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                                                                    Exhibit 10.9


                      THIRD AMENDMENT TO SECOND AMENDED AND
                      -------------------------------------
                             RESTATED LOAN AGREEMENT
                             -----------------------


     THIS THIRD AMENDMENT TO LOAN AGREEMENT is made as of this __ day of
October, 1999, by and between STORAGE COMPUTER CORPORATION, a Delaware
corporation (the "Borrower") and CITIZENS BANK OF MASSACHUSETTS (successor in
interest to State Street Bank and Trust Company), a Massachusetts chartered
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 as amended by the First
Amendment to Second Amended and Restated Loan Agreement dated as of April 30,
1998 and Second Amendment to Second Amended and Restated Loan Agreement dated as
of July 1, 1999 (collectively, 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 are hereby
acknowledged, the parties hereby amend the Loan Agreement as follows:

     Section
AMENDMENT OF SECTION 1.01. Section 1.01 of the Loan Agreement is hereby amended
as follows:

                    (a)  the definition of "Line of Credit" contained in Section
                         1.01 of the Loan Agreement is amended by deleting the
                         reference to "Eight Million Seven Hundred Thousand
                         Dollars ($8,700,000)" and replacing it with "Seven
                         Million Four Hundred Thousand Dollars ($7,400,000)".

                    (b)  the definition of "Maturity Date" contained in Section
                         1.01 of the Loan Agreement is hereby amended by
                         deleting the reference to "January 4, 2000" and
                         replacing it with the following: "the following,
                         whichever is applicable: (i) January 4, 2000, (ii)
                         Sixth Month Extension Date, to the extent the Borrower
                         has complied with Section 2.11(A), or (iii) One Year
                         Extension Date, to the extent the Borrower has complied
                         with Section 2.11(B)"

                    (c)  the definition of "Maximum Line Availability" contained
                         in Section 1.01 of the Loan Agreement is deleted in its
                         entirety and


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                         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:

<TABLE>
<CAPTION>
                           Period                                       Maximum Line Availability
                           ------                                       -------------------------

<S>                                                                     <C>
                  October 1, 1999 through January 2, 2000                       $7,400,000

                  January 3, 2000 up to the Maturity Date                       $6,800,000

                  Maturity Date                                                         0
</TABLE>

                    PROVIDED, HOWEVER, (i) the Maximum Line Availability shall
                    be permanently reduced to $5,995,000 or $4,250,000
                    respectively, to the extent the Borrower has complied with
                    Sections 2.11(A) or 2.11(B) hereof 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" contained in Section
                         1.01 of the Loan Agreement is hereby amended by adding
                         "Warrants", after the term "Pledge Agreement" in the
                         fifth line.

                    (e)  the definition of "Note" contained in Section 1.01 of
                         the Loan Agreement is deleted in its entirety and
                         replaced with the following:

                         "Note" shall mean the secured Fourth Amended and
                         Restated Line of Credit Note in the maximum principal
                         amount of $7,400,000 dated October __, 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 to Section
                         1.01 of the Loan Agreement in the appropriate
                         alphabetical order:

                         "Extension Warrant" shall mean the Warrant attached
                         hereto as EXHIBIT H.

                         "Initial Warrant" shall mean the Warrant attached
                         hereto as EXHIBIT G.


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                         "One Year Extension Date" shall have the meaning set
                         forth in Section 2.11(B).

                         "Sixth Month Extension Date" shall have the meaning set
                         forth in Section 2.11(A).

                         "Warrants" shall mean the Initial Warrant and Extension
                         Warrant.

                         "Working Capital" shall mean current assets (excluding
                         accounts or notes receivable from affiliates) of the
                         Borrower and its Subsidiaries less current liabilities
                         of the Borrower and its Subsidiaries, all as determined
                         on a consolidated basis in accordance with generally
                         accepted accounting principles in the United States of
                         America in effect from time to time.

