Exhibit 10.1(j)


 


SUBORDINATION
AGREEMENT


 


THIS SUBORDINATION AGREEMENT (this “Agreement”) is made as of November 14,
2005 by and among (i) each of the parties a signatory hereto as junior
creditors (each individually and all
collectively, together with their successors and assigns and all other holders
of Junior Debt, the “Junior Creditors”);
(ii) EVOLVING SYSTEMS, INC., a Delaware corporation, (“ESI”), and the other US Obligors on the signature page hereto; and (iii) CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company, as agent for the lenders from time to
time parties to the Credit Agreements described below (the Agent and such
lenders, together with their successors and assigns and all other holders of
Senior Debt, collectively being referred to as the “Senior
Creditors”).


 


INTRODUCTION


 


A.            ESI and Telecom Software Enterprises, LLC, as borrowers, Evolving Systems
Holdings, Inc., as a guarantor, the Agent and the other Senior Creditors thereunder have
entered into a Credit Agreement dated the date hereof (as the same may be
amended, supplemented, replaced, substituted, refinanced or otherwise modified
from time to time, as permitted hereunder, the “Term
Loan  Credit Agreement”), pursuant
to which, among other things, the Senior Creditors thereunder have agreed,
subject to the terms and conditions set forth therein, to make certain term
loans and financial accommodations to ESI and Telecom Software Enterprises,
LLC, as borrowers thereunder.


 


B.            Evolving Systems Ltd.,
certain other Obligors, CSE Finance
Inc. and the other Senior Creditors thereunder have entered into a
Revolving Facility Agreement dated the date hereof (as the same may be amended,
supplemented, replaced, substituted, refinanced or otherwise modified from time
to time, as permitted hereunder, the “Revolving  Loan  Credit
Agreement” and together with the Term Loan Credit Agreement, the
“Credit Agreements”), pursuant to
which, among other things, the Senior Creditors thereunder have agreed, subject
to the terms and conditions set forth therein, to make certain revolving loans
and financial accommodations to certain of the Obligors.


 


C.            ESI and the Junior
Creditors have entered into certain unsecured subordinated notes each dated November             ,
2005 evidencing indebtedness in the aggregate original principal amount of $                                   ,
issued by ESI in exchange for those certain Secured Notes referred to as “A
Notes” in the original aggregate principal amount of $11,950,000 (as the same
may be amended, supplemented or otherwise modified from time to time as
permitted hereunder, together with all notes and other instruments issued in
replacement thereof or substitution therefor, the “Junior
Notes”).


 


D.            As an inducement to and
as one of the conditions precedent to the agreement of the Agent and the other
Senior Creditors under the Credit Agreements to consummate the transactions
contemplated thereby, the Agent and the other Senior Creditors have required
the execution and delivery of this Agreement by the Junior Creditors, ESI and
the US Obligors on the signature page hereto.


 


NOW THEREFORE, in order to induce
the Senior Creditors to consummate the transactions contemplated by the Credit
Agreements, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree
as follows:


 


1.             Definitions. Capitalized terms
used but not otherwise defined in this Agreement shall have the meanings
assigned to such terms in the applicable Credit Agreement.  As used in this Agreement, the following
terms have the following meanings:


 





















 


Agent shall mean
CapitalSource Finance LLC, a Delaware limited liability company, as agent for
the Senior Creditors, or any other Person appointed by the holders of any
Senior Debt as agent for purposes of any Senior Debt Documents and this
Agreement; provided that, after the consummation of any refinancing of any
Senior Debt, the term “Agent” shall refer to any Person appointed by the
holders of the applicable Senior Debt at such time as agent for themselves for
purposes of, among other things, this Agreement.


 


Available
Cash for Payment shall have the meaning set forth in the Junior Notes as
in effect on the date of this Agreement, except that, solely for purposes of
this Agreement, clause (iv) of such definition of “Available Cash for
Payment” shall refer to $4.0 million (instead of $4.5 million).


 


Bankruptcy
Code shall mean, collectively, (i) with
respect to ESI and any other US Obligor, Chapter 11 of Title 11 of the United
States Code, as amended from time to time and any successor statutes and all rules and
regulations promulgated thereunder and (ii) with respect to any other
Obligor organized or otherwise formed under the laws of England, the Insolvency
Act of 1986, as amended from time to time and any successor acts and all rules and
regulations promulgated thereunder.


 


Collection
Action shall mean, with respect to the Junior Debt, any action (a) to sue
for, take or receive from or on behalf of any US Obligor, by set-off or in any
other manner, the whole or any
part of any moneys which may now or hereafter be owing by any US Obligor with
respect to the Junior Debt, (b) to initiate or participate with others in
any suit, action or Proceeding against any US Obligor or its property to (i) enforce
payment of or to collect the whole or any part of the Junior Debt or (ii) commence
judicial enforcement of any of the rights and remedies under the Junior Debt
Documents or applicable law with respect to the Junior Debt, (c) to
accelerate any Junior Debt, (d) to cause any US Obligor to honor any
redemption, put or mandatory payment obligation with respect to the Junior Debt
or any other equity interests of any US Obligor or (e) to take any action
under the provisions of any state, local, federal or foreign law, including,
without limitation, the UCC, or under any contract or agreement, to enforce
against, foreclose upon, take possession of or sell any property or assets of
any US Obligor.


 


Debtor
Relief Law shall
mean, collectively, the Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, in each case as amended
from time to time.


 


Junior Debt shall mean,
collectively, all of the obligations, liabilities and indebtedness of ESI (and,
if applicable, any other US Obligors) to the Junior Creditors evidenced by the Junior Notes and all
other amounts now or hereafter owed by ESI or such other US Obligor to the
Junior Creditors under or in respect of any of the Junior Debt Documents.


 


Junior Debt
Documents shall mean, collectively, the Junior Notes, any
guaranty with respect to the Junior Debt and all other documents, agreements
and instruments evidencing the foregoing and/or executed and delivered in
connection therewith.


 


Junior
Default shall mean (i) a default in the payment of the Junior Debt or in
the performance of any term, covenant or condition contained in any of the Junior Debt Documents, or (ii) any
other occurrence permitting the Junior Creditors to accelerate the payment of,
or put or cause the redemption of, all or any portion of the Junior Debt or any
of the Junior Debt Documents.


 


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Missed
Secondary Default Payments shall have the meaning set forth in Section 2.3(b).


 


Obligor or Obligors shall mean, each
individually and all collectively, each US Obligor, Evolving Systems Ltd.,
Evolving Systems Holdings, Ltd. and all guarantors of the Senior Debt or, if
applicable, the Junior Debt (it being understood that there is no requirement
under the Junior Debt Documents that any Person guarantee the Junior Debt).


