MILBERG WEISS BERSHAD

HYNES & LERACH LLP

ALAN SCHULMAN (128661)

KEITH F. PARK (54275)

KATHERINE L. BLANCK (149110)

SPENCER A. BURKHOLZ (147029)

600 West Broadway, Suite 1800

San Diego, CA 92101

Telephone: 619/231-1058



SPECTOR & ROSEMAN, P.C.

ROBERT M. ROSEMAN

2000 Market Street

12th Floor

Philadelphia, PA 19103

Telephone: 215/864-2400

- and -

ELLEN GUSIKOFF STEWART (144892)

600 West Broadway, Suite 1800

San Diego, CA 92101

Telephone: 619/338-4514



BERNSTEIN LITOWITZ BERGER &

GROSSMANN LLP

DANIEL L. BERGER

1285 Avenue of the Americas

33rd Floor

New York, NY 10019

Telephone: 212/554-1400

Co-Lead Counsel for Plaintiffs



UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION



In re IMP, INC. SECURITIES LITIGATION

___________________________________

Master File No. C-96-20826-SW(PVT)

CLASS ACTION


KEVIN WALSH, PAUL GOTTLIEB and CAROLYN

GOTTLIEB, joint tenants, derivatively on behalf of IMP, INC.,

Plaintiffs,

vs.

BARRY CARRINGTON, BERNARD V. VONDERSCHMITT,

ZVI GRINFAS, PETER D. OLSON, DAVID LAWS,

CHARLES ISHERWOOD, and GEORGE RASSAM,

Defendants.

- and -

IMP, INC.,

Nominal Defendant.

___________________________________

C-97-20238-JW(PVT)

DERIVATIVE ACTION



DECLARATION OF ALAN SCHULMAN IN SUPPORT OF APPROVAL

OF THE PROPOSED CLASS AND DERIVATIVE SETTLEMENT AND IN

SUPPORT OF APPLICATION FOR ATTORNEYS' FEES AND

REIMBURSEMENT OF EXPENSES, AND PLAN OF ALLOCATION




DATE: August 26, 1998

TIME: 10:00 a.m.

COURTROOM: The Honorable

Spencer Williams


TABLE OF CONTENTS


I. PRELIMINARY STATEMENT

II. HISTORY OF THE ACTION

III. THE LITIGATION

III. FACTORS TO BE CONSIDERED IN SUPPORT OF SETTLEMENT

IV. THE PLAN OF ALLOCATION

V. THE FEE APPLICATION

VI. CONCLUSION




I, ALAN SCHULMAN, declare:

1. I am a member of Milberg Weiss Bershad Hynes & Lerach LLP, one of Plaintiffs' Co-Lead Counsel in this litigation. I have personal knowledge of the matters set forth herein based upon my active supervision and participation in all material aspects of the prosecution of this litigation.

2. I submit this declaration in support of Plaintiffs' application, pursuant to Rules 23 and 23.1 of the Federal Rules of Civil Procedure, for approval of the Settlement herein for an award of attorneys' fees and reimbursement of expenses, and for approval of the Plan of Allocation of settlement proceeds to class members. The Stipulation of Settlement, dated January 30, 1998, provides for payment of $9.5 million which has been deposited in escrow and is earning interest for the benefit of the Class (the "Settlement Fund"), and implementation of certain procedures for reviewing and monitoring IMP's product issues and insider trader policy in full settlement of the claims asserted by Plaintiffs on behalf of the Class and derivatively on behalf of IMP in this action (the "Settlement").(1)

I. PRELIMINARY STATEMENT

3. This case has been vigorously litigated for over a year. The Settlement was not arrived at until Plaintiffs conducted discovery, including the review and analysis of over ten thousand pages of documents which were produced by Defendants and third parties, and plaintiffs had prevailed in litigating issues in the California Court of Appeal. In addition, Plaintiffs interviewed a number of former employees to develop evidence; consulted with experts in the high-technology industry knowledgeable about the issues raised in the litigation and damage analysis; and thoroughly researched the law pertinent to the claims and defenses asserted. Furthermore, settlement negotiations were arduous and protracted, extending for more than eleven months, and a resolution was not achieved until after the intervention and assistance of an experienced settlement mediator, the Honorable J. Lawrence Irving, retired United States District Judge.

4. Consequently, this Settlement is the product of hard-fought litigation. It was negotiated by experienced counsel with a firm understanding of the strengths and weaknesses of their respective cases. The Settlement confers an immediate and substantial benefit on the Class and upon IMP, and eliminates the risk of continued litigation whose outcome could not be assured. It is respectfully submitted that the Settlement should be approved as fair, reasonable and adequate, counsel should be awarded attorneys' fees and reimbursement of expenses for their efforts in creating this benefit on behalf of the Class and IMP, and the Plan of Allocation should be approved.

5. The following is a summary of the principal events which occurred during the course of this litigation.

II. HISTORY OF THE ACTION

6. During the relevant period, IMP was a supplier of analog and mixed signal CMOS integrated circuit solutions. It was alleged that during the Class Period (April 24, 1996 through July 22, 1996), the Defendants represented to the market that IMP's business trends were strong. In particular, IMP publicly touted sales of its 62C538 computer chip to Iomega Corporation ("Iomega"), including a $10 million order received from Iomega just before the commencement of the Class Period for inclusion of the 62C538 chip in Iomega's popular Zip Drive.

