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CONSOLIDATED
CAUSE NO. D-1-GN-06-003501
JOEL GERBER, On Behalf of Himself and All § IN THE DISTRICT COURT OF
Others Similarly Situated, 8
8 98th JUDICIAL DISTRICT
Plaintiff,
§ TRAVIS COUNTY, TEXAS
vs.
FREESCALE SEMICONDUCTOR, INC.,
MICHAEL MAYER, H. RAYMOND
BINGHAM, KRISH A. PRABHU, ANTONIO
M. PEREZ, KEVIN J. KENNEDY, STEPHEN P.
KAUFMAN, THE BLACKSTONE GROUP,
THE CARLYLE GROUP, PERMIRA
ADVISERS, and TEXAS PACIFIC GROUP,
Defendants.
WR OR LD COR in Le OR LA OR Ui RO? OP
MEMORANDUM OF LAW IN SUPPORT OF UNOPPOSED MOTION FOR
PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
Jeff S. Westerman, Esq.
Milberg Weiss & Bershad LLP
One California Plaza
300 South Grand Avenue, Suite 3900
Los Angeles, CA 90071-3149
(213) 617-1200
Jacob A. Goldberg
Faruqi & Farugi LLP
P.O. Box 30132
Elkins Park, PA 19027
(212) 983-9330
Co-Lead Counsel for Plaintiffs
MUM
Tommy Jacks
State Bar No. 10452000
1205 Rio Grande Street
Austin, TX 78701
(512) 478-4422
MIAN AN
000302554
Liaison Counsel for Plaintiffs
oP,
MAR 2 8 20072c>
Amalia Rodriguez-Mendoza, Clerk
Filed in The District Court
of Travis County, Texas
At.I. INTRODUCTION
Plaintiffs submit this application for preliminary approval of the proposed settlement of
this shareholder class action (the “Settlement”). Under the terms of the Settlement, Defendant
Freescale Semiconductor, Inc. (“Freescale”) agreed to provide certain supplemental disclosures
with respect to its merger with Firestone Holdings LLC and Firestone Acquisition Corporation.
‘The proposed Settlement is set forth in a Stipulation of Settlement, dated March 6, 2007 (the
“Settlement Stipulation”), which contains all the material terms of the Settlement, including the
manner and form of notice to be given to the Settlement Class, the conditions to the Settlement’s
final approval, and other terms.
Plaintiffs submit that the proposed Settlement meets the criteria for preliminary
settlement approval. The Settlement Stipulation was entered into in good faith, after arm’s
length negotiations between the parties, who were represented by counsel with extensive
experience and expertise in shareholder class action litigation. Accordingly, Plaintiffs ask this
Court to enter an Order: (1) granting preliminary approval of the proposed Settlement; (2)
preliminarily certifying the proposed Settlement Class for purposes of the Settlement; (3)
preliminarily certifying Plaintiffs as Class Representatives; (4) directing that the Class be given
notice of the pendency of this action and the Settlement, in the form and manner proposed by the
parties; and (5) scheduling a hearing at which the Court will consider the parties’ motion for final
approval of the Settlement and entry of their proposed final judgment, and Plaintiffs’ application
for an award of attorneys’ fees and reimbursement of costs. A proposed Preliminary Approval
Order is attached as Exhibit A to the Settlement Stipulation and has been consented to by
Plaintiffs and Defendants.Il. BACKGROUND OF THE LITIGATION
On September 15, 2006, Freescale announced that it had entered into an Agreement and
Plan of Merger (the “Merger Agreement”), dated as of September 15, 2006, with Firestone
Holdings LLC and Firestone Acquisition Corporation (collectively, “Firestone”), acquisition
vehicles for a private equity consortium lead by The Blackstone Group, The Carlyle Group,
Permira Advisers LLC, and Texas Pacific Group. Pursuant to the Merger Agreement, Firestone
would acquire all of Freescale’s outstanding shares for $40.00 in cash per share (the “Merger”.
Beginning in September 2006, several putative class action petitions were filed in this
Court alleging that Freescale’s Board of Directors (the “Directors”) breached fiduciary duties
owed to Freescale stockholders in approving the Merger, and that The Blackstone Group, The
Carlyle Group, Permira Advisers LLC, and Texas Pacific Group aided and abetted those alleged
breaches of fiduciary duty. The petitions also alleged that Freescale failed to disclose certain
details concerning the Merger and the process leading up to the Merger. The Plaintiffs sought
class certification, damages, and certain forms of equitable relief.
On October 3, 2006, Freescale filed with the Securities and Exchange Commission
(“SEC”) a Preliminary Proxy Statement on Schedule 14A. On October 19, 2006, Freescale
filed with the SEC a Definitive Proxy Statement on Schedule 14A. The proxy statements
disclosed certain information concerning the Merger.
Freescale and the Directors began producing to Plaintiffs certain documents concerning
the Merger on October 21, 2006. Freescale and the Directors ultimately produced to Plaintiffs
over 50,000 pages of documents concerning the Merger.On October 25, 2006, the Court held a pre-trial conference. At that conference, the
Court scheduled a hearing for November 8, 2006 on Plaintiffs’ motion for a temporary
injunction.
On October 30, 2006, Plaintiffs took the deposition of Krish Prabhu, one of the
Directors who approved the Merger.
On October 31, 2006, the Court granted an Order: (i) consolidating the Petitions as Jn re
Freescale Semiconductor, Inc. Shareholder Lawsuit, Case No. D-1-GN-06-003501; (ii)
appointing the law firms of Milberg Weiss Bershad & Schulman LLP (now known as Milberg
Weiss & Bershad LLP) and Faruqi & Faruqi LLP as Co-Lead Counsel for Plaintiffs; and (iii)
appointing The Jacks Law Firm as Liaison Counsel for Plaintiffs.
1. THE SETTLEMENT
Negotiations between the parties on October 31, 2006 through November 2, 2006
resulted in an agreement-in-principle to settle the action as set forth in a Memorandum of
Understanding executed on November 3, 2006. The Settlement provided for certain
supplemental disclosures concerning the Merger, including, among other things, additional
information concerning the preliminary indication of interest the Freescale received from a
competing consortium of private equity firms lead by Kohlberg Kravis Roberts & Company,
Silver Lake Partners, and AlpInvest Partners NV; additional information concerning the analyses
performed by Freescale’s financial advisor, as well as the faimess opinion provided by that
advisor; additional information concerning the strategic alternatives considered by Freescale; and
additional information concerning Freescale’s reported revenues and gross margin for the third
fiscal quarter of 2006. Although Freescale and the Directors disputed that the disclosures in the
Preliminary and Final Proxy Statements were inadequate, Freescale and the Directors agreed to
4and did supplement those disclosures by filing with the SEC on November 3, 2006 certain
additional definitive proxy materials on Schedule 14A.
IV. THE SETTLEMENT CLASS SHOULD BE CERTIFIED
Prior to granting preliminary approval of a settlement, the Court should conduct a
complete review of the criteria of Rule 42 of the Texas Rules of Civil Procedure to determine
whether it is appropriate to certify the Settlement Class. McAllen Medical Center, Inc. v. Ramon
Cortez, Jr., et al., 66 S.W.3d 227 (Tex. 2001); Amchem Prods., Inc. v. Windsor, 521 U.S. 591
(1997).!
Rule 42 provides that an action may be maintained as a class action if it satisfies each of
the each of the four prerequisites of Rule 42(a): “(1) numerosity - the class is so numerous that
joinder of all members is impracticable; (2) commonality - there are questions of law or fact
common to the class; (3) typicality - the claims or defense of the representative parties are typical
of the claims or defenses of the class; and (4) adequacy of representation - the representative
parties will fairly and adequately protect the interest of the class.” Citizens Ins. Co. of Am. v.
