Exhibit 10.1


 


Agreement


 


This AGREEMENT, dated April 20, 2010
(the “Agreement”), is by and between Evolving Systems, Inc., a Delaware
corporation (the “Company”), and Karen Singer, as Trustee of the Singer
Children’s Management Trust (the “Stockholder” and, together with the
Stockholder’s Affiliates (as defined below) and Associates (as defined below)
from time to time, the “Singer Group”).


 


WHEREAS, the Stockholder is the
beneficial owner of 2,184,671 shares of common stock, par value $0.001 per
share, of the Company (the “Shares”); and


 


WHEREAS, the Stockholder has requested
that the Company amend the Stockholders’ Rights Agreement dated as of March 4,
2009, as amended to date (the “Rights Agreement”) so that the threshold at
which a person becomes an “Acquiring Person” under the Rights Agreement is
increased from 25% to 30%; and


 


WHEREAS, pursuant to agreements entered
into by the Company and Stockholder, the Stockholder has three (3) representatives
on the Board of Directors (the “Singer Nominees”); and


 


WHEREAS, the Stockholder has requested
that the Board of Directors appoint one of the Singer Nominees to the
Compensation Committee of the Board; and


 


WHEREAS, the Company has requested that
the Singer Group vote its Shares in favor of a proposal to amend the Company’s
2007 Stock Incentive Plan, as attached hereto as Exhibit A.


 


NOW, THEREFORE, in consideration of the
premises, mutual covenants and agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Stockholder, on behalf of the Singer Group, and the Company
hereby agree as follows:


 


Section 1.  Representations.


 


(a) Binding Agreement; Authority.
The Company hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered by the Company, and is a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The Company further represents and warrants that the Resolutions (as
defined below) were duly adopted by the Board of Directions, have not in any
way been amended, modified, revoked or rescinded, have been in full force and
effect since the adoption to and including the date hereof, are now in full
force and effect and are the only corporate proceedings of the Company now in
force relating to or affecting the matters referred to therein. The Stockholder
represents and warrants that this Agreement has been duly authorized, executed
and delivered by such Stockholder, and is a valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with its
terms.


 


(b) Share Ownership. The
Stockholder represents and warrants that, as of the date hereof, it and its
Affiliates and Associates are the “beneficial owners” (as defined below) of the
class and series of shares of capital stock of the Company in the amounts set
forth above. None of the Singer Group nor any of their respective Affiliates
and Associates beneficially own, or have any rights, options or agreements to
acquire or vote, any other shares of capital stock of the Company.


 


(c) Certain Defined Terms.
For purposes of this Agreement, the term “Affiliate” and “Associate” shall have
the respective meanings set forth in Rule 12b-2 promulgated by the
Securities and Exchange Commission (the “SEC”) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). For purposes of this Agreement,
the terms “beneficial owner” and “beneficially own” shall have the same 


 


1

















 


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


 


Section 2.  Singer Nominee on the Compensation Committee


 


The Company agrees that for so long as
the Singer Group is the beneficial owner of no less than twenty percent (20%)
of the Company’s issued and outstanding common stock: (a) the Compensation
Committee of the Board of Directors shall be composed of four (4) members
and will include at least two (2) Singer Nominees, or their successors and
(b) all action taken by the Compensation Committee, including but not
limited to granting of equity awards and determination of executive
compensation, shall require the unanimous approval of all members of the Committee.


 


Section 3. Amendment to the Rights
Plan.
As of the date of this Agreement, the Board of Directors has approved an
amendment to the Rights Plan to increase the threshold at which a person
becomes an Acquiring Person under the Rights Agreement to 29%, in accordance
with the resolutions (collectively, the “Resolutions”) attached hereto as Exhibit B.


 


Section 4.  Voting.


 


(a) 2010 Meeting of Stockholders.
The Singer Group agrees in connection with the 2010 Meeting of Stockholders (i) to
be present for quorum purposes and (ii) to vote all of its Shares as of
the record date in favor of the amendments to the Company’s 2007 Stock
Incentive Plan in the form attached as Exhibit A
hereto.


 


(b) Further Assurances. The
Singer Group shall, at the Company’s sole cost and expense, take all actions
requested in writing by the Company and necessary to carry out the intention of
this Section 4, including, without limitation, delivering to the Company
upon its written request executed proxies naming the proxies appointed by the
Company for all Shares as of the record dates for the aforementioned meetings
of stockholders.


 


Section 5.  Remedies. Each party hereto hereby acknowledges and
agrees that irreparable harm would occur in the event any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to specific relief hereunder, including, without limitation, an
injunction or injunctions to prevent and enjoin breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof in
any state or federal court in the State of Delaware or in any state or federal
court in the State of Colorado, in addition to any other remedy to which they
may be entitled at law or in equity. Any requirements for the securing or
posting of any bond with such remedy are hereby waived.


 


Section 6.  Amendment; Waiver. Any provision of this Agreement may be
amended or waived, if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment by all parties hereto, or in the case of a
waiver, by the party hereto against whom the waiver is to be effective.  No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.


 


Section 7.  No Assignment or Benefit to Third Parties. The Stockholder may not assign, or
cause to be assigned, any of its rights under this Agreement or delegate, or
cause to be delegated, any of the obligations relating to the Singer Group
under this Agreement by operation of law or otherwise, without the prior
written consent of the Company. Nothing in this Agreement, express or implied,
is intended to 


 


2

















 


confer upon any person, other than the
Stockholder and the Company and their respective permitted successors and
permitted assigns, any right or remedy under or by reason of this Agreement.


 


Section 8.  Entire Agreement. This Agreement, together with the
schedule hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and may be amended only by an agreement in writing
executed by the parties hereto.


 


Section 9.  Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be validly given, made or served, if in
writing and sent by U.S. registered mail, return receipt requested, by
facsimile, with written confirmation of receipt, or by electronic mail in
portable document format, with written confirmation of receipt:


 


	
  if
  to the Company:

  	
  Evolving
  Systems, Inc.

