Document:

Exhibit 10.1

 

TOWERS WATSON & CO.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

 

This
Award Agreement (the “Agreement”), made as of this    day of       ,
2010, between Towers Watson & Co., a Delaware corporation (the
“Company”), and NAME (the “Optionee”), is made pursuant to the terms of the
Company’s 2009 Long Term Incentive Plan (the “Plan”).  Capitalized terms used herein but not defined
shall have the meanings set forth in the Plan.

 

Section 1.                                            Grant of Option.  The Company grants to the Optionee, on the terms
and conditions set forth herein, an option (the “Option”) for the purchase of
                            
shares of the Company’s Class A common stock (the “Option Shares”), par
value $0.01 per share (the “Common Stock”), effective as of the date hereof
(the “Date of Grant”).  The Option is not
intended to qualify as an “incentive stock option” within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.

 

Section 2.                                            Exercise Price.  The exercise price per share of the Option shall
be
$                  ,
which is the Fair Market Value (as defined in the Plan) of a share of Common
Stock as of the Date of Grant (the “Option Price”).

 

Section 3.                                            Vesting of
Option.  The Option shall vest and
become exercisable in accordance with the following vesting schedule, subject
to the Optionee’s continued Service with the Company or any Subsidiary on each
such vesting date:

 

	
  Date

  	
   

  	
  Total Option Shares Subject to Exercise

  	
   

  
	
  on or after

  	
   

  	
  Incremental

  	
   

  	
  Cumulative

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Section 4.                                            Option Term.  The Option Shares that become vested pursuant
to this Agreement may be purchased at any time on or after the date of vesting
and prior to the expiration of the term of the Option (the “Option Term”).  The Option Term shall expire on the day prior
to the seventh anniversary of the Date of Grant, unless earlier terminated in
accordance with the terms of the Plan or upon termination of the Optionee’s
Service (“Termination of Service”) in accordance with Section 5
hereof.  Upon the expiration or
termination of the Option Term, any unexercised Option Shares shall be
cancelled and shall be of no further force or effect.

 

Section 5.                                            Termination of
Service.

 

(a)                                  General.  Subject to the following provisions of this Section 5,
in the event of a Termination of Service for any reason prior to the date that
the Option becomes vested in accordance with this Agreement, the Optionee shall
forfeit the Optionee’s interest in any Option Shares that have not yet become
vested, which shall be cancelled and be of no further force or effect.  Except as otherwise set forth in this Section 5,
in the event of a Termination of Service for any reason following any
applicable vesting date, the Optionee’s right to purchase any Option Shares
that have previously become vested in accordance with the terms hereof shall
expire on the effective date of such Termination of Service (or the expiration
of the original seven-year Option Term, if earlier).

 

 

(b)                                 Cause.  Notwithstanding the provisions of Section 5(a) hereof,
in the event of a Termination of Service for “Cause” (as defined below), the
Optionee’s right to purchase any Option Shares, whether or not vested, shall
immediately terminate and all rights thereunder shall cease.  For purposes of this Agreement, termination
for “Cause” means the Optionee’s termination of Service due to: (i) persistent
neglect or negligence in the performance of the Optionee’s employment duties; (ii) persistent
unexcused absenteeism by the Optionee, (iii) breach of the Company’s Code
of Business Conduct or related policies by the Optionee, (iv) conviction
(including pleas of guilty or no contest) of the Optionee for any act of fraud,
misappropriation or embezzlement, (v) any deliberate and material breach
of fiduciary duty to the Company by the Optionee or other conduct by the
Optionee that leads to the material damage or prejudice of the Company, or (vi) illegal
use by the Optionee of controlled dangerous substances or use of alcohol to
such extent as to have a material adverse effect on the Optionee’s performance
of his or her duties with respect to the Company.  The Company shall have the power to determine
whether the Optionee has been terminated for Cause and the date upon which such
termination for Cause occurs.  Any such
determination shall be final, conclusive and binding upon the Optionee.  In addition, if the Company shall reasonably
determine that the Optionee has committed or may have committed any act which
could constitute the basis for a termination of Optionee’s Service for Cause,
the Company may suspend the Optionee’s rights to exercise the Option or vest in
any right with respect to the Option, pending a determination by the Company of
whether an act has been committed which could constitute the basis for a
termination for “Cause” as provided in this Section 5(b).

