Exhibit 10.9

 

SECOND AMENDMENT
TO
CREDIT AGREEMENT (18-MONTH)

          THIS SECOND AMENDMENT TO CREDIT AGREEMENT (18-MONTH) dated as of
December 17, 2002 (this "Amendment") is dated as of July 21, 2003, by and
between QUANTUM CORPORATION, a Delaware corporation ("Borrower"), and KEYBANK
NATIONAL ASSOCIATION, as Administrative Agent, Letter of Credit Issuing Lender
and Lender, FLEET NATIONAL BANK, as Lender, UNION BANK OF CALIFORNIA, N.A., as
Lender, SILICON VALLEY BANK, as Lender, COMERICA BANK CALIFORNIA, as Lender, and
each lender from time to time party hereto (collectively, "Lenders").

RECITALS

          A.     Lenders and Borrower are parties to a Credit Agreement
(18-Month) dated as of December 17, 2002, as amended by a First Amendment to
Credit Agreement (18-Month) dated as of January 31, 2003 (together, the "Credit
Agreement").

          B.     Pursuant to the Credit Agreement, Borrower executed and
delivered to Lenders certain promissory notes in the aggregate amount of One
Hundred Million Dollars ($100,000,000).

          C.     Borrower has requested, and Administrative Agent and Lenders
have agreed subject to satisfactions of the conditions set forth herein, to
amend the Credit Agreement to add or modify certain definitions and to modify
certain covenants of Borrower to: (i) permit an increase in the principal amount
of Subordinated Debt of Borrower that may be outstanding for a period of time as
specified herein in order to allow Borrower to issue new convertible
subordinated notes and use the proceeds therefrom (together with funds required
to be provided by Maxtor Corporation pursuant to the Maxtor Reimbursement
Agreement (the "Maxtor Funds")) to redeem up to $287,500,000 of the Convertible
Subordinated Debentures now outstanding (plus any redemption premium owing in
connection with such redemption); (ii) permit Borrower to use up to $50,000,000
of cash to redeem the Convertible Subordinated Debentures to the extent that the
net proceeds of the newly issued convertible subordinated notes are insufficient
to redeem up to $287,500,000 of the Convertible Subordinated Debentures now
outstanding (plus any redemption premium owing in connection with such
redemption) in accordance with the Redemption Notice; (iii) reduce Borrower’s
minimum Consolidated EBITDA requirement for the fiscal quarters ending June 29,
2003 and September 30, 2003; and (iv) modify the calculation of Borrower’s
Consolidated EBITDA for Borrower’s fiscal quarters ending September 30, 2003,
December 31, 2003 and March 31, 2004 to permit Borrower to include in such
calculation certain restructuring charges in an amount not to exceed $2,000,000
for the fiscal quarter ending September 30, 2003, and not to exceed $10,000,000
in the aggregate for all such fiscal quarters combined.

          D.     Each capitalized term used but not otherwise defined herein
shall have the meaning ascribed thereto in the Credit Agreement.

          NOW, THEREFORE, the parties hereto agree as follows:

--------------------------------------------------------------------------------

ARTICLE 1
AMENDMENTS TO CREDIT AGREEMENT

          This Amendment shall be deemed to be an amendment to the Credit
Agreement and shall not be construed in any way as a replacement or substitution
therefor.  All of the terms and conditions of, and terms defined in, this
Amendment are hereby incorporated by reference into the Credit Agreement as if
such terms and provisions were set forth in full therein.

          1.1    The following definitions are added to Section 1.01 (Defined
Terms):

          

          ""New Convertible Subordinated Notes" means subordinated, convertible
notes to be issued by the Borrower on or before August 15, 2003 that conform to
all of the following:  (a) in a total principal amount of at least $150,000,000
but not to exceed $225,000,000; (b) bearing interest at a rate not in excess of
5% per annum; (c) subordinated in right of payment to the obligations of
Borrower under the Credit Agreement and other Loan Documents at least to the
same extent as the existing Convertible Subordinated Debentures and containing
subordination provisions no less favorable to Administrative Agent and Lenders
than those set forth in Schedule 7.13 or as otherwise approved by the Requisite
Lenders and acknowledged by the Administrative Agent; (d) having a maturity date
that is no earlier than seven (7) years after issuance; and (e) permitting no
amortization of the principal amount of the obligations represented thereby
prior to such maturity date."

          

      

 

 

          ""Refunding Period" means a period of sixty (60) days commencing with
the first day on which the New Convertible Subordinated Notes are issued."

