<PAGE>

                                                                    Exhibit 10.3

                     FIRST AMENDMENT TO SECOND AMENDED AND
                            RESTATED LOAN AGREEMENT


     THIS FIRST AMENDMENT TO LOAN AGREEMENT is made as of this 30th day of
April, 1999, by and between STORAGE COMPUTER CORPORATION, a Delaware corporation
(the "Borrower") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company (hereinafter referred to as the "Bank").

     WHEREAS, the Borrower and the Bank are parties to a Second Amended and
Restated Loan Agreement dated as of November 16, 1998 (the "Loan Agreement").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Loan Agreement.

     NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereby amend the Loan Agreement as follows:

     Section 1.  Amendment of Section 1.01.  Section 1.01 is hereby amended as
                 follows:

               (a)  the definition of "Line of Credit" is amended by deleting
                    the reference to "Ten Million Five Hundred Thousand Dollars
                    ($10,500,000)" and replacing it with "Eight Million Seven
                    Hundred Thousand Dollars ($8,700,000)".

               (b)  the definition of "Maturity Date" is hereby amended by
                    deleting the reference to "March 1, 1999" and replacing it
                    with "January 4, 2000".

               (c)  the definition of "Maximum Line Availability" is deleted in
                    its entirety and replaced with the following:

                    "Maximum Line Availability" shall mean the line of credit
                    made available to the Borrower under this Agreement (subject
                    to the proviso at the end of this definition) in the maximum
                    principal amounts during the following periods indicated:
<PAGE>

<TABLE>
<CAPTION>

               Period                                    Maximum Line Availability

<S>                                                    <C>
          April 29, 1999 through April 30, 1999           $8,700,000

          May 1, 1999 through August 31, 1999             $8,400,000

          September 1, 1999 through September 30, 1999    $7,800,000

          October 1, 1999 through October 31, 1999        $7,500,000

          November 1, 1999 through November 30, 1999      $7,200,000

          December 1, 1999 through January 3, 2000        $6,900,000

          Thereafter                                               0
</TABLE>

               provided, however, (i) upon the Borrower's receipt of the Second
               Tax Refund during the period from May 1, 1999 through August 31,
               1999, the Maximum Line Availability referenced above shall be
               further permanently reduced from $8,400,000 to $8,100,000 and
               (ii) the Maximum Line Availability shall be permanently reduced
               by any proceeds received by the Borrower or Bank pursuant to
               Sections 2.01(g) or 5.16 hereof.

               (d)  the definition of "Loan Documents" is hereby amended by
                    adding "Membership Pledge Agreement, Goodlander Note,
                    Goodlander Guaranty" after the term "Pledge Agreement" in
                    the fifth line.

               (e)  the definition of "Note" is deleted in its entirety and
                    replaced with the following:

                    "Note" shall mean the secured Third Amended and Restated
                    Line of Credit Note in the maximum principal amount of
                    $8,700,000 dated April 30, 1999 issued by the Borrower to
                    the Bank in form of Exhibit A hereto, and all extensions,
                    renewals, modifications, substitutions, replacements and
                    restatements thereof.

               (f)  the following definitions shall be added in the appropriate
                    alphabetical order:

                    "Goodlander Guaranty" shall mean the personal limited
                    guaranty dated April 30, 1999 executed by Theodore
                    Goodlander in favor of the Bank in form and substance
                    satisfactory to the Bank.

     "Goodlander Note" shall mean the $1,650,000 promissory note dated as of
April 30, 1999

                                       2
<PAGE>

issued by Theodore Goodlander in favor of the Bank.

     "Membership Pledge Agreement" shall mean that certain Pledge Agreement
dated April 30, 1999, by and between the Bank on Borrower in the form of Exhibit
G hereto, as the same may be amended, restated or otherwise modified from time
to time.

     "Net Asset Sale Proceeds" shall mean the cash proceeds of the sale or
disposition of assets (including by way of merger), and the cash proceeds of any
insurance payments on account of the destruction or loss of property, by the
Borrower or any of its Subsidiaries, net of (a) any Indebtedness permitted by
Section 6.01(c) (purchase money debt and capital leases) secured by assets being
sold in such transaction required to be paid from such proceeds, (b) income
taxes that, as estimated by the Borrower in good faith, will be required to be
paid by the Borrower or any of its Subsidiaries in cash as a result of, and
within 12 months after, such and (c) all reasonable expenses of the Borrower or
any of its Subsidiaries payable in connection with the sale or disposition.

