Sample Business Contracts

OEM Agreement - Brocade Communications Systems Inc. and Storage Technology Corp.

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                                  OEM AGREEMENT

        This OEM Agreement (hereinafter, "Agreement") is effective as of May 1,
1998, by and between Brocade Communications Systems, Inc., a corporation
organized under the laws of the State of California, with its principal place of
business at 1901 Guadalupe Parkway, San Jose, California 95131 (hereinafter,
"Brocade") and Storage Technology Corporation (including its subsidiaries and
affiliates), a company organized under the laws of the state of Delaware, with
its principal place of business at 2270 South 88th Street, Louisville,
Colorado 80022 (hereinafter, "OEM"). This Agreement will be administered on
behalf of OEM by the Storage Tek Network Systems Group, with its principal place
of business at 7600 Boone Avenue North, Minneapolis, Minnesota 55428. All
primary correspondence to OEM with respect to this Agreement shall be sent to
the Minnesota address.


        WHEREAS, Brocade manufactures certain equipment useful for gigabit data
communication interconnect products such as hubs, switches and transceivers
which contain hardware components and software programs compatible with such
equipment, and which Brocade is willing to provide to OEM on the terms and
conditions set forth herein; and

        WHEREAS, OEM shall combine such equipment with other equipment, software
programs and/or services so as to add Significant Value to Brocade's equipment
to create OEM Products and to market the OEM Products on a "turnkey" basis;

        NOW, THEREFORE, the parties hereto, for consideration mutually
exchanged, agree as follows:

1. DEFINITIONS. For purposes of this Agreement, the definitions below apply to
the respective capitalized terms;

        (a)    "End-User" A prospective customer of OEM or OEM's distribution
               channels to whom OEM Products are offered and/or sold for use in
               the regular course of such customer's business.

        (b)    "End-User License Agreement" The form of OEM's license agreement
               set forth in Exhibit C and attached hereto, under which OEM
               grants an End-User a license to use the Software in conjunction
               with the Product as part of an OEM Product.

        (c)    "OEM Products" Certain storage interconnect solutions and
               transceivers manufactured and sold by OEM consisting of
               combinations of the Products with other substantial value added
               equipment and software independently developed or procured by
               OEM, to be offered by OEM, together with related services,
               directly or indirectly to End-Users, on a turnkey basis.

<PAGE>   2

        (d)     "Products" Brocade's products and services set forth in the then
                current version of Exhibit A and attached hereto, including all
                model conversions, elements and accessories, whether
                incorporated into OEM Products or used as spares in support of
                OEM Products. All Products sold to OEM shall be newly
                manufactured products, not containing used materials, unless
                specifically agreed in advance by OEM and Brocade.

        (e)     "Significant Value" The value added by the OEM through product
                enhancements, either hardware or software, tradename and
                significant sales/service leverage or also by other means
                approved, in advance and in writing, by Brocade.

        (f)     "Software" The computer software incorporated within the Product
                which provides the basic operating environment for the Product.

2. TERM. This Agreement shall commence on the date set forth above and shall
remain in full force and effect for a period of [*], unless earlier
terminated as provided herein. Thereafter, this Agreement shall automatically
renew for successive one (1) year periods unless either party notifies the other
party at least sixty (60) days prior to expiration of the Term. Notwithstanding
the foregoing, this Agreement shall remain in full force and effect and shall
apply to any accepted purchase order (hereinafter, "Order(s)") issued during the
Term of this Agreement and until the obligations of each party, under such
Orders, have been fulfilled.

3. OEM'S RESPONSIBILITIES. In consideration for the rights and licenses granted
to OEM hereunder, OEM shall:

        (a)     Combine the Product with other equipment and/or computer
                software programs independently developed or procured by OEM so
                as to create OEM Products;

        (b)     Market, sell and deliver OEM Products directly or indirectly to

        (c)     Provide a copy of the appropriate End-User License Agreement,
                when applicable, to all customers and prospective customers as
                part of any OEM Products. The End-User License Agreement
                provided by OEM shall be at least as protective of Brocade's
                interests as Brocade's License Agreement;

        (d)     Provide technical support for OEM Products directly or
                indirectly to End-Users, including all necessary maintenance,
                training, and support to enable proper operation of the OEM

        (e)     Order, pay for, take delivery of and accept Products; and

        (f)     Protect Brocade's proprietary rights in the Software;

4. FORECAST. On the first working day of each month, OEM shall provide Brocade
with a written minimum [*] rolling non-binding forecast of expected
monthly purchases of

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Products. If OEM fails to timely provide Brocade with the forecast, Brocade
reserves the right to extend the lead time for shipment of Products.


        (a) Prices for all Products are set forth in the then current version of
Exhibit B and attached hereto. All freight, insurance, taxes, duties or other
shipping expenses shall be borne by OEM. All prices, charges, and fees quoted by
Brocade are in United States Dollars and all amounts to be paid by OEM shall be
paid in United States Dollars.

