NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTION

Transcription

1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re ELAN CORPORATION SECURITIES LITIGATION Civil Action No. 02-CV-0865(RMB)(FM) This Document Relates To: ALL ACTIONS. CLASS ACTION NOTICE OF PENDENCY AND SETTLEMENT OF CLASS ACTION TO: ALL PERSONS OR ENTITIES THAT PURCHASED OR OTHERWISE ACQUIRED THE ADSs of ELAN CORPORATION, PLC ( ELAN ) FROM FEBRUARY 7, 2000 TO JULY 1, 2002, INCLUSIVE AND WERE DAMAGED THEREBY (THE CLASS, THE CLASS PERIOD ). PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS MAY BE AFFECTED BY PROCEEDINGS IN THIS ACTION. PLEASE NOTE THAT IF YOU ARE A MEMBER OF THE SETTLEMENT CLASS YOU MAY BE ENTITLED TO SHARE IN THE PROCEEDS OF THE SETTLEMENT FUND DESCRIBED IN THIS NOTICE. CLAIMS DEADLINE. TO CLAIM YOUR SHARE OF THIS FUND, YOU MUST SUB- MIT A VALID PROOF OF CLAIM AND RELEASE POSTMARKED ON OR BEFORE MARCH 15, EXCLUSION DEADLINE. REQUESTS FOR EXCLUSION MUST BE MAILED TO THE SETTLEMENT ADMINISTRATOR, POSTMARKED NO LATER THAN JANUARY 10, BANKS, BROKERS AND OTHER NOMINEES. PLEASE SEE THE INSTRUCTIONS IN SECTION XIV BELOW. This Notice has been sent to you pursuant to Rule 23 of the Federal Rules of Civil Procedure and an Order of the United States District Court for the Southern District of New York (the Court ). The purpose of this Notice is to inform you of the settlement of this class action (the Litigation ) and of the hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the Settlement. This Notice describes the rights you may have in connection with the Settlement and what steps you may take in relation to the Settlement and the Litigation. The Settlement creates a fund in the principal amount of $75,000, in cash (the Settlement Fund ) which is earning interest. Based on an estimate of the number of ADSs entitled to participate in the Settlement and the anticipated number of claims to be submitted by Settlement Class Member(s), the average distribution from the Settlement Fund would be approximately $0.50 per ADS before deduction of Courtapproved fees and expenses. However, your actual recovery from the Settlement Fund will depend on a number of variables, including the number of claimants, the number of ADSs you purchased, the expense of administering the claims process, and the timing of your purchases and sales of ADSs (if any).

2 The parties to the Litigation do not agree on the average amount of damages per ADS that would have been recoverable if Lead Plaintiffs were to have prevailed on the claims asserted in the Litigation, or even whether the Lead Plaintiffs would have prevailed on any of those claims. The issues on which the parties disagree include: (1) whether any of the statements made or facts allegedly omitted were false, material or otherwise actionable; (2) the extent to which external factors, such as general market conditions, influenced the trading price of Elan ADSs at various times during the Class Period; (3) the extent to which the various matters that Lead Plaintiffs alleged were materially false or misleading influenced (if at all) the trading price of Elan ADSs at various times during the Class Period; (4) the extent to which the various allegedly adverse material facts that Lead Plaintiffs alleged were omitted influenced (if at all) the trading price of Elan ADSs at various times during the Class Period; and (5) the appropriate economic model for determining the amount by which the trading prices of Elan ADSs were allegedly artificially inflated (if at all) at any time during the Class Period. Counsel for the Lead Plaintiffs believe that the Settlement is a substantial recovery and is in the best interests of the Settlement Class. Because of the risks associated with continuing to litigate and proceeding to trial, there was a danger that the Lead Plaintiffs would not have prevailed on any of their claims, in which case the Settlement Class would have received nothing. Indeed, Defendants assert that they never made any false or misleading statements or omissions at any time and substantially prevailed on a motion to dismiss the consolidated complaint. In addition, the amount of damages recoverable by the Settlement Class, if any, was and continues to be vigorously challenged by the Defendants. If the Litigation were tried, recoverable damages, if any, would have been limited to losses caused by conduct actionable under the laws and, had the Litigation gone to