Document:

Exhibit 10.1(c)

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (the “Agreement”)
is entered into as of this 14th day of November, 2005, by and between CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company, as administrative agent and collateral agent for the Lenders defined
below (in such capacities, “Agent” or “Secured Party”) under the Loan Agreement (as defined below),
and EVOLVING SYSTEMS, INC., a Delaware corporation (“Pledgor”).

 

RECITALS

 

A.            Reference is made to (i) that certain
Credit Agreement (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time to time, the “US Loan Agreement”), dated as of the date hereof, among
Pledgor, the other Credit Parties named therein, Secured Party and the Lenders from
time to time a party thereto (the “US Lenders”), and
to the other Loan Documents referred to therein, and (ii) that certain Revolving
Facility Agreement (the “UK Loan Agreement,”
and together with the US Loan Agreement, collectively, the “Loan Agreement”), dated as of the date hereof, among the
Credit Parties named therein, Secured Party, as agent, CSE Finance, Inc.
and the other Lenders from time to time a party thereto (the “UK Lenders,” and together with the US Lenders, collectively,
the “Lenders”), and
to the other Loan Documents referred to therein.

 

B.            Pledgor is a Borrower under the US Loan Agreement
and a Guarantor under that certain Guaranty, dated as of the date hereof, among
Pledgor and the other Guarantors named therein in favor of Agent for the
benefit of the UK Lenders (the “Guaranty”), and
is the record and beneficial owner of certain securities of each of the
entities listed on Schedule 1.1 attached hereto and as described
herein and the holder of the notes listed on Schedule 1.2 attached
hereto and as described herein.  The
obligations of Secured Party and Lenders to execute and deliver the Loan
Documents under each Loan Agreement and to make the loans provided for
thereunder are conditioned on, among other things, the execution of this
Agreement and the pledge by Pledgor to Secured Party, for its benefit and the
benefit of the Lenders, of the Collateral (as defined herein) as security for,
among other things, Pledgor’s obligations under the Loan Documents to which it is
a party and the Guaranty, and Pledgor has agreed to enter into this Agreement
in order to induce Secured Party and Lenders to enter into the Loan Documents
and to make the Loan.

 

Accordingly,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Secured Party and Lenders to
enter into the Loan Documents, the parties hereto, intending to be legally
bound, do hereby agree as follows:

 

SECTION 1

DEFINITIONS

 

1.1.          Defined Terms. 
Capital terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Loan Agreement or, to the extent the
same are used or defined therein, the meanings provided in Article 9 of
the UCC in effect on the date hereof. 
Whenever the context so requires, each reference to gender includes the
masculine and feminine, the singular number includes the plural and vice
versa.  This Agreement shall mean such
agreement as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time

 

 

to time. 
Unless otherwise specified, all accounting terms not defined in the US Loan
Agreement shall have the meanings given to such terms in and shall be
interpreted in accordance with GAAP. 
References in this Agreement to any Person shall include such Person and
its successors and permitted assigns.  In
this Agreement, the following terms shall mean as follows:

 

“Collateral” shall mean, collectively and each individually, (i) (a) 100%
of the issued and outstanding capital stock, equity securities, limited
liability company interests, membership interests and ownership interests of
Telecom Software Enterprises, LLC, a Colorado limited liability company and Evolving
Systems Holdings, Inc., a Delaware corporation, and (b) securities
representing 65% of the aggregate voting power of the issued and outstanding
capital stock and ownership interests of Evolving Systems Networks India PVT
Ltd., an India corporation, in each case under the foregoing (a) or (b) owned
or held of record or beneficially by Pledgor on the date hereof as listed on Schedule 1.1
hereto (and the certificates, copies of which are attached hereto, representing
such shares, securities and/or interests, if any); (ii) all other capital
stock, equity securities, limited liability company interests, membership
interests and ownership interests of Telecom Software Enterprises, LLC, Evolving
Systems Holdings, Inc. or any current or future direct Subsidiary of Pledgor
organized under the laws of the United States or any state thereof, in each
case owned or held of record or beneficially by Pledgor at any time (and the
certificates representing such shares, securities and/or interests, if any); (iii) securities
representing 65% of the aggregate voting power of the capital stock, equity
securities, limited liability company interests, membership interests and
ownership interests of Evolving Systems Networks India PVT Ltd. or any current
or future direct Subsidiary of Pledgor organized outside of the laws of the
United States, in each case owned or held of record or beneficially by Pledgor
at any time (and the certificates representing such shares, securities and/or
interests, if any); (iv) all other Investment Property of Pledgor; (v) the
Pledged Notes; (vi) any and all replacements, products and proceeds of,
and dividends, distributions in property, securities, returns of capital or
other distributions made on or with respect to, any of the foregoing; and (vii) all
rights and privileges of Pledgor with respect to the foregoing.  Notwithstanding the foregoing, the term “Collateral”
shall not include securities representing at any time more than 65% of the
aggregate voting power of the Capital Stock of a “controlled foreign
corporation,” as defined in Section 957 of the Code.

 

“Default” shall mean any event, fact, circumstance or
condition that, with the giving of applicable notice or passage of time or
both, would constitute, be or result in an Event of Default.

 

“Event of Default” shall mean the occurrence of any
event set forth in Section 4.

 

“Initial Pledged Notes”
means the notes set forth on Schedule 1.2 attached hereto.

 

“Investment Property” shall have the meaning given that term
in the UCC.

 

“Loan Documents” shall mean, collectively, the Loan Documents
as defined in each Loan Agreement.

 

“Obligations” shall mean, collectively, all “Obligations” as
defined in each Loan Agreement and all “Guaranteed Obligations” as defined in
the Guaranty.

 

“Pledged Notes” means all Initial Pledged Notes and all notes,
instruments or chattel paper pledged pursuant to this Agreement.

 

2

 

SECTION 2

COLLATERAL

 

2.1.          Pledge of Collateral.

 

(a)           As security for the due and punctual payment and
performance of (i) the Obligations and (ii) Pledgor obligations under
this Agreement (collectively, the “Secured Obligations”),
Pledgor pledges and assigns to Secured Party, for its benefit and the ratable
benefit of the Lenders, and grants to Secured Party, for its benefit and the ratable
benefit of the Lenders, a continuing first priority security interest in and
Lien on, all of Pledgor’s right, title and interest in the Collateral and all
proceeds thereof.

 

(b)           As of the Closing Date, Pledgor has delivered to
Secured Party, for its benefit and the benefit of the Lenders, the Initial
Pledged Notes and all certificates, if any, representing that portion of the
Collateral described in clause (i) of the definition of Collateral.  Pledgor will deliver to Secured Party, for
its benefit and the benefit of the Lenders, within ten (10) Business Days
after Pledgor’s acquisition of such Collateral, all certificates, if any,
representing that portion of the Collateral described in clauses (ii), (iii) and
(iv) of the definition of Collateral (and agrees that to the extent any
such Collateral is uncertificated, Pledgor will not certificate such Collateral
without delivering such certificates to Secured Party), in each case registered
in the name of Pledgor and accompanied by a stock power duly executed by
Pledgor in blank in form and substance satisfactory to Secured Party, with any
and all documentary tax stamps and other documents necessary to cause Secured
Party, for its benefit and the benefit of the Lenders, to have a good, valid
and perfected continuing first priority pledge of and Lien on such Collateral
(free and clear of any other Liens other than Permitted Liens (as defined in
each Loan Agreement)).  Any Pledged Notes
acquired by Pledgor (excluding checks, drafts and similar instruments that are
customarily endorsed or presented for collection or deposit in the Ordinary
Course of Business), shall be accompanied by proper instruments of assignment
or endorsement for security purposes, duly executed by Pledgor, and such other
instruments or documents as the Secured Party may request in writing in its
Permitted Discretion, in form and substance satisfactory to Secured Party, to
cause Secured Party, for its benefit and the benefit of the Lenders, to have a
good, valid and perfected continuing first priority pledge of and Lien on such
Collateral (free and clear of any Liens other than Permitted Liens (as defined
in each Loan Agreement)); provided, that so long as no Event of
Default shall have occurred and be continuing, Pledgor may retain for collection
in the Ordinary Course of Business any such Pledged Notes but shall mark all
Pledged Notes (excluding checks, drafts and similar instruments that are
customarily endorsed or presented for collection or deposit in the ordinary
course of business) with the following legend: “This Writing and the
obligations evidenced or secured hereby are subject to the security interest of
CapitalSource Finance LLC, as Agent, as secured party, for the benefit of
certain Lender Parties.” With respect to all other Collateral consisting of
Investment Property in which a security interest may be perfected by control
under the UCC, Pledgor shall, within ten (10) Business Days after Pledgor’s
acquisition of such Collateral, take such action as may be required to perfect
Secured Party’s security interest in such Collateral by control under the UCC
as a first priority security interest in such Collateral (free and clear of any
other Liens other than Permitted Liens (as defined in each Loan
Agreement).  At any time following the
occurrence and continuation of an Event of Default, at the option of Secured
Party, the Collateral or any part thereof may be registered in the name of
Secured Party, for its benefit and the benefit of the Lenders, or of its or
their nominees, and Pledgor covenants that, upon written demand by Secured
Party, Pledgor shall, and shall cause the Person in which such Collateral
evidences an ownership stake to, effect such registration.

