Document:

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                                                                   Exhibit 10.14

                              QUANTUM CORPORATION

                              MAXTOR CORPORATION

                  7% Convertible Subordinated Notes due 2004

                         THIRD SUPPLEMENTAL INDENTURE

                           Dated as of April 2, 2001

                                      to

                                   INDENTURE

                          Dated as of August 1, 1997

                       LASALLE BANK NATIONAL ASSOCIATION

                         (f/k/a LaSalle National Bank)
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     This Third Supplemental Trust Indenture, dated as of April 2, 2001 (the
"Supplemental Indenture"), among Quantum Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
Maxtor Corporation, a corporation duly organized and existing under the laws of
the State of Delaware ("Maxtor"), and LaSalle Bank National Association (f/k/a
Lasalle National Bank), a national banking association organized and existing
under the laws of the United States of America, as Trustee (the "Trustee"),
supplementing that certain Indenture, dated as of August 1, 1997, between the
Company and the Trustee, as supplemented by the Supplemental Indenture, dated as
of August 1, 1997 (the "First Supplemental Indenture"), as supplemented by the
Second Supplemental Indenture, dated as of August 4, 1999 (the "Second
Supplemental Indenture," and such Indenture, as supplemented by the First
Supplemental Indenture, the Second Supplemental Indenture and this Supplemental
Indenture, being referred to herein as the "Indenture").

                                    RECITALS

     A.  The Company has duly authorized the execution and delivery of the
Indenture heretofore executed and delivered to provide for the issuance from
time to time of its unsecured debentures, notes, or other evidences of
indebtedness to be issued in one or more series as provided for in the Indenture
heretofore executed and delivered.

     B.  The Company issued Securities denominated "7% Convertible Subordinated
Notes due 2004" (the "Notes") pursuant to the terms of the First Supplemental
Indenture.

     C.  On August 4, 1999, the Company entered into a restructuring (the
"Restructuring") of its common stock, whereby the common stock of the Company
was exchanged for two classes of tracking stock called DLT & Storage Systems
group stock and Hard Disk Drive group stock.  In connection with the
Restructuring, each share of common stock was changed into one share of DLT &
Storage Systems group stock and 0.5 shares of Hard Disk Drive ("HDD") group
stock, and pursuant to Section 1409 of the Indenture, the Company and the
Trustee executed the Second Supplemental Indenture to make the Notes convertible
into both classes of tracking stock as set forth in the Second Supplemental
Indenture.

     D.  The Company has entered into an Amended and Restated Agreement and
Plan of Merger and Reorganization, dated as of October 3, 2000, by and among the
Company, Insula Corporation, a Delaware corporation and a wholly-owned
subsidiary of the Company ("Spinco"), Maxtor and Hawaii Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Maxtor pursuant to which
the Company will contribute and transfer to Spinco all of the assets and
liabilities associated with the HDD business, and upon the completion of such
contribution and transfer and immediately prior to and in connection with the
merger of Spinco with and into Maxtor (the "Merger"), the Company will redeem
the Hard Disk Drive group stock.

     E.  Pursuant to Section 1409 of the Indenture, the Company, Maxtor and
Trustee have agreed in connection with the Merger to execute this Supplemental
Indenture to make the Notes
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convertible into Quantum Common Stock (as defined below) and the Maxtor Common
Stock (as defined below) as set forth herein.

                                  ARTICLE ONE
                                   AMENDMENTS

Section 101  Amendment to Section 101 of Indenture.  Section 101 of the
Indenture, as amended by Section 101 of the Second Supplemental Indenture, is
hereby amended by deleting the definitions of DSS Common Stock and HDD Common
Stock and by adding the following definitions in appropriate alphabetical order:

          "Board of Directors" means either the board of directors of the
     Company or Maxtor, as the case may be, or any duly authorized committee of
     that board empowered to act for it with respect to this Indenture.

          "Board Resolution" means a copy of a resolution certified by the
     Secretary or an Assistant Secretary of the Company or Maxtor, as the case
     may be, to have been duly adopted by the Board of Directors and to be in
     full force and effect on the date of such certification, and delivered to
     the Trustee.

          "Common Stock" shall mean the Quantum Common Stock and Maxtor Common
     Stock 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 or
     Maxtor, as the case may be, and which are not subject to redemption by the
     Company or Maxtor.

          "Maxtor" means the corporation named as "Maxtor" in the first
     paragraph of this instrument until a successor Person shall have become
     such pursuant to the applicable provisions of this Indenture, and
     thereafter "Maxtor" shall mean such successor Person.

          "Maxtor Common Stock" shall mean the Common Stock, par value $.01 per
     share, of Maxtor 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 Maxtor and which
     are not subject to redemption by Maxtor; provided that if at any time there
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     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.

          "Maxtor Subsidiary" means a corporation of which at least a majority
     of the outstanding voting stock having the power to elect a majority of the
     board of directors of such corporation is at the time owned, directly or
     indirectly, by Maxtor or by one or more other subsidiaries of Maxtor, or by
     Maxtor and one or more other subsidiaries of Maxtor, and

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     the accounts of which are consolidated with those of Maxtor in its most
     recent consolidated financial statements in accordance with generally
     accepted accounting principles. For the purposes of this definition,
     "voting stock" means stock which ordinarily has voting power for the
     election of directors, whether at all times or only so long as no senior
     class of stock has such voting power by reason of any contingency.

          "Officers' Certificate" means a certificate signed by the Chairman of
     the Board, a Vice Chairman of the Board, the President or a Vice President,
     and by the principal financial officer, the Treasurer, an Assistant
     Treasurer, the Secretary or an Assistant Secretary, of the Company or
     Maxtor, as the case may be, and delivered to the Trustee.  One of the
     officers signing an Officers' Certificate given pursuant to Section 1004
     shall be the principal executive, financial or accounting officer of the
     Company.

          "Quantum Common Stock" shall mean the Common Stock, par value $0.01
     per share, of the Company 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
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     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.

Section 102  Amendments to Article Fourteen of Indenture.

     Article Fourteen of the Indenture, as amended by Section 102 of the Second
Supplemental Indenture, is hereby replaced in its entirety with the following:

                                ARTICLE FOURTEEN

                            CONVERSION OF SECURITIES

     SECTION 1401.  Applicability of Article Fourteen.

          The provisions of this Article shall be applicable to the Securities
     which are convertible into shares of Quantum Common Stock or Maxtor Common
     Stock, as the case may be, and the issuance of such shares of Quantum
     Common Stock or Maxtor Common Stock, as the case may be, upon the
     conversion of such Securities, except as otherwise specified as
     contemplated by Section 301 for the Securities of such series.

     SECTION 1402.  Exercise of Conversion Privilege.

          In order to exercise a conversion privilege, the Holder of a Security
     with such a privilege shall surrender such Security to the Company at the
     office or agency maintained for that purpose pursuant to Section 1002,
     accompanied by a duly executed conversion notice to

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     the Company and Maxtor substantially in the form set forth in Section 206
     stating that the Holder elects to convert such Security or a specified
     portion thereof. Such notice shall also state, if different from the name
     and address of such Holder, the name or names (with address) in which the
     certificate or certificates for shares of Quantum Common Stock and Maxtor
     Common Stock, as the case may be, which shall be issuable on such
     conversion shall be issued. Securities surrendered for conversion shall (if
     so required by the Company, Maxtor or the Trustee) be duly endorsed by or
     accompanied by instruments of transfer in forms satisfactory to the
     Company, Maxtor and the Trustee duly executed by the registered Holder or
     its attorney duly authorized in writing; and Securities so surrendered for
     conversion (in whole or in part) during the period from the close of
     business on any Regular Record Date to the opening of business on the next
     succeeding Interest Payment Date (excluding Securities or portions thereof
     called for redemption during the period beginning at the close of business
     on a Regular Record Date and ending at the opening of business on the first
     Business Day after the next succeeding Interest Payment Date, or if such
     Interest Payment Date is not a Business Day, the second such Business Day)
     shall also be accompanied by payment in funds acceptable to the Company of
     an amount equal to the interest payable on such Interest Payment Date on
     the principal amount of such Security then being converted, and such
     interest shall be payable to such registered Holder notwithstanding the
     conversion of such Security, subject to the provisions of Section 307
     relating to the payment of Defaulted Interest by the Company. As promptly
     as practicable after the receipt of such notice and of any payment required
     pursuant to a Board Resolution and, subject to Section 303, set forth, or
     determined in the manner provided, in an Officers' Certificate, or
     established in one or more indentures supplemental hereto setting forth the
     terms of such series of Security, and the surrender of such Security in
     accordance with such reasonable regulations as the Company may prescribe,
     the Company and Maxtor shall issue and shall deliver, at the office or
     agency at which such Security is surrendered, to such Holder or on its
     written order, a certificate or certificates for the number of full shares
     of the respective Quantum Common Stock and Maxtor Common Stock issuable
     upon the conversion of such Security (or specified portion thereof), in
     accordance with the provisions of such Board Resolution, Officers'
     Certificate or supplemental indenture, and cash as provided therein in
     respect of any fractional share of such Quantum Common Stock or Maxtor
     Common Stock, as the case may be, otherwise issuable upon such conversion.
     Such conversion shall be deemed to have been effected immediately prior to
     the close of business on the date on which such notice and such payment, if
     required, shall have been received in proper order for conversion by the
     Company and Maxtor and such Security shall have been surrendered as
     aforesaid (unless such Holder shall have so surrendered such Security and
     shall have instructed the Company and Maxtor to effect the conversion on a
     particular date following such surrender and such Holder shall be entitled
     to convert such Security on such date, in which case such conversion shall
     be deemed to be effected immediately prior to the close of business on such
     date) and at such time the rights of the Holder of such Security as such
     Security Holder shall cease and the Person or Persons in whose name or
     names any certificate or certificates for shares of Quantum Common Stock
     and Maxtor Common Stock shall be issuable upon such conversion shall be
     deemed to have become the holder or holders of record of the shares
     represented thereby. Except as set forth above and subject to the final

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     paragraph of Section 307, no payment or adjustment shall be made upon any
     conversion on account of any interest accrued on the Securities (or any
     part thereof) surrendered for conversion or on account of any dividends on
     Quantum Common Stock or Maxtor Common Stock issued upon such conversion.

          In the case of any Security which is converted in part only, upon such
     conversion the Company shall execute and the Trustee shall authenticate and
     deliver to or on the order of the Holder thereof, at the expense of the
     Company, a new Security or Securities of the same series, of authorized
     denominations, in aggregate principal amount equal to the unconverted
     portion of such Security.

     SECTION 1403.  No Fractional Shares.

          No fractional share of Quantum Common Stock or Maxtor Common Stock
     shall be issued upon conversions of Securities of any series. If more than
     one Security shall be surrendered for conversion at one time by the same
     Holder, the number of full shares which shall be issuable upon conversion
     shall be computed on the basis of the aggregate principal amount of the
     Securities (or specified portions thereof to the extent permitted hereby)
     so surrendered. If, except for the provisions of this Section 1403, any
     Holder of a Security or Securities would be entitled to a fractional share
     of Quantum Common Stock or Maxtor Common Stock upon the conversion of such
     Security or Securities, or specified portions thereof, the Company or
     Maxtor, as the case may be, shall pay to such Holder an amount in cash
     equal to the current market value of such fractional share computed, (i) if
     such Quantum Common Stock or Maxtor Common Stock, as the case may be, is
     listed or admitted to unlisted trading privileges on a national securities
     exchange or market, on the basis of the last reported sale price regular
     way on such exchange or market on the last trading day prior to the date of
     conversion upon which such a sale shall have been effected, or (ii) if such
     Quantum Common Stock or Maxtor Common Stock, as the case may be, is not at
     the time so listed or admitted to unlisted trading privileges on a national
     securities exchange or market, on the basis of the average of the bid and
     asked prices of such Quantum Common Stock or Maxtor Common Stock, as the
     case may be, in the over-the-counter market, on the last trading day prior
     to the date of conversion, as reported by the National Quotation Bureau,
     Incorporated or similar organization if the National Quotation Bureau,
     Incorporated is no longer reporting such information, or if not so
     available, the fair market price as determined by the Board of Directors.
     For purposes of this Section 1403, "trading day" shall mean each Monday,
     Tuesday, Wednesday, Thursday and Friday, other than any day on which either
     the Quantum Common Stock or Maxtor Common Stock, as the case may be, is not
     traded on the Nasdaq National Market, or if the Quantum Common Stock or
     Maxtor Common Stock, as the case may be, is not traded on the Nasdaq
     National Market, on the principal exchange or market on which the Quantum
     Common Stock or Maxtor Common Stock, as the case may be, is traded or
     quoted.

     SECTION 1404.  Adjustment of the Quantum Conversion Price and the Maxtor
                    Conversion Price.

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          The Quantum Conversion Price and the Maxtor Conversion Price shall be
     adjusted for any stock dividends, stock splits, reclassifications,
     combinations or similar transactions in accordance with the terms of the
     supplemental indenture or Board Resolutions of the Company or Maxtor, as
     the case may be, setting forth the terms of the Securities as set forth in
     Section 105 of this Supplemental Indenture.

          Whenever either the Quantum Conversion Price or the Maxtor Conversion
     Price is adjusted, the Company or Maxtor, as the case may be, shall compute
     the adjusted Quantum Conversion Price or Maxtor Conversion Price, as the
     case may be, in accordance with terms of the applicable Board Resolution of
     the Company or Maxtor, as the case may be, or supplemental indenture and
     shall prepare an Officers' Certificate of either the Company or Maxtor, as
     the case may be, setting forth the adjusted Quantum Conversion Price or
     Maxtor Conversion Price, as the case may be, and showing in reasonable
     detail the facts upon which such adjustment is based, and such certificate
     shall forthwith be filed at each office or agency maintained for the
     purpose of conversion of Securities pursuant to Section 1002 and, if
     different, with the Trustee. The Company shall with respect to any
     adjustment to the Quantum Conversion Price forthwith cause a notice setting
     forth the adjusted Quantum Conversion Price to be mailed, first class
     postage prepaid, to each Holder of Securities of such series at its address
     appearing on the Security Register and to any conversion agent other than
     the Trustee.  Maxtor shall with respect to any adjustment to the Maxtor
     Conversion Price forthwith cause a notice setting forth the adjusted Maxtor
     Conversion Price to be mailed, first class postage prepaid, to each Holder
     of Securities of such series at its address appearing on the Security
     Register and to any conversion agent other than the Trustee.

          SECTION 1405.  Notice of Certain Corporate Actions.

          (i) In the case of the Company, if:

               (1) the Company shall declare a dividend (or any other
          distribution) on its Quantum Common Stock payable otherwise than in
          cash out of its retained earnings (other than a dividend for which
          approval of any stockholders of the Company is required) that would
          require an adjustment pursuant to Section 1404; or

               (2) the Company shall authorize the granting to all or
          substantially all of the holders of its Quantum Common Stock of
          rights, options or warrants to subscribe for or purchase any shares of
          capital stock of any class or of any other rights (other than any such
          grant for which approval of any stockholders of the Company is
          required); or

               (3) any reclassification of the Quantum Common Stock (other than
          a subdivision or combination of its outstanding shares of Quantum
          Common Stock, or of any consolidation, merger or share exchange to
          which the Company is a party and for which approval of any
          stockholders of the Company is required), or of the sale of all or
          substantially all of the assets of the Company shall occur; or

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               (4) the voluntary or involuntary dissolution, liquidation or
          winding up of the Company shall occur;

               then the Company shall cause to be filed with the Trustee, and
          shall cause to be mailed to all Holders at their last addresses as
          they shall appear in the Security Register, at least 20 days (or 10
          days in any case specified in Clause (1) or (2) above) prior to the
          applicable record date hereinafter specified, a notice stating (i) the
          date on which a record is to be taken for the purpose of such
          dividend, distribution, rights, options or warrants, or, if a record
          is not to be taken, the date as of which the holders of Quantum Common
          Stock of record to be entitled to such dividend, distribution, rights,
          options or warrants are to be determined, or (ii) the date on which
          such reclassification, consolidation, merger, share exchange, sale,
          dissolution, liquidation or winding up is expected to become
          effective, and the date as of which it is expected that holders of
          Quantum Common Stock of record shall be entitled to exchange their
          shares of Quantum Common Stock for securities, cash or other property
          deliverable upon such reclassification, consolidation, merger, share
          exchange, sale, dissolution, liquidation or winding up. If at any time
          the Trustee shall not be the conversion agent, a copy of such notice
          shall also forthwith be filed by the Company with the Trustee.

          (ii) In the case of Maxtor, if:

               (1) Maxtor shall declare a dividend (or any other distribution)
          on its Maxtor Common Stock payable otherwise than in cash out of its
          retained earnings (other than a dividend for which approval of any
          stockholders of Maxtor is required) that would require an adjustment
          pursuant to Section 1404; or

               (2) Maxtor shall authorize the granting to all or substantially
          all of the holders of its Maxtor Common Stock of rights, options or
          warrants to subscribe for or purchase any shares of capital stock of
          any class or of any other rights (other than any such grant for which
          approval of any stockholders of Maxtor is required); or

               (3) any reclassification of the Maxtor Common Stock (other than a
          subdivision or combination of its outstanding shares of Maxtor Common
          Stock, or of any consolidation, merger or share exchange to which
          Maxtor is a party and for which approval of any stockholders of Maxtor
          is required), or of the sale of all or substantially all of the assets
          of Maxtor shall occur; or

               (4) the voluntary or involuntary dissolution, liquidation or
          winding up of Maxtor shall occur;

               then Maxtor shall cause to be filed with the Trustee, and shall
          cause to be mailed to all Holders at their last addresses as they
          shall appear in the Security Register, at least 20 days (or 10 days in
          any case specified in Clause (1) or (2) above) prior to the applicable
          record date hereinafter specified, a notice stating (i) the date on
          which a record is to be taken for the purpose of such dividend,
          distribution, rights,

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          options or warrants, or, if a record is not to be taken, the date as
          of which the holders of Maxtor Common Stock of record to be entitled
          to such dividend, distribution, rights, options or warrants are to be
          determined, or (ii) the date on which such reclassification,
          consolidation, merger, share exchange, sale, dissolution, liquidation
          or winding up is expected to become effective, and the date as of
          which it is expected that holders of Maxtor Common Stock of record
          shall be entitled to exchange their shares of Maxtor Common Stock for
          securities, cash or other property deliverable upon such
          reclassification, consolidation, merger, share exchange, sale,
          dissolution, liquidation or winding up. If at any time the Trustee
          shall not be the conversion agent, a copy of such notice shall also
          forthwith be filed by Maxtor with the Trustee.

     SECTION 1406.  Reservation of Shares of Quantum Common Stock and Maxtor
                    Common Stock.

          The Company shall at all times reserve and keep available, free from
     preemptive rights, out of its authorized but unissued Quantum Common Stock,
     for the purpose of effecting the conversion of Securities, the full number
     of shares of Quantum Common Stock then issuable upon the conversion of all
     outstanding Securities that have conversion rights.

          Maxtor shall at all times reserve and keep available, free from
     preemptive rights, out of its authorized but unissued Maxtor Common Stock,
     for the purpose of effecting the conversion of Securities, the full number
     of shares of Maxtor Common Stock then issuable upon the conversion of all
     outstanding Securities that have conversion rights.

     SECTION 1407.  Payment of Certain Taxes Upon Conversion.

          Except as provided in the next sentence, the Company will pay any and
     all taxes that may be payable in respect of the issue or delivery of shares
     of its Quantum Common Stock on conversion of Securities pursuant hereto.
     The Company shall not, however, be required to pay any tax which may be
     payable in respect of any transfer involved in the issue and delivery of
     shares of its Quantum Common Stock in a name other than that of the Holder
     of the Security or Securities to be converted, and no such issue or
     delivery shall be made unless and until the person requesting such issue
     has paid to the Company the amount of any such tax, or has established, to
     the satisfaction of the Company, that such tax has been paid.

          Except as provided in the next sentence, Maxtor will pay any and all
     taxes that may be payable in respect of the issue or delivery of shares of
     its Maxtor Common Stock on conversion of Securities pursuant hereto.
     Maxtor shall not, however, be required to pay any tax which may be payable
     in respect of any transfer involved in the issue and delivery of shares of
     its Maxtor Common Stock in a name other than that of the Holder of the
     Security or Securities to be converted, and no such issue or delivery shall
     be made unless and until the person requesting such issue has paid to
     Maxtor the amount of any such tax, or has established, to the satisfaction
     of Maxtor, that such tax has been paid.

     SECTION 1408.  Nonassessability.

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          The Company covenants that all shares of its Quantum Common Stock
     which may be issued upon conversion of Securities will upon issue in
     accordance with the terms hereof be duly and validly issued and fully paid
     and nonassessable.

          Maxtor covenants that all shares of its Maxtor Common Stock which may
     be issued upon conversion of Securities will upon issue in accordance with
     the terms hereof be duly and validly issued and fully paid and
     nonassessable.

     SECTION 1409.  Provision in Case of Consolidation, Merger or Sale of
                    Assets.

          (i)  With respect to the Company, if any of the following events
               occur, namely (i) any reclassification or change of the
               outstanding shares of Quantum Common Stock (other than a
               subdivision or combination of Quantum Common Stock to which
               Section 1404 applies), (ii) any consolidation, merger or
               combination of the Company with another corporation as a result
               of which holders of Quantum Common Stock shall be entitled to
               receive stock, securities or other property or assets (including
               cash) with respect to or in exchange for such Quantum Common
               Stock, or (iii) any sale or conveyance of the properties and
               assets of the Company as, or substantially as, an entirety to any
               other corporation as a result of which holders of Quantum Common
               Stock shall be entitled to receive stock, securities or other
               property or assets (including cash) with respect to or in
               exchange for such Quantum Common Stock, then the Company and
               Maxtor (as required) or the successor or purchasing corporation,
               as the case may be, shall execute with the Trustee a supplemental
               indenture (which shall comply with the Trust Indenture Act as in
               force at the date of execution of such supplemental indenture)
               providing that the Holder of each Security of a series then
               Outstanding that is convertible into Quantum Common Stock of the
               Company shall have the right thereafter to convert such Security
               into the kind and amount of shares of stock and other securities
               or property or assets (including cash) receivable upon such
               reclassification, change, consolidation, merger, combination,
               sale or conveyance by a holder of a number of shares of Quantum
               Common Stock issuable upon conversion of such Securities
               (assuming, for such purposes, a sufficient number of authorized
               shares of Quantum Common Stock is available to convert all such
               Securities) immediately prior to such reclassification, change,
               consolidation, merger, combination, sale or conveyance assuming
               such holder of Quantum Common Stock did not exercise his rights
               of election, if any, as to the kind or amount of securities, cash
               or other property receivable upon such consolidation, merger,
               statutory exchange, sale or conveyance (provided that, if the
               kind or amount of securities, cash or other property receivable
               upon such consolidation, merger, statutory exchange, sale or
               conveyance is not the same for each share of Quantum Common Stock
               in respect of which such rights of election shall not have been
               exercised ("nonelecting share")), then for the purposes of this
               Section 1409 the kind and amount of securities, cash or other
               property receivable upon such consolidation, merger, statutory
               exchange, sale or conveyance for each

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               non-electing share shall be deemed to be the kind and amount so
               receivable per share by a plurality of the nonelecting shares.

         (ii)  With respect to Maxtor, if any of the following events occur,
               namely (i) any reclassification or change of the outstanding
               shares of Maxtor Common Stock (other than a subdivision or
               combination of Maxtor Common Stock to which Section 1404
               applies), (ii) any consolidation, merger or combination of Maxtor
               with another corporation as a result of which holders of Maxtor
               Common Stock shall be entitled to receive stock, securities or
               other property or assets (including cash) with respect to or in
               exchange for such Maxtor Common Stock, or (iii) any sale or
               conveyance of the properties and assets of Maxtor as, or
               substantially as, an entirety to any other corporation as a
               result of which holders of Maxtor Common Stock shall be entitled
               to receive stock, securities or other property or assets
               (including cash) with respect to or in exchange for such Maxtor
               Common Stock then the Company and Maxtor or the Company and the
               successor or purchasing corporation, as the case may be, shall
               execute with the Trustee a supplemental indenture (which shall
               comply with the Trust Indenture Act as in force at the date of
               execution of such supplemental indenture) providing that the
               Holder of each Security of a series then Outstanding that is
               convertible into Maxtor Common Stock shall have the right
               thereafter to convert such Security into the kind and amount of
               shares of stock and other securities or property or assets
               (including cash) receivable upon such reclassification, change,
               consolidation, merger, combination, sale or conveyance by a
               holder of a number of shares of Maxtor Common Stock issuable upon
               conversion of such Securities (assuming, for such purposes, a
               sufficient number of authorized shares of Maxtor Common Stock
               available to convert all such Securities) immediately prior to
               such reclassification, change, consolidation, merger,
               combination, sale or conveyance assuming such holder of Maxtor
               Common Stock did not exercise his rights of election, if any, as
               to the kind or amount of securities, cash or other property
               receivable upon such consolidation, merger, statutory exchange,
               sale or conveyance (provided that, if the kind or amount of
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               securities, cash or other property receivable upon such
               consolidation, merger, statutory exchange, sale or conveyance is
               not the same for each share of Maxtor Common Stock in respect of
               which such rights of election shall not have been exercised
               ("Maxtor nonelecting share")), then for the purposes of this
               Section 1409 the kind and amount of securities, cash or other
               property receivable upon such consolidation, merger, statutory
               exchange, sale or conveyance for each Maxtor non-electing share
               shall be deemed to be the kind and amount so receivable per share
               by a plurality of the Maxtor nonelecting shares.

         (iii) Such supplemental indenture in the event of either (i) or (ii)
               above shall provide for adjustments which, for events subsequent
               to the effective date of such supplemental indenture, shall be as
               nearly equivalent as may be practicable to the adjustments
               provided for in this Article Fourteen or in accordance with the
               terms

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<PAGE>

               of the supplemental indenture or Board Resolutions of the Company
               or Maxtor, as the case may be, setting forth the terms of such
               adjustments. The above provisions of this Section 1409 shall
               similarly apply to successive consolidations, mergers,
               conveyances, sales, transfers or leases. Notice of the execution
               of such a supplemental indenture shall be given by the Company to
               the Holder of each Security of a series that is convertible into
               Quantum Common Stock or Maxtor Common Stock as provided in
               Section 106 promptly upon such execution.

               Neither the Trustee nor any conversion agent, if any, shall be
               under any responsibility to determine the correctness of any
               provisions contained in any such supplemental indenture relating
               either to the kind or amount of shares of stock or other
               securities or property or cash receivable by Holders of
               Securities of a series convertible into Quantum Common Stock and
               Maxtor Common Stock upon the conversion of their Securities after
               any such consolidation, merger, conveyance, transfer, sale or
               lease or to any such adjustment, but may accept as conclusive
               evidence of the correctness of any such provisions, and shall be
               protected in relying upon, an Opinion of Counsel with respect
               thereto, which the Company or Maxtor, as applicable, shall cause
               to be furnished to the Trustee upon request.

                                      -11-
<PAGE>

     SECTION 1410.  Duties of Trustee Regarding Conversion.

          Neither the Trustee nor any conversion agent shall at any time be
     under any duty or responsibility to any Holder of Securities that are
     convertible into Quantum Common Stock and Maxtor Common Stock to determine
     whether any facts exist which may require any adjustment of the Quantum
     Conversion Price or the Maxtor Conversion Price, as the case may be, or
     with respect to the nature or extent of any such adjustment when made, or
     with respect to the method employed, whether herein or in any supplemental
     indenture, any resolutions of the Board of Directors of the Company or
     Maxtor, as the case may be, or written instrument executed by one or more
     officers of the Company provided to be employed in making the same. Neither
     the Trustee nor any conversion agent shall be accountable with respect to
     the validity or value (or the kind or amount) of any shares of Quantum
     Common Stock or Maxtor Common Stock, or of any securities or property,
     which may at any time be issued or delivered upon the conversion of any
     Securities and neither the Trustee nor any conversion agent makes any
     representation with respect thereto. Subject to the provisions of Section
     601, neither the Trustee nor any conversion agent shall be responsible for
     any failure of either the Company or Maxtor to issue, transfer or deliver
     any shares of their respective Quantum Common Stock or Maxtor Common Stock
     or stock certificates or other securities or property upon the surrender of
     any Security for the purpose of conversion or to comply with any of the
     covenants of the Company and Maxtor contained in this Article Fourteen or
     in the applicable supplemental indenture, resolutions of the Board of
     Directors of the Company or Maxtor, as the case may be, or written
     instrument executed by one or more duly authorized officers of the Company
     or Maxtor, as the case may be.

     SECTION 1411.  Repayment of Certain Funds Upon Conversion.

          Any funds which at any time shall have been deposited by the Company
     or on its behalf with the Trustee or any other paying agent for the purpose
     of paying the principal of, and premium, if any, and interest, if any, on
     any of the Securities (including, but not limited to funds deposited
     pursuant to Article Thirteen hereof) and which shall not be required for
     such purposes because of the conversion of such Securities as provided in
     this Article Fourteen shall after such conversion be repaid to the Company
     by the Trustee upon the Company's written request.

Section 103  Amendments to Section 201 of First Supplemental Indenture.

     Section 201 of the First Supplemental Indenture, as amended by Section 201
of the Second Supplemental Indenture, is hereby amended by deleting the
definitions of DSS Conversion Price and HDD Conversion Price and by adding the
following definitions in the appropriate alphabetized order:

          "Maxtor Conversion Price" shall have the meaning specified in Section
     501 of this Supplemental Indenture.

                                      -12-
<PAGE>

          "Quantum Conversion Price" has the meaning specified in Section 501 of
     this Supplemental Indenture.

Section 104 Amendment to Section 401 of First Supplemental Indenture.

     Section 401 of the First Supplemental Indenture, as amended by Section 104
of the Second Supplemental Indenture, is hereby amended by replacing the proviso
beginning in the fourth line of the first paragraph of Section 401 with the
following:

     provided, however, that the Notes will not be redeemable following August
     --------  -------
     1, 1999, and before August 1, 2001, unless the fair market value of the
     Quantum Common Stock and Maxtor Common Stock issuable upon the conversion
     of $1,000 of principal amount of Notes, based on the Closing Prices for at
     least 20 Trading Days within a period of 30 consecutive Trading Days ending
     within five Trading Days prior to the notice of redemption, exceeds $1,250
     (using the same Trading Days for determining the Closing Prices of both the
     Quantum Common Stock and the Maxtor Common Stock).

Section 105 Amendment to Article Five of First Supplemental Indenture.

     Article Five of the First Supplemental Indenture, as amended by Section 105
of the Second Supplemental Indenture, is hereby replaced in its entirety with
the following:

     Section 501  Conversion Right

          Subject to and upon compliance with the provisions of this Article
     Five, each Holder shall have the right to convert any $1000 of principal of
     Notes held by such Holder into the number of shares of Quantum Common Stock
     obtained by dividing $666.67 by the Quantum Conversion Price and into the
     number of shares of Maxtor Common Stock obtained by dividing $333.33 by the
     Maxtor Conversion Price. Such conversion right shall commence on August 1,
     1997 and expire at the close of business on August 1, 2004, subject, in the
     case of the conversion of any Global Security, to any applicable book-entry
     procedures of the Depositary therefor. In case a Note is called for
     redemption at the election of the Company, such conversion right in respect
     of the Note shall expire at the close of business on the Business Day next
     preceding the Redemption Date. A Note in respect of which a Holder is
     exercising its option to require redemption upon a Fundamental Change may
     be converted only if such Holder withdraws its election to exercise its
     option in accordance with Article Six hereof.

          The initial Quantum Conversion Price shall be $30.883 and the initial
     Maxtor Conversion Price shall be $20.318, and each shall be adjusted in
     certain instances as provided in this Article Five.

     Section 502  Adjustment of Conversion Price.

                                      -13-
<PAGE>

     The Quantum Conversion Price shall be subject to adjustment from time to
time as follows:

          (a)  In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Quantum Common Stock in shares of
Quantum Common Stock, the Quantum Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Quantum Conversion Price by a fraction of which the
numerator shall be the number of shares of Quantum Common Stock outstanding at
the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination.  The Company will not pay any dividend or
make any distribution on shares of Quantum Common Stock held in the treasury of
the Company.  If any dividend or distribution of the type described in this
Section 502(a) is declared but not so paid or made, the Quantum Conversion Price
shall again be adjusted to the Quantum Conversion Price which would then be in
effect if such dividend or distribution had not been declared.

          (b)  In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Quantum Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Quantum Common Stock at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Quantum Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Quantum Conversion Price in effect immediately prior to the date fixed for
determination of stockholders entitled to receive such rights or warrants by a
fraction of which the numerator shall be the number of shares of Quantum Common
Stock outstanding at the close of business on the date fixed for determination
of stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Quantum Common Stock outstanding on
the date fixed for determination of stockholders entitled to receive such rights
and warrants plus the total number of additional shares of Quantum Common Stock
offered for subscription or purchase.  Such adjustment shall be successively
made whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following the
date fixed for determination of stockholders entitled to receive such rights or
warrants.  To the extent that shares of Quantum Common Stock are not delivered
after the expiration of such rights or warrants, the Quantum Conversion Price
shall be readjusted to the Quantum Conversion Price which would then be in
effect had the

                                      -14-
<PAGE>

adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Quantum Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Quantum Conversion Price shall again be adjusted to be the Quantum Conversion
Price which would then be in effect if such date fixed for the determination of
stockholders entitled to receive such rights or warrants had not been fixed. In
determining whether any rights or warrants entitle the holders to subscribe for
or purchase shares of Quantum Common Stock at less than such Current Market
Price, and in determining the aggregate offering price of such shares of Quantum
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors.

          (c)  In case outstanding shares of Quantum Common Stock shall be
subdivided into a greater number of shares of Quantum Common Stock, the Quantum
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and conversely, in case outstanding shares of Quantum Common Stock
shall be combined into a smaller number of shares of Quantum Common Stock, the
Quantum Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.

          (d)  In case the Company shall, by dividend or otherwise, distribute
to all holders of its Quantum Common Stock shares of any class of capital stock
of the Company (other than any dividends or distributions to which Section
502(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 502(b),
and excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 502(a) (any of the foregoing hereinafter in this Section
502(d) called the "Distribution Securities")), then, in each such case (unless
the Company elects to reserve such Distribution Securities for distribution to
the Holders upon the conversion of the Notes so that any such Holder converting
Notes will receive upon such conversion, in addition to the shares of Quantum
Common Stock to which such Holder is entitled, the amount and kind of such
Distribution Securities which such Holder would have received if such Holder had
converted its Notes immediately prior to the Distribution Record Date (as
defined in Section 504(c) for such distribution of the Distribution
Securities)), the Quantum Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Quantum Conversion
Price in effect on the Distribution Record Date with respect to such
distribution by a fraction of which the numerator shall be the Current Market
Price per share of the Quantum Common Stock on such Distribution Record Date
less the fair market value (as determined by

                                      -15-
<PAGE>

the Board of Directors, whose determination shall be conclusive, and described
in a Board Resolution) on the Distribution Record Date of the portion of the
Distribution Securities so distributed applicable to one share of Quantum Common
Stock and the denominator shall be the Current Market Price per share of the
Quantum Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following such Distribution Record Date;
provided, however, that in the event the then fair market value (as so
--------  -------
determined) of the portion of the Distribution Securities so distributed
applicable to one share of Quantum Common Stock is equal to or greater than the
Current Market Price of the Quantum Common Stock on the Distribution Record
Date, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive upon conversion the amount of
Distribution Securities such Holder would have received had such Holder
converted each Note on the Distribution Record Date. In the event that such
dividend or distribution is not so paid or made, the Quantum Conversion Price
shall again be adjusted to be the Quantum Conversion Price which would then be
in effect if such dividend or distribution had not been declared. If the Board
of Directors determines the fair market value of any distribution for purposes
of this Section 502(d) by reference to the actual or when issued trading market
for any securities, it must in doing so consider the prices in such market over
the same period used in computing the Current Market Price of the Quantum Common
Stock.

          Each share of Quantum Common Stock upon conversion of Notes shall be
entitled to receive the appropriate number of Rights, if any, and the
certificates representing the Quantum Common Stock issued upon such conversion
shall bear such legends, if any, in each case as provided by and subject to the
terms of the Rights Agreement as in effect at the time of such conversion.  If
the Rights are separated from the Quantum Common Stock in accordance with the
provisions of the Rights Agreement such that the Holders would thereafter not be
entitled to receive any such Rights in respect to the Quantum Common Stock,
issuable upon conversion of such Notes, the Quantum Conversion Price will be
adjusted as provided in this Section 502(d) on the separation date; provided
                                                                    --------
that if such Rights expire, terminate or are redeemed by the Company, the
Quantum Conversion Price shall again be adjusted to be the Quantum Conversion
Price which would then be in effect if such separation had not occurred.  In
lieu of any such adjustment, the Company may amend the Rights Agreement to
provide that upon conversion of the Notes the Holders will receive, in addition
to the Quantum Common Stock issuable upon such conversion, the Rights which
would have attached to such shares of Quantum Common Stock if the Rights had not
become separated from the Quantum Common Stock pursuant to the provisions of the
Rights Agreement.

          Rights or warrants distributed by the Company to all holders of
Quantum Common Stock entitling the holders thereof to subscribe for or purchase
shares of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger

                                      -16-
<PAGE>

Event"): (i) are deemed to be transferred with such shares of Quantum Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Quantum Common Stock, shall be deemed not to have been distributed
for purposes of this Section 502 (and no adjustment to the Quantum Conversion
Price under this Section 502 will be required) until the occurrence of the
earliest Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment (if any is required) to the
Quantum Conversion Price shall be made under this Section 502(d). If any such
right or warrant, including any such existing rights or warrants distributed
prior to the date of this Supplemental Indenture, are subject to events, upon
the occurrence of which such rights or warrants become exercisable to purchase
different securities, evidences of indebtedness or other assets, then the date
of the occurrence of any and each such event shall be deemed to be the date of
distribution and record date with respect to new rights or warrants with such
rights (and a termination or expiration of the existing rights or warrants
without exercise by any of the holders thereof). In addition, in the event of
any distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Quantum Conversion Price under this
Section 502 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Quantum Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Quantum Common Stock with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Quantum Common Stock as of the date
of such redemption or repurchase, and (2) in the case of such rights or warrants
which shall have expired or been terminated without exercise by any holders
thereof, the Quantum Conversion Price shall be readjusted as if such rights and
warrants had not been issued.

     For purposes of this Section 502(d) and Sections 502(a) and (b), any
dividend or distribution to which this Section 502(d) is applicable that also
includes shares of Quantum Common Stock, or rights or warrants to subscribe for
or purchase shares of Quantum Common Stock (or both), shall be deemed instead to
be (1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Quantum Common Stock or rights
or warrants (and any Quantum Conversion Price reduction required by this Section
502(d) with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares of Quantum
Common Stock or such rights or warrants (and any further Quantum Conversion
Price reduction required by Sections 502(a) and (b) with respect to such
dividend or distribution shall then be made), except (A) the Distribution Record
Date of such dividend or distribution shall be substituted as "the date fixed
for the determination of stockholders entitled to receive such dividend

                                      -17-
<PAGE>

or other distribution" and "the date fixed for such determination" within the
meaning of Sections 502(a) and (b) and (B) any shares of Quantum Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of Section 502(a).

          (e)  In case the Company shall, by dividend or otherwise, distribute
to all holders of its Quantum Common Stock cash (excluding (x) any quarterly
cash dividend on the Quantum Common Stock to the extent the aggregate cash
dividend per share of Quantum Common Stock in any fiscal quarter does not exceed
the greater of (A) the amount per share of Quantum Common Stock of the next
preceding quarterly cash dividend on the Quantum Common Stock to the extent that
such preceding quarterly dividend did not require any adjustment of the Quantum
Conversion Price pursuant to this Section 502(e) (as adjusted to reflect
subdivisions or combinations of the Quantum Common Stock), and (B) 3.75% of the
arithmetic average of the Closing Price (determined as set forth in Section
504(a)) during the ten Trading Days (as defined in Section 504(e)) immediately
prior to the date of declaration of such dividend, and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary), then, in such case, the Quantum
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Quantum Conversion Price in effect immediately
prior to the close of business on such Distribution Record Date by a fraction of
which the numerator shall be the Current Market Price of the Quantum Common
Stock on the Distribution Record Date less the amount of cash so distributed
(and not excluded as provided above) applicable to one share of Quantum Common
Stock and the denominator shall be such Current Market Price of the Quantum
Common Stock, such reduction to be effective immediately prior to the opening of
business on the day following the Distribution Record Date; provided, however,
                                                            --------  -------
that in the event the portion of the cash so distributed applicable to one share
of Quantum Common Stock is equal to or greater than the Current Market Price of
the Quantum Common Stock on the Distribution Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder shall
have the right to receive upon conversion the amount of cash such Holder would
have received had such Holder converted each Note on the Distribution Record
Date.  In the event that such dividend or distribution is not so paid or made,
the Quantum Conversion Price shall again be adjusted to be the Quantum
Conversion Price which would then be in effect if such dividend or distribution
had not been declared.  If any adjustment is required to be made as set forth in
this Section 502(e) as a result of a distribution that is a quarterly dividend,
such adjustment shall be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant hereto.  If an adjustment is required to be made as set forth in this
Section 502(e) above as a result of a distribution that is not a quarterly
dividend, such adjustment shall be based upon the full amount of the
distribution.

                                      -18-
<PAGE>

          (f)  In case a tender or exchange offer made by the Company or any
Subsidiary of the Company for all or any portion of the Quantum Common Stock
shall expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per share of
Quantum Common Stock having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that as of the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it may be
amended) exceeds the Current Market Price of the Quantum Common Stock on the
Trading Day next succeeding the Expiration Time, the Quantum Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Quantum Conversion Price in effect immediately prior to the
Expiration Time by a fraction of which the numerator shall be the number of
shares of Quantum Common Stock outstanding (including any tendered or exchanged
shares) on the Expiration Time multiplied by the Current Market Price of the
Quantum Common Stock on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Quantum Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the Current Market Price of the Quantum Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time.  In the event that the Company is obligated to purchase shares
pursuant to any such tender or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Quantum Conversion Price shall again be adjusted to
be the Quantum Conversion Price which would then be in effect if such tender or
exchange offer had not been made.

          (g)  In case of a tender or exchange offer made by a Person other than
the Company or any Subsidiary for an amount which increases the offeror's
ownership of Quantum Common Stock to more than 25% of the aggregate amount of
Quantum Common Stock outstanding and shall involve the payment by such Person of
consideration per share of Quantum Common Stock having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive,
and described in a Board Resolution) at the last time (the "Offer Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Current Market Price of
the Quantum Common Stock on the Trading Day next succeeding the Offer Expiration
Time, and in which, as of the Offer Expiration Time the Board of Directors is
not recommending rejection of the offer, the Quantum Conversion Price shall be
reduced

                                      -19-
<PAGE>

so that the same shall equal the price determined by multiplying the Quantum
Conversion Price in effect immediately prior to the Offer Expiration Time by a
fraction of which the numerator shall be the number of shares of Quantum Common
Stock outstanding (including any tendered or exchanged shares) on the Offer
Expiration Time multiplied by the Current Market Price of the Quantum Common
Stock on the Trading Day next succeeding the Offer Expiration Time and the
denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Offer Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Quantum Common Stock outstanding (less any Accepted
Purchased Shares) on the Offer Expiration Time and the Current Market Price of
the Quantum Common Stock on the Trading Day next succeeding the Offer Expiration
Time, such reduction to become effective immediately prior to the opening of
business on the day following the Offer Expiration Time. In the event that such
Person is obligated to purchase shares pursuant to any such tender or exchange
offer, but such Person is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Quantum Conversion
Price shall again be adjusted to be the Quantum Conversion Price which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this Section 502(g)
shall not be made if, as of the Offer Expiration Time, the offering documents
with respect to such offer disclose a plan or intention to cause the Company to
engage in any transaction described in Article Eight of the Indenture.

Section 503 Adjustment of Maxtor Conversion Price.

     The Maxtor Conversion Price shall be subject to adjustment from time to
time as follows:

          (a)  In case Maxtor shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Maxtor Common Stock in shares of
Maxtor Common Stock, the Maxtor Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Maxtor Conversion Price by a fraction of which the
numerator shall be the number of shares of Maxtor Common Stock outstanding at
the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination.  The Company will not pay any dividend or
make any distribution on shares of Maxtor Common Stock held in the treasury of
Maxtor.  If any dividend or distribution of the type

                                      -20-
<PAGE>

described in this Section 503(a) is declared but not so paid or made, the Maxtor
Conversion Price shall again be adjusted to the Maxtor Conversion Price which
would then be in effect if such dividend or distribution had not been declared.

          (b)  In case Maxtor shall issue rights or warrants to all holders of
its outstanding shares of Maxtor Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Maxtor Common Stock at a price per share less than the Current Market Price
(as defined below) on the date fixed for determination of stockholders entitled
to receive such rights or warrants, the Maxtor Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Maxtor Conversion Price in effect immediately prior to the date fixed for
determination of stockholders entitled to receive such rights or warrants by a
fraction of which the numerator shall be the number of shares of Maxtor Common
Stock outstanding at the close of business on the date fixed for determination
of stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Maxtor Common Stock outstanding on
the date fixed for determination of stockholders entitled to receive such rights
and warrants plus the total number of additional shares of Maxtor Common Stock
offered for subscription or purchase.  Such adjustment shall be successively
made whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following the
date fixed for determination of stockholders entitled to receive such rights or
warrants.  To the extent that shares of Maxtor Common Stock are not delivered
after the expiration of such rights or warrants, the Maxtor Conversion Price
shall be readjusted to the Maxtor Conversion Price which would then be in effect
had the adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of shares of Maxtor Common Stock
actually delivered.  In the event that such rights or warrants are not so
issued, the Maxtor Conversion Price shall again be adjusted to be the Maxtor
Conversion Price which would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants had
not been fixed.  In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Maxtor Common Stock at less than
such Current Market Price, and in determining the aggregate offering price of
such shares of Maxtor Common Stock, there shall be taken into account any
consideration received by Maxtor for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of Directors of
Maxtor.

          (c)  In case outstanding shares of Maxtor Common Stock shall be
subdivided into a greater number of shares of Maxtor Common Stock, the Maxtor
Conversion Price in effect at the opening of business on the day following the
day

                                      -21-
<PAGE>

upon which such subdivision becomes effective shall be proportionately reduced,
and conversely, in case outstanding shares of Maxtor Common Stock shall be
combined into a smaller number of shares of Maxtor Common Stock, the Maxtor
Conversion Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.