7. It was alleged that to artificially inflate the price of IMP stock to allow IMP insiders to sell substantial amounts of IMP stock in one month, Defendants issued false and misleading statements about IMP's business and its future prospects. It was alleged that Defendants were aware that Iomega had experienced serious and persistent quality and delivery problems with the 62C538 ship. It was alleged that IMP had been unable to deliver to Iomega sufficient quantities of reliable 62C538 chips, at sufficient rates to keep up with Iomega' production schedule demands. As a result, it was alleged that Defendants knew its relationship with Iomega, its most important customer, was in jeopardy. It was also alleged that IMP' rate of revenue growth was slowing, and that it was experiencing weakness in new orders and shipment delays from other customers.(2)

8. On July 22, 1996, shortly after the Individual Defendants sold substantial amounts of IMP stock, the Company announced that the June quarter financial results would be disastrous due to declining revenue and earnings and IMP would need to restructure and fire over 10% of its employees, causing IMP's stock price to collapse to $6 per share and well below the prices per share at which the Individual Defendants sold their IMP shares in May 1996. In later months, IMP announced further layoffs, the fact that Iomega had terminated its relationship with IMP, and that major customers had requested delays and reductions in orders, resulting in losses. For the quarter ended September 30, 1996, IMP reported a loss of $10 million, and for the December 30, 1996 quarter it reported a loss of $2.1 million. IMP continues to struggle to this day.

III. THE LITIGATION

9. On and after October 1, 1996 the following class actions were filed in the United States District Court for the Northern District of California: Roberts, et al. v. IMP, Inc., et al., CV96-20826SW(PVT); Garrod, et al. v. IMP, Inc., et al., CV96-20834SW(PVT); Azad, et al. v. IMP, Inc., et al., CV96-20862SW(PVT); Suscavage v. IMP, Inc., et al., CV97-0590DLJ; and Tokayer, et al. v. IMP, Inc., et al., CV97-20361SW(PVT) (the "Federal Class Actions"). The Federal Class Actions were consolidated under In re IMP, Inc. Sec. Litig., Master File No. C-96-20826-SW(PVT). The Federal Class Actions alleged violations of §§10(b), 20(a) and 20A of the Securities and Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, on behalf of all persons who purchased or otherwise acquired the stock of IMP from April 24, 1996 through July 22, 1996 (the "Class Period"), excluding the Defendants, members of their families and any entity in which a Defendant has an interest (the "Federal Class Actions").

10. The Federal Class Actions alleged that Defendants misrepresented the success, demand and backlog for its most important product, the 62C538 computer chip, during the Class Period while they concealed that significant problems plagued IMP's relationship with Iomega, its largest customer for that product. Defendants' alleged misrepresentations and omissions caused the artificial inflation of the price of IMP stock to the damage of members of the Class.

11. On March 2, 1997, a derivative action was filed in the United States District Court for the Northern District of California entitled Walsh, et al. v. Carrington, CV97-20238-SW(PVT) ("the Federal Derivative Action"). This action was originally filed on November 8, 1996 in the Court of Chancery in the State of Delaware. By stipulation it was dismissed and refiled in the Northern District of California. The Federal Derivative Action alleged claims for Breach of Fiduciary Duty and California Corporations Code §§25402 and 25502.5 and arises out of the same set of facts as the Federal Class Actions, including claims against those directors who sold their IMP stock in advance of the July 22, 1996 announcement.

12. On and after September 19, 1996 the following class actions were filed in the Superior Court of California, County of Santa Clara: Lee, et al. v. IMP, Inc., CV760793; Richter v. IMP, Inc., et al., CV761566; Tancabel, et al. v. IMP, Inc., CV763405; and Moroson, et al. v. IMP, Inc., CV763969 (the "State Class Actions"). These actions were consolidated under Lee, et al. v. IMP, Inc., CV760793. The State Class Actions alleged violations of California Corporations Code §§25400 and 25500, California Civil Code §§1709-1710, and California Business and Professions Code §17200 on behalf of all persons who purchased or otherwise acquired the common stock of IMP from April 24, 1996 through July 22, 1996, excluding the Defendants, members of their families and any entity in which a Defendant has an interest.

13. The State Class Actions also alleged that Defendants misrepresented the demand and backlog for its most important product, the 62C538 computer chip, during the Class Period while they concealed that significant problems plagued IMP's relationship with Iomega, its largest customer for that product. Defendants' alleged misrepresentations and omissions caused artificial inflation of the price of IMP stock to the damage of members of the Class.

14. On November 13, 1996 a derivative action on behalf of IMP was filed in the Superior Court of California, County of Santa Clara, entitled Shockley v. Carrington, et al., Civil 762109 (the "State Derivative Action"). The State Derivative Action alleged claims against certain of IMP's officers and directors for breach of fiduciary duty and violation of California Corporations Code §§25402 and 25502.5. This action alleged, inter alia, that the conduct of the individuals regarding alleged misstatements concerning product demand and order backlog subjected IMP to claims for damage from Class members. The claims in the State Derivative Action, except under California Corporations Code §25502.5, have been dismissed.

