Document:

Exhibit 10.1 (a)

EVOLVING
SYSTEMS, INC.

 

BRIDGE
BANK, N.A.

 

LOAN
AND SECURITY AGREEMENT

 

 

 

This LOAN AND SECURITY
AGREEMENT is entered into as of February 22, 2008, by and
between BRIDGE BANK, N.A. (“Bank”) and EVOLVING SYSTEMS, INC. (“Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time
from Bank, and Bank desires to extend credit to Borrower.  This Agreement sets forth the terms on which
Bank will advance credit to Borrower, and Borrower will repay the amounts owing
to Bank.

 

AGREEMENT

 

The parties agree as follows:

 

1.             DEFINITIONS
AND CONSTRUCTION.

 

1.1          Definitions. 
As used in this Agreement, the following terms shall have the following
definitions:

 

“Accounts” means, with respect to any Person, all
presently existing and hereafter arising accounts, contract rights, payment
intangibles, and all other forms of obligations owing to such Person arising
out of the sale or lease of goods (including, without limitation, the licensing
of software and other technology) or the rendering of services by such Person,
whether or not earned by performance.

 

“Advance” or “Advances” mean a cash advance or cash
advances under the Revolving Facility.

 

“Affiliate” means, with respect to any Person, any
other Person that controls directly or indirectly such Person, any other Person
that controls or is controlled by or is under common control with such Person,
and each of such Person’s senior executive officers and directors.  For purposes of this definition, the term “control”
(and the correlative terms, “controlled by” and “under common control with”)
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and/or policies of a Person, whether
through ownership of securities or other interests, by contract or otherwise

 

“Bank Expenses” means all:  reasonable costs or expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan
Documents; reasonable Collateral audit fees; and Bank’s reasonable attorneys’
fees and expenses incurred in amending, enforcing or defending the Loan
Documents (including fees and expenses of appeal), incurred before, during and
after an Insolvency Proceeding, whether or not suit is brought.

 

“Borrower’s Books” means all of Borrower’s books and
records including:  ledgers; records
concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files, and
the equipment, containing such information.

 

“Borrowing Base” means, as of any date of
determination, an amount equal to eighty percent (80%) of Eligible Accounts
plus one hundred percent (100%) of Eligible Cash, as determined by Bank with
reference to the most recent Borrowing Base Certificate delivered by Borrower.

 

“Borrowing Base Certificate” means such certificate
executed by Borrower (as to its respective Eligible Accounts and Eligible Cash)
in the form attached hereto as Exhibit C.

 

“Business Day” means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized
or required to close.

 

“Capital Expenditures” means for any period, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) made by the Credit Parties and their consolidated Subsidiaries
during such period that are required to be treated as capital expenditures
under GAAP.

 

1

 

“Capital Stock” means (i) with respect to any
Person that is a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting) of corporate
stock, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership or other equity interests of such Person.

 

“Cash” means unrestricted  cash and cash equivalents.

 

“Change in Control” means (i) a transaction in
which any “person” or “group” (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of
1934), directly or indirectly, of more than 50 percent (50%) of the total
voting power of Borrower or (ii) the date a majority of members of the
Board of Directors of Borrower is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Board of Directors of Borrower before the date of the
appointment or election or (iii) the date any “person” or “group” (within
the meaning of Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by the person or group)
ownership of stock of Borrower possessing 30 percent (30%) or more of the total
voting power of the stock of Borrower.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the California Uniform Commercial Code as
in effect from time to time.

 

“Collateral” means the property described on Exhibit A attached hereto.

 

“Contingent Obligation” means, as applied to any
Person, any agreement, undertaking or arrangement by which such Person assures,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, any
Indebtedness, leases, dividends or other obligations (“primary obligations”) of
any other Person (the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (a) for the purchase or payment of any such primary
obligation or (b) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, including, without limitation, any so-called “keepwell” or “makewell”
agreement, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, (iv) otherwise
to assure or to hold harmless the owner of such primary obligation against loss
in respect thereof, (v) with respect to any letter of credit of such
Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (vi) with respect to any agreement or arrangement designed to
protect such Person against fluctuation in interest rates, currency exchange
rates or commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the
ordinary course of business.  The amount
of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determined amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith;
provided, however, that such amount shall not in any event exceed the maximum amount
of the obligations under the guarantee or other support arrangement.

 

“Copyrights” means any and all copyright rights,
applications to register and registrations of the same, and like protections in
works of authorship and derivative work thereof.

 

“Credit Extension” means each Advance, Term Advance,
or any other extension of credit by Bank for the benefit of Borrower hereunder.

 

“Credit Parties” shall mean Borrower and each U.S.
Subsidiary of Borrower that becomes a Credit Party pursuant to Section 6.14.

 

2

 

“Cross License Agreement” shall mean, collectively, (i) the
Intercompany License Agreement, dated as of October 17, 2005, between
Borrower, as licensor, and Revolving Borrower, as licensee, and (ii) the
Intercompany License Agreement, dated as of October 17, 2005 between
Revolving Borrower, as licensor, and Borrower, as licensee.

 

“Daily Balance” means the outstanding principal amount
of the Obligations owed at the end of a given day.

 

“EBITDA” means with respect to Credit Parties and
their consolidated Subsidiaries on a consolidated basis and without duplication
for any period the sum of the following for such period, all determined in
accordance with GAAP:

 

(a)           Net
Income;

 

(b)           plus
the sum of the following, to the extent deducted in determining such Net Income
and without duplication:

 

                (i)            Interest Expense;

 

                (ii)           franchise and income taxes;

 

                (iii)          depreciation, amortization and
impairment expense;

 

                (iv)          all other non-cash and/or
non-recurring charges  and expenses
approved by Bank in its reasonable discretion (but including, without requiring
approval of Bank, non-cash charges related to accounting for employee stock
option plans as required by FAS 123R) excluding (A) accruals for cash
expenses made in the ordinary course of business and (B) write-offs of
accounts receivable;

 

                (v)           loss from any sale of assets, other
than sales in the ordinary course of business;

 

                (vi)          extraordinary losses from the sale of
securities or the extinguishment of debt; and

 

(c)           minus
the sum of the following, to the extent included in determining such Net Income
and without duplication:

 

                (i)            gain from any sale of assets, other
than sales in the ordinary course of business;

 

                (ii)           extraordinary gains from the sale of
securities or the extinguishment of debt;

 

                (iii)          all other non-cash and/or
non-recurring income that is in each case not operating income;

 

                (iv)          proceeds of insurance (other than
business interruption insurance); and

 

                (v)           the amounts that would be accrued in
connection with TSE Contingent Obligations if the Credit Parties accrued for
such amounts.

 

For purposes of computing EBITDA, the EBITDA of any
Person accrued prior to the date it becomes a Credit Party or is merged into or
consolidated with a Credit Party or a Subsidiary thereof that Person’s assets
and acquired by a Credit Party or a Subsidiary thereof shall be excluded.

 

“Eligible Accounts” means, at any time, those Accounts
of Borrower that arise in the ordinary course of Borrower’s business that comply
in all material respects with all of Borrower’s representations and warranties
to Bank set forth in the Loan Documents to the extent such provisions are
applicable to the Borrower’s Accounts and shall include both (i) Accounts
that create offsetable deferred revenue and (ii) Accounts with respect to
the account debtors listed on Appendix 1 attached hereto (or any successor of
any such account debtor); provided, that standards of eligibility may be fixed
and revised from time to time by Bank in Bank’s reasonable judgment based upon
the 

 

3

 

results of an audit
performed by Bank in accordance with Section 4.4 and upon notification
thereof to Borrower in accordance with the provisions hereof. 
Unless otherwise agreed to by Bank, Eligible Accounts shall not include
the following:

 

(a)           Accounts that the account debtor has failed to pay
within ninety (90) days of invoice date, other than Qwest, Vodafone Egypt and
Cable & Wireless Panama (or any of their respective successors), which
Accounts shall be included as Eligible Accounts provided that such Accounts are
within one hundred-twenty (120) days of invoice date;

 

(b)           Accounts with respect to an account debtor,
thirty-five percent (35%) of whose Accounts the account debtor has failed to
pay within ninety (90) days of invoice date (or, in the case of Qwest, Vodafone
Egypt and Cable & Wireless Panama, or any of their respective
successors, within one-hundred twenty (120) days of invoice date);

 

(c)           Accounts with respect to which the account debtor is
an officer, employee, or agent of Borrower;

 

(d)           Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or other terms by reason of which the payment by the account debtor may be
conditional, in each case solely to the extent thereof;

 

(e)           Accounts with respect to which the account debtor is
an Affiliate of Borrower;

 

(f)            Accounts with respect to which the account debtor does
not have its principal place of business in the United States, except Eligible
Foreign Accounts;

 

(g)           Accounts with respect to which the account debtor is
the United States or any department, agency, or instrumentality of the United
States;

 

(h)           Accounts with respect to which Borrower is liable to
the account debtor for goods sold or services rendered by the account debtor to
Borrower or for deposits or other property of the account debtor held by
Borrower, but only to the extent of any amounts owing to the account debtor against
amounts owed to Borrower, as the case may be;

 

(i)            Accounts with respect to an account debtor, including
Subsidiaries and Affiliates of such account debtor, whose total obligations to
Borrower exceed thirty percent (30%) of all Accounts of Borrower (other than
for AT&T and T-Mobile (and any successor thereof) which percentage shall be
sixty-percent (60%)), to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank;

 

(j)            Accounts with respect to which the account debtor
disputes liability or makes any claim with respect thereto as to which Bank
believes, in its reasonable discretion, that there may be a basis for dispute
(but only to the extent of the amount subject to such dispute or claim), or is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business; provided that so long as adequate post-petition financing is being
provided to such account debtor, post-petition Accounts of such account debtor
may be deemed Eligible Accounts by and to the extent of Bank in its reasonable
discretion;

 

(k)           Retentions and hold-backs;

 

(l)            Bonded Accounts; and

 

(m)          Accounts with respect to Accenture, American
Telecommunication, Inc., Bulgaria Telecom, MTN Nigeria, Vodafone Egypt,
Vodafone Japan, and Wireless Trade (or any of their respective successors),
solely to the extent of the percentage of foreign tax withholding set forth in
the chart in Appendix 1 for the applicable account debtor.

 

4

 

“Eligible Cash” means Cash of Borrower and its U.S.
Subsidiaries.

 

“Eligible Foreign Accounts” means Accounts of Borrower
with respect to which the account debtor does not have its principal place of
business in the United States and that (i) are supported by one or more
letters of credit in an amount and of a tenor, and issued by a financial
institution, acceptable to Bank, (ii) are owing from an account debtor
identified in Appendix 1 (or any successor of any such account debtor), or (iii) 
are billed and collected in the United Kingdom and that are properly secured
and perfected or (iv) Bank approves on a case-by-case basis.

 

“Equipment” means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.

 

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.

 

“Event of Default” has the meaning assigned in Article 8.

 

“Fixed Charge Coverage Ratio” means for the Credit
Parties and their consolidated Subsidiaries on a consolidated basis and without
duplication, on any date of determination, the ratio of (a) EBITDA minus
Unfinanced Capital Expenditures minus income and franchise taxes paid in
cash, to (b) Fixed Charges, in each case for the twelve months then
ending.

 

“Fixed Charges” means, for any period, the sum of the
following for the Credit Parties and their consolidated Subsidiaries, on a
consolidated basis and without duplication: 
(a) Total Debt Service and (b) dividends, repurchases or
redemptions of equity and/or distributions paid in cash.

 

“Foreign Subsidiary” shall mean any Subsidiary of a
Person that is not a U.S. Subsidiary.

 

“GAAP” means generally accepted accounting principles
in the United States of America as in effect from time to time.

 

“Guarantor” shall mean any Credit Party other than
Borrower, and “Guarantors” shall mean all such other Credit Parties.

 

“Hedging Agreements” means any swap agreements (as
defined in Section 101 of the U.S. Bankruptcy Code) and any other
agreements or arrangements designed to provide protection against fluctuations
in interest or currency exchange rates and entered into for bona fide hedging
purposes and not for speculation.

 

“Indebtedness” of any Person means, without
duplication, (a) all indebtedness for borrowed money, (b) all
obligations for the deferred purchase price of property or services (other than
trade payables incurred and payable in the ordinary course of business of such
Person), (c) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder
and all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments issued by such Person, (d) all
obligations evidenced by notes, bonds, debentures or similar instruments, (e) all
capital lease obligations and (f) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a) through
(e) above.

 

“Insolvency Proceeding” means, with respect to any
Person, any proceeding commenced by or against such Person under any provision
of the United States Bankruptcy Code, as amended, or under any other bankruptcy
or insolvency law, including assignments for the benefit of creditors, formal
or informal moratoria, compositions, extension generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual Property
Collateral” means all of Borrower’s right, title, and interest in and to the
following: (1) Copyrights, Trademarks, Patents, and trade secrets; (2) claims
for damages by way of past, present and future infringement of any of the
rights included above; (3) all licenses or other rights to use any of the
Copyrights, Patents or Trademarks included above, and all license fees and
royalties arising from such use to the extent permitted by 

 

5

 

such license or rights; (4) all amendments,
renewals and extensions of any of the Copyrights, Trademarks or Patents
included above; and (5) all proceeds and products of the foregoing,
including, without limitation, all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing included above.

 

“Interest Expense” means total interest expense
generated during the period in question (including attributable to conditional
sales contracts, capital leases and other title retention agreements in
accordance with GAAP and all unused line and commitment fees and administrative
and similar fees) of the Credit Parties and their consolidated Subsidiaries on
a consolidated basis and without duplication with respect to all outstanding
Indebtedness, including accrued interest and interest paid in kind and
capitalized interest, but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers’ acceptance financing, net costs
under Hedging Agreements and fees payable to Bank on the Closing Date under Section 2.5.

 

“Intermediate Holdco” means Evolving Systems Holdings, Inc.,
a Delaware corporation.

 

“Inventory” means all “inventory” (as defined in the
Code) in which any Borrower has or acquires any interest, including work in
process and finished products intended for sale or lease or to be furnished
under a contract of service, of every kind and description now or at any time
hereafter owned by or in the custody or possession, actual or constructive, of
any Borrower, including such inventory as is temporarily out of its custody or
possession or in transit.

 

“Investment” means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.

 

“IRC” means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.

 

“Letter of Credit Exposure” means, at the time in
question, the sum, without duplication, of (i) the aggregate undrawn
amount of all outstanding Letters of Credit, plus (ii) the aggregate
unreimbursed amount of all drawn Letters of Credit, in each case at such time.

 

“Lien” means any mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance.

 

“Loan Documents” means, collectively, this Agreement,
any promissory note executed by Borrower evidencing the Advances or Term
Advance, and any other agreement entered into in connection with this
Agreement, all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse
effect on (i) the business operations or condition (financial or
otherwise) of Borrower and its Subsidiaries taken as a whole or (ii) the
ability of Borrower to repay the Obligations or otherwise perform its
obligations under the Loan Documents or (iii) the enforceability or
priority of Bank’s security interests in the Collateral.

 

“Negotiable Collateral” means all of Borrower’s
letters of credit of which Borrower is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper.

