Exhibit 4.1


 


REGISTRATION RIGHTS AGREEMENT


 


THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the 3rd day of
November, 2003, by and among Evolving Systems, Inc., a Delaware corporation
(the “Parent”),
and the shareholders listed on Exhibit A hereto, referred to hereinafter
collectively as the “Company
Shareholders” and individually as a “Company Shareholder.”


 


RECITALS


 


WHEREAS,
pursuant to the Agreement and Plan of Merger, dated
November 3, 2003, by and among the Parent, ESI Acquisition One
Corporation, an Ohio corporation and wholly-owned subsidiary of the Parent (“Merger Sub”), CMS
Communications, Inc., an Ohio corporation (the “Company”), and the Company
Shareholders (the “Merger
Agreement”), Merger Sub is being merged with and into the
Company with the Company being the surviving corporation, and the common shares
of the Company held by the Company Shareholders are being converted into shares
of the Parent Common Stock (the “Transaction”);


 


WHEREAS,
the obligations of the parties in the Merger Agreement are conditioned upon the
execution and delivery of this Agreement; and


 


WHEREAS,
in connection with the consummation of the Transaction, the parties desire to
enter into this Agreement in order to grant registration and other rights to
the Company Shareholders with respect to their shares of the Parent’s common
stock as set forth below.


 


NOW, THEREFORE, in consideration of the
premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


 


SECTION 1.         GENERAL.


 


1.1                               Definitions. 
Unless otherwise defined herein, as used in this Agreement,
the following terms shall have the following respective meanings:


 


(a)                                  “Exchange Act” means
the Securities Exchange Act of 1934, as amended.


 


(b)                                  “Form S-3” means
such form under the Securities Act as in effect on the date hereof or any
successor or similar registration form under the Securities Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Parent with the SEC.


 


(c)                                  “Holder” means
a person owning of record Registrable Securities that have not been sold to the
public or any assignee of record of such Registrable Securities in accordance
with Section 2.6(b) hereof and who does not notify the Parent in writing
upon or prior to the earlier of (i) the Filing Date or (ii) the 75th day
following the date hereof that he does not wish his Registrable Securities to
be included in the Registrable Securities covered by the Registration
Statement.


 


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(d)                                  “Prospectus”
means the prospectus included in the Registration Statement with respect to the
terms of the offering of the Registrable Securities covered by the Registration
Statement, and all amendments and supplements thereto, including any and all
exhibits and annexes thereto and any information incorporated by reference
therein.


 


(e)                                  “Registrable Securities” means
the number of shares of the Parent Common Stock received by the Company
Shareholders upon consummation of the Transaction and any shares of the Parent
Common Stock issued in respect thereof as the result of any adjustment,
recapitalization, reorganization, stock split, stock dividend or other change
in the Parent’s capital structure; provided, however, that Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement shall have become effective under the Securities Act and such Registrable
Securities shall have been disposed of in accordance with the Registration
Statement and the Securities Act, or (ii) with respect to a Holder, at such
time as all of the Registrable Securities held by such Holder can, in a three
month period, be distributed to the public in accordance with Rule 144 under
the Securities Act, as such rule may be amended from time to time, or any
successor rule or regulation (“Rule 144”); or (iii) at such time as all of the
Registrable Securities held by such Holder could be sold by such Holder in a
three-month period in accordance with Rule 144, assuming that, for purposes of
calculating the required holding periods set forth under Rule 144 for such
Holder, such Holder acquired such Registrable Securities on the earlier of the
Effective Date (as defined below) or the date such Holder received such
Registrable Securities.


 


(f)                                    “Rules”
shall mean the rules and regulations promulgated by the SEC under the
Securities Act or under the Exchange Act.


 


(g)                                 “SEC” means
the Securities and Exchange Commission.


 


(h)                                 “Securities Act” shall
mean the Securities Act of 1933, as amended.


 


(i)                                    “Special Registration
Statement” shall mean a registration statement (i) relating
to any employee benefit plan or (ii) related to equity securities issued upon
conversion of debt securities.


 


Capitalized terms used,
but not defined, herein shall have the meanings set forth in the Merger
Agreement.


 


SECTION 2.         REGISTRATION; RESTRICTIONS ON TRANSFER.