  
	
   

  	
  9777
  Pyramid Court

  
	
   

  	
  Suite 100

  
	
   

  	
  Englewood,
  Colorado 80112

  
	
   

  	
  Facsimile:
  (303) 802-1138

  
	
   

  	
  Email:  Anita.Moseley@evolving.com

  
	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Holme
  Roberts & Owen LLP

  
	
   

  	
  1700
  Lincoln Street, Suite 4100

  
	
   

  	
  Denver,
  Colorado 80203

  
	
   

  	
  Facsimile:
  (303) 866-0200

  
	
   

  	
  Email:  charles.maguire@hro.com

  
	
   

  	
  Attention:  Charles D. Maguire, Jr.

  
	
   

  	
   

  
	
  if
  to the Stockholder:

  	
  Karen
  Singer

  
	
   

  	
  c/o
  Romulus Holdings

  
	
   

  	
  2200
  Fletcher Avenue, Fifth Floor

  
	
   

  	
  Fort
  Lee, NJ 07024

  
	
   

  	
   

  
	
  with
  copies to:

  	
  Andrews
  Kurth LLP

  
	
   

  	
  450
  Lexington Avenue

  
	
   

  	
  New
  York, NY 10017

  
	
   

  	
  Attention:  Charles Uniman, Esq.

  
	
   

  	
  Facsimile: 
  (212) 850-2929

  



 


Section 10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to any conflict of laws provisions thereof. Each party hereto,
on behalf of itself and its Affiliates and Associates, hereby irrevocably and
unconditionally consents to the exclusive jurisdiction of the courts in the
State of Delaware and/or the courts of the United States of America located in
the State of Delaware, for any action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby, and agrees
not to commence any action, suit or proceeding related thereto except in such
courts. Each party hereto, on behalf of itself and its Affiliates and
Associates, hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby, in the courts in the State of Delaware
and/or the courts of the United States of America located in the State of
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding in any such court has been brought in any inconvenient forum.


 


3

















 


Section 11. Counterparts. This Agreement may be executed and
delivered (including without limitation by facsimile or PDF signature) in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.


 


Section 12. No Presumption Against
Draftsman.  Each party hereto hereby acknowledges that
the parties hereto fully negotiated the terms of this Agreement, that each such
party had an equal opportunity to influence the drafting of the language
contained in this Agreement and that there shall be no presumption against any
such party on the ground that such party was responsible for preparing this
Agreement or any part hereof.


 


Section 13. Enforceability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.  It is hereby stipulated and declared to be
the intention of the parties hereto that the parties hereto would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable. In
addition, the parties hereto shall use best efforts to agree upon and
substitute a valid and enforceable term, provision, covenant or restriction for
any such that is held invalid, void or unenforceable by a court of competent
jurisdiction.


 


[SIGNATURES FOLLOW]


 


4

















 


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


 


	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  EVOLVING
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thaddeus Dupper

  
	
   

  	
   

  	
  Thaddeus
  Dupper

  
	
   

  	
  Title:

  	
  President &
  CEO

  
	
   

  	
   

  
	
   

  	
  STOCKHOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Karen Singer

  
	
   

  	
  Karen
  Singer, Trustee for Singer Children’s

  
	
   

  	
  Management Trust

  



 


5

















 


Exhibit A


 


EVOLVING SYSTEMS, INC.

AMENDED AND RESTATED


2007 STOCK INCENTIVE PLAN


 


Adopted by the Board of Directors on March 12,
2007


Amended by the Board of Directors on March 2,
2010


 


 


1.             GENERAL


 


(a)           Purpose.  The primary
purposes of the Evolving Systems, Inc. 2007 Stock Incentive Plan are to
attract, retain and motivate employees, directors and consultants, to
compensate them for their contributions to the growth and profits of the
Company and its Affiliates and to encourage them to own Common Stock.


 


(b)           Types of Awards.  The
Plan permits the award of (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Stock Appreciation Rights, (iv) Restricted
Stock, (v) Restricted Stock Units, (vi) Performance Awards, and (vii) Other
Stock-Based Awards.


 


2.             DEFINITIONS


 


Except
as otherwise provided in an applicable Award Agreement, the following
capitalized terms shall have the meanings indicated below for purposes of the
Plan and any Award:


 


(a)           “Affiliate” means a parent or
subsidiary of the Company, with “parent” meaning an entity that controls the
Company directly or indirectly, through one or more intermediaries, and “subsidiary”
meaning an entity that is controlled by the Company directly or indirectly,
through one or more intermediaries. 
Solely with respect to the grant of an Incentive Stock Option, Affiliate
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and
(f), respectively, of the Code.


 


(b)           “Award” means any award of an
Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit,
Performance Award, or Other Stock-Based Award.


 


(c)           “Award Agreement” means the written or
electronic document setting forth the terms and conditions of an Award.  The Award Agreement is subject to the terms
and conditions of the Plan.


 


(d)           “Board” means the Board of
Directors of Evolving Systems, Inc.


 


(e)           “Change of Control” means the occurrence of any
of the following events:


 


(i)        the date any
person or group acquires, or has acquired during the 12-month period ending on
the date of the most recent acquisition by the person or group, assets from the
Company that have a total gross fair market value equal to or more than 40% of
the total gross fair market value of all assets of the Company immediately
prior to the acquisition;


 


(ii)       the date any person or group
within the meaning of the Exchange Act acquires ownership of our stock that,
together with stock held by the person or group, constitutes more than 50% of
the total fair market value or total voting power entitled to vote in the
election of directors or any other change in ownership described in Treas. Reg.
Section 1.409A-3(i)(5)(v);


 


6

















 


(iii)      the date any
person or group acquires, or has acquired during the 12-month period ending on
the date of the most recent acquisition by the person or group, ownership of
stock possessing 30% or more of the total voting power of the stock of the
Company;


 


(iv)      the date a majority of
members of the Board is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of our
Board before the date of the appointment or election; or


 


(v)           any other change in
effective control described in Treas. Reg. Section 1.409A(i)(5)(vi).


 


(f)            “Code” means the Internal Revenue
Code of 1986, as amended, and the applicable rulings, regulations and guidance
thereunder.


