Document:

Second Amendment to Participation Agreement

Exhibit 10.8

 

SECOND AMENDMENT

TO

PARTICIPATION AGREEMENT

          THIS SECOND AMENDMENT TO PARTICIPATION AGREEMENT dated as of December 17, 2002 (this "Amendment") is dated as of July 21, 2003, by and among QUANTUM CORPORATION,
a Delaware corporation, as Lessee (together with its permitted successors and assigns, the "Lessee"); SELCO SERVICE CORPORATION, an Ohio corporation, as Lessor (together with its permitted successors and assigns, the "Lessor"); COMERICA BANK-CALIFORNIA, FLEET
NATIONAL BANK and KEYBANK NATIONAL ASSOCIATION as Participants (together with their permitted successors and assigns and SELCO SERVICE CORPORATION, in its capacity as a Participant, each a "Participant" and collectively the "Participants"); and KEYBANK NATIONAL
ASSOCIATION (in such capacity, together with its successors in such capacity, the "Agent") for the Participants.

RECITALS

          A.    Lessee, Lessor, Agent and Participants are parties to a Participation Agreement dated as of December 17, 2002, as amended by a First
Amendment to Participation Agreement (together, the "Participation Agreement").

          B.    Lessee has requested that the Lessor, Agent and Participants amend the Participation Agreement and certain other of the Operative Documents,
and Lessor, Agent and Participants have agreed, subject to satisfaction of the conditions set forth herein, to add or modify certain definitions and to modify certain covenants of Lessee to:  (i) permit an increase in the principal amount of Subordinated Debt of
Lessee that may be outstanding for a period of time as specified herein in order to allow Lessee 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 Lessee to use up to $50,000,000 of cash to redeem
existing 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 Lessee’s minimum Consolidated EBITDA requirement for the fiscal quarters ending June 29, 2003 and September 30, 2003; and (iv) modify the calculation of
Lessee’s Consolidated EBITDA for Lessee’s fiscal quarters ending September 30, 2003, December 31, 2003 and March 31, 2004 to permit Lessee 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.

          C.    Each capitalized term used but not otherwise defined herein shall have the meaning ascribed thereto in Appendix 1 to the Participation
Agreement, as amended by this Amendment.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1

AMENDMENTS TO PARTICIPATION AGREEMENT

          This Amendment shall be deemed to be an amendment to the Participation 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 Participation Agreement as if such terms and provisions were set forth in full therein.

          1.1    Section 10.2(a)(iv) of the Participation Agreement is amended and restated in its entirety as follows:

                 “(iv)       Indebtedness of Lessee under the Convertible Subordinated Debentures and the
New Convertible Subordinated Notes;”

          1.2    Section 10.2(a)(x) of the Participation Agreement is amended and restated in its entirety as follows:

	
          

	
          "(x)        Subordinated Indebtedness of Lessee to any Person, provided that (A) such Indebtedness contains subordination
provisions no less favorable to Agent and the Participants than those set forth in Exhibit O or as otherwise approved by the Required Participants and (B) the aggregate principal amount of all Subordinated Debt of Lessee 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"

	

          1.3    Section 10.2(j) of the Participation Agreement is amended and restated in its entirety as follows:

	
          

	
           (j)      Certain Indebtedness Payments, Etc.  Neither Lessee 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 10.2(j); 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 Agent and the Participants than those set forth on Exhibit O, (iii) increase the interest rate applicable thereto, or (iv) accelerate the scheduled payment thereof. 
Lessee 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 Lessee under the Operative Documents shall at all times constitute “Designated Senior Indebtedness” under both such indentures).  Notwithstanding the
foregoing, Lessee at any time:

	
          

	
      

	
 

	
 

	
2.

		
           (1)     conduct an exchange offer (whether public, private or on a 3(a)(9) basis) of all or part of the Lessee’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 Lessee under the Operative 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 Lessee 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 Lessee's Subordinated Debt shall not be increased by means of any exchange of the New Securities for all or part of the
Lessee’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 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) in accordance with the Redemption Notice, Lessee 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 10.02(j).

