Evolving Systems,Inc. (NASDAQ:EVOL) Files An 8-K Entry into a Material Definitive Agreement
Item 2.03 Entry into a Material Definitive Agreement.

The information set forth under Item 2.03 below is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation.

On August16, 2017, Evolving Systems Holdings Limited (“EVOL Holdings” or “Company”), a wholly owned subsidiary of Evolving Systems,Inc. (“EVOL Inc.”) entered into a Term Loan Facility Agreement with East West Bank as lender in the amount of $4,730,000 (the “Loan Facility”). The purpose of the Loan Facility is to provide funds in connection with the Company’s entry into a Share Purchase Agreement with Lumata Holdings Limited (“Lumata Holdings”) and Francisco Partners III (Cayman) L.P, dated August12, 2017, whereby the Company agreed to acquire all of the issued and outstanding shares of four (4)Lumata Holdings subsidiaries – Lumata France SAS, Lumata Spain S.L., Lumata UK Ltd. and Lumata Deutschland GmbH (“Lumata Entities”) in exchange for a cash payment totaling €4million, subject to certain adjustments (“Lumata Acquisition”). The Lumata Acquisition is anticipated to be completed on or before September12, 2017, at which point the Company will utilize the Loan Facility to fund the Lumata Acquisition. See the Form8-K filed by Evolving Systems,Inc. on August17, 2017 for the terms and conditions of the Lumata Acquisition.

The Loan Facility requires the Company to make monthly principal payments of approximately $131,400 commencing 31July2018 and interest at the greater of (a)3.5% or (b)the variable rate of interest that appears in the Wall Street Journal on a monthly measurement date plus in either case 1.5%. EVOL Inc. entered into the Loan Facility as the Parent Guarantor; Evolving Systems BLS LTD and Evolving Systems Limited entered into the Loan Facility as Original Guarantors (the “Original Guarantors”). The Loan Facility is secured over all of the assets of EVOL Holdings and the Original Guarantors in accordance with the terms of a Debenture entered into by EVOL Holdings and the Original Guarantors in favor of East West Bank. EVOL Holdings, EVOL Inc. and the Original Guarantors also entered into a Subordination Deed whereby each of the parties agreed to subordinate all loans by and among each other to East West Bank. Following completion of the Lumata Acquisition, Lumata France SAS and LumataUK Ltd are also bound to adhere to the finance documents as additional obligors.

The Loan Facility requires the Company to pay an Arrangement Fee (Origination fee) of $23,650, payable in 4equal installments, with the first payment due on the date of the Loan Facility and the remaining three payments on the first, second and third anniversary thereof. The Company also agreed to pay East West Bank’s legal fees in connection with the transaction. The Company may prepay the Loan Facility at any time, in a minimum amount of $250,000 and increments of $50,000, subject to a prepayment fee of 2% of the amount prepaid, on any prepayment made before the second anniversary date of the Agreement. The unpaid balance of the Loan Facility is due on August16, 2021.

The Loan Facility includes financial covenants as well as negative covenants that place restrictions on EVOL Holdings, the Parent and Original Guarantors and the additional obligors’ ability to, among other things: incur additional indebtedness; create liens or other encumbrances on assets; make loans, enter into letters of credit, guarantees, investments and acquisitions; sell or otherwise dispose of assets; declare dividends, cause or permit a change of control; merge or consolidate with another entity; enter into affiliate transactions; and change the nature of its business materially, subject to standard exceptions.

Outstanding amounts under the Loan Facility may be accelerated by notice from East West Bank upon the occurrence of certain events of default, including without limitation: payment defaults, breach of covenants beyond applicable grace periods, breach of representations and warranties, bankruptcy and insolvency defaults, and the occurrence of a material adverse effect (as defined). Acceleration is automatic upon the occurrence of certain bankruptcy and insolvency defaults.

Text of Agreements. The full text of the Loan Facility, the Debenture and the Subordination Deed are attached as Exhibits10.1, 10.2 and 10.3, respectively, to this Current Report on Form8-K. The foregoing descriptions are qualified in their entirety by reference to such exhibits.