        (b) Payment terms are [*] from the Invoice date. Invoices will be
forwarded at the time of shipment. Amounts not paid [*] after the invoice date
are subject to a late payment charge of the lesser of one and one-half percent
(1.5%) or the maximum rate permitted by law, which shall be enforced if
delinquency in payment is not promptly brought current upon notice by Brocade,
or in the event of a continued pattern of delayed payments. OEM shall pay all of
Brocade's collection costs and expenses to enforce and preserve Brocade's rights
under this Section.



        (a) OEM shall initiate purchases of Products under this Agreement by
issuing Orders to Brocade either in hard copy form, by fax, or by electronic
data interchange (hereinafter, "EDI"). OEM's Orders shall be governed only by
the terms and conditions of this Agreement. Any additional terms and conditions
contained on any Order or other OEM document are of no force or effect, and
Brocade hereby gives notice of objection to such additional terms.--

        (b) Orders are for the purpose of identifying types and quantities of
Products to be shipped and requesting delivery times. Each Order placed by the
OEM must include quantity, price, shipping instructions, agreed designated
destination and billing addresses, part or model number, and desired delivery
date, which date shall be no later than 120 days after the date of the Order.
OEM shall forward all Orders to Brocade's principal office or as otherwise
instructed by Brocade. Brocade reserves the right, in its sole discretion, to
accept or reject, in whole or in part, any or all Orders placed by OEM that are
not in compliance with this Agreement. Brocade shall use reasonable commercial
efforts to notify OEM of the acceptance or rejection of an Order within [*]
after receipt of the Order. Brocade shall use reasonable commercial efforts 
to meet such dates, but Brocade will not be liable for late delivery. If

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delivery is delayed beyond [*] OEM shall have the right to cancel an unshipped
Order, or portion thereof, without penalty. With OEM's prior approval, Brocade
may make partial deliveries of Orders. Such deliveries will be invoiced and paid
when due, without regard for subsequent deliveries.

        (c) All shipments shall be made [*] Shipments shall be sent to
designated locations mutually acceptable to Brocade and OEM. Title in and the
right of possession to such Products passes to OEM upon [*]. OEM is responsible
for obtaining any insurance for the Products and for filing all claims with the
carrier, or insurer, for damages or loss in transit.


        (a) Discontinuation of Products. Brocade may, from time to time, in its
discretion, discontinue the offering of any Product by providing an End of Life
notice (hereinafter "EOL") to OEM, effective [*] after written notice to OEM of
such discontinuation. Such EOL notice will notify OEM of any special conditions,
such as time frames for placing final Purchase Orders and accepting delivery
thereof, and minimum order quantities, applicable to Brocade's acceptance of
final Purchase Orders for certain EOL Products. EOL Product Purchase Orders are
non-cancelable and are, if canceled by OEM, subject to a cancellation charge
equal to the value of the EOL Products canceled. EOL Purchase Orders for EOL
Products shall be considered as being in addition to Purchase Orders placed
against forecasted requirements. Products shall be delivered within [*] after
receipt of an EOL Purchase Order.

        (b) Changes to Products. Brocade reserves the right to introduce
modifications to the Products, so long as the product specifications are not
adversely affected. Brocade will use reasonable commercial efforts to inform OEM
of significant product changes prior to their implementation in units shipped to
OEM. It is recognized by the parties that there may be optional changes
requested by either OEM or by Brocade which are not required to make the
Products conform to their specifications. The cost of implementing such changes,
if any, (including kits and labor) on previously delivered units shall be borne
by OEM. Brocade shall not change any elements affecting the OEM's unique image
associated with the Products, including OEM's logo, labeling or packaging,
without OEM's prior approval.

        (c) In the event that changes that may affect the form, fit, function,
[*] Brocade shall first obtain OEM's approval, which shall not be unreasonably
withheld. After mutual agreement that any such changes are to be made, Brocade
shall promptly ensure that such changes ("Mandatory Engineering Changes") are
included at no additional charge to OEM in all Products which are not yet
delivered to OEM. OEM may also request that Brocade incorporate such changes to
Products previously delivered under the warranty provisions of Section 11.

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        (a) OEM may cancel or reschedule the quantity on any Order previously
accepted by Brocade by sending written notice to Brocade, subject to the
following limitations. Each Order may be rescheduled only once. Any rescheduling
may not delay delivery for more than [*] but in no event beyond the Term of
this Agreement, Cancellation requests for quantities on Orders that have already
been rescheduled will be subject to charges and limitations based upon the
original scheduled delivery date, which may preclude a cancellation due to the
[*] limitation. The following charge will apply: 

           Number of Days prior to           Cancellation charges        Rescheduling charges
             scheduled delivery                  per unit                      per unit
               91 days or more                     [*]                            [*]          
                  61-90 days                                                            
                  31-60 days                                                            
                  0-30 days                                                             

        (b) Cancellation and/or rescheduling charges, [*] are subject to [*]
terms from the date of OEM's request subject to such charges.


