COMMONWEALTH OF MASSACHUSETTS OF THE TRIAL COURT CIVIL ACTION NO C

Transcription

1 COMMONWEALTH OF MASSACHUSETTS WORCESTER, SS. SUPERIOR COURT DEPARTMENT OF THE TRIAL COURT CIVIL ACTION NO C ) PHILIPPE E. GUT AND GWEN PRATT GUT, ) on behalf of themselves and all ) others similarly situated, ) Plaintiffs, ) ) v. ) ) JOSEPH F. MACDONOUGH, ) JOHN L. CASAGRANDE, JAMES N. BALL, ) NELSON P. BALL, EDWARD S. BILZERIAN, ) NANCY M. CARLSON, ) DAVID E. CARLSTROM, ) BENJAMIN J. COLONERO, Jr., ) ROBERT A. KLUGMAN, ) JEFFREY B. LELAND, PAUL F. MCGRATH, ) CHARLOTTE C. SPINNEY, ) PHYLLIS A. STONE, JAMES E. TASHJIAN, ) WESTBOROUGH FINANCIAL SERVICES, INC., ) WESTBOROUGH BANCORP MHC, ) THE WESTBOROUGH BANK, ) ASSABET VALLEY BANCORP, ) HUDSON SAVINGS BANK, and ) HUDWEST FINANCIAL SERVICES, INC. ) Defendants. ) ) NOTICE OF PENDENCY, PROPOSED SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING TO: ALL PERSONS OR ENTITIES WHO OWNED THE PUBLIC COMMON STOCK OF WESTBOROUGH FINANCIAL SERVICES, INC. ON JUNE 22, 2007 (THE SETTLEMENT CLASS ). THIS NOTICE WAS SENT TO YOU BY ORDER OF THE COURT. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF THIS CLASS ACTION AND, IF YOU ARE A CLASS MEMBER, CONTAINS IMPORTANT INFORMATION AS TO YOUR RIGHTS CONCERNING THE SETTLEMENT DESCRIBED BELOW. IF THE COURT APPROVES THE PROPOSED SETTLEMENT, YOU WILL BE FOREVER BARRED FROM CONTESTING THE FAIRNESS OF THE PROPOSED SETTLEMENT OR FROM PURSUING THE SETTLED CLAIMS (DEFINED HEREIN). IF YOU HELD SHARES OF WESTBOROUGH FINANCIAL SERVICES, INC. STOCK FOR THE BENEFIT OF ANOTHER, PLEASE CONTACT THE SETTLEMENT ADMINISTRATOR LISTED IN PARAGRAPH 34 OF THIS NOTICE IMMEDIATELY.

2 WHAT IS THE PURPOSE OF THIS NOTICE? 1. This Notice relates to a proposed settlement (the Settlement ) of a class action lawsuit entitled Gut v. MacDonough, et al., Case No C., currently pending in the Trial Court of Massachusetts, Superior Court Department for the County of Worcester ( Worcester Superior Court ) (the Action ). The Action was filed by the Plaintiffs, Philippe E. Gut and Gwen Pratt Gut, on behalf of themselves and as representatives of the Class, against Defendants Joseph F. MacDonough, John L. Casagrande, James N. Ball, Nelson P. Ball, Edward S. Bilzerian, Nancy M. Carlson, David E. Carlstrom, Benjamin J. Colonero, Jr., Robert A. Klugman, Jeffrey B. Leland, Paul F. McGrath, Charlotte C. Spinney, Phyllis A. Stone, James E. Tashjian, Westborough Financial Services, Inc, Westborough Bancorp, MHC, The Westborough Bank, Assabet Valley Bancorp, Hudson Savings Bank and Hudwest Financial Services, Inc. (collectively, the Defendants ). The Plaintiffs and Defendants are referred to herein as the Parties. 2. This Notice describes the rights that you may have pursuant to the Settlement and what steps you may, but are not required to, take in relation to the Settlement. 3. This Notice also serves to inform you of the pendency and proposed settlement of the Action (the Settlement ), and the Court s conditional certification of a Settlement Class for purposes of the Settlement, and to notify you of a hearing to be held on March 26, 2009 at 2:00 p.m. before the Worcester Superior Court, 225 Main Street, Worcester, Massachusetts (the Settlement Hearing ) for the purpose of determining (i) whether the proposed Settlement of the Action on the terms and conditions provided for in the Stipulation is fair, reasonable, adequate and should be finally approved by the Court; (ii) whether the Settlement Class should be finally certified and whether the Settlement Class Representatives and the Settlement Class Counsel have adequately represented the interests of the Settlement Class with respect to the Action and the claims asserted therein; (iii) whether judgment should be entered pursuant to the Stipulation, inter alia, dismissing the Action with prejudice; and (iv) other matters relating to the proposed Settlement. WHY DID I GET THIS NOTICE? 4. In a class action, one or more people, called Class Representatives (in this case Philippe E. Gut and Gwen Pratt Gut), sue on behalf of people who have similar claims and have suffered damages. All these people are Class Members and collectively comprise a Class. One court, in this case the Worcester Superior Court in Worcester, Massachusetts, resolves the issues for all Class Members. The people who sued are called Plaintiffs, and the individuals and companies they sued are called the Defendants. 2

