UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO

Transcription

1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO JOHN B. BLYLER AND MALCOLM J. CORSE, on behalf Case No. C BLW of themselves and all others similarly situated, Plaintiffs, v. WILLIAM J. AGEE, et al., Defendants. NOTICE OF CLASS ACTION AND PROPOSED CLASS ACTION SETTLEMENT, AND FINAL FAIRNESS AND APPROVAL HEARING TO: ALL CURRENT AND FORMER PARTICIPANTS OF THE MORRISON KNUDSEN SAVINGS PLAN ( SAVINGS PLAN WHO HELD SHARES OF MORRISON KNUDSEN STOCK IN THEIR SAVINGS PLAN ACCOUNTS ON OR AFTER JULY 19, 1994; AND ALL INDIVIDUALS WHO WERE PARTICIPANTS OF THE MORRISON KNUDSEN EMPLOYEE STOCK OWNERSHIP PLAN ( ESOP ON OR AFTER JULY 19, THIS NOTICE MAY AFFECT YOUR RIGHTS; PLEASE READ IT CAREFULLY AND IN ITS ENTIRETY. I. PURPOSE OF THIS NOTICE Your rights may be affected by a lawsuit pending in this Court, Case No. C BLW. This is not a notification that you have been sued. To the contrary, this a notice of a class action lawsuit and proposed settlement of the class action from which you may benefit. Plaintiffs John B. Blyler and Malcolm J. Corse ( Plaintiffs have alleged that twenty-nine named defendants ( Defendants breached fiduciary duties allegedly owed to the Morrison Knudsen ( MK Savings Plan and the former MK Employee Stock Ownership Plan (the ESOP (collectively the Plans participants under the Employee Retirement Income Security Act of 1974 ( ERISA, with respect to the prudence of investment in shares of MK stock held in the Plans on and after July 19, Plaintiffs allege that these Defendants are liable for losses incurred in the ESOP and Savings Plan participants accounts by continuing to offer MK stock as an investment option to Savings Plan participants and as the investment vehicle of the ESOP on and after July 19, 1994, when it was allegedly not prudent to do so, among other allegations. Each and every one of the Defendants denies these allegations, claims and charges. The Court has not ruled on the merits of the Plaintiffs claims or on the denials and other defenses made by the Defendants. The Court, however, has ruled that this lawsuit may be maintained as a class action and has certified a class of Plaintiffs (hereinafter the Plaintiff Class consisting of: All participants in the Morrison Knudsen Employee Stock Ownership Plan on and after July 19, 1994, and their beneficiaries, and all participants in the Morrison Knudsen Savings Plan for whose benefit the Savings Plan held MK common stock after July 19, 1994, and their beneficiaries, but excluding all of the defendants and their beneficiaries. The Defendants reserve the right to ask the Court to change this definition to include all participants, including certain named Defendants, in the MK ESOP and Savings Plan during the class period. You are receiving this Notice because you may be, or have been identified as a member of the Plaintiff Class, and the purpose of this Notice is to advise you of these events and their potential effect on your rights, including a statement of your rights with respect to the proposed settlement of this case. The determination that this lawsuit is to be maintained as a class action means that the final outcome of this lawsuit, whether by settlement or by litigation and whether favorable to the Plaintiffs or to the Defendants, will apply in like manner to every member of the Plaintiff Class. You do not have the ability to opt out of the Plaintiff Class.