          (d)  In case Maxtor shall, by dividend or otherwise, distribute to all
holders of its Maxtor Common Stock shares of any class of capital stock of
Maxtor (other than any dividends or distributions to which Section 503(a)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 503(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 503(a) (any of the foregoing hereinafter in this Section 503(d) called
the "Maxtor Distribution Securities")), then, in each such case (unless Maxtor
elects to reserve such Maxtor Distribution Securities for distribution to the
Holders upon the conversion of the Notes so that any such Holder converting
Notes will receive upon such conversion, in addition to the shares of Maxtor
Common Stock to which such Holder is entitled, the amount and kind of such
Maxtor Distribution Securities which such Holder would have received if such
Holder had converted its Notes immediately prior to the Distribution Record Date
(as defined in Section 504(c) for such distribution of the Maxtor Distribution
Securities)), the Maxtor Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Maxtor Conversion
Price in effect on the Distribution Record Date with respect to such
distribution by a fraction of which the numerator shall be the Current Market
Price per share of the Maxtor Common Stock on such Distribution Record Date less
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the Maxtor
Board of Directors) on the Distribution Record Date of the portion of the Maxtor
Distribution Securities so distributed applicable to one share of Maxtor Common
Stock and the denominator shall be the Current Market Price per share of the
Maxtor Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Distribution Record Date;
provided, however, that in the event the then fair market value (as so
--------  -------
determined) of the portion of the Maxtor Distribution Securities so distributed
applicable to one share of Maxtor Common Stock is equal to or greater than the
Current Market Price of the Maxtor Common Stock on the Distribution Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each Holder shall have the right to receive upon conversion the amount of Maxtor
Distribution Securities such Holder would have received had such Holder
converted each Note on the Distribution Record Date.  In the event that such
dividend or distribution is not so paid or made, the Maxtor Conversion Price
shall again be adjusted to be the Maxtor Conversion Price which would then be in
effect if such dividend or distribution had not been declared.

                                      -22-
<PAGE>

If the Board of Directors of Maxtor determines the fair market value of any
distribution for purposes of this Section 503(d) by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price of the Maxtor Common Stock.

     Rights or warrants distributed by Maxtor to all holders of Maxtor Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Maxtor's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events ("Maxtor
Trigger Event"): (i) are deemed to be transferred with such shares of Maxtor
Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of
future issuances of Maxtor Common Stock (such rights or warrants the "Maxtor
Rights"), shall be deemed not to have been distributed for purposes of this
Section 503 (and no adjustment to the Maxtor Conversion Price under this Section
503 will be required) until the occurrence of the earliest Maxtor Trigger Event,
whereupon such Maxtor Rights shall be deemed to have been distributed and an
appropriate adjustment (if any is required) to the Maxtor Conversion Price shall
be made under this Section 503(d). In lieu of any such adjustment, Maxtor may
provide in the agreement that governs the Maxtor Rights (the "Maxtor Rights
Agreement") that upon conversion of the Notes the Holders will receive, in
addition to the Maxtor Common Stock issuable upon such conversion, the Maxtor
Rights which would have attached to such shares of Maxtor Common Stock if the
Maxtor Rights had not become separated from the Maxtor Common Stock pursuant to
the provisions of the Maxtor Rights Agreement. Each share of Maxtor Common Stock
upon conversion of Notes shall be entitled to receive the appropriate number of
Maxtor Rights, if any, and the certificates representing the Maxtor Common Stock
issued upon such conversion shall bear such legends, if any, in each case as
provided by and subject to the terms of the Maxtor Rights Agreement as in effect
at the time of such conversion. If any Maxtor Rights are subject to events, upon
the occurrence of which such rights the Maxtor Rights become exercisable to
purchase different securities, evidences of indebtedness or other assets, then
the date of the occurrence of any and each such event shall be deemed to be the
date of distribution and record date with respect to new rights or warrants with
such Maxtor Rights (and a termination or expiration of the existing Maxtor
Rights without exercise by any of the holders thereof). In addition, in the
event of any distribution (or deemed distribution) of Maxtor Rights, or any
Maxtor Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto that was counted for purposes of calculating a
distribution amount for which an adjustment to the Maxtor Conversion Price under
this Section 503 was made, (1) in the case of any such Maxtor Rights which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Maxtor Conversion Price shall be readjusted upon such final redemption or

                                      -23-
<PAGE>

repurchase to give effect to such distribution or Maxtor Trigger Event, as the
case may be, as though it were a cash distribution, equal to the per share
redemption or repurchase price received by a holder or holders of Maxtor Common
Stock with respect to such Maxtor Rights (assuming such holder had retained such
Maxtor Rights ), made to all holders of Maxtor Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such Maxtor Rights which
shall have expired or been terminated without exercise by any holders thereof,
the Maxtor Conversion Price shall be readjusted as if such Maxtor Rights had not
been issued.

     For purposes of this Section 503(d) and Sections 503(a) and (b), any
dividend or distribution to which this Section 503(d) is applicable that also
includes shares of Maxtor Common Stock, or rights or warrants to subscribe for
or purchase shares of Maxtor Common Stock (or both), shall be deemed instead to
be (1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Maxtor Common Stock or rights
or warrants (and any Maxtor Conversion Price reduction required by this Section
503(d) with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such shares of Maxtor
Common Stock or such rights or warrants (and any further Maxtor Conversion Price
reduction required by Sections 503(a) and (b) with respect to such dividend or
distribution shall then be made), except (A) the Distribution Record Date of
such dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution" and "the date fixed for such determination" within the meaning of
Sections 503(a) and (b) and (B) any shares of Maxtor Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of Section
503(a).

          (e) In case Maxtor shall, by dividend or otherwise, distribute to all
holders of its Maxtor Common Stock cash (excluding (x) any quarterly cash
dividend on the Maxtor Common Stock to the extent the aggregate cash dividend
per share of Maxtor Common Stock in any fiscal quarter does not exceed the
greater of (A) the amount per share of Maxtor Common Stock of the next preceding
quarterly cash dividend on the Maxtor Common Stock to the extent that such
preceding quarterly dividend did not require any adjustment of the Maxtor
Conversion Price pursuant to this Section 503(e) (as adjusted to reflect
subdivisions or combinations of the Maxtor Common Stock), and (B) 3.75% of the
arithmetic average of the Closing Price (determined as set forth in Section
504(a)) during the ten Trading Days (as defined in Section 504(e)) immediately
prior to the date of declaration of such dividend, and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up of
Maxtor, whether voluntary or involuntary), then, in such case, the Maxtor
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Maxtor Conversion Price in effect immediately
prior to the close of business on such Distribution Record Date by a fraction of
which the numerator

                                      -24-
<PAGE>

shall be the Current Market Price of the Maxtor Common Stock on the Distribution
Record Date less the amount of cash so distributed (and not excluded as provided
above) applicable to one share of Maxtor Common Stock and the denominator shall
be such Current Market Price of the Maxtor Common Stock, such reduction to be
effective immediately prior to the opening of business on the day following the
Distribution Record Date; provided, however, that in the event the portion of
                          --------  -------
the cash so distributed applicable to one share of Maxtor Common Stock is equal
to or greater than the Current Market Price of the Maxtor Common Stock on the
Distribution Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted each Note on the Distribution Record Date. In the event that such
dividend or distribution is not so paid or made, the Maxtor Conversion Price
shall again be adjusted to be the Maxtor Conversion Price which would then be in
effect if such dividend or distribution had not been declared. If any adjustment
is required to be made as set forth in this Section 503(e) as a result of a
distribution that is a quarterly dividend, such adjustment shall be based upon
the amount by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant hereto. If an adjustment is required
to be made as set forth in this Section 503(e) above as a result of a
distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution.

          (f) In case a tender or exchange offer made by Maxtor or any Maxtor
Subsidiary for all or any portion of the Maxtor Common Stock shall expire and
such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to Maxtor stockholders of consideration per share of Maxtor
Common Stock having a fair market value (as determined by the Board of Directors
of Maxtor, whose determination shall be conclusive and described in a resolution
of the Board of Directors of Maxtor) that as of the last time (the "Maxtor
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it may be amended) exceeds the Current Market Price of the
Maxtor Common Stock on the Trading Day next succeeding the Maxtor Expiration
Time, the Maxtor Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Maxtor Conversion Price in effect
immediately prior to the Maxtor Expiration Time by a fraction of which the
numerator shall be the number of shares of Maxtor Common Stock outstanding
(including any tendered or exchanged shares) on the Maxtor Expiration Time
multiplied by the Current Market Price of the Maxtor Common Stock on the Trading
Day next succeeding the Maxtor Expiration Time and the denominator shall be the
sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Maxtor Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Maxtor Purchased Shares") and (y) the product of the number of

                                      -25-
<PAGE>

shares of Maxtor Common Stock outstanding (less any Maxtor Purchased Shares) on
the Maxtor Expiration Time and the Current Market Price of the Maxtor Common
Stock on the Trading Day next succeeding the Maxtor Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Maxtor Expiration Time. In the event that Maxtor is
obligated to purchase shares pursuant to any such tender or exchange offer, but
Maxtor is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Maxtor Conversion Price shall
again be adjusted to be the Maxtor Conversion Price which would then be in
effect if such tender or exchange offer had not been made.

          (g) In case of a tender or exchange offer made by a Person other than
Maxtor or any Maxtor Subsidiary for an amount which increases the offeror's
ownership of Maxtor Common Stock to more than 25% of the aggregate Maxtor Common
Stock outstanding and shall involve the payment by such Person of consideration
per share of Maxtor Common Stock having a fair market value (as determined by
the Board of Directors of Maxtor, whose determination shall be conclusive, and
described in a resolution of the Board of Directors of Maxtor) at the last time
(the "Maxtor Offer Expiration Time") tenders or exchanges may be made pursuant
to such tender or exchange offer (as it shall have been amended) that exceeds
the Current Market Price of the Maxtor Common Stock on the Trading Day next
succeeding the Maxtor Offer Expiration Time, and in which, as of the Maxtor
Offer Expiration Time the Board of Directors of Maxtor is not recommending
rejection of the offer, the Maxtor Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Maxtor Conversion Price
in effect immediately prior to the Maxtor Offer Expiration Time by a fraction of
which the numerator shall be the number of shares of Maxtor Common Stock
outstanding (including any tendered or exchanged shares) on the Maxtor Offer
Expiration Time multiplied by the Current Market Price of the Maxtor Common
Stock on the Trading Day next succeeding the Maxtor Offer Expiration Time and
the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Maxtor Offer Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Maxtor Accepted Purchased Shares") and (y)
the product of the number of shares of Maxtor Common Stock outstanding (less any
Maxtor Accepted Purchased Shares) on the Maxtor Offer Expiration Time and the
Current Market Price of the Maxtor Common Stock on the Trading Day next
succeeding the Maxtor Offer Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the Maxtor
Offer Expiration Time. In the event that such Person is obligated to purchase
shares pursuant to any such tender or exchange offer, but such Person is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Maxtor Conversion Price shall again be

                                      -26-
<PAGE>

adjusted to be the Maxtor Conversion Price which would then be in effect if such
tender or exchange offer had not been made.  Notwithstanding the foregoing, the
adjustment described in this Section 503(g) shall not be made if, as of the
Maxtor Offer Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause Maxtor to engage in any transaction
described in Article Eight of the Indenture.

     Section 504 Certain Definitions.  For purposes of this Article Five, the
following terms shall have the meaning indicated:

          (a) "Closing Price" with respect to any securities on any day shall
mean the closing sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the New York Stock Exchange, or, if such
security is not listed or admitted to trading on such exchange, on the principal
national securities exchange or quotation system on which such security is
quoted or listed or admitted to trading, or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors of the Company or
Maxtor, as the case may be, for that purpose, or a price determined in good
faith by the Board of Directors of the Company or Maxtor, as the case may be,
or, to the extent permitted by applicable law, a duly authorized committee
thereof, whose determination shall be conclusive.

          (b) "Current Market Price" shall mean the average of the daily Closing
Prices per share of Quantum Common Stock or Maxtor Common Stock as applicable,
for the ten consecutive Trading Days immediately prior to the date in question;
provided, however, that (1) if the "ex" date (as hereinafter defined) for any
--------  -------
event (other than the issuance or distribution or Fundamental Change requiring
such computation) that requires an adjustment to the Quantum Conversion Price or
the Maxtor Conversion Price, as the case may be, pursuant to Section 502 or
Section 503, as applicable, occurs during such ten consecutive Trading Days, the
Closing Price for each Trading Day prior to the "ex" date for such other event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the Quantum Conversion Price or the Maxtor Conversion Price, as the case
may be, is so required to be adjusted as a result of such other event, (2) if
the "ex" date for any event (other than the issuance, distribution or
Fundamental Change requiring such computation) that requires an adjustment to
the Quantum Conversion Price or the Maxtor Conversion Price pursuant to Section
502 or Section 503, as applicable, occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the

                                      -27-
<PAGE>

"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the Quantum Conversion Price or
the Maxtor Conversion Price, as the case may be, is so required to be adjusted
as a result of such other event, and (3) if the "ex" date for the issuance,
distribution or Fundamental Change requiring such computation is prior to the
day in question, after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors of the
Company or Maxtor, as the case may be, or, to the extent permitted by applicable
law, a duly authorized committee thereof in a manner consistent with any
determination of such value for purposes of Section 502(d), (f) or (g), in the
case of Quantum Common Stock, or Section 503 (d), (f) or (g), in the case of
Maxtor Common Stock, whose determination shall be conclusive and described in a
resolution of the Board of Directors of the Company or Maxtor, as the case may
be, or such duly authorized committee thereof, as the case may be) of the
evidences of indebtedness, shares of capital stock or assets being distributed
applicable to one share of Quantum Common Stock or Maxtor Common Stock, as the
case may be, as of the close of business on the day before such "ex" date. For
purposes of any computation under Section 502(f) or (g) in the case of Quantum
Common Stock, or 503(f) or (g) in the case of Maxtor Common Stock, the Current
Market Price on any date shall be deemed to be the average of the daily Closing
Prices per share of Quantum Common Stock or Maxtor Common Stock, as the case may
be, for such day and the next two succeeding Trading Days; provided, however,
                                                           --------  -------
that if the "ex" date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the Quantum
Conversion Price or Maxtor Conversion Price pursuant to Section 502 or Section
503 occurs on or after the Expiration Time, Offer Expiration Time, Maxtor
Expiration Time or Maxtor Offer Expiration Time, as the case may be, for the
tender or exchange offer requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Quantum Conversion Price or the Maxtor
Conversion Price, as the case may be, is so required to be adjusted as a result
of such other event. For purposes of this paragraph, the term "ex" date, (1)
when used with respect to any issuance or distribution, means the first date on
which the Quantum Common Stock or Maxtor Common Stock, as the case may be,
trades regular way on the relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or combination of
shares of Quantum Common Stock or Maxtor Common Stock, as the case may be, means
the first date on which the Quantum Common Stock or Maxtor Common Stock, as the
case may be, trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective, and (3) when
used with respect to any tender or exchange offer means the first date on which
the Quantum Common Stock or Maxtor Common Stock, as the case may be, trades
regular way on such exchange

                                      -28-
<PAGE>

or in such market after the Expiration Time, Offer Expiration Time, Maxtor
Expiration Time or Maxtor Offer Expiration Time, as the case may be, of such
offer.

          (c)   "Distribution Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Quantum Common Stock or Maxtor Common Stock, as the case may be, have the right
to receive any cash, securities or other property or in which such Quantum
Common Stock or Maxtor Common Stock, as the case may be, (or other applicable
security) is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of stockholders entitled to
receive such cash, securities or other property (whether such date is fixed by
the Board of Directors of the Company or the Board of Directors of Maxtor, as
the case may be, or by statute, contract or otherwise).

          (d)   "fair market value" shall mean the amount which a willing buyer
would pay a willing seller in an arm's length transaction.

          (e)   "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national securities exchange, a day on which the New York Stock Exchange or such
other national securities exchange is open for business or (y) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made on thereon or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.

   Section 505  General Conversion Provisions

          (a)   No adjustment in the Quantum Conversion Price or the Maxtor
Conversion Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in either such price; provided, however,
                                                          --------  -------
that any adjustments which by reason of this Section 505(a) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment of the Quantum Conversion Price or the Maxtor Conversion Price, as
the case may be.  All calculations under this Article Five with respect to the
Quantum Common Stock shall be made by the Company and with respect to the Maxtor
Common Stock by Maxtor, and shall be made to the nearest one tenth of a cent or
to the nearest one hundredth of a share, as the case may be.  No adjustment need
be made for rights to purchase Quantum Common Stock pursuant to a Company plan
for reinvestment of dividends or interest.  No adjustment need be made for
rights to purchase Maxtor Common Stock pursuant to a Maxtor plan for
reimbursement of dividends or interest.  To the extent the Notes become
convertible into cash, assets, property or securities (other than capital stock
of the Company or Maxtor), no adjustment need be made thereafter as to the cash,
assets, property or such securities.  Interest will not accrue on the cash.

                                      -29-
<PAGE>

          (b) Whenever the Quantum Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an Officers' Certificate setting forth the Quantum
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.  Whenever the Maxtor Conversion Price is
adjusted as herein provided, Maxtor shall promptly file with the Trustee and any
conversion agent other than the Trustee an Officers' Certificate signed by the
applicable officers of Maxtor setting forth the Maxtor Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.  Promptly after delivery of such certificate, the Company or Maxtor,
as the case may be, shall prepare a notice of such adjustment of the Quantum
Conversion Price or the Maxtor Conversion Price, as the case may be, setting
forth the adjusted Quantum Conversion Price or Maxtor Conversion Price, as the
case may be, and the date on which each adjustment becomes effective and shall
mail such notice of such adjustment to the Holder of each Note at his last
address appearing on the Security Register within 20 days after execution
thereof.  Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.

          (c) In any case in which this Article Five provides that an adjustment
shall become effective immediately after a record date for an event, the Company
or Maxtor, as the case may be, may defer until the occurrence of such event (i)
issuing to the Holder of any Note converted after such record date and before
the occurrence of such event the additional shares of Quantum Common Stock or
Maxtor Common Stock, as the case may be, issuable upon such conversion by reason
of the adjustment required by such event over and above the Quantum Common Stock
and Maxtor Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 1403 of the Indenture.

          (d) For purposes of this Article Five, the number of shares of Quantum
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Quantum Common Stock.

     The Company will not pay any dividend or make any distribution on shares of
Quantum Common Stock held in the treasury of the Company.  For purposes of this
Article Five, the number of shares of Maxtor Common Stock at any time
outstanding shall not include shares held in the treasury of Maxtor but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Maxtor Common Stock.  Maxtor will not pay any dividend or
make any distribution on shares of Maxtor Common Stock held in the treasury of
Maxtor.

          (e) The Company may make such reductions in the Quantum Conversion
Price, in addition to those required by this Sections 502 or 503, as the

                                      -30-
<PAGE>

     Board of Directors of the Company considers to be advisable to avoid or
     diminish any income tax to holders of Quantum Common Stock or rights to
     purchase Quantum Common Stock resulting from any dividend or distribution
     of stock (or rights to acquire stock) or from any event treated as such for
     income tax purposes.

             Maxtor may make such reductions in the Maxtor Conversion Price, in
     addition to those required by this Section 503, as the Board of Directors
     of Maxtor considers to be advisable to avoid or diminish any income tax to
     holders of Maxtor Common Stock or rights to purchase Maxtor Common Stock
     resulting from any dividend or distribution of stock (or rights to acquire
     stock) or from any event treated as such for income tax purposes.

             To the extent permitted by applicable law, the Company from time to
     time may reduce the Quantum Conversion Price by any amount for any period
     of time if the period is at least twenty (20) days, the reduction is
     irrevocable during the period and the Board of Directors shall have made a
     determination that such reduction would be in the best interests of the
     Company, which determination shall be conclusive. Whenever the Quantum
     Conversion Price is reduced pursuant to the preceding sentence, the Company
     shall mail to holders of record of the Notes a notice of the reduction at
     least fifteen (15) days prior to the date the reduction takes effect, and
     such notice shall state the reduced Quantum Conversion Price and the period
     during which it will be in effect.

             To the extent permitted by applicable law, Maxtor from time to time
     may reduce the Maxtor Conversion Price by any amount for any period of time
     if the period is at least twenty (20) days, the reduction is irrevocable
     during the period and the Board of Directors shall have made a
     determination that such reduction would be in the best interests of Maxtor,
     which determination shall be conclusive. Whenever the Maxtor Conversion
     Price is reduced pursuant to the preceding sentence, Maxtor shall mail to
     holders of record of the Notes a notice of the reduction at least fifteen
     (15) days prior to the date the reduction takes effect, and such notice
     shall state the reduced Maxtor Conversion Price and the period during which
     it will be in effect.

Section 106  Amendment to Section 301 of the First Supplemental Indenture.

             Section 301 of the First Supplemental Indenture is hereby amended
     by replacing in its entirety the following:

                                 ARTICLE THREE

                               CERTAIN COVENANTS

             Section 301  Registration and Listing.

                                      -31-
<PAGE>

             The Company (i) will effect all registrations with, and obtain all
     approvals by, all governmental authorities that may be necessary under any
     United States Federal or state law (including the Securities Act, the
     Exchange Act and state securities and Blue Sky laws) before the shares of
     Quantum Common Stock issuable upon conversion of Notes may be lawfully
     issued and delivered, and thereafter publicly traded, and qualified or
     listed as contemplated by clause (ii); and (ii) will list the shares of
     Quantum Common Stock required to be issued and delivered upon conversion of
     the Notes prior to such issuance or delivery on the New York Stock
     Echangeor such other exchange or automated quotation as the Quantum Common
     Stock is then listed at such date of conversion.

             Maxtor (i) will effect all registrations with, and obtain all
     approvals by, all governmental authorities that may be necessary under any
     United States Federal or state law (including the Securities Act, the
     Exchange Act and state securities and Blue Sky laws) before the shares of
     Maxtor Common Stock issuable upon conversion of Notes may be lawfully
     issued and delivered, and thereafter publicly traded, and qualified or
     listed as contemplated by clause (ii); and (ii) will list the shares of
     Maxtor Common Stock required to be issued and delivered upon conversion of
     the Notes prior to such issuance or delivery on the Nasdaq National Market
     or such other exchange or automated quotation as the Maxtor Common Stock is
     then listed at such date of conversion.

             The provisions of Section 1008 of the Indenture shall not apply to
     this Section 301.

Section 107  Amendment to Annex 1.

     Annex 1 of the First Supplemental Indenture is hereby replaced in its
entirety with Annex 1 hereto.

                                  ARTICLE TWO
                                 MISCELLANEOUS

Section 201  Reference to and Effect on the Indenture.

     This Supplemental Indenture shall be construed as supplemental to the
Indenture and all the terms and conditions of this Supplemental Indenture shall
be deemed to be part of the terms and conditions of the Indenture.  This
Supplemental Indenture is subject to the provisions of the Trust Indenture Act,
and shall, to the extent applicable, be governed by such provisions.

Section 202  Supplemental Indenture May be Executed In Counterparts.

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

                                      -32-
<PAGE>

Section 203  Effect of Headings.

     The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.

Section 204  Separability.

     In case any one or more of the provisions contained in this Supplemental
Indenture or in the Notes shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any other provisions of this Supplemental Indenture or of the
Notes, but this Supplemental Indenture and the Notes shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.

Section 205  Governing Law.

     THIS SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

Section 206  Company's Obligations with Respect to Maxtor.

     The Company will be required to fulfill any and all obligations set forth
in this Supplemental Indenture of Maxtor in the event and to the extent that
Maxtor fails to fulfill its obligations set forth in this Supplemental
Indenture.

Section 207  Access to Information

     The Trustee and the Company shall provide Maxtor with access to all Books ,
Records, and personnel, upon  reasonable request in writing by Maxtor, required
for Maxtor to meet its obligations set forth in this Supplemental Indenture,
including, without limitation,  lists of the holders of the Notes.

                                      -33-
<PAGE>

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

                                Quantum Corporation

                                By: /s/ Richard L. Clemmer
                                   _____________________________________________
                                   Richard L. Clemmer
                                   Executive Vice President, Finance and
                                   Chief Financial Officer

                                Maxtor Corporation

                                By: /s/ Glenn Stevens
                                   _____________________________________________

                                LaSalle Bank National Association (f/k/a
                                LaSalle National Bank), as Trustee

                                By: /s/ Victoria Douyon
                                   _____________________________________________

                                   Victoria Douyon, Vice President

                                      -34-
<PAGE>

                                    Annex 1

                           [Form of Face of Security]

[If the Security is a Global Security, insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

                              QUANTUM CORPORATION

                   7% Convertible Subordinated Note due 2004

No. __________                                                   $ ____________

                                                            CUSIP: ____________

     Quantum Corporation, a corporation duly organized and existing under the
laws of Delaware (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ________________, or registered assigns, the principal sum of
___________________ Dollars on August 1, 2004 and to pay interest thereon from
August 1, 1997 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on February 1 and August 1 in
each year, commencing February 1, 1998, at the rate of 7% per annum, until the
principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the January 15 or
July 15 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date.  Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.

     Payment of the principal of (and premium, if any) and any interest on this
Security will be made at the office or agency of the Company maintained for such
purpose in the Borough of

                                      A-1
<PAGE>

Manhattan, The City of New York, or at the option of the Holder of this
Security, at the Corporate Trust Office, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
                          --------  -------
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register;
provided, further, that a Holder with an aggregate principle amount in excess of
--------  -------
$5,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder.

     Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     IN WITNESS WHEREOF, the Company has caused this instrument to be signed
manually or by facsimile by their duly authorized officers and by its corporate
seal to be affixed or imported hereon.

Dated:  ___________

                                       QUANTUM CORPORATION

                                       By:____________________________________
                                          Title:
Attest:

By:___________________________
   Title:

     The Trustee's certificates of authentication shall be in substantially the
following form:

     This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.

                                       LASALLE BANK NATIONAL
                                       ASSOCIATION (f/k/a LaSalle National Bank)
                                       As Trustee

                                       By:____________________________________
                                           Victoria Douyon, Vice President

                                      A-2
<PAGE>

                          Form of Reverse of Security

     This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of August 1, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and LaSalle Bank National Association (f/k/a
LaSalle National Bank), as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), and reference is hereby
made to the Indenture and all indentures supplemental thereto for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Indebtedness and the Holders
of the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $287,500,000, and is
issued pursuant to a Supplemental Trust Indenture supplementing the Indenture,
dated as of August 1, 1997, from the Company to Trustee relating to the issuance
of the "7% Convertible Notes due 2004" of this series (the "Supplemental
Indenture").

     The Securities will not be subject to redemption prior to August 1, 1999
and will be redeemable on and after such date at the option of the Company, in
whole or in part, upon not less than 15 nor more than 60 days' notice to the
Holders, at the Redemption Prices (expressed as a percentage of principal
amount) set forth below; provided, however, that the Securities will not be
                         --------  -------
redeemable following August 1, 1999, and before August 1, 2001, unless the fair
market value of the Quantum Common Stock and Maxtor Common Stock issuable upon
the conversion of $1,000 of principal amount of Notes, based on the Closing
Prices for at least 20 Trading Days within a period of 30 consecutive Trading
Days ending within five Trading Days prior to the notice of redemption, exceeds
$1,250 (using the same Trading Days for determining the Closing Prices of both
the Quantum Common Stock and the Maxtor Common Stock).

     The Redemption Price (expressed as a percentage of principal amount) is as
follows for the 12 month periods beginning on August 1 of the following years:

     Year                                   Redemption Price
     ----                                   ----------------

     1999.......................                 105%
     2000.......................                 104%
     2001.......................                 103%
     2002.......................                 102%
     2003.......................                 101%

and 100% at August 1, 2004, in each case together with accrued and unpaid
interest to, but excluding, the Redemption Date; provided, however, that
                                                 --------  -------
interest installments whose Stated Maturity is on such Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.

                                      A-3
<PAGE>

     The Securities are not subject to redemption through operation of any
sinking fund.

     In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.

     If a Fundamental Change (as defined in the Supplemental Indenture) occurs
at any time prior to August 1, 2004, the Securities will be redeemable on the
30th day after notice thereof at the option of the Holder.  Such payment shall
be made at the following prices (expressed as a percentage of principal amount)
in the event of a Fundamental Change occurring during the 12 month period
beginning August 1 of the following years:

     Year                 Percentage       Year                  Percentage
     ----                 ----------       ----                  ----------
     1997.............        107%         2001.............        103%
     1998.............        106          2002.............        102
     1999.............        105          2003.............        101
     2000.............        104

and 100% at August 1, 2004; provided in each case that if the Applicable Price
(as defined in the Supplemental Indenture) is less than the Reference Market
Price (as defined in the Supplemental Indenture), the Company shall redeem such
Securities at a price equal to the foregoing redemption price multiplied by the
fraction obtained by dividing the Applicable Price by the Reference Market
Price.  In each case, the Company shall also pay accrued interest, if any, on
such Securities to, but excluding, the Repurchase Date; provided, however, that
                                                        --------  -------
interest installments whose Stated Maturity is on such Repurchase Date will be
paid to the Holders of such Securities, or one or more Predecessor Securities,
of record at the close of business on the relevant Record Dates referred to on
the face hereof, all as provided in the Supplemental Indenture.  The Company
shall mail to all Holders a notice of the occurrence of a Fundamental Change and
of the redemption right arising as a result thereof on or before the 10th day
after the occurrence of such Fundamental Change.  For a Security to be so repaid
at the option of the Holder, the Company must receive at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, the City of
New York, or, at the option of the Holder, the Corporate Trust Office of the
Trustee, such Security with the form entitled "Option to Elect Redemption Upon a
Fundamental Change" on the reverse thereof duly completed, together with such
Securities duly endorsed for transfer, on or before the 30th day after the date
of such notice (or if such 30th day is not a Business Day, the immediately
succeeding Business Day).

     The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto.  Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee as his or
her attorney-in-fact for any and all such purposes.

                                      A-4
<PAGE>

     The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture, except that the Company will not be able
to defease the right of the Holders to convert this Security pursuant to Article
Fourteen of the Indenture.

     Subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before August 1, 2004 (except that,
in case this Security or any portion hereof shall be redeemed, such right shall
terminate with respect to this Security or portion hereof, as the case may be,
so redeemed at the close of business on the first Business Day next preceding
the date fixed for redemption as provided in the Indenture, unless the Company
defaults in making the payment due upon redemption or except as otherwise
provided in the Indenture), to convert any $1,000 of principal of Notes held by
such holder into the number of Quantum Common Stock obtained by dividing $666.67
by the Quantum Conversion Price (initially $30.883) and into the number of
Maxtor Common Stock obtained by dividing $333.33 by the Maxtor Conversion Price
(initially $20.318), as the Quantum Conversion Price or the Maxtor Conversion
Price may be adjusted from time to time, upon surrender of this Security,
together with the conversion notice hereon duly executed, to be accompanied (if
so required by the Company and Maxtor) by instruments of transfer, in form
satisfactory to the Company and Maxtor and to the Trustee, duly executed by the
Holder or by its duly authorized attorney in writing.  Such surrender shall, if
made during any period beginning at the close of business on a Regular Record
Date and ending at the opening of business on the Interest Payment Date next
following such Regular Record Date (unless this Security or the portion being
converted shall have been called for redemption on a Redemption Date during the
period beginning at the close of business on a Regular Record Date and ending at
the opening of business on the first Business Day after the next succeeding
Interest Payment Date, or if such Interest Payment Date is not a Business Day,
the second such Business Day), also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Security then being
converted. Subject to the aforesaid requirement for payment and, in the case of
a conversion after the Regular Record Date next preceding any Interest Payment
Date and on or before such Interest Payment Date, to the right of the Holder of
this Security (or any Predecessor Security) of record at such Regular Record
Date to receive an installment of interest (with certain exceptions provided in
the Indenture), no adjustment is to be made on conversion for interest accrued
hereon or for dividends on shares of Quantum Common Stock or Maxtor Common Stock
issued on conversion.  Neither the Company nor Maxtor will be required to issue
fractional shares upon any such conversion, but shall make adjustment therefor
as provided in the Indenture.  Each of the Quantum Conversion Price and the
Maxtor Conversion Price is subject to adjustment as provided in the Indenture.
In the event of conversion of this Security in part only, a new Security or
Securities for the unconverted portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.

     If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.

                                      A-5
<PAGE>

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of more than 50% in principal amount of the Securities at
the time Outstanding of each series to be affected.  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences.  Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

     No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

     The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.  As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate

                                      A-6
<PAGE>

principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

                                      A-7
<PAGE>

                                 Abbreviations

     The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:

     TEN COM   -  as tenants in common             UNIF GIFT MIN ACT___________

     TEN ENT   -  as tenants by the entireties
                  (Cust)
     JT TEN    -  as joint tenants with right of   Custodian _____ under Uniform
                  survivorship and not as tenants           (Minor)
                  in common                        Gifts to Minors Act _________
                                                                        (State)

    Additional abbreviations may also be used though not in the above list.

                               Conversion Notice

     To   Quantum Corporation:
          Maxtor Corporation

     The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Quantum Common Stock
and Maxtor Common Stock of the Company in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon the conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted principal
amount hereof, be issued and delivered to the registered Holder hereof unless a
different name has been indicated below. If this Notice is being delivered on a
date after the close of business on a Regular Record Date and prior to the
opening of business on the related Interest Payment Date (unless this Security
or the portion thereof being converted has been called for redemption on a
Redemption Date after the close of business on a Regular Record Date and prior
to the opening of business on the first Business Day after the next succeeding
Interest Payment Date, or if such Interest Payment Date is not a Business Day,
the next such Business Day), this Notice is accompanied by payment, in funds
acceptable to the Company, of an amount equal to the interest payable on such
Interest Payment Date of the principal of this Security to be converted. If
shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect hereto. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.

                                      A-8
<PAGE>

       Principal Amount to be Converted
     (in an integral multiple of $1,000, if less
               than all)
          $ __________

Dated:___________
                                             __________________________________

                                             __________________________________

                                             Signature(s) must be guaranteed by
                                             a qualified guarantor institution
                                             with membership in an approved
                                             signature guarantee program
                                             pursuant to Rule 17Ad-15 under the
                                             Securities Exchange Act of 1934 if
                                             shares of Quantum Common Stock and
                                             Maxtor Common Stock are to be
                                             delivered, or Securities to be
                                             issued, other than to and in the
                                             name of the registered owner.

                                             __________________________________
                                             Signature Guaranty

     Fill in for registration of shares of Quantum Common Stock or Maxtor Common
Stock, or Securities to be issues, if to be issued otherwise than to the
registered Holder.

___________________________        ____________________________________________
(Name)                              Social Security or Other Taxpayer
                                    Identification Number

___________________________
(Address)

___________________________

                                      A-9
<PAGE>

                          OPTION TO ELECT REDEMPTION
                           UPON A FUNDAMENTAL CHANGE

To:  Quantum Corporation

     The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Quantum Corporation (the "Company") as to
the occurrence of a Fundamental Change and requests and instructs the Company to
redeem the entire principal amount of this Security, or the portion thereof
(which is $1,000 or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture referred to in this Security at the
redemption price, together with accrued interest to, but excluding, such date,
to the registered Holder hereof.

Dated: ______________________                ___________________________________

                                             ___________________________________
                                             Signature(s)

                                             Signature(s) must be guaranteed by
                                             a qualified guarantor institution
                                             with membership in an approved
                                             signature guarantee program
                                             pursuant to Rule 17Ad-15 under the
                                             Securities Exchange Act of 1934.

                                             ___________________________________
                                             Signature Guaranty

Principal amount to be redeemed
(in an integral multiple of $1,000,
if less than all):

__________________________________

NOTICE:  The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.

                                     A-10<PAGE>

                                                                   Exhibit 10.20

                                                               EXECUTION VERSION

                              FIRST AMENDMENT TO
                              ------------------
                 AMENDED AND RESTATED PARTICIPATION AGREEMENT
                 --------------------------------------------

     THIS FIRST AMENDMENT TO AMENDED AND RESTATED PARTICIPATION AGREEMENT (this
"Amendment"), dated as of March 28, 2001, is entered into by and among:
 ---------

          (1)  QUANTUM CORPORATION, a Delaware corporation (the "Lessee");
                                                                 ------

          (2)  SELCO SERVICE CORPORATION, an Ohio corporation (the "Lessor");
                                                                    ------

          (3)  Each of the financial institutions listed in the Amended and
     Restated Participation Agreement referred to in Recital A below as
                                                     ---------
     "participants" (collectively, the "Participants"); and
                                        ------------

          (4)  THE BANK OF NOVA SCOTIA ("BNS"), as agent for the Participants
                                         ---
     (in such capacity, the "Agent").
                             -----

                                    RECITALS
                                    --------

     A.   The Lessee, the Lessor, the Participants and the Agent are parties to
an Amended and Restated Participation Agreement dated as of July 12, 2000 (the
"Participation Agreement").
 -----------------------

     B.   The Lessee has recently approached the Lessor, the Participants and
the Agent and requested that the Lessor, the Participants and the Agent amend
the Participation Agreement in order to conform with the changes to be made in
that certain Credit Agreement (3-Year) entered into as of April 19, 2000 and
amended and restated as of the date hereof among the Lessee, as borrower, the
financial institutions party thereto as lenders and/or agents, and Bank of
America, N.A., as administrative agent and letter of credit issuing agent.

     C.   The Lessor, the Participants and the Agent are willing so to amend the
Participation Agreement upon the terms and subject to the conditions set forth
herein.

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Lessee, the Lessor, the Participants and Agent hereby agree as
follows:

     1.   Definitions, Interpretation. All capitalized terms defined above and
          ---------------------------
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Appendix 1 to the Participation
                                                -------------------------------
Agreement, as amended by this Amendment. The rules of interpretation set forth
---------
in Appendix 1 to the Participation Agreement shall, to the extent not
   -----------------------------------------
inconsistent with the terms of this Amendment, apply to this Amendment and are
hereby incorporated by reference.

                                       1
<PAGE>

   2.   Amendment to Participation Agreement. Subject to the satisfaction of the
        ------------------------------------
conditions set forth in Paragraph 4 below, the Participation Agreement is hereby
                        -----------
amended by as follows:

          (a)  Clause (a) of Section 6.3 is amended by changing the two
               -------------------------
     references to "Section 10.1(s)" set forth therein to "Section 10.2(h)".
                    ---------------                        ---------------

          (b)  Section 8 (Representations) is amended by changing Section 8.3
               ---------                                          -----------
     thereof to read in its entirety as set forth on Attachment 1 hereto.
                                                     ------------

          (c)  Section 10 (Other Covenants and Agreements) is amended by (i)
               ----------
     changing Section 10.1 thereof to read in its entirety as set forth on
              ------------
     Attachment 2 hereto; (ii) renumbering existing Sections 10.2 and 10.3
     ------------                                   ----------------------
     thereof as "Section 10.3" and Section 10.4", respectively; and (iii) adding
                 ------------      ------------
     a new Section 10.2 thereto to read in its entirety as set forth on
           ------------
     Attachment 3 hereto.
     ------------

          (d)  Schedule III is hereby amended by (i) changing the references
               ------------
     therein from "Chris Osborn, Director" to "Liz Hanson, Director" with
     respect to the notice information for The Bank of Nova Scotia, (ii)
     changing the e-mail references therein from "cosborn@scotiacapital.com" to
     "lhanson@scotiacapital.com" with respect to the notice information for The
     Bank of Nova Scotia, and (iii) changing the notice information for KeyBank
     National Association as a Participant to read in its entirety as follows:

                        KEYBANK NATIONAL ASSOCIATION
                        601 108th Ave. NE
                        Belleview, Washington  98009-9027

                        Telephone: (425) 709-4571
                        Facsimile: (425) 709-4565
                        Email: tom_crandell@keybank.com

          (e)  A new Schedule 8.3 is added immediately after Schedule 6.4 to
                     ------------                            ------------
     read in its entirety as set forth on Attachment 4 hereto.
                                          ------------

          (f)  Schedule 10.01 is hereby renumbered "Schedule 10.2".
               --------------

          (g)  Appendix 1 to the Participation Agreement is amended to read in
               -----------------------------------------
     its entirety as set forth on Attachment 5 hereto.
                                  ------------

          (h)  Exhibit Q to the Participation Agreement is amended to read in
               ----------------------------------------
     its entirety as set forth on Attachment 6 hereto.
                                  ------------

   3.   Representations and Warranties.  The Lessee hereby represents and
        ------------------------------
warrants to the Agent and the Participants that the following are true and
correct on the date of this Amendment and that, after giving effect to the
amendment set forth in Paragraph 2 above, the following will be true and correct
                       -----------
on the Effective Date (as defined below):

          (a)  The representations and warranties of the Lessee set forth in

     Section 8.3 of the Participation Agreement and in the other Operative
     ------------------------------------------
     Documents are true and correct in all

                                       2
<PAGE>

     material respects as if made on such date (except for representations and
     warranties expressly made as of a specified date, which shall be true as of
     such date);

          (b) No Default has occurred and is continuing;

          (c) All of the Operative Documents are in full force and effect;

          (d) There has been no event or circumstance since the date of the
     Financial Statements of the Lessee and its Subsidiaries for the fiscal year
     ended March 31, 2000 which has a Material Adverse Effect;

          (e) Any material consent, approval, order or authorization of, or
     registration, declaration or filing with, any Governmental Authority
     required to be obtained or made in connection with the consummation of the
     HDD Redemption and Maxtor Merger have been duly obtained or made;

          (f) No litigation, investigation or proceeding of or before an
     arbitrator or Governmental Authority is pending, or to the knowledge of the
     Lessee after due and diligent investigation, threatened by or against the
     Lessee or any of its Subsidiaries or against any of their properties or
     revenues which in any manner challenges or seeks to prevent, enjoin, alter
     or delay the HDD Redemption or the Maxtor Merger; and

          (g) The Maxtor Merger Effective Time has occurred and the HDD
     Redemption has been consummated, each in accordance with the material terms
     of the Maxtor Merger Documents and on or before April 30, 2001.

(Without limiting the scope of the term "Operative Documents," the Lessee
expressly acknowledges in making the representations and warranties set forth in
this Paragraph 3 that, on and after the date hereof, such term includes this
     -----------
Amendment.)

     4.  Effective Date.  The amendments effected by Paragraph 2 above shall
         --------------                              -----------
become effective upon the date (the "Effective Date") that the Lessor, the Agent
                                     --------------
and the Participants receives the following, each in form and substance
satisfactory to the Agent, the Participants and their respective counsel:

          (a) This Amendment duly executed by the Lessor, the Lessee, each
     Participant and the Agent;

          (b) A First Amendment to Amended and Restated Master Lease Agreement
     in the form of Attachment 7 hereto, duly executed by the Lessee and the
                    ------------
     Lessor and appropriately notarized for recording;

          (c) A certificate of the Secretary or an Assistant Secretary of the
     Lessee attaching and certifying (i) that the resolutions of the Board of
     Directors of the Lessee, in the form delivered to the Agent on the Closing
     Date, are in full force and effect and have not been amended, supplemented,
     revoked or repealed since such date; and (ii) the incumbency and signature
     of persons authorized to execute and deliver on its behalf this Amendment;

          (d) A nonrefundable amendment fee to be paid to each Participant equal
     to .175% of each Participant's Commitment;

                                       3
<PAGE>

          (e) All fees and expenses of the Lessor's and the Agent's counsels
     through the Effective Date, to the extent set forth in statements of such
     counsels delivered to the Lessee on or before the Effective Date; and

          (f) Such other evidence as the Lessor, the Agent or any Participant
     may reasonably request to establish the accuracy and completeness in all
     material respects of the representations and warranties and the compliance
     with the terms and conditions contained in this Amendment and the other
     Operative Documents.

In addition, within a reasonable period of time (but in no event later than
thirty (30) days after the Effective Date), the Lessee shall deliver to the
Agent, the Lessor and the Participants (a) such endorsements as the Lessor and
the Agent may reasonably request to each of (i) the ALTA owner's title insurance
policy issued in connection with the closing of the Amended and Restated
Participation Agreement, and (ii) the ALTA lender's title insurance policy
issued in connection with the closing of the Amended and Restated Participation
Agreement; and (b) a favorable written opinion of (i) Wilson Sonsini Goodrich &
Rosati, California counsel to the Lessee, and (ii) local counsel licensed to
practice in Colorado, in each case addressed to the Agent for the benefit of the
Agent, the Lessor and the Participants, covering such legal matters as the Agent
may reasonably request and otherwise in form and substance satisfactory to
Agent.

     5.  Effect of this Amendment.  On and after the Effective Date, each
         ------------------------
reference in the Participation Agreement and the other Operative Documents to
the Participation Agreement shall mean the Participation Agreement as amended
hereby.  Except as specifically amended above, (a) the Participation Agreement
and the other Operative Documents shall remain in full force and effect and are
hereby ratified and affirmed and (b) the execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power, or remedy of the Participants or the Agent, nor
constitute a waiver of any provision of the Participation Agreement or any other
Operative Document.

     6.  Miscellaneous.
         -------------

          (a) Counterparts.  This Amendment may be executed in any number of
              ------------
     identical counterparts, any set of which signed by all the parties hereto
     shall be deemed to constitute a complete, executed original for all
     purposes.

          (b) Headings.  Headings in this Amendment are for convenience of
              --------
     reference only and are not part of the substance hereof.

          (c) Governing Law. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY
              -------------
     THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICT-OF-LAW OR CHOICE-
     OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE INTERNAL LAWS OF
     ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY AND
     PERFORMANCE.

                                       4
<PAGE>

     IN WITNESS WHEREOF, the Lessee, the Lessor, the Agent and the Participants
have caused this Amendment to be executed as of the day and year first above
written.

THE LESSEE:                             QUANTUM CORPORATION

                                        By: /s/ Richard L. Clemmer
                                           Name: Richard L. Clemmer
                                           Title: Executive Vice President
                                                  Finance and Chief Financial
                                                  Officer

THE LESSOR:                             SELCO SERVICE CORPORATION

                                        By:_____________________________________
                                           Name:  ______________________________
                                           Title: ______________________________

THE AGENT:                              THE BANK OF NOVA SCOTIA

                                        By:_____________________________________
                                           Name:  ______________________________
                                           Title: ______________________________

THE PARTICIPANTS:                       THE BANK OF NOVA SCOTIA

                                        By:_____________________________________
                                           Name:  ______________________________
                                           Title: ______________________________

                                        KEYBANK NATIONAL ASSOCIATION

                                        By:_____________________________________
                                           Name: _______________________________
                                           Title: ______________________________

                                       5
<PAGE>

                                        SELCO SERVICE CORPORATION

                                        By:_____________________________________
                                           Name:  ______________________________
                                           Title: ______________________________

                                        UNION BANK OF CALIFORNIA, N.A.