 

 

 

          ""Refunding Proceeds" means all of the proceeds of the issuance and
sale of the New Convertible Subordinated Notes net of the costs and fees paid to
or deducted by or on behalf of third parties in connection with issuance and
sale of the New Convertible Subordinated Notes."

          1.2    The definitions of "Investment" and "Subordinated Debt"
contained in Section 1.01 (Defined Terms) of the Credit Agreement are amended
and restated in their entirety as follows:

          

          ""Investment" means, as to any Person, any investment by such Person,
whether by means of the purchase or other acquisition of stock or other
securities of any other Person or by means of a loan, creating a debt, capital
contribution, guaranty or other debt or equity participation or interest in any
other Person.  For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment.  Notwithstanding the
foregoing, the term "Investment" shall not include purchases of Convertible
Subordinated Debentures or New Convertible Subordinated Notes made in compliance
with Section 7.11 of this Agreement."

          

      

 

 

          ""Subordinated Debt" means the Convertible Subordinated Debentures,
the New Convertible Subordinated Notes and any other subordinated debt permitted
by Section 7.01."

2

--------------------------------------------------------------------------------

          1.3    Section 7.01(j) of the Credit Agreement is amended and restated
in its entirety as follows:

          

          "(j)     Subordinated Debt of Borrower to any Person, provided that
(A) such Indebtedness contains subordination provisions no less favorable to
Administrative Agent and Lenders than those set forth in Schedule 7.13 or as
otherwise approved by Requisite Lenders and (B) the aggregate principal amount
of all Subordinated Debt of Borrower outstanding (including the Convertible
Subordinated Debentures and the New Convertible Subordinated Notes) does not
exceed $525,000,000 during the Refunding Period and does not exceed $350,000,000
at any other time; and (C) the maturity date of the Subordinated Debt shall not
be earlier than the Business Day next following the Maturity Date; and"

          

          1.4            Section 7.01(d) of the Credit Agreement is amended and
restated in its entirety as follows:

          

          "(d)    Indebtedness of Borrower under the Convertible Subordinated
Debentures and the New Convertible Subordinated Notes;"

          

          1.5    Section 7.11 of the Credit Agreement is amended and restated in
its entirety as follows:

          

          "7.11  Certain Indebtedness Payments, Etc.  Neither Borrower nor any
of its Subsidiaries shall pay, prepay, redeem, purchase, defease or otherwise
satisfy in any manner prior to the scheduled payment thereof any Subordinated
Debt except as otherwise permitted under this Section 7.11; amend, modify or
otherwise change the terms of any document, instrument or agreement evidencing
Subordinated Debt such that such amendment, modification or change would (i)
cause the outstanding aggregate principal amount of all such Subordinated Debt
so amended, modified or changed to be increased as a consequence of such
amendment, modification or change, (ii) cause the subordination provisions
applicable to such Subordinated Debt to be less favorable to Administrative
Agent and Lenders than those set forth on Schedule 7.13, (iii) increase the
interest rate applicable thereto, or (iv) accelerate the scheduled payment
thereof.  Borrower shall not cause or permit any of its obligations, except the
obligations constituting Senior Indebtedness, to constitute "Designated Senior
Indebtedness" under the Indenture governing the Convertible Subordinated
Debentures or the indenture governing the New Convertible Subordinated Notes (it
being understood that the Obligations of Borrower under this Agreement shall at
all times constitute "Designated Senior Indebtedness" under both such
indentures).  Notwithstanding the foregoing, Borrower may at any time: 

          

3

--------------------------------------------------------------------------------

          (1)  conduct an exchange offer (whether public, private or on a
3(a)(9) basis) for all or part of the Borrower’s Convertible Subordinated
Debentures or the New Convertible Subordinated Notes for one or more of the
following:  (a) new securities ("New Securities") that are subordinated in right
of payment to the obligations of Borrower under the Credit Agreement and other
Loan Documents at least to the same extent as the existing Convertible
Subordinated Debentures or the New Convertible Subordinated Notes, as
applicable; provided that (w) the aggregate annual interest obligation of
Borrower under the New Securities shall be equal to or less than the aggregate
annual interest obligation under the existing Convertible Subordinated
Debentures or the New Convertible Subordinated Notes, as applicable, (x) the
maturity date of the New Securities shall not be earlier than the maturity date
of the existing Convertible Subordinated Debentures or the New Convertible
Subordinated Notes, as applicable, (y) the total principal amount of the
obligations represented by Borrower's Subordinated Debt shall not be increased
by means of any exchange of the New Securities for all or part of the Borrower’s
Convertible Subordinated Debentures or the New Convertible Subordinated Notes,
as applicable, and (z) the New Securities shall not permit any amortization of
the principal amount of the obligations represented thereby prior to the
maturity of the existing Convertible Subordinated Debentures or the New
Convertible Subordinated Notes, as applicable; or (b) new securities issued by
Maxtor ("Maxtor Securities"), in the case of the Convertible Subordinated
Debentures only; or