1.        Section AMENDMENT OF ARTICLE II. Article II of the Loan Agreement
               is hereby amended as follows:

                    (a)  The last sentence of Section 2.01(g)(iii) of the Loan
                         Agreement is deleted in its entirety and replaced with
                         the following:

                              Within one Business Day after the receipt of Net
                              Equity Proceeds by the Borrower or any of its
                              Subsidiaries, the Borrower shall make a prepayment
                              of the Loan (to be applied as a permanent
                              reduction of the Maximum Line Availability) in an
                              amount equal to the sum of (i) 100% of all Net
                              Equity Proceeds that are received by the Borrower
                              or any of its Subsidiaries after the date hereof
                              and that are in excess of $1,405,000 but less than
                              $4,500,000, plus (ii) 50% of all Net Equity
                              Proceeds that are received by the Borrower or any
                              of its Subsidiaries after the date hereof and that
                              are in excess of $4,499,999. It is understood by
                              the parties hereto that all Net Equity Proceeds
                              that are received by the Borrower or any of its
                              Subsidiaries after the date hereof, and that the
                              Borrower is not required to prepay to the Bank, as
                              provided in the immediately preceding sentence of
                              this Section 2.01(g)(iii), may be retained and
                              used by the Borrower and/or its Subsidiaries as
                              working capital.

                    (b)  Section 2.10 of the Loan Agreement is deleted in its
                         entirety and replaced with the following Sections 2.10,
                         2.11 and 2.12.

          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


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     shall be payable as follows: (i) $20,000 to be paid on July 1, 1999 and
     (ii) the balance of $150,000 (the "Deferred Fee") shall be payable on the
     Maturity Date as the same may be extended from time to time, as provided in
     Section 2.11, provided, however, that $25,000 of the Deferred Fee shall be
     waived if the Bank is paid $125,000 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 2.11. MATURITY DATE EXTENSION.

          (A) To the extent that on or before December 15, 1999, (i) the
     Borrower delivers a written request to the Bank to extend the Maturity
     Date, (ii) the Borrower is in compliance with all terms and conditions of
     the Loan Documents on the date of such request, (iii) the Borrower delivers
     to the Bank a certificate satisfactory to the Bank certifying such
     compliance and (iv) the Maximum Line of Availability has been permanently
     paid down and reduced to less than $5,995,000, the Maturity Date shall be
     extended to June 30, 2000 (the "Sixth Month Extension Date"), as provided
     for in the definition of "Maturity Date".

          (B) To the extent that on or before December 15, 1999, (i) the
     Borrower delivers a written request to the Bank to extend the Maturity
     Date, (ii) the Borrower is in compliance with all terms and conditions of
     the Loan Documents on the date of such request, (iii) the Borrower delivers
     to the Bank a certificate satisfactory to the Bank certifying such
     compliance and (iv) the Maximum Line of Availability has been permanently
     paid down and reduced to less than $4,250,000, the Maturity Date shall be
     extended to January 5, 2001 (the "One Year Extension Date"), as provided
     for in the definition of "Maturity Date".

          SECTION 2.12. WARRANTS. On or before October __, 1999, the Borrower
     agrees to execute and deliver to the Bank, or its nominee, the Warrants.

     Section 3.     AFFIRMATIVE COVENANTS. Article V of the Loan Agreement is
                    hereby amended by deleting Sections 5.15 and 5.16 in their
                    entirety and replacing them with the following:

          SECTION 5.15 [ INTENTIONALLY LEFT BLANK ]

          SECTION 5.16. ADDITIONAL CAPITAL OR COMPANY SALE. In the event the
     Maturity Date is not extended pursuant to Sections 2.11(A) or 2.11(B), on
     or before December 16, 1999, the Borrower will provide evidence
     satisfactory to the Bank that the Borrower (either through an asset sale or
     stock sale) will be sold on or before January 4, 2004, and that such sale
     will generate sufficient net proceeds to pay off the Obligations in full.
     (i) On or before March 31, 2000 (in the event the Maturity Date is extended
     to June 30, 2000 (i.e. the Sixth Month Maturity Date), pursuant to Section
     2.11(A)), or (ii) on or before August 31, 2000 (in the event the Maturity
     Date is


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     extended to January 5, 2001 (i.e. the One Year Extension Date) pursuant to
     Section 2.11(B)), the Borrower will provide the Bank evidence satisfactory
     to the Bank that the Borrower (either through an asset sale or stock sale)
     will be sold on or before the applicable Maturity Date, and that such sale
     will generate sufficient net proceeds to pay off the Obligations in full.

