<PAGE>   1

                                        

                             CONFIDENTIAL TREATMENT



                   THE FOLLOWING IS A REDACTED VERSION OF THE
                     OEM AGREEMENT DATED AS OF JUNE 7, 1996
                 BY AND BETWEEN STORAGE TECHNOLOGY CORPORATION
                AND INTERNATIONAL BUSINESS MACHINES CORPORATION

                 THIS MATERIAL IS BEING SUBMITTED IN CONNECTION
                   WITH A REQUEST FOR CONFIDENTIAL TREATMENT
                          PURSUANT TO RULE 24b-2 UNDER
                    THE SECURITIES AND EXCHANGE ACT OF 1934


<PAGE>   2

                                 OEM AGREEMENT

                                    BETWEEN

                        INTERNATIONAL BUSINESS MACHINES
                                  CORPORATION

                                      AND

                         STORAGE TECHNOLOGY CORPORATION

                                  JUNE 7, 1996
<PAGE>   3

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                    <C>
BACKGROUND  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.    DEFINITIONS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.    SCOPE OF AGREEMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3.    TERM OF AGREEMENT   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4.    COMPONENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.    AGREEMENT ADMINISTRATOR   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6.    PURCHASE COMMITMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
      6.1     1996-1998  **   Volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
      6.2     1999  **  Volumes/Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
      6.3     Qualified Upgrades  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
      6.4     Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
      6.5     Liquidated Damages/  **  Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
      6.6     Other StorageTek Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
      6.7     Exceptions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
      6.8     Additional StorageTek Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

7.    PRICING & PAYMENT TERMS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
      7.5     **  Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
      7.6     Recovery Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
      7.7     FRU Prices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
      7.8     Lowest Cost Sourcing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
      7.9     Taxes/Duties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
      7.10    Payment Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
      7.11    Snapshot Feature  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

8.    IBM SALES TO STORAGETEK   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22

9.    QUALITY   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
      9.1     Manufacturing Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
      9.2     Engineering Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
      9.3     Quality Levels  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
      9.4     Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
      9.5     ISO 9000 Certification and Use of Subcontractors  . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
</TABLE>




-----------------------

**  Confidential portions omitted and filed separately with the Securities and 
    Exchange Commission under an application for confidential treatment.




                                       i
<PAGE>   4
<TABLE>
<S>  <C>                                                                                                               <C>
10.  PRODUCT LEAD TIMES AND FORECAST  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
      10.4    Current Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
      10.5    StorageTek's Capacity/Allocation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

11.   PURCHASE ORDERS, ALTERATIONS & RESCHEDULING   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

12.   CONSIGNMENT   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37

13.   DELIVERY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
      13.1    On-time Delivery  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
      13.2    Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
      13.3    Title/Risk of Loss    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
      13.4    Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41

14.   EQUIPMENT WARRANTY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
      14.10   Licensed Programs, Microcode  and Maintenance Code Warranty . . . . . . . . . . . . . . . . . . . . . .  43

15.   FRUs  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
      15.4    FRU Rework Procedures and Prices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45

16.   FIELD SERVICE &  SUPPORT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
      16.1    Installation Support  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
      16.2    Training  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
      16.3    Service of Equipment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
      16.4    Emergency and Expert Maintenance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
      16.5    Labor Rate Table  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
      16.6    New Product Development Center Support  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
      16.7    Maintenance and Installation Tools  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
      16.8    Maintenance and Technical Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
      16.9        Access  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

17.   MARKETING RIGHTS & SUPPORT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
      17.2    Marketing Support Organization  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51
      17.3    Training  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
      17.4    Additional Initial Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
      17.5    Ongoing Training  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
      17.6    Marketing Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  52
      17.7    Marketing Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53
      17.8    Systems Engineering Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53

18.   REPRESENTATIONS AND WARRANTIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54
</TABLE>



-----------------------



                                       ii
<PAGE>   5
<TABLE>
<S>   <C>                                                                                                              <C>
19.   TRADEMARK & ADVERTISING   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
      19.1    Trademark and Design Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
      19.2    Advertising/Disclosure  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55

20.   CONFIDENTIALITY   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

21.   ASSIGNMENT & CHANGE OF CONTROL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

22.   DISPUTE RESOLUTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  57
      22.1    Escalation Process  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  57
      22.2    Mediation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58

23.   TERMINATION/REMEDIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58
      23.1    Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58
      23.2    Termination by Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58
      23.3    Termination for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59
      23.4    Material Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61
      23.5    **  License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62
      23.6    Manufacturing Make or Have Made Rights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62
      23.7    Termination for Convenience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  63
      23.8    Termination for Burdensome Condition  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64
      23.9    Wind Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  66
      23.10   ** After Termination  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

24.   INDEMNIFICATION RIGHTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67
      24.1    Intellectual Property Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67
      24.2    General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68
      24.3    Obligations of IBM  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68

25.   GOVERNING LAW   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69
      25.1    New York Law  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69
      25.2    Limitation of Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69
      25.3    Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69

26.   GENERAL   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70
      26.1    Compliance with Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70
      26.2    Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70
      26.3    Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70
      26.4    Counterparts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  71
      26.5    Headings and Attachments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72
      26.6    Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72
      26.7    Waiver  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72
</TABLE>



-----------------------

**  Confidential portions omitted and filed separately with the Securities and 
    Exchange Commission under an application for confidential treatment.



                                      iii
<PAGE>   6
<TABLE>
      <S>     <C>                                                                                                      <C>
      26.8    Severability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72
      26.9    Weekends and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72
      26.10   Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72
      26.11   Survival  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  73
      26.12   Order of Precedence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  73
</TABLE>



                                       iv
<PAGE>   7
                       EXHIBITS, ATTACHMENTS, APPENDICES


<TABLE>
<S>                           <C>
Exhibit 1     -  Prices
         Attachment 1     -   Product Prices
         Attachment 2     -   Volume Recovery Tables
                 Appendix A   -   1996  **  Payment Table
                 Appendix B   -   1997  **  Payment Table
                 Appendix C   -   1998  **  Payment Table
                 Appendix D   -   1999  **  Payment Table
         Attachment 3     -   Upgrade Pricing

Exhibit 2    -   Specifications
         Attachment 1     -   Manufacturing Test Specifications
         Attachment 2     -   Product Specifications

Exhibit 3    -   IBM Developer Agreement Between IBM and StorageTek:  Base Agreement
         Attachment 1     -   Statement of Work
                 Appendix A   -   Functional, Technical and Quality Specifications
                          Schedule 1  - Iceberg Items
                          Schedule 2  - Kodiak Items
                          Schedule 3  - IXFP and IXOF Items
                          Schedule 4  - Iceberg  Performance Commitments for 7/96
                          Schedule 5  - Iceberg  Performance Commitments for 6/97
                          Schedule 6  - Kodiak  Performance Commitments for 10/96
                          Schedule 7  - Kodiak  Performance Commitments for 10/1/97
                          Schedule 8  - Capacity Ratio Specification
                 Appendix B   -   Completion and Acceptance Criteria
                          Schedule 1  - Monterey System Test
                          Schedule 2  - Current Volume Assumptions
                 Appendix C   -   [Intentionally Left Blank]
                 Appendix D   -   Certificate of Originality
                 Appendix E   -   IBM Source Code Custody Agreement
                 Appendix F   -   Performance Assessment Workload (PAWS)
                 Appendix G   -   Product Development Plan
         Attachment 2     -   Description of Licensed Works
                 Appendix A   -   IBM LIC Terms
                 Appendix B   -   StorageTek LIC Terms

Exhibit 4    -   Consignment Agreement

Exhibit 5    -   FRU Prices/Lead Times

Exhibit 6    -   Data Items

Exhibit 7    -   List of Countries for IP Indemnity

Exhibit 8    -   Examples of Calculations of IBM Volume Credit Due to RAS Criteria

</TABLE>


-----------------------

**  Confidential portions omitted and filed separately with the Securities and 
    Exchange Commission under an application for confidential treatment.



                                     v
<PAGE>   8


                                 OEM AGREEMENT


This agreement is made and entered into as of June 7, 1996, by and between
International Business Machines Corporation, having an office for the
transaction of business at 5600 Cottle Road, San Jose, California 95193
(hereinafter called "IBM" or "Monterey"), and Storage Technology Corporation,
having an office for the transaction of business at 2270 South 88th Street,
Louisville, Colorado 80028 (hereinafter called "StorageTek," "STK" or "Oahu").
StorageTek and IBM may be individually referred to herein as a "Party" and
collectively as the "Parties."

BACKGROUND

StorageTek manufactures and sells, among others, certain Equipment as more
fully described below. IBM  wishes to purchase such Equipment from StorageTek
on an Original Equipment Manufacturer (OEM) basis at large volume prices in
order to resell or lease such Equipment to its customers throughout the world,
both directly and indirectly through its distributors, Subsidiaries, and other
channels.  In order to secure access to IBM's distribution channels, to provide
StorageTek with the opportunity to reach more customers, to provide more
product choices for customers and also due to IBM's willingness to invest a
substantial amount in product research and development and in product
engineering, StorageTek is willing to sell such Equipment to IBM at such prices
if IBM will purchase a substantial amount of the Products and Upgrades,
advertise and market the Products and Upgrades, provide maintenance and repair
service for the Equipment sold or leased by it, maintain an inventory of spare
parts and take certain other related actions.

The provisions of this section are intended to generally explain the reasons
that StorageTek and IBM have entered into this Agreement, but do not constitute
a portion of the contractual obligations, terms or conditions agreed to by the
Parties, which are set forth in the following sections of this Agreement.


                                WITNESSETH THAT:

In  consideration of the mutual premises and covenants herein contained, the
Parties hereto agree as follows:

1.       DEFINITIONS

         1.1              "Agreement" shall mean this OEM Agreement, its
                          Exhibits, their Attachments, their Appendices and
                          their Schedules.

         1.2              "Agreement Administrator" shall have the meaning set
                          forth in Section 5.

         1.3              "Annual Volumes" shall have the meaning set forth in
                          Section 6.1.
<PAGE>   9
         1.4              "APAR" shall mean a completed form entitled
                          "Authorized Program Analysis Report," that is used by
                          IBM to report suspected Code or documentation errors
                          in a Licensed Program (including updates or
                          enhancements thereto) and to request their
                          investigation and correction.

         1.5              "Audit Rights" (Section 7.5c) shall mean a Party's
                          right to have Price Waterhouse, Arthur Andersen or
                          Ernst & Young, or their lawful successors, audit the
                          other Party's books and records on reasonable prior
                          notice for the purpose of making a factual
                          determination of whether a specified event has
                          occurred.  The Parties shall request the firms in the
                          order set forth above, and shall only request the
                          second or third listed firm if the earlier listed
                          firms decline to serve.  In carrying out such audit
                          responsibilities, said accounting firm shall use
                          generally accepted accounting principles (hereafter
                          "GAAP"), as consistently applied by the audited
                          party.  The auditor's working papers shall not be
                          made available to the Party requesting the audit.

         1.6              "Base Iceberg Package" shall have the meaning set
                          forth in the IDA.

         1.7              "Burdensome Condition" (Section 23.8) shall mean:  **
           .

         1.8              "CHANGE OF CONTROL" (SECTION 21) SHALL MEAN THE
                          ACQUISITION BY AN ENTITY OF MORE THAN (I)  ** in the
                          case of a Change of Control for the purpose of
                          Section  **  hereunder, or (ii) **  in the case of a
                          Change of Control for the purpose of Section **
                          hereunder, of the  ** , or any consolidation, merger
                          or other reorganization  **  is not the continuing or
                          surviving corporation or pursuant to which shares  **
                          would be converted into cash, securities or other
                          property.

         1.9              "Commit Date" shall have the meaning set forth in
                          Section 13.1i.

         1.10             "Contract Coordinators" (Section 5) shall mean those
                          individuals described in Section 11.1 of the
                          Statement of Work (Attachment 1 to Exhibit 3).

         1.11             "Cost Exclusions" (Section 9.3f) shall mean those
                          parts costs that are incurred by IBM for (i) FRUs
                          returned for warranty credit, (ii)  FRU removals
                          which are not in accordance with FRU removal
                          procedure to the extent that such removals exceed
                          StorageTek's actual experience during the first six
                          (6) months of 1996, (iii) defective IBM Drives, and
                          (iv) FRUs replaced due to a confirmed IBM Drive or
                          any other IBM-supplied component failure (without a
                          defect in the associated StorageTek FRU package).

         1.12             "Count Key Data Systems" (Section 6.6a) shall mean
                          storage subsystems or solutions which present a count
                          key data or extended count key data image to the
                          host.





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         1.13             "Day(s),"  "month(s)," "quarter(s)" and "year(s)"
                          shall mean calendar days, months, quarters or years,
                          unless otherwise specified.

         1.14             "Delivery," "Delivered," "Deliver" (Section 2.1)  or
                          other forms of the term shall mean the physical
                          transfer of Equipment by StorageTek to an
                          IBM-specified common carrier, freight forwarder,  or
                          IBM's agent at StorageTek's plant of manufacture.

         1.15             "Devices" (Section 6.2) shall mean products which
                          would be ** .

         1.16             "Disclosing Party" shall have the meaning set forth
                          in Section 20.

         1.17             "Drives" shall have the meaning set forth in Section
                          12.1.

         1.18             "Effective Date" shall have the meaning set forth in
                          Section 3.

         1.19             "Emergency Engineering Change" shall have the meaning
                          set forth in Section 9.2b.

         1.20             "Equipment" (Section 2) shall mean Products, Upgrades
                          and FRUs.

         1.21             "Error Free Installation" (Section 9.3b) shall mean
                          installations of Products and Upgrades Delivered that
                          both (i) Plug and Play; and (ii) meet the following
                          criteria:  (a) arrives configured according to IBM's
                          written instructions; (b) has all of the correct
                          documentation, cables and accessories included; and
                          (c) is Delivered in the correct packaging and with
                          the shipping documents.  Such criteria shall
                          specifically not include any failures caused by IBM
                          or the customer, or for which IBM or the customer is
                          responsible, including without limitation, I/O
                          control program generations, shipping damage, failure
                          (for any reason) of Drives or other IBM-supplied
                          components.

         1.22             "Estimated Volumes" shall have the meaning set forth
                          in Section 7.6a.

         1.23             "FAST" shall mean Iceberg, as described in the
                          Specifications.

         1.24             "FASTER" shall mean Kodiak, as described in the
                          Specifications.

         1.25             "FRU" (Section 6.2) shall mean any part, assembly or
                          subassembly of Products, Devices or Upgrades supplied
                          by StorageTek that are designed to be replaceable in
                          the field.

         1.26             "Gigabyte" or "GB" shall mean one billion bytes of
                          storage.






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         1.27             "IBM Customer Engineering" shall have the meaning set
                          forth in Section 16.2.

         1.28             "IBM Total" shall have the meaning set forth in
                          Section 7.6c.

         1.29             "IDA" (Section 2.2) shall refer to the IBM Developer
                          Agreement, which is attached hereto as Exhibit 3.

         1.30             "IDC Methodology" shall have the meaning set forth in
                          Section 7.6b.

         1.31             "Impact Error" (Section 9.3a) shall mean an incident,
                          as reasonably determined by IBM, that either results
                          in: (1) the loss of data, or (2) the loss of access
                          to data resulting in an application interrupt (e.g.,
                          an abnormal program ending or "abend" or inability to
                          bring up an application) or system interrupt (e.g., a
                          system outage or requirement to initiate an initial
                          program load command in order to resolve or clear an
                          error condition).  Any Impact Error due to improper
                          use of the Equipment by the customer, or an IBM agent
                          or employee will be excluded.

         1.32             "Invention" shall mean any idea, design, concept,
                          process, technique, invention, discovery or
                          improvement, whether or not patentable, either
                          conceived or reduced to practice solely by one or
                          more employees of one of the Parties or its
                          Subsidiaries (Inventing Party) or jointly by one or
                          more employees of  IBM or its Subsidiaries and one or
                          more employees of StorageTek or its Subsidiaries
                          (Joint Invention) in the performance, and during the
                          term, of this Agreement.

         1.33             "Level 1" support are those activities that assist
                          the user in resolving "how to" and operational-type
                          questions, as well as technical questions on
                          installation procedures.

         1.34             "Level 2" support are those activities that require
                          additional research and analysis of a user problem.
                          The Problem Management System database is checked to
                          locate a duplicate of the problem being reported and
                          the previous solution applied to that problem.

         1.35             "Level 3" support are those activities that require
                          duplication of the user problem, analysis of APAR or
                          PMR records and distribution of a fix to resolve the
                          user problem.

         1.36             "Licensed Programs" shall mean IXFP, IXOF and the
                          Snapshot Feature (as defined in Section 1.13 of the
                          DLW).

         1.37             "Liquidated Damages" shall mean those damages
                          described in Section 6.5.

         1.38             "Machine Month" or "MM" (Section 9.3a) shall mean a
                          measurement, established at the end of such calendar
                          month, of the number of units of Product installed
                          and operational during a month at an end user's
                          location, prorated on a daily basis (e.g., the sum of
                          the total number of machine days [i.e., number of
                          machines installed and




                                      4
<PAGE>   12
                          operational at an end user's location on a particular
                          day] in a calendar month, divided by the number of
                          days in that month).

         1.39             "Maintenance Code" shall be as defined in the DLW.

         1.40             "Major Enhancements" shall be as defined in the IDA.

         1.41             "Mandatory Engineering Changes" shall have the
                          meaning set forth in Section 9.2.

         1.42             "Maximum Percentage" shall have the meaning set forth
                          in Section 10.2.
      
         1.43             "Megabyte" or "MB" shall mean one million bytes of
                          storage.

         1.44             "Microcode" shall have the meaning set forth in the
                          Description of Licensed Works.

         1.45             "Minimum Percentage" shall have the meaning set forth
                          in Section 10.2.

         1.46             "Minimum Volumes" shall have the meaning set forth in
                          Section 6.5.

         1.47             "  **  Price" shall have the meaning set forth in
                          Section 7.5.

         1.48             "New FRU Cost" (Section 7.7a) shall mean StorageTek's
                          price for FRUs, as specified in Section 7.7a.
                          StorageTek will provide IBM a schedule setting forth
                          this cost for each FRU (the current version set forth
                          in Exhibit 5 to this Agreement, FRU Prices and Lead
                          Times) which list will be adjusted semiannually (in
                          January and July).

         1.49             "New Product Development Center Support" shall have
                          the meaning set forth in Section 16.6.

         1.50             "Non-RMM Device" shall have the meaning set forth in
                          Section 1.11 of the DLW.

         1.51             "Notification Date" shall have the meaning set forth
                          in Section 6.2a.

         1.52             "Object Code" shall have the meaning set forth in the
                          SOW.

         1.53             "Plug and Play" means that a unit of Product or
                          Upgrade, when installed following StorageTek's
                          recommended installation procedures, operates without
                          experiencing any functional failures during
                          installation and passes all installation verification
                          tests, that internal diagnostic routines execute
                          successfully and generally that each such unit of
                          Product or Upgrade is observed to operate properly
                          and in accordance with





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                          the Specifications (as the same may be changed in any
                          applicable Product Development Plan) through the
                          installation of such unit.  A functional failure is
                          defined as any repair/replacement/adjustment
                          corrective action that is required to install or make
                          the subsystem functional that is not specified as
                          part of the installation instructions.

         1.54             "PMR" shall mean a problem management report that is
                          used by IBM to report machine failures.

         1.55             "Product(s)" (Section 6.1) shall mean the products
                          purchased from StorageTek by IBM and consist of the
                          StorageTek-manufactured Iceberg, Kodiak and Arctic
                          Fox high performance storage subsystems, including
                          any Deliverables, Enhancements and Maintenance
                          Modifications hereafter made pursuant to the IDA, and
                          controllers, A-boxes, B-boxes, Microcode and Licensed
                          Works, and which are further described in Exhibit 2,
                          Specifications, and Appendices A and B to Attachment
                          1 of Exhibit 3. Products also include related
                          documentation and other supporting materials.

         1.56             "Product Engineering Services" shall mean the support
                          and services as described in Section 3.7 of the SOW.

         1.57             "Qualified Upgrades" shall have the meaning set forth
                          in Section 6.3.

         1.58             "Quarterly Cost" (Section 6.2b(1) shall mean the sum
                          of  **  plus  ** , and for  **  for the **  quarter,
                          plus the  **  ; provided, however, that  **  plus  **
                          and the  **  plus  ** .

         1.59             "Quarterly Volumes" shall have the meaning set forth
                          in Section 6.2.

         1.60             "QUICK" shall mean Arctic Fox.

         1.61             "RAS criteria" shall have the meaning set forth in
                          Section 9.3a.

         1.62             "Receiving Party" shall have the meaning set forth in
                          Section 20.

         1.63             "Recovery Payments" shall have the meaning set forth
                          in Section 7.6.

         1.64             "Remainder Percentage" shall have the meaning set
                          forth in Section 10.2.

         1.65             "Service Call" (Section 9.3a) shall mean any service
                          call due to a failure condition resulting from either
                          a subsystem hardware or Microcode error (including
                          the Microcode portion of Snapshot Feature) (e.g., 01,
                          02 and 04 service codes).





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         1.66             "Service Call Rate" (Section 9.3a) shall mean a rate
                          which is calculated as follows:

                           number of service            180 GB for Iceberg or
                           calls during month           360 GB for Kodiak
                                                      x
                          ---------------------------   -----------------------

                             number of                      average capacity
                           Machine Months                  in GB per machine

         1.67          "Severity Level" shall mean a designation (i.e.,
                       Severity 1, Severity 2, Severity 3 and Severity 4)
                       assigned to errors that is intended to indicate the
                       seriousness of the error based upon the impact that the
                       error has on the user's operation.

         1.68          "Severity 1" is a "critical problem"; the product is
                       unusable or an error severely impacts a customer's
                       operation.  Severity 1 requires maximum effort to
                       resolve a critical problem until an emergency fix is
                       developed, implemented and made generally available to
                       IBM's customers who experience such problem.

         1.69          "Severity 2" is a "major problem"; important function is
                       not available resulting in operations being severely
                       restricted.

         1.70          "Severity 3" is a "minor problem"; inability to use a
                       function occurs, but it does not seriously affect the
                       user.

         1.71          "Severity 4" is a "minor problem" that is not
                       significant to the user's operation; the user may be
                       able to circumvent the problem.

         1.72          "Source Code" shall have the meaning as set forth in the
                       SOW.

         1.73          "Specifications" (Section 2.1) shall mean the
                       descriptions contained in Appendices A and B to
                       Attachment 1 of Exhibit 3 and Exhibit 2, Specifications.

         1.74          "Standard Parts Cost" (Section 9.3f) shall mean the
                       following with respect to the following specific periods
                       of this Agreement:

                       a.     First twelve months of the Agreement:  **  of the
                              New FRU Cost plus  **  of the Used FRU Cost for
                              each FRU, plus actual freight; and

                       b.     Thereafter:  **  of the New FRU Cost plus  **
                              of the Used FRU Cost for each FRU, plus actual
                              freight.





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         1.75          "StorageTek Installed Base" shall mean **  prior to the
                       Effective Date and  **  distributed by StorageTek
                       pursuant to the terms of Section 6.7 and 6.8, below.

         1.76          "Subsidiary"  (Section 6.6) shall mean a corporation,
                       company, limited liability company or other entity:

                       a.     more than fifty percent (50%) of whose
                              outstanding shares or securities (representing
                              the right to vote for the election of directors
                              or other managing authority) are, now or
                              hereafter, owned or controlled, directly or
                              indirectly, by a party hereto; or

                       b.     which does not have outstanding shares or
                              securities, as may be the case in a partnership,
                              joint venture, or unincorporated association, but
                              more than fifty percent (50%) of whose ownership
                              interest representing the right to make the
                              decisions for such corporation, company or other
                              entity is, now or hereafter, owned or controlled,
                              directly or indirectly, by a party hereto;

                       but such corporation, company or other entity shall be
                       deemed to be a Subsidiary only so long as such ownership
                       or control exists.

         1.77          **

         1.78          "Terabyte" or "TB" (Section 6.1) shall mean one trillion
                       bytes of storage which is accessible to the customer.
                       For calculating storage capacities of purchases of  **.


         1.79          "Upgrade(s)" (Section 6.2b) shall mean additional
                       features or functions, including but not limited to
                       Major Enhancements, which improve performance or
                       increase capacity of previously sold or leased Products
                       or Devices.


         1.80          "Used FRU Cost" (Section 7.7a) shall mean the price of
                       rework for FRUs as determined by Section 15.4.  This
                       cost as of the execution of this Agreement is set forth
                       in Exhibit 5 to this Agreement, FRU Prices and Lead
                       Times, which will be adjusted semiannually (in January
                       and July).


         1.81          Capitalized terms not otherwise defined in the OEM
                       Agreement shall have the definitions set forth elsewhere
                       in the Agreement.





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2.       SCOPE OF AGREEMENT

         2.1     StorageTek agrees to develop IBM requested enhancements to the
                 Equipment, to provide continuing engineering and marketing and
                 service support for the Equipment, and to manufacture, test,
                 sell and Deliver Equipment to IBM and desires that IBM supply
                 Drives for use in such Equipment all in accordance with the
                 Specifications, procedures and conditions contained in this
                 Agreement.

         2.2     IBM (i) agrees to fund the continuing engineering on, and the
                 future development of, specific enhancements to the Equipment
                 as set forth in the IDA, (ii) intends to add value to such
                 Equipment by consigning IBM Drives to StorageTek for inclusion
                 in the Equipment, and (iii) has the right to market and sell
                 Equipment purchased from StorageTek, all in accordance with
                 the terms of this Agreement.

         2.3     Changes to Specifications, procedures and conditions contained
                 in the Agreement, its Exhibits, their Attachments and their
                 Schedules may be made from time to time upon mutual written
                 agreement, specifically identifying this Agreement and stating
                 an intent to make such changes.

3.       TERM OF AGREEMENT

         Unless earlier terminated, the term of this Agreement shall be for a
         period from the date first set forth above (hereinafter "Effective
         Date"), through December 31, 1999.

4.       COMPONENTS

         Because the Equipment purchased by IBM from StorageTek is likely to be
         associated with the IBM brand, IBM wishes to be assured that such
         Equipment, when sold to its customers, will have the quality that its
         customers expect from items so branded.  Accordingly, IBM believes
         that, to the extent that StorageTek can utilize components in such
         Equipment that are manufactured by or for IBM under its high quality
         standards, it would be desirable for StorageTek to obtain such
         components from IBM for use in manufacturing the Equipment.  On
         receipt of IBM's written request, StorageTek agrees  that if such   **
         , it will  **  .  StorageTek agrees to  **  if IBM  **  ,  and if such
         **  , and such  **  .

5.       AGREEMENT ADMINISTRATOR

         Each Party will identify an Agreement Administrator no later than June
         15, 1996, who shall have overall responsibility for managing this
         Agreement for such Party.  Until such time, the





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         Agreement Administrators are set forth below.  The Agreement
         Administrators may not amend the terms of this Agreement.  In addition
         to other responsibilities as may be agreed, such Administrators or any
         successor named by the Party designating such Administrator, will
         complete as soon as possible after the Effective Date, and will update
         throughout the term of this Agreement their respective entries in
         Exhibit 6, "Data Items." The Administrators shall also be responsible
         for the exchange of data, as provided in this Agreement.

         The Agreement Administrators are:

         For StorageTek:            **

         For IBM:                   **


6.       PURCHASE COMMITMENTS

         6.1     1996-1998  **  VOLUMES

                 IBM intends to purchase a specified volume of Products and
                 Qualified Upgrades during 1996, 1997 and 1998 from StorageTek
                 **  (hereafter " **  Volumes").  The  **  Volumes, based upon
                 the capacity, in Terabytes, of Products and Qualified Upgrades
                 purchased by IBM and credited to IBM pursuant to other
                 provisions of this Agreement,  are  **  Terabytes in 1996,  **
                 Terabytes in 1997, and  **  Terabytes in 1998.  If IBM's
                 purchases and credits do not equal or exceed the  **  Volume,
                 then IBM will make Recovery Payments as set forth in Section
                 7.6, and, in certain circumstances, IBM will be obligated to
                 pay Liquidated Damages as set forth in Section 6.5b or 6.5c.

         6.2     1999  **  VOLUMES/PRICING

                 IBM may continue to purchase Products and Upgrades from
                 StorageTek during 1999 according to the process detailed
                 below:

                 a.    On or before  **  , the Parties will  **  , then IBM
                       must notify StorageTek according to the following
                       schedule  **  :





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                                Notification Date       For Shipment in
                                --------------------------------------- 
                                        [S]                   [C]
                                        **                    **
                                        **                    **
                                        **                    **
                                        **                    **

                 b.    Prices which StorageTek shall charge to IBM for Products
                       in 1999 will be based on price quotes.  Thirty (30) days
                       prior to each Notification Date described in paragraph
                       6.2a, above, StorageTek shall provide a price quote to
                       IBM for Products to be shipped to IBM in the
                       corresponding  **  as indicated above.  Such price shall
                       be the greater of:

                       (1)    **

                       (2)    **

                       IBM's purchase volumes for  **  (hereafter "  **
                       Volumes") shall depend on the price determined as set
                       forth above.

                       If StorageTek provides the cost described in paragraph
                       6.2b(1), above, as its price, IBM's  ** Volumes shall be
                       **  Terabytes of Products and Upgrades.  If StorageTek
                       provides the price described in paragraph 6.2b(2),
                       above, as its price, IBM's  **  Volumes shall be  **
                       Terabytes of Products and Upgrades .

                 c.    Prices provided to IBM by StorageTek pursuant to
                       paragraph 6.2b, above, shall be based on StorageTek's
                       **  .

                 d.    Notwithstanding the above, if IBM fails to notify
                       StorageTek prior to  **  of its desire to purchase
                       Products for  **  1999, and if, on or before  **  IBM
                       decides that it wishes to continue to purchase Products
                       **  1999, then,  **  1999 only, IBM may elect to
                       purchase such Products at the price quoted pursuant to
                       paragraph 6.2b, above  **  , by providing a
                       noncancelable purchase order for such units of Products
                       as IBM may require.

                 e.    If IBM does not attain its  **  Volumes for any quarter,
                       then IBM shall pay a  **  Volume Recovery Payment
                       computed in accordance with Exhibit 1, Attachment 2,
                       Appendix D.  IBM's payment of these Recovery Payments
                       shall be the sole and exclusive remedy to StorageTek for
                       IBM's failure to purchase the Quarterly Volumes pursuant
                       to this Agreement.





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                 f.    If IBM does not attain its  **  Volumes for  **  , then
                       StorageTek may use IBM Materials  **  to sell or
                       distribute Devices and Major Enhancements therefor,
                       subject, however, to the applicable provisions of the
                       Description of Licensed Works Transaction Document.

         6.3     QUALIFIED UPGRADES

                 **  , if the total of IBM's purchases and credits is more than
                 **  , then the capacity of any and all Upgrades purchased
                 during such year as measured in Terabytes shall be credited
                 toward IBM's attainment of its  **  Volumes in such year.  If
                 the total of IBM's purchases and credits is  **  Terabytes or
                 less  **  then IBM may credit a maximum of  **  Terabytes of
                 Upgrade purchases  **  in determining attainment of its   **
                 Volumes.   Such  Upgrades  shall  be  hereafter  referred  to
                 as  "Qualified Upgrades."  Upgrades  **  will count toward
                 achievement of the  **  Volumes to the extent that the
                 capacity of Upgrades purchased and credited does not exceed
                 **  of the total capacity purchased and credited.

         6.4     CREDITS

                 IBM's  **  Volumes are subject to credits based upon
                 StorageTek's failure to meet agreed-to specifications relating
                 to quality, availability, supply, delivery, technical
                 milestones and other such items to the extent that such
                 credits are provided for elsewhere in this Agreement.  As
                 applied herein, credits shall be additive to any actual
                 purchase of Equipment by IBM.

         6.5     LIQUIDATED DAMAGES/  **  PAYMENTS

                 IBM intends, through a combination of purchases of Equipment
                 from StorageTek and credits to volumes as provided elsewhere
                 in this Agreement, to achieve a minimum of  **  Terabytes
                 ("Minimum Volumes") of its **  Volumes in  **  .

                 a.    If,  **  , IBM has not purchased its Minimum Volumes,
                       then, except as otherwise provided in Sections 6.6a,
                       6.6b and 21, StorageTek may elect to terminate this
                       Agreement and receive from IBM **  pursuant to Sections
                       6.5b or 6.5c, below.  StorageTek will provide IBM with
                       notice of such failure by  **  in which a shortfall
                       occurs.  IBM shall have the option to avoid such
                       termination **  by  **  , respectively; provided that
                       IBM has received at least twenty (20) days' prior
                       written notice of such shortfall.  Such  **  .  If IBM
                       **  , subject to Section 23.9, StorageTek may terminate
                       this Agreement effective upon notice, which must be
                       provided no later than  **  of such year.





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                 b.    If IBM's total volume of purchases **  is less than its
                       Minimum Volumes, and StorageTek elects to terminate this
                       Agreement  **  , but no later than  **  pursuant to
                       Section 6.5a above, then IBM will pay to StorageTek:

                       (1)    ** in the amount of  **  ; plus

                       (2)    The net sum of any  **  as determined in
                              accordance with Section 7.6d, provided, however,
                              that such  **  shall not exceed the sum of  **  ;
                              plus

                       (3)    Any unpaid  **  , provided, however, that no
                              additional  **  shall be due  **  , and, provided
                              further, that  **  shall not exceed the sum of
                              **  .

                 c.    If IBM's total volume of purchases for  **  is less than
                       its Minimum Volumes, and StorageTek elects to terminate
                       this Agreement  **  , but no later than  **  pursuant to
                       Section 6.5a above, then IBM will pay to StorageTek:

                       (1)    ** in the amount of  **  ; plus

                       (2)    The net sum of any  **  as determined in
                              accordance with Section 7.6d; provided, however,
                              that such  **  shall not exceed the sum of  **  .

                 d.    If IBM terminates this Agreement for convenience  **  ,
                       then, except as otherwise provided in Sections 6.6a,
                       6.6b and 21, IBM will pay  **  as described in Section
                       7.6, below, to the extent not already paid, that would
                       be due  **  , plus the sum of  **  .

                 e.    If IBM terminates this Agreement for convenience between
                       **  and  **  , then, except as otherwise provided in
                       Sections 6.6a, 6.6b and 21, IBM will pay to StorageTek:

                       (1)    **  in the amount of  **  for each  **  that has
                              elapsed before the  **  ; plus

                       (2)    The net sum of any unpaid  **  through the end of
                              the  **  ; provided, however, that no additional
                              **  shall be due for any **.

                 f.    The provisions of Sections ** to StorageTek for IBM's
                       **  in connection with this Agreement or arising from
                       **  termination of this Agreement pursuant to Section
                       **  in the event of IBM's termination of this Agreement
                       **  .

                 g.    The Parties acknowledge and agree that the foregoing  **
                       amount is not a penalty but represents a good faith
                       estimate by the Parties of the amount of





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                       damages incurred by StorageTek upon the occurrence of
                       the events set forth in Sections 6.5b through 6.5e.  The
                       Parties have entered into this provision after each
                       Party has had the opportunity to consult counsel, and
                       pursuant to a mutual intent to avoid the expenses of any
                       dispute resolution process.

         6.6     OTHER STORAGETEK DISTRIBUTION

                 a.    StorageTek and its Subsidiaries may, at their sole
                       discretion, sell, lease or otherwise distribute Devices
                       and products competitive with Equipment to third
                       parties, provided, however, that neither StorageTek nor
                       its Subsidiaries are  ** , and, provided further, that,
                       except for situations as described in Section 6.7,
                       below, if StorageTek chooses to use, sell, lease or
                       otherwise distribute, either directly or indirectly:

                       (1)    any  **  , or

                       (2)    any product that  **  and the  **  form of all or
                              such portion includes  **  of the  ** of any  **
                              that either constitutes (a)  ** , or (b)  ** ;

                       then, unless the sale is excepted pursuant to Section
                       6.8, below, IBM shall be  **  its obligations and
                       liabilities related to  **  , as well as any obligation
                       to pay any  **  in the year in which the sale occurred
                       and thereafter.  StorageTek shall also have no right to
                       terminate this Agreement for failure of IBM to meet its
                       **  and shall immediately notify IBM in writing that
                       such use, sale, lease or other distribution has
                       occurred, and shall indicate that IBM  ** the foregoing
                       obligations.  IBM shall also have the right to  **  ,
                       and to  **  to either (a) ** (b) ** and contract for  **
                       from StorageTek on a  **  basis at a  **  rate
                       (provided, in either case, that **.  If IBM  **  , then:
                       (i) IBM shall  **  that it would have received which was
                       based on the  **  being delivered by  **   IBM, if  **
                       , will be deemed  **  and not  **  .  Each Party may
                       also terminate its obligation to  **  specified in
                       Section ** .

                 b.    If StorageTek licenses, transfers, sells or assigns to a
                       third party all or a portion of a Licensed Work and  **
                       form of all or such portion includes  **  that either
                       constitutes (a) ** , or (b)  **  ; then IBM shall be  **
                       its obligations and liabilities related to  **  , as
                       well as any obligation to  **  in the year in which the
                       sale occurred and thereafter.  StorageTek shall also
                       have no right to terminate this Agreement for failure of
                       IBM to meet its  **  and shall immediately notify IBM in
                       writing that such license, transfer, sale or assignment
                       has occurred, and shall indicate that IBM  **  the
                       foregoing





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                       obligations.  IBM shall also have the right to  **  and
                       to  **  to either (a)  **  (b)  **  and contract for  **
                       from StorageTek on a  **  basis at a  **  rate
                       (provided, in either case, that **  .  If IBM  **  ,
                       then:  (i) IBM shall  **  that it would have received
                       which was based on the **  being delivered by StorageTek
                       to IBM by its  **  ; and (ii) such  **  to the extent
                       not delivered to IBM, if  **  , will be deemed  **  and
                       not  **  .  Each Party may also terminate its obligation
                       to  **  specified in Section ** .

                 c.    If IBM learns of facts that indicate that StorageTek is
                       selling, leasing or otherwise distributing the products
                       described in Section 6.6a, above, directly or
                       indirectly, to customers other than IBM,  or has
                       licensed, transferred,  sold or assigned the Licensed
                       Works described in Section 6.6b, above, then upon
                       written notice by IBM to StorageTek:

                       (1)    StorageTek shall investigate the facts and
                              circumstances relating to the incident
                              thoroughly, and share the results, but not the
                              customer-specific details, with IBM.  If both
                              Parties agree that no such sale, lease or other
                              distribution occurred or no such license was
                              granted, then the rights and obligations of the
                              Parties shall not change.  If the Parties are
                              unable to agree on the facts relating to such
                              incident, then the matter will be handled
                              pursuant to the dispute resolution process
                              described in Section 22.

                       (2)    if StorageTek or its Subsidiaries has made a
                              sale, lease or other distribution to third
                              parties, as described in Section 6.6a, above, or
                              has licensed, transferred, sold or assigned the
                              Licensed Works to a third party, as described in
                              Section 6.6b, above, other than IBM, then IBM's
                              obligations shall be modified as set forth in
                              such sections.

         6.7     EXCEPTIONS

                 a.    Sales, leases, or other distribution or use of Devices
                       by StorageTek or its Subsidiaries in the following
                       situations are excepted from the provisions of Section
                       6.6, and will be credited toward calculation of IBM's
                       purchase volume for the purpose of determining whether
                       IBM has achieved its **  Volumes:

                       (1)    Sales, leases or other distribution of  **  .
                              For the purpose of determining the  ** which
                              shall be credited to IBM's  **  Volumes, only the
                              **  will be used.





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                       (2)    Sales of Devices by StorageTek or its
                              Subsidiaries to  **  with whom StorageTek:

                              (a)   prior to the Effective Date, had a  **
                                    such Devices, and such Devices are  **
                                    prior to  **  ; or

                              (b)   between the Effective Date and  **  , had a
                                    **  such Devices and such Devices are **
                                    on or before  **   and  **  on or before
                                    **  , provided, however, that the  ** of
                                    **  after  **  , does  **  ;

                              and further provided that, in the case of (a) or
                              (b), shipments made prior to  **  will not be
                              credited to IBM's  **  Volumes; and

                       (3)    Sales of Devices to  **  existing as of the  **
                              pursuant to orders received within  ** days after
                              **  , provided such Devices are  **  to such
                              distributor(s) on or before  ** ; and further
                              provided that  **  made prior to  **   will not
                              be credited to IBM's  ** Volumes.

                 b.    Uses, sales, leases or other distribution of Equipment
                       or Devices by StorageTek or its Subsidiaries in the
                       following situations are excepted from the provisions of
                       Section 6.6a, and will not be credited as IBM's volumes
                       for the purpose of determining IBM's attainment of its
                       ** Volumes:

                       (1)    Sales or leases by StorageTek or it Subsidiaries
                              of Equipment that is  **  StorageTek or its
                              Subsidiaries  **  ; however, all  **  from
                              StorageTek which are  **  to StorageTek will  **
                              IBM's attainment of its  **  Volumes;

                       (2)    Use of Equipment or Devices internally by
                              StorageTek or its Subsidiaries for development,
                              manufacture, test and demonstration at
                              StorageTek's manufacturing facility or field
                              service offices;

                       (3)    Use of Equipment or Devices internally by
                              StorageTek for StorageTek's or its Subsidiaries'
                              **  , provided that such Equipment or Devices are
                              used by StorageTek or its Subsidiaries solely to
                              **  StorageTek's or its Subsidiaries'  **  ; and
                              sales or distributions of Equipment and Devices
                              by StorageTek or its Subsidiaries to  **  ,
                              provided further that such Equipment or Devices
                              are used solely by  **  and are used solely to
                              **  ; and further provided that the  **  so used
                              by StorageTek and sold to  **  by StorageTek does
                              not exceed ** over the term of this Agreement;





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                       (4)    Sales or leases of used Equipment, Devices or
                              Count Key Data Systems  that StorageTek or its
                              Subsidiaries purchase from IBM or a third party
                              provided that StorageTek or its Subsidiaries  **
                              such  **  Equipment, Devices or Count Key Data
                              Systems in substantially the same  **  ; or  **
                              any such Product  **  that StorageTek has
                              purchased from  **  .

                       (5)    Sales or use of FRUs for maintenance purposes
                              only.  However, nothing in this clause 6.7b(5)
                              shall be interpreted as granting StorageTek an
                              implied license to distribute FRUs that are or
                              contain IBM Materials or other IBM Code not
                              licensed under this Agreement.

                       (6)    Sales or leases of Arctic Fox and Arctic Fox
                              Upgrades, provided that the  **  will  ** to
                              agree by  **  for IBM's purchase of Arctic Fox
                              from StorageTek, at the prices set forth in  **
                              .

                       (7)    Sales of Non-RMM Devices, as defined in Section
                              ** , after  **  ; and

                       (8)    Use of Count Key Data Systems that are not
                              Equipment or Devices by StorageTek or its
                              Subsidiaries.

         6.8     ADDITIONAL STORAGETEK SALES

                 In the event that StorageTek or its Subsidiaries makes sales
                 which are not within the scope of the sales enumerated in
                 Section 6.7, above, IBM shall nevertheless continue its
                 obligations for future  ** and  **  if the total units of
                 Product, Upgrades, Count Key Data Systems and Devices sold by
                 StorageTek and its Subsidiaries, and not included under
                 Section 6.7, above, in any consecutive  **  period, does not
                 exceed  **  units; provided that under no circumstances shall
                 any units of Product, Upgrades, Count Key Data Systems and
                 Devices sold by StorageTek and its Subsidiaries pursuant to
                 this Section 6.8, include **.  IBM will receive credit against
                 the attainment of its  **  Volumes in an amount equal to two
                 times the amount of Terabytes sold pursuant to this Section
                 6.8.  For the purposes of determining the capacity that shall
                 be so credited,  **  will be used.


7.       PRICING & PAYMENT TERMS

         7.1     Prices charged to IBM by StorageTek for Products sold
                 hereunder in 1996, 1997 and 1998 shall be as set forth in
                 Attachment 1 to Exhibit 1 to this Agreement.  These prices
                 include necessary cables, software, packaging, packing and
                 shipping materials and such other items (excluding manuals) as
                 StorageTek currently includes in its





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                 Product shipments.  Manuals normally included with Product
                 shall also be included through September 31, 1996.  Prior to
                 such date the Parties will meet to discuss methods by which
                 StorageTek could assist in preparing or having such manuals
                 prepared at IBM's expense.

         7.2     Prices charged to IBM for Upgrades shall be as set forth in
                 Attachment 3 to Exhibit 1 to this Agreement.

         7.3     In the case of Products or Upgrades manufactured by StorageTek
                 in Europe, an additional charge equivalent to  **  will be
                 added by mutual agreement to the prices set forth in
                 Attachments 1 and 3 to Exhibit 1, which charge initially shall
                 be  **  .

         7.4     Prices charged for Products in 1999 shall be as set forth in
                 Section 6.2.

         7.5     **  PRICE

                 Notwithstanding any other provisions in this Agreement, in no
                 event will any price charged by StorageTek to IBM exceed  **
                 Prices, as defined below:

                 a.    The prices,  **  offered by StorageTek to IBM for  **
                       under this Agreement shall be  **  after **  to  **  .

                 b.    If, during the term of this Agreement, StorageTek  **
                       for  **  to IBM hereunder, StorageTek agrees to  **  ,
                       and StorageTek agrees to  **  .

                 c.    In addition to the above, StorageTek  **  IBM  **  for
                       purposes of  **  .  If the  **  determines that IBM  **
                       , then  **  , StorageTek will  **  .  Unless otherwise
                       agreed,  **  will not exceed **  .

         7.6     RECOVERY PAYMENTS

                 a.    If IBM fails to purchase volumes from StorageTek equal
                       to its  **  Volumes for each  **  , IBM will pay to
                       StorageTek a sum referred to herein as a Recovery
                       Payment.  This amount shall be calculated,  **  , on a
                       **  basis by using  **  as represented in the  **
                       Tables attached hereto as  **  , respectively, of  **  .
                       The amount of such Recovery Payments shall be calculated
                       at least  **  and shall be based on  **  made by
                       StorageTek to IBM, plus  **  pursuant to other
                       provisions of this Agreement, which  **  shall be  **
                       to IBM by StorageTek (hereinafter "  **  Volumes").  If
                       the parties cannot agree on such  **  Volumes, then they
                       shall resolve the dispute pursuant to Section 22.  No
                       later than the last day of such quarter, IBM will pay to
                       StorageTek or StorageTek





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                                       18
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                       will pay to IBM the estimated net sum of any Recovery
                       Payment due to the other Party.   For  ** such  **
                       Recovery Payment shall not be reconciled to actual
                       volumes of shipments and credits.  For the  **  such  **
                       Recovery Payment shall be  **  and credits for such  **
                       by  **  of the following year.  Such Recovery Payment
                       shall not exceed the sum of  **  in any year.

                 b.    Definition of IBM Total. As used in Appendices B and C
                       of Attachment 2 to Exhibit 1  hereto, "IBM Total"  shall
                       mean  (1)  for the   **  ,  the   **   IBM volumes of
                       all  **  sold by IBM **  , expressed in Terabytes, which
                       are  **  for each  **  by  **  using the  methodology
                       that is consistent with  **  then current outlook report
                       for  **  or, if such data is not available, as otherwise
                       mutually agreed; and (2) for the  **  , subject to
                       StorageTek's Audit Rights, the total of  **  during such
                       year.

                 c.    1996.  The Recovery Payment for 1996 shall be calculated
                       by reference to  **  .  After making such calculation
                       and after  **  the amount, if any,  **  in the  **  ,
                       any positive number resulting shall be  **  StorageTek
                       by IBM as  **  Recovery Payment.  If a negative number
                       results, then StorageTek shall  **  IBM for the  **  of
                       such negative number.

                 d.    1997-1998.   The Recovery Payment for 1997 and 1998
                       shall be calculated by reference to  **  .  After  **
                       such Recovery Payment the  **  amount, if any,  **  with
                       respect to the  **  , any positive number resulting from
                       this calculation shall be  **  StorageTek by IBM.  If a
                       negative number results, then StorageTek shall  **  IBM
                       for the  **  of such negative number.  All such **
                       shall be  **  after receipt of  **  reflecting the  **
                       of shipments or  **  amounts, but no sooner than the  
                       **  .

                 e.    1999.  The Recovery Payments, if any, for 1999 shall be
                       calculated by reference to  **  , as provided for in
                       Section ** , above.

                 f.    Notwithstanding anything to the contrary in this Section
                       7.6, in the event that StorageTek terminates this
                       Agreement based on IBM's failure to purchase its  **
                       Volumes or if IBM terminates this Agreement for
                       convenience, then IBM's liability for  **  shall be  **
                       amounts calculated pursuant to Section **.

