1
EXHIBIT 10.15
PURCHASE AGREEMENT
BETWEEN
BROCADE COMMUNICATIONS SYSTEMS, INC.
AND
SEQUENT COMPUTER SYSTEMS, INC.
CONTENTS PAGE
1. DEFINITIONS 2
2. SCOPE OF AGREEMENT 2
3. TERM AND TERMINATION 3
4. PRODUCT DOCUMENTATION AND TRAINING 3
5. PRICE AND PAYMENT 4
6. FORECASTING 5
7. PURCHASE ORDERS 5
8. SHIPPING, DELIVERY AND PACKAGING 9
9. INSPECTION AND ACCEPTANCE 10
10. WARRANTY 10
11. [*]
12. RETURN MATERIAL AUTHORIZATION 12
13. MANDATORY CHANGES 12
14. SEQUENT REQUESTED CHANGES 13
15. BROCADE REQUESTED CHANGES 14
16. PRODUCT XXXXXXXXXX 00
00. MEETINGS AND SUPPLIER PERFORMANCE 15
18. REPORTS 16
19. MATERIAL MANAGEMENT 16
20. LIMITATION OF LIABILITY 16
21. CONFIDENTIAL AND PROPRIETARY INFORMATION 16
22. INFRINGEMENT 17
23. INDEMNITY AND INSURANCE 18
24. NOTICES 19
25. MISCELLANEOUS PROVISIONS 19
26. ENTIRE AGREEMENT 21
ATTACHMENTS
A PRODUCT SPECIFICATION 23
B PRODUCT AND PRODUCT SUPPORT PRICING 24
C SUPPLIER QUALITY 26
D PRODUCT SUPPORT 32
E REPORTS 38
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 1
2
PURCHASE AGREEMENT
BETWEEN
BROCADE COMMUNICATIONS SYSTEMS, INC.
AND
SEQUENT COMPUTER SYSTEMS, INC.
This Agreement, effective_______________("Effective Date"), is entered into by
and between Sequent Computer Systems, Inc. ("Sequent"), an Oregon corporation,
and Brocade Communications Systems, Inc. ("Brocade"), a California corporation.
Now, therefore, the parties agree as follows:
1. DEFINITIONS
1.1 "Product(s)" means the products described in Attachment A,
Product Specification and any other product(s) added to this
Agreement by mutual consent of the parties.
1.2 "Product Documentation" means Brocade's assembly drawings, user
manuals, diagnostic software documentation, operations manuals,
and any other such materials required for the maintenance,
operation, and use of the Products generally made available to
customers. Upon mutual agreement between the parties, Brocade
will provide additional documentation not generally made
available to customers.
1.3 "Product Support" means the type and level of support described
in Attachment D, Product Support, subject to the provisions
contained in this Agreement.
1.4 "Field Replaceable Unit" ("FRU") means a component of the Product
that will be used to replace or repair failed Product in the
field.
2. SCOPE OF AGREEMENT
2.1 Brocade agrees to sell Products and Product Support to Sequent in
accordance with the terms and conditions of this Agreement. This
Agreement is non-exclusive and the parties may enter into similar
agreements with other parties. The parties acknowledge that
Sequent may sell the Products worldwide for use with Sequent's
NUMA-Q and Symmetry product lines and other product lines as
mutually agreed between the parties. Sequent shall not be
obligated to purchase any Products or Product Support from
Brocade hereunder.
2.2 The parties acknowledge that this Agreement may be executed prior
to complete qualification of the Product by Sequent.
Qualification of the Product by Sequent and the Product meeting
all Product specifications as required in Attachment A are
conditions precedent to Sequent's willingness to purchase
Products or Product Support under this Agreement.
Page 2
3
3. TERM AND TERMINATION
3.1 Subject to the provisions of sub-Sections 3.2, 3.3, and 3.4,
below, the term of this Agreement shall be for a period of [*]
from the Effective Date.
3.2 Sequent may terminate this Agreement at any time, without cause,
by giving Brocade at least [*] prior written notice. Termination
of the Agreement will not relieve the parties of any obligations
incurred prior to the date of termination, including any Sequent
liability for cancellations as described in sub-Section 7.7.
3.3 Either party may immediately terminate this Agreement if the
other party:
(i) becomes insolvent or bankrupt, files or has filed against
it a petition in bankruptcy and any proceeding under the
bankruptcy or insolvency laws is not dismissed within
thirty (30) calendar days, or undergoes a reorganization
pursuant to a petition in bankruptcy filed with respect to
it; or
(ii) has all or a substantial portion of its capital stock or
assets expropriated by any government; or
(iii) is dissolved or liquidated, or has a petition for
dissolution or liquidation filed with respect to it; or
(iv) is subject to property attachment, court injunction, or
court order which substantially and negatively affects its
operations; or
(v) makes an assignment for the benefit of creditors.
3.4 Either party may terminate this Agreement if the other party
fails to perform any of its material obligations under the terms
and conditions of this Agreement so as to be in default hereunder
and fails to cure such default within [*] after receiving written
notice thereof.
4. PRODUCT DOCUMENTATION AND TRAINING
4.1 Brocade shall provide Sequent with one (1) reproducible copy of
the Product Documentation in the form of printed material,
magnetic media, CD ROM, or electronic means as mutually agreed,
at no charge to Sequent. Brocade reserves the right to change the
content of the Product Documentation at any time. In the event
that such Documentation is changed during the term of this
Agreement, Brocade agrees, also at no charge, to promptly notify
Sequent of revised Product Documentation and its availability on
Brocade's web site. Additional copies of Product Documentation
and changes thereto may be ordered by Sequent at Brocade's
then-current price.
4.2 Brocade hereby grants to Sequent without additional charge the
right to reproduce any Product Documentation furnished under this
Section together with an unconditional license to Sequent or each
Sequent customer who purchases the Product to use the Product
Documentation to maintain, use, or provide training on the
Product purchased by such customer. Any reproduced
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 3
4
copies of such Documentation shall contain legends and copyrights
appearing on the copies of the Product Documentation which were
furnished to Sequent.
4.3 Brocade will provide one initial training course to a maximum of
[*] Sequent employees at a time and location to be agreed upon
between the parties. The training course and materials will be at
no charge to Sequent. [*] for use in subsequent training. [*]
4.4 Brocade will provide additional training to Sequent when Product
changes are made that affect Product Support. [*]
4.5 Sequent may request training courses in addition to those
described in sub-Section 4.3 and 4.4, above, at Brocade's
then-current charges.
5. PRICE AND PAYMENT
5.1 [*]
5.2 [*]
5.3 [*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 4
5
5.4 [*]
5.5 Pricing does not include federal, state, or local excise, sales,
or use taxes, except those taxes that are based on Brocade's
income. If such taxes are applicable, they shall be set out as a
separate line item on Brocade's invoice.
5.6 Payment terms for all Products and Product Support shall be net
[*] from the date of a correct invoice. Payment of an invoice
shall not constitute or imply acceptance of the Product or
Product Support or relieve Brocade of any obligations assumed
under this Agreement, nor prevent Sequent from asserting any
other rights it may have under this Agreement or at law or in
equity.
5.7 [*]
5.8 [*]
6. FORECASTING
Sequent agrees to provide Brocade with twelve-month rolling forecasts of
Sequent's estimated annual Product purchase requirements. These
forecasts are good faith estimates only, and Sequent shall not be liable
to Brocade for failure to purchase any of the forecasted Product.
7. PURCHASE ORDERS
7.1 Sequent's purchase orders shall be the sole basis for purchase of
Product and Product Support under this Agreement. Designated
Sequent procurement agents shall be the only persons authorized
to issue purchase orders or changes to purchase orders. Purchase
orders and change orders may be transmitted by mail, facsimile,
or other methods approved by both parties. Purchase order numbers
shall be referenced on all correspondence, invoicing, and packing
slips relating to each order.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 5
6
7.2 Purchase orders will specify: (i) Sequent's part numbers, (ii)
Product description, (iii) Product revision level, (iv) quantity
ordered, (v) shipping destination, and (vi) due-on-dock dates.
Brocade shall acknowledge in writing its acceptance of such
purchase orders within [*] from receipt of Sequent's purchase
order.
7.3 Sequent's part numbers and part number revision levels appearing
on the purchase orders shall be considered the most recent. In
the event that Brocade finds any discrepancy between the part or
revision level numbers appearing on a purchase order and any
other part or revision level numbers which Brocade believes are
correct, Brocade shall obtain clarification from Sequent before
shipment of the Product.