                                        By:_____________________________________
                                           Name:  ______________________________
                                           Title: ______________________________

                                       6
<PAGE>

                                 ATTACHMENT 1
                                 ------------

                              Revised Section 8.3
                              -------------------

     SECTION 8.3 Representations of the Lessee. The Lessee represents and
                 -----------------------------
warrants to each of the other parties hereto that:

          (a) Corporate Status.  The Lessee (i) is a corporation duly organized,
              ----------------
validly existing and in good standing under the laws of the State of Delaware
and (ii) has duly qualified and is authorized to do business and has obtained a
certificate of authority to transact business as a foreign corporation in the
States of California and Colorado and in each other jurisdiction where the
failure to so qualify is reasonably likely to be Material.

          (b) Corporate Power and Authority.  As of their respective dates of
              -----------------------------
execution, the Lessee has corporate power and authority to execute, deliver and
carry out the terms and provisions of the Operative Documents, the Maxtor Merger
Documents and the Snap Spin-Off Documents to which it is or will be a party and
has taken all necessary corporate action to authorize the execution, delivery
and performance of such documents to which it is or will be a party and has or
will have duly executed and delivered each such document required to be executed
and delivered by it and, assuming the due authorization, execution and delivery
thereof on the part of each other party thereto, each such document constitutes
or will constitute a legal, valid and binding obligation enforceable against it
in accordance with its terms, except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equitable principles.

          (c) No Violation.  Neither the execution, delivery and performance by
              ------------
the Lessee of the Operative Documents, the Maxtor Merger Documents or the Snap
Spin-Off Documents to which it is or will be a party nor compliance with the
terms and provisions thereof, nor the consummation by the Lessee of the
transactions contemplated therein (i) will result in a violation by the Lessee
of any applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality having
jurisdiction over the Lessee or the Property that would (x) adversely affect the
validity or enforceability of such documents to which the Lessee is a party, or
the title to, or value or condition of, the Property, or (y) have a Material
Adverse Effect on the consolidated financial position, business or consolidated
results of operations of the Lessee, or (z) have an adverse effect on the
ability of the Lessee to perform its obligations under such documents, (ii) will
conflict with or result in any breach under, or (other than pursuant to the
Operative Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of Lessee
pursuant to the terms of, any indenture, loan agreement or other agreement for
borrowed money to which the Lessee is a party or by which it or any of its
property or assets is bound or to which it may be subject (other than Permitted
Liens), or (iii) will violate any provision of the certificate or articles of
incorporation or bylaws of the Lessee.

          (d) Litigation.  Except as set forth on Schedule 8.3, there are no
              ----------                          ------------
actions, suits or proceedings pending or, to the knowledge of the Lessee,
threatened (i) that are reasonably likely to have a Material Adverse Effect or
(ii) that question the validity of the Operative Documents or the rights or
remedies of the Lessor, the Agent or the Participants with respect to the Lessee
or the Property under the Operative Documents.

                                     [1]-1
<PAGE>

          (e) Governmental Approvals.  No Governmental Action by any
              ----------------------
Governmental Authority having jurisdiction over the Lessee or the Property is
required to authorize or is required in connection with (i) the execution,
delivery and performance by the Lessee of any Operative Document or (ii) the
legality, validity, binding effect or enforceability against the Lessee of any
Operative Document, except for the filing or recording of the Operative
Documents listed in Section 8.4(f) hereof with the appropriate Governmental
Authorities, all of which will have been completed on or prior to the Land
Interest Acquisition Date.

          (f) Investment Company Act.  The Lessee is not an "investment company"
              ----------------------
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act.

          (g) Public Utility Holding Company Act.  The Lessee is not a "holding
              ----------------------------------
company, or a "subsidiary company," or an "affiliate" of a "holding company", or
of a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.

          (h) Accuracy of Information Furnished.  None of the Operative
              ---------------------------------
Documents and none of the other certificates, statements or information
furnished to the Lessor, the Agent or any Participant by or on behalf of the
Lessee or any of its Subsidiaries in connection with the Operative Documents or
the transactions contemplated thereby (taken together with all such Operative
Documents, certificates, statements or information) contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood by the Lessor,
the Agent or any Participant that the projections and forecasts provided by the
Lessee are not to be viewed as facts and that actual results during the period
or periods covered by such projections and forecasts may differ from the
projected or forecasted results).

          (i) Taxes.  All United States federal income tax returns and all other
              -----
Material tax returns which are required to have been filed have been or will be
prepared in accordance with applicable law and filed by or on behalf of the
Lessee by the respective due dates, including extensions, and all taxes due with
respect to the Lessee pursuant to such returns or pursuant to any assessment
received by the Lessee have been or will be paid.  The charges, accruals and
reserves on the books of the Lessee in respect of taxes or other governmental
charges are, in the opinion of the Lessee, adequate.

          (j) Compliance with ERISA.  Each member of the ERISA Group has
              ---------------------
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all Material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan.  No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.

                                     [1]-2
<PAGE>

          (k) Environmental and Other Regulations.  Except as set forth in
              -----------------------------------
Schedule III attached hereto, the Lessee and the Property are in compliance with
all Environmental Laws relating to pollution and environmental control or
employee safety in the jurisdiction in which the Property is located and in all
other domestic jurisdictions, other than, with respect to such other
jurisdictions, those Environmental Laws the non-compliance with which would not
have a Material Adverse Effect.

          (l) Offer of Securities, etc.  Neither the Lessee nor the Guarantor
              -------------------------
nor any Person authorized to act on their behalf has, directly or indirectly,
offered any interest in the Property or the Lease or any other interest similar
thereto (the sale or offer of which would be integrated with the sale or offer
of such interest in the Property or the Lease), for sale to, or solicited any
offer to acquire any of the same from, any Person other than the Participants,
the Lessor and other "accredited investors" (as defined in Regulation D of the
Securities and Exchange Commission).

          (m) Financial Statements.  The audited consolidated statement of
              --------------------
financial position of the Lessee and its consolidated Subsidiaries as of March
31, 1997 and the related consolidated statements of income, shareholder's equity
and cash flows for the fiscal year then ended, reported on by Ernst & Young,
LLP, a copy of which has been delivered to each of the Lessor, the Participants
and the Agent, present fairly in all material respects, in conformity with
generally accepted accounting principles, the financial position of the Lessee
as of such date and its results of operations and cash flows for such fiscal
year.

          (n) DSS Combined Financial Statements.  The DSS Combined Financial
              ---------------------------------
Statements filed by the Lessee with the Securities and Exchange Commission
together with its 10-Q quarterly report for the fiscal quarter ended December
31, 2000 (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except for the absence of footnotes
thereto and as otherwise expressly noted therein; (ii) fairly present the
financial condition of the DSS Business on a stand-alone basis as of the date
thereof and the results of operations of such business for the period covered
thereby in accordance with GAAP consistently applied throughout the period
covered thereby, except for the absence of footnotes thereto and as expressly
noted therein, and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Lessee and its Subsidiaries relating to the DSS
Business as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness, in accordance with GAAP consistently applied
throughout the period covered thereby.

          (o) No Violation or Default.  Neither the Lessee nor any of the
              -----------------------
Lessee's Subsidiaries is in violation of or in default with respect to (i) any
Requirement of Law applicable to such Person or (ii) any Contractual Obligation
of such Person, where, in each case, such violation or default is reasonably
likely to have a Material Adverse Effect.  Without limiting the generality of
the foregoing, neither the Lessee nor any of the Lessee's Subsidiaries (A) is in
violation of any Environmental Laws, (B) to the best of the Lessee's knowledge,
has any liability or potential liability under any Environmental Laws or (C) has
received written notice or other written communication of an investigation or is
under investigation by any Governmental Authority having jurisdiction over the
Lessee or any of the Lessee's Subsidiaries having authority to enforce
Environmental Laws, where, in each case, such violation, liability or
investigation could reasonably be expected to have a Material Adverse Effect,
nor, to the best of the Lessee's knowledge, have any Hazardous Materials been
released or disposed of on any of

                                     [1]-3
<PAGE>

the properties owned by the Lessee or the Lessee's Subsidiaries which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. No Event of Default or Default has occurred and is
continuing.

          (p) Title; Possession Under Leases.  The Lessee and the Lessee's
              ------------------------------
Subsidiaries (i) own and have good title (without regard to minor defects of
title), or leasehold interests in, all their other respective properties and
assets which are material to the business of the Lessee and its Subsidiaries
taken as a whole as reflected in the most recent Financial Statements delivered
to the Agent (except those assets and properties disposed of since the date of
such Financial Statements in compliance with this Participation Agreement) and
(ii) own and have good title (without regard to minor defects of title) to, or
leasehold interests in, all respective properties and assets acquired by the
Lessee and the Lessee's Subsidiaries since such date which are material to the
business of the Lessee and its Subsidiaries taken as a whole (except those
assets and properties disposed of in compliance with this Participation
Agreement).  Such assets and properties are subject to no Lien, except for
Permitted Liens.

          (q) Patent and Other Rights.  The Lessee and the Lessee's Subsidiaries
              -----------------------
own or license under validly existing agreements (or could obtain such
ownership, possession or license on terms not materially adverse to the Lessee
and its Subsidiaries, taken as a whole, and under circumstances that could not
reasonably be expected to have a Material Adverse Effect), and have the full
right to license without the consent of any other Person, all patents, licenses,
trademarks, trade names, trade secrets, service marks, copyrights and all rights
with respect thereto, which are material to conduct the businesses of the Lessee
and its Subsidiaries (taken as a whole) as now conducted.

          (r) Solvency, Etc.  The Lessee and each of its Material Subsidiaries
              --------------
is Solvent and, after the execution and delivery of the Operative Documents and
the consummation of the transactions contemplated thereby, will be Solvent.

          (s) Catastrophic Events.  Neither the Lessee nor any of the Lessee's
              -------------------
Subsidiaries and none of their properties is affected by any fire, explosion,
strike, lockout or other labor dispute, earthquake, embargo or other casualty
that is reasonably likely to have a Material Adverse Effect.  As of the Closing
Date, there are no disputes presently subject to grievance procedure,
arbitration or litigation under any of the collective bargaining agreements,
employment contracts or employee welfare or incentive plans to which the Lessee
or any of the Lessee's Subsidiaries is a party, an there are no strikes,
lockouts, work stoppages or slowdowns, or, to the best knowledge of the Lessee,
jurisdictional disputes or organizing activities occurring or threatened which
alone or in the aggregate are reasonably likely to have a Material Adverse
Effect.

          (t) Maxtor Merger Matters.
              ---------------------

              (i)  The Maxtor Merger Agreement and the other Maxtor Merger
Documents have been duly executed by each of the parties thereto and are
enforceable in accordance with their terms by and against all such parties. Such
agreements have not been amended, modified or supplemented since their
respective dates of execution in any manner that could reasonably be expected to
be materially adverse to the Lessor or the Participants.

                                     [1]-4
<PAGE>

          (ii)   All material conditions precedent to the effectiveness of the
Maxtor Merger have been satisfied (or, with respect to conditions precedent to
Maxtor's obligations thereunder, waived by Maxtor) and the Maxtor Merger has
been consummated in accordance with the terms of the Maxtor Merger Agreement.
The HDD Redemption has been duly authorized by and on behalf of the Lessee and
has been consummated in accordance with the terms of the Maxtor Merger Agreement
and the other Maxtor Merger Documents.

          (iii)  Pursuant to the Maxtor Merger Documents, Maxtor is legally
obligated to indemnify the Lessee and the Lessee's Subsidiaries to the extent
set forth therein.  Maxtor has not disputed, disclaimed or breached in any
material respect such indemnification obligations.

     (u)  Snap Spin-Off Matters.
          ---------------------

          (i)    As of the dates of the Snap Spin-Off Documents, each,
respectively, will be duly executed by each of the parties thereto in a form
substantially identical to the form thereof filed as an exhibit to the Snap
Appliances S-1 and will be enforceable in accordance with its terms by and
against all parties thereto and, as of any date subsequent thereto, such
agreements will not have been amended, modified or supplemented in any manner
that could reasonably be expected to be materially adverse to the Lessor or the
Participants.

          (ii)   As of the date of the consummation of the Snap Spin-Off, all
material conditions precedent to the effectiveness of the Snap Spin-Off will
have been satisfied and the Snap Spin-Off will have been consummated in
accordance with the terms of the Snap Spin-Off Documents.

          (iii)  As of the dates of the Snap Spin-Off Documents, Snap Appliances
will be legally obligated to indemnify the Lessee and the Lessee's Subsidiaries
to the extent set forth therein.

          (iv)   Prior to the consummation of the Snap Spin-Off, any material
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority required to be obtained or made in
connection with the consummation of the Snap Spin-Off will have been duly
obtained or made.

          (v)    Immediately prior to the consummation of the Snap Spin-Off, no
litigation, investigation or proceeding of or before an arbitrator or
Governmental Authority will be pending, or to the knowledge of the Lessee after
due and diligent investigation, threatened by or against the Lessee or any of
its Subsidiaries or against any of their properties or revenues which in any
manner challenges or seeks to prevent, enjoin, alter or delay the consummation
of the Snap Spin-Off.

          (vi)   Prior to the consummation of the Snap Spin-Off, the Lessee
shall have obtained a private letter ruling from the IRS to the effect that the
distribution to the Lessee's shareholders of all or substantially all of shares
of Snap Appliances held by the Lessee will constitute a tax-free reorganization
under the Code.

                                     [1]-5
<PAGE>

          (v)  Disclosure.
               ----------

               (i)   No statement, information, report, representation, or
warranty made by the Lessee in any Operative Document or furnished to the Agent,
the Lessor or any Participant in connection with any Operative Document contains
any untrue statement of a material fact or, when viewed together with the
Lessee's periodic reports filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, omits to state
any material fact necessary to make the statements herein or therein not
misleading.

               (ii)  None of the information supplied or to be supplied by the
Lessee or any of its Subsidiaries for inclusion or incorporation by reference
in:

                     (A)  the Maxtor Merger S-4 or the Snap Appliances S-1 will
     at the time such registration statement is declared or ordered effective
     under the Securities Act of 1933, as amended, contain any untrue statement
     of a material fact or omit to state any material fact required to be stated
     therein or necessary in order to make the statements therein, in light of
     the circumstances in which they were made, not misleading; and

                     (B)  the proxy statement of the Lessee contained in the
     Maxtor Merger S-4 shall not, on the date such proxy statement is first
     mailed to the stockholders of the Lessee, at the time of the meeting of the
     Lessee's stockholders called for therein and at the Maxtor Merger Effective
     Time, contain any untrue statement of a material fact or omit to state any
     material fact required to be stated therein or necessary in order to make
     the statements therein, in light of the circumstances under which they are
     made, not false or misleading, or omit to state any material fact necessary
     to correct any statement in any earlier communication with respect to the
     solicitation of proxies for such stockholders' meeting which has become
     false or misleading. The proxy statement of the Lessee contained in the
     Maxtor Merger S-4 will comply as to form in all material respects with the
     provisions of the Securities Exchange Act of 1934, as amended, and the
     rules and regulations promulgated thereunder.

Notwithstanding the foregoing, the Lessee makes no representation or warranty
with respect to any information supplied by Maxtor which is contained in any of
the foregoing documents.

                                     [1]-6
<PAGE>

                                 ATTACHMENT 2
                                 ------------

                             Revised Section 10.1
                             --------------------

     SECTION 10.1   Affirmative Covenants of the Lessee.  So long as this
                    -----------------------------------
Participation Agreement is in effect, the Lessee shall, and shall (except in the
case of the Lessee's reporting covenants) cause each Subsidiary, to:

          (a)  Financial Statements. Deliver to the Agent and each Participant,
               --------------------
in form and detail satisfactory to the Agent and the Required Participants:

               (i)   as soon as available, but in any event within ninety (90)
     days after the end of each fiscal year of the Lessee, or, if the Lessee has
     been granted an extension by the Securities and Exchange Commission
     permitting the late filing by the Lessee of any annual report on form 10-K,
     the earlier of (x) 120 days after the end of each fiscal year of the Lessee
     or (y) the last day of any such extension, (A) a consolidated balance sheet
     of the Lessee and its Subsidiaries as at the end of such fiscal year, and
     the related consolidated statements of income and cash flows for such
     fiscal year, and (B) in respect of any period (or partial period) prior to
     the Maxtor Merger Effective Time, DSS Combined Financial Statements for
     such year-end; in each case setting forth in comparative form the figures
     for the previous fiscal year, all in reasonable detail, audited and
     accompanied by a report and opinion of an independent certified public
     accountant of nationally recognized standing, which report and opinion
     shall be prepared in accordance with GAAP and shall not be subject to any
     qualifications or exceptions as to the scope of the audit nor to any
     qualifications and exceptions not reasonably acceptable to the Required
     Participants;

               (ii)  as soon as available, but in any event within forty-five
     (45) days after the end of each of the first three fiscal quarters of each
     fiscal year of the Lessee, or, if the Lessee has been granted an extension
     by the Securities and Exchange Commission permitting the late filing by the
     Lessee of any quarterly report on form 10-Q, the earlier of (x) sixty (60)
     days after the end of each of the first three fiscal quarters of each
     fiscal year of the Lessee or (y) the last day of any such extension, (A) a
     consolidated balance sheet of the Lessee and its Subsidiaries as at the end
     of such fiscal quarter, and the related consolidated statements of income
     and cash flows for such fiscal quarter and for the portion of the Lessee's
     fiscal year then ended, and (B) in respect of any period (or partial
     period) prior to the Maxtor Merger Effective Time, DSS Combined Financial
     Statements for such quarter end; in each case setting forth in comparative
     form the figures for the corresponding fiscal quarter of the previous
     fiscal year and the corresponding portion of the previous fiscal year, all
     in reasonable detail and certified by a Responsible Officer of the Lessee
     as fairly presenting the financial condition, results of operations and
     cash flows of the Lessee and its Subsidiaries in accordance with GAAP,
     subject only to normal year-end audit adjustments and the absence of
     footnotes; and

               (iii) Reports required to be delivered pursuant to clauses (i)
                                                                  -----------
     and (ii) of this Section 10.1(a) shall be deemed to have been delivered on
     --------------------------------
     the date on which the Lessee posts such reports on the Lessee's website on
     the Internet at the website address listed on Schedule III hereof or when
                                                   ------------
     such report is posted on the Securities and Exchange Commission's website
     at www.sec.gov.; provided that (A) the Lessee shall
                      --------

                                     [2]-1
<PAGE>

     deliver paper copies of the reports referred to in such clauses (i) and
     (ii) of this Section 10.1(a) to the Agent or any Participant who requests
     the Lessee to deliver such paper copies until written request to cease
     delivering paper copies is given by the Agent or such Participant, (B) the
     Lessee shall notify the Agent and the Participants of the posting of any
     such new material, and (C) in every instance the Lessee shall provide paper
     copies of the Compliance Certificates required by clause (i) of Section
                                                       ---------------------
     10.1(b) to the Agent and each Participant. Except for the Compliance
     -------
     Certificates referred to in such clause (i) of Section 10.1(b), the Agent
                                      -----------------------------
     shall have no obligation to request the delivery or to maintain copies of
     the reports referred to in clauses (i) and (ii) of this Section 10.1(a),
                                --------------------------------------------
     and in any event shall have no responsibility to monitor compliance by the
     Lessee with any such request for delivery, and each Participant shall be
     solely responsible for requesting delivery to it or maintaining its copies
     of such reports.

          (b)  Certificates, Notices and Other Information.  Deliver to the
               -------------------------------------------
Agent and each Participant, in form and detail satisfactory to the Agent and the
Required Participants:

               (i)   concurrently with the delivery of the financial statements
     referred to in clauses (i) and (ii) of Section 10.1(a), a duly completed
                    ---------------------------------------
     Compliance Certificate signed by a Responsible Officer of the Lessee;

               (ii)  promptly after the same are available, copies of each
     annual report, proxy or financial statement or other report or
     communication sent to the stockholders of the Lessee, and copies of all
     annual, regular, periodic and special reports and registration statements
     which the Lessee may file or be required to file with the Securities and
     Exchange Commission under Sections 13 or 15(d) of the Securities Exchange
     Act of 1934, as amended, and not otherwise required to be delivered to the
     Agent pursuant hereto;

               (iii) promptly after the occurrence thereof, notice of any
     Default or Event of Default;

               (iv)  notice of any change in accounting policies or financial
     reporting practices by the Lessee or any Subsidiary that is material to the
     Lessee or to the Lessee and its Subsidiaries on a consolidated basis;

               (v)   promptly after the commencement thereof, notice of any
     litigation, investigation or proceeding affecting the Lessee where the
     reasonably expected damages to the Lessee exceed the Threshold Amount, or
     in which injunctive relief or similar relief is sought, which relief, if
     granted, has a Material Adverse Effect;

               (vi)  promptly after the occurrence thereof, notice of any
     Reportable Event with respect to any Plan or the intent to terminate any
     Plan, or the institution of proceedings or the taking or expected taking of
     any other action to terminate any Plan or withdraw from any Plan;

               (vii) promptly after the occurrence thereof, notice of any
     Material Adverse Effect;

                                     [2]-2
<PAGE>

               (viii)  promptly after the occurrence thereof, notice of (i) any
     material amendment of or supplement to, or the occurrence of any material
     breach under, any of the Maxtor Merger Documents or the Snap Spin-Off
     Documents, and (ii) the consummation of each step in the Snap Spin-Off; and

               (ix)    promptly, such other data and information as from time to
     time may be reasonably requested by the Agent, or, through the Agent or any
     Participant.  Notwithstanding any provision of this Participation Agreement
     to the contrary, so long as no Default or Event of Default shall have
     occurred and be continuing, neither the Lessee nor any of its Subsidiaries
     shall be required to disclose, permit the inspection, examination,
     photocopying or making extracts of, or discuss, any document, information
     or other matter that (A) constitutes non-financial trade secrets or non-
     financial proprietary information, or (B) the disclosure of which to any
     Participant, or their designated representative, is then prohibited by law
     or any agreement binding on the Lessee or any of its Subsidiaries that was
     not entered into by the Lessee or any such Subsidiary for the purpose of
     concealing information from the Participants.

          Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of the Lessee setting forth details of the
occurrence referred to therein and stating what action the Lessee has taken and
proposes to take with respect thereto.

          (c)  Payment of Taxes.  Pay and discharge when due all material taxes,
               ----------------
assessments, and governmental charges, except for any such tax, assessment,
charge, or levy which is an Ordinary Course Lien under subsection (b) of the
                                                       --------------
definition of such term and except as otherwise provided in Section 13 hereof or
                                                            ----------
Article XIII of the Lease.
------------

          (d)  Preservation of Existence.  Preserve and maintain its existence,
               -------------------------
licenses, permits, rights, franchises and privileges necessary or desirable in
the normal conduct of its business, except (i) as permitted by Section 10.2(c),
                                                               ---------------
or (ii) where failure to do so does not have a Material Adverse Effect.

          (e)  Maintenance of Properties.  Maintain, preserve and protect all of
               -------------------------
its material properties and equipment necessary in the operation of its business
in good order and condition, subject to wear and tear in the ordinary course of
business, and not permit any waste of its properties, except where failure to do
so would not reasonably be expected to have a Material Adverse Effect.

          (f)  Maintenance of Insurance.  Maintain liability and casualty
               ------------------------
insurance with responsible insurance companies satisfactory to the Agent in such
amounts and against such risks as is customary for similarly situated
businesses.

          (g)  Compliance with Requirements of Law.  (i) Comply with all
               -----------------------------------
Requirements of Law, noncompliance with which has a Material Adverse Effect; and
(ii) conduct its operations and keep and maintain its property in material
compliance with all Environmental Laws.

          (h)  Inspection Rights.  At any time during regular business hours and
               -----------------
as often as reasonably requested upon reasonable notice, permit the Agent or any
Participant, or any employee, agent or representative thereof, to examine, audit
and make copies and abstracts from

                                     [2]-3
<PAGE>

the Lessee's records and books of account and to visit and inspect its
properties and to discuss its affairs, finances and accounts with any of its
officers and key employees, and, upon request, furnish promptly to the Agent or
any Participant true copies of all financial information and internal management
reports made available to their senior management.

          (i) Keeping of Records and Books of Account.  Keep adequate records
              ---------------------------------------
and books of account reflecting all financial transactions in conformity with
GAAP, consistently applied, and in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
the Lessee or any applicable Subsidiary.

          (j) Compliance with ERISA.  Cause, and cause each of its ERISA
              ---------------------
Affiliates to:  (i) maintain each Plan in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law; (ii) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; and (iii) make all required contributions to any
Plan subject to Section 412 of the Code.

          (k) Compliance with Agreements.  Promptly and fully comply with all
              --------------------------
Contractual Obligations to which any one or more of them is a party, except for
any such Contractual Obligations (i) the nonperformance of which would not cause
a Default or Event of Default, (ii) then being contested by any of them in good
faith by appropriate proceedings, or (iii) if the failure to comply therewith
could not reasonably be expected to have a Material Adverse Effect.

                                     [2]-4
<PAGE>

                                 ATTACHMENT 3
                                 ------------

                               New Section 10.2
                               ----------------

     SECTION 10.2    Negative Covenants of the Lessee.  So long as this
                     --------------------------------
Participation Agreement is in effect, the Lessee shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly:

          (a)  Indebtedness.  Create, incur, assume or suffer to exist any
               ------------
Indebtedness, except for the following ("Permitted Indebtedness"):
              ------                     ----------------------

               (i)    The obligations of the Lessee under the Operative
     Documents;

               (ii)   Indebtedness outstanding on the date hereof and listed on

     Schedule 10.2 and any refinancings, refundings, renewals or extensions
     -------------
     thereof, provided that the amount of such Indebtedness is not increased at
              --------
     the time of such refinancing, refunding, renewal or extension except by an
     amount equal to the premium or other amount paid, and fees and expenses
     incurred, in connection with such refinancing and by an amount equal to any
     utilized commitments thereunder;

               (iii)  Ordinary Course Indebtedness;

               (iv)   Indebtedness of the Lessee under the Convertible
     Subordinated Debentures;

               (v)    Indebtedness of the Lessee and its Subsidiaries under
     loans and Capital Leases incurred by the Lessee or any of its Subsidiaries
     to finance the acquisition by such Person of real property, improvements,
     fixtures, equipment or other fixed assets (together with attachments,
     ascensions, additions, "soft costs" and proceeds thereof), provided that in
     each case, (A) such Indebtedness is incurred by such Person at the time of,
     or not later than six (6) months after, the acquisition by such Person of
     the property so financed, and (B) such Indebtedness does not exceed the
     purchase price of the property so financed;

               (vi)   Indebtedness of the Lessee and any of its Subsidiaries
     under Synthetic Lease Obligations incurred by such Person;

               (vii)  Indebtedness of the Lessee and its Subsidiaries under
     initial or successive refinancings, refundings, renewals or extensions of
     any Indebtedness permitted by clauses (v) and (vi) above, provided that the
                                   --------------------        --------
     amount of such Indebtedness is not increased at the time of such
     refinancing, refunding, renewal or extension except by an amount equal to
     the premium or other amount paid, and fees and expenses incurred, in
     connection with such refinancing;

               (viii) Indebtedness of the Lessee and its Subsidiaries in
     respect of any Permitted Receivables Facility;

               (ix)   Indebtedness of the Lessee to any of the Lessee's
     Subsidiaries, Indebtedness of any of the Lessee's Subsidiaries (other than
     Snap Appliances, except as

                                     [3]-1
<PAGE>

     permitted pursuant to Section 10.02(e)(ix)) to the Lessee or Indebtedness
                           ---------------------
     of any of the Lessee's Subsidiaries (other than Snap Appliances, except as
     permitted pursuant to Section 10.02(e)(ix)) to any of the Lessee's other
                           ---------------------
     Subsidiaries;

               (x)    Subordinated Indebtedness of the Lessee to any Person,
     provided that (A) such Indebtedness contains subordination provisions no
     --------
     less favorable to the Agent and the Participants than those set forth in
     Exhibit R or as otherwise approved by the Required Participants and (B) the
     ---------
     aggregate principal amount of all Subordinated Debt of the Lessee
     outstanding (including the Convertible Subordinated Debentures) does not
     exceed $350,000,000 at any time;

               (xi)   Indebtedness not exceeding, in the aggregate at any time,
     ten percent (10%) of the total consolidated assets of the Lessee and its
     Subsidiaries determined as of the end of the most recent fiscal quarter;
     provided that if such fiscal quarter end date is prior to the Maxtor Merger
     --------
     Effective Time, such Indebtedness shall not exceed 10% of the combined
     assets of DSS, based upon the most recent DSS Combined Financial
     Statements; and

               (xii)  Indebtedness in the form of Guarantee Obligations set
     forth in the terms of the Maxtor Merger Agreement.

          (b)  Liens. Incur, assume or suffer to exist, any Lien upon any of its
               -----
property, assets or revenues, whether now owned or hereafter acquired, except
for the following ("Permitted Liens"):
                    ---------------

               (i)    Liens in favor of any of the Agent or any Participant
     securing the obligations of the Lessee under the Operative Documents;

               (ii)   Liens existing on the date hereof and listed on Schedule
                                                                      --------
     10.2 and any renewals or extensions thereof, provided that the property
     ----                                         --------
     covered thereby is not increased and any renewal or extension of the
     obligations secured or benefited thereby is permitted by Section 10.2(a);
                                                              ---------------

               (iii)  Ordinary Course Liens;

               (iv)   Liens granted by a person securing Investments of such
     Person which constitute Permitted Investments under Section 10.2(e);
                                                         ---------------

               (v)    Liens on cash or cash equivalents securing reimbursement
     obligations of the Lessee under letters of credit (other than any letters
     of credit issued under the Loan Documents) in an aggregate amount of all
     such cash and cash equivalents not to exceed $50,000,000;

               (vi)   Liens in respect of accounts receivable and any related
     property that are the subject of a Permitted Receivables Facility;

               (vii)  Liens on the property or assets of any corporation which
     becomes a Subsidiary of the Lessee after the date of this Participation
     Agreement, provided that
                --------

                                     [3]-2
<PAGE>

     (A) such Liens exist at the time such corporation became a Subsidiary, and
     (B) such Liens were not created in contemplation of such acquisition by the
     Lessee;

               (viii)  Rights of vendors or lessors under conditional sale
     agreements, Capital Leases or other title retention agreements, provided
                                                                     --------
     that in each case, (A) such rights secure or otherwise relate to Permitted
     Indebtedness, (B) such rights do not extend to any property other than
     property acquired with the proceeds of such Permitted Indebtedness
     (together with accessions, additions, replacements and proceeds thereof),
     and (z) such rights do not secure any Indebtedness other than Permitted
     Indebtedness;

               (ix)    Liens securing Indebtedness and any related obligations
     of the Lessee or any of its Subsidiaries which constitutes Permitted
     Indebtedness under clause (vi) of Section 10.2(a) (or refinancings of such
                        ------------------------------
     Indebtedness under clause (vii) of Section 10.2(a)), provided that such
                        --------------------------------  --------
     Liens cover only those assets subject to Synthetic Lease Obligations
     (together with accessions, additions, replacements and proceeds thereof);

               (x)     Liens incurred in connection with leases, subleases,
     licenses and sublicenses granted to Persons not interfering in any material
     respect with the business of the Lessee and its Subsidiaries and any
     interest or title of a lessee or licensee under any such leases, subleases,
     licenses or sublicenses;

               (xi)    Liens in favor of the Lenders in connection with the
     letter of credit cash collateral account established in accordance with the
     Loan Documents; and

               (xii)   Liens not otherwise permitted hereunder on the property
     or assets of the Lessee and any of its Subsidiaries securing (A) borrowed
     money Indebtedness of the Person granting such Lien, (B) all obligations of
     the Lessee arising other than in connection with any securitization which
     are evidenced by bonds, debentures, notes or other similar instruments, or
     (C) Indebtedness consisting of letter of credit reimbursement obligations,
     provided that, in each case, (x) the aggregate principal amount of all
     --------
     Indebtedness secured by such Liens does not exceed at any time ten percent
     (10%) of the total assets of the Lessee and its Subsidiaries determined as
     of the end of the fiscal quarter immediately preceding the date of
     determination (provided that if such fiscal quarter end date is prior to
                    --------
     the Maxtor Merger Effective Time, the aggregate principal amount of all
     Indebtedness secured by such Liens shall not exceed 10% of the combined
     assets of DSS, based upon the most recent DSS Combined Financial
     Statements) and (y) such Liens do not encumber current assets of the Lessee
     and its Subsidiaries in excess of $50,000,000.

          (c)  Fundamental Changes. Merge or consolidate with or into any Person
               -------------------
or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation or
dissolution or sell all or substantially all of its assets, except that:
                                                            ------

               (i)     any Subsidiary may merge with (A) the Lessee, provided
                                                                     --------
     that the Lessee shall be the continuing or surviving corporation, (B) any
     one or more Subsidiaries, and (C) any joint venture, partnership or other
     Person, so long as such joint venture, partnership and other Person will,
     as a result of making such merger and all other contemporaneous related
     transactions, become a Subsidiary;

                                     [3]-3
<PAGE>

               (ii)    any Subsidiary may sell all or substantially all of its
     assets (upon voluntary liquidation or otherwise), to the Lessee or to
     another Subsidiary;

               (iii)   the Lessee may merge with any other corporation, provided
                                                                        --------
     that (A) the Lessee is the surviving corporation, and (B) immediately after
     giving effect to such merger, no Default or Event of Default shall have
     occurred and be continuing;

               (iv)    any Subsidiary may merge or consolidate with or into any
     other Person or sell all or substantially all of its assets to the extent
     such transaction is a Disposition otherwise permitted under Section 10.2(d)
                                                                 ---------------
     or an Investment otherwise permitted under Section 10.2(e) and immediately
                                                ---------------
     after giving effect to such merger or consolidation, no Default or Event of
     Default shall have occurred and be continuing; and

               (v)     Spinco may merge with Maxtor pursuant to and as set forth
     in Section 2.2 of the Maxtor Merger Agreement.

          (d)  Dispositions.  Make any Dispositions, except:
               ------------

               (i)     Ordinary Course Dispositions;

               (ii)    Dispositions permitted by Section 10.2(c);
                                                 ---------------

               (iii)   Dispositions which constitute the making of or
     liquidation of Permitted Investments;

               (iv)    Dispositions to Snap Appliances of assets and liabilities
     of the Lessee related to the Snap Business pursuant to the Snap Spin-Off
     Documents that are permitted pursuant to Section 10.2(e);
                                              ---------------
               (v)     Disposition of Snap Appliances stock permitted by Section
                                                                         -------
     10.2(f)(vi);
     -----------

               (vi)    Dispositions not otherwise permitted hereunder not
     exceeding twenty percent (20%) of Consolidated Tangible Net Worth for the
     four fiscal quarter period ending as of the end of the fiscal quarter
     immediately preceding the date of determination, other than Dispositions by
     the Lessee or any Subsidiary to Snap Appliances or relating to stock of
     Snap Appliances;

               (vii)   Dispositions of accounts receivables and any related
     property that are the subject of a Permitted Receivables Facility by the
     Lessee and its Subsidiaries; and

               (viii)  Dispositions of the HDD Business pursuant to the Maxtor
     Merger Documents and ancillary documents executed contemporaneously
     therewith.

          (e)  Investments.  Make any Investments, except for the following
               -----------
("Permitted Investments"):

               (i)     Investments existing on March 31, 2000;

               (ii)    Ordinary Course Investments;

                                     [3]-4
<PAGE>

               (iii)   Investments permitted by Section 10.2(a) or Section
                                                ---------------    -------
     10.2(c);
     -------

               (iv)    Investments arising from rights received by the Lessee
     and its Subsidiaries upon the required payment of any permitted contingent
     obligations of the Lessee and its Subsidiaries;

               (v)     Investments in the nature of Acquisitions, provided that
     the aggregate amount of such Acquisitions in any period of four consecutive
     fiscal quarters does not exceed twenty percent (20%) of Consolidated
     Tangible Net Worth as determined as of the fiscal quarter immediately
     preceding the date of determination;

               (vi)    Investments of the Lessee and its Subsidiaries in Swap
     Contracts, provided that all such arrangements are entered into in
     connection with bona fide hedging operations and not for speculation;

               (vii)   Investments by Quantum Technology Ventures (or any other
     Subsidiary of the Lessee with the primary purpose of making venture
     investments) and other Investments which the Lessee's Board of Directors
     determines to be strategic for the Lessee in an aggregate cost basis, at
     any time invested for all such entities and investments together, not to
     exceed the sum of (A) $150,000,000 and (B) the aggregate gain or loss on
     such Investments previously made under this clause (vii);
                                                 ------------

               (viii)  Investments not otherwise permitted hereunder, provided
                                                                      --------
     that the aggregate amount of such other Investments made after March 31,
     2000 (less any return on any such Investments) does not exceed twenty
     percent (20%) of Consolidated Tangible Net Worth as determined as of the
     fiscal quarter immediately preceding the date of determination; and

               (ix)    Investments in Snap Appliances from and after the First
     Amendment Effective Date but prior to the consummation of the Snap Spin-Off
     in an aggregate amount not exceeding $100,000,000.

          (f)  Restricted Payments.  Make any Restricted Payments, except as
               -------------------                                 ------
follows:

               (i)     (a) the Lessee may pay dividends or other distributions
     payable solely in shares of capital stock of the Lessee and (b) any
     Subsidiary of the Lessee may make Restricted Payments to (A) the Lessee or
     (B) any other Subsidiary of the Lessee (other than Snap Appliances, except
     that any Subsidiary of Snap Appliances may make Restricted Payments to Snap
     Appliances);

               (ii)    the Lessee may distribute rights pursuant to a
     shareholder rights plan or redeem such rights, provided that such
                                                    --------
     redemption is in accordance with the terms of such shareholder rights plan;

               (iii)   the Lessee may make Restricted Payments in connection
     with or pursuant to any of its Employee Benefits Plans or in connection
     with the employment, termination or compensation of its employees, officers
     or directors;

                                     [3]-5
<PAGE>

               (iv)    the Lessee may make Restricted Payments with the Net
     Security Proceeds received from a substantially concurrent issuance of
     Equity Securities or capital stock or with its Equity Securities or capital
     stock or the Lessee may convert any Equity Securities in accordance with
     their terms into other Equity Securities;

               (v)     the Lessee may purchase Equity Securities pursuant to one
     or more stock repurchase programs, provided that (A) no Default or Event of
                                        --------
     Default shall have occurred and be continuing, and (B) after giving effect
     to any such repurchases the Lessee shall be in compliance with Section
                                                                    -------
     10.2(e);
     -------

               (vi)    the Lessee may, on or before the date twelve months
     subsequent to the First Amendment Effective Date, dividend or distribute to
     its shareholders all or substantially all stock of Snap Appliances held by
     it pursuant to the Snap Spin-Off, provided there exists no Default or Exist
     of Default; and

               (vii)   the Lessee may declare or pay any dividends in respect of
     its Equity Securities or purchase or redeem shares of its Equity Securities
     or make distributions to shareholders not otherwise permitted hereunder,
     provided that the aggregate amount paid or distributed in any period of
     --------
     four consecutive quarters (excluding any amounts covered by clause (ii)
                                                                 -----------
     above) does not exceed five percent (5%) of Consolidated Tangible Net Worth
     as determined as of the fiscal quarter immediately preceding the date of
     determination.

          (g)  ERISA.  At any time engage in a transaction which could be
               -----
subject to Sections 4069 or 4212(c) of ERISA, or permit any Pension Plan to (i)
engage in any non-exempt "prohibited transaction" (as defined in Section 4975 of
the Code); (ii) fail to comply with ERISA or any other applicable Requirements
of Law; or (iii) incur any material "accumulated funding deficiency" (as defined
in Section 302 of ERISA), which, with respect to each event listed above, has a
Material Adverse Effect.

          (h)  Change in Nature of Business.  Engage, either directly or
               ----------------------------
indirectly through Affiliates, in any line of business other than the digital
storage business, any other business incidental or reasonably related thereto,
or any businesses that are, as determined by the Board of Directors of the
Lessee, appropriate extensions thereof.

          (i)  Transactions with Affiliates.  Enter into any transaction of any
               ----------------------------
kind with any Affiliate (other than transactions among the Lessee or any of its
Subsidiaries and any Subsidiary) of the Lessee other than arm's-length
transactions with Affiliates that are otherwise permitted hereunder.

          (j)  Certain Indebtedness Payments, Etc.  Pay, prepay, redeem,
               -----------------------------------
purchase, defease or otherwise satisfy in any manner prior to the scheduled
payment thereof any Subordinated Debt except as otherwise permitted under this
Section 10.2(j); amend, modify or otherwise change the terms of any document,
---------------
instrument or agreement evidencing Subordinated Debt such that such amendment,
modification or change would (i) cause the outstanding aggregate principal
amount of all such Subordinated Debt so amended, modified or changed to be
increased as a consequence of such amendment, modification or change, (ii) cause
the subordination provisions applicable to such Subordinated Debt to be less
favorable to the Agent and the Participants than those set forth on Exhibit R,
                                                                    ---------
(iii) increase the interest rate applicable

                                     [3]-6
<PAGE>

thereto, or (iv) accelerate the scheduled payment thereof, except that, subject
to the other terms and provisions hereof, the Lessee may (A)(1) call for
redemption of the entire outstanding amount of the Convertible Subordinated
Debentures and, (2) to the extent such Convertible Subordinated Debentures are
not converted prior to the redemption date, redeem up to thirty percent (30%) of
any such outstanding Convertible Subordinated Debentures less the amount of
Subordinated Debt purchased by the Lessee pursuant to clause (B)(2) of this
                                                      ---------------------
Section 10.2(j), provided that (x) no Default or Event of Default has occurred
---------------
and is continuing or would result from such call for redemption or redemption
and (y) the closing price of a share of common stock of the Lessee shall have
exceeded one hundred twenty percent (120%) of the then applicable conversion
price for twenty (20) trading days within a period of thirty (30) consecutive
trading days ending within five (5) trading days prior to the notice of
redemption. The Lessee shall not cause or permit any of its obligations, except
the obligations constituting Senior Indebtedness, to constitute "Designated
Senior Indebtedness" under the Indenture governing the Convertible Subordinated
Debentures (it being understood that the obligations of the Lessee under the
Operative Documents shall at all times constitute "Designated Senior
Indebtedness") or, subject to the other terms and provisions of this Section
                                                                     -------
10.2(j), the Lessee may (B)(1) pay, prepay, redeem, purchase, defease or
-------
otherwise satisfy in any manner any Subordinated Debt, with the Net Security
Proceeds from the substantially contemporaneous issuance of Equity Securities by
the Lessee or in exchange for Equity Securities of the Lessee; (2) otherwise
purchase outstanding Subordinated Debt, provided that the aggregate value of all
such Subordinated Debt repurchased, together with the amount of all redemptions
undertaken pursuant to clause (A) of this Section 10.2(j), does not at any time
                       ----------------------------------
exceed thirty (30%) of the total amount of any Convertible Subordinated
Debentures outstanding as of March 31, 2000. The Lessee may convert, or honor a
conversion request with respect to, any such Subordinated Debt into Equity
Securities of the Lessee in accordance with the terms of, and pay any cash to
holders of such Subordinated Debt in connection with, such a conversion solely
to the extent representing the value of any fractional shares.

          (k)  Financial Covenants.
               -------------------

               (i)     Consolidated Tangible Net Worth.  Permit Consolidated
                       -------------------------------
     Tangible Net Worth on the last day of any fiscal quarter (such date to be
     referred to herein as a "determination date"), commencing with the fiscal
     quarter ended March 31, 2000, to be less than the greater of: (A) seventy-
     five percent (75%) of Consolidated Tangible Net Worth as of March 31, 2000,
     or (B) the sum of (1) an amount equal to seventy-five percent (75%) of
     Consolidated Tangible Net Worth as of March 31, 2000; plus (2) an amount
                                                           ----
     equal to seventy-five percent (75%) of the sum of positive Consolidated Net
     Income (ignoring any quarterly losses and any charge for In-Process
     Research and Development described in clause (6) below) for each fiscal
     quarter after the quarter ended March 31, 2000, through and including the
     quarter ending on the determination date; plus (3) an amount equal to
                                               ----
     seventy-five (75%) of the Net Security Proceeds of all Equity Securities
     issued by the Lessee (excluding any issuance where the Net Security
     Proceeds to the Lessee therefor are less than $10,000,000) during the
     period commencing on March 31, 2000 and ending on the determination date;
     plus (4) an amount equal to seventy-five percent (75%) of the increase in
     ----
     shareholders' equity resulting, in accordance with GAAP, from any
     conversion of Convertible Subordinated Debentures into Equity Securities;
     minus (5) the lesser of (x) the aggregate amount paid by the to repurchase
     -----
     Equity Securities during the period commencing on March 31, 2000 and ending
     on the

                                     [3]-7
<PAGE>

     determination date and (y) $200,000,000; minus (6) the lesser of (x) the
                                              -----
     aggregate amount of charges taken by the Lessee for In-Process Research &
     Development associated with Acquisitions during the period commencing on
     March 31, 2000 and ending on the determination date, and (y) $100,000,000,
     provided that any such charges were taken by the Lessee during the quarter
     --------
     in which any such Acquisition was completed; and minus (7) for any fiscal
                                                      -----
     quarter ending after the Snap Spin-Off is consummated, the lesser of (x)
     net book value of Snap Appliances as of the First Amendment Effective Date
     (as determined in accordance with GAAP and reflected on the Lessee's
     financial statements for the fiscal quarter ending March 30, 2001) and (y)
     $150,000,000.

               (ii)   Minimum Quick Ratio.  Permit the Quick Ratio determined as
                      -------------------
     of the last day of any fiscal quarter of the Lessee (commencing with the
     quarter ending March 31, 2000) to be less than 1.10:1.

               (iii)  Maximum Leverage Ratio.  Permit the Leverage Ratio,
                      ----------------------
     determined as of the last day of any fiscal quarter of the Lessee,
     commencing with the fiscal quarter ending March 31, 2000 (measured on a
     rolling four quarter basis for the four fiscal quarters then ended), to be
     greater than 2.00:1.

