Document:

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                                                                   EXHIBIT 10.16
                                                              AGREEMENT NO. ____

                       BROCADE COMMUNICATION SYSTEMS, INC.
                            OEM AND LICENSE AGREEMENT

This BROCADE Communications Systems, Inc. Original Equipment Manufacturer
("OEM") and License Agreement (including the attached terms and conditions and
exhibits, each of which is expressly incorporated herein, collectively the
"Agreement") is entered into as of this 27th day of April, 1999 (the "Effective
Date") by and between Brocade Communications Systems, Inc., a corporation
organized under the laws of the State of California, U.S.A., and having its
principal place of business at 1901 Guadalupe Parkway, San Jose, California
95131, ("BROCADE") and McDATA Corporation ("McDATA"), a Delaware corporation,
and having its principal place of business at 310 Interlocken Parkway,
Broomfield, Colorado 80021.

This Agreement consists of the following:

         The terms and conditions contained in this cover/signature page
         OEM terms and conditions (the "Terms")
         Exhibit A - Price List
         Exhibit B - Service and Support Requirements
         Exhibit C - Technical Training Program
         Exhibit D - Software License Agreement
         Exhibit E - McDATA Products
         Exhibit F - Settlement Agreement and Mutual Release (dated April 14,
                     1998)
         Exhibit G - ASIC Specifications
         Exhibit H - Brocade - HP - McDATA Support Letter
         Exhibit I - Brocade - McDATA NDA
         Exhibit J - Manufacturing [*] Test Processes
         Exhibit K - Hardware Subassemblies MTBF

IN WITNESS WHEREOF, in consideration of the covenants and other compensation set
forth herein, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto have executed this Agreement as of the Effective Date.

<TABLE>
<CAPTION>
BROCADE: Brocade Communications Corporation                 McDATA: McDATA Systems, Inc.
<S>                                                         <C>
Signature:   /s/ Greg Reyes                                 Signature:   /s/ John F. McDonnell
           -------------------------                                  -----------------------------
Name:            Greg Reyes                                 Name:            John F. McDonnell
           -------------------------                                  -----------------------------
Title:           President and CEO                          Title:           President
           -------------------------                                  -----------------------------
</TABLE>

*Certain information in this agreement has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions. Asterisks within brackets denote omissions.
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Agreement No.: ______

                      BROCADE COMMUNICATIONS SYSTEMS, INC.
                         OEM AND LICENSE AGREEMENT TERMS

These Terms are effective as of the Effective Date of the Agreement and are made
between BROCADE and McDATA, as identified on the cover/signature page to which
these Terms are attached. BROCADE and McDATA hereby agree as follows:

1.0      DEFINITIONS

1.1 "ASIC Firmware" means the object code [*] versions of BROCADE's proprietary
software used in conjunction with BROCADE's current generation of Fibre Channel
products incorporating the BROCADE ASIC and designated with version numbers 1.X,
and related software design specifications provided to McDATA pursuant to the
Technology License and Development Agreement between the parties dated November
1, 1996.

1.2 "ASIC Specifications" means the specifications attached hereto as Exhibit G.

1.3 "BROCADE ASIC" means that generation of BROCADE Felt and McFlannel
application specific integrated circuits ("ASIC") as of April 1, 1998 for the
Felt ASIC, and July 1998 for the McFlannel ASIC, with the LSI Logic part numbers
[*] and [*], respectively.

1.4 "Customers" means the collective reference to End Users and Resellers.

1.5 "Derivative Work(s)" means any work of authorship that is based upon one or
more preexisting works such as a revision, modification, translation,
abridgement, condensation, expansion, or any other form in which such
preexisting works may be recast, transformed, or adapted and which, if prepared
without authorization of the owner of the copyright in such preexisting work,
would constitute a copyright infringement.

1.6 "End User(s)" means McDATA's customers of the Products (as incorporated into
the McDATA Products), which shall only be the ultimate users of a McDATA
Product, and not a reseller, agent, broker or other intermediary in the chain of
distribution.

1.7 "Hardware" means the SilkWorm Motherboard, CPU Board, G_Port Board, and
FL_Port Board offered to McDATA by BROCADE as set forth in Exhibit A.

1.8 "Licensed Software" means the software products set forth in Exhibit A, in
object code only, supporting version numbers 1.x of the ASIC Firmware and which
are pre-installed on all of the applicable Hardware shipped to McDATA under this
Agreement, and which further require a license key specific to an individual
Hardware unit ("Key") to activate the Licensed Software.

1.9 "McDATA Functionality" means McDATA's Intellectual Property Rights (as
defined in Section 13) embodied in the ASIC Specifications, as amended from time
to time by mutual consent, and McDATA's hardware designs, simulation models, and
system architecture specifications embodied in the McDATA Products.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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1.10 "McDATA Product" means the Fibre Channel switches set forth in Exhibit E
which are designed and assembled by McDATA in which the [*] of such switches are
comprised of the Hardware set forth in Exhibit A, in accordance with the terms
set forth in Section 2.2.

1.11 "Prices" means the net amounts charged by BROCADE in relation to the list
of Products offered by BROCADE hereunder. The Prices are attached hereto in
Exhibit A.

1.12 "Products" means the Hardware and Licensed Software offered to McDATA by
BROCADE as set forth in Exhibit A, and any related documentation and manuals
provided by BROCADE, as set forth in Section 2.4.2.

1.13 "Reseller(s)" means any business entity which McDATA utilizes to market and
service the McDATA Products to End Users in accordance with the terms of this
Agreement, including systems integrators, original equipment manufacturers and
distributors.

1.14 "Software License Agreement" means the Software License Agreement, set
forth as Exhibit D, as may be amended by mutual agreement from time to time.

2.0      LICENSES

2.1 Grant of License. Subject to the terms of this Agreement, BROCADE grants
McDATA a non-exclusive, non-transferable, worldwide license to: (a) market,
sell, distribute, sublicense and demonstrate the Products to Customers solely as
incorporated into the McDATA Products set forth in Exhibit E; and (b) use the
Products solely as incorporated into the McDATA Products as reasonably required
in connection with such marketing, sales, distribution and demonstration.

2.2 No Standalone. McDATA agrees not to market, sell, distribute, sublicense or
demonstrate the Products in standalone form, except that McDATA shall have the
right to distribute spare and field replacement units of the Hardware solely for
use in connection with previously sold units of McDATA Product.

2.3 Private Label. McDATA shall privately label the Products as incorporated
into the McDATA Products, and may remove the BROCADE branding on the Products
and attach McDATA trademarks or other marks to the Products as the branding of
the Products, except that McDATA shall not remove any of BROCADE's proprietary
copyright, trademark and patent notices without BROCADE's prior written notice.

2.4       Documentation.

2.4.1 Documentation to McDATA. Promptly following the Effective Date and
concurrent with BROCADE's general release, if any, of the Products, BROCADE will
provide to McDATA BROCADE's standard technical documentation including but not
limited to data sheets, BROCADE Manuals (as defined below) and other manuals
distributed to resellers of the Products (such as technical manuals), all of
which BROCADE will supply in BROCADE's standard electronic format for
incorporating into the McDATA Manuals (as defined below) ("Documentation").
During the term of this Agreement, BROCADE will provide to McDATA updates to the
Documentation, if any, when BROCADE generally makes such updates available to
licensees of the Products.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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2.4.2   Documentation Licenses.

(a) Technical Documentation. Subject to the terms of this Agreement, BROCADE
hereby grants to McDATA a nonexclusive, nontransferable, worldwide license to
reproduce and use BROCADE's technical documentation provided to McDATA by
BROCADE hereunder, solely for McDATA's internal purposes in connection with the
manufacture, marketing and support of the McDATA Products into which the
Products are incorporated as set forth herein. Modifications to such technical
documentation by McDATA shall require BROCADE's prior written authorization,
which authorization will not be unreasonably withheld.

(b) Manuals. Subject to the terms of this Agreement, BROCADE hereby grants to
McDATA a nonexclusive, nontransferable, worldwide license to modify the BROCADE
End User manual(s) (including manual text and layouts) for the Products
("BROCADE Manuals"), subject to BROCADE's written approval as described below,
and to distribute such approved, revised versions of the BROCADE Manuals with
the McDATA Product (the "McDATA Manuals"). BROCADE will review and approve the
McDATA Manuals in writing as to form and content with respect to the Products
prior to their use or distribution. Such approval shall not be unreasonably
withheld and shall be made within [*] following BROCADE's receipt of the
proposed McDATA Manuals. Notwithstanding the foregoing, such approval shall not
be required for (a) changes to content made by McDATA which are consistent with
changes made by McDATA to the McDATA Products (other than changes to the
Products), or (b) changes consistent with McDATA's usage, style or format
guidelines, provided that no such change alters the form, features or
functionality of the Products.

(c) Ownership. McDATA agrees that the foregoing licenses do not grant to McDATA
any title or other right of ownership to the Documentation. Notwithstanding the
foregoing, the parties agree that McDATA shall own any modifications made to the
McDATA Manuals

2.4.3 Expenses. McDATA is solely responsible for all expenses incurred by McDATA
in modifying, reproducing and using the Documentation.

2.4.4    Documentation Warranty.

(a) [*]. BROCADE [*] that the Documentation will be [*]. Except as expressly
provided in this Section 2.4.4(a), BROCADE grants the licenses in Section 2.4.2
to McDATA hereunder solely on an "AS IS" basis.

(b) Disclaimer. EXCEPT AS OTHERWISE PROHIBITED BY LAW, AND THEN ONLY TO THE
EXTENT SO PROHIBITED, BROCADE DISCLAIMS ALL REPRESENTATIONS, WARRANTIES AND
CONDITIONS, WHETHER EXPRESS, IMPLIED OR STATUTORY, REGARDING THE DOCUMENTATION,
INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR FITNESS FOR A PARTICULAR PURPOSE.

2.5 Restrictions. Without BROCADE's prior written consent, McDATA will not do
any of the following acts: (a) disassemble, decompile, reverse engineer any
Products, or otherwise reduce the Licensed Software to human-readable form; (b)
copy or otherwise reproduce any Products, in whole or in part; (c) except as
authorized herein, remove, modify or otherwise tamper with notices or legends on
the Products or any labeling on any physical media containing the Licensed
Software; (d) use the Products in any manner to provide service bureau, time
sharing, or other computer services to third parties, (e) except as set forth
below, create Derivative Works from,

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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adapt, modify, change or enhance the Products. McDATA's rights in the Products
will be limited to those expressly granted in this Agreement, (f) remove the
Licensed Software from the Hardware in which is it embedded, or (g) authorize
third parties to do any of the foregoing. McDATA agrees to include the foregoing
restrictions in its agreements with its Resellers.

2.6      ASIC License.

(a) Right to Purchase. BROCADE grants McDATA the right to purchase, use and
resell the BROCADE ASIC as incorporated into the McDATA Products and not for
resale on a standalone basis, and shall authorize LSI Logic and LSI Logic's
authorized distributors to sell the BROCADE ASIC to McDATA for incorporation
into the McDATA Products, (such right and authorization is herein defined as
"ASIC License") which ASIC License is fully paid-up and irrevocable. The pricing
for such ASIC shall be as established between McDATA and LSI Logic and/or its
distributors.

 (b) [*]. Brocade agrees that within thirty (30) days of the Effective Date of
this Agreement, it will [*] with [*] reasonably acceptable to McDATA, all [*]
and [*] (as defined below) [*], all of which shall be in a [*] form which
generally conforms to industry standards. For the purposes of this Agreement,
the term [*] means [*], and [*] means the [*] required to [*] and [*] the [*],
including [*] and [*]. Upon completion of the final design of the McFlannel
application ASIC, BROCADE will update the [*] to include the [*] and [*] for the
McFlannel ASIC.

(c) Access to [*]. Concurrent with BROCADE's [*] of the [*], BROCADE and McDATA
will execute an [*] authorizing said [*] to [*] to McDATA in the event that: (i)
upon receipt of [*] from LSI Logic of the [*], BROCADE will promptly notify
McDATA and work with McDATA to [*] for the [*], (ii) LSI Logic and/or LSI
Logic's authorized distributors fail or refuse to sell such [*] to McDATA,
including as a result of LSI Logic's [*] or [*] (other than as a result of
McDATA's failure to make payments when due or McDATA otherwise breaches its
obligations owed to LSI Logic or LSI Logic's authorized distributors) and,
BROCADE has not, within [*] of receipt of McDATA's written notice of such
refusal to sell by LSI Logic, [*] for McDATA the right to purchase said [*] from
a [*], (iii) the filing by or against BROCADE of bankruptcy proceedings which
have not been dismissed for a period of [*] after the date of filing, or (iv)
solely prior to the release to production of the McFlannel ASIC and solely with
respect to the ASIC Designs and Manufacturing Documentation for the McFlannel
ASIC, the McFlannel ASIC do not [*] to the McFlannel ASIC specifications after
McDATA has provided BROCADE with written notice of such [*] and BROCADE has
failed to remedy such [*] within: (A) [*] of receipt of such written notice, or
(B) if such [*] cannot reasonably be remedied within [*], if BROCADE fails to
provide McDATA, within the stated [*] period, a written plan for specifying a
[*] to such failure which will be completed within the ensuing [*] period (or
longer time period if mutually agreed by the parties), along with demonstrable
evidence that progress has begun with respect to such plan ("[*]"). BROCADE
shall pay all [*] charged by the [*] pursuant to the [*]. Upon the release of
the [*] following a [*], then McDATA shall have the following rights in and to
the [*]:

         (i) McDATA shall have a non-transferable, non-exclusive, right and
         license to complete the development of, or have developed, and to [*],
         or [*], the [*] for incorporation into the McDATA Products. McDATA
         agrees that such [*] shall be used by McDATA solely to complete the
         development of (if applicable) and to [*], sell, maintain and support
         the [*] as incorporated into the McDATA Products. McDATA agrees that
         BROCADE shall have the right to approve any [*] McDATA may use pursuant
         to this section, which approval shall not be unreasonably withheld by
         BROCADE;

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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         (ii) McDATA shall not use the [*] and [*] except as provided herein.

         (iii) McDATA will maintain the confidentiality of the proprietary [*]
         and [*] as it would maintain the confidentiality of its own comparable
         information, but in no event with less than reasonable care.

         (iv) McDATA will not, without BROCADE's express written permission make
         or have made, or permit to be made, more [*] of the [*] and/or [*] than
         are necessary for the permissible uses hereunder, and that each such
         necessary [*] shall contain the same notices or legends which appear on
         the [*] of each portion of the [*] and [*].

         (v) BROCADE shall use its reasonable best efforts to assist McDATA in
         securing a [*] between McDATA and any third parties with whom BROCADE
         may have contracts, licenses or other arrangements necessary to the [*]
         of the [*].

         (vi) If McDATA exercises the [*] under this Section 2.6, McDATA agrees
         to [*] BROCADE reasonable [*] for the [*] by McDATA and the amount of
         such [*] shall be subject to the good faith negotiation of the parties.

2.7. ASIC Firmware License BROCADE grants McDATA an irrevocable, perpetual,
nonexclusive, nontransferable, worldwide fully paid up license to (i) internally
reproduce and modify the [*] version of the ASIC Firmware to compile a
derivative object code version of the ASIC Firmware, (ii) prepare and have
prepared Derivative Works of the ASIC Firmware, and (iii) reproduce, distribute,
sublicense, publicly perform and publicly display such object code version of
the ASIC Firmware only as incorporated into the McDATA Products and not for
resale on a standalone basis. BROCADE will provide each new release of the ASIC
Firmware to McDATA in a mutually agreed format within [*] days after the date of
general commercial availability of such release. Within [*] days of any such
release, BROCADE shall notify McDATA in writing in the form of BROCADE standard
release notes of changes to the [*] of such ASIC Firmware or related software
design specifications resulting from program errors or corrections in relation
to the immediately prior version of the ASIC Firmware; the parties agree that
such BROCADE notification shall not include information regarding modifications
to the ASIC Firmware as a result of custom work performed by BROCADE for third
parties. BROCADE agrees not to incorporate any such custom modifications to the
ASIC Firmware into the versions provided to McDATA to the extent that any such
modifications would affect the base functionality of the ASIC Firmware.

