Document:

Exhibit 10.1(i)

 

GUARANTY

 

November 14, 2005

 

CapitalSource Finance LLC,
as Agent

4445 Willard Avenue, 12th Floor

Chevy Chase, Maryland  20815

 

Re:                               (i) Evolving Systems, Inc., a
Delaware corporation (“ESI”) (ii) Telecom Software Enterprises,
LLC, a Colorado limited liability company (“Telecom”), and (iii) Evolving
Systems Holdings, Inc., a Delaware corporation (“Holdings”, and
together with ESI and Telecom, each, a “Guarantor” and collectively, “Guarantors”)

 

Ladies and Gentlemen:

 

Pursuant to the Revolving Facility
Agreement (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced from time to time, the “Loan
Agreement”), dated as of November 14, 2005 among CapitalSource Finance
LLC, as Agent (“Agent”), CSE Finance, Inc. and the other Lenders
from time to time a party thereto, Evolving Systems Ltd., a company
incorporated under the laws of England & Wales with registration
number 2325854 (“Borrower”) and Evolving Systems Holdings Ltd., a
company incorporated under the laws of England & Wales with
registration number 5272751 (“U.K. Guarantor,” and, together with
Borrower, individually a “Credit Party” and collectively, the “Credit
Parties”), the Lenders have agreed to make available to Borrower a Revolving
Facility and other advances (collectively, the “Loans”).  As a condition to Lenders entering into the
Loan Agreement and funding the Loans, the Lenders are requiring that the
above-referenced Guarantors execute and deliver this Guaranty (the “Guaranty”)
in favor of Agent and the Lenders.

 

Due to the close business
and financial relationships between the Guarantors and the Credit Parties, in
consideration of the benefits which will accrue to Guarantors and as an
inducement for and in consideration of the Lenders making loans and advances
and providing other financial accommodations to Borrower or any other Credit
Party pursuant to the Loan Agreement and other Loan Documents, Guarantors
hereby agree in favor of Agent and the Lenders as follows:

 

1.                                       Definitions.  As used herein the following
terms shall have the following meanings. Initially capitalized terms used
herein without definitions shall have the meanings given in the Loan Agreement.

 

(a)                                  “Security Agreement” shall have the
meaning set forth in Section 3 hereof.

 

(b)                                 “Obligor” and “Obligors” shall
have the meanings set forth in Section 4(a) hereof.

 

2.                                       Guaranty.

 

(a)                                  Each Guarantor absolutely, unconditionally
and irrevocably guarantees and agrees to be liable for the full and
indefeasible payment and performance when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise, of the
following (all of

 

 

which are collectively referred to herein as the “Guaranteed
Obligations”):  (i) all Obligations
of Borrower and/or any other Credit Parties to Agent or any Lender, now or
hereafter existing under the Loan Agreement or any other Loan Document,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise, and
whether arising before, during or after the initial or any renewal term of the
Loan Agreement or after the commencement of any case with respect to Borrower
or any other Credit Party under any Debtor Relief Laws (including, without
limitation, the payment of interest and other amounts, which would accrue and
become due but for the commencement of such case, whether or not such amounts
are allowed or allowable in whole or in part in any such case), whether direct
or indirect, absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, secured or unsecured, and however
acquired by Agent or such Lender and (ii) all costs and expenses
(including, without limitation, reasonable attorneys’ fees and legal expenses)
incurred by Agent or any Lender in connection with the preparation, execution,
delivery, recording, administration, collection, liquidation, enforcement and
defense of Borrower’s and/or any other Credit Party’s Obligations as aforesaid
to Agent or any Lender, the rights of Agent or any Lender in any collateral securing
the Obligations or under this Guaranty, the Security Agreement and all other
Loan Documents or involving claims by or against Agent or any Lender directly
or indirectly arising out of or related to the relationships between Borrower, any
Guarantor or any other Credit Party and Agent or any Lender under this
Agreement, the Loan Agreement, any other Loan Documents or any other document
executed in connection therewith, whether such expenses are incurred before,
during or after the initial or any renewal term of the Loan Agreement and the
other Loan Documents or after the commencement of any case with respect to any
Credit Party under any Debtor Relief Laws; provided, however,
that no Guarantor shall be required to pay or reimburse Agent or any Lender for
any costs or expenses incurred by Agent or such Lender in connection with any
action, claim or proceeding which is determined in a final, nonappealable
judgment by a court of competent jurisdiction binding on such party to have
arisen as a result of the gross negligence or willful misconduct of such party;
provided, further, that each Guarantor shall only be liable under
this Guaranty for the maximum amount of such liability that can be hereby
incurred without rendering this Guaranty, as it relates to such Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount. 
Without limiting the generality of the foregoing, each Guarantor’s
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by Borrower or any other Credit Party to Agent
and Lenders under any Loan Document but for the fact that they are
unenforceable or not allowable due to the existence of any proceeding under any
Debtor Relief Laws involving Borrower or any other Credit Party.

