Document:

<PAGE>   1

                                                                  EXHIBIT 10.27

                            BASIC LEASE INFORMATION
                                   OFFICE NET

<TABLE>
<S>                                           <C>
LEASE DATE:                                   July 26, 2000

TENANT:                                       Brocade Communications Systems, Inc., a Delaware corporation

TENANT'S NOTICE ADDRESS:                      1901 Guadalupe Parkway
                                              San Jose, California 95131

TENANT'S BILLING ADDRESS:                     1901 Guadalupe Parkway
                                              San Jose, California 95131

TENANT CONTACT:                               Wendy Richardson   PHONE NUMBER:  408/487-8100
                                              Facility Manager   FAX NUMBER:    408/487-8101

LANDLORD:                                     Spieker Properties, L.P., a California limited partnership

LANDLORD'S NOTICE ADDRESS:                    151 Metro Drive
                                              San Jose, CA 95110

LANDLORD'S REMITTANCE ADDRESS:                P.O. Box 45587 Dept. # 11531
                                              San Francisco, CA 94145-0587

PROJECT DESCRIPTION:                          That certain six-story, Class A, multi-tenant office building located at the
                                              southeast corner of Technology Drive and Metro Drive, situated in the County of
                                              Santa Clara, City of San Jose, State of California.

BUILDING DESCRIPTION:                         That certain real property commonly known as 1740 Technology Drive, located at 1740
                                              Technology Drive, San Jose, California, and as depicted on EXHIBIT B attached
                                              hereto.

PREMISES:                                     Approximately thirty-one thousand one hundred sixty-eight (31,168) rentable square
                                              feet, which consists of 15.95% of the Project and as depicted on EXHIBIT B attached
                                              hereto.

PERMITTED USE:                                General office and administrative, and up to twenty percent (20%) of the rentable
                                              area of the Premises may be used for communications laboratory purposes.

OCCUPANCY DENSITY:                            4.5 per 1,000 rentable square feet of the Premises.

PARKING DENSITY:                              4 spaces per 1,000 usable square feet of the Premises.

PARKING CHARGE:                               Initially at $0 per space per month for nonreserved parking spaces during the
                                              initial Term of this Lease, thereafter subject to adjustment pursuant to Paragraph
                                              37 hereof.

SCHEDULED TERM COMMENCEMENT DATE:             December 1, 2000, subject to adjustment pursuant to the terms of this Lease.

SCHEDULED LENGTH OF TERM:                     One hundred seventeen (117) months following the Term Commencement Date.

SCHEDULED TERM EXPIRATION DATE:               August 31, 2010, subject to adjustment pursuant to the terms of this Lease.

BASE RENT:                                    With respect to the Premises, see Paragraph 39.A hereof.

SECURITY DEPOSIT:                             Eight Hundred Thirteen Thousand Four Hundred Eighty-six and No/100 Dollars
                                              ($813,486.00) Letter of Credit delivered in accordance with the terms of Paragraph
                                              39.D (subject to adjustment as provided in Paragraphs 39.D and 19 hereof).

TENANT'S NAICS CODE:                          51121

TENANT'S PROPORTIONATE SHARE OF PROJECT:      15.95%
</TABLE>

The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms

                                        1

<PAGE>   2

provided under the particular Lease paragraph pertaining to such information. In
the event of any conflict between the Basic Lease Information and the Lease, the
latter shall control.

LANDLORD                                   TENANT

Spieker Properties, L.P.,                  Brocade Communications Systems, Inc.,
a California limited partnership           a Delaware corporation

By: Spieker Properties, Inc.,              By:
    a Maryland corporation,                   --------------------------------
    its general partner                        Michael J. Byrd
                                               Its:  Vice President, Finance,
                                                     Chief Financial Officer

By:                                        By:
    --------------------------------           --------------------------------
         John W. Petersen                           Victor Rinkle
    Its: Senior Vice President                 Its: Vice President, Operations

                                       2
<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
<S>                                                                                                                        <C>
         Basic Lease Information............................................................................................1
         Table of Contents..................................................................................................2
1.       Premises...........................................................................................................4
2.       Possession and Lease Commencement..................................................................................4
3.       Term...............................................................................................................4
4.       Use................................................................................................................4
5.       Rules and Regulations..............................................................................................6
6.       Rent...............................................................................................................6
7.       Operating Expenses.................................................................................................6
8.       Insurance and Indemnification......................................................................................8
9.       Waiver of Subrogation..............................................................................................9
10.      Landlord's Repairs and Maintenance.................................................................................9
11.      Tenant's Repairs and Maintenance...................................................................................9
12.      Alterations.......................................................................................................10
13.      Signs.............................................................................................................10
14.      Inspection/Posting Notices........................................................................................11
15.      Services and Utilities............................................................................................11
16.      Subordination.....................................................................................................12
17.      Financial Statements..............................................................................................12
18.      Estoppel Certificate..............................................................................................13
19.      Security Deposit..................................................................................................13
20.      Limitation of Tenant's Remedies...................................................................................13
21.      Assignment and Subletting.........................................................................................13
22.      Authority of Tenant...............................................................................................14
23.      Condemnation......................................................................................................14
24.      Casualty Damage...................................................................................................15
25.      Holding Over......................................................................................................16
26.      Default...........................................................................................................16
27.      Liens.............................................................................................................17
28.      Substitution......................................................................................................17
29.      Transfers by Landlord.............................................................................................17
30.      Right of Landlord to Perform Tenant's Covenants...................................................................18
31.      Waiver............................................................................................................18
32.      Notices...........................................................................................................18
33.      Attorney's Fees...................................................................................................18
34.      Successors and Assigns............................................................................................18
35.      Force Majeure.....................................................................................................18
36.      Surrender of Premises.............................................................................................18
37.      Parking...........................................................................................................19
38.      Miscellaneous.....................................................................................................19
39.      Additional Provisions.............................................................................................20
40.      Jury Trial Waiver.................................................................................................23
         Signatures........................................................................................................23

Exhibits:
         Exhibit A......................................................................................Rules and Regulations
         Exhibit B............................................................................Site Plan, Property Description
         Exhibit C................................................................................Lease Improvement Agreement
</TABLE>

         Additional Exhibits as Required

                                       3
<PAGE>   4

                                      LEASE

THIS LEASE is made as of the 26th day of July, 2000, by and between Spieker
Properties, L.P., a California limited partnership (hereinafter called
"LANDLORD"), and Brocade Communications Systems, Inc., a Delaware corporation
(hereinafter called "TENANT").

                                  1. PREMISES

        Landlord leases to Tenant and Tenant leases from Landlord, upon the
terms and conditions hereinafter set forth, those premises (the "PREMISES")
outlined in red on EXHIBIT B and described in the Basic Lease Information. The
Premises shall be all or part of a building (the "BUILDING") and of a project
(the "PROJECT"), which may consist of more than one building and additional
facilities, as described in the Basic Lease Information. The Building and
Project are outlined in blue and green respectively on EXHIBIT B. Landlord and
Tenant acknowledge that physical changes may occur from time to time in the
Premises, Building or Project, and that the number of buildings and additional
facilities which constitute the Project may change from time to time, which may
result in an adjustment in Tenant's Proportionate Share, as defined in the Basic
Lease Information, as provided in Paragraph 7.A.

                      2. POSSESSION AND LEASE COMMENCEMENT

        EXISTING IMPROVEMENTS. If this Lease pertains to a Premises in which the
interior improvements have already been constructed ("EXISTING IMPROVEMENTS"),
the provisions of this Paragraph 2. shall apply and the term commencement date
("TERM COMMENCEMENT DATE") shall be the earlier of the date on which: (1) Tenant
takes possession of some or all of the Premises; or (2) December 1, 2000. If for
any reason Landlord cannot deliver possession of the Premises to Tenant on the
scheduled Term Commencement Date, Landlord shall not be subject to any liability
therefore, nor shall Landlord be in default hereunder nor shall such failure
affect the validity of this Lease, and Tenant agrees to accept possession of the
Premises at such time as Landlord is able to deliver the same, which date shall
then be deemed the Term Commencement Date. Tenant shall not be liable for any
Rent (defined below) for any period prior to the Term Commencement Date. Tenant
acknowledges that Tenant has inspected and accepts the Premises in their present
condition, "as is" AND IN GOOD REPAIR, and as suitable for the Permitted Use (as
defined below), and for Tenant's intended operations in the Premises. Tenant
agrees that the Premises and other improvements are in good and satisfactory
condition as of when possession was taken. Tenant further acknowledges that no
representations as to the condition or repair of the Premises nor promises to
alter, remodel or improve the Premises have been made by Landlord or any agents
of Landlord unless such are expressly set forth in this Lease. Upon Landlord's
request, Tenant shall promptly execute and return to Landlord a "Start-Up
Letter" in which Tenant shall agree, among other things, to acceptance of the
Premises and to the determination of the Term Commencement Date, in accordance
with the terms of this Lease, but Tenant's failure or refusal to do so shall not
negate Tenant's acceptance of the Premises or affect determination of the Term
Commencement Date. To the best of Landlord's knowledge, all elevators, HVAC and
other building systems are in good working order.

A.

B.

                                     3. TERM

        The term of this Lease (the "TERM") shall commence on the Term
Commencement Date and continue in full force and effect for the number of months
specified as the Scheduled Length of Term in the Basic Lease Information or
until this Lease is terminated as otherwise provided herein. If the Term
Commencement Date is a date other than the first day of the calendar month, the
Term shall be the number of months of the Length of Term in addition to the
remainder of the calendar month following the Term Commencement Date.

                                     4. USE

A. GENERAL. Tenant shall use the Premises for the permitted use specified in the
Basic Lease Information ("PERMITTED USE") and for no other use or purpose.
Tenant shall control Tenant's employees, agents, customers, visitors, invitees,
licensees, contractors, assignees and subtenants (collectively, "TENANT'S
PARTIES") in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the occupant density (the "OCCUPANCY DENSITY") or the parking density
(the "PARKING DENSITY") specified in the Basic Lease Information at any time.
Tenant shall pay the Parking Charge specified in the Basic Lease Information as
Additional Rent (as hereinafter defined) hereunder. So long as Tenant is
occupying the Premises, Tenant and Tenant's Parties shall have the nonexclusive
right to use, in common with other parties occupying the Building or Project,
the parking areas, driveways and other common areas of the Building and Project,
including at no cost to Tenant during the initial Term of this Lease, Landlord's
fitness facility, subject to the terms of this Lease and such rules and
regulations as Landlord may from time to time prescribe. Landlord reserves the
right, without notice or liability to Tenant, and without the same constituting
an actual or constructive eviction, to alter or modify the common areas from
time to time, including the location and configuration thereof, and the
amenities and facilities which Landlord may determine to provide from time to
time, provided that any such alteration or modification shall not materially
adversely affect Tenant's use of the Premises or the parking area as provided
hereunder, and provided further that any such alteration or modification shall
not detract from the first-class quality of the Building. In the event that any
alteration or modification of the common area materially and adversely affects
Tenant's use of the parking areas of the Project, Landlord may provide to Tenant
a reasonable alternate parking area for Tenant's and Tenant's Parties' use.
During the Term hereof, provided that Tenant comply with the reasonable
requirements of Landlord's security system, Tenant shall have the right to
access the Premises via Landlord's security system, twenty-four (24) hours per
day, three hundred sixty-five (365) days per calendar year, in accordance with
the terms and conditions of this Lease, subject to Landlord's repair and
maintenance obligations pursuant to this Lease which obligations may require the
performance of after-hours repair or maintenance work by Landlord which work may
temporarily prevent after-hours access to the Building. As of the date of this
Lease, Landlord employs a roving security service covering the Project.
Notwithstanding the foregoing, nothing in this Lease shall be deemed to require
that Landlord provide security services to Tenant or any tenant of the Project
at any time.

B. LIMITATIONS. Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises or from any portion of the
common areas as a result of Tenant's or any Tenant's Party's use thereof, nor
take any action which would constitute a nuisance or would disturb, obstruct or
endanger any other tenants or occupants of the Building or Project or elsewhere,
or interfere with their use of their respective premises or common areas.
Storage outside the Premises of materials, vehicles or any other items

                                       4
<PAGE>   5

is prohibited. Tenant shall not use or allow the Premises to be used for any
immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer the commission of any waste in, on or about the Premises. Tenant shall
not allow any sale by auction upon the Premises, or place any loads upon the
floors, walls or ceilings which could endanger the structure, or place any
harmful substances in the drainage system of the Building or Project. No waste,
materials or refuse shall be dumped upon or permitted to remain outside the
Premises. Landlord shall not be responsible to Tenant for the non-compliance by
any other tenant or occupant of the Building or Project with any of the
above-referenced rules or any other terms or provisions of such tenant's or
occupant's lease or other contract.

C. COMPLIANCE WITH REGULATIONS. Subject to punchlist items, if any, provided by
Tenant to Landlord in accordance with Paragraph 2.B above, when entering the
Premises, Tenant accepts the Premises in the condition existing as of the date
of such entry. Tenant shall at its sole cost and expense strictly comply with
all existing or future applicable municipal, state and federal and other
governmental statutes, rules, requirements, regulations, laws and ordinances,
including zoning ordinances and regulations, and covenants, easements and
restrictions of record (to the extent Tenant has actual or constructive
knowledge of such restrictions of record) governing and relating to Tenant's
Permitted Use or other specific use by Tenant or Tenant's Parties, occupancy or
possession of the Premises, to Tenant's use of the common areas, or to the use,
storage, generation or disposal of Hazardous Materials (hereinafter defined) by
Tenant or Tenant's Parties (collectively "REGULATIONS"). Tenant shall at its
sole cost and expense obtain any and all licenses or permits necessary for
Tenant's use of the Premises. Tenant shall at its sole cost and expense promptly
comply with the requirements of any board of fire underwriters or other similar
body now or hereafter constituted. Tenant shall not do or permit anything to be
done in, on, under or about the Project or bring or keep anything which will in
any way increase the rate of any insurance upon the Premises, Building or
Project or upon any contents therein or cause a cancellation of said insurance
or otherwise affect said insurance in any manner. Tenant shall indemnify, defend
(by counsel reasonably acceptable to Landlord), protect and hold Landlord
harmless from and against any loss, cost, expense, damage, attorneys' fees or
liability arising out of the failure of Tenant to comply with any Regulation to
the extent that such compliance is required of Tenant under this Lease. Tenant's
obligations pursuant to the foregoing indemnity shall survive the expiration or
earlier termination of this Lease. Landlord represents that, on the date
Landlord delivers possession of the Premises to Tenant, the Premises shall
comply in all material respects with those Regulations applicable to real
property located in Santa Clara County and pertaining to the Premises. Landlord
shall be responsible for complying with Regulations (including ADA and Title 24
to the extent any such compliance requirement of Landlord is expressly stated
herein) pertaining to the common areas of the Project prior to and except to the
extent arising out of Tenant's occupancy or use of the Premises or common areas
or construction of any Tenant Improvements or Alterations made by or on behalf
of Tenant, whether by Landlord or otherwise and whether performed before or
after the Term Commencement Date, or installation of any equipment, fixtures,
furniture or other personal property in or about the Premises. Tenant shall have
the sole responsibility for complying, at Tenant's cost, with any and all
provisions of the Americans with Disabilities Act of 1990, as it has been and
may later be amended ("ADA"), (i) with respect to the Premises; and (ii) with
respect to the common areas of the Project where in the case of this clause (ii)
such compliance has been brought about by: (A) any Tenant Improvements or
Alterations to the Premises or to the common areas made by or on behalf of
Tenant, whether by Landlord or otherwise, and performed after the Term
Commencement Date; (B) requirements of Tenant's employees, or any changes to
Tenant's use of the Premises; or (C) any architectural barriers caused by
Tenant's installation of any equipment, fixtures, furniture, or other personal
property in or about the Premises (items (i) and (ii) collectively, "TENANT'S
ADA RESPONSIBILITIES"). Tenant shall indemnify, defend and hold Landlord, its
agents and employees harmless from and against any and all claims, damages, or
liabilities (including, without limitation, reasonable attorneys' fees and
costs) arising directly or indirectly from Tenant's failure to satisfy any of
Tenant's ADA Responsibilities. Landlord shall indemnify, defend and hold Tenant,
its agents and employees harmless from and against any and all claims, damages
or liabilities arising directly or indirectly from Landlord's failure to comply
with any obligations of a landlord under the ADA, other than such claims,
damages or liabilities arising from Tenant's failure to satisfy any of Tenant's
ADA Responsibilities; provided, however, that Landlord may treat costs of ADA
compliance with respect to the common areas of the Project to the extent
incurred after the date Landlord delivers possession of the Premises to Tenant
as an Operating Expense. Notwithstanding anything to the contrary contained in
Paragraph 7.A of this Lease, costs of ADA and Title 24 compliance brought about
by alterations to the common areas performed before the date Landlord delivers
possession of the Premises to Tenant for Tenant's construction of the Tenant
Improvements, or which are expressly made Landlord's responsibility under this
Lease, will be borne solely by Landlord and shall neither be treated as an
Operating Expense nor be the responsibility of Tenant, except to the extent
provided herein. Landlord represents that, as of the date Landlord delivers
possession of the Premises to Tenant, to the best of Landlord's actual
knowledge, the Premises and the Building shall comply in all material respects
with the ADA and Title 24 as the ADA and Title 24 have, as of the date Landlord
delivers possession of the Premises to Tenant, been interpreted in Santa Clara
County and pertain to the Premises and the Building. Notwithstanding anything to
the contrary contained in this Lease, regardless of whether the cost of
compliance with Regulations shall be borne by Tenant, or Tenant and other
tenants of the Project as an Operating Expense (as defined herein), Landlord
shall perform or cause to be performed any compliance with Regulations items as
described in this Lease which items are located in the common area or are
structural in nature; provided, however, that the costs of such compliance items
shall be allocated in accordance herewith.

D. HAZARDOUS MATERIALS. As used in this Lease, "HAZARDOUS MATERIALS" shall
include, but not be limited to, hazardous, toxic and radioactive materials and
those substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or other similar designations in any
Regulation. Tenant shall not cause, or allow any of Tenant's Parties to cause,
any Hazardous Materials to be handled, used, generated, stored, released or
disposed of in, on, under or about the Premises, the Building or the Project or
surrounding land or environment in violation of any Regulations. Tenant must
obtain Landlord's written consent prior to the introduction of any Hazardous
Materials onto the Project. Notwithstanding the foregoing, Tenant may handle,
store, use and dispose of products containing small quantities of Hazardous
Materials for "general office purposes" (such as toner for copiers) to the
extent customary and necessary for the Permitted Use of the Premises; provided
that Tenant shall always handle, store, use, and dispose of any such Hazardous
Materials in a safe and lawful manner and never allow such Hazardous Materials
to contaminate the Premises, Building, or Project or surrounding land or
environment. Tenant shall immediately notify Landlord in writing of any
Hazardous Materials' contamination of any portion of the Project of which Tenant
becomes aware, whether or not caused by Tenant. Landlord shall have the right at
all reasonable times and if Landlord determines in good faith that Tenant may
not be in compliance with this Paragraph 4.D to inspect the Premises and to
conduct tests and investigations to determine whether Tenant is in compliance
with the foregoing provisions, the costs of all such inspections, tests and
investigations to be borne by Tenant. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect and hold Landlord harmless from and
against any and all claims, liabilities, losses, costs, loss of rents, liens,
damages, injuries or expenses (including reasonable attorneys' and consultants'
fees, and court costs), demands, causes of action, or judgments directly or
indirectly arising out of or related to the use, generation, storage, release,
or disposal of Hazardous Materials by Tenant or any of Tenant's Parties in, on,
under or about the Premises, the Building or the Project or surrounding land or
environment, which indemnity shall include, without limitation, damages for
personal or bodily injury, property damage, damage to the environment or natural
resources occurring on or off the Premises, losses attributable to diminution in
value or adverse effects on marketability, the cost of any investigation,
monitoring, government oversight, repair, removal, remediation, restoration,
abatement, and disposal, and the preparation of any closure or other required
plans, whether such action is required or necessary prior to or following the
expiration or earlier termination of this Lease. Neither the consent by Landlord
to the use, generation, storage, release or disposal of Hazardous Materials nor
the strict compliance by Tenant with all laws pertaining to Hazardous Materials
shall excuse Tenant from Tenant's obligation of indemnification pursuant to this
Paragraph 4.D. Tenant's obligations pursuant to the foregoing indemnity shall
survive the expiration or earlier termination of this Lease.

                                       5
<PAGE>   6

                            5. RULES AND REGULATIONS

        Tenant shall faithfully observe and comply with the building rules and
regulations attached hereto as EXHIBIT A and any other rules and regulations and
any modifications or additions thereto which Landlord may from time to time
prescribe in writing for the purpose of maintaining the proper care,
cleanliness, safety, traffic flow and general order of the Premises or the
Building or Project. Tenant shall cause Tenant's Parties to comply with such
rules and regulations. Landlord shall not be responsible to Tenant for the
non-compliance by any other tenant or occupant of the Building or Project with
any of such rules and regulations, any other tenant's or occupant's lease or any
Regulations.

                                     6. RENT

A. BASE RENT. Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever, at the Remittance Address specified in the Basic
Lease Information or to such other place as Landlord may from time to time
designate in writing. Base Rent for the first full month of the Term for the
Premises shall be paid by Tenant upon Tenant's execution of this Lease. Such
payment of Base Rent for the first full month of the Term shall be applied to
the first full month of the Term by Landlord upon its receipt thereof so that,
upon such application by Landlord of such payment, no additional payment of Base
Rent allocable to the first full month of the Term shall be due from Tenant. If
the obligation for payment of Base Rent commences on a day other than the first
day of a month, then Base Rent shall be prorated and the prorated installment
shall be paid on the first day of the calendar month next succeeding the Term
Commencement Date. The Base Rent payable by Tenant hereunder is subject to
adjustment as provided elsewhere in this Lease, as applicable. As used herein,
the term "Base Rent" shall mean the Base Rent specified in the Basic Lease
Information as it may be so adjusted from time to time.

B. ADDITIONAL RENT. All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.D. and E., and any monies spent by Landlord pursuant to Paragraph
30, shall be considered additional rent ("ADDITIONAL RENT"). "RENT" shall mean
Base Rent and Additional Rent.

                              7. OPERATING EXPENSES

A. OPERATING EXPENSES. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share of
the Building and/or Project (as applicable), as defined in the Basic Lease
Information, of Operating Expenses (defined below) in the manner set forth
below. Tenant shall pay the applicable Tenant's Proportionate Share of each such
Operating Expenses. Landlord and Tenant acknowledge that if the number of
buildings which constitute the Project increases or decreases, or if physical
changes are made to the Premises, Building or Project or the configuration of
any thereof, Landlord may reasonably adjust Tenant's Proportionate Share of the
Building or Project to equitably and fairly reflect the change. Landlord's
determination of Tenant's Proportionate Share of the Building and of the Project
shall be conclusive so long as it is reasonably and consistently applied.
"OPERATING EXPENSES" shall mean all expenses and costs of every kind and nature
which Landlord shall pay or become obligated to pay, because of or in connection
with the ownership, management, maintenance, repair, preservation, replacement
and operation of the Building or Project and its supporting facilities and such
additional facilities now and in subsequent years as may be determined by
Landlord to be necessary or desirable to the Building and/or Project (as
determined in a reasonable manner) other than those expenses and costs which are
specifically attributable to Tenant or which are expressly made the financial
responsibility of Landlord or specific tenants of the Building or Project
pursuant to this Lease. Operating Expenses shall include, but are not limited
to, the following:

        (1) TAXES. All real property taxes and assessments, possessory interest
        taxes, sales taxes, personal property taxes, business or license taxes
        or fees, gross receipts taxes, service payments in lieu of such taxes or
        fees, annual or periodic license or use fees, excises, transit charges,
        and other impositions, general and special, ordinary and extraordinary,
        unforeseen as well as foreseen, of any kind (including fees "in-lieu" of
        any such tax or assessment) which are now or hereafter assessed, levied,
        charged, confirmed, or imposed by any public authority upon the Building
        or Project, its operations or the Rent (or any portion or component
        thereof), or any tax, assessment or fee imposed in substitution,
        partially or totally, of any of the above. Operating Expenses shall also
        include any taxes, assessments, reassessments, or other fees or
        impositions with respect to the development, leasing, management,
        maintenance, alteration, repair, use or occupancy of the Premises,
        Building or Project or any portion thereof, including, without
        limitation, by or for Tenant, and all increases therein or reassessments
        thereof whether the increases or reassessments result from increased
        rate and/or valuation (whether upon a transfer of the Building or
        Project or any portion thereof or any interest therein or for any other
        reason). Operating Expenses shall not include inheritance or estate
        taxes imposed upon or assessed against the interest of any person in the
        Building or the Project, or taxes computed upon the basis of the net
        income of any owners of any interest in the Building or the Project. If
        it shall not be lawful for Tenant to reimburse Landlord for all or any
        part of such taxes, the monthly rental payable to Landlord under this
        Lease shall be revised to net Landlord the same net rental after
        imposition of any such taxes by Landlord as would have been payable to
        Landlord prior to the payment of any such taxes.

        (2) INSURANCE. All insurance premiums and costs, including, but not
        limited to, any deductible amounts, premiums and other costs of
        insurance incurred by Landlord, including for the insurance coverage set
        forth in Paragraph 8.A. herein.

        (3) COMMON AREA MAINTENANCE.

                (a) Repairs, replacements, and general maintenance of and for
                the Building and Project and public and common areas and
                facilities of and comprising the Building and Project,
                including, but not limited to, the roof and roof membrane,
                windows, elevators, restrooms, conference rooms, health club
                facilities, lobbies, mezzanines, balconies, mechanical rooms,
                building exteriors, alarm systems, pest extermination,
                landscaped areas, parking and service areas, driveways,
                sidewalks, loading areas, fire sprinkler systems, sanitary and
                storm sewer lines, utility services, heating/ventilation/air
                conditioning systems, electrical, mechanical or other systems,
                telephone equipment and wiring servicing, plumbing, lighting,
                and any other items or areas which affect the operation or
                appearance of the Building or Project, which determination shall
                be at Landlord's discretion, except for: those items to the
                extent paid for by the proceeds of insurance or paid by Tenant
                or other third parties; and those items attributable solely or
                jointly to specific tenants of the Building or Project.

                (b) Repairs, replacements, and general maintenance shall include
                the cost of any improvements made to or assets acquired for the
                Project or Building that in Landlord's discretion may reduce any
                other Operating Expenses, including present or future repair
                work, are reasonably necessary for the health and safety of the
                occupants of the Building or Project, or for the operation of
                the Building systems, services and equipment, or are required to
                comply with any Regulation, such costs or allocable portions
                thereof to be amortized over such reasonable period as Landlord
                shall determine which period is substantially in accordance with
                generally accepted accounting principles, together with interest
                on the unamortized balance at the publicly announced "prime
                rate" charged by Wells Fargo Bank, N.A. (San Francisco) or its
                successor at the time such improvements or capital assets are
                constructed or acquired, plus two (2)

                                       6
<PAGE>   7

                percentage points, or in the absence of such prime rate, then at
                the U.S. Treasury six-month market note (or bond, if so
                designated) rate as published by any national financial
                publication selected by Landlord, plus four (4) percentage
                points, but in no event more than the lesser of (i) ten percent
                (10%) or (ii) the maximum rate permitted by law, plus reasonable
                financing charges.

                (c) Payment under or for any easement, license, permit,
                operating agreement, declaration, restrictive covenant or
                instrument relating to the Building or Project.

                (d) All expenses and rental related to services and costs of
                supplies, materials and equipment used in operating, managing
                and maintaining the Premises, Building and Project, the
                equipment therein and the adjacent sidewalks, driveways, parking
                and service areas, including, without limitation, expenses
                related to service agreements regarding security, fire and other
                alarm systems, janitorial services, window cleaning, elevator
                maintenance, Building exterior maintenance, landscaping and
                expenses related to the administration, management and operation
                of the Project, including without limitation salaries, wages and
                benefits and management office rent.

                (e) The cost of supplying any services and utilities which
                benefit all or a portion of the Premises, Building or Project,
                including without limitation services and utilities provided
                pursuant to Paragraph 15 hereof.

                (f) Legal expenses and the cost of audits by certified public
                accountants; provided, however, that legal expenses chargeable
                as Operating Expenses shall not include the cost of negotiating
                leases, collecting rents, evicting tenants nor shall it include
                costs incurred in legal proceedings with or against any tenant
                or to enforce the provisions of any lease.

                (g) A management and accounting cost recovery fee not to exceed
                four percent (4%) of the sum of the Project's revenues.

If the rentable area of the Building and/or Project is not fully occupied during
any fiscal year of the Term as determined by Landlord, an adjustment shall be
made in Landlord's discretion in computing the Operating Expenses for such year
so that Tenant pays an equitable portion of all variable items (e.g., utilities,
janitorial services and other component expenses that are affected by variations
in occupancy levels) of Operating Expenses, as reasonably determined by
Landlord; provided, however, that in no event shall Landlord be entitled to
collect in excess of one hundred percent (100%) of the total Operating Expenses
actually incurred by Landlord from all of the tenants in the Building or
Project, as the case may be.

Operating Expenses shall not include the cost of providing tenant improvements
or other specific costs incurred for the account of specific tenants of the
Building or Project other than Tenant, the initial construction cost of the
Building, or debt service on any mortgage or deed of trust recorded with respect
to the Project other than pursuant to Paragraph 7.A(3)(b) above. Moreover, if
Landlord does not provide janitorial service to the Premises, Operating Expenses
with respect to the Premises shall not include the cost of janitorial service.
In addition, notwithstanding anything in the definition of Operating Expenses in
this Lease to the contrary, Operating Expenses shall not include the following,
except to the extent specifically provided: costs of capital improvements,
replacements or equipment and any depreciation or amortization expenses thereon,
except to the extent included in Operating Expenses in Paragraph 7.A of this
Lease; marketing costs, including leasing commissions, attorneys' fees in
connection with the negotiation and preparation or enforcement of letters, deal
memos, letters of intent, leases, subleases and/or assignments, space planning
costs, and other costs and expenses incurred in connection with lease, sublease
and/or assignment negotiations and transactions with present or prospective
tenants or other occupants of the Building or the Project; except to the extent
included in Operating Expenses in Paragraph 7.A(3) above, interest, principal,
points and fees on debt or amortization payments on any mortgage or deed of
trust or any other debt instrument encumbering the Building or Project or the
land on which the Building or Project is situated; and advertising and
promotional expenditures; Landlord's general corporate overhead and general
administrative expenses not related to the operation of the Building or the
Project (including executive salaries), except as specifically set forth in
Paragraph 7.A of this Lease.

Notwithstanding anything herein to the contrary, in any instance wherein
Landlord, in Landlord's reasonable discretion, deems Tenant to be responsible
for any amounts greater than Tenant's Proportionate Share, Landlord shall have
the right to allocate costs in any manner Landlord reasonably deems appropriate.
Landlord shall not collect from the tenants of the Project an amount greater
than 100% of the Operating Expenses incurred in the Project.

The above enumeration of services and facilities shall not be deemed to impose
an obligation on Landlord to make available or provide such services or
facilities except to the extent if any that Landlord has specifically agreed
elsewhere in this Lease to make the same available or provide the same. Without
limiting the generality of the foregoing, Tenant acknowledges and agrees that it
shall be responsible for providing adequate security for its use of the
Premises, the Building and the Project and that Landlord shall have no
obligation or liability with respect thereto, except to the extent if any that
Landlord has specifically agreed elsewhere in this Lease to provide the same.

B. PAYMENT OF ESTIMATED OPERATING EXPENSES. "ESTIMATED OPERATING EXPENSES" for
any particular year shall mean Landlord's estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner. During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year. Tenant shall pay Tenant's Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each calendar month during such year, in advance. Such payment shall be
construed to be Additional Rent for all purposes hereunder. If at any time
during the course of the fiscal year, Landlord reasonably determines that
Operating Expenses are projected to vary from the then Estimated Operating
Expenses by more than five percent (5%), Landlord may, by written notice to
Tenant, revise the Estimated Operating Expenses for the balance of such fiscal
year, and Tenant's monthly installments for the remainder of such year shall be
adjusted so that by the end of such fiscal year Tenant has paid to Landlord
Tenant's Proportionate Share of the revised Estimated Operating Expenses for
such year, such revised installment amounts to be Additional Rent for all
purposes hereunder.

C. COMPUTATION OF OPERATING EXPENSE ADJUSTMENT. "OPERATING EXPENSE ADJUSTMENT"
shall mean the difference between Estimated Operating Expenses and actual
Operating Expenses for any fiscal year determined as hereinafter provided.
Within one hundred twenty (120) days after the end of each fiscal year, or as
soon thereafter as practicable, Landlord shall deliver to Tenant a statement of
actual Operating Expenses for the fiscal year just ended, accompanied by a
computation of Operating Expense Adjustment. If such statement shows that
Tenant's payment based upon Estimated Operating Expenses is less than Tenant's
Proportionate Share of Operating Expenses, then Tenant shall pay to Landlord the
difference within thirty (30) days after receipt of such statement, such payment
to constitute Additional Rent for all purposes hereunder. If such statement
shows that Tenant's payments of Estimated Operating Expenses exceed Tenant's
Proportionate Share of Operating Expenses, then (provided that Tenant is not in
default under this Lease) Landlord shall pay to Tenant the difference within
thirty (30) days after delivery of such statement to Tenant. If this Lease has
been terminated or the Term hereof has expired prior to the date of such
statement, then the Operating Expense Adjustment shall be paid by the
appropriate party within thirty (30) days after the date of delivery of the
statement. Should this Lease commence or terminate at any time other than the
first

                                       7
<PAGE>   8

day of the fiscal year, Tenant's Proportionate Share of the Operating Expense
Adjustment shall be prorated based on a month of 30 days and the number of
calendar months during such fiscal year that this Lease is in effect.
Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B,
Landlord's failure to provide any notices or statements within the time periods
specified in those paragraphs shall in no way excuse Tenant from its obligation
to pay Tenant's Proportionate Share of Operating Expenses.

D. NET LEASE. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Building
and/or Project and its supporting facilities and such additional facilities now
and in subsequent years as may be determined by Landlord to be necessary or
desirable to the Building and/or Project.

E. TENANT AUDIT. If Tenant shall dispute the amount set forth in any statement
provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the
right, not later than thirty (30) days following receipt of such statement and
upon the condition that Tenant shall first deposit with Landlord the full amount
in dispute, to notify Landlord of such dispute and to request an audit in
writing, and within sixty (60) days after Landlord's receipt of such written
notice, to cause Landlord's books and records with respect to Operating Expenses
for such fiscal year to be audited by certified public accountants selected by
Tenant and subject to Landlord's reasonable right of approval. The Operating
Expense Adjustment shall be appropriately adjusted on the basis of such audit.
If such audit discloses a liability for a refund in excess of six percent (6%)
of Tenant's Proportionate Share of the Operating Expenses previously reported,
the cost of such audit shall be borne by Landlord; otherwise the cost of such
audit shall be paid by Tenant. If Tenant shall not request an audit in
accordance with the provisions of this Paragraph 7.E. within thirty (30) days
after receipt of Landlord's statement provided pursuant to Paragraph 7.B. or
7.C., such statement shall be final and binding for all purposes hereof. Tenant
acknowledges and agrees that any information revealed in the above described
audit may contain proprietary and sensitive information and that significant
damage could result to Landlord if such information were disclosed to any party
other than Tenant's auditors, Tenant's executives and financial managers and
Tenant's legal counsel, all of whom Tenant shall require to keep confidential
any information discovered through such audit, which requirement of
confidentiality shall survive the termination of this Lease. Except to the
extent required by an order of a court with proper jurisdiction, Tenant shall
not in any manner disclose, provide or make available any information revealed
by the audit to any person or entity without Landlord's prior written consent,
which consent may be withheld by Landlord in its sole and absolute discretion.
The information disclosed by the audit will be used by Tenant solely for the
purpose of evaluating Landlord's books and records in connection with this
Paragraph 7.E.

                        8. INSURANCE AND INDEMNIFICATION

A. LANDLORD'S INSURANCE. All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord's sole control.

        (1) PROPERTY INSURANCE. Landlord agrees to maintain property insurance
        insuring the Building against damage or destruction due to risk
        including fire, vandalism, and malicious mischief in an amount not less
        than the replacement cost thereof, in the form and with deductibles and
        endorsements as selected by Landlord. At its election, Landlord may
        instead (but shall have no obligation to) obtain "All Risk" coverage,
        and may also obtain earthquake, pollution, and/or flood insurance in
        amounts selected by Landlord.

        (2) OPTIONAL INSURANCE. Landlord, at Landlord's option, may also (but
        shall have no obligation to) carry (i) insurance against loss of rent,
        in an amount equal to the amount of Base Rent and Additional Rent that
        Landlord could be required to abate to all Building tenants in the event
        of condemnation or casualty damage for a period of twelve (12) months;
        and (ii) liability insurance and such other insurance as Landlord may
        deem prudent or advisable, in such amounts and on such terms as Landlord
        shall determine. Landlord shall not be obligated to insure, and shall
        have no responsibility whatsoever for any damage to, any furniture,
        machinery, goods, inventory or supplies, or other personal property or
        fixtures which Tenant may keep or maintain in the Premises, or any
        leasehold improvements, additions or alterations within the Premises.

B. TENANT'S INSURANCE. Tenant shall procure at Tenant's sole cost and expense
and keep in effect from the date of this Lease and at all times until the end of
the Term the following:

        (1) PROPERTY INSURANCE. Insurance on all personal property and fixtures
        of Tenant and all improvements, additions or alterations made by or for
        Tenant to the Premises on an "All Risk" basis, insuring such property
        for the full replacement value of such property.

        (2) LIABILITY INSURANCE. Commercial General Liability insurance covering
        bodily injury and property damage liability occurring in or about the
        Premises or arising out of the use and occupancy of the Premises and the
        Project, and any part of either, and any areas adjacent thereto, and the
        business operated by Tenant or by any other occupant of the Premises.
        Such insurance shall include contractual liability insurance coverage
        insuring all of Tenant's indemnity obligations under this Lease. Such
        coverage shall have a minimum combined single limit of liability of at
        least Two Million Dollars ($2,000,000.00), and a minimum general
        aggregate limit of Three Million Dollars ($3,000,000.00), with an
        "Additional Insured - Managers or Lessors of Premises Endorsement." All
        such policies shall be written to apply to all bodily injury (including
        death), property damage or loss, personal and advertising injury and
        other covered loss, however occasioned, occurring during the policy
        term, shall be endorsed to add Landlord and any party holding an
        interest to which this Lease may be subordinated as an additional
        insured, and shall provide that such coverage shall be "PRIMARY" and
        non-contributing with any insurance maintained by Landlord, which shall
        be excess insurance only. Such coverage shall also contain endorsements
        including employees as additional insureds if not covered by Tenant's
        Commercial General Liability Insurance. All such insurance shall provide
        for the severability of interests of insureds; and shall be written on
        an "OCCURRENCE" basis, which shall afford coverage for all claims based
        on acts, omissions, injury and damage, which occurred or arose (or the
        onset of which occurred or arose) in whole or in part during the policy
        period.

        (3) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Workers'
        Compensation Insurance as required by any Regulation, and Employers'
        Liability Insurance in amounts not less than One Million Dollars
        ($1,000,000) each accident for bodily injury by accident; One Million
        Dollars ($1,000,000) policy limit for bodily injury by disease; and One
        Million Dollars ($1,000,000) each employee for bodily injury by disease.

        (4) COMMERCIAL AUTO LIABILITY INSURANCE. Commercial auto liability
        insurance with a combined limit of not less than One Million Dollars
        ($1,000,000) for bodily injury and property damage for each accident.
        Such insurance shall cover liability relating to any auto of Tenant
        (including owned, hired and non-owned autos, and automobiles used within
        the scope of employment under Tenant).

        (5) ALTERATIONS REQUIREMENTS. In the event Tenant shall desire to
        perform any Alterations, Tenant shall deliver to Landlord, prior to
        commencing such Alterations (i) evidence reasonably satisfactory to
        Landlord that Tenant carries "Builder's

                                       8
<PAGE>   9

        Risk" insurance covering construction of such Alterations in an amount
        and form approved by Landlord, (ii) such other insurance as Landlord
        shall nondiscriminatorily and reasonably require, and (iii) a lien and
        completion bond or other security in form and amount satisfactory to
        Landlord in Landlord's reasonable discretion (which amount of such bond
        or other security shall be approximately one hundred fifty percent
        (150%) of the total cost of completion of the portion of the Tenant
        Improvements for which Landlord requires such additional security).
        Landlord shall in no event be required to accept an instrument of
        security for purposes of the foregoing sentence which instrument of
        security is not customarily accepted by Landlord for such purposes in
        the ordinary course of Landlord's business operations.

        (6) GENERAL INSURANCE REQUIREMENTS. All coverages described in this
        Paragraph 8.B. shall be endorsed to (i) provide Landlord with thirty
        (30) days' notice of cancellation or change in terms; and (ii) waive all
        rights of subrogation by the insurance carrier against Landlord. If at
        any time during the Term the amount or coverage of insurance which
        Tenant is required to carry under this Paragraph 8.B. is, in Landlord's
        reasonable judgment, materially less than the amount or type of
        insurance coverage typically carried by owners or tenants of properties
        located in the general area in which the Premises are located which are
        similar to and operated for similar purposes as the Premises or if
        Tenant's use of the Premises should change with or without Landlord's
        consent, Landlord shall have the right to require Tenant to increase the
        amount or change the types of insurance coverage required under this
        Paragraph 8.B. All insurance policies required to be carried by Tenant
        under this Lease shall be written by companies rated A X or better in
        "Best's Insurance Guide" and authorized to do business in the State of
        California. With respect to the Tenant named hereunder (Brocade
        Communications Systems, Inc."), in any event deductible amounts under
        all insurance policies required to be carried by Tenant under this Lease
        shall not exceed One Hundred Thousand Dollars ($100,000.00) per
        occurrence, provided that Tenant maintains a tangible net worth of at
        least Fifty Million and No/100 Dollars ($50,000,000.00) as reasonably
        determined by Landlord, or, if Tenant's net worth is less than Fifty
        Million and No/100 Dollars ($50,000,000.00), such deductible amounts
        shall not exceed Twenty-Five Thousand and No/100 Dollars ($25,000.00)
        per occurrence. With respect to any other party which becomes "Tenant"
        under this Lease, by assignment or operation of law, or otherwise, in
        any event deductible amounts under all insurance policies required to be
        carried by Tenant under this Lease shall not exceed Five Thousand
        Dollars ($5,000.00) per occurrence. Tenant shall deliver to Landlord on
        or before the Term Commencement Date, and thereafter at least fifteen
        (15) days before the expiration dates of the expired policies, certified
        copies of Tenant's insurance policies, or a certificate evidencing the
        same issued by the insurer thereunder; and, if Tenant shall fail to
        procure such insurance, or to deliver such policies or certificates,
        Landlord may, at Landlord's option and in addition to Landlord's other
        remedies in the event of a default by Tenant hereunder, procure the same
        for the account of Tenant, and the cost thereof shall be paid to
        Landlord as Additional Rent.

