Carreker Corporation Securities Litigation 03-CV-0250-Amended Consolidated Class Action

UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

_______________________________________In re CARREKER CORPORATION § CIVIL ACTION NO. 3:03-CV-0250-MSECURITIES LITIGATION §

§ Consolidated with Actions Nos. 3:03-§ CV-0347-D; 3:03-CV-00384; 3:03-CV-§ 00384; 3:03-CV-0410-D; 3:03-CV-§ 00465; 3:03-CV-489; 3:03-CV-0528-P;§ 3:03-CV-0540-P; 3:03-CV-0563-N;§ 3:03-CV-0569-N; 3:03-CV-0638; 3:03-

_______________________________________§ CV-0673-H

AMENDED CONSOLIDATED CLASS ACTION COMPLAINT

TABLE OF CONTENTS

Case 3:03-cv-00250 Document 94-1 Filed 06/13/2005 Page 1 of 76

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I. INTRODUCTION AND OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

III. THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IV. SUBSTANTIVE ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

A. FACTUAL BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

1. The Applicable Generally Accepted Accounting Principle . . . . . . . . . . . . . 6

2. Carreker Admits That It Violated GAAP Through The Restatementof Its Financial Statements Dating Back To FY1998 . . . . . . . . . . . . . . . . . 7

3. Defendants Knowingly or Recklessly Prematurely RecognizedRevenue From Licenses That Were Not Functional in Violationof SOP 97-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4. Defendants Knowingly or Recklessly Recognized ImplementationServices Revenue Before The Services Were Performed in Violationof SOP 97-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

5. Defendants Knowingly or Recklessly Recognized Revenue fromContracts That Were Not Executed until after the Quarter Had AlreadyClosed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

6. Defendants’ and the Carreker Family’s Stock Sales While Carreker’sStock Price Was Artificially Inflated as a Result of the False FinancialStatements . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

(a) The November 2000 Secondary Offering . . . . . . . . . . . . . . . . . . . 25

(b) Defendants’ Open-Market Stock Sales While Carreker’s StockPrice Was Artificially Inflated as a Result of the FalseFinancial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

(c) Denny Carreker’s Family’s Stock Sales While Carreker’s StockPrice Was Artificially Inflated as a Result of the FalseFinancial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

(d) Carreker’s Senior Vice President of InvestorRelations Has Been Indicted for Insider Trading . . . . . . . . . . . . . . 29

B. PRE-CLASS PERIOD FALSE AND MISLEADING STATEMENTS . . . . . . . . . 30


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1. False First Quarter of FY1998 Financial Results . . . . . . . . . . . . . . . . . . . . 30

2. False Second Quarter of FY1998 Financial Results . . . . . . . . . . . . . . . . . . 31

3. False Third Quarter of FY1998 Financial Results . . . . . . . . . . . . . . . . . . . 32

4. False Fourth Quarter and FY1998 Financial Results . . . . . . . . . . . . . . . . . 33

5. False First Quarter of FY1999 Financial Results . . . . . . . . . . . . . . . . . . . . .36

C. FALSE AND MISLEADING STATEMENTS DURING THE CLASSPERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

1. False Second Quarter of FY1999 Financial Results . . . . . . . . . . . . . . . . . 36



4. False First Quarter of FY2000 Financial Results . . . . . . . . . . . . . . . . . . . . .

40


6. False Secondary Offering Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42



9. False First Quarter of FY2001 Financial Results . . . . . . . . . . . . . . . . . . . . 47




13. False and Misleading Statements Made During SecondQuarter of FY2002 Investors Conference Call . . . . . . . . . . . . . . . . . . . . . . 53

V. THE TRUTH EMERGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

VI. APPLICABILITY OF THE FRAUD-ON-THE-MARKET DOCTRINE . . . . . . . . . . . . 61

VII. INAPPLICABILITY OF STATUTORY SAFE HARBOR . . . . . . . . . . . . . . . . . . . . . . . 62


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VIII. UNDISCLOSED ADVERSE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

IX. ADDITIONAL SCIENTER ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

X. CLASS ACTION ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

COUNT I: Against the Individual Defendants and Carreker for Violation ofSection 10(b) of the Securities Exchange Act and Rule 10b-5 . . . . . . . . . . . . . . 68

COUNT II: Against the Individual Defendants for Violation of Section 20(a)of the Securities Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70

COUNT III: Violation of Section 20A of the Securities Exchange ActAgainst Defendants Denny Carreker and Antinori . . . . . . . . . . . . . . . . . . . . . . . . . 71

JURY DEMAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Lead Plaintiffs Reed Gustow and Heather C. Winett, husband and wife, by their attorneys

allege the following facts, except as to allegations about themselves or their counsel, based upon


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counsel’s investigation, which included: analysis of publicly-available news articles and reports,

public filings with the Securities and Exchange Commission (“SEC”), press releases, interviews of

former employees of defendant Carreker Corporation (“Carreker” or the “Company”), and

consultation with a financial markets expert, and review of other matters of public record.

I. INTRODUCTION AND OVERVIEW

1. This is a securities fraud action brought under Section 10(b), 20(a) and 20A of the

Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§78j, 78t(a), 78t-1, and the rules

and regulations promulgated thereunder by the SEC, including Rule 10b-5, 17 C.F.R. §240.10b-5.

2. Carreker sells customized “payments-related” software, principally to banks.

Carreker’s software products, however, require customization before the software will function

according to the individual needs of the customer. This means that the software must first be

installed and then “implemented” over time so that the software is “functional.” When purchasing

software requiring significant customization, most banks pay Carreker to perform the customizing

by purchasing software installation and implementation services as part of the software arrangement.

3. Because Carreker sold customized software (as opposed to “off-the-shelf” and ready-

to-use software), special accounting rules dictated when Carreker could recognize revenue on its

financial statements from the sales of software contracts. The applicable accounting principle,

Statement of Position (“SOP”) 97-2, also governs when and in what amounts revenue from software

implementation services are recognized.

4. Under SOP 97-2, where an arrangement to deliver software whether alone or with

other products or services, such as implementation services, requires significant modification or

customization of software, the entire arrangement must be accounted for as a single contract, and

the seller must use the “percentage of completion” method when recognizing revenue generated

from the contract. [SOP 97-2 ¶¶74-75.] Where implementation services are “essential to the


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functionality” of the software, both the sale of software license and implementation services must

be accounted under the “percentage-of-completion” method. [SOP 97-2 ¶65.] In addition, SOP 97-2

requires that when a software company uses contracts requiring signatures by the seller and the

customer, both signatures must appear as “evidence of an arrangement” before the seller – the

software company – may recognize revenue. [SOP 97-2 ¶16.]

5. Carreker reported consistent record revenue and earnings growth for the First Quarter

of fiscal year (“FY”) 1998 to the Fourth Quarter of FY2000, as the Company appeared to meet or

exceed the consensus estimates of Wall Street analysts.

6. To meet these estimates, however, and to report an upward growth trend, Carreker

prematurely and improperly recognized revenue from its software contracts on its publicly-filed

financial statements. During every quarter after Carreker’s initial public offering on May 20, 1998

through the Second Quarter of FY2002, Carreker prematurely recognized revenue from:

! Software contracts that required Carreker to provide implementation services

essential to the software’s functionality, in violation of Generally Accepted Accounting Principles

(“GAAP”);

! implementation services that had not yet been performed, in violation of GAAP; and

! software contracts that had not been fully executed by both Carreker and its customer,

in violation of GAAP.

7. As a result, Carreker’s financial statements filed with the SEC were materially false

and misleading from the First Quarter of FY1998 through the Second Quarter of FY2002. Carreker

artificially inflated revenue by approximately 8% and earnings per share by more than 114% for

FY1998. Carreker also inflated revenue by approximately 13% for FY2001, and understated a net

loss by more than 33%.

8. Carreker’s artificial inflation of revenue and earnings over this long period of time


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was not innocent or an accident. Several former Carreker employees have reported that defendant

John “Denny” Carreker, Jr., the Company’s CEO, Chairman and largest shareholder, directed

several Company officers and employees to prematurely recognize revenue to enable Carreker to

meet or exceed analysts’ estimates and report a consistent trend of growth. Numerous Carreker

employees were witnesses to Carreker’s calculated premature revenue practices, as detailed below.

9. After Carreker had artificially inflated its stock price through the premature

recognition of software revenue, the insiders cashed out. In November 2000, Denny Carreker and

Ronald Antinori, Carreker’s former Vice Chairman, Chief Technology Officer and second largest

shareholder, conducted a secondary offering of over 2 million shares of the Company’s stock. The

secondary offering enabled Denny Carreker and Ronald Antinori to sell large blocks of their

Carreker stock at an all time high price – $17 per share – attained through Carreker’s systemic and

sustained recognition of revenue that had not yet been earned.

10. As set forth below and in the attached declaration of plaintiffs’ expert, Denny

Carreker and Ronald Antinori would have been unable to sell their shares at a secondary offering

price of $17 per share had Carreker not falsely reported a consistent and upward trend of revenue

and earnings growth in the quarters preceding the secondary offering.

11. Denny Carreker reaped approximately $25.7 million, and Ronald Antinori

approximately $15.7 million from the secondary offering. Both unloaded over 34% of their total

Carreker shares in the secondary offering.

12. Within less than 9 months after the secondary offering, Carreker’s stock price began

to decline to its old lows when the Company – even after continued premature revenue recognition

– was unable to make up for losses caused by lower demand for its consulting services in 2001.

13. On September 17, 2002, Carreker’s Audit Committee received a letter from Carreker

employees detailing Denny Carreker’s misappropriation of funds, fraudulent recognition of revenues


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and insider trading. The letter spurred an internal investigation of Carreker’s revenue recognition

practices.

14. On December 10, 2002, Carreker disclosed the existence of this internal investigation

to the marketplace and warned that none of its financial statements could be relied upon. Carreker

also revealed that it would likely have to restate its financial statements for prior periods – by

definition an admission that its prior financial statements were materially misstated. Carreker’s

stock dropped to $3.98 on news of the December 10, 2002 revelation, a decline of 22.6% from the

previous day’s closing price of $5.08.

15. On April 30, 2003, Carreker filed its Form 10-K containing its financial results for

FY1998, FY1999, FY2000, and FY2001. In its FY2002 Form 10-K, Carreker admitted to premature

recognition of revenue from software licensing contracts and software implementation services.

16. This action seeks to pursue remedies under the Exchange Act on behalf of a class of

investors who purchased shares of Carreker common stock during the period July 30, 1999 through

December 10, 2002, inclusive (the “Class Period”).

II. JURISDICTION AND VENUE

17. This Court has jurisdiction over the subject matter of this action pursuant to Section

27 of the Exchange Act, 15 U.S.C. § 78aa.

18. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act

and 28 U.S.C. § 1391(b). Carreker maintains its principal executive offices in this District and many

of the acts giving rise to the violations of law complained of herein, including the preparation and

dissemination to the investing public of false and misleading information, occurred in this District.

19. In connection with the acts, conduct and other wrongs alleged in this Complaint, the

defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,

including the mails, telephone communications and the facilities of national securities exchanges.


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III. THE PARTIES

20. Lead Plaintiffs Reed Gustow and Heather C. Winett, husband and wife, purchased

shares of Carreker common stock during the Class Period and held the stock at the time the fraud

was revealed on December 10, 2002. Lead Plaintiffs have thereby been damaged. Reed Gustow

and Heather C. Winett were appointed Lead Plaintiffs in this action by Court Order dated August

14, 2003. A certification demonstrating all of their transactions in Carreker common stock during

the Class Period is attached hereto as Exhibit 1.

21. Defendant Carreker Corp. f/k/a Carreker-Antinori, Inc. is a Delaware corporation

with its principal place of business located at 4055 Valley View Lane, Dallas, Texas 75244.

22. Defendant John “Denny” Carreker, Jr. (“Denny Carreker”) is the co-founder of

Carreker and, at all times relevant to this action, served as Chief Executive Officer and Chairman

of the Board of Directors of Carreker. Denny Carreker signed the registration statement and

prospectus filed in connection with the November 3, 2000 secondary stock offering as well as all

of the materially false and misleading quarterly and annual financial reports filed with the SEC

during the Class Period.

23. Defendant Ronald Antinori (“Antinori”) is the co-founder of Carreker and served as

Chief Technology Officer of Carreker from January 1997 until January 31, 1999 and as Vice

Chairman of Carreker’s Board of Directors from January 1997 until July 17, 2000. Antinori signed

the materially false and misleading 10-K reports for FY1998 and FY1999.

24. Defendant Terry L. Gage (“Gage”), at all times relevant to this action, served as

Chief Financial Officer and Treasurer of Carreker. In or around June 2003, Gage resigned from the

Company. Gage signed the registration statements filed in connection with the November 3, 2000

secondary stock offering as well as all of the materially false and misleading quarterly and annual

financial reports filed with the SEC during the Class Period.


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IV. SUBSTANTIVE ALLEGATIONS

A. FACTUAL BACKGROUND

25. Carreker provides payments-related software and consulting solutions to financial

institutions and financial services providers. Many of Carreker’s software products require

significant customization before the software can function. When purchasing software that requires

significant customization, most banks pay Carreker to perform the customizing by purchasing

software installation and implementation services as part of the software arrangement. [FY2002

Form 10-K.]

1. The Applicable Generally Accepted Accounting Principle

26. American Institute of Certified Public Accountants (“AICPA”) Statement of Position

(“SOP”) 97-2 governs when and in what amounts revenue from sales of software licenses may be

recognized. Under SOP 97-2, where an arrangement to deliver software, whether alone or with

other products or services, such as implementation services, requires “significant production,

modification, or customization of software,” the entire arrangement must be accounted for as a

single contract, and the software vendor must apply the “percentage-of-completion” method to both

the license and services components when recognizing revenue generated from the contract. [SOP

97-2 ¶¶74-75.]

27. SOP 97-2 also governs when and in what amounts revenue from software

implementation services are recognized. Under SOP 97-2, where implementation services are

“essential to the functionality” of the software, both the license and implementation services

elements of bundled software transactions must be accounted for under the “percentage-of-

completion” method. [SOP 97-2 ¶65.]

28. When a software company uses contracts requiring signatures by the software

company and its customer, SOP 97-2 provides that both signatures – the software vendor’s and the


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customer’s – are required as “evidence of an arrangement” before the software company may

recognize revenue. [SOP 97-2 ¶16.]

2. Carreker Admits That It Violated GAAP Through The Restatementof Its Financial Statements Dating Back To FY1998

29. In its FY2002 Form 10-K and Third Quarter of FY2002 Form 10-Q Carreker,

respectively, restated its financial results for FY1998, FY1999, FY2000 and FY2001 and the First

and Second Quarters of FY2002. The Company provided the following explanation for the

restatement:

[I]n certain instances, revenue had been recorded on contracts in one accountingperiod where customer signature and delivery of software had been completed, butwhere the contract may not have been fully executed by the Company in thataccounting period. The Company determined that revisions to certain prior financialstatements were necessary to ensure that all agreements for which revenue wasrecognized in an accounting period were executed by both parties no later than theend of the accounting period in which the revenue was being recognized.

* * *The Company had originally concluded under the criteria of SOP 97-2 that serviceswere not essential to the functionality of the software, requiring recognition ofsoftware license revenue at the time of delivery of the software. However, as a resultof this review, the Company has now decided that when implementation fees arereceived for specific types of transactions in which the Company is licensingsoftware and performing certain implementation services, these services are moreproperly considered essential to the functionality of the other elements of thearrangement. Therefore, the related license revenue and implementation revenueshould have been recognized as the services were performed using the percentage ofcompletion method rather than upon delivery of the software. The impact of theserevisions on total revenue was to defer the timing of revenue recognition fortransactions that combine both a software license and implementation services.

* * *

Thus, through the restatement, Carreker admitted that: (1) from FY1998 to the Second Quarter of

FY2002, the Company prematurely recognized revenue from software licensing contracts that were

not fully-executed in the period in which the software was delivered rather than in the period in

which the contracts were fully-executed as required by GAAP; and (2) from FY1998 to the Second

Quarter of FY2002, the Company misstated its revenues from software license and implementation


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services by prematurely recognizing revenue from software for which implementation services were

essential to functionality in the period the software was delivered in violation of GAAP, rather than

recognizing the license revenue and implementation revenue as the implementation services were

performed using the percentage of completion method. The FY2002 Form 10-K specifically stated,

“the related license revenue and implementation revenue should have been recognized as the

services were performed using the percentage of completion method rather than upon delivery of

the software.” The FY2002 Form 10-K was signed by Denny Carreker and Gage and the

restatement therein constitutes an admission by each defendant that the Forms 10-K they had signed

in prior years contained materially false financial statements. [FY2002 Form 10-K at note 3; Third

Quarter of FY2002 Form 10-Q at note 3].

30. By restating its financial results for FY1998 through FY2001, Carreker admitted that

the financial statements were materially false and misleading because GAAP provides that only

previously issued financial statements which are misstated are to be retroactively restated. [APB

Opinion No. 20, APB Opinion No. 9 and the AICPA’s Statement on Auditing Standards (“SAS”) No.

53.] Similarly, financial statements filed with the SEC that are not prepared in conformity with

GAAP are presumed to be misleading and inaccurate. [Regulation S-X, 17 C.F.R. § 210.4-01(a)(1).]

31. The impact of the restatement on reported revenue and earnings for FY 1998 through

FY 2001 is as follows:

FY1998 FY1999 FY2000 FY2001

Reported Restated Reported Restated Reported Restated Reported Restated


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(In thousands except for e.p.s.)

REVENUES Consulting Fees Software Licensing Fees Software Maintenance Fees Software Implementation Hardware Total Revenues

NET INCOMEEARNINGS PER SHARE

$26,32816,3275,0316,557

77455,017

5,172$0.30

$26,47812,4285,0316,557

050,494

2,471$0.14

$49,72513,7276,9855,116

267 75,820

7,894$0.42

$ 49,72513,9066,9855,116

075,732

7,815$0.41

$71,71518,03011,2239,298

n/a110,266

13,594$0.67

$71,71517,76511,2239,245

n/a109,948

13,592$0.67

$42,84240,29129,347

19,210 n/a131,690

(35,605)($1.63)

$42,342 25,15325,908

20,723 n/a114,126

(53,376)($2.44)

Carreker did not disclose the quarterly impact of the restatement for the quarters during FY1998,

FY1999, and FY2000. [FY1998, FY1999, FY2000, FY2001, and FY2002 Forms 10-K.]

32. The restated software implementation fee revenue figures do not reflect all necessary

adjustments. Carreker admitted in its explanation of the restatement that it improperly booked

revenue from implementation service fees upon delivery of the software rather than as the services

were performed. In addition, as discussed in Part IV-A-4 below, Carreker engaged in this practice

at the latest in 1999. However, comparison of the restated software implementation revenue figures

with the reported figures shows that no adjustment was made to the reported figures for FY1998 and

FY1999 while a mere $53,000 downward adjustment was made to implementation revenue reported

for FY 2000 and a $1.5 million upward adjustment was made in FY 2001. Had Carreker properly

restated revenue from implementation services, total revenue, net income and earnings per share

correspondingly would have been further negatively impacted in at least certain periods.

33. Through its improper accounting practices, Carreker converted a 33% decline in

earnings per share in FY1998 into a 43% increase. By virtue of its accounting manipulations,

Carreker also was able to report that sales of its software grew 45% in FY1998 when in reality sales

increased only 11%. Carreker was also able to report that software license revenue grew 123% in

FY2001 when in fact it had only grown 42% over the prior year period. Similarly, the premature

revenue recognition scheme permitted Carreker to report a 343% decline in earnings per share in


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FY2001 when in reality earnings per share declined 464%. Thus, through the improper revenue

recognition practices, Carreker distorted the sales growth picture for its software business as well

as the revenue and earnings growth picture for its entire operations.

34. As concluded by Scott D. Hakala, Ph.D., CFA, a financial markets expert and

Director of CBIZ Valuation Group, LLC (“Dr. Hakala”) who plaintiffs engaged to opine on certain

subjects in this case including the materiality of the restatement: “Recognition of software licensing

fee revenue and software implementation fee revenue before that revenue was earned in violation

of generally accepted accounting principles (SOP 97-2) is material to investors and ... led to a

substantial distortion of the trends and valuation of [Carreker] throughout the period from May 20,

1998 through December 10, 2002.” Dr. Hakala also opined that Carreker’s premature recognition

of revenue led to a “roller coaster” type of stock price chart because, as is often the case, this type

of improper accounting led to substantial overstatements of revenue and earnings in certain quarters

and years while in other quarters and years the reported numbers were less than they would have

been had revenue actually earned in that period not already been improperly reported in an earlier

period. Dr. Hakala concluded that “revelation of the extent of the problems and the true state of

Carreker’s financial condition, particularly in the second half of 2002, led to a significant loss in

value for the shareholders of Carreker.” [May 31, 2005 Declaration of Scott D. Hakala at ¶7, which

is attached hereto as Exhibit 2.]

35. Based on regression analyses of Carreker’s share price’s response to key Company

events, Dr. Hakala concludes that if Carreker had properly stated its financial condition, the value

of Carreker’s common stock would have been materially reduced throughout the period from May

20, 1998 through December 10, 2002. According to Dr. Hakala, the share price of Carreker was

particularly inflated in FY1998 and early FY1999 as a result of the material overstatement of

software license fees and earnings as evidenced by the restatement. [May 31, 2005 Declaration of


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Scott D. Hakala at ¶8, which is attached hereto as Exhibit 2.]

36. Dr. Hakala further concludes that in FY2001 revenue and earnings were materially

inflated as a result of Carreker’s premature recognition of revenue, as indicated by the restatement.

Correspondingly, in 2002, Carreker’s shares declined and investors suffered losses as a result of the

Company being unable to report revenue that had already been improperly reported in earlier

periods. More particularly, Dr. Hakala found that Carreker’s inability to maintain the inflated

revenues and earnings in 2001 led to significant share price declines of: (i) 12.18% associated with

the Second Quarter of FY2002 earnings announcement on September 13, 2002; (ii) 29.41%

associated with the revised earnings guidance for the Third Quarter of FY2002 on November 14,

2002; (iii) and 24.22% associated with the announcement of a need to restate prior reported revenue

and earnings on December 10, 2002. Dr. Hakala summarized that “the true state of Carreker’s

business was revealed at the end of the proposed Class Period and led to substantial declines in its

relative share price of 57.29% between September 12 and December 10, 2002.... [and]

[f]urthermore, losses in values occurred over the following 90 days after the end of the proposed

Class Period.” [May 31, 2005 Declaration of Scott D. Hakala at ¶10, which is attached hereto as

Exhibit 2.]

3. Defendants Knowingly or Recklessly Prematurely Recognized RevenueFrom Licenses That Were Not Functional in Violation of SOP 97-2

37. Carreker violated GAAP (SOP 97-2) by recording revenue from software license

contracts that required “significant production, modification, or customization of software” and for

which implementation services were necessary to the software’s functionality in the fiscal quarter

of delivery rather than under the percentage of completion method as the implementation services


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were performed (the “Acceleration of Software License Revenue Practice”). This practice resulted

in Carreker’s premature recognition of revenue from software licenses. As a consequence,

defendants made material misrepresentations concerning Carreker’s revenues and earnings in

various public documents. In its FY2002 Form 10-K and Third Quarter of FY2002 Form 10-Q,

Carreker admitted that the Acceleration of Recognition of Software License Revenue Practice

resulted in the Company prematurely recognizing substantial percentages of revenue during the

Class Period. [The foregoing allegations are based on SOP 97-2 ¶¶74-75 and Carreker’s

explanation of the restatement set forth in the FY2002 10-K at note 3 and Third Quarter of FY2002

10-Q at note 3.]

38. Defendant Gage, Carreker’s CFO, knew license and implementation revenue was

being recognized improperly. Gage advised Denny Carreker of this on several occasions. Denny

Carreker, however, insisted that revenue be booked at the earliest possible time, even though it

meant violating applicable accounting rules. At one point after June 1998 but before August 2000,

a heated discussion took place between Gage and Denny Carreker after Gage insisted that revenue

be recorded properly in accordance with applicable accounting rules. Gage ultimately agreed to

record revenue improperly as Denny Carreker had demanded. [The foregoing allegations are based

upon information provided to counsel for lead plaintiffs in September 2003 by Carreker’s Investor

Relations Coordinator and Executive Assistant to defendant Gage from June 1998 to August 2000

(“Source 3”). Source 3’s desk was located approximately five feet from Terry Gage’s office and

approximately equally as close to Denny Carreker’s office. As Investor Relations Coordinator and

Executive Assistant to the CFO, Source 3 interacted with Carreker’s accounting department and

gathered documents reviewed by Carreker’s outside auditor, Ernst & Young, as part of its audits

and quarterly reviews.]

39. Every quarter-end from 1999 to at least early 2001, Carreker executives including


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but not limited to Gage, Jack Davis (Executive Vice President and Managing Director of

Technology), Royce Brown (Executive Vice President, Vice Chairman of the Office of the

President, and Managing Director of Payment Systems), Wyn Lewis (Executive Vice President of

the Revenue Enhancement Division), and Subhash Mukerji (Sales Supervisor) would gather in

Denny Carreker’s office at the Company’s Dallas offices where they would scheme about how to

increase the Company’s reported revenues so the Company could meet or exceed analysts’ estimates

and report growth. At these meetings, Denny Carreker exerted significant pressure on the executives

to generate revenue to enable the Company to bridge the gap between actual revenue and Wall Street

analysts’ estimates. [The foregoing allegations are based upon information provided to counsel for

lead plaintiffs by a former Senior Principal, or installation manager, responsible for the installation

of Carreker software from 1999 to the Fall of 2002 (“Source 1”) who has personal knowledge of

the information.]

40. It was common knowledge at the Company that “Denny Carreker recognized revenue

and cooked the books to get the stock price up.” [The foregoing allegations are based upon

information provided to counsel for lead plaintiffs by a former Senior Consultant at Carreker from

prior to the IPO to November 2001 who executed revenue enhancement projects for banks and

advised banks how to make back-office operations more efficient (“Source 4”).]

41. According to Source 3, at each quarter-end and fiscal year-end from at least June

1998 to at least August 2000, Denny Carreker and Gage often had significant disagreements with

the Company’s independent auditors, Ernst & Young (“E&Y”) regarding Carreker’s recognition of

revenue. In fact, according to Source 3, sometime between June 1998 and August 2000, E&Y

refused to approve one of the Company’s 10-Q reports due to a dispute over revenue recognition.

However, Denny Carreker threatened to terminate the relationship if E&Y did not approve the 10-Q

report. Faced with Denny Carreker’s threat, E&Y ultimately agreed to approve the 10-Q report.


-14-

[The forgoing allegations are based on information provided to counsel for lead plaintiffs in

September 2003 by Source 3 who overheard the threat.]

42. Source 3 also provided that while employed by Carreker, a colleague who worked

in Carreker’s accounting department would tell Source 3 virtually every quarter that earnings

estimates would not be met. However, to Source 3’s and the colleague’s surprise, earnings estimates

were always met or exceeded. Based on her knowledge of the Company’s results of operations,

Source 3’s accounting department colleague did not know how the Company could possibly have

met its earnings estimates.

43. From early 1998 to at least 2000, Carreker commonly shipped blank CDs or the

wrong software altogether in order to report the delivery of software and book the revenue from the

sale of the license. Only when Carreker’s team arrived to perform the installation services did the

Company’s customer receive the actual software it purchased. [The forgoing allegations are based

on information provided to counsel for lead plaintiffs by: (i) Source 1 who has personal knowledge

of the information; and (ii) a former employee who worked as a Project Manager from 1995 to 1999

and as a consultant from 1999 to 2003 (“Source 6”) who has personal knowledge because Source

6's job duties as a Project Manager required Source 6 to ship software to customers even though

the software was not ready.]

44. Source 6 was aware that back-dating of contracts and claiming revenue during a

reporting period for contracts that were not signed during the reporting period were occurring at the

Company. These practices were common and, “they did it all the time,” according to Source 6.

45. According to Source 6, Carreker’s improper revenue recognition practices were

ongoing within the Company when Source 6 joined Carreker in 1995. According to Source 6, there

were significant pressures within the Company to meet financial targets and to ship software at the

end of the quarter without the appropriate documentation. Carreker often shipped inferior product,


-15-

and sometimes empty boxes and boxes containing only descriptive literature, so that revenue could

be recognized, according to Source 6. Source 6 knew of this because Source 6 was one of the

individuals responsible for shipping the software. The request to ship the software before they were

ready occurred most frequently on the last one or two days of the quarter, according to Source 6.

The people who reported to Denny Carreker knew of the improper practices because they were the

individuals who would give the orders to ship the software, according to Source 6. According to

Source 6, Carreker would “hold the end of the month open” for up to a week in order to “get things

in.” Source 6 was told to ship the software even if the Company had not yet received the contract.

Source 6 said that primarily Source 6's boss, Jack Davis, was the person telling Source 6 to follow

these improper practices. Sometimes Source 6 was told to ship empty boxes, boxes containing only

descriptive literature and not software, and, oftentimes, software known to have “read errors” so that

shipments could go out and the revenue could be recognized during the then-current reporting

period. Source 6 had knowledge of this because Source 6 was one of the individuals responsible for

shipping the software. According to Source 6, the “revenue enhancement area,” “check link

contracts,” “Antinori software products,” and “Genesis” were areas within Carreker where improper

accounting practices were most frequently employed. Denny Carreker was aware of Carreker’s

improper revenue recognition practices and was giving the orders to his subordinates to “make the

numbers,” according to Source 6. Carreker’s improper revenue recognition practices were employed

“to make the numbers, to make things look better than they were,” according to Source 6.

Knowledge of these improper practices was company-wide, according to Source 6.

46. According to Source 6, shipping records, which were all handled through FedEx,

could be compared with dates on certain software contracts to show that the software was shipped

prior to the execution of the contract so that software revenue could be recognized as the software

was shipped. Source 6 also stated that some of the demands by management to ship software early


-16-

were made by email, but the majority of the demands were made verbally.

47. Similarly, according to a former Carreker employee who was a Staff Accountant

from 1999 to 2001 and whose duties included performing billing and preparing subsidiary financial

statements and who worked on accounts receivables (“Source 7”), Carreker sometimes billed

customers for software sales before the software was shipped. Source 7 knows this because, at the

direction of Source 7’s superiors (including but not limited to controllers), Source 7 sometimes

prepared and sent invoices to customers even though the software was still at Carreker’s office.

Source 7 actually saw the corresponding software in Carreker’s office when the invoices were sent.

According to Source 7, when the invoices were generated and sent to customers, revenue and

accounts receivable were recorded by Carreker.

4. Defendants Knowingly or Recklessly Recognized Implementation ServicesRevenue Before The Services Were Performed in Violation of SOP 97-2

48. Carreker violated GAAP (SOP 97-2) by recording revenue from implementation

services that were necessary to the functionality of the software before the implementation services

were performed (the “Acceleration of Implementation Revenue Practice”). This practice resulted

in Carreker’s premature recognition of revenue from implementation services. As a consequence,

defendants made material misrepresentations concerning Carreker’s revenues and earnings in

various public documents. In its FY2002 Form 10-K and Third Quarter of FY2002 Form 10-Q,

Carreker admitted that the Acceleration of Recognition of Implementation Revenue Practice resulted

in the Company prematurely recognizing substantial percentages of revenue during the class period.

[The foregoing allegations are based on SOP 97-2 ¶¶65, 74-75 and Carreker’s explanation of the

restatement set forth in the FY2002 Form 10-K at note 3 and Third Quarter of FY2002 Form 10-Q

at note 3.]

49. Source 1 maintained a schedule that tracked the percentage of installation work


-17-

completed by the installation manager’s team at the end of each month. The Company would

consider the revenue earned and correspondingly recognize as revenue the same percentage of the

installation fee as the percentage of the installation work that was reported as having been

completed. At the quarter-end meetings, Denny Carreker directed Jack Davis to pressure Source

1 to report that a higher percentage of installation services were performed than actually were

performed. Also, at quarter-ends from 1999 to early 2001, Managing Principal, Paul Carrubba, at

the direction of Jack Davis, would instruct Source 1 to report that a higher percentage of installation

services was performed than actually was performed. Carreker controller, Judy Grooters, at the

direction of defendant Gage, would also sometimes instruct Source 1 to report that a higher

percentage of installation services was performed than actually was performed. On certain

occasions Davis and Carrubba instructed Source 1 to report a specific amount of services had been

performed so as to allow the Company to meet analysts’ revenue estimates. Employees commonly

referred to this practice as “the end-of-quarter revenue hunt.” Source 1 explained that when the

installation services for which the revenue had already been recognized were actually performed,

the installation team was instructed to bill the time spent performing the services to maintenance

which was a fixed price arrangement purchased with a software license. In many cases the accounts

had already been closed because the installation had been complete. [The forgoing allegations are

based on information provided to counsel for lead plaintiffs by Source 1 who has personal

knowledge of the information.]

50. Carreker would commonly bill customers and recognize revenue from

implementation of software before any implementation services were actually performed. One

example of a contract for which the Company prematurely recognized revenue from implementation

services was the National City Bank engagement in or around May 2001 for which Carreker billed

the bank more than $1 million for implementation services and booked the revenue before even


-18-

beginning the implementation process. Indeed, it was generally known throughout the Company

that implementation revenue was recognized before implementation services were performed. A

former employee indicated that this practice was “common” at Carreker, and that “in order for us

to make numbers, we had to creatively claim income.” [The foregoing allegation is based on

information provided to counsel for lead plaintiffs by a former Carreker employee who was

responsible for implementation of Carreker software from January 1998 to the Fall of 2001

(“Source 2”) and who has personal knowledge of the information.]

51. Similarly, Source 7, the Staff Accountant whose duties included performing billing,

was aware from Source 7’s involvement in the billing process that Carreker improperly recognized

revenue from National City Bank and First Union before the implementation of their software was

complete. According to Source 7, it was not unusual for Carreker to send invoices for

implementation services before implementation services were performed. Source 7 knows this

because project managers tracked the progress of implementation progress on tracking forms, and

Source 7 was often told by superiors in the billing department to send invoices before the tracking

forms were available. Source 7 said tracking forms were unavailable because implementation had

not yet begun. Source 7 said that when invoices were generated and sent to customers, revenue and

accounts receivable were recorded by Carreker. [The foregoing allegation is based on information

provided to counsel for lead plaintiffs by Source 7 who has personal knowledge of the information.]

52. Source 7 also attended a “breakfast meeting” in 2000 with Denny Carreker and

numerous other personnel from the billing department. At this meeting, Source 7 and several other

employees voiced concerns regarding, among other things, implementation services being billed

before the implementation services were performed. Denny Carreker, however, took no action to

remedy the employees’ concerns. [The foregoing allegation is based on information provided to

counsel for lead plaintiffs by Source 7 who has personal knowledge of the information.]


-19-

53. According to Source 1, the implementation team would hold “kickoff meetings” at

the purchaser bank during which no actual implementation services were performed. Nevertheless,

following the “kickoff meeting,” the Company would often recognize 25% of the implementation

revenue from the job. [The foregoing allegations are based on information provided to counsel for

lead plaintiffs by Source 1 who has personal knowledge of the information.]