7.4 Product lead-time shall be no greater than the lead times in the
schedule below, from receipt of Sequent's purchase order until
shipment by Brocade to Sequent's requested point of delivery.
Brocade shall use best efforts to meet deliveries requested
inside the Product lead-time. Brocade agrees to meet the Product
lead-times according to the following schedule.
Time Period Lead Time (Calendar Days)
----------- -------------------------
through 9/30/97 [*]
10/1/97-3/31/98 [*]
4/1/98-onward [*]
7.5 Upside Flexibility Model: Sequent shall have the right for any
given purchase order on "unallocated Product" as that term is
described below, to an increase in quantities in issued purchase
orders as follows:
Number of Calendar Days
Prior to Scheduled Due on Dock Date Allowable Increase
[*] [*]%
[*]%
[*]%
[*]%
[*]%
[*]%
[*]%
[*]%
For the purposes of this sub-Section, "unallocated Product" shall
mean a Product not on allocation; with allocation defined as
Brocade's inability to meet the allowable increase in quantities
provided above due to Product component or capacity constraint
which is beyond the reasonable control of Brocade.
7.6 Sequent shall have the right to reschedule delivery for [*] up to
maximum of [*] out from the original scheduled due-on-dock date
for all quantities not scheduled for delivery in Sequent's then-
current fiscal quarter. For all reschedules of quantities
scheduled
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 6
7
for delivery in Sequent's then-current fiscal quarter, [*] of the
monthly volume can be rescheduled up to [*] out into Sequent's
next fiscal quarter. Sequent shall provide Brocade written notice
of requested reschedules at least [*] prior to the scheduled
due-on-dock date.
7.7 This sub-Section governs cancellation of Product by Sequent.
Sequent shall have the right to cancel delivery for any
particular Product subject to the provisions of this sub-Section.
7.7.1 Sequent cancellations of Product occurring in calendar
year 1997 are subject to the following cancellation
schedule and fees:
[*]
* On cancellations occurring within 1 - 30 calendar days
from the due on dock date of the cancelled Product
cancellation fees will be;
[*] of the Product purchase price of the cancelled
Product, [*]
** On cancellations occurring within 31 - 60 calendar days
from the due on dock date of the cancelled Product;
Cancellation fees shall be based on [*] of the cancelled
Product purchase price.
*** On cancellations occurring greater than [*] calendar days
from the due on dock date of the cancelled Product;
[*]
7.7.2 Cancellations occurring during calendar year 1998 through
the remainder of the term of the Agreement are subject to
the following cancellation schedule and fees:
[*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 7
8
[*]
* On cancellations occurring within 1 - 15 calendar days
from the due on dock date of the cancelled Product
cancellation fees will be;
[*] of the Product purchase price of the cancelled
Product, [*]
** On cancellations occurring within 16 - 30 calendar days
from the due on dock date of the cancelled Product;
Cancellation fees will be based on Brocade's [*] of the
cancelled Product purchase price.
*** On cancellations occurring within 31 - 60 calendar days
from the due on dock date of the cancelled Product;
Cancellation fees shall be based on [*] of the cancelled
Product purchase price.
**** On cancellations occurring greater than [*] calendar days
from the due on dock date of the cancelled Product;
[*]
7.7.3 [*]
7.7.4 Prior to any subsequent re-sale of a cancelled Product
Brocade may invoice Sequent for such Product, as of the
Product's due-on-dock date. Payment terms will be net
[*] from the date of a correct invoice. [*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 8
9
8. SHIPPING, DELIVERY, AND PACKAGING
8.1 Brocade shall follow all instructions contained in Sequent's
routing instructions, which Sequent will provide to Brocade.
Sequent may modify its routing instructions from time to time and
will provide Brocade with an updated version of any such modified
instructions. Brocade shall be responsible for any freight
charges incurred for Product shipped outside the routing
instructions to include, but not be limited to, use of other than
Sequent preferred carriers.
8.2 Brocade will ship the Product so that delivery is made at
Sequent's dock or a dock location designated by Sequent on the
due-on-dock date specified in the purchase order, subject to
Sequent's right to reschedule or cancel delivery as provided in
sub-Sections 7.6 and 7.7, above. Brocade shall maintain a minimum
on-time delivery performance of [*] to Sequent's requested
due-on-dock dates. Deliveries will be considered on time if they
are made no more than [*] earlier or [*] later than the
due-on-dock date specified in the Sequent purchase order. Sequent
may refuse to accept deliveries that are not on time. [*] If
Sequent agrees to take partial shipments of any order, each such
partial shipment shall be deemed a separate transaction. [*]
8.3 If Brocade anticipates or becomes aware that it will not supply
the Product on the due-on-dock delivery date acknowledged by
Brocade for any reason, Brocade shall notify Sequent immediately
after Brocade has knowledge of the situation. The notification
may be communicated by facsimile, telephone, electronic mail, or
any other method agreed to by the parties, provided that Brocade
shall obtain Sequent's actual acknowledgment of the notice of
anticipated delay. Brocade and Sequent will jointly develop
alternatives to resolve any late delivery of the Product,
including use of premium routing. Brocade will develop recovery
plans with new committed due-on-dock dates and communicate such
plans to Sequent within [*] of missed shipments. If Brocade is
unable to deliver the Product on the acknowledged due-on-dock
date, through no fault of Sequent, Sequent may require Brocade
to use premium routing and ship the Product freight pre-paid
at Brocade's expense.
8.4 In the event of Product allocation due to circumstances beyond
Brocade's reasonable control, Brocade shall [*] to supply the
number of Products in Sequent's then current forecast covering
the affected period of allocation, in no event less than the
proportion of Sequent's percentage of Product on order to the
total Product on order by all of Brocade's customers for the
Product or similar Products.
8.5 Except as provided otherwise in sub-sections 8.1 and 8.3, above,
sub-section 13.2.1, below, and applicable provisions of
Attachment D, [*] unless otherwise specified by Sequent's
designated procurement agents.
8.6 Each shipment of the Product by Brocade shall include a packing
slip which contains at a minimum: (i) Brocade's name; (ii) box
number (e.g., 1 of 3, 2 of 3); (iii) receiving address; (iv)
Sequent's purchase order number; (v) Sequent's part
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 9
10
number; (vi) revision level of Sequent's part number; (vii)
Product serial number; (viii) shipping quantity; (ix) date of
shipment; and (x) return material authorization ("RMA") number,
when applicable.
8.7 Unless requested otherwise by Sequent, all shipments to a single
Sequent-designated location shipped on the same day shall be
consolidated by Brocade into a single shipment.
8.8 Brocade shall provide the following information about its Product
in writing within two weeks of execution of the Agreement: (i)
country of origin; (ii) NAFTA preference criteria; (iii)
harmonized scheduled tariff classification number; and (iv)
export commerce control number ("ECCN"). Brocade, at its expense,
will prepare all international shipping documentation, including
commercial invoice, NAFTA certificate, Shipper's Letter of
Instruction, Shipper's Export Declaration, and any other
necessary documentation, for international shipments upon request
from Sequent, provided that the Product can be shipped to the
requested destination under a General License under the U.S.
Export Administration Regulations. If a validated or other
specific prior license is required under the U.S. Export
Administration Regulations, Brocade may request that the Product
be exported by Sequent and that Sequent assume all responsibility
for export licenses and other export documentation.
9. INSPECTION AND ACCEPTANCE
Inspection and acceptance of the Product by Sequent will be made within
[*] after delivery. Failure to inspect and accept or reject the Product
shall neither relieve Brocade from warranty responsibility or any
applicable quality requirements, infringement, or Product liability as
provided in this Agreement nor impose any liability on Sequent. Product
not conforming to Product specifications may, at Sequent's option, be
returned to Brocade at Brocade's expense for repair or replacement of
the Product, [*] for any amounts previously paid by Sequent for the
Product, or, if the foregoing remedies are insufficient, [*].
10. WARRANTY
Brocade warrants that all new Product delivered under this Agreement
will for a period of [*] from the date of shipment of the Product by
Brocade: (i) conform to and perform in accordance with the Product
specifications identified in Attachment A, and to any drawings agreed
upon by the parties or samples provided to and approved by Sequent; and
(ii) be free from defects in materials and workmanship. This warranty
shall survive inspection, test, acceptance, and payment. The warranties
provided in this Section, referred to hereinafter as the Product
Warranty, are in addition to any other remedies available at law or in
equity, including the remedies set forth in Section 11, below.