 

(c)           Pledgor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming the Agent or its
designee as the secured party and Pledgor as the debtor as Agent may require
and including any other information with respect to Pledgor or otherwise as may
be required by the UCC of such jurisdiction as Agent may determine together
with amendments and continuations with respect thereto.

 

3

 

(d)           In the event that Pledgor fails to do so, Secured
Party shall have the right, but not the obligation, to pay any taxes or levies
on or relating to the Collateral and any costs to preserve the Collateral,
which payments shall be part of the Obligations.  No injury to, or loss or destruction of any of,
the Collateral or any Material Adverse Effect or Material Adverse Change shall
relieve Pledgor of any of the Secured Obligations.

 

(e)           Secured Party acknowledges that notwithstanding
Pledgor’s delivery of a stock certificate representing 72.99% of the outstanding
capital stock of Evolving Systems Networks India PVT, Ltd., and notwithstanding
anything to the contrary contained in this Agreement or any Loan Document,
Secured Party’s security interest and Lien extends only to securities
representing 65% of the aggregate voting power of the outstanding capital stock
of Evolving Systems Networks India PVT, Ltd., and Secured Party has no security
interest in or Lien on the remaining securities representing 35% of the aggregate
voting power of the shares of capital stock of Evolving Systems Networks India
PVT, Ltd. (a portion of which unencumbered shares are evidenced by the
certificate delivered to Secured Party).  
The Secured Party agrees to return to Pledgor the stock certificate(s)
representing the ownership interests in Evolving Systems Networks India PVT,
Ltd. as reasonably requested by Pledgor so long as Pledgor has delivered the
new stock certificate(s) of Evolving Systems Networks India PVT, Ltd.
representing 65% of Pledgor’s aggregate voting power of the ownership interests
in therein.

 

2.2.          Voting Rights, Dividends and Distributions.

 

(a)           So long as no Event of Default has occurred and
is continuing, subject to the terms of this Agreement (i) Pledgor shall be
entitled to exercise all voting and/or consensual rights and powers relating to
the Collateral; provided, however, that Pledgor will not be
entitled to exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Collateral or the rights
and remedies of the Agent or any of the Lenders under this Agreement, the Loan
Agreement or any other Loan Document or the ability of the Agent or any of the
Lenders to exercise the same and (ii) Pledgor shall be entitled to receive
and retain and to utilize in accordance with the Loan Agreement cash dividends
payable on the Collateral to the extent, and only to the extent, that such cash
dividends are permitted by, and otherwise paid in accordance with, the terms
and conditions of this Agreement, the Loan Agreement, the other Loan Documents
and applicable law.  All noncash
dividends, and all dividends paid or payable in cash or otherwise in connection
with a partial or total liquidation or dissolution, return of capital, capital
surplus or paid-in surplus, and all other distributions (other than dividends
and distributions referred to in the preceding sentence) made on or in respect
of the Collateral, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock or partnership interests of the issuer of any
Collateral or received in exchange for the Collateral or any part thereof, or
in redemption thereof, or as a result of any merger, amalgamation, arrangement,
consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by Pledgor, to the extent required to be paid to the Agent
pursuant to the terms of the Loan Agreement or the other Loan Documents, shall
not be commingled by Pledgor with any of its other funds or property but shall
be held separate and apart therefrom, shall be held in trust for the benefit of
the Agent and shall be forthwith delivered to the Agent in the same form as so
received (with any necessary endorsement).

 

(b)           Each party hereto shall execute and deliver (or
cause to be executed and delivered) to the other party such proxies, powers of
attorney, dividend orders and other instruments as such other party may request
in writing for the purpose of enabling it to exercise the voting and/or
consensual rights and powers that it is entitled to exercise pursuant to this
Agreement and/or to receive the dividends that it is authorized to receive and
retain pursuant to this Agreement.

 

4

 

(c)           Upon the occurrence and continuation of an Event
of Default, all rights of Pledgor to exercise voting and/or consensual rights
and powers and/or to receive dividends that Pledgor is entitled to exercise
and/or receive pursuant to this Section 2.2 shall cease immediately
upon notice by or on behalf of Secured Party to Pledgor, and all such rights
thereupon shall become vested solely and exclusively in Secured Party, for its
benefit and the benefit of the Lenders, automatically without any action by any
Person.  Pledgor hereby appoints Secured
Party, for its benefit and the benefit of the Lenders, its attorney-in-fact,
with full power of substitution, which appointment as attorney-in-fact is
irrevocable and coupled with an interest, to take all such actions upon or
after the occurrence and continuation of an Event of Default, whether in the
name of Secured Party, any Lender or Pledgor, as Secured Party may consider
necessary or desirable for the purpose of exercising such rights and receiving
such dividends.  Any dividends,
distributions in property, returns of capital and other distributions made on
or in respect of the Collateral, and any and all cash and other property received
in exchange therefor and/or redemption of any Collateral delivered to Pledgor
in violation of this Agreement shall be held in trust for the benefit of the
Secured Party, for its benefit and the benefit of the Lenders, and forthwith
shall be delivered to Secured Party, for its benefit and the benefit of the
Lenders.  Any and all money and other
property received by Secured Party pursuant to the provisions of this Section 2.2(c) shall
be retained by Secured Party, for its benefit and the benefit of the Lenders,
as part of the Collateral.

