<PAGE>
                                                                    EXHIBIT 10.9

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of December 31,
2000 by and between Crossroads Systems, Inc. (the "Borrower") and Silicon Valley
Bank ("Bank").

DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, an Amended and Restated Loan and Security Agreement, dated August 17,
1999, as may be amended from time to time (the "Loan Agreement"). The Loan
Agreement provided for, among other things, a Committed Revolving Line in the
original principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000). Defined terms used but not otherwise defined herein shall have the
same meanings as in the Loan Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."

2.   DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.   DESCRIPTION OF CHANGE IN TERMS.

     A.   Modification(s) to Loan Agreement.

          1.   Section 6.2 entitled "Financial Statements, Reports,
               Certificates" is hereby amended to read as follows:

               (a) Borrower will deliver to Bank: (i) as soon as available, but
               no later than 30 days after the last day of each month, a company
               prepared consolidated balance sheet and income statement covering
               Borrower's consolidated operations during the period, in a form
               acceptable to Bank and certified by a Responsible Officer; (ii)
               as soon as available, but no later than 90 days after the end of
               Borrower's fiscal year, audited consolidated financial statements
               prepared under GAAP, consistently applied, together with an
               unqualified opinion on the financial statements from an
               independent certified public accounting firm acceptable to Bank;
               (iii) within 5 days of filing, copies of all statements, reports
               and notices made available to Borrower's security holders or to
               any holders of Subordinated Debt and all reports on Form 10-K,
               10-Q and 8-K filed with the Securities and Exchange Commission;
               (iv) a prompt report of any legal actions pending or threatened
               against Borrower or any Subsidiary that could result in damages
               or costs to Borrower or any Subsidiary of $100,000 or more; and
               (v) budgets, sales projections, operating plans or other
               financial information Bank requests.

               (b) Within 30 days after the last day of each month, Borrower
               will deliver to Bank a Borrowing Base Certificate signed by a
               Responsible Officer with aged listings of accounts receivable and
               accounts payable.

               (c) Within 30 days after the last day of each month, Borrower
               will deliver to Bank with the monthly financial statements a
               Compliance Certificate signed by a Responsible Officer.


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<PAGE>


               (d) Bank has the right to audit Borrower's Accounts at Borrower's
               expense, but the audits will be conducted prior to the initial
               Advance and no more often than once every 6 months thereafter
               unless an Event of Default has occurred and is continuing.

          2.   Section 6.7 entitled "Financial Covenants" is hereby amended to
               read as follows:

               Borrower will maintain as of the last day of each month:

               (i)  Quick Ratio. A ratio of Quick Assets to Current Liabilities
                    of at least 1.50 to 1.00.

               (ii) Borrower may incur a quarterly loss, provided such loss (as
                    measured by earnings before interest, taxes, depreciation
                    and amortization) is not greater than $11,700,000 for the
                    fiscal quarter ending January 31, 2001, $11,800,000 for the
                    fiscal quarter ending April 30, 2001, $11,400,000 for the
                    fiscal quarter ending July 31, 2001 and $10,400,000 for the
                    fiscal quarter ending October 31, 2001.

          3.   The following terms as defined in Section 13.1 entitled
               "Definitions" are hereby amended to read as follows:

               "Borrowing Base" is 80% of Eligible Accounts, as determined by
               Bank from Borrower's most recent Borrowing Base Certificate.

               "Committed Revolving Line" is an Advance of up to $3,000,000.

               "Eligible Accounts" (item "d" only) Accounts for an account
               debtor, including Affiliates, whose total obligations to Borrower
               exceed 25% of all Accounts, for the amounts that exceed that
               percentage, unless Bank approves in writing;

               "Revolving Maturity Date" is February 1, 2002.

4.   CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

5.   PAYMENT OF LOAN FEE. Borrower shall pay Bank a fee in the amount of ______
Dollars ($_________)(the "Loan Fee"), plus all out-of-pocket expenses.

6.   NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.

7.   CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, Bank
is relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.


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<PAGE>


8.  CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee.

    This Loan Modification Agreement is executed as of the date first written
above.

BORROWER:                                     BANK:

CROSSROADS SYSTEMS, INC.                      SILICON VALLEY BANK


By:                                           By:
   ------------------------------                ------------------------------
Name:                                         Name:
     ----------------------------                  ----------------------------
Title:                                        Title:
      ---------------------------                   ---------------------------


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<PAGE>


[LOGO]

                               SILICON VALLEY BANK


                       PRO FORMA INVOICE FOR LOAN CHARGES


BORROWER:                  CROSSROADS SYSTEMS, INC.

LOAN OFFICER:              MIKE DRAEKEN

DATE:                      DECEMBER 31, 2000


                           LOAN FEE                       $________
                           DOCUMENTATION FEE                 250.00

                           TOTAL FEE DUE                  $_____.00
                                                          =========

PLEASE INDICATE THE METHOD OF PAYMENT:

         {   }   A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.