trial, Defendants intended to assert that all or most of the losses of the Members were caused by non-actionable factors. Defendants also would have asserted that throughout the Class Period the uncertainties and risks associated with Elan s business and financial condition were fully and adequately disclosed. Plaintiffs Lead Counsel have not received any payment for their services in conducting the Litigation on behalf of the Members of the Settlement Class, nor have they been reimbursed for all of their out-of-pocket expenditures. If the Settlement is approved by the Court, Plaintiffs Lead Counsel will apply to the Court for attorneys fees of up to 25% of the settlement proceeds, and reimbursement of expenses incurred not to exceed $600,000, all to be paid from the Settlement Fund. If the amounts requested by Plaintiffs Lead Counsel are approved by the Court, the average cost would be approximately $0.13 per ADS. The average cost per ADS could vary depending on the number of ADSs for which valid claims are submitted. This Notice is not an expression of any opinion by the Court about the merits of any of the claims or defenses asserted by any party in the Litigation. For further information regarding this Settlement you may contact: Rick Nelson, Lerach Coughlin Stoia Geller Rudman & Robbins LLP, 401 B Street, Suite 1700, San Diego, California 92101, Telephone: 800/ ; or Carolyn Moskowitz, Pomerantz Haudek Block Grossman & Gross LLP, 100 Park Avenue, 26th Floor, New York, New York , Telephone: 212/ Please do not contact the Court or Elan. I. NOTICE OF SETTLEMENT HEARING ON PROPOSED SETTLEMENT A settlement hearing will be held on February 18, 2005, at 2:30 p.m., before the Honorable Richard M. Berman, United States District Judge, Southern District of New York, Thurgood Marshall Courthouse, Courtroom 706, 40 Centre Street, New York, New York (the Settlement Hearing ). The purpose of the Settlement Hearing will be to determine: (1) whether the settlement consisting of $75,000, in cash (plus accrued interest) should be approved as fair, reasonable and adequate to Members of the Settlement Class (as defined below); (2) whether the proposed plan to distribute the settlement proceeds (the Plan of Allocation ) is fair, reasonable, and adequate; (3) whether the application by Plaintiffs Lead Counsel for an award of attorneys fees and reimbursement of expenses should be approved; and (4) whether the Litigation should be dismissed with prejudice and the Released Parties released from all Released Claims against them. The Court may adjourn or continue the Settlement Hearing or modify any dates set forth herein without further notice to the Settlement Class. 2

3 II. DEFINITIONS USED IN THIS NOTICE A. Authorized Claimant means a Member (or the representative of such Member including, without limitation, agents, administrators, executors, heirs, successors, and assigns), who submits a Proof of Claim and Release and who is entitled to a distribution from the Distribution Fund. B. Defendants means Elan Corporation, plc, Donal Geaney, Shane M. Cooke, Thomas G. Lynch, William F. Daniel, the Irish firm of KPMG ( KPMG-Ireland ), and KPMG LLP. C. Elan or the Company means Elan Corporation, plc. D. Final Judgment means that judgment to be entered by the Court, substantially in the form of Exhibit B to the Stipulation, approving the Settlement, dismissing the Litigation with prejudice and without costs to any party, releasing all Released Claims, and enjoining Members from instituting, continuing, or prosecuting any action asserting one or more Released Claims. E. Lead Plaintiffs means Norman J. Lefkovitz and S&T Investment Company. F. Member means any person or entity who is a member of the Settlement Class, and including, without limitation, the Lead Plaintiffs, but excluding those persons or entities who submit (or for whom are submitted) valid and timely requests for exclusion from the Settlement Class in accordance with the procedures set forth in Section IX of this Notice. G. Net Settlement Fund or Distribution Fund means the Settlement Fund less all fees and expenses allowed by the Court, any notice and administration expenses, and any taxes that may be payable from the Settlement Fund. H. Plaintiffs Executive Committee Members means Gregory Van Kipnes, Michael Pennock, Randy Spokane and Charles Tighe. I. Plaintiffs Lead Counsel means Lerach Coughlin Stoia Geller Rudman & Robbins LLP and Pomerantz Haudek Block