15. Shortly after the State and Federal Class Actions, and State and Federal Derivative Actions were filed, Plaintiffs' Counsel organized themselves in order to efficiently and effectively prosecute this litigation and to avoid any duplication of effort. Pursuant to an Order of the Court, the Federal Class Actions were consolidated for all purposes under the caption In re IMP Securities Litigation. The Order also established a Master File and Master Docket, and approved the structure of Plaintiffs' Counsel. The state actions were also consolidated under the low-numbered Lee action.

16. Plaintiffs' Counsel conducted discovery in the State Actions, reviewing over ten thousand pages of IMP'S internal documents, including sales, product and financial documents.

17. As set forth below, through this discovery, Plaintiffs' were able to uncover many documents supporting their allegations.

18. In April, 1997, after over seven months of negotiations, Defendants agreed to produce, on an informal basis in connection with settlement discussions, certain categories of relevant documents. Among other things, Defendants produced Board minutes, distribution agreements, correspondence, purchase orders, invoices and other sales documentation, and various documents related to IMP's 62C538 chip product and its sales to its key customers, including Iomega. In total, Defendants produced approximately 3,000 pages of documents.

19. Plaintiffs' Counsel established a system in order to identify those documents which were pertinent to the issues in the case, and to ascertain whether additional documents and information had not been produced. Plaintiffs' pursuit and analysis of Defendants' documents revealed areas of additional inquiry and assisted in presenting plaintiffs' case for settlement purposes. 20. On October 16, 1997, Plaintiffs' Counsel served discovery requests on Defendants in the State Actions, including a California Code of Civil Procedure §2025 deposition notice and First Request For Production of Documents. In response to Plaintiffs' discovery requests and the filing of federal actions, on November 12, 1997, Defendants' filed a motion to stay the State Actions pending resolution of the recently filed parallel Federal Action, or in the alternative to stay discovery in the State Actions. Shortly after a hearing held before Judge Ambler, on December 11, 1996, the Court denied both of Defendants' motions. In connection with the denial of Defendants' motions to stay, Judge Ambler assigned the resolution of all discovery disputes in the State Actions to a discovery referee to be agreed upon by the parties. The parties were continuing meet and confer discussions over further document production and protective order issues when this settlement occurred.

21. Plaintiffs' Counsel served non-party subpoena duces tecum on IMP's customers -- Western Digital, Rockwell International, QLogic Corp., International Rectifier Corp., Hewlett Packard Co., and JTS Corp., news organization CNBC, Inc., and IMP's auditor -- Price Waterhouse -- to obtain documents relevant to the issues. In response, Plaintiffs obtained over 8,039 pages of relevant documents.

22. Before any non-parties would agree to produce documents in response to the subpoenas served, they asserted that some of the information sought was highly sensitive and confidential. Accordingly, Plaintiffs' Counsel drafted a Confidentiality Order which would provide Defendants and non-parties protection from public disclosure of confidential information to the extent necessary, while providing Plaintiffs with sufficient flexibility to use the information gathered.

23. Plaintiffs' Counsel's investigation also included interviews with several persons, including former IMP employees, with knowledge about IMP or relating to the claims alleged. The information derived from these interviews was important. Among other things, Plaintiffs' Counsel learned of additional avenues of inquiry to be explored with Defendants and non-party witnesses.

24. During the litigation, Plaintiffs' Counsel conferred on many occasions with consultants with expertise about damage analysis and technology issues.

25. Plaintiffs' technology consultant provided valuable advice as to the types of products sold by IMP. This information assisted in drafting the Complaint and pursuing discovery.

26. Plaintiffs' damage consultant analyzed the potential recoverable damages and the materiality of the alleged false and misleading statements. This consultant also assisted in formulating the Plan of Allocation in connection with the Settlement.

27. Under the provisions of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), because Defendants filed (following consolidation of the actions and Plaintiffs' filing of a Second Consolidated Amended Complaint on May 23, 1997), on June 13, 1997 a motion to dismiss the Federal Action, Plaintiffs were precluded from conducting any formal discovery in the Federal Action. Notwithstanding the stay of formal discovery, Plaintiffs' investigation included a review of IMP's SEC filings, securities analysts' reports and advisories about the Company, press releases issued by the Company, media reports about the Company and discussions with consultants and others familiar with IMP's business and operations. In the Federal Court Derivative action, which was not subject to the stay, plaintiffs were provided with and reviewed and analyzed the documents provided by the defendants in the state actions. In addition, plaintiffs sought and obtained additional documents and information concerning their claims.

28. On November 12, 1996, Defendants filed a Motion to Stay [the State Actions] Pending Parallel Federal Action Or In the Alternative to Stay Discovery [in the State Actions]. Plaintiffs opposed Defendants' motion, arguing that a stay was entirely contrary to established California case law. Shortly after a hearing held before Judge Ambler, on December 11, 1996, the Court denied the motion in its entirety by written order. Defendants filed a writ petition challenging this order, which was accepted for review by the Sixth Appellate District. The case (H016281) was consolidated with similar writ petitions challenging similar Superior Court orders from two other cases -- Diamond Multimedia Systems v. Superior Court of Santa Clara County (Case No. H016186) and Oak Technology v. Superior Court of Santa Clara County (Case No. H016141) -- and heard by the Court of Appeal. Extensive effort was placed into briefing important issues regarding Plaintiffs' right to litigate in state court at the same time a related federal action was pending. The Court of Appeal in an unpublished opinion, issued on August 14, 1997, upheld the trial court's order allowing Plaintiffs to proceed with their state court action. IMP's petition for review by the California Supreme Court was denied on October 22, 1997.

