan. In general, each of these joint ventures has been established with
a strong local partner, providing an existing infrastructure for the marketing
of Elan-developed products.
STRATEGIC RELATIONSHIPS
As part of Elan's objective to be the "Preferred Industry Partner" to
certain leading pharmaceutical and biotechnology companies, in addition to its
client-funded and self-funded research and development activities, Elan has
entered into technology or product development collaborative arrangements with
a number of strategic partners. In several of these arrangements, Elan has
purchased an equity interest in its partner in order to enhance Elan's
participation in the arrangement.
In August 1993, Elan formed ATS for the purpose of developing and marketing
pharmaceutical products based upon drug delivery systems incorporating Elan's
ETDAS technology, BEODAS technology and MIDAS technology. ATS was funded
through a subscription offering of units to Elan's stockholders, each unit
52
<PAGE>
consisting of one common share of ATS and one Elan warrant to purchase one
Ordinary Share of Elan. The subscription offering, together with $35 million
contributed by Elan to ATS, resulted in approximately $108.5 million of net
proceeds to ATS. Elan has the Purchase Option, which is currently exercisable,
to purchase all, but not less than all, of the outstanding common shares of
ATS at predetermined prices through April 30, 1998. The Purchase Option price
is (i) $36 per share (aggregate of $141.2 million), if exercised before
October 31, 1996, (ii) $49 per share (aggregate of $192.2 million), if
exercised after October 31, 1996 and on or before October 31, 1997, and (iii)
$61 per share (aggregate of $239.3 million), if exercised after October 31,
1997 and on or before April 30, 1998. The Purchase Option price may be paid in
cash, in Ordinary Shares or in a combination thereof at Elan's discretion.
Pursuant to a development and license agreement, Elan is conducting research
and development activities on behalf of ATS.
In September 1994, Elan, Dura Pharmaceuticals, Inc. ("Dura") and Dura
Delivery Systems, Inc. ("DDSI") formed a broad strategic alliance. The
strategic alliance followed the purchase by Elan in April 1994 of 342,857
shares of Dura common stock and warrants to purchase an additional 300,000
shares of Dura common stock at an exercise price of $8.75 per share, for
aggregate consideration of approximately $3.5 million. In connection with the
formation of the strategic alliance, Elan, Dura and DDSI entered into (i) a
technology access agreement (the "Technology Agreement"), which provides for
the development by Elan of generic versions of certain drugs and the supply of
such drugs to Dura for sale exclusively in the United States, (ii) a protein
and peptide agreement which provides for the development by Elan of up to five
compounds for systemic delivery through the lungs utilizing Dura's proprietary
pulmonary dry powder drug delivery system and (iii) a licensing agreement (the
"Licensing Agreement") pursuant to which Elan received exclusive rights to
develop, manufacture and market in most countries outside the United States
eight identified respiratory compounds for use in Dura's proprietary pulmonary
dry powder drug delivery system. In addition, in connection with the execution
of the licensing agreement, Elan and DDSI entered into a loan agreement (the
"DDSI Loan Agreement") pursuant to which Elan agreed to lend to DDSI $10
million for a term of seven years (the "DDSI Loan") for the purpose of
enabling DDSI to further develop certain compounds. Pursuant to the DDSI Loan
Agreement, Elan had the right to convert the DDSI Loan, including accrued
interest, if any, into shares of callable common stock of DDSI, at
predetermined conversion rates, upon the exercise by Dura of an option (the
"Dura Option") held by it to purchase all of the outstanding callable common
stock of DDSI. In November 1995, Dura announced its intention to exercise the
Dura Option and to purchase all of the outstanding callable common stock of
DDSI for consideration consisting of common stock of Dura. In connection with
such exercise, Elan converted the DDSI Loan into DDSI callable common stock
and received 376,581 shares of Dura common stock upon the consummation of the
acquisition of DDSI by Dura. Between March 11 and March 13, 1996, Elan sold
376,580 shares of Dura common stock reducing its ownership to 4.1%.
In December 1995, Elan purchased in a private placement 333,333 units, each
unit consisting of one share of callable common stock of Spiros Development
Corporation ("Spiros") and one warrant to purchase 1.2 shares of common stock
of Dura at an exercise price of $38.94 per share, at a purchase price of
$30.00 per unit. The warrants expire on December 29, 2000. The private
placement of the units was made in connection with the development of an
alliance among Dura, DDSI and Spiros, which was formed for the purpose of
developing certain products based on a proprietary dry powder drug delivery
system licensed to Spiros by Dura and DDSI. Under the terms of the alliance,
Dura has the right to purchase all (but not less than all) of the outstanding
callable common stock of Spiros at predetermined prices through December 31,
1999.
In October 1994, Elan entered into a master development and license
agreement and an administrative support agreement with Nale Laboratories, a
public limited company ("Nale"), pursuant to which Nale and Elan agreed to
utilize Elan's research and development, medical and regulatory infrastructure
for the development of complex generic drug candidates selected by Nale.
Additionally, Nale may utilize Elan's manufacturing capabilities under certain
specified terms and conditions. In connection with the execution of such
agreements, Elan purchased 625,000 Nale ordinary shares, representing 26.6% of
Nale's outstanding ordinary shares, and a warrant to purchase an additional
500,000 Nale ordinary shares at an exercise price of $16.00 per ordinary
share,
53
<PAGE>
for aggregate consideration of $10,000,000. In March 1996, pursuant to an
Asset Purchase Agreement, a wholly-owned U.S. subsidiary of Nale acquired the
Warner Chilcott division of Warner-Lambert Company.
In August 1995, Elan and Ethical Holdings, plc ("Ethical") entered into a
technology collaboration and product development agreement for a number of
controlled-release and transdermal products. Ethical agreed to grant Elan
access to certain Ethical proprietary technologies for use in Elan-developed
products. At Elan's option, Elan may require Ethical to conduct research and
development and/or manufacture such products. In connection with the
establishment of the arrangement, Elan paid to Ethical a license fee of
$8 million. Ethical will also receive certain milestone payments and a share
of license fees and royalties relating to the marketing of all products under
the arrangement. Finally, Elan purchased 700,000 ordinary shares of Ethical,
and received a warrant, exercisable until August 31, 2000, to purchase an
additional 950,000 Ethical ordinary shares at an exercise price of $9.75 per
share until August 31, 1998, and $10.75 per share thereafter, for aggregate
consideration of approximately $6.9 million.
In October 1995, Elan and Emisphere Technologies, Inc. ("Emisphere") formed
a strategic alliance providing for the application of Elan's drug delivery
technologies to Emisphere's membrane absorption technologies. Elan and
Emisphere executed a letter of intent to establish a joint venture for the
development of oral formulations of heparin and heparinoid, two products which
currently must be administered by injection. In connection with the formation
of the strategic alliance, Elan purchased 600,000 shares of Emisphere common
stock, and a received a warrant, exercisable until October 18, 2000, to
purchase an additional 250,000 shares of Emisphere common stock at an exercise
price of $16.25 per share, for aggregate consideration of $7,500,000.
MANUFACTURING AND FACILITIES
Elan generally retains manufacturing rights to the products it develops.
Elan manufactures some or all of the product requirements for certain client
companies, including Cardizem CD and Cardizem SR for HMR, Verelan and Prostep
for AHP and a range of products for licensees, distributors and joint venture
partners throughout the world. Elan manufactures all of the Naprelan for its
licensee, AHP.
Elan's principal executive offices and primary manufacturing, sales and
administrative facilities, comprising a 235,000 square foot complex, are
located in Athlone, Ireland. In addition, Elan has established its own 40-bed
clinical pharmacology center and attendant bioanalytical facilities at the
Athlone complex. Elan also leases an 8,100 square research facility at Trinity
College in Dublin, Ireland. Elan owns a 55,000 square foot administrative and
manufacturing facility in Gainesville, Georgia, as well as in excess of 150
acres of land immediately adjacent to such facility, 40% of which is zoned for
industrial and commercial use suitable for expansion of Elan's operations. In
addition, Elan owns a 36,500 square foot manufacturing facility in Mezzovico,
Switzerland. Elan also leases the following facilities: (i) a 20,000 square
foot manufacturing, sales and administrative facility in Brea, California,
(ii) a 29,000 square foot sales, warehouse, manufacturing and administration
facility in Smithfield, Rhode Island, (iii) a 4,200 square foot distribution,
marketing and product finishing facility in the Philippines and (iv) a 5,000
square foot research and development facility in Yvane, Israel. Finally, Elan
has acquired a 25,000 square foot manufacturing facility located near its
Athlone, Ireland complex.
On July 13, 1995 and September 26, 1995, Elan received the Warning Letters
from the FDA, which identified certain conditions at Elan's Athlone, Ireland
and Gainesville, Georgia manufacturing facilities which the FDA considered to
be deviations from GMP regulations. Elan believes that all of its facilities
are in substantial compliance with GMP regulations. However, a determination
by the FDA that Elan is not in substantial compliance with such regulations
could have a material adverse effect on Elan. See "Risk Factors-- Government
Regulation."
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<PAGE>
RESEARCH AND DEVELOPMENT
Elan's product development efforts have been and are expected to continue to
be either self-funded, funded by licensees, or both. Elan spent approximately
IR(Pounds)17.7 million, IR(Pounds)14.1 million and IR(Pounds)11.4 million on
self-funded research and development activities during fiscal 1995, fiscal
1994 and and fiscal 1993, respectively, excluding related general and
administrative costs. The cost of research and development activities funded
by licensees is included in the cost of goods sold.
GOVERNMENTAL REGULATION
The design, development, testing, manufacturing and marketing of
pharmaceutical products are intensely regulated by governmental regulatory
agencies, including the FDA. For example, the Federal Food, Drug and Cosmetic
Act (the "FDCA"), the Controlled Substances Act and other United States
federal statutes and regulations impose requirements on the testing,
manufacture and approval of Elan's products marketed in the United States.
Non-compliance with applicable requirements can result in fines and other
judicially imposed sanctions, including the initiation of product seizures,
import restrictions, injunctive actions and criminal prosecutions based on
products or manufacturing practices that violate statutory requirements. In
addition, informal administrative remedies can involve requests to recall
violative products, as well as the refusal of the government to enter into
supply contracts or to approve new drug applications ("NDAs") or other pre-
market approval applications ("PMAs") until manufacturing or other alleged
deficiencies are brought into compliance. The FDA also has the authority to
withdraw approval of drugs in accordance with statutory due process
procedures.
The FDA approval procedure is a lengthy process. Prior to clinical (human)
studies, the applicant must show through animal and laboratory studies that
the product is reasonably safe to administer to humans. This is followed by
studies in humans which must be preceded by the filing of an investigational
new drug ("IND") application. A 30-day waiting period after the filing of each
IND is required by the FDA prior to the commencement of initial (Phase I)
clinical testing in healthy subjects. If the FDA has not commented on or
questioned the IND within such 30-day period, initial clinical studies may
begin. If, however, the FDA has comments or questions, such comments or
questions must be addressed or answered to the satisfaction of the FDA before
initial clinical testing can begin. In some instances, this process could
result in substantial delay and expense. Phase I studies are intended to
demonstrate the functional characteristics and safety of a product.
After Phase I testing, extensive efficacy and safety studies in patients
must be conducted. After successful completion of the required clinical
testing, an NDA is filed, and its approval, which is required for marketing in
the United States, involves an extensive review process by the FDA. In certain
cases, an ANDA may be filed in lieu of filing an NDA. An ANDA relies on
bioequivalency tests which compare the applicant's drug with an already
approved reference drug, rather than on clinical studies. An ANDA would be
available to Elan for a new formulation of a drug for which bioequivalent
sustained release forms have already been approved by the FDA. Because the
majority of Elan's drug development has been carried out on drugs which do not
have such forms approved by the FDA, Elan expects that most of its new drug
formulations will require NDA filings. There can be no marketing in the United
States of any product for which an NDA or ANDA is required until the NDA or
ANDA has been approved by the FDA. The NDA itself is a complicated and
detailed document and must include the results of extensive clinical and other
testing, the cost of which is substantial. While the FDA is required to review
applications within 180 days of their filing, in the process of reviewing
applications the FDA frequently requests that additional information be
submitted and this typically restarts the 180-day regulatory review period
anew when the requested additional information is submitted. The effect of
such request and subsequent submission can significantly extend the time for
the NDA review process. Until an NDA is actually approved, there can be no
assurance that the information requested and submitted will be considered
adequate by the FDA to justify approval. The packaging and labeling of all
Elan-developed products are also subject to FDA approval and ongoing
regulation. It is impossible to anticipate the amount of time that will be
required to obtain approval from the FDA to market any product.
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An FDA approval of an NDA for a new chemical entity or a new dosage
form/delivery system which was based, at least in part, upon the required
submission of new clinical (human) data, is entitled to non-patent regulatory
exclusivity against another person obtaining effective approval of an
abbreviated type of NDA (an ANDA or "Paper-NDA") pending the expiration of the
applicable exclusivity period (five years for a new chemical entity and three
years for other approvals based upon submission of new clinical data). This
regulatory exclusivity does not operate to preclude the effective approval of
a full NDA during the exclusivity period.
Whether or not FDA approval has been obtained, approval of a pharmaceutical
product by comparable regulatory authorities must be obtained in any foreign
country prior to the marketing of the product in that country. The approval
procedure varies from country to country, can involve additional testing, and
the time required may differ from that required for FDA approval. Although
there are some procedures for unified filings for certain European countries,
in general, each country has its own procedures and requirements, many of
which are time consuming and expensive. Thus, there can be substantial delays
in obtaining required approvals from both the FDA and foreign regulatory
authorities after the relevant applications are filed. After such approvals
are obtained, further delays may be encountered before the products become
commercially available and the products are potentially subject to a
withdrawal proceeding if new evidence raises significant questions of safety
or effectiveness. If, subsequent to approval, new information becomes
available concerning the safety of any of Elan's approved products, this could
result in the need to revise the labeling for the affected product or in the
withdrawal of the approval of that product.
All facilities and manufacturing techniques used for the manufacture of
products for clinical use or for sale in the United States must be operated in
conformity with GMP regulations, the FDA regulations governing the production
of pharmaceutical products. On July 13, 1995 and September 26, 1995, Elan
received the Warning Letters from the FDA, which identified certain conditions
at Elan's Athlone, Ireland and Gainesville, Georgia manufacturing facilities
which the FDA considered to be deviations from GMP regulations. As a result of
discussions with the FDA, Elan implemented a number of corrective actions and
is intensifying its GMP compliance procedures. The Warning Letters have not
had, and Elan does not believe that the Warning Letters will have, a material
adverse effect on Elan and its operations. Elan believes that its facilities
are in substantial compliance with GMP regulations. However, a determination
by the FDA that Elan is not in material compliance with such regulations could
have a material adverse effect on Elan. See "Risk Factors--Government
Regulation."
From time to time, the FDA and other federal, state and foreign governmental
agencies may adopt regulations that affect the manufacturing and marketing of
products by Elan, including special regulations that may apply to any products
utilizing biotechnology compounds. It is not possible to predict the impact
that any such regulations, if adopted, might have on Elan or its operations.
The Orphan Drug Act provides incentives to manufacturers to develop and
market drugs for rare diseases and conditions affecting fewer than 200,000
persons in the United States at the time of application for orphan drug
designation. A drug that receives orphan drug designation for an indication
and is the first product to receive FDA marketing approval for that indication
is entitled to a seven-year exclusive marketing period in the United States
for that indication. However, a drug that is considered by the FDA to be
different from a particular orphan drug is not barred from sale in the United
States during such seven-year exclusive marketing period.
Certain in vitro diagnostic products, medical nutrition devices and certain
delivery systems (for example, Panoject, Panoderm and Medipad) are regulated
or potentially regulated under the FDCA as medical devices. As medical
devices, these products would be subject to premarketing and postmarketing
requirements applicable to devices, including those governing (i) clinical
testing, (ii) prior FDA approval in the form of (a) an FDA determination
through the 510(k) process of substantial equivalence to a marketed device or
(b) an approved PMA, (iii) postmarketing record and reporting obligations and
(iv) GMP obligations. The failure to adhere to these requirements can result
in a refusal of permission to market, a withdrawal of permission to market and
the imposition of sanctions, including seizure, recall, notification,
injunction, and civil and criminal penalties. Additionally, as a condition to
marketing or continued marketing, the FDA may impose certain postmarket
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surveillance and/or tracing requirements which may significantly increase the
regulatory costs associated with a product. The PMA approval requirements are
generally analogous to the NDA approval requirements. The 501(k) process,
while generally less burdensome than the PMA requirements, requires
affirmative FDA approval and may be dependent upon the generation of safety
and effectiveness data, as well as manufacturing and quality assurance data
and information. There can be no assurance that a given medical device will
obtain the necessary approvals or that any approval will be obtained within a
specified time framework.
Enteral formulas and other nutritional products offered for their
nutritional value are regulated as foods under the FDCA. As foods, they are
subject to labeling and manufacturing requirements for foods and special
dietary foods. If the foods contains any food additive or any color additive
that is not generally recognized as safe, that food is considered to be
adulterated unless the use of the food additive or color additive is
consistent with an approved food additive or color additive regulation. The
issuance of a food additive or color additive regulation requires the
generation of data to establish the safety of the intended use of the
additive, and even when successful, can take several years to effectuate. The
marketing of a food in violation of any of the applicable requirements may
result in the imposition of sanctions, including seizure, injunction and
criminal prosecution.
Under the FDCA, it is possible for a given product to be regulated both as a
drug and a medical device or as a food and a drug, subject to the
corresponding requirements applicable to the respective categories.
PATENTS AND PATENT APPLICATIONS
Elan believes that patent protection of its technologies and products is
important to its future operations. Elan's success and competitive position
will depend, in part, on its ability to obtain patents in various
jurisdictions on its current and future technologies and products, to defend
its patents, to protect its trade secrets and to operate without infringing on
the proprietary rights of others. In addition, under a number of license
agreements to which Elan is a party, the failure to obtain patents on the
products which are the subject of such license agreements will reduce the
royalty rate to which Elan is entitled. Finally, Elan's current favorable tax
position is based, in large part, upon Irish tax law, which disregards income
from qualifying patents for income tax purposes. There can be no assurance
that (i) any additional patents will be issued in any or all appropriate
jurisdictions in the future, (ii) Elan's patents will not be successfully
challenged, (iii) Elan's technologies or products do not infringe upon the
patents of third parties or (iv) the scope and validity of Elan's patents will
prevent third parties from developing similar technologies or products.
Although a patent has a statutory presumption of validity in the United
States, the issuance of a patent is not conclusive as to such validity or as
to the enforceable scope of the claims of the patent. There can be no
assurance that patents issued covering Elan's technologies or products will
not be infringed or successfully avoided through design innovation or by the
challenge of such presumption of validity. Finally, there can be no assurance
that products utilizing Elan's technologies, if and when issued, will not
infringe on patents or other rights of third parties. The validity of a patent
after its issuance by the patent office can be challenged by litigation. The
expense involved in litigation regarding patent protection or a challenge
thereto can be significant and cannot be estimated by Elan.
It is also possible that third parties will obtain patents or other
proprietary rights that may be necessary or useful to Elan. In cases where
third parties are first to invent a particular product or technology, it is
possible that those parties will obtain patents that will be sufficiently
broad so as to prevent Elan from using such technology or from further
developing or commercializing certain products.
In addition, Elan uses substantial unpatented proprietary technology. There
can be no assurance that others will not develop similar technology.
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COMPETITION
Elan's current and future products face competition from both traditional
forms of drug delivery systems, as well as more advanced drug delivery systems
developed by others. In addition, in certain cases, Elan's products face
direct competition from products manufactured and marketed by major
multinational pharmaceutical companies, some of which may potentially include
certain of Elan's current clients. Many of these other pharmaceutical concerns
have far greater financial resources, technical staffs and manufacturing and
marketing capabilities than Elan.
Two of Elan's products, Verelan and Cardizem CD, which account for an
aggregate of 29% of Elan's total revenues in fiscal 1995, use delivery systems
which are patent protected until 2007 and 2011, respectively. In addition, HMR
also holds patents over Cardizem CD which expire in 2011. Other forms of
sustained-release diltiazem and verapamil are reported to be in various stages
of development by other companies. Elan cannot predict the impact of future
competition on the sales of its products. See "--Litigation."
Elan believes that competition among drug delivery systems is generally
based upon, among other things, quality, performance, efficacy, price,
convenience and safety. Acceptance by health care providers, of which there
can be no assurance, is important to the success of Elan's products.
LITIGATION
In November 1993, a patent infringement lawsuit was commenced in U.S.
District Court for the District of New Jersey by Marion Merrell Dow Inc.
("MMD"), Carderm Capital L.P. ("Carderm Capital") and Elan against Hoechst-
Roussel Pharmaceuticals, Inc. ("Hoechst-Roussel"), alleging that certain of
the plaintiffs' patents relating to controlled-absorption formulations of
diltiazem had been infringed by Hoechst-Roussel's attempt to obtain FDA
approval of its own version of once-daily diltiazem, the rights to which
Hoechst-Roussel had licensed from Biovail Corporation International
("Biovail"). In connection with the acquisition by Hoechst-Roussel's parent,
Hoechst AG, of MMD, in April 1995 Hoechst-Roussel terminated certain
agreements with Biovail pursuant to which Hoechst-Roussel had acquired rights
to Biovail's once-daily formulation of diltiazem and the action was terminated
as between Hoechst-Roussel, MMD and Carderm Capital. Elan retained its action
against Hoechst-Roussel and in September 1995, Elan filed with the Court a
motion to substitute Biovail for Hoechst-Roussel as the defendant in the
action. On November 6, 1995, the Court entered an order granting Elan's motion
to substitute. Elan is seeking, among other things, (i) an injunction against
sales and marketing of Tiazac, Biovail's once-daily formulation of diltiazem,
and (ii) pursuant to Elan's allegation that Biovail failed to comply with its
patent certification obligations under the Waxman-Hatch Act, the withdrawal of
FDA approval to market Tiazac in the United States pending Biovail's
compliance with such certification obligations, including the certification of
applicable Elan patents, and the conclusion of the action. The parties to the
action are currently conducting discovery. It is anticipated that a trial date
will be set in the early fall of 1996.
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BUSINESS OF ATHENA
Athena discovers, develops and markets therapeutic products and diagnostic
services for patients with neurological disorders. Athena's focus is on
Alzheimer's disease and other neurological diseases, including epilepsy,
multiple sclerosis and Parkinson's disease. Athena's sales and marketing
group, including a national sales force of more than 50 representatives,
markets Permax(R) (pergolide mesylate), a proprietary product for the
treatment of Parkinson's disease, diagnostic testing services and the
Athenaline range of branded multi-source (generic) pharmaceutical products.
Athena believes that it has established a leadership position in pathology-
based approaches to diagnose and treat Alzheimer's disease, for which there is
no known prevention or cure. In collaboration with Eli Lilly and Company and
many academic researchers, Athena has been a leader in understanding the
molecular pathways that lead to the underlying pathology of Alzheimer's
disease.
Athena Diagnostics, Inc., Athena's wholly-owned subsidiary operating as a
clinical reference laboratory, provides over 50 diagnostic testing services to
the neurology market and, in January 1996, began marketing of a panel of
testing services to aid in the diagnosis of Alzheimer's disease.
DESCRIPTION OF ELAN CAPITAL STOCK
Elan's authorized capital stock consists of 100,000,000 Ordinary Shares, par
value 4 Irish pence per share (the "Elan Ordinary Shares"), 1,000 Executive
Shares par value one Irish pound per share (the "Executive Shares"), and
25,000 "B' Executive Shares, par value 4 Irish pence per share (the "'B'
Executive Shares").
ORDINARY SHARES
General. All of the 38,477,169 Elan Ordinary Shares issued as of May 10,
1996 were fully paid, duly authorized and validly issued. Holders of Elan
Ordinary Shares are entitled to receive such dividends as may be recommended
by the Board of Directors of Elan and approved by the stockholders and/or such
interim dividends as the Board of Directors of Elan may decide. On liquidation
or a winding up of Elan, the assets available for distribution among the
holders of Elan ADSs and Elan Ordinary Shares not otherwise represented by
Elan ADSs shall be distributed pro rata. Elan Ordinary Shares have no
conversion or redemption rights.
Voting Rights. Holders of Ordinary Shares are entitled to one vote per
share, either in person or by proxy whenever a formal vote is called for by a
poll. On non-contentious matters brought before a general or special meeting
of stockholders, a vote shall be taken by a show of hands, in which every
stockholder present in person or by proxy will have one vote; provided
however, that no individual will have more than one vote. Elan's Memorandum
and Articles of Association ("Elan's Articles") provide that three or more
stockholders present in person or by proxy holding not less than one-third of
the issued Ordinary Shares constitute a quorum at a meeting of stockholders. A
majority of votes cast is required for ordinary resolutions; however, a 75%
vote is required for adoption of a special resolution, such as a proposed
amendment to Elan's Articles or authorizing a voluntary liquidation of Elan.
Variation of the rights relating to a class of shares requires the approval of
a special resolution by the class in question. Stockholders do not have
cumulative voting rights for the election of directors, which means that the
holders of a majority of the shares can elect all of the directors.
Rights of Dissenting Stockholders. There are no appraisal rights under Irish
law.
Stockholder Meetings. Under Irish law, a company's annual general meeting of
stockholders ("annual meeting") must take place in the Republic of Ireland and
any business transacted at a meeting held in breach of this requirement will
be void, unless all stockholders entitled to attend and vote at such meeting
consent in writing to the meeting being held elsewhere or alternatively a
resolution providing that the meeting be held elsewhere has been passed at the
preceding annual meeting of stockholders, and the articles of association do
not require that the annual meeting be held in Ireland. Elan's Articles permit
annual meetings to be held outside Ireland if the above procedures are
followed.
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Under Irish law, extraordinary general stockholders' meetings may be
convened by the board of directors or at the request of stockholders holding
not less than one-tenth of the paid-up capital of the company as at the
relevant date. An annual meeting must be held each year and not more than 15
months shall elapse between the date of one annual meeting and that of the
next. The Minister for Enterprise and Employment of Ireland may, on the
application of any stockholder, call or direct the calling of a general
meeting if default is made in holding such meeting. Irish law requires at
least 14 days' written notice of a meeting, except that an annual meeting or a
meeting for passing a special resolution requires at least 21 days' written
notice.
Issuance of Shares. Irish company law restricts the power of the board of
directors to allot shares and to grant share subscription rights and rights to
convert securities of a company into shares unless the stockholders pass a
resolution conferring such powers of the board of directors for periods of up
to five years. By an ordinary resolution passed by Elan's stockholders on July
2, 1992, the Board of Directors is authorized, during the period expiring July
1, 1997, to allot shares up to the amount of Elan's present authorized but
unissued share capital. In addition, Elan may not pay, directly or indirectly,
a commission in excess of 10% of the price at which shares are issued to any
person subscribing for or procuring subscriptions for Ordinary Shares.
Preemptive Rights. Irish law provides that equity shares (and rights to
subscribe for or convert securities into equity shares) must, before being
issued or granted for cash, be offered, pro rata, to the existing holders of
equity shares. The stockholders may by special resolution eliminate this
requirement for periods of up to five years. Elan's stockholders have passed
the necessary special resolution eliminating the requirement for these
preemptive rights for the period expiring July 1, 1997.
Derivative Action Suits. As a general principle of Irish law, only a company
itself can be the proper plaintiff for the purposes of maintaining proceedings
in respect of wrongs done to the company. Neither an individual stockholder
nor any group of stockholders has any right of action in such circumstances.
There are, however, certain exceptions to this principle available under
equitable principles on a case-by-case basis. For example, the controlling
stockholders cannot perpetrate a fraud on the minority stockholders or commit
an act which is illegal or ultra vires. Additionally, if a company purports to
act on the strength of a decision by a simple majority where certain decisions
call for more than a simple majority, an individual stockholder is entitled to
bring suit. In cases where the controlling stockholders will not institute
proceedings in the name of the company in those instances where they are
properly called for, one or more of the aggrieved minority stockholders may
bring what has come to be known as a derivative action, namely an action that
derives from the injury to the company rather than the injury to individual
stockholders. A minority stockholder is also able to initiate proceedings in
the name of the company in certain other limited circumstances.