Grossman & Gross LLP. J. Plan of Allocation means that plan or formula of allocation of the Distribution Fund described herein, which plan or formula shall govern the distribution of the Distribution Fund. K. Released Claims means any and all claims, including Unknown Claims, rights, demands, causes of action, suits, matters, and issues, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, that have been, might have been or could be asserted against the Released Parties by or on behalf of Lead Plaintiffs or any Member of the Settlement Class, arising out of or related, directly or indirectly, in any way, to both the purchase or other acquisitions of publicly traded Elan ADSs during the Class Period (February 7, 2000 to July 1, 2002) and the allegations set forth or that could have been set forth in the Litigation by Lead Plaintiffs. L. Released Parties means each and every one of the following: the Defendants and each of their respective present and former parents, principals, subsidiaries, affiliates, general or limited partners or partnerships, directors, officers, employees, agents, insurers, co-insurers, re-insurers, attorneys, accountants, auditors, advisors, investment bankers and underwriters (in their capacity as underwriters or financial advisors to Elan and not with respect to any brokerage services provided to any Settlement Class Member), consultants, predecessors, successors, heirs, assigns, administrators, executors, trustees, personal representatives and immediate families. M. Settlement Administrator means Berdon Claims Administration LLC or such other or subsequent person or entity that the Court shall appoint. N. Settlement Class means all persons or entities who purchased or otherwise acquired the publicly traded ADSs of Elan from February 7, 2000 to July 1, 2002, inclusive and were damaged thereby (the Class ), including, without limitation, two subclasses consisting of: (1) all persons who acquired Elan ADSs as a result 3

4 of the merger with The Liposome Company, Inc. on or about May 12, 2000 (the Liposome Merger Sub- Class ); and (2) all persons who acquired Elan ADSs as a result of the merger with Dura Pharmaceuticals, Inc. on or about November 9, 2000 (the Dura Merger Sub-Class ). Excluded from the Settlement Class are Defendants, officers and directors of the Company, as well as their families; members of the immediate family of each of the individual Defendants; any entity in which any Defendant has or had a controlling interest; the legal representatives, heirs, executors, successors or assigns of any such excluded party; and those members of the Settlement Class that timely and validly exclude themselves from the Settlement Class. O. Settlement Effective Date means the date upon which the Final Judgment becomes both final and no longer subject to appeal or review (or further appeal or review), whether by exhaustion of any possible appeal, lapse of time, or otherwise. P. Settlement Fund means the payments to be made in accordance with paragraph 3 of the Stipulation, including any interest earned thereon. Q. Settlement Hearing means the hearing to be held by the Court to consider final approval of the Settlement pursuant to Rule 23(e) of the Federal Rules of Civil Procedure. R. Settling Parties means the Lead Plaintiffs, the Members, and the Defendants. S. Stipulation shall mean the Stipulation and Agreement of Settlement dated as of October 21, T. Unknown Claims means any Released Claims which any Lead Plaintiff or Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Parties which, if known by him, her or it, might have affected his, her or its settlement with and release of the Released Parties, or might have affected his, her or its decision not to object to this Settlement. With respect to any and all Released Claims, upon the Settlement Effective Date, the Plaintiffs, and each of the Members, by operation of the Final Judgment, waive any and all provisions, rights and benefits conferred by Cal. Civ. Code 1542, which provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXE- CUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR, and any other law of any jurisdiction (domestic or foreign), or principle of common law, which is similar, comparable, or equivalent to said provision. III. LITIGATION On and after February 4, 2002 the following cases were filed in or transferred to the United States District Court for the Southern District of New York (the Court ): A. Pinkowitz v. Elan Corp., et al., No. 02-cv-0865; B. Israel v. Elan Corp., et al., No. 02-cv-0871; C. Birnbaum v. Elan Corp., et al., No. 02-cv-0892; D. Cohen v. Elan Corp., et al., No. 02-cv-0907; E. Mirken v. Elan Corp., et al., No. 02-cv-0928; F. Housman v. Elan Corp., et al., No. 02 Civ. 930; G. Kahn v. Elan Corp., et al., No. 02-cv-0943; H. Wilen v. Elan Corp., et al., No. 02-cv-0949; I. Moy v. Elan Corp., et al., No. 02-cv-0970; 4

