Prospectus
ELAN CORPORATION, plc
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215,798 American Depositary Shares
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This Prospectus relates to 215,798 American Depositary Shares
("ADSs"), evidenced by American Depositary Receipts ("ADRs"), each
representing one Ordinary Share, par value 4 Irish pence (an "Ordinary
Share"), of Elan Corporation, plc ("Elan") issuable upon exercise of
certain outstanding stock warrants (the "Warrants") previously issued by
Athena Neurosciences, Inc. ("Athena"). The Warrants were issued pursuant
to (i) a Stock Purchase Warrant dated as of September 2, 1994 and amended
on February 7, 1995 (the "Harvard Warrant") between Harvard College and
Athena (as successor to Genica Pharmaceuticals Corporation ("Genica"));
(ii) a Stock Purchase Warrant dated as of February 2, 1993 (the "Lehman
Warrant") between Lehman Brothers Inc. and Athena (as successor to Genica);
(iii) a Warrant dated as of November 17, 1994 (the "PaineWebber Warrant")
between PaineWebber R&D Partners III, L.P. and Athena; and (iv) a Warrant
dated as of June 16, 1995 (the "MMC/GATX Warrant") between MMC/GATX
Partnership No. I and Athena (such agreements, collectively, the "Warrant
Agreements").
The Elan ADSs are traded on the New York Stock Exchange (the
"NYSE") under the symbol "ELN".
Elan, Elan Acquisition Corp., a wholly-owned subsidiary of Elan
("Subco"), and Athena entered into an Agreement and Plan of Merger dated as
of March 18, 1996 (the "Merger Agreement") pursuant to which on July 1,
1996 Subco merged (the "Merger") into Athena with Athena as the surviving
corporation. In the Merger, each outstanding share (other than shares
owned by Athena as treasury stock or shares owned by any subsidiary of
Athena or owned by Elan or by any subsidiary of Elan) of common stock, par
value $.01 per share, of Athena ("Athena Common Stock") was converted into
the right to receive .2956 of an Elan ADS. In addition, Elan assumed the
obligations of Athena under the Warrant Agreements. As a result, the
Warrants are no longer exercisable for shares of Athena Common Stock, but
instead, upon exercise thereof, the holder is entitled to receive Elan ADSs
in lieu of shares of Athena Common Stock on the basis provided in the
Prospectus.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE ADSs.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
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COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is July 1, 1996.
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No person is authorized to give any information or to make any
representation not contained in this Prospectus and, if given or made, such
information or representation should not be relied upon as having been
authorized by Elan or any other person. This Prospectus 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 nor any distribution of the securities made
under this Prospectus shall, under any circumstances, create an implication
that there has been no change in the affairs of Elan since the date of this
Prospectus.
Table of Contents
Page
Enforceability of Civil Liabilities Under
United States Federal Securities Laws........................... 1
Available Information............................................. 1
Incorporation of Certain Documents by
Reference....................................................... 2
The Company....................................................... 4
Risk Factors...................................................... 4
The Warrants...................................................... 8
Use of Proceeds................................................... 9
Description of Elan Capital Stock................................. 9
Description of American Depositary Receipts....................... 13
Legal Matters..................................................... 19
Experts........................................................... 19
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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 portions 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
Elan 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 in accordance therewith files
reports and other information with the Securities and Exchange Commission
(the "Commission"). The reports and other information filed by Elan 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, 20 Broad Street, New York, New York 10005, on which exchange the
Elan ADSs are listed.
Elan has filed with the Commission a Post-Effective Amendment
on Form F-3 to a Registration Statement on Form F-4 (together with any
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), with respect to the
securities offered hereby. Statements contained in this Prospectus as to
the content of any contract or other document are not necessarily complete,
and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference and the
exhibits and schedules hereto. For further information regarding Elan and
the securities offered hereby, reference is hereby made to the Registration
Statement.
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Elan provides The Bank of New York, as depositary (the
"Depositary"), with 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.
Upon receipt of such reports, the Depositary promptly mails such reports to
all holders of record of ADSs registered on the books of the Depositary.
The Company 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 ADSs. As a foreign private issuer, the Company is exempt from
the rules under the Exchange Act prescribing the furnishing and content of
proxy statements.
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;
(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, 1995; September 15, 1995; October 30, 1995; December 1,
1995; January 3, 1996; January 17, 1996; January 30, 1996; March 19,
1996; March 19, 1996; March 19, 1996; April 1, 1996; May 13, 1996;
June 13, 1996; and June 19, 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 report
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) 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;
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(ii) Athena's Current Report on Form 8-K dated March 18,
1996; and
(iii) Athena's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, filed with the Commission on May 1, 1996.