	
	
 

	
 

	
		
          No exchange or series of exchanges of New Securities or Maxtor Securities for all or any part of Lessee’s Convertible Subordinated Debentures pursuant to this
Section 10.2(j) 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 Lessee's Convertible
Subordinated Debentures are reduced by means of such exchange or series of exchanges.  Notwithstanding any provision of this Section 10.2(j) to the contrary, Lessee may (A) convert, or honor a conversion request with respect to, any such Subordinated Debt into
Equity Securities of Lessee 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.

	

3.

          1.4    Section 10.2(k)(iv) of the Participation Agreement is amended and restated in its entirety as follows:

	
          

	
          "(iv)     Minimum Consolidated EBITDA.  Permit Consolidated EBITDA, determined as of the last day of any fiscal quarter of Lessee
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
Lessee’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 Lessee’s Consolidated Net Income an amount equal to the actual restructuring charges
incurred by Lessee 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 Lessee’s
Consolidated Net Income for Lessee’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 Lessee’s Consolidated Net Income for the Lessee’s fiscal
quarters ending September 30, 2003, December 31, 2003 and March 31, 2004 shall not exceed $10,000,000 in the aggregate."

	
          

          1.5    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 L to the Participation Agreement.

          1.6    Section 17.1 of the Lease is amended to incorporate the following as a "Lease Event of Default":

	
          

	
          "(q)     Maxtor fails to pay to Lessee on or before August 1, 2004 all amounts owing pursuant to that certain Reimbursement Agreement between
Borrower and Maxtor dated as of April 2, 2001.”

	
          

4.

          1.7    The following definitions are added to Appendix 1 to the Participation Agreement:

	
          

	
          ""New Convertible Subordinated Notes" means subordinated, convertible notes to be issued by the Lessee 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 Lessee under the Participation Agreement
and other Operative Documents at least to the same extent as the existing Convertible Subordinated Debentures and containing subordination provisions no less favorable to Agent and Participants than those set forth in Exhibit O or as otherwise approved by
the Required Participants; (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 the New Convertible Subordinated Notes are offered for sale."

	
	
 

	
 

	
		
          ""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.

	

          1.8    The definitions of "Investment" and "Subordinated Debt" contained in Appendix 1 to the Participation 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 10.2(j) of the Participation Agreement."

	
          

	
 

	
 

	
 

		
          ""Subordinated Debt" means the Convertible Subordinated Debentures, the New Convertible Subordinated Notes and any other subordinated debt permitted by
clause (x) of Section 10.2(a) of the Participation 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 the following conditions precedent:

                  (a)    This Amendment duly executed by the Lessee, the Lessor, the Required Participants and the
Agent;

                  (b)    A Second Amendment to the Lease in the form of Attachment 2, duly executed by Lessor and
Lessee and notarized for recording,

                  (c)    A Second Amendment to the Deed of Trust in the form of Attachment 3, duly executed by
Lessor and Agent and notarized for recording;

                  (d)    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 Lessee to enter into this Amendment; and

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

          2.2    In addition, within a reasonable time period not to exceed thirty (30) days after recordation of the amendments described in 2.1(b) and
2.2(c), Lessee shall deliver to the Agent, the Lessor and the Participants (a) such endorsements as the Lessor and the Agent may reasonably request to each of the (i) ALTA owner's title insurance policy issued in connection with the closing of the Participation
Agreement, and (ii) ALTA lender's title insurance policy issued in connection with the closing of the Participation Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

          Lessee hereby represents and warrants to Lessor, Agent and the Participants that:

          3.1    After giving effect to the amendment of the Participation Agreement pursuant to this Amendment and the consummation of the transactions
contemplated hereby (i) each of the representations and warranties set forth in Section 8.3 of the Participation Agreement and in the other Operative Documents are 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 Participation Agreement being deemed to include this Amendment), and (ii) there
exists no Lease Event of Default or Potential Lease Default under the Operative Documents after giving effect to this Amendment.