 

“Net Income” means, for any period, the net income (or loss) of the Credit Parties
and their consolidated Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP;
provided, that there shall be excluded (a) the income (or loss) of any
Person in which any other Person (other than a Credit Party or a “Credit Party”
under and as defined in the Revolving Loan Agreement) has a joint ownership
interest, except to the extent of the amount of dividends or other
distributions actually paid to any Credit Party by such Person during such
period, (b) the income (or loss) of any Person accrued prior to the date
it becomes or is merged into or consolidated with a Credit Party or a “Credit
Party” under and as defined in the Revolving Loan Agreement or that Person’s
assets are acquired by a Credit Party or a “Credit Party” under and as defined
in the Revolving Loan Agreement, (c) the income of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions of that income by that Subsidiary is not at the time permitted by
operation of the terms of the charter or any agreement, instrument, judgment,
decree, order, statute, rule or 

 

6

 

governmental
regulation applicable to that Subsidiary and (d) the income (loss)
associated with any Hedging Agreements.

 

“Obligations” means all debt, principal, interest,
Bank Expenses and other amounts owed to Bank by Borrower pursuant to this
Agreement or any Loan Document, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding involving Borrower.

 

“Organizational Documents” shall mean (a) for any
corporation, the memorandum and/or certificate or articles of incorporation,
the bylaws, any certificate of designation, or other instrument relating to the
rights of preferred shareholders or stockholders of such corporation and any
shareholder rights agreement, (b) for any partnership, the partnership
agreement and, if applicable, the certificate of limited partnership, and (c) for
any limited liability company, the operating agreement and articles or
certificate of formation or organization.

 

“Patents” means all patents and patent applications,
including without limitation divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

 

“Permitted Indebtedness” means:

 

(a)           Indebtedness in favor of Bank arising under this
Agreement, any other Loan Document, the Revolving Loan Agreement or any other
Revolving Loan Document;

 

(b)           Indebtedness existing on the Closing Date and
disclosed in the Schedule including extensions and replacements thereof
provided that the principal amount of such Indebtedness as of the date of such
extension or replacement is not increased and the maturity and weighted average
life thereof are not shortened;

 

(c)           Indebtedness not to exceed an amount equal to $250,000
in the aggregate at any time outstanding constituting capital lease
obligations;

 

(d)           Indebtedness incurred after the Closing Date secured
by Liens permitted under clause (c)(i) of the definition of “Permitted
Liens” provided (i) the principal amount of such Indebtedness secured
thereby does not exceed 100% of the cost of the subject property and (ii) the
aggregate amount thereof outstanding at any given time does not exceed an
amount equal to $200,000;

 

(e)           Subordinated Debt;

 

(f)            inter-company unsecured Indebtedness arising from
loans made by Borrower to its Wholly-Owned Subsidiaries that are Credit Parties
to fund working capital requirements of such Subsidiaries in the ordinary
course of business; provided, that, upon the request of Bank, such Indebtedness
shall be evidenced by promissory notes having terms (including subordination
terms) satisfactory to Bank, the sole originally executed counterparts of which
shall be pledged and delivered to Bank as security for the Obligations;

 

(g)           inter-company unsecured Indebtedness not listed in the
Schedule on the Closing Date arising from loans made by Borrower to Evolving
Systems Networks India PVT Ltd, an India corporation, and Evolving Systems
GmbH, a German corporation, so long as such Persons are Wholly-Owned
Subsidiaries of Borrower, to fund working capital requirements of such
Subsidiaries in the ordinary course of business; provided, that, that upon the
request of Bank, such Indebtedness shall be evidenced by promissory notes
having terms (including subordination terms) satisfactory to Bank, the sole
originally executed counterparts of which shall be pledged and delivered to
Bank as security for the Obligations; provided, however, that the aggregate
amount of Investments permitted pursuant to subsection (i) of the
definition of Permitted Investments and outstanding Indebtedness permitted
pursuant to this subsection (g) does not exceed $100,000 at any time;

 

(h)           the incurrence by Borrower or any Subsidiary thereof
of Indebtedness up to an amount equal to $50,000 arising from the honoring by a
bank or other financial institution of a check, draft or

 

7

similar instrument drawn
against insufficient funds, so long as such Indebtedness is covered within five
Business Days;

 

(i)            unsecured Indebtedness of Borrower or its Subsidiaries
incurred in connection with the financing of insurance premiums in the ordinary
course of business with respect to insurance required or permitted under Section 6.5
up to an amount equal to $500,000 in aggregate annual premiums;

 

(j)            Borrower or any of its U.S. Subsidiaries may enter
into guarantees of Indebtedness of Borrower or any such U.S. Subsidiary that
are Credit Parties otherwise permitted under the other subsections of this
definition of “Permitted Indebtedness”;

 

(k)           Borrower and the Revolving Borrower may enter into
unsecured Hedging Agreements in the ordinary course of business for bona fide
hedging purposes and not for speculation in an aggregate notional or contract
amount not to exceed $250,000 outstanding at any time;

 

(l)            the TSE Contingent Obligations;

 

(m)          a guaranty of the obligations of the Revolving
Borrower under the Revolving Loan Documents;

 

(n)           Contingent Obligations in respect of Borrower’s
guarantee of the expenses incurred by certain employees in connection with the
use of credit cards sponsored by Borrower in an aggregate amount not to exceed
$150,000 at any time outstanding;

 

(o)           Contingent Obligations incurred in the ordinary course
of business with respect to surety and appeal bonds, performance bonds and
other similar obligations; and

 

(p)           other unsecured Indebtedness of Borrower and its
Subsidiaries not to exceed an amount equal to $50,000 in the aggregate
outstanding at any time.

 

“Permitted Investment” means:

 

(a)           Investments existing on the Closing Date disclosed in
the Schedule;

 

(b)           (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one (1) year
from the date of creation thereof and currently having rating of at
least A-2 or P-2 from either Standard & Poor’s Corporation or
Moody’s Investors Service, (iii) certificates of deposit maturing no more
than one (1) year from the date of investment therein issued by Bank and (iv) Bank’s
money market accounts or other money market funds substantially all of whose
assets are comprised of securities of the type described in clauses (i) through
(iii) above;

 

(c)           Investments created by the Loan Documents or Revolving
Loan Documents;

 

(d)           trade credit extended by Borrower and its Subsidiaries
in the ordinary course of business and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;

 

(e)           Investments constituting inter-company Permitted
Indebtedness;

 

(f)            loans to employees and advances for business travel
and similar temporary advances made in the ordinary course of business to
officers, directors and employees, not to exceed an amount equal to $25,000 in
the aggregate at any time outstanding;

 

(g)           the endorsement of negotiable instruments for deposit
or collection or similar

 

 

8

 

transactions in the
ordinary course of business;

 

(h)           Investments constituting transactions otherwise
permitted under this Agreement;

 

(i)            Investments in the Capital Stock of Evolving Systems
Networks India PVT Ltd and Evolving Systems GmbH not listed in the Schedule on
the Closing Date; provided that the aggregate amount of such Investments
permitted under this subsection (i) and the outstanding Indebtedness
permitted under subsection (g) of the definition of Permitted Indebtedness
shall not exceed $100,000 at any time;

 

(j)            Investments in any domestic Wholly-Owned Subsidiary of
Borrower that is or concurrent with such Investment becomes a Credit Party;

 

(k)           Investments received in compromise or resolution of
litigation or arbitration proceedings with Persons who are not Affiliates of
Borrower up to an amount equal to $50,000 in the aggregate;

 

(l)            Investments represented by prepaid expenses made in
the ordinary course of business;

 

(m)          the TSE Contingent Obligations; and

 

(n)           Without duplication of any quantitative limits, the
Revolving Borrower and its Subsidiaries may make Investments permitted under
the Revolving Loan Agreement.

 

For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“Permitted Liens” means the following:

 

(a)           Any Liens existing on the Closing Date and disclosed
in the Schedule or arising under this Agreement, the other Loan Documents or
any of the Revolving Loan Documents;

 

(b)           Liens for taxes, fees, assessments or other
governmental charges or levies, either (i) not delinquent or (ii) being
contested in good faith by appropriate proceedings and, with respect to this
clause (ii), all such items do not exceed $250,000 against Persons organized in
the United States in the aggregate at any time or such items do not exceed
$1,500,000 against Persons organized outside the United States in the aggregate
at any time;

 

(c)           (i) Purchase money Liens securing Indebtedness
permitted under clause (d) of the definition of “Permitted
Indebtedness”; provided, that (x) any such Lien attaches to the subject
property concurrently with or within twenty (20) days after the acquisition
thereof, (y) such Lien attaches only to the subject property; and (ii) Liens
arising under capital leases permitted under clause (c) of the
definition of “Permitted Indebtedness” to the extent such Liens attach only to
the property that is the subject of such capital leases;

 

(d)           Liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by Liens of the type
described in clauses (a) through (c) above, provided that any
extension, renewal or replacement Lien shall be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced does not increase;

 

(e)           Statutory liens of landlords, carriers, warehousemen,
mechanics and/or materialmen and other similar Liens imposed by law or that
arise by operation of law in the ordinary course of business that, in any such
case, are only for amounts not yet delinquent or which are being contested in
good faith by appropriate proceedings (which have the effect of preventing or
staying the forfeiture or sale of the property subject thereto) and with
respect to which adequate reserves or other appropriate provisions are being
maintained by such Person in accordance with GAAP;

 

 

9

 

 

(f)            Liens (other than any Lien imposed by ERISA) incurred
or deposits or pledges made in the ordinary course of business (including,
without limitation, surety bonds and appeal bonds) in connection with workers’
compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids, leases, trade
contracts, statutory obligations and other similar obligations (other than for
the repayment of Indebtedness);

 

(g)           Any attachment or judgment Lien provided that the
enforcement of such Liens is effectively stayed, satisfied, vacated, dismissed
or discharged within 30 days of issuance or execution and such Liens secure
claims not otherwise constituting an Event of Default;

 

(h)           Easements, rights of way, restrictions, zoning
ordinances, reservations, covenants and other similar charges, title exceptions
or encumbrances relating to real property of Borrower and any Subsidiaries
incurred in the ordinary course of business that, either individually or in the
aggregate, are not substantial in amount, do not interfere in any material
respect with the use of the property affected or the ordinary conduct of the
business of Borrower and do not result in material diminution in value of the
property subject thereto;

 

(i)            Liens arising by virtue of any statutory or common law
provision relating to banker’s liens, rights of set-off, recoupment,
combination of accounts or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution;

 

(j)            Liens that arise under customary non-assignment
provisions in contracts, leases, subleases, licenses and sublicenses entered
into with unaffiliated third parties in the ordinary course of business; and

 

(k)           Liens of licensors and sublicensors on licenses and
sublicenses of Intellectual Property Collateral or other intellectual property
(if any) of Borrower or any Subsidiary thereof entered into in the ordinary
course of business.

 

“Person” means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or governmental agency.

 

“Prime Rate” means the variable rate of interest, per
annum, that appears in The Wall Street Journal on the date of
measurement, whether or not such announced rate is the lowest rate available
from Bank.

 

“Responsible Officer” shall mean, (a) with
respect to any Credit Party, the chief executive officer or the president of
such Credit Party, or any other officer having substantially the same authority
and responsibility; or (b) with respect to compliance with financial
covenants or delivery of financial information under this Agreement, the chief
financial officer or the treasurer of Borrower, or any other officer having
substantially the same authority and responsibility.

 

“Revolving Borrower” shall mean Evolving Systems
Limited, a company incorporated under the laws of England and Wales, as the “Borrower”
under the Revolving Loan Agreement.

 

“Revolving Facility” means the facility under which
Borrower may request Bank to issue Advances, as specified in Section 2.1(a) hereof
or Letters of Credit, as specified in Section 2.1(b).

 

“Revolving Line Limit” means One Million Dollars
($1,000,000).

 

“Revolving Maturity Date” means February 22,
2011.

 

“Revolving Loan Agreement” shall mean the Revolving
Loan Agreement dated the date hereof by and among Revolving Borrower and Bank,
as the same be amended, modified, supplemented or restated from time to time.

 

 

10

 

 

“Revolving Loan Documents” shall mean the Revolving
Loan Agreement and all other agreements, documents, instruments and
certificates heretofore or hereafter executed in connection with the Revolving
Loan Agreement.

 

“Schedule” means the schedule of exceptions attached
hereto and approved by Bank, if any.

 

“Securities Act” shall mean the Securities Act of
1933, as amended.

 

“Senior Debt” shall mean, on any date of
determination, the Obligations hereunder and all Indebtedness under the
Revolving Loan Agreement (provided that, for purposes of determining the
Indebtedness outstanding under the Revolving Facility and the Revolving Loan
Agreement as of the end of each fiscal quarter, “Senior Debt” shall mean the
average daily amount of outstanding principal and accrued interest on the
Revolving Facility and the “Revolving Facility” under (and as defined in) the
Revolving Loan Agreement for such fiscal quarter), on a consolidated basis and
without duplication. For all purposes of this Agreement, the term “Senior Debt”
shall be calculated to include (i.e., not net of) discounts, deductions or
allocations relating or applicable to or arising from any equity or equity
participation or fees, whether under GAAP or otherwise.

 

“Shares” means (i) (a) 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, and (b) upon consummation of the merger of Intermediate
Holdco with and into Borrower following the Closing Date, securities
representing 65% of the aggregate voting power of the issued and outstanding
Capital Stock and ownership interests of Evolving Systems Holdings Ltd., a
company incorporated under the laws of England and Wales, in each case under
the foregoing (a) or (b) owned or held of record or beneficially by
Borrower on the Closing Date (in the case of Evolving Systems Networks India
PVT Ltd.) or on the effective date of such merger (in the case of Evolving
Systems Holdings Ltd.), as listed on Annex A 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 any future direct U.S. Subsidiary of Borrower, in each
case owned or held of record or beneficially by Borrower at any time (and the
certificates representing such shares, securities and/or interests, if any);
and (iii) to the extent not duplicative of clause (i), 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. and Evolving
Systems Holdings Ltd. or any future direct Foreign Subsidiary, in each case
owned or held of record or beneficially by Borrower at any time (and the
certificates representing such shares, securities and/or interests, if any). Notwithstanding
the foregoing, the term “Shares” 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.

 

“Solvent” shall mean, as to any Person at any time,
that such Person (a) is not “insolvent” as that term is defined in Section 101(32)
of the United States Bankruptcy Code, title 11 U.S.C. (“Bankruptcy
Code”), Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2
of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) does not have “unreasonably
small capital,” as that term is used in Section 548(a)(1)(B)(ii)(II) of
the Bankruptcy Code or Section 5 of the UFCA, (c) is not engaged
or about to engage in a business or a transaction for which its
remaining property is “unreasonably small” in relation to such business or
transaction as that term is used in Section 4 of the UFTA, and (d) is not
unable to pay its debts as they mature or become due, within the meaning of Section 548(a)(1)(B)(ii)(III) of
the Bankruptcy Code, Section 4 of the UFTA and Section 6 of the
UFCA.  As used herein, all references to the Bankruptcy Code, UFTA and
UFCA, and specific provisions thereof, shall include all definitions used
therein and the interpretive case law applicable to such statutes and
definitions.

 

“Subordinated Debt” means any debt incurred by
Borrower or any of its Subsidiaries that is subordinated to the debt owing by
Borrower to Bank on terms acceptable to Bank (and identified as being such by
Borrower and Bank), including, without limitation, the unsecured Indebtedness
of Borrower evidenced by the Subordinated Loan Documents.

 

“Subordinated Loan Documents” shall mean,
collectively, the Subordinated Notes and all other agreements, documents and
instruments executed and delivered in connection therewith.

 

 

11

 

 

“Subordinated Notes” shall mean the Subordinated Notes
of Evolving Systems dated November 14, 2005 in the original aggregate
principal amount of $4,869,700.47.