11. [*]
11.1 In addition to the provisions of this Section, Brocade shall be
subject to the requirements and expectations provided for in
Attachment C.
11.2 For the purposes of this Section, the following definitions
apply.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 10
11
11.2.1 "Reimbursement" shall mean monetary compensation, no
charge replacement Product, unscheduled price reductions,
or some mutually agreed to combination thereof. Other
forms of Reimbursement may be identified by mutual
agreement on a case by case basis.
11.2.2 The terms "Quality Failure," "Reliability Failure," "Red
Light," and "Purge" are defined in Attachment C.
11.3 [*] Quality Failures, Reliability Failures, Red Lights, and
Purges when the quality and/or reliability of the Product drops
below the thresholds defined in this sub-Section.
11.3.1 [*] will be [*] when any of the following events occur:
(i) Brocade-confirmed Quality Failures in parts per
million ("PPM") exceed [*] the PPM
defined in Section 5 of Attachment C; or
(ii) A Red Light or Purge is directly attributable to
Brocade's inability to meet the Product
specification or PPM thresholds described in this
sub-Section, or results from a safety violation.
11.3.2 [*] when any of the following events occur:
(i) Product mean time between failures ("MTBF") drops
below [*] of Brocade's predicted MTBF of [*] for a
16 port switch and [*] for an 8 port switch; or
(ii) A Red Light or Purge is directly attributable to
Brocade's inability to meet the Product
specification or the MTBF thresholds described in
this sub-Section, or results from a safety
violation.
11.3.3 [*] to Sequent will be based on accumulated performance
over a [*] rolling period. For instance:
[*]
11.3.4 The parties will summarize and communicate quality and
reliability data to provide metrics needed to track
performance as provided in Section 7 of Attachment C.
11.4 [*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 11
12
(ii) [*]
(iii) An "incident" as described in 11.4 (i) and 11.4 (ii) above
begins when a Quality Failure, Reliability Failure, Red
Light or Purge is directly attributable to Brocade's
inability to meet the Product specification or the
appropriate PPM or MTBF thresholds, as provided in this
Section 11, or results from a safety violation. An
"incident" ends when Brocade meets or exceeds the
deficient Product specification or PPM or MTBF threshold
or the safety violation has been fully resolved.
11.5 [*] to Sequent under this Section shall be made by the parties at
the end of each calendar year quarter and [*] Brocade to Sequent
within [*] from the date of the accounting.
11.6 Remedies in this Section are in addition to those outlined in
Section 10, Warranty. Payment under this Section shall not
relieve Brocade of any obligations assumed, nor prevent Sequent
from asserting any other rights it may have, under this
Agreement. Amounts paid pursuant to sub-Section 11.4 constitute
all damages per incident for Quality Failures and/or
Reliability Failures under this Agreement.
12. RETURN MATERIAL AUTHORIZATION
If Brocade requires an RMA to expedite the return of defective Product,
Brocade shall provide a verbal RMA allowing immediate return of the
Product and follow up with a written RMA within [*] from the date of
giving the verbal RMA. Except for the need to obtain an RMA, Brocade
shall not require prior approval for the return of Product from Sequent.
13. MANDATORY CHANGES
13.1 In the event that changes are required to make the Product
conform to safety and/or regulatory agency requirements
("Mandatory Engineering Changes"), Brocade shall immediately
implement the Mandatory Engineering Changes
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 12
13
without charge to Sequent in further production of the Product.
Brocade shall provide Sequent with written notice of any
Mandatory Engineering Changes at the time that Brocade knows of
such requirements.
13.2 Brocade and Sequent shall discuss and mutually agree upon one or
more of the following remedies, or any other agreed upon
remedies, for implementing Mandatory Engineering Changes on
previously delivered Product. Brocade shall use best efforts to
immediately implement the selected remedies, [*].
13.2.1 Sequent may return the affected Product to Brocade or an
authorized Brocade facility for implementation of the
Mandatory Engineering Change or Product replacement.
[*]
13.2.2 Sequent may request and Brocade will ship Mandatory
Engineering Change kits for Product delivered to Sequent
before the Mandatory Engineering Change was implemented.
Brocade shall provide Sequent with installation
instructions and/or training necessary to implement the
Mandatory Engineering Change.
13.2.3 Brocade may be requested to provide on-site technical
assistance at the appropriate location to implement the
Mandatory Engineering Change.
13.2.4 Sequent may request that a Brocade-approved third party
organization implement Mandatory Engineering Change kits
for the affected Product.
13.3 In the event that Brocade cannot implement all Mandatory
Engineering Changes to Product delivered to Sequent within a
reasonable time, not to exceed [*] from the date of Brocade's
written notice to Sequent of the requirement for such changes,
Brocade shall provide no charge replacement Product to Sequent in
exchange for the Product requiring the Mandatory Engineering
Change.
13.4 Sequent shall have the option to cancel open purchase orders
without penalty if the Mandatory Engineering Changes are
incompatible with or adversely affect performance of Products
purchased by Sequent and such changes are not made compatible
with the Products or Sequent is not provided with an acceptable
remedy within [*] after Brocade receives notification from
Sequent of its intent to cancel its open purchase orders.
14. SEQUENT REQUESTED CHANGES
14.1 Sequent may request that Brocade provide [*] evaluation of
changes to the Product or changes to the method of packing,
packaging, or shipment of the Product. Sequent's request will
include a written description of the proposed change sufficient
to permit Brocade to evaluate its feasibility.
14.2 If Sequent's proposed change is accepted by Brocade, Brocade
shall notify Sequent in writing within [*] from the date of
request, of the terms and conditions under which it would make
the change requested by Sequent. Brocade's written evaluation
shall state the cost, if any, to make the
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 13
14
change and the date that Brocade would be able to implement such
change. If the proposed change would be at cost to Sequent,
Sequent must provide prior written approval to Brocade before the
change is made. In the evaluation of the effect such changes may
have on regulatory agency certifications, the above referenced
[*] may be extended to take into account the time necessary for
Brocade to obtain new regulatory agency certifications.
15. BROCADE REQUESTED CHANGES
15.1 Subject to the provisions of this Section 15, Brocade may propose
optional changes, including changes that affect form, fit,
function, [*] as those terms are defined below, which are not
Mandatory Engineering Changes ("Optional Engineering Changes").
For the purposes of this Section, the following definitions
apply:
15.1.1 "Form" means the dimensions, weight, appearance,
packaging, labeling, finish, texture, color, or material
properties of the Product.
15.1.2 "Fit" means the assembly interchangeability or attachment
scheme of the Product or FRU within the Product. Fit
includes the ability of an item to become an integral part
of another item.
15.1.3 "Function" means performance, operational interface to
other components or functions, fitness for use, or
testability of the Product or FRU within the Product.
15.1.4 [*]
15.1.5 [*]
15.2 Brocade shall maintain a formal product change control system to
ensure that notification is submitted to Sequent on all proposed
changes to Products covered by Attachment A. Brocade shall
provide ongoing Product technology directions and schedules for
all Product and Product-related options. Included in the change
notification process shall be the following:
(i) anticipated last shipment date of unchanged Product;
(ii) means of identification between changed and unchanged
Product;
(iii) a complete and detailed description of the change
proposed and any data that will support the benefits of
the change;
(iv) impact to installed base of Product, including FRU
inventories.
15.3 [*]
15.4 If the Optional Engineering Changes proposed by Brocade in
Sequent's sole opinion necessitate evaluation by Sequent for
compatibility with Sequent's systems and/or specifications,
Brocade upon Sequent's request shall provide Sequent with one (1)
set of evaluation products, FRUs, or designs which
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 14
15
incorporate the proposed changes. Sequent will request such
evaluation products, FRUs, or designs within [*] of receipt of
Brocade's change proposal. Evaluation products, FRUs, or designs
that are provided to Sequent under this provision are for
evaluation purposes and will be returned to Brocade after the
evaluation period. Sequent has the right, without liability, to
accept or reject Brocade's proposed Optional Engineering Changes
and will inform Brocade of its approval or rejection of those
changes in writing within [*] from Sequent's receipt of notice of
Brocade's proposed changes or within [*] of receipt of the
evaluation products, FRUs, or designs, whichever is later. If no
written response is received by Brocade from Sequent within the
applicable period, Sequent will be deemed not to have accepted
the changes.