 


Paid in
Full or Payment in Full shall mean the irrevocable and indefeasible
payment in full in cash of all of the Senior Debt and the termination of the
lending commitments under the Senior Debt Documents.


 


Permitted Junior Debt Payments shall mean payments of principal and
interest on the Junior Debt as and when due and payable on a non-accelerated
basis in accordance with the terms of the Junior Debt Documents as in effect on
the date hereof or as modified in accordance with the terms of this Agreement.


 


Person shall mean any natural
person, corporation, general or limited partnership, limited liability company,
firm, trust, association, government, governmental agency or other entity,
whether acting in an individual, fiduciary or other capacity.


 


Proceeding shall mean any
voluntary or involuntary insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person,
including, without limitation, any of the foregoing under Debtor Relief Laws.


 


Reorganization
Subordinated Securities shall mean any debt or equity securities issued
in a Proceeding in substitution of all or any portion of the Junior Debt, in
each case that (a) are subordinated in right of payment, performance and
otherwise to the Senior Debt (or any debt and/or equity securities issued in substitution of all or any portion of
the Senior Debt) to at least the same extent that the Junior Debt is
subordinated to the Senior Debt pursuant to the terms of this Agreement, (b) do
not have the benefit of any obligation of any Person (whether as issuer,
guarantor or otherwise) unless the Senior Debt has at least the same benefit of
the obligation of such Person, and (c) do not have any terms, and are not
subject to or entitled to the benefit of any agreement or instrument that has
terms, that are more burdensome to the issuer of or other obligor on such debt
or equity securities than are the terms of (x) any such debt or equity
securities issued to the Senior Creditors in connection with such Proceeding or
(y) the Junior Debt immediately prior to such issuance; provided in each case
that the Junior Creditors shall have entered into such supplements to or
modifications of this Agreement as the Agent reasonably may request to reflect
the continued subordination of the Reorganization Subordinated Securities to
the Senior Debt (or debt and equity securities issued in substitution of all or
a portion thereof).


 


Senior
Covenant Default shall mean
any “Event of Default” (or other term of similar import or
meaning) under the Senior Debt Documents (other than a Senior Payment Default).


 


Senior Debt shall mean the “Obligations,”
as such term is defined in each Credit Agreement, including, without
limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from
time to time hereafter owing, due or payable, whether before or after the
filing of a Proceeding, together with (a) any amendments, modifications,
refinancings, replacements, 


 


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renewals or extensions thereof and (b) any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is an allowed claim; provided, however, that in no
event shall the aggregate outstanding principal amount of the Senior Debt
exceed the sum of (i) the principal amount of the loans and any unfunded
loan commitments under the Credit Agreements as in effect on the date hereof,
reduced by the sum (without duplication of amounts) of (x) the aggregate amount
of all scheduled principal payments made thereon under the Term Loan Credit
Agreement from time to time (other than any principal payment which by express
terms may be reborrowed thereunder) and (y) the aggregate amount of any
permanent reductions in the amount of the revolving commitments under the
Revolving Loan Credit Agreement (specifically excluding, however, any such
payments or commitment reductions resulting from any refinancing of Senior Debt
to the extent the terms thereof otherwise are not prohibited by the terms of
this Agreement), plus (ii) $1,625,000. 
Senior Debt shall be considered to be outstanding whenever any loan
commitment under any Senior Debt Document is outstanding.


 


Senior Debt
Documents shall mean, collectively, the Credit Agreements, the
other Loan Documents and all other documents, agreements and instruments
evidencing, securing or otherwise pertaining to all or any portion of the
Senior Debt.


 


Senior
Default shall mean any Senior Payment Default or Senior Covenant Default.


 


Senior
Payment Default shall mean any failure by any Obligor to make any
required payment of interest or principal, or any fee (including, without
limitation, any letter of credit fees) or other monetary payment, under the
Senior Debt Documents, including, without limitation, any default in payment of
Senior Debt after acceleration thereof and/or the filing of a Proceeding, or any failure to pay the
amounts described in this definition regardless of any requirement of notice or
lapse of time or both before such failure to pay becomes an Event of Default
under the Senior Debt Documents.


 


Senior Secondary Default shall mean the following Senior Covenant
Defaults under the Credit Agreements which, in the Agent’s Permitted
Discretion, are capable of being remedied or cured: (i) failure to timely
provide the financial reports or compliance certificate required under items
(a), (b), (d) or (e) of Exhibit C-1 to Section 6.1; (ii) failure
to provide evidence of the insurance required to be maintained pursuant to Section 6.4(b) (other
than any directors and officers liability insurance) within 10 days of Agent’s
request for such evidence of insurance; (iii) failure to obtain the
landlord waiver and consent or failure to obtain the leasehold mortgage under Section 6.7(d)(i)(b) or
the title insurance policy required under Section 6.7(d)(i)(c) within
10 days of when due; or (iv) failure to comply with the provisions of
Sections 6.7(a), (b) or (c) of
the Credit Agreements, provided that, in this case of this subsection (iv),
the Agent has not notified the Junior Creditors in writing within 120 days of
the occurrence of any such failure that, in the Agent’s Permitted Discretion,
such failure is not a Senior Secondary Default.


 


US Obligor or US Obligors shall mean, each
individually and all collectively, ESI, Telecom Software Enterprises, LLC,
Evolving Systems Holdings, Inc. and all US Persons who are guarantors of
the Senior Debt or, if applicable, the Junior Debt (it being understood that
there is no requirement under the Junior Debt Documents that any Person
guarantee the Junior Debt).


 


US Persons shall mean a Person
incorporated or otherwise organized under the laws of the United States of
America or a state of the United States of America or the District of Columbia.


 


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2.             Subordination.


 


2.1           Subordination of Junior Debt to
Senior Debt.  Each of the US Obligors covenants
and agrees, and each of the Junior Creditors by its acceptance of the Junior
Notes (whether upon original issue or transfer or assignment) covenants and
agrees, that (a) the payment of any and all of the Junior Debt is
subordinate and subject in right of payment, to the extent and in the manner
hereinafter set forth, to the prior Payment in Full of the Senior Debt and (b) the
existing and hereafter acquired liens and security interests of the Agent or
any Senior Creditor in any Collateral is senior, regardless of the time, order,
lack or method of perfection, to all existing and hereafter acquired liens and
security interests, if any, of the Junior Creditors (or any agent therefor) in
the Collateral, if any, securing all or any portion of the Junior Debt.  Each Senior Creditor, whether now outstanding
or hereafter created, incurred, assumed or guaranteed, shall be deemed to have
acquired Senior Debt in reliance upon the provisions contained in this
Agreement.  The parties hereto intend
this Agreement to be deemed enforceable by any applicable court under any Bankruptcy
Code and other Debtor Relief Laws.


