Software Development Agreement

Contract No. LHL-101E

SOFTWARE DEVELOPMENT AGREEMENT



SECTION I





THIS AGREEMENT made as of this first day of May, 1993, by and between AMERICAN TELEPHONE AND TELEGRAPH COMPANY, a New York corporation having a place of business at 67 Whippany Road, Whippany, New Jersey 07052-3303 ("Company") and EVOLVING SYSTEMS, INC., a Colorado corporation having a place of business at 8000 East Maplewood Avenue, Englewood, Colorado 80111 ("Supplier").



WHEREAS, Company desires to retain Supplier to furnish the programming, training, consulting or other services (the "Services") specified in Work Authorization Letters (each an "Authorization Letter") to be issued from time to time and executed by both parties; and



WHEREAS, Company also desires to obtain certain license rights to the Pre- existing Software created and/or owned by Supplier as provided in the Authorization Letter; and



WHEREAS, Supplier is willing to grant such rights and perform such Services based upon the terms and conditions set forth in this Agreement and in the Authorization Letter applicable thereto;



NOW, THEREFORE, in consideration of the foregoing recitals and the terms and conditions set forth in this Agreement and in the Authorization Letters issued hereunder, the parties agree as follows:



DEFINITIONS. As used in this Agreement, the following terms have the following meaning, unless the context indicates otherwise:



"SOFTWARE". The lower case noun "software" means, depending on context,

(a) one or more software works, (b) one or more of such works together with

one or more software media providing representations of copies of such

work(s), or (c) an aggregate of (a) and (b). The adjective "software"

means the term qualifies a subject which is or pertains to software.



"SOFTWARE MEDIA". The terms "Software media" or "software media" refer to

a physical means or manifestation primarily adapted to convey, record,

store or carry software, a representation of a copy of such software being

provided by details of such media. The terms include any tape, document,

semiconductor memory, wave(s) or other physical means or manifestation

comprising one or more such media and primarily adapted to convey such

software to means external thereto or to persons, but the terms do not mean

software or copy.



"OBJECT PROGRAM" or "OBJECT CODE". The term "object program" or "object

code" means the fully compiled or assembled series of instructions, written

in machine language, ready to be loaded into the computer, that guides the

operation of the computer, in printed out form as well as stored in

software media compatible with any equipment described in this Agreement.



"SOURCE PROGRAM" or "SOURCE CODE". The term "source program" or "source

code" means the computer program expressed in a source language that

operates on the computers identified in the Specifications, and includes

such other information or documentation identified as source code in an

Authorization Letter. Such source code shall consist of a full source

language statement of the programs comprising the Software.

"DOCUMENTATION". The term "documentation" means the documentation relating

to the Software as set forth in the Authorization Letter. Subject to the

terms of the Authorization Letter, Documentation may include complete

program maintenance, documentation, procedures, flow charts, schematic

diagrams and annotations which comprise the precoding detail design

specification, and all other material necessary to allow a reasonably

skilled programmer or analyst to maintain and enhance the Software without

the assistance of Supplier or reference to any other materials.



"PRE-EXISTING SOFTWARE". Supplier's or third-party software, in object

code and source code form, including all related documentation, as

described in the Authorization Letter.



"DEVELOPED SOFTWARE". The modifications to the Pre-existing Software and

any custom software, in object code and source code form, including all

related documentation, which Supplier will develop in accordance with an

Authorization Letter.



"SOFTWARE". The upper case term "Software" means the Pre-existing Software

combined with the Developed Software.



"WORK". The term "Work" as used in this Agreement shall have the same

meaning as the term "Services."



STATEMENT OF WORK. Supplier shall provide the Services described in the - ----------------- Authorization Letter and deliver the Pre-existing Software and the Developed Software (collectively referred to as "Software") and all other Deliverables described in the Authorization Letter to Company at Company's location in accordance with the Work schedule set forth in the Authorization Letter. The Software and such other Deliverables shall perform and comply with the specifications set forth in the Authorization Letter (the "Specifications").



REPRESENTATIVES. Company's Technical Representative(s) for each project shall - --------------- be designated in the Authorization Letter.



Supplier's Representative for each project under this Agreement shall be designated in the Authorization Letter.



DELIVERABLES. Supplier shall provide to Company the Deliverables described in - ------------ the Authorization Letter for each project.



PERFORMANCE OF WORK. All Work under this Agreement shall be completed in - ------------------- accordance with the schedule identified in the Authorization Letter.



SOFTWARE TITLE AND RIGHTS. For purposes of this clause, the term "Developed - ------------------------- Information" shall mean the Developed Software and other Deliverables developed under or in anticipation of Work specified in the Authorization Letter by or in behalf of Supplier for Company.