 

 

 

          (2)  redeem up to $287,500,000 of the existing Convertible
Subordinated Debentures (plus any redemption premium owing in connection with
such redemption) on or before September 30, 2003 in accordance with the
redemption notices delivered to the holders thereof by August 15, 2003
("Redemption Notice") with the Refunding Proceeds and the Maxtor Funds but only
if the Refunding Proceeds are placed in trust with the Administrative Agent for
the duration of the Refunding Period.  For purposes of the immediately preceding
sentence, if the net proceeds of any New Convertible Subordinated Notes are
insufficient to redeem up to $287,500,000 of the Convertible Subordinated
Debentures (plus any redemption premium owing in connection with such
redemption), Borrower shall be permitted to use up to but in no event more than
$50,000,000 in cash in order to redeem up to $287,500,000 of the Convertible
Subordinated Debentures (plus any redemption premium owing in connection with
such redemption) in accordance with this Section 7.11."

 

 

 

 

          No exchange or series of exchanges of New Securities or Maxtor
Securities for all or any part, or any redemption, of Borrower’s Convertible
Subordinated Debentures pursuant to this Section 7.11 shall be deemed to permit
any reduction in the amount of Maxtor's reimbursement obligations under the
Maxtor Reimbursement Agreement except on a dollar-for-dollar basis to the extent
that the obligations represented by Borrower's Convertible Subordinated
Debentures are reduced by means of such exchange or series of exchanges or any
redemption.  Notwithstanding any provision of this Section 7.11 to the contrary,
Borrower may (A) convert, or honor a conversion request with respect to, any
such Subordinated Debt into Equity Securities of Borrower in accordance with the
terms thereof; (B) pay cash to holders of such Subordinated Debt in connection
with such a conversion but solely to the extent representing the value of any
fractional shares; (C) make payments of interest on such Subordinated Debt not
in violation of the Subordination provisions of such Subordinated Debt; (D) pay
the redemption premium, if any, owing in connection with any redemption of all
or part of the Convertible Subordinated Debentures; (E) pay additional interest
in an amount not to exceed 50 basis points per annum of the aggregate principal
amount of the New Convertible Subordinated Notes to the extent due under the
provisions of the New Convertible Subordinated Notes due to Borrower's failure
to register such notes or shares of common stock into which the notes are
convertible within the period or to keep such notes or shares registered for or
during the periods specified in the indenture for the New Convertible
Subordinated Notes or the Registration Rights Agreement; and (F) make other
payments, repayments, redemptions, purchases, defeasance or other satisfaction
of Subordinated Debt not to exceed $5,000,000 in the aggregate."

4

--------------------------------------------------------------------------------

          1.6     Section 7.12(d) of the Credit Agreement is amended and
restated in its entirety as follows:

          

          "(d)    Minimum Consolidated EBITDA.  Permit Consolidated EBITDA,
determined as of the last day of any fiscal quarter of Borrower commencing with
the fiscal quarter ending December 31, 2002, to be less than the following: (i)
for the fiscal quarter ending December 31, 2002, $1.00; (ii) for the fiscal
quarter ending March 31, 2003, $18,000,000; (iii) for the fiscal quarter ending
June 29, 2003, $9,000,000; (iv) for the fiscal quarter ending September 30,
2003, $9,000,000; (v) for the fiscal quarter ending December 31, 2003,
$12,500,000; and (vi) for the fiscal quarter ending March 31, 2004,
$13,000,000.  For purposes of calculating Borrower’s Consolidated EBITDA as of
the last day of the fiscal quarters ending September 30, 2003, December 31, 2003
and March 31, 2004 only, there shall be added to Borrower’s Consolidated Net
Income an amount equal to the actual restructuring charges incurred in each such
quarter by Borrower for facility and employee-related charges (to the extent
such charges were deducted in calculating Borrower’s Consolidated Net Income);
provided, however, that (x) the amount of such restructuring charges to be added
to Borrower’s Consolidated Net Income for Borrower’s fiscal quarter ending
September 30, 2003 shall not exceed $2,000,000, and (y) the aggregate amount of
all such restructuring charges to be added to the Borrower’s Consolidated Net
Income for Borrower’s fiscal quarters ending September 30, 2003, December 31,
2003 and March 31, 2004 combined shall not exceed $10,000,000 in the aggregate.

