EXHIBIT 10.1

 

ATTACHMENT I

 

LEGAL RELEASE OF CLAIMS, INCLUDING EMPLOYMENT RELATED CLAIMS AND CLAIMS UNDER
THE AGE DISCRIMINATION IN EMPLOYMENT ACT

 

This Legal Release of Claims, including Employment Related Claims and Claims
under the Age Discrimination in Employment Act (“Agreement”), is between the
undersigned employee (“you”) and Evolving Systems, Inc., its subsidiaries and
affiliates and their respective past and present officers, directors, employees,
agents, insurers, attorneys, assigns and other representatives of any kind
(collectively “Evolving Systems”). You and Evolving Systems will be referred to
collectively as “the Parties.”

 

1.                                       Your employment with Evolving Systems
has been terminated effective November 30, 2011 (the “Termination Date”).

 

2.                                       By your signature below except as
otherwise agreed by Evolving Systems, you agree that you have returned or,
within seven (7) days of the Termination Date, will return all Evolving Systems
property, including all copies of Evolving Systems documents, which you have had
in your possession, custody or control at any time through the end of your
employment. Evolving Systems property includes, but is not limited to, Evolving
Systems files, notes, drawings, records, business plans and forecasts, financial
information specifications computer-recorded information, uniforms, tools,
equipment, computers, cellular phones, PDAs, credit cards, entry cards,
identification badges, keys, company vehicles, and any tangible property or
materials of any kind which contain any Evolving Systems proprietary or
confidential information.

 

3.                                       Evolving Systems will pay you the Base
Severance Payments and contribute to COBRA premiums as described in Section
7.2(c) of the Employment Agreement attached as Appendix A, if and only if you
execute this Agreement and comply with provisions of Section 4 of the Employment
Agreement.

 

4.                                       EXCEPT AS SPECIFICALLY DESCRIBED IN THE
EMPLOYMENT AGREEMENT, YOU SHALL BE RESPONSIBLE FOR ALL COBRA PAYMENTS, AND
FAILURE TO TIMELY REMIT PREMIUM SHALL CAUSE AN IMMEDIATE LOSS OF YOUR COVERAGE
WITHOUT FURTHER NOTICE.

 

5.                                       You acknowledge that you have read and
understand this Agreement and the separation letter dated November 30, 2011 (the
“Separation Letter’’).

 

6.                                       Subject to the exclusions described in
Subsection (i) of this Section 6, you agree that by executing this Agreement,
you are releasing all claims that you have or may have against Evolving Systems,
including as follows:

 

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(a)                                  You intend to release and forever discharge
and in fact release and forever discharge, Evolving Systems from any and all
claims, demands, rights, liabilities and causes of action of any kind or nature,
known or unknown, arising prior to or through the date you execute this
Agreement; and

 

(b)                          You agree that your release includes, but is not
limited to, any and all claims, demands, rights, liabilities and causes of
action arising or having arisen out of or in connection with your employment or
termination of employment with Evolving Systems, Inc.; and

 

(c)                                With the exception of claims for the Standard
Termination Payments under Section 7.1 of the Employment Agreement, the Base
Severance Payments and benefits under Section 7.2(c) of the Employment Agreement
and Enhanced Severance Benefits under Section 7.4(b) of the Employment Agreement
and claims for any unemployment benefits to which you may be entitled, by your
signature below you intend to and do release and waive any claim or right to
further compensation, benefits, damages/penalties, attorneys’ fees, costs or
expenses of any kind from Evolving Systems; and

 

(d)                                This release specifically includes, but is
not limited to, a release of any and all claims pursuant to: state or federal
wage payment laws; Title VII of the Civil Rights Act of 1964; the Rehabilitation
Act of 1973; the Reconstruction Era Civil Rights Acts, 42 U.S.C. §§ 1981-1988;
the Civil Rights Act of 1991; the Americans with Disabilities Act; the Americans
with Disabilities Amendments Act of 2008; Executive Order 11246; state or
federal family and/or medical leave acts; the Consolidated Omnibus Budget
Reconciliation Act of 1985; the Employee Retirement Income Security Act of 1974;
and any other federal, state or local laws or regulations of any kind, whether
statutory or decisional. This release also includes, but is not limited to, a
release of any claims for wrongful termination, tort, breach of contract,
defamation, misrepresentation, violation of public policy or invasion of
privacy. This release covers claims that you know about as well as those you may
not know about; and

 

(e)                                 To the extent allowed by applicable
statutory and regulatory law, the release contained in the preceding paragraph
includes a waiver of rights and claims which you may have arising under the Age
Discrimination in Employment Act of 1967 (Title 29, United States Code, 621 et
seq.) (the “ADEA”). Pursuant to the Older Workers Benefit Protection Act (Public
Law 101-433; 1990 s. 1511), you acknowledge that this release is intended to
apply, and you expressly agree that it shall be effective as a waiver of rights
and claims arising under the ADEA. However, by executing this Agreement, you do
not waive rights and claims that may arise subsequent to the execution of this
Agreement; and

 

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(f)                                  You agree that this Agreement is intended
to be interpreted in the broadest possible manner in favor of Evolving Systems,
to include all actual or potential legal claims that you may have against
Evolving Systems, except as specifically provided otherwise in this Agreement;
and

 

(g)                               You further state and agree that you have not
experienced any illness, injury, or disability compensable or recoverable under
the workers compensation laws of any state and that you have not reported to
Evolving Systems and you also agree that you will not file a workers
compensation claim asserting the existence of any such illness, injury, or
disability; and

 

(h)                               You agree that you have been and are hereby
advised by Evolving Systems to consult with an attorney prior to executing this
Agreement.

 

(i)                                   NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THE FOREGOING, YOU SPECIFICALLY HAVE EXCLUDED FROM THIS RELEASE ANY CLAIMS
THAT YOU MAY HAVE AGAINST THE COMPANY UNDER THE INDEMNIFICATION AGREEMENT
ENTERED INTO BETWEEN YOU AND THE COMPANY ON JANUARY 7, 2002, AS AMENDED TO DATE,
A COPY OF WHICH IS ATTACHED AS APPENDIX B, AND APPLICABLE D&O INSURANCE, WHICH
SHALL CONTINUE IN FULL FORCE AND EFFECT AND ARE NOT AFFECTED IN ANY WAY BY THIS
RELEASE AND ANY CLAIMS FOR COMPENSATION AND/OR EMPLOYMENT BENEFITS THAT ARE OWED
BY THE COMPANY UNDER THE EMPLOYMENT AGREEMENT WHICH COMPENSATION AND BENEFITS
ARE NOT AFFECTED IN ANY WAY BY THIS RELEASE.

 

7.                                You agree that the Severance Benefits that you
are accepting by signing this Agreement have value to you. You agree that you
would not be entitled to these Severance Benefits without signing this
Agreement. You acknowledge that you will receive the Severance Benefits in
exchange for the benefit you are providing to Evolving Systems by signing this
Agreement. You also acknowledge and agree that Evolving Systems will withhold
from the Severance Benefits all applicable deductions and federal, state and
local taxes.

 

8.                                     You agree that the only benefit you are
to receive by signing this Agreement are the benefits described in your
Employment Agreement, and that in signing this Agreement you did not rely on any
information, oral or written, from anyone, including your supervisor, other than
the information contained in this Agreement and the Separation Letter.

 

9.                                     You represent that you have not
previously assigned or transferred any of the legal rights and claims that you
have given up by signing this Agreement. You

 

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agree that this Agreement also binds all persons who might assert a legal right
or claim on your behalf, such as your heirs, personal representatives and
assigns.

 

10.                          You agree that: (a) this Agreement, the Employment
Agreement, the Indemnification Agreement, the Separation Letter and the
Consulting Agreement entered into as of November 30, 2011 constitute the entire
agreement between you and Evolving Systems regarding its subject matter, without
regard to any other oral or written information that you may have received about
this Agreement; (b) if any part of this Agreement is declared to be
unenforceable, all other provisions of this Agreement shall remain enforceable;
and (c) this Agreement shall be governed by federal law and by the laws of the
State of Colorado, irrespective of the choice of law rules of any jurisdiction.
You also agree that you will continue to be bound by the Proprietary Information
Agreement that you are a party to and that you shall remain bound by the
non-solicitation agreement and non-competition covenants in your Employment
Agreement and that those agreements and any other similar agreements you are a
party to are not hereby released, terminated or modified.

 

11.                               You have up to the Executive Deadline
described in your Employment Agreement to sign this Agreement (the “Deliberation
Period’’). During the Deliberation Period you should consult with an attorney of
your choosing and consider whether you wish to sign this Agreement. You agree
that, after you have signed and delivered this Agreement to Evolving Systems,
this Agreement will not be effective or enforceable until the end of a seven (7)
day revocation period beginning the day that you deliver this Agreement to
Evolving Systems (the “Revocation Period’’). You understand that you will not
receive the Severance Benefits until the Revocation Period has expired. During
the Revocation Period, you may revoke this Agreement without condition and in
your sole judgment, but you may do so only by delivering a written statement of
revocation to Thad Dupper, Evolving Systems, Inc., 9777 Pyramid Court, Suite
100, Englewood, CO 80112. If Evolving Systems does not receive a written
revocation notice by the end of the Revocation Period, this Agreement will
become legally enforceable and you may not thereafter revoke this Agreement.