15.5 If Sequent rejects the Optional Engineering Changes, Brocade
shall continue supplying the unaltered Product or provide Sequent
with opportunities for last time buy of the unaltered Product
under the terms of Section 16, below.
15.6 Brocade will incorporate changes accepted by Sequent into Product
on Sequent's open purchase orders and, at Sequent's request, into
Product going through Brocade's repair process.
15.7 Any changed Product resulting from application of this Section
shall be considered added to this Agreement and subject to its
terms and conditions.
16. PRODUCT WITHDRAWAL
Brocade will notify Sequent in writing at least [*] prior to withdrawal
of a Product. Brocade will ship Product for open purchase orders that
Brocade has accepted before the withdrawal date for an additional [*]
after the withdrawal date. All EOL ("End of Life") purchase orders will
be considered non-cancellable.
17. MEETINGS AND SUPPLIER PERFORMANCE
17.1 Brocade appoints its Account Manager and Sequent appoints its
designated Supplier Business Manager as liaisons to monitor
Brocade's performance under this Agreement. These liaisons will
also be responsible for coordinating meetings, discussions and
reports provided for in this Agreement. The names and telephone
and facsimile numbers of the liaisons will be provided and may be
changed by notice from one party to the other.
17.2 Sequent's designated liaison will conduct quarterly supplier
performance review and planning meetings with Brocade's Sequent
account management team. Sequent and Brocade shall mutually
develop supplier performance requirements and goals based on
Brocade's obligations and responsibilities under this Agreement,
to be evaluated by the parties at these periodic meetings.
Brocade's performance requirements and goals will be based on:
[*] The locations and times for these meetings will be determined
by Sequent and Brocade. The purpose of these meetings will
include the following:
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 15
16
(i) Review Brocade's performance over the previous quarter;
(ii) Review action items and resolution;
(iii) Identify opportunities and areas of improvement;
(iv) Agreement on commitments, set target dates, and identify
persons responsible;
(v) Review appropriate Brocade reports;
(vi) [*]
(vii) Review Brocade quality and reliability improvement plans;
(viii) Publish minutes.
18. REPORTS
Recurring reports to be provided by Brocade and Sequent under this
Agreement are listed in Attachment E, Reports. All reports will be made
available in electronic form or as otherwise mutually agreed. There
shall be no charge to either for any recurring reports required under
this Agreement.
19. MATERIAL MANAGEMENT AND PERFORMANCE STANDARDS
19.1 Brocade shall manage the scheduling of material to meet Sequent's
Product availability and delivery requirements as set forth in
this Agreement and on accepted purchase orders. Brocade will
provide status reports to Sequent that include open order status
and ship date information, on the following schedule:
1997: [*]
1998: [*]
19.2 Brocade shall manage sub-tier supplier performance in areas to
include quality, availability, including allocated Product, and
delivery to meet the requirements of this Agreement. Brocade
shall set performance goals and objectives with sub-tier
suppliers and monitor progress against goals. Sequent may request
status reports periodically to audit these suppliers'
performance.
20. LIMITATION OF LIABILITY
EXCEPT AS PROVIDED FOR IN [*] NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES,
INCLUDING LOST PROFITS, ARISING OUT OF THIS AGREEMENT OR ANY PERFORMANCE
HEREUNDER, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
21. CONFIDENTIAL AND PROPRIETARY INFORMATION
21.1 Both parties may, in connection with this Agreement, disclose to
the other party information considered confidential and
proprietary information of the disclosing party ("Confidential
Information"). Information shall be considered Confidential
Information if identified as confidential in nature by the
disclosing party at the time of disclosure, or which by its
nature is normally and reasonably considered confidential, such
as information related to past, present or future research,
development, or business affairs, any proprietary products,
materials or
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 16
17
methodologies, or any other information which provides the
disclosing party with a competitive advantage. Confidential
Information, if disclosed or provided in tangible form, shall be
clearly and conspicuously identified as company confidential or
proprietary. Confidential Information, if orally or visually
disclosed, shall be identified as company confidential or
proprietary in nature at the time of disclosure. The receiving
party shall protect the disclosing party's Confidential
Information with the same degree of care that it regularly uses
to protect its own Confidential Information from unauthorized use
or disclosure, but in no event less than a reasonable degree of
care. Confidential Information shall not be provided or disclosed
to anyone except those employees of the receiving party with a
need to know under this Agreement. No rights or licenses under
patents, trademarks or copyrights are granted or implied by any
disclosure of Confidential Information. Confidential Information
and any and all authorized copies thereof shall remain the
property of the disclosing party and shall be destroyed or
returned if requested by the disclosing party. The receiving
party shall not export or re-export Confidential Information
without the appropriate United States or foreign government
export licenses. This Section 21 shall survive the expiration or
termination of this Agreement for a period of [*]
21.2 The obligations of confidentiality imposed by this Agreement
shall not apply to any Confidential or Proprietary Information
that: (a) is rightfully received from a third party without
accompanying markings or disclosure restrictions; (b) is
independently developed by employees of the receiving party who
have not had access to such Confidential Information; (c) is or
becomes publicly available through no wrongful act of the
receiving party; (d) is already known by the receiving party as
evidenced by documentation bearing a date prior to the date of
disclosure; or, (e) is approved for release in writing by an
authorized representative of the disclosing party.
21.3 The terms and conditions of this Agreement, but not its
existence, are considered Confidential Information.
22. INFRINGEMENT
22.1 Brocade will defend or settle at its own expense any action or
claim brought against Sequent to the extent that such action is
based upon a claim that any Product purchased hereunder infringes
a patent, copyright, trade secret, or any intellectual property
right of any third party. Brocade shall indemnify and hold
Sequent harmless against all costs and expenses and damages,
including reasonable attorneys' fees, and shall pay those costs,
expenses, and damages incurred by Sequent, so long as Sequent
provides the following: (i) prompt notification of any claim,
provided that Sequent has actual knowledge of such claim; (ii)
reasonable cooperation and assistance with a claim at Brocade's
expense; (iii) sole control of defense and settlement to Brocade.
22.2 In the defense or settlement of a claim for infringement of a
patent, copyright, trade secret, or any intellectual property
right of any third party, Brocade may procure for Sequent the
right to continue using the Product, or if such remedy is not
reasonably available, replace or modify the Product so that its
use or resale becomes non-infringing, provided that any
replacement or modified product meets substantially the same
specifications as the original and is acceptable to
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 17
18
Sequent. If any of the above remedies are not available, Sequent
may return the Product to Brocade and receive [*] for the
Product.
22.3 Brocade shall have no liability to Sequent to the extent that a
claim of infringement is based upon (i) compliance with Sequent's
designs, plans, or specifications if without such designs, plans,
or specifications the Product would not have been infringing;
(ii) the combination of the Product with other products or
devices not supported hereunder where the Product itself would
not be infringing; or (iii) modifications of the Product made by
Sequent or on Sequent's behalf by a party other than Brocade,
where the unmodified Product would not be infringing.
23. INDEMNITY AND INSURANCE
23.1 Brocade shall defend, indemnify, and hold Sequent harmless at
Brocade's sole cost and expense, from tangible property damage,
personal injury including death, and expense, including
attorney's fees, incurred by an employee, agent, invitee, or
customer of Sequent, regardless of how caused if arising out of a
Product defect or defect that results from the providing of
services, except to the extent such loss, property damage,
personal injury, or expense, including attorneys' fees, was
caused by the negligence of Sequent or its employees, customers,
or authorized agents while acting within the scope of their
authority.
23.2 Brocade shall provide Sequent with a certificate of insurance
with not less than the following coverages upon execution of this
Agreement. Sequent shall be named as an additional insured on
Brocade's insurance coverage. The fulfillment of the insurance
obligations shall not otherwise relieve Brocade of any liability
assumed under the Agreement or in any way modify or limit any
obligations of indemnification hereunder.
Coverage Required Limits
-------- ---------------
Worker's Compensation: Statutory
Employer's Liability: [*] each accident, bodily injury by accident
[*] each employee, bodily injury by disease
[*] policy limit, bodily injury by disease
Comprehensive General
Liability: [*] general aggregate
[*] products/completed operations aggregate
[*] personal and advertising injury limit
[*] each occurrence limit
Automobile Liability: [*] combined single limit, bodily injury and
property damage coverage
23.3 Certificates of insurance shall state that a policy or policies
have been issued and are in force at such time, that the policy
or policies shall not expire or lapse, and that the policy or
policies will not be cancelled or changed so as to affect the
insurance described in the certificate until after thirty (30)
days prior written
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 18
19
notice to Sequent of such change. Such certificates or true
copies thereof and any notices regarding insurance shall be sent
to:
Sequent Computer Systems, Inc.