 

(c)                                  Disability or
Retirement. 
Notwithstanding the provisions of Section 5(a) hereof, in the
event of a Termination of Service as a result of Disability (as defined in the
Plan) or Retirement (as defined below) following any applicable vesting date,
the Optionee, or the Optionee’s legal representative, shall retain the right to
purchase any Option Shares that have previously become vested in accordance
with the terms hereof until the expiration of three years following the date of
such Termination of Service (or the expiration of the original seven-year
Option Term, if earlier).  For purposes
of this Agreement, “Retirement” means that the Optionee has terminated Service
after becoming eligible to commence retirement benefits under the terms of the
retirement plan applicable to the Optionee. 
If no such plan is applicable, or if more than one such plan exists,
then “Retirement” shall have the meaning as determined by the Company in its
sole discretion.

 

(d)                                              Death or
Involuntary Termination.  Notwithstanding
the provisions of Section 5(a) hereof, in the event of a Termination
of Service as a result of death or Involuntary Termination (as defined below)
following any applicable vesting date, the Optionee, or the Optionee’s legal
representative, shall retain the right to purchase any Option Shares that have
previously become vested in accordance with the terms hereof until the
expiration of one year following the date of such Termination of Service (or
the expiration of the original seven-year Option Term, if earlier).  The determination as to whether a Termination
of Service of the Optionee is an Involuntary Termination shall be made by the
Company in its sole discretion.

 

Section 6.                                                        Change in
Control.  Notwithstanding the provisions
of Section 3 hereof, the Option shall fully vest and become fully
exercisable immediately prior to a Change in Control (as defined in the Plan),
unless the Option is assumed by, or a reasonably equivalent award is
substituted for, the Option in connection with the Change in Control.  In the event of any such assumption or
substitution, the assumed or substituted award shall vest on the same

 

2

 

conditions as the Option,
provided that if the Optionee’s Service is terminated without Cause upon or
within twelve (12) months following the Change in Control, the assumed or
substituted award shall fully vest and become exercisable upon such
termination.

 

Section 7.                                            Procedure for
Exercise.

 

(a)                                  Notice of
Exercise.  The Option
may be exercised, in whole or in part, and whole Option Shares may be
purchased, at any time during the term hereof by notice to the Company in the
form required by the Committee (as defined in the Plan), together with payment
of the aggregate Option Price therefor and any applicable withholding taxes.

 

(b)                                 Payment of
Option Price; Withholding Taxes.  Payment of the Option Price shall be made: (i) in
cash or by cash equivalent acceptable to the Committee, (ii) by payment in
shares of Common Stock valued at the Fair Market Value of such shares on the
date of exercise, (iii) through an open-market, broker-assisted sales
transaction pursuant to which the Company is promptly delivered the amount of
proceeds necessary to satisfy the exercise price, or (iv) by a combination
of the methods described above.  In
addition to and at the time of payment of the Option Price, the Optionee shall
pay to the Company the full amount of any and all applicable income tax,
employment tax and other amounts required to be withheld in connection with
such exercise, payable under such of the methods described above for the
payment of the Option Price.

 

Section 8.                                            Investment
Representation.  Upon the
exercise of the Option at a time when there is not in effect a registration
statement under the Act relating to the shares of Common Stock, by virtue of
such exercise, the Optionee shall be deemed to represent and warrant to the
Company that the shares of Common Stock shall be acquired for investment and
not with a view to the distribution thereof, and not with any present intention
of distributing the same, and the Optionee shall provide the Company with such
further representations and warranties as the Company may require in order to
ensure compliance with applicable Federal and state securities, blue sky and
other laws.  No shares of Common Stock
shall be acquired unless and until the Company and/or the Optionee shall have
complied with all applicable Federal or state registration, listing and/or
qualification requirements and all other requirements of law or of any
regulatory agencies having jurisdiction, unless the Committee has received
evidence satisfactory to it that the Optionee may acquire such shares pursuant
to an exemption from registration under the applicable securities laws.  Any determination by the Committee in this
regard shall be final, binding and conclusive. 
The Company reserves the right to legend any certificate for shares of
Common Stock, conditioning sales of such shares upon compliance with applicable
Federal and state securities laws and regulations.