Daccach, 2007 Tex. LEXIS 194, 12 (Tex. 2007); see Southwestern Ref. Co. v. Bernal, 22
S.W.3d 425, 433 (Tex. 2000). In addition, the class action must qualify under one of the
requirements of Rule 42(b). Id.
Here, pursuant to Rules 42(a) and (b)(3) of the Texas Rules of Civil Procedure, and for
the purposes of the Settlement only, Plaintiffs seck preliminary certification of a Settlement
Class on behalf of all persons who owned Freescale common stock as of September 11, 2005, or
at any time thereafter through and including December 1, 2006, the closing date for Freescale
1 Texas Rule 42 was modeled after its federal counterpart — Rule 23 of the Federal Rules of Civil
Procedures. Therefore, decisions interpreting the federal class action rule are persuasive
authority for applying Rule 42. Intratex Gas Co. v. Beeson, 22 8.W.3d 398 (Tex. 2000).
5shareholders entitled to vote on the company’s acquisition by Firestone, and their successors-in-
interest and transferees. Excluded from the Settlement Class are Defendants and Firestone,
members of the immediate families of any Individual Defendant, any entity in which any
Defendant has or had a controlling interest, the directors and officers of Freescale and Firestone
and the legal representatives, heirs, successors, or assigns of any such excluded Person. Also
excluded from the Settlement Class are any persons or entities who timely and correctly asserted
appraisal rights pursuant to Delaware law.
As detailed below, the prerequisites for a class action under Rules 42(a) and (b)(3) of the
Texas Rules of Civil Procedure have been satisfied in this action.
A. The Prerequisites of Rule 42(a) Are Met
L. Numerosity - To satisfy the “numerosity” requirement, the proposed class must
be “so numerous that joinder of all members is impracticable.” Tex. R. Civ. P. 42(a)(1).
“Numerosity is not based on numbers alone, but includes such factors as judicial economy, the
nature of the action, geographical location of class members, and the likelihood that class
members would be unable to prosecute individual lawsuits.” State Indus., Inc. v. Fain, 38
§.W.3d 167, 170 (Tex. App. 2000) (citing Rainbow Group, Ltd. v. Johnson, 990 8.W.2d 351,
356 (Tex. App. 1999). Here, where there are tens of thousands of stockholders of record of
Freescale common stock, located all over the country, numerosity is easily satisfied. See
Weatherly v. Deloitte & Touche, 905 S.W.2d 642 (Tex. App. 1995) (finding that numerosity is
established when joinder of two hundred parties dispersed throughout the United States,
Bermuda, and Canada is impracticable).
2. Commonality — “Commonality,” under Rule 42(a)(2), is satisfied if plaintiffs
demonstrate that “there are questions of law or fact common to the class.” Tex. R. Civ. P.
642(a)(2). “The threshold to establish commonality is not high.” Tana Oil & Gas Corp. v. Bates,
978 S.W.2d 735 (Tex. App. 1998) (citing Intratex Gas Co. v. Beeson, 960 S.W.2d 389, 398 (Tex.
App. 1998)). The commonality requirement does not mean that all questions, or even most
questions, must be identical; rather, only some common issue of fact or law must be present. Jd.
Here, Plaintiffs have alleged that Defendants breached fiduciary duties owed to Freescale
stockholders in approving the Merger. Common questions include:
{a) whether Defendants breached their fiduciary duties of entire fairness, loyalty,
independence, due care, full disclosure, good faith, diligence, honesty and fair dealing;
(b) whether Defendants engaged in self-dealing in connection with their
consideration of the Merger;
(c) whether Defendants unjustly enriched themselves and other insiders or affiliates
of Freescale;
(d) whether Defendants imposed barricrs to discourage other bidders or offers for
Freescale or its assets;
(e) whether the Merger, as negotiated and structured by Defendants, denied
shareholders information (particularly with respect to the value of their shares) necessary to
make informed decisions about the disposition of their shares; and
() whether Plaintiffs and other members of the Class would suffer irreparable harm
by Defendants’ alleged conduct; and, if so, the proper remedy and/or measure of damages.
The central issues at issue here, which are common to all Class Members’ claims, satisfy
the requirement that there be common questions of law or fact.
73. Typicality — With respect to “typicality,” the inquiry is whether the claims of the
class representatives are typical of the class as a whole. Tex. R. Civ, P. 42(a)(3); Weatherly, 905
S.W.2d 642, 653. It is not necessary that the named representative suffer precisely the same
injury as the other class members. Jd. Instead, a class representative’s claim is found to be
typical where his or her claims “arise from the same event or course of conduct giving rise to the
claims of other class members” and where they are “based on the same legal theory” as those of
absent class members. Adams v. Reagan, 791 S.W.2d 284 (Tex. App. 1990). Plaintiffs are
owners of Freescale common stock and seek to prove Defendants’ liability on theories that are
identical to those available to other Class Members and based on an identical set of facts as set
forth in the petitions and summarized in the Settlement Stipulation. Accordingly, Plaintiffs’
claims are typical of the Class.
4. Adequacy of Representation - The “adequacy of representation” prong of Rule
42(a)(4) concems the adequacy of a proposed class representative and their counsel. Tex. R.
Civ. P. 42(a)(4). The adequacy prong consists of two requirements: “(1) it must appear that the
representative parties, through their attorneys, will vigorously prosecute the class claims; and (2)
there must be an absence of conflict or antagonism between the interests of the named plaintiffs
and those of other members of the proposed class.” Weatherly, 905 $.W.2d 642, 651.
As demonstrated above, the Plaintiffs’ interests are consistent with, and not in conflict
with or antagonistic to, the interests of other Class Members. Plaintiffs allege that Defendants
breached fiduciary duties owed to Freescale stockholders in approving the Merger and failed to
disclose certain details concerning the Merger and the process leading up to the Merger. These
allegations affect Plaintiffs and all other Class Members alike. Thus, Plaintiffs have beendamaged by the same alleged conduct, and possess the incentive to prosecute the Class claims to
achieve the best possible result for all Class Members.
Additionally, Plaintiffs are represented by experienced class action attorneys who have
been appointed as lead counsel in numerous nationwide class actions, and have a successful track
record in litigating major class actions. Thus, Plaintiffs’ Co-Lead Counsel are qualified and
experienced and have the ability and willingness to protect the interests of the Class.
B. The Requirements for Rule 42(b)(3) Have Been Met
As noted above, in addition to meeting the prerequisites of Rule 42(a), an action must
satisfy at least one of the three conditions of subdivision (b) of Rule 42. Rule 42(6)(3) is met
where the court finds that “questions of law or fact common the members of the class
predominate over any questions affecting only individual members and that a class action is
superior to other available methods for the fair and efficient adjudication of the controversy.”
Tex. R. Civ. P. 42(b)(3). As recited above, there are numerous common questions affecting the
claims of the Class, and there are few if any questions affecting only individual members of the
Class. Class action treatment is superior to any alternative here because: individuals have little
interest in controlling the prosecution of separate actions; the litigation already commenced by
members of the Class have been consolidated herein; and no difficulties are likely to arise in
managing this class action, especially in light of the Settlement.
V. THE SETTLEMENT SHOULD BE PRELIMINARILY APPROVED
Rule 42(e) of the Texas Rules of Civil Procedure provides that before a class action may
be settled, dismissed or compromised, notice of the material terms of the proposcd settlement,
dismissal or compromise must be given to the settlement class, and judicial approval must be
obtained. Tex. R. Civ. P. 42(e).Approval of a class action settlement involves a three-step process:
1. Preliminary approval of the proposed settlement and plan of distribution of the
settlement fund to class members at an informal hearing;
2. Dissemination of notice of the settlement to all affected class members informing
them of the proposed settlement and their right to participate in, object to or exclude themselves
from the class proceeding; and
3, A formal “fairness hearing” at which class members may be heard regarding the
settlement and at which evidence and argument concerning the faimess, adequacy and
reasonableness of the settlement is presented. O'Reilly v. Griffith, 975 S.W.2d 57, 59, Footnote
1 (Tex. App. 1998) (citing Fred Misko, Jr. Managing Complex Litigation: Class Actions & Mass
Torts, 13" Annual Advanced Personal Injury Law Course (1997))
Preliminary approval permits notice to be given to the class members of a hearing on
final settlement approval, at which class members and the settling parties may be heard with
respect to final approval. See McNamara v. Bre-X Minerals Lid., 214 F.R.D. 424, 430 (E.D.