3 5. The Plaintiffs and other Class Members are all persons or entities who owned the public common stock of Westborough Financial Services, Inc. ( Westborough ) on June 22, 2007, the record date for the shareholder vote on the proposed merger of Westborough and Assabet Valley Bancorp. Excluded from the Class are all defendants named in this action, as well as: (a) the Individual Defendants, 1 the members of their immediate families, their legal representatives, heirs, successors or assigns, and any entity in which they have or had a controlling interest; and (b) the Entity Defendants, 2 their officers, directors, corporators, trustees, affiliates, legal representatives, parents, subsidiaries, predecessors, successors or assigns, and any entity in which they have or had a controlling interest. 6. The Court sent you this Notice because, as a Class Member, you have a right to know about the proposed Settlement of the claims asserted in the Action and about your options before the Court determines whether to approve the Settlement. If the Court approves the Settlement, after objections and appeals are resolved, payments will be made pursuant to the terms of the Settlement. 7. This package explains the Action, the Settlement, your legal rights, what benefits are available, who is eligible to receive them, and how to receive them. 8. The issuance of this Notice is not an expression of the Court s opinion on the merits of any claim in the Action, and the Court still has to decide whether to approve the Settlement. If the Court approves the Settlement, payments will be made after the Final Judgment is entered, all appeals, if any, are exhausted, and the processing of all claims is complete. Please be patient. WHAT IS THIS LAWSUIT ABOUT? 9. On November 13, 2006, the Westborough Board unanimously voted to approve a Merger Agreement with Assabet. The terms of the Merger Agreement provided that Westborough MHC, which owned 64.4% of the outstanding shares of Westborough, would merge into Assabet, with Assabet as the surviving entity. Similarly, the Westborough Bank would merge into Hudson Savings Bank. Finally, Westborough s minority shareholders would be cashed out at $35.00 per share and would not retain any interest in the newly merged Assabet entity. 10. On June 4, 2007, Plaintiffs filed their Verified Class Action Complaint, in which they alleged that Defendants breached their fiduciary duties to Westborough shareholders by approving the merger with Assabet and asked the Court to prevent the merger from being completed. The lawsuit claimed that the merger between Westborough Financial Services, Inc. and Assabet Valley Bancorp was the result of an unfair process that did not adequately protect the rights of Westborough s public shareholders. In part, Plaintiffs alleged that Defendants agreed to the merger with Assabet without adequately considering potential offers from other bidders which would have resulted in a higher 1 Individual Defendants include: Joseph F. MacDonough, John L. Casagrande, James N. Ball, Nelson P. Ball, Edward S. Bilzerian, Nancy M. Carlson, David E. Carlstrom, Benjamin J. Colonero, Jr., Robert A. Klugman, Jeffrey B. Leland, Paul F. McGrath, Charlotte C. Spinney, Phyllis A. Stone, and James E. Tashjian. 2 The Entity Defendants include: Westborough Financial Services, Inc., Westborough Bancorp MHC, The Westborough Bank, Assabet Valley Bancorp, Hudson Savings Bank and HudWest Financial Services, Inc. 3