Class Action Suits. In contrast to a derivative action which lies where it
is alleged that a wrong has been done to the company, Irish law permits an
action by a stockholder in his own right where he alleges that his personal
rights have been infringed. If such a stockholder has rights which are
identical to those enjoyed by other members or by all members of the same
class of stockholders, it is possible for the stockholder to commence a suit
in a representative capacity on behalf of himself and the other persons
affected.
Additionally, under Irish company law any member of a company who claims
that the affairs of the company are being conducted, or that the powers of the
directors of the company are being exercised, in a manner oppressive to him or
any of the members (including himself) or in disregard of his or their
interests as members, may apply to the courts for an appropriate order.
Interlocking and Interested Directors. Irish company law provides that it
shall be the duty of a director of a company who is in any way, whether
directly or indirectly, interested in a contract or proposed contract with the
company to declare the nature of his interest at a meeting of the directors of
the company. Regulation 70(d) of Elan's Articles provide, among other things,
that a director may not generally vote in respect of any contract or
arrangement or any other proposal whatsoever in which he has any material
interest otherwise than by virtue of his interests in shares or other
securities of or otherwise in or through Elan. Such Regulation also provides
that if any question shall arise at any meeting as to the materiality of a
director's interest or as to the entitlement of any
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director to vote and such question is not resolved by his voluntarily agreeing
to abstain from voting, such question shall be referred to the members of the
Board of Directors whose votes are not in question. Additionally, it is
provided by such regulation that the stockholders of Elan may, by ordinary
resolution, ratify any transaction not duly authorized by reason of a
contravention of the regulation. The above principles could apply where a
director of Elan is or was a director and/or stockholder of or otherwise
connected with another company with which Elan had entered into contracts.
EXECUTIVE SHARES AND "B' EXECUTIVE SHARES
There are presently issued 1,000 Executive Shares, all fully paid, which are
held by four persons. There are presently issued 21,375 "B' Executive Shares,
all fully paid, which are held by one person. The Executive Shares do not
confer on the holders thereof the right to receive notice of or to attend and
vote at any meeting of Elan under any circumstances except with respect to
matters relating to them as a class. A "B' Executive Share confers on the
holder thereof the same voting rights as are enjoyed by a holder of an
Ordinary Share. Neither the Executive Shares nor the "B' Executive Shares have
the right to any profits of Elan, except as Elan may from time to time decide
to distribute as a dividend on such shares. These shares were established by
Elan as a means of enabling its key employees to participate in profits of
Elan. In the event of the winding up of Elan, Executive Shares shall have a
priority over Elan Ordinary Shares, and the "B' Executive Shares shall rank
pari passu with the Elan Ordinary Shares, with respect to return of capital
but neither the Executive Shares nor the "B' Executive Shares shall be
entitled to participate further in any way in the profits or assets of Elan.
Elan does not presently intend to issue any additional Executive or "B'
Executive Shares.
DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS
Elan ADRs evidencing Elan ADSs (each of which represents one Ordinary Share)
are issuable pursuant to the Deposit Agreement. Each Elan ADS represents one
Ordinary Share (or evidence of a right to receive such share) deposited in
accordance with the Deposit Agreement with The Bank of Ireland, Dublin,
Ireland, as agent of the Depositary, or any successor to such agent (the
"Custodian"). An Elan ADR may represent any number of Elan ADSs.
The following statement includes a summary of certain provisions of the
Deposit Agreement. Such summary does not purport to be complete and is
qualified in its entirety by reference to the Deposit Agreement, which has
been incorporated by reference as an exhibit to the Registration Statement of
which this Prospectus is a part. Additional copies of the Deposit Agreement
are available for inspection at the Corporate Trust Office of the Depositary
at 101 Barclay Street, New York, New York 10286, at the office of the
Depositary's agent and at the designated office of the Custodian in Dublin,
Ireland.
DEPOSIT AND WITHDRAWAL OF SHARES
The Depositary has agreed that upon the deposit with the Custodian in
Dublin, or upon delivery to the Depositary at its Corporate Trust Office for
forwarding to the Custodian at the risk of the depositor, of Ordinary Shares
or evidence of rights to receive such Ordinary Shares and, subject to the
terms of the Deposit Agreement, it will execute and deliver through its
Corporate Trust Office to the person or persons specified by the depositor an
Elan ADR or ADRs registered in the name of such person or persons for the
number of Elan ADSs issuable in respect of such deposit.
Upon surrender of Elan ADRs at the Corporate Trust Office of the Depositary,
and upon payment of the charges provided in the Deposit Agreement, Elan ADR
holders are entitled to delivery at the Corporate Trust Office of the
Depositary or at the office of the Custodian in Dublin of the Ordinary Shares
and any other property at the time represented by the surrendered Elan ADRs,
except that the Depositary may make delivery of such other property at its
Corporate Trust Office. The forwarding of share certificates and other
documents of title for such delivery at the Corporate Trust Office of the
Depositary in New York City will be at the risk and expense of the Elan ADR
holder.
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DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
The Depositary is required, to the extent that in its judgment it can
convert Irish pounds (or any other foreign currency) on a reasonable basis
into dollars and transfer the resulting dollars to the United States, to
convert all cash dividends and other cash distributions which it receives on
the underlying Ordinary Shares into dollars, and to distribute the amount thus
received to the holders of Elan ADRs in proportion to the number of Elan ADSs
representing such Ordinary Shares held by each of them. The amount distributed
will be reduced by any amounts required to be withheld by Elan or the
Depositary on account of taxes. If the Depositary determines that in its
judgment any foreign currency received by it cannot be so converted and
transferred to the United States, the Depositary may distribute the foreign
currency received by it or in its discretion hold such foreign currency for
the respective accounts of the Elan ADR holders entitled to receive the same.
If a distribution by Elan consists of a stock dividend or a free
distribution of Ordinary Shares, the Depositary may, with Elan's approval, and
shall if Elan so requests, distribute to the holders of outstanding Elan ADRs,
in proportion to their holdings, additional Elan ADRs for an aggregate number
of Elan ADSs representing the number of Ordinary Shares received as such
dividend or free distribution. If additional Elan ADRs are not so distributed,
each Elan ADS shall thenceforth also represent the additional Ordinary Shares
distributed with respect to the Ordinary Shares represented thereby.
If Elan offers, or causes to be offered, to the holders of Ordinary Shares
any right to subscribe for additional Ordinary Shares or any rights of any
other nature, the Depositary will, if requested by Elan, either (i) make such
rights available to holders of Elan ADRs by means of warrants or otherwise, if
lawful and feasible, or (ii) if making such rights available is not lawful or
not feasible, or if the rights represented by such warrants or other
instruments are not exercised and appear to be about to lapse, the Depositary
in its discretion may sell such rights or warrants or other instruments at
public or private sale, at such place or places and upon such terms as the
Depositary may deem proper, and allocate the proceeds of such sales for the
accounts of the holders of Elan ADRs otherwise entitled thereto upon an
averaged or other practicable basis without regard to any distinctions among
such holders because of exchange restrictions, or the date of delivery of any
Elan ADR or ADRs, or otherwise. The Depositary will not make available to
holders of Elan ADRs any right to subscribe for or to purchase any securities
unless a registration statement is in effect or unless the offering and sale
of such securities to such holders is exempt from registration under the
provisions of the Securities Act.
Should such distribution of rights not be possible, the Depositary intends
to endeavor to dispose of the rights for the benefit of the holders of Elan
ADRs, as stated above. Any disposal of rights may substantially reduce the
equity of the holders of Elan ADRs.
In the event that the Depositary determines that any distribution in
property (including Ordinary Shares or right to subscribe therefor) is subject
to any tax which the Depositary is obligated to withhold, the Depositary may
dispose of all or a portion of such property in such amounts and in such
manner as the Depositary deems necessary and practicable to pay such taxes, by
public or private sale, and the Depositary shall distribute the net proceeds
of any such sale or the balance of any such property, after deduction of such
taxes, to the Elan ADR holders entitled thereto.
RECORD DATES
Whenever any cash dividend or other cash distribution becomes payable or any
distribution other than cash is made, or whenever rights are issued with
respect to the Ordinary Shares, or whenever the Depositary receives notice of
any meeting of holders of securities represented by Elan ADRs, the Depositary
will fix a record date for the determination of the holders of Elan ADRs who
are entitled to receive such dividend, distribution or rights, or the net
proceeds of the sale thereof, or to give instructions for the exercise of
voting rights at any such meeting, subject to the provisions of the Deposit
Agreement.
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VOTING OF THE UNDERLYING ORDINARY SHARES
Upon receipt of a notice of any meeting of holders of Ordinary Shares or
securities represented by the Elan ADRs, the Depositary, as soon as
practicable thereafter, will mail the information contained in such notice of
meeting to the record holders of Elan ADRs.
The record holders of Elan ADRs at the close of business on the date
specified by the Depositary are entitled under the Deposit Agreement, subject
to any applicable provisions of law and Elan's Articles, to instruct the
Depositary as to the exercise of the voting rights, if any, pertaining to the
Ordinary Shares or other securities represented by the Elan ADSs. The
Depositary has agreed it will endeavor, insofar as practicable, to vote the
Ordinary Shares or other securities so represented in accordance with such
instructions. The Depositary has agreed not to vote the Ordinary Shares or
other securities so represented unless it has received such instructions from
the record holders of Elan ADRs.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The Elan ADRs and the Deposit Agreement may at any time be amended by
agreement between Elan and the Depositary. Any amendment which imposes or
increases any fees or charges (other than the fees of the Depositary for the
execution and delivery or cancellation of Elan ADRs and taxes or other
governmental charges), or which otherwise prejudices any substantial existing
right of Elan ADR holders, will not take effect as to outstanding Elan ADRs
until the expiration of three months after notice of such amendment has been
given to the record holders of outstanding Elan ADRs. Every holder of an Elan
ADR at the time such amendment so becomes effective will be deemed, by
continuing to hold such Elan ADR, to consent to such amendment and to be bound
by the Deposit Agreement as so amended. In no event may any amendment impair
the right of any Elan ADR holder to surrender his Elan ADR and receive
therefor the underlying Ordinary Shares and any other property represented
thereby.
Whenever so directed by Elan the Depositary has agreed to terminate the
Deposit Agreement by mailing notice of such termination to the record holders
of all Elan ADRs then outstanding at least 30 days prior to the date fixed in
such notice of such termination. The Depositary may likewise terminate the
Deposit Agreement at any time 60 days after the Depositary shall have
delivered to Elan a notice of its election to so resign and a successor
Depositary shall not have been appointed and accepted its appointment within
such 60 days. The Deposit Agreement provides that Elan will use its best
efforts to appoint a successor Depositary. If any Elan ADRs remain outstanding
after the day of termination, the Depositary thereafter will discontinue the
registration of transfer of Elan ADRs, will suspend the distribution of
dividends to the holders thereof and will not give any further notices or
perform any further acts under the Deposit Agreement, except that the
Depositary shall continue to collect dividends or other distributions
pertaining to the underlying Ordinary Shares, shall sell rights as provided in
the Deposit Agreement, and shall continue to deliver securities together with
any dividends or other distribution received with respect thereto and the net
proceeds of the sale of any rights or other property, in exchange for
surrendered Elan ADRs. At any time after the expiration of two years from the
date of termination, the Depositary has the right under the Deposit Agreement
to sell the underlying Ordinary Shares and any other property and hold the net
proceeds for the pro rata benefit of the holders of Elan ADRs which have not
theretofore been surrendered.
CHARGES OF DEPOSITARY
The Depositary charges a fee to the party to whom Elan ADRs are delivered
against deposits and the party surrendering Elan ADRs for delivery of Ordinary
Shares or other underlying securities, represented by the Elan ADRs issued or
surrendered. Elan pays all other charges of the Depositary, including charges
for issuance of Elan ADRs payable as a dividend or distribution or in
connection with a rights offering to stockholders, except for taxes and other
governmental charges, any applicable transfer or registration fees on the
deposit or withdrawal of Ordinary Shares, and certain cable, telex, facsimile
and delivery charges, any of which are payable by persons depositing or
withdrawing Ordinary Shares, and such expenses as are incidental to the
conversion of foreign
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currency into dollars. Elan will pay all charges of the Depositary in
connection with the initial issuance of the Elan ADRs evidencing the Elan ADSs
offered hereby.
GENERAL
Elan will through the Depositary distribute to holders of Elan ADRs annual
reports including its financial statements. Neither the Depositary nor Elan
will be liable to the holders of Elan ADRs if prevented or delayed by law or
any circumstances beyond their control in performing their obligations under
the Deposit Agreement. The obligations of Elan and the Depositary under the
Deposit Agreement are expressly limited to performing in good faith their
respective duties specified therein.
The Elan ADRs are transferable on the books of the Depositary; provided,
however, that the Depositary may close the transfer books, at any time or from
time to time, when deemed expedient by it in connection with the performance
of its duties. As a condition precedent to the execution and delivery,
registration of transfer, split-up, combination or surrender of any Elan ADR
or withdrawal of Ordinary Shares, the Depositary or the Custodian may require
payment of a sum sufficient to reimburse it for any tax or other governmental
charge and any stock transfer or registration fee with respect thereto and
payment of any applicable fees payable by the holders of Elan ADRs. The
Depositary may refuse to execute and deliver Elan ADRs, register the transfer
of any Elan ADR or make any distribution of, or related to, Ordinary Shares
until it has received such proof of citizenship, residence, exchange control
approval or other information as it may deem necessary or proper. The
execution and delivery, transfers and surrenders of Elan ADRs generally may be
suspended, during any period when the transfer books of the Depositary are
closed, if such suspension action is deemed necessary or advisable by the
Depositary or Elan at any time or from time to time. Holders of Elan ADRs are
entitled to withdraw their deposited Ordinary Shares at any time, subject only
to (i) temporary delays caused by closing the transfer books of the Depositary
or Elan, as the case may be, or the deposit of shares in connection with
voting at a stockholders' meeting, or the payment of dividends; (ii) the
payment of fees, taxes and similar charges; and (iii) compliance with any
United States or foreign laws or governmental regulations relating to the Elan
ADRs or the withdrawal of deposited securities. The holders of Elan ADSs may
inspect the books for the registration and transfer of Elan ADRs at all
reasonable times, provided that such inspection shall not be for the purpose
of communicating with holders of Elan ADSs in the interest of a business or
object other than the business of Elan or a matter related to the Deposit
Agreement or the Elan ADSs.
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COMPARATIVE RIGHTS OF STOCKHOLDERS
As a result of the Merger, Athena stockholders will receive Elan ADSs which
represent Ordinary Shares of Elan, a public limited company incorporated under
the laws of Ireland. The following is a summary of material differences
between the rights of Athena stockholders and the rights of stockholders of
Elan arising from the differences between the corporate laws of Delaware and
Ireland. For information as to where the governing instruments of Athena and
Elan may be obtained, see "Available Information."
Pursuant to Section 14 of the Exchange Act and the rules promulgated
thereunder (the "Proxy Rules"), Athena is required to comply with certain
notice and disclosure requirements relating to the solicitation of proxies in
respect of stockholder meetings. As a foreign private issuer, Elan is not
subject to the Proxy Rules. However, Elan is subject to the rules of the Irish
Stock Exchange and the London Stock Exchange regulating notices of stockholder
meetings and solicitation of proxies. Under the applicable requirements,
notice of a stockholder meeting is normally accompanied by a stockholder
circular (or, in the case of an annual general meeting, by an annual report
and accounts) containing an explanation of the purpose of the meeting and the
recommendations of the Board of Directors of Elan (the "Elan Board") with
respect to actions to be taken. All such communications are sent by the
Depositary to holders of Elan ADSs promptly upon receipt thereof. As a foreign
private issuer with securities listed on the NYSE and registered under Section
12 of the Exchange Act, Elan is also required under the Exchange Act to
publicly file with the Commission and the NYSE annual reports and other
information. As an issuer with securities listed on the Nasdaq National Market
and registered under Section 12 of the Exchange Act, Athena is also required
under the Exchange Act to publicly file with the Commission and the Nasdaq
National Market an annual report and other information.
VOTING RIGHTS
Under the DGCL, each stockholder is entitled to one vote per share unless
the certificate of incorporation provides otherwise. In addition, the
certificate of incorporation may provide for cumulative voting at all
elections of directors of the corporation. Under the Athena Certificate and
the Athena By-laws, holders of Athena Shares are entitled to one vote per
share on all matters, and cumulative voting is not permitted. A quorum
consists of a majority of the shares entitled to vote, unless otherwise
required by law.
Under Irish law, the voting rights of stockholders are governed by the Irish
Companies Acts and by a company's articles of association. Holders of Ordinary
Shares are entitled to one vote per share, either in person or by proxy
whenever a formal vote is called for by a poll. On non-contentious matters
brought before a general or special meeting of stockholders, a vote shall be
taken by a show of hands in which every stockholder present in person and
every proxy shall have one vote; provided, however, that no individual shall
have more than one vote. Cumulative voting is essentially unknown under Irish
law. Elan's Articles specify that three members present in person or by proxy
being holders of not less than one third of the issued Ordinary Shares shall
be a quorum.
ACTIONS BY WRITTEN CONSENT
Under the DGCL, unless otherwise provided in the certificate of
incorporation, any action required or permitted to be taken at any meeting of
stockholders may instead be taken without a meeting, without prior notice or a
vote if a written consent to the action is signed by holders of outstanding
shares of stock having at least the number of votes that would be required to
authorize such action at a meeting of stockholders entitled to vote thereon
were present and voting. The Athena Certificate does not prohibit action by
written consent.
Under Irish law, a company's articles of association may provide that a
resolution in writing executed by or on behalf of each stockholder who would
have been entitled to vote upon it if it had been proposed at a general
meeting will be as effective as if it had been passed at a general meeting
properly convened and held. Elan's Articles do not contain any such provision.
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SOURCES AND PAYMENT OF DIVIDENDS
The DGCL permits the payment of dividends on common stock, subject to any
restrictions contained in the certificate of incorporation, without
stockholders' consent out of a corporation's surplus (the excess of net assets
over capital) or out of net profits for the current and preceding fiscal
years. If the net assets are diminished to an amount less than the aggregate
amount of capital represented by the outstanding stock having a preference on
the distribution of assets, then no distribution paid out of net profits shall
be made until the deficiency in the amount of capital represented by the
preferred shares shall have been repaired. The Athena Certificate and Athena
By-laws do not restrict the payment of dividends on the Athena Shares.
Under Irish law, a company may pay dividends on its ordinary shares, subject
to the prior rights of holders of its preferred shares, only out of its
distributable profits (accumulated, realized profits less accumulated,
realized losses) and not out of share capital, which includes share premiums
(paid-in surplus). Amounts credited to the share premium account (representing
the excess of the consideration for the issue of outstanding shares over the
aggregate par value of such shares) may not be paid out as cash dividends but
may be used, among other things, to pay up unissued shares which may then be
distributed to stockholders in proportion to their holdings. In addition, a
public company such as Elan may make a distribution at any time only if, at
that time and immediately after such distribution, the amount of its net
assets is not less than the aggregate of its called-up (i.e., issued and paid-
up) share capital and undistributable reserves.
Under Elan's Articles, subject to applicable law, the stockholders may by
ordinary resolution declare dividends in accordance with the respective rights
of the members, but no dividend may exceed the amount recommended by the Elan
Board. In addition, subject to applicable law, if the profits of Elan
available for distribution appear to justify such payments, the Elan Board may
from time to time pay interim dividends.
RIGHTS OF PURCHASE AND REDEMPTION
Under the DGCL, a corporation may purchase shares of any class of its
capital stock or redeem shares of any class or series of preferred stock
unless its capital is impaired or would become impaired as a result of such
purchase or redemption. However, a purchase or redemption of preferred stock
may be made out of the corporation's capital if such shares will be retired
upon their acquisition and the capital of the corporation thereby reduced. The
Athena Certificate does not restrict this right.
Under Irish law, a company may issue redeemable shares if authorized by its
articles of association and subject to the conditions stated therein. A public
company, such as Elan, may purchase its own shares, including any redeemable
shares, if authorized by its articles of association and provided that such
purchase is, in the case of an on-market purchase, within the scope of an
authority given by ordinary resolution of the stockholders specifying the
maximum number and permissible price range of shares to which it relates and
is, in other cases, made pursuant to a contract authorized in advance by
special resolution of the stockholders.
Under Irish law, shares may be redeemed or purchased only if fully paid and
only out of distributable profits unless the shares are to be canceled on
redemption or purchase, when they can also be redeemed or, as the case may be,
purchased out of the proceeds of a new issue of shares made for the purpose of
the redemption or purchase. Any amount, in excess of the par value thereof,
payable on redemption or purchase of shares may be paid out of profits and, if
the shares are to be canceled, may be paid out of the proceeds of a new issue
of shares up to an amount equal to the lesser of the aggregate of premiums
received by the company on the issue of the shares to be redeemed or purchased
and the amount of the company's share premium account at the time of the
redemption or purchase (including amounts transferred to that account in
respect of premiums on the new issue). The share premium account must be
reduced by the amount of any such payment.
Elan's Articles permit it to issue redeemable shares and to purchase its own
shares. No redeemable shares have been issued, and no purchase of any of its
shares has been made, by Elan. Elan annually seeks the authority of its
stockholders to make market purchases of its shares and to re-issue off-market
any treasury shares resulting from any such market purchases.
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SPECIAL MEETING OF STOCKHOLDERS
Under the DGCL, a special meeting of stockholders may be called only by the
board of directors or by such person or persons as may be authorized by the
certificate of incorporation or by-laws. The Athena By-laws provide that a
special meeting of stockholders may be called by the Board of Directors or the
Chief Executive Officer.
Under Irish law, an extraordinary general meeting of stockholders may be
called by the board of directors or by stockholders holding not less than one-
tenth of the paid-up capital of the company carrying voting rights at general
meetings. An extraordinary general meeting, if convened for the passing of a
special resolution, requires 21 days' notice (a special resolution, to be
passed, requires the approval of at least 75% of the votes cast at the
meeting), and, if convened for the passing only of an ordinary resolution,
requires 14 days' notice (an ordinary resolution, to be passed requires the
approval of a majority of the votes cast). An annual general meeting requires
21 days' notice regardless of the type of resolution to be proposed. "Special
resolutions" generally involve proposals to change the name of the company, to
alter its capital structure in certain respects, to change or amend the rights
of stockholders, to permit the company to issue new shares for cash without
applying the stockholders' preemptive rights, to amend the company's objects
(purpose clause) and articles of association and to carry out certain other
matters where either the company's articles of association or the Companies
Acts prescribe that a "special resolution" is required. All other proposals
relating to the ordinary course of the company's business such as the election
of directors would be the subject of an "ordinary resolution."
RIGHTS OF APPRAISAL
Under the DGCL, stockholders who follow prescribed statutory procedures are
entitled, in the event of certain mergers or consolidations, to surrender
their shares to the corporation in exchange for the judicially determined
"fair value" of such shares. A stockholder, however, is not entitled to such
appraisal rights if the shares of stock held by the stockholder are listed on
a national securities exchange or held of record by more than 2,000
stockholders, unless the agreement of merger or consolidation converts such
shares of stock into anything except shares of stock of the surviving
corporation, shares of stock of any other corporation that at the effective
date of the merger will be either listed on a national securities exchange or
held of record by more than 2,000 stockholders, cash in lieu of fractional
shares of such stock or any combination of such shares and cash in lieu of
fractional shares. Athena stockholders are not entitled to appraisal rights.
See "The Merger Agreement--Appraisal Rights."
While Irish law does not generally provide for appraisal rights, if a
stockholder applies to a court as described under "--Stockholders' Votes on
Certain Reorganizations" below, the court may specify such terms for the
acquisition as it considers appropriate.
PREEMPTIVE RIGHTS
Unless the certificate of incorporation expressly provides otherwise,
stockholders of a Delaware corporation do not have preemptive rights. The
Athena Certificate does not provide for preemptive rights.
Under Irish law, equity shares (shares other than shares which with respect
to dividends and capital carry a right to participate only up to a specified
amount in a distribution) and rights to subscribe for, or to convert any
security into, equity shares must, before being issued or granted for cash, be
offered to the existing equity stockholders in proportion to the respective
nominal values of their holdings, unless the articles of association or a
special resolution passed at a general meeting of stockholders provide
otherwise. By a resolution passed by Elan's stockholders on July 2, 1995, the
Elan Board is authorized, during the period to July 1, 1997, to allot equity
shares up to the amount of Elan's present authorized but unissued share
capital otherwise than pro rata to its existing stockholders.
AMENDMENT OF GOVERNING INSTRUMENTS
Under the DGCL, any amendment, alteration or repeal of any article of the
certificate of incorporation requires the affirmative vote of a majority of
the outstanding stock entitled to vote thereon and of a majority of
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the outstanding stock of each class entitled to vote thereon as a class. If
the certificate of incorporation requires a greater vote or the articles being
amended, altered or repealed require a greater vote for action by the board of
directors or the stockholders, such greater vote is required to alter, amend
or repeal such article. The Athena Certificate does not require a greater vote
than the DGCL prescribes. Even if not otherwise entitled to vote upon a
proposed amendment, the holders of the outstanding shares of any class (or
series of any class) are entitled under the DGCL to vote as a class upon such
proposed amendment if it would alter the number of authorized shares or par
value of the shares of such class (or series) or adversely affect the powers,
preferences or special rights of the shares of such class (or series).
Under the DGCL, the by-laws of a corporation generally may be amended or
repealed by the affirmative vote of the holders of a majority of the issued
and outstanding stock of the corporation entitled to vote thereon as a class.
As permitted by the DGCL, the Athena Certificate provides that the Athena By-
laws may be altered, amended or repealed by the Board of Directors.
Under Irish law, the stockholders have the authority to alter most
provisions of a company's memorandum and all provisions of its articles of
association by a Special Resolution subject, in the case of certain amendments
to the memorandum of association, to the right of dissenting stockholders to
apply to the courts to cancel the amendments. Under Irish law, the board of
directors is not authorized to change the memorandum or the articles of
association. Amendments affecting the rights of the holders of any class of
shares may, depending on the rights attached to such class and the nature of
the amendments, also require approval of the class affected at a separate
class meeting, although an amendment so approved will be subject to
confirmation by the court if the holders of at least 10% of the shares of that
class apply to the court for the cancellation of the amendment.
STOCKHOLDERS' VOTES ON CERTAIN REORGANIZATIONS
Under the DGCL, the vote of a majority of the outstanding shares of capital
stock entitled to vote thereon generally is necessary to approve a merger or
other reorganization. However, subject to certain conditions set forth in the
DGCL, no vote of the stockholders of a surviving corporation to a merger is
needed unless required by the certificate of incorporation if (i) the
agreement of merger does not amend in any respect the certificate of
incorporation of such surviving corporation, (ii) each share of stock of such
constituent corporation outstanding immediately prior to the effective date of
the merger is to be an identical outstanding or treasury share of the
surviving corporation after the effective date of the merger, and (iii) either
no shares of common stock of the surviving corporation and no shares,
securities or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of common stock of the surviving corporation to be issued or
delivered under the plan of merger plus those initially issuable upon
conversion of any other shares, securities or obligations to be issued or
delivered under such plan do not exceed 20% of the shares of common stock of
such constituent corporation outstanding immediately prior to the effective
date of the merger. Finally, the DGCL permits a corporation to include in its
certificate of incorporation a provision requiring for any corporate action
the vote of a larger portion of the stock or of any class or series thereof
than would otherwise be required under the DGCL. The Athena Certificate does
not contain such a provision.