          3.2    Lessee has the corporate power and authority and legal right to make, deliver the amendments described herein, and to perform the
obligations of its part to be performed under the Participation Agreement as amended hereby and the amendments described herein.  Lessee has taken all necessary action to authorize the execution, delivery and performance of this Amendment and the amendments
described herein.  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 amendments
described herein or the performance by Lessee of the Participation Agreement as amended hereby.

          3.3    This Amendment and the Participation Agreement as amended hereby are, or upon delivery thereof to Agent will be, the legal, valid and
binding obligations of Lessee, enforceable against Lessee 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 Participation Agreement, the other Operative 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 Participation Agreement and the other Operative Documents shall
remain in full force and effect in accordance with their respective terms.

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

          4.3    This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which shall together
constitute one and the same instrument.

          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 Lessee

By:  /s/ Mary
Springer                               

 Name: Mary Springer

 Title:  Treasurer

 

KEYBANK NATIONAL ASSOCIATION, as Agent

By:  /s/ Robert W. Boswell                          

 Name: Robert W. Boswell

 Title:  Vice President

 

KEYBANK NATIONAL ASSOCIATION, as Participant

By:  /s/ Robert W. Boswell                          

 Name: Robert W. Boswell

 Title:  Vice President

 

FLEET NATIONAL BANK, as Participant

By:  /s/ Greg
Roux                                   

 Name: Greg Roux

 Title:  Managing Director

 

SELCO SERVICE CORPORATION, as Lessor

By:  /s/ Donald C. Davis                            

 Name: Donald C. Davis

 Title:  Vice President

 

SELCO SERVICE CORPORATION, as Participant

By:  /s/ Donald C. Davis                            

 Name: Donald C. Davis

 Title:  Vice President

 

COMERICA BANK-CALIFORNIA, as Participant

By:  /s/ Rob
Ways                                  

 Name: Rob Ways

 Title:  Vice President

7.

 

ATTACHMENT 1

FORM OF SECOND AMENDMENT TO LEASE AGREEMENT

Prepared by and upon recording return to:

Timothy N. Brown, Esq.

Reed Smith Crosby Heafey LLP

Two Embarcadero Center, Suite 2000

San Francisco, California 94111

SECOND AMENDMENT TO MASTER LEASE, DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING

          THIS SECOND AMENDMENT TO MASTER LEASE, DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Amendment") dated as
of July ___, 2003, is entered into by and between SELCO SERVICE CORPORATION, an Ohio Corporation (the "Lessor") and QUANTUM CORPORATION, a Delaware corporation (the "Lessee").

RECITALS

          A.    The Lessor, Lessee, Keybank National Association, as Agent (in such capacity, the "Agent"), and the financial institutions from time to time
parties thereto (the "Participants") are parties to the Participation Agreement, dated as of December 17, 2002 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement").

          B.    Pursuant to the Participation Agreement, the Lessor and the Lessee executed a Master Lease, Deed of Trust with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing ("Lease"), dated December 17, 2002, affecting certain real property located in El Paso County, Colorado, described in Schedule 1 to the Lease.  The Lease was recorded on December 23, 2002, in the Official Records
of El Paso County, Colorado, as Document Number 202228819.

          C.    The Lessee now has requested the Lessor, the Participants and the Agent to amend the Participation Agreement in certain respects.

          D.    Pursuant to the Second Amendment to Participation Agreement dated as of the date hereof ("Second Amendment to Participation Agreement")
among the Lessor, Lessee, the Required Participants and Agent, the parties thereto have agreed to amend the Participation Agreement upon the terms and subject to the conditions set forth therein, including without limitation, the execution, delivery and recordation
of this Amendment.

1.

AGREEMENT

          1.      Definitions.  All capitalized terms not otherwise defined in this Amendment shall have the respective meanings given to
those terms in Appendix 1 to the Lease, as amended by this Amendment.