     "Net Debt Proceeds" shall mean cash proceeds (net of reasonable out-of-
pocket transaction fees and expenses) of the incurrence by the Borrower or any
of its Subsidiaries of Indebtedness other than Indebtedness permitted by Section
6.01(a) (Bank debt) and (c) (purchase money debt and capital leases).

     "Net Equity Proceeds" shall mean the cash proceeds (net of reasonable out-
of-pocket fees and expenses) received by the Borrower or any of its Subsidiaries
in connection with any issuance by the Borrower or any of its Subsidiaries of
any shares of its capital stock or other equity interests or options, warrants
or other purchase rights to acquire such capital stock or other equity interests
to, or receipt of a capital contribution from, any Person.

     "Net Operating Loss" shall be defined as net income/loss (calculated in
accordance with GAAP, consistently applied), excluding extraordinary gains
(including any forgiveness of debt) and losses, income taxes paid, interest
expense and penalties and income tax refunds to the extent treated as net
income.

     "Second Tax Refund" shall have the meaning set forth in Section 3.21
hereof.

     "Trust Account" shall mean the Borrower's trust account at the Bank,
Account No. 65837940.

     "Working Capital Ratio" shall mean, at the date of determination thereof,
current assets (excluding accounts or notes receivable from any Affiliate),
divided by all current liabilities (after adjustments for any debt forgiveness),
including outstanding Loans, current maturities of lease obligations, but
excluding any amounts outstanding under the Indebtedness of the Borrower under
the Shareholder Note and any indebtedness incurred by the Borrower pursuant to
Section 5.15 hereof.

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<PAGE>

     Section 2.  Amendment to Section 2.01.  Section 2.01 will be amended by
                 adding the following section (g) at the end:

          (g) Contingent Required Prepayments.

               (i)  Net Asset Sale Proceeds.  At least fifteen Business Days
                    prior to the sale or other disposition of any assets by the
                    Borrower and its Subsidiaries that would result in Net Asset
                    Sale Proceeds, the Borrower shall provide written notice to
                    the Bank of the estimated closing date for such asset sale
                    or disposition and the amount of the Net Asset Sale
                    Proceeds. Upon receipt of Net Asset Sale Proceeds by the
                    Borrower or any of its Subsidiaries, the Borrower shall
                    within one Business Day pay to the Bank as a prepayment of
                    the Loan to be applied as a permanent reduction of the
                    Maximum Line Availability.

               (ii) Net Debt Proceeds.  At least fifteen Business Days prior to
                    the incurrence of Indebtedness that would result in Net Debt
                    Proceeds, the Borrower shall provide written notice to the
                    Bank of the estimated closing date for such Indebtedness and
                    the amount of the Net Debt Proceeds.  Within one Business
                    Day after the incurrence of such Indebtedness, the Borrower
                    shall pay to the Bank as a prepayment of the Loan to be
                    applied as a permanent reduction of the Maximum Line
                    Availability.

             (iii)  Net Equity Proceeds.  At least fifteen Business Days prior
                    to the consummation of any transaction that would result in
                    Net Equity Proceeds, the Borrower shall provide written
                    notice to the Bank of the estimated closing date for such
                    transaction and the amount of Net Equity Proceeds.  Within
                    one Business Day after the receipt of Net Equity Proceeds by
                    the Borrower or any of its Subsidiaries, the Borrower shall
                    pay to the Bank a prepayment of the Loan to be applied as a
                    permanent reduction of the Maximum Line Availability.

               (vi) Net Insurance and Condemnation Proceeds.  Within fifteen
                    Business Day of the date of receipt by the Borrower or any
                    of its Subsidiaries of any insurance or condemnation
                    proceeds (less any reasonable related costs and expenses),
                    the Borrower shall pay to the Bank as a prepayment of the
                    Loan to be applied as a permanent reduction of the Maximum
                    Line Availability.

                                       4
<PAGE>

                    The provisions of this Section 2.01(g) shall not be deemed
                    to be a waiver of, nor shall they otherwise limit or
                    supersede, the application of any other covenant contained
                    in this Agreement.

     Section 3.  Amendment of Section 2.02(a).  Section 2.02(a) of the Loan
          Agreement is hereby amended by deleting "one quarter percent ( 1/4%)"
          in the last line and replacing it with "one percent (1%)."