The Irish Companies Acts provide for schemes of arrangement, which are
arrangements or compromises between a company and any class of its
stockholders (or any class of its creditors) and are used for certain types of
reconstructions, amalgamations, capital reorganizations or takeovers. They
require the approval at a specially convened meeting of a majority of the
stockholders in number representing 75% in value of the relevant class of
shares present and voting, either in person or by proxy, and the sanction of
the courts. Once so approved and sanctioned, all stockholders of the relevant
class are bound by the terms of the scheme; a dissenting stockholder would
have no dissenters' rights. The Irish Companies Acts also provide that where a
take-over offer is made for the shares of a certain class of a company
incorporated in Ireland and, within four months of the date of the offer the
offeror has, by virtue of acceptances of the offer, acquired or contracted to
acquire not less than 80% in value of the shares to which the offer relates,
the offeror may before the expiration of six months after the date of the
offer by notice compulsorily require stockholders of the relevant class who do
not accept the offer to
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transfer their shares on the terms of the offer. A dissenting stockholder may
apply to the court within one month of the date on which such notice was given
objecting to the compulsory transfer or its terms. The court is unlikely (in
the absence of fraud or oppression) to exercise its discretion to order that
the compulsory transfer not take effect, but it may vary the terms of the
transfer as it thinks fit.
RIGHTS OF INSPECTION
The DGCL allows any stockholder to inspect during business hours the
stockholder list and the corporation's other books and records for a purpose
reasonably related to such person's interest as a stockholder.
Except when closed in accordance with the provisions of the Irish Companies
Acts, the register and index of names of stockholders of an Irish company may
be inspected during business hours by its stockholders, including in the case
of Elan, holders of Elan ADSs, without charge and by other persons upon
payment of a charge, and copies may be obtained on payment of a charge. The
stockholders of an Irish company, including, in the case of Elan, holders of
Elan ADSs, may, without charge, also inspect the minutes of meetings of the
stockholders during business hours and obtain copies upon payment of a charge.
The published annual accounts of an Irish company are required to be laid
before the stockholders in general meeting and a stockholder is entitled to a
copy of such accounts. The stockholders of Elan, including the holders of Elan
ADSs, have no rights to inspect the accounting records of Elan or minutes of
meetings of directors. Certain registers required to be kept by the company
are open to public inspection, and service contracts of directors of the
company (which have at least three years unexpired or require at least three
years' notice to terminate without compensation) must be available for
inspection during business hours.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Under the DGCL, the certificate of incorporation of a Delaware corporation
may provide for the classification of the board of directors with respect to
the time for which directors severally hold office. The Athena Certificate
does not provide for such classification of Board of Directors of Athena.
Irish law permits a company to provide for the classification of the board
of directors with respect to the time for which directors severally hold
office. Elan's Articles do not provide for such classification of the Elan
Board. Elan's Articles require that, at every annual meeting, one-third (or
the nearest number to one-third) of the directors (other than the Chairman)
will retire from office (provided that if the number of directors subject to
retirement by rotation is two, one of them will retire and if the number of
such directors is one, he or she will retire) and that all vacant
directorships may be filled at that meeting. The directors to retire in each
year are the directors who have been longest in office since their last
election or appointment. Although this tri-annual rotation of directors is
similar to a classified board, it is different in that any director who is one
of the one-third of directors who have been longest in office since their last
election or appointment at the time of the annual meeting will retire from
office regardless of the actual year of such director's last appointment. A
retiring director is eligible for re-election.
REMOVAL OF DIRECTORS
Under the DGCL, the entire board of directors or any individual director may
be removed from office, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors. If the
stockholders are entitled to cumulative voting in the election of directors,
unless the entire board is removed, no individual director may be removed
without cause if the number of votes cast against the resolution for his
removal would be sufficient if cumulatively voted to elect one or more
directors to the board. If the board of directors is classified, a director
may be removed by a vote of stockholders only for cause, unless the
certificate of incorporation provides otherwise. The Board of Directors of
Athena is not classified and therefore directors may be removed without cause.
Under the Irish Companies Acts, stockholders have the right, irrespective of
the provisions of the articles of association, to remove a director by
ordinary resolution, provided that notice of the intention to propose it has
been given to the company not less than 28 days before the relevant meeting.
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VACANCIES ON THE BOARD OF DIRECTORS
As permitted under the DGCL, the Athena By-laws provide that the board of
directors may increase or decrease the number of directors and fill any
vacancy on the board, including vacancies resulting from an increase in the
number of directors.
Under Irish law, stockholders of an Irish public company may, by ordinary
resolution, appoint a person a director either to fill a vacancy or as an
additional director. The board of directors also has the power to appoint a
person a director to fill a vacancy or as an additional director, provided
that such appointment will only last until the next following annual general
meeting of the company, at which the director concerned will retire but may be
re-elected.
LIABILITY OF DIRECTORS
The DGCL permits a Delaware corporation to include in its certificate of
incorporation a provision that would eliminate a director's monetary liability
for certain breaches of his fiduciary duty if as in a lawsuit by or on behalf
of the corporation or in an action by stockholders of the corporation. The
Athena Certificate eliminates a director's or officer's monetary liability in
a lawsuit by or on behalf of the corporation or in an action by stockholders
of the corporation to the full extent permitted by the DGCL.
Irish law does not permit a company to exempt any director or other officer
of the company or any person employed by the company as auditor from any
liability which by virtue of any rule of law would otherwise attach to him in
respect of any negligence, default, breach of duty or breach of trust of which
he may be guilty in relation to the company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The DGCL provides that a corporation may, and in certain circumstances,
must, indemnify its directors, officers, employees or agents for expenses,
judgments or settlements actually and reasonably incurred by them in
connection with suits and other legal actions or proceedings if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation and had no reasonable cause to believe
their conduct was unlawful. The DGCL also permits a corporation to adopt
procedures for advancing expenses to directors, officers and others without
the need for a case-by-case determination of eligibility, so long as in the
case of officers and directors, they undertake to repay the amounts advanced
if it is ultimately determined that the officer or director was not entitled
to be indemnified. The Athena Certificate and the Athena By-laws provide for
indemnification of officers and directors to the fullest extent permitted by,
and the Athena By-laws contain provisions for advancing expenses in the manner
provided for in, the DGCL.
Irish law does not permit a company to indemnify a director or an officer of
the company or any person employed by the company as auditor against any
liability of such person by virtue of any rule of law in respect of his
negligence, default, breach of duty or breach of trust in relation to the
company except any liability incurred by such person in defending any legal
proceedings (whether civil or criminal) in which judgment is given in his
favor or in which he is acquitted or in certain proceedings brought by him in
which, although he is liable, a court finds that he acted honestly and
reasonably and that having regard to all the circumstances he ought fairly to
be excused and relief is granted by the court. Elan's Articles contain such an
indemnity in respect of such persons (other than any person employed as
auditor).
STOCKHOLDERS' SUITS
Under the DGCL, a stockholder may institute a lawsuit on behalf of the
corporation. An individual stockholder also may commence a lawsuit on behalf
of himself and other similarly situated stockholders where the requirements
for maintaining a class action under Delaware law have been met. Neither the
Athena Certificate nor the Athena By-laws prescribe any procedure for the
exercise of these stockholder rights.
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Irish law permits an action by a stockholder in his own right (or in a
representative capacity on behalf of himself and other affected consenting
stockholders of the same class if their rights are identical) where he alleges
that his personal rights have been infringed. Additionally, under Irish law,
any stockholder of a company who claims that the affairs of the company are
being conducted, or that the powers of the directors of the company are being
exercised, in a manner oppressive to him or any of the stockholders (including
himself) or in disregard of his or their interests as stockholders, may apply
to court for an appropriate order.
As a general principle of Irish law, a stockholder generally has no right to
sue in the name of the company; the company itself is the proper plaintiff for
the purposes of maintaining proceedings in respect of wrongs done to the
company. There are, however, certain exceptions to this principle available
under equitable principles on a case-by-case basis. For example, the
controlling stockholders cannot perpetrate a fraud on the minority
stockholders or commit an act that is illegal or ultra vires. Additionally, if
a company purports to act on the strength of a decision by a simple majority
of votes where such a decision requires more than a simple majority, an
individual stockholder is entitled to bring suit. In certain circumstances, if
controlling stockholders fail to institute proceedings in the name of the
company when such proceedings are properly called for, one or more of the
aggrieved minority stockholders may apply to the court to bring what has come
to be known as a derivative action, namely an action that derives from the
injury to the company rather than the injury to individual stockholders.
CERTAIN PROVISIONS RELATING TO SHARE ACQUISITIONS
The DGCL generally prevents a corporation from entering into certain
business combinations with an interested stockholder (defined as any person or
entity that is the beneficial owner of at least 15% of a corporation's voting
stock or an affiliate or associate of the corporation who was the owner of 15%
or more of the corporation's voting stock at any time in the preceding three
years) or its affiliates, unless (i) the corporation's board of directors
approved the business combination or transaction prior to the time the
stockholder became an interested stockholder, (ii) the interested stockholder
acquired 85% of the corporation's voting stock in the same transaction in
which it exceeded 15%, or (iii) the business combination is approved by the
board of directors and by a vote of two-thirds of the outstanding voting stock
not owned by the interested stockholder.
Takeovers of certain Irish public companies, including Elan, are regulated
by the City Code on Takeovers and Mergers (the "City Code"), which prescribes
non-statutory rules not enforceable at law but administered by the Panel on
Takeovers and Mergers, a body comprised of representatives of certain City of
London financial and professional institutions, which oversees the conduct of
such takeovers. One of the provisions of the City Code is to the effect that
(i) when any person acquires, whether by a series of transactions over a
period of time or not, shares which (taken together with shares held or
acquired by persons acting in concert with him) carry 30% or more of the
voting rights of a public company; or (ii) when any person, together with
persons acting in concert with him, holds not less than 30% but not more than
50% of the voting rights and such person, or any person acting in concert with
him, acquires in any period of twelve months additional shares carrying more
than 1% of the voting rights, such person must generally make an offer for all
of the equity shares of the company (whether voting or non-voting) for cash,
or accompanied by a cash alternative, at not less than the highest price paid
for the relevant shares during the twelve months preceding the date of the
offer.
DISCLOSURE OF INTERESTS
Section 67 of the Irish Companies Act, 1990 provides that a person
(including a company or other legal entity) who acquires an interest or
becomes aware that he has acquired an interest of 5% or more of any class of
shares comprised in a public company's "relevant share capital" (which, for
these purposes, means that company's issued share capital carrying rights to
vote in all circumstances at general meetings of the company) is obliged to
notify that company in writing of his interest within five business days (that
is, excluding Saturdays, Sundays and public holidays in Ireland) after
becoming so interested or so aware. Thereafter any changes in such interest of
at least 1% calculated as required by the Companies Act, 1990 or which reduce
such interest below 5% must be notified to the company. In addition, a person
is obliged to notify the Irish Stock Exchange if his or
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her interest in the shares of any company listed on that exchange reaches,
exceeds or falls below 10%, 25%, 50% or 75% of the relevant class of shares.
The Ordinary Shares are "relevant share capital" for this purpose. Failure by
any person to notify punctually and properly is an offense, and as a
consequence of such failure (except where it relates to his ceasing to be
interested in shares) no right or interest in respect of the relevant shares
will be enforceable by him, directly or indirectly, by action or legal
proceeding. Application may be made to the Irish courts to remove this
restriction, but this would not be successful unless the court was satisfied
that the failure to notify was not due to any deliberate act of omission on
the part of the applicant.
In addition, Section 81 of the Companies Act, 1990 provides that a public
company may by notice in writing (a "Section 81 Notice") require a person whom
the company knows or has reasonable cause to believe to be, or to have been at
any time during the three years immediately preceding the date on which the
notice is issued, interested in shares comprised in the company's "relevant
share capital" to confirm that fact or (as the case may be) to indicate
whether or not that is the case, and where he holds or has during the relevant
time held an interest in such shares, to give such further information as may
be required relating to his interest and any other interest in the shares of
which he is aware. The disclosure must be made within such reasonable period
as may be specified in the relevant notice (which may, depending on the
circumstances, be as short as one or two days).
For the purpose of the above obligations, the interest of a person in shares
means, subject to certain exceptions, any kind of interest in shares including
interests in any shares (i) in which his spouse, or his child or stepchild
under the age of 18 is interested, (ii) in which a corporate body is
interested and either (a) that corporate body is or its directors are
accustomed to act in accordance with that person's directions or instructions
or (b) that person controls one-third or more of the voting power of that
corporate body or (iii) in which another party is interested and the person
and that other party are parties to a "concert party" agreement under section
73 of the Companies Act, 1990 (being an agreement which provides for one or
more parties to it to acquire interests in shares of the company, which
imposes obligations or restrictions on any one or more of the parties as to
the use, retention or disposal of such interests acquired pursuant to such
agreement and pursuant to which any interest in the company's shares is in
fact acquired by any of the parties). The holding of an Elan ADR evidencing an
Elan ADS would generally constitute an interest in the underlying Ordinary
Shares.
Where a Section 81 Notice is served by a company on a person who is or was
interested in shares of the company and that person fails to give the company
any information required by the notice within the time specified in the
notice, the company may apply to the court for an order directing that any
transfer of those shares will be void, no voting rights in respect of such
shares may be exercised, no further shares shall be issued in respect of such
shares or otherwise to such person and, other than in a liquidation, no
payments, including dividends, shall be made in respect of such shares. Such
restrictions may also void any agreement to transfer such shares. In addition,
it is a criminal offense in Ireland to fail to comply with a Section 81
Notice.
APPROVAL OF THE AMENDMENT TO THE
ATHENA NEUROSCIENCES, INC. 1991 LONG-TERM INCENTIVE PLAN
The Athena Board has adopted, subject to approval of the Athena stockholders
at the Athena Special Meeting, an amendment to the 1991 Incentive Plan to
increase the number of Athena Shares authorized for issuance under the 1991
Incentive Plan by 202,500 Athena Shares. In accordance with the terms of the
Merger Agreement, any rights or options granted under the 1991 Incentive Plan
will be converted into equivalent rights or options in Elan based upon the
Exchange Ratio. If the Merger is consummated, Elan does not intend to make any
future grants under the 1991 Incentive Plan.
In February 1996, the Athena Board adopted an amendment to the 1991
Incentive Plan to reserve an additional 1,200,000 Athena Shares for issuance
thereunder. Also in February 1996, in accordance with past practice, options
covering an aggregate of 202,500 Athena Shares were granted, subject to the
approval of Athena stockholders. In March 1996, following approval of the
Merger Agreement, the Athena Board reduced the number of additional Athena
Shares to be reserved under the 1991 Incentive Plan from 1,200,000 Athena
Shares to the 202,500 Athena Shares subject to the options previously granted.
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<PAGE>
The amendment to the 1991 Incentive Plan to increase the number of shares
authorized for issuance thereunder by 202,500 Athena Shares will be proposed
for approval by Athena stockholders at the Athena Special Meeting and, if
approved, will be effective as of February 1996. The chart below lists the
options covering such Athena Shares which have been granted to (i) the chief
executive officer, (ii) the other four most highly compensated executive
officers of Athena whose salary and bonus in the last fiscal year exceeded
$100,000 (the "Named Executive Officers"), (iii) all executive officers as a
group, (iv) all non-executive directors as a group, and (v) all non-executive
officers, employees and consultants as a group:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
NO. OF
NAME AND POSITION ATHENA OPTIONS
----------------- --------------
<S> <C>
John Groom................................................. 75,000
President and Chief Executive Officer
Morgan L. Beatty........................................... 15,000
Vice President, Technical Operations
Michael D. Coffee.......................................... 10,000
Vice President, Sales and Marketing
Paulette E. Setler......................................... 5,000
Senior Vice President, Corporate Development and
Chief Scientific Officer
Jan D. Wallace............................................. 35,000
Vice President, Clinical and Regulatory Affairs
Executive Group............................................ 177,500
Non-Executive Director Group............................... 0
Non-Executive Officer/Employee/Consultant Group............ 25,000
</TABLE>
All of the above options were granted at an exercise price of $12.625 per
share, the fair market value on the date of the grants. In the event the
Merger Agreement is approved, these options will be exercisable, assuming an
Exchange Ratio of .2956, for approximately 59,859 Elan ADSs at an exercise
price of $42.71 per Elan ADS.
The following description of the 1991 Incentive Plan is a summary only. Any
stockholder who wishes to review the full text of the 1991 Incentive Plan can
obtain a copy of the plan, without charge, by contacting: Athena
Neurosciences, Inc., 800 Gateway Boulevard, South San Francisco, California,
94080, Attn: Stock Administrator.
OVERVIEW OF THE 1991 INCENTIVE PLAN
The purpose of the 1991 Incentive Plan is to promote the long-term success
of Athena and the creation of stockholder value by attracting and retaining
eligible individuals with exceptional qualifications, by encouraging such
individuals to focus on long-range objectives, and by linking participants
directly to stockholder interests through increased stock ownership. The 1991
Incentive Plan became effective upon Athena's initial public offering and
replaced Athena's 1989 Stock Plan (the "1989 Plan"). Awards made under the
1989 Plan continue to be administered in accordance with the provisions of the
1989 Plan.
The 1991 Incentive Plan provides for awards in the form of restricted Athena
Shares ("Restricted Athena Shares"), stock units or options or any combination
thereof. No payment is required upon receipt of an award, except that a
recipient of newly issued Restricted Athena Shares must pay at least the par
value of such Restricted Athena Shares to Athena.
Restricted Athena Shares are Athena Shares that are subject to forfeiture in
the event that the applicable vesting conditions are not satisfied. Restricted
Athena Shares are nontransferable prior to vesting (except for certain
transfers to a trustee). Restricted Athena Shares have the same voting and
dividend rights as other Athena Shares.
73
<PAGE>
A stock unit represents the equivalent of one Athena Share and is
nontransferable prior to the holder's death. A holder of stock units has no
voting rights or other privileges as an Athena stockholder but is entitled to
receive dividend equivalents on his or her units equal to the amount of
dividends paid on the same number of Athena Shares. Dividend equivalents may
be converted into additional stock units or settled in the form of cash,
Athena Shares or a combination thereof. Vested stock units will be settled at
the time determined by the Compensation Committee of Athena's Board of
Directors (the "Committee"). If the time of settlement is deferred, interest
or additional dividend equivalents may be credited on the deferred payment.
ADMINISTRATION AND ELIGIBILITY
The 1991 Incentive Plan is administered by the Committee. The Committee
selects the individuals who will receive awards, determines the size of any
award and establishes vesting and other conditions. Employees, non-employee
directors (or their affiliates), consultants and advisers of Athena (or any
subsidiary of Athena) are eligible to participate in the 1991 Incentive Plan,
although Athena incentive stock options ("Athena ISOs") may be granted only to
employees. The participation of non-employee directors of Athena (or their
affiliates) is limited to non-discretionary grants of non-statutory stock
options ("Athena NSOs"), as described below.
SHARES SUBJECT TO THE INCENTIVE PLAN
The total number of Athena Shares reserved for issuance under the 1991
Incentive Plan is 3,552,500 (which includes the 202,500 share increase that
Athena stockholders are being asked to approve at the Athena Special Meeting).
As of the Record Date, options to purchase an aggregate of 3,595,562
(including the 202,500 share increase) Athena Shares at a weighted average
exercise price of $9.03 per share were outstanding under the 1991 Incentive
Plan and no Restricted Athena Shares were outstanding. As of the Record Date,
there were approximately 319 employees, 9 directors and 24 consultants and
advisers eligible to participate in the 1991 Incentive Plan. The closing
trading price on May 10, 1996 of Athena Shares on the Nasdaq National Market
was $18.50.
TERMS OF AWARDS
Options may include Athena NSOs as well as Athena ISOs intended to qualify
for special tax treatment. The exercise price of an option under the 1991
Incentive Plan must be equal to or greater than the fair market value of
Athena Shares on the date of grant in the case of Athena ISOs and the par
value of Athena Shares in the case of Athena NSOs. Both Athena NSOs and Athena
ISOs may be granted in combination with stock appreciation rights ("SARs"), or
SARs may be added to outstanding Athena NSOs at any time after the grant. As
of the Record Date there were no SARs outstanding under the 1991 Incentive
Plan. An SAR permits the participant to elect to receive any appreciation in
the value of the optioned stock directly from Athena, in Athena Shares or cash
or a combination thereof, in lieu of exercising the option. The Committee has
the discretion to determine the form in which such payment will be made. The
amount payable upon exercise of an SAR is measured by the difference between
the market value of the optioned stock at exercise and the option exercise
price. Generally, SARs may be exercised at any time after the underlying
Athena NSO or Athena ISO vests. Upon exercise of an SAR, the corresponding
portion of the related option must be surrendered and cannot thereafter be
exercised. Conversely, upon exercise of an option to which an SAR is attached,
the SAR may no longer be exercised to the extent that the corresponding option
has been exercised. The term of an Athena ISO cannot exceed ten years, and all
options and SARs are nontransferable prior to the optionee's death. No
optionee may receive more than 400,000 options or SARs in the same calendar
year.
The exercise price of an option may be paid in any lawful form permitted by
the Committee, including without limitation the surrender of Athena Shares or
Restricted Athena Shares already owned by the optionee, or the concurrent sale
or pledge of a portion of the option shares sufficient to pay in full for the
shares purchased. The Committee may also permit optionees to satisfy their
withholding tax obligations upon exercise of an Athena NSO by surrendering a
portion of their option shares to Athena.
74
<PAGE>
As noted above, the Committee determines the number of Restricted Athena
Shares, stock units or options to be included in the award as well as the
vesting and other conditions. The vesting conditions may be based on the
recipient's length of service, his or her individual performance, Athena's
performance or other appropriate criteria. In general the vesting conditions
will be based on the recipient's length of service. Vesting may be accelerated
in the event of the recipient's death, disability or retirement and will be
accelerated in the event of a change in control of Athena (including the
Merger).
For purposes of the 1991 Incentive Plan, the term "change in control" means
(i) that any person is or becomes the beneficial owner, directly or
indirectly, of at least 50% of the combined voting power of Athena's
outstanding securities, except by reason of a repurchase by Athena of its own
securities, or (ii) that a change in the composition of the Board of Directors
occurs as a result of which fewer than one-half of the incumbent directors are
directors who either had been directors of Athena 24 months prior to such
change or were elected or nominated for election to the Athena Board with the
approval of at least a majority of the directors who had been directors of
Athena 24 months prior to such change and who were still in office at the time
of the election or nomination.
NON-EMPLOYEE DIRECTORS
Members of the Athena Board who are not employees of Athena are not eligible
for any awards under the 1991 Incentive Plan other than an annual grant of
5,000 Athena NSOs and, for those new non-employee directors elected after
December 31, 1994, 20,000 Athena NSOs upon election. These grants (other than
the initial grants to newly elected directors) are made at the conclusion of
each regular annual meeting of Athena stockholders to non-employee directors
(or their affiliates) who will continue to serve on the Athena Board. The
exercise price for all Athena NSOs granted to directors is equal to the fair
market value of an Athena Share on the date of grant. The Athena NSOs will
become exercisable (i) after one year of service in the case of annual grants,
and (ii) in four equal installments on the first through fourth anniversaries
of the date of grant, in the case of the initial grants; or, if earlier, in
the event of a change in control of Athena or in the event of the director's
disability, death, or retirement at or after age 65. The Athena NSOs expire
upon the earlier of ten years after the date of grant, twelve months after the
termination of the director's service because of death or disability, and
three months after the termination of the director's service for any other
reason.
U.S. FEDERAL INCOME TAX CONSEQUENCES
Under current U.S. federal tax laws and regulations, neither the optionee
nor Athena will incur any federal tax consequences as a result of the grant of
an option. The optionee will have no taxable income upon exercising an Athena
ISO (except that the alternative minimum tax may apply), and Athena will
receive no deduction when an Athena ISO is exercised. Upon exercising an
Athena NSO, the optionee generally must recognize ordinary income equal to the
"spread" or difference between the exercise price and the fair market value of
Athena Shares on the date of exercise; Athena will be entitled to a deduction
for the same amount. In the case of an employee, the option spread at the time
an Athena NSO is exercised is subject to income tax withholding, but the
optionee generally may elect to satisfy the withholding tax obligation by
having Athena Shares withheld from those purchased under the Athena NSO. The
tax treatment of a disposition of option shares acquired under the 1991
Incentive Plan depends on how long the shares have been held and on whether
such shares were acquired by exercising an Athena ISO or an Athena NSO. Athena
will not be entitled to a deduction in connection with a disposition of option
shares, except in the case of a disposition of shares acquired under an Athena
ISO before the applicable Athena ISO holding period has been satisfied. Unless
the Committee otherwise determines, awards under the 1991 Incentive Plan
provide that if any payment (or transfer) by Athena to a recipient would be
nondeductible by Athena for federal income tax purposes as an excess parachute
payment, then the aggregate present value of all such payments (or transfers)
will be reduced to an amount which maximizes such value without causing any
such payment (or transfer) to be nondeductible. Athena's Board of Directors
has determined that no such reduction shall apply to options currently
outstanding.
AMENDMENT AND ADJUSTMENT OF AWARDS
The Committee is authorized, within the provisions of the 1991 Incentive
Plan, to amend the terms of outstanding Restricted Athena Shares or stock
units, to modify or extend outstanding options or to exchange new
75
<PAGE>
options for outstanding options, including outstanding options with a higher
exercise price than the new options. The 1991 Incentive Plan provides for
appropriate adjustments in the number of shares available for future awards as
well as the exercise price and the number of shares covered by outstanding
options in the event of a reclassification, stock split, combination of
shares, stock dividend, extraordinary cash dividend or other recapitalization
of Athena. In the event of a merger (including the Merger), awards will be
subject to the agreement of merger or reorganization.
If the proposed Merger is consummated, Elan will assume all outstanding
options granted under the 1991 Incentive Plan. All Athena Options will become
exercisable for an adjusted number of Elan ADSs at an adjusted exercise price.
All Athena Options will become exercisable in full as a result of the Merger.
See "The Merger Agreement--Treatment of Athena Stock Options, Warrants and
Convertible Debt."
AMENDMENT AND TERMINATION OF PLAN
The Athena Board may amend the 1991 Incentive Plan at any time, subject to
Athena stockholder approval if required by law. The 1991 Incentive Plan will
remain in effect until terminated by the Athena Board, except that no Athena
ISOs may be granted after December 13, 2004.
THE BOARD OF DIRECTORS OF ATHENA HAS DETERMINED THAT THE TERMS OF THE
AMENDMENT TO THE 1991 INCENTIVE PLAN ARE FAIR TO, AND IN THE BEST INTERESTS
OF, ATHENA AND THE ATHENA STOCKHOLDERS. ACCORDINGLY, THE ATHENA BOARD OF
DIRECTORS RECOMMENDS THAT ATHENA STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE AMENDMENT TO THE 1991 INCENTIVE PLAN.
76
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS OF ATHENA
Information is set forth in the table below concerning the annual and other
compensation for services in all capacities to Athena for the fiscal years
ended December 31, 1993, 1994 and 1995, of those persons who were at December
31, 1995 (i) the chief executive officer, and (ii) the Named Executive
Officers. No executive officer left Athena during the year who, but for that
departure, would be a Named Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND COMPEN- OPTIONS/ COMPENSA-
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) SATION($) SARS(#)(2) TION($)(3)
------------------ ---- ------------ -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
John Groom.............. 1995 $320,570 $70,000 $ 0 50,000 $1,605
President and Chief 1994 300,000 66,000 0 125,000 1,434
Executive Officer 1993 252,798 60,000 0 75,000 1,510
Morgan L. Beatty........ 1995 188,676 38,600 0 7,500 1,605
Vice President, 1994 178,995 18,250 33,179(5) 5,000 1,434
Technical Operations 1993 63,610(4) 20,000 5,428(5) 75,000 0
Michael D. Coffee....... 1995 204,252 33,600 0 37,500 1,605
Vice President, 1994 188,469 27,300 0 25,000 1,434
Sales and Marketing 1993 175,397 27,000 0 15,000 1,510
Paulette E. Setler...... 1995 207,315 18,900 0 7,500 1,605
Senior Vice President, 1994 196,462 18,000 0 38,000 1,434
Business Development 1993 186,932 28,500 0 10,000 1,510
and Chief
Scientific Officer
Jan D. Wallace.......... 1995 213,087 25,800 0 12,500 1,605
Vice President, 1994 200,280 39,000 13,759(5) 20,000 1,434
Clinical and Regulatory 1993 189,486 40,000 5,610(5) 5,000 1,510
Affairs
</TABLE>
- --------
(1) Includes amounts deferred by each individual under Athena's Profit-Sharing
401(k) Plan (the "401(k) Plan").
