Prothena Corporation plc
Prothena Corp plc (Form: 8-K, Received: 12/21/2012 16:17:43)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 20, 2012

 

 

Prothena Corporation plc

(Exact name of registrant as specified in its charter)

 

 

Ireland

(State or other jurisdiction of incorporation)

 

001-35676   Not Applicable
(Commission File Number)   (IRS Employer Identification Number)

650 Gateway Boulevard

South San Francisco, California 94080

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (650) 837-8550

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Reference is made to the Registration Statement on Form 10 (the “Form 10”) filed by Prothena Corporation plc (“we,” “us,” “Prothena” or the “ Company ”) with the Securities and Exchange Commission (the “SEC”), which included an Information Statement, dated December 17, 2012 (the “Information Statement”) describing, among other things, the separation and distribution of Prothena from Elan Corporation, plc (“Elan”). The Form 10 was declared effective by the SEC on December 17, 2012. A copy of the Information Statement is attached hereto as Exhibit 99.1. In this Form 8-K, we refer to this demerger, including the transfer of the Prothena business to Prothena and the pro rata issuance by Prothena of its outstanding shares, as the “distribution” and we refer to certain reorganization transactions (which preceded the distribution) and the distribution collectively as the “separation and distribution.” See Item 8.01 for more information.

Item 1.01. Entry into a Material Definitive Agreement.

Agreements with Elan

In connection with the separation and distribution, the Company entered into several agreements with Elan, and, in some cases, certain of its subsidiaries, that govern the terms of the separation and distribution and the Company’s relationship with Elan thereafter, including the agreements described below. A more extensive summary of each of these agreements can be found in the Information Statement in the section entitled “Arrangements Between Elan and Prothena,” which is incorporated herein by reference. The information about those agreements therein and below is qualified in its entirety by reference to the full text of the agreements, which are filed as exhibits to this Current Report on Form 8-K and are hereby incorporated by reference.

Intellectual Property Agreements

On December 20, 2012, Neotope Biosciences Limited (“Neotope”), a wholly owned subsidiary of the Company, Elan Pharma International Limited (“EPIL”) and Elan Pharmaceuticals, Inc. (“Elan Pharmaceuticals” and, together with EPIL, the “Elan Parties”) entered into an Amended and Restated Intellectual Property License and Contribution Agreement and a related Intellectual Property License and Conveyance Agreement, in which the Elan Parties convey ownership of certain patents, patent applications, biological materials and other intellectual property to Neotope. In addition, these agreements provide for certain licenses from the Elan Parties to Neotope regarding research and development and other activities.

Asset Purchase Agreement

On December 20, 2012, Prothena Biosciences Inc (“Prothena US”), a wholly owned subsidiary of the Company, and Elan Pharmaceuticals entered into an Asset Purchase Agreement pursuant to which Prothena US purchased certain laboratory and other capital equipment and certain pre-payments and receivables related to the Company’s business.

Tax Matters Agreement

On December 20, 2012, the Company and Elan entered into a Tax Matters Agreement under which tax liabilities relating to taxable periods before and after the separation and distribution will be computed and apportioned between the parties, and responsibility for payment of those tax liabilities (including any taxes attributable to the separation and distribution) will be allocated between the parties. Furthermore, the Tax Matters Agreement sets forth the rights of the parties in respect of the preparation and filing of tax returns, the handling of audits or other tax proceedings and assistance and cooperation and other matters, in each case, for taxable periods ending on or before or that otherwise include the date of the separation and distribution.


Transitional Services Agreement

On December 20, 2012, the Company and Elan entered into a Transitional Services Agreement under which Elan will provide to the Company, and the Company will provide to Elan, certain services for a limited time to help ensure an orderly transition following the separation and distribution.

Research and Development Services Agreement

On December 20, 2012, the Company and Elan entered into a Research and Development Services Agreement under which the Company will provide certain research and development services to Elan and setting forth, among other things, the general principles around ownership of intellectual property as it relates to such services.

Item 2.01 Completion of Acquisition or Disposition of Assets.

The information included in Items 1.01 and 8.01 is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

As previously disclosed in the Information Statement, the Company, Elan and Elan Science One Limited, a wholly owned subsidiary of Elan (the “Subscriber”), entered into a Subscription and Registration Rights Agreement, dated November 8, 2012, pursuant to which Subscriber would, subject to certain conditions and immediately after the completion of the separation and distribution, purchase approximately 18% of the outstanding ordinary shares of the Company (as calculated immediately following the consummation of such subscription). Pursuant to this agreement, on December 20, 2012, the Company allotted, issued and sold to the Subscriber 3,182,253 ordinary shares of the Company for $26.0 million. As the ordinary shares were allotted, issued and sold to the Subscriber, an accredited investor, in a private transaction, issuance and sale of the shares to the Subscriber was exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof.

Item 4.01 Changes in Registrant’s Certifying Accountant.

Dismissal of Independent Registered Public Accounting Firm

Prior to the separation and distribution, the carve-out combined financial statements of the Prothena business were audited by KPMG, Dublin, Ireland (“KPMG Ireland”), the Company’s independent registered public accounting firm. In connection with the separation and distribution, and in contemplation that the Company would be a “domestic” filer for reporting purposes under the Securities Exchange Act of 1934, as amended, the Board of Directors of the Company (the “Board”) determined that KPMG Ireland should resign as the independent registered public accountants of the Company, effective upon the completion of the separation and distribution, and engage an independent registered public accountant based in the United States for purposes of the Company’s filings with the SEC. In connection with the completion of the separation and distribution, which occurred on December 20, 2012, KPMG Ireland resigned and the Board approved the engagement of KPMG LLP as the Company’s independent registered public accounting firm to audit the consolidated financial statements of the Company for the fiscal year ending December 31, 2012, such engagement to be effective upon completion of the separation and distribution.

KPMG Ireland audited the carve-out combined financial statements of the Prothena business for the fiscal years ended December 31, 2010 and 2011. For the fiscal years ended December 31, 2010 and 2011, no report by KPMG Ireland on the Company’s financial statements contained an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal


years ended December 31, 2010 and 2011 and the subsequent interim period through December 20, 2012, (i) there have been no disagreements with KPMG Ireland on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to KPMG Ireland’s satisfaction, would have caused KPMG Ireland to make reference to the subject matter of the disagreement in connection with its report, and (ii) there were no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K.

The Company has provided KPMG Ireland with a copy of the disclosures contained in this Item 4.01 and requested that KPMG Ireland furnish a letter addressed to the Commission stating whether it agreed with those disclosures. A copy of such letter, dated December 21, 2012, is filed as Exhibit 16.1 to this Current Report on Form 8-K.

Engagement of a New Independent Registered Public Accounting Firm

As noted above, in connection with the separation and distribution, the Board approved the engagement of KPMG LLP as the Company’s independent registered public accounting firm to audit the consolidated financial statements of the Company for the year ending December 31, 2012, such engagement to be effective upon consummation of the separation and distribution.

During the fiscal years ended December 31, 2010 and 2011, and during the subsequent interim period through December 20, 2012, neither the Company nor anyone acting on its behalf consulted KPMG LLP regarding (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and either a written report was provided or oral advice was provided that the new accountant concluded was an important factor in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any other matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event of the type described in Item 304(a)(1)(v) of Regulation S-K.

Item 5.01 Changes in Control of Registrant.

The information included in Items 1.01 and 8.01 is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

As disclosed in the Information Statement, effective immediately prior to the completion of the separation and distribution, the Board consists of Lars Ekman, Dale Schenk, Richard Collier, and Shane Cooke. Dr. Ekman is the Chairman of the Board. Dr. Ekman and Messrs. Cooke and Collier were appointed to serve as members of each of the Nominating and Corporate Governance Committee, the Compensation Committee, and the Audit Committee of the Board. Each of Nigel Clerkin, William F. Daniel and Mary Sheahan tendered their resignations as directors of the Company effective immediately prior to the completion of the separation and distribution.

Also effective immediately prior to the completion of the separation and distribution, Dr. Schenk was appointed as Chief Executive Officer and President, John Randall Fawcett was appointed as Controller and interim Chief Financial Officer, Gene Kinney was appointed as Chief Scientific Officer and Head of Research and Development, and Tara Nickerson was appointed as Head of Corporate and Business Development and Secretary.

Information regarding each of these directors and officers is included under the heading “Corporate Governance and Management” in the Information Statement, which is incorporated herein by reference.


On December 19, 2012, the Board adopted the Prothena Corporation plc 2012 Long Term Incentive Plan, (the “Prothena LTIP”) and the Prothena Corporation plc Incentive Compensation Plan (the “Prothena Bonus Plan”) and the Board of Directors of Prothena US adopted the Prothena Biosciences Inc Severance Plan (the “Prothena Severance Plan”), in each case subject to the completion of the separation and distribution. The Prothena LTIP is an omnibus plan that provides for the award of stock options, stock appreciation rights, RSUs, performance units, dividend equivalents and other share-based awards to certain employees and consultants of the Company and its subsidiaries and affiliates, and to non-employee directors of the Company. The Prothena Bonus Plan provides for payment to the Company’s named executive officers of bonus amounts earned in 2012 during their employment with Elan, as well as bonus amounts earned during employment with Prothena US for the balance of 2012 and for subsequent plan years commencing January 1, 2013. Participants in the Prothena Bonus Plan will be eligible to receive cash performance awards based on attainment of specified performance goals to be established by the plan administrator, and the exact amount payable to each participant is subject to the discretion of the plan administrator. The Prothena Severance Plan provides the Company’s named executive officers with severance pay and benefits substantially equivalent in the aggregate to what they would have received under the Elan U.S. Severance Plan (the “Elan Severance Plan”), which is intended to continue the benefits that would have been provided under the Elan Severance Plan in case of an involuntary termination during 2013.

Following the separation and distribution, on December 20, 2012, the Board (comprised solely of the directors of the Company following the separation and distribution) committed to award stock options to Dr. Ekman, Mr. Cooke, Mr. Collier, Mr. Fawcett, Dr. Kinney and Dr. Nickerson to purchase 125,000, 50,000, 50,000, 36,000, 200,000, and 54,000 Prothena ordinary shares, respectively, under the Prothena LTIP. Such stock options are expected to be awarded on the 25th trading day immediately following the separation and distribution, with an exercise price equal to the average of the closing stock prices for the 25-trading day period immediately following the separation and distribution. With respect to the stock options granted to Drs. Kinney and Nickerson and Mr. Fawcett, it is expected that each such stock option will vest as to 25% of the Prothena ordinary shares subject to such option on the first anniversary of the date of grant and the remaining 75% of the Prothena ordinary shares subject to such option will vest in substantially equal installments on a monthly basis over the subsequent 36 months. With respect to the stock options granted to Dr. Ekman and Messrs. Cooke and Collier, it is expected that each such stock option will vest as to 100% of the Prothena ordinary shares subject to such option on the first anniversary of the date of grant.

The preceding description of the Prothena LTIP, Prothena Bonus Plan and Prothena Severance Plan is intended only as a summary and is qualified in its entirety by reference to the full terms of such plans, which are filed as Exhibits 10.4, 10.5 and 10.6 to this Current Report on Form 8-K and incorporated herein by reference. Further descriptions of the terms and conditions of these plans is included under the heading “Executive Compensation” in the Information Statement, which is incorporated herein by reference.

Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.

Prior to the separation and distribution, the Board adopted a Code of Conduct and Corporate Governance Guidelines, copies of which are available on the Company’s website at www.Prothena.com. Information on such website does not constitute part of this Current Report on Form 8-K.

Item 5.07 Submission of Matters to a Vote of Security Holders.

On December 18, 2012, the shareholders of the Company approved by written resolution the adoption of the Prothena LTIP and the Prothena Bonus Plan, in each case subject to the completion of the separation and distribution.


Item 8.01 Other Events.

Separation and Distribution

On December 20, 2012, Elan completed its separation and distribution of the Company. The separation of the Prothena business from Elan was completed through a “demerger” under Irish law. The demerger was effected by Elan transferring the Prothena business to the Company, in exchange for the Company issuing directly to the holders of Elan ordinary shares and Elan American Depositary Shares (“ADSs”), on a pro rata basis, Prothena ordinary shares representing 99.99% of the Company’s outstanding shares (with the remaining 0.01% of the Company’s outstanding shares, which were previously issued to the original incorporators of the Company having been redeemed and cancelled by the Company after the demerger). The Company’s issuance of 99.99% of its outstanding ordinary shares constituted a deemed “in specie distribution,” or a distribution in the form of assets other than cash (in this case, Prothena shares), by Elan to holders of record of Elan ordinary shares and Elan ADSs as of 11:59 p.m., Dublin Time, on December 14, 2012 (the “record date”). Pursuant to the demerger, each Elan shareholder received 1 Prothena ordinary share for every 41 Elan ordinary shares or Elan ADSs held as of the record date. For more information, please see the Information Statement, which describes the details of the separation and distribution and provides information as to the business and management of the Company. A copy of the Information Statement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

As a result of the completion of the separation and distribution, the Company is now an independent company, and Prothena ordinary shares are listed on The Nasdaq Global Market under the symbol “PRTA”. As of December 20, 2012, the Company had approximately 17,679,182 million ordinary shares outstanding.

On December 21, 2012, the Company issued a press release announcing the consummation of the separation and distribution and the Company’s listing of its ordinary shares on The Nasdaq Global Market. A copy of the press release is attached as Exhibit 99.2 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

 

  (d) Exhibits.

 

Exhibit
No.

  

Description

  2.1

   Amended and Restated Intellectual Property License and Contribution Agreement, dated December 20, 2012, by and among Neotope Biosciences Limited, Elan Pharma International Limited, and Elan Pharmaceuticals, Inc.

  2.2

   Intellectual Property License and Conveyance Agreement, dated December 20, 2012, by and among Neotope Biosciences Limited, Elan Pharma International Limited and Elan Pharmaceuticals, Inc.

  2.3

   Asset Purchase Agreement, dated December 20, 2012, between Elan Pharmaceuticals, Inc. and Prothena Biosciences Inc

10.1

   Tax Matters Agreement, dated December 20, 2012, by and between Elan Corporation, plc and Prothena Corporation plc

10.2

   Transitional Services Agreement, dated December 20, 2012, by and between Elan Corporation, plc and Prothena Corporation plc

10.3

   Research and Development Services Agreement, dated December 20, 2012, by and between Elan Corporation, plc and Prothena Corporation plc

10.4

   Prothena Corporation plc 2012 Long Term Incentive Plan

10.5

   Prothena Biosciences Inc Severance Plan

10.6

   Prothena Corporation plc Incentive Compensation Plan

16.1

   Letter of KPMG Ireland, dated December 21, 2012

99.1

   Information Statement, dated December 17, 2012

99.2

   Press Release, dated December 21, 2012


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: December 21, 2012     PROTHENA CORPORATION PLC
    By:  

/s/ Dale B. Schenk

    Name:   Dale B. Schenk
    Title:   Chief Executive Officer


EXHIBIT INDEX

 

Exhibit
No.

  

Description

  2.1    Amended and Restated Intellectual Property License and Contribution Agreement, dated December 20, 2012, by and among Neotope Biosciences Limited, Elan Pharma International Limited, and Elan Pharmaceuticals, Inc.
  2.2    Intellectual Property License and Conveyance Agreement, dated December 20, 2012, by and among Neotope Biosciences Limited, Elan Pharma International Limited and Elan Pharmaceuticals, Inc.
  2.3    Asset Purchase Agreement, dated December 20, 2012, between Elan Pharmaceuticals, Inc. and Prothena Biosciences Inc
10.1    Tax Matters Agreement, dated December 20, 2012, by and between Elan Corporation, plc and Prothena Corporation plc
10.2    Transitional Services Agreement, dated December 20, 2012, by and between Elan Corporation, plc and Prothena Corporation plc
10.3    Research and Development Services Agreement, dated December 20, 2012, by and between Elan Corporation, plc and Prothena Corporation plc
10.4    Prothena Corporation plc 2012 Long Term Incentive Plan
10.5    Prothena Biosciences Inc Severance Plan
10.6    Prothena Corporation plc Incentive Compensation Plan
16.1    Letter of KPMG Ireland, dated December 21, 2012
99.1    Information Statement, dated December 17, 2012
99.2    Press Release, dated December 21, 2012

Exhibit 2.1

AMENDED AND RESTATED

INTELLECTUAL PROPERTY LICENSE AND

CONTRIBUTION AGREEMENT

AMONG

NEOTOPE BIOSCIENCES LIMITED

AND

ELAN PHARMA INTERNATIONAL LIMITED

AND

ELAN PHARMACEUTICALS, INC.

Dated as of December 20, 2012

 

1


AMENDED AND RESTATED INTELLECTUAL PROPERTY LICENSE AND

CONTRIBUTION AGREEMENT

This AMENDED AND RESTATED INTELLECTUAL PROPERTY LICENSE AND CONTRIBUTION AGREEMENT (the “Agreement”) is made this 20th day of December 2012 (the “Amendment Effective Date”) among NEOTOPE BIOSCIENCES LIMITED, a private limited company incorporated under the laws of Ireland with offices at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland (“NBL”) on the one hand, and ELAN PHARMA INTERNATIONAL LIMITED, a private limited company incorporated under the laws of Ireland with offices at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland (“EPIL”) and ELAN PHARMACEUTICALS, INC., a Delaware corporation having an address at 180 Oyster Point Boulevard, South San Francisco, CA 94080 (“EPI”) on the other hand (collectively, “Elan”).

WHEREAS:

 

  A. Elan Corporation, plc (“PLC”) and Prothena Corporation plc (“Prothena”) have entered into that Certain Demerger Agreement dated as of November 8, 2012 (the “Demerger Agreement”).

 

  B. Elan Science One Limited, predecessor in interest to NBL, and EPIL entered into that certain Intellectual Property License and Contribution Agreement dated March 23, 2010 (the “IPLC”).

 

  C. NBL, an Affiliate of EPIL and EPI as of the Amendment Effective Date, will be wholly owned by Prothena upon the consummation of the transactions contemplated by the Demerger Agreement (the “Demerger”).

 

  D. The Demerger Agreement contemplates that, prior to the Demerger, the Pre-Demerger Restructuring (as defined in the Demerger Agreement) shall have been consummated, which Pre-Demerger Restructuring is intended to allocate, assign, and transfer to entities that will be owned by Prothena from and after the Demerger (including NBL), assets and liabilities that comprise the Prothena Business (as defined in the Demerger Agreement).

 

  E. As part of the Pre-Demerger Restructuring, EPI, EPIL and NBL wish to amend and restate pursuant to this Agreement the IPLC, in order to clarify, allocate, assign and transfer to NBL the assets and liabilities relating to the Projects (as defined below) to the extent set forth herein.

NOW IT IS HEREBY AGREED AS FOLLOWS:

ARTICLE I

DEFINITIONS

In this Agreement, the following definitions shall apply:

 

“A b Field”    Treatment and/or prevention of neurodegenerative conditions in humans associated with beta amyloid deposition, including, without limitation, Alzheimer’s disease and/or Mild Cognitive Impairment

 

2


   using immunological approaches directed at one or more epitopes of A b or any naturally occurring variants thereof, including without limitation, the administration of a peptide immunogen as a vaccine or the administration of an antibody
“Acquired Assets”    Assigned IP, Project Contracts, Project Materials other than Elan Materials, and Project Records that are owned by Elan as of the Effective Date.
“Acquired Liabilities”    Debts, liabilities, losses, guarantees, commitments and obligations relating to or associated with the Acquired Assets.
“Active Immunotherapeutic Approaches”    Direct immunization with a target, or a fragment derived from a target (“Immunogen”), either with adjuvant alone or coupled to a carrier molecule designed to elicit an immune response of humoral or cellular nature in the host. Included are Immunogens in complex with another protein, such as, for example, lipid stabilized Immunogens and protein conjugated Immunogens, as well as multivalent vaccines incorporating multiple Immunogens.
“Affiliate”    A corporation or other entity that controls, is controlled by or is under common control with such corporation or entity. A person or entity shall be regarded as in control of another entity if it owns or controls more than fifty percent (50%) of the voting securities or other ownership interest of the other corporation or entity.
“Ancillary Intellectual Property”    The Intellectual Property licensed by Elan to NBL pursuant to Article III hereof and set forth on Schedule E.
“Assigned Intellectual Property” or “Assigned IP”    Neotope Patent Rights, Project Know-How, Non- A b General Immunotherapy Patent Rights and Neotope Trademark Rights.
“Effective Date”    The effective date of the IPLC.
“ELND2 Materials”    Antibodies 6F10, 5E10, 5D8 and 8G9, which specifically bind ELND-002.
“Elan Materials”    The materials listed in Schedule D.
“Exclusive License”    A fully paid, perpetual, irrevocable (except as otherwise expressly provided in Article III) and royalty free license including the right to sublicense, whereby licensee’s rights are sole and entire and operate to exclude all others including licensor and its Affiliates, except as otherwise expressly provided herein.
“General Immunotherapy Patent Rights”    The Patents listed in Schedule F. 
“Inactive”    Funded at an average annual rate of less than seventy-five thousand dollars ($75,000) over a period of two calendar years, including both internal and external expenditures in the aggregate.

 

3


“Intellectual Property”    All (a) inventions (whether or not patentable and whether or not reduced to practice), records of inventions, test information, developments, applications, improvements, formulae, concepts, ideas, methods or processes, research property rights, all improvements to any of the foregoing, and all Patents, (b) copyrights, and all applications, registrations and renewals in connection therewith, (c) trade secrets, Know-How and confidential information, (d) domain names, computer software, firmware and applications (including source code, executable code, data, databases, programming and notes and documents and other related documentation), other than commercial off-the-shelf software, (e) works and designs embodied in advertising and promotional materials, (f) other proprietary rights and (g) copies and tangible embodiments of the foregoing in whatever form or medium.
“Know-How”    Confidential scientific, technical, medical and marketing data, trade secrets and information, including all ideas, concepts, research and development, know-how, composition information and embodiments, manufacturing and production processes, techniques and information, specifications, technical and business data, designs, drawings, supplier lists, pricing and cost information, and data and know-how embodied in business and marketing plans and proposals, inventions (whether or not patentable and whether or not reduced to practice), records of inventions, test information, developments, applications, improvements, formulae, concepts, ideas, methods or processes, research property rights and all improvements to any of the foregoing.
“Neotope Patent Rights”    The Patents listed on Schedule A-I and any Patents claiming priority thereto.
“Neotope Trademark Rights”    Collectively, (a) the Trademark Rights listed on Schedule A-II (a), (b) the Trademark Rights filed or issued in any country in the Territory, relating solely to any of the marks listed on Schedule A-II (b) and any trademark applications claiming priority thereto, and/or (c) such other Trademark Rights created or filed in any country in the Territory by NBL or OTL.
“Non- A b General Immunotherapy Patent Rights”    General Immunotherapy Patent Rights that, when issued, solely contain claims outside the A b Field.
“OTL”    Onclave Therapeutics Limited.
“Passive Immunotherapeutic Approaches”    Treatment of a host with either a whole antibody, or a fragment of an antibody which recognizes a target (or fragment or epitope in the target).

 

4


“Patents”    All patents and patent applications, whether foreign or domestic, all patents arising from such applications, and all patents and patent applications based on, or claiming or corresponding to the priority dates, of any of the foregoing and any renewals, reissues, extensions (or other governmental actions that provide exclusive rights to the owner thereof in the patented subject matter beyond the original expiration date), substitutions, confirmations, registrations, revalidations, reexaminations, additions, continuations, continued prosecutions, continuations-in-part or divisions of or to any of the foregoing, including without limitation, supplementary protection certificates or the equivalent thereof.
“Person”    Any individual, firm, partnership, company, corporation, government authority or other entity.
“Project Contracts”    (i) The contracts listed in Schedule B and (ii) all contracts to which NBL and/or OTL is a party, but to which neither EPIL or EPI, nor any Affiliate of EPIL or EPI is a party.
“Project Know-How”    All Know-How relating solely to the Projects.
“Project Materials”    The materials listed in Schedule C, NEOD001, NEOD002 and all murine, rat and humanized antibodies, cell lines, hybridomas, human tissue samples, transgenic tissue samples, CSF samples, peptides, proteins, immunogens, vectors and other materials stored at 650 Gateway Boulevard, South San Francisco, CA 94080 as of the Demerger or on the premises of any third party pursuant to a Project Contract, excluding antibodies specific for amyloid beta peptide.
“Project Records”    Copies of all files, documents and correspondence relating solely to the Projects, including data, reports, certificates, laboratory notebooks, written notes, standard operating procedures, logs, studies, databases, raw or experimental data, research records, assay protocols, meeting minutes, certificates of analysis, and vendor and supplier lists necessary for furthering the Projects and products arising therefrom.
“Projects”    Research, development and commercialization activities directed to the use, in the diagnosis, prevention and treatment of diseases, of Active Immunotherapeutic Approaches and Passive Immunotherapeutic Approaches, in each case directly targeting one or more Targets.

 

5


“Synuclein Patent Rights”    The Patents listed in Schedule A-III and Patents claiming priority thereto.
“Target”    Any and all (i) targets disclosed in the General Immunotherapy Patent Rights other than amyloid beta peptide, including AA, AL, IAPP, synuclein and beta-2-microglobulin; (ii) tau; (iii) TDP-43; (iv) osteopontin; (v) iC3b; (vi) ApoE; (vii) Connective Tissue Growth Factor (“CTGF”); (viii) PAR2; (ix) ApoA1; (x) TTR; (xi) ApoB; (xii) huntingtin; (xiii) fragments of any and all of (i)-(xii); and/or (xiv) epitopes presented by any and all of (i)-(xiii) complexed with other molecular entities, including without limitation proteins, lipids, polymers, nucleic acids, compounds; provided, however, that in the case of (xiv), such epitope shall include at least two amino acids of any of (i)-(xii) as determined by standard epitope mapping techniques.
“Territory”    The world.
“Trademark Rights”    All trademarks, trademark rights, service marks, service mark rights, trade dress, logos, slogans, trade names, trade name rights, Internet domain names and subdomains, together with all translations, adaptations, derivations, and combinations thereof and all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith.

ARTICLE II

PURCHASE AND SALE OF ACQUIRED ASSETS

 

1. Elan hereby transfers, sells, conveys, assigns and delivers to NBL all right, title and interest in the Territory (i) to the Acquired Assets and (ii) subject to the terms of the Demerger Agreement, the Acquired Liabilities. Subject to Article VI hereof and notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to transfer, sell, convey, or assign any Acquired Asset if an attempted transfer, sale, conveyance, or assignment thereof, without the consent of a third party, would constitute a breach or other contravention of the rights of such Acquired Asset, or would in any way adversely affect the rights of EPI or EPIL, or upon transfer, sale, conveyance or assignment, NBL under such Acquired Asset.

 

2. Subject to Article VI hereof, Elan shall use commercially reasonable efforts to conclude as soon as reasonably practicable after the Effective Date the perfected assignments of, and to consummate the transfer of all of Elan’s rights, title, and interest in the Acquired Assets to NBL (it being understood that the Non- A b General Immunotherapy Patent Rights, if any, will be issued and transferred to NBL after the Demerger (as defined in the Demerger Agreement)).

 

3. Elan shall use commercially reasonable efforts to transfer and deliver all Project Materials and Project Records when and in the manner requested by NBL.

 

6


ARTICLE III

GRANT OF EXCLUSIVE LICENSE OF PATENT RIGHTS AND MATERIALS

 

1.1 Elan hereby grants to NBL a license, on a paid up and exclusive basis in the Territory (with the right to grant sublicenses) solely for the Projects, to make, use, offer for sale, sell and import products under General Immunotherapy Patent Rights other than Non- A b General Immunotherapy Patent Rights.

 

1.2 Elan hereby grants to NBL an Exclusive License in the Territory solely for the Projects to (1) conduct research and development activities, and (2) make, have made, use, sell, offer for sale and import products within the Projects, under:

 

  a. Synuclein Patent Rights; and

 

  b. Elan Materials.

 

2.1 For the avoidance of doubt, Elan and its Affiliates, other than NBL and OTL, shall use certain Target antibodies, i.e., 11A5, 12C6, 6H7, 8A5, 5C12 and the lipid/synuclein antibodies (collectively, “Synuclein Antibodies”) solely for research purposes, excluding use in studies relating to the Projects, and for no other purpose (“Elan’s Permitted Use”).

 

3.1 Except as provided in this Section 3.1, Elan and its Affiliates, other than NBL and OTL, shall not distribute to third parties or make a public disclosure of any Synuclein Antibodies without NBL’s prior written consent. Elan may, without NBL’s prior written consent:

 

  a. Distribute to collaborators other than academic institutions under a written agreement prohibiting publication or further distribution of the Elan Materials and expressly limiting use to Elan’s Permitted Use; or

 

  b. Distribute no more than 1 mg of any of 11A5, 6H7, and 8A5 under a written agreement prohibiting identification of the antibody structure and further distribution and expressly limiting use to Elan’s Permitted Use; or

 

  c. Publish results obtained with, but not the structure of, any of 11A5, 6H7, and 8A5; or

 

  d. Disclose and publish in a patent application and any patent issuing therefrom any results obtained with the Synuclein Antibodies in Elan’s Permitted Use.

 

4.1 For the avoidance of doubt, NBL and its Affiliates shall use certain non-Target antibodies, i.e., ELND2 Materials, TY11/15, 27-1, 2E4, 3G10 and APP antibodies solely for research purposes relating to the Projects, and for no other purpose (“NBL’s Permitted Use”).

 

7


5.1 Except as provided in this Section 5.1, NBL and its Affiliates shall not distribute to third parties or make a public disclosure of any ELND2 Materials without Elan’s prior written consent. NBL may, without Elan’s prior written consent:

 

  a. Distribute to collaborators other than academic institutions under a written agreement prohibiting publication or further distribution of the ELND2 Materials and expressly limiting use to NBL’s Permitted Use; or

 

  b. Distribute to academic institutions conducting research in furtherance of the Projects under a written agreement prohibiting further distribution of the ELND2 Materials and expressly limiting use to NBL’s Permitted Use; or

 

  c. Disclose and publish in a patent application and any patent issuing therefrom any results obtained with the ELND2 Materials in NBL’s Permitted Use.

 

6.1 On an annual basis, NBL shall review Projects to identify which have been Inactive. Within sixty (60) days of such identification, NBL shall notify Elan of such Inactive Projects, and the rights granted to NBL under Article III with respect to Ancillary Intellectual Property related solely to such identified Inactive Projects shall terminate and shall revert to Elan.

ARTICLE IV

CONSIDERATION

The parties hereto acknowledge that in connection with the consummation of the IPLC on March 23, 2010 and in consideration for the transfer of the assets acquired pursuant to Article II of the IPLC and the licenses granted pursuant to Article III of the IPLC, Elan Science One Limited, predecessor in interest to NBL, issued to EPIL ninety (90) ordinary shares of Elan Science One Limited.

 

8


ARTICLE V

PROSECUTION OF PATENT RIGHTS

NBL shall solely control the prosecution and maintenance of all Neotope Patent Rights, and shall pay all costs associated therewith incurred after the Effective Date and shall have no obligation to Elan in respect of such Neotope Patent Rights. EPI shall solely control the prosecution of Synuclein Patent Rights; provided, however, that EPI shall keep NBL reasonably apprised of the status of the Synuclein Patent Rights and reasonably consider the input of NBL with respect to the prosecution of any claims in the Synuclein Patent Rights solely related to the Projects.

ARTICLE VI

RELATIONSHIP TO DEMERGER AGREEMENT

This Agreement is subject in all respects to the terms and conditions of the Demerger Agreement. The consummation of the transactions contemplated by this Agreement shall constitute part of the Pre-Demerger Restructuring (as defined in the Demerger Agreement) under the Demerger Agreement and shall accordingly be consummated prior to the consummation of the transactions contemplated by the Demerger Agreement. The Acquired Assets and Acquired Liabilities conveyed to NBL pursuant to this Agreement shall constitute assets of the Prothena Business and Prothena Business Liabilities, respectively, for all purposes of the Demerger Agreement. Nothing contained in this Agreement shall be deemed to supersede any of the covenants, agreements, representations or warranties of Elan, Seller, Prothena, or Buyer contained in the Demerger Agreement. In the event of a conflict between this Agreement and the Demerger Agreement, the terms of the Demerger Agreement shall control.

ARTICLE VII

TERM AND TERMINATION

This Agreement may be terminated at any time prior to the Demerger by written consent of the parties hereto.

ARTICLE VIII

MISCELLANEOUS

 

1. Force Majeure

Neither party to this Agreement shall be liable for delay in the performance of any of its obligations hereunder if such delay results from causes beyond its reasonable control, including, without limitation, acts of God, fires, strikes, acts of war, or intervention of any government authority, but any such delay or failure shall be remedied by such party as soon as practicable.

 

9


2. Relationship of the Parties

Nothing contained in this Agreement is intended or is to be construed to constitute EPI, EPIL and NBL as partners or joint venturers or employees of the other party or to constitute any party as granting a license or sublicense of rights of which such party does not have possession, whether by ownership or license. Neither party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other party or to bind the other party to any contract, agreement or undertaking with any third party.

 

3. Counterparts

This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement. This Agreement may be executed by facsimile (including electronically by PDF). The parties agree that facsimile copies of signatures have the same effect as original signatures.

 

4. Notices

Any notice or other communication required or permitted to be given to either party under this Agreement shall be given in writing and shall be delivered by hand or by facsimile (and promptly confirmed by registered mail, postage prepaid and return receipt requested, or by reputable overnight delivery service or courier), addressed to each party at the following addresses or such other address as may be designated by notice pursuant to this Article VII Section 4:

 

If to NBL:

  

Neotope Biosciences Limited

Treasury Building

Lower Grand Canal Street

Dublin 2, Ireland

Attention: Director

  

If to EPI:

  

Elan Pharmaceuticals, Inc.

180 Oyster Point Blvd.

South San Francisco, CA 94080

Attention: Secretary

  

If to EPIL:

  

Elan Pharma International Limited

Treasury Building

Lower Grand Canal Street

Dublin 2, Ireland

Attention: Director

  

Any notice or communication given in conformity with this Article VIII Section 4 shall be deemed to be effective when received by the addressee, if delivered by facsimile, hand or delivery service or courier, and four days after mailing, if mailed.

 

10


5. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of Ireland.

 

6. Severability

If any provision in this Agreement is deemed to be or becomes invalid, illegal or unenforceable, (i) such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable or, if it cannot be so amended without materially altering the intention of the parties, it will be deleted, and (ii) the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.

 

7. Amendments

No amendment, modification or addition hereto shall be effective or binding on either party unless set forth in writing and executed by a duly authorized representative of both parties.

 

8. Waiver

No waiver of any right under this Agreement shall be deemed effective unless contained in a writing signed by the party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.

 

9. Headings

The section headings contained in this Agreement are included for convenience only and form no part of the agreement between the parties.

 

10. Assignment, Etc.

Neither party may assign its rights and obligations hereunder without the prior written consent of the other party; provided, however, that either party shall have the right to assign such rights and obligations hereunder to an Affiliate or to any Person with which such party is merged or consolidated or which purchases all or substantially all of the assets of such party.

 

11. No Effect on Other Agreements

No provision of this Agreement shall be construed so as to negate, modify or affect in any way the provisions of any other agreement between the parties unless specifically referred to, and solely to the extent provided in any such other agreement.

 

12. Successors

This Agreement will inure to the benefit of and be binding upon the successors of the parties hereto.

 

11


IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Agreement on the date last written below, effective as of the Effective Date.

 

NEOTOPE BIOSCIENCES LIMITED
By:   /s/ William F. Daniel
  Name: William F. Daniel
  Title: Director
  Date:

 

ELAN PHARMACEUTICALS, INC.     ELAN PHARMA INTERNATIONAL LIMITED
By:    /s/ Alan Campion     By:    /s/ William F. Daniel

Name: Alan Campion

Title: Treasurer and Chief Financial Officer

Date:

   

Name: William F. Daniel

Title: Director

Date:

 

12

Exhibit 2.2

INTELLECTUAL PROPERTY LICENSE AND CONVEYANCE

AGREEMENT

AMONG

NEOTOPE BIOSCIENCES LIMITED

AND

ELAN PHARMA INTERNATIONAL LIMITED

AND

ELAN PHARMACEUTICALS, INC.

Dated as of December 20, 2012

 

1


INTELLECTUAL PROPERTY LICENSE AND CONVEYANCE AGREEMENT

This INTELLECTUAL PROPERTY LICENSE AND CONVEYANCE AGREEMENT (the “Agreement”) is made this 20th day of December 2012 (the “Effective Date”) among NEOTOPE BIOSCIENCES LIMITED, a private limited company incorporated under the laws of Ireland with offices at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland (“NBL”) on the one hand, and ELAN PHARMA INTERNATIONAL LIMITED, a private limited company incorporated under the laws of Ireland with offices at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland (“EPIL”) and ELAN PHARMACEUTICALS, INC., a Delaware corporation having an address at 180 Oyster Point Boulevard, South San Francisco, CA 94080 (“EPI”) on the other hand (collectively, “Elan”).

WHEREAS:

 

  A. Elan Corporation, plc (“PLC”) and Prothena Corporation plc (“Prothena”) have entered into that Certain Demerger Agreement dated as of November 8, 2012 (the “Demerger Agreement”).