 

Section 9.                                            Limitation of
Rights.  The Optionee shall not have
any privileges of a stockholder of the Company with respect to the Option
Shares, including without limitation any right to vote such Option Shares or to
receive dividends or other distributions in respect thereof, until the date of
the issuance to the Optionee of the applicable shares of Common Stock.  Nothing in the Plan, this Agreement or the
Option shall confer upon the Optionee any right to continued Service or to
interfere in any way with the right of the Company to terminate the Optionee’s
Service at any time.

 

3

 

Section 10.                                      Adjustments.  The Option granted hereunder shall be subject
to the provisions of Section 4.3 of the Plan relating to adjustments for
recapitalizations, reclassifications and other changes in the Company’s
corporate structure.

 

Section 11.                                      Transfer Restrictions.

 

(a)                                  Option.  The Option may not be transferred, pledged,
assigned, hypothecated or otherwise disposed of in any way by the Optionee,
except by will or by the laws of descent and distribution.  In the event that an Optionee becomes legally
incapacitated, the Option shall be exercisable by the Optionee’s legal
guardian, committee or legal representative. 
If the Optionee dies, the Option shall thereafter be exercisable by the
Optionee’s beneficiary as designated by the Optionee in the manner prescribed
by the Committee or, in the absence of an authorized beneficiary designation,
by the legatee of such Option under the Optionee’s will, or by the Optionee’s
estate in accordance with the Optionee’s will or the laws of descent and
distribution, in each case in the same manner and to the same extent that the
Option was exercisable by the Optionee on the date of the Optionee’s
death.  The Option shall not be subject
to execution, attachment or similar process. 
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of
any execution, attachment or similar process upon the Option, shall be null and
void and without effect.

 

(b)                                 Option Shares.  Until the third anniversary of the Date of
Grant of the Option, the Optionee shall not sell, transfer, pledge, assign, hypothecate
or otherwise dispose of in any way, other than by will or by the laws of
descent and distribution, any of the shares of Common Stock received by the
Optionee pursuant to the exercise of the Option, other than any shares of
Common Stock that, based on the price of Common Stock on the date of such
exercise, have an aggregate value equal to the amount of (i) the aggregate
Option Price payable upon such exercise of the Option (including any brokerage
commissions payable upon the sale of shares to pay the aggregate Option Price),
plus (ii) all applicable income and/or employment taxes accruing and owed
by the Optionee in connection with the Option exercise.

 

Section 12.                                      Notices.  Any notice hereunder by the Optionee shall be
given to the Company in writing and such notice shall be deemed duly given only
upon receipt thereof by the Company, delivered to Towers Watson & Co.,
901 N. Glebe Road, Arlington, VA 22203, Attention:  Treasurer. 
Any notice hereunder by the Company shall be given to the Optionee in
writing and such notice shall be deemed duly given only upon receipt thereof at
such address as the Optionee may have on file with the Company.

 

Section 13.                                      Construction.  The Option hereunder is granted pursuant to
the Plan and is in all respects subject to the terms and conditions of the
Plan.  The Optionee hereby acknowledges
that a copy of the Plan has been delivered to the Optionee and accepts the
Option hereunder subject to all terms and provisions of the Plan, which are
incorporated herein by reference.  In the
event of a conflict or ambiguity between any term or provision contained herein
and a term or provision of the Plan, the Plan will govern and prevail.  The construction of and decisions under the
Plan and this Agreement are vested in the Committee, whose determinations shall
be final, conclusive and binding upon the Optionee.

 

Section 14                                         Governing Law.  This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the choice of law principles thereof.

 

4

 

Section 15.                                      Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

 

Section 16.                                      Binding Effect.  This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

 

Section 17.                                      Entire Agreement.  This Agreement and the Plan constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof, merging any and all prior agreements.

 

Section 18.                                      Foreign Exchange Control
Approval.  If any
foreign exchange control approval, consent or permission is required for the
exercise of the Option including acquisition of Common Stock pursuant to the
exercise of the Option, the Optionee shall be responsible for obtaining all
such approvals, consents and permissions. 
The Company or any of its subsidiaries shall not be liable to the
Optionee in any manner whatsoever in the event the Optionee is unable to
exercise the Option or acquire Common Stock pursuant to the exercise of the
Option as a result of the Optionee’s failure to obtain any approval, consent or
permission required under applicable laws of the jurisdiction where the
Optionee is employed.