Tex. 2002). Preliminary approval does not require the Court to decide the ultimate question of
whether the proposed settlement if fair, reasonable, or adequate. That decision is made at the
final approval stage, after notice of the settlement is given to the class and they have had an
opportunity to voice their views on the settlement or to seek exclusion. See 3B J. Moore,
Moore’s Federal Practice §23.08[2.-1], at 23-479 (2d ed, 1993). Preliminary approval is the
prerequisite for giving notice to the class so that “the proposed settlement .. . may be submitted
to members of the prospective class for their acceptance or rejection.” Philadelphia Housing
Auth. V. American Radiator & Standard Sanitary Corp., 323 F. Supp. 364, 372 (E.D. Pa. 1970).
The Settlement meets the criteria for evaluating a request for preliminary approval:
10“Tf the preliminary evaluation of the proposed settlement does not
disclose grounds to doubt its faimess or other obvious deficiencies,
such as unduly preferential treatment of a class representative or of
segments of the class, or of excessive compensation for attorneys,
and appears to fall within the range of possible approval, the court
should direct that notice under Rule 23(e) be given to the class
members of a formal fairness hearing, at which arguments and
evidence may be presented in support of and in opposition to the
settlement.”
McNamara v, Bre-X Minerals, 214 F.R.D. at 430 (quoting Manual for Complex Litigation, Third
§ 30.41.
A. The Settlement Agreement Resulted From Arm’s-Length Negotiations
And Is Not The Product Of Collusion
There is an initial presumption that a proposed settlement is fair and reasonable when it is
the result of arm’s-length negotiations conducted by capable counsel experienced in class action
litigation arising under the federal securities laws. See Newberg on Class Actions §11.4] at ll-
88 (3d ed. 1992); In re Shell Oil Refinery, 155 F.R.D. 552, 556 (E.D. La. 1993) {citing evidence
of counsel demonstrating “their conviction that the settlement amount was well within the range
of possible approval and was the result of arms length, non-collusive bargaining”). In
determining whether the settlement was the product of non-collusive negotiations, courts give
substantial weight to the experience of the attorneys who prosecuted the case and negotiated the
settlement. McNamara v. Bre-X Minerals, 214 F.R.D. at 430-31 (“Counsel on all sides have
proved to the Court their knowledge of the facts and law relevant to this case.”); id. at 431
(“{s]ettlement was reached by knowledgeable counsel, and it was arrived at after much
negotiation”).
The proposed Settlement is the result of lengthy negotiations between Plaintiffs’ Co-Lead
Counsel and Defendants’ Counsel. Counsel on both sides are experienced and thoroughly
familiar with the factual and legal issues. Plaintiffs’ Counsel recommend preliminary approval
11of the proposed Settlement based upon their experience, their knowledge of the strengths and
weaknesses of the case, the likely outcome at trial and on appeal, and all! the other factors
considered in evaluating proposed class action settlements.
B. The Settlement Has No Obvious Deficiencies, Such as Preferential Treatment
of Class Representatives or Segments of the Class or Excessive Compensation
for Attorneys
The Settlement has no obvious deficiencies such as preferential treatment of Class
representatives or segments of the Class or excessive compensation for attorneys. The Plaintiffs
will receive no preferential treatment as they and the other Class Members have benefited from
the supplemental disclosures agreed to by the Defendants. Moreover, the Settlement does not
mandate excessive compensation for Plaintiffs’ Counsel. The proposed Settlement Notice states
that Plaintiffs’ Counsel will apply for an award of attorneys’ fees and expenses in the amount of
$975,000, to be paid exclusively by the Defendants. Any award of fees and expenses is subject
to Court approval.
Cc The Proposed Settlement Is Within The Range Of Possible Approval
The primary question raised by a request for preliminary approval is whether the
proposed settlement is in the range of possible final approval. See Jackson v. Capital Bank &
Trust Co., Civil Action Nos. 90-4734 Section “B”, 90-4735 Section “B”, 1994 U.S. Dist. LEXIS
3899, at *4 (B.D. La. Mar. 30, 1994) (“[T]his Court preliminarily approved of the settlement as
being within the range of possible approval... .”); In re Corrugated Container Antitrust
Litigation, MDL No. 310, 1979 U.S. Dist. LEXIS 12096, at *1 (S.D. Tex. May 30, 1979)
(granting preliminary approval upon finding that “these settlements are within the range of
possible approval and that notice of them should be given to the class members”), aff'd in part,
rev'd in part, 643 F.2d 195 (5" Cir. 1981).
12In this case, the proposed Settlement was reached after Plaintiffs’ Co-Lead Counsel
conducted a full review of the terms and conditions of the Merger. Plaintiffs Co-Lead Counsel
analyzed Freescale’s SEC proxy statements, reviewed over 50,000 pages of additional
documents produced by the Defendants, and conducted the deposition of Krish Prabhu, a
Freescale Director who approved the Merger. Such due diligence was intended to and did enable
Plaintiffs’ Co-Lead Counsel to further evaluate the strategic alternatives considered by Freescale
and the valuation of the company in the Merger.
By agreeing to the proposed Settlement, Plaintiffs caused Freescale to supplement the
disclosures it made in the proxy statements, thereby securing additional information to evaluate
the faimess of the proposed Merger. Plaintiffs submit that the additional disclosures resulting
from the proposed Settlement confer a substantial benefit upon the Class. Accordingly, the
Settlement falls within the range of possible final approval, and therefore warrants preliminary
approval. See Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 395, 396 (1970), (United States
Supreme Court observed that “an increasing number of lower courts have acknowledged that a
corporation may receive a ‘substantial benefit’ from a [stockholders’ action]” and that private
stockholders’ actions “furnish a benefit to all shareholders by providing an important means of
enforcement of the proxy statute.” (citations omitted)).
VIL THE PROPOSED PROGRAM OF NOTICE TO THE CLASS IS APPROPRIATE
Rule 42(c)(2)(B) states: “For any class certified under Rule 42(b)(3), the court must
direct to class members the best notice practicable under the circumstances, including individual
notice to all members who can be identified through reasonable effort.” Rule 42(e)(1)(B) states:
“Notice of the material terms of the proposed settlement, dismissal, or compromise of the claims,
13issues or defenses, together with an explanation of when and how the members may elect to be
excluded from the class, shall be given to all members in such manner as the court directs.”
A class action settlement notice must inform interested parties of the pending action and
provide them with an opportunity to present their objections. Tricon Ins. Servs. v Dallas
Cowboys Football Club, Ltd., 2004 Tex App. Lexis 7342, 5 (Tex. App. 2004). The settlement
notice must also provide a full and fair disclosure of the terms of a proposed settlement. Gen.
Motors Corp. v. Bloyed, 916 S.W.2d 949, 959 (Tex. 1996). In addition, the settlement notice
must contain the maximum amount of attorneys’ fees sought by class counsel and specify the
method of calculating the award. /d. at 957.
Pursuant to the Settlement Stipulation, Plaintiffs and Defendants recommend to the Court
a program and form of notice substantially in the forms provided in Exhibits 1 and 3 to Exhibit A
to the Settlement Stipulation.