54. According to a September 17, 2002 letter sent by the “Committee of Concerned

Carreker Employees” (“CCCE”) to the Audit Committee of Carreker’s Board of Directors and to

the SEC, Denny Carreker and Gage knowingly recognized implementation services revenue before

the services were performed in violation of SOP 97-2:

Mr. Carreker and his CFO, Terry Gage, have fraudulently recognized revenue fromcompany business and contracts which they know violates GAAP rules andimproperly inflates corporate profits and corporate stock values with the intent tomislead investors. This has been conducted in many forms - backdating contracts;claiming revenue from contracts not yet signed by the client in the reporting periodclaimed, and the premature announcement of signed business when no such contracthas been signed by the client through premature press releases; intentionallyoverestimating the percent of completion/installation of software contracts inorder to recognize revenue; overstating consulting fees when the client disputes thevalue of consulting services received or the completion of these services. Some ofthe contracts include First Star, Chase Bank, First Virginia (revenue enhancement),Key Bank (software installation), Fleet Boston (risk management), and Mellon Bank(software). Through Bob Olson (EVP for Marketing) and Denny Carreker,employees have been encouraged or intimidated (through loss of employment) to lieand misrepresent to auditors the true status of these contracts as they relate to GAAPinterpretation and application. Many employees have informed the Company’s auditcommittee of these illegal acts apparently resulting in no action or investigationbecause of the lack of independence maintained there.

(Emphasis added). [Sep. 17, 2002 letter from the CCCE to the Audit Committee of Carreker’s Board

of Directors, which is reproduced in its entirety at ¶121 below and attached hereto as Exhibit 3.]

5. Defendants Knowingly or Recklessly Recognized Revenue from ContractsThat Were Not Executed until after the Quarter Had Already Closed

55. Carreker violated GAAP (SOP 97-2) by recording revenue in fiscal quarters from

software contracts that were not fully-executed – and for which “evidence of an arrangement” did


-20-

not exist – until a subsequent quarter (the “Extended Quarters Practice”). This practice resulted in

Carreker’s premature recognition of revenue. As a consequence, defendants made material

misrepresentations concerning Carreker’s revenues and earnings in various public documents. In

its FY2002 Form 10-K and Third Quarter of FY2002 Form 10-Q, Carreker admitted that the

Extended Quarters Practice resulted in the Company prematurely recognizing substantial

percentages of revenue during the Class Period. [The foregoing allegations are based on SOP 97-2

¶16 and Carreker’s explanation of the restatement set forth in the FY2002 Form 10-K at note 3 and

Third Quarter of FY2002 Form 10-Q at note 3.]

56. At the end of each quarter Carreker would often offer banks exceptionally generous

deals in order to meet analysts’ estimates. On many occasions the contracts would come back

undated from customers after the reporting period had already closed so as to allow Carreker to

insert dates that preceded the end of quarter deadline. [The foregoing allegations are based on

information provided to counsel for lead plaintiffs by Source 1 who has personal knowledge of the

information.] A few examples of such contracts include but are not limited to: (i) a contract

memorializing the sale of software and implementation services to Trustmark Bank for $280,000

that according to its heading was created on November 1, 1999 but was backdated to October 29,

1999 by Paul Carrubba and Trustmark Bank’s Chief Information Officer, Jim Outlaw, in order to

allow Carreker to recognize the revenue in the Third Quarter of FY1999 which ended on October

31, 1999; and (ii) a contract memorializing the sale of a software license as well as installation and

implementation services to Toronto Dominion Bank for $382,500 that according to the filename

printed on the bottom margin of the document was created on May 1, 2001 but was backdated to

April 30, 2001 by Carreker Executive Vice President Michael Hansen and Michael P. Blassing, Vice

President at The Toronto-Dominion Bank, in order to allow Carreker to recognize the revenue in the

First Quarter of FY 2001 which ended on April 30, 2001. [The foregoing allegations are based on


-21-

the contracts themselves, which are attached hereto as Exhibits 4 and 5, and information provided

by Source 1.]

57. According to a former Senior Consultant who was employed by Carreker from 1996

through late 2001 who was involved in revenue enhancement projects for banks and in improving

operational efficiencies for banks (“Source 4”), Royce Brown, Executive Vice President, Vice

Chairman of the Office of the President, and Managing Director of Payment Systems for Carreker

told Source 4 about Carreker’s improper revenue recognition practices. Source 4 heard from other

employees that these improper revenue recognition practices included the back-dating of contracts

and reporting revenue from contracts that were not signed during the reporting quarter. In fact,

according to Source 4, it was commonly known at the Company that Denny Carreker was

“recognizing revenue and cooking the books to get the price for the stock up.” According to Source

4, it was also common knowledge that if Carreker employees mentioned that they had a client that

was getting close to signing a contract, Denny Carreker would say “go ahead and book it,” (i.e.,

recognize the revenue) regardless of whether the contract had actually been signed. According to

Source 4, Denny Carreker was notorious for going in-person to clients and saying something to the

effect of “okay, you owe us x number of dollars in April, ... we need to make our March revenue

goals, if you will pay us a discounted price, we will take that now.” According to Source 4, it was

common knowledge within Carreker that toward the end of the quarter Denny Carreker would often

approach clients and offer them discounted contracts if they would pay for the contracts during the

current quarter. According to Source 4, the revenue from these contracts would be immediately

recognized, even though the services required by such contracts would not be completed until future

quarters. According to Source 4, this practice angered one of Carreker’s largest clients, Wells

Fargo, and particularly Webb Edwards, a high-level executive at Wells Fargo. According to Source

4, Carreker’s foregoing revenue recognition practices were “crooked” and in violation of GAAP.


-22-

[The foregoing allegations are based on information obtained from Source 4 who has personal

knowledge of the information.]

58. According to Source 4, at a board meeting held in late 2000 or early 2001, Director

Richard R. Lee, Jr. and Denny Carreker had a heated argument about Carreker’s practice of

recognizing revenue from contracts that were not executed by quarter-end, during which Richard

Lee admonished Denny Carreker for allowing the improper accounting practice to continue. As

stated to Source 4 by Royce Brown, at this board meeting Lee essentially advised Denny Carreker

that the Company could not continue to employ the improper revenue recognition practices that it

had been utilizing. Despite Lee’s protestations, the improper revenue practices continued. [The

forgoing allegations are based on information provided to counsel for lead plaintiffs by Source 4

who was informed of the argument by former Executive Vice President, Vice Chairman of the Office

of the President, and Managing Director of Payment Systems, Royce Brown.]

59. Contracts were often backdated by 30 to 45 days to the previous quarter so that

Carreker could increase revenue in that already-closed quarter. [The foregoing allegation is based

on information obtained by counsel for lead plaintiffs from a former Carreker employee who stated

that they had personal knowledge of the contract backdating, as the former employee “did deals”

involving the backdated contracts.]

60. According to Source 7 (the former Staff Accountant), Carreker sometimes generated

invoices and correspondingly recognized software revenue before executed contracts were received

from customers. The only support Carreker had for these invoices was a spreadsheet prepared by

other Carreker employees outlining the terms of the purported contract. Source 7 prepared and sent

the invoices to customers and saw that Carreker had not yet obtained a signed contract from the

customer. According to Source 7, the missing contracts would usually be received after the invoices

were sent to customers. The dates on the contracts often post-dated the dates of the invoices. [The


-23-

forgoing allegations are based on information provided to counsel for lead plaintiffs by Source 7

who had personal knowledge in that Source 7 generated invoices, witnessed that there were no

underlying contracts, and witnessed that dates of subsequently received contracts often post-dated

the corresponding invoices.]

61. Source 7 voiced a concern about improper billing practices in a letter to Denny

Carreker in 1999, which stated that billing sometimes took place without the existence of an

underlying contract. Neither Denny nor anyone else at Carreker did anything to resolve Source 7’s

concern. Terry Gage replied to Source 7 instructing that these types of concerns should be directed

to him rather than Denny Carreker in the future. Further, according to Source 7, at the “breakfast

meeting” in 2000 with Denny Carreker and numerous other personnel from the billing department

referenced in ¶52 above, Source 7 and other employees voiced concerns concerning, among other

things, invoices and software revenue being generated before contracts were received from

customers. Denny Carreker took no subsequent action to remedy their concerns. [The foregoing

allegation is based on information provided to counsel for lead plaintiffs by Source 7 who has

personal knowledge of the information.]

62. Once again, according to the September 17, 2002 letter sent by the CCCE to the

Audit Committee of Carreker’s Board of Directors and to the SEC, Denny Carreker and Gage

knowingly recognized revenue from contracts that were not executed until after the quarter had

already closed in violation of SOP 97-2 and knew about the backdating of contracts:

Mr. Carreker and his CFO, Terry Gage, have fraudulently recognized revenue fromcompany business and contracts which they know violates GAAP rules andimproperly inflates corporate profits and corporate stock values with the intent tomislead investors. This has been conducted in many forms - backdating contracts;claiming revenue from contracts not yet signed by the client in the reportingperiod claimed, and the premature announcement of signed business when nosuch contract has been signed by the client through premature press releases;intentionally overestimating the percent of completion/installation of softwarecontracts in order to recognize revenue; overstating consulting fees when the client


-24-

disputes the value of consulting services received or the completion of these services.Some of the contracts include First Star, Chase Bank, First Virginia (revenueenhancement), Key Bank (software installation), Fleet Boston (risk management),and Mellon Bank (software). Through Bob Olson (EVP for Marketing) and DennyCarreker, employees have been encouraged or intimidated (through loss ofemployment) to lie and misrepresent to auditors the true status of these contracts asthey relate to GAAP interpretation and application. Many employees have informedthe Company’s audit committee of these illegal acts apparently resulting in no actionor investigation because of the lack of independence maintained there.


of Directors, which is reproduced in its entirety at ¶121 below and attached hereto as Exhibit 3.]

63. According to a memo dated February 24, 2003 from the CCCE to counsel for a

plaintiff whose class action was subsequently consolidated into this case, several directors, including

Ronald Antinori, were aware of the fraudulent revenue recognition practices orchestrated by Denny

Carreker but took no action to prevent the continuation of the false statements and GAAP violations:

Several Directors were notified on many occasions by numerous employeesof the fraudulent revenue recognition violation by Denny Carreker but refused toinvestigate or act to prevent future violations by Denny Carreker and his seniormanagement. Specifically, James Fischer and Ron Antinori of the Board bothwere notified by employees in 1999 of several particular instances but refusedto investigate. Simply put, board members refused to carryout their fiduciaryresponsibility to shareholders by ensuring accurate and complete reporting of theCompany’s revenues because either they were actively conspiring with DennyCarreker to fraudulently report revenues or were too concerned for their own boardseat and interests to raise the issue with the entire Board of Directors. There hasbeen a long history of conflict of interest among board member’s private interestswith Denny Carreker and his family and their respective positions on the board,which has had a diminutive effect on corporate governance within the Company.The September 17 letter address many of these conflicts.th

(Emphasis added). [Feb. 24, 2003 CCCE memo, which is reproduced in its entirety at ¶122

below.]

6. Defendants’ and the Carreker Family’s Stock Sales While Carreker’s StockPrice Was Artificially Inflated as a Result of the False Financial Statements

(a) The November 2000 Secondary Offering

64. In early 2000, when Carreker’s stock price approached $10 per share, many


-25-

employees wanted to sell their shares. Denny Carreker insisted that the Company conduct a

secondary stock offering so, among other things, he could sell stock while simultaneously

establishing a blackout period to prevent other employees from selling shares, which he believed

would help sustain Carreker’s inflated stock price. Gage advised Denny Carreker not to conduct the

secondary offering because the Company was not in need of cash. [The forgoing allegations are

based on information provided to counsel for lead plaintiffs in September 2003 by Source 3.]

65. In the quarter prior to the secondary offering in November 2000, Paul Carrubba

directed Source 1 to report that more installation services had been completed because Denny

Carreker was demanding that the Company meet analyst expectations so that the stock would not

decline and derail the secondary offering. [The forgoing allegations are based on information

provided to counsel for lead plaintiffs by Source 1 who has personal knowledge of the information.]

66. By registration statement and prospectus filed with the SEC on November 3, 2000,

Carreker issued and sold 2 million shares of its common stock to the public at $17 per share for

proceeds of approximately $32 million. At the time of the secondary offering, the stock price was

trading at all-time highs. Capitalizing on the artificially inflated stock price, certain Carreker

directors and executive officers collectively sold 2.5 million previously restricted shares to the

public at $17 per share and, as a result of the underwriting banks’ exercise of an over-allotment

option, the directors and executive officers sold an additional 675,000 shares to the public on

November 14, 2000 at $22.38, for total proceeds of more than $55 million. Thus, the selling

stockholders received $55 million through the offering while the Company received $32 million

from the offering.

67. Denny Carreker sold 1,508,750 shares of Carreker common stock in the secondary


The 1,508,750 shares sold by Denny Carreker in the secondary offering included 236,250 shares sold on1

November 14, 2000 at $22.38 as a result of the underwriter exercising its over-allotment option.

The 919,375 shares sold by Denny Carreker in the secondary offering included 146,250 shares sold on2

November 14, 2000 at $22.38 as a result of the underwriter exercising its over-allotment option.

-26-

offering, or approximately 34.3% of his holdings, capturing proceeds of more than $25.7 million:1

Shares Owned

Prior to Offering

4,395,271

Shares

Sold

1,508,750

Estimated

Proceeds

$25,709,718

Shares Owned

After Offering

2,886,521

Percent Sold

34.3%

Antinori sold 919,375 shares of common stock, or 34.4% of his holdings, capturing proceeds of

approximately $15.7 million:2

Shares Owned

Prior to Offering

2,669,646

Shares

Sold

919,375

Estimated

Proceeds

$15,680,999

Shares Owned

After Offering

1,750,271

Percent Sold

34.4%

[The foregoing allegations are based on information obtained by counsel for lead plaintiffs from

Carreker’s Prospectus filed with the SEC on November 3, 2000 and from the Carreker defendants’

motion to dismiss the Consolidated Class Action Complaint.]


-27-

68. As demonstrated by the chart below, in early 2000, when Denny Carreker decided

to have a secondary offering, Carreker’s stock price had finally returned to levels it had not traded

at since immediately after the Company’s initial public offering despite the reporting of consistent

record revenues and earnings. In fact, the secondary offering occurred when the price of the stock

was trading at all-time highs on the heels of Carreker’s announcement that it had met or exceeded

Wall Street analyst estimates for ten consecutive quarters. Within less than nine months from the

secondary offering, the stock price had returned to its old lows, as the Company – even after

improperly recognizing software license and implementation services revenue that had not yet been

earned – could not make up for the shortfall caused by a steep decline in demand for its consulting

services in 2001. [2001 Form 10-K.]

69. Dr. Hakala has concluded that, among other things, based on regression analyses of

Carreker’s share price’s response to key Company events, had Carreker properly accounted for the


-28-

software licensing fees and implementation services fees prior to the secondary offering, the offering

price would have been significantly lower: “[H]ad the state of the financial condition of Carreker

been corrected the amount of shareholders equity would have been reduced a significant amount and

the secondary offering price would have been substantially reduced.” Dr. Hakala further recognized

that “the share price of Carreker suspiciously peaked around the time of the secondary offering.”

[May 31, 2005 Declaration of Scott D. Hakala at ¶9, which is attached hereto as Exhibit 2.]

(b) Defendants’ Open-Market Stock Sales While Carreker’s Stock PriceWas Artificially Inflated as a Result of the False Financial Statements

70. The Individual Defendants also sold shares of Carreker stock in the open-market

while knowingly issuing false and misleading financial statements:

Date Shares Sold Price Proceeds

Denny Carreker 5/27/99

6/7/99 - 6/8/99

9/7/01

9/17/01 - 9/21/01

5,000

10,000

2,777

5,554

23,331

$8.63

$9.13 - $9.50

$7.40

$7.25 - $7.35

$43,125

$92,187

$20,549

$40,544

$196,405

Ronald Antinori 1/27/00 - 1/31/00

6/5/00

9/14/00

130,000

10,000

70,000

210,000

$9.16 - $9.25

$12.00

$17.02

$1,202,125

$120,000

$1,191,400

$2,513,525

Terry Gage 12/15/98

1/31/01

129,000

6,949

135,949

$4.75

$25.69

$612,750

$178,505

$791,255

[The foregoing allegations are based on information obtained by counsel for lead plaintiffs from

Thomson Financial]

(c) Denny Carreker’s Family’s Stock Sales While Carreker’s Stock PriceWas Artificially Inflated as a Result of the False Financial Statements

71. Denny Carreker’s brother, James D. Carreker, who served on Carreker’s Board of

Directors throughout the Class Period, and two sons, John D. Carreker III, who was an officer of

Carreker throughout the Class Period, and Brenton E. Carreker, who was employed by Carreker


-29-

throughout the Class Period, also profited handsomely by selling Carreker stock at artificially

inflated levels, as shown below:

Date Shares Sold Price Proceeds

James D. Carreker 2/18/00 - 2/24/00

2/28/00 - 3/6/00

3/7/00 - 3/13/00

3/17/00 - 3/24/00

3/27/00 - 3/30/00

42,500

94,000

66,500

10,500

51,000

264,500

$12 - $13.25

$12 - $13.13

$12 - $13.98

$11.57 - $12

$12.30 - $13

$513,125

$1,150,600

$879,350

$122,990

$643,200

$3,309,265

John D. Carreker III 5/27/99

6/7/99 - 6/8/99

1/16/01

5,000

10,000

15,000

30,000

$8.63

$9.13 -$9.50

$38.75 - $38.94

$43,125

$92,187

$583,968

$719,280

Brenton E. Carreker 1/3/01

1/16/01

10,000

2,884

12,884

$31.03

$36.88

$310,250

$106,347

$416,597

In the aggregate, Denny Carreker’s sons and brother sold approximately $4.5 million worth of

Carreker stock while the shares traded at artificially inflated prices as a results of the fraud

orchestrated by Denny Carreker. [The foregoing allegations are based on information obtained by

counsel for lead plaintiffs from Thomson Financial]

(d) Carreker’s Senior Vice President of InvestorRelations Has Been Indicted for Insider Trading

72. On December 4, 2001, the SEC filed a civil suit against Carreker’s Senior Vice

President of Investor Relations, George Matus, and his brother, Peter Matus, and alleged that George

Matus had advance knowledge of Carreker’s negative First Quarter of FY2001 earnings news and

participated in both the drafting of the press release announcing the negative news and the decision

as to when to release the news. Rather than maintain the confidentiality of the news and abstain

from trading in Carreker stock, however, George Matus conveyed the confidential negative

information to his brother and transferred $50,000 to him in order to trade in Carreker securities and

profit from the non-public information. Under their plan, Peter Matus then used the funds to


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purchase 750 Carreker put options, effectively betting that the price of Carreker shares would

decline once the negative news was made public. When Peter Matus sold the options a week later,

the price had declined more than 40%, netting the brothers a profit of $209,940. On June 24, 2002,

a final judgment was entered in the SEC’s case that ordered George and Peter Matus jointly and

severally to disgorge $209,940 in illegal trading profits plus $9,941 prejudgment interest on that

amount and assessed the maximum civil penalty under the Insider Trading Sanctions Act of

$629,820 against each defendant. Subsequently, on February 24, 2004, George and Peter Matus,

were indicted by a federal grand jury and charged with insider trading and securities fraud. [SEC

Litigation Release 18596, Feb. 25, 2004.]

B. PRE-CLASS PERIOD FALSE AND MISLEADING STATEMENTS

1. False First Quarter of FY1998 Financial Results

73. On June 3, 1998, Carreker issued a press release reporting revenues of $10.3 million

in the first quarter of 1998, a 36% increase over the year ago period. Net income was reported to

have risen to $360,000, or $0.03 per share, compared to $146,000, $0.01 per share, in the first

quarter of 1997. The Company also reported that revenue from software licenses increased 149.5%

from $1.3 million to $3.1 million, and revenue from software maintenance and implementation fees

increased 3.7% from $1.8 million to $1.9 million. According to defendant Gage:

We started the year strongly, hitting or exceeding all of our financial and operationalgoals, and specifically expanding software sales. The net proceeds from our MayIPO significantly improved our balance sheet and provided us with the financialfoundation to execute our long-term growth strategy.

Carreker’s false First Quarter of FY1998 financial results were published in its Form 10-Q signed

by Denny Carreker and Gage and filed with the SEC on July 2, 1998.

74. As a practice, Denny Carreker, Gage, and Antinori, among others, would review

Carreker’s earnings press releases before they were issued to the market. [The foregoing allegation


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is based on information provided by Source 3.]

75. The First Quarter of FY1998 earnings press release and Form 10-Q were false and

misleading for the reasons stated in ¶83 below.

2. False Second Quarter of FY1998 Financial Results

76. On August 27, 1998, Carreker issued a press release reporting purportedly “record”

Second Quarter of FY1998 financial results. The Company reported that revenue increased 25.7%

to $13.7 million, compared with revenue of $10.9 million in the second quarter of 1997, and that net

income was $1.7 million, or $0.10 per share, compared to $1.2 million, or $0.09 per share, in the

prior year quarter. Carreker also reported that revenue from software licenses increased 226.7% to

$3.8 million from $1.2 million, and revenue from software maintenance and implementation fees

increased 52.8% to $3.1 million from $2.0 million. Carreker’s false Second Quarter of FY1998

financial figures were included in Carreker’s Form 10-Q signed by Denny Carreker and Gage and

filed with the SEC on September 14, 1998.

77. The Second Quarter of FY1998 earnings press release and Form 10-Q were false and


3. False Third Quarter of FY1998 Financial Results

78. On November 24, 1998, Carreker issued a press release reporting “record” Third

Quarter of FY1998 financial results. The Company also reported that revenue increased 28% to

$13.9 million, compared with revenue of $10.8 million in the Third Quarter of FY1997, and that net

income increased 108.2% in the quarter to $1.7 million, or $.10 per share, compared to $809,000,

or $.06 per share, in the prior year quarter. Carreker Further reported that revenue from software

licenses increased 21.7% to $3.6 million from $3 million and revenue from software implementation

fees increased 107.1% to $1.9 million from $936,000. Earnings for the Third Quarter of FY1998

met the average analysts’ estimate. Carreker’s false Third Quarter of FY1998 financial figures were


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included in its Form 10-Q signed by Denny Carreker and Gage and filed with the SEC on December

15, 1998.

79. The Third Quarter of FY1998 earnings press release and Form 10-Q were false and


80. On December 22, 1998, BancBoston Robertson Stephens issued a report

recommending that investors “buy” Carreker common stock because the Company “can

conservatively grow revenues and earnings at 25% or more per annum over the foreseeable future.”

BancBoston Robertson Stephens’ report was based on Carreker’s false and misleading reported

financial results. Carreker common stock closed at $5.44 on December 22, 1998, up more than 14%

from the closing price of $4.75 on the prior day.

81. In January 1999, Carreker acquired Genisys Operations, Inc. in exchange for 1.24

million shares of Carreker common stock. The acquisition using artificially inflated stock enabled

Carreker to add to its product line and increase sales.

4. False Fourth Quarter and FY1998 Financial Results

82. On March 22, 1999, Carreker issued a press release announcing “record” Fourth

Quarter and FY1998 financial results. The Company reported that revenues for the Fourth Quarter

of FY1998 increased 28.7% to $15.2 million compared to $11.8 million for the same period in

FY1997, and that net income for the Fourth Quarter “doubled” to $1.4 million, or $.08 per share,

compared to net income of $763,000, or $.05 per share, in FY1997. For FY1998, the Company

reported that revenues increased 28.6% to $55.0 million from $42.8 million in FY1997, and net

income increased 72.1% to $5.2 million, or $0.30 per share, from $3.0 million, or $0.21 per share,

in FY1997. The Company highlighted that in FY1998 revenues from software licenses increased

to $16.3 million, compared to $11.2 million in FY1997, and that revenues from software


-33-

implementation fees increased to $6.6 million, compared to $4.1 million in FY1997. Denny

Carreker commented on the seemingly impressive results, stating in pertinent part that, “[w]e are

confident in our business model and in our ability to continue delivering this type of consistent and

profitable growth.” Carreker’s false Fourth Quarter and FY1998 financial figures were included in

its Form 10-K signed by, among others, Denny Carreker, Antinori and Gage and filed with the SEC

on April 28, 1999. In the Form 10-K, Carreker also made the following false and misleading

statements concerning its accounting methodology: (1) when “significant production, modification

or customization of software was required,” it accounted for revenue from software licenses on a

percentage of completion basis; and (2) it recognized revenue from implementation service fees as

the services were performed.

83. The Fourth Quarter and FY1998 press release and Form 10-K were false and

misleading because:

(A) As described in detail in Part IV-A-3 above, Carreker recorded revenue from

software license contracts that required “significant production, modification, or customization” and

for which implementation services were necessary to the software’s functionality in the fiscal

quarter of delivery rather than as the implementations services were performed in violation of

GAAP. This practice resulted in Carreker’s premature recognition of revenue from software

licenses. In its FY2002 Form 10-K, Carreker admitted that this practice resulted in the Company

prematurely recognizing substantial percentages of software license revenue which in turn led to

significant overstatements of total revenue, net income and earnings during the class period;

(B) As described in detail in Part IV-A-4 above, Carreker recorded revenue from

implementation services that were necessary to the functionality of software before the services were

performed in violation of GAAP. This practice resulted in Carreker’s premature recognition of

revenue from implementation services. In its FY2002 Form 10-K, Carreker admitted that this


-34-

practice resulted in the Company prematurely recognizing implementation service revenue which

in turn led to significant overstatements of total revenue, net income and earnings during the class

period;

(C) As described in detail in Part IV-A-5 above, Carreker recorded in fiscal

quarters revenue from software contracts that were not fully-executed – and for which “evidence

of an arrangement” did not exist – until a subsequent quarter, in violation of GAAP. This practice

resulted in Carreker’s premature recognition of revenue from software licenses and implementation

services. In its FY2002 Form 10-K, Carreker admitted that this practice resulted in the Company

prematurely recognizing software license and implementation service revenue which in turn led to


(D) Based on the restated figures published in Carreker’s FY2002 Form 10-K, the

Company’s total revenue and revenue from software licenses for FY1998 were overstated by more

than 8% and 31%, respectively;

(E) Based on the restated figures published in Carreker’s FY2002 Form 10-K, the

Company’s net income and earnings per share for FY1998 were overstated by more than 109% and

114%, respectively;

(F) Carreker was not experiencing the level of sales and earnings growth it touted

to investors. Carreker touted that earnings grew 43% in FY1998, however, based on the restated

results published in Carreker’s FY2002 Form 10-K, earnings declined 33% in FY1998 from

FY1997. Carreker also touted that software license revenue and total revenue grew 45% and 29%,

respectively. However, based on the restated results published in Carreker’s FY2002 Form 10-K,

software license revenue and total revenue grew only 11% and 18%, respectively, in FY1998 from

FY1997.

84. Carreker restated its FY1998 financial results in its FY2002 10-K. Carreker’s


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FY1998 financial results were overstated as follows:

(In thousands except for earnings per share)

REVENUES

Consulting Fees

Software Licensing Fees

Software Maintenance Fees

Software Implementation Fees

Hardware

Total Revenues

NET INCOME

EARNINGS PER SHARE

Reported

$ 26,328

16,327

5,031

6,557

774

55,017

5,172

$0.30

As Restated

$ 26,478

12,428

5,031

6,557

0

50,494

2,471

$0.14

Net Change

$ 150

(3,899)

0

0

(774)

(4,523)

(2,701)

($0.16)

Over/Under

-0.57%

31.37%

0.00%

0.00%

n/a

8.22%

109.31%

114.29%

As part of the restatement of all of its financial statements dating back to FY1998, Carreker adjusted

the method it used to account for out-of-pocket reimbursements. [FY2002 Form 10-K.] Inasmuch

as out-of-pocket reimbursements are unrelated to the revenue improprieties alleged herein and the

inclusion of revenue newly classified as such distorts the comparison of the figures reported to

investors in FY1998 against restated total revenues, the newly classified revenue has been excluded

from this comparison.


85. On May 18, 1999, Carreker issued a press release announcing “record” First Quarter

of FY1999 financial results. The Company reported that revenues for the First Quarter increased

32.5% to $14.5 million, compared to revenues of $10.9 million for the same period in 1998. The

Company touted that, for “the third consecutive quarter,” it “more than doubled” net income,

resulting in $963,000, or $.05 per share compared to $383,000, or $.03 per share, in FY1998.

Carreker further reported that revenues from software licenses decreased to $3.1 million, compared

to $3.5 million in the First Quarter of FY1998, and revenue from software implementation fees

increased to $1.4 million, compared to $1.0 million in the First Quarter of FY1998. Earnings for

the First Quarter of FY1999 met the average analysts’ estimate. Carreker’s false financial figures

were reported in its First Quarter of FY1999 Form 10-Q signed by Denny Carreker and Gage and


-36-

filed with the SEC on June 14, 1999.

86. The First Quarter of 1999 earnings press release and Form 10-Q were false and


C. FALSE AND MISLEADING STATEMENTS DURING THE CLASS PERIOD


87. On August 17, 1999, Carreker announced its Second Quarter of FY1999 financial

results, which it falsely asserted was the “6th Consecutive Record Quarter.” The Company reported

record quarterly revenue of $18.9 million, up 32.0% from $14.3 million in the prior year. The

Company further reported that net income increased 33.4% to $2.3 million, or $.12 per share,

compared to net income of $1.7 million, or $.10 per share, in FY1998. Carreker’s false Second

Quarter of FY1999 financial figures were included in its Form 10-Q signed by Denny Carreker and

Gage and filed with the SEC on September 14, 1999.




89. On November 30, 1999, Carreker announced its financial results for the Third

Quarter of FY1999, which it falsely asserted was the “7th Consecutive Record Quarter.” The

Company reported that revenue for the third quarter had increased 43.4% to a “record” $20.9

million, compared to revenue of $14.5 million for the same period in FY1998. Carreker further

reported that net income increased 21.7% to $2 million, or $.11 per share, compared to net income

of $1.7 million, or $.09 per share, in FY1998. Carreker’s false Third Quarter of FY1999 financial

figures were included in its Form 10-Q signed by Denny Carreker and Gage and filed with the SEC

on December 15, 1999.



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91. On March 7, 2000, Carreker announced its false Fourth Quarter and FY1999 financial

results. The Company falsely asserted that the Fourth Quarter constituted the “8th Consecutive

Record Quarter.” The Company reported that revenue for the Fourth Quarter increased 41.8% to

a “record” 21.6 million compared to revenue of $15.2 million in the Fourth Quarter of FY1998.

Carreker further reported that net income increased 85.8% to a “record” $2.6 million, or $0.14 per

share, compared to net income of $1.4 million, or $.07 per share, in FY1998. Carreker touted that

earnings per share grew 100%. With regard to its FY1999 financial results, the Company touted that

revenue rose 37.8% to a record $75.8 million, compared with revenue of $55 million for FY1998,

and that net income increased 52.6% to a “record” $7.9 million, or $0.42 per share, compared to

$5.2 million, or $0.30 per share, for FY1998. Carreker’s false Fourth Quarter and FY1999 financial

figures were included in its Form 10-K signed by, among others, Denny Carreker, Antinori and

Gage and filed with the SEC on May 1, 2000. In the Form 10-K, Carreker also made the following

false and misleading statements concerning its accounting methodology: (1) when “significant

production, modification or customization of software was required,” it accounted for revenue from

software licenses on a percentage of completion basis; and (2) it recognized revenue from

implementation service fees as the services were performed.

92. The Fourth Quarter and FY1999 earnings press release and Form 10-K were false

and misleading because:






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period;









Company’s net income and earnings per share for FY1999 were overstated by more than 1% and

2.44%, respectively; and


Company was not experiencing the consecutive level of record earnings and revenue growth it

touted to investors.


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93. Carreker restated its FY1999 financial results in its FY2002 Form 10-K. Carreker’s



REVENUES

Consulting Fees




Hardware

Total Revenues

NET INCOME

EARNINGS PER SHARE

Reported

$ 49,725

13,727

6,985

5,116

267

75,820

7,894

$0.42

As Restated

$ 49,725

13,906

6,985

5,116

0

75,732

7,815

$0.41

Net Change

$ 0

179

0

0

(267)

(88)

(79)

($0.01)

Over/Under

0.00%

-1.29%

0.00%

0.00%

n/a

0.001%

1.01%

2.44%








94. On May 25, 2000, Carreker announced its financial results for the First Quarter of

FY2000, which it falsely asserted “mark[ed] the ninth consecutive quarter of record financial

results.” The Company reported that revenue for the First Quarter of FY2000 increased a “record”

52.3% to $22.1 million compared to revenue of $14.5 million for the same period in FY1999, and

that net income increased 53.5% to a “record” $1.5 million, or $0.08 per share, compared to net

income of $1.0 million, or $.05 per share, in FY1999. Carreker further reported that earnings per

share “climbed” 60% in the first quarter, and quarter-on-quarter software license revenue grew 48%.

Earnings for the first quarter of 2000 exceeded the average analysts’ estimate by $.01. According

to Denny Carreker:


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We are extremely pleased to deliver once again record results to our stockholders.The powerful combination of revenue and net income growth resulted in watershedfirst quarter performance, and leaves us well positioned to continue our profitablegrowth in fiscal 2000. We are also excited to have been recently named by BusinessWeek Magazine as the 75th best "Hot Growth Company" out of 10,000 publiclytraded corporations.

Carreker’s false First Quarter of FY2000 financial figures were included in its Form 10-Q signed

by Denny Carreker and Gage and filed with the SEC on June 14, 2000.

95. The First Quarter of FY2000 earnings press release and Form 10-Q were false and



96. On September 12, 2000, Carreker announced its financial results for the Second

Quarter of FY2000 in a press release entitled, “Carreker Corporation Announces Record Results;

Revenues Increase 52%, Profits Rise 51%, EPS Climbs 50%.” The Company falsely touted that,

“[f]or the 10th consecutive quarter, Carreker Corporation, a leading provider of integrated consulting

and software solutions, announced today significantly stronger earnings during the Second Quarter

of 2000 when compared to the same period in 1999.” Carreker reported that revenue for the Second

Quarter of FY2000 increased a “record” 52% to $28.7 million compared to revenue of $18.9 million

for the same period in FY1999. The Company further reported that net income increased to a

“record” $3.4 million, or $0.18 per share, compared to net income of $2.3 million or, $0.12 per

share, in FY1999. The Company touted that earnings per share exceeded analysts’ estimates by $.03

to $.04. According to Denny Carreker:

Revenues, profits and earnings per share for the second quarter of 2000 were thehighest in Carreker's history. We are pleased to have delivered record financialresults to our shareholders and to have met or exceeded analysts' expectations for10 consecutive quarters. . . .

Carreker’s false Second Quarter of FY2000 financial figures were included in its Form 10-Q signed

by Denny Carreker and Gage and filed with the SEC on September 14, 2000.


