Software Development Services Agreement

Exhibit 10.16


SOFTWARE DEVELOPMENT SERVICES AGREEMENT


Between and


SIEMENS CANADA LIMITED UNISPHERE SOLUTIONS, INC. 2185 DERRY ROAD WEST ONE EXECUTIVE DRIVE MISSISSAUGA, ONTARIO CHELMSFORD, MASSACHUSETTS L5N 7A6 01824


(HEREINAFTER REFERRED TO AS "SIEMENS") (HEREINAFTER REFERRED TO AS "CUSTOMER")


Customer agrees to purchase and Siemens agrees to furnish on the following terms and conditions the Services described herein to the extent Customer issues purchase orders.


THE "SERVICES AGREEMENT - TERMS AND CONDITIONS" ON THE FOLLOWING PAGES OF THIS DOCUMENT, THE ATTACHED SCHEDULE A AND PURCHASE ORDERS ISSUED PURSUANT TO PARAGRAPH 2.1 CONSTITUTE THE ENTIRE AGREEMENT (HEREINAFTER AGREEMENT) BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND CANCELS AND SUPERSEDES ANY PRIOR UNDERSTANDINGS AND AGREEMENTS BETWEEN THE PARTIES HERETO WITH RESPECT THERETO. UNLESS OTHERWISE AGREED TO IN WRITING BY THE PARTIES, CUSTOMER'S ORDERS FOR SERVICES SHALL BE GOVERNED BY THE TERMS OF THIS AGREEMENT AND NOTHING CONTAINED IN ANY PRINTED TERMS ON ANY PURCHASE ORDER, LETTER OR OTHER INSTRUMENT SHALL IN ANY WAY MODIFY, VARY, CHANGE OR ADD ANY TERM OR CONDITION HERETO.


For good and valuable consideration (the receipt and sufficiency of which each party acknowledges) the parties have entered into this Agreement on the dates specified below but in each case as of the 1st day of October, 1999.


Siemens Canada Limited Unisphere Solutions, Inc.


By /s/ BE Schwarz By /s/ Thomas Burkardt
--------------------------------- ---------------------------
Signature Signature


B.E. SCHWARZ Thomas Burkardt/COO ------------------------------------ ---------------------- Name/Title Name/Title


MAY 12, 2000 MAY 9, 2000 ------------------------------------ ----------- Date Date


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SERVICES AGREEMENT - TERMS AND CONDITIONS


ARTICLE 1 - INTERPRETATION
--------------------------


1.1 DEFINITIONS


In this Agreement and in Work Plans, unless otherwise defined in a Work Plan the words and terms shall have the respective meanings ascribed to them as follows:


(1) "Business Day" means any day excepting a statutory holiday in the
Province of Ontario and/or the Commonwealth of Massachusetts or a
Saturday or a Sunday.


(2) "Change Order" means a document executed by the parties and which
describes and authorizes changes to a Work Plan.


(3) "Change Order Proposal" means the documents used by Siemens to propose
a change to Services under a Work Plan.


(4) "Change Order Request" means the documents approved by Siemens to be
used by Customer to request a change to Services under a Work Plan.


(5) "Change Order Response" means a response by Siemens to a Change Order
Request made by Customer under a Work Plan, or a response by Customer
to a Change Order Proposal.


(6) "Confidential Information" means all information marked
"confidential", "restricted" or "proprietary" by either party or which
is designated as confidential in a Service Work Plan.


(7) "Customer Data" means all data and information, however recorded,
provided to Siemens by Customer to enable Siemens to provide Services.


(8) "Customer Representative" means a person or persons designated in
writing by Customer to whom formal communications from Siemens in
respect of a Work Plan shall be addressed.


(9) "Effective Date" in relation to this Agreement means the date first
written above and in relation to any Work Plan means the Effective
Date of the Work Plan.


(10) "Equipment" means all equipment, hardware, computers and devices.


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(11) "Generally Accepted Accounting Principles" means, the generally
accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants, or any successor
institute, applicable as at the date on which such calculation is made
or required to be made in accordance with generally accepted
accounting principles.


(12) "Intellectual Property" means all intellectual and industrial property
created, developed or first reduced to practice by a party under a
Work Plan including, without limitation, Software and related
documentation, compilations of data and computer databases,
specifications, designs and industrial designs, know-how, Confidential
information, works of authorship, mask works and integrated circuit
topographies, inventions and improvements.


