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                                                                     EXHIBIT 4.3

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                      ZERO COUPON CONVERTIBLE SUBORDINATED
                               DEBENTURES DUE 2018

                       WESTERN DIGITAL CORPORATION, ISSUER

                          FIRST SUPPLEMENTAL INDENTURE

                            DATED AS OF APRIL 6, 2001

        STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., TRUSTEE

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                          FIRST SUPPLEMENTAL INDENTURE

        This FIRST SUPPLEMENTAL INDENTURE, dated as of April 6, 2001, by and
among WESTERN DIGITAL TECHNOLOGIES, INC. (formerly, WESTERN DIGITAL
CORPORATION), a Delaware corporation (the "Company"), WESTERN DIGITAL
CORPORATION (formerly WESTERN DIGITAL HOLDINGS, INC.), a Delaware corporation,
of which the Company is a wholly-owned subsidiary pursuant to the Merger (as
defined below) ("Holdings"), and STATE STREET BANK and TRUST COMPANY of
CALIFORNIA, N.A., a national banking association organized and existing under
the laws of the United States of America (the "Trustee").

                                 R E C I T A L S

        A.     The Company and the Trustee entered into an indenture, dated as
of February 18, 1998 (such indenture, as supplemented by this First Supplemental
Indenture, and as further supplemented or amended in accordance with its terms,
herein the "Indenture"), providing for the issuance by the Company of Zero
Coupon Convertible Subordinated Debentures due 2018 (the "Securities").

        B.     Contemporaneous with the execution hereof, the Company, Holdings
and WD Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of
Holdings ("Merger Sub"), entered into an Agreement and Plan of Merger to Form
Holding Company, dated April 6, 2001 (the "Merger Agreement"), pursuant to which
(i) Merger Sub merged into the Company, (ii) all of the Company's outstanding
capital stock was converted on a share for share basis into capital stock of
Holdings, (iii) the stockholders of the Company became stockholders of Holdings,
and (iv) the Company became a wholly-owned subsidiary of Holdings (the
"Merger").

        C.     In connection with the consummation of the Merger, and pursuant
to the Merger Agreement, the Company changed its name to "Western Digital
Technologies, Inc." and Holdings changed its name to "Western Digital
Corporation."

        D.     Section 11.14 of the Indenture provides, among other things, that
upon the occurrence of any consolidation, merger or combination of the Company
with another corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets with respect
to or in exchange for such Common Stock, then the Company or the successor
corporation shall execute with the Trustee a supplemental indenture, providing
that each Security shall be convertible into the kind and amount of shares of
stock and other securities or property or assets receivable upon such
consolidation, merger or combination by a holder of a number of shares of Common
Stock issuable upon conversion of such Security immediately prior to such
consolidation, merger or combination.

        E.     Pursuant to Section 11.14 of the Indenture, upon consummation of
the transactions contemplated by the Merger Agreement, each Security became
convertible into the common stock of Holdings, $0.01 par value per share, and
all of the adjustment provisions set forth in Article 11 of the Indenture became
applicable to the common stock of Holdings.

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        F.     Section 9.01 of the Indenture provides, among other things, that
the Company and the Trustee can amend the Indenture and the Securities without
the consent of any Securityholder, to (i) comply with Section 11.14 of the
Indenture and (ii) to make any change that does not adversely affect the right
of any Securityholder.

        G.     Article 5 of the Indenture permits the Merger because the Company
is the surviving Person in the Merger.

        H.     In no event, as a result of this First Supplemental Indenture,
will the Company be released from its obligations under the Indenture inasmuch
as such obligations relate to amounts payable under or in respect of the
Indenture or the Securities.

                                   AGREEMENT:

        NOW, THEREFORE, each party hereto agrees as follows for the benefit of
the other parties:

                                    ARTICLE 1

                       RELATION TO INDENTURE; DEFINITIONS

        SECTION 1.01. This First Supplemental Indenture constitutes an integral
part of the Indenture. Except as hereby expressly modified, the Indenture and
the Securities issued thereunder are in all respects ratified and confirmed and
all of the terms, conditions and provisions thereof shall remain in full force
and effect.

        SECTION 1.02. For all purposes of this First Supplemental Indenture
capitalized terms used herein without definition shall have the meanings
specified in the Indenture.

                                    ARTICLE 2

                      ASSUMPTION OF RIGHTS AND OBLIGATIONS

        SECTION 2.01. The Company hereby assigns, and Holdings hereby expressly
assumes all of the rights and obligations, covenants and duties of the Company
under the Indenture and the Securities issued thereunder.

        SECTION 2.02. The parties hereby confirm the rights and obligations of
the Company under the Indenture and the Securities and that nothing contained
herein shall act or be deemed to be a release of the Company from its rights or
obligations under the Indenture.

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                                    ARTICLE 3

                                   AMENDMENTS

        SECTION 3.01.

        (a) The definitions of the following words contained in Section 1.01 of
the Indenture, are hereby amended by deleting them in their entirety and
inserting in lieu thereof the following respective definitions:

               "Common Stock" means any stock of any class of the Company which
        has no preference in respect of dividends or of amounts payable in the
        event of any voluntary or involuntary liquidation, dissolution or
        winding up of the Company and which is not subject to redemption by the
        Company. Subject to the provisions of Section 11.14, however, shares
        issuable upon conversion of the Securities shall include only shares of
        Common Stock, par value of $0.01 per share, of the Company as it exists
        on the date of this First Supplemental Indenture or shares of any class
        or classes resulting from any reclassification or reclassifications
        thereof and which have no preference in respect of dividends or of
        amounts payable in the event of any voluntary or involuntary
        liquidation, dissolution or winding up of the Company and which are not
        subject to redemption by the Company; provided that if at any time there
        shall be more than one such resulting class, the shares of each such
        class then so issuable shall be substantially in the proportion which
        the total number of shares of such class resulting from all such
        reclassifications bears to the total number of shares of all such
        classes resulting from all such reclassifications.

               "Company" means Parent, except:

               (i)    in connection with the following provisions of the
        Indenture, "Company" means Western Digital: (1) the recitals, (2) the
        following definition: "Registration Rights Agreement," (3) Section 4.03
        Compliance Certificate, Section 4.06 Existence, Section 4.07 Maintenance
        of Properties, Section 4.08 Payment of Taxes and Other Claims, (4)
        Article 5, (5) Section 7.04, (6) Section 9.05 Notation on or Exchange of
        Securities and (7) Section 11.04 Taxes on Conversion; and

               (ii)   in connection with the following provisions of the
        Indenture, "Company" means Western Digital and/or Parent as the context
        may require in such provisions: (1) the following definitions: Board of
        Directors, Officer, Officers' Certificate, Opinion of Counsel, (2)
        Article 2 The Securities, (3) Article 3 Redemption and Purchases, (4)
        Article 4 Covenants, except Section 4.02 Financial Information; SEC
        Reports, Section 4.03 Compliance Certificate, Section 4.06 Existence,
        Section 4.07 Maintenance of Properties, Section 4.08 Payment of Taxes
        and Other Claims, (5) Article 6 Events of Default, (6) Section 7.07
        Compensation and Indemnity, Section 7.08 Replacement of Trustee, (7)
        Article 8 Discharge of Indenture, (8) Article 9 Amendments, and (9)
        Section 12.04 Certificate and Opinion as to Conditions Precedent,
        Section 12.11 Successors,

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        in all cases, until a successor replaces it pursuant to the applicable
        provisions of this Indenture and, thereafter shall mean such successor.
        The foregoing sentence shall likewise apply to any subsequent such
        successor or successors.

               "Credit Agreement" means that certain Credit Agreement, dated as
        of September 20, 2000, by and among Western Digital, as Borrower, the
        other Credit Parties signatory thereto, the other Lenders signatory
        thereto from time to time, General Electric Capital Corporation, as
        Administrative Agent, and Bank of America, as Documentation Agent, as
        amended and as further amended from time to time.

               "Designated Senior Indebtedness" means the Credit Agreement and
        any particular Senior Indebtedness in which the instrument creating or
        evidencing the same or the assumption or guarantee thereof (or related
        agreements or documents to which Western Digital is a party) expressly
        provides that such Senior Indebtedness shall be "Designated Senior
        Indebtedness" for purposes of this Indenture; provided that such
        instrument, agreement or other document may place limitations and
        conditions on the right of such Senior Indebtedness to exercise the
        rights of Designated Senior Indebtedness. If any payment to any holder
        of Designated Senior Indebtedness is rescinded or must otherwise be
        returned by such holder or Representative upon the insolvency,
        bankruptcy or reorganization of Western Digital or otherwise, the
        reinstated Indebtedness of Western Digital arising as a result of such
        rescission or return shall constitute Designated Senior Indebtedness
        effective as of the date of such rescission or return.

               "Indebtedness" means, with respect to any Person, and without
        duplication, (a) all indebtedness, obligations and other liabilities
        (contingent or otherwise) of such Person for borrowed money (including
        obligations in respect of overdrafts, foreign exchange contracts,
        currency exchange agreements, interest rate protection agreements, and
        any loans or advances from banks, whether or not evidenced by notes or
        similar instruments) or evidenced by bonds, debentures, notes or similar
        instruments (whether or not the recourse of the lender is to the whole
        of the assets of such Person or to only a portion thereof), (b) all
        reimbursement obligations and other liabilities (contingent or
        otherwise) of such Person with respect to letters of credit, bank
        guarantees or bankers' acceptances, (c) all obligations and liabilities
        (contingent or otherwise) in respect of leases of such Person (i)
        required, in conformity with generally accepted accounting principles,
        to be accounted for as capitalized lease obligations on the balance
        sheet of such Person, or (ii) required, in conformity with generally
        accepted accounting principles, to be accounted for as an operating
        lease, provided either (A) such operating lease requires, at the end of
        the term thereof, that such Person make any payment other than accrued
        periodic rent in the event that such Person does not acquire the leased
        real property and related fixtures subject to such lease, or (B) such
        Person has an option to acquire the leased real property and related
        fixtures, whether such option is exercisable at any time or under
        specific circumstances, (d) all obligations of such Person (contingent
        or otherwise) with respect to an interest rate swap, cap or collar
        agreement or other similar instrument or agreement, (e) all direct or
        indirect guaranties or similar agreements by such Person in respect of,
        and obligations or liabilities (contingent or otherwise) of such Person
        to purchase or otherwise acquire or otherwise assure a creditor against
        loss in respect of, indebtedness, obligations or liabilities of another
        Person of the kind described in clauses

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        (a) through (d), (f) any indebtedness or other obligations described in
        clauses (a) through (d) secured by any mortgage, pledge, lien or other
        encumbrance existing on property which is owned or held by such Person,
        regardless of whether the indebtedness or other obligation secured
        thereby shall have been assumed by such Person and (g) any and all
        deferrals, renewals, extensions and refundings of, or amendments,
        modifications or supplements to, any indebtedness, obligation or
        liability of the kind described in clauses (a) through (f).

