$150,000,000


                      AMENDED AND RESTATED CREDIT AGREEMENT


                                   dated as of


                                  July 15, 1998


                                      among


                               Iomega Corporation,


                             The Banks Party Hereto,


                                 Citibank, N.A.,
                            as Administrative Agent,


                                       and


                   Morgan Guaranty Trust Company of New York,
                             as Documentation Agent


<PAGE>



                                TABLE OF CONTENTS


                                                                           PAGE

                                    ARTICLE 1
                                   DEFINITIONS

SECTION 1.01.  Definitions....................................................1
SECTION 1.02.  Accounting Terms and Determinations...........................17

                                    ARTICLE 2
                                  THE CREDITS

SECTION 2.01.  Commitments to Lend...........................................17
SECTION 2.02.  Method of Borrowing...........................................18
SECTION 2.03.  Maturity of Loans.............................................19
SECTION 2.04.  Interest Rates................................................19
SECTION 2.05.  Method of Electing Interest Rates.............................21
SECTION 2.06.  Fees..........................................................22
SECTION 2.07.  Termination or Reduction of Commitments.......................23
SECTION 2.08.  Optional Prepayments..........................................23
SECTION 2.09.  Mandatory Prepayments.........................................23
SECTION 2.10.  General Provisions as to Payments.............................25
SECTION 2.11.  Funding Losses................................................25
SECTION 2.12.  Computation of Interest and Fees..............................26
SECTION 2.13.  Notes.........................................................26

                                    ARTICLE 3
                                   CONDITIONS

SECTION 3.01.  Closing.......................................................26
SECTION 3.02.  Consequence of Effectiveness..................................28
SECTION 3.03.  Borrowings....................................................28
                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Corporate Existence and Power.................................29
SECTION 4.02.  Corporate and Governmental Authorization; No Contravention....29
SECTION 4.03.  Binding Effect................................................29
SECTION 4.04.  Financial Information.........................................29
SECTION 4.05.  Litigation....................................................30
SECTION 4.06.  Compliance with ERISA.........................................30
SECTION 4.07.  Environmental Matters.........................................30
SECTION 4.08.  Taxes.........................................................31
SECTION 4.09.  Subsidiaries..................................................31
SECTION 4.10.  Regulatory Restrictions on Borrowing..........................31
SECTION 4.11.  Full Disclosure...............................................31
SECTION 4.12.  Representations in Collateral Documents True and Correct......32
SECTION 4.13.  Solvency......................................................32
SECTION 4.14.  Properties....................................................32
SECTION 4.15.  Year 2000.....................................................32

                                    ARTICLE 5
                                    COVENANTS

SECTION 5.01.  Information...................................................33
SECTION 5.02.  Payment of Obligations........................................36
SECTION 5.03.  Maintenance of Property; Insurance............................36
SECTION 5.04.  Conduct of Business and Maintenance of Existence..............37
SECTION 5.05.  Compliance with Laws..........................................37
SECTION 5.06.  Inspection of Property, Books and Records.....................38
SECTION 5.07.  Mergers and Sales of Assets...................................38
SECTION 5.08.  Use of Proceeds...............................................38
SECTION 5.09.  Negative Pledge...............................................39
SECTION 5.10.  Limitation on Debt............................................40
SECTION 5.11.  Minimum Consolidated Tangible Net Worth.......................40
SECTION 5.12.  Debt to Consolidated Tangible Net Worth.......................41
SECTION 5.13.  Minimum Consolidated EBITDA...................................41
SECTION 5.14.  Maximum Cash Conversion Days..................................41
SECTION 5.15.  Capital Expenditures..........................................42
SECTION 5.16.  Restricted Payments...........................................42
SECTION 5.17.  Investments...................................................43
SECTION 5.18.  Transactions with Affiliates..................................43
SECTION 5.19.  Restrictive Agreements........................................43
SECTION 5.20.  Accounting Changes............................................44
SECTION 5.21.  Modification of Certain Documents.............................44
SECTION 5.22.  Capital Stock.................................................44
SECTION 5.23.  Further Assurances............................................44
SECTION 5.24.  Landlord and Warehouseman Waivers.............................46

                                    ARTICLE 6
                                    DEFAULTS

SECTION 6.01.  Events of Default.............................................46
SECTION 6.02.  Notice of Default.............................................49

                                    ARTICLE 7
                                   THE AGENTS

SECTION 7.01.  Appointment and Authorization.................................49
SECTION 7.02.  Agents and Affiliates.........................................49
SECTION 7.03.  Action by Agents..............................................49
SECTION 7.04.  Consultation with Experts.....................................49
SECTION 7.05.  Liability of Agents...........................................50
SECTION 7.06.  Indemnification...............................................50
SECTION 7.07.  Credit Decision...............................................50
SECTION 7.08.  Successor Agents..............................................51
SECTION 7.09.  Agents' Fees..................................................51

                                    ARTICLE 8
                            CHANGE IN CIRCUMSTANCES

SECTION 8.01.  Basis for Determining Interest Rate Inadequate or Unfair......51
SECTION 8.02.  Illegality....................................................52
SECTION 8.03.  Increased Cost and Reduced Return.............................52
SECTION 8.04.  Taxes.........................................................54
SECTION 8.05.  Base Rate Loans Substituted for Affected Euro-Dollar Loans....55
SECTION 8.06.  Substitution of Bank..........................................56

                                    ARTICLE 9
                                 MISCELLANEOUS

SECTION 9.01.   Notices......................................................56
SECTION 9.02.  No Waivers....................................................57
SECTION 9.03.  Expenses; Indemnification.....................................57
SECTION 9.04.  Sharing of Set-offs...........................................57
SECTION 9.05.  Amendments and Waivers; Release of Collateral.................58
SECTION 9.06.  Successors; Participation and Assignments.....................58
SECTION 9.07.  No Reliance on Margin Stock...................................60
SECTION 9.08.  Governing Law; Submission to Jurisdiction.....................60
SECTION 9.09.  Counterparts; Integration; Effectiveness......................60
SECTION 9.10.  WAIVER OF JURY TRIAL..........................................61
SECTION 9.11.  Confidentiality...............................................61
SECTION 9.12.  Right of Set-off..............................................61



         COMMITMENT SCHEDULE
         PRICING SCHEDULE
         SCHEDULE I - Debt
         SCHEDULE II - None
         EXHIBIT A - Note
         EXHIBIT B - Opinion of Counsel for the Borrower  
         EXHIBIT C - Opinion of Special  Counsel for the Agents  
         EXHIBIT D - Assignment  and Assumption Agreement  
         EXHIBIT E - Security  Agreement 
         EXHIBIT F - Pledge Agreement
         EXHIBIT G - Subordinated Note

         AGREEMENT dated as of July 15, 1998 among IOMEGA CORPORATION, the BANKS
party hereto, CITIBANK, N.A., as Administrative Agent, and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Documentation Agent.

         WHEREAS, the Borrower, the banks referred to therein,  Citibank,  N.A.,
as administrative agent for such banks, and Morgan Guaranty Trust Company of New
York, as  documentation  agent for such banks, are parties to a Credit Agreement
dated as of March 11, 1997 and amended and restated as of January 23, 1998;

         WHEREAS, such parties desire to amend and restate said Credit Agreement
as provided in this Agreement and, upon satisfaction of the conditions specified
in Section 3.01, said Credit Agreement will be so amended and restated; and

         NOW, THEREFORE, the parties hereto agree as follows:



                                    ARTICLE 1

                                   DEFINITIONS

     SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings: "Administrative Agent" means Citibank, N.A., in its capacity
as  administrative  agent for the Banks  hereunder,  and its  successors in such
capacity.

         "Administrative  Questionnaire"  means,  with respect to each Bank,  an
administrative  questionnaire in the form prepared by the Administrative  Agent,
completed by such Bank and returned to the Administrative  Agent (with a copy to
the Borrower and the Documentation Agent).

         "Affiliate" means (i) any Person that directly,  or indirectly  through
one or more  intermediaries,  controls the Borrower (a "Controlling  Person") or
(ii) any Person (other than the Borrower or a Subsidiary) which is controlled by
or is under common control with a Controlling  Person. As used herein,  the term
"control" means possession,  directly or indirectly, of the power to vote 10% or
more of any  class of  voting  securities  of a Person or to direct or cause the
direction  of the  management  or  policies  of a Person,  whether  through  the
ownership of voting securities, by contract or otherwise.

         "Agents" means the  Administrative  Agent and the Documentation  Agent,
and "Agent" means either of the foregoing.

         "Agreement",  when used with  reference to this  Agreement,  means this
Amended and Restated  Credit  Agreement  dated as of July 15, 1998, as it may be
amended from time to time.

         "Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic  Lending Office,  and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.

         "Asset Sale" means any sale, lease or other disposition  (including any
such transaction  effected by way of merger or consolidation) by the Borrower or
any of its domestic Subsidiaries of any Collateral, including without limitation
any  sale-leaseback  transaction,  whether or not involving a capital lease, but
excluding (i)  dispositions of inventory,  cash, cash equivalents and other cash
management  investments  and  obsolete,  unused  or  unnecessary  equipment  and
undeveloped real estate,  in each case in the ordinary course of business,  (ii)
dispositions of production  equipment to the extent proceeds of such disposition
do not exceed  $5,000,000  in any Fiscal  Year of the  Borrower  and  $7,000,000
during the period from and including  the  Effective  Date through and including
the  Termination  Date,  (iii)  dispositions  to  the  Borrower  or  a  domestic
Wholly-Owned  Subsidiary  and (iv)  dispositions  from the  Borrower  to [Iomega
Malaysia] of manufacturing equipment.

         "Assignee" has the meaning set forth in Section 9.06(c).

         "Available  Amount"  means (i) on any day on or prior to May 15,  1999,
the greater of the Base Amount and the Borrowing Base in effect on such day, and
(ii) on any day thereafter, the Borrowing Base in effect on such day.

         "Bank"  means each bank  listed on the  signature  pages  hereof,  each
Assignee which becomes a Bank pursuant to Section 9.06(c),  and their respective
successors.
         "Base  Amount" means  $110,000,000,  as such amount may be reduced from
time to time pursuant to Section 2.09(a) or (b).

         "Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the  Prime  Rate for  such day and (ii) the sum of 2 of 1% plus the  Federal
Funds Rate for such day.

         "Base Rate Loan"  means a Loan which  bears  interest  at the Base Rate
pursuant  to the  applicable  Notice of  Borrowing  or Notice of  Interest  Rate
Election or the provisions of Section 2.05(a) or Article 8.

         "Borrower" means  Iomega Corporation, a Delaware  corporation,  and its
successors.

         "Borrower  Plan" means the  memorandum  dated July 8, 1998 furnished to
the Banks in connection with the transactions contemplated hereby.

         "Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower  on the same day  pursuant  to Article 2, all of which Loans are of the
same type  (subject  to Article 8) and,  except in the case of Base Rate  Loans,
have the same initial  Interest  Period. A Borrowing is a Base Rate Borrowing if
such  Loans are Base Rate  Loans or a  Euro-Dollar  Borrowing  if such Loans are
Euro-Dollar Loans.

         "Borrowing  Base" means,  on any date, the amount of the Borrowing Base
as of the date of the Borrowing Base  Certificate  then most recently  delivered
pursuant  to  Section  5.01(n),  determined  by  calculating  the  sum  of (i) a
percentage  to be  agreed  by the  Borrower  and the  Agents on the basis of the
Initial Information and notified to the Banks within 21 days after the Effective
Date (or,  upon 30 days'  notice  from the  Administrative  Agent,  such  lesser
percentage as the Required Banks shall determine in their reasonable  discretion
based on the overall  creditworthiness of the account debtors and specify to the
Borrower,  through the  Administrative  Agent,  as being  appropriate  for these
purposes) of the aggregate  amount of Eligible  Receivables  at such date,  plus
(ii) a  percentage  to be agreed by the  Borrower and the Agents on the basis of
the  Initial  Information  and  notified  to the Banks  within 21 days after the
Effective  Date (or, upon 30 days' notice from the  Administrative  Agent,  such
lesser  percentage  as the Required  Banks shall  determine in their  reasonable
discretion based on the marketability,  accessibility and value of Inventory and
specify to the Borrower,  through the Administrative Agent, as being appropriate
for these purposes) of the aggregate  amount of Eligible  Inventory at such date
less  (iii) the  aggregate  amount of Letter of Credit  Exposure  in  respect of
letters of credit issued by any Bank which are secured by a security interest in
the Collateral pursuant to the Collateral Documents.

         "Borrowing Base  Certificate"  means a certificate,  duly executed by a
senior financial or accounting officer of the Borrower, satisfactory in form and
substance to the Agents.