         7.7     FRU PRICES

                 Prices charged by StorageTek to IBM for new FRUs will be  **
                 of such FRUs and the multiples set forth in Section 7.7a,
                 below.  For the purpose of this section and Section 15.4, cost
                 shall be determined by using  **  .  The standard cost will be





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                 reviewed ** , and any differences in cost will be adjusted in
                 the following period.  Compliance with this section shall be
                 subject to IBM's Audit Rights.

                 a.    Multiples for New FRUs.

                       (1)    During 1996 the multiple is  **  .

                       (2)    During the remaining term of this Agreement the
                              multiple is  **  .

                       (3)    After the termination of this Agreement the
                              multiple is  **   .

                 b.    FRU Rework.  Prices for FRUs returned by IBM will be
                       determined in accordance with Section 15.4.

         7.8     LOWEST COST SOURCING.

                 The Parties agree that it is in their mutual interest for
                 StorageTek to obtain parts for new production and maintenance
                 purposes at the lowest practicable cost. If IBM identifies a
                 potential alternative source for any part, StorageTek will
                 make a good faith reasonable effort to qualify the
                 alternative.  If such bid is comparable with the quality,
                 terms and conditions and offers a better price compared to the
                 then current source of such parts, and awarding such
                 alternative source a supply contract pursuant to such bid does
                 not adversely impact the terms of StorageTek's purchases of
                 other parts from the then current source, then the lower cost
                 will be used in determining prices to IBM for Equipment
                 whether or not StorageTek actually obtains the part or parts
                 from such alternative source.

         7.9     TAXES/DUTIES

                 The prices for Equipment supplied under this Agreement are
                 exclusive of any customs charges and duties and sales, use,
                 privilege, excise and similar taxes levied by the USA, foreign
                 territories, or any other governmental entity on the Products,
                 their export, import, shipment, purchase or sale.  IBM shall
                 pay and be responsible for the payment of any such taxes
                 (excluding taxes based upon StorageTek's net income) or
                 duties; and, to the extent legally required, StorageTek shall
                 collect any applicable taxes unless IBM establishes its
                 exemption therefrom.  If StorageTek is required to pay any
                 such taxes or duties, IBM will reimburse StorageTek pursuant
                 to StorageTek's invoice.

                 IBM hereby represents to StorageTek that it is purchasing the
                 Products hereunder for the purpose of resale, rent, lease or
                 in-house use, and, if required by applicable law,





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                 IBM will furnish StorageTek with pertinent and valid sales and
                 use tax exemption certificates.

         7.10    PAYMENT TERMS

                 a.    StorageTek will invoice IBM for Equipment on or after
                       the date on which such Equipment is Delivered.  If any
                       unit of Equipment is Delivered and is not suitable to be
                       installed, then the Equipment shall not be considered as
                       Delivered until such time that such Equipment is
                       rendered suitable for installation.  IBM or  its
                       designee  will  exercise  reasonable  efforts to install
                       Equipment  that it receives.  IBM will promptly notify
                       StorageTek when such Equipment is not suitable for
                       installation.

                       Subject to Section 13.1k, payment terms will be the
                       number of days from date of receipt of a correct invoice
                       by IBM as shown in the following table:

                            Invoice Date             Payment Term
                            [S]                            [C]
                                                                        
                          --------------------------------------------
                            1996                           ** days
                            1997 or later                  ** days

                 b.    StorageTek's invoices must state the IBM purchase order
                       number, description of the item(s) being invoiced,
                       quantity shipped, ship date, unit price, total amount
                       due and the remit-to address.  StorageTek will mail or
                       deliver invoices to the address indicated on the
                       purchase order.

                 c.    Payment of an invoice by IBM under IBM purchase order(s)
                       will not be construed as and will not constitute an
                       acceptance of Product failing to conform to
                       specifications or agreed upon quality levels, nor will
                       any payment to StorageTek be construed as or constitute
                       a waiver of any of IBM's legal rights or remedies.

                 d.    StorageTek will invoice, and IBM will pay, in US Dollars
                       to the address listed on StorageTek's invoice.  All
                       payments will be made by wire transfer of immediately
                       available funds.

         7.11    SNAPSHOT FEATURE

                 IBM will license the Snapshot Feature as set forth in the
                 Description of Licensed Works for the license fees set forth
                 in Attachment 3 to Exhibit 1 hereto.





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8.       IBM SALES TO STORAGETEK

         8.1     StorageTek, in its sole discretion, may acquire Equipment from
                 IBM for orders that StorageTek  **  and which are  **  .  The
                 prices for the first  **  units of Products will be  **  for
                 such Products.  The prices for all other units of Products
                 will not exceed  **  for such Products.  The prices for
                 Upgrades will not exceed  **  for such Upgrades.  Such
                 Equipment may be sold by StorageTek  **  .  Sales by IBM to
                 StorageTek will be pursuant to  **  , as  **  (as defined in
                 such  **  with a one (1) day transit period, except that all
                 Equipment supplied pursuant to this section by IBM to
                 StorageTek shall be provided on  **  basis  **  .  Moreover,
                 StorageTek shall not be subject to  **  requirements that are
                 contained in  **  for such units.

         8.2     IBM agrees to sell StorageTek the Upgrades it reasonably
                 requires to meet the ongoing remarketing obligations
                 StorageTek has as of the  **  with respect to  **  .  The
                 prices for Upgrades for  ** which IBM will charge Storagetek
                 shall be commercially reasonable and not exceed  **  of IBM's
                 average selling price per  **  for the  **  as determined by
                 **  , but under no circumstance shall such prices be any less
                 than  **  of the price charged to IBM by StorageTek per MB of
                 Product as set forth in Section 7.  Any such Upgrades, when
                 purchased by IBM from StorageTek, will be counted as IBM's
                 volumes in calculating IBM's attainment of its  **  , and will
                 not be subject to the limitations of Section 6.3, and will be
                 counted in addition to the Qualified Upgrades.


9.       QUALITY

         9.1     MANUFACTURING TESTING

                 Prior to Delivery, StorageTek shall conduct a mutually
                 agreed-upon preshipment manufacturing test at its plant on
                 each unit of Equipment.  Notwithstanding such preshipment
                 manufacturing testing, all Equipment must conform to the
                 Specifications.

                 StorageTek will provide IBM on a quarterly basis with a
                 complete, summarized record of inspection and tests performed
                 on each unit of Equipment during the term of the Agreement.
                 Detailed records of inspection and tests (in manual and
                 electronic form) performed for each unit of Equipment shall
                 also be kept by StorageTek for three (3) years.  Upon IBM's
                 request, StorageTek will provide IBM with access to an
                 electronic copy of the specific test results for each unit of
                 Equipment within two (2) business days after receipt of such
                 request.





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                 IBM's representative may, if it so requests and at its sole
                 expense, witness the preshipment tests carried out by
                 StorageTek, provided such request is made at least three (3)
                 days prior to the scheduled Delivery of the items being
                 tested.  Any such observation by IBM shall be subject to
                 StorageTek's reasonable safety and security rules and shall be
                 conducted to the extent feasible on a noninterference basis.

                 IBM may also conduct its own testing to the extent feasible on
                 a non-interference basis either at StorageTek's plant, its
                 own facilities or IBM's customers' facilities, at IBM's own
                 expense, to confirm that the Equipment meets the
                 Specifications.   Any testing performed at StorageTek's plant
                 shall be subject to StorageTek's reasonable safety and
                 security rules.

         9.2     ENGINEERING CHANGES

                 a.    Mandatory Engineering Changes.  If changes that may
                       affect the form, fit, function, interface, reliability
                       or serviceability of the Equipment (including
                       interchangeability with previously purchased FRUs) are
                       required in order to make the Equipment sold hereunder
                       conform to the Specifications ("Mandatory Engineering
                       Changes"), StorageTek shall first obtain IBM's approval.
                       If it is mutually agreed that the change is to be made,
                       StorageTek shall make the changes at no charge to IBM in
                       all units of Equipment which are not yet delivered to
                       IBM.  If such changes are required to make delivered
                       units of Equipment conform to those Specifications, they
                       shall be supplied in the form of mandatory field change
                       kits at no charge to IBM in accordance with the
                       procedure set forth below.

                       IBM shall supply labor to install, subject to Section
                       9.3h,  all Mandatory Engineering Changes in delivered
                       units of Equipment.

                       Field change kits resulting from Mandatory Engineering
                       Changes described above will be administered as follows:

                       (1)    StorageTek will promptly send an engineering
                              change notice (ECN) to IBM prior to Delivery of
                              the first shipment of Equipment that contains a
                              Mandatory Engineering Change.  IBM shall issue a
                              no-charge purchase order for all mandatory field
                              change kits that IBM desires.  Such kits and any
                              Equipment returned which are covered by the
                              Mandatory ECNs shall be shipped freight prepaid
                              by StorageTek, at no charge to IBM.

                       (2)    StorageTek will ship the mandatory field change
                              kits according to the schedule that is set forth
                              in clause (4), below, and issue a no-charge
                              invoice to IBM for all parts ordered and shipped
                              as a part of the mandatory field change kits.

                       (3)    Subject to the terms of Section 15.3, IBM will
                              use reasonable efforts to see that repairable
                              parts (displaced by field change kits) from
                              Equipment





                                       23
<PAGE>   31
                              are packaged separately from other parts
                              returned.  IBM will send Products to StorageTek,
                              freight prepaid, and Upgrades and FRUs, freight
                              collect.

                       (4)    For each Mandatory Engineering Change the parties
                              will agree upon an appropriate round-robin
                              process for distributing field change kits to the
                              field and securing the return of displaced FRUs
                              for rework by StorageTek.

                 b.    Emergency Engineering Changes.  Notwithstanding Section
                       9.2a, above, StorageTek may issue any engineering change
                       necessary to remedy an Equipment-down situation at a
                       customer of IBM or to make any unit of the Equipment
                       safe (an "Emergency Engineering Change") upon notice to
                       IBM but without any prior evaluation or approval by IBM;
                       provided, however, that StorageTek agrees to follow the
                       procedures as set forth in Section 9.2a in order to
                       implement a permanent solution to resolve the safety or
                       down situation that arose precipitating the need for the
                       engineering change.

                       As to any affected Equipment from time to time in IBM's
                       inventory or control, or already accepted by IBM, IBM
                       shall use reasonable efforts to promptly accomplish the
                       installation of such Emergency Engineering Change.  In
                       the event of installation of Emergency Engineering
                       Changes by IBM hereunder, StorageTek shall implement a
                       corrective action plan, including the provision of
                       information, materials, tools and parts necessary to
                       effect the installation of such Emergency Engineering
                       Changes on the affected Equipment (all without cost to
                       IBM), subject to Section 9.3h.

                 c.    Optional Engineering Changes.  In addition to Mandatory
                       Engineering Changes, it is recognized by the Parties
                       that there may be optional changes requested by either
                       IBM or StorageTek, which are not required to make the
                       units of Equipment conform to the Specifications.  The
                       cost of implementing such changes (including kits and
                       labor) on delivered Equipment shall be divided between
                       the parties as they mutually agree.  StorageTek will
                       deliver field change kits for such changes to IBM, as
                       specified in IBM's purchase order, which purchase order
                       shall be given by IBM to StorageTek within such time
                       period as the Parties shall mutually agree.

                 d.    Procedures Regarding Proposed Engineering Changes.  In
                       connection with any engineering changes proposed
                       pursuant to Section 9.2a, above, StorageTek will forward
                       to IBM, at IBM's request, a minimum of two (2) samples
                       of each such proposed engineering change, as well as the
                       details of any proposed change, to enable IBM to
                       determine whether to approve such change, including:

                       (1)    the effect of the change on the form, fit,
                              function, interface, reliability or
                              serviceability of the Equipment;





                                      24
<PAGE>   32
                       (2)    StorageTek's reference number for the proposed
                              change;

                       (3)    StorageTek's  identification of the item to be
                              changed and whether any items should be returned;

                       (4)    description of and reason for the change with
                              sufficient engineering detail and applicable
                              validation data, as endorsed by StorageTek's
                              quality control process, to enable the proposal
                              to be assessed;

                       (5)    the date and, if available at the time,
                              StorageTek's serial number from which StorageTek
                              proposes to implement the change;

                       (6)    whether retroactive action is proposed and, if
                              so, the details of any necessary field action and
                              the initial availability of FRUs (on Engineering
                              Changes, StorageTek will advise IBM about the
                              effect on (a) outstanding orders for Equipment;
                              (b) units of Equipment which are at the time of
                              such proposed change in for repair or
                              replacement; and (c) the next batch of units of
                              Equipment to be delivered from StorageTek's plant
                              on which the Engineering Change should be
                              implemented);

                       (7)    intended alterations to FRUs, documentation,
                              tools and other relevant material supplied or to
                              be supplied to IBM; and

                       (8)    whether any parts will become obsolete as a
                              result of the change.

                       Except for any Emergency Engineering Changes, StorageTek
                       is required to obtain IBM's prior written approval for
                       each Engineering Change before StorageTek's
                       implementation of the same.

                 e.    Revalidation.  Upon implementation of each engineering
                       change, StorageTek agrees to perform revalidation
                       testing at no charge to IBM to ensure that the Equipment
                       so changed meets the Specifications.

                 f.    Obsolete Upgrades and FRUs.  If StorageTek makes any
                       Mandatory, Emergency or StorageTek-initiated Engineering
                       Change which renders any Upgrades and FRUs obsolete
                       (i.e., unusable), StorageTek shall replace the obsolete
                       Upgrades and FRUs at no charge to IBM in accordance with
                       the procedures set forth in Section 9.2a, above.   No
                       returns are authorized for field change kits that are
                       requested as a result of an optional IBM-initiated
                       engineering change which renders any Upgrade or FRU
                       obsolete.





                                      25
<PAGE>   33
         9.3     QUALITY LEVELS

                       a.     RAS Criteria.  StorageTek shall maintain (i)
                              throughout the term of this Agreement, and (ii)
                              for a period of  **  after the date of last
                              Delivery of each type of Product (provided IBM
                              pays for the Product Engineering Services unless
                              it is not required to do so and StorageTek is
                              still providing Product Engineering Services for
                              its own distribution of Equipment or Devices);
                              the following reliability, availability and
                              service ("RAS") levels for the Products:

                            SERVICE CALL CALCULATION

<TABLE>
<CAPTION>
                                                            Effective
                              RAS Criteria                     Date          Iceberg        Kodiak
                              ------------                  -----------      -------        ------
                              <S>                             <C>            <C>             <C> 
                              Service Call Rate               **             **              **

                              Guardband                                       **                **
</TABLE>

                       For measuring Service Calls, the calculation of a
                       Machine Month is based on the use of a 180 GB and 360 GB
                       machine configuration for Iceberg and Kodiak,
                       respectively.

                                        IMPACT ERROR CALCULATION
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                 IMPACT ERRORS                                               
-------------------------------------------------------------------------------------------------------------
 <S>                       <C>         <C>          <C>          <C>          <C>         <C>          <C>    
                           **          **           **           **           **          **           **
-------------------------------------------------------------------------------------------------------------
 ICEBERG                       **           **          **           **           **           **          **
-------------------------------------------------------------------------------------------------------------
 KODIAK                        **           **          **           **           **           **          **
-------------------------------------------------------------------------------------------------------------
 GUARDBAND                     **           **          **           **           **           **          **
-------------------------------------------------------------------------------------------------------------
</TABLE>


                       Such rates will be calculated based on the total number
                       of Impact Errors that occur during a calendar quarter
                       divided by the total number of Machine Months during
                       said quarter for Iceberg and Kodiak, respectively.





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         and Exchange Commission under an application for confidential
         treatment.            

                                      26
<PAGE>   34
EXAMPLE:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                        OCTOBER               NOVEMBER              DECEMBER              TOTAL     
----------------------------------------------------------------------------------------------------
 <S>                    <C>                   <C>                   <C>                   <C>       
 End of Month           **                    **                    **                    **        
----------------------------------------------------------------------------------------------------
   Install Base                 **                    **                    **                    **
----------------------------------------------------------------------------------------------------
   Impact Errors               **                    **                    **                     **
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
 Failure Rate                                                                                     **
----------------------------------------------------------------------------------------------------
</TABLE>

                       Impact Error measurements for Kodiak will not count
                       toward any criteria until the earlier of: (i) the first
                       quarter in which  **  units of Kodiak have been
                       installed by IBM, or (ii) the second quarter of 1997,
                       provided that at least  **  units have been installed by
                       IBM as of the last day of such quarter.

                       Impact Error measurements for Iceberg will not count
                       toward any criteria until  **  units of Iceberg have
                       been installed by IBM.

                       The RAS measurements shall exclude impacts or failures
                       of Products where a microcode or engineering change is
                       available which, if installed, would have prevented the
                       impact or failure from occurring; provided, however,
                       that such microcode or engineering change was made
                       available by StorageTek for installation pursuant to a
                       nonemergency (i.e., generally distributed) engineering
                       change  at least three (3) months prior to the date of
                       an Impact Error or Service Call.  The RAS measurements
                       will exclude any Impact Errors and Service Calls that
                       arise from  ** concurrent Drive failures in the same
                       array, and any Service Calls and Impact Errors for units
                       of Iceberg and Kodiak installed as part of the ESP, as
                       defined in the SOW.

                       For the first ninety (90) days following the
                       availability of a Major Enhancement, IBM will exercise
                       reasonable efforts to install within 30 days engineering
                       changes that StorageTek designates as "critical."

                       Calculations of the actual Service Call Rate and Impact
                       Error Rate will be made based on U.S.  installations
                       only.

                 b.    Error Free Installation Criteria.  StorageTek shall
                       maintain a  **  Error Free Installation rate for
                       Products and Upgrades (separately calculated) until the
                       date





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         treatment.            

                                      27
<PAGE>   35
                       on which IBM no longer markets Products and Upgrades.
                       These measurements will be calculated separately for
                       Products and Upgrades.  This rate assumes that an
                       average IBM-customer subsystem installation is comprised
                       of an Iceberg subsystem, or a Kodiak control unit and
                       one connecting storage cabinet.  If the average
                       IBM-customer installation for the Kodiak Product
                       involves more than one connecting storage cabinet, then
                       the  **  rate for Kodiak will be reduced by  **  for
                       each connecting storage cabinet in calculating such
                       average.

                 c.    Levels for Future Functions.  Features or functions
                       added after the initial shipment in volume of Iceberg
                       and Kodiak will be measured against specific
                       reliability, availability and service criteria that is
                       to be documented and addressed in each applicable
                       product development plan and related specification for
                       the future feature or function, but in any event they
                       must meet the Iceberg and Kodiak criterion as specified
                       herein.

                 d.    Guardband.  StorageTek shall not be considered to be
                       failing to meet the criterion unless the percentage by
                       which IBM's actual measurements exceeds the criterion is
                       at least higher than the Guardband percentage set forth
                       above in Section 9.3a for Service Calls or Impact
                       Errors.

                 e.    Action Plan.  If StorageTek fails to meet the Service
                       Call Rate, Impact Error Rate, or Error Free Installation
                       Rate, then StorageTek shall promptly investigate the
                       cause of the failures, and generate and provide to IBM
                       within ten (10) days a root cause failure analysis that
                       describes the cause of the failures.  StorageTek will
                       promptly develop and implement an action plan acceptable
                       to IBM to resolve such failures, which plan shall
                       include remedies for failure to meet the Service Call
                       Rate, Impact Error Rate, or Error Free Installation Rate
                       in such action plan.

                       StorageTek shall provide all support necessary to meet
                       an agreed upon repair turnaround time that is
                       established in the action plan to maintain IBM's
                       customers' satisfaction.  StorageTek's plan may include,
                       but is not limited to increased repair capacity (i.e.,
                       labor, equipment, facilities); expedited freight; and
                       providing new, repaired and/or upgraded buffer stock to
                       IBM's stocking locations, distributors and customer
                       sites.

                 f.    Price Reduction for FRU Costs.  StorageTek shall provide
                       a price reduction to IBM  **  after the date of last
                       Delivery of each type of Products in an amount that is
                       equal to  **  ("Excess FRU Cost").  The calculation of
                       this price reduction shall specifically exclude  **  .
                       The price reduction provided hereunder may  **
                       StorageTek.   Any claim to such price reduction will be





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         and Exchange Commission under an application for confidential
         treatment.            

                                      28
<PAGE>   36
                       deemed waived if not made by IBM no later than  **  days
                       after the  **  in which such Excess FRU Cost occurred.

                 g.    Reporting of FRU Consumption.  IBM will provide a
                       quarterly report to StorageTek that summarizes
                       IBM-reported fault symptom information for the
                       consumption of FRUs in repair actions that are
                       undertaken by IBM in the United States.  The summarized
                       information in this report will be adjusted by IBM to
                       exclude those items which qualify as Cost Exclusions.
                       This information is considered to be IBM confidential,
                       and StorageTek agrees to keep such information
                       confidential under the terms of the Agreement for
                       Exchange of Confidential Information between the
                       Parties.

                 h.    Credit for Labor Costs.  The target for labor required
                       for repair actions  (including  **  and those repair
                       actions related to  **  , but excluding labor required
                       for  **  is  **  for each  ** during a Machine Month.
                       StorageTek shall provide a credit to IBM on a  **  basis
                       up through  ** after the date of last Delivery of
                       Product, upon StorageTek's receipt of appropriate
                       supporting documentation, for average labor costs per
                       Machine Month incurred by IBM in connection with repair
                       actions that are in excess of  **  of that  **  target
                       ("Excess Labor Cost").  The amount of this credit will
                       be calculated by multiplying the number of hours in
                       excess of  **  of that **  target by a rate of  **  per
                       hour.  In the event that IBM incurs labor costs in
                       excess of  ** of that  **  target and the Parties
                       determine that the incurrence of  **  , then a  **
                       action will be developed and implemented.  This plan
                       shall include  **  .  The calculation of Excess Labor
                       Cost will be based on  **  and  **  .  The credit
                       provided hereunder may  **  be used by **  , first, by
                       **  against any  **  during the  **  ; second, against
                       **  , or third,  ** after  **  .  Any claim to such
                       credit will be deemed waived if not made by IBM no later
                       than  ** days after the  **  in which such Excess Labor
                       Cost occurred.

                 i.    Attainment.  The RAS criteria will be separately
                       calculated and applied to Iceberg and Kodiak.  If
                       StorageTek fails to meet the established RAS criteria
                       for Service Calls or Impact Error rates set forth in
                       Section 9.3a for Iceberg and Kodiak in any calendar
                       quarter (after taking into consideration the applicable
                       Guardbands), then StorageTek shall be given until the
                       end of the next succeeding quarter to implement the
                       action plan described in Section 9.3e, above.

                       If the RAS criteria is missed again during such next
                       quarter, then IBM will receive credit towards attainment
                       of its  **  Volumes in an amount equal to





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         and Exchange Commission under an application for confidential
         treatment.            

                                      29
<PAGE>   37
                       either:  (i) such  **  , or (ii)  **  , times the  **
                       was more than the  **  set forth in Section  ** , above.

                       The amount of credit that is counted for attainment
                       towards IBM's  **  will be calculated  **  ." Such  **
                       amounts will be  **  to determine the amount of credit
                       that IBM is entitled to receive toward the achievement
                       of its volume commitments.  An example of the
                       calculation of the amount of credits to which IBM may
                       become entitled under this clause (i) is  **  .

         9.4     QUALITY ASSURANCE

                 StorageTek shall maintain at its sole cost and expense an
                 effective quality control system to maintain under continuous
                 control the entire process of design, manufacture and FRU
                 repairs, including the packaging and shipping of Equipment.
                 This system shall include checks to verify that all
                 requirements of the Specifications are satisfied.

                 StorageTek is responsible to insure that workmanship,
                 construction and other standards specified by this system
                 satisfy the requirements of the Specifications.  StorageTek's
                 quality assurance shall be applied in a manner that will
                 maintain a consistent level of quality.  StorageTek's quality
                 control procedures and instructions shall be made available to
                 StorageTek's employees, agents, contractors and
                 subcontractors, and to IBM,  at the place of manufacture.

                 Upon request, IBM may conduct inspections on a
                 non-interference basis at StorageTek's manufacturing and
                 repair plants at any time during normal working hours provided
                 that, within 24 hours if an emergency situation exists or at
                 least three (3) days under non-emergency situations, prior
                 written notice is given by IBM.  StorageTek will use
                 reasonable efforts to accommodate visits on shorter notice.
                 Such inspection may, at IBM's option, include the witnessing
                 of tests and inspection of Equipment, whether completed or
                 not.  StorageTek will promptly take appropriate corrective
                 action with regard to any deficiencies found by IBM and
                 reasonably agreed to by StorageTek.

         9.5     ISO 9000 CERTIFICATION AND USE OF SUBCONTRACTORS

                 StorageTek shall maintain ISO 9000 certification, and use
                 statistical process control systems to monitor quality, for
                 its manufacturing and development processes for Equipment
                 supplied to IBM during the term of the Agreement.

                 StorageTek shall ensure that its subcontractors that are
                 involved with the manufacturing and development of Equipment
                 shall maintain ISO 9000 certification,





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         and Exchange Commission under an application for confidential
         treatment.            

                                      30
<PAGE>   38
                 and use similar statistical process control systems to monitor
                 quality.  StorageTek shall also ensure that its suppliers who
                 provide parts, assemblies or subassemblies that are used in
                 the manufacturing and development of Equipment shall maintain
                 ISO 9000 certification or use reasonable process control
                 systems to monitor quality.

                 It is the sole responsibility of StorageTek to select and
                 manage its suppliers.  StorageTek will make available to IBM,
                 upon request, a list of all suppliers that are used to supply
                 parts or components in StorageTek's manufacturing process for
                 Equipment.  StorageTek agrees to use its best efforts to
                 notify IBM of any additions or changes made in its suppliers.
                 If IBM reasonably determines that there is a supplier that may
                 be of concern to it, then StorageTek shall develop and
                 implement a mutually agreeable plan to address IBM's concerns.

                 StorageTek shall provide, upon written request by IBM, all
                 information pertaining to the measurements of quality that are
                 made for Equipment, and generated or derived from StorageTek's
                 statistical process control systems.

                 StorageTek is solely responsible for the quality of Equipment
                 supplied to IBM.  Review and approval by IBM of StorageTek's
                 or any of its subcontractor's quality process systems does not
                 relieve StorageTek of this responsibility.

                 StorageTek agrees to notify IBM of any planned significant
                 changes that may adversely affect its manufacturing processes
                 or could adversely affect the form, fit, function, quality,
                 reliability, serviceability or safety of the Equipment to be
                 supplied to IBM no later than ninety (90) days before planned
                 implementation.


10.  PRODUCT LEAD TIMES AND FORECAST

          10.1   IBM will provide a monthly build forecast to StorageTek for a
                 **  period (or a period equal to the remaining term of this
                 Agreement if less than  **  ).  The current quarter forecast
                 will be broken down by week and by Delivery location.
                 Volumes, specified in units of Product and Upgrades by
                 Delivery location,  for the quarter following the then-current
                 quarter will be established and provided to StorageTek no
                 later than  **  prior to the start of any given quarter.  At
                 such time, the forecast for the upcoming quarter will be
                 binding, subject to the quarterly volume modifications
                 referred to in Sections 10.2 and 10.3.  Except as otherwise
                 provided in the preceding sentence, volume forecasts are
                 provided as good faith estimates of IBM's anticipated
                 requirements for Products and Upgrades for the periods
                 indicated based on current market conditions and do not
                 constitute commitments to purchase any fixed quantity of
                 Products.





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         and Exchange Commission under an application for confidential
         treatment.            

                                     31
<PAGE>   39
          10.2   StorageTek agrees to supply, and IBM agrees to take Delivery
                 of, during any current quarter, and to pay in accordance with
                 Section 7, above, for not less than the Minimum Percentage (as
                 shown in the table below) of the units forecasted as of the
                 date the volumes became binding as provided in Section 10.1.
                 StorageTek agrees to use the Remainder Percentage (as shown in
                 the table below) to satisfy the next quarter's orders.
                 StorageTek will hold additional units in excess of the
                 Remainder Percentage provided that IBM purchases and pays for
                 such additional units.  Any units of inventory not required
                 under this section to be purchased and delivered in the
                 then-current quarter will be applied to and delivered to
                 fulfill the next-following quarter's volume requirements
                 before any new orders for such next-following quarter are
                 fulfilled.

<TABLE>
<CAPTION>
                                                         1996        1Q-3Q 1997      4Q 1997-end
                                                         ----        ----------      -----------
                       <S>                              <C>            <C>               <C>
                       Minimum Percentage                 **           **                **
                       Remainder Percentage               **           **                **
</TABLE>

                 With  **  prior written notice, IBM may elect to adjust the
                 flexibility for  **  to correspond to the other elements of
                 the above table, as well as the Maximum Percentage described
                 for the same quarters in Section 10.3, below, by changing the
                 payment terms set forth for those quarters in Section 7.10
                 from 45 to 30 days.

                 Initial purchases of Iceberg Product shall exclusively be  **
                 until such time as IBM has purchased up to  **  .

         10.3    IBM may also require StorageTek to deliver during the current
                 quarter, for which IBM shall pay in accordance with Section 7,
                 above, up to the Maximum Percentage as shown in the table
                 below of the units forecasted as of date the volumes became
                 binding as provided in Section 10.1, except as adjusted as set
                 forth in the penultimate paragraph of Section 10.2, above.

<TABLE>
<CAPTION>
                                                    Q4 1996        1Q-3Q 1997            4Q 1997-end
                                                    -------        ----------            -----------
                       <S>                            <C>              <C>                    <C>
                       Maximum Percentage             **               **                     **
</TABLE>





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         and Exchange Commission under an application for confidential
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                                      32
<PAGE>   40
         10.4    CURRENT QUARTER

                 Subject to Sections 10.2 and 10.3, in order to assist
                 StorageTek in planning its manufacturing operations, IBM will
                 provide modifications to the previously submitted weekly
                 schedules in the current forecast, as follows:

<TABLE>
<CAPTION>
                             FLEXIBILITY                                 NOTICE REQUIRED
                               TARGET                             (in days from anticipated
                                                                         Delivery date)           
                             ---------------------------------------------------------------------
                              <S>    <C>                                    <C>
                                +/-   **                                    within      **
                                +/-   **                                    within      **
                                +/-   **                                    within      **
                                +/-   **                                    within      **
                                +/-   **                                    within      **
                                +/-   **                                    beyond      **
</TABLE>

               All volume increases will be allowable per the matrix above up
               to StorageTek's maximum capacity.  StorageTek's initial maximum
               capacity is stated in the following table:

                  CAPACITY IN UNITS OF PRODUCT PER WEEK, FOR:

<TABLE>
<CAPTION>
                                             Iceberg            Kodiak
                                             -------            ------
                                 <S>           <C>                <C>
                                 1996          **                 **
                                 1997          **                 **
                                 1998          **                 **
</TABLE>

                 Upon mutual agreement, StorageTek will add additional capacity
                 if IBM  increases its forecasted volumes beyond the current
                 maximum capacity with at least six months' prior written
                 notice to StorageTek.  StorageTek agrees to use reasonable
                 efforts to accommodate variations greater than those stated
                 above, including but not limited to accepting assistance from
                 IBM.

         10.5    STORAGETEK'S CAPACITY/ALLOCATION

                 a.    StorageTek expressly represents that StorageTek has, as
                       of the Effective Date of this Agreement, and will
                       maintain throughout the term of this Agreement, adequate
                       product and manufacturing capacity to fulfill in a
                       timely fashion all its existing contractual commitments
                       as well as the quantities committed to in





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         and Exchange Commission under an application for confidential
         treatment.            

                                      33
<PAGE>   41
                       this Agreement by IBM (when taking into account Section
                       10.4) and any commitments StorageTek subsequently enters
                       into, without allocation of production among its
                       customers.  However, if StorageTek is unable to meet its
                       Delivery commitments and must allocate its capacity,
                       inventory, test equipment, resources, use of personnel,
                       parts, components, supplier resources and capabilities,
                       etc., that are used to produce Equipment, then
                       StorageTek agrees to:

                       (1)    act in good faith; and

                       (2)    allocate its capacity, supplier resources and
                              capabilities, inventory, test equipment,
                              resources, use of personnel, parts, components,
                              and available supply of Equipment to fill orders
                              for IBM in the following order of priorities:

                               (i)  ** ; and

                              (ii)  ** .

                 b.    StorageTek will allocate parts, components and materials
                       in accordance with the following priorities:

                       (1)    Code A FRUs order/requirements are filled first;
                              and

                       (2)    then a fair allocation between manufacturing
                              orders and nonemergency maintenance parts
                              order/requirements.


         11.     PURCHASE ORDERS, ALTERATIONS & RESCHEDULING

         11.1    IBM may submit purchase orders at any time; provided, however,
                 that subject to Section 11.6, any order shall be binding on
                 both Parties if such order is within the forecast range set
                 forth in Sections 10.2 and 10.3, and is submitted not less
                 than ten (10) business days before IBM's requested date of
                 Delivery.  IBM may request that StorageTek deliver in fewer
                 than ten (10) business days and StorageTek may agree to do so.

         11.2    This Agreement does not constitute a purchase order.  IBM may
                 issue purchase orders from time to time during the term of
                 this Agreement in either electronic (EDI) or written form.
                 Authorization to StorageTek to perform any work or produce any
                 Equipment under this Agreement will be through IBM purchase
                 orders only.  Alterations to the quantity, delivery date,
                 engineering level, or other items on





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         and Exchange Commission under an application for confidential
         treatment.            

                                      34
<PAGE>   42
                 purchase orders may be made by IBM from time to time, subject
                 to StorageTek's agreement.  Purchase orders will be considered
                 noncancelable within ten (10) days of the scheduled Delivery
                 date.

         11.3    IBM shall submit its purchase orders to StorageTek at the
                 address set forth in the Notices section of this Agreement.
                 IBM's purchase orders will include:

                 a.    IBM's part, model or feature numbers, configuration and
                       description of Equipment;

                 b.    quantity required;

                 c.    unit or item price and total order price;

                 d.    required delivery date(s);

                 e.    delivery instructions (including a carrier who will
                       accept delivery at StorageTek's address); and

                 f.    reference to this Agreement.

                 Unless otherwise specifically agreed to in writing, additional
                 terms and conditions on IBM's purchase orders or on
                 StorageTek's acknowledgment, whether in conflict with this
                 Agreement or not, are superseded hereby and are of no force
                 and effect.

         11.4    StorageTek agrees to accept conforming IBM purchase orders and
                 to manufacture, supply and Deliver Equipment in accordance
                 with the terms and conditions of this Agreement.  StorageTek
                 agrees to provide written acknowledgment of IBM's purchase
                 orders within two (2) days, for volumes within IBM's forecast,
                 or within five (5) days, for volumes  in excess of IBM's
                 forecast, as measured from StorageTek's actual receipt of the
                 purchase order (without regard to the Notices section of this
                 agreement, except for EDI) which purchase order may be made
                 verbally and/or in advance of StorageTek's receipt of a hard
                 copy confirming such order.  If StorageTek's acknowledgment is
                 not received by IBM within the two (2) or five (5) day period,
                 as described above, from the date of receipt of the purchase
                 order from IBM, then the purchase order, including the
                 requested delivery date(s) will be deemed to be accepted by
                 StorageTek.  StorageTek may not reject any IBM purchase order
                 that conforms to the requirements of this Agreement and covers
                 quantities forecasted by IBM, as described in Section 10.

         11.5    Orders for FRUs needed on a "Code A" basis (i.e.,
                 emergency-customer down) will be shipped by StorageTek within
                 twenty-four (24) hours at a price not to exceed the





                                      35
<PAGE>   43
                 lesser of  **  of the price in Exhibit 5 or such price plus
                 **  , with IBM designating the carrier and being responsible
                 for freight and insurance costs.  However, IBM will not pay
                 any premium (i.e. pay only 100%) for Code A FRUs necessitated
                 because StorageTek has failed to deliver nonemergency FRU
                 orders within the lead times set forth in Exhibit 5.

         11.6    IBM may cancel purchase order(s) or any portions thereof for
                 any reason by notifying StorageTek in writing at least ten
                 (10) days prior to the scheduled Delivery date.  Cancellation
                 will be effective upon StorageTek's receipt of the written
                 cancellation notice from IBM.  StorageTek will immediately
                 cease building such units for the affected purchase order(s)
                 in accordance with the cancellation notice.  IBM will have no
                 liability for canceled purchase orders other than as set forth
                 in Section 10.2, and, if applicable, any Recovery Payment as
                 described in Section 7.6 hereof.

         11.7    If for any reason StorageTek is unable to Deliver as required
                 by accepted IBM purchase order(s), and fails to correct such
                 inability within  **  of such failure, IBM will have the right
                 to cancel such purchase order(s) or portions thereof  by
                 notifying StorageTek in writing.  If IBM cancels purchase
                 orders under this Section 11.7, IBM's only obligation will be
                 to pay for Products or Upgrades already delivered at the time
                 of IBM's cancellation notice  **  .

         11.8    Due to ongoing and unpredictable market conditions, StorageTek
                 agrees to permit IBM, upon written notice to StorageTek, to
                 require StorageTek to reconfigure units of Products and
                 Upgrades as follows:

                 a.    Configuration changes that do not change a unit model
                       number may be made without additional cost until  **
                       before scheduled Delivery; and

                 b.    Any other configuration changes may be made at any time
                       (including Product and Upgrades that require
                       reconfiguration after Delivery) and such configuration
                       changes will be  **  .  StorageTek and IBM will agree in
                       advance on a schedule of lead times and costs that will
                       apply to such configurations.

         11.9    Subject to Section 10, IBM may reschedule purchase order(s) or
                 any portions thereof for any reason by notifying StorageTek in
                 writing at least  **  prior to the Delivery Date specified on
                 the purchase order(s).

         11.10   For the last quarter of this Agreement, the purchase orders
                 submitted by IBM to StorageTek shall be noncancelable unless
                 StorageTek is manufacturing Devices.





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         and Exchange Commission under an application for confidential
         treatment.            

                                      36
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         11.11   Products and Upgrades that are supplied to IBM hereunder will
                 consist of new parts and components.  FRUs that IBM returns
                 will be reworked by StorageTek to an equivalent-to-new
                 reliability level.  Such reworked FRUs will not be used in any
                 new Products or Upgrades Delivered to IBM hereunder, but may
                 instead be returned to IBM as reworked FRUs.


12.      CONSIGNMENT

         12.1    IBM will consign certain disk drives ("Drives") to StorageTek
                 for use in Equipment.  Drives supplied by IBM to StorageTek
                 shall only be used by StorageTek to build Equipment for IBM
                 and shall remain the property of IBM.

         12.2    StorageTek agrees to sign and adhere to the terms and
                 conditions of the IBM Consignment Agreement, attached hereto
                 as Exhibit 4, provided, however, that the terms of this
                 Section 12 prevail over those of Exhibit 4.

         12.3    IBM agrees to consign Drives to StorageTek in accordance with
                 a mutually agreed Profile based on at least a  five-day buffer
                 ahead of StorageTek's build cycle, and including a yield
                 factor based upon the previous quarter's experience and
                 calculated using  a  mutually  agreed formula.   Any Drives,
                 or other  IBM-supplied  parts and components, that are not
                 used by StorageTek due to integration fall-out will be
                 returned to IBM within ten (10) days after such fall-out.

         12.4    If IBM fails to provide consigned Drives to StorageTek in
                 accordance with Section 12.3, and StorageTek's manufacturing
                 line is down such that StorageTek cannot  meet its Delivery
                 dates to IBM, then StorageTek will agree, per Section 10.2, to
                 hold up to  **  as the case may be, of such undelivered and
                 forecasted Products and Upgrades, without Drives, in inventory
                 for up to  **  .  If the amount of such Products and Upgrades
                 held in inventory exceeds  **  of the forecasted volumes then
                 StorageTek will notify IBM, and IBM will  **  .

         12.5    If IBM Drives are not available for an extended period of
                 time, IBM may request assistance from StorageTek in securing
                 drives from other drive manufacturers in lieu of using IBM
                 Drives. StorageTek agrees, on a best effort basis, to assist
                 in securing the most cost effective, high quality alternative,
                 and with the agreement of IBM, to take the steps necessary to
                 integrate such drives into the Product.  In such event, the
                 parties will agree in advance on an equitable division of
                 StorageTek's cost of securing, qualifying and integrating such
                 drives, including any cost relating to inventory or required
                 firm purchase commitments even if such substitution is only
                 temporary in nature.





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<PAGE>   45
         12.6    StorageTek agrees to return to IBM freight collect any IBM
                 consigned Drives in StorageTek's inventory, within five (5)
                 days of receipt of IBM's written (or EDI) request.


13.      DELIVERY

         13.1    ON-TIME DELIVERY

                 a.    StorageTek shall use its best efforts to ensure that
                       every scheduled Delivery date is met.  StorageTek must
                       notify IBM in advance if a scheduled Delivery date will
                       not be met.  StorageTek will make every reasonable
                       effort at its expense to ensure the earliest possible
                       Delivery date and quantities for late Equipment,
                       including, but not limited to, overtime and expedite
                       charges.  "On schedule" means  **  .  Unless delay is
                       caused by IBM's delay in its supply of Drives or IBM-
                       supplied parts and components, StorageTek will arrange
                       for premium transportation and pay, at StorageTek's sole
                       cost and expense, for the difference between normal
                       transportation and such premium transportation,
                       including,  but not limited to, air transportation and
                       expedited freight charges.  StorageTek also agrees to
                       provide, at IBM's request, an action plan to correct
                       late shipments and to resolve any Delivery problems.

                 b.    If, during any  **  period, StorageTek fails, on a
                       one-time basis only, to Deliver more than  ** but not
                       more than  **  , of the units of Equipment that are
                       scheduled for Delivery in a calendar month by their
                       scheduled Delivery dates, then StorageTek shall be
                       required to expedite shipment of such units in
                       accordance with Section 13.1.  If more than  **  of such
                       units of Equipment are Delivered late in  **  , then
                       StorageTek will provide IBM with credit towards
                       attainment of its **  Volumes for  **  in an amount
                       equal to  **  the number of  **  that were  **  in
                       excess of **  .

                 c.    If StorageTek fails to Deliver more than  **  of the
                       units of Equipment that are scheduled for Delivery by
                       their scheduled Delivery dates in the next following
                       month, and except for Volumes subject to the one time
                       per  **  provision defined in 13.1b, above, then
                       StorageTek shall provide IBM with  **  credit towards
                       attainment of its  **  Volumes for  **  equal to  **
                       the number of **  that  **  by StorageTek.

                 d.    If, in the month following any month in which a  **
                       adjustment was credited to  **  Volumes under this
                       Section 13.1, StorageTek fails to Deliver more than  **
                       of the units of Equipment that are scheduled for





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<PAGE>   46
                       Delivery by their scheduled Delivery dates, then
                       StorageTek shall provide IBM with  **  credit towards
                       attainment of its  **  Volumes for  **  in an amount
                       equal to  **  the number of  ** that were  **  by
                       StorageTek.

                 e.    If, in the next following month, StorageTek fails to
                       Deliver more than  **  of the units of Equipment that
                       are scheduled for Delivery by their scheduled Delivery
                       dates, then StorageTek shall provide IBM with  **
                       credit towards attainment of its  **  Volumes for  **
                       in an amount equal to  **  the number of  **  that were
                       **  by StorageTek.

                 f.    If, in the next following month, and for each additional
                       consecutive month, StorageTek fails to Deliver more than
                       **  of the units of Equipment that are scheduled for
                       Delivery by their scheduled Delivery dates, then
                       StorageTek shall provide IBM with  **  credit towards
                       attainment of its  **  Volumes for  **  in an amount
                       equal to  **  the number of  **  that were  **  by
                       StorageTek.

                 g.    Notwithstanding anything to the contrary in this
                       Section, and in lieu of credits provided in other
                       paragraphs of this Section, if, in any calendar month,
                       and subject to Section 13.1b. above, StorageTek fails to
                       Deliver more than  **  of the units of Equipment that
                       are scheduled for Delivery by their scheduled Delivery
                       dates, then StorageTek shall provide IBM with  **
                       credit towards attainment of its  **  Volumes for that
                       **  in an amount equal to  **  the number of  ** that
                       were  **  by StorageTek.

                 h.    Any credit towards achievement of IBM's  **  Volumes for
                       **  by StorageTek to IBM  **  such Equipment  **  by
                       StorageTek  **  credited towards IBM's attainment of its
                       volumes.

                 i.    Notwithstanding anything to the contrary in this
                       Section, units of Equipment which StorageTek fails to
                       Deliver by the Delivery date will not be counted as
                       failures to Deliver if StorageTek causes such units to
                       be delivered to IBM customers by the delivery date IBM
                       has committed to such customers (the "Commit Date").
                       IBM will notify StorageTek in writing of each unit of
                       Equipment which fails to arrive by the Commit Date
                       within ten (10) business days after StorageTek notifies
                       IBM that such shipment was expedited.

                 j.    If IBM fails to deliver Drives to StorageTek in
                       accordance with the  **  in Section  **  of this
                       Agreement and this delay results in  **  in accordance
                       with  **  then IBM agrees to  **  , and StorageTek
                       agrees to  **  , and such units  **  .





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                 k.    If StorageTek fails to deliver to IBM more than  **  of
                       the units of Equipment scheduled for Delivery by the
                       scheduled Delivery dates in a month, for  **
                       consecutive calendar months then the payment terms in
                       Section 7.10a will be immediately extended to  **  days
                       until  **  after the first month in which StorageTek
                       Delivers 98% or more of Equipment on its scheduled
                       Delivery date.


                 l.    IBM expressly reserves the right to assert that any
                       failure to ship Equipment on a timely basis, including,
                       but not limited to, failures for which volume
                       adjustments are provided for in this section, could
                       constitute a material breach of StorageTek's obligations
                       under this Agreement.

         13.2    CARRIER

                 It is understood and agreed that IBM shall make all
                 arrangements for shipments of the Equipment. It shall be the
                 responsibility of IBM, at its own expense, to supply
                 StorageTek with detailed documentation and instructions and
                 all necessary export licenses, customs declarations and
                 certificates in properly executed form required for successful
                 shipment of Equipment from the Manufacturing Site and entry
                 into foreign territories. StorageTek shall notify IBM when
                 Equipment is ready for shipment from StorageTek's plant. IBM
                 will pay all shipping and transportation charges directly to
                 the carrier or freight forwarder as long as shipped in
                 accordance with IBM's routing instructions. If IBM requests
                 that StorageTek arrange shipping, IBM shall reimburse
                 StorageTek for the shipping charges pursuant to StorageTek's
                 invoice. In no event will IBM reimburse StorageTek for, or pay
                 any C.O.D. charges, should StorageTek ship by another carrier
                 without prior IBM approval. If StorageTek ships using other
                 than an IBM-approved carrier, StorageTek is responsible for
                 any incremental increase in freight charges.

         13.3    TITLE/RISK OF LOSS

                 Title to Equipment and risk of  loss shall pass to IBM at
                 StorageTek's plant of manufacture loading dock.  [F.O.B. by
                 UCC/ExWorks by INCOTERMS]; provided, however, that
                 notwithstanding anything to the contrary in this Agreement
                 title to all Licensed Works will remain with StorageTek,
                 except as provided in the IDA and its related Attachments. All
                 claims for shipping damage shall be resolved between IBM,
                 carriers or freight forwarders handling the Equipment and the
                 insurance companies and agents responsible for adjusting such
                 claims, and StorageTek shall have no responsibility with
                 respect thereto. However, at IBM's request, StorageTek agrees
                 to cooperate reasonably with IBM in filing and settling such
                 claims.





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<PAGE>   48
         13.4    PACKAGING

                 StorageTek will package each unit of Equipment according to an
                 agreed-upon Specification for packaging.  The prices for
                 Equipment include all packaging costs.


14.      EQUIPMENT WARRANTY

         14.1    StorageTek warrants that units of Equipment (excluding Drives
                 and nonserialized FRUs) that are to be provided to IBM
                 hereunder conform to the Specifications and are and shall
                 remain free from defects in materials and workmanship, for the
                 time periods specified in this Section 14.1.

                 a.    The warranty period for each unit of Products and
                       Upgrades shall be  **  after the earlier of:

                       (1)    ** ; or

                       (2)    ** .

                 b.    StorageTek will serialize the FRUs identified as
                       serialized on Exhibit 5, and as to those FRUs the
                       warranty period shall be  **  after the earlier of:

                       (1)    ** ; or

                       (2)    ** .