Supplier agrees, and shall obligate Supplier's employees and subcontractors to agree, that all such Developed Information shall be kept in confidence by Supplier and Supplier's employees, shall be used only in the performance of this Agreement or work as specified in the Authorization Letter, and may not be used for other purposes except upon such terms as may be agreed upon between the parties in writing. If Supplier has the right to use any of the Developed Information owned by Company, all copies of the Developed information shall bear such copyright notices and other legends regarding ownership of the property as may be requested by Company.



Company shall not acquire under this Agreement any title to any portion of the Software or any portion of any other Deliverable which was not developed by or in behalf of Supplier for Company under or in anticipation of this Agreement (collectively referred to as the "Background Information"). The term "Background Information" includes the Pre-existing Software. Supplier agrees to grant to Company a license to use such Background Information as provided in the Authorization Letter. If Company has the right to use any of the Background Information, all copies of the Background information shall bear such copyright notices and other legends regarding ownership of the property as may be requested by Supplier.



Company agrees to protect and maintain the confidentiality of the Background Information and to use the Background Information only for the purposes set forth in the applicable Authorization Letter. Unless otherwise provided in the applicable Authorization Letter, Company shall not sublicense, assign, transfer, disclose or distribute any Background Information to any third party. Without limiting the foregoing, Company shall require any of its employees, agents, customers or assigns who may receive disclosure of any Background Information to agree to protect the confidentiality and use of such information in the manner provided above. Company agrees to use best efforts to enforce such agreements on behalf of Supplier.



Subject to the limitations of the preceding paragraphs, Company shall acquire title upon its delivery to all Software media and other information communication media copies of the other Deliverables delivered under this Agreement to Company, whether or not Company owns any portion of such Software or other information fixed on the media or on the other Deliverables, provided that Supplier shall retain risk of loss and damage to any such Deliverables and media and any software or other information fixed therein until acceptance of the Software and other Deliverables by Company. Supplier agrees, for itself and its affiliates, not to assert any patent or copyright owned or controlled by Supplier or any affiliate thereof against Company, its affiliates and its and their direct or indirect customers in connection with any of the Software or other Deliverables or any other subject matter directly or indirectly containing or derived from Work done under or in anticipation of this Agreement, unless Company or its customers violate(s) the terms of the license or other restrictions relating to the use, possession, disclosure or ownership of such Software, Deliverables, or other subject matter.



COMPENSATION. In full compensation for the Work performed and any rights - ------------ transferred, assigned or granted to Company under this Agreement and any and all expenses Supplier might incur and for complying with all of the terms and conditions contained in this Agreement, Company shall pay Supplier as provided in the Authorization Letter.



INVOICING AND PAYMENT. Separate invoices shall be rendered in duplicate in - --------------------- accordance with milestone activities or as otherwise provided in the Authorization Letter.



Invoices shall be sent in duplicate to the address set forth in the

Authorization Letter.



Company shall pay properly rendered invoices within thirty (30) days of

receipt thereof.



NOTICES. Any notice or demand which under the terms of this Agreement or under - -------- any statute must or may be given or made by Supplier or Company shall be in writing and shall be given or made by telegram, tested telex, confirmed facsimile, or similar communication or by certified or registered mail addressed to the respective parties as follows:



To Company: American Telephone and Telegraph Company

P.O. Box 1101 (101 JFK Parkway)

Short Hill, NJ 07078-0996

Attn: Purchasing Manager

Technical Services/Projects



To Supplier: Evolving Systems, Inc.

8000 East Maplewood Avenue

Englewood, CO 80111

Attn: Steve Langion



with a copy to:

Evolving Systems, Inc.

8000 East Maplewood Avenue

Englewood, CO 80111

Attn: Larry Schwartz



Such notice or demand shall be deemed to have been given or made when sent by telegram, telex, of facsimile, or other communications or when deposited, postage prepaid in the U.S. mail.



The above addresses may be charged at any time by giving prior

written notice as above provided.



TERM. The term of this Agreement shall be five (5) years from the effective - ---- date unless earlier terminated pursuant to this Agreement. Company may extend such term for successive one (1) year periods by providing written notice to Supplier at least thirty (30) days' prior to the expiration of the initial five (5) year term or any one (1) year renewal thereof. No termination of this Agreement shall effect the performance of either party under an Authorization Letter unless the Authorization Letter is terminated in accordance with the provisions of the Authorization Letter.



THE DOCUMENTS FORMING THIS AGREEMENT. This Agreement consists of the following: - ------------------------------------



A. This SECTION I, attached hereto and made a part of this Agreement.



B. SECTION II, "General Provisions of a Software Development Contract",

attached hereto and made a part of this Agreement.