               "Senior Indebtedness" means the principal of, premium, if any,
        interest (including all interest accruing subsequent to the commencement
        of any bankruptcy or similar proceeding, whether or not a claim for
        post-petition interest is allowable as a claim in any such proceeding),
        rent and end of term payments payable on or in connection with, and, to
        the extent not included in the foregoing, all amounts payable as fees,
        costs, expenses, liquidated damages, indemnities, repurchase and other
        put obligations and other amounts to the extent accrued or due on or in
        connection with, Indebtedness of Western Digital, whether outstanding on
        the date of this Indenture or thereafter created, incurred, assumed,
        guaranteed or in effect guaranteed by Western Digital (including all
        deferrals, renewals, extensions or refundings of, or amendments,
        modifications or supplements to, the foregoing). Notwithstanding the
        foregoing, the term Senior Indebtedness shall not include (i)
        Indebtedness evidenced by the Securities, (ii) Indebtedness of Western
        Digital to any subsidiary of Western Digital, a majority of the voting
        stock or which is owned, directly, or indirectly, by Western Digital,
        (iii) accounts payable or other Indebtedness to trade creditors created
        or assumed by Western Digital in the ordinary course of business and
        (iv) any particular Indebtedness in which the instrument creating or
        evidencing such Indebtedness shall not be senior in right of payment to,
        or is pari passu with, or is subordinated or junior to, the Securities.
        Notwithstanding the foregoing, the term Senior Indebtedness shall not
        include any Indebtedness of Western Digital to any subsidiary of Western
        Digital, a majority of the voting stock of which is owned, directly or
        indirectly, by Western Digital. If any payment made to any holder of any
        Senior Indebtedness or its Representative with respect to such Senior
        Indebtedness is rescinded or must otherwise be returned by such holder
        or Representative upon the insolvency, bankruptcy or reorganization of
        Western Digital or otherwise, the reinstated Indebtedness of Western
        Digital arising as a result of such rescission or return shall
        constitute Western Digital Senior Indebtedness effective as of the date
        of such rescission or return.

               (b)    The following definitions are hereby included in Section
        1.01 of the Indenture:

               "Parent" means Western Digital Corporation (formerly, Western
        Digital Holdings, Inc.), a Delaware corporation.

               "Parent Designated Senior Indebtedness" means any particular
        Senior Indebtedness in which the instrument creating or evidencing the
        same or the assumption or guarantee thereof (or related agreements or
        documents to which Parent is a party) expressly provides that such
        Parent Senior Indebtedness shall be "Parent Designated Senior
        Indebtedness" for purposes of this Indenture; provided that such
        instrument, agreement or other document may place limitations and
        conditions on the right of such Parent Senior Indebtedness to exercise
        the rights of Parent Designated Senior

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        Indebtedness. If any payment to any holder of Parent Designated Senior
        Indebtedness is rescinded or must otherwise be returned by such holder
        or Representative upon the insolvency, bankruptcy or reorganization of
        Parent or otherwise, the reinstated Indebtedness of Parent arising as a
        result of such rescission or return shall constitute Parent Designated
        Senior Indebtedness effective as of the date of such rescission or
        return.

               "Parent Representative" means the (a) indenture trustee or other
        trustee, agent or representative for any Parent Senior Indebtedness or
        (b) with respect to any Parent Senior Indebtedness that does not have
        any such trustee, agent or other representative, (i) in the case of such
        Parent Senior Indebtedness issued pursuant to an agreement providing for
        voting arrangements as among the holders or owners of such Parent Senior
        Indebtedness, any holder or owner of such Parent Senior Indebtedness
        acting with the consent of the required Persons necessary to bind such
        holders or owners of such Parent Senior Indebtedness and (ii) in the
        case of all other such Parent Senior Indebtedness, the holder or owner
        of such Parent Senior Indebtedness.

               "Parent Senior Indebtedness" means the principal of, premium, if
        any, interest (including all interest accruing subsequent to the
        commencement of any bankruptcy or similar proceeding, whether or not a
        claim for post-petition interest is allowable as a claim in any such
        proceeding), rent and end of term payments payable on or in connection
        with, and, to the extent not included in the foregoing, all amounts
        payable as fees, costs, expenses, liquidated damages, indemnities,
        repurchase and other put obligations and other amounts to the extent
        accrued or due on or in connection with, Indebtedness of Parent, whether
        outstanding on the date of this Indenture or thereafter created,
        incurred, assumed, guaranteed or in effect guaranteed by Parent
        (including all deferrals, renewals, extensions or refundings of, or
        amendments, modifications or supplements to, the foregoing).
        Notwithstanding the foregoing, the term Parent Senior Indebtedness shall
        not include (i) Indebtedness evidenced by the Securities, (ii)
        Indebtedness of Parent to any subsidiary of Parent, a majority of the
        voting stock or which is owned, directly, or indirectly, by Parent,
        (iii) accounts payable or other Indebtedness to trade creditors created
        or assumed by Parent in the ordinary course of business and (iv) any
        particular Indebtedness in which the instrument creating or evidencing
        such Indebtedness shall not be senior in right of payment to, or is pari
        passu with, or is subordinated or junior to, the Securities.
        Notwithstanding the foregoing, the term Parent Senior Indebtedness shall
        not include any Indebtedness of Parent to any subsidiary of Parent, a
        majority of the voting stock of which is owned, directly or indirectly,
        by Parent. If any payment made to any holder of any Parent Senior
        Indebtedness or its Representative with respect to such Parent Senior
        Indebtedness is rescinded or must otherwise be returned by such holder
        or Representative upon the insolvency, bankruptcy or reorganization of
        Parent or otherwise, the reinstated Indebtedness of Parent arising as a
        result of such rescission or return shall constitute Parent Senior
        Indebtedness effective as of the date of such rescission or return.

               "Western Digital" means Western Digital Technologies, Inc.
        (formerly, Western Digital Corporation), a Delaware corporation.

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        (c)    Section 6.10 of the Indenture is hereby amended by substituting
in its entirety the clause which reads, "Second: to holders of Senior
Indebtedness to the extent required by Article 10;" with the following:

               "Second: to holders of Senior Indebtedness and Parent Senior
        Indebtedness to the extent required by Article 10 and Article 10A,
        respectively;"

        (d)    Article 10 of the Indenture is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:

                                   "ARTICLE 10

                                  SUBORDINATION

               SECTION 10.1. AGREEMENT OF SUBORDINATION. Western Digital
        covenants and agrees for itself and its successors, and each Holder of
        Securities issued hereunder by such Holder's acceptance thereof likewise
        covenants and agrees, that all Securities shall be issued subject to the
        provisions of this Article 10; and each Person holding any such Security
        whether upon original issue or upon transfer or assignment thereof,
        accepts and agrees to be bound by such provisions.

               The payment by Western Digital of the Principal Amount, Issue
        Price, accrued Original Issue Discount, accrued Liquidated Damages, if
        any, Redemption Price, Purchase Price, Fundamental Change Redemption
        Price, interest and any other amounts payable, if any, in respect of all
        Securities issued hereunder shall, to the extent and in the manner
        hereinafter set forth, be subordinated and subject in right of payment
        to the prior payment in full in cash or other payment satisfactory to
        the holders of Senior Indebtedness of all Senior Indebtedness, whether
        outstanding at the date of this Indenture or thereafter incurred, or
        thereafter created, assumed or guaranteed.

               No provision of this Article 10 shall prevent the occurrence of
        any Default or Event of Default hereunder.

               SECTION 10.2. PAYMENTS TO HOLDERS. Western Digital shall make no
        payment with respect to the payment of Principal Amount, Issue Price,
        accrued Liquidated Damages, if any, accrued Original Issue Discount,
        Redemption Price, Purchase Price, Fundamental Change Redemption Price,
        interest and any other amounts payable, if any, on the Securities,
        except payments and distributions made by the Trustee as permitted by
        Section 10.05, if:

               (i)    a default in any payment obligations in respect of Senior
        Indebtedness occurs and is continuing, without regard to any applicable
        period of grace (whether at maturity or at a date fixed for payment or
        by declaration or otherwise); or

               (ii)   any other default occurs and is continuing with respect to
        Designated Senior Indebtedness that permits the holders of such
        Designated

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        Senior Indebtedness as to which such default relates to accelerate its
        maturity and the Trustee receives a notice of the default (a "Payment
        Blockage Notice") from a holder of Designated Senior Indebtedness, or a
        Representative of Designated Senior Indebtedness.

               If the Trustee receives any Payment Blockage Notice pursuant to
        clause (ii) above, no subsequent Payment Blockage Notice shall be
        effective for purposes of this Section unless and until at least 365
        days shall have elapsed since the initial effectiveness of the
        immediately prior Payment Blockage Notice. No nonpayment default that
        existed or was continuing on the date of delivery of any Payment
        Blockage Notice to the Trustee shall be, or be made, the basis for a
        subsequent Payment Blockage Notice unless such default shall have been
        cured or waived for a period of not less than 90 days (it being
        acknowledged that (x) any action of Western Digital or any of its
        Subsidiaries occurring subsequent to delivery of a Payment Blockage
        Notice that would give rise to any event of default pursuant to any
        provision of Senior Indebtedness under which an event of default
        previously existed (or was continuing at the time of delivery of such
        Payment Blockage Notice) shall constitute a new event of default for
        this purpose and (y) any breach of a financial covenant giving rise to a
        nonpayment default for a period ending subsequent to the date of
        delivery of the respective Payment Blockage Notice shall constitute a
        new event of default for this purpose.)