 


2.2           Proceedings.


 


(a)           Payments and Distributions.  In the event of any Proceeding involving any
Obligor or any Property of any Obligor, (i) all Senior Debt first shall be
Paid in Full before any payment of, or payment or distribution with respect to,
the Junior Debt shall be made (other than a distribution of Reorganization
Subordinated Securities); (ii) any payment or distribution, whether in
cash, property or securities which, but for the terms hereof, otherwise would
be payable or deliverable in respect of the Junior Debt (other than a
distribution of Reorganization Subordinated Securities), shall be paid or
delivered directly to the Agent (to be held and/or applied by the Agent in
accordance with the terms of the applicable Credit Agreement) until all Senior
Debt is Paid in Full, and each of the Junior Creditors irrevocably authorizes,
empowers and directs all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises to effect all such
payments and distributions, and each of the Junior Creditors also irrevocably
authorizes, empowers and directs the Agent to demand, sue for, collect and
receive every such payment or distribution; and (iii) each of the Junior
Creditors agrees to execute and deliver to the Agent or its representative all
such further instruments confirming the authorization referred to in the
foregoing clause (ii).


 


(b)           Proofs of Claim; Claims; Voting;
and Other Matters.


 


The
Junior Creditors shall not initiate, prosecute or participate in any claim or
action in any Proceeding or otherwise challenging the enforceability, validity,
perfection or priority of the Senior Debt, this Agreement, or any liens and
security interests securing the Senior Debt. 
In the event the Junior Creditors (i) fail to execute, verify,
deliver and file any proofs of claim in respect of the Junior Debt in
connection with any Proceeding prior to the date that is 30 days before the
expiration of the time to file any such proof or (ii) fail to vote any
such claim in any Proceeding prior to the date that is 15 days before the
expiration of the time to vote any such claim, the Junior Creditors hereby
irrevocably authorize, empower and appoint the Agent as its agent and
attorney-in-fact to execute, verify, deliver and file such proofs of claim and
to vote such claim (including the right to vote to accept or reject any plan of
partial or complete liquidation, reorganization, arrangement, composition, or
extension); provided the Agent shall have


 


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no obligation to exercise any
such authority with respect to the Junior Creditors’ claim.  In the event that the Agent votes any claim
in accordance with the authority granted hereby, the Junior Creditors shall not
be entitled to change or withdraw such vote.


 


(c)           Reinstatement.  The Senior Debt shall continue to be treated
as Senior Debt and the provisions of this Agreement shall continue to govern
the relative rights and priorities of the Senior Creditors and the Junior
Creditors even if all or part of the Senior Debt or the security interests
securing the Senior Debt are subordinated, set aside, avoided or disallowed in
connection with any such Proceeding. This Agreement shall be reinstated if at
any time any payment of any of the Senior Debt is rescinded or must otherwise
be returned by any Senior Creditor or any representative of such Senior
Creditor.


 


(d)           Collateral.  To the extent that the Junior Creditors have
or acquire any liens or other rights with respect to any Collateral, the Junior
Creditors shall not assert such rights in any Proceeding without the prior
written consent of the Agent unless
requested to do so by the Agent, in which case the Junior Creditors shall seek
to exercise such rights in the manner requested by the Agent.


 


2.3           Junior
Debt Payments.


 


(a)           Restrictions
on Payments; Commencement of Payment Blockage.  The
terms of the Junior Debt Documents to the contrary notwithstanding, ESI and the
other US Obligors each hereby agrees that it may not make, and each Junior
Creditor hereby agrees that it will not accept, any payment or distribution on
account of, or any redemption, purchase or acquisition of, the Junior Debt (by
set off or otherwise) until the Senior Debt is Paid in Full; provided that
Permitted Junior Debt Payments may be made by ESI (and, if applicable, the
other US Obligors) and accepted by the Junior Creditors quarterly on the tenth
Business Day following the earlier of (i) delivery to Agent of the
financial statements and compliance certificates of the Obligors for the
applicable fiscal quarter as required by the Credit Agreements and (ii) the
due date for delivery under the Credit Agreements of the financial statements
and compliance certificates of the Obligors for the applicable fiscal quarter
as required by the Credit Agreements (commencing with the tenth Business Day
following the earlier of (x) the delivery to the Agent of the audited financial
statements and compliance certificates for the fiscal year ending December 31,
2005 as required by the Credit Agreements and (y) the due date for delivery
under the Credit Agreements of the audited financial statements and compliance
certificates for the fiscal year ending December 31, 2005 as required by
the Credit Agreements) so long as, at the time of such payment or immediately
after giving effect thereto:


 


(i)            no Senior Default exists or would be created by the making of such
payment;


 


(ii)           there shall be Available Cash for Payment;


 


(iii)          such Permitted Junior Debt Payment is not made from proceeds of the
Senior Debt under the Revolving Loan Credit Agreement; and


 


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(iv)          the Obligors have delivered compliance certificates pursuant to the
Credit Agreements certifying that the Obligors would have been in compliance on
a pro forma basis (recomputed for the most recent period for which
financial statements have been delivered to the Senior Creditors after giving
effect thereto as of the first day of such period) with the financial covenants set forth in the Credit Agreements assuming
the financial covenant levels for the then current period shall apply, and the
Obligors shall have provided to the Agent such other evidence thereof as
requested by the Agent to the satisfaction of the Agent.


 


With each payment on the
Junior Debt, ESI shall certify in writing to the Junior Creditors that such
payment is a Permitted Junior Debt Payment and that no Senior Default exists. ESI
shall provide a copy of such written certification to the Agent.  If a Senior Default has occurred at the time
such payment is made by ESI (or, if applicable, any other US Obligor), the
Agent shall have 120 days from the date the Agent receives such written
certification to notify the Junior Creditors that a Senior Default did exist at
the time such payment was made and that such payment was received by the Junior
Creditors in violation of this Agreement.  
In the event that the Junior Creditors are notified by the Agent within
such 120 day period that the Junior Creditors received such payment in
violation of this Agreement, the Junior Creditors shall promptly return such
payment to the Agent.  If the Agent fails
to notify the Junior Creditors within such 120 day period, the Junior Creditors
shall have no further obligation or liability to return such payment.


 


No Senior Default shall be
deemed to have been cured or waived for purposes of this Section 2.3(a) unless
and until ESI and the Junior Creditors shall have received a written waiver or
notice of cure of any such Senior Default from the Agent.  To the extent such Senior Default is cured or
waived, the Agent agrees to provide the Junior Creditors with notice thereof
within a reasonable period of time.