 

(b)                                 This Guaranty is a guaranty of payment and
not of collection.  Each Guarantor agrees
that Agent need not attempt to collect any Guaranteed Obligations from Borrower,
any other Credit Party, any other Guarantor or any other Obligor or to realize
upon any collateral or other security granted in favor of Agent for the
Guaranteed Obligations, but may require Guarantors to make immediate payment of
all of the Guaranteed Obligations to Agent, for the benefit of the Lenders,
when due, whether by maturity, acceleration or otherwise, or at any time
thereafter.  Agent shall apply any
amounts received in respect of the Guaranteed Obligations to the Guaranteed
Obligations in such order as Agent may elect.

 

(c)                                  Payment by Guarantors shall be made in U.S.
dollars to Agent at the office of Agent from time to time on demand as
Guaranteed Obligations become due. 
Guarantors shall make all payments to Agent on the Guaranteed
Obligations without deduction or withholding for or on account of, any setoff,
counterclaim, defense, Taxes, Other Taxes or conditions of any kind.  One or more successive or concurrent actions
may be brought hereon against any Guarantor either in the same action in which Borrower,
any other Credit Party or any other Obligor is sued or in separate
actions.  In the event any claim or
action, or action on any judgment, based on this Guaranty is brought against any
Guarantor, such Guarantor agrees not to deduct or set-off any amounts which are
or may be owed by Agent or any Lender to any Guarantor or make any counterclaim
or seek recoupment in any action.

 

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3.                                       Grant and Perfection of Security Interest.

 

(a)                                  Grant of Security Interest.  To
secure payment and performance of the Guaranteed Obligations, each Guarantor has
granted to Agent, for the ratable benefit of the Lenders, a continuing security
interest in and Lien upon, all such Guarantor’s personal property and assets
referred to therein, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Guaranteed Obligations at any time granted to or held or acquired by Agent or
any Lender, the “Collateral”) pursuant to that certain Security
Agreement (the “Security Agreement”), dated as of the date hereof, among
Guarantors and Agent.

 

4.                                       Waivers and Consents.

 

(a)                                  With respect to the obligations and
liabilities of the Guarantors under this Guaranty in their capacity as
Guarantors, notice of acceptance of this Guaranty, the making of loans and
advances and providing other financial accommodations to Borrower or any other
Credit Party and presentment, demand, protest, notice of protest, notice of
nonpayment or default and all other notices to which Borrower or Guarantors or
any other Credit Party is entitled are hereby waived by Guarantors.  Each Guarantor also waives notice of and
hereby consents to (i) any amendment, modification, supplement, waiver,
extension, renewal, or restatement of the Loan Agreement and any of the other
Loan Documents, including, without limitation, extensions of time of payment of
or increase or decrease in the amount of any of the Guaranteed Obligations, the
interest rate, fees, other charges, or any collateral, and the guarantee made
herein shall apply to the Loan Agreement and the other Loan Documents and the
Guaranteed Obligations as so amended, modified, supplemented, renewed, restated
or extended, increased or decreased, (ii) the taking, exchange, surrender
and releasing of collateral or guaranties now or at any time held by or
available to Agent or any Lender for the obligations of Borrower, any other
Credit Party or any other party at any time liable on or in respect of the
Guaranteed Obligations or who is the owner of any property which is security
for the Guaranteed Obligations (individually, an “Obligor” and
collectively, the “Obligors”), (iii) the exercise of, or refraining
from the exercise of any rights against Borrower, any other Credit Party or any
other Obligor or any collateral, (iv) the settlement, compromise or
release of, or the waiver of any default with respect to, any of the Guaranteed
Obligations and (v) any financing by Agent or any Lender of Borrower under
the applicable provisions of any Debtor Relief Laws.  Each Guarantor agrees that the amount of the
Guaranteed Obligations shall not be diminished and the liability of any Guarantor
hereunder shall not be otherwise impaired or affected by any of the foregoing.

