Document:

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EXHIBIT 10.11

Made  and  entered  this  9 day  of  August,  1998
                             --
BETWEEN:

Bartech  Mediterranean  Limited  (hereinafter:  "Bartech")
of  Tel  Aviv,  Israel of  the  first  part;

AND:
Inter-Continental  Hotels  Corporation  for  and  on  behalf  of
Classic  Hotel  Management  Ltd. of 250  Hayarkon  Street,  Tel-Aviv,  Israel
(hereinafter:  the  "Hotel")  of  Tel  Aviv,  Israel
of  the  second  part;

WHEREAS
Inter-Continental  Hotels  Corporation  is  manager  and  operator  of the David
Inter-Continental  Hotel,  and  has  been  authorized  by  the  Hotel  to
enter  into  this  Agreement  as  its  agent  for  and  on  its  behalf;  and

WHEREAS
The  Hotel  has  requested  that  Bartech  install,  maintain  and  operate  the
Units  in  the  premises  of  the  David  Inter-Continental,  pursuant  to  a
revenue  sharing  scheme;  and

WHEREAS
Bartech  shall purchase the Units for the sole purpose of their installation and
operation  in  the  David  Inter-Continental,  pursuant  to  such  revenue
sharing  scheme;  and

WHEREAS
As  a  consequence  of  and  in  connection  with  the  foregoing,  each  of the
parties  are  entering  into  this  Agreement  to  reflect  their understandings
and  agreements  with  respect  to  the  installation,  maintenance  and
operation  of  the  Units  in  the  David  Inter-Continental.

                                      -1-
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NOW,  THEREFORE,  IT  IS  HEREBY  AGREED  AS  FOLLOWS:

1.  Definitions;  Interpretations
    -----------------------------

1.1  The  preamble and schedules to this Agreement form an integral part hereof.

1.2  The  paragraph headings are included solely for the sake of convenience and
shall  not  serve  in  any  way  for  interpretive  purposes.

1.3  For  the  purposes  of  this  Agreement, the following terms shall have the
following  meanings:

1.3.1  The  term  "Net Revenues" means all of the actual revenues collected from
       Hotel  guests  due  to  the  sale  of  the Products offered in the Units.

1.3.2  The term the "Products" means those items which are to be placed and sold
       in  the  Units.

1.3.3  The  term the "David Inter-Continental" means the David Inter-Continental
       Tel  Aviv  hotel  that is located at 12 Kaufman Street Tel Aviv, Israel.

1.3.4  The  term  the  "Units"  means  the Bartech mini-bar units described in
       Schedule  with  Top  Dry  Section Double Balcony together with a fully
       functional  energy  efficiency facility to reduce use of electricity in
       the refrigeration  system,  which  shall  be  operated  to  the  fullest
       extent possible  in  coordination  with  the  Hotel.

2.  Representations  and  Undertakings
    ----------------------------------

2.1  Each  party  hereto  (each a "Representing Party") represents, warrants and
undertakes  to  each  other  party  hereto  as  follows:

a.  The  Representing  Party  is  duly  organized  validly  existing and in good
standing  under  the laws of the jurisdiction of its incorporation or formation.

b.  The  Representing  Party  has all necessary corporate power and authority to
enter  into  this  Agreement  and  to  comply  with  and fulfill its obligations
hereunder.  The execution, delivery and performance by the Representing Party of
this  Agreement  has been duly authorized by all necessary corporate actions and
proceedings and this Agreem_nt constitutes a legal, valid and binding obligation
of  the Representing Party, enforceable against it in accordance with its terms.

c.  Neither the execution, delivery and performance by the Representing Party of
this  Agreement  nor  compliance  by  the  Representing Party with any provision
hereof  shall  (with  or  without the giving of notice or the passage of time or
both)  violate,  conflict  with,  result  in a breach of or constitute a default
under  (i)  the articles of incorporation, by-laws or any similar organizational
document  of  the  Representing Party, (ii) any agreement or instrument to which
the  Representing  Party  is  a  party or by which the Representing Party or its
assets  are  bound  or affected or (iii) any order, injunction, decree, statute,
law,  rule  or  regulation  applicable  to  the  Representing  Party.

