MILBERG WEISS BERSHAD

HYNES & LERACH LLP

WILLIAM S. LERACH (68581)

KEITH F. PARK (54275)

600 West Broadway, Suite 1800

San Diego, CA 92101

Telephone: 619/231-1058

- and -

REED R. KATHREIN (139304)

JEFFREY W. LAWRENCE (166806)

222 Kearny Street, 10th Floor

San Francisco, CA 94108

Telephone: 415/288-4545

HAGENS & BERMAN

STEVE W. BERMAN

KARL P. BARTH

1301 Fifth Avenue

Suite 2929

Seattle, WA 98101

Telephone: 206/623-7292

LAW OFFICE OF MILES M.

TEPPER

MILES M. TEPPER

200 Executive Drive, Suite 100

West Orange, NJ 07052

Telephone: 201/243-6700

KAUFMAN, MALCHMAN, KIRBY

& SQUIRE

JEFFREY H. SQUIRE

919 Third Avenue, 11th Floor

New York, NY 10022

Telephone: 212/371-6600

Attorneys for Plaintiff

JAMES P. ROONEY, JR., On Behalf of Himself and

All Others Similarly Situated,

Plaintiff,

vs.

IDENTIX, INC., et al.,

Defendants.

___________________________________

No. C-97-20082-RMW

CLASS ACTION

DATE: March 6, 1998

TIME: 9:00 a.m.

COURTROOM: The Honorable

Ronald M. Whyte

I. INTRODUCTION

II. AWARD OF ATTORNEYS' FEES

A. A Reasonable Percntage Of The Fund Recovered Is The Appropriate Approach To Awarding Attorneys' Fees In Common Fund Cases

B. A Percentage Fee Of 30% Of The Class Fund Created Is Reasonable In This Case

C. Consideration Of Relevant Factors Justify An Award Of A 30% Fee In This Case

III. PUBLIC POLICY CONSIDERATIONS MANDATE THE AWARD OF ADEQUATE FEES IN REPRESENTATIVE ACTIONS SO THAT COMPETENT AND EXPERIENCED LAWYERS WILL UNDERTAKE SUCH REPRESENTATIONS

IV. CLASS COUNSEL'S EXPENSES ARE REASONABLE AND WERE NECESSARILY INCURRED TO ACHIEVE THE BENEFIT OBTAINED FOR THE CLASS

V. CONCLUSION

TO: ALL PARTIES AND THEIR ATTORNEYS OF RECORD

PLEASE TAKE NOTICE that, pursuant to an Order of the Court dated December 19, 1997, on March 6, 1997 at 9:00 a.m., or as soon thereafter as counsel may be heard, before the Honorable Ronald M. Whyte, United States District Judge, Representative Plaintiffs will and hereby do move for an order awarding Representative Plaintiffs' counsel's attorneys' fees of thirty percent of the Class Settlement Fund, plus reimbursement of expenses incurred, plus interest on such fees and expenses. Plaintiffs' motion is based upon Plaintiffs' Memorandum of Points and Authorities in Support of Plaintiffs' Application for Attorneys' Fees and Reimbursement of Expenses, the several Declarations of counsel for the Representative Plaintiffs submitted in support thereof, the Stipulation of Settlement dated as of December 15, 1997, all other pleadings and matters of record, and such additional evidence or argument as may be presented at the hearing.

I. INTRODUCTION

This class action has been settled for $3 million in cash which, subject to Court approval, resolves this case with respect to all defendants.

The efforts of class counsel in achieving this result are set forth in the Declaration of Miles M. Tepper in Support of Approval of Settlement, Award of Attorneys' Fees and Reimbursement of Expenses (the "Tepper Declaration") filed herewith. These efforts included a substantial pre-filing investigation, including interviews of third parties, substantial documentary and deposition discovery from defendants and third parties, working with damage experts, and successfully negotiating this settlement with defense counsel.