 

Section 19.                                      Arbitration.   In
the event the Optionee or other holder of an Option disputes or disagrees with
any determination by the Committee with respect to this Option, the Plan or
such person, the Optionee or other optionholder may request arbitration with
respect to such decision.  The review by
the arbitrator shall be limited to determining whether the Committee’s decision
was arbitrary or capricious.  This
arbitration shall be the sole and exclusive review permitted of the Committee’s
decision, and the Optionee and any other option holder hereby explicitly waive
any right to judicial review. Notice of demand for arbitration shall be made in
writing to the Committee within 30 days after the applicable decision by the
Committee.  The arbitrator shall be
selected by those members of the Board of Directors who are neither members of
the Committee nor employees of the Company. 
If there are no such members of the Board of Directors, the arbitrator
shall be selected by the Board of Directors. 
The arbitrator shall be an individual who is an attorney licensed to
practice law in the State of Delaware. 
Such arbitrator shall be neutral within the meaning of the Commercial Rules of
Dispute Resolution of the American Arbitration Association; provided, however,
that the arbitration shall not be administered by the American Arbitration
Association.  Any challenge to the
neutrality of the arbitrator shall be resolved by the arbitrator whose decision
shall be final and conclusive.  The
arbitration shall be administered and conducted by the arbitrator pursuant to
the Commercial Rules of Dispute Resolution of the American Arbitration
Association.  The decision of the arbitrator
on the issue(s) presented for arbitration shall be final and conclusive
and may be enforced in any court of competent jurisdiction.

 

5

 

IN
WITNESS WHEREOF, the Company and the Optionee have executed this Agreement
effective as of the date first above written.

 

 

	
   

  	
  TOWERS
  WATSON & CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee
  Signature

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Optionee
  Name

  	
   

  
	
   

  	
  address

  	
   

  
	
   

  	
  address

  	
   

  
				

 

6Exhibit 4.4

 

FIRST AMENDMENT

TO

RIGHTS AGREEMENT

 

THIS FIRST AMENDMENT TO RIGHTS AGREEMENT (the “Amendment”)
is entered into as of December 10, 2009, between EVOLVING SYSTEMS, INC., a
Delaware corporation (the “Company”), and AMERICAN STOCK TRANSFER &
TRUST COMPANY LLC (the “Rights Agent”).

 

WHEREAS, the Company and the Rights Agent have entered
into that certain Rights Agreement dated as of March 4, 2009 (the “Rights
Agreement”); and

 

WHEREAS, the Company and the Rights Agent wish to
amend the Rights Agreement in order to increase the percentage of shares of the
Common Shares that a Person may become the Beneficial Owner of without being
deemed to be an Acquiring Person.

 

NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree as follows:

 

1.                                       Section 1(a) of
the Rights Agreement is hereby amended and restated in its entirety to read as
follows:

 

(a)                                  “Acquiring Person” shall mean any Person
(as such term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter defined) of
25.0% or more of the Common Shares then outstanding.  Notwithstanding the foregoing, (i) the
term Acquiring Person shall not include (A) the Company, (B) any
Subsidiary (as such term is hereinafter defined) of the Company, (C) any
employee benefit or compensation plan of the Company or any Subsidiary of the
Company, (D) any Person holding Common Shares for or pursuant to the terms
of any such employee benefit or compensation plan, and (ii) no Person
shall become an “Acquiring Person”: (A) as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 25.0% or more of the Common Shares then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 25.0% or more of the Common
Shares then outstanding by reason of share purchases by the Company and shall,
following written notice from, or public disclosure by the Company of such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares without the prior consent of the Company and shall then
Beneficially Own more than 25.0% of the Common Shares then outstanding, then
such Person shall be deemed to be an “Acquiring Person,” (B) a Person who
would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this Section 1(a), has become such as a result of the
acquisition of Common Shares directly from the Company or pursuant to the
exercise of options pursuant to the option plan of the Company; provided,
however, that if such Person shall purchase additional Common Shares after
becoming the Beneficial Owner of 25.0% or more of the Common Shares then
outstanding, such Person shall be deemed an “Acquiring Person,” subject to the
exceptions set forth in this Section 1(a), or (C) if the Board of
Directors determines in good faith that a Person who would otherwise be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this Section 1(a),
has become such inadvertently, and such Person divests, as promptly as
practicable (as determined in good faith by the Board of Directors), but in any
event within five Business Days, following receipt of written notice from the
Company of such event, of Beneficial Ownership of a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this Section 1(a), then such
Person shall no longer be deemed to be an “Acquiring Person” for purposes of
this Agreement; provided, however, that if such Person shall again become the
Beneficial Owner of 25.0% or more of the Common Shares then outstanding, such
Person shall be deemed an “Acquiring Person,” subject to the exceptions set
forth in this Section 1(a).