               (iv)   Minimum Profitability.  Suffer or permit there to exist,
                      ---------------------
     as of the last day of any fiscal quarter, for the four fiscal quarters
     ending on such date, commencing with the fiscal quarter ending March 31,
     2000, (A) any two fiscal quarters in which the aggregate negative
     Consolidated Net Income for such fiscal quarters exceeds five percent (5%)
     of Consolidated Tangible Net Worth as of such date, or (B) cumulative
     Consolidated Net Income for such four-quarter period of less than $1.00.
     For purposes of calculating this covenant, charges for In-Process Research
     & Development associated with Acquisitions shall be excluded, provided that
     (x) any such charges for In-Process Research and Development are taken
     during the quarter in which any such Acquisitions are completed, and (y) to
     the extent that the aggregate amount of any such charges for In-Process
     Research and Development taken does not exceed $100,000,000 from and after
     the First Amendment Effective Date.

          (l)  No Impairment of Deposits.  Enter into or become bound by any
               -------------------------
agreement, instrument, indenture or other obligation which could directly or
indirectly restrict, prohibit or require the consent of any Person to the making
by the Lessee of any deposit of Cash Collateral or the realization thereon or
utilization thereof (or of any earnings thereon or of any other Collateral) by
the Lessor, the Agent or any of the Participants.

          (m)  Tax Losses.  Alone or together with one or more of its
               ----------
Subsidiaries or Affiliates incur a Tax Loss, the uninsured portion of which
(individually, or together with all other prior Tax Losses) exceeds the
Threshold Amount, where an "uninsured" Tax Loss means a Tax Loss which is not
the subject of a bona fide insurance policy or contract with an insurer or
syndicate of insurers of national repute or as to which such insurer or insurers
have disputed or disclaimed contractual liability for such Tax Loss or otherwise
breached the terms of such policy or contract.

                                     [3]-8
<PAGE>

     (n)  Maxtor Merger and Snap Spin-Off Matters.
          ---------------------------------------

          (i)  Without the consent of the Agent and the Required Participants,
     the Lessee shall not and shall not permit any of its Subsidiary Affiliates
     to:

               (A)  amend or supplement the terms of any Maxtor Merger Document
     to which it is a party in a manner that could reasonably be expected to be
     materially adverse to the Lessor or any Participant,

               (B)  agree to transfer any asset or assume any liability pursuant
     to Section 1.1(d) of the HDD General Assignment Agreement,

               (C)  agree to transfer any asset or assume any liability pursuant
     to an Ancillary Agreement (as defined in Section 2.1(h) of the HDD
     Separation Agreement),

               (D)  agree that any asset is an HDD Asset pursuant to Section
     1.2(l) of the HDD General Assignment Agreement,

               (E)  agree that any liability is an Excluded HDD Liability
     pursuant to Section 1.5(f) of the HDD General Assignment Agreement (other
     than those set forth on Schedule 1.5 thereto) or

               (F)  otherwise agree to transfer assets to or assume liabilities
     of Maxtor or Spinco in a manner not set forth in the Maxtor Merger
     Documents; provided that the Lessee may, and may permit any of its
                --------
     Subsidiaries or Affiliates to, take any of the actions described in clauses
     (B) through (F) above if after giving effect to the same, in the aggregate
     (and assuming that any of the same consisting of contingent or off-balance
     sheet liabilities are incurred and accounted for in an amount equal to that
     which could reasonably be expected to be paid by the Lessee or its
     Subsidiary or Affiliate in connection therewith), the Lessee will remain in
     compliance with the covenants set forth in Section 10.2(k).
                                                ---------------

               (ii) Without the consent of the Agent and the Required
     Participants, the Lessee shall not and shall not permit any of its
     Subsidiaries or Affiliates to:

                    (A)  amend or supplement the terms of any Snap Spin-Off
     Document to which it is a party in a manner that could reasonably be
     expected to be materially adverse to the Lessor or any Participant,

                    (B)  agree to transfer any asset or assume any liability
     pursuant to Section 1.1(d) or 1.4(b) of the Snap General Assignment
     Agreement,

                    (C)  agree to transfer any asset or assume any liability
     pursuant to an Ancillary Agreement (as defined in Section 2.1(h) of the
     Snap General Assignment Agreement),

                    (D)  agree that any asset is an Snap Asset pursuant to
     Section 1.2(a)(iv) of the Snap General Assignment Agreement,

                                     [3]-9
<PAGE>

                    (E)  agree to assume any liability pursuant to Section 2.1
     of the Snap Employment Matters Agreement or

                    (F)  otherwise agree to transfer Snap assets to or assume
     liabilities of Snap Appliances in a manner not set forth in the Snap Spin-
     Off Documents; provided that the Lessee may, and may permit any of its
     Subsidiaries or Affiliates to, take any of the actions described in clauses
     (B) through (F) above after giving effect to the same, in the aggregate
     (and assuming that any of the same consisting of contingent or off-balance
     sheet liabilities are incurred and accounted for in an amount equal to that
     which could reasonably be expected to be paid by the Lessee or its
     Subsidiary or Affiliate in connection therewith), the Lessee will remain in
     compliance with the covenants set forth in Section 10.2(k).

          (o)  Appraisal.  On or prior to the date that is not later than thirty
               ---------
(30) days (or such later date as is acceptable to the Agent and the Lessor)
after the Land Interest Acquisition Date, the Agent, the Lessor and the
Participants shall have received an Appraisal of that portion of the Phase I
project on the Land Interest described in the Preliminary Letter of Value
delivered pursuant to Section 6.1(d), which Appraisal shall (i) show that the
Fair Market Sales Value of the Land Interest with respect to such Property as of
the projected Completion Date shall not exceed twenty-five (25%) of the Fair
Market Sales Value of such Land Interest and the Improvements to be constructed
thereon in accordance with the Plans and Specifications for Property, and (ii)
show as of the projected Completion Date the Fair Market Sales Value of such
Land Interest and the Improvements to be constructed thereon in accordance with
the Plans and Specifications, and (iii) meet the other applicable requirements
set forth in the definition of the term "Appraisal" contained in Appendix 1.

                                    [3]-10
<PAGE>

                                 ATTACHMENT 4
                                 ------------

                               New Schedule 8.3
                               ----------------

                                  LITIGATION

     On August 7, 1998, the Lessee was named as one of several defendants in a
patent infringement lawsuit filed in the U.S. District Court for the Northern
District of Illinois, Eastern Division.  The plaintiff, Papst Licensing GmbH
("Papst"), owns at least 26 U.S. patents, which it asserts that the Lessee has
infringed. In October 1999 the case was transferred to a federal district court
in New Orleans, Louisiana, where it has been joined with suits involving Maxtor
Corporation and Minebea Company, Ltd. for the purposes of coordinated discovery
under multi-district litigation rules.  IBM has recently been sued by Papst and
has been added to the multi-district proceedings.  The final results of this
litigation, as with any litigation, are uncertain.  In addition, the costs of
engaging in litigation with Papst will be substantial.

     The Lessee is also subject to other legal proceedings and claims that arise
in the ordinary course of its business.  For example, in fiscal year 2000,
Discovision Associates brought patents they hold to the Lessee's attention.
While management currently believes the amount of ultimate liability, if any,
with respect to these actions will not materially affect the financial position,
results of operations, or liquidity of the Lessee, the ultimate outcome of any
litigation is uncertain.  Were an unfavorable outcome to occur, the impact could
be material to the Lessee.

                                     [4]-1
<PAGE>

                                 ATTACHMENT 5
                                 ------------

                              Revised Appendix 1
                              ------------------

                                  APPENDIX 1
                                       to
               Amended and Restated Participation Agreement and
Amended and Restated Master Lease, each as amended and each dated as of July 12,
                                     2000,
          and Construction Deed of Trust amended as of July 12, 2000

                 (Specialty Storage Product Group Facilities)

                        DEFINITIONS AND INTERPRETATION

     A.   Interpretation.  In each Operative Document, unless a clear contrary
          --------------
intention appears:

          (i)    the singular number includes the plural number and vice versa;

          (ii)   reference to any Person includes such Person's successors and
     assigns but, if applicable, only if such successors and assigns are
     permitted by the Operative Documents, and reference to a Person in a
     particular capacity excludes such Person in any other capacity or
     individually ;

          (iii)  reference to any gender includes each other gender;

          (iv)   reference to any agreement (including any Operative Document),
     document or instrument means such agreement, document or instrument as
     amended or modified and in effect from time to time in accordance with the
     terms thereof and, if applicable, the terms of the other Operative
     Documents and reference to any promissory note includes   any promissory
     note which is an extension or renewal thereof or a substitute or
     replacement therefor;

          (v)    reference to any Applicable Law means such Applicable Law as
     amended, modified, codified, replaced or reenacted, in whole or in part,
     and in effect from time to time, including rules and regulations
     promulgated thereunder, and reference to any section or other provision of
     any Applicable Law means that provision of such Applicable Law from time to
     time in effect and constituting the substantive amendment, modification,
     codification, replacement or reenactment of such section or other
     provision;

          (vi)   reference in any Operative Document to any Article, Section,
     Appendix, Schedule, or Exhibit means such Article or Section thereof or
     Appendix, Schedule or Exhibit thereto;

          (vii)  "hereunder", "hereof", "hereto" and words of similar import
     shall be deemed references to an Operative Document as a whole and not to
     any particular Article, Section or other provision thereof;

                                     [5]-1
<PAGE>

          (viii)  "including" (and with correlative meaning "include") means
     including without limiting the generality of any description preceding such
     term;

          (ix)    "or" is not exclusive; and

          (x)     relative to the determination of any period of time, "from"
     means "from and including" and "to" means "to but excluding".

     B.   Accounting Terms.  In each Operative Document, unless expressly
          ----------------
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.

     C.   Conflict in Operative Documents.  If there is any conflict between any
          -------------------------------
Operative Documents, such Operative Document shall be interpreted and construed,
if possible, so as to avoid or minimize such conflict but, to the extent (and
only to the extent) of such conflict, the Lease shall prevail and control.

     D.   Legal Representation of the Parties.  The Operative Documents were
          -----------------------------------
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.

     E.   Defined Terms.  Unless a clear contrary intention appears, terms
          -------------
defined herein have the respective indicated meanings when used in each
Operative Document.

     "Account" is defined in Section 3.11 of the Participation Agreement and in
      -------                -------------------------------------------
Section 1 of the Cash Collateral Agreement.
------------------------------------------

     "Acquisitions" means any transaction or series of related transactions for
      ------------
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any line of business
or any division of a Person, (b) the acquisition of in excess of fifty percent
(50%) of the capital stock, partnership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary).

     "Acquisition Request" is defined in Section 3.3 of the Participation
      -------------------                --------------------------------
Agreement.
---------

     "Adjusted Percentage" is defined in Section 11.6 of the Participation
      -------------------                ---------------------------------
Agreement.
---------

     "Administrative Fee" is defined in Section 4.1 of the Participation
      ------------------                --------------------------------
Agreement.
---------

     "Advance" means an advance of funds by the Lessor pursuant to Section 3 of
      -------                                                      ------------
the Participation Agreement which will be used to pay Land Interest Acquisition
---------------------------
Costs or Property Improvements Costs.

     "Affiliate" means any Person directly or indirectly controlling, controlled
      ---------
by, or under direct or indirect common control with, another Person.  A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power (a) to vote ten percent (10%) or more
of the securities (on a fully diluted basis) having ordinary voting power for
the election of directors or managing general partners; or (b) to direct or
cause

                                     [5]-2
<PAGE>

the direction of the management and policies of such Person whether by
contract or otherwise; provided that Persons, other than Subsidiaries, in which
                       --------
Quantum Technology Ventures holds Equity Securities shall not be "Affiliates"
for purposes of this definition.

     "After Tax Basis" means, with respect to any payment to be received, the
      ---------------
amount of such payment increased so that, after deduction of the amount of all
taxes required to be paid by the recipient calculated at the then maximum
marginal federal and state income tax rates generally applicable to Persons of
the same type as the recipient (less any tax savings realized as a result of the
payment of the indemnified amount) with respect to the receipt by the recipient
of such amounts, such increased payment (as so reduced) is equal to the payment
otherwise required to be made.

     "Agent" means The Bank of Nova Scotia, as successor in interest to the
      -----
Original Agent in its capacity as agent for the Participants pursuant to the
Participation Agreement, or any successor or additional agent appointed in
accordance with the terms of the Participation Agreement.

     "Agent Financing Statements" means UCC financing statements appropriately
      --------------------------
completed and executed for filing in the applicable jurisdiction in order to
perfect a security interest in favor of the Agent for the ratable benefit of the
Participants in the Equipment located on the Property or in any Improvements on
the Property.

     "Alternate Base Rate" means, for any period, an interest rate per annum
      -------------------
equal to the lower of (i) the Prime Rate or (ii) the Federal Funds Effective
Rate most recently determined by the Agent plus one-half percent (0.50%).  If
either of the aforesaid rates or equivalent changes from time to time after the
date of the Participation Agreement, the Alternate Base Rate shall be
automatically increased or decreased, if appropriate and as the case may be,
without notice to the Lessee or the Lessor, as of the effective time of each
change.

     "Alternate Basic Rate Advance" means an Advance bearing interest or Yield
      ----------------------------
determined with reference to the Alternate Base Rate as provided in the
Participation Agreement.

     "Applicable Law" means all existing and future applicable laws, rules,
      --------------
regulations (including Environmental Laws), statutes, treaties, codes,
ordinances, permits, certificates, covenants, restrictions, requirements, orders
and licenses of and interpretations by, any Governmental Authorities, and
applicable judgments, decrees, injunctions, writs, orders or like action of any
court, arbitrator or other administrative, judicial or quasi-judicial tribunal
or agency of competent jurisdiction (including those pertaining to health,
safety or the environment (including, without limitation, wetlands) and those
pertaining to the construction, use or occupancy of the Property) and any
restrictive covenant or deed restriction or easement affecting the Property.

     "Applicable Margin" means at any time with respect to any Advance, either
      -----------------
(i) at any time amounts are deposited in an Account subject to the Cash
Collateral Agreement, and with respect to that portion of the Advances
represented by such Collateral, one-quarter percent (0.25%) per annum margin
with respect to Tranche A Participation Interests and Tranche B Participation
Interests therein and one and one-quarter percent (1.25%) per annum margin with
respect to Tranche C Participation Interests therein, or (ii) at any other time,
the per annum

                                     [5]-3
<PAGE>

margin which is determined pursuant to the Pricing Grid, and, in each case,
added to the Eurodollar Rate or Alternative Base Rate applicable to such
Advance.

     "Appraisal" means, with respect to the Property, an appraisal, prepared by
      ---------
a reputable appraiser approved by the Lessor, the Agent and the Required
Participants, which in the judgment of counsel to the Lessor, the Agent and the
Required Participants, complies with all of the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules
and regulations adopted pursuant thereto, and all other applicable Requirements
of Law, which appraisal will (i) appraise the Fair Market Sales Value of the
Property as built in accordance with the Plans and Specifications; on the fifth
anniversary of the Effective Date; as of the commencement of the Renewal Term,
if any; and at the end of the Renewal Term, if any; and (ii) contain an estimate
of the useful life of the Improvements as of each such date, all in a form
satisfactory to the Lessor, the Agent and the Required Participants.

     "Appurtenant Rights" means (i) all agreements, easements, rights of way or
      ------------------
use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to any Land Interest or the Improvements, including, without limitation, the use
of any streets, ways, alleys, vaults or strips of land adjoining, abutting,
adjacent or contiguous to any Land Interest and (ii) all permits, licenses and
rights, whether or not of record, appurtenant to any Land Interest.

     "Asset Termination Value" means, as of any date of determination, an amount
      -----------------------
equal to (i) the sum of (A) the outstanding Advances, (B) all accrued and unpaid
interest on the Advances, and (C) all other amounts owing by the Lessee under
the Operative Documents, less (ii) the sum of all payments received by the
Lessor, the Agent or the Participants on account of payments to reduce Asset
Termination Value, including reductions resulting from payments by the Lessor,
the Lessee or the Guarantor and/or any payment of the Partial Purchase Option
Price upon the exercise of a Partial Purchase Option and/or the proceeds from
the sale of the Property and/or amounts realized from the Collateral pursuant to
the Cash Collateral Agreement.

     "Assignment and Acceptance" is defined in Section 12.1(b) of the
      -------------------------                ----------------------
Participation Agreement.
-----------------------

     "Assignment of Construction Documents" means the Assignment of Construction
      ------------------------------------
Documents, dated as of the Effective Date, in the form attached as Exhibit A to
                                                                   ------------
the Construction Agency Agreement, as the rights of the Original Lessor
---------------------------------
thereunder have been further assigned to the Lessor as of July  12, 2000.

     "Assignment of Lease" means the Assignment of Lease, dated as of the
      -------------------
Effective Date, from the Original Lessor to the Original Agent for the benefit
of the Participants, and consented to by the Lessee pursuant to that certain
Lessee's Consent, dated as of the Effective Date (the "Consent to Assignment")
by the Lessee, as obligor, in favor of the Agent for the benefit of the
Participants, in each case in the respective forms set forth in Exhibit L to the
                                                                ----------------
Participation Agreement, as the respective rights and obligations of the
-----------------------
Original Lessor and the Original Agent thereunder have been further assigned to
the Lessor and the Agent as of July 12, 2000.

     "Assignment of Purchase Agreement" means the Assignment of Certain Rights
      --------------------------------
under Purchase and Sale Agreement, dated as of the Land Interest Acquisition
Date, by and among the Lessee, as assignor, the Original Lessor, as assignee and
the Existing Owner, as seller, as the

                                     [5]-4
<PAGE>

rights of the Original Lessor thereunder have been further assigned to the
Lessor as of July 12, 2000.

     "Available Commitments" means as to any Participant at any time, an amount
      ---------------------
equal to the excess, if any, of (a) the amount of such Participant's Commitment
over (b) the aggregate amount of its Participation Interest in all Advances made
by the Lessor then outstanding.

     "Bankruptcy Code" means Title 11 of the United States Code entitled
      ---------------
"Bankruptcy," as now or hereafter in effect.

     "Basic Rent" means the sum of (i) that portion of the Property Improvements
      ----------
Costs due on any Payment Date, if any, as set forth on Schedule 1 to the Lease
                                                       -----------------------
and (ii) the interest or Yield on Advances due on any Payment Date as set forth
in Section 3.8 of the Participation Agreement.
   ------------------------------------------

     "Benefit Arrangement" means at any time an employee benefit plan within the
      -------------------
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.

     "Board" means the Board of Governors of the Federal Reserve System of the
      -----
United States (or any successor).

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
      ------------
which is not a day on which banks in Albany, New York, New York, New York, San
Francisco, California or (if interest is being determined by reference to the
Eurodollar Rate) London, England, are generally authorized or obligated, by law
or executive order, to close.

     "Capital Leases" means any and all leases under which certain obligations
      --------------
are required to be capitalized on the books of a lessee in accordance with GAAP.

     "Cash Collateral" is defined in Section 1 of the Cash Collateral Agreement.
      ---------------                ------------------------------------------

     "Cash Collateral Agreement" means the Cash Collateral Agreement dated as of
      -------------------------
the Effective Date among the Lessee, the Original Lessor, the Original Agent and
the Participants, in the form of Exhibit S to the Participation Agreement, as
                                 ----------------------------------------
the respective rights and obligations of the Original Lessor and the Original
Agent thereunder have been assigned to the Lessor and the Agent as of July  12,
2000.

     "Casualty" means any damage or destruction of all or any portion of the
      --------
Property as a result of a fire or other casualty.

     "CERCLA" means the Comprehensive Environmental Response, Compensation, and
      ------
Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.

     "Certifying Party" is defined in Section 26.1 of the Lease.
      ----------------                -------------------------

     "Change of Control" means with respect to the Lessee, the occurrence of any
      -----------------
of the following events:  (a) any person or group of persons (within the meaning
of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
but excluding any employee benefit plan of the Lessee or its Subsidiaries, or
any person or entity acting in its capacity as trustee,

                                     [5]-5
<PAGE>

agent or other fiduciary or administrator of any such plan) shall become the
"beneficial owner" (within the meaning of Rules 13d-3 and 13d-5 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, except that such a person or group shall be deemed to have
"beneficial ownership" of all securities that such person or group has the right
to acquire (such right, an "option right"), whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of forty
percent (40%) or more of the outstanding Equity Securities of the Lessee
entitled to vote for members of the board of directors, or (B) during any period
of twelve (12) consecutive months, a majority of the members of the board of
directors of the Lessee cease to be composed of individuals (i) who were members
of that board on the first day of such period, (ii) whose election or nomination
to that board was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or (iii) whose election or nomination to that board was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time
of such election or nomination at least a majority of that board.

     "Change of Law" is defined in Section 13.9 of the Participation Agreement.
      -------------                -------------------------------------------

     "Claims" means any and all obligations, liabilities, losses, actions,
      ------
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever, including, as they relate to issues involving any
Environmental Law or Environmental Violation, those matters set forth in Section
                                                                         -------
13.3 of the Participation Agreement.
-----------------------------------

     "Closing Date" is defined in Section 2 of the Participation Agreement.
      ------------                ----------------------------------------

     "Code" means the Internal Revenue Code of 1986, as amended from time to
      ----
time, or any successor statute thereto.

     "Collateral" means the Collateral under the Cash Collateral Agreement.
      ----------

     "Commitment" means (i) as to any Participant, the obligation of such
      ----------
Participant to purchase a Participation Interest in Advances to be made by the
Lessor under the Participation Agreement, in an aggregate amount at any one time
outstanding not to exceed the amount set forth opposite such Participant's name
on Schedule I to the Participation Agreement, as such amount may be reduced from
   -----------------------------------------
time to time in accordance with the provisions of the Participation Agreement,
and (ii) as to the Lessor, the obligation of the Lessor to make Advances from
amounts received from the Participants pursuant to the purchase of Participation
Interests under the Participation Agreement.

     "Commitment Percentage" means, as to any Participant at any time, the
      ---------------------
percentage which such Participant's Commitment then constitutes of the aggregate
Commitments of the Participants (or, at any time after the Commitments of the
Participants shall have expired or terminated, the percentage which the
aggregate amount of such Participant's Participation Interest then outstanding
constitutes of the aggregate amount of the Participation Interests then
outstanding).

     "Commitment Period" means the period from and including the Effective Date
      -----------------
to but not including the earlier of the Completion Date or the Outside
Completion Date, or such earlier date on which the Commitments shall terminate
as provided in the Operative Documents or such later

                                     [5]-6
<PAGE>

date as may be provided for the Completion of construction in the Construction
Agency Agreement due to the existence of a Force Majeure Event.

     "Completion" means such time as (i) the conditions set forth in Section 7
      ----------                                                     ---------
of the Participation Agreement are satisfied and (ii) the Improvements are ready
------------------------------
for occupancy.

     "Completion Date" means, with respect to the Property, the date on which
      ---------------
Completion of the Improvements on such Property has occurred.

     "Compliance Certificate" means a certificate substantially in the form of
      ----------------------
Exhibit Q, properly completed and signed by a Responsible Officer of the Lessee.
---------

     "Condemnation" means any condemnation, requisition, confiscation, seizure
      ------------
or other taking or sale of the use, access, occupancy, easement rights or title
to the Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action.  A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title is taken.

     "Confidential Information" is defined in Section 15.13 of the Participation
      ------------------------                ----------------------------------
Agreement.
---------

     "Consent to Assignment" is defined in the definition of the term
      ---------------------
"Assignment of Lease".

     "Consent to Construction Agency Agreement Assignment" means the Consent
      ---------------------------------------------------
dated as of the Effective Date by the Lessee to the Construction Agency
Agreement Assignment in the form attached to the Construction Agency Agreement
Assignment.

     "Consolidated EBITDA" means, for any period, for the Lessee and its
      -------------------
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) the amount
written off in connection with In-Process Research & Development related to the
Meridian Acquisition in the second fiscal quarter of year 2000, (f) the charge
taken in the fourth fiscal quarter of year 2000 in connection with DSS, and (g)
the amount of any charges taken in connection with In-Process Research &
Development associated with Acquisitions (other than any charge included in
clause (e) above) provided that (i) any such charges are taken during the fiscal
                  --------
quarter in which the related Acquisition was completed, and (ii) for purposes of
calculating In-Process Research & Development charges under this clause (g), the
                                                                 ----------
aggregate amount of any such charges does not exceed $100,000,000 from and after
the First Amendment Effective Date; provided that; in respect of any period (or
                                    --------
partial period) prior to the Maxtor Merger Effective Time, "Consolidated EBITDA"
shall be determined solely in respect of the DSS Business on a stand-alone
basis, based upon the then-current DSS Combined Financial Statements.

                                     [5]-7
<PAGE>

     "Consolidated Funded Indebtedness" means, as of any date of determination,
      --------------------------------
for the Lessee and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations and liabilities, whether current
or long-term, for borrowed money (including obligations under the Loan Documents
to the extent consisting of principal), (b) that portion of obligations with
respect to Capital Leases that would in conformity with GAAP be capitalized on
the consolidated balance sheet of the Lessee and its Subsidiaries, and (c)
Synthetic Lease Obligations;  provided that in respect of any date prior to the
                              --------
Maxtor Merger Effective Time, "Consolidated Funded Indebtedness" shall be
determined solely in respect of the DSS Business on a stand-alone basis, based
upon the then-current DSS Combined Financial Statements.

     "Consolidated Interest Charges" means, for any period, for the Lessee and
      -----------------------------
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses payable by the Lessee and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, (b) the portion of rent
payable by the Lessee and its Subsidiaries with respect to such period under
Capital Leases that is treated as interest in accordance with GAAP and (c) the
portion of rent under any Synthetic Lease Obligation that would be treated as
interest in accordance with GAAP if the Synthetic Lease Obligation were treated
as a Capital Lease under GAAP; provided that in respect of any date prior to the
                               --------
Maxtor Merger Effective Time, "Consolidated Interest Charges" shall be
determined solely in respect of the DSS Business on a stand-alone basis, based
upon the then-current DSS Combined Financial Statements.

     "Consolidated Net Income" means, for any period, for the Lessee and its
      -----------------------
Subsidiaries on a consolidated basis, the net income of the Lessee and its
Subsidiaries from continuing operations after extraordinary items for that
period after excluding the Maxtor Merger Net Charge in the case of the period in
which it is recorded; provided that in respect of any period (or partial period)
                      --------
prior to the Maxtor Merger Effective Time, "Consolidated Net Income" shall be
determined solely in respect of the DSS Business on a stand-alone basis, based
upon the then-current DSS Combined Financial Statements.

     "Consolidated Tangible Net Worth" means, as of any date of determination,
      -------------------------------
for the Lessee and its Subsidiaries on a consolidated basis, Shareholders'
Equity of the Lessee and its Subsidiaries on that date minus the Intangible
Assets of the Lessee and its Subsidiaries on that date provided that in respect
                                                       --------
of any date prior to the Maxtor Merger Effective Time, "Consolidated Tangible
Net Worth" shall be determined solely in respect of the DSS Business on a stand-
alone basis, based upon the then-current DSS Combined Financial Statements.

     "Construction Agency Agreement" means the Construction Agency Agreement,
      -----------------------------
dated as of the Effective Date, between the Original Lessor and the Construction
Agent, in the form of Exhibit M to the Participation Agreement, as the rights of
the Original Lessor thereunder have been assigned to the Lessor as of July 12,
2000.

     "Construction Agency Agreement Assignment" means the Assignment of
      ----------------------------------------
Construction Agency Agreement, dated as of the Effective Date, from the Original
Lessor to the Original Agent, for the benefit of the Participants, in the form
of Exhibit N to the Participation Agreement, as the respective rights and
   ----------------------------------------
obligations of the Original Lessor and the Original Agent thereunder have been
further assigned to the Lessor and the Agent as of July 12, 2000.

                                     [5]-8
<PAGE>

     "Construction Agency Agreement Event of Default" means a "Construction
      ----------------------------------------------
Agency Agreement Event of Default" as defined in Section 5.1 of the Construction
                                                 -------------------------------
Agency Agreement.
----------------

     "Construction Agent" means the Lessee, as construction agent under the
      ------------------
Construction Agency Agreement.

     "Construction Commencement Date" is defined in Section 2.3 of the
      ------------------------------                ------------------
Construction Agency Agreement.
-----------------------------

     "Construction Period" means, with respect to the Property, the period
      -------------------
commencing on the Construction Commencement Date and ending on the earlier of
the Completion Date and the Outside Completion Date for such Property.

     "Contractual Obligation" means, as to any Person, any provision of any
      ----------------------
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.

     "Covered Liabilities" is defined in Section 11.6 of the Participation
      -------------------                ---------------------------------
Agreement.
---------

     "Convertible Subordinated Debentures" means the 7% Convertible Subordinated
      -----------------------------------
Notes due 2004 issued by the Lessee pursuant to the Indenture dated as of August
1, 1997 and the Supplemental Indenture dated as of August 1, 1997 between the
Lessee and LaSalle National Trust Company, N.A., as Trustee.

     "DSS" means DLT and Storage Systems Group, a reportable business segment of
      ---
the Lessee, as indicated in the Lessee's quarterly report filed with the
Securities and Exchange Commission on form 10-Q on or about February 14, 2001.

     "DSS Business" means, collectively, all businesses and activities of the
      ------------
Lessee and its Subsidiaries, other than the HDD Business.

     "DSS Combined Financial Statements" means, collectively, the annual or
      ---------------------------------
quarterly (as the case may be) condensed combined balance sheet and statements
of income and cash flow in respect of DSS on a stand-alone basis, prepared in a
manner and in a form consistent with those contained in the Lessee's 2000 10-K
and December 31, 2000 10-Q filings that were filed with the Securities and
Exchange Commission on or about June 26, 2000 and February 14, 2000,
respectively.

     "Deed" is defined in Section 6.1(e) of the Participation Agreement,
      ----                ---------------------------------------------
together with the quitclaim deed delivered by the Original Lessor to the Lessor
as of July 12, 2000.

     "Default" means any event or condition which, with the lapse of time or the
      -------
giving of notice, or both, would constitute an Event of Default.

     "Defaulted Amount" is defined in Section 11.7 of the Participation
      ----------------                ---------------------------------
Agreement.
---------

     "Defaulting Participant" means, at any time, any of the Participants which
      ----------------------
at such time has (i) failed to make a payment when due to the Lessor equal to
its Commitment Percentage of an Advance, (ii) has been notified of such failure
by the Lessor, and (iii) has not cured such failure by making such payment,
together with interest at the Late Payment Rate.

                                     [5]-9
<PAGE>

     "Depositary Bank" is defined in Section 1 of the Cash Collateral Agreement.
      ---------------                ------------------------------------------

     "Designated Payment Date" means the Expiration Date, the Termination Date
      -----------------------
or other date of termination of the Lease.

     "Disclosure Letter" means the letter from the Lessee to the Lessor and the
      -----------------
Agent, dated the Effective Date, which identifies itself as the "Disclosure
Letter" under the Participation Agreement.

     "Disposition" or "Dispose" means the sale, transfer, License Disposition or
      -----------      -------
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal with
or without recourse of any notes or accounts receivable or any rights and claims
associated therewith.

     "Dollars" and "$" mean dollars in lawful currency of the United States of
      -------       -
America.

     "Effective Date" means August 22, 1997.
      --------------

     "Employee Benefit Plan" means any employee benefit plan within the meaning
      ---------------------
of Section 3(3) of ERISA maintained or contributed to by the Lessee or any ERISA
Affiliate, other than a Multiemployer Plan.

     "End of the Term Report" is defined in Section 13.2 of the Participation
      ----------------------                ---------------------------------
Agreement.
---------

     "Environmental Audit" means a Phase One environmental site assessment (the
      -------------------
scope and performance of which meets or exceeds ASTM Standard Practice E1527-93
Standard Practice for Environmental Site Assessments:  Phase One Environmental
Site Assessment Process) of the Property to be leased by the Lessor on the
Closing Date or of the Property to be remarketed under the Remarketing Option
under the Lease.

     "Environmental Certificate" is defined in Section 6.1 of the Participation
      -------------------------                --------------------------------
Agreement.
---------

     "Environmental Law" means, whenever enacted or promulgated, any Federal,
      -----------------
state, county or local law, statute, ordinance, rule, regulation, license,
permit, authorization, approval, covenant, criteria, guideline, administrative
or court order, judgment, decree, injunction, code or requirement or any
agreement with a Governmental Authority:

          (i)  relating to pollution (or the cleanup, removal, remediation or
     encapsulation thereof, or any other response thereto), or the regulation or
     protection of human health, safety or the environment, including air,
     water, vapor, surface water, groundwater, drinking water, land (including
     surface or subsurface), plant, aquatic and animal life, or

          (ii) concerning exposure to, or the use, containment, storage,
     recycling, treatment, generation, discharge, emission, Release or
     threatened Release, transportation, processing, handling, labeling,
     containment, production, disposal or remediation of any Hazardous
     Substance, Hazardous Condition or Hazardous Activity; in each case as
     amended and as now or hereafter in effect, and any common law or equitable
     doctrine (including, without limitation, injunctive relief and tort
     doctrines such as negligence, nuisance, trespass and strict liability) that
     may impose liability or obligations for injuries

                                    [5]-10
<PAGE>

     (whether personal or property) or damages due to or threatened as a result
     of the presence of, exposure to, or ingestion of, any Hazardous Substance,
     whether such common law or equitable doctrine is now or hereafter
     recognized or developed. Applicable laws include, but are not limited to,
     CERCLA; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. (S)
     6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. (S) 1251
     et seq.; the Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq.; the National
     Environmental Policy Act, 42 U.S.C. (S) 4321; the Refuse Act, 33 U.S.C.
     (S)(S) 401 et seq.; the Hazardous Materials Transportation Act of 1975, 49
     U.S.C. (S)(S) 1801-1812; the Toxic Substances Control Act, 15 U.S.C. (S)(S)
     2601 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7
     U.S.C. (S)(S) 136 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S)
     300f et seq.; and the Occupational Safety and Health Act of 1970, each as
     amended and as now or hereafter in effect, and their state and local
     counterparts or equivalents, including any regulations promulgated
     thereunder.

     "Environmental Violation" means any activity, occurrence or condition or
      -----------------------
omission that violates or results in non-compliance with any Environmental Law.

     "Equipment" means equipment, apparatus, furnishings, fittings and personal
      ---------
property of every kind and nature whatsoever purchased by the Lessor using the
proceeds of the Participation Interests in the Advances now or subsequently
attached to, contained in or used or usable in any way in connection with any
operation or letting of the Property, including but without limiting the
generality of the foregoing, all semiconductor manufacturing equipment, screens,
awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm
doors and windows, shelving, counters, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilation, air conditioning and air-cooling apparatus, refrigerating, and
incinerating equipment, escalators, elevators, loading and unloading equipment
and systems, cleaning systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae), televisions,
computers, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, appliances, fittings and fixtures of every kind and
description.

     "Equipment Schedule" means each Equipment Schedule in the form of Exhibit B
      ------------------                                               ---------
to the Lease.
------------

     "Equity Securities" of any Person means (a) all common stock, preferred
      -----------------
stock, participations, shares, partnership interests or other equity interests
in such Person (regardless of how designated and whether or not voting or non-
voting) and (b) all warrants, options and other rights to acquire any of the
foregoing, other than convertible debt securities which have not been converted
into common stock, preferred stock, participations, shares, partnership
interests or other equity interests in any such Person.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended from time to time or any successor Federal statute.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
      ---------------
under common control with the Lessee within the meaning of Sections 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

                                    [5]-11
<PAGE>

     "ERISA Group" means the Lessee and all members of a controlled group of
      -----------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Lessee, are treated as a single employer
under Section 414 of the Code.

     "Eurocurrency Reserve Requirements" means, for any day as applied to an
      ---------------------------------
Advance, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.

     "Eurodollar Rate" means, with respect to each day during each Interest
      ---------------
Period, the rate per annum determined by the Agent to be the offered rate per
annum at which deposits in Dollars appear with respect to such Interest Period
on the Reuters Screen LIBOR Page (or any successor page), or if such offered
rate is not available, then the rate per annum at which deposits in Dollars
appear with respect to such Interest Period on the Telerate Page 3750 (or any
successor page) in each case as of 11:00 a.m. (London time), two (2) Business
Days prior to the beginning of such Interest Period or in the event that the
foregoing offered rates are not available, then the average (rounded upward to
the nearest whole multiple of one sixteenth of one percent per annum, if such
average is not such a multiple) of the respective rates notified to the Agent by
each of the Participants as the rates at which such Participant's Funding Office
is offered Dollar deposits at or about 11:00 a.m. (London time), two (2)
Business Days prior to the beginning of such Interest Period in the interbank
Eurodollar market for delivery on the first day of such Interest Period for the
number of days comprised therein in an amount comparable to the amount of the
Advances estimated to be outstanding during such Interest Period.

     "Eurodollar Rate Advance" means on Advance bearing interest or Yield
      -----------------------
determined with reference to the Eurodollar Rate as provided in the
Participation Agreement.

     "Event of Default" means a Lease Event of Default, a Construction Agency
      ----------------
Agreement Event of Default or a Guarantee Event of Default.

     "Excepted Payments" means:
      -----------------

             (a) all indemnity payments (including indemnity payments made
     pursuant to Section 13 of the Participation Agreement) to which the Lessor,
                 -----------------------------------------
     or any of its Affiliates, agents, officers, directors or employees is
     entitled;

             (b) any amounts (other than Basic Rent or amounts payable by Lessee
     pursuant to Section 16.2, Section 16.3, Section 16.4 or Articles XVII, XX
                 -------------------------------------------------------------
     or XXII of the Lease) payable under any Operative Document to reimburse the
     --------------------
     Lessor or any of its respective Affiliates (including the reasonable
     expenses of the Lessor incurred in connection with any such payment) for
     performing or complying with any of the obligations of the Lessee under and
     as permitted by any Operative Document, except to the extent that one or
     more Participants have indemnified the Lessor with respect thereto pursuant
     to the Participation Agreement;

                                    [5]-12
<PAGE>

             (c) any amount payable to the Lessor by any Participant or
     transferee permitted under the Operative Documents of the interest of the
     Lessor as the purchase price of such Participant's Participation Interest;

             (d) any insurance proceeds (or payments with respect to risks self-
     insured or policy deductibles) under liability policies other than such
     proceeds or payments payable to the Agent or the Lessor;

             (e) any insurance proceeds under policies maintained by the Lessor;

             (f) Transaction Expenses or other amounts or expenses paid or
     payable to or for the benefit of the Lessor;

             (g) all right, title and interest of the Lessor to the Property or
     any portion thereof or any other property to the extent any of the
     foregoing has been released from the Lien of the Mortgage, the Assignment
     of Lease and the Construction Agency Agreement Assignment pursuant to the
     terms thereof following the payment of the Participant Balances of all of
     the Participants and all amounts due and owing to the Agent; and

             (h) any payments in respect of interest to the extent attributable
      to payments referred to in clauses (a) through (g) above.
                             -----------------------

     "Excess Investment" of the Lessor means the excess (if any) of the
      -----------------
outstanding Participant Balance of the Lessor in the Property from time to time
over the amount that would have been the Lessor's Participant Balance if, in
connection with all Advances actually made under the Participation Agreement,
all Participants had paid to the Lessor an amount equal to such Advances times
their respective Commitment Percentages, as such excess may be determined by the
Lessor.  Absent the existence of a Defaulting Participant, a failure by
Participant to make a payment required by Section 3.4 of the Participation
                                          --------------------------------
Agreement or some other unexpected contingency, it is expected that the Lessor
---------
will have no Excess Investment.

     "Excess Proceeds" means the excess, if any, of the aggregate of all
      ---------------
awards, compensation or insurance proceeds payable in connection with a Casualty
or Condemnation over the Asset Termination Value paid by the Lessee pursuant to
Articles XIV and XV of the Lease with respect to such Casualty or Condemnation.

     "Excess Reimbursement" is defined in Section 11.6 of the Participation
      --------------------                ---------------------------------
Agreement.
---------

     "Existing Financing" means the debt and equity financing provided to the
      ------------------
Existing Owner to purchase and/or construct the Land Interest and any
Improvements.

     "Existing Participants" means the lenders and holders of equity interests
      ---------------------
under the Existing Financing.

     "Existing Owner" means Schuck Holdings LLC, a Colorado limited liability
      --------------
company.

     "Expiration Date" means the later of (i) April 19, 2003, or (ii) the
      ---------------
scheduled expiration of any Renewal Term, if any.

                                    [5]-13
<PAGE>

     "Expiration Date Purchase Obligation" means the Lessee's obligation,
      -----------------------------------
pursuant to Section 20.2 of the Lease, to purchase all (but not less than all)
            -------------------------
of the Property on the Expiration Date.

     "Fair Market Sales Value" means, with respect to the Property, the amount,
      -----------------------
which in any event shall not be less than zero, that would be paid in cash in an
arm's-length transaction between an informed and willing purchaser and an
informed and willing seller, neither of whom is under any compulsion to purchase
or sell, respectively, for the ownership of the Property.  The Fair Market Sales
Value of the Property shall be determined based on the assumption that, except
for purposes of Article XVII of the Lease and Section 13.2 of the Participation
                -------------------------     ---------------------------------
Agreement, the Property is in the condition and state of repair required under
---------
Section 10.1 of the Lease and the Lessee is in compliance with the other
-------------------------
requirements of the Operative Documents.

     "Federal Funds Effective Rate" means, for any day, an interest rate per
      ----------------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of quotations for such day on such transaction received by the Agent
from three Federal funds brokers of recognized standing selected by it.

     "Fee Letter" means the letter from the Lessee to the Agent, The Bank of
      ----------
Nova Scotia and KeyBank National Association, dated as of July 12, 2000.

     "Financial Statements" means, with respect to any accounting period for any
      --------------------
Person, consolidated statements of income, shareholders' equity and cash flows
of such Person for such period, and a balance sheet of such Person as of the end
of such period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.

     "First Amendment Effective Date" means March 28, 2001.
      ------------------------------

     "Fixtures" means all fixtures relating to the Improvements, including all
      --------
components thereof, located in or on the Improvements which are acquired with
Advances and all replacements and Modifications thereto, other than Lessee's
Property.

     "Force Majeure Event" means with respect to the Property any event (the
      -------------------
existence or potentiality of which was not known and could not have been
discovered through the exercise of due diligence by the Lessee prior to the
Closing Date) beyond the reasonable control of the Construction Agent, other
than a Casualty or Condemnation, including, but not limited to, strikes,
lockouts, adverse soil conditions, acts of God, adverse weather conditions,
inability to obtain labor or materials, government activities, civil commotion
and enemy action; but excluding any event, cause or condition that results from
the Construction Agent's financial condition or failure to pay or any event,
cause or condition which could be remedied through the exercise of commercially
reasonable efforts or the commercially reasonable expenditure of funds.

     "Funding Date" means any Business Day on which Advances are funded pursuant
      ------------
to the Participation Agreement.

                                    [5]-14
<PAGE>

     "Funding Losses" means with respect to any repayment, prepayment or
      --------------
conversion of any Eurodollar Rate Advance, the amount (which shall not be less
than zero) computed in accordance with the following formula:

Funding Losses                 =        (R - T x P x D)
                                       -----------------
                                              360

Where                 R        =      the interest rate or Yield that was or
                                      would have been applicable to such
                                      Eurodollar Rate Advance;

                      T        =      the Eurodollar Rate for the date of such
                                      repayment, prepayment, conversion, failure
                                      to borrow, failure to contribute or
                                      failure to convert for new Eurodollar Rate
                                      Advances, of the same principal amount or
                                      equity contribution made for an assumed
                                      Interest Period (the "Remaining Period")
                                      which begins on the date of such
                                      repayment, prepayment, conversion, failure
                                      to borrow, failure to contribute or
                                      failure to convert and ends on the last
                                      day of the actual Interest Period that was
                                      or would have been applicable to the
                                      Eurodollar Rate Advance that was repaid,
                                      prepaid or converted or that was not
                                      borrowed, contributed or converted;

                      P        =      the principal amount of the Eurodollar
                                      Rate Advance that was repaid, prepaid or
                                      converted or that was not borrowed,
                                      contributed or converted; and

                      D        =      the number of days in the Remaining
                                      Period.

     "Funding Office" means the office of each Participant identified on
      --------------
Schedule II to the Participation Agreement as its Funding Office.
------------------------------------------

     "Funding Request" is defined in Section 3.4 of the Participation Agreement.
      ---------------                ------------------------------------------

     "GAAP" means generally accepted accounting principles set forth in the
      ----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied.  If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Operative Document, and either
the Lessee or the Required Participants shall so request, the Agent, the
Participants and the Lessee shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Participants), provided that,
                                                             --------
until so amended, (a) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) the Lessee shall
provide to the Agent and the Participants financial statements and other
documents required under the Operative Documents or as reasonably requested
thereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

                                    [5]-15
<PAGE>

     "Governmental Action" means all permits, authorizations, registrations,
      -------------------
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of the Property.

     "Governmental Authority" means (a) any international, foreign, federal,
      ----------------------
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.

     "Gross Proceeds" is defined in Section 22.1(k) of the Lease.
      --------------                ----------------------------

     "Guarantee" means the Guarantee executed by the Guarantor in favor of the
      ---------
Original Agent, for the benefit of the Participants, in the form of Exhibit O to
                                                                    ------------
the Participation Agreement, as the rights of the Original Agent thereunder have
---------------------------
been assigned to the Agent as of July 12, 2000.

     "Guarantee Event of Default" is defined in the Guarantee.
      --------------------------

     "Guarantor" means Quantum Corporation, a Delaware corporation.
      ---------

     "Guaranty Obligation" means, as to any Person, any (a) guaranty by such
      -------------------
Person of Indebtedness of, or other obligation payable or performable by, any
other Person or (b) assurance, agreement, letter of responsibility, letter of
awareness, undertaking or arrangement given by such Person to an obligee of any
other Person with respect to the payment or performance of an obligation by, or
the financial condition of, such other Person, whether direct, indirect or
contingent, including any purchase or repurchase agreement covering such
obligation or any collateral security therefor, any agreement to provide funds
(by means of loans, capital contributions or otherwise) to such other Person,
any agreement to support the solvency or level of any balance sheet item of such
other Person or any "keep-well" or other arrangement of whatever nature, in each
such case, given for the purpose of assuring or holding harmless such obligee
against loss with respect to any obligation of such other Person; provided,
                                                                  --------
however, that the term Guaranty Obligation shall not include endorsements of
-------
instruments for deposit or collection in the ordinary course of business.  The
amount of any Guaranty Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, covered by such Guaranty Obligation or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined by
the Person in good faith.

     "Hazardous Activity" means any activity, process, procedure or undertaking
      ------------------
that directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Substance into the environment (including air, water
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life); (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would be regulated as hazardous
waste treatment, storage or disposal within the meaning of any Environmental
Law.

                                    [5]-16
<PAGE>

     "Hazardous Condition" means any condition that violates or threatens to
      -------------------
violate, or that results in or threatens noncompliance with, any Environmental
Law.