 


(g)           “Committee” means the Compensation
Committee of the Board which shall consist of four (4) members of the
Board, and, so long as the Singer Children’s Management Trust (the “Trust”) is
the beneficial owner of no less than twenty percent (20%) of the Company’s
issued and outstanding Common Stock, shall further consist of at least two (2) members
of the Board that have been nominated by the Trust.


 


(h)           “Common Stock” means a share of Evolving
Systems, Inc., common stock, $0.001 par value per share.


 


(i)            “Company” means Evolving Systems, Inc.,
a Delaware corporation.


 


(j)            “Consultant” means any person, including
an advisor, engaged by the Company or an Affiliate to render consulting or
advisory services and who is compensated for such services.


 


(k)           “Continuous Service” means continuous service as
an Employee, Director or Consultant to the Company or an Affiliate.  Unless otherwise stated in the applicable
Award Agreement, a Participant’s change in position or duties with the Company
or any Affiliate shall not result in interrupted or terminated service, so long
as such Participant continues service as an Employee, Director or
Consultant.  Whether a termination or
interruption in service shall have occurred for purposes of the Plan shall be
determined by the Committee (or its designee), which determination shall be
final, binding and conclusive.


 


(l)            “Covered Employee” means the chief executive
officer and other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code and other
employees who may become subject to such reporting.


 


(m)          “Director” means a member of the
Board.


 


(n)           “Dividend Equivalents” means any
right granted under Section 11 of the Plan.


 


(o)           “Employee” means any person employed
by the Company or an Affiliate, determined in accordance with the Company’s
standard personnel policies and practices.


 


(p)           “Exchange Act” means the U.S. Securities
Exchange Act of 1934, as it may be amended from time to time, or any successor
act thereto.


 


(q)           “Fair Market Value” means, as of any date, the
value of the Common Stock of the Company determined as follows:


 


7

















 


(i)        If the Common
Stock is listed on any established stock exchange, or traded on the Nasdaq
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in Common Stock) on the determination date, as reported in The Wall Street Journal or such other
source as the Board deems reliable. 
Unless otherwise provided by the Committee, if there is no closing sales
price (or closing bid if no sales were reported) for the Common Stock on the
determination date, then the Fair Market Value shall be the closing sales price
(or closing bid if no sales were reported) on the last preceding date for which
such quotation exists.


 


(ii)       In the absence of such
markets for the Common Stock, the Fair Market Value shall be determined in good
faith by the Committee.


 


(r)            “Full-Value Award” means an Award of
Restricted Stock, Restricted Stock Units, Performance Award or Other
Stock-Based Award.


 


(s)           “Incentive Stock Option” means an
Option granted under Section 6 of the Plan that is intended to meet the
requirements of Section 422 of the Code, or any successor provision
thereto.


 


(t)            “Non-statutory Stock Option” means an Option
granted under Section 6 of the Plan that is not intended to be an
Incentive Stock Option.


 


(u)           “Option” or “Stock Option” means
a right to purchase one or more shares of Common Stock.


 


(v)           “Other Stock-Based Award” means any
right granted under Section 10 of the Plan.


 


(w)          “Participant” means an eligible
individual who is granted an Award under the Plan.


 


(x)            “Performance Award” means any right granted
under Section 9 of the Plan.


 


(y)           “Performance Criteria” means any
quantitative or qualitative measures, as determined by the Committee, which may
be used to measure the level of performance of the Company, an Affiliate or any
individual Participant during a Performance Period, including any Qualifying
Performance Criteria.


 


(z)            “Performance Period” means any period as
determined by the Committee in its sole discretion.


 


(aa)         “Person” means any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, or government or political subdivision thereof.


 


(bb)         “Qualifying Performance Criteria” means one or
more of the following performance criteria applied to the individual, the
Company as a whole, an Affiliate, a business unit, or any combination thereof,
and measured quarterly, annually or cumulatively over a period of years, on an
absolute basis or relative to a pre-established target, to a previous quarter
or year’s results or to a designated comparison group, in each case as
specified by the Committee in the Award Agreement: (i) revenue (ii) earnings
before interest, taxes, depreciation and amortization (EBITDA), (iii) adjusted
EBITDA (earnings before interest, taxes, depreciation, amortization,
impairment, stock compensation and gain/loss on foreign exchange transaction, (iv) net
earnings, (v) net income, (vi) product-related targets and (vi) cash
flow, subject to adjustment by the Committee to remove the effect of charges
for restructurings, discontinued operations, extraordinary items and all items
of gain, loss or expense 


 


8

















 


determined
to be extraordinary or unusual in nature or infrequent in occurrence, related
to the disposal of a segment or a business, or related to a change in
accounting principle or otherwise.


 


(cc)         “Plan” means this Evolving Systems, Inc.
2007 Stock Incentive Plan.


 


(dd)         “Restricted Stock” means an Award of shares of
Common Stock granted under Section 8 of the Plan.


 


(ee)         “Restricted Stock Unit” means a right
granted under Section 8 of the Plan that is denominated in shares of
Common Stock.


 


(ff)           “Share Reserve” means as defined in Section 4
of the Plan.


 


(gg)         “Stock Appreciation Right” means any
right granted under Section 7 of the Plan.


 


(hh)         “Substitute Award” means an Award granted in
substitution for, or in assumption of, outstanding awards previously granted by
an entity acquired by the Company or an Affiliate or with which the Company or
Affiliate combines.