 

(b)                                 No invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations shall affect,
impair or be a defense to this Guaranty, nor shall any other circumstance which
might otherwise constitute a defense available to or legal or equitable
discharge of Borrower or any other Credit Party in respect of any of the
Guaranteed Obligations, or any Guarantor in respect of this Guaranty (other
than the irrevocable and indefeasible payment in full in cash of the Guaranteed
Obligations), affect, impair or be a defense to this Guaranty.  Without limitation of the foregoing, the
liability of Guarantors hereunder shall not be discharged or impaired in any
respect by reason of any failure by Agent to perfect or continue perfection of
any lien or security interest in any collateral or any delay by Agent in
perfecting any such lien or security interest. 
As to interest, fees and expenses, whether arising before or after the
commencement of any case with respect to Borrower or any other Credit Party
under any Debtor Relief Laws, Guarantors shall be liable therefor, even if
Borrower’s or any other Credit Party’s liability for such amounts does not, or
ceases to, exist by operation of law.  Each
Guarantor acknowledges that neither Agent nor any Lender has made any
representations to Guarantors with respect to Borrower, any other Credit Party,
any other Obligor or otherwise in connection with the execution and delivery by
Guarantors of this Guaranty and no Guarantor is in any respect relying upon
Agent or any Lender or any statements by Agent or any Lender in connection with
this Guaranty.

 

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(c)                                  Each Guarantor hereby irrevocably and
unconditionally waives and relinquishes, until the irrevocable and indefeasible
payment in full in cash of the Guaranteed Obligations, all statutory,
contractual, common law, equitable and all other claims against Borrower or any
other Credit Party, any collateral for the Guaranteed Obligations or other
assets of Borrower, any other Credit Party or any other Obligor, for
subrogation, reimbursement, exoneration, contribution, indemnification, setoff
or other recourse in respect to sums paid or payable to Agent or any Lender by
Guarantors hereunder and each Guarantor hereby further irrevocably and
unconditionally waives and relinquishes, until the irrevocable and indefeasible
payment in full in cash of the Guaranteed Obligations, any and all other
benefits which such Guarantor might otherwise directly or indirectly receive or
be entitled to receive by reason of any amounts paid by or collected or due
from such Guarantor, Borrower, any other Credit Party or any other Obligor upon
the Guaranteed Obligations or realized from their property.  The foregoing waiver of rights is made in
favor of Agent and the Lenders only and shall not be deemed a waiver of such
rights for the benefit of Borrower, any other Guarantor, any other Credit Party
or any other Obligor, or any other creditors of Borrower, Guarantors, any other
Credit Party or any other Obligor.

 

(d)                                 Each Guarantor hereby irrevocably and
unconditionally waives and relinquishes any right to revoke this Guaranty that
Guarantors may now have or hereafter acquire.

 

(e)                                  Without limiting the generality of any other
waiver or other provision set forth in this Guaranty, each Guarantor hereby
irrevocably and unconditionally waives all rights and defenses arising out of
an election of remedies by Agent, even though that election of remedies, such
as a nonjudicial foreclosure with respect to security for a Guaranteed
Obligation, has destroyed such Guarantor’s rights of subrogation and
reimbursement against Borrower or any other Credit Party.

 

(f)                                    Without limiting the generality of any other
waiver or other provision set forth in this Guaranty, each Guarantor waives all
rights and defenses that such Guarantor may have because the Guaranteed
Obligations are secured by real property. 
This means, among other things: (i) Agent may collect from
Guarantor without first foreclosing on any real or personal property collateral
pledged by Borrower or any other Credit Party; and (ii) if Agent
forecloses on any real property collateral pledged by Borrower or any other
Credit Party: (A) the amount of the Guaranteed Obligations may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price and (B) Agent may
collect from Guarantors even if Agent, by foreclosing on the real property
collateral, has destroyed any right Guarantors may have to collect from Borrower
or any other Credit Party.  This is an
unconditional and irrevocable waiver of any rights and defenses Guarantors may
have because the Guaranteed Obligations are secured by real property.

 

(g)                                 Without limiting the generality of any other
waiver or other provision set forth in this Guaranty, each Guarantor hereby
irrevocably and unconditionally waives and relinquishes, to the maximum extent
such waiver or relinquishment is permitted by applicable law, all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
than compulsory counterclaims) in any action or proceeding with respect to this
Guaranty, each Guarantor’s obligations hereunder, the Collateral or any matter
arising from or related to the foregoing.