 

“Subsidiary” shall mean, as to any initial Person, any
other Person in which more than fifty percent (50%) of all equity, membership,
partnership or other ownership interests is owned directly or indirectly by such
initial Person or one or more of its Subsidiaries. For purposes of the Loan
Documents, any reference to “Subsidiary” shall be deemed to refer to a
Subsidiary of Borrower unless the context provides otherwise.

 

“Term Advance” means a cash advance under Section 2.1.

 

“Term Line” means a credit extension of up to Four
Million Dollars ($4,000,000).

 

“Term Maturity Date” means February 22, 2010.

 

“Total Debt” means, on any date of determination, the
total Indebtedness of the Credit Parties and their consolidated Subsidiaries on
a consolidated basis and without duplication, including, without limitation,
all Indebtedness under the Loan Documents, Revolving Loan Documents and all
accrued interest on the foregoing (including, without limitation, all interest
paid in kind) and all capital lease obligations and including, without
duplication, Contingent Obligations consisting of guarantees of Indebtedness
that otherwise would constitute Total Debt of other Persons (provided that, for
purposes of determining the Indebtedness outstanding under any revolving credit
facility (including this Agreement and the Revolving Loan Agreement) as of the
end of each fiscal quarter, “Total Debt” shall mean the average daily amount of
outstanding principal and accrued interest on such revolving credit facility
for such fiscal quarter). For all purposes of this Agreement, the term “Total
Debt” shall be calculated to include (i.e., not net of) discounts, deductions
or allocations relating or applicable to or arising from any equity or equity
participation or fees, whether under GAAP or otherwise.

 

“Total Debt Service” means, for any period, the sum
for Credit Parties and their consolidated Subsidiaries on a consolidated basis
of (a) scheduled payments of principal on any an all Total Debt during
such period, (b) other required payments of principal on Total Debt other
than the Obligations, (c) any other cash amounts due or payable with
respect to, in connection with or on Total Debt during such period, and (d) Interest
Expense paid in cash or required to be paid in cash during such period.

 

“Trademarks” means any trademark and servicemark
rights, whether registered or not, applications to register and registrations
of the same, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

 

“Transfer Pricing Agreements” shall mean (i) the
Master Services Agreement entered into between Borrower and Evolving Systems
Networks India Pvt Ltd, dated as of the 31st day of August, 2004, as
amended December 8, 2004, June 1, 2005 and April 1, 2006, and
the Master Services Agreement entered into between Revolving Borrower and
Evolving Systems Networks India Pvt Ltd, dated as of the 1st day of June 2005,
amended April 1, 2006, and (ii) agreements on transfer pricing in
form and substance reasonably satisfactory to Bank.

 

“TSE Contingent Obligations” means the deferred
payment obligations to the Sellers (as defined in Section 1.4 of the TSE
Purchase Agreement).

 

“TSE Purchase Agreement” means the Acquisition
Agreement of Telecom Software Enterprises, LLC, dated as of October 15,
2004 among Evolving Systems, Inc., as Buyer, and Lisa Marie Maxson and
Peter McGuire, as Sellers.

 

“Unfinanced Capital Expenditures” means, for any
period, all Capital Expenditures made during such period other than any Capital
Expenditures financed within 30 days of such expenditure with the proceeds of
Permitted Indebtedness (Permitted Indebtedness, for this purpose, does not
include advances under a revolving line of credit), including, without
limitation, advances under the Revolving Facility and the revolving loan
facility established pursuant to the Revolving Loan Documents.

 

 

12

 

 

“U.S. Subsidiary” shall mean any Subsidiary of a
Person incorporated or otherwise organized under the laws of the United States
of America or a state of the United States of America or the District of
Columbia.

 

“Wholly-Owned Subsidiary” shall mean any Subsidiary in
which (other than directors’ qualifying shares required by law) one hundred
percent (100%) of the equity, at the time as of which any determination is
being made, is owned, beneficially and of record, by Borrower or by one or more
of the other Wholly-Owned Subsidiaries of Borrower, or both.

 

All capitalized terms used which are not specifically
defined herein shall have the respective meanings assigned to them in Article 9
of the Code to the extent the same are used or defined therein. Unless
otherwise specified in any Loan Document, this Agreement, any other Loan
Document and any agreement or contract referred to herein shall mean such
agreement or contract, as modified, amended, supplemented or restated and in
effect from time to time, subject to any applicable restrictions set forth in
the Loan Documents.

 

1.2          Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms “financial statements” shall include the notes and schedules thereto.

 

2.             LOAN AND TERMS OF PAYMENT.

 

2.1          Credit
Extensions.

 

Borrower promises
to pay to the order of Bank, in lawful money of the United States of America,
the aggregate unpaid principal amount of all Credit Extensions made by Bank to
Borrower hereunder in accordance with the terms hereof. Borrower shall also pay
interest on the unpaid principal amount of Advances at rates in accordance with
the terms hereof.

 

(a)           Revolving Advances.

 

(i)            Subject to and upon the terms and conditions of this
Agreement, Borrower may request, and Bank shall make available, Advances from
time to time in an aggregate outstanding amount not to exceed the lesser of (i) the
Revolving Line Limit or (ii) the Borrowing Base minus,
in each case, the Letter of Credit Exposure, and the FX Amount. Subject to the
terms and conditions of this Agreement, amounts borrowed pursuant to this Section 2.1(a) may
be repaid and reborrowed at any time prior to the Revolving Maturity Date, at
which time all Advances under this Section 2.1(a) shall be
immediately due and payable. Borrower may prepay any Advances in whole or in
part without penalty or premium.

 

(ii)           Whenever Borrower desires an Advance, Borrower will
notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific time, on the Business Day that
the Advance is to be made. Each such notification shall be promptly confirmed
by a Payment/Advance Form in substantially the form of Exhibit B hereto. Bank is authorized to make Advances
under this Agreement, based upon instructions received from a Responsible
Officer of Borrower or a designee of a Responsible Officer of Borrower, or
without instructions if in Bank’s discretion such Advances are necessary to
meet Obligations which have become due and remain unpaid after expiration of
any applicable grace or cure period and the giving of any required notice of
such non-payment. Bank shall be entitled to rely on any telephonic notice given
by a person who Bank reasonably believes to be a Responsible Officer or a
designee thereof. Bank will credit the amount of Advances made under this Section 2.1(a) to
such deposit account or Obligation as Borrower specifies.

 

(b)           Letters of Credit. Subject to the terms and conditions of
this Agreement, at any time prior to the Revolving Maturity Date, Bank agrees
to issue letters of credit for the account of Borrower and the other Credit
Parties (each, a “Letter of Credit” and collectively, the “Letters of Credit”)
in an aggregate outstanding face amount not to exceed the lesser of the
Revolving Line Limit or the Borrowing Base minus, in each
case, the aggregate amount of the outstanding Advances, and the FX Amount at
any time, provided that the aggregate face amount of all outstanding Letters of
Credit shall not in any case exceed $500,000, minus the FX Amount at any time. All
Letters of Credit shall be, in form and substance, acceptable to Bank in its
reasonable discretion and shall

 

 

13

 

 

be subject to (i) the terms and conditions of Bank’s form of
standard application and letter of credit agreement with such changes thereto
as Borrower and Bank may agree (the “Application”) and (ii) payment by
Borrower of Bank’s standard fees. In the event of any conflict between the
terms of this Agreement and the terms of any Application, the terms of this
Agreement shall control. If Bank is obligated to advance funds under a Letter
of Credit, Borrower immediately shall reimburse the amount of the funds so
advanced not later than 10:00 a.m. (Pacific time) on the date that such
payment is made by Bank under the Letter of Credit, if Borrower shall have
received written or telephonic notice of such payment prior to 9:00 a.m.
(Pacific time) on such date, or, if such notice has not been received by
Borrower prior to such time on such date, then not later than 10:00 a.m.
(Pacific time), on the first Business Day that Borrower has such notice prior
to prior to 9:00 a.m. (Pacific time), and, in the absence of such
reimbursement, the unreimbursed amount automatically shall be deemed to be an
Advance under Section 2.1(a). To the extent an unreimbursed amount under a
Letter of Credit is deemed to be an Advance hereunder, Borrower’s obligation to
reimburse such amount shall be discharged and replaced by the resulting
Advance. If any portion of the Letter of Credit Exposure, whether or not then
due and payable, remains unpaid or outstanding on the Revolving Maturity Date
or such earlier date as this Agreement may be terminated, Borrower shall: (A) provide
cash collateral therefor on terms reasonably acceptable to Bank; or (B) cause
all such Letters of Credit and guaranties thereof, if any, to be cancelled and
returned; or (C) deliver a stand-by letter (or letters) of credit in
guarantee of such portion of the Letter of Credit Exposure, which stand-by
letter (or letters) of credit shall be of like tenor and duration (plus thirty
(30) additional days) as, and in an amount equal to at least 105% of the
aggregate maximum amount then available to be drawn under, such Letters of
Credit to which such outstanding Letter of Credit Exposure relate and shall be
issued by a Person, and shall be subject to such terms and conditions, as are
reasonably satisfactory to Bank. The obligation of Borrower to reimburse Bank
for drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, the Application, and such Letters of Credit, under all
circumstances whatsoever; provided, however, that after paying in full its
reimbursement obligation hereunder, nothing herein shall adversely affect the
right of Borrower to commence any proceeding against Bank for any wrongful
disbursement made by Bank under a Letter of Credit as a result or solely to the
extent of acts or omissions constituting gross negligence or willful misconduct
on the part of Bank. Borrower shall indemnify, defend, protect, and hold Bank
harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys’ fees, arising out of or in connection with
any Letters of Credit, except for expenses caused by Bank’s gross negligence or
willful misconduct.

 

(c)           Foreign Exchange Sublimit. Subject to and upon the terms and
conditions of this Agreement and any other agreement that Borrower may enter
into with the Bank in connection with foreign exchange transactions, including
foreign exchange services (“FX Contracts”) and subject to the availability
under the Revolving Line Limit and the Borrowing Base minus,
in each case, the aggregate amount of the outstanding Advances and the Letter
of Credit Exposure at any time, Borrower may request Bank to enter into FX
Contracts with Borrower due not later than the Revolving Maturity Date. Borrower
shall pay any standard issuance and other fees that Bank notifies Borrower in
advance will be charged for issuing and processing FX Contracts for Borrower. The
FX Amount shall not in any case exceed $500,000, minus the Letter of Credit
Exposure at any time.. The “FX Amount” shall equal the amount determined by
multiplying (i) the aggregate amount, in United States Dollars, of FX
Contracts between Borrower and Bank remaining outstanding as of any date of
determination by (ii) the applicable Foreign Exchange Reserve Percentage
as of such date. The “Foreign Exchange Reserve Percentage” shall be a
percentage as determined by Bank, in its reasonable discretion from time to
time. If at any time the Revolving Facility is terminated or otherwise ceases
to exist, Borrower shall promptly secure in cash all obligations under the
Foreign Exchange Sublimit on terms reasonably acceptable to Bank.

 

(d)           Term
Advance.

 

(i)            Borrower promises to pay to the order of Bank, in
lawful money of the United States of America, the aggregate unpaid principal
amount of the Term Advance made by Bank to Borrower hereunder in accordance
with the terms hereof. Borrower shall also pay interest on the unpaid principal
amount of the Term Advance at rates in accordance with the terms hereof.

 

(ii)           Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make one Term Advance on the Closing Date to Borrower
in an aggregate amount not to exceed the Term Line.

 

 

14

 

 

(iii)         Interest shall accrue from the date of the Term
Advance at the rate specified in Section 2.2, and shall be payable monthly
on the tenth day of each month so long as any portion of the Term Advance is
outstanding. The Term Advance shall be payable in twenty-four (24) equal
monthly installments of principal, plus all accrued interest, beginning on March 10,
2008, and continuing on the same day of each month thereafter through the Term
Maturity Date, at which time all amounts owing under this Section 2.1 and
any other amounts owing under this Agreement shall be immediately due and
payable. The Term Advance, once repaid, may not be reborrowed. Borrower may
prepay all or any portion of the Term Advance in accordance with Section 2.2(d).

 

2.2          Interest Rates, Payments, and Calculations.

 

(a)           Interest Rates.

 

(i)            Advances. Except as set forth in Section 2.2(b),
the Advances shall bear interest, on the outstanding Daily Balance thereof at a
rate per annum equal to one half of one percent (0.50%) above the Prime Rate.

 

(ii)           Term Advance. Except as set forth in Section  2.2(b),
the Term Advance shall bear interest, on the outstanding Daily Balance thereof,
at a fixed rate per annum equal to eight and one quarter percent (8.25%).

 

(b)           Late Fee; Default Rate. If any payment is not made within ten (10) days
after the date such payment is due, Borrower shall pay Bank a late fee equal to
the lesser of (i) five percent (5%) of the amount of such unpaid amount or
(ii) the maximum amount permitted to be charged under applicable law. All
Obligations shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a rate equal to four (4) percentage
points above the interest rate applicable immediately prior to the occurrence
of the Event of Default.

 

(c)           Payments. Interest hereunder shall be due and
payable on the tenth calendar day of each month during the term hereof. Bank
shall, at its option, charge such interest and all Bank Expenses against
Borrower’s main operating deposit account, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. To the extent
permitted by applicable law, any interest not paid when due shall be compounded
by becoming a part of the Obligations, and such interest shall thereafter
accrue interest at the rate then applicable hereunder. Subject to Section 12.3,
all payments shall be free and clear of any taxes, withholdings, duties,
impositions or other charges, to the end that Bank will receive the entire
amount of any Obligations payable hereunder, regardless of source of payment. Payments
will be made via auto debit from Borrower’s main operating account at the Bank.

 

(d)           Prepayment. Borrower may prepay all or any portion
of the Term Advance only upon written notice to Bank, which shall be irrevocable,
at least three Business Days before the proposed prepayment date (the “Prepayment
Date”), such notice shall specify the Prepayment Date and the amount to be
prepaid. On any Prepayment Date prior to August 22, 2009, Borrower shall
pay Bank, in addition to the principal amount to be prepaid and the interest
accrued thereon through the Prepayment Date, a premium equal to (i) one
and one half percent (1.5%) of the prepaid principal amount of the Term Advance
if the prepayment occurs prior to the first anniversary of the Closing Date,
and (ii) one percent (1%) of the prepaid principal amount of the Term
Advance if the prepayment takes place during the period beginning on the day
after the first anniversary of the Closing Date through August 22, 2009. This
Section 2.2(d) shall be applicable to all prepayments of Term
Advances including prepayments following a Default.

 

(e)           Computation. In the event the Prime Rate is changed
from time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate. All interest chargeable under
the Loan Documents shall be computed on the basis of a three hundred sixty
(360) day year for the actual number of days elapsed.

 

2.3          Crediting Payments. If an Event of Default does not exist,
Bank shall credit a wire

 

 

15

 

 

transfer of funds, check
or other item of payment to such deposit account or Obligation as Borrower
specifies. If an Event of Default exists, the receipt by Bank of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon Pacific time shall
be deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

 

2.4          Fees. Borrower shall pay to Bank the following:

 

(a)           Facility Fee. On the Closing Date, a Facility Fee
equal to $25,000 which shall be nonrefundable; and

 

(b)           Bank Expenses. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys’ fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys’ fees and expenses not later than ten Business Days after written
demand therefor. Bank shall endeavor to provide reasonable supporting
documentation for the amount of any Bank Expenses payable by Borrower to Bank
under this Section 2.4(b).