         {   }   DEBIT DDA # __________________ FOR THE TOTAL AMOUNT.

         {   }   LOAN PROCEEDS


------------------------------------------
BORROWER                            (DATE)


------------------------------------------
SILICON VALLEY BANK                 (DATE)
ACCOUNT OFFICER'S SIGNATURE


<PAGE>


                             COMPLIANCE CERTIFICATE

TO:     SILICON VALLEY BANK


FROM:   CROSSROADS SYSTEMS, INC.


The undersigned authorized officer of CROSSROADS SYSTEMS, INC. ("Borrower")
certifies that under the terms and conditions of the Amended and Restated Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending _______________ with all
required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on
this date. Attached are the required documents supporting the certification. The
Responsible Officer certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.
The Responsible Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date
this certificate is delivered.

 PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.

<Table>
<Caption>
REPORTING COVENANT                                REQUIRED                  COMPLIES
------------------                                --------                  --------
<S>                                        <C>                              <C>
CPA audited Financial Statements + CC      Annually within 90 days          YES / NO
Interim Financial Statements + CC          Monthly within 30 days           YES / NO
Annual 10K Report                          Within 5 days of SEC filing      YES / NO
A/R and A/P Aging, Borrowing
Base Certificate                           Monthly within 30 days           YES / NO
</Table>

<Table>
<Caption>
FINANCIAL COVENANT           REQUIRED             ACTUAL                    COMPLIES
------------------           --------             ------                    --------

TO BE TESTED ON A MONTHLY BASIS, UNLESS OTHERWISE NOTED:
<S>                         <C>                <C>                          <C>
Quick Ratio                 1.50 : 1.00        ____ : 1.00                  YES / NO
Maximum Loss (quarterly)    *                  $__________                  YES / NO
</Table>


*Not greater than $11,700,000 for the fiscal quarter ending January 31, 2001,
$11,800,000 for the fiscal quarter ending April 30, 2001, $11,400,000 for the
fiscal quarter ending July 31, 2001 and $10,400,000 for the fiscal quarter
ending October 31, 2001.

COMMENTS REGARDING FINANCIAL COVENANTS:

                                        =======================================
                                                 BANK USE ONLY
                                        RECEIVED BY: ____________________
                                        DATE: ________________
                                        REVIEWED BY: ____________________
                                        COMPLIANCE STATUS:  YES / NO
                                        =======================================

Very truly yours,
CROSSROADS SYSTEMS, INC.

BY:
    -------------------------------------------------
NAME:
      -----------------------------------------------
TITLE:
       ----------------------------------------------


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<PAGE>


                           BORROWING BASE CERTIFICATE
                               COLLATERAL SCHEDULE

Borrower: Crossroads Systems, Inc.                 Lender: Silicon Valley Bank


Commitment Amount:         $3,000,000
--------------------------------------------------------------------------------
<Table>
<S>                                                                      <C>
ACCOUNTS RECEIVABLE

               1.   Accounts Receivable Book Value as of                 $
                                                         --------         ----------
               2.   Additions (please explain on reverse)                $
                                                                          ----------
               3.   TOTAL ACCOUNTS RECEIVABLE                            $
                                                                          ----------

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

               a.   Amounts over 90 days due             $
                                                          ----------

               b.   Balance of 50% over 90 day accounts  $
                                                          ----------
               c.   Excess 25% Concentration Limit       $
                                                          ----------
               d.   Foreign Accounts                     $
                                                          ----------
               e.   Governmental Accounts                $
                                                          ----------
               f.   Contra Accounts                      $
                                                          ----------
               g.   Promotion or Demo Accounts           $
                                                          ----------
               h.   Intercompany/Employee Accounts       $
                                                          ----------
               i.   Other (please explain on reverse)    $
                                                          ----------
         4.    TOTAL ACCOUNTS RECEIVABLE DEDUCTION                       $
                                                                          -----------
         5.    Eligible Accounts (#3 minus #4)                           $
                                                                          -----------
         6.    LOAN VALUE OF ACCOUNTS (80% of #5 )                       $
                                                                          -----------

BALANCES
         7.    Maximum Loan Amount (minus Cash Management Sublimit)      $
                                                                          -----------
         8.    Total Funds Available Lesser of #6 or #7                  $
                                                                          -----------
         9.    Present balance owing on Line of Credit                   $
                                                                          -----------
        10.    Outstanding under Sublimits (Letters of Credit)           $
                                                                          -----------
RESERVE POSITION (#8 minus #9 and #10)                                   $
                                                                          -----------
</Table>

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.

                                                   ---------------------------
                                                        BANK USE ONLY

COMMENTS:                                          Rec'd By:
                                                            ------------------
CROSSROADS SYSTEMS, INC.                                    Auth. Signer

                                                   Date:
                                                        ----------------------
By:
    -----------------------                       Verified:
    Authorized Signer                                      -------------------
                                                           Auth. Signer

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


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