         "Capital  Stock" means (i) in the case of a corporation,  any shares of
its capital stock, (ii) in the case of a partnership, any participation interest
(whether  general or limited),  (iii) in the case of any other business  entity,
any participation or other interest in the equity or profits thereof or (iv) any
warrant,  option or other right to acquire any Capital  Stock  described  in the
foregoing clauses (i), (ii) and (iii).

         "Collateral" means collateral subject to the Collateral Documents.

         "Collateral  Documents"  means  the  Pledge  Agreement,   the  Security
Agreement, any additional pledge or security agreements required to be delivered
pursuant  to the Loan  Documents  and any  instruments  of  assignment,  lockbox
letters or other instruments or agreements executed pursuant to the foregoing.

         "Commitment"  means  (i)  with  respect  to  each  Bank  listed  on the
Commitment Schedule,  the amount set forth opposite the name of such Bank on the
Commitment  Schedule,  and (ii) with respect to any Assignee,  the amount of the
transferor Bank's Commitment assigned to it pursuant to Section 9.06(c), in each
case as such amount may be changed from time to time pursuant to Section 2.07 or
9.06(c).

         "Commitment Schedule" means the Commitment Schedule attached hereto.

         "Consolidated  Debt" means,  at any date,  the Debt of the Borrower and
its  Consolidated  Subsidiaries,  determined on a consolidated  basis as of such
date.

         "Consolidated  EBITDA"  means,  for any  period,  the net income of the
Borrower and its Consolidated  Subsidiaries,  determined on a consolidated basis
for such  period,  after  excluding  the  effect of any  extraordinary  or other
non-recurring  gain (but not loss),  plus, to the extent deducted in determining
such net income for such period,  the aggregate amount of (i) interest  expense,
(ii) income tax expense,  (iii)  depreciation,  amortization  and other  similar
non-cash  charges,  iv) Nomai R&D Expenses and (v) the Permitted Second Quarter
Addback.

         "Consolidated  Subsidiary"  means, at any date, any Subsidiary or other
entity the accounts of which would be consolidated with those of the Borrower in
its  consolidated  financial  statements if such  statements were prepared as of
such date.

         "Consolidated  Tangible Net Worth" means, at any date, the consolidated
stockholders'  equity of the Borrower  and its  Consolidated  Subsidiaries  less
their  consolidated  Intangible Assets, all determined as of such date, plus the
sum of (i) Nomai R&D Expenses,  (ii) the Permitted  Second  Quarter  Addback and
(iii)  amortization  of goodwill  and other  intangible  assets  relating to the
acquisition by the Borrower of a controlling  interest in Nomai. As used herein,
"Intangible  Assets"  means the amount (to the extent  reflected in  determining
such consolidated  stockholders'  equity) of (i) all write-ups (except write-ups
resulting from foreign currency  translations and write-ups of assets of a going
concern  business  made  within  twelve  months  after the  acquisition  of such
business)  after  September 30, 1996 in the book value of any asset owned by the
Borrower or a Consolidated  Subsidiary,  (ii) all Investments in  unconsolidated
Subsidiaries  and all equity  Investments in Persons which are not  Subsidiaries
and (iii) all  unamortized  debt  discount  and  expense,  unamortized  deferred
charges, goodwill, patents, trademarks,  service marks, trade names, anticipated
future  benefit  of  tax  loss  carry-forwards,   copyrights,   organization  or
developmental expenses and other intangible assets.

         "Debt" of any Person means, at any date, without  duplication,  (i) all
obligations  of such Person for borrowed  money,  (ii) all  obligations  of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services,  except  trade  accounts  payable  arising in the  ordinary  course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (v) all  non-contingent  obligations (and, for purposes of
Section  5.09  and the  definitions  of  Material  Debt and  Material  Financial
Obligations, all contingent obligations) of such Person to reimburse any bank or
other  Person in  respect  of  amounts  paid under a letter of credit or similar
instrument, (vi) all Debt secured by a Lien on any asset of such Person, whether
or not such  Debt is  otherwise  an  obligation  of such  Person,  and (vii) all
Guarantees  by such Person of Debt of another  Person  (each such  Guarantee  to
constitute  Debt in an amount  equal to the amount of such other  Person's  Debt
Guaranteed thereby).

         "Default"  means any condition or event which  constitutes  an Event of
Default  or which  with the  giving of  notice  or lapse of time or both  would,
unless cured or waived, become an Event of Default.

         "Derivatives  Obligations"  of any Person means all obligations of such
Person in  respect  of any rate  swap  transaction,  basis  swap,  forward  rate
transaction,  commodity  swap,  commodity  option,  equity or equity index swap,
equity or equity index  option,  bond  option,  interest  rate  option,  foreign
exchange transaction,  cap transaction,  floor transaction,  collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar  transaction  (including  any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.

         "Documentation  Agent" means Morgan Guaranty Trust Company of New York,
in its  capacity  as  documentation  agent  for  the  Banks  hereunder,  and its
successors in such capacity.

         "Domestic  Business  Day"  means any day except a  Saturday,  Sunday or
other day on which  commercial banks in New York City are authorized or required
by law to close.

         "Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative  Questionnaire (or identified in its
Administrative  Questionnaire  as its  Domestic  Lending  Office)  or such other
office as such Bank may hereafter  designate as its Domestic  Lending  Office by
notice to the Borrower and the Administrative Agent.

         "Effective  Date" means the date this  Agreement  becomes  effective in
accordance with Section 3.01.

         "Eligible  Inventory" means, at any date of determination  thereof, the
value  (determined  at the lower of cost or market) of all Inventory  other than
those types of  Inventory  agreed by the Borrower and the Agents on the basis of
the  Initial  Information  and  notified  to the Banks  within 21 days after the
Effective Date.

         "Eligible Receivables" means, at any date of determination thereof, the
aggregate  of  all  Receivables  at  such  date  other  than  those  classes  of
Receivables  agreed by the  Borrower  and the Agents on the basis of the Initial
Information and notified to the Banks within 21 days after the Effective Date.

         "Environmental  Laws"  means  any and all  federal,  state,  local  and
foreign statutes,  laws, judicial  decisions,  regulations,  ordinances,  rules,
judgments, orders, decrees, plans, injunctions,  permits,  concessions,  grants,
franchises, licenses, agreements and other governmental restrictions relating to
the  environment  or the  effect  of  the  environment  on  human  health  or to
emissions,  discharges  or  releases  of  pollutants,   contaminants,  Hazardous
Substances  or  wastes  into the  environment,  including  (without  limitation)
ambient air, surface water,  ground water or land, or otherwise  relating to the
manufacture,   processing,  distribution,  use,  treatment,  storage,  disposal,
transport  or handling of  pollutants,  contaminants,  Hazardous  Substances  or
wastes or the clean-up or other remediation thereof.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended, or any successor statute.

         "ERISA Group" means the Borrower,  any  Subsidiary 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 Borrower or any
Subsidiary,  are treated as a single  employer under Section 414 of the Internal
Revenue Code.

         "Euro-Dollar  Business  Day" means any  Domestic  Business Day on which
commercial  banks are open for  international  business  (including  dealings in
dollar deposits) in London.

         "Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or   affiliate   located  at  its  address  set  forth  in  its   Administrative
Questionnaire  (or  identified  in  its  Administrative   Questionnaire  as  its
Euro-Dollar  Lending  Office) or such other office,  branch or affiliate of such
Bank as it may hereafter  designate as its Euro-Dollar  Lending Office by notice
to the Borrower and the Administrative Agent.

         "Euro-Dollar  Loan" means a Loan which bears  interest at a Euro-Dollar
Rate pursuant to the  applicable  Notice of Borrowing or Notice of Interest Rate
Election.

         "Euro-Dollar Margin" has the meaning set forth in Section 2.04(b).

         "Euro-Dollar  Rate"  means a rate of  interest  determined  pursuant to
Section 2.04(b) on the basis of a London Interbank Offered Rate.

         "Euro-Dollar  Reserve  Percentage"  means, for any day, that percentage
(expressed  as a decimal)  which is in effect on such day, as  prescribed by the
Board  of  Governors  of the  Federal  Reserve  System  (or any  successor)  for
determining  the maximum  reserve  requirement  for a member bank of the Federal
Reserve System in New York City with deposits  exceeding five billion dollars in
respect of  "Eurocurrency  liabilities"  (or in respect of any other category of
liabilities  which includes  deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United  States office of any Bank to United
States residents).

         "Events of Default" has the meaning set forth in Section 6.01.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time.

         "Existing  Credit  Agreement"  means the Credit  Agreement  dated as of
March 11,  1997 and  amended  and  restated  as of  January  23,  1998 among the
Borrower,  the banks  referred to therein,  Citibank,  N.A.,  as  administrative
agent, and Morgan Guaranty Trust Company of New York, as documentation agent, as
in effect from time to time prior to the Effective Date.

         "Existing Bank" means a "Bank" (as such term is defined in the Existing
Credit  Agreement) that is a party to the Existing Credit Agreement  immediately
prior to the Effective Date.

         "Federal  Funds Rate" means,  for any day, the rate per annum  (rounded
upward, if necessary,  to the nearest 1/100 of 1%) 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 on such day, as published by
the  Federal  Reserve  Bank  of New  York  on the  Domestic  Business  Day  next
succeeding  such day,  provided that (i) if such day is not a Domestic  Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the  next  preceding  Domestic  Business  Day  as so  published  on the  next
succeeding  Domestic  Business  Day and (ii) if no such rate is so  published on
such next succeeding  Domestic Business Day, the Federal Funds Rate for such day
shall  be the  average  rate  quoted  to  Citibank,  N.A.  on  such  day on such
transactions as determined by the Administrative Agent.

         "Fiscal Quarter" means a fiscal quarter of the Borrower.

         "Fiscal Year" means a fiscal year of the Borrower.

         "GAAP" means generally accepted accounting principles as in effect from
time to time,  applied on a basis consistent (except for changes concurred in by
the  Borrower's  independent  public  accountants)  with the most recent audited
consolidated   financial   statements  of  the  Borrower  and  its  Consolidated
Subsidiaries delivered to the Banks.

         "Group of Loans" means, at any time, a group of Loans consisting of (i)
all Loans which are Base Rate Loans at such time or (ii) all  Euro-Dollar  Loans
having the same Interest  Period at such time,  provided  that, if a Loan of any
particular  Bank is converted to or made as a Base Rate Loan pursuant to Article
8, such Loan shall be included in the same Group or Groups of Loans from time to
time as it would have been in if it had not been so converted or made.

         "Guarantee"  by  any  Person  means  any   obligation,   contingent  or
otherwise,  of such Person directly or indirectly guaranteeing any Debt or other
obligation  of any other  Person and,  without  limiting the  generality  of the
foregoing, any obligation,  direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or  advance or supply  funds for the  purchase or
payment  of)  such  Debt or other  obligation  (whether  arising  by  virtue  of
partnership arrangements,  by agreement to keep-well, to purchase assets, goods,
securities  or services,  to  take-or-pay,  or to maintain  financial  statement
conditions  or  otherwise),  (ii) to reimburse a bank for amounts  drawn under a
letter of credit for the purpose of paying such Debt or (iii)  entered  into for
the  purpose of  assuring  in any other  manner the holder of such Debt or other
obligation  of the payment  thereof or to protect  such holder  against  loss in
respect  thereof (in whole or in part),  provided that the term Guarantee  shall
not include  endorsements  for  collection or deposit in the ordinary  course of
business. The term Guarantee used as a verb has a corresponding meaning.

         "Hazardous  Substances"  means  any  toxic,  radioactive,   caustic  or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and  other  hydrocarbons,  or any  substance  having  any  constituent  elements
displaying any of the foregoing characteristics.

         "Indemnitee" has the meaning set forth in Section 9.03(b).

         "Initial  Information"  means  the  information  as  to  Inventory  and
Receivables distributed to the Banks on July 14, 1998.

         "Interest Period" means: (1) with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice of
Borrowing or on the date  specified  in an  applicable  Notice of Interest  Rate
Election and ending one, two,  three or six months  thereafter,  as the Borrower
may elect in such notice; provided that

                  (a) any  Interest  Period which would  otherwise  end on a day
         which is not a  Euro-Dollar  Business Day shall be extended to the next
         succeeding  Euro-Dollar  Business Day unless such Euro-Dollar  Business
         Day falls in another calendar month, in which case such Interest Period
         shall end on the next preceding Euro-Dollar Business Day;

                  (b) any Interest  Period which begins on the last  Euro-Dollar
         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 such
         Interest  Period) shall,  subject to clause (c) below,  end on the last
         Euro-Dollar Business Day of a calendar month; and

                  (c) any Interest  Period which would  otherwise  end after the
         Termination Date shall end on the Termination Date.