 

Acknowledgment

 

By signing below you: (a) acknowledge that you have read and understand this
Agreement; (b) understand that it is a legally binding document that may affect
your legal rights; and (c) that you have been advised to consult a lawyer of
your choosing before signing this Agreement and have had an opportunity to do
so.

 

 

Signed:

/s/ Brian R. Ervine

 

Date:

November 30, 2011

 

 

 

 

 

Print Name:

BRIAN R. ERVINE

 

 

 

 

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Appendix A

 

Employment Agreement

 

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EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is entered into effective May 19,
2011 (the “Effective Date”), by and among BRIAN R. ERVINE (“Executive”) and
EVOLVING SYSTEMS, INC. (the “Company”).

 

WHEREAS, the Company desires to continue to employ Executive and, in connection
therewith, to compensate Executive for Executive’s services to the Company, and
Executive wishes to continue to be employed by the Company and provide services
to the Company in return for certain compensation;

 

WHEREAS, the Company and Executive previously executed a 2010 Compensation Plan
and a Management Change in Control Agreement providing certain terms and
conditions relevant to Executive’s employment (collectively with all other plans
and compensation agreements, the “Previous Agreements”); and

 

WHEREAS, the Company and Executive desire to enter into this Agreement and to
supersede and terminate the Previous Agreements excluding the Indemnification
Agreement which shall continue in full force and effect and is incorporated
herein by reference.

 

Accordingly, in consideration of the mutual promises and covenants contained
herein and for other good and valuable consideration had and received, the
sufficiency of which is hereby acknowledged, the parties agree to the following:

 

1.                                      DEFINITIONS.

 

“Board of Directors” or “Board” means the Board of Directors of the Company.

 

“Cause” shall be limited to mean the following:

 

(i)                                    Willful misfeasance or nonfeasance by
Executive that materially injures the reputation, business or business
relationships of the Company or any of its officers, directors or employees and
such action or failure is not remedied or reasonable steps to effect such remedy
are not commenced within thirty (30) days following receipt of written notice;

 

(ii)                                Any act involving moral turpitude or
conviction of a crime other than a vehicular offense (other than vehicular
manslaughter) which reflects in some material fashion unfavorably upon the
business or business relationships of the Company or any of its officers,
directors or employees;

 

(iii)                            The willful and continued failure to perform
substantially the Executive’s duties or to follow the reasonable direction of
the Board within thirty (30) business days after receipt by Executive of written
notice of such failure; or

 

(iv)                               Willful or prolonged absence from work by
Executive, other than by reason of Disability or leave of absence, whether paid
or unpaid.

 

“Change of Control” shall mean the occurrence of any of the following:

 

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(i) the date any person or group acquires ownership of stock of the Company
that, together with stock held by the person or group, constitutes more than
fifty percent (50%) of the total fair market value or total voting power of the
stock of the Company; (b) a liquidation or dissolution of the Company; or (c)
the sale of all or substantially all (greater than seventy five percent (75%))
of the fair market value of the assets of the Company.  For purposes of this
Agreement, the sale by the Company of certain of its assets to Neustar, Inc.
pursuant to that certain Asset Purchase Agreement dated April 21, 2011, shall
not be deemed a Change of Control.

 

(ii) the acquisition by any person, entity or “group”, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial
ownership within the meaning of Rule 13-d promulgated under the Securities
Exchange Act of more than fifty percent (50%) of either the then- outstanding
shares of the Company’s common stock or the combined voting power of the
Company’s then-outstanding voting securities entitled to vote generally in the
election of directors (hereinafter referred to as the ownership of a
“Controlling Interest”) excluding, for this purpose, any acquisitions by (a) the
Company or its subsidiaries or affiliates; or (b) any employee benefit plan of
the Company or its subsidiaries or affiliates; or any one person, or more than
one person acting as a group, acquires (or has acquired during the twelve
(12)-month period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the Company possessing fifty percent
(50%) percent or more of the total voting power of the stock of such
corporation; or

 

(iii) individuals who constitute the majority of the Board as of the date of
this Agreement (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided that any individual who becomes a member
of the Board after the date of this Agreement whose election, or nomination for
election by holders of the Company’s securities, was approved by the vote of at
least a majority of the individuals then constituting the Incumbent Board shall
be considered a member of the Incumbent Board.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.

 

“Disability” shall mean the earliest of the date on which Executive is deemed
disabled under:

 

(i) the long-term disability policy maintained by the Company;

 

(ii) Code Section 22(e)(3); or

 

(iii) the determination of the Social Security Administration.

 

Notwithstanding the foregoing, Executive shall not be considered to have
suffered a Disability under subparagraph (ii) above if Executive timely provides
medical certification from a qualified licensed physician that Executive is able
to perform the essential functions of Executive’s position, with or without
reasonable accommodation.

 

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“Good Reason” shall mean the occurrence of any of the following without
Executive’s prior written consent:

 

(i) the removal of Executive as Executive Vice President, Chief Financial
Officer, and Chief Administrative Officer of the Company or the assignment to
Executive of any duties or responsibilities materially inconsistent with
Executive’s position, including any material diminution of Executive’s status,
title, authority, duties or responsibilities or any other action that results in
a material diminution in such status, title, authority, duties or
responsibilities;

 

(ii) the requirement that Executive report within a management structure that
adds a layer of management between Executive and the Chief Executive Officer of
the Company;

 

(iii) the requirement that Executive relocate Executive’s principal place of
employment to a location that is farther than thirty-five (35) miles from
Executive’s current (as of the Effective Date) principal place of employment;

 

(iv) the reduction by five percent (5%) or more of Executive’s base salary or
the reduction by five percent (5%) or more of the aggregate of Executive’s base
salary and incentive bonus target, without Executive’s consent, or any action
that materially adversely affects Executive’s overall compensation and benefits
package, provided that the Company may change the benefits package if those
changes are made on a non-discriminatory basis for all employees who participate
in the benefits plans available to Executive; or

 

(v) the failure of the Company to pay to Executive any portion or installment of
any salary, bonus or deferred compensation within fourteen (14) days of the date
such compensation is due.

 

“Termination Date” shall mean Executive’s last day of employment, regardless of
whether termination is on account of death, Disability, with or without Cause,
or a resignation with or without Good Reason.

 

2.                                      EMPLOYMENT BY THE COMPANY.

 

2.1                               POSITION.  Subject to the terms set forth
herein, the Company continues to employ Executive in the positions of Executive
Vice President, Chief Financial Officer, and Chief Administrative Officer, and
Executive hereby accepts such continued employment.  During the term of
Executive’s employment with the Company, Executive will devote Executive’s best
efforts and substantially all of Executive’s business time and attention to the
business of the Company.

 

2.2                               DUTIES.  Executive will report to the Chief
Executive Officer and shall perform such duties as are normally associated with
Executive’s officer positions and such appropriate duties as are assigned to
Executive from time to time.  Executive shall perform Executive’s duties under
this Agreement at such other locations as agreed upon by Executive and the
Company.

 

2.3                               TERM.  The term of this Agreement shall run
from the Effective Date until such time as it is terminated in accordance with
the terms of this Agreement.

 

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2.4                               COMPANY POLICIES AND BENEFITS.  The employment
relationship between the parties shall be subject to the Company’s personnel
policies and procedures as they may be interpreted, adopted, revised or deleted
from time to time in the Company’s sole discretion. Subject to any specific
exceptions or conditions set forth in Section 3.4, Executive will be eligible to
participate on substantially the same basis as similarly situated Executives in
the Company’s benefit plans and programs in effect from time to time during
Executive’s employment; provided, however, that participation and awards under
any equity compensation or equity bonus plan or program shall be determined by
the Board on an individual, case-by-case basis.  All matters of eligibility for
coverage or benefits under any benefit plan or program shall be determined in
accordance with the provisions of such plan or program.  The Company reserves
the right to change, alter, or terminate any benefit plan or program in its sole
discretion; provided, however, that no such change, alteration or termination
will change any vested or accrued benefits or rights of Executive. 
Notwithstanding the foregoing, in the event that the terms of this Agreement
expressly provide Executive with benefits that differ from the Company’s
generally available benefits, then the terms of this Agreement shall control.

 

3.                                      COMPENSATION AND BENEFITS.

 

3.1                               SALARY.  Executive shall receive for
Executive’s services to be rendered hereunder an initial annualized base salary
of two hundred sixty thousand dollars ($260,000) (the “Base Salary”), subject to
annual review and adjustment from time to time by the Board.  The Base Salary
shall be payable in accordance with Company’s standard payroll practices.