     Section 4.  Amendment of Article II.  Article II of the Loan Agreement is
          hereby amended by adding to the end the following Section 2.10:


          Section 2.10.  Waiver and Restructure Fee.  The Borrower shall pay the
     Bank a $170,000 Waiver and Restructure Fee.  Such fee has been earned as of
     this date and shall be payable as follows:  (i) $20,000 shall be payable on
     April 30, 1999 and (ii) the balance of $150,000 (the "Deferred Fee") shall
     be payable on January 3, 2000, provided, however, that $50,000 of the
     Deferred Fee shall be waived if the Bank is paid $100,000 of such Deferred
     Fee prior to December 1, 1999.  Notwithstanding the foregoing, the entire
     Deferred Fee (i.e., $150,000) shall be immediately due and payable without
     notice upon the occurrence of an Event of Default.

     Section 5.  Amendment to Article III.  The following Sections 3.21 and 3.22
are added to the end of Article III.

     3.21 Tax Refund.  The Borrower will file with the Internal Revenue Service
on or before April 23, 1999 a tax return seeking a tax refund of approximately
$300,000 (the "Second Tax Refund").  The Borrower will receive the Second Tax
Refund on or before July 31, 1999.

     3.22 Projections and Perfection Certificate  The projections attached
hereto as Schedule 3.22 have been prepared by the Borrower in good faith and are
based on reasonable assumptions.  The Perfection Certificate delivered to the
Bank on the date hereof and the information contained therein is true and
correct in all respects.

     Section 6.  Amendment to Section 5.03.  Section 5.03 will be amended by
deleting section (h) in its entirety and adding the following sections:

               (h)  Projected cash flow statements for eight week periods on an
                    ongoing basis with actual results compared to the
                    projections delivered on the first Business Day of every
                    other week, commencing on May 3, 1999.

               (i)  Within fifteen days of each month end, a monthly collateral
                    analysis in form and substance acceptable to the Bank.

                                       5
<PAGE>

               (j)  Copies of all tax returns upon filing with the applicable
                    taxing authority.

               (k)  Other information as the Bank may request from time to time.

     Section 7.  Affirmative and Negative Covenant Amendments.  The following
sections of Article V and VI are amended as follows:

               (a)  Section 5.03(g) is hereby amended by deleting it in its
                    entirety and replacing it with the following:

                    [Intentionally Left Blank]

               (b)  Section 5.06 is hereby amended by deleting the last sentence
                    and replacing it with the following:

                    The Borrower shall continue to maintain the Trust Account
                    and pay all costs and expenses in connection therewith.  On
                    a daily basis, the Borrower shall transfer all of its cash
                    receipts (other than cash permitted to be retained by the
                    Borrower's Subsidiaries under Section 5.17 hereof) into the
                    Trust Account.  The Borrower authorizes the Bank to access
                    the Trust Account at any time and as often as it elects to
                    collect all or a portion of the funds in the Trust Account
                    and apply such funds to the Obligations in its discretion.

               (c)  Section 5.07 is hereby amended by adding the following
                    paragraph (v) at the end of the first sentence:

                    and (v) foreign credit insurance covering all foreign and
                    unaffiliated account debtors of the Borrower in form and
                    substance satisfactory to the Bank.

               (d)  Section 5.11 is hereby amended by deleting the last sentence
                    in its entirety and replacing it with the following:

                    The Borrower will file with the Internal Revenue a tax
                    return on or before April 23, 1999, seeking the Second Tax
                    Refund.  The Borrower shall pay (or direct the appropriate
                    taxing authority to pay) all of the proceeds of the Second
                    Tax Refund to the Bank as prepayment of the Loan and to
                    permanently reduce the Maximum Line Availability as
                    contemplated in the definition of Maximum Line Availability.

                                       6
<PAGE>

               (e)  Section 5.14 is hereby amended by deleting it in its
                    entirety and replacing it with the following:

                    The Borrower shall continue to engage Profit Management,
                    Inc., or other financial consultant acceptable to the Bank,
                    to review its operations and formulate a business plan to
                    raise additional capital, sell the Borrower or obtain
                    replacement capital or financing.

               (f)  Section 6.08 is amended by deleting the proviso in the fifth
                    line and replacing it with the following:

                    , provided, however, that so long as no default exists or
                    would result therefrom, the Borrower may make regularly
                    scheduled interest payments on any subordinated debt that
                    the Borrower may incur in compliance with Section 5.15
                    hereof, provided further, the interest rate per annum under
                    such subordinated debt does not exceed the Prime Rate plus
                    one percent (1%).

     Section 8.  The Maximum Line Availability shall be permanently reduced by
any proceeds received by the Borrower or Bank pursuant to Sections 2.01(g) or
5.16 hereof.