C. INDEMNIFICATION. Tenant shall indemnify, defend by counsel reasonably
acceptable to Landlord, protect and hold Landlord, Spieker Properties, Inc., and
each of their respective directors, shareholders, partners, lenders, members,
managers, contractors, affiliates and employees (collectively, "LANDLORD
INDEMNITEES") harmless from and against any and all claims, liabilities, losses,
costs, loss of rents, liens, damages, injuries or expenses, including reasonable
attorneys' and consultants' fees and court costs, demands, causes of action, or
judgments, directly or indirectly arising out of or related to: (1) claims of
injury to or death of persons or damage to property or business loss occurring
or resulting directly or indirectly from the use or occupancy of the Premises,
Building or Project by Tenant or Tenant's Parties, or from activities or
failures to act of Tenant or Tenant's Parties; (2) claims arising from work or
labor performed, or for materials or supplies furnished to or at the request or
for the account of Tenant in connection with performance of any work done for
the account of Tenant within the Premises or Project; (3) claims arising from
any breach or default on the part of Tenant in the performance of any covenant
contained in this Lease; and (4) claims arising from the negligence or
intentional acts or omissions of Tenant or Tenant's Parties. The foregoing
indemnity by Tenant shall not be applicable to claims to the extent arising from
the gross negligence or willful misconduct of Landlord or Landlord's agents,
employees, or contractors or Landlord's breach of a material term of this Lease
beyond any applicable cure periods. Landlord shall not be liable to Tenant and
Tenant hereby waives all claims against Landlord for any injury to or death of,
or damage to any person or property or business loss in or about the Premises,
Building or Project by or from any cause whatsoever (other than Landlord's gross
negligence or willful misconduct or Landlord's breach of a material term of this
Lease beyond any applicable cure periods) and, without limiting the generality
of the foregoing, whether caused by water leakage of any character from the
roof, walls, basement or other portion of the Premises, Building or Project, or
caused by gas, fire, oil or electricity in, on or about the Premises, Building
or Project, acts of God or of third parties, or any matter outside of the
reasonable control of Landlord. The provisions of this Paragraph shall survive
the expiration or earlier termination of this Lease.

                            9. WAIVER OF SUBROGATION

        Landlord and Tenant each waives any claim, loss or cost it might have
against the other for any injury to or death of any person or persons, or damage
to or theft, destruction, loss, or loss of use of any property (a "LOSS"), to
the extent the same is insured against (or is required to be insured against
under the terms hereof) under any property damage insurance policy covering the
Building, the Premises, Landlord's or Tenant's fixtures, personal property,
leasehold improvements, or business, regardless of whether the negligence of the
other party caused such Loss.

                     10. LANDLORD'S REPAIRS AND MAINTENANCE

        Landlord shall maintain in good repair, reasonable wear and tear
excepted, the structural soundness of the roof, foundations, and exterior walls
of the Building. The term "exterior walls" as used herein shall not include
windows, glass or plate glass, doors, special store fronts or office entries.
Any damage caused by or repairs necessitated by any negligence or act of Tenant
or Tenant's Parties may be repaired by Landlord at Landlord's option and
Tenant's expense. Tenant shall promptly give Landlord written notice of any
defect or need of repairs in such components of the Building for which Landlord
is responsible upon Tenant's knowledge of the same, after which Landlord shall
have a reasonable opportunity and the right to enter the Premises at all
reasonable times to repair same. Landlord shall make commercially reasonable
efforts to cause its agents, employees and contractors who enter the Premises to
use commercially reasonable efforts not to unreasonably interfere with Tenant's
Permitted Use of the Premises. Landlord's liability with respect to any defects,
repairs, or maintenance for which Landlord is responsible under any of the
provisions of this Lease shall be limited to the cost of such repairs or
maintenance, and there shall be no abatement of rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of repairs, alterations or improvements in or to any
portion of the Premises, the Building or the Project or to fixtures,
appurtenances or equipment in the Building, except as provided in Paragraph 24.
Subject to punchlist items described in Paragraph 2.B hereof, by taking
possession of the Premises, Tenant accepts them "as is," as being in good order,
condition and repair and the condition in which Landlord is obligated to deliver
them and suitable for the Permitted Use and Tenant's intended operations in the
Premises, whether or not any notice of acceptance is given. Landlord shall
promptly commence the correction of the punchlist items described in Paragraph
2.B hereof, if any, following Landlord's receipt of any such punchlist items
list in accordance with this Lease.

                      11. TENANT'S REPAIRS AND MAINTENANCE

        Tenant shall at all times during the Term at Tenant's expense maintain
all parts of the Premises and such portions of the Building as are within the
exclusive control of Tenant in a first-class, good, clean and secure condition
and promptly make all necessary repairs and replacements, as reasonably
determined by Landlord, with materials and workmanship of the same character,
kind and quality as the original. Notwithstanding anything to the contrary
contained herein, Tenant shall, at its expense, promptly repair any damage to
the Premises or the Building or Project resulting from or caused by any
negligence or act of Tenant or Tenant's Parties.

                                       9
<PAGE>   10

                                 12. ALTERATIONS

A. Tenant shall not make, or allow to be made, any alterations, physical
additions, improvements or partitions, including without limitation the
attachment of any fixtures or equipment, in, about or to the Premises
("ALTERATIONS") without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed with respect to proposed
Alterations which: (a) comply with all applicable Regulations; (b) are, in
Landlord's reasonable opinion, compatible with the Building or the Project and
its mechanical, plumbing, electrical, heating/ventilation/air conditioning
systems, and will not cause the Building or Project or such systems to be
required to be modified to comply with any Regulations (including, without
limitation, the Americans With Disabilities Act), unless Tenant in its sole
discretion agrees in writing to pay for all costs and expenses associated with
such compliance requirement (which agreement shall survive termination of this
Lease); and (c) will not interfere with the use and occupancy of any other
portion of the Building or Project by any other tenant or its invitees.
Specifically, but without limiting the generality of the foregoing, Landlord
shall have the right of written consent for all plans and specifications for the
proposed Alterations, construction means and methods, all appropriate permits
and licenses, any contractor or subcontractor to be employed on the work of
Alterations, and the time for performance of such work, and may impose
reasonable rules and regulations for contractors and subcontractors performing
such work. Tenant shall also supply to Landlord any documents and information
reasonably requested by Landlord in connection with Landlord's consideration of
a request for approval hereunder. Notwithstanding the foregoing, Tenant shall
have the right, without consent of, but upon at least ten (10) business days'
prior written notice (as provided under Paragraph 12.B below) to, Landlord, to
make non-structural, cosmetic Alterations within the interior of the Premises
(and which are not visible from the outside of the Premises), which do not
impair the value of the Building, and which cost, in the aggregate, less than
Twenty-Five Thousand Dollars ($25,000.00) in any twelve (12) month period during
the Term of this Lease, provided that such Alterations shall nevertheless be
subject to all of the remaining requirements of this Paragraph 12, including
without limitation, subparagraphs (a) through (c) above, other than the
requirement of Landlord's prior consent. In addition, all Alterations shall be
performed by duly licensed contractors or subcontractors reasonably acceptable
to Landlord, proof of insurance shall be submitted to Landlord as required under
Paragraph 8.B above, and Landlord reserves the right to impose reasonable rules
and regulations for contractors and subcontractors. Tenant shall, if requested
by Landlord, promptly furnish Landlord with complete as-built plans and
specifications for any Alterations performed by Tenant to the Premises, at
Tenant's sole cost and expense. Tenant shall cause all Alterations to be
accomplished in a first-class, good and workmanlike manner, and to comply with
all applicable Regulations and Paragraph 27 hereof. Tenant shall at Tenant's
sole expense, perform any additional work required under applicable Regulations
due to the Alterations hereunder. No review or consent by Landlord of or to any
proposed Alteration or additional work shall constitute a waiver of Tenant's
obligations under this Paragraph 12, nor constitute any warranty or
representation that the same complies with all applicable Regulations, for which
Tenant shall at all times be solely responsible. Tenant shall reimburse Landlord
for all costs which Landlord may incur in connection with granting approval to
Tenant for any such Alterations, including any costs or expenses which Landlord
may incur in electing to have outside architects and engineers review said plans
and specifications, and shall pay Landlord an administration fee of five percent
(5%) of the cost of the Alterations as Additional Rent hereunder. All such
Alterations shall remain the property of Tenant until the expiration or earlier
termination of this Lease, at which time they shall be and become the property
of Landlord; provided, however, that Landlord may, at Landlord's option, require
that Tenant, at Tenant's expense, remove any or all Alterations (excluding the
initial Tenant Improvements) made by or on behalf of Tenant and restore the
Premises by the expiration or earlier termination of this Lease, to their
condition existing prior to the construction of any such Alterations, reasonable
wear and tear excepted. All such removals and restoration shall be accomplished
in a first-class and good and workmanlike manner so as not to cause any damage
to the Premises or Project whatsoever. If Tenant fails to remove such
Alterations or Tenant's trade fixtures or furniture or other personal property,
Landlord may keep and use them or remove any of them and cause them to be stored
or sold in accordance with applicable law, at Tenant's sole expense. In addition
to and wholly apart from Tenant's obligation to pay Tenant's Proportionate Share
of Operating Expenses, Tenant shall be responsible for and shall pay prior to
delinquency any taxes or governmental service fees, possessory interest taxes,
fees or charges in lieu of any such taxes, capital levies, or other charges
imposed upon, levied with respect to or assessed against its fixtures or
personal property, on the value of Alterations within the Premises, and on
Tenant's interest pursuant to this Lease, or any increase in any of the
foregoing based on such Alterations. To the extent that any such taxes are not
separately assessed or billed to Tenant, Tenant shall pay the amount thereof as
invoiced to Tenant by Landlord.

At Landlord's election and notwithstanding the foregoing, however, Tenant shall
pay to Landlord the cost of removing any such Alterations and restoring the
Premises to their original condition, such cost to include a reasonable charge
for Landlord's overhead and profit as provided above at the time Landlord grants
written consent to a requested Alteration; provided, however, that Landlord
shall not require that Tenant pay to Landlord the cost of removing any such
Alterations and restoring the Premises to their original condition as described
in the foregoing sentence if the following conditions precedent are satisfied by
Tenant: (i) Tenant (and not a sublessee or assignee of Tenant) shall be the
party for which the Alterations are requested and Tenant is in possession of the
portion of the Premises upon which the Alterations shall be made, and (ii) the
removal costs of such Alterations described above are determined by Landlord in
its reasonable discretion to be less than a cumulative total of one hundred
thousand and no/100 dollars ($100,000.00) with respect to all existing
Alterations which Landlord may require to be removed pursuant to the terms of
this Lease. Nothing in the foregoing sentence shall be interpreted to relieve
Tenant of its obligations described in this Lease to remove Alterations and
restore the Premises at Tenant's cost in accordance with this Paragraph 12,
Paragraph 36 and with other applicable terms and conditions of this Lease. In
the event that Tenant does remove any such Alterations and restores the Premises
in accordance with the terms of this Lease, Landlord shall return any monies
delivered by Tenant to Landlord in accordance with the preceding sentence. In
the event Tenant fails to remove Alterations and restore the Premises in
accordance with the terms of this Lease, Landlord may perform the same on
Tenant's behalf apply monies collected by Landlord for such purpose to the
removal and restoration or, in the event Landlord does not require any such
payment by Tenant, the amount due from Tenant may be deducted from the Security
Deposit or any other sums or amounts held by Landlord under this Lease.

B. In compliance with Paragraph 27 hereof, at least ten (10) business days
before beginning construction of any Alteration, Tenant shall give Landlord
written notice of the expected commencement date of that construction to permit
Landlord to post and record a notice of non-responsibility. Upon substantial
completion of construction, if the law so provides, Tenant shall cause a timely
notice of completion to be recorded in the office of the recorder of the county
in which the Building is located.

C. Notwithstanding anything to the contrary contained in Paragraph 12.A, at the
time Landlord gives its consent for any Alterations, Tenant shall also be
notified whether or not Landlord will require that such Alterations be removed
upon the expiration or earlier termination of this Lease. Landlord shall respond
to Tenant's written request within fifteen (15) business days. In the event
Landlord fails to respond to Tenant's written request within such fifteen (15)
business day time period, Landlord shall not be in default hereof nor shall
Tenant be deemed to have received consent to the requested Alterations; however
Tenant is entitled to provide a second written request for consent to Landlord.
Landlord shall respond to Tenant's second written request for consent described
in this Paragraph 12.C within ten (10) business days after Landlord's receipt
thereof. In the event Landlord fails to so respond to Tenant's second written
request, Landlord shall be deemed to have consented to Tenant's request to make
Alterations; provided, however, that if the total cost of any proposed
Alterations by Tenant during the previous six (6) month period is equal to or
more than One Hundred Thousand Dollars ($100,000.00), Landlord shall be deemed
to have rejected Tenant's second request to make such Alterations.

                                    13. SIGNS

Tenant shall not place, install, affix, paint or maintain any signs, notices,
graphics or banners whatsoever or any window decor which is visible in or from
public view or corridors, the common areas or the exterior of the Premises or
the Building, in or on any exterior window or window fronting upon any common
areas or service area without Landlord's prior written approval which Landlord
shall have the right

                                       10
<PAGE>   11

to withhold in its absolute and sole discretion; provided that Tenant's name
shall be included in any Building-standard door and directory signage, if any,
in accordance with Landlord's Building signage program, including without
limitation, payment by Tenant of any fee charged by Landlord for maintaining
such signage, which fee shall constitute Additional Rent hereunder. Any
installation of signs, notices, graphics or banners on or about the Premises or
Project approved by Landlord shall be subject to any Regulations and to any
other requirements imposed by Landlord. Tenant shall remove all such signs or
graphics by the expiration or any earlier termination of this Lease. Such
installations and removals shall be made in such manner as to avoid injury to or
defacement of the Premises, Building or Project and any other improvements
contained therein, and Tenant shall repair any injury or defacement including
without limitation discoloration caused by such installation or removal. Any
signage rights granted by Landlord to Tenant shall be exclusive to Tenant and
such rights shall not be assigned, subleased or otherwise conveyed without the
prior written approval of Landlord of which Landlord shall have the right to
withhold in its absolute and sole discretion. Tenant's signage rights under this
Paragraph are personal to the original Tenant named in this Lease and shall not
inure to the benefit of any assignees or subtenants. Notwithstanding anything
contained in this Paragraph 13 to the contrary, Tenant shall be entitled to two
(2) signs to be located as follows (a) one (1) sign on the monument facing
Technology Drive, and (b) one (1) sign on the monument facing Metro Drive each
in a location reasonably determined by Landlord. Such signage right is personal
to Tenant and subject to the following terms and conditions:

        1.      Tenant shall submit plans and drawings for such signage to the
                City of San Jose and to any other public authorities having
                jurisdiction and shall obtain written approval from each such
                jurisdiction prior to installation, and shall fully comply with
                all applicable Regulations;

        2.      Tenant shall, at Tenant's sole cost and expense, design,
                construct and install such signage;

        3.      All signs shall be subject to Landlord's prior written approval,
                which Landlord shall have the right to withhold in its absolute
                and sole discretion;

        4.      Tenant shall maintain its signage in good condition and repair,
                and all costs of maintenance and repair shall be borne by
                Tenant. Maintenance shall include, without limitation, cleaning
                and, if such signage is illuminated, relamping at reasonable
                intervals. Tenant shall be responsible for any electrical energy
                used in connection with its signs;

        5.      At Landlord's option, Tenant's signage rights granted hereby may
                be revoked and terminated upon occurrence of any of the
                following events:

                (a)     Tenant shall be in material default, as defined in
                        Paragraph 26 as determined by Landlord in its sole
                        discretion, and shall not have cured said default for a
                        period of ninety (90) days;

                (b)     Except with respect to Permitted Transfers described in
                        Paragraph 21.A(3) hereof, Tenant shall assign this Lease
                        or sublet any portion of the Premises without Landlord's
                        prior written consent in accordance with Paragraph 21,
                        or Tenant occupies less than fifty percent (50%) of the
                        Premises;

                (c)     This Lease shall terminate or otherwise no longer be in
                        effect.

        6.      Upon the expiration or earlier termination of this Lease if
                Tenant fails to remove its signage in accordance with this
                Paragraph 13, or at such other time that Tenant's signage rights
                are terminated pursuant to the terms hereof, Landlord shall
                cause Tenant's signage to be removed from the Building and the
                Building to be repaired and restored to the condition which
                existed prior to the installation of Tenant's signage
                (including, if necessary, the replacement of any precast
                concrete panels), all at the sole cost and expense of Tenant and
                otherwise in accordance with Paragraph 36 of this Lease, without
                further notice from Landlord notwithstanding anything to the
                contrary contained in this Lease. Tenant shall pay all costs and
                expenses for such removal and restoration within thirty (30)
                days following delivery of an invoice therefore.

                         14. INSPECTION/POSTING NOTICES

After reasonable notice, except in emergencies where no such notice shall be
required, Landlord and Landlord's agents and representatives, shall have the
right to enter the Premises to inspect the same, to clean, to perform such work
as may be permitted or required hereunder, to make repairs, improvements or
alterations to the Premises, Building or Project or to other tenant spaces
therein, to deal with emergencies, to post such notices as may be permitted or
required by law to prevent the perfection of liens against Landlord's interest
in the Project or to exhibit the Premises to prospective tenants, purchasers,
encumbrancers or to others, or for any other purpose as Landlord may deem
necessary or desirable; provided, however, that Landlord shall use reasonable
efforts not to unreasonably interfere with Tenant's business operations. Tenant
shall not be entitled to any abatement of Rent by reason of the exercise of any
such right of entry. Tenant waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned thereby.
Landlord shall at all times have and retain a key with which to unlock all of
the doors in, upon and about the Premises, excluding Tenant's vaults and safes
or special security areas (designated in advance), and Landlord shall have the
right to use any and all means which Landlord may deem necessary or proper to
open said doors in an emergency, in order to obtain entry to any portion of the
Premises, and any entry to the Premises or portions thereof obtained by Landlord
by any of said means, or otherwise, shall not be construed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises or any portions thereof. At any time
within six (6) months prior to the expiration of the Term or following any
earlier termination of this Lease or agreement to terminate this Lease, Landlord
shall have the right to erect on the Premises, Building and/or Project a
suitable sign indicating that the Premises are available for lease.

                           15. SERVICES AND UTILITIES

A. Provided Tenant shall not be in default hereunder, and subject to the
provisions elsewhere herein contained and to the rules and regulations of the
Building, Landlord shall furnish to the Premises during ordinary business hours
of generally recognized business days, to be reasonably determined by Landlord
(but exclusive, in any event, of Saturdays, Sundays and legal holidays), water
for lavatory and drinking purposes and electricity, heat and air conditioning as
usually furnished or supplied for use of the Premises for reasonable and normal
office use as of the date Tenant takes possession of the Premises as determined
by Landlord (but not including above-standard or continuous cooling for
excessive heat-generating machines, excess lighting or equipment), janitorial
services during the times and in the manner that such services are, in
Landlord's judgment, customarily furnished in comparable office buildings in the
immediate market area, and elevator service, which shall mean service either by
nonattended automatic elevators or elevators with attendants, or both, at the
option of Landlord. Tenant acknowledges that Tenant has inspected and accepts
the water, electricity, heat and air conditioning and other utilities and
services being supplied or furnished to the Premises as of the date Tenant takes
possession of the Premises, as being sufficient for use of the Premises for
reasonable and normal office use in their present condition, "as is," and
suitable for the Permitted Use, and for Tenant's intended operations in the
Premises. Landlord shall have no obligation to provide additional or after-hours
electricity, heating or air conditioning, but if Landlord elects to provide such
services at Tenant's request, Tenant shall pay to Landlord, upon demand, a
reasonable charge for such services as reasonably determined by Landlord. Tenant
agrees to keep and cause to be kept closed all window covering

                                       11
<PAGE>   12

when necessary because of the sun's position, and Tenant also agrees at all
times to cooperate fully with Landlord and to abide by all of the regulations
and requirements which Landlord may reasonably prescribe for the proper
functioning and protection of electrical, heating, ventilating and air
conditioning systems. Wherever heat-generating machines, excess lighting or
equipment are used in the Premises which affect the temperature otherwise
maintained by the air conditioning system, Landlord reserves the right to
install supplementary air conditioning units in the Premises and the cost
thereof, including the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord.

B. Tenant shall not without written consent of Landlord use any apparatus,
equipment or device in the Premises, including without limitation, computers,
electronic data processing machines, copying machines, and other machines, using
excess lighting or using electric current, water, or any other resource in
excess of or which will in any way increase the amount of electricity, water, or
any other resource being furnished or supplied for the use of the Premises for
reasonable and normal office use, and the Permitted Use, in each case as of the
date Tenant takes possession of the Premises and as determined by Landlord, or
which will require additions or alterations to or interfere with the Building
power distribution systems; nor connect with electric current, except through
existing electrical outlets in the Premises or water pipes, any apparatus,
equipment or device for the purpose of using electrical current, water, or any
other resource. If Tenant shall require water or electric current or any other
resource in excess of that being furnished or supplied for the use of the
Premises as of the date Tenant takes possession of the Premises as determined by
Landlord, Tenant shall first procure the written consent of Landlord which
Landlord may refuse, to the use thereof, and Landlord may cause a special meter
to be installed in the Premises so as to measure the amount of water, electric
current or other resource consumed for any such other use. Tenant shall pay
directly to Landlord upon demand as an addition to and separate from payment of
Operating Expenses the cost of all such additional resources, energy, utility
service and meters (and of installation, maintenance and repair thereof and of
any additional circuits or other equipment necessary to furnish such additional
resources, energy, utility or service). Landlord may add to the separate or
metered charge a recovery of additional expense incurred in keeping account of
the excess water, electric current or other resource so consumed. Following
receipt of Tenant's request to do so, Landlord shall use good faith efforts to
restore any service specifically to be provided under Paragraph 15 that becomes
unavailable and which is in Landlord's reasonable control to restore; provided,
however, that Landlord shall in no case be liable for any damages directly or
indirectly resulting from nor shall the Rent or any monies owed Landlord under
this Lease herein reserved be abated by reason of: (a) the installation, use or
interruption of use of any equipment used in connection with the furnishing of
any such utilities or services, or any change in the character or means of
supplying or providing any such utilities or services or any supplier thereof;
(b) the failure to furnish or delay in furnishing any such utilities or services
when such failure or delay is caused by acts of God or the elements, labor
disturbances of any character, or otherwise or because of any interruption of
service due to Tenant's use of water, electric current or other resource in
excess of that being supplied or furnished for the use of the Premises as of the
date Tenant takes possession of the Premises; (c) the inadequacy, limitation,
curtailment, rationing or restriction on use of water, electricity, gas or any
other form of energy or any other service or utility whatsoever serving the
Premises or Project, whether by Regulation or otherwise; or (d) the partial or
total unavailability of any such utilities or services to the Premises or the
Building or the diminution in the quality or quantity thereof, whether by
Regulation or otherwise; or (e) any interruption in Tenant's business operations
as a result of any such occurrence; nor shall any such occurrence constitute an
actual or constructive eviction of Tenant or a breach of an implied warranty by
Landlord. Landlord shall further have no obligation to protect or preserve any
apparatus, equipment or device installed by Tenant in the Premises, including
without limitation by providing additional or after-hours heating or air
conditioning. Landlord shall be entitled to cooperate voluntarily and in a
reasonable manner with the efforts of national, state or local governmental
agencies or utility suppliers in reducing energy or other resource consumption.
The obligation to make services available hereunder shall be subject to the
limitations of any such voluntary, reasonable program. In addition, Landlord
reserves the right to change the supplier or provider of any such utility or
service from time to time. Tenant shall have the right to directly contract with
or otherwise obtain any electrical or janitorial service for or with respect to
the Premises or Tenant's operations therein from any supplier or provider of any
such service. Tenant shall cooperate with Landlord and any supplier or provider
of such services designated by Landlord from time to time to facilitate the
delivery of such services to Tenant at the Premises and to the Building and
Project, including without limitation allowing Landlord and Landlord's suppliers
or providers, and their respective agents and contractors, reasonable access to
the Premises for the purpose of installing, maintaining, repairing, replacing or
upgrading such service or any equipment or machinery associated therewith.

C. Tenant shall pay, upon demand, for all utilities furnished to the Premises,
or if not separately billed to or metered to Tenant, Tenant's Proportionate
Share of all charges jointly serving the Project in accordance with Paragraph 7.
All sums payable under this Paragraph 15 shall constitute Additional Rent
hereunder.

D. Tenant may contract separately with providers of telecommunications or
cellular products, systems or services for the Premises. Even though such
products, systems or services may be installed or provided by such providers in
the Building, in consideration for Landlord's permitting such providers to
provide such services to Tenant, Tenant agrees that Landlord and the Landlord
Indemnitees shall in no event be liable to Tenant or any Tenant Party for any
damages of any nature whatsoever arising out of or relating to the products,
systems or services provided by such providers (or any failure, interruption,
defect in or loss of the same) or any acts or omissions of such providers in
connection with the same or any interference in Tenant's business caused
thereby. Tenant waives and releases all rights and remedies against Landlord and
the Landlord Indemnitees that are inconsistent with the foregoing.

                                16. SUBORDINATION

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, this Lease shall be and is hereby
declared to be subject and subordinate at all times to: (a) all ground leases or
underlying leases which may now exist or hereafter be executed affecting the
Premises and/or the land upon which the Premises and Project are situated, or
both; and (b) any mortgage or deed of trust which may now exist or be placed
upon the Building, the Project and/or the land upon which the Premises or the
Project are situated, or said ground leases or underlying leases, or Landlord's
interest or estate in any of said items which is specified as security.
Notwithstanding the foregoing, Landlord shall have the right to subordinate or
cause to be subordinated any such ground leases or underlying leases or any such
liens to this Lease. If any ground lease or underlying lease terminates for any
reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the successor in interest to
Landlord provided that Tenant shall not be disturbed in its possession under
this Lease by such successor in interest so long as Tenant is not in default
under this Lease. Within ten (10) days after request by Landlord, Tenant shall
execute and deliver any additional documents evidencing Tenant's attornment or
the subordination of this Lease with respect to any such ground leases or
underlying leases or any such mortgage or deed of trust, in the form requested
by Landlord or by any ground landlord, mortgagee, or beneficiary under a deed of
trust, subject to such nondisturbance requirement. If requested in writing by
Tenant, Landlord shall use commercially reasonable efforts to obtain a
subordination, nondisturbance and attornment agreement for the benefit of Tenant
reflecting the foregoing from any ground landlord, mortgagee or beneficiary, at
Tenant's expense, subject to such other terms and conditions as the ground
landlord, mortgagee or beneficiary may require.

                            17. FINANCIAL STATEMENTS

At the request of Landlord from time to time, Tenant shall provide to Landlord
Tenant's and any guarantor's current financial statements or other information
discussing financial worth of Tenant and any guarantor, which Landlord shall use
solely for purposes of this Lease and in connection with the ownership,
management, financing and disposition of the Project. Landlord shall not
disclose, provide or make available any confidential information revealed by
Tenant's private financial information to any person or entity without Tenant's
prior written consent.

                                       12
<PAGE>   13

                            18. ESTOPPEL CERTIFICATE

Tenant agrees from time to time, within ten (10) days after request of Landlord,
to deliver to Landlord, or Landlord's designee, an estoppel certificate stating
that this Lease is in full force and effect, that this Lease has not been
modified (or stating all modifications, written or oral, to this Lease), the
date to which Rent has been paid, the unexpired portion of this Lease, that
there are no current defaults by Landlord or Tenant under this Lease (or
specifying any such defaults), that the leasehold estate granted by this Lease
is the sole interest of Tenant in the Premises and/or the land at which the
Premises are situated, and such other matters pertaining to this Lease as may be
reasonably requested by Landlord or any mortgagee, beneficiary, purchaser or
prospective purchaser of the Building or Project or any interest therein.
Failure by Tenant to execute and deliver such certificate shall constitute an
acceptance of the Premises and acknowledgment by Tenant that the statements
included are true and correct without exception. Tenant agrees that if Tenant
fails to execute and deliver such certificate within such ten (10) day period,
Landlord may execute and deliver such certificate on Tenant's behalf and that
such certificate shall be binding on Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Building or
Project or any interest therein. The parties agree that Tenant's obligation to
furnish such estoppel certificates in a timely fashion is a material inducement
for Landlord's execution of this Lease, and shall be an event of default
(without any cure period that might be provided under Paragraph 26.A(3) of this
Lease) if Tenant fails to fully comply or makes any material misstatement in any
such certificate.

                              19. SECURITY DEPOSIT

Tenant agrees to deposit with Landlord upon execution of this Lease, a security
deposit as stated in the Basic Lease Information (the "SECURITY DEPOSIT"), which
sum shall be held and owned by Landlord, without obligation to pay interest, as
security for the performance of Tenant's covenants and obligations under this
Lease. The Security Deposit is not an advance rental deposit or a measure of
damages incurred by Landlord in case of Tenant's default. Upon the occurrence of
any event of default by Tenant, Landlord may from time to time, without
prejudice to any other remedy provided herein or by law, use such fund as a
credit to the extent necessary to credit against any arrears of Rent or other
payments due to Landlord hereunder, and any other damage, injury, expense or
liability caused by such event of default, and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be promptly returned by
Landlord to Tenant at such time after termination of this Lease that all of
Tenant's obligations under this Lease have been fulfilled to Landlord's
reasonable satisfaction, reduced by such amounts as may be required by Landlord
(i) to remedy defaults on the part of Tenant in the payment of Rent or other
obligations of Tenant under this Lease, (ii) to repair damage to the Premises,
Building or Project caused by Tenant or any Tenant's Parties, and (iii) to clean
the Premises to the extent Tenant fails to comply with Paragraph 36 hereof.
Landlord may use and commingle the Security Deposit with other funds of
Landlord. Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, and all other provisions of any Regulations, now or
hereinafter in force, which restricts the amount or types of claim that a
landlord may make upon a security deposit or imposes upon a landlord (or its
successors) any obligation with respect to the handling or return of security
deposits.

                       20. LIMITATION OF TENANT'S REMEDIES

The obligations and liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of Landlord or of the
individual or other partners of Landlord or its or their partners, directors,
officers, or shareholders, and Tenant agrees to look solely to Landlord's
interest in the Project for the recovery of any amount from Landlord, and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual or other partners of Landlord or its or their partners, directors,
officers or shareholders. Any lien obtained to enforce any such judgment and any
levy of execution thereon shall be subject and subordinate to any lien, mortgage
or deed of trust on the Project. Under no circumstances shall Tenant have the
right to offset against or recoup Rent or other payments due and to become due
to Landlord hereunder except as expressly provided in this Lease, which Rent and
other payments shall be absolutely due and payable hereunder in accordance with
the terms hereof. In no case shall Landlord be liable to Tenant for any lost
profits, damage to business, or any form of special, indirect or consequential
damage on account of any breach of this Lease or otherwise, notwithstanding
anything to the contrary contained in this Lease.

                          21. ASSIGNMENT AND SUBLETTING

A.      (1) GENERAL. This Lease has been negotiated to be and is granted as an
        accommodation to Tenant. Accordingly, this Lease is personal to Tenant,
        and Tenant's rights granted hereunder do not include the right to assign
        this Lease or sublease the Premises, or to receive any excess, either in
        installments or lump sum, over the Rent which is expressly reserved by
        Landlord as hereinafter provided, except as otherwise expressly
        hereinafter provided. Tenant shall not assign or pledge this Lease or
        sublet the Premises or any part thereof, whether voluntarily or by
        operation of law, or permit the use or occupancy of the Premises or any
        part thereof by anyone other than Tenant, or suffer or permit any such
        assignment, pledge, subleasing or occupancy, without Landlord's prior
        written consent except as provided herein. If Tenant desires to assign
        this Lease or sublet any or all of the Premises in the case where
        Landlord's consent is required, Tenant shall give Landlord written
        notice (the "TRANSFER NOTICE") at least thirty (30) days prior to the
        anticipated effective date of the proposed assignment or sublease, which
        shall contain all of the information reasonably requested by Landlord to
        address Landlord's decision criteria specified hereinafter. Landlord
        shall then have a period of ten (10) business days following receipt of
        the Transfer Notice to notify Tenant in writing that Landlord elects
        either: (i) to terminate this Lease as to the space so affected as of
        the date so requested by Tenant; or (ii) to consent to the proposed
        assignment or sublease, subject, however, to Landlord's prior written
        consent of the proposed assignee or subtenant and of any related
        documents or agreements associated with the assignment or sublease. If
        Landlord should fail to notify Tenant in writing of such election within
        said period, Landlord shall be deemed to have waived option (i) above,
        but written consent by Landlord of the proposed assignee or subtenant
        shall still be required. If Landlord does not exercise option (i) above,
        Landlord's consent to a proposed assignment or sublease shall not be
        unreasonably withheld. Consent to any assignment or subletting shall not
        constitute consent to any subsequent transaction to which this Paragraph
        21 applies. Notwithstanding the foregoing, Landlord hereby waives its
        right to recapture a portion of the Premises, as such right is described
        in clause (i) above, in the following circumstance only: (X) The term of
        such proposed sublease shall be no more than forty-eight (48) months and
        no extension options shall be granted in such sublease. With respect to
        any sublease that occurs, the standard of "sound financial condition"
        described as a condition to Landlord's consent shall be based upon a
        determination by Landlord, in its reasonable discretion, that such
        proposed transferee shall have a tangible net worth, evidenced by
        audited financial statements delivered to Landlord pursuant to the terms
        of this Lease, that is reasonably sufficient, taking into account all
        expected obligations of the transferee with respect to the proposed
        transfer and all of its other contingent and noncontingent obligations,
        to service when due the obligations of the transferee with respect to
        the proposed transfer.

(2)     CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other instances
        in which it may be reasonable for Landlord to withhold Landlord's
        consent to an assignment or subletting, Landlord and Tenant acknowledge
        that it shall be reasonable for Landlord to withhold Landlord's consent
        in the following instances: if the proposed assignee does not agree to
        be bound by and assume the obligations of Tenant under this Lease in
        form and substance reasonably satisfactory to Landlord; the use of the
        Premises by such proposed assignee or subtenant would not be a Permitted
        Use or would violate any exclusivity or other arrangement which Landlord
        has with any other tenant or occupant or any Regulation or would
        increase the Occupancy Density or Parking Density of the Building or
        Project, or would otherwise result in an undesirable tenant mix for the
        Project as

                                       13
<PAGE>   14

        determined by Landlord; the proposed assignee or subtenant is not of
        sound financial condition as determined by Landlord in Landlord's sole
        discretion; the proposed assignee or subtenant is a governmental agency;
        the proposed assignee or subtenant does not have a good reputation as a
        tenant of property or a good business reputation; the proposed assignee
        or subtenant is a person with whom Landlord is negotiating to lease
        space in the Project or is a present tenant of the Project if Tenant's
        proposed sublease space competes with space Landlord has available for
        lease in the Project ; the assignment or subletting would entail any
        Alterations which would lessen the value of the leasehold improvements
        in the Premises or use of any Hazardous Materials (except as expressly
        approved in this Lease) or other noxious use or use which may
        unreasonably disturb other tenants of the Project; or Tenant is in
        default of any obligation of Tenant under this Lease, or Tenant has
        defaulted under this Lease on three (3) or more occasions during any
        twelve (12) months preceding the date that Tenant shall request consent.
        Failure by or refusal of Landlord to consent to a proposed assignee or
        subtenant shall not cause a termination of this Lease. Upon a
        termination under Paragraph 21.A(1)(i), Landlord may lease the Premises
        to any party, including parties with whom Tenant has negotiated an
        assignment or sublease, without incurring any liability to Tenant. At
        the option of Landlord, a surrender and termination of this Lease shall
        operate as an assignment to Landlord of some or all subleases or
        subtenancies. Landlord shall exercise this option by giving notice of
        that assignment to such subtenants on or before the effective date of
        the surrender and termination. In connection with each request for
        assignment or subletting, Tenant shall pay to Landlord Landlord's
        standard fee (which amount shall not exceed $1,500.00) for approving
        such requests, as well as all costs reasonably incurred by Landlord and
        all costs incurred by any mortgagee or ground lessor in approving each
        such request and effecting any such transfer, including, without
        limitation, reasonable attorneys' fees.

(3)     PERMITTED TRANSFERS. An "Affiliate" means any entity that (i) controls,
        is controlled by, or is under common control with Tenant (ii) results
        from the transfer of all or substantially all of Tenant's assets or
        stock, or (iii) results from the merger or consolidation of Tenant with
        another entity. "Control," as used in the previous sentence, means the
        direct or indirect ownership of more than fifty percent (50%) of the
        voting securities of an entity or possession of the right to vote more
        than fifty percent (50%) of the voting interest in the ordinary
        direction of the entity's affairs. Notwithstanding anything to the
        contrary contained in this Lease, Landlord's consent is not required for
        any assignment of this Lease or sublease of all or a portion of the
        Premises to an Affiliate so long as the following conditions are met:
        (a) at least five (5) days after any such assignment or sublease,
        Landlord receives written notice of such assignment or sublease (as well
        as any documents or information reasonably requested by Landlord
        regarding the transfer and the transferee in support of the requirements
        of this Paragraph 21.A(3)); (b) Tenant is not then in default under this
        Lease; (c) if the transfer is an assignment or any other transfer to an
        Affiliate other than a sublease, the intended assignee assumes in
        writing all of Tenant's obligations under this Lease relating to the
        Premises in form satisfactory to Landlord or, if the transfer is a
        sublease, the intended sublessee accepts the sublease in form
        satisfactory to Landlord; (d) the intended transferee has a tangible net
        worth, as evidenced by financial statements delivered to Landlord and
        certified by an independent certified public accountant in accordance
        with generally accepted accounting principles that are consistently
        applied, at least equal to Tenant as of the date of this Lease; (e) the
        Premises shall continue to be operated solely for the use specified in
        the Basic Lease Information; and (f) Tenant shall pay to Landlord
        Landlord's standard fee (which amount shall not exceed $1,500.00) for
        approving assignments and subleases and all costs reasonably incurred by
        Landlord and all costs incurred by any mortgagee or ground lessor for
        such assignment or subletting, including, without limitation, reasonable
        attorneys' fees. No transfer to an Affiliate in accordance with this
        subparagraph shall relieve Tenant named herein of any obligation under
        this Lease or alter the liability of Tenant named herein for the payment
        of Rent or for the performance of any other obligation to be performed
        by Tenant, including the obligations contained in Paragraph 25 with
        respect to any Affiliate.

B. BONUS RENT. Any Rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the Rent payable hereunder, after
amortization of a reasonable brokerage commission and reasonable attorneys' fees
incurred by Tenant solely in connection with the sublease or assignment,
reasonable, actual out of pocket costs of tenant improvements made solely in
connection with the sublease or assignment and paid for by Tenant, and
reasonable, out-of-pocket marketing costs, shall be divided and paid, forty
percent (40%) to Tenant, sixty percent (60%) to Landlord. In any subletting or
assignment undertaken by Tenant, Tenant shall diligently seek to obtain the
then-fair market rental amount (as reasonably determined by Landlord and Tenant)
available in the marketplace for comparable space available for leasing (using
as a basis for such determination other Landlord-owned Buildings and Projects of
the same stature and located in the same geographic area in which the Premises
are located).

C. CORPORATION. If Tenant is a corporation, a transfer of corporate shares by
sale, assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings) resulting in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this Lease. Notwithstanding anything to the
contrary in this Lease, the transfer of outstanding capital stock or other
listed equity interests, or the purchase of outstanding capital stock or other
listed equity interests, or the purchase of equity interests issued in an
initial public offering of stock, by persons or parties other than "insiders"
within the meaning of the Securities Exchange Act of 1934, as amended, through
the "over-the-counter" market or any recognized national or international
securities exchange shall not be included in determining whether control has
been transferred.

D. UNINCORPORATED ENTITY. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or of the underlying beneficial interests of
said entity and/or a change in the identity of the persons responsible for the
general credit obligations of said entity shall constitute an assignment for all
purposes of this Lease.

E. LIABILITY. No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or any guarantor of this
Lease of any liability under its guaranty or alter the primary liability of the
Tenant named herein for the payment of Rent or for the performance of any other
obligations to be performed by Tenant, including obligations contained in
Paragraph 25 with respect to any assignee or subtenant. Landlord may collect
rent or other amounts or any portion thereof from any assignee, subtenant, or
other occupant of the Premises, permitted or otherwise, and apply the net rent
collected to the Rent payable hereunder, but no such collection shall be deemed
to be a waiver of this Paragraph 21, or the acceptance of the assignee,
subtenant or occupant as tenant, or a release of Tenant from the further
performance by Tenant of the obligations of Tenant under this Lease or of any
guarantor. Any assignment or subletting which conflicts with the provisions
hereof shall be void.

                                  22. AUTHORITY

Landlord represents and warrants that it has full right and authority to enter
into this Lease and to perform all of Landlord's obligations hereunder and that
all persons signing this Lease on its behalf are authorized to do. Tenant and
the person or persons, if any, signing on behalf of Tenant, jointly and
severally represent and warrant that Tenant has full right and authority to
enter into this Lease, and to perform all of Tenant's obligations hereunder, and
that all persons signing this Lease on its behalf are authorized to do so.

                                23. CONDEMNATION

A. CONDEMNATION RESULTING IN TERMINATION. If the whole or any substantial part
of the Premises should be taken or condemned for any public use under any
Regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would

                                       14
<PAGE>   15

prevent or materially interfere with the Permitted Use of the Premises, either
party shall have the right to terminate this Lease at its option. If any
material portion of the Building or Project is taken or condemned for any public
use under any Regulation, or by right of eminent domain, or by private purchase
in lieu thereof, Landlord may terminate this Lease at its option. In either of
such events, the Rent shall be abated during the unexpired portion of this
Lease, effective when the physical taking of said Premises shall have occurred.

B. CONDEMNATION NOT RESULTING IN TERMINATION. If a portion of the Project of
which the Premises are a part should be taken or condemned for any public use
under any Regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and the taking prevents or materially interferes with the
Permitted Use of the Premises, and this Lease is not terminated as provided in
Paragraph 23.A. above, the Rent payable hereunder during the unexpired portion
of this Lease shall be reduced, beginning on the date when the physical taking
shall have occurred, to such amount as may be fair and reasonable under all of
the circumstances, but only after giving Landlord credit for all sums received
or to be received by Tenant by the condemning authority, subject to the last
sentence of Paragraph 23.C of this Lease. Notwithstanding anything to the
contrary contained in this Paragraph, if the temporary use or occupancy of any
part of the Premises shall be taken or appropriated under power of eminent
domain during the Term, this Lease shall be and remain unaffected by such taking
or appropriation and Tenant shall continue to pay in full all Rent payable
hereunder by Tenant during the Term; in the event of any such temporary
appropriation or taking, Tenant shall be entitled to receive that portion of any
award which represents compensation for the use of or occupancy of the Premises
during the unexpired Term. In the event a portion or the whole of Tenant's
Premises shall be taken or appropriated under the power of eminent domain or
conveyed in lieu thereof and such restoration cannot be made, in Landlord's sole
opinion, within one hundred eight (180) days from the time of taking, Landlord
shall notify Tenant within sixty (60) days of such taking and Tenant shall have
the right to cancel this Lease by giving Landlord written notice of its
intention to cancel within thirty (30) days of the date of Landlord's notice.
If, however, within sixty (60) days after the date that the nature and extent of
the taking are finally determined, Landlord notifies Tenant that Landlord at its
cost will add on to the remaining Premises so that the area and the approximate
layout of the Premises will be substantially the same after the date of taking
as they were before the date of taking, and Landlord commences the restoration
immediately and completes the restoration within one hundred eighty (180) days
after Landlord so notifies Tenant, this Lease shall continue in full force and
effect without any reduction in Rent, except the abatement made pursuant to this
paragraph.

C. AWARD. Landlord shall be entitled to (and Tenant shall assign to Landlord)
any and all payment, income, rent, award or any interest therein whatsoever
which may be paid or made in connection with such taking or conveyance and
Tenant shall have no claim against Landlord or otherwise for any sums paid by
virtue of such proceedings, whether or not attributable to the value of any
unexpired portion of this Lease, except as expressly provided in this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant's personal property and moving costs, shall be and
remain the property of Tenant.

D. WAIVER OF CCP SECTION 1265.130. Each party waives the provisions of
California Civil Code Procedure Section 1265.130 allowing either party to
petition the superior court to terminate this Lease as a result of a partial
taking.

                               24. CASUALTY DAMAGE

A. GENERAL. If the Premises or Building should be damaged or destroyed by fire,
tornado, or other casualty (collectively, "CASUALTY"), Tenant shall give
immediate written notice thereof to Landlord upon learning of the same. Within
thirty (30) days after Landlord's receipt of such notice, Landlord shall notify
Tenant whether in Landlord's good faith estimation material restoration of the
Premises can reasonably be made within one hundred eighty (180) days from the
date of such notice and receipt of required permits for such restoration.
Landlord's determination shall be binding on Tenant.