 

SECTION 3

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

3.1           Collateral.  Pledgor hereby represents and
warrants to Secured Party and Lenders as of the date hereof and as of the date
of each Advance under the UK Loan Agreement (which representations and
warranties shall survive the execution and delivery of this Agreement and the
making of the Loans under each Loan Agreement) as follows:  (a) Pledgor is, or, with respect to the
Collateral described in clauses (ii), (iii) and (iv) of the
definition of Collateral, will be, the direct record and beneficial owner of
each share, security and other interest that comprises the Collateral, and
Pledgor has and will have good, valid and marketable title thereto, free and
clear of all Liens other than those created by this Agreement or except as
permitted under the Loan Documents; (b) all of the Collateral under clause
(i) of the definition of Collateral has been, or, with respect to the
Collateral described in clauses (ii) and (iii) of the definition of
Collateral, will be, duly and validly issued, fully paid and nonassessable; (c) the
Collateral constitutes that percentage of the issued and outstanding capital
stock, equity securities and ownership interests of each Person in which such
Collateral represents an ownership interest (calculated on a fully diluted, as
converted basis) as set forth on Schedule 1.1; (d) the
Collateral is and will be duly and validly pledged to Secured Party, for its
benefit and the benefit of the Lenders, in accordance with applicable law, and
Secured Party, for its benefit and the benefit of the Lenders, has and will
have a good, valid and perfected first priority Lien on and security interest
in the Collateral and the proceeds thereof subject to no other Liens (except as
permitted under the Loan Documents), and no filing or other action will be
necessary to perfect or protect such Lien in any Collateral constituting
certificated securities other than delivery to Secured Party of certificates
representing such Collateral accompanied by a stock power duly executed by
Pledgor in blank; (e) except to the extent required by applicable law, the
obligations of Pledgor hereunder are not subordinated in any way to any other
obligation of Pledgor or to the rights of any other Person; and (f) except
as expressly permitted under the Loan Agreement, Pledgor will not consent to or
approve the issuance of (i) any additional shares of any class of capital
stock or other equity securities of any issuer of the Collateral described in
clauses (i), (ii) or (iii) of the definition of Collateral, (ii) any
securities convertible voluntarily by the holder thereof or automatically upon
the occurrence or nonoccurrence of any event or condition into, or exchangeable
for, any such shares or interests, or (iii) any warrants, options, rights,
or other commitments entitling any person to purchase or otherwise acquire any
such shares or interests.  Pledgor has
full legal authority and power to own the Collateral and to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereunder, and

 

5

 

Pledgor is under no legal
restriction, limitation or disability that would prevent any of the
foregoing.  No effective financing
statement relating to any of the Collateral is on file in any public office
except those on behalf of Secured Party for the benefit of itself and the
Lenders.

 

3.2.          Authorization.  The
execution, delivery and performance by Pledgor of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate actions on the part of Pledgor and
pursuant to all necessary consents required thereof.  This Agreement has been duly executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors’ rights
generally and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).  No approval, consent,
authorization of, filing registration or qualification with, or other action
by, Pledgor or any other Person (including, without limitation, any Person
whose securities constitute part of the Collateral) or Governmental Authority
that has not been obtained is or will be necessary to permit the valid
execution, delivery and performance of this Agreement by Pledgor or the
consummation of the transactions or creation of the Liens and security
interests contemplated hereby other than delivery of certificates representing
the Collateral (if any) to Secured Party and the filing of appropriate UCC
financing statements.

 

3.3.          No Conflicts.  The
execution, delivery and performance by Pledgor of this Agreement and the
consummation of the transactions contemplated hereby and the creation and
granting of the security interests and Liens contemplated hereby do not and
will not (1) conflict with or violate any provision of any applicable law,
statute, rule, regulation, ordinance or tariff or any order, injunction, writ
or decree of any Governmental Authority binding on or applicable to Pledgor or
any of its properties or assets; (2) conflict with, result in a breach of,
constitute a default of or an event of default under, or an event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in a conflict, breach, default or event of default under,
require any consent not obtained under, or result in or require the
acceleration of any indebtedness pursuant to, any indenture, agreement or other
instrument to which Pledgor is a party or by which it, or any of its properties
or assets are bound or subject in each case the effect of which would be or
have a Material Adverse Effect; (3) if applicable, conflict with or
violate any provision of the certificate of incorporation or formation or
by-laws or operating agreement of Pledgor or any Person whose securities
constitute part of the Collateral under clause (i), (ii) or (iii) of
the definition of Collateral or any agreement by and between Pledgor or any such
Person and its shareholders or equity owners or among any such shareholders or
equity owners (other than any such agreements among the equity owners or
shareholders of Pledgor with respect to the Capital Stock of Pledgor); or (4) result
in the creation or imposition of any Lien of any nature whatsoever upon any of
the properties or assets of Pledgor (except as contemplated herein).

 

3.4.          Non-Subordination. 
Except to the extent required by applicable law, the obligations of
Pledgor under this Agreement are not subordinated in any way to any other
obligation of Pledgor or to the rights of any other Person, and Pledgor is not
a party to or bound by any other agreement, document or instrument that
otherwise relates to the Secured Obligations or any of the Collateral (other
than the Loan Documents or as permitted by the Loan Documents).

 

3.5.          Litigation and Compliance; Other Agreements.

 

(a)           There is no action, suit, proceeding or
investigation pending or, to Pledgor’s knowledge, threatened (1) against the
Collateral that would reasonably be expected to have a Material Adverse Effect,
or (2) that questions or could reasonably be expected to prevent the
validity of this Agreement or the right or ability of Pledgor to enter into
this Agreement or to consummate the

 

6

 

transactions contemplated hereby.

 

3.6           [Intentionally Omitted].

 

3.7           Covenants.

 

(a)           Pledgor shall take all necessary and
appropriate actions to ensure that this Agreement and the Liens and pledges
created hereby are and remain enforceable against Pledgor in accordance with
their terms and that Pledgor complies with each of its obligations
hereunder.  Pledgor shall not (i) cause
or permit to be done, or enter into or make or become a party to any agreement,
arrangement or commitment to do or cause to be done, any of the things
prohibited by this Agreement or that would breach this Agreement, or (ii) enter
into or make or become a party to any agreement, document or instrument or
arrangement that would prevent Pledgor from complying herewith and/or
performing hereunder.

 

(b)           Pledgor hereby agrees to take or cause to be
taken promptly such further actions, obtain such consents and approvals and
duly execute and deliver or cause to be executed and delivered such further
agreements, assignments, instructions or documents Secured Party may request in
its Permitted Discretion with respect to or in order to fully effectuate the
purposes, terms and conditions of this Agreement and the consummation of the transactions
contemplated hereby, whether before, at or after the performance and/or
consummation of such transactions or the occurrence of a Default or Event of
Default, including, without limitation, any of the foregoing necessary or
required or requested by Secured Party in its Permitted Discretion to create,
perfect, maintain, preserve, continue, validate or otherwise protect, and from
time to time renew, Secured Party’s, for its benefit and the benefit of the
Lenders, perfected first priority Lien on and pledge of the Collateral.  Without limiting the foregoing, upon the
exercise by Secured Party or any Lender or any of its or their Affiliates or
agents of any right or remedy hereunder which requires any consent, approval or
registration with, consent, qualification or authorization by, any Person,
Pledgor shall execute and deliver, or cause (to the extent that it has the
legal right, power or authority to cause) the execution and delivery of, all
applications, certificates, instruments and other documents that Secured Party
or any Lender or its or their Affiliate or agents may be required to obtain for
such consent, approval, registration, qualification or authorization.  Pledgor hereby appoints Secured Party, for its
benefit and the benefit of the Lenders, its attorney-in-fact (without requiring
Secured Part to act as such), with full power of substitution, which
appointment as attorney-in-fact is irrevocable and coupled with an interest, to
take all such actions, whether in the name of Secured Party, for its benefit
and the benefit of the Lenders, or Pledgor, as Secured Party in its Permitted
Discretion may consider necessary with respect to the foregoing (but only to
the extent Pledgor fails to so execute and/or file any of the foregoing within
two (2) Business Days of Secured Party’s request or the time when Pledgor
is otherwise obligated to do so). 
Pledgor will pay all reasonable costs associated with respect to the
foregoing, including without limitation, the cost of filing any of the
foregoing in all public offices or other locations wherever Secured Party in
its Permitted Discretion deems filing to be necessary or desirable.