(13) "Intellectual Property Rights" includes all intellectual and
industrial property rights including all rights to copyrights,
copyright applications, trademarks, patents, inventions, discoveries,
patent applications, renewals thereof, industrial designs, design
rights, trade secrets and information of a confidential nature.


(14) "Joint Review Committee" means the committee established pursuant to
Article 10.


(15) "Services" means the services to be provided by Siemens to Customer
and described in Work Plans.


(16) "Siemens Representative" means a person or persons designated in
writing by Siemens to whom formal communications from Customer in
respect of a Work Plan shall be addressed.


(17) "Software" means computer programs and related documentation and
includes application programs, operating system programs, utilities,
templates, parameter tables and settings, interfaces to external
programs, tools, program related data, and local area network
management software.


(18) "Work Location" means the facility designated in a Work Plan where
employees of Siemens will perform Services. A Work Location may be a
data centre of Siemens, a Customer facility or a third party facility.


(19) "Work Plan" means, for the work being done prior to October, 1999, the
Concept Paper executed by the parties hereto, and otherwise means a
Development Project Agreement executed by the parties hereto pursuant
to this Agreement.


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1.2 PRIORITY OF SCHEDULES


Unless there is something in the context or subject matter inconsistent therewith, in the event of a conflict or inconsistency between this Agreement and any Work Plan, the provisions of the Work Plan shall prevail over the provisions of this Agreement, but only to the extent of the conflict or inconsistency.


ARTICLE 2 - PROVISION OF SERVICES
--------------------------------- 2.1 SERVICES


During the term of this Agreement Siemens will provide Customer and Customer will accept from Siemens Services as described in Work Plans to be separately executed by Siemens and Customer. Each Work Plan shall automatically incorporate the provisions of this Agreement, shall be in substantially the form of Schedule A and shall describe in detail the tasks to be performed by Siemens, the price to be paid by Customer, and such additional provisions as the parties may agree upon. In the event that Customer wishes to issue Purchase orders subsequent to the execution of the Schedule(s), the Purchase order shall automatically incorporate the provisions of this Agreement and the related Schedule(s).


2.2 CUSTOMER ASSISTANCE


Customer shall assist Siemens in the performance of the Services by making available all Equipment, Software, documentation, Customer Data, information and personnel reasonably required by Siemens on a timely basis. Customer shall also ensure that those of its personnel who are assigned to assist Siemens are familiar with Customer's business processes and requirements and have the expertise and capabilities necessary to so assist Siemens.


2.3 CHANGE ORDER PROCEDURE


(1) CUSTOMER CHANGE ORDER REQUEST


Customer shall have the right under this Agreement to request changes in the Work Plan ("Changes"). To request a Change, the Customer Representative shall deliver a Change Order Request to the Siemens Representative specifying the proposed Change and the purpose and objective sought with such proposed Change. Within five (5) Business Days after Siemens's receipt of the Change Order Request (or such other period as the parties may agree to), Siemens shall deliver to Customer a Change Order Response. The Change Order Response shall (i) describe the scope procedure proposed by Siemens to respond to the Change Order Request, (ii) describe how the proposed Change could be implemented and the effect, if any, that such Change would have on the performance of the Services and the provisions of the Work Plan including on the charges, or (iii) request clarification of additional information with respect to the Change


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requested by Customer. The Customer Representative and Siemens Representative will meet to determine whether the parties desire for Siemens to proceed in the manner proposed by Siemens.


(2) SIEMENS CHANGE ORDER PROPOSAL


Siemens shall have the right under a Work Plan to request changes to the Work Plan (a "Change"). To request a Change, the Siemens Representative will deliver a Change Order Proposal to the Customer Representative specifying the proposed Change and the purpose and objective sought with such proposed Change. Within five (5) Business Days (or such other period as the parties may agree to) after Customer's receipt of the Change Order Proposal, Customer shall deliver to Siemens a written response ("Change Order Response"): (i) requesting clarification or additional information with respect to the Change proposed by Siemens; or (ii) accepting the Change proposed by Siemens; (iii) declining the change. The Siemens Representative and Customer Representative will meet to determine whether the parties desire for Siemens to proceed with the making of the Changes in accordance with the Change Order Response.


(3) CHANGE ORDERS


Upon agreement in writing by Customer to implement a Change and agreement thereof by Siemens in a Change Order, Siemens shall proceed in accordance with the provisions of the Work Plan. Change Orders shall be deemed part of the Work Plan, shall amend the Work Plan to the extent of the amendments contained in the Change Order, and each of the parties shall carry out its duties and responsibilities set out in the Change Order. Unless otherwise specified in a Change Order or Work Plan, Changes made pursuant to a Change Order shall be deemed to have been accepted by Customer upon use by or for Customer.