               Western Digital may and shall resume payments on and
        distributions in respect of the Securities upon the earlier of:

               (1) in case of a default referred to in clause (i) above, the
        date upon which the default is cured or waived in accordance with the
        terms of the governing instrument or ceases to exist, or

               (2) in the case of a default referred to in clause (ii) above,
        the date upon which the default is cured, waived in accordance with the
        terms of the governing instrument or ceases to exist or 179 days pass
        after the applicable Payment Blockage Notice is received if the maturity
        of such Designated Senior Indebtedness has not been accelerated, unless
        this Article 10 otherwise prohibits the payment or distribution at the
        time of such payment or distribution.

               Upon any payment by Western Digital or distribution of assets of
        Western Digital of any kind or character, whether in cash, property or
        securities, to creditors upon any dissolution or winding-up or
        liquidation or reorganization or bankruptcy of Western Digital, whether
        voluntary or involuntary or insolvency, receivership or similar
        proceedings relating to Western Digital or its property, or an
        assignment for the benefit of creditors or any marshaling of Western
        Digital's assets or liabilities, all amounts due or to become due upon
        all Senior Indebtedness of Western Digital shall first be paid in full
        in cash or other payment satisfactory to the holders of such Senior
        Indebtedness before any payment is made on account of the Principal
        Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price, Purchase Price,

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        Fundamental Change Redemption Price, interest or any other amounts
        payable, if any, in respect of the Securities (except payments made
        pursuant to Article 8 hereof from monies deposited with the Trustee
        pursuant thereto prior to the happening of such dissolution or
        winding-up or liquidation or reorganization or bankruptcy of Western
        Digital, whether voluntary or involuntary or insolvency, receivership or
        similar proceedings relating to Western Digital or its property, or an
        assignment of the benefit of creditors or any marshaling of Western
        Digital's assets or liabilities), and upon any such dissolution or
        winding-up or liquidation or reorganization or bankruptcy of Company,
        whether voluntary or involuntary or insolvency, receivership or similar
        proceedings relating to Western Digital or its property, or an
        assignment of the benefit of creditors or any marshalling of Western
        Digital's assets or liabilities, any payment by Western Digital, or
        distribution of assets of Western Digital of any kind or character,
        whether in cash, property or securities, to which the Holders of the
        Securities or the Trustee would be entitled, except for the provisions
        of this Article 10, shall (except as aforesaid) be paid by Western
        Digital or by any receiver, trustee in bankruptcy, liquidating trustee,
        agent or other Person making such payment or distribution, or by the
        Holders of the Securities or by the Trustee under this Indenture if
        received by them or it, directly to the holders of Senior Indebtedness
        of Western Digital as their interests may appear or their representative
        or representatives, or to the trustee or trustees under any indenture
        pursuant to which any instruments evidencing any such Senior
        Indebtedness may have been issued, as their respective interests may
        appear to the extent necessary to pay all such Senior Indebtedness in
        full in cash or other payment satisfactory to the holders of such Senior
        Indebtedness, after giving effect to any concurrent payment or
        distribution to or for the holders of such Senior Indebtedness, before
        any payment or distribution is made to the Holders of the Securities or
        to the Trustee.

               In the event that any Securities are declared due and payable
        before their Stated Maturity pursuant to Section 6.02, then and in such
        event Western Digital shall promptly notify holders of its Senior
        Indebtedness of such acceleration. Western Digital may not pay the
        Securities until 120 days have passed after such acceleration occurs and
        may thereafter pay the Securities only to the extent that this Article
        10 permits the payment at that time.

               In the event that, notwithstanding the foregoing provisions, any
        payment or distribution of assets of Western Digital of any kind or
        character, whether in cash, property or securities (including, without
        limitation, by way of setoff or otherwise), prohibited by the foregoing
        provisions in this Section 10.02, shall be received by the Trustee or
        the Holders of the Securities before all Senior Indebtedness of Western
        Digital is paid in full in cash or other payment satisfactory to the
        holders of such Senior Indebtedness such payment or distribution shall
        be held in trust for the benefit of and shall be paid over or delivered
        to the holders of Senior Indebtedness of Western Digital or their
        representative or representatives, or to the trustee or trustees under
        any indenture pursuant to which any instruments evidencing any such
        Senior Indebtedness may have been issued, as their respective interests
        may appear, as calculated by

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        Western Digital, for application to the payment of all such Senior
        Indebtedness remaining unpaid to the extent necessary to pay all such
        Senior Indebtedness in full in cash or other payment satisfactory to the
        holders of such Senior Indebtedness, after giving effect to any
        concurrent payment or distribution to or for the holders of such Senior
        Indebtedness.

               For purposes of this Article 10, the words, "cash, property or
        securities" shall not be deemed to include shares of stock of Western
        Digital as reorganized or readjusted, or securities of Western Digital
        or any other corporation provided for by a plan of reorganization or
        readjustment, the payment of which is subordinated at least to the
        extent provided in this Article 10 with respect to the Securities to the
        payment of all Senior Indebtedness of Western Digital which may at the
        time be outstanding; provided that (i) such Senior Indebtedness is
        assumed by the new corporation, if any, resulting from any such
        reorganization or readjustment, and (ii) the rights of the holders of
        such Senior Indebtedness (other than leases that are not assumed by
        Western Digital or the new corporation, as the case may be) are not,
        without the consent of such holders, altered by such reorganization or
        readjustment. The consolidation of Western Digital with, or the merger
        of Western Digital into, another corporation or the liquidation or
        dissolution of Western Digital following the conveyance or transfer of
        its property as an entirety, or substantially as an entirety, to another
        corporation upon the terms and conditions provided for in Article 5
        hereof shall not be deemed a dissolution, winding-up, liquidation or
        reorganization for the purposes of this Section 10.02 if such other
        corporation shall, as a part of such consolidation, merger, conveyance
        or transfer, comply with the conditions stated in Article 5 hereof.

               Nothing in this Section 10.02 shall apply to claims of, or
        payments to, the Trustee under or pursuant to Section 7.07 or payments
        or distributions received by the Trustee or Holders of the Securities
        from Parent. This Section 10.02 shall be subject to the further
        provisions of Section 10.05.

               SECTION 10.3. SUBROGATION OF SECURITIES. Subject to the payment
        in full in cash or other payment satisfactory to the holders of Senior
        Indebtedness of all Senior Indebtedness of Western Digital, the rights
        of the Holders of the Securities shall be subrogated to the rights of
        the holders of such Senior Indebtedness to receive payments or
        distributions of cash, property or securities of Western Digital
        applicable to such Senior Indebtedness until the Principal Amount, Issue
        Price, accrued Original Issue Discount, accrued Liquidated Damages, if
        any, Redemption Price, Purchase Price, Fundamental Change Redemption
        Price and interest, if any, in respect of the Securities shall be paid
        in full; and, for the purposes of such subrogation, no payments or
        distributions to the holders of such Senior Indebtedness of any cash,
        property or securities to which the Holders of the Securities or the
        Trustee would be entitled except for the provisions of this Article 10,
        and no payment over pursuant to the provisions of this Article 10, to or
        for the benefit of the holders of such Senior Indebtedness by Holders of
        the Securities or the Trustee, shall, as between Western Digital, its
        creditors other

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        than holders of its Senior Indebtedness, and the Holders of the
        Securities be deemed to be a payment by Western Digital to or on account
        of its Senior Indebtedness; and no payments or distributions of cash,
        property or securities to or for the benefit of the holders of the Notes
        pursuant to the subrogation provisions of this Article 10, which would
        otherwise have been paid to the holders of Senior Indebtedness shall be
        deemed to be a payment by Western Digital to or for the account of the
        Securities. It is understood that the provisions of this Article 10 are
        and are intended solely for the purpose of defining the relative rights
        of the Holders of the Securities, on the one hand, and the holders of
        Senior Indebtedness, on the other hand. Nothing contained in this
        Article 10 or elsewhere in this Indenture or in the Securities is
        intended to or shall impair, as between Western Digital, its creditors
        other than the holders of its Senior Indebtedness and the Holders of the
        Securities, the obligation of Western Digital, which is absolute and
        unconditional, to pay to the Holders of the Securities the Principal
        Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price, Purchase Price, Fundamental Change
        Redemption Price and interest, if any, in respect of the Securities as
        and when the same shall become due and payable in accordance with their
        terms, or is intended to or shall affect the relative rights of the
        Holders of the Securities and creditors of Western Digital other than
        the holders of its Senior Indebtedness, nor shall anything herein or
        therein prevent the Trustee or the Holder of any Security from
        exercising all remedies otherwise permitted by applicable law upon
        default under this Indenture, subject to the rights, if any, under this
        Article 10 of the holders of Senior Indebtedness in respect of cash,
        property or securities of Western Digital received upon the exercise of
        any such remedy.

               Upon any payment or distribution of assets of Western Digital
        referred to in this Article 10, the Trustee, subject to the provisions
        of Section 7.01, and the Holders of the Securities shall be entitled to
        rely upon any order or decree made by any court of competent
        jurisdiction in which such dissolution, winding-up, liquidation or
        reorganization proceedings are pending, or a certificate of the
        receiver, trustee in bankruptcy, liquidating trustee, agent or other
        Person making such payment or distribution, delivered to the Trustee, to
        the Holders of the Securities for the purpose of ascertaining the
        Persons entitled to participate in such distribution, the holders of the
        Senior Indebtedness and other indebtedness of Western Digital, the
        amount thereof or payable thereon, the amount or amounts paid or
        distributed thereon and all other facts pertinent thereto or to this
        Article 10.