         "Internal  Revenue  Code" means the Internal  Revenue Code of 1986,  as
amended, or any successor statute.

         "Inventory"  shall mean  inventory  (as defined in Article 9 of the New
York Uniform  Commercial  Code) to the extent  comprised  of readily  marketable
materials of a type  manufactured,  consumed or held for resale  (including  raw
materials  and  work-in-process)  by the  Borrower  in the  ordinary  course  of
business.

         "Investment"  means any  investment in any Person,  whether by means of
share purchase, capital contribution, loan, Guarantee, time deposit or otherwise
(but not including any demand deposit).

         "Letter of Credit  Exposure"  shall mean, at any time and in respect of
any letter of credit,  the sum of (i) the amount  available  for drawings  under
such  letter of credit  issued  for the  account of the  Borrower  plus (ii) the
aggregate  unpaid amount of all  reimbursement  obligations  at the time due and
payable in respect of previous  drawings  made under such letter of credit minus
(iii) the amount  available for drawings not in excess of $20,000,000  under any
such letter of credit that is a standby  letter of credit  issued in  connection
with litigation resulting in preliminary injunctive relief.

         "Lien" means,  with respect to any asset, any mortgage,  lien,  pledge,
charge,  security  interest  or  encumbrance  of any kind,  or any other type of
preferential  arrangement that has  substantially the same practical effect as a
security  interest,  in respect of such asset. For purposes hereof, the Borrower
or any  Subsidiary  shall be deemed to own  subject to a Lien any asset which it
has  acquired or holds  subject to the  interest of a vendor or lessor under any
conditional  sale agreement,  capital lease or other title  retention  agreement
relating to such asset.

         "Loan" means a loan made by a Bank pursuant to Section 2.01.

         "Loan  Documents"  means this Agreement,  the Notes  and the Collateral
Documents.

         "London Interbank Offered Rate"  has  the meaning  set forth in Section
 2.04(b).

         "Major Casualty  Proceeds" means (i) the aggregate  insurance  proceeds
received by the Borrower or any of its domestic  Subsidiaries in connection with
one or more related events under any insurance policy maintained by the Borrower
or any of its  domestic  Subsidiaries  covering  losses with respect to tangible
real or personal  property or improvements or losses from business  interruption
or (ii) any award or other  compensation  with  respect to any  condemnation  of
property (or any transfer or  disposition  of property in lieu of  condemnation)
received by the Borrower or any of its domestic  Subsidiaries,  if the amount of
such aggregate proceeds or award or other compensation exceeds $1,000,000.

         "Material  Adverse  Effect" means (i) any material  adverse effect upon
the  condition  (financial or  otherwise),  results of  operations,  properties,
assets or business of the Borrower and its Subsidiaries,  taken as a whole; (ii)
a material  adverse effect on the ability of the Borrower or any other Person to
consummate the transactions  contemplated hereby to occur on the Effective Date;
(iii) a material  adverse effect on the ability of the Borrower to perform under
this  Agreement and the Notes and the other Loan  Documents;  or (iv) a material
adverse effect on the rights and remedies of the Agents and the Banks under this
Agreement and the Notes and the other Loan Documents.

         "Material Debt" means Debt (except Debt  outstanding  hereunder) of the
Borrower and/or one or more of its Subsidiaries,  arising in one or more related
or unrelated  transactions,  in an aggregate  principal or face amount exceeding
$5,000,000.

         "Material  Financial  Obligations"  means a principal or face amount of
Debt and/or payment or  collateralization  obligations in respect of Derivatives
Obligations of the Borrower and/or one or more of its  Subsidiaries,  arising in
one or more  related  or  unrelated  transactions,  exceeding  in the  aggregate
$5,000,000.

         "Material  Plan" means,  at any time, a Plan or Plans having  aggregate
Unfunded Liabilities in excess of $5,000,000.

         "Multiemployer  Plan" means,  at any time, an employee  pension benefit
plan  within the meaning of Section  4001(a)(3)  of ERISA to which any member of
the ERISA Group is then making or accruing an obligation  to make  contributions
or has within the preceding  five plan years made  contributions,  including for
these  purposes any Person which ceased to be a member of the ERISA Group during
such five year period.

         "Net Cash  Proceeds"  means,  with respect to any Asset Sale, an amount
equal to the cash proceeds  received by the Borrower or any of its  Subsidiaries
from or in respect of such Asset Sale  (including any cash proceeds  received as
income or other proceeds of any noncash  proceeds of such Asset Sale),  less (x)
any expenses  reasonably  incurred by such Person in respect of such Asset Sale,
(y) the amount of any Debt  secured by a Lien on any asset  disposed  of in such
Asset Sale and discharged  from the proceeds  thereof and (z) any taxes actually
paid or to be payable by such  Person (as  estimated  by a senior  financial  or
accounting officer of the Borrower, giving effect to the overall tax position of
the Borrower) in respect of such Asset Sale.

         "Nomai" means Nomai S.A., a societe anonyme organized under the laws of
the Republic of France.

         "Nomai R&D  Expenses"  means all  expenses  relating to the writeoff of
in-process  research  and  development  expenses of Nomai  recorded in the third
Fiscal Quarter of 1998 in connection  with the  acquisition by the Borrower of a
controlling interest in Nomai.

         "Notes" means  promissory  notes of the Borrower,  substantially in the
form of Exhibit A hereto,  evidencing  the  Borrower's  obligation  to repay the
Loans, and "Note" means any one of such promissory notes issued hereunder.

         "Notice of Borrowing" has the meaning set forth in Section 2.02.

         "Notice of Interest Rate Election" has the meaning set forth in Section
 2.05.

         "Parent"  means, with respect to any  Bank, any Person controlling such
 Bank.

         "Participant" has the meaning set forth in Section 9.06(b).

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

         "Permitted  Acquisition"  shall  mean  any  Proposed  Acquisition  with
respect to which the following conditions have been met:

                   (i) the  Security  Agent shall have  received (A) a perfected
         lien on all of the Capital  Stock (or, in the case of the Capital Stock
         of a foreign Person, no more than 65% of the outstanding  Capital Stock
         thereof)  and assets (to the extent owned by a Person  domiciled  under
         the laws of the United  States or any  political  subdivision  thereof)
         acquired in  connection  with the  Proposed  Acquisition,  junior to no
         other Liens,  except as permitted by Section 5.09,  and (B) a guarantee
         from any  Subsidiary  organized  under the laws of the United States or
         any  political  subdivision  thereof  acquired or created in connection
         with such Proposed Acquisition;

                  (ii) the Borrower shall have delivered a written notice to the
         Agents and the Banks of its intention to make such Proposed Acquisition
         (other than any Proposed  Acquisition  the purchase price of which does
         not exceed  $1,000,000)  no less than 10 Business Days (or such shorter
         period agreed to by the Agents) prior to the proposed consummation date
         thereof (the  "Consummation  Date"),  setting forth the material  terms
         thereof  and the  source  of  funding  of the  purchase  price  of such
         Proposed Acquisition;

                 (iii)  the  sum of the  cash  purchase  price  of all  Proposed
         Acquisitions,  including any deferred  purchase price,  does not exceed
         $10,000,000;  provided  that such  Proposed  Acquisition  is  otherwise
         permitted by Section 5.17(d);

                  (iv) the amount of Debt assumed  (directly or indirectly) as a
         result of all Proposed  Acquisitions  does not exceed $5,000,000 in the
         aggregate; provided that the incurrence of such Debt is permitted under
         Section 5.10(e);

                   (v) the sum of the fair market  value of that  portion of the
         purchase price of all Proposed Acquisitions payable in common equity of
         the Borrower does not exceed $10,000,000;

                  (vi) on the  Consummation  Date for such Proposed  Acquisition
         and after giving effect thereto, (A) no Default shall have occurred and
         be continuing and (B) all representations and warranties under the Loan
         Documents shall be true and correct in all material  respects as though
         made on and as of such date; and

                 (vii) the Borrower shall have provided the Agents and the Banks
         such other financial information,  financial analyses, documentation or
         other information  relating to such Proposed  Acquisition (other than a
         Proposed  Acquisition  the  purchase  price  of which  does not  exceed
         $1,000,000)  as  either  Agent or the  Required  Banks  may  reasonably
         request.

         "Permitted  Second Quarter  Addback" means special charges taken in the
second  Fiscal  Quarter  of 1998  to the  extent  such  special  charges  exceed
$10,000,000 and are less than  $20,000,000  (and to the extent that such special
charges  exceed  $20,000,000  then such special  charges will be deemed to equal
$20,000,000),  so long as the cash portion of all special  charges taken in such
Fiscal Quarter does not exceed $14,000,000.

         "Person"  means an  individual,  a  corporation,  a  limited  liability
company,  a  partnership,  an  association,  a  trust  or any  other  entity  or
organization,  including a government or political  subdivision  or an agency or
instrumentality thereof.

         "Plan" means, at any time, an employee pension benefit plan (other than
a  Multiemployer  Plan)  which is covered by Title IV of ERISA or subject to the
minimum  funding  standards  under Section 412 of the Internal  Revenue Code and
either (i) is maintained,  or  contributed  to, by any member of the ERISA Group
for  employees  of any member of the ERISA  Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for  employees  of any Person which
was at such time a member of the ERISA Group.

         "Pledge Agreement" means the pledge agreement dated as of the Effective
Date  substantially in the form of Exhibit F hereto between the Borrower and the
Security Agent, as amended from time to time.

         "Pricing Schedule" means the Pricing Schedule attached hereto.

         "Prime Rate" means the rate of interest publicly announced by Citibank,
 N.A. in New York City from time to time as its Prime Rate.

         "Proposed  Acquisition"  shall mean (a) any purchase by the Borrower or
any Wholly-Owned Subsidiary of (i) any capital stock of any Person if, following
such  purchase,  such  Person  would  be a  Subsidiary,  or (ii) any  merger  or
consolidation  of a Wholly-Owned  Subsidiary with any Person,  provided that, in
each such case  referred to in this clause (a),  such Person is in the same or a
similar  line of  business  as the  Borrower,  and (b)  any  acquisition  by the
Borrower  or any  Wholly-Owned  Subsidiary  of all or  substantially  all of the
assets,  operations,  any division or any operating unit of any Person, provided
that,  in each such case,  such  Person is in (or such  assets are usable in, or
such  operations  or division  are in) the same or a similar line of business as
the Borrower.

         "Quarterly  Payment  Dates" means each March 31, June 30,  September 30
and December 31.

         "Receivable" means, as at any date of determination thereof, the unpaid
portion of the obligation, as stated in the respective invoice, of a customer of
the Borrower in respect of Inventory  sold or services  rendered in the ordinary
course of business,  which amount has been earned by performance under the terms
of the related  contract  and  recognized  as a  receivable  on the books of the
Borrower,  net of any credits,  rebates or offsets owed to the customer and also
net of any commissions  payable to Persons other than Subsidiaries or Affiliates
of the Borrower or any of their employees.

         "Reference Banks"  means the principal London offices of Fleet National
Bank,  Citibank,  N.A. and  Morgan  Guaranty  Trust  Company  of  New  York, and
"Reference Bank" means any one of such Reference Banks.

         "Regulation  U" means  Regulation  U of the Board of  Governors  of the
Federal Reserve System, as in effect from time to time.

         "Required  Banks" means, at any time,  Banks having at least 51% of the
aggregate  amount  of  the  Commitments  or,  if  the  Commitments   shall  have
terminated, holding at least 51% of the aggregate unpaid principal amount of the
Loans.

         "Restricted  Payment" means (i) any dividend or other  distribution  on
any shares of the Borrower's  capital stock (except  dividends payable solely in
shares of its capital stock other than mandatorily  redeemable  preferred stock)
or (ii) any  payment on  account  of the  purchase,  redemption,  retirement  or
acquisition of (a) any shares of the Borrower's capital stock or (b) any option,
warrant or other right to acquire  shares of the  Borrower's  capital stock (but
not including payments of principal,  premium (if any) or interest made pursuant
to the  terms  of  convertible  debt  securities  prior  to  conversion).  It is
understood  that the net exercise of stock options and other employee awards not
involving any cash payments by the Borrower,  pursuant to plans described in the
Borrower's  filings  with  the  Securities  and  Exchange  Commission,  does not
constitute a Restricted Payment by the Borrower.

         "Revolving  Credit  Period"  means the period  from and  including  the
Effective Date to but not including the Termination Date.

         "SEC" means the Securities and Exchange Commission.

         "Security Agent" means Citicorp USA, Inc., in its capacity as agent for
the Banks under the Collateral Documents, and its successors in such capacity.