29. On January 8, 1997, Defendants demurred and filed a motion to strike Plaintiffs' State Court Class Action complaint. Plaintiffs filed their opposition on February 6, 1997. This case was settled before the Court rendered an opinion on Defendants' demurrer. Defendants also filed a demurrer in the State Court Derivative Action, which was granted in part except for the California Corp. Code §25502.5 claim.

30. On November 25, 1996, pursuant to the PSLRA, Plaintiffs filed a motion to be appointed Lead Plaintiffs and for appointment of Lead Plaintiffs' Co-lead counsel in the Federal Action and to consolidate all actions. On January 13, 1997, the Court appointed Moshe Carmi, Brent Garrod, Jason Duncan, Robert I. Slater, Addol Reza Azad, Richard Gallagher, Jared J. Genter, Steve Leonhardt, Jeff Lee and Trevor Roberts as Lead Plaintiffs and Milberg Weiss, Spector & Roseman, and Bernstein, Litowitz, Berger & Grossman as Plaintiffs' Co-Lead Counsel and consolidated the cases in the Federal Action.

31. On June 13, 1997, Defendants moved to dismiss Plaintiffs' federal class action complaint. Plaintiffs' opposition was filed on July 17, 1997. This motion was continued several times and was pending at the time the settlement was reached. Defendants also filed a motion to dismiss the Federal Derivative action which was fully briefed and pending at the time of the settlement.

32. Following the Court's approval of lead plaintiffs and lead counsel in this action, on February 12, 1997 (following the filing of a copycat complaint on December 2, 1996, Turner, et al. v. IMP, et al., Case No. 96-583, United States District Court, District of Delaware), IMP shareholders filed a motion in Delaware Federal Court for appointment as lead plaintiffs and for approval of lead plaintiffs' choice of counsel. Both the IMP defendants and plaintiffs' counsel opposed the efforts of the IMP shareholders to litigate another similar action in Delaware Federal Court. Plaintiffs' counsel in this action expended substantial efforts to oppose this motion, and the Delaware plaintiffs' attempt to transfer the California federal actions to Delaware pursuant to Multi-District Litigation Procedures, and to stay this action pending resolution of the transfer motion. Plaintiffs' counsel in this action were successful in the withdrawal of the Delaware plaintiffs' motions to litigate the cases in Delaware, and the Delaware actions were transferred to this Court.

33. The parties attended a number of status conferences in person in the state court action, and by telephone in the federal court action whereby it informed the Court of ongoing discovery, issues related to the Court of Appeal review in the state action, and the status of settlement discussions.

34. In connection with settlement discussions, the parties agreed to utilize a settlement mediator. The Honorable J. Lawrence Irving, retired United States District Judge, was jointly engaged for this purpose. Plaintiffs' Counsel prepared a detailed Settlement Memorandum. This Settlement Memorandum was submitted to Judge Irving for in camera review, to provide him with a sense of Plaintiffs' cases.(3)

35. On February 7, 1997, the parties initially met with Judge Irving. The parties held diametrically opposed views on liability. Plaintiffs claimed that Defendants had known from the beginning of the Class Period that IMP could not sustain its rate of growth and meet its projected results and that its relationship with Iomega was deteriorating and would be terminated. Defendants claimed that their announced expectations were reasonable and made in good faith, that Defendants made all appropriate disclosures in a timely fashion, and that none of the Settling Defendants sold their IMP stock based upon knowledge of IMP's impending disclosures.

36. In addition to the differing views on liability and damages, there were issues relating to any contribution to a settlement between IMP and Defendants' insurance carriers. The insurance was a wasting asset because it was being used to pay defense costs. If a settlement were not achieved, there would have been substantially less insurance available to pay any judgment. Moreover, because of the different layers of insurance, an excess layer would not fund any settlement until the layer below it had been exhausted. The insurance carriers had their own counsel present at the February 7, 1997 settlement meeting. By the end of the first day of mediation with Judge Irving, little progress had been made, and there still remained a very substantial gap between Plaintiffs' demand and Defendants' offer.

37. On November 10, 1997, the parties met again with Judge Irving to discuss settlement. Again, there remained a gap between plaintiffs' demand and Defendants' offer.

38. After that session, the parties continued to confer separately by telephone with Judge Irving on many occasions and there were many telephone conversations among counsel for Plaintiffs and Defendants and a face-to-face meeting in Plaintiff Counsel's office.

39. Finally, on January 30, 1998, a Memorandum of Understanding was signed by the parties, providing for the payment of $9.5 million by IMP and its insurance carriers.

40. After the agreement-in-principle was reached, Plaintiffs' Counsel prepared a draft of the Stipulation of Settlement and Exhibits. Again, there were extensive negotiations with Defendants' Counsel concerning the release language and other details, and many drafts and redrafts of these papers were exchanged before final agreement was achieved.

41. On March 31, 1998, counsel for Plaintiffs and Defendants signed the Stipulation of Settlement providing for the payment of $9.5 million in cash, plus interest, to Plaintiffs and the members of the Class and the review and implementation of certain procedures for monitoring IMP's product issues and insider trading policy.