00000 X.X. Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Manager, Contracts, MS EDO2-805
23.4 Upon Sequent's request, Brocade shall furnish Sequent, for its
inspection and approval, policies of insurance with all
endorsements, or conformed specimens thereof, certified by the
insurance company to be true and correct copies. The fulfillment
of this insurance obligation shall not otherwise relieve Brocade
of any liability assumed under this Agreement or in any way
modify or limit Brocade's obligations to indemnify Sequent
hereunder.
24. NOTICES
Any legal notice required or permitted to be made or given to either
party pursuant to this Agreement shall be sufficiently made or given on
the date of delivery if delivered personally or on the date of mailing
if sent by certified or registered mail (postage prepaid and return
receipt requested) to the other party at the address set forth below.
Either party may change the information below by giving the other party
prior written notice of such change.
Brocade: Brocade Communications Systems, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attn: Chief Financial Officer
Sequent: Sequent Computer Systems, Inc.
00000 X.X. Xxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Manager, Contracts, MS EDO2-805
25. MISCELLANEOUS PROVISIONS
25.1 Compliance with Laws
Brocade shall comply with all applicable federal, state, country,
and local laws, ordinances, regulations, and codes in the
performance of this Agreement.
25.2 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of Oregon.
25.3 Waiver
The failure of either party to insist upon or enforce strict
conformance by the other party of any provision of this Agreement
or to exercise any right under this Agreement shall not be
construed as a waiver or relinquishment of such party's
Page 19
20
right unless made in writing and shall not constitute any
subsequent waiver or relinquishment.
25.4 Amendments, Changes, and Modifications
Amendments, changes, or modifications to the Agreement, to be
valid, must be in writing and signed by authorized
representatives of both parties. Any verbal agreements,
discussions, and understandings, express or implied, shall not
constitute an amendment to this Agreement.
25.5 Invalid Provisions
If any provision of this Agreement is finally held by a court of
competent jurisdiction to be illegal or unenforceable, the
legality, validity, and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired.
25.6 Survival
The provisions of Section 10 (Warranty), Section 11 [*], Section
16 (Product Withdrawal), Section 20 (Limitation of Liability),
Section 21 (Confidential and Proprietary Information), Section 22
(Infringement), Section 23 (Indemnity and Insurance), sub-Section
25.1 (Compliance with Laws), sub-Section 25.2 (Governing Law),
and applicable provisions of Attachment D (Product Support) of
this Agreement shall survive the termination or expiration of
this Agreement. Outstanding purchase orders shall survive the
termination of this Agreement.
25.7 Force Majeure
Neither party shall be responsible for delays or failures in
performance resulting from acts beyond the reasonable control of
such party, including, but not limited to, acts of God, strikes
or other labor disputes, riots, acts of war, communication line
failures, power failures, fire, or disasters. The time for
performance of any delayed obligation shall be extended for the
time period lost by reason of the delay, except that if the delay
exceeds thirty (30) calendar days from the beginning of the
delay, Sequent may terminate this Agreement for cause without
further notice or liability to Brocade.
25.8 Successors and Assigns
Except as specifically provided for in sub-Section 3.3.2 of
Attachment D, below, [*]. Any assignment of rights shall not work
as a novation of obligations hereunder without written agreement.
[*], either party may assign this Agreement to a surviving entity
in connection with any merger, acquisition, or consolidation of
not less than a majority ownership in the merged, acquired, or
consolidated company by the surviving entity.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 20
21
25.9 Attorney's Fees
If either party commences litigation to enforce any provision of
this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses of litigation, including
fees and expenses of any appeal.
25.10 Headings
The section and paragraph headings of this Agreement are intended
as a convenience only, and shall not affect the interpretation of
its provisions.
25.11 Conflicting Terms
The terms and conditions of this Agreement shall take precedence
over any conflicting terms and conditions contained on Sequent's
purchase orders and Brocade's quotation or acknowledgment.
25.12 Cumulative Remedies
The rights and remedies afforded to either party pursuant to any
provision of this Agreement are in addition to and do not in any
way limit any other rights or remedies afforded to either party
by any other provision of this Agreement or by law. All such
rights and remedies are cumulative and may be exercised
singularly or concurrently.
26. ENTIRE AGREEMENT
This Agreement, including all Attachments, constitutes the entire
Agreement between the parties and supersedes all prior or
contemporaneous agreements, discussions, and understandings between the
parties, either express or implied. The following Attachments are part
of this Agreement and are incorporated herein by this reference.
Attachments:
A Product Specification
B Product and Product Support Pricing
C Supplier Quality
D Product Support
E Reports
Page 21
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
Sequent Computer Systems, Inc. Brocade Communications Systems, Inc.
By: /s/ Xxxxx X. Pittarger By: /s/ Xxxxx X. Xxxxxxx
------------------------------- ----------------------------
(Signature) (Signature)
Name: Xxxxx X. Pittarger Name: Xxxxx X. Xxxxxxx
-------------------------- --------------------------
(Printed or Typed) (Printed or Typed)
Title: VP Operations Title: CEO
------------------------- -------------------------
Date: 6/17/97 Date: 6/17/97
-------------------------- -------------------------
Page 22
23
ATTACHMENT A
PRODUCT SPECIFICATION
This Attachment describes the Product and Product specifications required under
the Agreement.
1. PRODUCT DESCRIPTION AND PRODUCT SPECIFICATIONS
The Products and Product specifications are described below. The Product
specifications are further described in Sequent documents identified by
the Sequent part numbers listed below. Such documents identified below
are incorporated by reference as though fully set forth herein. Product
descriptions and specifications are subject to change by mutual
agreement of the parties.
PRODUCT DESCRIPTION Production Specifications
------------------- (By Sequent Part Numbers)
-------------------------
16 Port Fibre Channel Switch 1003-69661
8 Port Fibre Channel Switch 1003-69660
0 Port Fibre Channel Switch for Service Spares 1003-73151
G-Port Card for Service Spares 1003-73153
GBIC, multi-mode, non-OFC for FC Switch (2M to 500M) 1003-73152
Page 23
24
ATTACHMENT B
PRODUCT AND PRODUCT SUPPORT PRICING
This Attachment sets forth Product and Product Support pricing to Sequent from
Brocade under the Agreement.
1. PRODUCT PRICING
1997 1998*
(not to exceed)
1.1 8 Port Sequent part number 1003-69660;
Brocade part number B1600-110 [*] [*]
1.2 16 Port: Sequent part number 1003-69661;
Brocade part number B1600-100 [*] [*]
1.3 0 Port: Sequent part number 1003-73151;
Brocade part number X1017 [*] [*]
1.4 GBIC: Sequent part number 1003-73152
Brocade part number X1006 [*] [*]
1.5 G-Port Card: Sequent part number 1003-73153;
Brocade part number X1003 [*] [*]
* Note: Pricing for 1999 through the remainder of the term of the
Agreement will be as agreed upon between the parties [*].
** Note: For initial stocking orders and subsequent orders in excess of
a net aggregate of [*], Brocade will apply a [*] for Brocade
part number X1003 and a [*] for Brocade part number X1006.
2. PRODUCT SUPPORT PRICING
2.1 Exchange Product Charges
The charge for Exchange Product, as that term is defined in
sub-Section 3.1 of Attachment D, shall be [*] of the then-current
Product price or the repair price for the Product, whichever is
less.
2.2 Out of Warranty Repair Charges
(i) Switch: [*]
(ii) G Port without GBIC: [*]
2.3 NTF Charges
Charges for NTF testing of Product will be per the following
schedule:
(i) Switch: [*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 24
25
(ii) G-Port Card: [*]
2.4 Recertification Charges
Charges for re-certification, as provided in sub-Section 6 of
Attachment D, shall be [*].
2.5 Charges for out of warranty upgrade will be as agreed upon
between the parties on a case-by-case basis.