          2.      Amendments to the Lease.

                  2.1     The following definitions are added to Appendix 1 to the Participation
Agreement:

                  ""New Convertible Subordinated Notes" means subordinated, convertible notes to be issued by the Lessee 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 note in excess of 5% per annum; (c) subordinated in right of payment to the
obligations of Lessee under the Participation Agreement and other Operative Documents at least to the same extent as the existing Convertible Subordinated Debentures and containing subordination provisions no less favorable to Agent and Participants than those set
forth in Exhibit O or as otherwise approved by Required Participants; (d) having a Maturity Date that is no earlier than the Business Day next following the maturity date of Lessee's existing Convertible Subordinated Debentures after the date of issuance;
and (e) permitting no amortization of the principal amount of the obligations represented thereby prior to the maturity of Lessee's existing Convertible Subordinated Debentures."

                  ""Refunding Period" means a period of sixty (60) days commencing with the first day the New Convertible
Subordinated Notes are offered for sale."

""Refunding Proceeds" means all of the proceeds of the issuance of the New Convertible Subordinated Debentures net of the costs and fees paid to third parties in connection with issuance of the New Convertible
Subordinated Notes."

                  2.2     The definitions of "Investments" and "Subordinated Debt" contained in Appendix 1 to the
Participation 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 10.2(j) of the Participation Agreement."

                  ""Subordinated Debt" means the Convertible Subordinated Debentures, the New Convertible Subordinated Notes and
any other subordinated debt permitted by clause (x) of Section 10.2(a) of the Participation Agreement."

                  2.3     Section 17.1 of the Lease is amended to incorporate the following as a "Lease Event of
Default":

                  "(q)  Maxtor fails to pay to Lessee on or before August 1, 2004 all amounts owing pursuant to that certain
Reimbursement Agreement between Borrower and Maxtor dated as of April 2, 2001.”

2.

                  3.      Effective Date.  This Amendment shall become effective on the date of
satisfaction of the conditions set forth in Section 2.1 of the Second Amendment to Participation Agreement (the "Effective Date").

                  4.      Effect of this Amendment.  On and after the Effective Date, each
reference in the Lease and the other Operative Documents to the Lease shall mean the Lease as amended hereby.  Except as specifically amended above, (a) the Lease shall remain in full force and effect, and (ii) the execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, alter or affect any provision, condition, or covenant contained in the Lease or the other Operative Documents or affect or impair any rights, powers, or remedies of the Lessor, Agent or the
Participants.

                  5.      Counterparts.  This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall together constitute one and the same instrument.

 

                  IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be duly executed by an officer thereunto
duly authorized as of the date and year first above written.

	
                                                                                               

	
LESSOR:

SELCO SERVICE CORPORATION, as Lessor

By:  /s/ Paula
Oswald                                 

 Name: Paula Oswald

 Title:  Vice President

 

LESSEE:

SELCO SERVICE CORPORATION, as Lessee

By:  /s/ Paula
Oswald                                 

 Name: Paula Oswald

 Title:  Vice President

3.

ATTACHMENT 2

FORM OF SECOND AMENDMENT TO DEED OF TRUST

Prepared by and upon recording return to:

Timothy N. Brown, Esq.

Reed Smith Crosby Heafey LLP

Two Embarcadero Center, Suite 2000

San Francisco, California 94111

SECOND AMENDMENT TO DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

          THIS SECOND AMENDMENT TO DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (this "Amendment") dated as of July _____, 2003, is entered into by and between SELCO
SERVICE CORPORATION, an Ohio Corporation (the "Grantor") and KEYBANK NATIONAL ASSOCIATION, as Agent (in such capacity, the "Beneficiary").

RECITALS

          A.      The Grantor, Quantum Corporation (the "Lessee"), Keybank National Association, as Agent (in such capacity, the "Agent"), and the
financial institutions from time to time parties thereto (the "Participants") are parties to the Participation Agreement, dated as of December 17, 2002 (as amended, supplemented or otherwise modified from time to time, the "Participation Agreement").