     "Hazardous Substance" means any of the following:  (i) any petroleum or
      -------------------
petroleum product, explosives, radioactive materials, asbestos, formaldehyde,
polychlorinated biphenyls, lead and radon gas; (ii) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste or pollutant, in each case whether naturally occurring, man-made or the
by-product of any process, that is toxic, harmful or hazardous to the
environment or human health or safety; or (iii) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste or pollutant that would support the assertion of any claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law.

     "HDD" means Hard Disk Drive Group, a reportable business segment of the
      ---
Lessee, as indicated in the Lessee's quarterly report filed with the Securities
and Exchange Commission on form 10-Q on or about February 14, 2001.

  "HDD Assets" has the meaning specified in Section 4.14 of the HDD General
   ----------                               -------------------------------
Assignment Agreement, subject to Section 5.16(d) of the HDD General Assignment
--------------------             ---------------------------------------------
Agreement.
---------

     "HDD Business" has the meaning specified in Section 4.16 of the HDD General
      ------------                               -------------------------------
Assignment Agreement.
--------------------

     "HDD Convertible Debt Portion" means the pro rata portion described on
      ----------------------------
Schedule 1 attached hereto.
--------------------------

     "HDD General Assignment Agreement" means that General Assignment and
      --------------------------------
Assumption Agreement dated as of the Maxtor Merger Effective Date among the
Lessee, Spinco and Maxtor.

     "HDD Redemption" means the redemption by the Lessee of all or substantially
          ----------
all of the outstanding HDD common stock, par value $0.01 per share, of the
Lessee, in exchange for common stock of Spinco.

     "HDD Separation Agreement" means that Separation and Redemption Agreement
      ------------------------
dated as of the Maxtor Merger Effective Date, among the Lessee, Spinco and
Maxtor.

     "Impositions" means, except to the extent described in the following
      -----------
sentence, any and all liabilities, losses, expenses, costs, charges and Liens of
any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings ("Taxes") including (i) real and personal property
                              -----
taxes, including personal property taxes on any property covered by the Lease
that is classified by Governmental Authorities as personal property, and real
estate or ad valorem taxes in the nature of property taxes; (ii) sales taxes,
use taxes and other similar taxes (including rent taxes and intangibles taxes);
(iii) any excise taxes; (iv) real estate transfer taxes, mortgage taxes,
conveyance taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, privilege
and doing business taxes, license and registration fees; (vi) assessments on the
Property, including all assessments for public improvements or benefits, whether
or not such improvements are commenced or completed within the Term; and (vii)
any tax, Lien, assessment or charge asserted, imposed or assessed by the PBGC or
any governmental authority succeeding to or performing functions

                                    [5]-17
<PAGE>

similar to, the PBGC, and in each case all interest, additions to tax and
penalties thereon, which at any time prior to, during or with respect to the
Term or in respect of any period for which the Lessee shall be obligated to pay
Supplemental Rent, may be levied, assessed or imposed by any Governmental
Authority upon or with respect to (a) the Property or any part thereof or
interest therein; (b) the purchase, sale, leasing, financing, refinancing,
demolition, construction, alteration, substitution, subleasing, assignment,
control, condition, occupancy, servicing, maintenance, repair, ownership,
possession, activity conducted on, delivery, insuring, use, operation,
improvement, transfer of title, return or other disposition of the Property or
any part thereof or interest therein; (c) the Participation Interests with
respect to the Property or any part thereof or interest therein; (d) the
rentals, receipts or earnings arising from the Property or any part thereof or
interest therein; (e) the Operative Documents, the performance thereof, or any
payment made or accrued pursuant thereto; (f) the income or other proceeds
received with respect to the Property or any part thereof or interest therein
upon the sale or disposition thereof; (g) any contract (including the
Construction Agency Agreement) relating to the construction, acquisition or
delivery of the Improvements or any part thereof or interest therein; or (h)
otherwise in connection with the transactions contemplated by the Operative
Documents.

     The term "Imposition" shall not mean or include the following (except to
the extent that such Taxes apply in consequence of the Lease being treated other
than as a loan for purposes of such Taxes and exceed the amount of such Taxes
that would have applied if the Lease had been so treated as a loan:

          (1) Taxes and impositions (other than Taxes that are, or are in the
     nature of, sales, use, transfer or property taxes) that are imposed on an
     Indemnitee by the United States federal or any foreign government that are
     based on or measured by the net income (including taxes based on capital
     gains and minimum taxes) of such Person; provided, that this clause (1)
                                                                  ----------
     shall not be interpreted to prevent a payment from being made on an After
     Tax Basis if such payment is otherwise required to be so made;

          (2) Taxes and impositions (other than Taxes that are, or are in the
     nature of, sales, use, transfer or property taxes) that are imposed by any
     state or local jurisdiction or taxing authority within any state or local
     jurisdiction and that are franchise taxes or are based upon or measured by
     net income or net receipts; provided, that this clause (2) shall not be
                                                     ----------
     interpreted to prevent a payment from being made on an After Tax Basis if
     such payment is otherwise required to be so made (anything to the contrary
     notwithstanding, nothing in the Operative Documents shall be construed to
     impose upon Lessee any liability for Taxes imposed upon an Indemnitee to
     the extent imposed with respect to any activities of such Indemnitee other
     than under the transactions contemplated by the Operative Documents);

          (3) any Taxes or imposition for so long as, but only for so long as,
     it is being contested in accordance with the provisions of Section 13.5 of
                                                                ---------------
     the Participation Agreement;
     ---------------------------

          (4) any Taxes which are imposed on an Indemnitee as a result of the
     gross negligence or willful misconduct of such Indemnitee itself (as
     opposed to gross negligence or willful misconduct imputed to such
     Indemnitee), but not Taxes imposed as a result of ordinary negligence of
     such Indemnitee; or

                                    [5]-18
<PAGE>

          (5) any Taxes or imposition to the extent, but only to such extent, it
     relates to any act, event or omission that occurs after the termination of
     the Lease and redelivery or sale of the Property in accordance with the
     terms of the Lease (but not any Taxes or imposition that relates to any
     period prior to such termination and redelivery).

Any Taxes excluded from the defined term "Imposition" in any one of the
foregoing clauses (1) through (4) shall not be construed as constituting an
          -----------------------
Imposition by any provision of any other of the aforementioned clauses.  For
purposes of the foregoing, taxes based upon or measured by net income shall be
deemed to include, without limitation, any Imposition that qualifies as an
"income tax" within the meaning of United States Treasury Regulation Section
1.901-2.

     "Improvements" means all buildings, structures, Fixtures, Equipment, and
      ------------
other improvements of every kind existing on the Land Interest Acquisition Date
and at any time and from time to time and either constructed pursuant to the
Construction Agency Agreement or those purchased with amounts advanced by the
Participants pursuant to the Participation Agreement (or those becoming the
property of the Lessor pursuant to Article XI of the Lease) on or under the Land
                                   -----------------------
Interest, together with any and all appurtenances to such buildings, structures,
or improvements, including sidewalks, utility pipes, conduits and lines, parking
areas and roadways, and including all Modifications and other additions to or
changes in the Improvements at any time, other than Lessee's Property.

     "Indebtedness" means, as to any Person at any date of determination, all
      ------------
items which would, in conformity with GAAP, be classified as liabilities on a
balance sheet of such Person as at such date excluding (i) trade and other
                                             ---------
accounts payable in the ordinary course of business in accordance with customary
trade terms and which are not overdue for a period of more than sixty (60) days
(unless contested in good faith by the Lessee or any Subsidiary), (ii) deferred
taxes, and (iii) accrued interest and expenses, except to the extent
capitalized, and in any event including:
                              ---------

          (a) all obligations of such Person for borrowed money and all
     obligations of such Person evidenced by bonds, debentures, notes or other
     similar instruments;

          (b) any direct or contingent obligations of such Person arising under
     letters of credit (including standby and commercial), banker's acceptances,
     bank guaranties, surety bonds and similar instruments;

          (c) whether or not so included as liabilities in accordance with GAAP,
     net obligations under any Swap Contract in an amount equal to (x) if such
     Swap Contract has been closed out, the termination value thereof, or (y) if
     such Swap Contract has not been closed out, the mark-to-market value
     thereof determined on the basis of readily available quotations provided by
     any recognized dealer in such Swap Contract;

          (d) whether or not so included as liabilities in accordance with GAAP
     and whether with or without recourse, all obligations of such Person to pay
     the deferred purchase price of property or services, and indebtedness
     (excluding prepaid interest thereon) secured by a Lien on property owned or
     being purchased by such Person (including indebtedness arising under
     conditional sales or other title retention agreements);

                                    [5]-19
<PAGE>

          (e) lease payment obligations under Capital Leases or Synthetic Lease
     Obligations; and

          (f) all Guaranty Obligations of such Person in respect of any of the
     foregoing obligations of any other Person.

     For all purposes of the Operative Documents, the Indebtedness of any Person
shall include, at any such time as such partnership or joint venture is not
Solvent, the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person (subject to customary recourse
exceptions acceptable to the Required Participants).

     "Indemnitee" means the Lessor, the Agent, the Participants, their
      ----------
respective Affiliates and their respective successors, assigns, directors,
shareholders, partners, officers, employees and agents.

     "In-Process Research & Development" means purchased in-process research and
      ---------------------------------
development, as specified on the Lessee's statement of income in accordance with
GAAP.

     "Insurance Requirements" means all terms and conditions of any insurance
      ----------------------
policy required by the Lease to be maintained by the Lessee, and all
requirements of the issuer of any such policy.

     "Intangible Assets" means assets that are required to be disclosed as
      -----------------
intangible assets in accordance with GAAP on the Lessee's balance sheet,
including customer lists, goodwill, computer software, copyrights, trade names,
trade marks, patents, unamortized deferred charges, unamortized debt discount
and capitalized research and development costs.

     "Interest Payment Advance" means any Advance made to fund the payment of
      ------------------------
interest or Yield accruing on the Advances during the Construction Period.

     "Interest Period" means, with respect to any Advance:
      ---------------

          (a)  during the Syndication Period:

               (i) initially, the period commencing on the funding with respect
          to such Advance and ending one (1) month thereafter; and

               (ii) thereafter, each period commencing on the last day of the
          next preceding Interest Period applicable to such Advance and ending
          one month thereafter; and

          (b) subsequent to the Syndication Period, each period commencing on
     the last day of the next preceding Interest Period applicable to such
     Advance and ending one, two (2), three (3) or six (6) months thereafter, as
     selected by the Lessee by irrevocable notice to the Lessor and the Agent
     not less than three (3) Business Days prior to the last day of the then
     current Interest Period with respect thereto; provided that, the foregoing
     provisions relating to Interest Periods are subject to the following:

                                    [5]-20
<PAGE>

               (i) if any Interest Period would otherwise end on a day that is
          not a Business Day, such Interest Period shall be extended to the next
          succeeding Business Day unless the result of such extension would be
          to carry such Interest Period into another calendar month in which
          event such Interest Period shall end on the immediately preceding
          Business Day;

               (ii) any Interest Period that would otherwise extend beyond the
          Expiration Date shall end on the Expiration Date;

               (iii)  any Interest Period that begins on the last Business Day
          of a calendar month (or on a day for which there is no numerically
          corresponding day in the calendar month at the end of the Interest
          Period) shall end on the last Business Day of a calendar month;

               (iv) the Lessee shall select Interest Periods so as not to
          require a payment or prepayment of any Advance during an Interest
          Period for such Advance; and

               (v) if the Lessee shall fail to notify the Lessor and the Agent
          of the next Interest Period, such Advance shall automatically convert
          to an Alternate Base Rate Advance on the last day of the current
          Interest Period therefor.

     "Investment" means, as to any Person, any investment by such Person,
      ----------
whether by means of the purchase or other acquisition of stock or other
securities of any other Person or by means of a loan, creating a debt, capital
contribution, guaranty or other debt or equity participation or interest in any
other Person.  For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment.

     "Investment Company Act" means the Investment Company Act of 1940, as
      ----------------------
amended, together with the rules and regulations promulgated thereunder.

     "Land Interest" means fee title to the parcel of real property described on
      -------------
Schedule 1 of the Lease Supplement and all Appurtenant Rights attached thereto.
----------------------------------

     "Land Interest Acquisition Cost" means, with respect to the Property, the
      ------------------------------
amount funded by the Lessor under the Participation Agreement as the purchase
price of the Land Interest as set forth in the Acquisition Request therefor,
including closing costs and fees in connection therewith.

     "Land Interest Acquisition Date" means the date on which the Lessor
      ------------------------------
acquires the Land Interest, which date shall be specified in the Acquisition
Request.

     "Late Payment Rate" means (a) for each day (other than as set forth in
      -----------------
clause (b) of this definition) the Federal Funds Effective Rate or (b) for the
----------
purpose of computing interest on past due payments for each day following the
fifth day after such payments first became due, a rate of two percent (2%) per
annum in excess of the Alternate Base Rate then in effect; provided, the Late
Payment Rate shall not, notwithstanding anything to the contrary herein
contained, exceed the maximum rate of interest permitted by applicable law.

                                    [5]-21
<PAGE>

     "Lease" means the Original Lease as amended and restated by the Amended and
      -----
Restated Master Lease, dated as of July 12, 2000, between the Lessor and the
Lessee, together with the Lease Supplement and all Equipment Schedules thereto.

     "Lease Balance" means, as of any date of determination, an amount equal to
      -------------
(i) the sum of the outstanding amount of the Advances, all accrued and unpaid
interest and Yield on the Advances, and all other amounts owing by the Lessee
under the Operative Documents, less (ii) the sum of all payments received by the
Lessor, the Agent or the Participant on account of payments to reduce the Lease
Balance, including reductions resulting from payments by the Lessor, the Lessee
and the Guarantor, proceeds from the sale of the Property and/or amounts
realized from the Collateral pursuant to the Cash Collateral Agreement.

     "Lease Default" means any event or condition which, with the lapse of time
      -------------
or the giving of notice, or both, would constitute a Lease Event of Default.

     "Lease Event of Default" is defined in Section 17.1 of the Lease.
      ----------------------                -------------------------

     "Lease Supplement" means the Lease Supplement substantially in the form of
      ----------------
Exhibit A to the Lease together with all attachments and schedules thereto, as
----------------------
such Lease Supplement may be supplemented, amended or modified from time to
time.

     "Lenders" means the lenders from time to time party to, and as defined in,
      -------
the Loan Documents.

     "Lessee" means Quantum Corporation, a Delaware corporation, as lessee under
      ------
the Lease, and its successors and assigns expressly permitted under the
Operative Documents.

     "Lessee's Property" is defined in Section 11.1 of the Lease.
      -----------------                -------------------------

     "Lessor" means SELCO Service Corporation, as successor in interest to the
      ------
Original Lessor in its capacity as Lessor under the Lease, and its successors
and assigns expressly permitted under the Operative Documents.

     "Lessor Financing Statements" means UCC financing statements appropriately
      ---------------------------
completed and executed for filing in the applicable jurisdiction in order to
protect the Lessor's interest under the Lease to the extent the Lease is a
security agreement.

     "Lessor Lien" means any Lien, true lease or sublease or disposition of
      -----------
title arising as a result of (a) any claim against the Lessor not resulting from
the transactions contemplated by the Operative Documents, (b) any act or
omission of the Lessor which is not required by the Operative Documents or is in
violation of any of the terms of the Operative Documents, (c) any claim against
the Lessor with respect to Taxes or Transaction Expenses against which Lessee is
not required to indemnify the Lessor, pursuant to Sections 9 or 13.5 of the
                                                  -------------------------
Participation Agreement or (d) any claim against the Lessor arising out of any
-----------------------
transfer by the Lessor of all or any portion of the interest of the Lessor in
the Property or the Operative Documents other than the transfer of title to or
possession of the Property by the Lessor pursuant to and in accordance with the
Lease or the Participation Agreement or pursuant to the exercise of the remedies
set forth in Article XVII of the Lease.
             -------------------------

                                    [5]-22
<PAGE>

     "Leverage Ratio" means, as of any date of determination, for the Lessee and
      --------------
its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the period of the
four fiscal quarters ending on, or ending most recently prior to, such date.

     "License Disposition" means, in respect of any patent, trademark,
      -------------------
copyright, mask work, trade secret or other intellectual property right owned or
held by the Lessee or any of its Subsidiaries (the "IP Holder") which is
                                                    ---------
material to the Lessee or any of its Subsidiaries (together, "Material IP"), (a)
                                                              -----------
the granting by the IP Holder of an exclusive license across all or
substantially all fields, uses or regions to any Person other than the Lessee or
another Subsidiary, (b) the granting of any license by the IP Holder that
conveys directly or indirectly to any Person other than the Lessee or its
Subsidiaries all or substantially all of the economic value of such Material IP,
or (c) the abandonment by the IP Holder of such Material IP.

     "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
      ----
arrangement (including in the nature of, cash collateral accounts or security
interests), encumbrance, lien (statutory or other), fixed or floating charge, or
other security interest of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable
Requirements of Law of any jurisdiction), including the interest of a purchaser
of accounts receivable.

     "Loan Documents" means (i) the Credit Agreement (3-Year), entered into as
      --------------
of April 19, 2000 and amended and restated as of the Restatement Date (as
defined therein), among the Lessee as borrower, Bank of America, N.A. as
administrative agent and letter of credit issuing lender, The Bank of Nova
Scotia and the other financial institutions party thereto, and each note, letter
of credit application, request for extension of credit, certificate, fee letter
and other instrument or agreement from time to time executed by the Lessee or
any of its Subsidiaries and delivered in connection with such agreement; and
(ii) the 364 Day Credit Agreement and each note, request for extension of
credit, certificate, fee letter and other instrument or agreement from time to
time executed by the Lessee or any of its Subsidiaries and delivered in
connection with such agreement.

     "Marketing Period" and "Remarketing Period" mean the period commencing on
      ----------------       ------------------
the date one hundred eighty (180) days prior to the Expiration Date and ending
on the Expiration Date or such other 180 day period as is referred to in Section
                                                                         -------
17.2(h) of the Lease.
--------------------

     "Material", "Materially", and "Material Adverse Effect" mean material to,
      --------    ----------        -----------------------
or a material adverse effect on, (i) the business, assets, operations or
financial or other condition of the Lessee or the Guarantor and their respective
Subsidiaries taken as a whole or, in respect of anytime prior to the Maxtor
Merger Effective Time, to the DSS Business on a stand-alone basis, (ii) the
ability of the Lessee or the Guarantor to perform its obligations under any of
the Operative Documents, (iii) the value or condition of the Property or the
Lessor's interests therein or title thereto, or (iv) the rights and remedies of
the Lessor, the Agent and the Participants under the Participation Agreement or
any other Operative Document taken as a whole.

     "Material Subsidiaries" means each Subsidiary of the Lessee which has
      ---------------------
assets with a total book value greater than ten percent (10%) of the
consolidated total assets of the Lessee and its

                                    [5]-23
<PAGE>

Subsidiaries, each determined as of the end of the fiscal quarter immediately
preceding the date of determination.

     "Maturity Date" means April 19, 2003, unless extended in accordance with
      -------------
the provisions of Section 3.7(b) of the Participation Agreement.
                  ---------------------------------------------

     "Maxtor" means Maxtor Corporation, a Delaware corporation.
      ------

     "Maxtor Merger" means the merger between Spinco and Maxtor, undertaken
      -------------
pursuant to the Maxtor Merger Agreement.

     "Maxtor Merger Agreement" means that Amended and Restated Agreement and
      -----------------------
Plan of Merger and Reorganization dated as of October 3, 2000, by and among the
Lessee, Spinco, Maxtor and Hawaii Acquisition Corporation, in substantially the
form attached to the Lessee's Form 8-K/A filed with the Securities and Exchange
Commission on or about December 14, 2000.

     "Maxtor Merger Documents" means the documents set forth on Schedule 1
      -----------------------                                   ----------
attached hereto under the caption "Maxtor Merger Documents" (each in a form
---------------
substantially identical to that filed as an exhibit to the Maxtor Merger S-4).

     "Maxtor Merger Effective Date" means the date of the effectiveness of the
      ----------------------------
Maxtor Merger.

     "Maxtor Merger Effective Time" means the time of the effectiveness of the
      ----------------------------
Maxtor Merger.

     "Maxtor Merger Net Charge" means an amount equal to the lesser of (i) the
      ------------------------
amount of the expense charge recorded by the Lessee in accordance with GAAP
(whether arising from discontinued operations, the restructuring of the
continuing DSS operations or the amortization of deferred compensation) in
either the first fiscal quarter of fiscal year 2002 or the fourth fiscal quarter
of fiscal year 2001, as the case may be, in connection with the Maxtor Merger
minus any gain recorded by the Lessee in accordance with GAAP in connection with
the sale of the HDD Business in such quarter and (ii) $75,000,000, but in any
event not less than $0.

     "Maxtor Merger S-4" means that Registration Statement on Form S-4 filed by
      -----------------
Maxtor with the Securities and Exchange Commission on or about December 11,
2000, as amended on or about (i) January 23, 2001, (ii) February 16, 2001 and
(iii) February 28, 2001, together with all exhibits and attachments thereto, and
as the prospectus contained in such Registration Statement was amended on or
about March 7, 2001.

     "Meridian Acquisition" means the acquisition by DSS of Meridian Data, Inc.,
      --------------------
which was completed on or about September 10, 1999.

     "MKE" means Matsushita-Kotobuki Electronics Industries, Ltd., a Japanese
      ---
corporation.

     "Modifications" is defined in Section 11.1(a) of the Lease.
      -------------                ----------------------------

     "Moody's" means Moody's Investors Service, Inc. and any successor thereto
      -------
that is a nationally-recognized rating agency.

                                    [5]-24
<PAGE>

     "Mortgage" means, with respect to the Property, a Construction Deed of
      --------
Trust, Security Agreement and Financing Statement substantially in the form
attached as Exhibit P to the Participation Agreement, made by the Original
            ----------------------------------------
Lessor in favor of a trustee for the Original Agent for the benefit of the
Participants and satisfactory in form and substance to the Agent and the
Required Participants in order to create a first priority mortgage lien on the
Lessor's fee interest in the Property and a first priority security interest in
the Equipment, as the respective rights and obligations of the Original Lessor
and the Original Agent thereunder have been assigned to the Lessor and the Agent
as of July 12, 2000.

     "Mortgage Documents" is defined in Section 6.1 of the Participation
      ------------------                --------------------------------
Agreement.
---------

     "Mortgage Taxes" is defined in Section 6.1 of the Participation Agreement.
      --------------                ------------------------------------------

     "Multiemployer Plan" means any employee benefit plan of the type described
      ------------------
in Section 4001(a)(3) of ERISA.

     "Net Cure Proceeds" is defined in Section 11.8 of the Participation
      -----------------                ---------------------------------
Agreement.
---------

     "Net Proceeds" means all amounts paid in connection with any Casualty or
      ------------
Condemnation, and all interest earned thereon, less the expense of claiming and
collecting such amounts, including all costs and expenses in connection
therewith for which the Agent or the Lessor is entitled to be reimbursed
pursuant to the Lease.

     "Net Sales Proceeds" means the Gross Proceeds actually received by the
      ------------------
Lessor upon any sale by the Lessor of any part of the Property pursuant to

Articles XVII or XXII of the Lease, including, without limitation, (i) any such
----------------------------------
payments made to the Lessor by the Lessee or any purchaser, (ii) any Shortfall
Amount paid to the Lessor by the Lessee, and (iii) any interest paid by the
Lessee to the Lessor on past due amounts under the Lease; but excluding any
payments applied by the Lessor to pay, or received by the Lessor as
reimbursement for, bona fide costs of the sale and further excluding any excess
net sales proceeds received from a purchaser that the Lessor is required to pay
over to the Lessee.  In the event that for any reason whatsoever, including a
default by the Lessee, the Lessor does not sell the Property pursuant to the
Lease on the Designated Payment Date, "Net Sales Proceeds" shall nonetheless
include any Shortfall Amount actually received by the Lessor.  Further, if the
Lessor does not sell the Property pursuant to the Lease, then "Net Sales
Proceeds" shall also include the excess, if any, of:

          (a) all rents and all sales, condemnation and insurance proceeds
     actually received by the Lessor from any sale or lease after the Designated
     Payment Date of any interest in, or because of any subsequent taking or
     damage to, the Property; over

          (b) the sum of (i) all costs of collecting the rents and proceeds
     described in the preceding clause (a) plus (ii) all ad valorem taxes,
                                ----------
     insurance premiums and other costs of every kind incurred by the Lessor
     with respect to the ownership, operation or maintenance of the Property.

However, for purposes of computing any excess described in the preceding
sentence, costs described in clause (b) shall not include the Lessor's general
                             ----------
overhead costs or any costs for which the Participants have already paid the
Lessor their Commitment Percentages thereof as required by Section 11.6 of the
                                                           -------------------
Participation Agreement.
-----------------------

                                    [5]-25
<PAGE>

     "Net Security Proceeds" means, with respect to any sale or issuance of any
      ---------------------
Equity Securities or other security by any Person (including in the case of the
Lessee, any sale or issuance of any Subordinated Debt), the aggregate
consideration received by such Person from such sale or issuance less the actual
                                                                 ----
amount of fees and commissions payable to Persons other than such Person or any
Affiliate of such Person.

     "Non-Consenting Participant" means any Participant which has denied, or is
      --------------------------
deemed to have denied, an Extension Request pursuant to Section 3.7 of the
                                                        ------------------
Participation Agreement.
-----------------------

     "Operative Documents" means the following:
      -------------------

          (a)  the Participation Agreement;

          (b)  the Lease and Lease Supplement;

          (c)  the Guarantee;

          (d)  the Property Purchase Agreement, the Assignment of Purchase
     Agreement and the Deed;

          (e)  the Construction Agency Agreement;

          (f)  the Assignment of Lease and each Supplement to the Assignment of
     Lease;

          (g)  the Consent to Assignment;

          (h)  the Equipment Schedules;

          (i)  the Mortgage;

          (j)  the Construction Agency Agreement Assignment;

          (k)  the Consent to Construction Agency Agreement Assignment;

          (l)  the Assignment of Construction Documents; and

          (m)  the Cash Collateral Agreement.

     "Ordinary Course Indebtedness" means:
      ----------------------------

          (a)  Indebtedness under the Loan Documents;

          (b)  intercompany Guaranty Obligations of the Lessee or any of its
     Subsidiaries guarantying Indebtedness otherwise permitted hereunder of the
     Lessee or any Subsidiary of the Lessee (other than Snap Appliances);

          (c)  Indebtedness arising from the honoring of a check, draft or
     similar instrument against insufficient funds or from the endorsement of
     instruments for collection in the ordinary course of the Lessee's or any
     Subsidiary's business;

                                    [5]-26
<PAGE>

          (d)  Permitted Swap Obligations; and

          (e)  Indebtedness of the Lessee or any of its Subsidiaries with
     respect to surety, appeal, indemnity, performance or other similar bonds in
     the ordinary course of business.

     "Ordinary Course Investments" means Investments consisting of:
      ---------------------------

          (a)  Investments in other assets properly classified as "marketable
     securities" or "cash" or "cash equivalents" under GAAP, and which conform
     to the investment policies adopted by the Board of Directors of the Lessee
     from time to time;

          (b)  advances to officers, directors and employees of the Lessee and
     its Subsidiaries for travel, entertainment, relocation and analogous
     ordinary business purposes;

          (c)  Investments of the Lessee in any of its Subsidiaries (other than
     Snap Appliances) and Investments of any Subsidiary of the Lessee in the
     Lessee or another Subsidiary of the Lessee (other than Snap Appliances);

          (d)  extensions of credit to customers or suppliers of the Lessee and
     its Subsidiaries in the ordinary course of business and any Investments
     received in satisfaction or partial satisfaction thereof;

          (e)  Guaranty Obligations permitted by Section 10.2(a) of the
                                                ----------------------
     Participation Agreement;
     -----------------------

          (f)  Investments received by the Lessee or any of its Subsidiaries as
     distributions on claims in connection with the bankruptcy or reorganization
     of customers or suppliers and in settlement of delinquent obligations of,
     and other disputes with, customers and suppliers arising in the ordinary
     course of business;

          (g)  Investments of any Subsidiary existing at the time it becomes a
     Subsidiary of the Lessee, provided that such Investments were not made in
                               --------
     anticipation of such Person becoming a Subsidiary of the Lessee; and

          (h)  Investments consisting of loans to employees, officers and
     directors, the proceeds of which shall be used to purchase Equity
     Securities of the Lessee or its Subsidiaries and other loans to employees,
     officers and directors.

     "Ordinary Course Liens" means:
      ---------------------

          (a)  Liens pursuant to any Loan Document;

          (b)  Liens for taxes not yet due or which are being contested in good
     faith and by appropriate proceedings, if adequate reserves with respect
     thereto are maintained on the books of the applicable Person in accordance
     with GAAP;

          (c)  carriers', warehousemen's, mechanics', materialmen's, repairmen's
     or other like Liens arising in the ordinary course of business which are
     not overdue for a

                                    [5]-27
<PAGE>

     period of more than thirty (30) days or which are being contested in good
     faith and by appropriate proceedings, if adequate reserves with respect
     thereto are maintained on the books of the applicable Person in accordance
     with GAAP;

          (d)  pledges or deposits in connection with worker's compensation,
     unemployment insurance and other social security legislation;

          (e)  deposits to secure the performance of bids, trade contracts
     (other than for borrowed money), leases, statutory obligations, surety and
     appeal bonds, performance bonds and other obligations of a like nature
     incurred in the ordinary course of business;

          (f)  easements, rights-of-way, restrictions and other similar
     encumbrances affecting real property which, in the aggregate, are not
     substantial in amount, and which do not in any case materially detract from
     the value of the property subject thereto or materially interfere with the
     ordinary conduct of the business of any Person;

          (g)  attachment, judgment or other similar Liens arising in connection
     with litigation or other legal proceedings (and not otherwise an Event of
     Default hereunder) in the ordinary course of business that is currently
     being contested in good faith by appropriate proceedings, adequate reserves
     have been set aside, and no material property is subject to a material risk
     of loss or forfeiture;

          (h)  Liens on the property or assets of any Subsidiary of the Lessee
     in favor of the Lessee or any other Subsidiary of the Lessee (other than
     Snap Appliances);

          (i)  Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of customs duties and in connection with
     the importation of goods in the ordinary course of the Lessee's and its
     Subsidiaries' businesses;

          (j)  Liens arising solely by virtue of any statutory or common law
     provision relating to banker's liens, rights of set-off or similar rights
     and remedies as to deposit accounts or other funds maintained with a
     creditor depository institution; provided that (x) such deposit account is
                                      --------
     not a dedicated cash collateral account and is not subject to restrictions
     against access by the Lessee in excess of those set forth by regulations
     promulgated by the Board, and (y) such deposit account is not intended by
     the Lessee or any Subsidiary to provide collateral to the depository
     institution; and

          (k)  Liens on insurance proceeds in favor of insurance companies with
     respect to the financing of insurance premiums.

     "Original Agent" is defined in Recital A to the Participation Agreement.
      --------------

     "Original Executed Counterpart" is defined in Section 31.8 of the Lease.
      -----------------------------                -------------------------

     "Original Lessor" is defined in Recital A to the Participation Agreement.
      ---------------

     "Original Participation Agreement" is defined in Recital A to the
      --------------------------------                ----------------
Participation Agreement.
-----------------------

     "Outside Completion Date" means the second anniversary of the Effective
      -----------------------
Date.

                                    [5]-28
<PAGE>

     "Overdue Rate" means, with respect to the Advances, fees or any other
      ------------
payment due under the Operative Documents, the interest rate then applicable to
the Advances plus two percent (2%) per annum.

     "Partial Purchase Date" is defined in Section 20.5(b) of the Lease.
      ---------------------                ----------------------------

     "Partial Purchase Notice" is defined in Section 20.5(b) of the Lease.
      -----------------------                ----------------------------

     "Partial Purchase Option" is defined in Section 20.5(b) of the Lease.
      -----------------------                ----------------------------

     "Partial Purchase Option Price" is defined in Section 20.5(a) of the Lease.
      -----------------------------                ----------------------------

     "Participant's Letter" is defined in Section 12.1(b) of the Participation
      --------------------                ------------------------------------
Agreement.
---------

     "Participation Agreement" means the Original Participation Agreement as
      -----------------------
amended and restated by the Amended and Restated Participation Agreement, dated
as of July 12, 2000, among the Lessee, the Lessor, the Participants and the
Agent.

     "Participation Interest" means, as to each Participant, a participation
      ----------------------
interest in, or in the case of each Tranche C Participant, an equity investment
in, the Lease and the right to receive that percentage of the following payments
actually received by the Lessor from or on behalf of the Lessee as is set forth
on Schedule I to the Participation Agreement, subject to the provisions of
   -----------------------------------------
Sections 3.11 - 3.21 and Section 11 of the Participation Agreement:  (i) Basic
------------------------------------------------------------------
Rent, (ii) Supplemental Rent, (iii) Asset Termination Value, (iv) Purchase
Option Price, (v) Partial Purchase Option Price, (vi) Net Sales Proceeds, (vii)
Residual Value Guarantee Amount, (viii) the Shortfall Amount, and (ix) other
payments in respect of indemnities or pursuant to the Guarantee or the exercise
of remedies under the Operative Documents, excluding, however, (x) any Excepted
Payments and (y) as to a particular Participant, any payments on account of any
Advances and any Required Supplemental Payments (and interest thereon) for which
the Lessor has not received payment from such Participant of such Participant's
Commitment Percentage thereof.  For example, if the Lessor elects to pay for
insurance required of the Lessee by the Lease because of the Lessee's failure to
obtain such insurance, the Lessor's receipt of reimbursement for the cost of
such insurance from the Lessee shall be included within "Participation Interest"
for purposes of this Agreement only if such Participant has paid to the Lessor
such Participant's Commitment Percentage of such cost pursuant to Section 11.6
                                                                  ------------
or Section 11.7 of the Participation Agreement.
----------------------------------------------

     "Participants" means each Person executing the Participation Agreement or a
      ------------
Participant's Letter as a Participant and purchasing a Participation Interest in
the transactions contemplated by the Participation Agreement and the other
Operative Documents.

     "Participant Balance" means for each Participant the sum of its Tranche A
      -------------------
Participation Interest Balance, its Tranche B Participation Interest Balance and
its Tranche C Participation Interest Balance.

     "Payment Date" means (a) any Scheduled Payment Date and (b) any date on
      ------------
which interest or Yield is payable pursuant to Section 3.8(d) of the
                                               ---------------------
Participation Agreement in connection with any prepayment of the Advances.
-----------------------

                                    [5]-29
<PAGE>

     "PBGC" means the Pension Benefit Guaranty Corporation or any entity
      ----
succeeding to any or all of its functions under ERISA.

     "Pension Plan" means any "employee pension benefit plan" (as such term is
      ------------
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Lessee or any
ERISA Affiliate or to which the Lessee or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.

     "Permitted Exceptions" means (a) the respective rights and interests of the
      --------------------
parties to the Operative Documents as provided in the Operative Documents; (b)
the rights of any sublessee or assignee under a sublease or an assignment
expressly permitted by the terms of the Lease; (c) Liens for Taxes that either
are not yet due or are being contested in accordance with the provisions of
Section 13.1 of the Lease or Section 13.5 of the Participation Agreement; (d)
-------------------------    -------------------------------------------
Liens arising by operation of law, materialmen's, mechanics', workers',
repairmen's, employees', carriers', warehousemen's and other like Liens in
connection with any Modifications or arising in the ordinary course of business
for amounts that either are not more than sixty (60) days past due or are being
diligently contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease, and that have been bonded
                           -------------------------
for not less than the full amount in dispute (or as to which other security
arrangements satisfactory to the Lessor have been made), which bonding (or
arrangements) shall comply with applicable Requirements of Law, and has
effectively stayed any execution or enforcement of such Liens; (e) Liens arising
out of judgments or awards with respect to which appeals or other proceedings
for review are being prosecuted in good faith and for the payment of which
adequate reserves have been provided as required by GAAP or other appropriate
provisions have been made, so long as such proceedings have the effect of
staying the execution of such judgments or awards and satisfy the conditions for
the continuation of proceedings to contest set forth in Section 13.1 of the
                                                        -------------------
Lease; (f) all encumbrances, exceptions, restrictions, easements, rights of way,
-----
servitudes, encroachments and irregularities in title, other than Liens which,
in the reasonable assessment of the Agent, do not materially impair the value of
the Property or the use of the Property for its intended purpose; (g) easements,
rights of way and other encumbrances on title to the Property pursuant to
Section 12.2 of the Lease; (h) a Lien consisting of a deposit or pledge made, in
-------------------------
the ordinary course of business, in connection with, or to secure payment of,
obligations under worker's compensation, unemployment insurance or similar
legislation and (i) Liens of the types described in clauses (i), (ii) and (iv)
                                                    --------------------------
of Section 10.2(b) of the Participation Agreement and clauses (b), (d), (e) and
-------------------------------------------------     -------------------------
(h) of the definition of Ordinary Course Liens; provided, however, that
---                                             --------  -------
Permitted Exceptions shall in no event include Lessor's Liens.

     "Permitted Indebtedness" is defined in Section 10.2(a) of the Participation
      ----------------------                ------------------------------------
Agreement.
---------

     "Permitted Investments" is defined in Section 10.2(e) of the Participation
      ---------------------                ------------------------------------
Agreement.
---------

     "Permitted Liens" is defined in Section 10.2(b) of the Participation
      ---------------                ------------------------------------
Agreement.
---------

     "Permitted Receivables Facility" means one or more accounts receivable
      ------------------------------
financing arrangements including (a) the sale of accounts receivable and any
related property by the Lessee and/or any of its Subsidiaries to a financing
party or a special purpose vehicle, and/or (b) the

                                    [5]-30
<PAGE>

granting of a security interest in accounts receivable and any related property
by the Lessee and/or any of its Subsidiaries; provided, however, that the
                                              --------  -------
aggregate advances under all such accounts receivable financing arrangements
shall not exceed $100,000,000 at any time.

     "Permitted Swap Obligations" means all obligations (contingent or
      --------------------------
otherwise) of the Lessee or any of its Subsidiaries existing or arising under
Swap Contracts, provided that such obligations are (or were) entered into by
                --------
such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets held or
reasonably anticipated by such Person, or changes in the value of securities
issued by such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or taking a
"market view."

     "Person" means any individual, trustee, corporation, general partnership,
      ------
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture,
Governmental Authority, or otherwise.

     "Plan" means any employee benefit plan maintained or contributed to by the
      ----
Lessee or by any trade or business (whether or not incorporated) under common
control with the Lessee as defined in Section 4001(b) of ERISA and insured by
the PBGC under Title IV of ERISA.

     "Plans and Specifications" means, with respect to the Property, the plans
      ------------------------
and specifications for the Improvements to be constructed on the Property.

     "Pricing Grid" means Schedule II to the Participation Agreement.
      ------------        ------------------------------------------

     "Prime Rate" means the per annum rate publicly announced by the Agent from
      ----------
time to time at its New York Branch.  The Prime Rate is determined by the Agent
from time to time as a means of pricing credit extensions to some customers and
is neither directly tied to any external rate of interest or index nor
necessarily the lowest rate of interest charged by the Agent at any given time
for any particular class of customers or credit extensions.  Any change in the
Alternative Base Rate resulting form a change in the Prime Rate shall become
effective on the Business Day on which each change in the Prime Rate occurs.

     "Property" means (i) the Land Interest and (ii) all of the Improvements,
      --------
Equipment and Fixtures at any time located on or under such Land Interest other
than Lessee's Property.

     "Property Balance" means, with respect to the Property, as of any date of
      ----------------
determination, an amount equal to (i) the sum of the outstanding amount of the
Advances, all accrued and unpaid interest and Yield on the Advances, and all
other amounts owing by the Lessee under the Operative Documents, less (ii) the
sum of all payments received by the Lessor, the Agent or the Participant on
account of payments to reduce the Property Balance, including reductions
resulting from payments by the Lessor, the Lessee and the Guarantor and/or
proceeds from the sale of the Property and/or amounts realized from the
Collateral pursuant to the Cash Collateral Agreement.

     "Property Cost" means, with respect to the Property, the aggregate amount
      -------------
of the related Land Interest Acquisition Cost and the related Property
Improvements Cost.

                                    [5]-31
<PAGE>

     "Property Improvements Cost" means, with respect to the Property, the
      --------------------------
amount funded to or on behalf of the Construction Agent by the Lessor under the
Participation Agreement and the Construction Agency Agreement to construct any
Improvements, Fixtures or Modifications and to purchase Equipment to be used on
the Property in accordance with the Plans and Specifications therefor and the
Operative Documents, as set forth in the Acquisition Request and Funding
Requests therefor (including interest and Yield on the Advances during the
Construction Period applied to such cost and funded by an Interest Payment
Advance).

     "Property Purchase Agreement" means the Purchase and Sale Agreement, dated
      ---------------------------
as of July, 1997, between the Existing Owner and the Lessee, and assigned to the
Original Lessor pursuant to the Assignment of Purchase Agreement, providing for
the purchase of the Property by the Lessor on the Land Interest Acquisition
Date.

     "Purchase Notice" is defined in Section 20.1 of the Lease.
      ---------------                -------------------------

     "Purchase Option" is defined in Section 20.1 of the Lease.
      ---------------                -------------------------

     "Purchase Option Price" is defined in Section 20.1 of the Lease.
      ---------------------                -------------------------

     "Quick Ratio" means, with respect to the Lessee and its Subsidiaries at any
      -----------
time, the ratio, determined on a consolidated basis in accordance with GAAP, of:
(a) the sum at such time of all (i) cash and cash equivalents of the Lessee and
its Subsidiaries (excluding restricted cash), and (ii) accounts receivable of
the Lessee and its Subsidiaries, less all reserves therefor; to (b) the sum at
                                                             --
such time of (i) the current liabilities of the Lessee and its Subsidiaries
(including any such liabilities outstanding under the Loan Documents and the
Operative Documents), plus (ii) to the extent not included in clause (i), the
                      ----                                    ----------
aggregate outstanding obligations under the Loan Documents with respect to the
principal amount of loans, the undrawn face amount of letters of credit and
unreimbursed drawings under letters of credit; provided that in respect of any
                                               --------
period (or partial period) prior to the Maxtor Merger Effective Time, the "Quick
Ratio" shall be determined solely in respect of the DSS Business on a stand-
alone basis, based upon the then-current DSS Combined Financial Statements.

     "Release" means any release, pumping, pouring, emptying, injecting,
      -------
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.

     "Remarketing Option" is defined in Section 22.1 of the Lease.
      ------------------                -------------------------

     "Remarketing Period" is defined in the definition "Marketing Period".
      ------------------

     "Renewal Option" is defined in Section 21.1(a) of the Lease.
      --------------                ----------------------------

     "Renewal Request" is defined in Section 21.1(a) of the Lease.
      ---------------                ----------------------------

     "Renewal Response Date" is defined in Section 21.1(a) of the Lease.
      ---------------------                ----------------------------

     "Renewal Term" means, individually, either of the two one-year periods
      ------------
which immediately follow April 19, 2003, with respect to which Lessee has
exercised its Renewal Option pursuant to Section 21.1 of the Lease.
                                         -------------------------

                                    [5]-32
<PAGE>

     "Rent" means, collectively, the Basic Rent and the Supplemental Rent, in
      ----
each case payable under the Lease.

     "Reportable Event" means any of the events set forth in Section 4043(b) of
      ----------------
ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.

     "Requesting Party" is defined in Section 26.1 of the Lease.
      ----------------                -------------------------

     "Required Modification" is defined in Section 11.1(a) of the Lease.
      ---------------------                ----------------------------

     "Required Participants" means, at any time, Participants the Commitment
      ---------------------
Percentages of which aggregate at least sixty-six and two-thirds percent
(66 2/3%).

     "Required Supplemental Payments" means all payments of Supplemental Rent
      ------------------------------
that the Lessee has agreed to pay the Lessor under the Lease and the other
Operative Agreements, other than (i) the Administrative Fee, (ii) Excepted
Payments, (iii) Residual Value Guarantee Amount, (iv) Asset Termination Value,
(v) Purchase Option Price, (vi) Partial Purchase Option Price and (vii) interest
or Yield accruing on any amount due from the Lessee, which amount is itself not
a Required Supplemental Payment under this definition.  For example, if the
Lessor incurs attorneys' fees because of a breach by the Lessee of the Lease,
the payments required of the Lessee by the Lease as reimbursement for such fees
shall constitute a Required Supplemental Payment.

     "Requirement of Law" means all Federal, state, county, municipal and other
      ------------------
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Property, the Improvements or the
demolition, construction, use or alteration thereof, whether now or hereafter
enacted and in force, including any that require repairs, modifications or
alterations in or to the Property or in any way limit the use and enjoyment
thereof (including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. (S) 1201 et. seq. and any other similar
Federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any that may relate to environmental requirements (including all
Environmental Laws), and all permits, certificates of occupancy, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments which are either of
record or known to the Lessee affecting the Property, other than Lessor Liens,
the Appurtenant Rights and any easements, licenses or other agreements entered
into pursuant to Section 12.2 of the Lease.
                 -------------------------

     "Residual Value Guarantee Amount" means (i) during the Construction Period,
      -------------------------------
an amount equal to eighty-nine and nine-tenths percent (89.9%) of the Lease
Balance, and (ii) at all other times, an amount equal to the aggregate Tranche A
Participation Interest Balances of the Participants holding Tranche A
Participation Interests.

     "Response Actions" means remove, removal, remedy, and remedial action as
      ----------------
those terms are defined in CERCLA, 42 U.S.C. (S) 9601.

     "Responsible Officer" means the President, any Vice President, the
      -------------------
Treasurer or Controller of the Lessee.

                                    [5]-33
<PAGE>

     "Responsible Officer's Certificate" means a certificate signed by any
      ---------------------------------
Responsible Officer, which certificate shall certify as true and correct the
subject matter being certified to in such certificate.

     "Restricted Payment" means:
      ------------------

          (a) the declaration or payment of any dividend or distribution by the
     Lessee or any Subsidiary, either in cash or property, on any shares of the
     capital stock of any class of the Lessee or any Subsidiary; and

          (b) any other payment or distribution by the Lessee or any Subsidiary
     in respect of its capital stock, either directly or indirectly.

     "Restructuring Date" means July 12, 2000, if all conditions described in
      ------------------
Schedule 6.4 to the Participation Agreement have been satisfied or waived or
-------------------------------------------
deferred as provided in Section 6.4 of the Participation Agreement.
                        ------------------------------------------

     "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
      ---
Hill Companies, Inc., and any successor thereto that is a nationally-recognized
rating agency.