         14.2    All warranties provided by StorageTek to IBM hereunder shall
                 survive any inspection, delivery, acceptance and payment and
                 shall not be affected by the fact that IBM has resold, rented
                 or leased units of Equipment to others.

         14.3    IBM will maintain failure records for Products and Upgrades to
                 the same extent as IBM maintains such records for similar
                 high-end direct access storage device products marketed by it.
                 If IBM believes failures for a given serial number unit of
                 Equipment warrants replacement, IBM may request and StorageTek
                 may agree to replace the same at no cost to IBM.  StorageTek's
                 agreement will not unreasonably be withheld.  In order to
                 improve Equipment quality and minimize costs, StorageTek may
                 request relevant information from the data which IBM retains
                 regarding failure by machine serial number.  IBM may agree to
                 provide such information to StorageTek.  Such agreement will
                 not be unreasonably withheld.





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         14.4    StorageTek's liability under warranty pursuant to Section 14.1
                 is limited to:  Delivery to the IBM regional stocking
                 locations specified by IBM of retrofit kits (containing FRUs)
                 with installation instructions (at no charge to IBM) as
                 necessary to make Equipment conform to the Specifications, or
                 otherwise be free from defects in materials and workmanship;
                 or repair or replacement, at StorageTek's option, without cost
                 to IBM, of the defective Equipment.  IBM will use reasonable
                 efforts to resolve customer issues through use of FRUs or
                 retrofit kits before requesting repair or replacement of the
                 defective Product or Upgrade.  Labor to remove defective FRUs
                 and install replacement FRUs under this warranty shall be
                 supplied by IBM at no charge to StorageTek, subject to Section
                 9.3h.  Where warranty can be provided by replacing a FRU,
                 StorageTek will provide and IBM will install the replacement
                 FRU.

         14.5    All warranty claims shall be made by IBM, regardless of any
                 transfer of title or possession of the Equipment by IBM to
                 other parties, and StorageTek agrees that IBM may make
                 warranty claims against StorageTek on the behalf of any
                 rightful user or possessor of the Equipment.

         14.6    StorageTek's liability to perform warranty under this Section
                 14  shall not apply to failures of any unit of Equipment
                 caused by:

                 a.    Physical abuse or use that is not consistent with
                       operating instructions for the Equipment; or

                 b.    Modification (by other than StorageTek's personnel or
                       agents) in any way other than approved by StorageTek;
                       provided, however, that the warranty shall not be voided
                       by repair or replacement of FRUs or the attachment of
                       items in the manner described in maintenance or
                       installation instructions provided by StorageTek.

         14.7    Claims under the terms of this warranty shall be submitted to
                 StorageTek in writing (including EDI) and shall clearly state
                 the Product or Upgrade serial number.   Where available, IBM
                 shall send StorageTek its field defect report.  Defective FRUs
                 replaced under this warranty become the property of
                 StorageTek.

         14.8    Both Parties will ensure that FRUs returned to the other Party
                 are properly and adequately packaged, and IBM agrees to use
                 the same or equivalent packaging as StorageTek uses to package
                 such FRUs.

         14.9    StorageTek shall use reasonable commercial efforts to complete
                 repairs of FRUs for in-warranty units within thirty (30)
                 business days after the date StorageTek receives the defective
                 FRUs, but in any case, it will complete repairs of the FRUs at
                 no charge to IBM within sixty (60) days after receipt.  If,
                 upon receipt, StorageTek determines that such defective FRUs
                 are not repairable or if StorageTek has not completed its
                 failure analysis on any FRU within ten (10) business days
                 after StorageTek's receipt, then replacement FRUs will be
                 provided at no charge by StorageTek to IBM within ten (10)
                 business days.  If StorageTek cannot find a defect or
                 assignable cause in a





                                      42
<PAGE>   50
                 FRU that is returned by IBM as defective, StorageTek will
                 replace the received FRU and will ensure that the FRU is not
                 included in Equipment and cannot be returned in the future to
                 IBM.

         14.10   LICENSED PROGRAMS, MICROCODE  AND MAINTENANCE CODE WARRANTY

                 a.    StorageTek warrants that the Licensed Programs and
                       Microcode will conform to the Specifications, as such
                       Specifications may be modified by any Product
                       Development Plan, and are and shall remain free from
                       defects in workmanship.  The Maintenance Code shall
                       remain free from defects in workmanship.  The warranties
                       set forth in this Section 14.10 shall not apply to:

                       (1)    use of the Licensed Programs or Microcode which
                              is not in accordance with the end user
                              documentation delivered by  ** , pertaining to
                              the Licensed Programs or Microcode;

                       (2)    use of the Licensed Programs or Microcode with
                              other than the hardware described in the
                              Specifications;

                       (3)    use of the Licensed Programs, Microcode and
                              Maintenance Code in other than the software
                              configuration described in the Specifications;

                       (4)    any modifications of the Licensed Programs,
                              Microcode and Maintenance Code not made or
                              authorized by  ** ;

                       (5)    use of other than the then current, or
                              immediately preceding, version of the Licensed
                              Programs; or

                       (6)    ** that  **  by  **  of the Microcode.

                       StorageTek does not warrant that the functions contained
                       in the Licensed Program and Maintenance Code will
                       satisfy IBM's or its end user's requirements to the
                       extent such requirements are different than those set
                       forth in the Specifications, as such Specifications may
                       be modified by any Product Development Plan, or that the
                       Licensed Programs will  **  or its  **  , or that the **
                       of the Licensed Programs and Maintenance Code will be
                       **  .

                 b.    In the event of a breach of the warranties contained in
                       this Section 14.10, StorageTek will exercise reasonable
                       commercial efforts to implement appropriate procedures
                       to correct such breach in accordance with Section 16.8,
                       for Licensed Programs and Microcode and Section 16.7 for
                       Maintenance Code.





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         14.11   StorageTek warrants that it will competently perform all work
                 relating to the Deliverables in a manner consistent with
                 ordinary Microcode programmers skilled in the art, and,
                 further, all Deliverables will conform to the mutually
                 agreed-upon Specifications.

         14.12   THE WARRANTIES IN SECTIONS 14 AND 18 OF THIS OEM AGREEMENT,
                 AND IN PART 6 OF THE SOURCE CODE CUSTODY AGREEMENT, ARE IN
                 LIEU OF ALL OTHER WARRANTIES EITHER WRITTEN, ORAL OR IMPLIED
                 WITH RESPECT TO THE EQUIPMENT, DELIVERABLES, LICENSED PROGRAMS
                 AND MAINTENANCE CODE.

                 STORAGETEK DISCLAIMS THE IMPLIED WARRANTIES OF
                 MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.  EXCEPT
                 AS OTHERWISE PROVIDED IN SECTION 18.2, STORAGETEK ALSO
                 DISCLAIMS THE IMPLIED WARRANTY OF NONINFRINGEMENT.

                 STORAGETEK'S WARRANTY OBLIGATIONS SHALL EXTEND ONLY TO IBM,
                 AND STORAGETEK SHALL HAVE NO LIABILITY ARISING OUT OF ANY
                 WARRANTIES PROVIDED BY IBM WHICH ARE BEYOND STORAGETEK'S
                 WARRANTY OBLIGATIONS IN THIS AGREEMENT.

                 IBM'S EXCLUSIVE REMEDY FOR A BREACH OF THE WARRANTY SET FORTH
                 IN THIS SECTION 14 IS SET FORTH IN SECTION 14.4 FOR EQUIPMENT,
                 AND SECTION 14.10(b); FOR LICENSED PROGRAMS, MICROCODE AND
                 MAINTENANCE CODE, PROVIDED, HOWEVER, THAT STORAGETEK PROMPTLY
                 PERFORMS ITS WARRANTY OBLIGATIONS PURSUANT TO SECTION 14.


15.      FRUs

         15.1    During the term of this Agreement and for  **  after the last
                 Delivery of Product or Upgrades, or for so long as StorageTek
                 makes FRUs available to any other entity, whichever is later,
                 StorageTek agrees to provide FRUs to IBM.  The list of FRUs
                 and their respective prices and lead times are described in
                 Exhibit 5, which Exhibit will be updated semiannually (in
                 January and July).

         15.2    Notwithstanding anything herein to the contrary, if StorageTek
                 intends to discontinue producing or making available any FRU
                 after the  **  obligation set forth above, StorageTek agrees
                 to provide IBM with twelve (12) months' prior written notice
                 of such intent and permit IBM to purchase as many FRUs as IBM
                 reasonably believes it will need for the Products.  In the
                 alternative, and at IBM's option, StorageTek





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                 agrees to grant IBM the right to manufacture such FRUs in
                 accordance with Section 23.6.

         15.3    FRUs shall be packaged in the same or equivalent packaging as
                 StorageTek used to package such FRUs.  Return of FRUs for
                 repair or replacement is subject to a reasonable material
                 return procedure to be mutually agreed between the Parties.

         15.4    FRU REWORK PROCEDURES AND PRICES

                 a.    StorageTek will attempt to rework/repair all FRUs
                       returned from IBM and return them to IBM within 30 days
                       of receipt.  At IBM's request, StorageTek will also ship
                       to IBM any unrepairable FRUs.

                 b.    Except as otherwise provided in Section 9, Quality, and
                       Section 14, Equipment Warranty, StorageTek will invoice
                       IBM, and IBM agrees to pay,  **  for FRUs as described
                       in Section 7.7, plus normal transportation charges
                       unless IBM requests special handling. Such costs will be
                       subject to IBM's Audit Rights.


16.      FIELD SERVICE &  SUPPORT

         16.1    INSTALLATION SUPPORT

                 a.    Upon IBM's written request, StorageTek will, at no
                       charge to IBM, assist IBM in installing units purchased
                       under this Agreement, including on-site installation if
                       necessary, in accordance with the table below provided
                       StorageTek is not prevented from doing so by either
                       IBM's customer or the scheduling of installations by IBM
                       in a particular geographical area which exceed
                       StorageTek's resources of personnel when taking into
                       account StorageTek's other service commitments.  IBM's
                       written requests will specify the installation site,
                       date of installation, whether the site is classified and
                       any special installation instructions. StorageTek may
                       provide at IBM's request additional installation
                       services beyond those required in this section at the
                       rates described in Section 16.5.

        PERCENTAGE OF INSTALLATIONS STORAGETEK WILL SUPPORT (BY PRODUCT)

<TABLE>
<CAPTION>
                              TIME PERIOD                   ICEBERG           KODIAK
                              -----------                   ------------------------
                                 <S>                           <C>              <C>
                                 3Q96                          **               **
                                 4Q96                          **               **
                                 1Q97                          **               **
</TABLE>





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                 b.    The services and charges referred to in this section do
                       not include additional  **  arising from: (i)  **  , or
                       (ii)  **  equipment, such as  **  .  IBM agrees to  **
                       .

         16.2    TRAINING

                 a.    StorageTek will provide  **  "train the Trainer"  **
                       for IBM  **  personnel (not to exceed a total of  **
                       for each  **   ).  One of each such session will be held
                       in  **  ; however, IBM may choose  **  to the U.S.  This
                       training will cover  **  at the  **  that StorageTek
                       covers when **  and will  **  :

                       (1)    the maintenance, diagnosis,  and repair of
                              Products and Upgrades;

                       (2)    the replacement of FRUs ;

                       (3)    how the Products and Upgrades function;

                       (4)    how the Products and Upgrades react to and report
                              problems;

                       (5)    how to install the Products and Upgrades.

                       In addition, StorageTek will conduct  **  training
                       sessions for IBM's  **  personnel at StorageTek's
                       expense  **  .  The goal of this training will be to  **
                       by IBM's   **  team.

                 b.    At IBM's request, StorageTek will provide up to  **
                       additional initial training sessions beyond the
                       sessions described above at a fee of  **  per class,
                       plus reasonable travel and living expenses for
                       StorageTek trainers if such sessions are held at a
                       location other than StorageTek's training facility.
                       StorageTek also agrees to make its training facilities
                       available to IBM at StorageTek's cost for IBM to provide
                       education to its personnel through the end of 1996.

                 c.    StorageTek will also provide "on-the-job" training for
                       IBM customer engineering personnel by assisting them, at
                       IBM's option, in any Product and Upgrade installations
                       as described in Section 16.1.

                 d.    For all new Products and Upgrades StorageTek makes
                       available to IBM during the term of this Agreement,
                       StorageTek agrees to provide IBM personnel with
                       assistance at no charge to develop training for IBM's
                       customer engineering personnel at the same level as the
                       training StorageTek provides to its own personnel on its
                       other products.





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         16.3    SERVICE OF EQUIPMENT

                 To assist IBM in product transition, in every
                 country/territory where StorageTek has a service organization
                 and IBM  **  , at IBM's  request, StorageTek agrees to  **  :

                 a.    ** ; and

                 b.    ** .

                 At the beginning of each quarter, IBM agrees to commit to, and
                 to pay for as set forth in Section 16.5, and StorageTek
                 thereafter agrees to provide, the number of hours of such
                 customer engineering support IBM will require at the beginning
                 of each quarter.  The maximum fee StorageTek will charge IBM
                 for each hour of such customer engineering support actually
                 provided (except for the no charge installation support) is
                 set forth in the table found in Section 16.5.  To the extent
                 StorageTek is unable to provide service hereunder, StorageTek
                 will promptly refund unearned payments.

         16.4    EMERGENCY AND EXPERT MAINTENANCE COVERAGE

                 In every country/territory where IBM installs Products and
                 Upgrades,  StorageTek agrees to make available upon IBM's
                 request and on the shortest possible notice customer service
                 engineers to support critical customer situations. The maximum
                 fee StorageTek will charge IBM for each hour of such support
                 actually provided is set forth in the table in Section 16.5.
                 In addition, IBM will reimburse StorageTek for actual and
                 reasonable travel expenses incurred by StorageTek's personnel
                 in providing this support in countries where StorageTek does
                 not have a service organization.

         16.5    LABOR RATE TABLE

<TABLE>
<CAPTION>
                              Calendar Quarter                   Maximum Hourly Rate 
                              -------------------------------------------------------
                                    <S>                                    <C>
                                    **                                     **
                                    **                                     **
                                    **                                     **
                                    **                                     **
                                    **                                     **
                                    ** and beyond                          **
</TABLE>

         16.6    NEW PRODUCT DEVELOPMENT CENTER SUPPORT

                 a.    StorageTek will provide its New Product Development
                       Center Support ("NPDC") **.  In addition,  ** ,
                       StorageTek will  **  .  StorageTek agrees to





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                       provide IBM  **  that StorageTek uses to provide NPDC
                       support for  **  .  StorageTek grants IBM a license to
                       **  in accordance with the Description of Licensed
                       Works.

                 b.    To assist IBM in transitioning to its own service
                       center, StorageTek agrees that until  **  , IBM's  **
                       shall be able to  **  from StorageTek's NPDC for problem
                       resolution  **  if,  **  , it would be  **  to contact
                       the NPDC than to contact StorageTek's development
                       organization directly.

                 c.    StorageTek shall provide comparable levels of response
                       times for NPDC support to IBM as those that StorageTek
                       provides to its own customer service base (including
                       StorageTek's tape and service products).

         16.7    MAINTENANCE AND INSTALLATION TOOLS

                 To assist IBM in providing optimum hardware and software
                 maintenance service to customers, StorageTek agrees to:

                 a.    Assist IBM,   **  , in  **  needed to  **  ,  for
                       example (without limitation)  **  , etc., to include
                       Iceberg, Kodiak and Arctic Fox; and

                 b.    Promptly provide to IBM all problem determination and
                       service information, tools, Maintenance Code and related
                       documentation (except for the  **  tools and software,
                       as to which StorageTek agrees to  **  ) and all
                       replacements, enhancements, revisions, and modifications
                       **  , to the extent not prevented by  **  .  StorageTek
                       grants IBM a license to the  **  in accordance with the
                       Description of Licensed Works.

                 StorageTek also agrees to provide technical support,  **  , to
                 correct and fix bugs and defects that arise from IBM's use of
                 Maintenance Code.

         16.8    MAINTENANCE AND TECHNICAL SUPPORT

                 a.    Maintenance.  IBM will be responsible to provide Level
                       1, Level 2 and Level 3 support to its customers.  IBM
                       agrees to use its commercially reasonable efforts to
                       perform the following:

                       (1)    maintain  **  to provide maintenance to customers
                              who are capable of performing installations of
                              Equipment and taking  **  and to  **  ;





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                       (2)    maintain  **  to provide support to the field and
                              who are capable of diagnosing and resolving
                              complex "system issues" related to, among other
                              things, system configuration and operating
                              systems;

                       (3)    maintain  **  of planning and implementing
                              complex system configurations, performing virtual
                              DASD capacity planning, planning for acceptable
                              subsystem performance, undertaking performance
                              measurement and tuning, and resolving or
                              assisting in the resolution of system-related
                              problems when required;

                       (4)    provide necessary and relevant  **  information,
                              and  **  information to StorageTek in order for
                              StorageTek to perform its technical and
                              engineering support responsibilities as set forth
                              below; and

                       (5)    order a  **  for the Products  **  to address
                              customer requirements.

                 b.    Technical Support.  StorageTek agrees, upon IBM's
                       request,  **  , to provide technical support to IBM for
                       the Equipment, Licensed Programs and Microcode,
                       including without limitation, assistance in problem
                       determination, problem source identification and problem
                       diagnosis, in the following manner:

                       (1)    Equipment.  StorageTek will provide IBM with
                              reasonable assistance for the Equipment  ** .

                              In addition, if a malfunction or failure in
                              Equipment  **  , then StorageTek shall, if
                              requested, provide  **  .  Prior to honoring a
                              request for  **  , the Equipment for which the
                              request is to be made shall be at  **  .  IBM's
                              technical support personnel must have **  to
                              assist StorageTek's personnel  **  and to supply
                              needed  **  for repairs).  Upon receipt of
                              appropriate supporting documentation, IBM will
                              **  StorageTek for  **  in providing this
                              support.

                              StorageTek agrees to use its commercially
                              reasonable efforts to assist IBM in resolving
                              problems within the time frames set forth below:

                              (a)   Any Severity 1 level problem:  Within  **
                                    after notification by IBM of any such
                                    problem;

                              (b)   Any Severity 2 level problem:  Within  **
                                    after notification by IBM of any such
                                    problem;





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                              (c)   Any Severity 3 level problem:  Within  **
                                    after notification by IBM of any such
                                    problem; and

                              (d)   Any Severity 4 level problem:  Within  **
                                    after notification by IBM of any such
                                    problem.

                              For purposes of this Section 16.8b(1),
                              "resolving" by StorageTek means to assist IBM in
                              restoring the customer's machine to  **  of
                              operation or functionality (which may be
                              accomplished by a  **  that such machine is
                              operating and functioning as designed).

                       (2)    Licensed Programs and Microcode.  The following
                              is a description of the support that StorageTek
                              shall provide to IBM:

                              (a)   receive the APAR or PMR, and any supporting
                                    documentation and materials, as
                                    appropriate;

                              (b)   analyze the problem symptoms and diagnose
                                    the suspected error in the Licensed
                                    Programs or Microcode;

                              (c)   attempt to recreate the problem on
                                    StorageTek's test system, if recreation is
                                    required;

                              (d)   reasonably develop a bypass or
                                    circumvention for high impact (e.g.,
                                    typically, Severity 1) problems with
                                    assistance of IBM's personnel;

                              (e)   reasonably determine if Maintenance
                                    Modifications are required to be made to
                                    the Deliverables and, if so, provide the
                                    Code or other corrections to IBM in the
                                    format specified by IBM;

                              (f)   provide resolution assistance to APARs or
                                    PMRs in accordance with the IBM-assigned
                                    Severity Level as set forth in Section
                                    16.8b(1)(a)-(d) above;

                              (g)   receive technical questions and supporting
                                    documentation and materials, and analyze
                                    such technical questions and provide
                                    answers to the same; and

                              (h)   generate and promptly provide to IBM the
                                    most current releases of the Licensed
                                    Programs or Microcode with all of the past
                                    fixes incorporated as required, including
                                    any accumulated maintenance items.





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         16.9    **   ACCESS

                 During the term of the Agreement, IBM agrees to allow
                 StorageTek to have access to IBM's  **  , and  ** access for
                 **  and other such implementations solely to support IBM's
                 provision of technical support for Equipment and Licensed
                 Programs.  This information may be viewed and updated
                 electronically by StorageTek where feasible and appropriate.
                 StorageTek's use of and access to  **  is subject to continual
                 review, and may be terminated if such use or access is beyond
                 the permitted purposes as set forth herein.

17.      MARKETING RIGHTS & SUPPORT

         17.1    On the Effective Date, the Parties will announce that they
                 have entered into an agreement under which IBM will market
                 Products worldwide that it purchases on an OEM basis from
                 StorageTek.

         17.2    MARKETING SUPPORT ORGANIZATION

                 StorageTek agrees to establish a marketing support
                 organization to provide timely sales and marketing support to
                 IBM on a worldwide basis. This organization will provide  **
                 the following support:

                 a.    ** , StorageTek will maintain a project office staffed
                       with persons trained in StorageTek's administrative and
                       support systems to assist and interface with IBM
                       administrative personnel in processing IBM's customer
                       orders.  Until  **   , IBM's customer orders for
                       Products and Upgrades will be processed  **  .
                       StorageTek will provide this processing and support  **
                       to IBM through **  .

                 b.    Through  **  , StorageTek will provide worldwide  **  to
                       IBM through a  **  located in  **  , StorageTek will  **
                       .  StorageTek agrees to  **  to staff these positions
                       with individuals acting as Disk Product managers as of
                       **  .

         17.3    TRAINING

                 StorageTek agrees to provide marketing training and support to
                 IBM to facilitate IBM's sales of Products and Upgrades.





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                 a.    Initial Training.

                       (1)    Sales.  During  **  , StorageTek will provide,
                              **  "train the Trainer" training sessions for IBM
                              **  personnel to  **  to IBM's marketing
                              personnel  **  information about the Products and
                              Upgrades and their technologies to  **  the
                              products, including  **  of the Products and
                              Upgrades and the customer environments  **  to
                              the Products and ** each Product  **  .

                       (2)    Systems Engineering.  During  **  , StorageTek
                              will provide,  **   "train the Trainer" training
                              sessions for IBM  **  personnel on  **  .  The
                              training  will   **   to describe in detail   **
                              operating  environments and optimum
                              configurations, and to  **  to IBM's **
                              regarding changes or improvements as required.

         17.4    ADDITIONAL INITIAL TRAINING

                 StorageTek will provide up to  **  training sessions to each
                 of the above groups beyond those sessions described above at a
                 fee of  **  per class, plus  **  for StorageTek's trainers
                 when such training is provided at  **  facility.  StorageTek
                 also agrees to make its training facilities available to IBM
                 ** for IBM  **  to its personnel through  **  .

         17.5    ONGOING TRAINING

                 StorageTek agrees to provide IBM with material, documentation,
                 and support from StorageTek's Engineering and Technical
                 Support Staff similar to that provided as of the Effective
                 Date on StorageTek's new products, for IBM to provide its
                 personnel with training for all new Products and Upgrades.

         17.6    MARKETING MATERIALS

                 StorageTek will promptly provide IBM with electronic and paper
                 copies, to the extent available, of all marketing materials
                 used by StorageTek within one year prior to the Effective Date
                 of this Agreement, to market StorageTek products similar to
                 Products and Upgrades, including without limitation all "white
                 papers," materials describing the advantages and benefits of
                 such StorageTek products,  and  materials related to
                 comparisons of such StorageTek products with competitive
                 products.





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                 In, addition StorageTek will provide samples, artwork, and
                 camera ready copy (to the extent available) of all collateral
                 materials (e.g., brochures and product guides) and advertising
                 related to StorageTek products similar to Products and
                 Upgrades.

                 IBM may  **  from StorageTek for  **  of StorageTek's  **  for
                 such materials.

                 To the extent that StorageTek has the right to do so,
                 StorageTek hereby grants IBM a  **  , nonexclusive worldwide
                 right and license to all of the marketing and collateral
                 materials relating to the Products and Upgrades it receives
                 from StorageTek, during the term of this Agreement, to use,
                 reproduce, display, distribute, create and have created
                 Derivative Works of  any or all such materials without
                 attribution and grant sublicenses of equivalent scope to its
                 Subsidiaries but not otherwise; provided IBM does not use
                 StorageTek's trademarks or trade names except as specifically
                 permitted.  StorageTek will identify portions of the materials
                 which are subject to third-party rights.

         17.7    MARKETING TOOLS

                 StorageTek will provide all of its marketing tools, software
                 and related documentation related to the Products and
                 Upgrades, excluding third-party confidential materials,   ** .
                 In addition, StorageTek will reasonably assist IBM in updating
                 its own tools to support Products and Upgrades.  StorageTek
                 agrees to provide IBM such tools and software (in Source Code
                 form, to the extent not prevented by supplier license
                 transferability restrictions and if StorageTek discontinues
                 its support of such tools and software, and in Object Code
                 form).  StorageTek hereby grants IBM a  **  , nonexclusive
                 worldwide right and license to the tools, software and related
                 documentation it receives from StorageTek during the terms of
                 this Agreement, to use, reproduce, display, distribute, and
                 create, and have created Derivative Works of  any or all such
                 tools and software without attribution, and grant sublicenses
                 of equivalent scope to its Subsidiaries but not otherwise.

         17.8    SYSTEMS ENGINEERING SUPPORT

                 StorageTek agrees to provide IBM with fully trained persons
                 with substantial systems engineering and technical support
                 experience in the Equipment to  **  and to interface with  **
                 .  StorageTek will provide IBM with such support  **  during
                 **  , and with  **  of such support during  **  .  IBM may **
                 support for  **  , for the duration of the Agreement, at a  **
                 , provided IBM  **  IBM may  **  at the beginning of  **  .
                 All such support is  **  of personnel.  To the extent
                 StorageTek is unable to provide hours hereunder, StorageTek
                 will promptly refund unearned payments.





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18.      REPRESENTATIONS AND WARRANTIES

         18.1    Each Party represents and warrants that it has the authority
                 and right to enter into this Agreement, and has no existing
                 obligations, and shall not assume any obligations, that
                 conflict with its obligations or the rights granted to it in
                 this Agreement.  Each Party also represents and warrants that
                 it has the authority to convey the rights granted or assigned
                 by it in this Agreement.  Each Party will provide, upon
                 request, copies of agreements or other documentation necessary
                 to establish such rights.  If a Party is unable to supply a
                 copy of such agreements or other documentation, then such
                 Party shall use its best efforts to obtain such agreements or
                 other documentation to sufficiently establish that it has been
                 granted these rights.

         18.2    StorageTek represents and warrants that  **  the Equipment (or
                 Devices if  **  pursuant to Section ** ) (including the
                 Deliverables), Maintenance Code and Licensed Programs licensed
                 to IBM hereunder  **  , provided, however, that this
                 representation and warranty shall  **  Equipment (or Devices
                 if  ** pursuant to Section ** ) that  **  , and only
                 Maintenance Code and Licensed Programs that  **  , Equipment
                 (or Devices if  **  pursuant to Section ** ).  The right to
                 **  based on the foregoing representation and warranty  **
                 upon  **  as set forth in Section ** .  StorageTek further
                 represents and warrants that the Equipment (including the
                 Deliverables), Maintenance Code and Licensed Programs, **.
                 StorageTek  **  , provide IBM with  **  that StorageTek  **
                 to the Equipment, including the Deliverables, Maintenance Code
                 or Licensed Programs.

         18.3    StorageTek represents and warrants that, with respect to the
                 Deliverables, Licensed Programs and Maintenance Code created
                 outside the United States, all authors have waived their moral
                 rights in all Deliverables, Licensed Programs and Maintenance
                 Code to the extent permitted by law.

         18.4    StorageTek represents and warrants that the Equipment (or
                 Devices if manufactured by IBM pursuant to Section 23.6), when
                 used in accordance with the Specifications, will not present a
                 health or safety risk to persons or property; and the
                 Equipment shall comply with all applicable regulatory health
                 and safety standards, including UL, CSA, VDE, IEC, FCC,
                 European Economic Community CE-mark standards, any other
                 standards that are described in the Specifications or as
                 required by law.  StorageTek agrees to provide IBM with copies
                 of all reports, certifications, and other relevant documents
                 related to such standards at StorageTek's expense.

         18.5    StorageTek represents that  **  are, as of  **  equal to or
                 better than  **  for every  **  available on  **  .  If IBM
                 **  process described in Section ** .





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19.      TRADEMARK & ADVERTISING

         19.1    TRADEMARK AND DESIGN RIGHTS

                 Except as provided in Section 8, but notwithstanding any other
                 provisions of this Agreement, neither party hereto is granted
                 the right to use the trademarks, trade names, or service marks
                 of the other party (including those of Subsidiaries), directly
                 or indirectly, in connection with any product, promotion or
                 publication without the prior written approval of the other
                 party, except that IBM may use StorageTek's trademarks and
                 trade names for the aforementioned purposes on any Equipment
                 shipped by StorageTek which bears such trademarks or trade
                 names.  Any approved use of one Party's trademark or trade
                 name shall enure to the benefit of the Party owning such
                 trademark or trade name.

         19.2    ADVERTISING/DISCLOSURE

                 Neither party shall, without first obtaining the written
                 consent of the other party, in any manner disclose any details
                 of the work to be performed herein, the terms, conditions and
                 subject matter of this Agreement, or documents issued
                 hereunder, except as may be required by law or government rule
                 or regulation.  To the extent that a party is compelled to
                 make a disclosure due to government rule or regulation, such
                 disclosure shall be limited to the extent required, and the
                 other party shall have an opportunity to review the
                 information prior to its release. Each party may independently
                 and without the consent of the other party inform customers of
                 the fact that an OEM distribution arrangement exists between
                 the Parties; however, to the extent that such communication
                 includes any additional information about the other party,
                 such party shall have an opportunity to review such
                 information prior to disclosure.

         19.3    Upon request by IBM, StorageTek shall apply IBM's, its
                 Subsidiaries', its distributors' and/or its OEMs' trademarks,
                 logos and other information designated by IBM for the Product
                 and Upgrades as may be provided to StorageTek by IBM.

         19.4    By no later than  ** , StorageTek shall remove all of its
                 trademarks and any other markings which would identify
                 StorageTek from  **  the Product or other items which,  **  ,
                 would be visible to the IBM's customers or service technicians
                 and,  **  from Upgrades and FRUs.

         19.5    Use of a Party's trademarks by the other Party shall not
                 diminish the owner's right, title or interest to such
                 trademarks.





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20.      CONFIDENTIALITY

         20.1    It is anticipated that confidential information will be
                 exchanged between the Parties.  Where confidential information
                 must be exchanged, it will be exchanged under an IBM Agreement
                 for the Exchange of Confidential Information (hereafter
                 "AECI").

         20.2    With respect to all nonconfidential information disclosed by
                 one party (hereafter the "Disclosing Party") to the other
                 party (hereafter the "Receiving Party"), except to the extent
                 such information is protected by the Disclosing Party's patent
                 or copyright rights, the Disclosing Party grants to the
                 Receiving Party, to the extent, if any, of its interest
                 therein, a nonexclusive, royalty-free, irrevocable,
                 unrestricted, worldwide license to use, have used, disclose to
                 others, make copies in the case of documents, and dispose of,
                 all without limitation, such nonconfidential information in
                 any manner as it determines, including the use of such
                 nonconfidential information in the development, manufacture,
                 marketing and maintenance of products and services
                 incorporating such nonconfidential information.

21.      ASSIGNMENT & CHANGE OF CONTROL

         Neither Party shall assign or subcontract this Agreement, or any right
         or obligation hereunder, without the prior written consent of the
         other Party, except that subcontracts pursuant to StorageTek's normal
         manufacturing procedures may be assigned, provided, however, that
         StorageTek may not subcontract final assembly and test without IBM's
         prior written consent.  Any attempted assignment or subcontract not in
         compliance with this paragraph shall be void.

         StorageTek shall promptly notify IBM in writing of any Change of
         Control involving StorageTek.  Upon such Change of Control,  **  as
         provided below.

         21.1    In the event that a Change in Control occurs whereby control
                 of StorageTek is acquired by (i)  **  ; or (ii)  **  ; then
                 IBM may (i)  **  such Change of Control  **  a Change of
                 Control  **  ; or (ii)   ** of the later of:  (i) written
                 notice by StorageTek to IBM of such Change of Control; or (ii)
                 the effective date of such Change of Control.  In the event of
                 **  , IBM shall be  **  on the date of  ** and thereafter.  If
                 IBM  **  pursuant to this Section, StorageTek shall  **  for
                 **  , subject to the **  ; and provided further, that  **
                 shall not **.  In addition, IBM  **  hereof, for  **
                 following the date that IBM  **  .  In addition, IBM agrees to
                 **  to StorageTek  **  , to StorageTek for a period of  **
                 after the date  **  pursuant to this Section at a price that
                 is **, and based on  ** existing as of the date  **  .





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         21.2    In the event that a Change of Control occurs in which control
                 of StorageTek is acquired by:  (i)  **  ; or (ii)  **  ; then
                 **  and  **  will apply in the event  **  ; provided, however,
                 that **.

         **  the Changes of Control described above, a Change of Control of  **
         shall  **  this Agreement.


22.      DISPUTE RESOLUTION

         22.1    ESCALATION PROCESS

                 The Parties will attempt in good faith to promptly resolve any
                 controversy or claim arising out of or relating to this
                 Agreement by negotiations between executives of the Parties.

                 If a controversy or claim should arise, the Agreement
                 Administrators, or their respective successors, or their
                 superiors, will meet in person or phone, as they decide, at
                 least once and will attempt to resolve the matter.  Either
                 Agreement Administrator may require the other to meet within
                 seven days at a mutually agreed upon time and location.

                 If the matter has not been resolved within ten days of their
                 first meeting, or a request for such meeting if no meeting
                 occurs, the Agreement Administrators shall refer the matter to
                 senior executives, who shall have authority to settle the
                 dispute (hereafter "Senior Executives"). The Senior Executive
                 for IBM shall be the General Manager of IBM's Storage System
                 business or his/her designee and the Senior Executive of
                 StorageTek shall be its Chief Executive Officer, or his/her
                 designee.  Thereupon, the Agreement Administrators shall
                 promptly prepare and exchange memoranda stating the issues in
                 dispute, and their positions, summarizing the negotiations
                 which have taken place, and attaching relevant documents.  The
                 Senior Executives will meet in person or by telephone within
                 seven (7) days of the end of the ten-(10) day period referred
                 to above, at a mutually agreed time.

                 The first meeting shall be held at the offices of the
                 Agreement Administrator receiving the request to meet. If more
                 than one meeting is held, the meetings shall be held in
                 rotation at the offices of IBM and StorageTek.

                 If the matter has not been resolved within fifteen (15) days
                 of the first meeting of the Senior Executives (which period
                 may be extended by mutual agreement), the Parties will attempt
                 in good faith to resolve the controversy or claim in
                 accordance with the following mediation process.  During the
                 course of negotiations between the





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                 representatives, all reasonable requests made by one party to
                 the other for nonprivileged information will be honored in
                 order that each of the parties may be fully informed of the
                 circumstances relevant to the dispute.

         22.2    MEDIATION PROCESS

                 If the escalation process fails to resolve a dispute in
                 connection with this Agreement, any such dispute shall be
                 submitted to expedited mediation prior to the commencement of
                 any litigation with respect to such dispute. In the event
                 either party intends to seek recourse against the other by an
                 action at law or in equity, such party shall first give notice
                 to the other party. Within ten (10) business days of such
                 notice, the Parties shall  attempt to agree on  one mediator
                 who shall be a person mutually agreeable to both Parties and
                 who shall be experienced in the DASD industry. In the event
                 the Parties cannot agree on one mediator, each shall have the
                 right to appoint one mediator, and the two mediators shall
                 appoint a third. Mediation shall commence within twenty (20)
                 business days of the notice of request for mediation. Each
                 party agrees to cooperate fully with the mediator(s) in an
                 attempt to resolve any disputes. The mediator(s) shall use the
                 rules of the American Arbitration Association in conducting
                 the mediation. Any decision reached through mediation shall be
                 in writing but shall not be legally binding upon the Parties
                 nor admissible as evidence in any legal proceedings.  If the
                 Parties cannot resolve their differences  to their mutual
                 satisfaction within thirty (30) business days of the request
                 for mediation, either Party shall be free to pursue any and
                 all other remedies available to such Party, including, but not
                 limited to, litigation.  Costs of the Mediator shall be born
                 equally by the Parties.


23.      TERMINATION/REMEDIES

         23.1    TERMINATION BY MUTUAL CONSENT

                 This Agreement shall be subject to termination prior to the
                 expiration of the term at any time by mutual consent of the
                 parties, evidenced by a written agreement providing for
                 termination.  Such agreement will include provisions to allow
                 StorageTek access to IBM disk drives of the same type as are
                 then being consigned to StorageTek and to provide IBM ongoing
                 maintenance, FRUs and Product Engineering Services if
                 StorageTek offers such items to any other entity.

         23.2    TERMINATION BY BANKRUPTCY

                 This Agreement may be immediately terminated by either Party
                 if any of the following events ("Triggering Events") occur:
                 (1) the other Party files a voluntary petition under any
                 provision of the U.S. Bankruptcy Code or under any similar
                 insolvency law, makes an assignment for the benefit of its
                 creditors, (2) any involuntary petition in bankruptcy under
                 any provision of the U.S. Bankruptcy Code or under any similar
                 insolvency law is filed against such other Party, or (3) a
                 receiver






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                 is appointed for, or a levy or attachment is made against all
                 or substantially all of its assets, and such involuntary
                 petition is not dismissed or such receiver or levy or
                 attachment is not discharged within sixty (60) days after the
                 filing, appointment or making thereof.

                 To the extent that applicable bankruptcy law does not permit
                 the exercise of rights under the immediately preceding
                 paragraph, the bankrupt party agrees that adequate assurance
                 of performance by the bankrupt party of the balance of this
                 Agreement as a "Debtor-in-possession" or any similar entity
                 under successor bankruptcy laws will include assurances both
                 of such entity's ability to adequately produce products for
                 the specifically permitted Agreement and such entity's
                 willingness and ability to protect the other party's
                 proprietary rights.  As a personal contract, exercise of
                 rights by a trustee or  assignment  of  rights  hereunder
                 would  not  be  appropriate  and  such understanding is an
                 essential part of each Party's willingness to enter into this
                 Agreement.

         23.3    TERMINATION FOR CAUSE

                 a.    If either Party is in material breach of this Agreement,
                       the other Party may give written notice to the
                       defaulting Party specifying the respects in which the
                       defaulting Party has failed to perform or comply with
                       the terms and conditions of this Agreement.  In the
                       event that any defaults so indicated shall not be
                       remedied by the defaulting Party within sixty (60) days
                       (ten (10) days as to a failure to pay any amounts
                       indisputably due) unless a different period is provided
                       for elsewhere in this Agreement after such notice, the
                       party not in default may, by written notice to the
                       defaulting Party, terminate this Agreement.

                 b.    Either Party may submit disputes related to the notice
                       of termination to the Escalation Process or Mediation
                       Process described in Section 22 but such termination
                       notice shall not be stayed by submission to escalation
                       or mediation and termination shall take effect as set
                       forth above.  Failure of either Party to terminate this
                       Agreement due to a breach on the part of the other Party
                       shall not prejudice its rights to terminate for a
                       subsequent breach on the part of the defaulting Party.

                 c.    The right of a Party to terminate this Agreement, and
                       the exercise of such right by such Party, shall be in
                       addition to any other remedies or rights granted in this
                       Agreement or which a Party would have in law or equity.

                 d.    If IBM terminates this Agreement for cause:






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                       (1)    IBM will be relieved of its obligations to  **
                              due in the year of termination (including any
                              previously  **  to StorageTek in that calendar
                              year, which shall be  **  by StorageTek), and
                              thereafter, and to pay any  **  , that would
                              otherwise be due in the year of termination, or
                              thereafter;

                       (2)    IBM will receive the  **  license and  **  rights
                              set forth in, and pursuant to, Sections **  of
                              the Agreement, and the  **  for  **  shall become
                              **  ;

                       (3)    So long as StorageTek continues to provide
                              Product Engineering Services as described in
                              Section  **  of the  **  for any  **  product,
                              which product includes any,  all or  some of  the
                              Deliverables, StorageTek will provide IBM with
                              such Product Engineering Services with respect to
                              those same portions of such Deliverables a  **  ,
                              and will, in addition grant to IBM a  **  license
                              to the  **  (with respect to those same portions
                              of such Deliverables) of the  **  as the licenses
                              granted to IBM, under the  **  , for Licensed
                              Works;

                       (4)    All licenses granted to StorageTek to use  **
                              under Section ** of the Description of Licensed
                              Works will survive such termination, and be  **
                              as provided in such Description of Licensed
                              Works, provided, however, that, if StorageTek
                              elects to maintain or effectuate, whichever the
                              case may be, the StorageTek  **  Licenses set
                              forth in Section **, and in Section ** of the
                              Description of Licensed Works  **  , then
                              StorageTek must  ** and also  **  as set forth in
                              the Description of Licensed Works for such
                              license, except that  **  shall be  **  for each
                              **  StorageTek following the date of StorageTek's
                              receipt of IBM's written notice of termination,
                              and except that, once StorageTek has  ** pursuant
                              to this section  **  then such license shall
                              become  **  ,  and provided further, that any  **
                              by StorageTek to IBM under this section shall be
                              **  for products other than as covered in
                              Sections  **  of the  **  , and shall have no
                              effect on the  **  to be **  pursuant to Section
                              **  ; and

                       (5)    Despite such termination, IBM shall have the  **
                              for any and all Specified Functions in process
                              under the IDA, and if IBM  **  , StorageTek will
                              continue to develop Specified Functions  **  as
                              specified in the IDA.  Further, if IBM  **  , the
                              rights and obligations of the Parties to the
                              intellectual property related to such  **  .  If
                              IBM does not  ** any such Specified Function,
                              StorageTek will have  **  above, provided,
                              however, that if IBM  **  for any Specified
                              Function of the Deliverables  **  , and
                              StorageTek  ** completes development of such
                              Specified





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                              Function, then such  **  Specified Function to
                              the extent  **  will be deemed a  **  and not  
                              **.

                 e.    If StorageTek terminates this Agreement for cause:

                       (1)    IBM will pay to StorageTek all Recovery Payments
                              that are unpaid as of the date of termination;

                       (2)    IBM will pay to StorageTek any amounts that
                              become due under the IDA during the ninety (90)
                              day period following the date on which StorageTek
                              provides notice of termination to IBM;

                       (3)    IBM will supply disk drives of the same type as
                              the Drives which are being consigned, or similar
                              replacements therefor, to StorageTek for a period
                              of two (2) years after the date of termination at
                              a price that is no higher than the average
                              selling price for five (5) major IBM OEM
                              customers who acquire such disk drives at
                              comparable volumes, and based upon IBM's standard
                              OEM terms and conditions existing at the time of
                              termination;

                       (4)    The StorageTek Material Use Licenses set forth in
                              Sections 3.2d and 3.2e of the DLW will become
                              fully paid-up and irrevocable; and

                       (5)    So long as StorageTek continues to provide
                              Product Engineering Services as described in
                              Section  **  for any StorageTek product which
                              includes any, all or some of the Deliverables,
                              StorageTek will provide IBM with such Product
                              Engineering Services (with respect to the same
                              portions of the Deliverables) at  **  .

         23.4    MATERIAL BREACH

                 A material breach shall include, but not be limited to, a
                 material failure to:

                 a.    pay any amounts that are undisputably due;

                 b.    deliver Equipment or to supply software, tools and
                       licenses in accordance with this Agreement;

                 c.    comply with the reliability, availability, and service
                       levels specified in the Agreement;

                 d.    manufacture Equipment in accordance with the Agreement;





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                 e.    supply Deliverables in accordance with Attachment 1 to
                       Exhibit 3; or

                 f.    comply with Section 18, Representations and Warranties.

                 A Party may not be declared to be in material breach of any
                 provision of this Agreement if, and to the extent that its
                 failure to perform has been caused by the other Party's breach
                 of this Agreement.

         23.5     **   LICENSE

                 StorageTek hereby grants to IBM a fully paid-up license to  **,
                 effective if:  (1) IBM has  **  , (2) StorageTek has  **  ,
                 or (3) one of the Triggering Events set forth in Section 23.2
                 occurs; provided, however, that IBM may not exercise its
                 rights under such license if, on the day IBM notifies
                 StorageTek that IBM will exercise such rights: (i) IBM is in
                 material breach of this Agreement; (ii) StorageTek has given
                 IBM notice in writing of such material breach prior to the
                 applicable event set forth in Section 23.5, above; and (iii)
                 IBM has failed to cure such material breach; and IBM
                 thereafter fails to cure such material breach within sixty
                 (60) days of IBM's notice to StorageTek.

         23.6    MANUFACTURING MAKE OR HAVE MADE RIGHTS

                 If an event under Section 23.5, above, occurs, or if IBM
                 elects to receive  **  pursuant to Section ** , then
                 StorageTek agrees to provide the following assistance to IBM
                 or IBM's designee  **  to enable IBM or its designee to assume
                 Equipment, Devices or just FRUs, as the case may be,
                 manufacturing responsibilities:

                 a.    Grant access by  **  to  **  ;

                 b.    Provide a complete copy of all bills of  material for
                       Equipment including the costs and sources of materials
                       listed therein and identification of suppliers. In
                       addition, if IBM requests, StorageTek agrees to assist
                       IBM in acquiring parts, or materials from StorageTek's
                       vendors at prices, terms and conditions  **  , and
                       including  **  .

                 c.    Provide copies of all materials related to and required
                       for the manufacture and test of any and all Equipment,
                       Devices or just FRUs, as the case may be, including, but
                       not limited to, assembly drawings, component drawings,
                       mechanical drawings, schematics, process descriptions,
                       tools and fixtures.

                 d.    In addition StorageTek will provide training on the use 
                       of such tools.





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                 e.    Provide a copy of each document, Maintenance Code,
                       Microcode, Licensed Works, and any related software that
                       relates to the manufacture, maintenance or repair of
                       Equipment, Devices or just FRUs, as the case may be.

                 f.    Provide, to the extent that it has the right to do so:
                       (i) a  ** , nonexclusive,  **  and license to use the
                       information, tooling, equipment, and know-how described
                       in this Section 23.6 and (ii) a  **  ; solely to
                       manufacture, have manufactured, test, have tested, sell,
                       lease and otherwise distribute, the Equipment, Devices
                       or just FRUs, as the case may be.  In addition,
                       StorageTek agrees to transfer title to IBM or IBM's
                       designee with respect to all tooling specific to and
                       necessary for manufacture and test of Equipment, Devices
                       or just FRUs, as the case may be.


                 g.    Provide IBM with permission to disclose confidential
                       StorageTek information related to Equipment, Devices or
                       just FRUs, as the case may be, which has been received
                       by IBM under this Agreement, or information received
                       pursuant to any confidential disclosure agreement
                       between the Parties, to the same extent as IBM would
                       disclose its own confidential information to third
                       Parties in order to have Equipment, Devices or just
                       FRUs, as the case may be, manufactured by such third
                       Parties.

                 h.    Grant to IBM a  ** , nonexclusive,  **  license to  **
                       to the extent such license is required for IBM to
                       exercise the rights granted under this Section.  Such
                       license shall include the right to  **  the Equipment,
                       Devices or just FRUs, as the case may be.  Such license
                       shall  **  , including  **  to its  **  .

         23.7    TERMINATION FOR CONVENIENCE

                 IBM shall also have the right to terminate this Agreement for
                 convenience  **  by providing StorageTek with a  **  prior
                 written notice of its election to do so. In the event IBM
                 elects to terminate this Agreement for convenience, IBM's
                 liability for such termination is  **  to StorageTek of any
                 **  , if any,  owed pursuant to Section ** .  StorageTek
                 agrees that, in consideration for such  **  , IBM shall have
                 the option to  **  prior to the date such termination becomes
                 effective, and StorageTek will at IBM's request  **  , finish
                 any partially completed Equipment in StorageTek's possession
                 on such date and Deliver any such Equipment promptly to IBM.
                 Also, the  **  granted pursuant to the  **  will become
                 effective and  **  .  Moreover, IBM agrees to supply disk
                 drives of the same type as the Drives that are being
                 consigned, or similar replacements therefor, to StorageTek for
                 a period of  **  after the date of termination at a price that
                 is  **  , and based upon IBM's standard OEM terms and
                 conditions at the time of termination.





