SECOND AMENDMENT TO CREDIT AGREEMENT

EXHIBIT 10.4

SECOND AMENDMENT TO CREDIT AGREEMENT

     THIS AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of September 14, 2006, by and between DOT HILL SYSTEMS CORP., a Delaware corporation (“Borrower”), and XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

     WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of that certain Credit Agreement between Borrower and Bank dated as of July 1, 2004, as amended from time to time (“Credit Agreement”).

     WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set forth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect said changes.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:

     1. Section 5.4. is hereby deleted in its entirety, and the following substituted therefor:

     “SECTION 5.4. CAPITAL EXPENDITURES. Make any additional investment in fixed assets in any fiscal year in excess of an aggregate of $10,000,000.00.”

     2. Except as specifically provided herein, all terms and conditions of the Credit Agreement remain in full force and effect, without waiver or modification. All terms defined in the Credit Agreement shall have the same meaning when used in this Amendment. This Amendment and the Credit Agreement shall be read together, as one document.

     3. Borrower hereby remakes all representations and warranties contained in the Credit Agreement and reaffirms all covenants set forth therein. Borrower further certifies that as of the date of this Amendment there exists no Event of Default as defined in the Credit Agreement, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default.

1.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above.

				XXXXX FARGO BANK,
DOT HILL SYSTEMS CORP.				NATIONAL ASSOCIATION
By:		/s/ Xxxx Xxxxxxxxxxx		By:		/s/ Xxxxx X. Xxxxxxxx
		Xxxx Xxxxxxxxxxx				Xxxxx X. Xxxxxxxx
		Chief Executive Officer				Vice President
By:		/s/ Xxxx Xxxxx
		Xxxx Xxxxx
		Chief Financial Officer

2.