3. TRAINING
Charges for additional training (training conducted other than the
original/initial one day training course provided to Sequent and Sequent
service partners) shall be as follows:
(i) One (1) day at Brocade: [*] per person
Includes: Copy of all course materials
(ii) One (1) day at Sequent-specified site:
[*][*] persons/5 person minimum, plus travel expenses
[*] per person for more than five persons
Includes: Copy of all course materials for each
person
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 25
26
ATTACHMENT C
SUPPLIER QUALITY
1. INTRODUCTION, SCOPE AND [*]
1.1 This Attachment is subject to applicable terms and conditions of
the Agreement and defines the quality requirements and
expectations for Brocade under the Agreement. Changes to this
Attachment must be approved by the parties' designated quality
representatives. Except as specifically provided otherwise, there
will be no charge to Sequent for activities and discharge of
obligations required of Brocade described in this Attachment.
1.2 Brocade shall implement the procedures, plans, goals and
processes to include but not be limited to: (i) document control;
(ii) continuous improvement; (iii) customer feedback; (iv)
performance tracking against objectives; and (v) corrective
action processes required of Brocade to remain in compliance with
its obligations under the Agreement.
1.3 Brocade shall create, implement and maintain a continuous
process improvement program with the goals of reducing costs and
lead-time and improving quality and service to Sequent. Such
program shall be documented and provided to Sequent.
1.4 [*]
2. INSPECTION, AUDIT RIGHTS AND STOP SHIPS
2.1 Sequent shall have the right to inspect and audit any
manufacturing or administrative site, including Brocade sites
that supply goods or services, including the Product, subject to
agreements with Brocade suppliers. In addition, on an annual
basis at a time which is mutually agreed upon between the
parties, Sequent shall be entitled to audit Brocade records and
processes which directly insure that Brocade [*]. Sequent shall
also be entitled to review relevant documents pertaining to
quality information including but not limited to procedures and
certificates of conformance affecting materials, including the
Products, if requested. Brocade shall assist Sequent in arranging
such inspections, audits and reviews.
2.2 Sequent shall have the right, without liability, to stop
Brocade's shipments to Sequent and/or Sequent's customers of
Product that does not conform to the specifications and criteria
contained herein. Sequent will advise Brocade of such
non-conformance. Such Products shall not be shipped by Brocade
unless (i) Brocade has corrected the areas of non-conformance in
the Product and Sequent approves Product shipment or (ii) Sequent
permits shipment of such Products pending Brocade's correction of
the non-conformance.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 26
27
3. DEFINITIONS
3.1 Quality Failure: Any failure that occurs in Sequent's factory
during integration/systems test or during the first [*]
after installation at a Sequent customer site, both
circumstances sometimes referred to as "dead on arrival" ("DOA").
These failures are considered in the calculation of the
parts-per-million ("PPM") failure rate. This includes any and all
functional and non-functional failures, to include but not be
limited to incorrect labels and missing jumpers.
3.2 Reliability Failure: Any failure that occurs after the first
[*] of operation after installation at Sequent's customer's
site. Reliability is measured as mean-time-between-failure(s)
("MTBF").
3.3 Red Light: A Red Light is anything that causes data corruption,
loss of use, safety, and/or other problems that negatively impact
the customer's ability to effectively use the Product per its
functional specification or intended use. This includes not only
the Product or a service but also related processes such as
shipping and documentation. When a Red Light occurs, Product is
not shipped and resources are redirected to solve the situation.
3.4 Purge: Removal and segregation of Product in Sequent's factory
and service centers due to a discrepancy with a particular lot or
date code of the Product.
3.5 Quality Issues: Quality Issues are those issues that arise when
the Products do not meet the Product specifications and include
but are not limited to incorrect packaging, labeling, incorrect
revision levels and Purges.
3.6 Routine Questions and Issues: Routine Questions and Issues are
those that do not address Quality Failures, Red Lights, Purges
or Quality Issues.
4. PERFORMANCE ACTIVITIES
4.1 Brocade shall establish, implement and maintain a comprehensive
quality assurance program to ensure the consistent supply of
Products that meet the requirements specified in the Agreement
and this Attachment. Details of the program shall be made
available to Sequent upon request and Sequent has the right to
survey and audit the program. Sequent will provide a minimum of
two (2) weeks notice prior to any planned survey or audit.
4.2 Brocade shall have a documented system to ensure a consistent
supply of materials used for the assembly of Products. This
system shall maintain procedures for incoming inspection per
category of material and procedures outlining the qualification
of new materials suppliers.
4.3 Brocade shall have a formally documented manufacturing process
and quality control system. Brocade shall also maintain
established intervals for preventive maintenance of manufacturing
equipment.
4.4 Brocade shall have a documented system to ensure continued
accuracy of measurement equipment in manufacturing. Measuring
equipment shall be
Page 27
28
calibrated at established intervals against certified standards
that have valid relationships to national standards.
4.5 Brocade shall have an established program for statistical process
control ("SPC") in manufacturing. This program shall use SPC
tools to control and improve the manufacturing process and its
capabilities. Documentation for process control shall consist of
control procedures, SPC limits and SPC violation rules.
4.6 Brocade shall maintain and use a system for identifying and
segregating non-conforming material. Adequate documentation
concerning the nature of the non-conformance shall be generated
and maintained.
4.7 All material received at Sequent shall conform with the
requirements specified in the purchase order and the Product
specifications. To support Sequent's quality assurance program
and to enable compliance with regulatory requirements, the
current revision of each of the following items must be furnished
to Sequent upon request:
(i) [*]
(ii) [*]
(iii) [*]
5. SEQUENT QUALITY FAILURE AND RELIABILITY FAILURE REQUIREMENTS
5.1 The Quality Failure requirement for the Product is that the
failure rate shall be no higher than [*]. This
failure rate will be measured by calculating the number of
defects found in Sequent factory in addition to any failures that
occur within the first [*] after installation
at a customer site, divided by the total number of Products
shipped. [*]
[*]
5.2 The Reliability Failure Goal for the 16 Port Switch is [*]
MTBF (Annual Failure Rate (AFR) x [*]). The Reliability
Failure Goal for the 8 Port Switch is [*] MTBF (Annual
Failure Rate (AFR) equal to or approximately %)
5.3 A Red Light will occur if the reliability of the Product drops
below the required [*] for the 16 port switch or [*]
for the 8 port switch.
[*]
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 28
29
6. TECHNICAL SUPPORT AND RESPONSIVENESS
6.1 Brocade shall promptly notify Sequent, in writing, of any
discrepancies found which could have a detrimental effect on
previously shipped Product. In such cases, Brocade shall provide
a timely response with effective corrective action for any
nonconformity discovered.
6.2 Routine Questions and Issues. Brocade will provide [*]
acknowledgment, by electronic mail ("Email"),
facsimile ("Fax") or other method of communication agreed to by
the parties, of all Sequent requests for assistance with Routine
Questions and Issues, including but not limited to questions
regarding Product service and support. Sequent shall have access
to Brocade personnel, to include but not be limited to
developers, order fulfillment, quality and technical personnel,
to assist Sequent. Brocade personnel shall use best efforts to
provide a response to Sequent's requests for assistance within
[*] of receipt of the request.
6.3 Failure Analysis. Brocade shall perform failure analysis on
all failed Products returned to Brocade. Failure analysis will be
a cooperative effort between Brocade and Sequent to determine the
root cause of the failure. Initial failure analysis on failed
Products shall be completed within [*] from Brocade's receipt of
the Products; except in isolated incidents based on extreme
critical Sequent customer need, from the time of receipt by
Brocade of defective Product from Sequent, Brocade agrees to
provide expedited failure analysis on a commercially reasonable
basis, including isolation of the defect to the basic component
level. Complete failure analysis to root cause shall be completed
within [*] from receipt of failed Product. Once failure analysis
has been completed, Brocade will Email or Fax a failure analysis
report to the Sequent Supplier Engineer designated by Sequent to
work with Brocade. The failure analysis report shall include at a
minimum, the Product part number, Product serial number, failure
cause and corrective action that Brocade will take to prevent
further occurrences of the failure. There will be no charges for
failure analysis.
6.4 Quality Issues. Quality Issues must be responded to by Brocade
within two (2) business days after being notified that such an
issue exists. Brocade shall completely close the Quality Issue
with effective corrective action that will prevent a repeat
failure within [*] depending on the nature of the issue.
6.5 Red Lights. Red Lights shall be highest priority and shall cause
immediate allocation of all necessary Brocade resources to
expeditiously develop and implement effective containment and
resolution plans in conjunction with Sequent, until problem
resolution. Brocade's commitment of resources shall be at its
expense and shall include but not be limited to committing
Brocade personnel to work evenings and weekends or, if necessary,
to send such personnel to Sequent's site or Sequent's customer's
site.