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         23.8    TERMINATION FOR BURDENSOME CONDITION

                 a.    Upon the occurrence of a Burdensome Condition involving
                       only a circumstance described in Section ** , IBM shall
                       **  prior written notice to StorageTek, to terminate
                       this Agreement in its entirety (including, but not
                       limited to, the IDA)  **  , including, but not limited
                       to,  ** ; except that

                       (1)    IBM shall not be entitled to the  ** ;

                       (2)    IBM shall remain liable for any  **  with respect
                              to the  **  in which IBM sends notice of such
                              termination to StorageTek, the  **  thereafter
                              and any  **  for which such  ** remain unpaid.
                              For purposes of this Section 23.8,  **  shall be
                              computed as set forth  ** , and IBM may continue
                              to purchase Equipment, at its option, in all  **
                              in which it remains liable for  **  ;

                       (3)    IBM shall be  **  during the  **  notice period
                              and also the  **  that were scheduled to have  **
                              for the  **  period after such notice period, and
                              StorageTek shall not be  ** under the  **  after
                              the  **  notice period;

                       (4)    The licenses granted to StorageTek pursuant to 
                              the  **  shall be  **  ;

                       (5)    StorageTek shall be  **  for all  **  for
                              materials that StorageTek made prior to
                              notification of termination in order to comply
                              with its obligations under the Agreement;
                              provided that such materials are Delivered to IBM
                              **  (to the extent that  **  of such materials
                              has been reimbursed); and further provided that
                              in no event will such reimbursement by IBM exceed
                              the sum of  **  ;

                       (6)    IBM shall supply disk drives as the same type as
                              the Drives that are being consigned, or similar
                              replacements therefor, to StorageTek for a period
                              of  **  after the date of termination at a price
                              that is  **  , and based on  **  ; and

                       (7)    The licenses granted to IBM pursuant to the  **
                              shall be the same as if termination under this
                              Section 23.8a had been a  **  or a  **  .

                 b.    Upon the occurrence of a Burdensome Condition involving
                       a circumstance described in Section ** , IBM shall  **
                       prior written notice to StorageTek, to terminate this
                       Agreement in its entirety (including, but not limited
                       to, the IDA).





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                       IBM's liability will be limited as set forth in Sections
                       23.8a(1) through 23.8(7), above, except that:

                       (1)    The period in which IBM shall remain liable for
                              **  as set forth in Section 23.8a(2) above shall
                              **  IBM notifies StorageTek of termination
                              pursuant to Section 26.3; and

                       (2)    The period in which IBM shall be  **  pursuant to
                              Section 23.8a(3) above shall be the  ** period
                              following the date that IBM notifies StorageTek
                              of termination pursuant to Section 26.3.

                 c.    Upon the occurrence of a Burdensome Condition,
                       StorageTek shall  **  prior written notice to IBM, to
                       terminate this Agreement in its entirety  **  ; except
                       that

                       (1)    StorageTek shall  **  ;

                       (2)    IBM shall  **  all obligations to make any
                              further  **  , including  **  in which StorageTek
                              notifies IBM of termination pursuant to Section
                              26.3, and to  **  ;

                       (3)    IBM shall have no further obligation to  **  to
                              StorageTek under the  **  , and StorageTek shall
                              **  that IBM has made to StorageTek under the  **
                              ;

                       (4)    The  **  granted pursuant to the Description of
                              Licensed Works will become effective, subject to
                              the  **  as set forth in the Description of
                              Licensed Works; and provided that the licenses
                              granted pursuant to the DLW shall not  **  ;

                       (5)    IBM shall supply disk drives as the same type as
                              the Drives that are being consigned, or similar
                              replacements therefor, to StorageTek for a period
                              of  **  after the date of termination at a price
                              that is  **  , and based on  **  ;

                       (6)    The licenses granted to IBM pursuant to the
                              Description of Licensed Works shall become  ** ;
                              and

                       (7)    IBM will receive the manufacturing make or have
                              made rights set forth in, and pursuant to,
                              Section 23.6 of this Agreement.





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                 d.    For purposes of this Section 23.8,  **  shall be
                       computed as the  **  that would be due under Sections **
                       using the Volume Recovery table only for the  **  in
                       which IBM provides notice to StorageTek (or for the
                       period set forth in Section 23.8a(2) above for a
                       termination for Burdensome Condition relating only to a
                       circumstance described in Section  **  as if such
                       payments were calculated on a  **  basis alone with  **
                       obligation.  After making such payment, IBM shall  **
                       for any subsequent  **  (or with respect to a
                       termination under Section 23.8a, for the period set
                       forth in clause (2) thereunder), or for the  **  or
                       thereafter.

                 e.    In no event will either Party's liability to the other
                       for termination pursuant to this Section 23.8 exceed (i)
                       the sum of  **  in the event of a termination of this
                       Agreement only as a result of a circumstance described
                       in Section 1.7(ii); or (ii) the sum of  **  in the event
                       of a termination of this Agreement as a result of a
                       circumstance described in Section 1.7(i).  These
                       limitations of liability will not apply to  **  hereof;
                       nor shall such limitations apply to any **  as modified
                       above.

         23.9    WIND DOWN

                 Upon termination of this Agreement by either Party for any
                 reason prior to the expiration of the term set forth in
                 Section 3:

                 a.    IBM may continue, for  **  following the date of notice
                       of such termination, to place noncancelable purchase
                       orders at prices for the quarter in which such notice is
                       effective for Equipment, and StorageTek agrees to accept
                       such orders and to manufacture supply and Deliver such
                       Equipment to IBM if ordered for Delivery within 90 days
                       of such purchase orders and within appropriate lead
                       times; and

                 b.    StorageTek may continue for  **  following the date of
                       notice of termination (unless a longer period is
                       otherwise provided for in this Agreement), to place
                       noncancelable purchase orders for disk drives of the
                       same type as the Drives that are being consigned, or
                       similar replacements therefor, at a price that is  **  ,
                       and based on IBM's standard terms and conditions; and
                       IBM agrees to accept such purchase orders and to
                       manufacture, supply and deliver such disk drives, if
                       ordered for delivery by StorageTek within appropriate
                       lead times.

                 Except for a termination of this Agreement by StorageTek
                 pursuant to Sections 6.5b or 6.5c, Equipment ordered by IBM
                 hereunder, if Delivered after termination, will





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                 be credited toward IBM's attainment of its  **  Volumes, as
                 the case may be, for the quarter in which the Agreement was
                 terminated.

         23.10   ** AFTER TERMINATION

                 Subject to Sections 23.3 and 23.8, and so long as StorageTek
                 continues to provide Product Engineering Services as described
                 in Section ** for any StorageTek product, if either Party
                 terminates this Agreement,  then IBM may elect to:   (i)  **
                 Product Engineering Services under the SOW; (ii)   ** Product
                 Engineering Services at the  **  under the SOW, but at a
                 funding level of  **  of the funding levels for Product
                 Engineering Services required under the SOW; or (iii) receive
                 such Product Engineering Services as it may request, up to the
                 levels as then required under the SOW, on a time and materials
                 basis at  **  .


24.      INDEMNIFICATION RIGHTS

         24.1    INTELLECTUAL PROPERTY INDEMNITY

                 a.    StorageTek shall indemnify, defend and hold harmless IBM
                       **  in respect to any costs, expenses, liability or
                       damages, including reasonable attorney's fees, arising
                       out of or related to any action  **  to the extent that
                       it is based on a  **  .  StorageTek agrees to provide
                       IBM with  ** to defend a claim brought in  **  .

                 b.    StorageTek shall also indemnify IBM in accordance with
                       the preceding paragraph for  **  , provided that such
                       **  , provided, however, that StorageTek's liability
                       under this paragraph is **  .

                 c.    StorageTek shall have no obligation regarding any  **
                        to the extent based on:  (i)  **  ; (ii) **  , (iii)
                        **  ; or (iv) ** .

                 d.    If the use of the  **  shall become,  **  to become,  **
                       based on  **  , StorageTek may,  **  , either:

                       (1)    procure for  IBM the right to continue to market
                              and use the  **  on a continued, uninterrupted
                              basis; or

                       (2)    replace or modify the  **  with a functionally
                              equivalent substitute so that the  **  will
                              become noninfringing.





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         24.2    GENERAL INDEMNITY

                 a.    StorageTek shall indemnify, defend and hold harmless IBM
                       in respect to any cost, expenses, liability or damages,
                       including reasonable attorney's fees, for any
                       third-party claims arising out of or related to:

                       (1)    injury or damage to persons or property resulting
                              **  from any  **  , or the  **  used in, or in
                              connection with,  **  ;

                       (2)    StorageTek's failure to make available any  **
                              and related documentation to  **  under
                              reasonable terms and conditions;

                       (3)    StorageTek's failure to  **  ;

                       (4)    Any  **  , provided that such claims do not
                              specifically pertain to  **  in the ordinary
                              course of business by  **  end user customers; or

                       (5)    StorageTek's failure to comply with or a  **  .

                 b.    StorageTek shall, however, have no liability to
                       indemnify IBM if and only to the extent that:

                       (1)    the injury or damage is due to use of  **  ,
                              Maintenance Code or Licensed Programs in a manner
                              for which it was not designed;

                       (2)    the injury or damage is caused by the negligence
                              of  IBM or another third party (but excluding
                              those servants, agents, contractors or
                              subcontractors of StorageTek); or

                       (3)    the  **  has been modified by:  (i) anyone other
                              than StorageTek, or (ii) IBM if not authorized by
                              StorageTek.

         24.3    OBLIGATIONS OF IBM

                 The obligation of StorageTek to defend and make payments under
                 Sections 24.1 and 24.2 is conditioned on the following:

                 a.    StorageTek shall be notified promptly in writing by IBM
                       of any claim;

                 b.    StorageTek shall  **  for its settlement or compromise;
                       and





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                 c.    IBM shall  **  in defending such an action.

                 IBM may participate, at its sole cost and expense, in the
                 defense of any action on such claim and any negotiations for
                 its settlement or compromise.

25.      GOVERNING LAW

         25.1    NEW YORK LAW

                 The relationship between the Parties and this Agreement are
                 governed by the substantive laws of the state of New York. Any
                 action between the Parties must be brought before a court of
                 competent jurisdiction located in the United States Southern
                 District of New York.  Each Party hereby waives any right to a
                 jury trial in any dispute between them. The Parties agree that
                 the United Nations convention on the international sale of
                 goods shall not apply to this Agreement.

                 It shall be a condition precedent to the filing of any such
                 actions that the dispute resolution procedure set forth in
                 Section 22 will have been followed prior to the filing of such
                 action, excepting only that a Party may institute an action
                 seeking a preliminary injunction, temporary restraining order,
                 or other equitable relief, if necessary in the opinion of that
                 Party to avoid material harm to its property, rights or other
                 interest, before commencing or at any time during the course
                 of the dispute procedure in Section 22.

         25.2    LIMITATION OF ACTIONS

                 Neither Party will bring a legal action in connection with
                 this Agreement against the other more than **  after the cause
                 of action arose. This limitation does not apply to actions
                 brought to enforce (i) indemnification rights (Section 24) or
                 (ii) violation of intellectual property rights.

         25.3    LIMITATION OF LIABILITY

                 Except as may be required pursuant to Section 6.5, in no event
                 shall either Party hereto be liable to the other for more than
                 **  for any and all causes of action and claims of any nature
                 (including, but not limited to, claims that obligations,
                 representations or warranties hereunder have failed of their
                 essential purpose) in connection with this Agreement;
                 provided, however, that:

                 (a)   ** ; and





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                 (b)   ** .

26.      GENERAL

         26.1    COMPLIANCE WITH LAWS

                 Each Party agrees to comply at its own expense with all
                 applicable laws and regulations of the United States, the
                 European Union, and all other countries or country groups.

         26.2    RELATIONSHIP OF THE PARTIES

                 Each Party acknowledges and agrees that it is it is
                 independent of the other.  Neither Party is, or will claim to
                 be, a partner, employee, joint venturer, agent, or legal
                 representative of the other Party except as specifically
                 stated in this Agreement. Neither Party will assume or create
                 any obligation or responsibility, expressly or by implication,
                 on behalf of or in the name of  the other Party.  Each Party
                 is responsible for the direction and compensation of its
                 employees.

                 Each Party may have similar agreements with others.  Each
                 Party may design, develop, manufacture, acquire or market its
                 own or competitive products and services.

         26.3    NOTICES

                 All notices by one party to the other in connection with this
                 Agreement shall be in writing and will be sent to the
                 following addresses:

                 Notices related to forecasts, orders, and shipment will be
                 sent to:

                 For IBM:                 For StorageTek:
                                                 
                                                 
                 **                              Agreement Administrator 
                 Procurement Manager             for IBM Agreement
                 IBM Corporation                 Storage Technology Corporation
                 5600 Cottle Road                2270 South 88th Street
                 San Jose, CA  95193             Louisville, CO  80028

All other notices, including without limitation notices of breach, default,
will be sent to the following addresses:





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         For IBM:                              For StorageTek:
                                               
         **                                    Agreement Administrator
         Vice President, Worldwide Materials     for IBM Agreement           
         IBM Corporation                       Storage Technology Corporation
         5600 Cottle Road                      2270 South 88th Street        
         San Jose, CA  95193                   Louisville, CO  80028         
                                               with a copy to:               
                              
                              
                              
                              
                              

         For IBM:                              For StorageTek:
         Legal Department                      General Counsel
         IBM Corporation                       Storage Technology Corporation
         5600 Cottle Road                      2270 South 88th Street
         San Jose, CA  95193                   Louisville, CO  80028


                 Either Party may change any address at which it will receive
                 notices by notifying the other Party in writing.

                 Notices and other communications between the Parties in
                 connection with this Agreement shall be deemed given:

                 a.    three days after being sent by U.S. mail, postage
                       prepaid, certified or registered, to the address listed
                       above; or

                 b.    on the date it is sent via facsimile transmission with
                       confirmation from the receiving party that the
                       transmission was completed successfully, with the
                       original document sent as described above in item a.

                 Notices related to order, forecast, shipment, and delivery may
                 also be sent via confirmed electronic mail (EDI) to the
                 address listed above and shall be deemed given on the date of
                 confirmation of delivery.

         26.4    COUNTERPARTS

                 This Agreement may be executed simultaneously in two (2)
                 counterparts, each of which shall be deemed an original, but
                 both of which together shall constitute one and the same.





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         26.5    HEADINGS AND ATTACHMENTS

                 The headings in this Agreement are for reference only and will
                 not affect its meaning or interpretation.  The Exhibits, their
                 Attachments, their Appendices and their Schedules, are
                 attached to and referenced in this Agreement and are
                 incorporated herein by reference.

         26.6    AMENDMENT

                 For any change to this Agreement to be valid, it must be
                 signed by both Parties.

         26.7    WAIVER

                 The failure by either Party at any time to enforce the
                 provisions of this Agreement, to exercise any option or
                 election, or to require at ant time the performance by the
                 other Party of any provisions herein will not be construed as
                 a waiver of such provision.

         26.8    SEVERABILITY

                 If any provision or provisions of this Agreement shall be held
                 to be invalid, illegal or unenforceable, the validity,
                 legality and enforceability of the remaining provisions shall
                 not in any way be affected or impaired provided the original
                 intentions of both Parties are maintained.

         26.9    WEEKENDS AND HOLIDAYS

                 If any obligation of a party hereunder falls due on a weekend
                 day or a Federal holiday, then that obligation shall be due on
                 the next business day following such weekend day or Federal
                 holiday.

         26.10   FORCE MAJEURE

                 Neither StorageTek nor IBM shall be liable for any delay or
                 failure of performance hereunder due to any contingency beyond
                 its control which renders performance commercially
                 unreasonable including, but not limited to, an act of God,
                 war, mobilization, riot, strike, embargo, fire, flood,
                 hurricane, earthquake or power failure ("force majeure
                 incident").

                 When only part of StorageTek's or IBM's ability to perform is
                 excused under this section, StorageTek or IBM must allocate
                 production and deliveries or receipt of deliveries among
                 various customers or suppliers then under contract for similar
                 goods during the period when StorageTek or IBM is unable to
                 perform.  The allocation must be effected in accordance with
                 Section 10.5 of the Agreement.



                                      72
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                 If either StorageTek or IBM claims excuse for nonperformance
                 under this section, it must give notice in writing to the
                 other party.

                 If StorageTek is unable to Deliver or IBM is unable to sell
                 Equipment, or if IBM is unable to deliver Drives, due to a
                 force majeure incident, any units of Equipment that were
                 properly ordered by IBM and not Delivered will be counted
                 toward IBM's attainment of its Quarterly Volumes, Annual
                 Volumes and Minimum Volumes.

                 If a Party's inability continues for more than one hundred
                 twenty (120) days, the other Party may terminate this
                 Agreement and IBM shall have no liability hereunder for
                 Recovery Payments and Liquidated Damages.

         26.11   SURVIVAL

                 The rights and obligations of Sections 1, 7.6, 7.7a, 7.8,
                 7.10, 9, 14, 15, 16.8, 18, 19.1, 19.2, 19.5, 20, 22, 23, 24,
                 25 and 26, and 11, 13.1a, 13.2, 13.3 and 13.4  (with respect
                 to FRUs), shall survive and continue after any expiration or
                 termination of this agreement and shall bind the parties and
                 their legal representatives, successors and assigns.

         26.12   ORDER OF PRECEDENCE

                 In the event that there is an inconsistency or conflict
                 between the terms in the Specifications and other terms of
                 this Agreement, then such other terms in this Agreement shall
                 take precedence over the terms in the Specifications.


THIS AGREEMENT SUPERSEDES ALL PROPOSALS, ORAL OR WRITTEN, AND ALL NEGOTIATIONS,
CONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT.  THE PARTIES BOTH ACKNOWLEDGE THAT THEY HAVE
NOT BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY ANY REPRESENTATIONS OR
STATEMENTS, ORAL OR



                                      73
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WRITTEN, NOT EXPRESSLY CONTAINED HERE.  THE TERMS AND CONDITIONS OF THIS
AGREEMENT SHALL PREVAIL, NOTWITHSTANDING ANY VARIANCE WITH THE TERMS AND
CONDITIONS OF ANY ORDER OR OTHER INSTRUMENT SUBMITTED BY THE PARTIES.


INTERNATIONAL BUSINESS MACHINES          STORAGE TECHNOLOGY CORPORATION
  CORPORATION



By:                                      By: 
        -------------------------------          -------------------------------
Name:                                    Name:
        -------------------------------          -------------------------------
Title:                                   Title:    
        -------------------------------          -------------------------------
Date:                                    Date:     
        -------------------------------          -------------------------------



                                      74
<PAGE>   82
                   CONFIDENTIAL TREATMENT -- EXHIBIT PORTION


                  THE FOLLOWING IS A REDACTED VERSION OF THE
                  "EXHIBITS, ATTACHMENTS, APPENDICES" PORTION
                                     OF THE
                     OEM AGREEMENT DATED AS OF JUNE 7, 1996
                  BY AND BETWEEN STORAGE TECHNOLOGY CORPORATION
                 AND INTERNATIONAL BUSINESS MACHINES CORPORATION

                  THIS MATERIAL IS BEING SUBMITTED IN CONNECTION
                    WITH A REQUEST FOR CONFIDENTIAL TREATMENT
                          PURSUANT TO RULE 24b-2 UNDER
                       THE SECURITIES EXCHANGE ACT OF 1934

<PAGE>   83
                           ATTACHMENT 1 TO EXHIBIT 1

UNIT PRICES

              UNIT CONTROLLER OEM PRICE (INCLUDING IXFP SOFTWARE)
              PRICES EXCLUDING DRIVES IN THOUSANDS OF US DOLLARS
                     ($K) OR MILLIONS OF US DOLLARS ($M)

ICEBERG   see notes (1) (2) (3) (4)        # Escon

         Cache MB                          Channel    **

**





System Average                                        **


KODIAK   see notes (2) (3) (4)

**





System Average                                        **  

-------------

Notes: (1)  For   **   Iceberg, pricing will be   **   for first   **   units
            shipped during a quarter; any additional units shipped during that
            quarter will be priced at   **   .  Note:   **   figure above
            reflects average cost assuming current volume estimate of   **
            units.
       (2)  The following amounts will be added to the price of certain Iceberg
            and Kodiak units shipped during these quarters:

            During the following quarters                                  **
                                                                          ----
            For the first following number of units   **   shipped         ** 
            Add the following amount ("Price Adder") to applicable unit
            prices:                                                        ** 
            Total additional cost during the quarter ("Minimum       
            Adder"):                                                       **

            If fewer units than indicated above are shipped to IBM during a
            quarter, then IBM shall pay to STK   ** the   **   amount of   **
            applicable to units shipped during that quarter and the   **   for
            that quarter no later than   **   days following the end of that
            quarter.
       (3)  STK will purchase the   **   from third-party suppliers; IBM will
            then pay to STK the cost of these   ** (including actual material
            burden, not to exceed   **   to STK on terms consistent with those
            provided to by the supplier to STK.  IBM will manufacture and
            provide to STK on a consignment basis   **   .
       (4)  System Averages assume product mix incorporated in current volume
            estimates.  The cache sizes listed above refer to physical size.
       (5)  The stated prices shall include any   **   (excluding the   **   )
            that are available at the time of Delivery and are incorporated
            into   **   .





-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.
<PAGE>   84
                           ATTACHMENT 1 TO EXHIBIT 1
                                    (Page 2)

Current Volume Assumptions

                                          Number of Controllers

ICEBERG                        # Escon
         Cache    **           Channel               **

  **





TOTAL                                                **


KODIAK

  **





TOTAL KODIAK

TOTAL ICEBERG & KODIAK                               **





-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.
<PAGE>   85
                           ATTACHMENT 1 TO EXHIBIT 1
                                    (Page 3)

Current Volume Assumptions

                                                  TB's

ICEBERG                        # Escon
         Cache    **           Channel      **

  **





SYSTEM TOTAL                                **


KODIAK

  **





TOTAL KODIAK

TOTAL ICEBERG & KODIAK                      **





-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.

<PAGE>   86
                          ATTACHMENT 2 TO EXHIBIT 1


                    Appendix A  1996   **   Payment Table

                    Appendix B  1997   **   Payment Table

                    Appendix C  1998   **   Payment Table

                    Appendix D  1999   **   Payment Table













-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.

<PAGE>   87
                                  Appendix A


1996    **  Payment Table

Estimated Volumes in TB's
Payments in   **



<TABLE>
<CAPTION>
                3Q96                                   FY1996
--------------------------------------------------------------------------------
 <S>                <C>                     <C>                 <C>      
    Estimated                                Estimated           
     Volumes        **   Payments             Volumes            **   Payments
   Under & over                            Under & over         
--------------------------------------------------------------------------------
   **             

--------------------------------------------------------------------------------
</TABLE>


Note:  Full Year commitment:   **

      **   Volumes equal   **   plus any   **   .




-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.

<PAGE>   88
                                   Appendix B
                                    (Page 1)
 
1997     ** Payment Table -- 1Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's
                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **   to **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **   to **                                **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
</TABLE>




1997   **    Payment Table  --  2Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's

                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **   to **                                **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **   to **                                **                          **                          **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
                                                                                                          
</TABLE>

-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.

<PAGE>   89
                                  Appendix B
                                    (Page 2)
 

1997   **    Payment Table  --  3Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's

                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             

from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **  to **                                              **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                          **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
                    
</TABLE>

1997   **    Payment Table  --  4Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's

                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **  to **                                              **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                          **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
NOTE: 1997 ** payments are **.                                                                               
</TABLE>

-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.

<PAGE>   90
                                   Appendix C
                                    (Page 1)

1998     ** Payment Table -- 1Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's
                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                                                                          
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **     **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **   to **                               **                           **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
</TABLE>




1998   **    Payment Table  --  2Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's

                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **  to **                                              **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                          **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
                                                                                                          
</TABLE>

-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.
<PAGE>   91
                                   Appendix C
                                    (Page 2)

1998     ** Payment Table -- 3Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's
                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **     **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **   to **                               **                           **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
</TABLE>




1998   **    Payment Table  --  4Q YTD

<TABLE>
<CAPTION>
Payments in   **
Volumes in TB's

                                                                    **    Total
                                                                  ---------------
   Estimated
    Volumes                           from   **   to              from    **   to                     Standard
   (in TB's)                                 **   TB                      **   TB                      **  TB
--------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                         <C>             
from   **   to **                                             **  Total x    **                         **
                                                          **   x Estimated Volume     **   x Estimate Volume

from   **   to **                                             **   Total x   **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **   to **                                             **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

from   **  to **                                              **    Total    **                         **
                                                          **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                         **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume

                                                      (  **  Total  **   x   **
                                                                              
from   **  to **                                 **                          **                          **
                                                                                                          
                             **   x Estimated Volume      **   x Estimated Volume     **   x Estimated Volume
                                                                                                          
</TABLE>


Note: 1998 ** payments are **.

-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.
<PAGE>   92
                                              Appendix D


1999    **  Payment Table

Estimated Volumes in TB's
Payments in   **



<TABLE>
<CAPTION>
When Quarterly Volume Commitment = ** TB's        When Quarterly Volume Commitment = ** TB's
--------------------------------------------------------------------------------------------
 <S>                      <C>                     <C>                   <C>      
    Estimated                                       Estimated           
     Volumes              **   Payments              Volumes            **   Payments
   Under & over                                   Under  & over         
--------------------------------------------------------------------------------------------
   **             

--------------------------------------------------------------------------------------------
</TABLE>


       * Volumes equal   **   plus any   **   .




-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.



<PAGE>   93
                           ATTACHMENT 3 TO EXHIBIT 1

                                UPGRADE PRICING

ICEBERG

1.    INTEGRATED ICEBERG CAPACITY UPGRADES (excluding drives)

      a)     Base Kit, including  ** assembly, and  **   :  Price =   **

      b)     Base Kit with additional  ** , including ** :  Price =   **   .

      c)     During 1997, the first  **  TB of Capacity Upgrades shipped to
             IBM by StorageTek will be priced at   ** (excluding   **   )

2.    FREEZER CAPACITY UPGRADES (including drives)

      a)     Base Kit, including  ** assembly,  **  and  **  :  Price = ** .

      b)     Base Kit with additional   ** , including   **  :  Price = **

3.    SNAPSHOT FEATURE LICENSE FEES

      a)     First   **   units:  Fee =   **   .

             Additional units:    Fee =   **   .

      b)    Minimum cumulative quantity to be taken by IBM on or prior
            to   **   =   **   units. Minimum cumulative quantity to be
            taken by IBM on or prior to   **   =   **   units.

      c)    If StorageTek makes available the   **   on or later than   **   ,
            then StorageTek will provide without cost to IBM   **   Snapshot
            Feature licenses. If StorageTek makes available the   **   on or
            between   ** , then StorageTek will provide without cost to IBM
            **   Snapshot Feature licenses.  If   **   is available on or
            before   **   , then   **   Snapshot Copy Licenses.  These
            licenses shall not count towards the minimum quantities in (b)
            above.

      d)    StorageTek will make Snapshot Copy available by   **   .  For each
            **   slip beyond   **   , the   ** and   **   dates for minimum
            Snapshot Copy volumes moves by   **   each.




-----------------

**  Confidential  portions omitted and filed separately with the Securities and
    Exchange Commission under an application for confidential treatment.

<PAGE>   94

4.    MEMORY KIT

      a)     Memory Kit with minimum      **:  Price = StorageTek's   **   .

      b)     Turbo Shared Memory Upgrade Kit (Escon to Escon):  Price =   **  .

      c)     If StorageTek makes the   **   available on or later than   **   ,
             then StorageTek will provide without cost to IBM   **   Turbo
             Shared Memory Upgrade Kits. If StorageTek makes the   **
             available on or between **   , then StorageTek will provide
             without cost to IBM   **   Turbo Shared Memory Upgrade Kits.  If
             Turbo is available on or before   **   , then   **   Turbo
             upgrades.

      d)     8 Path Upgrade Kit (Escon to Escon):  Price =   **   .

5.    OTHER UPGRADE KITS

      Upgrade kits not listed above will be priced at   **   .


KODIAK

1.      **  Upgrade Kit (with non-mirrored cache, excluding drives):  Price =
        **   .

2.    Other upgrade kits will be priced at   **   .


ARCTIC FOX

      Prices are as follows:
                                     **               **                **

      Non-mirrored -   **

      **   MB Memory                 **   MB          **   MB
      **   MB

      **   MB Memory                 **   MB          **   MB
      **   MB

     Mirrored -   **

     **   MB Memory                  **   MB          **   MB
     **   MB

     **   MB Memory                  **   MB          **   MB
     **   MB


--------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   95

                                  EXHIBIT 2

The documents described in the attached pages and in the form as delivered to
IBM in Connection with this Agreement prior to the Effective Date, and as
further modified in accordance with the provisions of the Agreement, are hereby
incorporated into the Agreement by this Reference.
<PAGE>   96
                          Attachment 1 to Exhibit 2
<PAGE>   97
FILE:  OAHUMFG1 LIST3270 A1  National VM/ESQ Conversational Monitor System

    MANUFACTURING TEST PROCESSES AND QUALIFICATIONS     


    o    The test process is described in the   **test instruction attachment
         for Equipment.  This process describes test durations, criteria, and
         feedback, and includes Oahu monitoring and identification of   **
         and   ** are   **   by Monterey at an appropriate timeframe, and
         results are acceptable as measured by   **   .

    o    Oahu agrees that the test process for   **   shall be   **   than that
         process described for   **   and will be subject to MONTEREY   **
         before implementation of same in   **   Equipment that is to be   **
         under the Agreement.





--------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   98
             ICEBERG(TM)  TEST ENGINEERING, TEST INSTRUCTION, EMUSYS

DOCUMENT ID: ITE_EST.TI          REVISION:  4.3                 DATE: 14-FEB-96
================================================================================




                                   STORAGETEK

                          ICEBERG(TM)  TEST ENGINEERING

                            TEST INSTRUCTION, EMUSYS




              CONTROLLED COPY NUMBER: _____________

              NOTE:    A controlled  copy is indicated 
                       if RED ink is used for the 
                       Control Copy Number.  If the 
                       number is not red, this indicates 
                       an Uncontrolled Copy.





================================================================================
STORAGETEK PROTECTED              PAGE: 1 OF 85     ICEBERG(TM) Test Engineering
<PAGE>   99
             ICEBERG(TM)  TEST ENGINEERING, TEST INSTRUCTION, EMUSYS

DOCUMENT ID: ITE_EST.TI          REVISION:  4.3                 DATE: 14-FEB-96
================================================================================



                               DOCUMENT APPROVALS
                               ==================


ICEBERG TEST ENGINEERING                                                 2/19/96
DOCUMENT OWNER / DEPT MGR: -----------------------------------------------------
                           **                                               Date




ICEBERG TEST ENGINEERING                                                 2/20/96
DOCUMENT CONTROLLER:       -----------------------------------------------------
                           **                                               Date




ICEBERG TEST ENGINEERING                                                 2/19/96
DOCUMENT CO-AUTHOR:        -----------------------------------------------------
                           **                                               Date




ICEBERG TEST ENGINEERING                                                 2/20/96
DOCUMENT CO-AUTHOR:        -----------------------------------------------------
                           **                                               Date




ICEBERG MANUFACTURING                                                    2/19/96
DEPARTMENT MANAGER:        -----------------------------------------------------
                           **                                               Date


================================================================================
STORAGETEK PROTECTED              PAGE: 2 OF 85     ICEBERG(TM) Test Engineering


------------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.

<PAGE>   100
PLEASE NOTE:  Pages 3 through  85 of Exhibit  2, Attachment 1, pertaining to 
Iceberg Test Engineering, Test Instructions, EMUSYS, following Pages 1-8
pertaining to Iceberg Test Engineering, Checkoff List, EMUSYS, and the
following single pages Iceberg Test Engineering, Penguin Hardware
Validation, Checkoff List and Iceberg Test  Engineering, Freezer Hardware
Validation, Checkoff List, have been omitted in their entirety (rather than
redacting all of the information on each and every page) as the Company
believes that these pages are comprised completely of proprietary product
specifications and testing processes, the disclosure of which would  be a 
significant competitive disadvantage to the Company by revealing such 
information not reciprocally available to the Company with respect to the
product specifications and testing processes of the Company s competitors. 
Moreover, such disclosure could possibly disrupt the Company s relationship
with IBM as it would invite the Company's competitors to challenge the
quality of the Company's specifications and testing processes.
<PAGE>   101
To:    **


                    Fru Shipment Criteria


o     Process per attached process flow

o     Testing per attached matrix

o     Fru must successfully pass defined testing criteria





Definitions

PRSESS        -   Pre-ESS test as defined in Iceberg test process
IBCESS        -   Iceberg card cage ESS test as defined in Iceberg test process
IBSPAR        -   Iceberg spares FRE qualification process




  **
5/21/96

------------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.



<PAGE>   102
                                 APPENDIX C

                              FRUQ PROCESS FLOW



<TABLE>
<S>   <C>                                                <C>                                         <C>                
      ---------                                          ---------                                   ---------
        **                                                  **                                          **    

      ---------                                          ---------                                   ---------




      ---------                                        -------------                               -------------
       **                                                   **                                          **           **
                                                                                                                       
                **                                                      **

      ---------                                        -------------                               -------------



      ---------              ---------------

        *          **              **   
                  -----------           

      ---------              ---------------



      ---------

       **        **
                   
      ---------




      ---------                                        -------------                               

        *                                                  **                                              
                 -----------------------------------                  -------------------------------------

      ---------                                        -------------                               


                                                         ---------                                   

                                                            **

                                                         ---------                                   
</TABLE>

------------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   103
               ICEBERG GENERAL FRU QUALIFICATION REQUIREMENTS

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
     **
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------



------------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   104
                                                                            COPY


                                                             Fax: (303) 673-7669
                                                          Office: (303) 673-6538


FACSIMILE MESSAGE COVER SHEET


Date:       5-21-96                
     ----------------------------

To:          **
     ----------------------------

Via:       Garth Pickett           
     ----------------------------

Fax:      408-998-4790             
     ----------------------------

From:       **                     
     ----------------------------



Following are 1 pages including this cover sheet. If you did not receive all 
pages, please call (303) 673-6538.

Message:

Today is the only day Randy will be here for questions.  He is on x35373
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                            CONFIDENTIALITY NOTICE


      NOTICE:   If  the reader of this message is not the intended recipient, 
      please be advised that any dissemination, distribution or copying of this
      communication is  prohibited. If you  received this communication in 
      error, please notify the sender immediately. Thank you for your 
      cooperation.



------------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   105
**

The   **   is the process used on all items that have been repaired. Basically
the   **   difference is the   **   test on repaired cards. The process is   **
for all items returned whether less than or greater than the   **   from this
point in the process   **    .  The area we identified at the meeting last week 
as being different  for less than    **    days is  the repair process that
occurs prior to this.



  **
5/22/96





--------------------
** Confidential portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.  
<PAGE>   106
To:    **


                            Fru Shipment Criteria



o     Process per attached process flow

o     Testing per attached matrix

o     Fru must successfully pass defined testing criteria





Definitions

PRSESS        -   Pre-ESS test as defined in Iceberg test process
IBCESS        -   Iceberg card cage ESS test as defined in Iceberg test process
IBSPAR        -   Iceberg spares FRE qualification process




  **
5/21/96


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<PAGE>   107
                                  APPENDIX C

                              FRUQ PROCESS FLOW

<TABLE>
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        *          **              **   
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</TABLE>

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   Exchange Commission under an application for confidential treatment.
<PAGE>   108
               ICEBERG GENERAL FRU QUALIFICATION REQUIREMENTS

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<PAGE>   109
                                ATTACHMENT 2


                           PRODUCT SPECIFICATIONS
                                  EXHIBIT 2


<TABLE>
<CAPTION>
       Document    Revision     Title
       Number      Date          
       --------    --------     -----------------------------------------------
<S>    <C>         <C>          <C>          
1.     **          JULY 95      **

2.     **          OCT 95       **

3.     **          JULY 95      **

4.     **          JULY 95      **

5.     **          JULY 95      **

6.     **          OCT 95       **

7.     **          OCT 94       **

8.     **          DEC 95       **

9.     **          DEC 95       **

10.    **          DEC 95       **

11.    **          MAY 96       **

12.    **          DEC 95       **

13.    **          03/04/96     **

14.    **          JUL 95       **

15.    **          JUL 95       **
</TABLE>



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<PAGE>   110
<TABLE>
<CAPTION>
       Document    Revision     Title
       Number      Date          
       --------    --------     -----------------------------------------------
<S>    <C>         <C>          <C>          
16.    **          JUL 95       **
       
17.    **          JUL 94       **
       
18.    **          MAR 96       **
       
19.    **          DEC 95       **
       
20.    **          FEB 94       **
       
21.    **          NOV 94       **
       
22.    **          JUN 94       **
       
23.    **          AUG 95       **
       
24.    **          AUG 95       **
       
25.    **          JUNE 96      **
       
26.    **          APR 96       **
       
27.    **          FEB 95       **
       
28.    **          DEC 95       **
       
29.    **          APR 96       **
       
30.    **          AUG 95       **
       
31.    **          DRAFT        **
       
32.    **          04/11/96     **
       
33.    **          DEC 95       **
       
34.    **          DEC 95       **
</TABLE>



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   Exchange Commission under an application for confidential treatment.
<PAGE>   111
<TABLE>
<CAPTION>
       Document    Revision     Title
       Number      Date          
       --------    --------     -----------------------------------------------
<S>    <C>         <C>          <C>          
35.    **           SEPT 95      **
       
36.                05/01/96     **
       
37.                04/18/96     **
       
38.    **          08/03/95     **
       
39.    **          08/03/95     **

40.    **          08/03/95     **

41.    **          08/03/95     **
       
42.    **          08/03/95     **
       
43.                10/31/95     **
</TABLE>


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<PAGE>   112
                                                                       EXHIBIT 3

               IBM DEVELOPER AGREEMENT BETWEEN IBM AND STORAGETEK

                                 BASE AGREEMENT


The IBM Developer Agreement ("IDA") consists of this Base Agreement and its
Transaction Documents.  This IBM Developer Agreement is entered into between
International Business Machines Corporation , with an office at 5600 Cottle
Road,  San Jose, California 95193 ("IBM") and Storage Technology Corporation,
with an office at 2270 South 88th Street, Louisville, Colorado 80028
("StorageTek"), which IDA is Exhibit 3 to the OEM Agreement between the
parties.

This Base Agreement establishes the basic terms and conditions under which
StorageTek will develop features, enhancements to storage products, microcode
therefor, related software, documentation and other supporting materials and
ongoing support thereof, for the Iceberg, Kodiak and Arctic Fox storage
products that IBM will purchase from StorageTek under the OEM Agreement.  The
Transaction Document(s) attached hereto specify the work to be performed by
StorageTek and supplementary provisions and rights of the parties with respect
thereto.

The IDA, together with the documents listed in the Statement of Work ("SOW"),
is the complete agreement with respect to the development activities described
above and replaces all prior oral or written communications between StorageTek
and IBM regarding the transactions described in the Transaction Documents.

1.0      DEFINITIONS

Capitalized terms have the following meanings.

1.1      "Appearance Design" is the appearance presented by an object, formed
         in hardware or by  software, that creates a visual impression on an
         observer.  Appearance Design refers to the ornamental and not the
         functional aspects of the object.

1.2      "Deliverable" is any item that StorageTek prepares or provides under a
         Transaction Document, including IBM Materials and Licensed Works.
         Where Deliverables include code, StorageTek shall deliver object and
         fully commented source code, which source code shall correspond to the
         current release or version of the Deliverable and be in the form
         specified in the Transaction Document.

1.3      "Derivative Work" is a work that is based on an underlying work and
         that would be a copyright infringement if prepared without the
         authorization of the copyright owners of the underlying work.
         Derivative Works are subject to the ownership rights and licenses of
         others in the underlying work.

1.4      "Development Environment" includes devices, compilers, hardware,
         software, user and programming documentation, media or other items
         required for the development, testing, maintenance or implementation
         of a Deliverable.
<PAGE>   113
1.5      "Enhancements" are changes or additions, other than Maintenance
         Modifications, to the Deliverables.

         "Basic Enhancements" are incidental updates or Enhancements that
         support new releases of operating systems and devices.  They do not
         include Major Enhancements.

         "Major Enhancements" provide substantial additional value that could
         be offered to customers for an additional charge.

1.6      "IBM Licensees" include IBM, its Subsidiaries, and those authorized by
         them to Distribute IBM's products.

1.7      "IBM Materials" are Deliverables that are funded in accordance with
         the terms of this Agreement by IBM and as result from product
         engineering funding specified in the SOW, that IBM owns, such as
         programs, program listings, programming tools, documentation, reports
         and drawings.  IBM Materials also include Basic Enhancements and
         Maintenance Modifications that StorageTek creates or authorizes others
         to create during the term of this IDA.  The term "IBM Materials" does
         not include Licensed Works, Maintenance Code, software tools licensed
         to IBM by StorageTek, equipment or items specifically excluded in a
         Transaction Document.

1.8      "Invention" is as defined in the OEM Agreement.

1.9      "Licensed Works" are as identified in the Description of Licensed
         Works.

1.10     "Maintenance Modifications" are revisions that correct errors and
         deficiencies in the Deliverables.

1.11     "Moral Rights" are personal rights associated with authorship of a
         work under applicable law.  They include the rights to approve
         modifications and to require authorship identification.

1.12     "Personnel" are either party's employees or subcontractors working
         under the IDA.

1.13     "Products" are as defined in the OEM Agreement.

1.14     "Services" are efforts expended by StorageTek or StorageTek's
         Personnel to perform the work described in a Transaction Document.
         Deliverables may result from such work.


2.0      AGREEMENT STRUCTURE

2.1      Structure. The structure of the IDA is as follows:

         The "Base Agreement" defines certain basic terms and conditions of the
         development and funding of the Deliverables in the SOW.





                                       2
<PAGE>   114
         "Transaction Documents" specify the details of a transaction related
         to the Deliverables and the rights and obligations of the parties
         thereto and may include additional terms and conditions. Transaction
         Documents include, among others, the Statement of Work and the
         Description of Licensed Work, and their amendments, appendices,
         schedules and exhibits.

2.2      Conflicting Terms. Terms in IBM's purchase orders for development and
         support issued under the IDA and terms in StorageTek's invoices
         related thereto are all void unless identified otherwise in the IDA.


3.0      RELATIONSHIP OF THE PARTIES

3.1      Independent Contractor. Each party is an independent contractor.
         Neither party is, nor will claim to be, a legal representative,
         partner, franchisee, agent or employee of the other except as
         specifically stated in the IDA.  Neither party will assume or create
         obligations for the other.  Neither party nor such party's Personnel
         are employees of the other party. Each party is responsible for the
         direction and compensation of its own Personnel.

3.2      Confidentiality. Where confidential information must be exchanged, it
         will be done under the Agreement for Exchange of Confidential
         Information ("AECI") No. OEM-9447.

         All Deliverables that are identified in the Agreement as IBM Materials
         shall be marked by StorageTek as IBM Confidential and treated and
         protected as the confidential information of IBM in accordance with
         StorageTek's obligations under the AECI and  mutatis mutandis with
         respect to Deliverables and other StorageTek confidential materials
         that are marked StorageTek Confidential.

3.3      Loaned Items:  If any party lends the other party items ("Loaned
         Items"), the lending party will do so under a mutually agreeable
         equipment loan agreement ("ELA").  The party borrowing the Loaned
         Items (and such party's Personnel) will use the Loaned Items only in
         support of the IDA or as otherwise mutually agreed in writing in the
         ELA.  The party borrowing the Loaned Items will return the Loaned
         Items as specified in the ELA or the Transaction Document, whichever
         is earlier.

3.4      Furnished Items: Either party may provide the other party items for
         use in connection with this IDA.  These items will be identified as
         either "IBM Furnished Items" or "StorageTek Furnished Items", as the
         case may be, in the applicable Transaction Document(s).  The party to
         whom any Furnished Items (and such party's Personnel) will use such
         Furnished Items   **and   **   without the approval of the owner of
         such Furnished Items.  At the end of the term of the Agreement the
         party receiving such Furnished Items will destroy such Items,
         including any copies of them, unless the party owning such Furnished
         Items requests that the party receiving such Furnished Items delivers
         them to such furnishing party.





---------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       
                                       3
<PAGE>   115
3.5      Records: Both parties will maintain auditable records to support
         invoices issued and payments made to the other.  The records will be
         retained and made available for   **  from the date of the related
         payment or invoice.  Each party shall have   **   , as that term is
         defined in the OEM Agreement.  The auditor will only disclose to the
         requesting party any payments due and payable, or specific failure of
         records to support invoices, for the period examined.

3.6      The parties shall each:

         a.      use their own then-current processes designed to prevent
                 and/or identify contamination by harmful code.  Each party
                 shall promptly notify the other party if suspected
                 contamination occurs in spite of such processes.

         b.      participate in progress meetings to review StorageTek's
                 performance of its obligations  as specified in a Transaction
                 Document or as otherwise agreed in writing by the parties; and

         c.        **   obtain the   **   and such party's Personnel to convey
                 the rights granted or assigned in the IDA.

3.7      Neither party will, without the other party's prior written approval:

         a.        **   other than as may be permitted under the OEM Agreement,
                 and any attempt to do so is void; provided, however, that
                 either party shall be permitted to use individual
                 subcontractors or temporary agencies, so long as the other
                 party's rights (as set forth in the OEM Agreement and the
                 documents comprising the IDA) are enforced against such
                 subcontractors; and provided, further, that each party
                 acknowledges that Subsidiaries of the other party have been
                 and will continue to be involved in the development activities
                 described in the IDA.

         b.      assume or create obligations on the other party's behalf, or
                 make any representations for such other party; or

         c.      disclose the terms of the IDA except under a nondisclosure
                 agreement to the disclosing party's financial advisors,
                 attorneys and accountants, or to assert the disclosing party's
                 rights under it.  If required by law to disclose the terms of
                 the IDA, StorageTek will promptly notify IBM.  Upon  request,
                 StorageTek will seek confidential treatment for the IDA.





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       and Exchange Commission under an application for confidential treatment.
       
                                       4
<PAGE>   116
3.8      StorageTek will: unless otherwise specified in the SOW or any document
         comprising the IDA, maintain records to verify authorship of all
         Licensed Works and IBM Materials for   **after the expiration of the
         term of the OEM Agreement.  Upon request by IBM, StorageTek shall
         deliver or otherwise make available such information in a form
         reasonably specified by IBM;


4.0      OWNERSHIP AND RIGHTS

4.1      IBM Materials:  IBM   **   , and StorageTek agrees to execute any
         documents and undertake any actions reasonably necessary to effect and
         perfect the assignment of the ownership of   **   to IBM.

         Each party's Personnel may use copies, intermediate versions, drafts
         and partial copies of the other parties' owned property (i.e., IBM
         Materials for IBM, Licensed Works for StorageTek) only as set forth in
         the Agreement.  At the expiration of the term of the OEM Agreement and
         unless otherwise necessary to exercise the licenses granted to the
         receiving party for such other party's owned property, the receiving
         party will destroy (and, upon request certify destruction thereof)
         these items unless the owning party requests that the receiving party
         deliver them to the owning party.

4.2      Development Environment

         a.      For each Deliverable, StorageTek will list all items contained
                 in its Development Environment that are not provided by IBM.
                 StorageTek will deliver the listed items that are not
                 commercially available; StorageTek will revise the list for
                 any changes and deliver these updated items that are not
                 commercially available.

         b.      StorageTek grants IBM a   **    license to use, execute,
                 reproduce, display, perform, and prepare Derivative Works of,
                 all delivered Development Environment items and their
                 Derivative Works.  StorageTek grants IBM the right to
                 authorize others to do any of the above in support of this
                 Agreement.  This license applies to associated audio and
                 visual works.

4.3      Patents

         StorageTek grants IBM an  **  license under any patents and patent
         applications that are (a) owned or licensable by StorageTek now or in
         the future, and (b) required to make, have made, use, have used, sell,
         offer for sale, license or otherwise transfer:  (i) combinations of
         Equipment with equipment or software; (ii) Deliverables or its
         Derivative Works for inclusion in Equipment; and (iii) combinations of
         a Deliverable or its Derivative Works with equipment and other
         software in such equipment.





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       and Exchange Commission under an application for confidential treatment.
       