In addition, all filings on Form 20-F filed by Elan pursuant to
the Exchange Act, and, to the extent designated therein, any reports on
Form 6-K of Elan, after the initial filing of the Registration Statement of
which this Prospectus forms a part, after the date of this Prospectus and
prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. 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 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 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 is delivered upon
written or oral request to Elan Corporation, plc, Monksland, Athlone,
County Westmeath, Republic of Ireland, Attn: William F. Daniel,
+353-902-95000.
THE COMPANY
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. 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.
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Elan was incorporated as a private limited company in Ireland
in 1969. In January 1984, Elan became a public limited company. Elan's
principal executive offices are located at Monksland, Athlone, County
Westmeath, Ireland, telephone number +353-902-95000.
RISK FACTORS
In connection with an investment in the Elan ADSs offered by
this Prospectus, prospective investors should consider, among other
factors, the following:
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, Advanced Therapeutic Systems,
Limited ("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 American Home Products Corporation
("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.
Revenues from the sale and manufacture of Cardizem\ SR,
Cardizem\ CD and Verelan\ 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.
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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 substantial compliance with such regulations
could have a material adverse effect on Elan.
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.
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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.
Elan is presently engaged in litigation relating to its once-daily
formulation of diltiazem.
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
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tangible book value per share to Elan's stockholders. 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.
THE WARRANTS
Pursuant to the Merger Agreement, each Warrant may be exercised
on the same terms and conditions as were applicable prior to the Merger,
except for the price and share adjustments described herein. Each Warrant
now represents the right to purchase that number of Elan ADSs equal to the
product of the number of shares of Athena Common Stock subject to such
Warrant and not exercised prior to the effective time of the Merger,
multiplied by .2956 and rounded downward to the nearest whole share. The
exercise price per share shall be equal to the exercise price per share
under such Warrant divided by .2956 and rounded upward to the nearest one-
hundredth of one whole cent. The Merger Agreement does not provide for the
issuance of fractional Elan ADSs upon the exercise of a Warrant. Upon the
exercise of a Warrant, in lieu of any fractional Elan ADS that would be
issued as a result of such exercise, Elan will pay to the holder of such
Warrant cash in an amount equal to such fractional share multiplied by the
last reported sales price of Elan ADSs on the NYSE.
Harvard Warrant
As a result of the Merger, the Harvard Warrant now represents
the right to purchase up to 11,829 Elan ADSs, at an exercise price of
$20.30 per Elan ADS. The Harvard Warrant expires September 2, 2004.
Lehman Warrant
As a result of the Merger, the Lehman Warrant now represents
the right to purchase up to 11,829 Elan ADSs, at an exercise price of
$15.23 per Elan ADS. The Lehman Warrant expires February 2, 1999.
PaineWebber Warrant
As a result of the Merger, the PaineWebber Warrant now
represents the right to purchase up to 147,800 Elan ADSs, at an exercise
price of $27.74 per Elan ADS; provided, however, that under certain
circumstances set forth in the PaineWebber Warrant, the exercise price
shall be increased to $37.55 per Elan ADS. The exercise price can only be
increased if on or after November 17, 1996, the Closing Price (as defined
in the PaineWebber Warrant) for Elan ADSs shall have equaled or exceeded
$50.74 per share (subject to adjustment as provided in the PaineWebber
Warrant) for 15 consecutive days during which the NYSE (or any successor to
such system) is open for business and the holder of the PaineWebber Warrant
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is given the required notice and opportunity to exercise such warrant
before the increase in the exercise price. The PaineWebber Warrant expires
November 15, 1999.
MMC/GATX Warrant
As a result of the Merger, the MMC/GATX Warrant now represents
the right to purchase up to 44,340 Elan ADSs, at an exercise price of
$23.35 per Elan ADS.
USE OF PROCEEDS
The net proceeds to Elan from the issuance of Elan ADSs upon
the exercise of the Warrants (approximately $5,555,595, assuming the
exercise of all the Warrants (or $7,005,513 if the exercise price of the
PaineWebber Warrant is increased as described above)) will be used for
general corporate purposes.
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
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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.
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 on 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,
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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 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 provides, among other things, that a director may not generally
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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 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 Amended and Restated Deposit
Agreement dated as of May 17, 1996 (the "Deposit Agreement") by and among
Elan, The Bank of New York, as depositary, and the owners and holders of
ADRs. 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.
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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,
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.
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 U.S., 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 U.S., 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.
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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 rights 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.
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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.
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.
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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
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
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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 or 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 U.S. 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.
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.
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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 herein 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.