 

5.                                       Subordination.  Each
Guarantor hereby agrees that, after the occurrence and during the continuance
of a Default or Event of Default, the payment of all amounts due with respect
to any indebtedness now or hereafter owed to any Guarantor by Borrower or any
other Credit Party is hereby subordinated in right of payment to the
indefeasible payment in full to Agent, for the benefit of the Lenders, of the
Guaranteed Obligations and, after the occurrence and during the continuance of
a Default or Event of Default, all such amounts that are received in violation
of this Section 5 are hereby assigned to Agent, for the ratable benefit of
the Lenders, as security for the Guaranteed Obligations.

 

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6.                                       Acceleration. 
Notwithstanding anything to the contrary contained herein or any of the
terms of any of the other Loan Documents, the liability of Guarantors for the
entirety of the Guaranteed Obligations shall mature and become immediately due
and payable, upon the acceleration of the Guaranteed Obligations.

 

7.                                       Account Stated.  The
books and records of Agent showing the account between Agent, the Lenders and Borrower
shall be admissible in evidence in any action or proceeding against or
involving Guarantors as prima facie evidence of the existence and amounts of
the obligations and indebtedness therein recorded and, in the absence of
manifest error, shall be binding on Guarantors.

 

8.                                       Representations and Warranties.  Each
Guarantor hereby represents and warrants to Agent and the Lenders the following
(which shall survive the execution and delivery of this Guaranty):

 

(a)                                  Security Agreement.  Each
of the representations and warranties made by such Guarantor in the Security
Agreement is true and correct.

 

(b)                                 Survival of Warranties; Cumulative.  All
representations and warranties contained in this Guaranty, the Security
Agreement and each of the Loan Documents to which any Guarantor is a party
shall survive the execution and delivery of this Guaranty and shall be
conclusively presumed to have been relied on by Agent and the Lenders
regardless of any investigation made or information possessed by Agent or any
Lender.  The representations and
warranties set forth herein shall be cumulative and in addition to any other
representations or warranties which Guarantor shall now or hereafter give, or
cause to be given, to Agent or any Lender.

 

(c)                                  Each Guarantor has knowledge of the Borrower’s
and each other Credit Party’s financial condition and affairs and has adequate
means to obtain from the Borrower and each other Credit Party on an ongoing
basis information relating thereto and to the Borrower’s and such other Credit
Party’s ability to pay and perform its obligations under the Loan Documents,
and agrees to assume the responsibility for keeping, and to keep, so informed
for so long as this Guaranty is in effect. 
Each Guarantor acknowledges and agrees that the Lenders and the Agent
shall have no obligation to investigate the financial condition or affairs of
any Obligor for the benefit of Guarantors nor to advise Guarantors of any fact
respecting, or any change in, the financial condition or affairs of Borrower,
any other Credit Party or any other Obligor that might become known to the
Agent or any Lender at any time, whether or not the Agent or such Lender knows
or believes or has reason to know or believe that any such fact or change is
unknown to Guarantors, or might (or does) materially increase the risk of any Guarantor
as guarantor, or might (or would) affect the willingness of any Guarantor to
continue as a guarantor of the obligations of Borrower or any other Credit
Party under the Loan Documents.

 

(d)                                 It is in the best interests of Guarantors to
execute this Guaranty inasmuch as Guarantors will derive substantial direct or
indirect benefits from the loans, advances and other financial accommodations
made from time to time to the Borrower or any other Credit Party by the Lenders
pursuant to the Loan Agreement, and each Guarantor agrees that the Lenders and
the Agent are relying on this representation in agreeing to make loans,
advances and other financial accommodations to the Borrower and the other
Credit Parties.

 

5

 

9.                                       Affirmative and Negative Covenants. Each Guarantor hereby reaffirms and
confirms each of the affirmative and negative covenants, as applicable to such Guarantor and with all
applicable grace or cure periods, set forth in the Security Agreement and the Loan
Agreement, all of which are incorporated herein by this reference.

 

10.                                 Events of Default and Remedies.

 

(a)                                  Events of Default.  The
occurrence or existence of any Event of Default under the Loan Agreement is
referred to herein individually as an “Event of Default”, and
collectively as “Events of Default”.

 

(b)                                 Remedies.

