exv10w2






Exhibit 10.2




Amendment Number 1

to

OEM Purchase and License Agreement

Between EMC Corporation and Brocade Communications, Inc.

OEM Agreement Number OEM 051208 Dated May 20, 2008




This Amendment Number 1 (“the Amendment”) to the OEM Purchase and License Agreement (the
“Agreement”) dated May 20, 2008 BROCADE Communications Systems, Inc., a Delaware corporation with
an office located at 1745 Technology Drive, San Jose, California 95110, and BROCADE Communications
Switzerland SarL., a Geneva corporation with principal offices at 29 Route de l’Aeroport, Case
Postale 105, CH-1215, Geneva 15, Switzerland, and BROCADE Communications Services Switzerland,
SarL,, a Geneva corporation with principal offices at 29 Route de l’Aeroport, Case Postale 105,
CH-1215, Geneva 15, Switzerland (collectively, “BROCADE”), and EMC Corporation, 176 South
Street, Hopkinton, MA 01748 together with its designated Subsidiaries (“EMC”), and commences on the
date accepted and executed by BROCADE (“Effective Date”).



RECITALS




WHEREAS, the parties wish to amend the Agreement so as to define the Kanban Process as it relates
to Brocade owned KanBans to be placed within EMC designated warehouses;



NOW THEREFORE, in consideration of the above and the other respective promises of the parties set
forth herein, the parties hereto agree as follows:



1.0 Delete Sections 7.4.1 through 7.4.5 of the Agreement in its entirety and replace with the
following Sections 7.4.1 through 7.4.5:



7.4 Purchase Orders — Kanban Process




7.4.1 KanBan Order Process. The KanBan order, delivery and reschedule process (the “KanBan
Process”) established herein shall be in addition to and an alternative to the Standard Process.
EMC may order Products for placement into a BROCADE Consignment KanBan (as defined below) subject
to issuance of Quarterly Purchase Orders and Release Notices (each as defined below); in which case
the procedures set forth below shall apply. Notwithstanding anything herein to the contrary, EMC
may continue to order Products pursuant to the order process in Section 7.3, provided that a sixty
(60) day (or less if agreed to by the parties) advance notification in writing is provided to
BROCADE.



(a) A “KanBan” shall be a supply of Products in a fixed lot size as defined by EMC’s “KanBan
Calculator Report”. EMC may increase BROCADE’s Consignment KanBan inventory level above the
quantities calculated by the KanBan Calculator Report solely as required to fulfill EMC’s remaining
current quarter material requirements planning demand.



 









 





Such increases will be made via False Pull Notices communicated to BROCADE. The KanBan Calculator
Report uses the following formula to determine bin size: [1.5(LT)(ADD) + SS(ADD)] / EOQ, where



LT = Lead Time which is made up of BROCADE process time plus Transit time. BROCADE process time is
defined as the time from when BROCADE receives the replenishment notice until the time Product is
on BROCADE dock to be picked up by the carrier. Transit time is the time from carrier pick up to
delivery at EMC’s dock.



ADD = Average Daily Demand is EMC’s quarterly demand quantity divided by 60 business days.



SS =
Safety Stock, a pre-determined number that EMC may decide to add. Currently Safety Stock is .5. EMC agrees that the SS number will not increase without BROCADE’s mutual consent.



EOQ = Economic Order Quantity is determined by a specific calculation of pallet size and shipping
economies.)



Products to be stocked in:



BROCADE Consignment KanBan- BROCADE owned Products that are provided to EMC for storage in one of
the BROCADE Consignment KanBan Sites for the purpose of on-demand fulfillment of EMC’s requirements
for Products. A “BROCADE Consignment KanBan Site” shall mean the EMC designated warehouse locations
identified in Exhibit M.



(b) EMC will establish a quarterly purchase order and BROCADE will deliver products as detailed in
EMC’s KanBan Calculator Report to the BROCADE Consignment KanBan sites within one week of receipt
of EMC’s written authorization to do so. EMC will maintain a minimum of thirteen (13) weeks of
purchase order coverage. EMC will also issue a DSR which will include EMC’s demand that will match
EMC’s Purchase order coverage. BROCADE will fill in its supply commitment and return the DSR to EMC
within two (2) Business Days. BROCADE will make material available to support its supply commitment
within the KanBan replenishment lead times detailed in Paragraph 7.4.1(c) below regardless of the
quantity of products actually Pulled through this KanBan Process. BROCADE will be measured on
making material available per EMC’s DSR demand and actual release notice fulfillment lead times.
EMC will communicate changes to its demand via the DSR and update its purchase orders to match the
DSR within one (1) day of changes to the DSR demand. BROCADE will respond to DSR demand changes
within a maximum of two (2) Business Days. BROCADE will provide weekly supply updates via the DSR
between 8pm ET Friday and 12:00 noon ET each Monday that will include any changes to BROCADE’s
supply commitments and actual “make available” quantities from the previous week. BROCADE will
promptly communicate any changes in supply commitments via the DSR. EMC’s liability is limited to
the following which shall supercede the cancellation terms set forth in Section 7.3.3.2 above, when
the parties are utilizing the KanBan process:



 









 





[**] of purchase price for Products located in BROCADE’s Consignment KanBans and
replenishment notices in process that do not exceed the KanBan Calculator Report, which Products
BROCADE is unable to reallocate to another customer using commercially reasonable efforts. EMC’s
cancellation fee for such Products shall be calculated using the purchase price in effect as of the
date that such Products were added to the BROCADE Consignment KanBan. BROCADE will use commercially
reasonable efforts to reallocate these Products and EMC will not be charged a cancellation fee if
BROCADE is successful.



EMC purchase liability is limited to 100% of EMC unique labels and manuals that are beyond the
BROCADE Consignment KanBan quantities and within [**] calendar days of EMC’s purchase order delivery
date.



EMC has no purchase liability beyond [**] calendar days of EMC’s purchase order delivery date.



In the event that EMC’s KanBan Calculator Report reduces the total amount of Products required in
the BROCADE Consignment KanBan, then the excess in will be stated in sheet 2 of the KanBan
Calculator Report. EMC will be liable for the excess Products detailed in sheet 2 of the KanBan
Calculator Report, per terms established above.



(c) EMC may remove only complete KanBans from a BROCADE Consignment KanBan and shall thereby take
delivery and possession of the applicable KanBan to support its customer demand. EMC is not
required to take delivery of BROCADE Consigned KanBans until EMC has a customer sales order demand
for such Products. EMC shall Pull KanBans from the BROCADE Consignment KanBan on a first-in
first-out basis. EMC shall notify BROCADE within one (1) day after EMC physically removes a
complete KanBan from a BROCADE Consignment KanBan (each such occurrence a “Pull”), and such notice
shall be deemed a non-cancelable release order for replacement KanBans (“Release Notice”). EMC
notification will be sent to BROCADE by 12:00 noon Eastern time every day as needed. The parties
agree that pull notifications will be sent two times per day during the last five business days of
BROCADE’s fiscal quarter, one by 12:00 noon Eastern time and one by 5 pm Eastern time. If EMC pulls
material from the BROCADE Consignment KanBan during the last day of BROCADE’s fiscal quarter,
notification will be sent per the previously defined fiscal quarter end notification schedule
above. BROCADE shall apply the Release Notice against the then-open Quarterly Purchase Order.
BROCADE will ship Products per Releases Notices and replenish KanBans within the following lead
times:



BROCADE Consignment KanBans will be replenished and False Pull Notices delivered within five (5)
Business Days for all products from receipt of EMC’s release notice and False Pull Notice, if
within EMC’s purchase order quantities.



BROCADE Consignment KanBans will be replenished per BROCADE’s commitment via the DSR, from receipt
of EMC’s release notice if such notices are in excess of EMC’s purchase order quantities. If EMC’s
release notice exceeds BROCADE’s current cumulative supply commitment, the BROCADE Consignment
KanBan will be replenished per the DSR overall supply commitment.





 




			
	[**]	 	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.




 









 










BROCADE will respond via E-mail with confirmation of receipt, and ship date, if within BROCADE’s
supply commitment via the DSR, within two (2) normal business hours of receipt of EMC’s release
notice. BROCADE will ship a replacement KanBan to the applicable KanBan Site for placement into the
applicable BROCADE Consignment KanBan.



(d) BROCADE shall ship BROCADE owned KanBans to be placed in a BROCADE KanBan Queue, via Exworks
BROCADE Consignment Kanban Sites for international locations and FOB BROCADE Consignment Kanban
Site for U.S. locations where “Delivery” is defined in Section (f) below, including freight,
provided that EMC has approved the shipping method and carrier in advance. Notwithstanding the
foregoing, in the event of expedited shipments, BROCADE may choose the carrier at its sole
discretion.



(e) EMC shall provide the space for the BROCADE Consignment KanBans with the exception of the
Shannon/Cork HUB where Brocade will pay the third party logistics provider (“3PL”) directly and
include the cost in non-product invoicing. All Products in the BROCADE Consignment KanBan shall be
and remain the property of BROCADE, until such time as they are Delivered to EMC, as defined below.
EMC will store each BROCADE Consignment KanBan in EMC’s facilities or contract with an EMC
designated 3PL to store Brocade Consignment KanBans in a manner such that the BROCADE Consignment
KanBan shall be segregated by a clear and durable physical delineation, separating the BROCADE
Consignment KanBan from the other parts of the EMC location or EMC designated 3PL Hub and from
EMC’s other products, supplies, inventory, and equipment, and EMC or it’s designated 3PL Hub shall
conspicuously mark the area of each BROCADE Consignment KanBan Site to indicate BROCADE’s ownership
of the KanBans. EMC shall have no right of ownership or control over the BROCADE Consignment
KanBans. EMC and its designated 3PL Hub will exercise the same degree of care to keep and maintain
the KanBans as EMC uses with respect to its own inventory. EMC and its designated 3PL Hub will
implement and maintain commercially reasonable measures to prevent any loss, theft, damage, or
destruction of the KanBans.