 

  B. NBL, an Affiliate of EPIL and EPI as of the Effective Date, will be wholly owned by Prothena upon the consummation of the transactions contemplated by the Demerger Agreement (the “Demerger”).

 

  C. The Demerger Agreement contemplates that, prior to the Demerger, the Pre-Demerger Restructuring (as defined in the Demerger Agreement) shall have been consummated, which Pre-Demerger Restructuring is intended to allocate, assign, and transfer to entities that will be owned by Prothena from and after the Demerger (including NBL), assets and liabilities that comprise the Prothena Business (as defined in the Demerger Agreement).

 

  D. As part of the Pre-Demerger Restructuring, EPI, EPIL and NBL wish to allocate, assign and transfer to NBL the assets and liabilities relating to the Projects (as defined below) to the extent set forth herein.

NOW IT IS HEREBY AGREED AS FOLLOWS:

ARTICLE I

DEFINITIONS

In this Agreement, the following definitions shall apply:

 

“Acquired Assets”    Assigned IP, Project Contracts, Project Materials other than Elan Materials, and Project Records that are owned by Elan as of the Effective Date.
“Acquired Liabilities”    Debts, liabilities, losses, guarantees, commitments and obligations relating to or associated with the Acquired Assets.

 

2


“Active Immunotherapeutic Approaches”    Direct immunization with a target, or a fragment derived from a target (“Immunogen”), either with adjuvant alone or coupled to a carrier molecule designed to elicit an immune response of humoral or cellular nature in the host. Included are Immunogens in complex with another protein, such as, for example, lipid stabilized Immunogens and protein conjugated Immunogens, as well as multivalent vaccines incorporating multiple Immunogens.
“Affiliate”    A corporation or other entity that controls, is controlled by or is under common control with such corporation or entity. A person or entity shall be regarded as in control of another entity if it owns or controls more than fifty percent (50%) of the voting securities or other ownership interest of the other corporation or entity.
“AGE”    Advanced glycation end products.
“Ancillary Intellectual Property”    The Intellectual Property licensed by Elan to NBL pursuant to Article III hereof and set forth on Schedule E.
“Assigned Intellectual Property” or “Assigned IP”    Neotope Patent Rights, Project Know-How and Neotope Trademark Rights.
“ELND2 Materials”    Antibodies 6F10, 5E10, 5D8 and 8G9, which specifically bind ELND-002.
“Elan Materials”    The materials listed in Schedule D.
“Exclusive License”    A fully paid, perpetual, irrevocable (except as otherwise expressly provided in Article III) and royalty-free license including the right to sublicense, whereby licensee’s rights are sole and entire and operate to exclude all others including licensor and its Affiliates, except as otherwise expressly provided herein.
“Inactive”    Funded at an average annual rate of less than seventy-five thousand dollars ($75,000) over a period of two calendar years, including both internal and external expenditures in the aggregate.
“Intellectual Property”    All (a) inventions (whether or not patentable and whether or not reduced to practice), records of inventions, test information, developments, applications, improvements, formulae, concepts, ideas, methods or processes, research property rights, all improvements to any of the foregoing, and all Patents, (b) copyrights, and all applications, registrations and renewals in connection therewith, (c) trade secrets, Know-How and confidential information, (d) domain names, computer software, firmware and applications (including source code, executable code, data, databases, programming and notes and documents and other related documentation), other than commercial off-the-shelf software, (e) works and designs embodied in advertising and promotional materials, (f) other proprietary rights and (g) copies and tangible embodiments of the foregoing in whatever form or medium.

 

3


“Know-How”    Confidential scientific, technical, medical and marketing data, trade secrets and information, including all ideas, concepts, research and development, know-how, composition information and embodiments, manufacturing and production processes, techniques and information, specifications, technical and business data, designs, drawings, supplier lists, pricing and cost information, and data and know-how embodied in business and marketing plans and proposals, inventions (whether or not patentable and whether or not reduced to practice), records of inventions, test information, developments, applications, improvements, formulae, concepts, ideas, methods or processes, research property rights and all improvements to any of the foregoing.
“Laminin”    Laminin 411 (Flanagan et al., Laminin-411 Is a Vascular Ligand for MCAM and Facilitates TH17 Cell Entry into the CNS, Plos One, July 2012, Vol. 7, Issue 7) and other laminin molecules.
“MCAM”    Melanoma cell adhesion molecule (Flanagan et al., Laminin-411 Is a Vascular Ligand for MCAM and Facilitates TH17 Cell Entry into the CNS, Plos One, July 2012, Vol. 7, Issue 7).
“Neotope Patent Rights”    The Patents listed on Schedule A-I and any Patents claiming priority thereto.
“Neotope Trademark Rights”    The Trademark Rights listed on Schedule A-II.
“OTL”    Onclave Therapeutics Limited.
“Passive Immunotherapeutic Approaches”    Treatment of a host with either a whole antibody, or a fragment of an antibody which recognizes a target (or fragment or epitope in the target).
“Patents”    All patents and patent applications, whether foreign or domestic, all patents arising from such applications, and all patents and patent applications based on, or claiming or corresponding to the priority dates, of any of the foregoing and any renewals, reissues, extensions (or other governmental actions that provide exclusive rights to the owner thereof in the patented subject matter beyond the original expiration date), substitutions, confirmations, registrations, revalidations, reexaminations, additions, continuations, continued prosecutions, continuations-in-part or divisions of or to any of the foregoing, including without limitation, supplementary protection certificates or the equivalent thereof.
“Person”    Any individual, firm, partnership, company, corporation, government authority or other entity.
“Project Contracts”    The contracts listed in Schedule B.

 

4


“Project Know-How”    All Know-How relating solely to the Projects.
“Project Materials”    The materials listed in Schedule C.
“Project Records”    Copies of all files, documents and correspondence relating solely to the Projects, including data, reports, certificates, laboratory notebooks, written notes, standard operating procedures, logs, studies, databases, raw or experimental data, research records, assay protocols, meeting minutes, certificates of analysis, and vendor and supplier lists necessary for furthering the Projects and products arising therefrom.
“Projects”    Research, development and commercialization activities directed to the use, in the diagnosis, prevention and treatment of diseases, of (a) Active Immunotherapeutic Approaches and Passive Immunotherapeutic Approaches, in each case directly targeting one or more Targets and/or (b) any and all Syn103 Program Compounds.
“Syn 103 Program Compounds”   

ELN584103 (4-fluoro-N-(4-(trifluoromethyl)phenyl)benzenesulfonamide) having the structure:

LOGO

And related compounds ELN584092, ELN584105, ELN584164, ELN584095, ELN584090.

“Synuclein Patent Rights”    The Patents listed in Schedule A-III and Patents claiming priority thereto.
“Target”    Any and all of (i) MCAM; (ii) Laminin; (iii) AGE; (iv) damaged myelin; (v) fragments of any and all of (i)-(iv); and/or (vi) epitopes presented by any and all of (i)-(v) complexed with other molecular entities, including without limitation proteins, lipids, polymers, nucleic acids, compounds; provided, however, that in the case of (vi), such epitope shall include at least two amino acids of any of (i)-(iv) as determined by standard epitope mapping techniques.
“Territory”    The world.
“Trademark Rights”    All trademarks, trademark rights, service marks, service mark rights, trade dress, logos, slogans, trade names, trade name rights, Internet domain names and subdomains, together with all translations, adaptations, derivations, and combinations thereof and all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith.

 

5


ARTICLE II

PURCHASE AND SALE OF ACQUIRED ASSETS

 

1. Elan hereby transfers, sells, conveys, assigns and delivers to NBL all right, title and interest in the Territory to (i) the Acquired Assets and (ii) subject to the Demerger Agreement, the Acquired Liabilities. Subject to Article VI hereof and notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to transfer, sell, convey, or assign any Acquired Asset if an attempted transfer, sale, conveyance, or assignment thereof, without the consent of a third party, would constitute a breach or other contravention of the rights of such Acquired Asset, or would in any way adversely affect the rights of EPI or EPIL, or upon transfer, sale, conveyance or assignment, NBL under such Acquired Asset.

 

2. Subject to Article VI hereof, Elan shall use commercially reasonable efforts to conclude as soon as reasonably practicable after the Effective Date the perfected assignments of, and to consummate the transfer of all of Elan’s rights, title, and interest in the Acquired Assets to NBL.

 

3. Elan shall use commercially reasonable efforts to transfer and deliver all Project Materials and Project Records when and in the manner requested by NBL.

ARTICLE III

GRANT OF EXCLUSIVE LICENSE OF PATENT RIGHTS AND MATERIALS

 

1. Elan hereby grants to NBL an Exclusive License in the Territory solely for the Projects to (1) conduct research and development activities, and (2) make, have made, use, offer for sale, sell and import products within the Projects, under:

 

  a. Synuclein Patent Rights; and

 

  b. Elan Materials.

 

2. For the avoidance of doubt, Elan and its Affiliates, other than NBL and OTL, shall use certain Target antibodies, i.e., 11A5, 12C6, 6H7, 8A5, 5C12 and the lipid/synuclein antibodies (collectively, “Synuclein Antibodies”) solely for research purposes, excluding use in studies relating to the Projects, and for no other purpose (“Elan’s Permitted Use”).

 

3. Except as provided in this Section 3, Elan and its Affiliates, other than NBL and OTL, shall not distribute to third parties or make a public disclosure of any Synuclein Antibodies without NBL’s prior written consent. Elan may, without NBL’s prior written consent:

 

  a. Distribute to collaborators other than academic institutions under a written agreement prohibiting publication or further distribution of the Elan Materials and expressly limiting use to Elan’s Permitted Use; or

 

6


  b. Distribute no more than 1 mg of any of 11A5, 6H7, and 8A5 under a written agreement prohibiting identification of the antibody structure and further distribution and expressly limiting use to Elan’s Permitted Use; or

 

  c. Publish results obtained with, but not the structure of, any of 11A5, 6H7, and 8A5; or

 

  d. Disclose and publish in a patent application and any patent issuing therefrom any results obtained with the Synuclein Antibodies in Elan’s Permitted Use.

 

4. For the avoidance of doubt, NBL and its Affiliates shall use certain non-Target antibodies, i.e., ELND2 Materials, TY11/15, 27-1, 2E4, 3G10 and APP antibodies solely for research purposes relating to the Projects, and for no other purpose (“NBL’s Permitted Use”).

 

5. Except as provided in this Section 5, NBL and its Affiliates shall not distribute to third parties or make a public disclosure of any ELND2 Materials without Elan’s prior written consent. NBL may, without Elan’s prior written consent:

 

  a. Distribute to collaborators other than academic institutions under a written agreement prohibiting publication or further distribution of the ELND2 Materials and expressly limiting use to NBL’s Permitted Use; or

 

  b. Distribute to academic institutions conducting research in furtherance of the Projects under a written agreement prohibiting further distribution of the ELND2 Materials and expressly limiting use to NBL’s Permitted Use; or

 

  c. Disclose and publish in a patent application and any patent issuing therefrom any results obtained with the ELND2 Materials in NBL’s Permitted Use.

 

6. On an annual basis, NBL shall review Projects to identify which have been Inactive. Within sixty (60) days of such identification, NBL shall notify Elan of such Inactive Projects, and the rights granted to NBL under Article III with respect to Ancillary Intellectual Property related solely to such identified Inactive Projects shall terminate and shall revert to Elan.

ARTICLE IV

CONSIDERATION

In consideration for the transfer of the Acquired Assets to NBL, NBL shall pay EPI and EPIL a total of $375,000 and assume (subject to the terms of the Demerger Agreement) the Acquired Liabilities.

 

7


ARTICLE V

PROSECUTION OF PATENT RIGHTS

NBL shall solely control the prosecution and maintenance of all Neotope Patent Rights, and shall pay all costs associated therewith incurred after the Effective Date and shall have no obligation to Elan in respect of such Neotope Patent Rights. EPI shall solely control the prosecution of Synuclein Patent Rights; provided, however, that EPI shall keep NBL reasonably apprised of the status of the Synuclein Patent Rights and reasonably consider the input of NBL with respect to the prosecution of any claims in the Synuclein Patent Rights solely related to the Projects.

ARTICLE VI

RELATIONSHIP TO DEMERGER AGREEMENT

This Agreement is subject in all respects to the terms and conditions of the Demerger Agreement. The consummation of the transactions contemplated by this Agreement shall constitute part of the Pre-Demerger Restructuring (as defined in the Demerger Agreement) under the Demerger Agreement and shall accordingly be consummated prior to the consummation of the transactions contemplated by the Demerger Agreement. The Acquired Assets and Acquired Liabilities conveyed to NBL pursuant to this Agreement shall constitute assets of the Prothena Business and Prothena Business Liabilities, respectively, for all purposes of the Demerger Agreement. Nothing contained in this Agreement shall be deemed to supersede any of the covenants, agreements, representations or warranties of Elan, Seller, Prothena, or Buyer contained in the Demerger Agreement. In the event of a conflict between this Agreement and the Demerger Agreement, the terms of the Demerger Agreement shall control.

ARTICLE VII

TERM AND TERMINATION

This Agreement may be terminated at any time prior to the Demerger by written consent of the parties hereto.

ARTICLE VIII

MISCELLANEOUS

 

1. Force Majeure

Neither party to this Agreement shall be liable for delay in the performance of any of its obligations hereunder if such delay results from causes beyond its reasonable control, including, without limitation, acts of God, fires, strikes, acts of war, or intervention of any government authority, but any such delay or failure shall be remedied by such party as soon as practicable.

 

2. Relationship of the Parties

Nothing contained in this Agreement is intended or is to be construed to constitute EPI, EPIL and NBL as partners or joint venturers or employees of the other party. Neither party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other party or to bind the other party to any contract, agreement or undertaking with any third party.

 

8


3. Counterparts

This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement. This Agreement may be executed by facsimile (including electronically by PDF). The parties agree that facsimile copies of signatures have the same effect as original signatures.

 

4. Notices

Any notice or other communication required or permitted to be given to either party under this Agreement shall be given in writing and shall be delivered by hand or by facsimile (and promptly confirmed by registered mail, postage prepaid and return receipt requested, or by reputable overnight delivery service or courier), addressed to each party at the following addresses or such other address as may be designated by notice pursuant to this Article VII Section 4:

 

If to NBL:   

Neotope Biosciences Limited

Treasury Building

Lower Grand Canal Street

Dublin 2, Ireland

Attention: Director

  
If to EPI:   

Elan Pharmaceuticals, Inc.

180 Oyster Point Blvd.

South San Francisco, CA 94080

Attention: Secretary

  
If to EPIL:   

Elan Pharma International Limited

Treasury Building

Lower Grand Canal Street

Dublin 2, Ireland

Attention: Director

  

Any notice or communication given in conformity with this Article VIII Section 4 shall be deemed to be effective when received by the addressee, if delivered by facsimile, hand or delivery service or courier, and four days after mailing, if mailed.

 

5. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of Ireland.

 

6. Severability

If any provision in this Agreement is deemed to be or becomes invalid, illegal or unenforceable, (i) such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable or, if it cannot be so amended without materially altering the intention of the parties, it will be deleted, and (ii) the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.

 

9


7. Amendments

No amendment, modification or addition hereto shall be effective or binding on either party unless set forth in writing and executed by a duly authorized representative of both parties.

 

8. Waiver

No waiver of any right under this Agreement shall be deemed effective unless contained in a writing signed by the party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.

 

9. Headings

The section headings contained in this Agreement are included for convenience only and form no part of the agreement between the parties.

 

10. Assignment, Etc.

Neither party may assign its rights and obligations hereunder without the prior written consent of the other party; provided, however, that either party shall have the right to assign such rights and obligations hereunder to an Affiliate or to any Person with which such party is merged or consolidated or which purchases all or substantially all of the assets of such party.

 

11. No Effect on Other Agreements

No provision of this Agreement shall be construed so as to negate, modify or affect in any way the provisions of any other agreement between the parties unless specifically referred to, and solely to the extent provided in any such other agreement.

 

12. Successors

This Agreement will inure to the benefit of and be binding upon the successors of the parties hereto.

 

10


IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Agreement on the date last written below, effective as of the Effective Date.

 

NEOTOPE BIOSCIENCES LIMITED
By:   /s/ William F. Daniel
  Name: William F. Daniel
  Title: Director
  Date:

 

  ELAN PHARMACEUTICALS, INC.       ELAN PHARMA INTERNATIONAL LIMITED
By:   /s/ Alan Campion     By:   /s/ William F. Daniel
 

Name: Alan Campion

Title: Treasurer and Chief Financial Officer

Date:

     

Name: William F. Daniel

Title: Director

Date:

 

11

Exhibit 2.3

A SSET P URCHASE A GREEMENT

This Asset Purchase Agreement (this “ Agreement ”), is made and entered into as of December 20, 2012, by and between, Elan Pharmaceuticals, Inc., a Delaware corporation (“ Seller ”), and Prothena Biosciences Inc, a Delaware corporation (“ Buyer ”).

WHEREAS, Elan Corporation, plc, an Irish public limited company (“ Elan ”) ,and Prothena Corporation plc, an Irish public limited company (“ Prothena ”), have entered into a Demerger Agreement, dated November 8, 2012 (the “ Demerger Agreement ”), for the purpose of accomplishing the separation of the Prothena Business (as that term is defined therein) into a separate, independent company through a demerger under Irish law (the “ Demerger ”);

WHEREAS, in connection with the Demerger and as part of the Pre-Demerger Restructuring (as defined in the Demerger Agreement), Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, all of Seller’s right, title and interest in the Purchased Assets (as defined below) and the Assumed Liabilities (as defined below), subject to the terms and conditions set forth herein; and

WHEREAS, all capitalized terms used but not defined herein shall have the meanings given to them in the Demerger Agreement.

NOW, THEREFORE, subject to the Demerger Agreement and in consideration of the mutual agreements set forth herein and the payment by Buyer of the Purchase Price and the assumption by Buyer of the Assumed Liabilities, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that:

1. Purchase . Prior to the Demerger and otherwise in accordance with and subject to the terms of the Demerger Agreement, Seller hereby sells, assigns, transfers, conveys and delivers to Buyer, and Buyer hereby purchases from Seller, all of Seller’s right, title and interest in (i) the assets set forth on Exhibit A and (ii) the working capital item balances, as of the date immediately prior to the date of consummation of the Demerger, set forth on Exhibit B attached hereto (collectively, the “ Purchased Assets ”).

2. Assumption of Liabilities . Prior to the Demerger and otherwise in accordance with and subject to the terms of the Demerger Agreement, Buyer shall assume and agree to pay, perform and discharge the liabilities and obligations relating to or associated with the Purchased Assets (collectively, the “ Assumed Liabilities ”).

3. Consideration . The consideration for the Purchased Assets shall be a cash payment of $3,000,000 (the “ Purchase Price ”), plus the assumption of the Assumed Liabilities.

4. The Demerger Agreement . This Agreement is subject in all respects to the terms and conditions of the Demerger Agreement. Nothing contained in this Agreement shall be deemed to supersede any of the covenants, agreements, representations or warranties of Elan, Seller, Prothena, or Buyer contained in the Demerger Agreement. In the event of a conflict between this Agreement and the Demerger Agreement, the terms of the Demerger Agreement shall control.

5. Benefit . This Agreement is intended solely to benefit the parties and their respective successors and assigns and shall not create any rights in or liabilities to any other parties or expand any rights in or liabilities to any other parties.


6. Governing Law; Waiver of Jury Trial . This Agreement, the legal relations between the parties and the adjudication and the enforcement thereof, shall be governed by and interpreted and construed in accordance with the substantive laws of the State of Delaware applicable to agreements made and to be performed wholly within that jurisdiction. The parties hereby expressly waive the right to a trial by jury in any action or proceeding brought by or against any of them relating to this agreement or the transactions contemplated hereby.

7. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

2


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

SELLER:
ELAN PHARMACEUTICALS, INC.
By:   /s/ Alan Campion
  Name: Alan Campion
  Title: Treasurer and Chief Financial Officer


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

BUYER:
PROTHENA BIOSCIENCES INC
By:   /s/ John L. Donahue
  Name: John L. Donahue
  Title: Assistant Secretary

 

A-2

Exhibit 10.1

EXECUTION COPY

 

 

 

TAX MATTERS AGREEMENT

by and between

ELAN CORPORATION, PLC

AND

PROTHENA CORPORATION PLC,

Dated 20 December 2012

 

 

 


TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

DEFINITIONS

  

Section 1.01

   Definition of Terms      2   

ARTICLE II

  

ALLOCATION OF TAXES

  

Section 2.01

   Ordinary Course Taxes      7   

Section 2.02

   Transaction Taxes      7   

Section 2.03

   Transfer Taxes      8   

Section 2.04

   Entitlement to Tax Attributes      9   

Section 2.05

   Additional Costs      9   

ARTICLE III

  

TAX RETURN FILING AND PAYMENT OBLIGATIONS

  

Section 3.01

   Tax Return Preparation and Filing      9   

Section 3.02

   Treatment of Transactions and Reporting Obligations      10   

Section 3.03

   VAT      10   

ARTICLE IV

  

TAX-FREE TREATMENT OF DISTRIBUTION & RELATED TRANSACTIONS

  

Section 4.01

   Representations      10   

Section 4.02

   Covenants      11   

ARTICLE V

  

TAX CONTESTS; INDEMNIFICATION; COOPERATION

  

Section 5.01

   Notice      13   

Section 5.02

   Control of Tax Contests      13   

Section 5.03

   Indemnification Payments      13   

Section 5.04

   Interest on Late Payments      14   

Section 5.05

   Treatment of Indemnity Payments      14   

Section 5.06

   Cooperation      14   

Section 5.07

   Confidentiality      15   

 

-i-


ARTICLE VI

  

DISPUTE RESOLUTION

  

Section 6.01

   Tax Disputes      15   

ARTICLE VII

  

MISCELLANEOUS

  

Section 7.01

   Authorization      16   

Section 7.02

   Expenses      16   

Section 7.03

   Entire Agreement      16   

Section 7.04

   Governing Law      16   

Section 7.05

   Notice      16   

Section 7.06

   Priority of Agreements      18   

Section 7.07

   Amendments and Waivers      18   

Section 7.08

   Termination      18   

Section 7.09

   No Third Party Beneficiaries      19   

Section 7.10

   Assignability      19   

Section 7.11

   Enforcement      19   

Section 7.12

   Survival      19   

Section 7.13

   Construction      19   

Section 7.14

   Severability      20   

Section 7.15

   Counterparts      20   

Section 7.16

   Successors      20   

 

-ii-


TAX MATTERS AGREEMENT

THIS TAX MATTERS AGREEMENT (this “ Agreement ”) is made and entered into as of 20 December 2012 by and between Elan Corporation, plc, an Irish public limited company (“ Parent ”), and Prothena Corporation plc, an Irish public limited company (“ Prothena ”) (and Parent and Prothena, collectively, the “ Companies ”).

WHEREAS, the board of directors of Parent has determined that it would be appropriate and desirable to separate a substantial portion of the drug discovery business platform from Parent;

WHEREAS, the board of directors of Parent has approved and declared advisable the separation of a substantial portion of Parent’s drug discovery business platform pursuant to a “demerger” under Irish law in which Parent will contribute such drug discovery business platform to Prothena (such transfer, the “ Prothena Transfer ”) in exchange for Prothena issuing directly to holders of ordinary shares of Parent and American Depositary Shares (“ ADSs ”) of Parent, on a pro rata basis, Prothena ordinary shares representing 100% of Prothena’s outstanding ordinary shares (such direct share issuance, the “ Distribution ”);

WHEREAS, Parent and Prothena have entered into the Demerger Agreement pursuant to which Parent shall effect the Prothena Transfer and the Distribution;

WHEREAS, immediately following the Distribution, Elan Science One Limited, a wholly-owned subsidiary of Parent, will subscribe for 18% of Prothena’s outstanding ordinary shares in exchange for cash;

WHEREAS, the Companies intend that the Prothena Transfer and the Distribution (taken together) should not give rise to a chargeable gain for Parent in respect of the disposal by Parent of Neotope Biosciences, pursuant to Section 615 of the Taxes Consolidation Act, 1997 of Ireland (the “ TCA ”) and should be relieved from Irish stamp duty for which Prothena would otherwise be accountable for, pursuant to Section 80 of the Stamp Duties Consolidation Act, 1999 of Ireland (the “ SDCA ”);

WHEREAS, the Companies intend (and save in respect of any cash received in lieu of Prothena ordinary shares) that the Prothena Transfer and the Distribution (taken together) shall qualify as a “scheme of reconstruction or amalgamation” pursuant to section 587 of the TCA with the result that no chargeable gain for Irish Tax purposes shall arise for shareholders in Parent within the charge to Irish Tax as a result of the receipt of shares in connection with the Distribution;


WHEREAS, the Companies intend that the (i) Prothena Transfer, taken together with the Distribution, qualify as a “reorganization” under Code Section 368(a)(1)(D), and (ii) the Distribution, as such, qualify as a distribution of Prothena ordinary shares to Parent shareholders pursuant to Code Section 355; and

WHEREAS, the Companies desire to allocate the Tax responsibilities, liabilities and benefits of certain transactions and to provide for certain other Tax matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Companies (each on behalf of itself and each of its subsidiaries as of the Closing Date and its future subsidiaries) hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definition of Terms .

The following terms shall have the following meanings (such meanings to apply equally to both the singular and the plural forms of the terms defined). Unless otherwise stated, all Section references are to this Agreement. Any capitalized terms used herein and not otherwise defined shall have the meaning given to such term in the Demerger Agreement.

Active Trade or Business ” means the active conduct (determined in accordance with Code Section 355(b)) of the business conducted, prior to the Distribution, by Parent and its subsidiaries and, after the Distribution, by the Prothena Group members independently and with separate employees. For these purposes, members shall include only those members that are part of the “separate affiliated group” of Parent or Prothena, as applicable, within the meaning of Code Section 355(b)(3)(B).

Additional Costs ” means liabilities, damages, penalties, judgments, assessments, losses, costs and expenses (including reasonable attorneys’ and accountants’ fees and expenses), whether arising under strict liability or otherwise, in each case, arising out of or incident to the imposition, assessment or assertion of any Tax or adjustment against a party with respect to an amount for which such party is entitled to indemnification under this Agreement.

Adjustment Request ” means any formal or informal claim or request for a Refund filed with any Taxing Authority.

ADSs ” has the meaning set forth in the recitals.

Agreement ” has the meaning set forth in the recitals.

Closing Date ” means the date on which the Distribution is consummated.

Code ” means the U.S. Internal Revenue Code of 1986, as amended.

 

-2-


C ompanies ” has the meaning set forth in the recitals.

Demerger Agreement ” means the Demerger Agreement, dated as of November 8, 2012, between Parent and Prothena, as may be amended from time to time.

Distribution ” has the meaning set forth in the recitals.

Equity Investment ” means Prothena’s potential cash issuance of common shares, ordinary shares, American Depository Receipts, ADSs and/or preferred shares to investors after the Transactions.

Final Determination ” means the final resolution of any Tax liability for any Tax period by or as a result of (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction, (ii) a final settlement with the United States Internal Revenue Service, a closing agreement or accepted offer in compromise under Code Sections 7121 or 7122, or a comparable arrangement under the laws of Ireland or another jurisdiction, (iii) any allowance of a Refund in respect of an overpayment of Tax, but only after the expiration of all periods during which such amount may be recovered by the jurisdiction imposing such Tax, or (iv) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

Indemnitee ” has the meaning set forth in Section 5.01.

Indemnifying Party ” has the meaning set forth in Section 5.01.

Irish Group Relief ” means any loss, allowance or other amount eligible for surrender by way of group relief in accordance with the TCA.

Joint Return ” means any Tax Return filed by a Tax Group that includes at least one Parent Group member and at least one Prothena Group member.

Neotope Biosciences ” means Neotope Biosciences Limited, an Irish private limited company and currently a wholly owned subsidiary of Parent;

Onclave ” mean Onclave Therapeutics Limited, an Irish private limited company and currently a wholly owned subsidiary of Parent.

Parent ” has the meaning set forth in the recitals.

Parent Capital Stock ” means (ii) all classes or series of outstanding capital stock of Parent for U.S. federal income Tax purposes, including ordinary shares, ADSs and all other instruments treated as outstanding equity in Parent for U.S. federal income Tax purposes, and (ii) all options, warrants and other rights to acquire such capital stock.

Parent Group ” means Parent and each of its subsidiaries, in each case, including any successors thereof, but excluding Prothena and each of its subsidiaries.

 

-3-


Parent Group Taxes ” means any Tax imposed on or payable by the Parent Group or any member thereof for any Tax period whether or not by reason of being a member of any Tax Group.

Parent Representation Letter ” means the representation letter executed by Parent in connection with the delivery of the Tax Opinions.

Post - Distribution Period ” means the portion of the Closing Date after the completion of the Distribution and any date thereafter.

Pre - Closing Period ” means any Tax period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date.

Proceedings ” has the meaning set forth in Section 7.04.

Prothena ” has the meaning set forth in the recitals.

Prothena Capital Stock ” means (i) all classes or series of outstanding capital stock of Prothena for U.S. federal income Tax purposes, including ordinary shares, preferred shares and all other instruments treated as outstanding equity in Prothena for U.S. federal income Tax purposes, and (ii) all options, warrants and other rights to acquire any such capital stock (including ordinary shares).

Prothena Group ” means Prothena and each of its subsidiaries, in each case, including any successors thereof, but excluding, for the avoidance of doubt, any member of the Parent Group.

Prothena Group Taxes ” means (i) in the case of a Prothena Separate Return, any Tax imposed on or payable by the Prothena Group or any member thereof, and (ii) in the case of a Joint Return, the aggregate Tax liability of the Prothena Group member(s), as determined by Parent pursuant to Section 3.01.

Prothena Representation Letter ” means the representation letter executed by Prothena in connection with the delivery of the Tax Opinions.

Prothena Separate Return ” means any Tax Return (other than a Joint Return) that includes or relates to any Prothena Group member (including any such Tax Return filed by or on behalf of a Tax Group).

Prothena Transfer ” has the meaning set forth in the recitals.

Refund ” means any cash refund of Taxes or reduction of Taxes by means of credit, offset or otherwise, together with any interest received or credited thereon.

Restricted Period ” means the period commencing upon the Closing Date and ending at the close of business on the first day following the second anniversary of the Closing Date.

 

-4-


SDCA ” has the meaning set forth in the recitals.

Straddle Period ” means a Tax period beginning on or before and ending after the Closing Date.

Tax ” or “ Taxes ” shall mean all forms of taxation, whenever created or imposed, and whether of the United States, Ireland or elsewhere, and whether imposed by a federal, state, municipal, governmental, territorial, local, foreign or other body, and without limiting the generality of the foregoing, shall include net income, gross income, capital gains, gross receipts, sales, use, value added, ad valorem, transfer, recording, franchise, profits, license, lease, service, service use, payroll, wage, withholding, employment, unemployment insurance, workers compensation, social security, excise, severance, stamp, business license, business organization, occupation, premium, property, environmental, windfall profits, customs, duties, alternative minimum, estimated or other taxes, fees, premiums, assessments or charges of any kind whatever imposed or collected by any governmental entity or political subdivision thereof, together with any related interest, charges, penalties, additions to such tax or additional amounts imposed with respect thereto by such governmental entity or political subdivision.

Tax Advisor ” has the meaning set forth in Section 6.01.

Tax Attributes ” means net operating losses, capital losses, investment credits, foreign Tax credits, excess charitable contributions, general business credits, or any other loss, deduction, credit or other comparable item that could reduce a Tax liability.

Tax Contest ” means an audit, review, examination or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any Adjustment Request).

Tax Dispute ” means any dispute arising in connection with this Agreement.

Tax - Free Treatment ” means (i) for U.S. federal, state or local Tax purposes, (x) the Prothena Transfer and Distribution, taken together, qualifying as a transaction that is described in Code Sections 355(a) and 368(a)(1)(D), in which the Prothena ordinary shares distributed are “qualified property” under Code Section 361(c) and Parent shareholders recognize no income or gain for U.S. federal income Tax purposes under Code Section 355 (except to the extent of any cash received in lieu of fractional Prothena ordinary shares), and (y) to the extent applicable, the Transactions qualify for Tax-Free Treatment under comparable provisions of U.S. state and local Tax law; and (ii) for Irish Tax purposes, the Prothena Transfer and Distribution, taken together, qualifying as (x) a transaction that falls within the provisions of both section 615 of the TCA and Section 80 of the SDCA and, as a result, does not give rise to a chargeable gain for Parent on the disposal of Neotope Biosciences and does not give rise to a charge to stamp duty in respect of the transfer of the shares in Neotope Biosciences to Prothena and (y) save in respect of the receipt of any cash in lieu of fractional Prothena ordinary shares, a transaction that falls within Section 587 of the TCA and, as a result, the receipt of Prothena ordinary shares in connection with the Distribution does not give rise to a chargeable gain for shareholders of Parent within the charge to Irish Tax.

 

-5-


Tax Group ” means two or more entities that file a Tax Return under applicable Tax law on an affiliated, consolidated, combined, unitary or other group basis or that are otherwise treated as members of the same group for relevant Tax purposes.

Tax Opinions ” means the opinions obtained by Parent with respect to the Prothena Transfer and Distribution.

Tax Return ” means any return, filing, report, questionnaire, information statement, claim for Refund, or other document required or permitted to be filed, including any amendments thereto, for any Tax period with any Taxing Authority.

Taxing Authority ” means any governmental authority imposing Taxes.

TCA ” has the meaning set forth in the recitals.

Third Party Transaction Taxes ” means all liabilities relating to Taxes of any third party, including any Parent shareholder, for which any Parent Group or Prothena Group member, as the case may be, is or becomes liable, resulting from, or arising in connection with, the failure of the Prothena Transfer and Distribution to qualify for Tax-Free Treatment, including any liability of Parent under applicable securities laws relating to the failure of the Transactions to qualify for Tax-Free Treatment.

Transaction Document ” means any document executed by Parent and/or Prothena, as the case may be, in connection with the Transactions, including this Agreement, the Demerger Agreement, the Parent Representation Letter and the Prothena Representation Letter.

Transaction Taxes ” means all U.S. federal, state and local income and franchise Taxes and any Irish Taxes of any Parent Group member or Prothena Group member, as the case may be, resulting from, or arising in connection with, the failure of any of the Prothena Transfer and the Distribution to qualify for Tax-Free Treatment.

Transactions ” means the Prothena Transfer and Distribution, as contemplated by the Demerger Agreement and other relevant documents.

Transfer Taxes ” means any stamp, sales, use, gross receipts, value added, goods and services, harmonized sales, land transfer or other transfer Taxes imposed in connection with, or that are otherwise related to, the Transactions. For the avoidance of doubt, “Transfer Taxes” shall not include any income or franchise Taxes payable in connection with the Transactions or Taxes in lieu of any such income or franchise Taxes.

Unqualified Opinion ” means an opinion obtained by Prothena (at its sole expense), in form and substance satisfactory to Parent, providing that the completion of a proposed action by the Prothena Group (or, in each case, any member thereof) prohibited by Section 4.02(b) or (c) below would not affect the Tax-Free Treatment. Any Unqualified Opinion shall be delivered by nationally recognized U.S. tax counsel or Irish tax counsel acceptable to Parent, as applicable, and Parent shall use its reasonable best efforts to determine whether such Unqualified Opinion is reasonably satisfactory to Parent within 30 Business Days of the receipt of such Unqualified Opinion by Parent.

 

-6-


VAT ” means value added Tax payable or recoverable pursuant to the VATCA.

VAT Group ” has the meaning set forth in Section 3.03(a).

VATCA ” means the Value-Added Tax Consolidation Act, 2010 of Ireland.

ARTICLE II

ALLOCATION OF TAXES

Section 2.01 Ordinary Course Taxes .

(a) Except as provided in Sections 2.02 and 2.03 below, Parent shall indemnify each Prothena Group member against, and hold it harmless from, all Parent Group Taxes.

(b) Except as provided in Sections 2.02 and 2.03 below, each Prothena Group member, jointly and severally, shall indemnify each Parent Group member against, and hold it harmless from, all Prothena Group Taxes (including Taxes payable upon the completion of a Tax Contest, as provided in Section 5.02).

(c) If, with respect to any Prothena Group Tax, the Parent Group (or any member thereof) subsequently receives (or realizes) a Refund, it shall remit to Prothena, within 30 days, the amount of such Refund net of any Taxes or other expenses incurred by the Parent Group (or any member thereof) in connection with the Refund.

(d) Except as provided in Section 2.01(e) below, if, with respect to any Parent Group Tax, the Prothena Group (or any member thereof) subsequently receives (or realizes) a Refund, it shall remit to Parent, within 30 days, the amount of such Refund net of any Taxes or other expenses incurred by the Prothena Group (or any member thereof) in connection with the Refund.

(e) The Prothena Group, except to the extent not permitted by law, shall elect to forego, and/or shall not claim, carrybacks of any Tax Attributes of the Prothena Group to a Pre-Closing Period. For the avoidance of doubt, the Prothena Group shall have no claim against the Parent Group (whether pursuant to the terms of this Agreement or otherwise) to the extent that any Tax Attributes of the Prothena Group available to the Prothena Group as of the Closing Date are subsequently determined to be invalid or are otherwise not available to any Prothena Group member.

Section 2.02 Transaction Taxes .

