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Employment Agreement - Brocade Communications Systems Inc. and Michael J. Byrd

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                             1901 Guadalupe Parkway
                               San Jose, CA 95131
                                 (408) 487-8000

                                 April 5, 1999

Mr. Michael J. Byrd
14858 Gypsy Hill Road
Saratoga, CA 95070

Dear Mike:

     Brocade Communications Systems, Inc. (the "Company") is pleased to offer
you employment on the following terms:

1. POSITION. You will serve in a full-time capacity as Vice President and Chief
Financial Officer of the Company. You will report to the Company's Chief
Executive Officer.

2. SALARY AND BONUS. You will be paid a salary at the initial annual rate of
$200,000, payable in semi-monthly installments in accordance with the Company's
standard payroll practices for salaried employees. This salary will be subject
to adjustment pursuant to the Company's employee compensation policies in effect
from time to time. You will also be eligible for an annual bonus of up to 30% of
your annual salary (pro-rated for the fiscal year ending October 31, 1999) upon
achievement of mutually agreed upon milestones A third of each year's bonus will
be paid quarterly, commencing with the fiscal quarter ending July 31, 1999. The
balance will be paid at the end of the Company's fiscal year.

3. INITIAL STOCK OPTION GRANT. You will be granted an initial option to purchase
330,000 shares of the Company's Common Stock. Except as otherwise provided in
this letter, the option will be subject to the terms and conditions applicable
to options granted under the Company's 1998 Equity Incentive Plan (the "Plan"),
as described in the Plan and the applicable stock option agreement and stock
repurchase agreement. The exercise price will be equal to $5.00 per share. The
term of the option will be 10 years, except that the option will expire (if
earlier) on the date 3 months after your service terminates for any reason
except for your death or permanent and total disability ("Disability"), in which
case the option will expire one year from the date of your termination. The
option will be immediately exercisable, but the purchased shares will be subject
to repurchase by the Company at the exercise price in the event that your
service terminates before you vest in the shares. You will vest in the option
shares in equal monthly installments over the first 48 months of service, as
described in the applicable stock option 

<PAGE>   2

agreement and stock repurchase agreement. In addition, your option shares will
vest on an accelerated basis under the following circumstances:

               (a) All of your option shares will vest if your service with the
        Company terminates because of your death or your permanent and total
        disability. For this purpose, you will be considered totally and
        permanently disabled if (i) you fail to perform your duties for at least
        90 consecutive days due to physical or mental injury, disability or
        illness (other than pursuant to a "pre-existing condition" you have on
        April 2, 1999, as such term is defined in the Health Insurance
        Portability and Accountability Act of 1996), and (ii) you are determined
        to be totally and permanently disabled by a qualified independent
        physician expert in the area of the disability or illness selected in
        good faith by the Chief Executive Officer.

               (b) If the Company discharges you without Cause (as defined
        below), you will receive three year's vesting acceleration (if such
        termination occurs before April 2, 2000) or one two year's vesting
        acceleration (if such termination occurs on or after April 2, 2000 and
        prior to April 2, 2001).

               (c) One-half of your remaining unvested option shares will vest
        if the Company is subject to a Change in Control before your service
        with the Company terminates. Thereafter, the same number of option
        shares will vest each month as before the Change in Control, except as
        otherwise provided in this letter. For the purposes of this agreement, a
        "Change of Control" shall mean the closing of (i) a consolidation or
        merger of the Company with or into any other corporation or corporations
        in which the holders of the Company's outstanding shares immediately
        before such consolidation or merger do not, immediately after such
        consolidation or merger, retain stock representing a majority of the
        voting power of the surviving corporation of such consolidation or
        merger, or (ii) a sale of all or substantially all of the assets of the

               (d) All of your option shares will vest if, within one year after
        a Change in Control, you are subject to a Constructive Termination (as
        defined below).