                                      -2-
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2.2  Bartech  represents  that  it  has  and for the term of this Agreement will
continue  to  have full title and ownership of the Units and any other equipment
necessary  for  their  operation, and that it will not create or permit to exist
any  security, pledge, lien, mortgage or other encumbrance (a "Security") on the
Units  or  such equipment during the term of this Agreement, other than by means
of  an  agreement creating a Security for the benefit of an entity financing the
purchase  and installation of the Units ("Finance Agreement" and "Financier", as
appropriate),  which  Finance Agreement shall contain, inter alia, the following
conditions:

2.2.1 The Financier acknowledges the terms of this Agreement and undertakes that
none of the Hotel's rights hereunder, including operation of the Bartech system,
shall  be  prejudiced in any way by the exercise of its security or by any other
rights  granted  to  the  Financier  under  the  Finance  Agreement;

2.2.2  The  Financier shall notify the Hotel as soon as practicable of any event
of  default  by  Bartech  under  the  Finance  Agreement;  and

2.2.3  The Hotel shall have the right to approve in advance any entity which the
Financier  proposes  to  appoint  in  place  of  Bartech  to  operate the Units.

2.3  Both  parties  represent  that they have fully examined all aspects of this
transaction  and are not entering into it in reliance upon any representation of
the  other  party  as to the profitability or commercial success of the venture,
nor  have  they  received any such representation. In addition, Bartech confirms
that  it shall have no claim against the Hotel as a result of the Hotel's policy
regarding  allocation  of  rooms  to guests and/or the clientele frequenting the
David  Inter-Continental  and/or, without derogating from Clause 8.9 hereof, the
provision  of  food  and  drinks, including VIP amenities, to hotel guests or in
guest  rooms  by  the  Hotel  or  any  third  party.

2.4  The Hotel represents that the David Inter-Continental shall have 560 rooms
in  which  the  Units  are  to  be  installed.

3.  Installation  of  the  Units

3.1  Bartech  hereby  agrees  to  install the Units in the premises of the David
Inter-Continental.  The  Units  and  their installation shall be of the standard
customary  and  usual  for  five  star  hotels in Europe and Israel, as provided
herein.  In this regard, Bartech confirms that it has examined the plans related
to  the  cabinets  for the Units and their design, and finds them fully suitable
for  its  aims and for the fulfillment of its undertakings and obligations under
this  Agreement  and  in  particular,  this  section,  and  waives  any claim of
unsuitability  in  regard  thereto,  provided  that there are no changes to such
plans  examined  by  Bartech.  Notwithstanding  the  aforesaid it is agreed that
Bartech shall not be exempt from performance of this Agreement on the grounds of
unsuitability,  if  such  exist.

                                      -3-
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3.2  The  first two hundred (200) Units shall be installed no later than
October 20,  1998  (the  "First  Installation  Date").

3.3  Following  the First Installation Date, the Hotel shall be entitled to give
two  (2)  weeks  notice  setting forth its request that Bartech proceed with the
installation  of  a  further forty (40) Units (a "Notice Period"). Following the
conclusion  of  each  Notice  Period, the Hotel shall be entitled to give notice
once  again for the installation of a further forty (40) Units, and so on, until
all  of  the  Units  are  installed.

3.4  Bartech  undertakes  that  the  relevant Units shall be fully installed and
operable on or prior to the First Installment Date and the remaining Units shall
be  fully  installed  and  operable  in  batches  of  forty  on  or prior to the
conclusion  of  each relevant Notice Period. The Units shall be installed on all
floors  of  the David Inter-Continental in the above stages in accordance with a
work  plan to be agreed in writing between the parties. Bartech acknowledge that
in  the  event  that  all the Bartech System and the Units are not installed and
operable  on  or  prior  to  the  First Installation Date, or on or prior to the
conclusion  of  each  Notice  Period  in the manner set forth above, substantial
damage  will  be  caused  to  the  Hotel  and  such  damage  may  not  be easily
quantifiable.  In  such  event  Bartech agrees that, without derogating from any
other  remedy  available  to  the  Hotel,  it  shall pay to the Hotel liquidated
damages  in  the amount of U.S.$4,000 for each week that the first 200 Units are
not  fully  installed  and  operable  following the First Installation Date, and
US$2,000  for  each  week  that  each  relevant  batch of 40 Units are not fully
installed  and  operable following the conclusion of the relevant Notice Period.
If there is a delay in installing Units due to the fact that the cabinets do not
match specifications given to the manufacturer, the installation period shall be
extended  for  the  length  of  the  delay.

3.5  The  Hotel  undertakes  to install and to provide the items set forth in
SCHEDULE  3.5.

3.6  The  Units  shall  be  interfaced  with  the PMS system in use in the David
Inter-Continental.  The  parties  agree  that  the  license  fee  due to the PMS
suppliers  (as  evidenced  by  the  relevant agreement with such license holder)
shall  be  fully  paid  by  Bartech.