Class counsel's efforts to date have been without compensation of any kind and our attorneys' fees as well as the reimbursement of substantial expenses have been wholly contingent upon the result achieved. As compensation for these efforts, class counsel request this Court to award them attorneys' fees of 30% of the Settlement Fund, plus $74,786.61 in expenses (plus interest on the award at the same rate and for the same period as that earned on the Settlement Fund). Plaintiffs' counsel's percentage fee request is in line with numerous other decisions within the Ninth Circuit. It is the proper and most efficient method of compensating counsel for the result they have obtained for the class.

The Court should also consider class members' reactions to the attorneys' fees which counsel seek. A summary notice of the settlement was published in Investor's Business Daily on January 26, 1998, and individual notices of the settlement were mailed to over 4,400 members of the class,⁽¹⁾ which advised class members of this settlement and of their right to object to plaintiffs' counsel's fee request. To date, there have been no objections to the fee application.⁽²⁾ This fact is particularly significant here since we know the class includes many institutional investors with substantial stakes in the Settlement Fund sufficient to motivate them to object to the fee application if they thought it was appropriate to do so.

For the reasons set forth below, we submit that the requested attorneys' fees and the expenses for which reimbursement is sought are fair and reasonable under the applicable legal standards and in light of the substantial risks of no recovery faced and overcome, the result achieved and the efforts expended. The fees and expenses should be awarded by the Court in the amount requested.

II. AWARD OF ATTORNEYS' FEES

A. A Reasonable Percntage Of The Fund Recovered Is The Appropriate Approach To Awarding Attorneys' Fees In Common Fund Cases

For our efforts on behalf of the class, class counsel are applying for compensation from the Settlement Fund on a percentage basis. The percentage method is the appropriate method of fee recovery because, among other things, it aligns the lawyers' interest in being paid a fair fee with the interest of the class in achieving the maximum recovery in the shortest amount of time required under the circumstances.

It has long been recognized in equity that "a private plaintiff, or his attorney, whose efforts create, discover, increase or preserve a fund to which others also have a claim is entitled to recover from the fund the costs of his litigation, including attorneys' fees." Vincent v. Hughes Air West, Inc., 557 F.2d 759, 769 (9th Cir. 1977). The purpose of this doctrine is to avoid unjust enrichment and "to spread litigation costs proportionately among all the beneficiaries . . . ." Id. This rule, known as the common fund doctrine, is firmly rooted in American case law. See, e.g., Trustees v. Greenough, 105 U.S. 527 (1882); Central R. & Banking Co. v. Pettus, 113 U.S. 116 (1885).⁽³⁾

In Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984), the Supreme Court stated that the percentage method of computing fees was the proper approach in the "common fund" context where, as here, the fees are paid out of (not in addition to) the fund recovered:

Unlike the calculation of attorney's fees under the "common fund doctrine," where a reasonable fee is based on a percentage of the fund bestowed on the class, a reasonable fee under § 1988 reflects the amount of attorney time reasonably expended on the litigation.

Id. (emphasis added).

In In re Washington Public Power Supply System Sec. Litig. ("WPPSS"), 19 F.3d 1291 (9th Cir. 1994), the Ninth Circuit held that the district court has discretion to use either the lodestar/multiplier method or the percentage-of-the-fund method in common fund cases, and emphasized that "the district court should be guided by the fundamental principle that fee awards out of common funds be 'reasonable under the circumstances.'" Id. at 1296 (citation omitted).

In Paul, Johnson, 886 F.2d 268, Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), and Torrisi v. Tucson Electric Power Company, 8 F.3d 1370 (9th Cir. 1993), the Ninth Circuit expressly approved the use of the percentage method in common fund cases.