     "Scheduled Payment Date" means (a) as to interest or Yield on any Advances
      ----------------------
having an Interest Period of three (3) months or less, the last day of each
Interest Period, (b) as to interest or Yield on any Advances having an Interest
Period longer than three (3) months, each day which is three (3) months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, (c) as to interest or Yield on any Advances bearing
interest at the Alternate Base Rate, the last day of each March, June, September
and December, and (d) as to the principal amount or equity contribution amount
of the Advances, each date indicated on Schedule 1 to the Lease as being a
                                        -----------------------
payment date with respect to such portion of the Property Cost, if any.

     "Securities Act" means the Securities Act of 1933, as amended, together
      --------------
with the rules and regulations promulgated thereunder.

     "Security Documents" means the collective reference to the Mortgage, the
      ------------------
Assignment of Lease, the Construction Agency Agreement Assignment, the
Assignment of Construction Documents, the Cash Collateral Agreement and all
other security documents hereafter delivered to the Agent granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of the
Lessor to the Agent and the Participants under the Participation Agreement or of
the Lessee to the Lessor under the Lease.

     "Senior Indebtedness" means, with respect to any Person at any time, all
      -------------------
Indebtedness of such Person other than Subordinated Debt.

     "Shareholders' Equity" means, as of any date of determination for the
      --------------------
Lessee and its Subsidiaries on a consolidated basis, shareholders' equity as of
that date determined in accordance with GAAP.

     "Shortfall Amount" means, as of the Expiration Date, the amount that the
      ----------------
Asset Termination Value will exceed the aggregate of the Gross Proceeds and the
Residual Value Guarantee Amount upon the completion of a sale of the Property
pursuant to Article XXII of the Lease.
            -------------------------
                                    [5]-34
<PAGE>

     "Significant Casualty" means (i) a Casualty that results in an insurance
      --------------------
settlement on the basis of a total loss, or a constructive or compromised total
loss, or (ii) a Casualty that in the reasonable, good faith judgment of the
Lessee (as evidenced by a Responsible Officer's Certificate delivered to the
Lessor pursuant to Section 16.1 of the Lease) either (a) renders the Property
                   -------------------------
unsuitable for continued use as a commercial property of the type of such
property immediately prior to such Casualty or (b) is so substantial in nature
that restoration of the Property to substantially its condition as existed
immediately prior to such Casualty would be impracticable or impossible.

     "Significant Condemnation" means (i) a Condemnation that involves a taking
      ------------------------
of Lessor's entire title to the related Land Interest, (ii) a Condemnation that
results in loss of possession of the Property by the Lessee for a period in
excess of one hundred eighty (180) consecutive days, or (iii) a Condemnation
that in the reasonable, good faith judgment of the Lessee (as evidenced by a
Responsible Officer's Certificate delivered to the Lessor pursuant to Section
                                                                      -------
16.1 of the Lease) either (a) renders the Property unsuitable for continued use
-----------------
as commercial of the type of such property immediately prior to such
Condemnation or (b) is such that restoration of the Property to substantially
its condition as existed immediately prior to such Condemnation would be
impracticable or impossible.

     "Significant Event" means (i) a Significant Casualty, (ii) a Significant
      -----------------
Condemnation, (iii) an event where the restoration of the Property subject to a
Casualty or Condemnation shall not be completed prior to the earlier of (A) the
180th day prior to the Expiration Date or (B) twelve (12) months following the
occurrence of such Casualty or Condemnation or (iv) the occurrence of an
Environmental Violation where the costs to clean up or remediate the same are
reasonably estimated by the Lessee to exceed $5,000,000.

     "Snap Appliances" means Snap Appliances, Inc., a Delaware corporation.
      ---------------

     "Snap Appliances S-1" means that Registration Statement on Form S-1 filed
      -------------------
by Snap Appliances with the Securities and Exchange Commission on or about
October 30, 2000, as amended on or about November 13, 2000, together with all
exhibits and attachments thereto.

     "Snap Business" has the meaning specified in Section 4.20 of the Snap
      -------------                               ------------------------
General Assignment Agreement.
----------------------------

     "Snap Employee Matters Agreement" means that Employment Matters Agreement
      -------------------------------
to be entered into by the Lessee and Snap Appliances in connection with the Snap
Spin-Off in a form substantially identical to the form of such agreement
attached as an exhibit to the Snap Appliances S-1.

     "Snap General Assignment Agreement" means that General Assignment and
      ---------------------------------
Assumption Agreement to be entered into by the Lessee and Snap Appliances in
connection with the Snap Spin-Off in a form substantially identical to the form
of such agreement attached as an exhibit to the Snap Appliances S-1.

     "Snap Master Agreement" means that Master Separation and Distribution
      ---------------------
Agreement effective as of October 26, 2000 between the Lessee and Snap
Appliances.

                                    [5]-35
<PAGE>

     "Snap Spin-Off Documents" means the documents set forth on Schedule 1
      -----------------------                                   ----------
attached hereto under the caption "Snap Spin-Off Documents" together with any
---------------
and all other documents entered into pursuant thereto, in connection therewith
or required thereby.

     "Snap Spin-Off" means (a) the contribution and assignment by the Lessee to
      -------------
Snap Appliances of certain assets and liabilities of the Lessee associated with
the Snap Business, substantially in accordance with the terms of the Snap Master
Agreement, (b) the consummation by Snap Appliances of an initial public offering
following which the Lessee shall retain an ownership interest in not less than
80% of outstanding common stock of Snap Appliances, substantially in accordance
with the Snap Appliances S-1 and (c) the distribution to the Lessee's
shareholders of all or substantially all remaining shares of Snap Appliances
pursuant to a tax-free reorganization.

     "Solvent" means, as to any Person at any time, that (i) the fair value of
      -------
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (ii) the present fair saleable value of the
property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (iii) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.

     "Specified Event of Default" is defined in Section 17.1(q) of the Lease.
      --------------------------                ----------------------------

     "Spinco" means Insula Corporation, a Delaware corporation and, prior to the
      ------
Maxtor Merger Effective Time, a wholly-owned Subsidiary of the Lessee.

     "Subdivided Parcel" is defined in Section 20.5(a) of the Lease.
      -----------------                ----------------------------

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

     "Subsidiary" of a Person means a corporation, partnership, joint venture,
      ----------
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned or controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.

     "Supplemental Rent" means all amounts, liabilities and obligations (other
      -----------------
than Basic Rent) which Lessee assumes or agrees to pay to Lessor or any other
Person under the Lease, or under any of the other Operative Documents,
including, without limitation, payments of the Residual Value Guarantee Amount,
the Shortfall Amount and payments pursuant to Sections 16.2, 16.3, 16.4 or 17.6
                                              ---------------------------------
of the Lease and Articles XX and XXII of the Lease.
------------     ---------------------------------

                                    [5]-36
<PAGE>

     "Supplement to Assignment of Lease" means the Supplement substantially in
      ---------------------------------
the form of Exhibit A to the Assignment of Lease together with all attachments
            ------------------------------------
and schedules thereto, as such Supplement to Assignment of Lease may be
supplemented, amended or modified from time to time.

     "Swap Contract" means (a) any and all rate swap transactions, basis swaps,
      -------------
forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward bond or forward bond price or forward bond
index transactions, interest rate options, forward foreign exchange
transactions, cap transactions, floor transactions, collar transactions,
currency swap transactions, cross-currency rate swap transactions, currency
options, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., or any other master agreement (any such master agreement, together with
any related schedules, as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, a "Master Agreement"), including any such
                                          ----------------
obligations or liabilities under any Master Agreement.

     "Syndication Period" means the period commencing on the Effective Date and
      ------------------
concluding on the earlier of (i) the date which is ninety (90) days after the
Effective Date or (ii) the date on which the Agent has syndicated Participation
Interests to other Participants representing not less than seventy percent (70%)
of the total Commitment set forth on Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Synthetic Lease Obligations" means all monetary obligations of a Person
      ---------------------------
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations
which do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as secured debt
of such Person.

     "Tax Loss" means any and all taxes (including interest and penalties) of
      --------
the Lessee or any of its Subsidiaries paid, or required to be paid, at any time
as a result of the Maxtor Merger or HDD Redemption not qualifying to be treated
as a tax free transaction or as part of a tax-free reorganization under the Code
(or other applicable tax law), whether as a result of the IRS (or any other
applicable taxing authority) making such a determination or otherwise.

     "Taxes" is defined in the definition of Impositions.
      -----

     "Term" is defined in Section 2.3 of the Lease.
      ----                ------------------------

     "Termination Date" is defined in Section 15.1(d), 16.2(a) and 17.2(e) of
      ----------------                ---------------------------------------
the Lease.
---------

     "Termination Notice" is defined in Section 16.1 of the Lease.
      ------------------                -------------------------

     "364 Day Commitment" means $53,600,000.
      ------------------

                                    [5]-37
<PAGE>

     "364 Day Credit Agreement" means the Credit Agreement (364-Day/1-Year),
      ------------------------
dated as of April 19, 2000, among the Lessee as borrower, Bank of America, N.A.
as administrative agent, The Bank of Nova Scotia and the other financial
institutions party thereto.

     "Threshold Amount" means $10,000,000.
      ----------------

     "Two Year Commitment" means $12,400,000.  The Two Year Commitment expires
      -------------------
on the earlier of the Completion Date or the Outside Completion Date.

     "Tranche A Participants" means those Participants purchasing a Tranche A
      ----------------------
Participation Interest in the Advances and maintaining a Tranche A Participation
Interest Commitment.

     "Tranche A Participation Interest" means, (i) as to each Tranche A
      --------------------------------
Participant, such Participant's Tranche A Participation Interest Commitment
Percentage, multiplied by the outstanding amount of all Advances as to which
such Participant has funded its Tranche A Participation Interest Commitment
Percentage under Section 3.4 of the Participation Agreement and (ii) as to all
                 ------------------------------------------
Tranche A Participants, 86.679162% of all outstanding Advances.

     "Tranche A Participation Interest Balance" means for each Tranche A
      ----------------------------------------
Participant as of any date of determination an amount equal to (i) the sum of
such Tranche A Participant's Tranche A Participation Interest in all outstanding
Advances, together with all accrued and unpaid interest thereon, and all other
amounts owing by the Lessee to such Tranche A Participant under the Operative
Documents, less (ii) the sum of all payments received by the Tranche A
Participant on account of payments to reduce such Tranche A Participant's
Tranche A Participation Interest, including reductions resulting from payments
by the Lessor, the Lessee and the Guarantor and/or proceeds from the sale of the
Property and/or amounts realized from the Collateral pursuant to the Cash
Collateral Agreement.

     "Tranche A Participation Interest Commitment" is defined in Section 3.5 of
      -------------------------------------------                --------------
the Participation Agreement.
---------------------------

     "Tranche A Participation Interest Commitment Percentage" means (i) with
      ------------------------------------------------------
respect to all Participants in the aggregate, 86.679162% of the aggregate
Commitments, and (ii) with respect to each Tranche A Participant, the percentage
of the aggregate Commitments set forth after such Participant's Tranche A
Participation Interest Commitment in Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Tranche B Participants" means those Participants purchasing a Tranche B
      ----------------------
Participation Interest in the Advances and maintaining a Tranche B Participation
Interest Commitment.

     "Tranche B Participation Interest" means, (i) as to each Tranche B
      --------------------------------
Participant, such Tranche B Participant's Tranche B Participation Interest
Commitment multiplied by the outstanding amount of all Advances as to which such
Participant has funded its Tranche B Participation Interest Commitment
Percentage under Section 3.4 of the Participation Agreement and (ii) as to all
                 ------------------------------------------
Tranche B Participants, 9.80000% of all outstanding Advances.

     "Tranche B Participation Interest Balance" means for each Tranche B
      ----------------------------------------
Participant as of any date of determination an amount equal to (i) the sum of
such Tranche B Participant's Tranche B Participation Interest in all outstanding
Advances, together with all accrued and

                                    [5]-38
<PAGE>

unpaid interest thereon, and all other amounts owing by the Lessee to such
Tranche B Participant under the Operative Documents, less (ii) the sum of all
payments received by the Tranche B Participant on account of payments to reduce
such Tranche B Participant's Tranche B Participation Interest, including
reductions resulting from payments by the Lessor, the Lessee and the Guarantor
and/or proceeds from the sale of the Property and/or amounts realized from the
Collateral pursuant to the Cash Collateral Agreement.

     "Tranche B Participation Interest Commitment" is defined in Section 3.5 of
      -------------------------------------------                --------------
the Participation Agreement.
---------------------------

     "Tranche B Participation Interest Commitment Percentage" means (i) with
      ------------------------------------------------------
respect to all Participants in the aggregate, 9.80000% of the aggregate
Commitments, and (ii) with respect to each Tranche B Participant, the percentage
of the aggregate Commitments set forth after such Participant's Tranche B
Participation Interest Commitment in Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Tranche C Participants" means those Participants purchasing a Tranche C
      ----------------------
Participation Interest in the Advances and maintaining a Tranche C Participation
Interest Commitment.

     "Tranche C Participation Interest" means, (i) as to each Tranche C
      --------------------------------
Participant, such Tranche C Participant's Tranche C Participation Interest
Commitment multiplied by the outstanding amount of all Advances as to which such
Participant has funded its Tranche C Participation Interest Commitment
Percentage under Section 3.4 of the Participation Agreement and (ii) as to all
                 ------------------------------------------
Tranche C Participants 3.520838% of all outstanding Advances.

     "Tranche C Participation Interest Balance" means for each Tranche C
      ----------------------------------------
Participant as of any date of determination an amount equal to (i) the sum of
such Tranche C Participant's Tranche C Participation Interest in all outstanding
Advances, together with all accrued and unpaid Yield thereon, and all other
amounts owing by the Lessee to such Tranche C Participant under the Operative
Documents, less (ii) the sum of all payments received by the Tranche C
Participant on account of payments to reduce such Tranche C Participant's
Tranche C Participation Interest, including reductions resulting from payments
by the Lessor, the Lessee and the Guarantor, proceeds from the sale of the
Property and/or amounts realized from the Collateral pursuant to the Cash
Collateral Agreement.

     "Tranche C Participation Interest Commitment" is defined in Section 3.5 of
      -------------------------------------------                --------------
the Participation Agreement.
---------------------------

     "Tranche C Participation Interest Commitment Percentage" means (i) with
      ------------------------------------------------------
respect to all Participants in the aggregate, 3.520838% of the Aggregate
Commitments, and (ii) with respect to each Tranche C Participant, the percentage
of the Aggregate Commitments set forth after such Participant's Tranche C
Participation Interest Commitment in Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Transaction Expenses" means the following costs and expenses incurred by
      --------------------
the Lessor, the Agent and, to the extent referred to below, the Participants in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents:

                                    [5]-39
<PAGE>

          (a)  the reasonable fees, out-of-pocket expenses and disbursements of
     counsel for each of the Lessor and the Agent, in negotiating the terms of
     the Operative Documents and the other transaction documents, preparing for
     the closing under, and rendering opinions in connection with, such
     transactions and in rendering other services customary for counsel
     representing parties to transactions of the types involved in the
     transactions contemplated by the Operative Documents;

          (b)  the reasonable fees, out-of-pocket expenses and disbursements of
     counsel of each of the Lessor and the Agent in connection with (1) any
     amendment, supplement, waiver or consent with respect to any Operative
     Documents requested or approved by the Lessee and (2) any enforcement of
     any rights or remedies against the Lessee in respect of the Operative
     Documents;

          (c)  any and all Taxes and fees incurred in recording, registering or
     filing any Operative Document or any other transaction document, any deed,
     declaration, mortgage, security agreement, notice or financing statement
     with any public office, registry or governmental agency in connection with
     the transactions contemplated by the Operative Documents;

          (d)  any title fees, premiums and escrow costs and other expenses
     relating to title insurance and the closing contemplated by the Transaction
     Documents; and

          (e) all expenses relating to all Environmental Audits and Appraisals.

     "Type" means, with respect to any Advance, its nature as an Alternate Base
      ----
Rate Advance or a Eurodollar Rate Advance.

     "UCC Financing Statements" means collectively the Agent Financing
      ------------------------
Statements and the Lessor Financing Statements.

     "Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
      -----------------------       ---
effect in any applicable jurisdiction.

     "Yield" is defined in Section 3.8(b) of the Participation Agreement.
      -----                ---------------------------------------------

                                    [5]-40
<PAGE>

                                                                      SCHEDULE 1
                                                                   TO APPENDIX 1

                         HDD CONVERTIBLE DEBT PORTION;
               MAXTOR MERGER DOCUMENTS; SNAP SPIN-OFF DOCUMENTS
               ------------------------------------------------

HDD Convertible Debt Portion
----------------------------

The HDD Convertible Debt Portion shall be 33.33%.

Maxtor Merger Documents
-----------------------

 .    Maxtor Merger Agreement.

 .    HDD Separation Agreement.

 .    HDD General Assignment Agreement.

 .    Tax Sharing and Indemnity Agreement among the Lessee, Spinco and Maxtor.

 .    Transitional Services Agreement among the Lessee, Spinco and Maxtor.

 .    Intellectual Property Agreement among the Lessee, Spinco and Maxtor.

 .    Indemnification Agreement among the Lessee, Spinco and Maxtor.

 .    Reimbursement Agreement, dated as of a date on or prior to the Maxtor
     Merger Effective Date, between the Lessee and Maxtor.

Snap Spin-Off Documents
-----------------------

 .    Snap Master Agreement.

 .    Snap General Assignment Agreement.

 .    Master Intellectual Property Agreement between the Lessee and Snap
     Appliances.

 .    Snap Employee Matters Agreement.

 .    Tax Sharing Agreement between the Lessee and Snap Appliances.

 .    Master Transitional Services Agreement between the Lessee and Snap
     Appliances.

 .    Indemnification and Insurance Matters Agreement between the Lessee and Snap
     Appliances.

 .    Hard Disk Drive Supply Agreement dated as of June 30, 2000, entered into by
     Snap Appliances and the Lessee.

                                    [5]-41
<PAGE>

                                 ATTACHMENT 6
                                 ------------

                               Revised Exhibit Q
                               -----------------

                        FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date: _______________________,___

To:  The Bank of Nova Scotia, as Agent

Ladies and Gentlemen:

     Reference is made to that certain Amended and Restated Participation
Agreement, dated as of July 12, 2000 between Quantum Corporation, a Delaware
corporation (the "Lessee"), SELCO Service Corporation, an Ohio corporation (the
                  ------
"Lessor"), the Participants from time to time party thereto, The Bank of Nova
 ------
Scotia, as agent (the "Agent"), (said agreement, as amended, restated, extended,
                       -----
supplemented or otherwise modified in writing from time to time, the
"Participation Agreement;" the terms defined therein being used herein as
 -----------------------
therein defined).

     The undersigned Responsible Officer hereby certifies as of the date hereof
that he is the ____________________________________ of the Lessee, and that, as
such, he is authorized to execute and deliver this Compliance Certificate to the
Agent on the behalf of the Lessee, and that:

           [Use following for fiscal year-end financial statements]

     1.   Attached hereto as Schedule 1 are the year-end audited financial
statements required by clause (i) of Section 10.1(a) of the Participation
                       --------------------------------------------------
Agreement for the fiscal year of the Lessee ended as of the above date, together
---------
with the report and opinion of an independent certified public accountant
required by such section.

          [Use following for fiscal quarter-end financial statements]

     1.   Attached hereto as Schedule 1 are the unaudited financial statements
                             ----------
required by clause (ii) of Section 10.1(a) of the Participation Agreement for
            -------------------------------------------------------------
the fiscal quarter of the Lessee ended as of the above date.  Such financial
statements fairly present the financial condition, results of operations and
changes in financial position of the Lessee and its Subsidiaries in accordance
with GAAP as at such date and for such periods, subject only to normal year-end
audit adjustments and the absence of footnotes.

     2.   The undersigned has reviewed and is familiar with the terms of the
Participation Agreement and has made, or has caused to be made under his
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Lessee during the accounting period covered by the attached
financial statements.

                                     [6]-1
<PAGE>

     3.   A review of the activities of the Lessee and its Subsidiaries during
such fiscal period has been made under my supervision with a view to determining
whether during such fiscal period the Lessee performed and observed all its
respective obligations under the Operative Documents, and

                                 [select one:]

     [to the knowledge of the undersigned during such fiscal period, the Lessee
performed and observed each covenant and condition of the Operative Documents
applicable to it.]

                                    --or--

     [the following covenants or conditions have not been performed or observed
and the following is a list of all such Defaults and its nature and status:]

     4.   The following financial covenant analyses and information set forth on
Schedule 2 attached hereto are true and accurate on and as of the date of this
Compliance Certificate.

     IN WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate as of ________________, ___________.

                                   QUANTUM CORPORATION

                                   By: _________________________________________

                                   Name: _______________________________________

                                   Title: ______________________________________

                                     [6]-2
<PAGE>

                   For the Quarter/Year ended _______________ ("Statement Date")
                                                                --------------

                                  SCHEDULE 2
                         to the Compliance Certificate
                                 ($ in 000's)

     [NOTE:  With respect to any period (or partial period) prior to the Maxtor
Merger Effective Time, certain of the ratios and amounts described herein shall
  be determined solely in respect of the DSS Business on a stand-alone basis,
        based upon the then-current DSS Combined Financial Statements.]

<TABLE>
<S>                                                                        <C>
I.   Section 10.2(n)(i)

  Please indicate whether the Lessee remains in compliance with the
  covenants set forth in Section 10.2(k) after taking into account the
  aggregate amount of any transfers of assets or assumptions of
  liabilities (assuming that any contingent or off balance sheet                YES  /  NO
  liabilities are incurred and accounted for in an amount equal to that
  which could reasonably be expected to be paid) pursuant to Section
  10.2(n)(i).

II.  Section 10.2(n)(ii)(D)

  Please indicate whether the Lessee remains in compliance with the
  covenants set forth in Section 10.2(k) after taking into account the
  aggregate amount of any transfers of assets or assumptions of
  liabilities (assuming that any contingent or off balance sheet                YES  /  NO
  liabilities are incurred and accounted for in an amount equal to that
  which could reasonably be expected to be paid) pursuant to Section
  10.2(n)(i)(D).

III. Section 10.2(e)(ix)

  Note:  Please indicate whether the Lessee or any of its Subsidiaries
  ----
  made any Investment in Snap Appliances pursuant to Section
  10.2(e)(ix) in the period to which this Compliance Certificate                YES  /  NO
  relates, and if so complete this section.

      Aggregate Investments in Snap Appliances from and after
      Restatement Date but prior to consummation of the Snap Spin Off.     $___________________

      Maximum permitted:                                                        $100,000,000
</TABLE>

                                     [6]-3
<PAGE>

IV.  Section 10.2(k)(i) - Minimum Consolidated Tangible Net Worth.

<TABLE>
     <S>                                                                            <C>
     A.   Actual Consolidated Tangible Net Worth at Statement Date:

          1.  Shareholders' Equity:                                                 $____________________

          2.  Intangible Assets:                                                    $____________________

          3.  Consolidated Tangible Net Worth (Line IV.A.1 less Line IV.A.2):       $____________________

     B.   75% of Consolidated Tangible Net Worth as of March 31, 2000               $____________________

     C.   Amount equal to 75% of the sum of positive Consolidated Net Income
          (ignoring any quarterly losses and any charge for In-Process Research
          and Development described in Line IV.F below) for each fiscal quarter
          after the quarter ended March 31, 2000, through and including the
          quarter ending on the Statement Date:                                     $____________________

     D.   Amount equal to 75% of the Net Security Proceeds of all Equity
          Securities issued by the Lessee (excluding any issuance where the Net
          Security Proceeds to the Lessee are less than $10,000,000) during the
          period commencing on March 31, 2000 and ending on the Statement Date:     $____________________

     E.   Amount equal to 75% of the increase in shareholders' equity
          resulting from any conversion of Convertible Subordinated Debentures
          into Equity Securities during the period commencing on March 31, 2000
          and ending on the Statement Date:                                         $____________________

     F.   Lesser of (i) the aggregate amount paid by the Lessee to repurchase
          Equity Securities during the period commencing on March 31, 2000 and
          ending on the Statement Date, and (ii) $200,000,000:                      $____________________

     G.   Lesser of (i) the aggregate amount of charges taken by the Lessee
          for In Process Research & Development associated with Acquisitions
          during the period commencing on March 31, 2000 and ending on the
          Statement Date, and (ii) $100,000,000; provided that any such amounts
                                                 --------
          were paid during the quarter in which any such Acquisition was
          completed:                                                                $____________________

     H.   For any fiscal quarter ending after the Snap Spin-Off is                  $____________________
</TABLE>

                                     [6]-4
<PAGE>

<TABLE>
     <S>                                                                            <C>
          consummated, the lesser of (i) net book value of Snap Appliances as of
          the First Amendment Effective Date and (ii) $150,000,000.

     I.   Sum of:  Lines IV.B + IV.C + IV.D + IV.E less IV.F less IV.G less         $____________________
          IV.H:

     J.   Greater of Line IV.B and IV.I:                                            $____________________

     K.   Excess (deficiency) for covenant compliance (Line IV.A.3 less IV.J):      $____________________
</TABLE>

                                     [6]-5
<PAGE>

V.   Section 10.2(k)(ii) - Minimum Quick Ratio.

<TABLE>
     <S>                                                                            <C>
     A.   Quick Assets:

          1.        Amount of cash and cash equivalents of the Lessee and its
               Subsidiaries (excluding restricted cash) as of the Statement Date:   $____________________

          2.        Amount of all accounts receivable of the Lessee and its
               Subsidiaries, less all reserves therefor, as of the Statement Date:  $____________________

          3.        Amount of Quick Assets as of Statement Date (Lines V.A.1 + 2):  $____________________

     B.   Current Liabilities:

          1.        Amount of current liabilities of the Lessee and its
               Subsidiaries as of the Statement Date (including any such
               liabilities outstanding under the Loan Documents and the Operative
               Documents):                                                          $____________________

          2.        Aggregate amount of outstanding obligations under the Loan
               Documents with respect to the principal amount of loans, the
               undrawn face amount of letters of credit and unreimbursed drawings
               under letters of credit (to the extent not included in Line V.B.1):  $____________________

          3.        For one year prior to the Maturity Date, the aggregate
               outstanding Synthetic Lease Obligations under the Operative
               Documents:

          4.        Amount of total current liabilities of the Lessee and its       $____________________
               Subsidiaries as of the Statement Date (Line V.B.1 + 2 + 3):

     C.   Quick Ratio ((Line V.A.3 / Line V.B.4):                                   ________________ to 1

          Minimum required:                                                                     1.10 to 1
</TABLE>

                                     [6]-6
<PAGE>

VI.  Section 10.2(k)(iii) - Maximum Leverage Ratio.

<TABLE>
     <S>                                                                            <C>
     A.   Consolidated EBITDA measured on a rolling four quarter basis for
          the four fiscal quarters ended as of the Statement Date ("Subject
                                                                    -------
          Period"):
          ------

          1.        Consolidated Net income for Subject Period:                     $____________________

          2.        Consolidated Interest Charges for Subject Period:               $____________________

          3.        Provision for income taxes for Subject Period:                  $____________________

          4.        Depreciation expenses for Subject Period:                       $____________________

          5.        Amortization expenses for intangibles for Subject Period:       $____________________

          6.        Amount written off in connection with In-Process Research &
               Development related to the Meridian Acquisition (in the second
               fiscal quarter of year 2000 only):                                   $____________________

          7.   Amount of charge taken in connection with DSS (in the fourth
               fiscal quarter of year 2000 only):                                   $____________________

          8.        Lesser of (i) the aggregate amount of charges taken by the
               Lessee for In Process Research & Development associated with
               Acquisitions during the period commencing on March 31, 2000 and
               ending on the Statement Date, and (ii) $100,000,000; provided that
                                                                    --------
               any such amounts were paid during the quarter in which any such
               Acquisition was completed:                                           $____________________

          9.        Consolidated EBITDA (Lines VI.A.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8): $____________________

     B.   Consolidated Funded Indebtedness at Statement Date:                       $____________________

     C.   Leverage Ratio (Line VI.B / Line VI.A.9):                                 ________________ to 1

          Maximum permitted:                                                                    2.00 to 1
</TABLE>

                                     [6]-7
<PAGE>

VII. Section 10.2(k)(iv) - Minimum Profitability.

<TABLE>
<S>                                                                                 <C>
     A.   5% of Consolidated Tangible Net Worth as of Statement Date:               $____________________

     B.   Aggregate amount of the two greatest quarterly losses incurred            $____________________
          during the four quarters immediately preceding the Statement Date:

     C.   Excess (deficiency) for covenant compliance (Line VII.A less Line         $____________________
          VII.B):

     D.   Cumulative Consolidated Net Income for the four quarters                  $____________________
          immediately preceding the Statement Date:

     E.   Excess (deficiency) for covenant compliance (Line VII.D less $1.00):      $____________________
</TABLE>

                                     [6]-8
<PAGE>

                                 ATTACHMENT 7
                                 ------------

         Form of First Amendment to Amended and Restated Master Lease

RECORDING REQUESTED BY
AND WHEN RECORDED, RETURN TO:
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
Attn: Dolph M. Hellman, Esq.

--------------------------------------------------------------------------------

                              FIRST AMENDMENT TO
                  AMENDED AND RESTATED MASTER LEASE AGREEMENT
                  -------------------------------------------

     THIS FIRST AMENDMENT TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (this
"Amendment"), dated as of March 28, 2001, is entered into by and between:
 ---------

          (1)  QUANTUM CORPORATION, a Delaware corporation (the "Lessee"); and

          (2)  SELCO SERVICE CORPORATION, an Ohio corporation (the "Lessor").

                                   RECITALS
                                   --------

     A.   The Lessee, the Lessor, each of the financial institutions that are
parties thereto as "Participants" ("Participants"), and THE BANK OF NOVA SCOTIA
                                    ------------
("BNS"), as agent for the Participants (in such capacity, the "Agent"), are
  ---                                                          -----
parties to that certain Amended and Restated Participation Agreement dated as of
dated as of July 12, 2000 (the "Participation Agreement"), pursuant to which the
                                -----------------------
Lessor and the Participants have provided to the a lease facility referenced
therein.

     B.   Pursuant to the Participation Agreement, the Lessee and the Lessor
executed a Master Lease Agreement dated as of July 12, 2000, affecting certain
real property located in El Paso County, Colorado, described in Schedule 1
                                                                ----------
thereto (the "Master Lease Agreement").  The Master Facility 1 Lease Agreement
              ----------------------
was recorded in the Official Records of El Paso County, Colorado, on July 12,
2000, as Document No. 200081204.

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

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

                                     [7]-1
<PAGE>

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Lessee and the Lessor hereby agree as follows:

     1.   Definitions, Interpretation.  All capitalized terms defined above and
          ---------------------------
elsewhere in this Amendment shall be used herein as so defined.  Unless
otherwise defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Appendix 1 to the Participation
                                                -------------------------------
Agreement, as amended by the First Amendment to Amended and Restated
---------
Participation Agreement and this Amendment.  The rules of interpretation set
forth in Appendix 1 to the Participation Agreement shall, to the extent not
         -----------------------------------------
inconsistent with the terms of this Amendment, apply to this Amendment and are
hereby incorporated by reference.

     2.   Amendments to the Master Lease Agreement.
          ----------------------------------------

          (a) Section 8.1 (Condition of the Property) is amended by replacing
              -----------
     "SECTION 10.3(a)" with "SECTION 10.4(a)".
      ---------------        ---------------

          (b) Clause (v) of Section 11.1 is amended by changing the reference to
              --------------------------
     "Sections 8.2 and 10.2" set forth therein to "Sections 8.2, 10.1 and 10.2".
      ---------------------                        ---------------------------

          (c) Section 14.3(f) is amended by changing the reference to "Section
              ---------------                                          -------
     10.1(v)" set forth therein to "Section 10.2(k)".
     -------                        ---------------

          (d) Section 15.1(e) is amended by changing the reference to "Sections
              ---------------                                          --------
     10.1 and 11.1" set forth therein to "Sections 10.1, 10.2 and 11.1".
     -------------                        ----------------------------

          (c) Appendix 1 is amended to read in its entirety as set forth on
              ----------
     Annex 1 hereto.
     -------

     3.   Effective Date.  The amendments effected by Paragraph 2 above shall
          --------------                              -----------
become effective on the "Effective Date" as defined in the First Amendment to
the Amended and Restated Participation Agreement, subject to satisfaction of the
conditions set forth in Paragraph 4 thereof.
                        -----------

     4.   Effect of this Amendment.  On and after the Effective Date, each
          ------------------------
reference in the Master Lease Agreement and the other Operative Documents to the
Master Lease Agreement shall mean the Master Lease Agreement as amended hereby.
Except as specifically amended above, (a) the Master Lease Agreement and the
other Operative Documents shall remain in full force and effect and are hereby
ratified and affirmed and (b) the execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power, or remedy of the Lessor, the Participants or the Agent, nor
constitute a waiver of any provision of the Master Lease Agreement or any other
Operative Document.

                                     [7]-2
<PAGE>

     5.   Miscellaneous.
          -------------

          (a) Counterparts.  This Amendment may be executed in any number of
              ------------
     counterparts, each of which shall be deemed an original, but all of which
     taken together shall constitute one and the same instrument. The signature
     page and acknowledgment of any counterpart may be removed therefrom and
     attached to any other counterpart to evidence execution thereof by all of
     the parties hereto without affecting the validity thereof.

          (b) Headings.  Headings in this Amendment are for convenience of
              --------
     reference only and are not part of the substance hereof.

          (c) Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
              -------------
     AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS,
     WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO MATTERS
     RELATING TO THE CREATION OF THE LEASEHOLD ESTATE UNDER THE LEASE AND THE
     EXERCISE OF RIGHTS AND REMEDIES WITH RESPECT THERETO, WHICH SHALL BE
     GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE IN WHICH
     SUCH ESTATE IS LOCATED.

                         [The signature page follows.]

                                     [7]-3
<PAGE>

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

LESSEE:                          QUANTUM CORPORATION

                                 By:_________________________________
                                    Name:____________________________
                                    Title:___________________________

LESSOR:                          SELCO SERVICE CORPORATION

                                 By:_________________________________
                                    Name:____________________________
                                    Title:___________________________

                                     [7]-4
<PAGE>

STATE OF _____________________)
                              )
COUNTY OF ____________________)

          On ________ 2001, before me, _______________________, a Notary Public
in and for the State of California, personally appeared ______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

          WITNESS my hand and official seal.

          [SEAL]
                                                     ___________________________
<PAGE>

STATE OF _____________________)
                              )
COUNTY OF ____________________)

          On ___________, 2001, before me, _______________________, a Notary
Public in and for the State of California, personally appeared
_______________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.

          WITNESS my hand and official seal.

          [SEAL]
                                                   _____________________________
<PAGE>

                            ANNEX 1 TO ATTACHMENT 7
                            -----------------------

                                  APPENDIX 1

                                      to
               Amended and Restated Participation Agreement and
Amended and Restated Master Lease, each as amended and each dated as of July 12,
                                     2000,
          and Construction Deed of Trust amended as of July 12, 2000

                 (Specialty Storage Product Group Facilities)

                        DEFINITIONS AND INTERPRETATION

     A.   Interpretation.  In each Operative Document, unless a clear contrary
          --------------
intention appears:

          (i)     the singular number includes the plural number and vice versa;

          (ii)    reference to any Person includes such Person's successors and
     assigns but, if applicable, only if such successors and assigns are
     permitted by the Operative Documents, and reference to a Person in a
     particular capacity excludes such Person in any other capacity or
     individually;

          (iii)   reference to any gender includes each other gender;

          (iv)    reference to any agreement (including any Operative Document),
     document or instrument means such agreement, document or instrument as
     amended or modified and in effect from time to time in accordance with the
     terms thereof and, if applicable, the terms of the other Operative
     Documents and reference to any promissory note includes any promissory note
     which is an extension or renewal thereof or a substitute or replacement
     therefor;

          (v)     reference to any Applicable Law means such Applicable Law as
     amended, modified, codified, replaced or reenacted, in whole or in part,
     and in effect from time to time, including rules and regulations
     promulgated thereunder, and reference to any section or other provision of
     any Applicable Law means that provision of such Applicable Law from time to
     time in effect and constituting the substantive amendment, modification,
     codification, replacement or reenactment of such section or other
     provision;

          (vi)    reference in any Operative Document to any Article, Section,
     Appendix, Schedule, or Exhibit means such Article or Section thereof or
     Appendix, Schedule or Exhibit thereto;

          (vii)   "hereunder", "hereof", "hereto" and words of similar import
     shall be deemed references to an Operative Document as a whole and not to
     any particular Article, Section or other provision thereof;

          (viii)  "including" (and with correlative meaning "include") means
     including without limiting the generality of any description preceding such
     term;

                                    [7-A]-1
<PAGE>

          (ix)    "or" is not exclusive; and

          (x)     relative to the determination of any period of time, "from"
     means "from and including" and "to" means "to but excluding".

     B.   Accounting Terms.  In each Operative Document, unless expressly
          ----------------
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.

     C.   Conflict in Operative Documents.  If there is any conflict between any
          -------------------------------
Operative Documents, such Operative Document shall be interpreted and construed,
if possible, so as to avoid or minimize such conflict but, to the extent (and
only to the extent) of such conflict, the Lease shall prevail and control.

     D.   Legal Representation of the Parties.  The Operative Documents were
          -----------------------------------
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.

     E.   Defined Terms.  Unless a clear contrary intention appears, terms
          -------------
defined herein have the respective indicated meanings when used in each
Operative Document.

     "Account" is defined in Section 3.11 of the Participation Agreement and in
      -------                -------------------------------------------
Section 1 of the Cash Collateral Agreement.
------------------------------------------

     "Acquisitions" means any transaction or series of related transactions for
      ------------
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any line of business
or any division of a Person, (b) the acquisition of in excess of fifty percent
(50%) of the capital stock, partnership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary).

     "Acquisition Request" is defined in Section 3.3 of the Participation
      -------------------                --------------------------------
Agreement.
---------

     "Adjusted Percentage" is defined in Section 11.6 of the Participation
      -------------------                ---------------------------------
Agreement.
---------

     "Administrative Fee" is defined in Section 4.1 of the Participation
      ------------------                --------------------------------
Agreement.
---------

     "Advance" means an advance of funds by the Lessor pursuant to Section 3 of
      -------                                                      ------------
the Participation Agreement which will be used to pay Land Interest Acquisition
---------------------------
Costs or Property Improvements Costs.

     "Affiliate" means any Person directly or indirectly controlling, controlled
      ---------
by, or under direct or indirect common control with, another Person.  A Person
shall be deemed to be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power (a) to vote ten percent (10%) or more
of the securities (on a fully diluted basis) having ordinary voting power for
the election of directors or managing general partners; or (b) to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise; provided that Persons, other than Subsidiaries, in which
                       --------
Quantum Technology Ventures holds Equity Securities shall not be "Affiliates"
for purposes of this definition.

                                    [7-A]-2
<PAGE>

     "After Tax Basis" means, with respect to any payment to be received, the
      ---------------
amount of such payment increased so that, after deduction of the amount of all
taxes required to be paid by the recipient calculated at the then maximum
marginal federal and state income tax rates generally applicable to Persons of
the same type as the recipient (less any tax savings realized as a result of the
payment of the indemnified amount) with respect to the receipt by the recipient
of such amounts, such increased payment (as so reduced) is equal to the payment
otherwise required to be made.

     "Agent" means The Bank of Nova Scotia, as successor in interest to the
      -----
Original Agent in its capacity as agent for the Participants pursuant to the
Participation Agreement, or any successor or additional agent appointed in
accordance with the terms of the Participation Agreement.

     "Agent Financing Statements" means UCC financing statements appropriately
      --------------------------
completed and executed for filing in the applicable jurisdiction in order to
perfect a security interest in favor of the Agent for the ratable benefit of the
Participants in the Equipment located on the Property or in any Improvements on
the Property.

     "Alternate Base Rate" means, for any period, an interest rate per annum
      -------------------
equal to the lower of (i) the Prime Rate or (ii) the Federal Funds Effective
Rate most recently determined by the Agent plus one-half percent (0.50%).  If
either of the aforesaid rates or equivalent changes from time to time after the
date of the Participation Agreement, the Alternate Base Rate shall be
automatically increased or decreased, if appropriate and as the case may be,
without notice to the Lessee or the Lessor, as of the effective time of each
change.

     "Alternate Basic Rate Advance" means an Advance bearing interest or Yield
      ----------------------------
determined with reference to the Alternate Base Rate as provided in the
Participation Agreement.

     "Applicable Law" means all existing and future applicable laws, rules,
      --------------
regulations (including Environmental Laws), statutes, treaties, codes,
ordinances, permits, certificates, covenants, restrictions, requirements, orders
and licenses of and interpretations by, any Governmental Authorities, and
applicable judgments, decrees, injunctions, writs, orders or like action of any
court, arbitrator or other administrative, judicial or quasi-judicial tribunal
or agency of competent jurisdiction (including those pertaining to health,
safety or the environment (including, without limitation, wetlands) and those
pertaining to the construction, use or occupancy of the Property) and any
restrictive covenant or deed restriction or easement affecting the Property.

     "Applicable Margin" means at any time with respect to any Advance, either
      -----------------
(i) at any time amounts are deposited in an Account subject to the Cash
Collateral Agreement, and with respect to that portion of the Advances
represented by such Collateral, one-quarter percent (0.25%) per annum margin
with respect to Tranche A Participation Interests and Tranche B Participation
Interests therein and one and one-quarter percent (1.25%) per annum margin with
respect to Tranche C Participation Interests therein, or (ii) at any other time,
the per annum margin which is determined pursuant to the Pricing Grid, and, in
each case, added to the Eurodollar Rate or Alternative Base Rate applicable to
such Advance.

     "Appraisal" means, with respect to the Property, an appraisal, prepared by
      ---------
a reputable appraiser approved by the Lessor, the Agent and the Required
Participants, which in the

                                    [7-A]-3
<PAGE>

judgment of counsel to the Lessor, the Agent and the Required Participants,
complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Requirements of Law, which
appraisal will (i) appraise the Fair Market Sales Value of the Property as built
in accordance with the Plans and Specifications; on the fifth anniversary of the
Effective Date; as of the commencement of the Renewal Term, if any; and at the
end of the Renewal Term, if any; and (ii) contain an estimate of the useful life
of the Improvements as of each such date, all in a form satisfactory to the
Lessor, the Agent and the Required Participants.

     "Appurtenant Rights" means (i) all agreements, easements, rights of way or
      ------------------
use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to any Land Interest or the Improvements, including, without limitation, the use
of any streets, ways, alleys, vaults or strips of land adjoining, abutting,
adjacent or contiguous to any Land Interest and (ii) all permits, licenses and
rights, whether or not of record, appurtenant to any Land Interest.

     "Asset Termination Value" means, as of any date of determination, an amount
      -----------------------
equal to (i) the sum of (A) the outstanding Advances, (B) all accrued and unpaid
interest on the Advances, and (C) all other amounts owing by the Lessee under
the Operative Documents, less (ii) the sum of all payments received by the
Lessor, the Agent or the Participants on account of payments to reduce Asset
Termination Value, including reductions resulting from payments by the Lessor,
the Lessee or the Guarantor and/or any payment of the Partial Purchase Option
Price upon the exercise of a Partial Purchase Option and/or the proceeds from
the sale of the Property and/or amounts realized from the Collateral pursuant to
the Cash Collateral Agreement.

     "Assignment and Acceptance" is defined in Section 12.1(b) of the
      -------------------------                ----------------------
Participation Agreement.
-----------------------

     "Assignment of Construction Documents" means the Assignment of Construction
      ------------------------------------
Documents, dated as of the Effective Date, in the form attached as Exhibit A to
                                                                   ------------
the Construction Agency Agreement, as the rights of the Original Lessor
---------------------------------
thereunder have been further assigned to the Lessor as of July 12, 2000.

     "Assignment of Lease" means the Assignment of Lease, dated as of the
      -------------------
Effective Date, from the Original Lessor to the Original Agent for the benefit
of the Participants, and consented to by the Lessee pursuant to that certain
Lessee's Consent, dated as of the Effective Date (the "Consent to Assignment")
by the Lessee, as obligor, in favor of the Agent for the benefit of the
Participants, in each case in the respective forms set forth in Exhibit L to the
                                                                ----------------
Participation Agreement, as the respective rights and obligations of the
-----------------------
Original Lessor and the Original Agent thereunder have been further assigned to
the Lessor and the Agent as of July 12, 2000.

     "Assignment of Purchase Agreement" means the Assignment of Certain Rights
      --------------------------------
under Purchase and Sale Agreement, dated as of the Land Interest Acquisition
Date, by and among the Lessee, as assignor, the Original Lessor, as assignee and
the Existing Owner, as seller, as the rights of the Original Lessor thereunder
have been further assigned to the Lessor as of July  12, 2000.

                                    [7-A]-4
<PAGE>

     "Available Commitments" means as to any Participant at any time, an amount
      ---------------------
equal to the excess, if any, of (a) the amount of such Participant's Commitment
over (b) the aggregate amount of its Participation Interest in all Advances made
by the Lessor then outstanding.

     "Bankruptcy Code" means Title 11 of the United States Code entitled
      ---------------
"Bankruptcy," as now or hereafter in effect.

     "Basic Rent" means the sum of (i) that portion of the Property Improvements
      ----------
Costs due on any Payment Date, if any, as set forth on Schedule 1 to the Lease
                                                       -----------------------
and (ii) the interest or Yield on Advances due on any Payment Date as set forth
in Section 3.8 of the Participation Agreement.
   ------------------------------------------

     "Benefit Arrangement" means at any time an employee benefit plan within the
      -------------------
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.

     "Board" means the Board of Governors of the Federal Reserve System of the
      -----
United States (or any successor).

     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
      ------------
which is not a day on which banks in Albany, New York, New York, New York, San
Francisco, California or (if interest is being determined by reference to the
Eurodollar Rate) London, England, are generally authorized or obligated, by law
or executive order, to close.

     "Capital Leases" means any and all leases under which certain obligations
      --------------
are required to be capitalized on the books of a lessee in accordance with GAAP.

     "Cash Collateral" is defined in Section 1 of the Cash Collateral Agreement.
      ---------------                ------------------------------------------

     "Cash Collateral Agreement" means the Cash Collateral Agreement dated as of
      -------------------------
the Effective Date among the Lessee, the Original Lessor, the Original Agent and
the Participants, in the form of Exhibit S to the Participation Agreement, as
                                 ----------------------------------------
the respective rights and obligations of the Original Lessor and the Original
Agent thereunder have been assigned to the Lessor and the Agent as of July 12,
2000.