(a) Subject to the relative fault provision in Section 2.02(c) below, each Prothena Group member, jointly and severally, shall indemnify each Parent Group member against, and hold it harmless from, any Transaction Taxes and Third Party Transaction Taxes attributable to:

(i) any inaccurate representation of fact, plan or intent made by Prothena in Section 4.01 of this Agreement or in the Prothena Representation Letter; and

 

-7-


(ii) any action or omission by Prothena or any of its Affiliates in the Post-Distribution Period, other than any action or omission (x) contemplated under any Transaction Document, or (y) that was taken or omitted in reliance upon any representation, warranty or covenant made by Parent in this Agreement or the Parent Representation Letter to the extent such representation or warranty is incorrect or such covenant was breached, in whole or in relevant part.

(b) Subject to the relative fault provision in Section 2.02(c) below, Parent shall indemnify each Prothena Group member against, and hold it harmless from, any Transaction Taxes and Third Party Transaction Taxes attributable to:

(i) any inaccurate representation of fact, plan or intent made by Parent in Section 4.01 of this Agreement or in the Parent Representation Letter; and

(ii) any action or omission by Parent or any of its Affiliates in the Post-Distribution Period, other than any action or omission (x) contemplated under any Transaction Document, or (y) that was taken or omitted in reliance upon any representation, warranty or covenant made by Prothena in this Agreement or the Prothena Representation Letter to the extent such representation or warranty is incorrect or such covenant was breached, in whole or in relevant part.

(c) If the liability for any Transaction Taxes or Third Party Transaction Taxes arises as a result of or is attributable to (i) any inaccurate representation or any act or omission set forth in Section 2.02(a) above and (ii) any other factor or cause that independently or together with the factors or causes set forth in clause (i) above contributes to (or results in) a liability for Transaction Taxes, then such liability for Transaction Taxes and Third Party Transaction Taxes shall be shared by the Parent Group and the Prothena Group according to relative fault.

(d) The party liable for any Transaction Taxes shall be entitled to any Refund of such Transaction Taxes, and, if another party subsequently receives (or realizes) any such Refund, such party shall, within 30 days, remit the amount of such Refund, net of any Taxes incurred by such party (or any member of its group) in connection with such Refund, to the party entitled to such Refund under this Agreement.

Section 2.03 Transfer Taxes .

(a) The Parent Group shall be liable for any Transfer Taxes, except to the extent that such liability would not have arisen but for a voluntary transaction, action or omission carried out, effected or made by any Prothena Group member at any time after the Demerger. The parties shall cooperate in good faith to minimize the amount of any Transfer Taxes and obtain any Refunds thereof.

(b) Without prejudice to the generality of Section 2.03(a) above, Parent shall indemnify Prothena against, and hold it harmless from, any liability for any Irish stamp duty which Prothena is properly required to pay if it shall be determined that section 80 of the SDCA

 

-8-


did not apply to the transfer of the shares in Neotope Biosciences Limited pursuant to the Prothena Transfer, except to the extent that such liability would not have arisen but for a voluntary transaction, action or omission carried out, effected or made by any Prothena Group member at any time after the Demerger.

(c) In the case of any Transfer Taxes which have given rise to a claim by the Prothena Group under Section 2.03(a) or (b), if the Prothena Group subsequently receives a Refund of any such Transfer Taxes, Prothena shall remit, within 30 days, to Parent the Refund received by the Prothena Group net of Taxes or other expenses incurred by the Prothena Group in connection with the Refund.

Section 2.04 Entitlement to Tax Attributes .

Prothena shall procure that each Prothena Group member shall make such surrenders of Irish Group Relief in respect of any accounting period beginning on or before the Closing Date to any Parent Group member as Parent may, in its sole discretion, direct, provided always that Prothena shall be under no obligation to procure that the Prothena Group make any surrender of Irish Group Relief to the extent that such surrender cannot lawfully be made. Prothena shall procure that each Prothena Group member, and Parent shall procure that each Parent Group member, shall use all reasonable endeavours to procure that full effect is given to the surrenders to be made pursuant to this Section 2.04 and that such surrenders are allowed in full by the Irish Revenue Commissioners and (without prejudice to the generality of the foregoing) shall, at each party’s own cost, sign and submit to the Irish Revenue Commissioners all such Tax returns and other documents as may be necessary to secure that full effect is given to this Section 2.04. For the avoidance of doubt, no payment shall be made by any Parent Group member to any Prothena Group member in respect of any surrender made pursuant to this Section 2.04.

Section 2.05 Additional Costs .

Each Party shall be entitled to indemnification for Additional Costs related to any indemnity payment under this Agreement.

ARTICLE III

TAX RETURN FILING AND PAYMENT OBLIGATIONS

Section 3.01 Tax Return Preparation and Filing

(a) Subject to Section 3.03, Parent shall prepare and file, or shall cause to be prepared and filed, all Joint Returns required to be filed under applicable Tax law after the date hereof (including any Joint Returns required to be filed for the taxable period in which the Transactions occur), and shall pay, or cause to be paid, all Taxes shown to be due and payable on such Joint Returns; provided that Prothena shall (i) provide Parent, within 15 days of its request, with all information requested by Parent for purposes of calculating the Prothena Group’s items of income, gain, loss, deduction or expense to be reported on any such Joint Return, and (ii) pay to Parent the Prothena Group’s share, if any, of any Tax liability reported on such Joint Return,

 

-9-


within five days of Parent’s delivery of a reasonably detailed calculation of such Tax liability, which calculation shall be made by the Parent Group in accordance with its past practices. Subject to Section 3.02, Prothena shall prepare and file, or shall cause to be prepared and filed, all Prothena Separate Returns required to be filed under applicable Tax law after the date hereof, and shall pay, or cause to be paid, all Taxes shown to be due and payable on such Prothena Separate Returns.

(b) Except as required by any Transaction Document, Prothena shall not cause or permit any Prothena Group member to take any action on the Closing Date other than in the ordinary course of business, including the sale of any assets, distribution of any dividend or making of any Tax election.

Section 3.02 Treatment of Transactions and Reporting Obligations .

The parties shall report the Transactions for all applicable Tax purposes in a manner consistent with the Tax Opinions, unless, and then only to the extent, an alternative position is required pursuant to a Final Determination. Parent shall determine the Tax reporting of any issue relating to the Transactions that is not covered by the Tax Opinion. The parties shall comply (and cause their subsidiaries to comply) with all applicable reporting requirements of U.S. Treasury Regulation Section 1.368-3.

Section 3.03 VAT .

(a) Parent shall procure that, effective as of the Closing Date, Neotope Biosciences and Onclave shall cease to be members of a group within the meaning of section 15 of the VATCA in respect of which any Parent Group member is also a member (a “ VAT Group ”).

(b) Prothena shall procure that Neotope Biosciences or Onclave, as appropriate, pay to Parent (or to such Parent Group member as Parent may direct) the appropriate Prothena Group member’s share, if any, of any VAT liability for which any Parent Group member is liable in respect of the VAT due on supplies by Neotope Biosciences or Onclave for a Straddle Period, and such payment shall be made within 5 days of Parent’s delivery of a reasonably detailed calculation of such VAT liability, which calculation shall be made by the Parent Group in accordance with its past practices. Parent shall prepare and file, or shall cause to be prepared and filed, any Tax return required to be filed under applicable Tax law by any VAT Group in respect of a Straddle Period, and shall pay, or cause to be paid, all Taxes shown to be due and payable on such Tax return.

ARTICLE IV

TAX-FREE TREATMENT OF DISTRIBUTION & RELATED TRANSACTIONS

Section 4.01 Representations .

(a) Parent represents and warrants that, as of the Closing Date, (i) the Transaction Documents, including all statements in the Transaction Documents by or about the

 

-10-


Prothena Group, are true, correct and complete in all material respects, and Parent knows of no other facts that could cause any Transaction to fail to qualify for Tax-Free Treatment, and (ii) it has no plan or intention to take any action inconsistent with the Parent Representation Letter or any covenant of any Parent Group member set forth in any Transaction Document.

(b) Prothena represents and warrants that, as of the Closing Date, (i) all statements in the Transaction Documents by or about the Prothena Group, and any member thereof, are true, correct and complete in all material respects, and Prothena knows of no other facts that could cause any Transaction to fail to qualify for Tax-Free Treatment, and (ii) it has no plan or intention to take any action inconsistent with the Prothena Representation Letter or any covenant of any Prothena Group member set forth in any Transaction Document.

Section 4.02 Covenants .

(a) During the Restricted Period, (i) neither Parent nor any of its Affiliates (or any officers or directors acting on behalf of Parent or any of its subsidiaries, or any Person acting with the implicit or explicit permission of any such officers or directors) shall take or fail to take any action if such action (or the failure to take such action) would (x) be inconsistent with any covenant, representation or statement made by, Parent or any of its Affiliates in the Parent Representation Letter or in any Transaction Document, or (y) prevent, or be reasonably likely to prevent, the Transactions (or any portion thereof) from qualifying for Tax-Free Treatment; and (ii) none of Prothena or any of its Affiliates (or any officers or directors acting on behalf of Prothena or any of its subsidiaries, or any Person acting with the implicit or explicit permission of any such officers or directors) shall take or fail to take any action if such action (or the failure to take such action) would (x) be inconsistent with any covenant, representation or statement made by, Prothena or any of its Affiliates in the Prothena Representation Letter or in any Transaction Document, or (y) prevent, or be reasonably likely to prevent, the Transactions (or any portion thereof) from qualifying for Tax-Free Treatment.

(b) Without limiting the generality of the foregoing, during the Restricted Period and subject to Section 4.02(d), neither Prothena nor any of its Affiliates (or any officers or directors acting on behalf of Prothena or any of its subsidiaries, or any Person acting with the implicit or explicit permission of any such officers or directors) shall:

(i) merge or consolidate Prothena with any other Person, or liquidate or partially liquidate Prothena;

(ii) cause or permit Prothena to be treated as other than a corporation for U.S. federal income Tax purposes;

(iii) discontinue, sell, transfer or cease to maintain the Active Trade or Business (including by failing to make reasonable efforts to pursue opportunities to perform research and development services for unrelated parties with whom Prothena or any of its subsidiaries is otherwise collaborating), or engage in any transaction that could result in Prothena ceasing to be engaged in the Active Trade or Business;

(iv) redeem, repurchase or otherwise acquire any outstanding Prothena Capital Stock;

 

-11-


(v) issue any shares of Prothena Capital Stock, other than shares of Prothena Capital Stock issued in the Equity Investment and to employees of the Prothena Group as compensation for services;

(vi) amend, terminate or fail to enforce the terms of any proxy agreement entered into between Parent and Prothena with respect to the voting of Parent’s shares of Prothena Capital Stock;

(vii) take any action that permits a proposed acquisition of Prothena Capital Stock to occur by means of an agreement to which Prothena is a party, including by (x) soliciting any Person to make a tender offer for, or otherwise acquire or sell, Prothena Capital Stock (other than the Equity Investment and shares of Prothena Capital Stock issued to employees of the Prothena Group as compensation for services) or approving or otherwise permitting any such transaction, (y) participating in or otherwise supporting any unsolicited tender offer for, or other unsolicited acquisition or disposition of, Prothena Capital Stock or approving or otherwise permitting any such transaction, or (z) making a determination that a tender offer is a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any proposed acquisition of Prothena Capital Stock; or

(viii) without duplication for Section 4.02(b)(iii), sell, transfer or otherwise cease to be the beneficial owner of the shares of Neotope Biosciences acquired by Prothena pursuant to the Prothena Transfer.

(c) To the extent that, as a result of a subsequent amendment to the Code and/or the U.S. Treasury Regulations, any action or a failure to take any action by a Parent Group member or a Prothena Group member could affect any Transaction’s qualification for Tax-Free Treatment, then the covenants contained in Section 4.02(a)(i)(y) and in Section 4.02(a)(ii)(y) shall automatically be deemed to incorporate by reference such actions and the failure to take such actions, and the Prothena Group shall comply with the requirements of the relevant amendment through the end of the Restricted Period; provided , however , that, for the avoidance of doubt, no such action or failure to take any such action before the date the relevant amendment is enacted shall constitute a breach of such Sections to the extent such actions or failure to take such actions would not have otherwise constituted a breach of such Sections before such date.

(d) For the avoidance of doubt, neither the Prothena Group nor any of its Affiliates shall take any action prohibited by Section 4.02(b) or Section 4.02(c), unless (i) Parent receives prior written notice describing the proposed action in reasonable detail, and (ii) the Prothena Group delivers to Parent an Unqualified Opinion and Parent, in its reasonable discretion, which discretion shall be exercised in good faith solely to preserve the Tax-Free Treatment, provides its written consent permitting the proposed action. Parent’s obligation to cooperate in connection with the Prothena Group’s delivery of an Unqualified Opinion is as expressly set forth in Section 5.06(b) below. For the avoidance of doubt, the Parent Group’s right to indemnification for Transaction Taxes shall be determined without regard to whether the Prothena Group satisfies any or all of the requirements of this Section 4.02(d).

 

-12-


(e) After the Distribution, each of Prothena and its Affiliates shall maintain its books and records for financial reporting and, to the extent applicable, U.S. federal income Tax purposes using the accrual method of accounting.

ARTICLE V

TAX CONTESTS; INDEMNIFICATION; COOPERATION

Section 5.01 Notice .

Within 30 days after a party (the “ Indemnitee ”) becomes aware of the existence of a Tax Contest that may give rise to an indemnification claim by it against another party under this Agreement (each such party, an “ Indemnifying Party ”), the Indemnitee shall promptly notify the Indemnifying Parties of the Tax Contest, and thereafter shall promptly forward or make available to the Indemnifying Parties copies of all notices and communications with a Taxing Authority solely to the extent relating to such Tax Contest; provided, however, that any delay on the part of the Indemnitee in notifying the Indemnifying Parties shall not relieve the Indemnifying Parties from any obligation hereunder unless (and then solely to the extent) the Indemnifying Parties are actually prejudiced thereby.

Section 5.02 Control of Tax Contests .

Parent shall have the right to (i) contest, compromise or settle any adjustment or deficiency proposed or asserted with respect to any Tax liability with respect to a Joint Return or any Irish stamp duty liability which Prothena is required to pay if it shall be asserted that section 80 of the SDCA did not apply to the transfer of the shares in Neotope Biosciences pursuant to the Prothena Transfer, and (ii) file, prosecute, compromise or settle any Adjustment Request (and determine the manner in which any Refund shall be received) with respect to any Tax addressed in clause (i) immediately above; provided that, to the extent a Tax Contest solely relates to Transaction Taxes with respect to which the Prothena Group could be liable under Section 2.02(a), Parent shall reasonably consult with the Prothena Group with respect to Parent’s defense and control of such Tax Contest.

Section 5.03 Indemnification Payments .

An Indemnitee shall be entitled to make a claim, including, for the avoidance of doubt, any claim for Third Party Transaction Taxes, for payment pursuant to this Agreement at the time the Indemnitee determines that it is entitled to such payment. The Indemnitee shall provide to the Indemnifying Parties notice of such claim within 30 days of the date on which it first determines that it is entitled to claim such payment, including a description of such claim and a detailed calculation of the amount of the indemnification payment that is claimed; provided, however, that any delay on the part of the Indemnitee in notifying the Indemnifying Parties shall not relieve the Indemnifying Parties from any obligation hereunder unless (and then solely to the extent) the Indemnifying Parties are actually prejudiced thereby. Unless the Indemnifying Parties reasonably dispute their liability for, or the amount of, an indemnity payment, such parties shall make the claimed payment to the Indemnitee within 10 days after receiving notice of (i) the Indemnitee’s payment of a Tax for which the Indemnifying Parties are liable under this Agreement, or (ii) a Final Determination which results in the Indemnifying Parties becoming obligated to make a payment to the Indemnitee under this Agreement.

 

-13-


Section 5.04 Interest on Late Payments .

With respect to any indemnification payment (including any disputed payment that is ultimately required to be paid) not made by the due date for payment set forth in this Agreement, interest shall accrue at a rate of 2% above EURIBOR for the period from the date falling 30 Business Days after the due date to the date of actual payment.

Section 5.05 Treatment of Indemnity Payments .

Except for any payment of interest under Section 5.04 and in the absence of a Final Determination to the contrary, any amount payable with respect to any Tax under this Agreement shall, to the extent permitted under applicable Tax law, be treated as occurring immediately prior to the Transactions, as an inter-company distribution or a contribution to capital, as the case may be. Notwithstanding the foregoing, the amount of any indemnity payment under this Agreement shall be (i) decreased to take into account any Tax benefit actually realized by the Indemnitee (or an Affiliate thereof) arising from the incurrence or payment of the relevant indemnified item, and (ii) increased to take into account any Tax cost actually incurred by the Indemnitee (or an Affiliate thereof) arising from the receipt of the relevant indemnity payment. Any indemnity payment will initially be made without regard to this Section 5.05 and will be reduced or increased to reflect any applicable Tax benefit or Tax cost, as the case may be, within 30 days after the Indemnitee (or an Affiliate thereof) actually realizes such Tax benefit or incurs such Tax cost by way of a Refund, an increase in Taxes or otherwise. In the event of a Final Determination relating to the Indemnitee’s (or its Affiliate’s) incurrence or payment of an indemnified item and/or receipt of an indemnity payment pursuant to this Section 5.05, the Indemnitee will, within 30 days of such Final Determination, provide the other parties with notice thereof and supporting documentation addressing, in reasonable detail, the amount of any reduction or increase in Taxes of the Indemnitee (or its Affiliate) resulting from such Final Determination, and the parties will promptly make any payments necessary to reflect the relevant reduction or increase in Tax liability.

Section 5.06 Cooperation .

(a) Pursuant to this Agreement, each member of the Parent Group and the Prothena Group shall cooperate fully with all reasonable requests from the other parties in connection with the preparation and filing of Tax Returns and Adjustment Requests, the resolution of Tax Contests and any other matters covered herein. If any parties fail to comply with any of their obligations set forth in this Section 5.06(a), and such failure results in the imposition of additional Taxes, the nonperforming parties shall be liable for such additional Taxes.

(b) In connection with the foregoing, Parent shall, at Prothena’s sole expense, reasonably cooperate with Prothena, upon its written request, in connection with obtaining an Unqualified Opinion; provided , however , that Parent’s cooperation shall not affect the Parent Group’s indemnity obligation for Taxes under this Agreement, decrease in any respect the Prothena Group’s indemnity obligation for Taxes under this Agreement, or cause any member of the Parent Group to have any liability to any third party.

 

-14-


Section 5.07 Confidentiality .

Any information or document provided under this Agreement shall be kept confidential by the recipient parties, except as may otherwise be necessary in connection with the filing of any Tax Return or the resolution of any Tax Contest. In addition, if Parent or Prothena determines that providing any information or document could be commercially detrimental, violate any law or agreement or waive any privilege, the parties shall use their reasonable best efforts to permit compliance with the obligations under this Agreement in a manner that avoids any such harm or consequence.

ARTICLE VI

DISPUTE RESOLUTION

Section 6.01 Tax Disputes .

The parties shall endeavor, and shall cause their respective Affiliates to endeavor, to resolve in good faith all disputes arising in connection with this Agreement. The parties shall negotiate in good faith to resolve any Tax Dispute within 30 days. Upon written notice by a party after such 30-day period, the matter will be referred to a U.S. tax counsel or other tax advisor of recognized national standing (the “ Tax Advisor ”) that will be jointly chosen by Parent and Prothena; provided, however, that, if Parent and Prothena do not agree on the selection of the Tax Advisor after 10 days of good faith negotiation, their respective U.S. or Irish tax counsel or other advisors of recognized national standing shall select a mutually acceptable Tax Advisor within the following 10-day period. The Tax Advisor may, in its discretion, obtain the services of any third party necessary to assist the Tax Advisor in resolving the Tax Dispute. The Tax Advisor shall furnish written notice to the Companies of its resolution of the Tax Dispute as soon as practicable, but in any event no later than 90 days after acceptance of the matter for resolution. Any such resolution by the Tax Advisor shall be binding on the parties, and the parties shall take, or cause to be taken, any action necessary to implement such resolution. All fees and expenses of the Tax Advisor shall be shared equally by Parent and the Prothena Group. If the parties are unable to find a Tax Advisor willing to adjudicate the Tax Dispute and whom the parties, acting in good faith, find acceptable (under the standards set forth in this Section 6.01), (i) the Tax Dispute will be submitted for mediation, and (ii) if the Tax Dispute is not resolved in mediation, either party will have the right to commence litigation, in a manner consistent with Clause 30 of the Demerger Agreement. If any dispute regarding the preparation of a Tax Return is not resolved before the due date for filing such return, the return shall be filed in the manner deemed correct by the party responsible for filing the return without prejudice to the rights and obligations of the parties hereunder; provided that the preparing party shall file an amended Tax Return, within 10 days after the completion of the process set forth in this Section 6.01, reflecting any changes made in connection with such process.

 

-15-


ARTICLE VII

MISCELLANEOUS

Section 7.01 Authorization .

Each party hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such party, that this Agreement constitutes a legal, valid and binding obligation of such party, and that the execution, delivery and performance of this Agreement by such party does not contravene or conflict with any provision of law or of its charter or bylaws or any agreement, instrument or order binding on such party.

Section 7.02 Expenses .

Except as otherwise provided in this Agreement or any other Transaction Document, each party will bear its own expenses in connection with the matters addressed herein.

Section 7.03 Entire Agreement .

This Agreement and the other Transaction Documents, including any related annexes, schedules and exhibits, as well as any other agreements and documents referred to herein and therein, will together constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and will supersede all prior negotiations, agreements and understandings of the parties of any nature, whether oral or written, with respect to such subject matter.

Section 7.04 Governing Law .

This Agreement is governed by and shall be construed in accordance with the laws of Ireland. The courts of Ireland are to have exclusive jurisdiction to settle any dispute, whether contractual or non-contractual, arising out of or in connection with this Agreement. Any proceeding, suit or action arising out of or in connection with this Agreement or the negotiation, existence, validity or enforceability of this Agreement (“ Proceedings ”) shall be brought only in the courts of Ireland. Each of the Companies waives (and agrees not to raise) any objection, on the ground of forum non conveniens or on any other ground, to the taking of Proceedings in the courts of Ireland. Each Party also agrees that a judgment against such party in Proceedings brought in shall be conclusive and binding upon such party and may be enforced in any other jurisdiction. Each of the Companies irrevocably submits and agrees to submit to the jurisdiction of the courts of Ireland.

Section 7.05 Notice .

All notices, requests, permissions, waivers and other communications hereunder will be in writing and will be deemed to have been duly given (i) five Business Days following sending by registered or certified mail, postage prepaid, (ii) when sent, if sent by facsimile; provided that the facsimile transmission is promptly confirmed by telephone, (iii) when

 

-16-


delivered, if delivered personally to the intended recipient, and (iv) one Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a party at the following address for such party:

 

If to Parent:                       

Elan Corporation, plc

Treasury Building

Lower Grand Canal Street

Dublin 2

Ireland

Tel.: +353 1 709 4000

Fax: +353 1 709 4713

Attention: William F. Daniel, Company Secretary

 

with a copy to (which shall not constitute notice):

 

A&L Goodbody

International Financial Services Centre

North Wall Quay

Dublin 1

Tel.: +353 1 649 2000

Fax: +353 1 649 2649

Attention: John Given/Darragh O’Dea

 

and

 

Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, NY 10281

USA

Tel.: +1 212 504 6000

Fax: + 212 504 6666

Attention: Christopher T. Cox

If to Prothena:   

Prothena Corporation plc

650 Gateway Boulevard

South San Francisco

CA 94080

U.S.A.

Tel.: +1 650-837-8550

Fax: + 2 650-837-8560

Attention: Dale Schenk, CEO

 

-17-


  

with a copy to (which shall not constitute notice):

 

Prothena Corporation plc

25-28 North Wall Quay

Dublin 1

Ireland

Tel.: +353 1 649 2000

Fax: +353 1 649 2649

Attention: John Given

or to such other address(es) as will be furnished in writing by any such party to the other party in accordance with the provisions of this Section 7.05. Any notice to Parent will be deemed notice to all members of the Parent Group and any notice to Prothena will be deemed notice to all members of the Prothena Group.

Section 7.06 Priority of Agreements .

If there is a conflict between any provision of this Agreement and a provision in another Transaction Document, the provision of this Agreement will control, unless specifically provided otherwise in this Agreement or in the applicable Transaction Document.

Section 7.07 Amendments and Waivers .

(a) This Agreement may be amended and any provision of this Agreement may be waived; provided that any such amendment or waiver will be binding upon a party only if such amendment or waiver is set forth in a writing executed by such party. No course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any party hereto under or by reason of this Agreement.

(b) No delay or failure in exercising any right, power or remedy hereunder will affect or operate as a waiver thereof; nor will any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that any party hereto would otherwise have. Any waiver, permit, consent or approval of any kind or character of any breach or default under this Agreement or any such waiver of any provision of this Agreement must satisfy the conditions set forth in this Section 7.07(b) and will be effective only to the extent in such writing specifically set forth.

Section 7.08 Termination .

This Agreement shall automatically terminate, without further action by any party hereto, upon the termination of the Demerger Agreement if such termination occurs prior to the Distribution. If terminated, no party will have any liability of any kind to the other parties or any other Person on account of the termination or otherwise with respect to this Agreement.

 

-18-


Section 7.09 No Third Party Beneficiaries .

Except as otherwise provided in the indemnification provisions contained herein, this Agreement is solely for the benefit of the parties hereto and does not confer on third parties (including any employees of any member of the Parent Group or the Prothena Group) any remedy, claim, reimbursement, claim of action or other right in addition to those existing without reference to this Agreement.

Section 7.10 Assignability .

No party will assign its rights or delegate its duties under this Agreement without the written consent of the other parties, except that any party may assign its rights or delegate its duties under this Agreement to an Affiliate; provided that such assigning party agrees in writing to be bound by the terms and conditions contained in this Agreement, and provided, further , that the assignment or delegation will not relieve any party of its indemnification obligations or obligations in the event of a breach of this Agreement. Except as provided in the preceding sentence, any attempted assignment or delegation will be void.

Section 7.11 Enforcement .

The parties agree that irreparable damage would occur to Parent and Prothena in the event that any provision of this Agreement were not performed in accordance with the terms hereof. The parties agree that Parent and Prothena shall be entitled to injunctive relief to prevent any breach of this Agreement and to enforce specifically the terms and provisions hereof, such remedy being in addition to any other remedy to which a party may be entitled at law or in equity.

Section 7.12 Survival .

All Sections of this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time (except to the extent any Sections expressly provide for an earlier date, in which case, as of such date).

Section 7.13 Construction .

The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Agreement. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. The use of the words “include” or “including” in this Agreement will be by way of example rather than by limitation. The use of the words “or,” “either” or “any” will not be exclusive. The parties have participated jointly in the negotiation and drafting of this Agreement, and the parties acknowledge that, in the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Except as otherwise expressly provided elsewhere in this Agreement or any other Transaction Document, any provision herein which contemplates the agreement, approval or consent of, or exercise of any right of, a party, such party may give or withhold such agreement, approval or consent, or exercise such right, in its sole and absolute discretion, the parties hereto hereby expressly disclaiming any implied duty of good faith and fair dealing or similar concept.

 

-19-


Section 7.14 Severability .

The parties agree that (i) the provisions of this Agreement shall be severable in the event that for any reason whatsoever any of the provisions hereof are invalid, void or otherwise unenforceable, (ii) any such invalid, void or otherwise unenforceable provisions shall be replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (iii) the remaining provisions shall remain valid and enforceable to the fullest extent permitted by Applicable Law.

Section 7.15 Counterparts .

This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party, the other parties will re-execute original forms thereof and deliver them to the requesting party. No party will raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature was transmitted or communicated through the use of facsimile machine or other electronic means as a defense to the formation of a Contract and each such party forever waives any such defense.

Section 7.16 Successors .

For the avoidance of doubt, for all purposes of this Agreement, a party shall be subject to all of the restrictions and obligations, and shall have all of the rights, of such party’s predecessor.

--

 

-20-


IN WITNESS whereof this Agreement has been duly executed as a deed by the parties to it on the date set out at the beginning of this Agreement.

 

GIVEN UNDER THE COMMON SEAL

of ELAN CORPORATION, PLC

in the presence of:

   
      /s/ Nigel Clerkin
      Signature of Authorised Signatory
     
      /s/ William F. Daniel
      Signature of Director/Secretary

GIVEN UNDER THE COMMON SEAL

of PROTHENA CORPORATION PLC

in the presence of:

   
      /s/ Nigel Clerkin
      Signature of Director
     
      /s/ William F. Daniel
      Signature of Director/Secretary

Exhibit 10.2

DATED 20 DECEMBER 2012

Elan Corporation Plc

and

Prothena Corporation Plc

 

 

TRANSITIONAL SERVICES AGREEMENT

 

 

Subject to Contract

A & L GOODBODY


Exhibit

CONTENTS

 

1.    INTERPRETATION    1
2.    SERVICES TO BE PROVIDED    5
3.    WARRANTIES    6
4.    PERSONNEL    6
5.    DURATION    6
6.    SERVICE FEES    6
7.    TRANSITIONAL SERVICES CHANGE MANAGEMENT    7
8.    INTELLECTUAL PROPERTY    7
9.    DATA PROTECTION    7
10.    TERMINATION    8
11.    EFFECT OF TERMINATION    9
12.    LIABILITY    9
13.    AUDIT ACCESS    9
14.    CONFIDENTIALITY    9
15.    FORCE MAJEURE    10
16.    ENTIRE AGREEMENT    10
17.    ASSIGNMENT    10
18.    SUB-CONTRACTING    10
19.    NO PARTNERSHIP    10
20.    VARIATION    10
21.    SEVERABILITY    11
22.    WAIVER    11
23.    EXPENSES    11
24.    NOTICES    11
25.    DISPUTE ESCALATION PROCEDURE    11
26.    NON SOLICITATION    12
27.    COUNTERPARTS    12
28.    GOVERNING LAW AND JURISDICTION    12

 

SCHEDULE 1 – Transitional Services

SCHEDULE 2 – Service Fees

SCHEDULE 3 – Transitional Services Committee

SCHEDULE 4 – Premises


THIS AGREEMENT is made the 20 day of December 2012 (the “ Effective Date ”).

BETWEEN:

 

  (1) Elan Corporation Plc, a public limited company incorporated in Ireland (registered number 30356) having its registered office is at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland (“Elan”);

 

  (2) Prothena Corporation Plc, a public limited company incorporated in Ireland (registered number 518146) having its registered office is at 25-28 North Wall Quay, Dublin 2 (“Prothena”)

(each a “ Party ” and together the “ Parties ”).

WHEREAS:

 

A. Elan entered into a demerger agreement with Prothena dated 8 November 2012 (the “ Demerger Agreement ”), pursuant to which the Prothena Business (as defined in the Demerger Agreement) will be separated from Elan and transferred to Prothena.

 

B. In accordance with the Demerger Agreement, Elan has agreed to provide to Prothena certain transition services for specified periods following Completion (as defined in the Demerger Agreement), as set forth in Part A of Schedule 1.

 

C. Elan desires to purchase from Prothena, and Prothena desires to provide to Elan certain transition services for specified periods following Completion as set forth in Part B of Schedule 1.

NOW IT IS HEREBY AGREED as follows:

 

1. INTERPRETATION

 

1.1. Definitions

In this Agreement the following terms shall have the meanings specified below:

Affiliate means, in relation to either party, any company which is for the time being a holding company of that party or a subsidiary of that party or of any such holding company (as defined in Section 155 of the Companies Act 1963 (as amended)).

Agreement means this agreement and the schedules hereto;

Applicable Law means any Irish, U.S. federal, state, local or other foreign statute, enactment, ordinance, order, regulation, guidance or other similar instrument (including building codes and local authority byelaws) which relate to the provision or receipt of the Transitional Services or otherwise relate to the performance of this Agreement;

Background Intellectual Property Rights means any Intellectual Property Rights owned by or licensed to either Party and used by that Party in the provision of the Transitional Services;

Breaching Party has the meaning set forth in clause 10.3;

Business Day means 9am to 5.30pm on any day that is not a Saturday or a Sunday or public holiday, on which the banks are generally open for business in Ireland and New York City, New York, United States;

Completion has the meaning given to it in the Demerger Agreement;

Computer Systems means the computer equipment, software, ancillary equipment, communications equipment, operating software, routers, hubs, servers, micro processors, firmware and any equipment or systems containing, controlled or affected by any of the foregoing and used by either Party in the supply of the Transitional Services;

 

1


Confidential Information means any information which might fairly be considered to be of a confidential nature including commercial, business, financial, technical, operational, administrative, marketing, economic or other information or data (including trade secrets, know-how, customer and supplier details, new products, prices, strategy, marketing, business opportunities and future plans) in whatever form supplied or received (whether in oral, written, magnetic, electronic, digital or any other form) relating to the business and/or the affairs of either Party which is directly or indirectly disclosed or made available in connection with this Agreement by either Party, or on either Party’s behalf, to the other Party and/or any of the other Party’s directors, officers, employees, advisers or consultants before or after the date of this Agreement;

Continuing Affiliate means any Affiliate of Elan that will continue to be an Affiliate of Elan following Completion;

Data Protection Law means the Data Protection Acts 1988 and 2003 or any other similar Applicable Law and where Data Controller, Data Processor and Personal Data or Processing are referred to in this Agreement they shall have the respective meanings set out in the Data Protection Law;

Demerger Agreement has the meaning given to it in the Recitals

Effective Date means the date of Completion;

Elan has the meaning set forth in the Recitals;

Elan Services Fees has the meaning given to it in Clause 6;

Elan Services means the services to be provided by Elan to Prothena under this Agreement as set out

in Part A of Schedule 1 (which for the avoidance of doubt include the IT Services).

Force Majeure means in relation to any Party, any circumstances beyond the reasonable control of that Party involving war, insurrection, riot, civil commotion, acts of terrorism, act of God, market closure (which is not in the ordinary course of business), fire, water damage, explosion, mechanical breakdown, any law, decree, regulation or order of any government or governmental body (including any court or tribunal), any material interruption in telecommunications, Internet or utilities services, in each case which is beyond the affected Party’s reasonable control and which actually prevents, hinders or delays such Party from performing its obligations under this Agreement;

Good Industry Practice means, in relation to any undertaking and any circumstances, the exercise of the skill, diligence, and prudence which would be expected from a reasonably skilled and experienced person engaged in the same type of undertaking in the same industry sector;

Initiating Party has the meaning given in clause 10.3;

Intellectual Property Right means any trade mark, service mark, trade name, mask work, invention, discoveries, concepts, ideas and improvements to existing technology, patent, patent application, trade secret, copyright, know-how, data, proprietary information, processes, procedure, protocol, techniques, designs, formulae, products, compounds, compositions, material, technologies, apparatus, devices, assays, screens, Internet domain names, trade dress and general intangibles of like nature (together with goodwill), customer lists, confidential information, licences, software, databases and compilations including any and all collections of data and all documentation thereof (including any registrations or applications for registration of any of the foregoing) all rights in or to any of the foregoing and any other similar type of proprietary intellectual property rights and “ Intellectual Property ” shall be construed accordingly;

IT Services means the IT services more particularly described in Part A of Schedule 1;

IT Services Agreement means any agreement to be entered into by Elan with a third party for the provision of the whole or part of the IT Services;

Nominated Representatives means the representative of each of the Parties for the purposes of this Agreement identified in Schedule 3;

 

2


Party has the meaning given in the Recitals;

Personal Data has the meaning given to it under the applicable Data Protection Law;

Personnel means those employees and other personnel of either Party, allocated by such Party to provide the Transitional Services or otherwise to be involved in the performance of this Agreement, including the Nominated Representatives;

Premises means the premises identified in Schedule 4;

Proceedings shall have the meaning given in clause 28.2;

Prothena Business has the meaning given to it in the Demerger Agreement;

Prothena Services Fees has the meaning given to it in clause 6;

Prothena Services means the services to be provided by Prothena and its Affiliates to Elan as set out in Part B of Schedule 1;

Provider means (i) Elan or its Affiliates, as applicable, with respect to the Elan Services and (ii) Prothena or its Affiliates, as applicable, with respect to the Prothena Services;

Service Fees means the fees to be paid for the Transitional Services pursuant to clause 6 as more particularly set out in Schedule 2;

Service Recipient means (i) Prothena or its Affiliates with respect to the Elan Services and (ii) Elan or any Continuing Affiliate with respect to the Prothena Services;

Service Tax or Service Taxes means sales, use, VAT (as defined below), ad volorem, transfer, recording, service, service use, and other similar taxes, fees, premiums, assessments or charges imposed or collected by any governmental entity or political subdivision thereof, together with any related interest and any penalties, additions to such tax or additional amounts imposed with respect thereto by such governmental entity or political subdivision;

Service Term means, in respect of each Transitional Service, the period from the date on which the Transitional Service is scheduled to commence and on which the Transitional Service (or part of a Transitional Service) is provided during the Term as set out in Schedule 1, or if earlier, the date on which the Transitional Service is terminated in accordance with Clause 10;

Transitional Services means either or both of the Elan Services and the Prothena Services, as the context so requires and “Transitional Service” shall be construed accordingly;

Transitional Services Commencement Date means the date of Completion;

Transitional Services Management Committee means the committee to be established by the Parties pursuant to clause 7;

Term has the meaning given in clause 5; and

VAT means Value Added Tax.