        (a) OEM shall promptly inspect all Products shipped to OEM upon receipt
thereof and may reject any item that falls substantially to conform to the then
current specifications. To reject a Product, OEM shall, within [*] after receipt
of the Products notify Brocade of any defect or deficiency and request a Return
Material Authorization number (hereinafter "RMA"). If no notice is given within
that time, then the Products shall be deemed accepted and thereafter are
returnable only for warranty repair. Products which fail upon initial
installation at End-User locations may be deemed by OEM as "DOA", so long as
such initial failures are reported by OEM not later than [*] from the date of
shipment by Brocade. Brocade shall use commercially reasonable efforts to
provide replacements for DOA units on an expedited basis to be received at the
Continental US location specified by the OEM within [*] of receipt of the
returned DOA units. Brocade shall have the right to utilize the [*] spare
inventory (as defined in section 9(d)) for fulfillment of this DOA replacement,
which does not waive Brocade's obligation for maintaining the [*] spares

        (b) Within [*] of receiving an RMA number, which shall be issued by
Brocade within two (2) business days of OEM's request, OEM shall return rejected
or DOA Product(s), freight prepaid and properly insured, in the original
shipping carton, or in other suitable protective packaging if the original
carton is no longer available, FOB destination with the RMA number displayed on
the outside of the carton, to the address and by the shipping means, as

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specified by Brocade in the RMA. Product returns will not be accepted by Brocade
without an RMA number.

        (c) If Brocade confirms the defect, Brocade shall, at Brocade's option
and expense, either repair or replace the Product or issue credit to OEM.
Brocade shall reimburse OEM for the shipping charges to return properly rejected
Product and for the shipment of the replacement Product; otherwise OEM shall be
responsible for all shipping charges.

        (d) Brocade [*] of spare parts which are specified and paid for by the
OEM. The procedures for maintaining, configuring, testing, and shipping of
spares will be defined in the technical support procedures. Maintenance of the
level of [*] spare inventory is the responsibility of the OEM.


The parties agree to negotiate in good faith to develop and honor the terms of
mutually acceptable technical support procedures which shall define the
responsibilities of each party with respect to end user support, including
provisions to address continuously available emergency support, appropriate
levels of support and means of communicating issues between the parties, and
problem tracking and escalation procedures.



        (b) During the Warranty Period Brocade shall, at its sole option and
expense, repair or replace any hardware Product, or part or component thereof,
which Brocade determines was defective in material or workmanship. Products
shipped as exchanged units under this Section 11, (i) may be newly manufactured,
(ii) may be assembled from new or serviceable used parts that are equivalent to
new parts in performance, or (iii) may have been previously installed, but in
other respects meets the Product specifications.

        (c) OEM shall request and receive an RMA number, which shall be issued
by Brocade within two (2) business days of OEM's request, for repair of Product
prior to return for repair. OEM shall use reasonable commercial efforts to
return Product with defects covered by the foregoing warranty to Brocade, [*]
pursuant to the shipping and other requirements specified by Brocade in its RMA,
within [*] of issuance of the RMA number. Brocade shall use reasonable
commercial efforts to ship repaired/replacement Product

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within [*] but in no event later than [*] of receipt of the defective units.
Repair or replacement of the Product does not extend the Warranty Period.

        (d) OEM's sole and exclusive remedy for breach of any of the foregoing
warranties shall be to seek repair or replacement of the affected Product, and,
if such repair or replacement is not effected after reasonable notice and
opportunity for remedial action by Brocade, to obtain repayment of any amounts
paid to Brocade for that Product.

        (e) This warranty does not apply to any Product which (i) has been
altered, except by Brocade or at Brocade's direction, (ii) has been improperly
handled, installed, operated or packaged, or (iii) has been damaged by accident,
misuse, negligence, or external factors such as failure or fluctuation of
electrical power or air conditioning which subjects Products to conditions
beyond their specification, fire, flood, or failures induced by interconnection
with non-Brocade products.

        (f) During the Term of this Agreement, any repair or reconditioning of
any Product not covered by warranty shall be subject to Brocade's then standard
out of warranty prices, terms, and conditions.

        (g) Brocade and OEM agree to work together to minimize no-trouble-found
(NTF) returns to Brocade by identifying and correcting the root cause. If the
NTF returns exceed 5% of all returns, and if OEM is not participative or
effective at problem resolution, and Brocade gives OEM thirty day written
notice, Brocade may invoke the NTF charges as defined in Exhibit B.


        (a) Brocade's entire liability, for any and all damages, arising out of
or relating to this agreement or the products, shall in no event exceed [*].