In fee awards in securities class actions since Paul, Johnson, district courts in this Circuit have virtually uniformly shifted to the percentage method because it fosters judicial economy by eliminating the detailed and time-consuming lodestar analysis. As Judge Patel correctly (and resoundingly) observed in In re Activision Sec. Litig., 723 F. Supp. 1373 (N.D. Cal. 1989):

The question this court is compelled to ask is, "Is this process necessary?" Under a cost-benefit analysis, the answer would be a resounding, "No!" Not only do the Lindy and Kerr-Johnson analyses consume an undue amount of court time with little resulting advantage to anyone, but, in fact, it may be to the detriment of the class members. They are forced to wait until the court has done a thorough, conscientious analysis of the attorneys' fee petition. Or, class members may suffer a further diminution of their fund when a special master is retained and paid from the fund. Most important, however, is the effect the process has on the litigation and the timing of settlement. Where attorneys must depend on a lodestar approach there is little incentive to arrive at an early settlement. The history of these cases demonstrates this as noted below in the discussion of typical percentage awards.

The Third Circuit, home of the Lindy formulation, recently criticized its application in common fund cases and recommended a return to a percentage of the fund approach. In the Report of the Third Circuit Task Force, Court Awarded Attorney Fees, 108 F.R.D. 237 (1985), the Task Force concluded that the Lindy method was a "cumbersome, enervating, and often surrealistic process of preparing and evaluating fee petitions that now plagues the Bench and Bar . . . ." Id. at 258. According to the Task Force, the percentage scheme with appropriate judicial supervision would ordinarily be adequate to protect the integrity of the fee award process. It recommended that early in the litigation the court set or "negotiate" a percentage-based fee and offered a number of suggestions for fashioning a mechanism for fee setting. Id. at 255-58. This court agrees with the Task Force's conclusion that a number of salutary effects can be achieved by this procedure, including removing the inducement to unnecessarily increase hours, prompting early settlement, reducing burdensome paperwork for counsel and the court and providing a degree of predictability to fee awards. Id. at 258.

Id. at 1375-76. Moreover, supporting authority for the percentage method in other circuits and by commentators is overwhelming.⁽⁴⁾

Compensating counsel in common fund cases on a percentage basis makes eminently good sense. First, it is consistent with the practice in the private marketplace where contingent fee attorneys are customarily compensated on a percentage-of-the-recovery method.⁽⁵⁾ Second, it provides plaintiffs' counsel with a strong incentive to effectuate the maximum possible recovery in the shortest amount of time necessary under the circumstances.⁽⁶⁾ Third, use of the percentage method decreases the burden imposed upon the court by the "lodestar" method and assures that class members do not experience undue delay in receiving their share of the settlement.⁽⁷⁾

B. A Percentage Fee Of 30% Of The Class Fund Created Is Reasonable In This Case

In Paul, Johnson, the Ninth Circuit established 25% of the common fund as the "benchmark" award for attorneys' fees. 886 F.2d at 272. This "benchmark" percentage should be adjusted upward or downward when circumstances indicate that the percentage of recovery would be either too small or too large in light of the hours devoted to the case or other relevant factors. Torrisi, 8 F.3d at 1376. The guiding principle is that the fee award be "'reasonable under the circumstances.'" WPPSS, 19 F.3d at 1296 (citation omitted).

Virtually all district courts in this Circuit award percentages between 25% and 33% in securities class actions, with 30% awards representing the overwhelming majority. Over eight years ago, Judge Patel of this District critically analyzed securities class action "lodestar/multiplier" fee awards in Activision, 723 F. Supp. 1373, concluding "that in class action common fund cases the better practice is to set a percentage fee and that, absent extraordinary circumstances that suggest reasons to lower or increase the percentage, the rate should be set at 30%." Id. at 1378 (emphasis added). This Court explained its rationale as follows:

The Ninth Circuit's opinion does not appear to foreclose, upon appropriate findings, the setting of a different benchmark, since it left "to the district court the task of determining what this reasonable percentage should be." Id. [Paul, Johnson, 886 F.2d at 271.] The 25% was given for guidance and the court indicated it would approve use of that figure. As documented by the lengthy list of cases below, this court finds that in most recent cases the benchmark is closer to 30%. Therefore, the court finds that a figure of approximately 30% is substantially justified.

This court's review of recent reported cases discloses that nearly all common fund awards range around 30% even after thorough application of either the lodestar or twelve-factor method.