 

(c)           Pledgor (i) shall (A) maintain at all
times the pledge of the Collateral to Secured Party, for its benefit and the
benefit of the Lenders, and Secured Party’s, for its benefit and the benefit of
the Lenders, perfected first priority Lien on the Collateral; and (B) defend
the Collateral and Secured Party’s, for its benefit and the benefit of the
Lenders, perfected first priority Lien thereon and pledge thereof against all
claims and demands of all Persons at any time (except for Liens permitted under
the Loan Documents) and pay all reasonable costs and expenses (including,
without limitation, in-house

 

7

 

documentation
and diligence fees and legal expenses and reasonable attorneys’ fees and
expenses) in connection with such defense, which, at Secured Party’s
discretion, may be added to the Obligations, and (ii) shall not sell, lease,
transfer, pledge, encumber, restrict, assign or otherwise dispose of any of the
Collateral or any interest therein or create, incur, assume or suffer to exist
any Lien on the Collateral or any interest therein (except pursuant hereto or allowed
pursuant to the Loan Documents).

 

(d)           Pledgor shall, and shall cause each Person whose
securities constitute the Collateral to, (i) keep true, complete and
accurate records with respect to the Collateral, (ii) except as permitted
by the Loan Documents, not take or permit to be taken any action in connection
with the Collateral or otherwise which would impair in any material respect (as
determined by Secured Party in its Permitted Discretion) the value of the
Collateral, taken as a whole, or any material portion thereof or the value of
the interests or rights of Pledgor or Secured Party, for its benefit and the
benefit of the Lenders, therein, including, without limitation, any amendment
to or modification of the certificate of incorporation (or similar charter documents)
or bylaws (or similar documents) of Pledgor or such Person that is not
permitted by the Loan Documents.

 

(e)           Pledgor shall notify Agent at least thirty (30)
Days before any change of its state of incorporation, corporate name, federal
tax identification number or address.

 

3.8           No Third Party Beneficiary.  No
rights are intended to be created under this Agreement for the benefit of any
third party donee, creditor or incidental beneficiary of Pledgor.

 

SECTION 4

EVENTS OF DEFAULT

 

The occurrence of any one or
more of the following shall constitute an “Event of Default” under this
Agreement: (a) Pledgor shall be in violation, breach or default of, or
shall fail to perform, observe or comply with any covenant, obligation or
agreement set forth in, this Agreement and such failure shall not be cured
within the applicable period, if any; provided that, with respect to the
covenants set forth herein (other than Sections 3.7(c)(i)(A) and 3.7(c)(ii) for
which there shall be no cure periods), there shall be a 30 calendar day cure
period commencing from the earlier of (i) Receipt (as defined herein) by
Pledgor of written notice of such breach, default, violation or failure, and (ii) the
time at which any authorized officer of Pledgor knew or became aware of such failure,
violation, breach or default; (b) any representation, statement or
warranty made or deemed made by Pledgor in this Agreement shall not be true and
correct in all material respects or shall have been false or misleading in any
material respect on the date when made or deemed to have been made (except to
the extent already qualified by materiality, in which case it shall be true and
correct in all respects and shall not be false or misleading in any respect)
except those made as of a specific date; (c) any Event of Default (as
defined in the Loan Agreement) shall occur and be continuing past any cure
period and shall not have been waived in writing or cured within the applicable
cure period; or (d) if prior to termination of this Agreement pursuant to Section 6.11
hereof, this Agreement shall cease to be in full force and effect or any Lien
created hereunder shall cease to constitute a valid perfected first priority
Lien on the Collateral or Secured Party, for its benefit and the benefit of the
Lenders, otherwise ceases to have a valid perfected first priority Lien on and
security interest in any of the Collateral, except as otherwise permitted by
the terms of this Agreement or the other Loan Documents.

 

8

 

SECTION 5

RIGHTS AND REMEDIES

 

5.1           Rights and Remedies in Loan Documents.

 

(a)           In addition to the provisions set forth in this
Agreement, upon the occurrence and continuation of an Event of Default, Secured
Party, for its benefit and the benefit of the Lenders, shall have the right to
exercise any and all rights, powers, options and remedies provided for in any
Loan Document and/or herein, under the UCC or at law or in equity, including,
without limitation, to the fullest extent permitted by applicable law, the
right (in its sole and absolute discretion) to, which Pledgor agrees to be
commercially reasonable, (i) apply the Collateral to reduce the Secured
Obligations, (ii) foreclose the Liens created hereunder and under the Loan
Documents, (iii) realize upon, take possession of and/or sell any
Collateral, with or without judicial process, at public or private sales or at
any broker’s board or on any securities exchange or otherwise, (iv) exercise
all rights and powers with respect to the Collateral as Pledgor might exercise
in its absolute discretion, including, without limitation, to (1) relinquish
or abandon any Collateral or any Lien thereon, (2) to vote all or any part
of the Collateral and otherwise act with respect thereto as though it were the
outright owner thereof, (3) to settle, adjust, compromise and arrange all
claims and demands whatsoever in relation to all or any part of the Collateral,
(4) to execute all such contracts, agreements, deeds, documents and
instruments, to bring, defend and abandon all such actions, suits and
proceedings, and to take all actions in relation to all or any party of the
Collateral, and/or (5) to appoint managers, sub-agents, and officers for
any of the purposes mentioned in the foregoing provisions of this Section and
to dismiss the same, (v) collect and send notices regarding the
Collateral, with or without judicial process, (vi) by its own means or
with judicial assistance, enter any premises at which Collateral is located, or
render any of the foregoing unusable or dispose of the Collateral on such
premises without any liability for rent, storage, utilities, or other sums, and
Pledgor shall not resist or interfere with such action, (vii) at any
Credit Party’s or Pledgor’s expense, require that all or any part of the Collateral
be assembled and made available to Secured Party at any place designated by
Secured Party in its Permitted Discretion, and/or (viii) relinquish or
abandon any Collateral or any Lien thereon.  
Agent shall have the right in its sole discretion to determine which
rights and/or remedies Agent or any other Lender may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent’s or any Lender’s rights and remedies under this
Agreement, at law or in equity.

 

(b)           Secured Party, in its sole discretion, shall
have the right, but not the obligation, at any time that any Credit Party or
Pledgor fails to do so, and from time to time, without prior notice, as
applicable, to discharge taxes, levies or Liens on any of the Collateral that
are in violation of any Loan Document unless Credit Party or Pledgor, as
applicable, is in good faith with due diligence by appropriate proceedings
contesting those items.  Such expenses
and advances shall be added to the Obligations until reimbursed to Secured
Party and shall be secured by the Collateral, and such payments by Secured
Party shall not be construed as a waiver by Secured Party or Lenders of any
Event of Default or any other rights or remedies of Secured Party and Lenders.

 

(c)           Pledgor agrees that notice received by it at
least ten (10) calendar days before the time of any intended public sale,
or the time after which any private sale or other disposition of Collateral is
to be made, shall be deemed to be reasonable notice of such sale or other
disposition.  If permitted by applicable
law, any perishable Collateral which threatens to speedily decline in value or
which is sold on a recognized market may be sold immediately by Secured Party
without prior notice to Pledgor.  At any
sale or disposition of Collateral, Secured Party may (to the extent permitted
by applicable law) (i) purchase all or any part thereof free from any
right of redemption by Pledgor or any Credit Party or other Person guaranteeing
the Obligations, which right is hereby waived and released, (ii) restrict
the number of prospective bidders or purchasers and/or further restrict such
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing for their own account, for investment and not with a view
to the distribution or resale of the Collateral, and (iii) otherwise
require that such sale be conducted subject to restrictions as to such other
matters as Secured Party may deem necessary in order that such sale may be
effected in such manner as to comply with all applicable state and federal
securities and other laws.  The Agent
shall not be obligated to make any sale or other disposition of any Collateral
if it shall

 

9

 

determine not to do so, regardless of the fact that
notice of sale or other disposition of such Collateral shall have been given.
The Agent may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned.  For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof.  The Agent shall be free to
carry out such sale pursuant to such agreement and Pledgor shall not be
entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full.

