EXHIBIT 10.4


 


FORM OF EXECUTIVE
OFFICER COMPENSATION AGREEMENT


 


	
  TO:

  	
  [name of executive officer]

  
	
   

  	
   

  
	
  FROM:

  	
  Evolving Systems, Inc. - Compensation Committee of the
  Board of Directors

  
	
   

  	
   

  
	
  SUBJECT:

  	
  2008 Compensation Plan

  



 


The
Compensation Package in this memorandum has been submitted to and approved by
the Compensation Committee of the Board of Directors of Evolving Systems, Inc.  This Compensation Plan (the “Plan”) is
effective during calendar year 2008, and is provided to you to give you
information regarding compensation offered to you as [insert title].  This Plan
supersedes all prior Compensation plans or other compensation agreements, oral
or written, you have with the Company, other than stock options or other equity
awards previously granted to you, the Management Change in Control Agreement,
as amended, and the Indemnification Agreement which shall continue in full
force and effect.  Your Plan
includes a base salary paid in accordance with the normal payroll practices of
Evolving Systems, as well as eligibility for quarterly and annual incentive
compensation.


 


This Plan is not a contract of employment and shall not be
construed to guarantee employment for any particular period of time.  All Evolving Systems’ employees are employed
at will.  You, or Evolving Systems, may
terminate the employment relationship at any time, with or without notice, for
any reason or no reason.  The Plan may be
changed or discontinued by the Company at any time, with or without prior notice.


 

















 


I.              Compensation


 


A.            Base Salary


 


                                                Annual Base
Salary (effective 1/1/2008)                          $XXX,XXX


 


                                                Target
Incentive Compensation                                        [50%]
[60%] [75%] of Base Salary, paid as described below


 


Your
annual base salary will be paid in accordance with the Company’s standard
payroll practices.


 


B.            Incentive Compensation


 


1.             Target Incentive Compensation Award.


 


Attainment
of Quarterly and Annual Results, and the percentage payout attributable to such
attainment, will be determined based upon the Incentive Compensation Formula
shown on Attachment 1.


 


In
the event your employment terminates prior to the end of any calendar quarter,
for reasons other than Cause (as described below), the Quarterly Incentive
Compensation that would have been paid at the end of the calendar quarter will
be pro-rated to the date of termination of your employment.  Except as noted in Section II(2) below,
there will be no pro-ration for the Annual Incentive Compensation; you must be
employed by the Company on December 31, 2008, to be eligible for the
Annual Incentive Compensation amount.


 


2.                                      Time
and Form of Payment.  Incentive
Compensation will be paid in the form of five (5) substantially equal
payments, based upon attainment of defined Company quarterly results and annual
results.  Each payment shall constitute a
separate payment for purposes of Section 409A.  The Company shall pay each Incentive
Compensation payment, on the date determined by the Company, during the 60-day
period immediately following the last day of the quarterly or annual
performance period.


 


II.                                     Severance


 


1.                                       Termination by the Company.  In the event
your employment is terminated by the Company other than for (a) Cause; (b) Disability;
(c) death, or (d) under the circumstances described in subsection 2
below, you will be paid severance compensation in an amount equal to six (6) months of your then current
Base Salary.


 

















 


2.                                       Change in CEO; Change in a Material Condition.  [Applicable to Ervine and Moseley] In the event
there is a change in the position of the CEO of the Company, and your
employment is terminated within 6 months following such change (other than for
Cause, Disability or death), or there is a Change in a Material Condition of
your employment (as described below) during such 6 month period and as a result
of such Change in a Material Condition you resign during such 6 month period,
you will be paid severance compensation in an amount equal to (a) nine (9) months of your then current
Base Salary, (b) your pro-rated quarterly Incentive Compensation, plus (c) a
pro-rated portion of the amount allocable to your then current Annual Incentive
Compensation Portion, pro-rated to the date of your employment
termination.  Provided, however, that the
Incentive Compensation portions will only be paid to you when and if other
executives of the Company receive payout on the Quarterly Incentive
Compensation and/or the Annual Compensation portions for the quarter/year in
which your employment was terminated.