         "Security  Agreement"  means  the  security  agreement  dated as of the
Effective Date substantially in the form of Exhibit E hereto among the Borrower,
the Security Agent and Northern Trust Company, as Concentration Bank, as amended
from time to time.

         "Subordinated  Notes" means one or more Senior Subordinated  Promissory
Notes in an aggregate principal amount not to exceed $40,000,000, in the form of
Exhibit H hereto.

         "Subsidiary"  means, as to any Person,  any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons  performing  similar
functions are at the time directly or  indirectly  owned by such Person.  Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.

         "Temporary  Cash  Investment"   means  any  Investment  in  (i)  direct
obligations of the United States or any agency thereof or obligations guaranteed
by the United States or any agency thereof, (ii) commercial paper rated at least
A-1 by Standard & Poor's Ratings Services or P-1 by Moody's  Investors  Service,
Inc., (iii) time deposits with, including certificates of deposit issued by, any
office  located  in the  United  States  of any bank or trust  company  which is
organized or licensed  under the laws of the United  States or any State thereof
(or,  if  the  Investment  is  made  outside  the  United  States  by a  foreign
Subsidiary,  any  office  located  in the  United  Kingdom,  Switzerland  or the
Netherlands  of any bank or trust company  which is organized or licensed  under
the laws of the United Kingdom,  Switzerland or the  Netherlands,  the unsecured
long-term debt of which is rated at least A by Standard & Poor's Ratings Service
or A2 by  Moody's  Investors  Services,  Inc.)  and  has  capital,  surplus  and
undivided  profits   aggregating  at  least   $1,000,000,000,   (iv)  repurchase
agreements with respect to securities described in clause (i) above entered into
with an office of a bank or trust  company  meeting the  criteria  specified  in
clause  (iii)  above,  or (v) any other  obligation  which  meets  the  criteria
established in the Borrower's  U.S. cash  investment  policy as in effect on the
date hereof.

         "Termination  Date"  means  July  14,  2000,  or,  if such day is not a
Euro-Dollar  Business Day, the next succeeding  Euro-Dollar  Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar Business Day.

         "Unfunded Liabilities" means, with respect to any Plan at any time, the
amount  (if any) by which (i) the value of all  benefit  liabilities  under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for  purposes of Section  4044 of ERISA,  exceeds  (ii) the fair market
value of all Plan assets allocable to such  liabilities  under Title IV of ERISA
(excluding any accrued but unpaid contributions),  all determined as of the then
most  recent  valuation  date for such Plan,  but only to the  extent  that such
excess  represents  a potential  liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

         "United States" means the United States of America.

         "Usage" means at any date the  percentage  equivalent of a fraction (i)
the  numerator of which is the  aggregate  outstanding  principal  amount of the
Loans at such date,  after  giving  effect to any  borrowing  or payment on such
date,  and  (ii)  the  denominator  of  which  is the  aggregate  amount  of the
Commitments at such date. If for any reason any Loans remain  outstanding  after
termination of the Commitments,  the Usage for each date on or after the date of
such termination shall be deemed to be greater than 66%.

         "Wholly-Owned  Subsidiary"  means,  at any time, a Subsidiary,  all the
outstanding Capital Stock (other than qualifying  director's shares) of which is
owned, directly or indirectly, by the Borrower at such time.

     SECTION  1.02.  Accounting  Terms  and  Determinations.   Unless  otherwise
specified  herein,  all accounting  terms used herein shall be interpreted,  all
accounting  determinations hereunder shall be made, and all financial statements
required to be delivered  hereunder  shall be prepared in accordance  with GAAP;
provided  that,  if the  Borrower  notifies  the  Administrative  Agent that the
Borrower  wishes to amend any  provision  hereof to eliminate  the effect of any
change in GAAP on the  operation  of such  provision  (or if the  Administrative
Agent  notifies the Borrower that the Required Banks wish to amend any provision
hereof for such  purpose),  then the Borrower's  compliance  with such provision
shall be  determined  on the  basis of GAAP in  effect  immediately  before  the
relevant change in GAAP became effective,  until either such notice is withdrawn
or such  provision is amended in a manner  satisfactory  to the Borrower and the
Required Banks.


                                    ARTICLE 2
                                   THE CREDITS

     SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on the terms
and conditions set forth in this  Agreement,  to make loans to the Borrower from
time to time during the Revolving  Credit  Period;  provided  that,  immediately
after each such loan is made, the aggregate  outstanding principal amount of all
Loans by such Bank shall not exceed  the  lesser of its  Commitment  and its pro
rata share of the Available  Amount.  Each Borrowing under this Section shall be
in an  aggregate  principal  amount of  $5,000,000  or any  larger  multiple  of
$1,000,000 (except that any such Borrowing may be in the aggregate amount of the
unused  Commitments)  and  shall  be made  from the  several  Banks  ratably  in
proportion to their respective  Commitments.  Within the foregoing  limits,  the
Borrower may borrow under this Section,  prepay Loans to the extent permitted by
Section 2.08 and reborrow at any time during the  Revolving  Credit Period under
this Section.

     SECTION  2.02.  Method  of  Borrowing.  (a) The  Borrower  shall  give  the
Administrative  Agent notice (a "Notice of Borrowing") not later than 12:00 Noon
(New York City  time) on (x) the date of each  Base Rate  Borrowing  and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: (i
the date of such Borrowing,  which shall be a Domestic  Business Day in the case
of a Base  Rate  Borrowing  or a  Euro-Dollar  Business  Day in  the  case  of a
Euro-Dollar Borrowing;

               (ii) the aggregate amount of such Borrowing;

               (iii)  whether the Loans  comprising  such  Borrowing are to bear
          interest initially at the Base Rate or a Euro-Dollar Rate; and

               (iv) in the case of a Euro-Dollar Borrowing,  the duration of the
          initial Interest Period applicable thereto,  subject to the provisions
          of the definition of Interest Period.

In no  event  shall  the  total  number  of  Groups  of  Loans  at any one  time
outstanding exceed twenty.

          (b) Promptly after receiving a Notice of Borrowing, the Administrative
Agent shall notify each Bank of the contents  thereof and of such Bank's ratable
share of such  Borrowing  and such Notice of Borrowing  shall not  thereafter be
revocable by the Borrower.

          (c) Not later  than 1:00 P.M. (New York City time) on the date of each
Euro-Dollar Borrowing or 2:00 P.M. (New York City time) on the date of each Base
Rate  Borrowing,  each Bank  shall  make  available  its  ratable  share of such
Borrowing,  in Federal or other funds immediately available in New York City, to
the  Administrative  Agent at its  address  specified  in or pursuant to Section
9.01. Unless the Administrative  Agent determines that any applicable  condition
specified in Article 3 has not been  satisfied,  the  Administrative  Agent will
make the funds so  received  from the Banks  available  to the  Borrower  at the
Administrative Agent's aforesaid address.

          (d) Unless the  Administrative Agent shall have received notice from a
Bank before the date of any Borrowing (or, in the case of a Base Rate Borrowing,
prior to 1:30 P.M.(New York City time) on the date of such  Borrowing) that such
Bank will not make  available to the  Administrative  Agent such Bank's share of
such Borrowing, the Administrative Agent may assume that such Bank has made such
share  available to the  Administrative  Agent on the date of such  Borrowing in
accordance with subsection (b) of this Section and the Administrative Agent may,
in reliance upon such assumption,  make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share  available to the  Administrative  Agent,  such Bank and the Borrower
severally  agree to repay to the  Administrative  Agent forthwith on demand such
corresponding  amount together with interest thereon, for each day from the date
such  amount is made  available  to the  Borrower  until the date such amount is
repaid  to the  Administrative  Agent,  at (i) if such  amount  is repaid by the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest  rate  applicable  thereto  pursuant  to Section  2.04 and (ii) if such
amount is repaid by such Bank,  the Federal Funds Rate. If such Bank shall repay
to the Administrative Agent such corresponding amount, the Borrower shall not be
required  to repay  such  amount  and the  amount so  repaid by such Bank  shall
constitute  such Bank's Loan  included in such  Borrowing  for  purposes of this
Agreement.

     SECTION 2.03.  Maturity of Loans. Each Loan shall mature, and the principal
amount  thereof  shall  be due  and  payable  (together  with  interest  accrued
thereon), on the Termination Date.

     SECTION 2.04.  Interest Rates.  (a) Each Base Rate Loan shall bear interest
on the outstanding  principal  amount  thereof,  for each day from the date such
Loan is made until it becomes  due,  at a rate per annum equal to the sum of (x)
the Base Rate Margin (as  determined  in accordance  with the Pricing  Schedule)
plus (y) the Base Rate for such day. Such interest shall be payable quarterly in
arrears on each Quarterly Payment Date and, with respect to the principal amount
of any Base Rate Loan  converted to a Euro-Dollar  Loan, on the date such amount
is so  converted.  Any  overdue  principal  of or interest on any Base Rate Loan
shall bear  interest,  payable on demand,  for each day until paid at a rate per
annum  equal to the sum of 2% plus the Base  Rate  Margin  for such day plus the
Base Rate for such day.  

     (b) Each Euro-Dollar Loan shall bear interest on the outstanding  principal
amount thereof,  for each day during each Interest Period applicable thereto, at
a rate per annum  equal to the sum of the  Euro-Dollar  Margin for such day plus
the Adjusted London  Interbank  Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest  Period on the last day thereof
and, if such Interest Period is longer than three months,  at intervals of three
months after the first day thereof.

         "Euro-Dollar  Margin"  means a rate per annum  determined in accordance
with the Pricing Schedule.

         The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.

         The "London  Interbank  Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary,  to the next higher 1/16 of 1%)
of the  respective  rates per annum at which  deposits in dollars are offered to
each of the  Reference  Banks in the London  interbank  market at  approximately
11:00 A.M.  (London time) two Euro-Dollar  Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar  Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.

     (c) Any overdue principal of or interest on any Euro-Dollar Loan shall bear
interest,  payable on demand,  for each day until paid at a rate per annum equal
to the higher of (i) the sum of 2% plus the Euro-Dollar Margin for such day plus
the Adjusted  London  Interbank  Offered Rate applicable to such Loan on the day
before such payment was due and (ii) the sum of 2% plus the  Euro-Dollar  Margin
for such  day plus a rate per  annum  equal to the  quotient  obtained  (rounded
upward,  if  necessary,  to the next  higher  1/100 of 1%) by  dividing  (x) the
average  (rounded  upward,  if necessary,  to the next higher 1/16 of 1%) of the
respective  rates per annum at which one day (or,  if such  amount  due  remains
unpaid more than three Euro-Dollar  Business Days, then for such other period of
time not  longer  than  three  months as the  Administrative  Agent may  select)
deposits in dollars in an amount approximately equal to such overdue payment due
to each of the Reference  Banks are offered to such Reference Bank in the London
interbank market for the applicable  period  determined as provided above by (y)
1.00  minus  the  Euro-Dollar  Reserve  Percentage  (or,  if  the  circumstances
described in clause (a) or (b) of Section 8.01 shall exist,  at a rate per annum
equal to the sum of 2% plus the Base Rate for such day).

     (d) The Administrative  Agent shall determine each interest rate applicable
to the Loans  hereunder.  The  Administrative  Agent shall  promptly  notify the
Borrower and the participating Banks of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.

     (e)  Each  Reference  Bank  agrees  to use  its  best  efforts  to  furnish
quotations to the Administrative  Agent as contemplated by this Section.  If any
Reference Bank does not furnish a timely  quotation,  the  Administrative  Agent
shall  determine  the relevant  interest  rate on the basis of the  quotation or
quotations  furnished by the  remaining  Reference  Bank or Banks or, if none of
such  quotations is available on a timely basis,  the provisions of Section 8.01
shall apply.

     SECTION 2.05.  Method of Electing Interest Rates. (a) The Loans included in
each  Borrowing  shall bear interest  initially at the type of rate specified by
the Borrower in the applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of interest rate borne by
each  Group  of  Loans  (subject  to  subsection  (d) of  this  Section  and the
provisions of Article 8), as follows:  

          (i) if such  Loans  are Base Rate  Loans,  the  Borrower  may elect to
     convert such Loans to Euro-Dollar Loans as of any Euro-Dollar  Business Day
     and

          (ii) if such Loans are  Euro-Dollar  Loans,  the Borrower may elect to
     convert  such Loans to Base Rate Loans or elect to  continue  such Loans as
     Euro-Dollar  Loans for an additional  Interest  Period,  subject to Section
     2.10 if any such conversion is effective on any day other than the last day
     of an Interest Period applicable to such Loans.

