Amendment Number 4 to Statement of Work Number 8 of the Goods Agreement - IBM



 Exhibit 10.2 

 

 

 3039 E CORNWALLIS RD 

RESEARCH TRIANGLE PARK NC 27709-2195 

May 18, 2010  

Mr. Mike Harrison 
 Brocade Communications
Systems, Inc. 
 1745 Technology Drive 

San Jose, CA 95110 
 Subject: Amendment 4 to
SOW#8 of the IBM/Brocade Goods Agreement ROC-P-68 
 This letter (the “Amendment”) serves as Amendment Number 4 to SOW#8, including
all amendments thereto (“SOW#8”) of the Goods Agreement ROC-P-68 (the “Agreement”), which the parties hereto do mutually agree to amend as follows 

1. Add Attachment F (including Schedule 1 thereto), Product Unique Attachment for IBM System x. The purpose of this attachment is to define unique terms
and conditions that apply to sales of Brocade products to the IBM System x only. 
 2. Amend Section 1.1.1 to read in its entirety as
follows: 
 “1.1.1 Additional Products. In addition to the Products set forth in Section 1.1 above, (a) the
Products set forth in Schedule 1 to Attachment E to this SOW#8 are available to Buyer under the terms of this SOW#8, as such terms are modified in Attachment E for purposes of the Products set forth in Schedule 1 to Attachment E; and (b) the
Products set forth in Schedule 1 to Attachment F to this SOW#8 are available to Buyer under the terms of this SOW#8, as such terms are modified in Attachment F for purposes of the Products set forth in Schedule 1 to Attachment F.” 

3. Schedule 1 to Attachment E of the SOW#8 is hereby deleted in its entirety and replaced with Schedule 1 to Attachment E attached hereto. 

 4. The effective date of this Amendment shall be the date on the top of this Amendment (the “Effective Date”). 

The parties acknowledge that they have read this Amendment, understand it, and agree to be bound by its terms and conditions. All capitalized terms not
defined herein shall have the meaning set forth in the Goods Agreement or the SOW #8. All other terms and conditions of the Goods Agreement and SOW#8 that are unaffected by the revisions set forth in this Amendment shall remain in full force and
effect. Further, the parties agree that this Amendment and the Goods Agreement and SOW#8 are the complete and exclusive statement of the agreement between the parties, superseding all proposals or other prior agreement, oral or written, and all
other communications between the parties relating to this subject. 








									
	Accepted and Agreed To:	  		  	Accepted and Agreed To:
	International Business Machines Corporation	  		  	Brocade Communications Systems, Inc.
					
	By:	 	 /s/ Michelle B. Wright    5/18/10
	  		  	By:	 	 /s/ Charles Leeming

	Authorized
Signature                            
Date                    	  		  	Authorized
Signature                            
Date                    
			
	 Michelle B. Wright
	  		  	 Charles Leeming

	Type or Print Name	  		  	Type or Print Name
			
	 GCM, Storage OEM Procurement
	  		  	 VP, OEM Sales

	Title & Organization	  		  	Title & Organization
			
	Address:	  		  	 Address:      1745 Technology Drive

		 		  		  	
                     San Jose, CA 95110


				
		 		  		  	Accepted and Agreed To:
		 		  		  	Brocade Communications Switzerland, SarL
					
		 		  		  	By:	 	 /s/ Ulrich Plechschmidt    19-May-2010

		 		  		  	Authorized
Signature                            
Date                    
				
		 		  		  	 Ulrich Plechschmidt

		 		  		  	Type or Print Name
				
		 		  		  	 Vice President EMEA

		 		  		  	Title & Organization

  

 IBM Brocade/Confidential 








 Schedule 1 to Attachment E 

[**] 
  

 [**] Pages 3 - 7 have been omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions. 
 IBM Brocade/Confidential 








 Attachment F 

Product Unique Attachment 

Special Terms 
 Buyer may
purchase Products listed in Schedule 1 to this Attachment F. The terms and conditions of this SOW #8, as amended, will apply to such purchases, with the exception of the following changes. In case of a conflict between the terms of SOW #8,
as amended, and this Attachment F, the terms of this Attachment F shall prevail for purchases of Products set forth in Schedule 1 to this Attachment F. 

The following changes are made to SOW #8 for purposes of Products set forth in Schedule 1 to Attachment F. 

 

	•	 	 Section 2.1, Pricing: The fourth paragraph is removed. Quarterly rebates do not apply to purchases by Buyer of Product under Schedule 1 to
this Attachment F. 


  

	•	 	 Section 2.4, Point of Sale (POS) Reporting: is amended to read in its entirety as follows “Buyer agrees to work with supplier to
identify a process to provide select Point of Sale (POS) Information to Supplier on an agreed to regular basis. The select POS information will include at least IBM PN, IBM ship date, quantity, channel and postal code to the extent that the data is
available to provide to the supplier. The supplier agrees to identify a process to limit supplier's employee access to the buyer's data.” 