Id. at 1377.

Courts in this district generally award 30% fees for favorable results in securities class actions. For example, in May, 1997, Judge Patel awarded a fee of 30% plus expenses in In re Conner Peripherals, Inc. Sec. Litig., Master File No. C-95-2244-MHP (N.D. Cal. May 7, 1997), attached as Exhibit 2 to the separate Declaration of Miles M. Tepper in Support of Plaintiffs' Application for Attorneys' Fees and Reimbursement of Expenses ("Tepper Decl."). In July 1992, The Honorable Charles A. Legge awarded fees of 30% plus expenses in In re AT&E Corporate Sec. Litig., Master File No. C-90-3265-CAL (N.D. Cal. July 13, 1992) Tepper Decl., Ex. 3. In February 1991, December 1995, and March 1996, The Honorable D. Lowell Jensen awarded fees of 30% plus expenses in In re Genentech, Inc. Sec. Litig., Master File No. C-88-4038 DLJ (N.D. Cal. February 21, 1991) Tepper Decl., Ex. 4; In re Ross Systems Sec. Litig., Master File No. C-94-0017-DLJ(WDB) (N.D. Cal. December 13, 1995) Tepper Decl., Ex. 5; and Leonard v. NetFrame Systems, Inc., C-95-0238-DLJ (N.D. Cal. March 20, 1996) Tepper Decl., Ex. 6. In August 1991, November 1992, December 1994, and October 1996, The Honorable Edward A. Infante awarded fees of 33-1/3%, 32%, 30% and 30%, respectively, plus expenses in In re Seagate Technology Sec. Litig., Master File No. C-84-20756(A)-WAI (N.D. Cal. August 14, 1991) Tepper Decl., Ex. 7; In re ASK Computer Systems Sec. Litig., No. C-85-20207(A)-WAI(EAI) (N.D. Cal. November 16, 1992) Tepper Decl., Ex. 8; In re Advanced Micro Devices Sec. Litig., Master File No. C-93-20662-EAI (N.D. Cal. December 12, 1994) Tepper Decl., Ex. 9; and Fisher v. Acuson Corp., Master File No. C-93-20477-EAI (N.D. Cal. October 7, 1996) Tepper Decl., Ex. 10. In April 1992 and July 1994, The Honorable James Ware awarded fees of 30% plus expenses in Berley v. Sculley, C-91-20270-JW (N.D. Cal. April 20, 1992) Tepper Decl., Ex. 11; and In re Altera Corp. Sec. Litig., Master File No. C-92-20399-JW(EAI) (N.D. Cal. July 29, 1994) Tepper Decl., Ex. 12. In March and October of 1991, Judge William A. Ingram awarded fees of 35% and 30%, respectively, plus expenses in Cooper v. Hwang, No. C-86-20146-WAI (N.D. Cal. March 5, 1991) Tepper Decl., Ex. 13; and Perkins v. Preletz, No. 90-20026-WAI (N.D. Cal. October 1, 1991) Tepper Decl., Ex. 14. In December 1993 and June 1994, The Honorable Fern M. Smith awarded fees of 30% plus expenses in Shields v. Smith, No. C-90-0349-FMS (N.D. Cal. December 21, 1993) Tepper Decl., Ex. 15; and Levy v. Eletr, No. C-88-3457-FMS (N.D. Cal. June 20, 1994) Tepper Decl., Ex. 16. In June 1995, The Honorable Claudia Wilken awarded fees of 30% plus expenses in Roe v. Hospital Staffing Services, Inc., No. C-92-4101-CW (N.D. Cal. June 30, 1995) Tepper Decl., Ex. 17. Judge William H. Orrick awarded fees of 30% plus expenses in In re Cirrus Logic Sec. Litig., Master File No. 93-1591-WHO (N.D. Cal. July 1, 1997) Tepper Decl., Ex. 18; and In re Sam & Libby Inc. Sec. Litig., Master File No. 92-1564-WHO (N.D. Cal. August 1, 1994) Tepper Decl., Ex. 19. And, in January 1996, The Honorable Saundra Brown Armstrong awarded fees of 30% of the settlement fund in In re Hexcel Corp. Sec. Litig., Master File No. C-92-4811-SBA (N.D. Cal. January 22, 1996) Tepper., Ex. 20.