 


2.1                               Registration Procedures and Expenses.  The Parent shall:


 


(a)                                  subject
to receipt of information from the Holders that is both customary and
necessary, make commercially reasonable efforts to prepare and file with the
SEC, as soon as practicable following the Closing (the date of such filing with
the SEC, the “Filing Date”),
a registration statement on Form S-3 (the “Registration Statement”) to enable the resale of the
Registrable Securities by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in the
Registration Statement; provided, however, that not less than five
(5) business days prior to the filing of the Registration Statement with the
SEC, the Parent shall furnish to the Holders, and counsel to the Holders; a
copy of the


 


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Registration Statement proposed to be filed and the
Parent agrees to consider appropriate comments provided by such Holders and
their counsel for inclusion in the Registration Statement; provided, further, that Parent
shall not be required to file a Registration Statement with the SEC until such
time as the audited financial statements for the Company, required by the Rules
to be included in the Registration Statement, are available in form and
substance satisfactory to Parent and its independent auditors (the “Company Financial Statements”);


 


(b)                                  use
its commercially reasonable efforts to cause the Company to complete the
preparation of, and facilitate the audit of, the Company Financial Statements;


 


(c)                                  not
less than five (5) business days prior to the filing thereof with the SEC,
furnish to the Holders and to counsel for the Holders, a copy of each amendment
to the Registration Statement, and each amendment or supplement, if any, to the
Prospectus (including all documents incorporated by reference therein after the
initial filing of the Registration Statement), and Parent agrees to consider
appropriate comments provided by such Holders and their counsel for inclusion
in the Registration Statement;


 


(d)                                  use
its commercially reasonable efforts, subject to receipt of necessary
information from the Holders, as reasonably determined upon consultation with
such Holder’s counsel to cause the Registration Statement to become effective
as soon as practicable after the Filing Date (the “Effective Date”);


 


(e)                                  use
its commercially reasonable efforts to prepare and file with the SEC such
amendments and supplements to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement current and continuously effective for a period not exceeding, with
respect to each Holder’s Registrable Securities, the earlier of (i) the
second anniversary of the Effective Time, (ii) the date on which such
Holder may sell all Registrable Securities then held by such Holder without
restriction by the volume limitations of Rule 144(e) of the Securities Act or
(iii) such time as all Registrable Securities covered by the Registration
Statement have been sold thereunder;


 


(f)                                    furnish
to any Holder with respect to the Registrable Securities registered under the
Registration Statement such number of copies of the Registration Statement, the
Prospectus (including any preliminary prospectuses) any amendments or
supplements thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of all or
any of the Registrable Securities by such Holder, provided, however, that the
obligation of the Parent to deliver copies of the Prospectus and any amendments
or supplements thereto to such Holder shall be subject to the receipt by the
Parent of reasonable assurances from such Holder that the Holder will comply
with the applicable provisions of the Securities Act and of such other securities
or blue sky laws as may be applicable in connection with any use of such
Prospectus or any amendments or supplements thereto;


 


(g)                                 arrange,
if necessary for registration or qualification of the Registrable Securities
under the securities or blue sky laws of such states specified in writing by
any of the Holders, and maintain such registration or qualification in effect
so long as required; provided,


 


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however,
that the Parent shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;


 


(h)                                 bear
all fees and expenses in connection with the procedures in paragraphs (a)
through (g) and (k) of this Section 2.1 and the registration of the
Registrable Securities pursuant to the Registration Statement;


 


(i)                                    advise
the Holders, promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable efforts to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued;


 


(j)                                    ensure
that the Registration Statement and any amendment or supplement thereto and any
Prospectus forming part thereof and any amendment or supplement thereto (i)
complies with the applicable requirements of the Securities Act and (ii) does
not to contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading


 