          

          1.7     The schedule appended hereto as Attachment 1 is substituted in
place of and shall supersede Schedule 2 to the Compliance Certificate set forth
in Exhibit B to the Credit Agreement.

          1.8     Section 8.01 of the Credit Agreement is amended to incorporate
the following as an "Event of Default":

          

          "8.01(m)  Maxtor fails to pay to Borrower on or before August 1, 2004
all amounts owing pursuant to the Maxtor Reimbursement Agreement.

          

5

--------------------------------------------------------------------------------

ARTICLE 2
CONDITIONS TO EFFECTIVENESS OF AMENDMENT

          2.1     The effectiveness of this Amendment is subject to the
fulfillment to the satisfaction of KeyBank National Association, as
Administrative Agent under the Credit Agreement, in its sole discretion, of the
following conditions precedent:

                    (a)    Borrower shall have executed and delivered to
Administrative Agent this Amendment;

                    (b)    The Requisite Lenders shall have executed and
delivered to Administrative Agent this Amendment;

                    (c)    Administrative Agent shall have received appropriate
authorization documents, including borrowing resolutions and certificates of
incumbency, confirming to its satisfaction that all necessary corporate and
organizational actions have been taken to authorize Borrower to enter into this
Amendment; and

                    (d)    Administrative Agent shall have received such other
documents, instruments or agreements as Administrative Agent may require to
effectuate the intents and purposes of this Amendment.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

          Borrower hereby represents and warrants to Administrative Agent and
Lenders that:

          3.1     After giving effect to the amendment of the Credit Agreement
pursuant to this Amendment and the consummation of the transactions contemplated
hereby (i) each of the representations and warranties set forth in Section 5 of
the Credit Agreement is true and correct in all material respects as if made on
the date hereof except to the extent such representations and warranties
specifically refer to an earlier date in which case they shall be true and
correct in all material respects as of such earlier date (with references to the
Credit Agreement being deemed to include this Amendment), and (ii) there exists
no Event of Default under the Credit Agreement after giving effect to this
Amendment.

          3.2     Borrower has the full corporate power and authority and legal
right to make, deliver and to perform the obligations of its part to be
performed under the Credit Agreement as amended hereby.  Borrower has taken all
necessary action to authorize the execution, delivery and performance of this
Amendment.  No consent or authorization of, filing with, or other act by or in
respect of any Governmental Authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Amendment
or the performance by Borrower of the Credit Agreement as amended hereby.  This
Amendment has been duly executed and delivered by Borrower, and constitutes a
legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms.

          3.3     This Amendment and the Credit Agreement as amended hereby are,
or upon delivery thereof to Administrative Agent will be, the legal, valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally.

6

--------------------------------------------------------------------------------

ARTICLE 4
MISCELLANEOUS

          4.1     The Credit Agreement, the other Loan Documents and all
agreements, instruments and documents executed and delivered in connection with
any of the foregoing shall each be deemed to be amended hereby to the extent
necessary, if any, to give effect to the provisions of this Amendment.  Except
as so amended hereby, the Credit Agreement and the other Loan Documents shall
remain in full force and effect in accordance with their respective terms.

          4.2     Borrower agrees to pay Administrative Agent on demand for all
reasonable expenses, including reasonable fees and costs of attorneys and costs
of title insurance, incurred by Administrative Agent in connection with the
preparation, negotiation and execution of this Amendment and any document
required to be furnished hereunder.

7

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date set forth in the preamble hereto.

                                                                                               

QUANTUM CORPORATION, a Delaware corporation, as Borrower
By:  /s/ Mary Springer                               
Name: Mary Springer
Title:  Treasurer

 

KEYBANK NATIONAL ASSOCIATION, as Administrative Agent,
Letter of Credit Issuing Lender and Lender

By:  /s/ Robert W. Boswell                          
Name: Robert W. Boswell
Title:  Vice President

 

FLEET NATIONAL BANK, as Lender

By:  /s/ Greg Roux                                   
Name: Greg Roux
Title:  Managing Director

 

UNION BANK OF CALIFORNIA, N.A., as Lender

By:  /s/ Sarabelle Hitchner                           
Name: Sarabelle Hitchner
Title:  Vice President

 

SILICON VALLEY BANK, as Lender

By:  /s/ Kevin Walsh                                 
Name: Kevin Walsh
Title:  Vice President

 

COMERICA BANK CALIFORNIA, as Lender

By:  /s/ Rob Ways                                  
Name: Rob Ways
Title:  Vice President

8

--------------------------------------------------------------------------------