 

(d)           Pledgor hereby acknowledges that (i) notwithstanding
that a higher price might be obtained for the Collateral at a public sale than
at a private sale or sales, the making of a public sale of the Collateral may
be subject to registration requirements under applicable securities laws and
other legal restrictions, compliance with which would require such actions on
the part of Pledgor, would entail such expenses and would subject Secured
Party, any Lender, any underwriter through whom the Collateral may be sold or
any controlling person of any of the foregoing to such liabilities, as would
make a public sale of the Collateral impractical, and accordingly, Pledgor
hereby agrees that private sales made by Secured Party or any Lender in good
faith in accordance with the provisions of this Agreement may be at prices and
on other terms less favorable to the seller than if the Collateral were sold at
a public sale, and that Secured Party and Lenders shall not have any obligation
to take any steps in order to permit the Collateral to be sold at a public
sale, such a private sale being considered or deemed to be a sale in a
commercially reasonable manner; (ii) any private sale of the Collateral
may be subject to compliance with federal and state securities and/or other
laws, and (iii) Secured Party is hereby authorized to comply with any
limitation or restriction in connection with such sale that may be necessary in
order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser(s) by any Governmental Authority or officer
or court.

 

5.2           Application of Proceeds. 
In addition to any other rights, options and remedies Secured Party and
Lenders have under the Loan Documents, the UCC, at law or in equity, the
proceeds of any collection, recovery, receipt, appropriation, realization,
transfer, exchange, disposition or sale of the Collateral as aforesaid shall be
applied in accordance with the terms of each Loan Agreement.

 

5.3           Rights of Lender to Appoint Receiver. 
Without limiting and in addition to any other rights, options and
remedies Secured Party and Lenders have hereunder or under the Loan Documents,
the UCC, at law or in equity, upon the occurrence and continuation of an Event
of Default, Secured Party shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by Secured
Party to enforce its rights and remedies in order to manage, protect and
preserve the Collateral and continue the operation of the business of Borrower
and/or Pledgor and to collect all revenues and profits thereof and apply the
same to the payment of all expenses and other charges of such receivership
including the compensation of the receiver and to the payments as aforesaid
until a sale or other disposition of such Collateral shall be finally made and
consummated.

 

5.4           Attorney in Fact.  Pledgor
hereby irrevocably appoints Secured Party, for its benefit and the benefit of
the Lenders, as its attorney in fact to take any action Lender deems necessary
upon the occurrence and continuation of an Event of Default to perfect, protect
and realize upon its Lien and first priority security interest in the
Collateral, for its benefit and the benefit of the Lenders, including the
execution and delivery of any and all documents or instruments related to the
Collateral in Pledgor’s name, or otherwise to effect fully the purpose, terms
and conditions of this Agreement and the other Loan Documents, and said
appointment shall create in Secured Party, for its benefit and the benefit of
the Lenders, a power coupled with an interest.

 

10

 

SECTION 6

MISCELLANEOUS

 

6.1           No Waiver of Defaults; Waiver.  No
course of action or dealing, renewal, waiver, release or extension of any
provision of any Loan Document or this Agreement, or single or partial exercise
of any such provision, or delay, failure or omission on Secured Party’s or
Lenders’ part in enforcing any such provision shall affect the liability of
Pledgor or operate as a waiver of such provision or preclude any other or
further exercise of such provision.  No
waiver by Secured Party or any Lender of any one or more defaults by any other
party in the performance of any of the provisions of any Loan Document or this
Agreement shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver.  Notwithstanding any other provision of any
Loan Document or this Agreement, by completing the Closing and/or by making
Advances and/or funding the Loan, neither Secured Party nor any Lender waives
any breach of any representation or warranty under any Loan Document or this
Agreement, and all of Secured Party’s and Lenders’ claims and rights resulting
therefrom are specifically reserved. 
Except as expressly provided for herein, Pledgor hereby waives setoff,
counterclaim, demand, presentment, protest, all defenses with respect to any
and all instruments and all notices and demands of any description (including,
without limitation, notice of acceptance hereof, notice of any Loan made,
credit extended, collateral received or delivered) and the pleading of any
statute of limitations as a defense to any demand under any Loan Document, it
being the intention that Pledgor shall remain liable under this Agreement and the
Loan Documents until the full amount of all Secured Obligations shall have been
indefeasibly paid in cash (other than indemnity obligations under the Loan
Documents not then due and payable for any events of claims that would give
rise thereto that are not then pending) and performed and satisfied in full and
any commitments to extend credit under the Loan Agreement are terminated,
notwithstanding any act, omission or anything else which might otherwise
operate as a legal or equitable discharge of Pledgor.  Pledgor hereby waives any and all defenses
and counterclaims it may have or could interpose in any action or procedure
brought by Secured Party or any Lender to obtain an order of court recognizing
the assignment of, or Lien of Secured Party, for its benefit and the benefit of
the Lenders, in and to, any Collateral.

 

6.2           Entire Agreement.  This
Agreement and the other Loan Documents to which Pledgor is a party constitute
the entire agreement between Pledgor and Secured Party and Lenders with respect
to the subject matter hereof and thereof, and supersede all prior agreements
and understandings, if any, relating to the subject matter hereof or
thereof.  Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have
no force and effect unless in writing signed by the parties hereto.  Each party hereto acknowledges that it has
been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.

 

6.3           Amendment.  No provision of this Agreement
may be changed, modified, amended, restated, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing or in any other
manner other than by a written agreement signed by Secured Party and
Pledgor.  Pledgor acknowledges that it
has been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.

 

6.4           Notices.  Any notice or request under
this Agreement shall be given to any party hereto at

 

11

 

such party’s address set forth beneath its signature
on the signature page hereto, or at such other address as such party may
hereafter specify in a notice given in the manner required under this Section 6.4.  Any such notice or request shall be given
only by, and shall be deemed to have been received upon (each, a “Receipt”):  (a) registered
or certified mail, return receipt requested, on the date on which such received
as indicated in such return receipt, (b) delivery by a nationally
recognized overnight courier, one (1) 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.

 

6.5           Governing Law; Jurisdiction; Construction.  This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without giving effect to its choice of law
provisions.  Any judicial proceeding
against Pledgor with respect to any of the Secured Obligations, any of the
Collateral or this Agreement may be brought in any federal or state court of
competent jurisdiction located in Montgomery County in the State of Maryland or
the Borough of Manhattan in the State of New York.  By execution and delivery of this Agreement,
Pledgor (a) accepts the non-exclusive jurisdiction of the aforesaid courts
and irrevocably agrees to be bound by any judgment rendered thereby, (b) waives
personal service of process, (c) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to Section 6.4 hereof, and (d) waives any objection to
jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction, venue, convenience or forum non conveniens. 
Nothing shall affect the right of Secured Party or any Lender to serve
process in any manner permitted by law or shall limit the right of Secured
Party or any Lender to bring proceedings against Pledgor in the courts of any
other jurisdiction having jurisdiction. 
Any judicial proceedings against Secured Party or any Lender, involving,
directly or indirectly, the Secured Obligations, Collateral or this Agreement shall
be brought only in a federal or state court located in Montgomery County in the
State of Maryland or the Borough of Manhattan in the State of New York.  Pledgor acknowledges that it participated in
the negotiation and drafting of this Agreement and that, accordingly, it shall
not move or petition a court construing this Agreement to construe it more
stringently against one party than against any other.

 

6.6           Severability; Captions; Counterparts;
Facsimile Signature.  If any provision of this Agreement is
adjudicated to be invalid under applicable laws or regulations, such provision
shall be inapplicable to the extent of such invalidity without affecting the
validity or enforceability of the remainder of this Agreement which shall be
given effect so far as possible.  The
captions in this Agreement are intended for convenience and reference only and
shall not affect the meaning or interpretation of this Agreement.  This Agreement may be executed in one or more
counterparts (which taken together, as applicable, shall constitute one and the
same instrument) and by facsimile transmission, which facsimile signatures
shall be considered original executed counterparts.  Each party to this Agreement agrees that it
will be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.