     "Casualty" means any damage or destruction of all or any portion of the
      --------
Property as a result of a fire or other casualty.

     "CERCLA" means the Comprehensive Environmental Response, Compensation, and
      ------
Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.

     "Certifying Party" is defined in Section 26.1 of the Lease.
      ----------------                -------------------------

     "Change of Control" means with respect to the Lessee, the occurrence of any
      -----------------
of the following events:  (a) any person or group of persons (within the meaning
of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
but excluding any employee benefit plan of the Lessee or its Subsidiaries, or
any person or entity acting in its capacity as trustee, agent or other fiduciary
or administrator of any such plan) shall become the "beneficial owner" (within
the meaning of Rules 13d-3 and 13d-5 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, except that
such a person

                                    [7-A]-5
<PAGE>

or group shall be deemed to have "beneficial ownership" of all securities that
such person or group has the right to acquire (such right, an "option right"),
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of forty percent (40%) or more of the outstanding
Equity Securities of the Lessee entitled to vote for members of the board of
directors, or (B) during any period of twelve (12) consecutive months, a
majority of the members of the board of directors of the Lessee cease to be
composed of individuals (i) who were members of that board on the first day of
such period, (ii) whose election or nomination to that board was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or (iii) whose election
or nomination to that board was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of that board.

     "Change of Law" is defined in Section 13.9 of the Participation Agreement.
      -------------                -------------------------------------------

     "Claims" means any and all obligations, liabilities, losses, actions,
      ------
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever, including, as they relate to issues involving any
Environmental Law or Environmental Violation, those matters set forth in Section
                                                                         -------
13.3 of the Participation Agreement.
-----------------------------------

     "Closing Date" is defined in Section 2 of the Participation Agreement.
      ------------                ----------------------------------------

     "Code" means the Internal Revenue Code of 1986, as amended from time to
      ----
time, or any successor statute thereto.

     "Collateral" means the Collateral under the Cash Collateral Agreement.
      ----------

     "Commitment" means (i) as to any Participant, the obligation of such
      ----------
Participant to purchase a Participation Interest in Advances to be made by the
Lessor under the Participation Agreement, in an aggregate amount at any one time
outstanding not to exceed the amount set forth opposite such Participant's name
on Schedule I to the Participation Agreement, as such amount may be reduced from
   -----------------------------------------
time to time in accordance with the provisions of the Participation Agreement,
and (ii) as to the Lessor, the obligation of the Lessor to make Advances from
amounts received from the Participants pursuant to the purchase of Participation
Interests under the Participation Agreement.

     "Commitment Percentage" means, as to any Participant at any time, the
      ---------------------
percentage which such Participant's Commitment then constitutes of the aggregate
Commitments of the Participants (or, at any time after the Commitments of the
Participants shall have expired or terminated, the percentage which the
aggregate amount of such Participant's Participation Interest then outstanding
constitutes of the aggregate amount of the Participation Interests then
outstanding).

     "Commitment Period" means the period from and including the Effective Date
      -----------------
to but not including the earlier of the Completion Date or the Outside
Completion Date, or such earlier date on which the Commitments shall terminate
as provided in the Operative Documents or such later date as may be provided for
the Completion of construction in the Construction Agency Agreement due to the
existence of a Force Majeure Event.

                                    [7-A]-6
<PAGE>

     "Completion" means such time as (i) the conditions set forth in Section 7
      ----------                                                     ---------
of the Participation Agreement are satisfied and (ii) the Improvements are ready
------------------------------
for occupancy.

     "Completion Date" means, with respect to the Property, the date on which
      ---------------
Completion of the Improvements on such Property has occurred.

     "Compliance Certificate" means a certificate substantially in the form of
      ----------------------
Exhibit Q, properly completed and signed by a Responsible Officer of the Lessee.
---------

     "Condemnation" means any condemnation, requisition, confiscation, seizure
      ------------
or other taking or sale of the use, access, occupancy, easement rights or title
to the Property or any part thereof, wholly or partially (temporarily or
permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action.  A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title is taken.

     "Confidential Information" is defined in Section 15.13 of the Participation
      ------------------------                ----------------------------------
Agreement.
---------

     "Consent to Assignment" is defined in the definition of the term
      ---------------------
"Assignment of Lease".

     "Consent to Construction Agency Agreement Assignment" means the Consent
      ---------------------------------------------------
dated as of the Effective Date by the Lessee to the Construction Agency
Agreement Assignment in the form attached to the Construction Agency Agreement
Assignment.

     "Consolidated EBITDA" means, for any period, for the Lessee and its
      -------------------
Subsidiaries on a consolidated basis, an amount equal to the sum of (a)
Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) the amount
written off in connection with In-Process Research & Development related to the
Meridian Acquisition in the second fiscal quarter of year 2000, (f) the charge
taken in the fourth fiscal quarter of year 2000 in connection with DSS, and (g)
the amount of any charges taken in connection with In-Process Research &
Development associated with Acquisitions (other than any charge included in
clause (e) above) provided that (i) any such charges are taken during the fiscal
                  --------
quarter in which the related Acquisition was completed, and (ii) for purposes of
calculating In-Process Research & Development charges under this clause (g), the
                                                                 ----------
aggregate amount of any such charges does not exceed $100,000,000 from and after
the First Amendment Effective Date; provided that; in respect of any period (or
                                    --------
partial period) prior to the Maxtor Merger Effective Time, "Consolidated EBITDA"
shall be determined solely in respect of the DSS Business on a stand-alone
basis, based upon the then-current DSS Combined Financial Statements.

     "Consolidated Funded Indebtedness" means, as of any date of determination,
      --------------------------------
for the Lessee and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations and liabilities, whether current
or long-term, for borrowed money (including obligations under the Loan Documents
to the extent consisting of principal), (b) that portion of obligations with
respect to Capital Leases that would in conformity with GAAP be

                                    [7-A]-7
<PAGE>

capitalized on the consolidated balance sheet of the Lessee and its
Subsidiaries, and (c) Synthetic Lease Obligations; provided that in respect of
                                                   --------
any date prior to the Maxtor Merger Effective Time, "Consolidated Funded
Indebtedness" shall be determined solely in respect of the DSS Business on a
stand-alone basis, based upon the then-current DSS Combined Financial
Statements.

     "Consolidated Interest Charges" means, for any period, for the Lessee and
      -----------------------------
its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses payable by the Lessee and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, (b) the portion of rent
payable by the Lessee and its Subsidiaries with respect to such period under
Capital Leases that is treated as interest in accordance with GAAP and (c) the
portion of rent under any Synthetic Lease Obligation that would be treated as
interest in accordance with GAAP if the Synthetic Lease Obligation were treated
as a Capital Lease under GAAP; provided that in respect of any date prior to the
                               --------
Maxtor Merger Effective Time, "Consolidated Interest Charges" shall be
determined solely in respect of the DSS Business on a stand-alone basis, based
upon the then-current DSS Combined Financial Statements.

     "Consolidated Net Income" means, for any period, for the Lessee and its
      -----------------------
Subsidiaries on a consolidated basis, the net income of the Lessee and its
Subsidiaries from continuing operations after extraordinary items for that
period after excluding the Maxtor Merger Net Charge in the case of the period in
which it is recorded; provided that in respect of any period (or partial period)
                      --------
prior to the Maxtor Merger Effective Time, "Consolidated Net Income" shall be
determined solely in respect of the DSS Business on a stand-alone basis, based
upon the then-current DSS Combined Financial Statements.

     "Consolidated Tangible Net Worth" means, as of any date of determination,
      -------------------------------
for the Lessee and its Subsidiaries on a consolidated basis, Shareholders'
Equity of the Lessee and its Subsidiaries on that date minus the Intangible
Assets of the Lessee and its Subsidiaries on that date provided that in respect
                                                       --------
of any date prior to the Maxtor Merger Effective Time, "Consolidated Tangible
Net Worth" shall be determined solely in respect of the DSS Business on a stand-
alone basis, based upon the then-current DSS Combined Financial Statements.

     "Construction Agency Agreement" means the Construction Agency Agreement,
      -----------------------------
dated as of the Effective Date, between the Original Lessor and the Construction
Agent, in the form of Exhibit M to the Participation Agreement, as the rights of
the Original Lessor thereunder have been assigned to the Lessor as of July 12,
2000.

     "Construction Agency Agreement Assignment" means the Assignment of
      ----------------------------------------
Construction Agency Agreement, dated as of the Effective Date, from the Original
Lessor to the Original Agent, for the benefit of the Participants, in the form
of Exhibit N to the Participation Agreement, as the respective rights and
   ----------------------------------------
obligations of the Original Lessor and the Original Agent thereunder have been
further assigned to the Lessor and the Agent as of July 12, 2000.

     "Construction Agency Agreement Event of Default" means a "Construction
      ----------------------------------------------
Agency Agreement Event of Default" as defined in Section 5.1 of the Construction
                                                 -------------------------------
Agency Agreement.
----------------

                                    [7-A]-8
<PAGE>

     "Construction Agent" means the Lessee, as construction agent under the
      ------------------
Construction Agency Agreement.

     "Construction Commencement Date" is defined in Section 2.3 of the
      ------------------------------                ------------------
Construction Agency Agreement.
-----------------------------

     "Construction Period" means, with respect to the Property, the period
      -------------------
commencing on the Construction Commencement Date and ending on the earlier of
the Completion Date and the Outside Completion Date for such Property.

     "Contractual Obligation" means, as to any Person, any provision of any
      ----------------------
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its property is bound.

     "Covered Liabilities" is defined in Section 11.6 of the Participation
      -------------------                ---------------------------------
Agreement.
---------

     "Convertible Subordinated Debentures" means the 7% Convertible Subordinated
      -----------------------------------
Notes due 2004 issued by the Lessee pursuant to the Indenture dated as of August
1, 1997 and the Supplemental Indenture dated as of August 1, 1997 between the
Lessee and LaSalle National Trust Company, N.A., as Trustee.

     "DSS" means DLT and Storage Systems Group, a reportable business segment of
      ---
the Lessee, as indicated in the Lessee's quarterly report filed with the
Securities and Exchange Commission on form 10-Q on or about February 14, 2001.

     "DSS Business" means, collectively, all businesses and activities of the
      ------------
Lessee and its Subsidiaries, other than the HDD Business.

     "DSS Combined Financial Statements" means, collectively, the annual or
      ---------------------------------
quarterly (as the case may be) condensed combined balance sheet and statements
of income and cash flow in respect of DSS on a stand-alone basis, prepared in a
manner and in a form consistent with those contained in the Lessee's 2000 10-K
and December 31, 2000 10-Q filings that were filed with the Securities and
Exchange Commission on or about June 26, 2000 and February 14, 2000,
respectively.

     "Deed" is defined in Section 6.1(e) of the Participation Agreement,
      ----                ---------------------------------------------
together with the quitclaim deed delivered by the Original Lessor to the Lessor
as of July 12, 2000.

     "Default" means any event or condition which, with the lapse of time or the
      -------
giving of notice, or both, would constitute an Event of Default.

     "Defaulted Amount" is defined in Section 11.7 of the Participation
      ----------------                ---------------------------------
Agreement.
---------

     "Defaulting Participant" means, at any time, any of the Participants which
      ----------------------
at such time has (i) failed to make a payment when due to the Lessor equal to
its Commitment Percentage of an Advance, (ii) has been notified of such failure
by the Lessor, and (iii) has not cured such failure by making such payment,
together with interest at the Late Payment Rate.

     "Depositary Bank" is defined in Section 1 of the Cash Collateral Agreement.
      ---------------                ------------------------------------------

                                    [7-A]-9
<PAGE>

     "Designated Payment Date" means the Expiration Date, the Termination Date
      -----------------------
or other date of termination of the Lease.

     "Disclosure Letter" means the letter from the Lessee to the Lessor and the
      -----------------
Agent, dated the Effective Date, which identifies itself as the "Disclosure
Letter" under the Participation Agreement.

     "Disposition" or "Dispose" means the sale, transfer, License Disposition or
      -----------      -------
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal with
or without recourse of any notes or accounts receivable or any rights and claims
associated therewith.

     "Dollars" and "$" mean dollars in lawful currency of the United States of
      -------       -
America.

     "Effective Date" means August 22, 1997.
      --------------

     "Employee Benefit Plan" means any employee benefit plan within the meaning
      ---------------------
of Section 3(3) of ERISA maintained or contributed to by the Lessee or any ERISA
Affiliate, other than a Multiemployer Plan.

     "End of the Term Report" is defined in Section 13.2 of the Participation
      ----------------------                ---------------------------------
Agreement.
---------

     "Environmental Audit" means a Phase One environmental site assessment (the
      -------------------
scope and performance of which meets or exceeds ASTM Standard Practice E1527-93
Standard Practice for Environmental Site Assessments:  Phase One Environmental
Site Assessment Process) of the Property to be leased by the Lessor on the
Closing Date or of the Property to be remarketed under the Remarketing Option
under the Lease.

     "Environmental Certificate" is defined in Section 6.1 of the Participation
      -------------------------                --------------------------------
Agreement.
---------

     "Environmental Law" means, whenever enacted or promulgated, any Federal,
      -----------------
state, county or local law, statute, ordinance, rule, regulation, license,
permit, authorization, approval, covenant, criteria, guideline, administrative
or court order, judgment, decree, injunction, code or requirement or any
agreement with a Governmental Authority:

          (i)   relating to pollution (or the cleanup, removal, remediation or
     encapsulation thereof, or any other response thereto), or the regulation or
     protection of human health, safety or the environment, including air,
     water, vapor, surface water, groundwater, drinking water, land (including
     surface or subsurface), plant, aquatic and animal life, or

          (ii)  concerning exposure to, or the use, containment, storage,
     recycling, treatment, generation, discharge, emission, Release or
     threatened Release, transportation, processing, handling, labeling,
     containment, production, disposal or remediation of any Hazardous
     Substance, Hazardous Condition or Hazardous Activity; in each case as
     amended and as now or hereafter in effect, and any common law or equitable
     doctrine (including, without limitation, injunctive relief and tort
     doctrines such as negligence, nuisance, trespass and strict liability) that
     may impose liability or obligations for injuries (whether personal or
     property) or damages due to or threatened as a result of the presence of,
     exposure to, or ingestion of, any Hazardous Substance, whether such common
     law or

                                   [7-A]-10
<PAGE>

     equitable doctrine is now or hereafter recognized or developed. Applicable
     laws include, but are not limited to, CERCLA; the Resource Conservation and
     Recovery Act of 1976, 42 U.S.C. (S) 6901 et seq.; the Federal Water
     Pollution Control Act, 33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42
     U.S.C. (S)(S) 7401 et seq.; the National Environmental Policy Act, 42
     U.S.C. (S) 4321; the Refuse Act, 33 U.S.C. (S)(S) 401 et seq.; the
     Hazardous Materials Transportation Act of 1975, 49 U.S.C. (S)(S) 1801-1812;
     the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601 et seq.; the
     Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. (S)(S) 136 et
     seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f et seq.; and the
     Occupational Safety and Health Act of 1970, each as amended and as now or
     hereafter in effect, and their state and local counterparts or equivalents,
     including any regulations promulgated thereunder.

     "Environmental Violation" means any activity, occurrence or condition or
      -----------------------
omission that violates or results in non-compliance with any Environmental Law.

     "Equipment" means equipment, apparatus, furnishings, fittings and personal
      ---------
property of every kind and nature whatsoever purchased by the Lessor using the
proceeds of the Participation Interests in the Advances now or subsequently
attached to, contained in or used or usable in any way in connection with any
operation or letting of the Property, including but without limiting the
generality of the foregoing, all semiconductor manufacturing equipment, screens,
awnings, shades, blinds, curtains, draperies, artwork, carpets, rugs, storm
doors and windows, shelving, counters, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilation, air conditioning and air-cooling apparatus, refrigerating, and
incinerating equipment, escalators, elevators, loading and unloading equipment
and systems, cleaning systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae), televisions,
computers, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, appliances, fittings and fixtures of every kind and
description.

     "Equipment Schedule" means each Equipment Schedule in the form of Exhibit B
      ------------------                                               ---------
to the Lease.
------------

     "Equity Securities" of any Person means (a) all common stock, preferred
      -----------------
stock, participations, shares, partnership interests or other equity interests
in such Person (regardless of how designated and whether or not voting or non-
voting) and (b) all warrants, options and other rights to acquire any of the
foregoing, other than convertible debt securities which have not been converted
into common stock, preferred stock, participations, shares, partnership
interests or other equity interests in any such Person.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended from time to time or any successor Federal statute.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
      ---------------
under common control with the Lessee within the meaning of Sections 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

                                   [7-A]-11
<PAGE>

     "ERISA Group" means the Lessee and all members of a controlled group of
      -----------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Lessee, are treated as a single employer
under Section 414 of the Code.

     "Eurocurrency Reserve Requirements" means, for any day as applied to an
      ---------------------------------
Advance, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.

     "Eurodollar Rate" means, with respect to each day during each Interest
      ---------------
Period, the rate per annum determined by the Agent to be the offered rate per
annum at which deposits in Dollars appear with respect to such Interest Period
on the Reuters Screen LIBOR Page (or any successor page), or if such offered
rate is not available, then the rate per annum at which deposits in Dollars
appear with respect to such Interest Period on the Telerate Page 3750 (or any
successor page) in each case as of 11:00 a.m. (London time), two (2) Business
Days prior to the beginning of such Interest Period or in the event that the
foregoing offered rates are not available, then the average (rounded upward to
the nearest whole multiple of one sixteenth of one percent per annum, if such
average is not such a multiple) of the respective rates notified to the Agent by
each of the Participants as the rates at which such Participant's Funding Office
is offered Dollar deposits at or about 11:00 a.m. (London time), two (2)
Business Days prior to the beginning of such Interest Period in the interbank
Eurodollar market for delivery on the first day of such Interest Period for the
number of days comprised therein in an amount comparable to the amount of the
Advances estimated to be outstanding during such Interest Period.

     "Eurodollar Rate Advance" means on Advance bearing interest or Yield
      -----------------------
determined with reference to the Eurodollar Rate as provided in the
Participation Agreement.

     "Event of Default" means a Lease Event of Default, a Construction Agency
      ----------------
Agreement Event of Default or a Guarantee Event of Default.

     "Excepted Payments" means:
      -----------------

          (a)  all indemnity payments (including indemnity payments made
     pursuant to Section 13 of the Participation Agreement) to which the Lessor,
                 -----------------------------------------
     or any of its Affiliates, agents, officers, directors or employees is
     entitled;

          (b)  any amounts (other than Basic Rent or amounts payable by Lessee
     pursuant to Section 16.2, Section 16.3, Section 16.4 or Articles XVII, XX
                 -------------------------------------------------------------
     or XXII of the Lease) payable under any Operative Document to reimburse the
     --------------------
     Lessor or any of its respective Affiliates (including the reasonable
     expenses of the Lessor incurred in connection with any such payment) for
     performing or complying with any of the obligations of the Lessee under and
     as permitted by any Operative Document, except to the extent that one or
     more Participants have indemnified the Lessor with respect thereto pursuant
     to the Participation Agreement;

                                   [7-A]-12
<PAGE>

          (c) any amount payable to the Lessor by any Participant or transferee
     permitted under the Operative Documents of the interest of the Lessor as
     the purchase price of such Participant's Participation Interest;

          (d) any insurance proceeds (or payments with respect to risks self-
     insured or policy deductibles) under liability policies other than such
     proceeds or payments payable to the Agent or the Lessor;

          (e) any insurance proceeds under policies maintained by the Lessor;

          (f) Transaction Expenses or other amounts or expenses paid or payable
     to or for the benefit of the Lessor;

          (g) all right, title and interest of the Lessor to the Property or any
     portion thereof or any other property to the extent any of the foregoing
     has been released from the Lien of the Mortgage, the Assignment of Lease
     and the Construction Agency Agreement Assignment pursuant to the terms
     thereof following the payment of the Participant Balances of all of the
     Participants and all amounts due and owing to the Agent; and

          (h) any payments in respect of interest to the extent attributable to
     payments referred to in clauses (a) through (g) above.
                             -----------------------

     "Excess Investment" of the Lessor means the excess (if any) of the
      -----------------
outstanding Participant Balance of the Lessor in the Property from time to time
over the amount that would have been the Lessor's Participant Balance if, in
connection with all Advances actually made under the Participation Agreement,
all Participants had paid to the Lessor an amount equal to such Advances times
their respective Commitment Percentages, as such excess may be determined by the
Lessor.  Absent the existence of a Defaulting Participant, a failure by
Participant to make a payment required by Section 3.4 of the Participation
                                          --------------------------------
Agreement or some other unexpected contingency, it is expected that the Lessor
---------
will have no Excess Investment.

     "Excess Proceeds" means the excess, if any, of the aggregate of all awards,
      ---------------
compensation or insurance proceeds payable in connection with a Casualty or
Condemnation over the Asset Termination Value paid by the Lessee pursuant to
Articles XIV and XV of the Lease with respect to such Casualty or Condemnation.
--------------------------------

     "Excess Reimbursement" is defined in Section 11.6 of the Participation
      --------------------                ---------------------------------
Agreement.
---------

     "Existing Financing" means the debt and equity financing provided to the
      ------------------
Existing Owner to purchase and/or construct the Land Interest and any
Improvements.

     "Existing Participants" means the lenders and holders of equity interests
      ---------------------
under the Existing Financing.

     "Existing Owner" means Schuck Holdings LLC, a Colorado limited liability
      --------------
company.

     "Expiration Date" means the later of (i) April 19, 2003, or (ii) the
      ---------------
scheduled expiration of any Renewal Term, if any.

                                   [7-A]-13
<PAGE>

     "Expiration Date Purchase Obligation" means the Lessee's obligation,
      -----------------------------------
pursuant to Section 20.2 of the Lease, to purchase all (but not less than all)
            -------------------------
of the Property on the Expiration Date.

     "Fair Market Sales Value" means, with respect to the Property, the amount,
      -----------------------
which in any event shall not be less than zero, that would be paid in cash in an
arm's-length transaction between an informed and willing purchaser and an
informed and willing seller, neither of whom is under any compulsion to purchase
or sell, respectively, for the ownership of the Property.  The Fair Market Sales
Value of the Property shall be determined based on the assumption that, except
for purposes of Article XVII of the Lease and Section 13.2 of the Participation
                -------------------------     ---------------------------------
Agreement, the Property is in the condition and state of repair required under
---------
Section 10.1 of the Lease and the Lessee is in compliance with the other
-------------------------
requirements of the Operative Documents.

     "Federal Funds Effective Rate" means, for any day, an interest rate per
      ----------------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of quotations for such day on such transaction received by the Agent
from three Federal funds brokers of recognized standing selected by it.

     "Fee Letter" means the letter from the Lessee to the Agent, The Bank of
      ----------
Nova Scotia and KeyBank National Association, dated as of July 12, 2000.

     "Financial Statements" means, with respect to any accounting period for any
      --------------------
Person, consolidated statements of income, shareholders' equity and cash flows
of such Person for such period, and a balance sheet of such Person as of the end
of such period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.

     "First Amendment Effective Date" means March 28, 2001.
      ------------------------------

     "Fixtures" means all fixtures relating to the Improvements, including all
      --------
components thereof, located in or on the Improvements which are acquired with
Advances and all replacements and Modifications thereto, other than Lessee's
Property.

     "Force Majeure Event" means with respect to the Property any event (the
      -------------------
existence or potentiality of which was not known and could not have been
discovered through the exercise of due diligence by the Lessee prior to the
Closing Date) beyond the reasonable control of the Construction Agent, other
than a Casualty or Condemnation, including, but not limited to, strikes,
lockouts, adverse soil conditions, acts of God, adverse weather conditions,
inability to obtain labor or materials, government activities, civil commotion
and enemy action; but excluding any event, cause or condition that results from
the Construction Agent's financial condition or failure to pay or any event,
cause or condition which could be remedied through the exercise of commercially
reasonable efforts or the commercially reasonable expenditure of funds.

     "Funding Date" means any Business Day on which Advances are funded pursuant
      ------------
to the Participation Agreement.

                                   [7-A]-14
<PAGE>

     "Funding Losses" means with respect to any repayment, prepayment or
      --------------
conversion of any Eurodollar Rate Advance, the amount (which shall not be less
than zero) computed in accordance with the following formula:

     Funding Losses      =        (R - T x P x D)
                                  ---------------
                                        360

     Where     R         =    the interest rate or Yield that was or would have
                              been applicable to such Eurodollar Rate Advance;

               T         =    the Eurodollar Rate for the date of such
                              repayment, prepayment, conversion, failure to
                              borrow, failure to contribute or failure to
                              convert for new Eurodollar Rate Advances, of the
                              same principal amount or equity contribution made
                              for an assumed Interest Period (the "Remaining
                              Period") which begins on the date of such
                              repayment, prepayment, conversion, failure to
                              borrow, failure to contribute or failure to
                              convert and ends on the last day of the actual
                              Interest Period that was or would have been
                              applicable to the Eurodollar Rate Advance that was
                              repaid, prepaid or converted or that was not
                              borrowed, contributed or converted;

               P         =    the principal amount of the Eurodollar Rate
                              Advance that was repaid, prepaid or converted or
                              that was not borrowed, contributed or converted;
                              and

               D         =    the number of days in the Remaining Period.

     "Funding Office" means the office of each Participant identified on
      --------------
Schedule II to the Participation Agreement as its Funding Office.
------------------------------------------

     "Funding Request" is defined in Section 3.4 of the Participation Agreement.
      ---------------                ------------------------------------------

     "GAAP" means generally accepted accounting principles set forth in the
      ----
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession, that are
applicable to the circumstances as of the date of determination, consistently
applied.  If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Operative Document, and either
the Lessee or the Required Participants shall so request, the Agent, the
Participants and the Lessee shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Participants), provided that,
                                                             --------
until so amended, (a) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) the Lessee shall
provide to the Agent and the Participants financial statements and other
documents required under the Operative Documents or as reasonably requested
thereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

                                   [7-A]-15
<PAGE>

     "Governmental Action" means all permits, authorizations, registrations,
      -------------------
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of the Property.

     "Governmental Authority" means (a) any international, foreign, federal,
      ----------------------
state, county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.

     "Gross Proceeds" is defined in Section 22.1(k) of the Lease.
      --------------                ----------------------------

     "Guarantee" means the Guarantee executed by the Guarantor in favor of the
      ---------
Original Agent, for the benefit of the Participants, in the form of Exhibit O to
                                                                    ------------
the Participation Agreement, as the rights of the Original Agent thereunder have
---------------------------
been assigned to the Agent as of July 12, 2000.

     "Guarantee Event of Default" is defined in the Guarantee.
      --------------------------

     "Guarantor" means Quantum Corporation, a Delaware corporation.
      ---------

     "Guaranty Obligation" means, as to any Person, any (a) guaranty by such
      -------------------
Person of Indebtedness of, or other obligation payable or performable by, any
other Person or (b) assurance, agreement, letter of responsibility, letter of
awareness, undertaking or arrangement given by such Person to an obligee of any
other Person with respect to the payment or performance of an obligation by, or
the financial condition of, such other Person, whether direct, indirect or
contingent, including any purchase or repurchase agreement covering such
obligation or any collateral security therefor, any agreement to provide funds
(by means of loans, capital contributions or otherwise) to such other Person,
any agreement to support the solvency or level of any balance sheet item of such
other Person or any "keep-well" or other arrangement of whatever nature, in each
such case, given for the purpose of assuring or holding harmless such obligee
against loss with respect to any obligation of such other Person; provided,
                                                                  --------
however, that the term Guaranty Obligation shall not include endorsements of
-------
instruments for deposit or collection in the ordinary course of business.  The
amount of any Guaranty Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, covered by such Guaranty Obligation or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined by
the Person in good faith.

     "Hazardous Activity" means any activity, process, procedure or undertaking
      ------------------
that directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Substance into the environment (including air, water
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life); (iii) involves the containment or
storage of any Hazardous Substance; or (iv) would be regulated as hazardous
waste treatment, storage or disposal within the meaning of any Environmental
Law.

                                   [7-A]-16
<PAGE>

     "Hazardous Condition" means any condition that violates or threatens to
      -------------------
violate, or that results in or threatens noncompliance with, any Environmental
Law.

     "Hazardous Substance" means any of the following:  (i) any petroleum or
      -------------------
petroleum product, explosives, radioactive materials, asbestos, formaldehyde,
polychlorinated biphenyls, lead and radon gas; (ii) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste or pollutant, in each case whether naturally occurring, man-made or the
by-product of any process, that is toxic, harmful or hazardous to the
environment or human health or safety; or (iii) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas, medical
waste or pollutant that would support the assertion of any claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law.

     "HDD" means Hard Disk Drive Group, a reportable business segment of the
      ---
Lessee, as indicated in the Lessee's quarterly report filed with the Securities
and Exchange Commission on form 10-Q on or about February 14, 2001.

     "HDD Assets" has the meaning specified in Section 4.14 of the HDD General
      ----------                               -------------------------------
Assignment Agreement, subject to Section 5.16(d) of the HDD General Assignment
--------------------             ---------------------------------------------
Agreement.
---------

     "HDD Business" has the meaning specified in Section 4.16 of the HDD General
      ------------                               -------------------------------
Assignment Agreement.
--------------------

     "HDD Convertible Debt Portion" means the pro rata portion described on
      ----------------------------
Schedule 1 attached hereto.
--------------------------

     "HDD General Assignment Agreement" means that General Assignment and
      --------------------------------
Assumption Agreement dated as of the Maxtor Merger Effective Date among the
Lessee, Spinco and Maxtor.

     "HDD Redemption" means the redemption by the Lessee of all or substantially
         -----------
all of the outstanding HDD common stock, par value $0.01 per share, of the
Lessee, in exchange for common stock of Spinco.

     "HDD Separation Agreement" means that Separation and Redemption Agreement
      ------------------------
dated as of the Maxtor Merger Effective Date, among the Lessee, Spinco and
Maxtor.

     "Impositions" means, except to the extent described in the following
      -----------
sentence, any and all liabilities, losses, expenses, costs, charges and Liens of
any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings ("Taxes") including (i) real and personal property
                              -----
taxes, including personal property taxes on any property covered by the Lease
that is classified by Governmental Authorities as personal property, and real
estate or ad valorem taxes in the nature of property taxes; (ii) sales taxes,
use taxes and other similar taxes (including rent taxes and intangibles taxes);
(iii) any excise taxes; (iv) real estate transfer taxes, mortgage taxes,
conveyance taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, privilege
and doing business taxes, license and registration fees; (vi) assessments on the
Property, including all assessments for public improvements or benefits, whether
or not such improvements are commenced or completed within the Term; and (vii)
any tax, Lien, assessment or charge asserted, imposed or assessed by the PBGC or
any governmental authority succeeding to or performing functions similar to, the
PBGC, and in each case all interest, additions to tax and penalties thereon,
which

                                   [7-A]-17
<PAGE>

at any time prior to, during or with respect to the Term or in respect of any
period for which the Lessee shall be obligated to pay Supplemental Rent, may be
levied, assessed or imposed by any Governmental Authority upon or with respect
to (a) the Property or any part thereof or interest therein; (b) the purchase,
sale, leasing, financing, refinancing, demolition, construction, alteration,
substitution, subleasing, assignment, control, condition, occupancy, servicing,
maintenance, repair, ownership, possession, activity conducted on, delivery,
insuring, use, operation, improvement, transfer of title, return or other
disposition of the Property or any part thereof or interest therein; (c) the
Participation Interests with respect to the Property or any part thereof or
interest therein; (d) the rentals, receipts or earnings arising from the
Property or any part thereof or interest therein; (e) the Operative Documents,
the performance thereof, or any payment made or accrued pursuant thereto; (f)
the income or other proceeds received with respect to the Property or any part
thereof or interest therein upon the sale or disposition thereof; (g) any
contract (including the Construction Agency Agreement) relating to the
construction, acquisition or delivery of the Improvements or any part thereof or
interest therein; or (h) otherwise in connection with the transactions
contemplated by the Operative Documents.

     The term "Imposition" shall not mean or include the following (except to
the extent that such Taxes apply in consequence of the Lease being treated other
than as a loan for purposes of such Taxes and exceed the amount of such Taxes
that would have applied if the Lease had been so treated as a loan:

          (1)  Taxes and impositions (other than Taxes that are, or are in the
     nature of, sales, use, transfer or property taxes) that are imposed on an
     Indemnitee by the United States federal or any foreign government that are
     based on or measured by the net income (including taxes based on capital
     gains and minimum taxes) of such Person; provided, that this clause (1)
                                                                  ----------
     shall not be interpreted to prevent a payment from being made on an After
     Tax Basis if such payment is otherwise required to be so made;

          (2)  Taxes and impositions (other than Taxes that are, or are in the
     nature of, sales, use, transfer or property taxes) that are imposed by any
     state or local jurisdiction or taxing authority within any state or local
     jurisdiction and that are franchise taxes or are based upon or measured by
     net income or net receipts; provided, that this clause (2) shall not be
                                                     ----------
     interpreted to prevent a payment from being made on an After Tax Basis if
     such payment is otherwise required to be so made (anything to the contrary
     notwithstanding, nothing in the Operative Documents shall be construed to
     impose upon Lessee any liability for Taxes imposed upon an Indemnitee to
     the extent imposed with respect to any activities of such Indemnitee other
     than under the transactions contemplated by the Operative Documents);

          (3)  any Taxes or imposition for so long as, but only for so long as,
     it is being contested in accordance with the provisions of Section 13.5 of
                                                                ---------------
     the Participation Agreement;
     ---------------------------

          (4)  any Taxes which are imposed on an Indemnitee as a result of the
     gross negligence or willful misconduct of such Indemnitee itself (as
     opposed to gross negligence or willful misconduct imputed to such
     Indemnitee), but not Taxes imposed as a result of ordinary negligence of
     such Indemnitee; or

                                   [7-A]-18
<PAGE>

          (5)  any Taxes or imposition to the extent, but only to such extent,
     it relates to any act, event or omission that occurs after the termination
     of the Lease and redelivery or sale of the Property in accordance with the
     terms of the Lease (but not any Taxes or imposition that relates to any
     period prior to such termination and redelivery).

Any Taxes excluded from the defined term "Imposition" in any one of the
foregoing clauses (1) through (4) shall not be construed as constituting an
          -----------------------
Imposition by any provision of any other of the aforementioned clauses.  For
purposes of the foregoing, taxes based upon or measured by net income shall be
deemed to include, without limitation, any Imposition that qualifies as an
"income tax" within the meaning of United States Treasury Regulation Section
1.901-2.

     "Improvements" means all buildings, structures, Fixtures, Equipment, and
      ------------
other improvements of every kind existing on the Land Interest Acquisition Date
and at any time and from time to time and either constructed pursuant to the
Construction Agency Agreement or those purchased with amounts advanced by the
Participants pursuant to the Participation Agreement (or those becoming the
property of the Lessor pursuant to Article XI of the Lease) on or under the Land
                                   -----------------------
Interest, together with any and all appurtenances to such buildings, structures,
or improvements, including sidewalks, utility pipes, conduits and lines, parking
areas and roadways, and including all Modifications and other additions to or
changes in the Improvements at any time, other than Lessee's Property.

     "Indebtedness" means, as to any Person at any date of determination, all
      ------------
items which would, in conformity with GAAP, be classified as liabilities on a
balance sheet of such Person as at such date excluding (i) trade and other
                                             ---------
accounts payable in the ordinary course of business in accordance with customary
trade terms and which are not overdue for a period of more than sixty (60) days
(unless contested in good faith by the Lessee or any Subsidiary), (ii) deferred
taxes, and (iii) accrued interest and expenses, except to the extent
capitalized, and in any event including:
                              ---------

          (a)  all obligations of such Person for borrowed money and all
     obligations of such Person evidenced by bonds, debentures, notes or other
     similar instruments;

          (b)  any direct or contingent obligations of such Person arising under
     letters of credit (including standby and commercial), banker's acceptances,
     bank guaranties, surety bonds and similar instruments;

          (c)  whether or not so included as liabilities in accordance with
     GAAP, net obligations under any Swap Contract in an amount equal to (x) if
     such Swap Contract has been closed out, the termination value thereof, or
     (y) if such Swap Contract has not been closed out, the mark-to-market value
     thereof determined on the basis of readily available quotations provided by
     any recognized dealer in such Swap Contract;

          (d)  whether or not so included as liabilities in accordance with GAAP
     and whether with or without recourse, all obligations of such Person to pay
     the deferred purchase price of property or services, and indebtedness
     (excluding prepaid interest thereon) secured by a Lien on property owned or
     being purchased by such Person (including indebtedness arising under
     conditional sales or other title retention agreements);

                                   [7-A]-19
<PAGE>

          (e)  lease payment obligations under Capital Leases or Synthetic Lease
     Obligations; and

          (f)  all Guaranty Obligations of such Person in respect of any of the
     foregoing obligations of any other Person.

     For all purposes of the Operative Documents, the Indebtedness of any Person
shall include, at any such time as such partnership or joint venture is not
Solvent, the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person (subject to customary recourse
exceptions acceptable to the Required Participants).

     "Indemnitee" means the Lessor, the Agent, the Participants, their
      ----------
respective Affiliates and their respective successors, assigns, directors,
shareholders, partners, officers, employees and agents.

     "In-Process Research & Development" means purchased in-process research and
      ---------------------------------
development, as specified on the Lessee's statement of income in accordance with
GAAP.

     "Insurance Requirements" means all terms and conditions of any insurance
      ----------------------
policy required by the Lease to be maintained by the Lessee, and all
requirements of the issuer of any such policy.

     "Intangible Assets" means assets that are required to be disclosed as
      -----------------
intangible assets in accordance with GAAP on the Lessee's balance sheet,
including customer lists, goodwill, computer software, copyrights, trade names,
trade marks, patents, unamortized deferred charges, unamortized debt discount
and capitalized research and development costs.

     "Interest Payment Advance" means any Advance made to fund the payment of
      ------------------------
interest or Yield accruing on the Advances during the Construction Period.

     "Interest Period" means, with respect to any Advance:
      ---------------

          (a)  during the Syndication Period:

               (i)  initially, the period commencing on the funding with respect
          to such Advance and ending one (1) month thereafter; and

               (ii) thereafter, each period commencing on the last day of the
          next preceding Interest Period applicable to such Advance and ending
          one month thereafter; and

          (b)  subsequent to the Syndication Period, each period commencing on
     the last day of the next preceding Interest Period applicable to such
     Advance and ending one, two (2), three (3) or six (6) months thereafter, as
     selected by the Lessee by irrevocable notice to the Lessor and the Agent
     not less than three (3) Business Days prior to the last day of the then
     current Interest Period with respect thereto; provided that, the foregoing
     provisions relating to Interest Periods are subject to the following:

                                   [7-A]-20
<PAGE>

               (i)    if any Interest Period would otherwise end on a day that
          is not a Business Day, such Interest Period shall be extended to the
          next succeeding Business Day unless the result of such extension would
          be to carry such Interest Period into another calendar month in which
          event such Interest Period shall end on the immediately preceding
          Business Day;

               (ii)   any Interest Period that would otherwise extend beyond the
          Expiration Date shall end on the Expiration Date;

               (iii)  any Interest Period that begins on the last Business Day
          of a calendar month (or on a day for which there is no numerically
          corresponding day in the calendar month at the end of the Interest
          Period) shall end on the last Business Day of a calendar month;

               (iv)   the Lessee shall select Interest Periods so as not to
          require a payment or prepayment of any Advance during an Interest
          Period for such Advance; and

               (v)    if the Lessee shall fail to notify the Lessor and the
          Agent of the next Interest Period, such Advance shall automatically
          convert to an Alternate Base Rate Advance on the last day of the
          current Interest Period therefor.

     "Investment" means, as to any Person, any investment by such Person,
      ----------
whether by means of the purchase or other acquisition of stock or other
securities of any other Person or by means of a loan, creating a debt, capital
contribution, guaranty or other debt or equity participation or interest in any
other Person.  For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment.

     "Investment Company Act" means the Investment Company Act of 1940, as
      ----------------------
amended, together with the rules and regulations promulgated thereunder.

     "Land Interest" means fee title to the parcel of real property described on
      -------------
Schedule 1 of the Lease Supplement and all Appurtenant Rights attached thereto.
----------------------------------

     "Land Interest Acquisition Cost" means, with respect to the Property, the
      ------------------------------
amount funded by the Lessor under the Participation Agreement as the purchase
price of the Land Interest as set forth in the Acquisition Request therefor,
including closing costs and fees in connection therewith.

     "Land Interest Acquisition Date" means the date on which the Lessor
      ------------------------------
acquires the Land Interest, which date shall be specified in the Acquisition
Request.

     "Late Payment Rate" means (a) for each day (other than as set forth in
      -----------------
clause (b) of this definition) the Federal Funds Effective Rate or (b) for the
----------
purpose of computing interest on past due payments for each day following the
fifth day after such payments first became due, a rate of two percent (2%) per
annum in excess of the Alternate Base Rate then in effect; provided, the Late
Payment Rate shall not, notwithstanding anything to the contrary herein
contained, exceed the maximum rate of interest permitted by applicable law.

                                   [7-A]-21
<PAGE>

     "Lease" means the Original Lease as amended and restated by the Amended and
      -----
Restated Master Lease, dated as of July 12, 2000, between the Lessor and the
Lessee, together with the Lease Supplement and all Equipment Schedules thereto.

     "Lease Balance" means, as of any date of determination, an amount equal to
      -------------
(i) the sum of the outstanding amount of the Advances, all accrued and unpaid
interest and Yield on the Advances, and all other amounts owing by the Lessee
under the Operative Documents, less (ii) the sum of all payments received by the
Lessor, the Agent or the Participant on account of payments to reduce the Lease
Balance, including reductions resulting from payments by the Lessor, the Lessee
and the Guarantor, proceeds from the sale of the Property and/or amounts
realized from the Collateral pursuant to the Cash Collateral Agreement.

     "Lease Default" means any event or condition which, with the lapse of time
      -------------
or the giving of notice, or both, would constitute a Lease Event of Default.

     "Lease Event of Default" is defined in Section 17.1 of the Lease.
      ----------------------                -------------------------

     "Lease Supplement" means the Lease Supplement substantially in the form of
      ----------------
Exhibit A to the Lease together with all attachments and schedules thereto, as
----------------------
such Lease Supplement may be supplemented, amended or modified from time to
time.

     "Lenders" means the lenders from time to time party to, and as defined in,
      -------
the Loan Documents.

     "Lessee" means Quantum Corporation, a Delaware corporation, as lessee under
      ------
the Lease, and its successors and assigns expressly permitted under the
Operative Documents.

     "Lessee's Property" is defined in Section 11.1 of the Lease.
      -----------------                -------------------------

     "Lessor" means SELCO Service Corporation, as successor in interest to the
      ------
Original Lessor in its capacity as Lessor under the Lease, and its successors
and assigns expressly permitted under the Operative Documents.

     "Lessor Financing Statements" means UCC financing statements appropriately
      ---------------------------
completed and executed for filing in the applicable jurisdiction in order to
protect the Lessor's interest under the Lease to the extent the Lease is a
security agreement.

     "Lessor Lien" means any Lien, true lease or sublease or disposition of
      -----------
title arising as a result of (a) any claim against the Lessor not resulting from
the transactions contemplated by the Operative Documents, (b) any act or
omission of the Lessor which is not required by the Operative Documents or is in
violation of any of the terms of the Operative Documents, (c) any claim against
the Lessor with respect to Taxes or Transaction Expenses against which Lessee is
not required to indemnify the Lessor, pursuant to Sections 9 or 13.5 of the
                                                  -------------------------
Participation Agreement or (d) any claim against the Lessor arising out of any
-----------------------
transfer by the Lessor of all or any portion of the interest of the Lessor in
the Property or the Operative Documents other than the transfer of title to or
possession of the Property by the Lessor pursuant to and in accordance with the
Lease or the Participation Agreement or pursuant to the exercise of the remedies
set forth in Article XVII of the Lease.
             -------------------------

                                   [7-A]-22
<PAGE>

     "Leverage Ratio" means, as of any date of determination, for the Lessee and
      --------------
its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the period of the
four fiscal quarters ending on, or ending most recently prior to, such date.

     "License Disposition" means, in respect of any patent, trademark,
      -------------------
copyright, mask work, trade secret or other intellectual property right owned or
held by the Lessee or any of its Subsidiaries (the "IP Holder") which is
                                                    ---------
material to the Lessee or any of its Subsidiaries (together, "Material IP"), (a)
                                                              -----------
the granting by the IP Holder of an exclusive license across all or
substantially all fields, uses or regions to any Person other than the Lessee or
another Subsidiary, (b) the granting of any license by the IP Holder that
conveys directly or indirectly to any Person other than the Lessee or its
Subsidiaries all or substantially all of the economic value of such Material IP,
or (c) the abandonment by the IP Holder of such Material IP.

     "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
      ----
arrangement (including in the nature of, cash collateral accounts or security
interests), encumbrance, lien (statutory or other), fixed or floating charge, or
other security interest of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable
Requirements of Law of any jurisdiction), including the interest of a purchaser
of accounts receivable.

     "Loan Documents" means (i) the Credit Agreement (3-Year), entered into as
      --------------
of April 19, 2000 and amended and restated as of the Restatement Date (as
defined therein), among the Lessee as borrower, Bank of America, N.A. as
administrative agent and letter of credit issuing lender, The Bank of Nova
Scotia and the other financial institutions party thereto, and each note, letter
of credit application, request for extension of credit, certificate, fee letter
and other instrument or agreement from time to time executed by the Lessee or
any of its Subsidiaries and delivered in connection with such agreement; and
(ii) the 364 Day Credit Agreement and each note, request for extension of
credit, certificate, fee letter and other instrument or agreement from time to
time executed by the Lessee or any of its Subsidiaries and delivered in
connection with such agreement.

     "Marketing Period" and "Remarketing Period" mean the period commencing on
      ----------------       ------------------
the date one hundred eighty (180) days prior to the Expiration Date and ending
on the Expiration Date or such other 180 day period as is referred to in Section
                                                                         -------
17.2(h) of the Lease.
--------------------

     "Material", "Materially", and "Material Adverse Effect" mean material to,
      --------    ----------        -----------------------
or a material adverse effect on, (i) the business, assets, operations or
financial or other condition of the Lessee or the Guarantor and their respective
Subsidiaries taken as a whole or, in respect of anytime prior to the Maxtor
Merger Effective Time, to the DSS Business on a stand-alone basis, (ii) the
ability of the Lessee or the Guarantor to perform its obligations under any of
the Operative Documents, (iii) the value or condition of the Property or the
Lessor's interests therein or title thereto, or (iv) the rights and remedies of
the Lessor, the Agent and the Participants under the Participation Agreement or
any other Operative Document taken as a whole.