Each such  election  shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Administrative  Agent not later than 10:30 A.M. (New York
City  time) on the third  Euro-Dollar  Business  Day before  the  conversion  or
continuation  selected in such notice is to be  effective.  A Notice of Interest
Rate Election may, if it so specifies,  apply to only a portion of the aggregate
principal amount of the relevant Group of Loans;  provided that (i) such portion
is allocated  ratably among the Loans comprising such Group and (ii) the portion
to which such Notice  applies,  and the  remaining  portion to which it does not
apply,  are each at least  $5,000,000  (unless such portion is comprised of Base
Rate Loans).  If no such notice is timely received before the end of an Interest
Period for any Group of Euro-Dollar  Loans, the Borrower shall be deemed to have
elected  that such Group of Loans be  converted to Base Rate Loans at the end of
such Interest Period.

     (b) Each Notice of Interest Rate Election shall specify:

               (i) the Group of Loans (or portion  thereof) to which such notice
          applies;

               (ii) the date on which the conversion or continuation selected in
          such notice is to be effective, which shall comply with the applicable
          clause of subsection (a) above;

               (iii) if the Loans comprising such Group are to be converted, the
          new type of Loans and, if the Loans resulting from such conversion are
          to be Euro-Dollar Loans, the duration of the next succeeding  Interest
          Period applicable thereto; and

               (iv) if such Loans are to be continued as  Euro-Dollar  Loans for
          an  additional  Interest  Period,  the  duration  of  such  additional
          Interest Period.

Each  Interest  Period  specified in a Notice of Interest  Rate  Election  shall
comply with the provisions of the definition of Interest Period.

     (c) Promptly  after  receiving a Notice of Interest  Rate Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall notify
each Bank of the  contents  thereof  and such  notice  shall not  thereafter  be
revocable by the Borrower.

     (d) The Borrower  shall not be entitled to elect to convert any Loans to,or
continue any Loans for an additional  Interest Period as,  Euro-Dollar  Loans if
(i) the aggregate  principal amount of any Group of Euro-Dollar Loans created or
continued as a result of such election  would be less than  $5,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower  delivers notice
of such election to the Administrative Agent.

     SECTION  2.06.  Fees.  (a)  Commitment  Fee. The Borrower  shall pay to the
Administrative  Agent,  for the account of the Banks  ratably in  proportion  to
their Commitments, a commitment fee at the Commitment Fee Rate (determined daily
in accordance  with the Pricing  Schedule) per annum on the daily average amount
by  which  the  aggregate  amount  of  the  Commitments  exceeds  the  aggregate
outstanding principal amount of the Loans. Such commitment fee shall accrue from
and  including  the  Effective  Date to but  excluding  the  date on  which  the
Commitments  terminate  in their  entirety,  and shall be payable  quarterly  in
arrears on each Quarterly  Payment Date and on the date on which the Commitments
terminate in their  entirety.  

     (b) Utilization  Fee. For each day on which Usage exceeds 33%, the Borrower
shall pay to the  Administrative  Agent for the account of the Banks  ratably in
proportion to their  Commitments,  a utilization fee at the Utilization Fee Rate
(determined  daily in  accordance  with the Pricing  Schedule)  per annum on the
aggregate  principal  amount of Loans  outstanding on such day. Such utilization
fee shall be payable  quarterly in arrears on each Quarterly Payment Date and on
the Termination Date.

     SECTION 2.07. Termination or Reduction of Commitments.(a) The Borrower may,
upon at least three Domestic Business Days' notice to the Administrative  Agent,
(i) terminate the  Commitments at any time, if no Loans are  outstanding at such
time,  or (ii) ratably  reduce from time to time,  by an aggregate  amount of at
least  $25,000,000,  the aggregate  amount of the  Commitments  in excess of the
aggregate  outstanding principal amount of the Loans. Promptly after receiving a
notice pursuant to this subsection,  the Administrative  Agent shall notify each
Bank of the contents thereof. 

     (b) Unless previously terminated,  the Commitments shall terminate in their
entirety on the Termination Date.

     SECTION 2.08. Optional  Prepayments. (a) Subject in the case of Euro-Dollar
Loans to Section 2.10,  the Borrower  may,  upon at least one Domestic  Business
Day's notice to the Administrative Agent, prepay any Group of Base Rate Loans or
upon at least three  Euro-Dollar  Business  Days'  notice to the  Administrative
Agent, prepay any Group of Euro-Dollar Loans, in each case in whole at any time,
or from time to time in part in  amounts  aggregating  $5,000,000  or any larger
multiple of $1,000,000,  by paying the principal  amount to be prepaid  together
with  interest  accrued  thereon to the date of  prepayment.  Each such optional
prepayment  shall be applied to prepay  ratably the Loans of the  several  Banks
included  in such  Group of  Loans.

     (b)  Promptly  after  receiving  a notice  of  prepayment  pursuant to this
Section, the Administrative Agent shall notify each Bank of the contents thereof
and of such Bank's ratable share of such  prepayment,  and such notice shall not
thereafter be revocable by the Borrower.

     SECTION  2.09.  Mandatory  Prepayments. (a) If at any  time  after the date
hereof,  the Borrower or any of its domestic  Subsidiaries shall receive any Net
Cash Proceeds of any Asset Sale,  (i) the Borrower  shall  forthwith  prepay the
Loans in an aggregate  principal  amount equal to 100% of such Net Cash Proceeds
and (ii) if such Net Cash Proceeds are received on any date on or before May 15,
1999,  the Base Amount on such date shall be reduced in an amount  equal to 100%
of such Net Cash Proceeds;  provided that in the case of the sale or disposition
of  equipment,  the Base  Amount  shall be  reduced  only on the 90th day  after
receipt of such Net Cash Proceeds, and only in an amount equal to the amount (if
any) by which (x) the amount such Person shall not have expended or committed to
expend during such 90-day period for the replacement of the equipment in respect
of  which  such  Net Cash  Proceeds  were  received  exceeds  (y) the  aggregate
principal amount of Loans prepaid on the first day of such 90-day period.  

     (b) If at any  time  after  the  date  hereof, the  Borrower  or any of its
domestic  Subsidiaries  shall  receive  any  Major  Casualty  Proceeds,  (i) the
Borrower shall forthwith prepay the Loans in an aggregate principal amount equal
to the aggregate  Major  Casualty  Proceeds  received by such Person and (ii) if
such Major Casualty Proceeds are received on any date on or before May 15, 1999,
the Base Amount on such date shall be reduced in an amount equal to 100% of such
Major Casualty Proceeds;  provided that the Base Amount shall be reduced only on
the 180th day after  receipt of such  Major  Casualty  Proceeds,  and only in an
amount  equal to the amount (if any) by which (x) the amount such  Person  shall
not have  expended or  committed to expend  during such  180-day  period for the
restoration  or replacement of the asset in respect of which such Major Casualty
Proceeds were received (or for investment in any other fixed assets) exceeds (y)
the aggregate principal amount of Loans prepaid on the first day of such 180-day
period.

     (c) If on any Domestic  Business  Day the aggregate  outstanding  principal
amount of the Loans  exceeds  the lesser of the  Commitments  and the  Available
Amount, the Borrower shall prepay no later than the next Domestic Business Day a
principal amount of Loans equal to such excess.

     (d) The prepayments required by subsection (a) shall be made forthwith upon
receipt by the Borrower or any of its Subsidiaries,  as the case may be, of such
Net Cash  Proceeds;  provided  that if the Net Cash  Proceeds  in respect of any
Asset Sale is less than  $1,000,000,  such prepayment shall be made upon receipt
of proceeds  such that,  together  with all other such  amounts  not  previously
applied,  such Net Cash Proceeds is equal to at least  $1,000,000;  and provided
further  that if any such  prepayment  would  otherwise  require  prepayment  of
Euro-Dollar  Loans or  portions  thereof  prior  to the last day of the  related
Interest  Period,  such  prepayment  shall,  unless  the  Administrative   Agent
otherwise  notifies the Borrower upon the instructions of the Required Banks, be
deferred to such last day. The Borrower shall give the  Administrative  Agent at
least  five  Euro-Dollar  Business  Days'  notice  of each  prepayment  required
pursuant to subsection (a).

     SECTION 2.10.  General  Provisions as to Payments.  (a) The Borrower  shall
make each  payment  of  principal  of,  and  interest  on, the Loans and of fees
hereunder not later than 1:00 P.M. (New York City time) on the date when due, in
Federal  or  other  funds  immediately  available  in  New  York  City,  to  the
Administrative  Agent at its address  specified in or pursuant to Section  9.01.
The Administrative Agent will promptly distribute to each Bank its ratable share
of each such payment received by the Administrative Agent for the account of the
Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans
or of fees shall be due on a day which is not a Domestic  Business Day, the date
for payment thereof shall be extended to the next succeeding  Domestic  Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day  which is not a  Euro-Dollar  Business  Day,  the date for
payment  thereof shall be extended to the next succeeding  Euro-Dollar  Business
Day unless such  Euro-Dollar  Business Day falls in another  calendar  month, in
which case the date for payment thereof shall be the next preceding  Euro-Dollar
Business  Day. If the date for any payment of principal is extended by operation
of law or otherwise,  interest  thereon shall be payable for such extended time.


     (b) Unless the Borrower notifies the  Administrative  Agent before the date
on which any payment is due to the Banks  hereunder  that the Borrower  will not
make such payment in full, the Administrative Agent may assume that the Borrower
has made such payment in full to the  Administrative  Agent on such date and the
Administrative  Agent  may,  in  reliance  on  such  assumption,   cause  to  be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank.  If and to the extent that the  Borrower  shall not have so made such
payment,  each Bank shall repay to the Administrative  Agent forthwith on demand
such amount  distributed to such Bank together with interest  thereon,  for each
day from the date such  amount is  distributed  to such Bank until the date such
Bank repays such amount to the Administrative Agent, at the Federal Funds Rate.

     SECTION  2.11.  Funding  Losses.  If the  Borrower  makes  any  payment  of
principal  with respect to any  Euro-Dollar  Loan,  or any  Euro-Dollar  Loan is
converted to a Base Rate Loan (whether such payment or conversion is pursuant to
Article  2, 6 or 8 or  otherwise),  on any day  other  than  the  last day of an
Interest  Period  applicable  thereto,  or the last day of an applicable  period
fixed pursuant to Section 2.04(c),  or if the Borrower fails to borrow,  prepay,
convert or continue  any  Euro-Dollar  Loans after  notice has been given to any
Bank in accordance with Section 2.02(b),  2.05(c) or 2.08(b), the Borrower shall
reimburse  each Bank  within 15 days  after  demand  for any  resulting  loss or
expense incurred by it (or by an existing or prospective  Participant  which has
purchased or agreed to purchase a participation in the related Loan),  including
(without  limitation)  any loss incurred in obtaining,  liquidating or employing
deposits from third  parties,  but excluding loss of margin for the period after
such payment or  conversion or failure to borrow,  prepay,  convert or continue;
provided that such Bank shall have delivered to the Borrower a certificate as to
the amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.  

     SECTION 2.12. Computation of Interest and Fees. All interest and fees shall
be computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day). 

     SECTION 2.13.  Notes.  (a) The Borrower's  obligation to repay the Loans of
each Bank shall be  evidenced by a single Note payable to the order of such Bank
for the account of its Applicable  Lending Office

     (b) Each Bank may, by notice to the Borrower and the Administrative  Agent,
request  that  the  Borrower's  obligation  to  repay  such  Bank's  Loans  of a
particular  type be  evidenced  by a separate  Note.  Each such Note shall be in
substantially  the form of Exhibit A hereto with  appropriate  modifications  to
reflect  the fact that it relates  solely to Loans of the  relevant  type.  Each
reference in this  Agreement to the "Note" of such Bank shall be deemed to refer
to and include any or all of such Notes, as the context may require.

     (c)  Promptly  after it  receives  each  Bank's  Note  pursuant  to Section
3.01(a), the Documentation Agent shall forward such Note to such Bank. Each Bank
shall record the date,  amount and type of each Loan made by it and the date and
amount of each payment of principal  made by the Borrower with respect  thereto,
and may, if such Bank so elects in connection  with any transfer or  enforcement
of its  Note,  endorse  on the  schedule  forming  a  part  thereof  appropriate
notations to evidence the foregoing  information  with respect to each such Loan
then outstanding; provided that a Bank's failure to make any such recordation or
endorsement shall not affect the Borrower's  obligations  hereunder or under the
Notes. Each Bank is hereby irrevocably  authorized by the Borrower so to endorse
its Note and to attach to and make a part of its Note a continuation of any such
schedule as and when required.