(k)                                with
a view to making available to the Holders the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any
time permit the Holders to sell Registrable Securities to the public without
registration, the Parent covenants and agrees to: (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
until the earlier of (A) such date as all of the Registrable Securities
may be resold pursuant to Rule 144(k) or any other Rule of similar effect or
(B) such date as all of the Holders’ Registrable Securities shall have
been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Parent under the Securities Act and under the
Exchange Act; (iii) furnish to any Holder upon request, as long as such Holder
owns any Registrable Securities, (A) a written statement by the Parent
that it has complied with the reporting requirements of the Securities Act and
the Exchange Act, (B) a copy of the Parent’s most recent Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information
as may be reasonably requested in order to avail such Holder of any rule or
regulation of the SEC that permits the selling of any such Registrable
Securities without registration; and (iv) subject to the conditions set forth
in this Agreement, and provided the conditions of Rule 144(k) are satisfied in
all respects, including without limitation, that such Holder is not an
Affiliate of the Parent, as such term is defined in Rule 144, use commercially
reasonable efforts to cause the removal of any restrictive legends on the
Registrable Securities necessary to enable such Holder to sell the Registrable
Securities under Rule 144(k).


 


(l)                                    It
shall be a condition precedent to the obligations of the Parent to take any
action pursuant to this Section 2.1 that any Holder shall furnish to the
Parent, pursuant to the written request by the Parent, such information
regarding itself, the Registrable Securities to be sold by such Holder, and the
intended method of disposition of such Registrable Securities as shall be
required to effect the registration of the Registrable Securities.


 


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2.2                               Suspension.


 


(a)                                  Each
Holder agrees that it will promptly notify the Parent of any changes in the
information set forth in the Registration Statement regarding the Holder or the
Holder’s plan of distribution.


 


(b)                                  Except
in the event that paragraph (c) below applies, the Parent shall: (i) if
deemed necessary by the Parent, prepare and file from time to time with the SEC
a post-effective amendment to the Registration Statement or a supplement to the
Prospectus forming a part thereof or a supplement or amendment to any document
incorporated therein by reference or file any other required document so that
such Registration Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Registrable Securities being sold
thereunder, such Prospectus, Supplement or amendment will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and
(ii)  promptly inform each Holder that the Parent has complied with
its obligations in Section 2.2(b)(i) (or that, if the Parent has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Parent will notify each Holder to that effect, will use
its commercially reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify each
Holder pursuant to Section 2.2(b)(i) hereof when the amendment has become
effective).


 


(c)                                  Subject
to paragraph (d) below, in the event: (i) of any request by the SEC or any
other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or related Prospectus or for additional information;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) of
the receipt by the Parent of any notification with respect to the suspension of
the registration or qualification or exemption from registration or
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose; or (iv) of any event
or circumstance which, in the reasonable judgment of Parent, necessitates the
making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or any omission to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; then
the Parent shall deliver a certificate in writing to each Holder (the “Suspension Notice”)
to the effect of the foregoing and, upon receipt of such Suspension Notice,
each Holder will refrain from selling any Registrable Securities pursuant to
the Registration Statement (a “Suspension”) until such Holder’s receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Parent, or until
it is advised in writing by the Parent that any stop order suspending the
effectiveness of the Registration Statement has been withdrawn, that the
registration or qualification of the


 


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Registrable Securities has been reinstated  in such jurisdiction or that the  current Prospectus may be used, as
appropriate, and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in any such
Prospectus.  In the event of any
Suspension, the Parent will use its commercially reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable, and in no event later than 20 business days, after delivery of a
Suspension Notice to each Holder.


 


(d)                                  Notwithstanding
the foregoing paragraphs of this Section 2.2, the Holders shall not be
prohibited from selling Registrable Securities under the Registration Statement
as a result of Suspensions on more than two occasions of not more than sixty
(60) days each in any twelve (12) month period, unless, in the good faith
judgment of the Parent’s Board of Directors, upon advice of counsel, the sale
of Registrable Securities under the Registration Statement in reliance on this
paragraph 2.2(d) would be reasonably likely to cause a violation of the
Securities Act or the Exchange Act and result in potential liability to the
Parent.


 


(e)                                  Provided
that a Suspension is not then in effect, any Holder may sell Registrable
Securities under the Registration Statement, provided that it arranges for
delivery of a current Prospectus to the transferee of such Registrable Securities.


 


(f)                                    In
the event of a sale of Registrable Securities by any Holder, such Holder must
also deliver to the Parent’s transfer agent, with a copy to the Parent, a
Certificate of Subsequent Sale substantially in the form attached hereto as
Exhibit B, so that the shares may be properly transferred.


