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                                                                   EXHIBIT 10.12

                 LETTER AGREEMENT DATED FEBRUARY 22, 2000 BY AND
                       BETWEEN REGISTRANT AND JAMES MOORE



                                February 22, 2000


Mr. James Moore
President and Chief Operating Officer
Crossroads Systems, Inc.

         Re:  Severance offer

Dear James:

     In connection with the termination of your employment as President and
Chief Operating Officer of Crossroads Systems, Inc. ("Crossroads" or the
"Company") effective March 3, 2000, the Company is offering you a severance
package in exchange for your agreement to release the Company from any and all
claims. The details of the severance package and release are explained below. We
encourage you to review this document carefully and to discuss it with an
attorney.

         SEVERANCE.

         The Company agrees to provide you with the following severance package
in exchange for your agreement to release the Company from any and all claims as
set forth below.

o        Salary continuation from March 3, 2000 through October 31, 2000, based
         on your current annual salary of $200,000.00, less statutory deductions
         and withholdings, to be paid according to the Company's normal payroll
         practices, for a total gross payment of $133,333.00.

o        Your option (the "Option") to purchase 570,000 shares of common stock
         (the "Option Shares") at an exercise price of $0.233 granted pursuant
         to the Company's 1996 Stock Option/Stock Issuance Plan on November 12,
         1997, to the extent outstanding but not otherwise vested, shall
         automatically accelerate as to a part of the Option so that the total
         number of vested Option Shares for which the Option shall be
         exercisable after taking such acceleration into account shall be equal
         to the number of Option Shares in which you would have vested under the
         normal vesting/exercise schedule in effect for the Option had you
         completed service through October 2, 2000 for a total number of vested
         shares of 427,500. Stock options granted to you on May 25, 1999, shall
         immediately terminate with respect to any and all vested option shares
         for which such options have not been exercised or for such shares which
         are not otherwise exercisable in accordance with their respective
         vesting/exercise schedules. You will be subject to compliance with all
         applicable requirements of law relating thereto (including, but not
         limited to, Rule 144 promulgated under the Securities Act of 1933, as
         amended) and with all applicable regulations of any stock exchange (or
         the Nasdaq National Market, if applicable) on which the Common Stock
         may be listed for trading as of the date hereof.

o        Forgiveness of the Promissory Note dated October 1, 1997, a copy of
         which is attached as Exhibit A, for a total loan forgiveness of Ninety
         Thousand dollars ($90,000). You will continue to be liable for the
         remaining two Promissory Notes of Ninety Thousand dollars ($90,000),
         plus interest, pursuant to the terms of Exhibit B-1, as well as for the
         entire amount of the second Promissory Note dated May 29, 1999, in the
         amount of One Hundred Twenty-Six Thousand dollars ($126,000), plus
         interest, a copy of which is attached as Exhibit B-2. Repayment of both
         of the above Promissory Notes shall be within ninety (90) days
         following termination.


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o        If you elect to continue health and welfare coverage under federal
         COBRA, the Company will pay your COBRA premiums, in an amount
         sufficient to maintain the level health and welfare benefits as in
         effect on your last day of employment, through the earlier of December
         31, 2000 or the date you are no longer eligible for COBRA. Thereafter,
         you will be solely responsible for your health and welfare benefits,
         including all COBRA premiums.

YOUR AGREEMENT.

         By signing this Agreement and accepting the severance as outlined
above, you agree to waive, release, and forever discharge Crossroads and its
parents, successors, assigns, divisions, subsidiaries, affiliates, partners,
officers, directors, executives, investors, shareholders, managers, supervisors,
employees, agents, attorneys and representatives (the "Released Parties" or
"Releasees"), from any and all claims, demands, and causes of action which you
have or claim to have, whether known or unknown, of whatever nature, which
exists or may exist as of the date of your execution of this Agreement.
"Claims," "demands," and "causes of action" include, but are not limited to,
claims based on contract, fraud, equity, tort, discrimination, harassment,
retaliation, personal injury, constructive discharge, emotional distress, public
policy, wage, and hour law, defamation, claims for debts, accounts, attorneys'
fees, compensatory damages, punitive damages, and/or liquidated damages, claims
for vesting or accelerated vesting of options to purchase the Company's Common
Stock, and any and all claims arising under the Americans with Disabilities Act,
the Family and Medical Leave Act, or any other federal or state statute
governing employment, including but not limited to Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act, 29 U.S.C. Section 621 et
seq., as such statutes may have been or may be amended from time to time.