        (b) Notwithstanding any other provision in this Agreement to the
contrary, neither party shall be liable for any incidental, indirect, special or
consequential damages, including loss of profits, revenue, data or use, or cost
of procuring substitute services or goods, incurred by either party or any third
party, whether in an action in contract or tort or an action based on a warranty
claim, even if the other party, or any other person, has been advised of the
possibility of such damages and notwithstanding any failure of essential purpose
of any limited remedy provided herein.


        (a) Brocade will defend, at its expense, any suit or proceeding brought
against the OEM to the extent that such action is based on a claim that Products
manufactured or developed and supplied by Brocade to the OEM hereunder
constitute a direct infringement of any duly [*]. Brocade will pay all damages
and costs finally awarded against the OEM in any such action which are
attributable to such claim, provided that Brocade is promptly informed in
writing and furnished a copy of each communication, notice or other action
relating to the alleged infringement and is given the authority, information and

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assistance necessary to defend or settle such claim. OEM shall have the right,
at its expense, to participate in any such claim or action.

        (b) Brocade will not be obligated to defend or be liable for costs and
damages if the infringement arises out of compliance with the OEM's
specifications or from a combination with or an addition to Products not
manufactured or developed by Brocade, modifications of the Products after
delivery by Brocade or the use of such Products beyond that established or
approved in writing by Brocade. Should the Products delivered by Brocade become,
or in Brocade's opinion be likely to become, the subject of a claim of
infringement of any duly [*] then Brocade may, at its option, (i) procure for
the OEM the right to use such Products free of any liability or infringement or
(ii) replace such Products with non-infringing substitutes or modify such
Products to be non-infringing, (in either case with no material degradation in
performance) or (iii) if neither (i) nor (ii) is available, [*] accept the
return of such Products.


        (a) Either party may terminate this Agreement for a material breach of
this Agreement if the defaulting party has not cured such breach within thirty
(30) days after receipt of notice that it has breached a provision of this
Agreement and/or such defaulting party has not begun substantial efforts to cure
any such breach which requires more than thirty (30) days to correct.

        (b) Either party may terminate this Agreement, effective immediately and
without liability, upon written notice to other party if the other party (i)
becomes insolvent, (ii) declares bankruptcy, (iii) becomes the subject of any
proceeding seeking relief, reorganization or rearrangement under the laws
relating to insolvency, (iv) makes an assignment for the benefit of its
creditors, or (v) commences the liquidation, dissolution or winding up of its


        (a) Brocade retains all of its right, title and interest in and to all
patents, copyrights, trademarks, tradesecrets, mask works and other intellectual
property embodied in the Products (for purposes of this Section, "Intellectual
Property") including any improvements or enhancements to the Products. OEM may
not copy, reproduce, distribute, (except as set explicitly forth in this
Agreement), reverse engineer, decompile or disassemble the Products or
Intellectual Property, as the case may be. No rights or licenses, with respect
to the Products or Intellectual Property, are granted or deemed granted
hereunder, except as explicitly set forth in this Agreement. All Product(s)
incorporated into OEM Products shall be marked with such copyright, patent,
proprietary legends, restrictions or other notices as Brocade may reasonably
require to protect its interests or Brocade's suppliers' interests therein.

        (b) OEM retains all proprietary rights in and to all designs,
engineering details, schematics, drawings, specifications, software, business
data and other similar data which may

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<PAGE>   9
be provided to Brocade unless OEM specifically requests changes to be
incorporated in Brocade's standard product. Brocade shall not sell Products
containing unique elements, features, or characteristics developed by OEM or
based specifically upon OEM's specifications to any third party without OEM's
written consent.

        (c) Each party agrees (i) to hold the other party's confidential
information in strict confidence, (ii) not to disclose such confidential
information to any third parties, and (iii) not to use any confidential
information for any purpose except for the business purpose.

16. SOFTWARE LICENSE. Notwithstanding anything to the contrary contained herein,
title to all Software shall remain with Brocade or its suppliers, as applicable.
Brocade hereby grants to OEM a nonexclusive, nontransferable right and license
to distribute copies of the applicable Software solely in conjunction with the
distribution of the Products, as part of OEM Products, to End-Users during the
term of this Agreement. No modification or preparation of derivative works of
the Software whatsoever is permitted. The Software is provided and is authorized
to be installed, executed and used only in machine-readable, object code form.