ARTICLE 3 - PRICE AND PAYMENT
----------------------------- 3.1 PRICE


Customer agrees to pay Siemens's charges for the Services in accordance with the provisions of the applicable Work Plans. Except for travel covered by the applicable Work Plan and except for travel to normal status and review meetings at the parties' respective headquarters, if Customer requests Siemens to provide Services at a place other than Siemens's premises, then Customer shall be responsible for and shall reimburse Siemens for all reasonable travel, lodging, meals and other out-of-pocket expenses incurred by Siemens.


3.2 INVOICING


Except as otherwise set forth in the Work Plan, any payments due Siemens from Customer will be invoiced once a month in advance and will be processed through the parties' InterCompany Clearing system. Each month's invoice shall specify the applicable Work Plan


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reference numbers. At the time of delivery of each month's invoice, Siemens shall provide Customer with details of the charges to Customer for the preceding month, and also at that time Siemens shall reconcile any discrepancy between the advance charge made for the preceding month as provided above and that preceding month's actual charges. Once the invoice has been processed by Siemens through the InterCompany Clearing system, any sum due Siemens under a Work Plan that is not paid within thirty (30) calendar days of the due date specified in the InterCompany Clearing system shall bear an administration fee from the due date thereof to the date of payment at a rate of 15% per annum, calculated and payable monthly.


3.3 ESTIMATED PRICE


Where an estimated price is specified in a Schedule(s), it is not warranted by Siemens, and it represents Siemens's reasonable efforts, based on information made available, to estimate the cost of Services which will be required to accomplish the tasks described therein. For individual phases of a project other models such as "Risk and Reward Pricing" or "Incentive-Based-Pricing" can be agreed upon. This depends on specific project situation and availability of information and has to defined separately in an attachment to this Agreement.


3.4 PASS THROUGH EXPENSES


In the event that Customer gives its prior written approval for a Siemens charge or expense to be passed through to Customer, if the Siemens charge is to be based on Siemens's cost (such as pass-through expenses), Siemens will provide to Customer, information and documentation sufficient to substantiate Siemens's costs with respect to such charge. Customer shall pay such charges plus an administrative fee of 5% of such charges, except that this administrative fee shall not apply to charges which are expressly provided for in a Work Plan, such as those contemplated by Section 4.3 or extraordinary expenses to fulfill Customer's hiring needs as contemplated by Attachment D to the first Development Project Agreement. No such expenses shall be incurred by Siemens without first having obtained Customer's consent thereto. (The parties note that the acquisition of certain capital equipment is covered instead by Section 4.3.)


3.5 PRORATION


All periodic charges under a Work Plan are to be computed on a calendar month basis, and will be prorated for any partial month, unless specifically stated otherwise in the Work Plan.


3.6 TAXES


Prices in Work Plans are exclusive of all taxes and Customer shall pay any sales, use, goods and services, consumption or other tax and any duties or tariffs that may be assessed whether based upon the delivery, possession, sale or use of the Services or otherwise, or assets, except that Customer shall not be responsible for taxes based on Siemens's net income or, except as specified in Section 4.3, taxes on any capital equipment that Siemens acquires pursuant to


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Section 4.3. The parties will provide reasonable assistance to each other in order to minimize tax impacts.


3.7 REMEDIES IN THE EVENT OF FAILURE TO PAY


If Customer defaults in a payment obligation and fails to cure that default within 30 days after having been given written notice of the default, Siemens may in addition to any other rights or remedies at law or under this Agreement withhold further Services under any Work Plan until such failure is remedied.


ARTICLE 4 - OWNERSHIP
--------------------- 4.1 CUSTOMER DATA


All Customer Data shall be and remain the property of Customer and shall not be removed from the Customer's premises by Siemens without the authorization of the Customer.


4.2 INTELLECTUAL PROPERTY


Customer shall own the Intellectual Property Rights of any development under contract, all of which Siemens assigns to Customer, and Siemens shall cooperate with Customer (at Customer's expense) in executing any assignments or other documents and in taking other steps reasonably necessary for Customer to perfect and protect those rights.