C. Consideration Of Relevant Factors Justify An Award Of A 30% Fee In This Case

Numerous factors are present here which justify this Court's award of a 30% fee:

(i) The settlement achieved. A settlement of $3 million has been obtained solely through the efforts of class counsel without the assistance of any regulatory agency or the necessity of a lengthy trial and post-trial appeals. This favorable settlement was achieved as a result of very extensive and creative prosecutorial, investigative and discovery efforts as detailed in the Tepper Declaration. As a result of this settlement, class members will receive compensation for their losses in Identix stock and avoid the very substantial risk of no recovery in the absence of a settlement.

(ii) The risks both as to liability and damages. The parties strongly disagreed about liability and damages. Defendants have vigorously denied any wrongdoing, and asserted from the outset of the litigation an aggressive attack on the sufficiency of plaintiffs' complaint, as well as on the merits of plaintiff's case from a factual perspective. Were this settlement not achieved, plaintiffs faced costly and risky litigation against the defendants, including the virtual certainty of a motion to dismiss, and the vigorous assertion a a multiplicity of pre-trial defenses, with ultimate success far from certain. It is possible that the case would never have reached a jury and, if it did, a jury could have found no liability or no damages.

(iii) The diligent prosecution of this case. A considerable effort on the part of plaintiffs' counsel was required to produce this settlement. Plaintiffs' counsel spent many hours investigating the case, conducting discovery of defendants and third parties -- mastering the relevant facts and dynamics of Identix's business, and working with their experts in order to make effective arguments on the merits and conduct meaningful settlement discussions.

(iv) The complexity of this action's factual and legal questions. The factual and legal questions at issue are and would continue to be the subject of complex analysis. Numerous issues would be involved in proving liability, including proof of scienter, materiality, loss causation and damages.

(v) The contingent nature of the case and the financial burden carried by the plaintiffs. A determination of a fair fee must include consideration of the contingent nature of the fee and the difficulties which were overcome in obtaining the settlement. Class counsel have received no compensation during the more than a year this litigation has been pending, and have incurred significant expenses in litigating for the benefit of the plaintiff class. Any fee award or expense reimbursement to class counsel has always been at risk and completely contingent on the result achieved and on this Court's exercise of its discretion in making any award.

(vi) A 30% fee award reflects the market rate in similar complex, contingent litigations. As demonstrated by the decisions cited above, a 30% fee is a percentage that has been repeatedly awarded by the courts in this Circuit and District. Moreover, the requested fees are in line with awards in numerous other similar cases. Attached as Appendix A is a sampling of similar cases throughout the country showing fees awarded in common fund cases equal to or greater than the percentage requested here.

Further, a Federal Judicial Center Study released in 1996, which covered all class actions in four selected federal district courts including the Northern District of California, found that as to the size of attorneys' fees: "median rates ranged from 27% to 30%." Thomas E. Willging, Laurel L. Hooper, and Robert J. Niemic, An Empirical Study of Class Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules (1996) at 69. This finding is in line with an analysis of fee awards in class actions conducted in 1995 by National Economic Research Associates, an economics consulting firm. Using data from 656 shareholder class actions, the study reports on the central question of attorneys' fees: "Regardless of case size, fees average approximately 32 percent of the settlement." Frederick C. Dunbar, Todd S. Foster, Vinita M. Juneja, Denise N. Martin, Recent Trends III: What Explains Settlements in Shareholder Class Actions (NERA June, 1995) at 7.

