The prospectus for Sequoia Systems Inc’s initial public offering of shares lifts the veil on Hewlett-Packard Co’s plans for the fault-tolerant Unix machines it has signed to buy from the Marlborough, Massachusetts company. According to the prospectus, Hewlett has acquired exclusive rights to market the Sequoia Series 300 machines and successors to the telecomunications industry – the key market already targeted by Tandem Computers Inc for its new MIPS Computer Systems Inc RISC-based Integrity S-2 fault tolerant Unix machines – for the next eight years. Hewlett has committed to a minimum 22 systems, worth $6m all told, for the 12 months to March 31 1991, and the exclusivity of the agreement is contingent on minimum purchase commitments being met thereafter. If it takes more than $50m of the machines over a 12 month period, Hewlett buys the right to build a proportion of its requirement under licence in the succeeding 12 months. It gets the same right if Sequoia fails to meet delivery commitments for two successive quarters, files for bankruptcy, or if Hewlett ac quires more than 30% of Sequoia’s shares. Hewlett also has the right to develop its own machines based on Sequoia’s technology but must transfer any patentable improve ments it may make to Sequoia at no charge.