2 Pursuant to Rule 23 of the Federal Rules of Civil Procedure and an order of the Court listed above, this notice will inform you of the terms of the proposed settlement of this class action 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 this class action litigation. This Notice also advises you of your right to object to the settlement or any part thereof. The giving of this Notice is not to be understood as expressing any opinion by this Court as to the merits of any of the claims or defenses asserted by any party herein, and is for the sole purpose of informing all class members of the class action and proposed settlement, so that individual class members may make whatever decisions they may deem appropriate for the protection of their interests. II. DESCRIPTION OF LITIGATION. On July 18, 1997, Plaintiffs filed a class action lawsuit on behalf of themselves and other participants in the former MK ESOP and the MK Savings Plan. The First Amended Complaint in this lawsuit was filed on July 21, The remaining defendants in this case are: MK, the Committee for the MK ESOP, the Administrative Committee for the MK Savings Plan, T. Rowe Price Trust Company, Mellon Bank, N.A., Stephen Hanks, Roger Allen, Karen Ogden and John Zabala (hereinafter the Remaining Defendants. The First Amended Complaint alleges violations of ERISA, the national law governing private retirement plans in the United States. The Plaintiffs contend that the each of the Remaining Defendants were fiduciaries of the MK ESOP and/or Savings Plan and failed to meet the standard of care required of ERISA fiduciaries with respect to the prudence of continued investment in shares of MK stock held by the ESOP and Savings Plan on and after July 19, Each of the Remaining Defendants has denied and continues to deny each and every allegation of wrongdoing set forth in the First Amended Complaint. The Remaining Defendants believe they acted in accordance with the law at all time relevant to this lawsuit. III. NOTICE OF PROPOSED CLASS SETTLEMENT The following is a summary of the terms of the Class Action Stipulation of Settlement and Release of All Claims (the Settlement Agreement. The actual Settlement Agreement controls all terms of the settlement, and a copy of the Settlement Agreement is attached. Subject to Court approval, the Plaintiffs and the Defendants have agreed on a settlement for monetary relief valued at Twenty-One Million Dollars ($21,000, This payment will be in final settlement of all claims by every member of the Plaintiff Class against all Defendants. The Defendants do not admit they did anything wrong, or that they are liable to pay the Plaintiff Class anything, or that there is any merit to the charges made by Plaintiffs. Instead, the proposed settlement with Plaintiffs is a compromise of disputed claims. In return for the payment by certain contributing parties into the Settlement Fund, all claims against the Defendants held by members of the Plaintiff Class will be dismissed with prejudice and all members of the class will be forever barred from any future litigation asserting those released claims. Any monies held in the Settlement Fund shall be initially deposited into a non-interest bearing Escrow Account, but may be transferred into an interest bearing account 180 days following the Effective Date of the Settlement Agreement or upon receipt of any returned distribution check for any member of the Class. This Settlement Fund, totaling Twenty-One Million Dollars ($21,000,000.00, will, after reduction for such fees in an amount not to exceed thirty-three and one-third percent (33 1/3% and expenses of the Plaintiffs counsel as may be allowed by the court, and the administrative costs of effecting this settlement ( Administrative Expenses, be distributed to class members in a method to be determined by the court. The court has not fixed the amount of fees and expenses to be allowed, nor has the court determined the precise method of allocating and distributing the net settlement fund to class members. The parties have agreed that the cost of all Administrative Expenses shall be shared equally by Washington Group, Inc. and the Settlement Fund. Class Counsel will seek the payment of an incentive award to representative Plaintiffs John B. Blyler and Malcolm J. Corse in an amount not to exceed $25,000 each. The Defendants reserve the right to oppose any application made to the court by Plaintiffs counsel for the payment of incentive awards. Although the exact amounts to be distributed to individual class members cannot be accurately determined until the above fees and expenses have been fixed, the method for calculating the settlement amount to be awarded to each class member has been determined. After payment from the Settlement Fund of all costs and fees as the Court may allow, the Settlement Fund will be divided into two amounts representing the proportion of MK stock held by each plan. Seventy- Eight percent (78% of the net Settlement Fund will be allocated for calculating and distributing settlement amounts to MK Savings Plan participants, and Twenty-Two percent (22% of the net Settlement Fund will be allocated for calculating and distributing settlement amounts to MK ESOP participants. Individual settlement amounts will be calculated as follows: 2