42. Plaintiffs' Co-lead Counsel are actively engaged in complex federal civil litigation, particularly the litigation of securities class and derivative actions. Our experience in the field allowed us to identify the complex issues involved in this case and to formulate strategies to effectively prosecute a case of this complexity. I believe that our reputations as attorneys, unafraid to carry a meritorious case through the trial and appellate levels, gave us strong leverage in engaging in settlement negotiations with Defendants.

43. In the estimation of Plaintiffs' Counsel, the compromise embodied in the Settlement represents a significant achievement in terms of a successful and efficient resolution of a large and complex class and derivative action. The Settlement was negotiated vigorously and at arm's length without any diminution of Plaintiffs' litigation efforts until an agreement-in-principle had been reached.

44. On April 1, 1998, the parties submitted the Stipulation for preliminary approval by the Court. In connection with that submission, the parties submitted a [Proposed] Order Preliminarily Approving Settlement and Approving the Form and Manner of Notice. On June 15, 1998, the Court preliminarily approved the terms of the Settlement and directed that Plaintiffs' Counsel cause the mailing of the Notice of Pendency and Proposed Settlement of Class Action (the "Notice") and the Notice of Pendency and Settlement of Derivative Action ("Derivative Notice") and the Proof of Claim and Release (the "Proof of Claim") to all potential Class members and the Notice of Pendency and Settlement of Derivative Action to all current IMP shareholders identifiable with reasonable effort ("Notice Order").

45. The Court's Notice Order also directed Plaintiffs' Counsel to cause a Summary Notice of Class and Derivative Action Settlement ("Publication Notice") to be published in Investor's Business Daily.

46. Submitted herewith is the Declaration of Cheryl Washington of Gilardi & Co., the claims administrator, which attests that a total of 36,019 Notices have been mailed to potential Class members, a total of 7,191 Derivative Notices have been mailed to current IMP shareholders and that the Publication Notice was published on July 14, 1998 as directed by the Court.

47. The Notice provides that any objections to the Settlement or the application for attorneys' fees and reimbursement of expenses have to be filed by August 7, 1998. Only one objection to the Plan of Allocation has been filed but not yet received by Plaintiffs' Counsel. Counsel will respond to it once received.

III. FACTORS TO BE CONSIDERED IN SUPPORT OF SETTLEMENT

48. As set forth above, the terms of the Settlement were fairly, honestly and aggressively negotiated by all parties with the assistance of an experienced settlement mediator. In fact, the negotiations broke down on several occasions as a result of what were significant differences in the parties' views about the merits.

49. Ultimately, the negotiation of the Settlement was the product of several face-to-face meetings, meetings with an experienced settlement mediator, and countless telephone calls involving Defendants' and Plaintiffs' Counsel. Throughout the course of those negotiations, all parties were represented by counsel with vast experience in securities litigation in general, and securities class and derivative actions in particular. There can be no legitimate question that the Settlement was the result of an adversarial process which produced a fair and honest compromise.

50. Another factor considered in assessing the merits of class and derivative action settlements -- whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt -- is equally supportive of the conclusion that the Settlement is fair, reasonable and adequate to the Class.

51. Throughout the course of the litigation, Defendants asserted that they possessed absolute defenses to the claims alleged by Plaintiffs. We continue to believe that Plaintiffs would have prevailed had there been a trial. As the aggressive posture struck by Defendants' Counsel throughout the course of this litigation makes obvious, however, there was no doubt that Defendants would have employed every imaginable argument to avoid liability had there not been a settlement.

52. In assessing the merits of the Settlement, Plaintiffs' Counsel considered the wide-ranging factual and legal questions that were hotly disputed. Plaintiffs' Counsel were aware that many of the defenses that had been and would be asserted by Defendants had some possibility, albeit uncertain, of success. This uncertainty made the outcome problematical, especially when weighed against the tangible benefits conferred by the Settlement.

53. If this action were not settled, and Plaintiffs were successful at trial and appeal, there is a question whether IMP could pay a large judgment. IMP stock is now trading for less than $1.00 per share. Indeed, IMP has continued to report huge losses as set forth above. Moreover, as described above, the insurance coverage was a wasting asset which would have been substantially depleted by defense costs if this case went to trial. In fact, by settling at this stage, plaintiffs were able to obtain $9.5 million of the $10 million in available insurance coverage. This was a significant result considering the poor financial condition of IMP and its ability to fund any settlement of judgment.

54. Another factor in considering whether to approve class action settlements is the judgment of the counsel to the parties that the settlement is fair and reasonable. As outlined in detail above, the Settlement was the product of long and frequently contentious negotiations between adversaries with significant experience in securities class and derivative action litigation with the assistance of a retired United States District Judge as settlement mediator.

55. Plaintiffs' Co-lead Counsel strongly believe that the Settlement represents the best possible resolution. As outlined above, the Settlement is fair, reasonable and adequate in all respects and should be approved by the Court.

IV. THE PLAN OF ALLOCATION

56. Pursuant to the Notice Order and as set forth in the Notice, all Class members who wish to participate in the distribution of the Settlement Fund must submit a valid Proof of Claim form postmarked on or before October 6, 1998. As provided in the Stipulation, after deducting all appropriate taxes, administrative costs, attorneys' fees and reimbursement of expenses, the Settlement Fund (the "Net Settlement Fund") shall be distributed according to a Plan of Allocation.