4 payment per share to the shareholders because the merger with Assabet provided the greatest benefit to the Defendants. 11. Defendants answered the Complaint on June 29, 2007 in which they denied the claims made in Plaintiffs Class Action Complaint. 12. Plaintiffs were granted expedited discovery on June 12, 2007 to support their motion for a preliminary injunction to stop or enjoin the proposed merger. Counsel for Plaintiffs reviewed over 113,000 pages of documents related to the merger and conducted and/or defended 13 depositions of many individuals with knowledge of the circumstances surrounding the merger. Based on the facts learned through discovery, the parties prepared legal briefs on the issue of whether the Court should stop the merger or allow it to proceed. 13. The Court heard oral arguments on Plaintiffs motion for preliminary injunction on August 9, On August 14, 2007, the Court issued an Order denying Plaintiffs motion to enjoin the merger. 15. The merger between Westborough and Assabet was completed on August 24, On October 19, 2007, Plaintiffs filed a Motion for Class Certification which Defendants opposed on November 19, Plaintiffs then filed a Reply on December 6, 2007 and Defendants filed a Sur-Reply on January 3, The Motion for Class Certification was pending at the time the parties reached this settlement. 17. On July 31, 2008, the parties participated in a mediation before an impartial mediator. As a result of the mediation, the parties reached an agreement regarding the settlement of this action as set forth in the Stipulation. WHAT RECOVERY DOES THE SETTLEMENT PROVIDE? 18. The Settlement, which is described in the Stipulation and Agreement of Settlement, will create a Settlement Fund to pay claims of all persons or entities who owned the public common stock of Westborough Financial Services, Inc. ( Westborough ) on June 22, 2007, the record date for the shareholder vote on the proposed merger of Westborough and Assabet Valley Bancorp (the Class ). The total value of the Settlement with the Defendants is $500,000 in cash, including damages, interest, attorneys fees and expenses. The Net Settlement Fund (the Settlement Fund less notice and administration costs, attorneys fees and litigation expenses awarded to Plaintiffs counsel by the Court) will be distributed to Class Members as follows: a. For all record shareholders who voted in favor of the merger between Westborough and Assabet, the recovery will be their pro rata share of 10% of the Net Settlement Fund; b. For all record shareholders who voted against the merger, formerly abstained from the vote, or did not return their proxy, the recovery will be their pro rata share of 90% of the Net Settlement Fund;. Shareholders whose shares were counted against the merger are entitled to greater recovery than those shareholders who voted in favor of the merger. This is because, under Massachusetts 4

