Free Declaration - District Court of Arizona - Arizona

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Peter D. Baird (001978) [email protected] Robert H. McKirgan (011636) [email protected] Richard A. Halloran (013858) [email protected] Kimberly A. Demarchi (020428) [email protected] Lewis and Roca LLP 40 North Central Avenue Phoenix, Arizona 85004-4429 Facsimile (602) 734-3746 Telephone (602) 262-5311 Attorneys for POST Integrations, Inc., et al. George C. Chen (019704) [email protected] Bryan Cave LLP Two North Central Avenue, Suite 2200 Phoenix, AZ 85004-4406 Tel: (602) 364-7367 Fax: (602) 364-7070 Attorneys for Lexcel, Inc., et al.

William McKinnon [email protected] 800 East Ocean Boulevard, Unit 501 Long Beach, California 90802-5449 Nicholas J. DiCarlo (016457) [email protected] DiCarlo Caserta & Phelps PLLC 6750 East Camelback Road, Suite 100-A Scottsdale, Arizona 85251 Attorneys for Plaintiff MTSI and Third Party Defendant Gene Clothier

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Merchant Transaction Systems, Inc., ) ) Plaintiff, ) vs. ) ) Nelcela, Inc., et al., ) Defendants. ) ) And Related Counterclaims, Cross-Claims, ) ) and Third-Party Claims. ) 1. No. CIV 02-1954-PHX-MHM RULE 56(f) DECLARATION OF RICHARD A. HALLORAN (Assigned to The Honorable Mary H. Murguia)

I am an attorney with Lewis and Roca LLP, counsel for the POST Parties

(POST Integrations, Ebocom, Inc., Mary Gerdts, and Douglas McKinney) in the abovecaptioned case. 2. 3. I make this declaration based on my personal knowledge. The Joint Parties have sought to conduct discovery regarding Nelcela,

Inc.'s, Len Campagna's, and Alec Dollarhide's (collectively "Nelcela") use and distribution since 2001 of software derived from the Lexcel Software, which the jury has found includes the Nelcela Merchant System and Nelcela Authorization System software (hereafter "the Software"). 4. On August 27, 2007, the POST Parties served requests for production on

Nelcela seeking documents relating to the use of the Software by Electronic Payment Exchange a/k/a "EPX," InterCept Payment Solutions, Phoenix Payment Systems, and/or
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Bancorp Bank. Ex. 1. 5. On September 27, 2007, Nelcela responded by producing some documents

but refusing to produce many of the documents requested. Ex. 2. The documents Nelcela did produce, however, show that Nelcela has licensed the Nelcela Merchant System and Nelcela Authorization System software to third parties including Electronic Payment Exchange a/k/a/ "EPX" and InterCept Payment Solutions ("InterCept"). See Separate Statement of Facts in Support of the Joint Parties' Response to the Nelcela Parties' Post Trial Memorandum on Statute of Limitations ("SOF") ¶¶ 9, 13-14. The documents also show that Nelcela has continued to do business since 2001. See SOF ¶ 14. 6. On October 1, 2007, I wrote to Nelcela's counsel requesting production of

the additional documents previously requested from Nelcela. Ex. 3. On October 16, 2007, Nelcela's counsel responded, refusing to produce any additional documents. Ex. 4. 7. In early September 2007, the Joint Parties served subpoenas duces tecum

on EPX and Phoenix Payment Systems ("PPS") seeking production of the source code utilized by those entities to process credit card transactions, as well as the documentation reflecting the relationship of those entities with Nelcela. Ex. 5; Ex. 6. EPX and PPS refused to produce their source code and have failed to produce a single document in response to the subpoenas. Ex. 7. 8. During his deposition in Phase I of this lawsuit, Dollarhide refused

(pursuant to the instruction of Nelcela's counsel) to answer questions about Nelcela's distribution of software to PPS. See SOF ¶ 21. 9. During Phase II of this lawsuit, the Joint Parties intend to: (a) pursue

production of the remaining documents in Nelcela's possession, custody, and control; (b) depose Dollarhide, Campagna, and other representatives of Nelcela regarding use of the Nelcela software by EPX, InterCept, PPS, Bancorp, and other third parties; (c) pursue production of the source code and other documents sought from EPX, PPS, and Bancorp. The Joint Parties expect these materials will further establish, among other things:
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a. Nelcela distributed the Software to third parties (including EPX, InterCept, PPS, and/or Bancorp) before and after June 13, 2002; b. Nelcela caused the Software to be copied by third parties (including EPX, InterCept, PPS, and/or Bancorp) before and after June 13, 2002; c. Nelcela oversaw copying of the Software by third parties (including EPX, InterCept, PPS, and/or Bancorp) before and after June 13, 2002; d. Nelcela modified the Software for used by third parties (including EPX, InterCept, PPS, and/or Bancorp) before and after June 13, 2002; e. Nelcela was compensated for the use of the Software by third parties (including EPX, InterCept, PPS, and/or Bancorp) before and after June 13, 2002. I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. DATED: October 30, 2007.

By s/ Richard A. Halloran__________ Richard A. Halloran

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CERTIFICATE OF SERVICE I hereby certify that on October 30, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Merrick B. Firestone [email protected] Veronica L. Manolio [email protected] RONAN & FIRESTONE, PLC 9300 East Raintree Drive, Suite 120 Scottsdale, Arizona 85260 Ray K. Harris [email protected] FENNEMORE CRAIG, P.C. 3003 North Central Avenue, Suite 2600 Phoenix, Arizona 85012-2913

s/ Debi Garrett

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