 

1.2. Interpretation Generally

 

  1.2.1. Any reference to any statute, statutory provision or to any order or regulation shall be construed as a reference to that statute, provision, order or regulation as extended, modified, replaced or re-enacted from time to time (whether before or after the date of this Agreement) and all statutory instruments, regulations and orders from time to time made thereunder or deriving validity therefrom (whether before or after the date of this Agreement);

 

  1.2.2. words denoting any gender include all genders and words denoting the singular include the plural and vice versa;

 

3


  1.2.3. all references to recitals, clauses, paragraphs, schedules and annexures are to recitals in, clauses and paragraphs of and schedules and annexures to this Agreement, unless specified otherwise;

 

  1.2.4. headings are for convenience only and shall not affect the interpretation of this Agreement;

 

  1.2.5. words such as “hereunder”, “hereto”, “hereof” and “herein” and other words commencing with “here” shall unless the context clearly indicates to the contrary refer to the whole of this Agreement and not to any particular section, clause or paragraph hereof;

 

  1.2.6. in construing this Agreement general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things and general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words and any reference to the word “include” or “including” is to be construed without limitation;

 

  1.2.7. the word “or” shall unless the context clearly indicates to the contrary be interpreted as “and/or”;

 

  1.2.8. any reference to “Agreement” or any other document or to any specified provision of this Agreement or any other document is to this Agreement, that document or that provision as in force for the time being and as amended from time to time in accordance with the terms of this Agreement or that document;

 

  1.2.9. any reference to a person shall be construed as a reference to any individual, firm, other party, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;

 

  1.2.10. any reference to a person includes his successors, personal representatives and permitted assigns;

 

  1.2.11. “writing” or any similar expression includes transmission by facsimile sent in accordance with clause 24 of this Agreement;

 

  1.2.12. any references to “EUR,” “€” or “euros” are to euros, the lawful currency of Ireland;

 

  1.2.13. any references to “USD,” “$” or “dollars” are to U.S. dollars, the lawful currency of the United States;

 

  1.2.14. if any action or duty to be taken or performed under any of the provisions of this Agreement would fall to be taken or performed on a day which is not a Business Day such action or duty shall be taken or performed on the Business Day next following such day;

 

  1.2.15. all references to time are references to Irish time;

 

  1.2.16. the contra proferentem rule of construction shall not apply in the interpretation of this Agreement; and

 

  1.2.17. for the avoidance of doubt, any reference to Ireland does not include Northern Ireland.

 

  1.2.18. Capitalized terms used but not defined herein shall have the meanings specified in the Demerger Agreement, as it may be amended from time to time.

 

1.3. Schedules

The contents of the schedules form an integral part of this Agreement and shall have as full effect as if they were incorporated in the body of this Agreement and the expressions “this Agreement” and “the Agreement” as used in any of the schedules shall mean this Agreement and any reference to “this Agreement” shall be deemed to include the schedules.

 

4


2. SERVICES TO BE PROVIDED

 

2.1. With effect from the Transitional Services Commencement Date and subject to clauses 10 and 2.7:

 

  2.1.1. Elan or its Affiliates shall provide or procure the provision of the Elan Services to Prothena and its Affiliates for each Service Term as set forth in Part A of Schedule 1; and

 

  2.1.2. Prothena or its Affiliates shall provide or procure the provision of the Prothena Services to Elan and any relevant Continuing Affiliates for the relevant Service Term as set forth in Part B of Schedule 1.

 

2.2. In performing its obligations under this Agreement, each party shall use reasonable endeavours to:

 

  2.2.1. provide the Transitional Services using commercially reasonable skill and judgment, in accordance with the policies and procedures of the Provider in place as of the date of Completion and, to the extent applicable, in a comparable manner and to a comparable level of service as the Service Recipient enjoyed during the twelve (12) month period preceding the Transitional Services Commencement Date and at all times in accordance with Applicable Law;

 

  2.2.2. maintain the necessary resources (human and technological) to provide the Transitional Services; and

 

  2.2.3. use reasonable endeavours to promptly obtain the authorisations, memberships, licences, approvals, consents or qualifications of any person as may be necessary for the performance of its obligations pursuant to this Agreement, including obtaining from third party providers all consents necessary to grant any sublicenses in connection with the performance of Transitional Services hereunder and maintain such authorisations, memberships, licences, approvals, consents and qualifications in full force and effect.

 

2.3 In the event that the consent of a third party provider, if required, is requested by the Provider and is not obtained within thirty (30) days following Completion, the Provider shall notify the Service Recipient and shall cooperate with the Service Recipient to provide an alternate means of providing the Transitional Services affected by such failure to obtain consent, such alternative to be reasonably satisfactory to the Parties. In the event that such an alternative is required and agreed upon by the Parties, the Provider shall provide the Transitional Services in such alternative manner and the Service Recipient shall bear any expenses incurred in the provision of such Transitional Services through such alternative means.

 

2.4 If the Parties do not elect such an alternative plan, either Party may terminate any such affected Transitional Services upon ten (10) days’ prior written notice. The Service Recipient shall be responsible for any costs or expenses incurred in connection with obtaining any consents, approvals or authorizations described in clause 2.2.3 or 2.3.

 

2.5 The Provider shall not be in breach of this Agreement for a failure, delay or other problem in connection with the provision of (or the procurement of the provision of) the Transitional Services (or part thereof) to the extent the Provider’s inability to perform the Transitional Services is directly attributable to a failure by the Service Recipient. Where a failure by the Service Recipient causes a delay in the provision of the Transitional Services, the time allowed in respect of the provision of such delayed Transitional Services shall be extended by the amount of time reasonably required to re-schedule events or steps that would otherwise have occurred, but for, or which were directly impacted as a result of, such failure by the Service Recipient.

 

2.6 Notwithstanding anything to the contrary contained in this Agreement (including the accompanying schedules), no Provider (or any of its Personnel or, if applicable, subcontractors) shall make any substantive business decisions with respect to the Service Recipient in performing Transitional Services. Each provision of this Agreement (including the accompanying schedules) shall be interpreted in a manner consistent with this clause 2.6.

 

2.7

Elan shall provide or procure the provision of the IT Services to Prothena and its Affiliates until (i) 30 th  June 2013, (ii) until the date of commencement of the IT Services Agreement or (iii) until the IT Services are terminated in accordance with Clause 10, whichever date is the earlier.

 

5


3. WARRANTIES

 

3.1. Each Party warrants to the other Party that it has the corporate power and capacity and all necessary licences, permits and consents to enter into this Agreement and to perform its obligations under this Agreement.

 

3.2. Except to the extent set out in this Agreement, all representations, warranties, conditions and other terms express or implied by statute or common law are, to the fullest extent permitted by law, excluded from this Agreement.

 

4. PERSONNEL

 

4.1. Each Party shall co-operate as far as is reasonably practicable in providing any information or assistance reasonably requested by the other Party, provided that such information is reasonably necessary in connection with the Transitional Services, and shall ensure that such of its Personnel whose decisions and input are necessary for the provision of the Transitional Services are reasonably available to the other Party for consultation and negotiation in relation to any matter connected with this Agreement and the provision of the Transitional Services.

 

4.2. Each Party shall allow or procure reasonable access to any Premises from which the Transitional Services are provided to suitable qualified Personnel of the other Party, and each Party shall ensure that all of its Personnel allowed access pursuant to the provisions of this clause comply with all reasonable safety, confidentiality and security requirements notified to it from time to time by the Party allowing access.

 

4.3. It is acknowledged by the Parties that this Agreement constitutes a contract for the provision of services and not a contract of employment. Accordingly, during the Term of this Agreement, each Party shall at all times retain overall control of its Personnel who shall perform the relevant Transitional Services at the direction of such Party; and such Party shall be solely responsible for the payment of all remuneration and benefits of any kind (including all salaries, holiday pay, tax, health insurance, pay related social insurance payments and contributions to pension arrangements) and shall make all proper deductions from the remuneration that it pays to its Personnel and sub-contractors.

 

5. DURATION

This Agreement shall come into effect on the Transitional Services Commencement Date and unless earlier terminated pursuant to clause 10, shall continue in full force for each Service Term set forth in part A or part B of Schedule 1, or until 31 December 2013 (whichever date is the earlier) unless terminated prior to the end of such period in accordance with this Agreement (“ Term ”).

 

6. SERVICE FEES

 

6.1. As compensation for the Transitional Services to be provided hereunder, Prothena shall pay to Elan (or a nominated Affiliate) a fee for each Elan Service (the “ Elan Services Fees ”) and Elan shall pay to Prothena (or a nominated Affiliate) a fee for the Prothena Services (the “ Prothena Services Fees ”) in each case in the amount and in accordance with Schedule 2 (which, for the avoidance of doubt, reflects an arm’s length cost-plus standard) and including, as applicable, any fees for any Elan Services or Prothena Services provided by third party providers and invoiced to the Service Recipient at cost (such fees, “ Service Fees ”).

 

6.2. Unless otherwise stated (including in the relevant Schedules) all amounts payable under this Agreement shall be invoiced by the Provider (or its nominated Affiliate) monthly in arrears and shall be due and payable in U.S. dollars within thirty (30) days after the receipt of such invoice.

 

6.3. In addition to the amounts described in clause 6.1, each Service Recipient shall pay, and hold its Provider harmless against, any Service Taxes applicable to the provision of the Transitional Services, which, for the avoidance of doubt, will not include any income or franchise taxes. In connection with the foregoing, all amounts stated to be payable under this Agreement are stated as exclusive of any VAT chargeable on them, which shall be paid by the paying Party at the rate and in the manner prescribed in law from time to time.

 

6.4. If the Service Recipient receives an invoice from the Provider which it disputes in good faith, the Service Recipient shall notify the Provider in writing of such dispute as soon as reasonably practicable and the Service Recipient may withhold payment of such sums as are in dispute pending resolution of such dispute.

 

6


6.5. Each party shall be entitled to receive interest on any payment not made to it when properly due to it pursuant to the terms of this Agreement, calculated from day to day at a rate per annum equal to 2% above the providing base rate of the European Central Bank and payable from the day after date on which payment was due up to and including the date of payment.

 

6.6. All Service Fees payable under this Agreement shall become due immediately on termination (in whole or in part) or expiry of this Agreement.

 

7. TRANSITIONAL SERVICES CHANGE MANAGEMENT

 

7.1. The Parties shall establish, operate and maintain the Transitional Services Management Committee during the Term of this Agreement and hereby appoint the respective Nominated Representatives identified in Schedule 3 to serve on such Transitional Services Management Committee.

 

7.2. Without prejudice to the other provisions of this Agreement, the Nominated Representatives of each Party shall meet every month in person or by telephone until termination or expiry of this Agreement to discuss the performance of the Transitional Services.

 

7.3. The Nominated Representatives shall be responsible for the management of all matters relating to the provision of the Transitional Services and for liaising with each other to ensure the smooth operation of this Agreement and the proper discharge by each Party of its respective obligations.

 

7.4. In the event that either Party’s Nominated Representative, shall for any reason, cease to be engaged in the Transitional Services, such Party shall take all reasonable steps to arrange that a suitably qualified replacement is appointed as soon as is reasonably practical, that there is a reasonable handover period, that the adverse effects of a change of Nominated Representative are minimised and where reasonably practicable, that the other Party is notified in writing in advance of the change.

 

7.5. All changes to the Transitional Services shall be managed and agreed in writing between the Nominated Representatives.

 

8. INTELLECTUAL PROPERTY

 

8.1 Save as expressly provided for in this Agreement, no party shall be granted any proprietary or other interest in respect of the Intellectual Property Rights of any other party and, for the avoidance of doubt, nothing in this Agreement shall transfer or grant to Prothena any right, title or interest in or to any trademarks or other Intellectual Property Rights owned or used by Elan.

 

8.2 The Provider hereby grants, or shall procure the grant of, to the Service Recipient a non-exclusive, non-transferable, royalty-free licence (without the right to sub-licence) to use any Intellectual Property Rights owned by the Provider (or licensed to the Provider) for the Term solely to the extent necessary for the receipt of the Transitional Services by the Service Recipient in accordance with and subject to the terms of this Agreement and each such licence shall terminate automatically on cessation of the provision of the relevant Transitional Service to which it relates.

 

8.3 The Service Provider hereby grants to the Provider a non-exclusive, non-transferable, royalty-free licence (without the right to sub-licence) to use any Intellectual Property Rights owned by the Service Recipient (or licensed to the Service Recipient) for the Term solely to the extent necessary for the provision of the Transitional Services by the Provider under this Agreement and each such licence shall terminate automatically on cessation of the provision of the relevant Transitional Service to which it relates.

 

9. DATA PROTECTION

 

9.1 With respect to the Parties’ rights and obligations under this Agreement in relation to Personal Data, the Parties agree that except to the extent set out in this clause 9, they each shall remain solely responsible for determining the contents and use of their Personal Data.

 

9.2 To the extent that the provision of Transitional Services involves the processing of Personal Data by one Party (the “ Data Processor ”) on behalf of the other (the “ Data Controller ”), the Data Processor agrees that:

 

7


  9.1.1. it shall only process Personal Data in accordance with the instructions of the Data Controller and solely as strictly necessary for the performance of its obligations under this Agreement;

 

  9.1.2. it shall implement and maintain such technical and organisational security measures as are required to comply with the data security obligations in Data Protection Law;

 

  9.1.3. the Data Controller (or its authorised representative(s)) shall be entitled at its own cost, at reasonable times and on reasonable notice, to audit the technical and organisational security measures adopted by the Processor to ensure that such measures comply with the data security obligations in Data Protection Law; and

 

  9.1.4. the Data Processor shall report any incident which gives rise to a risk of unauthorised disclosure, loss, destruction or alteration of such personal data to the Controller immediately upon becoming aware of such an incident.

 

9.2. In connection with the Parties’ access to the facilities and Computer Systems of the other:

 

  9.2.1. each Party agrees that it will comply, and will ensure that its respective employees, agents and suppliers comply, with its obligations as required under Data Protection Law; and

 

  9.2.2. each Party agrees that it will use best endeavours to procure that its employees, agents and service providers only access and use relevant Premises, facilities, systems and data as required for the performance of their allocated responsibilities and in accordance with such policies and procedures in force from time to time which have been notified to it in writing with respect to access to and use of the other Party’s Premises including, inter alia, security policies and health and safety policies.

 

10. TERMINATION

 

10.1. Either Party may terminate this Agreement at any time forthwith on written notice if a receiver, examiner or administrator is appointed of the whole or any part of the other Party’s assets or the other Party is struck off the Register of Companies in the jurisdiction where it was incorporated or an order is made or a resolution passed for winding up the other Party (unless such order or resolution (i) is part of a voluntary scheme for the reconstruction or amalgamation of the Party as a solvent corporation and the resulting corporation, if a different legal person, undertakes to be bound by this Agreement or (ii) is discharged within twenty (20) Business Days).

 

10.2. The Service Recipient may terminate this Agreement with respect to any Transitional Service at any time prior to the last day of the Service Term for such Transitional Service (as set forth on Schedule 1) upon fifteen (15) days’ written notice to the Provider.

 

10.3 A Party (the “ Initiating Party ”) may terminate this Agreement, only to the extent that it relates to any particular Transitional Service, with immediate effect by written notice to the other Party (the “ Breaching Party ”) if the Breaching Party is in material breach of this Agreement and, if the breach is capable of remedy, fails to remedy the breach within twenty (20) Business Days starting on the day after receipt of written notice from the Initiating Party giving full details of the breach and requiring the Breaching Party to remedy the breach and stating that a failure to remedy the breach may give rise to termination under clause 10.3 of this Agreement.

 

10.4 Termination of this Agreement shall not prejudice any rights of either Party which may have arisen on or before the date of termination, including any rights to payment of Service Fees pursuant to clause 6.

 

10.5 Any waiver by either Party of a breach of any provision of this Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision.

 

10.6 Upon the termination of this Agreement for any reason, subject as otherwise provided in this Agreement to any rights or obligations which have accrued prior to termination, neither of the Parties shall have any further obligation to the other under this Agreement.

 

10.7 Clauses 8, 9, 10.4, 10.5, 10.6, 11, 12, 13, 14, 24, 25 and 28 (inclusive) shall survive expiry or termination (for whatever reason) of this Agreement.

 

8


11. EFFECT OF TERMINATION

 

11.1 Upon any termination or expiry of this Agreement (howsoever occasioned) each Party may require the other Party to return or delete, or to deliver up all or any off-line storage and security and copies of, the requesting Party’s Confidential Information, Background Intellectual Property Rights and Personal Data then in the other Party’s possession or control (excluding documents stored in either party’s back up electronic archives).

 

11.2 The provisions of this clause 11 shall apply mutatis mutandis to any partial termination of this Agreement.

 

12. LIABILITY

 

12.1. Nothing in this Agreement shall limit the liability of either party for:

 

  12.1.1. fraud or fraudulent misrepresentation;

 

  12.1.2. for death or personal injury caused by its negligence or the negligence of its employees, contractors or agents;

 

  12.1.3. any liability which cannot be excluded or limited by law.

 

12.2 Subject to Clause 12.1, no party shall be liable to another party for any indirect or consequential loss or damage even if foreseeable or if such party has been advised of the possibility of such losses.

 

12.3 Subject to Clause 12.1 the total liability of either party arising under or in connection with this Agreement, whether in tort (including negligence), contract, representation (other than fraudulent misrepresentations) or otherwise or for loss (whether direct, indirect or consequential) of business, profits, use, revenue, data, anticipated savings or goodwill shall be limited to USD$500,000.

 

12.4 Neither party shall be liable for any failure to provide, or for any delay in the provision of, any of the Transitional Services to the extent that such failure or delay is directly caused or is contributed to directly by any failure of a third party service provider retained directly by the Provider to provide an element of the Transitional Services.

 

13. AUDIT ACCESS

 

13.1. Each Party shall keep or cause to be kept full and accurate records (the “ Records ”) existing or generated as part of the Transitional Services performed in connection with this Agreement in accordance with Applicable Law and regulation and consistent with Good Industry Practice. Such Records shall be kept for a period of seven (7) years from the date of their creation, and shall be made available to the other Party promptly on request in such format as may be reasonably requested at the requesting Party’s cost.

 

13.2. Each Party shall grant to the other Party, any internal, external and statutory auditors and/or regulators of the other Party and their respective authorised agents the right of reasonable access to the Records and any sites and materials on reasonable notice and shall provide all reasonable assistance at all times for the purposes of carrying out an audit of the other Party’s compliance with this Agreement. Each Party will give and procure such assistance as may be necessary for the other Party, their auditors and regulators, to understand any such information.

 

14. CONFIDENTIALITY

 

14.1. Any Confidential Information of either Party provided to or accessible by the other Party in connection herewith, regardless of form, shall be received and held in confidence and used solely for purposes relating to this Agreement.

 

14.2. “Confidential Information” as defined herein does not include any information (i) lawfully received by the receiving Party from another source free of restriction and without breach of this Agreement, (ii) that becomes generally available to the public without breach of this Agreement, or (iii) known to the receiving Party at the time of disclosure free from any confidentiality obligations (including existing confidentiality obligations to the other Party). Each Party shall be fully responsible for breaches of its obligations under this clause 14 by its agents, employees, contractors or subcontractors.

 

9


14.3. Nothing contained in this clause 14 shall prohibit any Party from disclosing, or permitting the disclosure of, Confidential Information if and only to the extent that such Party is compelled to disclose such Confidential Information by judicial or administrative process or by other requirements of Applicable Law.

 

14.4. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made as described in the preceding sentence, the Party receiving such demand or request shall, unless prohibited by Applicable Law, promptly notify the other Party in writing of the existence of such demand or request and shall provide such Party with a reasonable opportunity to seek an appropriate protective order or other remedy at such Party’s expense. In the event that such appropriate protective order or other remedy is not obtained or is not sought, the Party receiving such demand or request shall furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed. The provisions of this clause 14.4 do not apply to any legal proceedings between the Parties to this Agreement.

 

15. FORCE MAJEURE

 

15.1. If any Party is affected by Force Majeure, it shall promptly notify the other Party of the nature and extent of the circumstances in question.

 

15.2. Provided that the Party affected by Force Majeure continues to use all reasonable endeavours to perform its obligations under this Agreement, such Party shall not be deemed to be in breach of this Agreement, or otherwise be liable to the other Party, for any delay in performance or other non-performance of any of its obligations under this Agreement to the extent that the delay or non-performance is due to any Force Majeure of which it has notified the other Party, and the time for performance of that obligation shall be extended accordingly.

 

16. ENTIRE AGREEMENT

 

16.1. This Agreement set out the entire agreement and understanding between the Parties in respect of the provision of Transitional Services and, save to the extent there has been a fraudulent misrepresentation, supersedes all previous agreements, arrangements, representations and understandings between the Parties, whether written or oral, relating to the provision of Transitional Services, which shall cease to have any further force or effect.

 

17. ASSIGNMENT

 

17.1. Neither Party may assign or otherwise transfer its rights or obligations under this Agreement without the prior written consent of the other Party.

 

18. SUB-CONTRACTING

The Provider reserves the right to use sub-contractors to assist it in the provision of the Transitional Services as the Provider deems appropriate.

 

19. NO PARTNERSHIP

Nothing in this Agreement shall create, or be deemed to create, a partnership between the Parties. In providing and/or procuring the provision of the Transitional Services, the Parties shall at all times be independent contractors.

 

20. VARIATION

This Agreement may not be modified except by an instrument in writing signed by the duly authorised representatives of both Parties.

 

10


21. SEVERABILITY

If any provision of this Agreement is held by any court or other competent authority to be void or unenforceable in whole or in part, the other provisions of this Agreement and the remainder of the affected provisions shall continue to be valid. The Parties shall then use all reasonable endeavours to replace the void or unenforceable provision with a valid and enforceable substitute provision, the effect of which is as close as possible to the intended effect of the void or unenforceable provision.

 

22. WAIVER

Either Party may (a) extend the time for the performance of any of the obligations or other acts of the other Party, (b) waive any inaccuracies in the warranties contained herein or in any document delivered pursuant to this Agreement or (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. Any failure to assert, or delay in the assertion of, rights under this Agreement shall not constitute a waiver of those rights or of any other rights under this Agreement.

 

23. EXPENSES

Except as otherwise provided in this Agreement, the Parties shall bear their respective direct and indirect costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby.

 

24. NOTICES

 

24.1.

Any notice or other communication to be given by one Party to the other Party under, or in connection with, this Agreement shall be in writing and signed by or on behalf of the Party giving it. It shall be served by sending it by fax to the number set out in Schedule 3, or delivering it by hand, or sending it by pre-paid recorded delivery, special delivery or registered post, to the address set out in Schedule 3, and in each case marked for the attention of the relevant Party set out in Schedule 3 (or as otherwise notified from time to time in accordance with the provisions of this clause). Any notice is effective when delivered. A notice given by post shall be deemed (if not proved to have been delivered earlier) to have been duly given on the third (3 rd ) day after posting.

 

24.2. A Party may notify the other Parties to this Agreement of a change to its name, relevant addressee, address or fax number for the purposes of this clause, provided that such notice shall only be effective on:

 

  24.2.1. the date specified in the notice as the date on which the change is to take place; or

 

  24.2.2. if no date is specified or the date specified is less than five (5) Business Days after the date on which the notice is received, the date falling five (5) Business Days after notice of any change has been received.

 

25. DISPUTE ESCALATION PROCEDURE

 

25.1. Where at any point during the Term of this Agreement any matter relating to this Agreement cannot be agreed by the Parties, it shall be escalated as follows:

 

  25.1.1. the matter shall be referred as soon as practicable to the Nominated Representative for resolution; and

 

  25.1.2. if the matter has not been resolved within ten (10) Business Days (or such longer period as may be agreed in writing by the Parties) of being referred to the Nominated Representative or if the Nominated Representative determine it is incapable of being resolved at that level, then the matter shall be immediately referred to the Chief Executive Officer of Prothena and the Chief Executive Officer of Elan; and

 

  25.1.3. if after the expiry of 30 Business Days from the time the matter in dispute was referred to the CEO of each of Elan and Prothena the matter remains unresolved, the Parties shall refer the matter to non-binding mediation in accordance with the procedure set out in clause 21.3.1 of the Demerger Agreement.

 

  25.1.4. in the event that:-

 

  (1) having been so requested, the mediation does not commence within 20 Business Days of the request for mediation; or

 

11


  (2) a binding settlement in writing is not reached within a period of 60 Business Days after the delivery of a written request for mediation;

 

  25.1.5. and, in any such case, the dispute or difference referred to in this clause 25 remains unresolved, the Parties (or the relevant one of them) shall then be entitled to instigate legal proceedings

 

25.2. Any joint decision as to a resolution at any stage in the above process shall be recorded in writing and signed on behalf of each Party and shall be final and binding on the Parties.

 

26. NON SOLICITATION

The parties will comply with their non solicitation obligations at clause 17 of the Demerger Agreement.

 

27. COUNTERPARTS

This Agreement may be executed in any number of counterparts and by the Parties to it on separate counterparts, each of which is an original but all of which together constitute one and the same instrument. This Agreement shall be of no effect unless and until each Party has executed at least one counterpart.

 

28. GOVERNING LAW AND JURISDICTION

 

28.1. This Agreement shall be governed by and construed in accordance with the laws of Ireland.

 

28.2. Subject to the provisions of clause 25, each of the Parties irrevocably agrees that the courts of Ireland are to have non-exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement and, for such purposes, irrevocably submits to the non-exclusive jurisdiction of such courts. Any proceeding, suit or action arising out of or in connection with this Agreement (the “ Proceedings ”) may therefore be brought in the courts of Ireland.

 

28.3. Each of the Parties irrevocably waives any objection to Proceedings in the courts referred to in clause 28.2 on the grounds of venue or on the grounds of forum non conveniens.

 

28.4. The submission to the non-exclusive jurisdiction of the courts referred to in clause 28.2 shall not (and shall not be construed so as to) limit the right of the Parties to take Proceedings against the other Party in any other court of competent jurisdiction, nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not) if and to the extent permitted by applicable law and subject to the provisions of clause 25.

 

12


IN WITNESS whereof this Agreement has been duly executed on the date shown at the beginning of this Agreement.

SIGNED for and on behalf

of ELAN CORPORATION PLC

by

 

  /s/ William F. Daniel
  (Signature)

in the presence of:

Signature of Witness: /s/ Kevin Dalton                                

Name of Witness: Kevin Dalton

Address of Witness: IFSC, Dublin

Occupation of Witness: Paralegal

 

13


SIGNED for and on behalf

of PROTHENA CORPORATION PLC

by

in the presence of:

 

  /s/ William F. Daniel
  William F. Daniel (Director)

 

Signature of Witness:

   /s/ Conor McEneaney   

Name of Witness:

   /s/ Conor McEneaney   

Address of Witness:

   IFSC, Dublin   

Occupation of Witness:

   Trainee Solicitor   

 

14


SCHEDULE 1

Transitional Services

The following categories of services will be provided:

Part A—Elan Services

The Elan Services shall comprise the following:

 

Elan Service

  

Description of Services

  

Date Service
Term

ends

  

Personnel for provision
of the Elan Services

CMC / QA

        
   Chemistry, Manufacturing and Control Project Management for all Prothena Programs. Managing processes with Boehringer Ingelheim on three projects: NEOD001, NEOD002, MCAM    29 March 2013    Gerry Murphy
   Packaging and Labling Management for all Prothena Programs including NEOD001, NEOD002, MCAM    28 June 2013    Phil Chou
   Bio Ananlytical Management for all Prothena Programs including NEOD001, NEOD002, MCAM    28 June 2013    Holly Lin
   Quality Assurance Management for all Prothena Programs including NEOD001, NEOD002, MCAM    1 April 2013    Patrick Smith
   Chemistry, Manufacturing and Control Project Management for all Prothena Programs including NEOD001, NEOD002, MCAM    1 March 2013    David Bruton
   Chemistry, Manufacturing and Control Regulatory Management for all Prothena Programs including NEOD001, NEOD002, MCAM    1 April 2013    Karen Quigley / Amy Smith

Information Services

        

 

15


   Provide laboratory notebook type services    1 March 2013    Cary Cochrell

Facilities

        
   Environmental Health & Safety Management for Prothena    1 April 2013    David Meyer
   Security Management for Prothena    26 April 2013    Alex Sanchez
   Procurement Management for Prothena    26 April 2013    Jim Latimer

Company Secretary

        
   Secretarial and Corporate Support for Prothena’s Irish Companies (Neotope Biosciences Ltd, Onclave Therapeutics Ltd and Prothena plc)    28 June 2013    Liam Daniel
   These services shall not include acting as a company secretary, director or officer for any of Prothena companies or Affiliates (including Neotope Biosciences Ltd., Onclave Therapeutics Ltd and Prothena Plc) or acting as an authorised signatory or providing a registered office for any of the Prothena companies or Affiliates.      

Finance

        
   External financial reporting services including assistance with SEC external reporting filing obligations for year end 2012    31 March 2013    Darragh Lyons
   Accounts payable services - provision of temporary accounts payable services as required    28 February 2013    Dan Hensley
   Irish tax transition assistance to Prothena finance team - Irish tax compliance and tax registration assistance and general Irish tax advice    31 March 2013    Sean Murphy
   SOX / Internal Audit services - advisory / consulting services, including initial filing setup    31 March 2013    Edgar Trinidad / Sandy Alipio
   Assistance with opening bank accounts    31 March 2013    David Egan

 

16


Legal

        
   Oversight of outside IP and corporate counsel, assistance/ guidance on IP, transactional, regulatory, compliance and corporate matters.    31 December 2012    Nina Ashton
   Stock Administration Training for Prothena    31 March 2013    Liz Fitzgerald
   Assistance with legal obligations associated with the recent formation of Prothena Biosciences Inc.    31 March 2013    John Donahue (Legal 5%, HR 10%)
      31 March 2013    Diana King
   Ensure transition of appropriate employee data/information from Elan to Prothena; assistance/guidance on select employee relations and employment law topics; other misc. topics, if needed    31 March 2013    Mike Feinman

Compliance

        
   Assist in the setting up of Compliance Management for Prothena. Assist in the day-to-day operations of the Compliance Program    31 March 2013    Fabiana Lacerca-Allen

HR

        
   Ensure appropriate/smooth transition of year-end 2012 compensation process; provide access to any 2013 compensation surveys (to extent it already has access); HRIS topics related to compensation (e.g., data requirements, modeling approach); other misc. compensation topics    31 March 2013    Tara Cassidy
   Ensure appropriate/smooth transition to 2013 Prothena benefits platform; assistance to deal with immediate needs @ plan-year beginning; HRIS topics related to benefits (e.g., file feeds to carriers); other misc. benefits topics    31 March 2013    Laura Klenske

 

17


External Communications

   Assist Prothena to establish its investor relation function, including identification and initial management of an external vendor to conduct relations on behalf of Prothena    31 December 2012    Anita Kawatra

Other

   Continue to support Prothena’s Research initiatives    31 December 2012    Peter Seubert
   Oversight of operations including facilities, IT, compliance and HR    11 January 2013    Johannes Roebers

IT Services

  

•    Helpdesk Support

 

•    IT Procurement support

 

•    Client Software Installations and Support

 

•    Client Hardware Break/Fix Support

 

•    Mobile Device Management

 

•    User Provisioning /Deactivation

 

•    Email Management

 

•    Application User Account Management

 

•    Fixed Line Telephony, and Voicemail support

 

•    File and Print Server management

 

•    Audio Conference Support

 

•    Telecom Support

   Service Term ends in accordance with clause 2.7   

 

18


  

•    Patch Management

•    Mobility Services

•    VPN Remote access

•    Data Centre Management

•    Provision of IT security Management

•    Action vulnerability notifications on IT infrastructure.

•    Manage service to minimize the impact on business operations after an IT Security incident has occurred.

•    IT Compliance including SOX management

•    Lab Systems Support

•    Back up & Recovery Management

•    Lab System Recovery Support

•    Network and Firewall Management,

•    Local Area Network Management

•    Server Management

•    Storage Management

•    Infrastructure Backups

•    ERP Support

•    Domain Registrations and Management

•    Technical Website Management

•    IT Vendor Contract management

     

 

19


Part B—Prothena Services

 

Prothena Service

  

Description of Services

   Date Service Term
ends
    

Personnel for the
provision of the Prothena
Services

Finance

   Provision of clinical costing / financial modelling services      31 March 2013       Randy Fawcett

Tysabri Services

  

Working with Elan on ongoing studies for VLA4 antagonists including:

-CIDP

-Spinal Cord Injury

-Other similar studies

Providing Elan with the assistance necessary to connect with the right laboratories for ongoing VLA4 antagonist studies.

Working with Elan on Tysabri risk stratification

Working with Elan on PML issues

Finalizing discussion papers with BIIB on risk stratification and PML biology

Working with Elan medical affairs on educational programs both internally and externally.

Providing assistance with the history of Tysabri from a research and clinical development perspective

    
 
31 December
2013
  
  
  

 

20


Elan Publication Review

   At the request of Elan / Guriq Basi; Gene Kinney / Prothena will assist Guriq Basi / Elan in reviewing proposed Elan publications related to work done at Elan prior to Completion. Such assistance shall not require a time commitment of in excess of five percent of any work day of Gene Kinney and shall end no later than June 30, 2013    30 June 2013    Gene Kinney

 

21


SCHEDULE 2

Service Fees

1.1 The Elan Services Fees will comprise:

 

1.1.1 a charge per full time equivalent (“Full Time Equivalent” or “FTE”) allocated by Elan to the provision of the Elan Services (excluding the IT Services, which are addressed below) (plus a mark up of 40% to cover the fully loaded cost (including overheads) and reflect an arm’s length cost-plus standard). The FTE shall be calculated on the basis of the number of Elan staff or contractors supporting the provision of the Elan Services in a particular month, and the portion of time dedicated by them to the provision of the Elan Services. The FTE shall be calculated by using a rate of USD$250,000 per annum (before mark up of 40%) per employee allocated by Elan to provide the Elan Services who are in Elan’s staff wage bands 1-5. A rate of USD$400,000 per annum (before mark up of 40%) shall apply for any employee allocated by Elan to provide the Elan Services who are in Elan’s staff wage band 6 and above.

 

1.1.2 a fixed monthly charge of USD$75,000 (which includes a mark up) in respect of the IT Services for so long as such services are provided in accordance with clause 2.7 of this Agreement, which, for the avoidance of doubt, reflects and arm’s length cost-plus standard.

1.2 The Prothena Services Fees will comprise:

 

1.2.1 a charge per full time equivalent (“Full Time Equivalent” or “FTE”) allocated by Prothena to the provision of the Prothena Services (plus a mark up of 40% to cover the fully loaded cost (including overheads) and reflect an arm’s length cost-plus standard). The FTE shall be calculated on the basis of the number of Prothena staff or contractors supporting the provision of the Prothena Services in a particular month, and the portion of time dedicated by them to the provision of the Prothena Services. The FTE shall be calculated by using a rate of USD$250,000 per annum (before the mark up of 40%) for any employee allocated by Prothena to provide the Prothena Services who was last in Elan’s staff wage bands 1-5 prior to Completion. A rate of USD$400,000 per annum (before mark up of 40%) shall apply for any employee allocated by Prothena to provide the Prothena Services who was last in Elan’s staff wage band 6 prior to Completion. If an employee is used by Prothena to provide the Prothena Services who was not employed by Elan or Prothena or an Affiliate in the 12 months prior to Completion then the rate for that employee shall be determined by using (i) a rate of USD$250,000 per annum (before the mark up of 40%) if that employee is in Prothena staff wage tier 4-5 or (ii) a rate of USD$400,000 per annum (before mark up of 40%) if that employee is in Prothena staff wage tier 1-3.

 

1.2.2 a fixed monthly charge of USD$6,000 (which includes a mark up) in respect of the Tysabri services for so long as such services are provided under this Agreement to account for use of lab space and capital equipment for any month in which Elan Employees use Prothena lab space or Tysabri samples are analyzed using Prothena equipment.

 

2. The Provider shall ensure that its payroll system shall be structured so that the payroll costs in respect of FTE’s engaged in the provision of the Transitional Services it is providing shall be separately identifiable and capable of allocation so as to facilitate the calculation of the Service Fees in accordance with this Schedule 2.

 

3. During the Term and at the start of each calendar month, the Provider shall deliver to Service Recipient an estimate which the parties will agree as the estimate of resources and the Provider’s staff or contractors which will be required for the provision of its Transitional Services in that month. The estimate shall state the amount of Service Fees it is estimated will be due in respect of the Provider’s Transitional Services for the relevant period.

 

22


4. At the end of each calendar month, the Provider shall provide the Service Recipient with a report detailing the services provided, and the categories and line items under which its Service Fees have been accrued, in respect of that monthly period (the “Monthly Report” ) which shall include the FTE allocation.

 

5. The Provider shall issue an invoice for the Service Fees detailing the amount due in respect of its Transitional Services respectively for the relevant period. Where costs in Euro have been incurred by the Provider in the relevant period the parties agree to use of an average of the exchange rate between the U.S. dollar and Euro over the relevant period which shall then be reflected in the monthly invoice in U.S. dollars for that period.