In addition, the requested fees reflect the private marketplace, a result repeatedly encouraged by the courts. See Continental Illinois, 962 F.2d at 572. In private litigation, attorneys regularly contract for contingent fees between 30% and 40% directly with their clients. See Phemister, ¶66,234, at 66,995 ("Contingent fee arrangements in non-class action damage lawsuits use the simple method of paying the attorney a percentage of what is recovered for the client. The more the recovery, the more the fee. The percentages agreed on vary, with one-third being particularly common."); Kirchoff, 786 F.2d at 323 (observing that "40% is the customary fee in tort litigation" and noting, with approval, contract providing for one-third contingent fee if litigation settled prior to trial). These percentages are the prevailing market rates throughout the United States for contingent representation.

However, in class action common fund cases such as this, class counsel's attorneys' fees can only be determined by the Court in the exercise of its discretion. Here, plaintiffs request an award of 30%, consistent with historic precedent, numerous recent authorities from courts in this Circuit and District, and equal to the amount the class was advised we could seek. An award of the requested fee recognizes the substantial benefits conferred on the class and the circumstances under which this result was accomplished. It is fair to both counsel and the class and should be awarded by the Court.

Class counsel's efforts were performed on a wholly contingent basis. Despite significant risk and in the face of determined opposition, an excellent result has been obtained for the class. Under these circumstances, it necessarily follows that we are entitled to the award of a reasonable percentage fee based on the benefit conferred and the common fund obtained. Under all of the circumstances present here, a 30% fee plus expenses is fair and reasonable.⁽⁸⁾

III. PUBLIC POLICY CONSIDERATIONS MANDATE THE AWARD OF ADEQUATE FEES IN REPRESENTATIVE ACTIONS SO THAT COMPETENT AND EXPERIENCED LAWYERS WILL UNDERTAKE SUCH REPRESENTATIONS

The federal securities and corporate governance laws are remedial in nature and, in order to effectuate their statutory purpose of protecting investors and consumers, private lawsuits are to be encouraged. See Basic Inc. v. Levinson, 485 U.S. 224 (1988); Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299 (1985); Herman & MacLean v. Huddleston, 459 U.S. 375 (1983); Affiliated Ute Citizens v. United States, 406 U.S. 128 (1972); Superintendent of Ins. v. Bankers Life & Casualty Co., 404 U.S. 6, 12 (1971). Indeed, the ultimate effectiveness of these remedies may largely depend on the efficacy of the representative litigation device. 3 Louis Loss, Securities Regulation 1819 (2d ed. 1961).

Private lawsuits serve to further the objective of the federal securities laws which is to protect investors and consumers against fraudulent and other deceptive practices. As a practical matter, those lawsuits can be maintained only if competent counsel can be obtained to prosecute them. Competent counsel can be obtained if reasonable and adequate compensation for their services were awarded if a successful result is achieved. "To make certain that the public is represented by talented and experienced trial counsel, the remuneration should be both fair and rewarding. The concept of a private attorney acting as a 'private attorney general' is vital to the continued enforcement and effectiveness of the Securities Acts."

Eltman v. Grandma Lee's, Inc., [1986-1987 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶92,798, at 93,907 (E.D.N.Y. 1986) (citations omitted).

That those goals have been achieved here is beyond question. A cash recovery, via this settlement, has been obtained for class members who were harmed by the alleged wrongdoing of the defendants. Despite the risk, a significant service has been provided to these investors -- a demonstration that the protection provided by the federal securities and corporate governance laws is real and can provide benefits through the representative litigation device. Because of these risks, the result obtained and the other factors discussed herein, class counsel respectfully request the Court to award the fees and expenses requested.

IV. CLASS COUNSEL'S EXPENSES ARE REASONABLE AND WERE NECESSARILY INCURRED TO ACHIEVE THE BENEFIT OBTAINED FOR THE CLASS

Class counsel have incurred costs and expenses in an aggregate amount of $74,786.61 in prosecuting this litigation on behalf of the class. These expenses are categorized in the declarations of counsel submitted to the Court herewith.