3.0      TERM

The initial term of this Agreement shall commence on the Effective Date, and
shall extend for a period of twenty-four (24) months from the Effective Date
("Initial Term"), unless earlier terminated as set forth herein. This Agreement
may be renewed for subsequent one (1) year terms upon the prior written
agreement of the parties (each a "Renewal Term"). Whether or not the parties
renew this Agreement upon the expiration of the Initial Term or any subsequent
Renewal Term as set forth in the foregoing sentence, the parties agree that this
Agreement shall be deemed to automatically renew for successive three (3) month
periods in the event that McDATA continues to [*] Products in the [*] set forth
in Section 10.3 hereof ("Product End-of-Life"), unless otherwise terminated as
set forth herein. This Agreement shall always be interpreted to have a definite
term. Neither party has made or shall make any commitments regarding the
duration or renewal of this Agreement beyond those expressly stated herein.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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4.0      TAXES

The parties acknowledge that the Prices do not include duty, sales, use, excise,
import, export, goods and services, value added or similar taxes or duties,
including any penalties and interest thereon, and all government permit and
license fees and customs and similar fees, which BROCADE may incur in respect of
this Agreement, including any costs expended to collect such amounts from McDATA
("Taxes"). McDATA agrees to pay, indemnify and hold BROCADE harmless from all
applicable Taxes (other than taxes based upon BROCADE's net income), unless
McDATA procures and provides to BROCADE an exemption certificate in a form
reasonably acceptable to BROCADE and to the appropriate taxing authority. If
McDATA fails to pay any Taxes as of the original due date therefor and BROCADE
receives any assessment or other notice (collectively, the "Assessment") from
any governmental taxing authority stating that such Taxes are due from BROCADE,
then BROCADE shall give McDATA written notice of the Assessment and McDATA shall
pay the taxing authority.

5.0      ORDERS, CHANGES AND CANCELLATIONS

5.1 Sales Forecast. During the term of the Agreement, within [*] days after the
beginning of each month, McDATA will submit to BROCADE by facsimile, e-mail or
nationally-recognized overnight delivery service a forecast of its projected
sales and purchases for a one hundred and eighty (180) day rolling period. The
forecasts will include: (a) quantity and type of Product to be sold and
projected delivery dates for the first ninety (90) days of such period, and (b)
the aggregate number of quantity and type of Product to be sold in each of
months four, five and six of such period. Such forecasts shall not be binding on
either party, but shall be made in good-faith.

5.2       Orders.

(a) Hardware Orders. McDATA will order Hardware by submitting written purchase
orders to BROCADE by facsimile, e-mail or nationally-recognized overnight
delivery service. All orders shall reference this Agreement, state the
quantities, part numbers and descriptions of Hardware ordered, applicable prices
and license fees, requested delivery dates and shipping instructions. All orders
placed by McDATA will be subject to acceptance by BROCADE, as well as to
BROCADE's standard lead times and forecasted requirements. BROCADE shall accept
or reject in writing any purchase orders which were forecasted by McDATA in
accordance with Section 5.1 above within [*] days of receipt of such purchase
orders by BROCADE; BROCADE shall use commercially reasonable efforts to accept
or reject purchase orders which were not forecasted in accordance with Section
5.1 above. All such purchase orders shall be governed by the terms and
conditions of this Agreement. For purposes of this Agreement, the order date
will be the date on which BROCADE receives McDATA's order. BROCADE will use
commercially reasonable efforts to ship the Hardware to McDATA in accordance
with delivery dates specified in the order as accepted by BROCADE.

(b) Licensed Software Orders. McDATA will order Keys to the Licensed Software by
submitting written purchase orders to BROCADE by facsimile, e-mail or
nationally-recognized overnight delivery service. All orders shall reference
this Agreement, state the quantities ordered, and provide the [*] of the CPU
board(s) for which McDATA seeks to activate the Licensed Software. All such
orders are subject to acceptance by BROCADE. BROCADE shall accept or reject any
such purchase orders in writing within [*] days of receipt of such purchase
orders by BROCADE. All such purchase orders shall be governed by the terms and
conditions of this Agreement.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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5.3 Hardware Order Change or Cancellation by McDATA. McDATA may not cancel or
modify its Hardware orders thirty (30) days or less prior to the originally
scheduled shipment date. If McDATA submits to BROCADE a written request to
cancel or modify a Hardware order more than thirty (30) days prior to the
originally scheduled shipment date, BROCADE will make commercially reasonable
efforts to accommodate such requests, subject to written confirmation of receipt
of such request by BROCADE; such confirmation of receipt shall be provided
within [*] days after receipt by BROCADE. In the event of a BROCADE authorized
Hardware order change, it may be necessary for BROCADE to revise the scheduled
shipment date by mutual agreement of the parties.

5.4 Cancellation by BROCADE. With [*] days prior notice, BROCADE reserves the
right to cancel any Hardware orders placed by McDATA and accepted by BROCADE as
set forth above, or to refuse or delay shipment thereof, if McDATA: (a) fails to
make any payment as provided in this Agreement or otherwise agreed to by BROCADE
and McDATA, (b) fails to meet reasonable credit or financial requirements
established by BROCADE, including any limitations on allowable credit, or (c)
otherwise fails to comply with the terms and conditions of this Agreement.

5.5 Conflict. Any terms and conditions of: (a) any McDATA order for Products, or
(b) BROCADE acknowledgment or acceptance which are in addition to or
inconsistent with the terms and conditions of this Agreement will be deemed
stricken and unenforceable under such order, acknowledgment or acceptance.

6.0      PAYMENT TERMS

6.1 Payment. In consideration of the rights granted by BROCADE to McDATA in
Sections 2.6 ("ASIC License") and 2.7 ("ASIC Firmware License"), McDATA shall
pay to BROCADE the following amounts: (a) [*] United States Dollars ([*]) on
April 15, 1998; (b) [*] United States Dollars on each of July 15, 1998, October
15, 1998, January 15, 1999 and April 15, 1999. The parties agree that as of the
Effective Date of this Agreement, [*] United States Dollars ([*]) has been paid
by McDATA in respect of such payment obligations.

6.2 Payment for Products. McDATA shall pay all invoices net thirty (30) days
after the date of BROCADE's invoice, which BROCADE will issue upon shipment of
the Products for the Hardware or delivery of the Keys for the Licensed Software.

6.3 Late Payment. Payments made under this Agreement after their due date will
incur interest at a rate equal to one and one-half percent (1.5%) per month or
the highest rate permitted by applicable law, whichever is lower. In addition,
if McDATA fails to pay any invoice when due, BROCADE may: (i) declare all
amounts owed by McDATA to be immediately due and payable and refuse to deliver
any further Products or Keys until such amounts have been paid (ii) require
C.O.D. payment for Products or Keys ordered, and/or (iii) pursue any other
remedies under this Agreement, at law or in equity available to it.

6.4 No Setoff. McDATA will not setoff or offset against BROCADE's invoices
amounts that McDATA claims are due to it other than for authorized returns and
rejected shipments.

7.0      SHIPMENT AND DELIVERY

7.1      Shipment and Delivery.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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(a) Hardware. Delivery will be made F.O.B. BROCADE facility. In the absence of
specific written instructions from McDATA, BROCADE will select the carrier, but
such carrier will not be the agent of BROCADE. Title, risk of loss and/or damage
to Hardware, and responsibility for filing claims with the carrier, will pass to
McDATA on delivery to such carrier. BROCADE will pack all Hardware shipped in
accordance with standard commercial practices. McDATA agrees that it will be
responsible for and pay all shipping, freight and insurance charges incurred in
such shipment.

(b) Licensed Software. Upon acceptance of an order as set forth in Section
5.2(b) above, BROCADE will promptly deliver the necessary Keys to the Licensed
Software for the specified Worldwide Switch Numbers via E-mail to McDATA. Upon
receipt of each delivery of Keys, McDATA will log the receipt of each Key for
tracking purposes, and will use commercially reasonable best efforts to prevent
unauthorized access to such Keys. Notwithstanding the provisions of Section
5.2(b) and 7.1(b), BROCADE authorizes McDATA to enable the BROCADE software
licensed to third parties through third party purchase orders issued to and
accepted by BROCADE for mutually agreed upon third parties for BROCADE software
installed on McDATA Products sold to such third parties, and McDATA shall [*]
for such software.

7.2 Partial Shipments. McDATA agrees to accept partial shipments and pay for
Products comprising a partial shipment on the terms set forth above; provided,
however, that BROCADE shall only submit an invoice for Products that it has
actually shipped, unless otherwise agreed to in writing by the parties.

7.3 Delayed Delivery. If delivery of any Products is delayed (i) more than [*]
days on or before December 31, 1999, or (ii) more than [*] days (after December
31, 1999) following the accepted scheduled delivery date, McDATA may, at any
time prior to delivery by BROCADE of such Products to the transporting carrier,
cancel without penalty that undelivered portion of its purchase order covering
such Products.

7.4      Acceptance of Products.

(a) All Products sold under this Agreement shall materially conform to the
standards set forth in Section 15.2, below. McDATA's acceptance of each Product
shall occur upon delivery unless McDATA notifies BROCADE in writing within
thirty (30) days after delivery that such Product does not materially conform to
such standards. Payment for any Product by McDATA shall not reduce the thirty
(30) day period available for inspection and reporting of any material
non-conformance.

(b) McDATA may inspect and test Products received from BROCADE as set forth
above. BROCADE shall have the right to observe McDATA's inspection and test
procedures.

(c) In the event that any Product delivered to McDATA does not conform to the
standards in Section 15.2 below, and such non-conformance is not due to freight
damage, damage incurred after receipt by McDATA, or other exclusions in Section
15, McDATA shall immediately notify BROCADE, and request a RMA from BROCADE.
McDATA shall deliver, at its expense, all such non-conforming Products to
BROCADE pursuant to a valid RMA. Upon verification of such non-conformance,
BROCADE will either promptly repair or replace the non-conforming Product within
thirty (30) days of its receipt by BROCADE. Upon receipt of written request from
McDATA, BROCADE may be able to process small amounts of Product on an expedited
basis for an additional fee.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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8.0      OTHER AGREEMENTS, PRICING AND MARKETING

8.1 Software License Agreement. McDATA agrees that all Licensed Software will be
distributed to Customers subject to a Software License Agreement (including
warranty statement), along with a McDATA Manual, in a manner which is (a) no
less protective of BROCADE's Intellectual Property Rights in the Licensed
Software than the form attached hereto as Exhibit D, and (b) legally enforceable
in the jurisdictions in which the Licensed Software, as incorporated into the
McDATA Products, is distributed.

8.2 Pricing Freedom. McDATA is, and will remain, entirely free to determine its
Customer prices and fees in its own discretion.

8.3 Negative Statements. Neither party to this Agreement shall make any
intentionally false, negatively misleading or intentionally misleading remarks
of any kind or nature regarding the products or services of the other party to
its current or potential customers, the press, resellers, suppliers or any other
third party ("Negative Remarks"), and each party to this Agreement shall
expressly inform its employees, contractors, and resellers of such prohibition.
A violation of this section shall be immediately reported to the President of
each of the parties, and such individuals shall take mutually agreed remedial
measures to prevent future occurrences of Negative Remarks. Notwithstanding the
remedial efforts undertaken by either party to prevent such Negative Remarks,
the parties agree that the repeated violation of this Section by either party
shall be deemed to be a material breach of this Agreement.

8.4 Versions. In the event that BROCADE develops any new features or
functionality for (i) of the ASIC Firmware as described in Section 1.1, (ii) the
Licensed Software which supports such ASIC Firmware, or (iii) the Hardware
versions specified in Exhibit A, and BROCADE makes such new features or
functionality generally available to its customers, BROCADE shall offer such new
features or functionality to McDATA under the terms and conditions of this
Agreement at reasonable prices which are mutually agreed to by the parties.

8.5 Support Letter. BROCADE and McDATA agree to provide support to
Hewlett-Packard with respect to the McDATA Product and software licensed from
BROCADE related thereto as set forth on Exhibit H.

8.6 Repair Facilities. BROCADE will maintain facilities to repair or replace, at
BROCADE's sole discretion, the Hardware for a [*] year period, commencing on the
date BROCADE issues a general market End of Life ("EOL") notice to its customers
for the SilkWorm switch with respect to the generation of such switch applicable
to the Hardware subassemblies set forth in Exhibit A. Upon expiration of the
such [*] year period, BROCADE agrees to provide to McDATA [*] required, as
determined by BROCADE, to repair the Hardware subassemblies

9.0      McDATA OBLIGATIONS

9.1 Training. McDATA agrees to train an appropriate number of its systems
engineering, manufacturing and support personnel on products purchased from
BROCADE according to the Technical Training Program listed in Exhibit C in order
to ensure McDATA can provide adequate support to Customers as set forth in
Exhibit B. From time to time BROCADE may introduce new training courses, and
McDATA agrees to provide ongoing training to its personnel on a periodic basis
to ensure that its personnel are adequately trained. Additional training
materials and updates are available for the fees set forth in Exhibit C.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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9.2 Product Customer Support and Service. McDATA shall provide the appropriate
personnel, facilities and equipment necessary to provide support in the use of
the Products (as incorporated into the McDATA Products) to Customers as required
to: (i) provide BROCADE regular feedback (at least quarterly) on Customer
satisfaction metrics in a manner mutually agreed by the parties, and (ii)
conduct service and support of McDATA's Products. McDATA will have personnel
attend product, sales and service training courses as may be offered by BROCADE
or McDATA from time to time.

 9.3 Support for McFlannel ASIC. The parties acknowledge that as of the
Effective Date, the McFlannel ASIC require testing to ensure that such ASIC
conform to the relevant ASIC Specifications. BROCADE agrees to provide
assistance with such McFlannel ASIC testing to ensure substantial conformity
with the ASIC Specifications through [*]. In the event that during such testing
of the McFlannel ASIC, a substantial non-conformity with the ASIC Specifications
is discovered by McDATA and/or BROCADE, the parties agree to meet and jointly
determine a plan of resolution for such non-conformity.

10.0     ENGINEERING CHANGES

10.1 Product ECO's BROCADE shall use commercially reasonable efforts to provide
McDATA with [*] days' notice of changes to the Products (including Licensed
Software or drivers) that affect the form, fit or function of the Products
("Engineering Change Order" or "ECO").

10.2 Mandatory Product ECO's. BROCADE may issue notice of "Mandatory Changes",
which are changes to the Product(s) required to satisfy governmental
environmental, safety or other standards, reliability concerns, or to guarantee
a continuity of supply. BROCADE will make commercially reasonable efforts to
provide McDATA with [*] days prior written notice of Mandatory Changes prior to
implementing such changes, however this period may be reduced if the change
involves safety or reliability, or if otherwise required by law.

10.3 Product End-of-Life. Upon EOL notification from BROCADE to McDATA for the
Hardware subassemblies and not withstanding any of the provisions in this
section, BROCADE and McDATA will work together to facilitate a mutually agreed
upon EOL plan. Provided that McDATA issues [*] no fewer than the following [*]
of the following Hardware subassemblies per [*]: [*] as set forth in Exhibit A,
and schedules a [*] of all such Hardware subassemblies in such [*] with a
minimum of [*] leadtime for [*], then BROCADE agrees [*] the manufacture, sale
or distribution of any such Product ("End of Life" or "EOL"). The pricing for
Hardware subassemblies purchased at [*] shall be the prices set forth in Exhibit
A in the [*]. In the contrary case, BROCADE shall have the right to provide
McDATA with one hundred eighty (180) days' written notice of intent to EOL any
Product provided to McDATA hereunder. McDATA may place orders for any demand
during the first ninety (90) days of such EOL notice for delivery of affected
Product(s) prior to the end of the notice period. To the extent that such orders
exceed McDATA's previous forecast for such Product(s), the orders shall be
non-cancelable. BROCADE shall accept only forecasted orders in the last [*] days
of the stated notice period, and all such orders shall be non-cancelable. In
addition, during such notice period, BROCADE shall have the right, in its sole
discretion, to require payment for Product(s) from McDATA at the time such
purchase orders are submitted. If any component of any of the four Hardware
subassembly products set forth on Exhibit A is declared EOL and independent of
McDATA's ability to maintain the minimum purchase requirement of the affected
Hardware subassembly unit, BROCADE may declare the affected Hardware subassembly
product EOL. Within [*] days of EOL notification from BROCADE ("EOL Notification
Period"), McDATA may (i) [*] for the affected Hardware subassembly component, or
(ii) notify BROCADE in writing that McDATA will [*] for sufficient units of the

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the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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relevant component from [*] and arrange for the [*] to the facility designated
by BROCADE ("Last Buy Notification"). Provided that BROCADE receives such Last
Buy Notification within [*] days from the date of BROCADE's EOL notification,
the parties will negotiate in good faith the terms whereby BROCADE would [*] the
affected Hardware subassembly. In no event, however, shall BROCADE be required
to resume the manufacture of an affected Hardware subassembly unit after [*]
days from the end of the EOL Notification Period. BROCADE shall not be obligated
to qualify new components, develop alternative sources or redesign the affected
Hardware subassembly unit.