                                    ARTICLE 3

                                   CONDITIONS

     SECTION  3.01.  Closing.  The  closing hereunder  shall  occur when (i) the
Documentation  Agent has received all the  following  documents,  each dated the
Effective  Date  unless  otherwise  indicated,  and  (ii) the  other  conditions
specified  below  shall have been  satisfied:  

          (a) a duly  executed  Note for the  account  of each Bank  dated on or
     before the  Effective  Date and  complying  with the  provisions of Section
     2.13;

          (b) either a counterpart  hereof signed by the Required  Banks and the
     Borrower or facsimile or other  written  confirmation  satisfactory  to the
     Documentation  Agent  confirming  that such party has signed a  counterpart
     hereof;

          (c) an  opinion  of Hale  and  Dorr  LLP,  counsel  for the  Borrower,
     substantially in the form of Exhibit B hereto, and covering such additional
     matters  relating to the transactions  contemplated  hereby as the Required
     Banks may reasonably request;

          (d) an opinion  of Davis  Polk &  Wardwell,  special  counsel  for the
     Documentation  Agent,  substantially  in the form of Exhibit C hereto,  and
     covering such additional matters relating to the transactions  contemplated
     hereby as the Required Banks may reasonably request;

          (e) duly executed  counterparts  of each of the Collateral  Documents,
     together with evidence  satisfactory to the Agents of the effectiveness and
     perfection  (to the  extent  required  thereby)  of the Liens  contemplated
     thereby,  including  the filing of UCC-1's  and the  delivery  of any stock
     certificates comprising the Collateral;

          (f) the binders referred to in Section 5.03(c);

          (g)  the  Borrower  shall  have  paid in full  (or  made  arrangements
     satisfactory  to  the  Documentation  Agent  for  paying  in  full)  on the
     Effective Date, all fees and other amounts (if any) then due and payable by
     the  Borrower  to the Banks and the Agents to the extent  invoiced at least
     one Domestic Business Day prior to the Effective Date;

          (h) evidence satisfactory to it that all fees and expenses payable for
     the account of the Banks and the Agents and their  affiliates  on or before
     the Effective Date have been paid in full in the amounts  previously agreed
     upon on or before the Effective Date; and

          (i) all  documents  the  Documentation  Agent may  reasonably  request
     relating to the existence of the Borrower,  the corporate authority for and
     the validity of the Loan Documents,  and any other matters relevant hereto,
     all in form and substance satisfactory to the Documentation Agent.

         Promptly after the Effective Date occurs, the Documentation Agent shall
notify the Borrower,  the Administrative  Agent and the Banks thereof,  and such
notice shall be conclusive and binding on all parties hereto.

     SECTION 3.02.  Consequence of Effectiveness. On the Effective Date, without
further action by any of the parties thereto, the Existing Credit Agreement will
be  automatically  amended and restated to read as this Agreement  reads. On and
after the Effective Date, the rights and obligations of the parties hereto shall
be governed by the provisions  hereof. The rights and obligations of the parties
to the  Existing  Credit  Agreement  with  respect  to the  period  prior to the
Effective  Date shall  continue to be governed by the  provisions  thereof as in
effect prior to the Effective Date. No Borrowing or Interest Period in existence
prior to the Effective Date shall be affected by the occurrence of the Effective
Date. 

     SECTION 3.03.  Borrowings. The obligation of any Bank to make a Loan on the
occasion  of any  Borrowing  is subject  to the  satisfaction  of the  following
conditions:

               (a) the fact that the  Effective  Date shall have  occurred on or
          before July 31, 1998;

               (b) receipt by the Administrative  Agent of a Notice of Borrowing
          as required by Section 2.02;

               (c)  the  fact  that,  immediately  after  such  Borrowing,   the
          aggregate  outstanding  principal  amount of the Loans will not exceed
          the lesser of the aggregate Commitments and the Available Amount;

               (d) the fact that,  immediately  before and after such Borrowing,
          no Default shall have occurred and be continuing; and

               (e) the  fact  that the  representations  and  warranties  of the
          Borrower  contained in this  Agreement  shall be true on and as of the
          date of such Borrowing.

     Each  Borrowing  hereunder  shall  be  deemed  to be a  representation  and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c), (d) and (e) of this Section.



                                    ARTICLE 4

                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants that:

     SECTION 4.01.  Corporate Existence and Power. The Borrower is a corporation
duly  incorporated,  validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all corporate powers and all material
governmental licenses, consents,  authorizations and approvals required to carry
on its  business as now  conducted.  

     SECTION 4.02.  Corporate and Governmental Authorization;  No Contravention.
The  execution,  delivery and  performance by the Borrower of the Loan Documents
are within the Borrower's  corporate  powers,  have been duly  authorized by all
necessary  corporate  action,  require no action by or in respect  of, or filing
with, any governmental  body,  agency or official (other than in connection with
the Collateral Documents) and do not contravene,  or constitute a default under,
any provision of applicable law or regulation or of the  Borrower's  certificate
of incorporation or by-laws or of any agreement,  judgment,  injunction,  order,
decree or other  instrument  binding  upon the Borrower or any  Subsidiary,  the
contravention  of which  instrument  or default  under  which  instrument  could
reasonably  be  expected  to have a Material  Adverse  Effect,  or result in the
creation  or  imposition  of any  Lien  on any  asset  of  the  Borrower  or any
Subsidiary. 

     SECTION 4.03.  Binding  Effect.  The Loan Documents  (other than the Notes)
constitute  valid and binding  agreements  of the Borrower  and each Note,  when
executed and  delivered in accordance  with this  Agreement,  will  constitute a
valid and  binding  obligation  of the  Borrower,  in each case  enforceable  in
accordance with its terms except (i) as may be limited by bankruptcy, insolvency
or similar laws  affecting  creditors'  rights  generally  and (ii) as rights of
acceleration  and the  availability  of  equitable  remedies  may be  limited by
equitable   principles  of  general   applicability.   

     SECTION 4.04. Financial  Information. (a) The consolidated balance sheet of
the Borrower and its  Consolidated  Subsidiaries as of December 31, 1997 and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for the Fiscal Year then ended,  reported  on by Arthur  Andersen  LLP , a
copy of which  financial  statements  has been  delivered  to each of the Banks,
fairly present, in conformity with GAAP, the consolidated  financial position of
the  Borrower  and its  Consolidated  Subsidiaries  as of such  date  and  their
consolidated  results of  operations  and cash flows for such  Fiscal  Year.  (b
Except as previously  disclosed to the Banks prior to the Effective Date,  since
December  31, 1997 there has been no material  adverse  change in the  business,
financial  position,  results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.

     SECTION  4.05.  Litigation.  Except  with  respect  to clause  (i)  of  the
definition of "Material  Adverse Effect" in the event of an adverse  decision in
any of the legal  proceedings  referenced in the Borrower's  Quarterly Report on
Form 10-Q for the Fiscal Quarter ended March 29, 1998, there is no action,  suit
or proceeding pending against, or to the Borrower's knowledge threatened against
or affecting,  the Borrower or any Subsidiary  before any court or arbitrator or
any  governmental  body,  agency  or  official  in which  there is a  reasonable
possibility of an adverse decision which could  materially  adversely affect the
business,  consolidated financial position or consolidated results of operations
of the Borrower and its  Consolidated  Subsidiaries,  considered as a whole,  or
which in any manner draws into  question the validity or  enforceability  of the
Loan Documents.  

     SECTION  4.06.  Compliance  with ERISA.  Each member of the ERISA Group has
fulfilled its obligations  under the minimum funding  standards of ERISA and the
Internal  Revenue  Code with  respect to each Plan and is in  compliance  in all
material  respects  with the  presently  applicable  provisions of ERISA and the
Internal  Revenue 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
Internal  Revenue  Code  in  respect  of any  Plan,  (ii)  failed  to  make  any
contribution or payment to any Plan or Multiemployer Plan, or made any amendment
to any Plan,  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 Internal Revenue 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. 

     SECTION  4.07.  Environmental  Matters.  In  the  ordinary  course  of  its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws  on the  business,  operations  and  properties  of the  Borrower  and  its
Subsidiaries,  in the course of which it  identifies  and  evaluates  associated
liabilities and costs (including,  without limitation,  any capital or operating
expenditures  required  for  clean-up  or closure  of  properties  presently  or
previously owned, any capital or operating  expenditures  required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition  of any  license,  permit or contract,  any related  constraints  on
operating  activities,  including  any  periodic  or  permanent  shutdown of any
facility  or  reduction  in the level of or change in the  nature of  operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous  Substances  and any actual or potential  liabilities  to
third parties,  including employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of complying with Environmental Laws,
are  unlikely  to have a  material  adverse  effect on the  business,  financial
condition  or  results  of  operations  of the  Borrower  and  its  Consolidated
Subsidiaries, considered as a whole.

     SECTION  4.08.  Taxes.  The  Borrower and its  Subsidiaries  have filed all
United  States  Federal  income tax returns and all other  material  tax returns
which are  required to be filed by them and have paid all taxes due  pursuant to
such  returns or pursuant  to any  assessment  received  by the  Borrower or any
Subsidiary.  The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes or other  governmental  charges are, in the
Borrower's reasonable opinion, adequate.

     SECTION 4.09.  Subsidiaries.  Each of the Borrower's corporate Subsidiaries
which has  consolidated  assets of at least  $1,000,000  is a  corporation  duly
incorporated,  validly  existing  and in good  standing  under  the  laws of its
jurisdiction  of  incorporation,  and has all corporate  powers and all material
governmental licenses, authorizations,  consents and approvals required to carry
on its business as now conducted.

     SECTION 4.10. Regulatory Restrictions on Borrowing. The Borrower is not (i)
an  "investment  company"  within the meaning of the  Investment  Company Act of
1940,  as  amended,  (ii) a "holding  company"  within the meaning of the Public
Utility Holding Company Act of 1935, as amended,  or (iii) otherwise  subject to
any regulatory  scheme which restricts its ability to incur debt.  

     SECTION 4.11. Full Disclosure.  (a All information  heretofore furnished by
the  Borrower to the Agents or any Bank for  purposes of or in  connection  with
this  Agreement  or  any  transaction  contemplated  hereby  is,  and  all  such
information  hereafter  furnished by the Borrower to the Agents or any Bank will
be,  true and  accurate  in all  material  respects on the date as of which such
information is stated or certified.  The Borrower has disclosed to the Banks any
and all facts which  materially  and adversely  affect,  or may  materially  and
adversely  affect (to the extent the Borrower can now reasonably  foresee),  the
business, operations or financial condition of the Borrower and its Consolidated
Subsidiaries,  taken  as a whole,  or the  Borrower's  ability  to  perform  its
obligations  under  the Loan  Documents.  

     (b) The projections set forth in the Borrower Plan were based on reasonable
assumptions  and as of their  date  represented  the  best  estimate  of  future
performance  of the  Borrower and its  Subsidiaries.  During the period from the
respective  dates as of which  information is stated in the Borrower Plan to and
including  the  Effective  Date, no event has occurred and no condition has come
into existence which would have caused the projections  therein to be materially
misleading.

     SECTION 4.12.  Representations  in Collateral  Documents  True and Correct.
Each of the  representations  and  warranties  of the Borrower  contained in the
Collateral Documents is true and correct.

     SECTION 4.13.  Solvency.  As of each of the Effective  Date and the date of
each Borrowing,  after giving effect to the transactions  contemplated hereby to
occur on such date:  (i) the  aggregate  fair market  value of the assets of the
Borrower  will  exceed  its  liabilities  (including  contingent,  subordinated,
unmatured and unliquidated  liabilities),  (ii) the Borrower will be able to pay
its debts as they mature and (iii) the Borrower will not have unreasonably small
capital for the business in which it is engaged.  

     SECTION 4.14. Properties. (a) Each of the Borrower and its Subsidiaries has
good  title to,  or valid  leasehold  interests  in,  all its real and  personal
property material to its business, except for minor defects in title that do not
interfere with its ability to conduct its business as currently  conducted or to
utilize such  properties for their intended  purposes.  

     (b) Each of the Borrower and its Subsidiaries  owns, or is licensed to use,
all trademarks,  tradenames, copyrights, patents and other intellectual property
material  to its  business,  and  the  use  thereof  by  the  Borrower  and  its
Subsidiaries  does not  infringe  (as  determined  in a judicial or  alternative
dispute resolution  proceeding) upon the rights of any other Person,  except for
any  such  infringements  that,  individually  or in the  aggregate,  could  not
reasonably be expected to result in a Material Adverse Effect.