               SECTION 10.4. AUTHORIZATION BY HOLDERS. Each Holder of a Security
        by such Holder's acceptance thereof authorizes and directs the Trustee
        in his behalf to take such action as may be necessary or appropriate to
        effectuate the subordination provided in this Article 10 and appoints
        the Trustee such Holder's attorney-in-fact for any and all such
        purposes.

               SECTION 10.5. NOTICE TO TRUSTEE. Western Digital shall give
        prompt written notice in a form of an Officers' Certificate to a Trust
        Officer of any fact

                                       11
<PAGE>   13

        known to Western Digital which would prohibit the making of any payment
        of monies to or by the Trustee or any Paying Agent in respect of the
        Securities pursuant to the provisions of this Article 10, but failure to
        give such notice shall not affect the subordination of the Securities to
        the Senior Indebtedness as provided in this Article 10. Notwithstanding
        the provisions of this Article 10 or any other provision of this
        Indenture, the Trustee shall not be charged with knowledge of the
        existence of any facts which would prohibit the making of any payment of
        monies to or by the Trustee in respect of the Securities pursuant to the
        provisions of this Article 10, unless and until a Trust Officer shall
        have received written notice thereof at the Corporate Trust Office from
        Western Digital (in the form of an Officers' Certificate) or a holder or
        holders of Senior Indebtedness or a Representative or from any trustee
        therefor; and before the receipt of any such written notice, the
        Trustee, subject to the provisions of Section 7.01, shall be entitled in
        all respects to assume that no such facts exist; provided that if on a
        date not fewer than two Business Days prior to the date upon which by
        the terms hereof any such monies may become payable for any purpose
        (including, without limitation, the payment of the Principal Amount,
        Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price, Purchase Price, Fundamental Change
        Redemption Price, interest or any other amounts payable, if any, in
        respect of any Security) the Trustee shall not have received, with
        respect to such monies, the notice provided for in this Section 10.05,
        then, anything herein contained to the contrary notwithstanding, the
        Trustee shall have full power and authority to receive such monies and
        to apply the same to the purpose for which they were received, and shall
        not be affected by any notice to the contrary which may be received by
        it on or after such prior date.

               Notwithstanding anything to the contrary herein set forth,
        nothing shall prevent any payment of amounts deposited with the Trustee
        pursuant to Section 8.01 so long as the Trustee had no notice that such
        amounts when so deposited were prohibited pursuant to the provisions of
        Section 10.2.

               The Trustee, subject to the provisions of Section 7.01, shall be
        entitled to rely on the delivery to it of a written notice by a Person
        representing himself to be a holder or a Representative of Designated
        Senior Indebtedness (subject to the requirements set forth in the
        definition of Designated Senior Indebtedness) or a Representative of
        Senior Indebtedness of Western Digital (or a trustee on behalf of such
        holder) to establish that such notice has been given by a holder or a
        Representative of Designated Senior Indebtedness (subject to the
        requirements set forth in the definition of Designated Senior
        Indebtedness) or a Representative of such Senior Indebtedness or a
        trustee on behalf of any such holder or holders. In the event that the
        Trustee determines in good faith that further evidence is required with
        respect to the right of any Person as a holder of Senior Indebtedness of
        Western Digital to participate in any payment or distribution pursuant
        to this Article 10, the Trustee may request such Person to furnish
        evidence to the reasonable satisfaction of the Trustee as to the amount
        of such Senior Indebtedness held by such Person, the extent to which
        such Person is entitled to participate in such payment or distribution
        and any other facts pertinent

                                       12
<PAGE>   14

        to the rights of such Person under this Article 10, and if such evidence
        is not furnished the Trustee may defer any payment to such Person
        pending judicial determination as to the right of such Person to receive
        such payment.

               SECTION 10.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The
        Trustee in its individual capacity shall be entitled to all the rights
        set forth in this Article 10 in respect of any Senior Indebtedness of
        Western Digital at any time held by it, to the same extent as any other
        holder of such Senior Indebtedness, and nothing or elsewhere in this
        Indenture shall deprive the Trustee of any of its rights as such holder.

               With respect to the holders of Senior Indebtedness of Western
        Digital, the Trustee undertakes to perform or to observe only such of
        its covenants and obligations as are specifically set forth in this
        Article 10, and no implied covenants or obligations with respect to the
        holders of such Senior Indebtedness shall be read into this Indenture
        against the Trustee. The Trustee shall not be deemed to owe any
        fiduciary duty to the holders of Senior Indebtedness of Western Digital
        and, subject to the provisions of Section 7.01, the Trustee shall not be
        liable to any holder of such Senior Indebtedness if it shall pay over or
        deliver to Holders of Securities, Western Digital or any other Person
        money or assets to which any holder of Senior Indebtedness of Western
        Digital shall be entitled by virtue of this Article 10 or otherwise.

               SECTION 10.7. NO IMPAIRMENT OF SUBORDINATION. No right of any
        present or future holder of any Senior Indebtedness of Western Digital
        to enforce subordination as herein provided shall at any time in any way
        be prejudiced or impaired by (i) any amendment of or addition or
        supplement to any such Senior Indebtedness or any instrument or
        agreement relating thereto (unless otherwise expressly provided
        therein), or (ii) any act or failure to act on the part of Western
        Digital or by any act or failure to act, in good faith, by any such
        holder, or by any noncompliance by Western Digital with the terms,
        provisions and covenants of the instrument, regardless of any knowledge
        thereof which any such holder may have or otherwise be charged with or
        (iii) a failure to act by any Holders of Securities or the failure of
        such Holder to comply with this Indenture.

               SECTION 10.8. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
        SUBORDINATION PROVISIONS. Each Holder of Securities by such Holder's
        acceptance thereof, acknowledges and agrees that the foregoing
        subordination provisions are, and are intended to be, an inducement and
        a consideration to each holder of any Senior Indebtedness, whether such
        Senior Indebtedness was created, assumed or acquired before or after the
        issuance of the Securities, to acquire and continue to hold, or to
        continue to hold, such Senior Indebtedness and such holder of Senior
        Indebtedness shall be deemed conclusively to have relied on such
        subordination provisions in acquiring and continuing to hold, or in
        continuing to hold, such Senior Indebtedness, and no amendment or
        modification of the provisions contained herein shall diminish the
        rights of such holder or holders unless such holder or holders shall
        have agreed in writing thereto.

                                       13
<PAGE>   15

               SECTION 10.9. REINSTATEMENT OF SUBORDINATION. If, at any time,
        all or part of any payment of any Senior Indebtedness theretofore made
        by Western Digital or any other Person is rescinded or must otherwise be
        returned by the holders of such Senior Indebtedness for any reason
        whatsoever (including, without limitation, the insolvency, bankruptcy or
        reorganization of Western Digital or such other Person), these
        subordination provisions shall continue to be effective or be
        reinstated, as the case may be, all as though such payment had not been
        made.

               SECTION 10.10. PERMITTED PAYMENTS. Nothing contained in this
        Article 10 or elsewhere in this Indenture, or in the Securities shall
        prevent (a) Western Digital at any time, except under the conditions
        described in Section 10.02, from making payments at any time of
        Principal Amount, Issue Price, accrued Original Issue Discount, accrued
        Liquidated Damages, if any, Redemption Price, Purchase Price,
        Fundamental Change Redemption Price or interest or any other amounts
        payable, if any, in respect of the Securities, or from depositing with
        the Trustee or any Paying Agent money for such payments, or (b) the
        application by the Trustee or Paying Agent of any moneys deposited with
        it under this Indenture to the payment of or on account of the Principal
        Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price, Purchase Price, Fundamental Change
        Redemption Price or interest or any other amounts payable, if any, in
        respect of the Securities to the Holders of the Securities entitled
        thereto to the beneficiaries thereof, if such payment would not have
        been prohibited by the provisions of Section 10.02.

               SECTION 10.11. ARTICLE APPLICABLE TO PAYING AGENTS. If at any
        time any Paying Agent other than the Trustee shall have been appointed
        by Western Digital or Parent and be then acting hereunder, the term
        "Trustee" as used in this Article 10 shall (unless the context otherwise
        requires) be construed as extending to and including such Paying Agent
        within its meaning as fully for all intents and purposes as if such
        Paying Agent were named in this Article 10 in addition to or in place of
        the Trustee; provided, however, that the first paragraph of Section
        10.05 shall not apply to Western Digital or any Affiliate of Western
        Digital if it or such Affiliate acts as Paying Agent.

               SECTION 10.12. TREATMENT OF CONVERSION PAYMENTS. Notwithstanding
        anything in this Indenture to the contrary, neither the issuance and
        delivery of junior securities upon conversion of the Securities in
        accordance with Article 11 nor the payment of cash in lieu of fractional
        shares of Common Stock in accordance with Article 11 shall be deemed to
        constitute a payment or distribution on account of the Principal Amount,
        Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price or Fundamental Change Purchase Price
        or interest or any other amounts payable, if any, in respect of the
        Securities. For the purposes of this paragraph, the term "junior
        securities" means (a) shares of any stock of any class of Western
        Digital, (b) securities of Western Digital which are subordinated in
        right of payment to all Senior Indebtedness of Western Digital which may
        be outstanding at the time of issuance or delivery of

                                       14
<PAGE>   16

        such securities to substantially the same extent as, or to a greater
        extent than, the Securities are so subordinated as provided in this
        Article 10, and (c) any securities into which the Securities become
        convertible pursuant to Section 11.14 which are securities of a Person
        required to enter into a supplemental indenture pursuant to such section
        (or Section 5.01) and are either (x) shares of any stock of any class of
        such Person, or (y) securities of such Person which are subordinated in
        right of payment to all Senior Indebtedness of such Person which may be
        outstanding at the time of issuance or delivery of such securities to
        substantially the same extent as, or to a greater extent than, the
        Securities or, are so subordinated as provided in this Article 10.
        Nothing contained in this Article or elsewhere in this Indenture or in
        the Securities is intended to or shall impair, as among Western Digital,
        its creditors other than the holders of Senior Indebtedness, and the
        holders of the Securities, the right, which is absolute and
        unconditional, of the holder of any Security to convert such Security in
        accordance with Article 11.