You may pay the exercise price of shares of the Company's Common Stock acquired
under the option with a full-recourse promissory note secured by the shares. The
note will have a term of seven years, except that it will come due (if earlier)
one year after your employment terminates for any reason. The note will bear
interest at the applicable federal rate (as announced by the Internal Revenue
Service from time to time), and it will provide for principal and interest to be
payable in a lump sum on the due date. The Company will register the shares of
its Common Stock acquired or to be acquired under the option on a Form S-8
Registration Statement as soon as reasonably practicable after the Company's
initial public offering.

     For purposes of this letter, "Cause" means (i) unauthorized use or
disclosure of the confidential information or trade secrets of the Company which
is materially injurious to the 

<PAGE>   3

Company; (ii) any breach of this letter agreement, the Proprietary Information
and Inventions Agreement between you and the Company, or any other agreement
between you and the Company, if the breach is materially injurious to the
Company, (iii) conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state, (iv) demonstrably willful
misconduct which is materially injurious to the Company and which is not cured
within 60 days after you received written notice specifying such misconduct or
(v) gross negligence in the performance of duties assigned to you.

     For purposes of this letter, "Constructive Termination" means (i) a
material reduction of your duties, authority or responsibilities, (ii) any
reduction in your title, (iii) a change in your reporting relationship requiring
you to report to any person other than the Company's Chief Executive Officer,
(iv) a reduction of your salary or bonus, as in effect immediately before the
Change in Control, or (v) the relocation of your principal place of employment,
if the distance between your new office and your office immediately before the
relocation is more than 35 miles.

4. FUTURE OPTION GRANTS. Starting on April 2, 2001, you will be eligible to
participate in the Company's evergreen option grant program and to annually
receive an additional option to purchase a number of shares of the Company's
Common Stock equal to at least 75,000 shares but in no event less than the
number of shares subject to the annual evergreen option grant of any other
officer of the Company (other than the Chief Executive Officer). To qualify for
the annual grant, you must have remained in your position as Chief Financial
Officer and had satisfactory performance for the preceding year. The exercise
price of each option will be equal to the fair market value of the Company's
Common Stock on the date of grant and will be subject to the standard vesting
and other provisions under the Company's form of stock option agreement.

employees, you will be required, as a condition to your employment with the
Company, to sign the Company's standard Invention Assignment and Confidentiality

6. PERIOD OF EMPLOYMENT. Your employment with the Company will be "at will,"
meaning that either you or the Company will be entitled to terminate your
employment at any time and for any reason, with or without cause. Any contrary
representations which may have been made to you are superseded by this offer.
This is the full and complete agreement between you and the Company on this
term. Although your job duties, title, compensation and benefits, as well as the
Company's personnel policies and procedures, may change from time to time, the
"at will" nature of your employment may only be changed in an express written
agreement signed by you and a duly authorized officer of the Company.

7. SEVERANCE PAY. If the Company terminates your employment for any reason other
than Cause, and if no Change in Control has occurred, then the Company will
continue to pay your base salary for a period of 12 months following the
termination of your employment, subject to your not breaching the
non-competition and non-solicitation provisions set forth below. Your base
salary will be paid at the rate in effect at the time of the termination of your
employment and in accordance with the Company's standard payroll procedures. In
addition, subject to your 

<PAGE>   4

not breaching the non-competition and non-solicitation provisions set forth
below, you and your eligible dependents will be entitled to continue
participating in all of the Company's employee benefit programs for a period of
12 months following the termination of your employment, subject to the terms of
any insurance policies or other contracts applicable to such programs. In
addition, you will receive one year's accelerated vesting under your stock
option and/or restricted stock purchase agreements with the Company (which shall
be in addition to any accelerated vesting pursuant to paragraph 3(b) hereof).
If, after a Change in Control, the Company terminates your employment for any
reason other than Cause or you are subject to a Constructive Termination, then
the Company will pay you a lump sum equal to 130% of your annual base salary,
calculated at the rate in effect at the time of the termination of your
employment or (if greater) at the rate in effect immediately before the Change
in Control. The payment will be made at the time of the termination of your

     During your employment and during any continuation of salary period
referred to in the preceding paragraph (the "Continuation Period"), you agree
not to: (i) undertake any planning for any outside business activity that is
competitive with the Company; or (ii) directly or indirectly own any interest
in, manage, control, participate in (whether as an officer, director, employee,
partner, agent, representative or otherwise), consult with, render services for,
or in any manner engage in any business directly competing with the Company and
engaged in such business anywhere within any state, possession, territory, or
jurisdiction of the United States of America.