 

2.5          Overadvances. If the aggregate amount of the
outstanding Advances plus the aggregate face amount of all outstanding
Letters of Credit, and the FX Amount exceeds the lesser of the Revolving Line
or the Borrowing Base at any time, Borrower shall immediately pay to Bank, in
cash, the amount of such excess.

 

2.6          Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.9, shall continue in full force and effect
for so long as any Obligations remain outstanding (other than contingent
indemnity obligations for which no claim has been made) or Bank has any
obligation to make credit extensions under this Agreement. Notwithstanding the
foregoing, Bank shall have the right to terminate its obligation (if any) to
make credit extensions under this Agreement immediately and without notice upon
the occurrence and during the continuance of an Event of Default. Notwithstanding
termination, Bank’s Lien on the Collateral shall remain in effect for so long
as any Obligations are outstanding (other than contingent indemnity obligations
for which no claim has been made).

 

3.             CONDITIONS
OF LOANS.

 

3.1          Conditions Precedent to Initial Credit
Extension. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:

 

(a)           this Agreement, executed by Borrower;

 

(b)           a certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;

 

(c)           UCC National Form Financing Statement (Borrower);

 

(d)           an intellectual property security agreement (Borrower);

 

(e)           payoff letter from CapitalSource Finance LLC and any
documents required to terminate its security interest in Borrower’s assets;

 

(f)            certificates representing the Shares and stock powers
for the Shares which are part of the Collateral, executed in blank by Borrower
for each of Borrower’s Subsidiaries;

 

 

16

 

 

(g)           payment of the fees and Bank Expenses then due
specified in Section 2.4 hereof;

 

(h)           current financial statements of Borrower;

 

(i)            an audit of the Collateral, the results of which shall
be satisfactory to Bank; and

 

(j)            such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.

 

3.2          Conditions Precedent to all Credit
Extensions. The
obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:

 

(a)           in the case of an Advance, the timely receipt by Bank
of the Payment/Advance Form as provided in Section 2.1; and

 

(b)           the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of
such Payment/Advance Form, in the case of an Advance, and on the effective date
of such Credit Extension as though made at and as of each such date (except, in
each case, to the extent where such representations and warranties expressly
relate to an earlier date, in which case they shall have been true and correct
in all respects as of such earlier date), and no Event of Default shall have
occurred and be continuing as of the date of such Credit Extension, or would
exist after giving effect to such Credit Extension. The making of each Credit
Extension shall be deemed to be a representation and warranty by Borrower on
the date of such Credit Extension as to the accuracy of the facts referred to
in this Section 3.2.

 

4.             CREATION
OF SECURITY INTEREST.

 

4.1          Grant of Security Interest. Borrower grants and pledges to Bank a
continuing security interest in all of Borrower’s right, title and interest in,
to and under all presently existing and hereafter acquired or arising
Collateral in order to secure prompt repayment of any and all Obligations and
in order to secure prompt performance by Borrower of each of its covenants and
duties under the Loan Documents. Such security interest is effective to create
a valid and continuing security interest in and, upon the filing of appropriate
financing statements in Borrower’s jurisdiction of organization, a perfected
security interest in favor of Bank in the Collateral with respect to which a
security interest may be perfected by filing pursuant to the Code.

 

4.2          Delivery of Additional Documentation
Required; Authorization to File Financing Statements. Borrower shall from time to time
execute and deliver to Bank, at the reasonable request of Bank, all Negotiable
Collateral and other documents that Bank may reasonably request, in form
reasonably satisfactory to Bank, to perfect and continue the perfection of Bank’s
security interests in the Collateral and in order to fully consummate all of
the transactions contemplated under the Loan Documents. Borrower hereby
irrevocably authorizes Bank at any time and from time to time to file in any
filing office in any Code jurisdiction any initial financing statements and
amendments thereto that (i) indicate the Collateral (A) as all assets
of Borrower or words of similar effect, regardless of whether any particular
asset comprised in the Collateral falls within the scope of Article 9 of
the Code or such jurisdiction, or (B) as being of an equal or lesser scope
or with greater detail, and (ii) contain any other information required by
part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment. Borrower from time to time
may deposit with Bank specific time deposit accounts to secure specific
Obligations. Borrower authorizes Bank to hold such balances in pledge and to
decline to honor any drafts thereon or any request by Borrower or any other
Person to pay or otherwise transfer any part of such balances for so long as
the Obligations are outstanding (other than contingent indemnity obligations
for which no claim has been made).

 

4.3          Pledge of Shares. Borrower hereby pledges, assigns and
grants to Bank a security interest in all of Borrower’s right, title and
interest in the Shares, together with all proceeds and substitutions thereof,
all cash, stock and other moneys and property paid thereon, all rights to
subscribe for securities declared or granted in connection therewith, and all
other cash and noncash proceeds of the foregoing (collectively, the “Shares
Collateral”; provided however, that notwithstanding the foregoing, the term “Shares
Collateral” shall not include

 

 

17

 

 

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 IRC),
as security for the performance of the Obligations. The certificate or
certificates for the Shares, if any, will be delivered to Bank, accompanied by
an instrument of assignment duly executed in blank by Borrower, and Borrower
shall cause the books of each entity whose shares are part of the Shares and
any transfer agent to reflect the pledge of the Shares. Upon the occurrence and
during the continuance of an Event of Default, Bank may effect the transfer of
the Shares into the name of Bank and cause new certificates representing such
securities to be issued in the name of Bank or its transferee. Borrower will
execute and deliver such documents, and take or cause to be taken such actions,
as Bank may reasonably request to perfect or continue the perfection of Bank’s
security interest in the Shares. Unless an Event of Default shall have occurred
and be continuing, Borrower shall be entitled (a) to exercise any rights
with respect to the Shares and to give consents, waivers and ratifications in
respect thereof, provided that no vote shall be cast or consent, waiver or
ratification given or action taken if the result thereof would materially and
adversely affect the rights inuring to a holder of the Collateral or the rights
and remedies of Bank under this Agreement or any other Loan Document or the
ability of the Bank to exercise the same and (b) to receive and retain and
to utilize in accordance with this 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 other Loan Documents and applicable law. Upon the
occurrence and continuation of an Event of Default, all rights of Borrower to
exercise voting and/or consensual rights and powers and/or to receive dividends
that Borrower is entitled to exercise and/or receive pursuant to this Section 4.3
shall cease immediately upon notice by or on behalf of Bank to Borrower, and
all such rights thereupon shall become vested solely and exclusively in Bank,
automatically without any further action by any Person. The Shares are not held
in a brokerage or similar securities account. Bank acknowledges that
notwithstanding Borrower’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, Bank’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 Bank 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 Bank).  Bank agrees to
return to Borrower the stock certificate(s) representing the ownership
interests in Evolving Systems Networks India PVT, Ltd. as reasonably requested
by Borrower so long as Borrower has delivered the new stock certificate(s) of
Evolving Systems Networks India PVT, Ltd. representing 65% of Borrower’s
aggregate voting power of the ownership interests in therein. Borrower shall
merge Intermediate Holdco with and into Borrower within fifteen (15) days
following the Closing Date. Upon the effectiveness of such merger, the shares
of Evolving Systems Holdings Ltd that
constitute Shares under and as defined in this Agreement shall automatically
and without any further action by Bank or any other Person become subject to
Bank’s security interest in the Shares under this Agreement, and Borrower shall
deliver to Bank the certificate(s) representing 65% of the aggregate
voting power of the outstanding Capital Stock of Evolving Systems Holdings Ltd.,
accompanied by an instrument of assignment duly executed in blank by Borrower.

 

4.4          Right to Inspect. Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower’s usual business hours but no more than once a
year (unless an Event of Default has occurred and is continuing), to inspect
Borrower’s Books and to make copies thereof and to check, test, and appraise
the Collateral and to audit Borrower’s Accounts in order to verify Borrower’s
financial condition or the amount, condition of, or any other matter relating
to, the Collateral. Bank and any such officers, employees and agents shall
maintain the confidentiality of all non-public information (whether written or
verbal and whether specifically identified as “confidential”) obtained during
such visits, inspections, examinations, audits or meetings in accordance with Section 12.10.
Until the Revolving Loan Agreement is terminated and so long as no Event of
Default has occurred and is continuing, Bank agrees to coordinate exercise of
its rights under this Section 4.4 with any exercise of Bank’s rights under
Section 4.1 of the Revolving Loan Agreement.

 

 

18

 

 

5.             REPRESENTATIONS
AND WARRANTIES.

 

Borrower represents and
warrants as follows:

 

5.1          Due
Organization and Qualification. Borrower and each Subsidiary of Borrower is a
corporation, partnership or limited liability company, or other form of entity,
as the case may be, validly existing under the laws of its jurisdiction of
incorporation, organization or formation and is qualified and licensed to do
business in each jurisdiction where the failure so to qualify or be licensed or
qualified would reasonably be expected to result in a Material Adverse Effect.

 

5.2          Due
Authorization; No Conflict. The execution, delivery, and performance by Borrower
of the Loan Documents to which it is a party (a) are within Borrower’s
powers, (b) have been duly authorized by all requisite corporate action, (c) are
not in conflict with nor constitute a breach of any provision contained in
Borrower’s Organizational Documents, and (d) will not constitute an event
of default under any agreement to which Borrower is a party or by which
Borrower is bound, the effect of which would reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse Effect. Borrower
is not in default under any agreement to which it is a party or by which it is
bound, the effect of which would reasonably be expected to result in a Material
Adverse Effect.

 

5.3          No
Prior Encumbrances.
Borrower has good and marketable title to, or a valid leasehold interest in,
license of, or right to use, all of its material property necessary or used in
its ordinary course of business, free and clear of Liens, except for Permitted
Liens.

 

5.4          Intellectual
Property Collateral.
Borrower is the owner of, or has sufficient rights by license or otherwise in,
the Intellectual Property Collateral necessary for the conduct of Borrower’s
business, except for rights and licenses granted by Borrower in the ordinary
course of business and rights and licenses as set forth in the Schedule. As of
the Closing Date, each of the Patents of Borrower is valid and enforceable, and
to Borrower’s knowledge no part of the Copyrights, Patents or Trademarks of
Borrower has been judged invalid or unenforceable, in whole or in part, and to
Borrower’s knowledge no claim has been made that any part of the Copyrights,
Patents or Trademarks of Borrower infringes the Copyrights, Patents or
Trademarks of any third party. After the Closing Date, except as would not
reasonably be expected to result in a Material Adverse Effect: (i) each of
the Patents of Borrower is valid and enforceable; (ii) to Borrower’s
knowledge no part of the Copyrights, Patents or Trademarks of Borrower has been
judged invalid or unenforceable, in whole or in part; and (iii) to
Borrower’s knowledge no claim has been made that any part of the Copyrights,
Patents or Trademarks of Borrower infringes the Copyrights, Patents or
Trademarks of any third party. Except as set forth in the Schedule as of the
Closing Date, Borrower’s rights as a licensee of intellectual property do not
give rise to more than five percent (5%) of its gross revenue in any given
month, including without limitation revenue derived from the sale, licensing,
rendering or disposition of any product or service (the “Materiality Threshold”).
Borrower agrees to provide notice to Bank, with delivery of its monthly
Compliance Certificate, of any licenses that meet the foregoing Materiality
Threshold. Except as set forth in the Schedule or as disclosed in writing to
Bank after the Closing Date, Borrower is not a party to, or bound by, any
license that meets the Materiality Threshold that restricts the grant by
Borrower of a security interest in Borrower’s rights under such license.

 

5.5          Name;
Location of Chief Executive Office. Except as disclosed in the Schedule, as of the
Closing Date Borrower has not done business under any name other than that
specified on the signature page hereof. As of the Closing Date, the chief
executive office of Borrower is located at the address indicated in Section 10
hereof. As of the Closing Date, all Borrower’s Inventory and Equipment is
located only at the location set forth in Appendix 2 attached hereto.

 

5.6          Litigation. Except as set forth in the Schedule,
there are no actions or proceedings pending by or against any Credit Party
before any court or administrative agency which would reasonably be expected to
have a Material Adverse Effect, or a material adverse effect on Borrower’s
interest or Bank’s security interest in the Collateral.

 

5.7          No
Material Adverse Change in Financial Statements. All consolidated and consolidating financial
statements related to Borrower and any consolidated Subsidiary that Bank has
received from

 

19

 

 

Borrower fairly
present in all material respects the consolidated financial position and
results of operations of Borrower (or such Subsidiary) and its consolidated
Subsidiaries as of the dates and for the relevant periods indicated (subject in
the case of unaudited financial statements, to year end adjustments and matters
that would be disclosed in financial statement notes). Since the date of the
most recent financial statements submitted to Bank, there has not occurred any
Material Adverse Effect or, to Borrower’s knowledge, any event or condition
that would reasonably be expected to result in a Material Adverse Effect.

 

5.8          Merchantable Inventory. All material Inventory is in all
material respects of good and marketable quality, free from all material
defects, except for Inventory for which adequate reserves have been made.

 

5.9          Bona Fide Eligible Accounts. The Eligible Accounts identified in the
Borrowing Base Certificate most recently delivered to Bank are bona fide
existing obligations. The Borrowing Base Certificate most recently delivered to
Bank pursuant to this Agreement correctly identifies in all material respects
those Accounts of Borrower that are Eligible Accounts as of the date of such
Borrowing Base Certificate.

 

5.10        Solvency,
Payment of Debts.
Borrower is and, after giving effect to the transactions and Indebtedness
contemplated by the Loan Documents, will be Solvent.

 

5.11        Regulatory
Compliance. The
Credit Parties have met the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to the minimum funding requirements of
ERISA, and no event has occurred resulting from Borrower’s failure to comply
with ERISA that would reasonably be expected to result in a Material Adverse
Effect. Borrower is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940. Borrower
is not engaged principally, or as one of the important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T and U of the Board of Governors
of the Federal Reserve System). Borrower is in compliance in all material
respects with all the provisions of the Federal Fair Labor Standards Act. Borrower
is in compliance with all statutes, laws, ordinances or rules applicable
to it, except where any such non-compliance would not reasonably be expected to
result in a Material Adverse Effect.

 

5.12        Environmental
Condition. Except
as disclosed in the Schedule, no Credit Party’s properties or assets has ever
been used by any Credit Party or, to the best of Borrower’s knowledge, by
previous owners or operators, in the disposal of, or to produce, store, handle,
treat, release, or transport, any hazardous waste or hazardous substance other
than in accordance with applicable law; to the best of Borrower’s knowledge,
none of Borrower’s properties or assets has ever been designated or identified
in any manner pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for closure pursuant
to any environmental protection statute; no lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned by any Credit Party; and no Credit Party has received a
written summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal, state or other governmental agency
concerning any action or omission by any Credit Party resulting in the
releasing, or otherwise disposing of, hazardous waste or hazardous substances
into the environment.

 

5.13        Taxes. As of the Closing Date except as
disclosed in the Schedule, each Credit Party has filed or caused to be filed
all federal (if applicable) and all other tax returns required to be filed by
such Person, and have paid, or have made adequate provision for the payment of,
all taxes reflected therein (other than taxes that are not at the time
delinquent or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings and for which adequate reserves shall
have been set aside on the books of the applicable Credit Party in accordance
with GAAP). After the Closing Date, each Credit Party has filed or caused to be
filed all federal (if applicable) and all other material tax returns required
to be filed by such Person, and have paid, or have made adequate provision for
the payment of, all taxes reflected therein (other than taxes that are not at
the time delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings and for which adequate
reserves shall have been set aside on the books of the applicable Credit Party
in accordance with GAAP).