5 J. Sprengel v. Elan Corp., et al., No. 02-cv-0986; K. Gersten v. Elan Corp., et al., No. 02-cv-1005; L. Siegel v. Elan Corp., et al., No. 02-cv-1021; M. Lerner v. Elan Corp., et al., No. 02-cv-1042; N. Tehrani v. Elan Corp., et al., No. 02-cv-1096; O. Lakhani v. Elan Corp., et al., No. 02-cv-1107; P. Eisdorfer v. Elan Corp., et al., No. 02-cv-1144; Q. Nowak v. Elan Corp., et al., No. 02-cv-1152; R. Abe Siegel Trustee v. Elan Corp., et al., No. 02-cv-1306; S. Chernekoff v. Elan Corp., et al., No. 02-cv-1358; T. Klein v. Elan Corp., et al., No. 02-cv-3746; U. Krim v. Elan Corp., et al., No. 02-cv-1611; V. Krause v. Elan Corp., et al., No. 02-cv-1616 W. Gallai v. Elan Corp., et al., No. 02-cv-1655; X. Baker v. Elan Corp., et al., No. 02-cv-1858; Y. Wheelock v. Elan Corp., et al., No. 02-cv-1890; Z. Pomerantz v. Elan Corp., et al., No. 02-cv-1903; AA. Vajdos v. Elan Corp., et al., No. 02-cv-1911; BB. Pope v. Elan Corp., et al., No. 02-cv-4231; CC. Curtis v. Elan Corp., et al., No. 02-cv-4310; DD. Dodd v. Elan Corp., et al., No. 02-cv-4312; EE. Fruchter v. Elan Corp., et al., No. 02-cv-4313; FF. Sheniak v. Elan Corp., et al., No. 02-cv-4314; and GG. Harris v. Elan Corp., et al., No. 02-cv By Order dated August 7, 2002, the Court consolidated all such actions under the caption In re Elan Securities Litigation, No. 02-cv-0865(RMB)(FM) (the Litigation or the Action )). On December 3, 2002, the Court appointed S&T Investment Company and Dr. Norman Lefkovitz as Lead Plaintiffs and approved Lead Plaintiffs choice of counsel, and by Order dated December 11, 2002, appointed plaintiffs Gregory Van Kipnes, Michael Pennock, Randy Spokane and Charles Tighe as members of Plaintiffs Executive Committee. On or about January 24, 2003, Lead Plaintiffs filed a Consolidated Complaint (the Complaint ). The Complaint generally alleges that the Defendants violated 10(b), 14(a) and 20(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b), 78n(a) and 78t(a)) and Rule 10b-5 of the Securities and Exchange Commission (17 C.F.R b-5) and 11, 12(a)(2) and 15 of the Securities Act of 1933 (15 U.S.C. 77k, 77l(a)(2) and 77o). Counsel for Lead Plaintiffs and counsel for the Defendants have engaged in substantial arm s-length negotiations in an effort to resolve the Litigation. These negotiations included conducting numerous telephone conferences between the parties and mediations before Judge Nicholas Politan (Ret.), during which the terms of any agreement were extensively debated and negotiated. 5

6 IV. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT The amended consolidated complaint dated January 24, 2003 asserts that during the Class Period, defendants improperly accounted for significant transactions, and otherwise failed to adequately disclose material information regarding those transactions, thereby artificially inflating the price of Elan ADSs. A May 18, 2004 report issued by United States Magistrate Judge Frank Maas recommended to United States District Judge Richard M. Berman dismissal of all the accounting claims and disclosure claims related to Elan s transactions with Joint Business Ventures during the Class Period, as well as dismissal of all claims asserted against Elan s outside auditors. The report also recommended that plaintiffs be permitted to proceed with claims that Elan failed to adequately disclose information regarding other transactions during the Class Period, but not how the company accounted for such transactions. On October 25, 2004, Elan announced that it had entered into a provisional agreement with the Staff of the Securities and Exchange Commission (the "SEC") to settle the investigation by the SEC's Division of Enforcement that commenced in February 2002, whereby Elan agreed to pay a civil penalty of $15 million without admitting to any of the allegations regarding violations alleged in a complaint to be filed by the SEC. In connection with the SEC settlement, the SEC will not require Elan to restate or adjust any of its historic financial