11.0     CROSS LICENSE AND COVENANT NOT TO SUE

11.1 Definitions. For the purposes of this Agreement, the following terms shall
have the following definitions:

(a) "Fibre Channel-based Products" means technology and materials for switching
and interconnect hardware and related software involved with the development of,
operation, management services and software for Fibre Channel products.

(b) "BROCADE Know-how" means the designs, techniques, inventions, practices,
methods, knowledge, skill, experience, test data and cost, sales and
manufacturing data relating to the manufacture of Fibre Channel-based Products
developed or acquired by BROCADE or acquired by license or otherwise with a
royalty-free right of sublicense or license as of April 1, 1998, and in the
possession of McDATA as of April 1, 1998.

(c) "BROCADE Patents" means the existing BROCADE patents and patent applications
as of April 1, 1998 whose claims would be infringed by the manufacture, use,
sale, offer for sale, import or other disposition of Fibre Channel-based
Products; including without limitation all foreign counterparts issued or
issuing on such patents or patent applications. It is understood that the
license set forth in Section 11.2 is not contingent upon actual practice of the
BROCADE Patents during the Patent Term.

(d) "McDATA Know-how" means the designs, techniques, inventions, practices,
methods, knowledge, skill, experience, test data and cost, sales and
manufacturing data relating to the manufacture of Fibre Channel-based Products
developed or acquired by McDATA or acquired by license or otherwise with a
royalty-free right of sublicense or license as of April 1, 1998, and in the
possession of BROCADE as of April 1, 1998. Notwithstanding the foregoing,
BROCADE acknowledges that McDATA Know-how shall not include McDATA know-how
developed by McDATA or [*] or McDATA know-how received from [*] in relation to
US Patent Application Serial Numbers [*] and [*] for products jointly developed
by McDATA and [*] or for products developed by McDATA for [*].

(e) "McDATA Patents" means, except as to the joint patents between McDATA and
[*] (US Patent Application Serial Numbers [*] and [*]) which patent applications
are directly related to the products jointly developed by McDATA for [*]
referenced in the Agreement between McDATA and BROCADE dated March 26, 1998, the
existing McDATA patents and patent applications as of April 1, 1998 whose claims
would be infringed by the manufacture, use, sale, offer for sale, import or
other disposition of Fibre Channel-based Products; including without limitation
all foreign counterparts issued or issuing on such patents or patent
applications. It is understood that the license set forth in Section 11.2 is not
contingent upon actual practice of the McDATA Patents during the Patent Term.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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(f) "Patent Term" means the term of the patent cross-license contained in
Section 11.2.

11.2 Cross-License and Covenant Not to Sue. Subject to the terms and conditions
of this Agreement, (i) BROCADE hereby grants to McDATA a perpetual,
non-exclusive, non-transferable, worldwide, royalty-free license, without the
right to sublicense, under the BROCADE Patents and the BROCADE Know-how to make,
use, sell, offer to sell, lease, import and otherwise transfer the Fibre
Channel-based Products and BROCADE covenants that, to the extent that McDATA and
McDATA's customers and distributors exercise the rights expressly granted to
McDATA hereunder, BROCADE will not assert any patent or trade secret rights
against McDATA or its direct or indirect customers, and (ii) McDATA hereby
grants to BROCADE a perpetual, non-exclusive, non-transferable, worldwide,
royalty-free license, without the right to sublicense, under the McDATA Patents
and the McDATA Know-how to make, use, sell, offer to sell, lease, import and
otherwise transfer the Fibre Channel-based Products and McDATA covenants that,
to the extent that BROCADE and BROCADE's customers and distributors exercise the
rights expressly granted herein, McDATA will not assert any patent or trade
secret rights against BROCADE or its direct or indirect customers. For the
purposes of the patent licenses set forth above, "perpetual" shall mean the life
of the applicable patents. Each party shall be responsible for overseeing
compliance with the terms and conditions of this Agreement, and shall be liable
for any breach of its obligations hereunder. Nothing in this Section 11 shall be
construed to obligate either party to disclose any information or materials to
the other party with respect to the patents and know-how of such party, whether
or not in existence on or before April 1, 1998.

11.3     Ownership

(a) BROCADE. McDATA acknowledges and agrees that BROCADE is and shall remain the
sole owner of the BROCADE Patents and the BROCADE Know-how and that McDATA has
no rights in or to the BROCADE Patents or the BROCADE Know-how other than the
license set forth herein.

(b) McDATA. BROCADE acknowledges and agrees that McDATA is and shall remain the
sole owner of the McDATA Patents and the McDATA Know-how and that BROCADE has no
rights in or to the McDATA Patents or the McDATA Know-how other than the license
set forth herein.

11.4 Prosecution Expenses. Each party shall be responsible for the payment of
the prosecution expenses related to the patents that such party owns.

11.5 Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED HEREIN, BROCADE AND
McDATA HEREBY EXPRESSLY DISCLAIM ANY AND ALL WARRANTIES, REPRESENTATIONS OR
CONDITIONS OF ANY KIND OR NATURE, WHETHER EXPRESS, IMPLIED OR STATUTORY,
RELATING TO EACH PARTY'S RESPECTIVE PATENTS AND KNOW-HOW SET FORTH IN THIS
SECTION 11, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THIRD
PARTY RIGHTS. Without limiting the generality of the foregoing, neither BROCADE
nor McDATA warrant the patentability of any information or materials, or the
safety, usefulness or accuracy of any information provided hereunder.

12.0     CONFIDENTIAL INFORMATION AND ADVERTISING

12.1 Definition. "Confidential Information" means: (i) all source code and all
technical or business information furnished in any form or medium, whether oral,
written, graphic or electronic by one party to the other pursuant to this
Agreement, including without limitation all analyses, architecture, code,
concepts, data, designs, discoveries, forecasts, ideas, information, inventions,
know-how, knowledge, layouts, mask works, methodologies, plans,

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processes, products, projections, protocols, prototypes, schematics, skills,
structure, techniques, and/or work product, tangible or intangible, whether or
not patentable, and all originals and all copies of any compilations, database,
drawing, file (including on any computer storage media), memoranda, model,
notes, prototype, record, report, software, summary, writing or other materials
whether tangible or not, and whether or not eligible for copyright protection,
or any other information relating to any research project, work in progress,
future development, scientific engineering, manufacturing, marketing or other
business or financial plan relating to either party, its present or future
products, sales, suppliers, customers, employees, investors or business; and
(ii) all other non-public information that the party disclosing the information
(the "Disclosing Party") designates at the time of disclosure as being
confidential, or if disclosed orally or visually is identified as such prior to
disclosure and summarized, in writing, by the Disclosing Party to the receiving
party (the "Recipient") within [*] days of initial disclosure, including without
limitation, the terms and conditions of this Agreement, and information
regarding either party's financial condition, business opportunities, plans for
development of future products or new versions of existing products, know-how,
technology or customers.

12.2 Access to and Use of Confidential Information. A party receiving
Confidential Information agrees (a) that it shall use the same degree of care
and means that it utilizes to protect its own information of a similar nature,
but in any event not less than reasonable care and means, to prevent the
unauthorized use or the disclosure of such confidential information to third
parties, (b) not to disclose or use any of such Confidential Information for any
purpose except as necessary and consistent with the terms of this Agreement, (c)
to limit the use of and access to such Confidential Information to such
employees and subcontractors who have a need to know such Confidential
Information and have signed legally binding non-disclosure agreements, and (d)
that it will promptly notify the other party in writing of any unauthorized
disclosures and/or use thereof. The aforementioned notice shall include a
detailed description of the circumstances of the unauthorized disclosure or use
and the parties involved therewith.

12.3 Exclusions. Notwithstanding the foregoing, Confidential Information does
not include information that: (a) is or becomes generally available to the
public other than (i) as a result of a disclosure by Recipient or its employees
or any other person who receives such information in violation of this
Agreement, (b) is or becomes available to Recipient on a non confidential basis
from a source which is entitled to disclose it to Recipient, (c) can be
documented, by adequate written records, was developed by employees or agents of
the Recipient independently of and without reference to any information
communicated to Recipient by the Disclosing Party, or (d) is required by law to
be disclosed by the Recipient. A disclosure of Confidential Information (x) in
response to a valid order by a court or other governmental body, (y) otherwise
required by law, or (z) necessary to establish the rights of either party under
this Agreement shall not be considered to be a breach of this Agreement or a
waiver of confidentiality for other purposes; provided however, that the party
disclosing such information shall provide prompt written notice thereof to the
other party to enable it to seek a protective order or otherwise prevent such
disclosure.

12.4 Injunctive Relief. In the event of an unauthorized use, distribution or
disclosure of any Confidential Information, the parties agree that the
disclosing party will not have an adequate remedy at law. Therefore, injunctive
or other equitable relief may be appropriate to restrain such use, distribution
or disclosure, threatened or actual.

12.5 Advertising and Releases. Except as may be required by law or regulation,
no news release, material that references this Agreement or the other party
shall be issued by either party without the prior written consent of the other
party.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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13.0     PROPRIETARY RIGHTS

Subject to the provisions of Section 11 of this Agreement, the Intellectual
Property Rights in and to the ASIC Firmware, BROCADE ASIC, Licensed Software and
the Products are and will remain the sole and exclusive property of BROCADE and
its suppliers, if any, whether the ASIC Firmware, BROCADE ASIC, and the Products
are separate or combined with any other products. BROCADE's rights under this
Section 13.0 will include, but not be limited to: (i) all copies of the ASIC
Firmware, and the Licensed Software portion of the Products; (ii) all
Intellectual Property Rights in the ASIC Firmware, BROCADE ASIC, and the
Products; and (iii) all modifications to, and Derivative Works based upon, the
BROCADE ASIC and the Products. McDATA shall own all Intellectual Property Rights
in and to the authorized modifications to and Derivative Works based upon the
ASIC as set forth in Section 2.7 and McDATA Functionality. McDATA shall retain
all right, title and interest, including manufacturing control and worldwide
Intellectual Property Rights in and to the McDATA Functionality. For the
purposes of this Agreement, "Intellectual Property Rights" means copyright
rights (including, without limitation, the exclusive right to use, reproduce,
modify, distribute, publicly display and publicly perform the copyrighted work),
trademark rights (including, without limitation, trade names, trademarks,
service marks, and trade dress), patent rights (including, without limitation,
the exclusive right to make, use and sell), trade secrets, moral rights, right
of publicity, authors' rights, contract and licensing rights, goodwill and all
other intellectual property rights as may exist now and/or hereafter come into
existence and all applications, renewals and extensions thereof, regardless of
whether such rights arise under the law of the United States or any other state,
country or jurisdiction. "Moral Rights" means the inalienable right to claim
authorship to or to object to any distortion, mutilation, or other modification
in relation to a work, whether or not such would be prejudicial to the author's
reputation, and any similar right, existing under common or statutory law or any
country in the world or under any treaty, regardless or whether or not such
right is denominated or generally referred to as a "moral right."

14.0     INDEMNITY

14.1 Infringement Claims. BROCADE will indemnify, defend and hold McDATA
harmless from any and all damages, liabilities, costs and expenses finally
awarded against McDATA as a result of any claim, judgment or adjudication
against McDATA which claims that (i) any of the Products, as furnished by
BROCADE under this Agreement, infringes or misappropriates any US patent, any
copyright or trademark, or (ii) the ASIC Firmware infringes any US patent or any
copyright, or (iii) the design of the ASIC, as furnished by BROCADE to LSI
Logic, infringes any US patent or any copyright. If a Product, ASIC Firmware or
the BROCADE ASIC are held in any such suit to infringe and the use of such
Product, ASIC Firmware or BROCADE ASIC is enjoined, BROCADE will have the
option, at its own discretion and expense, to (w) procure for McDATA the right
to continue using such Product, ASIC Firmware or BROCADE ASIC, (x) replace such
Product, ASIC Firmware or BROCADE ASIC with non-infringing Product, ASIC
Firmware or BROCADE ASIC of substantially equivalent quality and purpose, (y)
modify such Product, ASIC Firmware or BROCADE ASIC to make it non-infringing,
provided the modified Product, ASIC Firmware or BROCADE ASIC remains
substantially equivalent in quality and purpose to such Product, ASIC Firmware
or BROCADE ASIC, or (z) terminate the Agreement and return to McDATA the
depreciated value of such Product, ASIC Firmware or BROCADE ASIC based on
straight line depreciation over [*].

14.2 Exceptions. BROCADE will not be obligated to defend or be liable for costs
and damages to the extent that infringement, or a claim thereof, arises out of
or is related to (a) a modification made to Product, ASIC Firmware or BROCADE
ASIC by McDATA or a third party made in violation of this Agreement, (b) the

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omitted portions. Asterisks within brackets denote omissions.

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combination of a Product, ASIC Firmware or BROCADE ASIC with products or data
not provided by BROCADE, (c) use of other than the latest unmodified release of
Product, ASIC Firmware or BROCADE ASIC made available to McDATA by BROCADE if
such infringement would have been avoided by the use thereof, (d) McDATA's
failure to use or deploy modifications to the ASIC Firmware or Licensed Software
provided to McDATA by BROCADE to avoid infringement, (e) the direct result of
the manufacture of the BROCADE ASIC by LSI Logic. Notwithstanding the foregoing,
the parties acknowledge and agree that BROCADE shall have no obligation to
defend or indemnify McDATA against claims that the Products infringe the
Intellectual Property Rights of third parties pursuant to the foregoing Section
unless McDATA: (x) promptly informs BROCADE of such suit or proceeding, and
furnishes to BROCADE a copy of each communication, notice or other action
relating thereto, (y) gives BROCADE the authority, information and reasonable
assistance necessary to settle or litigate such suit or proceeding, and (z) does
not settle, or agree to settle, any such suit or proceeding without the prior
written permission of BROCADE, which will not be unreasonably withheld or
delayed.

14.3 Limitations. THE FOREGOING STATES THE ENTIRE LIABILITY OF BROCADE FOR
INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT BY ANY PRODUCT, ASIC FIRMWARE OR
BROCADE ASIC FURNISHED UNDER THIS AGREEMENT.

14.4 McDATA Indemnity. McDATA agrees to defend, indemnify and hold BROCADE
harmless from any and all losses, damages, liabilities, costs and expenses
(including but not limited to reasonable attorneys' fees and costs of
litigation) incurred by BROCADE as a result of any third party claim, regardless
of the form of action, arising from (i) McDATA's misuse or misrepresentation of
the Products or Documentation or Intellectual Property Rights contained therein,
(ii) McDATA's breach of its representations or warranties under this Agreement,
(iii) McDATA's false advertising, intentional wrongdoing, gross negligence, or
product liability arising from the marketing, sale or distribution of a McDATA
Product, or (iv) McDATA's modifications to the ASIC Firmware, the BROCADE ASIC
or the Products furnished by BROCADE to McDATA hereunder (if the unmodified
version of the information or materials provided by BROCADE to McDATA would not
have so infringed), provided that BROCADE promptly notifies McDATA of any such
claim in writing, gives McDATA sole control of the defense and all related
settlement negotiations, and cooperates with McDATA in defending or settling any
such claim.

15.0     LIMITED WARRANTY AND WARRANTY DISCLAIMER

15.1 Mutual Warranty. Each party certifies and represents to the other party
that as of the Effective Date, it has full power, right and authority to execute
this Agreement, to fulfill all its rights and obligations herein.