        (a) Events. The rights described in Section 17(b) shall become effective
during the term of this Agreement for a specific Product when:

                (a1) OEM has given notice to Brocade of its intent to establish
            a funded escrow account for the Product accompanied by payment of
            fees as detailed in Exhibit D, Restricted Manufacturing Rights Fees
            and Requirements, and either

                (a2) Brocade becomes bankrupt or insolvent, becomes the subject
            of any proceedings seeking relief or reorganization which are not
            stayed within ninety (90) days, or makes an assignment for the
            benefit of creditors; or

                (a3) otherwise, only after [*] and then only upon the occurrence
            of situation (i) below and at least one or more of the situations
            (i) through (iv):

                (i)     Brocade fails to deliver at least [*] of the scheduled
                        delivery quantities during any [*] and such default has
                        not been cured within [*] after receipt of written
                        notification from OEM, except for events of Force
                        Majeure or allocation which are reasonably beyond the
                        control of Brocade, including, but not limited to,
                        scarcity of parts or components within the industry
                        and/or such increased market demand that would
                        necessitate allocation of Product; or

                (ii)    OEM has placed Brocade on "Stop Ship" as provided is
                        Section 19(b) for a Manufacturing Quality problem (as
                        distinct from a Design problem) and Brocade has failed
                        to cure such event within sixty (60) days after receipt
                        of OEM's Stop Ship notice; or

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                (iii) One-hundred-eighty (180) days after the time when Brocade
                      provides an EOL notice pursuant to Section 7(a), then
                      Brocade and OEM agree to negotiate in good faith to
                      support OEM's existing long-term obligations, this support
                      to include the necessary and foreseeable EOL purchases and
                      the thresholds for invoking (this) Restricted
                      Manufacturing Rights section; or

               (iv)   Brocade is merged or consolidated with or into a
                      competitor of OEM ("Competitor") or enters into a
                      cooperative arrangement with a Competitor which is the
                      functional equivalent of such an acquisition or merger or
                      consolidation; and thereafter Brocade fails to deliver at
                      least [*] of the scheduled delivery quantities during any
                      [*] period; and such reduced deliveries have not been
                      cured within [*] after written notification from OEM.

        (b) Rights Granted. Brocade hereby grants to OEM, which shall become
effective on the occurrence of the appropriate events set forth in Section
17(a), parts (a2) or (a3), a non-exclusive, [*] non-transferable, right and
license to manufacture or have manufactured such Product and related parts
thereof, as necessary for sale of OEM Products as defined in Section 1c herein,
in consideration of the payment by OEM of a mutually agreed-upon royalty, not to
exceed thirty-three-percent (33%) of the then-current OEM Price of the said
Product, but only until such time as Brocade may give reasonable assurance to
OEM that Brocade has cured the default condition that gave rise to granting the
rights here before stated. No such royalty as described above in this paragraph
shall be due in the case that this paragraph is invoked because of the
bankruptcy or insolvency of Brocade as defined in Section 17(a),part (a2) above.

18. INSTALLATION SUPPORT. Upon OEM's written request, Brocade will, at no charge
for Brocade's employee's time, assist in installing Products purchased hereunder
at the first two (2) customer sites, charging only for reasonable travel and
living expenses.


        (a) In an effort to maintain the quality of the manufacturing and other
processes related to the Products, Brocade agrees to not make a material move in
its current manufacturing facilities without the prior written consent of OEM,
which consent shall not be unreasonably withheld. Brocade shall maintain an
effective quality control system which shall ensure that the entire process of
design, manufacture and repair, including packaging and shipping, is maintained
under continuous control. Brocade's systems shall ensure that all Product
specifications and test specifications for the Products are satisfied, including
workmanship standards. Upon request, Product specifications and test
specification shall be made available to OEM. Brocade shall develop and
implement continuous quality improvement methodologies to monitor, control, and
improve its processes and Products, including obtaining and maintaining
appropriate ISO 9000 certifications, including ISO 9002 at Brocade's
manufacturing partners' facilities.

        (b) Brocade and OEM agree to work together to ensure a "Plug-and-Play"
rate of greater than or [*] for the Products over the term of this Agreement.
Upon any occurrence of a "Plug-and-Play" failure, OEM and Brocade will work
together to promptly identify and correct

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<PAGE>   11

the root cause of the failure. If a subsequent failure is reported prior to
resolution of the preceding occurrence OEM reserves the right to place Brocade
on a "Stop Ship" and Brocade shall not resume shipments to OEM until Brocade and
OEM have identified the cause of the quality problem and have agreed upon a
course of action to correct such problem. If resolution of the problem is not
resolved within [*] of the "Stop Ship", OEM may cancel any undelivered
quantities on Orders for Products without payment of cancellation charges per
Section 8(a).

20. RELIABILITY. Brocade's Products are designed for long life and robustness
and should generally perform to their specifications for up to five years (the
"Service Life"). If the Products fail to meet their reliability standards by
more than [*] during their Service Life, as measured by mutually agreeable
means, Brocade shall use all reasonable commercial efforts to implement
appropriate corrective actions as may be necessary in order to achieve such
reliability standards.

In addition, if OEM experiences an actual field failure rate on a population of
Products that fails to meet their reliability standards of such Products by more
than [*] and which causes additional service requirements on the part of OEM
over and above those assumed in the Product specifications, then Brocade shall
extend the original Warranty Period of such population of units to [*] (or such
longer period as may mutually agreed based upon the specific circumstance) as
compensation for OEM's additional service expenditures.