 

6.7           Successors and Assigns.  This
Agreement (a) shall inure to the benefit of, and, except as provided in
the Loan Agreement, may be enforced by, Secured Party and Lenders, Transferees,
Participants (to the extent expressly provided in the Loan Agreement) and all
future holders of the Notes, if any, any of the Secured Obligations or any of the
Collateral and each of their respective successors and permitted assigns, and (b) shall
be binding upon and enforceable against Pledgor and Pledgor’s permitted assigns
and successors.  Pledgor shall not
assign, delegate or transfer this Agreement or any of its rights or obligations
thereunder without the prior written consent of Secured Party.  This Agreement shall be

 

12

 

binding upon Pledgor and its respective heirs,
administrators, executors, successors and assigns.  Nothing contained in this Agreement or any
other Loan Document shall be construed as a delegation to Secured Party or any
Lender of Pledgor’s duty of performance. 
PLEDGOR ACKNOWLEDGES AND AGREES THAT SECURED PARTY AND LENDERS AT ANY
TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND REISSUE (WITHOUT ANY
SUBSTANTIVE CHANGES OTHER THAN THOSE RESULTING FROM SUCH DIVISION) THE NOTES,
AND/OR (II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT, ANY NOTE, THE
OBLIGATIONS, THE COLLATERAL AND/OR THE LOAN DOCUMENTS TO ONE OR MORE
TRANSFEREES IN EACH CASE ON THE TERMS AND CONDITIONS PROVIDED IN THE LOAN
AGREEMENT.  The terms “Secured Party” and
“Lenders” in this Agreement includes Transferees and Participants and Secured
Party’s successors and assigns, each of which shall, except as provided in the
Loan Agreement, have all rights and benefits of Secured Party or Lender
hereunder.  Except as provided in the
Loan Agreement, each Transferee and Participant shall have all of the rights
and benefits with respect to the Secured Obligations, Notes, Collateral, this
Agreement and/or Loan Documents held by it as fully as if the original holder
thereof.  Notwithstanding any other
provision of this Agreement or any Loan Document, Secured Party and Lenders may
disclose to any Transferee or Participant all information, reports, financial
statements, certificates and documents obtained under any provision of this
Agreement, provided, that Transferees and Participants shall be subject
to the confidentiality provisions contained in each Loan Agreement that are
applicable to Secured Party and Lenders.

 

6.8           Waiver of Jury Trial.  EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION ARISING HEREUNDER OR IN ANY WAY CONNECTED WITH OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THE
TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS
OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.

 

6.9           Expenses.  Pledgor shall pay to Secured
Party and Lenders all reasonable costs and expenses incurred by Secured Party,
Lenders and/or their Affiliates and reasonable attorneys’ fees and expenses (a) in
any effort to enforce this Agreement against Pledgor, (b) in defending or
prosecuting any actions, claims or proceedings by or against Pledgor arising
out of or relating to this Agreement and/or the Collateral (except to the
extent such action, claim or proceeding is determined in a final, nonappealable
judgment by a court of competent jurisdiction binding on such Secured Party,
Lender or Affiliate to have arisen as a result of the gross negligence or
willful misconduct of such party), (c) arising in any way out of the
taking or refraining from taking by Secured Party or any Lender of any action
requested by Pledgor, and/or (d) in connection with any modification,
restatement, supplement, amendment, waiver or extension of this Agreement
and/or any related agreement, document or instrument requested by Pledgor.  If Secured Party or any Lender or any of its
Affiliates uses in-house counsel for any of the foregoing, Pledgor expressly
agrees that its obligations hereunder include reasonable cost of time spent by
such in-house counsel.

 

13

 

6.10         Rights and Remedies. 
Secured Party, for its benefit and the benefit of the Lenders, shall
have the right in its sole discretion to determine which rights and/or remedies
Secured Party or Lenders may at any time pursue, relinquish, subordinate or modify,
and such determination will not in any way modify or affect any of Secured
Party’s or Lenders’ rights, Liens or remedies under any Loan Document or this
Agreement, applicable law or equity.  The
enumeration of any rights and remedies in this Agreement or any Loan Document
is not intended to be exhaustive, and all rights and remedies of Secured Party
described in this Agreement and the Loan Documents are cumulative and are not
alternative to or exclusive of any other rights or remedies which Secured Party
otherwise may have.  The partial or
complete exercise of any right or remedy shall not preclude any other further
exercise of such or any other right or remedy.

 

6.11         Termination; Release of Collateral.  This
Agreement shall continue in full force and effect until full performance and
indefeasible payment in full in cash of all Secured Obligations (other than
indemnity obligations under the Loan Documents not then due and payable for any
events of claims that would give rise thereto that are not then pending) and
termination of any commitments to extend credit under any of the Loan
Documents.  Notwithstanding any other
provision of this Agreement or any Loan Document, no termination of this
Agreement shall affect Secured Party’s or Lenders’ rights or any of the Secured
Obligations existing as of the effective date of such termination until the
Secured Obligations have been fully performed and indefeasibly paid in cash in
full (other than indemnity obligations under the Loan Documents not then due
and payable for any events of claims that would give rise thereto that are not
then pending) and Pledgor shall have executed and delivered releases in favor
of Agent and Lenders in form and substance satisfactory to Agent, in its
Permitted Discretion (provided, however, that such release may exclude claims
filed by Pledgor against Secured Party or any Lender prior to the payoff
contemplated in this Section 6.11 to the extent arising out of the
gross negligence, willful misconduct or fraud of Secured Party or any Lender).  The Liens granted to Secured Party, for its
benefit and the benefit of the Lenders, hereunder and any financing statements
filed pursuant hereto and the rights and powers of Secured Party and Lenders
hereunder shall continue in full force and effect until all of the Secured
Obligations have been fully performed and indefeasibly paid in full in cash
(other than indemnity obligations under the Loan Documents not then due and
payable for any events of claims that would give rise thereto that are not then
pending) and Pledgor shall have executed and delivered releases in favor of
Agent and Lenders in form and substance satisfactory to Agent, in its Permitted
Discretion.  Subject to Section 12.3
of the Loan Agreement, promptly following full performance and satisfaction and
indefeasible payment in full in cash of all Secured Obligations (other than
indemnity obligations under the Loan Documents not then due and payable for any
events of claims that would give rise thereto that are not then pending) and the
termination of any commitments to extend credit under any Loan Documents, the
Liens created hereby shall terminate and Secured Party and Lenders shall
execute and deliver such documents, at Pledgor’s expense, as are necessary to
release their Liens in the Collateral and shall return the Collateral to
Pledgor; provided, however, that the parties agree that,
notwithstanding any such termination or release or the execution, delivery or
filing of any such documents or the return of any Collateral, if and to the
extent that any such payment made or received with respect to the Obligations
is subsequently invalidated, determined to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other Person under any Debtor Relief Law, common law or
equitable cause or any other law, then the Obligations intended to be satisfied
by such payment shall be revived and shall continue as if such payment had not
been received by Agent or any Lender and the Liens created hereby shall be
revived automatically without any action on the part of any party hereto and
shall continue as if such payment had not been received by Agent or any
Lender.   Secured Party and each Lender
shall not be deemed to have made any representation or warranty with

 

14

 

respect to any Collateral so delivered except that
such Collateral is free and clear, on the date of such delivery, of any and all
Liens arising from its own acts.

 

6.12         Approvals and Duties. 
Secured Party and Lenders shall have no responsibility for or obligation
or duty with respect to any of the Collateral (other than the duty of
reasonable care with respect to the safekeeping of such Collateral in their
custody) 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.

 

6.13         Survival.  It is the express intention and
agreement of the parties hereto that all covenants, representations, warranties
and waivers and indemnities made by Pledgor herein shall survive the execution,
delivery and termination of this Agreement until all Obligations are performed
in full and indefeasibly paid in full in cash and any commitments to extend
credit under any of the Loan Documents are terminated.