57. If approved, the Plan of Allocation will govern how the proceeds of the Settlement Fund will be distributed among Class members who submit appropriate Proof of Claim forms.

58. The proposed Plan of Allocation provides:

(a) The Net Settlement Fund will be distributed to Settlement Class Members who submit valid, timely Proof of Claim forms ("Authorized Claimants"). Settlement Class Members will be eligible to participate in the distribution of the Settlement Fund only if they have a net loss on all transactions in IMP common stock during the Settlement Class Period.

(b) Only Settlement Class Members who purchased or otherwise acquired IMP stock during the Class Period and held their stock to the end of the Class Period are eligible for a distribution from the Settlement Fund. This is because Plaintiffs' damage expert has determined that there were no corrective disclosures during the Class Period that cured any of the alleged misrepresentations and, as a result, any losses incurred by Class Members who bought and sold their IMP stock during the Class Period were not the result of any actionable conduct by the Defendants. In other words, the Plan of Allocation does not provide compensation for all trading losses that may have occurred during the Settlement Class Period because some trading losses are not related to the alleged wrongful conduct.

(c) To the extent there are sufficient funds in the Net Settlement Fund, each Authorized Claimant will receive an amount equal to the Authorized Claimant's claim, as defined below. If, however, the amount in the Net Settlement Fund is not sufficient to permit payment of the total claim of each Authorized Claimant, then each Authorized Claimant shall be paid the percentage that each Authorized Claimant's claim bears to the total of the claims of all Authorized Claimants.

(d) The total of 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 IMP 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.

(e) A claim will be calculated as follows:

(f) The date of purchase or sale is the "contract" or "trade" date as distinguished from the "settlement" date. The determination of the price paid per share and the price received per share shall be exclusive of all commissions, taxes, fees and charges.

(g) 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.

59. This proposed Plan of Allocation was formulated after extensive consultation with Plaintiffs' materiality and damage expert in order to calculate a fair way to divide the Net Settlement Fund for distribution among Class members. While it is not intended to (and does not) reflect an exact method of calculating damages (if the Settlement were not approved and the case were to proceed to trial), the proposed Plan of Allocation attempts to eliminate the effects of market forces unrelated to the alleged misrepresentations and omissions. Thus, the proposed Plan of Allocation is designed to fairly and rationally allocate the proceeds of this Settlement among Class members.

V. THE FEE APPLICATION

60. The Notice provides that Plaintiffs' Counsel may apply for an award of attorneys' fees equal to thirty percent of the Settlement Fund, plus expenses. As set forth in Plaintiffs' Memorandum In Support of Plaintiffs' Counsel's Application for an Award of Attorneys' Fees and Reimbursement of Expenses, Plaintiffs are requesting fees of 30% of the Settlement Fund and expenses of $371,577.28.

61. Plaintiffs' Counsel achieved an extremely beneficial result for the Class and IMP at great risk and expense to themselves. They were unwavering in their dedication to the interests of the Class and their investment of the time and resources necessary to bring this litigation to a successful conclusion.

62. Plaintiffs' Counsel's compensation for the services rendered is wholly contingent. The expenses incurred in the prosecution of this litigation are set forth in the accompanying declarations from Plaintiffs' law firms.

63. As reported to me by plaintiffs' counsel, a total of 4,072.05 hours of attorney time have been devoted to the litigation for a resulting "lodestar" of $1,389,570.

64. As described above, this case was aggressively litigated and settled only after Plaintiffs' Counsel had received, reviewed and analyzed substantial document discovery from the Defendants and had conducted critical interviews.

65. The expertise and experience of Plaintiffs' Counsel is described in each of the affidavits of Plaintiffs' law firms submitted herewith in support of the application for fees and expenses ("Fee Affidavits"). Plaintiffs' Counsel, including the members of Plaintiffs' Co-Lead Counsel are among the most experienced and skilled practitioners in the securities litigation field.

66. Defendants are represented by an outstanding law firm, which spared no effort in the defense of their clients. Steven Schatz, Esq., the lead attorney on this case from Wilson, Sonsini, Goodrich & Rosati, counsel for the Defendants, is a recognized expert in securities litigation. In the face of this formidable opposition, Plaintiffs' Counsel developed their case so as to persuade Defendants to settle the case on a basis highly favorable to the Class.

67. This litigation was undertaken by Plaintiffs' Counsel on a wholly contingent basis. From the outset, Plaintiffs' Counsel understood that they were embarking on a complex, expensive and lengthy litigation with no guarantee of ever being compensated for the enormous investment of time and money the case would require. In undertaking that responsibility, Plaintiffs' Counsel were obligated to assure that sufficient resources of attorneys were dedicated to the prosecution of this litigation and that funds were available to compensate staff and the considerable out-of-pocket costs which a case such as this entails. Moreover, in committing to work this case to the fullest, Plaintiffs' Counsel did not work on other potentially profitable matters.

68. Because of the nature of a contingent practice where cases are predominantly "big cases" lasting several years, not only do contingent litigation firms have to pay regular overhead, but they also have to advance the expenses of the litigation. With an average lag time of three to four years for these cases to conclude, the financial burden on contingent counsel is far greater than on a firm that is paid on an ongoing basis.