3.7  One half of the cost of the items set forth in the technical Specifications
attached  as  Schedule 3.A hereto shall be borne by Bartech. Payment by Bartech
for  those  items (together with applicable VAT) which have been paid for by the
Hotel  prior  to the signing of this Agreement shall be made on the date hereof.
Further items shall be paid for by Bartech with ten (10) days of presentation of
an  invoice  to  Bartech  (together  with  applicable  VAT).

3.8  Bartech  undertakes to promptly remove all packaging and boxes with respect
to  the  Units  and  related  equipment,  from  the  premises  of  the  David
Inter-Continental,  upon  the  completion  of  installation of the Units, in the
stages  set  forth  in  Section3.2  and  3.3.

                                      -4-
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4.  Operation  and  Maintenance  of the  Units
    ------------------------------------------

4.1 Bartech hereby undertakes to maintain and operate the Units installed in the
David Inter-Continental to the standard usual and customary for five star hotels
in  Europe  and  Israel, and to repair any malfunction in a Unit upon receipt of
notification  by the Hotel, pursuant to the provisions of this Agreement. In the
event that such malfunction cannot be repaired within 12 hours of receipt of the
Hotel's  notice,  Bartech  shall  replace  such  unit  forthwith,  and  in  all
circumstances no later than 24 hours after receipt of such notice. It is further
agreed  that  it  is  a  material provision of this Agreement that each Unit and
Bartech  computer  system shall be fully operable for at least 360 days in every
365  day  period.

4.2  The  personnel  operating  and  maintaining  the  Units  (hereinafter:  the
"Operators")  .  shall be the employees of Bartech. There shall be no employee -
employer  relationship  between  the  Operators  and  the  Hotel.  The  terms of
employment  of  the  Operators  (including,  but  not  limited  to,  salary  and
termination  of  such  employment) shall be determined by Bartech, provided that
none  of  the  terms of their employment shall be inferior to those set forth in
the Hotel Association and Histadrut employment contract. Bartech undertakes that
it  shall maintain sufficient trained personnel in order to operate and maintain
the  Units  and  the  Bartech "computer system in the manner and to the standard
contemplated  by  this  Agreement.

4.3  Bartech  undertakes  that it shall cause the Operators to act in accordance
with the rules and regulations of conduct as issued by the Hotel with respect to
the  conduct  within  the  David  Inter-Continental.

4.4  The Operators shall wear the customary uniforms which are worn by employees
of  the David Inter-Continental. The Hotel shall charge Bartech for the cost for
hire  of  such  uniforms.

4.5  The  Hotel  hereby  agrees  to  provide  to Bartech, for the benefit of the
Operators,  meals  that  are  customarily provided to the employees of the David
Inter-Continental. The Hotel shall charge Bartech for the cost of such meals and
which  shall  be  in  the  amount which is equal to the staff coffee shop prices
offered  by  the  Hotel.

4.6  The Hotel shall have no vicarious liability with respect to the acts and/or
the  omissions  of  the  Operators.

4.7  Notwithstanding  Section 4.2, Bartech agrees to terminate the employment of
any  of  the Operators, as soon as requested to do so by the Hotel, by notice in
writing  for  improper  behavior  or  for  behavior not in accordance with Hotel
procedure,  and  in such case Bartech shall not permit the Operator to enter the
David  Inter-Continental.

                                      -5-
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4.8 The Hotel shall allow and facilitate the Operators' reasonable access to the
guest rooms not less than twice a day and for a reasonable period of time, after
coordination  with  the  General  Manager of the Hotel or his designate so as to
permit  Bartech to fulfill its obligations under this Agreement at such hours as
are  agreed  to  by  the parties, and which in the Hotel's sole judgment, do not
cause  a  disturbance  to  the  guests.

4.9  The  Hotel  undertakes to provide Bartech with a room on level 00, which is
situated  close  to  the  service  elevator  for  the  purpose of storage of the
Products  and  as  an  office  for  the  Bartech  computer  system.

4.10 The room mentioned in section 4.9 above shall be locked. Bartech shall have
the sole access right to such room. A special key shall be held by the Hotel, to
enable  access to the storage room in the case of an emergency. The Hotel hereby
agrees  not  to  use  the  key  in its possession for any purpose other than the
purpose  mentioned  in  this  section.

4.11  The  measures and specifications of the room mentioned in sections 4.9 and
4.10  above  are  provided in SCHEDULE 4.11 of this Agreement and based on these
specifications  and  the  room's  location,  Bartech  waives  any  claim  of
unsuitability  in regard thereto. The Hotel shall not charge Bartech and Bartech
shall not incur any expenses/charges whatsoever in connection with the provision
and/or  the  use  of  the  said rooms and office as set forth in this Agreement.