15.2 Product Warranty to McDATA. BROCADE warrants to McDATA that the Products
(except for Products which may be refurbished pursuant to Section 15.4) are new
, and that, for a period of [*] months after the date of the shipment of the
Products to McDATA (the "Hardware Warranty Period") (i) the Hardware will
substantially conform to BROCADE's standard manufacturing [*] test processes as
set forth in Exhibit J, and (ii) the Products will be Year 2000 compliant. In
addition, BROCADE warrants to McDATA that for a period of ninety (90) days after
the date of shipment of the Products to McDATA (the "Software Warranty Period")
the Licensed Software will substantially conform to the applicable standard
BROCADE product specifications for the Licensed Software. For the purposes of
this Agreement, "Year 2000 compliant" means that all Products and Documentation
provided to McDATA will correctly interpret and manipulate all date-related
data, when dates are in the 20th and 21st centuries, and that no delivery or
performance of such Products and Documentation shall be materially interrupted
or delayed as a result of the occurrence of or processes driven by dates after
December 31, 1999, provided that the

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

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non-BROCADE hardware, software and other system components with which the
Products and Documentation interact, directly or indirectly (including without
limitation the McDATA Products and all other third party information, materials,
components, hardware and software or any kind), also correctly interpret and
manipulate all such date-related data.

15.3 ASIC Warranty. BROCADE warrants to McDATA that the design information
furnished to LSI Logic for the manufacture of the BROCADE ASIC shall be
sufficient to enable LSI Logic to manufacture such BROCADE ASIC in substantial
conformance to the ASIC Specifications; provided, however, that nothing in this
Section 15.3 shall be construed to impose responsibility upon BROCADE for
defects in any such BROCADE ASIC introduced by LSI Logic in the course of the
LSI Logic manufacturing process. In the event that McDATA provides BROCADE with
written notice detailing a substantial non-conformity of the BROCADE ASIC with
the ASIC Specifications due to the design thereof and not the manufacture of
such BROCADE ASIC by LSI Logic, BROCADE will use diligent efforts to coordinate
with LSI Logic to remedy any such substantial non-conformity.

15.4 Limitations to Warranty. McDATA shall notify BROCADE of a failure by the
Product to substantially perform in accordance with the relevant standards set
forth in Section 15.2, as applicable, during the applicable Hardware Warranty
Period or Software Warranty Period. If BROCADE confirms such Product is
defective after McDATA, at McDATA's expense, has returned the Product to a
BROCADE-authorized repair center for inspection, then, BROCADE will at its
election promptly repair or replace any such Product within [*] days of receipt
thereof, at no charge to McDATA. Replacement Product may be either new or
re-manufactured and certified as new (in accordance with BROCADE's standard
manufacturing test processes or, with regard to the Licensed Software, the
applicable specifications). In the event that the Product returned is not
defective, McDATA will be responsible for freight costs for return shipment to
McDATA. The foregoing warranties shall not apply to Products that have been (i)
damaged by accident through no fault of BROCADE, Acts of God, shipment, improper
installation, abnormal physical or electrical stress, misuse or misapplication,
as determined by BROCADE in its sole reasonable discretion, or (ii) modified
without BROCADE's express written acceptance of such modification for warranty
purposes. BROCADE reserves the right to charge additional fees for repairs or
replacements performed on Products after the Hardware Warranty Period or
Software Warranty Period, as applicable, has terminated.

15.5 McDATA's Exclusive Remedy. McDATA acknowledges and agrees that its sole and
exclusive remedy for breach of the limited Product warranties is as set forth in
Section 15.4.

15.6 Title Warranty. BROCADE warrants that title to all Products and ASIC
Firmware delivered to McDATA by BROCADE shall be free and clear of all liens,
encumbrances or other restrictions.

15.7 Disclaimer. THE FOREGOING PRODUCT WARRANTIES IN SECTION 15 ARE IN LIEU OF,
AND BROCADE EXPRESSLY DISCLAIMS, ALL OTHER REPRESENTATIONS, WARRANTIES OR
CONDITIONS, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS,
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.

15.8 Epidemic Failure Warranty In addition to the warranties specified above,
BROCADE warrants all Hardware subassemblies against epidemic failure for a
period of [*] years after date of shipment of the Hardware subassemblies from
BROCADE. An epidemic failure means:

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         (i) the occurrence of the [*] the Hardware subassembly [*] more
         frequently that the calculated Mean Time Between Failure ("MTBF"), as
         specified in Exhibit K attached hereto and incorporated herein by
         reference, for that Hardware subassembly within a [*], provided [*] is
         caused by the Hardware subassembly and is not McDATA system or McDATA
         environment induced. In the case of the epidemic failure, BROCADE shall
         [*] of the affected Hardware subassembly population (after [*] is
         identified), as long as the [*], as specified in Exhibit K, remains at
         [*]. BROCADE calculates the MTBF for each Hardware subassembly using
         Belcore Specification TR332, Issue 5 parts count method.

         (ii) the occurrence of more than [*] that is considered a hazard class
         2 or above (approved and initialed by both parties) safety incident
         where the customers life or property is damaged due to the [*].

16.0     LIMITATION OF LIABILITY AND INSURANCE

16.1 Nuclear, Aviation or Life Support Application. McDATA acknowledges that
Product is not specifically designed, manufactured or intended for use in
connection with the design, construction, maintenance, and/or operation of any
(i) nuclear facility, (ii) aircraft, aircraft communication or aircraft ground
support system, or (iii) life support system. Except as otherwise provided
herein, BROCADE shall not be liable to McDATA, in whole or in part, for any
claims or damages arising from such use, or resale by McDATA to a third party
for such purposes, and McDATA agrees not to sell into nuclear, aviation or life
support application and shall include a provision in its Customer agreement a
statement relating to the Products' inapplicability to such applications.

16.2.    Limitation of Liability.

(a) EXCEPT FOR BREACHES OF SECTION 12 AND 14, IN NO EVENT SHALL EITHER PARTY BE
LIABLE TO THE OTHER PARTY, FOR INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFIT, WHETHER
BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR
OTHERWISE, AND WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH LOSS.

(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING SUBSECTION, EITHER PARTY'S
TOTAL LIABILITY (EXCEPT FOR BREACHES OF SECTIONS 12 AND 14) TO THE OTHER PARTY
UNDER THIS AGREEMENT WILL BE LIMITED TO (a) WITH REGARD TO THE PRODUCTS, [*], OR
(b) WITH REGARD TO THE ASIC FIRMWARE OR BROCADE ASICs, [*].

16.3 Insurance. Each party agrees during the term of this Agreement to carry the
amount that party deems to be sufficient liability insurance to meet its
indemnification obligations under this Agreement.

17.0     EXPORTATION; GOVERNMENT APPROVAL AND FOREIGN CORRUPT PRACTICES ACT

17.1 Export. McDATA acknowledges that all Products including documentation and
other technical data are subject to export controls imposed by the U.S. Export
Administration Act of 1979, as amended (the "Act"), and the regulations
promulgated thereunder. McDATA warrants and represents to BROCADE that it will
not export or re-export (directly or indirectly) any Products or documentation
or other technical data therefor, in whole or in part, in violation of the Act
and the regulations thereunder. McDATA shall indemnify, defend and hold BROCADE

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       18
<PAGE>   19
harmless against any claims for cost, damage, expense or liability arising out
of or in connection with any breach of this Section.

17.2 Government Rights. The Licensed Software is "commercial computer software"
as defined in the applicable provisions of the Federal Acquisition Regulation
(the "FAR") and supplements thereto, including the Department of Defense ("DoD")
FAR Supplements (the "DFARS"). The parties acknowledge that the Licensed
Software was developed entirely at private expense and that no part of the
Licensed Software was first produced in the performance of a Government
contract. If McDATA supplies the Licensed Software to a U.S. Government agency,
in accordance with FAR 12.212 and its successors or DFARS 227.7202 and its
successors, as applicable, McDATA shall license the Licensed Software to the
Government subject to the terms of this Agreement.

17.3 Governmental Approval. If any approval with respect to this Agreement, or
the notification or registration thereof, will be required at any time during
the term of this Agreement, with respect to giving legal effect to this
Agreement in the jurisdiction where McDATA Products are distributed, or with
respect to compliance with exchange regulations or other requirements so as to
assure the right of remittance abroad of U.S. dollars pursuant to this
Agreement, McDATA will immediately take whatever steps may be necessary in this
respect, and any charges incurred in connection therewith will be for the
account of McDATA. McDATA will keep BROCADE currently informed of its efforts in
this connection. BROCADE will be under no obligation to ship Products to McDATA
hereunder until McDATA has provided BROCADE with satisfactory evidence that such
approval, notification or registration is not required or that it has been
obtained.

18.0     DEFAULT AND TERMINATION

18.1 Default. In addition to any other rights or remedies which may be available
at law or in equity, either party may terminate this Agreement upon the
occurrence of any one of the following: (a) In the event of a material breach by
either party in the performance of their obligations hereunder, the party
alleging the breach shall give written notice specifying the nature and extent
of the breach to the other party and such party shall have [*] days thereafter
to cure the breach. If the breach is not cured within the [*] day period,
termination shall be come effective on the [*] day following the written notice;
(b) In the event of proceedings in bankruptcy or insolvency invoked by or
against either party, or in the event of the appointment of a receiver, or the
making an assignment for the benefit of creditors; or proceedings are commenced
against such party under any bankruptcy, insolvency or debtor's relief law, if
such proceeding is not vacated or set aside within [*] days after the date of
commencement thereof; or

18.2 Termination for Convenience. In the event market conditions change to the
extent that the Product is no longer competitive, McDATA may terminate this
agreement for convenience. In that event, McDATA agrees to provide BROCADE with
[*] days written notice of its intent to terminate for convenience. Further,
McDATA agrees to reasonably compensate BROCADE for work in progress as of the
date of notification.

18.3 Effect of Termination. Upon the expiration or termination of this
Agreement, however arising:

18.3.1 Except for the retention of [*] of the Confidential Information of the
other party solely for support purposes, each party will cease its use of the
Confidential Information of the other party, and will return or destroy, at the
other party's direction, all such Confidential Information and any copies or
portions thereof which are incorporated into documents or archives;

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       19
<PAGE>   20
18.3.2 If this Agreement is terminated pursuant to Section 18.1, the payment of
all amounts owed by McDATA to BROCADE as of the effective date of such
expiration or termination shall accelerate, and such payments shall become
payable as of such effective date, whether or not longer payment periods had
originally been established; and

18.3.3 Provided that BROCADE has not terminated this Agreement due to McDATA's
material breach of the terms of this Agreement, McDATA may submit orders for
Products, including without limitation those Products which BROCADE has agreed
not to discontinue pursuant to the terms and conditions set forth in Section
10.3 ("Product End of Life"), which orders are subject to approval by BROCADE in
its sole discretion, provided that McDATA pays BROCADE for such Product(s) at
the time such purchase orders are accepted by BROCADE. The parties agree that
orders submitted as set forth in this Section shall not be considered approved
by BROCADE until and unless BROCADE has notified McDATA of its acceptance of
such order in writing pursuant to Section 5.2 hereof.

18.4 Nonexclusive Remedy. The exercise by either party of any remedy under this
Agreement will be without prejudice to its other remedies under this Agreement
or otherwise.

18.5 Survival. The parties' obligations under Sections 2.4.2(c) ("Ownership"),
2.4.4 ("Documentation Warranty"), 2.5 ("Restrictions"), 2.6 ("ASIC License"),
2.7 ("ASIC Firmware License"), 4.0 ("Taxes"), 8.1 ("Software License
Agreement"), 10.2 ("Mandatory Product ECO's"), 11.0 ("Cross License and Covenant
Not to Sue"), 11.3 ("Ownership"), 11.5 ("Disclaimer of Warranties"), 12
("Confidential Information and Advertising"), 13 ("Proprietary Rights"), 14
("Indemnity"), 15 ("Limited Warranty and Warranty Disclaimer"), 16.2
("Limitation of Liability"), 18 ("Default and Termination"), 19 ("General") and
Exhibit D shall survive any termination and/or expiration of this Agreement.

19.0     GENERAL

19.1 Assignment. This Agreement will bind and inure to the benefit of each
party's permitted successors and assigns. Neither party may assign this
Agreement, in whole or in part, without the other party's written consent which
consent will not be unreasonably withheld, except that BROCADE may assign its
rights and delegate its duties hereunder in connection with any merger,
reorganization, consolidation, or other business combination, or the sale of all
or substantially all of its assets. Any attempt to assign this Agreement without
such consent will be null and void.

19.2 Independent Contractors. The relationship between BROCADE and McDATA
established by this Agreement is that of independent contractors. No franchise,
joint venture or partnership is established by this Agreement. Neither party
hereunder is the agent, broker, partner, employee, or legal representative of
the other for any purpose, and neither party shall have the right to bind or
otherwise obligate such other party.

19.3 Governing Law; Attorneys Fees. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California, excluding
its conflicts and choice of law rules, and shall not be construed in accordance
with the United Nations Convention for the International Sale of Goods (CISG).
In the event that any dispute between the parties arises out of or is related to
any of the provisions of this Agreement, and/or the performance or termination
thereof, the prevailing party in any such action shall recover all of its costs,
including reasonable attorneys' fees.

                                       20
<PAGE>   21
19.4 Arbitration. Except with respect to claims for emergency or preliminary
injunctive relief with respect to breach of provisions in Section 11 above or
breach of any Intellectual Property Rights hereunder, any dispute, claim or
controversy arising out of or relating to this Agreement, or the interpretation,
making, performance, breach or termination thereof, shall be finally settled by
binding arbitration in Santa Clara County, California under the Rules of
Arbitration of the American Arbitration Association, by a panel of three
arbitrators reasonably familiar with the technology and business pertaining to
the products covered by this Agreement, appointed in accordance with said Rules.
The arbitration and all pleadings and written evidence shall be in the English
language. Judgment on the award entered by the arbitrator may be entered in any
court having jurisdiction thereof.

19.5 Notices. Notices under this Agreement shall be sufficient only if sent by
certified mail or air express, return receipt requested, or other
nationally-recognized delivery service, or personally delivered to a party.
Notice by mail shall be deemed received on actual receipt. Notices to McDATA
shall be sent to the attention of the Contracts Department, and notices to
BROCADE shall be sent to the attention of "Legal Services."

19.6 No Waiver. The failure of either party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party to
thereafter enforce any such provision or any other provision.

19.7 Unenforceable Provisions. If any term of this Agreement is found to be
illegal or unenforceable, the remaining portions of this Agreement shall remain
in effect, and the parties agree to negotiate in good faith substitute
enforceable terms with similar economic impact on the parties.

19.8 Force Majeure. Neither party will be responsible for any failure to perform
due to causes beyond its reasonable control (each a "Force Majeure"), including,
but not limited to, acts of God, war, riot, embargoes, acts of civil or military
authorities, denial of or delays in processing of export license applications,
fire, floods, earthquakes, accidents, strikes, or fuel crises, provided that
such party gives prompt written notice thereof to the other party. The time for
performance will be extended for a period equal to the duration of the Force
Majeure, but in no event longer than sixty (60) days.

19.9 Modifications. Any amendments and modifications to this Agreement shall be
in writing signed by both parties.

19.10 Entire Agreement. Except as provided in (i) the Non-Disclosure Agreement
executed by and between the parties as of February 23, 1999 set forth hereto as
Exhibit I, (ii) the Memorandum of Understanding executed by and between the
parties as of February 23, 1999, or (iii) the Settlement Agreement and Mutual
Release between the parties dated April 14, 1998 set forth hereto as Exhibit F,
this Agreement is the entire understanding between McDATA and BROCADE with
respect to the subject matter of this Agreement, and supersedes:

(a) All prior or contemporaneous proposals, whether oral or written, all
negotiations, conversations or discussions between the parties, and industry
custom or past course of dealing, relating to such subject matter,

(b) The Purchase and License Agreement entered into between the parties on May
31, 1996,

(c) The Technology License and Development Agreement entered into between the
parties on November 1, 1996,

(d) The Software License Agreement entered into between the parties on October
2, 1998,

                                       21
<PAGE>   22
(e) The Mutual Confidentiality and Non-Disclosure Agreement entered into between
the parties on February 12, 1996; and

(f) The two-page Agreement entered into between the parties on March 26, 1998.