SECTION  4.15.  Year  2000.  Any  reprogramming  required  to permit  the proper
functioning,  in and  following the year 2000,  of (i) the  Borrower's  computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment  supplied by others or with which the  Borrower's  systems  interface)
which are material to the operations of the Borrower and the testing of all such
systems and equipment,  as so reprogrammed,  will be completed by June 30, 1999.
The cost to the Borrower of such reprogramming and testing and of the reasonably
foreseeable  consequences  of year  2000  to the  Borrower  (including,  without
limitation,   reprogramming  errors  and  the  failure  of  others'  systems  or
equipment) will not result in a Default or a Material Adverse Effect. Except for
such  of the  reprogramming  referred  to in the  preceding  sentence  as may be
necessary,  the computer and management  information systems of the Borrower and
its Subsidiaries  are and, with ordinary course upgrading and maintenance,  will
continue  to be,  sufficient  to permit the  Borrower  to conduct  its  business
without Material Adverse Effect.


                                    ARTICLE 5

                                    COVENANTS

         The  Borrower  agrees  that,  so long as any  Bank  has any  Commitment
hereunder or any principal of or interest on any Loan remains unpaid:

     SECTION 5.01. Information. The Borrower will deliver to each of the Banks:

          (a) as soon as available and in any event within 90 days after the end
     of each Fiscal Year, a  consolidated  balance sheet of the Borrower and its
     Consolidated Subsidiaries as of the end of such Fiscal Year and the related
     consolidated statements of operations,  stockholders' equity and cash flows
     for such Fiscal Year,  setting forth in each case in  comparative  form the
     figures  for  the  previous  Fiscal  Year,  all  reported  on  in a  manner
     acceptable to the SEC by Arthur  Andersen LLP or other  independent  public
     accountants of nationally recognized standing;

          (b) as soon as available and in any event within 45 days after the end
     of  each  of the  first  three  Fiscal  Quarters  of each  Fiscal  Year,  a
     consolidated   balance   sheet  of  the  Borrower   and  its   Consolidated
     Subsidiaries as of the end of such Fiscal Quarter, the related consolidated
     statement  of   operations   for  such  Fiscal   Quarter  and  the  related
     consolidated statements of operations and cash flows for the portion of the
     Fiscal Year ended at the end of such Fiscal  Quarter,  setting forth in the
     case of each such  statement of  operations  and cash flows in  comparative
     form the figures for the corresponding  period in the previous Fiscal Year,
     all certified  (subject to normal  year-end  adjustments) as to fairness of
     presentation  and consistency  with GAAP by the Borrower's  chief financial
     officer or chief accounting officer;

          (c) as soon as available and in any event within 30 days after the end
     of each fiscal month of the Borrower,  a consolidated  balance sheet of the
     Borrower and its Consolidated Subsidiaries as at the end of such month, the
     related  consolidated  statements  of  operations  for such  month  and the
     related consolidated statement of operations and cash flows for the portion
     of the Fiscal  Year ended at the end of such  month  setting  forth in each
     case in comparative form the figures for the  corresponding  periods of the
     previous  Fiscal  Year all  certified  (subject  to  normal  quarterly  and
     year-end  adjustment  and to the  absence of  footnotes)  as to fairness of
     presentation  and consistency  with GAAP by the Borrower's  chief financial
     officer or chief accounting officer;

          (d)  simultaneously  with  the  delivery  of  each  set  of  financial
     statements  referred to in clauses (a) and (b) above,  a certificate of the
     Borrower's chief financial officer or chief accounting  officer (i) setting
     forth in reasonable  detail the calculations  required to establish whether
     the Borrower was in compliance  with the  requirements  of Sections 5.09 to
     5.15,  inclusive,  and Section 5.17,  and the  calculation of the Borrowing
     Base on the date of such financial  statements and (ii) stating whether any
     Default  exists on the date of such  certificate  and, if any Default  then
     exists, setting forth the details thereof and the action which the Borrower
     is taking or proposes to take with respect thereto;

          (e)  simultaneously  with  the  delivery  of  each  set  of  financial
     statements  referred  to in clause (a) above,  a  statement  of the firm of
     independent  public  accountants which reported on such statements  stating
     whether  anything has come to their attention to cause them to believe that
     (i) any  Default  existed  on the  date of such  statements  and  (ii)  the
     calculations   set   forth   in   the   officer's   certificate   delivered
     simultaneously therewith pursuant to clause (c) above are not correct;

          (f) promptly upon receipt  thereof,  copies of all reports (other than
     drafts of final  reports)  submitted  to the  Borrower  by its  independent
     public accountants in connection with each annual, interim or special audit
     of the  financial  statements  of the  Borrower  made by such  accountants,
     including the comment letter submitted by such accountants to management in
     connection with their annual audit;

          (g)  within  five  Domestic  Business  Days  after any  officer of the
     Borrower  obtains  knowledge  of any  Default,  if  such  Default  is  then
     continuing,  a certificate of the  Borrower's  chief  financial  officer or
     chief  accounting  officer setting forth the details thereof and the action
     which the Borrower is taking or proposes to take with respect thereto;

          (h) as  soon  as  reasonably  practicable  after  any  officer  of the
     Borrower obtains knowledge thereof,  notice of any event or condition which
     has had or could  reasonably be expected to have a Material  Adverse Effect
     and the nature of such Material Adverse Effect;

          (i) as  soon  as  reasonably  practicable  after  any  officer  of the
     Borrower  obtains  knowledge of the  commencement of, or of a threat of the
     commencement of, an action,  suit or proceeding against the Borrower or any
     of its  Subsidiaries  before any court or  arbitrator  or any  governmental
     body,  agency or official in which there is a reasonable  likelihood  of an
     adverse decision which could have a Material Adverse Effect or which in any
     manner  questions the validity of the Loan  Documents,  a certificate  of a
     senior  financial  officer of the Borrower setting forth the nature of such
     pending  or  threatened  action,  suit or  proceeding  and such  additional
     information  with  respect  thereto as may be  reasonably  requested by any
     Bank;

          (j) promptly after the mailing thereof to the Borrower's  shareholders
     generally, copies of all financial statements, reports and proxy statements
     so mailed;

          (k)  promptly  after the filing  thereof,  copies of all  registration
     statements (other than the exhibits thereto and any registration statements
     on Form S-8 or its  equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
     their equivalents) filed by the Borrower with the SEC;

          (l) if and when any member of the ERISA Group (i) gives or is required
     to give notice to the PBGC of any "reportable event" (as defined in Section
     4043 of ERISA) with respect to any Plan which might constitute  grounds for
     a termination of such Plan under Title IV of ERISA,  or knows that the plan
     administrator  of any Plan has given or is  required  to give notice of any
     such reportable  event, a copy of the notice of such reportable event given
     or required to be given to the PBGC;  (ii)  receives  notice of complete or
     partial  withdrawal  liability  under  Title IV of ERISA or notice that any
     Multiemployer  Plan  is  in  reorganization,   is  insolvent  or  has  been
     terminated,  a copy of such  notice;  (iii)  receives  notice from the PBGC
     under Title IV of ERISA of an intent to terminate,  impose liability (other
     than for premiums  under Section 4007 of ERISA) in respect of, or appoint a
     trustee to administer  any Plan, a copy of such notice;  (iv) applies for a
     waiver of the minimum  funding  standard  under Section 412 of the Internal
     Revenue  Code,  a copy of such  application;  (v) gives notice of intent to
     terminate  any Plan under Section  4041(c) of ERISA,  a copy of such notice
     and other  information filed with the PBGC; (vi) gives notice of withdrawal
     from any Plan pursuant to Section 4063 of ERISA, a copy of such notice;  or
     (vii)  fails  to  make  any  payment  or   contribution   to  any  Plan  or
     Multiemployer Plan or makes any amendment to any Plan which has resulted or
     could result in the  imposition of a Lien or the posting of a bond or other
     security,  a certificate of the Borrower's chief financial officer or chief
     accounting  officer  setting  forth details as to such  occurrence  and the
     action,  if any, which the Borrower or applicable member of the ERISA Group
     is required or proposes to take;

          (m) within 30 days after the  commencement  of each Fiscal  Year,  the
     Borrower's operating and capital expenditure budgets and cash flow forecast
     on a quarterly  basis for such  Fiscal Year and on an annual  basis for the
     succeeding Fiscal Years through the Termination Date;

          (n) on or before the 21st day of each calendar month, a Borrowing Base
     Certificate  setting  forth a calculation  of the Borrowing  Base as of the
     last Domestic Business Day of the immediately preceding calendar month; and

          (o)  from  time to time  such  additional  information  regarding  the
     financial  position or business of the  Borrower  and its  Subsidiaries  as
     either Agent, at the request of any Bank, may reasonably request.

     SECTION 5.02. Payment of Obligations.  The Borrower will pay and discharge,
and will cause each Subsidiary to pay and discharge,  at or before maturity, all
their  respective  material  obligations  and  liabilities  (including,  without
limitation, tax liabilities and claims of materialmen, warehousemen and the like
which if  unpaid  might by law give rise to a Lien),  except  where the same are
contested in good faith,  and will maintain,  and will cause each  Subsidiary to
maintain,  in accordance with GAAP, if and to the extent  appropriate,  reserves
for the accrual thereof.

     SECTION 5.03.  Maintenance  of Property;  Insurance.  (a) The Borrower will
keep, and will cause each  Subsidiary to keep, all property useful and necessary
in its business in reasonably  good working order and  condition,  ordinary wear
and tear excepted.

     (b) The Borrower will, and will cause each Subsidiary to, maintain  (either
in the Borrower's name or in such  Subsidiary's own name) with financially sound
and responsible insurance companies,  insurance on all their respective material
properties  in at least  such  amounts,  against at least such risks and with no
greater risk retention as are usually  maintained,  insured against or retained,
as the case may be, in the same general area by companies of established  repute
engaged in the same or a similar business.

     (c) On or prior  to the  Effective  Date,  the  Borrower  shall  cause  the
Security  Agent to be  named as an  additional  insured  and loss  payee on each
insurance  policy  required to be maintained  pursuant to this Section 5.03. The
Borrower will deliver to the Banks (i) on the Effective  Date,  binders from the
Borrower  insurance  broker dated such date showing the amount of coverage as of
such date,  (ii) upon the request of any Bank through the  Administrative  Agent
from time to  information  presented in  reasonable  detail as to the  insurance
carried, (iii) within five days of receipt of notice from any insurer, a copy of
any notice of cancellation,  nonrenewal or material change in coverage from that
existing on the Effective Date and (iv) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower.

     SECTION 5.04. Conduct of Business and Maintenance of Existence.The Borrower
and its  Subsidiaries  will  continue to engage in business of the same  general
type as now conducted by the Borrower and its  Subsidiaries,  and will preserve,
renew and keep in full force and effect their  respective  corporate  existences
and their respective rights, privileges and franchises necessary or desirable in
the normal  conduct of business;  provided  that  nothing in this Section  shall
prohibit:

               (i) the merger of a Subsidiary into the Borrower if, after giving
          effect thereto, no Default shall have occurred and be continuing;

                 (ii) the merger or consolidation of a Subsidiary with or into a
         Person  other  than the  Borrower  if the  corporation  surviving  such
         consolidation or merger is a Wholly-Owned  Subsidiary and, after giving
         effect thereto, no Default shall have occurred and be continuing; or

                (iii) the termination of the corporate existence of a Subsidiary
         if the Borrower in good faith  determines  that such  termination is in
         the best interest of the Borrower and is not materially disadvantageous
         to the Banks.

         The Borrower will not modify its policy for  classification of doubtful
accounts in any manner  materially  detrimental  to the  interests  of the Banks
(including,  without limitation, in any manner which would result in an increase
in the Borrowing Base) without the consent of the Required Banks.

     SECTION 5.05.  Compliance  with Laws.  The Borrower  will comply,  and will
cause each  Subsidiary  to comply,  in all respects  with all  applicable  laws,
ordinances,  rules,  regulations and  requirements  of governmental  authorities
(including,  without limitation,  Environmental Laws and ERISA and the rules and
regulations thereunder),  except (i) where the necessity of compliance therewith
is  contested  in good  faith by  appropriate  proceedings  or (ii)  where  such
noncompliance  could not  reasonably  be  expected  to have a  Material  Adverse
Effect.

     SECTION 5.06. Inspection of Property,  Books and Records. The Borrower will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries shall be made of all dealings and transactions
in relation to its business and activities; and will permit, and will cause each
Subsidiary  to permit,  representatives  of any Bank at such  Bank's  expense to
visit and  inspect  any of their  respective  properties,  to  examine  and make
abstracts  from any of their  respective  books and records and to discuss their
respective  affairs,  finances  and  accounts  with their  respective  officers,
employees and  independent  public  accountants,  all at such  reasonable  times
(including reasonable notice) and as often as may reasonably be requested.