 

 

2.                                       Section 23(b)(ii) of
the Rights Agreement is hereby amended and restated in its entirety to read as
follows:

 

(ii)                                  In addition, the Board of Directors of
the Company may, at its option, at any time after the time a Person becomes an
Acquiring Person and the expiration of any period during which the holder of Rights
may exercise the rights under Section 11(a)(ii) hereof but prior to
any event described in clause (i), (ii) or (iii) of Section 13(a) hereof,
redeem all but not less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger, consolidation or sale
or other transfer (in one transaction or in a series of related transactions)
of stock, assets or earning power aggregating 50% or more of the stock, assets
or earning power of the Company and its subsidiaries (taken as a whole) in
which all holders of Common Shares are treated alike and not involving (other
than as a holder of Common Shares being treated like all other such holders) an
Interested Stockholder or a Transaction Person or (y)(A) if and for so
long as the Acquiring Person is not thereafter the Beneficial Owner of 25.0% or
more of the then outstanding Common Shares, and (B) at the time of
redemption no other Persons are Acquiring Persons.

 

3.                                       Exhibit C
of the Rights Agreement is hereby amended and restated in its entirety to read
as provided in Exhibit C hereto.

 

4.                                       The
Rights Agreement, as amended hereby, shall be and remain in full force and
effect in accordance with its terms and is ratified and confirmed hereby in all
respects.

 

5.                                       This
Amendment may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

 

6.                                       This
Amendment shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.

 

7.                                       This
Amendment and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof.

 

8.                                       If
any term, provision, covenant or restriction of this Amendment is held by a
court of competent jurisdiction or other authority 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.

 

 

IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed, all as of the day and year first above
written.

 

	
   

  	
  Attest:  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ THADDEUS DUPPER

  
	
   

  	
  Thaddeus Dupper

  
	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  /s/ ANITA T. MOSELEY

  
	
   

  	
  Anita T.Moseley

  
	
   

  	
  Secretary

  

 

 

	
   

  	
  Attest:  AMERICAN STOCK
  TRANSFER & TRUST COMPANY LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ HERBERT J. LEMMER

  
	
   

  	
  Print Name:

  	
  Herbert J. Lemmer

  

 

 

EXHIBIT C TO RIGHTS AGREEMENT

 

FORM OF SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES

 

EVOLVING SYSTEMS, INC.

 

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED SHARES

 

On March 4,
2009, the Board of Directors of Evolving Systems, Inc. (the “Company”)
declared a dividend of one preferred share purchase right (a “Right”) for each
outstanding share of common stock, par value $0.001 per share (the “Common
Shares”), of the Company.  The dividend
is effective as of March 16, 2009 (the “Record Date”) with respect to the
stockholders of record on that date.  The
Rights will also attach to new Common Shares issued after the Record Date.  Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series C Junior
Participating Preferred Stock, par value $0.001 per share (the “Preferred
Shares”), of the Company at a price of $8.00 per one one-hundredth of a
Preferred Share (the “Purchase Price”), subject to adjustment.  Each Preferred Share is designed to be the
economic equivalent of 100 Common Shares. 
The description and terms of the Rights are set forth in a Rights
Agreement dated as of March 4, 2009 (the “Rights Agreement”), between the
Company and American Stock Transfer & Trust Company LLC (the “Rights
Agent”), as amended by the First Amendment to Rights Agreement dated as of December 10,
2009, between the Company and the Rights Agent.