4.12  The  Hotel  shall bear the costs and expenses of electricity and/or energy
required  for  the  daily  operation  of  the  Units.

4.13  The  Hotel  shall perform, on behalf of Bartech, the collection of the Net
Revenues  from  the  guests.

5.  THE  PRODUCTS

5.1  The Products shall at all times be of a type and standard appropriate for a
five  star  hotel  and  shall  at  all  times comply with Kashrut standards. The
Products  shall  be  approved  in  advance  by  the Hotel General Manager or his
designate.  Bartech  shall  elect which of such Products shall be stocked in the
Units  at  any  given  time,  subject  to  prior  approval  of  the  Hotel.

5.2  The  price  of  the  Products to be charged to the guests shall be mutually
determined  by  Bartech and the Hotel. The parties agree that the pricing of the
Products shall be determined taking into account prices charged by other similar
five  star  hotels  in  Tel  Aviv.

5.3  Bartech  shall  be  responsible for the purchase of the Products. The Hotel
agrees  to  facilitate  the purchase by Bartech of the Products from the general
suppliers  of  the  David  Inter-Continental,  should  Bartech  so  elect.

                                      -6-
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6.  Promotion
The  Hotel  undertakes  to  provide written instructions and descriptions to the
guests  with  respect  to  the operation and location of the Units. Such written
instructions  and  descriptions shall be readily displayed in each guest room or
otherwise provided to guests. The design of the instructions shall be subject to
the  prior  written  approval  of  the  Hotel  (which  shall not be unreasonably
withheld)  and  design  and  printing costs of such instructions shall be at the
sole  expense  of  Bartech.

7.  Term  of  Agreement

7.1 The term of this Agreement shall commence with execution hereof and shall be
for  a  period  of  6  years  (72  month  period) commencing on January 1, 1999.

7.2 Notwithstanding the aforementioned under section 7.1 above in the event that
the  David  Inter-Continental  ceases  to  be  operated  under the operating and
management  agreement  with  the  Inter-Continental  Hotels Corporation, Bartech
shall be entitled to terminate this Agreement by giving notice within sixty (60)
days thereof. In such event, Bartech shall continue operating the Bartech System
for  four  (4)  months after giving notice and shall thereafter remove the Units
and  all  other  equipment  related  to the Bartech operations in the manner set
forth  in  Clause 9.2. Bartech shall not be entitled to receive any compensation
for  such  termination.

8.  ,Revenue  Sharing
    -----------------
8.1  Bartech and the Hotel agree that the Net Revenues shall be allocated, on an
aggregate  and cumulative basis, during each calendar from the generation of the
first  Net  Revenues  as  follows:

     8.1.1  When  the cumulative yearly Net Revenues exceed $0 but is no greater
     than  $XXXX,  the Hotel shall retain XXXX% of the Net Revenues and shall
     pay  Bartech  XXX%  of  the  Net  Revenues.

     8.1.2  When  the  cumulative yearly Net Revenues exceeds $XXX but is no
     greater than $XXXX, the Hotel shall retain XXX% of all the Net Revenues
     and  shall  pay  Bartech XXXX%  of  all  the  Net  Revenues.

     8.1.3  When  the  cumulative yearly Net Revenues exceed $XXXXX, the Hotel
     shall  retain XXXX% of all the Net Revenues and shall pay Bartech XXX% of
     all  the  Net  Revenues.

8.2  The  allocation  of  the Net Revenues among Bartech and the Hotel, for each
calendar  month  shall  be  made  as  set forth section 8.1 above based upon the
amount  of the Net Revenues accumulated from the beginning of such calendar year
to  the  end  of  the  month  with  respect  to  which  such allocation is made.

8.3  The  Hotel  shall pay Bartech the requisite amount plus V.AT. no later than
fifteen  (15)  days  following the end of each calendar month against an invoice
issued  to  it  by  Bartech for such amount. Such amount so transferred shall be
paid  in  NIS, equivalent to the representative exchange rate for the US$:Shekel
known  on  the  date  of payment, and from such amount shall be deducted charges
incurred  by the Hotel from credit card companies for the payment of such amount
should  the  same  have  been  paid  by  credit  card  by  guests.

                                      -7-
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8.4  In  the  event  that the Net Revenues are less than the amount of the gross
revenues  expected  according  to  the  Bartech  System, then representatives of
Bartech  and  the Hotel shall meet in order to discuss such discrepancy. For the
avoidance  of  any  doubt  however,  such  meeting  shall  not derogate from the
allocation  of  Net  Revenues under Clause 8.1 unless agreed to by both parties.