21. DOCUMENTATION. Brocade hereby grants to OEM, without additional charge, the
right to reproduce, copy, display, translate, modify and private label any
documents/manuals of the general categories (unless specifically prohibited) of
(i) Product description, (ii) installation, maintenance, reference, or
diagnostics, or (iii) user guides, for use by OEM or OEM's customers to sell and
maintain the Products when sold or provided in conjunction with OEM Products and
further grants to OEM the right to grant its subsidiaries and distributors
appropriately restricted rights to copy such documentation solely for use in
selling and maintaining OEM Products at OEM's End-Users. All such documentation
shall bear OEM's trade name, trademark and logo (and shall not bear any evidence
of Brocade's trade name, trademark, or logo or other ownership rights, unless
distributed in a completely unmodified form from that originally supplied by
Brocade), and shall also contain a restrictive legend regarding distribution and
copying rights furnished by OEM. Use of OEM's trade name, trademark or logo
shall not diminish Brocade's right, title or interest in any documentation owned
by Brocade or Brocade's suppliers. OEM hereby agrees to assist in the
enforcement and protection of Brocade's rights, title, or interests thereto.


        (a) Force Majeure. Neither party shall be liable for its inability to
perform due to causes beyond its reasonable control such as acts of God, fire,
theft, war, riot, embargoes, civil insurrections, labor or transportation
strikes, flood, earthquake, volcanic eruption, shortages of material or energy,
acts of civil, military or government authorities, acts of public enemy,
terrorist acts or sabotage. If either party's performance is to be delayed by
any such

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<PAGE>   12

contingencies, that party's performance shall be extended for a reasonable
period of time provided the delayed party gives prompt notice to the other party
of such delays.

        (b) Independent Contractors. Brocade and OEM are independent
contractors. Neither party has the authority, express or implied, to assume or
create any obligations, responsibility or liability on behalf of the other party
nor to bind the other party in any manner.

        (c) Confidentiality. Both parties agree to keep the information
contained in this Agreement confidential and not to disclose any of the terms
and conditions of this Agreement, to any third parties, without the prior
written consent of the other party.

        (d) Survivability. In the event that this Agreement expires or is
terminated for any reason by either party hereto, each party's duties and
obligations that by their nature would normally extend beyond the term of this
Agreement, shall do so.

        (c) Responsibility for Taxes. Taxes imposed with respect to the
transactions contemplated hereunder (with the exception of income taxes or other
taxes imposed upon Brocade and measured by the gross or net income of Brocade),
shall be the responsibility of OEM.

        (f) Export Regulations. The parties hereto acknowledge and agree to
comply with the laws and regulations of the United States which restrict the
export of commodities and technical data of United States origin.

        (g) Notice. All notices, Orders, acceptances of Orders given under this
Agreement shall be made in writing and will be effective (i) when delivered, if
delivered in person, (ii) during the business day of receipt (or the next
business day if not received during a normal business hour), if by telecopy and
confirmed with the receiving party by telephone, or (iii) three (3) days after
depositing same in the U.S. mail as registered mail, return receipt requested,
postage prepaid and addressed to the other party at the address of the other
party set forth on the first page hereof or at such other address as may be
specified to the other party via notice in accordance with this Section (g).

        (h) Assignment. Either party may delegate or assign any of its rights,
duties, or obligations under this Agreement provided prior written notice is
given to the other party.

        (i) Severability. If any provision of this Agreement is declared invalid
or unenforceable by a court of competent jurisdiction, it is mutually agreed
that this Agreement shall endure except for the part declared invalid or
unenforceable by order of such court and the parties shall negotiate, in good
faith, a substitute, valid, and enforceable provision which most nearly effects
the parties' intent in entering into this Agreement.

        (j) Waiver. The failure or delay of either party to require performance
by the other party hereto, or to enforce its rights under any provision of this
Agreement, shall not affect the rights with respect to such provision unless and
until such performance has been waived in writing by such party.

<PAGE>   13
        (k) Inventory. OEM shall stock inventory of Products and
replacement/spare units sufficient to fulfill its obligations under this

        (l) Insurance. At its sole cost and expense, Brocade shall carry and
maintain Commercial and General Liability Insurance covering all operations of
Brocade, including but not limited to products, completed operations, and
contractual liability, against claims for personal and bodily injury and
property damage with a combined single limit of [*].

        (m) Compliance with Law. The parties hereto shall comply with all laws
applicable to the manufacture and sale of the Products or OEM Products,
including, by way of example and not limitation, Executive Order 1126 as amended
by Executive Order 11375 (non-discrimination in employment) and the U.S. Clean
Air Act of 1990. Brocade shall use reasonable efforts to give OEM as much notice
as is practicable in the event Brocade uses ozone depleting chemicals in the
manufacture of the Products. OEM reserves the right to reject any Products
manufactured utilizing or containing such materials if OEM has not been
previously notified of the same.