3 (i The Settlement Fund shall be divided into two amounts as follows: (A = (B = 78% of the Settlement Fund shall be allocated for calculating and distributing Settlement Amounts to MK Savings Plan Participants and former MK Savings Plan Participants in the Plaintiff Class 22% of the Settlement Fund shall be allocated for calculating and distributing Settlement Amounts to former MK ESOP Participants in the Plaintiff Class Settlement Amounts shall then be calculated as follows: (ii For MK Savings Plan Participants and former MK Savings Plan Participants in the Plaintiff Class, (A a claimant s Savings Settlement Factor = A+B-C-D/ E where: a A= the dollar value, if any, of a Savings Plan Participant s balance in MK stock on the first day of the Class Period; b B= the dollar value, if any, of all purchases of MK stock, including transfers of MK stock into a Savings Plan Participant s account, by a Savings Plan Participant during the Class Period as of the time of purchase(s; c C= the dollar value, if any, of all sales of MK stock, including transfers of MK stock out of a Savings Plan Participant s account, of MK stock during the Class Period as of the time of such sales; d D=the value of MK shares in a Savings Plan Participant s account on September 11, 1996; e E= the sum of all claimants Savings Settlement Factors (B a claimant s Settlement Amount = cash in an amount equal to the product of the claimant s Savings Settlement Factor and all monies held in the Savings Plan Net Settlement Fund immediately prior to the distribution of Settlement Amounts on the Settlement Distribution Date. (iii For former MK ESOP Participants in the Plaintiff Class: (A a claimant s ESOP Settlement Factor = A+B-C/ D, where a A= the dollar value, if any, of an ESOP Participant s balance in MK stock on the first day of the Class Period; b B= the dollar value, if any, of all purchases of MK stock, including transfers of MK stock into an ESOP Participant s account, during the Class Period as of the time of purchase(s; c C= the dollar value, if any, of all sales of MK stock, including transfers of MK stock out of a ESOP Participant s account, during the Class Period as of the time of such sales; d D=the sum of all claimants ESOP Settlement Factors (B a claimant s Settlement Amount = (1 cash in an amount equal to the product of the claimant s ESOP Settlement Factor and all monies held in the ESOP Net Settlement Fund immediately prior to the distribution of Settlement Amounts on the Settlement Distribution Date; plus (2 Washington Group Common Stock, if any, in an amount equal to the product of the claimant s ESOP Settlement Factor and all Washington Group Common Stock held in the ESOP Net Settlement Fund immediately prior to the distribution of Settlement Amounts on the Settlement Distribution Date; plus 3

4 (3 Washington Group Tranche A Warrants, if any, in an amount equal to the product of the claimant s ESOP Settlement Factor and all Washington Group Tranche A Warrants held in the ESOP Net Settlement Fund immediately prior to the distribution of Settlement Amounts on the Settlement Distribution Date; plus (4 Washington Group Tranche B Warrants, if any, in an amount equal to the product of the claimant s ESOP Settlement Factor and all Washington Group Tranche B Warrants held in the ESOP Net Settlement Fund immediately prior to the distribution of Settlement Amounts on the Settlement Distribution Date; plus (5 Washington Group Tranche C Warrants, if any, in an amount equal to the product of the claimant s ESOP Settlement Factor and all Washington Group Tranche C Warrants held in the ESOP Net Settlement Fund immediately prior to the distribution of Settlement Amounts on the Settlement Distribution Date. Because Washington Group, Inc. and certain subsidiaries filed petitions to reorganize under Chapter 11 of the United States Bankruptcy Code, on May 14, 2001, certain contributions to the Settlement Fund are subject to Bankruptcy Court approval and must be made in the form of Washington Group, Inc. Common Stock and Warrants. Class Counsel have agreed with the escrow agent chosen by the parties that immediately upon receipt of any Washington Group, Inc. stock or warrants, such stock and warrants will be sold. Class Counsel will not make any decisions concerning the financial condition of Washington Group, Inc. or the prudence of continued investment in Washington Group, Inc. stock or warrants before the sale of the Washington Group, Inc. Stock or warrants. MK Savings Plan participants and former MK Savings Plan participants in the Plaintiff Class, shall have their Settlement Amounts distributed: (i where possible into Class Members existing MK Savings Plan accounts; (ii where a former MK Savings Plan participant s Settlement Amount is equal to or less than five hundred dollars ($500 that former MK Savings Plan participant will receive a check in the amount of his or her Settlement Amount; (iii where a former MK Savings Plan participant s Settlement Amount exceeds five thousand dollars ($5000 that former MK Savings Plan participant shall have thirty (30 days within which to elect to have his or her MK Saving Plan account reestablished; (iv where a former MK Savings Plan participant s Settlement Amount exceeds five hundred dollars ($500 but is equal to or less than five thousand dollars ($5000 that former MK Savings Plan participants shall have thirty (30 days within which he or she may elect to reestablish his or her MK Savings Plan account to receive his or her Settlement Amount and indicate where the Settlement Amount, once deposited in the participant