 

6. All Service Fees shall be subject to increase or decrease (by way of reconciliation in subsequent invoices) to the extent such increases or decreases are provided for by Schedule 2.

 

7. Any disputes in relation to the Service Fees shall be dealt with in accordance with Clause 25.

The following is an illustrative table showing how the Service Fees will be calculated each month:

Elan Services to Prothena

 

Name / Department

   Rate      % time charged to
Prothena for relevant
month
    Monthly Cost  
                  (Excluding uplift
of 40%)
 

CMC / QA

       

Gerry Murphy

   $

$

250,000 per annum

20,833 per month

  

  

     100   $ 20,833   
       

 

 

 

Legal

       

Nina Ashton

   $

$

400,000 per annum

33,333 per month

  

  

     40   $ 13,333   
       

 

 

 

IT Services

        Not applicable      $ 75,000   

Total cost per month (excluding IT services):

        $ 34,166   

Plus 40 % uplift:

        $ 47,832   

Total cost per month (including uplift and IT services):

        $ 122,832   

 

23


Prothena Services to Elan

 

Name / Department

   Rate      % time charged to
Prothena for relevant
month
    Monthly Cost  
                 

(Excluding

uplift of 40%)

 

Finance

       

Randy Fawcett

   $

$

250,000 per annum

20,833 per month

  

  

     2.5   $ 521   

Total Cost per month:

        $ 521   

Plus 40% uplift:

        $ 729   

Total cost per month:

        $ 729   

 

24


SCHEDULE 3

Transitional Services Committee

Nominated Representative

Elan Nominated Representative

 

Name & Contact Details

Name:

Address:

Telephone:

Fax:

E-mail:

 

Mary Sheahan

Elan Corporation plc, Treasury Building, Lower Grand Canal Street, Dublin 2

+353 1 709 4039

+353 1 709 4700

Mary.Sheahan@elan.com

Prothena Nominated Representative

 

Name & Contact Details

Name:

Address:

Telephone:

Fax:

E-mail:

 

Randy Fawcett

Prothena Biosciences Inc, 650 Gateway Boulevard, South San Fancisco, California 94080

650 837 8550

837 8560

Elan Nominated Representative for Invoices and Invoice related correspondence

 

Name & Contact Details

Name:

Address:

Telephone:

Fax:

E-mail:

 

Mary Sheahan

Elan Corporation plc, Treasury Building, Lower Grand Canal Street, Dublin 2

+353 1 709 4039

+353 1 709 4700

Mary.Sheahan@elan.com

Prothena Nominated Representative for Invoices and Invoice related correspondence

 

Name & Contact Details

Name:

Address:

Telephone:

Fax:

E-mail:

 

25


SCHEDULE 4

Premises

Elan Premises

Treasury Building, Lower Grand Canal Street, Dublin 2

Prothena Premises

650 Gateway Boulevard

South San Francisco

CA 94080


DATED DECEMBER 2012

 

 

TRANSITIONAL SERVICES AGREEMENT

 

A & L GOODBODY

Exhibit 10.3

20 December 2012

ELAN CORPORATION PLC

AND

PROTHENA CORPORATION PLC

RESEARCH AND DEVELOPMENT SERVICES

AGREEMENT


Contents

 

   Clause      Page   
1.    Interpretation      1   
2.    Projects      4   
3.    Services      4   
4.    Governance      5   
5.    Payments      5   
6.    Intellectual Property Rights and Publication:      6   
7.    Confidentiality      7   
8.    Warranties      7   
9.    Insurance      8   
10.    Dispute Resolution      8   
11.    Data Protection      8   
12.    Term and Termination      8   
13.    Liability      9   
14.    Personnel      9   
15.    Force Majeure      10   
16.    Assignment      10   
17.    Relationship between the parties      10   
18.    Notices      11   
19.    Variation      12   
20.    Waiver      12   
21.    Rights Cumulative      12   
22.    Severability      12   
23.    Entire Agreement      12   
24.    Survival      12   
25.    Further Assurances      12   
26.    Governing Law and Jurisdiction      12   

Schedule 1—Prothena Services

Schedule 2—Charges


This Agreement is made on 20 December 2012

Between

 

(1) Elan Corporation Plc a public limited company incorporated in Ireland, with registered number 30356 having its registered office at Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland ( Elan ); and

 

(2) Prothena Corporation Plc a public limited company incorporated in Ireland with registered number 518146 having its registered office is at 25-28 North Wall Quay, Dublin 2, Ireland ( Prothena ).

(each a Party, together the Parties)

Whereas

 

A. Elan has entered into an agreement with Prothena dated 8 November 2012 (the “Demerger Agreement” ) whereby Elan has transferred to Prothena the Prothena Business (as defined in the Demerger Agreement) which comprises the biotechnogy business focused on the discovery and development of novel antibodies for the potential treatment of a broad range of diseases.

 

B. Elan and Prothena have agreed to enter into this agreement in accordance with the terms of the Demerger Agreement in order to make available to Elan certain of Prothena’s resources and services on the terms and conditions and subject to the limitations herein with a view to conducting research and development to identify potential therapeutics or potential targets for intervention for the Projects.

It is agreed

 

1. Interpretation

 

1.1. In this Agreement:

Affiliate means, in relation to either party, any company which is for the time being a holding company of that party or a subsidiary of that party or of any such holding company (as defined in section 155 of the Companies Act 1963 (as amended)).

Applicable Law means:

 

  (a) any statute, regulation, by law, ordinance or subordinate legislation which is in force for the time being to which a party is subject;
  (b) the common law as applicable to the parties (or any one of them);
  (c) any binding court order, judgment or decree applicable to the parties (or any one of them); and
  (d) any applicable industry code, policy, guidance, standard or accreditation terms (i) enforceable by law which is in force for the time being, and/or (ii) stipulated by any regulatory authority to which any party is subject.

Background Intellectual Property means, in respect of any party, any Intellectual Property (other than Foreground Intellectual Property) which is owned by or licensed to such party before the Effective Date or is later developed or otherwise acquired by such party independently of performing its obligations under this Agreement and which is used or is required for use in connection with any Project or services contemplated under this Agreement.

Business Day means a day other than a Saturday, Sunday or public holiday in Ireland

Charges has the meaning given to it in clause 5.1 .

Completion has the meaning given to it in the Demerger Agreement

Confidential Information means the confidential information more particularly described in clause 7.

Data means, in respect of either party, all data or records of whatever nature and whatever form (including Personal Data) relating to the business, clients, potential clients or employees of that party, whether subsisting before the date of this Agreement or as created or processed as part of, or in connection with, any Project or Services.


Dispute means any dispute or difference arising out of or in connection with this Agreement.

Data Protection Law means the Data Protection Acts 1988 and 2003 or any other similar Applicable Law and where Data Controller Data Processor and Personal Data or Processing are referred to in this Agreement they shall have the respective meanings set out in Data Protection Law.

Effective Date means the date of Completion.

Fixed Charge has the meaning given to it in Schedule 2.

Final Report means a written report prepared and agreed by Elan and Prothena at the completion of a Project, as more fully described in clause 4.4.

Foreground Intellectual Property means any Intellectual Property that is specifically related to any Project that arises or is created in the course of or in connection with any Project and (i) has no applicability to the Prothena Business (“ Elan Foreground IP ”); or (ii) has applicability to the Prothena Business (“ Prothena Foreground IP ”) which Intellectual Property arises or is created in the course of or in connection with the provision of the Prothena Services, including adaptations, amendments, variations and derivatives to the other party’s Background Intellectual Property.

Full Time Equivalent or FTE has the meaning given to it in Schedule 2

Good Industry Practice means the exercise of that degree of reasonable skill, diligence, prudence and foresight which would be expected from a skilled and experienced provider of services similar to the Prothena Services, seeking in good faith to comply with its contractual obligations including, without limitation compliance with all Applicable Laws.

Insolvency Event means in respect of a party (the Affected Party):

 

  (a) if the Affected Party enters into liquidation whether compulsory or voluntary (other than for the purposes of amalgamation or reconstruction approved in writing by the former party on the basis that the resulting company undertakes that other party’s obligations under this Agreement and is commercially acceptable to the former party which approval shall not be unreasonably withheld or delayed); or

 

  (b) if the Affected Party has a receiver or administrative receiver or administrator or similar official appointed over all or any of its assets and not discharged within a period of thirty (30) days; or

 

  (c) if the Affected Party is declared insolvent or makes any general composition with its creditors; or

 

  (d) if the Affected Party ceases or threatens to cease to carry on the whole or any material part of its business and any such cessation, in the reasonable opinion of the party terminating this Agreement, would be likely to affect adversely the other party’s ability to observe and perform properly and punctually all or any of its obligations under or pursuant to this Agreement.

Intellectual Property means all (a) inventions (whether or not patentable and whether or not reduced to practice), records of inventions, test information, developments, applications, improvements, formulae, concepts, ideas, methods or processes, research property rights, all improvements to any of the foregoing, and all Patents, (b) Trademark Rights and all copyrightable works, (c) copyrights, and all applications, registrations, and renewals in connection therewith, (d) trade secrets, know-how rights and confidential information (including all ideas, concepts, research and development, know-how, composition information and embodiments, manufacturing and production processes, techniques and information, specifications, technical and business data, designs, drawings, supplier lists, pricing and cost information, and data and know-how embodied in business and marketing plans and proposals), (e) computer software, firmware and applications (including source code, executable code, data, databases, programming and notes and documents and other related documentation) , (f) works and designs embodied in advertising and promotional materials, (g) other proprietary rights and (h) copies and tangible embodiments of the foregoing in whatever form or medium.

 

2


Mark-Up has the meaning given to it in Schedule 2.

Monthly Report has the meaning given to it in Schedule 2.

Owning Party means: (a) in the case of any Elan Background Intellectual Property, Elan; (b) in the case of any Prothena Background Intellectual Property, Prothena; and (c) in the case of Elan Foreground IP, Elan and (d) in the case of Prothena Foreground IP, Prothena

Person means any individual, firm, partnership, company, corporation, government authority or other entity.

Personnel means any individuals engaged in the provision of the Prothena Services on behalf of a party, including any employees, agents and sub-contractors of that party.

Processing means obtaining, recording or holding Personal Data or carrying out any operation or set of operations on Personal Data.

Project(s) means research and development activity in support of the programs referred to in Schedule 1.

Project Manager means the person to be appointed in accordance with clause 4.1.

Project Plan means the project plan agreed to by the parties in respect of each Project.

Prothena Services means those services more particularly described in Schedule1 provided that any “Prothena Services” shall be substantially similar to services provided, prior to Completion, by Prothena to Elan in conducting the Prothena Business.

Research Costs has the meaning given to it in Schedule 2

Term means the term of this Agreement as set out in clause 12.

Third Party Contract has the meaning as set out in clause 3.6.

Trademark Rights All trademarks, trademark rights, service marks, service mark rights, trade dress, logos, slogans, trade names, trade name rights, Internet domain names and subdomains (including all website content associated therewith), together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith.

Variable Charge has the meaning given to it in Schedule 2.

 

1.2. In this Agreement, unless the context otherwise requires:

 

  (a) any recitals and schedules form part of this Agreement and references to this Agreement include them;

 

  (b) references to recitals, clauses and schedules are to recitals and clauses of, and schedules to, this Agreement and references in a schedule or part of a schedule to paragraphs are to paragraphs of that schedule or that part of that schedule;

 

  (c) references to this Agreement or any other document are to this Agreement or that document as in force for the time being and as amended from time to time in accordance with this Agreement or that document (as the case may be);

 

  (d) words importing a gender include every gender, references to the singular include the plural and vice versa and words denoting persons include individuals and bodies corporate, partnerships, unincorporated associations and other bodies (in each case, wherever resident and for whatever purpose) and vice versa; and

 

3


  (e) a reference to a statute, statutory provision or subordinate legislation (as so defined) shall be construed as including a reference to that statute, provision or subordinate legislation as in force at the date of this Agreement and as from time to time modified or consolidated, superseded, re-enacted or replaced (whether with or without modification) after the date of this Agreement).

 

1.3. The headings and contents table in this Agreement are for convenience only and do not affect its interpretation. The schedules to this Agreement shall form part of this Agreement.

 

1.4. If there is a conflict or inconsistency between any clause of, and any schedule to, this Agreement the clause prevails. For this purpose an omission (whether deliberate or inadvertent) is not, by itself, to be construed as giving rise to a conflict or inconsistency.

 

1.5. In this Agreement the words “other”, “includes”, “including” and “in particular” do not limit the generality of any preceding words and any words which follow them shall not be construed as being limited in scope to the same class as the preceding words where a wider construction is possible.

 

2. Projects

 

2.1. Elan and Prothena agree to undertake the Projects

 

3. Services

 

3.1. Prothena shall provide two FTE’s worth of effort per year in performance of the Prothena Services for the benefit of Elan and its Affiliates.

 

3.2. In respect of the Prothena Services, Prothena is appointed by Elan under this Agreement as the non-exclusive provider of the Prothena Services and nothing in this Agreement prevents Elan or any of its Affiliates from acquiring the Prothena Services or services similar to the Prothena Services in any territory from any third party or from performing any such services for itself internally. Each Person who performs the Prothena Services shall be an employee of Prothena (or an Affiliate thereof) under Applicable Law, and, at all times, shall perform the Prothena Services solely at the direction of such Person’s employer.

 

3.3. Prothena shall develop the Project Plan for the applicable Project, which Project Plan shall include a reasonable timetable and shall be agreed in writing by the parties. Prothena will deliver an appropriate draft Project Plan to Elan within one month of Elan’s request.

 

3.4. Prothena shall perform all of its obligations under this Agreement, including the provision of the Prothena Services:

(a) in accordance with any applicable Project Plan;

(b) in accordance with Good Industry Practice; and

(c) in compliance with all Applicable Laws.

 

3.5. Prothena shall provide the Prothena Services in a timely manner and in accordance with any timetable identified in the applicable Project Plan. If at any time, Prothena believes that any of its obligations will not, or are unlikely to, be met in accordance with the timetable in the Project Plan, it shall as soon as reasonably practical:

(a) inform Elan in writing of the reasons for not meeting, or being unable to meet, the timetable in the Project Plan;

(b) inform Elan in writing of the consequences of not meeting the timetable in the Project Plan; and

(c) take all steps reasonably necessary, including all additional resources, to mitigate such failure and to ensure the timetable in the Project Plan is met as soon as reasonably practical.

 

3.6.

Where the Prothena Services require contracting with a third party ( “Third Party Contract” ) , such Third Party Contract shall be entered into between Elan and such third party and Prothena shall not be

 

4


a party thereto. Invoices for a Third Party Contract shall be sent to and paid by Elan and Prothena shall have no responsibility with regard the charges incurred thereunder. Elan shall be responsible for maintaining all data generated under such Third Party Contract. For the avoidance of doubt Prothena shall not be responsible for meeting its timetable in the Project Plan or the reporting obligations at clause 3.5 where the Prothena Services require a Third Party Contract and Elan, without bona fide reason, unduly delays entering into a Third Party Contract

 

4. Governance

 

4.1. The parties shall each appoint a Project Manager to assume overall responsibility for their respective roles and obligations under this Agreement. The parties’ respective Project Managers will be responsible for:

 

  (a) co-ordinating all development work in respect of each Project, including overseeing the performance and quality of the Project and completion of any milestones;

 

  (b) arranging and attending (personally or by representative), at each party’s own cost, management meetings as described in clause 4.5 and other meetings, at intervals and locations as agreed between the parties from time to time, to discuss developments and seek to resolve any issues arising. The parties’ respective Project Managers shall use reasonable endeavours to resolve issues arising under this Agreement, but shall refer all problems which are outside their ordinary authority to resolve to appropriate members of the parties’ respective senior management;

 

  (c) co-ordinating day to day liaison between the parties;

 

  (d) co-ordinating the preparation of the Final Reports; and

 

  (e) co-ordinating the identification of any Foreground Intellectual Property created or developed, or to be created or developed, in the course of any Project, prior to or as soon as reasonably practicable following creation or development of the same in the course of any Project.

 

4.2. Either party may replace its appointed Project Manager at any time on prior written notice to the other party.

 

4.3. Each party shall permit the other’s Project Manager (and other duly authorised representatives) such access to its premises at which any Project is being conducted as may be reasonably appropriate having regard to the nature and progress of such Project at any time.

 

4.4. On completion of each Project, the parties shall jointly inspect and evaluate the work performed and shall jointly produce and sign a Final Report in respect of the Project, incorporating such matters and details as may be agreed between the parties from time to time.

 

4.5. The parties agree, at least once every 12 months during the term hereof, or at such other intervals, and at such locations, including by teleconference, as may be agreed between them from time to time, to procure that their respective Project Managers meet (each such meeting a Management Meeting ) to discuss and review the progress and status of any Project performed hereunder, and consider proposals and agree actions in relation to the same with a view to ensuring the due and proper completion of all Projects in accordance with such dates and quality standards as may be agreed between the parties. Minutes of each management meeting are to be prepared by Elan and agreed by both Project Managers.

 

5. Payments

 

5.1. As compensation for the Prothena Services to be provided hereunder, Elan (or an Affiliate nominated by them) shall pay Prothena the charges in the amount and in accordance with Schedule 2 (the “ Charges ”).

 

5.2. Unless otherwise stated (including in the relevant Schedules), Prothena shall invoice Elan (or an Affiliate nominated by them) monthly in arrears in respect of the Charges and the Charges shall be due and payable in US Dollars within thirty (30) days after the receipt of such invoice.

 

5


5.3. Reasonable travel and expense costs shall be reimbursed by Elan (or an Affiliate nominated by them) to any Prothena employee on the assigned Prothena Services (only if such persons home is based outside a 75 mile radius from the relevant Elan premises or designated work location, unless otherwise negotiated and agreed in writing).

 

5.4. Unless otherwise expressly stated between the parties, the Charges and other such amounts expressed to be payable by Elan under this Agreement shall constitute Elan’s entire payment liability under this Agreement.

 

5.5. All amounts stated to be payable under this Agreement are stated as exclusive of any VAT chargeable on them, which shall be paid by the paying party at the rate and in the manner prescribed in law from time to time.

 

5.6. If Elan (or an Affiliate nominated by them) receives an invoice from Prothena which it disputes in good faith, Elan shall notify Prothena in writing of such dispute as soon as reasonably practicable and Elan may withhold payment of such sums as are in dispute pending resolution of such dispute.

 

5.7. Each party shall be entitled to receive interest on any payment not made to it when properly due to it pursuant to the terms of this Agreement, calculated from day to day at a rate per annum equal to 2% above the providing base rate of the European Central Bank and payable from the day after date on which payment was due up to and including the date of payment.

 

6. Intellectual Property Rights and Publication:

 

6.1. All Background Intellectual Property is and shall remain the exclusive property of the party owning it (or, where applicable, the third party from whom its right to use the Background Intellectual Property has derived).

 

6.2. Each party shall grant to the other party for the duration of this Agreement a non-exclusive, non transferable (without the right to sub-licence) licence to use its Background Intellectual Property solely to the extent necessary for the other party to carry out its obligations under this Agreement.

 

6.3. Unless otherwise provided all right, title and interest (including copyright and database right) in and to each party’s Data shall remain the absolute property of that party at all times.

 

6.4. With the exception of Foreground Intellectual Property (below), each party hereby assigns to the other party, all present and future right, title and interest being capable of assignment it may acquire in and to any adaptations, amendments, variations and derivatives that it makes to the other party’s Background Intellectual Property or that have been created or developed by the other party or on its behalf.

 

6.5. If during the term of this Agreement Prothena (or its authorised sub-contractors) develop or create (whether with or without others and whether jointly with the other party or not) any Foreground Intellectual Property, they shall promptly disclose any such Foreground Intellectual Property to Elan.

 

6.6. Unless the parties otherwise agree in writing:

 

  (a) Elan Foreground Intellectual Property shall be owned by Elan, provided, however that Elan hereby grants Prothena a non-exclusive royalty free license to such Foreground Intellectual Property Rights solely for research purposes.
  (b) Prothena Foreground IP shall be owned by Prothena, provided, however, that Prothena hereby grants Elan an exclusive royalty free licence solely for the research, development and commercialization of ELND-005 and ELND-002, including the right to make, have made, use, offer for sale, sell, have sold, import and have imported ELND-005 and ELND-002.

 

6.7. The Owning Party shall have sole responsibility for the filing, prosecution, maintenance and enforcement of its Foreground Intellectual Property. Upon Elan’s request and at Elan’s expense, Prothena will undertake such actions as requested by Elan to secure for the benefit of Elan such Prothena Foreground IP as provided for by clause 6.6.

 

6.8

Subject to the remainder of this clause 6.8, Elan shall, at its own expense, defend or at its option settle any action brought against Prothena which consists of a claim that the use of Elan’s Background Intellectual Property or Foreground Intellectual Property within the scope of any activity contemplated

 

6


  under this Agreement infringes any Intellectual Property right belonging to a third party, and Elan agrees to be responsible for all and indemnify Prothena against all losses, costs (including reasonable legal costs), damages, liabilities, claims and expenses suffered or incurred by Prothena in connection with any such claim. Elan’s obligations under this clause 6.8 shall be conditional on Prothena:

 

  (a) promptly notifying Elan of such claim;

 

  (b) giving Elan express authority to proceed as contemplated by this clause 6.8; and

 

  (c) providing Elan with all such available information and assistance as it may reasonably require in responding to such claim.

 

6.9 Elan agrees to reasonably consider Prothena’s request to publish results of the Prothena Services subject to the remaining obligations of this clause 6 and the obligations of clause 7, and to provide the relevant Personnel with appropriate byline credit in any publication proposed by Elan according to generally accepted standards for authorship.

 

7. Confidentiality

 

7.1. The parties each undertake to keep confidential and not to disclose to any third party nor to use themselves other than for the purposes of the Projects or as permitted under or in accordance with this Agreement (including for the purpose of enjoying the benefit of the rights and licences granted under clause 6) any confidential or secret information in any form directly or indirectly belonging or relating to the other, its Affiliates, its or their business or affairs, disclosed by the one and received by the other pursuant to or in the course of this Agreement or any Project, including without limitation any Background Intellectual Property of the other or Foreground Intellectual Property of the other, and the existence and terms of this Agreement ( Confidential Information ).

 

7.2. Each of the parties undertakes to disclose Confidential Information of the other only to those of its officers, employees, agents and contractors, to whom and to the extent to which, such disclosure is necessary for the purposes contemplated under this Agreement.

 

7.3. The obligations contained in this clause 7 shall survive the expiry or termination of this Agreement for any a period of seven (7) years but shall not apply to any Confidential Information which:

 

  (a) is publicly known at the time of disclosure to the receiving party;

 

  (b) after disclosure becomes publicly known otherwise than through a breach of this Agreement by the receiving party, its officers, employees, agents or contractors;

 

  (c) can be proved by the receiving party to have reached its hands otherwise than by being communicated by the other party including being known to it prior to disclosure, or having been developed by or for it wholly independently of the other party or having been obtained from a third party without any restriction on disclosure on such third party of which the recipient is aware, having made due enquiry; or

 

  (d) is required by law, regulation or order of a competent authority (including any regulatory or governmental body or securities exchange) to be disclosed by the receiving party, provided that, where practicable, the disclosing party is given reasonable advance notice of the intended disclosure.

 

8. Warranties

 

  (a) Each party warrants that it has full power and authority to carry out the actions contemplated under this Agreement, and that its entry into and performance under the terms of this Agreement will not infringe the rights of any third party or cause it to be in breach of any obligations to a third party.

 

  (b) Prothena warrants that it shall perform the Projects in a professional manner with reasonable skill and care, using suitably qualified personnel, and shall use commercially reasonable endeavours to achieve the objectives of each Project;

 

7


  (c) Each party warrants that all information, data and materials provided by it to the other hereunder will be, to the best of its knowledge, accurate and complete in all material respects, and it is entitled to provide the same to the other without recourse to any third party;

 

9. Insurance

 

9.1. Prothena will at all times during the term of this Agreement, maintain in force and effect at its own expense with a reputable insurance company, public and employers’ liability insurance and professional indemnity insurance, each for a minimum level of cover of $2 million which shall remain in effect throughout this Agreement and for 6 years after termination subject to cover availability.

 

10. Dispute Resolution

 

10.1. Where at any point during the Term of this Agreement any matter relating to this Agreement cannot be agreed by the Parties, it shall be escalated as follows:

 

  (a) the matter shall be referred as soon as practicable to the Project Manager for resolution; and

 

  (b) if the matter has not been resolved within ten (10) Business Days (or such longer period as may be agreed in writing by the Parties) of being referred to the Project Manager or if the Project Manager determines it is incapable of being resolved at that level, then the matter shall be immediately referred to the Chief Executive Officer of Prothena and the Chief Executive Officer of Elan; and

 

  (c) if after the expiry of 30 Business Days from the time the matter in dispute was referred to the CEO of each of Elan and Prothena the matter remains unresolved, the Parties shall refer the matter to non-binding mediation in accordance with the procedure set out in clause 21.3.1 of the Demerger Agreement.

 

  (d) in the event that:-

 

  (1) having been so requested, the mediation does not commence within 20 Business Days of the request for mediation; or

 

  (2) a binding settlement in writing is not reached within a period of 60 Business Days after the delivery of a written request for mediation;

 

  (e) and, in any such case, the dispute or difference referred to in this clause 10 remains unresolved, the Parties (or the relevant one of them) shall then be entitled to instigate legal proceedings

 

10.2. Any joint decision as to a resolution at any stage in the above process shall be recorded in writing and signed on behalf of each Party and shall be final and binding on the Parties.

 

11. Data Protection

 

11.1. The parties shall at all times comply with the provisions of the Data Protection Law in their Processing of Personal Data including, without limitation, ensuring that appropriate technical and organisational measures are taken against unauthorised or unlawful processing of the Personal Data and against accidental loss or destruction of, or damage to the Personal Data.

 

12. Term and Termination

 

12.1. This Agreement shall come into effect on the Effective Date and, subject to the remaining terms of this Agreement, shall continue in full force and effect for a period of two (2) years unless the parties agree in writing to extend this Agreement.

 

12.2. Either party (the first party ) shall be entitled to terminate this Agreement at any time by notice in writing to the other (the other party ) if:

 

  (a) the other party is in material breach of this Agreement which breach is irremediable or, if remediable, is not remedied by the defaulting party within thirty (30) days of being requested to do so by the other;

 

8


  (b) the other party is subject to an Insolvency Event; or

 

  (c) the other party is in breach of any of its confidentiality obligations under clause 7

 

12.3. Termination in accordance with this clause 12 shall be without prejudice to the rights of the parties accrued at the date of termination.

 

12.4. Upon termination of any licences hereunder in accordance with this Agreement each party shall forthwith destroy or, at the request of the other party, return all information and materials belonging to the other party then in its or its contractors’ possession, custody or control, including all Confidential Information of the other party relating to such licences with the exception, in the case of the Terminating Party, of such information and materials belonging to the Defaulting Party as shall be reasonably required by the Terminating Party to enjoy the benefit of any continuing licences to it hereunder, and shall not retain any copies of the same except that either party may retain copies of information in its back up electronic systems.

 

13. Liability

 

13.1. Nothing in this Agreement shall limit the liability of either party for:

 

  (a) fraud or fraudulent misrepresentation;

 

  (b) for death or personal injury caused by its negligence or the negligence of its employees, contractors or agents;

 

  (c) any liability which cannot be excluded or limited by law.

 

13.2 Subject to Clause 13.1, no party shall be liable to another party for any indirect or consequential loss or damage even if foreseeable or if such party has been advised of the possibility of such losses.

 

13.3 Subject to Clause 13.1, the total liability of either party arising under or in connection with this Agreement, whether in tort (including negligence), contract, representation (other than fraudulent misrepresentations) or otherwise or for loss (whether direct, indirect or consequential) of business, profits, use, revenue, data, anticipated savings or goodwill shall be limited to USD$500,000.

 

13.4 Prothena shall not be liable for any failure to provide, or for any delay in the provision of, any of the Prothena Services to the extent that such failure or delay is directly caused or is contributed to directly by any failure of a third party service provider to provide an element of the Prothena Services.

 

14. Personnel

 

14.1 Prothena shall appoint Personnel to perform the Prothena Services who shall have the experience and knowledge to provide the applicable Prothena Services in accordance with Good Industry Practice.

 

14.2 If Elan reasonably determines at any time that a member of the Personnel is not suitable for involvement in the provision of the Prothena Services, it shall notify the other party in writing detailing the reasons for its determination. Where, following any reasonable consultation between Elan and Prothena regarding the said notification, Elan and Prothena agree that the relevant member of the Personnel is not or is no longer suitable for involvement in the provision of the Prothena Services, Prothena shall take or procure that reasonable steps are taken in accordance with its established human resources procedure and Applicable Law to remove the relevant person from his or her position as a member of the Personnel as soon as reasonably practicable. In the event that Elan and Prothena do not agree that a relevant member of the Personnel is no longer suitable, then such matter shall be managed in accordance with clause 10.

 

9


  15. Force Majeure

 

15.1. Neither party shall be liable for any delay in performing or for failure to perform its obligations hereunder if the delay or failure results from any cause or circumstance whatsoever beyond its reasonable control, including any breach or non-performance of this Agreement by the other party (hereinafter event of force majeure ), provided the same arises without the fault or negligence of such party. If an event of force majeure occurs, the date(s) for performance of the obligation affected shall be postponed for as long as is made necessary by the event of force majeure, provided that if any event of force majeure continues for a period of or exceeding three (3) months, either party shall have the right to terminate this Agreement forthwith by written notice to the other party. Each party shall use its reasonable endeavours to minimise the effects of any event of force majeure.

 

16. Assignment

This Agreement shall be binding upon and inure to the benefit of Prothena and Elan and their respective successors and permitted assigns. Neither party may assign all or any part of any benefit of or interest, right or licence in or arising under this Agreement without the prior written consent of the other party, provided, however, that either party may, without prior notice or consent, assign this Agreement and/or the rights and obligations thereunder to an Affiliate or, in connection with the transfer or sale of all or substantially all of its business related to the subject matter of this Agreement, or in the event of a change in control, merger, acquisition, consolidation or similar transaction, to a third party. Any purported assignment or transfer in violation of this Clause 16 shall be void.

 

17. Relationship between the parties

 

17.1. Nothing in this Agreement is to be construed as establishing or implying any partnership or joint venture between the parties, or as appointing any party as the agent or employee of any other party. No party shall hold out any other party as its partner or joint venturer. Except, and to the extent, that this Agreement expressly states otherwise, no party may incur any expenses or negotiate on behalf of any other party or commit any other party in any way to any person without that other party’s prior written consent.

 

18. Notices

All notices to be given to a party under this Agreement shall be in writing in English detailed for the party below, and sent by overnight courier, first class prepaid post, or by other means of delivery requiring an acknowledged receipt. All notices shall be effective upon receipt.

 

  (a) in the case of Elan:

Address:         Treasury Building, Lower Grand Canal Street, Dublin 2, Ireland

Attention:       Company Secretary

 

  (b) in the case of Prothena:

Address:         [Note: Prothena to insert]

Attention:         ¿

A party may change the details recorded for it in this clause by notice to the other in accordance with this clause 18.

 

18.2. A notice shall be treated as having been received:

 

  (a) if delivered by hand between 9.00 am and 5.00 pm on a Business Day (which time period is referred to in this clause as Business Hours ), when so delivered; and if delivered by hand outside Business Hours, at the next start of Business Hours; and

 

  (b) if sent by first class post, at 9.00 am on the second Business Day after posting if posted on a Business Day and at 9.00 am on the third Business Day after posting if not posted on a Business Day.

 

18.3. In proving that a notice has been given it shall be conclusive evidence to prove that delivery was made, or that the envelope containing the notice was properly addressed and posted (as the case may be).

 

10


19. Variation

No variation of this Agreement shall be effective unless it is in writing and is signed by or on behalf of each of the parties.

 

20. Waiver

Delay in exercising, or failure to exercise, any right or remedy in connection with this Agreement shall not operate as a waiver of that right or remedy. The waiver of a right to require compliance with any provision of this Agreement in any instance shall not operate as a waiver of any further exercise or enforcement of that right and the waiver of any breach shall not operate as a waiver of any subsequent breach. No waiver in connection with this Agreement shall, in any event, be effective unless it is in writing, refers expressly to this clause, is duly signed by or on behalf of the party granting it and is communicated to the other party in accordance with clause 18 (Notices).

 

21. Rights Cumulative

The rights and remedies of the parties in connection with this Agreement are cumulative and, except as expressly stated in this Agreement, are not exclusive of any other rights or remedies provided by law or equity or otherwise. Except as expressly stated in this Agreement (or at law or in equity in the case or rights and remedies provided by law or equity) any right or remedy may be exercised (wholly or partially) from time to time.

 

22. Severability

The parties intend each provision of this Agreement to be severable and distinct from the others. If a provision of this Agreement is held to be illegal, invalid or unenforceable, in whole or in part, the parties intend that the legality, validity and enforceability of the remainder of this Agreement shall not be affected.

 

23. Entire Agreement

 

23.1 This Agreement (together with all other documents to be entered into pursuant to it) sets out the entire agreement and understanding between the parties, and supersedes all proposals and prior agreements, arrangements and understandings between the parties, relating to its subject matter.

 

23.2 Each party acknowledges that in entering into this Agreement (and any other document to be entered into pursuant to it) it does not rely on any representation, warranty, collateral contract or other assurance of any person (whether party to this Agreement or not) that is not set out in this Agreement or the documents referred to in it. Each party waives all rights and remedies which, but for this clause, might otherwise be available to it in respect of any such representation, warranty, collateral contract or other assurance. The only remedy available to any party in respect of any representation, warranty, collateral contract or other assurance that is set out in this Agreement (or any document referred to in it) is for breach of contract under the terms of this Agreement (or the relevant document). Nothing in this Agreement shall, however, limit or exclude any liability for fraud.

 

24. Survival

Termination of this Agreement for any reason shall not affect any rights or liabilities that have accrued prior to termination or the coming into force or continuance in force of any term that is expressly or by implication intended to come into or continue in force on or after termination.

 

25. Further Assurances

Each party shall do and execute, or arrange for the doing and executing of, any other act and document reasonably requested of it by any other party to implement and give full effect to the terms of this Agreement.

 

26. Governing Law and Jurisdiction

This Agreement and any non-contractual obligations arising out of or in relation to this Agreement shall be governed by and construed in accordance with Irish law. The parties to this Agreement irrevocably agree that the courts of Ireland are to have non-exclusive jurisdiction to settle any questions or disputes which may arise out of or in connection with this Agreement.

 

11


This Agreement has been entered into on the date stated at the beginning of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above.

 

  ELAN CORPORATION PLC       PROTHENA CORPORATION PLC
By:    /s/ William F. Daniel     By:    /s/ Neil McLoughlin

Name: William F. Daniel

Title: Company Secretary

   

Name: Neil McLoughlin

Title: Company Secretary

 

12


SCHEDULE 1

Prothena Services

A. Support for ELND-005 and ELND-002 programs

 

  (1) Expert advice and opinion in the areas of nonclinical safety/toxicology and pharmacology

 

  a. Attendance in project team meetings

 

  b. Leadership of a nonclinical subteam

 

  i. Development and proposal of nonclinical plans

 

  (2) Representation/presentations of nonclinical areas at external meetings (regulatory/investigator/KOL/investor/scientific)

 

  (3) Regulatory support for nonclinical sections of pertinent documents

 

  a. IND filings and updates

 

  b. IB preparation and updates

 

  c. Regulatory briefing packages

 

  d. NDA filings

 

  e. Ex-US filings

 

  (4) Conducting and interpreting externally conducted nonclinical studies (GLP and non-GLP)

 

  a. Assistance in patent filing based on nonclinical results

 

  (5) Inspection or audit readiness activities

 

  (6) Timely response to regulatory and/or investigator questions

 

  (7) Identification and maintenance of nonclinical expert advisors as needed

 

13


SCHEDULE 2

Charges

1.1 The Charges will comprise:

1.1.1. a fixed charge at a rate of USD$250,000 per annum (“Fixed Charge”) per the equivalent of one employee working full time (“Full Time Equivalent” or “FTE”) allocated by Prothena to the provision of the Prothena Services. In accordance with clause 3.1 of this Agreement, Prothena will allocate two FTE’s during the Term to support the provision of the Prothena Services. Elan will pay Prothena the Fixed Charge per FTE for each full year of the Term so that the total Fixed Charge for each year of the Term will be USD$500,000.

1.1.2 a variable charge at a rate of USD $250,000 per annum (“ Variable Charge ”) per one FTE allocated by Prothena to the provision of the Prothena Services, payable where the Fixed Charge has been exceeded for that year. The actual amount of the Variable Charge payable will be calculated pro rata based on the number of days spent providing the Prothena Services. For the avoidance of doubt, Elan shall only be liable to pay a Variable Charge if the Fixed Charge of $500,000 per annum payable in accordance with clause 1.1.1 of this Schedule, has been exhausted in full in respect of that year.

1.1.3 Research costs (“Research Costs”) which shall comprise the other reasonable direct overhead costs to Prothena of performing the Prothena Services including direct materials and other relevant overheads.

1.1.4 a mark-up of 10% (“Mark-Up”) as applied to the Fixed Charge, the Variable Charge (if any) and Research Costs, such that the Fixed Charge, the Variable Charge (if any), Research Costs and Mark-Up, collectively, shall reflect an arm’s length cost-plus standard.

