Exhibit 10.27

|GRAPHIC |  | Chairman of the Board of
Directors Performance Incentive
Bonus Plan
|------- |  | -------------------------------------------------------------------

Table of Contents

|Plan Objectives                                      |  | Page 1
|---------------------------------------------------- |  | ------
|Plan Administration                                  |  | Page 1
|Plan Period                                          |  | Page 1
|Eligibility                                          |  | Page 1
|Cash Performance Incentive Bonus                     |  | Page 1
|Performance Goals                                    |  | Page 1
|Cash PIB Payouts                                     |  | Page 2
|Other Important Plan Details                         |  | Page 2
|Employment at Will                                   |  | Page 2
|Board of Directors/Compensation Committee Discretion |  | Page 2

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Plan Objectives

The McDATA Chairman of the Board of Directors Performance Incentive Bonus Plan ("Plan") was developed to provide compensation to the Chairman of the Board for the
successful completion of annual goals established by the Board of Directors.

Plan Administration

The Board of Directors and its selected designees in Human Resources will administer this Plan as approved by the Compensation Committee of the Board of Directors
("Compensation Committee"). The Compensation Committee must approve any material exceptions to this Plan, and retains the right to amend or discontinue this Plan in whole or in part at any time with
or without notice to the Chairman of the Board.

Plan Period

The effective Plan period is from January 1, 2002 through December 31, 2003, with performance measured and rewarded on an annual basis. Unless
otherwise revoked by the Board of Directors, the Plan will renew on an annual basis, subject the the establishment of new goals for each year.

Eligibility

Plan participation is limited to McDATA Corporation's Chairman of the Board of Directors (the "Chairman").

To
be eligible for annual rewards under the Plan, the Chairman must be in an active status defined as being a regular full-time employee on McDATA's US or international
payroll. Active status an approved leave of absence, subject to proration as described in this document.

Eligibility
begins on the date the Chairman meets the above eligibility requirements and ends the date he or she does not. A Chairman who enters an eligible status during the plan period
will have participation in the Plan effective as of that day and will then be eligible for a prorated cash bonus payout in that quarter based on their actual days of eligible participation beginning
with the date of hire.

The
Chairman must be employed through the last day of a year to receive payment under the Plan based on that year's performance.

The
Chairman will be deemed to be ineligible for the Company's Profit Sharing Plan. Any changes to Plan eligibility must be approved by the Compensation Committee.

Cash Performance Incentive Bonus

A cash performance incentive bonus (PIB), approved in January 2002 by the Board, may be payable under the Plan when annual targets established by the
Compensation Committee at the beginning of each year, are met or exceeded.

Performance Goals

At the beginning of each year, performance goals including financial metrics or other objectives will be established by the Compensation Committee, and attached
to this document as Appendix A. The Chairman will be provided with these goals, subject to any applicable weighting or other provisions established by the Compensation Committee, and will also
be provided with potential annual PIB earnings.

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Cash PIB Payouts

If applicable, the payout of cash awards will occur annually as soon as administratively feasible after the first Board of Directors meeting following the end of
the year.

A
Chairman terminating employment with the company on or before the last day of the year for reasons other than death or permanent disability will not be eligible for a cash PIB payout
under this Plan.

All
cash PIB amounts are stated in gross terms and will be paid net of applicable taxes and other deductions as required by law. Cash PIB payments under this Plan are considered eligible
earnings for the McDATA Employee Stock Purchase Plan and the McDATA Retirement Savings Plan, but not for purposes of the Company's life, disability, or other benefit plans.

Other Important Plan Details

Cash awards payable to the Chairman on any type of approved leave of absence will be prorated based on the number of days worked during the quarter.

In
the event of the death of a Chairman during the year, applicable bonus payments will made to the Chairman's designated beneficiary or to the estate in the absence of a designated
beneficiary on the regular bonus delivery date based on the actual completion of service during the year and the level of achievement of current annual objectives.

Employment at Will

The above information does not constitute a guarantee of work, job status or employment for any period of time. The employment of the Chairman may be terminated
at will at any time by either party, with or without prior notice. This Plan does not create a contract of employment, either expressed or implied, between the Chairman and the Company.

Board of Directors/Compensation Committee Discretion

This Plan has been approved by the Compensation Committee who may, with approval of the Board of Directors, alter, extend or revoke the Plan or any other Plan
provisions without prior notice to the Chairman. The Plan may be terminated at any time. The Chairman will be notified in a timely manner of any material changes to the Plan.

The
Compensation Committee may approve changes to the Chairman's eligibility under the Plan, including an altered payment either retrospectively or in advance.

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