A. The Notice Plan
The mechanics of giving notice of a proposed settlement is within the trial court's
discretion, subject to the reasonableness standards imposed by due process. Bloyed, 916 8.W.2d
949, 957 (Tex. 1996). Defendants have retained Proxy Services Corporation (‘Proxy Services”),
as Notice Agent, to mail, by first class mail, the Settlement Notice (Exhibit 1 to Exhibit A to the
Settlement Stipulation), to all members of the Class who can be identified from Freescale’s
transfer records. The Notice Agent will usc reasonable efforts to notify brokers and other
nominee owners of the proposed Settlement and request such nominees to either forward copies
of the Settlement Notice to their beneficiaries, or to provide Proxy Services with a list of such
beneficiaries and Proxy Services will then forward copies of the Settlement Notice to such
14beneficiaries. The Settlement Notice advises such brokers and nominees that they are entitled to
reimbursement for their reasonable expenses actually incurred in complying with this request.
Defendants will cause a Publication Notice (Exhibit 2 to Exhibit A to the Settlement
Stipulation) to be published in the national edition of The Wall Street Journal within ten days of
the mailing of the Settlement Notice. Defendants’ Counsel will file with the Court proof of
publication of the Publication Notice at or before the Settlement Fairness Hearing.
B. The Proposed Plan Of Notice Satisfies Rule 42 And Due Process
The proposed form of mailed Settlement Notice, among other things, describes the
nature, history, and status of the litigation, sets forth the definition of the Class; states the nature
of the claims alleged and issues involved; describes the Class Members’ rights under Rule 42
and the Settlement Stipulation; advises Class members that they may enter an appearance
through their own counsel; states in detail the “Released Claims” to be released; and defines the
“Released Parties” to be released from such Released Claims. In addition, the proposed
Settlement Notice describes the Settlements’ benefits; provides contact information for
Plaintiffs’ Counsel; states the amount for which Plaintiffs’ Counsel are moving the Court for an
award of attorney’ s fees and expenses (to be paid by Defendants); and summarizes the reasons
the parties are proposing the Settlement. The proposed Settlement Notice also discloses the date,
time, and place of the final Settlement Faimess Hearing, and the procedures for commenting on
the proposed Settlement and appearing at the hearing. For these reasons, Plaintiffs’ proposed
Settlement Notice amply satisfies the requirements of due process.
VI. CONCLUSION
For the foregoing reasons, Plaintiffs respectfully submit that certification of the
Settlement Class and preliminary approval of the proposed Settlement are appropriate. Plaintiffs
15respectfully request that the Court enter the form of Preliminary Order For Notice and Hearing in
Connection With Settlement Proceedings that is attached as Exhibit A to the Settlement
Stipulation.
vo)
Dated: March 28, 2007 a 7
. “ /
Témimty Jacks’
//State Bar Nev 10452000
f Laura Ruth Jacks
Texas State Bar No. 24010366
1205 Rio Grande Street
Austin, TX 78701
Tel: (512) 478-4422
Fax: (512) 478-5015
Liaison Counsel for Plaintiffs
Jeff S. Westerman, Esq.
Milberg Weiss & Bershad LLP
One California Plaza
300 South Grand Avenue, Suite 3900
Los Angeles, CA 90071-3149
Tel: (213) 617-1200
Fax: (213) 617-1975
Jacob A. Goldberg
Farugi & Farugi LLP
P.O. Box 30132
Elkins Park, PA 19027
Tel: (212) 983-9330
Fax: (212) 983-9331
Co-Lead Counsel for Plaintiffs
CERTIFICATE OF SERVICE
This is to certify that on this the 28" day of March 2007, a true and correct copy of the
above and foregoing was forwarded to the following counsel of record via e-mail.
16Plaintiffs
Robert F. Claxton
Robert J. Hill
CLaxTON & HILL, PLLC
3131 McKinney Avenue, Suite 700
Dallas, TX 75204-2471
Telephone: (214) 969-9029
Facsimile: (214) 953-0583
claxtonhill@airmail.net
Nadeem Faruqi
Shane T. Rowley
Antonio Vozzolo
FaRUQ! & FARUQI, LLP
320 East 39th Street
New York, NY 10016
Telephone: (212) 983-9330
Facsimile: (212) 983-9331
nfarugi@farugilaw.com
Srowley@farugilaw.com
Avozzolo@farugilaw.com
Jacob A. Goldberg
FARUQI & FARUQI LLP
Post Office Box 30132
Elkins Park, PA 19027
Telephone: (215) 782-8235
Facsimile: (215) 782-8236
jgoldberg@faruqilaw.com
Marc R. Stanley
Roger L. Mandel
Martin Woodward
STANLEY MANDEL & IoLa, LLP
3100 Monticello Avenue, Suite 750
Dallas, TX 75205
Telephone: (214) 443-4300
Facsimile: (214) 443-0358
rmandeicl@smi-law.com
mstanley@smi-law.com
Attorneys for Joel Gerber
Attorneys for Daniel Lifshitz
17Peter D, Bull
BULL & LiFsHITz, LLP
18 East 41st Street
New York, NY 10017
Telephone: (212) 213-6222
Facsimile: (212) 213-9405
pdb@nyclasslaw.com
Joseph F. Brophy
BisHOP LONDON Bropuy & Dopps, PC
3701 Bee Caves Road, Suite 200
Austin, TX 78746
Telephone: (512) 479-5900
Facsimile: (512) 479-5934
jbrophy@pbishoplondon.com
Brian J. Robbins
S. Benjamin Rozwood
Christopher A. Sgarlata
ROBBINS UMEDA & FINK LLP
610 W. Ash Street, Suite 1800
San Diego, CA 92101
Telephone: (619) 525-3990
Facsimile: (619) 525-3991
BRobbins@ruflaw.com
BRozwood@ruflaw.com
Patricia C. Weiser
Debra S. Goodman
THE WEISER LAW FiRM PC
121 N. Wayne Avenue, Suite 100
Wayne, PA 19087
Telephone: (610) 225-2677
Facsimile: (610) 225-2678
pw@weiserlawfirm.com
dsg@weiserlawfirm.com
Paul T. Warner
THE WARNER LAW FIRM
6363 Woodway Drive, Suite 910
Houston, TX 77057
Telephone: (713) 783-7077
Facsimile: (713) 583-9196
pwarner@wamer-law.net
Attomeys for Traci Warner
Attorneys for Richard D. Hockstein
Attorneys for Edward Tansey and Richard D.
Hockstein
18Tommy Jacks International Union of Operating Engineers
JACKS LAW FIRM Local No. 825 Pension Fund
1205 Rio Grande Street
Austin, TX 78701
Telephone: (512) 478-4422
Facsimile: (512) 478-5015
tiacks@jackslaw.com
Jeff S, Westerman
MILBERG WEISS BERSHAD & SCHULMAN LLP
One California Plaza
300 S. Grand Avenue, Suite 3900
Los Angeles, CA 90071
Telephone: (213) 617-1200
Facsimile: (213) 617-1975
jwesterman@milbergweiss.com
mfurukawa@milbergweiss.com
Vincent M. Giblin
KROLL HEINEMAN GIBLIN LLC
99 Wood Avenue South, Suite 307
Tselin, NJ. 08830
Telephone: (732) 491-2100
Facsimile: (732) 491-2120
ygiblin@krollfirm.com
Defendants
John J. McKetta TIT Attorneys for Freescale Semiconductor, Inc.