 

(i)                                     At any time an Event of Default exists or has
occurred and is continuing, Agent shall have all rights and remedies provided
in this Guaranty, the Security Agreement, the other Loan Documents to which any
Guarantor is a party, the Uniform Commercial Code and other applicable law, all
of which rights and remedies may be exercised without notice to or consent by
Guarantors or any Obligor, except as such notice or consent is expressly
provided for hereunder, in the Loan Agreement or any other Loan Document to
which any Guarantor is a party, or required by applicable law.  All rights, remedies and powers granted to
Agent hereunder, under any of the other Loan Documents or the Security
Agreement to which any Guarantor is a party, the Uniform Commercial Code or
other applicable law, are cumulative, not exclusive and enforceable, in Agent’s
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by any Guarantor
of this Guaranty, the Security Agreement or any of the other Loan Documents to
which any Guarantor is a party.  Agent
may, at any time or times, proceed directly against any Guarantor to collect
the Guaranteed Obligations without prior recourse to any other Obligor or any
of the Collateral.

 

(ii)                                  Without limiting the foregoing, at any time
an Event of Default exists or has occurred and is continuing, in addition to
the rights granted to Agent under the Security Agreement or the Loan Agreement,
Agent may, in its discretion and without limitation, accelerate the payment of
all Guaranteed Obligations and demand immediate payment thereof to Agent (provided
that, upon the occurrence of any Event of Default described in Article VIII(g) or
(h) of the Loan Agreement, all Guaranteed Obligations shall
automatically become immediately due and payable).

 

11.                                 Termination.  This Guaranty is continuing,
unlimited, absolute and unconditional. 
All Guaranteed Obligations shall be conclusively presumed to have been
created in reliance on this Guaranty.  This
Guaranty may not be terminated and shall continue so long as either (a) the
Loan Agreement shall be in effect (whether during its original term or any
renewal, substitution or extension thereof) or (b) any non-contingent
Guaranteed Obligations shall be outstanding.

 

12.                                 Reinstatement.  If
any payment of any Guaranteed Obligations is invalidated, declared to be
fraudulent or preferential, set aside, rescinded, or if after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Guaranteed Obligations, Agent or any Lender is required to surrender, return or
otherwise restore such payment or proceeds to any Person for any reason, then
the Guaranteed Obligations intended to be satisfied by such payment or proceeds
shall be reinstated and continue and this Guaranty shall continue in full force
and effect as if such payment or proceeds had not been received by Agent or
such Lender.  Guarantors shall be liable
to pay to Agent and the Lenders, and do indemnify and hold Agent and the
Lenders harmless for the amount of any payments or proceeds rescinded, invalidated,
surrendered or returned.  This Section 12
shall remain effective notwithstanding 

 

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any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. 
This Section 12 shall survive the termination of this Guaranty.

 

13.                                 Amendments and Waivers. 
Neither this Guaranty nor any provision hereof shall be amended,
modified, waived or discharged orally or by course of conduct, but only by a
written agreement signed by an authorized officer of Agent and otherwise in
accordance with the terms of the Loan Agreement, and as to any amendments or
modifications, or any waivers in favor of Agent or any Lender, as also signed
by an authorized officer of Guarantors. 
Agent shall not by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its or any Lender’s rights, powers
and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Agent.  Any such
waiver shall be enforceable only to the extent specifically set forth
therein.  A waiver by Agent of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.

 

14.                                 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver.

 

(a)                                  The validity, interpretation and enforcement
of this Guaranty and any dispute arising out of the relationship between
Guarantors, Agent and the Lenders pursuant to this Guaranty or the other Loan
Documents to which any Guarantor is a party, whether in contract, tort, equity
or otherwise, shall be governed by the internal laws of the State of New York
without giving effect to its choice of law provisions.

 

(b)                                 Guarantor hereby irrevocably consents and
submits to the non-exclusive jurisdiction of the state and federal courts
located in the Montgomery County in the State of Maryland or the Borough of Manhattan
in the State of New York, whichever Agent may elect, and waives any objection
based on venue or forum  non  conveniens with respect to any
action instituted therein arising under this Guaranty or any of the other Loan
Documents to which any Guarantor is a party or in any way connected with or
related or incidental to the dealings of Guarantors, Agent and the Lenders in
respect of this Guaranty or any of the other Loan Documents to which any Guarantor
is a party or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising and whether in contract, tort, equity or
otherwise, and agrees that any dispute arising out of the relationship between
Guarantors, Borrower or any other Credit Party and Agent and the Lenders pursuant
to this Guaranty or the other Loan Documents to which any Guarantor is a party or
the conduct of any such Persons in connection with this Guaranty, the other
Loan Documents to which any Guarantor is a party or otherwise in connection
with the transactions contemplated by the Loan Documents shall be heard only in
the courts described above (except that Agent shall have the right to bring any
action or proceeding against any Guarantor or its property in the courts of any
other jurisdiction having jurisdiction which Agent deems necessary or
appropriate in order to realize on any collateral at any time granted by Borrower,
any other Credit Party or any Guarantor to Agent or to otherwise enforce its or
the Lenders’ rights against any Guarantor or its property).

