Chaparral Network Storage Ordered to Stop Shipping Products That Infringe On Crossroads Patent.

Business Editors & High-Tech Writers

AUSTIN, Texas--(BUSINESS WIRE)--Oct. 17, 2001

Judge Triples Damages, Issues Permanent Injunction for

Router and RAID Products

Crossroads Systems Inc. (Nasdaq: CRDS), a global provider of connectivity for storage networking solutions, announced that on Oct. 11, 2001, a judge has issued an injunction against Chaparral Network Storage Inc.'s RAID and router products that use access controls or LUN zoning because they willfully infringe the Crossroads 5,941,972 ("972") patent, as found earlier by a jury on Sept. 12, 2001.

Those infringing products are Fibre Channel-to-Ultra2 SCSI storage router models FS 1220 and FS 2620; the G-Series External RAID Controllers, models G 7313, G 7324, and G 8324; the A-Series Rack Mount RAID Controller, model A 8526; and the K-Series External RAID Controllers, models K 7313 and K 7413.

The judge tripled the damages Chaparral was ordered to pay in September, when Crossroads won its patent litigation suit against the company. The judge also stated that Chaparral no later than 30 days from the date of the injunction, will take back permanently all Chaparral products which are now or will be in the possession or under control of dealers, distributors, or sales agents and which infringe the `972 patent.

"We believe that access controls are essential in the storage area network and are pleased the judge and jury found that Crossroads has the exclusive rights to that patented technology," said Larry Sanders, president and chief operating officer Crossroads Systems. "We will continue to protect our patent portfolio vigorously."

About Crossroads Systems Inc.

With headquarters in Austin, Texas, Crossroads Systems (Nasdaq:CRDS) is a leading global provider of connectivity for storage networks regardless of technology or location. Crossroads enables protocol-independent connectivity at gigabit speeds for a wide range of devices that scale for small businesses to global enterprises. Crossroads' products are in solutions from ADIC, ATL, Compaq, Dell, Fujitsu, Siemens, Groupe Bull, Hewlett-Packard, Hitachi Data Systems, IBM, McDATA, StorageTek, Sun Microsystems, Unisys, ACAL, Bell Micro, Cranel/Adexis, Datalink and Tech Data. Crossroads is a voting member of the Storage Networking Industry Association (SNIA). For more information about Crossroads Systems, please visit www.crossroads.com or call 800/643-7148.

Forward-Looking Statements

This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: the quarterly fluctuations of Crossroads' operating results and Crossroads' inability to accurately predict revenues and budget for expenses for future periods; the extent of Crossroads' future operating losses and negative cash flow; the company's ability to maintain its operating margins; the deteriorating economic environment, including in particular related expense reductions by organizations affecting their IT spending and budget; the dependence of Crossroads' business on the storage area network market which is evolving and unpredictable; the possibility that the pending shareholder class action lawsuits could result in an adverse outcome to the company; Crossroads' ability to develop new and enhanced products that achieve market acceptance; the effect of competition; the effect of undetected software or hardware errors, which may affect the company's results or reduce demand for Crossroads' products in the long term; Crossroads' inability to protect its intellectual property rights, including any adverse outcome in the company's pending patent litigation with certain of its competitors; the continuation of Crossroads' successful relationships with its limited number of OEM customers, including its ability to replace revenue from ADIC and Compaq Computer Corporation and/or to realize the benefit of the new agreement with Compaq; Crossroads' ability to retain and recruit key personnel to manage its business successfully; Crossroads' ability to successfully achieve the benefits of the acquisition of Polaris Communications and any subsequent acquisition or strategic relationship; and that Crossroads' stock price could be volatile regardless of Crossroads' actual financial performance and other factors detailed in Crossroads' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on 10-Q.