                                       22

<PAGE>   23
                                    EXHIBIT A

                                   PRICE LIST

SILKWORM SUBASSEMBLIES

<TABLE>
<CAPTION>
                                       [*]         [*]         [*]         [*]
Product Number       Subassembly      Units       Units       Units       Units
--------------       -----------      -----       -----       -----       -----
<S>                  <C>              <C>         <C>         <C>         <C>
MD1001                   [*]           [*]         [*]         [*]         [*]
MD1002                   [*]           [*]         [*]         [*]         [*]
MD1003                   [*]           [*]         [*]         [*]         [*]
MD1015                   [*]           [*]         [*]         [*]         [*]
</TABLE>

FW-0000000007-0002   Licensed Software                   [*] /bundle/motherboard
                     (regardless of number of units)

                     BROCADE WebTools
                     BROCADE SES
                     BROCADE Zoning

-        McDATA acknowledges and agrees that the lead time for forecasted new
         orders as of the Effective Date is sixty (60) days.

-        McDATA agrees that subassemblies are to be ordered in [*] in minimum
         increments of [*].

-        McDATA acknowledges that subassemblies have not been [*].

Repair Pricing

         MD 1001:  [*]
         MD1002    [*]                  [*]
         MD1003    [*]                  [*]
         MD1015    [*]                  [*]

Time and Materials

BROCADE will evaluate "Out of Warranty" returns of each of the above Hardware
subassemblies for a fixed evaluation fee of [*] per Hardware subassembly
("Evaluation Fee"). In the event that McDATA authorizes the repair of the
Hardware subassemblies, the applicable Evaluation Fee will be applied toward the
repair cost. In the event the rate of the subassemblies tested to the BROCADE
standard manufacturing [*] process exceed a "No Trouble Found" ("NTF") rate
greater than [*] during any given [*] day period, the Evaluation Fee will be
charged for all subassemblies exceeding the [*] NTF rate for the following [*]
day period. BROCADE will use commercially reasonable efforts to repair
subassemblies within [*] days of the receipt of the written or email

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       23
<PAGE>   24
approval by McDATA of the repair or the quote by BROCADE. All such repairs will
be subject to a ninety day warranty (according to the terms and limitations set
forth in Section 15 of this Agreement) from the date of shipment by BROCADE.

                                       24
<PAGE>   25
                                    EXHIBIT B

                        SERVICE AND SUPPORT REQUIREMENTS

1.0      SERVICE AND SUPPORT REQUIREMENT

         McDATA will be responsible for working directly with Customers, and
         BROCADE Support will work directly with McDATA to support McDATA
         personnel, as necessary. McDATA represents and warrants that it is
         experienced in, capable of, and staffed to provide, Level 1 and Level 2
         support (as defined below). BROCADE offers training programs for
         BROCADE's standard fees as set forth in this Exhibit B (which may be
         amended from time to time upon written notice) to assist in attaining
         this level of expertise on BROCADE Products. BROCADE Support will
         accept calls for technical assistance only from Level II engineers.

         BROCADE will provide Level 3 support to McDATA (as defined below).

2.0      SUPPORT LEVEL DEFINITIONS

2.1      LEVEL 1 SUPPORT

                  Level 1 support is the first line, direct Customer contact,
                  most likely via a telephone call handling group provided by
                  McDATA.

                  Level One support includes:

                  -        First contact direct Customer interaction

                  -        Information collection and analysis

                  -        Identification of whether the problem is known and
                           has a known solution

                  -        Troubleshooting and problem reproduction

                  -        Problem report administration and tracking

                  The parties agree that Customers shall not have the right to
                  contact BROCADE directly for questions related to the
                  Products.

2.2      LEVEL 2 SUPPORT

                  Level 2 support is "technical support" provided by McDATA
                  personnel. Level 2 support is typically provided by experts in
                  the applicable Product and who serve as the escalation point
                  for Level 1. Level 2 support personnel are expected to resolve
                  all known problems, installation and configuration issues,
                  assist in firmware or driver updates at the Customer site,
                  search BROCADE posted Technical Notes and other technical
                  information supplied that will assist in providing problem
                  resolutions. All pertinent data shall be entered in McDATA's
                  problem tracking database.

                  Should the Level 2 analyst be unable to resolve a problem,
                  either because of lack of expertise, exhausted troubleshooting
                  knowledge, or expiration of the allotted Level 2 resolution
                  time, the Level 2 analyst may escalate the problem to Level 3
                  for resolution. Level 2 personnel of McDATA will continue to
                  diligently work with Level 3 personnel of BROCADE to
                  accomplish resolution. Level 2 personnel of McDATA will
                  communicate all resolutions back to the Customers.

                                     25
<PAGE>   26
                  Escalations should be presented to BROCADE engineers in the
                  form of a problem tracking data base record with all pertinent
                  configuration detail and failure information or symptoms
                  documented in detail.

                  In an effort to maintain an efficient support organization and
                  crisp exchange of information, McDATA will limit the number of
                  support personnel ( Level 2) authorized to contact BROCADE
                  (Level 3) to 5 and ensure that these personnel have attended
                  Courses 1, 2, and 3 taught at the BROCADE training facility.

2.3      LEVEL 3 SUPPORT

                  Level 3 support is provided by BROCADE System Engineers (SE)
                  and/or Technical Support Engineers (TSE). Level 3 is the first
                  point of contact for technical issues between BROCADE and
                  McDATA. Once a problem is accepted by BROCADE in its sole
                  discretion for escalation to Level 3, BROCADE is responsible
                  for resolution and will utilize commercially reasonable
                  resources to resolve such problem.

                  Prior to escalating to Level 3, it is expected that McDATA
                  shall provide the following information and documentation:

                  -        Any error information from the device connected to
                           the switch and from the switch.

                  -        All names and revisions of hardware equipment.

                  -        All firmware revisions of the drivers.

                  -        Any log files from the devices connected to the
                           switch.

                  -        Any trace file from the devices connected to the
                           switch.

                  -        The configuration information of the equipment being
                           used.

                  -        Detailed definition of all steps taken to reproduce
                           and resolve this situation prior to escalation to
                           Level 3.

         Assigned Level 3 support personnel (SE and/or TSE) can be contacted via
         direct dial, email to an established "support" alias, web site
         initiated input, and by calling BROCADE's 1-888-ATFIBRE support number.
         Direct access to BROCADE support personnel will be possible during
         normal BROCADE business hours (8 AM to 5 PM PST, M-F). Emergency
         situations for Severity 1 problems are handled via 7 X 24 pager
         coverage at 1-888-ATFIBRE (1-888-283-4273)

3.0      BROCADE SEVERITY DEFINITIONS AND SUPPORT GOALS

         The goal for initial response time to all telephone support requests is
         [*] or less during normal BROCADE working hours. For after hours
         telephone requests, the goal is [*] or less. The targeted response time
         for requests submitted by other means, such as email, or fax, is [*].

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       26
<PAGE>   27
<TABLE>
<CAPTION>
Severity       Definition                                   Service Objection                                 Resolution Time
<S>            <C>                                          <C>                                               <C>
1              BROCADE Product is completely                Respond to initial request within 30              Less than 5 days,
               non-functional, or deemed a safety           minutes during normal BROCADE                     using commercially
               hazard, situation has high impact on         business hours, and 1 hour for non-               reasonable efforts.
               development or delivery efforts.             business hours.  Resources applied
               Installation problems.                       until a solution or acceptable work-
                                                            around is found.

2              BROCADE Product is functionally              Respond to initial request within 1               Less than 15 days
               impaired, has substantially degraded         (one) hour during normal BROCADE
               performance but is not completely            business hours.  Resources applied
               dysfunctional.  There are no                 continuously, during business hours,
               available work-arounds.  Situation           until a solution or work-around is
               has medium impact on customer                found.
               activity

3              BROCADE Product or advertised                Resources applied on a priority basis,            Next maintenance
               functionality may be slightly                until a solution or work-around is                release.
               impaired but is operational, has low         found.
               to no impact on customer activity,
               and there are work-arounds available.

4              Generic questions, and enhancement           Answer generic questions or provide               Commercially
               requests.                                    path to answers within reasonable                 reasonable efforts for
                                                            time frames.  The BROCADE web site                generic questions.
                                                            will be the prime repository for this             Enhancement
                                                            type of information.  Enhancement                 requests are
                                                            requests will be reviewed and                     processed on a case
                                                            implemented in the next major release,            by case basis.
                                                            where feasible, or to meet specific
                                                            commitments made.
</TABLE>

                                       27
<PAGE>   28
                                    EXHIBIT C

                           TECHNICAL TRAINING PROGRAM

                            BROCADE TRAINING OUTLINE

<TABLE>
<CAPTION>
                                                     Course                                Days        Cost per
                                                                                                        person
<S>      <C>                                        <C>                                    <C>         <C>
1.1      FC & SAN intro:                                                                    1             [*]
                                                    Audience: Sales/Marketing/SE's

1.2      Switch intro & features:                                                           2             [*]
                                                    Audience: Sales/Marketing/SE's

1.3      Install/Config/Troubleshoot/Mgmt tools:                                            2             [*]
                                                    Audience: SE's, Tech support

                  FULL COURSE                                                               5             [*]
</TABLE>

Note:  Includes non-reproducible copy of all materials for each person.
Additional binders of training materials may be purchased from BROCADE.

Courses will be offered at BROCADE's offices in San Jose, CA or at such other
facility notified to McDATA from time to time. A minimum of five students will
be required to register and attend each course, or the course in question may,
at BROCADE's sole option, be canceled. McDATA agrees that it shall pay any and
all travel and lodging expenses related to such training. BROCADE will make
these courses available to Customers, on terms to be negotiated at BROCADE's
then-current rates for Customer training courses.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       28
<PAGE>   29
                                    EXHIBIT D

                       BROCADE SOFTWARE LICENSE AGREEMENT

PLEASE READ THIS END-USER SOFTWARE LICENSE AGREEMENT CAREFULLY BEFORE USING THE
SOFTWARE CONTAINED IN THIS EQUIPMENT.

BY USING THE EQUIPMENT THAT CONTAINS THIS SOFTWARE, YOU ARE CONSENTING TO BE
BOUND BY THIS AGREEMENT. IF YOU DO NOT AGREE TO ALL OF THE TERMS OF THIS
AGREEMENT, PROMPTLY RETURN THE EQUIPMENT AND DO NOT USE THE SOFTWARE OR ALLOW
OTHERS TO USE OR COPY THE SOFTWARE.

SINGLE USER LICENSE. Subject to the terms and conditions of this Agreement,
Brocade Communications Systems, Inc. ("Brocade") and its suppliers grant to
Customer ("Customer") a personal, non-transferable, nonexclusive license to use
the specific Brocade Software program modules or features which have been
enabled by license keys supplied by Brocade or its authorized distributors and
for which Customer has paid any applicable license fees (collectively, the
"Software"), in object code form only: (i) solely as embedded in Brocade
equipment owned or leased by Customer; and (ii) for key-enabled Software, solely
on the single central processing unit corresponding to the license key(s)
supplied by Brocade or its authorized distributors and to the license fees paid
by Customer.

LIMITATIONS. Except as otherwise expressly provided under this Agreement,
Customer shall have no right, and Customer specifically agrees not to:

(i)      make error corrections to or otherwise modify, edit or adapt the
         Software or create Derivative Works based upon the Software;

(ii)     except as set forth herein, copy the Software, in whole or in part;

(iii)    decompile, reverse engineer, translate, disassemble or otherwise reduce
         the Software to human-readable form;

(iv)     remove the Software from the equipment in which it is embedded; or

(v)      permit third parties to do any of the foregoing.

Only to the extent required by law, if any, Brocade shall provide Customer with
the interface information needed to achieve interoperability between the
Software and another independently created program, upon Customer's request and
upon payment of Brocade's applicable fee. Customer shall observe strict
obligations of confidentiality with respect to such information, using
commercially reasonable efforts and means consistent with high industry
standards.

UPGRADES AND ADDITIONAL COPIES. For purposes of this Agreement, "Software" shall
include (and the terms and conditions of this Agreement shall apply to) any
upgrades, updates, bug fixes or modified versions (collectively, "Upgrades") or
backup copies of the Software licensed or provided to Customer by Brocade or its
authorized distributor; provided that Customer has paid the applicable license
fees and holds the corresponding license keys for such copies or Upgrades.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, CUSTOMER HAS NO LICENSE
OR RIGHT TO USE ANY SUCH ADDITIONAL COPIES OR UPGRADES

                                       29
<PAGE>   30
UNLESS (1) CUSTOMER, AT THE TIME OF ACQUIRING SUCH COPY OR UPGRADE, ALREADY
HOLDS A VALID LICENSE AND THE CORRESPONDING LICENSE KEYS TO THE ORIGINAL
SOFTWARE; (2) SUCH ADDITIONAL COPIES OR UPGRADES ARE USED ONLY ON THE BROCADE
EQUIPMENT FOR WHICH THE ORIGINAL SOFTWARE IS LICENSED; AND (3) CUSTOMER IS THE
ORIGINAL END USER PURCHASER OR LESSEE OF SUCH BROCADE EQUIPMENT. Except as
explicitly provided for in the Limited Warranty section below, Brocade reserves
the right to charge additional fees for such additional copies and Upgrades.

NOTICES OF PROPRIETARY RIGHTS. Customer may make such backup copies of the
Software as may be necessary for Customer's lawful use, provided Customer
affixes to such copies all trademark, copyright, patent, and notices of other
proprietary rights on any such copies, in whatever form, of the Software in the
same form and manner that such notices appear in the Software. Except as
expressly authorized in this Agreement, Customer shall not make any copies or
duplicates of any Software without the prior written permission of Brocade.

PROTECTION OF INFORMATION. Customer agrees that aspects of the Software and
associated documentation, including the specific design and structure of
individual programs, constitute the trade secrets and/or copyrighted material of
Brocade and its Customer shall not disclose, provide, or otherwise make
available such trade secrets or copyrighted material in any form to any third
party without the prior written consent of Brocade. Customer shall implement
reasonable security measures to protect such trade secrets and copyrighted
material. Title to Software and all related documentation shall remain solely
with Brocade.

LIMITED WARRANTY. Brocade warrants that the Software will substantially conform
to its published specifications for a period of ninety (90) days from the later
of receipt of the equipment containing the Software or receipt of access to the
Software. This limited warranty extends only to Customer as the original
licensee. Customer's sole and exclusive remedy and the entire liability of
Brocade and its suppliers under this limited warranty will be, at Brocade or its
service center's option, repair, replacement, or refund of the Software if
reported (or, upon request, returned) to Brocade or its designee within the
stated ninety (90) day period. Except as expressly granted in this Agreement,
the Software is provided AS IS. Brocade does not warrant that the Software is
error free or that Customer will be able to operate the Software without
problems or interruptions. Brocade reserves the right to charge additional fees
for repairs or replacements performed outside of the ninety (90) day limited
warranty period. This warranty does not apply if the Software or the Brocade
equipment in which the Software is embedded (a) is licensed for beta,
evaluation, testing or demonstration purposes for which Brocade does not receive
a license fee, (b) has been altered, except by Brocade, (c) has not been
installed, operated, repaired, or maintained in accordance with instructions
supplied by Brocade, (d) has been subjected to abnormal physical or electrical
stress, misuse, negligence, or accident, or (e) is used in ultra-hazardous
activities.

DISCLAIMER. EXCEPT AS SPECIFIED IN THIS WARRANTY, ALL EXPRESS OR IMPLIED
CONDITIONS, REPRESENTATIONS, AND WARRANTIES INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OR CONDITION OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, SATISFACTORY QUALITY OR ARISING
FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE, ARE HEREBY EXCLUDED TO THE
MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW.