 

(c)                                  Each Guarantor hereby waives personal service
of any and all process upon it and consents that all such service of process
may be made by certified mail (postage prepaid, return receipt requested)
directed to its address set forth on the signature page hereof and service
so made shall be deemed to be completed five (5) days after the same shall
have been so deposited in the U.S. mails, or, at Agent’s option, by service
upon Guarantors in any other manner provided under the rules of any such
courts.

 

(d)                                 EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS 

 

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GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH SUCH GUARANTOR IS
A PARTY OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF GUARANTORS AND AGENT OR ANY LENDER IN RESPECT OF THIS GUARANTY OR
ANY OF THE OTHER LOAN DOCUMENTS TO WHICH ANY GUARANTOR IS A PARTY OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  EACH GUARANTOR HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT A JURY AND THAT SUCH GUARANTOR OR AGENT OR ANY LENDER MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS GUARANTY WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF GUARANTORS AND AGENT AND LENDERS TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

(e)                                  Neither Agent nor any Lender shall have any
liability to Guarantors (whether in tort, contract, equity or otherwise) for
losses suffered by Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Guaranty, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
such Person that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct of such Person (as determined pursuant to a
final, non-appealable order of a court of competent jurisdiction).  Except as prohibited by law, each Guarantor
waives any right which it may have to claim or recover in any litigation with
Agent or any Lender any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages.  Each Guarantor:  (i) certifies that none of Agent, any
Lender or any of their respective representatives, agents or attorneys acting
for or on behalf of such Person has represented, expressly or otherwise, that
such Person would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Guaranty and (ii) acknowledges that in entering
into this Guaranty and the other Loan Documents, Agent and the Lenders are
relying upon, among other things, the waivers and certifications set forth in
this Section 14 and elsewhere herein and therein.  Except as prohibited by law, (A) each
Guarantor and (B) by acceptance if this Guaranty, Agent and each Lender
agree that no such party shall be liable to any other party with respect to
this Guaranty on any theory of liability for any special, indirect,
consequential or punitive damages.

 

15.                                 Notices.  All notices, requests and
demands hereunder shall be made in accordance with the Loan Agreement to the
addresses of the parties on the signature page hereto.

 

16.                                 Partial Invalidity.  If
any provision of this Guaranty is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Guaranty as a whole,
but this Guaranty shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.

 

17.                                 Entire Agreement.  This
Guaranty represents the entire agreement and understanding of the parties
concerning the subject matter hereof, and supersedes all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written.

 

18.                                 Successors and Assigns.  This
Guaranty shall be binding upon Guarantors and their respective successors and
assigns and shall inure to the benefit of Agent, each Lender and their
respective successors, and transferees and assigns permitted under the Loan
Agreement.  The liquidation, dissolution or
termination of any Guarantor shall not terminate this Guaranty as to such
entity or as to such Guarantor.

 

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19.                                 Counterparts.  This
Guaranty may be executed by the parties hereto in several counterparts, each of
which shall be deemed an original and all of which shall constitute together
but one and the same agreement.  Delivery
of an executed counterpart of a signature page to this Guaranty by
facsimile shall be effective as delivery of a manually executed counterpart of
this Guaranty.

 

20.                                 Interpretive Provisions.

 

(a)                                  All references to the plural herein shall
also mean the singular and to the singular shall also mean the plural unless
the context otherwise requires.

 

(b)                                 All references to Guarantors, Agent and any
Lender pursuant to the definitions set forth in the recitals hereto, or to any
other Person herein, shall include their respective successors and assigns permitted
under the Loan Agreement (including, without limitation, any receiver, trustee
or custodian for such person or any of its assets or such person in its
capacity as debtor or debtor-in-possession under the United States Bankruptcy
Code).

 

(c)                                  The words “hereof”, “herein”, “hereunder”, “this
Guaranty” and words of similar import when used in this Guaranty shall refer to
this Guaranty as a whole and not any particular provision of this Guaranty and
as this Guaranty now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

 

(d)                                 The word “including” when used in this
Guaranty shall mean “including, without limitation”.

 

(e)                                  An Event of Default shall exist or continue
or be continuing until such Event of Default is waived in accordance with Section 13
or is waived or cured as provided in the Loan Agreement.

 

(f)                                    In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including”, the words “to” and “until” each mean “to but excluding” and the
word “through” means “to and including”.