                                       5
<PAGE>   117
4.4      Inventions.

         a.      Disclosure.  StorageTek will promptly disclose in writing to
                 IBM each Invention.   Such disclosure will specify the
                 features or concepts that StorageTek believes to be new or
                 different.

         b.      Ownership.  IBM shall own all   ** and   **   including   **
                 relating to an Appearance Design which arise out of
                 development that is fully or partially funded by IBM under
                 this IDA.  StorageTek will, at IBM's expense, assist in the
                 filing of patent applications on these   **   and have
                 required documents signed.  StorageTek hereby   **   , any
                 such   **   together with the right to seek protection by
                 obtaining patent rights therefor and to claim all rights of
                 priority thereunder, and the same shall become and remain
                 IBM's property whether or not such protection is sought.

         c.      License.  IBM grants to StorageTek a   **   license under   **
                 and shall include the right to make, have made, use, have
                 used, lease, sell offer for sale and/or otherwise transfer any
                 apparatus, and to practice and have practiced any process,
                 provided, however, that such license is not applicable to any
                 **   , patent applications or patents relating to Appearance
                 Designs.

         d.      No Other Patent Rights.  Except as specifically granted, the
                 IDA does not grant either party any rights in any patents or
                 patent applications.

5.0      DELIVERY AND ACCEPTANCE

5.1      Delivery: StorageTek will provide all Deliverables according to the
         schedule in a Transaction Document with remedies for failure to do so
         as specified in the Agreement.

5.2      Evaluation:  IBM has the right to evaluate each Deliverable as
         specified in the applicable Transaction Document before accepting it
         to verify that it meets the requirements of such Transaction Document.
         IBM will notify StorageTek if it accepts (in whole or in part) or
         rejects each Deliverable according to the processes described in the
         particular Transaction Document.

6.0      PERSONNEL

6.1      Parties' IDA Representatives:   A Technical and a Contract Coordinator
         for each of StorageTek and IBM will be appointed pursuant to the SOW
         to represent them in matters specific to the SOW and all other
         documents comprising the IDA.  Each party will address all notices,
         payments and deliveries to the appropriate coordinator.  A party will
         notify the other in writing when coordinators change.





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       and Exchange Commission under an application for confidential treatment.
       
                                       6
<PAGE>   118
6.2      StorageTek will:

         a.      provide appropriate   ** the Personnel who will perform
                 StorageTek's obligations under the IDA;

         b.      assure that the skill levels being applied by StorageTek's
                 Personnel to the part of its business being used to perform
                 the IDA are consistent with the skills being applied in
                 comparable parts of StorageTek's business that are not
                 involved in performing this IDA;

         c.      not   **   technical deelopment personnel who will support
                 development of the Products to areas of StorageTek's business
                 that are not involved in performing under this IDA if so doing
                 would   **   the Products or the   **   ; and

         d.      supply its   **   to IBM as to how it will   **   with the
                 specific development group performing the obligations under
                 this IDA.

6.3      Both Parties will:

         a.      assign employees with the requisite knowledge and skills to
                 perform their respective obligations under the IDA;

         b.      perform obligations under the IDA and grant rights to the
                 other party as set forth therein; and

         c.      be responsible for the direction, control, compensation and
                 actions of their own Personnel; and

         d.      if such employment would violate the terms of Section 2397 of
                 Title Ten of the U.S.C.A., not employ or compensate Personnel
                 to perform work under this IDA (without M's prior written
                 approval) who were, within the last two years:  1) members of
                 the U.S.  Armed forces in a pay grade of O-4 or higher; or 2)
                 civilians employed by the U.S. Department of Defense with a
                 pay rate equal to or greater than the minimum rate for a grade
                 GS-13.

7.0      COMPLIANCE WITH LAWS

7.1      Compliance with Laws and Regulations: Each party will, at its own
         expense, comply with all applicable governmental laws and regulations.

7.2      Exports: Each party will comply with all applicable government export
         laws and regulations.





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       and Exchange Commission under an application for confidential treatment.
       
                                       7
<PAGE>   119
7.3      EEO/OSHA: To the extent applicable, each party will comply with
         Executive Order 11246 of the President of the United States on Equal
         Employment Opportunity and the  Occupational Safety and Health Act of
         1970.

8.0      PRICES, PAYMENTS AND TAXES

8.1      Compensation: IBM will pay StorageTek for its Services in accordance
         with the IDA.  StorageTek's applicable taxes, expenses and payments to
         third parties are included in the compensation, unless identified
         otherwise in a Transaction Document.

8.2      Invoices:  StorageTek and IBM will each submit invoices for Services,
         as specified in each particular Transaction Document in accordance
         with that document, with payment due as set forth in such Transaction
         Document.  The applicable expenses and payments to third parties are
         included in the compensation, unless otherwise identified in a
         Transaction Document.

9.0      AGREEMENT TERM AND TERMINATION AND SURVIVAL

9.1      Term.  The term of this IDA is coextensive with that of the OEM
         Agreement; the IDA's continuation is contingent upon the OEM Agreement
         remaining in effect.

9.2      Termination.  The provisions relating to termination of the IDA shall
         be as set forth in the OEM Agreement.

9.3      Survival.  Any terms of the IDA that by their nature extend beyond its
         termination (e.g., Part 4.0 "Ownership and Rights" and Part 8.0
         "Compliance with Laws") shall survive.  These terms will apply to
         either party's successors and assigns.

10.0     SUBSIDIARY RIGHTS

10.1     Each party may sublicense its intellectual property rights granted to
         it by the other party under the Agreement to its Subsidiaries, who may
         sublicense the same to their Subsidiaries.





                                       8
<PAGE>   120


                               STATEMENT OF WORK


                    A Transaction Document Issued Under the
                    IBM Developer Agreement ("IDA" or "MDA")


By signing this Transaction Document, IBM and StorageTek agree that the
complete agreement between the parties regarding the Deliverables consists of
the following documents:

      A.     This Statement of Work ("SOW");
      B.     The IBM Developer Agreement Base Agreement ("Base Agreement");
      C.     Exhibit: Certificate of Originality ("COO");
      D.     Description of Licensed Work ("DLW");
      E.     IBM Source Code Custody Agreement ("Escrow Agreement");
      F.     The Agreement for Exchange of Confidential Information ("AECI")
             No. OEM-9447; and 
      G.     The OEM Agreement.

1.    OVERVIEW

      Pursuant to the terms of this SOW and in connection with the purchase and
      distribution of Iceberg, Kodiak and Arctic Fox by IBM under the OEM
      Agreement, StorageTek will design, develop, document, test and provide
      certain features, functions and enhancements to the microcode, software,
      hardware, and related materials for Iceberg, Kodiak, and Arctic Fox, as
      well as ongoing maintenance and support thereof.  IBM agrees   **these
      activities and provide such other items and/or assistance, as specified
      herein.

2.    DEFINITIONS

      Unless otherwise defined herein, capitalized terms shall have the same
      meanings as set forth in the Base Agreement or the OEM Agreement.

      2.1    "Base Iceberg Package" shall mean the Iceberg product as it exists
             as of June 30, 1996,  including the Freezer III, IXFP base
             support, IXOF and Predictive Service Analysis, as listed in
             Section 6 of this SOW.

      2.2    "Code" means computer programming code, including both Object Code
             and Source Code, and including computer programming code being
             used as microcode:





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       and Exchange Commission under an application for confidential treatment.
       

<PAGE>   121
             a.  Object Code is the computer programming code substantially in 
                 binary form. It is directly executable by a computer after
                 processing, but without compilation or assembly.
           
             b.  Source Code is the computer programming code, other than Object
                 Code, and related source code level system documentation, 
                 comments and procedural code, such as job control language. 
                 It may be printed out or displayed in a form readable and 
                 understandable by a programmer of ordinary skill.
           
      2.3    "Completion and Acceptance Criteria" shall mean, for each
             Deliverable, the criteria listed in the attached Appendix B, as
             modified by the PDP, that each such Deliverable must meet.

      2.4    "Design Change Request" or "DCR" shall mean a request by either of
             StorageTek or IBM to make a change in any Specified Function,
             which DCR must follow the process listed in Section 5.1(a).

      2.5    "Dispute Resolution Process" shall mean the dispute resolution
             process described in Section 22 of the OEM Agreement.

      2.6    "ESP" or "Early Support Program" means the Early Support Program
             process as IBM has previously implemented such programs for S/390
             storage subsystems.

      2.7    The "ESP Date" shall mean, with respect to Section 6.1 hereof, the
             date that StorageTek meets the ESP Checkpoint criteria as
             specified in Appendix B attached hereto.

      2.8    "Arctic Fox" is a solid state storage device comprised of Kodiak
             without the disk drives.

      2.9    "Iceberg" shall be as described in Appendix A attached hereto.

      2.10   "Kodiak" shall be as described in Appendix A attached hereto.

      2.11   "Impact Error" is as defined in the OEM Agreement.

      2.12   "PDP Date" is the date specified for StorageTek to provide to IBM
             the PDP for each Specified Function or each group of Specified
             Function(s).





<PAGE>   122
      2.13   "Product Development Plan" or "PDP" shall mean a written plan
             prepared by  **describing the activities to be undertaken in
             connection with each Specified Function or group of Specified
             Functions listed in Section 6.1 hereof, in the same form as is
             attached as Appendix G.  PDPs in existence for Deliverables with
             Volume dates prior to and including October 1, 1996, shall be
             reasonably modified, as practicable to accommodate this format.

      2.14   "Program Trouble Report" or "PTR" shall mean a report prepared by
             either of StorageTek or IBM to reflect a problem discovered during
             component testing or IBM's review of Deliverables.

      2.15   "Specified Functions" or "SF" shall mean the specific functions
             and/or features that, either individually or together with other
             Specified Functions listed in Section 6.1 hereof, comprise
             Deliverables.

      2.16   "Volume" shall mean, with respect to the heading in Section 6.1
             hereof, the date on which StorageTek shall meet the Volume
             Shipment Checkpoint and Volume Shipment Compliance criteria as
             specified in Exhibit B.  With respect to all Specified Functions,
             the Volume date means that StorageTek has the capability of
             filling orders in reasonable quantities on such date.


3.    STORAGETEK'S RESPONSIBILITIES

      StorageTek agrees to perform the following obligations under this SOW:

      3.1    PROJECT MANAGEMENT.

             a.    Write or provide a PDP for each Deliverable for which a PDP
                   Date is established in Section 6.1.  StorageTek will include
                   in the PDP (or otherwise provide for in existing PDP's) a
                   project staffing plan, a specification and a development
                   plan, all as described in Appendix G and, as required,
                   submit updates that include reassignment of key personnel
                   and training plans.  The PDP is subject to the written
                   approval of IBM's Contract Coordinator in writing, which
                   approval may not be arbitrarily withheld or delayed.  If no
                   approval is received within a reasonable time after the PDP
                   Date or if IBM has rejected the PDP, either party may invoke
                   the Dispute Resolution Process.  Notwithstanding any failure
                   to obtain IBM's approval of the PDP, StorageTek shall
                   proceed to perform the Services with respect





---------------

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       and Exchange Commission under an application for confidential treatment.




                                       3
<PAGE>   123
                   to the Deliverable in accordance with the terms of this
                   Agreement, and the Volume date, volume commitments and
                   remedies shall apply with respect thereto.

             b.    Submit written monthly status reports ("Reports") that
                   indicate StorageTek's progress against the accepted plan.

                   The Reports will include:

                   (1)    a summary of accomplishments during the current
                          reporting period, as compared with the schedule set
                          forth in the PDP;

                   (2)    a summary of all concerns or issues (including,
                          without limitation,  development delays, and changes
                          to the Deliverables' specifications pursuant to the
                          DCR and PTR process described herein) for the current
                          reporting period along with the plan and projected
                          date for resolution, if any;

                   (3)    the status of outstanding concerns or issues that
                          were reported in previous reporting periods; and

                   (4)    any other information that materially affects
                          StorageTek's ability to provide the Deliverables.

             c.    Notify IBM in writing of any development or delivery delays
                   as soon as StorageTek becomes aware of such delays.

             d.    Provide all Deliverables in accordance with Section 6 and as
                   further described in the PDP, including without limitation,
                   meeting the schedule set forth therein, which Deliverable
                   shall be in accordance with the requirements specified in
                   Section 6  and also in accordance with Appendix A,
                   "FUNCTIONAL, TECHNICAL AND QUALITY SPECIFICATIONS", as the
                   same may be modified by the applicable PDP.

      3.2    DESIGN, CODE AND DEVELOPMENT.

             a.    Provide and implement the Deliverables in accordance with
                   the specifications described in Appendix A and Section 6
                   hereof, as the same may be amended by StorageTek's PDP with
                   the written agreement of IBM's Contract Coordinator.

             b.    Use its established  procedures to implement the following
                   development processes for activities being under taken
                   subsequent to the Effective Date hereof:

                   (1)    design change requests (DCRs);





                                       4
<PAGE>   124
                   (2)    program trouble reports (PTRs);

                   (3)    design reviews of hardware, microcode and software 
                          design; and

                   (4)    code and test case inspections, as appropriate.

             c.    Ensure that user documentation Deliverables are created by
                   individuals best qualified to describe the technical details
                   unique for its subsystems.  StorageTek will further ensure
                   these individuals are available for interviews, at no
                   additional cost to IBM   **, to augment the information as
                   required; provided, however, that IBM agrees not to
                   unreasonably interfere with such individuals' ability to
                   perform the Services hereunder.  IBM will provide prior
                   reasonable written notice to StorageTek prior to any
                   requested interviews and shall be subject to StorageTek's
                   facility security requirements.

      3.3    INSPECTIONS.

             StorageTek will inspect the Deliverables that StorageTek develops
             under this SOW as such inspection is required pursuant to the
             applicable PDP.  StorageTek's inspection shall be done in
             accordance with the processes it applies generally to inspection
             in its overall business.  StorageTek will inform IBM of the dates
             for all inspections and provide draft copies of the Deliverable
             subject to inspection at least one (1) week before the inspection
             meeting, or at such other time as the parties may mutually agree
             if such draft copies cannot reasonably be provided at least one
             (1) week before the inspection meeting.  IBM has the right to
             participate in these inspections and to review the results of the
             inspections.

      3.4    TRAINING.  StorageTek agrees to provide training to IBM in
             accordance with Sections 16 and 17 of the OEM Agreement.

      3.5    QUALITY.  StorageTek's Deliverables shall be subject to the
             quality requirements set forth in Section 9 of the OEM Agreement
             and Section 2D to Appendix A attached hereto.

      3.6    StorageTek will document and provide to IBM each Deliverable
             according to the criteria in  Appendix B, "COMPLETION AND
             ACCEPTANCE CRITERIA."

      3.7    StorageTek shall provide product engineering services ("Product
             Engineering Services") to support Equipment that IBM is acquiring
             or has acquired from StorageTek.  These Services shall include,
             without being limited thereto, the following:





---------------

**     Confidential portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.




                                       5
<PAGE>   125
             a.    StorageTek shall correct errors and deficiencies in the
                   Licensed Works and IBM Materials to ensure conformance to
                   the Specifications therefor (as these have been modified by
                   any applicable PDP);

             b.    StorageTek shall supply to IBM all corrections to the
                   Licensed Works that it has made outside of the scope of this
                   Agreement that affect the Equipment;

             c.    StorageTek shall provide minor updates and changes that
                   support new releases of operating systems and devices (e.g.,
                   HDAs, channel path, escon directors); and

             d.    StorageTek shall provide Basic Enhancements and Maintenance
                   Modifications to the Licensed Works and IBM Materials, as
                   well as enhance and support existing StorageTek software and
                   microcode that are normally shipped in or with Iceberg,
                   Kodiak, or Arctic Fox for the purpose of configuration,
                   service, maintenance and support; provided, however, that
                   IBM shall not acquire any ownership rights with respect to
                   StorageTek's Maintenance Code, proprietary tools and
                   maintenance documentation and enhancements thereto that are
                   owned by StorageTek and generally used by StorageTek for its
                   other products, all of which are excluded from the term
                   "Licensed Works."


4.    IBM'S RESPONSIBILITIES

      IBM agrees to perform the following obligations under this SOW:

      4.1    IBM's Contract Coordinator will, on a timely basis, review and
             accept or reject in writing all Deliverables according to the
             acceptance criteria specified in Appendix B, "COMPLETION AND
             ACCEPTANCE CRITERIA," as modified by the PDP.  Acceptance of all
             Deliverables shall not be unreasonably withheld or delayed, and
             any disagreement between the parties shall be subject to the
             Dispute Resolution Process described in Section 22 of the OEM
             Agreement.  StorageTek's warranty in Section 14 of the OEM
             Agreement relative to the conformance of the Deliverables with the
             Specifications applies regardless of any acceptance of a
             Deliverable by IBM under the acceptance criteria specified in
             Appendix B, as modified by the PDP.

      4.2    IBM shall track and record all Impact Errors.  Such tracking and
             recording shall be performed by IBM's product engineering group in
             accordance with its standard practice presently utilized for IBM's
             comparable DASD products.





                                       6
<PAGE>   126
      4.3    FUNDING.

             The parties have agreed upon the following schedule of funding
             relating to the Services to be performed by StorageTek hereunder:

<TABLE>
<CAPTION>
                                                                                       **
                        Total Funding       **   Funding          **   Funding         Funding  
                        -------------     --------------        --------------       -----------
             <S>              <C>                <C>                <C>              <C>           <C>
             1996:            **                 **                 **                **
                                                                    **                **
             1997:            **                 **                 **                **             **
                                                                    **                **
             1998:            **                 **                 **                **             **
             1999:            **                 **                                  _____         ____
                            ------             -------                                                 
                                          
             Totals:          **                 **                                   **             **
</TABLE>

             (1) Subject to Section 4.3b
             (2) StorageTek is   **   of this amount to the   **   .

             a.    Aggregate Funding Amounts. IBM  agrees to provide StorageTek
                   with aggregate funding for   ** Services in the following
                   amounts:

                   1996:      **   ;
                   1997:      **   ;
                   1998:      **   ; and
                   1999:    subject to Section   **   .

                   On a quarterly basis the parties shall specify Deliverables
                   (other than "Committed In-Plan" Deliverables, as specified
                   in Section 6.1 hereof) eligible for consideration for
                   funding from (i) **   funds; (ii)   **   funds; or (iii)
                   **   funds.

                   StorageTek acknowledges that IBM shall have sole discretion
                   to   **   funding through the   ** process (except for   **
                   highlighted in Section   **  ).





---------------

**    Confidential portions omitted and filed separately with the Securities 
      and Exchange Commission under an application for confidential treatment.




                                       7
<PAGE>   127
             b.    Product Engineering Funding.  IBM  shall fund     **
                   Services for the products that IBM is purchasing from
                   StorageTek under the OEM Agreement, as those products are
                   enhanced in accordance with this IDA, as follows:
                   
                                      1996--   **
                                      1997--   **
                                      1998--   **
                                      1999--   **

                   Each year's total amount of   **   funding shall be divided
                   by 4 and allocated to each quarter of the applicable year,
                   except for 1996, in which the total amount for 1996 shall be
                   divided by 2 and allocated to each of the third and fourth
                   quarters of 1996.

                   In any particular year, if StorageTek requires more funds to
                   meet its product engineering obligations under the OEM
                   Agreement than is funded above, StorageTek shall be
                   responsible for any such additional funds.

                   In any particular year, if StorageTek spends less than the
                   **  funds, the amount   **   for   ** will be made
                   available for use by IBM for Deliverables that are other
                   than "Committed In-Plan Items".  In addition, if StorageTek
                   is achieving its quality requirements for the Equipment as
                   set forth in Section 9 of the OEM Agreement ("Quality
                   Requirements"), IBM may,   **   funds and apply the
                   remaining to Deliverables that are other than "Committed
                   In-Plan Items"; provided, however, that if the quality of
                   the Equipment falls below the Quality Requirements, then IBM
                   agrees to   **   to be used   **   funds.

                   With respect to   **   , IBM may, at its option,   **
                   allocated for **   by giving written notice at least one
                   year prior to the end of the first or any subsequent quarter
                   in   **   ; any such notice(s) will be effective for the
                   applicable quarter and for any subsequent quarters in   **.

                   StorageTek agrees to negotiate in good faith to provide
                   Product Engineering Services   **   at a price equal to   **
                   if IBM so requests and StorageTek is still providing product
                   engineering for such Devices or Equipment.





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       8
<PAGE>   128
             c.    Funding of Deliverables.  Except to the extent of   **
                   which StorageTek will fund in   **   , IBM shall fund   **
                   of the development for the Deliverables specified in Section
                   6.1 as "Committed In- Plan Items" as follows:

                   (i)    ICEBERG:

                          Product                      $          Year

                             **                          **               **




                   (ii)   KODIAK:

                          Product                      $           Year
                   
                             **                          **               **



                          If StorageTek requires more funds to complete any
                          such Deliverables than are specified above,
                          StorageTek shall   **   funding.  Notwithstanding
                          such StorageTek funding, the Deliverables shall
                          remain IBM Materials for purposes of the rights and
                          obligations set forth in the IDA documents.

                          If StorageTek requires   **   funds to complete a
                          Deliverable, then the parties agree any   ** funds
                          shall be made available for other Deliverables and
                          other development projects.

                          Each year's total amount of development funding shall
                          be divided by 4 and allocated to each quarter of the
                          applicable year, except for 1996, in which the total
                          amount for 1996 shall be divided by 2 and allocated
                          to each of the third and fourth quarters of 1996.

                   d.     General.  Funds are considered to be spent for
                          product engineering or a project based upon the
                          application of GAAP, as those principles have been





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**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       9
<PAGE>   129
                          applied during the one calendar year period preceding
                          the calendar year of the execution of this SOW.

                          For each quarter, StorageTek shall invoice IBM for
                          Services to be performed during each such quarter on
                          or before the first business day of the quarter, and
                          IBM shall pay for such Services in   ** payments due
                          and payable on the last business day of the end of
                          each month of each quarter.

                   e.       **   Funding.  During the term of the Agreement,
                          StorageTek may, from time to time, conceive idea(s)
                          for updates, improvements, or other development
                          projects which are not merely duplicative of
                          activities otherwise undertaken hereunder and which
                          add commercially significant functionality and/or
                          performance improvements to Equipment or Devices
                          (hereafter, "New Developments").

                          StorageTek may, but is not obligated to, offer any
                          New Development that it conceives during the term of
                          the Agreement to IBM--together with its reasonable
                          estimate of the cost and development schedule for
                          such New Development.  IBM may   **   such New
                          Developments as a project hereunder.  If IBM   **
                          such New Developments   **   hereunder, or if
                          StorageTek   **   , StorageTek shall own such New
                          Developments. Except as permitted under the DLW,
                          StorageTek is **   Derivative Works of IBM   **   or
                          materials that are otherwise based upon IBM   **   in
                          any New Development that would be   **   by
                          StorageTek.

                          If StorageTek completes   **   New Developments for
                          inclusion in or that would enhance the Iceberg,
                          Kodiak and Arctic Fox Products, then StorageTek shall
                          offer all devices, features, upgrades, or other
                          products for Iceberg, Kodiak and Arctic Fox using
                          such New Developments to IBM at its   **   Price (as
                          defined in the OEM Agreement) and in the case of
                          microcode or software New Developments, offer to
                          license them to IBM under reasonable terms and
                          conditions, which includes the right to sublicense
                          customers, at   **   , not to exceed such   **
                          Price.  StorageTek agrees to deliver the object
                          version of the Code to IBM which may be replicated
                          and distributed directly to customers for any such
                          New Development that IBM elects to license and to
                          deliver the source code version of the Code to IBM to
                          maintain and support such New Development and prepare
                          Derivative Works thereof.





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       10
<PAGE>   130
                          If the New Developments include any   **   ,
                          StorageTek is licensed to sell or license such **
                          devices, features, upgrades, or other products using
                          such New Developments to third parties as set forth
                          in the DLW Transaction Documents.

                          All such New Developments shall become IBM Materials
                          if funded by IBM and any intellectual property rights
                          arising out of the development of such New
                          Developments shall be owned by IBM in accordance with
                          the IDA.

      4.4    IBM shall provide SSA design and implementation assistance (not to
             exceed two person-years) in accordance with the PDP.

      4.5    In order to assist StorageTek in providing Deliverables as
             specified in the IDA, IBM's DASD subsystem product development
             group shall make reasonable efforts to provide, by the dates set
             forth in the related PDP, StorageTek with the following items; but
             StorageTek shall have no remedy for IBM's failure to so provide
             any of these items and shall remain responsible, despite any such
             failure by IBM, for StorageTek's obligations under this Agreement:

             a.    Documentation and specifications as required in accordance
                   with the specific PDP:     ** .

             b.    Products, programs, documentation, and training, as required
                   in accordance with the PDP:

                   (1)      **   and   **    such as   **   test;

                   (2)      **   , including the   **   referred to in Section
                            **   hereof; and

                   (3)      **   .

          c.    Assistance as required in accordance with the PDP for:

                   (1)    General Design Review -- not to exceed one person
                          month per year during this SOW; and

                   (2)    ESP Selection, account management, test plan,
                          monitoring, VSAM consultation.





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       11
<PAGE>   131
             d.    Product specifications, and support for   **   with   **   ,
                   as required by the applicable PDP.

             To the extent that IBM has the right to do so, IBM grants
             StorageTek a   ** license (unless   **   such items, and then such
             license shall be   **   ) to use, execute, reproduce, display and
             perform the items provided under this subsection--only in support
             of IDA.

      4.6    If IBM fails to provide any of the above items, then StorageTek
             will immediately notify IBM's Contract Coordinator in writing and,
             if within fourteen (14) days thereafter, IBM has still not
             provided such items, then the parties shall use the Dispute
             Resolution Process to reach a resolution in order to avoid
             unreasonable delays.


5.    MUTUAL RESPONSIBILITIES

      5.1    PROJECT CONTROLS.  Both parties will use the following project
             controls for work performed under this SOW.

             a.    Design Change Requests (DCR). All changes to the
                   specifications must go through the following DCR process:

                   (1)    either party may propose a DCR;

                   (2)    StorageTek will size the DCR and advise IBM in
                          writing of any impact to the schedule;

                   (3)    IBM will decide whether to have the DCR implemented
                          or not; and

                   (4)    StorageTek will keep a log of all DCRs to track the
                          status of such DCRs through the development and test
                          cycle.

                      The log will specify the status as:

                                "Proposed" - a DCR has been created and has been
                                distributed to both parties;

                                "Accepted/Rejected" - IBM has notified
                                StorageTek that the DCR has been accepted or
                                rejected;





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       12
<PAGE>   132
                                "Design Specification Updated" - StorageTek has
                                updated the Product's Design Specification to
                                reflect the DCR if it has been accepted;

                                "In Process" - StorageTek is implementing the 
                                DCR; or

                                "Complete" - The DCR has been implemented and
                                tested and the Documentation is updated to
                                reflect the DCR.

                          Any approval of a DCR by IBM or StorageTek must be
                          made by that party's Contract Coordinator in writing.

             b.    Program Trouble Reports (PTR).  All problems discovered
                   during component testing or IBM's review of Deliverables
                   will follow the PTR process. The procedure used will be as
                   follows:

                   (1)    either party may issue a PTR;

                   (2)    StorageTek will track the status of each PTR; and

                   (3)    the tracking system will specify the status as:

                                "Opened" - a problem has been discovered and
                                entered into the PTR  tracking system;

                                "Received" - the programmer or engineer
                                responsible for the code is working on the PTR;

                                "Answered" - the programmer or engineer has
                                fixed and tested the  problem; or

                                "Closed" - the test has been rerun, to verify
                                that the problem has been corrected and has not
                                caused any new problems.

      5.2    PROJECT MANAGEMENT.

             a.    Project Management.  IBM's and StorageTek's respective
                   management teams will meet monthly and review the field
                   support and status of the Deliverables.  The field support
                   review will encompass the field performance of products,
                   open problems and status, resource allocation and use and
                   customer situations. The status of the Deliverables shall be
                   reviewed for progress in connection with the PDP, including
                   plans for corrective action (if any Deliverable is  behind
                   the PDP schedule) and a summary of all concerns and issues.





                                       13
<PAGE>   133
             b.    Plan Change Process.  As business needs, business
                   opportunities or resource availabilities change, IBM may
                   supply StorageTek with a concise description of new product
                   requirements to StorageTek, which StorageTek will review and
                   provide a  ** therefor.  In addition, StorageTek may also
                   propose alternative descriptions of such new product
                   requirements (as well as other new product requirements),
                   together with   **   .

                   If StorageTek can commit to such new product requirements
                   without adversely affecting, to a material extent, the
                   Deliverables already planned, StorageTek shall propose an
                   ESP/volume shipment plan to be reviewed and negotiated in
                   good faith by the parties. If StorageTek cannot include the
                   requested new product requirement within the then-current
                   commitments, IBM may provide a prioritization and the
                   parties will negotiate in good faith amended commitments for
                   all or any affected Deliverables.

      5.3    ESCROW.  By   **   , StorageTek and IBM shall have available and
             ready to deposit into escrow the following items (which
             collectively shall be called "Escrowed Materials"):

             a.    As to StorageTek, a complete and accurate copy of the
                   Licensed Works existing on   **   , for Iceberg (including
                   IXFP and IXOF), Kodiak and Arctic Fox and the applicable
                   Development Environment and the capacity ratio benchmark
                   specified in Schedule 8; and

             b.    As to IBM, a complete copy of the initial benchmarks IBM
                   used as of   ** , measure performance requirements for
                   Iceberg and Kodiak.

             The purpose for such escrow is to determine the level of the
             Licensed Works in existence on June 30, 1996, together with the
             benchmarks used to measure the Products' performance and other
             requirements (as such Products are in existence as of   **   ).

             The parties have agreed that Data Securities International, Inc.
             ("DSI") shall be the escrow agent for such escrow.  Upon execution
             of a mutually agreeable escrow agreement by the parties, which
             Escrow Agreement shall be attached to the IDA as Appendix E
             thereto, and on   **   , StorageTek and IBM shall deposit the
             Escrowed Materials described in this paragraph into the escrow
             account at DSI. The parties shall agree to reasonable changes to
             the Escrow Agreement as they may be requested by the Custodian.
             The parties agree to equally share the escrow agent fees for such
             escrow.





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       14
<PAGE>   134
      5.4    PROVISION OF LICENSED WORKS.

             On a timely basis, StorageTek shall provide to IBM the Licensed
             Works.

      5.5    HEADCOUNT AND EQUIPMENT INVESTMENTS.  The parties recognize that 
             in order to achieve the Impact Error Rate objectives set forth in
             Section 9.3 of the OEM Agreement, an investment in headcount and
             equipment is required for   **   commencing with the Effective Date
             of the Agreement.  IBM shall provide, at its own cost,   **   field
             support personnel, nine (9) test engineering and support personnel,
             and a   **   IBM Model   **   processor system of a configuration
             adequate for the testing that has been defined by both parties with
             standard IBM software licenses and maintenance related thereto.
             StorageTek shall provide, at its own cost and incremental to
             development and product engineering funding otherwise specified
             herein,  ** Iceberg engineers,   **   Kodiak engineers,   **   test
             engineers,   **   regression test technicians,   **   program
             administrators, for an aggregate of  **  StorageTek personnel.  The
             personnel may be adjusted by mutual written agreement.  All such
             personnel and items shall be provided and/or installed and
             operational as soon as practicable, with the objective of  **  days
             after the Effective Date, but in no event longer than   **   days
             after the Effective Date.  If IBM is unable within   **   days to
             obtain the specified system processor because of supply constraints
             or other reasons, the parties will meet to determine the
             appropriate solution.





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

       


                                       15
<PAGE>   135
6.    DELIVERABLES, SCHEDULES AND VOLUME COMMITMENT ADJUSTMENTS

      6.1    CHART OF DELIVERABLES.

             A.    ICEBERG

                          1.  COMMITTED IN PLAN ITEMS

                           FIRST ICEBERG DELIVERABLE:

                                PDP DATE:    **
            SPECIFIED FUNCTIONS COMPRISING FIRST ICEBERG DELIVERABLE

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
                                                                                        (see Appendix B)
  <S>                                <C>                <C>              <C>                   <C>
  **                                 **                 **               **                    **
</TABLE>




                           SECOND ICEBERG DELIVERABLE
                                 PDP DATE:   **
           SPECIFIED FUNCTIONS COMPRISING SECOND ICEBERG DELIVERABLE

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
       <S>                                   <C>              <C>              <C>                   <C>
       **                                    **               **               **                    **
</TABLE>



(1)  Must Review means that this package of items has IBM-requested content.
     StorageTek needs to evaluate   **   in order to commit volume production
     dates and content. This will be done by the PDP Date.  If the   **   is
     not available by 8/1/96 for any reason, then the parties shall put into
     place a recovery plan pursuant to which they will    **   for use with
     Iceberg and the provisions of the OEM Agreement with respect to   **
     shall apply.





                 __________________________________

                 **     Confidential  portions omitted and filed separately
                 with the Securities and Exchange Commission under an
                 application for confidential treatment.




                                       16
<PAGE>   136
                           THIRD ICEBERG DELIVERABLE

                                PDP DATE:    **
                        SPECIFIED FUNCTIONS COMPRISING THIRD ICEBERG DELIVERABLE

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                     <C>
     **                              **                **               **                      **
</TABLE>


                           FOURTH ICEBERG DELIVERABLE
                                 PDP DATE:   **
           SPECIFIED FUNCTIONS COMPRISING FOURTH ICEBERG DELIVERABLE

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                     <C>
     **                              **                **               **                      **
</TABLE>


                           FIFTH ICEBERG DELIVERABLE
                                 PDP DATE:   **
            SPECIFIED FUNCTIONS COMPRISING FIFTH ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                     <C>
     **                              **                **               **                      **
</TABLE>



                           SIXTH ICEBERG DELIVERABLE
                                  PDP DATE: **
            SPECIFIED FUNCTIONS COMPRISING SIXTH ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                     <C>
     **                              **                **               **                      **
</TABLE>

(1)  On the PDP date they may mutually agree to rearrange the development
project priorities or cancel this Specified Function.





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       17
<PAGE>   137
                            2.  WANTED, TO BE SIZED

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
      <S>                            <C>                                                        <C>
      **                             **                                                         **
</TABLE>



                            3.  TO BE DECIDED ITEMS

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>
     **                              **
</TABLE>


                             4.  OUT OF PLAN ITEMS
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>
     **                              **
</TABLE>






---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

       


                                       18
<PAGE>   138
       B.    KODIAK

                          1.  COMMITTED IN-PLAN ITEMS

                            FIRST KODIAK DELIVERABLE

                                 PDP DATE:   **
            SPECIFIED FUNCTIONS COMPRISING FIRST KODIAK DELIVERABLE
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                     <C>
     **                              **                **               **                      **
</TABLE>




                           SECOND KODIAK DELIVERABLE
                                 PDP DATE:   **
      SPECIFIED FUNCTIONS COMPRISING SECOND KODIAK DELIVERABLE (K-1 FRAME)

<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
           <S>                       <C>                <C>              <C>                   <C>
           **                        **                 **               **                    **
</TABLE>



                            THIRD KODIAK DELIVERABLE
                                 PDP DATE:   **
            SPECIFIED FUNCTIONS COMPRISING THIRD KODIAK DELIVERABLE
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                   <C>
     **                              **                **               **                    **
</TABLE>





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

       


                                       19
<PAGE>   139
                           FOURTH KODIAK DELIVERABLE

                                PDP DATE:     **
            SPECIFIED FUNCTIONS COMPRISING FOURTH KODIAK DELIVERABLE
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                   <C>
     **                              **                **               **                    **
</TABLE>

---------------

(1)  The parties intend to decide between   ** proposal by   **   ; if they
     decide not to proceed and  confirm such decision in writing, then no  
     **   shall apply to this Specified Function.
     

                            FIFTH KODIAK DELIVERABLE
                                 PDP DATE:   **
            SPECIFIED FUNCTIONS COMPRISING FIFTH KODIAK DELIVERABLE
<TABLE>
<CAPTION>
                                                                                            VOLUME
                                                                                          COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                   <C>
     **                              **                **               **                    **
</TABLE>



                            SIXTH KODIAK DELIVERABLE
                                 PDP DATE:   **
            SPECIFIED FUNCTIONS COMPRISING SIXTH KODIAK DELIVERABLE

<TABLE>
<CAPTION>
                                                                                            VOLUME
                                                                                          COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
     <S>                             <C>               <C>              <C>                   <C>
     **                              **                **               **                    **
</TABLE>





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       20
<PAGE>   140

                    
                           2.  WANTED, TO BE SIZED
<TABLE>
<CAPTION>
                                                                                            VOLUME
                                                                                          COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
       <S>                           <C>               <C>              <C>                   <C>
       **                            **                **               **                    **
</TABLE>



                      3.  "IN DEVELOPMENT BUDGET" ITEMS
<TABLE>
<CAPTION>
                                                                                            VOLUME
                                                                                          COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
       <S>                           <C>               <C>              <C>                   <C>
       **                            **                **               **                    **
</TABLE>


These items will be developed with part of the   **   funds that are specified
in 4.3b and have no   **   associated with them.



                           4.  TO BE DECIDED ITEMS
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
       <S>                           <C>               <C>              <C>                   <C>
       **                            **                **               **                    **
</TABLE>



                            5.  OUT OF PLAN ITEMS
<TABLE>
<CAPTION>
                                                                                             VOLUME
                                                                                           COMMITMENT
      DELIVERABLE                   TYPE             ESP DATE          VOLUME             ADJUSTMENT 
      -----------                   ----             --------          ------             -----------
       <S>                           <C>               <C>              <C>                   <C>
       **                            **                **               **                    **
</TABLE>

NOTE:  With respect to all of the above Specified Functions, should StorageTek
fail to deliver any Specified Function by the Volume date listed for such
Specified Function in Section 6.1 above, then  IBM shall be entitled to
purchase the existing subsystem product from StorageTek at the   **   as if
StorageTek had delivered such Specified Function by such Volume date.





---------------

**    Confidential portions omitted and filed separately with the Securities
      and Exchange Commission under an application for confidential treatment.
       



                                       21
<PAGE>   141
      6.2    CERTIFICATE OF ORIGINALITY (COO).

             StorageTek agrees to provide a Certificate of Originality for
             software and microcode items identified in 6.1.  A blank
             Certificate of Originality is attached hereto as Appendix D.

7.    [RESERVED]


8.    SPECIFICATIONS

      All Deliverables will be prepared and provided according to the standards
      in Appendix A, "FUNCTIONAL, TECHNICAL AND QUALITY SPECIFICATIONS" and
      those set forth in the associated PDP.  In the event of a conflict
      between Appendix A and the applicable PDP as approved in writing by IBM's
      Contract Coordinator, the PDP shall control.


9.    QUALITY MEASUREMENTS

      The quality measurements shall be as set forth in Section 9 of the OEM
      Agreement, except for host software, which shall be as set forth in
      Section 2D of Appendix A attached hereto.


10.   LICENSE

      10.1   Except as specifically stated in the Agreement,  no license or
             immunity is granted either directly or by implication, estoppel or
             otherwise, under any intellectual property right of either party,
             including, but not limited to, trade secrets, copyrights,
             trademarks and patents.


11.   COORDINATORS

      11.1   CONTRACT COORDINATORS.

             IBM and StorageTek agree that the following named contract
             coordinators are responsible for amendments (including working
             with each party's respective legal department to prepare and
             execute such amendments), receipt of notices under this  IDA and
             all nontechnical administrative matters associated with this SOW.
             The Contract Coordinators are:





                                       22
<PAGE>   142
<TABLE>
<CAPTION>
             FOR IBM:                                   FOR STORAGETEK:
             <S>           <C>                          <C>           <C>
             Name:         **                           Name:         **
             Title/Dept:   Director, Future             Title/Dept:   Vice President,
                           Storage Subsystems                         Online Development
             Address:      9000 S. Rita Road            Address:      2270 South 88th Street
                           Tuscon, Arizona  85744                     Louisville, Colorado  80028
             Phone:        (520)   **                                 Phone: (303)   **
             Facsimile:    (520) 799-____               Facsimile:    (303)   **
</TABLE>

Notices shall be deemed given as specified in Section 26.3 of the OEM
Agreement.

      11.2   TECHNICAL COORDINATORS.

             IBM and StorageTek agree that the following named coordinators
             will administer and coordinate the technical matters associated
             with this SOW.  Any changes in the party's coordinators shall be
             provided to the other party in writing. They are responsible for
             accepting all Deliverables and will supervise all exchanges of
             confidential information under the CDA. The Technical Coordinators
             are:


<TABLE>
<CAPTION>
             FOR IBM:                                   FOR STORAGETEK:
             <S>           <C>                          <C>           <C>
             Name:         **                           Name:         **
             Title/Dept:   Director, Future             Title/Dept:   Vice President,
                           Storage Subsystems                         Online Development
             Address:      9000 S. Rita Road            Address:      2270 South 88th Street
                           Tuscon, Arizona  85744                     Louisville, Colorado  80028
             Phone:        (520)   **                                 Phone:  (303)   **
             Facsimile:    (520) 799-_____              Facsimile:    (303)   **
</TABLE>





---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       



                                       23
<PAGE>   143
                                                                    ATTACHMENT 1

                                   APPENDIX A
                FUNCTIONAL, TECHNICAL AND QUALITY SPECIFICATIONS
                            TO THE STATEMENT OF WORK


1.       TECHNICAL SPECIFICATIONS

         The technical specifications for the existing Iceberg, Kodiak and
Arctic Fox products, as well as the IXFP and IXOF software are contained in the
following documents:

         a.        **

         b.        **

         c.        **

         d.        **

         e.        **

         f.        **

         g.        **

         h.        **

         i.        **

         j.        **

         k.        **

         l.        **

         m.        **

         n.        **

         o.        **


-----------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

<PAGE>   144
         p.        **

         q.        **

         r.        **

         s.        **

         t.        **

         u.        **

         v.        **

         w.        **

         x.        **

         y.        **

         z.        **

         aa.       **

         bb.       **

         cc.       **

         dd.       **

         ee.       **

         ff.       **

         gg.       **

         hh.       **

         ii.       **

-----------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.





                                     A-2
<PAGE>   145
         jj.       **

         kk.       **

         ll.       **

         mm.       **

         nn.       **

         oo.       **

         The technical descriptions for the  **  Iceberg Items (as specified
in Section 6.1 hereof) are in Schedule 1.

         The technical descriptions for the  **  Kodiak Items are in Schedule 2.

         The technical descriptions for the  **  IXFP and IXOF Items are in
Schedule 3:


2.       PERFORMANCE SPECIFICATIONS

A.       Performance Test Set

  **

Each performance workload has a specification of the number of channels, cache
size, subsystem capacity, and the number of logical volumes to be used for each
evaluation.

B.        Particular Performance Specifications

As specified in Schedules 4, 5, 6 and 7, Committed in Plan Items must maintain
performance specifications as currently existing or improve thereon as required
by the applicable PDP.

C.       Capacity Ratio Specifications

For calculating storage capacities for purchases of Iceberg, a ratio of  **  of
storage accessible to 1   **   is used to determine Terabytes.  The benchmark
in Schedule 8 produces a capacity ratio of   **

------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.





                                     A-3
<PAGE>   146
 .  Future enhancements to Iceberg, when this benchmark is applied, shall not 
produce results less than **.  Upon mutual written agreement, such benchmark 
may be modified.

D.  Host Software Quality Measurements

StorageTek's host software development (IXFP and IXOF) shall meet a quality
index of no more than   **   errors per   ** lines of actually executing code
(not including comments, dummy, nonoperational or nonfunctional lines of code)
("KLOC") for all of the code, including base, new and modified code that is to
be delivered to IBM under the IDA and its related attachments and appendices.

-----------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.





                                     A-4
<PAGE>   147

                          SCHEDULE 1 TO APPENDIX A TO

                               STATEMENT OF WORK



Integrated Iceberg Overview

The integrated Iceberg is   **,  packaged in an   **   .  This unit contains
**   .  The system will initially support both FIPS and ESCON interfaces.
There are   **   differences between an Iceberg Controller with Freezer III and
the Integrated Iceberg system.  Since the Freezer is   **   .  There is   **
 .  The   **   .




















                                         
------------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   148
  **















                                         
------------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   149
                                  XSA/SnapShot
                               EXECUTIVE OVERVIEW
                                    **&   **
                                   APRIL 1996
                         Storage Technology Corporation
                             2270 South 88th Street
                      Louisville, Colorado 80028-3256 USA

ABSTRACT 
--------------------------------------------------------------------------------

As customers strive to achieve the 7 x 24 operations that their users
demand, time remains the enemy. Storage management and data duplication, and
the time that they take,  continues to prevent customers from achieving this
critical business objective.  Iceberg, through Virtual DASD, greatly reduces
storage management requirements for users.  Now a new product, XSA SnapShot,
compliments Iceberg by extending storage management benefits to data
duplication. By significantly reducing the resources and duration of data
duplication, XSA SnapShot saves the user significant Time without additional
risk. This paper provides an executive overview of SnapShot, and the benefits
it provides. It is intended for StorageTek management and sales personnel.

THE NEED                                               
----------------------      [GRAPHIC]




--------------------

**       Confidential portions omitted and filed separately with the Securities
         and Exchange Commission under an application for confidential
         treatment.            
<PAGE>   150

**













---------------
**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.



4

<PAGE>   151
**Overview

The   **   contains the following features.   **







---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       
5
<PAGE>   152
                                 **Description

The   **   array is   **















                                         
------------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

6
<PAGE>   153
                                        **Load

**   Load project is a method for   **













---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
       
7
<PAGE>   154
                                        **Analysis


**   Analysis (PSA) is the method by which the   **


















---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

8
<PAGE>   155
ESCON 128   **

For ESCON on Iceberg, the subsystem will initially support a maximum of   **
followed later with support for a   ** .  A   **   is defined as the
communication   **   between the   **   and   **   .  In order to access   **
, a   ** will have four logical paths associated with it.  This is due to the
**   Control Unit images that are used to access **   .  The support of   **
Control Unit images will not consume   **   resources available to the
subsystem.  Each parallel channel card installed in the subsystem will reduce
the number of host paths supported by   **   on the   ** and by   **   on the
**   .    **   installed parallel channel cards (  **   per cluster) will
reduce the total number of   **   from   **    to   **   for   **   total   **
and from   **   to   **   for   **   total   **   .  The   **   project has
been   **   and is currently   **   .











                                         
---------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.

9
<PAGE>   156
Table 5-1.  Parallel and ESCON Channel Configurations Options

<TABLE>
<CAPTION>                                                                      
                          Cluster 0                             Cluster 1      
                
                 ---------------------------------------------------------------
Total            Cntrl Reg 0      Cntrl Reg 1     Cntrl Reg 2     Cntrl Reg 3
                 ---------------------------------------------------------------
<S>                    <C>           <C>              <C>              <C>
8P                     **            **               **               **
16P                    **            **               **               **
24P                    **            **               **               **
32P 4P                 **            **               **               **
8S - Single            **            **               **               **
8S - Dual              **            **               **               **
16S - Dual             **            **               **               **
16P/8S - Single        **            **               **               **
16P/8S - Dual          **            **               **               **
</TABLE>

Note:  Mixed channel configurations   **   are supported   **   will support
**   configurations.  

(1)  Where P is one OEMI channel (one fourth of an ICQ card), 1S is one ESCON
link (one half of an ICE1 or ICE2 card).  Where Single is the top link enabled
on each ICE card and Dual is both links enabled in each ICE card.  

(2)  Each link will support   **   for Release 1 and   **   for Release 2.  

(3)  Each link will support   **   for Release 1 and   **   for Release 2.  

(4)  Each link will support   **   for Release 1 and   **   for Release 2.  

(5)  Each link will support   **   for Release 1.  This configuration   **  
for Release 2.  

(6)  Each link will support   **   for Release 1.  This configuration   **  
for Release 2.  

All channels to a device from the same system (host or LPAR) must be the same
type.  Channel types S (=CNC), FX (=CVC), BL (Block - MUX) cannot be intermixed
to a device from the same system.  Channel configurations are therefore
symmetrical between the clusters.





------------------------

**     Confidential portions omitted and filed separately with the
       Securities and Exchange Commission under an application for confidential
       treatment.                                                              

10
<PAGE>   157

                          SCHEDULE 2 TO APPENDIX A TO
                               STATEMENT OF WORK

                              KODIAK Descriptions

                                       **
K-1

  **   VOLUMES:

         This is a development to   **   .  This becomes desirable (and
          necessary) due to increased capacity drives   ** volume.

  **   SIZE:

         This is a cost reduction element to allow the parity group (or RAID
         group) size to increase from its current **   to   **   .  This means
         that the effective real data space utilization grows from   **   which
         realizes a reduced cost for data protection.  This group size must
         **   for practical reasons.