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97. The Second Quarter of FY2000 press release and Form 10-Q were false and


98. On September 13, 2000, Robertson Stephens issued a report maintaining the firm’s

“buy” rating on Carreker common stock:

Carreker reported strong second quarter results yesterday, with earnings-per-share and revenue well ahead of our estimates. In light of the most recent results, weare raising our 2000 and 2001 revenue estimates. We recommend aggressivepurchase of the shares as the company is clearly demonstrating accelerating revenueand earnings-per-share growth, in our opinion.

Robertson Stephens’ report was based on Carreker’s false and misleading reported financial results.

After Robertson Stephens’ reiteration of a “buy” rating, Carreker common stock closed at $16.94

per share, which was an increase of nearly 20% over the closing price on the previous day of $14.13.

6. False Secondary Offering Prospectus

99. On November 3, 2000, Carreker filed with the SEC its prospectus for the secondary

stock offering which was signed by Denny Carreker and Gage and incorporated by reference the

FY1999 Form 10-K and the Forms 10-Q for the First and Second Quarters of FY2000. The

prospectus was false and misleading for the reasons provided in ¶92 above and ¶105 below.


100. On December 5, 2000, Carreker announced purportedly “record” financial results for

the Third Quarter of FY2000. The Company asserted that the Third Quarter “marked the 11th

consecutive quarter that Carreker has reported increased quarter-over-quarter revenues and

earnings.” The Company reported that revenue for the Third Quarter increased to $28.8 million

compared to revenue of $20.9 million for the same period in FY1999, and that net income increased

to $3.7 million, or $0.19 per share, compared to net income of $2.0 million, or $0.11 per share, in

FY1999. Carreker further reported that earnings per share increased 73%, and revenue from

software licenses grew 112% in the third quarter. Moreover, the Company reported that earnings


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per share exceeded analysts’ consensus estimates by $0.02. The press release also contained the

following false and misleading statements:

“We are extremely pleased to deliver once again record results to our stockholderswhile meeting or exceeding analysts' expectations for 11 consecutive quarters,” saidJ.D. “Denny” Carreker, Chairman and Chief Executive Officer. . . .

* * *The Forbes Magazine list of the 200 Best Small Companies in America rankedCarreker at No. 50. This represents a jump of 80 places for Carreker, which rankedNo. 130 in 1999. According to Forbes, several tough criteria are used to calculatea company's ranking, including five-year sales growth of at least 5% and fourconsecutive quarters of net income surpassing $1 million. The companies that madethis year's list averaged a five-year return on equity of 18.7%, a 12-month salesgrowth of 44.4% and 12-month EPS growth of 76.9%. Carreker was able to achievea top 50 ranking through superior performance in each category. As the magazinesays, “Those that make the final cut are truly gritty survivors.”

Carreker’s false Third Quarter of FY2000 financial figures were included in its Form 10-Q signed

by Denny Carreker and Gage and filed with the SEC on December 13, 2000. In the Form 10-Q,

Carreker also made the following false and misleading statements concerning its accounting

methodology: (1) when “significant production, modification or customization of software was

required,” it accounted for revenue from software licenses on a percentage of completion basis; and

(2) it recognized revenue from implementation service fees as the services were performed.



102. Following Carreker’s announcement of its purportedly strong Third Quarter of

FY2000 financial results, Chase Hambrecht & Quist, Inc. issued an investment report on December

6, 2000, rating Carreker stock a “Buy.” More specifically, the report stated, “Given the co.’s

outstanding performance, its diverse growth opportunities, and the 30+% year-on-year bottom line

growth rate that we are projecting for CANI over the next two years, we believe CANI should trade

at 35x our 2001 EPS estimate of $0.88 or to roughly $32. Reiterate BUY.” On December 7, 2000,

Carreker stock closed at $29.19 per share, an increase of almost 22% over the closing price on


-43-

December 5, 2000 of $24.13. Chase Hambrecht & Quist’s report was based on Carreker’s false and

misleading reported financial results.


103. On February 22, 2001, Carreker issued a press release reaffirming its guidance for

the Fourth Quarter and FY2000. The Company estimated that Fourth Quarter revenue would be

approximately $30.5 million and earnings per share would be approximately $0.22. The Company

also estimated that FY2000 revenues would be approximately $110 million and earnings per share

would be approximately $0.66. Revenue and earnings per share estimates of approximately $145

million and $0.88, respectively, were given for FY2001. The Company’s common stock closed at

$16.75 per share on February 22, 2001, an increase of more than 11% over the closing price of $15

on the prior day. The press release affirming Carreker’s Fourth Quarter and FY2000 financial

results were false and misleading for the reasons stated in ¶105 below.

104. On March 13, 2001, Carreker announced its purported “record” financial results for

the Fourth Quarter and FY2000. The Company touted that, “[f]or the 12th consecutive quarter,

Carreker . . . announced today significantly stronger earnings during the fourth quarter when

compared to the same period in fiscal 1999.” Carreker reported that revenue increased 43% to $30.8

million from $21.6 million for the same period in FY1999, and that net income increased to $5.0

million, or $0.22 per diluted share, compared to net income of $2.6 million, or $0.14 per diluted

share, in FY1999. Carreker further reported that earnings per share grew 57%. For FY2000,

revenue increased 45% to $110.3 million, net income increased 72% to $13.6 million, and earnings

per share grew 60% to $0.67. Earnings for the Fourth Quarter of FY2000 met the average analysts’

estimate, and earnings for FY2000 exceeded the average analysts’ estimate by $.01. The press

release also contained a misleading statement concerning the Company’s inclusion in several stock

indexes as well as its inclusion on Forbes list of “Best Small Companies”:


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Increased market recognition and visibility. Carreker was added to the Standard &Poor Small Cap 600 Index, the Russell 2000 Index and the Russell 3000 Index,raising the company's visibility in the professional investment community andproviding the opportunity to expand the company's shareholder base. Additionally,Forbes Magazine placed Carreker at No. 50 on its list of Best Small Companies,while BusinessWeek placed the company at No. 75 on its list of Hot GrowthCompanies.

Carreker’s false Fourth Quarter and FY2000 financial figures were included in its Form 10-K signed

by, among others, Denny Carreker and Gage and filed with the SEC on April 30, 2001. In the Form

10-K, Carreker also made the following false and misleading statements concerning its accounting



















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period;








(D) Based on the restated figures published in Carreker’s FY2002 10-K, the

Company was not experiencing the consecutive level of record earnings and revenue growth it

touted to investors;

(E) Carreker’s inclusion in the Forbes list of the 200 Best Small Companies in

America, the Business Week list of “Hot Growth Companies”, and the Russell 2000, Russell 3000

and Standard & Poor’s Small Cap 600 Indices was only achieved through the fraudulent revenue

recognition practices alleged herein.




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REVENUES

Consulting Fees




Total Revenues

NET INCOME

EARNINGS PER SHARE

Reported

$ 71,715

18,030

11,223

9,298

110,266

13,594

$0.67

As Restated

$ 71,715

17,765

11,223

9,245

109,948

13,592

$0.67

Net Change

$ 0

(265)

0

(53)

(318)

(2)

0

Over/Under

0.00%

1.49%

0.00%

0.57%

0.003%

0.01%

0.00%








107. On May 22, 2001, Carreker issued a press release stating that it expected revenues

for FY2001 to meet prior guidance of $145 million, and that earnings per share would be $0.88. The

Company also stated that it expected revenues of approximately $25 million and earnings per share

of $0.06 in the First Quarter of FY2001.

108. On June 6, 2001, Carreker issued a press release announcing its First Quarter of

FY2001 financial results. The Company reported that revenues were $25.4 million and net income

was $1.3 million, or $0.06 per share. According to Denny Carreker:

For purposes of guidance for fiscal year 2001, we remain confident in our organic,previously stated, fiscal 2001 revenue guidance of approximately $145 million andearnings per share of approximately $0.88. With the closing of the Check Solutionsacquisition, we are adjusting our fiscal 2001 revenue guidance to $175 million andearnings per share to $0.95 excluding goodwill amortization and one-time, merger-related charges. This will result in approximately 59 percent revenue growth andapproximately 44 percent earnings per share growth over fiscal 2000.

For purposes of guidance for fiscal year 2002, we anticipate revenues of


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approximately $245 million and earnings per share of approximately $1.33. Thistranslates to revenue growth of 40 percent and earnings per share growth of 40percent over revised forecasted fiscal 2001 levels.

Carreker’s false First Quarter of FY2001 financial figures were included in its Form 10-Q signed

by Denny Carreker and Gage and filed with the SEC on June 12, 2001. In the Form 10-Q, Carreker

also made the following false and misleading statements concerning its accounting methodology:

(1) when “significant production, modification or customization of software was required,” it

accounted for revenue from software licenses on a percentage of completion basis; and (2) it

recognized revenue from implementation service fees as the services were performed. After

Carreker reported its First Quarter of FY2001 financial results and guided investors that fiscal-year

earnings and revenue will exceed expectations, shares of the Company’s common stock leapt 34%

on June 7, 2001, closing at $15.04.

109. The First Quarter of FY2001 press release and Form 10-Q were false and misleading

for the reasons stated in ¶118 below.


110. On August 7, 2001, Carreker issued a press release announcing that it was reducing

revenue and earnings guidance for the Second Quarter of FY2001. The Company stated that it

expected revenue for the Second Quarter to be below its prior guidance of $38 million by

approximately 12 to 13%. The Company also stated that it expected earnings per share for the

Second Quarter to be approximately $0.00 to $0.01 per share.

111. On August 27, 2001, The American Banker reported that Carreker was changing its

accounting policies after profits disappointed investors:

Though in the past the company based its guidance on software sales itexpected to close in a given quarter, it now will recognize deals only after they haveclosed and the company is receiving cash. This will spread out revenue recognitionover several quarters, instead of when the deal closes, "based on a signature whenthe client agrees to terms," Mr. Carreker said. This will improve "visibility" -- the


-48-

guidance the company gives analysts about anticipated results, he said.

The company is also "pulling the bar down" and being "ultraconservative"on future revenues, he said.

Denny Carreker’s assertion that the Company was waiting until a deal closed “based on a signature”

to recognize revenue from software licenses was false and misleading. Carreker commonly

recognized revenue from software license contracts that were not fully-executed, and therefore not

“closed”, until after the end of the reporting period (see Part IV-A-5 above). In addition, the

statement that Carreker is “being ultraconservative on future revenues” was false based on the

Company’s restatement which shows that: (a) Carreker inflated FY2001 total revenues by 13.3%;

(b) Carreker inflated revenues from software licenses in FY2001 by more than 60%; and (c)

Carreker understated both its FY2001 net loss and earnings per share by more than 33%.

112. On September 20, 2001, Carreker issued a press release announcing its Second

Quarter of FY2001 financial results. The Company reported Second Quarter revenue of $33.9

million, and net losses of $11.6 million. Carreker’s false Second Quarter of FY2001 financial

figures were included in its Form 10-Q signed by Denny Carreker and Gage and filed with the SEC

on September 14, 2001. In the Form 10-Q, Carreker also made the following false and misleading








114. On December 4, 2001, Carreker issued a press release announcing its financial results


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for the Third Quarter of FY2001. The Company reported revenue of $29.7 million and a net loss

of ($26.4) million, or ($1.21) per share. Carreker’s false Third Quarter of FY2001 financial figures

were included in its Form 10-Q signed by Denny Carreker and Gage and filed with the SEC on

December 14, 2001. In the Form 10-Q, Carreker also made the following false and misleading








116. On February 14, 2002, Carreker raised its revenue and earnings guidance for the

Fourth Quarter of FY2001. The Company said it expected revenue for the Fourth Quarter to be

above its prior guidance of $38 million by approximately 10%. The Company also stated that it

expected earnings per share for the Fourth Quarter to be approximately $0.01 to $0.03. After

Carreker increased its Fourth Quarter revenue and earnings guidance, shares of the Company’s

common stock jumped 18% to close at $5.93 on February 15, 2002.

117. On March 12, 2002, Carreker issued a press release announcing its Fourth Quarter

and FY2001 financial results. The Company reported revenue of $42.8 million and net income of

$1.1 million, or $0.05 per share, for the fourth quarter. For FY2001, the Company reported that

revenues were $131.7 million with a net loss of ($35.6) million, or ($1.63) per share. Carreker’s

false Fourth Quarter and FY2001 financial figures were included in its Form 10-K signed by, among

others, Denny Carreker and Gage and filed with the SEC on April 15, 2002. In the Form 10-K,

Carreker also made the following false and misleading statements concerning its accounting


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Following Carreker’s release of its false Fourth Quarter and FY2001 financial results, the price of

Carreker common stock rose more than 10% closing at $9.03.

















period;




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Company’s total revenue and revenue from software licenses for FY2001 were overstated by more

than 13.3% and 60%, respectively;


Company’s net income and earnings per share for FY2001 were overstated by more than 33%;

(F) Carreker was not experiencing the level of sales and earnings growth it touted

to investors. Carreker reported that earnings declined 343% in FY2001, however, based on the

restated results published in Carreker’s FY2002 Form 10-K, earnings declined 464% in FY2001.

Carreker touted that software license revenue grew 123%. However, based on the restated results

published in Carreker’s FY2002 Form 10-K, software license revenue grew only 42% in FY2001.




REVENUES

Consulting Fees




Total Revenues

NET LOSS

EARNINGS PER SHARE

Reported

$ 42,842

40,291

29,347

19,210

131,690

(35,605)

($1.63)

As Restated

$ 42,342

25,153

25,908

20,723

114,126

(53,376)

($2.44)

Net Change

$ (500)

(15,138)

(3,439)

1,513

(17,564)

(17,771)

($0.81)

Over/Under

1.18%

60.18%

13.27%

-7.30%

13.34%

33.29%

33.20%



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the method it used to account for out-of-pocket reimbursements. [2002 Form 10-K.] Inasmuch as

out-of-pocket reimbursements are unrelated to the revenue improprieties alleged herein and the




13. False and Misleading Statements Made During SecondQuarter of FY2002 Investors Conference Call

120. During an analyst conference call held on September 12, 2002 following the

Company’s announcement of its false second quarter financial figures, Denny Carreker stated:

Let me open by confirming what you read in our September 4 news release.th

We want you to hold us to the highest standards of corporate governance andaccountability. We intend to be as clear as possible in our accounting and ourreporting to you, and we continue to be committed to embracing best practicesin the conduct of our business.

Denny Carreker’s statement was false and misleading because Carreker was not committed to

embracing best practices in the conduct of its business as demonstrated by Carreker’s fraudulent

revenue recognition practices alleged herein.

V. THE TRUTH EMERGES

121. On or about September 17, 2002, the “Committee of Concerned Carreker Employees”

(“CCCE”) sent a letter to the Audit Committee of Carreker’s Board of Directors (i.e., Donald L.

House, James L. Fischer, Richard R. Lee, and Ronald G. Steinhart) and sent a copy to the SEC Fort

Worth Office and the SEC’s Complaint Center in Washington, D.C. The letter states as follows:

The Committee of Concerned Carreker Employees represents employees whoshare substantial concerns over the management of Carreker Corporation and theoversight function of its Board of Directors, particularly, its Audit Committee. Thepurpose of this letter is to maintain a record of Carreker’s mismanagement, failureto comply with SEC disclosure requirements, illegal and fraudulent conduct of itsCEO and other officers of the Company, and the Board of Director’s knowledge andcomplicity with these actions.


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Over the past several years, these matters have been brought to the attentionof several individual board members (both past and presently serving on the Board)and collectively to the Board as a whole. Through inaction, either by failing orrefusing to investigate or otherwise exercise your fiduciary responsibilities to carryout informed oversight of the Company’s management, you as Board members arecomplicit, and in some matters actively participated, in the reprehensible conductdescribed below.

This Committee has sought advice of counsel on their obligations to disclosethese violations of law to the SEC and the Department of Justice in light of recentlegislation by Congress. We have been advised that the Sarbanes-Oxley Act protectsdisclosure by employees in order to ensure accountability of the company’smanagement and board of directors. Indeed, we have been told that disclosure is anobligation in order to avoid complicit conduct. This letter records the disclosure ofthese illegal acts and once again strongly encourages you to act affirmatively in thedischarge of your fiduciary responsibilities to the Company’s employees and outsideshareholders even though you have failed to do so in the past.

With some amusement but mostly amassment at your audacity, we believethat the announcement of the formation of a “Corporate Governance Committee” asdisclosed by the Company’s press release dated September 4, 2002 is mere windowdressing in order for the board and CEO of Carreker Corp. to invoke the “EnronDirectors’ and CEO defense” of uninformed ignorance. Regardless of your“proactive”strategy, the board of directors of Carreker are responsible forinvestigating and eliminating the abuses and illegal conduct of the Company’s CEO.Unfortunately, we believe it highly unlikely that you are able to carry out yourresponsibilities to shareholders given the current configuration of Carreker’s boardin light of the fact that the board lacks independence from management (DennyCarreker) in all decisions and oversight concerning nomination of directors,appointments to board committees, integrity of accounting and revenue recognition,and management compensation.

Indeed, there apparently exists substantial conflicts of interest on the boardwith numerous board members preventing any “independent action” by the board.This certainly becomes apparent by the long time appointment of Denny Carreker’sbrother to the Board (James D. Carreker) who headed the audit committee beginning1997, and who continues to carry much influence over the audit committee’soversight of the company’s management and methods of recognizing revenue.Further conflict of interest are found by the long term appointments to the board ofDonald L. House (also Chairman of the Audit Committee) and David K. Sias, bothwho have been undisclosed paid consultant of the Company during their years asboard members. Finally, for over 20 years, Richard R. Lee (appointed to the Boardin 1984 by Denny Carreker) has also acted as an undisclosed paid consultant andadvisor to the CEO and his family being actively involved in their estatemanagement, trustee on various trusts holding substantial shares of Carreker stock,and investment advisor to Denny Carreker responsible for the management of hisCarreker Corporation and other stock holdings. Nepotism is actively invoked by the


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CEO through the appointment of his sons (John Carreker, EVP International, andBrent Carreker, Managing Principle) to key management positions and theemployment of relatives in part time positions. Several of these relatives to the CEOcollect pay checks bi-monthly from the Company while failing to keep any officehours of attendance or otherwise perform work for the Company as required by allother employees. The Board of Directors have passively condoned this conduct andfailed to properly report such conflicts of interest and nepotism to the SEC asrequired.

The Company’s CEO has consistently treated the Company as his own“piggy bank” at the expense of its employees and shareholders. The following is buta sample of those illegal acts through failure to disclose or fraudulent conduct andabuse of power carried out by Denny Carreker:

• Misappropriation of Funds – (a) weekly, Denny Carreker receives thousands ofCompany dollars in cash from Roxanne, a corporate accounting bookkeeper for theCompany and personal secretary to Denny Carreker. These payments of cashrepresent compensation to Mr. Carreker and he has never disclosed it to regulatorsas salary or other compensation even though required to do so. Mr. Carrekerrequired many employees to reduce their salaries in 2001 and 2002 because ofdeclining corporate revenues in order to reduce operating expenses. He evendisclosed in the Company Proxy Report the reduction of his salary when in fact hewas receiving these undisclosed cash payments; (b) also, Mr. Carreker has taken hiswife and other family members on lavish trips to many parts of Europe and Asiaunder the pretense of business, charging the entire expense off to the Company ascorporate business travel, including air fare, meals and hotel expenses, for his wifeConnie, when in fact, no business was conducted or remotely contemplated for thebenefit of the Company. Villas in France and a private yacht are just some of thenon-business excesses used by Mr. Carreker and his wife at Company expense.Further, the Company has repeatedly paid thousands of dollars for Denny Carreker’sfurniture, interior decorator consulting fees, and craft worker’s fees performingreconstruction work at his home in Highland Park at the demand and direction of hiswife, Connie. Again, this was not disclosed as compensation to Mr. Carreker asrequired; (c) Mr. Carreker has required the Company pay thousands of dollars for hisprivate club membership fees with the University Club and the Petroleum Club, butfails to disclose this to regulators, even though he uses these memberships forpersonal entertainment.

• Fraudulent Recognition of Company Revenues – Mr. Carreker and his CFO,Terry Gage, have fraudulently recognized revenue from company business andcontracts which they know violates GAAP rules and improperly inflatescorporate profits and corporate stock values with the intent to misleadinvestors. This has been conducted in many forms - backdating contracts;claiming revenue from contracts not yet signed by the client in the reportingperiod claimed, and the premature announcement of signed business when nosuch contract has been signed by the client through premature press releases;intentionally overestimating the percent of completion/installation of software


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contracts in order to recognize revenue; overstating consulting fees when theclient disputes the value of consulting services received or the completion ofthese services. Some of the contracts include First Star, Chase Bank, FirstVirginia (revenue enhancement), Key Bank (software installation), Fleet Boston(risk management), and Mellon Bank (software). Through Bob Olson (EVP forMarketing) and Denny Carreker, employees have been encouraged orintimidated (through loss of employment) to lie and misrepresent to auditors thetrue status of these contracts as they relate to GAAP interpretation andapplication. Many employees have informed the Company’s audit committeeof these illegal acts apparently resulting in no action or investigation because ofthe lack of independence maintained there.

• Undisclosed Loans and Club Memberships – Denny Carreker has granted severalloans to employees without first seeking approval from the Board’s compensationcommittee. They include a $50,000 loan to Bob Olson (EVP) and several CountryClub membership fees paid by the Company for Mr. Olson, Brent Carreker, and JohnCarreker. These loans and club memberships were not reported as compensation forthese employees.

• Insider Trading – Mr. Carreker’s son Brent has openly bragged to companyemployees of his profits from insider trading of Carreker stock. Also, ConnieCarreker, the CEO’s wife, frequently shares and uses (herself) insider informationwith friends in her investment club involving Carreker stock. Again, she has openlybragged to employees of her gains. In fact, the impetus for George Matus (SVP -Investor Relations) to violate insider trading laws was the apparent ease andunaccountability with which Mr. Carreker’s family violates securities law. Finally,John Carreker has established off-shore bank accounts in the Grand Camen Islandsto evade detection from the SEC of utilizing insider information of the Company toillegally trade Carreker stock.

It is of further interest to employees of the Company that Mr. Carreker hasannounced that he will certify the completeness and accuracy of the financialdisclosure filings and materials made available to the investing public as required ofall public company CEO’s through recent legislation. Certainly by doing so, Mr.Carreker is once again violating securities law, but with one additional caveat - thatis that the Board of Directors, particularly the Audit Committee, is complicit withMr. Carreker in misleading and violating SEC regulations.


of Directors, which is attached hereto as Exhibit 3.]

122. According to a memo dated February 24, 2003 from the CCCE to counsel for a

plaintiff whose class action was subsequently consolidated into this case, the September 17, 2002

letter to the Audit Committee precipitated the internal investigation of Carreker’s improper revenue


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recognition practices which led to the restatement of the Company’s financial statements dating back

4½ years to its initial public offering. The memo specifically provides:

Past and present employees of Carreker Corporation have formed CCCE forpurposes of setting the record straight as to the mismanagement, theft, fraud andmisrepresentation with the intent to deceive its shareholders actively carried out byCarreker Corporation’s CEO, Denny Carreker and other senior managementemployees, including the Board of Directors’ complicity with such illegal activity.The information being provided to you may assist the shareholders of Carreker whohave been damaged during the past five years from mismanagement and failure toproperly report revenues.

The letter attached to this fax was mailed to each member of the CarrekerCorporation’s Board of Directors Audit Committee shortly after Denny Carrekerissued a company press release on September 4, 2002, proudly proclaiming hisestablishment of a new governance committee to assist the Board of Directors inmaintaining appropriate corporate governance and reporting practices. Also, DennyCarreker fraudulently announced that he and the CFO, Terry Gage, would certify theaccuracy and completeness of all materials available by the Company forshareholders, investors and the public. The September 4 press release was designedth

by Denny Carreker to deceive and mislead investors and the public since he and theBoard of Directors knew that any certification would be false. The financialreporting of revenue since 1998 for the company has been inaccurate and in fact,there has been an ongoing conspiracy by Denny Carreker, the CFO and the Board ofDirectors to mislead and deceive the investing public as to the accuracy of revenuesas reported. This fraudulent conspiracy goes beyond “cooking the books” to otheracts of thefts, embezzlement, insider trading and fraud as further described in theattached letter.

CCCF’s September 17 letter caused the Board of Directors to resendth

[sic] Denny Carreker’s September 4 revenue certification pronouncement andth

initiate its own investigations into violations of the Company’s revenuerecognition and reporting obligations by management. Had this not occurred,Denny Carreker would have wilfully lied to the public again. The Board of Directorshired Akin & Gump to perform a cursory investigation intended to limit liability anddistance the Board members from Denny Carreker’s conspiracy. Curiously enough,Carreker’s Board did not retain the Company’s primary lead law firm, Locke, Liddell& Sapp, to investigate. The reason for this was Maury Purnell, a senior partner andnamesake of the Liddell firm, was appointed as Corporate Secretary from 1998 untilhis resignation in 2002, and was fully aware and took an active part in themisrepresentations by Denny Carreker, including failure to properly comply withreporting obligations of SEC Rules. The Board announced the results of itsinvestigation in January 2003, declaring the Company would restate its revenuebeginning as far back as 1998, but found no illegal or fraudulent conduct on the partof Denny Carreker and the company’s management. Nothing could be further fromthe truth. The Company’s attorneys from Akin & Gump performed the most


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superficial investigation - many employees contacted by them refused to discuss withthem Mr. Carreker’s conspiracy over fear of Denny Carreker’s threats to sue themfor breach of the Company’s Non-Disclosure Agreement (for which each employeeis compelled to sign [as] a precondition to employment). Not surprisingly, the SECis conducting an active investigation into Carreker’s fraudulent conduct through itsFt. Worth office - agent David Peavler has been assigned to the case.

Several Directors were notified on many occasions by numerous employeesof the fraudulent revenue recognition violation by Denny Carreker but refused toinvestigate or act to prevent future violations by Denny Carreker and his seniormanagement. Specifically, James Fischer and Ron Antinori of the Board bothwere notified by employees in 1999 of several particular instances but refusedto investigate. Simply put, board members refused to carryout their fiduciaryresponsibility to shareholders by ensuring accurate and complete reporting of theCompany’s revenues because either they were actively conspiring with DennyCarreker to fraudulently report revenues or were too concerned for their own boardseat and interests to raise the issue with the entire Board of Directors. There hasbeen a long history of conflict of interest among board member’s private interestswith Denny Carreker and his family and their respective positions on the board,which has had a diminutive effect on corporate governance within the Company.The September 17 letter address many of these conflicts.th

CCCE is forwarding this information to you for the benefit of Carrekershareholders and employees who have been damaged by Denny Carreker’smismanagement of the Company. No person of CCCE has or will participate in thelawsuit for damages or stands to gain monetarily from these suits.

If you would like to contact us for further facts and detailed informationconcerning these illegal actions by Carreker, go online to www.yahoo/finance.co andfind message board for CANIE (Carreker Corporation). Write a message saying “CEplease contact (your firm’s first name) and (the last four numbers of your extensionphone number).” I will call you back and ask for your extension.

(Emphasis added). [Feb. 24, 2003 CCCE memo.]

123. On December 10, 2002, Carreker shocked investors by disclosing in a Form 8-K filed

with the SEC that a Special Committee of independent Board members established by Carreker’s

Board of Directors was reviewing all of its previously reported financial results, principally focusing

on the timing of its recognition of revenues during prior periods. The Company further disclosed

that the review had uncovered timing issues that could cause some revenues to be shifted to the

subsequent sequential quarter. The Company cautioned investors that it believed it may be required


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to restate its financial statements for prior periods and that its historical financial statements for prior

periods should not be relied upon. Finally, Carreker announced that it was postponing its earnings

release for the Third Quarter of FY2002. In response to this revelation, the price of Carreker

common stock plunged to $3.98 on December 10, 2002, a decline of 22.6% from the closing price

of $5.08 on the previous day.

124. On December 17, 2002, Carreker filed an 8-K report with the SEC disclosing that the

Company received notice that the SEC had commenced an informal inquiry into Carreker’s revenue

recognition practices.

125. On December 24, 2002, Carreker issued a press release announcing it received

notification from NASDAQ that its stock was subject to being delisted as a result of the delay in

filing its Third Quarter of FY2002 Form 10-Q.

126. On January 28, 2003, Carreker announced that its Special Committee had completed

its investigation, and that, the Company would be restating “its historical financials, primarily to

revise its accounting for licenses and certain service revenues, which will tend to spread the related

revenue over multiple periods, affecting both historical and future contracts. Carreker expects to

restate its financial results beginning with its 1998 fiscal year, and will present its financial results

for the third and fourth quarters of fiscal 2002, as well as for future periods, on this basis.”

127. On February 24, 2003, Carreker announced that the Nasdaq Listing Qualifications

Panel granted an exception for Carreker’s securities to continue to trade on The Nasdaq National

Market. The exception required Carreker to file its Third Quarter of FY2002 Form 10-Q and

FY2002 Form 10-K, and all other necessary restatements on or before April 30, 2003.

128. In the long-delayed Third Quarter of FY2002 Form 10-Q filed on April 30, 2003, the

Company restated its financial results for each of the quarters of FY2001 as well as the First and

Second Quarters of FY2002. In addition, in its Form 10-K for FY2002, which was also filed on


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April 30, 2003, Carreker restated its financial results for FY1998, FY1999, FY2000, and FY2001.

In the FY2002 10-K, Carreker admitted that it had prematurely recognized revenue from software

licensing contracts in the period in which the software was delivered rather than the period in which

the contracts were fully-executed. The Company further admitted in the FY2002 10-K that

throughout the Class Period, it had misstated its revenues by prematurely recognizing revenues in

the period of delivery, rather than recognizing the license revenue and implementation revenue as

the implementation services were performed using the percentage of completion method. The

FY2002 10-K specifically stated, “the related license revenue and implementation revenue should

have been recognized as the services were performed using the percentage of completion method

rather than upon delivery of the software.”

VI. APPLICABILITY OF THE FRAUD-ON-THE-MARKET DOCTRINE

129. Plaintiffs will rely, in part, upon the presumption of reliance established by the fraud-

on-the-market doctrine, in that, among other things:

(A) Defendants made public misrepresentations and/or failed to disclose material

facts during the Class Period;

(B) The omissions and misrepresentations were material;

(C) Carreker common stock traded in an efficient market at all relevant times in

that: (i) the market rapidly reacted to and reflected all public information in the share price,

including but not limited to information regarding the financial condition of Carreker; (2) Carreker’s

trading volume and public float (shares available for ownership by the general public) was sufficient

to attract investor interest and analyst coverage [May 31, 2005 Declaration of Scott D. Hakala,

Ph.D., CFA at ¶6, which is attached hereto as Exhibit 2.];

(D) The misrepresentations alleged would tend to induce a reasonable investor


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to misjudge the value of Carreker common stock; and

(E) Lead Plaintiffs and the other members of the Class purchased Carreker

common stock between the time the defendants failed to disclose or misrepresented material facts

and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts.

130. Based upon the foregoing, Lead Plaintiffs and other members of the Class are entitled

to a presumption of reliance upon the integrity of the market for, at least, the purpose of class

certification, as well as for the ultimate proof of their claims on the merits. Lead Plaintiffs will also

rely, in part, upon the presumption of reliance related to a material omission.

131. The names and addresses of the record owners of the shares of Carreker common

stock purchased during the Class Period are available from Carreker and/or its transfer agent(s).

Notice can be provided to purchasers of Carreker common stock by a combination of published

notice and first class mail using techniques and forms of notice similar to those customarily used

in class actions arising under the federal securities laws.

VII. INAPPLICABILITY OF STATUTORY SAFE HARBOR

132. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false and misleading statements pleaded in this

Complaint. None of the allegedly false and misleading statements pleaded herein was a forward

looking statement nor were any statements identified as “forward-looking statements” when made.

To the extent that there were any forward-looking statements, there were no meaningful cautionary

statements identifying important factors that could cause actual results to differ materially from

those in the purportedly forward-looking statements. Alternatively, to the extent that the statutory

safe harbor does apply to any forward-looking statements pleaded herein, defendants are liable for

those false forward-looking statements because at the time each of those forward-looking statements

was made, the speaker knew that the forward-looking statement was false and/or the forward-


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looking statement was authorized and/or approved by an executive officer of Carreker who knew

that those statements were false when made.

VIII. UNDISCLOSED ADVERSE INFORMATION

133. The market for Carreker common stock was open, well-developed and efficient at

all relevant times. As a result of these materially false and misleading statements and failures to

disclose, Carreker common stock traded at artificially inflated prices during the Class Period. The

artificial inflation continued until the time Carreker admitted that it was prematurely recognizing

revenues and these admissions were communicated to, and/or digested by, the securities markets.

Lead Plaintiffs and other members of the Class purchased or otherwise acquired Carreker common

stock relying upon the integrity of the market price of Carreker common stock and market

information relating to Carreker, and have suffered damages.

134. During the Class Period, defendants materially misled the investing public, thereby

inflating the price of Carreker common stock, by publicly issuing false and misleading statements

and omitting to disclose material facts necessary to make defendants’ statements, as set forth herein,

not false and misleading. These statements and omissions were materially false and misleading in

that they failed to disclose material adverse information and misrepresented the truth about the

Company, its business and operations.

135. At all relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Lead Plaintiffs and other members of the Class. As described herein, during

the Class Period, defendants made or caused to be made a series of materially false or misleading

statements about Carreker’s business, prospects and operations. These material misstatements and

omissions had the effect of creating in the market an unrealistically positive assessment of Carreker

and its business, prospects and operations, thus causing the Company's common stock to be


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overvalued and artificially inflated at all relevant times. Defendants’ materially false and misleading

statements during the Class Period resulted in Lead Plaintiffs and other members of the Class

purchasing the Company’s common stock at artificially inflated prices. After the market learned

that the statements were false and misleading the value of Carreker common stock dropped

significantly, causing the damages complained of herein.

IX. ADDITIONAL SCIENTER ALLEGATIONS

136. As alleged herein, defendants acted with scienter in that defendants knew or

recklessly disregarded that the public documents and statements, issued or disseminated by or in the

name of the Company were materially false and misleading; knew that such statements or

documents would be issued or disseminated to the investing public; and knowingly and substantially

participated or acquiesced in the issuance or dissemination of such statements or documents as

primary violators of the federal securities laws. As set forth elsewhere herein in detail, defendants,

by virtue of their receipt of information reflecting the true facts regarding Carreker and its business

practices, their control over and/or receipt of Carreker’s public misleading statements and/or their

associations with the Company which made them privy to confidential proprietary information

concerning Carreker, were active and culpable participants in the fraudulent scheme alleged herein.

Defendants knew and/or recklessly disregarded the falsity and misleading nature of the information

which they caused to be disseminated to the investing public. The ongoing fraudulent scheme

described in this complaint could not have been perpetrated over a substantial period of time, as has

occurred, without the knowledge and complicity of the personnel at the highest level of the

Company, including the Individual Defendants.

137. Examples of defendants’ knowledge, reckless disregard of facts, and/or complicity

in the fraudulent scheme alleged herein are found at Parts IV-A-3 to IV-A-5 above. The fact that

Carreker has restated its financial statements for 18 consecutive periods in itself is strong evidence


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of fraudulent intent.