 

DETACHMENT
AND TRANSFER OF RIGHTS

 

Initially,
the Rights will be evidenced by the stock certificates representing Common
Shares then outstanding, and no separate Right Certificates will be
distributed.  Until the earlier to occur
of (i) a public announcement that a person or group of affiliated or
associated persons, has become an “Acquiring Person” (as such term is defined
in the Rights Agreement) or (ii) 10 business days (or such later date as
the Board may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer which would result in the
beneficial ownership by an Acquiring Person of 25.0% or more of the outstanding
Common Shares (the earlier of such dates being called the “Distribution Date”),
the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate.  In general, an “Acquiring
Person” is a person, the affiliates or associates of such person, or a group,
which has acquired beneficial ownership of 25.0% or more of the outstanding
Common Shares.

 

The
Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferable with
and only with the Common Shares.  Until
the Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference.  Until the
Distribution Date (or earlier redemption or expiration of the Rights) the
surrender or transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.  As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (“Right
Certificates”) will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.

 

EXERCISABILITY
OF RIGHTS

 

The
Rights are not exercisable until the Distribution Date.  The Rights will expire on March 4, 2019
(the “Final Expiration Date”), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case
as described below.  Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends.

 

The
Purchase Price payable, and the number of Preferred Shares or other securities
or property issuable or payable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution.  The number of outstanding Rights and the
number of one one-hundredths of a Preferred Share issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in Common
Shares, or subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.  With certain exceptions, no 

 

 

adjustment
in the Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.  No fractional Preferred Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be made based
on the market price of the Preferred Shares on the last trading day prior to
the date of exercise.

 

TERMS
OF PREFERRED SHARES

 

Preferred
Shares purchasable upon exercise of the Rights will not be redeemable.  Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $l per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per Common Share.  In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100 per share but will be entitled to an aggregate payment of 100
times the payment made per Common Share. 
Each Preferred Share will have 100 votes, voting together with the Common
Shares.  Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share.  These
rights are protected by customary anti-dilution provisions.  Because of the nature of the Preferred Shares’
dividend, liquidation and voting rights, the value of the one one-hundredth
interest in a Preferred Share purchasable upon exercise of each Right should
approximate the value of one Common Share. 
The Preferred Shares would rank junior to any other series of the
Company’s preferred stock.

 

TRIGGER
OF FLIP-IN AND FLIP-OVER RIGHTS

 

In the
event that any person or group of affiliated or associated persons becomes an
Acquiring Person, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person or any
affiliate or associate thereof (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of Common Shares having a market
value of two times the exercise price of the Right.  This right will commence on the date of
public announcement that a person has become an Acquiring Person (or the
effective date of a registration statement relating to distribution of the
rights, if later) and terminate 60 days later (subject to adjustment in the
event exercise of the rights is enjoined).

 

In the
event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its stock, consolidated assets or earning power
are sold to an Acquiring Person, its affiliates or associates or certain other
persons in which such persons have an interest, proper provision will be made
so that each such holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of
the Right.

 

REDEMPTION
AND EXCHANGE OF RIGHTS

 

At any
time prior to the earliest of (i) the close of business on the day of the
first public announcement that a person has become an Acquiring Person, or (ii) the
Final Expiration Date, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (the “Redemption
Price”).  In general, the redemption of
the Rights may be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may establish.  Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.

 

At any
time after any Person becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in
part, at an exchange ratio of one Common Share, or, under circumstances set
forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a Preferred Share (or of a share of a class or
series of the Company’s preferred stock having equivalent designations and the
powers, preferences and rights, and the qualifications, limitations and
restrictions), per Right (with value equal to such Common Shares).

 

AMENDMENT
OF RIGHTS

 

The
terms of the Rights generally may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as the Rights are distributed no such amendment may adversely
affect the interests of the holders of the Rights (excluding the interest of
any Acquiring Person).

 

 

ADDITIONAL
INFORMATION

 

A copy
of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on Form 8-K dated March 5,
2009.  A copy of the Rights Agreement is
available from the Company by writing to: Anita T. Moseley, Evolving Systems, Inc.,
9777 Pyramid Court, Suite 100, Englewood, CO 80112.  This summary description of the Rights is not
intended to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.

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