         You represent that you do not presently have on file, and agree that
you will not hereafter file, any claims, charges, grievances or complaints
against the Company and/or the Released Parties in or with any administrative,
state, federal or governmental entity, agency, board or court, or before any
other tribunal or panel or arbitrators, public or private, based upon any
actions or omissions by the Company and/or the Released Parties occurring prior
to the date of your execution of this Agreement.

         Finally, you represent and agree that you are the sole and lawful owner
of all rights, title and interest in and to all released matters, claims and
demands arising out of or in any way related to your employment with Crossroads
and/or the termination thereof.

         ACCEPTANCE OF AGREEMENT:

         You have twenty-one (21) days to consider this Agreement and you may
revoke this Agreement at any time during the first seven (7) days following your
execution of this Agreement by delivering written notice of revocation to the
Company's Vice President of Human Resources, Allen Sockwell, no later than five
(5:00) p.m. on the seventh (7th) day after execution. You received this
Agreement on February 23, 2000. The settlement offer contained in this Agreement
will automatically expire if this Agreement, fully executed by you, is not
received by the Company's Vice President of Human Resources, Allen Sockwell, on
or before March 15, 2000.

         This Agreement will become effective, irrevocable and fully enforceable
upon the expiration of seven (7) days following the date of your execution of
the Agreement (the "Effective Date"), provided that you have timely executed
this Agreement and you have not exercised your right to revoke this Agreement.





         OTHER IMPORTANT TERMS:

o        Nothing in this Agreement shall constitute or be treated as an
         admission of any wrongdoing or liability on the part of the Company
         and/or the Released Parties.


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o        You are advised to consult with an attorney of your choosing prior to
         entering into this Agreement.

o        This Agreement is binding on your representatives, heirs, executors,
         administrators, successors and assigns.

o        You are personally responsible for the payment of all federal, state
         and local taxes that are due, or may be due, for any payments and other
         consideration received by you under this Agreement. You agree to
         indemnify the Company and hold the Company harmless, from any and all
         taxes, penalties and/or other assessments that the Company is, or may
         become, obligated to pay on account of any payments and other
         consideration made to him under this Agreement.

o        The terms and existence of this Agreement are strictly confidential and
         may not be disclosed to any other person or entity, with the exception
         of your immediate family members and legal and financial advisors.

o        Certain obligations set forth in the Company's Proprietary Information
         and Inventions Agreement, signed by you on October 1, 1997, a copy of
         which is attached hereto as Exhibit C and incorporated herein by this
         reference, continue beyond the termination of your employment.

o        You agree not to disparage or in any way criticize the Company and/or
         its officers, managers, supervisors, employees, investors, products,
         services, or technology at any time in the future. Nothing contained in
         this Section is intended to prevent you from testifying truthfully in
         any legal proceeding.

o        This Agreement, and any agreements or documents referred to herein,
         constitute an integrated, written contract, expressing the entire
         agreement between the Company and you with respect to the subject
         matter hereof. In this regard, you represent and warrant that you are
         not relying on any promises or representations that do not appear in
         this Agreement. This Agreement can be amended or modified only by a
         written agreement, signed by Moore and the Company.

o        This Agreement shall, in all respects, be interpreted, enforced and
         governed under the laws of the State of Texas applicable to contracts
         executed and performed in Texas without giving effect to conflicts of
         law principles.

o        You agree that if any provision or portion of any provision of this
         Agreement is held to be invalid or unenforceable or to be contrary to
         public policy or any law, for any reason, the remainder of the
         Agreement shall not be affected thereby.

o        This Agreement may be executed in separate counterparts and by
         facsimile, and each such counterpart shall be deemed an original with
         the same effect as if the Company and Moore signed the same document.


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         We wish you the best in the future. Please do not hesitate to contact
me if you have any questions or comments regarding the severance offer contained
in this letter.

                                              CROSSROADS SYSTEMS, INC.

                                              By:
                                                 -------------------------------
                                              Its:
                                                  ------------------------------
James Moore

By:
   -----------------------------------

Date:
     ---------------------------------


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