8.5  At  the  end  of each calendar year there shall be a calculation of the Net
Revenues for such calendar year in accordance with the provisions of section 8.1
above  and  which  shall  be  based  upon  the accumulated Net Revenues from the
beginning  of  that  calendar  year.  Should  this  calculation  result  in  any
adjustment  to be paid by one party to another, this adjustment shall be paid no
later  than  forty  five  (45)  days  following  the  date  of  the calculation.

8.6  In  the  event of a discrepancy exceeding 3.5% between the Net Revenues and
the revenues from the Units expected according to the Hotel's front desk billing
system,  the  parties  shall  meet  and  discuss  the  discrepancy.

8.7  Bartech shall furnish to the Hotel the sales reports which are generated by
the Bartech system, with respect to the previous calendar month, within five (5)
days  following the end of such calendar month. This report shall be in the form
as  designated  by  Bartech  and  shall  specify the aggregate amount of the Net
Revenues  expected  with  respect  to  the  Units  and  shall  provide all other
pertinent  information  requested  or  required  by  the  Hotel.

8.8  Each  party  shall  have  the  right  and  shall  afford the other with the
opportunity  to  inspect and examine all aspects of the operation and accounting
related  to  the  Bartech operation. It is presently anticipated th_t this shall
occur  on  a  quarterly  basis.

8.9  The  Hotel  shall  be  entitled  to  conduct all types of promotions and/or
discounts  relating to the Units including, inter alia, complimentary discounts,
discounts  for large groups and discounts to preferred guests, provided that the
Hotel  shall  pay to Bartech the price of the Products which are to be provided,
at a discount equal to thirty percent (30%) of such price and which shall either
(i)  be deducted from the portion of the Net Revenues attributable to the Hotel;
or  (ii)  be  paid  directly  by  the  Hotel  to  Bartech.

Notwithstanding the foregoing, with regard to Products provided to guests in the
framework  of  promotions and/or discounts conducted by the Hotel as part of any
program  conducted  worldwide by the Inter-Continental Hotels Corporation or any
of  its affiliates, the Hotel shall pay Bartech the cost paid by Bartech for the
purchase  of  such  Products either (i) by deduction from the portion of the Net
Revenues  attributable  to  the Hotel; or (ii) by direct payment by the Hotel to
Bartech.  of  such  Products either (i) by deduction from the portion of the Net
Revenues  attributable  to  the Hotel; or (ii) by direct payment by the Hotel to
Bartech.  9.1  Ninety days prior to the end of term of this Agreement, the Hotel
shall  have  the option to notify Bartech in writing of its election to purchase
all  of  the  Units from Bartech, in the condition they are in at such time ("as
is"),  for a purchase price of US $XXX plus VAT (in which case the Units shall
be  transferred  to the Hotel free and clear of any Security). In the event that
the  Hotel  exercises  its option to purchase all of the Units, then transfer of
title  of  the  Units  shall  occur on the termination date, simultaneously with
payment  of  the  purchase  price  of  the  Units  by  the  Hotel.

                                      -8-
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9.2  Should  the  Hotel  not  provide such notification to Bartech, then Bartech
shall,  sixty  days  prior  to the end of the term of this Agreement, notify the
Hotel  of  its intention to remove all the Units and the Bartech computer in the
premises  of  the  David  Inter-Continental at Bartech's sole expense and on the
date  of termination of this Agreement remove the Units and the Bartech computer
from the premises of the David Inter-Continental and leave the Hotel in the same
state  of  good  repair, subject to fair wear and tear, as prior to installation
thereof.

9.3  In  the  event  of a material breach of this Agreement by either party, the
injured  party  shall  be entitled to terminate this Agreement 21 days after the
provision  of  written  notice  to the other party of its intention to terminate
this  Agreement,  providing,  that such breach shall have remained unremedied at
the  end  of this 21 day period. If the injured party is the Hotel, it shall, at
its  sole  option  and  discretion, and without derogating from any other remedy
afforded to it at law or under this Agreement, be entitled to require Bartech to
remove  the  Units  in  the  manner  set  forth  under  Clause  9.2  above.

10.1  Title  to  the Units shall remain in the sole ownership of Bartech for the
term  of  this  Agreement.

10.2  Title  to the Products shall remain in the sole ownership of Bartech until
their  sale  to  the  guests  in  the  David  Inter-Continental.