LIMITATION OF LIABILITY. TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, IN NO
EVENT WILL BROCADE OR ITS SUPPLIERS BE LIABLE FOR ANY LOST REVENUE, PROFIT, OR
DATA, OR FOR SPECIAL, INDIRECT, EXEMPLARY, EXTRAORDINARY, CONSEQUENTIAL,
INCIDENTAL, OR PUNITIVE DAMAGES HOWEVER CAUSED, AND REGARDLESS OF THE THEORY OF
LIABILITY,

                                       30
<PAGE>   31
ARISING OUT OF THE USE OF OR INABILITY TO USE THE SOFTWARE EVEN IF BROCADE OR
ITS SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT
SHALL BROCADE'S OR ITS SUPPLIERS' LIABILITY TO CUSTOMER, WHETHER IN CONTRACT,
TORT (INCLUDING NEGLIGENCE), OR OTHERWISE, EXCEED THE PRICE PAID BY CUSTOMER.
THE FOREGOING LIMITATIONS SHALL APPLY EVEN IF THE ABOVE-STATED WARRANTY FAILS OF
ITS ESSENTIAL PURPOSE. BECAUSE SOME STATES OR JURISDICTIONS DO NOT ALLOW
LIMITATION OR EXCLUSION OF CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE
LIMITATION MAY NOT APPLY.

ASSIGNMENT. This Agreement will bind and inure to the benefit of each party's
successors and permitted assigns. Customer may not transfer or assign this
Agreement, in whole or in part, without Brocade's written consent, even if
Customer sells, rents, distributes or leases the equipment for which the
Software is licensed or on which the Software is loaded.

TERM AND TERMINATION. This Agreement is effective until terminated. Customer's
license rights under this Agreement will terminate immediately without notice
from Brocade if Customer fails to comply with any provision of this Agreement.
Upon termination, Customer must destroy all copies of Software and the
corresponding license keys in its possession or control.

CUSTOMER RECORDS. Customer grants to Brocade and its independent accountants the
right to examine Customer's books, records and accounts during Customer's normal
business hours to verify Customer's compliance with this Agreement. In the event
such audit discloses non-compliance with this Agreement, Customer shall promptly
pay to Brocade the appropriate license fees.

EXPORT. Software, including technical data, is subject to U.S. export control
laws, including the U.S. Export Administration Act and its associated
regulations, and may be subject to export or import regulations in other
countries. Customer agrees to comply strictly with all such regulations and
acknowledges that it has the responsibility to obtain licenses to export,
re-export, or import Software.

RESTRICTED RIGHTS. The Software is "commercial computer software" as defined in
the applicable provisions of the Federal Acquisition Regulation (the "FAR") and
supplements thereto, including the Department of Defense ("DoD") FAR Supplements
(the "DFARS"). The parties acknowledge that the Licensed Software was developed
entirely at private expense and that no part of the Licensed Software was first
produced in the performance of a Government contract. If Customer is a U.S.
Government agency, in accordance with FAR 12.212 and its successors or DFARS
227.7202 and its successors, as applicable, the Software is licensed to the
applicable U.S. Government agency subject to the terms of this Agreement.

GENERAL. This Agreement shall be governed by and construed in accordance with
the laws of the State of California, United States of America, as if performed
wholly within the state and without giving effect to the principles of choice or
conflicts of law. If any portion hereof is found to be void or unenforceable,
the remaining provisions of this Agreement shall remain in full force and
effect. This Agreement constitutes the entire agreement between the parties with
respect to the use of the Software.

                                       31
<PAGE>   32
                                    EXHIBIT E

                                 MCDATA PRODUCTS

All releases and subsets of:

                                       [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       32
<PAGE>   33
                                    EXHIBIT F

                     SETTLEMENT AGREEMENT AND MUTUAL RELEASE

McDATA CORPORATION (McDATA) and BROCADE COMMUNICATIONS SYSTEMS, INC.,
("Brocade") enter into this Mutual Release as of April 14, 1998.

1.       The intent of this settlement agreement and mutual release is to
         release McDATA and Brocade from any and all claims which have been
         brought or could have been brought by either party in two lawsuits
         referenced below.

2.       McDATA has filed an action in the United States District Court for the
         District of Colorado on March 4, 1998, entitled McDATA Corporation v.
         Brocade Communications Systems, Inc., et al., Civil Action No. 98-S-535
         (the "Colorado Action"). Brocade has filed an action in the United
         States District Court for the Northern District of California on March
         20, 1998, entitled Brocade Communications Systems, Inc. v. McDATA
         Corporation, Civil Action No. C98-20259 RWM (the "California Action").
         Both parties have agreed to dismiss with prejudice the Colorado Action
         and the California Action. Each party will bear its own costs for the
         Colorado Action and the California Action, including all attorneys'
         fees.

3.       McDATA, for itself and its legal successors and assigns, agents,
         employees, representatives, officers, directors, parent, subsidiary or
         affiliated corporations, and each of them, hereby releases Brocade and
         its legal successors and assigns, agents, employees, representatives,
         officers, directors, parent, subsidiary, or affiliated corporations,
         and each of them, from and against any and all claims, actions, causes
         of action, liabilities and demands, whether known or unknown, that
         McDATA brought or could have brought in the Colorado Action or the
         California Action (collectively, the "McDATA Claims"). McDATA
         acknowledges that both known and unknown McDATA Claims are covered by
         this Settlement Agreement and Mutual Release, and waives any rights or
         benefits that may arise under California Civil Code section 1542, which
         provides as follows:

                  A general release does not extend to claims which the creditor
                  does not know or suspect to exist in his favor at the time of
                  executing the release, which if known by him must have
                  materially affected his settlement with the debtor.

4.       Brocade, for itself and its legal successors and assigns, agents,
         employees, representatives, officers, directors, parent, subsidiary or
         affiliated corporations, and each of them, hereby releases McDATA and
         its legal successors and assigns, agents, employees, representatives,
         officers, directors, parent, subsidiary, or affiliated corporations,
         and each of them, from and against any and all claims, actions, causes
         of action, liabilities and demands, whether known or unknown, that
         Brocade brought or could have brought in the Colorado Action or the
         California Action (collectively, the "Brocade Claims"). Brocade
         acknowledges that both known and unknown Brocade Claims are covered by
         this Settlement Agreement and Mutual Release, and waives any rights or
         benefits that may arise under California Civil Code section 1542, which
         provides as follows:

                  A general release does not extend to claims which the creditor
                  does not know or suspect to exist in his favor at the time of
                  executing the release, which if known by him must have
                  materially affected his settlement with the debtor.

                                       33
<PAGE>   34
5.       Excluded from the operation of this Mutual Release are any continuing
         obligations of the parties in connection with the March 26, 1998
         Agreement, the Technology License and Development Agreement dated as of
         November 1, 1996, and the Purchase and License Agreement dated as of
         May 31, 1996, and any claims arising out of such continuing
         obligations.

6.       This agreement is executed in counterparts.

McDATA Corporation                      Brocade Communications
                                        Systems, Inc.

By: /s/ John F. McDonnell               By: /s/    /s/
    -------------------------------         -----------------------------------

                                       34
<PAGE>   35
                                    EXHIBIT G

                               ASIC SPECIFICATIONS

[*]
McDATA has this copy

[*]
McDATA has this copy

[*] and BROCADE will Fed Ex the [*] within [*] of the approval of the agreement.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       35
<PAGE>   36
                                    EXHIBIT H
                                 SUPPORT LETTER

                      BROCADE COMMUNICATIONS SYSTEMS, INC.
                             1901 GUADALUPE PARKWAY
                               SAN JOSE, CA 95131
                                FAX 408-487-8091
                                 APRIL __, 1999

                                 SUPPORT LETTER

McDATA Corporation                          Hewlett-Packard Company
310 Interlocken Parkway                     8000 Foothills Blvd.
Broomfield, CO 80021                        Roseville, CA 95747

Dear                 and                 :

This letter is a follow-up to our recent communications and sets forth the
general terms under which BROCADE will supply products and support to HP in
connection with HP's use of a certain McDATA switch that incorporates unmodified
BROCADE hardware and software system elements and components, or modifications
approved in writing by BROCADE as defined in Exhibit A (the "ES 2500 Switch").
BROCADE and McDATA will each enter into separate written agreements with HP with
respect to the products and services it will supply based on the parties'
understandings reflected below. This arrangement, of course, is being entered
into by BROCADE voluntarily and without any obligation to do so, solely as an
accommodation to HP and McDATA, and there is no obligation on the part of any of
us to enter into similar arrangements concerning other products or other
customers.

1.       Software License: BROCADE will license specified software applications
         to HP for use in the ES 2500 Switch, in accordance with a mutually
         agreed upon application software license agreement.

2.       BROCADE Support: BROCADE will provide technical support to HP
         consistent with the attached escalation procedures, Schedule 1, to
         assist HP and McDATA in performing fault isolation and analysis of the
         ES 2500 Switch, and will use reasonable efforts to work with HP and
         McDATA to correct or provide work-arounds for any errors attributable
         to BROCADE. Such support will include BROCADE's using reasonable
         efforts to assist HP and McDATA in supporting the approved
         modifications listed in Schedule 2. BROCADE support will require both
         HP and McDATA to provide BROCADE with the necessary system elements to
         replicate identical configurations in the field. However, BROCADE will
         in no event be held legally or financially liable for any failure to
         identify, isolate, correct or provide work-arounds to any problems or
         deficiencies with the ES 2500 Switch or any modified BROCADE hardware
         or software, regardless of the reasons or circumstances.

3.       McDATA Support: McDATA will make available to BROCADE such information
         and equipment (including one or more ES 2500 Switches) at no charge to
         BROCADE as are reasonably necessary for BROCADE to provide the support
         to HP contemplated under the parties' arrangement in an efficient
         manner. In doing so, McDATA will not disclose to BROCADE any
         confidential information, and BROCADE will have no obligation of
         confidentiality with respect to the information provided. If BROCADE
         requires access to McDATA confidential information, the request must be
         made in writing and

                                       36
<PAGE>   37
         be submitted by a Vice President of BROCADE. The McDATA confidential
         information will then be supplied only to a Vice President at BROCADE.
         McDATA confidential information will be protected under the terms of
         the Non-Disclosure Agreement dated February 23, 1999.

This letter serves as Exhibit D of the BROCADE-HP Software License Agreement and
also as Exhibit H of the BROCADE-McDATA OEM and License Agreement.

Please indicate your acceptance of the above terms by signing below and
returning the signed letter to me at your earliest convenience. Please do not
hesitate to call me if you have any questions or concerns.

Sincerely,

Greg Reyes

Agreed to and Accepted:                  Agreed to and Accepted:
McDATA Corporation                       Hewlett-Packard Company

By:       /s/ John F. McDonnell          By:        /s/ /s/
      --------------------------------         --------------------------------
Name:       John F. McDonnell            Name:
      --------------------------------         --------------------------------
Date:          04/27/99                  Date:
      --------------------------------         --------------------------------

                                       37
<PAGE>   38
                                   SCHEDULE 1

                                       TO
                                 SUPPORT LETTER

                  ESCALATION, SERVICE AND SUPPORT REQUIREMENTS

1.0      SERVICE AND SUPPORT REQUIREMENT

         HP will be responsible for working directly with the End Users. McDATA
         and BROCADE support will work directly with HP to support HP personnel,
         as necessary. HP represents and warrants that it is experienced in,
         capable of, and staffed to provide, Level 1 and Level 2 support (as
         defined below). BROCADE offers regular training programs to assist in
         attaining this level of expertise on BROCADE Products.

         Subject to the terms of the "Support Letter" and the Non-Disclosure
         Agreement dated February 23, 1999, BROCADE and/or McDATA, as
         applicable, will provide Level 3 support (as defined below).
         Specifically, McDATA will be the initial contact for problem isolation
         and escalation, service and support issues from HP, and will be
         specifically responsible for hardware support. BROCADE will be the
         contact for escalation, service and support for BROCADE software issues
         following problem isolation by McDATA or HP.

2.0      SUPPORT LEVEL DEFINITIONS

2.1      LEVEL 1 SUPPORT

         Level 1 support is the first line, direct End User contact, most likely
         via a telephone call handling group provided by HP.

         Level One support includes:

         -        On site service and FRU replacement

         -        First contact, direct McDATA/End User interaction (rephrased,
                  please approve)

         -        Information collection and analysis

         -        Identification of whether the problem is known and has a known
                  solution

         -        Troubleshooting and problem reproduction

         -        Problem report administration and tracking

         The parties agree that End Users shall not have the right to contact
         BROCADE directly for questions related to the Products.

2.2      LEVEL 2 SUPPORT

         Level 2 support is "technical support" provided by HP personnel. Level
         2 support is typically provided by experts in the applicable Product
         and who serve as the escalation point for Level 1. Level 2 support
         personnel are expected to resolve all known problems, installation and
         configuration issues, assist in firmware or driver updates at the End
         User site, search BROCADE and/or McDATA posted Technical Notes and
         other technical information supplied that will assist in providing
         problem resolutions. All pertinent data shall be entered in HP's
         problem tracking database.

                                       38
<PAGE>   39
         Should the Level 2 analyst be unable to resolve a problem, either
         because of lack of expertise, exhausted troubleshooting knowledge, or
         expiration of the allotted Level 2 resolution time, the Level 2 analyst
         may escalate the problem to Level 3 for resolution. Level 2 personnel
         of HP will continue to diligently work with Level 3 personnel of
         BROCADE and/or McDATA to accomplish resolution. Level 2 personnel of HP
         will communicate all resolutions back to the End Users.

         Escalations should be presented to BROCADE and/or McDATA engineers in
         the form of a problem tracking data base record with all pertinent
         configuration detail and failure information or symptoms documented in
         detail.

         In an effort to maintain an efficient support organization and crisp
         exchange of information, HP and McDATA will limit the number of support
         personnel (Level 2) authorized to contact BROCADE (Level 3) to 5.

2.3      LEVEL 3 SUPPORT

         Level 3 support for covered software is provided by BROCADE System
         Engineers (SE) and/or Technical Support Engineers (TSE). Level 3 is the
         first point of contact for technical issues between BROCADE and HP or
         McDATA. Once a problem is accepted by BROCADE in its sole discretion
         for escalation to Level 3, BROCADE will utilize commercially reasonable
         resources to resolve such problem within the time frames set forth
         below.

         Prior to escalating to Level 3, it is expected that HP and/or McDATA
         shall provide the following information and documentation:

         -        Any error information from the device connected to the switch
                  and from the switch.

         -        All names and revisions of hardware equipment.

         -        All firmware revisions of the drivers.

         -        Any log files from the devices connected to the switch.

         -        Any trace file from the devices connected to the switch.

         -        The configuration information of the equipment being used.

         -        Any troubleshooting steps already performed.

         Assigned Level 3 support personnel (SE and/or TSE) can be contacted via
         direct dial, email to an established "support" alias, web site
         initiated input, and by calling BROCADE's 1-888-ATFIBRE support number.
         Direct access to BROCADE support personnel will be possible during
         normal BROCADE business hours (8 AM to 5 PM PST, M-F). Emergency
         situations for Severity 1problems are handled via 7 X 24 pager coverage
         at 1-888-ATFIBRE (1-888-283-4273)

3.0      BROCADE SEVERITY DEFINITIONS AND SUPPORT GOALS

         The goal for initial response time to all telephone support requests is
         [*] or less during normal BROCADE working hours. For after hours
         telephone requests, the goal is [*] or less. The targeted response time
         for requests submitted by other means, such as email, or fax, is [*].

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       39
<PAGE>   40
<TABLE>
<CAPTION>
Severity      Definition                                     Service Objective                                 Resolution Time
<S>           <C>                                            <C>                                               <C>
1             BROCADE Product is completely non-             Respond to initial request within 30              Less than 5 days,
              functional, or deemed a safety hazard,         minutes during normal BROCADE                     using commercially
              situation has high impact on                   business hours, and 1 hour for non-               reasonable efforts.
              development of delivery efforts.               business hours.  Resources applied until
              Installation problems.                         a solution or acceptable work-around is
                                                             found

2             BROCADE Product is functionally                Respond to initial request within 1 (one)         Less than 15 days
              impaired, has substantially degraded           hour during normal BROCADE business
              performance but is not completely              hours.  Resources applied continuously,
              dysfunctional.  There are no available         during business hours, until a solution or
              work-arounds.  Situation has medium            work-around is found.
              impact on customer activity.

3             BROCADE Product or advertised                  Resources applied on a priority basis,            Next maintenance
              functionality may be slightly impaired         until a solution or a work-around is              release.
              but is operational, has low to no impact       found.
              on customer activity, and there are
              work-arounds available.