GRAVES DOUGHERTY HEARON & Moopy
401 Congress Avenue, Suite 2200
Austin, TX 78767
Telephone: (512) 480-5600
Facsimile: (512) 478-1976
mmcketta@gdhm.com
RWittliff@edhm.com
Steven M. Schatz
Gregory L, Watts
WILSON SONSINI GoopRICH & Rosati, PC
19WILSON SONSINI GOODRICH & ROSATI, PC
650 Page Mill Road
Palo Alto, CA 94304
Telephone: (650) 320-4901
Facsimile: (650) 565-5100
sschatz@wser.com
gwatts@wsgr.com
Clayton Basser-Wall
WILSON SONSINI GOODRICH & ROsaTI, PC
8911 Capital of Texas Highway North
Austin, TX 78759
Telephone: (512) 338-5407
Facsimile: (512) 338-5499
cbasserwall@wsgr.com
Charles W. Schwartz
SKADDEN ARPS SLATE MEAGHER
& FLOM LLP
1000 Lousiana, Suite 6800
Houston, TX 77002
Telephone: (713) 655-5100
Facsimile: (713) 655-5200
schwartz@skadden.com
nreed@skadden.com
Attomeys for The Blackstone Group, Texas
Pacific Group, Permira Advisers, and the
Carlyle Group
20
Preview
CONSOLIDATED CAUSE NO. D-1-GN-06-003501 JOEL GERBER, On Behalf of Himself and All § IN THE DISTRICT COURT OF Others Similarly Situated, 8 8 98th JUDICIAL DISTRICT Plaintiff, § TRAVIS COUNTY, TEXAS vs. FREESCALE SEMICONDUCTOR, INC., MICHAEL MAYER, H. RAYMOND BINGHAM, KRISH A. PRABHU, ANTONIO M. PEREZ, KEVIN J. KENNEDY, STEPHEN P. KAUFMAN, THE BLACKSTONE GROUP, THE CARLYLE GROUP, PERMIRA ADVISERS, and TEXAS PACIFIC GROUP, Defendants. WR OR LD COR in Le OR LA OR Ui RO? OP MEMORANDUM OF LAW IN SUPPORT OF UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Jeff S. Westerman, Esq. Milberg Weiss & Bershad LLP One California Plaza 300 South Grand Avenue, Suite 3900 Los Angeles, CA 90071-3149 (213) 617-1200 Jacob A. Goldberg Faruqi & Farugi LLP P.O. Box 30132 Elkins Park, PA 19027 (212) 983-9330 Co-Lead Counsel for Plaintiffs MUM Tommy Jacks State Bar No. 10452000 1205 Rio Grande Street Austin, TX 78701 (512) 478-4422 MIAN AN 000302554 Liaison Counsel for Plaintiffs oP, MAR 2 8 20072c> Amalia Rodriguez-Mendoza, Clerk Filed in The District Court of Travis County, Texas At.I. INTRODUCTION Plaintiffs submit this application for preliminary approval of the proposed settlement of this shareholder class action (the “Settlement”). Under the terms of the Settlement, Defendant Freescale Semiconductor, Inc. (“Freescale”) agreed to provide certain supplemental disclosures with respect to its merger with Firestone Holdings LLC and Firestone Acquisition Corporation. ‘The proposed Settlement is set forth in a Stipulation of Settlement, dated March 6, 2007 (the “Settlement Stipulation”), which contains all the material terms of the Settlement, including the manner and form of notice to be given to the Settlement Class, the conditions to the Settlement’s final approval, and other terms. Plaintiffs submit that the proposed Settlement meets the criteria for preliminary settlement approval. The Settlement Stipulation was entered into in good faith, after arm’s length negotiations between the parties, who were represented by counsel with extensive experience and expertise in shareholder class action litigation. Accordingly, Plaintiffs ask this Court to enter an Order: (1) granting preliminary approval of the proposed Settlement; (2) preliminarily certifying the proposed Settlement Class for purposes of the Settlement; (3) preliminarily certifying Plaintiffs as Class Representatives; (4) directing that the Class be given notice of the pendency of this action and the Settlement, in the form and manner proposed by the parties; and (5) scheduling a hearing at which the Court will consider the parties’ motion for final approval of the Settlement and entry of their proposed final judgment, and Plaintiffs’ application for an award of attorneys’ fees and reimbursement of costs. A proposed Preliminary Approval Order is attached as Exhibit A to the Settlement Stipulation and has been consented to by Plaintiffs and Defendants.Il. BACKGROUND OF THE LITIGATION On September 15, 2006, Freescale announced that it had entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 15, 2006, with Firestone Holdings LLC and Firestone Acquisition Corporation (collectively, “Firestone”), acquisition vehicles for a private equity consortium lead by The Blackstone Group, The Carlyle Group, Permira Advisers LLC, and Texas Pacific Group. Pursuant to the Merger Agreement, Firestone would acquire all of Freescale’s outstanding shares for $40.00 in cash per share (the “Merger”. Beginning in September 2006, several putative class action petitions were filed in this Court alleging that Freescale’s Board of Directors (the “Directors”) breached fiduciary duties owed to Freescale stockholders in approving the Merger, and that The Blackstone Group, The Carlyle Group, Permira Advisers LLC, and Texas Pacific Group aided and abetted those alleged breaches of fiduciary duty. The petitions also alleged that Freescale failed to disclose certain details concerning the Merger and the process leading up to the Merger. The Plaintiffs sought class certification, damages, and certain forms of equitable relief. On October 3, 2006, Freescale filed with the Securities and Exchange Commission (“SEC”) a Preliminary Proxy Statement on Schedule 14A. On October 19, 2006, Freescale filed with the SEC a Definitive Proxy Statement on Schedule 14A. The proxy statements disclosed certain information concerning the Merger. Freescale and the Directors began producing to Plaintiffs certain documents concerning the Merger on October 21, 2006. Freescale and the Directors ultimately produced to Plaintiffs over 50,000 pages of documents concerning the Merger.On October 25, 2006, the Court held a pre-trial conference. At that conference, the Court scheduled a hearing for November 8, 2006 on Plaintiffs’ motion for a temporary injunction. On October 30, 2006, Plaintiffs took the deposition of Krish Prabhu, one of the Directors who approved the Merger. On October 31, 2006, the Court granted an Order: (i) consolidating the Petitions as Jn re Freescale Semiconductor, Inc. Shareholder Lawsuit, Case No. D-1-GN-06-003501; (ii) appointing the law firms of Milberg Weiss Bershad & Schulman LLP (now known as Milberg Weiss & Bershad LLP) and Faruqi & Faruqi LLP as Co-Lead Counsel for Plaintiffs; and (iii) appointing The Jacks Law Firm as Liaison Counsel for Plaintiffs. 1. THE SETTLEMENT Negotiations between the parties on October 31, 2006 through November 2, 2006 resulted in an agreement-in-principle to settle the action as set forth in a Memorandum of Understanding executed on November 3, 2006. The Settlement provided for certain supplemental disclosures concerning the Merger, including, among other things, additional information concerning the preliminary indication of interest the Freescale received from a competing consortium of private equity firms lead by Kohlberg Kravis Roberts & Company, Silver Lake Partners, and AlpInvest Partners NV; additional information concerning the analyses performed by Freescale’s financial advisor, as well as the faimess opinion provided by that advisor; additional information concerning the strategic alternatives considered by Freescale; and additional information concerning Freescale’s reported revenues and gross margin for the third fiscal quarter of 2006. Although Freescale and the Directors disputed that the disclosures in the Preliminary and Final Proxy Statements were inadequate, Freescale and the Directors agreed to 4and did supplement those disclosures by filing with the SEC on November 3, 2006 certain additional definitive proxy materials on Schedule 14A. IV. THE SETTLEMENT CLASS SHOULD BE CERTIFIED Prior to granting preliminary approval of a settlement, the Court should conduct a complete review of the criteria of Rule 42 of the Texas Rules of Civil Procedure to determine whether it is appropriate to certify the Settlement Class. McAllen Medical Center, Inc. v. Ramon Cortez, Jr., et al., 66 S.W.3d 227 (Tex. 2001); Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997).! Rule 42 provides that an action may be maintained as a class action if it satisfies each of the each of the four prerequisites of Rule 42(a): “(1) numerosity - the class is so numerous that joinder of all members is impracticable; (2) commonality - there are questions of law or fact common to the class; (3) typicality - the claims or defense of the representative parties are typical of the claims or defenses of the class; and (4) adequacy of representation - the representative parties will fairly and adequately protect the interest of the class.” Citizens Ins. Co. of Am. v. Daccach, 2007 Tex. LEXIS 194, 12 (Tex. 2007); see Southwestern Ref. Co. v. Bernal, 22 S.W.3d 425, 433 (Tex. 2000). In addition, the class action must qualify under one of the requirements of Rule 42(b). Id. Here, pursuant to Rules 42(a) and (b)(3) of the Texas Rules of Civil Procedure, and for the purposes of the Settlement only, Plaintiffs seck preliminary certification of a Settlement Class on behalf of all persons who owned Freescale common stock as of September 11, 2005, or at any time thereafter through and including December 1, 2006, the closing date for Freescale 1 Texas Rule 42 was modeled after its federal counterpart — Rule 23 of the Federal Rules of Civil Procedures. Therefore, decisions interpreting the federal class action rule are persuasive authority for applying Rule 42. Intratex Gas Co. v. Beeson, 22 8.W.3d 398 (Tex. 2000). 