 

5.14        Shares. Borrower has full power and authority
to grant a security interest in the Shares and no disability or contractual
obligation (other than the contractual obligations of Borrower to CapitalSource
Finance LLC and related security, which will be released and terminated
effective as of the Closing Date) exists that

 

 

20

 

would prohibit
Borrower from pledging the Shares pursuant to this Agreement. There are no
subscriptions, warrants, rights of first refusal or other restrictions on, or
options exercisable with respect to the Shares, other than restrictions on
transfer under applicable state and federal securities laws. The Shares have
been and will be duly authorized and validly issued, and are or will be fully
paid and non-assessable. As of the Closing Date, the Shares are not the subject
of any present or threatened suit, action, arbitration, administrative or other
proceeding, and Borrower knows of no reasonable grounds for the institution of
any such proceedings.

 

5.15        Subsidiaries. As of the Closing Date, Borrower does
not own any stock, partnership interest or other equity securities of any
Person, except for Permitted Investments.

 

5.16        Government
Consents. Each
Credit Party has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower’s
business as currently conducted in the jurisdictions where such business is
currently conducted, except, where failure to do so would not reasonably, in
each such case, be expected to result in a Material Adverse Effect.

 

5.17        Accounts. Except as disclosed in the Schedule, as
of the Closing Date, none of Borrower’s nor any Subsidiary’s bank accounts are
maintained with a Person other than Bank.

 

5.18        Full
Disclosure. No
representation, warranty or other statement made by Borrower in any certificate
or written statement furnished to Bank in connection with the transactions
contemplated by or pursuant to the Loan Documents contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the factual statements contained in such certificates or statements taken as a
whole materially misleading as of the time made or delivered in light of the
circumstances under which it was made or delivered, provided that
notwithstanding anything else contained in this Agreement or any Loan Document,
Borrower does not make any representation, warranty or guaranty as to any
projections furnished to Bank (except that such projections have been prepared
by the Borrower on the basis of assumptions which were believed to be
reasonable as of the date of such projections in light of current and
reasonably foreseeable business conditions).

 

6.             AFFIRMATIVE COVENANTS.

 

So long as any Obligation shall remain unpaid (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) and Bank shall have any commitment to make Credit
Extensions hereunder, Borrower shall do all of the following:

 

6.1          Good
Standing. Borrower
shall (a) except as permitted under Section 7.3, maintain its and
each of its Subsidiaries’ valid existence and good standing (to the extent such
concept applies) in its jurisdiction of incorporation, organization or
formation and (b) maintain qualification in each jurisdiction in which it
is required under applicable law except where failure to maintain such
qualification would not reasonably be expected to result in a Material Adverse
Effect. Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain, in force all licenses, approvals and agreements, the loss of which
would reasonably be expected to have a Material Adverse Effect.

 

6.2          Government
Compliance. Borrower
shall meet, and shall cause each Credit Party to meet, the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to the
minimum funding requirements of ERISA. Borrower shall comply, and shall cause
each Subsidiary to comply, with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which would reasonably
be expected to have a Material Adverse Effect.

 

6.3          Financial Statements, Reports,
Certificates. Borrower
shall deliver the following to Bank: (a) as soon as available, but in any
event within thirty (30) days after the end of each calendar month, a company
prepared consolidated balance sheet, income, and cash flow statement covering
Borrower’s consolidated operations during such period, prepared in accordance
with GAAP, consistently applied, in a form reasonably acceptable to Bank and
certified by a Responsible Officer; (b) as soon as available, but in any
event within one hundred twenty (120) days after the end of Borrower’s fiscal
year, audited consolidated financial statements of

 

 

21

 

 

Borrower prepared in
accordance with GAAP, consistently applied, together with an unqualified
opinion on such financial statements of an independent certified public
accounting firm reasonably acceptable to Bank; (c) copies (which may be in
electronic form) of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and, if applicable, all reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission; (d) promptly after any officer of any
Credit Party obtains knowledge thereof, a report of any legal actions pending
or threatened in writing against Borrower or any Subsidiary that would
reasonably be expected to result in damages or costs to Borrower or any
Subsidiary to the extent the amount in controversy exceeds $100,000
individually or $150,000 in the aggregate; (e) as soon as available, but
in any event within thirty (30) days after the end of Borrower’s fiscal year,
an operating budget in a form reasonably acceptable to Bank and approved by
Borrower’s board of directors; (f) such budgets, sales projections,
operating plans or other financial information as Bank may reasonably request
from time to time; and (g) within ten (10) Business Days after the
reasonable request of Bank, a report signed by Borrower, in form reasonably
acceptable to Bank, listing any applications or registrations that Borrower has
made or filed in respect of any Patents, Copyrights or Trademarks and the
status of any active or pending material United States Patent, Copyright or
Trademark applications or registrations, as well as any material change in
Borrower’s Intellectual Property Collateral (other than Foreign applications
and registrations), including but not limited to any subsequent ownership right
of Borrower in or to any Trademark, Patent or Copyright not specified in
Exhibits A, B, and C of any Intellectual Property Security Agreement delivered
to Bank by Borrower in connection with this Agreement.

 

Within ten (10) days after the last day of each
month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a
Responsible Officer of Borrower in substantially the form of Exhibit C
hereto, together with aged listings of accounts receivable and accounts payable
of Borrower.

 

Borrower shall deliver to Bank with the monthly
financial statements a Compliance Certificate signed by a Responsible Officer
of Borrower in substantially the form of Exhibit D hereto.

 

6.4          Inventory; Returns. Borrower shall keep all material
Inventory in good and marketable condition, free from all material defects
except for Inventory for which adequate reserves have been made. Returns and
allowances, if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower, as
they exist at the time of the execution and delivery of this Agreement. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves more than Fifty
Thousand Dollars ($50,000).

 

6.5          Taxes. Borrower shall make, and shall cause
each Subsidiary to make, due and timely payment or deposit of all material
federal, state, and local taxes, assessments, or contributions required of it
by law, and will execute and deliver to Bank, following Bank’s reasonable
request, appropriate certificates attesting to the payment or deposit thereof;
and Borrower will make, and will cause each Subsidiary to make, timely payment
or deposit of all material tax payments and withholding taxes required of it by
applicable laws, including, but not limited to, those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon Bank’s reasonable request, furnish Bank with proof satisfactory to
Bank indicating that Borrower or a Subsidiary has made such payments or
deposits; provided that Borrower or a Subsidiary need not make any payment
referred to in this Section 6.4 if the amount or validity of such payment
is contested in good faith by appropriate proceedings and is reserved against
(to the extent required by GAAP) by Borrower or the applicable Subsidiary.

 

6.6          Insurance.

 

(a)           Borrower, at its expense, shall keep the
Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks, and in such amounts, as ordinarily
insured against by other owners in similar businesses conducted in the
locations where Borrower’s business is conducted on the date hereof. Borrower
shall also maintain insurance relating to Borrower’s business, ownership and
use of the Collateral in amounts and of a type that are customary to businesses
similar to Borrower’s.

 

(b)           All such policies of insurance shall be
in such form, with such companies, and in such amounts as are reasonably
satisfactory to Bank. All such policies of property insurance shall contain a
lender’s loss payable endorsement, in a form reasonably satisfactory to Bank,
showing Bank as an additional loss payee thereof, and all liability insurance
policies, other than errors and omissions and D&O policies, shall show the
Bank

 

 

22

 

 

as an additional
insured and shall specify that the insurer must give at least twenty (20) days
notice to Bank before canceling its policy for any reason.  Upon Bank’s request, Borrower shall deliver
to Bank certified copies of such policies of insurance and evidence of the
payments of all premiums therefor.  Upon
the occurrence and during the continuance of any Event of Default, all proceeds
payable under any such policy shall, at the option of Bank, be payable to Bank
to be applied on account of the Obligations.

 

6.7          Accounts. 
Within 30 days of the Closing Date, Borrower shall maintain and shall
cause each of its U.S. Subsidiaries to maintain its primary U.S. depository,
operating, and investment accounts with Bank.

 

6.8          EBITDA.  Borrower
shall have, measured at the end of each fiscal quarter beginning with the
fiscal quarter ending March 31, 2008, EBITDA for the twelve month period
ending on such date of not less than (a) $4,700,000 for the periods ending
March 31, 2008 and June 30, 2008 or (b) $4,250,000 for any
period thereafter.

 

6.9          Fixed Charge Coverage. 
Borrower shall have, measured at the end of each fiscal quarter
beginning with the fiscal quarter ending March 31, 2008, a Fixed Charge
Coverage Ratio for the twelve month period ending on such date of at least (a) 1.30:1.00
for the period ending March 31, 2008 or (b) 1.15:1.00 for any period
thereafter.

 

6.10        Senior Leverage Ratio. 
Borrower shall have, measured at the end of each fiscal quarter
beginning with the fiscal quarter ending March 31, 2008, a ratio of (a) Senior
Debt calculated on such date to (b) EBITDA for the twelve month period
ending on such date of at least (i) 2.00:1.00 on any date of measurement
to and including September 30, 2008 or (b) 1.75:1.00 on any date of
measurement thereafter.

 

6.11        Minimum Liquidity. 
Borrower shall have, measured at the end of each month, a balance of
Cash on a consolidated basis plus Net Accounts of not less than
$4,500,000.  “Net Accounts” means,
without duplication, Accounts of the Credit Parties and the “Credit Parties”
under and as defined in the Revolving Loan Agreement aged less than 90 days
(or, in the case of Qwest, Vodafone Egypt and Cable & Wireless Panama,
120 days) from invoice date.

 

6.12        Intellectual
Property Rights.

 

(a)           Borrower shall promptly give Bank written
notice of any applications or registrations of Patents or Trademarks filed with
the United States Patent and Trademark Office, or the UK Intellectual Property
Office (with respect to patent or trademark filings), including the date of
such filing and the registration or application numbers, if any.  Borrower shall (i) give Bank not less
than 30 days prior written notice of the filing of any applications or
registrations with the United States Copyright Office or the UK Intellectual Property
Office (with respect to copyright filings), including the title of such
intellectual property rights to be registered, as such title will appear on
such applications or registrations, and the date such applications or
registrations will be filed, and (ii) prior to the filing of any such
applications or registrations, shall execute such documents as Bank may
reasonably request for Bank to maintain its perfection in such intellectual
property rights to be registered by Borrower, and upon the request of Bank,
shall file such documents against any such applications or registrations.  Upon filing any such applications or
registrations with the United States Copyright Office, Borrower shall promptly
provide Bank with (i) a copy of such applications or registrations,
without the exhibits, if any, thereto, (ii) evidence of the filing of any
documents requested by Bank to be filed for Bank to maintain the perfection and
priority of its security interest in such intellectual property rights, and (iii) the
date of such filing.

 

(b)           Bank may audit Borrower’s Intellectual
Property Collateral to confirm compliance with this Section, provided such
audit will occur at a time and place agreed to by both parties, will be
designed not to disrupt the business operations of Borrower and may not occur
more often than once per year, unless an Event of Default has occurred and is
continuing.  Bank shall have the right,
but not the obligation, to take, at Borrower’s sole expense, any actions that
Borrower is required under this Section to take but which Borrower fails
to take, after 15 days’ prior written notice to Borrower.  Borrower shall reimburse and indemnify Bank
for all reasonable out-of-pocket costs and reasonable out-of-pocket expenses
incurred in the reasonable exercise of its rights under this Section.

 

23

 

6.13        Consent of Inbound Licensors.  Other than licenses in the ordinary course, prior to
or within a reasonable period of time after entering into or becoming bound by
any license or agreement, Borrower shall: 
(i) provide written notice to Bank of the material terms of such
license or agreement with a description of its likely impact on Borrower’s
business or financial condition; and (ii) in good faith use commercially
reasonable efforts to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for Borrower’s interest in such licenses or
contract rights to be deemed Collateral and for Bank to have a security
interest in it that might otherwise be restricted by the terms of the
applicable license or agreement, whether now existing or entered into in the
future, provided, however, that the failure to obtain any such consent or
waiver shall not constitute a default under this Agreement.

 

6.14        Future Stock Pledges and Guaranties. 
Borrower shall notify Bank at the time that any Person becomes a
Subsidiary of Borrower, and promptly thereafter (and in any event within ten
Business Days after the appropriate documents are provided to Borrower by Bank)
(a) cause such Subsidiary to execute and deliver to Bank a joinder to the
Guaranty to become a Guarantor, and (b) pledge the Capital Stock in such
Subsidiary to Bank to secure the Obligations; provided that, the foregoing
provisions of this Section 6.14 to the contrary notwithstanding: (i) nothing
in this Section 6.14 shall require a Credit Party to grant any Lien in
favor of Bank in relation to the Capital Stock of Evolving Systems GmbH,
Evolving Systems GmbH, (ii) Evolving Systems Networks India PVT Ltd. and
Evolving Systems Holdings Ltd. shall not be required to execute a joinder to
the guaranty or to grant a security interest in any of their respective
Property to secure any such guaranty or the Obligations, provided, however,
Evolving Systems Holdings Ltd. shall be required to execute a guaranty in
connection with the Revolving Loan Agreement; (iii) no Foreign Subsidiary
of Borrower that is a “controlled foreign corporation,” as defined in Section 957
of the IRC, shall be required to deliver any guaranty or grant a security
interest in any of its Property to secure any such guaranty or the Obligations,
and neither Borrower nor any of its other U.S. Subsidiaries shall be required
to pledge securities representing in the aggregate more than sixty five percent
(65%) of the voting power of the outstanding voting equity securities of any
such Foreign Subsidiary of Borrower; and (iv) no Foreign Subsidiary of
Borrower incorporated in the United Kingdom shall be required to deliver any
guaranty or grant a security interest in any of its Property to secure such
guaranty or the Obligations if such guaranty or granting of a security interest
would be in breach of Section 151 of the Companies Act 1985.

 

6.15        Further
Assurances.  At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this
Agreement.

 

7.             NEGATIVE
COVENANTS.

 

So
long as any Obligation shall remain unpaid (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) and Bank shall have any commitment to make Credit Extensions
hereunder, Borrower will not do any of the following:

 

7.1          Dispositions. 
Convey, sell, lease, transfer or otherwise dispose of (collectively, a “Transfer”),
or permit any of its Subsidiaries to Transfer, all or any part of its business
or property, other than:

 

(a)           Transfers of Inventory, use of cash, or liquidation or
sale of cash equivalents, in each case in the ordinary course of business;

 

(b)           Transfers of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business (such license may include a restriction on assignability
of the license and its continuation after a Change in Control);

 

(c)           Transfers (whether in a single transaction or a series
of transactions) of obsolete, worn out, replaced, damaged or excess property
that is no longer needed in the ordinary course of business and has a book
value not exceeding $200,000 in the aggregate in any fiscal year;

 

(d)           Transfers not specifically permitted otherwise in this
Section 7.1 (other than Capital Stock of a Credit Party to the extent
owned by another Credit Party) to the extent (i) such sale is for fair 

 

24

 

market value and the
aggregate fair market value of all assets so sold does not exceed an amount
equal to $250,000 in any fiscal year, (ii) no Default or Event of Default
exists or otherwise would result therefrom, (iii) after giving effect to
such transaction, Borrower is in compliance on a pro forma basis with the
financial covenants referenced in Sections 6.8 to 6.11 (recomputed for the most
recent period for which financial statements have been delivered in accordance
with the terms hereof after giving effect thereto as of the first day of such
period), and (iv) the sole consideration therefor received by Borrower or
such Subsidiary is cash;

 

(e)           Transfers in connection with transactions otherwise
permitted under the other subsections of this Section 7 to the extent
permitted thereunder;

 

(f)            Transfers of property to any other Credit Party; and

 

(g)           Transfers permitted under the Revolving Loan
Documents.