10.3  Notwithstanding  the  aforementioned  under  section 10.1 above, all risks
pertaining  to  possible  damage  to  the Units which are covered by the Hotel's
property insurance shall be transferred to the Hotel at the time of the delivery
of the Units to David Inter-Continental and the Hotel hereby undertakes to use a
due  standard of care in connection with the custody and protection of the Units
against  fire  and  flood  and  all  other acts which are covered by third party
insurance  coverage  maintained by the Hotel. The Hotel shall not be responsible
for any damage caused to the Units by guests of the Hotel.

                                      -9-
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11.  Indemni!y  and  Insurance

11.1  In  addition  to  Clause  4.6,  Bartech  undertakes to indemnify the Hotel
against  any  suit  or  claim  brought  as  a  result  of any act or omission of
Bartech's  employees  or  as  a  result  of  Bartech's  activities.

11.2  Bartech  undertakes  to  obtain  insurance  as  set forth in Schedule 11.2
attached  hereto.  In  the  event  that  Bartech  fails  to produce satisfactory
evidence  of  insurance  in  accordance with terms of Schedule 11.2 by the First
Installation  Date,  the  Hotel  shall be entitled but not obliged to obtain the
said insurance cover and deduct the expenses incurred in obtaining the insurance
from  Bartech's  share  of  the  Net  Revenues.

12.  Governing  Law

This Agreement shall be governed by and construed in accordance with the laws of
the  State  of  Israel and subject to the jurisdiction of the competent court in
Tel  Aviv.

13.  Confidentiality  and  Property

All  types  of technical documents, general rules and special and specifications
of  a  confidential  nature  furnished  either to the Hotel by Bartech and/or to
Bartech  by  the  Hotel,  in  connection  with  this Agreement, shall remain the
exclusive  property  of Bartech . or the Hotel (as the case may be). None of the
information  referred to in this section may . be used or disclosed to any third
parties,  in  any  connection  whatsoever,  without the prior written consent of
Bartech  or  the  Hotel  (as  the  case  may  be).

14.  Miscellaneous

14.1 The Hotel shall be entitled to assign its rights and obligations under this
Agreement  without  the  prior  consent  of  Bartech provided that the rights of
Bartech  and  the obligations of the Hotel under this Agreement are not affected
by  such assignment and shall be fully preserved. The Hotel shall notify Bartech
of  the assignment of its rights and obligations. Bartech shall not be permitted
to  assign its rights or obligations under this Agreement, provided that Bartech
is  specifically permitted (subject to the prior consent of the Hotel) to assign
the  right  to  its  allocation  of  the  Net  Revenues  to  a  third  party.

14.2 Nothing in this Agreement shall be construed as creating a joint venture or
partnership  between  the  parties  and  neither  party  shall  act  as agent or
representative  of  the  other for any purpose, and further, except as expressly
provided  under  section 10 above, Bartech shall not have any proprietary rights
in  the  Hotel,  its  fittings,  fixtures  or  any  part  thereof.

14.3  In  the event that the Hotel, in its sole discretion, makes any changes to
the  David  Inter-Continental,  including, inter alia, any change resulting in a
reduction  in  the  total  number  of the rooms or floors open in the Hotel, the
Hotel  shall  not  be liable to Bartech in any way as a result of such change or
decrease  in  number  of  rooms  or  floors.

                                      -10-
<PAGE>

14.4  Each  party  shall  take  all  reasonable  steps  so  as to facilitate and
cooperate with respect to the performance of the other party's obligations under
this  Agreement.

14.5 In the event that any provision of this Agreement is considered or held, at
any  time  whatsoever,  to  be illegal, unenforceable and/or null and void, such
fact shall not affect the validity of the remaining provisions of the Agreement,
which  shall  thus  be  deemed  to be severable, and in such case, the Agreement
shall  be  considered  as having been drafted or redrafted without the provision
that  is  illegal,  unenforceable  or  null  and  void.

14.6 This Agreement may be amended or modified only by an instrument in writing,
executed  by  all  of  the  parties.

14.7  Any  notice  pursuant  to  this  Agreement  shall be addressed or faxed as
follows:

Bartech:
120  Yigal  Allon  Street,  Suite  312,  Tel  Aviv  Attention:  General  Manager
Facsimile:  03-6962890

The  Hotel:
12  Kaufman  Street,  Tel  Aviv  Attention:  General  Manager  Facsimile:

and shall be deemed to have been received by the addressee thereof: if delivered
by  a  messenger, upon receipt; if sent by facsimile, at the end of24 hours from
the time of dispatch (dispatch confirmed); and if delivered by hand, at the time
of  delivery.

