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EXHIBIT 10.16
SUPPLEMENT NO. 1
TO
PURCHASE AGREEMENT
BETWEEN
SEQUENT COMPUTER SYSTEMS, INC.
AND
BROCADE COMMUNICATIONS SYSTEMS, INC.
The above referenced agreement ("Agreement") entered into between Sequent
Computer Systems, Inc. ("Sequent") and Brocade Communications Systems, Inc.
("Brocade") is amended as provided below. This supplement number 1
("Supplement") is effective September 26, 1997 ("Supplement Effective Date.").
1. DEFINITIONS
1.1 "Caterpillar Product" shall mean the product described in
Attachment A of this Supplement.
1.2 "Caterpillar Development Project" shall mean the development of
the Caterpillar Product, including prototype and Production
Caterpillar Products.
1.3 "Production Caterpillar Product" shall mean Caterpillar Products
that will be available for purchase and resale by Sequent.
2. SCOPE OF SUPPLEMENT
2.1 This Supplement, together with the Agreement, contains the terms
and conditions which govern Brocade's development of the
Caterpillar Product for Sequent.
2.2 The Caterpillar Product shall be developed in accordance with the
Caterpillar Product description and specification as provided in
Attachment A.
2.3 The parties acknowledge that this Supplement may be executed
prior to complete qualification of the Caterpillar Product by
Sequent. Qualification of the Caterpillar Product by Sequent and
the Caterpillar Product meeting all specifications as required in
Attachment A are conditions precedent to Sequent's obligations
under this Supplement or under the Agreement.
2.4 Upon completion of the Caterpillar Development Project and
Brocade making the Production Caterpillar Product available to
Sequent, the parties shall add the Caterpillar Product to the
Agreement. Any purchases of the Production Caterpillar Product by
Sequent will be governed by the Agreement as amended by this
Supplement.
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3. CATERPILLAR DEVELOPMENT PROJECT
3.1 Unless otherwise mutually agreed to in writing by the parties,
Brocade shall begin the Caterpillar Development Project and
provide Sequent with the deliverables described below on or
before the dates indicated:
Deliverable Completion Date
----------- ---------------
Delivery of the first prototype November 7, 1997
Caterpillar Product to Sequent
Delivery of the first Production December 27, 1997
Caterpillar Product to Sequent
3.2 Brocade shall provide Sequent with a Production Caterpillar
Product that conforms to and performs in accordance with the
descriptions and specifications provided in Attachment A and,
unless otherwise agreed to in writing by the parties, Brocade
shall use [*] to make a Production Caterpillar Product available
for purchase by Sequent no later than December 27, 1997. Brocade
recognizes the importance of delivering the Production
Caterpillar Product at the earliest possible time.
3.3 After the Production Caterpillar Product has been made available
to Sequent and within a time period to be agreed upon between the
parties, Brocade shall upgrade all prototype Caterpillar Products
previously delivered to Sequent to Production Caterpillar
Products.
Such upgrades shall be done [*].
4. CATERPILLAR DEVELOPMENT PROJECT ACCEPTANCE, PRICING, AND PAYMENT
4.1 Brocade may invoice Sequent for the amounts set forth below upon
satisfaction of the acceptance criteria set forth in sub-Section
4.2, below for the listed deliverable. Such payments, when made,
shall constitute full and complete payment to Brocade for all of
its efforts and deliverables under the Caterpillar Development
Project, including, but not limited to, all costs and expenses
for work, communications, and technical data and equipment that
Brocade is required to provide to Sequent under this Supplement.
In the event Sequent terminates the Agreement without cause prior
to completion of all deliverables under this Supplement, Brocade
will be entitled solely to actual, substantiated, documented,
necessary and reasonable costs and expenses incurred by Brocade
under the Supplement up to the date of notice of termination. If
the Agreement is so terminated prior to full completion of
Brocade's obligations, in no event shall Sequent's obligation to
Brocade exceed the payment amount that would have been due
Brocade following acceptance of the next listed, but uncompleted,
deliverable.
*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.