 

7.2          Change in Business; Change in Control
or Executive Office.  Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the development,
distribution and implementation of software primarily for the communications
industry and the provision of related services, and other activities that are
reasonably incidental or ancillary thereto; or suffer or permit a Change in
Control; or without twenty (20) days prior written notification to Bank,
relocate its chief executive office or state of incorporation or formation or
change its legal name; or without Bank’s prior written consent, change the date
on which its fiscal year ends.

 

7.3          Mergers or Acquisitions. 
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with or into any other business organization, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
Capital Stock or property of another Person, other than:

 

(a)           Permitted Investments; and

 

(b)           upon not less than ten (10) Business Days’ prior
written notice to Bank, any Subsidiary of Borrower may (A) merge with, or
dissolve or liquidate into, or transfer its property to, Borrower or a
Wholly-Owned Subsidiary of Borrower that is a Credit Party, provided that, with
respect to any such merger, Borrower or such Wholly-Owned Subsidiary shall be
the continuing or surviving entity and (B) merge with, or dissolve or
liquidate into, or transfer its property to a Wholly-Owned Subsidiary of
Borrower as permitted by the Revolving Loan Documents.

 

7.4          Indebtedness. 
Create, incur, assume or be or remain liable with respect to any
Indebtedness, or permit any Subsidiary so to do, other than Permitted
Indebtedness.

 

7.5          Encumbrances; Negative Pledges.  (a) Create,
incur, assume or suffer to exist any Lien with respect to any of its property,
or assign or otherwise convey any right to receive income, including the sale
of any Accounts, or permit any of its Subsidiaries so to do, except for
Permitted Liens, or (b) agree with any Person other than Bank not to grant
a security interest in, or otherwise encumber, any of its property, or permit
any Subsidiary to do so except (i) in connection with any document or
instrument governing Liens related to purchase money Indebtedness and capital
leases which, in each case, otherwise constitute Permitted Liens, (ii) leased
equipment, intellectual property and general intangibles of Borrower to the
extent excluded from the Collateral, (iii) any Hedging Agreements, so long
as such prohibition is limited to the assets securing Borrower’s or such
Subsidiary’s obligations under the applicable Hedging Agreement and (iv) as
a result of the Loan Documents and the Revolving Loan Documents.

 

7.6          Distributions. 
Pay any dividends or make any other distribution or payment on account
of or in redemption, retirement or purchase of any Capital Stock, or permit any
of its Subsidiaries to do so, except that:

 

(a)           Borrower may repurchase the equity securities or
warrants or options to acquire any equity securities of Borrower owned or held
by former officers or employees pursuant to stock repurchase 

 

25

 

agreements as long as an
Event of Default does not exist prior to such repurchase or would not exist
after giving effect to such repurchase;

 

(b)           the Credit Parties and their Subsidiaries may make
payments pursuant to and in accordance with the Cross License Agreement and
Transfer Pricing Agreements; and

 

(c)           any Wholly-Owned Subsidiary of Borrower may declare
and pay dividends and other distributions to Borrower or to any other
Wholly-Owned Subsidiary of Borrower that is a Credit Party and the Wholly-Owned
Subsidiaries of Borrower party to the Revolving Loan Agreement or any of the
other Revolving Loan Documents may declare and pay dividends permitted under
the Revolving Loan Agreement.

 

7.7          Investments. 
Directly or indirectly acquire or own, or make any Investment in or to
any Person, or permit any of its Subsidiaries so to do, other than Permitted
Investments;  or suffer or permit any
Subsidiary to be a party to, or be bound by, an agreement that restricts such
Subsidiary from paying dividends or otherwise distributing property to Borrower
except (i) as a result of the Loan Documents and the Revolving Loan
Documents and (ii) as permitted under the Transfer Pricing Agreements.

 

7.8          Transactions with Affiliates. 
Directly or indirectly enter into or permit to exist any material
transaction with any Affiliate of Borrower except for:

 

(a)           transactions expressly permitted by, and subject to
the terms of, this Agreement, the other Loan Documents and the Revolving Loan
Documents;

 

(b)           compensation and employment arrangements with
employees, officers and directors in the ordinary course of business;

 

(c)           (i) transactions between or among any of the
Credit Parties and/or their Wholly-Owned Subsidiaries that are, or concurrent
with such transaction becomes, a Credit Party and (ii) transactions
between or among the Revolving Borrower and its Subsidiaries that are permitted
by the Revolving Loan Agreement;

 

(d)           the Cross License Agreement and the Transfer Pricing
Agreements;

 

(e)           the agreements identified in the Schedule; and

 

(f)            other transactions that are in the ordinary course of
Borrower’s business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm’s length transaction with a
non-affiliated Person.

 

7.9          Subordinated Debt. 
Make any payment in respect of any Subordinated Debt, or permit any of
its Subsidiaries to make any such payment, except in compliance with the terms
of such Subordinated Debt, or amend any provision contained in any
documentation relating to the Subordinated Debt without Bank’s prior written
consent except as permitted under the applicable subordination agreement.

 

7.10        Inventory and Equipment. 
Store any Inventory or Equipment with a fair market value in excess of
$250,000 with a bailee, warehouseman, or other third party unless the third
party has been notified of Bank’s security interest and Bank (a) has
received an acknowledgment from the third party that it is holding or will hold
the Inventory or Equipment for Bank’s benefit or (b) is in pledge
possession of the warehouse receipt, where negotiable, covering such Inventory
or Equipment. Store or maintain any Equipment or Inventory at a location other
than (i) one or more of the locations set forth in Appendix 2 attached
hereto or (ii) any other location or locations disclosed to Bank in
writing.

 

26

 

7.11        Compliance. 
Become an “investment company” or be controlled by an “investment
company,” within the meaning of the Investment Company Act of 1940, or become
principally engaged in, or undertake as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying margin
stock, or use the proceeds of the Term Advance for such purpose.

 

8.             EVENTS
OF DEFAULT.

 

Any one or more of the following events shall
constitute an Event of Default by Borrower under this Agreement:

 

8.1          Payment Default. 
If Borrower fails to pay (a) when due, any principal or prepayment
premium on the Term Advance or (b) within two (2) Business Days after
the same shall become due and payable, any interest, Bank Expenses or other
Obligations (other than principal or prepayment premiums) provided for or
required under this Agreement or the other Loan Documents;

 

8.2          Covenant Default.

 

(a)           If Borrower fails to perform any obligation under Section 6.3
(Financial Statements, Reports, Certificates), 6.5 (Taxes), 6.6 (Insurance),
6.8 (EBITDA), 6.9 (Fixed Charge Coverage Ratio), 6.10 (Senior Leverage Ratio),
6.11 (Minimum Liquidity) or 6.14 (Future Stock Pledges and Guaranties) or
violates any of the covenants contained in Article 7 of this Agreement; or

 

(b)           If Borrower fails or neglects to perform or observe
any other material term, provision, condition, covenant contained in this
Agreement or in any of the other Loan Documents and as to any default under
such other term, provision, condition or covenant that can be cured, has failed
to cure such default within 30 days after Borrower receives written notice
thereof or any officer of Borrower becomes aware thereof, and within such time
period the failure to have cured such default shall not be deemed an Event of
Default.

 

8.3          Material Adverse Effect. 
A Material Adverse Effect occurs;

 

8.4          Attachment.  (a) If
any material portion of Borrower’s assets, which has an aggregate fair market
value in excess of $175,000 individually or $350,000 in the aggregate, is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within thirty (30) days of being
issued or executed, (b) if Borrower is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs for more than fifteen (15) calendar days which is
reasonably likely to be, have or result in a Material Adverse Effect, (c) if
a judgment or other claim becomes a lien or encumbrance upon any material
portion of Borrower’s assets, which has an aggregate fair market value in
excess of $175,000 individually or $350,000 in the aggregate and such lien or
encumbrance has not been released or removed within thirty (30) days of
attaching, or (d) if a notice of lien, levy, or assessment is filed of
record with respect to any material portion of Borrower’s assets which has an
aggregate fair market value in excess of $175,000 individually or $350,000 in
the aggregate by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within thirty (30) days after Borrower
receives notice thereof, provided that none of the foregoing as described in
clauses (a) through (d) shall constitute an Event of Default where
such action or event is stayed or an adequate bond has been posted pending a
good faith contest by Borrower;

 

8.5          Insolvency. 
If Borrower is no longer Solvent, if an Insolvency Proceeding is
commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within sixty (60) days after the date
of commencement;

 

8.6          Other Agreements. 
If there is (a) an “Event of Default” as defined in the Revolving
Loan Agreement, (b) a default in the payment of any principal of or
interest when due on any Indebtedness of Borrower (other than the Obligations
and Borrower’s guarantee of the “Obligations” as defined in the Revolving Loan
Agreement) in the outstanding principal amount in excess of $250,000 in the
aggregate, which default is not 

 

27

 

cured or waived within
any applicable grace or cure period, or (c) a default or other failure to
perform in any agreement to which Borrower is a party or by which it is bound
relating to any Indebtedness (other than the Obligations and Borrower’s
guarantee of the “Obligations” as defined in the Revolving Loan Agreement) in
the outstanding principal amount in excess of $750,000 in the aggregate, which
default or breach is not cured or waived within any applicable grace or cure
period, which results in a right by a third party or parties, whether or not
exercised, to accelerate the maturity of such Indebtedness;

 

8.7          Judgments. 
If a judgment or judgments for the payment of money in an amount of at
least $175,000 individually or $350,000 in the aggregate (excluding judgments
and decrees to the extent covered by third party insurance of Borrower where
such coverage has been acknowledged by the insurer) shall be rendered against
Borrower and shall remain unsatisfied and unstayed for a period of thirty (30)
days of being rendered; or

 

8.8          Misrepresentations. 
If any warranty or representation set forth herein or in any certificate
delivered to Bank by Borrower pursuant to this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect when made
or deemed made.

 

8.9          Guaranty. 
If any guaranty of all or a portion of the Obligations (a “Guaranty”)
ceases for any reason to be in full force and effect, or any Guarantor fails to
perform any obligation under any Guaranty or a security agreement securing any
Guaranty (collectively, the “Guaranty Documents”) which failure to perform is
not cured or waived within any applicable grace or cure period, or any “event
of default” occurs under any Guaranty Document or any Guarantor revokes or
purports to revoke a Guaranty, or any warranty or representation of a Guarantor
set forth in any Guaranty Document to which such Guarantor is a party or in any
certificate delivered to Bank by a Guarantor in connection with any Guaranty
Document shall prove to have been incorrect in any material respect when made
or deemed made, or if any of the circumstances described in Sections 8.4
through 8.7 occur with respect to any Guarantor.

 

9.             BANK’S
RIGHTS AND REMEDIES.

 

9.1          Rights and Remedies. 
Upon the occurrence and during the continuance of an Event of Default,
Bank may, at its election, without notice of its election and without demand,
do any one or more of the following, all of which are authorized by Borrower:

 

(a)           Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable (provided that upon the occurrence of an Event of Default described
in Section 8.5, all Obligations shall become immediately due and payable
without any action by Bank);

 

(b)           Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other Loan Document;

 

(c)           Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;

 

(d)           Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the
Collateral.  Borrower agrees to assemble
the Collateral if Bank so requires, and to make the Collateral available to
Bank at a place or places designated by Bank which are reasonably convenient to
Bank and Borrower.  Borrower authorizes
Bank to enter the premises where the Collateral is located, to take and
maintain possession of the Collateral, or any part of it, and to pay, purchase,
contest, or compromise any encumbrance, charge, or lien which in Bank’s
determination appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith.  With respect to any of Borrower’s owned
premises, Borrower hereby grants Bank a license to enter into possession of
such premises and to occupy the same, without charge, in order to exercise any
of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(e)           Set off and apply to the Obligations any and all (i) balances
and deposits of Borrower held by Bank, or (ii) indebtedness at any time
owing to or for the credit or the account of Borrower held 

 

28

 

by Bank (Bank agrees to
notify Borrower promptly after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff
and application).;

 

(f)            Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral.  Except to
the extent that such use, assignment, license or sublicense is expressly
prohibited under a license agreement and would result in a breach under such
agreement for which such agreement would reasonably be expected to be
terminated by such licensor, upon the occurrence of such an Event of Default
and the exercise of its rights under this Section 9.1(f), Bank is granted
a license or other right, solely pursuant to the provisions of this Section 9.1,
to use, without charge, Borrower’s labels, patents, copyrights, rights of use
of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, solely as necessary in completing production of, advertising for
sale, and selling any Collateral and, and solely in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all
licenses and all franchise agreements shall inure to Bank’s benefit;

 

(g)           Dispose of the Collateral by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such
places (including Borrower’s premises) as Bank determines is commercially
reasonable, and apply any proceeds to the Obligations in whatever manner or
order Bank deems appropriate;

 

(h)           Bank may credit bid and purchase at any public sale;
and

 

(i)            Any deficiency that exists after disposition of the
Collateral as provided above will be paid promptly by Borrower.

 

9.2          Power of Attorney.  Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Bank
(and any of Bank’s designated officers, or employees) as Borrower’s true and
lawful attorney to:  (a) send
requests for verification of Accounts or notify account debtors of Bank’s
security interest in the Accounts; (b) endorse Borrower’s name on any
checks or other forms of payment or security that may come into Bank’s
possession; (c) sign Borrower’s name on any invoice or bill of lading
relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust
all claims under and decisions with respect to Borrower’s policies of
insurance; (f) settle and adjust disputes and claims respecting the
accounts directly with account debtors, for amounts and upon terms which Bank
determines to be reasonable; and (g) to file, in its sole discretion, one
or more financing or continuation statements and amendments thereto, relative
to any of the Collateral.  The
appointment of Bank as Borrower’s attorney in fact, and each and every one of
Bank’s rights and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully repaid and performed (other than
contingent indemnification Obligations to the extent no claim giving rise
thereto has been asserted) and Bank’s obligation to provide Credit Extensions
hereunder is terminated.

 

9.3          Accounts Collection. 
At any time after the occurrence and during the continuance of an Event
of Default, Bank may notify any Person owing funds to Borrower of Bank’s
security interest in such funds and verify the amount of such Account.  After the occurrence and during the
continuance of an Event of Default, Borrower shall collect all amounts owing to
Borrower for Bank, receive in trust all payments as Bank’s trustee, and
promptly deliver such payments to Bank in their original form as received from
the account debtor, with proper endorsements for deposit.

 

9.4          Bank Expenses. 
If Borrower fails to pay any amounts or furnish any required proof of
payment due to third persons or entities, as required under the terms of this
Agreement, then Bank may do any or all of the following after reasonable
written notice to Borrower:  (a) make
payment of the same or any part thereof; or (b) obtain and maintain
insurance policies of the type discussed in Section 6.6 of this Agreement,
and take any action with respect to such policies as Bank reasonably deems
prudent.  Any amounts so paid or
deposited by Bank shall constitute Bank Expenses, shall be due and payable
within 10 Business Days following demand, and, to the extent not paid when due,
shall bear interest at the then applicable rate hereinabove provided, and shall
be secured by the Collateral.  Any payments
made by Bank shall not constitute an agreement by Bank to make similar 

 

29

 

payments in the future or
a waiver by Bank of any Event of Default under this Agreement.