(2) Amounts shown represent option grants under Athena's 1991 Incentive Plan.
(3) Represents matching contribution by Athena under the 401(k) Plan for 1995,
1994 and 1993, respectively, of 131, 255 and 183 Athena Shares, valued at
the year-end closing prices of $12.25, $5.625 and $8.25 per share.
(4) No portion of this amount was deferred under the 401(k) Plan.
(5) These amounts represent relocation expenses paid.
77
<PAGE>
STOCK OPTIONS
The following tables summarize option grants and exercises during fiscal
1995 to and by the persons named in the Summary Compensation Table above, and
the value of the options held by such persons at the end of fiscal 1995.
Athena does not grant SARs.
OPTION/SAR GRANTS IN FISCAL 1995
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------ -------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR(2) ($/SH)(3) DATE 5%($)(4) 10%($)(4)
---- ---------- ---------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John Groom.............. 50,000 4.57% $6.375 03/08/05 $ 200,460 $ 508,005
Morgan L. Beatty........ 7,500 0.68 6.375 03/08/05 30,069 76,201
Michael D. Coffee....... 37,500 3.42 6.375 03/08/05 150,345 381,004
Paulette E. Setler...... 7,500 0.68 6.375 03/08/05 30,069 76,201
Jan D. Wallace.......... 12,500 1.14 6.375 03/08/05 50,115 127,001
</TABLE>
- --------
(1) The option granted is intended to be an incentive stock option under
Section 422 of the Code. The option vests in equal annual increments over
the four-year period measured from the date of grant. Each option has a
maximum term of ten years, subject to earlier termination if employment
ceases. The option will vest immediately if Athena undergoes a change in
control, including the Merger.
(2) An aggregate total of 1,095,003 options were granted to Athena employees
in the 1995 fiscal year.
(3) The exercise price of the options is the closing price of Athena's common
stock on the date of grant.
(4) The potential realizable value of the option grant has been calculated,
pursuant to regulations promulgated by the SEC, assuming that the market
price of the common stock appreciates in value from the date of grant to
the end of the option term at the annualized rates of 5% and 10%,
respectively. These values do not represent Athena's estimate or
projection of future common stock value.
AGGREGATED OPTION/SAR EXERCISES IN 1995 FISCAL YEAR AND
OPTION/SAR VALUES AT END OF FISCAL 1995
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
SHARES YEAR-END(#) YEAR-END($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
John Groom......... 0 $ 0 118,750/206,250 $315,625/993,750
Morgan L. Beatty... 0 0 43,750/ 43,750 199,843/213,593
Michael D. Coffee.. 0 0 76,250/ 63,750 732,031/325,781
Paulette E. Setler. 0 0 91,500/ 41,000 889,350/196,375
Jan D. Wallace..... 0 0 68,750/ 48,750 270,625/200,312
</TABLE>
- --------
(1) On December 29, 1995, the closing price of a share of Athena's common
stock on the Nasdaq National Market was $12.25.
(2) Calculated as the closing price on the exercise date, less the exercise
price.
78
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Evnin is not a former or current officer of Athena. Mr. Dovey has served
as Chairman of the Athena Board since June 1991. Mr. Davis was Chairman of the
Board of Directors of Genica at the time of its acquisition by merger with
Athena.
During fiscal 1995, no executive officer of Athena served as a member of the
compensation committee or board of directors of another entity for which any
of that entity's executive officers serve on the Athena Compensation Committee
or as a director.
COMPENSATION OF DIRECTORS
Beginning in July 1995, each eligible non-employee director of Athena is
compensated for attendance at meetings of the Athena Board and its committees,
in amounts per meeting ranging from $250 (in the case of telephonic committee
meetings) to $1,500 (in the case of Athena Board meetings). Eligible non-
employee directors are also reimbursed for reasonable expenses actually
incurred in attending Athena Board meetings. Directors affiliated or
associated with certain entities having specified relationships with Athena
(e.g., venture capital firms having an equity interest in Athena) are not
eligible for compensation and/or reimbursement. In addition, Irving S.
Johnson, Ph.D. receives $2,500 per year as a consultant to Athena, and also
receives $3,000 plus reimbursement of expenses for each quarterly meeting
attended for certain internal research committee meetings. Thomas D. Kiley
also receives $2,500 per year as a consultant to Athena. Dr. Selkoe has an
annual consulting contract with Athena under which he currently receives
$50,000 per year.
Each non-employee director is eligible to receive an annual grant of 5,000
Athena NSOs under the 1991 Incentive Plan (unless he receives in that year the
one-time grant to a newly-elected director). See "Approval of the Amendment to
the Athena Neurosciences, Inc. 1991 Long-Term Incentive Plan--Non-Employee
Directors."
In 1995, pursuant to an amendment to the 1991 Incentive Plan approved by the
stockholders, each non-employee director received a one-time grant, either
directly or as beneficial owner, of 10,000 Athena NSOs, with the exception of
Edmund M. Olivier, who resigned as of May 30, 1995, and Dr. Selkoe and Mr.
Davis, each of whom were newly elected to the Athena Board in 1995 and as such
received a grant of 20,000 Athena NSOs.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
For a description of severance agreements between Athena and its officers
see "The Merger--Interests of Certain Persons in the Merger."
PENSION PLANS
Athena has no pension plans.
LEGAL MATTERS
Certain legal matters relating to the Elan ADSs will be passed upon by
Cahill Gordon & Reindel, a partnership including a professional corporation,
New York, New York, United States counsel for Elan. Certain Irish legal
matters, including the validity of the Ordinary Shares, will be passed upon by
McCann FitzGerald Solicitors, Dublin, Ireland, Irish counsel for Elan. Cahill
Gordon & Reindel will rely upon McCann FitzGerald Solicitors with respect to
certain matters governed by Irish law. Pillsbury Madison & Sutro LLP is
expected to render the opinion referred to under the caption "U.S. Federal
Income Tax Consequences of the Merger." As of the Record Date, a member of
Pillsbury Madison & Sutro LLP participating in the consideration of legal
matters relating to the Merger and the transactions contemplated thereby owned
8,118 Athena Shares.
79
<PAGE>
EXPERTS
The consolidated financial statements and schedule of Elan as of March 31,
1994 and 1995, and for each of the years in the three-year period ended March
31, 1995, incorporated herein by reference, have been audited and reported
upon by KPMG, independent chartered accountants. Such consolidated financial
statements and schedule have been incorporated herein by reference in reliance
upon the report by KPMG, incorporated herein by reference, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Athena appearing in
Athena's Annual Report (Form 10-K) for the year ended December 31, 1995 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated in this Prospectus-Proxy
Statement by reference. Such consolidated financial statements and schedule
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
IRISH PROSPECTUS INFORMATION
KPMG, Ernst & Young LLP, PaineWebber, Pillsbury Madison & Sutro LLP and
McCann FitzGerald Solicitors have given and not withdrawn their respective
written consents to the issue of this document with the inclusion therein of
the references to them and, as the case may be, their reports or opinions in
the form and context in which they appear. Copies of those consents were
attached to the copy of this document which has been delivered to the
Registrar of Companies in Ireland for registration.
The financial information relating to Elan contained in this document does
not constitute full accounts within the meaning of section 19 of the Companies
(Amendment) Act, 1986 of Ireland. Full accounts of Elan have been prepared for
the three financial years ended March 31, 1993, 1994 and 1995 and the auditors
have given unqualified reports on such accounts which have been annexed to the
relevant annual returns delivered to the Registrar of Companies in Ireland.
80
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELAN CORPORATION, PLC,
ELAN ACQUISITION CORP.
AND
ATHENA NEUROSCIENCES, INC.
DATED AS OF MARCH 18, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
THE MERGER
<C> <S> <C>
Section 1.01. The Merger............................................... 1
Section 1.02. Effective Time........................................... 1
Certificate of Incorporation and By-Laws of Surviving
Section 1.03. Corporation.............................................. 2
Section 1.04. Directors and Officers of Surviving Corporation.......... 2
Section 1.05. Stockholders' Meeting.................................... 2
Section 1.06. Filing of Certificate of Merger.......................... 2
Section 1.07. Further Assurances....................................... 2
ARTICLE II
CONVERSION OF SHARES
Section 2.01. Shares................................................... 3
Section 2.02. Subco Common Stock....................................... 3
Section 2.03. Exchange of Shares....................................... 3
Section 2.04. Effect on Company Options, Warrants and Convertible Debt. 4
Section 2.05. Fractional Shares........................................ 5
Section 2.06. No Appraisal Rights...................................... 5
Section 2.07. Consideration for Parent Issuance........................ 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBCO
Section 3.01. Organization, Etc. ...................................... 5
Section 3.02. Board Recommendation..................................... 5
Section 3.03. Authority Relative to This Agreement..................... 5
Section 3.04. No Violations, Etc. ..................................... 6
Section 3.05. Finders or Brokers....................................... 6
Section 3.06. Registration Statement; Proxy Statement.................. 6
Section 3.07. SEC Filings.............................................. 7
Section 3.08. Financial Statements..................................... 7
Section 3.09. Absence of Undisclosed Liabilities....................... 8
Section 3.10. Absence of Changes or Events............................. 8
Section 3.11. Capitalization........................................... 8
Section 3.12. Litigation............................................... 8
Section 3.13. Officer's Certificate as to Tax Matters.................. 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Organization, Etc. ...................................... 8
Section 4.02. Authority Relative to This Agreement..................... 9
Section 4.03. No Violations, Etc. ..................................... 9
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Section 4.04. Fairness Opinion.......................................... 10
Section 4.05. Board Recommendation...................................... 10
Section 4.06. State Antitakeover Statutes............................... 10
Section 4.07. Affiliates................................................ 10
Section 4.08. Finders or Brokers........................................ 10
Section 4.09. Registration Statement; Proxy Statement................... 10
Section 4.10. Capitalization............................................ 10
Section 4.11. SEC Filings............................................... 11
Section 4.12. Financial Statements...................................... 11
Section 4.13. Absence of Undisclosed Liabilities........................ 11
Section 4.14. Absence of Changes or Events.............................. 12
Section 4.15. Capital Stock of Subsidiaries............................. 13
Section 4.16. Litigation................................................ 13
Section 4.17. Insurance................................................. 13
Section 4.18. Contracts and Commitments................................. 13
Section 4.19. Labor Matters; Employment and Labor Contracts............. 14
Section 4.20. Compliance with Laws...................................... 14
Section 4.21. Intellectual Property Rights.............................. 15
Section 4.22. Taxes..................................................... 15
Section 4.23. Employee Benefit Plans; ERISA............................. 16
Section 4.24. Environmental Matters..................................... 18
Section 4.25. Officer's Certificate as to Tax Matters................... 20
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business of the Company and Parent............. 20
Section 5.02. No Solicitation........................................... 22
Section 5.03. Access to Information..................................... 22
Section 5.04. Registration Statement and Proxy Statement................ 23
Section 5.05. Commercially Reasonable Efforts; Other Actions............ 23
Section 5.06. Public Announcements...................................... 24
Section 5.07. Notification of Certain Matters........................... 24
Section 5.08. Indemnification........................................... 24
Section 5.09. Expenses.................................................. 24
Section 5.10. Affiliates................................................ 24
Section 5.11. Stock Exchange Listings................................... 24
Section 5.12. Resignation of Directors.................................. 25
Section 5.13. Stock Purchase Plan....................................... 25
Section 5.14. Compensation.............................................. 25
Section 5.15. Governance................................................ 25
Section 5.16. Compliance With Treasury Regulations...................... 25
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS
OF PARENT, SUBCO AND THE COMPANY
Section 6.01. Registration Statement.................................... 25
Section 6.02. Stockholder Approvals..................................... 25
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Section 6.03. Listing................................................... 25
Section 6.04. Certain Proceedings....................................... 26
Section 6.05. Tax Matters............................................... 26
Section 6.06. Average Market Value...................................... 26
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PARENT AND SUBCO
Section 7.01. Representations and Warranties True....................... 26
Section 7.02. Performance............................................... 26
Section 7.03. Certificates.............................................. 27
Section 7.04. Material Adverse Change................................... 27
Section 7.05. Opinion of Counsel........................................ 27
Section 7.06. Consents, Approvals and Notifications..................... 27
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
Section 8.01. Representations and Warranties True....................... 27
Section 8.02. Performance............................................... 27
Section 8.03. Certificates.............................................. 27
Section 8.04. Material Adverse Change................................... 27
Section 8.05. Opinion of Counsel........................................ 27
Section 8.06. Consents, Approvals and Notifications..................... 27
ARTICLE IX
CLOSING
Section 9.01. Time and Place............................................ 28
Section 9.02. Filings at the Closing.................................... 28
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.01. Termination............................................... 28
Section 10.02. Termination by Parent..................................... 28
Section 10.03. Termination by the Company................................ 29
Section 10.04. Procedure for Termination................................. 29
Section 10.05. Effect of Termination and Abandonment..................... 29
ARTICLE XI
DEFINITIONS
Section 11.01. Terms Defined in This Agreement........................... 30
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ARTICLE XII
MISCELLANEOUS
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Section 12.01. Amendment and Modification............................ 31
Section 12.02. Waiver of Compliance; Consents........................ 31
Section 12.03. Survivability; Investigations......................... 32
Section 12.04. Notices............................................... 32
Section 12.05. Assignment; Third Party Beneficiaries................. 32
Section 12.06. Governing Law......................................... 33
Section 12.07. Counterparts.......................................... 33
Section 12.08. Severability.......................................... 33
Section 12.09. Interpretation........................................ 33
Section 12.10. Entire Agreement...................................... 33
Signatures............................................................ S-1
EXHIBITS
Exhibit A Form of Company Affiliate Letter......................
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 18, 1996 (the "Agreement"),
by and among Elan Corporation, plc, a public limited company organized under
the laws of Ireland ("Parent"), Elan Acquisition Corp., a Delaware corporation
("Subco"), which is a newly-formed, direct wholly-owned Subsidiary of Parent,
and Athena Neurosciences, Inc., a Delaware corporation (the "Company"). Subco
and the Company are hereinafter sometimes collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, Parent and the Company believe it is in the long-term strategic
interests of their respective stockholders to combine their businesses;
WHEREAS, pursuant to such combination, two members of the Board of Directors
of the Company will become members of the Board of Directors of Parent, the
President and Chief Executive Officer of the Company will become President and
Chief Operating Officer of Parent, and Parent will offer substantially
equivalent compensation and benefits to the Company's employees.
WHEREAS, the combination will be effected by the merger of Subco with and
into the Company pursuant to which stockholders of the Company will receive
Parent ADSs (as defined in Section 2.01) and the Company will become a wholly-
owned subsidiary of the Parent, all upon the terms and subject to the
conditions of this Agreement;
WHEREAS, Parent, Subco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
merger of Subco and the Company; and
WHEREAS, such combination is intended to qualify for Federal income tax
purposes as a tax-free reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. (a) In accordance with the provisions of this
Agreement and the General Corporation Law of the State of Delaware (the
"Delaware Act"), at the Effective Time (as hereinafter defined), Subco shall
be merged (the "Merger") with and into the Company, and the Company shall be
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Delaware. At the election of Parent, any direct wholly-owned
consolidated subsidiary of Parent incorporated under the laws of the United
States may be substituted for Subco as a Constituent Corporation in the
Merger. The name of the Surviving Corporation shall be "Athena Neurosciences,
Inc." At the Effective Time the separate existence of Subco shall cease.
(b) The Merger shall have the effects on Subco and the Company as
constituent corporations of the Merger as provided under the Delaware Act.
Section 1.02 Effective Time. The Merger shall become effective at the time
of filing of, or at such later time specified in, a certificate of merger, in
the form required by and executed in accordance with the Delaware Act, with
the Secretary of State of the State of Delaware in accordance with the
Delaware Act (the "Certificate of Merger"). The date and time when the Merger
shall become effective is herein referred to as the "Effective Time."
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Section 1.03 Certificate of Incorporation and By-Laws of Surviving
Corporation. The Restated Certificate of Incorporation and By-Laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
thereafter amended as provided by law.
Section 1.04 Directors and Officers of Surviving Corporation. The directors
of Subco immediately prior to the Effective Time will be the initial directors
of the Surviving Corporation, and the officers of the Company immediately
prior to the Effective Time will be the initial officers of the Surviving
Corporation, in each case until their successors are elected and qualified.
Section 1.05 Stockholders' Meeting. Each of the Company and Parent will take
all action necessary in accordance with applicable law and its respective
charter and by-laws to call and convene a special meeting of its respective
stockholders (each a "Special Meeting") as soon as practicable to consider and
vote upon the approval of this Agreement. Each of the Company and Parent,
through its respective Board of Directors, (i) shall recommend to its
stockholders approval of this Agreement which recommendation shall be
contained in each of the proxy statements of Parent (the "Parent Proxy
Statement") and the Company (the "Company Proxy Statement" together, the
"Proxy Statements"); provided, however, that the Board of Directors of the
Company may, in response to an unsolicited bona fide, written proposal from a
corporation, partnership, person, or other entity or group (a "Third Party")
regarding a Superior Proposal (as hereinafter defined in Section 5.02),
withdraw, modify or change its recommendation to the stockholders, but only if
the Board of Directors determines in good faith by a majority vote that
withdrawing, modifying or changing its recommendation is reasonably likely to
lead to an Acquisition Transaction (as hereinafter defined in Section 5.02)
that is more favorable to the stockholders of the Company than the Merger and
that failing to take such action would constitute a breach of the Board's
fiduciary duties, having received prior to such determination (x) the advice
of outside legal counsel of the Company that failing to take such action would
constitute a breach of the fiduciary duties of such Board of Directors, and
(y) the advice of a financial advisor of nationally recognized reputation
(including, without limitation, PaineWebber Incorporated) that the Superior
Proposal would provide greater value to the Company and its stockholders than
the Merger, and (ii) shall use all commercially reasonable efforts to solicit
from its respective stockholders proxies in favor of approval and adoption of
this Agreement.
Section 1.06 Filing of Certificate of Merger. At the Closing (as hereinafter
defined), Parent, Subco and the Company shall cause a Certificate of Merger to
be executed and filed with the Secretary of State of the State of Delaware as
provided in the Delaware Act, and shall take any and all other lawful actions
and do any and all other lawful things to cause the Merger to become
effective.
Section 1.07 Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary
or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, obligation, title or interest in, to or under
any of the rights, properties or assets of either of the Constituent
Corporations acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and
all right, obligation, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
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ARTICLE II
CONVERSION OF SHARES
Section 2.01 Shares. (a) Each share of common stock, par value $.01 per
share, of the Company (the "Company Common Stock") issued and outstanding
immediately prior to the Effective Time (except for shares, if any, owned by
the Company as treasury stock or owned by any Subsidiary (as defined in
Section 4.01) or owned by Parent or the Parent Subsidiaries (as defined in
Section 3.01) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive .2956 of an
American Depositary Share ("Parent ADSs"), evidenced by American Depositary
Receipts ("ADRs") (the "Exchange Ratio"), each Parent ADS representing one
Ordinary Share ("Parent Ordinary Shares"), par value 4 Irish pence, of Parent;
provided, however, that if the record date for the two-for-one stock split
announced on March 15, 1996 by Parent occurs prior to the Effective Time, the
Exchange Ratio will be doubled.
The Parent ADSs to be delivered in exchange for shares of Company Common
Stock pursuant to this Section 2.01(a) are hereinafter sometimes called the
"Closing Consideration." In the event of any change in Parent ADSs or Parent
Ordinary Shares or Company Common Stock by reason of any stock split,
readjustment, stock dividend, exchange of shares, reclassification,
recapitalization or otherwise, the Exchange Ratio shall be correspondingly
adjusted.
(b) At the Effective Time all shares of Company Common Stock, by virtue of
the Merger and without any action on the part of the holders thereof, shall no
longer be outstanding and shall be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of
Company Common Stock shall thereafter cease to have any rights with respect to
such shares of Company Common Stock, except the right to receive the Closing
Consideration for such shares of Company Common Stock specified in the
foregoing clause (a) upon the surrender of such certificate in accordance with
Section 2.03.
Section 2.02 Subco Common Stock. All shares of common stock, par value $.01
per share, of Subco issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into such number of newly issued shares of common
stock of the Surviving Corporation as shall equal the sum of the number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time and the number of shares of Company Common Stock underlying options,
warrants, calls, subscriptions or other rights or other agreements or
commitments of the Company assumed by the Parent.
Section 2.03 Exchange of Shares. (a) Promptly after the Effective Time,
Parent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the
Effective Time represented shares of Company Common Stock (the "Certificates")
a form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to Parent) and instructions for use in
effecting the surrender of the Certificates for exchange. Upon surrender to
Parent of a Certificate, together with such letter of transmittal duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor that number of shares of Parent ADSs which such holder has
the right to receive under this Article II, and such Certificate shall
forthwith be cancelled. If any Parent ADSs are to be issued to a person other
than the person in whose name the Certificate surrendered is registered, it
shall be a condition of exchange that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such exchange shall pay any transfer or other taxes required by
reason of the exchange to a person other than the registered holder of the
Certificate surrendered or such person shall establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered in accordance with the provisions of this Section 2.03, each
Certificate shall represent, for all purposes, the right to receive the
Closing Consideration in respect of the number of shares of Company Common
Stock evidenced by such Certificate. No dividends or other distributions that
are declared after the Effective Time on Parent ADSs and payable to the
holders of record thereof after the Effective Time will be paid to holders of
certificates representing Company Common Stock until
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such holders surrender their certificates. Upon such surrender, there shall be
paid to the record holder of the Parent ADRs representing Parent ADSs issued
upon such exchange, the amount of dividends or other distributions, excluding
interest, that become payable after the Effective Time and were not paid
because of the failure to surrender certificates for exchange.
(b) From and after the Effective Time there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged as provided in this Article
II.
(c) Neither Parent nor the Surviving Corporation shall be liable to any
holder of shares of Company Common Stock delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 2.04 Effect on Company Options, Warrants and Convertible Debt. (a)
As of the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, Parent shall assume all of the obligations of
the Company under each of the Company Plans, as defined below, with the effect
that each option to purchase shares of Company Common Stock that is
outstanding under the 1989 Stock Plan of Athena Neurosciences, Inc., the
Athena Neurosciences, Inc. 1991 Long-Term Incentive Plan (including, in case
of such plan, options to acquire 202,500 shares of the Company Common Stock
granted to executive officers of the Company which are contingent upon
approval of the Company's stockholders at the 1996 Annual Meeting to the
extent approved by such stockholders or in the event the Closing occurs prior
to such 1996 Annual Meeting; and Parent and the Company shall take all
requisite action as shall be required to obtain stockholder approval thereof)
and the Genica Pharmaceuticals Corporation 1989 Stock Option Plan (together,
the "Company Plans") immediately prior to the Effective Time, whether or not
exercisable, shall be assumed by Parent in such a manner that each such option
shall be exercisable upon the same terms and conditions as under Sections
9(b), 10.2 and 17, respectively, of the applicable Company Plan and the
applicable option agreement issued thereunder, except that (i) each such
option shall be exercisable for that number of Parent ADSs (rounded down to
the nearest whole share) equal to the number of shares of Company Common Stock
subject to such option multiplied by the Exchange Ratio, and (ii) the option
price per share of Parent ADSs shall be an amount equal to the option price
per share of Company Common Stock subject to such option in effect immediately
prior to the Effective Time divided by the Exchange Ratio (rounded up to the
nearest whole cent) (the "Parent Exchange Options").
(b) Parent agrees to file with the Securities and Exchange Commission at the
Effective Time a Registration Statement on Form S-8 or other appropriate form
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act") to register Parent ADSs issuable
upon exercise of the Parent Exchange Options and use its reasonable efforts to
cause such Registration Statement to remain effective until the exercise or
expiration of such options.
(c) As of the Effective Time, each warrant to purchase shares of Company
Common Stock ("Company Warrant") then outstanding shall remain outstanding and
shall be deemed to be a warrant to purchase, in place of the purchase of the
shares of Company Common Stock previously subject to such Company Warrant,
that number of Parent ADSs equal to the product of the number of shares of
Company Common Stock subject to such Company Warrant, and not exercised prior
to the Effective Time, multiplied by the Exchange Ratio and rounded downward
to the nearest whole share. The exercise price per share shall be equal to the
exercise price per share under the Company Warrant divided by the Exchange
Ratio and rounded upward to the nearest one-hundredth of one whole cent. As of
the Effective Time, any existing right to convert debt payable by the Company
into Company Common Stock shall remain effective and shall be deemed to be a
right to convert such debt into that number of Parent ADSs as is equal to the
product of the number of shares of Company Common Stock into which such debt
could have been converted prior to the Effective Time, and was not so
converted, multiplied by the Exchange Ratio and rounded downward to the
nearest whole share. Parent will assume all registration obligations
applicable to such warrants and convertible debt.
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Section 2.05 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Company Common Stock who upon surrender of
Certificates would be entitled to receive a fractional Parent ADS shall not be
entitled to receive dividends on or vote such fractional share and shall
receive, in lieu of such fractional share, cash in an amount equal to such
fraction multiplied by the Market Value. "Market Value" shall mean, with
respect to Parent ADSs issued, the mean between the high and low prices of the
Parent ADSs as reported on the New York Stock Exchange ("NYSE") Composite Tape
on the NYSE trading day immediately prior to the Effective Time. The
fractional share interests of each Company stockholder will be aggregated, and
no Company stockholder will receive cash in an amount equal to or greater than
the value of one full share of Parent ADSs. All references in this Agreement
to Parent ADSs to be issued as Closing Consideration shall be deemed to
include any cash in lieu of fractional shares payable pursuant to this Section
2.05.
Section 2.06 No Appraisal Rights. In accordance with Section 262(b) of the
Delaware Act, no holder of shares of Company Common Stock shall be entitled to
appraisal rights.
Section 2.07 Consideration for Parent Issuance. The consideration for the
allotment by Parent of Parent Ordinary Shares represented by Parent ADSs
constituting the Closing Consideration shall be the cancellation of all shares
of Company Common Stock pursuant to Section 2.01(b) and the issue to Parent of
new shares of common stock of the Surviving Corporation pursuant to Section
2.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBCO
Each of Parent and Subco jointly and severally represents and warrants to
the Company as follows:
Section 3.01 Organization, Etc. Each of the Parent and its subsidiaries
(together its "Parent Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Each of Parent and the Parent Subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except for failures to be so
qualified or in good standing which would not, individually and in the
aggregate, have a material adverse effect on the general affairs, management,
business, operations, assets, condition (financial or otherwise) or prospects
of Parent and its Parent Subsidiaries taken as a whole (a "Parent Material
Adverse Effect"). Neither Parent or any of its Parent Subsidiaries is in
violation of any of the provisions of its Memorandum and Articles of
Association (or other applicable charter document) or By-Laws. Parent owns
directly all of the outstanding capital stock of Subco.
Section 3.02 Board Recommendation. The Board of Directors of Parent has, by
a unanimous vote at a meeting of such Board duly held on March 14, 1996,
authorized the approval and adoption of this Agreement, the Merger and the
other transactions contemplated hereby, determined that the Merger is fair to
the holders of Parent Ordinary Shares and resolved to recommend that the
holders of such shares approve and adopt this Agreement, the Merger and the
other transactions contemplated hereby, including the issuance of the ADSs,
each representing one Parent Ordinary Share.