B. WITHIN 180 DAYS. If the Premises or Building should be damaged by Casualty to
such extent that material restoration can in Landlord's estimation be reasonably
completed within one hundred eighty (180) days after the date of such notice and
receipt of required permits for such restoration, this Lease shall not
terminate. Provided that insurance proceeds are received by Landlord to fully
repair the damage, Landlord shall proceed to rebuild and repair the Premises
diligently and in the manner determined by Landlord, except that Landlord shall
not be required to rebuild, repair or replace any part of any Alterations which
may have been placed on or about the Premises or paid for by Tenant. If the
Premises are untenantable in whole or in part following such damage, the Rent
payable hereunder during the period in which they are untenantable shall be
abated proportionately.

C. GREATER THAN 180 DAYS. If the Premises or Building should be damaged by
Casualty to such extent that material restoration cannot in Landlord's
estimation be reasonably completed within one hundred eighty (180) days after
the date of such notice and receipt of required permits for such rebuilding or
repair, and such damage materially and adversely interferes with the conduct of
Tenant's business in the Premises, then either Party shall have the right to
cancel this Lease by giving the other party written notice within ten (10) days
from the date of Landlord's notice that material restoration cannot in
Landlord's estimation be reasonably completed within such one hundred eighty
(180) day period. Said cancellation shall be effective thirty (30) days from the
first day that either party gives its notice to cancel. If neither party elects
to so cancel this Lease, Landlord shall proceed to rebuild and repair the
Premises diligently and in the manner determined by Landlord, except that
Landlord shall not be required to rebuild, repair or replace any part of any
Alterations which may have been placed on or about the Premises by Tenant. If
the Premises are untenantable in whole or in part following such damage, the
Rent payable hereunder during the period in which they are untenantable shall be
abated proportionately. Notwithstanding the above, Landlord shall not be
required to rebuild, repair or replace any part of any Alterations which may
have been placed, on or about the Premises or paid for by Tenant. If the
Premises are untenantable in whole or in part following such damage, the Rent
payable hereunder during the period in which they are untenantable shall be
abated proportionately, but only to the extent of rental abatement insurance
proceeds received by Landlord during the time and to the extent the Premises are
unfit for occupancy.

D. TENANT'S FAULT. Notwithstanding anything herein to the contrary, if the
Premises or any other portion of the Building are damaged by Casualty resulting
from the fault, negligence, or breach of this Lease by Tenant or any of Tenant's
Parties, Base Rent and Additional Rent shall not be diminished during the repair
of such damage and Tenant shall be liable to Landlord for the cost and expense
of the repair and restoration of the Building caused thereby to the extent such
cost and expense is not covered by insurance proceeds; provided that Tenant
shall not be liable for that portion of the repair costs for which Landlord was
obligated under the terms of this Lease to carry insurance but failed to carry
such insurance.

E. INSURANCE PROCEEDS. Notwithstanding anything herein to the contrary, if the
Premises or Building are damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, then, Landlord shall
promptly notify Tenant of the same and, in either case, Landlord shall have the
right to terminate this Lease by delivering written notice of termination to
Tenant within thirty (30) days after the date of notice to Landlord that said
damage or destruction is not fully covered by insurance or such requirement is
made by any such holder, as the case may be, whereupon this Lease shall
terminate thirty (30) days after Landlord delivers such notice. In the event
that the Premises are damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, and Landlord consequently
determines not to repair or restore the Premises, Tenant may terminate this
Lease by providing written notice of such termination to Landlord and such
termination shall be effective fifteen (15) days following Landlord's receipt of
such written notice from Tenant.

                                       15
<PAGE>   16

F. WAIVER. This Paragraph 24 shall be Tenant's sole and exclusive remedy in the
event of damage or destruction to the Premises or the Building. As a material
inducement to Landlord entering into this Lease, Tenant hereby waives any rights
it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code of
California with respect to any destruction of the Premises, Landlord's
obligation for tenantability of the Premises and Tenant's right to make repairs
and deduct the expenses of such repairs, or under any similar law, statute or
ordinance now or hereafter in effect.

G. TENANT'S PERSONAL PROPERTY. In the event of any damage or destruction of the
Premises or the Building, under no circumstances shall Landlord be required to
repair any injury or damage to, or make any repairs to or replacements of,
Tenant's personal property.

                                25. HOLDING OVER

Unless Landlord expressly consents in writing to Tenant's holding over, Tenant
shall be unlawfully and illegally in possession of the Premises, whether or not
Landlord accepts any rent from Tenant or any other person while Tenant remains
in possession of the Premises without Landlord's written consent. If Tenant
shall retain possession of the Premises or any portion thereof without
Landlord's consent following the expiration of this Lease or sooner termination
for any reason, then Tenant shall pay to Landlord for each day of such retention
the greater of the following: (i) one hundred seventy-five percent (175%) of the
amount of daily rental as of the last month prior to the date of expiration or
earlier termination, or (ii) the amount of the fair market rental as such amount
is reasonably determined by Landlord (Landlord shall use as a basis for its
determination other buildings and projects owned by Landlord, located in the
same geographic area as the Premises, and of the same class and stature as the
Building and Project). Tenant shall also indemnify, defend, protect and hold
Landlord harmless from any loss, liability or cost, including consequential and
incidental damages and reasonable attorneys' fees, incurred by Landlord
resulting from delay by Tenant in surrendering the Premises, including, without
limitation, any claims made by the succeeding tenant founded on such delay.
Acceptance of Rent by Landlord following expiration or earlier termination of
this Lease, or following demand by Landlord for possession of the Premises,
shall not constitute a renewal of this Lease, and nothing contained in this
Paragraph 25 shall waive Landlord's right of reentry or any other right.
Additionally, if upon expiration or earlier termination of this Lease, or
following demand by Landlord for possession of the Premises, Tenant has not
fulfilled its obligation with respect to repairs and cleanup of the Premises or
any other Tenant obligations as set forth in this Lease, then Landlord shall
have the right to perform any such obligations as it deems necessary at Tenant's
sole cost and expense, and any time required by Landlord to complete such
obligations shall be considered a period of holding over and the terms of this
Paragraph 25 shall apply. The provisions of this Paragraph 25 shall survive any
expiration or earlier termination of this Lease.

                                   26. DEFAULT

A. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
event of default on the part of Tenant:

        (1) ABANDONMENT. Abandonment or vacation of the Premises for a
        continuous period in excess of five (5) days. Tenant waives any right to
        notice Tenant may have under Section 1951.3 of the Civil Code of the
        State of California, the terms of this Paragraph 26.A. being deemed such
        notice to Tenant as required by said Section 1951.3.

        (2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any
        other amount due and payable hereunder date when said payment is due,
        such failure continuing for three (3) days after written notice of such
        failure, as to which time is of the essence, provided that Landlord
        shall not be required to provide such notice more than once during the
        twelve (12) month period commencing with the date of such notice. The
        second failure to pay any such amount within three (3) days after said
        payment is due during such 12-month period shall be an event of default
        hereunder without notice. Such notice shall replace rather than
        supplement any statutory notice required under Code of Civil Procedure
        Section 1161 or any similar or successor statute.

        (3) OTHER OBLIGATIONS. Failure to perform any obligation, agreement or
        covenant under this Lease other than those matters specified in
        subparagraphs (1) and (2) of this Paragraph 26.A., and in Paragraphs 8,
        16, 18 and 25, such failure continuing for thirty (30) days after
        written notice of such failure, as to which time is of the essence;
        provided, however, that in the event that any such cure cannot
        reasonably be completed within such thirty (30) day period and provided
        further that Tenant has commenced and is diligently pursuing such cure,
        Tenant shall have an additional period of fifteen (15) days to complete
        such cure. Notwithstanding anything to the contrary contained in this
        Lease, the following shall constitute an event of default under this
        Paragraph 26.A(3) without any such notice or lapse of time: (i) failure
        to provide an estoppel certificate when and as required under Paragraph
        18 hereof; (ii) failure to maintain insurance required under Paragraph 8
        hereof; (iii) failure to vacate the Premises upon the expiration or
        earlier termination of this Lease; (iv) failure to comply with any
        obligation under this Lease pertaining to Hazardous Materials; (v) any
        other matter provided for in another subparagraph of this Paragraph 26.A
        or for which another time limit is provided elsewhere in this Lease,
        including without limitation, under Exhibit C to this Lease.

        (4) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit
        of creditors.

        (5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
        Tenant, or the filing of an involuntary petition by Tenant's creditors,
        which involuntary petition remains undischarged for a period of thirty
        (30) days. If under applicable law, the trustee in bankruptcy or Tenant
        has the right to affirm this Lease and continue to perform the
        obligations of Tenant hereunder, such trustee or Tenant shall, in such
        time period as may be permitted by the bankruptcy court having
        jurisdiction, cure all defaults of Tenant hereunder outstanding as of
        the date of the affirmance of this Lease and provide to Landlord such
        adequate assurances as may be necessary to ensure Landlord of the
        continued performance of Tenant's obligations under this Lease.

        (6) RECEIVERSHIP. The employment of a receiver to take possession of
        substantially all of Tenant's assets or Tenant's leasehold of the
        Premises, if such appointment remains undismissed or undischarged for a
        period of fifteen (15) days after the order therefor.

        (7) ATTACHMENT. The attachment, execution or other judicial seizure of
        all or substantially all of Tenant's assets or Tenant's leasehold of the
        Premises, if such attachment or other seizure remains undismissed or
        undischarged for a period of fifteen (15) days after the levy thereof.

        (8) INSOLVENCY. The admission by Tenant in writing of its inability to
        pay its debts as they become due.

B.      REMEDIES UPON DEFAULT.

        (1) TERMINATION. In the event of the occurrence of any event of default,
        Landlord shall have the right to give a written termination notice to
        Tenant, and on the date specified in such notice, Tenant's right to
        possession shall terminate, and this Lease shall terminate unless on or
        before such date all Rent in arrears and all costs and expenses incurred
        by or on behalf of Landlord hereunder shall have been paid by Tenant and
        all other events of default of this Lease by Tenant at the time existing
        shall have been fully remedied to the satisfaction of Landlord. At any
        time after such termination, Landlord may recover possession of the
        Premises or any part thereof and expel and remove therefrom Tenant and
        any other person occupying the same, including any

                                       16
<PAGE>   17

        subtenant or subtenants notwithstanding Landlord's consent to any
        sublease, by any lawful means, and again repossess and enjoy the
        Premises without prejudice to any of the remedies that Landlord may have
        under this Lease, or at law or equity by any reason of Tenant's default
        or of such termination. Landlord hereby reserves the right, but shall
        not have the obligation, to recognize the continued possession of any
        subtenant. The delivery or surrender to Landlord by or on behalf of
        Tenant of keys, entry codes, or other means to bypass security at the
        Premises shall not terminate this Lease.

        (2) CONTINUATION AFTER DEFAULT. Even though an event of default may have
        occurred, this Lease shall continue in effect for so long as Landlord
        does not terminate Tenant's right to possession under Paragraph 26.B(1)
        hereof. Landlord shall have the remedy described in California Civil
        Code Section 1951.4 ("Landlord may continue this Lease in effect after
        Tenant's breach and abandonment and recover Rent as it becomes due, if
        Tenant has the right to sublet or assign, subject only to reasonable
        limitations"), or any successor code section. Accordingly, if Landlord
        does not elect to terminate this Lease on account of any event of
        default by Tenant, Landlord may enforce all of Landlord's rights and
        remedies under this Lease, including the right to recover Rent as it
        becomes due. Acts of maintenance, preservation or efforts to lease the
        Premises or the appointment of a receiver under application of Landlord
        to protect Landlord's interest under this Lease or other entry by
        Landlord upon the Premises shall not constitute an election to terminate
        Tenant's right to possession.

        (3) INCREASED SECURITY DEPOSIT. If Tenant is in default under Paragraph
        26.A(2) hereof and such default remains uncured for ten (10) days after
        such occurrence or such default occurs more than three times in any
        twelve (12) month period, Landlord may require that Tenant increase the
        Security Deposit to the amount of three times the current month's Rent
        at the time of the most recent default if the Security Deposit is less
        than the amount of three times the current month's Rent.

C. DAMAGES AFTER DEFAULT. Should Landlord terminate this Lease pursuant to the
provisions of Paragraph 26.B(1) hereof, Landlord shall have the rights and
remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State
of California, or any successor code sections. Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination, (2) the worth at the time of
award of the amount by which the unpaid Rent and other amounts that would have
been earned after the date of termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided;
(3) the worth at the time of award of the amount by which the unpaid Rent and
other amounts for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably avoided; and
(4) any other amount and court costs necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom. The "worth at the time of award" as used in (1) and (2) above
shall be computed at the Applicable Interest Rate (defined below). The "worth at
the time of award" as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%). If this Lease provides for any
periods during the Term during which Tenant is not required to pay Base Rent or
if Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base Rent
or value of such Rent concession, plus interest at the Applicable Interest Rate,
calculated from the date that such Base Rent or Rent concession would have been
payable.

D. LATE CHARGE. In addition to its other remedies, Landlord shall have the right
without notice or demand to add to the amount of any payment required to be made
by Tenant hereunder, and which is not paid and received by Landlord on or before
the first day of each calendar month, an amount equal to an amount equal to six
percent (6%) of the delinquent amount, or $150.00, whichever amount is greater,
for each month or portion thereof that the delinquency remains outstanding to
compensate Landlord for the loss of the use of the amount not paid and the
administrative costs caused by the delinquency, the parties agreeing that
Landlord's damage by virtue of such delinquencies would be extremely difficult
and impracticable to compute and the amount stated herein represents a
reasonable estimate thereof. Any waiver by Landlord of any late charges or
failure to claim the same shall not constitute a waiver of other late charges or
any other remedies available to Landlord.

E. INTEREST. Interest shall accrue on all sums not paid when due hereunder at
the lesser of ten percent (10%) per annum or the maximum interest rate allowed
by law ("APPLICABLE INTEREST RATE") from the due date until paid.

F. REMEDIES CUMULATIVE. All of Landlord's rights, privileges and elections or
remedies are cumulative and not alternative, to the extent permitted by law and
except as otherwise provided herein.

G. REPLACEMENT OF STATUTORY NOTICE REQUIREMENTS. When this Lease requires
service of a notice, that notice shall replace rather than supplement any
equivalent or similar statutory notice, including any notice required by
California Code of Civil Procedure Section 1161 or any similar or successor
statute. When a statute requires service of a notice in a particular manner,
service of that notice (or a similar notice required by this Lease) in the
manner required by this Paragraph 26 shall replace and satisfy the statutory
service-of-notice procedures, including those required by California Code of
Civil Procedure Section 1162 or any similar or successor statute.

                                    27. LIENS

Tenant shall at all times keep the Premises and the Project free from liens
arising out of or related to work or services performed, materials or supplies
furnished or obligations incurred by or on behalf of Tenant or in connection
with work made, suffered or done by or on behalf of Tenant in or on the Premises
or Project. If Tenant shall not, within ten (10) days following the imposition
of any such lien, cause the same to be released of record by payment or posting
of a proper bond, Landlord shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to cause the same
to be released by such means as Landlord shall deem proper, including payment of
the claim giving rise to such lien. All sums paid by Landlord on behalf of
Tenant and all expenses incurred by Landlord in connection therefor shall be
payable to Landlord by Tenant on demand with interest at the Applicable Interest
Rate as Additional Rent. Landlord shall have the right at all times to post and
keep posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Project and any other party having an interest therein, from mechanics' and
materialmen's liens, and Tenant shall give Landlord not less than ten (10)
business days prior written notice of the commencement of any work in the
Premises or Project which could lawfully give rise to a claim for mechanics' or
materialmen's liens to permit Landlord to post and record a timely notice of
non-responsibility, as Landlord may elect to proceed or as the law may from time
to time provide, for which purpose, if Landlord shall so determine, Landlord may
enter the Premises. Tenant shall not remove any such notice posted by Landlord
without Landlord's consent, and in any event not before completion of the work
which could lawfully give rise to a claim for mechanics' or materialmen's liens.

                            28. INTENTIONALLY OMITTED

                            29. TRANSFERS BY LANDLORD

In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord's successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of

                                       17
<PAGE>   18

"Landlord" to be performed after the passing of title to Landlord's
successor-in-interest. This Lease shall not be affected by any such sale and
Tenant agrees to attorn to the purchaser or assignee. Landlord's
successor(s)-in-interest shall not have liability to Tenant with respect to the
failure to perform any of the obligations of "Landlord," to the extent required
to be performed prior to the date such successor(s)-in-interest became the owner
of the Building.

               30. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant's sole cost and expense and
without any abatement of Rent. If Tenant shall fail to pay any sum of money,
other than Base Rent, required to be paid by Tenant hereunder or shall fail to
perform any other act on Tenant's part to be performed hereunder, including
Tenant's obligations under Paragraph 11 hereof, and such failure shall continue
for fifteen (15) days after notice thereof by Landlord, in addition to the other
rights and remedies of Landlord, Landlord may make any such payment and perform
any such act on Tenant's part. In the case of an emergency, no prior
notification by Landlord shall be required. Landlord may take such actions
without any obligation and without releasing Tenant from any of Tenant's
obligations. All sums so paid by Landlord and all incidental costs incurred by
Landlord and interest thereon at the Applicable Interest Rate, from the date of
payment by Landlord, shall be paid to Landlord on demand as Additional Rent.

                                   31. WAIVER

If either Landlord or Tenant waives the performance of any term, covenant or
condition contained in this Lease, such waiver shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein, or constitute a course of dealing contrary to the
expressed terms of this Lease. The acceptance of Rent by Landlord (including,
without limitation, through any "lockbox") shall not constitute a waiver of any
preceding breach by Tenant of any term, covenant or condition of this Lease,
regardless of Landlord's knowledge of such preceding breach at the time Landlord
accepted such Rent. Failure by Landlord to enforce any of the terms, covenants
or conditions of this Lease for any length of time shall not be deemed to waive
or decrease the right of Landlord to insist thereafter upon strict performance
by Tenant. Waiver by Landlord of any term, covenant or condition contained in
this Lease may only be made by a written document signed by Landlord, based upon
full knowledge of the circumstances.

                                   32. NOTICES

Each provision of this Lease or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to sending, mailing, or
delivery of any notice or the making of any payment by Landlord or Tenant to the
other shall be deemed to be complied with when and if the following steps are
taken:

A. RENT. All Rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at Landlord's Remittance Address set
forth in the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such Rent and other
amounts have been actually received by Landlord.

B. OTHER. All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be in writing and
either personally delivered, sent by commercial overnight courier, mailed,
certified or registered, postage prepaid or sent by facsimile with confirmed
receipt (and with an original sent by commercial overnight courier), and in each
case addressed to the party to be notified at the Notice Address for such party
as specified in the Basic Lease Information or to such other place as the party
to be notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt or
refusal to accept delivery. Tenant appoints as its agent to receive the service
of all default notices and notice of commencement of unlawful detainer
proceedings the person in charge of or apparently in charge of occupying the
Premises at the time, and, if there is no such person, then such service may be
made by attaching the same on the main entrance of the Premises.

C. REQUIRED NOTICES. Upon learning of the following circumstances, Tenant shall
promptly notify Landlord in writing of any notice of a violation or a potential
or alleged violation of any Regulation that relates to the Premises or the
Project, or of any inquiry, investigation, enforcement or other action that is
instituted or threatened by any governmental or regulatory agency against Tenant
or any other occupant of the Premises, or any claim that is instituted or
threatened by any third party that relates to the Premises or the Project.

                               33. ATTORNEYS' FEES

If Landlord places the enforcement of this Lease, or any part thereof, or the
collection of any Rent due, or to become due hereunder, or recovery of
possession of the Premises in the hands of an attorney, Tenant shall pay to
Landlord, upon demand, Landlord's reasonable attorneys' fees and court costs,
whether incurred without trial, at trial, appeal or review. In any action which
Landlord or Tenant brings to enforce its respective rights hereunder, the
unsuccessful party shall pay all costs incurred by the prevailing party
including reasonable attorneys' fees, to be fixed by the court, and said costs
and attorneys' fees shall be a part of the judgment in said action.

                           34. SUCCESSORS AND ASSIGNS

This Lease shall be binding upon and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon and inure to the benefit of
Tenant, its successors, and to the extent assignment is approved by Landlord as
provided hereunder, Tenant's assigns.

                                35. FORCE MAJEURE

If performance by a party of any portion of this Lease is made impossible by any
prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts
of God, inability to obtain services, labor, or materials or reasonable
substitutes for those items, government actions, civil commotions, fire or other
casualty, or other causes beyond the reasonable control of the party obligated
to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused. Tenant's obligation to pay Rent,
however, is not excused by this Paragraph 35.

                            36. SURRENDER OF PREMISES

Tenant shall, upon expiration or sooner termination of this Lease, surrender the
Premises to Landlord in the same condition as existed on the date Tenant
originally took possession thereof, reasonable wear and tear excepted,
including, but not limited to, all interior walls cleaned, all holes in walls
repaired and all floors cleaned, waxed, and free of any Tenant-introduced
marking or painting, all to the reasonable satisfaction of Landlord. Tenant
shall remove all of its debris from the Project. At or before the time of
surrender, Tenant shall comply with the terms of Paragraph 12.A. hereof with
respect to Alterations to the Premises and all other matters addressed in such
Paragraph. If the Premises are not so surrendered at the expiration or sooner
termination of this Lease, the provisions of Paragraph 25 hereof shall apply.
All keys to the Premises or any part thereof shall be surrendered to Landlord
upon expiration or sooner termination of the Term. Tenant shall give written
notice to Landlord at least thirty (30) days prior to vacating the Premises and
shall meet with Landlord for a joint inspection of the Premises at the time of
vacating at a mutually agreeable time, but nothing contained herein shall be
construed as an extension of the Term or as a consent by Landlord to any holding
over by Tenant. In the event of Tenant's failure to participate in such joint
inspection, Landlord's inspection at or after Tenant's vacating the Premises
shall conclusively be deemed correct for purposes of

                                       18
<PAGE>   19

determining Tenant's responsibility for repairs and restoration. Any delay
caused by Tenant's failure to carry out its obligations under this Paragraph 36
beyond the term hereof, shall constitute unlawful and illegal possession of
Premises under Paragraph 25 hereof.

                                   37. PARKING

        So long as Tenant is occupying the Premises, Tenant and Tenant's Parties
shall have the right to use up to the number of parking spaces specified in the
Basic Lease Information on an unreserved, nonexclusive, first come, first served
basis, for passenger-size automobiles, in the parking areas in the Project
designated from time to time by Landlord for use in common by tenants of the
Building. The parking rights granted under this Paragraph 37 are personal to
Tenant and are not transferable except: (i) pursuant to the terms of a sublease
or assignment which expressly transfers such parking rights and which has been
approved in writing by Landlord in accordance with the terms of this Lease, (ii)
a Permitted Transfer, provided that Tenant notify Landlord in writing of such
transfer of parking privileges, or (iii) with the express written consent of
Landlord which consent shall be granted in Landlord's sole discretion.

        Tenant may request additional parking spaces from time to time and if
Landlord in its sole discretion agrees to make such additional spaces available
for use by Tenant, such spaces shall be provided on a month-to-month unreserved
and nonexclusive basis (unless otherwise agreed in writing by Landlord), and
subject to such parking charges as Landlord shall determine, and shall otherwise
be subject to such terms and conditions as Landlord may require.

        Tenant shall at all times comply and shall cause all Tenant's Parties
and visitors to comply with all Regulations and any rules and regulations
established from time to time by Landlord relating to parking at the Project,
including any keycard, sticker or other identification or entrance system, and
hours of operation, as applicable.

        Landlord shall have no liability for any damage to property or other
items located in the parking areas of the Project, nor for any personal injuries
or death arising out of the use of parking areas in the Project by Tenant or any
Tenant's Parties. Without limiting the foregoing, if Landlord arranges for the
parking areas to be operated by an independent contractor not affiliated with
Landlord, Tenant acknowledges that Landlord shall have no liability for claims
arising through acts or omissions of such independent contractor. In all events,
Tenant agrees to look first to its insurance carrier and to require that
Tenant's Parties look first to their respective insurance carriers for payment
of any losses sustained in connection with any use of the parking areas.

        Landlord reserves the right to assign specific spaces, and to reserve
spaces for visitors, small cars, disabled persons or for other tenants or
guests, and Tenant shall not park and shall not allow Tenant's Parties to park
in any such assigned or reserved spaces. Tenant may validate visitor parking by
such method as Landlord may approve, at the validation rate from time to time
generally applicable to visitor parking. Landlord also reserves the right to
alter, modify, relocate or close all or any portion of the parking areas in
order to make repairs or perform maintenance service, or to restripe or renovate
the parking areas, or if required by casualty, condemnation (subject to Tenant's
right of termination provided in Paragraph 23 hereof), act of God, Regulations
or for any other reason deemed reasonable by Landlord.

        After the initial Term hereof, Tenant shall pay to Landlord (or
Landlord's parking contractor, if so directed in writing by Landlord), as
Additional Rent hereunder, the monthly charges established from time to time by
Landlord for parking in such parking areas (which shall initially be the charge
specified in the Basic Lease Information, as applicable). Tenant shall pay to
Landlord as Additional Rent hereunder, the monthly charge established by
Landlord then in effect for any reserved parking spaces requested by Tenant and
granted by Landlord, if any. Landlord shall have no obligation to provide such
reserved parking to Tenant during the Term hereof or any extension hereto. Such
parking charges shall be payable in advance with Tenant's payment of Basic Rent.
No deductions from the monthly parking charge shall be made for days on which
the Tenant does not use any of the parking spaces entitled to be used by Tenant.

                                38. MISCELLANEOUS

A.      GENERAL. The term "Tenant" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and their respective successors, executors,
administrators and permitted assigns, according to the context hereof.

B.      TIME. Time is of the essence regarding this Lease and all of its
provisions.

C.      CHOICE OF LAW. This Lease shall in all respects be governed by the laws
of the State of California.

D.      ENTIRE AGREEMENT. This Lease, together with its Exhibits, addenda and
attachments and the Basic Lease Information, contains all the agreements of the
parties hereto and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits, addenda and
attachments and the Basic Lease Information.

E.      MODIFICATION. This Lease may not be modified except by a written
instrument signed by the parties hereto. Tenant accepts the area of the Premises
as specified in the Basic Lease Information as the approximate area of the
Premises for all purposes under this Lease, and acknowledges and agrees that no
other definition of the area (rentable, usable or otherwise) of the Premises
shall apply. Tenant shall in no event be entitled to a recalculation of the
square footage of the Premises, rentable, usable or otherwise, and no
recalculation, if made, irrespective of its purpose, shall reduce Tenant's
obligations under this Lease in any manner, including without limitation the
amount of Base Rent payable by Tenant or Tenant's Proportionate Share of the
Building and of the Project.

F.      SEVERABILITY. If, for any reason whatsoever, any of the provisions
hereof shall be unenforceable or ineffective, all of the other provisions shall
be and remain in full force and effect.

G.      RECORDATION. Tenant shall not record this Lease or a short form
memorandum hereof.

H.      EXAMINATION OF LEASE. Submission of this Lease to Tenant does not
constitute an option or offer to lease and this Lease is not effective otherwise
until execution and delivery by both Landlord and Tenant.

I.      ACCORD AND SATISFACTION. No payment by Tenant of a lesser amount than
the total Rent due nor any endorsement on any check or letter accompanying any
check or payment of Rent shall be deemed an accord and satisfaction of full
payment of Rent, and Landlord may accept such payment without prejudice to
Landlord's right to recover the balance of such Rent or to pursue other
remedies. All offers by or on behalf of Tenant of accord and satisfaction are
hereby rejected in advance.

J.      EASEMENTS. Landlord may grant easements on the Project and dedicate for
public use portions of the Project without Tenant's consent; provided that no
such grant or dedication shall materially interfere with Tenant's Permitted Use
of the Premises. Upon Landlord's request, Tenant shall execute, acknowledge and
deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant's covenants hereunder.

K.      DRAFTING AND DETERMINATION PRESUMPTION. The parties acknowledge that
this Lease has been agreed to by both the parties, that both Landlord and Tenant
have consulted with attorneys with respect to the terms of this Lease and that
no presumption shall be created

                                       19
<PAGE>   20

against Landlord because Landlord drafted this Lease. Except as otherwise
specifically set forth in this Lease, with respect to any consent, determination
or estimation of Landlord required or allowed in this Lease or requested of
Landlord, Landlord's consent, determination or estimation shall be given or made
solely by Landlord in Landlord's good faith opinion, whether or not objectively
reasonable. If Landlord fails to respond to any request for its consent within
the time period, if any, specified in this Lease, Landlord shall be deemed to
have disapproved such request, except as otherwise expressly provided in this
Lease.

L.      EXHIBITS. The Basic Lease Information, and the Exhibits, addenda and
attachments attached hereto are hereby incorporated herein by this reference and
made a part of this Lease as though fully set forth herein.

M.      NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of light,
air or view by any structure which may be erected on lands adjacent to or in the
vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.

N.      NO THIRD PARTY BENEFIT. This Lease is a contract between Landlord and
Tenant and nothing herein is intended to create any third party benefit.

O.      QUIET ENJOYMENT. Upon payment by Tenant of the Rent, and upon the
observance and performance of all of the other covenants, terms and conditions
on Tenant's part to be observed and performed, Tenant shall peaceably and
quietly hold and enjoy the Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or persons lawfully or
equitably claiming by, through or under Landlord, subject, nevertheless, to all
of the other terms and conditions of this Lease. Landlord shall not be liable
for any hindrance, interruption, interference or disturbance by other tenants or
third persons, nor shall Tenant be released from any obligations under this
Lease because of such hindrance, interruption, interference or disturbance.

P.      COUNTERPARTS. This Lease may be executed in any number of counterparts,
each of which shall be deemed an original.

Q.      MULTIPLE PARTIES. If more than one person or entity is named herein as
Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.

R.      PRORATIONS. Any Rent or other amounts payable to Landlord by Tenant
hereunder for any fractional month shall be prorated based on a month of 30
days. As used herein, the term "fiscal year" shall mean the calendar year or
such other fiscal year as Landlord may deem appropriate.

                           39. ADDITIONAL PROVISIONS

A.      RENT.

Subject to the provisions of Paragraphs 2.B, Base Rent, net of Operating
Expenses per Paragraph 7 of this Lease, for the Premises shall be as follows:

<TABLE>
<S>                                                  <C>
From the Term Commencement Date through the
end of the twelfth (12th) month following
the Term Commencement Date:                          $135,581.00 per month plus operating expenses per Paragraph 7 of this Lease.
                                                     Operating Expenses for calendar year 2000 are estimated to be $23,999.00 per
                                                     month.

Month 13 following the Term Commencement
Date through Month 24:                               $139,648.00 per month plus operating expenses per Paragraph 7 of this Lease

Month 25 following the Term Commencement
Date through Month 36:                               $143,838.00 per month plus operating expenses per Paragraph 7 of this Lease.

Month 37 following the Term Commencement
Date through Month 48:                               $148,153.00 per month plus operating expenses per Paragraph 7 of this Lease.

Month 49 following the Term Commencement
Date through Month 60:                               $152,597.00 per month plus operating expenses per Paragraph 7 of this Lease.

Month 61 following the Term Commencement
Date through Month 72:                               $157,175.00 per month plus operating expenses per Paragraph 7 of this Lease.

Month 73 following the Term Commencement
Date through Month 84:                               $161,891.00 per month plus operating expenses per Paragraph 7 of this Lease.

Month 85 following the Term Commencement
Date through Month 96:                               $166,747.00 per month plus operating expenses per Paragraph 7 of this Lease.

Month 97 following the Term Commencement
Date through Month 108:                              $171,750.00 per month plus operating expenses per Paragraph 7 of this Lease

Month 109 following the Term Commencement
Date through Month 117:                              $176,902.00 per month plus operating expenses per Paragraph 7 of this Lease.
</TABLE>

B.      EARLY ACCESS. Provided Landlord has terminated the lease with the
existing tenant and is in possession of the Premises, Landlord shall provide
access to Tenant to the Premises on October 1, 2000, during normal business
hours after reasonable prior notice to Landlord for purposes of installing
furniture, fixtures and equipment (including network cabling and
telecommunications equipment to the extent such installation is approved by
Landlord in writing) and to commence construction of the Tenant Improvements
therein in the Premises, with all terms and conditions of this Lease in full
force and effect, excluding payment of Rent and Operating Expenses. Landlord and
Tenant shall each reasonably cooperate with the other to attempt to reasonably
coordinate their respective schedules to accommodate the early access by Tenant
contemplated by this Paragraph 39.B. In the event Landlord does not provide
access to Tenant to the Premises by October 1, 2000 for the purposes defined
above, the Term Commencement Date shall be six-one (61) days from the date
Landlord does provide access to Tenant to the Premises. Tenant may terminate
this Lease by delivering written notice to Landlord on June 1, 2001 only if
Landlord has not terminated the existing lease for the Premises and is not in
possession of the Premises by May 31, 2001. In the event of such termination,
Landlord shall return any Security Deposit to Tenant as well as any other sums
paid hereunder by Tenant to Landlord. All obligations of Tenant and Landlord
under this Lease shall thereafter terminate and no party shall have any further
obligations under this Lease.

C.      OPTION TO RENEW. Tenant shall, provided this Lease is in full force and
effect and Tenant is not and has not been in default under any of the terms and
conditions of this Lease, have two (2) successive options to renew this Lease
for a term of five (5) years each, for the Premises in "as is" condition and on
the same terms and conditions set forth in this Lease, except as modified by the
terms, covenants and conditions set forth below:

                                       20

<PAGE>   21

        (1)     If Tenant elects to exercise such option, then Tenant shall
                provide Landlord with written notice no earlier than the date
                which is Two Hundred Seventy (270) days prior to the expiration
                of the then current term of this Lease, but no later than 5:00
                p.m. (Pacific Standard Time) on the date which is one hundred
                eighty (180) days prior to the expiration of the then current
                term of this Lease. If Tenant fails to provide such notice,
                Tenant shall have no further or additional right to extend or
                renew the term of this Lease.

        (2)     The Base Rent in effect at the expiration of the then current
                term of this Lease shall be increased to reflect the current
                fair market rental for comparable space in the Building or
                Project and in other similar buildings in the same rental market
                as of the date the renewal term is to commence, taking into
                account the specific provisions of this Lease which will remain
                constant, and the Building amenities, location, identity,
                quality, age, conditions, term of lease, tenant improvements,
                services provided, and other pertinent items.

        (3)     Landlord shall advise Tenant of the new Base Rent for the
                Premises for the applicable renewal term which will be based on
                Landlord's determination of fair market rental value no later
                than fifteen (15) days after receipt of notice of Tenant's
                exercise of its option to renew. Tenant shall have forty-five
                (45) days after receipt of such notification from Landlord to
                accept the new Base Rent. If Tenant does not accept Landlord's
                determination of the new Base Rent within such forty-five (45)
                day period, this option shall be null and void, and Landlord
                shall have no further obligation to Tenant and may enter into a
                lease for the Premises with a third party on such terms and
                conditions as Landlord may determine in its sole discretion.

        (4)     Notwithstanding anything to the contrary contained in this
                Paragraph, in no event shall the Base Rent for any renewal term
                be less than the Base Rent in effect at the expiration of the
                previous term. In addition, Landlord shall have no obligation to
                provide or pay for any tenant improvements or brokerage
                commissions during any renewal term.

        (5)     Tenant's right to exercise any options to renew under this
                Paragraph shall be conditioned upon Tenant occupying the entire
                Premises and the same not being occupied by any assignee,
                subtenant or licensee other than Tenant or its affiliate at the
                time of exercise of any option and commencement of the renewal
                term. Tenant's exercise of any option to renew shall constitute
                a representation by Tenant to Landlord that as of the date of
                exercise of the option and the commencement of the applicable
                renewal term, Tenant does not intend to seek to assign this
                Lease in whole or in part, or sublet all or any portion of the
                Premises.

        (6)     Any exercise by Tenant of any option to renew under this
                Paragraph shall be irrevocable. If requested by Landlord, Tenant
                agrees to execute a lease amendment or, at Landlord's option, a
                new lease agreement on Landlord's then standard lease form for
                the Building reflecting the foregoing terms and conditions
                (which new lease form shall be reasonably acceptable to Tenant
                and shall provide to Tenant the benefit of its bargain contained
                herein), prior to the commencement of the renewal term. The
                options to renew granted under this Paragraph are not
                transferable; the parties hereto acknowledge and agree that they
                intend that each option to renew this Lease under this Paragraph
                shall be "personal" to the specific Tenant named in this Lease
                and that in no event will any assignee or sublessee have any
                rights to exercise such options to renew.

        (7)     If more than one renewal option is provided above, the exercise
                of each renewal option shall be contingent upon Tenant
                exercising the prior renewal option. Only one renewal option may
                be exercised at a time. As each renewal option provided for
                above is exercised, the number of renewal options remaining to
                be exercised is reduced by one and upon exercise of the last
                remaining renewal option Tenant shall have no further right to
                extend the term of this Lease.

D.      LETTER OF CREDIT.

        (1)     DELIVERY OF LETTER OF CREDIT. In lieu of depositing a security
                deposit with Landlord, Tenant shall, on execution of this Lease,
                deliver to Landlord and cause to be in effect during the Lease
                Term an unconditional, irrevocable letter of credit ("LOC") in
                the amount specified for the Security Deposit in the Basic Lease
                Information, as it may be increased as provided in this Lease
                (the "LOC AMOUNT") for an initial term of the LOC of three (3)
                years and thereafter shall renew automatically from year to year
                through 30 days beyond the expiration date of this Lease or any
                extension thereto. The LOC shall be in a form acceptable to
                Landlord and shall be issued by an LOC bank selected by Tenant
                and acceptable to Landlord. The text of the LOC shall expressly
                state that the LOC shall survive the termination of this Lease.
                An LOC bank is a bank that accepts deposits, maintains accounts,
                has a local office that will negotiate a letter of credit, and
                the deposits of which are insured by the Federal Deposit
                Insurance Corporation. Tenant shall pay all expenses, points, or
                fees incurred by Tenant in obtaining the LOC. The LOC shall not
                be mortgaged, assigned or encumbered in any manner whatsoever by
                Tenant without the prior written consent of Landlord. Tenant
                acknowledges that Landlord has the right to transfer or mortgage
                its interest in the Project, the Building and in this Lease and
                Tenant agrees that in the event of any such transfer or
                mortgage, Landlord shall have the right to transfer or assign
                the LOC and/or the LOC Security Deposit (as defined below) to
                the transferee or mortgagee, and in the event of such transfer,
                Tenant shall look solely to such transferee or mortgagee for the
                return of the LOC and/or the LOC Security Deposit. The maximum
                amount of any transfer fee associated with such transfer shall
                not be in excess of reasonable transfer fees customarily
                required by issuing banks, which about shall be expressly stated
                in the terms of the LOC, and shall be payable by Landlord.

        (2)     REPLACEMENT OF LETTER OF CREDIT. Tenant may, from time to time,
                replace any existing LOC with a new LOC if the new LOC (a)
                becomes effective at least thirty (30) days before expiration of
                the LOC that it replaces; (b) is in the required LOC amount; (c)
                is issued by an LOC bank acceptable to Landlord; and (d)
                otherwise complies with the requirements of this Paragraph 39.D.

        (3)     LANDLORD'S RIGHT TO DRAW ON LETTER OF CREDIT. Landlord shall
                hold the LOC as security for the performance of Tenant's
                obligations under this Lease. If, after notice and failure to
                cure within any applicable period provided in this Lease, Tenant
                is in default pursuant to this Lease, Landlord may, without
                prejudice to any other remedy it has, draw on that portion of
                the LOC necessary to (a) pay Rent or other sum in default; (b)
                pay or reimburse Landlord for any amount that Landlord may spend
                or become obligated to spend in exercising Landlord's rights
                under Paragraph 30 (Right of Landlord to Perform Tenant's
                Covenant); and/or (c) compensate Landlord for any expense, loss,
                or damage that Landlord may suffer because of Tenant's default.
                If Tenant fails to renew or replace the LOC at least thirty (30)
                days before its expiration, Landlord may, without prejudice to
                any other remedy it has, draw on the entire amount of the LOC.

        (4)     LOC SECURITY DEPOSIT. Any amount of the LOC that is drawn on by
                Landlord but not applied by Landlord shall be held by Landlord
                as a security deposit (the "LOC SECURITY DEPOSIT") in accordance
                with Paragraph 19 of this Lease.

                                       21
<PAGE>   22

        (5)     RESTORATION OF LETTER OF CREDIT AND LOC SECURITY DEPOSIT. If
                Landlord draws on any portion of the LOC and/or applies all or
                any portion of such draw, Tenant shall, within five (5) business
                days after demand by Landlord, either (a) deposit cash with
                Landlord in an amount that, when added to the amount remaining
                under the LOC and the amount of any LOC Security Deposit, shall
                equal the LOC Amount then required under this Paragraph 39.D; or
                (b) reinstate the LOC to the full LOC Amount.

        (6)     REDUCTION OF LETTER OF CREDIT. At least fifteen (15) business
                days prior to the dates specified in each of clauses a. through
                d. below, Tenant shall deliver to Landlord for review Tenant's
                financial statements prepared in accordance with generally
                accepted accounting principles and audited by a nationally
                recognized public accounting firm acceptable to Landlord, and
                any other financial information requested by Landlord ("TENANT'S
                FINANCIAL INFORMATION") If: (i) Tenant has a tangible net worth,
                which "tangible net worth" shall be determined by Landlord in
                its sole discretion and shall mean assets less intangible assets
                and total liabilities, with intangible asserts including
                nonmaterial benefits such as goodwill, patents, copyrights, and
                trademarks, in excess of One Hundred Seventy five Million and
                No/100 Dollars ($175,000,000.00) as reflected in Tenant's
                Financial Information, which amount shall be determined by
                Landlord to its satisfaction prior to any reduction in the LOC
                Amount; and (ii) Tenant's Financial Information reflects four
                (4) consecutive calendar quarters of profitability, as
                determined by Landlord, during the time period immediately
                preceding Tenant's request for reduction in the LOC Amount
                described in this subparagraph during the time period
                immediately preceding Tenant's request for reduction in the LOC
                Amount, as such profitability is determined by Landlord, then
                the following reductions in the LOC Amount may be made in
                accordance with the terms of this Paragraph 39.D(6):

                a.      At any time after the end of the thirty-sixth (36th)
                        month following the Term Commencement Date, the LOC
                        Amount may be reduced to an amount equal to Seven
                        Hundred Eleven Thousand Seven Hundred Fifty Six and
                        No/100 Dollars ($711,756.00);

                b.      At any time after the end of the forty-eighth (48th)
                        month following the Term Commencement Date, the LOC
                        Amount may be reduced to an amount equal to Six Hundred
                        Ten Thousand Seventy Seven and No/100 Dollars
                        ($610,077.00);

                c.      At any time after the end of the sixtieth (60th) month
                        following the Term Commencement Date, the LOC Amount may
                        be reduced to an amount equal to Five Hundred Eight
                        Thousand Three Hundred Ninety Seven and No/100 Dollars
                        ($508,397.00);

                d.      At any time after the end of the seventy-second (72nd)
                        month following the Term Commencement Date, the LOC may
                        be returned by Landlord to the issuing bank for
                        cancellation provided that Tenant has, prior to such
                        delivery by Landlord, delivered a cash security Deposit
                        (to be held by Landlord in accordance with the terms of
                        Paragraph 19 of this Lease) an amount equal to Four
                        Hundred Six Thousand Seven Hundred Eighteen and No/100
                        Dollars ($406,718.00).