2. 1 Prothena will maintain a range of cost codes (or cost centres) in its books for the purpose of recording the Research Costs.

2.2. At the end of each calendar month, Prothena shall provide Elan with a report detailing the services provided, and the categories and line items under which the Charges have been accrued, in respect of that monthly period (the “Monthly Report” ).

3. Prothena shall issue an invoice for the agreed Charges, detailing the amount due in respect of the Prothena Services respectively for the relevant period.

4. All Charges shall be subject to increase or decrease (by way of reconciliation in subsequent invoices) to the extent such increases or decreases are provided for by this Schedule 2.

5. Any disputes in relation to the Charges shall be dealt with in accordance with Clause 10 of this Agreement.

The following is an illustration of how the Charges will be calculated:

 

Charge

   cost per month USD$  

Fixed Charge for 2 FTE

     41,667   

Research Costs

     2,000   

Mark up of 10%

     4,368   
  

 

 

 

Total Cost

     48,038   
  

 

 

 

 

14

Exhibit 10.4

PROTHENA CORPORATION PLC

2012 LONG TERM INCENTIVE PLAN


TABLE OF CONTENTS

Page

 

1.    Definitions      1   
2.    Administration      4   
3.    Shares Subject to the Plan      6   
4.    Specific Terms of Awards      7   
5.    Certain Provisions Applicable to Awards      11   
6.    Transferability of Awards      11   
7.    Change in Control Provisions      12   
8.    Qualified Performance-Based Compensation      12   
9.    General Provisions      13   

 

-i-


PROTHENA CORPORATION PLC

2012 LONG TERM INCENTIVE PLAN

The purposes of the 2012 Long Term Incentive Plan are to advance the interests of Prothena Corporation plc and its shareholders by providing a means to attract, retain, and motivate employees, consultants and directors of Prothena Corporation plc, its subsidiaries and affiliates, to provide for competitive compensation opportunities, to encourage long term service, to recognize individual contributions and reward achievement of performance goals, and to promote the creation of long term value for shareholders by aligning the interests of such persons with those of shareholders.

 

1. Definitions.

For purposes of the Plan, the following terms shall be defined as set forth below:

(a) “Act” means the Companies Act 1963 as amended from time to time. References to any provision of the Act shall be deemed to include successor provisions thereto and regulations thereunder.

(b) “Affiliate” means any entity other than the Company and its Subsidiaries that is designated by the Board or the Committee as a participating employer under the Plan; provided, however, that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity.

(c) “Award” means any Option, SAR, Restricted Share, Restricted Share Unit, Performance Share, Performance Unit, Dividend Equivalent, or Other Share-Based Award granted to an Eligible Person under the Plan.

(d) “Award Agreement” means any written agreement, contract, or other instrument or document evidencing an Award.

(e) “Beneficiary” means the person, persons, trust or trusts which have been designated by an Eligible Person in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under this Plan upon the death of the Eligible Person, or, if there is no designated Beneficiary or surviving designated Beneficiary, then the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.

(f) “Board” means the Board of Directors of the Company.

(g) “Change in Control” means:

(i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization (however effected, including by general offer or court-sanctioned compromise, arrangement or scheme under the Act or otherwise) if more than 50% of the combined voting power of the continuing or surviving entity’s issued shares or securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization;

(ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets;

(iii) Individuals who as of the date the Board first consists of at least seven members constitute the Board (the “ Incumbent Directors” ) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of

 

1


the Company subsequent to the date the Board first consists of at least seven members shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors; but, provided further that any such person whose initial assumption of office is in connection with an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

(iv) Any transaction as a result of which any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company’s then outstanding voting securities (e.g., issued shares). For purposes of this subsection (v), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of any Subsidiary and (ii) a company owned directly or indirectly by the shareholders of the Company in substantially the same proportions as their ownership of the Shares of the Company.

(v) Notwithstanding the foregoing, in the case of an Award that constitutes deferred compensation subject to section 409A of the Code, the definition of “Change in Control” set forth above shall not apply, and the term “Change in Control” shall instead mean a “change in the ownership or effective control” of the Company or “in the ownership of a substantial portion of the assets” of the Company within the meaning of section 409A(a)(2)(A)(v) of the Code and the regulations and guidance issued thereunder, but only to the extent this substitute definition is necessary in order for the Award to comply with the requirements prescribed by section 409A of the Code.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions thereto and regulations thereunder.

(i) “Committee” means (i) with respect to Awards that are not intended to be “qualified performance-based compensation” under section 162(m) of the Code and are not made to an individual subject to Section 16 of the Exchange Act, the Compensation Committee of the Board, or such other Board committee (which may include the entire Board) as may be designated by the Board to administer the Plan, (ii) with respect to Awards that are intended to be “qualified performance-based compensation” under section 162(m) of the Code or made to an individual subject to Section 16 of the Exchange Act, a committee that consists of two or more persons appointed by the Board, all of whom shall be “outside directors” as defined under section 162(m) of the Code and related Treasury Regulations and a “non-employee directors” as defined by Rule 16b-3.

(j) “Company” means Prothena Corporation plc, a corporation organized under the laws of Ireland, or any successor corporation.

(k) “Control” means the ownership directly or indirectly of shares in a company carrying more than 50% of the total voting power represented by that company’s issued share capital.

(l) “Director” means a member of the Board who is not an employee of the Company, a Subsidiary or an Affiliate.

(m) “Dividend Equivalent” means a right, granted under Section 4(g), to receive cash, Shares, or other property equal in value to dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award, and may be paid currently or on a deferred basis. If interest is credited on accumulated dividend equivalents, the term “Dividend Equivalent” shall include the accrued interest.

 

2


(n) “Effective Date” has the meaning set forth in Section 9(m) below.

(o) “Eligible Person” means (i) an employee or consultant of the Company, a Subsidiary or an Affiliate, including any director who is an employee, or (ii) a Director.

(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include successor provisions thereto and regulations thereunder.

(q) “Fair Market Value” means, with respect to Shares or other property, the fair market value of such Shares or other property determined by such methods or procedures as shall be established from time to time by the Committee. If the Shares are listed on any established stock exchange or a national market system, unless otherwise determined by the Committee in good faith, the Fair Market Value of Shares shall mean the closing price per Share during regular trading hours on the date in question (or, if the Shares were not traded on that day, the next preceding day that the Shares were traded). The Committee may determine that, for an Award, the Fair Market Value of Shares shall mean the average of the closing price per Share during regular trading hours for a period, not to exceed 30 days, preceding the date in question on the principal exchange or market system on which the Shares are traded, as such prices are officially quoted on such exchange.

(r) “ Full-Value Award ” means any Award granted under the Plan other than an Option or a Share Appreciation Right.

(s) “ISO” means any Option intended to be and designated as an incentive stock option within the meaning of section 422 of the Code.

(t) “NQSO” means any Option that is not an ISO.

(u) “Option” means a right, granted under Section 4(b), to purchase Shares.

(v) “Other Share-Based Award” means a right, granted under Section 4(h),that relates to or is valued by reference to Shares.

(w) “Participant” means an Eligible Person who has been granted an Award under the Plan.

(x) “Performance Period” has the meaning set forth in Section 4(f)(i) below

(y) “Performance Share” means a performance share granted under Section 4(f).

(z) “Performance Unit” means a performance unit granted under Section 4(f).

(aa) “Plan” means this 2012 Long Term Incentive Plan.

(bb) “Restricted Shares” means an Award of Shares under Section 4(d) that may be subject to certain restrictions and to a risk of forfeiture.

(cc) “Restricted Share Unit” means a unit representing the Company’s obligation to deliver or issue one Share for each such unit, granted under Section 4(e), or the cash equivalent, at the end of a specified deferral period.

(dd) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under section 16 of the Exchange Act.

 

3


(ee) “SAR” or “Share Appreciation Right” means the right, granted under Section 4(c), to be paid an amount measured by the difference between the exercise price of the right and the Fair Market Value of Shares on the date of exercise of the right, with payment to be made in cash or Shares as specified in the Award or determined by the Committee.

(ff) “Share” means one ordinary share, par value $ 0.01, in the capital of the Company.

(gg) “Subsidiary” means any company which is, for the time being, a subsidiary of the Company within the meaning of section 155 of the Act. For the avoidance of doubt, and provided it is not in conflict with the Act, this shall include any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns shares possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

(hh) “Substitute Award” has the meaning set forth in Section 3(e) below

(ii) “Termination of Service” means, unless otherwise defined in an applicable Award Agreement, that a Participant is no longer employed by, providing consulting services to nor a director of the Company, its Subsidiaries and its Affiliates, as the case may be. A Participant employed by or providing service to a Subsidiary of the Company or one of its Affiliates shall also be deemed to incur a Termination of Service if the Subsidiary of the Company or Affiliate ceases to be such a Subsidiary or an Affiliate, as the case may be, and the Participant does not immediately thereafter become an employee or director of, or a consultant to, the Company, another Subsidiary of the Company or an Affiliate. Temporary absences from employment or service because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered a Termination of Service.

 

2. Administration.

(a) Authority of the Committee. The Plan shall be administered by the Committee, and the Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan:

(i) to select Eligible Persons to whom Awards may be granted;

(ii) to designate Affiliates;

(iii) to determine the type or types of Awards to be granted to each Eligible Person;

(iv) to determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, exercisability, or settlement of an Award, and waiver or accelerations thereof, and waivers of performance conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;

(v) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares or other Awards, or an Award may be cancelled, forfeited, exchanged, or surrendered;

(vi) to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Eligible Person;

 

4


(vii) to prescribe the form of each Award Agreement, which need not be identical for each Eligible Person;

(viii) to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan;

(ix) to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument thereunder;

(x) to accelerate the exercisability or vesting of all or any portion of any Award (provided that, except in the event of vesting due to a Change in Control or Termination of Service, no Award shall vest in full until at least the second anniversary of the grant date of such Award) or to extend the period during which an Award is exercisable ;

(xi) to determine whether uncertificated Shares may be used in satisfying Awards and otherwise in connection with the Plan; and

(xii) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan.

(b) Manner of Exercise of Committee Authority. The Committee shall have sole discretion in exercising its authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all persons, including the Company, Subsidiaries, Affiliates, Eligible Persons, any person claiming any rights under the Plan from or through any Eligible Person, and shareholders. By accepting an Award under the Plan, each Eligible Person accepts the authority and discretion of the Committee as set forth in, and exercised in accordance with, this Plan. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to other members of the Board or officers or managers of the Company or any Subsidiary or Affiliate the authority, subject to such terms as the Committee shall determine, to perform administrative functions and, with respect to Awards granted to persons not subject to section 16 of the Exchange Act, to perform such other functions as the Committee may determine, to the extent permitted under Rule 16b-3 (if applicable) and applicable law.

(c) Limitation of Liability. Each member of the Committee shall be entitled to rely or act upon, in good faith, any report or other information furnished to him or her by any officer or other employee of the Company or any Subsidiary or Affiliate, the Company’s independent public accountants, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, and no officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation.

(d) No Option or SAR Repricing Without Shareholder Approval. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or the base amount of outstanding SARs or cancel outstanding Options or SARs in exchange for cash, other awards or Options or SARs with an exercise price or base amount, as applicable, that is less than the exercise price or base amount, as applicable, of the original Options or SARs without shareholder approval. No amendment or adjustment under this Section 2(d) shall have the effect of reducing the amount payable for a Share to less than the par value of a Share.

 

5


3. Shares Subject to the Plan.

(a) Subject to adjustment as provided in Section 3(c), the total number of Shares reserved for issuance in connection with Awards under the Plan is 2,650,000. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares previously issued under the Plan, exceeds the number of Shares reserved under the preceding sentence. Shares issued or transferred under the Plan may be authorized but unissued Shares or reacquired Shares, including Shares purchased by the Company on the open market for purposes of the Plan. If and to the extent any Options or SARs are forfeited, cancelled, terminated, exchanged or surrendered without having been exercised, or the Shares subject to Options are withheld or surrendered to satisfy the exercise price of any Options or the minimum tax withholding obligations of any Options or SARs under Section 9(c), the Shares subject to such Awards shall again be available for all purposes of the Plan. If and to the extent any Full Value Awards are forfeited or terminated, or otherwise not paid in full, or the Shares subject thereto are withheld or surrendered for purposes of satisfying the minimum tax withholding obligations under Section 9(c), the Shares subject to such Awards shall again be available for all purposes of the Plan. To the extent an Award is settled in cash, any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture, settlement, termination, cancellation, exchange or surrender, again be available for all purposes of the Plan. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be cancelled to the extent of the number of Shares as to which the Award is exercised. For the avoidance of doubt, if Shares are repurchased on the open market with proceeds of the exercise price of Options, such Shares may not again be made available for issuance under the Plan.

(b) All Awards under the Plan, other than Dividend Equivalents, shall be expressed in Shares of stock. The maximum aggregate number of Shares with respect to which all Awards, other than Dividend Equivalents, may be made under the Plan to any individual during any calendar year shall be 750,000 Shares, subject to adjustment as described below. The same limit shall apply with respect to the maximum aggregate number of Shares with respect to which Options and SARs may be made under the Plan to any individual during any calendar year. A Participant may not accrue Dividend Equivalents during any calendar year in excess of $750,000. The individual limits described in this subsection (b) shall apply without regard to whether the Awards are to be paid in Shares of stock or in cash. All cash payments (other than Dividend Equivalents) shall equal the Fair Market Value of the Shares of stock to which the cash payment relates. Notwithstanding anything to the contrary herein, the foregoing limitations shall not apply until the earliest of: (a) the first material modification of the Plan; (b) the issuance of all of the Shares reserved for issuance under the Plan; (c) the expiration of the Plan; (d) the end of the reliance period pursuant to Section 162(m) of the Code and the rules and regulations promulgated thereunder; or (e) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. To the extent required by Section 162(m) of the Code, Shares subject to Awards which are cancelled shall continue to be counted against the limitations provided for herein.

(c) In the event that the Committee shall determine that any dividend in Shares, recapitalization, Share split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, extraordinary distribution, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of the Participants under the Plan, then the Committee shall make such equitable changes or adjustments as it deems appropriate and, in such manner as it may deem equitable, (i) adjust any or all of (x) the number and kind of shares which may thereafter be issued under the Plan, (y) the number and kind of shares, other securities or other consideration issued or issuable in respect of outstanding Awards, and (z) the exercise price, grant price, or purchase price relating to any Award or (ii) provide for a distribution of cash or property in respect of any Award; provided, however, in each case that, with respect to ISOs, such adjustment shall be made in accordance with section 424(a) of the Code, unless the Committee determines otherwise; provided further, however, that no adjustment shall be made pursuant to this Section 3 that causes any Award to be treated as deferred compensation pursuant to section 409A of the Code. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria and performance objectives, if any, included in, Awards in recognition of unusual or non-recurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any

 

6


Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in applicable laws, regulations, or accounting principles. No amendment or adjustment under this Section 3(c) shall have the effect of reducing the amount payable for a Share to less than the par value of a Share. In addition, in the event of a Change of Control, the provisions of Section 7 shall apply. Any adjustments determined by the Committee shall be final, binding and conclusive.

(d) Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or treasury Shares including Shares acquired by purchase in the open market or in private transactions.

(e) In connection with the acquisition of any business by the Company or any of its Subsidiaries, any outstanding equity grants with respect to stock of the acquired company may be assumed or replaced by Awards under the Plan upon such terms and conditions as the Committee determines in its sole discretion. Shares subject to any such outstanding grants that are assumed or replaced by Awards under the Plan in connection with an acquisition (“ Substitute Awards ”) shall not reduce the aggregate share limit set forth in Section 3(a), consistent with applicable stock exchange requirements. Notwithstanding any provision of the Plan to the contrary, Substitute Awards shall have such terms as the Committee deems appropriate, including without limitation exercise prices or base prices on different terms than those described herein, provided that the terms of such Substitute Awards shall not have the effect of reducing the amount payable for a Share to less than the par value of a Share. In the event that the Company assumes a shareholder-approved equity plan of an acquired company, available Shares under such assumed plan (after appropriate adjustments to reflect the transaction) may be issued pursuant to Awards under this Plan and shall not reduce the aggregate share limit set forth in Section 3(a), subject to applicable stock exchange requirements.

 

4. Specific Terms of Awards.

(a) General. Awards may be granted on the terms and conditions set forth in this Section 4. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 9(d)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of Termination of Service by the Eligible Person. All Awards shall be made conditional upon the Participant’s acknowledgement, in writing or by acceptance of the Award, that all decisions and determinations of the Committee shall be final and binding on the Participant, his or her beneficiaries and any other person having or claiming an interest under such Award. Awards under a particular Section of the Plan need not be uniform as among the Participants.

(b) Options. The Committee is authorized to grant Options, which may be NQSOs or ISOs, to Eligible Persons on the following terms and conditions:

(i) Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Committee; provided, however, that the exercise price per Share shall not be less than the Fair Market Value per Share on the date of grant.

(ii) Option Term. The term of each Option shall be determined by the Committee; provided, however, that such term shall not be longer than ten years from the date of grant of the Option.

(iii) Time and Method of Exercise. The Committee shall determine at the date of grant or thereafter the time or times at which an Option may be exercised in whole or in part (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), the methods by which such exercise price may be paid or deemed to be paid (including, without limitation, broker-assisted exercise arrangements), the form of such payment (cash or Shares), and the methods by which Shares will be delivered or deemed to be delivered to Eligible Persons.

 

7


(iv) Early Exercise. The Committee may provide at the time of grant or any time thereafter, in its sole discretion, that any Option shall be exercisable with respect to Shares that otherwise would not then be exercisable, provided that, in connection with such exercise, the Participant enters into a form of Restricted Share agreement approved by the Committee with respect to the Shares received on exercise.

(v) ISOs. The terms of any ISO granted under the Plan shall comply in all respects with the provisions of section 422 of the Code, including but not limited to the requirement that the ISO shall be granted within ten years from the earlier of the date of adoption or shareholder approval of the Plan. ISOs may only be granted to employees of the Company or a Subsidiary.

(c) SARs. The Committee is authorized to grant SARs to Eligible Persons on the following terms and conditions:

(i) Right to Payment. A SAR shall confer on the Eligible Person to whom it is granted a right to receive with respect to each Share subject thereto, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise over (2) the exercise price per Share of the SAR, as determined by the Committee as of the date of grant of the SAR (which shall not be less than the Fair Market Value per Share on the date of grant).

(ii) Other Terms. The Committee shall determine, at the time of grant, the time or times at which a SAR may be exercised in whole or in part (which shall not be more than ten years after the date of grant of the SAR), the method of exercise, method of settlement, form of consideration payable in settlement (whether paid in the form of cash, in Shares of stock or a combination of the two), method by which Shares will be delivered or deemed to be delivered to Eligible Persons, whether or not a SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Unless the Committee determines otherwise, a SAR (1) granted in tandem with an NQSO may be granted at the time of grant of the related NQSO or at any time thereafter and (2) granted in tandem with an ISO may only be granted at the time of grant of the related ISO.

(d) Restricted Shares. The Committee is authorized to grant Restricted Shares to Eligible Persons on the following terms and conditions:

(i) Issuance and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose at the date of grant or thereafter, which restrictions may lapse separately or in combination at such times, under such circumstances (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), in such installments, or otherwise, as the Committee may determine. Except to the extent restricted under the Award Agreement relating to the Restricted Shares or set forth in Section 4(d)(iv) below, an Eligible Person granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon (subject to clause (iv) below).

(ii) Forfeiture. Except as otherwise determined by the Committee, at the date of grant or thereafter, upon Termination of Service during the applicable restriction period, Restricted Shares and any accrued but unpaid dividends or Dividend Equivalents that are at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of Termination of Service resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Shares.

(iii) Certificates for Shares. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Participant, such certificates shall bear an appropriate

 

8


legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and, unless otherwise determined by the Committee, the Company shall retain physical possession of the certificate and the Participant shall deliver a stock power to the Company, endorsed in blank, relating to the Restricted Shares.

(iv) Dividends. Dividends paid on Restricted Shares shall be either paid at the dividend payment date, or deferred for payment to such date as determined by the Committee, consistent with the requirements of section 409A of the Code, in cash or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends. Unless otherwise determined by the Committee, Shares distributed in connection with a Share split or dividend in Shares, and cash or other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed. Payment of any dividends deferred pursuant to this subsection (iv) shall be made only upon an event permitted by section 409A of the Code. Dividends may accrue on unearned Performance Shares but shall not be payable unless and until the applicable performance goals are met.

(v) Early Exercise Options. The Committee shall award Restricted Shares to a Participant upon the Participant’s early exercise of an Option under Section 4(b)(iv) hereof. Unless otherwise determined by the Committee, the lapse of restrictions with respect to such Restricted Shares shall occur on the same schedule as the exercisability of the Option for which the Restricted Shares were exercised.

(e) Restricted Share Units. The Committee is authorized to grant Restricted Share Units to Eligible Persons, subject to the following terms and conditions:

(i) Award and Restrictions. Delivery of Shares or cash, as the case may be, will occur upon expiration of the deferral period specified for Restricted Share Units by the Committee (or, if permitted by the Committee, as elected by the Eligible Person), but consistent with the requirements of section 409A of the Code. In addition, Restricted Share Units shall be subject to such restrictions as the Committee may impose, if any (including, without limitation, the achievement of performance criteria if deemed appropriate by the Committee), at the date of grant or thereafter, which restrictions may lapse at the expiration of the deferral period or at earlier or later specified times, separately or in combination, in installments or otherwise, as the Committee may determine.

(ii) Forfeiture. Except as otherwise determined by the Committee at the date of grant or thereafter, upon Termination of Service during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Restricted Share Units), or upon failure to satisfy any other conditions precedent to the delivery of Shares or cash to which such Restricted Share Units relate, all Restricted Share Units that are at that time subject to deferral or restriction shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of Termination of Service resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Share Units.

(iii) Dividend Equivalents. Unless otherwise determined by the Committee at the date of grant, Dividend Equivalents on the specified number of Shares covered by a Restricted Share Unit shall be either (A) paid with respect to such Restricted Share Unit that is not a Performance Unit at the dividend payment date in cash or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Share Unit, consistent with the requirements of section 409A of the Code and the amount or value thereof paid in cash pursuant to the vesting schedule of the Restricted Share Unit or automatically deemed reinvested in additional Restricted Share Units or other Awards, as the Committee shall determine or permit the Participant to elect. Payment of any Dividend

 

9


Equivalents deferred pursuant to this subsection (iii) shall be made only upon an event permitted by section 409A of the Code. Dividend Equivalents may accrue on unearned Performance Units but shall not be payable unless and until the applicable performance goals are met.

(f) Performance Shares and Performance Units. The Committee is authorized to grant Performance Shares or Performance Units or both to Eligible Persons on the following terms and conditions:

(i) Performance Period. The Committee shall determine a performance period (the “Performance Period” ) of one or more years or other periods and shall determine the performance objectives for grants of Performance Shares and Performance Units. Performance objectives may vary from Eligible Person to Eligible Person and shall be based upon the performance criteria as the Committee may deem appropriate. The performance objectives may be determined by reference to the performance of the Company, or of a Subsidiary or Affiliate, or of a division or unit of any of the foregoing. Performance Periods may overlap and Eligible Persons may participate simultaneously with respect to Performance Shares and Performance Units for which different Performance Periods are prescribed.

(ii) Award Value. At the beginning of a Performance Period, the Committee shall determine for each Eligible Person or group of Eligible Persons with respect to that Performance Period the range of number of Shares, if any, in the case of Performance Shares, and the range of dollar values, if any, in the case of Performance Units, which may be fixed or may vary in accordance with such performance or other criteria specified by the Committee, which shall be paid to a Participant as an Award if the relevant measure of Company performance for the Performance Period is met.

(iii) Significant Events. If during the course of a Performance Period there shall occur significant events as determined by the Committee which the Committee expects to have a substantial effect on a performance objective during such period, the Committee may revise such objective.

(iv) Forfeiture. Except as otherwise determined by the Committee, at the date of grant or thereafter, upon Termination of Service during the applicable Performance Period, Performance Shares and Performance Units for which the Performance Period was prescribed shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in an individual case, that restrictions or forfeiture conditions relating to Performance Shares and Performance Units will be waived in whole or in part in the event of Termination of Service resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Performance Shares and Performance Units.

(v) Payment. Each Performance Share or Performance Unit may be paid in whole Shares, or cash, or a combination of Shares and cash either as a lump sum payment or in installments, all as the Committee shall determine, at the time of grant of the Performance Share or Performance Unit or otherwise, commencing as soon as practicable after the end of the relevant Performance Period.

(g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to Eligible Persons. Dividend Equivalents shall not be granted with respect to Options or SARs. The Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued, when the underlying Award vests or shall be deemed to have been reinvested in additional Shares, or other investment vehicles as the Committee may specify; provided, however, that Dividend Equivalents (other than freestanding Dividend Equivalents) shall be subject to all conditions and restrictions of any underlying Full Value Awards to which they relate. Dividend Equivalents may accrue on unearned performance-based Full Value Awards but shall not be payable unless and until such performance goals are met.

 

10


(h) Other Share-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, unrestricted shares awarded purely as a “bonus” and not subject to any restrictions or conditions, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the performance of specified Subsidiaries or Affiliates. The Committee shall determine the terms and conditions of such Awards at date of grant or thereafter. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 4(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, notes or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 4(h).

(i) Payment of par value of Shares. The Committee may require that a condition of the delivery of Shares under Section 4(b), 4(c), 4(d), 4(e) or 4(f) above is that the Participant pays the par value of Shares to the Company prior to delivery of the Shares, if required to do so under the Act.

 

5. Certain Provisions Applicable to Awards.

(a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted to Eligible Persons either alone or in addition to, in tandem with, or in exchange or substitution for, any other Award granted under the Plan or any award granted under any other plan or agreement of the Company, any Subsidiary or Affiliate, or any business entity to be acquired by the Company or a Subsidiary or Affiliate, or any other right of an Eligible Person to receive payment from the Company or any Subsidiary or Affiliate. Awards may be granted in addition to or in tandem with such other Awards or awards, and may be granted either as of the same time as, or a different time from, the grant of such other Awards or awards. Subject to the provisions of Section 2(d) hereof prohibiting Option and SAR repricing without shareholder approval, the per Share exercise price of any Substitute Award shall be determined by the Committee, in its discretion.

(b) Term of Awards. The term of each Award granted to an Eligible Person shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term of any Option or SAR exceed a period of ten years from the date of its grant (or such shorter period as may be applicable under section 422 of the Code).

(c) Form of Payment Under Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Shares, notes or other property (if permissible under section 409A of the Code and the Act), and may be made in a single payment or transfer, in installments, or on a deferred basis, consistent with the requirements of section 409A of the Code and the Act. The Committee may make rules relating to installment or deferred payments with respect to Awards, consistent with the requirements of section 409A of the Code, including the rate of interest, if any, to be credited with respect to such payments.

(d) Noncompetition. The Committee may, by way of the Award Agreements or otherwise, establish such other terms, conditions, restrictions and/or limitations, if any, of any Award, provided they are not inconsistent with the Plan and applicable law, including, without limitation, the requirement that the Participant not engage in competition with, solicit customers or employees of, or disclose or use confidential information of the Company or its Subsidiaries and Affiliates.

 

11


6. Transferability of Awards.

(a) Restrictions on Transfer. Except as described in this Section 6, or unless otherwise set forth by the Committee in an Award Agreement, Awards shall not be transferable by a Participant except by will or the laws of descent and distribution (except pursuant to a Beneficiary designation) and shall be exercisable during the lifetime of a Participant only by such Participant or his guardian or legal representative. A Participant’s rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to claims of the Participant’s creditors.

(b) Transfer of NQSOs. Notwithstanding the foregoing, the Committee may provide in a Award Agreement that a Participant may transfer NQSOs to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with the applicable securities laws, according to such terms as the Committee may determine; provided that the Participant receives no consideration for the transfer of a NQSO and the transferred NQSO shall continue to be subject to the same terms and conditions as were applicable to the NQSO immediately before the transfer.

 

7. Change in Control Provisions.

(a) Assumption of Awards. Upon a Change in Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding Options and SARs that are not exercised shall be assumed by, or replaced with comparable options or rights by, the surviving corporation (or a parent or subsidiary of the surviving corporation), and other outstanding Awards shall be converted to similar awards of the surviving corporation (or a parent or subsidiary of the surviving corporation).

(b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change in Control, the Committee may take any of the following actions with respect to any or all outstanding Awards: (i) determine that outstanding Options and SARs shall accelerate and become exercisable, in whole or in part, upon the Change in Control or upon such other event as the Committee determines, (ii) determine that the restrictions and conditions on outstanding Restricted Shares, Restricted Share Units, Performance Shares and Performance Units shall lapse, in whole or in part, upon the Change in Control or upon such other event as the Committee determines, (iii) determine that Eligible Persons holding Restricted Share Units, Performance Units, Dividend Equivalents and Other Share-Based Awards shall receive a payment in settlement of such Restricted Share Units, Performance Units, Dividend Equivalents, and Other Share-Based Awards in an amount determined by the Committee, (iv) require that Participants surrender their outstanding Options and SARs in exchange for a payment by the Company, in cash or stock, as determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the Shares subject to the Participant’s unexercised Options and SARs exceeds the exercise price of the Options or the base amount of SARs, as applicable, or (v) after giving Participants an opportunity to exercise their outstanding Options and SARs, terminate any or all unexercised Options and SARs at such time as the Committee deems appropriate. Such surrender, termination or settlement shall take place as of the date of the Change in Control or such other date as the Committee may specify. The Committee shall have no obligation to take any of the foregoing actions, and, in the absence of any such actions, outstanding Awards shall continue in effect according to their terms (subject to any assumption pursuant to subsection (a) above).

 

8. Qualified Performance-Based Compensation.

(a) Designation as Qualified Performance-Based Compensation. The Committee may determine that Restricted Shares, Restricted Share Units, Performance Shares, Performance Units, Dividend Equivalents or Other Share-Based Awards granted to an employee shall be considered “qualified performance-based compensation” under section 162(m) of the Code. The provisions of this Section 8 shall apply to any such Awards that are to be considered “qualified performance-based compensation” under section 162(m) of the Code. The Committee may also grant Options or SARs under which the exercisability of the Options is subject to achievement of performance goals as described in this Section 8 or otherwise.

(b) Performance Goals. When Restricted Shares, Restricted Share Units, Performance Shares, Performance Units, Dividend Equivalents or Other Share-Based Awards that are considered to be “qualified performance-based compensation” are granted, the Committee shall establish in writing (i) the

 

12


objective performance goals that must be met, (ii) the period during which performance will be measured, (iii) the maximum amounts that may be paid if the performance goals are met, and (iv) any other conditions that the Committee deems appropriate and consistent with the requirements of section 162(m) of the Code for “qualified performance-based compensation.” The performance goals shall satisfy the requirements for “qualified performance-based compensation,” including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the performance goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. As to Awards identified by the Committee as “qualified performance-based compensation,” the Committee shall not have discretion to increase the amount of compensation that is payable, but may reduce the amount of compensation that is payable upon achievement of the designated performance goals.

(c) Criteria Used for Objective Performance Goals. The Committee shall use objectively determinable performance goals based on one or more of the following criteria: stock price, earnings per share, price-earnings multiples, net earnings, operating earnings, revenue, number of days sales outstanding in accounts receivable, productivity, margin, EBITDA (earnings before interest, taxes, depreciation and amortization), net capital employed, return on assets, shareholder return, return on equity, return on capital employed, growth in assets, unit volume, sales, cash flow, market share, relative performance to a comparison group designated by the Committee, or strategic business criteria consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, customer growth, geographic business expansion goals, cost targets or goals relating to acquisitions or divestitures. The performance goals may relate to one or more business units or the performance of the Company as a whole, or any combination of the foregoing. Performance goals need not be uniform as among Participants.

(d) Timing of Establishment of Goals. The Committee shall pre-establish the performance goals in writing either before the beginning of the performance period or during a period ending no later than the earlier of (i) 90 days after the beginning of the performance period or (ii) the date on which 25% of the performance period has been completed, or such other date as may be required or permitted under applicable regulations under section 162(m) of the Code, provided that the outcome is substantially uncertain at the time of the Committee actually established the goal.

(e) Certification of Results. The Committee shall certify the performance results for the performance period specified in the Award Agreement after the performance period ends. The Committee shall determine the amount, if any, to be paid pursuant to each Award based on the achievement of the performance goals and the satisfaction of all other terms of the Award Agreement.

(f) Death, Disability or Other Circumstances. The Committee may provide in the Award Agreement that Awards under this Section 8 shall be payable, in whole or in part, in the event of the Participant’s death or disability, a Change in Control or under other circumstances consistent with the Treasury regulations and rulings under section 162(m) of the Code.

 

9. General Provisions.

(a) Compliance with Legal and Trading Requirements.

(i) The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan and any Award Agreement, shall be subject to all applicable Irish law, US federal, state and other applicable laws, rules and regulations, and to such approvals by any stock exchange, regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the issuance or delivery of Shares under any Award until completion of such stock exchange or market system listing or registration or qualification of such Shares or any required action under any Irish law, US state, federal or other applicable law, rule or regulation as the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed to obligate the Company to register any Shares under Irish law, US federal or state law or other applicable law. The Shares issued under the Plan may be subject to such other restrictions on transfer as determined by the Committee.

 

13


(ii) With respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intent of the Company that ISOs comply with the applicable provisions of section 422 of the Code, and Awards of “qualified performance-based compensation” comply with the applicable provisions of section 162(m) of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or section 422 or 162(m) as set forth in the Plan ceases to be required under section 16 of the Exchange Act or section 422 or 162(m) of the Code, that Plan provision shall cease to apply. The Committee may revoke any Award if it is contrary to law or modify a Award to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree to limit its authority under this Section.

(b) No Right to Continued Employment or Service. Neither the Plan nor any action taken thereunder shall be construed as giving any employee, consultant or director the right to be retained in the employ or service of the Company or any of its Subsidiaries or Affiliates, nor shall it interfere in any way with any right of the Company or any of its Subsidiaries or Affiliates to terminate any employee’s, consultant’s or director’s employment or service at any time, subject to applicable law.

(c) Taxes. The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to an Eligible Person, amounts of minimum withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem necessary or advisable under applicable laws to enable the Company and Eligible Persons to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of an Eligible Person’s tax obligations; provided, however, that the amount of tax withholding to be satisfied by withholding Shares shall be limited to the minimum amount of taxes, including employment taxes, required to be withheld under applicable Irish law, US federal, state and other applicable law.

(d) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee’s authority to grant Awards under the Plan without the consent of shareholders of the Company or Participants, except that any such amendment or alteration shall be subject to the approval of the Company’s shareholders to the extent such shareholder approval is required under (i) the rules of any stock exchange or automated quotation system on which the Shares may then be listed or quoted, (ii) the Act, (iii) section 162(m) of the Code or (iv) as it applies to ISOs, to the extent such shareholder approval is required under section 422 of the Code; provided, however, that, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her. The Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively; provided, however, that, without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her. Notwithstanding any provision to the contrary herein, the Plan and any Award Agreements issued under the Plan may be amended, without the consent of a Participant, in any respect deemed by the Board or the Committee to be necessary in order to preserve compliance with, or perfect an exemption from, section 409A of the Code.

(e) No Rights to Awards; No Shareholder Rights. No Eligible Person or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons and employees. No Award shall confer on any Eligible Person any of the rights of a shareholder of the Company unless and until Shares are duly issued or transferred to the Eligible Person in accordance with the terms of the Award.

 

14


(f) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company’s obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.

(g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

(h) Not Compensation for Benefit Plans. No Award payable under this Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees, consultants or directors unless the Company shall determine otherwise.

(i) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

(j) Employees Subject to Taxation outside the United States. With respect to Participants who are subject to taxation in countries other than the United States, the Committee may make Awards on such terms and conditions as the Committee deems appropriate to comply with the laws of the applicable countries, and the Committee may create such procedures, addenda and subplans and make such modifications as may be necessary or advisable to comply with such laws.

(k) Company Policies . All Awards granted under the Plan shall be subject to any applicable clawback or recoupment policies, share trading policies and other policies that may be implemented by the Board from time to time.

(l) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be determined in accordance with the laws of Ireland, without giving effect to principles of conflict of laws thereof.

(m) Effective Date; Plan Termination. The Plan shall be effective on the date that the spin-off of Prothena Corporation plc from Elan Corporation plc is first effective (the “Effective Date” ), provided that the Plan has been approved by the Company’s shareholders prior to that date. The Plan shall terminate as to future awards on the date which is ten (10) years after the Effective Date.