14.8  This  Agreement  constitutes the entire agreement between the parties, and
supersedes  all  prior  agreements,  understandings  and  arrangements among the
parties,  with  respect  to  the  subject  matter  hereof.  -

14.9  This  Agreement  may  be  executed  in  counterparts,  each of which shall
constitute an original, all of which taken together shall constitute one and the
same  agreement.

IN  WITNESS  THEREOF, the parties have executed this Agreement as of the day and
year  first  above  writttn.

/s/Ariel  Almog
-----------------
Directors

                                      -11-

<PAGE><PAGE>

                                                                    Exhibit 10.8

                      BROCADE COMMUNICATIONS SYSTEMS, INC.
                       1999 NONSTATUTORY STOCK OPTION PLAN

1.    Purposes of the Plan. The purposes of this Nonstatutory Stock Option Plan
      are:

      -     to attract and retain the best available personnel for positions of
            substantial responsibility,

      -     to provide additional incentive to Employees and Consultants, and

      -     to promote the success of the Company's business.

      Options granted under the Plan will be Nonstatutory Stock Options.

2.       Definitions.  As used herein, the following definitions shall apply:

      (a)   "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.

      (b)   "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

      (c)   "Board" means the Board of Directors of the Company.

      (d)   "Code" means the Internal Revenue Code of 1986, as amended.

      (e)   "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.

      (f)   "Common Stock" means the Common Stock of the Company.

      (g)   "Company" means Brocade Communications Systems, Inc.

      (h)   "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity.

      (i)   "Director" means a member of the Board.

      (j)   "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

      (k)   "Employee" means any person, including Officers, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
<PAGE>
        (l)   "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

        (m)   "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

          (i)   If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

          (ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

          (iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Administrator.

        (n)   "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.

        (o) "Officer" means a person who is an officer of the Company within the
meaning of Nasdaq guidelines, including all employees with the corporate rank of
vice-president or higher, and employees with lesser rank but comparable
authority.

        (p)   "Option" means a nonstatutory stock option granted pursuant to the
Plan that is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.

        (q)   "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

        (r)   "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

        (s)   "Optioned Stock" means the Common Stock subject to an Option.

        (t)   "Optionee" means the holder of an outstanding Option granted under
the Plan.

        (u)   "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

        (v)   "Plan" means this 1999 Nonstatutory Stock Option Plan.

        (w)   "Service Provider" means an Employee, Consultant or Director.

        (x)   "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

                                      -2-
<PAGE>
        (y)   "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

     3.    Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares, which may be optioned and sold
under the Plan, is one million (1,000,000) Shares. The Shares may be authorized,
but unissued, or reacquired Common Stock.

     If an Option expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares, which were subject thereto, shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).

     4.    Administration of the Plan.

        (a)   Administration. The Plan shall be administered by (i) the Board or
(ii) a Committee, which Committee shall be constituted to satisfy Applicable
Laws.

        (b)   Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

            (i)   to determine the Fair Market Value of the Common Stock;

            (ii)  to select the Service Providers to whom Options may be granted
hereunder;

            (iii) to determine whether and to what extent Options are granted
hereunder;

            (iv)  to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;

            (v)   to approve forms of agreement for use under the Plan;

            (vi)  to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

            (vii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

            (viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

            (ix)  to institute an Option Exchange Program;

                                      -3-
<PAGE>
            (ix)  to modify or amend each Option (subject to Section 14(b) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;

            (x)   to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;

            (xi)  to determine the terms and restrictions applicable to Options;

            (xii) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option that number of Shares having a Fair Market Value equal to the
amount required to be withheld (but not more than the amount required to be
withheld). The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by an Optionee to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and

            (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

      (c)   Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.

   5. Eligibility. Options may be granted to Service Providers; provided,
however, that Options may not be granted to Officers and Directors, except as an
essential inducement to an Officer entering into an employment agreement
regarding his or her initial service with the Company.

   6. Limitation. Neither the Plan nor any Option shall confer upon an Optionee
any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.

   7. Term of Plan. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for ten (10) years, unless sooner terminated
under Section 14 of the Plan.

   8. Term of Option. The term of each Option shall be stated in the Option
Agreement.

   9. Option Exercise Price and Consideration.

      (a)   Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator.

      (b)   Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions which must be satisfied before the Option may
be exercised.

      (c)   Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:

            (i)   cash;

            (ii)  check;

                                      -4-
<PAGE>
            (iii) promissory note;

            (iv)  other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised;

            (v)   consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

            (vi)  such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or

            (vii) any combination of the foregoing methods of payment.