          B.      Pursuant to the Participation Agreement, the Grantor executed a Deed of Trust, Security Agreement and Fixture Filing ("Deed of
Trust") in favor of Agent as Beneficiary, dated December 17, 2002, affecting the fee interest of Grantor in certain real property located in El Paso County, Colorado, described in Exhibit A to the Deed of Trust.  The Deed of Trust was recorded on December 23,
2002, in the Official Records of El Paso County, Colorado, as Document Number 202228823.

          C.      The Lessee now has requested the Grantor, the Participants and the Agent to amend the Participation Agreement in certain
respects.

          D.      Pursuant to the Second Amendment to Participation Agreement dated as of the date hereof ("Second Amendment to Participation
Agreement") among the Grantor, Lessee, the Required Participants and Agent, the parties thereto have agreed to amend the Participation Agreement upon the terms and subject to the conditions set forth therein, including without limitation, the execution, delivery and
recordation of this Amendment.

AGREEMENT

          1.      Definitions.  All capitalized terms not otherwise defined in this Amendment shall have the respective meanings given to
those terms in Appendix 1 to the Deed of Trust, as amended by this Amendment.

1.

          2.      Amendments to the Mortgage. 

                  2.1     The following definitions are added to Appendix 1 to the Participation
Agreement:

                  ""New Convertible Subordinated Notes" means subordinated, convertible notes to be issued by the Lessee 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 note in excess of 5% per annum; (c) subordinated in right of payment to the
obligations of Lessee under the Participation Agreement and other Operative Documents at least to the same extent as the existing Convertible Subordinated Debentures and containing subordination provisions no less favorable to Agent and Participants than those set
forth in Exhibit O or as otherwise approved by Required Participants; (d) having a Maturity Date that is no earlier than the Business Day next following the maturity date of Lessee's existing Convertible Subordinated Debentures after the date of issuance;
and (e) permitting no amortization of the principal amount of the obligations represented thereby prior to the maturity of Lessee's existing Convertible Subordinated Debentures."

                  ""Refunding Period" means a period of sixty (60) days commencing with the first day the New Convertible
Subordinated Notes are offered for sale."

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

                  2.2     The definitions of "Investment" and "Subordinated Debt" contained in Appendix 1 to the
Participation 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 10.2(j) of the Participation Agreement."

                  ""Subordinated Debt" means the Convertible Subordinated Debentures, the New Convertible Subordinated Notes and
any other subordinated debt permitted by clause (x) of Section 10.2(a) of the Participation Agreement."

                  3.      Effective Date.  This Amendment shall become effective on the date of
satisfaction of the conditions set forth in Section 2.1 of the Second Amendment to Participation Agreement ("Effective Date").

                  4.      Effect of this Amendment.  On and after the Effective Date, each
reference in the Deed of Trust and the other Operative Documents to the Deed of Trust or Mortgage shall mean the Deed of Trust as amended hereby.  Except as specifically amended above, (a) the Deed of Trust shall remain in full force and effect, and (ii) the
execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, alter or affect any provision, condition, or covenant contained in the Deed of Trust or the other Operative Documents or affect or impair any rights, powers, or
remedies of the Lessor, Agent or the Participants.

                  5.      Counterparts.  This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall together constitute one and the same instrument.

2.

                  IN WITNESS WHEREOF, the undersigned has caused this Amendment to be duly executed and delivered as of the date first
above written.

	
                                                                                               

	
GRANTOR:

SELCO SERVICE CORPORATION, as Grantor

By:  /s/ Paula
Oswald                                 

 Name: Paula Oswald

 Title:  Vice President

 

BENEFICIARY:

KEYBANK NATIONAL ASSOCIATION, as Agent

By:  /s/ Paula
Oswald                                 

 Name: Paula Oswald

 Title:  Vice President

3.Second Amendment to Credit Agreement

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

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