  **   SIZE:

         The current   **   size used in Kodiak is   **   .  This was chosen as
         an optimal amount for the internal transfer elements and the disk
         capacity.  Subsequent to that implementation, most drive vendors have
         dropped support for variable blocks sizes or sizes of this range.  To
         **   must be adopted.  The   **   size will allow our internal element
         size to be maintained and still utilize the   **   drives.

  **   DRIVE CABINET:

         With the support of   **   drives, up to   **   drives can be included
         in a   **   cabinet realizing both cost and floor space savings over
         the   **   drive   **   cabinets.

  **   DRIVE SUPPORT:

         Higher capacity   **   drives are becoming available and will
         represent a cost/performance advantage over the current drives being
         used.  Additionally, following the technology curves will be necessary
         for both supply and cost issues.  The support for   **   will
         encompass qualification, development of a dual port card, packaging,
         code support (both configuration and functional, and testing.






--------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatme
<PAGE>   158
  **

         The current   **   unit vendor for us is developing under contract to
         us   **   that will allow a   **   .  This allows greater that   **
         distances for the   **   drives.  We will need to administer and test
         this feature.

"BIND" OR MERGED ARCTIC FOX AND KODIAK

         This feature allows   **   to be held resident in cache and treated as
         if they were on   **   .  This is set up through the   **   and may be
         changed by the customer support engineer.  Data may still be   **
         through a requested action on the support controller for changes,
         power downs, etc.  This feature allows for   **   to have specific
         enhance performance characteristics over other   **  for performance
         critical data.

K-2

  **   POWER/PACKAGE

         The K-2 development   **   of the   **   and allows for   **   of   **
         in the   **   while maintaining the **   .  The   **   in the   **
         allows for   **   and   **   .  This provides a significant cost
         reduction, assembly and test time decrease, and reduced parts count.
         Additionally,   **   required is   **   as well as other   **
         requirements.

IMPROVED PERFORMANCE   **

         The   **   will be improved in various areas to provide increased
         performance that is targeted to be   **   in the simulated TSO
         workload.  The areas include:  better utilization of   **   , faster
         **   , faster   **   , increased   **   , and   **   .

NON-HOMOGENEOUS CACHE SUPPORT:

         This development allows for   **   .  With the development of the
         appropriate code,   **   may be done where only data written is   **
         in a   **   of the   **   depending on configuration choices at
         installation time.  This is a cost reduction over   **   system.





                                     
--------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   159
  **     SUPPORT:

         This development allows for a   **   mode where the total   **
         capacity, rather that be used in a  **   (e.g.  **   ) can be used as a
         **   space (stacked mode).  This allows for larger   **   in a   **
         with the appropriate code changes.

  **   SUPPORT:

         This development changes the addressing mechanisms in the   **   to
         allow larger capacities that can be realized with   **   .

LAPTOP PC SUPPORT:

         This development replaces the current,   **   with a   **   for a cost
         reduction.  The development includes the encapsulating the
         environmental report by the environmental multiplexor card onto the
         **   rather than   ** into the   **   .

Other Items

  **   SUPPORT:

         This is the qualification and testing of the   **   that will be
         available   **   .  It will physically replace the   **   with no
         other changes other than configuration and mapping software.

  **

          **   is using   **   and the ability to   **   and   **   on the
          **   for   **   .

          **   is the implementation of   **   to   **   on a   **   .

          **   is a   **   feature where the   **   and the   **   to   **  
         actions.  This requires documentation from IBM as to   **   necessary 
         for implementation.

  **   WITH DUAL COPY COMMANDS

         This feature maps the   **   to the   **   to allow   **   of   **
         rather than   **   implement at the   ** .






--------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   160
PINNED DATA SUPPORT AT THE SC

         This somewhat misnamed feature allows4 of   **   at the   **   as well
         as the ability to   **   and   **   of the   **   in   **   .  It is a
         service enhancement for   **   as well as   **   .

ENHANCED PDS SEARCH ASSIST

         Enhanced   **   is   **   for   **   operation based on analysis of
particular program accesses.

  **   ESCON

         This development is the   **   and the   **   to allow   **   .  This
         includes evaluation as to feasibility (if it's possible at a
         reasonable cost/effort).

  **   CACHE

         This is the   **   and the   **   .  Diagnostics, configuration, and
         some functional code will have some changes.

  **   STATISTICS

         This is the   **   for   **   performance.  This depends on the
         documentation for IBM as to the   ** statistics required.





                                     
--------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   161

                          SCHEDULE 3 TO APPENDIX A TO

                               STATEMENT OF WORK


XSA/SNAPSHOT   **
XSA/SnapShot is a virtual data duplication program product which   **


XSA/SNAPSHOT FOR   **
  **   of XSA/SnapShot will be implemented on   **   as well (after release of
MVS SnapShot).    **   SnapShot will allow   **   and   **   from the   **   .
SnapShot for   **   will run as a   **   or from   **   through   **   .  It
will also have a pre-requisite of   **   and   **   .


XSA/SNAPSHOT   **
XSA/SnapShot   **   will be the first major enhancement of XSA/SnapShot.  It
will   **   and   **   .  Final specifications are still being developed.





                                     
--------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   162

                             APPENDIX A: SCHEDULE 4
                            TO THE STATEMENT OF WORK




                    ICEBERG PERFORMANCE COMMITMENTS FOR  **
                                  VOLUME SHIP



<TABLE>
<CAPTION>
WORKLOAD                      SUBSYS      DATA       **        **           **           CACHE      # OF
                               GB'S      CHNLS       **       **            **           SIZE      DEVICES
                             --------    -----     ------   -------       -------      --------    -------
<S>                          <C>         <C>       <C>      <C>            <C>          <C>          <C>
  **





NOTE: NA -) NOT APPLICABLE

</TABLE>








                                         
------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   163


                             APPENDIX A: SCHEDULE 5
                            TO THE STATEMENT OF WORK




                    ICEBERG PERFORMANCE COMMITMENTS FOR   **
                                 VOLUME SHIP



<TABLE>
<CAPTION>
WORKLOAD                      SUBSYS      DATA       **       **            **           CACHE      # OF
                               GB'S      CHNLS       **       **            **           SIZE      DEVICES
                             --------    -----     -------  -------       -------      --------    -------
<S>                            <C>        <C>        <C>      <C>           <C>          <C>        <C>
  **



NOTE: NA -) NOT APPLICABLE
</TABLE>





                                         
------------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   164


                             APPENDIX A: SCHEDULE 6
                            TO THE STATEMENT OF WORK




                    KODIAK PERFORMANCE COMMITMENTS FOR   **
                                  VOLUME SHIP



<TABLE>
<CAPTION>
WORKLOAD                      SUBSYS      DATA       **       **            **           CACHE      # OF
                               GB'S      CHNLS       **       **            **           SIZE      DEVICES
                             --------    -----     -------  -------       -------      --------    -------
<S>                           <C>        <C>         <C>      <C>           <C>          <C>         <C>
  **





NOTE: NA -) NOT APPLICABLE
</TABLE>





                                         
------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   165


                            APPENDIX A:  SCHEDULE 7
                            TO THE STATEMENT OF WORK




                    KODIAK PERFORMANCE COMMITMENTS FOR   **
                                  VOLUME SHIP   ** 



<TABLE>
<CAPTION>
WORKLOAD                      SUBSYS      DATA       **       **            **           CACHE      # OF
                               GB'S      CHNLS       **       **            **           SIZE      DEVICES
                             --------    -----     -------  -------       -------      --------    -------
<S>                           <C>         <C>        <C>      <C>           <C>          <C>        <C>
  **





NOTE: NA -) NOT APPLICABLE
</TABLE>





                                         
------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   166

                          SCHEDULE 8 TO APPENDIX A TO
                               STATEMENT OF WORK



                          CAPACITY RATIO SPECIFICATION


The test to determine capacity ratio consists of backing up a   ** , and   ** .
IXFP used to report test results.  Specifications are as follows:

         A.        **

         B.        **   capacity:

                        **

         C.        **   (on FAST) =   **

         D.      Compression ratio =   **

         E.      Net Capacity Level =   **

         F.      Volume Utilization =   **

         G.      Capacity Ratio =   **





                                                   
----------------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.


<PAGE>   167
                                                                    ATTACHMENT 1

                                   APPENDIX B

                       COMPLETION AND ACCEPTANCE CRITERIA


1.        COMPLETION AND ACCEPTANCE CRITERIA.

          All completion and acceptance criteria for ESP, volume shipment
          checkpoint and volume shipment compliance are included in this
          section.

          In order to qualify for acceptance at the checkpoints identified
          herein, each Deliverable must perform according to the specifications
          identified and referenced in Appendix A, "FUNCTIONAL, TECHNICAL AND
          QUALITY SPECIFICATIONS" as amended by the associated PDP for such
          Deliverable. For the Iceberg and Kodiak Deliverables, the IBM System
          Test is attached as Schedule 1 to this Appendix B.

2.        STAGE CRITERIA.

          Specified Function, ESP and Acceptance Criteria are as follows:

          A.     ESP Checkpoint.  For each Specified Function, other than for
                 the Base Iceberg Package, StorageTek shall recommend to IBM
                 when each SF is ready for IBM to conduct an Early Support
                 Program ("ESP"), typically with a minimum of   **StorageTek;
                 IBM shall have the right to have up to   **   be IBM internal
                 customer sites or test installations. Machines supplied to IBM
                 installations shall be supplied at no charge to IBM during the
                 ESP test period.

                 Prior to the ESP start date, an ESP ready review shall be
                 conducted jointly by the parties; during this review
                 StorageTek will present the status of the testing that it has
                 completed for the Specified Function, with an accompanying
                 written report. StorageTek's report will include a summary of
                 all problems that have been encountered and resolved, details
                 on all unresolved problems and proposed action plans for their
                 resolution and status of meeting the agreed to exit criteria
                 for the function test of this Specified Function.

                 StorageTek will present its recommendation as to whether to
                 implement the plan for ESP shipments.   If StorageTek has
                 recommended proceeding, IBM will have   **   working days to
                 conclude whether the SF had met the criteria in the functional
                 test plan for ESP initiation.  IBM will not unreasonably
                 withhold its agreement that the particular Specified Function
                 is ready for the ESP.





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   168
                 If StorageTek disagrees with IBM's conclusion, StorageTek may
                 appeal by means of the Dispute Resolution Process.

                 For each Specified Function, StorageTek's obligation to be
                 ready to initiate an ESP at the designated date shall be met
                 upon its delivery of such Specified Function that is in
                 accordance with the specification documents for it as listed
                 below:

                 o  functional specification, as updated in accordance with
                    design change procedures

                 o  customer documentation readiness

                 o  Functional Test Plan Completion Criteria

                 o  performance measurement results against requirements,
                    substantial compliance required

      B.     Volume Shipment Checkpoint.  Prior to the volume shipment date, a
             volume shipment readiness review shall be conducted jointly by the
             parties; during this review StorageTek will present the status of
             the testing that it has completed for the Specified Function, with
             an accompanying written report. StorageTek's report will include a
             summary of all problems that have been encountered and resolved,
             details on all unresolved problems and proposed action plans for
             their resolution and status of meeting the agreed exit criteria
             for the ESP test of this Specified Function ("SF").

             StorageTek will present its recommendation as to whether to
             commence volume shipments. If StorageTek recommends proceedings
             with volume shipments, IBM will have   ** working days to conclude
             whether the SF had met the criteria in the ESP test plan for
             volume shipments.

             If StorageTek disagrees with IBM's conclusion, StorageTek may
             appeal by means of the Dispute Resolution Process (as that process
             is defined in Section 21 of the OEM Agreement).

             For each Specified Function, StorageTek's obligation to justify
             volume shipments at the designated date shall be met upon its
             delivery of such Specified Function that is in accordance with the
             specification documents for such Specified Function as listed
             below:

                 o  functional specification, as updated in accordance with
                    design change procedures

                 o  customer documentation readiness for volume shipments

                 o  ESP Test Plan Exit Criteria





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   169
                 o  performance measurement results against commitment curves,
                    complete compliance required

                 o  level 1 and level 2 support training completed

                 o  service cost estimate compliance

                 o  IBM System Test

                 o  manufacturing, marketing & service readiness

      C.     Testing.  StorageTek shall be responsible for running tests as
             specified in the applicable test plan; IBM shall have the right to
             monitor the tests being run to verify compliance with the
             specification documents for that Specified Function. Concurrently,
             IBM shall have the right to verify compliance by independently
             running tests at IBM's expense.

             A set of performance requirements will apply for each Specified
             Functions in the PDP.  These requirements will relate to   **
             environments appropriate to the Specified Function.  The standard
             set of performance benchmarks that IBM escrows pursuant to Section
             5.3 will be run to verify that performance has not been degraded
             for the delivered SF.  Any variation from the performance
             commitments specified in Appendix A for the identified "Committed
             In Plans" Items must be approved in writing by the Contract
             Coordinators for the respective parties, with specific reference
             being made in the approval to such approval relating to varying
             the otherwise applicable performance commitments.

      D.     Volume Shipment Compliance.  StorageTek shall have met its volume
             shipment date if it meets its obligation to justify volume
             shipments by the Volume Date specified in Section  6.1 above.

             IBM will provide written notification to StorageTek of any failure
             of the SF to meet the applicable criteria which notice shall
             identify the basis for any such IBM conclusion.  IBM shall have
             the right to verify compliance to test criteria by independently
             running tests, and StorageTek shall have the opportunity to
             witness any such testing.

             If StorageTek fails to deliver the Specified Function by the
             Volume date, in accordance with this Volume Shipment Compliance
             process, then the consequences shall be as specified in Section E
             below.

      E.     Volume Commitment Adjustment.

             (1)      **   . Notwithstanding any Volume Commitment Adjustment
                    designation in Section 6.1, if StorageTek fails to deliver
                    the   **   by the applicable Volume shipment date of   **
                    , then IBM shall be **   (as that   **   are established by





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   170
                    Sections 6.1 and 7.6(a), respectively of the OEM Agreement)
                    for each   **   of delay during the   ** of any such delay.

                    If StorageTek's failure to deliver the   ** continues
                    beyond the initial   **   , then IBM shall be   **   with
                    having   **   of the respective quarter's   **   applicable
                    to the   **   that is **   beyond the   **   of delay (as
                    that   **   are established by Sections 6.1, 6.2 and 7.6(a)
                    of the OEM Agreement) for each   **   of further delay.

             (2)    Other Functions. If StorageTek fails to meet the Volume
                    date for any Specified Function (other than the   **   ),
                    then IBM shall be   **   (as that **  are established by
                    Sections 6.1, 6.2  and 7.6(a) of the OEM Agreement) for
                    each   **   of delay multiplied by a factor; that factor
                    is:

                    o   **   for   **   VOLUME COMMITMENT ADJUSTMENT;

                    o   **   for   **   VOLUME COMMITMENT ADJUSTMENT; and

                    o   **   for   **   VOLUME COMMITMENT ADJUSTMENT.

                    However, notwithstanding the above and Section 6 of the
                    SOW, if the   **   (as it is defined in Section 6.1, with
                    **   ) is not delivered on   **   , then the factor applied
                    shall be   **   , of which   **   shall be used for   **
                    and   **   shall be used for   **   .

             (3)    General.  The   **   is the   **   and   **   , as well as
                    **   for   **   and   **   , as specified in Section 6 of
                    the OEM Agreement. If a SF is delivered at any time later
                    than 15 days after Volume date specified for such SF, then
                    it shall be considered to be delayed by a full month.  If
                    multiple functions fail to be shipped in accordance with
                    the designated Volume shipment dates, then the   **
                    applicable VOLUME COMMITMENT ADJUSTMENT factor shall apply.

                    Each such factor shall be multiplied by the percentage of
                    commitment applicable to the relevant subsystem, as is
                    established by the Current Volume Assumptions shown on the
                    attached Schedule 2.  For   **   , the percentage of
                    commitment is as for   **   .



-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   171
3.    TEST PLAN CRITERIA

      Functional Test Plan Completion/ESP Test Plan Exit Criteria/IBM System
Test Completion:

      A.     No known   **    in any Deliverables remain open; and

      B.     a list of any known   ** in place by StorageTek to resolve within
a specified period of time.

4.    ERROR PROCESSING DURING ESP TEST

      All problems found during the ESP Test will be logged by StorageTek and
      reported to IBM with the following minimum information:

      A.     a description of the error;

      B.     how to reproduce the error.  If it is an Information Unit error,
             where the error may be found;

      C.     a description of what is believed to be the correct result; and

      D.     the Severity of the problems discovered.

      StorageTek shall notify IBM of any   **   errors discovered during ESP
      Testing as soon as possible.  Other errors shall be provided to IBM in
      accordance with StorageTek's Standard Practices.  StorageTek shall   **
      to resolve all   **   reasonably possible.





-------------------

** Confidential portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   172
             SCHEDULE 1 TO APPENDIX B OF ATTACHMENT 1 TO EXHIBIT 3

                              MONTEREY SYSTEM TEST


For each specified function ("SF"), Oahu shall promptly notify Monterey In
writing when formal test, (i.e., Engineering Verification Test ("EVT")) is to
begin, and shall provide to Monterey a functional specification prior to such
time.  Any changes to an early ship program ("ESP") date to test the SF, and
all design change request ("DCRs") to the functional specifications for the
Products must be supplied to and approved by Monterey.

Oahu shall provide, within   **of request by Monterey, all documentation
determined by Monterey to be required to prepare for possible Monterey System
Test (MST) including but not limited to, all Oahu schedules related to the
development and test of each new SF or SFs, problem logs related to the SF(s),
detailed test plans used by Oahu for the formal testing of the SF(s), customer
and maintenance documentation associated with the SF(s), a list of product
claims for the new SF(s), and any other documentation normally produced for
marketing, service organizations, Oahu test, or for the customer.

Summary reports of test progress and problem status shall be updated and sent
to Monterey on a regular basis from this time until ESP on a schedule to be
agreed upon by Oahu and Monterey.

MONTEREY SYSTEM TEST (MST)

For each SF or group of SFs considered by Monterey to be available to the
customer as part of a single announce package with a single availability date,
Monterey shall have the right to waive execution of an MST, participate in a
joint MST with Oahu, or conduct an MST at either an Oahu or Monterey test site
location or locations, the location(s) and expected duration of such testing to
be reasonably determined by Monterey.  As the duration of a test is dependent
on, among other things, the complexity of the SF(s), the number of problems
found, the problem fix rate, and the amount of resources applied to the
testing, the expected duration should not be seen as a commitment by Monterey.
It is expected that should an MST be required by Monterey, the test would run a
minimum of 3 weeks at a level of resource applied to the test as mentioned
below.

A typical MST conducted by Monterey would consist of   **   , often conducted
in parallel and each utilizing approximately half the allocated test UUTs
(Units Under Test), tools and on-site support personnel.

The Monterey FVT (Functional Verification Test) would execute test scenarios,
the majority of which are run against a multi-host high stress background
(known as "(FVT) vanilla stress") driven by internally developed Monterey test
drivers.  Monterey FVT tests include, but are not limited to, the following
subtests: attachment, stress, functional/algorithm, power, error injection
(interface (both internal and





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   173
external), logic, drive, media), and channel sequence controls.

The Monterey SLT (System Level Test) would execute test scenarios, the majority
of which are run against a   ** under the MVS operating system   **   , using
both externally available applications, access methods and utilities as well as
internally developed jobstreams.  Monterey SLT tests include, but are not
limited to, the following subtests:
  **

ENTRY REQUIREMENTS FOR MST

      Receipt of all test resources as described below with adequate time to
      install and configure test UUTs

      Available schedule windows, CPUs, personnel and other   **   resources to
      conduct the MST

      No staging of the   **   considered to be part of the   **   to be tested
      in the current MST **   of contiguous   **   stress runs in both the
      Monterey FVT and SLT environments

      Documentation as described above

      **

MST REQUIRED RESOURCES

FAST, FASTER, and QUICK machines supplied to MST test locations will be
supplied at   **   to Monterey.  These machines will be at hardware, microcode
(including functional, service, et al.), and supporting software levels
approved by Monterey.  For a   **   , there are usually   **   divided between
FVT and SLT.

On-site support by Oahu personnel will be supplied to Monterey for any MST.
These personnel will be supplied in a quantity and at a skill level mutually
agreed upon by Oahu and Monterey at   **   to Monterey.  Monterey will request
at least   **   personnel,   **   and   **   for   **   training/testing, UUTEC
(Engineering Change) maintenance, and general support including failure data
collection.  This does not include any development resource which might be
required for UUT debug or fix testing.

Tools required by Oahu for its own testing of the products (including but no
limited to debug, support, and error injection) will be supplied at a quantity
and level mutually agreed to by Oahu and Monterey for any MST at   **   to
Monterey.

EXIT CRITERIA FOR MST

      All MST test variations attempted with   **   successful as determined by
      Monterey

      All   **   resolved with a mutually agreeable action plan for the
      resolution of the remainder of the problems

      Resolution of all problems considered by Monterey to be ESP gates with
      adequate time to verify the fixes to such problems and ensure no
      unexpected side effects of such fixes

      Signoff by the Monterey test group that all claims have been met

      SF(s) meets   **   and other Monterey quality criteria





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   174
      ENTRY CRITERIA FOR ESP

      Successful exit of MST or successful Monterey pre-ESP certification of
      Oahu testing or the non-default waiving of both of the prior criteria if
      Monterey determines that is appropriate

      Monterey agrees that all   ** found in any SF test effort by either Oahu
      or Monterey do not constitute ESP gates

      Monterey agrees that all testing efforts by either Oahu or Monterey
      (other than ESP) have been successfully concluded and that all   **   met

      Appropriate support structures exist to deal in a timely manner with any
      field problems which may be found

      SF(s) meets Monterey quality criteria for general availability





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   175
                          SCHEDULE 2 TO APPENDIX B TO
                               STATEMENT OF WORK

Current Volume Assumptions



                                                                      TB's

FAST                       # Escon
          Cache            Channel                    **  



 **





System Total
Upgrade (First   **   TB's, at   **                   **

FASTER


  **





Total Faster

Total Fast & Faster





-------------------

** Confidential  portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.
<PAGE>   176
                           Attachment 1 to Exhibit 3
                                  Appendix  C





                           [Intentionally left blank]
<PAGE>   177
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___


                            IBM DEVELOPER AGREEMENT

                               STATEMENT OF WORK

                                  APPENDIX  D

                      EXHIBIT: CERTIFICATE OF ORIGINALITY

                           NUMBER: ___(IDA NUMBER)___

                                     DATED

                                __(IDA DATE)___

                                    BETWEEN

                                  CORPORATION

                            ___(STREET ADDRESS)____

                             ___(CITY, STATE)_____

                                      AND

                            _____(VENDOR NAME)______

                            ____(STREET ADDRESS)____

                            _____(CITY, STATE)______





                                       1
<PAGE>   178
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___


                                    CONTENTS


                 EXHIBIT: CERTIFICATE OF ORIGINALITY APPENDIX:



<TABLE>
<S>                                                                          <C>
ICON ORIGINALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
                                                             
                                                             
IDENTIFICATION FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
                                                             
1.0      QUESTIONAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
                                                             
1.0      ICON REPRESENTATION  . . . . . . . . . . . . . . . . . . . . . . .  9
                                                             
2.0      CERTIFICATION  . . . . . . . . . . . . . . . . . . . . . . . . . .  8
                                                             
2.0      CREATOR OF ICON  . . . . . . . . . . . . . . . . . . . . . . . . .  9
</TABLE>





                                       2
<PAGE>   179
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___



AGREEMENT # ___(IDA Number)___             DATE OF AGREEMENT ___(IDA Date)___

                      EXHIBIT: CERTIFICATE OF ORIGINALITY

IBM Developer Agreement Transaction Document no:

                                      XXX
--------------------------------------------------------------------------------

If you provide IBM any program product, offering, related documentation,
microcode or other software material (collectively, "Software Material"), you
must complete this questionnaire and send it to IBM's Contract Coordinator for
this project.

You will provide IBM with any additional information needed for copyright
registration or enforcement of legal rights relating to the Software Material.

One questionnaire can cover one complete product, even if that product includes
multiple modules.  A separate questionnaire must be completed for code and
another for its related documentation.  Significant changes to the Software
Material will require completion of a new questionnaire.

Please do not leave any questions blank.  Write "not applicable" or "N/A" if a
question is not relevant to the Software Material.  If you need additional
space to complete any question, please attach a separate sheet of paper that
identifies the question number.





                                       3
<PAGE>   180
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___


1.0  QUESTIONAIRE

a)       Name of the Software Material (provide complete identification
         including version, release and modification numbers for programs and
         documentation):

b)       Was the Software Material or any portion thereof:

         1)  Written by any person(s) other than you or your employees working
         within their job assignments?

                 YES___   NO___
                 (If NO, skip to #3)

         2)  Did the person(s) write ALL or PART of the Software Material?

                 ALL___   PART___
                 If PART, state the percentage written by the person(s) ____%

         3)  Was the Software Material provided to you by COMPANY(IES) or
         INDIVIDUAL(S) or both?

                 COMPANY(IES)___  INDIVIDUAL(S)___   BOTH___ (Completed) and 
                 e)  below)


How did you acquire title to the Software Material or the right to grant the
licenses granted to IBM?

         4)  For each COMPANY, provide the following information:

                 Name:

                 Address:

How did the COMPANY acquire title to the Software Material?  (For example, the
Software Material was written by the COMPANY's employees as part of their job
assignment):

Did the COMPANY have each non-US contributor to the Software Material sign a
waiver of their moral rights?





                                       4
<PAGE>   181
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___

                          YES___  NO___

         5)  For each INDIVIDUAL(S) in 2c), provide the following:

                 Name:

                 Citizenship:

                 Address:

Did the INDIVIDUAL(S) create the Software Material while employed by, or under
a contractual relationship with, another party?

                 YES___   NO___
                 If YES, provide name and address of the other party:

Did the INDIVIDUAL(S) create or first publish the Software Material in a
country other than the US?

                 YES___   NO___
                 If YES, did the INDIVIDUAL(S) sign a waiver of moral rights?

                 YES___   NO___
                 (If YES, please attach a copy)

6)  Was any part of the Software Material registered at any copyright office?

                 YES___   NO___
                 (If YES, provide the following registration information:)


i)       Claimant Name:

ii)      Registration Number:

iii)     Date of Registration:

iv)      Title of Work:

c)  Was any part of the Software Material published?





                                       5
<PAGE>   182
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___

                          YES___  NO___

When and where was it published?

Was there a copyright notice on the published material(s)?

                 YES___   NO___
                 (If YES, provide the copyright notice below.)


Was any part of the Software Material distributed by you to any outside person
or company other than IBM?

                 YES___   NO___

When and where was the Software Material distributed?

To whom was the Software Material distributed?

Why was the Software Material distributed?

Under what conditions was the Software Material distributed?
(for example, under a contract.)


d)  Was any part of the Software Material derived from preexisting material(s)?

                 YES___   NO___
                 (If YES, provide the following information for each of the
                  preexisting materials:)

         1)  Name of the material:


         2)  Author (if known):


         3)  Owner (if known):


         4)  Copyright notice appearing on the material (if any):





                                      6
<PAGE>   183
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___


         5)  Was any new function added to the preexisting software?

                 YES___   NO___

                 Briefly describe the new function(s) below:

                 ___% of preexisting material used

                 ___% of preexisting material modified

                 ___% of new material consisting of or deriving from
                      preexisting materials


         6)  Briefly describe below how the preexisting material has been used:

                 e)  Were any part of the display screens, data formats,
                 instruction or command formats, operator messages, interfaces,
                 etc. (collectively called "External Characteristics") of the
                 Software Material copied or derived from the External
                 Characteristics of another program or product of yours or a
                 third party?

                 YES___   NO___
                 (If YES, provide the following information:)

                 a)  Name of Developer's or third party's program or product:


                 b)  Author (if known):


                 c)  Owner (if known):


                 d)  Copyright notice relating to the preexisting External
                     Characteristics (if any):


                 e)  Have the preexisting External Characteristics been
                     modified?

                          YES___  NO___





                                       7
<PAGE>   184
                     EXHIBIT: CERTIFICATE OF ORIGINALITY
                          DATED ___ (IDA DATE) ___


                          (Describe how they have been modified below:)

                 f)  Identify below any other circumstances that may affect
                 IBM's ability to reproduce and market the Software Material,
                 including:

                          1)       confidentiality or trade secrecy of
                                   preexisting materials:



                          2)      known or expected royalty obligations to
                                  others:



                          3)      preexisting materials developed for another
                                  party or customer (including government)
                                  where you may not have retained full rights
                                  to the materials:



                          4)      materials acquired from a person or company
                                  possibly having no title to them:

                 g)  Employee Identification.  You recognize that for purposes
                 of copyright registration or enforcement of legal rights
                 relating to the Software Material, IBM may need to know the
                 names, addresses and citizenships of all persons who wrote or
                 contributed to the writing of the Software Materials.  You
                 agree to keep accurate records of all such information
                 according to the IDA and to provide them to IBM at our
                 request.

                 h)  ICON.  An "ICON" is generally defined as a symbol on a
                 display screen that a user can point to with a device such as
                 a mouse in order to select a particular operation or software
                 application.  For each ICON contained in the Software
                 Materials, you will haveits creator complete an ICON
                 IDENTIFICATION FORM and submit them as appendices to this
                 Certificate of Originality.


 2.0  CERTIFICATION





                                       8
<PAGE>   185
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___

By signing below, you certify that all information contained in  this
Certificate of Originality, including any attachments or  appendices to it, are
accurate and complete.


(Developer Name) 
                 --------------------------------------------------------------

Signature: 
           --------------------------------------------------------------------

Print name: 
            -------------------------------------------------------------------

(Name of Signer)          
                 --------------------------------------------------------------

Title:           
       ------------------------------------------------------------------------

(Title of Signer) 
                  -------------------------------------------------------------

Date: 
      -------------------------------------------------------------------------




                                       9
<PAGE>   186
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___



                       APPENDIX: ICON IDENTIFICATION FORM


1.0  ICON REPRESENTATION

 Word(s), function or thing represented by the ICON:


2.0  CREATOR OF ICON

         a)  Name:

         b)  Job Title:

         c)  Business Address:

         d)  Business Telephone:

         e)  Citizenship:

         f)  Date created ICON in tangible form:

                 1)  Was the attached ICON created as an assigned work task
                 without reference to any preexisting icons or other work
                 authored or owned by another?

                          YES___  NO___
                          (If NO, identify the preexisting icon or other works 
                          that were referenced and attach copies:)

                 2)  If the ICON was created for inclusion in a specific
                 product, identify the product in which it will be (or was)
                 used and provide the planned availability date and country of
                 first publication:

                 3)  Identify or describe any known preexisting icons that
                 represent the same word or function or that are similar in
                 appearance to the ICON (attach copies):

                 4)  Please attach a copy of the ICON and, for identification
                 purposes, include on the drawing the information you provided
                 in response to Item 2 (a through f) above.





                                       10
<PAGE>   187
                      EXHIBIT: CERTIFICATE OF ORIGINALITY
                            DATED ___ (IDA DATE) ___





(Creator Name) 
               --------------------------------------------------------------

Signature:
           ------------------------------------------------------------------

Print name:
            -----------------------------------------------------------------

(Name of Signer)
                 ------------------------------------------------------------

Date:
      -----------------------------------------------------------------------





                                       11
<PAGE>   188
IBM DEVELOPER AGREEMENT (EXHIBIT 3)
STATEMENT OF WORK (ATTACHMENT 1)
APPENDIX E

--------------------------------------------------------------------------------

IBM SOURCE CODE CUSTODY AGREEMENT:     BASE AGREEMENT

--------------------------------------------------------------------------------

This Source Code Custody Agreement ("SCCA") between StorageTek, Custodian and
IBM describes the rights and obligations of the parties for the Escrowed Works
that StorageTek and IBM deliver to Custodian.  StorageTek and IBM shall be
called the "parties."

The SCCA consists of this Base Agreement and its Description of Escrowed Work
("DEW").  The SCCA is our complete agreement, as it supplements the IBM
Developer Agreement ("IDA"), and replaces all prior oral or written
communications between us regarding the Escrowed Works.

By signing below for our companies, the parties agree to the terms of this Base
Agreement.


AGREED TO:                                 AGREED TO:

Storage Technology Corporation             International Business Machines
                                           Corporation


-----------------------------------        ------------------------------------


By:                                        By:     
   --------------------------------           ---------------------------------
         (Authorized Signature)                    (Authorized Signature)


Name:                                      Name:   
     ------------------------------             -------------------------------

Date:                                      Date:   
     ------------------------------             -------------------------------


-----------------------------------        ------------------------------------
     StorageTek Office Address                       IBM Office Address





                                       1
<PAGE>   189
             IBM SOURCE CODE CUSTODY AGREEMENT #:    
                                                  -------------

AGREED TO:
                                  License Agreement #:
-------------------------------                        ------------------------
Custodian Name                                                                 

By: 
   ----------------------------
      (Authorized Signature)

Name:
     --------------------------

Date:  
     --------------------------

Custodian Address:


-------------------------------


-------------------------------


-------------------------------





                                       2
<PAGE>   190
IBM SOURCE CODE CUSTODY AGREEMENT

BASE AGREEMENT

--------------------------------------------------------------------------------


                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
PAR                       TITLE                                     PAGE
---                       -----                                     ----
<S>                       <C>                                       <C>
1                         DEFINITIONS                               2

2                         ESCROWED WORKS DEPOSITS                   2

3                         ESCROWED WORKS VERIFICATION               3

4                         RELEASE OF ESCROWED WORKS                 3

5                         LICENSE TO ESCROWED WORKS                 4

6                         WARRANTY                                  4

7                         LIABILITY AND INDEMNIFICATION             4

8                         TERM AND TERMINATION                      5

9                         COORDINATORS                              5

10                        PAYMENT                                   5

11                        GENERAL                                   6
</TABLE>





                                       3
<PAGE>   191
PART 1.  DEFINITIONS

Capitalized terms in the SCCA have the following meanings.  The DEW may define
additional terms.

1.1  CODE is computer programming code including both Object Code and Source
     Code.

         a)  OBJECT CODE is the computer programming code substantially in
         binary form.  It is directly executable by a computer after
         processing, but without compilation or assembly.

         b)  SOURCE CODE is the computer programming code that may be displayed
         in a form readable and understandable by a programmer of ordinary
         skill.  It includes related source code level system documentation,
         comments and procedural code, such as job control language.  Source
         Code does not include Object Code.

1.2  DERIVATIVE WORK is a work that is based on an underlying work and that
would be a copyright infringement if prepared without the authorization of the
copyright owners of the underlying work.

Derivative Works are subject to the ownership rights and licenses of others in
the underlying work.

1.3  ESCROWED WORKS are the materials that are described in the DEW.  They
include:

         a)  the Source Code in machine-readable form and the source code level
         system documentation in hard copy form;

         b)  a list of all Source Code modules of the Licensed Work;

         c)  a directory listing for each machine-readable medium;

         d)  commentary required to understand and use the Source Code;

         e)  a list of all Tools;

         f)  the Tools that Developer is required to escrow under the License
         Agreement; and,

         g) the code for initial performance benchmarks that IBM is required to
         escrow under the License Agreement.

StorageTek agrees that the source code for IXFP, IXOF, Iceberg, Kodiak and
Arctic Fox, deposited hereunder as of June 30, 1996 shall determine what is
considered Licensed Works under the Description of Licensed Works and that IBM
may rely on what is deposited as determinative for that purpose.





                                       4
<PAGE>   192
1.4  LICENSE AGREEMENT is the IBM Developer Agreement,  in which StorageTek
licenses IBM to its Licensed Works and IBM licenses the initial performance
benchmarks.

1.5  LICENSED WORKS are those deliverables that StorageTek licenses to IBM
under the License Agreement.

1.6 RELEASE EVENTS are the following occurrences when either IBM or StorageTek
may demand that Custodian deliver a copy of the Escrowed Works to the
requesting party:

         a) Either IBM or StorageTek may request Custodian to provide a copy to
         the requesting party at any time, but Custodian must retain the
         original deposited materials.

1.7  Tools include devices, compilers, hardware, software, user and programming
documentation, media or other items required for the development, testing,
maintenance or implementation of a Licensed Work.


PART 2.  ESCROWED WORKS DEPOSITS

2.1 StorageTek and IBM will:

         a)  deposit with Custodian two copies of their respective Escrowed
         Works as described in the DEW attached hereto.  StorageTek and IBM
         will identify each item in the deposit by labeling it;

         b)  deliver the Escrowed Works in good condition in sealed containers;

         c)  provide Custodian with a notice that shall not be confidential
         (hereafter "nonconfidential notice") of all items contained in each
         container;

         d)  replace all lost or damaged Escrowed Works promptly upon notice
         from Custodian; and

         e) if either party determines that the Escrowed Works are not complete
         and accurate, the depositing party shall promptly rectify the same.

2.2  Custodian will:

         a)  accept each Escrowed Works deposit in trust for the non-delivering
         party and send the non-delivering party a  notice confirming receipt
         within three business days;

         b)  retain the Escrowed Works;

         c)  match all items on the nonconfidential notice to the labels on
         Escrowed Works;





                                       5
<PAGE>   193
         d)  take all reasonable steps to protect and store Escrowed Works in
         appropriate containers and atmospheric conditions, segregated from
         other materials;

         e)  promptly provide notice to IBM and StorageTek in the event of lost
         or damaged Escrowed Works; and

         f)  store a copy of this SCCA and the nonconfidential notice of items
         with Escrowed Works.

PART 3.  ESCROWED WORKS VERIFICATION

3.1 Unless the requesting party and Custodian agree in writing, Custodian is
not responsible for technical verification that Escrowed Works are complete,
accurate and current. Each non-Custodian party may, at its expense, hire a
party qualified to do this verification. StorageTek will reimburse IBM's
expenses if the Escrowed Works do not comply with the requirements of this
SCCA, and mutatis mutandis with respect to StorageTek's expenses.

3.2  Verification includes generating Object Code from Source Code for each
Licensed Work.  The verifier will witness the transfer of the verified Source
Code to deposited media.  The depositing party will supervise the verification
which will be conducted at the depositing party's facilities unless the other
non-Custodian party advises otherwise.

3.3  One technical employee of the non-depositing, non-Custodian party may
witness verification.  To the extent possible, verification will be done in a
way that does not expose the Source Code to this employee.  If this is not
possible, this employee will treat the Source Code according to the
IBM/StorageTek Agreement for Exchange of Confidential Information, number
OEM-9447.


PART 4.  RELEASE OF ESCROWED WORKS

4.1 Either IBM or StorageTek may demand delivery of Escrowed Works by notice to
Custodian pursuant to Section 1.6, copying the other non-Custodian party.

4.2  If either non-Custodian party determines that it does not have a complete
set of Escrowed Works, it may request them from the other party.  The other
party will provide the materials required within three days of requesting
party's request.

4.3 Each non-Custodian party will treat Escrowed Works according to the
IBM/StorageTek Agreement for Exchange of Confidential Information.


PART 5.  LICENSE TO ESCROWED WORKS

5.1  The license to Escrowed Works is governed by the IDA.





                                       6
<PAGE>   194

PART 6.  WARRANTY

Each depositing party  represents and warrants that it has the authority to
deliver the Escrowed Works to the Custodian and that the Escrowed Works (other
than the Licensed Works being escrowed) are complete and accurate.


PART 7.  LIABILITY AND INDEMNIFICATION

7.1  Custodian will take all reasonable precautions to prevent disclosure of
Escrowed Works to unauthorized third parties.

7.2  Custodian is liable only for willful misconduct, gross negligence and
fraud in performing its duties under this SCCA.  Custodian is not liable if
StorageTek or IBM fails to comply with any provision of the License Agreement
or this SCCA.  Custodian is not liable for acting on any notice that it in good
faith believes to be genuine and legitimate.

7.3  If a third party makes a claim against Custodian:

         a) StorageTek will indemnify Custodian for claims based on
         StorageTek's failure to comply with this SCCA; and

         b)  IBM will indemnify Custodian for claims based on IBM's failure to
         comply with this SCCA.

These indemnities do not apply where it is found that Custodian acted with
willful misconduct, gross negligence or fraud.

7.4  The indemnifying party will pay any settlement amount that it authorizes
and all costs, damages and attorney's fees that a court finally awards if
Custodian:

         a)  promptly provides the indemnifying party notice of the claim; and

         b)  allows the indemnifying party to control and cooperates with it in
         the defense of the claim and settlement negotiations.

Custodian may participate in (but not control) the proceedings at its option
and expense.


PART 8.  TERM AND TERMINATION

8.1  This SCCA begins when all parties sign it and continues until terminated
by mutual written agreement of the parties.  Either non-Custodian party may, at
its option, extend the term of the DEW for additional years as described in
Payment.





                                       7
<PAGE>   195
8.2  Custodian will destroy any remaining Escrowed Works 30 days after the
expiration or termination of the DEW unless IBM or StorageTek provides notice
otherwise.

8.3   The provisions of Liability and Indemnification will survive the
expiration or termination of this SCCA.  These terms will apply to the parties'
respective successors and assigns.

8.4 If Custodian cannot continue its responsibilities, Custodian may resign by
giving IBM and StorageTek 90 days' notice. IBM and StorageTek in good faith
will select a successor custodian to assume Custodian's responsibilities.

PART 9.  COORDINATORS

9.1  SCCA Coordinators responsible to administer all matters associated with
this SCCA and its exhibits are:


FOR:         IBM:                          FOR:         STORAGETEK

Name:                                      Name:                             
           -------------------------                  -----------------------
                                                                             
Title/Dept:                                Title/Dept:                       
           -------------------------                  -----------------------
                                                                             
Address:                                   Address:                          
           -------------------------                  -----------------------
                                                                             
FOR:     ___(CUSTODIAN NAME)___                                              
                                                                             
Name:                                     
           -------------------------      
                                          
Title/Dept:                               
           -------------------------      
                                          
Address:                                  
           -------------------------      

                 

9.2  Each of us will assign an Escrowed Work Coordinator in the DEW.  These
coordinators are responsible to administer matters associated with the DEW.
The SCCA Coordinator and the Escrowed Work Coordinator may be the same person.
A party will provide notice to the others when coordinators change.





                                       8
<PAGE>   196
PART 10.  PAYMENT

10.1  IBM will pay Custodian within 30 days after receipt of an acceptable
invoice for services under the DEW.  All payments will be made in U.S. dollars.
The Exhibit:  Fee Schedule identifies the specified period of Custodian's
services and the firm fees for that period.  Custodian may propose a revised
fee schedule to the IBM SCCA Coordinator no later than 90 days before the end
of the specified period.  The IBM SCCA Coordinator will notify Custodian if it
accepts or rejects the proposed fee schedule.  If rejected, the IBM and
Custodian SCCA Coordinators will negotiate a new fee schedule for the next
period.  The IBM and Custodian SCCA Coordinators add the new fee schedule to
the SCCA by initialing and dating it.  If IBM and Custodian cannot agree to a
new fee schedule for the DEW, it will expire at the end of its term and IBM and
StorageTek in good faith will select a successor custodian.  Custodian will
provide all assistance required to move the Escrowed Works to the successor
custodian.

10.2  Custodian will invoice IBM for:

         a)  all services to be performed under a DEW for one year; and

         b)  renewal of a DEW 60 days before it expires.  IBM may renew the DEW
         for an additional year by paying the renewal fees. If Custodian does
         not receive the renewal fees within 30 days, it will notify in writing
         the IBM Escrowed Work Coordinator and the StorageTek Escrowed Works
         Coordinator.

If neither IBM nor StorageTek pay the fees by the expiration date of the DEW,
the DEW will expire, the Custodian shall thereupon notify the IBM Escrowed
Works Coordinator and the StorageTek Escrowed Works Coordinator in writing that
the Parties have thirty days from the date of the notice to cure such failure
to pay and shall continue to maintain the escrow for that period.

In addition to information required by the DEW, the invoice will identify this
SCCA, the DEW and the services invoiced plus their associated fees.  Custodian
will submit all invoices as identified in the DEW.

If IBM does not renew by 30 days before the expiration date, StorageTek may pay
the such fee instead.

Each non-paying non-Custodian party shall reimburse one-half of the fee paid by
the paying party through the year **; after that, either party may elect not to
pay or to contribute to the fee (in which case continuance of the SCCA is 
dependent upon the other party's actions entirely).





------------------

** Confidential portions omitted and filed separately with the Securities and 
   Exchange Commission under an application for confidential treatment.

                                      9
<PAGE>   197
PART 11.  GENERAL

11.1  Each party will comply with all applicable laws and regulations at its
expense.  This includes all export and import laws and regulations.

11.2  Except as provided in the SCCA, none of the parties may assign or
transfer the SCCA or its rights under it or delegate or subcontract its
obligations without the prior written approval of the other parties.  Any
attempt to do so is void.

11.3  No party will bring a legal action against another party more than two
years after the cause of action arose.  All parties will act in good faith to
resolve disputes.  All parties waive their rights to a jury trial in any
resulting litigation.  Litigation will only be commenced in the State of New
York.

11.4  All notices must be in writing.  Except as provided in the SCCA, for a
change to the SCCA to be valid, IBM and StorageTek must sign it.  Other than
changes to the Release Events, Custodian must also sign changes that affect its
rights or obligations under the SCCA.  IBM will provide Custodian with copies
of all changes that Custodian is not required to sign.

No approval, consent or waiver will be enforceable unless signed by the
granting party.

11.5  The substantive laws of the State of New York govern the SCCA.





                                     10
<PAGE>   198
IBM SOURCE CODE CUSTODY AGREEMENT

DESCRIPTION OF ESCROWED WORK

--------------------------------------------------------------------------------

This Description of Escrowed Work ("DEW") is a Transaction Document issued
under the IBM Source Code Custody Agreement ("SCCA").


PART 1.  DESCRIPTION

1.1 The Escrowed Works required for deposit with Custodian: 1) by StorageTek,
are the source code and object code for IXFP, IXOF, ICEBERG, KODIAK and ARCTIC
FOX (Licensed Works) the applicable Development Environment and the capacity
ratio benchmark; and 2) by IBM, the initial benchmarks used to measure
performance requirements for ICEBERG and KODIAK.  In each case, as more
completely described in the Statement of Work to the IBM Developer Agreement.

1.2  Deposit will occur within thirty days after the signing of this SCCA.

1.3  StorageTek agrees that the source code for IXFP, IXOF, Iceberg, Kodiak and
     Artic Fox, deposited hereunder as of June 30, 1996 shall determine what is
     considered Licensed Works under the Description of Licensed Works and that 
     IBM may rely on what is deposited as determinative for that purpose.

PART 2.  ESCROWED WORK COORDINATORS

2.1  Escrowed Work Coordinators responsible to administer all matters
associated with this DEW are:



FOR:        International Business   FOR:        Storage Technology
            Machines Corporation                 Corporation

Name:                                Name:                             
            ---------------------                --------------------- 
                                                                       
Title/Dept:                          Title/Dept:                       
            ---------------------                --------------------- 
                                                                       
Address:                             Address:                          
            ---------------------                --------------------- 
                                                                       
            ---------------------                --------------------- 
                                                                       
            ---------------------                --------------------- 
                                                                       
Phone:                               Phone:                            
            ---------------------                --------------------- 
                                                                       
Facsimile:                           Facsimile:                        
            ---------------------                --------------------- 
                                                                       
                                                                       


                                       11
<PAGE>   199
FOR:             ________(CUSTODIAN NAME)_________
                 
Name:           
                 ---------------------------------
Title/Dept:      
                 ---------------------------------
Address:         
                 ---------------------------------
                 
                 ---------------------------------
Phone:   
                 ---------------------------------
Facsimile:       
                 ---------------------------------

2.2  Notices are effective when received by the appropriate coordinator as
demonstrated by reliable written confirmation (for example, certified mail
receipt, courier receipt or facsimile receipt confirmation sheet.)


PART 3.  PAYMENT

3.1 Custodian will send its original invoices to IBM at the following address:

_____________(street address)____________________

_____________(city, state)_______________________

One copy of each invoice will be sent by mail or facsimile to the IBM Escrowed
Work Coordinator, with a copy to the StorageTek Escrowed Work Coordinator.

3.2  Custodian's invoices will include the following information:

         a)  IBM Source Code Custody Agreement Number;

         b)  name of Custodian and "remit to" address;

         c)  short description of the performance for which payment is due; and

         d)  IBM's purchase order number (if applicable), Custodian's invoice
             number and its date.