     During your employment and any Continuation Period, you also agree not to
directly or indirectly solicit or attempt to solicit either (i) the employment
of any employee of the Company or any of the Company's affiliates, or (ii) the
business of any customer of the Company or any of the Company's affiliates with
whom you had contact during your employment hereunder.

8. PARACHUTE EXCISE TAX. In the event that the severance and other benefits
provided for in this agreement or otherwise payable to you (a) constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and (b) but for this Section 8, would be
subject to the excise tax imposed by Section 4999 of the Code, then such
benefits shall be either be:

     (i)  delivered in full, or

     (ii) delivered as to such lesser extent which would result in no portion of
          such severance benefits being subject to excise tax under Section 4999
          of the Code,

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by you, on an after-tax basis, of the greatest amount of
benefits, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code. Unless the Company and you otherwise
agree in writing, any determination required under this Section 8 shall be made
in writing by the Company's independent public accountants immediately prior to
Change of Control (the "Accountants"), whose determination shall be conclusive
and binding upon you and 

<PAGE>   5

the Company for all purposes. For purposes of making the calculations required
by this Section 8, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and you shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8. Notwithstanding the foregoing, you shall be
entitled to at least as favorable protection to the excise tax imposed by
Section 4999 of the Code as is afforded to any other executive officer of the

9. WITHHOLDING TAXES. All forms of compensation referred to in this letter are
subject to reduction to reflect applicable withholding and payroll taxes.

10. ENTIRE AGREEMENT. This letter and the Company's standard Invention
Assignment and Confidentiality Agreement contain all of the terms of your
employment with the Company and supersede any prior understandings or
agreements, whether oral or written, between you and the Company.

11. AMENDMENT AND GOVERNING LAW. This letter agreement may not be amended or
modified except by an express written agreement signed by you and a duly
authorized officer of the Company. The terms of this letter agreement and the
resolution of any disputes will be governed by California law.


               (a) Except as provided in Section 12(d) below, you agree that any
dispute or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof shall be settled by arbitration to be held in Santa Clara
County, California, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
"Rules"). The arbitrator may grant injunctions or other relief in such dispute
or controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.

               (b) The arbitrator shall apply California law to the merits of
any dispute or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. You hereby expressly consent
to the personal jurisdiction of the state and federal courts located in
California for any action or proceeding arising from or relating to this
Agreement and/or relating to any arbitration in which the parties are

               (c) The Company and you shall each pay one-half of the costs and
expenses of such arbitration, and shall separately pay its counsel fees and

<PAGE>   6

               (d) You understand that nothing in Section 12 modifies
Executive's at-will status. Either the Company or you can terminate the
employment relationship at any time, with or without cause.


               We hope that you find the foregoing terms acceptable. You may
indicate your agreement with these terms and accept this offer by signing and
dating the enclosed duplicate original of this letter and returning it to me. As
required by law, your employment with the Company is also contingent upon your
providing legal proof of your identity and authorization to work in the United
States. This offer, if not accepted, will expire at the close of business on
April 5, 1999.

               We look forward to having you join us on May 3, 1999.

               If you have any questions, please call me.

                                   Very truly yours,

                                   BROCADE COMMUNICATIONS SYSTEMS, INC.

                                   By: /s/ Gregory L. Reyes
                                       Chief Executive Officer

I have read and accept this employment offer:

/s/ Michael J. Byrd
Signature of Michael J. Byrd

Dated:  April 7, 1999