               SECTION 10.13. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
        LIQUIDATING AGENT. Upon any payment or distribution of assets of Western
        Digital referred to in this Article 10, the Trustee and the Holders of
        Securities shall be entitled to rely upon any order or decree entered by
        any court of competent jurisdiction in which such insolvency,
        bankruptcy, receivership, liquidation, reorganization, dissolution,
        winding up or similar case or proceeding is pending, or a certificate of
        the trustee in bankruptcy, liquidating trustee, custodian, receiver,
        assignee for the benefit of creditors, agent or other Person making such
        payment or distribution, delivered to the Trustee or to the Holders of
        Securities, for the purpose of ascertaining the Persons entitled to
        participate in such payment or distribution, the holders of Senior
        Indebtedness and other indebtedness of Western Digital, the amount
        thereof or payable thereon, the amount or amounts paid or distributed
        thereon and all other facts pertinent thereto or to this Article 10."

        (e)    The Indenture is hereby amended by adding new Article 10A as
follows:

                                  "ARTICLE 10A
                                  SUBORDINATION

               SECTION 10A.1. AGREEMENT OF SUBORDINATION. Parent covenants and
        agrees for itself and its successors, and each Holder of Securities
        issued hereunder by such Holder's acceptance thereof likewise covenants
        and agrees, that all Securities shall be issued subject to the
        provisions of this Article 10A; and each Person holding any such
        Security whether upon original issue or upon transfer or assignment
        thereof, accepts and agrees to be bound by such provisions.

               The payment by Parent of the Principal Amount, Issue Price,
        accrued Original Issue Discount, accrued Liquidated Damages, if any,
        Redemption Price, Purchase Price, Fundamental Change Redemption Price,
        interest and any other

                                       15
<PAGE>   17

        amounts payable, if any, in respect of all Securities issued hereunder
        shall, to the extent and in the manner hereinafter set forth, be
        subordinated and subject in right of payment to the prior payment in
        full in cash or other payment satisfactory to the holders of Parent
        Senior Indebtedness of all Parent Senior Indebtedness, whether
        outstanding at the date of this Indenture or thereafter incurred, or
        thereafter created, assumed or guaranteed.

               No provision of this Article 10A shall prevent the occurrence of
        any Default or Event of Default hereunder.

               SECTION 10A.2. PAYMENTS TO HOLDERS. Parent shall make no payment
        with respect to the payment of Principal Amount, Issue Price, accrued
        Liquidated Damages, if any, accrued Original Issue Discount, Redemption
        Price, Purchase Price, Fundamental Change Redemption Price, interest and
        any other amounts payable, if any, on the Securities, except payments
        and distributions made by the Trustee as permitted by Section 10A.05,
        if:

               (i)    a default in any payment obligations in respect of Parent
        Senior Indebtedness occurs and is continuing, without regard to any
        applicable period of grace (whether at maturity or at a date fixed for
        payment or by declaration or otherwise); or

               (ii)   any other default occurs and is continuing with respect to
        Designated Senior Indebtedness that permits the holders of such
        Designated Senior Indebtedness as to which such default relates to
        accelerate its maturity and the Trustee receives a Payment Blockage
        Notice from a holder of Designated Senior Indebtedness, or a
        Representative of Designated Senior Indebtedness.

               If the Trustee receives any Payment Blockage Notice pursuant to
        clause (ii) above, no subsequent Payment Blockage Notice shall be
        effective for purposes of this Section unless and until at least 365
        days shall have elapsed since the initial effectiveness of the
        immediately prior Payment Blockage Notice. No nonpayment default that
        existed or was continuing on the date of delivery of any Payment
        Blockage Notice to the Trustee shall be, or be made, the basis for a
        subsequent Payment Blockage Notice unless such default shall have been
        cured or waived for a period of not less than 90 days (it being
        acknowledged that (x) any action of Parent or any of its Subsidiaries
        occurring subsequent to delivery of a Payment Blockage Notice that would
        give rise to any event of default pursuant to any provision of Parent
        Senior Indebtedness under which an event of default previously existed
        (or was continuing at the time of delivery of such Payment Blockage
        Notice) shall constitute a new event of default for this purpose and (y)
        any breach of a financial covenant giving rise to a nonpayment default
        for a period ending subsequent to the date of delivery of the respective
        Payment Blockage Notice shall constitute a new event of default for this
        purpose.)

               Parent may and shall resume payments on and distributions in
        respect of the Securities upon the earlier of:

                                       16
<PAGE>   18

               (1) in case of a default referred to in clause (i) above, the
        date upon which the default is cured or waived in accordance with the
        terms of the governing instrument or ceases to exist, or

               (2) in the case of a default referred to in clause (ii) above,
        the date upon which the default is cured, waived in accordance with the
        terms of the governing instrument or ceases to exist or 179 days pass
        after the applicable Payment Blockage Notice is received if the maturity
        of such Designated Senior Indebtedness has not been accelerated, unless
        this Article 10A otherwise prohibits the payment or distribution at the
        time of such payment or distribution.

               Upon any payment by Parent or distribution of assets of Parent of
        any kind or character, whether in cash, property or securities, to
        creditors upon any dissolution or winding-up or liquidation or
        reorganization or bankruptcy of Parent, whether voluntary or involuntary
        or insolvency, receivership or similar proceedings relating to Parent or
        its property, or an assignment for the benefit of creditors or any
        marshaling of Parent's assets or liabilities, all amounts due or to
        become due upon all Parent Senior Indebtedness shall first be paid in
        full in cash or other payment satisfactory to the holders of such Parent
        Senior Indebtedness before any payment is made on account of the
        Principal Amount, Issue Price, accrued Original Issue Discount, accrued
        Liquidated Damages, if any, Redemption Price, Purchase Price,
        Fundamental Change Redemption Price, interest or any other amounts
        payable, if any, in respect of the Securities (except payments made
        pursuant to Article 8 hereof from monies deposited with the Trustee
        pursuant thereto prior to the happening of such dissolution or
        winding-up or liquidation or reorganization or bankruptcy of Parent,
        whether voluntary or involuntary or insolvency, receivership or similar
        proceedings relating to Parent or its property, or an assignment of the
        benefit of creditors or any marshaling of Parent's assets or
        liabilities), and upon any such dissolution or winding-up or liquidation
        or reorganization or bankruptcy of Company, whether voluntary or
        involuntary or insolvency, receivership or similar proceedings relating
        to Parent or its property, or an assignment of the benefit of creditors
        or any marshalling of Parent's assets or liabilities, any payment by
        Parent, or distribution of assets of Parent of any kind or character,
        whether in cash, property or securities, to which the Holders of the
        Securities or the Trustee would be entitled, except for the provisions
        of this Article 10A, shall (except as aforesaid) be paid by Parent or by
        any receiver, trustee in bankruptcy, liquidating trustee, agent or other
        Person making such payment or distribution, or by the Holders of the
        Securities or by the Trustee under this Indenture if received by them or
        it, directly to the holders of Parent Senior Indebtedness as their
        interests may appear or their representative or representatives, or to
        the trustee or trustees under any indenture pursuant to which any
        instruments evidencing any such Parent Senior Indebtedness may have been
        issued, as their respective interests may appear to the extent necessary
        to pay all such Parent Senior Indebtedness in full in cash or other
        payment satisfactory to the holders of such Senior Indebtedness, after
        giving effect to any concurrent payment or distribution to or for the
        holders of such Senior Indebtedness, before any payment or distribution
        is made to the Holders of the Securities or to the

                                       17
<PAGE>   19

        Trustee. In the event that any Securities are declared due and payable
        before their Stated Maturity pursuant to Section 6.02, then and in such
        event Parent shall promptly notify holders of its Parent Senior
        Indebtedness of such acceleration. Parent may not pay the Securities
        until 120 days have passed after such acceleration occurs and may
        thereafter pay the Securities only to the extent that this Article 10A
        permits the payment at that time.

               In the event that, notwithstanding the foregoing provisions, any
        payment or distribution of assets of Parent of any kind or character,
        whether in cash, property or securities (including, without limitation,
        by way of setoff or otherwise), prohibited by the foregoing provisions
        in this Section 10A.02, shall be received by the Trustee or the Holders
        of the Securities before all Parent Senior Indebtedness is paid in full
        in cash or other payment satisfactory to the holders of such Parent
        Senior Indebtedness such payment or distribution shall be held in trust
        for the benefit of and shall be paid over or delivered to the holders of
        Parent Senior Indebtedness or their representative or representatives,
        or to the trustee or trustees under any indenture pursuant to which any
        instruments evidencing any such Parent Senior Indebtedness may have been
        issued, as their respective interests may appear, as calculated by
        Parent, for application to the payment of all such Parent Senior
        Indebtedness remaining unpaid to the extent necessary to pay all such
        Parent Senior Indebtedness in full in cash or other payment satisfactory
        to the holders of such Senior Indebtedness, after giving effect to any
        concurrent payment or distribution to or for the holders of such Senior
        Indebtedness.

               For purposes of this Article 10A, the words, "cash, property or
        securities" shall not be deemed to include shares of stock of Parent as
        reorganized or readjusted, or securities of Parent or any other
        corporation provided for by a plan of reorganization or readjustment,
        the payment of which is subordinated at least to the extent provided in
        this Article 10A with respect to the Securities to the payment of all
        Parent Senior Indebtedness which may at the time be outstanding;
        provided that (i) such Parent Senior Indebtedness is assumed by the new
        corporation, if any, resulting from any such reorganization or
        readjustment, and (ii) the rights of the holders of such Parent Senior
        Indebtedness(other than leases that are not assumed by Parent or the new
        corporation, as the case may be) are not, without the consent of such
        holders, altered by such reorganization or readjustment. The
        consolidation of Parent with, or the merger of Parent into, another
        corporation or the liquidation or dissolution of Parent following the
        conveyance or transfer of its property as an entirety, or substantially
        as an entirety, to another corporation upon the terms and conditions
        provided for in Article 5 hereof shall not be deemed a dissolution,
        winding-up, liquidation or reorganization for the purposes of this
        Section 10A.02 if such other corporation shall, as a part of such
        consolidation, merger, conveyance or transfer, comply with the
        conditions stated in Article 5 hereof.