        In the event that any of the above described reductions to the LOC
        Amount is made and, subsequently, Tenant fails to meet the corresponding
        profitability and tangible net worth condition precedent for a period of
        thirty (30) days following delivery by Landlord of written notice of any
        such failure, Tenant shall within two (2) business days, increase the
        face amount of the LOC to an amount equal to the LOC Amount existing
        prior to such reduction (including the reduction described in clause d.
        above). If Tenant fails to increase the LOC Amount as provided above,
        such failure shall constitute a default hereunder (which default shall
        not be subject to any cure rights afforded anywhere in this Lease and
        Landlord shall be entitled to draw on the LOC for the full LOC Amount
        and hold such LOC Amount as a Security Deposit in accordance with the
        terms of this Lease, and enforce all other rights available to Landlord
        pursuant to the terms of this Lease or under applicable law.

E.      CONTINGENCY. Tenant acknowledges that there is an existing lease on the
Premises. This Lease Agreement is contingent upon Landlord's termination of the
existing lease for the Premises and possession of the Premises. Upon termination
of the existing lease for the Premises, Landlord shall provide to Tenant written
notice of such termination.

F.      BROKER. Landlord and Tenant each represent and warrant to the other that
they have had no other dealings with any real estate broker or agent in
connection with the negotiation of this Lease, excepting only Bailes &
Associates, Inc. ("Broker") who represented Tenant, and that Landlord shall not
pay any commissions or fees to Broker in connection with this Lease. Each party
agrees to indemnify and defend the other party against and hold the other party
harmless from any and all claims, demands, losses, liabilities, lawsuits,
judgments, costs and expenses with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, including Broker, occurring by, through , or under
the indemnifying party.

                                       22
<PAGE>   23

                              40. JURY TRIAL WAIVER

EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL
REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY
JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH
THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE
COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS
LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 40. THE
PROVISIONS OF THIS PARAGRAPH 40 SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and the year first above written.

                                     LANDLORD

                                     Spieker Properties, L.P.,
                                     a California limited partnership

                                     By: Spieker Properties, Inc.,
                                         a Maryland corporation,
                                         its general partner

                                     By:
                                         --------------------------------------
                                         John W. Petersen
                                         Its:  Senior Vice President

                                     Date: July 26, 2000

                                     TENANT

                                     Brocade Communications Systems, Inc.,
                                     a Delaware corporation

                                     By:
                                         --------------------------------------
                                         Michael J. Byrd
                                         Its: Vice President, Finance,
                                              and Chief Financial Officer

                                     Date:  July 26, 2000

                                     By:
                                         --------------------------------------
                                         Mr. Victor Rinkle
                                         Its:   Vice President, Operations

                                     Date:  July 26, 2000

                                       23
<PAGE>   24

                                    EXHIBIT A
                              RULES AND REGULATIONS

1.      Driveways, sidewalks, halls, passages, exits, entrances, elevators,
        escalators and stairways shall not be obstructed by tenants or used by
        tenants for any purpose other than for ingress to and egress from their
        respective premises. The driveways, sidewalks, halls, passages, exits,
        entrances, elevators and stairways are not for the use of the general
        public and Landlord shall in all cases retain the right to control and
        prevent access thereto by all persons whose presence, in the judgment of
        Landlord, shall be prejudicial to the safety, character, reputation and
        interests of the Building, the Project and its tenants, provided that
        nothing herein contained shall be construed to prevent such access to
        persons with whom any tenant normally deals in the ordinary course of
        such tenant's business unless such persons are engaged in illegal
        activities. No tenant, and no employees or invitees of any tenant, shall
        go upon the roof of any Building, except as authorized by Landlord. No
        tenant, and no employees or invitees of any tenant shall move any common
        area furniture without Landlord's consent.

2.      No sign, placard, banner, picture, name, advertisement or notice,
        visible from the exterior of the Premises or the Building or the common
        areas of the Building shall be inscribed, painted, affixed, installed or
        otherwise displayed by Tenant either on its Premises or any part of the
        Building or Project without the prior written consent of Landlord in
        Landlord's sole and absolute discretion. Landlord shall have the right
        to remove any such sign, placard, banner, picture, name, advertisement,
        or notice without notice to and at the expense of Tenant, which were
        installed or displayed in violation of this rule. If Landlord shall have
        given such consent to Tenant at any time, whether before or after the
        execution of Tenant's Lease, such consent shall in no way operate as a
        waiver or release of any of the provisions hereof or of the Lease, and
        shall be deemed to relate only to the particular sign, placard, banner,
        picture, name, advertisement or notice so consented to by Landlord and
        shall not be construed as dispensing with the necessity of obtaining the
        specific written consent of Landlord with respect to any other such
        sign, placard, banner, picture, name, advertisement or notice.

        All approved signs or lettering on doors and walls shall be printed,
        painted, affixed or inscribed at the expense of Tenant by a person or
        vendor approved by Landlord and shall be removed by Tenant at the time
        of vacancy at Tenant's expense.

3.      The directory of the Building or Project will be provided exclusively
        for the display of the name and location of tenants only and Landlord
        reserves the right to charge for the use thereof and to exclude any
        other names therefrom.

4.      No curtains, draperies, blinds, shutters, shades, screens or other
        coverings, awnings, hangings or decorations shall be attached to, hung
        or placed in, or used in connection with, any window or door on the
        Premises without the prior written consent of Landlord. In any event
        with the prior written consent of Landlord, all such items shall be
        installed inboard of Landlord's standard window covering and shall in no
        way be visible from the exterior of the Building. All electrical ceiling
        fixtures hung in offices or spaces along the perimeter of the Building
        must be fluorescent or of a quality, type, design, and bulb color
        approved by Landlord. No articles shall be placed or kept on the window
        sills so as to be visible from the exterior of the Building. No articles
        shall be placed against glass partitions or doors which Landlord
        considers unsightly from outside Tenant's Premises.

5.      Landlord reserves the right to exclude from the Building and the
        Project, between the hours of 6 p.m. and 8 a.m. and at all hours on
        Saturdays, Sundays and legal holidays, all persons who are not tenants
        or their accompanied guests in the Building. Each tenant shall be
        responsible for all persons for whom it allows to enter the Building or
        the Project and shall be liable to Landlord for all acts of such
        persons.

        Landlord and its agents shall not be liable for damages for any error
        concerning the admission to, or exclusion from, the Building or the
        Project of any person.

        During the continuance of any invasion, mob, riot, public excitement or
        other circumstance rendering such action advisable in Landlord's
        opinion, Landlord reserves the right (but shall not be obligated) to
        prevent access to the Building and the Project during the continuance of
        that event by any means it considers appropriate for the safety of
        tenants and protection of the Building, property in the Building and the
        Project.

6.      All cleaning and janitorial services for the Building and the Premises
        shall be provided exclusively through Landlord. Except with the written
        consent of Landlord, no person or persons other than those approved by
        Landlord shall be permitted to enter the Building for the purpose of
        cleaning the same. Tenant shall not cause any unnecessary labor by
        reason of Tenant's carelessness or indifference in the preservation of
        good order and cleanliness of its Premises. Landlord shall in no way be
        responsible to Tenant for any loss of property on the Premises, however
        occurring, or for any damage done to Tenant's property by the janitor or
        any other employee or any other person.

7.      Tenant shall see that all doors of its Premises are closed and securely
        locked and must observe strict care and caution that all water faucets
        or water apparatus, coffee pots or other heat-generating devices are
        entirely shut off before Tenant or its employees leave the Premises, and
        that all utilities shall likewise be carefully shut off, so as to
        prevent waste or damage. Tenant shall be responsible for any damage or
        injuries sustained by other tenants or occupants of the Building or
        Project or by Landlord for noncompliance with this rule. On
        multiple-tenancy floors, all tenants shall keep the door or doors to the
        Building corridors closed at all times except for ingress and egress.

8.      Tenant shall not use any method of heating or air-conditioning other
        than that supplied by Landlord. As more specifically provided in
        Tenant's lease of the Premises, Tenant shall not waste electricity,
        water or air-conditioning and agrees to cooperate fully with Landlord to
        assure the most effective operation of the Building's heating and
        air-conditioning, and shall refrain from attempting to adjust any
        controls other than room thermostats installed for Tenant's use.

9.      Landlord will furnish Tenant free of charge with two keys to each door
        in the Premises. Landlord may make a reasonable charge for any
        additional keys, and Tenant shall not make or have made additional keys.
        Tenant shall not alter any lock or access device or install a new or
        additional lock or access device or bolt on any door of its Premises,
        without the prior written consent of Landlord. If Landlord shall give
        its consent, Tenant shall in each case furnish Landlord with a key for
        any such lock. Tenant, upon the termination of its tenancy, shall
        deliver to Landlord the keys for all doors which have been furnished to
        Tenant, and in the event of loss of any keys so furnished, shall pay
        Landlord therefor.

10.     The restrooms, toilets, urinals, wash bowls and other apparatus shall
        not be used for any purpose other than that for which they were
        constructed and no foreign substance of any kind whatsoever shall be
        thrown into them. The expense of any breakage, stoppage, or damage
        resulting from violation of this rule shall be borne by the tenant who,
        or whose employees or invitees, shall have caused the breakage,
        stoppage, or damage.

11.     Tenant shall not use or keep in or on the Premises, the Building or the
        Project any kerosene, gasoline, or inflammable or combustible fluid or
        material.

12.     Tenant shall not use, keep or permit to be used or kept in its Premises
        any foul or noxious gas or substance. Tenant shall not allow the
        Premises to be occupied or used in a manner offensive or objectionable
        to Landlord or other occupants of the Building by reason of noise,

                                       24
<PAGE>   25

        odors and/or vibrations or interfere in any way with other tenants or
        those having business therein, nor shall any animals or birds be brought
        or kept in or about the Premises, the Building, or the Project.

13.     No cooking shall be done or permitted by any tenant on the Premises,
        except that use by the tenant of Underwriters' Laboratory (UL) approved
        equipment, refrigerators and microwave ovens may be used in the Premises
        for the preparation of coffee, tea, hot chocolate and similar beverages,
        storing and heating food for tenants and their employees shall be
        permitted. All uses must be in accordance with all applicable federal,
        state and city laws, codes, ordinances, rules and regulations and the
        Lease.

14.     Except with the prior written consent of Landlord, Tenant shall not
        sell, or permit the sale, at retail, of newspapers, magazines,
        periodicals, theater tickets or any other goods or merchandise in or on
        the Premises, nor shall Tenant carry on, or permit or allow any employee
        or other person to carry on, the business of stenography, typewriting or
        any similar business in or from the Premises for the service or
        accommodation of occupants of any other portion of the Building, nor
        shall the Premises be used for the storage of merchandise or for
        manufacturing of any kind, or the business of a public barber shop,
        beauty parlor, nor shall the Premises be used for any illegal, improper,
        immoral or objectionable purpose, or any business or activity other than
        that specifically provided for in such Tenant's Lease. Tenant shall not
        accept hairstyling, barbering, shoeshine, nail, massage or similar
        services in the Premises or common areas except as authorized by
        Landlord.

15.     If Tenant requires telegraphic, telephonic, telecommunications, data
        processing, burglar alarm or similar services, it shall first obtain,
        and comply with, Landlord's instructions in their installation. The cost
        of purchasing, installation and maintenance of such services shall be
        borne solely by Tenant.

16.     Landlord will direct electricians as to where and how telephone,
        telegraph and electrical wires are to be introduced or installed. No
        boring or cutting for wires will be allowed without the prior written
        consent of Landlord. The location of burglar alarms, telephones, call
        boxes and other office equipment affixed to the Premises shall be
        subject to the prior written approval of Landlord.

17.     Tenant shall not install any radio or television antenna, satellite
        dish, loudspeaker or any other device on the exterior walls or the roof
        of the Building, without Landlord's consent. Tenant shall not interfere
        with radio or television broadcasting or reception from or in the
        Building, the Project or elsewhere.

18.     Tenant shall not mark, or drive nails, screws or drill into the
        partitions, woodwork or drywall or in any way deface the Premises or any
        part thereof without Landlord's consent. Tenant may install nails and
        screws in areas of the Premises that have been identified for those
        purposes to Landlord by Tenant at the time those walls or partitions
        were installed in the Premises. Tenant shall not lay linoleum, tile,
        carpet or any other floor covering so that the same shall be affixed to
        the floor of its Premises in any manner except as approved in writing by
        Landlord. The expense of repairing any damage resulting from a violation
        of this rule or the removal of any floor covering shall be borne by the
        tenant by whom, or by whose contractors, employees or invitees, the
        damage shall have been caused.

19.     No furniture, freight, equipment, materials, supplies, packages,
        merchandise or other property will be received in the Building or
        carried up or down the elevators except between such hours and in such
        elevators as shall be designated by Landlord.

        Tenant shall not place a load upon any floor of its Premises which
        exceeds the load per square foot which such floor was designed to carry
        or which is allowed by law. Landlord shall have the right to prescribe
        the weight, size and position of all safes, furniture or other heavy
        equipment brought into the Building. Safes or other heavy objects shall,
        if considered necessary by Landlord, stand on wood strips of such
        thickness as determined by Landlord to be necessary to properly
        distribute the weight thereof. Landlord will not be responsible for loss
        of or damage to any such safe, equipment or property from any cause, and
        all damage done to the Building by moving or maintaining any such safe,
        equipment or other property shall be repaired at the expense of Tenant.

        Business machines and mechanical equipment belonging to Tenant which
        cause noise or vibration that may be transmitted to the structure of the
        Building or to any space therein to such a degree as to be objectionable
        to Landlord or to any tenants in the Building shall be placed and
        maintained by Tenant, at Tenant's expense, on vibration eliminators or
        other devices sufficient to eliminate noise or vibration. The persons
        employed to move such equipment in or out of the Building must be
        acceptable to Landlord.

20.     Tenant shall not install, maintain or operate upon its Premises any
        vending machine without the written consent of Landlord.

21.     There shall not be used in any space, or in the public areas of the
        Project either by Tenant or others, any hand trucks except those
        equipped with rubber tires and side guards or such other material
        handling equipment as Landlord may approve. Tenants using hand trucks
        shall be required to use the freight elevator, or such elevator as
        Landlord shall designate. No other vehicles of any kind shall be brought
        by Tenant into or kept in or about its Premises.

22.     Each tenant shall store all its trash and garbage within the interior of
        the Premises. Tenant shall not place in the trash boxes or receptacles
        any personal trash or any material that may not or cannot be disposed of
        in the ordinary and customary manner of removing and disposing of trash
        and garbage in the city, without violation of any law or ordinance
        governing such disposal. All trash, garbage and refuse disposal shall be
        made only through entry-ways and elevators provided for such purposes
        and at such times as Landlord shall designate. If the Building has
        implemented a building-wide recycling program for tenants, Tenant shall
        use good faith efforts to participate in said program.

23.     Canvassing, soliciting, distribution of handbills or any other written
        material and peddling in the Building and the Project are prohibited and
        each tenant shall cooperate to prevent the same. No tenant shall make
        room-to-room solicitation of business from other tenants in the Building
        or the Project, without the written consent of Landlord.

24.     Landlord shall have the right, exercisable without notice and without
        liability to any tenant, to change the name and address of the Building
        and the Project.

25.     Landlord reserves the right to exclude or expel from the Project any
        person who, in Landlord's judgment, is under the influence of alcohol or
        drugs or who commits any act in violation of any of these Rules and
        Regulations.

26.     Without the prior written consent of Landlord, Tenant shall not use the
        name of the Building or the Project or any photograph or other likeness
        of the Building or the Project in connection with, or in promoting or
        advertising, Tenant's business except that Tenant may include the
        Building's or Project's name in Tenant's address.

27.     Tenant shall comply with all safety, fire protection and evacuation
        procedures and regulations established by Landlord or any governmental
        agency.

28.     Tenant assumes any and all responsibility for protecting its Premises
        from theft, robbery and pilferage, which includes keeping doors locked
        and other means of entry to the Premises closed.

29.     The requirements of Tenant will be attended to only upon appropriate
        application at the office of the Building by an authorized individual.
        Employees of Landlord shall not perform any work or do anything outside
        of their regular duties unless under special instructions from

                                       25
<PAGE>   26

        Landlord, and no employees of Landlord will admit any person (tenant or
        otherwise) to any office without specific instructions from Landlord.

30.     Landlord reserves the right to designate the use of the parking spaces
        on the Project. Tenant or Tenant's guests shall park between designated
        parking lines only, and shall not occupy two parking spaces with one
        car. Parking spaces shall be for passenger vehicles only; no boats,
        trucks, trailers, recreational vehicles or other types of vehicles may
        be parked in the parking areas (except that trucks may be loaded and
        unloaded in designated loading areas). Vehicles in violation of the
        above shall be subject to tow-away, at vehicle owner's expense. Vehicles
        parked on the Project overnight without prior written consent of the
        Landlord shall be deemed abandoned and shall be subject to tow-away at
        vehicle owner's expense. No tenant of the Building shall park in visitor
        or reserved parking areas. Any tenant found parking in such designated
        visitor or reserved parking areas or unauthorized areas shall be subject
        to tow-away at vehicle owner's expense. The parking areas shall not be
        used to provide car wash, oil changes, detailing, automotive repair or
        other services unless otherwise approved or furnished by Landlord.
        Tenant will from time to time, upon the request of Landlord, supply
        Landlord with a list of license plate numbers of vehicles owned or
        operated by its employees or agents.

31.     No smoking of any kind shall be permitted anywhere within the Building,
        including, without limitation, the Premises and those areas immediately
        adjacent to the entrances and exits to the Building, or any other area
        as Landlord elects. Smoking in the Project is only permitted in smoking
        areas identified by Landlord, which may be relocated from time to time.

32.     If the Building furnishes common area conferences rooms for tenant
        usage, Landlord shall have the right to control each tenant's usage of
        the conference rooms, including limiting tenant usage so that the rooms
        are equally available to all tenants in the Building. Any common area
        amenities or facilities shall be provided from time to time at
        Landlord's discretion.

33.     Tenant shall not swap or exchange building keys or cardkeys with other
        employees or tenants in the Building or the Project.

34.     Tenant shall be responsible for the observance of all of the foregoing
        Rules and Regulations by Tenant's employees, agents, clients, customers,
        invitees and guests.

35.     These Rules and Regulations are in addition to, and shall not be
        construed to in any way modify, alter or amend, in whole or in part, the
        terms, covenants, agreements and conditions of any lease of any premises
        in the Project.

36.     Landlord may waive any one or more of these Rules and Regulations for
        the benefit of any particular tenant or tenants, but no such waiver by
        Landlord shall be construed as a waiver of such Rules and Regulations in
        favor of any other tenant or tenants, nor prevent Landlord from
        thereafter enforcing any such Rules and Regulations against any or all
        tenants of the Building.

37.     Landlord reserves the right to make such other and reasonable rules and
        regulations as in its judgment may from time to time be needed for
        safety and security, for care and cleanliness of the Building and the
        Project and for the preservation of good order therein. Tenant agrees to
        abide by all such Rules and Regulations herein stated and any additional
        rules and regulations which are adopted.

                                       26
<PAGE>   27

                                    EXHIBIT B

                         SITE PLAN, PROPERTY DESCRIPTION

LEGAL DESCRIPTION - All that certain real property situated in the City of San
Jose, County of Santa Clara, State of California described as follows:

PARCEL A - Parcel No. 2 as shown on that certain Parcel Map filed in Book 443 of
Maps at Pages 8 and 9, on June 7, 1979, Official Records of Santa Clara County.

PARCEL B - Portion of Parcel 5, as shown on that certain Parcel Map recorded
June 7, 1979 in Book 443 of Maps, Pages 8 and 9, Records of Santa Clara County,
California, and being more particularly described as follows:

Beginning at the most westerly corner of Parcel 5 as shown upon that certain
Parcel Map recorded in Book 443 of Maps at Pages 8 and 9, Santa Clara County
Records.

Thence, from said POINT OF BEGINNING North 59 16' 50" East along the northwest
line of said Parcel 407.01 feet to the most northerly corner thereof; thence
South 301 29' 35" East along the northeast line of said Parcel 75.00 feet,
thence South 59 16' 35" West 407.01 feet to the southwest line of said Parcel;
thence North 30 29' 35" West along said line 75.00 feet to the POINT OF
BEGINNING.

                                       27
<PAGE>   28

                                    EXHIBIT C

                           LEASE IMPROVEMENT AGREEMENT

           This Lease Improvement Agreement ("IMPROVEMENT AGREEMENT") sets forth
the terms and conditions relating to construction of the initial tenant
improvements described in the Plans to be prepared and approved as provided
below (the "TENANT IMPROVEMENTS") in the Premises. Capitalized terms used but
not otherwise defined herein shall have the meanings set forth in the Lease (the
"LEASE") to which this Improvement Agreement is attached and forms a part.

1.      Base Building Work. The "Base Building Work" described on SCHEDULE 1 to
this EXHIBIT C, IF ANY, has been or will be performed by Landlord at Landlord's
sole cost and expense.

2.      Plans and Specifications.

           2.1 Tenant shall retain the services of DEVCON OR REEL GROBMAN AND
ASSOCIATES or such other architectural firm as shall be approved by Landlord in
writing (the "SPACE PLANNER") to prepare a detailed space plan (the "SPACE
PLAN") mutually satisfactory to Landlord and Tenant for the construction of the
Tenant Improvements in the Premises. Tenant shall submit the Space Plan and any
proposed revisions thereto to Landlord for Landlord's approval.

           2.2 Based on the approved Space Plan, Tenant shall cause the Space
Planner to prepare detailed plans, specifications and working drawings mutually
satisfactory to Landlord and Tenant for the construction of the Tenant
Improvements (the "PLANS"). Landlord and Tenant shall diligently pursue the
preparation of the Plans. Tenant shall submit the Plans and any proposed
revisions thereto, including the estimated cost of the Tenant Improvements. All
necessary revisions to the Space Plan and the Plans shall be made within two (2)
business days after Landlord's response thereto. This procedure shall be
repeated until Landlord ultimately approves the Space Plan and Plans.

           2.3 Tenant shall be responsible for ensuring that the Plans are
compatible with the design, construction and equipment of the Building, comply
with applicable Regulations and the Standards (defined below), and contain all
such information as may be required to show locations, types and requirements
for all heat loads, people loads, floor loads, power and plumbing, regular and
special HVAC needs, telephone communications, telephone and electrical outlets,
lighting, light fixtures and related power, and electrical and telephone
switches, B.T.U. calculations, electrical requirements and special receptacle
requirements. The Plans shall also include mechanical, electrical, plumbing,
structural and engineering drawings mutually satisfactory to Landlord and Tenant
which shall be prepared by DEVCON OR MCCLARNEY CONSTRUCTION or such other
contractor or contractors as shall be approved by Landlord in writing.
Notwithstanding Landlord's preparation, review and approval of the Space Plan
and the Plans and any revisions thereto, Landlord shall have no responsibility
or liability whatsoever for any errors or omissions contained in the Space Plan
or Plans or any revisions thereto, or to verify dimensions or conditions, or for
the quality, design or compliance with applicable Regulations of any
improvements described therein or constructed in accordance therewith. Tenant
hereby waives all claims against Landlord relating to, or arising out of the
design or construction of, the Tenant Improvements.

           2.4 Landlord may approve or disapprove the Space Plan or Plans or any
proposed revision thereto submitted to Landlord in Landlord's sole reasonable
discretion. Landlord's criteria for approvals shall be based on reasonable
criteria established from time to time by Landlord, but Landlord will be deemed
to have acted reasonably if Landlord's disapproval is predicated upon (i) effect
on the structural integrity of the Building, (ii) possible damage to the
Building's mechanical, electrical, plumbing and HVAC systems, (iii)
non-compliance with applicable laws, codes and regulations, (iv) incompatibility
with the base building plans, (v) failure to use materials required by Schedule
2 pertaining to Standards, and (vi) effect on the exterior of the Building or
any of the Building's common areas. Landlord shall not be deemed to have
approved the Space Plan, the Plans, or any proposed revisions thereto, unless
approved by Landlord in writing. Landlord shall approve or disapprove any Space
Plan, Plans or proposed revisions thereto submitted to Landlord for Landlord's
approval within three (3) business days after Landlord's receipt thereof. If
Landlord has not approved in writing any Space Plan, Plans, or proposed
revisions thereto submitted to Landlord within five (5) business days after
Landlord's receipt thereof, Landlord shall be deemed to have disapproved the
same.

3.      Specifications for Standard Tenant Improvements.

           3.1 Specifications and quantities of standard building components
which will comprise and be used in the construction of the Tenant Improvements
("STANDARDS") are set forth in SCHEDULE 2 to this EXHIBIT C. As used herein,
"STANDARDS" or "BUILDING STANDARDS" shall mean the standards for a particular
item selected from time to time by Landlord for the Building, including those
set forth on SCHEDULE 2 of this EXHIBIT C, or such other standards of equal or
better quality as may be mutually agreed between Landlord and Tenant in writing.

           3.2 No deviations from the Standards are permitted.

4.      Tenant Improvement Cost.

           4.1 The cost of the Tenant Improvements shall be paid for by Tenant,
including, without limitation, the cost of: Standards; space plans and studies;
architectural and engineering fees; permits, approvals and other governmental
fees; labor, material, equipment and supplies; construction fees and other
amounts payable to contractors or subcontractors; taxes; off-site improvements;
remediation and preparation of the Premises for construction of the Tenant
Improvements; taxes; filing and recording fees; premiums for insurance and
bonds; attorneys' fees; financing costs; and all other costs expended or to be
expended in the construction of the Tenant Improvements, including those costs
incurred for construction of elements of the Tenant Improvements in the
Premises, which construction was performed by Landlord prior to the execution of
the Lease or for materials comprising the Tenant Improvements which were
purchased by Landlord prior to the execution of the Lease; and an administration
fee of three percent (3%) of the total cost of the Tenant Improvements.

           4.2 Provided Tenant is not in default under the Lease, including this
Improvement Agreement, Landlord shall contribute a one-time tenant improvement
allowance not to exceed $218,000.00 ("TENANT IMPROVEMENT ALLOWANCE") toward the
cost of the initial Tenant Improvements. Provided Tenant is not then in default
under the Lease, including this Improvement Agreement, during the construction
of the Tenant Improvements, Landlord shall make monthly disbursements of the
Tenant Improvement Allowance for the benefit of Tenant and shall authorize the
release of monies for the benefit of Tenant as follows:

           (a)        Monthly Disbursements. On or before the twenty-first
                      (21st) day of the calendar month, during the construction
                      of the Tenant Improvements (or such other date as Landlord
                      may designate in writing), Tenant shall deliver to
                      Landlord: (i) a request for payment of Tenant's
                      contractor, which request shall be approved by Tenant,
                      showing the schedule, by trade, of percentage of
                      completion of the Tenant Improvements, detailing the
                      portion of the work completed and the portion not
                      completed; (ii) invoices from any subcontractor, laborer,
                      materialmen, supplier and any other party which performed
                      work on Tenant's behalf pursuant to this Improvement
                      Agreement,

                                       28
<PAGE>   29

                      including, but not limited to, labor rendered and
                      materials delivered to the Premises; (iii) executed
                      conditional mechanic's lien releases from all of the
                      parties submitting invoices with respect to the work
                      performed and for which payment is requested to be made,
                      which releases shall comply with the appropriate
                      provisions of California Civil Code 3262(d); (iv) executed
                      unconditional mechanic's lien releases from all of the
                      parties with respect to work performed and included on
                      prior pay requests, which releases shall comply with the
                      appropriate provisions of California Civil Code; and (v)
                      all other information reasonably requested by Landlord.
                      Tenant's request for payment shall be deemed Tenant's
                      acceptance and approval of the specific work furnished and
                      or the materials actually supplied as set forth in
                      Tenant's payment request. Within ten (10) business days
                      thereafter, Landlord shall deliver a check (or transfer
                      funds electronically) to Tenant made jointly payable to
                      Tenant's contractor and Tenant in payment of the lesser of
                      (A) Landlord's proportionate share of the amount of such
                      request for payment by Tenant's contractor, as set forth
                      in this paragraph, less a ten percent (10%) retention (the
                      aggregate amount of such retentions to be known as the
                      "FINAL RETENTION"), and (B) the balance of any remaining
                      available portion of the Tenant Improvement Allowance (not
                      including the Final Retention), provided Landlord does not
                      dispute any request for payment based upon noncompliance
                      with the Plans and or Standards, or due to any substandard
                      work, or for any other reasonable cause. For purposes of
                      this Improvement Agreement, Landlord's proportionate share
                      shall be the product of the following: (X) the amount of
                      the Tenant Improvement Allowance over total cost of the
                      Tenant Improvements, as such total cost may from time to
                      time increase as provided herein, multiplied by (Y) the
                      total amount approved by Landlord in Tenant's written
                      request for payment as described above. Landlord's payment
                      of such amounts shall not be deemed Landlord's approval or
                      acceptance of the work furnished or materials supplied as
                      set forth in Tenant's payment request.

           (b)        Final Retention. Subject to the provisions of this
                      Improvement Agreement, a check for the Final Retention
                      payable jointly to Tenant's contractor and Tenant shall be
                      delivered by Landlord to Tenant following the completion
                      of the construction of the Tenant Improvements and
                      expiration of the time for filing of any mechanics' liens
                      claimed or which might be filed on account of any work
                      ordered by Tenant or its contractor or any subcontractor;
                      provided that (A) Tenant delivers to Landlord properly
                      executed and unconditional mechanics lien releases in
                      compliance with both California Civil Code Section
                      3262(d)(2) and with Section 3262(d)(3) or Section
                      3262(d)(4) (which mechanics' lien releases shall be
                      executed by the subcontractors, labor suppliers and
                      materialmen in addition to Tenant's contractor), and all
                      appropriate bills and supporting documentation for the
                      work ordered by Tenant or its contractor or any
                      subcontractor, (B) Landlord has determined that no
                      substantial work exists which adversely affects the
                      mechanical, electrical, plumbing, heating, ventilating and
                      air conditioning, life-safety or other systems of the
                      Building or Project, the structure or exterior appearance
                      of the Building or Project, and (C) Space Planner and
                      Tenant's contractor deliver to Landlord a certificate of
                      completion, in a form reasonably acceptable to Landlord
                      certifying that the construction of the Tenant
                      Improvements has been substantially completed.

           (c)        Other Terms. Landlord shall only be obligated to make
                      disbursements from the Tenant Improvement Allowance in
                      accordance with the terms of this Agreement.

           4.3 In the event the estimated cost of the design and construction of
the Tenant Improvements exceeds the Tenant Improvement Allowance, Landlord's
proportionate share pursuant to Paragraph 4.2.(a) above shall be adjusted
accordingly. No credit shall be given to Tenant if the cost of the Tenant
Improvements is less than the Tenant Improvement Allowance.

           4.4 If the cost of the Tenant Improvements increases after the
Tenant's approval of the Plans due to the requirements of any governmental
agency or applicable Regulation, Landlord's proportionate share pursuant to
Paragraph 4.2.(a) above shall be adjusted accordingly.

           4.5 If Tenant requests any change(s) in the Plans after approval of
the estimate of the cost of the Tenant Improvements and any such requested
changes are approved by Landlord in writing in Landlord's sole discretion, and
the cost of the Tenant Improvements increases as a result of such approved
change(s). Landlord's proportionate share pursuant to Paragraph 4.2.(a) above
shall be adjusted accordingly.

5.      Construction of Tenant Improvements.

           5.1 Within ten (10) days after Tenant's and Landlord's approval of
the Plans including the estimate of the cost of the Tenant Improvements and
Landlord's receipt of payment of any such estimated cost exceeding the amount of
the Tenant Improvement Allowance, Tenant shall cause the contractor to proceed
to secure a building permit and commence construction of the Tenant Improvements
provided that the Building has in Landlord's discretion reached the stage of
construction where it is appropriate to commence construction of the Tenant
Improvements in the Premises.

           5.2 Tenant shall be responsible for obtaining all governmental
approvals to the full extent necessary for the construction and installation of
the Tenant Improvements and for Tenant's occupancy of the Premises, in
compliance with all applicable Regulations. Tenant shall employ DEVCON OR
MCCLARNEY CONSTRUCTION as the contractor or such other contractor or contractors
as shall be approved by Landlord in writing to construct the Tenant Improvements
in conformance with the approved Space Plan and Plans. The construction
contracts between Tenant and the approved contractor shall be subject to
Landlord's prior reasonable approval and shall provide for progress payments.
The contractor(s) shall be duly licensed and Landlord's approval of the
contractor(s) shall be conditioned, among other things, upon the contractor's
reputation for quality of work, timeliness of performance, integrity and
Landlord's prior experience with such contractor.

           5.3 Without limiting the provisions of Paragraph 35 of the Lease,
Landlord shall not be liable for any direct or indirect damages suffered by
Tenant as a result of delays in construction beyond Landlord's reasonable
control, including, but not limited to, delays due to strikes or unavailability
of materials or labor, or delays caused by Tenant (including delays by the Space
Planner, the contractor or anyone else performing services on behalf of Landlord
or Tenant).

           5.4 All work to be performed on the Premises by Tenant or Tenant's
contractor or agents shall be subject to the following conditions:

               (a) Such work shall proceed upon Landlord's written approval of
Tenant's contractor, and public liability and property damage insurance carried
by Tenant's contractor, and shall further be subject to the provisions of
Paragraphs 12 and 27 of the Lease.

               (b) All work shall be done in conformity with a valid building
permit when required, a copy of which shall be furnished to Landlord before such
work is commenced, and in any case, all such work shall be performed in a good
and workmanlike and first-class manner, and in accordance with all applicable
Regulations and the requirements and standards of any insurance underwriting
board, inspection bureau or insurance carrier insuring the Premises pursuant to
the Lease. Notwithstanding

                                       29
<PAGE>   30

any failure by Landlord to object to any such work, Landlord shall have no
responsibility for Tenant's failure to comply with all applicable Regulations.
Tenant shall be responsible for ensuring that construction and installation of
the Tenant Improvements will not affect the structural integrity of the
Building.

               (c) If required by Landlord or any lender of Landlord, all work
by Tenant or Tenant's contractor shall be done with union labor in accordance
with all union labor agreements applicable to the trades being employed.

               (d) Landlord or Landlord's agents shall have the right to inspect
the construction of the Tenant Improvements by Tenant during the progress
thereof. If Landlord shall give notice of faulty construction or any other
deviation from the approved Space Plan or Plans, Tenant shall cause its
contractor to make corrections promptly. However, neither the privilege herein
granted to Landlord to make such inspections, nor the making of such inspections
by Landlord, shall operate as a waiver of any right of Landlord to require good
and workmanlike construction and improvements erected in accordance with the
approved Space Plan or Plans.

               (e) Tenant shall cause its contractor to complete the Tenant
Improvements as soon as reasonably possible but in any event on or before the
Scheduled Term Commencement Date.

               (f) Tenant's construction of the Tenant Improvements shall comply
with the following: (i) the Tenant Improvements shall be constructed in strict
accordance with the approved Space Plan or Plans; (ii) Tenant's and its
contractor shall submit schedules of all work relating to the Tenant
Improvements to Landlord for Landlord's approval within two (2) business days
following the selection of the contractor and the approval of the Plans.
Landlord shall within five (5) business days after receipt thereof inform Tenant
of any changes which are necessary and Tenant's contractor shall adhere to such
corrected schedule; and (iii) Tenant shall abide by all rules made by Landlord
with respect to the use of freight, loading dock, and service elevators, storage
of materials, coordination of work with the contractors of other tenants, and
any other matter in connection with this Improvement Agreement, including,
without limitation, the construction of the Tenant Improvements.

               (g) Tenant or Tenant's contractor or agents shall arrange for
necessary utility, hoisting and elevator service with Landlord's contractor and
shall pay such reasonable charges for such services as may be charged by
Tenant's or Landlord's contractor.

               (h) Tenant's entry to the Premises for any purpose, including,
without limitation, inspection or performance of Tenant construction by Tenant's
agents, prior to the date Tenant's obligation to pay rent commences shall be
subject to all the terms and conditions of the Lease except the payment of Rent.
Tenant's entry shall mean entry by Tenant, its officers, contractors, licensees,
agents, servants, employees, guests, invitees, or visitors.

               (i) Tenant shall promptly reimburse Landlord upon demand for any
reasonable expense actually incurred by the Landlord by reason of faulty work
done by Tenant or its contractors or by reason of any delays caused by such
work, or by reason of inadequate clean-up.

               (j) Tenant hereby indemnifies and holds Landlord harmless with
respect to any and all costs, losses, damages, injuries and liabilities relating
in any way to any act or omission of Tenant or Tenant's contractor or agents, or
anyone directly or indirectly employed by any of them, in connection with the
Tenant Improvements and any breach of Tenant's obligations under this
Improvement Agreement, or in connection with Tenant's non-payment of any amount
arising out of the Tenant Improvements. Such indemnity by Tenant, as set forth
above, shall also apply with respect to any and all costs, losses, damages,
injuries, and liabilities related in any way to Landlord's performance or any
ministerial acts reasonably necessary (i) to permit Tenant to complete the
Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or
certificate of occupancy for the Premises.

               (k) Tenant's contractor and the subcontractors utilized by
Tenant's contractor shall guarantee to Tenant and for the benefit of Landlord
that the portion of the Tenant Improvements for which it is responsible shall be
free from any defects in workmanship and materials for a period of not less than
one (1) year from the date of completion thereof. Each of Tenant's contractor
and the subcontractors utilized by Tenant's contractor shall be responsible for
the replacement or repair, without additional charge, of all work done or
furnished in accordance with its contract that shall become defective within one
(1) year after the later to occur of (i) completion of the work performed by
such contractor of subcontractors and (ii) the Term Commencement Date. The
correction of such work shall include, without additional charge, all additional
expenses and damages incurred in connection with such removal or replacement of
all or any part of the Tenant Improvements, and/or the Building and/or common
areas that may be damaged or disturbed thereby. All such warranties or
guarantees as to materials or workmanship of or with respect to the Tenant
Improvements shall be contained in the construction contract or subcontract and
shall be written such that such guarantees or warranties shall inure to the
benefit of both Landlord and Tenant, as their respective interests may appear,
and can be directly enforced by either. Tenant covenants to give to Landlord any
assignment or other assurances which may be necessary to effect such rights of
direct enforcement.

6.      Insurance Requirements.

           6.1 All of Tenant's contractors shall carry worker's compensation
insurance covering all of their respective employees, and shall also carry
public liability insurance, including property damage, all with limits, in form
and with companies as are required to be carried by Tenant as set forth in
Paragraph 8 of the Lease.

           6.2 Tenant shall carry "Builder's All Risk" insurance in an amount
approved by Landlord covering the construction of the Tenant Improvements, and
such other insurance as Landlord may require, it being understood and agreed
that the Tenant Improvements shall be insured by Tenant pursuant to Paragraph 8
of the Lease immediately upon completion thereof. Such insurance shall be in
amounts and shall include such extended coverage endorsements as may be
reasonably required by Landlord including, but not limited to, the requirement
that all of Tenant's contractors shall carry excess liability and Products and
Completed Operation coverage insurance, each in amounts not less than $500,000
per incident, $1,000,000 in aggregate, and in form and with companies as are
required to be carried by Tenant as set forth in Paragraph 8 of the Lease.

           6.3 Certificates for all insurance carried pursuant to this
Improvement Agreement must comply with the requirements of Paragraph 8 of the
Lease and shall be delivered to Landlord before the commencement of construction
of the Tenant Improvements and before the contractor's equipment is moved onto
the site. In the event the Tenant Improvements are damaged by any cause during
the course of the construction thereof, Tenant shall immediately repair the same
at Tenant's sole cost and expense. Tenant's contractors shall maintain all of
the foregoing insurance coverage in force until the Tenant Improvements are
fully completed and accepted by Landlord, except for any Product and Completed
Operation Coverage insurance required by Landlord, which is to be maintained for
ten (10) years following completion of the work and acceptance by Landlord and
Tenant. All policies carried under this Paragraph 6 shall insure Landlord and
Tenant, as their interests may appear, as well as the contractors. All insurance
maintained by Tenant's contractors shall preclude subrogation claims by the
insurer against anyone insured thereunder. Such insurance shall

                                       30
<PAGE>   31

provide that it is primary insurance as respects the owner and that any other
insurance maintained by owner is excess and noncontributing with the insurance
required hereunder.

7.      Completion and Rental Commencement Date.

           7.1 Tenant's obligation to pay Rent under the Lease shall commence on
the Scheduled Term Commencement Date and the Scheduled Term Commencement Date
shall be the Term Commencement Date notwithstanding anything to the contrary
contained in Paragraph 2 of the Lease. However, Landlord Delays (as defined
below) shall extend the Term Commencement Date, but only in the event that
substantial completion of the Tenant Improvements is delayed despite Tenant's
reasonable efforts to adapt and compensate for such delays. In addition, no
Landlord Delays shall be deemed to have occurred unless Tenant has provided
notice, in compliance with the Lease, to Landlord specifying that a delay shall
be deemed to have occurred because of actions, inactions or circumstances
specified in the notice in reasonable detail. If such actions, inactions or
circumstances are not cured by Landlord within one (1) business day after
receipt of such notice ("COUNT DATE"), and if such actions, inaction or
circumstances otherwise qualify as a Landlord Delay, then a Landlord Delay shall
be deemed to have occurred commencing as of the Count Date. The Term
Commencement Date shall be extended by one day for each day from the Count Date
that a Landlord Delay has occurred, as calculated as provided above. The term
"Landlord Delays," as such term may be used in this Improvement Agreement, shall
mean any delays in the completion of the Tenant Improvements which are due to
any act or omission of Landlord, its agents or contractors. Landlord Delays
shall include, but shall not be limited to: (i) delays in the giving of
authorizations or approvals by Landlord, (ii) delays due to the acts or failures
to act, of Landlord, its agents or contractors, where such acts or failures to
act delay the completion of the Tenant Improvements, provided that Tenant acts
in a commercially reasonable manner to mitigate any such delay, (iii) delays due
to the interference of Landlord, its agents or contractors with the completion
of the Tenant Improvements or the failure or refusal of any party to permit
Tenant, its agents and contractors, access to and use of the Building or any
Building facilities or services, including elevators and loading docks, which
access and use are necessary to complete the Tenant Improvements, and (iv)
delays due to Landlord's failure to allow Tenant sufficient access to the
Building and/or the Premises during Tenant's move into the Premises.

           7.2 Within ten (10) days after completion of construction of the
Tenant Improvements, Tenant shall cause a Notice of Completion to be recorded in
the office of the Recorder of the county in which the Building is located in
accordance with Section 3093 of the Civil Code of the State of California or any
successor statute, and shall furnish a copy thereof to Landlord upon such
recordation. If Tenant fails to do so, Landlord may execute and file the same on
behalf of Tenant as Tenant's agent for such purpose, at Tenant's sole cost and
expense. At the conclusion of construction, (i) Tenant shall cause the Space
Planner and the contractor (i) to update the approved working drawings as
necessary to reflect all changes made to the approved working drawings during
the course of construction, (ii) to certify to the best of their knowledge that
the "record-set" of as-built drawings are true and correct, which certification
shall survive the expiration or termination of the Lease, and (c) to deliver to
Landlord two (2) sets of copies of such record set of drawings within ninety
(90) days following issuance of a certificate of occupancy for the Premises, and
(iii) Tenant shall deliver to Landlord a copy of all warranties, guarantees, and
operating manuals and information relating to the improvements, equipment, and
systems in the Premises.

           7.3 A default under this Improvement Agreement shall constitute a
default under the Lease, and the parties shall be entitled to all rights and
remedies under the Lease in the event of a default hereunder by the other party
(notwithstanding that the Term thereof has not commenced).

           7.4 Without limiting the "as-is" provisions of the Lease, except for
the Tenant Improvements, if any, to be constructed by Landlord pursuant to this
Improvement Agreement, Tenant accepts the Premises in its "as-is" condition and
acknowledges that it has had an opportunity to inspect the Premises prior to
signing the Lease. To the best of Landlord's knowledge, all elevators, HVAC and
other building systems are in good working order.

                             SCHEDULE 1 TO EXHIBIT C

         BASE BUILDING WORK - 1740 TECHNOLOGY DRIVE, SAN JOSE, CA 95110

                                      NONE.