 


3.                                       Definitions.  “Cause,” “Disability”
and “Change in a Material Condition” for purposes of the severance provisions described
in this Section II shall mean:


 


(a)           “Cause”  shall mean:


 


(i)                                     Willful action or failure to
act by you that in the reasonable opinion of the Board of Directors materially
injures the reputation, business or business relationships of the Company or any
of its officers, directors or executives and such action or failure is not
remedied or reasonable steps to effect such remedy are not commenced within ten
(10) days following receipt of written notice;


 


(ii)                                  Your failure to perform your
duties or to follow the reasonable directions of the Board of Directors of the
Company within ten (10) business days after receipt by you of written
notice of such failure;


 


(iii)                               Any act involving moral
turpitude or a crime, other than a vehicle offense (excepting vehicular
manslaughter), which could reflect in some material fashion unfavorably upon
the business or business relationships of the Company or any of its officers,
directors or executives.


 


(b)                                 “Disability” for purposes of this severance provision
shall mean a physical or mental infirmity which impairs your ability to
substantially perform your duties with the Company for a period of one hundred
eighty (180) consecutive days, provided that you have not returned to full-time
employment prior to the date of your termination of employment.


 

















 


(c)                                  “Change in a Material Condition” of employment for purposes
of this severance provision shall mean:


 


(i)                                     A material diminution (5% or
more) in your compensation plan, including Base Salary and/or Incentive
Compensation.


 


(ii)                                  A material diminution in
your authority, duties, or responsibilities.


 


(iii)                               A material diminution in the
authority, duties, or responsibilities of the supervisor to whom you report,
including a requirement that you report to a corporate officer or employee
instead of reporting directly to the Board.


 


(iv)                              A material diminution in the
budget over which you retain authority.


 


(v)                                 A material change (more than
twenty-five (25) miles) in the geographic location at which Executive must
perform his or her services for the Company, except for reasonably required
travel on Company business that is not materially greater than such travel
requirements prior to the change.


 


(vi)                              Any other action or inaction
that constitutes a material breach by the Company of this Compensation Plan.


 


You
are required to provide notice to the Company of the existence of the condition
described in this Section II(3)(c) within 90 days of the initial
existence of the condition.  Upon receipt
of such notice, the Company shall have 30 days during which it may remedy the
condition and not be required to pay you severance benefits.


 


4.                                       Time and Form of Payments.  Severance payments will be
paid in substantially equal installments over the applicable severance period
set forth in Section II(1) or II(2) above.  Each severance payment installment shall
constitute a separate payment for purposes of Section 409A.  Each severance payment installment shall be
paid in accordance with the payroll payment schedule of the Company in effect
on the date of your termination of employment. 
The severance payments shall commence on the payroll payment date for
the first pay period commencing immediately following the date of your
termination of employment, provided, however,
the portion of any severance payment relating to a pro-rated quarterly or
annual Incentive Compensation award, if any, shall be paid on the date
determined by the Company following the date of your termination of employment
but no later than March 15, 2009.


 


5.                                       Separation Agreement.  In exchange for
the severance payment described in this Section II, the Company will
require that you execute a Separation Agreement, in 


 

















 


which
you release all claims against the Company arising out of your employment or
termination of your employment.  In
addition, the Separation Agreement will provide that during the period of time
during which you receive severance payments you will refrain from (a) soliciting
Evolving Systems’ employees to leave the employ of the Company;  (b) interfering with the relationship of
the Company with any such employees, including, but not limited to, hiring such
employees; (c) targeting or soliciting customers of the Company to
purchase products or services in competition with the Company’s products or
services or to terminate a relationship with the Company and (d) competing
directly or indirectly with the Company as is described in the Management
Change in Control Agreement.


 


6.                                       Cause; Resignation.  Under no
circumstances will the Company be obligated to pay any amounts to you under
this Section II if your employment has been terminated by the Company for
Cause, Disability or death.  Except as
described in Section II(2) above, the Company will not pay any
amounts to you under this Section II if your employment terminates as a
result of your resignation.


 


7.                                       Change in Control.  The severance
provisions of this Compensation Plan shall not apply in the event of a Change
in Control, as defined in the Management Change in Control Agreement.  Accordingly, if severance described in this
Plan is paid, and the Management Change in Control Agreement is subsequently
triggered, payments made under this Plan shall be credited against, and shall
NOT be in addition to, amounts paid under the Management Change in Control
Agreement to the extent this is permitted without causing adverse effect under Section 409A.


 


8.                                       Delay in Payment.  Notwithstanding
anything contained in this Compensation Plan to the contrary, if you are deemed
by the Company at the time of your “separation from service” with the Company
to be a “specified employee,” any nonqualified deferred compensation to which
you are entitled under the Compensation Plan, if any, in connection with such
separation from service shall not be paid or commence payment until the date
which is the first business day following the six (6) month period after
your separation from service (or if earlier, your death).  Such delay in payment shall only be effected
with respect to each separate payment to the extent required to avoid adverse
tax treatment to you under Section 409A. 
Any compensation which would have otherwise been paid during the delay
period (whether in a lump sum or in installments) in the absence of this Section II(8) shall
be paid to you or your beneficiary in a lump sum payment on the first business
day following the expiration of the delay period.


 


9.                                       Key Definitions.  For
purposes of this Compensation Plan, the terms “separation from service” and “specified
employee” shall have the meanings ascribed to such terms within Section 409A
and applicable guidance.


 

















 


III.                                 Benefits


 


You will receive benefits in accordance with
the Company’s standard benefits plan and policies, with the following
modifications:


 


1.                                       Paid Time Off.  Your Paid
Time Off (PTO) will be set at one level above the “standard” rates for
employees, as follows: [applicable to US-based
executives — UK-based executives receive PTO based upon UK employment policies]


 




	
  Years of Service

  	
   

  	
  Hours Accrued per Pay Period

  	
   

  	
  Annual# of Days of PTO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0-2

  	
   

  	
  6.16

  	
   

  	
  20

  	
   

  
	
  3-5

  	
   

  	
  7.69

  	
   

  	
  25

  	
   

  
	
  6+

  	
   

  	
  9.23

  	
   

  	
  30

  	
   

  






 


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


 


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


 


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


 


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


 


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


 

















 


IV.                                SEC
Filing Requirements


 


You
will be considered an “Executive Officer” for purposes of the SEC rules relating
to trading of stock and reporting your stock trading.  You are required to pre-clear your trading in
Company stock with the Company’s General Counsel prior to buying or selling
Company stock.  You are expected to
familiarize yourself with the Insider trading regulations and to comply with
those regulations, in particular, to abide by Company trading-blackout rules and
to work with Company staff to assure that appropriate SEC forms can be timely
filed.


 


V.            Section 409A


 


The
Company and you intend that any amounts payable and benefits provided under
this Compensation Plan and the exercise of authority or discretion hereunder by
the Company or by you (i) shall be eligible for certain regulatory
exceptions to the limitations imposed on deferred compensation by Section 409A;
or (ii) shall comply with the provisions of Section 409A, in both
cases so as not to subject you to the payment of additional taxes and interest
that may be imposed under Section 409A. 
To the extent that any amount payable or benefit provided under this
Compensation Plan would trigger the additional tax or interest imposed under Section 409A,
the Company and you agree to work together to modify the Compensation Plan to
the minimum extent necessary to reasonably comply with the requirements of Section 409A,
provided that the Company shall not be required to assume any increased
economic burden.


 


Acknowledgment [at will provisions not applicable to UK-based
executives]


 


I
have received and read my 2008 Compensation Plan.  I understand the details of the Plan and how
it applies to me.  I understand that the Plan may be changed or
discontinued by the Company at any time with or without notice, and that no
representations or promises, either express or implied, have been made to me
about my continued employment, about my compensation or about the Plan other
than what is written here or in any Management Change in Control Agreement that
may be executed.  I understand
the responsibilities of my position and the critical nature of the performance
of this position on the success of Evolving Systems.  I understand that I am employed on an at-will
basis, and that this Plan does not alter or modify the at-will nature of my
employment.  I understand that I can
resign my position at any time, or Evolving Systems can terminate my employment
at any time, with or without prior written notice. I agree that the
compensation I receive under the Plan is fair and adequate compensation for my
services.


 


 


	
  Signature of Executive

  	
   

  	
  Date