6.6 Brocade shall comply with the Sequent Corporate Standard
Operating Policy for Electrostatic Discharge Control, Sequent
part number 1003-55472-E01, a copy of which has been provided to
Brocade.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 29
30
6.7 Depending on the amount and/or complexity of quality issues
outstanding at any given time, either party may initiate ongoing
weekly conference calls between the parties for the purpose of
quality issue resolution.
7. QUALITY DATA AND REPORTING
7.1 The parties will be responsible for providing each other with
quality data. The specific data, the party responsible for the
data, and the time for reporting is as follows:
Data (Field Metrics) & Responsible Party Time of Reporting
Summary of field Quality Failures [*] after On or before the
install) (Sequent) 15th of the month
Reliability Data in the form of average time between On or before
the replacement ("ATBR"). ATBR includes all 15th of the month
replacements, some of which may not have been actual failures
(Sequent)
Data (Factory Metrics) & Responsible Party Time of Reporting
Summary of all inspection/test station yields for the On or before the
month for all Products shipped to Sequent (Brocade) 15th of the month
Pareto of failures for the above stations for the month On or before the
for all Products shipped to Sequent (Brocade) 15th of the month
Failure analysis summary of Sequent returned On or before the
Products (Brocade) 15th of the month
[*]
7.2 This above data will be sent by Email, Fax or other method agreed
to by the parties, between Brocade and Sequent quality personnel
no later than the required time of reporting.
7.3 All Brocade test records must be archived for a minimum of
[*]. Brocade shall maintain and analyze in-process failure
data and use best efforts to improve test suites to drive the
number of in-process failures to zero.
7.4 Test flow diagram and content for all Products including systems,
features and spares shall be available to Sequent upon request.
8. CORRECTIVE ACTION PROCESS
All Quality Failures and Reliability Failures shall be resolved to root
cause. Brocade shall perform failure analysis on defective Products in
accordances with sub-Section 6.3 of the Agreement. Upon determining the
root cause of the failure, Brocade shall establish a corrective action
plan, with Sequent's assistance if requested, to insure that the Product
defect is removed and that root cause corrective action is implemented.
Sequent will assist Brocade with tracking all open failures and will
work with Brocade to insure that the proper repair priority is set. In
the event Brocade encounters a no trouble found ("NTF") in a Product
sent from Sequent, Brocade shall re-submit through the complete
manufacturing test process for a final assembly.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 30
31
9. MULTIPLE FAILURE PRODUCT DISPOSITION
9.1 Product of a specific part and serial number with a history of
[*] or more failures ("Multi-failure Product") shall be clearly
labeled as non-conforming due to multiple failures and segregated
from good Product, as the term "good" is described in sub-section
9.2, below.
9.2 Multi-failure Product may be re-labeled as "good" and used as a
replacement Product when the following criteria have been met:
(i) Brocade provides to the designated Sequent Supplier
Engineer ("SE"), written documentation of a positive
correlation between all failures and Brocade's fixes; and
(ii) Product meets all Product specifications and test
criteria; and
(iii) Sequent's SE has provided Brocade with written
authorization to label the documented Multi-failure
Product as good.
9.3 In the event that no positive correlation between failure and fix
can be established for a Multi-failure Product, then Brocade
shall not repair or use such Product as a replacement Product.
Brocade shall submit a scrap request to Sequent's designated
Supplier Engineer for review and authorization. Brocade's
requests for scrap authorization shall include the following
information:
(i) Product part, revision, and serial numbers;
(ii) Documented history of remedial processes performed on
the Product; and
(iii) Product's failure mode or quality conformance issue.
9.4 Brocade may be required to return scrapped Product to Sequent for
verification and analysis. Sequent will notify Brocade of this
requirement at the time of Product scrap authorization.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 31
32
ATTACHMENT D
PRODUCT SUPPORT
This Attachment sets forth the terms and conditions that govern the support for
the Product(s). Notwithstanding anything that may be construed to the contrary,
Sequent shall not have an obligation to purchase any Product Support from
Brocade under the Agreement.
1. PRODUCT SUPPORT AND PRODUCT SUPPORT DURATION
1.1 At Sequent's request, Brocade shall provide the Product Support
described in this Attachment. Charges for Product Support are
provided in Attachment B to the Agreement.
1.2 Product Support may include but not be limited to Product: (1)
testing; (ii) repair; (iii) upgrades; (iv) failure analysis; and
(v) advance exchange.
1.3 Brocade shall provide Product repair and testing at reasonable
prices and throughput time as provided in this Attachment D for a
period of not less than [*] years after Product withdrawal.
1.4 In the event that Brocade is unable or unwilling to comply with
Sequent's Product Support requirements, Brocade will, at
Sequent's request, assist Sequent in identifying another repair
source to provide all or part of the Product Support. Brocade's
assistance may include, but is not limited to: (i) training
required by Sequent and/or the third party to provide Product
Support and (ii) providing Sequent and/or the third party with
all necessary documentation and component sourcing information
required to perform Product Support. Such assistance will be
provided to Sequent [*].
1.5 The parties acknowledge that Product returns to Brocade may come
from three (3) different sources: (i) Sequent's service
organization; (ii) Sequent's evaluation and demonstration product
organization; and (iii) [*]. Processing returns may differ
depending on the source of the return. [*]
2. PRODUCT REPAIR
2.1 Upon Sequent's request for Product repair, Brocade shall ship
repaired or replacement Product within [*] of receipt of
Sequent's defective Product.
2.2 All field returned Product shall be upgraded and/or repaired as
agreed between the parties, and then reassembled, tested and
packaged per Sequent's requirements for new Product. All final
test and inspection as required by Brocade for new Product shall
be performed on field returned Product prior to its return to
Sequent.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 32
33
2.3 There shall be no charge for Product repair during Product
warranty. Prices for out-of-warranty Product repair are as
provided in sub-Section 2.2. of Attachment B.
3. EXCHANGE PRODUCT
3.1 For purposes of this Section 3, the following definitions apply:
3.1.1 "Exchange Product" means a new Product or a Product that
has been previously repaired or refurbished and which
Brocade uses to replace defective Product.
3.1.2 "Product Warranty" means the warranty period as provided
for in Section 10 of the Agreement.
3.1.3 "Product Support Warranty" means the warranty, as
described in sub-Section 3.5.3, below, applicable to
Exchange Product delivered pursuant to this Section 3
after expiration of the Product Warranty.
3.2 Brocade will provide replacement Product to Sequent under the
provisions of this Section 3. The charge for Exchange Product
shall be as provided in sub-Section 2.1 of Attachment B.
3.3 Repair of Exchange Product
3.3.1 All field returned Product shall be upgraded and/or
repaired as agreed between the parties, and then
reassembled, tested and packaged per Sequent's
requirements for new Product. All final test and
inspection required by Brocade for new Product shall be
performed on field returned Product prior to its return to
Sequent.
3.3.2 Brocade shall be responsible for repair and/or
refurbishment of Products that may be provided to Sequent
as Exchange Product. Brocade may assign repair or
refurbishment activities to a third party provided that
Brocade's assignee repairs and/or refurbishes Product in
accordance with Attachment C, Supplier Quality, and the
provisions of this Agreement. Brocade shall remain liable
to Sequent for its obligations under the Agreement, to
include but not be limited to providing Exchange Product.
3.4 In-Warranty Product Exchange
3.4.1 During Product Warranty, Brocade shall replace defective
Product under Product Warranty in accordance with and
subject to the following provisions. Except as provided in
sub-Section 3.4.1.2, below, there shall be no charge to
Sequent for Exchange Product provided under this
sub-Section 3.4.
3.4.1.1 Upon Sequent's request for an Exchange Product,
Sequent shall provide the serial number of the
failed Product and Brocade
Page 33
34
shall ship Exchange Product to Sequent or to a
location designated by Sequent:
(i) within [*] of Sequent's request; or
(ii) in case of a Quality Failure, as defined
in Attachment C, Brocade will ship an
Exchange Product (equivalent to new,
defined as any repaired line integration
failure, and line integration and DOA
NTFs) within [*] of Sequent's request.
If a new (not previously repaired or
refurbished) Exchange Product is
required, Brocade will ship such
Exchange Product within [*] starting the
next business day. Brocade may request
that line integration failures be
retained at Sequent as Brocade will have
the option to send a trained technician
to diagnose a failure to a FRU level and
effect repair on site, provided that
Sequent can accommodate Brocade's
request without impact to the Sequent
customer requested ship date.