                                       12
<PAGE>   200

IBM DEVELOPER AGREEMENT (EXHIBIT 3)
STATEMENT OF WORK (ATTACHMENT 1)
APPENDIX F

================================================================================
PERFORMANCE ASSESSMENT WORKLOAD SET (PAWS)

OVERVIEW

         The following document describes the methodology to be used in the
         performance evaluation of the STK's ICEBERG and KODIAK DASD I/O
         Subsystems.

         The performance workload suite has the following attributes:

         1.        **

         2.        **

         3.        **

         4.        **

         5.        **

         6.        **

The following is a summary of the workloads included in the subsystem workload
suite.

         1.      Random stress test.  A set of random access experiments,
                 called a four-corners test, evaluates performance of   **
                 conditions, such as ** or ** , with either ** operations, or
                 ** writes.

         2.      Sequential stress tests.  A set of sequential experiments are
                 included that stress the ** of the subsystem.  These tests
                 include both ** read and write streams, running between
                 ** .

         3.      Data base workload.  A data base workload is included that
                 tests a wide variation in ** .  This workload uses ** , and 
                 has been designed to ** the type of random access behavior 
                 seen in the ** data.

-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       1
<PAGE>   201
         4.      Batch workload.  A batch workload is included that ** the
                 ** seen in customer batch workloads.  This workload contains
                 a mixture of ** activity.

         5.      Sort workload.  A workload is included that is ** jobs.

         6.      Utility workload.  A utility workload is included that contains
                 the type of "data mover" applications that might be seen in 
                 many ** .

RANDOM  STRESS TEST

         The purpose of these experiments is to test variations of read and
         write content with high and low reference locality.

Key workload characteristics

         1.      The workload consists of ** tests:

                 **

         2.      Several measurement points are run for each case.  First, a **
                 point is taken at approximately ** to measure ** times.  An 
                 additional ** points are taken, ranging from around ** to ** 
                 for ** , and from around ** to maximum ** rate for ** .

         3.      ** rates are controlled by selecting various ** .The maximum 
                 rates are tested by establishing a ** .

         4.      ** volumes are standardly used, a sufficient number to allow 
                 ** of ** subsystems.

         5.      Access are uniformly distributed across all of the ** volumes.
                 **   are generated by a set of **   .

         6.      The ** tests use ** , and the ** use a **   .

         7.      The ** metrics for this *  are:

                   **


-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       2
<PAGE>   202
SEQUENTIAL STRESS TESTS

         1.      The following are the  ** of the sequential stress tests.

                  **

KEY WORKLOAD CHARACTERISTICS

         1.      The experiments are run with ** to ensure that the ** to the 
                 device is being ** by ** .Each data set is approximately ** .

         2.      Experiments are run with ** number of ** , varying from ** 
                 to ** for both ** .

         3.      The ** tests transfer roughly ** .The ** tests transfer ** .

         4.      The ** tests do not use the ** in the ** , thereby testing the
                 ** capability of the subsystem.

         5.      The ** metric for this workload is the ** rate in ** per 
                 second.

         --      Table 1 shows the test variations included in this sequential
                 test suite.

Table 1.   Sequential test.     **   sequential streams

EXPERIMENT       ACCESS METHOD       BLKSIZE       NO.BLKS       # OF STREAMS

  **

  **   DATA BASE WORKLOAD

         This test includes a general ** data base workload. This workload **  
         the ** characteristics of a variety of ** systems, and is implemented 
         as an application program using ** .This program has the ability to 
         generate a variety of ** .Unlike some benchmarks of this type, it is 
         not tuned to a ** , but rather is ** , and matches the ** of 
         characteristic data base environments.  In this way, it is a reasonable
         test of the effects of ** or the efficiency of ** , with ** 
         characteristics similar to ** and some characteristics of ** and ** 
         data base systems.



-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       3
<PAGE>   203
KEY WORKLOAD CHARACTERISTICS

         1.      The workload is run with ** , listed in order of "cache
                 friendliness".

         a.         **

         b.         **

         c.         **

         d.         **

         In general, the less cache friendly workloads have   **   and   **   .

         2.      With the exception of the   **   workload, these workloads are
                 run at  **   measurement points, with each measurement point
                 representing a   **   in variable user population.  This means
                 that   **   are added at higher loads, with each   **   having
                 a   **   .  (Some workloads, including the   **   variation,
                 **   user population that   **   at   **   measurement
                 points.)  As a result, as the user population grows at the
                 **   measurement points,   **   effects are generally observed
                 for a subsystem at a specific cache size.

                   **

                 The   **   measurement point generates an average of   **
                 per   **   volume in the workload, attempting to drive the
                 workload to   **   and   **   per volume at the   **
                 measurement points.  However, since the   **   times are
                 fixed, as response times increase at the   **   points, the
                 actual subsystem throughputs   **   these targets.

         3.      Each measurement point is run for approximately   **   .  The
                 data bases are   **   (to realistically deal with   **
                 sizes), and the   **   run duration is generally not long
                 enough for   **   design to stabilize into record caching.
                 This is due to the   **   unique to the   **   .  As a result,
                 some of the measurements of the   **   variation may be
                 pessimistic for the   **   .

         4.      The workload can be configured using multiples of   **
                 volumes.  The current setup uses   ** volumes, but can be
                 easily expanded beyond that number.  It



-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.


                                       4
<PAGE>   204
                 should be noted than although most   **   are configured with
                 more than   **   volumes, at any given time most of those 
                 volumes have very little activity, and most of the data is 
                 inactive.  In that sense, ** volume experiment with these work
                 loads represents the performance characteristics of a larger 
                 customer configuration.

         5.      Except for the   **   variation,   **   are skewed across   **
                 volumes.  For example, at the   ** measurement point for a set
                 of   **   volumes,   **   volumes attempt an   **   of
                 approximately   ** volumes attempt approximately   **   that
                 rate, and   **   volume attempts approximately   **   that
                 rate.

         6.      In the cache standard variation, a few volumes have   **
                 characteristics, while the rest of the volumes have   **   .
                 In the other workload variations, all of the   **   volumes
                 have   ** characteristics.  The standard cache workload
                 contains   **   volumes that have   **   characteristics.

         7.      A   **   variation is included to   **   throughput
                 capabilities of the subsystem.    **   measurement points are
                 run, from approximately  ** sec  per volume at the   **   rate,
                 to a   **   rate.  This workload uses a   **   user
                 population, reducing the   **   as load increases, to a   **
                 at the   ** measurement point.  For this workload,   **   tend
                 to remain constant across the measurement points.

         8.      The workload uses   **   sizes for all variations.

         9.      The   **   friendly variations have   **   write content.  All
                 writes are   **   writes, meaning that the record is   **   ,
                 and therefore   **   a hit in cache.

         10.     Each   **   volume in the workload has   **   data set.  Each
                 **   data set is approximately   ** in size.

         --      Table 2 shows some of the key workload characteristics for the
         random access         tests and the   ** workload.  The caching
         attributes shown are those measured on a   **   configuration.





-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       5
<PAGE>   205
Table 2.  Random Workload Attributes.  Workload attributes for a   **

EXPERIMENT    RD HIT %    WRITE %     F/W     RECRDMISS%    XFER SIZ     SKEW
                                      DESTG%

  **


BATCH WORKLOAD

         The purpose of the batch workload is to create a test which is
         representative of customer's ** batch window ** characteristics.  
         The following are the basic workload attributes:

KEY WORKLOAD CHARACTERISTICS

         1.      Contains a mixture of type of   **   activity

                   **

         2.      The average transfer size is   **   if   **   programs
                 excluded).  The   **   applications transfer either   **   or
                 **   per   **   , and the   **   applications transfer
                 approximately   **   per   ** .

         3.        **

         4.      The primary metrics for the workload are   **   and   **   and
                 **   times.

WORKLOAD IMPLEMENTATION

         1.      Contains   **   jobs, each with   **   job steps.  The
                 following is the mixture of   **   by the job steps:

                 **  reads of data sets with either  **  or  **  block sizes.

                 - A sequential application   **   that copies data sets with
                 either   **   or   **   block sizes.

                 - A   **   application that updates   **   of the records.



-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       6
<PAGE>   206
                 - A   **   application.  This is in fact the   **   variation
                 of the data base workload.

                 - A   ** application.

         2.      Each job is   **   except for the   **   of the steps.  This
                 is done to allow jobs to finish at roughly the same time, but
                 creates a mixture of activity at each point in time.

         3.      Each job has   **   data sets.  Except for the data base data
                 sets, data sets are   **   distributed across   **   .  Each
                 of the   **   data base data sets are distributed across each
                 of the   **   .

SORT WORKLOAD

WORKLOAD CHARACTERISTICS

         1.      A   **   application is included in the workload.  The key
                 attributes of the workload are:

                 - The   **

                 -   **

         2.      **   sorting is   **   , that is   **   sorting options are
                 used.  This is to ensure that this is truly a DASD benchmark,
                 and that   **   differences are not a significant factor in
                 the sort elapsed times.

         3.      A   **   size of   **   is sued to ensure   **   writes for
                 the sort work data sets.

         4.      The   **   attributes for   **   are   **   and   **   .

UTILITIES  WORKLOAD

         A collection of   **   are included in the test.  Customers often
         focus on these types of applications when conducting   **
         benchmarks.  The purpose of these tests are to   **   the various
         "data mover" type of utilities.  The following are included in this
         test suite:

         1.      **   Physical dump.





-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       7
<PAGE>   207
                 -        A series of physical dumps are performed, using   **
                          and   **   dump operations.

                 -        A   ** has been provided which causes the output to
                          be   **   , thereby eliminating   ** as a bottleneck.

                 -        The volumes dumped are   **   approximately   **
                          full.  The volumes contain   **   data sets.  They
                          are in fact   **   volumes used for the batch and
                          data base workloads.

                 -        **   is used.

         2.        **   Physical restore.

                 -        A series of physical restores are performed, using
                          **   and   **   restore operations.  The volumes
                          restored are the same as the batch and data   **
                          volumes.

         3.        **

                 -        A series of   **   jobs are executed.

                 -        The data sets used are the   **   as for the   **
                          stress tests,   **   with   **   .

         4.      IEBCOPY

                 -        A series of   **   jobs are executed.

                 -        The data sets consist of copies of a source 
                          library **.

WORKLOAD EXECUTION TIME

         --      Table 3 Shows approximate run times for each component of the
         workload.  These run times vary based upon the product being
         evaluated.  The total time to run the workloads and load and
         initialize the base operating system is currently around   **   .



-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       8
<PAGE>   208




Table 3.  Workload execution times

COMPONENT              DB LOAD              EXECUTION

  **



-----------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                                       9
<PAGE>   209
                   APPENDIX G TO ATTACHMENT 1 OF EXHIBIT 3
                   ---------------------------------------
                           Product Development Plan

                                    IBM SSD
                            BUSINESS LINE MANAGEMENT
                        (INTEGRATED PRODUCT DEVELOPMENT)

                         DEVELOP/QUALIFY/CERTIFY PHASE

                                    FOR THE

                             LARGE SYSTEMS STORAGE
                              OPEN SYSTEMS STORAGE
                                      AND
                       REMOVABLE MEDIA STORAGE SOLUTIONS
                                MARKET SEGMENTS

                              VERSION 2.0 DRAFT 4

                                 April xx, 1996

                                    IBM SSD
                              San Jose, California

        This document is to be used with the IBM SSD BLM (IPD) Process Handbook
        and is in review approved for use within the Removable Media Storage
        Solutions, Open Systems Storage, and Large Systems Storage market
        segments.

        A copy of the authorization is on file with the Document Owner.

        The document will be reviewed December, 1996


<PAGE>   210
      +--- SOFTCOPY NOTICE ---------------------------------------------+
      |                                                                 |
      | The current version of this document is maintained in softcopy  |
      | on the EE MDQ system in San Jose, the MDQ system in Tucson, and |
      | on the RSPINFO system in Rochester.  Printed copies are for     |
      | reference only.  To assure that the latest version is being     |
      | utilized, the softcopy document must be viewed.                 |
      |                                                                 |
      | Printed copies of this document may contain slight variations   |
      | in appearance; however, the content is the same.                |
      |                                                                 |
      +-----------------------------------------------------------------+
<PAGE>   211

           DOCUMENT CONTROL INFORMATION

        PROCESS OWNER:                 **

        PROCESS OWNER NODE/ID:         **

        OWNING DEPARTMENT:           Open Systems Business Line Management
                                     (FK8)

        DOCUMENT OWNER:                **

        DOCUMENT OWNER NODE/ID:        **

        DOCUMENT FILE NAME:          BLMBOX BOOKMSTR

        DOCUMENT LOCATION:           EE MDQ, MDQ, RSPINFO

        DOCUMENT RETENTION:            **

        DOCUMENT REVIEW SCHEDULE:    December, 1996

        DOCUMENT REVIEWED BY:        List of reviewers

   
<TABLE>
<CAPTION>
     +---------------+----------------------+---------------+----------+
     | NAME          |      DEPT  |   NODE     / ID         |   DATE   |
     +---------------+----------------------+---------------+----------+
       <S> <C>                             <C>              <C>
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96
       |   **                              **               04/  /96

</TABLE>



                                         
------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   212
<TABLE>
      <S>                                  <C>                 <C>
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96

</TABLE>


      DOCUMENT APPROVAL:     Approver's names, dept. and date of approval

<TABLE>
<CAPTION>
      +--------------------------+---------------------------+----------+
      | NAME                     |         TITLE             |   DATE   |
      +--------------------------+---------------------------+----------+
       <S> <C>                             <C>                 <C>
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96
       |   **                              **                  04/  /96


</TABLE>

        DOCUMENT DISTRIBUTION:      Softcopy is on EE MDQ in San Jose, 
                                    MDQ in Tucson, and RSPINFO in Rochester





                                         
------------------------

**     Confidential portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   213
      CHANGE HISTORY


<TABLE>
<CAPTION>
      +---------+----------+--------------------------------------------+
      | VERSION |    DATE     |       CHANGE DESCRIPTION                |
      +---------+----------+--------------------------------------------+
      <S>                 <C>           <C>
      | 0.6     |    01/  /95 |    Initial Draft of NPI Handbook        |
      +---------+----------+--------------------------------------------+
      | 1.0     |    02/24/95 |    Approved version of NPI Handbook     |
      +---------+----------+--------------------------------------------+
      | 2.0     |    04/19/96 |    Draft of BLM Handbook for LSS, OSS, & RMS
</TABLE>
<PAGE>   214
CONTENTS

<TABLE>
<S>                                                                    <C>
BLM (IPD) DEVELOP/QUALIFY/CERTIFY PHASE     . . . . . . . . . . .       7
                                                    
DEVELOP/QUALIFY/CERTIFY PHASE STEPS     . . . . . . . . . . . . .       9
Step 4.    ** . . . . . . . . . . . . . . . . . . . . . . . . . .       9
Step 5.    ** . . . . . . . . . . . . . . . . . . . . . . . . . .      14
Step 6.    ** . . . . . . . . . . . . . . . . . . . . . . . . . .      18
Step 7.    ** . . . . . . . . . . . . . . . . . . . . . . . . . .      22
Step 8.    ** . . . . . . . . . . . . . . . . . . . . . . . . . .      24
Step 9.    ** . . . . . . . . . . . . . . . . . . . . . . . . . .      27
Step 10.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      30
Step 11.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      34
Step 12.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      36
Step 13.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      39
Step 14.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      49
Step 15.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      50
Step 16.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      53
Step 17.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      56
Step 18.   ** . . . . . . . . . . . . . . . . . . . . . . . . . .      58
                                                    
                                                    
                                                    
FIGURES                                             
                                                    
         1.  BLM Process Overview . . . . . . . . . . . . . . . .      10

</TABLE>
                                                    
                                                    
TABLES





                                         
------------------------

**     Confidential  portions omitted and filed separately with the Securities
       and Exchange Commission under an application for confidential treatment.
<PAGE>   215
BLM (IPD) DEVELOP/QUALIFY/CERTIFY PHASE

This document represents the Business Line Management (Integrated Product
Development) Process as implemented in the following market segments:

        o   Large Systems Storage
        o   Open Systems Storage
        o   Removable Media Storage Solutions

The history of this process and its phases and decision checkpoints are
described in the IBM Storage Systems Division Business Line Management
(Integrated Product Development) Process Handbook, Version 2.0.

This document describes the work that goes on in each phase in more detail
including inputs needed at each step, deliverables from each step, and the
tasks performed in each step.  It does not include the very detailed processes
for how code is written, reviewed and tested, how vendor parts are qualified,
how chips are designed, simulated and tested, ... It does describe how the work
product of the various disciplines comes together in an integrated product
offering.
<PAGE>   216





PLEASE NOTE:  Pages 8 through 60 (Parts 4 through 18) of this Appendix G
Attachment 1 of Exhibit 3, entitled to "Product Development Plan," have been
omitted in their entirety (rather than redacting all of the information on each
and every page) as the Company believes that these pages are comprised
completely of proprietary information regarding numerous phases of IBM's
product development process.  The disclosure of such information would be
harmful to IBM and, moreover, to the Company's relationship with IBM as IBM
will not consent to the disclosure of this confidential information.
<PAGE>   217
                           ATTACHMENT 2 TO EXHIBIT 3


                            IBM DEVELOPER AGREEMENT
                          DESCRIPTION OF LICENSED WORK


This Description of Licensed Works ("DLW") is a Transaction Document issued
under the IBM Developer Agreement ("IDA") for the license to IBM of  an
existing Licensed Works owned by StorageTek. StorageTek retains ownership of
its intellectual property rights in the Licensed Works, but grants IBM licenses
to such Licensed Works, as set forth in this DLW Transaction Document. IBM owns
intellectual property rights in IBM Materials included in Deliverables provided
to IBM in accordance with the IDA , but grants StorageTek licenses to such IBM
Materials as set forth in this DLW Transaction Document.

1.       DEFINITIONS

        1.1      Royalty Accounting Month: Is the time frame during which
                 licenses fees become due.  The start and end dates of a
                 Royalty Accounting Month vary by the IBM geographic area where
                 licenses are granted.  The Royalty Accounting Months are:

                 a.    For StorageTek Worldwide and for IBM in the United
                       States/Puerto Rico:  begins on the first business day of
                       the current calendar month and ends on the last business
                       day of  that month.

                 b.    For IBM in the Americas/Far East Countries (Excluding
                       U.S.):  begins on the first business day of the prior
                       calendar month, ending on the last business day of that
                       month.

                 c.    For IBM in Europe/Middle East/Africa Countries:  begins
                       on the first business day of the last week of the prior
                       calendar month.  It includes the first three weeks of
                       the current calendar month and ends on the last business
                       day of that third week.

        1.2      "Tape Server" shall be as defined in the OEM Agreement.

        1.3      "Iceberg, Kodiak, Arctic Fox Storage System" (hereinafter "IKA
                 Storage System") shall mean any storage system which is
                 primarily designed for storing data, includes controller
                 Microcode of which more than   **of its total lines of
                 ultimately executable Source Code (including data
                 declarations, but not including any




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

<PAGE>   218
                 comments, dummy, nonoperational, or nonfunctional lines of
                 Source Code), consists of Licensed Works and IBM Materials in
                 combination, and either (a) represents itself to a host
                 computer system as a disk drive storage system, or (b) has
                 more than   ** of its total data storage capacity on   ** .

        1.4      "IBM Material Use License" shall mean a   **   , nonexclusive,
                 **   license to   **   Derivative Works of, the Licensed Works
                 and its Derivative Works.  Such license includes the right of
                 IBM to authorize others to do any of the above, and also
                 applies to associated audio and visual works.  Except for the
                 right to sublicense Subsidiaries pursuant to Section 11.0 of
                 the IDA, the right to sublicense under this definition is
                 limited to granting sublicenses for   **   which include terms
                 and conditions   **   , and to   **   under terms and
                 conditions that IBM uses for similar   ** of its own, and to
                 granting sublicenses to   **   under reasonable terms and
                 conditions.

        1.5      "StorageTek   **   License" shall mean a   **   ,
                 nonexclusive,   **   license to   **   and prepare Derivative
                 Works, of the IBM Materials and its Derivative Works.  Such
                 license includes the right of StorageTek to authorize others
                 to do any of the above, and also applies to associated audio
                 and visual works.    Except for the right to sublicense
                 Subsidiaries pursuant to Section 11.0 of the IDA, the right to
                 sublicense under this definition is limited to granting
                 sublicenses for **   which include terms and conditions   **
                 , to granting   **   under terms and conditions that
                 StorageTek uses for similar   **   of its own, and to granting
                 sublicenses to   **   under reasonable terms and conditions

        1.6      "IBM   **   License" shall mean a nonexclusive,   **   license
                 to use:  (a) the ideas, concepts, and techniques contained in;
                 (b) the structure, sequence and organization of, and (c) other
                 nonliteral aspects of, Licensed Works and their Derivative
                 Works  owned by StorageTek. Such license shall not include the
                 right of IBM to make a  copy of any of the Licensed Works or
                 Derivative Work thereof owned by StorageTek which is
                 substantially similar thereto  and would constitute literal
                 infringement under applicable copyright law.

        1.7      "StorageTek  **  License" shall mean a nonexclusive, **
                 license to use:  (a) the ideas, concepts, techniques contained
                 in; (b) the structure, sequence and organization of, and (c)
                 other nonliteral aspects of IBM Materials and their Derivative
                 Works.  Such license shall not include the right of StorageTek
                 to make a  copy of any of the IBM Materials or any Derivative
                 Work thereof owned by IBM which is substantially similar
                 thereto and would constitute literal infringement under
                 applicable copyright law.




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       2
<PAGE>   219
        1.8      "SSIKA Storage System" shall mean any storage system which is
                 primarily designed for storing data, which includes controller
                 Microcode of which more than   **   of its total lines of
                 ultimately executable Source Code (including data
                 declarations, but not including any comments, dummy,
                 nonoperational, or nonfunctional lines of Source Code),
                 consists of lines of Source Code from any Licensed Work, and
                 either (a) represents itself to a host computer system as a
                 disk drive storage system, or (b)  has more than   ** of its
                 total data storage   **   .

        1.9      "Microcode" is defined as a set of instructions that is either
                 imbedded into or is to be loaded into the Product and executes
                 below the external user interface of such Product.  Microcode
                 may be in magnetic or other storage media, integrated
                 circuitry or other media.

        1.10     "Maintenance Code" is defined as software other than
                 Microcode, including data files, which executes and exercises
                 the Product and Upgrades, and which detects, records, displays
                 and/or analyzes malfunctions, errors or other events in the
                 Product and Upgrades.

        1.11     "Non-RMM Device" shall mean a storage system primarily
                 designed for storing data which has less than   **   of its
                 total data storage capacity on rotating magnetic media disk
                 drives (other than magneto-optical) or in semiconductor
                 memory.

        1.12     "Arctic Fox Storage System" shall mean any IKA Storage System
                 manufactured by or for StorageTek which is primarily designed
                 for storing data, includes controller Microcode of which more
                 than   **
                  of its total lines of ultimately executable Source Code
                 including data declarations, but not including any comments,
                 dummy, nonoperational, or nonfunctional lines of Source Code,
                 consists of Licensed Works and IBM Materials in combination,
                 or solely IBM Materials, represents itself to a host computer
                 systems as a disk drive storage system, and includes only
                 semiconductor memory.

        1.13     "Snapshot Feature(s)" means the software with the capability
                 to enable Snapshot from within IXFP and from within Iceberg.

        1.14     All other capitalized terms shall have the meanings defined
                 elsewhere in the Agreement, as that term is defined in the OEM
                 Agreement between the Parties hereto, of even date herewith.





------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       3
<PAGE>   220
2.      DESCRIPTION

        2.1      The Licensed Works are the StorageTek software and Microcode,
                 both including Code as defined in the IDA, documentation and
                 related written materials for the StorageTek Iceberg , Kodiak
                 and Arctic Fox products, and Licensed Programs, including
                 Snapshot and the Snapshot Feature, all as they exist on   **
                 and are required to be escrowed pursuant to the IDA.

        2.2      StorageTek shall provide maintenance and support Services for
                 the Licensed Works, as described in a Statement of Work.


3.      GRANT OF LICENSES

        3.1      StorageTek hereby grants to IBM:

                 a.    A IBM   **   License:  (i)   **   prior to   **   , and
                       **   thereafter, for any purpose in connection with IKA
                       Storage Systems, except for manufacturing IKA Storage
                       Systems or SSIKA Storage Systems, and except that the
                       license for developing and distributing Basic
                       Enhancements and Maintenance Modifications for IKA
                       Storage Systems shall remain   **   and (ii)   **   for
                       manufacturing, selling or leasing IKA Storage Systems
                       except for SSIKA Storage Systems which becomes effective
                       upon termination or expiration of the Agreement.

                 b.    A IBM   **   License for any purpose;

                 c.    A   **   IBM Material Use License for developing and
                       distributing Basic Enhancements and Maintenance
                       Modifications for products other than IKA Storage
                       Systems;

                 d.    For products other than IKA Storage Systems,  a   **
                       IBM   **   License for any purpose except for developing
                       and distributing Basic Enhancements and Maintenance
                       Modifications (which is subject to Section 3.1c);

                 e.    Notwithstanding any other provisions of the Agreement, a
                       nonexclusive,   **   license to use, execute, reproduce,
                       display, perform, transfer, distribute, sublicense, and
                       prepare Derivative Works of, the IXFP software for the
                       purposes of enabling the connectivity of IKA Storage
                       Systems to IBM's operating systems and application
                       software. Such license includes the right of




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       4
<PAGE>   221
                       IBM to authorize others to do any of the above, and also
                       applies to associated audio and visual works.

                 f.    Notwithstanding any other provisions of the Agreement, a
                       **   , nonexclusive,   ** license to use, execute,
                       reproduce, display, perform and distribute internally,
                       and prepare Derivative Works of, Maintenance Code and
                       related documentation, if any, and Product service
                       documentation for the sole use in the maintenance of
                       products.  StorageTek agrees, upon request from   ** ,
                       to make available a license of the same scope as
                       heretofore provided under reasonable terms and
                       conditions to such   **   .

                 g.    Notwithstanding any other provisions of the Agreement,
                       IBM may grant limited sublicenses to its Subsidiaries
                       and   **   to use such Maintenance Code and related
                       documentation, and such Product service manuals, and
                       Derivative Works prepared by IBM hereunder, solely for
                       the purpose of maintaining Products purchased by IBM
                       under the Agreement, such sublicenses to be
                       nontransferable and lasting only so long as such
                       entities are Subsidiaries of IBM, or   ** IBM.

                 h.    A   **   IBM Material Use License to use the Snapshot
                       Feature to enable Snapshot.

                 i.    No rights or licenses are granted to IBM under this DLW
                       with respect to manufacturing of IKA Storage Systems
                       prior to expiration or termination of the Agreement or
                       SSIKA Storage Systems at any time.  Rights of IBM to use
                       Licensed Works to manufacture Devices in the case of a
                       Triggering Event are set forth in Section 23.6 of the
                       OEM Agreement.

                 j.    Under no circumstances will StorageTek make any claim
                       against IBM with respect to infringement of StorageTek
                       patents or copyrights with respect to any software which
                       is provided to IBM by StorageTek under the Agreement and
                       is not a Licensed Work.

        3.2      IBM hereby grants to StorageTek:

                 a.    An StorageTek   **   License (i) for any purpose in
                       connection with products other than IKA Storage Systems
                       during the term of the IDA, (ii) for performing
                       development activities, including Major Enhancements, in
                       connection with IKA Storage Systems (but not for
                       manufacturing, selling or leasing IKA




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       5
<PAGE>   222
                       Storage Systems) after   **   , and (iii) for any
                       purpose after the  expiration or termination of the IDA;

                 b.    A   **   StorageTek Material Use License for (1)
                       developing and manufacturing Products and Upgrades and
                       (2) developing and distributing Basic Enhancements and
                       Maintenance Modifications for (i) Tape Servers and (ii)
                       products other than IKA Storage Systems;

                 c.    For products other than IKA Storage Systems, a   **
                       StorageTek   **   License for any purpose except for
                       developing and distributing Basic Enhancements and
                       Maintenance Modifications for (i) Tape Servers and (ii)
                       all other products except IKA Storage Systems (which is
                       subject to Section 3.2b);

                 d.    An StorageTek   **   License for developing and
                       distributing Basic Enhancements and Maintenance
                       Modifications:  (i)   **   on the StorageTek Installed
                       Base (as defined in the OEM Agreement), and (ii)   **
                       for a period of   **   from the Effective Date of the
                       Agreement and   **   thereafter, for IKA Storage Systems
                       other than those in the StorageTek Installed Base;

                 e.    For IKA Storage Systems, a   **   StorageTek   **
                       License, which becomes effective upon expiration or
                       termination of the IDA (unless stated otherwise in
                       Section 6), or on the date that StorageTek begins the
                       sale, lease or other distribution of Devices which
                       include IBM Materials pursuant to Section 6.2(f) of the
                       OEM Agreement, for any purpose whatsoever, except for
                       developing and distributing Basic Enhancements and
                       Maintenance Modifications for IKA Storage Systems (which
                       is subject to Section 3.2d); and

                 f.    A   **   StorageTek   **   License, which becomes
                       effective on   **   and continues until expiration or
                       termination of the IDA (unless stated otherwise in
                       Section 6), for performing development activities,
                       including Major Enhancements, in connection with IKA
                       Storage Systems, but not for manufacturing, selling or
                       leasing IKA Storage Systems.

                 g.    A   **   StorageTek   **   License for any purpose in
                       connection with Arctic Fox Storage Systems, which
                       include IBM Materials, subject to revocation pursuant to
                       Section 6.7b.(6) of the OEM Agreement.

                 h.    A   **   StorageTek   **   License, which becomes
                       effective on   **   , for any purpose in connection with
                       Non-RMM Devices which include IBM Materials.




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       6
<PAGE>   223
                 i.    A   **   License for the purposes set forth in Sections
                       6.7a.(2), 6.7a.(3), 6.7b.(2) and 6.7b.(3) of the OEM
                       Agreement.


4.      COPYRIGHT

        4.1      StorageTek is responsible for copyright registration and
                 maintenance of, and for taking reasonable efforts for,
                 enforcement of the copyrights for the Licensed Works.
                 StorageTek authorizes IBM to act as its agent in the copyright
                 registration of the Licensed Works.

        4.2      IBM is responsible for copyright registration and maintenance
                 of, and for taking reasonable effort for enforcement of
                 copyrights for the IBM Materials.

        4.3      Each party agrees, upon the request of the other party, to
                 provide a copy of the Source Code for software and/or
                 Microcode incorporated in the nonrequesting party's product,
                 to an independent third party mutually agreed to by the
                 parties to determine if such software and/ or Microcode makes
                 Material Use of the requesting party's software and/or
                 Microcode.

        4.4      The provisions of this Section 4 shall survive termination or
                 expiration of the IDA.


5.      PAYMENT

        5.1      In consideration for the licenses indicated as being royalty
                 bearing in Section 3.1 granted to IBM in this DLW, IBM will
                 pay StorageTek royalties against revenues received by IBM and
                 its Subsidiaries as defined below:

                 a.       ** of (1) all license fees collected for   **   which
                       include Licensed Works or Derivative Works thereof (but
                       not including any works which consist only of IBM
                       Materials or Derivative Works thereof) for storage
                       systems other than IKA Storage Systems, and (2) all
                       license fees collected for software or Microcode other
                       than Major Enhancements, which include Licensed Works or
                       Derivative Works thereof, distributed separately from
                       hardware;

                 b.    The lesser of   **   for each   **   , which includes
                       Licensed Works or Derivative Works thereof (but not
                       including any works which consist only of IBM Materials
                       or Derivative Works thereof), and not including   **
                       by IBM or its Subsidiaries, or   **   of:  (a) the
                       actual revenue received for such   **




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       7
<PAGE>   224
                       or (b) in the case of a   **   , the average price of
                       all such IBM   **   by IBM in the calendar quarter prior
                       to the sale or lease of such   **   ;

                 c.      **   of all license fees collected for   **   , which
                       include Licensed Works and Derivative Works thereof (but
                       not including any works which consist only of IBM
                       Materials or Derivative Works thereof), installed on
                       **   after   **   ;

                 d.    Notwithstanding any other provision in this Description
                       of Licensed Works, IBM will pay StorageTek   **   as
                       specified in Attachment 3 to Exhibit 1 to the OEM
                       Agreement for each copy of the Snapshot Feature that IBM
                       distributes, except that copies acquired for internal
                       testing, technical evaluation and field support of
                       Equipment by IBM shall be   ** ; and

                 e.    All royalty obligations will be paid-up for the Licensed
                       Works when total royalties in the amount of   **   have
                       been paid by IBM or on   **   , whichever occurs first.
                       All the licenses granted to IBM by StorageTek will be
                       irrevocable at that time.

        5.2      In consideration for the licenses indicated as being   **   in
                 Section 3.2 granted to StorageTek in this DLW, StorageTek will
                 pay IBM   **   received by StorageTek and its Subsidiaries as
                 defined below:

                 a.      **   of (i) all license fees collected for   **   ,
                       which include IBM Materials or Derivative Works thereof,
                       for storage systems other than IKA Storage Systems, (ii)
                       the list price charged for customer service which
                       includes the right to install Basic Enhancements and
                       Maintenance Modifications on IKA Storage Systems, and
                       (iii) all license fees collected for software and
                       Microcode other than Major Enhancements, which include
                       IBM Materials or Derivative Works thereof, distributed
                       separately from hardware;

                 b.    The lesser of   **   for each (i)   **   , other than an
                       **   , or   **   therefor, which includes IBM Materials
                       or Derivative Works thereof, and (ii) each   **   or
                       controller therefor, sold or leased by StorageTek or its
                       Subsidiaries, or, in the case of (i) above, **   of (x)
                       the actual revenue received for such   **   or (y) in
                       the case of a   **   , the average price of all
                       StorageTek storage subsystems sold or leased by
                       StorageTek in the calendar quarter prior to the sale or
                       lease of such controller;

                 c.      **   of all license fees collected for   **   , which
                       include IBM Materials and Derivative Works thereof, made
                       in connection with   **   ;




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       8
<PAGE>   225

                 d.    The lesser of   **   for each   **   . sold or leased by
                       StorageTek, or   **   of:  (i) the actual revenue
                       received for each such   **   , or (ii) in the case of
                       an   **   , the average price of all StorageTek   **
                       sold or leased by StorageTek in the calendar quarter
                       prior to the sale or lease of such controller.

                 e.    All royalty obligations will be paid-up for the IBM
                       Materials when total royalties in the amount of   **
                       have been paid by IBM or on   **   whichever occurs
                       first. All the licenses granted to IBM by StorageTek
                       will be irrevocable at that time.

        5.3       **   Payment will be made by the last day of the calendar
                 month following the calendar quarter.  Royalties will be paid
                 less adjustments and refunds due to the owing party.  The
                 owing party will provide a statement summarizing the royalty
                 calculation with each payment.

        5.4      Notwithstanding any other provision of the Agreement, and
                 except for StorageTek's obligation to pay royalties pursuant
                 to Section 3.2d(ii) herein, neither Party shall be liable to
                 the other for royalties based on de minimis use, as determined
                 by applicable copyright law, of the other Party's Code,
                 documentation, and other written materials.

        5.5      The provisions of this Section 5 shall survive termination of
                 the Agreement.


6.      TERMINATION

        6.1      The termination of the Base Agreement or a Transaction
                 Document will not affect previously granted paid-up rights or
                 licenses to IBM or StorageTek or product users.

        6.2      Any license, which is subject to a royalty, granted hereunder
                 may be terminated by the licensor if the licensee fails to pay
                 any royalty due with respect to such grant and fails to cure
                 such nonpayment by the end of the next calendar quarter after
                 written notice from the Licensor.

        6.3      All licenses will survive termination for convenience by IBM
                 subject to the obligations to pay royalties where applicable,
                 except that, as set forth in Section 23.7 of the OEM
                 Agreement, the StorageTek   **   License for   **   Devices
                 and providing   **   for such Devices will become effective
                 and fully paid up; provided, however that royalties will be
                 due for   **   .




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       9
<PAGE>   226

        6.4      Upon termination of the Agreement for cause by IBM, all of the
                 licenses granted to IBM in Section 3.1 shall survive such
                 termination subject to the obligations to pay royalties where
                 applicable, except that the IBM   **   License set forth in
                 Section 3.1(a) hereof, shall become effective and shall become
                 fully paid up and irrevocable.  Upon termination of the
                 Agreement for cause by StorageTek, all of the licenses granted
                 to IBM in Section 3.1 shall survive such termination subject
                 to the obligations to pay royalties where applicable.

        6.5      Upon termination of the Agreement for cause the licenses
                 granted to StorageTek in Section 3.2 shall be treated as
                 follows:

                 a.    All licenses will survive termination for cause by
                       StorageTek subject to the obligations to pay royalties
                       where applicable except that the StorageTek   **
                       Licenses set forth in Sections 3.2d and 3.2e shall
                       become   **   ; and

                 b.    If terminated for cause by IBM:

                       All licenses granted to StorageTek to use IBM Materials
                       under Section 3.2, above, will survive such termination,
                       and be   **   as provided herein, provided, however,
                       that, if StorageTek elects to maintain or effectuate,
                       whichever the case may be, the StorageTek   ** Licenses
                       set forth in Section 3.2d(ii) (   **   for a period of
                       **   from the Effective Date, becoming royalty-free
                       thereafter, for use in developing and distributing Basic
                       Enhancements and Maintenance Modifications for IKA
                       Storage Subsystems other than those in the StorageTek
                       Installed Base), and in Section 3.2e (   **   license
                       for use in IKA Storage Systems or IKA Storage System
                       controllers for any purpose other than developing and
                       distributing Basic Enhancements and Maintenance
                       Modifications), then StorageTek must first pay to IBM
                       the sum of   **   and also pay to IBM royalties as set
                       forth in Section 5.2 above for such license, except that
                       such royalty shall be ** for each IKA Storage System
                       or IKA Storage System controller sold or leased by
                       StorageTek following the date of StorageTek's receipt of
                       IBM's written notice of termination, and, except that,
                       once StorageTek has paid in royalties pursuant to this
                       section the sum of an additional **, then such license 
                       shall become fully paid up and irrevocable, and
                       provided further, that any sums paid by StorageTek to
                       IBM under this section shall be in addition to any
                       royalty payments due pursuant to Section 5.2 hereof for
                       products other than as covered in Sections 3.2d and 3.2e
                       hereof, and shall have no effect on the total royalties
                       to be paid pursuant to Section 5.2e hereof.




------------------------------

**           Confidential  portions omitted and filed separately with the 
             Securities and Exchange Commission under an application for 
             confidential treatment.

                                       10
<PAGE>   227
                          ATTACHMENT 2 To EXHIBIT 3
                                  APPENDIX A

<PAGE>   228
IBM CUSTOMER AGREEMENT

PART 3 - MACHINES

--------------------------------------------------------------------------------

3.1      TITLE AND RISK OF LOSS

         When we accept your order, we agree to sell you the Machine described
         in a Transaction Document. We transfer title to you or, if you
         choose, your lessor when we ship the Machine. However, we reserve a
         purchase money security interest in the Machine until we receive the
         amounts due. For a feature, conversion, or upgrade involving the
         removal of parts which become our property, we reserve the security
         interest until we receive the amounts due and the removed parts. You
         agree to sign an appropriate document to permit us to perfect our
         purchase money security interest.

         We bear the risk of loss for the Machine through its Date of
         Installation. Thereafter, you assume the risk.

3.2      PRODUCTION STATUS

         Each IBM Machine is manufactured from new parts, or new and used
         parts. In some cases, the Machine may not be new and may have been
         previously installed. Regardless of the Machine's production status,
         our warranty terms apply.

3.3      INSTALLATION

         For the Machine to function properly, it must be installed in a
         suitable physical environment. You agree to provide an environment
         meeting our specified requirements for the Machine.

         We have standard installation procedures. We will successfully
         complete these procedures before we consider an IBM Machine (other
         than a Customer-set-up Machine) installed.

         You are responsible for installing a Customer-set-up Machine (we
         provide instructions to enable you to do so) and a non-IBM Machine.

         MACHINE FEATURES, CONVERSIONS, AND UPGRADES

         We sell features, conversions, and upgrades for installation on
         Machines, and, in certain instances, only for installation on a
         designated, serial-numbered Machine. Many of these transactions
         involve the removal of parts and their return to us. As applicable,
         you represent that you have the permission from the owner and any
         lien holders to 1) install features, conversions, and upgrades and 2)
         transfer ownership and possession of removed parts (which become our
         property) to us. You further represent that all removed parts are
         genuine and unaltered. A part that replaces a removed part will
         assume the warranty and Maintenance Service status of the replaced
         part.

         You agree to allow us to install the feature, conversion, or upgrade
         within 30 days of its delivery. Otherwise, we may terminate the
         transaction and you must return the feature, conversion, or upgrade
         to us at your expense.





<PAGE>   229


3.4      LICENSED INTERNAL CODE

         Certain Machines we specify (called "Specific Machine") use Licensed
         Internal Code (called "Code"). We own copyrights in Code. We own all
         copies of Code, including copies made from them.

         We will identify each Specific Machine in a Transaction Document. If
         you are the rightful possessor of a Specific Machine, we grant you a
         license to use the Code (or any replacement we provide) on, or in
         conjunction with, only the Specific Machine, designated by serial
         number, for which the Code is provided. We license the Code to only
         one rightful possessor at a time.

         Under each license, we authorize you to do only the following:

1.       execute the Code to enable the Specific Machine to function according 
         to its Specifications;

2.       make a backup or archival copy of the Code (unless we make one 
         available for your use), provided you reproduce the copyright notice 
         and any other legend of ownership on the copy. You may use the copy 
         only to replace the original when necessary; and

3.       execute and display the Code as necessary to maintain the Specific 
         Machine.

         You agree to acquire any replacement for, or additional copy of, Code
         directly from us in accordance with our standard policies and
         practices. You also agree to use that Code under these terms.

         You may transfer possession of the Code to another party only with
         the transfer of the Specific Machine. If you do so, you must 1)
         destroy all your copies of the Code that were not provided by us, 2)
         either give the other party all your IBM-provided copies of the Code
         or destroy them, and 3) notify the other party of these terms. We
         license the other party when it accepts these terms by initial use of
         the Code. These terms apply to all Code you acquire from any source.

         Your license terminates when you no longer rightfully possess the
         Specific Machine.

         ACTIONS YOU MAY NOT TAKE

         You agree to use the Code only as authorized above. You may not do,
         for example, any of the following:

1.       otherwise copy, display, transfer, adapt, modify, or distribute the 
         Code (electronically or otherwise), except as we may authorize in the 
         Specific Machine's Specifications or in writing to you;

2.       reverse assemble, reverse compile, or otherwise translate the Code 
         unless expressly  permitted by applicable law without the possibility 
         of contractual waiver;

<PAGE>   230

3.       sublicense or assign the license for the Code; or

4.       lease the Code or any copy of it.





<PAGE>   231
                           ATTACHMENT 2 TO EXHIBIT 3
                                  APPENDIX B



<PAGE>   232


                              MICROCODE LANGUAGE
                                      FOR
               INCORPORATION INTO CONSOLIDATED END USER CONTRACT
                             TO BE ISSUED IN JULY


                                   MICROCODE

1.  Definitions: The following terms are defined as follows:

A. "Microcode" is defined as a set of instructions (software) that is either
imbedded into or is to be loaded into the Equipment and executes below the
external user interface of such Equipment. Microcode includes both Internal
Code and Maintenance Code, and may be in magnetic or other storage media,
integrated circuitry or other media.

B. "Internal Code" is Microcode that (a) is an integral part of the Equipment,
(b) is required by such Equipment to perform its data storage and retrieval
functions, and (C) executes below the user interface of such Equipment.
Internal Code does not include other Microcode or software, including data
files, which may reside or execute in or be used by or in connection with such
Equipment, including, without limitation, Maintenance Code.

C. "Maintenance Code" is defined as Microcode and other software, including
data files, which may reside or execute in or be used by or in connection with
Equipment, and which detects, records, displays and/or analyzes malfunctions,
errors or other events occurring in the Equipment.

D. "Derivative Works" are defined as works (including software) based upon one
or more preexisting works such as a translation or a musical arrangement, or
any other form in which a work may be recast, transformed or adapted. A work
consisting of editorial revision, annotations, elaboration, or other
modifications which, as a whole, represent an original work of authorship, is
a Derivative Work.

2. The Equipment you have acquired by purchase or lease is manufactured by or
for StorageTek and contains Microcode. By accepting and using this Equipment
you acknowledge that StorageTek or its licensor(s) retains title to and
ownership of all Microcode, as well as all copies thereof, that may execute in
or be used in the operation of servicing of the Equipment and that the
copyright in such Microcode is owned by StorageTek or its licensor(s).

3. StorageTek hereby grants you, the end user of the Equipment, a personal,
non-transferable (except as permitted in the transfer terms in paragraph 5
below), nonexclusive license to use 


<PAGE>   233

and execute each copy of the Internal Code (or any replacement provided
by StorageTek or your authorized StorageTek distributor or reseller) solely to
enable the specific unit of Equipment for which the copy of Internal Code is
provided to perform its data storage and retrieval functions in accordance
with StorageTek's (or its licensor's) official published specifications. If
the Internal Code is provided to you in any fashion other than preloaded into
an integrated circuit, then you may make a single archival copy to be used
only to restore the Internal Code on the specific unit of Equipment for which
the copy of Internal Code is provided.

4.  Your license is limited to the use of the Internal Code as set forth in 
paragraph 3 above.  You may not use the Internal Code for any other purpose. 
You may not, for example, do any of the following:

         (i) access copy, display, print, adapt, alter, modify, patch, prepare
Derivative Works of, transfer or distribute (electronically or otherwise) or
otherwise use the Internal Code;

         (ii) reverse assemble, decode, translate, decompile or otherwise
reverse engineer the Internal Code (except, for use in European jurisdictions,
as decompilation may be expressly permitted under applicable European law
solely for the purpose of gaining information that will allow interoperability
when such information is not otherwise readily available); or

         (iii) sublicense, assign or lease the Internal Code or permit another
person to use such Internal Code, or any copy of it.

5. You may transfer possession of the Internal Code to another party only with
the transfer of the specific Equipment on which its use is authorized, and
your license to use the Internal Code is discontinued when you are no longer
an owner or a rightful possessor the Equipment. You must give such transferee
all copies of the Internal Code for the transferred Equipment that are in your
possession, along with a copy of all the provisions of this Notice. Any such
transfer by you is automatically (without further action on the part of either
party) expressly subject to all the terms and conditions of this Notice
passing in full to the party to whom such Equipment is transferred, and such
transferee accepts the provisions of this license by initial use of the
Internal Code. You cannot pass to the transferee of the Equipment any greater
rights than granted under this Notice, and shall hold StorageTek harmless from
any claim to the contrary by your transferee or its successors or assigns. In
addition, the terms and conditions of this Notice apply to any copies of
Internal Code now in your possession or use or which you hereafter acquire
from either StorageTek or another party.

6. Nothing in the license set forth in paragraph 3 above or in this entire
Notice shall convey, 

<PAGE>   234


in any manner, to you any license to or title to or other right to use
any Maintenance Code, or any copy of such Maintenance Code. You agree that you
shall not use or attempt to use the Maintenance Code or permit any other third
party to use or access such Maintenance Code. You acknowledge that copies of
both Internal Code and Maintenance Code may be installed on the Equipment
before shipment or included with the Equipment and other material shipped to
you, all for the convenience of StorageTek's service personnel or service
providers licensed by StorageTek, and that during the warranty period, if any,
associated with the Equipment, and during periods in which the Equipment is
covered under maintenance contract with StorageTek or service providers
licensed by StorageTek, both Internal Code and Maintenance Code may reside and
be executed in or used in connection with such Equipment, and you agree that
no rights to Maintenance Code are conferred upon you by such facts. StorageTek
or the licensed service provider may keep Maintenance Code, service tools and
manuals on your premises but they are to be used only by StorageTek's customer
service personnel or those of service providers licensed by StorageTek. You
further agree that upon (I) any termination of such warranty period or
maintenance contract period; or (ii) transfer of possession of the Equipment
to another party, StorageTek and its authorized service providers shall have
the right with respect to the affected Equipment to remove all service tools
and manuals and to remove or disable all Maintenance Code and/or replace
Microcode which includes both Internal Code and Maintenance Code with
Microcode that consists only of Internal Code.

7. You, the end user, agree to take all appropriate steps to ensure that all
of your obligations set forth in this Notice, particularly in paragraphs 4 and
6, are complied with by any third party having access to the Equipment.