     Affirmative Covenants.  The following Affirmative Covenants shall be added
to the end of Article V of the Loan Agreement.

     Section 5.15. New Capital. On or before April 30, 1999, the Borrower will
obtain a minimum of $350,000 of capital in the form of equity issuance or
subordinated debt under terms and documentation acceptable to the Bank,
including without limitation, a subordination agreement.  Absent the existence
of a default under any of the Loan Documents, $300,000 of the proceeds of new
capital will be applied as a permanent reduction of the Maximum Line
Availability, otherwise all of such proceeds will be applied to the Obligations
at the Bank's discretion.

     Section 5.16. Additional Capital or Company Sale.  On or before October 31,
1999, the Borrower will provide the Bank with evidence satisfactory to the Bank
in the form of a binding commitment letter from a lender, investor, joint
venture or other Person of (i) $7,000,000 of additional capital to be received
by the Borrower on or before January 4, 2000 and will be used to permanently
reduce the Maximum Line Availability or (ii) provide the Bank with evidence
satisfactory to the Bank that the Company will be sold on or before January 4,
2000, and that such sale will generate sufficient net proceeds to pay off the
Obligations in full.

     Section 5.17.  Subsidiary Cash.  At any time the Borrower's Subsidiaries
(excluding HVVR, LLC) holds cash in excess of $150,000 in the aggregate
(excluding any cash such Subsidiaries must maintain in a Value Added Tax Account
or similar account under applicable

                                       7
<PAGE>

law, not to exceed $150,000 in the aggregate), such excess funds shall be
immediately transferred to the Trust Account. The Borrower and its Subsidiaries
shall not open any new bank accounts (other than accounts previously disclosed
to the Bank in writing prior to the date hereof) without the consent of the
Bank.

     Section 5.18.  Pledge of Future Subsidiaries.  Upon the creation or
acquisition of any new Subsidiary, the Borrower shall enter into a Pledge
Agreement to grant the Bank a lien and security interest in all capital stock of
such new Subsidiary and execute all other documents and instruments as the Bank
may request to evidence and perfect such pledge, including without limitation,
blank stock powers.

     Section 9.  Financial Covenants.  Sections 7.01 through 7.04 are deleted in
their entirety and replaced with the following Sections 7.01 and 7.02:

     Section 7.01.  Minimum Working Capital Ratio.  The Borrower will not permit
its Working Capital Ratio, for any of the fiscal months set forth below, to be
less than the respective amounts indicated for such fiscal months:

               FISCAL MONTH:           WORKING CAPITAL RATIO:

                   May 1999                1 to 0.95
                   June 1999               1 to 1.00
                   July 1999               1 to 0.94
                   August 1999             1 to 0.87
                   September 1999          1 to 0.92
                   October 1999            1 to 0.86
                   November 1999           1 to 0.78
                   December 1999           1 to 0.82


     Section 7.02.  Maximum Net Operating Loss.  The Borrower will not permit
its Net Operating Loss, for any of the fiscal periods set forth below, to be
more than the respective amounts indicated for such fiscal periods:

                  FISCAL PERIOD:  MAXIMUM NET OPERATING LOSS:

                  January 1, 1999 through
                  the end of May 1999                       $4,100,000
                  January 1, 1999 through
                  the end of June 1999                      $3,400,000
                  January 1, 1999 through
                  the end of July 1999                      $4,100,000
                  January 1, 1999 through
                  the end of August 1999                    $4,900,000
                  January 1, 1999 through
                  the end of September 1999                 $4,200,000
                  January 1, 1999 through
                  the end of October 1999                   $4,965,000
                  January 1, 1999 through
                  the end of November 1999                  $5,930,000
                  January 1, 1999 through
                  the end of December 1999                  $5,370,000

                                       8
<PAGE>

     Section 10.  Effectiveness; Conditions to Effectiveness.  This Amendment to
Loan Agreement shall become effective upon execution hereof by the Borrower and
the Bank and satisfaction of the following conditions:

          (a)  Copies of Resolutions of the Board of Directors of the Borrower
     and Subsidiaries (as necessary) authorizing the execution, delivery and
     performance of the Borrower under this Amendment to Loan Agreement (as well
     as ratifying the authorization of execution, delivery and performance of
     the Security Documents) certified by a Secretary or an Assistant Secretary
     of the Borrower which certificate shall state that the resolutions are in
     full force and effect.