     "Material Subsidiaries" means each Subsidiary of the Lessee which has
      ---------------------
assets with a total book value greater than ten percent (10%) of the
consolidated total assets of the Lessee and its

                                   [7-A]-23
<PAGE>

Subsidiaries, each determined as of the end of the fiscal quarter immediately
preceding the date of determination.

     "Maturity Date" means April 19, 2003, unless extended in accordance with
      -------------
the provisions of Section 3.7(b) of the Participation Agreement.
                  ---------------------------------------------

     "Maxtor" means Maxtor Corporation, a Delaware corporation.
      ------

     "Maxtor Merger" means the merger between Spinco and Maxtor, undertaken
      -------------
pursuant to the Maxtor Merger Agreement.

     "Maxtor Merger Agreement" means that Amended and Restated Agreement and
      -----------------------
Plan of Merger and Reorganization dated as of October 3, 2000, by and among the
Lessee, Spinco, Maxtor and Hawaii Acquisition Corporation, in substantially the
form attached to the Lessee's Form 8-K/A filed with the Securities and Exchange
Commission on or about December 14, 2000.

     "Maxtor Merger Documents" means the documents set forth on Schedule 1
      -----------------------                                   ----------
attached hereto under the caption "Maxtor Merger Documents" (each in a form
---------------
substantially identical to that filed as an exhibit to the Maxtor Merger S-4).

     "Maxtor Merger Effective Date" means the date of the effectiveness of the
      ----------------------------
Maxtor Merger.

     "Maxtor Merger Effective Time" means the time of the effectiveness of the
      ----------------------------
Maxtor Merger.

     "Maxtor Merger Net Charge" means an amount equal to the lesser of (i) the
      ------------------------
amount of the expense charge recorded by the Lessee in accordance with GAAP
(whether arising from discontinued operations, the restructuring of the
continuing DSS operations or the amortization of deferred compensation) in
either the first fiscal quarter of fiscal year 2002 or the fourth fiscal quarter
of fiscal year 2001, as the case may be, in connection with the Maxtor Merger
minus any gain recorded by the Lessee in accordance with GAAP in connection with
the sale of the HDD Business in such quarter and (ii) $75,000,000, but in any
event not less than $0.

     "Maxtor Merger S-4" means that Registration Statement on Form S-4 filed by
      -----------------
Maxtor with the Securities and Exchange Commission on or about December 11,
2000, as amended on or about (i) January 23, 2001, (ii) February 16, 2001 and
(iii) February 28, 2001, together with all exhibits and attachments thereto, and
as the prospectus contained in such Registration Statement was amended on or
about March 7, 2001.

     "Meridian Acquisition" means the acquisition by DSS of Meridian Data, Inc.,
      --------------------
which was completed on or about September 10, 1999.

     "MKE" means Matsushita-Kotobuki Electronics Industries, Ltd., a Japanese
      ---
corporation.

     "Modifications" is defined in Section 11.1(a) of the Lease.
      -------------                ----------------------------

     "Moody's" means Moody's Investors Service, Inc. and any successor thereto
      -------
that is a nationally-recognized rating agency.

                                   [7-A]-24
<PAGE>

     "Mortgage" means, with respect to the Property, a Construction Deed of
      --------
Trust, Security Agreement and Financing Statement substantially in the form
attached as Exhibit P to the Participation Agreement, made by the Original
            ----------------------------------------
Lessor in favor of a trustee for the Original Agent for the benefit of the
Participants and satisfactory in form and substance to the Agent and the
Required Participants in order to create a first priority mortgage lien on the
Lessor's fee interest in the Property and a first priority security interest in
the Equipment, as the respective rights and obligations of the Original Lessor
and the Original Agent thereunder have been assigned to the Lessor and the Agent
as of July 12, 2000.

     "Mortgage Documents" is defined in Section 6.1 of the Participation
      ------------------                --------------------------------
Agreement.
---------

     "Mortgage Taxes" is defined in Section 6.1 of the Participation Agreement.
      --------------                ------------------------------------------

     "Multiemployer Plan" means any employee benefit plan of the type described
      ------------------
in Section 4001(a)(3) of ERISA.

     "Net Cure Proceeds" is defined in Section 11.8 of the Participation
      -----------------                ---------------------------------
Agreement.
---------

     "Net Proceeds" means all amounts paid in connection with any Casualty or
      ------------
Condemnation, and all interest earned thereon, less the expense of claiming and
collecting such amounts, including all costs and expenses in connection
therewith for which the Agent or the Lessor is entitled to be reimbursed
pursuant to the Lease.

     "Net Sales Proceeds" means the Gross Proceeds actually received by the
      ------------------
Lessor upon any sale by the Lessor of any part of the Property pursuant to
Articles XVII or XXII of the Lease, including, without limitation, (i) any such
----------------------------------
payments made to the Lessor by the Lessee or any purchaser, (ii) any Shortfall
Amount paid to the Lessor by the Lessee, and (iii) any interest paid by the
Lessee to the Lessor on past due amounts under the Lease; but excluding any
payments applied by the Lessor to pay, or received by the Lessor as
reimbursement for, bona fide costs of the sale and further excluding any excess
net sales proceeds received from a purchaser that the Lessor is required to pay
over to the Lessee.  In the event that for any reason whatsoever, including a
default by the Lessee, the Lessor does not sell the Property pursuant to the
Lease on the Designated Payment Date, "Net Sales Proceeds" shall nonetheless
include any Shortfall Amount actually received by the Lessor.  Further, if the
Lessor does not sell the Property pursuant to the Lease, then "Net Sales
Proceeds" shall also include the excess, if any, of:

          (a)  all rents and all sales, condemnation and insurance proceeds
     actually received by the Lessor from any sale or lease after the Designated
     Payment Date of any interest in, or because of any subsequent taking or
     damage to, the Property; over

          (b)  the sum of (i) all costs of collecting the rents and proceeds
     described in the preceding clause (a) plus (ii) all ad valorem taxes,
                                ----------
     insurance premiums and other costs of every kind incurred by the Lessor
     with respect to the ownership, operation or maintenance of the Property.

However, for purposes of computing any excess described in the preceding
sentence, costs described in clause (b) shall not include the Lessor's general
                             ----------
overhead costs or any costs for which the Participants have already paid the
Lessor their Commitment Percentages thereof as required by Section 11.6 of the
                                                           -------------------
Participation Agreement.
-----------------------

                                   [7-A]-25
<PAGE>

     "Net Security Proceeds" means, with respect to any sale or issuance of any
      ---------------------
Equity Securities or other security by any Person (including in the case of the
Lessee, any sale or issuance of any Subordinated Debt), the aggregate
consideration received by such Person from such sale or issuance less the actual
                                                                 ----
amount of fees and commissions payable to Persons other than such Person or any
Affiliate of such Person.

     "Non-Consenting Participant" means any Participant which has denied, or is
      --------------------------
deemed to have denied, an Extension Request pursuant to Section 3.7 of the
                                                        ------------------
Participation Agreement.
-----------------------

     "Operative Documents" means the following:
      -------------------

          (a)  the Participation Agreement;

          (b)  the Lease and Lease Supplement;

          (c)  the Guarantee;

          (d)  the Property Purchase Agreement, the Assignment of Purchase
     Agreement and the Deed;

          (e)  the Construction Agency Agreement;

          (f)  the Assignment of Lease and each Supplement to the Assignment of
     Lease;

          (g)  the Consent to Assignment;

          (h)  the Equipment Schedules;

          (i)  the Mortgage;

          (j)  the Construction Agency Agreement Assignment;

          (k)  the Consent to Construction Agency Agreement Assignment;

          (l)  the Assignment of Construction Documents; and

          (m)  the Cash Collateral Agreement.

     "Ordinary Course Indebtedness" means:
      ----------------------------

          (a)  Indebtedness under the Loan Documents;

          (b)  intercompany Guaranty Obligations of the Lessee or any of its
     Subsidiaries guarantying Indebtedness otherwise permitted hereunder of the
     Lessee or any Subsidiary of the Lessee (other than Snap Appliances);

          (c)  Indebtedness arising from the honoring of a check, draft or
     similar instrument against insufficient funds or from the endorsement of
     instruments for collection in the ordinary course of the Lessee's or any
     Subsidiary's business;

                                   [7-A]-26
<PAGE>

          (d)    Permitted Swap Obligations; and

          (e)    Indebtedness of the Lessee or any of its Subsidiaries with
     respect to surety, appeal, indemnity, performance or other similar bonds in
     the ordinary course of business.

     "Ordinary Course Investments" means Investments consisting of:
      ---------------------------

          (a)    Investments in other assets properly classified as "marketable
     securities" or "cash" or "cash equivalents" under GAAP, and which conform
     to the investment policies adopted by the Board of Directors of the Lessee
     from time to time;

          (b)    advances to officers, directors and employees of the Lessee and
     its Subsidiaries for travel, entertainment, relocation and analogous
     ordinary business purposes;

          (c)    Investments of the Lessee in any of its Subsidiaries (other
     than Snap Appliances) and Investments of any Subsidiary of the Lessee in
     the Lessee or another Subsidiary of the Lessee (other than Snap
     Appliances);

          (d)    extensions of credit to customers or suppliers of the Lessee
     and its Subsidiaries in the ordinary course of business and any Investments
     received in satisfaction or partial satisfaction thereof;

          (e)    Guaranty Obligations permitted by Section 10.2(a) of the
                                                   ----------------------
     Participation Agreement;
     -----------------------

          (f)    Investments received by the Lessee or any of its Subsidiaries
     as distributions on claims in connection with the bankruptcy or
     reorganization of customers or suppliers and in settlement of delinquent
     obligations of, and other disputes with, customers and suppliers arising in
     the ordinary course of business;

          (g)    Investments of any Subsidiary existing at the time it becomes a
     Subsidiary of the Lessee, provided that such Investments were not made in
                               --------
     anticipation of such Person becoming a Subsidiary of the Lessee; and

          (h)    Investments consisting of loans to employees, officers and
     directors, the proceeds of which shall be used to purchase Equity
     Securities of the Lessee or its Subsidiaries and other loans to employees,
     officers and directors.

     "Ordinary Course Liens" means:
      ---------------------

          (a)    Liens pursuant to any Loan Document;

          (b)    Liens for taxes not yet due or which are being contested in
     good faith and by appropriate proceedings, if adequate reserves with
     respect thereto are maintained on the books of the applicable Person in
     accordance with GAAP;

          (c)    carriers', warehousemen's, mechanics', materialmen's,
     repairmen's or other like Liens arising in the ordinary course of business
     which are not overdue for a

                                   [7-A]-27
<PAGE>

     period of more than thirty (30) days or which are being contested in good
     faith and by appropriate proceedings, if adequate reserves with respect
     thereto are maintained on the books of the applicable Person in accordance
     with GAAP;

          (d)    pledges or deposits in connection with worker's compensation,
     unemployment insurance and other social security legislation;

          (e)    deposits to secure the performance of bids, trade contracts
     (other than for borrowed money), leases, statutory obligations, surety and
     appeal bonds, performance bonds and other obligations of a like nature
     incurred in the ordinary course of business;

          (f)    easements, rights-of-way, restrictions and other similar
     encumbrances affecting real property which, in the aggregate, are not
     substantial in amount, and which do not in any case materially detract from
     the value of the property subject thereto or materially interfere with the
     ordinary conduct of the business of any Person;

          (g)    attachment, judgment or other similar Liens arising in
     connection with litigation or other legal proceedings (and not otherwise an
     Event of Default hereunder) in the ordinary course of business that is
     currently being contested in good faith by appropriate proceedings,
     adequate reserves have been set aside, and no material property is subject
     to a material risk of loss or forfeiture;

          (h)    Liens on the property or assets of any Subsidiary of the Lessee
     in favor of the Lessee or any other Subsidiary of the Lessee (other than
     Snap Appliances);

          (i)    Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of customs duties and in connection with
     the importation of goods in the ordinary course of the Lessee's and its
     Subsidiaries' businesses;

          (j)    Liens arising solely by virtue of any statutory or common law
     provision relating to banker's liens, rights of set-off or similar rights
     and remedies as to deposit accounts or other funds maintained with a
     creditor depository institution; provided that (x) such deposit account is
                                      --------
     not a dedicated cash collateral account and is not subject to restrictions
     against access by the Lessee in excess of those set forth by regulations
     promulgated by the Board, and (y) such deposit account is not intended by
     the Lessee or any Subsidiary to provide collateral to the depository
     institution; and

          (k)    Liens on insurance proceeds in favor of insurance companies
     with respect to the financing of insurance premiums.

     "Original Agent" is defined in Recital A to the Participation Agreement.
      --------------

     "Original Executed Counterpart" is defined in Section 31.8 of the Lease.
      -----------------------------                -------------------------

     "Original Lessor" is defined in Recital A to the Participation Agreement.
      ---------------

     "Original Participation Agreement" is defined in Recital A to the
      --------------------------------                ----------------
Participation Agreement.
-----------------------

     "Outside Completion Date" means the second anniversary of the Effective
      -----------------------
Date.

                                   [7-A]-28
<PAGE>

     "Overdue Rate" means, with respect to the Advances, fees or any other
      ------------
payment due under the Operative Documents, the interest rate then applicable to
the Advances plus two percent (2%) per annum.

     "Partial Purchase Date" is defined in Section 20.5(b) of the Lease.
      ---------------------                ----------------------------

     "Partial Purchase Notice" is defined in Section 20.5(b) of the Lease.
      -----------------------                ----------------------------

     "Partial Purchase Option" is defined in Section 20.5(b) of the Lease.
      -----------------------                ----------------------------

     "Partial Purchase Option Price" is defined in Section 20.5(a) of the Lease.
      -----------------------------                ----------------------------

     "Participant's Letter" is defined in Section 12.1(b) of the Participation
      --------------------                ------------------------------------
Agreement.
---------

     "Participation Agreement" means the Original Participation Agreement as
      -----------------------
amended and restated by the Amended and Restated Participation Agreement, dated
as of July 12, 2000, among the Lessee, the Lessor, the Participants and the
Agent.

     "Participation Interest" means, as to each Participant, a participation
      ----------------------
interest in, or in the case of each Tranche C Participant, an equity investment
in, the Lease and the right to receive that percentage of the following payments
actually received by the Lessor from or on behalf of the Lessee as is set forth
on Schedule I to the Participation Agreement, subject to the provisions of
   -----------------------------------------
Sections 3.11 - 3.21 and Section 11 of the Participation Agreement:  (i) Basic
------------------------------------------------------------------
Rent, (ii) Supplemental Rent, (iii) Asset Termination Value, (iv) Purchase
Option Price, (v) Partial Purchase Option Price, (vi) Net Sales Proceeds, (vii)
Residual Value Guarantee Amount, (viii) the Shortfall Amount, and (ix) other
payments in respect of indemnities or pursuant to the Guarantee or the exercise
of remedies under the Operative Documents, excluding, however, (x) any Excepted
Payments and (y) as to a particular Participant, any payments on account of any
Advances and any Required Supplemental Payments (and interest thereon) for which
the Lessor has not received payment from such Participant of such Participant's
Commitment Percentage thereof.  For example, if the Lessor elects to pay for
insurance required of the Lessee by the Lease because of the Lessee's failure to
obtain such insurance, the Lessor's receipt of reimbursement for the cost of
such insurance from the Lessee shall be included within "Participation Interest"
for purposes of this Agreement only if such Participant has paid to the Lessor
such Participant's Commitment Percentage of such cost pursuant to Section 11.6
                                                                  ------------
or Section 11.7 of the Participation Agreement.
----------------------------------------------

     "Participants" means each Person executing the Participation Agreement or a
      ------------
Participant's Letter as a Participant and purchasing a Participation Interest in
the transactions contemplated by the Participation Agreement and the other
Operative Documents.

     "Participant Balance" means for each Participant the sum of its Tranche A
      -------------------
Participation Interest Balance, its Tranche B Participation Interest Balance and
its Tranche C Participation Interest Balance.

     "Payment Date" means (a) any Scheduled Payment Date and (b) any date on
      ------------
which interest or Yield is payable pursuant to Section 3.8(d) of the
                                               ---------------------
Participation Agreement in connection with any prepayment of the Advances.
-----------------------

                                   [7-A]-29
<PAGE>

     "PBGC" means the Pension Benefit Guaranty Corporation or any entity
      ----
succeeding to any or all of its functions under ERISA.

     "Pension Plan" means any "employee pension benefit plan" (as such term is
      ------------
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Lessee or any
ERISA Affiliate or to which the Lessee or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.

     "Permitted Exceptions" means (a) the respective rights and interests of the
      --------------------
parties to the Operative Documents as provided in the Operative Documents; (b)
the rights of any sublessee or assignee under a sublease or an assignment
expressly permitted by the terms of the Lease; (c) Liens for Taxes that either
are not yet due or are being contested in accordance with the provisions of

Section 13.1 of the Lease or Section 13.5 of the Participation Agreement; (d)
-------------------------    -------------------------------------------
Liens arising by operation of law, materialmen's, mechanics', workers',
repairmen's, employees', carriers', warehousemen's and other like Liens in
connection with any Modifications or arising in the ordinary course of business
for amounts that either are not more than sixty (60) days past due or are being
diligently contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease, and that have been bonded
                           -------------------------
for not less than the full amount in dispute (or as to which other security
arrangements satisfactory to the Lessor have been made), which bonding (or
arrangements) shall comply with applicable Requirements of Law, and has
effectively stayed any execution or enforcement of such Liens; (e) Liens arising
out of judgments or awards with respect to which appeals or other proceedings
for review are being prosecuted in good faith and for the payment of which
adequate reserves have been provided as required by GAAP or other appropriate
provisions have been made, so long as such proceedings have the effect of
staying the execution of such judgments or awards and satisfy the conditions for
the continuation of proceedings to contest set forth in Section 13.1 of the
                                                        -------------------
Lease; (f) all encumbrances, exceptions, restrictions, easements, rights of way,
-----
servitudes, encroachments and irregularities in title, other than Liens which,
in the reasonable assessment of the Agent, do not materially impair the value of
the Property or the use of the Property for its intended purpose; (g) easements,
rights of way and other encumbrances on title to the Property pursuant to

Section 12.2 of the Lease; (h) a Lien consisting of a deposit or pledge made, in
-------------------------
the ordinary course of business, in connection with, or to secure payment of,
obligations under worker's compensation, unemployment insurance or similar
legislation and (i) Liens of the types described in clauses (i), (ii) and (iv)
                                                    --------------------------
of Section 10.2(b) of the Participation Agreement and clauses (b), (d), (e) and
-------------------------------------------------     -------------------------
(h) of the definition of Ordinary Course Liens; provided, however, that
---                                             --------  -------
Permitted Exceptions shall in no event include Lessor's Liens.

     "Permitted Indebtedness" is defined in Section 10.2(a) of the Participation
      ----------------------                ------------------------------------
Agreement.
---------

     "Permitted Investments" is defined in Section 10.2(e) of the Participation
      ---------------------                ------------------------------------
Agreement.
---------

     "Permitted Liens" is defined in Section 10.2(b) of the Participation
      ---------------                ------------------------------------
Agreement.
---------

     "Permitted Receivables Facility" means one or more accounts receivable
      ------------------------------
financing arrangements including (a) the sale of accounts receivable and any
related property by the Lessee and/or any of its Subsidiaries to a financing
party or a special purpose vehicle, and/or (b) the

                                   [7-A]-30
<PAGE>

granting of a security interest in accounts receivable and any related property
by the Lessee and/or any of its Subsidiaries; provided, however, that the
                                              --------  -------
aggregate advances under all such accounts receivable financing arrangements
shall not exceed $100,000,000 at any time.

     "Permitted Swap Obligations" means all obligations (contingent or
      --------------------------
otherwise) of the Lessee or any of its Subsidiaries existing or arising under
Swap Contracts, provided that such obligations are (or were) entered into by
                --------
such Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets held or
reasonably anticipated by such Person, or changes in the value of securities
issued by such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or taking a
"market view."

     "Person" means any individual, trustee, corporation, general partnership,
      ------
limited partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association, firm, joint venture,
Governmental Authority, or otherwise.

     "Plan" means any employee benefit plan maintained or contributed to by the
      ----
Lessee or by any trade or business (whether or not incorporated) under common
control with the Lessee as defined in Section 4001(b) of ERISA and insured by
the PBGC under Title IV of ERISA.

     "Plans and Specifications" means, with respect to the Property, the plans
      ------------------------
and specifications for the Improvements to be constructed on the Property.

     "Pricing Grid" means Schedule II to the Participation Agreement.
      ------------        ------------------------------------------

     "Prime Rate" means the per annum rate publicly announced by the Agent from
      ----------
time to time at its New York Branch.  The Prime Rate is determined by the Agent
from time to time as a means of pricing credit extensions to some customers and
is neither directly tied to any external rate of interest or index nor
necessarily the lowest rate of interest charged by the Agent at any given time
for any particular class of customers or credit extensions.  Any change in the
Alternative Base Rate resulting form a change in the Prime Rate shall become
effective on the Business Day on which each change in the Prime Rate occurs.

     "Property" means (i) the Land Interest and (ii) all of the Improvements,
      --------
Equipment and Fixtures at any time located on or under such Land Interest other
than Lessee's Property.

     "Property Balance" means, with respect to the Property, as of any date of
      ----------------
determination, an amount equal to (i) the sum of the outstanding amount of the
Advances, all accrued and unpaid interest and Yield on the Advances, and all
other amounts owing by the Lessee under the Operative Documents, less (ii) the
sum of all payments received by the Lessor, the Agent or the Participant on
account of payments to reduce the Property Balance, including reductions
resulting from payments by the Lessor, the Lessee and the Guarantor and/or
proceeds from the sale of the Property and/or amounts realized from the
Collateral pursuant to the Cash Collateral Agreement.

     "Property Cost" means, with respect to the Property, the aggregate amount
      -------------
of the related Land Interest Acquisition Cost and the related Property
Improvements Cost.

     "Property Improvements Cost" means, with respect to the Property, the
      --------------------------
amount funded to or on behalf of the Construction Agent by the Lessor under the
Participation Agreement and the

                                   [7-A]-31
<PAGE>

Construction Agency Agreement to construct any Improvements, Fixtures or
Modifications and to purchase Equipment to be used on the Property in accordance
with the Plans and Specifications therefor and the Operative Documents, as set
forth in the Acquisition Request and Funding Requests therefor (including
interest and Yield on the Advances during the Construction Period applied to
such cost and funded by an Interest Payment Advance).

     "Property Purchase Agreement" means the Purchase and Sale Agreement, dated
      ---------------------------
as of July, 1997, between the Existing Owner and the Lessee, and assigned to the
Original Lessor pursuant to the Assignment of Purchase Agreement, providing for
the purchase of the Property by the Lessor on the Land Interest Acquisition
Date.

     "Purchase Notice" is defined in Section 20.1 of the Lease.
      ---------------                -------------------------

     "Purchase Option" is defined in Section 20.1 of the Lease.
      ---------------                -------------------------

     "Purchase Option Price" is defined in Section 20.1 of the Lease.
      ---------------------                -------------------------

     "Quick Ratio" means, with respect to the Lessee and its Subsidiaries at any
      -----------
time, the ratio, determined on a consolidated basis in accordance with GAAP, of:
(a) the sum at such time of all (i) cash and cash equivalents of the Lessee and
its Subsidiaries (excluding restricted cash), and (ii) accounts receivable of
the Lessee and its Subsidiaries, less all reserves therefor; to (b) the sum at
                                                             --
such time of (i) the current liabilities of the Lessee and its Subsidiaries
(including any such liabilities outstanding under the Loan Documents and the
Operative Documents), plus (ii) to the extent not included in clause (i), the
                      ----                                    ----------
aggregate outstanding obligations under the Loan Documents with respect to the
principal amount of loans, the undrawn face amount of letters of credit and
unreimbursed drawings under letters of credit; provided that in respect of any
                                               --------
period (or partial period) prior to the Maxtor Merger Effective Time, the "Quick
Ratio" shall be determined solely in respect of the DSS Business on a stand-
alone basis, based upon the then-current DSS Combined Financial Statements.

     "Release" means any release, pumping, pouring, emptying, injecting,
      -------
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.

     "Remarketing Option" is defined in Section 22.1 of the Lease.
      ------------------                -------------------------

     "Remarketing Period" is defined in the definition "Marketing Period".
      ------------------

     "Renewal Option" is defined in Section 21.1(a) of the Lease.
      --------------                ----------------------------

     "Renewal Request" is defined in Section 21.1(a) of the Lease.
      ---------------                ----------------------------

     "Renewal Response Date" is defined in Section 21.1(a) of the Lease.
      ---------------------                ----------------------------

     "Renewal Term" means, individually, either of the two one-year periods
      ------------
which immediately follow April 19, 2003, with respect to which Lessee has
exercised its Renewal Option pursuant to Section 21.1 of the Lease.
                                         -------------------------

     "Rent" means, collectively, the Basic Rent and the Supplemental Rent, in
      ----
each case payable under the Lease.

                                   [7-A]-32
<PAGE>

     "Reportable Event" means any of the events set forth in Section 4043(b) of
      ----------------
ERISA or the regulations thereunder, a withdrawal from a Plan described in
Section 4063 of ERISA, or a cessation of operations described in Section 4062(e)
of ERISA.

     "Requesting Party" is defined in Section 26.1 of the Lease.
      ----------------                -------------------------

     "Required Modification" is defined in Section 11.1(a) of the Lease.
      ---------------------                ----------------------------

     "Required Participants" means, at any time, Participants the Commitment
      ---------------------
Percentages of which aggregate at least sixty-six and two-thirds percent
(66 2/3%).

     "Required Supplemental Payments" means all payments of Supplemental Rent
      ------------------------------
that the Lessee has agreed to pay the Lessor under the Lease and the other
Operative Agreements, other than (i) the Administrative Fee, (ii) Excepted
Payments, (iii) Residual Value Guarantee Amount, (iv) Asset Termination Value,
(v) Purchase Option Price, (vi) Partial Purchase Option Price and (vii) interest
or Yield accruing on any amount due from the Lessee, which amount is itself not
a Required Supplemental Payment under this definition.  For example, if the
Lessor incurs attorneys' fees because of a breach by the Lessee of the Lease,
the payments required of the Lessee by the Lease as reimbursement for such fees
shall constitute a Required Supplemental Payment.

     "Requirement of Law" means all Federal, state, county, municipal and other
      ------------------
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting the Property, the Improvements or the
demolition, construction, use or alteration thereof, whether now or hereafter
enacted and in force, including any that require repairs, modifications or
alterations in or to the Property or in any way limit the use and enjoyment
thereof (including all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. (S) 1201 et. seq. and any other similar
Federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any that may relate to environmental requirements (including all
Environmental Laws), and all permits, certificates of occupancy, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments which are either of
record or known to the Lessee affecting the Property, other than Lessor Liens,
the Appurtenant Rights and any easements, licenses or other agreements entered
into pursuant to Section 12.2 of the Lease.
                 -------------------------

     "Residual Value Guarantee Amount" means (i) during the Construction Period,
      -------------------------------
an amount equal to eighty-nine and nine-tenths percent (89.9%) of the Lease
Balance, and (ii) at all other times, an amount equal to the aggregate Tranche A
Participation Interest Balances of the Participants holding Tranche A
Participation Interests.

     "Response Actions" means remove, removal, remedy, and remedial action as
      ----------------
those terms are defined in CERCLA, 42 U.S.C. (S) 9601.

     "Responsible Officer" means the President, any Vice President, the
      -------------------
Treasurer or Controller of the Lessee.

     "Responsible Officer's Certificate" means a certificate signed by any
      ---------------------------------
Responsible Officer, which certificate shall certify as true and correct the
subject matter being certified to in such certificate.

                                   [7-A]-33
<PAGE>

     "Restricted Payment" means:
      ------------------

          (a)    the declaration or payment of any dividend or distribution by
     the Lessee or any Subsidiary, either in cash or property, on any shares of
     the capital stock of any class of the Lessee or any Subsidiary; and

          (b)    any other payment or distribution by the Lessee or any
     Subsidiary in respect of its capital stock, either directly or indirectly.

     "Restructuring Date" means July 12, 2000, if all conditions described in
      ------------------
Schedule 6.4 to the Participation Agreement have been satisfied or waived or
-------------------------------------------
deferred as provided in Section 6.4 of the Participation Agreement.
                        ------------------------------------------

     "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
      ---
Hill Companies, Inc., and any successor thereto that is a nationally-recognized
rating agency.

     "Scheduled Payment Date" means (a) as to interest or Yield on any Advances
      ----------------------
having an Interest Period of three (3) months or less, the last day of each
Interest Period, (b) as to interest or Yield on any Advances having an Interest
Period longer than three (3) months, each day which is three (3) months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, (c) as to interest or Yield on any Advances bearing
interest at the Alternate Base Rate, the last day of each March, June, September
and December, and (d) as to the principal amount or equity contribution amount
of the Advances, each date indicated on Schedule 1 to the Lease as being a
                                        -----------------------
payment date with respect to such portion of the Property Cost, if any.

     "Securities Act" means the Securities Act of 1933, as amended, together
      --------------
with the rules and regulations promulgated thereunder.

     "Security Documents" means the collective reference to the Mortgage, the
      ------------------
Assignment of Lease, the Construction Agency Agreement Assignment, the
Assignment of Construction Documents, the Cash Collateral Agreement and all
other security documents hereafter delivered to the Agent granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of the
Lessor to the Agent and the Participants under the Participation Agreement or of
the Lessee to the Lessor under the Lease.

     "Senior Indebtedness" means, with respect to any Person at any time, all
      -------------------
Indebtedness of such Person other than Subordinated Debt.

     "Shareholders' Equity" means, as of any date of determination for the
      --------------------
Lessee and its Subsidiaries on a consolidated basis, shareholders' equity as of
that date determined in accordance with GAAP.

     "Shortfall Amount" means, as of the Expiration Date, the amount that the
      ----------------
Asset Termination Value will exceed the aggregate of the Gross Proceeds and the
Residual Value Guarantee Amount upon the completion of a sale of the Property
pursuant to Article XXII of the Lease.
            -------------------------

     "Significant Casualty" means (i) a Casualty that results in an insurance
      --------------------
settlement on the basis of a total loss, or a constructive or compromised total
loss, or (ii) a Casualty that in the reasonable, good faith judgment of the
Lessee (as evidenced by a Responsible Officer's Certificate delivered to the
Lessor pursuant to Section 16.1 of the Lease) either (a) renders the
                   -------------------------

                                   [7-A]-34
<PAGE>

Property unsuitable for continued use as a commercial property of the type of
such property immediately prior to such Casualty or (b) is so substantial in
nature that restoration of the Property to substantially its condition as
existed immediately prior to such Casualty would be impracticable or impossible.

     "Significant Condemnation" means (i) a Condemnation that involves a taking
      ------------------------
of Lessor's entire title to the related Land Interest, (ii) a Condemnation that
results in loss of possession of the Property by the Lessee for a period in
excess of one hundred eighty (180) consecutive days, or (iii) a Condemnation
that in the reasonable, good faith judgment of the Lessee (as evidenced by a
Responsible Officer's Certificate delivered to the Lessor pursuant to Section
                                                                      -------
16.1 of the Lease) either (a) renders the Property unsuitable for continued use
-----------------
as commercial of the type of such property immediately prior to such
Condemnation or (b) is such that restoration of the Property to substantially
its condition as existed immediately prior to such Condemnation would be
impracticable or impossible.

     "Significant Event" means (i) a Significant Casualty, (ii) a Significant
      -----------------
Condemnation, (iii) an event where the restoration of the Property subject to a
Casualty or Condemnation shall not be completed prior to the earlier of (A) the
180th day prior to the Expiration Date or (B) twelve (12) months following the
occurrence of such Casualty or Condemnation or (iv) the occurrence of an
Environmental Violation where the costs to clean up or remediate the same are
reasonably estimated by the Lessee to exceed $5,000,000.

     "Snap Appliances" means Snap Appliances, Inc., a Delaware corporation.
      ---------------

     "Snap Appliances S-1" means that Registration Statement on Form S-1 filed
      -------------------
by Snap Appliances with the Securities and Exchange Commission on or about
October 30, 2000, as amended on or about November 13, 2000, together with all
exhibits and attachments thereto.

     "Snap Business" has the meaning specified in Section 4.20 of the Snap
      -------------                               ------------------------
General Assignment Agreement.
----------------------------

     "Snap Employee Matters Agreement" means that Employment Matters Agreement
      -------------------------------
to be entered into by the Lessee and Snap Appliances in connection with the Snap
Spin-Off in a form substantially identical to the form of such agreement
attached as an exhibit to the Snap Appliances S-1.

     "Snap General Assignment Agreement" means that General Assignment and
      ---------------------------------
Assumption Agreement to be entered into by the Lessee and Snap Appliances in
connection with the Snap Spin-Off in a form substantially identical to the form
of such agreement attached as an exhibit to the Snap Appliances S-1.

     "Snap Master Agreement" means that Master Separation and Distribution
      ---------------------
Agreement effective as of October 26, 2000 between the Lessee and Snap
Appliances.

     "Snap Spin-Off Documents" means the documents set forth on Schedule 1
      -----------------------                                   ----------
attached hereto under the caption "Snap Spin-Off Documents" together with any
---------------
and all other documents entered into pursuant thereto, in connection therewith
or required thereby.

     "Snap Spin-Off" means (a) the contribution and assignment by the Lessee to
      -------------
Snap Appliances of certain assets and liabilities of the Lessee associated with
the Snap Business,

                                   [7-A]-35
<PAGE>

substantially in accordance with the terms of the Snap Master Agreement, (b) the
consummation by Snap Appliances of an initial public offering following which
the Lessee shall retain an ownership interest in not less than 80% of
outstanding common stock of Snap Appliances, substantially in accordance with
the Snap Appliances S-1 and (c) the distribution to the Lessee's shareholders of
all or substantially all remaining shares of Snap Appliances pursuant to a tax-
free reorganization.

     "Solvent" means, as to any Person at any time, that (i) the fair value of
      -------
the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (ii) the present fair saleable value of the
property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (iii) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.

     "Specified Event of Default" is defined in Section 17.1(q) of the Lease.
      --------------------------                ----------------------------

     "Spinco" means Insula Corporation, a Delaware corporation and, prior to the
      ------
Maxtor Merger Effective Time, a wholly-owned Subsidiary of the Lessee.

     "Subdivided Parcel" is defined in Section 20.5(a) of the Lease.
      -----------------                ----------------------------

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

     "Subsidiary" of a Person means a corporation, partnership, joint venture,
      ----------
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned or controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.

     "Supplemental Rent" means all amounts, liabilities and obligations (other
      -----------------
than Basic Rent) which Lessee assumes or agrees to pay to Lessor or any other
Person under the Lease, or under any of the other Operative Documents,
including, without limitation, payments of the Residual Value Guarantee Amount,
the Shortfall Amount and payments pursuant to Sections 16.2, 16.3, 16.4 or 17.6
                                              ---------------------------------
of the Lease and Articles XX and XXII of the Lease.
------------     ---------------------------------

     "Supplement to Assignment of Lease" means the Supplement substantially in
      ---------------------------------
the form of Exhibit A to the Assignment of Lease together with all attachments
            ------------------------------------
and schedules thereto, as such Supplement to Assignment of Lease may be
supplemented, amended or modified from time to time.

     "Swap Contract" means (a) any and all rate swap transactions, basis swaps,
      -------------
forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or

                                   [7-A]-36
<PAGE>

equity index swaps or options, bond or bond price or bond index swaps or options
or forward bond or forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swap transactions, cross-
currency rate swap transactions, currency options, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., or any other master
agreement (any such master agreement, together with any related schedules, as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, a "Master Agreement"), including any such obligations or
                 ----------------
liabilities under any Master Agreement.

     "Syndication Period" means the period commencing on the Effective Date and
      ------------------
concluding on the earlier of (i) the date which is ninety (90) days after the
Effective Date or (ii) the date on which the Agent has syndicated Participation
Interests to other Participants representing not less than seventy percent (70%)
of the total Commitment set forth on Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Synthetic Lease Obligations" means all monetary obligations of a Person
      ---------------------------
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations
which do not appear on the balance sheet of such Person but which, upon the
insolvency or bankruptcy of such Person, would be characterized as secured debt
of such Person.

     "Tax Loss" means any and all taxes (including interest and penalties) of
      --------
the Lessee or any of its Subsidiaries paid, or required to be paid, at any time
as a result of the Maxtor Merger or HDD Redemption not qualifying to be treated
as a tax free transaction or as part of a tax-free reorganization under the Code
(or other applicable tax law), whether as a result of the IRS (or any other
applicable taxing authority) making such a determination or otherwise.

     "Taxes" is defined in the definition of Impositions.
      -----

     "Term" is defined in Section 2.3 of the Lease.
      ----                ------------------------

     "Termination Date" is defined in Section 15.1(d), 16.2(a) and 17.2(e) of
      ----------------                ---------------------------------------
the Lease.
---------

     "Termination Notice" is defined in Section 16.1 of the Lease.
      ------------------                -------------------------

     "364 Day Commitment" means $53,600,000.
      ------------------

     "364 Day Credit Agreement" means the Credit Agreement (364-Day/1-Year),
      ------------------------
dated as of April 19, 2000, among the Lessee as borrower, Bank of America, N.A.
as administrative agent, The Bank of Nova Scotia and the other financial
institutions party thereto.

     "Threshold Amount" means $10,000,000.
      ----------------

     "Two Year Commitment" means $12,400,000. The Two Year Commitment expires
      -------------------
on the earlier of the Completion Date or the Outside Completion Date.

                                   [7-A]-37
<PAGE>

     "Tranche A Participants" means those Participants purchasing a Tranche A
      ----------------------
Participation Interest in the Advances and maintaining a Tranche A Participation
Interest Commitment.

     "Tranche A Participation Interest" means, (i) as to each Tranche A
      --------------------------------
Participant, such Participant's Tranche A Participation Interest Commitment
Percentage, multiplied by the outstanding amount of all Advances as to which
such Participant has funded its Tranche A Participation Interest Commitment
Percentage under Section 3.4 of the Participation Agreement and (ii) as to all
                 ------------------------------------------
Tranche A Participants, 86.679162% of all outstanding Advances.

     "Tranche A Participation Interest Balance" means for each Tranche A
      ----------------------------------------
Participant as of any date of determination an amount equal to (i) the sum of
such Tranche A Participant's Tranche A Participation Interest in all outstanding
Advances, together with all accrued and unpaid interest thereon, and all other
amounts owing by the Lessee to such Tranche A Participant under the Operative
Documents, less (ii) the sum of all payments received by the Tranche A
Participant on account of payments to reduce such Tranche A Participant's
Tranche A Participation Interest, including reductions resulting from payments
by the Lessor, the Lessee and the Guarantor and/or proceeds from the sale of the
Property and/or amounts realized from the Collateral pursuant to the Cash
Collateral Agreement.

     "Tranche A Participation Interest Commitment" is defined in Section 3.5 of
      -------------------------------------------                --------------
the Participation Agreement.
---------------------------

     "Tranche A Participation Interest Commitment Percentage" means (i) with
      ------------------------------------------------------
respect to all Participants in the aggregate, 86.679162% of the aggregate
Commitments, and (ii) with respect to each Tranche A Participant, the percentage
of the aggregate Commitments set forth after such Participant's Tranche A
Participation Interest Commitment in Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Tranche B Participants" means those Participants purchasing a Tranche B
      ----------------------
Participation Interest in the Advances and maintaining a Tranche B Participation
Interest Commitment.

     "Tranche B Participation Interest" means, (i) as to each Tranche B
      --------------------------------
Participant, such Tranche B Participant's Tranche B Participation Interest
Commitment multiplied by the outstanding amount of all Advances as to which such
Participant has funded its Tranche B Participation Interest Commitment
Percentage under Section 3.4 of the Participation Agreement and (ii) as to all
                 ------------------------------------------
Tranche B Participants, 9.80000% of all outstanding Advances.

     "Tranche B Participation Interest Balance" means for each Tranche B
      ----------------------------------------
Participant as of any date of determination an amount equal to (i) the sum of
such Tranche B Participant's Tranche B Participation Interest in all outstanding
Advances, together with all accrued and unpaid interest thereon, and all other
amounts owing by the Lessee to such Tranche B Participant under the Operative
Documents, less (ii) the sum of all payments received by the Tranche B
Participant on account of payments to reduce such Tranche B Participant's
Tranche B Participation Interest, including reductions resulting from payments
by the Lessor, the Lessee and the Guarantor and/or proceeds from the sale of the
Property and/or amounts realized from the Collateral pursuant to the Cash
Collateral Agreement.

     "Tranche B Participation Interest Commitment" is defined in Section 3.5 of
      -------------------------------------------                --------------
the Participation Agreement.
---------------------------

                                   [7-A]-38
<PAGE>

     "Tranche B Participation Interest Commitment Percentage" means (i) with
      ------------------------------------------------------
respect to all Participants in the aggregate, 9.80000% of the aggregate
Commitments, and (ii) with respect to each Tranche B Participant, the percentage
of the aggregate Commitments set forth after such Participant's Tranche B
Participation Interest Commitment in Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Tranche C Participants" means those Participants purchasing a Tranche C
      ----------------------
Participation Interest in the Advances and maintaining a Tranche C Participation
Interest Commitment.

     "Tranche C Participation Interest" means, (i) as to each Tranche C
      --------------------------------
Participant, such Tranche C Participant's Tranche C Participation Interest
Commitment multiplied by the outstanding amount of all Advances as to which such
Participant has funded its Tranche C Participation Interest Commitment
Percentage under Section 3.4 of the Participation Agreement and (ii) as to all
                 ------------------------------------------
Tranche C Participants 3.520838% of all outstanding Advances.

     "Tranche C Participation Interest Balance" means for each Tranche C
      ----------------------------------------
Participant as of any date of determination an amount equal to (i) the sum of
such Tranche C Participant's Tranche C Participation Interest in all outstanding
Advances, together with all accrued and unpaid Yield thereon, and all other
amounts owing by the Lessee to such Tranche C Participant under the Operative
Documents, less (ii) the sum of all payments received by the Tranche C
Participant on account of payments to reduce such Tranche C Participant's
Tranche C Participation Interest, including reductions resulting from payments
by the Lessor, the Lessee and the Guarantor, proceeds from the sale of the
Property and/or amounts realized from the Collateral pursuant to the Cash
Collateral Agreement.

     "Tranche C Participation Interest Commitment" is defined in Section 3.5 of
      -------------------------------------------                --------------
the Participation Agreement.
---------------------------

     "Tranche C Participation Interest Commitment Percentage" means (i) with
      ------------------------------------------------------
respect to all Participants in the aggregate, 3.520838% of the Aggregate
Commitments, and (ii) with respect to each Tranche C Participant, the percentage
of the Aggregate Commitments set forth after such Participant's Tranche C
Participation Interest Commitment in Schedule I to the Participation Agreement.
                                     -----------------------------------------

     "Transaction Expenses" means the following costs and expenses incurred by
      --------------------
the Lessor, the Agent and, to the extent referred to below, the Participants in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents:

          (a)  the reasonable fees, out-of-pocket expenses and disbursements of
     counsel for each of the Lessor and the Agent, in negotiating the terms of
     the Operative Documents and the other transaction documents, preparing for
     the closing under, and rendering opinions in connection with, such
     transactions and in rendering other services customary for counsel
     representing parties to transactions of the types involved in the
     transactions contemplated by the Operative Documents;

          (b)  the reasonable fees, out-of-pocket expenses and disbursements of
     counsel of each of the Lessor and the Agent in connection with (1) any
     amendment, supplement, waiver or consent with respect to any Operative
     Documents requested or approved by the

                                   [7-A]-39
<PAGE>

     Lessee and (2) any enforcement of any rights or remedies against the Lessee
     in respect of the Operative Documents;

          (c)  any and all Taxes and fees incurred in recording, registering or
     filing any Operative Document or any other transaction document, any deed,
     declaration, mortgage, security agreement, notice or financing statement
     with any public office, registry or governmental agency in connection with
     the transactions contemplated by the Operative Documents;

          (d)  any title fees, premiums and escrow costs and other expenses
     relating to title insurance and the closing contemplated by the Transaction
     Documents; and

          (e)  all expenses relating to all Environmental Audits and Appraisals.

     "Type" means, with respect to any Advance, its nature as an Alternate Base
      ----
Rate Advance or a Eurodollar Rate Advance.

     "UCC Financing Statements" means collectively the Agent Financing
      ------------------------
Statements and the Lessor Financing Statements.

     "Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
      -----------------------       ---
effect in any applicable jurisdiction.

     "Yield" is defined in Section 3.8(b) of the Participation Agreement.
      -----                ---------------------------------------------

                                   [7-A]-40
<PAGE>

                                                                      SCHEDULE 1
                                                                   TO APPENDIX 1

                         HDD CONVERTIBLE DEBT PORTION;
               MAXTOR MERGER DOCUMENTS; SNAP SPIN-OFF DOCUMENTS
               ------------------------------------------------

HDD Convertible Debt Portion
----------------------------

The HDD Convertible Debt Portion shall be 33.33%.

Maxtor Merger Documents
-----------------------

 .    Maxtor Merger Agreement.
 .    HDD Separation Agreement.
 .    HDD General Assignment Agreement.
 .    Tax Sharing and Indemnity Agreement among the Lessee, Spinco and Maxtor.
 .    Transitional Services Agreement among the Lessee, Spinco and Maxtor.
 .    Intellectual Property Agreement among the Lessee, Spinco and Maxtor.
 .    Indemnification Agreement among the Lessee, Spinco and Maxtor.
 .    Reimbursement Agreement, dated as of a date on or prior to the Maxtor
     Merger Effective Date, between the Lessee and Maxtor.

Snap Spin-Off Documents
-----------------------

 .    Snap Master Agreement.
 .    Snap General Assignment Agreement.
 .    Master Intellectual Property Agreement between the Lessee and Snap
     Appliances.
 .    Snap Employee Matters Agreement.
 .    Tax Sharing Agreement between the Lessee and Snap Appliances.
 .    Master Transitional Services Agreement between the Lessee and Snap
     Appliances.
 .    Indemnification and Insurance Matters Agreement between the Lessee and Snap
     Appliances.
 .    Hard Disk Drive Supply Agreement dated as of June 30, 2000, entered into by
     Snap Appliances and the Lessee.

                                   [7-A]-41

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