Section 3.03 Authority Relative to This Agreement. Each of Parent and Subco
has full corporate power and authority to execute and deliver this Agreement
and to consummate the Merger and the other transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of each of Parent and Subco and
by Parent as the sole stockholder of Subco and no other corporate proceedings
on the part of Parent or Subco are necessary to authorize this Agreement or to
consummate the Merger or the other
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transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Subco and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes a
valid and binding agreement of each of Parent and Subco, enforceable against
each of them in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally or by general equitable principles.
Section 3.04 No Violations, Etc. (a) Assuming that all filings, permits,
authorizations, consents and approvals have been duly made or obtained as
contemplated by this Section 3.04, the execution and delivery of this
Agreement and the consummation by Parent and Subco of the Merger and the other
transactions contemplated hereby will not (i) subject to obtaining the
required approval of the stockholders of Parent, violate any provision of the
charter, by-laws or other organizational documents of either Parent or Subco,
(ii) subject to obtaining the required approval of the stockholders of Parent,
violate any statute, rule, regulation, order or decree of any public body or
authority by which Parent, Subco or any of their properties is bound, or (iii)
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default under, any license, franchise, permit,
indenture, agreement or other instrument to which Parent or its Parent
Subsidiaries is a party, or by which Parent, Parent Subsidiaries or any of
their properties is bound, excluding from the foregoing clauses (ii) and (iii)
violations, breaches and defaults which, individually and in the aggregate,
would not either impair the ability of Parent or Subco to consummate the
Merger or the other transactions contemplated hereby or have a Parent Material
Adverse Effect.
(b) No filing or registration with, or authorization, consent or approval
of, or notification to any governmental entity is required by Parent or Subco
in connection with the execution and delivery of this Agreement or the
consummation by Parent and Subco of the Merger and the other transactions
contemplated hereby, except (i) in connection with the applicable requirements
of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the
"HSR Act"), (ii) in connection with the applicable requirements of the
Mergers, Take-overs and Monopolies (Control) Act, 1978 (as amended) of Ireland
(the "Irish Mergers Act"), (iii) in connection with the provisions of the
Securities Act, (iv) the filing of appropriate merger documents as required by
the Delaware Act, (v) the listing on the NYSE of the Parent ADSs to be issued
in connection with the Merger, (vi) the agreement of the Irish Stock Exchange
and the London Stock Exchange (subject to allotment) to admit to their
respective Official Lists the Parent Ordinary Shares to be represented by
Parent ADSs constituting the Closing Consideration, (vii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the corporation, takeover or blue sky laws of various
states, (viii) such authorizations, orders, consents, licenses, confirmations,
clearances, permissions and approvals as may be required in any foreign
jurisdiction for the purposes of applicable anti-trust, competition, takeover
or similar legislation, and (ix) such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made, individually and in the aggregate, would not, either impair the ability
of Parent or Subco to consummate the Merger and the other transactions
contemplated hereby or have a Parent Material Adverse Effect.
Section 3.05 Finders or Brokers. Except for Goldman Sachs International,
neither Parent nor any Parent Subsidiary has employed any investment banker,
broker, finder or intermediary in connection with the transactions
contemplated hereby who might be entitled to a fee or any commission the
receipt of which is conditioned upon consummation of the Merger.
Section 3.06 Registration Statement; Proxy Statements. None of the
information provided by either Parent or Subco for inclusion or incorporation
by reference in (i) the registration statement registering under the
Securities Act the Parent ADSs to be issued at the Effective Time (such
registration statement as amended by any amendments thereto being referred to
herein as the "Registration Statement") or (ii) the Company Proxy Statement
shall, in the case of the Registration Statement, at (i) the time the
Registration Statement becomes effective and (ii) the Effective Time, and in
the case of the Company Proxy Statement, on the date the Proxy Statements are
first mailed to stockholders, at the time of the Special Meetings and at the
Effective Time, contain
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any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective Time any event
with respect to Parent or Subco shall occur which is required to be described
in the Registration Statement or Company Proxy Statement, such event shall be
so described, and an amendment or supplement shall be promptly filed with the
Securities and Exchange Commission (the "SEC") and, as required by law,
disseminated to the stockholders of the Company. The Registration Statement
and Company Proxy Statement will (with respect to Parent and Subco) comply as
to form in all material respects with the applicable provisions of the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act"), as the case
may be.
Section 3.07 SEC Filings. (a) Since January 1, 1995, Parent has filed with
the SEC its Annual Report on Form 20-F for the year ended March 31, 1995, its
report on Form 6-K for the three months ended September 30, 1995, and
registration statements under the Securities Act (the "Parent SEC Reports"),
each of which complied as to form when filed in all material respects with the
applicable provisions of the Securities Act and the Exchange Act, as the case
may be. As of their respective dates, the Parent SEC Reports (including all
exhibits and schedules thereto and documents incorporated by reference
therein) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Parent will deliver to the Company as soon as they become available true
and complete copies of any Annual Report on Form 20-F, report on Form 6-K
relating to a fiscal quarter or registration statements under the Securities
Act (the "1996 Parent SEC Reports") filed by it with the SEC, in each case
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such 1996 Parent SEC Reports (excluding any information
therein provided by the Company as to which the Parent and Subco make no
representation) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading and will comply in all material respects with all
applicable requirements of law. The audited consolidated financial statements
and unaudited consolidated interim financial statements of Parent and Parent
Subsidiaries to be included or incorporated by reference in such 1996 Parent
SEC Reports will be prepared in accordance with generally accepted accounting
principles in Ireland and, where indicated therein, will be reconciled to U.S.
generally accepted accounting principles, in each case applied on a consistent
basis throughout the periods involved and will fairly present the consolidated
financial position of Parent and Parent Subsidiaries as of the dates thereof
and the consolidated results of operations and consolidated cash flow for the
periods then ended (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments and to the extent they may not
include footnotes or may be condensed or summary statements). Parent announced
on March 15, 1996 that effective January 1, 1997 Parent will change its fiscal
year end to December 31 and that effective April 1, 1996 Parent will report
financial information in United States dollars, and any financial statements,
after such dates, included or incorporated by reference in any required forms,
reports, registration statements and documents required to be filed with the
SEC, shall reflect such changes.
Section 3.08 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
and its Parent Subsidiaries included or incorporated by reference in any of
the required forms, reports, registation statements and documents required to
be filed with the SEC by the Parent since December 31, 1994 have been prepared
in accordance with generally accepted accounting principles in Ireland and,
where indicated therein, were reconciled to U.S. generally accepted accounting
principles, in each case applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), and fairly
present the consolidated financial position of Parent and its Parent
Subsidiaries as of the date thereof and the consolidated results of operations
and consolidated cash flows for the periods then ended (subject in the case of
any unaudited interim financial statements to normal year-end adjustments and
to the extent these may not include footnotes or may be condensed summary
statements) and such audited consolidated financial statements have been
certified as such (without exception) by Parent's independent accountants.
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Section 3.09 Absence of Undisclosed Liabilities. At March 31, 1995, neither
Parent nor its Parent Subsidiaries has any liabilities or obligations of any
nature, whether absolute, accrued, unmatured, contingent or otherwise, or any
unsatisfied judgments or any unusual or extraordinary commitments, except the
liabilities recorded on the consolidated Balance Sheet as at March 31, 1995 of
the Parent and its Parent Subsidiaries contained in its audited financial
statements for the year ended March 30, 1995 and/or reflected in the notes
thereto, and except for liabilities or obligations that would not,
individually and in the aggregate, have a Parent Material Adverse Effect.
Section 3.10 Absence of Changes or Events. Since March 31, 1995, except as
set forth in the Parent's Annual Report of Form 20-F for the year ended March
31, 1995, there has been no Parent Material Adverse Effect, or any development
involving a prospective Parent Material Adverse Effect.
Section 3.11 Capitalization. The authorized capital stock of Parent consists
of 100,000,000 Parent Ordinary Shares, 1,000 executive shares, par value 1
Irish pound per share ("Parent Executive Shares") and 25,000 "B' executive
shares, par value 4 Irish pence per share ("Parent "B' Executive Shares"). As
of December 31, 1995, there were 38,106,011 Parent Ordinary Shares issued and
outstanding, no Parent Ordinary Shares held in Parent's treasury, 1,000 Parent
Executive Shares outstanding and 21,375 Parent "B' Executive Shares
outstanding. As of such date there were 3,190,804 Parent Ordinary Shares
reserved for issuance upon the exercise of outstanding options and options
which may be granted under the stock option plans of Parent (the "Parent
Plans"), 4,693,085 Parent Ordinary Shares reserved for issuance upon the
exchange of the Liquid Yield Option Notes (the "LYONs") issued by Elan
International Finance Ltd., a wholly-owned subsidiary of Parent, and
guaranteed by Parent and 3,922,662 Parent Ordinary Shares reserved for
issuance upon the exercise of the outstanding warrants with an exercise price
of $39.26 per share and an expiration date of August 12, 1998 ("1998
Warrants"). Except for the LYONs, the 1998 Warrants and the options granted
under the Parent Plans, there were not as of such date any existing options,
warrants, calls, subscriptions, or other rights or other agreements or
commitments obligating Parent to issue, transfer or sell any shares of its
capital stock or any other securities convertible into or evidencing the right
to subscribe for any such shares. All issued and outstanding Parent Ordinary
Shares are, and all Parent ADSs to be issued at the Effective Time shall be,
when issued, duly authorized and validly issued, fully paid, non-assessable
and free of preemptive rights with respect thereto.
Section 3.12 Litigation. There is no (i) claim, action, suit or proceeding
pending or, to the best knowledge of the Parent, threatened against or
relating to the Parent or any of its Parent Subsidiaries before any court or
governmental or regulatory authority or body or arbitration tribunal, or (ii)
outstanding judgment, order, writ, injunction or decree, or application,
request or motion therefor, of any court, governmental agency or arbitration
tribunal in a proceeding to which Parent, any Parent Subsidiary or any of
their respective assets was or is a party except, in the case of clauses (i)
and (ii) above, such as would not, individually and in the aggregate, either
impair Parent's ability to consummate the Merger or the other transactions
contemplated hereby or have a Parent Material Adverse Effect.
Section 3.13 Officer's Certificate as to Tax Matters. As of the date hereof,
Parent knows no reason why it will be unable to deliver to Cahill Gordon &
Reindel and Pillsbury Madison & Sutro LLP at the Closing an Officer's
Certificate in form sufficient to enable such counsel to render the opinions
required by Section 6.05.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subco that:
Section 4.01 Organization, Etc. Each of the Company, Athena Diagnostics,
Inc., a Massachusetts corporation, and Athena Neurosciences (Europe) Limited,
a private limited company organized in the United Kingdom (together, the
"Subsidiaries") is a corporation duly organized, validly existing and in good
standing
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under the laws of the jurisdiction of its incorporation and has all requisite
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
leased or the nature of its activities makes such qualification necessary,
except for failures to be so qualified or in good standing which would not,
individually and in the aggregate, have a material adverse effect on the
general affairs, management, business, operations, assets, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries
taken as a whole (a "Material Adverse Effect"). Neither the Company nor any of
its Subsidiaries is in violation of any of the provisions of its Restated
Certificate of Incorporation (or other applicable charter document) or By-
Laws. Set forth in Section 4.01 of the Disclosure Statement, dated as of the
date hereof, previously delivered by the Company to Parent (the "Disclosure
Statement") are accurate and complete copies of the Restated Certificate of
Incorporation (or other applicable charter document) and By-Laws, as currently
in effect, of each of the Company and its Subsidiaries.
Section 4.02 Authority Relative to This Agreement. The Company has full
corporate power and authority to execute and deliver this Agreement and to
consummate the Merger and the other transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the Merger
and the other transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Merger and the other transactions contemplated
hereby (other than, with respect to the Merger, the approval of a majority of
the outstanding shares of Company Common Stock at the Special Meeting or any
adjournment thereof as required by the Delaware Act). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Parent and Subco, constitutes
a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except to the extent that its enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles.
Section 4.03 No Violations, Etc. Except for the filings of the Certificate
of Merger and the Company Proxy Statement under and as contemplated by the
Exchange Act and the filings required under and in compliance with the HSR Act
and except as listed in Section 4.03 of the Disclosure Statement, no filing
with, notification to and no permit, authorization, consent or approval of,
any public body is necessary on the part of the Company for the consummation
by the Company of the Merger, the other transactions contemplated hereby or
the exercise by the Parent and the Surviving Corporation of full rights to own
and operate the business of the Company and its Subsidiaries. Except as listed
in Section 4.03 of the Disclosure Statement, neither the execution and
delivery of this Agreement nor the consummation of the Merger or the other
transactions contemplated hereby nor compliance by the Company with any of the
provisions hereof nor the exercise by the Parent and the Surviving Corporation
of full rights to own and operate the business of the Company and the
Subsidiaries will (i) subject to obtaining the approval of a majority of the
outstanding shares of Company Common Stock at the Special Meeting or any
adjournment thereof as required by the Delaware Act, conflict with or result
in any breach of any provision of the Restated Certificate of Incorporation
(or other comparable charter documents) or By-Laws of the Company or any of
its Subsidiaries, (ii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of its Subsidiaries or any
of their properties or assets or (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, acceleration, redemption
or repurchase) under, any of the terms, conditions or provisions of any (x)
note, bond, mortgage, indenture, or deed of trust or (y) license, lease,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound; except with respect to the foregoing clause (iii)(y)
violations, breaches or defaults which, individually and in the aggregate,
would not either impair the Company's ability to consummate the Merger or the
other transactions contemplated hereby or have a Material Adverse Effect, or
the exercise by the Parent and the Surviving Corporation of full rights to own
and operate the business of the Company and the Subsidiaries.
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Section 4.04 Fairness Opinion. The Company has received the opinion of
PaineWebber Incorporated to the effect that as of the date hereof the
financial terms of the Merger are fair to the Company's stockholders from a
financial point of view.
Section 4.05 Board Recommendation. The Board of Directors of the Company
has, by a unanimous vote at a meeting of such Board duly held on March 17,
1996, approved and adopted this Agreement, the Merger and the other
transactions contemplated hereby, and determined that the Agreement, the
Merger and the other transactions contemplated hereby, taken together, are
fair to and in the best interest of the stockholders of the Company, and
resolved to recommend that the holders of shares of Company Common Stock
approve and adopt this Agreement, the Merger and the other transactions
contemplated hereby.
Section 4.06 State Antitakeover Statutes. The Company has granted all
approvals and taken all other steps necessary to exempt the Merger and the
other transactions contemplated hereby from the requirements and provisions of
(S)203 of the Delaware Act and any other state antitakeover statute or
regulation such that none of the provisions of such (S)203 or any other
"business combination," "moratorium," "control share," or other state
antitakeover statute or regulation (x) prohibits or restricts the Company's
ability to perform its obligations under this Agreement or its ability to
consummate the Merger and the other transactions contemplated hereby, (y)
would have the effect of invalidating or voiding this Agreement or any
provision hereof, or (z) would subject Parent or Subco to any material
impediment or condition in connection with the exercise of any of their
respective rights under this Agreement or their ownership and operation of the
business of the Company and its Subsidiaries.
Section 4.07 Affiliates. The Company has delivered to Parent in Section 4.07
of the Disclosure Statement a list identifying all persons who to the best of
the Company's knowledge may be deemed to be "affiliates" of the Company for
purposes of Rule 145 under the Securities Act ("Affiliates") and, promptly
after the execution of this Agreement, the Company will deliver the written
agreement of each such person promptly after execution of this Agreement,
substantially in the form of Exhibit A hereto.
Section 4.08 Finders or Brokers. Except for PaineWebber Incorporated, whose
fees have been disclosed to Parent, neither the Company nor any Subsidiary of
the Company has employed any investment banker, broker, finder or intermediary
in connection with the transactions contemplated hereby who might be entitled
to a fee or any commission the receipt of which is conditioned upon
consummation of the Merger.
Section 4.09 Registration Statement; Proxy Statement. Except for information
concerning the Parent that the Parent has provided for inclusion or
incorporation by reference in the Proxy Statements, such information, at the
date the Proxy Statements are first mailed to stockholders, at the time of the
Special Meetings and at the Effective Time, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event with respect
to the Company or any of its Subsidiaries shall occur which is required to be
described in the Proxy Statements, such event shall be so described, and an
amendment or supplement shall be promptly filed with the SEC and, as required
by law, disseminated to the stockholders of the Company. The Proxy Statements
will (with respect to the Company and its Subsidiaries) comply as to form in
all material respects with the applicable provisions of the Securities Act and
Exchange Act, as the case may be.
Section 4.10 Capitalization. The authorized capital stock of the Company
consists of 45,000,000 shares of Company Common Stock and 5,000,000 shares of
Preferred Stock, par value $.01 per share (the "Company Preferred Stock"). No
shares of Company Preferred Stock are outstanding. As of December 31, 1995,
there are 27,565,069 shares of Company Common Stock outstanding and no
treasury shares. Section 4.10 of the Disclosure Statement identifies and
describes the number of shares of Company Common Stock to be received upon
exercise or conversion and the exercise or conversion price of each
outstanding option, warrant and convertible note (the "Company Common Stock
Equivalents"). Except for the Company Common Stock Equivalents there are no
existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating the Company to issue, transfer or sell
any shares of capital stock of the Company or
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any of its Subsidiaries or any other securities convertible into or evidencing
the right to subscribe for any such shares. Except as identified and described
in Section 4.10 of the Disclosure Statement, there are no outstanding stock
appreciation rights with respect to the capital stock of the Company or any of
its Subsidiaries. All issued and outstanding shares of Company Common Stock
are duly authorized and validly issued, fully paid, non-assessable and free of
preemptive rights with respect thereto.
Section 4.11 SEC Filings. (a) The Company has filed with the SEC all
required forms, reports, registration statements and documents required to be
filed by it with the SEC since December 31, 1994 (collectively, the "Company
SEC Reports"), all of which complied as to form when filed in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act, as the case may be. As of their respective dates the Company SEC Reports
(including all exhibits and schedules thereto and documents incorporated by
reference therein) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not mis-leading.
(b) The Company will deliver to Parent as soon as they become available true
and complete copies of any report, registration statement or statement mailed
by it to its securityholders generally or filed by it with the SEC, in each
case subsequent to the date hereof and prior to the Effective Time. As of
their respective dates, such reports and statements (excluding any information
therein provided by Parent or Subco, as to which the Company makes no
representation) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading and will comply in all material respects with all
applicable requirements of law. The audited consolidated financial statements
and unaudited consolidated interim financial statements of the Company and its
Subsidiaries to be included or incorporated by reference in such reports and
statements will be prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved and
will fairly present the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of
operations and consolidated cash flow for the periods then ended (subject, in
the case of any unaudited interim financial statements, to normal year-end
adjustments and to the extent they may not include footnotes or may be
condensed or summary statements).
Section 4.12 Financial Statements. (a) The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company and its Subsidiaries included or incorporated by reference in any of
the required forms, reports, registration statements and documents required to
be filed with the SEC by the Company and its Subsidiaries since December 31,
1994 have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved, and
fairly present the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of
operations and consolidated cash flows for the periods then ended (subject, in
the case of any unaudited interim financial statements, to normal year-end
adjustments and to the extent they may not include footnotes or may be
condensed or summary statements) and such audited financial statements are
accompanied by an unqualified opinion thereon by the Company's independent
auditors.
(b) The audited consolidated financial statements of the Company and its
Subsidiaries for the year ended December 31, 1995 have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved, and fairly present the
consolidated financial position of the Company and its Subsidiaries as of the
date thereof and the consolidated results of operations and consolidated cash
flows for the year then ended and such audited financial statements are
accompanied by an unqualified opinion thereon by the Company's independent
auditors. The Consolidated Balance Sheet as at December 31, 1995 of the
Company and its Subsidiaries contained in such financial statements is
hereinafter referred to as the "1995 Balance Sheet".
Section 4.13 Absence of Undisclosed Liabilities. At December 31, 1995
neither the Company nor its Subsidiaries has any liabilities or obligations of
any nature, whether absolute, accrued, unmatured, contingent or otherwise, or
any unsatisfied judgments or any unusual or extraordinary commitments, except
the liabilities
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recorded on the 1995 Balance Sheet and/or reflected in the notes thereto, and
except for liabilities or obligations that would not individually and in the
aggregate have a Material Adverse Effect.
Section 4.14 Absence of Changes or Events. Except as disclosed in Section
4.14 of the Disclosure Statement, since December 31, 1995 the Company and its
Subsidiaries have not, directly or indirectly:
(a) purchased, otherwise acquired, or agreed to purchase or otherwise
acquire, any shares of capital stock of the Company or any of its
Subsidiaries, or declared, set aside or paid any dividend or otherwise made
a distribution (whether in cash, stock or property or any combination
thereof) in respect of their capital stock (other than dividends or other
distributions payable solely to the Company or a wholly owned Subsidiary of
the Company);
(b) authorized for issuance, issued, sold, delivered, granted or issued
any options, warrants, calls, subscriptions or other rights for, or
otherwise agreed or committed to issue, sell or deliver any shares of any
class of capital stock of the Company or its Subsidiaries or any securities
convertible into or exchangeable or exercisable for shares of any class of
capital stock of the Company or its Subsidiaries, other than pursuant to
and in accordance with (i) the Employee Stock Purchase Plan or (ii) the
terms of the Company Common Stock Equivalents listed in Section 4.10 of the
Disclosure Statement or;
(c) (i) except in the ordinary course of business and consistent with
past practice, created or incurred any indebtedness for borrowed money,
(ii) assumed, guaranteed, endorsed or otherwise as an accommodation become
responsible for the obligations of any other individual, firm or
corporation, made any loans or advances to any other individual, firm or
corporation, (iii) entered into any commitment or transaction material to
the Company and its Subsidiaries taken as a whole, or (iv) incurred any
liabilities except for liabilities which, individually and in the
aggregate, would not have a Material Adverse Effect;
(d) instituted any change in its accounting methods, principles or
practices;
(e) revalued any of its respective assets, including without limitation,
writing down the value of inventory or writing off notes or accounts
receivables except for amounts previously reserved as reflected in the 1995
Balance Sheet;
(f) suffered any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually and in the
aggregate, have a Material Adverse Effect;
(g) suffered any adverse change, or any development involving a
prospective adverse change, except for those changes or prospective changes
which, individually and in the aggregate, would not have a Material Adverse
Effect;
(h) (i) increased in any manner the compensation of any of its directors
or officers or employees, except in the ordinary course of business and
consistent with past practice; (ii) paid or agreed to pay any pension,
retirement allowance or other employee benefit, or entered into or any
contract, agreement or understanding with any of its past or present
employees relating to any such pension, retirement allowance or other
employee benefit, except as required under agreements, plans or
arrangements existing at December 31, 1995; (iii) granted any severance or
termination pay to, or entered into any employment consulting or severance
agreement with, any person; (iv) entered into any material contract,
agreement or understanding with any of the Company's or its Subsidiaries'
past or present employees; (v) except in the ordinary course of business
and consistent with past practice or as may be required to comply with
applicable law, become obligated under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit arrangement, or similar
plan or arrangement which was not in existence prior to December 31, 1995,
including any bonus, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, group insurance, severance pay,
retirement or other benefit plan, contract, agreement or understanding or
for the benefit of any person, or amend any such plans, contracts,
agreements or understandings in existence at or prior to December 31, 1995;
or (vi) except as otherwise expressly contemplated hereby, sold,
transferred, leased, licensed, pledged, mortgaged, or otherwise disposed
of, or encumbered, or agreed to sell, transfer, lease, license, pledge,
mortgage or otherwise dispose of or encumber, any material properties,
real, personal or mixed; and
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(i) agreed to (i) do any of the things described in the preceding clauses
(a) through (h) other than as expressly contemplated or provided for in
this Agreement or (ii) take, whether in writing or otherwise, any action
which, if taken prior to the date of this Agreement, would have made any
representation or warranty in this Article IV untrue or incorrect.
Section 4.15 Capital Stock of Subsidiaries. The Company is directly or
indirectly the record and beneficial owner (including all such qualifying
shares) of all of the outstanding shares of capital stock of each of its
Subsidiaries. There are no proxies with respect to such shares, and there are
not any existing options, warrants, calls, subscriptions, or other rights or
other agreements or commitments obligating the Company or any Subsidiaries to
issue, transfer or sell any shares of capital stock of any Subsidiary or any
other securities convertible into or evidencing the right to subscribe for any
such shares. All of such shares so owned by the Company are duly authorized
and validly issued, fully paid, nonassessable and free of preemptive rights
with respect thereto and are owned by the Company free and clear of any claim,
lien or encumbrance of any kind with respect thereto. The Company does not
directly or indirectly own any interest in any corporation, partnership, joint
venture or other business association or entity except the Subsidiaries and
any interest set forth in Section 4.15 of the Disclosure Statement.
Section 4.16 Litigation. (a) There is no claim, action, suit or proceeding
(excluding applications for regulatory approval for marketing of
pharmaceutical products) pending or, to the best knowledge of the Company,
threatened against or relating to the Company or any of its Subsidiaries
before any court or governmental or regulatory authority or body or
arbitration tribunal, except for those claims, actions, suits or proceedings
which, individually and in the aggregate, would not have a Material Adverse
Effect.
(b) Except as set forth in Section 4.16 of the Disclosure Statement, there
is no outstanding judgment, order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal in a proceeding to which the
Company, any Subsidiary of the Company or any of their respective assets was
or is a party.
Section 4.17 Insurance. Section 4.17 of the Disclosure Statement lists all
insurance policies in force on the date hereof covering the businesses,
properties and assets of the Company and its Subsidiaries, the premiums and
coverages of such policies and all claims against such policies. All such
policies are currently in effect and true and complete copies of all such
policies have been made available to Parent. The Company has not received
notice of the cancellation of any of such insurance in effect on the date of
this Agreement.
Section 4.18 Contracts and Commitments. Neither the Company or its
Subsidiaries is a party to any existing contract, obligation or commitment of
any type (other than those described in Section 4.19 or 4.23 of the Disclosure
Statement) in any of the following categories:
(a) any sales contract, including any open bid or quotation, which is of
an open-end or blanket nature or contains warranties or penalty provisions
for late performance in excess of those consistent with industry practice,
or was incurred other than in the ordinary course of business and
consistent with past practice;
(b) contracts for the purchase of materials, supplies or equipment which
have not been entered into in the ordinary course of business and
consistent with past practice or which provide for purchase prices
substantially greater than those presently prevailing for such materials,
supplies or equipment, or for capital expenditures in excess of $500,000;
(c) a true and complete list of each lease requiring the payment of
rentals aggregating at least $500,000 per annum is set forth in Section
4.18 of the Disclosure Statement, and all of the leases so listed are valid
and subsisting and in full force and effect with respect to the Company and
its Subsidiaries, as the case may be;
(d) material contracts with distributors, manufacturers' representatives
or sales agents, except those which are terminable at the option of the
Company or its Subsidiaries on 60 days' notice or less without incurring
any liability thereby;
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(e) contracts under which the Company or its Subsidiaries has, except by
way of endorsement of negotiable instruments for collection in the ordinary
course of business and consistent with past practice, become absolutely or
contingently or otherwise liable for (i) the performance of any other
person, firm or corporation other than the Company or its Subsidiaries
under a contract, or (ii) the whole or any part of the indebtedness or
liabilities of any other person, firm or corporation other than the Company
or its Subsidiaries;
(f) powers of attorney outstanding from the Company or its Subsidiaries
other than as issued in the ordinary course of business and consistent with
past practice with respect to customs, insurance, patent, trademark or tax
matters, or to agents for service of process;
(g) contracts under which any amount payable by the Company or its
Subsidiaries is dependent upon the revenues or profits of the Company or
its Subsidiaries;
(h) contracts with any director, officer or employee of the Company other
than in such person's capacity as a director, officer or employee of the
Company;
(i) contracts which limit or restrict where the Company or any of its
Subsidiaries may conduct its or their business or the type or line of
business which the Company or any of its Subsidiaries may engage in;
(j) contracts containing any agreement with respect to any change of
control;
(k) contracts with any party for the loan of money or availability of
credit to or from the Company or any of its Subsidiaries (except credit
extended by the Company or any of its Subsidiaries to its or their
customers in the ordinary course of business and consistent with past
practice); and
(l) any hedging, option, derivative or other similar transaction.