5shareholders entitled to vote on the company’s acquisition by Firestone, and their successors-in- interest and transferees. Excluded from the Settlement Class are Defendants and Firestone, members of the immediate families of any Individual Defendant, any entity in which any Defendant has or had a controlling interest, the directors and officers of Freescale and Firestone and the legal representatives, heirs, successors, or assigns of any such excluded Person. Also excluded from the Settlement Class are any persons or entities who timely and correctly asserted appraisal rights pursuant to Delaware law. As detailed below, the prerequisites for a class action under Rules 42(a) and (b)(3) of the Texas Rules of Civil Procedure have been satisfied in this action. A. The Prerequisites of Rule 42(a) Are Met L. Numerosity - To satisfy the “numerosity” requirement, the proposed class must be “so numerous that joinder of all members is impracticable.” Tex. R. Civ. P. 42(a)(1). “Numerosity is not based on numbers alone, but includes such factors as judicial economy, the nature of the action, geographical location of class members, and the likelihood that class members would be unable to prosecute individual lawsuits.” State Indus., Inc. v. Fain, 38 §.W.3d 167, 170 (Tex. App. 2000) (citing Rainbow Group, Ltd. v. Johnson, 990 8.W.2d 351, 356 (Tex. App. 1999). Here, where there are tens of thousands of stockholders of record of Freescale common stock, located all over the country, numerosity is easily satisfied. See Weatherly v. Deloitte & Touche, 905 S.W.2d 642 (Tex. App. 1995) (finding that numerosity is established when joinder of two hundred parties dispersed throughout the United States, Bermuda, and Canada is impracticable). 2. Commonality — “Commonality,” under Rule 42(a)(2), is satisfied if plaintiffs demonstrate that “there are questions of law or fact common to the class.” Tex. R. Civ. P. 642(a)(2). “The threshold to establish commonality is not high.” Tana Oil & Gas Corp. v. Bates, 978 S.W.2d 735 (Tex. App. 1998) (citing Intratex Gas Co. v. Beeson, 960 S.W.2d 389, 398 (Tex. App. 1998)). The commonality requirement does not mean that all questions, or even most questions, must be identical; rather, only some common issue of fact or law must be present. Jd. Here, Plaintiffs have alleged that Defendants breached fiduciary duties owed to Freescale stockholders in approving the Merger. Common questions include: {a) whether Defendants breached their fiduciary duties of entire fairness, loyalty, independence, due care, full disclosure, good faith, diligence, honesty and fair dealing; (b) whether Defendants engaged in self-dealing in connection with their consideration of the Merger; (c) whether Defendants unjustly enriched themselves and other insiders or affiliates of Freescale; (d) whether Defendants imposed barricrs to discourage other bidders or offers for Freescale or its assets; (e) whether the Merger, as negotiated and structured by Defendants, denied shareholders information (particularly with respect to the value of their shares) necessary to make informed decisions about the disposition of their shares; and () whether Plaintiffs and other members of the Class would suffer irreparable harm by Defendants’ alleged conduct; and, if so, the proper remedy and/or measure of damages. The central issues at issue here, which are common to all Class Members’ claims, satisfy the requirement that there be common questions of law or fact. 73. Typicality — With respect to “typicality,” the inquiry is whether the claims of the class representatives are typical of the class as a whole. Tex. R. Civ, P. 42(a)(3); Weatherly, 905 S.W.2d 642, 653. It is not necessary that the named representative suffer precisely the same injury as the other class members. Jd. Instead, a class representative’s claim is found to be typical where his or her claims “arise from the same event or course of conduct giving rise to the claims of other class members” and where they are “based on the same legal theory” as those of absent class members. Adams v. Reagan, 791 S.W.2d 284 (Tex. App. 1990). Plaintiffs are owners of Freescale common stock and seek to prove Defendants’ liability on theories that are identical to those available to other Class Members and based on an identical set of facts as set forth in the petitions and summarized in the Settlement Stipulation. Accordingly, Plaintiffs’ claims are typical of the Class. 4. Adequacy of Representation - The “adequacy of representation” prong of Rule 42(a)(4) concems the adequacy of a proposed class representative and their counsel. Tex. R. Civ. P. 42(a)(4). The adequacy prong consists of two requirements: “(1) it must appear that the representative parties, through their attorneys, will vigorously prosecute the class claims; and (2) there must be an absence of conflict or antagonism between the interests of the named plaintiffs and those of other members of the proposed class.” Weatherly, 905 $.W.2d 642, 651. As demonstrated above, the Plaintiffs’ interests are consistent with, and not in conflict with or antagonistic to, the interests of other Class Members. Plaintiffs allege that Defendants breached fiduciary duties owed to Freescale stockholders in approving the Merger and failed to disclose certain details concerning the Merger and the process leading up to the Merger. These allegations affect Plaintiffs and all other Class Members alike. Thus, Plaintiffs have beendamaged by the same alleged conduct, and possess the incentive to prosecute the Class claims to achieve the best possible result for all Class Members. Additionally, Plaintiffs are represented by experienced class action attorneys who have been appointed as lead counsel in numerous nationwide class actions, and have a successful track record in litigating major class actions. Thus, Plaintiffs’ Co-Lead Counsel are qualified and experienced and have the ability and willingness to protect the interests of the Class. B. The Requirements for Rule 42(b)(3) Have Been Met As noted above, in addition to meeting the prerequisites of Rule 42(a), an action must satisfy at least one of the three conditions of subdivision (b) of Rule 42. Rule 42(6)(3) is met where the court finds that “questions of law or fact common the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Tex. R. Civ. P. 42(b)(3). As recited above, there are numerous common questions affecting the claims of the Class, and there are few if any questions affecting only individual members of the Class. Class action treatment is superior to any alternative here because: individuals have little interest in controlling the prosecution of separate actions; the litigation already commenced by members of the Class have been consolidated herein; and no difficulties are likely to arise in managing this class action, especially in light of the Settlement. V. THE SETTLEMENT SHOULD BE PRELIMINARILY APPROVED Rule 42(e) of