s reestablished account, will be transferred out of the Plan, e.g., to a rollover IRA, another qualified plan, or directly to the participant. Any former MK Savings Plan participants who do not make the elections required in subsections (iii or (iv above within thirty (30 days of receipt of notice that such election is required shall not have their MK Savings Plan account reestablished and will receive his or her Settlement Amount subject to applicable taxes. Payments to Savings Plan participants who have a distribution of $500 or less; to participants who can, but do not elect to reestablish their savings plan accounts; and to participants whose accounts may be reestablished, but who do not indicate where the distribution, once allocated to their reestablished account in the savings plan, is to be transferred out of the plan, e.g., who do not indicate which rollover IRA or other qualified pension plan the distribution should be made to, will be subject to applicable taxes. All former MK ESOP participants in the Plaintiff Class will receive checks for their individual Settlement Amounts subject to applicable taxes. IV. HEARING REGARDING PROPOSED CLASS SETTLEMENT The Court will hold a hearing in Federal District Court For the District of Idaho, Courtroom 3, 550 W. Fort St. Boise, ID 83724, at 11:00 a.m., on August 23, 2004, to determine whether, as recommended by Plaintiffs counsel, the class representatives and Defense Counsel it should approve the proposed settlement. If the settlement is approved by the Court, you will obtain the benefit of the settlement and be bound by the Final Judgment entered resolving this matter, which means you will not be allowed to bring your own claims against any of the Defendants. If you object to any aspect of the settlement, including the plan for distributing the funds, the application for attorneys fees, costs and expenses, the request for incentive payments to representative Plaintiffs, or Defendants request to change the definition of the Class, you must submit your objection in writing, to the Court clerk by mail postmarked before August 9, Attendance at the hearing is not necessary; however, class members wishing to be heard orally in opposition to the proposed settlement should indicate in their written objection their intention to appear at the hearing. If you do not follow these precise procedures, you will not have the right to have your objections heard by the Court and you will not have the right to appear at the final fairness hearing to object to the settlement. 4

5 Class members who support the proposed settlement do not need to appear at the hearing or take any other action to indicate their approval. V. APPROVAL OF PROPOSED SETTLEMENT If the settlement is approved by the Court, the Court will enter a Final Judgment and Order of Dismissal of the Action. ( Final Judgment. The Final Judgment will dismiss the class action, and all claims alleged therein, on the merits and with prejudice to the Plaintiff Class. The Final Judgment will provide that the Settlement Agreement may not be used against any Defendant in any action or proceeding, except to enforce the Final Judgment. The Final Judgment will provide that each Settlement Class Member shall be deemed to have released and forever discharged and agreed to the fullest extent permitted by law (i each Individual Defendant; (ii MK; (iii Washington Group; (iv Mellon Bank; (v T. Rowe Price and its affiliates, including T. Rowe Price Retirement Plan Services, Inc.; (vi the MK Savings Plan; (vii the MK ESOP; (viii the MK ESOP Committee; (ix the MK Savings Plan Committee; (x all past and present fiduciaries of the MK ESOP and/or the MK Savings Plan; (xi the Plan Committee; and (xii any and all predecessors, successors, direct and indirect parent corporations, subsidiaries, affiliates, together with past and present officers, directors, shareholders, employees, principals, agents, accountants, actuaries, representatives, attorneys, experts, professionals, fiduciaries, plan administrators, partners, insurers, reinsurers, receivers, trustees, directed trustees, estates, beneficiaries, assigns, heirs, administrators, and executors, if any, of the persons and entities listed in (i through (xi immediately above (the individuals and entities referred to in (i through (xii above are collectively referred to hereinafter as the Releasees from any and all past, present, and future matters, claims, demands, and causes of action of any kind whatsoever, whether at common law, pursuant to statute, ordinance, or regulation, in equity or otherwise, which any of them have or might have, known or unknown, now existing or that might arise hereafter, of any kind whatsoever, growing out of or in connection with any facts, acts, transactions, occurrences, events, or omissions that are based upon, arise out of, or in any way relate to the events underlying the Action, including but not limited to: (a The purchase of, retention of, and/or failure to sell MK common stock for the MK Savings Plan s participants/beneficiaries and the MK ESOP s participants/beneficiaries; (b Statements, representations, misrepresentations, disclosures of information, failures to disclose information or any other acts or omissions in connection with the purchase, retention or sale of MK stock to MK ESOP participants/beneficiaries and to MK Savings Plan participants/beneficiaries; (c Any provision of or interpretation of the MK