        Not applicable. 1740 TECHNOLOGY DRIVE, SAN JOSE, CA 95110. The following
constitutes the Building Standard tenant improvements ("STANDARDS") in the
quantities specified:

PARTITIONS

Interior:                2 1/2" Metal studs with 5/8" gypsum board on each side.
                         Taped smooth and ready for finish.

Demising:                3 5/8" Metal studs with 5/8" gypsum board to building
                         structure on one side and 6" above ceiling on other
                         side, with sound batt insulation Provide minimum of two
                         (2) 4'-0" x 4'-0" openings protected by security wire
                         mesh fabric in each wall. Taped smooth and ready for
                         finish.

Perimeter Wainscot:      5/8" layer of gypsum board, taped smooth ready for
                         finish. Extruded aluminum sill to match exterior
                         mullions.

Interior Columns         5/8" layer of gypsum board, taped smooth ready for
                         finish.

Paint:                   One coat primer, two coats of interior latex paint in
                         eggshell finish, on each side of partitions.

DOOR ASSEMBLIES

Doors:                   Doors will be 3'-0" x 9'-0" x 1 3/4" solid core
                         construction Sapeli mahogany. Tenant entry doors to be
                         20-minute rated.

Door Frames:             Door frames will be Sapeli mahogany. Frames to be
                         20-minute rated.

Door Hardware:           Tenant entry doors shall receive a lockset, surface
                         mounted closer, butt hinges, and door stop. Tenant
                         interior doors shall receive a latchset, butt hinges
                         and door stop. Door hardware to be Schlage, L-series
                         #15 stainless steel with ASSA cylinder. Schlage tail
                         piece required. Finish to be equal to ASSA bright
                         chrome.

CEILING SYSTEM

Acoustic ceilings        Acoustical suspended ceilings will be Armstrong,
and suspended            Cortega, Fire-rated Tegular tile #816A, with Donn DX
                         15/16" suspension system in #040 white.

                                       31
<PAGE>   32

systems:

Light Fixtures:          2' x 4' Light fixtures will have custom Optibrite
                         optical reflector (2)-lamp, Motorola Rapid Start
                         Electronic Ballast, part #M2RNT8ILL, 277-volt lamp
                         model #GEF32T8SP35.

                         2' x 2' Light fixtures will have custom Optibrite
                         reflector (3)-lamp, Motorola Rapid Start Electronic
                         Ballast, part #M3RNT8ILL, 277-volt lamp model
                         #GEF32T8SP35.

Light Switch Assembly:   Switches will be paired in double gang box to meet
                         Title 24 requirements. Bryant #4901, Ivory finish.

ELECTRICAL AND TELEPHONE

Receptacles:             Receptacles will be duplex 20 ampere, 125 volt a.c.
                         with Bryant wall plate, smooth line, Ivory finish

Telephone outlets:       Outlets will be a standard telephone plate in
                         manufacturer's standard colors, mounted vertically
                         level with electrical receptacles, Color: ivory.

Exit signage:            Exit signs to be Lithonia Emergency Systems, Titan
                         XS-series, housing color: white, panels: green, style:
                         stencil, catalog #ELA XCKFSWR/G J6, 120-volt

HEATING AND AIR CONDITIONING SYSTEM

HVAC System:             Interior and exterior zone cooling provided by Carrier
                         Moduline Plus Air Terminals. Perimeter heating provided
                         by five heating fan coil units located in ceiling
                         plenum on each floor.

FIRE PROTECTION

Fire Sprinkler Heads:    Sprinkler heads to be Central Model "A" recessed
                         pendant automatic and quick response sprinklers.
                         Escutcheons to be metal. Color to be white.

FLOOR COVERING:

Carpet:                  38 oz. weight cut pile, Designweave, Sabre Classic,
                         installed direct glue-down. All standard colors
                         available.

Tile:                    Armstrong, Standard Excelon vinyl composition tile. All
                         standard colors available.

Base:                    Burke, 4" rubber base, topset over VCT and straight cut
                         over carpet. All standard colors available.

WINDOW COVERING

Blinds:                  1" aluminum Hunter Douglas, Contract Celebrity mini
                         blinds Color: #002-Alabaster. Sized to fit within
                         aluminum mullion module.

                                       32
<PAGE>   33

                                   SCHEDULE 3
                                  TO EXHIBIT C

                        CONTRACTOR RULES AND REGULATIONS

GENERAL REQUIREMENTS FOR BUILDING CONSTRUCTION WORK

================================================================================

INTENT

The intent of these General Requirements is to communicate Spieker Properties
general performance expectations and requirements of contractors performing work
in our projects. While these requirements may not cover all specific project
requirements, or may not apply to all projects, they are intended to communicate
a basic overall methodology for doing construction work in Spieker Properties
projects.

                                   Preliminary

1.      All work performed shall be performed by union signatory general
        contractor utilizing all union labor and must comply with all applicable
        rules, regulations, and codes of the building, city, state, and federal
        governmental agencies having jurisdiction. The General Contractor will
        file drawings and secure all required permits prior to beginning work,
        unless circumstances require earlier construction commencement, as
        directed by the Owner's architect. All construction within the leased
        premises shall conform to applicable sections of California Title 24
        Standards and the American with Disabilities Act (ADA).

2.      All work shall be performed during regular business hours (7:00 A.M. -
        6:00 P.M.), Monday through Friday, with the exception of work types
        listed below. All building system operations will be maintained in
        normal operation, and will not be adversely impacted by construction
        work, unless specifically authorized by a Project Management
        representative. The contractor shall communicate requests to the
        Management Office 24 hours in advance of any required interruption of
        any building services.

                EXCEPTIONS - The following work is required to be performed on
                an overtime or off-hours basis: core drilling, nailing of
                tackless carpet stripping, spray painting of any lacquer or
                other volatile or odor creating substances, and any type of
                concrete chipping. Any scheduling requests for these types of
                off-hours work must be approved and authorized by the Management
                Office prior to performance any of work.

3.      All contractors must supply Certificate(s) of Insurance naming Spieker
        Properties, L.P. as additionally insured prior to the start of any
        construction. Insurance certificates and copies of permits, as required,
        must be provided to Project Management prior to the commencement of any
        work.

4.      Contractors representative will meet with Project Management
        representative prior to beginning contracted work, to review the scope
        of construction work, construction methods, these general requirements,
        any additional project specific requirements, and any potential impact
        to the satisfactory on-going operation of building services.

5.      The contractor will coordinate proper parking locations for construction
        personnel with Project Management prior to starting construction, to
        avoid impacting our tenants parking availability.

PROJECT AREA ACCESS

1.      Access to project buildings, parking structures, suites, etc. will be
        coordinated in advance with Project Office. No installed access control
        or security system will be over ridden or bypassed for any reason, or at
        any time. All construction personnel will be limited to those areas for
        which they have been given specific access.

2.      Access to all electrical closets, telephone closets, mechanical rooms,
        and suites must be coordinated in advance through the Project Office.
        Electrical, telephone, and other equipment rooms will be kept closed and
        locked when they are not physically occupied.

DURING WORK PERFORMANCE

1.      Upon the start of construction, the contractor will provide walk-off
        mats at all entrances to the construction area(s) from stairwells (if
        used) and entrances to all elevators.

2.      Contractors shall maintain cleanliness throughout; do not clutter or
        block hallways, exits, elevator lobby, electrical or telephone rooms.
        Building fire rated doors will not be propped open, removed, or their
        door closures disconnected. Nor will elevator doors be propped or jammed
        open to prevent the automatic function of it's timed door actuators.
        CONTRACTORS ARE REQUIRED TO UTILIZE THE FREIGHT ELEVATOR ONLY! Where a
        freight elevator is not available, Project Management will designate the
        appropriate elevator for contractor use. Where available, elevator
        protective pads will be used whenever moving materials or equipment in
        the elevator. Contractors are responsible for all damage they cause and
        clean-up.

3.      Building electrical closets will not, at any time, or for any reason, be
        utilized for the storage of any construction project materials or trash,
        as such storage constitutes a violation of prevailing fire codes.

4.      All material deliveries, and debris removal, must be made as
        expeditiously as possible so as to not have these vehicles blocking
        accesses to/from the building. The contractor, at contractor expense
        must remove all construction debris from the building. Building trash
        dumpsters are not to be utilized for the disposal of construction
        project debris, as these are provided for tenant use. As may be
        required, Contractor will make arrangements for delivery of a debris box
        for his use. The Project Office will approve an appropriate location for
        the debris box while it is on the project. Delivery or removal of large
        amounts of material is to be done after normal business hours with
        24-hr. prior approval of the Project Manager.

5.      The contractor is responsible for taking the following precautions/
        steps to protect the satisfactory on-going operation of all building
        systems and tenant operations:

        -       Covering HVAC supply and return duct openings to protect from
                construction dirt/dust being spread to other areas of the
                building or into the HVAC equipment/system. This can be
                accomplished by sealing off, covering with filtering media, or
                other Project Management approved method.

                                       33
<PAGE>   34

        -       Coordinate with Project Manager prior to construction to have
                fire sprinkler systems isolated, smoke detectors disabled, or
                alarm systems de-activated for periods as may be necessary.
                Contractor will protect those smoke detectors or fire sprinkler
                heads left installed in the area, after disabling, by covering
                them with plastic bags during construction.

        -       Where electrical components or circuits are removed, contractor
                will ensure full compliance with OSHA required lockout/tagout
                procedures to prevent personal injuries or system outages.

        -       Develop the best isolation possible of the construction area to
                contain any dirt, dust, noise or other potential tenant impact
                which may be generated by demo, construction work and clean-up.

6.      Any damage to any project area including but not limited to, parking
        areas, doors, freight elevators, and carpets will be reported to the
        Project Office and repaired by the contractor immediately. Spieker
        Properties reserves the right to remedy any damage at the Contractors
        expense if the damage is not repaired in a timely manner.

7.      No powder-actuated guns are to be used without the specific prior
        authorization of the Project Management Office.

8.      No foreign substances are to be poured down any restroom floor drains,
        or into other restroom fixtures.

9.      All firewall and floor penetrations shall be sleeved and sealed in
        accordance with applicable fire code, using only approved, UL listed,
        fire stop materials. All firestop installations must be reviewed and
        approved by the Project Manager prior to closing the associated area of
        work.

10.     All electrical panel and circuit breaker labeling will be performed in
        accordance with acceptable industry methods, or as may be directed by
        Project Management.

11.     Contractor will notify the Management Office at least 48 hours in
        advance of construction completion. A walk-through and punch list will
        be developed for each job.

12.     Smoking is prohibited in all buildings, and parking garages, at all
        times.

13.     The Contractor is responsible for ensuring, on an on-going basis, that
        common areas, work space, and construction use restrooms are thoroughly
        cleaned upon completion of work, including trash and material disposal,
        removal of all noise and dust shielding materials installed at beginning
        of project, windows cleaned, etc.

14.     THE PROJECT OFFICE IS TO BE NOTIFIED IMMEDIATELY SHOULD ANY EMERGENCY
        DEVELOP, ANY BUILDING SYSTEM OR OPERATION BE IMPACTED, OR ANY ASPECT OF
        THE CONSTRUCTION EFFORT IMPACT ANY TENANT.

SAFETY/COMPLIANCE

1.      General Contractor is responsible for ensuring jobsite safety
        compliance. This includes the work force as well as anyone entering the
        construction area. Protective barricades will be placed as required to
        ensure general area safety. Material Safety Data Sheets (MSDS) for all
        materials to be used on the jobsite must be provided to the Project
        Manager for review prior to bringing the materials into the project. The
        contractor will further ensure that a copy of each MSDS is available at
        the jobsite whenever a specific material is in use.

2.      No welding, burning, or cutting with an open flame will be performed
        without prior notification to the Project Office so that appropriate
        actions may be taken with fire alarm systems and fire sprinkler systems.
        Appropriate fire extinguishers will be immediately available at all
        times.

3.      The contractor is responsible for ensuring that all of their
        sub-contractors are aware, and in compliance, with these general
        requirements.

                                    MATERIALS

1.      The contractor shall contact the Management Office at the start of
        construction for instructions on building keying, specific hardware and
        other standards, as may be applicable, unless this coordination is
        accomplished through hardware submittals. All permanent keying will be
        provided through the Management Office.

2.      All HVAC, electrical, plumbing, fire alarm system, fire sprinkler,
        building control and lighting components installed will be of Building
        Standard manufacture, unless noted as otherwise on the approved plans
        and specifications. This includes but is not limited to thermostats,
        controls, diffusers, lighting fixtures, switches, lamps, relays, smoke
        detectors, fire sprinkler heads, sprinkler flow switches, manual pull
        stations, indicator horns/strobes, etc.

Project Completion

1.      Upon completion of project, contractor will perform a full air balance
        of any installed or modified HVAC systems, providing one copy of each
        air balance report to the Management Office.

2.      Upon completion of project, a completed test report (witnessed by a Fire
        Department representative as required) will be provided to the Project
        Management Office for all fire sprinkler or fire alarm systems having
        been impacted by any aspect of the construction work.

3.      Upon completion of construction, one (1) set of as-built prints, and one
        (1) set of as-built sepias, are to be provided to the Management Office.

4.      Contractor will ensure that specific submittals, manufacturers operation
        and maintenance manuals, and applicable manufacturers cut sheets are
        delivered to the Project Office for all equipment or components
        installed in the course of their work. This includes, but is not limited
        to, mechanical equipment, fire alarm system components, fire sprinkler
        system components, HVAC system equipment or components, lighting system
        components, electrical distribution or control components, and any
        sensing or monitoring components.

                                       34
<PAGE>   35

5.      Upon completion of construction clean inside of all perimeter windows
        and the interior of all lighting fixtures and louvers. Thoroughly clean
        all work areas, common areas where impacted, construction use restrooms,
        and freight elevators. Coordinate construction clean-up schedule with
        Management Office.

                              Building Contact List

Any questions or concerns should be directed to:

        PROJECT DIRECTOR            -           JENNIFER FERRARI
        BUILDING MANAGERS           -           SUSAN MCCAULEY
        CUSTOMER SERV. REP.         -           _____ N/A_______
        BUILDING ENGINEER           -                    SHAWN DALY
        MANAGEMENT OFFICE           -                   (408) 453-3434
        MANAGEMENT OFFICE FAX       -                   (408) 452-0931

                                       35<PAGE>   1
                                                                   Exhibit 10.28

                           COMPAQ COMPUTER CORPORATION

                                    CORPORATE

                               PURCHASE AGREEMENT

                                      WITH

                      BROCADE COMMUNICATIONS SYSTEMS, INC.

<PAGE>   2

                           COMPAQ COMPUTER CORPORATION

                                    CORPORATE

                               PURCHASE AGREEMENT

This purchase agreement and all attachments and Exhibits (called the
"Agreement") is made and entered into as of the 1st day of February, 2000, by
Compaq Computer Corporation, a Delaware Corporation and its subsidiaries and
affiliates collectively referred to a ("Buyer",) and Brocade Communication
Systems, Inc. ("Seller") a Delaware Corporation; herein referred to collectively
as the ("Parties"). The terms and conditions herein exclusively govern the
purchase and sale of the Products, Spares and/or Services more fully described
in Exhibits A and B ("Product Part Numbers, Descriptions, Unit prices and
Lead-Times") and ("Spare Part Numbers, Descriptions, Unit Prices and
Lead-Times") and in applicable specifications, attached hereto and incorporated
herein by reference.

Notwithstanding anything to the contrary in this Agreement, this Agreement is
[*] a [*] and [*] Buyer to [*] of Products but only establishes the terms and
conditions [*] Buyer submits orders in accordance with this Agreement

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller hereby agree as follows:

     1.   DEFINITIONS

        In addition to terms defined elsewhere in this Agreement, capitalized
        terms used herein shall have the meanings set forth below:

        "AFFILIATE" means, with respect to Buyer, (a) any other legal entity
        controlling, controlled by, or under the common control with Buyer, and
        (b) any OEM subcontractor of Buyer (c) any subcontractor of Buyer. As
        used in this definition, the term "control" means the possession,
        directly or indirectly or the power to direct, or cause the direction of
        the management and policy of the controlled person.

        "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or
        holidays on which banks in the State of Texas are generally closed.

        "BUYER FURNISHED ITEMS" - may include components, tools and services
        identified in the applicable Exhibit ___ ("Buyer Furnished Items") which
        Buyer provides to Seller.

* 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.

                                       1
<PAGE>   3

        "BUYER PRODUCTS" - will mean those products manufactured, marketed,
        distributed and/or otherwise made available by Buyer to Buyer's
        customers, which include hardware and software proprietary to Buyer
        and/or Buyer's suppliers, including, without limitation, the Products
        acquired from Seller under this Agreement.

        "CHANGE ORDER" - will mean any written document or Order, including but
        not limited to standard industry Electronic, internet prepared and
        properly authorized by Buyer and expressly accepted by Seller to
        identify changes to a Purchase Order previously accepted by Seller for
        Products, Spares and/or Services. A Change Order issued shall contain
        the Purchase Order No. affected, a Change Order Number, a Change Order
        date signifying the effective date of the change(s). The Change Order
        may include changes that affect, but are not necessarily limited to (i)
        rescheduling item(s) Delivery Date(s), (ii) adding [*] item(s) in whole
        or in part, and/or (iii) changes to Buyer designated destination
        point(s).

        "DEFAULT" shall mean:

        (i) with respect to Buyer, (a) Buyer's failure to comply with any
        material provision of this Agreement or any Order issued hereunder, and,
        in the case of a breach which is capable of remedy, such failure
        continues unremedied for a period of [*] days of written notification of
        said breach; provided, delays in delivery shall be deemed incurable and
        not subject to the [*] day cure period herein; or (b) Buyer becomes
        insolvent, becomes subject to any bankruptcy proceeding, makes an
        assignment for the benefit of creditors, or a receiver or similar
        officer is appointed to take charge of all or a part of such party's
        assets and such condition is not cured within [*] days; and

        (ii) with respect to Seller, (a) Seller's failure to comply with any
        material provision of this Agreement or any accepted Order issued
        hereunder, and in the case of a breach which is capable of remedy, fails
        to remedy same within [*] days of written notification of said breach;
        (b) Seller becomes insolvent, becomes subject to any bankruptcy
        proceeding or makes an assignment for the benefit of creditors, or a
        receiver or similar officer is appointed to take charge of all or a part
        of Seller's assets and such condition is not cured within thirty [*];
        (c) Seller assigns or attempts to assign, or subcontracts or attempts to
        subcontract, any or all of its rights or obligations under this
        Agreement or any Orders issued hereunder to a third party without
        Buyer's prior written approval, provided, however that Seller shall not
        be considered to be in Default in the event that Seller assigns, or
        subcontracts or attempts to subcontract, without consent from Buyer or
        notice to Buyer, any or all of its rights or obligations under this
        Agreement or any Orders issued hereunder to a successor-in-interest in
        connection with a merger, reorganization, acquisition, or sale of all or
        substantially all of Seller's assets.

* 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.

                                       2
<PAGE>   4

        "DEFECTIVE Products" shall mean Products, Spares and/or Services that do
        not conform to the Specifications or that contain any defect in
        material, workmanship or design.

        "DELIVERY DATE" - will mean; (i) the date stipulated on Buyer's Purchase
        Order for the delivery of the Products and/or Spares during normal
        business hours and days at the [*]; and (ii) the date stipulated on
        Buyer's Purchase Order for the performance of Services to be completed
        by Seller as specified within Buyer's Purchase Order.

        "ELECTRONIC INTERCHANGE" shall mean the transmission of data in an
        electronic format including but not limited Electronic Data Interchange,
        ("EDI") Electronic Funds Transfer, ("EFT"), Facsimile, Electronic Mail
        (email), World Wide Web ("WWW") and Electronic File Exchange of any of
        the transaction sets listed in Exhibit L, (Electronic Commerce
        Agreement), electronic Orders, credit card Orders, and internet Orders
        transmitted via the internet between the parties.

        "INFORMATION" shall mean confidential information, which might include
        but is not limited to business plans, forecasts, capacity, pricing and
        inventory levels.

        "LEAD-TIME" shall mean the period of time extending from the date the
        Purchase Order is received by Seller to the Seller delivery date for
        Products, Spares and/or Services. The lead-times for the Products,
        Spares and/or Services shall be set forth in Exhibits A and B ("Product
        Part Numbers, Descriptions, Unit prices and Lead-Times") and ("Spare
        Part Numbers, Descriptions, Unit Prices and Lead-Times") respectively,
        or as otherwise mutually agreed to in writing by the parties herein.

        "ORDER(S)" shall mean collectively any written Purchase Order; or
        electronic Purchase Order employing industry standard Electronic
        Commerce techniques; and internet orders employing the Internet and
        industry standard Ecommerce techniques that are properly authorized and
        issued by Buyer and expressly accepted by Seller for the purchase of
        Products, Spares and/or Services.

        "PROPRIETARY RIGHTS" - shall mean all current and future patents, mask
        works, copyrights, trade secrets, know-how and all other intellectual
        property rights, including all applications, continuations and
        registrations with respect thereto.

        "PURCHASE ORDER" - will mean a written document prepared by Buyer and
        expressly accepted by Seller to identify Products, Spares and/or
        Services to be furnished by Seller under the terms and conditions of
        this Agreement. Such Purchase Order shall contain, at a minimum: (i)
        Purchase Order Number, (ii) Purchase Order date, (iii) Purchase Order
        Item No. for each item ordered, (iv) quantity of each Product, Spares or
        Service ordered, (v) Buyer and/or Seller part number, (vi) revision
        designator for each Product/Spare, (vii) unit price of each item, (viii)
        Delivery Date of each item, and (ix) Buyer's designated destination
        point for each item.

* 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.

                                       3
<PAGE>   5

        "PRODUCTS" - will refer to goods that are either manufactured,
        distributed or otherwise made available from Seller to Buyer for
        acquisition by Buyer pursuant to the terms and conditions of this
        Agreement. The Products shall include the products described under
        Exhibit A ("Product Part Numbers, Descriptions, Unit Prices, and
        Lead-Times"), as may be amended from time to time.

        "RMA" - will mean a Return Material Authorization number assigned by
        Seller for a shipment of Products and/or Spares being returned by Buyer
        to Seller unless otherwise defined herein.

        "SERVICES" - will mean the services made available to Buyer by Seller,
        as described in Exhibit E attached hereto ("Services Addendum").

        "SOFTWARE" - will mean (i) the software which is a component of, or
        bundled with, the Products and Spares (whether in firmware or on
        magnetic, optical or other media) and (ii) the end user documentation
        for such software, including all updates and enhancements to such
        software and documentation. "Updates" as used herein will mean
        non-feature improvements, workarounds, bug-fixes, media replacements
        and/or maintenance corrections to the Software or hardware components of
        a Product. Enhancements as used herein will mean feature improvements,
        new functionality, improved performance, and any increase in value,
        however caused or arising.

        "SPARE(S)" - will mean any replacement parts/components, assemblies, or
        sub-assemblies for the Products. Such Spare Parts shall include, without
        limitation; the items described within the applicable Exhibit B ("Spare
        Part Numbers, Descriptions, Unit Prices and Lead-Times"), as may be
        amended from time to time.

        "SPECIFICATIONS" - may include as applicable (i) the specifications for
        the specific Product, Spare and/or Service set forth in Exhibit F
        ("Product, Spares and Repairs Specifications"); (ii) the specifications
        with regard to the specific Products, Spares and/or Services generally
        published by Seller; (iii) the General Quality Requirements set forth
        under Exhibit D, ("Quality Assurance") and (iv) the Product Agency And
        Regulatory Compliance Requirements set forth under Exhibit J.
        Specifications also include, but are not limited to, physical or
        operational performance parameters, characterization and/or attributes
        of the Products and Spares as identified elsewhere within this
        Agreement.

     2.   PRODUCT PURCHASES

        The terms and conditions contained in this Agreement shall govern the
        purchase and sale of Products, Spares and/or Services listed in a
        Products, Spares and/or Services Exhibit entered into from time to time
        by Buyer and Seller, which Exhibit shall be substantially in the form of
        Exhibits A and/or B ("Product Part Numbers, Descriptions, Unit prices
        and Lead-Times") and ("Spare Part Numbers, Descriptions, Unit Prices and
        Lead-Times") attached hereto.

                                       4
<PAGE>   6

     3.   PRODUCT FORECASTS

          3.1       Buyer shall provide at a minimum, a monthly forecast of its
                    intended purchases for a [*] month period. Such forecasts
                    are for Seller's convenience only, and Seller hereby
                    expressly acknowledges that such forecasts shall not create
                    any liability whatsoever for Buyer, including but not
                    limited to an obligation to purchase Products, Spares,
                    unique or industry standard material.

          3.2       Seller agrees to review forecasts provided by Buyer and
                    advise Buyer if Seller anticipates that Seller will be
                    unable to achieve the requested volumes. Buyer volume
                    forecasts will be provided to Seller in accordance with the
                    terms and conditions of Exhibit C, ("Flexibility Agreement")
                    contained herein. Seller may from time to time request Buyer
                    to review Buyer's forecast and advise of any changes.

     4.   ORDERS

          4.1       Orders shall set forth the following items: quantity, price,
                    delivery date, part number, and revision level.

          4.2       Seller shall accept any Order that materially conforms with
                    the terms of this Agreement. Seller shall use commercially
                    reasonable efforts to send written confirmation of such
                    acceptance within [*] days after Seller's receipt of a
                    written Order from Buyer subject to Terms referenced in
                    Exhibit C.

          4.3       The parties hereby agree that prior to commencement of
                    Electronic Commerce between the parties, Buyer and Seller
                    shall execute an Electronic Commerce Trading Agreement
                    listed in Exhibit L.

* 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.

                                       5
<PAGE>   7

          4.4       If Buyer issues an electronic Order, Seller shall
                    electronically "Verify" receipt of the electronic Order
                    within [*] of the electronic Order transmission by Buyer.
                    "Verify" or "Verification", as used herein shall mean
                    Seller's determination of successful receipt, from
                    electronic mailbox, of all necessary Order information and
                    requirements, (e.g. quantity, price, delivery date, part
                    number, and revision level), and notification to Buyer of
                    both the receipt of the electronic Order from Buyer any
                    discrepancies relating to the readability of such electronic
                    Order. Seller shall return an electronic Order
                    acknowledgment ("Electronic Transmission Acknowledgment") to
                    Buyer within [*] following Verification. Seller shall be
                    conclusively presumed to have accepted all electronic Orders
                    issued by Buyer and verified received by Seller, unless
                    Buyer is notified specifically, that Seller has not accepted
                    a particular electronic Order. Such notification by Seller
                    must take place within the said [*] day period from Buyer's
                    electronic Order transmission.

          4.4.1     All electronic Orders, Verifications, and Electronic
                    Transmission Acknowledgments and other related data
                    electronically transmitted shall;

          4.4.1.1       reference and be subject to the terms and conditions of
                    this Agreement, and

          4.4.1.2       contain information in a specified format in accordance
                    with Buyer's policies, specifications and procedures
                    regarding electronic data interchange information.

          4.5       No additional or different or conflicting provisions
                    proposed by Seller in any oral, electronic or written
                    acceptance, confirmation or acknowledgment shall apply
                    unless expressly agreed to in writing by Buyer. Buyer hereby
                    gives notice of its objection to any additional or different
                    terms. No additional or conflicting provisions proposed by
                    Buyer in any Order, or in any oral, written or electronic
                    data interchange, confirmation, verification or
                    acknowledgment, shall be binding on Seller unless as
                    expressly agreed to in writing by Seller. Seller hereby
                    gives notice of its objection to any additional or different
                    or conflicting terms.

          4.6       Seller agrees that all of Buyer's Affiliates, wherever
                    located, shall be entitled to make purchases under this
                    Agreement. Seller agrees to sell to Buyer's Affiliates as
                    notified to Seller in writing, and extend pricing, lead time
                    and warranty terms from this agreement to such Affiliate
                    upon credit approval.

* 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.

                                       6
<PAGE>   8

          4.7       The parties agree: i) the provision of the Uniform
                    Commercial Code Section 2-201 (Statute of Frauds) shall not
                    apply to these Electronic Transmissions; ii) these
                    Electronic Transmissions shall be deemed to satisfy any
                    legal formalities requiring that agreements be in writing;
                    iii) computer maintained records when produced in hard copy
                    form shall constitute business records and shall be
                    admissible to the same extent as other generally recognized
                    business records.

          4.8       BROCADE IS CURRENTLY UNABLE TO ACCEPT CREDIT CARD
                    TRANSACTIONS]

     5.   TERM OF AGREEMENT

        The initial term ("Term") of this Agreement shall be [*] years,
commencing on the date of this Agreement (the "Effective Date"). This Agreement
will be automatically renewed at the conclusion of the initial Term for a [*]
month period unless one of the parties notifies the other party not less than
[*] days prior to the end of such [*] year period that it does not intend to
renew this Agreement. Such automatic renewal provision shall apply at the end of
each subsequent [*] month period unless either party indicates, in accordance
with the [*] day notice provision described in the preceding sentence, that
renewal is not intended. This Agreement may terminate prior to the
aforementioned stated term under the circumstances set forth in Section 15.
Notwithstanding the foregoing, this Agreement shall remain in full force and
effect and shall be applicable to any Order issued by Buyer to Seller during the
term of this Agreement until all obligations under such Order have been
fulfilled.

     6.   PRICING

          6.1       The prices for the Products, Spares and/or Services shall be
                    established from time to time by the parties executing and
                    delivering a ("Pricing Schedule") in the form set forth in
                    Exhibits A and/or B, ("Product Part Numbers, Descriptions,
                    Unit Prices and Lead-Times") and ("Spare Part Numbers,
                    Descriptions, Unit Prices and Lead-Times"). The Product
                    prices (the "Prices") set forth in any Pricing Schedule
                    shall be fixed for the period set forth therein.

          6.2       The Prices shall include all direct, indirect and incidental
                    charges relating to the sale and delivery of the Products,
                    Spares and/or Services to Buyer including, without
                    limitation, packaging pursuant to the attached
                    specification, packing and crating,storage, forwarding agent
                    and brokerage fees, insurance costs, freight shipping
                    charges, and document fees.

* 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.

                                       7
<PAGE>   9

          6.3       Notwithstanding the above, Seller agrees to sell the
                    Products to Buyer at [*] to the [*] by Seller to a [*] the
                    Products under an agreement with [*] and [*] to those in
                    this Agreement. The [*] and [*] are [*] to, or [*] those [*]
                    by Seller [*]. If at any time during the term of this
                    Agreement, Seller [*] the Products to a [*] at a [*] that
                    [*] Buyer under an agreement with [*] and [*] to those in
                    this Agreement, Seller shall promptly notify Buyer in
                    writing and Buyer shall then have the [*] to [*] from Seller
                    at the [*] to such [*].

          6.4       Upon reasonable prior notice, Buyer shall have the right,
                    exercisable not more than once every [*] months, to appoint,
                    at Buyer's expense, an [*] firm reasonably acceptable to
                    Seller to [*], during Seller's normal business hours
                    Seller's [*] and [*] to the [*] of the [*] and/or [*],
                    subject to such [*] of a mutually agreeable confidentiality
                    agreement. In the event Seller [*] Products, Spares and/or
                    Services in accordance with this Section 6, Buyer shall be
                    entitled to (a) with respect to any Product, Spare and/or
                    Service that Buyer has received, but has [*], a [*] in the
                    [*] and (b) with respect to any Product, Spare and/or
                    Service [*] an [*].

          6.5       Seller shall use [*] efforts to maintain a [*] program and
                    to ensure that the [*] are [*] at all times. If Buyer does
                    not consider the Prices aggressive and competitive, Buyer
                    shall have the right, at any time and from time to time, to
                    request an immediate meeting with Seller, and if a [*] is
                    mutually agreed upon by the parties, Seller shall use [*]
                    efforts to amend the Subject Terms to comply with this
                    Section 6 by entering into a new [*] Schedule.

          6.6       Seller shall deliver Products to Buyer on the date (the
                    "On-dock Date") and to the location (the "Specified
                    Location") specified in the related Order. If Seller
                    anticipates or becomes aware that it will not supply the
                    Products on the due-on-dock delivery date acknowledged by
                    Seller for any reason, Seller shall proactively notify Buyer
                    immediately after Seller has knowledge of the situation. The
                    notification may be communicated by facsimile, telephone,
                    electronic mail, or any other method agreed to by the
                    parties, provided that Seller shall obtain Buyer's actual
                    acknowledgment of the notice of anticipated delay. Seller
                    and Buyer will jointly develop alternatives to resolve any
                    late delivery of the Products, including use of premium
                    routing [*]. Seller will develop recovery plans with new
                    committed due-on-dock dates and communicate such plans to
                    Buyer within [*] business day of missed shipments.

* 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.

                                       8
<PAGE>   10

          6.7       The terms governing all Products, Spares and/or Services
                    received by Buyer will be interpreted in accordance with the
                    International Chamber of Commerce Incoterms 1990 Edition.
                    All N. American requirements for Products or Spares shall be
                    shipped F.O.B. [*] N. American location. Unless otherwise
                    mutually agreed, all Product and Spares received by Buyer at
                    any [*] will be received as [*], Incoterms 1990 Edition.
                    Once minimum volume run-rates are realized, Seller will
                    implement up to [*] buffer stock in hub(s), and [*]
                    inventory at seller's location of choice. Unless otherwise
                    expressly agreed to in writing by Seller, title and risk of
                    loss of Products shall pass to Buyer upon receipt of goods
                    by Buyer from [*].

          6.8       If Seller delivers Products, Spares and/or Services in more
                    than [*] Business Day advance of the On-dock Date therefor,
                    Buyer may, at its option, either (i) return such Products,
                    Spares and/or Services to Seller at Seller's risk and
                    expense, including but not limited to any transportation,
                    import, or export related expenses or duties, (in which case
                    Seller, at its expense, shall redeliver such Products or
                    Spares to Buyer on the correct On-dock Date therefor) or
                    (ii) retain such Products or Spares and make [*] on the date
                    [*] would have been [*] based on the [*] On-dock Date
                    therefor.

          6.9       Changes to delivery dates may only be made by Buyer's
                    authorized purchasing representatives, as specified by
                    Buyer. Buyer may, [*], issue Change Orders for Products or
                    Spares quantities and schedule dates in accordance with the
                    flexibility agreement attached as an Exhibit C hereto (the
                    "Flexibility Agreement"). All Change Orders must be provided
                    in writing by confirmed facsimile or email.

          6.10      In the event that Products or Spares scheduled for delivery
                    are more than [*] Business Day late, Buyer may (i) at its
                    request, require Seller, [*], to ship and deliver such
                    Products or Spares via a different mode of transportation or
                    (ii) pursue [*] available to Buyer, [*] or in [*],
                    consistent with the terms 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.

                                       9
<PAGE>   11

          6.11      Buyer may measure Seller's On Time Delivery performance
                    against commitments for the purpose of establishing Seller's
                    rate of On Time Delivery, Lead-Time and cycle time
                    improvement against requirements of this Agreement. Unless
                    otherwise agreed to by the parties, On Time Delivery shall
                    mean delivery of scheduled Products no more than [*] days
                    early and [*] days late. Lead-Times for all Products, Spares
                    and/or Services ordered hereunder shall not exceed that
                    listed in Exhibit A and/or B, ("Product Part Numbers,
                    Descriptions, Unit prices and Lead-Times") and ("Spare Part
                    Numbers, Descriptions, Unit Prices and Lead-Times") attached
                    hereto.

     7.   PACKING, MARKING, AND SHIPPING INSTRUCTIONS

          7.1       Seller shall prepare and pack all Products and Spares in
                    accordance with the specifications identified in Exhibit K
                    or as mutually agreed to in writing.

          7.2       Seller shall mark, or cause to be marked, each shipping
                    container to adequately show Buyer's Order number, part
                    number, revision level, and quantity contained therein.
                    Packing list may be placed outside the box

     8.   QUALITY

          8.1       Seller shall ensure that all Products, Spares and/or
                    Services conform to the Specifications, drawings, samples,
                    revision levels and other descriptions designated in the
                    Product Schedule for such Products, Spares and/or Services.
                    The Specifications shall include any labeling requirements
                    as detailed in the Project Schedule or in Exhibit I.

          8.2       Seller shall establish and/or maintain a quality improvement
                    plan acceptable to Buyer. Seller's initial Quality Plan is
                    attached to this Agreement as an Exhibit D, Appendix 2 (the
                    "Quality Plan") and shall not be amended without Buyer's
                    prior written consent.

          8.3       Upon reasonable notice, Buyer shall be entitled to visit and
                    inspect Seller's facility sites during normal business hours
                    and Seller shall cooperate to facilitate such visits. Seller
                    authorizes and agrees to assist Buyer in performing sourcing
                    inspection and quality assurance reviews and or
                    certifications at Seller's manufacturing facilities and/or
                    its subcontractors or authorized agents. Buyer's inspections
                    shall in no way relieve Seller of its obligation to deliver
                    conforming Products, Spares and/or Services or waive Buyer's
                    right of inspection and acceptance at the time the Products
                    and Spares are delivered, nor does said right of inspection
                    waiver any rights under the warranty provisions.

* 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.

                                       10
<PAGE>   12

          8.4       At Buyer's request, Seller shall provide Buyer with relevant
                    inspection, quality, and reliability data.

     9.   CHANGES

          9.1       Buyer may from time to time request a change in the
                    Specifications for the Products, Spares and/or Services, and
                    Seller shall commercially reasonable efforts to evaluate and
                    respond in writing to such change request within [*]
                    business days. If Buyer's changes result in a material
                    change in Seller's costs or in the time for performance,
                    Seller and Buyer shall negotiate in good faith such
                    adjustments as the parties deem appropriate to address such
                    changes.

          9.2       Except for Mandatory Engineering Changes (as defined below),
                    no changes shall be made by Seller in the form, fit, or the
                    function of the Product or Spares to be purchased hereunder
                    without Buyer's prior written approval. Seller agrees to use
                    commercially reasonable efforts to (i) provide [*] days
                    notice to Buyer of any changes to form, fit, function, [*],
                    or [*] for the Products or Spares, and (ii) ensure that such
                    changes do not compromise specifications, quality, or
                    reliability of Products ordered by Buyer. Buyer shall review
                    any proposed change within [*] business days of such notice
                    and provide Seller with written approval of such proposed
                    change or request samples which incorporate the proposed
                    change. In the event samples are requested, Buyer will have
                    an additional [*] business days to accept or reject in
                    writing the proposed changes. In the event Buyer fails to
                    respond in writing within the applicable period, the
                    proposed change will be deemed accepted by Buyer.

* 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.

                                       11
<PAGE>   13

          9.3       Seller shall provide notice to Buyer within [*] business
                    days of becoming aware of the need to make any Mandatory
                    Engineering Changes to Buyer in "Mandatory Engineering
                    Change" as used herein shall mean any mechanical, electrical
                    firmware or other change which is necessary to (i) the
                    Products or Spares previously furnished, (ii) Product(s) or
                    Spares to be furnished to Buyer by Seller, to Products or
                    Spares meet the specifications outlined in Exhibit F,
                    reliability, safety, agreed to in Exhibit F and/or to insure
                    continuity of supply. Seller shall promptly make the
                    Mandatory Engineering Change at no charge to Buyer for
                    Products and Spares not yet shipped to Buyer. If the
                    Mandatory Engineering Change is applicable to previously
                    delivered Products and Spares to conform to the applicable
                    revised specifications, the change shall be supplied in the
                    form of a mandatory field exchange kit ("Field Kit") at no
                    charge to Buyer. Buyer may (i) exchange the Field Kit
                    itself, and either [*] for, or [*], which will include
                    Buyer's [*] for doing so; (ii) return the affected Products
                    and Spares to Seller, FOB [*], and Seller will make the
                    change at no cost to Buyer, or (iii) a combination of (i) or
                    (ii) as stated within this Section.

     10.  INSPECTION AND ACCEPTANCE

          10.1      Products, Spares and/or Services purchased or to be
                    purchased pursuant to this Agreement shall be subject to
                    inspection and test by Buyer at all times (including during
                    the period of manufacture or development) and places
                    (including Seller's facilities or Seller's subcontractor
                    facilities). Unless otherwise specified in the Order, final
                    inspection and acceptance of Products, Spares and/or
                    Services by Buyer shall be at Buyer's facilities. Buyer
                    reserves the right to reject Defective Products discovered
                    after [*] days of the date of delivery. Products which have
                    not been accepted or rejected in writing by Buyer within [*]
                    days of the date of [*] will be deemed accepted by Buyer.
                    The remedy for Defective Products discovered after [*] days
                    shall be as set forth under the terms of Section 11
                    "Warranty".

          10.2      If Buyer returns Defective Products to Seller for
                    correction, credit or replacement, Seller shall repair or
                    replace same within [*] business days of receipt thereof.
                    Seller shall bear [*] risk and [*] associated with replacing
                    or repairing verified Defective Products and [*] Seller
                    agrees to provide failure verification of Defective Products
                    within [*] business days after receipt thereof and failure
                    analysis within an additional [*] business days. Seller will
                    also provide Buyer with a written corrective action report
                    addressing the steps that will be taken to eliminate the
                    recurrence of the problem, and will use commercially best
                    efforts to implement the actions addressed in such report.

* 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.

                                       12
<PAGE>   14

          10.3      Seller shall reimburse Buyer for the out-of-pocket costs for
                    any special inspection measures deemed necessary by mutual
                    agreement.

     11.  WARRANTY

          11.1      Seller hereby warrants (a) that for [*] months from the date
                    of shipment of Products and/or Spares by Buyer that all
                    Products and/or Spares shall conform to applicable
                    specifications drawings, samples, and descriptions referred
                    to in this Agreement. Seller further represents and warrants
                    that Products and/or Spares purchased hereunder shall (i)
                    vest in Buyer good and valid title to such Products or
                    Spares free and clear of all liens, security interests,
                    encumbrances, burdens and other claims, and (ii) that
                    Products or Spares do not infringe any U.S. patent issued as
                    of the Effective Date, copyright or trade secret of any
                    third party. The warranty for replaced or repaired Products
                    or Spares shall be the remainder of the original Products
                    and Spares warranty or [*] days, whichever is longer.

          11.2      Upon discovery of a Defective Product during the warranty
                    period, Buyer shall promptly notify Seller in writing of
                    such Defective Product, including a detailed description of
                    the applicable defect, and promptly return such Defective
                    Product to Seller's facility. Seller will, at its option,
                    repair or replace the Defective Product, or credit an amount
                    equal to the [*], whichever is lower, for such Defective
                    Product. Seller shall bear all costs related to the
                    replacement or repair of Defective Product, including the
                    costs of the relevant turn-around shipment. Buyer shall use
                    commercially reasonable efforts to ensure that all Products
                    to be returned to Seller are verified to be defective. In
                    the event that Product(s) returned to Seller as defective
                    are determined to be No-Trouble-Found (NTF), Seller shall
                    return the Product to Buyer. In the event that NTF's exceed
                    [*] of the total returns over a [*] day period, Buyer may
                    subject to the NTF charge as listed in Exhibit E. THE
                    REMEDIES SET FORTH IN THIS SECTION 11.2 SHALL BE BUYER'S
                    SOLE AND EXCLUSIVE REMEDIES IN THE EVENT OF A BREACH OF THE
                    LIMITED WARRANTIES SET FORTH IN SECTION 11.1(A).

          11.3      As further provided in Section 31.10, IN NO EVENT WILL [*]
                    BE RESPONSIBLE TO THE OTHER FOR ANY INCIDENTAL OR
                    CONSEQUENTIAL DAMAGES ARISING OUT OF THIS WARRANTY. HOWEVER,
                    NOTHING HEREIN SHALL BE DEEMED AN ASSUMPTION BY EITHER PARTY
                    OF LIABILITY THAT THE OTHER PARTY HAS IN CONTRACT OR AT LAW,
                    WITH REGARD TO ANY THIRD-PARTY CLAIMS.

* 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.