 


3.             PLAN
ADMINISTRATION


 


(a)           Authority of the Committee.  Except as otherwise provided herein, the Plan
shall be administered by the Committee, which shall have the power to interpret
the Plan and to adopt such rules and guidelines for implementing the terms
of the Plan as it may deem appropriate. 
The Committee, shall have the ability to modify the Plan provisions, to
the extent necessary, or delegate such authority, to accommodate any changes in
law and regulations in jurisdictions in which Participants will receive
Awards.  Subject to the terms of the Plan
and applicable law, the Committee shall have full power and authority to:


 


(i)        designate
Participants;


 


(ii)       determine the type or types
of Awards to be granted to each Participant under the Plan;


 


(iii)      determine the
number of shares of Common Stock to be covered by (or with respect to which
payments, rights, or other matters are to be calculated in connection with)
Awards, ;


 


(iv)      determine the terms and
conditions of any Award;


 


(v)       determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in
cash, shares of Common Stock, other securities, or other Awards, or canceled,
forfeited, or suspended, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended;


 


(vi)      determine whether, to what
extent, and under what circumstances cash, shares of Common Stock, other
securities, other Awards, and other amounts payable with respect to an Award
under the Plan shall be deferred either automatically or at the election of the
holder thereof or of the Committee;;


 


(vii)     interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan;


 


(viii)    establish,
amend, suspend, or waive such rules and guidelines;


 


(ix)       appoint such agents as it
shall deem appropriate for the proper administration of the Plan;


 


9

















 


(x)        make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan; and


 


(xi)       correct any defect, supply
any omission, or reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem desirable to carry the Plan into effect.


 


(b)           Administrative Actions. Unless
otherwise expressly provided in the Plan, Subject to the limitations described
in subsection (a) above, all designations, determinations,
interpretations, and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Committee, may be made at any
time, and shall be final, conclusive, and binding upon all Persons, including
the Company, any Affiliate, any Participant, any holder or beneficiary of any
Award, any stockholder, and any employee of the Company or of any Affiliate.


 


(c)           No Liability.  No member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan, any Award or any Award Agreement.


 


(d)           Action
by the Committee. 
Notwithstanding anything to the contrary expressed or implied in this
Plan, any and all actions by the Committee required or permitted under this
Plan shall require the unanimous approval of all Committee members.


 


4.             SHARES
SUBJECT TO THE PLAN


 


(a)           Shares Available. 
Subject to adjustment as provided in Section 14
of the Plan, the maximum aggregate number of shares of Common Stock that may be
issued pursuant to Awards granted under the Plan (exclusive of shares of Common
Stock that have been issued pursuant to Awards (““Existing Awards”) that have
been granted under the Plan prior to April 20, 2010 and that have not,
prior to such date (x) expired or been cancelled or otherwise terminated,
without having been exercised or redeemed in full, (y) been reacquired by
the Company prior to vesting or (z) been repurchased by the Company at
cost prior to vesting) shall be 250,000 shares (“Share Reserve”).  Each share of Common Stock
issued pursuant to an Award shall reduce the Share Reserve by one (1) share.  To the extent that a distribution pursuant to
an Award is made in cash, the Share Reserve shall be reduced by the number of
shares of Common Stock subject to the redeemed or exercised portion of the
Award.  Notwithstanding any other
provision of the Plan to the contrary, the maximum aggregate number of shares
of Common Stock that may be issued under the Plan pursuant to Incentive Stock
Options (exclusive of shares of Common Stock that have been issued pursuant to
Existing Awards) is 250,000 shares, subject to adjustment as provided in Section 14
of the Plan.


 


(b)           Individual
Annual Award Limits.  The following calendar year
annual limits apply to grants of Awards unless the Committee specifically
determines at the time of grant that the Award is not intended to qualify as
performance-based compensation under the Plan: 
125,000 shares, subject to adjustment as provided in Section 14,
for grants of stock options, stock appreciation rights, restricted stock
awards, restricted stock units, performance shares and other stock-based
awards; and (ii) $0.00 in annual Performance Awards payable in cash or
other cash-based awards.


 


(c)           Changes to the Share Reserve.  If an Award  granted under the Plan shall for any reason (i) expire,
be canceled or otherwise terminate, in whole or in part, without having been
exercised or redeemed in full, (ii) be reacquired by the Company prior to
vesting, or (iii) be repurchased at cost by the Company prior to vesting,
the shares of Common Stock not acquired by the Participant under such 


 


10

















 


Award
shall revert or be added to the Share Reserve and become available for issuance
under the Plan; provided, however,
that shares of Common Stock shall not revert or be added to the Share Reserve
that are (A) had been awarded under an Existing Award,  (B) tendered in payment of an Option, (C) withheld
by the Company to satisfy any tax withholding obligation, or (D) purchased
by the Company with the proceeds from the exercise of Options, and provided, further, that shares of Common
Stock covered by a Stock Appreciation Right, to the extent the right is
exercised and settled in shares of Common Stock, and whether or not shares of
Common Stock are actually issued to the Participant upon exercise of the Stock
Appreciation Right, shall be considered issued or transferred pursuant to the
Plan.


 


(d)           Source of Shares.  Any shares of Common Stock delivered pursuant
to an Award may consist, in whole or in part, of authorized and unissued shares
or reacquired shares, bought on the market or otherwise.


 


(e)           Substitute Awards. 
In the case of Substitute Awards, the shares of
Common Stock subject to the Substitute Award shall not reduce the Share
Reserve.  If a Substitute Award shall for
any reason expire, be canceled or otherwise terminate, in whole or in part, be
settled in cash or otherwise settled by issuance of fewer shares, the shares of
Common Stock not acquired by the Participant shall not be added to the Share
Reserve.  Further, any shares of Common
Stock withheld or delivered to pay tax withholding obligations relating to a
Substitute Award shall not reduce the Share Reserve.


 


5.             ELIGIBILITY


 


Individuals
eligible to participate in this Plan include Employees, Directors and
Consultants of the Company, or any Affiliate; provided,
however, to the extent required under Section 409A of the Code,
an Affiliate of the Company shall include only an entity in which the Company
possesses at least twenty percent (20%) of the total combined voting power of
the entity’s outstanding voting securities or such other threshold ownership
percentage permitted under Section 409A of the Code.


 


6.             STOCK
OPTIONS


 


(a)           Grant of Options.  The Committee is hereby authorized to grant
Options to Participants with the following terms and conditions, and any other
terms and conditions not inconsistent with the provisions of the Plan, as the
Committee shall determine.  Incentive
Stock Options may be granted only to eligible Employees of the Company or of
any parent corporation or subsidiary corporation (as permitted by Section 422
of the Code).