ESOP document or MK Savings Plan documents purporting to require investment of contributions in MK stock and/or relievi ng any one or more of the Releasees of fiduciary responsibility with respect to the matters described in (a and (b above; (d The preparation, filing, and advocacy in support of the Bankruptcies and the disclosure statements, schedules, plan documents and all other documents filed or executed in support of, or in connection with, the 1996 Plan of Reorganization and the 2001 Plan of Reorganization, to the extent that they address or omitted to address matters involving the MK Savings Plan and/or the MK ESOP relating to the Action or relating to the matters described in (a through (c above; (e Any alleged failure prior to, during or after the Bankruptcies to pursue claims on behalf of the MK Savings Plan and/or the MK ESOP and their participants and beneficiaries, either in the Bankruptcies or outside of such proceedings, against a Releasee with respect to the matters set forth in (a through (d above; (f Any alleged failure to pursue claims prior to, during or after the settlement of the action captioned In Re Morrison Knudsen Corporation Securities Litigation No. CV S (EJL, initially filed on July 28, 1994 in the U.S. District Court for the District of Idaho, including the submission of proofs of claim and the granting of releases on behalf of the MK Savings Plan and/or the MK ESOP and their participants and beneficiaries to a Releasee with respect to the matters set forth in (a through (e above; (g To the extent not included within (a through (f above, any and all claims, including ERISA claims, for breach of fiduciary duty, breach of the duty of loyalty, breach of the duty of care, breach of the duty of prudence, breach of the duty of candor, prohibited transactions, or state law or other common law claims for negligence, gross negligence, fraud, negligent misrepresentation, professional negligence, malpractice, or violations of any other state or other federal statutes, rules or regulations, either directly, in a representative capacity or in any other capacity, by any Class Member against any of the Releasees arising out of, relating to, or in connection with purchases or sales of MK common stock during the Class Period and arising out of, or related to, any of the acts, omissions, misrepresentations, facts, events, matters, transactions, or occurrences referred to, or which could have been referred to, in any of the Complaints or other pleadings filed in the Action or otherwise alleged, asserted or contended in the Action based upon the facts alleged in the Complaints filed in the Action; and (j The decision to enter into and actions taken pursuant to or in compliance with, this Agreement. The Final Judgment shall further provide that Plaintiffs, for themselves and all members of the Settlement Class, waive any rights or benefits afforded by any similar statute or law of California or any other jurisdiction, that the settlement shall extinguish for all time all rights, claims and causes of action by the Plaintiffs and the Plaintiff Class, all participants and beneficiaries of the Plaintiff Class, and any other individual or entity empowered by statute or common law to bring a 5

6 claim on behalf of said participants with respect to any of the claims released in the settlement of this action. The Final Judgment shall further provide that Plaintiffs and all members of the Plaintiff Class waive the rights afforded by section 1542 of the California Civil Code, 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 executing the release, which if known by him must have materially affected his settlement with the debtor. If the settlement is not approved, the case will continue to be prepared for trial or such other judicial resolution of the claims and defenses as the court deems appropriate. VI. ADDITIONAL INFORMATION Procedures will be established to ascertain the amounts to be paid to class members and any other information needed to apportion and distribute the Settlement Fund. Plaintiffs counsel believes that, unless delayed by appeals or unforeseen events, this distribution may be made by within 180 days of September 22, Any questions you have concerning the matters contained in this notice (and any corrections or changes of name or address should not be directed to the court but should be directed by in writing to: Class Counsel Defense Counsel c/o Ellen M. Doyle c/o James P. Baker, Esq. Malakoff Doyle & Finberg, P.C. OR TO: Orrick Herrington & Sutcliffe, LLP 437 Grant St. 400 Sansome Street Suite 200- the Frick Building San Francisco, CA Pittsburgh, PA You may, of course, seek the advice and guidance of your own attorney, at your own expense if you desire. The pleadings and other records in this litigation, including a complete copy of the proposed settlement agreement, may be examined and copied at any time during regular office hours at: District Court for the District of Idaho, 550 W. Fort St. Boise, ID REMINDER AS TO TIME LIMITS If you wish to object to the proposed settlement in whole or in part, you must file your objection in writing, and in accordance with the precise procedures described in Section IV above, with the Clerk of the Court by mail postmarked on or before August 9, Include any request to be heard orally at the hearing. DATED: April 29, 2004 Cameron S. Burke Clerk of the Court United States District Court for the District of Idaho 6