  

	•	 	 Section 2.7, Warranty period. For purposes of Product listed in Schedule 1, the first instance of the text “[**]” is replaced
with “[**]”. The second instance of the text “[**]” remains unchanged. 


  

	•	 	 Section 3.1, Configure to Order (CTO): This section is deemed deleted. 



 

	•	 	 Section 3.2, Fulfillment Logistics – Section 3.2 shall be amended to read in its entirety as set forth in Schedule 2 to
this Attachment F. 


  

	•	 	 Section 4.4, Modified/Cancelled Order: This section deemed deleted. 



 

	•	 	 Section 4.6, Resolution of Customer Shipment Conflicts: This section is deemed deleted. 



 

	•	 	 Section 4.8, Shipped and Uninstalled (S&U) Process: This section is deemed deleted. 



 

	•	 	 Section 4.9, Rework Orders: This section is deemed deleted. 



 

	•	 	 Section 4.10, HVEC Hub Replenishment: This section is deemed deleted. 



 

	•	 	 Section 9.3.1: The definition of “Software Maintenance” in amended to read in its entirety as follows



 “Software Maintenance” refers to the provision to Buyer by Supplier of certain software
updates at no additional charge beyond the Software Maintenance and Support fees chargeable under Section 9.4.8 during the Software Maintenance period. Maintenance Releases and Minor Releases are generally included with Software Maintenance.
Major Releases generally are not included with Software Maintenance.” 
  

	•	 	 Section 9.4.6, Product Training: Section 9.4.6 is amended to read in its entirety as follows: 



“One Support Training session for Buyer will be scheduled to be held at the IBM RTP Training Center per launch. If other
training for Buyer on similar products is being delivered in a similar scheduled timeframe, then that training will be leveraged to deliver on this requirement. Supplier Education Services can make available agreed to training materials/content
to Buyer via Web-based Training or PDF. The IBM Commodity Manager responsible for this SOW will coordinate and request all training covered by this SOW.” 

 

 [**] Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 
 IBM Brocade/Confidential 









	•	 	 Section 9.4.8, Software Maintenance and Support Program: Section 9.4.8 is amended to read in its entirety as follows:



 “Products purchased under Attachment F to this SOW may be subject to an annual Software Maintenance and
Support program. If applicable, annual Software Maintenance and Support will be listed on the Schedule 1 to Attachment F. Under the terms of this support program, an initial [**] period of Software Maintenance and Support commencing from the date of
shipment of such unit of Product is included in the purchase price for each unit of Product. After this initial t[**]period, each unit of Product shall be eligible for up to [**] periods of Software Maintenance and Support, unless and until Buyer
terminates the Software Maintenance and Support program for all Products. For purposes of this Section, “Eligible Products” means the number of Products eligible for Software Maintenance and Support during the relevant time period. The
annual Software Maintenance and Support program shall be automatically renewed for all units of Product which remain eligible under the preceding sentence, unless cancelled by Buyer effective as of the end of a calendar quarter with ninety
(90) days prior written notice to Supplier. If the Maintenance and Support Program is cancelled by Buyer, Supplier is no longer obligated to provide Software Maintenance and Support to Buyer. The fees for each year of this annual Software
Maintenance and Support program for a unit of Product shall be listed as the Annual Software Maintenance and Support Fee per Unit in Schedule 1 to Attachment F. 

“For the convenience of the Buyer, [**] of annual Software Maintenance and Support shall be billed to Buyer with each unit of Product
purchased, [**] 
 “For purposes of clarification, [**] If Buyer elects not to renew the annual Software Maintenance and
Support program for all Products, any funds remaining in the [**] which have not been earned by Supplier shall either be refunded to Buyer or (if the parties mutually agree) may be used as an adjustment to other amounts due to Supplier. [**] or
adjust other amounts due to Supplier based on mutual agreement between the parties. 
 In addition, Buyer may, at Buyer’s
sole discretion renew Software Maintenance and Support beyond the [**]period at the Annual Software Maintenance and Support Fee per Unit in Schedule 1 to Attachment E. Supplier will invoice Buyer for these subsequent renewals. 

Notwithstanding the foregoing, any customer will be entitled to firmware fixes at no additional charge for a period of 5 years following
the Product End of Life. 
 “When initiating a technical support request with Supplier, Buyer may provide only if it is
reasonably available to Buyer either the serial number or worldwide name of the Product. Supplier shall have the right to assign support obligations to the appropriate local Supplier subsidiary.” 

 

 [**] Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 
 IBM Brocade/Confidential 









	•	 	 Section 10.2 Communications Coordinators: The Executive Sponsors listed in Section 10.2 are replaced with the following:



 For Supplier 
  

	 	Name:	[**] 


	 	Address	1745 Technology Drive 


	 	  	San Jose, CA 95110 


	 	Phone:	[**] 


	 	Email	[**] 

 For Buyer: 

 [**]3039 E.Cornwallis Road 

Research Triangle Park, NC 27709 

[**] 
 The Business Coordinator
and Technical Coordinator listed in Section 10.2 for Buyer are replaced with the following: 
 Business Coordinator:

 [**]3039 E.Cornwallis Road 

Research Triangle Park, NC 27709 

[**] 
 Technical
Coordinator: 
 [**]3039 E.Cornwallis Road 

Research Triangle Park, NC 27709 

([**] 
  

	•	 	 Attachment C, Initial Business Terms for Ethernet Networking Products: This attachment is deemed deleted. 