        (n) Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.

        (o) Audit Rights. OEM may, upon five (5) business days' prior notice,
audit Brocade's manufacturing sites to review Brocade's manufacturing processes,
statistical process control records, quality assurance procedures, packaging and
shipping procedures and other related procedures, functions or facilities of
Brocade which produce Products bought by OEM under the terms of this Agreement,
but only to the extent such audit does not unreasonably disrupt Brocade's
business in which case the parties shall mutually agree upon a more reasonable
time period for such audit.

        (p) Regulatory Responsibility. The responsibility to obtain and maintain
regulatory approvals for the Products shall remain with Brocade.

        (q) Statute of Limitations. No action, regardless of form, arising from
the transactions under this Agreement, may be brought by either party more than
three (3) years after the cause of the action has accrued.

        (r) Training. At times and places to be mutually agreed upon, Brocade
will offer OEM training courses for OEM's personnel. Brocade shall provide such
courses [*] associated with any Brocade [*] materials consumed by OEM's
attendees at such training classes. OEM shall pay all expenses of its personnel
for travel, food, and lodging. Additional training courses will be provided upon
reasonable request at a rate of [*] to cover instruction costs. Enrollment
in training classes will be limited to a maximum of [*].

        (s) Brocade warrants that the Item will operate without error or
interruption related to date data in the same manner in the 21st Century as
it does in the 20th Century so as not to cause

* 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

abnormal output or incorrect values, unless Product's operation is dependent
upon and noncompliance is caused by other Products over which Brocade has no

        (t) Entire Agreement. This Agreement, including the Exhibits attached
hereto, constitutes the entire agreement between the parties and no
modifications or waiver of any of the provisions or any future representation,
promise or addition shall be binding upon the parties unless agreed to in
writing. This Agreement supersedes and cancels any prior discussions,
understandings or agreements, whether written or verbal, in their entirety.

        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their authorized representatives as set forth below:

BROCADE CORPORATION                                          [OEM]

By: /s/ Signature Illegible                    By: /s/ Signature Illegible
    ---------------------------                    ----------------------------
Title: CEO                                     Title: VP, Gn Mgr. S
       ------------------------                      ---------------------------
Date: 5/28/98                                  Date: 5/29/98
      -------------------------                      ---------------------------

<PAGE>   15

                                    EXHIBIT A


Brocade Model #             OEM Part #            Description
B1630-STK                   8912998101            Silk Worm II "Privatized" Per Storage Tek Specification
                                                  Base unit, not orderable.
X1003                       8912998201            G Port Card (two ports, no GBICs)
X1015                       8912999201            FL Port Card (two ports, no GBICs)
X1017                       8912998401            Copper GBIC
X1006                       8912998301            Short Wave Optical GBICX10118912998501             Slide
Rack Kit

OEM may order Products from Brocade in a number of pre-defined configurations
which are defined in the pricing table in Exhibit B.

                                    Qty. of           Qty. of
                                    G Ports           FL Ports
                 Base Unit          Cards             Cards
Models           (8912998101)       (8912998201)      (8912999201)      Description
------           ------------       ------------      ------------      -----------
SNFCS41               1                   6                2            Switch, 12 G Ports & 4 FL Ports

SNFCS42               1                   4                4            Switch, 8 G Ports & 8 FL Ports

SNFCS43               1                   2                6            Switch, 4 G Ports & 12 FL Ports

                     Qty. of Copper          Qty. of Short Wave
                     GBICs                   Optical GBICs
Features             (8912998201)            (8912998201)               Description
--------             ------------            ------------               -----------
SNFCS4x-GB01               12                     4                     12 Copper & 4 Short Wave Laser 
                                                                        GBIC Option
SNFCS4x-GB02               8                      8                     8 Copper & 8 Short Wave Laser 
                                                                        GBIC Option
SNFCS4x-GB03               4                      12                    4 Copper & 12 Short Wave Laser
                                                                        GBIC Option
SNFCS4x-GB05               0                      16                    16 Short Wave Laser GBIC Option

"x" = 1, 2, or 3; Per STK Standards, a Feature is an 11 alpha-numeric character
string, the first seven of which are the Base Model into which the Feature may
be installed. Technically, we have 12 Features defined for the GBIC's.