 


2.3                               Indemnification.  For the purpose of this Section 2.3:


 


(a)                                  the
term “Selling Company Shareholder”
shall include each Holder and any officer, director, agent, trustee or
affiliate of such Holder;


 


(b)                                  the
term “Registration Statement”
shall include any final prospectus, exhibit, supplement or amendment included
in or relating to the Registration Statement referred to in Section 2.1;
and


 


(c)                                  the
term “Untrue Statement”
shall include any untrue statement or alleged untrue statement, or any omission
or alleged omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.


 


(i)                                    The
Parent agrees to indemnify and hold harmless each Selling Company Shareholder
from and against any losses, claims, damages or liabilities to which such
Selling Company Shareholder may become subject (under the Securities Act or
otherwise) but only insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon
(i) any Untrue Statement of a material fact contained in the Registration
Statement, or (ii) any failure by the Parent to fulfill any undertaking
included in the Registration Statement, and the Parent will reimburse such
Selling Company Shareholder for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim, provided, however, that the Parent shall not be
liable in any such case to the extent that such loss, claim, damage or
liability arises


 


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out of, or is based upon, an Untrue Statement made in
such Registration Statement in reliance upon and in conformity with written
information furnished to the Parent by or on behalf of any such Selling Company
Shareholder specifically for use in preparation of the Registration Statement
or the failure of any such Selling Company Shareholder to comply with its
covenants and agreements contained in Section 2.2 hereof or any statement
or omission in any prospectus that is corrected in any subsequent prospectus
that was delivered to a Holder prior to the pertinent sale or sales by such
Holder.


 


(ii)                                Each
Holder agrees to indemnify and hold harmless the other Selling Company
Shareholders and the Parent (and each person, if any, who controls the Parent
or the other Selling Company Shareholders within the meaning of Section 15
of the Securities Act, each officer of the Parent who signs the Registration
Statement and each director of the Parent) from and against any losses, claims,
damages or liabilities to which the other Selling Company Shareholders or the
Parent (or any such officer, director or controlling person) may become subject
(under the Securities Act or otherwise), but only insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, (A) any failure by such Holder to comply
with the covenants and agreements contained in Section 2.2 hereof, or
(B) any Untrue Statement of a material fact contained in the Registration
Statement if such Untrue Statement was made in reliance upon and in conformity
with written information furnished by or on behalf of a Holder specifically for
use in preparation of the Registration Statement, and such Holder will
reimburse the other Selling Company Shareholders and the Parent (or such officer,
director or controlling person), as the case may be, for any reasonable legal
or other expenses reasonably incurred in investigating, defending or preparing
to defend any such action, proceeding or claim.


 


(iii)                            Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 2.3, such indemnified person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party under this Section 2.3 (except to the extent that such
omission materially and adversely affects the indemnifying party’s ability to
defend such action) or from any liability otherwise than under this
Section 2.3.  Subject to the
provisions hereinafter stated, in case any such action shall be brought against
an indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, shall be entitled to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person.  After notice from the indemnifying person to
such indemnified person of its election to assume the defense thereof, such indemnifying
person shall not be liable to such indemnified person for any legal expenses
subsequently incurred by such indemnified person in connection with the defense
thereof, provided, however, that if there exists or shall exist a conflict of
interest that would make it inappropriate, in the reasonable opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at the
expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel (in addition to appropriate local counsel) for all indemnified parties.


 


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In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld or delayed.  No indemnifying person shall, without the
prior written consent of the indemnified person, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified person is
or could have been a party and indemnification could have been sought hereunder
by such indemnified person, unless such settlement includes an unconditional
release of such indemnified person from all liability on claims that are the
subject matter of such proceeding.


 


(iv)                               If
the indemnification provided for in this Section 2.3 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (i) or
(ii) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Parent on the one hand and the Holders on the other in connection
with the statements or omissions or other matters which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations.  The relative fault shall be determined by reference to, among
other things, in the case of an Untrue Statement, whether the Untrue Statement
relates to information supplied by the Parent on the one hand or a Holder on
the other and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such Untrue Statement.  The Parent and the Holders agree that it
would not be just and equitable if contribution pursuant to this
subsection (iv) were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (iv).  The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (iv) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this
subsection (iv), no Holder shall be required to contribute any amount in
excess of the amount by which the gross amount received by such Holder from the
sale of the Registrable Securities to which such loss relates exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such Untrue Statement.  No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.  The Holders’ obligations in this
subsection to contribute are several in proportion to their sales of
Registrable Securities to which such loss relates and not joint.