results or information. This provisional agreement is subject to final approval by the SEC Commissioners. The Lead Plaintiffs believe that the claims asserted in the Litigation have merit. However, counsel for the Lead Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and appeal. Counsel for the Lead Plaintiffs also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as the Litigation, as well as the difficulties and delays inherent in such litigation. Counsel for the Lead Plaintiffs also are mindful of the inherent problems of proof of, and possible defenses to, the violations asserted in the Litigation. Counsel for the Lead Plaintiffs believe that the Settlement set forth in the Stipulation confers substantial benefits upon and is in the best interests of the Settlement Class. In agreeing to the Settlement, Lead Plaintiffs and their counsel have considered documents and information developed through their own investigation of the claims asserted in this case, as well as documents produced by Elan, including transcripts of depositions of key Elan personnel (including several of the individual defendants) before the Securities & Exchange Commission ( SEC ) in connection with the agency s recent investigation of the Company; documents exchanged between Elan and the SEC in 1999 regarding accounting for Elan s Joint Business Ventures; and other documents produced by Elan to the SEC in connection with the agency s recent investigation. V. DEFENDANTS STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY The Defendants have denied and continue to deny each and all of the claims and contentions alleged by the Lead Plaintiffs in the Litigation. The Defendants expressly have denied and continue to deny all charges of wrongdoing or liability against them or any of them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Litigation. The Defendants also have denied and continue to deny, inter alia, the allegations that the Lead Plaintiffs or Settlement Class Members have suffered any damage or harm, that the price of Elan ADSs was artificially inflated by reason of any alleged misrepresentations, non-disclosures or otherwise, or that the Lead Plaintiffs or the Settlement Class Members were harmed by any of the conduct alleged in the Litigation. Nonetheless, the Defendants have concluded that further conduct of the Litigation would be protracted, expensive, and distracting and that it is desirable that the Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in the Stipulation. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like the Litigation. The Defendants have, therefore, determined that the Litigation should be settled in the manner and upon the terms and conditions set forth in the Stipulation. 6

7 VI. TERMS OF THE PROPOSED SETTLEMENT The Settlement Fund ( Settlement Fund ) consists of $75 million in cash, plus interest thereon. A portion of the Settlement Fund will be used for certain administrative expenses, including costs of printing and mailing notice of the Settlement, the cost of publishing newspaper notices, payment of any taxes assessed against the Settlement Fund and costs associated with the processing of claims submitted. In addition, as explained below, a portion of the Settlement Fund may be awarded by the Court to plaintiffs counsel as attorneys fees and for reimbursement of out-of-pocket expenses. The balance of the Settlement Fund (the Net Settlement Fund or the Distribution Fund ) will be distributed according to the Plan of Allocation described below to the Settlement Class Members who submit valid and timely Proof of Claim and Release forms. VII. PLAN OF ALLOCATION The Net Settlement Fund will be distributed to Settlement Class Members who submit valid and timely Proof of Claim and Release forms ( Authorized Claimants ) under the Plan of Allocation described here. In the event that the Court does not approve the Plan of Allocation, plaintiffs may alter the plan (subject to Court approval) without any further notice to Members, unless such Members expressly request notice of alteration of the plan. In order to receive such notice, you must send a request no later than January 10, 2005 to the Settlement Administrator at the address set forth below. To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant s claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage of the Net Settlement Fund that each Authorized Claimant s claim bears to the total of the claims of all Authorized Claimants. Payment in this manner shall be deemed conclusive against all Authorized Claimants. Claims will be calculated as follows: A. For ADSs purchased from February 7, 2000 through July 1, 2002 excluding ADSs acquired in the Liposome and Dura mergers: 1. For ADSs of Elan purchased from February 7, 2000 through July 18, 2000, and: a. sold prior to July 2, 2002, the claim per ADS is equal to $0; b. retained at the end of July 1, 2002, the claim per ADS is equal to $0.10 per share. 