                                       13
<PAGE>   15

          11.4      Seller warrants that Seller has not previously or otherwise
                    granted any rights to any third party which conflict with
                    the rights granted herein; as of the Effective Date, to
                    Seller's knowledge, there is no litigation, arbitration, or
                    other pending proceeding, pending or threatened with regard
                    to Seller before any court or any other governmental or
                    administrative agency that would interfere with Seller's
                    ability to provide the Products or Spares to Buyer under the
                    terms of this Agreement; that, as of the Effective Date, no
                    judgment, order, injunction or decree of any court or any
                    other governmental or administrative agency regarding
                    Products, Spares and/or Services have been entered against
                    or served upon Seller; and that Seller has the full power
                    and authority to enter into this Agreement, to carry out
                    Seller's obligation, as set forth herein and grant the
                    rights granted herein.

          11.5      Seller represents and warrants that all Products, Spares
                    and/or Services provided to Buyer under this Agreement
                    including own operating and manufacturing systems
                    ("Systems") used in support of providing Products, Spares
                    and/or Services to Buyer will operate accurately in the
                    manner in which they are intended as it relates to date
                    related operations when given a valid date containing
                    century, year, month and day, including, but not limited to,
                    the following specific performance features: (i) the
                    Products, Spares and Systems must accurately calculate and
                    execute dates using a four digit year; (ii) the Products,
                    Spares and Systems' functionality (on-line and batch),
                    including but not limited to entry, inquiry, maintenance and
                    update, must accurately support and execute four digit year
                    processing; (iii) the Products, Spares and Systems'
                    interfaces and reports must accurately support and execute
                    four digit processing; (iv) the Products, Spares and Systems
                    shall accurately execute the translations into the year 2000
                    with the correct system date (e.g., 1/1/2000) without human
                    intervention; (v) the Products, Spares and Systems must
                    accurately process with a four digit year after transition
                    to and beyond the year 2000, including accurate calculations
                    of leap year, without human interventions; and (vi) the
                    Products, Spares and Systems must accurately provide results
                    in forward and backward date calculation spanning century
                    boundaries, and shall accurately convert years previously
                    stored as two digits to four digits. The foregoing
                    representations and warranties shall not apply to the extent
                    that any such failure arises from any third party software
                    and/or firmware. In the event of any breach by Seller of the
                    foregoing representations and warranties, Seller shall, upon
                    receipt of written notice from Buyer and at Seller's sole
                    option, either: (i) use commercially

* 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.

                                       14
<PAGE>   16

                    reasonable efforts to promptly correct any such
                    nonconformance in the affected Products, Spares and/or
                    Systems; or (ii) [*] by Buyer to Seller for such Products,
                    Spares and/or Systems. THE FOREGOING REMEDIES SHALL BE
                    BUYER'S SOLE AND EXCLUSIVE REMEDIES FOR ANY BREACH OF THE
                    REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION
                    11.5.

          11.6      Software Warranty/Maintenance Seller warrants the Product
                    base Fabric OS and optional features (i.e. WebTools, Zoning,
                    etc) for a period of [*] days. Remedial fixes and [*] are
                    provided during this warranty period.

          New functionality may be provided as a new optional feature to enhance
          the functionality provided by the Product (i.e. Remote Fabrics).
          Seller [*] new license keys to enable these features (i.e. Webtools,
          Zoning, SES etc, users need to purchase a license key to enable new
          features.)

     12.  OUT OF WARRANTY REPAIRS AND SPARES AVAILABILITY

          12.1      Seller agrees to refurbish to a mutually agreed "minimum
                    acceptance level" any Products and Spares no longer covered
                    by the express warranties set forth elsewhere in this
                    Agreement (an "Out of Warranty Product") at the
                    refurbishment prices and according to the terms set forth in
                    Exhibit B ("Spare Part Numbers, Descriptions, Unit Prices
                    and Lead-Times") attached hereto.

          12.2      In addition, Seller shall make available for purchase by
                    Buyer replacement and repair Spares for Products in
                    accordance with the terms set forth in the applicable
                    Exhibit B attached hereto.

* 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.

                                       15
<PAGE>   17

     13.  TERM OF AVAILABILITY

          13.1      In consideration for Buyer's purchase of any Products or
                    Spares hereunder, Seller grants to Buyer the option to
                    purchase replacement Products and Spares at the last
                    revision level purchased under this Agreement for the period
                    [*] after Seller's formal "End of Life" or "EOL"
                    notification during the term of this Agreement (or the
                    Agreement's termination, as applicable), or for as long as
                    said Products or Spares is made available to any of Seller's
                    other customers, whichever is the later. Buyer shall use
                    commercially reasonable efforts to provide Seller with a
                    forecast for Buyer's anticipated purchases of Products and
                    related Spares for each Product within [*] days of the date
                    of "EOL" notification or the termination of this Agreement,
                    as applicable, and Seller shall make commercially reasonable
                    efforts, to provide Product or Spares in excess of such a
                    forecast.

          13.2      Thereafter, Seller may discontinue availability of Products
                    or Spares by giving Buyer [*] months prior written notice,
                    provided that, at Buyer's option, Seller shall sell Buyer,
                    pursuant to a last time Purchase Order for each Product
                    placed by Buyer prior to the expiration of such [*] month
                    period

                    sufficient quantities of Products and/or Spares [*]
                    necessary. Such last time purchase order shall be a
                    non-cancellable order and delivery must be scheduled to
                    occur within the above [*] month window. Seller shall use
                    reasonable efforts to delay [*] for the Products until
                    Seller deems necessary to meet Buyer's requested deliveries.
                    Should Buyer not require all of Product on such final order,
                    Seller shall make commercially reasonable efforts to [*] and
                    [*] for Buyer. Buyer shall pay all reasonable documented
                    costs including, but not limited to material, labor,
                    overhead as charged to Seller by Seller's subcontract
                    manufacturer, and reasonable profit margin. Such cost
                    liability shall be no more than the purchase price for the
                    Products.

          13.3      The parties shall negotiate in good faith the Terms and
                    Conditions of the purchase set forth in Sections 13.1. and
                    13.2 above. However, in no event shall the [*] for Products
                    or Spares, or any other charges related to Buyer's exercise
                    of its rights in Section 13.2 above, [*] then [*] to
                    Seller's other customers for [*] of Products or Spares.

* 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.

                                       16
<PAGE>   18

     14.  PAYMENT

          14.1      Buyer shall make payment in full for the purchase price of
                    all Products, Spares and/or Services purchased hereunder
                    (other than items disputed by Buyer in good faith) and
                    received by Buyer on or before the [*] day after the date of
                    Seller's invoice; provided, Seller's invoice shall not be
                    dated earlier than the shipment date of Products covered
                    thereby.

          14.2      Unless otherwise specified in an Exhibit or otherwise agreed
                    to in writing by the parties, payment shall be made in U.S.
                    dollars.

     15.  TERMINATION

          15.1      Either party (the "Non-Defaulting Party") may terminate this
                    Agreement and/or any Order issued hereunder at any time by
                    written notice to the other party (the "Defaulting Party")
                    upon the occurrence of a Default by the Defaulting Party
                    This Agreement shall terminate on the date of such written
                    notice (the "Termination Date").

          15.2      Upon termination by Seller of this Agreement and/or any
                    Order due to Buyer's Default or upon termination by Buyer
                    for reasons other than Seller's Default, Buyer's liability
                    shall be to purchase the Products and Spares in accordance
                    with Exhibit C and any and all Products and Spares that
                    Buyer has received and had not previously paid for.
                    Notwithstanding the foregoing, Seller may exercise any other
                    remedies available to Seller at law or in equity.

          15.3      Upon termination by Buyer of this Agreement and/or any Order
                    due to Seller's Default, Buyer may, at its option, (i)
                    return Defective Products to Seller, [*] , (ii) return
                    Defective Products to Seller for Seller's correction or
                    replacement or (iii) [*] any [*] as Buyer may have [*] or
                    [*] that are consistent with the other provisions of this
                    Agreement. Products or Spares required to be corrected or
                    replaced shall be subject to the same inspection and
                    acceptance provisions of this Agreement as Products or
                    Spares originally delivered under any Order.

     16.  FORCE MAJEURE

          16.1      Neither party shall be liable for its failure to perform any
                    of its obligations hereunder during any period in which
                    performance is delayed by fire, flood, war, embargo, riot or
                    an unforeseeable intervention of any government authority
                    that causes complete business interruption ("Force
                    Majeure"), provided that the party suffering such delay
                    immediately notifies the other party of the delay.

* 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.

                                       17
<PAGE>   19

          16.2      If, however, either party's (the "Delayed Party")
                    performance is delayed for reasons set forth above for a
                    cumulative period of [*] days or more, the other party,
                    notwithstanding any other provision of this Agreement to the
                    contrary, may terminate this Agreement and/or any Order
                    issued hereunder by [*] to the Delayed Party. In the event
                    of such termination by either party, Buyer's [*] hereunder
                    shall be for the [*] to Seller of [*] and owing for Products
                    or Spares previously delivered by Seller and accepted by
                    Buyer or on order as of the date of termination pursuant to
                    the Flexibility Model in Exhibit C. In the event the parties
                    do not [*] and/or [*] due to a Force Majeure, the time for
                    performance or cure will be extended for a period equal to
                    the duration of the Force Majeure.

     17.  NOTICES

        Any notice given under this Agreement shall be written or sent by telex
        or facsimile. Written notice shall be sent by registered mail or
        certified mail, postage prepaid, return receipt requested, or by any
        other overnight delivery service which delivers to the noticed
        destination, and provides proof of delivery to the sender. Any telex or
        facsimile notice must be followed within three (3) days by written
        notice. All notices shall be effective when first received at the
        following addresses:
<TABLE>
        <S>                                       <C>

        If to Seller:                             If to Buyer:

        CFO                                       Corporate Commodity Manager
        ------------------------------------                                 --------------------
        Brocade Communications                    Compaq Computer Systems
        ------------------------------------                             ------------------------
        1901 Guadalupe Pkwy                       20555 SH 249
        ------------------------------------                   ----------------------------------
        San Jose, CA 95131                        Houston, TX 77269-2000
        ------------------------------------                             ------------------------

        with copies to:                           with copies to;

        Compaq Sales Executive
        ------------------------------------      ------------------------------------------------
        Brocade Communications Systems
        ------------------------------------      ------------------------------------------------
        1901 Guadalupe Parkway
        ------------------------------------      ------------------------------------------------
        San Jose, CA 95131
        ------------------------------------      ------------------------------------------------
</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.

                                       18
<PAGE>   20

     18.  COMPLIANCE WITH LAWS

          18.1      All Products or Spares supplied and work performed under
                    this Agreement shall comply with all applicable United
                    States and foreign laws and regulations including, but not
                    limited to, emission and safety standards, the Occupational
                    Safety and Health Act (29 U.S.C. Sections 651 et seq.), the
                    Fair Labor Standards Act of 1938 (29 U.S.C. Sections
                    201-219), the Toxic Substance Control Act of 1976 (15 U.S.C.
                    Section 2601), all laws restraining the use of convict
                    labor, and Worker's Compensation Laws. Upon request, Seller
                    agrees to certify compliance with any applicable law or
                    regulations. Seller's failure to comply with any of the
                    requirements of this Section may result in a material breach
                    of this Agreement.

          18.2      The following provisions and clauses of the Federal
                    Acquisition Regulation (FAR), 48 CFR Chapter 1, are hereby
                    incorporated by reference, with the same force and effect as
                    if they were given in full text and are hereby made binding
                    upon the subcontractor or vendor, if applicable. Where the
                    clauses or provisions say "Contractor", substitute
                    "subcontractor or vendor."

                   1) Nonexempt Subcontracts and Purchase Orders over $2,500:
                   52.222-36 Affirmative Action for Handicapped Workers (APR
                   1984)

                   2) Nonexempt Subcontracts and Purchase Orders over $10,000 or
                   subcontracts and Purchase Orders the aggregate value of which
                   in any twelve month period exceeds or can be expected to
                   exceed $10,000: 52.222-26 Equal Opportunity (APR 1984)

                   3) Nonexempt Subcontracts and Purchase Orders over $10,000:
                   55.222-21 Certification of Nonsegregated Facilities (APR
                   1984) 52.222-35 Affirmative Action for Special Disabled and
                   Vietnam Era Veterans (APR 1984)

          18.3      This Agreement is subject to all applicable United States
                    laws and regulations relating to exports and to all
                    administrative acts of the U.S. Government pursuant to such
                    laws and regulations.

          18.4      The 1980 United Nations Convention on contracts for the
                    international sale of goods shall not apply to this
                    Agreement or any Order issued under this Agreement.

          18.5      Seller agrees to comply with all terms and conditions of the
                    Compaq Supplier Compliance Policy, attached as Exhibit G
                    hereto.

          18.6      In the event that Buyer licenses any Software to the U.S.
                    Government, Buyer shall identify such Software to the
                    Government as "commercial computer software" developed
                    exclusively at private expense, and in accordance with FAR
                    Section 12.212

                                       19
<PAGE>   21

                    or Defense FAR Supplement Section 227-7202, as applicable.
                    Buyer shall license the Software to the Government in
                    accordance with the terms of the Alliance Master Agreement
                    dated April 16, 1999.

     19.  INDEMNITY AND REMEDIES

          19.1      Seller shall indemnify, defend and hold harmless Buyer and
                    its Affiliates and their respective directors, officers,
                    shareholders, employees and agents ("Buyer Indemnified
                    Parties") from and against any and all claims, demands,
                    suits, actions, judgments, costs and liabilities (including
                    attorneys' fees) (each, an "Indemnified Loss"), relating to
                    or arising out of any allegation that Products or Spares
                    furnished under this Agreement infringe or violate any U.S.
                    patent issued as of the Effective Date, copyright or trade
                    secret of any third party and shall pay all costs and
                    damages awarded; provided, the foregoing indemnity shall not
                    apply to the extent any such claim is attributable solely to
                    design specifications furnished by Buyer to Seller. If an
                    injunction or exclusion order preventing the use, sale,
                    lease license, or other distribution of the Products or
                    Spares of any part thereof of the Products or Spares results
                    from such a claim (or, if Buyer [*] such an injunction is
                    [*]) Seller shall, at its expense, and at Buyer's request,
                    use commercially reasonable efforts to [*] for Buyer the [*]
                    to [*] the Products or Spares. In the event that Seller
                    cannot [*] for Buyer, Seller shall be deemed to have
                    breached its warranty set forth in Section 11.1 and
                    thereupon Seller shall [*] all such Products and Spares from
                    Buyer at the [*]. The foregoing indemnity obligation shall
                    not extend to any claims of infringement arising out of or
                    related to (i) a modification of the Products and/or Spares
                    by anyone other than Seller without Seller's prior written
                    consent; (ii) a combination of the Products and/or Spares
                    with any third party software or hardware where such
                    combination is the cause of such infringement; (iii) the use
                    of a version of Software other than the then-current version
                    if infringement would have been avoided with the use of the
                    then-current version; and (iv) any design specifications
                    provided by Buyer to Seller. The foregoing sets forth
                    Buyer's sole and exclusive remedy with respect to claims of
                    infringement of third party intellectual property rights of
                    any kind.

          19.2      Seller shall defend, indemnify and hold Buyer, its officers,
                    directors, agents and employees harmless from and against
                    any and all claims, [*], expenses (including reasonable
                    attorney's fees), [*], or judgments ("Claims") which are
                    caused by Seller and result from or arise out of:

          19.2.1    The [*] of Seller's agents, employees or subcontractors
                    (Personnel), or equipment [*] of Buyer or its customers; or

* 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.

                                       20
<PAGE>   22

          19.2.2    The [*] by Seller or its Personnel of any [*] for or on
                    behalf of Buyer; or

          19.2.3    The [*] or [*] of Seller or its Personnel; or

          19.2.4    The use by Seller or its Personnel of [*] or [*] whether or
                    not any [*] are [*] upon the [*] of such [*] or Buyer's, its
                    agents', or employees' [*] in permitting its use. Permission
                    by Buyer to use any such [*] shall be gratuitous.

          19.2.5    The use of any [*] and/or [*].

          19.3      Buyer shall defend, indemnify and hold Seller, its officers,
                    directors, agents and employees harmless from and against
                    any and all Claims which result from or arise out of any
                    design specifications provided by Buyer to Seller.

          19.4      In the event one party (the "Indemnifying Party") is
                    obligated to indemnify the other party (the "Indemnified
                    Party") under this Agreement, this obligation is contingent
                    upon the Indemnified Party providing the Indemnifying Party
                    with prompt written notice of any claim for which
                    indemnification is required, tender the defense of any such
                    claim to the Indemnifying Party, provide full cooperation
                    for such defense at the Indemnifying Party's expense. The
                    Indemnified Party shall not settle a claim without the
                    Indemnifying Party's prior written approval. The Indemnified
                    Party may participate in any such defense or settlement with
                    counsel of its own choosing at its expense.

          19.5      Except as otherwise provided in this Agreement, upon the
                    occurrence of a Default by a party hereto the other party
                    shall be entitled to exercise such rights and remedies as
                    are available at law or in equity

          19.6      [*] SHALL BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES
                    (INCLUDING, WITHOUT LIMITATION, LOST PROFITS AND
                    UNLIQUIDATED INVENTORY). INDIRECT, SPECIAL OR PUNITIVE
                    DAMAGES EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
                    POSSIBILITY OF SUCH DAMAGES EXCEPT (I) IN CONNECTION WITH A
                    BREACH OF THE [*] SET FORTH IN THIS AGREEMENT AND (II) TO
                    THE EXTENT ANY SUCH DAMAGES ARE A PART OF AN [*] AGAINST
                    WHICH BUYER IS ENTITLED TO BE [*] PURSUANT TO THE OTHER
                    PROVISIONS OF THIS SECTION 19.

        * 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.

                                       21
<PAGE>   23

     20.  TRADEMARKS; LOGOS

        Seller is authorized to use the Compaq logo and trademark only to the
        extent necessary to meet the required specification for the Products. No
        other rights with respect to Buyer's trademarks, trade names or brand
        names are conferred, either expressly or by implication, upon Seller.

     21.  GRATUITIES

        Each party represents that it has not offered nor given and will not (i)
        offer nor give any employee, agent, or representative of the other party
        any gratuity, or (ii) influence such person's normal job
        responsibilities in any way with a view toward securing any business
        from the other party or influencing such person with respect to the
        business between the parties.

     22.  INSURANCE

          22.1      Seller shall maintain such minimum insurance coverage as
                    listed below.

          22.2      Seller agrees to carry at all times and with financially
                    reputable companies insurance of the kinds and in the
                    amounts listed below:

                    a. WORKER'S COMPENSATION Statutory limits in each state in
                       which Supplier is required to provide Worker's
                       Compensation coverage including "All States" and
                       Voluntary Compensation" endorsement;

                    b. EMPLOYER'S LIABILITY -- with limits not less than [*]
                       Bodily Injury Each Accident; [*] Disease - Policy Limit,
                       [*] Disease - Each Employee;

                    c. COMPREHENSIVE GENERAL LIABILITY for Bodily Injury and
                       Property Damage - including Premises/Operations,
                       Products/Completed Operations, Contractual Liability,
                       Independent Contractor's Liability, Broad Form Property
                       Damage, Personal/Advertising Injury with a limit of not
                       less than [*] per occurrence and [*] in the annual
                       aggregate;

                    d. AUTOMOBILE LIABILITY For owned, non-owned, leased and
                       hired vehicles with a combined single limit of not less
                       than [*] for Bodily Injury and Property Damage;

* 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.

                                       22
<PAGE>   24
                    e. EXCESS/UMBRELLA LIABILITY [*] following form over
                       underlying liability coverages;

                    f. Insuring loss of or damage to goods, tools, equipment
                       owned by Compaq Computer Corporation, to the attention of
                       the Corporate Risk Management Department, indicating that
                       the insurance policies of the kind and limits listed
                       above are in effect for the full term of the Agreement.
                       Such Certificates of Insurance shall be kept current and
                       on file with Corporate Risk Management until the
                       conclusion of the term of this Agreement;

                    g. LEGAL LIABILITY insuring loss or damage to goods,
                       tools and equipment in Seller's care, custody and control
                       with a limit of not less than [*] per occurrence. Any
                       claims that occur shall be deemed to be valued at full
                       replacement cost (dealer sales cost).

     23.  CONFIDENTIAL INFORMATION

          23.1      The parties hereto will keep the terms of this Agreement
                    confidential and will not disclose such terms to any third
                    party except: (i) with the prior written consent of the
                    other party; (ii) as may be required by law or legal
                    process, including to legal and financial advisors in their
                    capacity of advising a party in such manners; (iii) in
                    confidence to its legal counsel, accountants, banks and
                    financing sources and their advisors solely in connection
                    with complying with financial transactions; or (iv) to the
                    extent disclosed in any mutually agreed press release.

          23.2      "Confidential Information" means all 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, or which, under the
                    circumstances surrounding disclosure, the Recipient knows or
                    has reason to know should be treated as confidential without
                    the need to be marked as "confidential", 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.

* 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.

                                       23
<PAGE>   25

          23.3      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.

          23.4      Both parties agree that the party receiving Confidential
                    Information will maintain such Information in confidence for
                    a period of [*] years from the date of disclosure of such
                    Confidential Information.

          23.5      Each party shall protect the other party's Confidential
                    Information to the same extent that it protects it own
                    confidential and proprietary information and shall take all
                    reasonable precautions to prevent unauthorized disclosure to
                    third parties.

          23.6      The parties acknowledge that the unauthorized disclosure of
                    such Confidential Information will cause irreparable harm.
                    Accordingly, the parties agree that the injured party shall
                    have the right to seek immediate injunctive relief enjoining
                    such unauthorized disclosure.

          23.7      The provisions of this Section 23 shall not apply to
                    information (i) known to the receiving party at the time of
                    receipt from the other party, (ii) generally known or
                    available to the public through no act or failure to act by
                    the receiving party, (iii) furnished to third parties by the
                    disclosing party without restriction on disclosure, (iv)
                    furnished to the receiving party by a third party as a
                    matter of right and without restriction on disclosure or (v)
                    furnished as required by court order or similar governmental
                    authority or by the imminent likelihood thereof or by
                    applicable law.

* 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.

                                       24
<PAGE>   26

          23.8      Immediately upon termination of this Agreement or at the
                    request of the other party, each of the parties shall
                    promptly return all materials in its possession containing
                    Confidential Information of the other party.

     24.  DOCUMENTATION, TRAINING AND TECHNICAL SUPPORT

          24.1      During the Term, Seller shall supply the documentation, and
                    technical support as listed in attached Exhibit H hereto
                    (Documentation and Technical Support).

          24.2      Seller hereby grants to Buyer a worldwide, nonexclusive,
                    nontransferable right to use, reproduce (in whole or in
                    part), have reproduced, [*] of, and distribute the Seller's
                    end user documentation and derivatives thereof through
                    multiple tiers of distribution. Buyer agrees to defend,
                    indemnify, hold Seller, its agents, officers and employees
                    harmless from all claims, losses, damages, costs or
                    liabilities arising from, resulting from or relating to the
                    introduction of Buyer of any inaccuracies, misstatements or
                    material omissions into such documentation or any
                    derivatives thereof except that Seller shall have no
                    liability for any errors or omissions introduced into the
                    documentation by Buyer's modifications or derivative works.

          24.2      Seller hereby grants to Buyer a worldwide, nonexclusive,
                    nontransferable right to use internally all documentation
                    supplied by Seller for purposes of implementation,
                    maintenance and support of the Products and Spares and any
                    development necessary to integrate the Products and Spares
                    into Products.

     25.  COUNTRY OF ORIGIN, DUTY DRAWBACK

          25.1      "Country of Origin" Marking: The Seller shall mark, in
                    English, all Products - with the Country of Origin
                    (manufacture),in compliance with Section 304 of the United
                    States Tariff Act. Both the Products and its container must
                    be conspicuously marked with the Country of Origin per
                    Buyer's Labeling Specification in Exhibit I . If the
                    Products itself cannot be marked legibly due to size, then
                    its immediate container must be marked. signed certificate
                    stating Country of Origin (manufacture) by quantity and part
                    number (Buyer's and Seller's).

* 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.

                                       25
<PAGE>   27

     26.  BUYER OWNED PROPERTY

        Any tools, drawings, specifications, or other materials furnished by
        Buyer for use by Seller in its performance under this Agreement or any
        Order issued hereunder shall be identified and shall remain the property
        of Buyer and shall be used by Seller only in its performance hereunder.
        Seller shall keep such material, tools, drawing, and specifications
        separate and identified as Buyer owned property. Such property shall be
        delivered, upon request, to a destination specified by Buyer in good
        condition, except for normal wear and tear.

     27.  SIMILAR PRODUCTS

        Seller understands that Buyer designs, develops and acquires hardware
        and software for use with its own computer system products, and that
        existing or planned hardware and software independently developed or
        acquired by Buyer may contain ideas and concepts similar or [*] to those
        contained in the Products and/or Spares. Seller agrees that entering
        this Agreement shall not preclude Buyer in any way, from using such
        ideas or concepts to develop or acquire similar hardware or software for
        any purpose, [*], provided Buyer does not (i) copy for such use, in
        whole or in part, the Seller's Products and/or Spares.

     28.  RIGHTS IN DEVELOPMENTS REFERENCE ALLIANCE AGREEMENT

        The rights in any custom development to the products developed by Seller
        pursuant to this Agreement shall be as specified in the Alliance Master
        Agreement # MA-99-105 entered into by the parties as of April 16, 1999.

        * 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.

                                       26
<PAGE>   28

     29.  EMBEDDED SOFTWARE

        Seller hereby grants to Buyer a non-exclusive, non-transferable,
        worldwide license to market and distribute, in object code form only,
        the Software (and to sublicense the Software, in object code form only,
        directly or through Buyer's channels of distribution) as a component of
        the relevant Products or Spares as part of or in conjunction with Buyer
        Products. Title to and ownership of the Software in the unmodified
        Products or Spares, Updates and Enhancements delivered by Seller will at
        all times remain the property of Seller or Seller's licensers unless
        otherwise agreed to in writing by the parties. Except as expressly set
        forth herein, Buyer agrees not to reproduce, copy, modify, translate,
        disassemble, reverse engineer or otherwise attempt, or permit others to
        attempt, to discover the source code of the Software, in whole or in
        part, except to the extent that such prohibition is restricted by
        applicable law. Upon mutual written agreement of the parties, [*] all
        Proprietary Rights in all modifications, Enhancements and derivative
        works of the Products or Spares developed by [*], subject to Seller's
        ownership of the Products and/or Spares.

     30.  [*]

        If there is a [*] representing the [*] of [*] or more of the [*] of
        Seller by one (1) of the [*] set forth in Exhibit M (a [*] ) and as a
        result of such [*], Buyer's access to technology relating to the
        Products is [*], Buyer may (i) [*] the then-current Seller technology
        for a mutually [*], or (ii) [*] the then-current Products [*] from
        Seller's third party [*] (currently [*]) for a period of up to [*] years
        following such [*] or until expiration of that certain Alliance
        Agreement between the parties dated April 16, 1999, whichever occurs
        first. Within [*] days after the date of this Agreement with respect to
        [*], and prior to contracting with any new or additional [*] for
        Products, Seller shall enter into a written agreement with any such [*]
        that will grant all rights to such [*] necessary to effectuate the
        intent of this Section 30. In the event that Seller fails to do so, the
        parties expressly agree that Buyer may provide a copy of the relevant
        portion of this Agreement to any such [*] (including [*]) and such [*]
        (including [*]) shall be entitled to rely on this Section 30 as
        representing Seller's approval of the [*] of Products [*] to Buyer
        without the necessity of any further action or approval by Seller. This
        Section 30 is not exercisable as long as Seller is not subject to a [*]
        involving one of the companies on Exhibit M

     31.  GENERAL

        31.1 SECTIONS 5, 10, 11, 13, 14, 15, 16, 17, 18, 19, 23, 27, 28 AND 31
        of this Agreement shall survive any such expiration or termination and
        remain in effect.

* 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.

                                       27
<PAGE>   29

          31.2      If any provision or provisions of this Agreement shall be
                    held to be invalid, illegal or unenforceable, such provision
                    shall be enforced to the fullest extent permitted by
                    applicable law and the validity, legality and enforceability
                    of the remaining provisions shall not in any way be affected
                    or impaired thereby.

          31.3      Any waiver of any kind by a party of a breach of this
                    Agreement must be in writing, shall be effective only to the
                    extent set forth in such writing and shall not operate or be
                    construed as a waiver of any subsequent breach. Any delay or
                    omission in exercising any right, power or remedy pursuant
                    to a breach or Default by a party shall not impair any
                    right, power or remedy which either party may have with
                    respect to a future breach or Default.

          31.4      Neither party shall export, re-export or otherwise disclose,
                    directly or indirectly, technical data received from the
                    other party or the product of such technical data to any
                    person or destination when such export, re-export or
                    disclosure is prohibited by the laws of the United States or
                    regulations of a Department of the United States.

          31.5      Neither Seller nor Buyer shall take [*] against disputed
                    amounts, or amounts not yet due and payable under this
                    Agreement. In the event an undisputed amount is past due
                    based upon the agreed terms, [*].

          31.6      To the extent the confidentiality provisions set forth in
                    Section 23 conflict with confidentiality provisions set
                    forth in any other confidentiality or non-disclosure
                    agreement between the parties hereto, this Agreement
                    represents the entire agreement with respect to the subject
                    matter hereof and supersedes all prior discussions and
                    agreements between the parties relating to the subject
                    matter hereof. This Agreement can be modified only by a
                    written amendment duly signed by persons authorized to sign
                    agreements on behalf of both parties, and shall not be
                    supplemented or modified by any course of dealing or trade
                    usage. Variance from or addition to the terms and conditions
                    of this Agreement in any Order, or other written
                    notification from Seller will be of no effect. Seller,
                    including its servants, agents and employees, is an
                    independent contractor and not an agent or employee of
                    Buyer. Without limiting the generality of the foregoing,
                    Seller is not authorized to represent or make any
                    commitments of behalf of Buyer, and Buyer expressly
                    disclaims any liability therefore.

* 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.

                                       28
<PAGE>   30

          31.7      THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS
                    AGREEMENT AND ANY ORDER ISSUED UNDER IT SHALL BE GOVERNED BY
                    THE LAWS OF THE STATE OF [*] WITHOUT REGARD TO THAT BODY OF
                    LAW CONTROLLING CONFLICTS OF LAW. THE PARTIES HEREBY WAIVE
                    APPLICATION OF THE U.N. CONVENTION ON CONTRACTS FOR THE
                    INTERNATIONAL SALE OF GOODS.

          31.8      Neither party shall assign or transfer this Agreement or any
                    rights and obligations under this Agreement without the
                    prior written consent of the other party. Notwithstanding
                    the foregoing, no consent to or notice of assignment is
                    required in the case of [*] merger, reorganization,
                    acquisition or sale of all or substantially all of its
                    assets. This Agreement will bind and inure to the benefit of
                    the parties and their respective successors and permitted
                    assigns.

          31.9      EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ANY AND ALL
                    WARRANTIES (EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE) OF
                    MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
                    NON-INFRINGEMENT OF THIRD PARTY RIGHTS ARE HEREBY DISCLAIMED
                    IN THEIR ENTIRETY. NO PERSON IS AUTHORIZED TO MAKE ANY
                    WARRANTY OR REPRESENTATION ON BEHALF OF SELLER CONCERNING
                    THE PERFORMANCE OF THE PRODUCTS, SPARES OR SERVICES.

          31.10     Upon the request of either party, the parties shall
                    cooperate and use commercially reasonable efforts to
                    implement as soon as practicable an electronic data
                    interchange system to process the submission and acceptance
                    of Orders, the payment of Products and such other matters as
                    the parties may mutually agree upon having such terms and
                    transmissions standards and formats as the parties may agree
                    IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES
                    HAVE EXECUTED THIS AGREEMENT AS OF THE DATE FIRST WRITTEN
                    ABOVE.

          31.11     EXCEPT TO THE EXTENT ANY DAMAGES ARE A PART OF AN [*] TO
                    WHICH EITHER PARTY IS ENTITLED TO BE [*] PURSUANT TO THE
                    PROVISIONS OF [*], IN NO EVENT SHALL SELLER'S TOTAL
                    LIABILITY UNDER THIS AGREEMENT EXCEED THE [*] OF (I) [*], or
                    (ii) [*] of the [*] received by Seller from Buyer during the
                    [*] immediately preceding the imposition of liability.

          * 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.

                                       29
<PAGE>   31

For the Buyer                           For the Seller

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

--------------------------------        --------------------------------
Signature                               Signature

--------------------------------        --------------------------------
Name                                    Name

--------------------------------        --------------------------------
Title                                   Title

--------------------------------        --------------------------------
Date                                    Date

                                       30
<PAGE>   32

                                    EXHIBIT A

                              PRODUCT PART NUMBERS,
                    DESCRIPTIONS, UNIT PRICES AND LEAD-TIMES

PRICING

Seller agrees that the price is firm for the period of [*] and that price will
be [*] prior to the end of the firm pricing period. Seller agrees to furnish a
non-binding price forecast for the following three calendar quarters. Seller
further agrees to provide price in US$.

                                     Table 1

<TABLE>
<CAPTION>
   COMPAQ
     P/N                                    BASE            UNIT      UNIT
   BROCADE       PROGRAM             LEAD   UNIT   COST     PRICE     PRICE  SHIP     SHIPPING       HUB
    P/N           NAME      SITE     TIME   PRICE  ADDERS   FOB       DDP    MODE   CONFIGURATION  LOCATION
-------------  ---------- ---------- ------ ------ ------- -------- -------- ----- --------------- --------
<S>             <C>       <C>        <C>    <C>    <C>     <C>      <C>      <C>   <C>             <C>

127552-B21       [*]       N.America [*]    [*]     TBD     1 [*]      N/A    [*]  Pallet (16 unit)   [*]
CQ-1630-0002

127553-B21       [*]       N.America [*]    [*]     TBD     1 [*]      N/A    [*]  Pallet (16 unit)   [*]
CQ-1630-0001

127552-B21       [*]       EMEA      [*]    [*]     NA      1 [*]      N/A    [*]  Pallet (16)        [*]
CQ-1630-0002

127553-B21       [*]       EMEA      [*]    [*]     NA      1 [*]      N/A    [*]  Pallet (16)        [*]
CQ-1630-0001

</TABLE>

SPECIFICATION

Buyer's specification number [*] is incorporated by reference.

THIS EXHIBIT IS AGREED TO AS OF THE DATE OF SIGNATURE BELOW, BY AND
BETWEEN:

For the Buyer                           For the Seller

--------------------------------        --------------------------------
Signature                               Signature

--------------------------------        --------------------------------
Name                                    Name

--------------------------------        --------------------------------
Title                                   Title

--------------------------------        --------------------------------
Date                                    Date

* 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.

                                       31
<PAGE>   33

                                    EXHIBIT B

                               SPARE PART NUMBERS,
                    DESCRIPTIONS, UNIT PRICES AND LEAD-TIMES

<TABLE>
<CAPTION>

                      8 PORT SWITCH
               -----------------------------
                         BROCADE                 COMPAQ P/N's
               -----------------------------     --------------------------------------------------------------------------------

                                                                                                                       OOW Repair
               Order P/N       Mfr. P/N          2-5-2 part #     6-3 part #    Spare part #    Price    Lead Time       Price
              ------------     -------------     ------------     ----------    ------------    -----    ---------     ----------
<S>           <C>              <C>               <C>              <C>           <C>             <C>      <C>

w/o GBIC      CQ-1630-0002     80-0000106-04     30-56042-01      127552-B21    127660-001       [*]      [*]             [*]

w/ GBIC

FRU'S:

Motherboard   XCQ-000001       60-0000005-01     29-34243-01      401930-001                     [*]       [*]            [*]

CPU Board     XCQ-000002       60-0000006-01     29-34244-01      401931-001                     [*]       [*]            [*]

G-Port Board  XCQ-000003       60-0000007-01     29-34245-01      401932-001                     [*]       [*]            [*]

Power Supply  XCQ-000004       60-0000012-01     29-34246-01      401933-001                     [*]       [*]            [*]

3" Fan with   XCQ-000005       60-0000008-01     29-34249-01      401934-001                     [*]       [*]            [*]
Tachometer

Front Panel   XCQ-000009      60-0000009-01      29-34468-01      128328-001                     [*]       [*]            [*]
subassembly

                      16 PORT SWITCH
               -----------------------------
                         BROCADE                 COMPAQ P/N's
               -----------------------------     --------------------------------------------------------------------------------

                                                                                                                       OOW Repair
               Order P/N       Mfr. P/N          2-5-2 part #     6-3 part #    Spare part #    Price    Lead Time       Price
              ------------     -------------     ------------     ----------    ------------    -----    ---------     ----------
w/o GBIC      CQ-1630-0001     80-0000105-04     30-56042-02      127553-B21    127660-002       [*]       [*]            [*]

FRU'S:

Motherboard     Same as                                                                          [*]       [*]            [*]
                8-port
CPU Board                                                                                        [*]       [*]            [*]

G-Port Board                                                                                     [*]       [*]            [*]

Power Supply                                                                                     [*]       [*]            [*]

3" Fan with                                                                                      [*]       [*]            [*]
Tachometer

Front Panel                                                                                      [*]       [*]            [*]
subassembly

</TABLE>

        Seller agrees that the [*] is [*] for the period of [*] and that [*]
        will be [*] prior to the end of the [*]. Seller agrees to furnish a
        non-binding price forecast for the following [*].

        Seller further agrees to provide price in US$.

* 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.

                                       32
<PAGE>   34

SPECIFICATION
Buyer's specification number [*] is incorporated by reference.

* 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.

                                       33
<PAGE>   35

                                    EXHIBIT C

                              FLEXIBILITY AGREEMENT

I.   Requirements

     A.   The following flexibility provisions apply to changes in purchase
          volume and/or delivery for existing orders and may be made [*] or [*]
          to [*].

                                     Table 1
<TABLE>
<CAPTION>

  Number of Weeks
Prior to Scheduled            Percentage               Percentage                  Percentage
  On-Dock Dates                Increase                 Decrease                   Reschedule
------------------            ----------               ----------                  ----------
<S>                           <C>                      <C>                         <C>

  12 weeks plus                  [*]                      [*]                          [*]

    8-12 weeks                   [*]                      [*]                          [*]

   4 to 8 weeks                  [*]                      [*]                          [*]

    < 4 weeks                    [*]                      [*]                          [*]

</TABLE>

Run Rate, Buffer Stock, and Replenishment

     B.   Buyer's expectation is that increase, decrease, and reschedule
          percentages may be executed by part number once per [*] day planning
          cycle.

II.  Liability

     A.   Buyer's liability in the event of notice of project discontinuance or
          cancellation without re-order shall be calculated based on using the
          [*]. Both Buyer and Seller will review the current [*] and past [*] to
          determine liability. At no time is Compaq liable for any material
          positioned in excess of the average of the last [*] or discrete
          P.O.s., governed in Table 1, above.

     B.   A Reclaim Value shall be calculated to value material. "Reclaim Value"
          shall mean the value of components that can be [*] or [*], less [*],
          to original manufacture within [*] days, once Buyer has provided
          notice of a volume decrease, and will be negotiated at the time
          required. Upon Buyer's approval, Seller shall use [*] commercially
          reasonable efforts to obtain the maximum Reclaim Value available in
          the market.

     C.   The value of Finished Goods shall be calculated as follows: Number of
          units in Buffer [*] as defined in III A. below) plus units in transit
          ([*] utilizing ocean freight and [*] utilizing air freight) times the
          unit price minus Reclaim Value.

* 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.

                                       34
<PAGE>   36

     D.   The value of Work in Process (WIP) shall be calculated as follows:
          Number of parts in WIP to be assessed based on point in process when
          decision to stop build is issued (defined as maximum liability) minus
          Reclaim Value. The number of parts in WIP shall be no greater than
          [*].

     E.   The value of Raw Material shall be calculated as follows: Quantity of
          Buyer unique components [*] the material cost of individual component
          [*] the Reclaim Value.

III. Buffer Stock Provisions:

     A.   Seller agrees to maintain [*] of buffer stock in finished goods
          inventory for shipment at Buyer's request. The [*] buffer stock
          requirement shall be calculated as the average [*] demand calculated
          over the next [*] of demand forecasted by the Buyer via the Electronic
          Commerce [*] and the previous [*] weeks of consumption.

     B.   Buffer stock may not be used to meet the Buyer's flexibility
          requirements. Seller shall use commercially reasonable efforts to
          replenish within [*] weeks of the Buyer's consumption.

     C.   Buffer stocks must be maintained in current dates and revisions
          consistent with Buyer's specification(s).

THIS EXHIBIT IS AGREED TO AS OF THE DATE OF SIGNATURE BELOW, BY AND BETWEEN:

For the Buyer                           For the Seller

--------------------------------        --------------------------------
Signature                               Signature

--------------------------------        --------------------------------
Name                                    Name

--------------------------------        --------------------------------
Title                                   Title

--------------------------------        --------------------------------
Date                                    Date

* 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.

                                       35
<PAGE>   37

                                    EXHIBIT D

                                QUALITY ASSURANCE

      TABLE OF CONTENTS

1.0  INTRODUCTION

2.0  QUALITY AND RELIABILITY ASSURANCE

     2.1 CONFORMANCE TO THE MATERIAL PURCHASE/ENGINEERING SPECIFICATION

     2.2 MATERIAL SAFETY COORDINATOR

     2.3 MATERIAL TRACEABILITY

     2.4 WORKMANSHIP

     2.5 DIAGNOSTICS, BIOS, AND SOFTWARE CONTROLS

     2.6 QUALITY SYSTEM PLAN

     2.7 MATERIAL ACCEPTANCE REQUIREMENTS

     2.8 RELIABILITY ACCEPTANCE REQUIREMENTS

     2.9 CONTINUOUS IMPROVEMENT PROCESS

     2.10 CORRECTIVE ACTION

     2.11 FAILURE ANALYSIS REPORTING

     2.12 [*]

     2.13 ASSESSMENTS

     2.14 PROCESS OR FACILITY CHANGES

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

<PAGE>   38

3.0  MATERIAL SPECIFIC REQUIREMENTS

     3.1  QUALITY ACCEPTANCE REQUIREMENTS

          3.1.1.  MEASUREMENT OF MATERIAL PERFORMANCE AT SELLER'S FACILITY

          3.1.2   MEASUREMENT OF MATERIAL PERFORMANCE AT BUYER'S FACILITY

     3.2 RELIABILITY ACCEPTANCE REQUIREMENT

     3.3  CONTINUOUS IMPROVEMENT

     3.4  PERFORMANCE DATA REPORTING

     3.5  SPARE MATERIAL DOCUMENTATION REQUIREMENTS

     3.6  MATERIAL PACKAGING REQUIREMENTS

<PAGE>   39

1.0  INTRODUCTION

This document sets forth and defines the standards for quality and reliability
performance pertaining to the Material as defined in this Agreement to which
this Exhibit is attached. Such Material shall be Material for use in Buyer's
manufacturing operations, new spare Material, or repaired spare or refurbished
Material used by the Buyer's field operations. Seller shall insure that all
Material submitted to Buyer's manufacturing operations shall not be combined in
any way with repaired spare or refurbished Material supplied to Buyer's field
operations and that processes for treating such Material shall be separate and
distinct.

Seller shall insure that the requirements stated herein are imposed by Seller
upon any third party or subtier supplier which Seller might utilize in its
performance under the Exhibit.

2.0  QUALITY AND RELIABILITY ASSURANCE

     2.1  CONFORMANCE TO THE MATERIAL PURCHASE/ENGINEERING SPECIFICATION

          Prior to production of the Material, Seller shall perform all
          necessary tests including, but not limited to, environmental, [*],
          safety, and regulatory to assure conformance to the Buyer's
          Purchase/Engineering Specification. In addition, Seller shall work
          with Buyer's designated engineering representatives to assure
          conformance to any and all end-use (systems configuration) performance
          requirements. Seller shall, upon Buyer's request, provide any test
          results or agency reports that Buyer may require, for review and
          concurrence.

          Seller shall acquire all materials and manufacture said materials in
          such a manner that all necessary agency certifications and ratings are
          maintained in the Material.

          Seller shall provide Buyer copies of all regulatory and safety agency
          submittal reports and approvals, in order to facilitate Buyer's timely
          achievement of required end-use system-level agency submittals.