138. The Individual Defendants were motivated to engage in this aforesaid scheme to

inflate the price of Carreker common stock in order to:

(A) allow the Individual Defendants to reap substantial profits through the sale

of approximately 2.8 million shares of Carreker stock at artificially inflated prices for proceeds of

approximately $45 million. Individually, Denny Carreker sold more than 1.5 million shares netting

proceeds of approximately $26 million; Antinori sold more than 1.1 million shares for proceeds of

approximately $18.2 million; and Gage sold approximately 136,000 shares, or 77% of his holdings,

capturing proceeds of $800,000. In November 2000 when Carreker’s stock was trading at all-time

highs, Denny Carreker sold 1,508,750 shares, or 34.3% of his holdings, as part of the secondary

offering, capturing proceeds of more than $25.7 million. Similarly, Antinori sold 919,375 shares,

or 34.4% of his holdings, as part of the secondary stock offering, reaping proceeds of approximately

$15.7 million. The sales occurred in suspicious amounts at suspicious times and were calculated

to maximize profits (i.e. as part of the secondary offering which was conducted when Carreker’s

stock price traded at all-time highs shortly before the stock substantially revisited prior lows as result

of weaker 2001 financial results). Moreover, Denny Carreker’s brother and two sons netted

proceeds in excess of $4.4 million through open market sales while Carreker’s common stock was

artificially inflated;

(B) allow the Company to increase its product portfolio and boost revenues and

net income by acquiring Genisys Operation Inc. in January, 1999, using its inflated stock as

currency;

(C) enable the Company to increase its product portfolio and boost revenues and

net income by acquiring Check Solutions Co. in June, 2001, using cash obtained through the sale

of stock at artificially inflated prices in the secondary offering; and


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(D) to assure banks that the Company was a viable company and that it would be

able to perform the required maintenance, customer support, and upgrades it software required –

prior to making large investments in software systems, banks scrutinized the financial performance

of prospective software vendors to ensure that the company would be in existence to provide

adequate servicing and support.

X. CLASS ACTION ALLEGATIONS

139. Lead Plaintiffs bring this action as a class action pursuant to Federal Rules of Civil

Procedure 23(a) and 23(b)(3) on behalf of a class of all persons who purchased Carreker common

stock during the period from July 30, 1999 through December 10, 2002 inclusive, and who were

damaged thereby. Excluded from the Class are: the defendants named herein; members of the

immediate families of the Individual Defendants; any parent, subsidiary, affiliate, officer, or director

of Defendant Carreker; any entity in which any excluded person has a controlling interest; and the

legal representatives, heirs, successors and assigns of any excluded person.

140. The members of the Class are so numerous that joinder of all members is

impracticable. While the exact number of Class members is unknown to Lead Plaintiffs at the

present time and can only be ascertained from books and records maintained by Carreker and/or its

agent(s), Lead Plaintiffs believe that there are, at a minimum, hundreds of members of the Class

located throughout the United States. Throughout the Class Period, Carreker had approximately 20

million shares of common stock outstanding, which were actively traded on the Nasdaq National

Market System in an efficient market.

141. Lead Plaintiffs will fairly and adequately represent and protect the interests of the

members of the Class. Lead Plaintiffs have retained counsel who are competent to conduct and

experienced in class action and securities litigation. Lead Plaintiffs intend to prosecute this action

vigorously. Lead Plaintiffs are members of the Class and do not have interests antagonistic to or


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in conflict with the other members of the Class.

142. Lead Plaintiffs’ claims are typical of the claims of the members of the Class. Lead

Plaintiffs and all members of the Class purchased Carreker common stock during the Class Period

at artificially inflated prices and have sustained damages arising out of the same wrongful course

of conduct.

143. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(A) Whether the federal securities laws were violated by defendants’ acts and

omissions as alleged herein;

(B) Whether defendants participated in and pursued the common course of

conduct and fraudulent scheme complained of herein;

(C) Whether the documents, reports, filings, releases and statements disseminated

to the investing public during the Class Period misrepresented material facts about the business,

performance, and prospects of Carreker;

(D) Whether defendants acted knowingly or recklessly in misrepresenting material

facts;

(E) Whether the market price of Carreker common stock during the Class Period

was artificially inflated due to the misrepresentations complained of herein; and

(F) Whether Lead Plaintiffs and the other members of the Class have sustained

damages and, if so, the appropriate measure thereof.

144. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy since, among other things, joinder of all members of the Class is

impracticable. Furthermore, as the damages suffered by individual Class members may be relatively


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small, the expense and burden of individual litigation make it virtually impossible for many Class

members individually to seek redress for the wrongful conduct alleged. Lead Plaintiffs do not

foresee any difficulty in the management of this litigation that would preclude its conduct as a class

action.

COUNT IAgainst the Individual Defendants and Carreker

for Violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5

145. Lead Plaintiffs repeat and reallege each and every allegation contained in the

preceding paragraphs as if fully set forth in full herein.

146. This Count is asserted against the Individual Defendants and Carreker and is based

upon Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated

thereunder by the SEC.

147. During the Class Period, defendants, singly and in concert, directly or indirectly,

engaged in a common plan, scheme, and unlawful course of conduct pursuant to which they

knowingly or recklessly engaged in acts, transactions, practices, and courses of business which

operated as a fraud and deceit upon Lead Plaintiffs and the other members of the Class, and made

various deceptive and untrue statements of material facts and omitted to state material facts

necessary in order to make the statements made, in light of the circumstances under which they were

made, not misleading to Lead Plaintiffs and the other members of the Class. The purpose and effect

of the scheme, plan, and unlawful course of conduct was, among other things, to induce Lead

Plaintiffs and the other members of the Class to purchase Carreker common stock during the Class

Period at artificially inflated prices.

148. During the Class Period, defendants, pursuant to such scheme, plan, and unlawful

course of conduct, knowingly and recklessly issued, caused to be issued and participated in the


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preparation and issuance of deceptive and materially false and misleading statements to the investing

public which were contained in or omitted from various documents and other statements, as

particularized above.

149. Defendants each knew the facts set forth herein and intended to deceive Lead

Plaintiffs and the other members of the Class, or in the alternative, acted with reckless disregard for

the truth when they failed to ascertain and disclose or cause the disclosure of the true facts to Lead

Plaintiffs and the other members of the Class.

150. The facts alleged herein compel a strong inference that defendants made materially

false and misleading statements to the investing public with scienter, in that the defendants knew

that the public statements issued or disseminated in the name of the Company were materially false

and misleading; knew or recklessly disregarded that such statements would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced in

the issuance or dissemination of such statements as primary violations of the federal securities laws.

151. As a result of the dissemination of the false and misleading statements set forth

above, the market price of Carreker common stock was artificially inflated during the Class Period.

In ignorance of the false and misleading nature of the representations described above and the

deceptive and manipulative devices and contrivances employed by defendants, Lead Plaintiffs and

the other members of the Class relied to their detriment on the integrity of the market price of the

securities in purchasing Carreker common stock. Had Lead Plaintiffs and the other members of the

Class known of the materially adverse information misrepresented or not disclosed by defendants,

they would not have purchased Carreker common stock at the artificially inflated prices that they

did.

152. As a result of the inflation of the prices of Carreker common stock during the Class

Period caused by defendants’ material misrepresentations and omissions, Lead Plaintiffs and the


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other members of the Class have suffered substantial damages as a result of the wrongs alleged.

153. By reason of the foregoing, defendants violated the Exchange Act and Rule 10b-5

promulgated thereunder in that they:

(A) employed devices, schemes, and artifices to defraud;

(B) made untrue statements of material facts or omitted to state material facts

necessary in order to make the statements made, in light of the circumstances under which they were

made, not misleading; and/or

(C) engaged in acts, practices, and a course of business which operated as a fraud

and deceit and a scheme to defraud upon Lead Plaintiffs and the other members of the Class in

connection with their purchases of Carreker common stock during the Class Period.

154. In addition to the duties of full disclosure imposed on defendants as a result of their

making of affirmative statements and reports, or participation in the making of such statements and

reports to the investing public, defendants had a duty to promptly disseminate truthful information

that would be material to investors in compliance with the integrated disclosure provisions of the

SEC as embodied in SEC Regulation S-X (17 C.F.R. § 210.01 et. seq.), Regulation S-K (17 C.F.R.

§§ 229.10 et. seq.) and other SEC regulations, including accurate and truthful information with

respect to the Company’s operations, financial condition and earnings so that the market price of

the Company’s common stock would be based on truthful, complete and accurate information.

COUNT IIAgainst the Individual Defendants for

Violation of Section 20(a) of the Securities Exchange Act

155. Lead Plaintiffs repeat and reallege each and every allegation contained in the

preceding paragraphs as if set forth fully herein.

156. The Individual Defendants, by virtue of their offices and specific acts described

above, were, at the time of the wrongs alleged herein, controlling persons of Carreker and all of its


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responsible employees within the meaning of Section 20(a) of the Securities Exchange Act.

157. The Individual Defendants had the power and influence and exercised the same to

cause Carreker’s employees to engage in the improper conduct and practices complained of herein,

and declined to exercise their authority to prevent Carreker and its employees from engaging in the

improper conduct and practices complained of herein.

158. By reason of the conduct alleged in Count I of the Complaint, the Individual

Defendants are liable for the aforesaid wrongful conduct, and are liable to Lead Plaintiffs and to the

other members of the Class for the substantial damages which they suffered in connection with their

purchases of Carreker common stock during the Class Period.

COUNT IIIViolation of Section 20A of the Securities Exchange Act

Against Defendants Denny Carreker and Antinori

159. Lead Plaintiffs repeat and reallege each and every allegation contained above. This

claim is asserted against Defendants Denny Carreker and Ronald Antinori.

160. Defendants Denny Carreker and Antinori, by virtue of their positions as Carreker

Officers and Directors, had access to, and were in possession of, material non-public information

about Carreker at the time they sold more than 47% and 67% of their holdings, respectively, for

combined proceeds of more than $56.7 million during the Class Period.

161. By virtue of their participation in the scheme to defraud investors described herein

and their sales of stock while in possession of material non-public information about Carreker,

Defendants Denny Carreker and Antinori violated § 10(b) of the Securities Exchange Act and

applicable rules and regulations thereunder.

162. Defendant Denny Carreker’s sale of 1,272,500 shares, or 29% of his holdings, at $17

per share for proceeds of more than $20.4 million on November 3, 2000 and his sale of 236,250

shares at $22.38 per share for proceeds of approximately $5.3 million on November 14, 2000 were


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made contemporaneously with plaintiff Heather Winett’s purchase of 1,500 shares of Carreker stock

on November 13, 2000.

163. Defendant Antinori’s sale of 773,125 shares, or 29% of his holdings, at $17 per share

for proceeds of more than $12.4 million on November 3, 2000 and his sale of 146,250 shares at

$22.38 per share for proceeds of approximately $3.3 million on November 14, 2000 were made

contemporaneously with plaintiff Heather Winett’s purchase of 1,500 shares of Carreker stock on

November 13, 2000.

164. Lead Plaintiffs and all other members of the Class who purchased shares of Carreker

stock contemporaneously with sales of Carreker stock by Defendants Denny Carreker and Antinori:

(a) have suffered substantial damages in that, in reliance on the integrity of the market, they paid

artificially inflated prices for Carreker stock as a result of the violations of § 10(b) and Rule 10b-5

herein; and (b) would not have purchased Carreker common stock at the prices they paid, or at all,

if they had been aware that the market prices had been artificially and falsely inflated by defendants’

misleading statements and concealment of material facts. At the time of the purchases by Lead

Plaintiff Heather Winett and Class Members, the fair market value of Carreker common stock was

substantially less than the price paid for the shares.

JURY DEMAND

Lead Plaintiffs demand a trial by jury on all issues.

WHEREFORE, Lead Plaintiffs pray for relief and judgment as follows:

(A) Determining that this action is a proper class action, certifying Lead Plaintiffs

as class representatives under Rule 23 of the Federal Rules of Civil Procedure, and Lead Counsel

as class counsel;

(B) Awarding compensatory damages in favor of Lead Plaintiffs and the other

members of the Class against all defendants, jointly and severally, for all damages sustained as a


-71-#626668v1<Imanage> -AMENDED CONSOLIDATED CLASS ACTION COMPLAINT

result of defendants’ wrongdoing of defendants, in an amount to be proven at trial, together with

interest thereon;

(C) Awarding Lead Plaintiffs and the Class their costs and expenses incurred in

this action including reasonable allowance of fees for Lead Counsel and experts, and reimbursement

of Lead Plaintiffs’ expenses; and

(D) Granting such other and further relief as the Court may deem just and proper.

DATED: May 31, 2005 Respectfully submitted,

Sherrie R. SavettArthur StockCasey M. PrestonJon J. LambirasBERGER & MONTAGUE, P.C.1622 Locust StreetPhiladelphia, PA 19103Telephone: (215) 875-3000Fax: (215) 875-5715

Lead Counsel for Lead Plaintiffs Reed Gustowand Heather C. Winett and the Class

/s/ Kenneth S. Marks Kenneth S. MarksSUSMAN GODFREY, L.L.P.1000 Louisiana, Suite 5100Houston, TX 77002Telephone: (713) 653-7854Fax: (713) 654-3381

Liaison Counsel


-72-#626668v1<Imanage> -AMENDED CONSOLIDATED CLASS ACTION COMPLAINT

CERTIFICATE OF SERVICE

I hereby certify that on this 31 day of May, 2005, true and correct copies of the foregoingst

Amended Consolidated Class Action Complaint and the Appendix thereto were sent via U.S. mailto the parties below:

Herbert J. SueERNST & YOUNG LLP5 Times SquareNew York, NY 10036(212) 773-3850

Bruce M. CormierERNST & YOUNG LLP1225 Connecticut Avenue, N.W.Washington, D.C. 20036(202) 327-7603

William B. DawsonKaren L. HirschmanTodd A. MurrayVINSON & ELKINS LLP3700 Trammell Crow Center2001 Ross AvenueDallas, TX 75201(214) 220-7795

Attorneys for Ernst & Young LLP

Mary L. O’ConnorAKIN GUMP STRAUSS HAUER & FELD, LLP1700 Pacific Avenue, Suite 4100Dallas, TX 75201(214) 969-2800

Paul R. BessetteMichael J. BilesJesse Z. WeissAKIN GUMP STRAUSS HAUER & FELD, LLP300 W. Sixth Street, Suite 2100Austin, TX 78701(512) 499-6200

Attorneys for Defendants CarrekerCorporation, John “Denny” Carreker,Jr., Ronald Antinori and Terry L. Gage

____________________________________Kenneth S. Marks


UNITED STATES DISTRICT COURTFOR THE NORM ][ERN DISTRICT OF TEXA S

DALLAS DIVISION

In re CARREKER CORPORATION § CIVIL ACTION NO. 3 :03-CV-0250-MSECURITIES LITIGATION

§ Consolidated with Actions Nos . 3 :03-§ CV-0347-D; 3 :03-CV-00384; 3 :03-CV-§ 00384; 3 :03-CV-0410-D ; 3 :03-CV-§ 00465; 3 :03-CV-489 ; 3 :03-CV-0528-P ;§ 3:03-CV-0540-P; 3 :03-CV-0563-N;

3 :03-CV -0569-N; 3 :03-CV-0638; 3 :03-CV-0673-14

APPENDIX TO AMENDED CONSOLIDATED C LASS ACTION COMPLAIN T

Exhibit 1 CertificationDernonstratingLead Plaintiffs' Transactions in CarrekerCommon Stock During the Class Period

Exhibit 2 Declaration of Dr . Scott D. Hakala, Ph.D, CFA

Exhibit 3 Letter from. the Committee of Concerned Carreker Employees to theAudit Committee of Carreker's Board of Director s

Exhibit 4 Contract Memorializing the Sale of Software and ImplementationServices to Trustmark Ban k

Exhibit 5 Contract Memorializing the Sale of a Software License as Well asInstallation and Implementation Services to Toronto Dominion Bank

Exhibit I

Certification Demonstrating Lead Plaintiffs'Transactions in Carreker Common Stock

During the Class Period

CARREKER CORPORATION

CERTIFICATION PURSUANT TO THE FEDERAL SECURITIES LAWS

Heather C . Win.ett and Reed Gustow ("Plaintiffs), duly swear and say, as to the claimsasserted under the federal securities laws, that :

1 . We have reviewed the complaint prepared by Berger & Montague, P,C . and filed

against Carreker Corporation and certain of its officers and directors, we approve of its contents, and

we authorize Berger & Montague, P .C. to represent us in this action.

2 . We did not purchase the security that is the subject of this action at the direction of

our counsel or in order to participate in this private action .

3 . We are willing to serve as representative plaintiffs on behalf of the class, including

providing testimony at deposition and trial, if necessary .

4. Our transactions in th.e securities of Carreker Corporation between and including May20, 1998 through December 10, 2002 (the "Class Period") are as follows :

SHARES DATE OF PRICE PERPURCHASED 1LU RCF ASE SHARE

Heather C. Winett 1500 11/13/00 $20.00

Reed Custow 1000 12/01/00 $25.00

5 . We have not sought to serve as class representatives in any other action filed underthe United States federal securities laws in the past three (3) years preceding the date on which, this

certification is signed .

6 . We have not andwill not accept any payment for serving as representative plaintiffson behalf of the class beyond our pro rata share of any recovery, or as ordered or approved by thecourt, including any award for reasonable costs and expenses (including lostwages) directly relatingto the representation of the class .

I declare under penalty of perjury under the laws of the United States that the foregoing istrue and correct. Executed this 0- day of April, 2003, at Philadelphia, Pennsylvania .

By :H ather C . Winett6d8 Fulton StreetPhiladelphia , PA 19147

BY: -- UReed Gustow608 Fulton StreetPhiladelphia, PA 19147

Exhibit 2

Declaration of Dr. Scott D . Hakala, Ph . D, CFA

UNITED STATES DISTRICT COURTNORTHERN D.lSTRJCT OF TEXAS

DALLAS DIVISION

IN RE CARREKER CORPORATIONSECURITIES LITIGATION

CIVIL ACTION NO .3 :03 -CAI-0250-M

DECLARATION OF SCOTT D. RAKALA, PI.D, CFA

1. Background and Qualifications of the Expert

1 . I am a director of CBIZ Valuation Group, LLC, a national business valuation and

consulting firm that operates as a wholly owned subsidiary of Century Business Services,

Inc ., a publicly traded business services firm (NASDAQ : CBIZ), CBIZ Valuation Group

is one of the largest business valuation and consulting firms in the United States wit h

offices in Dallas, Chicago, Atlanta and Princeton (Nevi Jersey) . CB17. Valuation Group

employs approximately 80 individuals providing business valuation services to public

and private companies .

2 . 1 received a Doctor of Philosophy degree in Economics and a Bachelor's degree

in Economics from the University of Minnesota .. I have earned the professional

designation of Chartered Financial Analyst, awarded by the Association for Investment

Management and Research. I have taught courses on asset pricing and market efficiency

at the doctorate (Ph.D .) level in a Ph .D. granting institution . In addition, I have served as

Declaration of Scof! D Hakaha , Ph,D., CPA I

a consultant and expert witness on numerous occasions regarding economic issues similar

to those in this litigation. I have been found qualified to testify on issues of materiality,

event studies, inflation per share and loss causation in securities litigation matters on a

number of occasions, including testifying (over the objections of the defendants) in In re

Clarent Securities Litigation in February 2005 before Judge Charles Breyer in the

Northern District of California .' A detailed summary of my qualifications, including

prior testimony and articles, is provided on the curriculum vitae attached hereto as

Exhibit A .

3 . The specific allegations in this case are very similar to allegations in In re,

Computer Associates Securities Litigation in the Eastern District of New York. I was an

expert assisting counsel for the plaintiffs in assessing materiality, inflation and damages

in the Computer Associates class action securities litigation. Computer Associates was

alleged to have engaged in improper accounting for software and related services

revenues in violation of generally accepted accounting principles in a manner similar to

Carreker (violations of SOP 97-2). t also have more recently assisted Mr. Kenneth

Feinberg and the United States government in developing a plan of allocation for a

restitution fund for purchasers of Computer Associates shares between January 20, 1998,

and May 14, 2002 . Thus, I am very familiar with the issues of materiality and share price

effects of the allegations set forth in this case .

1 In the past year, I have also been found qualified over objections of opposing parties in In Re RaytheonSecurities Litigation, District of Massachusetts, May 1 8, 2004, hearing ; In re 1 ceiera .co!n SecuritiesLitigation, District of Massachusetts, Memorandum issued on September 30, 2004 . In In re BroadeomSecurities Litigation, Central District of California, the court relied on my declaration in granting classcertification and the opposing counsel recently (this year) acknowledged my qualifications as to assessingmateriality, event studies and inflation per share in a reply brief, although contesting the admissibiEty ofaggregate damages estimates at trial.

Declaration of Scott B. Hakala, Pit . D., CPA 2

4. Plaintiffs are being charged fees for my services in this engagement based on my

hourly billing rate of $450 per hour . I have received assistance from other staff employed

by CBIZ Valuation Group .

fl. Information Considere d

S . My opinions are based on my professional experience, as well as a thorough

review of a substantial amount of available materials, including :

(a) 'I lie Consolidated. Class Action Complaint ("Complaint' ) in this matter ;

(b) Securities filings of Carreker Corporation (`<Carrekef') with the Securities and

Exchange Commission (SEC) from May 20, 1998, through December 31, 2003 ;

(c) Published news articles and press releases and other public news regardin g

Carreker from May 1, 1998 through December 10, 2003, found on Factiva an d

Bloomberg, L.P. ; '

(d) Publicly available financial information and public trading price information on

Carreker, market indices and similar public compan ies as found on Bloomberg .

L .P . ; and

(e) Various academic texts and published articles as cited in the text .

2 Bloomberg is a subscriber based on-line resource that contains news summaries and press releasesrelating to financial securities (such as mutual funds, stocks and bonds) and financial markets. Factiva(previously Dow Jones News Retrieval) is a searchable on-line database that contains news from pressreleases, securities filings, periodicals, journals, reporting services (Dow Jones, Associates Press andReuters) and newspapers with a focus on financial news.

Declaration of Scott D. Hakala , A.D., CPA 3

[IL Summary of the Analyses and Conclusions

6 . I found that the market for Carreker's common shares was efficient in that (as

illustrated in Exhibit B) t_he. market rapidly reacted to and reflected all public information

in the share price during the period from May 20, 1998 through December 10, 2002 At

all times, Carreker's trading volume4 and public float (shares available for ownership by

the general public) was sufficient to attract investor interest and analyst coverage .' The

event study (summarized in Exhibit B) found that the financial condition of Carreker was

of primary concern to investors and led to statistically significant increases and decreases

in the relative value of Carreker's share price throughout the period from May 20, 1998

through December 10, 2002. Thus, it is possible to develop a consistent model of

damages that may be used to estimate aggregate damages and to allocate damages across

individuals filing proofs of claim .

' i considered the efficient market factors outlined in Cammer v. Bioorn, 71 1 F. Supp . 1264 (D .N .J . 1989)

(See, also, the Order issued on September 30, 2004, in In re Xcolera .com) and found that: Carreker'strading volume, turnover and float. were sufficient to allow for active monitoring and trading of its shares ;

Carreker was adequately covered by analysts and news reports ; Carreker's SEC filings were timely during

the proposed Class Period; Carreker was registered for trading on a public exchange (NASDAQ NationalMarket) and able to register shares for trading ; and the event study illustrated an immediate reaction tomaterial news that significantly altered the mix of information .4 The daily trading volume in dollars from May 20, 1995 to December 10, 2032, was $3,536,246 .27 . Thedaily trading volume in dollars from the secondary offering on November 3, 2000 to December 10, 2002,

was $6,269,815.04 . This represented a significant rate of daily turnover of 1% to 3% over various timeperiods of the shares in the public float (shares held by non-affiliate and listed for public trading) . In myexperience with smaller capitalization stocks and in advising companies considering going public, anactively traded stock should have on average $100,000 in average daily volume on NASDAQ and aturnover rate of .5% per week ( .1% per day) to be considered actively traded .

The aggregate market value of Carreker's shares held by non-affiliates was $61,307,162 as of March 25,1999, $128,650,240 as of March 31, 2000, $343,542,306 as of March 31, 2001, S1174,064,535 as ofApril 5,2002, and $160,656,532 as of July 31, 2002, according to various Form 10-Ks filed by Carreker .Ordinarily, a public float of at least 2 million shares and market value of the float of $20 million issufficient to attract market maker interest and adequate coverage for an efficient market after an initialpublic offering .

Declaration of Seutt D. Hakala, Ph.D., CPA 4

7 . Recognition of software licensing fee revenue and software implementation fe e

revenue before that revenue was earned in violation of generally accepted accounting

principles (SOP 97-2) is material to investors and (as demonstrated in Exhibit fl) led to a

substantial distortion of the trends and valuation of the subject company throughout the

period from May 20, 1998 through December 10, 2002 . This led to a "roller coaster"

type of stock price chart whereby the shares of Carreker were substantially inflate d

during certain periods of time and less inflated in value at other periods of time, as shown

by the chart in Exhibit C.6 Eventually, revelation of the extent of the problems and the

true state of Carreker's financial condition, particularly in . the second half of 2002, led to

a significant loss in value for the shareholders of Carreker ,

8. I. also concluded that the misstatements in Carreker's financial reports were

material to investors .' Had Carreker properly stated its financial condition, my

preliminary event study analysis in Exhibit B finds that its share price would have been

materially reduced throughout the period from May 20, 1998 though December 10, 2002,

The share price of Carreker was particularly inflated in 1998 and early 1999 as result of

the premature recognition of software license fees in the fiscal year ended January 31,

1999. In that period of time, Carreker has indicated in published restatements that it

overstated revenues by 8 .22% and overstated its earnings and earnings per share by

Premature revenue recognition will lead to a roller coaster type of pattern for the stock price and inflationper share over an extended period of time . This type of improper accounting will often lead to substantialoverstatements of revenue and earnings in certain quarters and years, while in other quarters and yearsrevenues and earnings might be less than would have occurred had the company not prematurelyrecognized revenues in prior quarters . This was observed with respect to the improper accounting foundwith respect to Computer Associates in the second half of the 1990s through 2001 and is similar in,, this

case .1 See, for example, the SEC Staff Accounting Bulletin : No. 99 - Maleriali ', Amending 17 CFR. Part 211,dated August 12, 1999 ,

Declaration of Scot I). UIakaM, Ph.D., CPA 5

109 .31% and 114 .29% . These amounts are considered substantial in valuation practice

and by any rule of thumb threshold for materiality ! Had the overstatement of revenues

and earnings been revealed ,, the share price of Carreker would have been substantially

reduced, as occurred on December 10, 2002, as shown in Exhibit B .

9 . W itlh respect to the secondary offering on November 3, 2000, the share price o f

Carreker suspiciously peaked around the time of the secondary offering . As

demonstrated in Exhibit B, had the state of the financial condition of Carreker been

corrected the amount of shareholders equity would have been reduced a significant

amount and the secondary offering price would have been substantially reduced as a

result of the lower shareholders' equity, the loss of credibility and the significant

reduction of earnings in prior periods . As shown in Exhibit C, the decline in Carreker's

share price between the secondary offering on November 3, 2000, and December 10,

2002 cannot be explained by market or industry forces or by alternative causes, The

cumulative abnormal loss (the portion of the loss not explained by market and industry

forces) realized by investors that purchased shares in the secondary offering as of

December 10, 2002, was 68.72% (even giving credit for the offering discount) . Thus,

significant losses are evident and cannot be explained away by alternative causes .

10. Similarly, the revenues and earnings in the, year ended January 31, 2002, wer e

materially inflated by 13 .34% and 33.29%, respectively, as indicated by the restatement s

ultimately provided by Carreker .9 As shown in Exhibit B, the failure of Carreker t o

$ Ibid .Ibid .

Declara tion of Scot D, fakala, Ph.D., CFA 6

continue to maintain the inflated revenues and ear ings in 2001 led to significant share

price declines of, 12.18% associated with the second quarter 2002 earnings

announcement on September 13, 2002; 29.41% associated with the revised guidance for

third quarter 2002 on November 14, 2002 ; and 24 .22% associated with the announcement

of a need to restate prior revenues and earnings on December 10, 2002 . In this sense, the,

true state of Carreker's business was revealed at the end of the proposed Class Period and

led to substantial declines in its relative share price of 57 .29% between September 12 and

December 10, 2002 . Furthermore, losses in value occurred over the following 90 days

after the end of the proposed Class Period .

11 . Exhibit C illustrates the extent of the decline in Carre er's value relative to a

Composite Index (composed of an industry and market index weighted based on the

event study) and an Industry Index . During the period from May 20, 1998 through

December 10, 2002, Carreker's share price was consistently greater than the price

predicted by either the Composite Index or the Industry Index for Carreker ."o

IV, Further Discussion

12. The event study summarized in Exhibit B is based on regression analyses of the

returns generated by Carreker's shares on a daily basis from May 20, 1998 through

December 10, 2003." The event study provided is preliminary . However, it doe s

o The prediction is made by starting with the Carreker's share price 90 days after December 10, 2002, andworking backwards in time adjusting for changes in each of the respective indices .

There are two primary event study methods, the cumulative abnormal return method and the integrate d

Dec1 rration of Scott D. Hakala, Ph .D., CFA 7

indicate that Carreker's share price moved significantly in response to the key events in

this case .

13 . The market model po rtion of the analysis is based on a market index, the Russel l

3000 Index (RAY) and an industry index (SUBINDEX) created based on an equally-

weighted geometric index from the returns of Electronic Data Systems Corporation

(EDS), CIBER Inc . (CBR), DST Systems, Inc . (DST), Computer Horizons Corp .

(CHRZ), Unisys Corporation (CMS), and The Reynolds and Reynolds Company (REY) .

This combination (the "Composite Index") provided the best fit in explaining the market

and industry components of Carreker's returns over the study period . Collectively, the

index could explain 5 .17% of the daily variance in Carreker's stock price returns during

the entire study period.

14 . The regressions summarized in Exhibit B were based on the daily returns i n

natural log transformation format, The event coefficients printed out in Exhibit B are

transformed into percentage terms for ease of reference . The t-statistics reported for the

industry and market indices are from the regression outputs . The market and industry

indices are significant at greater than the 99% confidence level. The t-statistics reported

for the various event dates are based on the standard errors reported from the regression

results in the regression. A t-statistic with an absolute value greater than 1 .00 is

method (also known as the intervention analysis or event parameter method) . The integrated approach ismore reliable and powerful than the cumulative abnormal return method, See, for example, Marais and

Schipper, "Chapter I7A: Event Study Methods: Detecting and Measuring the Security Price Efects ofDisclosures and Interventions," Litigation Services Handbook: The Role of the Financial Expert, 200 5

Cumulative Supplement. The integrated event study approach, especially with a large number of eventscontrolled for in the analysis, is performed over the period of interest and of ter . includes (as controls) the

period one year prior to the Class Period and one year after to Class Period, In this case, the study periodbegins with the initial public offering and concludes one year after the end of the proposed Cass Period .

Declaration of Scott 1_ Hakata , Ph .D., CPA 8

considered mean ingful (more probably than not that an event occurred ), 1 .65 is

considered weakly significant, 1 .96 is considered significant (in the standard sense), 2 .33

is considered highly significant and 3 .00 is considered extremely significant (an outlier) .

1 5 , Exhibit B demonstrates the substantial, immediate reaction to the earnings news

associated with the earnings announcements in the last three months at the end of th e

proposed Class Period, adjusting for the market and industry indices-

16. This is a preliminary event study analysis without the benefit of discovery. I may

perform additional analyses and review discovery . I, therefore, may amend and

supplement my conclusions based on subsequent analyses and discovery .

I declare under penalty of perjury under the laws of the State of Texas and the United

States that the foregoing is true and correct, If called as a witness I could and would

competently testify thereto .

Executed this 31st day of May, 2005, at Dallas, Texas .

X66LL)94~Scott D. Hakala, Ph .D., CFA

„Declaration of Scod D. 'akala, Ph.D., CFA 9

Exhibit 3

Letter from the Committee of Concerned Carreke rEmployees to the Audit Committee of

Carreker 's Board of Directors

Com zteo of C of tern l rreker En.pyees

Septombcr 11, 20

Donald .E.., Lou seChairman of + uIitCena ftwC/O Ockham T htn c3715 Nora ide Pkwy N.W.Atlanta, Get $0.12 7

Janie L. FuckerDirector - Audit Committee7170 Ken f weod Dr.Dufla, TX 75240

ehtard IL LeZ Jr.creator-- ar dk C,mmtftao5445 fi rth l o Lu_Da[taa, TX 75225

Ronald Ow . Steinhar tDirector - Audit +f !aunt e7719 Map1ecroNtapDnUaa, TX 75246

Dear GrAOviuew

The Committee of Cc ► ed Car eker E ploy saprown s e p[o' g who shama h 9antin& CGUM to over the YdMag+ cnt of Carraker Corpare i p .d theoversight ffltctiou of its Board of Threetor .paartic thu4y its Audit C rurnL e. Thepnrp of this latter 18 to maintain a record of Carter` s W nanagement, fadlurcto ennnpty with SEC thaoMosuro require e , i egst sad frauamient rAindact of itsCEO and other o icon of the Cages, sad the Bch of Direaorlis knowledge andcomplicity with these actions .

Over the past .everai ytrst th e m tier have been brought to the aMnthn i ofseveral indi idua1 hoard emtbor (both past awl presently i4erv on the Board)find taKentk i to the 'Kowa as a whole. Through _fnsie ,tan either by fUUng orre iug to rove tipte or otherwise exercise your fiduciary re ptrnsiblttttes € s carryOut inflamed emersight of the Comporny a management, you as Loard members aretompieit, vitd iii sa ete ,natters actively partkipp.te&, t reprehensible conductdowrib below.