     Section 4.     FINANCIAL COVENANTS. Sections 7.01 and 7.02 of the Loan
                    Agreement are deleted in their entirety and replaced with
                    the following:

          SECTION 7.01. MINIMUM WORKING CAPITAL RATIO.

          (A)  Until the Maturity Date has been extended pursuant to Sections
     2.11(A) or 2.11(B) hereof, the Borrower will not permit the Working Capital
     Ratio, for any of the fiscal months set forth below, to be less than the
     respective ratio indicated for such fiscal months:

<TABLE>
<CAPTION>
                     FISCAL MONTH:                                           WORKING CAPITAL RATIO:

<S>                                                                          <C>
                    September 1999                                                  1 to 0.92
                    October 1999                                                    1 to 0.86
                    November 1999                                                   1 to 0.78
                    December 1999                                                   1 to 0.82
</TABLE>

          (B)  Upon extension of the Maturity Date pursuant to Sections 2.11(A)
     or 2.11(B) hereof, the Borrower will not permit the Working Capital to be
     less than the respective amounts indicated for such fiscal months:

<TABLE>
<CAPTION>
                  FISCAL MONTH:                                              AMOUNT:

<S>                                                                        <C>
                    December, 1999                                         $5,400,000
                     January, 2000                                         $4,700,000
                    February, 2000                                         $3,900,000
                      March, 2000                                          $3,200,000
              April, 2000 and Thereafter                                   $3,000,000
</TABLE>

          (C)  Upon extension of the Maturity Date pursuant to Sections 2.11(A)
     or 2.11(B) hereof, the Borrower shall maintain at all times (a) cash and
     cash equivalents of at least $1,500,000 or (b) $1,500,000 of the unused
     availability of the Maximum Line Availability.

          SECTION 7.02. MAXIMUM NET OPERATING LOSS. Until the Maturity Date has
     been extended pursuant to Sections 2.11(A) or 2.11(B) hereof, 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:

<TABLE>
<CAPTION>
                        FISCAL PERIOD:                                 MAXIMUM NET OPERATING LOSS:
<S>                                                                    <C>
</TABLE>


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<TABLE>
<CAPTION>
<S>                                                                    <C>
                    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
</TABLE>

     Section 5.     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 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 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 Amended and Restated Revolving
                         Credit Note, this Amendment and Warrants (and any
                         related amendments to any stockholders agreement as the
                         Bank deems necessary).


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

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

                    (f)  Long Form Good Standing Certificates for Borrower.


     Section 6.     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 except
                         otherwise set forth in Section 6(i) below, 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 Amendment. 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 Amendment. 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 "Releases") 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 Releases may have in any
                         way acted or failed to act in any manner as to cause
                         injury to


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                         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 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 Amendment, 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 Amendment 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.

                    (h)  The Borrower and Bank agree that Exhibits G and H
                         attached to this Amendment shall be Exhibits to the
                         Loan Agreement.

                    (i)  The parties hereto acknowledge and agree that the
                         Borrower has failed to deliver to the Bank certain
                         documents and items set forth in that post-closing
                         letter, dated April 30, 1999 (as the same may have been
                         amended, restated, modified or modified from time to
                         time, the "Post-Closing Letter Agreement"), by and
                         between the Borrower and the Lender. The Bank hereby
                         (a) acknowledges and agrees that all of the obligations
                         and liabilities of the Borrower under the Post-Closing
                         Agreement are terminated, and notwithstanding any
                         provision contained in any of the Loan Documents to the
                         contrary, neither the Borrower nor any of its
                         Subsidiaries shall have any further obligation to
                         deliver to the Bank those items set forth in the
                         Post-Closing Letter which as of the date hereof, have
                         not been so delivered to the Bank; and (b) waives any
                         default or Event of Default under the Loan Documents
                         which has occurred or may have occurred as a result of
                         the failure of the Borrower or any of its Subsidiaries
                         to deliver such items to the Bank.


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                           [INTENTIONALLY LEFT BLANK]


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     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 J. Goodlander
                                               --------------------------
                                               Name:  Theodore J. Goodlander
                                               Title: President


                                           CITIZENS BANK OF MASSACHUSETTS
                                           (as successor in interest to State
                                             Street Bank and Trust Company)


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


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