the Texas Rules of Civil Procedure provides that before a class action may be settled, dismissed or compromised, notice of the material terms of the proposcd settlement, dismissal or compromise must be given to the settlement class, and judicial approval must be obtained. Tex. R. Civ. P. 42(e).Approval of a class action settlement involves a three-step process: 1. Preliminary approval of the proposed settlement and plan of distribution of the settlement fund to class members at an informal hearing; 2. Dissemination of notice of the settlement to all affected class members informing them of the proposed settlement and their right to participate in, object to or exclude themselves from the class proceeding; and 3, A formal “fairness hearing” at which class members may be heard regarding the settlement and at which evidence and argument concerning the faimess, adequacy and reasonableness of the settlement is presented. O'Reilly v. Griffith, 975 S.W.2d 57, 59, Footnote 1 (Tex. App. 1998) (citing Fred Misko, Jr. Managing Complex Litigation: Class Actions & Mass Torts, 13" Annual Advanced Personal Injury Law Course (1997)) Preliminary approval permits notice to be given to the class members of a hearing on final settlement approval, at which class members and the settling parties may be heard with respect to final approval. See McNamara v. Bre-X Minerals Lid., 214 F.R.D. 424, 430 (E.D. Tex. 2002). Preliminary approval does not require the Court to decide the ultimate question of whether the proposed settlement if fair, reasonable, or adequate. That decision is made at the final approval stage, after notice of the settlement is given to the class and they have had an opportunity to voice their views on the settlement or to seek exclusion. See 3B J. Moore, Moore’s Federal Practice §23.08[2.-1], at 23-479 (2d ed, 1993). Preliminary approval is the prerequisite for giving notice to the class so that “the proposed settlement .. . may be submitted to members of the prospective class for their acceptance or rejection.” Philadelphia Housing Auth. V. American Radiator & Standard Sanitary Corp., 323 F. Supp. 364, 372 (E.D. Pa. 1970). The Settlement meets the criteria for evaluating a request for preliminary approval: 10“Tf the preliminary evaluation of the proposed settlement does not disclose grounds to doubt its faimess or other obvious deficiencies, such as unduly preferential treatment of a class representative or of segments of the class, or of excessive compensation for attorneys, and appears to fall within the range of possible approval, the court should direct that notice under Rule 23(e) be given to the class members of a formal fairness hearing, at which arguments and evidence may be presented in support of and in opposition to the settlement.” McNamara v, Bre-X Minerals, 214 F.R.D. at 430 (quoting Manual for Complex Litigation, Third § 30.41. A. The Settlement Agreement Resulted From Arm’s-Length Negotiations And Is Not The Product Of Collusion There is an initial presumption that a proposed settlement is fair and reasonable when it is the result of arm’s-length negotiations conducted by capable counsel experienced in class action litigation arising under the federal securities laws. See Newberg on Class Actions §11.4] at ll- 88 (3d ed. 1992); In re Shell Oil Refinery, 155 F.R.D. 552, 556 (E.D. La. 1993) {citing evidence of counsel demonstrating “their conviction that the settlement amount was well within the range of possible approval and was the result of arms length, non-collusive bargaining”). In determining whether the settlement was the product of non-collusive negotiations, courts give substantial weight to the experience of the attorneys who prosecuted the case and negotiated the settlement. McNamara v. Bre-X Minerals, 214 F.R.D. at 430-31 (“Counsel on all sides have proved to the Court their knowledge of the facts and law relevant to this case.”); id. at 431 (“{s]ettlement was reached by knowledgeable counsel, and it was arrived at after much negotiation”). The proposed Settlement is the result of lengthy negotiations between Plaintiffs’ Co-Lead Counsel and Defendants’ Counsel. Counsel on both sides are experienced and thoroughly familiar with the factual and legal issues. Plaintiffs’ Counsel recommend preliminary approval 11of the proposed Settlement based upon their experience, their knowledge of the strengths and weaknesses of the case, the likely outcome at trial and on appeal, and all! the other factors considered in evaluating proposed class action settlements. B. The Settlement Has No Obvious Deficiencies, Such as Preferential Treatment of Class Representatives or Segments of the Class or Excessive Compensation for Attorneys The Settlement has no obvious deficiencies such as preferential treatment of Class representatives or segments of the Class or excessive compensation for attorneys. The Plaintiffs will receive no preferential treatment as they and the other Class Members have benefited from the supplemental disclosures agreed to by the Defendants. Moreover, the Settlement does not mandate excessive compensation for Plaintiffs’ Counsel. The proposed Settlement Notice states that Plaintiffs’ Counsel will apply for an award of attorneys’ fees and expenses in the amount of $975,000, to be paid exclusively by the Defendants. Any award of fees and expenses is subject to Court approval. Cc The Proposed Settlement Is Within The Range Of Possible Approval The primary question raised by a request for preliminary approval is whether the proposed settlement is in the range of possible final approval. See Jackson v. Capital Bank & Trust Co., Civil Action Nos. 90-4734 Section “B”, 90-4735 Section “B”, 1994 U.S. Dist. LEXIS 3899, at *4 (B.D. La. Mar. 30, 1994) (“[T]his Court preliminarily approved of the settlement as being within the range of possible approval... .”); In re Corrugated Container Antitrust Litigation, MDL No. 310, 1979 U.S. Dist. LEXIS 12096, at *1 (S.D. Tex. May 30, 1979) (granting preliminary approval upon finding that “these settlements are within the range of possible approval and that notice of them should be given to the class members”), aff'd in part, rev'd in part, 643 F.2d 195 (5" Cir. 1981). 12In this case, the proposed Settlement was reached after Plaintiffs’ Co-Lead Counsel conducted a full review of the terms and conditions of the Merger. Plaintiffs Co-Lead Counsel analyzed Freescale’s SEC proxy statements, reviewed over 50,000 pages of additional documents produced by the Defendants, and conducted the deposition of Krish Prabhu, a Freescale Director who approved the Merger. Such due diligence was intended to and did enable Plaintiffs’ Co-Lead Counsel to further evaluate the strategic alternatives considered by Freescale and the valuation of the company in the Merger. By agreeing to the proposed Settlement, Plaintiffs caused Freescale to supplement the disclosures it made in the proxy statements, thereby securing additional information to evaluate the faimess of the proposed Merger. Plaintiffs submit that the additional disclosures resulting from the proposed Settlement confer a substantial benefit upon the Class. Accordingly, the Settlement falls within the range of possible final approval, and therefore warrants preliminary approval. See Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 395, 396 (1970), (United States Supreme Court observed that “an increasing number of lower courts have acknowledged that a corporation may receive a ‘substantial benefit’ from a [stockholders’ action]” and that private stockholders’ actions “furnish a benefit to all shareholders by providing an important means of enforcement of the proxy statute.” (citations omitted)). VIL THE PROPOSED PROGRAM OF NOTICE TO THE CLASS IS APPROPRIATE Rule 42(c)(2)(B) states: “For any class certified under Rule 42(b)(3), the court must direct to class members the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Rule 42(e)(1)(B) states: “Notice of the material terms of the proposed settlement, dismissal, or compromise of the claims, 13issues or defenses, together with an explanation of when and how the