 


(b)           Limited Exception to Payment
Blockage.  In the event that the Junior
Creditors would be permitted to received a Permitted Junior Debt Payment under Section 2.3(a) above
in respect of the Junior Debt solely but for the occurrence of a Senior
Secondary Default (a “Missed Secondary Default
Payment”), and provided no other Senior Default that is not a
Senior Secondary Default exists and the Junior Creditors are otherwise
permitted to receive such Permitted Junior Debt Payments pursuant to Sections
2.3(a)(ii), (iii) and (iv) above, the Junior Creditors shall be
permitted to receive any such Missed Secondary Default Payment upon the earlier
to occur of (i) the cure or waiver of such Senior Secondary Default as
provided in Section 2.3(a) or (ii) 180 days from the date written notice is provided by any
Junior Creditor to the Agent notifying the Agent of such Missed Secondary
Default Payment.


 


(c)           Non-Applicability
to Proceeding.  The provisions
of this Section 2.3 shall not apply to any payment with respect to
which Section 2.2 would be applicable.


 


2.4           Restriction on Action by the
Junior Creditors.


 


(a)           Notwithstanding any of the Junior Creditors’
rights under applicable law or any provision of the Junior Debt Documents to
the contrary and except as otherwise expressly permitted under clauses (b) and
(c) below, the Junior Creditors hereby 


 


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acknowledge and agree that the Junior Creditors
shall not take any Collection Action, until the Senior Debt is Paid in Full.


 


(b)           In the event that ESI (or, if applicable, any
other US Obligor) is permitted under this Agreement to make a Permitted Junior
Debt Payment in respect of the Junior Debt and is required to make such payment
pursuant to the Junior Debt Documents but fails to make such payment, the
Junior Creditors may, after one (1) year from the date written notice is
provided by any Junior Creditor to the Agent notifying the Agent of such
failure to pay, sue for such missed payment;
provided, however, that (i) such action to sue shall not
include any right on the part of Junior Creditors to take any other Collection
Action, including accelerating any Junior Debt or foreclosing upon or otherwise
exercising any rights to any property or assets of ESI or any other US Obligors,
and (ii) any moneys obtained by the Junior Creditors with respect to any
such Collection Action permitted under this Section 2.4(b) during
any Senior Default shall in any event be held in trust for the benefit of the
Agent and the Senior Creditors and promptly paid or delivered to the Agent for
the benefit of Senior Creditors in the form received until all Senior Debt is
Paid in Full.


 


(c)           In the event that the Senior Creditor
accelerates all of the Senior Debt, a Junior Creditor may, upon ten days prior written notice to the Agent,
accelerate its Junior Debt and obtain a judgment; provided, however,
that if following such acceleration of all of the Senior Debt, such
acceleration is rescinded, then each such Junior Creditor shall likewise
rescind such acceleration of the Junior Debt and shall not be permitted to take
any further action with respect to such judgment, and provided, further,
that (i) such acceleration right shall not include any right on the part
of Junior Creditors to take any other Collection Action or to enforce such
judgment, including foreclosing upon or otherwise exercising any rights to any
property or assets of ESI or any other US Obligors until all Senior Debt is
Paid in Full, (ii) any moneys obtained by the Junior Creditors with
respect to any such Collection Action permitted under this Section 2.4(c) shall
in any event be held in trust for the benefit of the Agent and the Senior
Creditors and promptly paid or delivered to the Agent for the benefit of Senior
Creditors in the form received until all Senior Debt is Paid in Full and (iii) in
the case of acceleration by all Junior Creditors in accordance with this Section 2.4(c),
any one Junior Creditor may provide such notice on behalf of all Junior
Creditors in a notice specifying it is being given on behalf of all Junior
Creditors.


 


(d)           Notwithstanding anything to the contrary
contained in this Agreement, in the event of a Change of Control (as such term
is defined in the Junior Notes as in effect on the date of this Agreement), the
Junior Creditors may take the following action:


 


(i)            With respect to an event under (i) or (ii) of
such Change of Control definition, a
Junior Creditor may, from the
earlier to occur of (A) receipt by Senior Creditors of Payment in Full of
the Senior Debt as a result of any of the transactions completed under (i) or
(ii) of such Change of Control definition, or (B) if there has not been an acceleration of the
Senior Debt (if there has been an acceleration of the Senior Debt, the
provisions of Section 2.4(c) shall apply), within 180
days from the date such transactions under (i) or (ii) of such Change
of Control definition are consummated, accelerate
its Junior Debt and accept and receive payment in satisfaction of its Junior
Debt in 


 


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accordance with the terms of
the Junior Debt Documents; provided in the case of acceleration by all Junior
Creditors in accordance with this Section 2.4(d)(i), any one Junior
Creditor may provide such notice on behalf of all Junior Creditors in a notice
specifying it is being given on behalf of all Junior Creditors; or


 


(ii)           With respect to an event under (iii) or (iv) of
such Change of Control
definition, upon ten days prior written
notice from a Junior Creditor to the Agent, such Junior Creditor may accelerate
its Junior Debt and accept and receive payment in satisfaction of its Junior
Debt; provided, in the case of acceleration by all Junior
Creditors in accordance with this Section 2.4(d)(ii), any one
Junior Creditor may provide such notice on behalf of all Junior Creditors in a
notice specifying it is being given on behalf of all Junior Creditors.


 


(e)           The Junior Creditors hereby waive any right
they may have to require that the Agent or the Senior Creditors to marshal any
assets of the Obligors in favor of the Junior Creditors, and the Junior
Creditors agree that they shall not acquire, by subrogation or otherwise, any
lien, estate, right or other interest in any collateral of the Obligors or the
proceeds therefrom.  Until the Senior Debt is Paid in Full,
the Junior Creditors shall not (i) institute any judicial or
administrative proceeding against any Obligor, the Agent or any Senior
Creditor, (ii) take any other action, including without limitation, any
Collection Action (except as expressly permitted under Sections 2.4(b), (c) or
(d) above), or (iii) fail to take any actions or give or fail to
give any consent, in each case which directly or indirectly would interfere
with or delay the exercise by the Agent or the Senior Creditors of their rights
and remedies under the Senior Debt Documents.


 


(f)            The US Obligors agree that any applicable
statute of limitations shall be tolled during any standstill period and waive
any right to assert any defense based upon any such statute of limitations
without giving effect to such tolling.


 


2.5           No Liens.


 


(a)           The Junior Creditors shall not
seek to obtain, and shall not take, accept, obtain or have, any lien or
security interest in any Collateral as security for all or any part of the Junior Debt
other than judgment liens obtained
in connection with a Collection Action permitted hereby and, in the event
that the Junior Creditors obtain any liens or security interests in any Collateral not otherwise permitted hereby,
the Junior Creditors shall (or shall cause its agent to) promptly execute and
deliver to the Agent such documents, agreements and instruments, and take such
other actions, as the Agent shall request to release such liens and security
interests in such Collateral.


 


(b)           The Agent and Senior Creditors shall have the exclusive right as to the
exercise and enforcement of all privileges and rights with respect to the
Collateral in their sole discretion, including, without limitation, the exclusive right
to take or retake control or possession of such Collateral and to hold, prepare
for sale, process, sell, lease, dispose of, or liquidate such Collateral or
settle or adjust insurance claims with respect thereto.  Without in anyway limiting the foregoing, if
in connection with any sale or other disposition of Collateral the Agent or the
Senior Creditors request that the Junior 


 


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Creditors release their liens upon such Collateral,
then the Junior Creditors shall execute and deliver such documents, agreements
and instruments, and take such other actions as are necessary to release the
Junior Creditors’ liens in such Collateral, subject to the Junior Creditors’
right to retain a lien subordinated hereunder on any proceeds from the
disposition of such Collateral in excess of the amount of the Senior Debt
outstanding.


 


(c)           In furtherance of this Section 2.5,
each of the Junior Creditors hereby irrevocably appoints the Agent its
attorney-in-fact, with full authority in the place and stead of such Junior
Creditor and in the name of such Junior Creditor or otherwise, to execute and
deliver any document, agreement or instrument which the Junior Creditors may be
required to deliver pursuant to this Section 2.5.  The Agent and the Senior Creditors shall have
no responsibility for or obligation or duty with respect to any of the
Collateral or any matter or proceeding arising out of or relating thereto,
including, without limitation, any obligation or duty to collect any sums due
in respect thereof or to protect or preserve any rights pertaining thereto.


 


2.6           Amendment of Junior Debt
Documents.  Until the Senior Debt is Paid in
Full, and anything contained in the Junior Debt Documents or any of the Senior
Debt Documents to the contrary notwithstanding, the Junior Creditors shall not,
without the prior written consent of the Agent, agree to any amendment or
supplement to, or other modification of, the Junior Debt Documents or the
Junior Debt the effect of which is to (a) increase the maximum principal
amount of the Junior Debt, (b) increase the rate of interest (cash or
otherwise) on any of the Junior Debt (except for regularly scheduled interest
at the non-default rate of interest to the extent expressly provided in the
Junior Debt Documents as in effect on the date of this Agreement), (c) change
the date upon which regularly scheduled payments of principal or interest on
the Junior Debt are due, (d) add or make more restrictive any event of
default or any covenant with respect to the Junior Debt or make any change to
any event of default or any covenant which would have the effect of making such
event of default or covenant more restrictive than those in effect in the
Credit Agreements on the date of this Agreement, (e) change the final
maturity date of any Junior Debt to a date that is earlier than the date which
is 180 days after the scheduled maturity date of the Senior Debt, (f) take
any liens or security interests in assets of the Obligors or any other property
or assets securing the Senior Debt, (g) change any redemption, put or
prepayment provisions of the Junior Debt, (h) alter the subordination
provisions with respect to the Junior Debt, including, without limitation,
subordinating the Junior Debt to any other indebtedness, or (i) change or
amend any other term of the Junior Debt Documents if such change or amendment
would result in a Senior Default, increase the obligations of any Obligor or
confer additional material rights on the Junior Creditors or any holder of the
Junior Debt in a manner adverse to any Obligor or the Senior Creditors.


 


2.7           Incorrect Payments.  If any payment or distribution on account of
the Junior Debt not permitted to be made by the Obligors or received by the
Junior Creditors under this Agreement is received by the Junior Creditors in
violation of this Agreement before all Senior Debt is Paid in Full, such
payment or distribution shall not be commingled with any asset of the Junior
Creditor, shall be held in trust by the Junior Creditors for the benefit of the
Senior Creditors and shall be promptly paid over to the Agent, or its
designated representative, for application (in accordance with the Credit
Agreements) to the payment of the Senior Debt then remaining unpaid, until all
of the Senior Debt is Paid in Full.


 


10





















 


2.8           Transfer.  No Junior Creditor shall sell, assign,
pledge, dispose of or otherwise transfer all or any portion of the Junior Debt
or any Junior Debt Document (a) without giving written notice within
fifteen (15) days of such action to the Agent, (b) unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the Agent a joinder to this Agreement providing for the continued
subordination of the Junior Debt to the Senior Debt as provided herein and for
the continued effectiveness of all of the rights of the Agent and the Senior
Creditors arising under this Agreement, and (c) unless, following the
consummation of any such action, there shall be either (i) no more than
five (5) holders of the Junior Debt, or (ii) one Person acting as
agent for all of the Junior Creditors pursuant to documentation reasonably
satisfactory to the Agent and the Junior Creditors such that any notice of a
Senior Default and other notices and communications to be delivered to or by
the Junior Creditors hereunder shall be made to or obtained from such agent and
shall be binding on the Junior Creditors as if directly received by or obtained
from the Junior Creditors. 
Notwithstanding the failure to execute or deliver any joinder to this
Agreement in form and substance satisfactory to the Agent, the subordination
effected hereby shall survive any sale, assignment, pledge, disposition or
other transfer of all or any portion of the Junior Debt, and the terms of this
Agreement shall be binding upon the successors and assigns of the Junior
Creditors.


 


2.9           Legends.  Until the Senior Debt is Paid in Full, the
Junior Notes and all other Junior Debt Documents at all times shall contain in
a conspicuous manner the following legend:


 


“This
instrument and the rights and obligations evidenced hereby are subordinate in
the manner and to the extent set forth in that certain Subordination Agreement
(as amended, the “Subordination Agreement”)
dated as of November 14, 2005 among Evolving Systems, Inc., a
Delaware corporation, the other US Obligors (as defined therein), the Junior
Creditors (as defined therein) and CapitalSource Finance LLC, as Agent for the Lenders
from time to time a party to the Credit Agreements (as defined therein), all as
more particularly described in the Subordination Agreement, and each holder of
this instrument, by its acceptance hereof, shall be bound by the provisions of
the Subordination Agreement.”


 


3.             Modifications to
Senior Debt. The Senior Creditors may at any
time without the consent of or notice to the Junior Creditors, without
incurring liability to the Junior Creditors and without impairing or releasing
the obligations of the Junior Creditors under this Agreement, change the manner
or place of payment or extend the time of payment of, increase the interest
rates and fees applicable to or renew or alter any of the other terms of the
Senior Debt (including increases to the principal amount of outstanding Senior
Debt subject to the proviso under the definition of Senior Debt in this
Agreement) or the Senior Debt Documents, or amend, modify, supplement, restate,
substitute, replace or refinance in any manner any Senior Debt Document or any
other any agreement, note, guaranty or other instrument evidencing or securing
or otherwise relating to the Senior Debt.


 


4.             Continued
Effectiveness of this Agreement.  The terms
of this Agreement, the subordination effected hereby, and the rights and the
obligations of the Junior Creditors, the US Obligors, the Agent and the Senior
Creditors arising hereunder shall not be affected, modified or impaired in any
manner or to any extent by the validity or enforceability of any of the Senior
Debt Documents or the Junior Debt Documents, or any exercise or non-exercise of
any right, power or remedy under or in respect of the Senior Debt, the Senior
Debt Documents, the Junior Debt or the Junior Debt Documents.  The Junior Creditors hereby acknowledge that
the provisions of this Agreement are intended to be 


 


11





















 


enforceable at all times, whether before the
commencement of, after the commencement of, in connection with or premised on
the occurrence of a Proceeding.


 


5.             No Contest. Each of the Junior
Creditors agrees that it will not at any time contest the validity, perfection,
priority or enforceability of the Senior Debt, the Senior Debt Documents, or
the liens and security interests of the Agent and any of the Senior Creditors
in any Collateral.


 


6.             Representations
and Warranties.  The Junior Creditors hereby
represent and warrant as follows:


 


6.1           Existence and Power.  Each of the Junior Creditors is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.


 


6.2           Authority.  Each of the Junior Creditors has the power
and authority to enter into, execute, deliver and carry out the terms of this
Agreement, all of which have been duly authorized by all proper and necessary
action and are not prohibited by such party’s organizational documents.


 


6.3           Binding Agreements.  This Agreement, when executed and delivered,
will constitute the valid and legally binding obligation of the Junior
Creditors, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by equitable principles.


 


6.4           Conflicting Agreements;
Litigation.  No provisions of any mortgage,
indenture, contract, agreement, statute, rule, regulation, judgment, decree or
order binding on the Junior Creditors conflicts with, or requires any consent
which has not already been obtained under, or would in any way prevent the
execution, delivery or performance of the terms of this Agreement by the Junior
Creditors or the Junior Debt Documents by the parties thereto. No pending or,
to the best of the Junior Creditors’ knowledge, threatened, litigation,
arbitration or other proceedings if adversely determined would prevent the
performance of the terms of this Agreement by such party or the Junior Debt
Documents by the parties thereto.


 


6.5           Ownership.  Each of the Junior Creditors is the sole
owner, beneficially and of record, of the Junior Notes, the other Junior Debt
Documents and the Junior Debt.


 


6.6           Defaults.  No Junior Default exists under or with
respect to the Junior Notes or any of the other Junior Debt Documents.


 


6.7           Junior Debt
Documents.  There are no material Junior
Debt Documents other than those attached hereto as Exhibit A.


 


6.8           Senior Debt
Documents.  The material Senior Debt
Documents are listed on Exhibit B attached hereto.


 


7.             Agent.  The Agent hereby represents and warrants to
the Junior Creditors as follows:


 


7.1           Existence
and Power.  The Agent is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized.


 


12





















 


7.2           Authority.  The Agent has the power and authority to
enter into, execute, deliver and carry out the terms of this Agreement, all of
which have been duly authorized by all proper and necessary action and are not
prohibited by its organizational documents.


 


7.3           Binding
Agreements.  This Agreement, when executed
and delivered, will constitute the valid and legally binding obligation of the
Agent enforceable in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and by
equitable principles.


 


7.4           Conflicting
Agreements; Litigation.  No provisions
of any mortgage, indenture, contract, agreement, statute, rule, regulation,
judgment, decree or order binding on the Agent conflicts with, or requires any
consent which has not already been obtained under, or would in any way prevent
the execution, delivery or performance of the terms of this Agreement by the
Agent. No pending or, to the best of the Agent’s knowledge, threatened,
litigation, arbitration or other proceedings if adversely determined would
prevent the performance of the terms of this Agreement by the Agent.


 


8.             Notice of
Junior Default.  Each of the Junior Creditors shall
provide the Agent with written notice of the occurrence of a Junior Default
under its Junior Note and ESI shall provide the Agent with a written notice of
the occurrence of each Junior Default, and each Junior Creditor who has
provided such notice and ESI shall notify the Agent in writing in the event
such Junior Default is waived; provided that (i) any failure to deliver
any such notices shall not otherwise affect the subordination provisions or
other obligations of the Junior Creditors or the US Obligors hereunder, (ii) no
such notice shall be effective for purposes of Section 2.4(b) unless
specifically stating so therein and (iii) any one Junior Creditor may
provide such notices on behalf of all Junior Creditors in a notice specifying
it is being given on behalf of all Junior Creditors.


 


9.             Cumulative
Rights, No Waivers.  Each and every
right, remedy and power granted to the Agent, the Senior Creditors or the
Junior Creditors hereunder shall be cumulative and in addition to any other
rights, remedy or power specifically granted herein or in the Senior Debt
Documents or the Junior Debt Documents, as applicable, or now or hereafter
existing in equity, at law, by virtue of statute or otherwise, and may be
exercised by the Agent, Senior Creditors or any Junior Creditor, as applicable,
from time to time, concurrently or independently and as often and in such order
as the Agent, the Senior Creditors or the Junior Creditors, as applicable, may
deem expedient.  Any failure or delay on
the part of the Agent, Senior Creditors or any of the Junior Creditors, as
applicable, in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect the rights of the Agent, the Senior Creditors or Junior
Creditors, as applicable, thereafter to exercise the same, and any single or
partial exercise of any such right, remedy or power shall not preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power, and no such failure, delay, abandonment or single or partial exercise of
the rights of the Agent, the Senior Creditors or the Junior Creditors, as applicable,
hereunder shall be deemed to establish a custom or course of dealing or
performance among the parties hereto.


 


10.           Modification.  This Agreement may be amended or modified
only by a writing signed by the US Obligors, the Agent and the holders of at least
50.1% of the then outstanding principal balance of the Junior Notes. The Junior
Creditors may waive any right under this Agreement or grant a consent by action
of the holders of at least 50.1% of the then outstanding principal balance of
the Junior Notes.  Any notice or demand
given to the Junior Creditor by the Agent or the Senior Creditors in any 


 


13





















 


circumstances not specifically required by the Agent or
the Senior Creditors shall not entitle the Junior Creditors to any other or
further notice or demand in the same, similar or other circumstances unless
specifically required hereunder.  Any
notice or demand given to the Agent or the Senior Creditors by any Junior
Creditor in any circumstances not specifically required by the Junior Creditors
shall not entitle the Agent or the Senior Creditors to any other or further
notice or demand in the same, similar or other circumstances unless
specifically required hereunder.


 


11.           Additional
Documents and Actions.  The Junior
Creditors at any time, and from time to time, after the execution and delivery
of this Agreement, promptly will execute and deliver such further documents and
do such further acts and things as the Agent reasonably may request in order to
effect fully the purposes of this Agreement.


 


12.           Notices.  Unless otherwise specifically provided
herein, any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and
shall be given only by, and
shall be deemed to have been received upon: 
(a) registered or certified mail, return receipt requested, on the
date on which such notice was received as indicated in such return receipt; (b) delivery
by a nationally recognized overnight courier, one Business Day after deposit
with such courier; or (c) facsimile or electronic transmission, in each
case upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.


 


Notices shall be addressed as
follows:


 


(a)           If to the Junior
Creditors:


 


Advent Crown Fund II C.V.


Advent Euro-Italian Direct
Investment Program Limited Partnership


Advent European
Co-Investment Program Limited Partnership


Advent PGGM Global Limited
Partnership


Digital Media &
Communications II Limited Partnership


Global Private Equity III
Limited Partnership


Global Private Equity III-A
Limited Partnership


Global Private Equity III-B
Limited Partnership


Global Private Equity III-C
Limited Partnership


Advent Partners Limited
Partnership


Advent Partners (NA) GPE III
Limited Partnership


Advent Partners GPE III
Limited Partnership


Advent Global GECC III
Limited Partnership


 


c/o
Advent International Company


75
State Street


Boston,
MA 02109


Attention:              Janet L. Hennessey,
Vice President


Facsimile:                                       (617) 951-0566


 


with
copies to:


Advent
International plc


123
Buckingham Palace Road


 


14





















 


London
SW1W 9SL


United
Kingdom


Attention:              James Brocklebank


Facsimile:                                       (44) 20-7333-0801


 


and


 


Pepper
Hamilton LLP


3000
Two Logan Square


Eighteenth
and Arch Streets


Philadelphia,
PA 19103-2799


Attention:              Cary S. Levinson


Facsimile:                                       (215) 981-4750


 


Apax
WW Nominees Ltd a/c AE4


 


c/o
Apax Partners Ltd.


15
Portland Place


London
W1B 1PT


United
Kingdom


Attention:              Peter Skinner


Facsimile:                                       (44) 20-7843-4001


 


with a
copy to:


 


Pepper
Hamilton LLP


3000
Two Logan Square


Eighteenth
and Arch Streets


Philadelphia,
PA 19103-2799


Attention:              Cary S. Levinson


Facsimile:                                       (215) 981-4750


 


Four Seasons
Venture II A.S.


 


c/o
Four Seasons Venture


Postboks
1216 Vika


0110
Oslo


Norway


Attention:              Gunnar Rydning


Facsimile:                                       (47) 2283-8518


 


Nigel
Clifford


Croftland


Moor
Lane


Speen


Newbury


Berks
RG14 1RT


United
Kingdom


 


15





















 


David
Gibbon


14
Beaumont Road


Windsor


Berks
SL4 1HY


United
Kingdom


 


(b)           If to the US Obligors:


 


Evolving
Systems, Inc.


9777
Pyramid Court


Suite 100


Englewood,
Colorado  80112


Attention:              Anita T. Moseley,
General Counsel


Facsimile:                                       (303) 802-1138


 


(c)           If to the Agent:


 


CapitalSource
Finance LLC


4445
Willard Avenue


12th
Floor


Chevy
Chase, MD 20815


Attention:              Corporate Finance
Group, Portfolio Manager


Facsimile:                                       (301) 841-2313


 


or in any case, to such other address as the party
addressed shall have previously designated by written notice to the serving
party, given in accordance with this Section 11.  A notice not given as provided above shall,
if it is in writing, be deemed given if and when actually received by the party
to whom given.


 


13.           Severability.  In the event that any provision of this
Agreement is deemed to be invalid, illegal or unenforceable by reason of the
operation of any law or by reason of the interpretation placed thereon by any
court or governmental authority, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.


 


14.           Successors
and Assigns.  This Agreement shall inure to
the benefit of the successors and assigns of the Agent, the Senior Creditors
and the Junior Creditors and shall be binding upon their respective successors
and assigns and the US Obligors.  The
Agent and Senior Creditors, without notice to or consent of the Junior
Creditors, may assign or transfer any or all of the Senior Debt or any interest
therein to any Person and, notwithstanding any such assignment or transfer, or
any subsequent assignment or transfer, the Senior Debt shall, subject to the
terms hereof, be and remain Senior Debt for purposes of this Agreement, and
every permitted assignee or transferee of any of the Senior Debt or of any
interest therein shall, to the extent of the interest of such permitted
assignee or transferee in the Senior Debt, be entitled to rely upon and be the
third party beneficiary of the subordination provided under this Agreement and
shall be entitled to enforce the terms and provisions hereof to the same extent
as if such assignee or transferee were initially a party hereto.  EACH OF THE JUNIOR CREDITORS AND THE US OBLIGORS
ACKNOWLEDGES AND AGREES THAT THE AGENT AND THE OTHER SENIOR CREDITORS AT ANY
TIME AND FROM TIME TO TIME MAY DIVIDE AND REISSUE (WITHOUT SUBSTANTIVE
CHANGES OTHER THAN THOSE RESULTING FROM SUCH DIVISION) THE NOTES EVIDENCING THE
SENIOR DEBT, THE OBLIGATIONS UNDER 


 


16





















 


THE CREDIT AGREEMENTS, THE COLLATERAL AND THE SENIOR
DEBT DOCUMENTS TO ONE OR MORE OTHER PERSONS, IN EACH CASE ON THE TERMS AND
CONDITIONS IN THE SENIOR DEBT DOCUMENTS. 
The terms “Agent” and “Senior Creditors” in this Agreement include
transferees and participants of the Senior Debt and successors and assigns,
each of which shall have all rights and benefits of the Agent or Senior
Creditors hereunder.  Each transferee and
participant of the Senior Debt (to the extent provided in the applicable Credit
Agreement) shall have all of the rights and benefits with respect to the Obligations
under the applicable Credit Agreement, the notes evidencing Senior Debt, the
Collateral, this Agreement and the Senior Debt Documents held by it as fully as
the original holder thereof.


 


15.           Counterparts.  This Agreement may be executed in one or more
counterpart originals, which, taken together, shall constitute one
fully-executed instrument.  Any signature
delivered by facsimile shall be deemed to be a counterpart original hereto.


 


16.           Defines
Rights of Creditors; Obligors’ Obligations Unconditional.  The provisions of this Agreement are solely
for the purpose of defining the relative rights of the Junior Creditors, the
Agent and the Senior Creditors and shall not be deemed to create any rights or
priorities in favor of any other Person, including, without limitation, any
Obligor.  As between the Obligors and the
Senior Creditors, nothing contained herein shall impair the unconditional and
absolute obligation of the Obligors to the Senior Creditors to pay the Senior
Debt as such Senior Debt shall become due and payable in accordance with the
Senior Debt Documents.  As between ESI
and the other US Obligors and the Junior Creditors, nothing contained herein
shall impair the unconditional and absolute obligation of ESI or, if
applicable, the other US Obligors to the Junior Creditors to pay the Junior
Debt as such Junior Debt shall become due and payable in accordance with the
Junior Debt Documents, subject to the terms of this Agreement.


 


17.           Subrogation.  After and subject to the indefeasible Payment
in Full of the Senior Debt, and prior to the irrevocable and indefeasible
repayment in full in cash of the Junior Debt, the Junior Creditors shall be
subrogated to the rights of the Senior Creditors to the extent that payments
and distributions otherwise payable to the Junior Creditors have been applied
to the Senior Debt in accordance with the provisions of this Agreement.  For purposes of such subrogation, no payments
or distributions to the Senior Creditors of any cash, property or securities to
which the Junior Creditors would be entitled except for the provisions of this
Agreement, and no payments pursuant to the provisions of this Agreement to the
Senior Creditors by the Junior Creditors, shall, as among the Obligors, their
creditors (other than the Senior Creditors) and the Junior Creditors be deemed
to be a payment or distribution by such Obligor to or on account of the Senior
Debt; it being understood that
the provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of the Junior Creditors, on the one hand, and the
Agent and the Senior Creditors, on the other hand.  The Agent and the Senior
Creditors shall have no obligation or duty to protect the Junior Creditors’
rights of subrogation arising pursuant to this Agreement or under any
applicable law, nor shall the Agent or the Senior Creditors be liable for any
loss to, or impairment of, any subrogation rights held by the Junior Creditors.


 


18.           Conflict.  In the event of any conflict between any
term, covenant or condition of this Agreement and any term, covenant or
condition of any of the Junior Debt Documents or the Senior Debt Documents, the
provisions of this Agreement shall control and govern.


 


19.           Headings.  The paragraph headings used in this Agreement
are for convenience only and shall not affect the interpretation of any of the
provisions hereof.


 


17





















 


20.           Termination.  This Agreement shall terminate upon the
indefeasible Payment in Full of the Senior Debt.


 


21.           Applicable
Law.  This Agreement shall be governed by and shall
be construed and enforced in accordance with the internal laws of the State of
New York, without regard to conflicts of law principles.


 


22.           CONSENT TO
JURISDICTION.  EACH OF
THE AGENT, THE JUNIOR CREDITORS AND THE OBLIGORS HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK
IN THE BOROUGH OF MANHATTAN AND IRREVOCABLY AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN
SUCH COURTS.  EACH OF THE AGENT, THE
JUNIOR CREDITORS AND THE OBLIGORS EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS.  EACH OF THE AGENT, THE
JUNIOR CREDITORS AND THE OBLIGORS HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE AGENT,
JUNIOR CREDITORS AND THE OBLIGORS AT THEIR RESPECTIVE ADDRESSES SET FORTH IN
THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE 10 DAYS AFTER THE SAME HAS
BEEN POSTED.


 


23.           WAIVER OF
JURY TRIAL.  THE
JUNIOR CREDITORS, THE OBLIGORS AND THE AGENT HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT.  EACH OF THE
JUNIOR CREDITORS, THE OBLIGORS AND THE AGENT ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO
RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH OF THE JUNIOR CREDITORS, THE OBLIGORS
AND THE AGENT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.


 


24.           Waiver of Consolidation.  Each
of the Junior Creditors acknowledges and agrees that (i) the Obligors are
each separate and distinct entities; and (ii) it will not at any time
insist upon, plead or seek advantage of any substantive consolidation, piercing
of the corporate veil or any other order or judgment that causes an effective
combination of the assets and liabilities of the Obligors in any Proceeding
under Debtor Relief Laws or other similar proceeding.


 


25.           Defense to Enforcement Provision.  If
any of the Junior Creditors, in contravention of the terms of this Agreement,
shall commence, prosecute or participate in any Proceeding or Collection Action
with respect to the Junior Debt against any Obligor, then Agent or any Senior
Creditor may (i) intervene and interpose such defense or pleas in its
name, and/or (ii) by virtue of this Agreement, restrain the enforcement
thereof in the name of Agent or any Senior Creditor.  If any of the Junior Creditors, in
contravention of the terms of this Agreement, obtains any cash or other assets
of any Obligor as a result of any Proceeding or Collection Action with respect
to the Junior Debt, such Junior Creditor agrees forthwith to pay, deliver and
assign to the Agent, with appropriate endorsements, any such cash or other 


 


18





















 


assets
for application to the Senior Debt owing to Agent and Senior Creditors until
the Senior Debt has been Paid in Full.


 


{Signatures
appear on the following page.}


 


19





















 


IN WITNESS WHEREOF, the Junior Creditor,
the US Obligors and the Agent have caused this Subordination Agreement to be
executed as of the date first above written.


 


	
   

  	
  JUNIOR CREDITORS:

  
	
   

  	
   

  
	
   

  	
  APAX WW NOMINEES LTD A/C AE4

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT CROWN FUND II C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT EURO-ITALIAN DIRECT

  INVESTMENT PROGRAM LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT EUROPEAN CO-INVESTMENT

  PROGRAM LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT PGGM GLOBAL LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  DIGITAL MEDIA & COMMUNICATIONS II

  
	
   

  	
  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III-A LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III-B LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III-C LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Limited Partnership,

  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Corporation, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT PARTNERS LIMITED PARTNERSHIP

  
							



 


20





















 


	
   

  	
  ADVENT PARTNERS (NA) GPE III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT PARTNERS GPE III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Corporation, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT GLOBAL GECC III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent Global Management Limited Partnership,
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Limited Partnership,
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Corporation, General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOUR SEASONS VENTURE II A.S.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NIGEL CLIFFORD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DAVID GIBBON

  
								



 


21





















 


	
   

  	
  OBLIGORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TELECOM SOFTWARE ENTERPRISES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EVOLVING SYSTEMS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial

  Officer

  



 


22





















 


	
  AGENT AND LENDER:

  	
  CAPITALSOURCE FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 


23





















 


EXHIBIT A


 


Junior Debt Documents


 


See Attached.


 


24





















 


EXHIBIT B


 


Senior Debt Documents


 


	
  1.

  	
   

  	
  Credit Agreement

  
	
  2.

  	
   

  	
  Security Agreement

  
	
  3.

  	
   

  	
  Acknowledgment of Intellectual Property Collateral Lien

  
	
  4.

  	
   

  	
  Pledge Agreement

  
	
  5.

  	
   

  	
  Revolving Facility Agreement

  
	
  6.

  	
   

  	
  Debenture

  
	
  7.

  	
   

  	
  Charge Over Shares (US Obligations)

  
	
  8.

  	
   

  	
  Charge Over Shares (UK Obligations)

  



 


25