 

9.5          Bank’s Liability for Collateral. 
So long as Bank complies with reasonable banking practices (including,
without limitation, reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder), Bank shall not in any
way or manner be liable or responsible for: 
(a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever.  All risk of loss, damage or destruction of
the Collateral shall be borne by Borrower.

 

9.6          Shares. 
Borrower recognizes that Bank may be unable to effect a public sale of
any or all the Shares in connection with the exercise of Bank’s rights and remedies
under this Agreement during the continuance of an Event of Default by reason of
certain prohibitions contained in federal securities laws and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof.  Borrower acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner.  Bank shall be under
no obligation to delay a sale of any of the Shares for the period of time
necessary to permit the issuer thereof to register such securities for public
sale under federal securities laws or under applicable state securities laws, even
if such issuer would agree to do so.

 

9.7          Remedies
Cumulative.  Bank’s rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be
cumulative.  Bank shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity.  No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of
any Event of Default on Borrower’s part shall be deemed a continuing
waiver.  No delay by Bank shall constitute
a waiver, election, or acquiescence by it. 
No waiver by Bank shall be effective unless made in a written document
signed on behalf of Bank and then shall be effective only in the specific
instance and for the specific purpose for which it was given.

 

9.8          Demand; Protest. 
Except as expressly provided for herein or in any other Loan Document,
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default or any other
notice (to the maximum extent permitted by applicable law) of any kind in
connection with the Loan Documents or the Collateral.

 

10.          NOTICES.

 

Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any Loan Document
shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrower or to Bank, as the case may be, at its addresses set
forth below:

 

	
  If to Borrower:

  	
  EVOLVING
  SYSTEMS, INC.

  9777 Pyramid Court, Suite 100

  Englewood, CO  80112

  Attn:  Anita T. Moseley, General Counsel

  FAX:  (303) 802-1138

  
	
   

  	
   

  
	
  with a copy to:

  	
  Attn:  Brian R. Ervine

  Executive Vice
  President, Chief Financial and Administrative Officer

  FAX:  (303) 802-1420

  
	
   

  	
   

  
	
  If to Bank:

  	
  Bridge Bank, N.A.

  55 Almaden Blvd.

  San Jose, CA 95113

  Attn:  Dan Pistone

  FAX:  (408) 423-8520

  

 

30

 

The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other.

 

Notices sent by personal delivery or recognized
overnight delivery service, or mailed by first-class, certified or registered
mail, shall be deemed to have been given when received; notices sent by
telefacsimile shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day).  Notices delivered through electronic
communications to the extent provided in the next paragraph shall be effective
as provided in such paragraph.

 

Notices and other communications to Bank hereunder may
be delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by Bank.  Bank may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it, provided that approval of such
procedures may be limited to particular notices or communications.  Unless each of the Persons sending and
receiving particular notices or communications otherwise agree, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient by
return e-mail (but excluding automated return e-mail, such as e-mail sent by
the “return receipt requested” function) or other written acknowledgement,
provided that if such notice or other communication is not sent during the
normal business hours of the recipient, such notice or communication shall be
deemed to have been sent at the opening of business on the next Business Day,
and (ii) notices or communications posted to an Internet or intranet
website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor.

 

11.          CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to principles of conflicts of law.  Each
of Borrower and Bank hereby submits to the non-exclusive jurisdiction of the
state and Federal courts located in the County of Santa Clara, State of
California.  BORROWER AND BANK EACH
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT.  EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

 

If the jury waiver set forth in Section is not enforceable,
then any dispute, controversy or claim arising out of or relating to this
Agreement, the Loan Documents or any of the transactions contemplated therein
shall be settled by judicial reference pursuant to Code of Civil Procedure Section 638
et seq. before a referee sitting without a jury, such referee to be mutually
acceptable to the parties or, if no agreement is reached, by a referee
appointed by the Presiding Judge of the California Superior Court for Santa
Clara County.  This Section shall not
restrict a party from exercising remedies under the Code or from exercising
pre-judgment remedies under applicable law.

 

12.          GENERAL
PROVISIONS.

 

12.1        Successors and Assigns. 
This Agreement shall bind and inure to the benefit of the respective
successors and permitted assigns of each of the parties; provided, however,
that neither this Agreement nor any rights hereunder may be assigned by
Borrower without Bank’s prior written consent, which consent may be 

 

31

 

granted or withheld in
Bank’s sole discretion.  Subject to
compliance with Section 12.3 by both Bank and the Transferee (as defined
in Section 12.3), Bank shall have the right without the consent of or
notice to Borrowers to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits
hereunder.

 

12.2        Indemnification. 
Borrower shall defend, indemnify and hold harmless Bank and its
officers, employees, and agents against: 
(a) all obligations, demands, claims, and liabilities claimed or
asserted by any other party in connection with the transactions contemplated by
this Agreement and the other Loan Documents; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank as a result of or in
any way arising out of, following, or consequential to transactions between
Bank and Borrower under this Agreement and the other Loan Documents (including
without limitation reasonable attorneys’ fees and expenses), except for losses
caused by the gross negligence or willful misconduct of the Person seeking
indemnification.

 

12.3        Tax Related Matters Upon Transfer or
Other Similar Transactions By Bank. 
Notwithstanding any other provision of this Agreement or any other Loan
Document, if Bank sells, transfers, assigns, negotiates, or grants
participations in all or any part of, or any interest in, Bank’s obligations,
rights or benefits under any of the Loan Documents (a “Transferred Interest”)
to any Person (a “Transferee”), then:

 

(a)           if Borrower is required by applicable law to deduct or
withhold any amounts for or in respect of tax with respect to any Transferred
Interest (a “Tax Deduction”) that Borrower would not have otherwise been
required to deduct or withhold if Bank had not sold, transferred, assigned,
negotiated or granted participation in such Transferred Interest,

 

(i)    Borrower
shall be permitted under the Loan Documents to deduct or withhold any such
amounts, and

 

(ii)   Borrower
shall not be required to pay, and neither Bank nor any Transferee shall be
entitled to receive, any amount under the Loan Documents with respect to such
Transferred Interest that is greater than (A) the amount that Borrower
would have been required to pay to Bank with respect to such Transferred Interest
if Bank had not sold, transferred, assigned, negotiated or granted a
participation in such Transferred Interest, less (B) any Tax Deduction
with respect to such Transferred Interest, less (C) any penalties,
interest and reasonable expenses arising from such Tax Deduction or with
respect thereto;

 

(b)           each Transferee shall timely deliver documentation
prescribed by applicable law or reasonably requested by Borrower as will enable
Borrower to determine whether or not withholding, backup withholding or
information reporting requirements would apply in respect of payments required
under the Loan Documents with respect to the relevant Transferred Interest;

 

(c)           each Transferee and, if applicable, Bank, shall
complete all required procedural formalities and shall deliver to Borrower (in
such number of copies as is required under applicable law or as shall be
reasonably requested by Borrower) on or prior to the date on which such
Transferee acquires a Transferred Interest (and promptly from time to time thereafter
upon the reasonable request of Borrower or upon the obsolescence, expiration or
invalidity of any form or document previously delivered by such Transferee or,
if applicable, Bank) all duly completed forms and other documentation, if any,
required to enable Borrower to make all payments required under the Loan
Documents with respect to such Transferred Interest without deduction or
withholding for or in respect of taxes, or, in the case of a Transferred
Interest in respect of which payments under the Loan Documents are not eligible
for a complete exemption, at a reduced rate of deduction or withholding in
respect of taxes;

 

(d)           with respect to any Transferred Interest, Bank and the
relevant Transferee shall indemnify Borrower, within 20 days after written
demand therefor, for all amounts for or in respect of taxes paid or incurred by
Borrower with respect to such Transferred Interest and the full amount of any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, excluding any amounts to the extent such amounts previously reduced,
under Section 12.3(a)(ii)(B) or (C), the amount paid by Borrower
under the Loan Documents with respect to such Transferred Interest; and

 

32

 

(e)           any failure by Borrower to comply with any obligation
under Section 6.5 (Taxes) with respect to any Transferred Interest as a
result of this Section 12.3 shall not constitute an Event of Default by
Borrower under this Agreement.

 

12.4        United States Person Status. 
Bank represents and warrants that it is a “United States person” within
the meaning of Section 7701(a)(30) of the IRC and that it is lending under
this Agreement through a lending office located in the United States.

 

12.5        Time of Essence. 
Time is of the essence for the performance of all obligations set forth
in this Agreement.

 

12.6        Severability of Provisions. 
Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.

 

12.7        Amendments in Writing, Integration. 
Neither this Agreement nor the Loan Documents can be amended or
terminated orally.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement and the
Loan Documents, if any, are merged into this Agreement and the Loan Documents.

 

12.8        Counterparts. 
This Agreement may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. 
Delivery of an executed counterpart of a signature page of this
Agreement by telecopy or electronic copy shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

12.9        Survival.  All
covenants, representations and warranties made in this Agreement shall survive
the execution and delivery of the Loan Documents and the making and funding of
the Term Advance so long as any Obligations remain outstanding (other than
contingent indemnity obligations for which no claim has been made).  The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 and the confidentiality provisions of Section 12.10
shall survive until all applicable statute of limitations periods with respect
to actions that may be brought have run.

 

12.10      Confidentiality. 
In handling any confidential information Bank and all employees and
agents of Bank, including but not limited to accountants, shall exercise the
same degree of care that it exercises with respect to its own proprietary
information of the same types to maintain the confidentiality of any non-public
information thereby received or received pursuant to this Agreement or the
other Loan Documents except that disclosure of such information may be made (i) to
the subsidiaries or affiliates of Bank in connection with their present or
prospective business relations with Borrower (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such information and instructed to keep such information confidential
in accordance with this Section 12.10), (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
(x) entered into a comparable confidentiality agreement in favor of
Borrower to which Borrower is a party or pursuant to which Borrower and its
Subsidiaries are third party beneficiaries and (y) delivered a copy of
such confidentiality agreement to Borrower, (iii) as required by law,
regulations, rule or order, subpoena, judicial order or similar order, (iv) as
may be required in connection with the examination, audit or similar
investigation of Bank by a regulatory authority or examiner regulating or
having jurisdiction over Bank and requiring or requesting such disclosure and (v) as
Bank may determine in connection with the enforcement of any remedies hereunder
at any time during the existence of an Event of Default.  Confidential information hereunder shall not
include information that either:  (a) is
in the public domain or in the knowledge or possession of Bank when disclosed
to Bank with no confidentiality obligations to a third party, or becomes part
of the public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to Bank by a third party on a non-confidential basis other than as a
result of this Section 12.10, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.  Should Bank be required to disclose any such
information by virtue of a subpoena or similar process by any court, tribunal,
or agency pursuant to items (iii), (iv) or (v) above, then Bank shall
use commercially reasonable efforts to promptly notify Borrower thereof so as
to allow Borrower, at its sole cost and expense, to seek a protective order or
to take any other 

 

33

 

appropriate action to
protect its rights.

 

12.11      Patriot Act.  To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record
information that identifies each person who opens an account.  WHAT THIS MEANS FOR YOU:  when you open an account, we will ask your
name, address, date of birth, and other information that will allow us to
identify you.  We may also ask to see
your driver’s license or other identifying documents.

 

12.12      No Consequential Damages.  
No party to this Agreement or any other Loan Document, nor any agent or
attorney of such party or Bank, shall be liable to any other party to this
Agreement or any other Person on any theory of liability for any special,
indirect, consequential or punitive damages.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

34

 

                IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

	
   

  	
  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Brian
  R. Ervine

  
	
   

  	
   

  
	
   

  	
  Title: Executive Vice
  President, Chief Financial and Administrative Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIDGE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
						

 

35

 

APPENDIX
1

 

	
  NAME
  OF ACCOUNT DEBTOR

  	
   

  	
  % WH TAXES

  
	
  Accenture

  	
   

  	
  10%

  
	
  Alaska Communications

  	
   

  	
   

  
	
  Alcatel

  	
   

  	
   

  
	
  Alltel

  	
   

  	
   

  
	
  AT&T Bellsouth

  	
   

  	
   

  
	
  AT&T Cingular

  	
   

  	
   

  
	
  Comcast

  	
   

  	
   

  
	
  Cox

  	
   

  	
   

  
	
  Cable &
  Wireless — Panama

  	
   

  	
   

  
	
  Leap/Crickett

  	
   

  	
   

  
	
  Lucent

  	
   

  	
   

  
	
  Qwest

  	
   

  	
   

  
	
  AT&T (Formerly SBC)

  	
   

  	
   

  
	
  Shaw

  	
   

  	
   

  
	
  SNET

  	
   

  	
   

  
	
  Sprint/Nextel

  	
   

  	
   

  
	
  Embarq

  	
   

  	
   

  
	
  Telenor Pakistan

  	
   

  	
   

  
	
  Telcordia

  	
   

  	
   

  
	
  Tw Telecom

  	
   

  	
   

  
	
  TNS

  	
   

  	
   

  
	
  Vartec

  	
   

  	
   

  
	
  Verisign

  	
   

  	
   

  
	
  Verizon

  	
   

  	
   

  
	
  Accenture

  	
   

  	
   

  
	
  American
  Telecommunication, Inc.

  	
   

  	
  Brazil 25% &
  20%; Mexico 10%

  
	
  Bulgaria Telecom

  	
   

  	
  15%

  
	
  British Telecom

  	
   

  	
   

  
	
  Cable & Wireless

  	
   

  	
   

  
	
  Cybercity

  	
   

  	
   

  
	
  Danet

  	
   

  	
   

  
	
  Lebanon MIC 1 S.A.L.

  	
   

  	
   

  
	
  Hutchison UK

  	
   

  	
   

  
	
  Hutchison Whampoa

  	
   

  	
   

  
	
  Inmarsat

  	
   

  	
   

  
	
  Monet

  	
   

  	
   

  
	
  MTN SA

  	
   

  	
   

  
	
  MTN Nigeria

  	
   

  	
  5%

  
	
  NEC Japan

  	
   

  	
   

  
	
  NTL (Acquired By Virgin
  Media)

  	
   

  	
   

  
	
  Siemens AG/VIPNet

  	
   

  	
   

  
	
  Siemans CAC

  	
   

  	
   

  
	
  Nokia/Siemans

  	
   

  	
   

  
	
  SiMobile

  	
   

  	
   

  
	
  Swisscom

  	
   

  	
   

  
	
  T-Mobile

  	
   

  	
   

  
	
  Tele2

  	
   

  	
   

  
	
  Virgin Media

  	
   

  	
   

  
	
  VipNet

  	
   

  	
   

  
	
  Vodafone Egypt

  	
   

  	
  15%

  
	
  Vodafone Greece

  	
   

  	
   

  
	
  IBM Greece

  	
   

  	
   

  
	
  Vodafone Japan

  	
   

  	
  10%

  
	
  Vodafone UK

  	
   

  	
   

  
	
  Wireless Trade

  	
   

  	
  5%

  

 

1

 

Appendix
2

 

Locations of
Inventory and Equipment

 

	
  Office Locations

  
	
   

  
	
  Evolving Systems, Inc.