     10. Exercise of Option.

      (a)   Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. An Option may not be exercised for a fraction of a
Share.

      An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.

      Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

      (b)   Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the

                                      -5-
<PAGE>
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

      (c)   Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option
Agreement, to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

      (d)   Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

      (e)   Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

   11. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.

   12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.

      (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the

                                      -6-
<PAGE>
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.

      (b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

      (c) Merger or Asset Sale. In the event of a merger of the Company with or
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock, immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

   13. Date of Grant. The date of grant of an Option shall be, for all purposes,
the date on which the Administrator makes the determination granting such
Option, or such other later date as is determined by the Administrator. Notice
of the determination shall be provided to each Optionee within a reasonable time
after the date of such grant.

                                       -7-
<PAGE>
   14. Amendment and Termination of the Plan.

      (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

                                      -8-
<PAGE>
      (b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.

   15. Conditions Upon Issuance of Shares.

      (a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

      (b) Investment Representations. As a condition to the exercise of an
Option the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

   16. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

   17. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

                                      -9-
<PAGE>
                      BROCADE COMMUNICATIONS SYSTEMS, INC.

                       1999 NONSTATUTORY STOCK OPTION PLAN

                             STOCK OPTION AGREEMENT

      Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

I.    NOTICE OF STOCK OPTION GRANT

      [OPTIONEE'S NAME AND ADDRESS]

      You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

         Grant Number
                                                --------------------------------
         Date of Grant
                                                --------------------------------
         Vesting Commencement Date
                                                --------------------------------
         Exercise Price per Share               $
                                                --------------------------------
         Total Number of Shares Granted
                                                --------------------------------
         Total Exercise Price                   $
                                                --------------------------------

         Type of Option:                        Nonstatutory Stock Option

         Term/Expiration Date:
                                                --------------------------------
         Vesting Schedule:

      Subject to the Optionee continuing to be a Service Provider on such dates,
this Option shall vest and become exercisable in accordance with the following
schedule:

      25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48th of the Shares subject to the Option shall
vest each full month thereafter, so as to be 100% vested and on the fourth
anniversary of the Vesting Commencement Date, subject to Optionee remaining a
Service Provider on such vesting dates.

<PAGE>
      Termination Period:

      This Option may be exercised for three months after Optionee ceases to be
a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for twelve months following Optionee's termination as a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.

II.   AGREEMENT

      1.    Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(b) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.

      2.    Exercise of Option.

            (a)   Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.

            (b)   Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to Stock Option Administration. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

            No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

      3.    Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:

            (a)   cash;

            (b)   check;

                                      -2-
<PAGE>
            (c)   consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan; or

            (d)   surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

      4.    Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

      5.    Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.

      6.    Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

            (a)   Exercising the Option. The Optionee may incur regular federal
income tax liability upon exercise of an NSO. The Optionee will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.

            (b)   Disposition of Shares. If the Optionee holds NSO Shares for at
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.

      7.    Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.

                                      -3-

<PAGE>
      8.    NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.

      By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE                                          BROCADE COMMUNICATIONS
                                                  SYSTEMS, INC.

--------------------------------                  ------------------------------
Signature                                         By

--------------------------------                  ------------------------------
Print Name                                        Title

--------------------------------
Residence Address

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

                                      -4-

<PAGE>
                                    EXHIBIT A

                      BROCADE COMMUNICATIONS SYSTEMS, INC.

                       1999 NONSTATUTORY STOCK OPTION PLAN

                                 EXERCISE NOTICE

Brocade Communications Systems, Inc.
Attention:  Stock Option Administration

      1.    Exercise of Option. Effective as of today, ________________, _____,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Brocade Communications Systems, Inc. (the
"Company") under and pursuant to the 1999 Nonstatutory Stock Option Plan (the
"Plan") and the Stock Option Agreement dated, _________, ___ (the "Option
Agreement"). The purchase price for the Shares shall be $___, as required by the
Option Agreement.

      2.    Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.

      3.    Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.

      4.    Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 12 of the
Plan.

      5.    Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

      6.    Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all
<PAGE>
prior undertakings and agreements of the Company and Purchaser with respect to
the subject matter hereof, and may not be modified adversely to the Purchaser's
interest except by means of a writing signed by the Company and Purchaser. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of California.

Submitted by:                                     Accepted by:

PURCHASER                                         BROCADE COMMUNICATIONS
                                                  SYSTEMS, INC.

--------------------------------                  ------------------------------
Signature                                         By

--------------------------------                  ------------------------------
Print Name                                        Title

                                                  ------------------------------
                                                  Date Received
--------------------------------

--------------------------------
Address:

                                      -2-

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