69. The above does not even take into consideration the possibility of no recovery. It is wrong to assume that a law firm handling complex contingent litigation always wins. Tens of thousands of hours have been expended in losing efforts. The factor labeled by the courts as "the risks of litigation" is not an empty phrase.

70. There are numerous cases where Plaintiffs' Counsel in contingent cases such as this, after the expenditure of thousands of hours, have received no compensation. It is unfortunate, but true, that Plaintiffs' Counsel who litigate cases in good faith and receive no fees are often the most diligent members of the Plaintiffs' bar. It is only the knowledge by Defendants and their counsel that the leading members of the Plaintiffs' securities bar are actually prepared to, and will, force a resolution on the merits and go to trial, that permits meaningful settlements in actions such as this.

71. I am aware of many hard fought lawsuits where, because of the discovery of facts unknown when the case was commenced, or changes in the law during the pendency of the case, or a decision of a judge or jury following a trial on the merits, excellent professional efforts of members of the Plaintiffs' bar produced no fee for counsel.

72. For example, there has been a recent trend towards dismissal of actions with prejudice at the pleading or summary judgment stage. Indeed, the most recent federal appellate reports are filled with opinions affirming dismissals with prejudice in securities cases. E.g., Suna v. Bailey Corp., 107 F.3d 64 (1st Cir. 1997); Chill v. General Electric Corp., 101 F.3d 263 (2d Cir. 1996); In re Syntex Sec. Litig., 95 F.3d 922 (9th Cir. 1996); Gross v. Summa Four, 93 F.3d 987 (1st Cir. 1996); Glassman v. Computervision Corp., 90 F.3d 617 (1st Cir. 1996); In re Stac Electronics Sec. Litig., 89 F.3d 1399 (9th Cir. 1996), cert. denied, ___ U.S. ___, 117 S. Ct. 1105 (1997); Epstein v. Washington Energy Co., 83 F.3d 1136 (9th Cir. 1996); Lovelace v. Software Spectrum, 78 F.3d 1015 (5th Cir. 1996); San Leandro Emergency Medical Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801 (2d Cir. 1996); Acito v. IMCERA Group, 47 F.3d 47 (2d Cir. 1995); Hillson Partners Ltd. Partnership v. Adage, Inc., 42 F.3d 204 (4th Cir. 1994); Melder v. Morris, 27 F.3d 1097 (5th Cir. 1994); Shields v. Citytrust Bancorp, 25 F.3d 1124 (2d Cir. 1994); Kowal v. MCI Communications Corp., 16 F.3d 1271, 1273 (D.C. Cir. 1994); Tuchman v. DSC Communications Corp., 14 F.3d 1061 (5th Cir. 1994); Mills v. Polar Molecular Corp., 12 F.3d 1170 (2d Cir. 1993); In re VeriFone Sec. Litig., 11 F.3d 865 (9th Cir. 1993); In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357 (3d Cir. 1993); Neubronner v. Milken, 6 F.3d 666 (9th Cir. 1993); Raab v. General Physics Corp., 4 F.3d 286 (4th Cir. 1993); Arazie v. Mullane, 2 F.3d 1456 (7th Cir. 1993).

73. The many recent appellate decisions affirming summary judgments and directed verdicts for defendants show that surviving a motion to dismiss is no guaranty of recovery in the 1990s. E.g., Silver v. H&R Block, 105 F.3d 394 (8th Cir. 1997); In re Worlds of Wonder Sec. Litig., 35 F.3d 1407 (9th Cir. 1994); Donohoe v. Consolidated Operating & Prod. Corp., 30 F.3d 907 (7th Cir. 1994); Sailors v. Northern States Power Co., 4 F.3d 610 (8th Cir. 1993); McGonigle v. Combs, 968 F.2d 810 (9th Cir.), cert. dismissed, 506 U.S. 948 (1992); Moorhead v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 949 F.2d 243 (8th Cir. 1991); In re Convergent Technologies Sec. Litig., 948 F.2d 507 (9th Cir. 1991). And even plaintiffs who succeed at trial may find their judgment overturned on appeal. E.g., Anixter v. Home-Stake Prod. Co., 77 F.3d 1215 (10th Cir. 1996) (overturning plaintiffs' verdict obtained after two decades of litigation); Backman v. Polaroid Corp., 910 F.2d 10 (1st Cir. 1990) (en banc) (reversing plaintiffs' verdict for securities fraud and ordering entry of judgment for defendants); Ward v. Succession of Freeman, 854 F.2d 780 (5th Cir. 1988) (reversing plaintiffs' jury verdict for securities fraud).