Section 4.19 Labor Matters; Employment and Labor Contracts. (a) None of the
Company or any of its Subsidiaries is a party to any union contract or other
collective bargaining agreement. Each of the Company and its Subsidiaries is
in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, except for
those failures to comply which, individually and in the aggregate, would not
have a Material Adverse Effect. There is no labor strike, slowdown or stoppage
pending (or any labor strike or stoppage threatened) against or affecting the
Company or any of its Subsidiaries. No petition for certification has been
filed and is pending before the National Labor Relations Board with respect to
any employees of the Company or any of its Subsidiaries who are not currently
organized.
(b) Except as entered into in the ordinary course of business or as set
forth in Section 4.19 of the Disclosure Statement, neither the Company nor any
of its Subsidiaries is a party to any employment, management services,
consultation or other contract or agreement with any past or present officer,
director or employee or, to the best of the Company's knowledge, any entity
affiliated with any past or present officer, director or employee.
Section 4.20 Compliance with Laws. (a) Neither the Company nor any of its
Subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule or order of any foreign, federal, state or local
government or any other governmental department or agency, or any judgment,
decree or order of any court, applicable to its business or operations, except
where any such violations or failures to comply would not, individually and in
the aggregate, have a Material Adverse Effect. The Company and its
Subsidiaries have all permits, licenses and franchises from governmental
agencies required to conduct their businesses as now being conducted, except
for such permits, licenses and franchises the absence of which would not,
individually and in the aggregate, have a Material Adverse Effect.
(b) To the best of the Company's knowledge, as to each product subject to
FDA's jurisdiction under the Federal Food, Drug and Cosmetic Act ("FDCA") and
the jurisdiction of the Drug Enforcement Agency under the Comprehensive Drug
Abuse Prevention and Control Act of 1970 ("CSA") which is manufactured,
tested, distributed, held, and/or marketed by the Company or any of its
Subsidiaries, such product is being manufactured, held and distributed in
substantial compliance with all applicable requirements under FDCA and CSA
including, but not limited to, those relating to investigational use,
premarket clearance, good manufacturing practices, labeling, advertising,
record keeping, filing of reports, and security.
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(c) The Company will promptly provide Parent with copies of any document
that is issued, prepared, or otherwise becomes available from the date of this
Agreement until the Effective Time which bears on the regulatory status under
the FDCA or the CSA of the Company, any of its Subsidiaries or any product of
the Company or its Subsidiaries, including, but not limited to, any deficiency
letter, warning letter, non-approvable letter/order, and withdrawal
letter/order except for documents reflecting such matters which, individually
and in the aggregate, would not have a Material Adverse Effect.
Section 4.21 Intellectual Property Rights. To the best of the Company's
knowledge, the Company or its Subsidiaries own or have the right to use all
Intellectual Property Rights (as defined below in this Section 4.21) necessary
to the conduct of their respective businesses. Section 4.21 of the Disclosure
Statement contains a worldwide list of all patents, trade names, trademarks
and service marks, and applications for the foregoing owned or possessed by
the Company or its Subsidiaries. No material rights or licenses to use
Intellectual Property Rights have been granted or acquired by the Company or
its Subsidiaries except those listed in Section 4.21 of the Disclosure
Statement. Except as disclosed in Section 4.21 of the Disclosure Statement
there have been no claims or assertions made by others that the Company has
infringed any material Intellectual Property Rights of others by the sale of
products or any other activity in the preceding five year period and, to the
knowledge of the Company, there has been no such material infringement by the
Company during this period. Except as set forth in Section 4.21 of the
Disclosure Statement, the Company has no knowledge of any infringement of
Intellectual Property Rights of the Company by others. Except as set forth in
Section 4.21 of the Disclosure Statement all issued patents, registered
trademarks, and service marks owned by the Company or its Subsidiaries are
recorded on the public record in the name of the Company or its Subsidiaries.
True and complete copies of all material listed in Section 4.21 of the
Disclosure Statement have been made available to Parent.
"Intellectual Property Rights" shall mean and include rights relating to the
Company's patents, trademarks, service marks, trade names, registered
copyrights, and all currently pending applications for any thereof.
Section 4.22 Taxes. Except for those matters which individually and in the
aggregate would not have a Material Adverse Effect (i) except as set forth in
Section 4.22 of the Disclosure Statement, the Company and its Subsidiaries
have prepared and timely filed or will timely file with the appropriate
governmental agencies all franchise, income and all other Tax (as hereinafter
defined) returns and reports (Tax returns and reports are hereinafter
collectively referred to as "Tax Returns") required to be filed for any period
on or before the Effective Time, taking into account any extension of time to
file granted to or obtained on behalf of the Company and/or its Subsidiaries
(copies of which for the past three fiscal years have been provided or made
available to Parent); (ii) all Taxes of the Company and its Subsidiaries in
respect of the pre-Merger period have been paid in full to the proper
authorities or fully accrued for with respect to fiscal periods for which
there are publicly available financial statements and otherwise on the books
of the Company, other than such Taxes as are being contested in good faith by
appropriate proceedings and are adequately reserved for in accordance with
generally accepted accounting principles; (iii) all deficiencies resulting
from Tax examinations of federal, state and foreign income, sales and
franchise and all other Tax Returns filed by the Company and its Subsidiaries
have either been paid or adequately reserved for in accordance with generally
accepted accounting principles; (iv) to the best knowledge of the Company, no
deficiency has been asserted or assessed against the Company or any of its
Subsidiaries and is pending, and no examination of the Company or any of its
Subsidiaries is pending or threatened for any material amount of Tax by any
taxing authority; (v) except for tax returns with respect to the 1995 fiscal
year, no extension of the period for assessment or collection of any Tax is
currently in effect and no extension of time within which to file any Tax
Return has been requested, which Tax Return has not since been filed; (vi) no
Tax liens have been filed with respect to any Taxes, except for property taxes
which have accrued but with respect to which penalty for nonpayment has not
occurred; (vii) the Company and each of its Subsidiaries have not agreed to
make any adjustment by reason of a change in their accounting methods that
would affect the taxable income or deductions of the Company or any of its
Subsidiaries for any period ending after the Effective Time; (viii) the
Company and its Subsidiaries have made timely payments of the Taxes required
to be deducted and withheld from the wages paid to their employees; (ix) there
are no Tax sharing agreements or arrangements under which the Company or any
Subsidiary will have any obligation or liability on
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or after the Effective Time; (x) the Company and its Subsidiaries have the net
operating loss carryforwards set forth in Section 4.22 of the Disclosure
Statement; (xi) the Company and its Subsidiaries have no overall foreign
losses as defined in Section 904(f)(2) of the Code; (xii) neither the Company
nor any of its Subsidiaries has unused foreign tax credits; (xiii) to the best
knowledge of the Company, there are no transfer pricing agreements made by the
Company or its Subsidiaries with any taxation authority; (xiv) except as set
forth in Section 4.22 of the Disclosure Statement no assets of the Company or
any of its Subsidiaries are held in an arrangement for which partnership Tax
Returns are being filed and neither the Company nor any of its Subsidiaries is
a partner in any partnership; (xv) except as set forth in Section 4.22 of the
Disclosure Statement, neither the Company nor any of its Subsidiaries owns any
interest in any "controlled foreign corporation" (within the meaning of
Section 957 of the Code), "passive foreign investment company" (within the
meaning of Section 1296 of the Code) or other entity the income of which is
required to be included in the income of the Company or such Subsidiary
whether or not distributed; (xvi) neither the Company nor any of its
Subsidiaries has made an election under Section 341(f) of the Code; and (xvii)
except as set forth in Section 4.22 of the Disclosure Statement, the Company
is not obligated to make any payments that would constitute excess parachute
payments within the meaning of Section 280G of the Code.
"Tax" or "Taxes" shall mean all federal, state, local and foreign taxes,
duties, levies, charges and assessments of any nature, including social
security payments and deductibles relating to wages, salaries and benefits and
payments to subcontractors (to the extent required under applicable Tax law),
and also including all interest, penalties and additions imposed with respect
to such amounts.
Section 4.23 Employee Benefit Plans; ERISA. Except as set forth in Section
4.23 of the Disclosure Statement:
(a) there are no "employee pension benefit plans" as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("Pension Benefit Plans"), "welfare benefit plans" as defined in Section 3(1)
of ERISA ("Welfare Plans"), or stock bonus, stock option, restricted stock,
stock appreciation right, stock purchase, bonus, incentive, deferred
compensation, severance, or vacation plans, or any other employee benefit
plan, program, policy or arrangement, covering employees (or former employees)
employed in the United States, maintained or contributed to by the Company or
any of its Subsidiaries or any of their ERISA Affiliates (as hereinafter
defined), or to which the Company or any of its Subsidiaries or any of their
ERISA Affiliates contributes or is obligated to make payments thereunder or
otherwise may have any liability (collectively, the "Employee Benefit Plans").
For purposes of this Agreement, "ERISA Affiliate" shall mean any person (as
defined in Section 3(9) of ERISA) that is or has been a member of any group of
persons described in Section 414(b), (c), (m) or (o) of the Code including the
Company or a Subsidiary.
(b) The Company and each of its Subsidiaries, and each of the Pension
Benefit Plans and Welfare Plans, are in compliance with the applicable
provisions of ERISA, the Code and other applicable laws except where the
failure to comply would not, individually and in the aggregate, have a
Material Adverse Effect.
(c) All contributions to, and payments from, the Pension Benefit Plans which
are required to have been made in accordance with the Pension Benefit Plans
have been timely made except where the failure to make such contributions or
payments on a timely basis would not, individually and in the aggregate,
either impair the Company's ability to consummate the Merger and the other
transactions contemplated hereby or have a Material Adverse Effect.
(d) Any Pension Benefit Plans intended to qualify under Section 401 of the
Code have been determined by the Internal Revenue Service ("IRS") to be so
qualified and no event has occurred and no condition exists with respect to
the form or operation of such Pension Benefit Plans which would cause the loss
of such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(e) There are (i) no investigations pending by any governmental entity
involving the Pension Benefit Plans or Welfare Plans, and (ii) no pending or
threatened claims (other than routine claims for benefits), suits or
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proceedings against any Pension Benefit or Welfare Plan, against the assets of
any of the trusts under any Pension Benefit or Welfare Plan or against any
fiduciary of any Pension Benefit or Welfare Plan with respect to the operation
of such plan or asserting any rights or claims to benefits under any Pension
Benefit Plan or against the assets of any trust under such plan, except for
those which would not, individually and in the aggregate, give rise to any
liability which would have a Material Adverse Effect, nor, to the best of the
Company's knowledge, are there any facts which would give rise to any
liability except for those which would not, individually or in the aggregate,
either impair the Company's ability to consummate the Merger and the other
transactions contemplated hereby or have a Material Adverse Effect in the
event of any such investigation, claim, suit or proceeding.
(f) None of the Company, any of its Subsidiaries or any employee of the
foregoing, nor any trustee, administrator, other fiduciary or any other "party
in interest" or "disqualified person" with respect to the Pension Benefit
Plans or Welfare Plans, has engaged in a "prohibited transaction" (as such
term is defined in Section 4975 of the Code or Section 406 of ERISA) which
could result in a tax or penalty on the Company or any of its Subsidiaries
under Section 4975 of the Code or Section 502(i) of ERISA, except any such
event which would not, individually and in the aggregate, either impair the
Company's ability to consummate the Merger and the other transactions
contemplated hereby or have a Material Adverse Effect.
(g) None of the Company, any of its Subsidiaries, or any of their ERISA
Affiliates maintain or contribute to, nor have they ever maintained or
contributed to, any pension plan subject to Title IV of ERISA or Sections 412
of the Code or 302 of ERISA.
(h) Neither the Company nor any Subsidiary of the Company nor any ERISA
Affiliate has incurred any material liability under Title IV of ERISA.
(i) Neither the Company, any of its Subsidiaries nor any of their ERISA
Affiliates has any material liability (including any contingent liability
under Section 4204 of ERISA) with respect to any multiemployer plan, within
the meaning of Section 3(37) of ERISA, covering employees (or former
employees) employed in the United States.
(j) Except as disclosed in Section 4.23 of the Disclosure Statement, with
respect to each of the Employee Benefit Plans, true, correct and complete
copies of the following documents have been made available to Parent: (i) the
plan document and any related trust agreement, including amendments thereto,
(ii) any current summary plan descriptions and other material communications
to participants relating to the Employee Benefit Plans, (iii) the most recent
Forms 5500, if applicable, and (iv) the most recent IRS determination letter,
if applicable.
(k) None of the Welfare Plans maintained by the Company or any of its
Subsidiaries provide for continuing benefits or coverage for any participant
or any beneficiary of a participant following termination of employment,
except as may be required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"), or except at the expense of the participant
or the participant's beneficiary. The Company and each of its Subsidiaries
which maintain a "group health plan" within the meaning of Section 5000(b)(1)
of the Code have complied with the notice and continuation requirements of
Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and
the regulations thereunder except where the failure to comply would not,
individually and in the aggregate, either impair the Company's ability to
consummate the Merger and the other transactions contemplated hereby or have a
Material Adverse Effect.
(l) No liability under any Pension Benefit or Welfare Plan has been funded
nor has any such obligation been satisfied with the purchase of a contract
from an insurance company as to which the Company or any of its Subsidiaries
has received notice that such insurance company is in rehabilitation or a
comparable proceeding.
(m) Except as set forth in Section 4.23 of the Disclosure Statement the
consummation of the transactions contemplated by this Agreement will not
result in an increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any benefits or compensation payable to or
in respect of any employee of the Company or any of its Subsidiaries.
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(n) The Company has disclosed to Parent in Section 4.23 of the Disclosure
Statement each Foreign Plan (as hereinafter defined) to the extent the
benefits provided thereunder are not mandated by the laws of the applicable
foreign jurisdiction. The Company and each of its Subsidiaries and each of the
Foreign Plans are in compliance with applicable laws and all required
contributions have been made to the Foreign Plans, except where the failure to
comply or make contributions would not, individually and in the aggregate,
either impair the Company's ability to consummate the Merger and the other
transactions contemplated hereby or have a Material Adverse Effect. Each of
the Foreign Plans that is a funded defined benefit plan has a fair market
value of plan assets that is greater than the plan's liabilities, as
determined in accordance with applicable laws. For purposes hereof, the term
"Foreign Plan" shall mean any plan, program, policy, arrangement or agreement
maintained or contributed to by, or entered into with, the Company or any
Subsidiary with respect to employees (or former employees) employed outside
the United States.
Section 4.24 Environmental Matters. (a) Except as, and to the extent set
forth in Section 4.24 of the Disclosure Statement,
(i) to the best of the Company's knowledge, the Company and each of its
Subsidiaries possess all Environmental Permits required under applicable
Environmental Laws to conduct its current business, and are, and to the
Company's knowledge have at all times been, in compliance with the terms
and conditions of such Environmental Permits, except where such failures to
possess or comply, individually and in the aggregate, would not have a
Material Adverse Effect, nor has the Company reason to believe that any
Environmental Permits possessed by the Company or any of its Subsidiaries
will be revoked, suspended, or will not be renewed;
(ii) to the best of the Company's knowledge, the execution and delivery
of this Agreement and the consummation by the Company of the Merger and
other transactions contemplated hereby and the exercise by the Parent and
the Surviving Corporation of rights to own and operate the businesses of
the Company and its Subsidiaries substantially as presently conducted will
not affect the validity or require the transfer of any Environmental
Permits held by the Company or any of its Subsidiaries, and will not
require any notification, disclosure, registration, reporting, filing,
investigation, or remediation under any Environmental Law;
(iii) to the best of the Company's knowledge, the Company and each of its
Subsidiaries are in compliance, and within the period of all applicable
statutes of limitation, have complied, with all applicable Environmental
Laws except where the failures to comply, individually and in the
aggregate, would not have a Material Adverse Effect; and have not received
notice of any liability under any Environmental Law;
(iv) to the best of the Company's knowledge, there is no civil, criminal,
or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, notice or demand letter, or request for
information pending or, to the knowledge of the Company, threatened under
any Environmental Law (a) against the Company or any of its Subsidiaries,
or (b) against any person or entity, including but not limited to any
Contractor, in connection with which liability could reasonably be imputed
or attributed by law or contract to the Company or any of its Subsidiaries;
(v) to the best of the Company's knowledge, no property or facility
presently or formerly owned, operated, or leased by the Company or any of
its present or former subsidiaries, or by any respective predecessor in
interest, is listed or proposed for listing on the National Priorities List
or the Comprehensive Environmental Response, Compensation and Liability
Information System, both promulgated under the Comprehensive Environmental
Response, Compensation & Liability Act, as amended ("CERCLA"), or on any
comparable list established under any Environmental Law, nor has the
Company or any of its Subsidiaries received any notification of potential
or actual liability or any request for information under CERCLA or any
comparable foreign, state, or local law;
(vi) to the best of the Company's knowledge, there has been no disposal,
spill, discharge, or release of any Hazardous Material generated, used,
owned, stored, or controlled by the Company, any of its Subsidiaries, or
respective predecessors in interest, on, at, or under any property
presently or formerly
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owned, leased, or operated by the Company, its Subsidiaries, any
predecessor in interest, or any Contractor, and there are no Hazardous
Materials located in, at, on, or under, or in the vicinity of, any such
facility or property, or at any other location, in either case that could
reasonably be expected to require investigation, removal, remedial, or
corrective action by the Company or any of its Subsidiaries or that would
reasonably likely result in liability of, or costs in excess of $500,000,
either individually or in the aggregate, to the Company or any of its
Subsidiaries under any Environmental Law;
(vii) to the best of the Company's knowledge, there has not been any
underground or aboveground storage tank or other underground storage
receptacle or related piping, or any impoundment or other disposal area
containing Hazardous Materials located on any facility or property owned,
leased or operated by the Company, any of its Subsidiaries, or respective
predecessors in interest during the period of such ownership, lease or
operation, and no asbestos or polychlorinated biphenyls have been used or
disposed of, or have been located at, on, or under any such facility or
property during the period of such ownership lease or operation;
(viii) to the best of the Company's knowledge, no lien has been recorded
against any properties, assets or facilities owned, leased or operated by
the Company or any of its Subsidiaries under any Environmental Law; and
(ix) to the best of the Company's knowledge, it does not own ingredients
or raw materials used in the manufacturing, processing or testing of its
products prior to the Company's ownership of its finished products.
(b) to the best of the Company's knowledge, a reasonable investigation
having been made, the Company has made available to Parent, Subco, and their
authorized representatives all records and files, including, but not limited
to, all assessments, reports, studies, audits, analyses, tests and data in
possession of the Company and its Subsidiaries concerning the existence of
Hazardous Materials at facilities or properties currently or formerly owned,
operated, or leased by the Company or any present or former subsidiary or
predecessor in interest, or concerning compliance by the Company and its
Subsidiaries with, or liability under, any Environmental Law.
(c) For purposes of this Agreement:
(i) "Contractor" shall mean any person or entity, including but not
limited to partners, licensors, and licensees, with which the Company
formerly or presently has any agreement or arrangement under which such
person or entity has or had physical possession of, and was or is obligated
to develop, test, process, manufacture or produce Diastat (R) (Diazepam
Rectal Gel) or BotB (TM) (Botulinum Toxin Type B), or any of their
component ingredients owned by the Company.
(ii) "Environmental Law" shall mean CERCLA, the Resource Conservation and
Recovery Act of 1976, as amended, and any other applicable federal, state,
local, or foreign statute, rule, regulation, order, judgment, directive,
decree or common law as now or previously in effect and regulating,
relating to, or imposing liability or standards of conduct concerning air
emissions, water discharges, noise emissions, the release or threatened
release or discharge of any Hazardous Material into the environment, the
generation, handling, treatment, storage, transport or disposal of any
Hazardous Material, or otherwise concerning pollution or the protection of
the outdoor or indoor environment, employee health or safety, the
experimental use of animals, or the disposal of animal carcasses.
(iii) "Environmental Permit" shall mean any permit, license, approval,
consent, or other authorization by a federal, state, local, or foreign
government or regulatory entity pursuant to any Environmental Law.
(iv) "Hazardous Material" shall mean any pollutant, contaminant, or
hazardous, toxic, medical, biohazardous, infectious or dangerous waste,
substance, constituent or material, defined or regulated as such in, or for
purposes of, any Environmental Law, including, without limitation, any
asbestos, any petroleum, oil (including crude oil or any fraction thereof),
any radioactive substance, any polychlorinated biphenyls, any animal
carcass, any toxin, chemical, virus, infectious disease or disease-causing
agent, and any other substance that can give rise to liability under any
Environmental Law.
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Section 4.25 Officer's Certificate as to Tax Matters. As of the date hereof,
the Company knows of no reason why it will be unable to deliver to Cahill
Gordon & Reindel and Pillsbury Madison & Sutro LLP at the Closing an Officer's
Certificate in form sufficient to enable such counsel to render the opinions
required by Section 6.05.
ARTICLE V
COVENANTS
Section 5.01 Conduct of Business of the Company and Parent. Except as
contemplated by this Agreement or as expressly agreed to in writing by Parent
or the Company, as the case may be, during the period from the date of this
Agreement to the Effective Time, the Company and its Subsidiaries and Parent
and its Parent Subsidiaries will each conduct its operations according to its
ordinary and usual course of business consistent with past practice, and will
use all commercially reasonable efforts to preserve intact its business
organization, to keep available the services of its officers and employees in
each business function and to maintain satisfactory relationships with
suppliers, distributors, customers and others having business relationships
with it and will take no action which would adversely affect its ability to
consummate the Merger or the other transactions contemplated hereby. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, neither the Company
nor any of its Subsidiaries nor Parent nor any of its Parent Subsidiaries
(except for those following clauses that apply only to the Company and its
Subsidiaries) will, without the prior written consent of Parent or the
Company, as applicable:
(a) amend its Restated Certificate of Incorporation (or other applicable
charter document) or By-Laws except, with respect to Parent, the proposed
two-for-one stock split announced on March 15, 1996;
(b) in the case of the Company, authorize for issuance, issue, sell,
deliver, grant any options for, or otherwise agree or commit to issue, sell
or deliver any shares of any class of capital stock of the Company or its
Subsidiaries or any securities convertible into or exchangeable or
exercisable for shares of any class of capital stock of the Company or its
Subsidiaries, other than in the case of the Company pursuant to and in
accordance with and subject to the limitations set forth in (i) the
Employee Stock Purchase Plan or (ii) the terms of the Company Common Stock
Equivalents listed in Section 4.10 of the Disclosure Statement;
(c) split except, with respect to Parent, the proposed two-for-one stock
split announced on March 15, 1996, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof, other than,
in the case of Parent, consistent with past practice) in respect of its
capital stock, except dividends to wholly-owned Subsidiaries or purchase,
redeem or otherwise acquire any shares of its own capital stock or that of
any of its subsidiaries or purchased, otherwise acquired, or agreed to
purchase or otherwise acquire, any shares of its capital stock or of any of
its subsidiaries;
(d) in the case of the Company, (i) except in the ordinary course of
business and consistent with past practice, create or incur indebtedness
for borrowed money; (ii) assume, guarantee, endorse or otherwise as an
accommodation become liable or responsible for the obligations of any other
individual, firm or corporation or make any loans or advances to any other
individual, firm or corporation; (iii) enter into any commitment or
transaction material to the Company and its Subsidiaries taken as a whole,
or (iv) incur any liabilities except for liabilities which, individually
and in the aggregate, would not have a Material Adverse Effect;
(e) in the case of the Company and except in the ordinary course of
business or as otherwise contemplated by the Disclosure Statement (i)
increase in any manner the compensation of any of the Company's or its
Subsidiaries' directors or officers or employees, except in the ordinary
course of business and consistent with past practice; (ii) pay or agree to
pay any pension, retirement allowance or other employee benefit, or enter
into any contract, agreement or understanding with any of the Company's or
its Subsidiaries' past or present employees relating to any such pension,
retirement allowance or other
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employee benefit, except as required under agreements, plans or
arrangements existing as of December 31, 1995; (iii) grant any severance or
termination pay to, or enter into any employment, consulting or severance
agreement with, any person; (iv) enter into any contract, agreement or
understanding with any of the Company's or its Subsidiaries' past or
present employees; and (v) except in the ordinary course of business and
consistent with past practice or as may be required to comply with
applicable law, become obligated under any new pension plan, welfare plan,
multiemployer plan, employee benefit plan, benefit arrangement, or similar
plan or arrangement which was not in existence prior to December 31, 1995,
including any bonus, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, group insurance, severance pay,
retirement or other benefit plan, contract, agreement or understanding or
for the benefit of any person, or amend any such plans, contracts,
agreements or understandings in existence prior to December 31, 1995.
(f) in the case of the Company, except as otherwise expressly
contemplated hereby, sell, transfer, lease, license, pledge, mortgage, or
otherwise dispose of, or encumber, or agree to sell, transfer, lease,
license, pledge, mortgage or otherwise dispose of or encumber, any material
properties, real, personal or mixed;
(g) in the case of the Company, except in the ordinary course of business
or as otherwise expressly contemplated hereby, grant or acquire any
material licenses to use any Intellectual Property Rights or unpatented
inventions set forth in Section 4.21 of the Disclosure Statement; provided
the Company and its Subsidiaries shall not grant any material licenses to
use any material Intellectual Property Rights or unpatented inventions so
set forth without the prior written consent of Parent, which consent shall
not be unreasonably withheld;
(h) in the case of the Company, except as otherwise expressly
contemplated hereby, enter into any other agreements, commitments or
contracts, except agreements, commitments or contracts for the purchase,
sale or lease of goods or services in the ordinary course of business and
consistent with past practice;
(i) in the case of the Company, authorize, recommend, propose or announce
an intention to authorize, recommend or propose, or enter into any
agreement in principle or an agreement with any other person with respect
to, any plan of liquidation or dissolution, any acquisition of a material
amount of assets or securities, any disposition of a material amount of
assets or securities or any material change in its capitalization, or any
entry into a material contract or any amendment or modification of any
material contract or any release or relinquishment of any material contract
rights not in the ordinary course of business and consistent with past
practice except as expressly contemplated by this Agreement;
(j) in the case of the Company, except as previously approved by the
Board of Directors of the Company prior to the date hereof and as
identified to Parent prior to the date hereof, authorize or commit to make
capital expenditures in excess of $500,000;
(k) in the case of the Company, permit any insurance policy naming it as
a beneficiary or a loss payee to be cancelled, terminated or materially
altered, except in the ordinary course of business and consistent with past
practice and following written notice to Parent;
(l) maintain its books and records in a manner not in the ordinary course
of business and substantially consistent with past practice;
(m) in the case of the Company, enter into any hedging, option,
derivative or other similar transaction;
(n) except in the case of the Parent as otherwise disclosed in this
Agreement, institute any change in its accounting methods, principles or
practices or revalue any of its respective assets, including without
limitation, writing down the value of inventory or writing off notes or
accounts receivables;
(o) in the case of the Company, pay, discharge or satisfy any material
claims, liabilities or obligations (absolute, accrued, contingent or
otherwise), other than the payment, discharge or satisfaction of
liabilities (including accounts payable) in the ordinary course of business
and consistent with past practice, or collect, or accelerate the collection
of, any amounts owed (including accounts receivable) other than the
collection in the ordinary course of business;
(p) in the case of the Company, exercise its technology purchase option
pursuant to its Purchase Option Agreement with PaineWebber R&D Partners
III, L.P.; or
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(q) in the case of the Company and, where applicable, in the case of the
Parent, agree to do any of the foregoing.