4             Generic questions, and enhancement             Answer generic questions or provide               Commercially
              requests.                                      path to answers within reasonable time            reasonable efforts
                                                             frames.  The BROCADE web site will be             for generic
                                                             the prime repository for this type of             questions.
                                                             information.  Enhancement requests will           Enhancement
                                                             be reviewed and implemented in the next           requests are
                                                             major release, where feasible, or to meet         processed on a case
                                                             specific commitments made.                        by case basis.
</TABLE>

                                       40
<PAGE>   41
                                   SCHEDULE 2
                                       TO
                                 SUPPORT LETTER

           APPROVED MODIFICATIONS FOR THE HP OEM FIBRE CHANNEL SWITCH

1.   External Loop Back Test

2.   [*]

3.   Remove BROCADE name and BROCADE unique references from SilkWorm

4.   [*]

5.   [*]

6.   Generic SNMP modifications

7.   OEM Logo Set command [*]

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       41
<PAGE>   42
                                    EXHIBIT I

                               MCDATA CORPORATION
               MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
                             (ORGANIZATIONAL LEVEL)

THIS AGREEMENT, by and between McDATA Corporation, hereinafter referred to as
"McDATA", having its principal place of business at 310 Interlocken Parkway,
Broomfield, Colorado 80021-3484 and,

                  Brocade Communication
                  457 E. Evelyn
                  Suite E
                  Sunnyvale, CA  94086

hereinafter referred to as the "Organization", establishes certain terms and
conditions applicable to the parties relative to the protection and
non-disclosure of the confidential information and materials of the parties.

                                    RECITALS

WHEREAS, each party hereto desires to protect its trade secrets, confidential
information and patentable ideas from unnecessary risk of unauthorized
disclosure while at the same time conducting business with the other party, and
the other party is willing to abide by the following covenants,

NOW, THEREFORE, the parties covenant and agree as follows:

1        DEFINITION AND AGREEMENT

1.1      Either party hereto may disclose to the other party (the receiving
         party) certain of its confidential information as defined at Section
         1.2 below. All such confidential information shall remain the property
         of the disclosing party.

1.2      In order to come under the terms of this Agreement, such confidential
         information must either be: (a) disclosed in tangible form clearly
         marked as "confidential", "restricted", "proprietary", or with similar
         wording, or (b) if orally disclosed, as may happen during meetings of
         the parties, within seventy-two hours of such disclosure, disclosing
         party shall deliver to receiving party a letter specifically
         identifying any such confidential information so disclosed and
         indicating that such information is to be treated as confidential under
         this Agreement. Neither party will, without the prior written consent
         of the other, receive or take possession of any books, drawings,
         blueprints, specifications, software (in any media), customer lists,
         data formulations, compositions, reports, letters, memoranda, notes or
         other writings or documents or copies thereof which contain or relate
         to any of the confidential information.

1.3      The receiving party hereby agrees to maintain such confidential
         information in confidence, to protect same with the same degree of care
         as that with which it uses to preserve and safeguard its own
         information of a similar nature and to disclose same only to officers,
         employees and agents of the receiving party who reasonably require same
         for the purposes hereof and who execute a confidentiality and
         non-disclosure agreement prior to receipt of same.

                                       42
<PAGE>   43
1.4      Each of the parties represents that it has in force a similar policy
         respecting the protection of its information as described in 1.2
         through 1.3, or will develop and implement a policy substantially
         equivalent to that as contained herein, including the execution of a
         confidentiality and non-disclosure agreement by each officer, employee
         and agent of the receiving party prior to divulging confidential
         information as described in 1.2 above.

1.5      The restrictions and obligations of the parties shall expire five (5)
         years from the date of termination of the party's contacts with the
         other party, and shall not apply to information which:

1.5.1    becomes a matter of general public knowledge; or

1.5.2    is required to be disclosed by the law of any government which has
         jurisdiction over such information; or

1.5.3    was previously known at the time of its receipt from the disclosing
         party without similar restrictions; or

1.5.4    is released by written mutual agreement of the parties; or

1.5.5    is provided by the owner of such information to third parties without
         similar restrictions on disclosure; or

1.5.6    can be documented, by adequate written records, to have been
         independently developed by the receiving party without reference to or
         use of any confidential information.

1.6      Use of such confidential information by the receiving party is limited
         to the use as is appropriate in exploring a potential business
         relationship and the furnishing of such confidential information under
         this Agreement shall not constitute any grant, option or license to the
         receiving party under any patent, copyright or other rights now or
         hereafter held by the party disclosing said confidential information.

1.7      In the event of a breach of this Agreement the parties expressly agree
         that the aggrieved party shall be entitled to (in addition to all other
         remedies available to it under this Agreement, by statute, or
         otherwise) injunctive and/or other equitable relief to secure the
         enforcement of this Agreement, or any part thereof.

2        CHANGES TO AGREEMENT

No provision of this Agreement shall be deemed waived, amended or modified by
either party unless such waiver, amendment or modification is in writing, signed
by the parties. No waiver in any one instance or with respect to any particular
entity shall be deemed to be a waiver in any other instance or with respect to
any other entity.

3        CONTINUING OBLIGATIONS

This Agreement shall be binding upon and inure to the benefit of the parties
hereto, their permitted successors and assigns.

4        MAINTENANCE OF AGREEMENT

If one or more provisions of this Agreement should be invalid, illegal or
unenforceable in any respect, the remaining provisions contained herein shall
not, in any way, be affected or impaired thereby.

                                       43
<PAGE>   44
5        LEGAL AUTHORITY

This Agreement shall be construed under and governed by the laws of the State of
Colorado as though this Agreement were executed in, by parties who were all
residents of, and were intended to be performed fully in, the State of Colorado.

6        ATTORNEYS' FEES

If any dispute arises between the parties with respect to the matters covered by
this Agreement which leads to a proceeding to resolve such dispute, the
prevailing party in such proceeding shall be entitled to receive its reasonable
attorneys' fees and out-of-pocket costs incurred in connection with such
proceeding, in addition to any other relief it may be awarded.

7        RETURN OF CONFIDENTIAL INFORMATION

Upon request, a receiving party shall destroy or return all confidential
information to the disclosing party.

8        EXPORT

The Parties agree that they will not in any form export, reexport, resell, ship
or divert or cause to be exported, reexported, resold, shipped or diverted,
directly or indirectly, any product or technical data (as defined by the United
States Export Administration Regulations) or Software furnished hereunder or the
direct product of such technical data or Software which, in so doing, would
violate any United States Export Laws or Regulations.

If such technical data of Software or the direct product thereof is covered by
General License GTDR (Technical Data Under Restriction) then such technical data
or Software or the direct product thereof will not be sold or otherwise made
available, directly or indirectly, to or for use by country groups, Q, S, W, Y,
Z, Afghanistan, or the People's Republic of China or such other countries as
specified by the current Export Administration Regulations.

                                       44
<PAGE>   45
By execution hereof, the parties hereby certify that they have read, understand
and are DULY AUTHORIZED TO EXECUTE THIS AGREEMENT.

Executed and submitted to McDATA  Accepted and effective as
for acceptance:                   of:
                                     -----------------------------------

Brocade Communication             McDATA Corporation
        (Organization)

By:   /s/    Seth D. Neiman       By:   /s/     Wo  Overstreet
     ---------------------------     -----------------------------------
         (signature)                                (signature)
Name:    Seth D. Neiman           Name:    Wo Overstreet
Title:   CEO                      Title:   Vice President of Marketing and Sales

                                       45
<PAGE>   46
                                    EXHIBIT J

                        MANUFACTURING [*] TEST PROCESSES

1.       [*] TEST. BROCADE will perform an [*] test on each subassembly ([*])
         prior to shipping that subassembly to McDATA.

2.       [*] TESTS. BROCADE perform [*] tests on each subassembly ([*]). All
         such [*] tests shall have optical ports cross-connected during
         diagnostics (port 0 to 3; port 2 to 4, etc.). Additional loops of [*]
         and [*] shall be done at [*] test: [*]

3.       [*] TESTS. BROCADE agrees to work diligently to eliminate failures on
         the subassemblies. If the failures persist for [*] days after the date
         of execution of this Agreement, and if McDATA yields can be
         substantially improved by performing a [*] test, then BROCADE shall
         perform the following [*] test on the affected subassemblies:

                  Additional [*] testing shall be set up to run the [*] in a
         test environment similar to the [*]. [*] test suites shall be agreed
         upon by both parties within [*] days of execution of this Agreement.
         All ports will be [*] during such tests. The duration of such tests
         shall be [*].

4.       TEST CORRELATION FOR FAILED SUBASSEMBLIES.

         a.       For the [*], BROCADE will provide to McDATA a test fixture for
                  performing validation tests on failed [*] and [*]. McDATA
                  shall run a validation test on each failed [*] and [*] on the
                  BROCADE test fixture, using a test suite agreed upon by both
                  parties. If McDATA is unable to validate the failure, McDATA
                  shall put the [*] or [*] back into its stock. If McDATA is
                  able to validate the failure, McDATA will return the validated
                  failed [*] or [*] to BROCADE for repair or replacement.

         b.       McDATA shall return to BROCADE all failed [*]. BROCADE shall
                  run such failed [*] through BROCADE's standard validation
                  test. If such [*] is determined to be No Trouble Found (NTF),
                  then BROCADE shall retest such [*] in McDATA equipment, using
                  McDATA's [*]. If the failure is validated in McDATA equipment,
                  BROCADE shall repair or replace such [*].

         c.       Both parties shall review the test correlation data and
                  process every [*] days to determine if the then-current test
                  correlation process shall be continued or changed.

         d.       Such test correlation process shall apply to [*] and [*]
                  failures.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.

                                       46
<PAGE>   47
1

                                     Brocade
                             Communications Systems
                              Silkworm Switch MTBF
--------------------------------------------------------------------------------
                     DEVICE RELIABILITY PREDICTION WORKSHEET

RCM NAME: SILKWORM SYSTEM
RCM P/N: BRC[*]                                                     DATE: 3/4/98
RCM REV: 2.1
RCM MFG: BROCADE COMMUNICATIONS SYSTEMS, INC.

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
BROCADE            MFG.        MFG. PART #      PART        QTY  FAILURE RATE SOURCE      FAILURE  QUALITY   1ST YR.  TOT. DEV.
PART #             NAME                      DESCRIPTION                                   RATE    FACTOR    MULTIP   FAIL. RATE
------------------------------------------------------------------------------------------------------------------------------------
<S>           <C>         <C>            <C>             <C>   <C>                      <C>      <C>       <C>      <C>

BRC[*]              MSL                          [*]          1   SEE DEVICE RELIABILITY     [*]      [*]       [*]      [*]
                                                                  PROD. WORKSHEET FOR [*]

BRC[*]              MSL                          [*]          1   SEE DEVICE RELIABILITY     [*]      [*]       [*]      [*]
                                                                  PROD. WORKSHEET FOR [*]

BRC[*]              MSL                          [*]          1   SEE DEVICE RELIABILITY     [*]      [*]       [*]      [*]
                                                                  PROD. WORKSHEET FOR [*]

BRC[*]              MSL                          [*]          1   SEE DEVICE RELIABILITY     [*]      [*]       [*]      [*]
                                                                  PROD. WRKSHT. FOR [*]

BRC[*]              MSL                          [*]          0   SEE DEVICE RELIABILITY     [*]      [*]       [*]      [*]
                                                                  PROD. WORKSHEET FOR [*]

                    MSL                          [*]          1   SEE DEVICE RELIABILITY     [*]      [*]       [*]      [*]
                                                                  PROD. WORKSHEET FOR [*]

BRC[*]              SAMTEC      [*]              [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]              SAMTEC      [*]              [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]              SUNON       [*]              [*]          2            [*]               [*]      [*]       [*]      [*]

BRC[*]              PRECISE                      [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]              PRECISE                      [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]              PRECISE                      [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]              ACCURA                       [*]          1            [*]               [*]      [*]       [*]      [*]

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

</TABLE>

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
<PAGE>   48

2

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
BROCADE            MFG.       MFG. PART #       PART       QTY   FAILURE RATE SOURCE      FAILURE  QUALITY   1ST YR.  TOT. DEV.
PART #             NAME                      DESCRIPTION                                   RATE    FACTOR    MULTIP   FAIL. RATE
------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>         <C>            <C>           <C>           <C>               <C>      <C>       <C>      <C>

BRC[*]                                                      1            [*]               [*]      [*]       [*]      [*]

BRC[*]            DIALIGHT      [*]            [*]         18            [*]               [*]      [*]       [*]      [*]

BRC[*]            BIVAR         [*]            [*]          8            [*]               [*]      [*]       [*]      [*]

BRC[*]            BERG          [*]            [*]          2            [*]               [*]      [*]       [*]      [*]

BRC[*]            BERG          [*]            [*]          4            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]          4            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]          3            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]         24            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]          8            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]         12            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]         18            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]          2            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]         22            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER       [*]            [*]          5            [*]               [*]      [*]       [*]      [*]

BRC[*]            OLANDER                      [*]          4            [*]               [*]      [*]       [*]      [*]

BRC[*]            IDI           [*]            [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]            IDI           [*]            [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]            BORG          [*]            [*]          1            [*]               [*]      [*]       [*]      [*]

BRC[*]            BORG          [*]            [*]          2            [*]               [*]      [*]       [*]      [*]

                                                                                                            SUBTOTAL:   [*]
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.<PAGE>   1
                                                                    EX: No. 10.1

                                  BIOGEN, INC.
                        1982 INCENTIVE STOCK OPTION PLAN
                       (AS AMENDED THROUGH JUNE 15, 2000)

I.   DEFINITIONS AND PURPOSE

     A.   Definitions: References in this document to the "Company" are to
Biogen, Inc., a Massachusetts corporation; reference to the "Plan" are to the
Biogen, Inc. 1982 Incentive Stock Option Plan; references to the "Code" are to
the United States Internal Revenue Code of 1986, as amended. Unless otherwise
specified or unless the context otherwise requires, the following terms, as used
in the Plan, have the following meanings:

     1. "Affiliate" means a corporation which, for purposes of Section 422 of
the Code, is a parent or subsidiary of the Company, direct or indirect.

     2. "Disability" means permanent and total disability as defined in Section
105(d)(4) of the Code.

     3. "Key Employee" means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as an officer of
the Company or of an Affiliate), designated by the Committee to be eligible to
be granted one or more Options under the Plan.

     4. "Option" means a right or option granted under the Plan.

     5. "Participant" means a Key Employee to whom one or more Options are
granted under the Plan. As used herein, "Participant" shall include
"Participant's Survivors" where the context requires.

     6. "Participant's Survivors" means a deceased Participant's legal
representatives and/or any person or persons who acquired the Participant's
rights to an Option by will or by the laws of descent and distribution.

     7. "Shares" mean those shares of the Common Stock, $.01 par value, of the
Company as to which Options have been or may be granted under the Plan.

     B.   Purposes Of The Plan: The Plan is intended to encourage ownership of
the Shares of the Company by Key Employees in order to attract such Key
Employees, to induce such Key Employees to remain in the employ of the Company
or of an Affiliate and to provide additional incentive for such Key Employees to
promote the success of the Company or its Affiliates. It is further intended
that Options issued pursuant to the Plan shall be eligible to constitute
"incentive stock options" within the meaning of Section 422 of the Code.

                                       1
<PAGE>   2

II.  SHARES SUBJECT TO THE PLAN

     The aggregate number of Shares as to which Options may be granted from time
to time shall be 44,208,000; provided, however that such aggregate number shall
be reduced by the number of shares which have been sold under, or may be sold
pursuant to options granted from time to time under the Company's 1985
Non-Qualified Stock Option Plan (the "1985 Plan"), to the same extent as if such
sales had been made or options granted pursuant to this Plan.

     If any option granted under this Plan or the 1985 Plan ceases to be
"outstanding", in whole or in part, other than by reason of the exercise of such
option, the shares which were subject to such option shall be available for the
granting of other Options. Any option shall be treated as "outstanding" until
such option is exercised in full, terminates under the provisions of this Plan
or the 1985 Plan, as the case may be, or expires by reason of lapse of time.