 


(v)                                   The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of this Section 2.3, and are fully informed regarding said
provisions.  They further acknowledge
that the provisions of this Section 2.3 fairly allocate the risks in light
of the ability of the parties to investigate the Parent and its business in
order to assure that adequate disclosure is made in the Registration Statement
as required by the Securities Act and the Exchange Act.  The parties are advised that federal or
state public policy as interpreted by the courts in certain jurisdictions may
be contrary


 


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to certain of the provisions of this Section 2.3,
and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this
Section 2.3 and further agree not to attempt to assert any such defense.


 


2.4                               Termination
of Conditions and Obligations.  The  restrictions
imposed by Section 2.6 upon the transferability of the Registrable
Securities shall cease and terminate as to any particular number of the
Registrable Securities when an opinion of counsel reasonably satisfactory to
the Parent shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.


 


2.5                               Information
Available.  So long as the
Registration Statement is effective covering the resale of Registrable
Securities owned by any Holder, the Parent:


 


(a)                                  will
furnish to each Holder, as soon as practicable after it is available, one copy
of (i) its annual report to shareholders (which annual report shall
contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants
registered with the Public Company Accounting Oversight Board) and (ii) if
not included in substance in the annual report to shareholders, its Annual
Report on Form 10-K (the foregoing, in each case, excluding exhibits);


 


(b)                                  will
furnish to each Holder, upon the request of the Holder, all exhibits to the
documents referred to in Section 2.5(a) filed with the SEC and all other
information that is made available to shareholders; and


 


(c)                                  upon
the reasonable request of any Holder, will meet with such Holder or a
representative thereof at the Parent’s headquarters to discuss all information
relevant for disclosure in the Registration Statement and will otherwise
cooperate with any Holder conducting an investigation for the purpose of reducing
or eliminating such Holder’s exposure to liability under the Securities Act,
including the reasonable production of information at the Parent’s
headquarters; provided, that the Parent shall not be required to disclose any
confidential information to or meet at its headquarters with any Holder until
and unless such Holder shall have entered into a confidentiality agreement in
form and substance reasonably satisfactory to the Parent with the Parent with
respect thereto.


 


2.6                               Restrictions
on Transfer.


 


(a)                                  Each
Holder agrees not to make any disposition of all or any portion of the
Registrable Securities unless and until:


 


(i)                                    The
Registration Statement is declared effective under the Securities Act and such
disposition is made in accordance with the Registration Statement; or


 


(ii)                                (A) the
transferee has agreed in writing to be bound by the terms of this Agreement,
(B) such Holder shall have notified the Parent of the proposed disposition
and shall have furnished the Parent with a detailed statement of the circumstances
surrounding the proposed disposition, and (C) if reasonably requested by
the Parent, such Holder shall have furnished the Parent with an opinion of
counsel, reasonably satisfactory to the Parent, that such


 


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disposition will not require registration of such
Registrable Securities under the Securities Act.  It is agreed that the Parent will not require opinions of counsel
for transactions made pursuant to Rule 144, except in unusual circumstances.


 


(b)                                  Notwithstanding
the provisions of subsection (a) above, no such restriction shall apply to
a transfer by any Holder transferring his Registrable Securities to such
Holder’s family member or a trust, partnership or limited liability company for
the benefit of an individual Holder or such Holder’s immediate family member; provided that in each case the transferee
will agree in writing to be subject to the terms of this Agreement to the same
extent as if the transferee was an original Holder hereunder.


 


(c)                                  Each
certificate representing Registrable Securities shall be stamped or otherwise
imprinted with legends substantially similar to the following (in addition to
any legend required under applicable state securities laws):


 


THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS EVOLVING SYSTEMS, INC. (THE “COMPANY”) HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.


 


THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT TO WHICH THE STOCKHOLDER
AND THE COMPANY ARE PARTIES.  COPIES OF
SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY.