 

[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]

 

15

 

IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Pledge
Agreement as of the date first written above.

 

	
   

  	
  CAPITALSOURCE FINANCE
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven A. Museles

  	
   

  
	
   

  	
  Name:

  	
  Steven A. Museles

  
	
   

  	
  Its: Senior Vice President

  
	
   

  	
   

  
	
   

  	
  4445 Willard Avenue, 12th
  Floor

  
	
   

  	
  Chevy Chase, MD 20815

  
	
   

  	
  Attention: Corporate
  Finance Group, Portfolio Manager

  
	
   

  	
  Telephone:

  	
  (301) 841-2700

  
	
   

  	
  FAX:

  	
  (301) 841-2313

  
	
   

  	
  E-Mail:

  	
  sladd@capitalsource.com

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Brian R. Ervine

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Its: Executive Vice President,
  Chief Financial &

  Administrative Officer

  
	
   

  	
  9777 Pyramid Court, Suite 100

  
	
   

  	
  Englewood, Colorado 80112

  
	
   

  	
  Attention:

  	
  Anita T. Moseley, General
  Counsel

  
	
   

  	
  Telephone:

  	
  (303) 802-2599

  
	
   

  	
  FAX:

  	
  (303) 802-1138

  
	
   

  	
  E-Mail:

  	
  atm@evolving.com

  
						

 

 

Pledge Agreement

 

Schedule 1.1

 

	
  Name of Entity

  	
   

  	
  Class or Series

  of Units

  	
   

  	
  Number of

  Units

  	
   

  	
  Percentage of

  Ownership

  	
   

  	
  Certificate

  Representing

  Such Units

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telecom Software
  Enterprises, LLC

  	
   

  	
  Membership Interests

  	
   

  	
  The Membership Interest is
  uncertificated

  	
   

  	
  100%

  	
   

  	
  The Membership Interest is
  uncertificated

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolving Systems Holdings, Inc.

  	
   

  	
  Common Stock

  	
   

  	
  100 shares

  	
   

  	
  100%

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolving Systems Networks
  India PVT Ltd.

  	
   

  	
  Equity Shares

  	
   

  	
  370,184 shares

  	
   

  	
  100%

  (only 65% pledged pursuant to this Agreement)

  	
   

  	
  001 (9,998 shares),

  002 (1 share)*,

  003 (1 share)*,

  004 (90,000

  shares) and 006

  (270,184 shares)**

  

 

* Certificates Numbers 002
and 003 are held by N. Madhusudan Reddy, a director of Evolving Systems
Networks India PVT Ltd, as the nominee of Evolving Systems, Inc.

 

** Only 65% of the
outstanding shares of Evolving Systems Networks India PVT, Ltd. are pledged to
Secured Party pursuant to this Agreement. 
Notwithstanding the fact that certificate no. 006 represents more than
65% of the outstanding shares of Evolving Systems Networks India PVT, Ltd.,
Secured Party’s security interest and Lien shall extend only to 65% of such
outstanding shares.

 

 

Pledge Agreement

 

Schedule 1.2

 

Initial Pledged Notes

 

None.Exhibit 10.1(d)

 

ACKNOWLEDGMENT
OF

INTELLECTUAL
PROPERTY COLLATERAL LIEN

 

This Acknowledgment of Intellectual Property
Collateral Lien (this “Acknowledgment”) is dated as of November 14,
2005, by each of Evolving Systems, Inc., a Delaware corporation (“ESI”), Telecom Software Enterprises, LLC, a Colorado limited
liability company (“TSE”) and
Evolving Systems Holdings, Inc. (“ESH,” and
together with ESI and TSE, individually and collectively, the “Grantor”), in favor of CapitalSource Finance LLC, a Delaware limited
liability company, as Agent for the Lenders (as defined below) under the Loan
Agreements (as defined below) (in such capacities, “Secured
Party”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to (i) that certain Credit
Agreement (as the same exists and may be amended, restated, supplemented,
extended, renewed, replaced or otherwise modified from time to time, the “US Loan Agreement”), dated as of the date hereof, among
Grantor, the other Credit Parties named therein, Secured Party and the Lenders named therein (the “US Lenders”) and (ii) that certain Revolving Facility
Agreement (as the same exists and may be amended, restated, supplemented,
extended, renewed, replaced or otherwise modified from time to time, the “UK Loan Agreement,” and together with the US Loan Agreement,
the “Loan Agreements”), dated
as of the date hereof, among Evolving Systems Ltd., Evolving Systems Holdings
Ltd, the other Credit Parties named therein, Secured Party, as Agent, and the Lenders named
therein (the “UK Lenders,” and together with the
US Lenders, the “Lenders”), the Lenders have agreed
to provide loans to each of the Borrowers under the Loan Agreements; and

 

WHEREAS, pursuant to the terms of the Security
Agreement (as defined in the Loan Agreement), Grantor granted to Secured Party,
for itself and the benefit of the Lenders, certain liens on the Collateral to
secure its Obligations (as defined in the Security Agreement) under the Loan
Agreement and the Guaranty (as defined in the Security Agreement); and

 

WHEREAS, pursuant to the terms of the Security
Agreement, Grantor is required to execute and deliver this Acknowledgment in
favor of Secured Party, for itself and the benefit of the Lenders;

 

NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to induce Secured Party and Lenders to enter into the
Loan Documents and to make the loans thereunder, Grantor hereby agrees with
Secured Party as follows:

 

Section 1.              Defined Terms. 
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Security Agreement or, to the extent the
same are used or defined therein, the meanings provided in Article 9 of
the UCC in effect on the date hereof. 
Whenever the context so requires, each reference to gender includes the
masculine and feminine, the singular number includes the plural and vice
versa.  This Acknowledgment shall mean
such agreement as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time to time.  Unless otherwise specified, all accounting
terms not defined in the Loan Documents shall have the meanings given to such
terms in and shall be interpreted in accordance with GAAP.

 

 

References in this
Acknowledgment to any Person shall include such Person and its successors and
permitted assigns.

 

Section 2.              Reaffirmation of Grant of
Security Interest in Intellectual Property Collateral. 
Grantor, as collateral security for the full, prompt and complete
payment and performance when due (whether at stated maturity, by acceleration
or otherwise) of the Obligations of Grantor, hereby reaffirms its grant to
Secured Party, for itself and the benefit of the Lenders, of a first priority
security interest in the Collateral, and further collaterally assigns, conveys,
mortgages, pledges, hypothecates and transfers to Secured Party, for itself and
the benefit of the Lenders, and grants to Secured Party, for itself and the
benefit of the Lenders, a lien on and security interest in all of its right,
title and interest in, to and under the following Collateral of Grantor (herein
referred to as “Intellectual
Property Collateral”):

 

(a)           all of its owned Trademarks and any
Trademark Licenses to which it is a party, including those referred to on Schedule I
hereto;

 

(i)            all renewals, reissues, continuations or extensions of
the foregoing;

 

(ii)           all goodwill of the business connected with the use
of, and symbolized by, each Trademark and each Trademark License;

 

(iii)          all Proceeds of the foregoing, including any claim by
Grantor against third parties for past, present, future (i) infringement
or dilution of any Trademark or Trademark licensed under any Trademark License
or (ii) injury to the goodwill associated with any Trademark or any
Trademark licensed under any Trademark License;

 

(b)           all
of its Copyrights and any Copyright Licenses to which it is a party, including
those referred to on Schedule II
hereto;

 

(i)            all
renewals, reissues, continuations or extensions of the foregoing; and

 

(ii)           all
Proceeds of the foregoing, including any claim by Grantor against third parties
for past, present, future infringement or dilution of any Copyright or
Copyright licensed under any Copyright License; and

 

(c)           all
of its Patents and any Patent Licenses to which it is a party, including those
referred to on Schedule III
hereto;

 

(i)            all
renewals, reissues, continuations or extensions of the foregoing; and

 

(ii)           all
Proceeds of the foregoing, including any claim by Grantor against third parties
for past, present or future infringement or dilution of any Patent or any
Patent licensed under any Patent License.