2. For ADSs of Elan purchased from July 19, 2000 through April 22, 2001, and: a. sold prior to July 2, 2002, the claim per ADS is equal to $0; b. retained at the end of July 1, 2002, the claim per ADS is equal to $1.60 per ADS (50% of the market adjusted price decline on July 2, 2002). 3. For ADSs of Elan purchased from April 23, 2001 through January 29, 2002, and: a. sold prior to January 30, 2002, the claim per ADS is equal to $0; b. sold from January 30, 2002 through July 1, 2002, the claim per ADS is equal to $2.99 per ADS (50% of the market adjusted price decline on January 30, 2002); c. retained at the end of July 1, 2002, the claim per ADS is equal to $4.59 per ADS (50% of the market adjusted price decline on January 30, 2002 plus 50% of the market adjusted price decline on July 2, 2002). 4. For ADSs of Elan purchased from January 30, 2002 through July 1, 2002, and: a. sold prior to July 2, 2002, the claim per ADS is equal to $0; b. retained at the end of July 1, 2002, the claim per ADS is equal to $1.60 per ADS (50% of the market adjusted price decline on July 2, 2002). 7

8 B. For ADSs acquired in the Liposome and Dura Mergers: 1. For ADSs of Elan acquired in the May 12, 2000 Liposome Merger, and: a. sold prior to July 2, 2002 at a gain (i.e., sales price above Elan s May 12, 2000 closing price of $39.94 per ADS), the claim per ADS is equal to $0; b. sold prior to July 2, 2002 at a loss (i.e., a sales price below Elan s May 12, 2000 closing price of $39.94 per ADS), the claim per ADS is $0.10 per share; c. retained at the end of July 1, 2002, the claim per ADS is equal to $0.15 per ADS. 2. For ADSs of Elan acquired in the November 9, 2000 Dura Merger, and: a. sold prior to July 2, 2002 at a gain (i.e., a sales price above Elan s November 9, 2000 closing price of $46.25 per ADS), the claim per ADS is equal to $0; b. sold prior to July 2, 2002 at a loss (i.e., a sales price below Elan s November 9, 2000 closing price of $46.25 per ADS), the claim per ADS is $0.10 per ADS; c. retained at the end of July 1, 2002, the claim per ADS is equal to $2.40 per ADS. C. General Provisions: 1. In processing claims, the first-in, first-out basis ( FIFO ) will be applied to purchases and sales. 2. Only those Authorized Claimants who sustained a Net Recognized Loss shall be entitled to share in the proceeds from the Net Settlement Fund. Net Recognized Losses shall be computed by deducting any Recognized Profits from Recognized Losses (as computed according to the above formula). Recognized Profits are those transactions which, as a result of applying the foregoing formula, resulted in a gain rather than a loss. Just as Recognized Losses under the foregoing formula will be less than transactional losses, so too will Recognized Profits be less than transactional profits. 3. The date of purchase or sale is the contract or trade date, and not the settlement date. 4. Brokerage commissions, fees and taxes should be excluded from the purchase or sale price of Elan ADSs. 5. Members of the class who do not file acceptable Proofs of Claim will not share in the Settlement proceeds, yet will nevertheless be bound by the Court judgments and the Settlement. 6. No person shall have any claim against plaintiffs counsel, the Settlement Administrator or other agent designated by plaintiffs counsel, or any defendant or any defendant s counsel based on the distribution made substantially in accordance with the Stipulation and the Plan of Allocation or further Orders of the court. The Court has reserved jurisdiction to allow, disallow or adjust the claim of any Settlement Class Member on equitable grounds. VIII. PARTICIPATION IN THE SETTLEMENT CLASS If you fall within the definition of the Settlement Class, you are a Settlement Class Member unless you elect to be excluded from the Settlement Class (see Section IX below). If you do not request to be excluded from the Settlement Class, you will be bound by any Final Judgment entered