 


(d)                                  The
Parent shall be obligated to reissue promptly unlegended certificates at the
request of any Holder thereof and, if required, deliver such unlegended
certificates to the escrow agent under the Hold-Back Share Escrow Agreement, if
the Parent has completed the registration contemplated by this Agreement.


 


(e)                                  Any
legend endorsed on a certificate pursuant to applicable state securities laws
and the stop-transfer instructions with respect to such Registrable Securities
shall be removed upon receipt by the Parent of an order of the appropriate blue
sky authority evidencing that such legend is no longer required.


 


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2.7                               Delay
of Registration; Furnishing Information.


 


(a)                                  No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this
Section 2.


 


(b)                                  It
shall be a condition precedent to the obligations of the Parent to take any
action pursuant to Section 2.2 that all selling Holders shall furnish to
the Parent such information regarding themselves, the Registrable Securities
held by them and the intended method of disposition of such Registrable
Securities as shall be required to effect the registration of their Registrable
Securities.


 


2.8                               Assignment
of Registration Rights.  The rights
to cause the Parent to register Registrable Securities pursuant to this
Agreement may only be assigned by a Holder to a transferee (a) in connection
with a transfer of Registrable Securities permitted under Section 2.6(b)
or (b) that acquires at least 10,000 shares of Registrable Securities (as
adjusted for any adjustment, recapitalization, reorganization, stock split,
stock dividend or other change in the Parent’s capital structure); provided that in each case (y) the
transferor shall, within 5 days after such transfer furnish Parent written
notice of the name and address of the transferee or assignee and the
Registrable Securities as to which such registration rights are being assigned
and (z) the transferee will agree in writing to be subject to the terms of this
Agreement to the same extent as if the transferee was an original Holder
hereunder.


 


2.9                               Agreement
to Furnish Information.  If
requested by the Parent, each Holder shall provide, within ten (10) days of
such request, such information as may be required by the Parent in connection
with the completion of any public offering of the Parent’s securities pursuant
to a registration statement filed under the Securities Act.  The obligations described in this
Section 2.9 shall not apply to a Special Registration Statement.  Each Holder agrees that any transferee of
any Registrable Securities shall be bound by this Sections 2.9.


 


SECTION 3.         MISCELLANEOUS.


 


3.1                               Governing Law.  This Agreement shall be governed by and construed
under the laws of the State of Colorado  as
applied to agreements among Colorado residents entered into and to be performed
entirely within Colorado.


 


3.2                               Successors and Assigns.  Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time.


 


3.3                               Entire Agreement.  This Agreement, the Exhibits hereto, the Merger
Agreement and the other documents delivered pursuant thereto constitute the
full and entire understanding and agreement among the parties with regard to
the subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.


 


11

















 


3.4                               Severability.  In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.


 


3.5                               Amendment
and Waiver.


 


(a)                                  Except
as otherwise expressly provided, this Agreement may be amended or modified only
upon the written consent of the Parent and the Holders of at least a majority
of the Registrable Securities.


 


(b)                                  Except
as otherwise expressly provided, the obligations of the Parent and the rights
of the Holders under this Agreement may be waived only with the written consent
of the Holders of at least a majority of the Registrable Securities.


 


(c)                                  For
the purposes of determining the number of Holders or Company Shareholders
entitled to vote or exercise any rights hereunder, the Parent shall be entitled
to rely solely on the list of record holders of its common stock as maintained
by or on behalf of the Parent.


 


(d)                                  Any
amendment or waiver effected in accordance with this Section 3.5 shall be
binding upon each Holder and Parent.  By
accepting the benefits conferred under this Agreement, the Holders hereby agree
to be bound by the provisions of this Section 3.5.


 


3.6                               Delays or Omissions.  It is agreed that no delay or
omission to exercise any right, power, or remedy accruing to any Holder, upon
any breach, default or noncompliance of the Parent 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 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 any
Holder’s part of any breach, default or noncompliance under this Agreement or
any waiver on such Holder’s part of any provisions or conditions of this
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 Holders, shall be cumulative and not alternative.


 


3.7                               Notices. 
All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of
receipt.  All communications shall be
sent to the party to be notified at the address as set forth on the signature
pages hereof or Exhibit A hereto or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.


 


3.8                               Attorneys’ Fees.  In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from


 


12

















 


the losing party all fees, costs and expenses of
enforcing any right of such 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.