<PAGE>   235



--------------------------------------------------------------------------------

                                    NOTICE

                    INTERNAL CODE LICENSE AND TERMS OF SALE

PLEASE READ THIS NOTICE CAREFULLY BEFORE INSTALLING AND OPERATING THIS
EQUIPMENT. THIS IS A LEGAL AGREEMENT BETWEEN YOU (EITHER AN INDIVIDUAL OR
ENTITY), THE END USER, AND STORAGE TECHNOLOGY CORPORATION ("STORAGETEK") THE
MANUFACTURER OF THE EQUIPMENT. BY ACCEPTING AND USING ANY UNIT OF EQUIPMENT
DESCRIBED IN THIS DOCUMENT AND THE ASSOCIATED MICROCODE, YOU AGREE TO BE BOUND
BY THE TERMS OF T HIS AGREEMENT. IF YOU DO NOT AGREE WITH THE TERMS OF THIS
AGREEMENT, DO NOT USE THE EQUIPMENT AND ASSOCIATED MICROCODE. IF YOU DO NOT
HAVE THE AUTHORITY TO BIND YOUR COMPANY, DO NOT USE THE EQUIPMENT AND
ASSOCIATED MICROCODE. IF YOU HAVE ANY QUESTIONS, CONTACT THE AUTHORIZED
STORAGETEK DISTRIBUTOR OR RESELLER FROM WHOM YOU ACQUIRED THIS EQUIPMENT. IF
THE EQUIPMENT WAS OBTAINED BY YOU DIRECTLY FROM STORAGETEK, CONTACT YOUR
STORAGETEK REPRESENTATIVE.

                                   MICROCODE


1.  Definitions: The following terms are defined as follows:

A. "Microcode" is defined as a set of instructions (software) that is either
imbedded into or is to be loaded into the Equipment and executes below the
external user interface of such Equipment. Microcode includes both Internal
Code and Maintenance Code, and may be in magnetic or other storage media,
integrated circuitry or other media.

B. "Internal Code" is Microcode that (a) is an integral part of the Equipment,
(b) is required by such Equipment to perform its data storage and retrieval
functions, and (c) executes below the user interface of such Equipment.
Internal Code does not include other Microcode or software, including data
files, which may reside or execute in or be used by or in connection with such
Equipment, including, without limitation, Maintenance Code.

C. "Maintenance Code" is defined as Microcode and other software, including
data files, which may reside or execute in or be used by or in connection with
Equipment, and which detects, records, displays and/or analyzes malfunctions,
errors or other events occurring in the Equipment.

D. "Derivative Works" are defined as works (including software) based upon one
or more preexisting works such as a translation or a musical arrangement, or
any other form in which a work may be recast, transformed or adapted. A work
consisting of editorial revision, annotations, elaboration, or other
modifications which, as a whole, represent an original work of authorship, is
a Derivative Work.

2. The Equipment you have acquired by purchase or lease is manufactured by or
for StorageTek and contains Microcode. By accepting and using this Equipment
you acknowledge that StorageTek or its licensor(s) retains title to and
ownership of all Microcode, as well as all copies thereof, that may execute in
or be used in the operation of servicing of the Equipment and that the
copyright in such Microcode is owned by StorageTek or its licensor(s).


<PAGE>   236


3.  StorageTek hereby grants you, the end user of the Equipment, a personal, 
non-transferable (except as permitted in the transfer terms in paragraph
5 below), nonexclusive license to use and execute each copy of the Internal
Code (or any replacement provided by StorageTek or your authorized StorageTek
distributor or reseller) solely to enable the specific unit of Equipment for
which the copy of Internal Code is provided to perform its data storage and
retrieval functions in accordance with StorageTek's (or its licensor's)
official published specifications. If the Internal Code is provided to you in
any fashion other than preloaded into an integrated circuit, then you may make
a single archival copy to be used only to restore the Internal Code on the
specific unit of Equipment for which the copy of Internal Code is provided.

4.  Your license is limited to the use of the Internal Code as set forth in 
paragraph 3 above. You may not use the Internal Code for any other
purpose. You may not, for example, do any of the following:

         (i) access copy, display, print, adapt, alter, modify, patch, prepare
Derivative Works of, transfer or distribute (electronically or otherwise) or
otherwise use the Internal Code;

         (ii) reverse assemble, decode, translate, decompile or otherwise
reverse engineer the Internal Code (except, for use in European jurisdictions,
as decompilation may be expressly permitted under applicable European law
solely for the purpose of gaining information that will allow interoperability
when such information is not otherwise readily available); or

         (iii) sublicense, assign or lease the Internal Code or permit another
person to use such Internal Code, or any copy of it.

5. You may transfer possession of the Internal Code to another party only with
the transfer of the specific Equipment on which its use is authorized, and
your license to use the Internal Code is discontinued when you are no longer
an owner or a rightful possessor the Equipment. You must give such transferee
all copies of the Internal Code for the transferred Equipment that are in your
possession, along with a copy of all the provisions of this Notice. Any such
transfer by you is automatically (without further action on the part of either
party) expressly subject to all the terms and conditions of this Notice
passing in full to the party to whom such Equipment is transferred, and such
transferee accepts the provisions of this license by initial use of the
Internal Code. You cannot pass to the transferee of the Equipment any greater
rights than granted under this Notice, and shall hold StorageTek harmless from
any claim to the contrary by your transferee or its successors or assigns. In
addition, the terms and conditions of this Notice apply to any copies of
Internal Code now in your possession or use or which you hereafter acquire
from either StorageTek or another party.

6. Nothing in the license set forth in paragraph 3 above or in this entire
Notice shall convey, in any manner, to you any license to or title to or other
right to use any Maintenance Code, or any copy of such Maintenance Code. You
agree that you shall not use or attempt to use the Maintenance Code or permit
any other third party to use or access such Maintenance Code. You acknowledge
that copies of both Internal Code and Maintenance Code may be installed on the
Equipment before shipment or included with the Equipment and other material
shipped to you, all for the convenience of StorageTek's service personnel or
service providers licensed by StorageTek, and that during the warranty period,
if any, associated with the Equipment, and during periods in which the
Equipment is covered under maintenance contract with StorageTek or service
providers licensed by StorageTek, both Internal Code and Maintenance Code may
reside and be executed in or used in connection with such Equipment, and you
agree that no rights to Maintenance Code are conferred upon you by such facts.
StorageTek or the licensed service provider may keep Maintenance Code, service
tools and manuals on your premises but they are to be used only by
StorageTek's customer service personnel or those of service providers licensed
by StorageTek. You further agree that upon (I) any termination of such
warranty period or maintenance contract period; or (ii) transfer of possession
of the Equipment to another party, StorageTek and its authorized service
providers shall have the right with respect to the affected Equipment to
remove all service tools and manuals and to remove or disable all Maintenance
Code and/or replace Microcode which includes both Internal Code and
Maintenance Code with Microcode that consists only of Internal Code.


<PAGE>   237


7. You, the end user, agree to take all appropriate steps to ensure that all
of your obligations set forth in this Notice, particularly in paragraphs 4 and
6, are complied with by any third party having access to the Equipment.




<PAGE>   238



                                   WARRANTY

(a) StorageTek warrants that at the time of shipment, and for a period of
twelve (12) months thereafter (the "Warranty Period"), the Equipment and the
Internal Code will be in conformance with StorageTek's published
specifications. Equipment purchased hereunder may consist in part of used
components which are warranted equivalent to new in performance. No warranty
of any kind is extended with respect to Maintenance Code, as to which you have
no right or license as provided above.

(b) During the Warranty Period, StorageTek will, at no charge to you, make all
adjustments, repairs and parts replacements necessary, in StorageTek's
opinion, to fulfill the above warranty. Any parts so replaced will become the
property of StorageTek on a substitution basis.

(c) Service pursuant to this warranty, as required at any time during the
Warranty Period, will be provided upon return of the Equipment to the nearest
StorageTek authorized service depot. StorageTek will return a repaired or
replacement unit (which may be used and/or reconditioned) to you within
[?thirty 30] days of receipt by StorageTek of the unit to be repaired. Any
such repaired or replacement Equipment unit will be covered by the above
warranty for the balance of the original Warranty Period.

(d) The foregoing warranty shall not apply if any adjustment, repair or parts
replacement is required because of accident, transportation by anyone other
than StorageTek, neglect, abuse or misuse, use of unauthorized supplies,
failure of electrical power, air conditioning or humidity controls, theft,
fire or water damage, or causes other than ordinary use. StorageTek shall not
be required to adjust or repair any Equipment or part if it would be
impractical to do so because of non-StorageTek alterations to the Equipment,
the Equipment's connection by mechanical or electrical means to unauthorized
equipment devices, or if the Equipment is moved outside the United States.


(e) THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, AND STORAGETEK SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF
THIRD PARTY RIGHTS ALL WITH RESPECT TO BOTH EQUIPMENT AND MICROCODE.

                    PATENT AND PROPRIETARY RIGHT INDEMNITY

(a) StorageTek shall defend, at its own expense, any action brought against
you to the extent that it is based upon a claim that the Equipment or Internal
Code infringes upon any United States patent, copyright, trademark, mask work,
trade secret or other proprietary right. In the event of such infringement,
StorageTek shall pay those costs and damages agreed upon in settlement or
compromise or finally assessed against you in any such action. The obligation
to undertake such defense and make such payments shall be conditioned upon the
following: (1) StorageTek shall be notified promptly in writing by you of such
claim, but in no event later than ten (10) days from the date you received
notice thereof; (2) StorageTek shall have sole control of the defense of any
action on such claim and all negotiations for its settlement or compromise;
(3) you shall provide reasonable assistance and cooperation to StorageTek in
defending such an action; and (4) should the use of Equipment become, or in
StorageTek's opinion be likely to become, the subject of an injunction,
StorageTek shall at its option and expense: (i) procure for you the right to
continue using 

<PAGE>   239

the Equipment; (ii) replace or modify the same so that such Equipment
becomes non-infringing; or (iii) grant you a refund for such Equipment, less
accumulated depreciation, and accept its return. The depreciation shall be an
equal amount per year over the lifetime of the Equipment as established by
StorageTek.

(b) StorageTek shall not have any liability to you under the provisions of
this Section 9 for any infringement, or claim thereof, to the extent based
upon the use of said Equipment in combination with other machines, apparatus
or devices not manufactured by StorageTek or sold by StorageTek to you, or the
use of the Equipment in a manner or for a purpose other than that for which it
was sold, or the use of the Equipment in a modified condition if such
modification was not authorized in writing by StorageTek. StorageTek will not
defend or indemnify you if any claim of infringement is asserted by your
parent, subsidiary or affiliate.

(c) THE FOREGOING STATES THE ENTIRE LIABILITY OF STORAGETEK AND YOUR SOLE AND
EXCLUSIVE REMEDY WITH RESPECT TO INFRINGEMENT OF ANY PROPRIETARY RIGHT BY
THE EQUIPMENT OR INTERNAL CODE OR ANY PART THEREOF.

                            LIMITATION OF LIABILITY

(a) Your sole and exclusive remedy for any breach of the warranty set forth in
Section 8(a) above, shall be limited to the remedies set forth in paragraph
(b) of the section on WARRANTY above. If StorageTek is unable to effect such
remedy within a reasonable time, and such remedy fails of its essential
purpose, you may recover your actual loss directly resulting from the breach,
subject, however, to the limitations set forth below.

(b) StorageTek's entire cumulative liability from any cause whatsoever, and
regardless of the form of action or actions, whether in contract, warranty or
tort (including negligence), arising under this Agreement, shall in no event
exceed the greater of $50,000 or the purchase price for the specific Equipment
that is the subject matter of or is directly related to the cause of action.
The foregoing limitation shall not apply to claims for proprietary right
infringement under Section 9 or to claims by third parties for personal injury
or damage to real or tangible personal property arising out of the negligence
of StorageTek. Except for the two exceptions set forth in the preceding
sentence, StorageTek shall have no liability for claims against you for loss
or damage suffered by third parties.

(c) IN NO EVENT WILL STORAGETEK BE LIABLE FOR ANY INDIRECT, SPECIAL,
CONSEQUENTIAL OR INCIDENTAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE
PROVIDING, PERFORMANCE OR USE OF THE EQUIPMENT, PARTS OR SERVICES PROVIDED
UNDER THIS AGREEMENT, OR LOSS OF, OR DAMAGE TO, YOUR RECORDS OR DATA. IT IS
YOUR RESPONSIBILITY TO ADEQUATELY SAFEGUARD (BACK UP) YOUR DATA USED IN
CONJUNCTION WITH THE EQUIPMENT.

(d) StorageTek shall not be liable for any failure or delay in performance
hereunder which is due, in whole or in part, to any cause beyond its control.




<PAGE>   240

                                   EXHIBIT 4

This is an Agreement between IBM and STK ("Contractor"), pursuant to which IBM
will consign certain disk drives on a no- charge basis to Contractor for
incorporation into Equipment that Contractor is producing for IBM, subject to
the following terms and conditions:

1.       DEFINITION OF CONSIGNED GOODS

For the purpose of this Agreement, consigned goods are defined as all items
furnished by IBM or caused by IBM to be furnished to Contractor which are not
purchased by Contractor.  Consigned goods include certain disk drives that
Contractor will use to fabricate Equipment for IBM.  Consigned goods do not
include capital equipment or tooling.

The goods that are to be consigned under this Agreement are:

             PART NUMBER                               DESCRIPTION

                **                                           **

IBM may, at its option and in its sole discretion, consign additional items to
Contractor under the terms of this Agreement.

2.       TERM OF AGREEMENT

The term of this Agreement will begin on the date it is signed by Contractor
and will end when IBM no longer has an obligation under Section 12 of the OEM
Agreement to consign drives, or earlier, when it is terminated by either party
as provided for in Section 3 below or when it is terminated by IBM as provided
for in Section 13 below.

3.       TERMINATION OF AGREEMENT

Either party may terminate this Agreement at any time for cause by giving
thirty (30) days' prior written notice to the other.

Upon termination of this Agreement, Contractor will return to IBM any consigned
goods then in its possession (including any parts, subassemblies, or assemblies
containing any consigned goods).  Contractor will account for all consigned
goods within five (5) calendar days.

4.       LOCATION OF CONSIGNED GOODS

The consigned goods will be located and used during the term of this Agreement
at a location that has been approved by IBM.  Contractor will not move the
consigned goods to another location without IBM's prior written approval.





--------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.
<PAGE>   241
5.       IBM'S PROPERTY

The consigned goods are and will remain the property of IBM.

6.       IBM'S INSPECTION OF CONSIGNED GOODS

During the term of this Agreement, IBM will have the right to enter
Contractor's property and facilities on reasonable notice during Contractor's
normal business hours and subject to Contractor's normal security requirements
to physically inspect the consigned goods, conduct physical inventories, and
audit stock-handling procedures (including receiving, storing and
distribution).

7.       CONTRACTOR INSPECTION OF CONSIGNED GOODS

Contractor will inspect all consigned goods for type, quantity and condition
upon receipt.  Contractor will notify IBM of any reasonably apparent
discrepancies within five (5) days of receipt.  Contractor's notification to
IBM will include a description of all discrepancies.  Discrepancies will be
described on the acknowledgement copy of the packing list accompanying the
shipment.  The packing list must be signed and dated before it is returned to
IBM.

8.       CONTRACTOR RESPONSIBILITIES

Contractor agrees that with respect to the consigned goods it will

         A.      Not commingle consigned goods with those of its own or third
                 parties.  Contractor will stock all consigned goods separately
                 and will specifically identify them as IBM property.

         B.      Not represent to any person for any reason that the consigned
                 goods belong to Contractor or to any third party.

         C.      Not attempt to sell, mortgage, pledge, assign, borrow against,
                 or otherwise create a security interest in favor of third
                 parties in the consigned goods.  Any such attempt will be void
                 and will constitute a breach of this Agreement.

         D.      Not use the consigned goods for any purpose except for the
                 performance of the OEM Agreement.

         E.      Maintain records of all consigned goods received from or
                 returned to IBM.  Contractor will maintain an effective
                 consigned goods inventory system and will use the consigned
                 goods on a first-in, first-out basis.

         F.      Perform a reasonable number of physical counts upon IBM's
                 request (to confirm records), and provide IBM with the
                 results.

         G.      Carefully store the consigned goods so as to prevent
                 deterioration.
<PAGE>   242
         H.      Incorporate into Equipment only those consigned goods that
                 meet the Specifications.  Nonconforming goods must be returned
                 to IBM for replacement, accompanied by a IBM "Authorization
                 for Return of Material" form.

9.       CONTRACTOR RESPONSIBILITY FOR LOST OR DAMAGED GOODS

Consigned goods are insured by IBM.  Notwithstanding that insurance, Contractor
agrees that it will be fully liable for any loss or damage occasioned by
Contractor's fault or negligence.  If any consigned goods are lost or damaged,
Contractor will notify IBM immediately.  Payment to IBM for consigned goods
lost or damaged due to Contractor fault or negligence will be at an amount
equal to IBM's replacement cost for such lost or damaged consigned goods plus
transit costs.

10.      TAXES AND ASSESSMENTS

IBM will pay all personal property taxes and assessments levied on the
consigned goods while they are in Contractor's possession.

11.      SEPARATE AGREEMENTS

This Agreement will not apply to any tools, tooling, gauges, or capital
equipment fabricated or acquired by Contractor pursuant to IBM Purchase Orders
or loaned or leased to Contractor by IBM.  All such equipment will be covered
by a separate Tooling, Equipment, Use, or other agreement.

12.      CONTRACTOR'S INABILITY TO PRODUCE

If Contractor's facility where the consigned goods are located and used is
involved in any Force Majeure Event by reason of which Contractor cannot
fulfill the terms of IBM Purchase Orders (which conform to the OEM Agreement),
or if for any other reason Contractor is unable or unwilling to perform under
IBM's Purchase Orders (which conform to the OEM Agreement), Contractor agrees
to immediately notify IBM and further agrees, if requested by IBM, to return
any or all of the consigned goods to IBM within ten (10) days of IBM's request
without charge to IBM except that transportation charges shall be billed
collect.

13.      BREACH OF CONTRACT

Failure of Contractor to materially comply with the terms and conditions of
this Agreement will be considered a breach of this Agreement unless IBM has
given specific written authorization for each particular occurrence of each
particular deviation.  IBM will notify Contractor of any breach by Contractor.
Contractor will have ten (10) business days to rectify the breach to Monterey's
satisfaction.  IBM may extend this period, in writing, at IBM's discretion.  If
Contractor fails to rectify the breach to IBM's satisfaction, IBM will have the
right to terminate this Agreement immediately at no charge to IBM for such
termination.

If Contractor fails to perform any of its obligations under this Agreement, or
either party terminates this Agreement, IBM will have an irrevocable right to
enter Contractor's property and
<PAGE>   243
facilities at any time during IBM's normal business hours for the purpose of
removing the consigned goods.  Contractor expressly waives any right or
remedies Contractor has with regard to the consigned goods, including, but not
limited to, any right Contractor has to notice and a hearing or to a bond,
undertaking or surety before a writ of replevin, order of seizure, or similar
writ or order will issue or become enforceable.

The rights and remedies under this Section 13 are not exclusive and are in
addition to any other rights or remedies provided by law or by this Agreement.

14.      ASSIGNMENT

Contractor will not assign this Agreement or any right or obligation created
under this Agreement except in connection with a permitted assignment under the
OEM Agreement.  Any attempted assignment will be void.

15.      IBM SUPPLIER CONSIGNMENT GUIDE

The "IBM Supplier Consignment Guide" is expressly incorporated and made a part
of this Agreement.

16.      COMMUNICATIONS AND NOTICES

All communications and notices between the parties concerning this Agreement,
if given to Contractor, will be in writing and sent by first class mail to:


         Attention                                                   
                  ------------------------------
                                                                      
         ---------------------------------------
                                                                      
         ---------------------------------------
                                                                      
         ---------------------------------------
                                                                      
         ---------------------------------------

and if given to IBM, will be in writing and sent by first class mail to:


         Attention                                                   
                  ------------------------------
                                                                      
         ---------------------------------------
                                                                      
         ---------------------------------------
                                                                      
         ---------------------------------------
                                                                      
         ---------------------------------------


For the purposes of this Agreement, a "Notice" is deemed given upon receipt by
the addressee.

Either party may change the above individual, title, department, or address by
notifying the other party in the same manner as any notice.

17.      CHANGES OR AMENDMENTS

Except as provided for in Section  17 above, this Agreement may not be changed
or amended except by a written agreement between the parties.
<PAGE>   244
18.      CONSTRUCTION

In the event of any inconsistency between the terms and conditions of this
Agreement, the "IBM Supplier Consignment Guide," or the terms and conditions of
the OEM Agreement, the order of precedence shall be: first, the terms and
conditions of the OEM Agreement; second, the terms and conditions of this
Consignment Agreement, and lastly the "IBM Supplier Consignment Guide".

19.      CONTINUING OBLIGATIONS

Any obligations and duties that by their nature extend beyond the expiration or
termination of this Agreement shall survive any such expiration or termination
and remain in effect.

20.      SEVERABILITY

If any provision of this Agreement shall be held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable, the validity, legality,
and enforceability of the remaining provisions of this Agreement shall in no
way be affected or impaired thereby.

21.      LIMITATION OF LIABILITY

Neither party shall be in default nor liable for damages for any delay or
failure to perform hereunder due to causes beyond its reasonable control,
including fires, strikes, riots, and acts of war, provided the defaulting party
provides the non-defaulting party with immediate notice of the anticipated
delay or failure to comply.

In no event shall either party be liable for indirect, special, or
consequential damages, including attorney's fees, even if advised in advance of
the possibility of such damages.

Neither party may bring an action, regardless of the form, arising out of this
Agreement more than two (2) years after the cause of action arose.

22.      GOVERNING LAW

The relationship between the Parties and this Agreement are governed by the
substantive laws of the state of New York.  Any action between the Parties must
be brought before a court of competent jurisdiction located in the United
States Southern District of New York.  Each party hereby waives any right to a
jury trial in any dispute between them.  The parties will first use the Dispute
Resolution escalation procedures described in the OEM Agreement to resolve any
disputes before any action is to be commenced in a court of competent
jurisdiction.

23.      SOLE AGREEMENT

This Agreement together with the OEM Agreement and its Exhibits, Schedules and
Attachments is the entire agreement about this subject between the parties.
This Agreement supersedes all prior or contemporaneous written or oral
agreements about this subject between the parties or any of their officials or
representatives.
<PAGE>   245

 IBM                                     STK
                                         
                                         
                                         
By                                       By                              
  ------------------------------           ------------------------------
                                         
Name                                     Name                            
    ----------------------------             ----------------------------
                                         
Title                                    Title                           
     ---------------------------              ---------------------------
                                         
Date                                     Date                            
    ----------------------------             ----------------------------
                                         
<PAGE>   246

                         CONSIGNMENT INVENTORY CONTROL





All correspondence regarding consigned material should be sent to:




                                IBM CORPORATION
                                 Department 617
                                5600 Cottle Road
                               San Jose, CA 95193




All routine questions or problems should be directed to the Consignment
Coordinator assigned or the buyer.

All questions or problems of a critical nature should be directed to the IBM
Purchasing Department Buyer.

Revised: January 1992.  Please note key changes preceded with (*).





                                                                               1
<PAGE>   247
                           SUPPLIER RESPONSIBILITIES
                       FOR MATERIAL HANDLING AND CONTROL
                           OF IBM CONSIGNED MATERIAL



1.       INTRODUCTION

         As an IBM Supplier, you are responsible for IBM's inventory while in
         your possession.  This agreement has been prepared for handling and
         control of IBM consigned material.  Most questions that could arise
         involving consignment are addressed to aid the supplier.  IBM may
         request space and facilities for an on site consignment representative
         to assist.

         If questions should arise that have not been explained fully by this
         document, please contact Consignment Inventory Control (CIC),
         Department 617.

2.       IBM SHIPMENT OF CONSIGNED MATERIAL TO SUPPLIER

         a.      Material will be shipped to supplier prepaid unless a
                 different arrangement has been agreed to in advance.

         b.      Partial shipment of Consigned material may be made when:

                 1)       The entire quantity is not readily available from IBM
                          stock (an IBM backorder is automatically created when
                          this situation occurs).

                 2)       If the size or quantity of a given item would cause
                          storage difficulties, the supplier may notify the IBM
                          Buyer and the buyer will arrange CIC for partial
                          shipments to be made.  The notification must be made
                          on a timely basis, preferably when the order is
                          placed.

3.       RECEIPT AND INSPECTION OF CONSIGNMENT BY SUPPLIER

         a.      All shipments of consigned material by IBM to the supplier
                 will be accompanied by two copies of an IBM packing list (see
                 Exhibits A, B, and C).

         b.      Immediately upon receipt, supplier is responsible for checking
                 all cartons for any sign of visible damage and noting such
                 damage on the consignee memo/bill of lading or delivery
                 receipt.  Also, note any shortages or overages of containers,
                 boxes, pallets, etc., if not as already noted on the freight
                 bill.

         c.      Visual external damage - Parts that are received by supplier
                 in packaging that exhibit external damage must be rejected and
                 held until disposition is made.  Supplier must note damage on
                 the delivery receipt and have the driver sign that exception
                 is taken.  Immediately call the carrier for a formal
                 inspection of the damage.  Carrier should make inspection
                 within five (5) working days.  If the carrier does not respond
                 within the five (5) days, supplier must notify the IBM Buyer.





                                                                               2
<PAGE>   248
                 In the event the carrier elects not to make an inspection, the
                 carrier must provide the supplier with a letter stating that
                 inspection has been waived.  The letter should include the
                 necessary information to identify the damaged shipment.  The
                 inspection report or letter of waiver and a copy of the
                 delivery receipt must be sent to the appropriate IBM Buyer who
                 will notify the IBM Traffic Department.

                 Please Note: Should the part be identified as "DFM", supplier
                 must notify the IBM Buyer and Traffic Department immediately
                 upon receipt.  The Traffic Department will instruct the
                 carrier to make an expedited 24 hour disposition.

         d.      All packing material must be available for the carrier's
                 inspection.

         e.      Hidden/concealed damage - Parts that are received with
                 external packaging intact, but parts inside damaged, must be
                 rejected.  If damage is discovered within ten (10) days of
                 receipt, the carrier must be notified to make a formal
                 inspection report and a copy of the bill of lading or delivery
                 receipt and carrier's damage inspection report must be
                 forwarded to the appropriate IBM Buyer; who in turn will
                 notify the Traffic Department.  IBM Material Review must be
                 notified in order to set up the necessary documentation for
                 the return of the defective parts.

         f.      Verification of Count - Hand or scale counts must be made on
                 all receipts of consigned material, rework material, or
                 material purchased from IBM.  A copy of the packing list must
                 be signed and returned to IBM CIC Department within five (5)
                 work days after receipt of materials.  It should be noted on
                 the form (see Exhibit D) that all items received were correct,
                 or items received were correct with the exception of any
                 shortage, overage or incorrect part indicated.  The method of
                 count should also be indicated.  Notify the IBM CIC Department
                 by telephone if the discrepancy cannot be reported within the
                 five day period.

         g.      All shipments received by supplier should be verified against
                 the Consignment Inventory Listing (CIL) and any discrepancies
                 should be referenced to a shipment and a CIL.

         h.      For audit purposes, supplier should retain one copy of the
                 updated packing list, along with the date the receipt
                 acknowledgement was returned to IBM.

         i.      If supplier receives parts that should have been consigned,
                 contact your Consignment Coordinator and set the parts aside.
                 Request an ARCM (Authorization to Return Consigned Material)
                 so that they may be returned to IBM.

         j.      Supplier should notify the IBM CIC Department immediately of
                 parts movement to and from supplier premises without
                 authorization, i.e., at the direction of the Buyer or
                 Engineer.

4.       DROP SHIPMENT  (Interplant & Supplier)

         a.      IBM May instruct other IBM plants or another supplier to ship
                 parts directly to a





                                                                               3
<PAGE>   249
                 consigned supplier.

         b.      The IBM Buyer will notify your company of this condition.  Any
                 attempt to ship to you without this prior notification should
                 be handled as explained in Section 3 Item A.

         c.      Upon receipt of an authorized drop shipment, receive the
                 material as a normal consigned shipment.

                 NOTE:    All drop shipments must be source stamped signifying
                          good parts.  If you receive unstamped parts, set
                          aside and contact the Buyer immediately.  Parts
                          should not be used until inspected.

         d.      Once quantities are verified, the receiving supplier should
                 indicate the actual quantity received on packing slip.  Sign
                 and date the packing slip and DELIVERY RECEIPT, staple the
                 original packing slip to the delivery receipt and forward to
                 the IBM Receiving Department with 24 hours.  Retain a copy of
                 the packing slip and delivery receipt for audit purposes.

         e.      If there are count discrepancies or defective parts on an
                 interplant drop shipment, notify the CIC Department
                 immediately.  If discrepancies or defective parts are received
                 on a drop shipment from another supplier, contact the Buyer
                 immediately.

         f.      Drop shipments from another supplier must have a drop ship
                 sequence number assigned by the sending supplier.  A separate
                 series of numbers should be used if parts are drop shipped to
                 more than one supplier.

         *g.     All drop shipments must be labeled in accordance with IBM
                 packaging specifications GA21-9261-08 as indicated below.

                 All articles must be marked with the country of origin.
                 Country Customs Organizations require every article of foreign
                 origin be marked in a conspicuous place as legibly, indelibly,
                 and permanently as the nature of the article will permit.  The
                 country of origin is defined as that manufacturing country
                 wherein the article obtained its present identity as a part,
                 sub-assembly or finished product.

                 All domestic and foreign shipping containers must be
                 identified as described below; this includes bagged or boxed
                 parts within a container or containers within a unit load
                 shipper.


                         IBM P/N                                  
                                --------------------------------- 
                         E/C LEVEL                                
                                  ------------------------------- 
                         PKG QTY                                  
                                --------------------------------- 
                         COUNTRY OF ORIGIN                        
                                          ----------------------- 
                                                                       
                    Figure 1. Identification required on each individual package





                                                                               4
<PAGE>   250
              *  In addition, the date of manufacture is required on each 
                 container when shipping shelf-life items.

         If size permits, this information should appear on two adjacent,
         vertical sides of the container when it is in the normal shipping
         position.





                 Figure 2. Label placement - unit package

         *h.     Audit all (100%) world trade receipts and maintain
                 documentation by month.

                 1)       Review receipts for container identification of
                          Country of Origin.  In those instances where COO is
                          not obvious, annotate the packing list and forward to
                          IBM receiving in your normal manner.

5.       STOCKING AND CONTROL OF CONSIGNED MATERIAL BY SUPPLIER

         a.      Store IBM San Jose consigned material in an area separate from
                 your own material, another company's material, IBM rework
                 material, or another IBM plant's material.

                 1)       If parts are required for a rework purchase order,
                          these must be provided. Consigned inventory should
                          not be used.

                 2)       Contact the IBM Buyer if this situation exists.

         b.      Maintain adequate inventory records on all IBM consigned
                 material including quantity of each part number received by
                 job number, assembly number and purchase order number.

         c.      It is recommended that a withdrawal system from the stock room
                 to the production line be set up and controlled, including a
                 parts inventory system.  Parts should be issued on a First In,
                 First Out basis (FIFO).  This location file can be either
                 computer system or card file for warehouse locations and card
                 file with assembly areas.  IBM identifies suppliers by
                 supplier number.  If your physical location has been assigned
                 more than one supplier number, you must segregate IBM's
                 inventory at your location by supplier number.

         d.      Selected suppliers will be required to prepare a critical
                 parts list reflecting parts that will represent a shortage
                 problem within a specified number of working days.  This
                 notification is not to be used for parts required for rework
                 or reconditioning.  These lists are to be forwarded to IBM CIC
                 Department.  Contact your IBM Buyer when delivery





                                                                               5
<PAGE>   251
                 problems arise (see Exhibit E).

         e.      Discrepant parts found during the manufacturing process are to
                 be held until dispositioned by IBM.  When this condition
                 exists, contact IBM CIC, Material Review or the IBM Buyer.





                                                                               6
<PAGE>   252
6.       RETURN OF CONSIGNED MATERIAL TO IBM

         a.      All consigned material returned to IBM must be listed on an
                 Authorization for Return of Consigned Material (ARCM), Form
                 Number 927-0342 (see Exhibit F).  A separate ARCM Document for
                 each category of material (excess, defective, down level,
                 wrong part issue or parts requested by IBM Analyzer) must be
                 attached to all parts.  The only exception is when parts have
                 been authorized to be scrapped on supplier's location.  See
                 page 7, Section 8d.  When this condition exists, only the ARCM
                 document is returned to IBM.

                 All Returns:

                 1)       An ARCM document will be prepared by CIC upon
                          notification from supplier that wrong part, excess,
                          down level or defective material exists at its
                          location.

                 2)       Periodically (at a minimum of twice per year),
                          contact IBM CIC to review the current IBM consigned
                          part number list to the established IBM manufacturing
                          process.  Any down level parts currently resident in
                          your facility should be dispositioned via ARCM
                          documents.

                 3)       CIC will send the ARCM document to supplier with
                          authorized signatures within 24 hours of notification
                          (see Exhibit F).

                 4)       When appropriate, CIC will notify IBM Inspector to
                          schedule a review of the material at supplier's
                          location.

                 5)       The IBM inspector will inspect the material and
                          indicate on the ARCM document if it is acceptable for
                          IBM stock.  Damaged material will be routed to IBM
                          Material Review.

                 6)       Include the number of boxes shipped to IBM on bottom
                          of form.  Remove and retain pink copy of ARCM
                          document for your records.

                 7)       Package individual parts in separate containers with
                          separate packing list.  All parts listed on an ARCM
                          must accompany the ARCM and preferably unitized.  The
                          ARCM document number must be clearly marked on the
                          outside of each container.  Containers should be
                          identified by number of boxes, i.e., 1 of 6, 2 of 6,
                          etc.

                 8)       Return remaining copies (white, green and yellow) of
                          the ARCM document along with the material (within
                          five days of receipt of the ARCM document) to IBM
                          receiving.  A bill of lading should be enclosed and a
                          notation that an ARCM is enclosed.

                 9)       Damaged parts listed on the ARCM document that
                          supplier agrees are supplier's responsibility must be
                          signed and dated by supplier.  Any disagreement will
                          be resolved through the IBM Buyer.





                                                                               7
<PAGE>   253
                 10)      All parts are to be packaged in accordance with IBM
                          General Packaging Specifications.  Transportation
                          charges will be paid by IBM.

                 11)      If a part is sent on a rework purchase order, the
                          document to return unreworkable parts is the Request
                          for Return Material (RRM), Form Number 927-8671 (see
                          Exhibit 11).  The RRM is provided by the responsible
                          Buyer.

7.       INVENTORY AND AUDIT REQUIREMENTS

         a.      A yearly physical inventory is required on all IBM consigned
                 material.

         b.      Additional audits may be required and will be arranged by the
                 IBM Buyer and/or the IBM Consignment Auditor.

         c.      RICS (Rotating Inventory Counts) may be performed on a weekly
                 or monthly basis by CIC.  These may be handled over the
                 telephone or in person by the Consignment Coordinator.

         d.      Actual inventory counts will be compared to the IBM
                 Consignment records and a percent-of-variance record will be
                 kept.  The control of consignment may be a factor in IBM's
                 determination of supplier's ability to perform current and
                 future subcontract work for IBM San Jose.

         e.      IBM requires that supplier keep inventory records.  These
                 records should indicate current IBM inventory and a record of
                 finished assemblies shipped to IBM as well as that inventory
                 received on consignment from IBM or an IBM supplier.  These
                 records are commonly referred to as in-transit records (i.e.
                 receipts, shipments, returned parts on the ARCM Documents,
                 drop shipments and hand carried parts).  Maintenance of these
                 records is an indication of supplier's ability to control
                 IBM's assets.  An acceptable sample log is attached for your
                 review (Exhibit G).

         f.      When a subcontractor is used to complete operations on IBM
                 material at supplier's direction or based upon an agreement
                 with IBM, supplier is responsible for being able to account
                 for that portion of the inventory that may be at the
                 subcontractor's location.  Supplier is also responsible for
                 informing IBM auditors of the subcontractor, its location and
                 what portion of IBM's inventory is located at subcontractor's
                 premises or at a subsequent location of supplier's.

         g.      Domestic Subsidiary - This involves assists that are given to
                 a domestic supplier who in turn gives it to their foreign
                 subsidiary for use in the production of goods to be imported
                 into the U.S. with the U.S. supplier as the Importer of
                 Record.

                 If you are the Importer of Record for goods benefiting from
                 this consignment, you may have value declaration
                 responsibilities to U.S. customs.  Contact the IBM Buyer for
                 customs valuation information.





                                                                               8
<PAGE>   254
8.       SUPPLIER RESPONSIBILITY FOR LOST OR DAMAGED GOODS

         a.      IBM Consigned material is insured by IBM; however, supplier
                 will be held liable for loss occasioned by supplier's fault or
                 negligence.  It is the supplier's responsibility to obtain
                 insurance to protect itself from loss due to its negligence.

         b.      Control and reporting as described in this instruction is
                 necessary to properly account for all IBM consigned material
                 and to prevent audit discrepancies.

         c.      IBM consigned parts are to be used only on new production
                 purchase orders.  Special arrangements with IBM Buyer are
                 necessary to use consigned parts for other orders, i.e.
                 rework, engineering jobs, etc.

         d.      There are occasions when IBM desires to scrap good or
                 defective parts at supplier locations versus returning the
                 inventory to IBM.  No parts are to be scrapped until supplier
                 received written authorization from an IBM Buyer or IBM
                 Material Review (MR).  The physical destruction of the
                 inventory must be witnessed by an IBM representative and
                 documented on an ARCM.

9.       SUPPLEMENTAL STANDARD TERMS AND CONDITIONS - IBM PARTS

         a.      Supplier acknowledges that all consigned material described in
                 the Consignment Agreement (Consignment Inventory Listing) has
                 been received in good condition and in the quantities stated
                 thereon except when supplier has notified IBM, in writing and
                 within five days following the receipt of the materials, or
                 specific damage or quantity discrepancies.  IBM acknowledges
                 that Supplier may not discover defects that are not reasonably
                 apparent until the consigned material is integrated into
                 systems and tested.

         b.      Title to all consigned materials shall remain in IBM.

         c.      For all materials lost, destroyed, or damaged through the
                 fault or negligence of the supplier, supplier will pay IBM, at
                 IBM's option, either the cost of such materials or the cost of
                 replacement materials required to complete the performance of
                 this order.

         d.      Supplier at its own expense will:

                 1)       Separately account for all IBM Material.

                 2)       Maintain current and accurate inventory records.

                 3)       Take an accurate physical inventory thereof as
                          required by IBM (not more often than once each three
                          months).

                 4)       Return all unused materials to the consigning IBM
                          location promptly upon completion, cancellation or
                          expiration unless otherwise agreed, or at any time
                          after completion, cancellation, or expiration of this
                          order upon IBM's request.





                                                                               9
<PAGE>   255
                 5)       IBM shall have the right to examine and audit said
                          records and to verify said inventories at any time
                          upon reasonable notice.

10.      EC - ENGINEERING CHANGES

         IBM may require supplier to change the parts or process used in
         assemblies.  Supplier should maintain records related to which
         purchase orders the change affects.

         If this change affects orders where IBM has already shipped supplier
         parts, contact your Consignment Coordinator to make sure correct parts
         have been forwarded for these orders.

         Supplier should call CIC if any problems occur with implementing an
         Engineering Change, including completing the phase-in within the agree
         upon time frame and/or quantity.

11.      SHIPMENTS TO IBM

         When supplier complete assemblies to be shipped to IBM, supplier will
         prepare the shipment and assign a control number in a sequential
         manner.  The purchase order number for the particular assembly must be
         shown.

         NOTE:   Suppliers are not authorized to overship on Consignment
                 Purchase Orders.  Packing slip and invoice quantities must
                 match shipment quantity.





                                                                              10
<PAGE>   256
                     EXHIBIT 5: FRU PRICES AND LEADTIMES
05/28/96
                               FREEZER III FRUs


<TABLE>
<CAPTION>
                                                                                                                    NOT TO EXCEED
                                                                                                                      PRICE FOR  
                                    ** |(-  PRICE   FOR   NEW    PARTS -)| |(-  PRICE FOR CODE A PARTS (1) -)|     REWORKED PARTS**
MONTEREY P/N  OAHU P/N  DESCRIPTION         **                            **                **                   **           **   
------------  --------  -----------       -------                       -------           ------                -----        -----
<S>           <C>       <C>               <C>                           <C>               <C>                   <C>          <C>
               **






NOTE 1: PRICE FOR CODE A PART B WILL BE PER THIS CHART OR   **   ,  WHICHEVER IS LESS.
NOTE 2: PRICE FOR REWORKED PARTS WILL BE PER THIS CHART OR   **   , WHICHEVER IS LESS.
NOTE 3: PRICES ARE SUBJECT TO CHANGE SEMI-ANNUALLY.
NOTE 4: LEAD TIMES FOR ALL PARTS WILL BE FOUR (4) WEEKS PROVIDED QUANTITY ORDERS - (/=10% OF NORMAL PRODUCTION USAGE VOLUMES, OTHER
        WISE LEAD TIMES WILL BE AS QUOTED.
NOTE 5: TOTAL COST SPENT FOR FRU'S WILL BE   **   ON AVERAGE PER MACHINE PER YEAR.
NOTE 6: (*) IN DESCRIPTION INDICATES THAT THIS P/N IS TO BE SERIALIZED.
</TABLE>





                                                   
----------------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                            MONTEREY CONFIDENTIAL
<PAGE>   257
                     EXHIBIT 5: FRU PRICES AND LEADTIMES
05/28/96
                                 PENGUIN FRUs

                                                                 
<TABLE>
<CAPTION>
                                                                                                                    NOT TO EXCEED
                                                                                                                      PRICE FOR  
                                    ** |(-  PRICE   FOR   NEW    PARTS -)| |(-  PRICE FOR CODE A PARTS (1) -)|     REWORKED PARTS(2)
MONTEREY P/N  OAHU P/N  DESCRIPTION         **                            **                **                   **           **   
------------  --------  -----------       -------                       -------           ------                -----        -----
<S>           <C>       <C>               <C>                           <C>               <C>                   <C>          <C>
               **







NOTE 1: PRICE FOR CODE A PART B WILL BE PER THIS CHART OR   **   WHICHEVER IS LESS.
NOTE 2: PRICE FOR REWORKED PARTS WILL BE PER THIS CHART OR   **   , WHICHEVER IS LESS.
NOTE 3: PRICES ARE SUBJECT TO CHANGE SEMI-ANNUALLY.
NOTE 4: LEAD TIMES FOR ALL PARTS WILL BE FOUR (4) WEEKS PROVIDED QUANTITY ORDERS - (/=10% OF NORMAL PRODUCTION USAGE VOLUMES, OTHER
        WISE LEAD TIMES WILL BE AS QUOTED.
NOTE 5: TOTAL COST SPENT FOR FRU'S WILL BE   **   ON AVERAGE PER MACHINE PER YEAR.
NOTE 6: (*) IN DESCRIPTION INDICATES THAT THIS P/N IS TO BE SERIALIZED.
</TABLE>





                                                   
----------------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                            MONTEREY CONFIDENTIAL
<PAGE>   258
                     EXHIBIT 5: FRU PRICES AND LEADTIMES
05/28/96
                                 KODIAK FRUs


<TABLE>
<CAPTION>
                                                                                                                    NOT TO EXCEED
                                                                                                                      PRICE FOR  
                                    ** |(-  PRICE   FOR   NEW    PARTS -)| |(-  PRICE FOR CODE A PARTS (1) -)|     REWORKED PARTS**
MONTEREY P/N  OAHU P/N  DESCRIPTION         **                            **                **                   **           **   
------------  --------  -----------       -------                       -------           ------                -----        -----
<S>           <C>       <C>               <C>                           <C>               <C>                   <C>          <C>
               **





NOTE 1: PRICE FOR CODE A PART B WILL BE PER THIS CHART OR   **   WHICHEVER IS LESS.
NOTE 2: PRICE FOR REWORKED PARTS WILL BE PER THIS CHART OR   **   , WHICHEVER IS LESS.
NOTE 3: PRICES ARE SUBJECT TO CHANGE SEMI-ANNUALLY.
NOTE 4: LEAD TIMES FOR ALL PARTS WILL BE FOUR (4) WEEKS PROVIDED QUANTITY ORDERS - (/=10% OF NORMAL PRODUCTION USAGE VOLUMES, OTHER
        WISE LEAD TIMES WILL BE AS QUOTED.
NOTE 5: TOTAL COST SPENT FOR FRU'S WILL BE   **   ON AVERAGE PER MACHINE PER YEAR.
NOTE 6: (*) IN DESCRIPTION INDICATES THAT THIS P/N IS TO BE SERIALIZED.
</TABLE>





                                                   
----------------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.

                            MONTEREY CONFIDENTIAL
<PAGE>   259

                                   Exhibit 6

                                   DATA ITEMS



1.       IBM RESPONSIBILITIES

         a.  Item               b.  Date Due              c.  Date Completed





2.       STORAGETEK RESPONSIBILITIES

         a.  Item               b.  Date Due              c.  Date Completed
<PAGE>   260

                                   EXHIBIT 7
                             LIST OF COUNTRIES FOR
                        INTELLECTUAL PROPERTY INDEMNITY

                         COUNTRIES FOR INDEMNIFICATION
**



















---------------------------

**     Confidential  portions omitted and filed separately with the Securities 
       and Exchange Commission under an application for confidential treatment.
<PAGE>   261
                                   EXHIBIT 8

       Examples of Calculation of IBM Volume Credits Due to RAS Criteria

<TABLE>
<CAPTION>
                                  Q1/Y1   Q2/Y1    Q3/Y1   Q4/Y1       YR 1 TTL              Q1/Y2   Q2/Y2  Q3/Y2  Q4/Y2  YR 2 TTL
                                  -----   -----    -----   -----       --------              -----   -----  -----  -----  --------
<S>              <C>                <C>     <C>      <C>     <C>         <C>          <C>      <C>     <C>   <C>   <C>    <C>
                 Quality Goal       **      **       **      **                       **       **      **    **
EXAMPLE I        Quality Actual     **      **       **      **                       **       **      **    **
                 Action Reqd        **      **       **      **                       **       **      **    **
                 Plan Volume        **      **       **      **          **           **       **      **    **    **
                 Volume Credit      **      **       **      **          **           **       **      **    **    **
                                                                                      
                 Quality Goal       **      **       **      **                       **       **      **    **
EXAMPLE  II      Quality Actual     **      **       **      **                       **       **      **    **
                 Action Reqd        **      **       **      **                       **       **      **    **
                 Plan Volume        **      **       **      **          **           **       **      **    **    **
                 Volume Credit      **      **       **      **          **           **       **      **    **    **
                                                                                      
                 Quality Goal       **      **       **      **                       **       **      **    **
EXAMPLE III      Quality Actual     **      **       **      **                       **       **      **    **
                 Action Reqd        **      **       **      **                       **       **      **    **
                 Plan Volume        **      **       **      **          **           **       **      **    **    **
                 Volume Credit      **      **       **      **          **           **       **      **    **    **
                                                                                      
                 Quality Goal       **      **       **      **                       **       **      **    **
EXAMPLE IV       Quality Actual     **      **       **      **                       **       **      **    **
                 Action Reqd        **      **       **      **                       **       **      **    **
                 Plan Volume        **      **       **      **          **           **       **      **    **    **
                 Volume Credit      **      **       **      **          **           **       **      **    **    **
                                                                                      
                 Quality Goal       **      **       **      **                       **       **      **    **
EXAMPLE V        Quality Actual     **      **       **      **                       **       **      **    **
                 Action Reqd        **      **       **      **                       **       **      **    **
                 Plan Volume        **      **       **      **          **           **       **      **    **    **
                 Volume Credit      **      **       **      **          **           **       **      **    **    **
                                                                                      
                                                                               
                                                                       
NOTES:
(1)      C.A.P. = Corrective Action Plan
(2)        **   unit annual volume    **   (quarterly breakdown)   **  =   **   unit volume credit (applied to   **    )
(3)        **   unit annual volume    **   (quarterly breakdown)   **  =   **   unit volume credit (applied to   **    )
(4)        **   unit annual volume    **   (quarterly breakdown)   **  =   **   unit volume credit (applied to   **    )
</TABLE>





---------------------

  **    Confidential  portions omitted and filed separately with the Securities
        and Exchange Commission under an application for confidential treatment.