(f) Products contained in a BROCADE Consignment KanBan shall be deemed to be “Delivered” to EMC for
purposes of this Amendment when the Products are Pulled by EMC or EMC’s designated 3PL. Upon
Delivery, EMC shall be deemed to be in receipt of the Products for purposes of Section 7.5.2 of the
Agreement, and the Pull date shall equal the date the Release notice was communicated to BROCADE
for purposes of Section 9 of the Agreement. BROCADE shall invoice EMC for such Products as detailed
in EMC’s or EMC’s designated 3PL’s pull release notice in accordance with Section 5 of the
Agreement. At such time, BROCADE shall also invoice EMC for such Delivered Products on a per unit
basis for the cost of shipping, insuring, and if applicable, custom formalities for such Products,
at agreed upon rates, from BROCADE’s manufacturing facilities to the BROCADE Consignment KanBan
Site that Brocade paid directly to third parties. EMC will pay 3PLs directly for warehousing
charges associated with storing Brocade Consignment KanBans. The only exception is the cost of
warehousing BROCADE Consignment KanBans in the Shannon Ireland Hub which shall be paid by Brocade
directly and then invoiced to EMC as part of the per unit costs described above. Once a KanBan has
been Pulled, no Product contained in such KanBan may be placed back into any BROCADE KanBan Queue,
and the Product may only be returned by EMC in accordance with the terms set forth in Section 7 or
Section 9 of the Agreement.



 









 





(g) At all times the BROCADE Consignment KanBans will be kept free by EMC from all liens, claims,
encumbrances, and interests of any kind.



(h) EMC, and its designated 3PL’s, will allow access to a BROCADE representative to perform a count
of KanBans held in each BROCADE KanBan Queue once per week at a time scheduled no less than
twenty-four (24) hours in advance to verify weekly activity and numbers of KanBans on hand. BROCADE
may, at its option, conduct an on-site audit to verify the count of KanBans and physically inspect
the KanBan Site.



2.0 Delete Sections 7.5.2 in its entirety and replace with the following:



7.5.2
Delivery Procedures.


(a) Delivery shall be F.C.A. Origin (Incoterms 2000) for the standard purchase order process.
BROCADE shall use EMC’s designated carriers. Title to Products (or, with respect to Software, the
media bearing Software) and risk of loss of Products shall pass to EMC upon signing of the bill of
lading by EMC or EMC’s carrier for the standard purchase and drop ship processes. EMC may modify
its routing instructions from time to time and will provide BROCADE with an updated version of any
such modified instructions. EMC shall arrange for transportation from BROCADE’s dock to the
designated ship to address. If there is any conflict between the current version of routing
instructions provided to BROCADE and the contents of this Section 7.4, then the current routing
instructions will prevail as to EMC’s carrier and routing information. Title to the Software
itself shall at all times remain with BROCADE.



(b) Title and risk of loss for the Kanban Process shall pass to EMC upon removal of Kanbans from
BROCADE’s Consignment Kanban. Title to the Software itself shall at all times remain with BROCADE.
The cost of shipping, insuring, and if applicable, custom formalities for such Products, at agreed
upon rates, from BROCADE’s manufacturing facilities to the BROCADE Consignment KanBan Site shall be
the responsibility of EMC.



IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number 1 to OEM Purchase and
License Agreement by their duly authorized representatives. This Agreement shall not be effective
until executed by Brocade and accepted by an authorized representative of EMC.



	 	 	 	 	 	 	 	 	 	 	 
	Executed and agreed to:	 	 	 	Accepted and agreed to:	 	 
	BROCADE Communication Systems,	 	 	 	EMC Corporation (EMC)	 	 
	Inc. “BROCADE”	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Charles Leeming	 	 	 	By:	 	/s/ Trevor Schick	 	 
	 

	 	 
	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 
	Name:
	 	Charles Leeming	 	 	 	Name:	 	Trevor Schick	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	VP, OEM Sales	 	 	 	Title:	 	V.P. GSCM	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Signed & Effective Date:  1/7/09
	 	 	 	Date:	 	12/22/08	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BROCADE Communication	 	 	 	 	 	 	 	 
	Switzerland, SarL	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	/s/ Kevin L. McKenna	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:
	 	Kevin L. McKenna	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:
	 	Director	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	09-January-2009	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 






 









 






EXHIBIT M

EMC HUBS




[**]





 




			
	[**]	 	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.