This Committee, h you h ad '[ge of counsel on their obligations to disclose tiwseviolations of law t to the SEC, and the Department of Justice; I light of resentle slation by ceng ., We ha b advised t W tho Sarbanes-Oxicy Actpro* is disc1ri ure by employees 1 order to cure sceountabtllty of the enm 'smanagement and board of a iteda a . Indeed, we have boon told ftf d d osuro is, anobl1 ation In order to ntd cot piteit conduct This l er record the d3orktsare ofIlse illegal R and once n ais strongly enaenrag you to act rns,at vely In thed bare of yotir E.duciury x ,eponsibl es to the Company's emptoyaoN and euttidesharehnldea even though you have 11ited to do o In the past

With some amusement but mostly 'Amass t at your audacity, we halleve that theanatollne ement of the €orMidiwt Of . A srperat Governance Cate" 44disclosed by the Compot a pass release dated September di 2002 is mere windowdressing in order for the board and CM of Cancer Corp to invoke the " <. rcni]ir sr i ra anal CEO defense" of uninformed ignorance . . Re rd le of Your*1praaedv . stratq&, the board of to tus' of Carreker are r$s nsthlo forMyesti tii n g and eliminating the sbnse and UC ss1 conduct of the C rnpany'a CEO .Jnl'olrtunotely, believe it higM,y unlikely that yeo are able to 4artT out your

mpokigibtU3ttes t sha oheide given the aurrc confturattion of CarrokcrIs hoardto light, of tc teca t' . the heard tacks ladopend re from management (DennyCarrtWw) in all &cIs ow5 and ovooight concerning nomhietkiu o direct rsappoi tmonts to board mmitt , integrity of accounting and rev ue recognition,and mansg;~ment eummn ssatie y

7ndeod, t vre apparently its suht{a tt l conflicts of inter t . on the board with"' nct-Ln irrvaa4 Yizoj tborn pr& -catLng an"y "XiNAtpanccicrEi i Inn" by the h ird. `T"hh

certainly becomes upporeitt by the long lima ap ainiMOI►t of Denny Carreker's'brother to the Board (J is D . Càrrcker) who beaded the audit committeebeginning 197, and Who Continu to cam much tnfuenee over the auditccnundit&s oversight of the ceutpanyls nsig e t and methods of recognizingrevenue . 'u er t onflict of bttreroxt are found by the long term appointments to thebeard of Donald ILA House (also Chairman of h Auk CanOdte€) and DavidSuss, bath who -hK+e been undisclosed paid consultant o the Company during th siry x rN as board cumbers, Finalfyf for aver 20 yearap Ridtord L Lee (apointed tothe Board in 1994 Cry Dourly Carr °her) lute Also acted as an isetased paidc ar ul# .nt and advisor to the CEO and his family being 8ctLvely Involved in theirestate m.anagem€ t, t q#teo an various trusts heading substantial s area of C rreksrstock and investment advisor to Donny C rr er responsible for the munage nt a tIda Carr lzr Corporation and *ther stock holding, Nopotbt'm Is actively tavo cedi bythe, CEO t roug the appahtment of his sons (Jahn Carr+eker EW Int rn(iouui ;and Iteent Currekar, Mannging Principle) to key manapment positions and theemploy a of refers in. part time-positions, Several of these telatlves to the CEOcollect pay cheeks b~mant ly fmm the Company while falling to k any officebovxrg of at danec or otherwise porforn work for the Company as required by allother omptoyecs . The Beard of Directors have Va s Vely condoned this conduct and

Exhibit 3

Letter from the C ommittee of Concerned CarrekerEmployees to the Audit Committee of

Carreker's Board of Directors

Lames i of Co ennned Carreker Eupkay s -

epto nhcr 17, 2+

Donald i. Rouseirmau of Au4it jox it

CID Oc am Teehnakgp%7U; N th ide Pi N.W.Atiogt GA 30,427

rtes L. FischerDirector - Auk CommitteeI V70 Kendallwt)ad Dr.,atlas, TX 7524

i rd R. Lee Jr.Th to'- /audit Commtttw5445 Cazum lewd Li .Da h s TX 75=5

Ronald C. SwInha -tDirector - Audit Ce mi tten'7719 Maplerro t T'.Dallas, TX. 7524

Dear Geatt[ aan;

The Committee tkf C ar oe ed Carreket twployeas spc .4mt$ em key g who sharexObSt ntiaJ ea eern over the manago font of Carrokor Cur sus a a*.d theo might function of its Board of Ti etorF .partieularly,fte Audit Corn rn tteo lbkpurpwo of thI5 lottcr is to maintain a record of Corrcker e x P .nagewent faliu nto comply with . SEC disclosure req i re nts rat d frauil k # onduet of itsCEO and other ut1icer~ of e Company, and tlf Boa A- of Dir erla knowledge andeti npU y wig, Most:a At o ,

Over t ho past everat y r, these Matters have been brought to # a n sn ofsa- crab itdivideal board tm (both past and pre t1ry SerAft 0 the-Board)nt.d es eel oly to the Th rjriJ as .e wkole. Through LILa-d-On-, either %9kk9 orraft sing invoptipto or of rwise exere +e ) O1r fiduciary r"p1r asibill to carryout informed oversight of the Gompooy management, you as Boars inemheni arefie pfici , and in same rautterA actively par atd, the reprvhonel a conductdpscTib, below.

This C'*mmittoe has sought advise of e n nl on Choir obligattous to z cianc th oveoLatlans Of Liw two the EC 11"d the Dep rtm zt of s%atloo in light of r' tlegislation Cengr . We have been advised that t ht, arbanes-Oxley Actpro is disciu by employees h. order to €r accountability of o cnr"paoy'smanAger c tt and board of dare •or:&. it teed, we have boon told that dis l ure is anobligation In e er to avoid complicit conduct, Thh liar record t e d1sc ware tot"then lil a[ acts and erneo again strongly ane ag you to act a uia ticWy in thedhichorge ofyour fiduciary ponsihl( ca to the Company's emnpl ccs ooxd toftWeKharehul, ,c even though you h4v 1Itk c to do so Its t he port

With some amusement but rn*stly 'ants. ,sit at your ovdad ty, we believe that theanotouncoment of the faemsWuo of . a Crporatp Gave al ce Comm tom" odioo oscd by the Company's pros release dated September 4, 2002 b mere wirndowc rettsing in order for the board and CRC) of Carer Corp . to L,va the "Etronter ns ' and CEO "t e" of uninformed ,osranoo, Vxgardloa of your

'" roa ve' , the beard of direv ' of Carr er are resuahlc forinv ti t ig And eeimhiat g the abuses and U legal conduct of the Company's CFO.Cufortmattely,wo 9bek leve It kigi1y mt h ly th you are able to earn out yourl pousibW e to ibarc o$cm' given the aurr a configuration of Cer cer s boardto 13 at of the f'trt that the bomb Wks independeasm from managerneat JennyC 'rc x) to all d lefens .and oversight concerning nomix'.atitrn 4reetorsappoit,t nts to board VOMMjtkes Integrity of accowi hug and revenue recognition,and nsgrwmnt cOOa ftiOI*

Tndcoi3, there spa tr sntly c iSts subsiarithil Conflicts of ii ros . on the ou d withawuaerriri 1rvx&% 1 Astomberi prrwatW of "9%kd,*rc-cUni aeflaszt" by the heard . I% h

,certainly becomes appprent by the long lima appal ffiU It of Dent Cnra'ckor',p

tot ior to the Board (Jn'nea D, carreker) who beaded the credit eamtnitteebeginning 19978 and who continues to cater much JafWrbce over the auditco s utttae's € vcrmight of the company's maasg at and method i of recognizingrevenue. Further conflict of ,tech s found by the long term appo# t arts to theboard of Donald L . Home (ohs C l as of t ho Audit Comnttteo) a nd Daum. K.Sias, both who -have been nudlictosed paid n uRaac or tMO Company dining t heiryears as board members. Fin idly, for over 20 yam, Rl and ,. , ec (eppointoI tothe ward In 19M key Denny Ca r) has also acted as an andhi osed paidco a nt and advisor to the CW and his fames Wag actively t olvod in mfrestate Aaye cnt, i tee an vartn is tru Ieakifng substantial shares at Carr eke rstack and in tnica€t advisor to Denny Canker ponalble for the management ofhis Cor i er Corporation and other stock laMhigs. 1 epm sm is actively ia'voked bythe CEO laugh the oopoiU ut of Ks :sans (John Carreker, .'P In to ate al ;and lircut Cnr , a car, Managing 'PE cIplc to key management posftio and t bbvmployn®ut of relatives In part time-position%, Several of these reietlves to the CEOcollect pay cbec t bA- iontbiy from the Company while foiling to keep aq citieshour of attendance or of eewise perform work for the Company as rsgn~re4'by allother cinptnyccc . The tarsi of"1 {i eetors have pamlet y condoned this conduct and

fnirhed tt properly ropaar aunt ftkcts of Interest and nepothm to the SEC usroq 4 d .

The Company's CEO has eo ittenily hooted the Company an bio own "piggyI rn 1 ' at the tx enoo of ernpiny s uted iaroiAderLL The fofiowhv% is but asample of those Illegal nets through future to disci or frrudu vet ear d' t unitoboe of power carried out by Denny Carr er:

Mi ppr i4on of 'hosts ~» {a) weekly, & I y Carreker rt es' th tondof [':nmptany dof rg h ersi€ from Roxanne, a ca purate countingboek'{ per for the Company and personal a+ to y to Denny Carreker.Tee pay nemts of s uha represent tamp flSottun to Mr. Cam and he hasnever dhh xod it to regutnto rs as suia or other cr ► po n*htn even thoughrequired to do so. Mr. Carrmkcr required nutty pioyaes to reduce theirsalaries in 2001 and 2082 bee we. of deefimng corporate rovenaC in order toret ee ffip othig eMWnRM ' oven dhekuot in the mpany xy Report€ e roduotion of .h Aulrn when In 1Ot be was rwelving pets vodlselogWsash pymeet (Ii) el o r. r°roker hay taken his w'fe and other familymembers on lavish trigs to many pe of Europe and Axis unifier theflreten e . of businm arging the enter pg a off to the Company ucorporate t o finon trnvet, Including air fare, menh aid hotel pens for 3w1fc Connie eo in fact no bizottax was a r du d. or Rattlye4mtcmpW0d for the b oM of t Company, V1tiua France and priv+yacht are oat some of the oan-hnnin aro use used by Mr. C# er and hisWife At Company a ponce, Further, time Company has rep ally paidthauean4s of dollars for Denny .t .s rrCher a ik rpituaev Wori H' dccOr5torcowiulting f and Graff wont`s fees p onnh mg constmation work at hisborne in Highland Park at the demand and direction of his wife, Connie .Again, t le was not sdis+ iosed us co tpensation•to Mr, C'axrcktr,as 'sec uirvd ;(e Mr. carrel er has required the Company, pay thorn ids of dotba for hisprie to club membership fees. with the Untiveraity Club and O 'etroieuClub but falls to diseloo4 this to golalorm even thought be uses themernembershi'pa for person entertainment.

Erod-Owl n a aus art -•- Mr. Car kerr and ids CFO ,Teary Goge, have udulently reeognlzed revenue from company businessand c o l ds which oy know Zvi,)fits GAAr rules and rspa e• snitcor orate prom and corporate Ouck value with the Went to 1asdi rv ton. This has been eouducted in runny foms -» bac thug contmttclaiming mim ue from of ntracte not yet s €ed by the elrt in the rapmqiagperiod r.k h nod . id *ho Cranust .iI a arrtxsouaarar ~us# AF'` nig"M hw i2w.n when tinSuth contract ba been idgnmtl y . the client through p nature pressrete s; I ttcrtt6nna1Jy overceti atihg fhe Percent ofof 90++am contneb in order to re iulze revenue ; oirumtating consultingfees when the client spates the value at" consulting aorrvtt received or thecamupletkan of thorn wvlres. Some of the contra include First Star, Clare:Bank, First Virgimin (eve .ue suhrnae ent), Key Sank .< u twsro

fnstaNton) FW BOA= (ri* m age nt) and Mef n t'C (Mowxro)Through ft b O ou (EVP for ' ettug) and Dounjr Carraker., employeeshave been tueoa ra o or intimid#W (through lass of loy cn1 to Ito and,masirvpr t to auditors the, erase status of these eontrc as they rotate toGAP llttrpretat n and applicHtI b. . Manny em l resji have 3nfonn d theCompany's audis oom i t of these 1' at act* it, ar nt y r6ulting in noaction or m v guflon beesw a of the I k of h dope"ence maintained there .U1 + Loa4 i g Chip MipbIL - Denny rroker- has gr+ xiuvoro1 1 ra l + wi a t first seethtg approval from the Board' s

rape *eaU n committee. They Wade -A $50, loan to Bob O15utit (EVP)and several Cwmtl7 C: ub memborskip s paid by the Ca m €or Mr,O bon, Bit Caber,. and John m1 '- These limns and 1nbYi"4ier;6AV -werount ro rr: as ►pcnsntmm for them ax ploycee .L gor .'' r ins . Mr. Et rr kor'n sea Brant iis6 openly b g to eo pan 'emp loyees of Bait profits from inaider tmding of Ca rreker atoeh o$ ConnieCarraknr, the CEO's wife frequenfly shares ai a (horam1€} Inkbdrinfor► atOn'5t Moods In hur Wvedm utt club halving Carrektr stockA pain, she 1 openly bre ed to exup1ey of her gagtts . In €eet, the i e rpfor G, eon htr (S - Investor Relu unm) to violate imolde r tradi lawsWa' the apparent ease and una 'uM ability with kh Mr. C kerlsfamily vlolatw scuriti taw heady, Jot Carne r hay establish off-shore bank sexaultM in the Grand cmcn bands to de doteeflou from theSEC of utilizing insider itt iwtttia. of die Cnntpany to Illegal tradeCer '1 S ic.

Tt Is of furtaor interest to employees of t1W Company that Mr. Cur ker has*nnouaced that ho will certify the completeness and accuracy of the fiuttn ldisel store fiiinP and1 .ma nia made evs' ble to the love sting public as required ofall public, company clOa thy4wga recent 1e 1on . ztainly by doh so, Mr .Game r is once api x+loiottin s urifles law but with one Additional caw at - thatis that . Board of 1) thus, particularly the Audit Cwnmittco, is comp at withMr. Cuter in ' is a htg and viulatin SEC regulations . ,

Sired:t eofC eermd C"arreker gramptoyees

Mr. Harold R. LOW Jr. ec. 9EC cmWint rater"curly and ltehenge C misiittn 450 Pita St, N.W,EnforcementDivision Waste can, D C.Burnett Plaza, Wte 130lO 2OS4J#0l Cherry St., Unit 19Fort worth, T 7610Z

Vllgqx

Exhibit AScott D. I akala, Ph .D., CFA

Employment History

1992 - Jan 1998, March 1998 to Present CBIZ Valuation Group, Inc . (formerly BusinessValuation Services), Dallas, Texa s

Director/Principal. As a financial economist and financial analyst, Dr . Hakala brings to the firm extensivepractical knowledge of finance, economics and statistics . His expertise includes : corporate finance,restructuring and cost of capital ; the valuation of securities and business interests (transactions,mergers, acquisitions, fairness opinions) ; the valuation of intangible assets (patents, trademarks) ;analysis of publicly traded securities (insider trading studies, trading analyses, event analyses,materiality, damages in securities litigation) ; economic loss analyses (commercial litigation) ; wage andcompensation determination (reasonable compensation studies, Lost personal income, wrongfultermination) ; transfer pricing ; derivative securities (options pricing and valuation) ; and antitrust andindustry structure, strategic pricing, marketing and cost allocation analyses .

Jan 1998 -- March 1998 Laser BioTfterapy, Inc ., Dallas, Texas

Interim President . Dr . Hakala served as the Chief Executive Officer of Laser BioTherapy, inc . Hisdecision-making authority involving issues of marketing, employment, negotiating with investors, pricing,product planning, financial planning and all other corporate decisions .

1988 - 1992 Dept, of Economics, Southern Methodist University, Dallas, Texas

Assistant Professor. Dr. Hakala taught graduate and undergraduate courses in macroeconomics,monetarylfinancial economics, financial institution regulation and international financial management .He supervised dissertations on international money, commodity options and forward markets, andforeign exchange rates . His research interests included monetary policy, the causes of fluctuations inemployment and output, capital stock estimation, aggregate production theory, foreign currencymovements (futures, options and forward contracts), inflation, interest rate movements and the termstructure of interest rates, asset pricing and consumption .

'1983 - 1988 Dept, of Economics, University of Minnesota , Minneapolis, Minnesot a

Lecturer. Dr . Hakala designed course materials and taught large classes in macroeconomics andinternational economics . He served on hiring committees and evaluated other instructors .

Formal Education

Doctor of Philosophy, Economics - 1989University of Minnesota , Minneapolis, MinnesotaGraduate School Fellowship(Graduateldissertation advisor Edward Prescott was awarded the Nobel Prize in Economics in 2004.)

Bachelor of Arts, Economics -1983Minor in Business Administration and Pre-Law EmphasisUniversity of Minnesota, Duluth, Minnesot aGraduated Summa Cum Laud eWhiteside Scholarship, full tuition and expense s

Scott D, Hakala , Ph .D., CFA Page 1

Honors and Awards

• Distinguished Instructor, Department of Economics, University of Minnesota, 1987-1988

Earhart Foundation Award, Department of Economics,, University of Minnesota, 1985

Graduate School Fellowship, 1983 and 198 4

• Cecil H. Meyers Outstanding Economics Student Award, 1982

Perfect Scores on Quantitative Analysis and Verbal Analysis sections of Graduate Record Examination(GRE), 198 2

• Alice Touhy Tweed Award, High School Valedictorian, 197 9

• Lee Krough Award (outstanding character), American Legion's Minnesota Boy's State, 1978, elected Lt .Governor and invited to represent state at other event s

• Centrum Award, 1979 (for outstanding character and contributions )

Professional Association s

• CFA Charter, The Institute of Chartered Financial Analysts , completed all tests and requirements for aCFA designation

b Member, American Economic Association

• Member, American Finance Association

Publications

• "Estimating and Applying Economic Value Added," Chapter 13E - Financial Valuation : Businesses andBusiness Interests - 1998 Update, Publisher : Warren, Gorham & Lamon t

"Valuation for Smaller Capitalization Companies' (with Dr . Mukesh Ba)aj), Chapter 12A - FinancialValuation: Businesses and Business Interests - 1998 Update. Publisher : Warren , Gorham & Lamont,

• "Analysis and Valuation of Distressed Equity Securities" (with Mr. M. Travis Keath), Chapter 13F -Financial Valuation: Businesses and Business Interests - 1999 Update. Publisher: Warren, Gorham &Lamont.

. "Analysis and Valuation of Distressed Equity Securities" (with Mr . M. Travis Keath), Valuation Strategies,September/October 1999, pp . 24-34. Publisher : Warren, Gorham & Lamont .

• Contributing author in The Art of MBA Integration: A Guide to Merging Resources, Processes andResponsibilities. October 1997 . Publisher : McGraw-Hill . Contributed on valuation of tangible andintangible assets (patents, trade secrets, customers, goodwill, employment agreements, non-competes,etc .), allocation of purchase price issues, accounting treatment of acquisitions, international valuationand transfer pricing and general valuation and due diligence issues. Assisted editor in commenting onand editing first half of text .

• Provided live and taped interviews pertaining to economic issues for television, including lengthyinterviews for CNN (July 1990), WFAA-TV (July 1990 ; July 1991 ; March 1992), and radio (Internet radioon November 9, 1999, discussing Microsoft anti-trust issues) .

ScottD. Hakata, Ph.D., CFA Page 2

Lectures Presented

Dr. Hakala is a frequent public speaker on valuation, economics, ethics, and monetary policy- Examptes include :

• "Valuation of Options for Litigation Purposes" -Nevi York University CLE Presentation-October 2000

a "Valuation Issues-Family Limited Partnerships" - Professional Financial Service, LP's Family LimitedPartnership Alert and Update ; Dallas/Fort Worth - February 2000

• "PPOs for Sale : the Valuation of Managed Care Entities" - Caesars Palace ; Las Vegas, Nevada -September 1992

m 'Equilibria in Continuous-Time Models of Money" - refereed paper presented to the Sixth WorldCongress of the Econometric Society ; Barcelona, Spain - August 199 0

"The Use and Holding of Currency" - Feature Presentation - Western Economic Association Meeting ;San Diego, California - July 1990

• "Values and Economics" -Dal€as Philosophical Forum ; Da€€as, Texas - March 199 0

'Ethics and the Role of Government" - ARCO Oil and Gas Research Center ; Piano, Texas - October1989

"Continuous-Time Models of Money: Policy Implications' - paper presented to the Division of Researchand Statistics of the Board of Governors of the Federal Reserve ; Washington, DC - January 198 8

Expert Witness/Litigation Suppor t

Dr . Hakala has undertaken various assignments involving litigation support and has testified as an expertwitness . He has been qualified as an expert and has testified in both U .S . District Court and in U .S . Tax Court .The following is a list of testimony on record:

David Graben and Frank Strickler v. Western Reserve Life Assurance Company of Ohio; lnterseeurities,Inc. and Timothy Hutton ; State District Court, 271$' Judicial District , Wise County , Texas ; depositiontestimony March 29, 2005 ; trial testimony May 18 , 2405; testified as to economic losses and prudentinvestment management involving the management of investment portfolios for two retired individuals .

Wechsler & Co., Inc . v . Commissioner of Internal Revenue, United States Tax Court (Docket No . 9667-04) ; trial testimony March 24, 2005; prepared a written report and rebuttal report as testimony in amatter involving the determination of the reasonable compensation of a Chief Executive Officer of abroker-dealer specializing in trading convertible debt securities as a deal er and on its own account .

Stephen T. Davis, Individually and as Owner of Lone Star Phones v. Dobson Cellular Systems Inc . d/b/aCellularOne and Dobson Communications Corporation and Kelly Lane ; In the United States DistrictCourt for the Northern District of Texas , Dallas Division (Case No . 3-04-CV-0465 B); depositiontestimony February 25, 2005 ; testified as to lost income associated with allegations of a breach ofcontract and wrongful termination of a dealership agreement .

in re ; RE Corporation Securities Litigation ; In the United States District Court, District of Connecticut(Master File No . 3 :0t3CV705(CFD))) ; deposition testimony February 23, 2005; testified as to materiality,inflation per share and aggregate damages in a class action securities case involving allegations ofinadequate and misleading disclosures relating to a secondary offering of tracking shares .

Scott D. Hakela , Ph,D ., CFA Page 3

• Alpine International Corp. v. Texas Health Resources; State District Court, 101 Judicial District, DallasCounty, Texas; deposition testimony February 21, 2005 ; testified as to lost profits associated with abreach of a non-solicitation provision in a contract .

• Michael Gloster and Victoria Gloster, t/a Gloster Marketing v . Relios, Inc., H. William Pollack, flf, andCarolyn Pollack ; In the United States District Court, Eastern District of Pennsylvania (Cause No . 02-CV-

7140) ; deposition testimony February 11, 2005 ; testified as to issues of valuation and profits involvingclaims of trademark and copyright infringement .

• in re: Clarent Corporation Securities Litigation; In the United States District Court, Northern District ofCalifornia, San Francisco Division (Master File No . C-0103361CRB(JCS)) ; deposition testimony January11, 2005 ; trial testimony January 31 and February 9, 2005 ; testified as to materiality, inflation per shareand aggregate damages in a class action securities case involving allegations of accounting fraudagainst former officers of the company and the accounting firm for its audit .

• In re: DOE, Inc . Securities Litigation; In the United States District Court, Western District of Pennsylvania(Master File No . 01- 1851) ; deposition testimony November 23, 2004 ; testified as to materiality, inflationper share and aggregate damages in a class action securities case .

• In re: Worldcom, Inc, ERISA Securities Litigation ; In the United States District Court, Southern District ofNew York (Master File No . 02 Civ . 4816 (DLC)) ; deposition testimony November 15, 2004 ; testified as todiscounts related to block size and information effects associated with the possible sale of shares ofWorldcom and MCI tracking stock in the first half of the 2002 .

• Adele Brody, et at., on behalf of themselves and all others similarly situated, vs. Peter S . Hellman, et al .;District Court, City and County of Denver, State of Colorado ; deposition testimony September 3, 2004,and May 27, 2005 ; hearing testimony November 30, 2004 ; testified as to the ability to measure damagesto a class of shareholders via a plan of allocation .

• in re. Broadcom Corp. Securities Litigation,, In the United States District Court, Central District ofCalifornia, Southern Division (No . SACV 01-275 GL T (MLGx)) ; deposition testimony August 27 and 29,September 10, December 1 and 2, 2004, and January 21, 2005 ; testimony during tearing April 21 andMay 25, 2005; testified as to materiality, valuation of customer contracts, valuation, inflation per shareand aggregate damages in a securities class action and damages in a related private action .

• Burt L. Schmidt, Individually and d/b/a Diamond S Trucking vs . Navistar Financial Corporation; StateDistrict Court, Hamilton County, Texas ; deposition testimony July 28, 2004 ; trial testimony August 30,2004; testified in rebuttal as to claims of lost profits associated with the repossession of tractor trucks bythe defendant in 2001 .

• Basic Management Inc, et al., vs. United States of America, et at . ; In the United States District Court,District of Nevada (No . CV-S-02-0884-RCJ-(RJJ)); deposition testimony July 22 and 23, 2004 ; testifiedin rebuttal as to appropriate assumptions and methods (including discount rates and appreciation rates)for a real estate development company in Nevada .

• In re. JTS Corporation, Suzanne L . Decker, Trustee, vs. Roger W. Johnson, et a! . ; In the United StatesBankruptcy Court, Northern District of California, (No . 98-59752 MM; A.P. No. 00-5423) ; depositiontestimony July 15, 2004; trial testimony April 11, 2005 ; testified in rebuttal to trustee's expert as toeconomic losses to creditors and reasonable value associated with certain business decisions .

• Randy S. Myers, Individually and on Behalf of all others Similarly Situated, vs . Progressive Concepts,inc . d/b/a Hawk Electronics; 352nd Judicial District, Tarrant County, Texas (Cause No . 352-201156-03) ;deposition testimony July 2, 2004 ; testified as to the appropriate measure of dam ages involvingallegations of improper billing involving cell phone services .

Scott D . Hakala , Ph .D., CFA Page 4

• OnSite Technology LLC vs. Duratherm, Inc. at al. ; In the United States District Court for the SouthernDistrict of Texas (Civil Action No . H-02-2624) ; trial testimony June 10, 2004 ; testified as to lost profitsand reasonable royalties as a result of allegations of patent infringement .

A TS Telecommunications Systems, Inc. and ATS Liquidating, Inc . €/kla Advanced TelecommunicationsSystems, Inc ., by and through its Pion Agent H. Malcolm Lovett, Jr. vs. Philip R . Lacerte and Four LCTrust vs . Stan M. Gorman, Sr., and B . Scott Pool; 113°1' Judicial District, Harris County, Texas (CauseNo. 2001-00997) ; deposition testimony May 25, 2004 ; testified as to reasonable and customary termsand consideration for the provision of performance guarantees, reasonable start-up and operatingexpenses, and issues of fraud and breach of fiduciary duty .

• ISG State Operations, Inc . vs . National Heritage Insurance Company, Inc . ; 250th Judicial District, TravisCounty, Texas (Cause No . 95-11014) ; deposition testimony May 11, 2004 ; trial testimony April 25, 2005 ;testified as to appropriate measures for calculation lost profits in a breach of contract claim involvingdata processing .

Xperex Corporation, at al. vs. Viasystems Technologies Corp ., LLC; Court of Chancery, New CastleCounty, State of Delaware (Civil No . 20582-NC); deposition testimony April 23, 2004 ; testified as to thevaluation of intangible assets and business related to allegations of fraudulent conveyance and breachof fiduciary duty to creditors .

• Richard Marcoux, on behalf of himself and all others similarly situated. v. Billy D. Prim, Andrew J.Fiiipowski, et al. ; County of Forsyth, State of North Carolina (No . 04 CvS 920); deposition testimony April12, 2004; testified as to errors in a fairness opinion issued in a proposed acquisition of a publiccompany .

Houston Saba, L.P. vs . Nick Hernandez and Boyd Page Inc . d/bfa Boyd Page & Associates ; 280thJudicial District, Harris County, Texas (Cause No . 2003-07457) ; deposition testimony March 31, 2004 ;testified as lost profits associated with disruption of a restaurant due to street repairs and construction .

m Avtoland of New Jersey, inc., at al, v. Commissioner of Internal Revenue; U .S . Tax Court (Docketnumber 12639-02) ; testified in trial February 19, 2004 ; testified as to issues related to the reasonablecompensation of executives in the auto retail business .

• Soils Control International, Inc. vs. Martin Marietta Magnesia Specialties, L.L .C. and Midwest IndustrialSupply, Inc; United States Court, District of Massachusetts (Civil Action No . A-03-CA-531 H) ; deposition

testimony January 30, 20x4 ; testified as to lost profits in a dispute relating to allegations of deceptivetrade practices .

• In re Raytheon Company Securities Litigation ; United States Court, District of Massachusetts (CivilAction No . 99-12142 (PBS)) ; deposition testimony January 27, 2004 ; testimony in hearings May 3 and 7,2004; testified as to materiality, causation, inflation per share and aggregate damages .

• In re : AT&T Corp Securities Litigation; United States District Court of New Jersey (MDL No, 1399, CivilAction No . 01-1883 (GEB)) ; Consolidation Class Action on Behalf of the Purchasers of AT&T WirelessTracking Stock Shares between April 27 and May 1, 2000 ; deposition testimony January 16, 2004 ;testified as to materiality, causation, inflation per share and aggregate damages .

m Robert Rodgers vs. Johnson Health Tech. Co., Ltd., Epix, Inc, dlb/a Vision Fitness, et al. . ; United StatesDistrict Court for the Western District of Texas, Austin Division (Civil Action No . A 02 CA 731 SS) ;deposition testimony January 7, 2004 ; testified as to reasonable royalties and damages for allegedpatent infringement.

Scott C . Hakala, Ph .D ., CFA Page 5

In re. Xcelera .Com Securities Litigation. ; United States District Court, District of Massachusetts, Boston,Massachusetts (Civil Action No . 00- CV-11649(RU12)) ; hearing testimony November 20 and 21, 2003 ;testified as to materiality, reliance and market efficiency in a hearing on class certification .

• C. F. Jordan, L .P . v. Argosy Gaming Company, Laneco Construction Systems, and Louisiana Glass,AAA Arbitration (Case Number 71 110 01059 01) ; deposition testimony November 18, 2003 ; testifiedin rebuttal to allegations of lost income from hotel construction and remediation activities .

• ELIZABETH M . KURECKA, individually and as Representative of the estate of Edward Kurecka,Deceased, MICHAEL KURECKA, TIM KURECKA, and MELANIE KURECKA POWELL v . DAVID H.AMMONS, M .D., GARY R . GODSIN, M.D ., and MICHAEL PETTIBON, M.£7. ; 342°d Judicial District,Tarrant County, Texas ; deposition testimony September 2003 ; testified as to the loss of income to thesurvivors in a wrongful death case .

Betsy Gross v. David Halbert and AdvancePCS ; 352ntl Judicial District, Tarrant County, Texas (CauseNo . 352-196123-02) ; deposition testimony August 26, 2003 ; testified at trial November 10 and 11, 2004 ;testified as to the valuation of executive stock options.

• Michael Aldridge, individually and on Behalf of All Other Similarly Situated, vs . A. T. Cross Corporation ;Bradford R, Boss; Russell A . Boss,- et at ; United States District Court, District of Rhode Island (C .A, No.00-203 (ML)) ; deposition testimony August 19, 2003 ; testified as to materiality, causation and damagesin a securities class action .

in Re Broadcom Corp . Securities Litigation; United States District Court, Central District of California,Southern Division (Master File No . SACV 01-275 GLT (ex)) ; deposition testimony July 29 and 30,2003; testified as to the market efficiency of the trading of Broadcom shares and aggregate damagescalculations relating to class certification.

J. Bryan Pickens vs . John T. Pickens, J . Michael liner, Michael K, Pickens, C. Robed Milner, Jr.,Pickens Financial Group, L .L.C., Pickens Resource Corp„ and Pickens, Ltd. ; 298th Judicial District,Dallas County, Texas (Cause No . 02-01105) ; deposition testimony July 11, 2003 ; testified as to theoverall financial performance of certain companies and the fairness (or benefits to the plaintiff) of certaintransactions involving the defendant companies and affiliated trusts .

• In re Arthur Franklin Tyler, Jr ., Debtor, Arthur Franklin Tyler, Jr., V . Tyweli Manufacturing Corporation,,U.S. Bankruptcy Court, Northern District of Texas, Dallas Division (Case No, 01-80343-SAF-13 ;Adversary No . 02-3530) ; trial testimony July 1, 2003 ; testified as to net asset value under variousassumptions in an involuntary shareholder foreclosurefshareholder oppression dispute .

FFP Partners, L . P. v. Jack J. Ceccarelli, Restructure Petroleum Marketing Services, Inc . f/k/a E-Z ServePetroleum Marketing Company and Environmental Corporation of America, Inc . ; American ArbitrationAssociation (Case No . 71-Y-198-00167-02) : hearing testimony May 19, 2003 ; testified as to the value ofgas-only operations related to allegations of breach of contract, breach of fiduciary duty and theft ofbusiness opportunities .

a RadioShack Corporation, and TE Electronics, L .P. vs . Fried, Frank, Harris, Shriver & Jacobson andHarvey Pitt; United States District Court, Northern District of Texas, Ft . Worth Division (Civil Action No .4:02-CV-0639-TV) ; deposition testimony May 9, 2003; testified as to causation and damages as a resultof allegations of legal malpractice .

• Printwrap, Inc. v. Printwrap Sales, Inc. and Maxine Ammon ; 134th Judicial District, Dallas County, Texas(Cause No . 02-5064-G); deposition testimony May 6, 2003 ; testified as to the valuation and economiclosses of a purchase of a specialty printing business as a result of allegations of materialmisrepresentations on the part of the seller.

Scott D . Hakala , Ph .D., CFA Page 6

• In re Theragenics Corp . Securities Litigation; United States District Court, Northern District of Georgia,Atlanta Division (Civil Action No . 1 ;99-CV-141-T*T); deposition testimony April 2, 2003, and August 14,2003; testified as to materiality, causation, inflation per share and damages as a result of allegations ofsecurities fraud (violations of the Securities Exchange Act of 1934, Rule 10b-5) .

• Teleplus, Inc., v. Avantel, S .A . ; United States District Court, Western District of Texas, San AntonioDivision (Civil No . SA-98-CA-0849 FB) ; deposition testimony March 26, 2003 ; trial testimony September26, 26 and 29, 2003; testified as to the valuation of a reseller and marketer of long-distance telephoneservices (primarily for domestic and international service in Mexico) .

• Russell Grigsby vs. ProTrader Group Management, L.L.C,, et al. ; American Arbitration Association(Cause No . 70-180-00648-02) ; deposition testimony March 7, 2003 ; arbitration hearing testimonyOctober 17 and November 3, 2003 ; testified in a fraud and shareholder oppression case as to the fairvalue of a brokerage firm with specialization in day trading .

Donald P. Williams vs . Peter O. Holliday, Iii, MD, and Open MRl of Decatur, Circuit Court of MorganCounty, Alabama (Case Number : CV-00-974) ; testified at trial March 4, 2003 ; testified as to the value ofloan guarantees and the value of a business operating an MRI in a shareholder oppression lawsuit .

• Menard, inc . v. Commissioner of Internal Revenue ; U .S . Tax Court ; testified in trial February 27, 2003 ;testified as to the compensation of executives in comparable and guideline companies and the propervaluation of incentive compensation benefits .

• Richard Strauss, Sovereign Texas Homes, ltd., et a!. vs. Wallace Sanders & Company, et al.; 191stJudicial District, Dallas County, Texas (Cause No . 02-2562-J) ; deposition testimony February 14 and 20,2003; testified as to materiality, causation, and damages as a result of allegations of improperaccounting ,

• Paul Dzera, Philip J, Gund and Stephen Marotta v. Zolfo Cooper, L.L.C. ; American ArbitrationAssociation (Arbitration no, 18Y180143301), Newark, New Jersey ; hearing testimony February 11,2003; testified as to measures of economic loss associated with claims brought by defendant .

• In re V/S!ONAMERICA, INC. SECURITIES LITIGATION; United States District Court, Middle District ofTennessee, Nashville Division (Master File No . 3-00-0279) ; deposition testimony December 12, 2002;testified as to materiality, causation, inflation per share and damages as a result of allegations ofsecurities fraud involving accounting misstatements (violations of the Securities Exchange Act of 1934,Rule 10b-5)-

• In re National Golf Properties, Inc. Shareholder ,Litigation; (Masseo Investment Partners, Ltd., AnneMarie Rouleau, Thomas Feiman, IRA and Robert Lewis, On Behalf of Themselves and All OthersSimilarly Situated, vs . James M. Stanich, et al . ; Superior Court of the State of California, County of LosAngeles (Lead Case No . BC268215) ; deposition testimony November 22, 2002 ; testified as to fairnessand problems with a fairness opinion involving a proposed acquisition of the public REIT, includingprocess, disclosure and allocations of proceeds problems .

• Ralph R. Unstead, Jr., On behalf of Himself and All Other Similarly Situated, v . lnfelect Communications,Inc,, et al. ; U .S . District Court for the Northern District of Texas, Dallas Division (No . 3 .99-CV-2604-M) ;deposition testimony October 31, 2002 ; testified as to materiality, causation and damages in a classaction securities case .

• Physicians Resource Group, Inc. and EyeCorp, Inc,,, vs . Dr. David Meyer, et a! ., ; U.S . BankruptcyCourt, Northern District of Texas, Dallas Division ; deposition testimony October 22, 2002 ; trial testimonyFebruary 7, 2002 ; testified as to issues of solvency and reasonably equivalent damages as a result ofcertain transactions between the defendants and the plaintiffs prior to bankruptcy .

Scott D . Hakala, Ph .D., CFA Page 7

• Maximicer, L .L.C., vs. PepsiCo, Inc. ; U.S. District Court for the Eastern District of Texas, MarshallDivision (No . 2.01-CV-132(tjw)) ; deposition testimony October 21, 2002 ; trial testimony December 10,2002; testified as to damages arising from claims of commercial defamation and other causes .

• HALCYON INVESTMENTS INC ., flkla B .A .S .S .,Inc., at al. . vs B.A.S.S ., LLC, f1wa LIVEWELLACQUISITION,LLC, B.A.S .S . (IP) ., at al. ; AAA Arbitration (File No . 30 E 181 00434 02); depositiontestimony October 10, 2002; testified as to due diligence, disclosures and economic damages estimatesinvolving an agreement to sell a business between the parties (subject to confidentiality agreement) .

• Jerry Krim, at al, v. pcOrder.corn, Inc., at at, ; U.S . District Court for the Western District of Texas, AustinDivision (Master File No . A:00-CA-77&-SS) ; hearing testimony September 20, 2002; testified in a classcertification hearing on the trading of shares and source of shares purchased by proposed lead plaintiffs .

• APA EXCELSIOR Ill L.P., APA EXCELSIOR III OFFSHORE, L .P.,APA/FOSTIN PENNSYLVANIAVENTURE CAPITAL FUND, CIN VENTURE NOMINEES LIMITED, STUARTA. EPSTEIN and DAVIDEPSTEIN, v. PREMIERE TECHNOLOGIES, INC.,BOLAND T. JONES, PATRICK G .JONES, GEORGEW, BAKER, SR ., and RAYMOND H. PIRTLE, JR; U .S . District Court for the Northern District of Georgia(Civil Action No . 1 :99-CV-1377-JOF); deposition testimony September 4, 2002 ; testified as to themateriality of certain representations and damages in a securities case .

• Microtune, L_ F . v. Broadcom Corporation ; U .S . District Court for the Eastern District of Texas, ShermanDivision (Civil Action No. 4:01-CV-023) ; deposition testimony August 29, 2002 ; testified as to thereasonable royalty in a patent infringement case .

• John F. Havens, On Behalf of Himself and All Others Similarly Situated, vs. James L. Pate, at al. ; andHoward Lasker, On Behalf of Himself and All Others Similarly Situated, vs. James L. Pate, at al., 295`,Judicial Dstrict, Harris County, Texas (Cause No . 2002.16085) ; deposition testimony July 15, 2002 ;hearing testimony July 18, 2002; testified as to the materiality of certain information omitted from a proxyto Pennzoil-Quaker State shareholders, issues with respect to the fairness opinion analysis byPennzoil's financial advisor, the determination of fairness and issues with respect to mergers andacquisitions .

• Lawrence D. Poliner, M.D. v. Texas Health Systems, at at. ; U .S . District Court, Northern District ofTexas, Dallas Division (Civil Action No . 3 :OOCV1007-P), deposition testimony May 20, 2002 ; testified asto certain anti-competitive issues involving a specialist medical practice .

• In re: Chartwell Health Care, Inc. ; John H. Litzlar, Chapter 7 Trustee, vs . Irving D. Boyes, at a1. ; U .S .Bankruptcy Court, Northern District of Texas, Dallas Division (Case No . 338-38546-SA -7) ; depositiontestimony April 25, 2002 ; testified as to solvency and economic losses of a nursing home operator .

• Leonard Saals,Jr. v. The Estate of William Lee Hatch, Jr., Deceased, at al. ; In the Probate CourtNumber One, Travis County, Texas (Cause No . 75278-A) ; deposition testimony March 22, 2002 ;testified as to the measurement of lost future earning capacity, case settled before issuance ofdeposition transcript .

• Leland Stenovich, et a!., vs . Spencer F. Eccles, et al. ; Third Judicial District Court, Salt Lake County,State of Utah (Class Action, Case No, 000007870) ; deposition testimony February 5 and 6, 2002 ;testified as to standards of practice, fairness and adequacy of consideration in a class action lawsuitrelating to the acquisition of First Security Corporation by Wells Fargo .

• in re Computer Associates Class Action Securities Litigation ; U.S. District Court for the Eastern Districtof New York (Master File No . 98-CV-4839) ; deposition testimony January 23 and 24, 2002 ; testified asto materiality, causation and damages in a securities fraud lawsuit .

Scott D_ Hakala , Ph .D., CFA Page 8

• Pamela Graham Reeves vs. VIJ, Inc. d/b/a National Utilities Co.INUCO and Greer Industries, Inc . ; U .S .District Court for the Northern District of Texas-Fort Worth Division (Case No . 400=CV-1671-BE) ; trialtestimony January 9, 2002 ; testified as to market wages, current job market and likelihood ofemployment for an individual alleged to have been wrongfully terminated .

Patricia E. Vincent and James R. Vincent v . Bank of America Texas, N.A . . ; In the 68' Judicial DistrictCourt, Dallas County, Texas (Cause No. DV99-00745) ; testimony in hearing in December 2000 and trialtestimony December 18, 2001 ; testified as to the proper calculation of interest on a home mortgage andcommon standards and practices for calculating mortgage interest

Joan C. Howard and Charles A. Anderson, on behalf of themselves and all others similarly situated. v.Everex Systems, Inc., and Steven L .W. Hui, et al. . ; U .S . District Court for the Northern District ofCalifornia (Case No, C 92 3742 CAL), deposition testimony November 19 and 20 and December 17,2001 ; testified as to materiality, causation and damages in a securities fraud lawsuit .

Reinsurance International Services Company, L .L.C. v. Lambert Feochurch Group Limited, et at.,, In the98t ' Judicial District Court, Travis County Texas (Civil Action No, 99-00745) ; deposition testimonySeptember 20, 2001 ; testified as to lost profits and lost business value experienced by a reinsurancebroker relating to allegations of misrepresentations and breach of duty ,

. Robert Alpert, James Ventures, L.P., Markus Investments, Inc, and James Investments, Inc . vs .Innovative Valve Technologies, Inc ., et al .,, U .S . District Court for the Southern District of Texas,Houston Division (Civil Action No . 1-4.01-076), deposition testimony September 19, 2001 ; testified as tomateriality, causation and damages in a securities fraud lawsuit .

Premier Lifestyles International Corporation vs . Electronic Clearing House, Inc . ; XpresscheX, inc., et al.;Superior Court for the State of California, County of Los Angeles (Case No . BC230691) ; depositiontestimony September 17 and 27, 2001 ; trial testimony November 27 and 28, 2001 ; testified as to lostbusiness opportunities and damages arising from various causes of action .

In re Phycor Corporation Securities Litigation; U.S . District Court for the Middle District of Tennessee,Nashville Division (Civil Action No . 3-98-0834) ; deposition testimony August 9 and November 6, 2001 ;testified as to materiality, causation and damages in a securities class action lawsuit .

• Ben Higbee and Bridgestone Healthcare Management, Inc. vs, Bridgestone Healthcare Management,lne,,, . .and David E, Sones; 101&s Judicial District, Dallas County, Texas (Cause No, 00-7365-3) ;deposition testimony June 21, 2001 ; testified as to preliminary findings as to fairness of certaintransactions involving a workers' compensation and rehabilitation business .

• Auto Wax Co., Inc. v . Mark V Products, Inc, . . ; U.S . District Court for the Northern District of Texas,Dallas Division (Civil Action No . 3-99 CV 0982-T) ; deposition testimony April 25, 2001 ; trial testimonyJune 29, 2001 ; testified as t the reasonable royalty and lost profits in a patent infringement andtrademark infringement case .

• Robe rt K . Bell, et aI, v. Fore Systems, Inc ., et al . . ; U .S, District Court for the Western District ofPennsylvania, (Civil Action No, 97-1265) ; deposition testimony February 1, 2 and 14, 2001, as to themateriality of various alleged accounting misrepresentations and as to damages in a class actionshareholder lawsuit .

Scott Cunningham and Elizabeth Cunningham v. Gutierrez, Mitchell & Coimenero, L .L.P., et al. ; 201'Judicial District, Travis County, Texas (Cause No . GNO-00849) ; deposition testimony January 12, 2001 ;trial testimony March 7, 2001 ; testified as to the economic loss and value to the owners of a temporaryservices business .

Scott 0 . Hakala : Ph .D., CFA Page 9

EIll .l x:l

Exhibit BPreliminary Event Study

COMPANY CarrekerRegression analysis - May 21 . 1998 to December 10. 2003

Market & Indus R ressions

CoefFigin tCentered R`2 6.1'79/n Percent of Variance explained by regressio nSEE 5.78°/ Standard error of residual (portion of movement unexplained by regression)

Constant 0.02% 0.1 0RAY 63.99% 4.20 Russel 3000 inde x

SUBINDEX 25.89% 2 . 66 Equal weight geometric ind ex consisting of EDS, FCER , DST, CHRZ_, UIS, AND RE Y

Market, Event and IndustryRe ressions

Centered R"*2 35,62%141 Percent of Variance explained by regressio nSEE 5 02 % Standard error of residual ( po rtion of movement unexplained by regression)

ConstantRAY 54.89% 3.83 Russet 3000 index

SUBINDEX 29 .26%, 3 .22 Equal weight geometric index consisting of EDS, CBR, DST, CHRZ, UlS, AND RE Y

Carreker-Antinod no, reported net income of $360 , 000 (3 cents per share) on revenueof $10 . 3 million for the first quarter ended April 30, compared with net income of$146,000 ( 1 cent) on revenue of $7 .5 million during the same period a year ago . (The

1 06104/1998 12 .59%; 2 .36 Dallas Morning New s )R . Stephens Starts Carreker-Antinori at buy with a target price of $16 : 00 per share (DowJones News Service) ; Harnbrecht & Quist Starts Canneker-Antinori at buy ( Dow JonesNews Service) ; Lehaman Brothers started Carreker-Antinori at buy with a 12-month

2 0611511998 2-45% 0 .48 target price of $14. 50 per sh are ( Bloomberg)Ca rreker inc . reported that Fleet Bank branches dramatically reduced average cash by

3 06129/1998 usi ng its Cashl'orecas'ter products . (Bloomberg

Carreker-Antinori , Inc, announced today that BOK Financial Corp has signed a contractto implement the Carreker-Antinori enterprise-wide solution Business Valuation

4 0713111998 9 .46% 1 .80 Improvement Process ( B-VIP) for the bank's affiliates ( Business Wire 0630 .1998)Carreker-Antinori, Inc . announced the release of Analysis Advantage (TM), a softwarepackage that rounds out the company 's successful Liquidity Management product suite .

5 08110/1998 -5 78°%, -1 .19 (Business Wire 08 .0 7 .1998)Barclays Bank is realizing savings from Internal Redevelopment Program utilizin g

6 08/17/1998 Carreker- Antinori Software ( Business Wire )Carreker-Antnori Inc. named Robert Olson as executive vice president and chie f

7 08/2011998 -7 .54% -1 .66 administrative officer . ( Reuters News )- mT THOMAS M CLIFFORD , shareholder of Carreker registered 19,260 shares ( Federa l

8 08127/1998 Filings Newswire sCarreker-Antinori announced financial resu€ts for the 1998 second fiscal quarter endedJuly 31, 1998 . Revenue increased 25.7% to $13 .7 million, compared with revenue of$10.9 million in the second fiscal quarter of 1997. Net income in the quarter was $1 . 7million or $0 .10 per diluted share , compared to $1 .2 million or $0 . 09 per diluted share, i nthe prior year quarter. (Business Wire 08 .27 . 1998) ; Lehman Brothers increase dCarreker-Antinori's 1998 earnings per share es ti mates to $0.34 from $0 .32 (Reuters

9 08128/1998 -12 .96% -2.77 News)Rising demand for automatic teller machines and electronic fund transfers amid ban kconsolidation provide a springboard for growth for Carreker-Antinori Inc . (Reuters News

10 09/11/1998 37 .72% 6,38 09 , 10,1998) ;

1 1 10115!1998 -1 .98% -0.40 RICHARD R LEE JR , Director , purchased 2,000 shares ( Federal Eilinq s Newswires)

Iof11


COMPANY CarrekerRegression analysis - May 21 , 1998 to December 10, 2003

The Fiserv Pittsburgh unit of Fiserv Inc , and Carreker have reached a cooperativemarketing agreement that provides increased market reach for both businesses and

12 10122/1998 3 .53% 0.69 im proved product availabiiity far their clients , ( BloombeSUSHASH MUKERJ[ . Vice President and TOM VLEISIDES , Shareholder, purchasedrespectively 5,000 shares at $5 .25 and 1,290 shares at $4 .94 ( Federal Filing s

13 10/29/1998 -3 . 12% -0.63 Ne w swire s )Ca rreker-Antinori Inc . announced that U .S . banks can realize financial improvements totheir bottom lines by reducing cash , a principal non-earnings asset to banks , through theuse of the Carreker-Antirtori CashTracker (TM) and CashForecaster (TM) cash reduction

14 11117/1998 solutions . ( Business Wire )

Carreker-Antinori announced financial results for the 1998 third fiscal quarter ende dOctober 31, 1998. Revenue increased 28% to $13 . 9 million, compared with revenue o f$10.8 million in the third fiscal quarter of 1997 . Net income increased 108 .2% in th equarter to $1 .7 million or $ . 10 per diluted share , compared to $809 , 000 or $ .06 per

15 11/25511998 7 .63% 1,45 diluted share in the prior year quarter. ( PR Newswire 11 .24.1998 ;Carreker-Antinori Announces New Trac2Fraud and Trac2ECP Product Suites .Trac2Fraud is a comprehensive suite of software solutions designed to detect and reportpotentially fraudulent check activity . Trac2ECP is an integrated suite of productsdesigned to deliver ECP functionality . Both are delivered on an integrated client-serve r

16 12102/1998 - 8 .53% -1 .78 platform . ( Business Wire)RICHARD R LEE JR, Director, purchased 3,000 shares at $4 .63 ( Federal Filing s

17 1211511998 -8 .77% - 1 .83 Newswires)Alltel Corp. agreed to market Carreker-Antino ri Inc.'s banking software systems. (Dow

18 1211611998 -4 .08%, -0 .83 Jones News Serv(sce )FISCHER JAMES , Director , and TERRY L GAGE, Chief Executive Officer, purchase drespective ly 4,000 shares at $11 .00 and 23,500 shares at $8 .90-11 . 00 (Federal Filing s

19 12118(1998 9.24% 1 .76 Newswires)Carreker-Antinori Inc . agreed to provide its Yield Management services in two majo r

20 12121/1998 -0,51% -0 .10 contracts with undisclosed banks . ( Dow Jones News Service)

Carreker-Antinori InC , was rated "buy„ in new coverage by analyst Steven S . Birer at21 12/22/1998 15 .1W1/0 2.85 Boston Robertson Stephens . The 12-month target price is $12 .50 der share ( Bloornber~)

Carreker announced the retirement of its Chief Technology Officer , Ron Antinori as ofJanuary 31, 1999, Mr . Antinori had agreed in contract to remain with the Companythrough this date, and will now continue further as both a consultant and Vice Chairma n

22 12/2811998 -3.30% -0.67 of the Board . ( Bloomberg }

Garreker- Antinori Inc. agreed to buy Genisys Operation Inc., which provides track andtrace software solutions , for 1 .24 million shares of Carreker stock . (Reuters News01 .19 .1999) ; Carreker announced that they have expanded their best practices businessunit within the company's payments Systems core competency and that the compan y

23 01 120/1995 3.t3aF'!o 0.60 has hired industry expert lay Mahaffey to manage the expansion . ( Bloomberg )_~_Bisys Group Inc.'s Bisys Document Solutions unit signed an agreement to market cas htracking and fraud reduction software produced by Carreker -Antinori Inc. to Bisys '

24 02/01/1999 -4 .51% -0.92 community bank customers . (IJow Janes Nevrs Service )Carreker -Antinori reported pro forma net income of $5 .5 million, or 34 cents a dilute dshare , on revenues of $52 .4 million, for the year ended Janua ry 31 , 1999, In fiscal 1997 ,the company earned $3 . 1 million, or 23 cents a diluted share on a pro forma basis, on

25 03/2411999 8 .40%'lo 1 .61 revenues of $40 .5 million . (Dow Jones Business News )Carreker-Antinori, Inc. announced the release of two new additions to its RiskManagement suite of products : FraudLink-KITB(TM ), a software solution developed toanalyze and detect potential check kiting activity , and FraudLink -PC(TM), a frau ddetection system designed specifi cally for community and mid-sized banks . (P RNewswire) ; Pegasystems Inc . and Carreker-Antinori announced the signing of a letter o fintent under which the companies expect to integrate their technology and servicepractices to create best-practices next generation solutions for the financial services

26 0411911999 0 . 72% 0 .1 4 industry . ( PR New swire )Carreker-Antinori was able to re-engineer Bank of Oklahoma operations , resulting i nnew revenues and reduced operating costs for the bank , by comb ining new technologies

27 04/23/1999 7 .67% 1 .47 and best practices . (Business Shire)

201 11


COMPANY Carreke rRecression analysis - May 21, 1998 to December 10, 2003

Hambert and Quist raised their 1999 revenue estimates on Carreker to $67 .6 millionfrom $65 million due to expected revenue growth in the consulting business . (Analyst

28 0511911999 4 .20% 0 .82 Re port)

Carreker-Antinari Inc ., Affiliated Computer Services Inc . and Eastman Kodak Co, haveformed an alliance to provide Internet access to digitized images of microfilm check s(Reuters News 05 .19 .1999)1 Carreker-Antinori announced financial results for the firs tquarter of fiscal 1999 . Revenues for the first quarter of fiscal 1999 increased 32.5% t o$14 .5 million compared to revenues of $10,9 million for the same period in fiscal 1998 .For the third consecutive quarter, the Company more than doubled net income, resultingin $963 , 000 or $ .b5 per diluted share compared to net income of $383,000 , or $ .03 pe r

29 05120/1999 1,1,78% 2 .57 diluted share in fiscal 1998. (Business Wire 05 .19 .1999)

Carreker announced the appointment of Jer ry Michael Snow as Senior Vice Presidentand Managing Principal of the company 's Software development and Documentatio ndivision , In this position , he will manage and direct the development of Carreker-Antinorisoftware products , as well as build upon the company 's technology base to deliver best

30 0610811999 1 .31% 0,26 of cl ass software to customers . ( Bloomberg)JOHN ill CARREKER, officer, sold respectively 10,000 shares at $9 .13-9 . 50 and 5,000

31 07116/1999 -2 .06% -0.41 shares at $8.63 ( Federal Filing s Newswires ]Carreker-Antinori, Inc . announces an agreement to provide ReserveL i nk(R) software toM&i Data Services , Milwaukee , Wis ., a leading financial ser v ices processor. (P R

32 0712011999 12 .51 % 2 . 35 Newswire)33 081 1611 999 ~6 .07% 2 .97 JACK DAVIS, Officer, sold 7 , 406 shares at $9 .00 ( Federal Pilings Newswires )

Carreker-Antinori Inc. formed the Office of the President , a management team which wil linclude the company's policy committee members and named Royce Brown and Wy nLewis vice-chairmen . Brown is executive vice president, payment systems division, an dLewis is executive vice president, revenue enhancement division . (Dow Jones New sService 08 . 17 .1999 ) ; Carreker-Antinori, inc . announced record second quarter 1999revenue of $ 18 .9 million , up 32% from prior 2Q98, Yield Management revenue of $6.2million, a 100 . 7% increase over 2Q98 and Accelerated growth in new Enterprise ITServices business , which grew to $2 .2 mi llion, representing 11 .6% of total 2099 revenue

34 08118/1999 -0 .40% -177 (P R N ewswire 08 .17 .1999)Carreker- Antinori , Inc. announced that its board of directors has authorized th erepurchase of shares of its common stock in the open market, with an aggregat e

35 10/15/ 1999 -149% -0.30 purct€ ase price of up to $1 .D million. ( Easine ss Wire }

BRENTON S CARREKER purchased 10,000 shares at $5 .91 . JOHN D CARREKER JR ,Officer, Director and Beneficial Owner , RICHARD R LEE JR , Director, and SUBHAS HMUKPRJ1, officer, purchased respectively 17,500 shares at $5 .59-6.03, 5,000 shares at

36 10/ 18/1999 7 .73% 1 .48 $5 . 56-5 .68 and 6, 040 shares at $5.78 . ( Federal Filings Newswires }Carreker Inc. was downgraded to "neutral" from near-term "buy"' by analyst Donal d

37 11/1911999 -2.01 % -0 .41 Cunningham at Gilmour & Associates. ( Bloomberg )

Carreker Inc announced revenue for the third quarter of fiscal 1999 increased 43 .4% to$20 .9 million compared to revenue of $14 . 5 million for the same period in fiscal 1998 .Gross profit increased 36.6% to $11 .2 million , or 53 .6% of revenue in the third quarter offiscal 1999 , compared to $8 .2 million , or 56. 2% of revenue in the third quarter of 1998 .Net income increased 21 .7°/% to $2 million or $1 1 per diluted share compared to ne t

38 12/0111999 1 .25% 0,25 income of $1 . 7 million or $ . 09 per rtiluted share in fiscal 1 998 . Bloomberg 11 .30 .1999Robertson Stephens raised 1999 revenue estimate on Carreker to $75 .8 million fro m$70 .4 million to reflect the company potential to generate growth from its softwar ebusiness and Backlog . However, They lowered EPS estimate to $0 .40 from $0,42 due to

39 12/02/1999 -7 .14% -1 . 48 the lower oeprating margin , (Analyst Report)

Carreker-Antinor€, Inc . announced two contracts , each for approximately $4 million, fo rthe company's Enterprise IT Services (FITS), which help

40 01/26/2000 -21 8%i -0 .44 financial institutions maxim ize the operational advantages of consolidation, (Bloorr€berg )

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COMPANY CarrekerRegression analysis - May 21, 1998 to December 10, 2003

Carreker announced that U .S . Bancorp, the nation's 12th largest bank holding company ,has contracted with the .company to integrate new software and technology into th ebank's branch operations to augment its customer service systems and improve interna l

41 01/27/2000 -0.82% -0 .16-efficiencies . (Blcornberg }Carreker-Antinori, inc. announced three new Yield Management contracts . The newcontracts are with a top 20 U .S . bank, a top 25 international bank, and a tier three U .S .bank, All of the clients expect the Carreker engagements to strongly impact their bottomline, generating a significant amount of new revenue each year beginning mid-yea r2000. (PR Newswire 02 .04 .2000) ; BILL LONG, Director, registered 10,000 share s

42 02113712000 7 .44% 1 .43 {Federal Filings Newswares} ;43 0211412000 -9.54% -2 .00 RONA LD R ANTE NORI registered 126,000 shares (Federal Filings Newswires )

RONALD R ANTINORI, Director and Beneficial Owner, sold 130,000 at $9 .16-9.25(Federal Filings Newswires); LARRY J PECK, Director, purchased 3,000 shares at $9,50

44 0212412000 0.70U/% 0.14 (Federal Filings Newswires )

Carreker-Antinori, Inc. announced record fourth fiscal quarter and twelve-month financia lresults . Revenue for the fourth quarter of fiscal 1999 increased 41 .8% to $21 .6 millioncompared to revenue of $15 .2 million for the same period in fiscal 1998, Gross profi tincreased 37 .1 % to $12 .1 million, or 55 .9% of revenue in the fourth quarter of fiscal1999, compared to $8 .8 million, or 57 .8% of revenue in the fourth quarter of 1998 . (PRNewswire 02 .07 .2000) ; Hambercht and Quist raised 2000 EPS estimates to $0.56 from

45 03108/2000 -8-82% -1 .84 $0.52 to reflect the positive outlook and the strong quarter . (Analyst Report ]

NCR Corp, and Carreker-Antinori Inc . formed an alliance to provide the banking industr ywith a service that will enable the electronic presentment and exchange of chec kimages . (Dow Jones News Service) ; Robertson Stephens raised 2000 revenu eestimates to $100 million from $93 .3 million and EPS to $0.57 from $0 .52 because of

0310912000 6 .211/446 1 .20 the signing of new clients and expanding existing relationships . (Analyst report )_Carreker Corp . agreed to offer closely held Accurate Software's Accurate Bankre cCorporate account-reconciliation product under a strategic alliance . (Dow Jones New s

47 03/27/2000 12.53% 2.35 Se€vice )JAMES D CARREKER, Director, sold respectively 188,000 shares at $11 .57-13 .98 and

48 0411812000 11-89% 037 76,500 shares at $12.00-13,25 (Federal Filings Newswires )

Carreker-Antinori, Inc . announced the latest in a series of new Revenue Enhancementmanagement contracts demonstrating the company's on-going leadership in valu eenhancement for all levels of the banking industry . The new engagements with threeU .S . banks, each with approximately $10 billion in total assets, represent a continue dexpansion into the regional banking market . Carreker's Revenue Enhancement service soffer banks the opportunity to generate significant new recurring revenue quickly ,beginning as soon as three to six months following approval and implementation of it s

49 04/28120(10 3.85% 0.75 recommendations. (Bloomberg ]Carreker Corporation announced its plans to acquire X-Port Software Enterprises o f

50 05104/2000 -1 .7711/c -0 .36 Toronto, Canada . AP R Newswire 05 .03 .2000)Carreker Inc, announced revenue for the first quarter of fiscal 2000 increased 52 .3% to$22.1 million compared to revenue of $14 .5 million for the same period in fiscal 1999 ,Net income increased 53.5% to $1 .5 million or $0 .08 per diluted share compared to ne tincome of $1,0 million or $ .05 per diluted share in fiscal 1999 . (Bloombereg 05 .25 .2000);Robertson Stephens increased 2000 EPS estimate on Carrekerto $0 .58 from $0 .57 and2001 EPS estimate on Carreker to $0 .75 from $0 .72 . (Bloomberg) ; Chase H&Q raised2000 revenue and EPS respectively from $98 3 million and $0 .57 to $104 million and$01 .58 . For 2001, they increased revenue and EPS from $121 million and $0 .74 to$128 .8 million to $076 due to the existence of market opportunity and new e-financia l

51 05126/2000 2.61 % 0 .59 products . (Analyst report)Carreker Inc. can now offer its clients a complete line of electronic cash processin gtechnology and services with completion of the acquisition of X-Port Softwar e

52 06/08/2000 -8 .04% -1 .67 Enterprises of Toronto, C anada . (Bloomberg )Carreker Inc. announced that its Revenue Enhancement Division is growing rapidly an d

53 0812112000 4 . 6 0 'X, 0 .88 will continue to experience robust growth through 2001 . (Bloomberg)Carreker Corp . received a contract from an undisclosed European insurer to launch a

54 09!1112000 2.19% 0.43 new wea lth management project (Dow !ones News Service )

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COMPANY CarrekerReq€ession analysis - May 21, 1998 to December 10, 200 3

Carreker announced stgniflcantly stronger earnings during the second quarter of 2000when compared to the same period in 1999 . Revenue for the second quarter of fiscal2000 increased 51 .9% to $28 .7 mi[iion compared to revenue of $18 . 9 million for thesame period in fiscal 1999 . Net income increased to $3 .4 million , or $0 .18 per dilutedshare , compared to net income of $2 .3 million or $0,12 per diluted share in fiscal 1999 .(PR Newswire 09 .12 .2000) ; Robertson Stephens raised 2000 and 2001 EPS es timateon Carreker respective ly to $0,65 from $0 .58 and to $ 0 .87 from $0 . 75 . (Bloomberg);Chase H&Q raised their estimates for 2000 from $104.9 million and $ 0 .58 to $108million and $0 .64 . For 2001 , they are moving from $128 .8 million and $0 .74 to $138 .2

55 09/ 1 312000 20 .51% 3.72 million and $0,86 . (Anal yst report)Carreker Corporation and Central Carolina Sank , a subsid ia ry of National CommerceBancorporation of Memphis , Tennessee signed Bank Value Improvement Process

56 09114/2000 4 .07% 0.50 (BVIP) contract. (PR Newswire )

57 0912212000 1 .84% 0 .36 RONALD R ANTINORI , Director , registered 70,000 shares ( Federal Filings Newswires)Carreker Corp was rated new "buy" with a 12-month target price of $26 . 00 per share b y

58 09125)2000 7 .80'% 1 . 50 analyst Angeline Billon at Johnston , Lemon & Co . ( Bloomberg)Carreker Corp . filed to sail two million shares of common stock , according to a filing wit hthe Securities and Exchange Commission . The company also registered two millio nshares , plus 600, 000 shares to cover any overailotments, on behalf of certai nshareholders . Carreker will not receive any proceeds from the sale of shares by th e

59 1010312000 -2 .05% -0 .4 1 shareholders . (Federal Filings Newswires )Carreker Corporation announced that Michael D . Hansen has joined the company as

60 1011112000 6.42% 1 .24 Executive Vice President and Managing director of eSolutions . ( PR Newswire)RONALD RANTINOR €, Benefi cial Owner , sold 70,000 at $17 .02 and Lar ry J Peck ,

61 10/12/2000 3 .56°ir -0 .72 Director, sold 3 ,000 shares at $17 .00 (Federal Filings Newswires)

Carreker Corporation has entered into an agreement to deliver to a top five U.S .62 10120/2000 11 .571 2 .18 financial institution Its internet-enabled eRM(TM) solution . ( PR Newswire 10.19 .2 000 )63 11/0312000 3.00% 0 .59 Carreker ' s offerin of 4.5 mUllen common shares was priced at $17 .00 ,(bloomber

Carreker Corp. was rated new "buy" in new coverage by analyst Terrence Tierney a t64 1110812000 U 19% 0,04 U .S . Bancorp Piper Jaffray . The target price is $31 per share . (Bloombers )

GEORGE NOGA, Officer , sold 4 , 000 shares at $17.81 - 18.00 (Federal Filings65 11/1612000 -5 .42°/ -1 .11 Newswires)

Carreker Corp . beat analysts third quarter estimates of 17 cents a share and reportedlicense revenue grew 112 .2%, while diluted ea rn ings per share increased 72 .7%. (DowJones News Service 12 . 05.2000); Robertson Stephens raised 2000 and 2001 EPSestimate on Carreker Inc . to $0 .66 from $0.65 and to $0 .88 from $0 . 86 respectively .(Bloomberg ) ; 11S Bancorp raised their 2001 and 2002 IMPS estimate on Carrekerrepectively from 60. 28 and $0 . 86 to $0.21 and $0 . 88 . (Analyst Report) ; Chase H&Qraised their 2000 revenue and EPS estimate on Carreker repectively from $108 millionand $0. 64 to $109. 9 million and $0 .66 , for 2001, they are moving from $138 .2 millio n

66 12/06/2000 10 .03% 1 .91 and $0 . 86 to $142.2 million and $0 .88 (Analyst Report) ;

Carreker and Gartner Group initiated a "Bank-To-Business " study . The study is designedto aid the sponsoring organizations in understanding and quantifying the extent o f

67 12/08/2000 -1 77% -0 .36 customers' demands for e-commerce enabling technologies . (Analyst report)Carreker Corporation expanded its global reach by announcing a fraud preventio ncontract of more than $1 million with one of the four largest banks in Australia . (P R

68 12112/2000 0,52%, 0.10 Newswire 12 .11 .2000)Carreker Corporation options will trade on the February expiration cycle . Position an d

69 1212.612.000 8 .16% 1 .56 exercise limits have been set at 22 , 500 contracts . ( Bloomberg)Standard & Poor's will add Carreker Corp . to the SmallCap 600 Index ( Dow Jones Nevis

70 01112/2001 7 .87% 1 .51 Service 01 . 11 .2001 )

Carreker Corporation a leading p rovider of e-finance enabling solutions to the financialindustry , announced that Hibernia National Bank has contracted with the company tointegrate new software and technology into the bank ' s branch and check operations to

71 0112512001 -3 .70'/0 -0 .75 enhance customer service and impro ve internal efficiencies . ( PR Newswire 01 .24 .2001 )

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COMPANY CarrekerRegression analysis - May 21 . 1998 to December 10, 2003

US Bancorp raised 12-month price target to $36 from $31 based on potentia l[ growth72 01/3012001 'r° .65% 1 .47 oppo rt une, (Analyst Re port)

Carreker Corporation announced further expansion in the global market with a ne wRevenue Enhancement contract for a top tier inte rnational bank with assets of morethan $100 billion (PR Newswire ) ; Robert son Stephens said Carreker Corp will not be asaffected as other companies in case spending happenned to decrease in the financia lindustry . They argue that Carreker is suffcientiy differenciated to be well i nsulated fromsuch spending deferrals. As a result, they believe Carreker should achieve a $27 pric e

73 02 121/2001 -5,66% - 1 .16 over the n ext 12-month . (Analyst Report)Carreker Corp . reaffirmed its guidance for the fourth quarter ended Jan . 31 , 2001, withearnings per share estimates of about 22 cents on revenue estimates of about $30 . 5

74 02/2212001 1290% 2.42 million . (Dow Jones News Service)Carreker Corp earned $0 .22 a share in its fiscal fourth quarter . That's exactly what th eStreet was looking for and it ' s up from the earnings of $0 .14 a share in the year ag oquarter. Revenues , though, a little light. The reading was up 43 percent , The Street wa slooking for about $37 million but they got $30 .8 million and net income was up 204

75 03/141200'! 14.56°x% ercentto a X4 . 95 million . (GNBC/EOow Jones Business Videa)273_pCarreker Corporation may signe a Revenue Enhancement consulting services contract

76 0311512001 -5.59%: -1 .15 with a major international bank . (P R Newswire 03 .14 .2001 )Carreker Corporation and ARGO Data Resource Corporation have agreed on a strategi calliance partnersh ip to deliver a seamless bank branch truncation product to the

77 03/2912001 4 .23% 0 .83 marketplace . ( PR NewswireCarreker Corp . signed an agreement with Xchange Inc . to serve as the exclusiveprovider of Xchange EnAct customer relationship management software to the bankin g

78 0410312001 -4.27% - 0 .87 indu stry . (Dow Jones News Service)Robert Hail , a leader in customer relationship management , has left the Bostonsales/service software outfit Xchange Inc . to become president of Carreker Corp,' s

79 04/0612001 -3 .96% -0 . 81 revenue enhancement division . (American Banker)

Carreker inc . was rated new "buy" in new coverage by analyst Vincent A Colicchio at80 04/25/2001 -0 0711%%% - 0 .01 Sou thwest Secur iti es, Inc . The 12-month target price is $27 .00 per share . (Bloomberg)

Carreker Corporation announced that Ronald G . Steinhart, a leader in the Dallasfinancial community for more than 37 years , has been appointed to the company ' s Board

81 04/30/2001 4 .6 15% 0.91 of Dfectors, ( PR Newswire 04.27 .2001 )Carreker Corp was downgraded to long-term "attractive" from "Buy" by RobertsonStephens analyst Andrew Jeffrey because of limited expected expansion in the next 12

82 051081200 1 .15.10% -3 .26 months (Bloomberg 05 . 07 .2001 )

Carreker Corp . agreed to pay $1095 million for payment processing company Chec kSolutions Co„ and forecast lower-than-expected first-quarter earnings , citing softspending by customers . (Reuters News 05.22. 2001 ) ; Carreker Corp was downgraded t o

83 05/23/200 1 -26 .59% -6 . 16 ]nng term "buy„ frvrn " buy" by analyst Adam H Holt at J .P. Morgan . ( Bloomberg )Can'eker Corporation announced that James R . Erwin, a 30-year veteran of the bankin gindustry and a former Bank of America executive , has been appointed to the company's

84 06104/2001 -0 31 % -0,06 Board of Directors, (Business Wire )For the first quarter, Carreker reported revenues rose to $25 .4 million from $221 million ,while net income fell to $1 .3 million from $1 . 5 million , Ea rnings per diluted share fell tosix cents , in line with revised estimates , from last year's eight cents per share . (ReutersNews 06 . 07.2001 ) ; Robertson Stephens analyst Andrew Jeffrey out his earnings view o nCarreker Corp . : one day after the software maker reported a drop in first - quarte rearnings but revised upward its guidance for the full year . (Reuters News ), CarrekerCorporation was rated new "buy" by analyst Brett Manderfeid at U .S . Bancorp Pipe r

85 06107/2001 33 .75 % 5.80 .!affray . ( Bloomberg )Carreker Corporation and Fiserv announced an agreement enabling Fise.rv to delive reight of Carreker 's proven technology solutions to its financia l institution clients using

86 0611212001 0 .24 Fiserv 's core p rocessing services PR !Newswire 06 11,2001 )George matus , Vice president, has filed form 144 to sell 2 ,500 shares of carreker Corp .

87 07120/2001 - 1 .55% -0.31

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COMPANY CarrekerRearession analysis - May 21 . 1998 to December 10 . 2003

Carreker expects secondquarter revenues to be down 12 to 13 percent from Its priorestimate of $38 million , issued in June . Carreker sees earnings of zero to I cent pershare before unusual items related to its recent acquisition of Check Solutions . ( ReutersNews ); Carreker Corp . was downgraded to "accumulate" from " buy" by analyst Vincent

88 08/0712001 -21 .17 % -4.74 A . Colicc hio at SANS Securities , Inc. (Bloomberg)

Robertson Stephens cut 2001 revenue and EPS estimate on Carreker to $124 millionand $0 .15 from $160 million and $0 .74 . The 2002 estimates for revenue and EPS are

89 0810812001 -12.89% -2 .75 now $160 .9 million and $0 .43 from $219 .8 million and $1 .23 . (Analyst Report}George Matus, Vice president, sold 2,900 shares of carreker Corp at $21 .00

90 08113312001 4 .63% 0.90 (Bloomberg )Carreker announced further expansion of its fraud prevention technology in the Souther nPacific region through a contract with Australia and New Zealand Banking Group Umite d(ANZ) . with total assets of $172 billion (AUD), is one of the worlds 100 largest banks ,

91 08114/2001 -3 .54% -0.74 (Bloomberg)Carreker Corp ., having missed earnings expectations for a third straight quarter, wil l

92 08/2712001 -0.94% -0 .19 change the way it reports on sales of software for banks (American Banker)

Carreker Corp's Check Solutions will provide proven software and advanced technology.93 0910412001 6.16 °% 1.19 to Sy rn cor, Canada leading financial transaction outsourcer . ( Bloomber )c

Carreker Corporation reported second quarter revenue of $33,9 million, and net lossesof $11,6 million, On a pro forma basis after giving effect to the recent acquisition ofCheck Solutions, not income for the quarter ended July 31, 2001 was $680,000 or $0.03

94 09,12112001 -11,20% 2 .12 per diluted share, exceeding prior guidance by $0.02. ( PR Newswire O 9-20 Z001)Carreker Corp . said a Delaware court issued a preliminary injunction against thecompany in response to a request by Pegasystems Inc . Pegasystems filed a complaintagainst Carreker seeking to enjoin and restrain Carreker from developing and marketin g

95 10/04/20 01 -7 .90% -1 .62 Exception Management products . ( Bloomberg 10 .03 .2001 )JOHN D and Connie Carreker have filed form 144 to sell 24,993 shares of carreker

96 10109/2001 -8.40% -1 .75 corp. (Bloomberg )

97 1011512001 -1 .2 0% - 0 .24 James R Erwin, Director, sold 10 ,000 shares at $7 .20-7.30 (Bloomberg 10.13 .200 1 )Carreker Corporation provided an update on the recent injunction and announced an

98 10/22/2001 -15 .30% - 3 .31 expense reduction initiative .( Dow Jones News )Carreker Corp . settled a lawsuit brought by Pegasystems I nc ., and its shares shot up

99 11105/2001 : 0 .02%v 3 . 64 near€y 3 2 percent- (Reuters News )Through a new strategic agreement, Carreker Corporation will link its performanc emeasurement technology with PROMODEL Corporation's simulation and analytica ltechnology to provide the financial services industry with a powerful tool to improv einfrastructure capacity planning , service quality measurement and operational efficiency .(PR Newswire 11 .15.2001); John D Carreker JR, Chief Executive officer of Carreke r

100 11116/2001 12 .03% 2.27 Corp . sold 8 , 331 shares at $7 .25-7 .40 . (Bloomberg )

Carreker Corporation reported third quarter revenue of $29 .7 million and a net loss of$26 .4 million or $1 .21 per diluted share, On a pro forma basis, the net loss for the thirdquarter ended October 31, 2001 was $3.9 million or $0.18 per diluted share . For the ninemonths ended October 31, 2001, revenues were $88 .9 million with a net loss of $36 .7million or $1 .68 per diluted share . On a pro forma basis, the net loss for the nine monthsended October 31, 2001 was $2 .0 million or $0.09 per diluted share . (PR Newswire12 .04.2001) : Carreker Corp . was raised to "buy" from "neutral" by US Bancorp Pipper

101 12/05/2001 2.02% 0.40 /affray with a 12-month target price of $8 . 00 per share . (Bloomb e_~The Securities and Exchange Commission filed an insider trading case against a seniorofficer of Carreker Corporation and his brother . Named as defendants were George P .Matus, a senior vice president of Carreker and his brother, Peter T, Matus, a licensedstockbroker . According to the Commission's Complaint, the Matus brothers obtained$209,940 in illegal trading profits by trading on inside information concerning Carreker'sMay 22, 2001, announcement that the company would miss its first-quarter earnings

102 12/06/2001 0.13 0%: 0.06 estimate . (SEC News Digest)

7of11


COMPANY CarrekerRegression analysis - May 21 . 1998 to December 10. 200 3

Carreker Corp announced that Michael D. Hansen has been named President and ChiefOperating Officer , reporting to J . 0 . Carreker. Chairman and Chief Executive Officer .

103 12121112001 2 .49% 0 . 49 Hansen was al so elected to the Board of Directors . (Bloomberg)Carreker Corp . officer George S . Noga purchased 40,000 shares in January, accordin gto a Form 4 released by the Securities and Exchange Commission . (Dow JonesCorporate Filings Alert 02 .13.2002), Subhash Mukerji, an officer of Carreker Corp

104 02114/2002 728% 1 .40 IJOUght 21,200 shares at $5 . 50-5 .83 . (Bloomberg) _Carreker Corp . expects to report fourth quarter revenue and earnings per share aboveits previous guidance, citing revenue carried over from legal issues in the third qua rter.(Dow Jones News Service 02 . 142002) ; Blake A Williams, a Vice President of Carreke r

105 02/15/2002 19.04% 3.48 Corp sold 6 ,413 shares at $5 .50-5 .57 . Blacmberg )Carreker Corporation announced the success of a two-year effort to scale its premie rsolutions for the use of large community and small regional financial institutions. In eachof its key lines of business, these institutions are now using Carreker solutions to realiz eproportionately the same significant earnings improvements as the original large clients .

106 02126/2002 13.46% 2.52 (PR Newswire )

Carreker Corp .'s fourth quarter results include about $5 .4 million of revenue and 1 5cents of earnings per share that was carried over from the third quarter and recognizedin the fourth following resolution of a legal issue . ( Dow Jones News Service 03 .1 2 .2002) ;Robertson Stephens raised Carreker 12-month target price to $10 from $5 to reflect

107 03113/2002 11€ .22% 2.12 increased confidence in the co rn pn 's bus iness outlook . (Analyst report)Carreker Corporation approximately sold 1,282,000 common shares to ins titutionalinvestors in a Private Investment Public Equity ("PIPE") transaction . The common stockwas sold at a price of $7 .83 per share resulting in net proceeds to the Company ofapproximately $9.3 million in new equity capital after fees and expenses . ( PR Newswire

108 0410912002 4 .49% 0,88 04 .08 .2002 )

Carreker Corp said first-quarter revenues and earnings will be higher than expected ,citing better-than-anticipated sales at one of its units and the award of technologycontracts . ( Reuters News) ; Carreker pre-announced positive 1Q2002 results with EPS o f$0.06 on revenues of approximately $35 million compared to Robertson Stephen s

1 08 05116/2002 9.01`% 1 .72 estim ates for EPS of $ 0 . 03 on $32 .2 million . (Analyst Report Robertson Stephens )The New York, New Mexico , Colorado, and Wyoming Bankers Associations ' recentl yjoined the American Bankers Association in its exclusive endorsement of three Carreke rCorporation technology solutions designed to help banks fight exposure to fraudulen tdeposit and check activities as well as reduce cash inventories and reserv e

110 0512312002 6 .11% 1 . 18 requirements . ( FAR Newswire Q5,22 .20(32)

Carreker Corporation reports revenues for the first quarter fiscal year 2002 ended April30 of $37 . 9 million , a 33% increase over revenues for the first quarter fiscal year 2001 of$28 .5 million . First quarter fiscal year 2002 net income was $3 .7 million , or $0.16 pe rdiluted share ( PR Newswire 06 .05 . 20 (1 2) ; USBancorp raised CY 2002 revenue and EP Sestimate to $157 million and $0 48 from $146 million and $0 .42, due to a quicke rrecovery in the revenue enhancement business and a 2 .7 million revenue bump for a

111 06106/2002 6 .2111/0 120 change in accounting related to reimbursable expenses. (Analyst Report)

Robertson Stephens raised 2002 revenue and EPS esti mates to $158 .1 million and$0.45 compared to prior estimates of $149 . 0 mil li on and $0 .47 . For 2003 , They raisedrevenue and EPS to $184 . 2 million and $0 . 77 from prior estimates of $177 .8 million an d

112 06/07/200.2 7.4411A 1 .43 $0. 80 to reflect in creasin1consulting and management revenues . ( Analyst Report)Carreker released Carreker Online Risk Expert (CORE) Workflow Manager, th eCompany's automated risk-decisioning software for banks , which was co-developed and

113 07/25/2002 implemented with Fleet Bank . ( Bloomberg)Superregional West Coast bank has acquired the Carreker suite of check image archiv eand delivery applications to deploy in building its own check image archive . (PR

114 08/26/2002 8,93% 1 .70

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Exhibit B

COMPANY CarrekerPreliminary Event Study

Repression analysis - Mav 21 . 1998 to December 10, 2003

Carreker Corporation reports revenues of $39 . 1 million for the second quarter ende dJuly 31, 2002, an 8% increase over revenues of $36 .1 million in the prior year period .(Business Wire 09 .12 .2002) ; Carreker Corp . shares dropped Friday after the maker ofbanking software warned that continuing soft demand will cut into revenue .(AssociatedPress Newswires ) ; US Bancorp cut 2002 and 2003 EPS estimate to $0.45 and $0.63respectively from $0 . 48 and $0 .70 They also reduced the 12-month price target to $1 3

115 09/1312002 - 12 .18% -2 .59 from $14 .(Analyst Report)§u-bash Mukerji , a shareholder of Carreker Corp bought 8,000 shares at $6 .40 .(B (oomberg 09,19 .2002 ) ; James D . Carreker, a Director of Carreker bought 20,000

116 0912012002 shares at $5 .77 (Bl oomberg )Carreker Corporation announced that the three large Australian-based banks using th eservices of Cash Services Australia (CSA) have become equity owners in CSA , WestpacBanking Corporation , Commonwealth Bank of Australia , and Australia and New ZealandBanking Group Limited each assumed ownership of 25 percent of the company, wit h

117 10110/2002 14 .78% 2. 74 Carreker retaining 25 percent . ( Business Wire 10.09.2002 )CarrekerCorporation announced the release and genera l availability of FraudLin kACHeCK(TM), which protects financial i nstitutions and their customers from the growin gthreat of fraudulent electronic debits to checking accounts via the automate d

118 11/1412002 clearinghouse (ACH) network. (Business Wire )Carreker Corp, would post lower third-quarter earnings because of a slowdown in bankspending on technology . They had also cut expenses and reduced its work force by 5percent this month . ( Reuters News 11 .14. 2002 ) ; Carreker Corporation reports that it sresults for the third quarter, ended October 31, 2002 will be lower than prior guidancedue primarily to delays in bank technology spending . Revenue for the quarter is nowexpected to be $35 .5 million as opposed to a prior guidance range of $36 to $38 million .

119 1111 5/2002 -29 .41% -6,94 (Business Wire 1 1 ,14 .2002 )US Bancorp out 2002 and 2003 lops estimate from $0.45 and $0 . 63 respectively to$036 and $ 0.45. They also reduced the 12-month price target from $13 to $7 .(Analyst

120 11/18/2002 2 .89 % 0.57 Report)Allied Irish Banks , p .l .c ., Ireland 's leading financial institution, has selected Carreker' sFraudLink(TM) solutions to detect and prevent fraudulent check activity. (Business Wire

121 11/22/2002 6 .28% 1 . 21 11 .21 .2{ 2)Trustrnark National Bank a $7 .2 billion financial services organization operating i nMississippi and Tennessee , has expanded its imaging capabilities with Carreker 's imag e

122 11/25/2002 6-47 % 1 .25 archive solutions. (Business Wire )Carreker Corp . is reviewing its financial statements and may file a restatement related t o

123 12110/2002 -24 .221'io -6.53 the timing of some revenue recognition . ( Reuters News)Carreker Corporation has sold Carreker ' s Exceptions Express (TM) back office solutio nto intelligent Processing Solutions Ltd . (iPSL) . The contract will generate $2 .1 millio n

124 12/12/2002 9,48% 1 .81 over the next 18 months. (Business Wire )Carreker announced that due to the delayed filing of its Form 10-Q, it has receive dnotification from The Nasdaq Stock Market that its securities are subject to deflating .

125 12124/2002 -1 .21'/n -024 (Blocm b erq)Carreicer Corporation and Metavante Corporation, the financial technology subsidiary o fMarshall & Ilsley Corporation announced an agreement under which Carreker wil llicense its Integrated Cash Operations Moduies (TM) (iCom) software to

126 01/07/2003 .4.71% - 0 .96 Metavante Business Wire)Carreker Corp was downgraded to "market perform" from "outperform" by analyst BrettManderfeld at U .S . Bancorp Piper Jeffrey . The 12-month target price is $4 .50 per share.

127 01 10 8!2003 -0 .68 ( Bloomberg)Carreker Corp .' s special committee investigating its revenue recognition procedure sfound issues surrounding when certain contracts were dated and became effective,

128 01/28/2003 29.84"/,% 5.21which will lead the company to restate its financial statements . (Dow Jones News

Milberg Weiss Bershad Hynes and Lerach LLP filed a securities class action lawsuit inthe United States District Court for the Northern District of Texas on behalf of persons

129 02/10/2003 4,89°1/: -1 . 00 wh o acquired the securities of Carreker Corp , May 20, 1998 through December 7 0, 2fl02

9of11

Exhibit B

COMPANY CarrekerPreliminary Event Study

Repression anaivsis - Mav 21, 1998 to December 10, 200 3

Carreker Corporation announced today that the Nasdaq Listing Qualifications Panel ha sgranted an exception for Carreker 's securities to continue to trade on The NasdaqNational Market. The exception requires Carreker to file its fiscal 2002 third quarter For m10-0, annual report on Form 10-K, and all other necessa ry restatements on or before

130 02/2412003 -0 . 21 April 30 , 2003, which fire Company expects to do . (Business Wire )Federman & Sherwood filed a securities class action lawsuit in the United States Distric tCourt for the Northern District of Texas on behalf of persons who acquired the securitie sof Carreker Corp . May 20 , 1998 th ro ugh December 10, 2002 (PR Newswir e03 .06 .2003 ) ; Carreker Corporation announced that Nancy Langer , former president ofMetavante Corporation 's Electronic Payment and Presentment division, has joined th ecompany as executive vice president of Global Payments Consulting (GPC), a newl ystructured unit that brings together all of the Company 's consulting services in one

131 03107/2003 7 .3!3% 1 .51 p ayments-focused group. ( Business Wire )Carreker Corporation announced that St . George Bank Ltd in Australia has purchased

132 03/1712003 Carreker's E nAct ( TM} solution ( Business Wire )Carreker Corporation announced that Wells Fargo has acquired the Carreker suite of

133 - -- 04/22!2003 -6.80% - 1 .40 image prorRSSing archive a nd capture applicstions (BUS!NESS WIRE )Carreker Corporation and Giesecke & Devrient GmbH (G&D) announced a strategicalliance to strengthen both companies ' market positions and product offerings in the fieldof cash automation and inventory management . (Associated Press Newswires

134 04/3012003 15.25% 2 .83 03 . 29 .2003 )

Carreker Corp . and Majesco Software Inc. formed a new company, Carretek LLC, thatwill provide business processing outsourcing and offshore information technology t o

135 05101/2003 22.68% 4.08 financial institutions and their processors . (Dow Jones News Service)The Stochastic Oscillator, a momentum indicator that shows the location of the currentclose relative to the stock's recent trading range, has generated "buy" signal fo r

136 05/29/2003 Carreker . (Bloornberg)Carreker Corporation reports revenues of $28 .3 million for the first quarter ended April30, 2003, compared with $28.5 million in the fourth quarter fiscal 2002 and $43,7 million

137 06103/2003 5.07 0.99 in the first quarter of fiscal 2002 . (Business Wire )

Carreker Corp . is facing two new shareholder lawsuits in connection with earningsrestatements it issued following an internal investigation into accounting discrepancies ,

138 06113 12003 -4A0% -0.84 according to the company's quarter! report. (Dow Jones Corporate F ilings Alert)Carreker Corp . said its Chief Financial Officer Terry L . Gage resigned , according to an 8-K filed with the Securities and Exchange Commission. ( Dow Jones Corporate Filing s

139 0612312003 -5.36% -1.31 Alert)

Carreker Corporation a leading provider of technology and consulting solutions for thefinancial industry, announced the release of Image Inspector(TM) software, the first

140 06/24/2003 app licati on in its Quality Assurance suite for check image quality . ( Business Wire)Carreker Corp . announced that London-based Lloyds 1S8 plc, a leading UK financialservices group, has selected Carreker 's Integrated Cash Operations Module (iCom(TM))cash inventory management solution for i ts Automated Teller Machine (ATM) network o f

141 06/26/2003 -•0.13°/ -0.03 4.200. IBioombera 06.25,2003)142 09110/2003

Carreker Corporation reports revenues of $36 .2 million for the second qua rter endedJuly 31 , 2003, compared with $28. 3 million in the first quarter fiscal 2003 and $43.5

143 0911112003 33 .31°!% 5 .73 million in the second quarter of fiscal 2t 12 . (Business Wire 09 11 2803 )Carreker Corp . and Wells Fargo will partner to develop ExchgLink(tM) software fo rsending and receiving check images, which Carreker will then market to financia l

144 09/2512003 institutions and archive providers . ( Bloomberg )Carreker Corp announced that Lisa Peterson has been hired as the company' s

145 10/02/2003 6 339% 1 .23 executive vice president and chief fina ncial officer . (Business Wire )Carreker Corp . was rated new "buy" in new coverage by Craig-Hallum Capital Grou p

146 11/ 1 012003 '112 .35% 2.32 3 11 5 per share ( Bloombe €cg)Robert M Olson JR, Offi cer , sold 30 ,000 shares of Carreker Corp . ( Bloomberg

147 12/03/2003 -1 .2512 .02 .2003)

10of11

incremental components during 2004 . The anti-money laundering software is designedto help banks protect their corporate reputations and their customers from the growingrisk of financial criminality and to comply with a growing number of laws and regulations .

148 12/0912003 (Business Wire 12.08.200 )Carreker Corporation announced that the Small Value Payments Co has formed analliance with Carreker to deliver Carreker's Check 21 Workshop to SVPCo tinancia!institutions. (Business Wire 12 .09.2003) ; Carreker Corporation reports revenues of$31 .4 million for the third quarter ended October 31, 2003, compared with $36.2 millionin the second quarter fiscal 2003 and $34 .2 million in the third quarter of fiscal 2002 .

149 1211012003 -2.12 (Business Wire)

11 Off s


Ct ANY Carreker

liglqxj

5/20/1998

7120/1998

9/2011998

11120//99 8

1120/1999

312011999

5/20/1999

7/20/1999

9/20/199 9

11/20/1999

112012000

3/20/2000

512012000

7/20/200 0

0 9/20/2000

ID 11/2012000

1/20/2001

3120/2001

5/20/2001

712012001

91201200 1

11/20/2001

1120/2002

3120/2002

5/2012002

712012002

9/20/2002

1112012002

1/2012003

T, T'i

m

0

c 3

u)

Price per Share (all equal to Carreker at 3110103 )--a Fv iv w w 4~-

t7Y o i3s C7 t~7 C3 C77 Cs t?~o c7 © 0 O C> O oC ~7 0 C7 0 O o C3 t

Exhibit 4

Contra ct Memorializing the Sale of Software andImplementation Services to Trustmark Bank

Uarre er-A n r Notice of Sale FormSafi a-r~-

Date of Contract. Contract Number: Wes Contact :

Company Name .---r '

Address: E. ee-

City, State, Zip: ~ 5 oc

Contract Contaci/Fide: Tide E V PAddress : Phone: Far:City : - ------ Sta te Zip

in voice Contact/Title ., Tide.Address: Phone: Fax .City: State Zi

p Technical ContactjTitle: Titl eAddress: phone: Fax:______________________

G i ty State Zip

Software Contact/Title: TildeAddress : Phone: Fax:City: State Zip

User Contac 'Tìtle: TitleAddress: Phone: Fax:City; State zip

Please Contact to arrange Kick-Off Meeting. Phone : L OI • ° ~n=

Pr©ducts/S ~- rvices Purchased :ASt\16 ,l ASPd6 BAO _ ... .ASI\I9 *Jnstall:c N *Implementation: N

Purchase Price : AS1\16 ( ASI116 BAO p o ASF19 ~ C) 0 KCnr, s ~ ~ K ~ b A c) $ K

35 K 3SKIf no, customer support hourly ra te is . $

Free'.Vtaintenaace Period/Maintenance Amount: SkLt T̀142-

Contract Special Stipulations :

(Form Routed to : Dan Barta, Rich Rosner, Roger Snell, Tim'M E1henny, Robin Adams, Kurt Liles, Carlton Williams .)

CA EK R - A.NTINORISHIPPING REQUEST

Requested By?(1. J C&J ( ~ Date :

Please Ship to following address to arrive by: I i ! j o 4 IiCompany: 1Contact: r r--. Q v .-l- ca.....sAddress: i 1

Phone 9 : (4 O 1- Ci I1r 0 p

Customer to be billed?OYes $~ ONo Copy to Accounting

Ship: Please 'iii Ou tOR.egutar Mail 1I3friority 2nd Day Mail(Modem D}tand Delivered M Email©Overnigh t (JUPS 2nd Day DGrdTrk

0 FTP 11 CD Q DisketteIf customer is to pay for Express DeliveryAcct N oShip Co .DateTracking NoShipper InitialsFT? Information

i xcel , ACT Customer File

REQUESTS FROM ANY DEPARTMENT MUST BE APPROVED BY THE SVP OF THAT DEPT .THIS SECTION MUST BE COMPLETED FOR ANY SOFTWARE SMPI ENT TO BE RELEASED .Approved SVP Engineer: Date:Approved SVP Cust Supt: Date:

Approved SVP Sales: Date:

Approved SVP Prod/Proj Mgmnt Date:

*Manuals will only be shipped routinely to customers with existing contracts . Otherwise, a signed Non-Disclosureis required . Faxes are acceptable. Any exceptions require approval of SVP Sales or SVP Product Mgmrtt.*Requests to ship preliminary documentation require approval of the appropriate Product Mgr , DocumentationMgr, and the Development Mgr . These copies will be plainly marked as Preliminary or Draft`

PRODUCTS :ASI14AS 1\4 2 .7ASM\i 12.7_AS1~4111\12 2 .7_ASI1 TRACS Interface 2 .7Vector IV to AS1\4 2 .7ASI\6ASM2.7Vector IV to ASI\S 2 .7ASI\12AS31I2 2 ,7 MainfrarrteASI112 2 .7 GUIAS[\1 4ASi! 14 2 .7 MainframeASI\14 2,7 PCASI\ 14 2 .7 AFP PCASi114 2 .7 PC CompressionA SI\ 14 2 .7 APIs[AS to ASI\_14 interfaceAS1\14 AFP Basic FontsAS(\14 AF'P Century SchoolbookASI114 AFP Format Box FontASI\14 AFP Futura Extra BoldASP I4 AFP Sonoran & BkMaster

ASfl15ASI1t5 2 .7 MainframeASI115 2 .7 PCASR 15 2.7 IPS InterfaceAS1t15 2.7 Teller MainframeASP. 15 2.7_ Teller PCAS 1t 1$ 2 .7 Auto TransferResearch Finder

FRAUDASi\16 3 .3 /Base SystemASI\16 3 .3 v-3raoch AccessAS1i16 3 .3 Check PrinterAS1119 1 .2 7 MainframeFraud Track I .5A Eva1_UsersFraud Track I .SA User sLicense 14o_ .. .... .

DOCUMENTATION :

Release Note s

s4zIDNoASR417 Manuals

ASA17 3, 2 .7;,_,_ ASM U SA . -- - I M_

ASA17 Letter Server 1 .5 2 .7._ASL6U SA IM

Case Finder 2 .7 Vector IV to ASI16

A n1Sr 2.7._ ASI114 U _ SA IM

ASI\I8 2.7 Mainfi-ame 2.7 AS1\14 API s

ASIt18 2 .7-'PC 2 .7. AS1115 U SA IMAS

1\12

0-3 .3 ASf16 U _ IM3A.0 AS)\17 U(3 .3) UR.P(3 .4)

AS11I0{3 2.7- _

SA(3 .3) SARP(3 .4)[AS to ASI interface e .7_ SUP(3 . I .9) SUP RP(3 .3 )FMS to ASI interface 2 .7

^ __ _RP(3 .4) IM(3 I .9 )SUP

K2 Coversheet Feature 2 .7_ .^

2 .7 . ASIl18 U IMFax Prefix 2 .7

_1.2 AS11I9 U 1MZ. 7 . ASP 100 U SA IM

OSMOSM 1 .2± (619197) Fraud Track U SA

Customer Support HH innovasion .SPECIAL ORDE ICSDs : Customer Support RB Fraud

NOw-01-39 03:39P 02

Q0

October 29, 1994

Lettero f'Ea ;ga rr .C floe Jf t

2 r, l r= CDut wTRUSTMARKBA14K243 . Capitol Strut3k'k u MS 39201-25< 2

srl i

Thank you for your camas intercom in tw+e C €rtccr-Amino, i, inc ., (C art kk-Ati€ ari) ?mud'I et cts= Sys (AS1116 On-Us Freud Dittectica, ASI 119 Deposit . Fru motion * d A 1f16 13t eczh

ti Access t ion). We set cacit d xhw t the paampect of pravAng fraud protration far ; sur ba& in 2 999.

11 Letter of E 1 ,t upmeaU an v111"er to T"t Lmark Bank, Inc . '[r►asrm t Bank, 1n " or the'Same) to pure i G ur-Aat ori ` s Fntud sofiw po. i (th-Us . Deposit Fr~, . d $)etettionSyxtcma, & a 'rata Access Op on) i sr mkrrtd to as da "Freud $ ^s i ms' and the ir+ Nationof tkhaa Fraud Sy Amt for a tat d pri c cf 5280,t t.6 . 'tis print in ti du a saute ax a ofS:90,000.00 (560,000 fo the 1116 Ora-Us Fro T ecate . Sys , SN9Ofl0 for to a ASI/ 1 9 D:positFrail D*fttion System wed MODO frw the Braw-h Access Gptian to ASiJt6 plus inS 11aUQTZ an d

ibratiot pees of Imo, . t. 7hii afar m mains valid trough November 7 0, 1999 and 6cc ttin t up m Trus x#c 1k eat, ttmiîg lfi4 Leer of Fsgag t Sao later than October 29, 1999,`tuBdt Bank f u r t h e r Agmet t o execute a ire lie an later dw November 30, 1999, , t to

the Mu "see pteltcq af tthe Motu Sea ax Lises aura dad Octobw 4, 1999 ,

az t vEMMUMMa-

Worthh with thw ms`s pest, Ca z Antkati wM:

Develop ftztir l aptcificaAons for iat ea between the Fr S ms ad the bnl sDDA,.Eu&-flc, All ltemx Pilo, 'T'enet (Brawh A sa Lien), ATM. osttd any tath custom1ritcrf v berween the Freud Systs -and the 3ffinn .'a $ystea(s) ideet a in theP. qu rnaiits Decwoent to he aampleted by the Cerra rrAudnasi tt I p rsonret .Dewlap W iensnU required ittcrf a to the Monk's spatem .InslalM tl e'sra**sI .Assist with ?rol t ag rte.Provide Lc a Aualy.i and Sys , Gehl scion S c, s. TES prr wddr.a at rink bttwccn pastion s, pros acted fl re tosscs and pia system so" i lu ding :

a Analysis of d w d ine the appmpri Mit*ting sy site* and torccom a settings for eFdMel system Otii to 1.

bark* Riled sys t xeeamdt dahm to set the rules and p rMcers for theoffer and br b systems.

a A Sauk scSVb%w1ftt sa)ysi based on the icespi u i of r eca r eoAtd systemparameters as den Ted by the astral past loss data .

L "J V :i

N v4- O -99 O3z 9P

W. Jim OutlawNc vs tb . . 1999Per 3 ct4

days k di; iO$ $ . UnIs s the disdO ng qty "*'0t *s im tri* or '!3 lett piavidea ohowisc, tiroreaming pary stall ceiam C*nfidW1iei Material in dsvc*, leke e!7 rrss mite pmcant to ptoteci itoonfidwAi4ly in any case, no less tt the r% eiv 4 party W ms to ptot its awe eCmMantWironicmattin), w id not dfscloaa it as, or usa it fir the t'fraf, azky third p ty . Th r wing vasty gaitdixclcnc cis disci sig pa y 'sr Conte j%WWAI a 3y t employe or 24etsts wkor Cl) issue agree, inWriting to retain is in CMfid s*d (ii) aced s 14WW it insane do mitts obi: kd9r.

N* wiim~g wokMg to the co y, Col fWokid Vial s not intto e any e*ra etioA tlx: (i)is in tk public in by no fault o'er r m3vin ', (ii) the receiving peaty davokTod irMdfa w&atjyWithout k ►wirtg s C ieI M srio or {iii} is or canes into the re eiving Patty's po eessror wilt rwtuss &+ iosute i tions-

The c cipi. st rtw*y make * remanahle n €bac of waits of all Caifi& W M berik. Su tx capita shall beM$* rift the saute n+ uW as The ori~me~.

P . as

7JU FrCWJSz Of this Season eenst $014 a o of the pairs cvaccsning the f tt 1Materials, nowit staid any groprtettsy ie, eaft or restttctou s cantemed in the C of ethel Meteria e,or axW y Tld loss Ye noll policy sW ` Ie*ns or v'Isitor entry ac wwwed 4 .

Upon exr,a n of s b bg Ike*^ the tics ray contain turher UM and conditions r+rs ing

'I ST t FURNOSVIED MREUNMER. IS ? .OVWWD AS fS AND ALL WAN S AExCLU )9), t'L ')NO ' 5MPLM W. R+ ' S OP % A A LITYFITNESS FORA?ARTICULAP. PURPOSE.

CARUMR A TINOM'S LIASMIrY WITH R.ES CT TO ANY WANW IN TTM& LtrrEROf AGRE & ' IS LIB TO RZFLACNO A DEMME SYSTEM OR RE7UNENG '17ECOS?D ING SYSTEMS ME, AT CSR-AN'T'I 'QRi'S OPFION . CAXRRXMUTINOR TS NOT L BLE FOR ANY INDIUM, SPA, PUNIT OR CONSEQU t1IALDOGES, IN :LUfINQ LOST PROM. ?if.[ . U M. (I) USING A 3TEK (ii)PE 1Fi ,TWO JIB "IfS LE"': ~~R~OF AGE~MENI OR. (iii) SnACmNG ANY ~T, ] O

B- 't£ d 3IMS LETTER OF AGREEMENT, EENN If THE BANK HAS ADVISED CABIN WRITING OF SUCH pO IBITITY . ''RTE CAE-ANt1lOI NOT LIABLE FORANY ) AGES U LA"S TO ANY SY' FM FAILURE .

This kftw shall be ei sve as of the dnta pt end sii& l oat n1t a cinti? suposeded urn full ioiof a bin int lica se.

lout? saspeMada gam' disc41ssi ous and a veeanoe of the acs renting to dh subject n s 3teraoand the te rms hcresaf may be =ended or)y 6YA writing exee € by boob patbes ,

'' 1 r fir, e ~ty~~ y '~I .'~~C~v

'Nov-01-99 03 :39P

Mr.Ju outurw4ovmher t, iPage 2 of4

Trsizti44 Of L C Sperre§cnal, technical lad proj+Ci staff on the Fsatsd Systems d is ►business process =4 soflw .

Based a s a s s t djWUS iwi, we arc poet t o of the following Pjci & if this Est Ike isslPad by dcs r 24, 1 9 ;

tom.-Us 'raudScfr. (ASlf 6) 5 KOKOBras;it AssOptkm 9 30100.ttt!T e rs~d Sofwax (ASV19) $ 90,000 .00

Total Uo*ft Pc* UVA"

LIMIJ&ta an and Cifibta ioa SeMces $ tN1,E Q.

itotawim Total $1 *.

P . 04

Fs. t f sMftW= will occur ae o ding to he fo lowi tg: (i) the ft m pr t af': 0,00.00 or "213of the Softwat Total shall be d*ta n owmai*n of this 'Utter a(kgc t ; m a4 (2) the secondpaymeeit of $60,00.00 o 1/3 of the Software Total 11 be an Na bea 30, 199#, u d (3) the thirdand final payment will be dtte on December 31, 19" ,

The payment for the iaatallation services will be due upon t ct riot±OU of Ms1astonos to be etutusliyW *W by the parties at a later date.

l e e a; o catnsty wqxnm shall be invoiced as they axe iumyed, Mime wq*nw will alsoawlu #It, ill, disa$n& ZVOUW fears and teleph , etc . and will be billed actording Do .Gamer-Antmm is internal travel pelicies . Payme Ut is cum t izty (30) days .

and spport for ft fret randy days der the Sys% r is tripped provided fm of serge.The aai mai a m it 1 % of the suxr : l4oottse fr* for t as cietod softws prcduakI rater is ,t Bak sus to assromer support and s mica desk, u$aetes d up, raps thatare gt liy west out to c-as srS co mainte e s +ice, Ater the first annual sn trxseace period,this r catenance f is auto an tecseasa before the start of a near m4im" ase parkd fakes ving 30clays notion from Car i ker.Antiuori .

trrx .p aimpwNan m r'r S .z r

Ce xek -As inarj awzts alt tide to or the sett to license eath SSystcm and rf1 portituns, otodificatianscopies tl af. including iutcrfsc Ord sets created or ptedb r+e r~ Ar~tinoe L

All a to e e snged oe =cited pV tV=t is this tie (heviu4er wrtrM to as "C " lei

Materials") *mjj be conapaucwslyaid by the arig maing meaty to indicate thoir source mid i tity, andstead berms the 1e czrd ' Co d al MerIriate", In c to xecaia its s as % mkidentiaL'* oralcanfd 4a oat must be Te&xmd to pmt and masked "CO7Yfc antiaT or " pr' sexy' Mthin 3 CC3 ~'recm~l .~CC

Nav-01-9g o3i46P

Mr.li CDutlaNovember 1, L99Page4 of4

if diR.` 1i0YB 'dA3CCL 1t l 9et4 fd1'~',~'1 DU? Ct .`mt 0 ,, . ? G'S~ . . : thh ISA.pe 'it c it L gagem t, pl .,,"+!!tu lcs#4 ;' si _ -c lsci w M d Tvh4K?3 to iii c 'ic 9ig4 copy of this imr.

~iCiCCFLE~*,

X11} t:.armbb3

MAMving ?tiucips9~1Ct t r 7,1999

AC.=p# and A gr'd W,

T,nt k Book, 1

>E3ai .. ~~:~

cc; CCU tra k ManagerCCMProduct 1'vc aprrt t Manager1~C~OW tissg

C :1W~6~T75A~S .CkF:&rw~d YlV~A~dec

11 -01 -99P04 : 16 RiV

P . as

Oct-of- 99 i2 :1 P

CARR. K R,- ANTINOR [

July t2, 1999

Mr . Sim Ou€iswSenior Vice PresidentTru_sttttark National an7AB East Capitol StreetJacksoet, Mississippi 3920 1

tear Jimt

R .o2

L~'u ttltJ(fUUF~~l ~

Liza; oir ENCACEM ENTConf dent at Materia l

Carreker-Antinori, Inc. ("Carreker-, ntinori') is pleased to submit this Letter of Engagement to perform anEnvirnnrnenial Assessment of Ttustmark National Bank Cl rasunark'), . This assessment will focus onTrustrnark's check fraud envtrontaent as it relates to cheek fraud exposure .

This letter outlines the st -vices, the deliverables : your participation, professional fees, and project schodule .

Carreker-An tinari agrs s to perform ft following services (the "Services") for Custocaer !

a) An analysis of the bank's current new account opening procedtues, teller procedures as they relate tocashing checici and taking deposits, and hackroom procedures as they relate to check inspection and frauddetection .

b) An analysis of the bank's current organizational structure as it relates to check fraud detection andcastigator- or check fraud tosses .

c) . An analysis of the bank's pm kisses, which will provide a link between past tosser and projected fin urelosses. The past loss review will Include a statistical sampling of charged off checking aunts todetermine if and to what tar charged off checking account totals actually contain fraud losses .

d) A costibenettt analysis for the irttplem tt€at~tsn of recommended system parameters as determined by thepast loss data . This analysis will present several deteetice rate scenarios based on different F'i'b levels .We will Provide a final recd ramdation on the rapt€rnil situation, which will allow the bank to make theappropriate staffing decisions, based on their unique environment . Past toss data will be categorized andprioritized so that the System rules are geared toward mitigating these losses .

e) Opportunities (or improvement using the 0n-Ls and Deposit Fraud Detection Systems as well asoperational recommendations outside these systems that will improve detection rates A decision treematrix will he provided to guide the bank's operati xtal personnel on the handling of different types ofsuspect items. For example, the matrix will recommend a different course of action and urgency for anitem flagged for "amount greater than average" than one flagged for "'new account" based on theknowledge that the first tuna has a 16 tizz greater chance of being fraudulent than the second item .

2. DE JIV1 RABLES.

a) Carreker-Antinori will present a report to management and discuss potential solutions orrecomrnendatiotts to reduce the risk of loess identified in the report . Grreker-Antinari Will also discuss

CJC q1-93 i2:18P P.C12

Trustat ark National Batikluly 12, 1949Page 2 = .

an organizatioraai structure &ar ongoing tnoaitcnug . reduction of risk and benchmarks based on ourexperience with other financial institutions .

b? A decision tree matrix to guide the bank 's Operationai rt el on the handling of different types ofsuspect item s

c) Profile of a check inspector including a description of the type ofind€vidual that would be successful inthis position and a list of characteristics that this person should mss.

3 . pUMS t ` CARR R-A?4TINOJ I.

Carreker-Antinori will provide the personnel necessary to pcrfhrm the review as outlined in the Services,section move.

I Ij A?+L4 . $ 12F

Both data and time c naitznents on the part of bank staff are limited to support this per cct . Caxrekcr.Antinori will wont to rrinirniae time required by utilizing existing reports and working closely with bankpersonnel to c ermine what data is easily accessible . Carte r -Anrit;ori and the Hank ages that :

al If any detailed research i s required, the Bank wi ll provide the personnel necessary to perlorrn such

b) The Bank will provide C:aerrker-Antinori with access to the infcamadari required for study and analysis ina timely manner .

5. -SCIEUM,

Czrreker-Antirtori agrees to make a good faith effort 10 begin providing the Services on a date to be mutuallyagreed on by the parties after they have entered into this engagement, Carreker-Antinori further agrees tomake a good faith effort to complete the prices in a reasonable time period after the project begins providedCustomer makes a good faith effort to make available on a timely basis the required personnel and materials,and to review on a nrmeiy basis the documents presented by Carreker•Anainori for approval ,

6. PIJC ING A. COI G.

aj The fee for the Carreker-&ntirtci ri vironmentai Assess oent Services will be a fixed price of 530,000 .Th is fee is due upon delivery and pr'esenonent of ihe r rt. 50% of this fee, or S15,000 will be creditedtoward the purchase of the C trek r-Action Lass Ana l ysis and System Cslibntion Services, pr videdsuch services and accompanying software, (On -us Check Fraud Detection System (AS E\16) & DepositFraud Detection System (ASre19)) are phased by Septem be r 3E7, E999,

hl Reasonable and customary expenses including but not limited to air, hotel, Teals and groundtransportation will be invoiced as inr red . Payment ter t,s for all of the above services are net thirty (30)days except expenses, which are due and payable upon the receipt of invoice .

7. LNPEKNEFICA[ON.

Carreker-Antinori drag indemnify and save Truetsrtark and Trustmark shall indernitity and save Carreker-kzni on harmless A and against any a i t B Lass, costs . liabilities, da ges, ,xudg.rnents . and expenses,including reasonable attorney's f, in connection with claims resulting from bodily injury or death of anyperson. or from damage to any property sustained by any person, arising Fern the performance of the servicesby contractors, agents, invitees, visitors. servants or e.mplc~yees,

P .03

Trustnsark National BankJuly 12. 1999Page 3

S. C NFrn NT!AL

The parties agree that any material, itrforinstion, data and other cor nu catioats disclosed during thet?erfarmanee of this agreement by either party (the "Originseing Party") to the other party (the "Aece€v€ngParty" ) and, if in writing , marked as " oofldential" or 'Proprietary" is Confidential Information and may notbe disclosed by the Receiving Party Mississippi codeannotated Section g-5-55 . r E .: -'à

a) Information Cave.

The parties further agree that any material, informatiogt, data and other'' canutttinicatibns relating toCarrcker-Antirtori's past, present, or future research . devewpment andlor business activities disclosed byCarre€cer-Antinori through the performance of this Agreement shall he deemed to be Conrldcafiallnforsatisxt ,

b) Handling of the lnformat€act

The parties further agree that all Confidential infarrnatim is and will remain the property of theDisclosing Party and that such Coofidetulal Information will not be copied or reproduced without theexpress written consent of the Disclosing Party, except for such copies as may be reasonably required forinternal evaluation or performance by the Receiving Party. Such copies shall be clearly marked as"Conti ntiar , or '-Propriesary . All Confidential Information, including copier thereof, will . be return edto the Disclosing Party within 30 days of r%clpL of writ= rtquost for the rcuwn of such information .Notwithstanding the foregoing , the rights and obligations of each party with respect to the disclosure ofConfidential Information shall survive the return or destruction of Confidential Information pursuant tothis motion .

9. i 3LL TUAL PRO, RT Y .PJCHTS.

Ca .aceker•Antinori retains all copyright and other intellectual property rights in everything developed eitherbefore or during the zoorse of an enga ement including systems, methodologies, software and know-how .Carreker- .Antinori also retains all copyright and other intellectual property rights in all reports, written adviceor other materials provided by Carr* r-Antinori to the Bank although the Bank will have the full right to usethese materials within its own organization . If these materials are to be used outside of the Bank's aweorganization, this will require pennissiun from Carreker-Artdmw€ .

LIMITATION QF.LjajLjjX ,

In no event shall either party be liable to the ocher for exemplary, incidental, indirect, special or Con" tretttiaidamages of any kind, including without lkuitaticra, low of profit, savings or revenue, however caused and onany cheory of liability arising out of or in connection with the services or work product provided pursuant tothis agreement, whether or not such party was advised of this loss .

Neither patty's liability for damages, regardless of the form of action, shall exceed the fees paid ,

H . TERMINATION .

It is un4crstood that, in the event this project is terminated by either party prior to its compiction , anyCarrel:er-Anzinori accreted man-dree and ou t-of-pocket expenses will be paid within two (2) weeks of, ificatim of prv ect terminations .

Trustmark National BankJuly 12, 1999Page 4

This iettlr supersedes prior discussions and agreements of the parses relating to the subject matte.! he mg, and thetames hereof nay be attended only by a writing executed by both parties . This project will be gov ed by the lawsof the State of Mississippi.

If the above adequately sets forth our current intent respecting the sire of our engagement, please so indicate bysigning below and returning to us one sign copy of this letter ,

Sincerely,

Paul A . CarrubbaManaging PrincipalFor: C era&ntiinor[, Inc.

A ; .epted and Agreed to :

Trusunar aticmal Bank

Date: {3

rc: S. Sargent ,M . InmanAccountingContracts Manager

F' . 04

Exhibit 5

Contract Memorializing the Sale of a SoftwareLicense as Well as Installation and Implementatio n

Services to Toronto Dominion Bank

hip in4 ~t~tttnd+l'ttsse Ch,,,,,eC A R R E K E Renah :i ng e-finance solutions - cLUiar .Lt~tt s~ ;a~ri! ".

Z3Hund Doi,.dreu b ySHIPPING REQUEST MErnail

iRequested By: Date: 0 Govemi hs i and Day

Please Ship to fot(o rats to arrive by; C3 FT?

Contact- _ tnrorma ti onCompany :Address: ~~`tr31 l7 7 41 t ~7 r~

Phone # : ~{3 Cfi t o

Onyx #REQUESTS FROM ANY DEPARTMENT MUST BE APPROVED BY THE SVP OF THAT DEPT,THIS SECTION MUST BECOMPLETED FOR ANY SOFTWARE SHIPMENT TO BE RELEASED,Approved SVP Engineer: Date;Approved SVP Cust Sup: Date:Approved SVP Sales: Date:

Approved SVP Prod/Proj Mgrnnt: Date:"'Manuals will only be shipped routinely to customers with existing contracts . Otherwise, a signed Non-Disclosure

is required. Faxes are ac ce ptable. Any exeeptidus require approval of SVP Sys or Ste' Product M t .* Requests to ship preliminary documentation require approval of the appropriate Product Mgr, Docu mentation Mgr, and the Development

'4-r. These copies will be plainly marked as Preliminary or Draft .

PRODUCTS :

Asr\AS [\4t t IN 12 2, 7-AS114 TRACS Interface 2. 7Vector IV to ASit4 2 .7_ASA6ASII6 2 7Vector IV to ASIt6 2 .7_

ASI\12ASRL2 2 .7 MainframeASB..12 2 .7„ , GUI

ASI\14ASIt14 2 .7_MainfASI\14 2 .7 PCASI\14 2,7__,_. AFPASI\14 2 .7_ PC c..w,ASR14 Fonts _IAS to ASIt[4 interface

AS1\1 5ASII! 5 2 .7_ MainframeASl115 2 .7- PCASI115 2 .7„_.. Teller MainframeASR 1 3 2.7_ Te[le: .PCResearch Finder

FRAUDFraudLinkOn .us 3 .3?~ HusePratidLinkOn-us 3,3__._ BranchFraudLinkDeposit 2._FraudLinkeTracker .FraudLinkKiteFraudLinkPCFraudLinkP. ositlvePay_

AS1\17 3 ._ASIt17 Letter Server I .S_ .Case Finder

3 ERSSPECIAL .

DOCUMENTATION:Release Notes

Manuals2.7 .,_,, ASI14 U SA IM2.7 - ASI\6 U SA - IM-2.7 Vector IV to ASI\62.7 ._ ASI\14 U SA Li2,7 ASI\ 14 APIs2 .7 .__ ASI\15 U SA EM_

1. .0 R .esearchPi nder SRO_3 .7 ASA17 U,_-, SA, „• SUP, ,, ._ .

1 .9 CaseFinder U_ SA_ SUP_2 .7 . .,, ASIUS U IM .. . .. .. . .2 .7 .__ ASI\ 100 U SA IM3 .3 ASII 16 U _2.0ASA19U IGFraudLinkPC U - IGFraudLinkeTracker U SA.ER dBankree U_ AG_

For Fulfillment Use Only

Date

PedSxp

. , , . . .. . .. .. .

UPSOTracking Na

Shipper Wt"

Order NumberRecv'd By

Maintenance 13 Virus Scan El Excel 0Monthly E Customer FileShipper Notes

TD 3ti'7c "AIR tot

Gan,razt r~i, . ~-L~Ctri35

APPENDIX-A snrraMa T 5 n mUc or;

Ths A ndtx A is part of a M lk slar Software Utr a, crated Aprg 30; 2061, tatweerr CAI iRFX5Ct3RPORMOtd., wttas t+z prinoipa€ oflic lWatod at 4M Vaky View Lane, Sale #10GQ, Tiathar. T*% 75z"(Carrocai ), and Toll ÒMONT -001M1N1DN BANK hoMing an o Mm at 53 Krig 5tnagt. Tor o, orvatic CanastaM5K 1A2 {' Customo? and is subject to, the general terra and cold '€tions s*t fort In that Uvmse .

C arreker hereby titenvas the IN towing systems to use Cu tor+rsr :

1 . FrtudUfl Or#-Vam The Syatwrn w V be, as of the date of its ittstaiatiprrr the *moat Current v®ra nor esae avajlab►e for sate, if a ftU tar vv on or re ase is $vali wtt ir€ six wtt'! of the daze qtinstaisat,on, it shall be made avafe a to the Cuatarrter at no additional cwt.

2, rr~ Cs license shalt tnvk the right to ua8 the sottr4e node for the Sy m Solely and ezokasiveiy it the ve it

dart ker a) Ceases to m; Maintenance Services for the current or tom immediately pr Otis „tam releasesgenerally avaifsble for prar ese, orb) fottowin 01%pirarJort of the warranty period st ed in Sutler, B.& of antiassist, cros ntart wrtttert Mende gMng a eon rnarciatly re"at s c ttunlty to fattae .411 d retuae. tooorreot matetW t iecla as neeossa y to Kesp the Sy €n pert rriing avti aMtiat :Y acwdiml to ~, adta , uan, ursl UnWhho tzsd rtroai catsor,a "used such dateeta.

To instf, operate and use t e $yate tnr the Custornoea irrtemai t uofness pu" s", namely is ,rcaasa s oricbelorlgirig . tta VW CAA(o kSer. Customer shall to *i:bwed to tcse, or DenYtit the user of, the system for thecperatiorts of, or for the benefit of, any Member of tt#e -M 51n% i=inancl C roue art is aubsd#eries in Canada,sect group b nn daened as .otiNe dAte of 41=U114n of this ► endix.

4 . %w0 ,sirxaLt"wn:The licensed System wilt t e solaiytor use at the Custome r` ; exist€tngoompuier Pro Mtt4g site stet below

Designated Operational Loeatnon(s)-, To be d etermin ed by The T 010M Qominte ink whirs thirty. . 00y dow of e*e utlon

5, 119.Stiiae Pte:Based On Custo er s average ;umsttt Oalyr Qr vs Check Volesnto, the PTiciag fA tlt v0em 3s matt izod ;n thech art below :

109M90 1 S tact

F raUNJ7*0r1-tjs

Cif ZQW$34®I S(S .E S 1$;75U0U S

dl.itldL C~j UA Lnc'etnenf 6 ~'rf~a_7 la1 6

too additional Li anse Fee Will be 4ua until s+ o s tans as- the Custantcrs a ge baby On-Us Check Vaturrieexceeds 1,1O,OO4 ,

Uptm ro%vest, put no sooner ftl% semS•~rtr catty, Custom r shall report to r srrehee in rwitir9 army Chung* incurrent wartime began on Daly On.Ua Valzarne ,

to the event that Cuatorret a reb or merges with another bank or banks in wale it is at least a 51"%s~+ar~3,otd r, and Customer utifisES System ant elf of such acquired or merged bmrtk(* , the tr W,-Uonvolume of air entitles In tr1* tggvee ate on whioti UIC $jls'•en, is used will detarr *e the f* ant 844tlonafUoenae F "s then teas and payable To Qarr icar, it any. If Customer is wired by a othor licensed user ofSP a System, ton for purposes of deierrnsning am/ adaltlonat license fees, the average C n iris check voiurnwdefined in the res,® v* lidwses snsli be combine ,

5. snt `chj t8 Total License Fee $Mail be Ndd FIecocding to > bgttowir45 schedule. 30% c$ $ ~ .t}f~) Shalt be due and

gw(abie thirty (30) days from the date of moution of this At?Gertdt# A, 50% (S1 W,V5,tI "all tFo due and

.` . . 1 . . . . `mil r. :. . ._ . ._ TD FNK CAS& t(G M

APPENDIX A M THE MASMA S*PTWA UCKrtse~CattlECIU1~C1~

payable the eaki lta 0=Ur of when the Systarm have been used SU006S lly in prrdurf4r for -,Qn ('O)carssesx+ti' a days, or )robe 31 , 2OO 1 , VA 2" (37&O shall be due and pay ab le no later thanDecember 31, 201

7 . Maintenance efyt a Fee :Annual Mart ice rieea Pas for thM System shall 15 4/6 of she t . cense Ftt ($47,813 .00) per year. Theirrttal Mtlnienance pert shaft le i v ° the Systet h .lse placed ssfutly in grnciucdors for tef (10)cons tlvs days, i ,vfr. no I?ttr than Omb.t 31, 2401, Thereafter. Maintertaet Services Fae shaif rAtincrease by rnnrs than $% lrrii i one mainii4riance period to next prrooMed that Carmkar gav n the Cus orrernotioe of such increase at toast s`skty (6o) oe endet tliys prior to tM Penewa€ dale or rnainterance sorvb!s . 1U1msintenarca eerviae fees oh 4 be itwatcced and paid aiinudy in advanca .

So long O etomer of uas to subse ibe and is current on Maintertanca StrAfts Fs, aft Mule varsicrsardor reloasas ai ft "tam irr d€ng ~, thous €iwftillon Interim mslnwn a rela# and upgracws ofr,-?em sisal! be d iveceU promo tty to the Customer.-tr

*

trwoioes shalt be deernec oast dun if pavmnnt is not reaet<+ed Wialin 30 days frost r €pt of In of r . Paw dueit voao s W bear intofest a the Toro ' Oonih icn Santa U.S. Dollar Prune Rate plus two nc (2%) perar,rn m from ft s date twtl paid in lute . In the eve-it of any dis ► of inv arrsot nt, me Cttstvaer fit .on of nefote the duo date, satin Carraker in writin ; of the disputed it s and the mason tar the dlwe. !'abateto n*tify "CatseKer of ay disputed Item or portion of an lnvoroe In aecardariae with this pi ston conWMkos awaiver of h dispule, and to tam of invotse ponion shall accrue interest Iron the s datr. Payment of allundisputod portions of any invoice shall ba pstd by the due date . Oarreker reserves the right 10 set o anyamounts due Osrtei et agelnst any amounts payable to the Customer .

9. C!'sArty ;entice or eater 's rust t auttlorYsod or required by this Appendix to be glven in wrslir to Carrelcer orCustOthot' stmt be * fft-Wntty giusn if sddfesSrrd to fit party and rOiN~ by ii at Off" . set feRh below Of atsuch other piw as It may from time to time ties€ snate in writing.

'To Customer; `t'a Carr+ r.

The To t 'antsrt o ir: o Bars~,K~R1tl w~''

iFYPC ._6 fIf3L..~iA2

htlarttloR= 8usinesS F+rodt is firoup

For Invoicing.,

the 'Pararrtgs in€t Bash

Osrreker t orpe teten4055 Valley View tone, Guile el 000De€tas, Teas 75244Atwit 0 tc troeta P, rte e r

For SHtpmem of Saftw a

'Pte Ttrg 6- cm*Ti in Bank ..5510 ESg aYr et 1' pit $1:149r

ti IA2

Telephone

This appendix A is part of tnO Ucarese as of the trot cote written below .

AccetzteWFM

Signed :

Mile; dyaiisa Pro. nt _

Date_ 3

Accspt d bgr 1 Cuatorner.4KI TDROHT04MINION DAR K

3ai l /,~1

1%37 +K' F+~+R~ FtiSM~?

'flda: Vl ~ C ¢ F'C,f%0'

OS71,vao 1 Ch at - aa~ sat .dca `15`0 ?-01A7 t :2~ RCVS age2o0 2

Max ORDER ONE

~ls :yt .

0471 ar ~:C trw. Fwd. ; :v-IN

This Work Order One ar% Otderl is haraby in=Wraied rota 1h Q water a rrant eraics46d Aare 30-2301, tietw n R KKR COBPOi $ QM ~~arr ns1 MCI THE Ttt ONT 1OW c t"Ostrm ►efl and issubject to to general terns and cond ions set forth to that AQte"wr &

WHEREAS, Gusto r deslms to es age C*tMMker to perform an ia9tallatieh oT the r-raudUnk Ort-Vs&rraas dote400s+ system, tthw 48ystams') of Cuswmar's deslptatad at .

NOW, TIED !, in crsnsideradon of the'rriukrrat promises and a eamer :ts carstained harem, Qarrekerand Ct st rater agree as hsitrswa

A. ae vioes

CarreKor agraw to pWorrit t#te 1a1iewlrtq setti'lces{tl` "Saa'i M-4 for Cua Amer,

t . FtimtIoi'tal specifications - work vAth Customw peraonntl to develop P nester 1 6pt r~eaticne for mecustom lriertacG baivem t1* Systa € and Customers, Ot3A, aid EBUfic IN* Systems,

2. Prr3jeo! Plan - aher Oustpn er tat gikfan vMt an a .p at of vw Funaaonat S7pwifYC` t tms, work withCustormsr to deveiop a P ect Ptah =mprised of a pre osed schedule "!d tttl~#t~msntdt1 t flss (th e"Taste U%j wk?, rwspon mii'ity for each task oeinn *"toned to Cthekar, xtorner oraftm,

3 . rOVIC d pE~ij~rt rrt r~3 Qnt aas'iMtanae for tr laden of the sof Wa e .

Carrekerwit at.s gn a tY are er to fa tRtata of par R5 the trine in teska:

a . Comet pr ect ki- n!f and Pte inirv9 Sessionb. Provide ages matter on bus~ria s seises Drojact tssues

Me ata send docu rat t e mutter sd, Enscne that the proms peen arl&$a business cbjeCttye. Track pna;ect tatKs AN ansute acttetlul ,daces ark being xnet v#* a projast pla nt . trr}sure project ttetays are esoalated to approprtate managetna ; it twee tot prabttam vtsialttty and

rMo4monMonitor and ruvitow rneetbng minuses

h. Monitor-and miow issues logL Assist to csaatten of t?teleLt Ostrriton . Fvrsati rat Specrzicat or fi ocwmert, Profeot plan, 5}eterrt

r fsiern ritatian Ce14M00Ca rent, and Imnbemantation Plan to MUMB a'Signwfr seeder from uta p fate Civialo Men ss

I- Resiew bank operarlonal procedure sCoordinate the it dtt cation of eEtrtent pro urns to Incorporate new systems

I . asst in softer: *( user utn rag reQuirernantstfl . i iew and assist in t e oroatfot o uSar eoeeptanea testing swategy and pann. t note is representative from Dames ar is present (onaiEe or via talaptRem) ±or ail sppr4prtato Proja

Team meet ao . Cassduot a Post.lrv i ntaWn meeting

Luz Anatyala, System C bradvn Scrviecs and Trdnir€q .

Loss A et ie ar+d System Csfbratlon Servzs provide a satween pest t s, D,e ed future lossesand pretdse ayztem settings for the FTaud "tk On Us which imitift

a, Analyze data to detorrtbn>r Me aispraprtate mlt ;gaang System as ar+d re nmendsettings for opbtmat$yaiessi ttzatIo L

b. AoaMer1ettt anatysia fora implemeAlatlon of rewin tended system P+ rarnatei as de(atmined tyt1' past lass data ,

c . Umlked System's reoommendat s to sat the rules and parameters for to back ott'roe and brar+ct,Systems .

d. Train the i rxner oper 4tional. tedwirat and project stall on V w fraud deta an buttress praoet;~s andthe s ears.

i3. ~arr~trwr r~fiu~ra~ .A~d ~~s~r:tl~~rs ,

As delved in The Furetionat Speciticatfon Ooci nten€, t'iarreksr egrW4 to the fot1C rag,

i _.- . . .,, . TB BNK CASH RGX' -: 1 S

7 .O $.ORDER E

L Provide toe-€~ec es,mry l yeterrt N®rt#.e#': tmrn the Customers D DA and Eulk PilsF systems a* twined In IP,4eau rt eats acumant €eted yy tie Cuetomsrà tee rnir p*r~crne L

2. Providw Prey ribs meet assistance i 1ho IrsstaltatisrM at tt°,e System .

9_ P oytri -;IA gt, Mrt°tt t8, test tats; WW a lost script Its assist in val dating the pre er ;)$ta€l an of theSys,

4, Cary r Till toitver isle JCt . 10 tVn alt Asa associated with 'tae System as wail as *stem Ro* on amk tdaaU l~ *t a eequeCrae Of Pb s

S . Provide doournematlon: to r etuds Us and Techn al Manuals, Prat ?tan and Usk List,

• Train the Custeme by €atlonai, Wmica4 an' Project staff on CatcaMr System .

47f the c u 2 tcrrtar, -

t. Cw tm ei- "It pmteld* tflo pesow*l rsq Atoll to the Project Piers .

2 . L Stor mr volt prt rleio dam aid/pr b€sslna$ or tachniua1 eS.Sis~ as rt:Cttagtod b Ca"Wkerin a ttm6lycrt8tnie~t'.

3 . Carreker witbe given" r~ec6rss ty. a~cas It acpltka;'soufG CO top pare the appropriatei~tar4aaea. '

4 . ' Custer AhI( vtda Carreiterwitt7 &eoss to the CPL! for'snsta ien and to tht of the were andlt1{BtfaeeB.

5 . Custortiei' wits make apt JCL modit'tcatcons required to comply with Wernai standards .

D . I~roi _Chac±ae Control f at e .

Any tnodif cation to 1h~ projeer- s"{ e, c+18 es, rEQssi Mr*reAls s as fi a opts. etc. wild felt under Project Ch reControl ante the Reo4uttemeata Delman 0c ment naa boar finalized and approvod by the Custo net. Cub tothis Sad tt*C chargr raqu patermtaliy Could irtteact project time fremes and oasts, all ohanges Suhrttitte afterChange Control is irnp .orne led rnvst be approved by the Custome?a Exeeulive Sponsor. The to~lo^wtngpas to for ChaMe Car rot will be €rr i rated .

Ant T eduesi fer changes must be submitted by the relev t patty using a Prnje 2 Ghsncj QortuaI ius-i .

t'. The Project Ct an v' nest maybe irukia' d by ehra Ga mer or by the Prrsj t ta5r4t as m al ty toidentify chime of o 1 n€t of n ls ,

. Project Change Requests will be eubmU sd through Carrakar Pr 3e t Mtnegai fa th traol *a Praji"ctChange Gc pre itdins.

A . Cuatpmet's ar uvve sponsor wili have aproval shanty over the im Sl srdentatlon of scat r,lned PreieclChance RKttess that here* budget or sohsdute imp*cL

5',+tdut

Garsaktv a 5 t i s mk salsa a good faith efott to b o n pr ,viding the Serftae on a bate to bb mute icy agreed onby the parties after *ey have antevao into this Wwork Order. rrekar furth er agrees to rn a Oaod faith eitonto complete ihe b iceein a r son tae t period after the project b o&4 provided Gstamer makes a qe dfaith ofiert to e't d 1ebtv on a timely basis :its squired {teraonnet and rt tee fs, add to rev€ew an a pi ty6"11 the daawnents premented try Carreker for approval, T his Woks Ordor shaft lam kale forrytiue (55) (laysafter the $yatem has basest ptaee4 into peaduation .

Carrektr will dav®fop a work galas (" "Pro t Work Plan') prior to a l v)stt ktcl€4l` t %ing u:xst %&M serve asthe Initial schetuIt for this project desorboct above . This Protect Work flan maybe updated thro cut theProject as app€ttonel info ration and lactars are idenllted .

F. s ryK #~5 atRi~ - r ass 4 .

1, The fee for the Mal Carrexer in halt e t sotvice3 Will 'be a r Me of $42„' t_dO US ter the site"slgnated In Appendix A of the A.p mement and the Int40aees identified k' Sin At of tT Work O rder.

a t .1 D i e\? M ee 378 d9t ? "# 2 of 2

• . . .. , . ., . .4 _._ 4b it

. ._ :. . .. .._, . . . .. 1.U tills c.! }t it .s.

WORK OJWER O*

contnue~

501A Of this tee, is due upon the cor pietian ot the tai Pu, t telck. ff meting . Thetemaining Met the 1*0, $2t .26b. S, ts dt when the 3yatern h been 4 produ n for ton (10)cone ,itlue days, however, no late than stx (8) months !tktt the tae of ex6cv{ ,ir of this Wont Otter. .

2 . The fee for the Qarreker f Ar hysks arid System (a%trt ort SerVio w91 00 a lixed price o(S125G.00US: 50% of this fee, {yt~ 67 ,A0?, is due upon 11t4 ca"teten of the lnhll& Proj a ".offreedrtg, tt r®rr rt ng 50°% of ttte taa, {$7R.6?$, ), is the upon cot ,i &Oan of the Los's Ane"is an d5yskat-i Oalibratkon Setvicas, however, rw later than six lG) tttonth from the daio of ttxecutian of this

Work

3. on" the it t$at instatletton of System is cerngiete && delved in Suer, F-, any ittlutm on-sits Catteker*t cap will be at the then current mart day rates 1o weeXd4yhvt:ekarL0 dgytr itdoy and will be it J e

as ireurred.

s . R snabla and c rstgmery e4emes, ineluing but nar limited is . air, hvtei, mess, gruurd trarisporta tanwilt be irEUOi-c6d as fn jrr:d in addition to the attated senvioee tees,

5 . Pa ea na to and customary **Irdnistratim rues, including bast not ltrr tml to, otce Woo, ut#ti'ltes,tauten :, faY, ph¢WectiOying. printtrr3, socratar:al time, tiptop and aarnpu;er supPOd, and netwark auppanwill to snv ed at the rate of $8 .00 per pre;act man hoer .

6, Faymem for alt a pensas is dwtl' t'Yy (4) days frcxrl the receipt e4 an fm o .

Involc ahe be deirned, peat due if pay"" i4 -not r ived w rin 10 isusl clays Pro€n the due date,Past due moot s wtl beef interest at Taranto erni~tien lgertk's liS. dollarPrme fete o{ug two pint( 2°16) per annum from the due data until paid in Yutt. to the evenI of any disp at an lrsvadee xnousu, tBank shall, on or bares the due date, nottty >~erxel er it wmeoq of * disputed demo sd the rein for thellspuo,e. FFailtite to nc y Carre$ or at ally 0N0 i:ern or portion of :}n lnvoicear f acoerdarce with thispu iision Carrsthutee a w& tit of such dispute, and the 'eem or #rruoioe gallon etmall a ,Ae intetlst from thed1jo date P4,YMOnt Of all unc put Portions of tiny m vo (ee ttsei bR paid t)y the due date . Canokerreeer FBS the r t to aet ot ; any BtSt0w me due v2 trokt 2 a, ;xirnsE wr ;kmo im pa *la t8 the nk.

IN WITNESS WHEFEoF, 045 WV~ Order One has been dsly executed and ;neo tented into the MaterAgreement as of iait day and year sat forth below, When In conflict with the aryls of the faster Agfearnant, the temrsat this Wort Order shall prevail . 'A

Ad tired try O~rr+ eicet,

or Prkviii)

Dom.

Aouip%vO by Customer't i "roRo }N ffiAN1.t

FsFrt+aciarad 5 rsi

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Date post:	11-Sep-2021
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Carreker Corporation Securities Litigation 03-CV-0250-Amended Consolidated Class Action

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