4.3 CAPITAL EQUIPMENT AND LICENSES


In connection with each Work Plan, Siemens shall acquire the capital equipment and licenses provided for in that Work Plan and selected by Customer, and the parties shall take into account such capital equipment acquisitions and license fees when determining the fees specified in the Work Plan. Such capital equipment shall be depreciated on a straight-line basis over a period of three (3) years. Such capital equipment shall be owned by Siemens. In the event that a Work Plan is terminated early, Customer shall pay Siemens the portion of the cost (including any applicable taxes) of the capital equipment acquired by Siemens under that Work Plan which cannot be used elsewhere by Siemens and which has not then been fully depreciated, and upon such payment that capital equipment shall become the property of Customer, and Customer shall similarly pay any unallocated license fees (i.e. fees for licenses which Siemens has acquired in accordance with this Agreement and cannot otherwise use following the early termination, to the extent those fees have not already been paid through the fees Customer has paid), and upon such payment Customer shall have all of Siemens' rights under those licenses.


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ARTICLE 5 - CONFIDENTIAL INFORMATION
------------------------------------ 5.1 CONFIDENTIAL OBLIGATION


Each party acknowledges that Confidential Information may be exchanged between the parties in the course of performance of the Services hereunder. Each party shall use no less than the same means it uses to protect its similar confidential and proprietary information, but in any event not less than reasonable means, to prevent the disclosure and to protect the confidentiality of the Confidential Information of the other party. Except as otherwise provided herein, each party agrees that it will not use the Confidential Information of the other party except for the purposes of this Agreement including Work Plans hereunder and will not disclose such Confidential Information or make it available to third persons other than to its full-time employees or agents having a need for access to such Confidential Information in connection with their employment with such party or performance of services for such party and with respect to whom such party takes steps, no less rigorous than those it takes to protect its own proprietary information, to prevent such employees from acting in a manner inconsistent with the terms of this Agreement.


5.2 EXCEPTIONS


Section 5.1 shall not apply to information which belongs to such party or is (i) already known by the recipient party without an obligation of confidentiality, (ii) publicly known or becomes publicly known through no unauthorized act of the recipient party, (iii) rightfully received from a third person, (iv) independently developed by the recipient party without use of the other party's information, (v) approved by the other party for disclosure, or (vi) required to be disclosed pursuant to a requirement of a governmental agency or law so long as the disclosing party provides the other party with notice of such requirement prior to any such disclosure.


5.3 RETURN OF CONFIDENTIAL INFORMATION


Upon the termination or expiration of this Agreement, each party will return to the other all documents and information, however recorded, including but not limited to drawings, specifications, descriptions, or other papers, tapes, or any other media which contain any of the other's Confidential Information. Upon the termination or expiration of a Work Plan or upon the completion of a Work Plan, each party will return to the other all such documents and information that relates to such Work Plan.


5.4 THIRD PARTY INFORMATION


Each party agrees not to disclose or deliver to the other any proprietary, confidential, secret or private information or intellectual property including any Software of any third person which it is under a duty or has contracted not to disclose, without the prior written consent of such third person and the other party.


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5.5 LOSS OF CONFIDENTIAL INFORMATION


In the event of any unauthorized disclosure or loss of, or inability to account for, Confidential Information of the furnishing party, the receiving party will notify the furnishing party immediately.


5.6 ENFORCEMENT OF CONFIDENTIALITY OBLIGATION


Customer recognizes that Siemens is in the business of providing software development Services and may perform Services for other persons similar to the Services. Subject to Customer's ownership of Intellectual Property pursuant to Section 4.2 and subject to the confidentiality and other provisions of this Agreement, Siemens retains the right and nothing shall prevent Siemens from using its ideas, concepts, methods, processes, know-how, organization, techniques or any Software or Equipment owned, leased or licensed by Siemens in providing Services to any third person.


ARTICLE 6 - OBLIGATIONS OF CUSTOMER
----------------------------------- 6.1 CUSTOMER PERSONNEL


Customer shall from time to time provide Siemens with a list of Customer employees to whom Siemens may deliver data or information in the provision of Services.


6.2 CUSTOMER DATA


Customer shall provide all Customer Data to Siemens in the manner the parties may agree to. Siemens will not be responsible or liable for any loss, damage or inconvenience suffered by Customer or by any third person arising out of Siemens's inability to perform the Services due to failure of Customer to provide all necessary Customer Data when required by a Work Plan or by reason of any deficiencies in the Customer Data.