               Nothing in this Section 10A.02 shall apply to claims of, or
        payments to, the Trustee under or pursuant to Section 7.07. This Section
        10A.02 shall be subject to the further provisions of Section 10A.05.

                                       18
<PAGE>   20

               SECTION 10A.3. SUBROGATION OF SECURITIES. Subject to the payment
        in full in cash or other payment satisfactory to the holders of Parent
        Senior Indebtedness of all Parent Senior Indebtedness, the rights of the
        Holders of the Securities shall be subrogated to the rights of the
        holders of such Parent Senior Indebtedness to receive payments or
        distributions of cash, property or securities of Parent applicable to
        such Parent Senior Indebtedness until the Principal Amount, Issue Price,
        accrued Original Issue Discount, accrued Liquidated Damages, if any,
        Redemption Price, Purchase Price, Fundamental Change Redemption Price
        and interest, if any, in respect of the Securities shall be paid in
        full; and, for the purposes of such subrogation, no payments or
        distributions to the holders of such Parent Senior Indebtedness of any
        cash, property or securities to which the Holders of the Securities or
        the Trustee would be entitled except for the provisions of this Article
        10A, and no payment over pursuant to the provisions of this Article 10A,
        to or for the benefit of the holders of such Parent Senior Indebtedness
        by Holders of the Securities or the Trustee, shall, as between Parent,
        its creditors other than holders of its Senior Indebtedness, and the
        Holders of the Securities be deemed to be a payment by Parent to or on
        account of its Senior Indebtedness; and no payments or distributions of
        cash, property or securities to or for the benefit of the holders of the
        Notes pursuant to the subrogation provisions of this Article 10A, which
        would otherwise have been paid to the holders of Parent Senior
        Indebtedness shall be deemed to be a payment by Parent to or for the
        account of the Securities. It is understood that the provisions of this
        Article 10A are and are intended solely for the purpose of defining the
        relative rights of the Holders of the Securities, on the one hand, and
        the holders of Senior Indebtedness, on the other hand. Nothing contained
        in this Article 10A or elsewhere in this Indenture or in the Securities
        is intended to or shall impair, as between Parent, its creditors other
        than the holders of its Parent Senior Indebtedness and the Holders of
        the Securities, the obligation of Parent, which is absolute and
        unconditional, to pay to the Holders of the Securities the Principal
        Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price, Purchase Price, Fundamental Change
        Redemption Price and interest, if any, in respect of the Securities as
        and when the same shall become due and payable in accordance with their
        terms, or is intended to or shall affect the relative rights of the
        Holders of the Securities and creditors of Parent other than the holders
        of its Senior Indebtedness, nor shall anything herein or therein prevent
        the Trustee or the Holder of any Security from exercising all remedies
        otherwise permitted by applicable law upon default under this Indenture,
        subject to the rights, if any, under this Article 10A of the holders of
        Parent Senior Indebtedness in respect of cash, property or securities of
        Parent received upon the exercise of any such remedy.

               Upon any payment or distribution of assets of Parent referred to
        in this Article 10A, the Trustee, subject to the provisions of Section
        7.01, and the Holders of the Securities shall be entitled to rely upon
        any order or decree made by any court of competent jurisdiction in which
        such dissolution, winding-up, liquidation or reorganization proceedings
        are pending, or a certificate of the receiver, trustee in bankruptcy,
        liquidating trustee, agent or other Person making

                                       19
<PAGE>   21

        such payment or distribution, delivered to the Trustee, to the Holders
        of the Securities for the purpose of ascertaining the Persons entitled
        to participate in such distribution, the holders of the Parent Senior
        Indebtedness and other indebtedness of Parent, the amount thereof or
        payable thereon, the amount or amounts paid or distributed thereon and
        all other facts pertinent thereto or to this Article 10A.

               SECTION 10A.4. AUTHORIZATION BY HOLDERS. Each Holder of a
        Security by such Holder's acceptance thereof authorizes and directs the
        Trustee in his behalf to take such action as may be necessary or
        appropriate to effectuate the subordination provided in this Article 10A
        and appoints the Trustee such Holder's attorney-in-fact for any and all
        such purposes.

               SECTION 10A.5. NOTICE TO TRUSTEE. Parent shall give prompt
        written notice in a form of an Officers' Certificate to a Trust Officer
        of any fact known to Parent which would prohibit the making of any
        payment of monies to or by the Trustee or any Paying Agent in respect of
        the Securities pursuant to the provisions of this Article 10A, but
        failure to give such notice shall not affect the subordination of the
        Securities to the Parent Senior Indebtedness as provided in this Article
        10A. Notwithstanding the provisions of this Article 10A or any other
        provision of this Indenture, the Trustee shall not be charged with
        knowledge of the existence of any facts which would prohibit the making
        of any payment of monies to or by the Trustee in respect of the
        Securities pursuant to the provisions of this Article 10A, unless and
        until a Trust Officer shall have received written notice thereof at the
        Corporate Trust Office from Parent (in the form of an Officers'
        Certificate) or a holder or holders of Parent Senior Indebtedness or a
        Representative or from any trustee therefor; and before the receipt of
        any such written notice, the Trustee, subject to the provisions of
        Section 7.01, shall be entitled in all respects to assume that no such
        facts exist; provided that if on a date not fewer than two Business Days
        prior to the date upon which by the terms hereof any such monies may
        become payable for any purpose (including, without limitation, the
        payment of the Principal Amount, Issue Price, accrued Original Issue
        Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase
        Price, Fundamental Change Redemption Price, interest or any other
        amounts payable, if any, in respect of any Security) the Trustee shall
        not have received, with respect to such monies, the notice provided for
        in this Section 10A.05, then, anything herein contained to the contrary
        notwithstanding, the Trustee shall have full power and authority to
        receive such monies and to apply the same to the purpose for which they
        were received, and shall not be affected by any notice to the contrary
        which may be received by it on or after such prior date.

               Notwithstanding anything to the contrary herein set forth,
        nothing shall prevent any payment of amounts deposited with the Trustee
        pursuant to Section 8.01 so long as the Trustee had no notice that such
        amounts when so deposited were prohibited pursuant to the provisions of
        Section 10A.2.

                                       20
<PAGE>   22

               The Trustee, subject to the provisions of Section 7.01, shall be
        entitled to rely on the delivery to it of a written notice by a Person
        representing himself to be a holder or a Representative of Designated
        Senior Indebtedness (subject to the requirements set forth in the
        definition of Designated Senior Indebtedness) or a Representative of
        Parent Senior Indebtedness (or a trustee on behalf of such holder) to
        establish that such notice has been given by a holder or a
        Representative of Designated Senior Indebtedness (subject to the
        requirements set forth in the definition of Designated Senior
        Indebtedness) or a Representative of such Parent Senior Indebtedness or
        a trustee on behalf of any such holder or holders. In the event that the
        Trustee determines in good faith that further evidence is required with
        respect to the right of any Person as a holder of Parent Senior
        Indebtedness to participate in any payment or distribution pursuant to
        this Article 10A, the Trustee may request such Person to furnish
        evidence to the reasonable satisfaction of the Trustee as to the amount
        of such Parent Senior Indebtedness held by such Person, the extent to
        which such Person is entitled to participate in such payment or
        distribution and any other facts pertinent to the rights of such Person
        under this Article 10A, and if such evidence is not furnished the
        Trustee may defer any payment to such Person pending judicial
        determination as to the right of such Person to receive such payment.

               SECTION 10A.6. TRUSTEE'S RELATION TO PARENT SENIOR INDEBTEDNESS.
        The Trustee in its individual capacity shall be entitled to all the
        rights set forth in this Article 10A in respect of any Parent Senior
        Indebtedness at any time held by it, to the same extent as any other
        holder of such Parent Senior Indebtedness, and nothing or elsewhere in
        this Indenture shall deprive the Trustee of any of its rights as such
        holder.

               With respect to the holders of Parent Senior Indebtedness, the
        Trustee undertakes to perform or to observe only such of its covenants
        and obligations as are specifically set forth in this Article 10A, and
        no implied covenants or obligations with respect to the holders of such
        Parent Senior Indebtedness shall be read into this Indenture against the
        Trustee. The Trustee shall not be deemed to owe any fiduciary duty to
        the holders of Parent Senior Indebtedness and, subject to the provisions
        of Section 7.01, the Trustee shall not be liable to any holder of such
        Parent Senior Indebtedness if it shall pay over or deliver to Holders of
        Securities, Parent or any other Person money or assets to which any
        holder of Parent Senior Indebtedness shall be entitled by virtue of this
        Article 10A or otherwise.

               SECTION 10A.7. NO IMPAIRMENT OF SUBORDINATION. No right of any
        present or future holder of any Parent Senior Indebtedness to enforce
        subordination as herein provided shall at any time in any way be
        prejudiced or impaired by (i) any amendment of or addition or supplement
        to any such Parent Senior Indebtedness or any instrument or agreement
        relating thereto (unless otherwise expressly provided therein), or (ii)
        any act or failure to act on the part of Parent or by any act or failure
        to act, in good faith, by any such holder, or by any noncompliance by
        Parent with the terms, provisions and covenants of the

                                       21
<PAGE>   23

        instrument, regardless of any knowledge thereof which any such holder
        may have or otherwise be charged with or (iii) a failure to act by any
        Holders of Securities or the failure of such Holder to comply with this
        Indenture.