          2.2 MATERIAL SAFETY COORDINATOR

          Seller shall designate a representative within its organization to
          interface with Buyer's representative on Material product safety
          issues. The Seller shall establish a Safety Incident Reporting
          Procedure which shall insure that Buyer is notified within [*] of
          Seller's gaining knowledge of real or potential safety problems or
          issues.

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

<PAGE>   40

     2.3  MATERIAL TRACEABILITY

     Seller shall assure that records are maintained for traceability of all
     regulatory controlled parts listed in agency reports. Regulatory controlled
     parts must be traceable to the source of manufacture by lot or date code,
     and must be traceable through the manufacturing process to their final
     destination via serialization of finished Material. Such information will
     be shared with Buyer upon request.

     Finished Material shipped to Buyer shall be serialized in accordance with
     the requirements of Buyer's Purchase/Engineering Specification. The general
     format shall be SSYWWxxxxx, where SS is the Seller's supplier code
     (assigned by the Buyer), Y is the last digit of the calendar year, WW is
     the calendar week, and xxxxx is a unique, sequential, 5-digit alpha-numeric
     sequence.

     2.4  WORKMANSHIP

     Seller shall assure that Material provided to Buyer meets all requirements
     of Seller's workmanship standards and practices. And that such standards
     and practices are sufficient to assure that the Material provided to Buyer
     meets all quality, reliability, safety and regulatory agency requirements.

     Seller shall insure that all repaired, refurbished, upgraded, tested, or
     advanced exchange items submitted to Buyer shall meet the same workmanship
     criteria as above except when otherwise specified by Buyer. Seller shall
     provide the same level, or higher, of environmental, electrical, or
     mechanical test for spare parts and accessories as in the corresponding
     items in a finished or higher level assembly of Material except where, with
     Buyer's approval, sufficient statistical evidence validates reduction of
     such testing. Seller shall inform Buyer before any such process changes are
     instituted.

     2.5  DIAGNOSTICS, BIOS, AND SOFTWARE CONTROLS:

     Seller shall be required to demonstrate adequate controls over the
     distribution use of diagnostics, BIOS and the software shipping with the
     product.

     A program for the regular maintenance of diagnostics shall be required by
     Seller to ensure that a virus is not present in the Material.

     Revision controls for both the BIOS and the software shall be traceable to
     the serial number of the units. This information shall be maintained in the
     event of a change and conveyed to Buyer for field tracking purposes.

<PAGE>   41

     2.6  QUALITY SYSTEM PLAN

     Seller shall submit to Buyer for review and concurrence a Quality Manual
     and a Quality Control Plan, no later than [*] days prior to Seller's first
     scheduled production build. These documents shall define the Seller's
     overall Quality Assurance system elements, and detail inspection, test and
     audit points for manufacture of Buyer's Material. The Quality Manual shall
     demonstrate compliance to the applicable ISO 9000 Quality Systems series of
     standards, and shall identify any level of registration if achieved (ISO
     9001, 9002, or 9003), by facility and location. Seller shall provide Buyer
     with a copy of any and all ISO 9000 certificates. The initial Supplier
     Quality Plan is included as Appendix 2 to this Exhibit.

     2.7  MATERIAL ACCEPTANCE REQUIREMENTS

     Seller shall insure that Material delivered to Buyer's receiving facility
     meets all the requirements of:

     o  Buyer's Purchase/Engineering Specification and [*] standards and
        requirements referenced therein.
     o  Material marking per external agency requirements.
     o  [*]
     o  Material specific performance levels.
     o  Compliance to then current European Economic Community standards and
        application of "CE" mark to product marking, as applicable.
     o  Material protection against damage and loss.

     Seller shall make all Material acceptance data available to Buyer for
     review upon request. Seller shall, upon Buyer's request, hold initial
     shipments of Material until it is verified to be in compliance with Buyer's
     specifications.

     Seller shall not begin production or repair and distribution of spare or
     refurbished Material in this Exhibit to Buyer until their process has been
     assessed to have produced Material that meets the requirements of this
     Exhibit and as specified in the Technical Statement of Work supplied, if
     appropriate, with the Request for Quote. This assessment, applicable to all
     contracted Material unless agreed otherwise by Buyer, shall be performed by
     the Buyer or Buyer's authorized representative. All results of this
     assessment shall be on file at the Seller's site and with the Buyer's
     authorized representative.

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

<PAGE>   42

     2.8  RELIABILITY ACCEPTANCE REQUIREMENTS

     All qualification and reliability testing of Material shall be conducted by
     Seller at Seller's site with Buyer's representatives present at [*] option.
     Seller shall perform at Seller's site all regulatory testing requirements
     and support any regulatory agency testing of the Material. Buyer may elect
     to perform any testing at Buyer's sites for Material verification and
     compliance.

     Buyer shall have full access to all reliability plans and test results data
     generated by Seller including, but not limited to, MTBF predictions and
     associated environmental parameters, acceleration factors, component
     derating factors, stress test parameters, test conditions, test failures,
     [*], failure modes and symptoms, root cause failure analysis, and resultant
     corrective actions.

     Reliability Testing shall be performed by Seller in three phases. These
     three phases will conform to the mutually agreed upon processes reviewed
     during the Supplier Audit and is documented in the Seller's Quality Plan:

     o  Phase I shall assure that [*] is [*] of [*] the [*].

     o  Phase II shall assure that the [*] does [*].

     o  Phase III shall assure that the [*] of the [*] and the [*] are [*]
        during [*]. It shall also serve as an [*] with [*].

     Summary reports of results for each phase of reliability testing shall be
     published and provided to Buyer. The content, format, and frequency of
     reporting shall be mutually agreed.

     Buyer reserves the right to review Seller's test plans for each phase of
     reliability testing, at least one month prior to the start of that phase.
     If such review is conducted, Seller shall resolve any of Buyer's concerns
     before the test phase shall commence. Seller's plans will include mutually
     agreed-upon statistical confidence limits for each phase of testing, where
     applicable.

     Seller shall be solely responsible for assuring that the Material design,
     third party vendor components, and manufacturing processes employed in the
     production of the Material meet the Material reliability requirements as
     set forth in the Buyer's Purchase/Engineering Specification. Seller shall
     further assure that any changes to the Material design as a result of
     engineering change, vendor change, or process change do not adversely
     affect the reliability of the Material as delivered to Buyer.

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

<PAGE>   43

     2.9  CONTINUOUS IMPROVEMENT PROCESS

     Having achieved the requirements of the Buyer's Purchase/Engineering
     Specification, Seller shall implement a process to continuously improve the
     level of Material performance within the manufacturing process. Seller
     shall establish a performance baseline for Buyer's Material and shall
     establish with Buyer mutually acceptable goals for periodic Material and
     process improvement.

     2.10 CORRECTIVE ACTION

     If at any time data from either Seller's or Buyer's control and measurement
     systems indicates that Material quality and/or reliability has fallen below
     the minimum established levels identified in Table 1, corrective action
     shall commence immediately and will continue until the quality and/or
     reliability again meets or exceeds the minimum acceptable level. In such
     event, the following shall be [*] of Seller, as a minimum:

     o  Immediately notify Buyer of the problem, its manifestations, symptoms,
        and an initial assessment of the problem severity and impact, in the
        case Seller first identifies the problem.

     o  Perform root cause failure analysis.

     o  Communicate corrective action to Buyer within a mutually agreeable time
        frame.

     o  Take whatever actions are deemed necessary, including additional
        inspections and tests, until Seller's manufacturing process is
        demonstrated to be under control.

     o  Instruct Buyer in dispositioning Material if Material in Buyer's
        possession or at Buyer's customers' sites is affected or suspect.

     o  If required, discontinue shipment to Buyer until the corrective action
        has been proven to be satisfactory to Buyer.

     Buyer's personnel may become involved in problem evaluation activities at
     Seller's facility if Buyer determines that such involvement is necessary
     and appropriate, or if Seller requests such support. Any such involvement
     by Buyer however, shall not relieve Seller of its obligations hereunder.
     Seller's personnel may be requested to come to Buyer's facility to
     participate in problem evaluation activities to facilitate timely problem
     resolution.

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

<PAGE>   44

     Buyer may also issue SCAR (Supplier Corrective Action Requests) from time
     to time to address specific failures. Seller will be expected to respond to
     all such VCAR forms within [*] of receipt at Seller's facility.

     2.11 FAILURE ANALYSIS REPORTING

     From time to time, Material which does not meet Buyer's
     Purchasing/Engineering Specification shall be returned to Seller as set
     forth in the Agreement ("failed Material"). This section applies to all
     returned Material whether under warranty or not.

     When failed Material is detected at Buyer's facilities or at Buyer'
     customer site(s), it will be returned to Seller for analysis and repair.
     Seller shall generate a Failure Analysis Report listing returned Material
     by model and serial number, detailing type of failure, verification testing
     process performed, and whether or not the failure mode could be verified or
     duplicated. If the failure mode was duplicated, the report should also list
     specific action taken to repair the Material and any action(s) taken within
     Seller's manufacturing process or the design of the Material to prevent
     recurrence of the problem. Such Failure Analysis Report shall be provided
     to Buyer within [*] business days of receipt of failed Material at Seller's
     facility.

     Seller further agrees to perform upon request an expedited root cause
     analysis on selected failed Material. Such expedited Failure Analysis
     Report shall be provided within [*] business days as a goal.

     Unverified Material failures shall be prominently identified in the report
     to allow Buyer's personnel to engage in further analysis activities when
     the returned Material is received at Buyer's manufacturing facility. Should
     Buyer determine after further testing that such returned Material continues
     to demonstrate the same failure modes, Buyer shall return such Material to
     Seller for further analysis and corrective action.

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

<PAGE>   45

     2.12 [*]: COMPAQ TO PROVIDE ADDITIONAL WORDING

     "[*]" shall mean a series of the same component [*], which is attributable
     to Seller, based on at least a [*] rate of the Material, Spares, or Repairs
     during a consecutive [*] day period, or any violation of the Buyer safety
     standard requirements. Seller shall be notified in writing of the
     occurrence of an [*] together with reasonable evidence thereof. Seller
     shall be responsible for providing full corrective action as outlined at
     Section 2.10 of this Exhibit, as well as the programs required to correct
     the fault at Seller's cost, either at Buyer's stocking location or
     potentially at customer sites. [*] is defined as the yearly projection of
     the [*] of a particular sample of Material based upon repair data, with a
     minimum established [*] of [*] per [*] for a [*].

     Prior to Seller undertaking any corrective action process identified
     herein, Seller shall have the right to disassemble the Material, Spares,
     repairs, or examine test results obtained by Buyer. Such corrective action
     shall be completed within [*] days of Buyer's original notification, or
     immediately in case of a safety related failure or defect. Seller shall be
     solely responsible for [*] to repair or replace the defective or failed
     Material, Spares, and Repairs ([*] associated with the shipment of
     defective or failed Material, Spares, or Repairs, as well [*] associated
     with the shipment of repaired or replacement units of Material, Spares, or
     Repairs), in addition to bearing [*] which are associated with the [*].

     2.13 ASSESSMENTS

     Buyer reserves the right to engage in assessments of the Seller's
     facilities involved with the assembly, test, repair, or other activities
     associated with the contracted Material of the Agreement during the life of
     this Agreement. Buyer shall notify Seller at least seven (7) working days
     in advance of its desire to perform an assessment and shall identify areas
     to be covered by the assessment.

     2.14 PROCESS OR FACILITY CHANGES:

     Seller shall [*] any [*] to the process used to produce Material without
     notification to Buyer. Seller shall be responsible for any [*] associated
     with non-conforming Material which is the result of an [*] to the
     manufacturing process.

     Seller may change the location of equipment, tooling, fixtures, and test
     equipment within the authorized facility [*] providing Seller bears the
     responsibility for re-qualifying such equipment, tooling, fixtures and test
     equipment for the Material and process. Such changes shall not impact
     delivery schedules of Material to Buyer.

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

<PAGE>   46

     Seller shall not change the currently approved location of the facility
     which produces or distributes the Material to another site [*] which shall
     not be unreasonably withheld or delayed. Seller shall notify Buyer at least
     [*] days before any such move. If Buyer does not approve or reject such
     relocation within [*] days of the date of Seller's notice, such relocation
     shall be deemed approved by Buyer. In the event of a timely rejection,
     Seller and Buyer agree to promptly negotiate in good faith to reasonably
     resolve any concerns that Buyer may have. Material may not be accepted by
     Buyer without a full site certification approval performed in accordance
     with Buyer's Supplier System Assessment which shall be supplied prior to
     any certification assessment.

3.0 MATERIAL SPECIFIC REQUIREMENTS

     3.1 QUALITY ACCEPTANCE REQUIREMENTS

          3.1.1 MEASUREMENT OF OUTGOING MATERIAL PERFORMANCE AT SELLER'S
                FACILITY

          Prior to shipment to Buyer, the quality of new Product, spare parts,
          and repaired and refurbished Material shall be measured by Seller. If
          the quality falls below the minimum acceptable level specified by
          mutual agreement and identified in Table 1 below, the corrective
          action process of Sec. 2.10 shall commence immediately.

          3.1.2 MEASUREMENT OF MATERIAL PERFORMANCE AT BUYER'S FACILITY

          Buyer shall employ a standardized data collection and reporting system
          to measure the performance of Seller's Material in Buyer's processes.
          It is expected that the performance of Seller's Material as measured
          at Buyer's facility shall be substantially equivalent to the outgoing
          Material performance per section 3.1.1. If major differences in
          performance beyond the expectations stated in section 3.1.1 are
          experienced, then Seller shall immediately commence corrective action
          activity per section 2.9.

          Specified Material quality failure rates, specified in [*] are
          identified in Table 1 of this Exhibit.

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

<PAGE>   47

          3.2 RELIABILITY ACCEPTANCE REQUIREMENTS

          Seller shall assure that reliability performance is maintained during
          volume production. Phase III testing as specified in Section 2.7 shall
          begin with the first production shipment to Buyer and shall continue
          for the life of the Exhibit. Seller shall [*] a comprehensive plan for
          Phase III testing that describes how the [*] will be demonstrated and
          maintained.

          Specified Material MTBFs and lower statistical confidence limits of
          Seller's test methods are identified in Table 1 below.

          3.3 CONTINUOUS IMPROVEMENT

          During the term of this Agreement, Seller shall establish plans and
          goals to continuously improve the outgoing Material performance. As
          continuous improvement is achieved, Material performance expectations
          shall be updated periodically.

          3.4 PERFORMANCE DATA REPORTING

          Data shall be reported to Buyer in a mutually acceptable format on a
          [*] basis.

          Seller shall submit to Buyer, or Buyer's designated representative,
          all spares repair activity data on Material as specified in Appendix 1
          of this Exhibit on a [*] basis. A Microsoft Excel format is preferred
          and a soft copy template shall be provided by Buyer.

          Seller shall provide Buyer, or Buyer's authorized representative, all
          revision information necessary for Buyer to maintain a complete and
          accurate revision matrix for all Material supplied to Buyer.

          3.5 SPARE MATERIAL DOCUMENTATION REQUIREMENTS

          For any spare Material requiring alignment, adjustment, or switch or
          jumper configuration settings in the field, Seller shall include in
          the Material package a brief technical document describing the method
          of performing such alignment, adjustment, or configuration settings.
          This document shall be provided by Buyer with Buyer's authorization
          for Seller's reproduction. Seller shall include, at Buyer's request,
          any special temporary instructions issued during the assembly of the
          unit if such instructions affect the form, fit, or function of the
          Material.

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

<PAGE>   48

          3.6 MATERIAL PACKAGING REQUIREMENTS

          Seller shall meet the packaging, ESD, container, labeling, and marking
          requirements as defined in the applicable specification provided by
          Buyer.

          For spare Material supplied to field operations, Seller shall provide
          the following information in addition to those packing slip
          requirements listed in Appendix 2, Paragraph 5.4. Seller's packing
          slip must contain: Seller's Name, Seller's part numbers, Seller's part
          descriptions, Seller's ship date, and the Buyer's specific ship-to
          address including Buyer's Stockroom Number if applicable.

<PAGE>   49

TABLE I

While no defects are expected, the following limits in Table 1 depict the
maximum allowable limit by product as specified and measured by Buyer.

<TABLE>
<CAPTION>
    PART            MATERIAL [*]       SPECIFIED              LOWER
   NUMBER           PERFORMANCE      MATERIAL MTBF      CONFIDENCE LIMITS
  -------           -----------      -------------      -----------------
  <S>               <C>              <C>                <C>

</TABLE>

                      (See Appendix 2, Attachment D (A)1.1)

OTHER CONSIDERATIONS:

1. QUALITY PERFORMANCE REQUIREMENTS:

Should the above limits be exceeded by [*] for [*] corrective action per para.
2.10 shall immediately commence to bring the levels below the limit
requirements. Corrective action shall bring the level within limits within [*].

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

<PAGE>   50

                                   APPENDIX 1
                            REPAIR DATA REQUIREMENTS

<TABLE>
<CAPTION>
DATA ELEMENTS                             DESCRIPTION OF FIELD
<S>                                       <C>

[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]

DATA ELEMENTS FROM DEFECT TAG (RETURNED WITH / ATTACHED TO PART)

[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]

</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.

<PAGE>   51
                              EXHIBIT D, APPENDIX 2

                           COMPAQ COMPUTER CORPORATION

                 SUPPLIER QUALITY PLAN, DELIVERABLE WORKSHEETS
                                       and
                             PROCESS MANAGEMENT PLAN

                                  prepared for

                      BROCADE COMMUNICATIONS SYSTEMS, INC.

                                      "[*]"

                                    APPROVALS

COMPAQ COMPUTER CORP.                                  BROCADE
                                             COMMUNICATIONS SYSTEMS, INC

On File                                      On File
-------------------------                   ---------------------------
[*]                                          [*]
Director, Corporate Procurement              Director of Quality

On File                                      On File
-------------------------                   ---------------------------
[*]                                          [*]
Commodity Manager                            VP Operations

On File                                      On File
------------------------------              --------------------------
[*]                                          [*]
Procurement Engineer                         Director Strategic Accounts

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

<PAGE>   52
I.     PURPOSE

This plan documents the specific system of process and product controls required
to assure products and services provided by the Supplier, and his sub-suppliers
meet the specifications, process requirements, and business goals of Compaq
Computer Corporation.

II.    SCOPE

This document lists actions required to improve the working relationship between
Compaq and the Supplier, event incidents of non-conforming product from entering
the Compaq manufacturing processes, and improve the process to reduce overall
costs. This document is a supplement to Compaq Computer Corporation's
contractual requirements and engineering specifications. In any case of
conflicting requirements Purchasing and Engineering documents shall take
precedence. This plan identifies actions and goals necessary to assure
conformance of:

1.      [*]

2.      [*]

3.      [*]

4.      [*]

5.      [*]

6.      [*]

7.      [*]

8.      [*]

9.      [*]

10.     [*]

11.     [*]

12.     [*]

13.     [*]

III.   REFERENCES

Applicable product specification: Rev. A or higher
Supplier Development Process Reference (SDPR)

IV.    QUALITY SYSTEM SURVEY

A full Quality System Survey may be conducted at the discretion of Compaq. The
intent of the survey is to allow Compaq the opportunity to evaluate the
supplier's quality, engineering, manufacturing capacity, and manufacturing
capabilities relative to critical parameter requirements. The survey is intended
to identify areas which may require improvement to meet Compaq's requirements
and establish a long-term business relationship. If deficiencies are found
within the Supplier's operations, the supplier and Compaq will develop an
improvement plan and schedule for action items and/or future activity.

V.     ENVIRONMENTAL SURVEY

An environmental survey will be conducted. Compaq's Environmental Survey is a
tool that examines the environmental performance of a potential supplier.
Failure to meet the requirements of the survey can impact Compaq's compliance
with national and international labeling, certification and procurement
requirements. The Environmental Survey is designed to identify areas of risk and
develop improvement plans to bring the supplier to an acceptable standard.

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

<PAGE>   53

VI.    QUALITY PLANNING

       1.0    Quality Planning Timeline

       Compaq and the Supplier will develop a basic timeline to complete the
       actions that are identified within this document.

       2.0    Critical Parameter Attachment A

       A critical product parameter is a product feature, property, attribute,
       or performance that affects product performance if found to be beyond
       specification limits. Compaq and the Supplier will mutually identify and
       agree on the critical process and product parameters to be monitored by
       the supplier and note them in attachment A.

       3.0    Print / Specification Review Attachment B

       As a part of the product evaluation process, Compaq and the Supplier are
       responsible for reviewing the specification, requirements, information
       packages, etc. to assure:

       1. All documentation is present and legible.

       2. Requirements are understood

       3. Critical product characteristics

       4. Effect of tolerances on manufacturing and ability of the process to
          meet the tolerances.

       5. Identification of special handling, transportation and storage during
          manufacturing.

       6. Specified dimensions and does not conflict with other documentation.

       7. Workmanship standards are understood

       4.0 Capacity Risk / Analysis

       A Capacity Risk Analysis will be provided by the Supplier in the
       Deliverable Worksheet. As a part of the process/product evaluation
       process, members of the Compaq/Supplier team may conduct a detailed
       review of the current manufacturing process and equipment to assure
       capacity is available to meet the Compaq requirements. At minimum, the
       Capacity Risk Analysis shall include the following:

             1. [*]

             2. [*]

             3. [*]

             4. [*]

             5. [*]

             6. [*]

             7. [*]

             8. [*]

             9. [*]

       5.0    Material Risk / Analysis

       A Material Risk Analysis will be provided by the Supplier in the
       Deliverable Worksheet. At a minimum the Material Risk Assessment shall
       include the following: [*]

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

<PAGE>   54

       6.0    Process Management Plan (PMP)

       A Process Management Plan shall be completed by the Supplier. The PMP
       must be implemented prior to volume shipments to Compaq. The PMP
       identifies parameters which require Statistical Process Control (SPC)
       monitoring during the manufacturing process. For critical parameters in
       the sub-tier supplier's process, a PMP will be developed between Compaq's
       supplier and his suppliers. The Process Management Plan at minimum will
       note the following :

       1. [*]

       2. [*]

       3. [*]

       4. [*]

       5. [*]

       6. [*]

       7. [*]

       8. [*]

       9. [*]

       10. [*]

       7.0    Product and Process Flow

       The Supplier shall submit both a product and process flow diagram. The
       product and process flow diagrams will document the actual path of the
       material/assembly through the Supplier's manufacturing facilities.
       Information included in the diagram shall include

        1. [*]

        2. [*]

        3. [*]

        4. [*]

        5. [*]

        6. [*]

        7. [*]

       8.0    Field Failure Rates and Reliability Test

       The Annual Field Return Rate (AFR) and the Annual Return Rate (ARR) will
       be referenced in the Compaq Product Specification. The supplier shall [*]
       quality control and reliability testing to ensure that the Annual Field
       Return Rate (AFR) and Annual Return Rate (ARR) is not exceeded. If the
       ARR/AFR exceeds the specified requirement the supplier must inform Compaq
       within [*] working days and a written corrective action plan [*] must be
       submitted to Compaq. Compaq reserves the option to stop shipment until
       containment and/or corrective action is in place. The Supplier is
       responsible for conducting On-Going Reliability Testing (ORT) on product
       supplied to Compaq. The conditions and criteria for On-Going Reliability
       Testing shall be defined and agreed on by Compaq and the Supplier
       Failures causing test to enter the failure zone will be reported to
       Compaq Procurement Engineering within 24 hours.

       9.0    Critical Process Data Review

       10.0   Preliminary Process Capability Studies

       All processes directly affecting critical parameters may be evaluated to
       establish a preliminary [*] . Critical parameters requiring process
       capabilities are listed in the Attachment A. Processes are considered
       capable if the [*] Any process resulting in [*] will require an
       appropriate corrective action or an equivalent containment plan.

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

<PAGE>   55

       11.0   Measurement Precision

       Measurement Precision is the extent to which a repeated measurement gives
       the same result. Variations may arise from the inherent capabilities of
       the instrument, from variations of the operator's use of the instrument,
       or from changes in operating conditions. All instruments, gages and test
       equipment used to evaluate critical parameters shall be evaluated for
       Repeatability and Reproducibility as documented in the SDPR (Measurement
       System Analysis and Evaluation-Gauge R&R) and/or by means of similarly
       effective methods.

       12.0   Supplier Corrective Action Process Attachment C

       The supplier will use the [*] format attachment C and adhere to the
       required response times to report internal problem issues including
       failure to meet agreed upon quality goals. In the event that Compaq
       encounters problems affecting late product shipment, product shortage,
       and receiving inspection failures, in-line manufacturing failures,
       material purges, etc., Compaq will notify the Supplier and generate a
       Supplier Corrective Action Request (SCAR) using the [*] format.

                The Supplier is required to acknowledge receipt of the Request
       for Corrective Action within [*] supplier workday. The Supplier is
       required to define and implement an effective containment within [*]
       working days of receipt of the SCAR. A long term, corrective action plan
       should be available within [*] working days of root cause identification.
       The proposed timeframes should be considered general guidelines. Each
       SCAR should be assessed for its criticality and urgency and appropriate
       action taken. In the [*] the Supplier is expected to respond with the
       following information:

       ROOT CAUSE: [*]

       CONTAINMENT ACTION PLAN: [*]

       CORRECTIVE ACTION PLAN: [*]

       VERIFICATION PLAN: [*]

       13.0   Engineering / Process / Product Change Notification Guidelines

       The Supplier must notify Compaq of any proposed change to the [*]
       process, product, critical components, or suppliers of critical
       components that affect form, fit, or function prior to the implementation
       of the change. During the development phase all proposed ECN/PCNs should
       be sent to the appropriate Design Engineer. During the production phase
       all proposed ECN/PCNs should be forwarded to the appropriate Compaq
       Program Manager. The notification must be received at Compaq no later
       than [*] days prior to the planned implementation date. At a minimum, the
       notification must contain the following information:

       1. Title and date of implementation.

       2. A list of part numbers and documents affected by the proposed change.

       3. A complete description of the change, including affected portions of
          any process, material, and affected parameters. Any change to process
          monitors or controls should be specified.

       4. Any information relating to urgency which must be considered.

       5. Description as to why the change(s) were made.

       6. Reliability data qualifying the change(s). Statistical data, including
          distribution and capability analysis [*] supporting the proposed
          change(s).

       7. Date codes or markings

       8. [*]

       9. Availability of samples

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

<PAGE>   56

       Final approval is granted by Compaq, based on successful product analysis
       and qualification ([*] ) and is subject to audit by Compaq. The Supplier
       and all affected departments shall be notified in writing of the final
       status. Until formal, written approval is received, the Supplier is
       required to deliver standard product as required by Compaq Procurement
       and to maintain an adequate backup position in the event the change is
       rejected. Compaq will provide reasonable grounds for the rejection of any
       ECN. Exceptions to the above requirements will be made with issues that
       affect safety standards, data loss, failure to meet specifications,
       applicable laws, regulations or standards. Each ECN will be reviewed for
       criticality and urgency and appropriate action taken.

       14.0   Program Goals Attachment D

       Attachment D notes goals which have been identified as significant to
       meeting the business objectives of Compaq Computer Corporation. These
       goals will be utilized to assess the supplier's performance and assist
       the Supplier in determining their impact on the process, products, and
       services provided to Compaq.

       V.II   PRODUCTION QUALIFICATION AND VERIFICATION

       1.0    First Article Inspection

       The Supplier is required to submit first article samples. These samples
       shall be representative of final production and are required to meet all
       applicable specifications. The samples will be inspected/tested as
       required to verify conformance specifications. The First Article results
       will be documented and reviewed with the Supplier. Unacceptable results
       will require the Supplier to initiate and implement corrective action,
       after which another sample will be submitted for evaluation and final
       approval. It is the responsibility of the Supplier to procure and approve
       first article samples from its sub-tier suppliers. Compaq may, at its
       option, require the Supplier to submit such parts and/or review
       associated documentation.

       2.0    Capability Studies

       A preliminary process capability study will be performed on all critical
       parameters (Attachment A) prior to revenue production to ensure
       statistical control.

       3.0    Equipment verification

       Gauge reproducibility and repeatability, along with equipment correlation
       studies, will be evaluated at this time

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

<PAGE>   57
       4.0    Out of Box Audit-OBA

       The supplier or the supplier's agent will perform an out-going product
       inspection to assure conformance to the specification and associated
       quality criteria. All failures will require an [*] for closure. Compaq
       must be notified immediately (within [*] ) of any failure. The results of
       the inspection will be used to determine product acceptability and to
       evaluate product problems during manufacturing. Inspection data will be
       reported to Compaq per the PMP. The report shall consist of, but not
       limited to, the following:

       1. Lot quantity

       2. Inspection sample size

       3. Quantity rejected

       4. P-chart

       5. [*]

       6. Defect Pareto for all failures

       At a minimum the inspection criteria will include the following:

       Workmanship, Compaq cosmetic specification, Kiting, Documentation,
       Labels, Packaging, and Pallet sizes

       5.0    Compaq System Test

       (Compaq System Test will [*] at this time)

       6.0    Program/Product/Process Review

       The primary goals of the program/product/process review are
       identification and elimination of potential trouble areas early in the
       business relationship and to establish a system which will assure all
       products and processes reflect continuous improvement and uniformity.
       Compaq and the Supplier will review all available information.
       Discrepancies will be identified and documented prior to production.
       Corrective action shall be established to reduce and/or eliminate any
       problems. Approval to initiate shipment to Compaq is signified by
       completion and approval by Compaq of the following:

       1. Compaq Product Specification at Revision A or greater.

       2. Certification to applicable National and International Standards

       3. Meeting all Compaq product specification requirements

              a)     Electrical

              b)     Visual

              c)     Mechanical

              d)     Agency

              e)     Quality

              f)     Shock and Vibrations / Packaging

       7.0    Environmental

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

<PAGE>   58
VII.   MANUFACTURING PROCESS/SUPPLIER CERTIFICATION

       The following minimum requirements must be fulfilled in order for a
       supplier to be approved as a Compaq Certified Participant

       Process Capability: All critical parameters must maintain a process
       capability index [*] or demonstrated equivalent capability.

       Correlation: if required, the [*] must maintain a minimum correlation
       coefficient [*]

       Measurement Precision / Correlation: Repeatability/reproducibility and
       correlation requirements as stated in the SDPR must be satisfied.

       [*]    documented performance as a Compaq supplier measured from
              initiation of the certification process.

       [*]    with an overall Supplier Rating of "Excellent" as measured by a
              documented supplier rating system. This criteria directly relates
              to the supplier's immediate past performance concerning support of
              corporate materials objectives.

       The amount of business conducted with the supplier shall be judged and
       documented by the commodity group to be a significant proportion or of
       strategic importance.

       The Supplier must be a [*]

       A Compaq Supplier Survey shall be on file at Compaq.

       Objective evidence of supplier continuous improvement must be available.

                                  ATTACHMENT A

                               CRITICAL PARAMETERS

<TABLE>
<CAPTION>
           PROCESS NAME              PARAMETER                 [*]
           ------------              ---------                 ---
      <S>                      <C>                     <C>
      [*]                      [*]                     [*]
      [*]                      [*]                     [*]
      [*]                      [*]                     [*]
</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.

<PAGE>   59

                                  ATTACHMENT B

                              SPECIFICATION REVIEW

The supplier has reviewed the Compaq product specifications for the applicable
part numbers and agrees to the product specifications or notes the following
exceptions.

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

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

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

---------------------------------------
NAME                               DATE

<PAGE>   60

                                  ATTACHMENT C
                                       [*]
                       Supplier Corrective Action Request

SCAR#                                           Open Date
                                                Closed Date
CPN                                             Reference Doc.
CPN disc.:                                      Supplier
Requester                                       Supplier Contact

Lot #
Lot Qty
Rej. Qty
[*]
Defect

Discipline 1   [*]                              [*]

Discipline 2                              [*]                             Date:

Discipline 3                              [*]                             Date

Discipline 4                              [*]                             Date

Discipline 5                              [*]                             Date

Discipline 6                              [*]                             Date

Discipline 7                              [*]                             Date

Discipline 8                              [*]                             Date

       * Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE>   61

                                  ATTACHMENT D
                                  PROGRAM GOALS

In the event this product goes through a Compaq factory integration the [*] goal
for Supplier fault failures in the Compaq factory is [*].

PROGRAM GOALS -

These goals are set [*] year with [*] - Brocade will reset these goals this [*].
Brocade has consistently bettered these goals.

<TABLE>
<CAPTION>
                PROCESS                                    GOAL
                -------                                    ----
<S>                                       <C>
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
[*]                                       [*]
</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.

<PAGE>   62

                             DELIVERABLE WORKSHEETS

SUMMARY

Supplier:          Brocade
                   1901 Guadalupe Parkway
                   San Jose, CA 95131

Manufacturer:      [*],  San Jose, CA

Compaq P/N:        380591-B21 8-port fiber channel switch, rack mount kit
                   380578-B21 16-port fiber channel switch, rack mount

Supplier Model #:  BR1630 -0011, -0010

Purpose:           Approve [*] and Brocade as supplier for the fiber channel
                   switch used in Storage Area Networks. The [*] (Brocade
                   silkworm) is a fibre channel switch for Storage Area Networks
                   (SAN) which contains a gigabyte Interface Connector (GBIC)
                   which is field serviceable. [*] has been producing the
                   product since [*]. RMAs will go through Brocade and [*] will
                   perform repairs. FW is field up-gradable. The switch itself,
                   the PCAs, and the GBICs are serialized. [*] purchases
                   components, builds, tests, and ships the units.

QUALITY SYSTEMS SURVEY: Rating [*]

Supplier Self Survey: Performed at [*] and Brocade by
                      [*]

Survey on file with Compaq Procurement engineering.

ENVIRONMENTAL SURVEY: Rating [*]

Supplier Self-Survey: Performed at [*] performed by [*],
                      Manager, Environmental Health and Safety on 2 Dec 98

Survey on file with Compaq Procurement engineering.

       Business Survey: RATING = [*]

Supplier Self survey: Performed by [*]

Survey on file with Compaq Procurement engineering.

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

<PAGE>   63

CAPACITY:  No capacity Issues

[*] submitted capacity analysis states capacity as [*] currently and increasing
to [*] in [*] as [*] adds a second manufacturing line. Current build plan is [*]
increasing to [*] in [*] . Compaq is currently forecasting [*].

                                     STEP 2

STEP 2 RISKS AND ISSUES:   No open issues

                                     STEP 3

2.12 Line Audit/Survey
Line audit performed by [*] and [*] on [*].
FAI Sample unit passed visual/cosmetic and final functional test.

2.13 Line Audit Findings
A trip report detailing the line audit and FAI is on file. [*] and [*] during
the audit are listed in the following table:

<TABLE>
<CAPTION>
           DISCREPANCY                                RESOLUTION                          STATUS
           -----------                                ----------                          ------
<S>                                 <C>                                                   <C>
[*]                                 1.  [*]                                               CLOSED
                                    2.  [*].  This printout would accompany the
                                        switch to final QA. Due (4/7)

Provide OBA sample plan             Document and return to revision A sampling plan       CLOSED

[*]                                     [*]                                               CLOSED

[*]                                     [*] Any failures or defective materials are       CLOSED
                                        expeditiously sent to MRB.

[*]                                 [*]                                                   CLOSED
</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.

<PAGE>   64

                                YIELDS AT RELEASE

<TABLE>
<CAPTION>
                               MARCH         MARCH
                             (GENERIC)      (COMPAQ)
                             ---------      --------
    <S>                      <C>            <C>

    In-circuit (PCA)         [*]
    Functional (PCA)         [*]
    Burn-in                  [*]
    Final Test               [*]             [*]
    Final Inspection         [*]             [*]
    [*]                      [*]             [*]
</TABLE>

STEP 3 RISKS AND ISSUES: No issues.

STEP 3 CONTINGENCY/DEVIATIONS/WAIVERS:  None

RECOMMENDATION:

Recommend Brocade and [*] be approved to manufacture the [*] Fibre channel
switch.

CAPACITY: ASSESSMENT

<TABLE>
<CAPTION>
                                                  MAR        APR        MAY        JUN       JUL
                                                  ---        ---        ---        ---       ---
<S>                                            <C>        <C>        <C>        <C>        <C>
TOTAL CAPACITY                                 [*]        [*]        [*]        [*]        [*]

BUILD SCHEDULE                                 [*]        [*]        [*]        [*]        [*]

CPQ  FORECAST  8 PORT                                     [*]        [*]        [*]        [*]

CPQ FORECAST  16 PORT                                     [*]        [*]        [*]        [*]

</TABLE>

CAPACITY: PLANS TO MEET UPSIDE REQUIREMENTS

<TABLE>
<CAPTION>
                     LEAD TIME
      UPSIDE        REQ'D WEEKS
      ------        -----------
      <S>           <C>
       [*]          [*]
       [*]          [*]
       [*]          [*]
       [*]          [*]
</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.

<PAGE>   65

MATERIAL: ASSESSMENT:

<TABLE>
<CAPTION>
Supplier        Component       Lead Time          Plans to meet upside
--------        ---------       ---------          --------------------
<S>             <C>             <C>                <C>
[*]             [*]             [*]                [*]
[*]             [*]             [*]                [*]
[*]             [*]             [*]                [*]
[*]             [*]             [*]                [*]
</TABLE>

Burn-in oven would require [*] time. All other commodities are [*] lead time for
[*] flex. Silkworm production capacity is currently [*] . Brocade reviews
capacity requirements on a [*] basis with our manufacturing partner and key
component suppliers. Capacity is assessed and documented for each step in the
manufacturing process, and capital requirements to support incremental increases
in capacity are documented and modified monthly.

Brocade has developed partnerships with suppliers of strategic components (e.g.,
ASICs, optical modules, Brocade unique components) that involve ongoing
communication of forecast information, technology roadmap exchanges, [*]
supplier performance reviews, executive forums, and supply chain optimization
activities. Brocade and [*] jointly manage Brocade's component supply base, with
Brocade as the lead for strategic components and [*] as the lead for standard
components. [*] provides turnkey inventory management.

                                     STEP 3

DESCRIPTION OF TEST AND INSPECTION EQUIPMENT, TOOLS, PLANS, AND  PROCESSES

[*] The units next go to final test which is a [*] a longer cable to check
attenuation. Next all units go through final inspection for cosmetics and a
shortened functional test. Units next proceed to packing, post packing
inspection or OBA, and shipping. [*] is pulled from packing to go to ORT.

IN-CIRCUIT TEST

ICT is done on a [*]. The test coverage is approximately [*] on the [*] boards.
On the [*] the test coverage is limited by number of test points available in
the fixture - we are using all the approx. [*] test points available. There are
a large number of [*] resistors on the board. The components that [*] using [*]
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.

<PAGE>   66

Functional test (PCA)

At functional test the [*] is assembled into a [*] for test. The test is done
using the [*] test. This test executes on [*] ports. The ports [*] configured
such that certain [*]. The processor transmits [*] then enters a monitoring
state during which it prints status information to the telnet session.

       Burn-In

In burn-in an assembled switch runs the dynamic Burn-in test to cycle test for
[*] . Temperature is elevated to [*] for [*] and then to [*] for the remaining
burn-in time. The tests run include [*] Test, [*] test, [*] Test, [*] test, [*]
Test and [*] test. Automatic power cycling occurs [*] and monitoring is
performed.-

       Configuration

The switch is loaded with the port cards and GBICs according to customer
requirements. The manufacturing FW is replaces with customer specific FW.

       Final Test / Inspection

The configured switch is tested using a telnet session running the Special
System test that includes [*], [*], and [*] tests. A cosmetic inspection and a
final check of the configuration are done using appropriate customer checklist.

       Out Of Box Audit (OBA)

Units ready to be sealed are removed from their packaging and functionally
tested and inspected as called out in the appropriate instructions.

RELIABILITY TEST

From the packaging area [*] is loaded into the ORT test bed until a [*] units
are under test. A new unit is placed in test and the oldest unit is removed [*].
ORT consists of looping the [*] for [*]. The test environment remains at [*]
during this time. Brocade performed ORT from [*]. From [*] has been performing
ORT. Copies of the Brocade ORT procedure and the [*] instruction for ORT burn-in
log record is on file. [*] is currently performing the ORT testing. To date a
total of [*] switches accumulating [*] with [*] have been run. From [*] switches
were run and [*] were accumulated with [*] failures as follows:

1. [*]

2. [*]

3. [*]

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

<PAGE>   67

YIELD HISTORY  (GENERIC)

<TABLE>
<CAPTION>
                                                        JAN
           STATION               OCT     NOV     DEC     99    FEB     MAR
           -------             ------- ------- ------- ------ ------ --------
<S>                            <C>     <C>     <C>     <C>    <C>    <C>
ICT                             [*]     [*]     [*]     [*]    [*]     [*]

FCT                             [*]     [*]     [*]     [*]    [*]     [*]

Burn-in                         [*]     [*]     [*]     [*]    [*]     [*]

Final test                      [*]     [*]     [*]     [*]    [*]     [*]

Final Inspection                [*]     [*]     [*]     [*]    [*]     [*]

OBA                                                     [*]    [*]     [*]

HASS                                                    [*]    [*]     [*]
</TABLE>

OBA
Feb :  [*]

       [*]

Mar:   [*]

ARR HISTORY

<TABLE>
<CAPTION>
                                                               JAN
DATE                1Q98     2Q98     3Q98    4Q98    TOTAL     99     FEB    MAR
----                ----     ----     ----    ----    -----    ----    ---    ---
<S>                 <C>      <C>      <C>     <C>     <C>      <C>     <C>    <C>
Install base        [*]      [*]      [*]     [*]     [*]      [*]     [*]    [*]

Returns             [*]      [*]      [*]     [*]     [*]      [*]     [*]    [*]

ARR                 [*]      [*]      [*]     [*]     [*]      [*]     [*]    [*]

ARR Monthly                                                    [*]     [*]    [*]
</TABLE>

FA OF RETURNS

JAN 99:

[*]

4Q98:

(NDF and customer caused defects are included):

[*]
[*]
[*]
[*]

FA and corrective actions for returns are on file with procurement engineering.

       * Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE>   68

MTBF

Based on ARR calculation = [*]

TOP DEFECT PARETOS AT RELEASE:

<TABLE>
<CAPTION>
STATION                      DEFECT AND PERCENT OF PARETO
-------                      ----------------------------
<S>                          <C>
Burn-in                      [*]

Final test                   [*]

OBA                          [*]

[*]                          [*]
</TABLE>

CORRECTIVE ACTIONS AND IMPROVEMENT PLANS:

[*]
[*]
[*]
[*]
[*]

PRODUCT CONFIGURATION

<TABLE>
<CAPTION>
   CPQ P/N            DESCRIPTION             UPC             JAN          SUPPLIER MODEL
   -------            -----------             ---             ---          --------------
<S>             <C>                       <C>             <C>              <C>
380591-B21      8-port fiber channel      741372751188    4948382083043    CQ-1630-0002
                switch, rack mount kit

380578-B21      16-port fiber channel     743172751171    4948382083036    CQ-1630-0001
                switch, rack mount kit
</TABLE>

       1.     Agency approvals:

<TABLE>
<CAPTION>
        COUNTRY                       SAFETY                  EMC
        -------                       ------                  ---
        <S>                           <C>                     <C>
        United States                 UL 1950                 FCC Part 15 Class A

        Canada                        CSA 22.2  No. 950       CSA 108.8 Class A

        Japan                         IEC 60950               VCCI (CISPR-22)

        EC and EFTA countries         EN60950                 EN 55022:1994/EN50082-
                                                              1:1992
                                                              (CE MARK)

        Australia New Zealand         AS/NZS 3260:1993        AS/NZ 3548
                                                              (C-Tick mark)

        International                 IEC 950                 CNS 1348 (BCIQ logo)
</TABLE>

<PAGE>   69

       Labels:

       Compaq P/N, Description, Count contained, UPC or JAN codes, [*] [*],
       Spares label, Compaq Logo tape

       Jumpers / switch setting: Power Switch in OFF position

       FW at release: [*]]

       Bezel color: [*]

       Bezel marking: 'Compaq Storage works Fibre Channel Switch'

       * Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE>   70
                             PROCESS MANAGEMENT PLAN

<TABLE>
<CAPTION>
                                                LOT SIZE                                           STOP SHIP CRITERIA/
                                                 SAMPLE         REPORT       REPORT                  REACTION OUT OF
PROCESS        PARAMETER     SPECIFICATION        PLAN          METHOD      FREQUENCY               CONTROL CONDITION
------------   -----------   --------------   ------------    -----------   ---------   ------------------------------------------
<S>            <C>           <C>              <C>             <C>           <C>         <C>
BURN-IN        YIELD         PASS/FAIL        [*]             YIELD CHART      [*]      1. [*]
                                                                                           PRODUCTION OF PRODUCT.
GENERIC        DIAGNOSTICS,                                                                NOTIFY COMPAQ WITHIN 24 HOURS.
PRODUCT        POWER
               CYCLING
SYSTEM -       YIELD         PASS/FAIL        [*]             YIELD CHART      [*]      1. IF FAILURES EXCEED [*] DUE TO
FINAL TEST -                                  WORK            [*]                          [*] FAILURES NOTIFY COMPAQ WITHIN [*].
COMPAQ         FUNCTIONAL                     INSTRUCTION                                  OPEN [*]; DETERMINE ROOT CAUSE AND
PRODUCT        TEST                                                                        TAKE CORRECTIVE ACTION FOR ALL [*]
                                                                                           FAILURES.
OUT OF BOX     YIELD         COMPAQ BOM,      SAMPLE
AUDIT                        DESIGN AND       PER [*] POST    YIELD/DPPM,      [*]      1. ON [*] RELEVANT [*],
(OBA)          VISUAL-       COSMETIC SPECS,  PACKAGING       [*]                       2. INSPECT/TEST ALL UNITS IN THE LOT
               MECHANICAL-   PACKAGING,       INSPECTION                                3. NOTIFY COMPAQ WITHIN [*] WORKING
COMPAQ         COSMETIC      LABELS, AND      PROCEDURE                                    HOURS OF ANY [*] FAILURE
PRODUCT        INSPECTION,   PALLETIZATION                                                 OPEN [*]; DETERMINE ROOT CAUSE AND TAKE
               ACCESSORY                                                                   CORRECTIVE ACTIONS FOR ALL [*] FAILURES.
               KITS,
               PALLETS

FINAL          YIELD         PASS/FAIL        [*]             YIELD CHART      [*]      1. ON [*] FAILURE STOP SHIPMENT,
QUALITY                                                       [*]                       2. INSPECT/TEST ALL UNITS IN THE LOT
AUDIT                                                                                   3. NOTIFY COMPAQ WITHIN [*] WORKING
                                                                                           HOURS OF ANY [*] FAILURE
COMPAQ                                                                                  4. OPEN [*] DETERMINE ROOT CAUSE AND
PRODUCT                                                                                    TAKE CORRECTIVE ACTIONS FOR
                                                                                             ALL [*] FAILURES.
</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.

<PAGE>   71
                             PROCESS MANAGEMENT PLAN

<TABLE>
<CAPTION>
                                                                                                          STOP SHIP CRITERIA/
                                                 LOT SIZE          REPORT              REPORT                 REACTION TO
PROCESS      PARAMETER        SPECIFICATION      SAMPLE PLAN       METHOD            FREQUENCY          OUT OF CONTROL CONDITION
-----------  ---------------  ----------------   ---------------   ---------------  --------------   ------------------------------
<S>          <C>              <C>                <C>               <C>              <C>              <C>
[*] SUMMARY  N/A              N/A                N/A               LIST             [*] REPORT DUE   SUMMARY OF ALL [*] BOTH CLOSED
                                                                                    BY THE [*] OF    AND OPEN FOR THE MONTH
                                                                                    THE [*] FOR
                                                                                    THE PREVIOUS
                                                                                    [*] DATA

ECN / PCN    ECNs / PCNs      ALL IMPLEMENTED    N/A               LIST             [*] REPORT DUE   SUMMARY OF ALL ECNs / PCNs
 LOG                          AND PROPOSED                                          BY THE [*] OF    IMPLEMENTED TO DATE AND
                              ECN/PCNs WITHIN                                       THE [*] FOR      ECNs / PCNs TO BE IMPLEMENTED
                              90 DAY                                                THE PREVIOUS     WITHIN [*] DAYS
                              LEAD TIME                                             [*] DATA

DEFECT       DEFECT PARETO    N/A                N/A               LIST             [*] REPORT DUE   SUMMARY OF TOP [*] FROM FINAL
PARETOS AND  FOR TOP                                                                BY THE [*] OF    [*] TEST, [*], AND CORRECTIVE
CORRECTIVE   DEFECTS                                                                THE [*] FOR      ACTIONS WITH IMPLEMENTATION
ACTIONS      CAUSING [*] OF                                                         THE PREVIOUS     DATES FOR EACH [*]
             REJECTS AND                                                            [*] DATA
             CORRECTIVE                                                                              [*].
             ACTIONS

ORT/HASS     PER BROCADE      PER BROCADE        [*] UNDER TEST    NUMBER OF        [*] REPORT DUE   NOTIFY COMPAQ WITHIN [*]
             ORT TEST         ORT/HASS           PER BROCADE       UNITS TESTING,   BY THE [*] OF    WORKDAYS OF A [*] FAILURE IN
             PROCEDURE        TEST PROCEDURE     ORT/HASS          FAILURES,        THE [*] FOR      ORT TESTING. SUBMIT CORRECTIVE
                                                 PROCEDURE         DEFECT PARETO,   THE PREVIOUS     ACTION AND IMPROVEMENT PLANS
                                                                   CORRECTIVE       [*] DATA         WITHIN [*] WORKDAYS.
                                                                   ACTIONS,
                                                                   IMPROVEMENT                       [*]
                                                                   PLAN

ARR          VERIFIED FIELD   [*]                MONTHLY           REPORT RETURNS   [*] REPORT DUE   IF  ARR EXCEEDS LIMIT NOTIFY
             FAILURES AND                        RETURNS           BY MONTH         BY THE [*] OF    COMPAQ WITHIN [*] WORKDAYS.
             TOTAL FIELD                                           COMPAQ ARR %     THE [*] FOR      SUBMIT CORRECTIVE ACTION
             RETURNS                                               INSTALLED BASE   THE PREVIOUS     PLAN WITHIN [*] WORKDAYS.
                                                                   AND              [*] DATA
                                                                   ALL OTHER ARR%                    [*]

</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.
<PAGE>   72
                                    EXHIBIT E
                                SERVICES ADDENDUM

This Addendum to the Corporate Purchasing Agreement ("CPA") between Buyer and
Seller ("Addendum") provides additional terms and conditions governing the
procurement of Services and/or Spares designated in Exhibit 1, "Schedule of
Spares" by Buyer. In the case of conflict between the CPA and this Addendum,
this Addendum will take precedence. Terms not otherwise defined herein shall
have the corresponding definitions ascribed to them in the CPA.

A.      SPARE PARTS AVAILABILITY

        1.      Seller shall make available for purchase by Buyer and/or Buyer's
                authorized third party, replacement Products in "new" and/or
                "like new" condition (collectively designated herein as
                "Spares") as set forth in the Schedule of Spares. Spares are
                considered either whole units (switches), or sub-assemblies (ex.
                [*]), "Like new" is defined as Spares that have been refurbished
                to the latest mandatory revision to meet all applicable
                electrical, mechanical, firmware and cosmetic specifications and
                Engineering documentation, including the replacement of damaged
                or missing non-functioning parts.

        2.      Seller and Buyer agree that Spares will be owned and held by
                Buyer. Buyer reserves the right to purchase Spares on an "as
                needed" basis subject to lead time. Buyer will maintain stock on
                hand sufficient to service the anticipated needs of Buyer's
                installed base.

B.      PRICING

        1.      Pricing for Spares is set forth in the Schedule of Spares.
                Pricing shall remain fixed for the Contract Pricing Period as
                set forth herein of [*] days. [*] days prior to the end of the
                then current Contract Pricing Period, Buyer and Seller shall
                meet to review the pricing of Spares. The Schedule of Spares
                will be amended to reflect any adjustment in pricing the parties
                mutually agree will apply to the subsequent Contract Pricing
                Period.

        2.      If pricing for Spares referenced in the Schedule of Spares
                cannot be agreed upon for a subsequent Contract Pricing Period,
                those items of Spares for which pricing can not be agreed upon
                will be deleted from this Addendum. If pricing for [*], Buyer
                shall have the [*] to [*] this [*], upon written notice to
                Seller, as it [*].

*  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.

                                       72

<PAGE>   73
        3.      In the event that No Trouble Found (NTF) returns exceed the
                terms outlined in section 11.2 of the Corporate Purchase
                Agreement, the following NTF charges may apply:

<TABLE>
<CAPTION>
                              BROCADE                                                COMPAQ P/"s
                   --------------------------------        ----------------------------------------------------------------
                    Order P/N            Mfr. P/N          2-5-2 part #       6-3 part #      Spare part #       NTF Charge
                   ------------       -------------        ------------       ----------      ------------       ----------
<S>                <C>                <C>                  <C>                <C>             <C>                <C>
8-port switch      CQ-1630-0002       80-0000106-04        30-56042-01        127552-B21       127660-001           [*]
16-port switch     CQ-1630-0001       80-0000105-04        30-56042-02        127553-B21       127660-002           [*]

FRUS:
Motherboard         XCQ-000001        60-0000005-01        29-34243-01        401930-001                            [*]
CPU Board           XCQ-000002        60-0000006-01        29-34244-01        401931-001                            [*]
G-Port Board        XCQ-000003        60-0000007-01        29-34245-01        401932-001                            [*]
Power Supply        XCQ-000004        60-0000012-01        29-34246-01        401933-001                            [*]
[*]                 XCQ-000005        60-0000008-01        29-34249-01        401934-001                            [*]
[*]                 XCQ-000009        60-0000009-01        29-34468-01        128328-001                            [*]
</TABLE>

C.      DELIVERY

        1.      Seller agrees to stock replacement inventory of Spares at a
                minimum of [*] geographical location of [*].

        2.      Seller shall utilize failure data or any other information
                available to Seller as manufacturer of the Spares, coupled with
                a non binding forecast supplied by Buyer, to establish proper
                stocking levels required for Seller to ship [*] percent [*] of
                orders received to the specified location within [*] business
                day of order receipt. The [*] percent [*] metric applies to all
                orders transmitted to Seller between the hours of [*]. on the
                same business day pst time. Seller shall immediately notify
                Buyer, in writing, if Seller has knowledge of any event which is
                reasonably likely to delay any specified delivery.

        3.      Seller further agrees that it will maintain a standard of [*]
                percent [*] for mistake free order processing and that less than
                [*] of Spares delivered to Buyer or Buyer's customer will be
                [*]. For purposes of this metric, [*] is defined as an out of
                box Spare that is [*] either due to wrong part shipped, under
                [*], incomplete, damaged, or functional failure ([*] within [*]
                following installation). Seller will resolve any order
                processing errors, delivery issues or [*], the [*] after
                notification by Buyer.

        4.      Buyer will measure Seller's performance to delivery metrics set
                forth in C.2 based upon the date stated on Buyer's electronic
                order. In the event Seller fails to meet these metrics, Buyer
                may, at its option, (I) establish a new mutually agreed upon
                delivery schedule for the Spares whereby [*] for premium
                transportation required to expedite delivery of such Spares, or
                (ii) [*]. If Seller delivers Spares outside of the required
                delivery "window", Buyer reserves the right to refuse said
                shipment and return the shipment, freight collect, to the
                Seller. These [*] and [*] are in addition to any other [*] and
                [*] or elsewhere in this Addendum.

D.      TIME IS OF THE ESSENCE

        Buyer and Seller hereto acknowledge that TIME IS OF THE ESSENCE to this
        Agreement, and that Buyer will suffer substantial damage in the event
        Spares are not delivered on time.

*  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.

                                       73
<PAGE>   74
E.      QUALITY

        Seller shall ensure that all Spares and/or Services delivered hereunder
        comply with the CPA "Quality Assurance" Addendum.

F.      RIGHTS AND ASSISTANCE TO [*]

        1.      It is mutually agreed between Buyer and Seller that Seller [*]
                or [*] Products or Spares should Seller [*] herein, and a
                reasonable cure period of at least [*]. Should Seller be [*],
                Seller will provide Buyer, at [*], a list of [*] and the list of
                [*] for those [*]. The [*] that are not available to Buyer from
                [*] other than Seller are to be listed. Those [*] having generic
                industry [*] and available to Buyer shall be [*] to generic [*].
                Seller further [*] Buyer with the [*] for [*] the [*] and/or [*]
                Products or Spares, along with [*], etc, of the [*]
                involved/required to perform such [*]. Seller [*] to the Buyer
                within [*] days from Buyer's written request and from Seller's
                written notification of [*].

        2.      Upon mutual agreement, Seller shall, [*], and upon reasonable
                notice, provide technical assistance and any [*] (subject to
                availability) necessary to [*]. Seller shall provide this
                service within [*] after 'mutual agreement for on-site support.

        3.      Upon mutual agreement Seller [*] Buyer or Buyer's selected [*]
                parties in any way with respect to the [*]. This support will
                continue during the Term of Availability and for so long as such
                Products and/or Spares are made available to any of Seller's
                other customers; [*].

G.      WARRANTY

        1.      Seller hereby warrants refurbished Spares for [*] months from
                the date of shipment from Seller. Refurbished Spares will be
                date coded indicating date of repair, to include human readable
                characters, in English, in plain sight.

        2.      Seller shall use commercially reasonable efforts to provide
                Flow-Through Warranty for Spares that are sold to Buyer from
                Seller utilizing 3rd party suppliers. This warranty passed to
                Buyer from Seller shall be no less than the warranty provided by
                the Seller. Such Spares should be noted as such in the Schedule
                of Spares

        3.      Buyer may appoint an Authorized Service Agent to administer the
                warranty process. Seller will recognize said appointment and
                will assist Buyer's Authorized Service Agent, as required by
                Buyer, to maintain the warranty process described herein

        4.      Seller shall bear all warranty costs such as labor, material,
                and inspection. If Buyer or [*] any such [*] them [*]. Buyer
                shall bear the cost of shipping Product to Seller's facility and
                Seller shall bear the cost of shipping Product back to Buyer's
                facility.

*  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.

                                       74
<PAGE>   75
H.      OUT-OF-WARRANTY SERVICE

        1.      Spares submitted by Buyer for repair once the warranty period
                has expired will be in reasonably good condition and repairable.
                In the event Spares submitted for repair have been damaged
                beyond repair as determined by Seller, Seller will not be
                obligated to refurbish such Spares. Seller agrees to notify
                Buyer's Service Organization within [*] business days of receipt
                of discrepant or non-repairable Spares, as long as quantity
                returned at any one time does not exceed mutually agreed
                volumes.

        2.      Seller shall have [*] business days from the date the Spares [*]
                for repair and return to Buyer.

        3.      Seller hereby warrants Replacement Spares for [*] months from
                the date of shipment.

        4.      Buyer will provide Seller with a non-binding estimated rolling
                twelve (12) month forecast on a monthly basis.

        5.      Delivery of repaired Spares by Seller shall be FOB origin. Buyer
                shall pay all transportation charges and bear all risk of loss
                or damage during transit

I.      ENGINEERING CHANGES

        Seller agrees to provide Buyer's authorized representative all
        information necessary for Buyer to maintain a complete and accurate
        revision matrix for all parts supplied to Buyer. The revision matrix
        allows a Field Engineer to understand the functional relationship
        between the revision levels of parts in a unit and the revision level of
        the item being installed. This information allows Buyer to determine if
        a specific Engineering Change to any part affects the upward or downward
        compatibility of any part or subassembly in the whole option or device.

J.      ESCALATION

        Seller agrees that during the term of this Addendum, it shall designate
        a Seller Representative who shall act as Buyer's primary contact for any
        service issues regarding parts procurement, exchange, repair or quality.
        Seller must prepare and present to Buyer an internal written escalation
        process and said Representative or designated backup(s) must be
        available to Buyer, at least by pager, Monday-Friday, 7:00am-7:00pm pst
        Seller shall provide technical support to Buyer for duration of this
        Addendum including the [*] Term of Availability. Seller will resolve all
        issues deemed to be Priority 1 Product "bugs", correct any problems with
        production, and provide a service solution to Buyer for its customers.
        Seller shall acknowledge escalated cases within [*] business day and
        both parties shall agree to provide a resolution within a mutually
        acceptable time to be decided on a case by case basis. At Buyer's
        request, and if available locally, on-site technical support by Seller
        shall be made available to Buyer or its authorized third (3rd) party.
        This will be determined on a case by case basis.

K.      DIRECT PROCUREMENT OF SPARES

        EXHIBIT F, SCHEDULE OF SPARES, DATED: _________.

*  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.

                                       75
<PAGE>   76

AGREED TO AND ACCEPTED BY:

(SELLER)                                 COMPAQ COMPUTER CORPORATION (BUYER)

BY:                                      BY:
      ------------------------------            --------------------------------
          (AUTHORIZED SIGNATURE)                     (AUTHORIZED SIGNATURE)

NAME:                                    NAME:
      ------------------------------            --------------------------------
            (TYPED OR PRINTED)                         (TYPED OR PRINTED)

TITLE:                                   TITLE:
      ------------------------------            --------------------------------
            (TYPED OR PRINTED)                         (TYPED OR PRINTED)

DATE:                                    DATE:
      ------------------------------            --------------------------------

                                       76
<PAGE>   77
                                    EXHIBIT F

                 PRODUCT, SPARES AND/OR SERVICES SPECIFICATIONS

<TABLE>
<CAPTION>
                                                        8 PORT SWITCH
                ----------------------------------------------------------------------------------------------------
                          BROCADE                                      COMPAQ P/"s
                ---------------------------  -----------------------------------------------------------------------
                 Order P/N       Mfr. P/N    2-5-2 part #  6-3 part #  Spare part #   UPC code  JAN code  Rev. Level
                ------------  -------------  ------------  ----------  ------------   -------   --------  ----------
<S>             <C>           <C>            <C>           <C>         <C>            <C>       <C>       <C>
w/o GBIC        CQ-1630-0002  80-0000106-04  30-56042-01   127552-B21   127660-001      N/A        N/A        [*]
w/GBIC         CQ-1630-0004  80-0000108-04      N/A          N/A                       N/A        N/A

FR"S:
Motherboard      XCQ-000001   60-0000005-01  29-34243-01   401930-001                   N/A        N/A
CPU Board        XCQ-000002   60-0000006-01  29-34244-01   401931-001                   N/A        N/A
G-Port Board     XCQ-000003   60-0000007-01  29-34245-01   401932-001                   N/A        N/A
Power Supply     XCQ-000004   60-0000012-01  29-34246-01   401933-001                   N/A        N/A
[*]              XCQ-000005   60-0000008-01  29-34249-01   401934-001                   N/A        N/A
[*]              XCQ-000009   60-0000009-01  29-34468-01   128328-001                   N/A        N/A
</TABLE>

<TABLE>
<CAPTION>
                                                       16 PORT SWITCH
                -----------------------------------------------------------------------------------------------------
                          BROCADE                                           COMPAQ P/"s
                ----------------------------  -----------------------------------------------------------------------
                 Order P/N        Mfr. P/N    2-5-2 part #   6-3 part #  Spare part #   UPC code  JAN code  Rev Level
                ------------   -------------  ------------   ----------  ------------   --------  --------  ---------
<S>             <C>            <C>            <C>            <C>          <C>           <C>       <C>       <C>
W/o GBIC        CQ-1630-0001   80-0000105-04  30-56042-02    127553-B21   127660-002      N/A        N/A       [*]
W/GBIC          CQ-1630-0003   80-0000107-04      N/A           N/A                       N/A        N/A

FR"S:
Motherboard           Same as 8-port
CPU Board
G-Port Board
Power Supply
[*]
[*]
</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.

                                       77
<PAGE>   78
                                    EXHIBIT G

                        COMPAQ SUPPLIER COMPLIANCE POLICY

Compaq Computer Corporation is proud of its reputation for integrity and honesty
in its business dealings. Our corporate culture of fairness and quality is one
of our most valuable assets. Maintaining this reputation is an ongoing process,
and Compaq considers it to be one of its most important jobs.

It is essential that the highest standards of conduct be observed by Compaq, as
well as its suppliers. In fact, Compaq believes that it suppliers must operate
at the same high level of integrity as Compaq. In this regard, Compaq has
adopted a Supplier Compliance Policy. As part of this policy, Compaq suppliers
must comply fully with the requirements set forth below. This policy requires
that Compaq suppliers and their employees exercise the highest degree of honesty
and integrity in conducting their business with Compaq, as well as other third
parties.

I.      ETHICAL STANDARDS Compaq expects its suppliers to avoid conflicts of
        interest that create opportunities for abuses and allegations of
        commercial bribery.

        A.      Conflicts of Interest -- Suppliers are expected to avoid any
                action which may involve, or appears to involve, a conflict of
                interest with Compaq.

        B.      Business Courtesies -- Business should be won or lost on the
                merits of the products and services being offered by its
                suppliers. Therefore, supplier funds or personal funds of its
                employees should not be used to provide a business courtesy
                unless the gift is commemorative, ceremonial or customary in
                nature and has an insubstantial value. Under no circumstances
                should a kickback or bribe ever be offered to Compaq or its
                employees.

II.     ENVIRONMENTAL STANDARDS Compaq expects its suppliers to conduct their
        business in a manner that provides a safe, healthy and environmentally
        friendly workplace and meets or exceeds all applicable environment and
        work place legal requirements.

        A.      Hazardous Materials, Air Emissions & Waste Water Discharges --
                Compaq requires that each of its suppliers comply with all
                applicable environmental laws and regulations regarding
                hazardous materials, air emissions and waste water discharges,
                including those regarding the manufacture, transportation,
                storage, disposal, and release to the environment of such
                materials.

        B.      Health & Safety -- Compaq expects its suppliers to maintain
                their facilities in a safe and healthy manner and in compliance
                with all applicable laws and regulations.

III.    EMPLOYMENT STANDARDS Compaq expects its suppliers to foster human
        dignity by treating their employees fairly and with respect. Compaq
        requires that its suppliers comply with all applicable national, state
        and local employment laws.

                                       78
<PAGE>   79
        A.      Child Labor -- Compaq expect its suppliers to refrain from using
                child labor. Workers can be no less than 14 years of age and not
                younger than the compulsory age to be in school. Compaq supports
                the development of legitimate workplace apprenticeship programs
                for the educational benefit of young people.

        B.      Prison Labor -- Compaq expects its suppliers to refrain from
                utilizing prison or forced labor within their work forces.

        C.      Disciplinary Practices -- Compaq expects its suppliers to
                refrain from using corporal punishment or other forms of mental
                or physical coercion with their employees.

        D.      Working Hours -- Compaq expects its suppliers to comply with all
                applicable laws regarding compensation for overtime work
                performed by their employees. Additionally, employees should be
                allowed at least one day off in seven.

IV.     COMPETITIVE STANDARDS Compaq expects its suppliers to compete fairly and
        vigorously within the marketplace. Compaq discourages anti-competitive
        practices by its suppliers that inhibit the operation of a free-market
        economy. Compaq requires that its suppliers comply with all applicable
        competition laws.

        A.      Price fixing -- Compaq expects its suppliers to refrain from
                collaborating with competitors to fix prices for its goods.

        B.      Anti-competitive Practices -- Compaq will not tolerate
                anticompetitive practices by its suppliers, including efforts to
                allocate markets or customers among their competitors or to fix
                bids.

V.      CONFIDENTIALITY Compaq requires that its suppliers enforce a policy that
        ensures the confidentiality of all proprietary or confidential
        information provided by Compaq.

        A.      Non-disclosure Agreement -- Compaq requires that its suppliers
                comply with the terms of the Confidentiality and Non-disclosure
                Agreements that have been entered into with Compaq.

        B.      Other Confidentiality Obligations -- Compaq requires its
                suppliers to refrain from making unauthorized disclosures to
                Compaq of third party confidential information.

VI.     COMPLIANCE WITH GOVERNMENT LAWS AND REGULATIONS Compaq expects its
        suppliers to comply with all applicable laws and regulations governing
        their business relationships with Compaq. In addition, Compaq requires
        that its Suppliers agree to implement and maintain a Small, Woman-Owned,
        Minority Business Enterprise (SWMBE) program in accordance with Federal
        Acquisition Regulations (FAR) 52.219-0(d)(ll)(iii). Upon request by
        Compaq, Suppliers agree to provide Compaq with written certification of
        its compliance with the SWMBE Federal Acquisition Regulations.

                                       79
<PAGE>   80
Compaq is dedicated to maintaining its reputation for fairness and integrity. In
many ways the future success of both Compaq and its suppliers depends on our
ability to build on these high standards.

The foregoing requirements are not intended to be all-inclusive, and Compaq
expects its suppliers to exercise ethical judgment beyond strict compliance with
the law, and to be responsive to the concerns of the communities in which they
operate. Failure to comply with the above requirements may result in reduction
of business with Compaq, or in some instances, termination of your relationship
with Compaq. Understanding and complying with the above requirements will help
to ensure that our mutual business activities are conducted in the highest
ethical and professional manner.

                                       80
<PAGE>   81
                                    EXHIBIT H

                  DOCUMENTATION, TRAINING AND TECHNICAL SUPPORT

I.      SERVICE AND SUPPORT REQUIREMENTS

        Buyer will be responsible for working directly with the End Users, and
        Seller Support will work directly with Buyer to support Buyer personnel,
        as necessary. Buyer represents and warrants that it is experienced in,
        capable of, and staffed to provide, Level 1 and Level 2 support (as
        defined below). Seller offers training programs to assist in attaining
        this level of expertise on Seller Products. Seller Support will accept
        calls for technical assistance only from Level II engineers who have
        attended Seller instructed training Courses 1 through 3.

        Seller will provide Level 3 support (as defined below).

II.     SUPPORT LEVEL DEFINITIONS

           1.0 LEVEL 1 SUPPORT

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

           -  First contact, direct Buyer/End User 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 End Users shall not have the right to contact
        Seller directly for questions related to the Products.

           2.0 LEVEL 2 SUPPORT

        Level 2 support is "technical support" provided by Buyer 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 Seller posted Technical Notes and
        other technical information supplied that will assist in providing
        problem resolutions. All pertinent data shall be entered in Buyer'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
        Buyer will continue to diligently work with Level 3 personnel of Seller
        to accomplish resolution. Level 2 personnel of Buyer will communicate
        all resolutions back to the End Users.

                                       81
<PAGE>   82
Escalations should be presented to Seller 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, Buyer will limit the number of support personnel (Level 2)
authorized to contact Seller (Level 3) to [*] and ensure that these personnel
have attended courses 1, 2, and 3 taught at the Seller training facility.

          3.0 LEVEL 3 SUPPORT

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

Prior to escalating to Level 3, it is expected that Buyer 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 Seller's [*] support number. Direct access to Seller support personnel
will be possible during normal Seller's business hours (8 AM to 5 PM PST, M-F).
Emergency situations for [*] problems are handled via [*] at [*].

          4.0 SELLER'S SEVERITY

Definitions and Support Goals

The goal for initial response time to all telephone support requests is [*] or
less during normal Seller 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.

                                       82
<PAGE>   83
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
   Severity                     Definition                        Service Objective           Resolution Time
----------------------------------------------------------------------------------------------------------------------
<S>             <C>                                         <C>                            <C>
1               SELLER Product is completely                Respond to initial request     [*] using commercially
                non-functional, or deemed a safety hazard,  within [*] during normal       reasonable efforts.
                situation has high impact on development    SELLER business hours, and
                or delivery efforts. Installation problems. [*] for non-business hours.
                                                            Resources applied until a
                                                            solution or acceptable work-
                                                            around is found.
----------------------------------------------------------------------------------------------------------------------
2               SELLER Product is functionally impaired,    Respond to initial request     [*]
                has substantially degraded performance but  within [*] during normal
                is not completely dysfunctional. There are  SELLER business hours.
                no available work-arounds.  Situation has   Resources applied
                medium impact on customer activity.         continuously, during business
                                                            hours, until a solution or
                                                            work-around is found.
----------------------------------------------------------------------------------------------------------------------
3               SELLER Product or advertised functionality  Resources applied on a         [*]
                may be slightly impaired but is             priority basis, until a
                operational, has low to no impact on        solution or a work-around is
                customer activity, and there are            found.
                work-arounds available.
----------------------------------------------------------------------------------------------------------------------
4               Generic questions, and enhancement          Answer generic questions or    Commercially reasonable
                requests.                                   provide path to answers        efforts for generic
                                                            within reasonable time         questions.  Enhancement
                                                            frames.  The SELLER web site   requests are processed on
                                                            will be the prime repository   a case by case basis.
                                                            for this type of information.
                                                            Enhancement requests will be
                                                            reviewed and implemented in
                                                            the next major release, where
                                                            feasible, or to meet specific
                                                            commitments made.
----------------------------------------------------------------------------------------------------------------------
</TABLE>

         * Certain information on this page has been omitted and filed
         separately with the Commission. Confidential treatment has bee
                requested with respect to the omitted portions.

                                       83

<PAGE>   84

                           TECHNICAL TRAINING PROGRAM
                                TRAINING OUTLINE

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
                              COURSE                            DAYS     COST
-----------------------------------------------------------------------------
<S>        <C>                                                   <C>      <C>
           1.1 FC & SAN intro:                                   1        [*]
                  Audience: Sales/Marketing/SE's

           1.2 Switch intro & features:                          3        [*]
                  Audience: Sales/Marketing/SE's

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

              FULL COURSE                                        5        [*]

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

Courses will be offered at SELLER's offices in San Jose, CA or at such other
facility notified to Buyer from time to time. A minimum of [*] students will be
required to attend, or the course in question may, at SELLER's sole option, be
canceled. Buyer agrees that it shall pay any and all travel and lodging expenses
related to such training. SELLER will make these courses available to End User
customers, on terms to be negotiated at SELLER's then-current rates for end user
training courses.
-----------------------------------------------------------------------------
</TABLE>

         * Certain information on this page has been omitted and filed
         separately with the Commission. Confidential treatment has bee
                requested with respect to the omitted portions.

                                       84
<PAGE>   85
                                    EXHIBIT I

                        SILKWORM II LABEL MATRIX: COMPAQ

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                               POSITIONING
-----------------------------------------------------------------------------------------------------------------------
                                                                                  on
                                                                                Pallet
                                                                                  or
                                                                                Single
                                                     on            on          Shipping
Label Name        Brocade P/N        Compaq Spec #  Switch       Carton        Container         Comments
-----------------------------------------------------------------------------------------------------------------------
<S>           <C>                    <C>            <C>          <C>          <C>            <C>
[*]           56-0001488-01 Rev A         [*]        [*]                                     Approved (email) 2/25/98
-----------------------------------------------------------------------------------------------------------------------
[*]           47-0001351-01 Rev 1         [*]        [*]                                     Approved (email) 2/25/98
-----------------------------------------------------------------------------------------------------------------------
[*]           56-0001486-01 Rev A         [*]        [*]                                     Approved (email) 2/25/98
-----------------------------------------------------------------------------------------------------------------------
[*]           56-0000312-01 Rev 1         [*]        [*]
-----------------------------------------------------------------------------------------------------------------------
[*]           56-0001484-01 Rev A         [*]                                      X         Approved (email) 4/29/98
-----------------------------------------------------------------------------------------------------------------------
[*]           56-0001485-01 Rev A         [*]                      [*]
-----------------------------------------------------------------------------------------------------------------------
[*]           55-0000969-01 Rev 1         [*]                      [*]
-----------------------------------------------------------------------------------------------------------------------
[*]           56-0000003-01 Rev A         [*]         [*]
-----------------------------------------------------------------------------------------------------------------------
[*]           85-0000003-01
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

         * Certain information on this page has been omitted and filed
         separately with the Commission. Confidential treatment has bee
                requested with respect to the omitted portions.

                                       85
<PAGE>   86
                                    EXHIBIT J

                    PRODUCT AGENCY AND REGULATORY COMPLIANCE

                                  REQUIREMENTS

<TABLE>
<CAPTION>
COUNTRY                        SAFETY                    EMC
<S>                            <C>                       <C>
United States                  UL 1950                   FCC Part 15 Class A
Canada                         CSA 22.2  No. 950         CSA 108.8 Class A
Japan                          IEC 60950                 VCCI (CISPR-22)
EC and EFTA countries          EN60950                   EN 55022:1994/EN50082-1:1992 (CE
                                                          MARK)
Australia New Zealand          AS/NZS 3260:1993          AS/NZ 3548 (C-Tick mark)
International                  IEC 950                   CNS 1348 (BCIQ logo)
</TABLE>

<PAGE>   87
                                   EXHIBIT K

                             PACKAGING SPECIFICATION

                  USE COMPAQ DRAWING NO. [*] (LATEST REVISION)

         * Certain information on this page has been omitted and filed
         separately with the Commission. Confidential treatment has bee
                requested with respect to the omitted portions.

<PAGE>   88
                                    EXHIBIT L

                          ELECTRONIC COMMERCE AGREEMENT
                     BETWEEN COMPAQ COMPUTER CORPORATION AND
                             BROCADE COMMUNICATIONS

This Electronic Commerce Agreement ("Agreement") is made and entered into on
___________ ("Effective Date"), by and between Compaq Computer Corporation
("Compaq"), a Delaware corporation with offices at 20555 SH 249, Houston, Texas
77070 and Brocade Communications _____________________a corporation with offices
at _______________, herein collectively referred to as the "Parties".

WHEREAS the Parties desire to transmit and receive data electronically and

WHEREAS the Parties desire to ensure that such transmissions are legally valid
and enforceable;

NOW THEREFORE, in consideration of the premises and of the covenants and
conditions set forth herein, the Parties agree as follows:

TRANSMISSION REQUIREMENTS. (a) Each Party may electronically transmit to or
receive from the other Party through any means of Electronic Commerce defined to
include, but is not limited to, Electronic Data Interchange (EDI), Facsimile,
Electronic Mail, Internet and World Wide Web, any of the transaction sets
("Electronic Interchanges") listed in Appendix A to this Agreement or such other
sets as the Parties agree to in writing from time to time. Any transmission of
data that does not conform to the applicable requirements as specified in
Appendix A for the type of Electronic Interchange(s) between the Parties, is/are
not an Electronic Interchange(s) and shall have no force or effect between the
Parties.

(b) Each Party shall adopt as its signature an electronic identification number
or code ("User ID") and shall use such signature in each Electronic Interchange
with the other Party. The Parties agree that a User ID, when affixed to or
contained in an Electronic Interchange, shall be legally sufficient to verify
the identity of the transmitting Party and to authenticate the Electronic
Interchange. (C)) Electronic Interchanges shall not be deemed to have been
properly received, and no Electronic Interchange shall give rise to any
obligation, until accessible to the receiving Party. Upon proper receipt of any
Electronic Interchange, the receiving Party shall promptly transmit a functional
acknowledgment or alternate acknowledging Electronic Interchange agreed to by
the Parties, which shall constitute conclusive evidence that a Electronic
Interchange has been properly received) If acceptance of a Electronic
Interchange is required by Appendix A, any such Electronic Interchange that has
been properly received shall not give rise to any obligation unless and until
the Party initially transmitting such Electronic Interchange has received a
business response Electronic Interchange, as specified in Appendix A.

<PAGE>   89

(e) Each Party shall establish reasonable controls to ensure the timely handling
of all data transmissions and shall contact promptly the sending Party for
corrective action in the event of a transmission error, such as an
unintelligible or garbled transmission, or in the event electronic transmission
operations are lo2. VALIDITY AND ENFORCEABILITY. (a) This Agreement has been
executed by the Parties to evidence their mutual intent to create binding
obligations pursuant to the Electronic Interchange specifying certain of the
applicable terms. Any Electronic Interchange properly transmitted pursuant to
this Agreement shall be considered a "writing" or "in writing" and any such
Electronic Interchange that contains or has a User ID affixed to it ("Signed
Electronic Interchanges") shall be deemed for all purposes (i) to have been
"signed" and (ii) to constitute an "original" when printed from electronic files
or records established and maintained in the normal course of business.

(b) The Parties agree not to contest the validity or enforceability of Signed
Electronic Interchanges under the provisions of any applicable law relating to
whether certain agreements are to be in writing or signed by the Party to be
bound thereby. Signed Electronic Interchanges shall be admissible if introduced
as evidence on paper in any judicial, arbitration, mediation, or administrative
proceeding to the same extent and under the same conditions as other business
records originated and maintained in documentary form. Each Party agrees that it
will not contest the admissibility of copies of Signed Electronic Interchanges
under either the business records exception to the hearsay rule or the best
evidence rule on the basis that such Signed Electronic interchanges were not
originated or maintained in documentary f

3. THIRD PARTY SERVICE PROVIDERS. (a) The Parties may transmit Electronic
Interchanges either directly or through third party service providers or
networks. Each Party shall be responsible for the costs of any third party
service provider with which it contracts and any other costs it incurs in the
electronic transmission or receipt of Electronic Interchanges under this
Agreem(b) Either Party may modify its election to use, not use, or change a
third party service provider upon thirty (30) days prior written notice to the
other Pa

4. OBLIGATION TO MAINTAIN RECORDS. Neither Party has an obligation to maintain
the storage of data records or other files for the other Pa

5. GENERAL TERMS AND CONDITIONS FOR PURCHASES AND SALES. This Agreement does not
express or imply any commitment to purchase or sell goods or services. Where the
Parties mutually agree to engage in such transactions using Electronic Commerce,
the general terms and conditions for such transactions shall be those contained
in the applicable purchase contract

6. SECURITY PROCEDURES AND CONFIDENTIALITY OF USER IDS. (a) Each Party shall
adopt and use security procedures that are reasonably sufficient to ensure that
all transmissions of Electronic Interchanges are authorized and to protect its
business records

<PAGE>   90

and data from improper acc

(b) The Parties agree that User IDs are confidential and shall not disclose the
other Party's User ID to any unauthorized par

7. TERM AND TERMINATION. This Agreement shall remain in effect until terminated
by either Party with not less than [*] days prior written notice; provided,
however, that any termination shall not affect the respective obligations or
rights of the Parties arising under any Electronic Interchanges or otherwise
under this Agreement prior to the effective date of terminat

8. LIMITATION OF DAMAGES. Neither Party shall be liable to the other for any
special, incidental, exemplary, or consequential damages arising from or as a
result of any delay, omission, or error in the electronic transmission or
receipt of any Electronic Interchanges pursuant to this Agreement, even if the
other Party has been advised of the possibility of such dama

9. CONTINGENCIES BEYOND A PARTY'S CONTROL. Neither Party shall be liable for any
failure to fulfill its obligations under this Agreement if such failure is
caused by the occurrence of any contingency beyond its reasonable control,
including but not limited to any mechanical, electronic, or communications
failure, that prevents it from transmitting or receiving any Electronic
Interchan

10. EXPIRATION OF CLAIMS. No action, regardless of form, arising out of this
Agreement may be brought by either Party more than [*] after the cause of action
has arisen.

11. GOVERNING LAW. This Agreement is governed by the laws of the State [*],
U.S.A., excluding its conflict of law rules.

NON-ASSIGNABILITY. This Agreement shall not be assigned or transferred by either
Party without the prior written consent of the other Pa

13. ENTIRE AGREEMENT. The
entire understanding between the Parties is incorporated herein and supersedes
all prior discussions and agreements between the Parties relating to the subject
matter hereto. This Agreement can be modified only by written amendment executed
by the Parties, and shall not be supplemented or modified by any course of
dealing or trade usa

14. TITLES AND CAPTIONS. All titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend, or describe the scope or intent of its provisi

15. INVALIDITY OF PROVISIONS. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable, such provision shall be
enforced to the fullest extent permitted by applicable law and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

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

<PAGE>   91
16. ADDRESSES AND NOTICES. Written notices required or permitted hereunder,
shall be deemed given and received when properly posted by registered or
certified mail, postage prepaid, first class, in an envelope properly addressed
to the addresses set forth in an Appendix to this Agreement, or such other
address, as a Party specifies in writing to the other Party.17. AUTHORITY TO
SIGN. The individuals signing this Agreement hereby represent and warrant that
they are empowered and authorized to sign on behalf of and bind the Party for
whom they have signed.

THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT AND AGREE TO BE BOUND
BY ITS TERMS AND CONDITIONS.

BROCADE COMMUNICATIONS

--------------------------------
Name:

--------------------------------
Title:

--------------------------------
Date:

COMPAQ COMPUTER CORPORATION

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

Name:

--------------------------------
Title:

--------------------------------
Date:

<PAGE>   92
                          ELECTRONIC COMMERCE AGREEMENT
                     BETWEEN COMPAQ COMPUTER CORPORATION AND
                         BROCADE COMMUNICATIONS SYSTEMS

                                   APPENDIX A

This appendix provides for the Electronic Interchange requirements for the
specific means of Electronic Commerce as provided.

           31.12 Electronic Data Interchange (EDI) Edifact Standard

The network Compaq will use is [*] or [*].

The Electronic Commerce business partners agree to notify each other when there
are unforeseen disruptions in normal process or when changes are about to occur
that have the potential of disrupting the use of Electronic Commerce for normal
business communications.

A Trading Partner Profile shall be received by Compaq Electronic Commerce
Services prior to establishing Seller as an Electronic Commerce Trading Partner.

           31.12.1 Electronic Commerce Transaction Sets

Below are the transaction sets Compaq supports for Purchasing Activities.
(Direction is from Compaq's perspective)

Planning Process:

Send [*] -  Planning Schedule(version [*])

Receive [*] - Commit signal (version [*] )

Purchase Order Process

Send [*] - Purchase Order (version [*])

Receive [*]  - Purchase Order Acknowledgment (version [*])

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has bee requested with respect to the
omitted portions.

<PAGE>   93
Closed Loop Process

Send [*] - Shipping Schedule (version [*])

Receive [*] - Ship Notice (version [*])

Send and Receive [*] - Inventory Report (version [*])

NOTE: Timeline of implementation of Compaq sending [*] is still to be determined

Return Material Process

Send/Receive [*] - Return Material Notification/Authorization

NOTE:  Timeline of implementation to be determined

All Documents

For all documents, the 997 - Functional Acknowledgment will be used. It should
be returned immediately and at the SET level.

           31.13 Electronic Mail

All data transmitted in the form of a business or sales transaction as an
obligation from either party through electronic mail must be digitally signed
and encrypted using the S/MIME format prior to being transmitted.

           31.14 Internet and World Wide Web

                 31.14.1  Data Security

All data transmitted in the form of a business or sales transaction as an
obligation from either party via the Internet or World Wide Web between the
parties shall be considered confidential information. Such information shall be
transmitted using a secure internet protocol or be encrypted when it is
electronically transmitted or stored as files, whether on a user's PC or a
network file share and shall remain encrypted unless it is being accessed by the
intended recipient.

If Seller does use Company-Sanctioned Encryption due to domestic or local laws,
Seller must have direct dial-up lines over which to transmit the decrypted
confidential information and shall be responsible for providing adequate
protection for the Seller's confidential information.

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has bee requested with respect to the
omitted portions.

<PAGE>   94
Access to Seller's URL

Seller shall provide Buyer read access to Seller's URL. Seller shall ensure that
Buyer has information and access to the most current URL.

             31.14.1.1 CUSTOMS AND EXPORT COMPLIANCE

Encrypted communications between the Parties and affiliates in other countries
or suppliers or customers in other countries, whether or not those customers or
suppliers are subsidiaries or affiliates of United States firms, are subject to
United States export licensing requirements.

<PAGE>   95
                                    EXHIBIT M

                           CHANGE OF CONTROL COMPANIES

                                       [*]

                                       [*]

                                       [*]

                                       [*]

                                       [*]

                                       [*]

                                       [*]

         * Certain information on this page has been omitted and filed
         separately with the Commission. Confidential treatment has bee
         requested with respect to the omitted portions.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]