(n) Section 409A. The Plan is intended to comply with section 409A of the Code, or an exemption, and payments may only be made under the Plan upon an event and in a manner permitted by section 409A of the Code, to the extent applicable. Notwithstanding anything in this Plan to the contrary, if required by section 409A of the Code, if a Participant is considered a “specified employee” for purposes of section 409A and if payment of any Award under this Plan is required to be delayed for a period of six months after “separation from service” within the meaning of section 409A of the Code, payment of such Award shall be delayed as required by section 409A, and the accumulated amounts with respect to such Award shall be paid in a lump sum payment within ten (10) days after the end of the six (6) month period. If the Participant dies during the postponement period prior to the payment of benefits, the amounts

 

15


withheld on account of section 409A shall be paid to the Participant’s Beneficiary within sixty (60) days after the date of the Participant’s death. For purposes of section 409A of the Code, each payment under the Plan shall be treated as a separate payment. In no event shall a Participant, directly or indirectly, designate the calendar year of payment. To the extent that any provision of the Plan would cause a conflict with the requirements of section 409A of the Code, or would cause the administration of the Plan to fail to satisfy the requirements of section 409A, such provision shall be deemed null and void to the extent permitted by applicable law. Notwithstanding anything in the Plan or any Award Agreement to the contrary, each Participant shall be solely responsible for the tax consequences of Awards under the Plan, and in no event shall the Company have any responsibility or liability if an Award does not meet any applicable requirements of section 409A of the Code. Although the Company intends to administer the Plan to prevent taxation under section 409A of the Code, the Company does not represent or warrant that the Plan or any Award complies with any provision of Federal, state, local or other tax law.

(o) Titles and Headings. The titles and headings of the sections in the Plan are for convenience of reference only. In the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

 

16

Exhibit 10.5

P ROTHENA B IOSCIENCES I NC

S EVERANCE P LAN


TABLE OF CONTENTS

 

     Page  
ARTICLE I I NTRODUCTION      1   
ARTICLE II D EFINITIONS      1   
ARTICLE III E LIGIBILITY      5   
ARTICLE IV P AY AND B ENEFITS I N L IEU OF WARN N OTICE      7   
ARTICLE V S EVERANCE P AY AND S EVERANCE B ENEFITS      7   
ARTICLE VI W AIVER AND R ELEASE A GREEMENT      11   
ARTICLE VII P LAN A DMINISTRATION      11   
ARTICLE VIII P ROCEDURES FOR M AKING AND A PPEALING C LAIMS FOR P LAN B ENEFITS      12   
ARTICLE IX A MENDMENT /T ERMINATION /V ESTING      14   
ARTICLE X N O A SSIGNMENT      14   
ARTICLE XI C ONFIDENTIAL I NFORMATION /C OOPERATION      14   
ARTICLE XII M ISCELLANEOUS P ROVISIONS      15   


P ROTHENA B IOSCIENCES I NC

S EVERANCE P LAN

ARTICLE I

I NTRODUCTION

The Company has adopted this Plan, for the benefit of certain “Eligible Employees” of the Company and certain Affiliates specified by the Company, effective as of the Effective Date. The Plan is intended to apply to United States based “Employees,” as described herein. The Plan shall be binding on any successor to all or substantially all of the Company’s assets or business.

The Plan is an unfunded welfare benefit plan for purposes of the ERISA. Except as otherwise provided herein, the Plan supersedes any prior formal or informal severance plans, programs or policies of the Company or its Affiliates covering Eligible Employees. The Plan operates on a calendar year.

ARTICLE II

D EFINITIONS

2.1. “ Act ” means the Irish Companies Act 1963, as amended from time to time. References to any provision of the Act shall be deemed to include successor provisions thereto and regulations thereunder.

2.2. “ Affiliate ” means any member of the group of corporations, trades or businesses or other organizations comprising the “controlled group” with the Company under Code Section 414.

2.3. “ Base Compensation ” means an Eligible Employee’s highest rate of base compensation during the thirteen (13) months prior to the date of the Eligible Employee’s Severance Date.

2.4. “ Change in Control ” means:

 

  (a) The consummation of a merger or consolidation of Prothena Corporation plc with or into another entity or any other corporate reorganization (however effected, including by general offer or court sanctioned compromise, arrangement or scheme under the Act or otherwise), if more than fifty percent (50%) of the combined voting power of the continuing or surviving entity’s issued shares or securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not shareholders of Prothena Corporation plc immediately prior to such merger, consolidation or other reorganization;


  (b) The sale, transfer or other disposition of all or substantially all of Prothena Corporation plc’s assets;

 

  (c) Individuals who, as of the date that the Board of Directors of Prothena Corporation plc first consists of at least seven members, constitute the Board of Directors of Prothena Corporation plc (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board of Directors of Prothena Corporation plc; provided, however, that any individual who becomes a director of Prothena Corporation plc subsequent to the date that the Board of Directors of Prothena Corporation plc first consists of at least seven members shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors; but, provided further that any such person whose initial assumption of office is in connection with an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors of Prothena Corporation plc, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director;

 

  (d) A transaction as a result of which a person or company obtains the ownership directly or indirectly of the ordinary shares in Prothena Corporation plc carrying more than fifty percent (50%) of the total voting power represented by Prothena Corporation plc’s issued share capital in pursuance of a compromise or arrangement sanctioned by the court under section 201 of the Act or becomes bound or entitled to acquire ordinary shares in Prothena Corporation plc under section 204 of the Act; or

 

  (e) Any transaction as a result of which any person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Prothena Corporation plc representing at least fifty percent (50%) of the total voting power represented by Prothena Corporation plc’s then outstanding voting securities (e.g., issued shares). For purposes of this subsection (e), the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of Prothena Corporation plc or of any subsidiary of Prothena Corporation plc and (ii) a company owned directly or indirectly by the shareholders of Prothena Corporation plc in substantially the same proportions as their ownership of the ordinary shares of Prothena Corporation plc.

 

  (f)

Notwithstanding the foregoing, in the case of any amounts payable under the Plan that constitute deferred compensation subject to Code Section 409A, the definition of “Change in Control” set forth above shall not apply, and the term “Change in Control” shall instead mean a “change in the ownership or effective control” of Prothena Corporation plc or “in the ownership of a substantial portion

 

2


  of the assets” of Prothena Corporation plc within the meaning of Code Section 409A(a)(2)(A)(v) and the regulations and guidance issued thereunder, but only to the extent this substitute definition is necessary in order for the payments to comply with the requirements prescribed by Code Section 409A.

2.5. “ Code ” means the Internal Revenue Code of 1986, as amended.

2.6. “ Company ” means Prothena Biosciences Inc.

2.7. “ Comparable Position ” means a position either with the Company or any of its Affiliates or with a successor or transferee of all or a part of the business of the Company or Affiliate, on terms which do not cause a Significant Reduction in Scope or Base Compensation and do not entail a Relocation. The Plan Administrator, in its sole discretion, will determine whether a position is a Comparable Position.

2.8. “ Confidential Information ” means trade secrets and other propriety information of an Employer or any Affiliate. If an Eligible Employee entered into a separate confidentiality or proprietary rights agreement with an Employer or any Affiliate, the term “Confidential Information” for purposes of this Plan shall have the meaning ascribed to any such term or concept as it is defined under, or used in, the separate agreement.

2.9. “ Effective Date ” means the date that the spin-off of Prothena Corporation plc from Elan Corporation plc is first effective.

2.10. “ Eligible Employee ” means each Employee who is not (i) covered by a written employment agreement that contains a severance provision, or covered by a written severance agreement (for the duration of that agreement); (ii) classified as “temporary,” including without limitation, anyone classified as an “intern” or “co-op”; (iii) a consultant; (iv) a “leased employee” as defined in Code Section 414(n); or (v) a person performing services for an Employer on a contract basis or as an independent contractor or consultant or through a purchase order, supplier agreement or any other form of agreement that the Employer enters into for services, regardless of whether any of the above such individuals set forth in (iii), (iv) or (v) are subsequently determined by the Internal Revenue Service, the U.S. Department of Labor or a court to be Employees.

2.11. “ Employee ” means any full-time or part-time employee of an Employer who regularly works thirty (30) hours or more per calendar week for the Employer.

2.12. “ Employer ” means the Company and each Affiliate identified on Attachment A, including the wholly-owned subsidiaries of the Affiliates identified on Attachment A.

2.13. “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

2.14. “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

3


2.15. “ Executive Employee ” means an Eligible Employee who was in Band VII and higher or any other title ranked at or higher than Senior Vice President, in each case, as of the date immediately prior to the Effective Date.

2.16. “ Involuntary Termination ” means a termination of an Eligible Employee’s employment by the Employer due to a business condition, as determined in the sole discretion of the Employer. The term Involuntary Termination shall include (i) a termination effective when the Eligible Employee exhausts a leave of absence during, or at the end of, a WARN Notice Period and (ii) a situation where an Eligible Employee on an approved leave of absence during which the Employee’s position is protected under applicable law (e.g., a leave under the Family Medical Leave Act), returns from such leave, and cannot be placed in employment with the Employer.

2.17. “ Plan ” means the Prothena Biosciences Inc Severance Plan, as set forth in this instrument and as hereafter amended.

2.18. “ Relocation ” means a material change in the geographic location at which the Eligible Employee is required to perform services. Such change in an Eligible Employee’s primary job site will be considered material if (i) for Eligible Employees other than field-based sales representatives (or similar field-based positions), the new location increases the Eligible Employee’s commute between home and primary job site by at least thirty (30) miles, or (ii) in the Company’s reasonable opinion, the new location requires that the Eligible Employee move his/her home to a new location at least thirty (30) miles away from the Eligible Employee’s home immediately prior to the change.

2.19. “ Severance Date ” means the final day of employment with the Employer which date shall be communicated in writing by the Employer to the Employee.

2.20. “ Significant Reduction in Scope or Base Compensation ” means a material diminution in the Eligible Employee’s authority, duties, or responsibilities or a material diminution in the Eligible Employee’s base compensation. For purposes herein, a material diminution in the Eligible Employee’s authority, duties, or responsibilities and a material diminution in the Eligible Employee’s base compensation shall be measured in comparison to the Eligible Employee’s authority, duties, or responsibilities and the Eligible Employee’s base compensation, respectively, on the Effective Date. The Plan Administrator, in its sole discretion, shall determine whether an Eligible Employee experiences a “Significant Reduction.”

2.21. “ Target Bonus ” means an Eligible Employee’s highest target annual bonus rate during the thirteen (13) months prior to the date of the Eligible Employee’s Severance Date.

2.22. “ Triggering Event ” means an Involuntary Termination, Relocation or Significant Reduction in Scope or Base Compensation.

2.23. “ WARN Notice Date ” means the date the Employer is required to notify an Eligible Employee pursuant to the WARN Act or similar state law that he/she is to be terminated from employment with the Employer in conjunction with a “plant closing” or “mass layoff” as described in the WARN Act or similar state law.

 

4


2.24. “ WARN Notice Period ” means the sixty (60) consecutive calendar day period, or other applicable period under similar state law, commencing on an Eligible Employee’s WARN Notice Date.

2.25. “ Week of Pay ” shall be determined based on the Eligible Employee’s status as a salaried or hourly Employee. If the Eligible Employee is a salaried Employee, Week of Pay shall be the Eligible Employee’s weekly Base Compensation. If the Eligible Employee is an hourly Employee, Week of Pay shall be the Eligible Employee’s hourly Base Compensation multiplied by his/her regularly scheduled number of hours worked per week at the highest weekly level in effect during the thirteen (13) months prior to the Eligible Employee’s Severance Date. If the Eligible Employee works part-time, his/her Week of Pay is determined on a prorated basis by calculating his/her average number of hours per week actually worked during the prior Year of Service.

2.26. “ Years of Service ” shall be determined in accordance with the Employer’s personnel records. An Eligible Employee shall receive credit for a Year of Service for each twelve (12) month period of active service with the Employer. For partial years of employment, the Eligible Employee shall receive credit for a full Year of Service if he/she completes at least six (6) full months of active service. If an Eligible Employee has not completed at least six (6) full months of active service during a partial year, he/she shall not receive credit for a Year of Service.

ARTICLE III

E LIGIBILITY

3.1. Conditions of Eligibility . To be eligible for benefits as described in Article V, the Eligible Employee must (i) remain an Employee through the Severance Date, (ii) through the Severance Date, fulfill the normal responsibilities of his/her position, including meeting regular attendance, workload and other standards of the Employer, as applicable, and (iii) submit the signed Waiver and Release Agreement required by the Plan Administrator on, or within forty-five (45) days after, his/her Severance Date or receipt of the Waiver and Release Agreement (whichever occurs later) and not revoke the signed Waiver and Release Agreement. In addition, in the event of a Relocation or a Significant Reduction in Scope or Base Compensation, the Eligible Employee must provide his/her Employer with written notice within ninety (90) days after the occurrence of such event. The Employer shall then have thirty (30) days to cure such event.

3.2. Conditions of Ineligibility . An otherwise Eligible Employee shall not receive severance pay or severance benefits under the Plan if:

 

  (a) the Employee ceases to be an Eligible Employee as defined by the Plan;

 

  (b) the Employee terminates employment with the Employer by reason of death;

 

5


  (c) the Employer terminates the Employee’s employment for one or more of the following reasons (determined in the sole discretion of the Plan Administrator): Commission by the Employee of an act of fraud, theft, misappropriation of funds, dishonesty, bad faith or disloyalty; violation by the Employee of any federal, state, local law or regulation; violation by the Employee of any rule, regulation or policy of the Employer or other job related misconduct; failure to perform the duties of the position held by such Employee in a manner which satisfies the reasonable expectations of the Employer; failure by the Employee to meet any requirement reasonably imposed upon such Employee by the Employer as a condition of continued employment; or dereliction or neglect by the Employee in the performance of such Employee’s job duties;

 

  (d) the Employee terminates employment with the Employer through job abandonment;

 

  (e) other than as set forth in Section 2.14(ii), the individual is no longer an Employee and is receiving long-term disability benefits from the Employer (as determined under the applicable Employer-sponsored long-term disability plan) as of the date the Triggering Event would have occurred had the individual been an Employee on such date;

 

  (f) the Employee is employed in an operation, division, department or facility, that is sold, leased or otherwise transferred, in whole or in part, from an Employer, and (i) the Employee accepts any position with the new owner/operator, or (ii) the Employee is offered a Comparable Position by the new owner/operator;

 

  (g) the Employee gives notice of his/her voluntary termination (other than as provided in Section 2.19) prior to his/her Severance Date or the effective date of a sale, lease or transfer of an operation, division, department or facility, as described in Section 3.2(f), regardless of the effective date of such termination;

 

  (h) the Employee ceases working with the Employer and receives severance benefits under the terms of another group reorganization/restructuring benefit plan or severance program sponsored by the Employer;

 

  (i) the Employee is offered a Comparable Position from an Employer, or accepts any position with an Employer, even if it is not a Comparable Position;

 

  (j) the Employee experiences a Triggering Event after the Plan is terminated;

 

  (k) the Employee does not timely execute and return to the Plan Administrator a valid Waiver and Release Agreement;

 

  (l)

the Employee works primarily in an office located in a country other than the United States and is entitled to severance benefits under the laws of such country or the policies of the company at which he/she is based and such severance benefits may not be waived; or

 

6


  (m) the Employee is offered a Comparable Position by, or accepts any position with, an employer with which the Company or any of its Affiliates has reached an agreement or arrangement under which the employer agrees to offer employment to the otherwise Eligible Employee.

The foregoing list of conditions is intended to be illustrative and may not be all inclusive; the Plan Administrator will determine in the Plan Administrator’s sole discretion whether an Eligible Employee is eligible for severance pay and severance benefits under the Plan.

ARTICLE IV

P AY AND B ENEFITS I N L IEU OF WARN N OTICE

4.1. Wage Payments . If an Eligible Employee is entitled to advance notice of a “plant closing” or a “mass layoff” under the WARN Act or similar state law, but experiences a Triggering Event before the end of a WARN Notice Period, the Eligible Employee shall be entitled to receive Weeks of Pay until the end of the WARN Notice Period as if he/she were still employed through such date. The Weeks of Pay under this Section 4.1 will be issued according to the normal payroll practices of the Employer and shall not be subject to the Waiver and Release Agreement.

4.2. Benefits . An Eligible Employee described in Section 4.1 shall be entitled to benefits under an Employer-sponsored medical, dental and vision benefit plans, as amended from time to time, through the end of the WARN Notice Period on the same terms and under the same conditions as applied to the Eligible Employee immediately prior to the Triggering Event. The benefits under this Section 4.2 are not subject to the Waiver and Release Agreement.

ARTICLE V

S EVERANCE P AY AND S EVERANCE B ENEFITS

5.1. Generally . In exchange for providing the Employer with an enforceable Waiver and Release Agreement, in a form acceptable to the Plan Administrator, an Eligible Employee who terminates employment on account of a Triggering Event shall be eligible to receive severance pay and severance benefits as described below and subject to the other provisions of this Plan. The consideration for the voluntary Waiver and Release Agreement shall be the severance pay and severance benefits the Eligible Employee would not otherwise be eligible to receive.

5.2. Severance Pay . Severance pay shall be determined in accordance with the table below based on the Eligible Employee’s “Band” classification immediately prior to the Effective Date and in accordance with the terms hereof. If the applicable Triggering Event occurs on or within two (2) years following a Change in Control and the Eligible Employee was an Employee at the time of the Change in Control, the Eligible Employee’s severance pay shall be determined under the column in the table below titled “Change in Control Severance Pay” and shall be paid

 

7


in accordance with the terms hereof. The Band applicable to any Eligible Employee shall be determined by the Plan Administrator, in its sole discretion, based on the Eligible Employee’s job position relative to the job grading system in place for the applicable Employer.

 

Employment

Classification

Immediately

prior to the

Effective
Date

  

Severance Pay prior to a Change in Control

  

Change in Control Severance Pay

Band I

   Six (6) Weeks of Pay plus two (2) additional Weeks of Pay for each Year of Service, limited to a maximum period of thirty-nine (39) Weeks of Pay.    Same as severance pay

Band II

   Nine (9) Weeks of Pay plus two (2) additional Weeks of Pay for each Year of Service, limited to a maximum period of thirty-nine (39) Weeks of Pay.    Same as severance pay

Band III

   Fifteen (15) Weeks of Pay plus two (2) additional Weeks of Pay for each Year of Service, limited to a maximum period of forty-five (45) Weeks of Pay.    Same as severance pay

Band IV

   Fifteen (15) Weeks of Pay plus two (2) additional Weeks of Pay for each Year of Service, limited to a maximum period of forty-five (45) Weeks of Pay.    Same as severance pay

Band V

   Twenty-four (24) Weeks of Pay plus two (2) additional Weeks of Pay for each Year of Service, limited to a maximum period of fifty-two (52) Weeks of Pay.    The greater of (i) severance pay described at left or (ii) twenty-six (26) Weeks of Pay plus an amount equal to the Eligible Employee’s Target Bonus.

Band VI

   Fifty-two (52) Weeks of Pay.*    Seventy-eight (78) Weeks of Pay plus an amount equal to the Eligible Employee’s Target Bonus.

Band VII

   Fifty-two (52) Weeks of Pay plus an amount equal to the Eligible Employee’s Target Bonus.*    Two times (2x) the sum of (a) fifty-two weeks (52) Weeks of Pay (prior to any reduction due to a Significant Reduction in Scope or Base Compensation, if applicable) and (b) the Eligible Employee’s Target Bonus.

 

8


Band VIII and

higher

   Seventy-eight (78) Weeks of Pay plus an amount equal to the Eligible Employee’s Target Bonus.    Two and one half times (2.5x) the sum of (a) fifty-two weeks (52) Weeks of Pay (prior to any reduction due to a Significant Reduction in Scope or Base Compensation, if applicable) and (b) the Eligible Employee’s Target Bonus.

* Eligible Employees in Bands VI and VII who had been continuously employed by Athena Neurosciences, Inc, Elan Pharmaceuticals, Inc., Elan Drug Delivery, Inc., Elan Holdings, Inc. from April 1, 2011 through the Effective Date shall be eligible to receive thirty-six (36) Weeks of Pay plus two (2) additional Weeks of Pay for each Year of Service, limited to a maximum period of seventy-eight (78) Weeks of Pay, if such amount provides a greater benefit to such Eligible Employee than that described in the table above.

Severance pay shall be paid in a lump sum payment within seventy-five (75) days following the Severance Date. Notwithstanding the foregoing, any severance pay and severance benefits which become payable shall be paid only if the Eligible Employee has executed and not revoked a signed Waiver and Release Agreement prior to the payment. All legally required taxes and any sums owed the Employer shall be deducted from Plan severance pay.

If an Employer reemploys an Eligible Employee who is receiving or has received severance pay and benefits under the Plan, the individual shall become ineligible and such pay and benefits shall cease effective as of the reemployment date. Further, the former Eligible Employee must repay the portion of the severance pay attributable to the period that begins on the date the Eligible Employee was reemployed. If the Plan Administrator, in its sole discretion, determines that the former Eligible Employee’s services address a critical business need, then the Plan Administrator may provide that no such repayment is required.

5.3. Severance Benefits .

(a) Medical, Dental and Vision Benefits Coverage Continuation . Under federal health care continuation coverage law (referred to as “ COBRA ”), the Eligible Employee who is receiving health care coverage under an Employer-sponsored plan is entitled to elect health care continuation coverage under the applicable Employer health plan if his/her employment terminates for certain reasons. Any of the Triggering Events would qualify the Eligible Employee to receive such continuation coverage, subject to the terms of the applicable health plan and governing law. If an Eligible Employee experiences a Triggering Event before his/her WARN Notice Period (if applicable) expires, his/her COBRA rights begin when the WARN Notice Period expires.

If an Eligible Employee elects to exercise his/her applicable COBRA continuation rights under the Employer health plan, for the lesser of six (6) months or the applicable Benefit Continuation Period (as defined below), the Eligible Employee will only be required to pay the same share of the applicable premium that would apply if he/she were participating in the applicable Employer health plan as an active employee. For the balance of the Benefit

 

9


Continuation Period, if any, the Eligible Employee will be required to pay the full monthly COBRA premium. On a monthly basis, the Employer will reimburse the Eligible Employee for the full cost of the COBRA premiums paid, less the amount that would apply if he/she were participating in the applicable Employer health plan as an active employee. For purposes of the Plan, “ Benefit Continuation Period ” shall mean for Eligible Employees in Bands I through V, the period of time following the Severance Date in which the Eligible Employee is entitled to receive regular severance pay under the Plan (regardless of whether the Eligible Employee is entitled to Change in Control severance pay) not to exceed six (6) months; for Eligible Employees in Band VI and VII, twelve (12) months; and for Eligible Employees in Band VIII or higher, eighteen (18) months. Any partial month will be rounded up to the next whole month.

All of the terms and conditions of an Employer-sponsored medical, dental and vision benefit plans, as amended from time to time, shall be applicable to an Eligible Employee (and his/her eligible dependents, if applicable) participating in any form of continuation coverage under a Employer-sponsored medical, dental and vision benefit plans. This Plan is not to be interpreted to expand an Eligible Employee’s health care continuation rights under COBRA.

(b) Career Transition Assistance . A career transition assistance firm selected and paid for by an Employer shall provide career transition assistance. An Eligible Employee must begin the available career transition assistance services within sixty (60) days following his/her Severance Date.

Subject to the limitations set forth above, career transition assistance shall be provided in accordance with the following table, provided that, to the extent these programs are not available following the Effective Date, substantially comparable career transition assistance shall be provided:

 

Employment

Classification

  

Career Transition Services

Band I

   QuickLaunch or reasonably equivalent program.

Band II

   One month Powerstart Program or reasonable equivalent.

Band III

   Three-month executive program.

Band IV

   Six-month executive program.

Band V

   Nine-month executive program.

Band VI

   Twelve-month executive program.

Bands VII and higher

   Twelve-month Key Executive Program.

5.4. Taxes . If any payment or benefit the Eligible Employee would receive pursuant to this Plan (“ Payment ”) would (a) constitute a “Parachute Payment” within the meaning of Code Section 280G, and (b) but for this sentence, be subject to the excise tax imposed by Code Section 4999 (the “ Excise Tax ”), then such Payment shall be equal to the Reduced Amount. The “ Reduced Amount ” shall be either (x) the largest portion of the Payment that would result in no

 

10


portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Eligible Employee’s receipt, on an after-tax basis, of the greatest economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting Parachute Payments is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the manner that results in the greatest economic benefit for the Eligible Employee. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata.

ARTICLE VI

W AIVER AND R ELEASE A GREEMENT

In order to receive the severance pay and severance benefits available under the Plan, an Eligible Employee must submit a signed Waiver and Release Agreement form to the Plan Administrator on or within forty-five (45) days after his/her Severance Date or receipt of the Waiver and Release Agreement, whichever occurs later. The required Waiver and Release Agreement form is attached to the Summary Plan Description as Attachment III, as the same may be changed in the Company’s sole discretion. An Eligible Employee may revoke his/her signed Waiver and Release Agreement within seven (7) days of his/her signing the Waiver and Release Agreement. Only with respect to Eligible Employees whose severance under the Plan is “non-qualified deferred compensation” subject to Section 409A of the Code, notwithstanding any provision of this Plan to the contrary, in no event shall the timing of such Eligible Employee’s execution of the Waiver and Release Agreement, directly or indirectly, result in the Eligible Employee designating the calendar year of payment, and if a payment that is subject to execution of the Waiver and Release Agreement could be made in more than one taxable year, payment shall be made in the later taxable year.

Any such revocation must be made in writing and must be received by the Plan Administrator within such seven-(7) day period. An Eligible Employee who timely revokes his/her Waiver and Release Agreement shall not be eligible to receive any severance pay or severance benefits under the Plan. An Eligible Employee who timely submits a signed Waiver and Release Agreement form and who does not exercise his/her right of revocation shall be eligible to receive severance pay and severance benefits under the Plan.

Eligible Employees shall be advised to contact their personal attorney at their own expense to review the Waiver and Release Agreement form if they so desire.

ARTICLE VII

P LAN A DMINISTRATION

The Company shall designate a committee to serve as the “Plan Administrator” of the Plan and the “named fiduciary” within the meaning of such terms as defined in ERISA. The Plan Administrator shall have full power and discretionary authority to determine eligibility for Plan severance pay and severance benefits and to construe the terms of the Plan, including, but

 

11


not limited to, the making of factual determinations, the determination of all questions concerning benefits and procedures for claim review and the resolution of all other questions arising under the Plan. Severance pay and severance benefits under the Plan will be payable only if the Plan Administrator determines in the Plan Administrator’s discretion that the Eligible Employee is entitled to them. The decisions of the Plan Administrator shall be final and conclusive with respect to all questions concerning the administration of this Plan.

The Plan Administrator may delegate to other persons responsibilities for performing certain of the duties of the Plan Administrator under the terms of this Plan and may seek such expert advice as the Plan Administrator deems reasonably necessary with respect to the Plan. The Plan Administrator shall be entitled to rely upon the information and advice furnished by such delegatees and experts, unless actually knowing such information and advice to be inaccurate or unlawful. The Plan Administrator shall establish and maintain a reasonable claims procedure, including a procedure for appeal of denied claims. The Plan Administrator has discretionary authority to grant or deny benefits under this Plan. In no event shall an Eligible Employee or any other person be entitled to challenge a decision of the Plan Administrator in court or in any other administrative proceeding unless and until the claim and appeals procedures established under this Plan have been complied with and exhausted.

In the event of a group termination, as determined in the sole discretion of the Plan Administrator, the Plan Administrator shall furnish affected Eligible Employees with such additional information as may be required by law.

ARTICLE VIII

P ROCEDURES FOR M AKING AND A PPEALING

C LAIMS FOR P LAN B ENEFITS

8.1. Claim for Benefits . It is not necessary that an Eligible Employee apply for severance pay and severance benefits under the Plan. However, if an Eligible Employee wishes to file a claim for severance pay and severance benefits, such claim must be in writing and filed with the Plan Administrator. If the Eligible Employee does not provide all the necessary information for the Plan Administrator to process the claim, the Plan Administrator may request additional information and set deadlines for the Eligible Employee to provide that information. Within ninety (90) days after receiving a claim, the Plan Administrator will:

 

  (a) either accept or deny the claim completely or partially; and

 

  (b) notify the claimant of acceptance or denial of the claim.

8.2. Benefits Review . If the claim is completely or partially denied, the Plan Administrator will furnish a written notice to the claimant containing the following information:

 

  (a) specific reasons for the denial;

 

  (b) specific references to the Plan provisions on which any denial is based;

 

12


  (c) a description of any additional material or information that must be provided by the claimant in order to support the claim and an explanation of why such material or information is necessary; and

 

  (d) an explanation of the Plan’s appeal procedures which shall also include a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following a denial of the claim upon review.

8.3. Appeal of Denied Claim . A claimant may appeal the denial of his/her claim and have the Plan Administrator reconsider the decision. The claimant or the claimant’s authorized representative has the right to:

 

  (a) request an appeal by written request to the Plan Administrator not later than sixty (60) days after receipt of notice from the Plan Administrator denying his claim;

 

  (b) review or receive copies, upon request and free of charge, any documents, records or other information “relevant” (within the meaning of Department of Labor Regulation 2560.503-1(m)(8)) to the claimant’s claim; and

 

  (c) submit written comments, documents, records and other information relating to his/her claim.

In deciding a claimant’s appeal the Plan Administrator shall take into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial review of the claim. If the claimant does not provide all the necessary information for the Plan Administrator to decide the appeal, the Plan Administrator may request additional information and set deadlines for the claimant to provide that information.

The Plan Administrator will make a decision with respect to such an appeal within sixty (60) days after receiving the written request for such appeal or, in special circumstances, within one-hundred twenty (120) days after receiving the written request for such appeal. The claimant will be advised of the Plan Administrator’s decision on the appeal in writing. The notice will set forth (1) the specific reasons for the decision, (2) specific reference to Plan provisions upon which the decision on the appeal is based, (3) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records or other information relevant to the claimant’s claim, and (4) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following a wholly or partially denied claim for benefits.

In no event shall a claimant or any other person be entitled to challenge a decision of the Plan Administrator in court or in any other administrative proceeding unless and until the claim and appeal procedures described above have been complied with and exhausted.

 

13


ARTICLE IX

A MENDMENT /T ERMINATION /V ESTING

Eligible Employees do not have any vested right to severance pay and/or severance benefits under the Plan and the Company reserves the right, in its sole discretion, to amend or terminate the Plan at any time in writing, signed by an authorized officer of the Company, provided, however, that (i) no amendment nor termination shall reduce severance pay or severance benefits attributable to a Triggering Event that occurs prior to the date the Plan is amended or terminates, and (ii) any amendment or termination that becomes effective after a Change in Control shall not adversely affect the rights of any Eligible Employee compared with such Eligible Employee’s rights if his/her employment terminated effective immediately before such amendment or termination became effective.

The Plan shall be effective only with respect to Triggering Events that occur on or before December 31, 2013. The Company may extend the Plan in its sole discretion.

ARTICLE X

N O A SSIGNMENT

Severance pay and severance benefits payable under the Plan shall not be subject to anticipation, alienation, pledge, sale, transfer, assignment, garnishment, attachment, execution, encumbrance, levy, lien, or charge, and any attempt to cause such severance pay and severance benefits to be so subjected shall not be recognized, except to the extent required by law.

ARTICLE XI

C ONFIDENTIAL I NFORMATION /C OOPERATION

Recognizing that the disclosure or improper use of Confidential Information will cause serious and irreparable injury to an Employer, Eligible Employees with such access acknowledge that (i) they will not at any time, directly or indirectly, disclose Confidential Information to any third party or otherwise use such Confidential Information for their own benefit or the benefit of others and (ii) in addition to any other remedy permissible by law, payment of severance pay and severance benefits under the Plan shall cease if an Eligible Employee discloses or improperly uses such Confidential Information. Any Eligible Employee subject to an individual confidentiality agreement or proprietary rights agreement with an Employer or any Affiliate will be deemed to violate the terms of this Article XI if he/she violates the terms of the individual confidentiality agreement or proprietary rights agreement.

Subject to the terms of the Waiver and Release Agreement, each Eligible Employee shall cooperate with any Employer and its legal counsel in connection with any current or future investigation or litigation relating to any matter to which the Eligible Employee was involved or of which the Eligible Employee has knowledge or which occurred during the Eligible Employee’s employment. Such assistance shall include, but not be limited to, depositions and testimony and shall continue until such matters are resolved. In addition, an Eligible Employee shall not in any way disparage any Employer nor any person associated with an Employer to any person, corporation, or other entity.

 

14


ARTICLE XII

M ISCELLANEOUS P ROVISIONS

12.1. Return of Property . In order for an Eligible Employee to commence receiving severance pay and severance benefits under the Plan, (i) he/she shall be required to return all Employer property (including, but not limited to, Confidential Information, client lists, keys, credit cards, documents and records, identification cards, equipment, laptop computers, software, and pagers), and (ii) repay any outstanding bills, advances, debts, amounts due to an Employer, as of his/her Severance Date. To the extent the Eligible Employee has any Employer property stored electronically (including, but not limited to, in the form of email) on his/her personal computer, in a personal email account, on a personal storage device, or otherwise, such Eligible Employee shall promptly provide copies of all such information to the Employer and thereafter permanently delete or otherwise destroy the Eligible Employee’s personal copy.

All pay and other benefits (except Plan severance pay and severance benefits) payable to an Eligible Employee as of his/her Severance Date according to the established policies, plans, and procedures of the Employer shall be paid in accordance with the terms of those established policies, plans and procedures. In addition, any benefit continuation or conversion rights which an Eligible Employee has as of his/her Severance Date according to the established policies, plans, and procedures of the Employer shall be made available to him/her.

12.2. Code Section 409A Compliance . It is the Company’s intent that amounts paid under this Plan shall not constitute “deferred compensation” as that term is defined under Code Section 409A and the regulations promulgated thereunder because the amounts paid under this Plan are structured to comply with the “short-term deferral” exception to Code Section 409A. However, if any amount paid under this Plan is determined to be “deferred compensation” within the meaning of Code Section 409A and compliance with one or more of the provisions of this Plan causes or results in a violation of Code Section 409A, then such provision shall be interpreted or reformed in the manner necessary to achieve compliance with Code Section 409A, including but not limited to, the imposition of a six (6) month delay in payment to any “specified employee” (as defined in Code Section 409A) following such specified employee’s date of termination which entitles him/her to a payment under this Plan. All payments to be made upon a termination of employment under this Plan may only be made upon a “separation from service” under Code Section 409A. In no event may the Eligible Employee, directly or indirectly, designate the calendar year of a payment.

12.3. Representations Contrary To The Plan . No employee, officer, or director of an Employer has the authority to alter, vary, or modify the terms of the Plan except by means of an authorized written amendment to the Plan. No verbal or written representations contrary to the terms of the Plan and its written amendments shall be binding upon the Plan, the Plan Administrator, or an Employer.

12.4. No Employment Rights . This Plan shall not confer employment rights upon any person. No person shall be entitled, by virtue of the Plan, to remain in the employ of an Employer and nothing in the Plan shall restrict the right of an Employer to terminate the employment of any Eligible Employee or other person at any time.

 

15


12.5. Plan Funding . No Eligible Employee shall acquire by reason of the Plan any right in or title to any assets, funds, or property of the Employer. Any severance pay, which becomes payable under the Plan is an unfunded obligation and shall be paid from the general assets of the Company. No employee, officer, director or agent of the Employer personally guarantees in any manner the payment of Plan severance pay and severance benefits.

12.6. Applicable Law . This Plan shall be governed and construed in accordance with ERISA and in the event that any reference shall be made to State law, the laws of the State of Delaware shall apply, without regard to its conflicts of law provisions.

12.7. Severability . If any provision of the Plan is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or other controlling law, the remainder of the Plan shall continue in full force and effect.

12.8. Recovery Of Payments Made By Mistake . An Eligible Employee shall be required to return to the Company any severance pay payment and any severance benefits payment, or portion thereof, made by a mistake, including but not limited to, any mistake of fact or law.

 

PROTHENA BIOSCIENCES INC
By:   /s/ Dale B. Schenk
Its:   Chief Executive Officer

__

 

16


P ROTHENA B IOSCIENCES I NC

S EVERANCE P LAN

A TTACHMENT A

For purposes of this Plan, “Employer” means Prothena Biosciences Inc and each of the following Affiliates to the extent each remains an Affiliate (including wholly-owned subsidiaries of these Affiliates):

1.

2.

3.

Exhibit 10.6

PROTHENA CORPORATION PLC

INCENTIVE COMPENSATION PLAN

1. Purpose of the Plan . The purpose of the Plan is to provide a link between compensation and performance, to motivate participants to achieve corporate performance objectives and to enable the Company, its subsidiaries and Affiliated Entities to attract and retain high quality Eligible Employees.

2. Definitions . As used herein, the following definitions shall apply:

(a) “ Affiliated Entity ” means any entity other than the Company and its subsidiaries that is designated by the Board or the Committee as a participating employer under the Plan; provided, however, that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity.

(b) “ Board ” means the Board of Directors of the Company.

(c) “ Bonus ” means a cash payment made pursuant to the Plan.

(d) “ Code ” means the Internal Revenue Code of 1986, as amended.

(e) “ Committee ” means (i) with respect to Bonuses that are not intended to be Performance-Based Compensation, the Compensation Committee of the Board, or such other Board committee (which may include the entire Board) as may be designated by the Board to administer the Plan, and (ii) with respect to Bonuses that are intended to be Performance-Based Compensation, a committee that consists of two or more persons appointed by the Board, all of whom shall be “outside directors” as defined under Section 162(m) of the Code and related Treasury Regulations.

(f) “ Company ” means Prothena Corporation plc.

(g) “ Covered Employee ” means an Employee who is a “covered employee” under Section 162(m) of the Code.