3.4.1.2 Sequent will use best efforts to return the
defective Product to Brocade within [*] from
domestic locations and [*] from international
locations from the date of delivery of the
Exchange Product unless otherwise directed to
hold or dispose of the defective Product by
Brocade. Brocade shall provide to Sequent a
listing by location of Brocade's exchange
facilities. In the event that the failed Product
is not returned to Brocade within the applicable
time period, Brocade may invoice Sequent for the
difference between the then-standard commercial
list price of a new Product and the price of an
Exchange Product, for the replacement Product;
provided, however, that upon receipt of the
defective Product from Sequent, Brocade shall
credit Sequent for the amount invoiced less any
reasonable and necessary administrative costs
incurred by Brocade for the invoice and credit
transactions.
3.4.1.3 Upon shipment of an Exchange Product, Brocade
shall notify Sequent of the Exchange Product
serial number that is being shipped as the
replacement.
3.4.1.4 Sequent shall be responsible for all freight
charges for return of failed Product and Brocade
shall be responsible for freight charges for
shipment of Exchange Product.
3.4.1.5 Brocade shall honor the original Product
Warranty of a Product and provide Exchange
Product under this Agreement, regardless of
whether Sequent was the original purchaser of
the Product.
3.4.2 From the date of delivery, the Exchange Product shall be
warranted in accordance with and for the remainder of the
Product Warranty of the defective Product which was
replaced or in accordance with and for the period of the
Product Support Warranty provided at sub-Section 3.5.3 of
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 34
35
this Attachment, whichever is longer, provided that
Sequent has provided Brocade with the serial number of the
failed Product, as defined in sub-Section 3.4.1.1. In the
case where no serial number is provided by Sequent, the
Exchange Product warranty shall default to [*]. Warranty
tracking and documentation for Products and FRUs as
configured upon initial shipment from Brocade, including
Exchange Products, shall be the responsibility of Brocade.
3.5 Post-Warranty Product Exchange and Repair
3.5.1 The provisions of this sub-Section 3.5 shall apply solely
to replacement of Product after expiration of the Product
Warranty.
3.5.2 Brocade shall repair or replace or exchange defective
Product under Product Support Warranty in accordance with
and subject to the following provisions.
3.5.2.1 Upon Sequent's request for Exchange Product,
Brocade shall ship Exchange Product to Sequent
within three (3) business days of Sequent's
request at no charge.
3.5.2.2 Sequent will use best efforts to return the
defective Product to Brocade within [*] from
domestic locations and [*] from international
locations, from the date of delivery of the
Exchange Product unless otherwise directed to hold
or dispose of the defective Product by Brocade.
Brocade shall provide to Sequent a listing by
location of Brocade's exchange facilities. In the
event that the failed Product is not returned to
Brocade during the applicable time period, Brocade
may invoice Sequent for the Exchange Product
Charge per Attachment B less the Out of Warranty
Repair charge per Attachment B. Invoices generated
under these circumstances shall be payable net [*]
from the date of receipt of a correct invoice.
3.5.2.3 Upon shipment of an Exchange Product, Brocade
shall notify Sequent of the Exchange Product
serial number that is being shipped as the
replacement.
3.5.2.4 Sequent shall be responsible for freight charges
for shipment of defective Product to Brocade.
Brocade shall be responsible for freight charges
for shipment of Exchange Product.
3.5.3 Products, including Exchange Product used to replace
defective Products under this Section 3.5 of Attachment D,
are warranted for a period of [*] from the date of
delivery of the Exchange Product, to conform to and
perform in accordance with the Sequent's specifications in
effect at the time of the replacement of the defective
Product, and to be free from defects in materials and
workmanship ("Product Support Warranty"). The
above-referenced Product Support Warranty is subject to
the applicable provisions of Section 10, Warranty, of the
Agreement. Warranty tracking and documentation for
Products,
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 35
36
including Exchange Products, shall be the responsibility
of Brocade. Sequent shall have the right to audit
Brocade's records that directly verify and monitor Product
warranty, at times and places mutually agreed upon.
4. FAILURE ANALYSIS
Brocade shall provide failure analysis in accordance with the provisions
of sub-Section 6.3 of Attachment C.
5. NO TROUBLE FOUND ("NTF") TESTING
5.1 Brocade shall provide NTF testing under the provisions of this
Section 5. For purposes of this Section 5, NTF shall mean that a
Product has undergone testing and has been determined by Brocade
to conform to and perform in accordance with all applicable
specifications, without repair, upgrade, or other modification
being required. Charges for NTF testing of Products are provided
for in Attachment B.
5.2 Upon Sequent's request, Brocade shall provide NTF testing on
Products, Such testing shall commence no later than [*] from
Brocade's receipt of the Product to be tested. Brocade shall
provide Sequent with the reports documenting and describing its
NTF results no later than [*] after Brocade receives the Product.
There shall be no charge to Sequent for NTF reports.
6. RECERTIFICATION
6.1 For purposes of this sub-Section, the following definition
applies:
"Recertification" shall include the following: (i) diagnostic
testing; (ii) upgrade with Mandatory Engineering Changes, if
required; (iii) system test; (iv) XXXX test; (v) burn-in; and
(vi) final test.
6.2 Brocade shall provide Recertification under the provisions of
this Section 6. Charges for Recertification testing of Products
are provided for in Attachment B.
6.3 Upon Sequent's request, Brocade shall provide Recertification on
Products. Such testing shall commence no later than [*] from
Brocade's receipt of the Product to be tested. Brocade shall
provide Sequent with the reports documenting and describing the
Recertification results no later than [*] after Brocade receives
the Product. There shall be no charge to Sequent for
Recertification reports.
6.4 Recertification will be performed on any Product that has been at
Sequent or one of Sequent's customers for period not exceeding
[*]. This Product would have originally been shipped to Sequent
or one of Sequent's customers for the purpose of qualification,
demonstration or on a similar trial basis. The expectation is
that after undergoing Brocade's Recertification process, this
Product could be returned to Sequent as "equivalent-to-new"
product.
6.5 In the event that Product is returned from one of Sequent's
customers after a period exceeding [*] and Brocade's estimated
cost of
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Page 36
37
recertification exceeds the standard cost provided in sub-Section
2.4 of Attachment B, Brocade shall provide a quotation with a
complete breakdown of time and materials for the Recertification
and upon Sequent's acceptance of the pricing Brocade shall
perform the Recertification.
Page 37
38
ATTACHMENT E
REPORTS
This Attachment summarizes the reports required of Brocade and Sequent under the
Agreement. There shall be no charge to either party for any reports required
under the Agreement.
1. RECURRING REPORTS
1.1 Brocade Provided Reports
1.1.1 Brocade Factory Metrics
Brocade will provide these reports to the designated
Sequent Supplier Engineer as provided in sub-Section 7.1
of Attachment C. The content of these reports shall
include:
(i) Summary of all inspection/test station yields
for the month for all Products shipped to
Sequent;
(ii) Pareto of failures for all inspection/test
stations for the month for all Products shipped
to Sequent; and
(iii) Failure analysis summary of Sequent returned
Products.
1.1.2 Repair Throughput and Aging Profile
Brocade will provide these reports [*] as agreed upon
between the parties.
1.2 Sequent Provided Reports
1.2.1 Sequent Field Metrics
Sequent will provide the following reports as provided for
in sub-Section 7.1 of Attachment C. The content of these
reports shall include:
(i) Summary of field Quality Failures
(ii) Reliability Data in the form of average time
between failures ("ATBR"). ATBR includes all
replacements, some of which may not have been
actual failures.
2. REQUESTED REPORTS
2.1 Brocade Provided Reports
2.1.1 Sub-Tier Supplier Performance
The content shall include status reports indicating
sub-tier supplier performance as provided in Section 19 of
the Agreement.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
Xx. 00
00
2.1.2 NTF Test Reports
The NTF reports required in Section 5 of Attachment D are
to be supplied no later than ten 10) business days after
completion of the NTF testing. Content of the reports will
be as provided in sub-Section 5.2 of Attachment D.
2.1.3 Failure Analysis Reports
Failure Analysis reports, including report content and
time requirements, are to be supplied under sub-Section
6.3 of Attachment C.
2.1.4 Recertification Reports
The Recertification reports required in Section 6 of
Attachment D are to be supplied no later than ten (10)
business days after completion of the Recertification.
Content of the reports will be as provided in sub-Section
6.3 of Attachment D.
Page 39