 


3.9                               Titles and Subtitles.  The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.


 


3.10                        Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.


 


3.11                        Aggregation of Stock.  All
Registrable Securities held or acquired by affiliated entities or persons or
persons or entities under common management or control shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.


 


[THIS SPACE
INTENTIONALLY LEFT BLANK]


 


13

















 


In Witness Whereof, the parties hereto have
executed this Registration Rights Agreement as
of the date set forth in the first paragraph hereof.


 


	
  PARENT:

  	
  COMPANY
  SHAREHOLDERS:

  
	
   

  	
   

  
	
  EVOLVING
  SYSTEMS, INC.

  	
   

  
	
   

  	
    /s/ John M. Cullen, Jr.

  	
   

  
	
  By:

  	
    /s/ Anita T. Moseley

  	
   

  	
  John M. Cullen, Jr.

  
	
  Name:

  	
  Anita T. Moseley

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
  Address:

  
	
   

  	
  986 Ridge Crest Drive

  
	
  Address:

  	
  Gahanna, Ohio 43230

  
	
  9777 Mount Pyramid Ct.

  	
  Fax: 614-355-0049

  
	
  Englewood, CO  80112

  	
   

  
	
  Fax:  (303) 802-1399

  	
   

  
	
   

  	
    /s/ Jeffrey A. Curran

  	
   

  
	
   

  	
  Jeffrey A. Curran

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  6450 Scioto Ct.

  
	
   

  	
  Westerville, Ohio 43082

  
	
   

  	
  Fax: 614-355-0049

  
	
   

  	
   

  
	
   

  	
    /s/ Michael E. Brannan

  	
   

  
	
   

  	
  Michael E. Brannan

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  987 Grandview Avenue

  
	
   

  	
  Columbus, Ohio 43212

  
	
   

  	
  Fax: 614-355-0049

  
	
   

  	
   

  
	
   

  	
    /s/ Stephen J. Valachovic

  	
   

  
	
   

  	
  Stephen J. Valachovic

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1087 Lincoln Road

  
	
   

  	
  Columbus, Ohio 43212

  
	
   

  	
  Fax: 614-355-0049

  
						



 


REGISTRATION
RIGHTS AGREEMENT


SIGNATURE
PAGE


 

















 


EXHIBIT A


 


SCHEDULE OF COMPANY
SHAREHOLDERS


 


John M. Cullen, Jr.


 


Jeffrey A. Curran


 


Michael E. Brannan


 


Stephen J. Valachovic


 


A-1

















 


EXHIBIT B


 


EVOLVING SYSTEMS, INC.


 


CERTIFICATE OF SUBSEQUENT SALE


 


[Name of Transfer Agent]


 


RE:          Sale of Shares of Common Stock of Evolving Systems, Inc. (the
“Company”) pursuant to the Company’s Prospectus dated
                      ,
2004 (the “Prospectus”)


 


Dear Sir/Madam:


 


The undersigned
hereby certifies, in connection with the sale of shares of Common Stock of the
Company included in the table of Selling Shareholders in the Prospectus, that
the undersigned has sold the shares pursuant to the Prospectus and in a manner
described under the caption “Plan of Distribution” in the Prospectus and that
such sale complies with all applicable securities laws, including, without
limitation, the Prospectus delivery requirements of the Securities Act of 1933,
as amended.


 


Selling Shareholder (the
beneficial
owner):                                                              


 


Record Holder (e.g., if
held in name of
nominee):                                                    


 


Restricted Stock
Certificate
No.(s):                                                                           


 


Number of Shares
Sold:                                                                                             


 


Date of
Sale:                                                                                                               


 


In the event that
you receive a stock certificate(s) representing more shares of Common Stock
than have been sold by the undersigned, then you should return to the
undersigned a newly issued certificate for such excess shares in the name of
the Record Holder and BEARING A RESTRICTIVE LEGEND.  Further, you should place a stop transfer on your records with
regard to such certificate.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  cc:

  	
  Investor Relations

  	
   

  
	
   

  	
  Evolving Systems, Inc.

  	
   

  
	
   

  	
  9777 Mt. Pyramid Ct. Suite 100

  	
   

  
	
   

  	
  Englewood, CO  80112

  	
   

  
									



 


B-1