 

3.2                               BONUS.  Executive shall be eligible for
quarterly and annual incentive bonuses (the “Bonus”) of sixty percent (60%) of
Executive’s then-current Base Salary, as determined by the Board in its sole
discretion based on a bonus plan to be established annually in writing by the
Board.  The Bonus shall be calculated based on performance goals measured at the
end of the applicable quarter/year.  The Company shall pay the quarterly and
annual Bonuses earned hereunder at the time(s) determined by the Company, but in
no event later than March 15 of the calendar year following the year in which
Executive’s right to the Bonus arises.

 

3.3                               EXPENSE REIMBURSEMENT.  The Company will
reimburse Executive for reasonable business expenses incurred by Executive
during the period Executive is employed by the Company, in accordance with the
Company’s standard expense reimbursement policy.

 

3.4                               PAID TIME OFF.  Executive shall have paid time
off in accordance with Exhibit A, which shall be scheduled at a time acceptable
to both the Executive and the Company.

 

3.5                               BENEFITS.  As provided in Section 2.4,
Executive will receive benefits in accordance with the Company’s standard
benefits plan and policies, as amended from time to time.  In addition,
Executive shall be entitled to receive the additional benefits set forth on
Exhibit A hereto,

 

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provided that such benefits are subject to change no more frequently than
annually at the direction of the Board.

 

4.                                      NON-COMPETITION; NON-SOLICITATION;
CONFIDENTIALITY.

 

4.1                               NON-COMPETITION. Executive acknowledges that
Executive has gained and will gain extensive and valuable experiences and
knowledge in the business conducted by the Company and has had and will have
extensive contacts with customers of the Company.  Accordingly, in consideration
of the mutual promises contained in this Agreement, Executive covenants and
agrees with the Company that, during the term of this Agreement and for a period
of twelve (12) months or, if Executive receives Enhanced Severance Benefits
under Section 7.4, eighteen (18) months, following the Executive’s Termination
Date, Executive shall not compete directly or indirectly with the Company and
shall not during such period make public statements in derogation of the
Company.  Competing directly or indirectly with the Company shall mean engaging
or having a material interest, directly or indirectly, as owner, employee,
officer, director, partner, venturer, stockholder, capital investor, consultant,
agent, principal, advisor or otherwise, either alone or in association with
others, in the operation of any entity’s division or group which (a) provides
operational support systems (OSS) software solutions for provisioning for
telecommunications carriers similar to those provided by the Company and/or (b)
is engaged in such other businesses as the Company is actively engaged in at the
time of Executive’s termination of employment.  Competing directly or indirectly
with the Company, as used in this Agreement, shall not include having an
ownership interest as an inactive investor, which for purposes of this Agreement
shall mean the beneficial ownership of less than five percent (5%) of the
outstanding shares of any series or class of securities of any competitor of the
Company, which shares are publicly traded in the securities markets.  This
Section 4.1 shall cease to apply in the event the Company is in breach of any
obligations to provide severance benefits in accordance with Section 7.2 and/or
Section 7.4 and fails to cure such breach within twenty (20) days of receiving
written notice of such breach from Executive.  Executive agrees that any
violation of this Section 4.1 by Executive, as determined by a court of law,
shall result in termination of the Company’s obligations to provide severance
benefits hereunder and in the event of such termination, Executive shall be
required to repay to the Company any such severance benefits previously
received.

 

4.2                               NON-SOLICITATION. Executive acknowledges that
Executive has had and will have extensive contacts with employees and customers
of the Company.  Accordingly, in consideration of the mutual promises contained
in this Agreement, Executive covenants and agrees that during the term of this
Agreement, and for a period of twelve (12) months or, if Executive receives
Enhanced Severance Benefits under Section 7.4, eighteen (18) months, following
Executive’s Termination Date, Executive shall not (i) solicit, raid, entice or
induce any employee of the Company to leave the employ of the Company; (ii)
interfere with the relationship of the Company with any such

 

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employees, including, but not limited to, hiring such employee; or (iii)
personally target or solicit customers of the Company to purchase products or
services in competition with the Company’s products or services or to terminate
a relationship with the Company.  This Section 4.2 shall cease to apply in the
event the Company is in breach of any obligations to provide severance benefits
in accordance with Section 7.2 and/or Section 7.4 and fails to cure such breach
within twenty (20) days of receiving notice of such breach from Executive. 
Executive agrees that any violation of this Section 4.2 by Executive, as
determined by a court of law, shall result in termination of the Company’s
obligations to provide severance benefits hereunder and in the event of such
termination, Executive shall be required. to repay to the Company any such
severance benefits previously received.

 

4.3          CONFIDENTIALITY. Executive acknowledges that Executive has had and
will have access to certain information related to the business, operations,
future plans and customers of the Company, the disclosure or use of which could
cause the Company substantial losses and damages. Accordingly, Executive
acknowledges and affirms the terms and conditions of the Proprietary Information
Agreement signed by Executive and incorporated by reference herein.

 

5.             OUTSIDE ACTIVITIES.  Except with the prior written consent of the
Board, Executive will not, while employed by the Company, undertake or engage in
any other employment, occupation, consulting, advisory, or other business
enterprise or business activities that would interfere with Executive’s
responsibilities and the performance of Executive’s duties hereunder.

 

6.             NO CONFLICT WITH EXISTING OBLIGATIONS.  Executive represents that
Executive’s performance of all the terms of this Agreement and as an executive
of the Company does not and will not breach any agreement or obligation of any
kind made prior to Executive’s employment by the Company, including agreements
or obligations Executive may have with prior employers or entities for which
Executive has provided services.  Executive has not entered into, and Executive
agrees that Executive will not enter into, any agreement or obligation, either
written or oral, that conflicts with Executive’s obligations hereunder.

 

7.             TERMINATION OF EMPLOYMENT.  The parties acknowledge that
Executive’s employment relationship with the Company is at-will.  Either
Executive or the Company may terminate the employment relationship at any time,
with or without Cause.  The provisions in this Section 7 govern the amount of
compensation, if any, to be provided to Executive upon termination of
Executive’s employment and do not alter Executive’s at-will status.

 

7.1          STANDARD TERMINATION PAYMENTS.

 

(a)           Salary and Reimbursements.  Regardless of the reason for
termination, the Company shall pay Executive on the first regularly scheduled
payroll date following Executive’s Termination Date any Base Salary accrued but
unpaid as of Executive’s Termination Date, the value of any accrued paid time
off unused by Executive as of Executive’s Termination Date, and any unpaid

 

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Expense Reimbursement, so long as the Expense Reimbursement complies with the
Company guidelines for such requests.

 

(b)           Bonus.  In the event Executive’s employment with the Company
terminates for any reason (including death or Disability) before the end of any
quarterly or annual performance period on which the Bonus is based, Executive
shall be paid a pro-rata portion of Executive’s Bonus (based on the number of
days Executive was employed in the applicable quarter with regard to the
quarterly bonus and the number of days Executive was employed in the calendar
year with respect to the annual bonus) of the Bonus that is earned for the
quarter/year in which Executive’s employment with the Company terminated, such
amounts to be paid on the date the Company would otherwise have paid the Bonus
if Executive’s employment with the Company had not terminated.  If the Bonus is
considered “compensation” for purposes of any Company-sponsored qualified
retirement plan, the right to defer such Bonus shall continue to be governed by
such plan or plans, with the terms of such plan or plans incorporated into this
Agreement by reference.  Except as otherwise provided in Section 7.4(b)(i),
Executive shall not be eligible to be paid a Bonus for any subsequent
performance period.

 

7.2          SEVERANCE BENEFITS — TERMINATION WITHOUT CAUSE/RESIGNATION FOR GOOD
REASON.

 

(a)           Company’s Right to Terminate.  The Company shall have the right to
terminate Executive’s employment under this Agreement for any of the following
reasons:

 

(i)            upon Executive’s Disability in accordance with Section 7.5;

 

(ii)           for Cause, by giving notice as described in Section 7.6;

 

(iii)         without Cause.

 

(b)           Executive’s Right to Terminate.  Executive shall have the right to
resign Executive’s employment with the Company at any time as well as following
an event constituting Good Reason.

 

(c)           Severance Benefits.  In the event that the Company terminates
Executive’s employment without Cause or Executive resigns for Good Reason,
Executive shall receive, in addition to the Standard Termination Payments, the
following:

 

(i)            Base Severance Payments.  Provided that Executive delivers to the
Company a fully executed and complete release, without revocation, in favor of
the Company and its subsidiaries and affiliates, and in form and substance
satisfactory to the Company (the “Release”) within sixty (60) days of
Executive’s Termination Date (the “Execution Deadline”), the Company shall
provide to Executive an amount equal to (a) twelve (12) months of Executive’s
then-current Base Salary and (b) one hundred percent (100%) of the amount of the
incentive Bonus target (excluding any commission targets) for the calendar year
in which the Termination Date occurs

 

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(collectively the “Base Severance Payments”).  The Base Severance Payments shall
be payable in twenty-six (26) installment payments in accordance with the
Company’s regular bi-weekly paydays, or if different, in accordance with the
Company’s customary payroll practices.

 

(ii)           COBRA Benefits.  In the event Executive elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) in accordance with the COBRA materials that will be provided to
Executive by the Company or the Company’s third party COBRA administrator, the
Company shall pay the Company’s portion (based upon the Company’s monthly
premium subsidy immediately prior to the Termination Date) of Executive’s COBRA
premium for the same medical, dental and vision benefit plan coverage (“Group
Health Plan Coverage”) Executive and Executive’s dependents had as of the
Termination Date for a period of twelve (12) months, or until Executive elects
to receive group medical, dental and vision insurance from another source,
whichever occurs first.  Payment of COBRA premiums will be made by the Company
on Executive’s behalf directly to the Group Health Plan’s COBRA administrator. 
Executive will be mailed a COBRA packet at Executive’s last known address.  Such
packet will contain additional information about Executive’s COBRA rights and
responsibilities.

 

(iii)         Severance Benefits Contingent on Execution of Release. 
Notwithstanding the foregoing, any Base Severance Payments that are otherwise
payable before the Execution Deadline shall be withheld pending Executive’s
execution and delivery of the Release and shall be paid on the payroll date
immediately following the Execution Deadline.  For the avoidance of doubt,
Executive shall forfeit the right to receive any Base Severance Payments or
COBRA Benefits if Executive fails to deliver the Release by the Execution
Deadline.  For this forfeiture to take effect, the Release shall not materially
alter Executive’s rights to receive any payments or benefits under this
Agreement; enlarge Executive’s obligations under this Agreement, including
without limitation, Executive’s covenants of non-competition and
non-solicitation; or impose material new obligations on Executive.

 

(d)           Compliance with Code Section 409A.  The Company and Executive
intend that (i) payments under Section 7.2(c)(i) will be made on account of an
involuntary separation from service within the meaning of Treasury Regulation
section 1.409A-1(n)(1) or a separation from service for good reason within the
meaning of Treasury Regulation section 1.409A-1(n)(2), (ii) amounts paid under
Section 7.2(c)(i) constitute separation pay exempt from Internal Revenue Code
Section 409A under Treasury Regulation section 1.409A-1(b)(9)(iii), and (iii)
Payments under Section 7.2(c)(ii) will be exempt from Code Section 409A as a
non-taxable fringe benefit to Executive, but neither party shall be liable to
the other in the event any such payment receives different tax treatment.  In
the event any of these payments is determined to be deferred compensation
subject to Internal Revenue Code Section 409A, the payments shall comply with
Section 7.9.

 

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7.3          CHANGE IN CONTROL -- VESTING OF STOCK OPTIONS.  Immediately upon
the occurrence of a Change in Control, fifty percent (50%) of Executive’s then
unvested stock options, stock appreciation rights, shares of restricted stock
and any other unvested equity awards, if any, shall vest.

 

7.4          RESIGNATION FOR GOOD REASON OR TERMINATION WITHOUT CAUSE IN
CONNECTION WITH A CHANGE OF CONTROL — ENHANCED SEVERANCE BENEFITS.

 

(a)           Timing. In the event that the Company terminates Executive’s
employment without Cause or Executive resigns for Good Reason within one hundred
eighty (180) days before or three hundred and sixty five (365) days after a
Change of Control, Executive shall receive the Enhanced Severance Benefits set
forth in Section 7.4(b), provided that if the Executive resigns for Good Reason
(i) Executive provides written notice to the Company of the existence of such
Good Reason within thirty (30) days of the initial existence of such condition
(or, if later, the date on which Executive becomes aware of the existence of
such condition); (ii) the Company is provided a period to cure the event or
condition giving rise to Good Reason, which cure right extends until the later
of fifteen (15) days (A) from the date of receipt of the notice from Executive
or (B) the date on which the Change of Control occurs (the “Cure Period”), and
the Company fails to do so within the Cure Period; and (iii) Executive resigns
from Executive’s employment for such Good Reason within five (5) days of the
expiration of the Cure Period.

 

(b)           Enhanced Severance Benefits.  If the Company terminates Executive
without Cause within one hundred eighty (180) days before or three hundred and
sixty five (365) days after a Change of Control or Executive resigns with Good
Reason pursuant to Section 7.4(a), Executive shall be entitled to receive all
Standard Termination Payments described in Section 7.1, the Base Severance
Payments described in Section 7.2(c)(i) and the COBRA Benefits described in
Section 7.2(c)(ii).  In addition, Executive will be entitled to the following:

 

(i)            Enhanced Severance Payments. The Company shall pay Executive an
additional sum of (a) fifty percent (50%) of Executive’s then-current annual
Base Salary; (b) fifty percent (50%) of the amount of the annual incentive Bonus
target (excluding any commission targets) for the calendar year immediately
preceding the calendar year in which Executive’s Termination Date occurs or for
the calendar year in which Executive’s Termination Date occurs, whichever is
greater; (c) in lieu of continuing to provide life or disability insurance for
Executive, eighteen (18) times the monthly premium or premiums for disability
and life insurance coverage of Executive paid by the Company immediately before
Executive’s Termination Date; and (d) an additional six (6) months of COBRA
Benefits described in Section 7.2(c)(ii) (collectively, the “Enhanced Severance
Payments”). The Enhanced Severance Payments shall commence in accordance with
Section 7.4(c), Section 7.4(d) and Section 7.9, and shall be commence
immediately

 

14

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following the last payment of Standard Termination Payments to Executive and be
made in thirteen (13) installment payments in accordance with the Company’s
regular bi-weekly paydays, or if different, in accordance with the Company’s
customary payroll practices.

 

(ii)           Tax Advice Reimbursement.  An amount, not to exceed $7,500, to
reimburse Executive for tax advice services during the period that extends
through the last day of the second calendar year following the calendar year in
which Executive’s Termination Date occurs, to be paid within sixty (60) days
following six (6) months after Executive’s Termination Date and receipt by the
Company of documentation from Executive substantiating the tax advice services
to be reimbursed.

 

(iii)         Vesting of All Stock Options and Rights.  All of Executive’s
unvested stock options, stock appreciation rights, shares of restricted stock
and any other unvested equity awards shall vest.  The remaining provisions of
Executive’s stock options, stock appreciation rights, restricted stock and other
equity awards, as governed by the applicable stock or equity incentive plan of
the Company, shall continue in full force and effect, provided, however, that
vested options and stock appreciation rights shall lapse if not exercised before
midnight on the day that is twelve (12) months after the Executive’s Termination
Date, or earlier in accordance with the expiration of the term of the option or
stock appreciation right.

 

(c)           Compliance with Code Section 409A:  Termination Date after Change
in Control.  The Company and Executive intend that payments under Section
7.4(b)(i) made in the event Executive’s Termination Date occurs within three
hundred and sixty five (365) days after a Change of Control shall constitute
payments on account of an involuntary separation from service as described in
Section 7.2(d) up until the lesser of: (a) two times (2x) the Executive’s
annualized compensation based upon the annual rate of pay in effect for the
taxable year preceding the termination (including any Bonus paid), adjusted for
any increase for the year of termination if such increase was expected to
continue indefinitely; and (b) the maximum amount that may be taken into account
under a qualified plan pursuant to Code section 401(a)(17) for the year in which
the Executive terminates employment (the lesser of (a) and (b) referred to
herein as the “Limit”).  In the event the Enhanced Severance Pay exceeds the
Limit, the remaining payments shall constitute deferred compensation subject to
Code Section 409A and shall be subject to the delayed payment restrictions of
Section 7.9.  In any event, neither party shall be liable to the other if any
such payment receives different tax treatment.

 

(d)           Compliance with Code Section 409A:  Termination Date before Change
in Control.  The Company and Executive intend that (i) in the event Executive’s
Termination Date occurs within one hundred eighty (180) days before a Change in
Control, the Base Severance Payments paid on account of the Executive’s
Termination Date shall constitute payments on account

 

15

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of an involuntary separation from service as described in Section 7.2(d) up
until the Limit, and amounts in excess of the Limit shall constitute deferred
compensation subject to Code Section 409A and shall be subject to the delayed
payment restrictions of Section 7.9, and (ii) the Enhanced Severance Payments
made upon the subsequent Change in Control will constitute deferred compensation
subject to Code Section 409A and shall be subject to the delayed payment
restrictions of Section 7.9.  In any event, neither party shall be liable to the
other if any such payment receives different tax treatment.

 

7.5          TERMINATION UPON DEATH OR DISABILITY OF EXECUTIVE.

 

(a)           Upon Executive’s death while employed pursuant to this Agreement,
this Agreement shall automatically terminate.

 

(b)           Subject to applicable state and federal law, the Company shall at
all times have the right, upon thirty (30) days written notice to Executive, to
terminate this Agreement based on Executive’s Disability.

 

(c)           In the event Executive’s employment is terminated due to
Executive’s death or Disability, the Company shall pay to Executive or
Executive’s heirs or estate all Standard Termination Payments together with any
other compensation and benefits payable to Executive through the Executive’s
Termination Date under any compensation or benefit plan, program or arrangement
during such period.  In addition, if Executive, or if Executive is deceased, a
participant on Executive’s health insurance plan, elects COBRA coverage, the
Company shall pay its third party administrator the full cost of COBRA coverage
for twelve (12) months from the Executive’s Termination Date.

 

7.6          Notice; Effective Date of Termination.

 

(a)           Termination of Executive’s employment pursuant to this Agreement
shall be effective on the earliest of:

 

(i)            excluding a termination due to Executive’s death or Disability,
the date on which the Company gives notice to Executive of Executive’s
termination, with or without Cause, unless the Company specifies a later date,
in which case, termination shall be effective as of such later date;

 

(ii)           the date of Executive’s death;

 

(iii)         ten (10) days after the Company gives notice to Executive of
Executive’s termination on account of Executive’s Disability; or

 

(iv)          thirty (30) days after Executive gives written notice to the
Company of Executive’s resignation, provided that the Company may set a
termination date at any time between the date of notice and the 30th day
thereafter (i.e., the effective date of resignation, but for this Section
7.6(a)), in which case the Executive’s resignation shall be effective as of such
earlier

 

16

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date (the date on which Executive’s resignation becomes effective, the “Actual
Resignation Effective Date”).

 

(b)           In the event that notice of a termination is given orally, at the
other party’s request, the party giving notice must provide written confirmation
of such notice within five (5) business days of the request.  In the event of a
termination for Cause, written confirmation shall specify the subsection(s) of
the definition of Cause being relied on by the Company to support the decision
to terminate for Cause, to afford Executive a reasonable opportunity to effect a
cure, if permitted and possible under the applicable subsections of the
definition of Cause.  In the event of a resignation for Good Reason, written
confirmation shall specify the subsection(s) of the definition of Good Reason
being relied on by Executive to support the decision to resign for Good Reason,
to afford the Company a reasonable opportunity to cure under the applicable
subsections of the definition of Good Reason.

 

7.7          COOPERATION WITH THE COMPANY AFTER TERMINATION OF EMPLOYMENT.
Notwithstanding anything to the contrary contained herein, payment of the
amounts specified in this Agreement is conditional upon Executive reasonably
cooperating with the Company in connection with any Change in Control or
proposed Change in Control and all matters relating to Executive’s employment
with the Company, assisting the Company as reasonably requested in transitioning
Executive’s responsibilities to Executive’s replacement, and Executive being
available to answer questions and provide transition assistance to the Company
through the end of the period during which Severance Benefits or Enhanced
Severance Benefits are to be paid.  Following Executive’s Termination Date, such
assistance shall be provided at mutually acceptable times, and in reasonable
amounts, taking into account other commitments that Executive may have. 
Executive agrees to use Executive’s best efforts to minimize any conflicts with
other commitments to facilitate this assistance.  The Company agrees to
reimburse Executive for reasonable out of pocket, pre-approved expenses incurred
in providing such assistance.

 

7.8          APPLICATION OF SECTION 280G. In the event that it is determined
that the Severance Benefit payable to Executive pursuant to Section 7 of this
Agreement, when added to any other payment or benefit to Executive from the
Company (including the acceleration of equity awards pursuant to Section
7.4(b)(iii)) that would be considered a “parachute payment” (a “Parachute
Payment”), within the meaning of section 280G of the Code, would cause Executive
to be considered to receive an “excess parachute payment” within the meaning of
section 280G of the Code (an “Excess Parachute Payment”), the amount payable to
Executive pursuant to Section 7 of this Agreement will be reduced to the maximum
amount that, when added to any other Parachute Payments made to Executive, could
be paid to Executive without causing Executive to receive an Excess Parachute
Payment.  Notwithstanding the foregoing, the Severance Benefit payable to

 

17

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Executive pursuant to Section 7 of this Agreement will not be reduced if (i) the
net amount payable to Executive without the reduction described in the preceding
sentence, but reduced by all Federal, state and local income and employment
taxes payable by Executive on the Severance Benefit payable pursuant to this
Agreement and all other Parachute Payments plus the excise tax payable on the
Excess Parachute Payment pursuant to Section 4999 of the Code, is greater than
(ii) the net amount that would be payable to Executive with the reduction
described in the preceding sentence and reduced by all Federal, state and local
income and employment taxes payable by Executive on the Severance Benefit
payable pursuant to this Agreement and all other Parachute Payments. For
purposes of this Section 7.8, Executive will be deemed to pay Federal income tax
and employment taxes at the highest marginal rate of Federal income and
employment taxation in the calendar year in which the Excess Parachute Payment
would occur and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Executive’s residence in the calendar year
in which the Excess Parachute Payment would be made, net of the reduction in
Federal income taxes that Executive may obtain from the deduction of such state
and local income taxes.  In addition, all determinations to be made under this
Section 7.8 will be made by the Company’s independent public accountant (the
“Accounting Firm”) immediately before the date the Severance Benefit under
Section 7 is to be paid.  The Accounting Firm will provide its determinations
and any supporting calculations and work papers both to the Company and to
Executive within ten (10) days of such date, and any such determination by the
Accounting Firm shall be binding upon the Company and Executive.

 

7.9          DEFERRED COMPENSATION SUBJECT TO CODE SECTION 409A. 
Notwithstanding anything to the contrary set forth herein, any payments and
benefits provided under this Agreement that constitute “deferred compensation”
within the meaning of Code Section 409A shall not commence in connection with
Executive’s termination of employment unless and until Executive has also
incurred a “separation from service” (as such term is defined in Treasury
Regulation Section 1.409A-1(h) (“Separation From Service”), unless the Company
reasonably determines that such amounts may be provided to Executive without
causing Executive to incur additional tax under Code Section 409A.  It is
intended that each installment of Severance Benefits provided for in this
Agreement is a separate “payment” for purposes of Treasury Regulation Section
1.409A-2(b)(2)(i).  For the avoidance of doubt, it is intended that Severance
Benefits set forth in this Agreement satisfy, to the greatest extent possible,
the exceptions from the application of Section 409A provided under Treasury
Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9).  If the
Company (or, if applicable, the successor entity thereto) determines that any
payments or benefits constitute “deferred compensation” under Code Section 409A
and Executive is, on the termination of service, a “specified Executive” of the
Company or any successor entity thereto, as such term is defined in

 

18

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Section 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to
avoid the incurrence of the adverse personal tax consequences to Executive under
Section 409A, the timing of the payments and benefits shall be delayed until the
earlier to occur of: (a) the date that is six (6) months and one day after
Executive’s Separation From Service, or (b) the date of Executive’s death (such
applicable date, the “Specified Executive Initial Payment Date”).  On the
Specified Executive Initial Payment Date, the Company (or the successor entity
thereto, as applicable) shall (i) pay to Executive a lump sum amount equal to
the sum of the payments and benefits that Executive would otherwise have
received through the Specified Executive Initial Payment Date if the
commencement of the payment of such amounts had not been so delayed pursuant to
this Section 7.9 and (ii) commence paying the balance of the payments and
benefits in accordance with the applicable payment schedules set forth in this
Agreement.

 

8.             GENERAL PROVISIONS.

 

8.1          NOTICES.  Any notice required or permitted under this Agreement
shall be given in writing by delivery in hand, express courier or by postage
prepaid, United States first class mail; registered or certified mail, return
receipt requested; facsimile at the party’s specified address; or as otherwise
specified by a party.  Notice shall be effective upon receipt.

 

8.2          RIGHT TO INJUNCTIVE RELIEF.  Executive agrees and acknowledges that
a violation of the covenants contained in Section 4 of this Agreement will cause
irreparable damage to the Company, and that it is and will be impossible to
estimate or determine the damage that will be suffered by the Company in the
event of breach by Executive of any such covenant.  Therefore, Executive further
agrees that, in the event of any violation or threatened violation of such
covenants, the Company shall be entitled to an injunction issued by any court of
competent jurisdiction restraining such violation or threatened violation by
Executive, such right to an injunction to be cumulative and in addition to
whatever other remedies the Company may have.

 

8.3          PARTIAL INVALIDITY/SEVERABILITY/NO AMENDMENT OF EXISTING
AGREEMENTS.  Executive acknowledges that the periods of time and geographic area
of restrictions imposed by Section 4 are fair and reasonable and are reasonably
required for the protection of the Company.  If any part or parts of Section 4
shall be held to be unenforceable or invalid, the remaining parts thereof shall
nevertheless continue to be valid and enforceable as though the invalid portion
or portions were not a part hereof.  If any of the provisions of Section 4
relating to the scope of restrictions, periods of time or geographic area of
restriction shall be deemed to exceed the scope of restrictions, maximum periods
of time or area which a court of competent jurisdiction would deem enforceable,
the scope of restrictions, time and area shall, for purposes of Section 4, be
deemed to be the maximum scope, time periods and area which a court of competent
jurisdiction would deem valid and enforceable.  If any other paragraph or
subparagraph of this Agreement shall be unenforceable under any applicable

 

19

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law, the remainder of this Agreement shall remain in full force and effect. 
Except as specifically provided herein, nothing in this Agreement is intended to
modify any existing agreements between the Company and Executive with regard to
the matters in Section 4.

 

8.4          WAIVER.  If either party should waive any breach of any provisions
of this Agreement, such party shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.  It is agreed that no delay or omission to exercise any right, power
or remedy accruing to either party, upon any breach, default or noncompliance by
the other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring.  It is further agreed that any
waiver, permit, consent or approval of any kind or character on either party’s
part of any breach, default or noncompliance under this Agreement or any waiver
on such party’s part of any provisions or conditions of the Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing.  All remedies, either under this Agreement by law, or otherwise
afforded to either party, shall be cumulative and not alternative.

 

8.5          WITHHOLDING.  All amounts payable hereunder shall be reduced by any
and all federal, state, and local taxes imposed upon the Executive that are
required to be paid or withheld by the Company.

 

8.6          COMPLETE AGREEMENT.  This Agreement constitutes the entire
agreement between Executive and the Company with regard to the subject matter
hereof.  This Agreement is the complete, final, and exclusive embodiment of the
parties’ agreement with regard to this subject matter and supersedes any prior
oral discussions or written communications and agreements, including but not
limited to any Previous Agreements.  This Agreement is entered into without
reliance on any promise or representation other than those expressly contained
herein, and it cannot be modified or amended except in writing signed by
Executive and an authorized officer of the Company.  The parties may enter into
separate agreement(s) related to stock options, stock awards or other matters
relative to Executive’s service with the Company or its affiliates.  These
separate agreements govern (or may govern) other aspects of the relationship
between the parties, have or may have provisions that survive termination of
Executive’s employment under this Agreement, may be amended or superseded by the
parties without regard to this Agreement and are enforceable according to their
terms without regard to the enforcement provision of this Agreement.

 

8.7          COUNTERPARTS.  This Agreement may be executed in separate
counterparts, including facsimile, PDF, or other electronic counterparts, any
one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.

 

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8.8          HEADINGS.  The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.

 

8.9          SUCCESSORS AND ASSIGNS.  The Company may assign this Agreement and
its rights and obligations hereunder in whole, but not in part, to any company
or other entity with or into which the Company may hereafter merge, consolidate,
or be acquired by, or to which the Company may transfer all or substantially all
of its assets.  Executive may not assign or transfer this Agreement or any
rights or obligations hereunder, other than to Executive’s estate upon
Executive’s death.

 

8.10        CHOICE OF LAW/ VENUE.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal,
substantive laws of the State of Colorado, as applied to agreements made and to
be performed solely within the State of Colorado and without regard to the
principles of conflicts of laws of the State of Colorado or of any other
jurisdiction that would result in the application of the laws of any other
jurisdiction to this Agreement.  Any action brought to enforce this Agreement
shall be brought in Colorado in a court of competent jurisdiction.

 

8.11        ATTORNEYS’ FEES.  In any action brought to enforce this Agreement,
the substantially prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses of enforcing any right of
such substantially prevailing party under or with respect to this Agreement,
including without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.

 

8.12        PRINCIPLES OF CONSTRUCTION.  In this Agreement, unless otherwise
expressly indicated or required by the context:

 

(a)           reference to and the definition of any document shall be deemed a
reference to such document as it may be amended, supplemented, revised, or
modified, in writing, from time to time but disregarding any amendment,
supplement, replacement or novation made in breach of this Agreement;

 

(b)           reference to any statute, decree or regulation shall be construed
as a reference to such statute, law, decree or regulation as re-enacted,
redesignated, amended or extended from time to time;

 

(c)           the words “including” or “includes” shall be deemed to mean
“including without limitation” and “including but not limited to” (or “includes
without limitation” and “includes but is not limited to”) regardless of whether
the words “without limitation” or “but not limited to” actually follow the term;
and

 

(d)           the words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement or Schedules shall refer to this Agreement
and its Schedules as a whole and not to any particular provision hereof or
thereof, as the case may be.

 

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(e)           any rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not be applied in the construction or
interpretation of this Agreement as each party participated in the drafting of
this Agreement and the parties have agreed that no provision or provisions of
this Agreement can, may, or should be attributed to either particular party.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first written above.

 

 

Company:

 

 

 

 

 

EVOLVING SYSTEMS, INC.

 

 

 

 

 

/s/ DAVID J. NICOL

 

By: David J. Nicol

 

Its: Chairman, Compensation Committee of the Board of Directors

 

 

 

 

 

Executive:

 

 

 

 

 

/s/ BRIAN R. ERVINE

 

Brian R. Ervine

 

[Signature Page to Employment Agreement]

 

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Exhibit A

 

Paid Time Off.  Paid Time Off (PTO) is set at one level above the “standard”
rates for employees, as follows:

 

Years of Service

 

Hours Accrued per Pay Period

 

Annual # of Days of PTO

0-2

 

6.16

 

20

3-5

 

7.69

 

25

6+

 

9.23

 

30

 

Executive will be expected to record your PTO in accordance with standard
Company policy and all other provisions of the Company’s PTO policy will apply.

 

Life Insurance Benefits.  In addition to the standard life insurance benefits
payable to employees of the Company, the Company will provide life insurance to
Executive in the amount of $300,000, subject to Executive’s insurability.  The
Company pays the premium, but the premium attributable to insurance over $50,000
is taxable to Executive.

 

Disability Benefits.  The Company will provide Executive with short term and
long term disability insurance coverage per the Company’s general plan for all
employees.  The general plan for employees pays benefits at the rate of 66 2/3%
of the employee’s base pay, with a base pay cap of $8,501 per month (resulting
in total monthly benefit payable to Executive under the Company plan of
$5,667).  This benefit, if payable, terminates at age 65.  In addition, the
Company will make available to Executive additional long term disability
coverage that will pay the lesser of the difference between 66 2/3% of
Executive’s monthly base salary and the benefit provided under the general
Company plan or $6,000 per month. (For example, if Executive’s monthly base
salary is $15,000, the additional long-term disability policy will provide
$4,334, the difference between the general Company plan benefit ($5,667) and 66
2/3% of Executive’s base salary.)  This additional benefit is payable until age
65, or, in some cases has a 5 year payout.

 

Upgrade to First Class Travel/Business Travel.  Upgrades to business class
travel will be made available to Executive in certain circumstances only in
accordance with the Company’s standard travel policies (for example, for certain
international flights). Upgrades to first class tickets, through the use of
coupons and mileage points, is permitted where there is no additional cost to
the Company.

 

Miscellaneous Benefits.  The Company will provide you with a cell
phone/Blackberry and cell phone/Blackberry service.  You will also be provided
with a laptop computer.

 

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Appendix B

 

Indemnification Agreement

 

25

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EVOLVING SYSTEMS, INC.

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is effective as of the 7th day of
January 2002, by and between EVOLVING SYSTEMS, INC., a Delaware corporation (the
“Company”), and Brian R. Ervine (“Indemnitee”).

 

WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and its related
entities;

 

WHEREAS, in order to induce Indemnitee to continue to provide services to the
Company, the Company wishes to provide for the indemnification of, and the
advancement of expenses to, Indemnitee to the maximum extent permitted by law;

 

WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company’s directors, officers, employees,
agents and fiduciaries, the significant increases in the cost of such insurance
and the general reductions in the coverage of such insurance;

 

WHEREAS, the Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited; and

 

WHEREAS, in view of the considerations set forth above, the Company desires that
Indemnitee shall be indemnified and advanced expenses by the Company as set
forth herein.

 

NOW, THEREFORE, in consideration of Indemnitee’s continued service to the
Company after the date hereof, the parties hereby agree as set forth below:

 

1.                                            CERTAIN DEFINITIONS.

 

(a)                             “Change in Control” shall mean, and shall be
deemed to have occurred if, on or after the date of this Agreement, (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in such
capacity or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing more
than 50% of the total voting power represented by the Company’s then outstanding
Voting Securities (as defined below), (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete

 

26

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liquidation of the Company or an agreement for the sale or disposition by the
Company of (in one transaction or a series of related transactions) all or
substantially all of the Company’s assets.

 

(b)                            “Claim” shall mean with respect to a Covered
Event (as defined below): any threatened, pending or completed action, suit,
proceeding or alternative dispute resolution mechanism, or any hearing, inquiry
or investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other.

 

(c)                             References to the “Company” shall include, in
addition to Evolving Systems, Inc., any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger to which
Evolving Systems, Inc. (or any of its wholly owned subsidiaries) is a party
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

 

(d)                            “Covered Event” shall mean any event or
occurrence related to the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company, or any subsidiary of the Company,
or is or was serving at the request of the Company as a director, officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity.

 

(e)                             “Expenses” shall mean any and all expenses
(including attorneys’ fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a witness in or
participating in (including upon appeal), or preparing to defend, to be a
witness in or to participate in, any action, suit, proceeding, alternative
dispute resolution mechanism, hearing, inquiry or investigation), judgments,
fines, penalties and amounts paid in settlement (if such settlement is approved
in advance by the Company, which approval shall not be unreasonably withheld),
actually and reasonably incurred, of any Claim and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement.

 

(f)                               “Expense Advance” shall mean a payment to
Indemnitee pursuant to Section 3 of Expenses in advance of the settlement of or
final judgment in any action, suit, proceeding or alternative dispute resolution
mechanism, hearing, inquiry or investigation which constitutes a Claim.

 

(g)                            “Independent Legal Counsel” shall mean an
attorney or firm of attorneys, selected in accordance with the provisions of
Section 2(d) hereof, who shall not have otherwise performed services for the
Company or Indemnitee within the last three years (other than with respect to
matters concerning the rights of Indemnitee under this Agreement, or of other
indemnitees under similar indemnity agreements).

 

(h)                            References to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit plan; and references
to “serving at the request of the Company” shall include any service as a
director, officer, employee, agent or fiduciary of the Company which imposes
duties on, or involves services by, such director, officer, employee, agent or
fiduciary with respect to an employee benefit plan, its participants or its
beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee

 

27

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reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan, Indemnitee shall be deemed to have acted in a
manner “not opposed to the best interests of the Company” as referred to in this
Agreement.

 

(i)                                “Reviewing Party” shall mean, subject to the
provisions of Section 2(d), any person or body appointed by the Board of
Directors in accordance with applicable law to review the Company’s obligations
hereunder and under applicable law, which may include a member or members of the
Company’ s Board of Directors, Independent Legal Counsel or any other person or
body not a party to the particular Claim for which Indemnitee is seeking
indemnification.

 

(j)                                “Section” refers to a section of this
Agreement unless otherwise indicated.

 

(k)                             “Voting Securities” shall mean any securities of
the Company that vote generally in the election of directors.

 

2.                                            INDEMNIFICATION.

 

(a)                             Indemnification of Expenses. Subject to the
provisions of Section 2(b) below, the Company shall indemnify Indemnitee for
Expenses to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any Claim (whether by reason
of or arising in part out of a Covered Event), including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses.

 

(b)                            Review of Indemnification Obligations.
Notwithstanding the foregoing, in the event any Reviewing Party shall have
determined (in a written opinion, in any case in which Independent Legal Counsel
is the Reviewing Party) that Indemnitee is not entitled to be indemnified
hereunder under applicable law, (i) the Company shall have no further obligation
under Section 2(a) to make any payments to Indemnitee not made prior to such
determination by such Reviewing Party, and (ii) the Company shall be entitled to
be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
Expenses theretofore paid in indemnifying Indemnitee; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee is entitled to
be indemnified hereunder under applicable law, any determination made by any
Reviewing Party that Indemnitee is not entitled to be indemnified hereunder
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expenses theretofore paid in indemnifying
Indemnitee until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).
 Indemnitee’s obligation to reimburse the Company for any Expenses shall be
unsecured and no interest shall be charged thereon.

 

(c)                             Indemnitee Rights on Unfavorable Determination;
Binding Effect. If any Reviewing Party determines that Indemnitee substantively
is not entitled to be indemnified hereunder in whole or in part under applicable
law, Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceeding. Absent such
litigation, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.

 

(d)                            Selection of Reviewing Party; Change in Control.
If there has not been a Change in Control, any Reviewing Party shall be selected
by the Board of Directors, and if there has been such a

 

28

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Change in Control (other than a Change in Control which has been approved by a
majority of the Company’s Board of Directors who were directors immediately
prior to such Change in Control), any Reviewing Party with respect to all
matters thereafter arising concerning the rights of Indemnitee to
indemnification of Expenses under this Agreement or any other agreement or under
the Company’s certificate of incorporation or bylaws as now or hereafter in
effect, or under any other applicable law, if desired by Indemnitee, shall be
Independent Legal Counsel selected by Indemnitee and approved by the Company
(which approval shall not be unreasonably withheld). Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent Indemnitee would be entitled to be indemnified
hereunder under applicable law and the Company agrees to abide by such opinion.
The Company agrees to pay the reasonable fees of the Independent Legal Counsel
referred to above and to indemnify fully such counsel against any and all
expenses (including attorneys’ fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.
Notwithstanding any other provision of this Agreement, the Company shall not be
required to pay Expenses of more than one Independent Legal Counsel in
connection with all matters concerning a single Indemnitee, and such Independent
Legal Counsel shall be the Independent Legal Counsel for any or all other
Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee
shall provide a written statement setting forth in detail a reasonable objection
to such Independent Legal Counsel representing other Indemnitees.

 

(e)                                  Mandatory Payment of Expenses.
Notwithstanding any other provision of this Agreement other than Section 10
hereof, to the extent that Indemnitee has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any Claim, Indemnitee shall be indemnified against all
Expenses incurred by Indemnitee in connection therewith.

 

3.                                            EXPENSE ADVANCES.

 

(a)                             Obligation to Make Expense Advances. The Company
shall make Expense Advances to Indemnitee upon receipt of a written undertaking
by or on behalf of the Indemnitee to repay such amounts if it shall ultimately
be determined that the Indemnitee is not entitled to be indemnified therefor by
the Company.

 

(b)                            Form of Undertaking. Any written undertaking by
the Indemnitee to repay any Expense Advances hereunder shall be unsecured and no
interest shall be charged thereon.

 

(c)                             Determination of Reasonable Expense Advances.
The parties agree that for the purposes of any Expense Advance for which
Indemnitee has made written demand to the Company in accordance with this
Agreement, all Expenses included in such Expense Advance that are certified by
affidavit of Indemnitee’s counsel as being reasonable shall be presumed
conclusively to be reasonable.

 

4.                                            PROCEDURES FOR INDEMNIFICATION AND
EXPENSE ADVANCES.

 

(a)                             Timing of Payments. All payments of Expenses
(including without limitation Expense Advances) by the Company to the Indemnitee
pursuant to this Agreement shall be made to the fullest extent permitted by law
as soon as practicable after written demand by Indemnitee therefor is presented
to the Company, but in no event later than forty-five (45) business days after
such written demand by Indemnitee is presented to the Company, except in the
case of Expense Advances, which shall be made no later than twenty (20) business
days after such written demand by Indemnitee is presented to the Company.

 

29

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(b)                            Notice/Cooperation by Indemnitee. Indemnitee
shall, as a condition precedent to Indemnitee’s right to be indemnified or
Indemnitee’s right to receive Expense Advances under this Agreement, give the
Company notice in writing within twenty-five (25) business days after receipt by
Indemnitee of notice of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee’s power.

 

(c)                             No Presumptions; Burden of Proof. For purposes
of this Agreement, the termination of any Claim by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement or applicable law, shall be a defense
to Indemnitee’s claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.

 

(d)                            Notice to Insurers. If, at the time of the
receipt by the Company of a notice of a Claim pursuant to Section 4(b) hereof,
the Company has liability insurance in effect which may cover such Claim, the
Company shall give prompt notice of the commencement of such Claim to the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such Claim in accordance with the terms of such policies.

 

(e)                             Selection of Counsel. In the event the Company
shall be obligated hereunder to provide indemnification for or make any Expense
Advances with respect to the Expenses of any Claim, the Company, if appropriate,
shall be entitled to assume the defense of such Claim with counsel approved by
Indemnitee (which approval shall not be unreasonably withheld) upon the delivery
to Indemnitee of written notice of the Company’s election to do so. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees or expenses of separate counsel
subsequently employed by or on behalf of Indemnitee with respect to the same
Claim; provided, however, that (i) Indemnitee shall have the right to employ
Indemnitee’s separate counsel in any such Claim at Indemnitee’s expense and
(ii) if (A) the employment of separate counsel by Indemnitee has been previously
authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (C) the Company shall not continue to retain
such counsel to defend such Claim, then the fees and expenses of Indemnitee’s
separate counsel shall be Expenses for which Indemnitee may receive
indemnification or Expense Advances hereunder.

 

5.                                            ADDITIONAL INDEMNIFICATION RIGHTS;
NONEXCLUSIVITY.

 

(a)                             Scope. The Company hereby agrees to indemnify
the Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company’s certificate of incorporation, the Company’s bylaws or
by

 

30

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statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties’ rights and
obligations hereunder except as set forth in Section 10(a) hereof.

 

(b)                            Nonexclusivity. The indemnification and the
payment of Expense Advances provided by this Agreement shall be in addition to
any rights to which Indemnitee may be entitled under the Company’s certificate
of incorporation, its bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.

 

6.                                       NO DUPLICATION OF PAYMENTS. The Company
shall not be liable under this Agreement to make any payment in connection with
any Claim made against Indemnitee to the extent Indemnitee has otherwise
actually received payment (under any insurance policy, provision of the
Company’s certificate of incorporation, bylaws or otherwise) of the amounts
otherwise payable hereunder.

 

7.                                       PARTIAL INDEMNIFICATION. If Indemnitee
is entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of Expenses incurred in connection with any Claim,
but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such Expenses to which
Indemnitee is entitled.

 

8.                                       MUTUAL ACKNOWLEDGMENT. Both the Company
and Indemnitee acknowledge that in certain instances, federal law or applicable
public policy may prohibit the Company from indemnifying its directors,
officers, employees, agents or fiduciaries under this Agreement or otherwise.
Indemnitee understands and acknowledges that the Company has undertaken or may
be required in the future to undertake with the Securities and Exchange
Commission to submit the question of indemnification to a court in certain
circumstances for a determination of the Company’s right under public policy to
indemnify Indemnitee.

 

9.                                       LIABILITY INSURANCE. To the extent the
Company maintains liability insurance applicable to directors, officers,
employees, agents or fiduciaries, Indemnitee shall be covered by such policies
in such a manner as to provide Indemnitee the same rights and benefits as are
provided to the most favorably insured of the Company’s directors, if Indemnitee
is a director; or of the Company’s officers, if Indemnitee is not a director of
the Company but is an officer; or of the Company’s key employees, agents or
fiduciaries, if Indemnitee is not an officer or director but is a key employee,
agent or fiduciary.

 

10.                                 EXCEPTIONS. Notwithstanding any other
provision of this Agreement, the Company shall not be obligated pursuant to the
terms of this Agreement:

 

(a)                                  Excluded Action or Omissions. To indemnify
Indemnitee for Expenses resulting from acts, omissions or transactions for which
Indemnitee is prohibited from receiving indemnification under this Agreement or
applicable law; provided, however, that notwithstanding any limitation set forth
in this Section 10(a) regarding the Company’s obligation to provide
indemnification, Indemnitee shall be entitled under Section 3 to receive Expense
Advances hereunder with respect to any such Claim unless and until a court
having jurisdiction over the Claim shall have made a final judicial
determination (as to which all

 

31

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rights of appeal therefrom have been exhausted or lapsed) that Indemnitee has
engaged in acts, omissions or transactions for which Indemnitee is prohibited
from receiving indemnification under this Agreement or applicable law.

 

(b)                                 Claims Initiated by Indemnitee. To indemnify
or make Expense Advances to Indemnitee with respect to Claims initiated or
brought voluntarily by Indemnitee and not by way of defense, counterclaim or
crossclaim, except (i) with respect to actions or proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other agreement or insurance policy or under the Company’s certificate of
incorporation or bylaws now or hereafter in effect relating to Claims for
Covered Events, (ii) in specific cases if the Board of Directors has approved
the initiation or bringing of such Claim, or (iii) as otherwise required under
Section 145 of the Delaware General Corporation Law (relating to indemnification
of officers, directors, employees and agents; and insurance), regardless of
whether Indemnitee ultimately is determined to be entitled to such
indemnification or insurance recovery, as the case may be.

 

(c)                                  Lack of Good Faith. To indemnify Indemnitee
for any Expenses incurred by the Indemnitee with respect to any action
instituted (i) by Indemnitee to enforce or interpret this Agreement, if a court
having jurisdiction over such action determines as provided in Section 13 that
each of the material assertions made by the Indemnitee as a basis for such
action was not made in good faith or was frivolous, or (ii) by or in the name of
the Company to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material defenses asserted by Indemnitee in such action was made in bad
faith or was frivolous.

 

(d)                                 Claims under Section 16(b). To indemnify
Indemnitee for expenses and the payment of profits arising from the purchase and
sale by Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute; provided,
however, that notwithstanding any limitation set forth in this
Section 10(d) regarding the Company’s obligation to provide
indemnification, Indemnitee shall be entitled under Section 3 to receive Expense
Advances hereunder with respect to any such Claim unless and until a court
having jurisdiction over the Claim shall have made a final judicial
determination (as to which all rights of appeal therefrom have been exhausted or
lapsed) that Indemnitee has violated said statute.

 

(e)                                  Payment under Insurance Policy. To
indemnify Indemnitee for payment which actually is made to Indemnitee under a
valid and collectible insurance policy, except in respect of any excess beyond
payment under such insurance.

 

11.                                 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall constitute an original.

 

12.                                 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective successors, assigns (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business or assets of the Company), spouses,
heirs and personal and legal representatives. The Company shall require and
cause any successor (whether direct or indirect, and whether by purchase,
merger, consolidation or otherwise) to all, substantially all, or a substantial
part, of the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company’s request.

 

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13.                                 EXPENSES INCURRED IN ACTION RELATING TO
ENFORCEMENT OR INTERPRETATION. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be indemnified for all Expenses
incurred by Indemnitee with respect to such action (including without limitation
attorneys’ fees), regardless of whether Indemnitee is ultimately successful in
such action, unless as a part of such action a court having jurisdiction over
such action makes a final judicial determination (as to which all rights of
appeal therefrom have been exhausted or lapsed) that each of the material
assertions made by Indemnitee as a basis for such action was not made in good
faith or was frivolous; provided, however, that until such final judicial
determination is made, Indemnitee shall be entitled under Section 3 to receive
payment of Expense Advances hereunder with respect to such action. In the event
of an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be indemnified for all Expenses incurred by Indemnitee in defense of
such action (including without limitation costs and expenses incurred with
respect to Indemnitee’s counterclaims and cross-claims made in such action),
unless as a part of such action a court having jurisdiction over such action
makes a final judicial determination (as to which all rights of appeal therefrom
have been exhausted or lapsed) that each of the material defenses asserted by
Indemnitee in such action was made in bad faith or was frivolous; provided,
however, that until such final judicial determination is made, Indemnitee shall
be entitled under Section 3 to receive payment of Expense Advances hereunder
with respect to such action.

 

14.                                 NOTICE. All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be
deemed duly given (i) if delivered by hand and signed for by the party
addressed, on the date of such delivery, or (ii) if mailed by domestic certified
or registered mail with postage prepaid, on the third business day after the
date postmarked. Addresses for notice to either party are as shown on the
signature page of this Agreement or as subsequently modified by written notice.

 

15.                                 CONSENT TO JURISDICTION. The Company and
Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of
the State of Delaware for all purposes in connection with any action or
proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be commenced, prosecuted and
continued only in the Court of Chancery of the State of Delaware in and for New
Castle County, which shall be the exclusive and only proper forum for
adjudicating such a claim.

 

16.                                 SEVERABILITY. The provisions of this
Agreement shall be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph or sentence) are
held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable, and the remaining provisions shall remain enforceable to the
fullest extent permitted by law. Furthermore, to the fullest extent possible,
the provisions of this Agreement (including without limitation each portion of
this Agreement containing any provision held to be invalid, void or otherwise
unenforceable, that is not itself invalid, void or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.

 

17.                                 CHOICE OF LAW. This Agreement, and all
rights, remedies, liabilities, powers and duties of the parties to this
Agreement, shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to principles of conflicts of laws.

 

18.                                 SUBROGATION. In the event of payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute all documents
required and shall do all acts that may be necessary to secure such rights and
to enable the Company effectively to bring suit to enforce such rights.

 

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19.                                 AMENDMENT AND TERMINATION. No amendment,
modification, termination or cancellation of this Agreement shall be effective
unless it is in writing signed by both the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed to be or shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver.

 

20.                                 INTEGRATION AND ENTIRE AGREEMENT. This
Agreement sets forth the entire understanding between the parties hereto and
supersedes and merges all previous written and oral negotiations, commitments,
understandings and agreements relating to the subject matter hereof between the
parties hereto.

 

21.                                 NO CONSTRUCTION AS EMPLOYMENT AGREEMENT.
Nothing contained in this Agreement shall be construed as giving Indemnitee any
right to be retained in the employ of the Company or any of its subsidiaries or
affiliated entities.

 

22.                                 NON-EXCLUSIVITY OF RIGHTS. The rights
conferred on Indemnitee by this Agreement shall not be exclusive of any other
right Indemnitee might have or hereafter acquire under any statute, provision of
the Company’s certificate of incorporation or bylaws, agreement, vote of
stockholders or directors, or otherwise, both as to action in Indemnitee’s
official capacity and as to action in another capacity while holding office.

 

23.                                 HEADINGS. The headings of the Sections are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.

 

 

EVOLVING SYSTEMS, INC.

 

By:

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Name: Anita T. Moseley

 

Title: Sr. Vice President & General Counsel

 

 

Address:

Evolving Systems, Inc.

 

9777 Mt. Pyramid Ct.

 

Englewood, CO 80112

 

 

 

AGREED TO AND ACCEPTED

 

 

INDEMNITEE

 

[g308201mm09i002.jpg]

 

 

 

Name: Brian R. Ervine

 

Title: Sr. Vice President & Chief Financial Officer

 

35

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