 

Section 3.              Acknowledgment. 
The security interests reaffirmed herein are granted in conjunction with
the security interest granted to Secured Party, for itself and the benefit of
the Lenders, pursuant to the Security Agreement and Grantor hereby acknowledges
and affirms that the rights and remedies of Secured Party and Lenders with
respect to the security interest in the Intellectual Property Collateral made
and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein

 

2

 

as if fully set forth
herein.  To the extent that there is any
conflict or inconsistency between this Acknowledgment and the Security
Agreement, the terms and conditions of the Security Agreement shall govern.

 

IN WITNESS WHEREOF, Grantor has caused this Acknowledgment
of Intellectual Property Collateral Lien to be executed and delivered by its
duly authorized offer as of the date first set forth above.

 

 

	
  EVOLVING SYSTEMS, INC., as a Grantor

  
	
   

  
	
   

  
	
  By:

  	
  /s/Brian R. Ervine

  	
   

  
	
  Name: Brian R. Ervine

  
	
  Title: Executive Vice President, Chief Financial and Administrative
  Officer

  
	
   

  
	
  TELECOM SOFTWARE ENTERPRISES, LLC, as a Grantor

  
	
   

  
	
  By:

  	
  /s/Brian R. Ervine

  	
   

  
	
  Name: Brian R. Ervine

  
	
  Title: Executive Vice President, Chief Financial and Administrative
  Offic

  
	
   

  
	
  EVOLVING SYSTEMS HOLDINGS, INC., as a Grantor

  
	
   

  
	
   

  
	
  By:

  	
  /s/Brian R. Ervine

  	
   

  
	
  Name: Brian R. Ervine

  
	
  Title: Executive Vice President, Chief Financial and Administrative
  Offic

  
	
   

  
	
   

  
	
  Accepted and Agreed:

  
	
   

  
	
  CAPITALSOURCE FINANCE LLC, as Secured Party

  
	
   

  
	
   

  
	
  By:

  	
  /s/Steven A. Museles

  	
   

  
	
   

  	
  Name: Steven A. Museles

  
	
   

  	
  Title: Senior Vice President

  
					

 

3

 

SCHEDULE I

to

ACKNOWLEDGMENT OF INTELLECTUAL PROPERTY LIEN

TRADEMARK REGISTRATIONS

 

A.            REGISTERED TRADEMARKS

 

Including Mark Reg. No. and Date

 

	
  Type of

  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Number

  	
   

  	
  Holder

  	
   

  	
  Date

  Granted

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Service Mark

  	
   

  	
  United States

  	
   

  	
  2,197,486

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Oct. 20, 1998

  	
   

  	
  Evolving Systems

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  United States

  	
   

  	
  2,355,550

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  June 6, 2000

  	
   

  	
  Evolving Systems

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  United States

  	
   

  	
  2,357,983

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  June 13, 2000

  	
   

  	
  Evolving Systems Logo (design)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  United States

  	
   

  	
  2,196,447

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Oct. 13, 1998

  	
   

  	
  OrderPath

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  United States

  	
   

  	
  2,510,765

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Nov. 20, 2001

  	
   

  	
  NumberManager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  United States

  	
   

  	
  2,673,290

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Jan. 7, 2003

  	
   

  	
  NumeriTrack

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark and Service
  Mark

  	
   

  	
  United States

  	
   

  	
  2,388,101

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Sept. 19, 2000

  	
   

  	
  What the World of
  Telecom is Coming to

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark Supplemental Register

  	
   

  	
  United States

  	
   

  	
  1,836,474

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  May 10, 1994

  	
   

  	
  Evolving Systems

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  United States

  	
   

  	
  2,930,141

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  March 8, 2005

  	
   

  	
  ServiceXpress

  

 

4

 

	
  Trademark

  	
   

  	
  Canada

  	
   

  	
  TMA0530757

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Aug. 3, 2000

  	
   

  	
  EVOLVING SYSTEMS and Design

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Canada

  	
   

  	
  TMA0530911

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Aug. 9, 2000

  	
   

  	
  EVOLVING SYSTEMS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Canada

  	
   

  	
  TMA0530826

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Aug. 8, 2000

  	
   

  	
  NODEMASTER

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Canada

  	
   

  	
  TMA0530777

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Aug. 7, 2000

  	
   

  	
  NUMBERMANAGER

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Canada

  	
   

  	
  TMA0530912

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Aug. 9, 2000

  	
   

  	
  ORDERPATH

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  Canada

  	
   

  	
  TMA0530778

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Aug. 7, 2000

  	
   

  	
  WHAT THE WORLD OF TELECOM
  IS COMING TO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  European Community

  	
   

  	
  2350692

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Sept. 16, 2002

  	
   

  	
  OmniPresence Server

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  State of Colorado

  	
   

  	
  19991083946

  	
   

  	
  Telecom Software
  Enterprises, LLC

  	
   

  	
  May 3, 1999

  	
   

  	
  ServiceLink

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trademark

  	
   

  	
  State of Colorado

  	
   

  	
  19991083945

  	
   

  	
  Telecom Software Enterprises,
  LLC

  	
   

  	
  May 3, 1999

  	
   

  	
  LNP WebLink

  

 

B.            TRADEMARK APPLICATIONS

 

None

 

C.            TRADEMARK LICENSES

 

None.

 

D.            LIST
OF URLS/DOMAIN NAMES:

 

evolving.com

evolvinglearning.com

telecomse.com

 

5

 

SCHEDULE II

to

ACKNOWLEDGMENT OF INTELLECTUAL PROPERTY LIEN

COPYRIGHT REGISTRATIONS

 

A.            REGISTERED COPYRIGHTS

 

Including Copyright Reg. No. and Date

 

None.

 

B.            COPYRIGHT APPLICATIONS

 

None.

 

C.            COPYRIGHT LICENSES

 

Including Name of Agreement, Parties and Date of Agreement

 

None.

 

6

 

SCHEDULE III

to

ACKNOWLEDGMENT OF INTELLECTUAL PROPERTY LIEN

PATENT REGISTRATIONS

 

A.            REGISTERED PATENTS

 

	
  County

  	
   

  	
  Holder

  	
   

  	
  Name

  	
   

  	
  Registration

  Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Evolving
  Systems, Inc.

  	
   

  	
  Systems
  and Method for Providing Network Element Management Functionality for
  Managing and Provisioning Network Elements Associated with Number Portability

  	
   

  	
  6,122,362

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Evolving
  Systems, Inc.

  	
   

  	
  Systems
  and Methods for Providing Order and Service Mediation for Telecommunications
  Systems

  	
   

  	
  6,169,793
  B1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Evolving
  Systems, Inc.

  	
   

  	
  Apparatus
  and Method for Extracting Presence, Location and Availability Data from a
  Communication Device Deployed in a Network

  	
   

  	
  6,662,015
  B2

  	
   

  

 

B.            PATENT LICENSES

 

None.

 

7

 

SCHEDULE III

to

ACKNOWLEDGMENT OF INTELLECTUAL PROPERTY LIEN

PATENT REGISTRATIONS

 

A.            PATENT APPLICATIONS

 

	
  County

  	
   

  	
  Applicant

  	
   

  	
  Name

  	
   

  	
  Application

  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United States

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Presence, Location and Availability
  Communication System and Method

  	
   

  	
  10/144,107

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United States

  	
   

  	
  Evolving Systems, Inc.

  	
   

  	
  Test Harness for Enterprise Application
  Integration Environment

  	
   

  	
  10/665,076

  

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]