(h) “ Director ” means a non-Employee member of the Board.

(i) “ Effective Date ” means the date that the spin-off of the Company from Elan Corporation plc is first effective.

(j) “ Eligible Employee ” means any Employee who is selected for participation in the Plan by the Committee.

(k) “ Employee ” means any person who is in the employ of the Company, a subsidiary or an Affiliated Entity, subject to the control and direction of the Company, the subsidiary or the Affiliated Entity as to both the work to be performed and the manner and method of performance. Neither service as a Director nor fees received from the Company, the subsidiary or the Affiliated Entity for service as a Director shall be sufficient to constitute Employee status.


(l) “ Long Term Incentive Plan ” means the Prothena Corporation plc 2012 Long Term Incentive Plan (or any successor to that plan).

(m) “ Performance-Based Compensation ” means compensation qualifying as “performance-based compensation” under Section 162(m) of the Code.

(n) “ Performance Goal ” means any measurable criterion tied to the success of the Company and based on one or more of the business criteria described in Section 6.

(o) “ Performance Period ” means a fixed period established by the Committee that may range in duration from a minimum period of twelve (12) months to a maximum period of thirty-six (36) months and over which the attainment of the applicable Performance Goals set by the Committee is to be measured.

(p) “ Plan ” means the Prothena Corporation plc Incentive Compensation Plan.

3. Administration of the Plan .

(a) The Committee . The Plan shall be administered by the Committee.

(b) Powers of the Committee . Subject the provisions of the Plan (including any other powers given to the Committee hereunder), the Committee shall have the authority, in its discretion, to:

(i) establish the duration of each Performance Period;

(ii) select the Eligible Employees who are to participate in the Plan for such Performance Period;

(iii) determine the specific Performance Goals for each Performance Period and the relative weighting of those goals, establish one or more designated levels of attainment for each such goal and set the Bonus potential for each participant at each corresponding level of attainment;

(iv) certify the level at which the applicable Performance Goals are attained for the Performance Period and determine, on the basis of that certification, the actual Bonus for each participant in an amount not to exceed his or her maximum Bonus potential for the certified level of attainment;

(v) exercise discretionary authority, when appropriate, to reduce the actual Bonus payable to any participant below his or her Bonus potential for the attained level of the Performance Goals for the Performance Period;

 

2


(vi) construe and interpret the terms of the Plan and Bonuses awarded under the Plan;

(vii) establish additional terms, conditions, rules or procedures for the administration of the Plan; provided, however, that no Bonus shall be awarded under any such additional terms, conditions, rules or procedures which are inconsistent with the provisions of the Plan; and

(viii) take such other action, not inconsistent with the terms of the Plan, as the Committee deems appropriate.

All decisions and determinations by the Committee shall be final, conclusive and binding on the Company, its subsidiaries, Affiliated Entities, the participants, and any other persons having or claiming an interest hereunder.

(c) Indemnification . In addition to such other rights of indemnification as they may have as members of the Board, members of the Committee who administer the Plan shall be defended and indemnified by the Company, to the extent permitted by law, on an after-tax basis against (i) all reasonable expenses (including attorneys’ fees) actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Bonus awarded hereunder and (ii) all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within 30 days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company’s expense to handle and defend the same.

4. Coverage . All Eligible Employees shall be covered by the Plan, except to the extent the Committee may elect to exclude one or more Eligible Employees from participation in a designated Performance Period.

5. Terms and Conditions of Bonus Awards .

(a) Pre-Established Performance Goals for Bonuses Intended to Qualify as Performance-Based Compensation . Payment of Bonuses intended to qualify as Performance-Based Compensation granted to Covered Employees shall be based solely on account of the attainment of one or more pre-established, objective Performance Goals over the designated Performance Period. The Committee shall establish one or more objective Performance Goals with respect to each Covered Employee for a Bonus intended to qualify as Performance-Based Compensation in writing not later than 90 days after the commencement of the Performance Period to which the Performance Goals relate or the date on which twenty-five percent (25%) of such Performance Period has been completed (or such other date as may be required or permitted under Section 162(m) of the Code), provided that the outcome of the Performance Goals must be

 

3


substantially uncertain at the time of their establishment. Such Performance Goals shall be based solely on one or more of the business criteria described in the Section 6 and shall be weighted, equally or in such other proportion as the Committee shall determine at the time such Performance Goals are established, for purposes of determining the actual Bonus amounts that may become payable upon the attainment of those goals. For each such Performance Goal, the Committee may establish one or more designated levels of attainment and set the Bonus potential for each Eligible Employee at each designated performance level. Alternatively, the Committee may establish a linear formula for determining the Bonus potential at various points of Performance Goal attainment. Under no circumstance, however, shall the aggregate Bonus potential for any participant for any Performance Period exceed the applicable maximum dollar amount set forth in Section 5(d).

(b) Performance Goals for Bonuses not Intended to Qualify as Performance-Based Compensation . The Performance Goals for Bonuses awarded to Eligible Employees other than Covered Employees or for Bonuses awarded to Covered Employees, in each case, that are not intended to qualify as Performance-Based Compensation, and the determination of final Bonuses pursuant to the achievement of Performance Goals, may conform to the requirements set forth above in Section 5(a) or may be based on such other quantitative or qualitative performance goals, as specified by the Committee. Performance Goals may differ for Bonuses awarded to different Eligible Employees. The Committee may weight the Performance Goals in such manner as the Committee determines at the beginning of the Performance Period. For the avoidance of doubt, Bonuses paid to Eligible Employees who would have been eligible to receive bonuses from Elan Corporation resulting from their employment by Elan Corporation in calendar year 2012, will be paid pursuant to this Section 5(b) and the terms of such Bonuses shall be consistent with the terms and conditions under the Elan Corporation bonus plan, subject to the limitations set forth herein and the Committee’s discretion pursuant to Section 5(d) below; provided, however that the amounts of such Bonuses shall not be less than the amounts determined under the Elan Corporation bonus plan as of the date immediately preceding the Effective Date.

(c) Committee Certification . As soon as administratively practicable following the completion of the Performance Period, the Committee shall certify the actual levels at which the Performance Goals for that period have been attained and determine, on the basis of such certified levels, the actual Bonus amount to be paid to each Eligible Employee for that Performance Period. Such certification shall be final, conclusive and binding on the participant, and on all other persons, to the maximum extent permitted by law.

(d) Committee Discretion . Except with respect to Bonuses that are not intended to qualify as Performance-Based Compensation, the Committee, in determining the amount of the Bonus actually to be paid to an Eligible Employee, shall in no event award a Bonus in excess of the dollar amount determined on the basis of the Bonus potential established for the particular level at which each of the applicable Performance Goals for the Performance Period is attained. The Committee shall have the discretion to reduce or eliminate the Bonus that would otherwise be payable with respect to one or more Performance Goals on the basis of the certified level of attained performance of those goals. In exercising its discretion to reduce the Bonus payable to any participant, the Committee may utilize such objective or subjective criteria as the Committee deems appropriate in its sole and absolute discretion. With respect to Bonuses

 

4


that are not intended to qualify as Performance-Based Compensation, the Committee shall have discretion to increase the Bonus that would otherwise be payable with respect to one or more Performance Goals on the basis of the certified level of attained performance of those goals, and in exercising its discretion to increase the Bonus payable to any participant, the Committee may utilize such objective or subjective criteria as the Committee deems appropriate in its sole and absolute discretion. Except with respect to Bonuses that are not intended to qualify as Performance-Based Compensation, the Committee shall not waive any Performance Goal applicable to a participant’s Bonus potential for a particular Performance Period, provided that, the Committee may, in its sole discretion, waive the Performance Goal for a particular Performance Period in the event of the participant’s death or disability or under such circumstances as the Committee deems appropriate in the event a Change in Control (as such term is defined in the Long Term Incentive Plan) should occur prior to the completion of that Performance Period.

(e) Individual Limitations on Awards . Notwithstanding any other provision of the Plan, the maximum amount of any Bonus paid to a Covered Employee or other Eligible Employee under the Plan shall be limited to Three Million Dollars ($3,000,000) per each twelve (12)-month period (or portion thereof) included within the applicable Performance Period.

(f) Payment Date . Payment of such Bonus amounts shall be made as soon as administratively practicable after the Committee certification, but in any event, no later than March 15 of the year following the year in which the Performance Period ends. No participant shall accrue any right to receive a Bonus award under the Plan unless that participant remains in Employee status until the end of the applicable Performance Period. Accordingly, no Bonus payment shall be made to any participant who ceases Employee status prior to the end of the Performance Period for that Bonus; provided, however, that the Committee shall have complete discretion to award a full or pro-rated Bonus, based on the level at which the applicable Performance Goals are attained for the Performance Period, to a participant who ceases Employee status prior to the end of such Performance Period by reason of death, disability or a termination of employment by the Company without cause, in each case, as determined by the Committee. Notwithstanding the foregoing, with respect to a Bonus payable for a 12 month Performance Period commencing January 1, an Eligible Employee must have maintained Employee status until at least October 1 of such Performance Period to be eligible to receive a Bonus for such Performance Period.

(g) Withholding Tax . To the extent required by applicable federal, state, local or foreign law, each employer shall withhold all applicable taxes from all Bonus amounts.

6. Business Criteria .

(a) Permitted Criteria . Performance Goals established by the Committee may be based on any one of, or combination of, the following: stock price, earnings per share, price-earnings multiples, net earnings, operating earnings, revenue, number of days sales outstanding in accounts receivable, productivity, margin, EBITDA (earnings before interest, taxes, depreciation and amortization), net capital employed, return on assets, shareholder return, return on equity, return on capital employed, growth in assets, unit volume, sales, cash flow, market share, relative performance to a comparison group designated by the Committee, or strategic

 

5


business criteria consisting of one or more objectives based on meeting specified revenue goals, market penetration goals, customer growth, geographic business expansion goals, cost targets or goals relating to acquisitions or divestitures. Such Performance Goals may be measured not only in terms of the Company’s performance but also in terms of its performance relative to the performance of other entities or may be measured on the basis of the performance of any of the Company’s business units or divisions or any parent or subsidiary entity. Performance may also be measured on an absolute basis, relative to internal business plans, or based on growth. As may be applicable, they may also be measured in aggregate or on a per-share basis. Performance Goals need not be uniform as among participants.

(b) Authorized Adjustments . To the extent applicable, subject to the following sentence and unless the Committee determines otherwise, the determination of the achievement of Performance Goals shall be determined based on the relevant financial measure, computed in accordance with U.S. generally accepted accounting principles (“GAAP”), and in a manner consistent with the methods used in the Company’s audited financial statements. To the extent permitted by Section 162(m) of the Code, if applicable, in setting the Performance Goals within the period prescribed in Section 5(a), the Committee may provide for appropriate adjustment as it deems appropriate, including for one or more of the following items: asset write-downs; litigation or claim judgments or settlements; changes in accounting principles; changes in tax law or other laws affecting reported results; changes in commodity prices; severance, contract termination, and other costs related to exiting, modifying or reducing any business activities; costs of, and gains and losses from, the acquisition, disposition, or abandonment of businesses or assets; gains and losses from the early extinguishment of debt; gains and losses in connection with the termination or withdrawal from a pension plan; stock compensation costs and other non-cash expenses; any extraordinary non-recurring items as described in applicable Accounting Principles Board opinions or Financial Accounting Standards Board statements or in management’s discussion and analysis of financial condition and results of operation appearing in the Company’s annual report to stockholders for the applicable year; and any other specified non-operating items as determined by the Committee in setting Performance Goals.

7. Effective Date and Term of Plan . The Plan is effective as of the Effective Date. Assuming that such stockholder approval is obtained, the Plan shall continue in effect until the Board terminates it or until stockholder approval again is required for the Plan to meet the requirements of Code Section 162(m) but is not obtained.

8. Amendment, Suspension or Termination of the Plan . The Board may at any time amend, suspend or terminate the Plan. However, any amendment or modification of the Plan shall be subject to stockholder approval to the extent required under Code Section 162(m) or other applicable law or regulation.

9. General Provisions .

(a) Transferability . No participant in the Plan shall have the right to transfer, alienate, pledge or encumber his or her interest in the Plan, and such interest shall not (to the maximum permitted by law) be subject to the claims of the participant’s creditors or to attachment, execution or other process of law. However, should a participant die before payment is made of the actual Bonus to which he or she has become entitled under the Plan, then that Bonus shall be paid to the executor or other legal representative of his or her estate.

 

6


(b) No Rights to Employment . Neither the action of the Company in establishing or maintaining the Plan, nor any action taken under the Plan by the Committee, nor any provision of the Plan itself shall be construed so as to grant any person the right to remain in Employee status for any period of specific duration, and each participant shall at all times remain an Employee at-will and may accordingly be discharged at any time, with or without cause and with or without advance notice of such discharge .

(c) Acknowledgement of Authority . All Bonuses shall be awarded conditional upon the participant’s acknowledgement, by participation in the Plan, that all decisions and determinations of the Committee shall be final and binding on the participant, his or her beneficiaries and any other person having or claiming an interest in such Bonus.

(d) Company Policies . All Bonuses under the Plan shall be subject to any applicable clawback or recoupment policy of the Company adopted from time to time by the Board.

(e) Unfunded Obligation . Eligible Employees eligible to participate in the Plan shall have the status of general unsecured creditors of the Company. Any amounts payable to such Employees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including (without limitation) Title I of the Employee Retirement Income Security Act of 1974, as amended. The Company shall not be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. Employees shall have no claim against the Company for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.

(f) Reliance on Reports . Each member of the Committee shall be fully justified in relying or acting in good faith upon any report made by the independent public accountants of the Company and its subsidiaries or Affiliated Entities and upon any other information furnished in connection with the Plan by any person or persons other than himself or herself. In no event shall any person who is or shall have been a member of the Committee or of the Board be liable for any determination made or other action taken or any omission to act in reliance upon any such report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.

(g) Successors . The terms and conditions of the Plan, together with the obligations and liabilities of the Company that accrue hereunder, shall be binding upon any successor to the Company, whether by way of merger, consolidation, reorganization or other change in ownership or control of the Company.

(h) Section 409A . The Plan is intended to comply with the short-term deferral rule set forth in the regulations under Section 409A of the Code in order to avoid application of Section 409A of the Code to the Plan. If and to the extent that any payment under this Plan is deemed to be deferred compensation subject to the requirements of Section 409A of the Code, this Plan shall be administered so that such payments are made in accordance with the requirements of Section 409A of the Code. If an award is subject to Section 409A of the Code,

 

7


(i) distributions shall only be made in a manner and upon an event permitted under Section 409A of the Code, (ii) payments to be made upon a termination of employment shall only be made upon a “separation from service” under Section 409A of the Code, and (iii) in no event shall a participant, directly or indirectly, designate the calendar year in which a distribution is made except in accordance with Section 409A of the Code. Any award granted under the Plan that is subject to Section 409A of the Code and that is to be distributed to a key employee (as defined below) upon separation from service shall be administered so that any distribution with respect to such award shall be postponed for six months following the date of the participant’s separation from service, if required by Section 409A of the Code. If a distribution is delayed pursuant to Section 409A of the Code, the distribution shall be paid within 30 days after the end of the six-month period. If the participant dies during such six-month period, any postponed amounts shall be paid within 90 days of the participant’s death. The determination of key employees, including the number and identity of persons considered key employees and the identification date, shall be made by the Committee or its delegate each year in accordance with Section 416(i) of the Code and the “specified employee” requirements of Section 409A of the Code.

(i) Conformity to Section 162(m) of the Code for Bonuses to Covered Employees Intended to Qualify as Performance-Based Compensation . With respect to Bonuses awarded to Covered Employees intended to qualify as Performance-Based Compensation, terms used in the Plan shall be interpreted in a manner consistent with Section 162(m) of the Code and regulations thereunder (including Treasury Regulation Section 1.162-27). If any provision of the Plan with respect such Bonuses or any agreement evidencing such Bonuses hereunder does not comply or is inconsistent with the provisions of Section 162(m)(4)(C) or regulations thereunder (including Treasury Regulation Section 1.162-27(e)) required to be met in order that compensation (other than post-termination compensation) shall constitute Performance-Based Compensation, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no adjustment to a Bonus or its related Performance Goals shall be authorized or made, and no post-termination payment shall be authorized or made under Section 5(f), if and to the extent that such authorization or the making of such adjustment or payment would contravene such requirements.

(j) Governing Law . The validity, construction, interpretation and effect of the Plan shall be governed and construed by and determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof.

 

8

Exhibit 16.1

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

December 21, 2012

Re. Prothena Corporation plc (formerly Neotope Corporation Limited)

(CIK# 0001559053)

Dear Sirs,

We were previously principal accountants for Prothena Corporation plc ( formerly Neotope Corporation Limited ) and, under the date of October 1, 2012, we reported on the carve-out combined balance sheets as at December 31, 2011 and 2010, and the carve-out combined statements of operations, parent company equity and cash flows for each of the years in the three-year period ended December 31, 2011.

On December 21, 2012, we resigned. We have read Item 4.01 of Form 8-K dated December 21, 2012, of Prothena Corporation plc and are in agreement with the statements contained therein. We have no basis to agree or disagree with other statements of the registrant contained therein.

Yours faithfully,

/s/ KPMG

Dublin, Ireland

 

December 21, 2012

Exhibit 99.1

INFORMATION STATEMENT

Prothena Corporation plc

Ordinary Shares

(par value $0.01 per share)

 

 

This information statement is being furnished in connection with the separation of a substantial portion of the drug discovery business platform of Elan Corporation, plc (“Elan”), which we describe more specifically herein and which we refer to as the “Prothena Business,” into a new company, Prothena Corporation plc (“Prothena”), an Irish public limited company. The separation of the Prothena Business from Elan will be completed through a “demerger” under Irish law. The demerger will be effected by Elan transferring the Prothena Business to Prothena, in exchange for Prothena issuing directly to the holders of Elan ordinary shares and Elan American Depositary Shares (“ADSs”), on a pro rata basis, Prothena ordinary shares representing 99.99% of Prothena’s outstanding shares (with the remaining 0.01% of Prothena’s outstanding shares, which were previously issued to the original incorporators of Prothena and which we refer to as the “incorporator shares,” being mandatorily redeemed by Prothena after the demerger as described below). Prothena’s issuance of 99.99% of its outstanding shares will constitute a deemed “ in specie distribution,” or a distribution in the form of assets other than cash (in this case, Prothena shares), by Elan to holders of record of Elan ordinary shares and Elan ADSs as of 11:59 p.m., Dublin Time, on December 14, 2012, which will be the record date. Pursuant to the demerger, each Elan shareholder will receive 1 Prothena ordinary share for every 41 Elan ordinary shares or Elan ADSs held as of the record date. We refer to this demerger, including the transfer of the Prothena Business to Prothena and the pro rata issuance by Prothena of 99.99% of its outstanding shares, as the “distribution” and we refer to the reorganization transactions (which will precede the distribution) and the distribution collectively as the “separation and distribution.” The distribution is expected to be effective at 11:59 p.m., Dublin Time, on December 20, 2012, subject to certain conditions described in this information statement; provided, that if the conditions have not been satisfied or waived on or before the effective date of the distribution, the distribution date may be extended until the conditions are satisfied or waived.

Prior to the separation and distribution, a wholly-owned subsidiary of Elan agreed (conditioned on the consummation of the separation and distribution) to subscribe for newly-issued ordinary shares of Prothena, representing 18% of the outstanding ordinary shares of Prothena (as calculated immediately following the consummation of such subscription), for a cash payment to Prothena of $26.0 million. This subscription will be consummated immediately following the separation and distribution. Immediately after the consummation of Elan’s subscription for 18% of Prothena’s outstanding ordinary shares (as calculated immediately following the consummation of such subscription), the incorporator shares will be mandatorily redeemed by Prothena pursuant to their terms for their initial subscription price, and cancelled. We refer to the separation and distribution, together with Elan’s subsequent subscription for an aggregate of 18% of our outstanding ordinary shares (as calculated immediately following the consummation of such subscription) and the redemption of the incorporator shares, as the “Prothena Transactions.”

We will not distribute any fractional Prothena ordinary shares. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices, and distribute the aggregate net cash proceeds from the sales on a pro rata basis to each holder who would otherwise have been entitled to receive a fractional share in the distribution.

For U.S. federal income tax purposes, Elan expects to receive an opinion on the closing date of the Prothena Transactions from each of Cadwalader, Wickersham & Taft LLP and KPMG LLP to the effect that the separation and distribution should qualify as a reorganization under section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”), and the distribution, as such, should qualify as a distribution of our ordinary shares to Elan shareholders under section 355 of the Code. If the separation and distribution are so treated, Elan shareholders should not recognize any gain for U.S. federal income tax purposes on the receipt of our ordinary shares, except with respect to cash received in lieu of fractional Prothena ordinary shares. However, the separation and distribution are not conditioned on the receipt of an opinion confirming these expected U.S. federal income tax consequences, nor will Elan seek a ruling from the United States Internal Revenue Service (“IRS”) addressing the separation and distribution and related transactions. See “The Separation and Distribution — Material U.S. Federal Income Tax Consequences of the Separation and Distribution and Related Transactions.”

For Irish tax purposes, Elan expects to receive an opinion on the closing date of the separation and distribution from KPMG Ireland to the effect that, save with respect to the receipt of cash in lieu of fractional entitlements to Prothena ordinary shares, the distribution should not give rise to a taxable event for those classes of Irish shareholders specifically referred to in the section below “Material Irish Tax Consequences of the Distribution.” However, the distribution is not conditioned on the receipt of an opinion confirming these expected Irish tax consequences, nor will Elan seek a specific confirmation from the Revenue Commissioners of Ireland in respect of the anticipated tax treatment of the distribution.

On December 12, 2012, Elan shareholders voted to approve the declaration of the deemed in specie distribution by Elan described above. No further shareholder approval of the separation and distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. Elan shareholders will not be required to pay for the Prothena ordinary shares to be received by them in the separation and distribution, or to surrender or to exchange Elan ordinary shares or Elan ADSs in order to receive Prothena ordinary shares, or to take any other action in connection with the separation and distribution.

There is currently no trading market for Prothena ordinary shares, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop shortly following the record date for the distribution, and we expect “regular-way” trading of Prothena ordinary shares to begin on the first trading day following the completion of the separation and distribution. Our ordinary shares have been approved for listing on The Nasdaq Global Market under the symbol “PRTA.”

 

 

In reviewing this information statement, you should carefully consider the matters described under the caption “ Risk Factors ” beginning on page 21.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell, or a solicitation of an offer to buy, any securities.

 

 

The date of this information statement is December 17, 2012.

This information statement was first mailed to Elan shareholders on or about December 19, 2012.


TABLE OF CONTENTS

 

SUMMARY

     3   

RISK FACTORS

     21   

FORWARD-LOOKING STATEMENTS

     43   

THE SEPARATION AND DISTRIBUTION AND RELATED TRANSACTIONS

     45   

ARRANGEMENTS BETWEEN ELAN AND PROTHENA

     62   

CAPITALIZATION

     69   

LISTING AND TRADING OF OUR ORDINARY SHARES

     70   

DIVIDEND POLICY

     71   

SELECTED HISTORICAL CARVE-OUT COMBINED FINANCIAL DATA

     72   

UNAUDITED PRO FORMA CONDENSED CARVE-OUT COMBINED FINANCIAL STATEMENTS

     74   

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     77   

BUSINESS

     87   

CORPORATE GOVERNANCE AND MANAGEMENT

     98   

EXECUTIVE COMPENSATION

     104   

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     109   

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     111   

DESCRIPTION OF SHARE CAPITAL

     112   

INDEMNIFICATION OF DIRECTORS AND OFFICERS

     127   

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     128   

INDEX TO FINANCIAL STATEMENTS

     F-1   

Industry and Market Data

This information statement includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys and other independent sources available to us. Some data are also based on our good faith estimates, which are derived from management’s knowledge of the industry and from independent sources. These third-party publications and surveys generally state that the information included therein has been obtained from sources believed to be reliable, but that the publications and surveys can give no assurance as to the accuracy or completeness of such information.

Trademarks and Service Marks

Unless otherwise indicated, the logos, trademarks, trade names, and service marks mentioned in this information statement are currently the property of, or are used with the permission of, Prothena or Elan. We own or have rights to use the trademarks, service marks and trade names that we use in conjunction with the operation of our business. Some of the more important trademarks that we own or have rights to use that appear in this information statement may be registered in the United States and other jurisdictions. Each trademark, trade name or service mark of any other company appearing in this information statement is owned by such company (including the trademark VELCRO, which is owned by Velcro Industries, B.V.).

About this Information Statement

Except as otherwise indicated or unless the context otherwise requires, all references to “we,” “our,” “us,” “Prothena” or the “Company” refer to Prothena Corporation plc, an Irish public limited company, together with its consolidated subsidiaries. References in this information statement to “Elan” refer to Elan Corporation, plc and its consolidated subsidiaries (other than, for all periods following the separation and distribution, Prothena). All references to “we,” “our,” “us,” “Prothena” or the “Company” in the context of historical results refer to the Prothena Business. Except as otherwise indicated or unless the context otherwise requires, the

 

1


information included in this information statement, including the combined financial statements of Prothena, which are comprised of the assets and liabilities of the Prothena Business, assumes the completion of all the transactions referred to in this information statement in connection with the separation of the Prothena Business from Elan (including the issuance of Prothena ordinary shares to Elan immediately following the separation and distribution).

This information statement is being furnished solely to provide information to Elan shareholders who will receive ordinary shares of Prothena in connection with the separation and distribution. It is not provided as an inducement or encouragement to buy or sell any securities. You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information contained in this information statement, unless we are required by applicable securities laws to do so.

 

2


SUMMARY

The following is a summary of some of the information contained in this information statement. This summary is included for convenience only and should not be considered complete. This summary is qualified in its entirety by the more detailed information contained elsewhere in this information statement. You should read the entire information statement carefully, including the risks discussed under “Risk Factors” beginning on page 21 and the financial statements and notes thereto included elsewhere in the information statement. Some of the statements in this summary constitute forward-looking statements. See “Forward-Looking Statements.”

Our Company

Overview

Prothena’s business consists of a substantial portion of Elan Corporation, plc’s former drug discovery business platform, including the following former wholly owned subsidiaries of Elan and related tangible assets and liabilities, which we refer to as the “Prothena Business:”

 

   

Neotope Biosciences Limited (“Neotope Biosciences”) . Neotope Biosciences, a wholly owned subsidiary of Prothena, is engaged in the discovery and development of antibodies for the potential treatment of a broad range of indications, including

 

   

AL and AA forms of amyloidosis, complex diseases caused by tissue deposition of misfolded proteins that result in progressive organ damage;

 

   

Parkinson’s disease and related synucleinopathies; and

 

   

Autoimmune disease and metastatic cancers such as melanoma in which melanoma cell adhesion molecule (“MCAM”) mediated cell adhesion may contribute to disease pathology or progression.

Neotope Biosciences’ strategy is to apply its expertise in generating novel therapeutic antibodies, working with a broad range of collaborators in specific disease models, to select candidates for further clinical development. Neotope Biosciences’ portfolio of targets includes alpha-synuclein for the potential treatment of synucleinopathies, such as Lewy body dementia and Parkinson’s disease, MCAM for autoimmune disease and metastatic cancers such as melanoma, and tau for Alzheimer’s disease and other tauopathies. Neotope Biosciences also has a program focused on the potential treatment of type 2-diabetes.

 

   

Onclave Therapeutics Limited (“Onclave”) . Onclave, a wholly-owned subsidiary of Neotope Biosciences, is engaged in the development of our lead program NEOD001, which is being evaluated for the potential treatment of AL amyloidosis. In 2012, Onclave was granted orphan drug designation of NEOD001 by the United States Food and Drug Administration (“FDA”). The FDA may grant orphan drug designation to potential therapeutics intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, which means that, if an applicant is the first to receive FDA approval for a particular active ingredient to treat a particular disease for which it was granted orphan drug designation, the FDA may not approve any other applications to market the same drug for the same orphan indication, except in limited circumstances, for seven years. We also plan to seek Orphan Drug Designation for NEOD001 in the European Union in 2013. In September 2012, Onclave filed an Investigational New Drug Application (“IND”) with the FDA for NEOD001 for AL amyloidosis. In October 2012, the FDA accepted the IND for NEOD001, allowing Onclave to proceed with plans to test NEOD001 in a phase 1 clinical trial. Onclave expects to initiate a phase 1 clinical trial of NEOD001 in AL amyloidosis patients by early 2013. The primary objectives of the phase 1 trial will be to evaluate safety and tolerability of NEOD001 and determine a recommended dose for testing NEOD001 in phase 2 trials. We anticipate that a phase 2 trial of NEOD001 could be initiated by mid-2014 assuming a phase 2 recommended dose is identified prior to that date.

 

 

 

3


   

Prothena Biosciences Inc (“Prothena US”) . Prothena US, a wholly-owned subsidiary of Neotope Biosciences, was organized as part of the reorganization transactions and will provide research and development services to Neotope Biosciences. Pursuant to the terms of the Research and Development Services Agreement, Prothena US will provide research and development services to Elan for a period of no less than 2 years following the separation and distribution.

Neotope Biosciences, Onclave, and Prothena US are collectively referred to herein as the “Prothena Subsidiaries.”

Strategy

We intend to advance and develop novel and proprietary therapeutic antibodies discovered by our scientists internally. Our goal is to be a leading biotechnology company focused on the discovery and development of novel antibodies for the potential treatment of a broad range of diseases that involve protein misfolding or cell adhesion. Key elements of our strategy to achieve this goal are to:

 

   

Continue to discover potential therapeutic antibodies directed against novel targets involved in protein misfolding and cell adhesion;

 

   

Quickly translate our research discoveries into clinical development;

 

   

Establish early clinical proof of concept with our potentially therapeutic antibodies;

 

   

Strategically collaborate or out-license select programs;

 

   

Highly leverage external talent and resources; and

 

   

Collaborate with scientific and clinical experts in disease areas of interest.

Reasons for the Separation and Distribution

The board of directors of Elan has determined that the separation and distribution are in the best interests of Elan and its shareholders because it will provide both Elan and Prothena the following key benefits: (i) greater strategic focus of financial resources and management’s efforts, (ii) direct and differentiated access to capital resources, (iii) enhanced investor choice through investment opportunities in two separate companies and (iv) enhanced management incentive tools.

Risk Factors

Our new company faces both general and specific risks and uncertainties that are described in detail under “Risk Factors” beginning on page 21. These risks and uncertainties relate to:

 

   

Our financial position, our need for additional capital and our business, including without limitation, risks arising out of the fact that we (i) have not generated any third party external revenues to date, (ii) expect to incur substantial losses for the foreseeable future, (iii) believe that our existing cash and cash equivalents will be sufficient to support us through June 30, 2015, following which we will require additional capital, which may or may not be available, (iv) are highly dependent on our ability to retain and attract qualified personnel and (v) will need to provide assurances to collaborators, prospective collaborators and suppliers that our financial resources and stability on a stand-alone basis is sufficient to satisfy their requirements for dong or continuing to do business with us;

 

   

The discovery, development and regulatory approval of drug candidates, including without limitation, risks arising out of the fact that (i) we are highly dependent on research and development programs that are at an early stage, (ii) we have no drug candidates in clinical trials and may not be able to progress drug candidates in the clinic or obtain regulatory approval for such drug candidates at all, or in a timely

 

 

4


 

manner, and (iii) our drug candidates will be subject to regulatory requirements, both before and after receipt of marketing approval, violation of which may subject us to administrative or judicially imposed sanctions;

 

   

The commercialization of our drug candidates, including without limitation, risks arising out of the fact that even if any of our candidates receive regulatory approval, (i) the approved product(s) may not achieve broad market acceptance or significant revenue, (ii) we may not be able to establish sufficient sales and marketing capabilities or enter into agreements with third parties to sell the approved product(s), (iii) the government and third-party payors may fail to provide adequate coverage and reimbursement rates for such drug candidate(s), (iv) the markets for our drug candidate(s) will be subject to intense competition, (v) we could incur substantial liabilities if a successful product liability or clinical trial claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities and (vi) we deal with hazardous materials and must comply with environmental laws and regulations;

 

   

Our dependence on third parties, including without limitation, risks arising out of the fact that we (i) will rely on third parties to conduct our clinical trials, (ii) may have to alter our research and development plans if we do not establish strategic collaborations, (iii) have no manufacturing capacity and have to rely on third-party manufacturers to produce our pre-clinical and clinical trial drug supplies, and (iv) will depend on third-party suppliers for key raw materials used in our manufacturing process;

 

   

Our intellectual property, including without limitation, risks arising out of the fact that (i) we may be unable to adequately protect the intellectual property relating to our drug candidates, (ii) our ability to successfully commercialize our drug candidates will be harmed if we infringe on the intellectual property rights of others, (iii) licenses to patent rights that we intend to enter into may be subject to termination if we fail to comply with our obligations under such licenses, (iv) litigation regarding patents, patent applications and other proprietary rights may be expensive, time consuming and result in delays in bringing drug candidates to market, (v) we may be unable to adequately prevent disclosure of trade secrets and other proprietary information and (vi) we may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employees;

 

   

The separation and distribution, including without limitation, risks arising out of the fact that (i) we may not realize some or all of the potential benefits we expect from our separation, (ii) our ability to operate our business effectively may suffer if we do not establish our own financial, administrative and other support functions, (iii) our accounting and other management systems and resources may not be adequately prepared to meet our financial reporting and other requirements, (iv) our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a separate, publicly-traded company, (v) the agreements entered into with Elan involve conflicts of interest, (vi) the IRS or the Revenue Commissioners of Ireland may successfully challenge the tax-free treatment of the separation and distribution, (vii) we expect to be treated as a “passive foreign investment company” for U.S. federal income tax purposes, (viii) the combined post-separation of value of Elan and Prothena shares may not equal or exceed the pre-separation value of Elan shares, (ix) certain of our executive officers and directors may have conflicts of interest after the distribution and (x) so long as we continue to be an emerging growth company, we will be exempt from certain reporting requirements; and

 

   

Our ordinary shares, including without limitation, risks arising out of the fact that (i) substantial sales of our ordinary shares may occur following the distribution, (ii) there is no existing market for our ordinary shares and a trading market that will provide you with adequate liquidity may not develop for our ordinary shares, (iii) we do not anticipate paying cash dividends, (iv) your percentage ownership in Prothena may be diluted in the future, (v) future sales of our ordinary shares cold adversely effect the trading price of our ordinary shares, (vi) Irish law may afford less protection to holders of our ordinary shares than the laws of the United States and (vii) our auditor is not inspected by the U.S. Public Company Accounting Oversight Board.

 

 

5


We urge you to see “Risk Factors” beginning on page 21 for a more thorough discussion of risk factors associated with our business, the separation and distribution and our ordinary shares.

Other Information

Prothena Corporation plc was incorporated as a private limited company, under the name “Neotope Corporation Limited”, under the laws of Ireland on September 26, 2012 and re-registered as a public limited company and changed its name to “Neotope Corporation plc” on October 25, 2012. On November 1, 2012, the shareholders of Prothena resolved, by way of special resolution, to change the name of the company to “Prothena Corporation plc”, and this was approved by the Irish Registrar of Companies on November 7, 2012. Our principal executive offices are located at 650 Gateway Boulevard, South San Francisco, California. Our telephone number is (650) 837-8550. Our registered office is 25-28 North Wall Quay, Dublin 1, Ireland. Our website address is www.prothena.com. Information contained on any website referenced in this information statement is not incorporated by reference in this information statement or in the Form 10 of which this information statement is a part.

Emerging Growth Company

We are an “Emerging Growth Company,” as defined in the Jumpstart Our Business Startups Act (or “JOBS Act”), and are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “Emerging Growth Companies.” These include, but are not limited to, (i) reduced obligations with respect to the disclosure of selected financial data in registration statements filed with the Securities and Exchange Commission (including the registration statement on Form 10 of which this information statement is a part), (ii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, (iii) an exception from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and the requirement to obtain shareholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act provides that an “Emerging Growth Company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the “Securities Act”) for complying with new or revised accounting standards. In other words, an “Emerging Growth Company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time and that election is irrevocable.

We could remain an “Emerging Growth Company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”), which would occur if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

 

6


QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION

The following is a brief summary of the terms of the separation and distribution. Please see “The Separation and Distribution and Related Transactions” for a more detailed description of the matters described below.

 

Q: What is the separation and distribution?

 

A: The separation and distribution is a series of transactions by which Elan will separate its Prothena Business from Elan’s other businesses. To complete the separation and distribution, we will issue 99.99% of our outstanding shares to holders of Elan ordinary shares and Elan ADSs, creating two separate, publicly traded companies. We expect that our ordinary shares will be listed on The Nasdaq Global Market.

 

Q: Will Elan hold any interest in Prothena after the separation and distribution?

 

A: Prior to the separation and distribution, a wholly-owned subsidiary of Elan agreed (conditioned on the consummation of the separation and distribution) to subscribe for newly-issued ordinary shares of Prothena, representing 18% of the outstanding ordinary shares of Prothena (as calculated immediately following the consummation of such subscription) for a cash payment to Prothena of $26.0 million. This subscription will be consummated immediately following the separation and distribution and immediately prior to the mandatory redemption by Prothena of the incorporator shares.

 

Q: