EXHIBIT 10.1


 


BOARD REPRESENTATION AGREEMENT


 


THIS AGREEMENT,
dated as of March 24, 2006 (the “Agreement”), is by and between Carreker
Corporation, a Delaware corporation (the “Company”), Prescott Group Capital
Management, L.L.C. (“Prescott Capital”), the investment funds listed on Schedule I
hereto (the “Prescott Funds”), Phil Frohlich (“Frohlich”), and Jeffrey D.
Watkins (“Watkins”) (Prescott Capital, the Prescott Funds, Frohlich and Watkins
are referred to collectively as the “Prescott Parties”).


 


WHEREAS, Prescott
Capital, the Prescott Funds, and Frohlich are, in the aggregate, the beneficial
owners of 1,826,909 shares of common stock, par value $0.01 per share, of the
Company (the “Common Stock”), constituting approximately 7.4% of the
outstanding Common Stock of the Company (the “Shares”);


 


WHEREAS, Prescott
Capital, the Prescott Funds, and Frohlich have filed a Schedule 13D with
the Securities and Exchange Commission (the “SEC”) with respect to their
ownership of shares of the Company and have amended their Schedule 13D
filing by amendments dated June 30, 2005 and November 29, 2005;


 


WHEREAS, by letter
dated November 29, 2005, Prescott Capital submitted a demand for
inspection of certain books and records of the Company (the “Inspection Demand”);


 


WHEREAS, by letter
dated January 6, 2006, Prescott Capital submitted a stockholder proposal
and supporting statement (the “Stockholder Proposal”) to the Company pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”);


 


WHEREAS, the
Company has responded by letter dated January 20, 2006, that such proposal
may be excluded from its proxy materials pursuant to Rule 14a-8(i) under
the Exchange Act;


 


WHEREAS, a vacancy
now exists on the Board of Directors of the Company due to the resignation of a
director, and the Prescott Parties desire that Jeffrey D. Watkins, President of
Prescott Capital, be appointed to fill such vacancy;


 


WHEREAS,  the Governance and Nominating Committee of
the Board of Directors (the “Nominating Committee”) has evaluated the candidacy
of Watkins consistent with the criteria set forth in the Company’s Corporate
Governance Guidelines and, subject to the terms and conditions set forth in
this Agreement, has recommended to the Board of Directors the election of
Watkins to fill the unexpired term of the resigning director;


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:


 


1.             REPRESENTATIONS.


 


(a)           Binding Agreement; Authority.  The Company
hereby represents and warrants that this Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms. Each
of the Prescott Parties represents and warrants that this Agreement has been
duly authorized, executed and delivered by such person and is a valid and binding
obligation of such person, enforceable against such person in accordance with
its terms.


 


(b)           Share Ownership of Common Stock. Each of the Prescott Parties hereby represents and
warrants that, as of the date hereof, it and its Affiliates and Associates (as
such terms are hereinafter defined) are the “beneficial owners” (as such term
is hereinafter defined) of an aggregate of 1,826,909 shares of Common Stock
(the “Shares”), and that neither it nor its Affiliates or Associates
beneficially owns, or has any rights, options or agreements to acquire or vote,
any other shares of Common Stock or any other capital stock or other securities
of the Company.


 


(c)           Defined Terms. For purposes of this Agreement, the terms “Affiliate” and “Associate”
shall have the respective meanings set forth in Rule 12b-2 promulgated by
the Securities and Exchange Commission (the “SEC”) under Exchange Act.  For purposes of this Agreement, the terms “beneficial
owner” and “beneficially own”


 

















 


shall have the same meanings as set forth in Rule 13d-3
promulgated by the SEC under the Exchange Act except that a person shall also
be deemed to be the beneficial owner of all shares of Common Stock which such
person has the right to acquire pursuant to the exercise of any rights in
connection with any securities or any agreement, regardless of when such rights
may be exercised and whether they are conditional.


 


2.             DIRECTOR.


 


(a)   Appointment of Director. The Prescott Parties and the Company agree that
upon the execution and delivery of this Agreement by the parties, the Board of
Directors of the Company will immediately elect Jeffrey D. Watkins (the “Prescott
Appointee”) to fill the directorship on the Board of Directors as a Class III
Director caused by the resignation of Keith W. Hughes (with the remaining term
of such directorship expiring at the Company’s 2007 annual meeting of
stockholders). The Prescott Appointee hereby agrees to serve as a director upon
election and agrees that he shall be bound by the terms and conditions of the
Company’s Insider Trading Policy, its Code of Ethics and Business Conduct, its
Corporate Governance Guidelines and all other policies applicable to the
Company’s directors.


 


(b)   Re-nomination of Director.  At the
request of Prescott Capital, the Prescott Appointee shall be considered by the
Company’s Nominating Committee for nomination for election as a director of the
Company, for the seat then held by him, at the election to be held at the
Company’s 2007 Annual Meeting on the same basis as all other serving directors
of the Company are considered for nomination. 
However, neither the Nominating Committee nor the Company shall be under
any obligation to nominate the Prescott Appointee for election to the Board of
Directors at such time.


 


Rights
and Duties as Director.  The Prescott Appointee shall be accorded the
same rights and privileges and access to information as the other directors of
the Company and shall perform all the duties of a director of the Company and
shall commit the requisite time and attention thereto on the same basis as the
other directors.


 


Compensation.  The
Prescott Appointee shall be compensated for his service as a director and shall
be reimbursed for his expenses on the same basis as all other non-employee
directors of the Company are compensated and shall be eligible for stock
options (or other stock-based compensation) on the same basis as all other
directors of the Company. The annual retainer will be prorated for the current
year in accordance with the Company’s customary practice.  Notwithstanding anything contained herein,
the receipt of stock  options (or other
stock-based compensation) by the Prescott Appointee in his capacity as a
director of the Company (or the exercise of any such stock options or vesting
of other stock-based compensation) shall not result in the violation of any
other terms of this Agreement.


 


Indemnification
and Insurance.  The Prescott Appointee shall be entitled to
the same rights of indemnification as the other directors except with respect
to any action brought by any of the Prescott Parties or their Affiliates,
Associates or Representatives or by a third party at their behest or with their
support or encouragement, as to which the Prescott Appointee hereby waives and
releases such rights of indemnification. The Prescott Appointee shall be added
to the Company’s Directors’ and Officers’ Liability Insurance Policy.


 


Information. The Prescott Parties agree to provide the Company
with such information concerning the Prescott Appointee as is required under
the Proxy Rules under the Exchange Act in connection with the preparation
and filing of the Company’s proxy statements relating to its annual meetings of
stockholders or its other reports or registration statements to be filed with
the SEC. The Prescott Parties hereby represent and warrant that all such
information heretofore or hereafter provided shall be accurate and complete in
all material respects.


 


Resignation.  If at any
time the ownership of Common Stock of the Prescott Parties, taken in the
aggregate, falls below one percent (1%) of the total number of issued and
outstanding shares of Common Stock of the Company as a result of sales or other
dispositions of such stock by the Prescott Parties, the Prescott Appointee will
tender his resignation from the Board of Directors, subject to acceptance by
the Board of Directors.


 

















 


3.             CONFIDENTIALITY.


 


(a)                   In his capacity as a director of the Company, the
Prescott Appointee will obtain and/or have access to information concerning the
Company’s business, assets, liabilities, financial condition, results of
operations, cash flows, markets and marketing, customers, employees, processes,
products, strategies, plans, projections and forecasts and other information
about the Company (together with all analyses, compilations, studies, notes,
summaries or other documents containing or based on the information obtained
from the Company, the “Company Information”) on the same basis as other
non-employee directors of the Company. 
In addition to the duties and responsibilities of the Prescott Appointee
as a director under Delaware and under federal securities laws with respect to
such Company Information, the Prescott Appointee and each other Prescott Party
to whom any Company Information is revealed will keep such information strictly
confidential and not disclose, publish, communicate or otherwise reveal such
Company Information to any other person, directly or indirectly (except as
permitted by Sections 3(b) and 3(c) below).


 


(b)                   To the extent consistent with his fiduciary duties
as a director of the Company and with the provisions of federal securities
laws, the Prescott Appointee may disclose Company Information to any other
Prescott Party, and, to the extent consistent with the provisions of federal
securities laws, any such Prescott Party who is not a director of the Company
may disclose Company Information to any other Prescott Party.  To the extent consistent with his fiduciary
duties as a director of the Company and with the provisions of federal
securities laws, the Prescott Appointee and any other Prescott Party may also
disclose Company Information to any Representative of a Prescott Party who has
executed and delivered to Prescott Capital, with a copy to the Company’s
General Counsel, an undertaking in the form of Exhibit A hereto. The
Prescott Parties are specifically prohibited from disclosing Company
Information to any other stockholder of the Company who is not a Prescott
Party, except that such restriction shall not apply to any involvement of the
Prescott Appointee in or with respect to any communication made by the Company
to its stockholders generally that is authorized by the officers of the Company
or by resolution of the Board of Directors. 
For proposes hereof, the Representatives of a person shall be its directors,
officers, legal counsel and accountants (“Representatives”).  Notwithstanding the foregoing, the Prescott
Appointee shall not furnish a list of the stockholders of the Company or reveal
the identity of other stockholders of the Company to any other Prescott Party
or any other person, except as approved in a resolution adopted by the Board of
Directors of the Company or except to the extent contained in any document
filed by the Company or any other stockholder
of the Company with the SEC.


 


(c)                   The restrictions in paragraph (a) above shall
not apply to information that (i) was in or enters the public domain or
was or becomes generally available to the public other than as a result of
disclosure by a Prescott Party or any Representative thereof, (ii) was independently
acquired by a Prescott Party (other than the Prescott Appointee) without
violating any of the obligations of any of the Prescott Parties or any of their
Representatives under this Agreement or any other confidentiality agreement, or
under any other contractual, legal, fiduciary or binding obligation or duty of
any Prescott Party or its Representatives, (iii) was available, or becomes
available, to a Prescott Party on a non-confidential basis other than as a
result of its disclosure to a Prescott Party by the Company or any director,
officer, employee or agent of the Company, but only if to the knowledge of the
Prescott Parties the source of such information is not bound by a
confidentiality agreement with the Company or is not otherwise prohibited from
transmitting the information to a Prescott Party or its Representatives by a
contractual, legal, fiduciary or other binding obligation, or (iv) was
authorized in writing by the Company to be disclosed.


 


(d)                   Each Prescott Party acknowledges that the federal
securities laws prohibit it from trading in Common Stock or other securities of
the Company while in the possession of material non-public information relating
to the Company, or from communicating such information or otherwise making
trading recommendations to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to trade in Common Stock or
other securities of the Company. 
Accordingly, the Prescott Parties and their respective partners,
managers, directors, employees, advisors and affiliates will refrain from
trading in Common Stock or other securities of the Company, or recommending
that others trade in Common Stock or other securities of the Company, at any
time while in the possession of Company Information that constitutes “material
non-public information” within the meaning of the federal securities laws.
Without limiting the generality of the foregoing, each Prescott Party agrees to
be bound by and to comply with the Company’s Insider Trading Policy.


 

















 


(e)           The Prescott Parties acknowledge that the Company
makes no express or implied representation or warranty as to the accuracy or
completeness of the Company Information, and that the Company shall have no
liability resulting from the use of the Company Information, errors therein or
omissions therefrom.  The Prescott
Parties and their respective partners, managers, directors, employees, advisers
and affiliates and other Representatives are not entitled to rely on the
accuracy or completeness of the Company Information.


 


(f)            In the event that any Prescott Party or any of its
Representatives is required (whether by oral questions, interrogatories,
requests for information or documents, subpoenas, civil or criminal
investigative or discovery demands or similar legal processes, or otherwise) to
disclose any Company Information, such Prescott Party will first provide the
Company with prompt written notice of such requirement so that the Company may
seek a protective order or other appropriate remedy, and/or waive compliance
with the provisions of this Section 3, and it will cooperate and will
cause its Representatives to cooperate with the Company with respect to the
foregoing.  In the absence of a
protective order or such a waiver from the Company, such Prescott Party or its
Representative shall be permitted to disclose that portion (and only that
portion) of the Company Information that such Prescott Party or Representative
is legally compelled to disclose; provided, however, that such Prescott Party and
such Representatives must use reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded by any person to whom any Company
Information is so disclosed.