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Deliverable Payment Amount
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Delivery of the first prototype $[*]
Caterpillar Product to Sequent
Delivery of the first Production $[*]
Caterpillar Product to Sequent
4.2 Sequent's obligation to pay the amounts listed above is
conditioned on satisfaction of the following acceptance criteria:
4.2.1 Delivery of the first prototype Caterpillar Product
to Sequent. This deliverable will be accepted at such time
as Sequent determines that Brocade has provided Sequent
with the first prototype Caterpillar Product that
satisfies the requirements of Attachment A.
4.2.2 Delivery of the first Production Caterpillar Product
to Sequent. This deliverable will be accepted at such time
as Sequent determines that Brocade has provided Sequent
with the first Production Caterpillar Product that
satisfies the requirements of Attachment A.
5. CATERPILLAR PRODUCT PRICING
5.1 Unless otherwise agreed to by the parties, prototype and
Production Caterpillar Product pricing shall be in accordance
with the following pricing matrix. Pricing is based on cumulative
Caterpillar Product purchases.
Cumulative Purchase Volume Price per Caterpillar Product
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[*] $[*]
[*] not to exceed $[*]
5.2 The prices listed above shall remain in effect until Brocade
ships [*] Caterpillar Products to the total marketplace. At such
time that Brocade ships in excess of [*] Caterpillar Products,
Brocade shall reduce the above referenced prices to Sequent by
[*] per Caterpillar Product, or any subsequent low cost Product
offering that Sequent purchases, until such time as Sequent has
realized a total price reduction of $[*].
6. PRECEDENCE
6.1 For purposes of this Supplement, the term "Product," as such term
is used in the Agreement, will mean the prototype and Production
Caterpillar Product as the terms and conditions of the Agreement
apply to this Supplement.
6.2 The terms and conditions of this Supplement shall take precedence
over any conflicting terms and conditions of the Agreement.
Except as otherwise provided in this Supplement, the remaining
terms and conditions of the Agreement shall remain in full force
and effect.
*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.
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IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by
their duly authorized representatives.
SEQUENT COMPUTER SYSTEMS, INC. BROCADE COMMUNICATIONS SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ XXXXXXX X. XXXXX
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(Signature) (Signature)
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
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(Printed or Typed) (Printed or Typed)
Title: Sr. Director Mfg. Ops Title: Vice President, Worldwide Sales
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Date: 4/20/98 Date: April 16, 1998
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ATTACHMENT A
PRODUCT SPECIFICATION
Attachment A is amended to include the following:
1. PRODUCT DESCRIPTION AND PRODUCT SPECIFICATIONS
Product Specifications
Product Description (By Sequent Part Numbers)
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6 Port Fibre Channel Switch 1003-74200
00 Xxxx XXX XXX-0XXX-00
0 Xxxx XXX FCS-9ASY-06
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ATTACHMENT B
PRODUCT AND PRODUCT SUPPORT PRICING
Attachment B is amended to include the following:
1. Product Pricing
1997 1998*
(not to exceed)
1.4 GBIC: Sequent part number 1003-73152
Brocade part number X1006 [*] [*]
1.6 16 Port FRU: Sequent part number FCS-9ASY-16 [*] [*]
1.7 6 Port FRU: Sequent part number FCS-9ASY-06 [*] [*]
1.8 6 Port: Sequent part number 1003-74200 [*] [*]
*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.
***Note: Refer to sub-Section 5.1 of the Agreement regarding volume based
pricing requirements.
*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.
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ATTACHMENT C
SUPPLIER QUALITY
Attachment C is amended as follows:
1. Delete sub-Section 11.3.2(i) and insert: "Product mean time between
failures ("MTBF") drops below [*] of Brocade's predicted
MTBF of [*] for a 16 port switch and [*] for a 6 port
switch; or"
2. Delete sub-Section 5.2 and insert: "The Reliability Failure Goal for the
16 Port Switch is [*] MTBF (Annual Failure Rate ("AFR") [*]).
The Reliability Failure Goal for the 6 Port Switch is [*] MTBF
(AFR [*]).
*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.
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