C. Authorization Letters which will be issued from time to time.



If any provision in Section II is inconsistent with any provision of SECTION I of this Agreement, SECTION I shall govern. If any provision of an Authorization Letter is inconsistent with Sections I or II, the Authorization Letter shall govern.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement, which is effective as of the day and year first above written.



EVOLVING SYSTEMS, INC. AMERICAN TELEPHONE AND

TELEGRAPH COMPANY





By:_____________________ By:_______________________ Name:___________________ Name:_____________________ Title:__________________ Title:____________________ Date:___________________ Date:_____________________

GENERAL PROVISIONS OF A SOFTWARE DEVELOPMENT CONTRACT



SECTION II



ACCEPTANCE - ----------



A. Company shall evaluate the Software and each other Deliverable (individually and collectively referred to in this clause as "Deliverable") furnished under an Authorization Letter for compliance with the Specifications and shall submit a written acceptance or rejection to Supplier within thirty (30) days after the receipt by Company of the complete Deliverable associated with each task. Company shall have the right to extend said period in writing if necessary. Such written acceptance or rejection shall be made only by Company's Technical Representative. A rejection shall state in detail which Specifications have not been met by the Deliverable and how the Deliverable fails to meet the Specifications. In no event shall early turnover of the Deliverable by Supplier to Company constitute acceptance of such Deliverable by Company. Company shall have the right to accept portions of the Software or of any other Deliverable. Company's acceptance of the Software or of any other Deliverable or any portion thereof shall occur only upon a formal written acceptance sent by the aforementioned Company Representative or upon payment of the invoice associated with the Deliverable or Software as detailed in the Authorization Letter.



B. If a Deliverable evaluated pursuant to paragraph A of this clause is rejected, Supplier agrees to correct, at its expense, each error leading to such rejection and resubmit the corrected Deliverable to Company within fifteen (15) days after receipt of notice from Company of such error. Company shall have thirty (30) days after the resubmitting of such corrected Deliverable to accept or reject such Deliverable in the same manner as provided in paragraph A above. If the corrected Deliverable complies with the Specifications, Supplier shall incorporate the corrections in the Deliverables.



C. If the errors in a rejected Deliverable are not corrected within the fifteen (15)-day period specified n paragraph B of this clause or if a resubmitted Deliverable rested or re-evaluated by Company during the thirty (30) day re- evaluation period is again rejected, then Company may, at it is option: (1) retain the Deliverable at an equitable adjustment in price as may be agreed by the parties, in which case that Deliverable shall be deemed accepted; (2) afford Supplier one or more correction extensions for a period or periods to be specified by Company without prejudice to Company's rights to thereafter exercise its option under either clause (1) or (3) of this paragraph without further notice to Supplier, if the errors have not been corrected; or (3) if the defect is material in nature, terminate the Authorization Letter and pay all expenses incurred by Supplier up to the termination date of the Authorization Letter. If option (3) is exercised, Company shall have no further obligation to Supplier under the Authorization Letter.



AFFILIATED COMPANY. An affiliated corporation, partnership or venture - ------------------ ("affiliate") is an entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the entity specified.



ARBITRATION. Should any dispute arise under this Agreement or under an - ----------- Authorization Letter, such matters shall be determined by arbitration in the following manner: Upon written request from either party to the other that such dispute be referred to arbitration, the parties shall endeavor to select an arbitrator within ten (10) days of such request. If no selection is made within that period, immediately thereafter the parties shall jointly request the American Arbitration Association to designate an arbitrator. The parties agree to abide by such rules respecting the time, place and frequency of arbitration meetings, and the procedure governing the presentation and hearing of the disputed matter, as shall be adopted by the arbitrator. The direct expenses of the arbitration, including the compensation and expenses of the arbitrator and fees of the Association, but not including the parties' expenses or the expenses of the parties' witnesses, shall be borne equally between the parties. The decision of the arbitrator shall be final and the parties agree to abide by such decision. ASSIGNMENT BY COMPANY. Company shall have the right to assign this Agreement - --------------------- and to assign its rights and delegate its duties under this Agreement either in whole or in part ("assignment"), at any time and without Supplier's consent, to any of its present or future affiliated companies, or to any combination of the foregoing. Company shall give Supplier written notice of any assignment. Upon acceptance of the assignment and assumption of the duties under this Agreement by assignee, Company shall be released and discharged, to the extent of the assignment, from all further duties under this Agreement as to material so assigned, provided that the assignee maintains a net worth at least equal to the value of the Services to be provided under any uncompleted Authorization Letters. If Company requests that Supplier waive the net worth condition set forth in the preceding sentence, Supplier shall not unreasonably deny such request.



ASSIGNMENT BY SUPPLIER. Supplier shall not assign any right or interest under - ---------------------- this Agreement (excepting mon ...