 


(g)           To the extent that any Company Information may
include materials subject to the attorney-client privilege, the Company is not
waiving and will not be deemed to have waived or diminished its attorney
work-product protections, attorney-client privileges or similar protections and
privileges as a result  of the disclosure
of any Company Information (including Company Information related to pending or
threatened litigation) to any Prescott Party.


 


(h)           The provisions of this Section 3 shall survive
the termination of the Standstill Period (as defined below) and the expiration
or the termination of this Agreement.


 


4.             ACQUISITIONS AND DISPOSITIONS OF STOCK.


 


Each
of the Prescott Parties covenants and agrees that, during the Standstill Period
(as defined below), neither it nor any of its Affiliates or Associates will,
without the prior written consent of the Company specifically expressed in a
vote adopted by the Board of Directors, directly or indirectly, purchase or
cause to be purchased or otherwise acquire or agree to acquire, become or agree
to become the beneficial owner of, announce an intention to acquire, or offer
or propose to acquire, or solicit an offer to sell, any Common Stock or other
securities issued by the Company (other than the Shares), or any securities
convertible into or exchangeable for Common Stock or any other equity
securities of the Company, if in any such case immediately after the taking of
such action such Prescott Party and its Affiliates and Associates would, in the
aggregate, beneficially own more than fifteen percent (15%) of the then outstanding
shares of Common Stock; provided that this Section shall not apply to any
Common Stock or other securities of the Company acquired pursuant to or
resulting from any Director’s compensation, stock split, stock dividend,
recapitalization, reclassification, or similar transaction.


 


If any
Prescott Party owns or acquires any Common Stock or other securities of the
Company in violation of this agreement, such Common Stock or other securities
in excess of those permitted by this Agreement shall immediately be disposed of
to persons who are not Affiliates or Associates of the Prescott Parties in bona
fide “brokers’ transactions” (as defined under Rule 144 under the
Securities Act of 1933, as amended), and, while owned or held by such Prescott
Party, any shares in excess of the number permitted to be owned by this
Agreement shall not be voted while such violation persists.


 


Each
of the Prescott Parties covenants and agrees that, during the Standstill Period
(as defined below), except as permitted by Section 5(c) hereof,  neither it nor any of its Affiliates or
Associates will, without the prior written consent of the Company specifically
expressed in a vote adopted by the Board of Directors, directly or indirectly,
sell or otherwise dispose of, or agree to sell or otherwise dispose of, any of
the Shares or any other Common Stock or other securities of the Company to any
purchaser or other transferee who (together with  any persons with whom such purchaser or transferee
is acting in concert or who are members of a “group” (within the meaning of
within the meaning of Section 13(d)(3) of the Exchange Act) of
persons that includes such purchaser or transferee), to the knowledge of such
the Prescott Parties and their Affiliates and Associates, beneficially owns or
own in the aggregate in excess of three percent (3%) of the total outstanding
shares of Common Stock of the Company. 
For purposes of


 

















 


this Section 4(c),
with respect to any sale effected through a bona fide “brokers’ transaction”,
the Prescott Parties and/or their Affiliates and Associates shall be deemed not
to have knowledge of the purchaser’s or purchasers’ beneficial ownership of
shares of Common Stock of the Company.


 


5.             STANDSTILL ARRANGEMENTS.


 


Each of the Prescott
Parties agrees that, during the period from the date of this Agreement through
the earlier of (i) the ninetieth (90th) day after the date of
the 2007 Annual Meeting of Stockholders of the Company or (ii) October 31,
2007 (the “Standstill Period”), neither it nor any of its Affiliates or Associates
will, without the written consent of the Company, directly or indirectly,
solicit, request, advise, assist or encourage others to:


 


(a)           solicit proxies or written consents of stockholders
with respect to Common Stock under any circumstances, or make, or in any way
participate in, any “solicitation” of any “proxy” to vote any shares of Common
Stock, or become a “participant” in any contested solicitation for the election
of directors with respect to the Company (as such terms are defined or used in Rules 14a-1
and Item 4 of Schedule 14A under the Exchange Act), or seek to advise or
influence any person with respect to the voting, holding or disposition of any
shares of Common Stock; provided, however, that nothing contained herein shall
prohibit the Prescott Appointee from exercising his rights, duties or
obligations as a director of the Company;


 


(b)           seek to call, or request the call of, a special
meeting of the stockholders of the Company (other than, in the case of the
Prescott Appointee, a call made by the Board of Directors as such), or make, or
induce any other stockholder to make, any stockholder proposal in respect of
the Company, regardless of whether such proposal is made for inclusion in the
Company’s proxy materials, is made at or in respect of any stockholders meeting
or is made in connection with any attempt to solicit stockholder consents, or
induce or assist any  other stockholder
in doing the same, or make a request for a list of the Company’s stockholders;


 


(c)           commence or announce any intention to commence, or
directly or indirectly or through or in conjunction with any other person
engage in, or encourage any other person to make, any tender offer or exchange
offer for any shares of Common Stock or other securities of the Company,
provided that nothing in Section 4(c) or this Section 5(c) shall
prevent such Prescott Party from tendering or selling any Common Stock or other
securities of the Company into or pursuant to a tender offer not made by or
instigated by the Prescott Parties or any of their respective Affiliates or
Associates.


 


(d)           file with or send to the SEC a Schedule 13D or
any amendments to any Schedule 13D under the Exchange Act with respect to
the Common Stock to reflect changes to the disclosures set forth therein and
exhibits filed therewith, except (i) for an amendment to the Schedule 13D
previously filed with the SEC by the Prescott Parties with respect to the
Shares, (the “Current Schedule 13D”) to reflect this Agreement; provided
that the Prescott Parties shall, prior to the filing of such amendment with the
SEC, provide the Company with a copy of such amendment as it is proposed to be
so filed and a reasonable opportunity to review and comment thereon, or (ii) to
the extent such amendment is filed solely to report one or a combination of
other actions (if any) permitted by this Agreement or authorized in writing by
the Company.  In addition, the Prescott
Parties may file a Schedule 13D to comply with amendments after the date
hereof to Section 13(d) of the Exchange Act, to the rules promulgated
thereunder, or to the SEC’s interpretation of either of the foregoing (it being
understood that nothing contained in this Section 5(d) shall be
deemed to permit any action or disclosure that is otherwise prohibited by this
Agreement). Such permitted amendments shall be referred to as the “Permitted Schedule 13D
Amendments.” In no case shall Item 4 of the Current Schedule 13D be
amended, except as otherwise permitted by this Section 5(d);


 


(e)           take any action or form any intention which would
require an amendment to the Current Schedule 13D (other than amendments
containing only Permitted Schedule 13D Amendments);


 


(f)            make a proposal or bid with respect to, or announce
any intention or desire to make, or publicly make or disclose, cause to be made
or disclosed publicly, any proposal or bid with respect to, the acquisition of
any substantial portion of the assets of the Company or of all or any portion
of the outstanding Common Stock (except that the Prescott Parties may file
Permitted Schedule 13D Amendments), or any merger, consolidation, other
business combination, restructuring, recapitalization, liquidation or other
extraordinary transaction involving the Company;


 

















 


(g)           nominate or propose any person or persons as a
director or directors of the Company to be elected at any annual or special
meeting of stockholders of the Company, or induce or assist or request any
other stockholder to do the same; provided that this prohibition shall not
apply to any actions of the Prescott Parties pursuant to and in accordance with
Section 2 hereof;


 


(h)           make or encourage any other person to make a demand
for inspection of any of the books and records of the Company; provided,
however, that nothing contained herein shall prohibit the Prescott Appointee
from exercising his rights, duties or obligations as a director of the Company;


 


(i)            act alone or in concert with others to seek control of
the management, the Board (including the composition thereof) or the policies,
business, operations or affairs of the Company; provided, however, that nothing
contained herein shall prohibit the Prescott Appointee from exercising his
rights, duties or obligations as a director of the Company;


 


(j)            publicly disclose, or cause or facilitate the public
disclosure (including by disclosure to any journalist or other representative
of the media) of, any request, or otherwise seek (in any manner that would
require public disclosure by any of the Prescott Parties or its Affiliates or
Associates), to obtain any waiver or consent under, or any amendment of, any
provision of this Agreement;


 


(k)           form, join in or in any other way participate in a “partnership,
limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of
the Exchange Act with respect to the Common Stock that seeks to achieve or do
any of the things prohibited or restricted by Section 4 or this Section 5;
or deposit any shares of Common Stock in a voting trust or similar arrangement
or subject any shares of Common Stock to any voting agreement or pooling
arrangement or proxy, that seeks to achieve or do any of the things prohibited
by Section 4 or this Section 5; or


 


(l)            instigate, encourage or assist or enter into any
discussions or arrangements with, any person to do any of the actions prohibited
or restricted by Section 4 or this Section 5.


 


6.             WITHDRAWAL OF INSPECTION DEMAND AND
STOCKHOLDER PROPOSAL.


 


Upon Watkins’ appointment to the Board
of Directors of the Company, the Prescott Parties do hereby withdraw the
Inspection Demand and the Stockholder Proposal and shall immediately
cease all efforts, direct or indirect, in furtherance of the Inspection Demand
and the Stockholder Proposal and any related solicitation.


 


7.             PRESS RELEASES AND OTHER PUBLIC STATEMENTS.


 


During the Standstill Period, the Company and the Prescott Parties
agree as follows:


 


(a)           The Company agrees, subject to the requirements of
applicable federal securities laws, to provide the Prescott Parties with an
opportunity to review and comment on and approve any press release, public
filing, or letter to the Company’s stockholders containing statements about the
Prescott Parties, prior to its public release.


 


(b)           The Prescott Parties agree, subject to the
requirements of applicable federal securities laws, to provide to the Company
an opportunity to review and comment on and approve any press release, public
filing, or letter to the Company’s stockholders containing statements about the
Company, prior to its public release.


 


(c)           Promptly after the execution of this Agreement the
parties hereto shall issue a press release in the form previously agreed to in
writing by the parties hereto.


 


(d)           Neither the Company nor any of the Prescott Parties,
nor any of their respective Affiliates or Associates, shall directly or
indirectly make or issue or cause to be made or issued any disclosure,
announcement or statement (including without limitation the filing of any
document or report with the SEC or any other governmental agency or any
disclosure to any journalist, member of the media or securities analyst)
concerning any other party to this Agreement or any of its respective past,
present or future general partners, directors, officers or employees, which
disparages, libels or defames such person or persons or otherwise contains a
statement that places such


 

















 


person
or persons in a bad light or damages their reputations; provided that,
consistent with the foregoing, any party may comment in good faith regarding
the business of the Company.


 


8.             REMEDIES.


 


(a)           Each party hereto hereby acknowledges and agrees
that irreparable harm would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to specific relief hereunder, including, without limitation, an injunction or
injunctions to prevent and enjoin breaches of the provisions of this  Agreement and to enforce specifically the terms and
provisions hereof in any state or federal court in the State of Delaware, in
addition to any other remedy to which they may be entitled at law or in equity.
Any requirements for the securing or posting of any bond with such remedy are
hereby waived.


 


(b)           The parties hereto agree that any actions, suits or
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby shall be brought solely and exclusively in the courts of
the State of Delaware and/or the courts of The United States of America located
in the State of Delaware (and the parties agree not to commence any action,
suit or proceeding relating thereto except in such courts), and further agree
that service of any process, summons, notice or document by U.S. registered
mail to the respective addresses set forth in Section 10 hereof shall be
effective service of process for any such action, suit or proceeding brought
against any party in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby, in the courts of the State of Delaware or The United States of America
located in the State of Delaware, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in any inconvenient forum.


If
action is initiated to enforce the provisions hereof, the prevailing party
shall be entitled to reimbursement of all reasonable costs and expenses,
including reasonable attorneys’ fees, incurred by it in connection therewith.


 


9.             ENTIRE AGREEMENT.


 


This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes any prior understandings or
agreements among them respecting any matters covered by this Agreement.


 


10.          NOTICES.


 


All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and sent by U.S. registered
mail, return receipt requested:


 


if to the Company:


 


Carreker Corporation.


4055 Valley View Lane, Suite 1000


Dallas, Texas 75244


Attention:   John S. Davis,
Executive Vice President and General Counsel


 


with a copy to:


Locke Liddell & Sapp LLP


2200 Ross Avenue, Suite 2200


Dallas, Texas 75210


Attention: John McKnight, Esq.


 

















 


if to the Prescott Parties:


 


Prescott Group Capital Management, L.L.C.


1924 South Utica, Suite 1120


Tulsa, Oklahoma 74104-6429


Attention: Jeffrey D. Watkins


 


11.          LAW GOVERNING.


 


This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without regard
to any conflict of laws provisions thereof.


 


12.          COUNTERPARTS.


 


This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


13.          NO PRESUMPTION AGAINST DRAFTSMAN; NO
ADMISSION.


 


Each of the undersigned parties hereby acknowledges
the undersigned parties fully negotiated the terms of this Agreement, that each
such party had the advice of legal counsel and an equal opportunity to
influence the drafting of the language contained in this Agreement and that
there shall be no presumption against any such party on the ground that such
party was responsible for preparing this Agreement or any part hereof.  Nothing contained herein shall constitute an
admission by any party hereto of liability or wrongdoing.


 


14.          ENFORCEABILITY.


 


If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that the parties would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable. In addition, the parties agree to use their best efforts to
agree upon and substitute a valid and enforceable term, provision, covenant or
restriction for any such that is held invalid, void or unenforceable by a court
of competent jurisdiction.


 


15.          AMENDMENT AND WAIVER.


 


All modifications and amendments to, and waivers of,
this Agreement must be in writing. No amendment or waiver of any provision of this
Agreement shall be implied by any failure of any party to enforce any remedy
upon the violation of such provision, even if such violation is continued or
repeated subsequently.


 


 


[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]


 

















 


IN WITNESS WHEREOF, each of the parties hereto has
executed this Agreement, or caused the same to be executed by its duly
authorized representative as of the date first above written.


 


	
  CARREKER CORPORATION

  	
  PRESCOTT GROUP CAPITAL

  
	
   

  	
  MANAGEMENT,
  LLC

  
	
   

  	
   

  
	
  /s/ J.
  D. CARREKER JR.

  	
   

  	
  /s/ Jeffrey
  D. Watkins

  	
   

  
	
  By: J. D. Carreker, Jr

  	
  By: Jeffrey D. Watkins

  
	
  Title: Chairman and CEO

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  PRESCOTT GROUP AGGRESSIVE

  
	
   

  	
  SMALL
  CAP, L.P.

  
	
   

  	
  PRESCOTT GROUP AGGRESSIVE

  
	
   

  	
  SMALL
  CAP II, L.P.

  
	
   

  	
  PRESCOTT GROUP MID CAP, L.P.

  
	
   

  	
  PRESCOTT GROUP AGGRESSIVE MID

  
	
   

  	
  CAP,
  L.P.

  
	
   

  	
  By:

  	
  Prescott Group Capital Management,

  
	
   

  	
   

  	
  LLC,
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     PHIL
  FROHLICH

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ PHIL
  FROHLICH

  	
   

  
	
   

  	
  Phil
  Frohlich

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  JEFFREY D. WATKINS

  	
   

  
	
   

  	
  Jeffrey
  D. Watkins

  
									



 

















 


SCHEDULE I


 


PRESCOTT GROUP AGGRESSIVE SMALL
CAP, L.P.


 


PRESCOTT GROUP AGGRESSIVE SMALL
CAP II, L.P.


 


PRESCOTT GROUP MID CAP, L.P.


 


PRESCOTT GROUP AGGRESSIVE MID CAP,
L.P.


 

















 


EXHIBIT A


 


UNDERTAKING


 


I hereby certify that I am obtaining access to
certain non-public documents or information of Carreker Corporation pursuant to
the terms and restrictions of a Board Representation Agreement (the “Agreement”)
entered into between Carreker Corporation, Prescott Group Capital Management,
L.L.C. (in its own capacity and on behalf of certain limited partnerships for
which it is the general partner), Phil Frohlich and Jeffrey D. Watkins. I
further certify that I have read the Agreement, that I understand the
Agreement, that I agree to be fully bound by Section 3 of the Agreement to
the same extent as if I were a “Prescott Party” as defined therein, and, if I
am to be a director of the Company, I agree to be fully bound by the Agreement
as if I were a “Prescott Appointee” as defined therein.   I also hereby submit myself to the jurisdiction
of the courts of the State of Delaware for purposes of the interpretation and
enforcement of the Agreement and this Undertaking.


 


	
  Dated:

  	
   

  	
  , 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name: