SUBORDINATED NOTES ONLY TO THE EXTENT
EXPRESSLY PERMITTED UNDER THE APPLICABLE SELLER SUBORDINATION AGREEMENT;
(E)
THE CREDIT PARTIES AND THEIR SUBSIDIARIES
MAY PAY (I) REASONABLE COMPENSATION (INCLUDING PERMITTED SECURITIES ISSUED AS
EQUITY COMPENSATION) TO OFFICERS AND EMPLOYEES FOR ACTUAL SERVICES RENDERED TO
BORROWER AND ITS SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS, INCLUDING
REASONABLE SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT, AND
(II) REASONABLE DIRECTORS' FEES, MEETING FEES AND REIMBURSEMENT OF ACTUAL
OUT-OF-POCKET EXPENSES INCURRED IN CONNECTION WITH ATTENDING BOARD OF DIRECTOR
MEETINGS; AND
(F)
EVOLVING SYSTEMS MAY PAY THE TSE
CONTINGENT OBLIGATION DUE ON NOVEMBER 15, 2005 IN AN AMOUNT UP TO $300,000 AND
TSE CONTINGENT OBLIGATIONS ON OR PROMPTLY THEREAFTER THE DAY OF DELIVERY TO
AGENT OF QUARTERLY FINANCIAL STATEMENTS FOR SUCH FISCAL QUARTER; PROVIDED, THAT
ALL OF THE FOLLOWING CONDITIONS ARE SATISFIED WITH RESPECT TO EACH SUCH PAYMENT:
(I)
NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND
IS CONTINUING OR WOULD ARISE AS A RESULT OF SUCH DISTRIBUTION;
(II)
THE CREDIT PARTIES ARE COMPLIANCE WITH THE
FINANCIAL COVENANTS REFERENCED IN SECTION 7.1(A) AND PROVIDE EVIDENCE TO AGENT
TO SUCH EFFECT; AND
(III)
THE AGGREGATE AMOUNT OF SUCH DISTRIBUTIONS
SHALL NOT EXCEED $2,900,000 DURING THE TERM;
(G)
EVOLVING SYSTEMS MAY DECLARE AND MAKE
DIVIDEND PAYMENTS OR OTHER DISTRIBUTIONS PAYABLE SOLELY IN PERMITTED SECURITIES;
AND
(H)
THE CREDIT PARTIES AND THEIR SUBSIDIARIES
MAY MAKE PAYMENTS PURSUANT TO AND IN ACCORDANCE WITH THE CROSS LICENSE AGREEMENT
AND TRANSFER PRICING AGREEMENTS.
7.6
TRANSACTIONS WITH AFFILIATES
No Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, enter into or consummate any transaction with any Affiliate of
such Person other than:
29
(A)
AS EXPRESSLY PERMITTED BY, AND SUBJECT TO
THE TERMS OF, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE REVOLVING LOAN
DOCUMENTS;
(B)
COMPENSATION AND EMPLOYMENT ARRANGEMENTS
(INCLUDING PERMITTED SECURITIES ISSUED AS EQUITY COMPENSATION) WITH EMPLOYEE,
OFFICERS AND DIRECTORS IN THE ORDINARY COURSE OF BUSINESS AND TO THE EXTENT
OTHERWISE PERMITTED UNDER SECTION 7.5(E);
(C)
OTHER TRANSACTIONS PURSUANT TO WRITTEN
AGREEMENTS BETWEEN A CREDIT PARTY OR ITS SUBSIDIARY AND ANY SUCH AFFILIATES THAT
ARE ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS AND PURSUANT TO THE
REASONABLE REQUIREMENTS OF THE BUSINESS OF SUCH CREDIT PARTY; PROVIDED, THAT
SUCH TRANSACTIONS AND AGREEMENTS ARE ON FAIR AND REASONABLE TERMS NOT LESS
FAVORABLE TO SUCH PERSON THAN WOULD BE OBTAINED IN AN ARM'S LENGTH TRANSACTION
BETWEEN UNRELATED PARTIES OF EQUAL BARGAINING POWER;
(D)
(I) TRANSACTIONS BETWEEN OR AMONG ANY OF THE
CREDIT PARTIES AND/OR THEIR DOMESTIC WHOLLY-OWNED SUBSIDIARIES THAT ARE OR
CONCURRENT WITH SUCH TRANSACTION BECOMES A CREDIT PARTY AND (II) TRANSACTIONS
BETWEEN OR AMONG THE REVOLVING BORROWERS AND ITS SUBSIDIARIES THAT ARE PERMITTED
BY THE REVOLVING LOAN AGREEMENT;
(E)
THE CROSS LICENSE AGREEMENT AND THE
TRANSFER PRICING AGREEMENTS IN FORM AND SUBSTANCE SATISFACTORY TO THE AGENT IN
ITS PERMITTED DISCRETION; AND
(F)
THE AGREEMENTS IDENTIFIED ON
SCHEDULE 7.6.
7.7
TRANSFER OF ASSETS
No Credit Party shall, and no Credit Party shall permit or cause any