members may elect to be excluded from the class, shall be given to all members in such manner as the court directs.” A class action settlement notice must inform interested parties of the pending action and provide them with an opportunity to present their objections. Tricon Ins. Servs. v Dallas Cowboys Football Club, Ltd., 2004 Tex App. Lexis 7342, 5 (Tex. App. 2004). The settlement notice must also provide a full and fair disclosure of the terms of a proposed settlement. Gen. Motors Corp. v. Bloyed, 916 S.W.2d 949, 959 (Tex. 1996). In addition, the settlement notice must contain the maximum amount of attorneys’ fees sought by class counsel and specify the method of calculating the award. /d. at 957. Pursuant to the Settlement Stipulation, Plaintiffs and Defendants recommend to the Court a program and form of notice substantially in the forms provided in Exhibits 1 and 3 to Exhibit A to the Settlement Stipulation. A. The Notice Plan The mechanics of giving notice of a proposed settlement is within the trial court's discretion, subject to the reasonableness standards imposed by due process. Bloyed, 916 8.W.2d 949, 957 (Tex. 1996). Defendants have retained Proxy Services Corporation (‘Proxy Services”), as Notice Agent, to mail, by first class mail, the Settlement Notice (Exhibit 1 to Exhibit A to the Settlement Stipulation), to all members of the Class who can be identified from Freescale’s transfer records. The Notice Agent will usc reasonable efforts to notify brokers and other nominee owners of the proposed Settlement and request such nominees to either forward copies of the Settlement Notice to their beneficiaries, or to provide Proxy Services with a list of such beneficiaries and Proxy Services will then forward copies of the Settlement Notice to such 14beneficiaries. The Settlement Notice advises such brokers and nominees that they are entitled to reimbursement for their reasonable expenses actually incurred in complying with this request. Defendants will cause a Publication Notice (Exhibit 2 to Exhibit A to the Settlement Stipulation) to be published in the national edition of The Wall Street Journal within ten days of the mailing of the Settlement Notice. Defendants’ Counsel will file with the Court proof of publication of the Publication Notice at or before the Settlement Fairness Hearing. B. The Proposed Plan Of Notice Satisfies Rule 42 And Due Process The proposed form of mailed Settlement Notice, among other things, describes the nature, history, and status of the litigation, sets forth the definition of the Class; states the nature of the claims alleged and issues involved; describes the Class Members’ rights under Rule 42 and the Settlement Stipulation; advises Class members that they may enter an appearance through their own counsel; states in detail the “Released Claims” to be released; and defines the “Released Parties” to be released from such Released Claims. In addition, the proposed Settlement Notice describes the Settlements’ benefits; provides contact information for Plaintiffs’ Counsel; states the amount for which Plaintiffs’ Counsel are moving the Court for an award of attorney’ s fees and expenses (to be paid by Defendants); and summarizes the reasons the parties are proposing the Settlement. The proposed Settlement Notice also discloses the date, time, and place of the final Settlement Faimess Hearing, and the procedures for commenting on the proposed Settlement and appearing at the hearing. For these reasons, Plaintiffs’ proposed Settlement Notice amply satisfies the requirements of due process. VI. CONCLUSION For the foregoing reasons, Plaintiffs respectfully submit that certification of the Settlement Class and preliminary approval of the proposed Settlement are appropriate. Plaintiffs 15respectfully request that the Court enter the form of Preliminary Order For Notice and Hearing in Connection With Settlement Proceedings that is attached as Exhibit A to the Settlement Stipulation. vo) Dated: March 28, 2007 a 7 . “ / Témimty Jacks’ //State Bar Nev 10452000 f Laura Ruth Jacks Texas State Bar No. 24010366 1205 Rio Grande Street Austin, TX 78701 Tel: (512) 478-4422 Fax: (512) 478-5015 Liaison Counsel for Plaintiffs Jeff S. Westerman, Esq. Milberg Weiss & Bershad LLP One California Plaza 300 South Grand Avenue, Suite 3900 Los Angeles, CA 90071-3149 Tel: (213) 617-1200 Fax: (213) 617-1975 Jacob A. Goldberg Farugi & Farugi LLP P.O. Box 30132 Elkins Park, PA 19027 Tel: (212) 983-9330 Fax: (212) 983-9331 Co-Lead Counsel for Plaintiffs CERTIFICATE OF SERVICE This is to certify that on this the 28" day of March 2007, a true and correct copy of the above and foregoing was forwarded to the following counsel of record via e-mail. 16Plaintiffs Robert F. Claxton Robert J. Hill CLaxTON & HILL, PLLC 3131 McKinney Avenue, Suite 700 Dallas, TX 75204-2471 Telephone: (214) 969-9029 Facsimile: (214) 953-0583 claxtonhill@airmail.net Nadeem Faruqi Shane T. Rowley Antonio Vozzolo FaRUQ! & FARUQI, LLP 320 East 39th Street New York, NY 10016 Telephone: (212) 983-9330 Facsimile: (212) 983-9331 nfarugi@farugilaw.com Srowley@farugilaw.com Avozzolo@farugilaw.com Jacob A. Goldberg FARUQI & FARUQI LLP Post Office Box 30132 Elkins Park, PA 19027 Telephone: (215) 782-8235 Facsimile: (215) 782-8236 jgoldberg@faruqilaw.com Marc R. Stanley Roger L. Mandel Martin Woodward STANLEY MANDEL & IoLa, LLP 3100 Monticello Avenue, Suite 750 Dallas, TX 75205 Telephone: (214) 443-4300 Facsimile: (214) 443-0358 rmandeicl@smi-law.com mstanley@smi-law.com Attorneys for Joel Gerber Attorneys for Daniel Lifshitz 17Peter D, Bull BULL & LiFsHITz, LLP 18 East 41st Street New York, NY 10017 Telephone: (212) 213-6222 Facsimile: (212) 213-9405 pdb@nyclasslaw.com Joseph F. Brophy BisHOP LONDON Bropuy & Dopps, PC 3701 Bee Caves Road, Suite 200 Austin, TX 78746 Telephone: (512) 479-5900 Facsimile: (512) 479-5934 jbrophy@pbishoplondon.com Brian J. Robbins S. Benjamin Rozwood Christopher A. Sgarlata ROBBINS UMEDA & FINK LLP 610 W. Ash Street, Suite 1800 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 BRobbins@ruflaw.com BRozwood@ruflaw.com Patricia C. Weiser Debra S. Goodman THE WEISER LAW FiRM PC 121 N. Wayne Avenue, Suite 100 Wayne, PA 19087 Telephone: (610) 225-2677 Facsimile: (610) 225-2678 pw@weiserlawfirm.com dsg@weiserlawfirm.com Paul T. Warner THE WARNER LAW FIRM 6363 Woodway Drive, Suite 910 Houston, TX 77057 Telephone: (713) 783-7077 Facsimile: (713) 583-9196 pwarner@wamer-law.net Attomeys for Traci Warner Attorneys for Richard D. Hockstein Attorneys for Edward Tansey and Richard D. Hockstein 18Tommy Jacks International Union of Operating Engineers JACKS LAW FIRM Local No. 825 Pension Fund 1205 Rio Grande Street Austin, TX 78701 Telephone: (512) 478-4422 Facsimile: (512) 478-5015 tiacks@jackslaw.com Jeff S, Westerman MILBERG WEISS BERSHAD & SCHULMAN LLP One California Plaza 300 S. Grand Avenue, Suite 3900 Los Angeles, CA 90071 Telephone: (213) 617-1200 Facsimile: (213) 617-1975 jwesterman@milbergweiss.com mfurukawa@milbergweiss.com Vincent M. Giblin KROLL HEINEMAN GIBLIN LLC 99 Wood Avenue South, Suite 307 Tselin, NJ. 08830 Telephone: (732) 491-2100 Facsimile: (732) 491-2120 ygiblin@krollfirm.com Defendants John J. McKetta TIT Attorneys for Freescale Semiconductor, Inc. GRAVES DOUGHERTY HEARON & Moopy 401 Congress Avenue, Suite 2200 Austin, TX 78767 Telephone: (512) 480-5600 Facsimile: (512) 478-1976 mmcketta@gdhm.com RWittliff@edhm.com Steven M. Schatz Gregory L, Watts WILSON SONSINI GoopRICH & Rosati, PC 19WILSON SONSINI GOODRICH & ROSATI, PC 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 320-4901 Facsimile: (650) 565-5100 sschatz@wser.com gwatts@wsgr.com Clayton Basser-Wall WILSON SONSINI GOODRICH & ROsaTI, PC 8911 Capital of Texas Highway North Austin, TX 78759 Telephone: (512) 338-5407 Facsimile: (512) 338-5499 cbasserwall@wsgr.com Charles W. Schwartz SKADDEN ARPS SLATE MEAGHER & FLOM LLP 1000 Lousiana, Suite 6800 Houston, TX 77002 Telephone: (713) 655-5100 Facsimile: (713) 655-5200 schwartz@skadden.com nreed@skadden.com Attomeys for The Blackstone Group, Texas Pacific Group, Permira Advisers, and the Carlyle Group 20