with respect to the Settlement in the Litigation whether or not you submit a Proof of Claim and Release form. If you are a Settlement Class Member, you need do nothing (other than timely file a properly filled out Proof of Claim and Release form if you wish to participate in the distribution of the Net Settlement Fund). Your interests will be represented by Plaintiffs Lead Counsel. If you choose, you may enter an appearance individually or through your own counsel at your own expense; provided, however, that in order to be heard at the Settlement Hearing or pose an objection to the Settlement, you and your counsel must follow the procedures set forth in Section XIII below. 8

9 TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM THAT ACCOM- PANIES THIS NOTICE. The Proof of Claim and Release form must be postmarked on or before March 15, 2005, and sent to the Settlement Administrator at the address below. Unless the Court orders otherwise, if you do not timely submit a valid Proof of Claim and Release form, you will be barred from receiving any payments from the Net Settlement Fund, but will in all other respects be bound by the provisions of the Stipulation and the Final Judgment. IX. EXCLUSION FROM THE CLASS You may request to be excluded from the Settlement Class. To do so, you must mail a written request stating that you wish to be excluded from the Settlement Class to the Settlement Administrator at: Elan Securities Litigation c/o Berdon Claims Administration LLC P.O. Box 9014 Jericho, NY The request for exclusion must state: (1) your name, address, and telephone number; and (2) all purchases and sales of Elan ADSs made during the Class Period, including the dates of purchase or sale, the number of shares of such securities purchased or sold and the price paid or received per share and documentation in support thereof. YOUR EXCLUSION REQUEST MUST BE POSTMARKED ON OR BEFORE JANUARY 10, 2005, AND, IN ORDER TO BE VALID, MUST CONTAIN ALL OF THE FOREGOING INFORMATION. IF YOU SUBMIT A VALID AND TIMELY REQUEST FOR EXCLUSION, YOU SHALL HAVE NO RIGHTS UNDER THE SETTLEMENT, SHALL NOT SHARE IN THE DISTRIBUTION OF THE NET SETTLEMENT FUND, AND SHALL NOT BE BOUND BY THE STIPULATION OR THE FINAL JUDGMENT. X. DISMISSAL AND RELEASES If the Settlement is approved, the Court will enter a Final Judgment in the Litigation. The Final Judgment will dismiss the Released Claims with prejudice as to all Defendants. The Final Judgment will also provide that all Members who have not validly and timely requested to be excluded from the Settlement Class shall be deemed to have released and forever discharged all Released Claims (to the extent Members have such claims) against all Released Parties. XI. APPLICATION FOR FEES AND EXPENSES At the Settlement Hearing, Plaintiffs Lead Counsel will request the Court to award attorneys fees of up to 25% of the Settlement Fund, plus reimbursement of expenses, not to exceed $600,000, which were incurred in connection with the Litigation, plus interest thereon. This compensation will be paid from the Settlement Fund. Members are not personally liable for any such fees or expenses. To date, plaintiffs counsel have not received any payment for their services in conducting the Litigation. XII. CONDITIONS FOR SETTLEMENT The Settlement is conditioned upon the occurrence of certain events described in the Stipulation. Those events include, among other things: (1) entry of the Final Judgment by the Court as provided for in the Stipulation; and (2) expiration of the time to appeal from or alter or amend the Final Judgment. In addition, Elan has the right to terminate the Settlement should requests for exclusion exceed 5% of the number of Elan 9

10 ADSs purchased during the Class Period. If, for any reason, any one of the conditions described in the Stipulation is not met, the Stipulation might be terminated and, if terminated, will become null and void, and the parties to the Stipulation will be restored to their respective positions as of August 23, XIII. THE RIGHT TO BE HEARD AT THE SETTLEMENT HEARING Any Member who has not validly and timely requested to be excluded from the Settlement Class, and who objects to any aspect of the Settlement, the Plan of Allocation, or the application for attorneys fees and expenses, may appear and be heard at the Settlement Hearing. Any such person must file a written notice of objection, filed with the Clerk of the Court on or before January 