5 caselaw, shareholders voting in favor of a corporate action in this case the merger have a limited ability to assert claims against the corporation for that action because they have acquiesced, or agreed, to the corporate action. In recognition of this, the claims of shareholders who voted in favor of the merger are not as strong as those voting against the merger and they are entitled to less compensation under this settlement agreement. WHY IS THERE A SETTLEMENT? 19. The Settlement resulted from arm s length negotiations among counsel for Plaintiffs and the Defendants as well as a mediation that was conducted before an impartial mediator on July 31, Detailed settlement discussions took place, which ultimately resulted in an agreement to settle the claims and forego further appeals, as memorialized in the Stipulation and Agreement of Settlement. 20. Under the proposed Settlement, the Court will not decide in favor of either the Plaintiffs or the Defendants. By agreeing to the Settlement, both the Plaintiffs and the Defendants avoid the costs and risks of protracted litigation and appeals, including the risk of reversal. Rather, by accepting the Settlement, Class Members will be compensated immediately after there is a Final Judgment. 21. The Defendants have denied and continue to deny any wrongdoing or the violation of any law. The Defendants believe there is a substantial basis for challenging the validity of the underlying findings in this matter. Plaintiffs continue to believe that the claims asserted in the Action have merit. Nevertheless, the Parties are entering into this Settlement, and foregoing appeal, to eliminate the burden, expense, and uncertainty of further litigation. Plaintiffs, aided by Class Counsel, have considered carefully the risks, burden and expense of further litigation and the inevitable difficulties and uncertainties of further litigation. Plaintiffs believe that the recovery contemplated by the Settlement provides an immediate benefit to Class Members that is superior to the risks of proceeding with the Action. Furthermore, after weighing these factors, Class Counsel has determined that the terms and conditions of this Settlement are fair, reasonable and adequate to Plaintiffs and the Class, and in their best interests. WHAT RIGHTS AM I GIVING UP UNDER THE SETTLEMENT? 22. If the Settlement is approved, the Court will enter a Final Judgment (the Judgment ). The Judgment will (i) dismiss the claims against the Defendants with prejudice; and (ii) provide that the Class Representatives and all other Class Members, shall, upon the settlement Effective Date (as defined in the Stipulation and Agreement of Settlement), be deemed to have and by operation of the Judgment shall have, fully, finally and forever released, waived, discharged and dismissed any and all Settled Plaintiffs and Defendants Claims (defined below) against the Released Plaintiff and Defendant Parties, as those persons are defined in the Stipulation and Agreement of Settlement. 23. Settled Plaintiffs Claims means any and all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or common law or any other law, rule or regulation, including both known claims and Unknown Claims, that have been or could have been asserted in the Action or any forum by the Class or any Class Member(s) as against the Released Defendants (a) arising out of or relating to the November 13, 2006 merger agreement between Westborough and Assabet Valley Bancorp and/or (b) arising out of or relating in any way to the institution, prosecution, defense, or settlement of the Action, except claims relating to the enforcement 5

6 of the settlement of the Action. 24. Settled Defendants Claims means any and all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or common law or any other law, rule or regulation, including both known claims and Unknown Claims, that have been or could have been asserted in the Action or any forum by the Released Defendants or any of them or the successors and assigns of any of them against the Released Plaintiffs or their attorneys, or any of their heirs, executors, administrators, successors and assigns (a) arising out of or relating to the November 13, 2006 merger agreement between Westborough and Assabet Valley Bancorp and/or (b) arising out of or relating in any way to the institution, prosecution, defense, or settlement of the Action, except claims relating to the enforcement of the settlement of the Action. HOW WILL THE LAWYERS BE PAID? 25. To date, Class Counsel has not received any payment for their services in prosecuting the Action on behalf of the Class, nor have counsel been reimbursed for their out-of-pocket expenses. The fee requested by Class Counsel would compensate Plaintiffs counsel for their efforts in achieving the Settlement for the benefit of the Class and for their risk in undertaking this representation on a contingency basis. The fee requested is within the range of fees awarded to plaintiffs counsel under similar circumstances in litigation of this type. 26. At the Final Approval Hearing, Class Counsel will make an application for an award by the Court attorneys fees in an amount not to exceed 10% of the fund, and reimbursement of expenses in an amount not to exceed $75,000, excluding costs of notice and administration. The application for attorneys fees and reimbursement of expenses will be determined by the Court. All amounts awarded by the Court shall be paid out of the Settlement Fund. HOW DO I PARTICIPATE IN THE SETTLEMENT? WHAT DO I NEED TO DO? 27. The Court has certified this Action as a class action for purposes of the Settlement only. If you owned the public common stock of Westborough Financial Services, Inc. on June 22, 2007, the record date for the shareholder vote on the proposed merger of Westborough and Assabet Valley Bancorp, then you are a Class Member. 28. As a Class Member you are represented by Plaintiffs and Class Counsel unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel must file an appearance on your behalf and must serve copies of such appearance on the attorneys listed in the section entitled, When and Where Will the Court Decide Whether to Approve the Settlement? below. 29. If you object to the Settlement or any of its terms, or Class Counsel s application for attorneys fees and reimbursement of litigation expenses, you must present your objections to the Court and deliver a copy to counsel for the parties no later than March 19, 2009 in the manner and form set forth in the section entitled, When and Where Will the Court Decide Whether to Approve the Settlement? below. 30. If you do not object to the Settlement, you do not have to take any additional steps and 6