               SECTION 10A.8. RELIANCE BY HOLDERS OF PARENT SENIOR INDEBTEDNESS
        ON SUBORDINATION PROVISIONS. Each Holder of Securities by such Holder's
        acceptance thereof, acknowledges and agrees that the foregoing
        subordination provisions are, and are intended to be, an inducement and
        a consideration to each holder of any Parent Senior Indebtedness,
        whether such Parent Senior Indebtedness was created, assumed or acquired
        before or after the issuance of the Securities, to acquire and continue
        to hold, or to continue to hold, such Parent Senior Indebtedness and
        such holder of Parent Senior Indebtedness shall be deemed conclusively
        to have relied on such subordination provisions in acquiring and
        continuing to hold, or in continuing to hold, such Senior Indebtedness,
        and no amendment or modification of the provisions contained herein
        shall diminish the rights of such holder or holders unless such holder
        or holders shall have agreed in writing thereto.

               SECTION 10A.9. REINSTATEMENT OF SUBORDINATION. If, at any time,
        all or part of any payment of any Parent Senior Indebtedness theretofore
        made by Parent or any other Person is rescinded or must otherwise be
        returned by the holders of such Parent Senior Indebtedness for any
        reason whatsoever (including, without limitation, the insolvency,
        bankruptcy or reorganization of Parent or such other Person), these
        subordination provisions shall continue to be effective or be
        reinstated, as the case may be, all as though such payment had not been
        made.

               SECTION 10A.10. PERMITTED PAYMENTS. Nothing contained in this
        Article 10A or elsewhere in this Indenture, or in the Securities shall
        prevent (a) Parent at any time, except under the conditions described in
        Section 10A.02, from making payments at any time of Principal Amount,
        Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price, Purchase Price, Fundamental Change
        Redemption Price or interest or any other amounts payable, if any, in
        respect of the Securities, or from depositing with the Trustee or any
        Paying Agent money for such payments, or (b) the application by the
        Trustee or Paying Agent of any moneys deposited with it under this
        Indenture to the payment of or on account of the Principal Amount, Issue
        Price, accrued Original Issue Discount, accrued Liquidated Damages, if
        any, Redemption Price, Purchase Price, Fundamental Change Redemption
        Price or interest or any other amounts payable, if any, in respect of
        the Securities to the Holders of the Securities entitled thereto to the
        beneficiaries thereof, if such payment would not have been prohibited by
        the provisions of Section 10A.02.

               SECTION 10A.11. ARTICLE APPLICABLE TO PAYING AGENTS. If at any
        time any Paying Agent other than the Trustee shall have been appointed
        by Parent and Western Digital and be then acting hereunder, the term
        "Trustee" as used in this Article 10A shall (unless the context
        otherwise requires) be construed as extending to and including such
        Paying Agent within its meaning as fully for all

                                       22
<PAGE>   24

        intents and purposes as if such Paying Agent were named in this Article
        10A in addition to or in place of the Trustee; provided, however, that
        the first paragraph of Section 10A.05 shall not apply to Parent or any
        Affiliate of Parent if it or such Affiliate acts as Paying Agent.

               SECTION 10A.12. TREATMENT OF CONVERSION PAYMENTS. Notwithstanding
        anything in this Indenture to the contrary, neither the issuance and
        delivery of junior securities upon conversion of the Securities in
        accordance with Article 11 nor the payment of cash in lieu of fractional
        shares of Common Stock in accordance with Article 11 shall be deemed to
        constitute a payment or distribution on account of the Principal Amount,
        Issue Price, accrued Original Issue Discount, accrued Liquidated
        Damages, if any, Redemption Price or Fundamental Change Purchase Price
        or interest or any other amounts payable, if any, in respect of the
        Securities. For the purposes of this paragraph, the term "junior
        securities" means (a) shares of any stock of any class of Parent, (b)
        securities of Parent which are subordinated in right of payment to all
        Parent Senior Indebtedness which may be outstanding at the time of
        issuance or delivery of such securities to substantially the same extent
        as, or to a greater extent than, the Securities are so subordinated as
        provided in this Article 10A, and (c) any securities into which the
        Securities become convertible pursuant to Section 11.14 which are
        securities of a Person required to enter into a supplemental indenture
        pursuant to such section (or Section 5.01) and are either (x) shares of
        any stock of any class of such Person, or (y) securities of such Person
        which are subordinated in right of payment to all Parent Senior
        Indebtedness of such Person which may be outstanding at the time of
        issuance or delivery of such securities to substantially the same extent
        as, or to a greater extent than, the Securities or, are so subordinated
        as provided in this Article 10A. Nothing contained in this Article or
        elsewhere in this Indenture or in the Securities is intended to or shall
        impair, as among Parent, its creditors other than the holders of Senior
        Indebtedness, and the holders of the Securities, the right, which is
        absolute and unconditional, of the holder of any Security to convert
        such Security in accordance with Article 11.

               SECTION 10A.13. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
        LIQUIDATING AGENT. Upon any payment or distribution of assets of Parent
        referred to in this Article 10A, the Trustee and the Holders of
        Securities shall be entitled to rely upon any order or decree entered by
        any court of competent jurisdiction in which such insolvency,
        bankruptcy, receivership, liquidation, reorganization, dissolution,
        winding up or similar case or proceeding is pending, or a certificate of
        the trustee in bankruptcy, liquidating trustee, custodian, receiver,
        assignee for the benefit of creditors, agent or other Person making such
        payment or distribution, delivered to the Trustee or to the Holders of
        Securities, for the purpose of ascertaining the Persons entitled to
        participate in such payment or distribution, the holders of Parent
        Senior Indebtedness and other indebtedness of Parent, the amount thereof
        or payable thereon, the amount or amounts paid or distributed thereon
        and all other facts pertinent thereto or to this Article 10A."

                                       23
<PAGE>   25

        SECTION 3.02. The reference in the third paragraph of Section 3.08(d) of
the Indenture to the "Rights Agreement" is hereby amended to reference the
Rights Agreement dated as of April 6, 2001 between Holdings and American Stock
Transfer & Trust Company, as Rights Agent.

        SECTION 3.03. The address for notices to the Company in Section 12.02 of
the Indenture is hereby amended to read:

               Western Digital Corporation
               20511 Lake Forest Drive
               Lake Forest, CA 92630-7741
               Attn: Michael A. Cornelius
               Phone: (949) 672-7000
               Fax: (949) 672-9612

        and

               Western Digital Technologies, Inc.
               20511 Lake Forest Drive
               Lake Forest, CA 92630-7741
               Attn: Michael A. Cornelius
               Phone: (949) 672-7000
               Fax: (949) 672-9612

                                    ARTICLE 4

                                     TRUSTEE

        The Trustee has accepted the amendment of the Indenture effected by this
First Supplemental Indenture and agrees to execute the Indenture as hereby
amended, but only upon the terms and conditions set forth in the Indenture,
including the terms and provisions defining and limiting the liabilities and
responsibilities of the Trustee, and without limiting the generality of the
foregoing, except as set forth in the Indenture, the Trustee shall not be
responsible in any manner whatsoever for or with respect to any of the recitals
or statements contained herein, all of which recitals or statements are made
solely by the Company, or for or with respect to (a) the validity or sufficiency
of this First Supplemental Indenture or any of the terms or provisions hereof,
(b) the proper authorization hereof by the Company by corporate action or
otherwise, (c) the due execution hereof by the Company, and (d) the consequences
(direct or indirect and whether deliberate or inadvertent) of any amendment
herein provided for, and the Trustee makes no representation with respect to any
such matters.

                                    ARTICLE 5

                                  MISCELLANEOUS

        SECTION 5.01. This First Supplemental Indenture shall become effective
as of the date and time of the consummation of the Merger.

                                       24
<PAGE>   26

        SECTION 5.02. The parties may sign multiple counterparts of this First
Supplemental Indenture. Each signed counterpart shall be deemed an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this First Supplemental Indenture.

        SECTION 5.03. In case any provision in this First Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

        SECTION 5.04. THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS.

                [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

                                       25
<PAGE>   27

        IN WITNESS WHEREOF, the undersigned, being duly authorized, have
executed this First Supplemental Indenture on behalf of the respective parties
hereto as of the date first written above.

                                   WESTERN DIGITAL TECHNOLOGIES, INC.

                                        By: /s/ Michael A. Cornelius
                                            ------------------------------------
                                        Name:  Michael A. Cornelius
                                        Title: Vice President, Law and
                                               Administration and Secretary

                                        WESTERN DIGITAL CORPORATION

                                        By: /s/ Michael A. Cornelius
                                            ------------------------------------
                                        Name:  Michael A. Cornelius
                                        Title: Vice President, Law and
                                               Administration and Secretary

                                        STATE STREET BANK AND TRUST
                                        COMPANY OF CALIFORNIA, N.A.

                                        By: /s/ Paula Oswald
                                            ------------------------------------
                                                    Authorized Signatory

                                       26Exhibit 10.1

                           PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the "Agreement") is entered into this
23rd day of September, 2000, by and between PREMIER LASER SYSTEMS, INC., a
California corporation (the "Seller") and SURGILIGHT, INC., a Delaware
corporation (the "Buyer").

     RECITALS

     WHEREAS, Seller is a debtor in a Chapter 11 proceeding in the United States
Bankruptcy Court for the Central District of California (the "Bankruptcy
Court"); and,

     WHEREAS, Seller desires to sell and Buyer desires to buy the business and
related assets of the Centauri Ophthalmic Laser System product line of Seller on
the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the promises contained herein and
intending to be legally bound, the parties agree as follows:

     1. Purchase of Assets. Subject to the terms and conditions of this
Agreement, Seller shall sell, convey and transfer and Buyer shall purchase,
acquire and accept from Seller all right, title and interest in the following
assets:

     (a) 150 Completed Er:YAG Laser Systems currently in Seller's inventory (the
"Product Sets").

     (b) raw materials and work in process sufficient to complete a minimum of
51% of 200 additional Product Sets.

     (c) Seller's entire inventory of Touch Tips.

     (d) Seller's entire inventory of fiber optic cables.

<PAGE>

     (e) those Patents listed in Exhibit "B" hereto.

     (f) Those 510K regulatory submissions described as Er:YAG Ophthalmology
K904630 and Er:YAG Anterior Capsulotomy K905141, and all clinical studies and
records related thereto.