ARTICLE 7 - WARRANTIES
---------------------- 7.1 MUTUAL WARRANTIES


(1) Customer and Siemens represent, warrant and covenant to the other
that:


(1) it has and will have good and sufficient power, authority and
right to enter into and deliver this Agreement and Work Plans and
to perform its obligations under this Agreement and Work Plans;


(2) neither the entering into nor the delivery of this Agreement or
the Work


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Plans, nor the carrying out of the obligations under this
Agreement or Work Plans will result in a violation of any
agreement, license or other instrument to which it is a party or
is bound;


(3) unless otherwise specified or disclosed in a Work Plan, Software,
Equipment, Intellectual Property and other property which is
provided, delivered, or transferred to a party under a Work Plan
for use pursuant to the Work Plan and the use thereof will not
violate any agreement, license or other instrument or duty to
which the party furnishing the property is bound, or result in
the infringement or violation of any Intellectual Property Right
or moral right of any person.


(2) Customer represents, warrants and covenants to Siemens that the provision
of any Services in a manner directed or specified by Customer or by the use
of Software, Equipment or procedures specified by Customer will not result
in the infringement or violation of any Intellectual Property Right or
moral right of any person.


7.2 QUALITY OF SERVICES


Siemens warrants that the Services will be performed with reasonable skill and care and by qualified persons authorized by Siemens to perform the Services, and shall be performed in accordance with the Work Plan as approved by the Customer.


7.3 DISCLAIMER


7.3A THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE IN LIEU OF ANY OTHER WARRANTIES OR CONDITIONS EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABLE QUALITY OR FITNESS FOR A PARTICULAR PURPOSE, AND THOSE ARISING BY STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE.


7.3B CUSTOMER SHALL BE RESPONSIBLE FOR THE OVERALL DESIGN OF ALL WORK PRODUCTS DEVELOPED HEREUNDER AND FOR THE FITNESS AND SUITABILITY THEREOF INCLUDING THE SPECIFICATIONS AND FEATURE SELECTION TO MEET CUSTOMER'S REQUIREMENTS AND THOSE OF CUSTOMER'S CUSTOMERS.


7.4 EXCLUSION OF CERTAIN LIABILITIES


7.4A IN NO EVENT WILL EITHER PARTY BE LIABLE FOR DAMAGES HEREUNDER OR UNDER ANY WORK PLAN WITH RESPECT TO SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL LOSS (EVEN IF IT HAS BEEN


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ADVISED OF THE POSSIBILITY OF SUCH LOSS) INCLUDING, BUT NOT LIMITED TO, LOST BUSINESS REVENUE, LOSS OF PROFITS, LOSS OF DATA OR FAILURE TO REALIZE EXPECTED PROFITS OR SAVINGS.


7.4B FOR BREACH OR DEFAULT BY SIEMENS OF ANY OF THE PROVISIONS OF THIS AGREEMENT OR ANY WORK PLAN, SIEMEN'S ENTIRE LIABILITY, REGARDLESS OF THE FORM OF ACTION, WHETHER BASED ON CONTRACT OR TORT, INCLUDING NEGLIGENCE, SHALL IN NO EVENT EXCEED EITHER THE AMOUNT PAID BY CUSTOMER FOR THE SERVICE THAT IS THE SUBJECT OF THE CLAIM OR, IN THE AGGREGATE IN RESPECT OF ALL CLAIMS UNDER OR RELATED TO A WORK PLAN, THE AMOUNT PAID BY CUSTOMER UNDER THE APPLICABLE WORK PLAN.


ARTICLE 8 - TERM AND TERMINATION
-------------------------------- 8.1 TERM


The term of this Agreement commences on the Effective Date and will continue until terminated by either party by giving the other no less than one hundred eighty (180) days prior written notice in writing. Subject to the provisions of this Agreement, all Work Plans executed by the parties during the term hereof which require performance beyond the term hereof shall be so performed and shall continue to be subject to the terms and conditions of this Agreement until each party's performance under the Work Plan is completed or until each party's obligations under the Work Plan is otherwise discharged.


8.2 TERMINATION FOR CAUSE


(1) In the event a party:


(1) materially breaches any of its duties, obligations or
responsibilities under this Agreement or a Work Plan, which
breach shall not be substantially cured within sixty (60) days
after written notice is given to the breaching party specifying
the breach, or
(2) commits an Act of Insolvency (as defined below),


then the party not in breach or insolvent, as the case may be, may, by
promptly giving notice thereof to the other party, terminate the Work
Plan affected by the default or this Agreement as of the date
specified in such notice of termination. In the event of such material
breach which is not substantially cured within sixty (60) days after
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