74. Moreover, subsequent to the passage of the Private Securities Litigation Reform Act of 1995 ("PSLRA") many cases in this District have been dismissed (with or without prejudice) at the pleading stage in response to defendants' arguments that the complaints do not meet the PSLRA's heightened pleading standards. See, e.g., Hockey v. Medhekar, [1997 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶99,465 (N.D. Cal. 1997); In re Silicon Graphics Sec. Litig., 970 F. Supp. 746 (N.D. Cal. Cal. 1997); Kane v. Madge Networks N.V., No. C 96-20652 RMW(PVT) (N.D. Cal. June 3, 1997); Zeid v. Kimberley, 973 F. Supp. 910 (N.D. Cal. 1997); In re Oak Tech. Sec. Litig., No. C-96-20552-SW(PVT), 1997 U.S. Dist. LEXIS 18503 (N.D. Cal. Aug. 1, 1997); Genna v. Digital Link Corp., No. C-96-20867 RMS (N.D. Cal. Sept. 11, 1997); Howard Gunty Profit Sharing v. Quantum Corp., No. 96 20711 SW, 1997 WL 514993 (N.D. Cal. Aug. 14, 1997); Molinari v. Symantec Corp., No. C-97-20021-JW (N.D. Cal. Feb. 17, 1998); Head v. Netmanage, Inc., No. C 97-4385 CRB (N.D. Cal. Feb. 23, 1998); In re Fritz Cos. Sec. Litig., No. C 96-2712 MHP (N.D. Cal. Mar. 5, 1998); Wenger v. Lumisys, Inc., No. C-97 20609 RMW (N.D. Cal. Mar. 30, 1998); Howard Gunty Profit Sharing v. Quantum Corp., No. C 96 20711 SW (N.D. Cal. Apr. 6, 1998); Ronconi v. Larkin, [Current Binder] Fed. Sec. L. Rep. (CCH) ¶90,212 (N.D. Cal. 1998); In re YES! Entertainment Corp. Sec. Litig., No. C97-01388 CRB (N.D. Cal. May 14, 1998).

75. The foregoing refutes the oft-heard argument that the commencement of a class action is a guarantee of a settlement and a large fee. Indeed, the course of this litigation demonstrates the fact that the mere filing of an action does not ensure that there will be any settlement or fee. It takes hard and diligent work by skilled counsel to develop facts and theories which will persuade Defendants to enter into serious settlement negotiations. If Defendants believe they will prevail, experience shows that they will litigate to the end. The risk factor is real.

76. Losses such as those described above are exceedingly expensive and can often threaten the survival of a law firm. Onlookers often focus on the gross fees awarded but fail to take into consideration that those fees are used to cover enormous overhead expenses incurred during the course of the litigation, are taxed by federal, state and local authorities, and, when reduced to a bottom line, are far less imposing to each individual involved than the gross fee awarded appears. Lawyers who specialize in contingent matters live in a world of uncertainty. Unlike the Defendants' bar, contingent Plaintiffs' Counsel normally have no steady flow of income. Changes in the law through legislation or judicial decree can be catastrophic, frequently affecting contingent counsel's entire inventory of pending cases. These are real threats.

77. Courts have repeatedly held that it is in the public interest to have experienced and able counsel enforce the securities laws and regulations pertaining to the duties of officers and directors of public companies. Vigorous private enforcement of the federal securities laws and state corporation laws can only occur if the private Plaintiffs can obtain parity in representation with that available to large institutional interests. If this important public policy is to be carried out, the courts must award fees which will adequately compensate private Plaintiffs' Counsel, taking into account the enormous risks undertaken with a clear view of the economics of a securities class action.

78. When we undertook to act for the Plaintiffs in this matter, it was with the knowledge that we would spend many hours of hard work against some of the best defense lawyers in the United States with no assurance of ever obtaining any compensation for our efforts, or even for the overhead of our offices, which is an increasingly substantial consideration. We were aware that the only way we would be compensated was to achieve a successful result. The benefits conferred on the Plaintiffs and derivatively on behalf of IMP by this Settlement are particularly noteworthy in that a Settlement Fund worth $9.5 million (plus interest) was obtained for the Class and significant corporate therapeutic relief for IMP despite the existence of substantial risks and the vigorous defense mounted by Defendants.

VI. CONCLUSION

79. For the reasons set forth above and in the accompanying Plaintiffs' Memorandum in Support of Final Approval of Settlement and Plaintiffs' Memorandum in Support of Plaintiffs' Counsel's Application for an Award of Attorneys' Fees and Reimbursement of Expenses, I respectfully submit that: (i) the Settlement is fair, reasonable and adequate and should be approved; (ii) the Plan of Allocation represents a fair method for the distribution of the Net Settlement Fund among Class members and should also be approved; and (iii) the application for attorneys' fees and reimbursement of expenses should be granted.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. If called as a witness, I could and would competently testify thereto. Executed this 17th day of August, 1998, at San Juan County, Washington.



___________________________________

ALAN SCHULMAN



IMP\DLM13784.dec

DECLARATION OF SERVICE BY MAIL

PURSUANT TO NORTHERN DISTRICT LOCAL RULE 23-2(c)(2)


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 August 18, 1998, declarant served the DECLARATION OF ALAN SCHULMAN IN SUPPORT OF APPROVAL OF THE PROPOSED CLASS AND DERIVATIVE SETTLEMENT AND IN SUPPORT OF APPLICATION FOR ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES, AND 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:

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 18th day of August, 1998, at San Diego, California.



______________________________

DANELLE L. McNERTNEY

1. As set forth hereafter, there are pending in San Jose Superior Court class and derivative actions against Defendants for violation of the California Corporations Code, Civil Code and Business & Professions Code for the same class period and based upon the same facts alleged herein. The Stipulation of Settlement herein provides that if the Settlement is approved and becomes final, those actions in the State Court shall be dismissed with prejudice.

2. Defendants' alleged scheme and its consequences are set forth in detail in plaintiffs' Second Amended Consolidated Complaint ("Complaint").

3. Defendants' Counsel also submitted a Settlement Memorandum to Judge Irving for in camera review, setting forth their position on the issues of liability and damages.