MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
KEITH F. PARK (54275)
KIRK B. HULETT (110726)
HENRY ROSEN (156963)
JAMES I. JACONETTE (179565)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

Attorneys for Plaintiffs

[Additional counsel appear on signature page.]

TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE that, pursuant to an Order of the Court filed February 11, 1999, on April 9, 1999, at 10:00 a.m., or as soon thereafter as counsel may be heard, at the United States Courthouse, 450 Golden Gate Avenue, San Francisco, CA, before the Honorable Fern M. Smith, United States District Judge, Representative Plaintiffs will and hereby move for an order approving the Plan of Allocation of settlement proceeds. Representative Plaintiffs' motion is based on the Plan of Allocation and the Memorandum in Support of Approval thereof, the declarations of counsel for Representative Plaintiffs, the Stipulation of Settlement dated as of June 17, 1998, all other pleadings and matters of record, and such additional evidence or argument as may be presented at the hearing.
 

I. INTRODUCTION

Representative Plaintiffs submit this memorandum in support of their motion for approval of the proposed Plan of Allocation (the "Plan") of the Net Settlement Fund among class members who file valid Proof of Claim forms evidencing a loss in their transactions in DSP Communications, Inc. ("DSPC") common stock during the Settlement Class Period. The Plan reflects Representative Plaintiffs' Counsel's view of the likely provable damages had this case gone forward and is also designed to promote ease of claims administration with its attendant reduced cost to the class. In addition, the Plan is similar in structure to numerous other such plans which have been utilized in securities class action cases. Representative Plaintiffs submit that the Plan is fair and equitable to class members and deserves the Court's approval.
 

II. STRUCTURE OF THE PLAN OF ALLOCATION

Under the proposed Plan, class members are required to submit a Proof of Claim form which sets forth all purchases and sales of DSPC common stock during the Settlement Class Period (January 7, 1997 to and including April 16, 1997). Class members are also asked to set forth the date(s) on which they purchased and sold their stock, the gross price paid for the stock and the net proceeds received from any sales, as well as their position in DSPC stock at the end of the Settlement Class Period. A "Claim" will be calculated in accordance with the Plan described in the Notice sent to class members and provides for varying calculations depending on a class member's date(s) of purchase(s) and sale(s).

A "Claim" will be computed as follows:
 

1. For shares of DSP Communications, Inc. common stock that were purchased on January 7, 1997 through April 16, 1997, and
 

 A. sold prior to April 17, 1997, the claim per share is 32% of the difference between (i) the purchase price, and (ii) the sales price;

B. retained at the end of April 16, 1997, the claim per share is the lesser of: (i) $3.50 per share (4/17/97 price decline), or (ii) the purchase price less $7.25 per share (4/17/97 closing price).

2. The date of purchase or sale is the "contract" or "trade" date as distinguished from the "settlement" date.

3. For Settlement Class Members who made multiple purchases or multiple sales during the Settlement Class Period, the earliest subsequent sale shall be matched with the earliest purchase and chronologically thereafter for purposes of the claim calculations.

4. All profits shall be subtracted from the total of all losses to determine if a Settlement Class Member has a Claim. Only if a Settlement Class Member had a net loss, after profits from all transactions in DSPC common stock during the Settlement Class Period are subtracted from the total of losses, will such class member be eligible to receive a distribution from the Net Settlement Fund.

5. The Court has reserved jurisdiction to allow, disallow or adjust the Claim of any Settlement Class Member on equitable grounds.

After the calculation of all claimants' Claims and the conduct of certain verification procedures by the Claims Administrator, Representative Plaintiffs' Counsel will recommend that each class member who has filed a valid Proof of Claim receive that portion of the Net Settlement Fund which is equal to a fraction, the numerator of which is the Claim for the particular Settlement Class Member and the denominator of which is the total Claims of all Settlement Class Members whose Claims are allowed.
 

III. THE PLAN OF ALLOCATION IS FAIR, REASONABLE AND ADEQUATE AND SHOULD BE APPROVED BY THE COURT

Assessment of a plan of allocation of settlement proceeds in a class action under Rule 23 of the Federal Rules of Civil Procedure is governed by the same standards of review applicable to the settlement as a whole -- the plan must be fair, reasonable and adequate. Class Plaintiffs v. Seattle, 955 F.2d 1268, 1284 (9th Cir. 1992). The purpose in developing a plan should be to devise one that permits equitable distribution of the limited settlement proceeds. Beecher v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978). Therefore, a plan of allocation that allocates most of the settlement to those most injured is reasonable. In re Gulf Oil/Cities Serv. Tender Offer Litig., 142 F.R.D. 588, 596 (S.D.N.Y. 1992).

The objective of this Plan is to provide an equitable basis upon which to distribute the Settlement Fund among eligible class members. Here, the Plan is based upon Representative Plaintiffs' theory of the alleged fraud, the impact it had on the price of DSPC stock and an analysis of potential class member damages. It will result in a fair distribution of the available proceeds among those class members who submit valid claims. The decisions cited above recognize that the goal of an equitable plan is fairness to the class as a whole, taking into consideration the strength of claims based on available facts and evidence, as well as the size of the fund to be distributed. The Plan in this case is based on such principles and therefore falls within the mainstream of allocation plans routinely approved.
 

IV. CONCLUSION

As indicated above, this Plan is equitable to class members. Moreover, the information required from a class member is easily obtainable by him or her and is also easily verifiable to the Claims Administrator. The Plan is, perforce, a fair and equitable method of allocating the proceeds of this settlement among class members.

For all of the foregoing reasons, Representative Plaintiffs' Counsel respectfully request that the Court approve the Plan of Allocation as submitted.

DSPCOMM\DLM14885.brf

I, the undersigned, declare:

1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Diego, over the age of 18 years, and not a party to or interested in the within action; that declarant's business address is 600 West Broadway, Suite 1800, San Diego, California 92101.

2. That on April 1, 1999, declarant served the NOTICE OF MOTION AND MOTION AND MEMORANDUM IN SUPPORT OF MOTION FOR APPROVAL OF PLAN OF ALLOCATION by depositing a true copy thereof in a United States mailbox at San Diego, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List and that this document was forwarded to the following designated Internet site at:

3. That there is a regular communication by mail between the place of mailing and the places so addressed.

I declare under penalty of perjury that the foregoing is true and correct. Executed this 1st day of April, 1999, at San Diego, California.

Source: Milberg Weiss Bershad Hynes & Lerach LLP website