 

(g)                                 Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, recodifying, supplementing
or interpreting the statute or regulation.

 

(h)                                 The captions and headings of this Guaranty
are for convenience of reference only and shall not affect the interpretation
of this Guaranty.

 

(i)                                     This Guaranty may use several different
limitations, tests or measurements to regulate the same or similar
matters.  All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with
their terms.

 

(j)                                     This Guaranty is the result of negotiations
among and has been reviewed by counsel to Agent, counsel to each Lender and
counsel to Guarantors, and is the product of all parties.  Accordingly, this Guaranty shall not be
construed against Agent or any Lender merely because of their involvement in
its preparation.

 

9

 

IN WITNESS WHEREOF,
Guarantors have executed and delivered this Guaranty as of the day and year
first above written.

 

	
   

  	
  EVOLVING SYSTEMS, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian R. Ervine

  	
   

  
	
   

  	
  Name: Brian R. Ervine

  
	
   

  	
  Title: Executive Vice
  President, Chief Financial &

  Administrative Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
  9777 Pyramid Court, Suite 100

  
	
   

  	
  Englewood, Colorado 80112

  
	
   

  	
  Attention:

  	
  Anita T. Moseley, General Counsel

  
	
   

  	
  Telephone:

  	
  (303) 802-2599

  
	
   

  	
  FAX:

  	
  (303) 802-1138

  
	
   

  	
  E-Mail:

  	
  atm@evolving.com

  
	
   

  	
   

  	
   

  
	
   

  	
  TELECOM SOFTWARE
  ENTERPRISES, LLC, a
  Colorado limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian R. Ervine

  	
   

  
	
   

  	
  Name: Brian R. Ervine

  
	
   

  	
  Title: Executive Vice
  President, Chief Financial &

  Administrative Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
  9777 Pyramid Court, Suite 100

  
	
   

  	
  Englewood, Colorado 80112

  
	
   

  	
  Attention:

  	
  Anita T. Moseley, General Counsel

  
	
   

  	
  Telephone:

  	
  (303) 802-2599

  
	
   

  	
  FAX:

  	
  (303) 802-1138

  
	
   

  	
  E-Mail:

  	
  atm@evolving.com

  
	
   

  	
   

  	
   

  
	
   

  	
  EVOLVING SYSTEMS
  HOLDINGS, INC., a

  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian R. Ervine

  	
   

  
	
   

  	
  Name: Brian R. Ervine

  
	
   

  	
  Title: Executive Vice
  President, Chief Financial &

  Administrative Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
  9777 Pyramid Court, Suite 100

  
	
   

  	
  Englewood, Colorado 80112

  
	
   

  	
  Attention:

  	
  Anita T. Moseley, General Counsel

  
	
   

  	
  Telephone:

  	
  (303) 802-2599

  
	
   

  	
  FAX:

  	
  (303) 802-1138

  
	
   

  	
  E-Mail:

  	
  atm@evolving.com

  
					

 

10

 

Accepted and Agreed this

14 day of November, 2005

 

CAPITALSOURCE FINANCE LLC,

a Delaware limited liability
company,

as Agent

 

 

	
  By:

  	
  /s/ Steven A. Museles

  	
   

  
	
  Name: Steven A. Museles

  
	
  Title: Senior Vice
  President

  

 

Address:

4445 Willard Avenue, 12th
Floor

Chevy Chase, Maryland  20815

Attention:  Corporate Finance Group, Portfolio Manager

Fax: (301) 841-2313

Phone:  (301) 841-2700

 

11Exhibit 10.1(j)

 

SUBORDINATION
AGREEMENT

 

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

 

INTRODUCTION

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

2.             Subordination.

 

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

 

2.2           Proceedings.

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

2.3           Junior
Debt Payments.

 

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

 

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

 

(ii)           there shall be Available Cash for Payment;

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

2.4           Restriction on Action by the
Junior Creditors.

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

2.5           No Liens.

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

Notices shall be addressed as
follows:

 

(a)           If to the Junior
Creditors:

 

Advent Crown Fund II C.V.