More than half of these expenses (approximately $39,606.08) are the fees of our consultants/experts and investigator who assisted us greatly, inter alia, in the areas of fact investigation, loss causation and damages. These consultants were indispensable to us. Without their involvement, we could not have resolved the case as we did. Class counsel believe these expenses are reasonable and know that they were necessarily incurred in obtaining this result for the class.⁽⁹⁾

V. CONCLUSION

The settlement of this action is the culmination of the hard work of class counsel. For their efforts, class counsel request that the Court approve the fee and expense application and enter the order awarding them 30% of the Settlement Fund, plus

$74,786.61 in expenses plus interest earned thereon at the same rate and for the same period as that earned on the Settlement Fund until paid.

DATED: February 25, 1998

Respectfully submitted,

LAW OFFICE OF MILES M. TEPPER

MILES M. TEPPER

______________________________

MILES M. TEPPER

200 Executive Drive, Suite 100

West Orange, NJ 07052

Telephone: 973/243-6700

MILBERG WEISS BERSHAD

HYNES & LERACH LLP

REED R. KATHREIN

JEFFREY W. LAWRENCE

222 Kearny Street, 10th Floor

San Francisco, CA 94108

Telephone: 415/288-4545

MILBERG WEISS BERSHAD

HYNES & LERACH LLP

WILLIAM S. LERACH

KEITH F. PARK

600 West Broadway, Suite 1800

San Diego, CA 92101

Telephone: 619/231-1058

KAUFMAN, MALCHMAN, KIRBY

& SQUIRE

JEFFREY H. SQUIRE

919 Third Avenue, 11th Floor

New York, NY 10022

Telephone: 212/371-6600

HAGENS & BERMAN

STEVE W. BERMAN

KARL P. BARTH

1301 Fifth Avenue, Suite 2929

Seattle, WA 98101

Telephone: 206/623-7292

Co-Lead Counsel for

Representative Plaintiffs

IDENTIX\DLM12894.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 February 26, 1998, declarant served the NOTICE OF MOTION AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS' APPLICATION FOR ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES 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:

http://securities.milberg.com

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 26th day of February, 1998, at San Diego, California.

______________________________

DANELLE L. McNERTNEY

1. See Declaration of Cheryl Washington Re Mailing of (A) Notice of Settlement of Class Action, Proof of Claim and Release Form; and (B) Publication of Summary Notice, ¶¶5,6.

2. The deadline for objections to be filed is February 27, 1998.

The notice that this Court approved and that was sent to class members advised that class counsel intended to apply for attorneys' fees of 30% of the Settlement Fund. Thus, there have been no objections by any class members to the fee amount that was requested by class counsel.

3. In Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268 (9th Cir. 1989), the Ninth Circuit explained the principle underlying fee awards in common fund cases:

Since the Supreme Court's 1885 decision in Central Railroad & Banking Co. of Ga. v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885), it is well settled that the lawyer who creates a common fund is allowed an extra reward, beyond that which he has arranged with his client, so that he might share the wealth of those upon whom he has conferred a benefit. The amount of such a reward is that which is deemed "reasonable" under the circumstances.

Id. at 271 (citations omitted, emphasis in original).

4. Courts in other circuits favor the percentage-of-recovery approach for the award of attorneys' fees in common fund cases. Two circuits have ruled that the percentage method is mandatory in common fund cases. Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261 (D.C. Cir. 1993); Camden I Condominium Ass'n v. Dunkle, 946 F.2d 768, 774-75 (11th Cir. 1991). Other circuits and commentators have expressly approved the use of the percentage method. Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994); Brown v. Phillips Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988) (footnote 16 of Blum recognizes both "implicitly" and "explicitly" that a percentage recovery is reasonable in common fund cases); Harman v. Lyphomed, Inc., 945 F.2d 969, 975 (7th Cir. 1991); In re First Fidelity Bancorporation Sec. Litig., 750 F. Supp. 160 (D.N.J. 1990); Report of the Third Circuit Task Force, Court Awarded Attorney Fees, 108 F.R.D. 237, 254 (October 8, 1985); Edward D. Cavanagh, Attorneys' Fees in Antitrust Litigation: Making the System Fairer, 57 Fordham L. Review 51, 100 (1988).