 


(b)           Award Agreement.  Each Option granted under the Plan shall be
evidenced by an Award Agreement.  The
Award Agreement shall specify whether the Option is intended to be an Incentive
Stock Option or a Nonstatutory Stock Option.


 


(i)        Exercise Price.  The purchase price per share of Common Stock
that may be purchased by an Option shall be determined by the Committee; provided, however, and except with respect
to Substitute Awards or as provided in Section 14, that such purchase
price shall not be less than 100% of the Fair Market Value of a share of Common
Stock on the date of grant of such Option.


 


(ii)       Term.  The term of each Option shall not exceed ten (10) years
from the date of grant.


 


(iii)      Vesting; Restrictions on Exercise.  The Award Agreement shall set forth any
installment or other restrictions on exercise of the Option during the term of
the Option.  Each Option


 


11






 












 


shall
become exercisable and shall vest over such period of time, or upon such events
or such Performance Criteria, as determined by the Committee.


 


(iv)      Time and Method of Exercise.  The Committee shall establish in the
applicable Award Agreement the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the form
or forms, including, without limitation, cash, shares of Common Stock, or other
Awards or any combination thereof, having a Fair Market Value on the exercise
date equal to the relevant exercise price, in which payment of the exercise
price with respect thereto may be made or deemed to have been made.


 


(v)       Termination of Continuous Service.  Each Award Agreement shall
set forth the extent, if any, to which the Participant shall have the right to
exercise the Option following termination of the Participant’s Continuous
Service.  Such provisions shall be
determined in the sole discretion of the Committee, need not be uniform among
all Options issued pursuant to the Plan, and may reflect distinctions based on
the reasons for termination of Continuous Service.  In the absence of specific
provisions in an Award Agreement setting forth rights to exercise following
termination of a Participant’s Continuous Service, the following shall apply:


 


(A)          Termination of Continuous
Service Other than as a Result of Disability or Death.  In the event a Participant’s Continuous
Service terminates (other than upon the Participant’s death or disability), the
Participant may exercise his or her Option (to the extent that the Participant
was entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (a) the date three (3) months
after the termination of the Participant’s Continuous Status as an Employee,
Director or Consultant (or such longer or shorter period specified in the
Option Agreement), or (b) the expiration of the term of the Option as set
forth in the Option Agreement.  If, at
the date of termination, the Participant is not entitled to exercise his or her
entire Option, the shares covered by the un-exercisable portion of the Option
shall revert to and again become available for issuance under the Plan.  If, after termination, the Participant does
not exercise his or her Option within the time specified in the Option
Agreement, the Option shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance under the Plan.


 


(B)           Disability of a
Participant.  In the event a Participant’s Continuous
Service terminates as a result of the Participant’s disability, the Participant
may exercise his or her Option (to the extent that the Participant was entitled
to exercise it as of the date of termination), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following
such termination (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement.  If, at the date
of termination, the Participant is not entitled to exercise his or her entire
Option, the shares covered by the un-exercisable portion of the Option shall
revert to and again become available for issuance under the Plan.  If, after termination, the Participant does
not exercise his or her Option within the time specified herein, the Option
shall terminate, and the shares covered by such Option shall revert to and
again become available for issuance under the Plan.


 


(C)           Death of a Participant.  In the event of the death of
a Participant during, or within a period specified in the Option Agreement
after the termination of, the Participant’s Continuous Service, the Option may
be exercised (to the extent the Participant was entitled to exercise the Option
as of the date of death) by the Participant’s estate, by a person who acquired
the right to exercise the Option by bequest or inheritance or by a person
designated to exercise the option upon the Participant’s death pursuant to
subsection 15(b), but only within the period ending on the earlier of (1) the
date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement), or (2) the expiration
of the term of such Option as set forth in the Option 


 


12

















 


Agreement.  If, at the time of death, the Participant was
not entitled to exercise his or her entire Option, the shares covered by the
un-exercisable portion of the Option shall revert to and again become available
for issuance under the Plan.  If, after
death, the Option is not exercised within the time specified herein, the Option
shall terminate, and the shares covered by such Option shall revert to and
again become available for issuance under the Plan.


 


(c)           Limitations
on Incentive Stock Options.


 


(i)        Initial Exercise.  The aggregate Fair Market Value of the shares
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by a Participant in any calendar year, under the Plan or
otherwise, shall not exceed $100,000. 
For this purpose, the Fair Market Value of the shares of Common Stock
shall be determined as of the date of grant and each Incentive Stock Option shall
be taken into account in the order granted.


 


(ii)       Ten Percent Stockholders.  An Incentive Stock Option granted to a
Participant who is the holder of record of more than ten percent (10%) of the
combined voting power of all classes of stock of the Company shall have an
exercise price at least equal to 110% of the Fair Market Value of a share of
Common Stock on the date of grant and the term of the Option shall not exceed
five (5) years.


 


(iii)      Notification of Disqualifying Disposition.  If any Participant shall make any disposition
of shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option under the circumstances described in Section 421(b) of
the Code (relating to certain disqualifying dispositions), the Participant
shall notify the Company of such disposition within ten (10) days thereof.


 


7.             STOCK
APPRECIATION RIGHTS


 


(a)           Grant of Stock Appreciation Rights.  The Committee is hereby authorized to grant
Stock Appreciation Rights to Participants. 
Subject to the terms of the Plan and any applicable Award Agreement, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the
Fair Market Value of a share of Common Stock on the date of exercise over (ii) the
grant price of the Stock Appreciation Right as specified by the Committee.


 


(b)           Award Agreement.  Each Stock Appreciation Right granted under
the Plan shall be evidenced by an Award Agreement.


 


(i)        Grant Price.  The grant price shall be determined by the
Committee; provided, however, and
except as provided in Section 14, that such price shall not be less than
100% of the Fair Market Value of one share of Common Stock on the date of
grant, except that if a Stock Appreciation Right is at any time granted in
tandem with an Option, the grant price of the Stock Appreciation Right shall
not be less than the exercise price of such Option.