 

	•	 	 Attachment D, Sales Assistance and Support: This attachment is deemed deleted. 



 

 [**] Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 
 IBM Brocade/Confidential 








 Schedule 1 

to 

Attachment F 
 [**]

  

 [**] Pages 11 - 12 been omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions. 
 IBM Brocade/Confidential 








 SCHEDULE 2 to 

ATTACHMENT F 

FULFILLMENT 
  

	3.2	Product Hubbing/Consignment 

  

	 	3.2.1	Hub Arrangement. “Hub Product” shall mean any Supplier Product listed in Schedule 1 to Attachment F. The following terms and conditions will apply to
any Hub Product(s) for which an agreement has been executed between and among Supplier, Buyer, and/or third party (“Hub Provider”) to allow such Hub Product to be shipped to and held in a third party’s warehouse (or warehouses)
(“Hub(s)”). 

  

	 	  	Hubs will be established for IBM’s third party fulfillment partners [**]. The parties reserve the right to discuss the addition of a Hub in other location(s),
subject to the mutual written agreement of the parties. 

  

	 	  	The parties will mutually agree to any incremental hubbing costs associated with the hubbing arrangement, such as freight cost to hub destinations and warehousing fees
prior to any performance, by documenting in SOW 8 Attachment F, Schedule 1 Product Price List and Description the amount of incremental hubbing costs which Supplier may include in the Product price. The parties agree to periodically review a
breakdown of such hubbing costs to determine if changes in the logistics will change this cost. 

  

	 	3.2.2	Hub Stocking On a weekly basis Buyer, or Hub Provider, will provide a 13-week rolling forecast to Supplier showing the demand for the Hub Products to be sent to
the Hub(s) and such quantities shall be identified by the specific geographic locations of the Hubs (“Hub Forecast”). Supplier agrees to ship quantities of such Product to the Hubs sufficient to meet at least [**] weeks of demand, and at
most [**]weeks of demand, both of which are based on the forward-looking [**]week period forecast (“Minimum Stock Level”). Should Buyer pull more than the Hub Forecast amount, Supplier will have [**]weeks to restock the Hub to the Minimum
Stock Level. The Minimum Stock Level will include the balance of the Hub Product physically in the Hub location available for immediate sale (“On-Hand Balance”) plus the Hub Product en route to the hub location scheduled for arrival within
the transit lead time for that Hub (“In-Transit Balance”). Supplier may reduce Hub inventory to zero only when there is no demand reflected in each week of the Hub Forecast for the forward-looking [**] week period. If forecast is
significantly higher than normal run rates, Buyer will work with Supplier to review Hub inventory levels and adjust as mutually agreed upon. 

  

	 	3.2.3	Ship Performance Supplier’s goal will be to satisfy a [**] Product Availability rate at each Hub location. “Product Availability” is defined as
Hub Products being available for purchase (“pull” from On-Hand Balance) by Hub Provider at the time a valid pull notification is received. At the beginning of each calendar quarter, Buyer and Supplier may discuss the above Product
Availability rate goal. Should the parties agree that the Product Availability rate goal was not achieved, Supplier will immediately acknowledge the deficiency. Within [**] days of such acknowledgement, Supplier will investigate the root cause of
such failure to achieve the Product Availability goal, and will develop an appropriate corrective action plan. Hub Product pull requests in excess of Hub Forecast will not be used in the calculation of the Product Availability rate, nor in the
determination of root cause. In addition, should Supplier experience constrained supply situation, the allocation provisions of SOW8 Section 4.1 “Allocation of Product Supply” shall apply. 


 

 [**] Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 
 IBM Brocade/Confidential 









	 	3.2.4	Shipping Supplier will be responsible for shipping charges of the Hub Product from Supplier’s point of origin to the Hub. Pursuant to Section 1.0 of
this Schedule 2 to Attachment F these costs may be included in the Product price. All shipments from the Hub will be EXW the Hub, and Buyer is responsible for all shipping charges thereafter. Buyer will act as the importer of record for all Hub
Product shipped from the Hub and will be responsible for associated customs, duty, and Value Add Tax (VAT) administration. Title to and risk of loss of the Hub Product will pass to Buyer upon physical removal of such Hub Product from Brocade’s
designated area within the applicable Hub. 

  

	 	3.2.5	Product Discontinuance for Products Held in Hub Discontinuance of any Hub Product shall be in accordance with the terms set forth in the SOW. The parties agree
to work together to minimize the liability of each party upon end-of-life notice of a Hub Product. 

  

 IBM Brocade/Confidential