<PAGE>   16

                              RELIABILITY STANDARDS

Brocade Product            OEM Part #        Description                    [*]
B1630-STK                  8912998101        Silkworm II "Privatized"       [*]
                                             No Port cards                  [*]
                                             No GBICs.                      [*]
X1003                      8912998201        G Port Card, No GBIC.          [*]
X1015                      8912999201        FL Port Card, No GBICs.        [*]
X1017                      8912998401        Copper GBIC.                   [*]
X1006                      8912998301        Short Wave Optical GBIC        [*]

                          * At 40 Degrees C., Sea Level

* 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
                                    EXHIBIT B
                                   PRICE LIST

OEM may order Products from Brocade in a number of pre-defined configurations
which are defined in the following table with each configuration priced

          Description                           STK Model           Brocade                      Price
         --------------                        ----------         Part Number                   -------
SilkWorm II, 12 G Ports, 4 FL Ports              SNFCS41          SK-1630-0001                     [*]
GBICs Set, 12 Cu, 4 SWL                       SNFCS41-GB01        SK-1630-0002                     [*]
GBICs Set, 8 Cu, 8 SWL                        SNFCS41-GB02        SK-1630-0003                     [*]
GBICs Set, 4 Cu, 12 SWL                       SNFCS41-GB03        SK-1630-0004                     [*]
GBICs Set, 0 Cu, 16 SWL                       SNFCS41-GB05        SK-1630-0005                     [*]
SilkWorm II, 8 G Ports, 8 FL Ports               SNFCS42          SK-1630-0006                     [*]
GBICs Set, 12 Cu, 4 SWL                       SNFCS42-GB01        SK-1630-0007                     [*]
GBICs Set, 8 Cu, 8 SWL                        SNFCS42-GB02        SK-1630-0008                     [*]
GBICs Set, 4 Cu, 12 SWL                       SNFCS42-GB03        SK-1630-0009                     [*]
GBICs Set, 0 Cu, 16 SWL                       SNFCS42-GB05        SK-1630-0010                     [*]
SilkWorm II, 4 G Ports, 12 FL Ports              SNFCS43          SK-1630-0011                     [*]
GBICs Set, 12 Cu, 4 SWL                       SNFCS43-GB01        SK-1630-0012                     [*]
GBICs Set, 8 Cu, 8 SWL                        SNFCS43-GB02        SK-1630-0013                     [*]
GBICs Set, 4 Cu, 12 SWL                       SNFCS43-GB03        SK-1630-0014                     [*]
GBICs Set, 0 Cu, 16 SWL                       SNFCS43-GB05        SK-1630-0015                     [*]

* Includes Web Tools Software bundle at no extra charge.

* 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

Field Replaceable Units (FRUs) Pricing:
X1006                 GBIC, short wave length     [*]

X1017                 GBIC, copper                [*]
X1011                 Slide RackMount Kit         [*]

Warranty Advanced Exchange Product Price: [*] plus receipt of return unit
within [*]. Out of Warranty Repair Price:

                      Switch: [*]
                      SFL/G Port Card: [*]
                      GBIC swl: [*]
                      GBIC copper: [*]

No Trouble Found (NTF) Charges: [*]

                      Switch: [*]
                      FL/G Port Card: [*]

* 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>   19

                                    EXHIBIT C

                           END-USER LICENSE AGREEMENT

The form(s) of the End-User License(s) that are applicable will be supplied as
an amendment replacing this Exhibit C.

Both parties will negotiate the language of the End-User License as referenced
in Section 1(b).

<PAGE>   20

                                    EXHIBIT D


The parties hereto agree to negotiate a separate written agreement ("Escrow
Agreement") with Brocade's designated "Escrow Agent" upon written request of
OEM. Such agreement shall provide for OEM to pay all costs, fees and charges of
the Escrow Agent for performing its functions as escrow agent.

Upon fulfillment of the obligations of Section 17(a1) by OEM, and within thirty
(30) days of execution of the Escrow Agreement, Brocade shall promptly deposit
with Escrow Agent, if not previously provided, all such Brocade information that
exists that would be required to support the manufacture, sale, and support of
the Product or Products which OEM specifies.

Nothing herein shall require that Brocade create any additional documentation or
information beyond that which Brocade has already created and normally makes
available to have the Product or Products manufactured for its own resale

Brocade shall also, in a timely manner, keep such information deposited with the
Escrow Agent current by supplying all related Product ECOs, process changes,
specifications, etc., so long as OEM has paid to Brocade the appropriate fees
and maintains with the Escrow Agent a current relationship.

        Fees payable to Brocade for Escrow Services related to Manufacturing

1.      Initial Escrow Deposit Fee (one time, per Product)         [*]

2.      Escrow Account Administration and Maintenance
                  ECO Deposit Fee (per ECO package)                [*]
                  Clerical (one hour minimum)                      [*]
                  Consultation                                     [*]
                  Outside costs                                    [*]

Initial Escrow Deposit Fee(s) and Account Administration and Maintenance fees
shall be invoiced and paid in advance, in minimum increments of [*].

Brocade may exercise reasonable practices to group or accumulate ECOs and/or
related information for deposit with the Escrow Agent so as to minimize costs
for both Brocade and OEM.

* 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.