Section 5.02 No Solicitation. (a) The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of its
Subsidiaries or any of its or its Subsidiaries' directors, officers,
employees, agents or representatives to, directly or indirectly, solicit,
initiate, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries or the making of any proposal
with respect to any merger, consolidation or other business combination
involving the Company or its Subsidiaries or acquisition of any kind of
material portion of the assets or capital stock of the Company and its
Subsidiaries taken as a whole (an "Acquisition Transaction") or negotiate,
explore or otherwise communicate in any way with any third party with respect
to any Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided,
however, that the Company may, in response to an unsolicited bona fide,
written proposal from a Third Party regarding a Superior Proposal (as
hereinafter defined) furnish information to, engage in discussions and
negotiate with such Third Party, but only if the Board of Directors of the
Company determines in good faith by a majority vote that taking such action is
reasonably likely to lead to an Acquisition Transaction that is more favorable
to the stockholders of the Company than the Merger and that failing to take
such action would constitute a breach of the Board's fiduciary duties, having
received prior to such determination (i) advice of outside legal counsel of
the Company that failing to take such action would constitute a breach of the
fiduciary duties of the Board of Directors and (ii) the advice of a financial
advisor of nationally recognized reputation (including, without limitation,
PaineWebber Incorporated) that the Superior Proposal would provide greater
value to the Company and its stockholders than the Merger. As used herein,
"Superior Proposal" means a bona fide, written and unsolicited offer made by
any financially responsible Third Party (other than the Parent) with respect
to an Acquisition Transaction for which any required financing is committed in
writing by reputable financing sources.
(b) The Company shall immediately notify the Parent of (i) receipt of any
proposal relating to an Acquisition Transaction or any request for nonpublic
information relating to the Company in connection with an Acquisition
Transaction or for access to the properties, books or records of the Company
or any Subsidiary by any person or entity that informs the Board of Directors
of the Company that it is considering making, or has made, a proposal relating
to an Acquisition Transaction and (ii) any action, failure to act,
determination or resolution by the Company or its Board of Directors referred
to in Sections 1.05, 5.02 and 10.02(c) or (d). Such notice to the Parent shall
be made orally and in writing and shall include a copy of any writing
submitted by such person or entity and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contract.
(c) During the period from the date of this Agreement through the Effective
Time, the Company shall not terminate, amend, modify or waive any provision of
any confidentiality or standstill agreement to which it or any of its
Subsidiaries is a party. During such period, the Company shall enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreement, including, but not limited to, by obtaining injunctions to prevent
any breaches of any such agreement and to enforce specifically the terms and
provisions thereof in any court of the United States of America or of any
state having jurisdiction.
Section 5.03 Access to Information. (a) From the date of this Agreement
until the Effective Time, the Company will give Parent and Subco and their
authorized representatives (including counsel, environmental and other
consultants, accountants, auditors and agents) full access during normal
business hours to all facilities, personnel and operations and to all books
and records of it and its Subsidiaries, will permit Parent and Subco and their
authorized representatives to conduct inspections as they may reasonably
require (including, without limitation, any air, water, soil or other
environmental testing and monitoring deemed necessary by them) and will cause
its officers and those of its Subsidiaries to furnish Parent with such
financial and operating data and other information with respect to its
business and properties as Parent may from time to time request.
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(b) From the date of this Agreement until the Effective Time, Parent and
Subco will give the Company and its authorized representatives (including
counsel, environmental and other consultants, accountants, auditors and
agents) full access during normal business hours to all facilities, personnel
and operations and to all books and records of it and its Parent Subsidiaries,
will permit the Company and its authorized representatives to conduct
inspections as they may reasonably require (including, without limitation, any
air, water, soil or other environmental testing and monitoring deemed
necessary by them) and will cause its officers and those of its Parent
Subsidiaries to furnish the Company with such financial and operating data and
other information with respect to their business and properties as the Company
may from time to time request.
(c) Parent and Subco agree to treat confidentially all confidential
information concerning the Company and its Subsidiaries which is furnished to
Parent and Subco or their representatives by or on behalf of the Company
whether before or after the date of this Agreement. The term "representatives"
shall include agents, financial advisors, consultants, lawyers, accountants,
directors, officers or employees of a person. Parent and Subco agree that such
information shall be used solely for the purposes of the Agreement, the Merger
and the transactions contemplated hereby. Except as required by law (and then
only with prior written notice to the Company of such requirement), neither
Parent and Subco nor its representatives shall disclose to any person any such
information. In the event that this Agreement is terminated pursuant to
Article X, Parent and Subco shall, and shall direct their representatives to,
promptly upon the written request of the Company deliver to the Company all
written material received from the Company and will keep confidential or
destroy any analyses, compilations, studies or other documents prepared by
Parent or Subco or its representatives reflecting information furnished by or
on behalf of the Company, without returning a copy thereof.
(d) The Company agrees to keep confidential all information concerning
Parent and Subco furnished to the Company or its representatives by or on
behalf of the Parent to the same extent that the Parent and Subco are
obligated pursuant to Section 5.03(c) to keep confidential information
furnished by or on behalf of the Company confidential.
Section 5.04 Registration Statement and Proxy Statement. The Company shall
prepare and file with the SEC as soon as is reasonably practicable after the
date hereof the Company Proxy Statement and Parent shall file the Registration
Statement in which the Company Proxy Statement shall be included. Parent and
the Company shall use all commercially reasonable efforts to have the
Registration Statement declared effective by the SEC and the Proxy Statement
cleared by the staff of the SEC as promptly as practicable. The Parent shall
prepare and disseminate to its stockholders as soon as reasonably practicable
after the date hereof the Parent Proxy Statement. Parent shall also take any
action required to be taken under applicable state blue sky or securities laws
in connection with the Parent ADSs to be issued as Closing Consideration.
Parent and the Company shall promptly furnish to each other all information,
and take such other actions (including without limitation using all
commercially reasonable efforts to provide any required consents of their
respective independent auditors), as may reasonably be requested in connection
with any action by any of them in connection with the preceding sentences of
this Section 5.04.
Section 5.05 Commercially Reasonable Efforts; Other Actions. Subject to the
terms and conditions herein provided, Parent, Subco and the Company shall use
all commercially reasonable efforts to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
appropriate under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, (i) the filing of Notification and Report Forms under the HSR Act
with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the Department of Justice (the "Antitrust Division") and using all
commercially reasonable efforts to respond as promptly as practicable to any
inquiries received from the FTC or the Antitrust Division for additional
information or documentation, (ii) the obtaining of all necessary consents,
approvals or waivers, and (iii) the lifting of any legal bar to the Merger.
Parent shall cause Subco to perform all of its obligations under this
Agreement and shall not take any action which would cause the Company to fail
to perform its obligations hereunder. The Company shall not take any action
which would cause Parent or Subco to fail to perform its obligations
hereunder.
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Section 5.06 Public Announcements. Before issuing any press release or
otherwise making any public statement with respect to the Merger or any of the
other transactions contemplated hereby, Parent, Subco and the Company will
consult with each other as to its form and substance and shall not issue any
such press release or make any such public statement prior to obtaining such
consent (which will not be unreasonably withheld), except as may be required
by law or by the rules and regulations of the Irish Stock Exchange or of the
London Stock Exchange.
Section 5.07 Notification of Certain Matters. Each party shall give prompt
notice to the other party of any notice of, or other communication relating
to, a default or event which, with notice or lapse of time or both, would
become a default, received by such party subsequent to the date of this
Agreement and prior to the Effective Time, under any contract material to the
general affairs, management, business, operations, assets, condition
(financial or otherwise) or prospects of such party and its subsidiaries taken
as a whole to which such party or any of its subsidiaries is a party or is
subject. The Company shall keep Parent and Subco informed of all non-routine
actions the Company intends to take in connection with any Environmental Law
and all actions shall be on terms and conditions reasonably satisfactory to
Parent and Subco. Each of the Company and Parent shall give prompt notice to
the other party of (a) any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the Merger or other transactions contemplated hereby, (b)
change or prospective change that is likely to have, respectively, a Material
Adverse Effect or Parent Material Adverse Effect or (c) the occurrence or
existence of any event which would, or could with the passage of time or
otherwise, make any representation or warranty contained herein untrue.
Section 5.08 Indemnification. (a) Parent shall (i) guarantee and (ii) shall
cause the Surviving Corporation to maintain and perform in the same manner the
Company's existing indemnification provisions with respect to present and
former directors and officers of the Company for all losses, claims, damages,
expenses or liabilities arising out of actions or omissions or alleged actions
or omissions occurring at or prior to the Effective Time to the extent
permitted or required under applicable law and the Company's Restated
Certificate of Incorporation and By-Laws in effect at the date hereof (to the
extent consistent with applicable law).
(b) For a period of three years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company
(provided that the Surviving Corporation may substitute therefor policies of
at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from facts or events
which occurred at or before the Effective Time; provided, however, that the
Surviving Corporation shall not be obligated to make annual premium payments
for such insurance to the extent such premiums exceed 150% of the annual
premiums paid as of the date hereof by the Company for such insurance.
Section 5.09 Expenses. Except as set forth in Section 10.05, Parent and
Subco, on the one hand, and the Company, on the other hand, shall bear their
respective expenses incurred in connection with the Agreement, the Merger, and
the transactions contemplated hereby, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby and all fees and expenses of investment bankers, finders,
brokers, agents, representatives, counsel and accountants, except that
expenses incurred in printing, mailing and filing (including without
limitation, SEC filing fees and stock exchange listing application fees) the
Company Proxy Statement shall be paid by Parent.
Section 5.10 Affiliates. The Company shall advise Parent in writing of any
person who, to the Company's knowledge, becomes an Affiliate after the date
hereof and prior to the Effective Time and shall use all commercially
reasonable efforts to cause each such person to deliver to Parent, no later
than the date such person becomes an Affiliate, a written agreement
substantially in the form of Exhibit A hereto. Parent shall use all
commercially reasonable efforts to satisfy for three years after the Effective
Time the requirements of Rule 144(c) under the Securities Act.
Section 5.11 Stock Exchange Listings. Parent shall use all commercially
reasonable efforts to list on (i) the NYSE, upon official notice of issuance,
the Parent ADSs to be issued in connection with the Merger and
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(ii) the Irish Stock Exchange and the London Stock Exchange (subject to
allotment) the Parent Ordinary Shares to be represented by Parent ADSs
constituting the Closing Consideration.
Section 5.12 Resignation of Directors. Prior to the Effective Time, the
Company shall take all commercially reasonable efforts to deliver to Parent at
no cost the resignations of such directors of the Subsidiaries as Parent shall
specify, effective at the Effective Time. In connection with any such
resignation, the directors shall simultaneously reconvey their directors'
qualifying shares, if any, to the applicable Subsidiary or such other persons
as Parent shall specify at no additional expense to Parent, Subco or any such
Subsidiary other than customary expenses directly relating to the transfer and
issuance of directors' qualifying shares, if any.
Section 5.13 Stock Purchase Plan. The Company shall, on or before the
Effective Time, terminate effective as of July 1, 1996 its Employee Stock
Purchase Plan. Contributions by Participants (as defined in such Plan) for the
Participation Period (as defined in such Plan) commencing on January 1, 1996
and ending on June 30, 1996 shall be used to purchase shares of the Company
Common Stock or Parent ADSs, as the case may be, in accordance with the terms
of such Plan. Any unused cash balances shall be refunded to Participants in
cash, without interest, in accordance with Section 7(f) of such Plan.
Section 5.14 Compensation. Except as provided in Section 5.13, after the
Effective Time, Parent shall cause the Company and its Subsidiaries to offer
compensation and benefits to their employees that are substantially equivalent
to the compensation and benefits that such employees enjoyed before the
Effective Time.
Section 5.15 Governance. Immediately after the Effective Time, Parent shall,
(i) appoint John Groom the President and Chief Operating Officer of Parent and
(ii) appoint John Groom and Dennis J. Selkoe, M.D. to Parent's Board of
Directors. Parent will use its reasonable efforts to enter into employment
agreements with employees of the Company who become directly employed by
Parent.
Section 5.16 Compliance With Treasury Regulations. (a) In order to avoid the
application of Section 367(a)(1) of the Code, Parent covenants that after the
Closing, Parent will ensure that Company complies with the reporting
requirements described in Treasury Regulation Section 1.367(a)-3T(c)(4).
(b) Parent shall provide to Company stockholders, who received Parent ADSs
in the Merger, any information concerning the Parent necessary to comply with
the filing requirements of Section 6038B of the Code and Treasury Regulation
Section 1.6038B-1T.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF PARENT, SUBCO AND THE COMPANY
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions:
Section 6.01 Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and remain in effect.
Section 6.02 Stockholder Approvals. The approval of a majority of the
outstanding shares of Company Common Stock cast at the Special Meeting or any
adjournment thereof shall have been obtained. The required approval of the
stockholders of the Parent shall have been obtained in the manner required for
the issuance of the Parent ADSs and the transactions contemplated by this
Agreement.
Section 6.03 Listing. The Parent ADSs issuable in connection with the Merger
shall have been authorized for listing on the NYSE subject to official notice
of issuance, and the Parent Ordinary Shares to be represented by Parent ADSs
constituting the Closing Consideration shall have been admitted (subject to
allotment) to the Official Lists of the Irish Stock Exchange and the London
Stock Exchange.
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Section 6.04 Certain Proceedings. (a) No writ, order, decree or injunction
of a court of competent jurisdiction or governmental entity shall have been
entered and remain in effect against Parent, Subco or the Company which
prohibits the consummation of the Merger or limits the exercise by the Parent
and the Surviving Corporation of full rights to own and operate the business
of the Company and its Subsidiaries, and any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and no action shall have been taken under the Irish Mergers Act
prohibiting the Merger and the relevant period under the Irish Mergers Act for
objection shall have expired.
(b) All authorizations, orders, consents, licenses, confirmations,
clearances, permissions and approvals which may be required in any foreign
jurisdiction for the purposes of applicable anti-trust, competition, takeover
or similar legislation in connection with the consummation of the Merger and
the other transactions contemplated hereby shall have been received and shall
remain in full force and effect.
Section 6.05 Tax Matters. Each of Parent and the Company shall have received
an opinion of Cahill Gordon & Reindel, counsel to the Parent and Subco, and
the Company shall have received an opinion of Pillsbury Madison & Sutro LLP,
counsel to the Company, each such opinion dated as of the Closing, each such
opinion substantially to the effect that (i) the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code; (ii) each of
Parent, Subco and the Company will be a party to such reorganization within
the meaning of Section 368(b) of the Code; and (iii) except for cash received
in lieu of fractional Parent ADSs, no gain or loss will be recognized by a
stockholder of Company as a result of the Merger with respect to the shares of
Company Common Stock converted into Parent ADSs; provided that: (i) Company
complies with the reporting requirements contained in Treasury Regulations (S)
1.367(a)-3T(c)(4); (ii) the Company stockholder owns (including beneficial,
indirect and constructive ownership) less than 5% of the total voting power or
total value of Parent's outstanding stock immediately after the Merger; and
(iii) the Company stockholder complies with the notice requirements of Section
6038B of the Code.
Section 6.06 Average Market Value. The Average Market Value of a Parent ADS
shall be equal to or greater than $50; provided, however that this condition
will be satisfied if the Parent increases the Exchange Ratio so that the
product of (a) a fraction of a Parent ADS corresponding to the increased
Exchange Ratio and (b) the Average Market Value of a Parent ADS is equal to or
greater than $14.875. "Average Market Value" shall mean the arithmetic average
of the closing price per share of a Parent ADS as reported on the NYSE
composite tape for the five consecutive trading days ending with the last
trading day prior to the Closing.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PARENT AND SUBCO
The obligation of Parent and Subco to effect the Merger and to perform their
other obligations to be performed at or subsequent to the Closing shall be
subject to the fulfillment at or prior to the Closing of the following
additional conditions, any one or more of which may be waived by Parent or
Subco:
Section 7.01 Representations and Warranties True. The representations and
warranties of the Company that are qualified with reference to a Material
Adverse Effect or materiality shall be true and correct and the
representations and warranties of the Company that are not so qualified shall
be true and correct in all material respects, in each case as of the date
hereof, and, except to the extent such representations and warranties speak as
of an earlier date, as of the Effective Time as though made at and as of the
Effective Time.
Section 7.02 Performance. The Company shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date except for those failures to so perform or comply which
individually and in the aggregate would not either impair the Company's
ability to consummate the Merger and the other transactions contemplated
hereby or have a Material Adverse Effect.
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Section 7.03 Certificates. The Company shall furnish such certificates of
its officers to evidence compliance with the conditions set forth in Sections
7.01 and 7.02 as may be reasonably requested by Parent or Subco.
Section 7.04 Material Adverse Change. There shall not have occurred since
December 31, 1995 any material adverse change in the general affairs,
management, business, operations, assets, conditions (financial or otherwise)
or prospects of the Company and its Subsidiaries taken as a whole (including
loss of a significant portion of the employees in the Company's therapeutic
research department).
Section 7.05 Opinion of Counsel. Parent shall have received the opinions of
Pillsbury Madison & Sutro LLP, counsel to the Company, and Lisabeth F. Murphy,
General Counsel to the Company, each substantially to the effect as the forms
of opinions which were previously agreed by the parties.
Section 7.06 Consents, Approval and Notifications. All the consents and
approvals, and notifications and disclosures, and filings and registrations
listed in Section 4.03 of the Disclosure Statement shall have been obtained.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement to effect the Merger
shall be subject to the fulfillment on or before the Closing Date of each of
the following additional conditions, any one or more of which may be waived by
the Company:
Section 8.01 Representations and Warranties True. The representations and
warranties of Parent and Subco that are qualified with reference to a Parent
Material Adverse Effect or materiality shall be true and correct and the
representations and warranties of Parent and Subco that are not so qualified
shall be true and correct in all material respects, in each case as of the
date hereof, and, except to the extent such representations and warranties
speak as of an earlier date, as of the Effective Time as though made at and as
of the Effective Time.
Section 8.02 Performance. Parent and Subco shall have performed and complied
in all material respects with all agreements, obligations and conditions
required by this Agreement to be performed or complied with by them on or
prior to the Closing Date except for those failures to so perform or comply
which individually or in the aggregate would not either impair the ability of
Parent or Subco to consummate the Merger and the other transactions
contemplated hereby or have a Parent Material Adverse Effect.
Section 8.03 Certificates. Parent and Subco shall furnish such certificates
of their respective officers to evidence compliance with the conditions set
forth in Sections 8.01 and 8.02 as may be reasonably requested by the Company.
Section 8.04 Material Adverse Change. There shall not have occurred since
March 31, 1995 any material adverse change in the general affairs, management,
business, operations, assets, condition (financial or otherwise) or prospects
of the Parent and its Parent Subsidiaries taken as a whole.
Section 8.05 Opinion of Counsel. The Company shall have received the opinion
of Cahill Gordon & Reindel, counsel to Parent, substantially to the effect as
the form of opinions previously agreed by the parties.
Section 8.06 Consents, Approvals and Notifications. All necessary consents
and approvals of, and notifications and disclosures to, and filings and
registration with, any United States or any other governmental authority or
any other third party required on the part of Parent and Subco for the
consummation of the Merger and the other transactions contemplated hereby
shall have been obtained or accomplished.
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ARTICLE IX
CLOSING
Section 9.01 Time And Place. Subject to the provisions of Articles VI, VII,
VIII and X, the closing of the Merger (the "Closing") shall take place at the
offices of Cahill Gordon & Reindel, as soon as practicable but in no event
later than 9:30 A.M., local time, on the first business day after the date on
which each of the conditions set forth in Articles VI, VII and VIII have been
satisfied or waived by the party or parties entitled to the benefit of such
conditions; or at such other place, at such other time, or on such other date
as Parent, Subco and the Company may mutually agree. The date on which the
Closing actually occurs is herein referred to as the "Closing Date."
Section 9.02 Filings at the Closing. Subject to the provisions of Articles
VI, VII, VIII and X, the Company, Parent and Subco shall cause to be executed
and filed at the Closing the Certificate of Merger and shall cause the
Certificate of Merger to be recorded in accordance with the applicable
provisions of the Delaware Act and shall take any and all other lawful actions
and do any and all other lawful things necessary to cause the Merger to become
effective.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.01 Termination. This Agreement may be terminated and the Merger
may be abandoned any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company:
(a) by mutual consent of the Boards of Directors of Parent and the
Company;
(b) by either Parent or the Company if, without fault of such terminating
party, the Merger shall not have been consummated on or before August 31,
1996, which date may be extended by mutual consent of the parties hereto;
(c) by either Parent or the Company, if any court of competent
jurisdiction or other governmental body shall have issued an order (other
than a temporary restraining order), decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Merger, and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(d) by either Parent or the Company, if the requisite approvals of
stockholders at each of the Special Meetings or any adjournment thereof is
not obtained.
Section 10.02 Termination by Parent. This Agreement may be terminated and
the Merger may be abandoned by action of the Board of Directors of Parent, at
any time prior to the Effective Time, before or after the approval by the
stockholders of the Company, if (a) the Company shall have failed to comply in
any material respect with any of the covenants or agreements contained in
Articles I and V of this Agreement to be complied with or performed by the
Company at or prior to such date of termination; (b) there exists a breach or
breaches of any representation or warranty of the Company contained in this
Agreement such that the Closing condition set forth in Section 7.01 would not
be satisfied; provided, however, that if such breach or breaches are capable
of being cured prior to the Effective Time, such breaches shall not have been
cured within 30 days of delivery to the Company of written notice of such
breach or breaches; (c) the Board of Directors of the Company (i) fails to
recommend the approval of this Agreement and the Merger to the Company's
stockholders, (ii) withdraws or amends or modifies in a manner adverse to the
Parent its recommendation or approval in respect of this Agreement or the
Merger, (iii) makes any recommendation with respect to an Acquisition
Transaction (including making no recommendation or stating an inability to
make a recommendation), other than a recommendation to reject such Acquisition
Transaction, or the Board of Directors of the Company shall have resolved to
take any of the foregoing actions referred to in this clause and publicly
disclosed such resolution; or (d) the Company or its representatives shall
furnish or disclose non-public information or negotiate, discuss, explore or
otherwise
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communicate in any way with a Third Party with respect to any Acquisition
Transaction, or the Board of Directors of the Company shall have resolved to
take any of the foregoing actions referred to in this clause and publicly
discloses such resolution; provided, however, that in such event Parent shall
have no right to terminate pursuant to this clause (d) of Section 10.02 until
the earlier of (i) May 31, 1996 or (ii) the thirtieth calendar day after the
Company or its representatives first furnishes or discloses non-public
information to, or negotiates, discusses, explores or otherwise communicates
with any Third Party with respect to an Acquisition Transaction (such earlier
date being referred to as the "Trigger Date") and only if the Company has not
terminated all such activities prior to the Trigger Date.
Section 10.03 Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time,
before or after the approval by the stockholders of the Company, by action of
the Board of the Directors of the Company, if (a) Parent or Subco shall have
failed to comply in any material respect with any of the covenants or
agreements contained in Articles I and V of this Agreement to be complied with
or performed by Parent or Subco at or prior to such date of termination or
(b) there exists a breach or breaches of any representation or warranty of
Parent or Subco contained in this Agreement such that the Closing condition
set forth in Section 8.01 would not be satisfied; provided, however, that if
such breach or breaches are capable of being cured prior to the Effective
Time, such breaches shall not be cured within 30 days of delivery to Parent of
written notice of such breach or breaches.
Section 10.04 Procedure for Termination. In the event of termination and
abandonment of the Merger by Parent or the Company pursuant to this Article X,
written notice thereof shall forthwith be given to the other.
Section 10.05 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article X, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party to this Agreement,
except as provided in this Section 10.05 and except that nothing herein shall
relieve any party from liability for any breach of this Agreement.
(b) In the event of a termination of this Agreement by the Company pursuant
to Section 10.03, then Parent shall within two business days of such
termination pay the Company by wire transfer or immediately available funds to
an account specified by the Company (i) up to $2.5 million to reimburse the
Company for its documented fees and expenses (including the fees and expenses
of counsel, accountants, consultants and advisors) incurred in connection with
this Agreement and the transactions contemplated hereby and (ii) a fee of $5
million as liquidated damages. In the event of a termination of this Agreement
by Parent pursuant to Section 10.02, then the Company shall within two
business days of such termination pay Parent by wire transfer or immediately
available funds to an account specified by Parent (i) up to $2.5 million to
reimburse Parent for its documented fees and expenses by Parent (including the
fees and expenses of counsel, accountants, consultants and advisors) incurred
in connection with this Agreement and the transactions contemplated hereby and
(ii) a fee of $5 million as liquidated damages.
(c) If this Agreement is terminated by the Parent pursuant to Section 10.02
(c) or (d), then in any such case the Company within two business days of such
termination shall pay the Parent by wire transfer of immediately available
funds to an account specified by Parent up to $2.5 million to reimburse Parent
for its documented fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and an additional fee of
$25 million (less any fee paid to Parent as liquidated damages pursuant to
Section 10.05(b)). If this Agreement is terminated (i) pursuant to Section
10.01 (except Section 10.01(a)) or (ii) by Parent pursuant to Section 10.02(a)
or (b) and in the case of either clause (i) or clause (ii), prior to such
termination any financially capable person shall have expressed a bona fide
interest in an Acquisition Transaction with the Company or its stockholders
then the Company shall within two business days of such termination pay Parent
by wire transfer of immediately available funds to an account specified by
Parent up to $2.5 million to reimburse Parent for its documented fees and
expenses (to the extent not previously reimbursed by the Company pursuant to
Section 10.05(b)) incurred in connection with this Agreement and the
transactions contemplated hereby and, if prior to or within twelve months
after such termination the Company or any of its Subsidiaries enters into a
definitive
A-29
<PAGE>
agreement with a third party with respect to, or consummates, an Acquisition
Transaction, then the Company, prior to the earlier of entering into any such
definitive agreement and consummating an Acquisition Transaction, shall pay
Parent by wire transfer of immediately available funds to an account specified
by Parent, an additional fee of $25 million (less any fee paid to Parent as
liquidated damages pursuant to Section 10.05(b)).
ARTICLE XI
DEFINITIONS
Section 11.01 Terms Defined in This Agreement. The following capitalized
terms used herein shall have the meanings ascribed in the indicated sections.