  9777 Pyramid Court,
  Suite 100

  Englewood, CO 80112

  USA

  
	
   

  
	
  Evolving Systems Limited

  One Angel Square

  Torrens Street London
  EC1V 1PL

  UK

  
	
   

  
	
  Evolving Systems Limited

  Riverside Buildings 108

  Walcot Street

  Bath BA1 5BG

  UK

  
	
   

  
	
  Tertio Deutschland GmbH

  Erich-Zeitler-Strasse
  12

  85737 Ismaning

  Munich

  Germany

  
	
   

  
	
  Evolving Systems Networks India
  Private Ltd.

  3rd Floor,
  HM Geneva House

  14, Cunningham Road

  Bangalore — 560 052

  India

  
	
   

  
	
  Evolving Systems Networks India
  Private Ltd.

  Shah Sultan Complex

  Door No. 17, Ali
  Asker Road

  Bangalore — 560 052

  India

  
	
   

  
	
  Evolving Systems Limited

  
	
  P-3-15, Plaza Damas

  
	
  60, Jalan Sri Hartamas
  1,

  
	
  Sri Hartamas

  
	
  50480 Kuala Lumpur

  
	
  Malaysia

  

 

2

 

	
  DEBTOR:

  	
   

  	
  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
  SECURED PARTY:

  	
   

  	
  BRIDGE BANK, N.A.

  

 

EXHIBIT A

 

COLLATERAL DESCRIPTION ATTACHMENT

TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to
as “Borrower” or “Debtor”) whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:

 

(a)           all
accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory
notes), inventory (including all goods held for sale or lease or to be
furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Debtor’s books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;

 

(b)           any
and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting obligations
and the security therefor or for any right to payment.  All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from
time to time (the “Code”).

 

Notwithstanding the foregoing, the “Collateral” does
not include any property that constitutes the capital stock of a controlled
foreign corporation (as defined in the Internal Revenue Code of 1986, as
amended, and the regulations thereunder) in excess of 65% of the voting power
of all classes of capital stock of such controlled foreign corporations
entitled to vote.

 

Notwithstanding the foregoing, the “Collateral” does
not include any lease under which Debtor is a lessee, license under which
Debtor is a licensee, other contract right, property right or agreement to
which Debtor is a party, any securities or other investment property owned by
Debtor that is subject to contractual prohibitions against or limitations on
the transfer or pledging of such securities or property, or any equipment owned
by Debtor that is subject to a purchase money Lien or capitalized lease
obligation if the contract or other agreement in which such Lien is granted (or
in the documentation for such capitalized lease obligation) validly prohibits
the creation of any other Lien on such equipment, or any of its rights or
interests thereunder if and for so long as the grant of such security interest
shall constitute or result in (i) the abandonment, invalidation or
unenforceability of any right, title or interest of Debtor therein or (ii) in
a breach or termination pursuant to the terms of, or a default under, any such
lease, license, contract, property rights, agreement or documentation (other
than to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law or
principles of equity); provided, however, in each such case, consent has not
been obtained despite Debtor’s commercially reasonable efforts to obtain it;
and provided further, that such security interest shall attach immediately at
such time as the condition causing such abandonment, invalidation,
unenforceability, other restriction or assignment shall be remedied and, to the
extent severable, shall attach immediately to any portion of such lease,
license, contract, property right or agreement that does not result in any of
the consequences specified in (i) or (ii) including, without
limitation, any proceeds of such lease, license, contract, property rights,
agreement, securities, other investment property, or equipment.

 

3

 

EXHIBIT B

 

ADVANCE REQUEST FORM

 

1

 

EXHIBIT C

 

BORROWING BASE CERTIFICATE

 

	
  Borrower:  EVOLVING SYSTEMS, INC.

  	
   

  	
  Lender: Bridge Bank,
  N.A.

  
	
   

  	
   

  	
   

  
	
  Commitment Amount:  $1,000,000

  	
   

  	
   

  

 

	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Accounts Receivable
  Book Value as of

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  2.

  	
  Additions (please
  explain on reverse)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  3.

  	
  TOTAL ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE
  DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Amounts over 90 days
  due*

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  5.

  	
  Balance of 35% over 90
  day accounts

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  6.

  	
  Concentration Limits*

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Foreign Accounts

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  8.

  	
  Governmental Accounts

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  9.

  	
  Contra Accounts

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  10.

  	
  Demo Accounts

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  11.

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  12.

  	
  Other (please explain
  on reverse)

  	
   

  	
  $

  	
   

  	
   

  	
   

  
	
  13.

  	
  TOTAL ACCOUNTS
  RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  14.

  	
  Eligible Accounts (#3
  minus #13)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  15.

  	
  LOAN VALUE OF ELIGIBLE
  ACCOUNTS (80% of #14)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  16.

  	
  Eligible Cash

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  17.

  	
  LOAN VALUE OF ELIGIBLE
  CASH (100% of #16)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  18.

  	
  LOAN VALUE OF ACCOUNTS
  PLUS ELIGIBLE CASH (#15 plus #17)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Maximum Loan Amount

  	
   

  	
   

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  20.

  	
  Total Funds Available
  [Lesser of #18 or #19]

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  21.

  	
  Present balance owing
  on Line of Credit

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  22.

  	
  Outstanding under
  Sublimits (Letters of Credit, FX Contracts)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  23.

  	
  AVAILABILITY (#20 minus
  #21 and #22)

  	
   

  	
   

  	
   

  	
  $

  	
   

  
								

 

* Or 120 days in the case of
Accounts of Qwest, Vodafone Egypt and Cable & Wireless Panama (or any
of their respective successors)

 

The undersigned represents and
warrants that the foregoing is true, complete and correct in all material
respects, and that the information reflected in this Borrowing Base Certificate
complies in all material respects with the representations and warranties set
forth in the Loan and Security Agreement between the undersigned and Bridge
Bank, N.A..

 

	
  EVOLVING SYSTEMS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Authorized
  Signer

  	
   

  	
   

  
				

 

1

 

EXHIBIT D

 

COMPLIANCE
CERTIFICATE

 

	
  TO:

  	
   

  	
  BRIDGE BANK, N.A.

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
   

  	
  EVOLVING SYSTEMS, INC.

  

 

The undersigned authorized officer of EVOLVING
SYSTEMS, INC. (“Borrower”) hereby certifies, solely in his or her capacity as
an authorized officer of Borrower, that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”),
(i) Borrower is in compliance for the period ending
                              
with all covenants except as noted below, (ii) no Default or Event of
Default exists as of the date hereof[, except as set forth in Schedule
[    ] attached hereto], and (iii) all representations
and warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof except [(x) as set forth in
Schedule [    ] attached hereto and (y)] to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are true and correct in all material respects as of such
earlier date.  Attached herewith are the
[audited/unaudited] financial statements required pursuant to Section 6.3[(a)][(b)]
of the Agreement.  Such financial
statements fairly present in all material respects the consolidated financial
position and results of operations of Borrower (or such Subsidiary) and its
consolidated Subsidiaries as of the dates and for the relevant periods
indicated (subject in the case of unaudited financial statements, to year end
adjustments and matters that would be disclosed in financial statement notes).
Capitalized terms used but not defined herein shall have the meanings set forth
in the Agreement.

 

Please
indicate compliance status by circling Yes/No under “Complies” column.

 

	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial
  statements

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  10K and 10Q

  	
   

  	
  (as applicable)

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  A/R Audit

  	
   

  	
  Initial and Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  Operating Budget

  	
   

  	
  within 30 days of FYE

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  IP Report

  	
   

  	
  Upon Bank’s request
  within 10 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  Deposit balances with
  Bank

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deposit balances
  outside Bank

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5% Licenses Report

  	
   

  	
  Monthly

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA measured on a
  trailing 12 month basis*

  	
   

  	
  $4,700,000 through
  6/30/08 and $4,250,000 thereafter

  	
   

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  Fixed Charge Coverage
  Ratio*

  	
   

  	
  1.30:1.00 through
  3/31/2008; 1.15:1.00 thereafter

  	
   

  	
        :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  Senior Leverage Ratio*

  	
   

  	
  2.25:1.00 through
  9/30/2008; 1.75:1.00 thereafter

  	
   

  	
        :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  
	
  Minimum Liquidity

  	
   

  	
  $4,500,000

  	
   

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
  N/A

  

 

*beginning March 31,
2008 and at the end of each fiscal quarter thereafter.

 

	
  Comments Regarding Exceptions: See Attached.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  AUTHORIZED
  SIGNER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  
	
  DATE

  	
   

  	
   

  
										

 

1

 

ANNEX A

 

SHARES

 

	
  Name of Entity

  	
   

  	
  Class or Series

  of Units

  	
   

  	
  Number of

  Units

  	
   

  	
  Percentage of

  Ownership

  	
   

  	
  Certificate

  Representing

  Such Units

  
	
  Evolving Systems

  Holdings, Ltd.†

  	
   

  	
  Ordinary

  	
   

  	
  100 shares

  	
   

  	
  100% (only 65%

  pledged pursuant to

  this Agreement)

  	
   

  	
  4 (1 share)*

  5 (65 shares)

  6 (34 shares)*

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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)***

  

 

† 65% of the
outstanding shares of Evolving Systems Holding Ltd. will automatically become
subject to Bank’s security interest in the Shares upon the effectiveness of the
merger of Intermediate Holdco with and into Borrower within fifteen (15) days
following the Closing Date.

 

* Certificate
Numbers 4 and 6 will be retained by Borrower and certificate number 5 will be
delivered to Bank.

 

** Certificate
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 Bank 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.,
Bank’s security interest and Lien shall extend only to 65% of such outstanding
shares.

 

1Exhibit 10.1(b)

INTELLECTUAL PROPERTY SECURITY
AGREEMENT

 

This Intellectual Property Security Agreement is
entered into as of February 22, 2008 by and between BRIDGE BANK, N.A. (“Bank”) and EVOLVING SYSTEMS, INC., a Delaware corporation (“Grantor”).

 

RECITALS

 

A.            Bank
has agreed to make certain advances of money and to extend certain financial
accommodations (the “Credit Extensions”) to Grantor in the amounts and manner
set forth in that certain Loan and Security Agreement by and between Bank and
Grantor dated of even date herewith (as the same may be amended, modified or
supplemented from time to time, the “Loan Agreement”; capitalized terms used
herein are used as defined in the Loan Agreement).  Bank is willing to make the Credit Extensions
to Grantor, but only upon the condition, among others, that Grantor shall grant
to Bank a security interest in certain Copyrights, Trademarks and Patents of
Grantor to secure the obligations of Grantor under the Loan Agreement.

 

B.            Pursuant
to the terms of the Loan Agreement, Grantor has granted to Bank a security
interest in all of Grantor’s right, title and interest, whether presently
existing or hereafter acquired, in, to and under all of the Collateral.

 

NOW, THEREFORE, Grantor agrees as follows:

 

AGREEMENT

 

To secure Borrower’s obligations under the Loan
Agreement and under any other agreement now existing or hereafter arising
between Borrower and Bank, Grantor grants and pledges to Bank a security
interest in all of Grantor’s right, title and interest in, to and under its
Intellectual Property Collateral (including without limitation those
Copyrights, Patents and Trademarks for which a registration or application for
registration has been filed as  listed on
Exhibits A, B and C hereto), and including without limitation all proceeds
thereof (such as, by way of example but not by way of limitation, license
royalties and proceeds of infringement suits), the right to sue for past,
present and future infringements, all rights corresponding thereto throughout
the world and all re-issues, divisions continuations, renewals, extensions and
continuations-in-part thereof.

 

This security interest is granted in conjunction with
the security interest granted to Bank under the Loan Agreement.  Each right, power and remedy of Bank provided
for herein or in the Loan Agreement or any of the Loan Documents, or now or
hereafter existing at law or in equity shall be cumulative and concurrent and
shall be in addition to every right, power or remedy provided for herein and
the exercise by Bank of any one or more of the rights, powers or remedies
provided for in this Intellectual Property Security Agreement, the Loan
Agreement or any of the other Loan Documents, or now or hereafter existing at
law or in equity, shall not preclude the simultaneous or later exercise by any
person, including Bank, of any or all other rights, powers or remedies.

 

Grantor represents and warrants that Exhibits A, B,
and C attached hereto set forth any and all intellectual property rights of
Grantor for which Grantor has obtained a registration, or in connection to
which Grantor has filed and maintains a pending application to obtain a
registration, with either the United States Patent and Trademark Office or the
United States Copyright Office, as applicable.

 

This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties have caused this Intellectual
Property Security Agreement to be duly executed by its officers thereunto duly
authorized as of the first date written above.

 

	
  Address of Grantor: 

  	
   

  	
  GRANTOR:   

  
	
   

  	
   

  	
   

  	
   

  
	
  9777 Pyramid Court, Suite 100  
  FAX:    

  	
   

  	
  EVOLVING
  SYSTEMS, INC. 

  
	
  Englewood, CO 80112

  	
   

  	
   

  	
   

  
	
  Attn:   Anita T. Moseley,
  General Counsel

  	
   

  	
  By:

  	
   

  
	
  (303) 802-1138

  	
   

  	
   

  	
  Brian R. Ervine

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Title: Executive
  Vice President, Chief Financial and Administrative Officer

  
	
  Attn:   Brian R. Ervine,
  Executive Vice President 

  Chief Financial and Administrative Officer

  	
   

  	
   

  	
   

  
	
  FAX: (303) 802-1420

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address of Bank   

  	
   

  	
  BANK: 

  
	
   

  	
   

  	
   

  
	
  55 Almaden Blvd.

  	
   

  	
  BRIDGE BANK, N.A. 

  
	
  San Jose, CA 95113

  	
   

  	
   

  
	
  Attention: Dan Pistone

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

2

 

EXHIBIT A

 

Copyright Registrations and
Applications

 

	
  Description

  	
   

  	
  Registration

  Number

  	
   

  	
  Registration Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  None.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

EXHIBIT B

 

Patents Registrations and
Applications

 

	
  Description

  	
   

  	
  Patent/ Application

  Number

  	
   

  	
  Issue/ Application Date

  	
   

  
	
  Apparatus and method for extracting presence, location and
  availability data from a communication device deployed in a network

  	
   

  	
  6,662,015

  	
   

  	
  12/09/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Systems and methods for providing order and service mediation for
  telecommunications systems

  	
   

  	
  6,169,793

  	
   

  	
  01/02/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Systems and method for providing network element management
  functionality for managing and provisioning network elements associated with
  number portability

  	
   

  	
  6,122,362

  	
   

  	
  09/19/00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Test harness for
  enterprise application integration environment

  	
   

  	
  7,337,361

  	
   

  	
  02/26/08

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wireless Device Activation

  	
   

  	
  60/992,193

  	
   

  	
  12/06/07

  	
   

  

 

2

 

EXHIBIT C

 

Trademarks Registrations and
Applications

 

	
  Description

  	
   

  	
  Registration/ Application

  Number

  	
   

  	
  Registration/ Application Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NumeriTrack

  	
   

  	
  2,673,290

  	
   

  	
  01/07/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ServiceXpress

  	
   

  	
  2,930,141

  	
   

  	
  03/08/05

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolving Systems
  (servicemark)

  	
   

  	
  2,197,486

  	
   

  	
  10/20/98

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolving Systems (and
  design)

  	
   

  	
  2,357,983

  	
   

  	
  06/13/00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OrderPath

  	
   

  	
  2,196,447

  	
   

  	
  10/13/98

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NumberManager

  	
   

  	
  2,510,765

  	
   

  	
  11/20/01

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolving Systems
  (trademark)

  	
   

  	
  2,355,550

  	
   

  	
  06/06/00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolving Systems
  (supplemental register)

  	
   

  	
  1,836,474

  	
   

  	
  05/10/94

  	
   

  

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]