Advent Euro-Italian Direct
Investment Program Limited Partnership

Advent European
Co-Investment Program Limited Partnership

Advent PGGM Global Limited
Partnership

Digital Media &
Communications II Limited Partnership

Global Private Equity III
Limited Partnership

Global Private Equity III-A
Limited Partnership

Global Private Equity III-B
Limited Partnership

Global Private Equity III-C
Limited Partnership

Advent Partners Limited
Partnership

Advent Partners (NA) GPE III
Limited Partnership

Advent Partners GPE III
Limited Partnership

Advent Global GECC III
Limited Partnership

 

c/o
Advent International Company

75
State Street

Boston,
MA 02109

Attention:              Janet L. Hennessey,
Vice President

Facsimile:                                       (617) 951-0566

 

with
copies to:

Advent
International plc

123
Buckingham Palace Road

 

14

 

London
SW1W 9SL

United
Kingdom

Attention:              James Brocklebank

Facsimile:                                       (44) 20-7333-0801

 

and

 

Pepper
Hamilton LLP

3000
Two Logan Square

Eighteenth
and Arch Streets

Philadelphia,
PA 19103-2799

Attention:              Cary S. Levinson

Facsimile:                                       (215) 981-4750

 

Apax
WW Nominees Ltd a/c AE4

 

c/o
Apax Partners Ltd.

15
Portland Place

London
W1B 1PT

United
Kingdom

Attention:              Peter Skinner

Facsimile:                                       (44) 20-7843-4001

 

with a
copy to:

 

Pepper
Hamilton LLP

3000
Two Logan Square

Eighteenth
and Arch Streets

Philadelphia,
PA 19103-2799

Attention:              Cary S. Levinson

Facsimile:                                       (215) 981-4750

 

Four Seasons
Venture II A.S.

 

c/o
Four Seasons Venture

Postboks
1216 Vika

0110
Oslo

Norway

Attention:              Gunnar Rydning

Facsimile:                                       (47) 2283-8518

 

Nigel
Clifford

Croftland

Moor
Lane

Speen

Newbury

Berks
RG14 1RT

United
Kingdom

 

15

 

David
Gibbon

14
Beaumont Road

Windsor

Berks
SL4 1HY

United
Kingdom

 

(b)           If to the US Obligors:

 

Evolving
Systems, Inc.

9777
Pyramid Court

Suite 100

Englewood,
Colorado  80112

Attention:              Anita T. Moseley,
General Counsel

Facsimile:                                       (303) 802-1138

 

(c)           If to the Agent:

 

CapitalSource
Finance LLC

4445
Willard Avenue

12th
Floor

Chevy
Chase, MD 20815

Attention:              Corporate Finance
Group, Portfolio Manager

Facsimile:                                       (301) 841-2313

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

{Signatures
appear on the following page.}

 

19

 

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

 

	
   

  	
  JUNIOR CREDITORS:

  
	
   

  	
   

  
	
   

  	
  APAX WW NOMINEES LTD A/C AE4

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT CROWN FUND II C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT EURO-ITALIAN DIRECT

  INVESTMENT PROGRAM LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT EUROPEAN CO-INVESTMENT

  PROGRAM LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT PGGM GLOBAL LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  DIGITAL MEDIA & COMMUNICATIONS II

  
	
   

  	
  LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III-A LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III-B LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  GLOBAL PRIVATE EQUITY III-C LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Limited Partnership,

  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Corporation, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT PARTNERS LIMITED PARTNERSHIP

  
							

 

20

 

	
   

  	
  ADVENT PARTNERS (NA) GPE III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT PARTNERS GPE III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Corporation, General

  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVENT GLOBAL GECC III LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent Global Management Limited Partnership,
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Limited Partnership,
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Advent International Corporation, General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOUR SEASONS VENTURE II A.S.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NIGEL CLIFFORD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DAVID GIBBON

  
								

 

21

 

	
   

  	
  OBLIGORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  EVOLVING SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TELECOM SOFTWARE ENTERPRISES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EVOLVING SYSTEMS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Brian R. Ervine

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial

  Officer

  

 

22

 

	
  AGENT AND LENDER:

  	
  CAPITALSOURCE FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

23

 

EXHIBIT A

 

Junior Debt Documents

 

See Attached.

 

24

 

EXHIBIT B

 

Senior Debt Documents

 

	
  1.

  	
   

  	
  Credit Agreement

  
	
  2.

  	
   

  	
  Security Agreement

  
	
  3.

  	
   

  	
  Acknowledgment of Intellectual Property Collateral Lien

  
	
  4.

  	
   

  	
  Pledge Agreement

  
	
  5.

  	
   

  	
  Revolving Facility Agreement

  
	
  6.

  	
   

  	
  Debenture

  
	
  7.

  	
   

  	
  Charge Over Shares (US Obligations)

  
	
  8.

  	
   

  	
  Charge Over Shares (UK Obligations)

  

 

25

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