5. Courts are encouraged to look to the private marketplace in setting a percentage fee:

The judicial task might be simplified if the judge and the lawyers bent their efforts on finding out what the market in fact pays not for the individual hours but for the ensemble of services rendered in a case of this character. This was a contingent fee suit that yielded a recovery for the "clients" (the class members) of $45 million. The class counsel are entitled to the fee they would have received had they handled a similar suit on a contingent fee basis, with a similar outcome, for a paying client. Suppose a large investor had sued Continental for securities fraud and won $45 million. What would its lawyers have gotten pursuant to their contingent fee contract?

In re Continental Illinois Sec. Litig., 962 F.2d 566, 572 (7th Cir. 1992). See also Phemister v. Harcourt Brace Jovanovich, Inc., 1984-2 Trade Cas. (CCH) ¶66,234, at 66,995 (N.D. Ill. 1984) ("Contingent fee arrangements in non-class action damage lawsuits use the simple method of paying the attorney a percentage of what is recovered for the client. The more the recovery, the more the fee. The percentages agreed on vary, with one-third being particularly common.").

6. The contingent fee uses private incentives rather than careful monitoring to align the interests of lawyer and client. The lawyer gains only to the extent his client gains. . . . The unscrupulous lawyer paid by the hour may be willing to settle for a lower recovery coupled with a payment for more hours. Contingent fees eliminate this incentive and also ensure a reasonable proportion between the recovery and the fees assessed to defendants.

At the same time as it automatically aligns interests of lawyer and client, rewards exceptional success, and penalizes failure, the contingent fee automatically handles compensation for the uncertainty of litigation.

Kirchoff v. Flynn, 786 F.2d 320, 325-26 (7th Cir. 1986) (emphasis added).

7. Professor Coffee argues that a percentage of the gross recovery is the only reasonable method of awarding fees in common fund cases:

If one wishes to economize on the judicial time that is today invested in monitoring class and derivative litigation, the highest priority should be given to those reforms that restrict collusion and are essentially self-policing. The percentage of the recovery award formula is such a "deregulatory" reform because it relies on incentives rather than costly monitoring. Ultimately, this "deregulatory" approach is the only alternative.

John C. Coffee, Jr., Understanding the Plaintiffs' Attorney: The Implications of Economic Theory for Private Enforcement of the Law Through Class and Derivative Actions, 86 Colum. L. Rev. 669, 724-25 (1986).

As Former Chief Judge Brieant, of the Southern District of New York, commenting upon the Paul, Johnson decision has succinctly stated:

Such an award is consistent with the new learning (old wine in a new bottle) announced by the Ninth Circuit in Paul, Johnson, supra, which new learning we believe will proceed from West to East and take us back to straight contingent fee awards bereft of largely judgmental and time-wasting computations of lodestars and multipliers. These latter computations, no matter how conscientious, often seem to take on the character of so much Mumbo Jumbo. They do not guarantee a more fair result or a more expeditious disposition of litigation.

In re Union Carbide Corp. Consumer Products Business Sec. Litig., 724 F. Supp. 160, 170 (S.D.N.Y. 1989).

8. Professor Conte acknowledged the propriety of adequate fees in common fund cases:

[C]ourts have been careful to award a fully compensable reasonable fee based on the underlying economic inducement for class action lawyers to pursue potentially expensive or complex common fund class litigation. These lawyers assume the risk of no compensation unless they successfully confer common fund benefits on the class, based on their reasonable expectation that they will share in the recovery in a fair proportion, in contrast to receiving a fee based initially on time-expended criteria that failed to give the results obtained factor primary consideration.

1 Alba Conte, Attorney Fee Awards §1.09, at 16 (2d ed. 1993) (footnotes omitted, emphasis in original).

9. The work performed by the principal experts/consultants is described either in their declarations or in the Declaration of Miles M. Tepper filed herewith.