<TABLE>
<S> <C>
1995 Balance Sheet........................................... 4.12
1996 Parent SEC Reports...................................... 3.07
1998 Warrants................................................ 3.11
Acquisition Transaction...................................... 5.02
ADRs......................................................... 2.01
Affiliates................................................... 4.07
Agreement.................................................... First Paragraph
Antitrust Division........................................... 5.05
Average Market Value......................................... 6.06
CERCLA....................................................... 4.24
Certificate of Merger........................................ 1.02
Certificates................................................. 2.03
Closing...................................................... 9.01
Closing Consideration........................................ 2.01
Closing Date................................................. 9.01
COBRA........................................................ 4.23
Code......................................................... RECITALS
Company...................................................... First Paragraph
Company Common Stock......................................... 2.01
Company Common Stock Equivalents............................. 4.10
Company Plans................................................ 2.04
Company Preferred Stock...................................... 4.10
Company Proxy Statement...................................... 1.05
Company SEC Reports.......................................... 4.11
Constituent Corporations..................................... First Paragraph
Contractor................................................... 4.24
CSA.......................................................... 4.20
Delaware Act................................................. 1.01
Disclosure Statement......................................... 4.01
Drug Enforcement Agency...................................... 4.20
Effective Time............................................... 1.02
Employee Benefit Plans....................................... 4.23
Environmental Law............................................ 4.24
Environmental Permit......................................... 4.24
ERISA........................................................ 4.23
ERISA Affiliate.............................................. 4.23
ERISA Benefit Plans.......................................... 4.23
Exchange Act................................................. 3.06
Exchange Ratio............................................... 2.01
FDCA......................................................... 4.20
</TABLE>
A-30
<PAGE>
<TABLE>
<S> <C>
Foreign Plan................................................. 4.23
FTC.......................................................... 5.05
Hazardous Material........................................... 4.24
HSR Act...................................................... 3.04
Intellectual Property Rights................................. 4.21
Irish Mergers Act............................................ 3.04
IRS.......................................................... 4.23
LYONs........................................................ 3.11
Market Value................................................. 2.05
Material Adverse Effect...................................... 4.01
Merger....................................................... 1.01
NYSE......................................................... 2.05
Parent....................................................... First Paragraph
Parent ADSs.................................................. 2.01
Parent "B' Executive Shares.................................. 3.11
Parent Exchange Options...................................... 2.04
Parent Executive Shares...................................... 3.11
Parent Material Adverse Effect............................... 3.01
Parent Ordinary Shares....................................... 2.01
Parent Plans................................................. 3.11
Parent Proxy Statement....................................... 1.05
Parent SEC Reports........................................... 3.07
Pension Benefit Plans........................................ 4.23
Proxy Statements............................................. 1.05
Registration Statement....................................... 3.06
SEC.......................................................... 3.06
Securities Act............................................... 3.04
Special Meeting.............................................. 1.05
Subco........................................................ First Paragraph
Superior Proposal............................................ 5.02
Surviving Corporation........................................ 1.01
Tax.......................................................... 4.22
Tax Returns.................................................. 4.22
Taxes........................................................ 4.22
Third Party.................................................. 1.05
Trigger Date................................................. 10.02
Welfare Plans................................................ 4.23
</TABLE>
ARTICLE XII
MISCELLANEOUS
Section 12.01 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement
of Parent, Subco and the Company at any time prior to the Effective Time with
respect to any of the terms contained herein; provided, however, that after
this Agreement is adopted by the stockholders of the Company, no such
amendment or modification shall change the amount or form of the Closing
Consideration.
Section 12.02 Waiver of Compliance; Consents. Any failure of Parent or
Subco, on the one hand, or the Company, on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by the
Company or Parent or Subco, respectively, only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant,
A-31
<PAGE>
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 12.02.
Section 12.03 Survivability; Investigations. The respective representations
and warranties of Parent, Subco and the Company contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any party
hereto and shall not survive the Closing.
Section 12.04 Notices. All notices and other communications hereunder shall
be in writing and shall be delivered personally, by next-day courier or mailed
by registered or certified mail (return receipt requested), first class
postage prepaid, or telecopied with written confirmation of receipt, to the
parties at the addresses specified below (or at such other address for a party
as shall be specified by like notice; provided that notices of a change of
address shall be effective only upon receipt thereof). Any such notice shall
be effective upon receipt, if personally delivered or telecopied, one day
after delivery to a courier for next-day delivery, or three days after
mailing, if deposited in the U.S. mail, first class postage prepaid.
(a) if to the Company, to
Athena Neurosciences, Inc.
800 Gateway Boulevard
South San Francisco, CA 94080
Telecopy: (415) 875-3620
Attention: General Counsel
with a copy to
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopy: (415) 983-1200
Attention: Thomas E. Sparks, Jr.
(b) if to Parent, or Subco, to
Elan Corporation, plc.
Monksland, Athlone
County Westmeath
Ireland
Telecopy: (011) (353) 902-95808
Attention: Thomas G. Lynch
with a copy to
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Telecopy: (212) 269-5420
Attention: William M. Hartnett, Esq.
Section 12.05 Assignment; Third Party Beneficiaries. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns
(including, without limitation, any wholly-owned Subsidiary of Parent
incorporated under the laws of Delaware and substituted for Subco as provided
in Section 1.01), but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent
A-32
<PAGE>
of the other parties. This Agreement is not intended to confer any rights or
remedies hereunder upon any other person except the parties hereto and, with
respect to Sections 5.08, 5.14 and 5.15, the officers, directors and employees
of the Company.
Section 12.06 Governing Law. This Agreement shall be governed by the laws of
the State of Delaware (regardless of the laws that might otherwise govern
under applicable Delaware principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
Section 12.07 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.08 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a party hereto, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall
only apply as to such party in the specific jurisdiction where such judgment
shall be made.
Section 12.09 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof; and (ii) the term "Subsidiary" of any specified
corporation shall mean any corporation of which a majority of the outstanding
securities having ordinary voting power to elect a majority of the board of
directors is directly or indirectly owned by such specified corporation or any
other person of which a majority of the equity interests therein is, directly
or indirectly, owned by such specified corporation.
Section 12.10 Entire Agreement. This Agreement, including the exhibits
hereto and the documents and instruments referred to herein (including the
Disclosure Statement), embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
representations, promises, warranties, covenants, or undertakings, other than
those expressly set forth or referred to herein and therein.
A-33
<PAGE>
IN WITNESS WHEREOF, Parent, Subco and the Company have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
above written.
ELAN CORPORATION, plc
By: /s/ Thomas G. Lynch
---------------------------------
NAME: THOMAS G. LYNCH
TITLE: CHIEF FINANCIAL OFFICER
ELAN ACQUISITION CORP.
By: /s/ Thomas G. Lynch
---------------------------------
NAME: THOMAS G. LYNCH
TITLE: CHIEF FINANCIAL OFFICER
ATHENA NEUROSCIENCES, INC.
By: /s/ John Groom
---------------------------------
NAME: JOHN GROOM
TITLE: PRESIDENT AND CHIEF
EXECUTIVE OFFICER
S-1
<PAGE>
ANNEX B
[LOGO OF ATHENA NEUROSCIENCES APPEARS HERE]
March 17, 1996
Board of Directors
Athena Neurosciences, Inc.
800 Gateway Boulevard
South San Francisco, CA 94080
Gentlemen:
Athena Neurosciences, Inc. (the "Company") proposes to enter into an
Agreement and Plan of Merger (the "Agreement"), with Elan Corporation, plc
("Parent") and Subco ("Subco"), a direct wholly owned subsidiary of parent.
Pursuant to the Agreement, Subco will merge with and into the Company (the
"Merger") and, at the effective time of the Merger, each outstanding share
(other than shares owned by Parent, the Company or any of their respective
subsidiaries (collectively the "Excluded Shares")) of common stock, par value
$.01 per share, of the Company (the "Common Stock") will be converted into the
right to receive 0.2956 of an American Depository Share ("Parent ADSs"), each
Parent ADS representing one Ordinary share, par value 4 Irish Pence, of Parent
(the "Exchange Ratio").
You have asked us whether or not, in our opinion, the Exchange Ratio is
fair, from a financial point of view, to the holders of Common Stock (other
than holders of Excluded Shares).
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related
financial information for the four fiscal years ended December 31,
1994 and the Company's draft 10-K (containing preliminary unaudited
financial information) for the fiscal year ended 12/31/95;
(2) Reviewed the Parent's Annual Reports, Forms 20-F and related financial
information for the five fiscal years ended March 31, 1995 and the
Parent's Forms 6-K and the related unaudited financial information for
the 9 months ended January 5, 1996;
(3) Reviewed certain information, including financial forecasts, relating
to the respective businesses, earnings, cash flows, assets and
prospects of the Company and the Parent, furnished to us by the
Company and the Parent;
(4) Conducted discussions with members of senior management of the Company
and the Parent concerning their respective businesses and prospects;
(5) Reviewed the historical market prices and trading activity for the
Common Stock and the Parent ADSs and compared such price and trading
histories with those of certain publicly-traded companies which we
deemed to be relevant;
(6) Compared the financial position and operating results of the Company
and the Parent, respectively, with those of certain other publicly-
traded companies which we deemed relevant;
(7) Compared the proposed financial terms of the Merger with the financial
terms of certain other mergers and acquisitions which we deemed to be
relevant;
(8) Reviewed the potential pro forma effects of the Merger;
(9) Reviewed a draft of the Agreement in the form presented to the Board
of Directors of the Company; and
(10) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed appropriate.
B-1
<PAGE>
In preparing our opinion, we have relied on the accuracy and completeness of
all information that was publicly available or supplied or otherwise made
available to us by or on behalf of the Company and the Parent, and we have not
assumed any responsibility to independently verify such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company or the Parent. We have assumed that
the financial forecasts examined by us were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the Company's and Parent's respective managements as to the future performance
of the Company and the Parent, respectively. We have also assumed, with your
consent, that: (i) the strategic and operating benefits contemplated by the
senior management of the Company and the Parent will be realized and (ii) all
material assets and liabilities (contingent or otherwise, known or unknown) of
the Company and the Parent are as set forth on the Company's and Parent's
respective financial statements. Our opinion is based upon economic, monetary
and market conditions as they exist and can be evaluated on the date hereof.
Furthermore, we express no opinion as to the price or trading range at which
shares of Common Stock or ADSs will trade following the date hereof.
This opinion does not constitute a recommendation to any shareholder of the
Company as to how any such shareholder should vote on the Merger. This opinion
does not address the relative merits of the Merger and any other transactions
or business strategies discussed by the Board of Directors of the Company as
alternatives to the Merger or the decision of the Board of Directors of the
Company to proceed with the Merger.
This opinion has been prepared at the request and for the use of the Board
of Directors of the Company and shall not be reproduced, summarized, described
or referred to, or provided to any other person, without the prior written
consent of PaineWebber Incorporated; provided, however, that this letter may
be reproduced in full in the Proxy Statement.
PaineWebber Incorporated is currently acting as financial advisor to the
Company in connection with the Merger and will receive a fee upon delivery of
this opinion and upon consummation of the Merger. From time to time
PaineWebber has provided investment banking services to the Company for which
it has received compensation commensurate with the services provided. In
addition, a representative of PaineWebber is a member of the Board of
Directors of the Company.
In the ordinary course of our business, we may trade the securities of the
Company and Parent for our own account and for the accounts of our customers
and, accordingly, may at any time hold long or short positions in such
securities. In addition, an affiliate of PaineWebber holds warrants to
purchase up to 1,000,000 shares of Common Stock at a below market exercise
price.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair, from a financial point of
view, to the holders of Common Stock (other than holders of Excluded Shares).
Very truly yours,
PaineWebber Incorporated
/s/ PaineWebber Incorporated
By: _________________________________
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except to the extent indicated below, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of Elan
is insured or indemnified in any manner against any liability which he or she
may incur in his or her capacity as such.
Paragraph 113 of the Articles of Association of Elan provides as follows:
113. Every Director and other officer of Elan (other than an Auditor)
shall be indemnified out of the assets of Elan against any cost, expense,
liability or other matter incurred by him in defending any proceedings,
whether civil or criminal, in relation to his acts while acting in such
office in which judgment is given in his favor or in which he is acquitted
or in connection with any application in which relief is granted to him by
the Court under the Acts.
Section 200 of the Irish Companies Act of 1963 (as amended) provides as
follows:
Subject as hereinafter provided, any provision whether contained in the
articles of a company or in any contract with a company or otherwise for
exempting any officer of the company or any person employed by the company
as auditor from, or indemnifying him against, any liability which by virtue
of any rule of law would otherwise attach to him in respect of any
negligence, default, breach of duty or breach of trust of which he may be
guilty in relation to the company shall be void, so, however, that:
(a) nothing in this section shall operate to deprive any person of
any exemption or right to be indemnified in respect of anything done or
omitted to be done by him while any such provision was in force; and
(b) notwithstanding anything in this section, a company may, in
pursuance of any such provision as aforesaid, indemnify any such
officer or auditor against any liability incurred by him in defending
proceedings, whether civil or criminal, in which judgment is given in
his favor or in which he is acquitted, or in connection with any
application under section 391 of the Companies Act, 1963 or section 42
of the Companies (Amendment) Act, 1983, in which relief is granted to
him by the court.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS.
(a) EXHIBITS.
2.1 Agreement and Plan of Merger, dated as of March 18, 1996, among
Elan Corporation, plc, Elan Acquisition Corp. and Athena
Neurosciences, Inc. (attached as Annex A to the Prospectus-Proxy
Statement included in this Registration Statement).
4.1 Amended and Restated Deposit Agreement, dated as of July 9, 1990
and amended as of July 31, 1990, among Elan Corporation, plc,
The Bank of New York, as depositary, and the holders from time
to time of the ADRs. Incorporated by reference to the
Registration Statement on Form F-1 of Elan and Drug Research
Corporation, plc, Registration No. 33-362777 filed with the
Commission on August 8, 1990.
5.1 Opinion of McCann FitzGerald with respect to the legality of the
securities registered hereby.
8.1 Opinion of Pillsbury Madison & Sutro LLP with respect to certain
tax matters.
23.1. Consent of McCann FitzGerald (included as part of Exhibit 5.1)
23.2. Consent of Pillsbury Madison & Sutro LLP (included as part of
Exhibit 8.1)
23.3. Consent of KPMG
23.4. Consent of Ernst & Young LLP, independent auditors
23.5. Consent of PaineWebber Incorporated
23.6. Consent of John Groom
23.7. Consent of Dennis J. Selkoe
24.1. Powers of Attorney
99.1. Form of proxy to be mailed to stockholders of Athena
Neurosciences, Inc.
(b) FINANCIAL STATEMENT SCHEDULES.
Not applicable.
(c) REPORTS, OPINIONS OR APPRAISALS.
1.1 Form of opinion of PaineWebber Incorporated (attached as Annex B
to the Prospectus-Proxy Statement included in this Registration
Statement).
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any
delayed offering or throughout a continuous offering.
(5) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of any employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) That, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(7) That, every prospectus (i) that is filed pursuant to paragraph (6)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means;
and (ii) to arrange or provide for a facility in the U.S. for the purpose
of responding to such requests. The undertaking in subparagraph (i) above
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DUBLIN,
IRELAND, ON MAY 15, 1996.
ELAN CORPORATION, plc
By Donal J. Geaney
-------------------------------------
(Donal J. Geaney)
Chief Executive Officer
and President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON BEHALF OF ELAN CORPORATION, PLC BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
* Chairman of the Board May 15, 1996
- ------------------------------------
(Donald E. Panoz)
* Chief Executive Officer/ May 15, 1996
- ------------------------------------ President and Director
(Donal J. Geaney) (Principal Executive
Officer)
* Chief Financial Officer/ May 15, 1996
- ------------------------------------ Executive Vice President
(Thomas G. Lynch) (Principal Financial
Officer)
* Executive Vice President and May 15, 1996
- ------------------------------------ Director
(Kenneth W. McVey)
* Group Financial Controller May 15, 1996
- ------------------------------------ (Principal Accounting
(William F. Daniel) Officer)
Director May 15, 1996
*
- ------------------------------------
(Howard C. Ansel, Ph.D.)
* Director May 15, 1996
- ------------------------------------
(Garo Armen, Ph.D.)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
* Director May 15, 1996
- ------------------------------------
(James Balog)
* Director May 15, 1996
- ------------------------------------
(David R. Bethune)
* Director May 15, 1996
- ------------------------------------
(Brendan Boushel)
* Director May 15, 1996
- ------------------------------------
(Laurence Crowley)
* Director May 15, 1996
- ------------------------------------
(Alan Gillespie)
* Director May 15, 1996
- ------------------------------------
(Charles Greyston)
* Director May 15, 1996
- ------------------------------------
(Kevin McIntyre, M.D.)
* Director May 15, 1996
- ------------------------------------
(Richard Thornburgh)
Thomas G. Lynch
- ------------------------------------
(Thomas G. Lynch)
(As Attorney-in-fact for each of the
persons indicated)*
Elan Pharmaceutical Research
Authorized Representative
Thomas G. Lynch Secretary May 15, 1996
- ------------------------------------
(Thomas G. Lynch)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of March 18, 1996, among
Elan Corporation, plc, Elan Acquisition Corp. and Athena
Neurosciences, Inc. (attached as Annex A to the Prospectus-Proxy
Statement included in this Registration Statement).
4.1 Amended and Restated Deposit Agreement, dated as of July 9, 1990
and amended on July 31, 1990, among Elan Corporation plc, The
Bank of New York, as depositary, and the holders from time to
time of the ADRs. Incorporated by reference to the Registration
Statement on Form F-1 of Elan and Drug Research Corporation,
plc, Registration No. 33-362777 filed with the Commission on
August 8, 1990.
5.1 Opinion of McCann FitzGerald Solicitors with respect to the
legality of the securities registered hereby.
8.1 Opinion of Pillsbury Madison & Sutro LLP with respect to certain
tax matters.
23.1 Consent of McCann FitzGerald Solicitors (included as part of
Exhibit 5.1)
23.2 Consent of Pillsbury Madison & Sutro LLP (included as part of
Exhibit 8.1)
23.3 Consent of KPMG
23.4 Consent of Ernst & Young LLP, independent auditors
23.5 Consent of PaineWebber Incorporated
23.6 Consent of John Groom
23.7 Consent of Dennis J. Selkoe
24.1 Powers of Attorney
99.1 Form of proxy to be mailed to stockholders of Athena
Neurosciences, Inc.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MCCANN FITZGERALD]
May 1996
Elan Corporation plc
Monksland
Athlone
Co. Westmeath
Ireland
Dear Sirs
We are acting as Irish Counsel for Elan Corporation, plc ("Elan"), a public
limited company incorporated under the laws of Ireland in connection with the
proposed offer (the "Offering") by Elan of up to 9,683,258 American Depositary
Shares of Elan (the "ADSs" and each an "ADS") each ADS representing one
ordinary share, par value 4 Irish pence of Elan (the "Ordinary Shares") in
exchange for all of the outstanding shares and rights to purchase shares of
common stock, par value $.01 per share, of Athena Neurosciences, Inc. ("Athena
Shares") pursuant to the Registration Statement and the related prospectus-
proxy statement (the "Registration Statement") to be filed by Elan under the
Securities Act of 1933, as amended (the "Act").
In connection with this opinion, we have examined and have assumed the truth
and accuracy of the contents of the original or copies of minutes of meetings
of the shareholders and Board of Directors of Elan, the register of members of
Elan, a copy of the Memorandum of Association and of the Articles of
Association of Elan, as amended and such documents and certificates of
officers of and advisers to Elan and of public officials as to factual matters
as we have deemed necessary or appropriate for the purposes of this opinion
but have made no independent investigation regarding such factual matters. In
our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such documents. We
have assumed that none of the resolutions and authorities of the shareholders
or Directors of Elan upon which we have relied have been varied, amended or
revoked or will have been varied, amended or revoked in any respect or have
expired or will have expired at the time of issue of the relevant Ordinary
Shares and that all of the Ordinary Shares will be issued in accordance with
such resolutions and authorities.
We are admitted to practice law only in Ireland and accordingly, we express
no opinion on the laws of any jurisdiction other than the laws (and the
interpretation thereof) of Ireland in force as at the date hereof. We assume
that the transactions contemplated by the Registration Statement are lawful
under the mutual states federal law, New York State law and all other
applicable laws (if any).
Based upon the foregoing, we are of the opinion that the Ordinary Shares
underlying the portion of the ADSs to be offered pursuant to the Registration
Statement, have been duly authorised and upon issue by Elan in accordance with
the terms of the Merger Agreement (as defined in the Registration Statement)
will be validly issued, fully paid and not subject to calls for additional
payment of any kind and no personal liability attaches to the holders thereof
purely by reason of the ownership thereof.
We hereby consent to the filing of this opinion with the United States
Securities and Exchange Commission as an exhibit to the Registration Statement
and to the references to our firm under the caption "Legal Matters" in the
Registration Statement and the prospectus-proxy statement. Our consent to such
references does not constitute a consent under Section 7 of the Act, as in
consenting to such references, we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is
<PAGE>
required under Section 7 or under the rules and regulations of the United
States Securities and Exchange Commission thereunder.
This opinion is being delivered to you and may not be relied upon or
distributed by any other person other than Cahill Gordon & Reindel, without
our consent. This opinion is to be construed in accordance with and governed
by the laws of Ireland.
Yours faithfully
McCann FitzGerald
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF PILLSBURY MADISON & SUTRO LLP]
May 14, 1996
Athena Neurosciences, Inc.
800 Gateway Boulevard
South San Francisco, California 94080
Ladies and Gentlemen:
With reference to the Registration Statement on Form F-4 (the "Registration
Statement") to be filed by Elan Corporation, plc, a public limited company
incorporated under the laws of Ireland ("Elan"), with the Securities and
Exchange Commission in connection with the registration under the Securities
Act of 1933, as amended, of its American Depositary Shares ("Elan ADSs," with
each Elan ADS representing one ordinary share, par value 4 Irish pence per
share, of Elan), to be issued in connection with the transactions contemplated
by the Agreement and Plan of Merger (the "Merger Agreement") dated as of March
18, 1996 by and among Elan, Elan Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of Elan, and Athena Neurosciences, Inc., a Delaware
corporation ("Athena"), which Merger Agreement is described therein and filed
as an annex to the Registration Statement, we hereby confirm that the
discussion set forth under the captions "Summary--Certain U.S. Federal Income
Tax Consequences" and "Certain Tax Consequences--U.S. Federal Income Tax
Consequences of the Merger" in the Registration Statement describes the
material federal income tax considerations relevant to the Athena shareholders
of receipt of Elan ADSs pursuant to the Merger Agreement.
We hereby consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus included therein.
Very truly yours,
Pillsbury Madison & Sutro LLP
<PAGE>
EXHIBIT 23.3
CONSENT OF KPMG
The Directors
Elan Corporation, plc
Monksland
Athlone
Country Westmeath
We consent to the incorporation by reference in the Registration Statement
on Form F-4 dated May 15, 1996 of Elan Corporation, plc of our report dated
May 5, 1995 relating to the consolidated balance sheets of Elan Corporation,
plc as of March 31, 1995 and 1994, and the related consolidated statements of
income, cashflows and shareholders' equity and related schedule for each of
the years in the three year period ended March 31, 1995, which report appears
in the March 31, 1995 Annual Report on Form 20-F of Elan Corporation, plc.
KPMG
Chartered Accountants
Dublin, Ireland
May 15, 1996
<PAGE>
EXHIBIT 23.4
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Proxy Statement of Athena Neurosciences, Inc. which is referred to and made a
part of the Registration Statement (Form F-4) and related Prospectus of Elan
Corporation, plc for the registration of shares of its Ordinary Shares and to
the incorporation by reference therein of our report dated February 2, 1996,
with respect to the consolidated financial statements and schedule of Athena
Neurosciences, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Palo Alto, California
May 15, 1996
<PAGE>
EXHIBIT 23.5
PAINEWEBBER INCORPORATED
U.S. CONSENT
PaineWebber Incorporated ("PaineWebber") hereby consents to the inclusion in
the Prospectus-Proxy Statement of Elan Corporation, plc, and Athena
Neurosciences, Inc., filed as a part of this Registration Statement on Form F-
4 of Elan Corporation, plc, of its opinion dated March 17, 1996 and to the
references made to PaineWebber in the "Summary" and "Opinion of Athena's
Financial Advisor" sections of such Prospectus-Proxy Statement. In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
PAINEWEBBER INCORPORATED
Stelios Papadopoulos
Managing Director
May 15, 1996
<PAGE>
EXHIBIT 23.6
CONSENT OF PROSPECTIVE DIRECTOR
Pursuant to the requirements of Rule 438 promulgated under the Securities
Act of 1933, as amended, the undersigned hereby consents to being named as a
prospective director of Elan Corporation, plc in the Elan Corporation, plc
Registration Statement on Form F-4 (No. 333- ) with respect to the
acquisition of Athena Neurosciences, Inc.
John Groom
Dated May 14, t1996
<PAGE>
EXHIBIT 23.7
CONSENT OF PROSPECTIVE DIRECTOR
Pursuant to the requirements of Rule 438 promulgated under the Securities
Act of 1933, as amended, the undersigned hereby consents to being named as a
prospective director of Elan Corporation, plc in the Elan Corporation, plc
Registration Statement on Form F-4 (No. 333- ) with respect to the
acquisition of Athena Neurosciences, Inc.
Dennis J. Selkoe
Dated May 14, 1996
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Brendan Boushel
------------------------
Brendan Boushel
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Donald E. Panoz
------------------------
Donald E. Panoz
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Donal J. Geaney
------------------------
Donal J. Geaney
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Thomas G. Lynch
------------------------
Thomas G. Lynch
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Kenneth W. McVey
------------------------
Kenneth W. McVey
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
William F. Daniel
------------------------
William F. Daniel
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Howard C. Ansel
-----------------------------
Howard C. Ansel, Ph.D.
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Garo Armen
-----------------------------
Garo Armen, Ph.D.
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
James Balog
-----------------------------
James Balog
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
David R. Bethune
-----------------------------
David R. Bethune
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Laurence Crowley
-----------------------------
Laurence Crowley
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Alan Gillespie
-----------------------------
Alan Gillespie
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Charles Greyston
-----------------------------
Charles Greyston
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Kevin McIntyre
-----------------------------
Kevin McIntyre, M.D.
<PAGE>
EXHIBIT 24.1
ELAN CORPORATION, PLC
KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby appoints Donald E.
Panoz, Donal J. Geaney, Thomas G. Lynch and Kenneth W. McVey, or any of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and restitution, for him and in his name, place, and stead, in any
and all capacities, to sign the Registration Statement under the Securities Act
of 1933, as amended, of Form F-4 to sign any and all pre- or post-effective
amendments to the Registration Statement of Form F-4, and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 30th day of April, 1996.
Richard Thornburgh
-----------------------------
Richard Thornburgh
<PAGE>
EXHIBIT 99.1
PRELIMINARY PROXY MATERIALS ATHENA NEUROSCIENCES, INC.
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 27, 1996
The undersigned hereby appoints Lisabeth F. Murphy and John Groom, and each
of them with full power to act alone, the true and lawful attorneys in fact and
proxies of the undersigned to vote all shares of Common Stock of Athena
Neurosciences, Inc., a Delaware corporation (the "Company"), held by the
undersigned, with full power of substitution, with the same force and effect as
the undersigned would be entitled to vote if personally present, at the Special
Meeting of Stockholders of the Company to be held at South San Francisco
Conference Center, 255 South Airport Boulevard, South San Francisco,
California, on June 27, 1996, at 10:00 a.m. (local time), and at any and all
adjournments or postponements thereof, as follows:
[X] Please mark your votes as in this example
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
March 18, 1996 (the "Merger Agreement"), by and among Elan Corporation, plc,
Elan Acquisition Corp. and the Company.
FOR [_] AGAINST [_] ABSTAIN [_]
2. Approval and adoption of the proposal to amend the Company's 1991 Long-
Term Incentive Plan, to increase the number of authorized shares under the 1991
Long-Term Incentive Plan to cover options granted to employees and consultants
of the Company on February 9, 1996.
FOR [_] AGAINST [_] ABSTAIN [_]
3. OTHER MATTERS: Discretionary authority is hereby granted with respect to
such other business as may properly come before the meeting or any adjournment
or postponement thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. THE COMPANY'S BOARD OF DIRECTORS ALSO
RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF THE PROPOSAL TO AMEND THE
1991 LONG-TERM INCENTIVE PLAN.
Please mark, sign, date and return this proxy card promptly, using the
enclosed envelope.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF THIS PROXY IS SUBMITTED, BUT NO DIRECTIONS ARE MADE, THIS PROXY WILL
BE VOTED "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE
PROPOSAL TO AMEND THE 1991 LONG-TERM INCENTIVE PLAN.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting
of Stockholders and the Prospectus-Proxy Statement, each dated ,
1996, furnished herewith.
Dated: _______________________, 1996
Signature: _________________________
Signature(s) (if held jointly): ____
Title or Authority: ________________
IMPORTANT: Please sign your name
exactly as it appears hereon. When
signing as attorney, agent,
executor, administrator, trustee,
guardian or corporate officer,
please give your full title as
such. Each joint owner should sign
the proxy. If executed by a
partnership, this proxy should be
signed by an authorized partner.