     The aggregate number of Shares as to which Options may be granted shall be
subject to change only by means of an amendment of the Plan duly adopted by the
Company and approved by the Shareholders of the Company within one year before
or after the date of the adoption of any such amendment, subject to the
provisions of Article VII.

III. ADMINISTRATION OF THE PLAN

     The Plan shall be administered by the Stock and Option Plan Administration
Committee of the Company (the "Committee"). The membership of the Committee
shall be determined and shall be subject to change without cause and without
notice from time to time, by the Company.

     The Committee is authorized to interpret the provisions of the Plan or of
any Option and to make all rules and determinations necessary or advisable for
the administration of the Plan. It may from time to time determine which
employees of the Company or of any Affiliate shall be designated as Key
Employees and which of the Key Employees shall be granted Options and, subject
to the other provisions of the Plan, the number of Shares for which an Option or
Options shall be granted. Subject to the provisions of the Plan, Options may be
granted upon such terms and conditions as the Committee may prescribe; provided,
however, that such terms and conditions shall be prescribed in the context of
preserving, to the extent reasonably possible, the United States tax status of
the Options as incentive stock options.

     This Plan is intended to comply in all respects with Rule 16b-3 or its
successors promulgated under the Securities Exchange Act of 1934 ("1934 Act")
with respect to participants who are subject to Section 16 of the 1934 Act, and
any provision in this Plan with respect to such persons contrary to Rule 16b-3
shall be deemed null and void to the extent permissible by law and deemed
appropriate by the Committee.

                                       2
<PAGE>   3

IV.  ELIGIBILITY FOR PARTICIPATION

     Each Participant must be a Key Employee of the Company or of an Affiliate
at the time an Option is granted.

     The Committee may grant to one or more Key Employees one or more Options,
and shall designate the number of Shares to be optioned under each Option so
granted; provided, however, that no Options shall be granted after December 31,
2002, and provided further, that the fair market value (determined as of the
date the Options are granted) of the Shares as to which incentive stock options
granted on or after January 1, 1987 by the Company or its Affiliates to any
individual employee under the Plan and/or under any other incentive stock option
plans are exercisable for the first time in any one calendar year shall not
exceed $100,000.

     Notwithstanding any of the foregoing provisions, the Committee may
authorize the grant of an Option to a person not then in the employ of the
Company or of an Affiliate, conditioned upon such person becoming eligible to be
a Participant at or prior to the execution of the Option agreement evidencing
such Option.

     In no event shall any employee be granted in any calendar year options to
purchase or receive more than 2,400,000 shares of the Company's Common Stock
pursuant to this Plan.

V.   TERMS AND CONDITIONS

     Each Option shall be set forth in writing in an Option agreement, duly
executed on behalf of the Company and by the Participant to whom such Option is
granted. No Option shall be deemed to have been granted and no purported grant
of any Option shall be effective, until such Option shall have been approved by
the Committee. The Committee may provide that Options be granted subject to such
conditions as the Committee may deem appropriate, including without limitation,
subsequent approval by the shareholders of the Company of this Plan or any
amendments thereto. Each such Option agreement shall be subject to at least the
following terms and conditions:

     A.   Option Price: If, including for this purpose the Shares which are the
subject of Options previously granted and outstanding or proposed to be granted
hereunder, the optionee owns 10% or less of the total combined voting power of
all classes of share capital of the Company, the Option price (per share) of the
Shares covered by each Option granted hereunder shall be not less than the fair
market value (per share) of the Shares on the date of the grant of the Option;
provided, however, that in no event shall the Option price be less than the par
value per share of Common Stock. In all other cases, the Option price shall be
not less than 110% of the said fair market value. For purposes hereof, the fair
market value shall be the average between the high and low sale prices, as
reported in the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") for the date of the grant of the Option or, if none, for the
most recent trading date thirty (30) days or less prior to the date of the grant
of the Option

                                       3
<PAGE>   4

on which the Common Stock was traded. If the fair market value cannot be
determined under the preceding sentence, it shall be determined in good faith by
the Committee.

     B.   Number of Shares: Each Option shall state the number of Shares to
which it pertains.

     C.   Term of Option: Each Option shall terminate at such date as the
Committee, at the time it authorizes the grant of the Option, shall determine,
and shall be subject to earlier termination as herein provided, except that if
the option price is required under Paragraph A of this Article V to be at least
110% fair market value, each such Option shall terminate not more than five (5)
years from the date of the grant hereof; and provided that in no case may the
term of any Option exceed ten (10) years.

     D.   Date of Exercise: The Committee may prescribe the date or dates on
which the Option becomes exercisable, and may provide that the Option rights
accrue or become exercisable in installments over a period of months or years,
or upon the attainment of stated goals. The Committee may stipulate that any
Option which becomes exercisable shall be subject to cancellation or that Shares
purchased upon the exercise of such Option shall be subject to repurchase rights
in favor of the Company. In such event, the Committee shall determine the date
or dates, or event or events, upon which such cancellation or repurchase rights
shall become effective or shall lapse, as the case maybe.

     E.   Medium of Payment: The option price shall be payable upon the exercise
of the Option. It shall be payable in cash, or, if permitted by the Committee
and by Section 422 of the Code, in shares or other consideration.

     F.   Prior Options: By its terms, each Option granted prior to January 1,
1987 under the Plan to a Participant, shall not be exercisable while there
is"outstanding" any other incentive stock option (as defined in the predecessor
to Section 422 of the Code), which was granted before the grant of such Option,
to such Participant to purchase Shares in the Company or in an Affiliate or in a
predecessor of the Company or of an Affiliate.

     G.   Termination of Employment: A Participant who ceases (for any reason
other than death or disability or termination by the Participant's employer for
cause) to be an employee of the Company or of an Affiliate, may exercise any
Option granted to such Participant, to the extent that the right to purchase
Shares thereunder has accrued on the date of such termination of employment, but
only within three (3) months, or such shorter period as may be determined by the
Committee, after such date, or, if earlier, within the originally prescribed
term of the Option. A Participant's employment shall not be deemed terminated by
reason of a transfer to another employer which is the Company or an Affiliate.

     A Participant whose employment is terminated by the Participant's employer
for cause shall forthwith upon such termination cease to have any right to
exercise any Option. For purposes of this paragraph, "cause" shall be deemed to
include dishonesty with respect to the

                                       4
<PAGE>   5

employer, insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct substantially
prejudicial to the business of the Company or any Affiliate. The determination
of the Committee as to the existence of cause shall be conclusive on the
Participant and Company.

     A Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of temporary
disability, or who is on leave of absence for any purpose permitted by any
authoritative interpretation of Section 422, shall not, during the period of any
such absence, be deemed, by virtue of such absence alone, to have terminated his
employment with the Company or with an Affiliate, except as the Committee may
otherwise expressly provide.

     H.   Disability: If a Participant ceases to be an employee of the Company
or of an Affiliate by reason of Disability, any Option held by him or her on the
date of Disability shall be exercisable as to all or any part of the Shares
subject to the Option, all of which shares shall be fully vested as of the date
of such Disability. A Disabled Participant may exercise such Option only within
a period of one (1) year after the date as of which the Committee determines
that he or she became Disabled, or, if earlier, within the originally prescribed
term of the Option.

     I.   Death: If a Participant dies while the Participant is an employee of
the Company or of an Affiliate, any Option held by him or her at the date of
death shall be exercisable as to all or any part of the Shares subject to the
Option, all of which shares shall be fully vested as of the date of the
Participant's death. A deceased Participant's Survivors may exercise such Option
only within a period of one (1) year after the date of death, or, if earlier,
within the originally prescribed term of the Option.

     J.   Exercise of Option and Issue of Shares: Options shall be exercised by
giving written notice to the Company, addressed to the Company at the address
specified in the Option agreement, with which the Participant shall tender the
Option price. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised, and shall contain any warranty required by Article VI. The
issuance of the Shares may be delayed by the Company if any law or regulation
requires the Company to take any action with respect to the shares prior to the
issuance thereof. Without limiting the generality of the foregoing, nothing
contained herein shall be deemed to require the Company to issue any Shares if
prohibited by law or applicable regulation.

     The Shares shall, upon delivery, be evidenced by an appropriate certificate
or certificates in respect of paid-up, non-assessable Shares.

     K.   Rights as a Shareholder: No Participant to whom an Option has been
granted shall have rights as a shareholder with respect to any Shares covered by
such Option except as to such Shares as have been registered in the Company's
share register in the name of such Participant upon the due exercise of the
Option.

                                       5
<PAGE>   6

     L.   Assignability and Transferability of Options: By its terms, an Option
granted to a Participant shall not be transferable by the Participant otherwise
than by will or by the laws of descent and distribution and shall be
exercisable, during the Participant's lifetime, only by such Participant. Such
Option shall not be assigned, pledged, or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment, or similar process. Any attempted transfer, assignment, pledge,
hypothecation, or other disposition of any Option or of any rights granted
thereunder contrary to the provisions of this Paragraph L, or the levy of any
attachment or similar process upon an Option or such rights, shall be null and
void.

     M.   Tax Withholding: In the event that any federal, state, or local income
taxes, employment taxes, Federal Insurance Contributions Act ("F.I.C.A.")
withholdings or other amounts are required by applicable law or governmental
regulation to be withheld from the Option holder's salary in connection with the
exercise of an Option, the Option holder shall advance in cash to the Company,
or to any Affiliate of the Company which employs or employed the Option holder,
the amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company's Common Stock, is authorized by the
Committee (and permitted by law), provided, however, that with respect to
persons subject to Section 16 of the 1934 Act, any such withholding arrangement
shall be in compliance with any applicable provisions of Rule 16b-3 promulgated
under Section 16 of the 1934 Act. For purposes hereof, the fair market value of
the shares withheld for purposes of payroll withholding shall be determined in
the manner provided in Section V.A. above, as of the most recent practicable
date prior to the date of exercise. If the fair market value of the shares
withheld is less than the amount of payroll withholdings required, the Option
holder may be required to advance the difference in cash to the Company or the
Affiliate employer.

     N.   Reload Options: Concurrently with the award of Options under the Plan,
the Committee may authorize reload options ("Reload Options") to purchase for
cash or shares a number of shares of Common Stock. The number of Reload Options
shall equal (i) the number of shares of Common Stock used to exercise the
underlying Options and (ii) to the extent authorized by the Committee, the
number of shares of Common Stock used to satisfy any tax withholding requirement
incident to the exercise of the underlying Options. The grant of a Reload Option
will become effective upon the exercise of underlying Options or Reload Options
through the use of shares of Common Stock held by the optionee for at least 6
months. Reload Options must be evidenced in Option agreements. The Option price
per share of Common Stock deliverable upon the exercise of a Reload Option shall
be determined in accordance with Paragraph V.A. hereof on the date the grant of
the Reload Option becomes effective. The term of each Reload Option shall be
equal to the remaining option term of the underlying Option. No additional
Reload Options shall be granted to Option holders when Options and/or Reload
Options are exercised pursuant to the terms of this Plan following termination
of the Option holder's employment or on account of death or total and permanent
disability. All other provisions of this Plan with respect to Options shall
apply equally to Reload Options.

                                       6
<PAGE>   7

     O.   Other provisions: The Option agreements authorized under the Plan
shall be subject to such other terms and conditions, including, without
limitation, restrictions upon the exercise of the Option, as the Committee shall
deem advisable. Any such Option agreement shall contain such limitations and
restrictions upon the exercise of the Option as shall be necessary in order that
such Option can be an "incentive stock option" within the meaning of the Section
442 of the Code.

VI.  PURCHASE FOR INVESTMENT

     If, and to the extent that, the issuance of Shares pursuant to the exercise
of Options is deemed by the Company to be subject to the United States
Securities Act of 1933, as now in force or hereafter amended, ("1993 Act"), or
to the securities laws of any other jurisdiction, the Company shall be under no
obligation to issue the Shares covered by such exercise unless the person or
persons who exercises or who exercise such Option shall make such warranty as
may be required by any applicable securities law of any applicable jurisdiction
and shall, in the case of the applicability of the 1933 Act, in the absence of
an effective registration under such Act with respect to such Shares, warrant to
the Company, at the time of such exercise, that such person is or that they are
acquiring the Shares to be issued to such person or to them, pursuant to such
exercise of the Option, for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and in such events the
person or persons acquiring such Shares shall be bound by the provisions of a
legend endorsed upon any share certificates expressing the requirements of any
applicable non-United States securities law, or, in cases deemed governed by the
1933 Act substantially the following legend, which shall be endorsed upon the
certificate or certificates evidencing the Shares issued by the Company pursuant
to such exercise:

          "The shares have not been registered under the securities laws of any
          country including the United States Securities Act of 1933, as
          amended, and the Company may refuse to permit the sale or transfer of
          all or any of the shares until (1) the Company has received an opinion
          of Counsel satisfactory to the Company that any such transfer is
          exempt from registration under all applicable securities laws or (2)
          in the case of sales or transfer to which the United States Securities
          Act of 1933 is applicable, unless a registration statement with
          respect to such shares shall be effective under such Act, as amended."

     Without limiting the generality of the foregoing, the Company may delay
issuance of the Shares until completion of any action or obtaining of any
consent which the Company deems necessary under any applicable law (including,
without limitation, state securities or "blue sky" laws).

VII. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     In the event that the outstanding Common Stock, $.01 par value, of the
Company is changed into or exchanged for a different number or kind of shares or
other securities of the

                                       7
<PAGE>   8

Company or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, change in par value, stock
split-up, combination of shares or dividend payable in capital stock, or the
like, appropriate adjustment shall be made in the number and kind of Shares for
the purchase of which Options may be granted under the Plan, and, in addition,
appropriate adjustment shall be made in the number and kind of Shares and in the
Option price per share subject to outstanding Options so that each Option holder
shall be in a position equivalent to the position the Option holder would have
been in had the Option holder exercised the Options immediately prior to the
applicable event. No such adjustment shall be made which shall, within the
meaning of Section 424 of the Code, constitute such a modification, extension or
renewal of any Option as to cause it to be considered as the grant of a new
Option.

VIII. DISSOLUTION OR LIQUIDATION OF THE COMPANY

     Upon the dissolution or liquidation of the company other than in connection
with a transaction to which the preceding Article VII is applicable, all Options
granted hereunder shall terminate and become null and void; provided, however,
that if the rights of a Participant or the Participant's Survivors hereunder
have not otherwise terminated and expired, the Participant or the Participant's
Survivors shall have the right immediately prior to such dissolution or
liquidation to exercise any Option granted hereunder to the extent that the
right to purchase Shares thereunder has accrued as of the date of exercise
immediately prior to such dissolution or liquidation.

IX.  TERMINATION OF THE PLAN

     The Plan shall terminate on December 31, 2002. The Plan may be terminated
at an earlier date by vote of the Shareholders; provided, however, that
expiration or any such earlier termination shall not affect any Option granted
or Option agreements executed prior to expiration or the effective date of such
termination.

X.   AMENDMENT OF THE PLAN

     The Plan may be amended by action of the Committee or the Board of
Directors of the Company; provided, however, that if the scope of any amendment
is such as to require shareholder approval in order to preserve incentive stock
option treatment, then such amendments shall also require approval, within one
(1) year before or after the adoption thereof, by the shareholders, and provided
further that if the scope of any amendment is such as to require shareholder
approval in order to comply with Rule 16b-3 under the 1934 Act, then such
amendment shall also require approval by the shareholders. Any amendment shall
not affect any Options theretofore granted and any Option agreements theretofore
executed by the Company and a Participant, unless such amendment shall expressly
so provide. No amendment shall adversely affect any Participant with respect to
an outstanding Option without the written consent of such Participant. With the
consent of the Option holder affected, the Committee may amend any outstanding
Option agreement in a manner not inconsistent with the plan, including, without
limitation, to accelerate the date of exercise of any installment of any Option.

                                       8
<PAGE>   9

XI.  EMPLOYMENT RELATIONSHIP

     Nothing herein contained shall be deemed to prevent the Company or an
Affiliate from terminating the employment of a Participant, nor to prevent a
Participant from terminating the Participant's employment with the Company or an
Affiliate.

XII. EFFECTIVE DATE

     This Plan first became effective as of January 8, 1982, subject to the
approval, within one (1) year after such adoption, of the shareholders of the
Company.

                                       9

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