          (b)  Certificate of the Secretary or Assistant Secretary of the
     Borrower and its Subsidiaries certifying the name and signatures of the
     officers of the Borrower authorized to sign this Amendment and other
     documents to be delivered in connection therewith as well as certifying and
     delivering certified articles of incorporation and by-laws.

          (c) Delivery to the Bank of the Goodlander Guaranty, Goodlander Note,
     Membership Pledge Agreement (with respect to HVVR, LLC) and post-closing
     letter agreement regarding items to be delivered post-closing.

          (d)  Confirmation of the existing unlimited guarantees of the
     Borrower's Subsidiaries' and the other Security Documents.

          (e)  Opinions of Borrower, Subsidiaries' and Ted Goodlander's counsel
     in form and substance satisfactory to the Bank.

          (f)  Long Form Good Standing Certificates for Borrower and its
     Subsidiaries.

          (g)  Insurance Certificate, in form and substance satisfactory to the
     Bank, together with evidence that the Borrower has obtained a foreign
     credit insurance policy in compliance with Section 5.07(v) hereof.

          (h)  Delivery to the Bank of the documents and instruments listed on
     Exhibit A hereto (November 16, 1998 missing documents).

                                       9
<PAGE>

          (i)  Delivery of collateral analysis of the Borrower satisfactory to
     the Bank.

          (j)  Delivery of fully-completed and executed Perfection Certificate
     in the form of Exhibit B hereto.

          (k)  Payment to the Bank of $20,000 of the Waiver and Restructure Fee.

          (l)  Such other documents or instruments as the Bank may request.

     Section 11.    Miscellaneous.

          (a)  The Borrower hereby confirms to the Bank that the representations
     and warranties of the Borrower set forth in Article III of the Loan
     Agreement (as amended and supplemented hereby) are true and correct as of
     the date hereof, as if set forth herein in full.

          (b)  The Borrower has reviewed the provisions of this Amendment and
     all documents executed in connection therewith or pursuant thereto or
     incident or collateral hereto or thereto from time to time and there is no
     Event of Default thereunder, and no condition which, with the passage of
     time or giving of notice or both, would constitute an Event of Default
     thereunder.

          (c)  The Borrower agrees that each of the Loan Documents shall remain
     in full force and effect after giving effect to this Agreement.  The
     granting of the liens and security interests under the Security Documents
     secure all the Obligations as may be amended by this Amendment.  The
     guarantees of the Borrower's Subsidiaries guarantee all of the Obligations
     as may be amended by this Amendment.

          (d)  This Amendment represents the entire agreement among the parties
     hereto relating to this Amendment, and supersedes all prior understandings
     and agreements among the parties relating to the subject matter of this
     Agreement.  The Borrower waives and releases any claims it may have
     against, and forever discharges, the Bank and its officers, directors,
     agents, attorneys, employees, successors and assigns (the "Releasees") from
     any claims and causes of action arising out of the transactions referred to
     or contemplated in any way by the Loan Documents, and this Amendment or
     otherwise, including without limitation, claims or defenses it may have to
     the effect that the Releasees may have in any way acted or failed to act in
     any manner as to cause injury to the Borrower or anyone claiming by or
     through them.

          (e)  The Borrower represents and warrants that neither the execution,
     delivery or performance by the Borrower of any of the obligations contained
     in this Amendment or in

                                       10
<PAGE>

     any Bank Document requires the consent, approval or authorization of any
     person or governmental authority or any action by or on account of with
     respect to any person or governmental authority.

          (f)  The Borrower agrees to pay on demand all of the Bank's reasonable
     expenses in preparing, executing and delivering this Agreement, and all
     related instruments and documents, including, without limitation, the
     reasonable fees and out-of-pocket expenses of the Bank's special counsel
     and all travel related expenses of the Bank in connection with any field
     audits or otherwise.  This Agreement shall be a Loan Document and shall be
     governed by and construed and enforced under the laws of the Commonwealth
     of Massachusetts.

          (g)  The Bank agrees that upon satisfaction in full, in cash of the
     Obligations as determined by the Bank, the Bank shall return to the
     Borrower any collateral or other property of the Borrower, at the
     Borrower's expense.



     IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Loan
Agreement under seal as of the date first written above.

                              STORAGE COMPUTER CORPORATION



                             By: /s/ Theodore Goodlander
                                 --------------------------------
                                 Name:  Theodore Goodlander
                                 Title:  President


                              STATE STREET BANK AND TRUST COMPANY



                             By: /s/ Kenneth Mooney
                                 --------------------------------
                                 Name:  Kenneth Mooney
                                 Title:  Vice President

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