 


(ii)       Term. The term of each Stock
Appreciation Right shall not exceed ten (10) years from the date of grant.


 


(iii)      Time and Method of Exercise.  The Committee shall establish in the
applicable Award Agreement the time or times at which a Stock Appreciation
Right may be exercised in whole or in part. 
At the discretion of the Committee, the payment upon exercise may be in
cash, shares of Common Stock or any combination thereof, or in any other manner
approved by the Committee in its sole discretion.  The Committee’s determination as to the form
of settlement shall be set forth in the Award Agreement.


 


13

















 


(iv)      Termination of Continuous Service.  Each Award Agreement shall set forth the
extent, if any, to which the Participant shall have the right to exercise the
Stock Appreciation Right following termination of the Participant’s Continuous
Service.  Such provisions shall be
determined in the sole discretion of the Committee, need not be uniform among
all Stock Appreciation Rights issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination of Continuous Service.


 


8.             RESTRICTED
STOCK AND RESTRICTED STOCK UNITS


 


(a)           Grant of Restricted Stock or Restricted Stock Units. The Committee
is hereby authorized to grant Awards of Restricted Stock and Restricted Stock
Units to Participants.


 


(b)           Award Agreement.  Each grant of Restricted Stock or Restricted
Stock Units shall be evidenced by an Award Agreement.


 


(i)        Restrictions on Transfer.  Shares of Restricted Stock and Restricted
Stock Units shall be subject to such restrictions as the Committee may
establish in the applicable Award Agreement (including, without limitation, any
limitation on the right to vote a share of Restricted Stock or the right to
receive any dividend or other right), which restrictions may lapse separately
or in combination at such time or times, in such installments or otherwise, as
the Committee may deem appropriate. 
Unrestricted shares of Common Stock, evidenced in such manner as the
Committee shall deem appropriate, shall be delivered to the holder of
Restricted Stock promptly after such restrictions have lapsed.


 


(ii)       Share Registration.  Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates.  In the
event any stock certificate is issued in respect of shares of Restricted Stock
granted under the Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.


 


(iii)      Forfeiture.  Upon
termination of Continuous Service during the restriction period, except as
determined otherwise by the Committee, all shares of Restricted Stock and all
Restricted Stock Units that are then subject to restrictions shall be forfeited
and reacquired by the Company.


 


9.             PERFORMANCE
AWARDS


 


(a)           Grant of Performance Awards.  The Committee is hereby authorized to grant
Performance Awards to Participants. 
Performance Awards include arrangements under which the grant, issuance,
retention, vesting and/or transferability of any Award is subject to such
Performance Criteria and such additional conditions or terms as the Committee
may designate.


 


(b)           Award Agreement.  Each grant of a Performance Award shall be
evidenced by an Award Agreement.  Subject
to the terms of the Plan and any applicable Award Agreement, a Performance
Award granted under the Plan:


 


(i)        may be
denominated or payable in cash, shares of Common Stock (including, without
limitation, Restricted Stock), other securities, or other Awards; and


 


(ii)       shall confer on the holder
thereof rights valued as determined by the Committee and payable to, or
exercisable by, the holder of the Performance Award, in whole or in part, upon
the 


 


14

















 


achievement
of such performance goals during such Performance Periods as the Committee
shall establish.


 


(c)           Covered Employee. 
The Committee may from time to time grant Awards to
Covered Employees that are intended to satisfy the performance-based
compensation requirements of Section 162(m) of the Code.  For purposes of such Awards, the Committee
shall consider all of the requirements of Section 162(m), including the
Qualifying Performance Criteria, approvals and certification by solely outside
directors, the individual Award limits and any other requirements under Section 162(m) of
the Code.


 


10.          OTHER STOCK-BASED AWARDS


 


The
Committee is hereby authorized to grant to Participants such other Awards that
are denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, shares of Common Stock, as are deemed by the
Committee to be consistent with the purposes of the Plan; provided,
however, that such grants must comply with applicable law.  Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the terms and
conditions of such Awards.  Shares of
Common Stock or other securities delivered pursuant to a purchase right granted
under this Section 10 shall be purchased for such consideration, which may
be paid by such method or methods and in such form or forms, including, without
limitation, cash, shares of Common Stock, other securities, or other Awards, or
any combination thereof, as the Committee shall determine.


 


11.          DIVIDEND EQUIVALENTS


 


The
Committee is hereby authorized to grant to Participants the right, if so
determined by the Committee, to receive, currently, or on a deferred basis,
dividends or Dividend Equivalents, with respect to the shares of Common Stock
covered by the Award.  The Committee may
provide that any dividends paid on shares of Common Stock subject to an Award
must be reinvested in additional shares of Common Stock, which may or may not
be subject to the same vesting conditions and restrictions applicable to the
Award.  Notwithstanding the award of
Dividend Equivalents or dividends, a Participant shall not be entitled to
receive a special or extraordinary dividend or distribution unless the
Committee shall have expressly authorized such receipt.  All distributions, if any, received by a
Participant with respect to an Award as a result of any split, Common Stock
dividend, combination of shares of Common Stock, or other similar transaction
shall be subject to the restrictions applicable to the original Award.


 


12.          TAX WITHHOLDING


 


The
Company or any Affiliate shall be authorized to withhold from any Award granted
or any payment due or transfer made under any Award or under the Plan the
amount (in cash, shares of Common Stock, other securities, or other Awards) of
withholding taxes due in respect of an Award, its exercise, or any payment or
transfer under such Award or under the Plan and to take such other action as
may be necessary in the opinion of the Company or Affiliate to satisfy
statutory withholding obligations for the payment of such taxes.


 


13.          CANCELLATION AND RE-GRANT OF
OPTIONS


 


(a)           Subject to
subsection (b) of this Article 13, the Board shall have the authority
to effect, at any time and from time to time (i) the repricing of any
outstanding Options under the Plan and/or (ii) with the consent of the
affected holders of Options, the cancellation of any outstanding Options and
the grant in substitution of new Options under the Plan covering the same or
different numbers of shares of Common Stock, but having an exercise price per
share not less than 100% of the Fair Market Value, or, 


 


15

















 


in
the case of a ten percent (10%) stockholder (as defined in subsection 6(c)),
not less than 110% of the Fair Market Value) per share of Common Stock on the
new grant date.


 


(b)           Prior to the
implementation of any such repricing or cancellation of one or more outstanding
Options as described in Section 13(c), the Board shall obtain the approval
of the stockholders of the Company to the extent required by the New York Stock
Exchange, Nasdaq or other securities exchange listing requirements applicable
to the Company, or applicable law.


 


(c)           To the extent
required by Section 162(m) of the Code, shares subject to an Option
canceled under this Section 13 shall continue to be counted against the
maximum award of Options permitted to be granted during any calendar year to an
individual Participant pursuant to Section 4(b) of the Plan.  The repricing of an Option hereunder resulting
in a reduction of the exercise price shall be deemed to be a cancellation of
the original Option and the grant of a new Option; in the event of such
repricing, both the original and the new Options shall be counted against the
maximum awards of Options permitted to be granted during any calendar year to
an individual Participant pursuant to Section 4(b) of the Plan.  The provisions of this Section 13(c) shall
be applicable only to the extent required by Section 162(m) of the
Code.


 


14.          ADJUSTMENTS UPON CHANGES IN
STOCK


 


(a)           Changes in Capital. 
If any change is made in the Common Stock subject to
the Plan, or subject to any Award, without the receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan and the maximum
number of shares subject to award to any person during any calendar year, and
the outstanding Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding
Awards.  Such adjustments shall be made
by the Committee proportionately, so as to put the Participant in the same
economic position both prior to and after the change in capital.  The determination of the Committee shall be
final, binding and conclusive.  (The
conversion of any convertible securities of the Company shall not be treated as
a “transaction not involving the receipt of consideration by the Company.”)


 


(b)           Change of Control. 
In the event of a Change of Control, to the extent
permitted by applicable law: (i) any surviving corporation (or an
Affiliate thereof) shall assume any Awards outstanding under the Plan or shall
substitute similar Awards for those outstanding under the Plan and (ii) such
Awards shall continue in full force and effect. 
In the event any surviving corporation (or an Affiliate) refuses to
assume or continue such Awards, or to substitute similar Awards for those
outstanding under the Plan, then vesting (or release from the repurchase
option) shall accelerate such that such Awards are fully vested at such event
and shall be exercisable for a period of 15 days after notice from the Company.  If not so exercised within the 15 day period,
then such Awards shall be terminated.


 


16

















 


15.          GENERAL PROVISIONS


 


(a)           Forms of Payment for Awards.  Subject to the terms of the Plan and any
applicable Award Agreement, payments or transfers to be made by the Company or
an Affiliate upon the grant, exercise, or payment of an Award may be made in
such form or forms as the Committee shall determine, including, without
limitation, cash, shares of Common Stock, rights in or shares issuable under
the Award or other Awards, other securities, or other Awards or any combination
thereof, and may be in a single payment or transfer, in installments, or on a
deferred basis, in each case in accordance with the rules and procedures
established by the Committee.  Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents in respect of installment or
deferred payments.


 


(b)           Limits on Transfer of Awards.  Except as provided by the Committee, no Award,
and no right under any such Award, shall be assignable, alienable, saleable, or
transferable by a Participant otherwise than by will or by the laws of descent
and distribution; provided, however, that, if so
determined by the Committee, a Participant may, in the manner established by
the Committee, designate a beneficiary or beneficiaries to exercise the rights
of the Participant with respect to any Award upon the death of a
Participant.  Each Award, and each right
under any Award, shall be exercisable, during the Participant’s lifetime, only
by the Participant or, if permissible under applicable law, by the Participant’s
guardian or legal representative.  No
Award, and no right under any such Award, may be pledged, alienated, attached,
or otherwise encumbered, and any purported pledge, alienation, attachment, or
encumbrance thereof shall be void and unenforceable against the Company or any
Affiliate.


 


(c)           Conditions and Restrictions Upon Securities Subject to
Awards.  The
Committee may provide that the shares of Common Stock issued upon exercise of
an Option or Stock Appreciation Right or otherwise subject to or issued under
an Award shall be subject to such further agreements, restrictions, conditions
or limitations as the Committee in its discretion may specify prior to the
exercise of such Option or Stock Appreciation Right or the grant, vesting or
settlement of such Award, including without limitation, conditions on vesting
or transferability and forfeiture or repurchase provisions or provisions on
payment of taxes arising in connection with an Award.  Without limiting the foregoing, such
restrictions may address the timing and manner of any resales by the
Participant or other subsequent transfers by the Participant of any shares of
Common Stock issued under an Award, including without limitation: (i) restrictions
under an insider trading policy or pursuant to applicable law; (ii) restrictions
designed to delay and/or coordinate the timing and manner of sales by
Participant and holders of other Company equity compensation arrangements; (iii) restrictions
as to the use of a specified brokerage firm for such resales or other
transfers; and (iv) provisions requiring shares to be sold on the open
market or to the Company in order to satisfy tax withholding or other
obligations.


 


(d)           Share Certificates.  All shares or other securities delivered
under the Plan pursuant to any Award or the exercise thereof shall be subject
to such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such
shares of Common Stock or other securities are then listed, and any applicable
Federal, state, or local securities laws, and the 


 


17

















 


Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. 
Notwithstanding any other provision of this Plan to the contrary, the
Company may elect to satisfy any requirement under this Plan for the
registration or delivery of stock certificates through the use of book-entry
registration.


 


(e)           Changes in Accounting or Tax Rules.  Except as provided otherwise at the time an
Award is granted, notwithstanding any other provision of the Plan to the
contrary, if, during the term of the Plan, any changes in the financial or tax
accounting rules applicable to any Award shall occur which, in the sole
judgment of the Committee, may have a material adverse effect on the reported
earnings, assets or liabilities of the Company, the Committee shall have the
right and power to modify, as necessary, any then outstanding and unexercised
Options, Stock Appreciation Rights and other outstanding Awards as to which the
applicable services or other restrictions have not been satisfied.


 


(f)            Non-exclusivity of the Plan.  The adoption of the Plan shall not be
construed as creating any limitations upon the right and authority of the
Committee to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or classes of
individuals or specifically to a particular individual or particular
individuals) as the Committee in its discretion determines desirable.


 


(g)           Other Award Agreement Provisions.  Each Award Agreement may contain such other
terms and conditions not inconsistent with the Plan as may be determined by the
Committee, in its sole discretion.


 


(h)           Other Employee Benefits.  The amount of any compensation deemed to be
received by a Participant as a result of the exercise of an Option or Stock
Appreciation Right, the sale of shares received upon such exercise, the vesting
of any Restricted Stock, receipt of Performance Shares, distributions with
respect to Restricted Stock Units, Performance Awards, or Other Stock-Based
Awards shall not constitute “earnings” or “compensation” with respect to which
any other employee benefits of such employee are determined, including without
limitation, benefits under any pension, profit sharing, 401(k), life insurance
or salary continuation plan.


 


(i)            Severability.  If any provision of the Plan or any Award
Agreement shall be determined to be illegal or unenforceable by any court of
law in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.


 


(j)            Governing Law.  The validity and construction of this Plan
and the Award Agreements shall be construed in accordance with and governed by
the laws of the State of Delaware other than any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Plan and the Award Agreements to the substantive laws of any other
jurisdiction.


 


(k)           Section 409A.  Notwithstanding anything in this Plan to the
contrary, the Plan and Awards made under the Plan are intended to comply with
the requirements imposed by Section 409A of the Code.  If any Plan provision or Award under the Plan
would result in the imposition of an additional tax under Section 409A of
the Code, the Company and the Participant intend that the Plan provision or
Award will be reformed to avoid imposition, to the extent possible, of the
applicable tax and no action taken to comply with Section 409A of the Code
shall be deemed to adversely affect the Participant’s 


 


18

















 


rights
to an Award.  The Participant further
agrees that the Committee, in the exercise of its sole discretion and without
the consent of the Participant, may amend or modify an Award in any manner and
delay the payment of any amounts payable pursuant to an Award to the minimum
extent necessary to meet the requirements of Section 409A of the Code as
the Committee deems appropriate or desirable.


 


(l)            Stockholder Rights.  No Participant nor any other holder of an Award
granted under the Plan shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such Award unless
and until such person has satisfied all requirements for exercise of the Award
or lapse of restrictions pursuant to its terms.


 


16.          AMENDMENT, MODIFICATION AND
TERMINATION


 


(a)           Amendment, Modification, and Termination.  Subject to Sections 3, 15(k) and 16(b),
and only upon unanimous approval of the entire Board, the Board may at any time
terminate, and from time to time may amend or modify the Plan; provided, however, that no amendment or modification may
become effective without approval of the stockholders of the Company if
stockholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, or if the Company, on the advice of
counsel, determines that stockholder approval is otherwise necessary or
desirable.


 


(b)           Awards Previously Granted.  Except as otherwise may be required under Section 15(k),
notwithstanding Section 16(a), to the contrary, no amendment, modification
or termination of the Plan or Award Agreement shall adversely affect in any
material way any previously granted Award, without the written consent of the
Participant holding such Award.


 


17.          STOCKHOLDER APPROVAL;
EFFECTIVE DATE OF PLAN


 


The
Plan shall be effective immediately upon approval by the stockholders.  Unless sooner terminated by the Board, this
Plan shall terminate automatically on March 11, 2017.  After the Plan is terminated, no Awards may
be granted.  Awards outstanding at the
time the Plan is terminated shall remain outstanding in accordance with the
terms and conditions of the Plan and the Award Agreement.


 


19

















 


EXHIBIT B


 


ADOPTION OF SECOND AMENDMENT TO
THE SHAREHOLDER RIGHTS PLAN


 


WHEREAS,
Evolving Systems, Inc. (the “Company’’) and American Stock Transfer &  Trust Company LLC (the “Rights Agent’’) have
entered into that certain Rights Agreement dated as of March 4, 2009, as
amended on December 10, 2009 (as amended, the “Rights Agreement’’); and


 


WHEREAS,
the Singer Children’s Management Trust (the “Trust’’), which owns approximately
21.8% of the Company’s common stock, par value $0.001 per share (“Common Stock’’),
has requested that the Company amend the Rights Agreement to increase the
percentage of the outstanding shares of Common Stock that a person or group of
affiliated or associated persons may beneficially own without becoming an
Acquiring Person (as defined in the Rights Agreement) to 29.0% (the “Rights
Plan Amendment”); and


 


WHEREAS,
the Board has been presented with a form of the second Amendment to Rights
Agreement evidencing the Rights Plan Amendment (the “Amendment Agreement’’);
and


 


WHEREAS, the Board believes
that approving the Rights Plan Amendment and the Amendment Agreement (in
substantially the form presented) is in the best interests of the Company and
its stockholders.


 


NOW
THEREFORE, BE IT RESOLVED, that the Rights Plan Amendment and the Company’s
entry into the Amendment Agreement (in substantially the form presented to the
Board) is hereby approved, effective April 20, 2010; and


 


FURTHER RESOLVED, that the proper officers of
the Company are each hereby authorized and directed, for and on behalf of the
Company, to execute the Amendment Agreement and to deliver the same to the
Rights Agent thereunder, such execution and delivery conclusively to evidence
the due authorization and approval thereof by the Company.


 


GENERAL
AUTHORIZING RESOLUTIONS


 


RESOLVED,
that the proper officers of the Company are hereby authorized and directed,
jointly and severally, for and on behalf of the Company, to execute and deliver
any and all certificates, agreements and other documents, take any and all
steps and perform any other acts that they deem necessary or advisable in order
to effectuate the purposes and intent of each and all of the foregoing
resolutions; and


 


FURTHER RESOLVED, that any
actions taken by proper officers of the Company prior to the adoption of the
foregoing resolutions that are within the authority conferred thereby are
hereby ratified, confirmed and approved in all respects as the act and deed of
the Company.


 


20