7 will receive your share of the Settlement if the Court grants final approval of the Settlement. WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE THE SETTLEMENT? DO I HAVE TO COME TO THE HEARING? MAY I SPEAK AT THE HEARING IF I DON T LIKE THE SETTLEMENT? If you do not wish to object to the proposed Settlement and/or the application for attorneys fees and reimbursement of litigation expenses, you need not attend the Settlement Fairness Hearing. 31. A SETTLEMENT FAIRNESS HEARING WILL BE HELD BEFORE THE WORCESTER SUPERIOR COURT ON March 26, 2009, at 2:00 p.m. in Courtroom 26 on the 4th floor, 225 Main Street, Worcester, MA Any Class Member may appear at the Settlement Fairness Hearing and be heard on any of the matters to be considered at the Settlement Fairness Hearing; provided, however, that no such person shall be heard unless his or her objection or opposition is made in writing, is filed, together with copies of any supporting papers upon which he or she intends to rely and a sworn statement attesting to his or her status as a Class Member, with the Clerk s Office at 225 Main Street, Worcester, Massachusetts, seven days prior to the date of the Settlement Fairness Hearing, which is Thursday, March 19, 2009, and is served on the same day by hand or overnight delivery to each of the following: Counsel for Plaintiffs: BERMAN DEVALERIO PATRICK T. EGAN One Liberty Square Boston, MA Counsel for the Defendants: FOLEY HOAG LLP MATTHEW C. BALTAY Seaport World Trade Center West 155 Seaport Boulevard Boston, Massachusetts You may file an objection without having to appear at the Settlement Fairness Hearing. Class Members who approve of the Settlement need not appear at the Settlement Fairness Hearing or file any concurrence. 32. While attendance at the Settlement Fairness Hearing is not necessary, persons wishing to be heard orally in opposition to the approval of the Settlement and/or the request for attorneys fees and reimbursement of litigation expenses are required to indicate in their written objections their intention to appear at the Settlement Fairness Hearing. Persons who intend to object to the Settlement and/or the application for an award of attorneys fees and reimbursement of litigation expenses, and desire to present evidence at the Settlement Fairness Hearing must include in their written objections the identity of any witnesses they may call to testify and any exhibits they may seek to introduce into evidence at the Settlement Fairness Hearing. 33. The Settlement Fairness Hearing may be delayed from time to time by the Court without further written notice to the Class. If you intend to attend the Settlement Fairness Hearing, you should confirm the date and time with Berman DeValerio. 7

8 Unless otherwise ordered by the Court, any Class Member who does not object in the manner described herein will be deemed to have waived any objection and shall be forever foreclosed from making any objection to the proposed Settlement and the application for attorneys fees and reimbursement of litigation expenses, and shall be bound by all the terms and provisions of the Stipulation and by all proceedings, orders and judgments in the Action. Class Members do not need to appear at the Settlement Fairness Hearing or take any other action to indicate their approval. CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE QUESTIONS? 34. This Notice contains only a summary of the terms of the proposed Settlement. For a more detailed statement of the matters involved in the Action, including copies of the Stipulation and Agreement of Settlement, or any inquiries concerning this Notice, please contact, either: Counsel for Plaintiffs: BERMAN DEVALERIO Patrick T. Egan One Liberty Square Boston, MA Tel: Settlement Administrator: STRATEGIC CLAIMS SERVICES 600 North Jackson Street, Suite 3 Media, PA Tel: DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE CLERK OF THE COURT REGARDING THIS NOTICE. Dated: January 8, 2009 By Order of the Clerk of the Court Worcester Superior Court 8