10, 2005, and served by hand or first class mail on each of the following: CLERK OF THE COURT UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Daniel Patrick Moynihan United States Courthouse 500 Pearl Street New York, NY and LERACH COUGHLIN STOIA GELLER POMERANTZ HAUDEK BLOCK RUDMAN & ROBBINS LLP GROSSMAN & GROSS LLP KEITH F. PARK MARC I. GROSS TRAVIS DOWNS III 100 Park Avenue 401 B Street, Suite th Floor San Diego, CA New York, NY Lead Counsel for Plaintiffs SHEARMAN & STERLING LLP HOWREY SIMON ARNOLD STUART J. BASKIN & WHITE LLP JACULIN AARON RICHARD W. BECKLER 599 Lexington Avenue HEATHER D. MCALLISTER New York, NY Pennsylvania Avenue, N.W. Washington, D.C Attorneys for Defendants Elan Corporation, Shane M. Cooke, and William F. Daniel Attorneys for Defendant Thomas G. Lynch PRYOR CASHMAN SHERMAN WILLKIE FARR & GALLAGHER LLP & FLYNN LLP MICHAEL R. YOUNG DONALD S. ZAKARIN 787 Seventh Avenue LISA M. BUCKLEY New York, NY Park Avenue, 10th Floor New York, NY Attorneys for Defendant Donal Geaney Attorneys for Defendant KPMG-Ireland GIBSON, DUNN & CRUTCHER LLP CHERYL JUSTICE 333 South Grand Avenue Los Angeles, CA Attorneys for Defendant KPMG LLP 10

11 Any such written objection must demonstrate the objecting person s membership in the Settlement Class, including documentation of the number of Elan ADSs purchased and sold during the Class Period, and contain a statement of the reasons for objection. Only Members who have submitted written notices of objection in this manner will be entitled to be heard at the Settlement Hearing, unless the Court orders otherwise. XIV. SPECIAL NOTICE TO NOMINEES If you, as nominee for a beneficial owner, hold or held any Elan ADSs purchased during the Class Period, then, within ten (10) days after you receive this Notice, you must either: (1) provide a list of the names and addresses of such beneficial owners to the Settlement Administrator, preferably on computer-generated mailing labels or, electronically in MS Word or WordPerfect files (label size Avery 5162); or in an MS Excel data table, setting forth (a) title/registration, (b) street address, (c) city/state/zip; or (2) send a copy of this Notice and the Proof of Claim and Release by first class mail to all such beneficial owners, providing written confirmation to the Settlement Administrator of having done so. If you choose to mail the Notice and Proof of Claim and Release yourself, you may obtain (without cost to you) as many additional copies of these documents as you will need to complete the mailing by contacting the Settlement Administrator at: Elan Securities Litigation c/o Berdon Claims Administration LLC P.O. Box 9014 Jericho, NY Telephone: 800/ Fax: 516/ Website: Regardless of whether you choose to complete the mailing yourself or elect to have the mailing performed for you, you are entitled to reimbursement for reasonable administrative costs actually incurred by you in connection with forwarding the Notice and Proof of Claim and Release form and which would not have been incurred but for the obligation to forward the Notice and Proof of Claim and Release form, after submission of appropriate documentation to the Settlement Administrator. XV. EXAMINATION OF PAPERS This Notice is a summary and does not describe all of the details of the Stipulation. For full details of the matters discussed in this Notice, you may review the pleadings and Stipulation filed with the Court, which may be inspected during business hours, at the office of the Clerk of the Court, United States District Court, Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York Further, the Stipulation and Agreement of Settlement and its exhibits, the Complaint and additional copies of this Notice and the Proof of Claim and Release are available on the Internet at 11

12 If you have any questions about the Settlement of the Litigation, you may contact Plaintiffs Lead Counsel by writing: LERACH COUGHLIN STOIA GELLER POMERANTZ HAUDEK BLOCK RUDMAN & ROBBINS LLP GROSSMAN & GROSS LLP WILLIAM S. LERACH MARC I. GROSS KEITH F. PARK 100 Park Avenue TRAVIS DOWNS III 26th Floor 401 B Street, Suite 1700 New York, NY San Diego, CA If you need additional copies of the Notice or Proof of Claim and Release, contact the Settlement Administrator as set forth in Section XIV above. PLEASE DO NOT CONTACT THE COURT OR ELAN REGARDING THIS NOTICE. Dated: November 8, 2004 BY ORDER OF THE COURT UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 12