     2. Seller's Disclaimer. Seller expressly disclaims and negates any
representation or warranty, whether expressed or implied, relating to the
condition of the acquired assets (including but not limited to any warranty of
merchantability, of fitness for a particular purpose, or of conformity to models
or samples of materials), it being the intention of Seller and Buyer that the
Assets be conveyed "as is, where at" in their present condition and state or
repair.

     3. Purchase Price. In consideration for Buyer's purchase of the assets of
Seller, Buyer shall pay to Seller the total sum of $3,725,000.00 as follows:

     (a) Cash at Closing in the amount of $500,000 (of which $100,000.00 will
come from Buyer's deposit); and,

     (b) A Purchase Note for an additional $3,225,000, payable as follows:

     (i) $1,000,000.00 on December 15, 2000, (ii) $1,000,000.00 on January 15,
2001, (iii) $725,000.00 on February 15, 2001, and (iv) $500,000.00 on February
28, 2001.

     Provided, however, if Seller delivers less than 1000 fiber optic cables to
Buyer at Closing then the Purchase Price will be reduced by an amount equal to
$400.00 multiplied by the number of fiber optic cables less than 1000 and such
reduction in the Purchase Price shall reduce the initial cash at closing amount.

     4. Security. Pursuant to a Pledge and Security Agreement attached hereto as
Exhibit "A", the Purchase Note will be secured by (a) freely tradable shares of
Buyer's common stock that will have a value of $3,000,000.00; and, (b) the

<PAGE>

assets. The number of shares of Buyer's common stock to be issued to Premier as
security will be determined based on the average closing price of a share of
Buyer's common stock for the five (5) business days immediately proceeding the
date of Closing.

     5. Seller Option. Seller shall have the option to sell and the Buyer the
obligation to buy an additional ten (10) Product Sets at a fixed price of
$50,000.00. Seller must exercise this option by giving written notice to Buyer
on or before March 1, 2001 or the option shall expire and have not further legal
effect. In the event Seller exercises this option, Buyer's payment shall be due
on March 1, 2001.

     6. Assignment and License of Patents. Seller shall provide to Buyer at
Closing

     (a) an Assignment of those patents of Seller relating solely to ophthalmic
devices and/or methods, as listed in Exhibit "B", attached hereto.

     (b) a world-wide, irrevocable, transferable, Exclusive License (with right
to sublicense) under the patents listed in Exhibit "C" attached hereto, limited
solely to the ophthalmic field, to make, have made, use, offer for sale, sell,
and import ophthalmic products or ophthalmic services.

     The above Assignment and Exclusive License shall be in the form and on the
conditions set forth in Exhibit "D", attached hereto, entitled Patent Assignment
and License Agreement"

     7. Bankruptcy Court Approval. Seller agrees that upon execution of this
Agreement by the parties hereto, Seller shall prepare and file a motion with the
Bankruptcy Court seeking, approval of this Agreement, including the following
terms and conditions relating to the submission of bids ("Overbids") for the
Assets to be sold hereunder:

<PAGE>

          (a) Only persons or entities that comply with the following procedures
will be deemed qualified bidders ("Qualified Bidders") at the hearing on the
motion for approval of the sale of the Acquired Assets contemplated herein (the
"Sale Hearing"). Buyer shall be deemed a Qualified Bidder at the Sale Hearing.

          (b) All Qualified Bidders must prequalify at least ten (10) days
before the Sale Hearing. In order to prequalify, any person or entity intending
to submit an Overbid must provide to Seller (i) sufficient evidence of the
person or entity's ability to complete the transaction and (ii) a deposit of
$100,000.00.

          (c) Any initial Overbid must be in a minimum amount of $4,000,000.00
(the "Initial Overbid"). Any Initial Overbid must be for the purchase of the
Assets on substantially the same terms as set forth in this Agreement, must be
all cash and must be closed within the timeframe required by this Agreement.

          (d) If a qualified Initial Overbid is received, bidding will continue
at the Sale Hearing in increments of not less than $100,000.00 in value.

          (e) All Overbids must be for all, and not less than all, of the
Assets.

          (f) If a sale of any of the Assets is consummated with a party other
than Buyer, Seller shall, at the Closing of the transaction, (1) return Buyer's
deposit in full, and (2) pay to Buyer a break-up fee equal to 2.5% of the total
consideration for the purchase and sale.

     8. Closing. The Closing under this Agreement shall take place on or before
October 18, 2000, or at such other time as mutually agreed upon by the parties.

<PAGE>

     9. Representations and Warranties.

     a. Title to Assets. Except as disclosed to Buyer, on the Closing Date,
Seller represents and warrants that Seller will have good and transferable title
to the Assets, free and clear of any lien, mortgage, charge, security interest,
pledge or other encumbrance or other adverse claim or interest of any nature,
other than the security interest to secure payment of the purchase price
hereunder.

     b. Government Authorizations and Third Party Approvals Buyer and Seller
represent and warrant that no authorizations or approvals of any governmental
body or regulatory authority is required to be obtained by either of them in
connection with the execution, delivery or performance of the Agreement, or, if
so required, each has or will, prior to Closing, obtain such required
authorizations or approvals. Seller and Buyer will obtain any and all necessary
third party approvals that are required for each to obtain in connection with
the execution, delivery or performance of this Agreement.

     c. Patents. Except as specifically disclosed to Buyer in writing, Seller
represents and warrants that Seller owns, possesses, and has good title to the
Patents listed in Exhibit "B" and Exhibit "C" hereto.

     d. Litigation. Except as specifically disclosed by Seller to Buyer in
writing, Seller represents and warrants that there are no legal actions, suits,
arbitrations, or other legal administrative or other governmental proceedings
pending or threatened against the Seller, or the Assets, or business that could
have a material adverse affect on the Assets; and that Seller is not aware of
any facts that might result in any such action, suit, arbitration, or other
proceeding.

<PAGE>

     10. Conditions Precedent to Closing. Unless waived, in whole or in part, in
writing by parties, the obligations of each party under this Agreement are
subject to and conditioned on the satisfaction, at or prior to the closing, of
all of the terms and conditions of this Agreement to be complied with and
performed by each party at or prior to the closing, and subject to the following
conditions:

     a. Approval of this Agreement and the Letter Agreement to be filed under
seal with the Bankruptcy Court dated September 23, 2000, by the Bankruptcy Court
in Seller's Chapter 11 proceedings.

     b. All corporate and other proceedings and actions taken in connection with
the transactions contemplated by this Agreement, and all certificates,
agreements, instruments, and documents mentioned in this Agreement shall be
satisfactory in form and substance to the parties and their counsel.

     c. The representations and warranties of parties in this Agreement shall be
deemed to have been made again on the closing date and to be true and correct at
that time.

     d. Approval of this Agreement and the transaction by the boards of
directors of Seller and Buyer.

     11. Survival of Representations and Warranties. All statements of fact
contained in any memorandum, certificate, instrument, or other document
delivered by or on behalf of Seller for information or reliance pursuant to this
Agreement shall be deemed representations and warranties by Seller under this
Agreement. All representations and warranties of the parties shall survive the
closing.

<PAGE>

     12. Amendments and Waiver. This Agreement may be amended or modified at any
time and in all respects, and any provision may be waived, by an instrument in
writing executed by Buyer and Seller, or by either of them in case of a waiver.

     13. Assignment. Neither this Agreement nor any right created by this
Agreement shall be assignable by either Seller (or its successors in interest)
or Buyer without the prior written consent of the other, except for an
assignment incident to a merger, consolidation, or reorganization of either
party. Nothing in this Agreement, expressed or implied, is intended to confer on
any person, other than the parties and their successors, any rights or remedies
under or by reason of this Agreement.

     14. Notices. Any notice, communication, request, reply, or advice
("notice") required or permitted to be given, made, or accepted by either party
to the other under this Agreement must be in writing and may be given or be
served by depositing it in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested or by delivering it in person to the party. Notice deposited in the
mail in the manner described in this paragraph shall be effective only if and
when received by the party to be notified. For purposes of notice, the addresses
of the parties shall, until changed as provided in this Agreement, be as
follows:

     Buyer:  SURGILIGHT, INC.
             12001 Science Drive, Suite 140
             Orlando, Florida 32826

     Seller: PREMIER LASER SYSTEMS
             3 Morgan
             Irvine, CA 92618

<PAGE>

     42. Headings. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

     43. Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     44. Parties in Interest. All the terms and provisions of this Agreement
shall be binding on and inure to the benefit of and be enforceable by Buyer and
Seller, their heirs, executors, administrators, successors, and permitted
assigns.

     45. Integrated Agreement. This Agreement constitutes the entire agreement
between the parties, and there are no agreements, understandings, restrictions,
warranties, or representations between the parties other than those set forth or
provided for in this Agreement.

     46. Choice of Law. It is the intention of the parties that the laws of
Florida shall govern the validity of this Agreement, the construction of its
terms, and the interpretation of the rights and duties of the parties.

     47. Attorney's Fees and Court Costs. If legal action is commenced to
enforce this Agreement, the prevailing party in such action shall be entitled to
recover its costs and reasonable attorneys' fees in addition to any other relief
granted.

     48. Non-Waiver of Rights. No delay or omission on the part of any party
hereto in exercising any right hereunder shall operate as a waiver of such right
or any other right under this Agreement.

<PAGE>

     49. Interpretation and Construction. The parties hereto have each
negotiated the terms hereof, reviewed this Agreement carefully, and discussed it
with their respective legal counsel. It is the intent of the parties that each
word, phrase, and sentence and other part hereof shall be given' its plain
meaning, and that rules of interpretation or construction of agreements that
would construe any ambiguity of any part hereof against the draftsman, by virtue
of being the draftsman, shall not apply.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                            PREMIER LASER SYSTEMS, INC.,
                                            a. California corporation

                                            By:  /s/  Michael J. Quinn
                                               -------------------------------
                                                      Michael J. Quinn
                                                      President & CEO

                                            SURGILIGHT, INC., a Delaware
                                            Corporation

                                            By:  /s/  J.T. Lin
                                               -------------------------------
                                                      J.T. Lin
                                                      President & CEO

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