     SECTION 5.07.  Mergers and Sales of Assets. (a) Except in connection with a
Permitted Acquisition, the Borrower will not, and will not permit any Subsidiary
to,  consolidate or merge with or into, or transfer all or substantially  all of
its assets to, any other Person, provided that (i) the Borrower may merge with a
Wholly-Owned Subsidiary if the Borrower is the corporation surviving such merger
and  immediately  after  giving  effect to such  merger,  no Default  shall have
occurred and be continuing,  and (ii) any  Wholly-Owned  Subsidiary or Nomai may
merge with,  or transfer  all or  substantially  all of its assets to, any other
Wholly-Owned  Subsidiary and  immediately  after giving effect to such merger or
transfer, no Default shall have occurred and be continuing.

     (b) Except in connection with a Permitted Acquisition, none of the Borrower
and its  Subsidiaries  will acquire the Capital Stock of or all or substantially
all of the assets,  operations, any division or any operating unit of any Person
(other than (i) Nomai and (ii) a Wholly-Owned Subsidiary).  None of the Borrower
and its  Subsidiaries  will  act as a  general  partner  under  any  partnership
agreement with any other Person.

     (c) The Borrower  and its  Subsidiaries  will not sell,  lease or otherwise
transfer, directly or indirectly, any property except for (i) sales of inventory
in the ordinary course of business, (ii) sales or dispositions of obsolete or no
longer useful equipment,  (iii) sales of production  equipment to the extent the
proceeds of such sale do not exceed $5,000,000 in any fiscal year and $7,000,000
during the period from and  including  the  Effective  Date to but excluding the
Termination  Date and (iv) the  granting of licenses in the  ordinary  course of
business.

     SECTION  5.08.  Use of Proceeds.  The proceeds of the Loans will be used by
the Borrower for general corporate purposes. None of such proceeds will be used,
directly or  indirectly,  for the  purpose,  whether  immediate,  incidental  or
ultimate,  of buying or  carrying  any  "margin  stock"  within  the  meaning of
Regulation U.

     SECTION 5.09. Negative Pledge. Neither the Borrower nor any Subsidiary will
create,  assume or suffer to exist any Lien on any asset now owned or  hereafter
acquired by it, except:

               (a) any Lien existing on any asset of any Person at the time such
          Person becomes a Subsidiary and not created in  contemplation  of such
          event;

               (b) any Lien on any asset  securing  Debt incurred or assumed for
          the purpose of financing all or any part of the cost of acquiring such
          asset, including, without limitation, Liens securing obligations under
          capital  leases,  provided  that  such  Lien  attaches  to such  asset
          concurrently with or within 90 days after the acquisition thereof;

               (c) any Lien on any asset of any Person existing at the time such
          Person  is  merged  or  consolidated  with or into the  Borrower  or a
          Subsidiary and not created in contemplation of such event;

               (d) any Lien  existing  on any  asset  prior  to the  acquisition
          thereof  by  the  Borrower  or  a   Subsidiary   and  not  created  in
          contemplation of such acquisition;

               (e) any Lien arising out of the refinancing,  extension,  renewal
          or refunding  of any Debt secured by any Lien  permitted by any of the
          foregoing  clauses  of this  Section,  provided  that such Debt is not
          increased and is not secured by any additional assets;

               (f) Liens  arising in the  ordinary  course of its  business  (i)
          which do not secure Debt or Derivatives Obligations, (ii) which do not
          secure any single obligation (or class of obligations  having a common
          cause) in an  amount  exceeding  $10,000,000  and (iii) as to which no
          financing  statement or other document similar in effect is on file in
          any recording office;

               (g) Liens on  intellectual  property of the  Borrower in favor of
          the holders of the  Subordinated  Notes;  provided that such Liens are
          junior to the Liens created by the Collateral Documents;

               (h) Liens created by the Collateral Documents; and

               (i) Liens not  otherwise  permitted by the  foregoing  clauses of
          this Section  securing  Debt in an aggregate  principal or face amount
          not at any time exceeding $15,000,000.

         Notwithstanding  the  foregoing,  neither the  Borrower  nor any of its
Subsidiaries  (other  than  Foreign  Subsidiaries  (as  defined  in  the  Pledge
Agreement) not  incorporated  under the laws of, or having a principal  place of
business  in,  Canada)  will  create,  assume or suffer to exist any Lien on any
Inventory (other than Liens described in clause (f) or (h) above) or Receivables
(other than Liens described in clause (h) above).

     SECTION  5.10.  Limitation  on Debt.  The  Borrower  will not, and will not
permit any of its  Subsidiaries  to, incur or at any time be liable with respect
to any Debt except: 

               (a) Debt under this Agreement;

               (b)  Debt  outstanding  on  the  date  hereof  not in  excess  of
          $52,100,000 in aggregate principal amount and identified on Schedule I
          hereto;

               (c) Debt of the  Borrower  of a type  described  in clause (b) of
          Section  5.09  incurred  in an  aggregate  amount not in excess of (i)
          during the period from and including  the  Effective  Date through and
          including December 31, 1998, $15,000,000,  (ii) during the period from
          and including January 1, 1999 through and including December 31, 1999,
          $30,000,000 and (iii) thereafter, $15,000,000;

               (d) Debt in respect of the Subordinated Notes; and

               (e)  Debt of the  Borrower  and its  Subsidiaries  not  otherwise
          permitted  by this Section  incurred  after the  Effective  Date in an
          aggregate  principal  amount  at any time  outstanding  not to  exceed
          $15,000,000.

     SECTION  5.11.  Minimum  Consolidated  Tangible  Net  Worth.   Consolidated
Tangible  Net Worth  will at no time be less than an amount  equal to the sum of
(i) $375,000,000 plus (ii) an amount equal to 75% of Consolidated Net Income for
each  Fiscal  Quarter  ending  after  March  31,  1998  but  before  the date of
determination,  in each case, for which Consolidated Net Income is positive (but
with no deduction on account of negative  Consolidated Net Income for any Fiscal
Quarter) plus (iii) 75% of the aggregate net proceeds, including the fair market
value of property other than cash (as determined in good faith by the Borrower's
board of  directors),  received by the Borrower from the issuance and sale after
the date hereof of any capital stock of the Borrower (other than the proceeds of
any issuance and sale of any capital  stock (x) to a Subsidiary  or (y) which is
required  to be  redeemed,  or is  redeemable  at the option of the  holder,  if
certain events or conditions  occur or exist or otherwise) or in connection with
the conversion or exchange of any Debt of the Borrower into capital stock of the
Borrower after March 31, 1998.  

     SECTION 5.12. Debt to Consolidated  Tangible Net Worth.  Consolidated  Debt
will not at any time  exceed 60% of  Consolidated  Tangible  Net Worth.  SECTION


     5.13. Minimum  Consolidated  EBITDA. On the last day of each Fiscal Quarter
set forth below, Consolidated EBITDA for the four consecutive quarters then most
recently ended shall not be less than the corresponding  amount set forth below:
------------------------------------------------------ ------------------------
<TABLE>

Fiscal Quarter Ending on or Closest to                         Amount
<S>                                                               <C>   

June 28, 1998                                                      $60,000,000

September 27, 1998                                                 $15,000,000

December 31, 1998                                                   $3,000,000

March 31, 1999                                                     $57,500,000

June 30, 1999                                                     $120,000,000

September 30, 1999                                                $120,000,000

December 31, 1999                                                 $120,000,000

March 31, 2000                                                    $120,000,000

June 30, 2000                                                     $120,000,000
</TABLE>

     SECTION 5.14.  Maximum Cash Conversion  Days. Cash Conversion Days for each
Fiscal  Quarter set forth below  shall not exceed the  corresponding  amount set
forth       below:        
<TABLE>

Fiscal Quarter Ending on or Closest to                         Amount
<S>                                                            <C>   
June 28, 1998                                                    100

September 27, 1998                                               80

December 31, 1998                                                70

March 31, 1999                                                   70

June 30, 1999                                                    70

September 30, 1999                                               70

December 31, 1999                                                60

March 31, 2000                                                   60

June 30, 2000                                                    60
</TABLE>

For  purposes  of this  Section,  "Cash  Conversion  Days"  means the sum of (i)
Accounts  Receivable Days and (ii) Inventory Days,  minus (iii) Accounts Payable
Days;  "Accounts  Receivable  Days" means,  for any period,  consolidated  trade
receivables,  less  allowance  for  doubtful  accounts,  of the Borrower and its
Consolidated   Subsidiaries  on  the  last  day  of  such  period,   divided  by
consolidated   average  daily  sales  of  the  Borrower  and  its   Consolidated
Subsidiaries  during  such  period;  "Inventory  Days"  means,  for any  period,
consolidated  inventories of the Borrower and its  Consolidated  Subsidiaries on
the last day of such period  divided by the  consolidated  average daily cost of
sales of the Borrower and its  Consolidated  Subsidiaries  for such period;  and
"Accounts Payable Days" means, for any period,  consolidated accounts payable of
the Borrower and its  Consolidated  Subsidiaries  on the last day of such period
divided by the consolidated  average daily cost of sales of the Borrower and its
Consolidated Subsidiaries for such period.

     SECTION 5.15.  Capital  Expenditures.  The aggregate amount of Consolidated
Capital  Expenditures  during any period  set forth  below  shall not exceed the
amount set forth below opposite such period:
<TABLE>


Fiscal Quarter Ending on                                          Amount
<S>                                                               <C>

September 27, 1998                                                 $40,000,000

December 31, 1998                                                  $40,000,000

Fiscal Year Ending on
December 31, 1999                                                 $130,000,000

Two Fiscal Quarters Ending Closest to June 30, 2000
                                                                   $70,000,000
</TABLE>

; provided that amounts for any period set forth above shall be increased by the
remainder,  if any,  of (x) the  amount  of  Consolidated  Capital  Expenditures
permitted to be made in the immediately preceding period minus (y) the amount of
Consolidated  Capital  Expenditures  made in such immediately  preceding period;
provided  further  that  amounts  for any  period set forth  above  shall not be
increased   pursuant  to  the  immediately   preceding   proviso  by  more  than
$10,000,000.

     SECTION 5.16. Restricted Payments.  Neither the Borrower nor any Subsidiary
will declare or make any Restricted Payment. 

     SECTION 5.17.  Investments.  Neither the Borrower nor any  Subsidiary  will
hold,  make or acquire any Investment in any Person other than: (a)  Investments
in Persons which are Subsidiaries on the date hereof;

          (b) up to an  aggregate  of  $44,000,000  of  Investments  in Nomai to
permit the Borrower to acquire a controlling interest in Nomai;

          (c) Temporary Cash Investments; provided that the Security Agent has a
perfected  Lien on all such domestic  Temporary  Cash  Investments  owned by the
Borrower; and

          (d) any Investment not otherwise permitted by the foregoing clauses of
this Section if,  immediately after such Investment is made or acquired,  (i) no
Default shall have  occurred and be  continuing  and (ii) the aggregate net book
value of all  Investments  permitted  by this  clause  (d) does not  exceed  (A)
$10,000,000,  in  respect  of the  portion  of such  Investments  for  which the
consideration  is cash,  (B)  $5,000,000,  in  respect  of the  portion  of such
Investments  for  which  the  consideration  is the  assumption  of Debt and (C)
$10,000,000,  in  respect  of the  portion  of such  Investments  for  which the
consideration is common equity of the Borrower.

     SECTION 5.18. Transactions with Affiliates. The Borrower will not, and will
not permit any  Subsidiary to,  directly or indirectly,  pay any funds to or for
the  account  of,  make  any  investment  (whether  by  acquisition  of stock or
indebtedness,  by  loan,  advance,  transfer  of  property,  guarantee  or other
agreement to pay,  purchase or service,  directly or  indirectly,  any Debt,  or
otherwise)  in,  lease,  sell,  transfer  or  otherwise  dispose of any  assets,
tangible or intangible,  to, or participate in, or effect, any transaction with,
any Affiliate  except on an arms-length  basis on terms at least as favorable to
the Borrower or such  Subsidiary  as could have been obtained from a third party
that was not an Affiliate.  

     SECTION 5.19. Restrictive  Agreements.  The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly,  enter into, incur or
permit to exist any agreement or other arrangement that prohibits,  restricts or
imposes any condition  upon (a) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other  distributions  with
respect to any shares of its capital stock or to make or repay loans or advances
to the Borrower or any other  Subsidiary or to Guarantee Debt of the Borrower or
any  other  Subsidiary;  provided  that (i) the  foregoing  shall  not  apply to
restrictions  and  conditions  imposed  by law or by this  Agreement,  (ii)  the
foregoing  shall not apply to restrictions  and conditions  existing on the date
hereof  identified  on Schedule II (but shall apply to any  extension or renewal
of,  or  any  amendment  or  modification  expanding  the  scope  of,  any  such
restriction  or  condition),  (iii) the  foregoing  shall not apply to customary
restrictions  and conditions  contained in agreements  relating to the sale of a
Subsidiary  pending such sale,  provided such  restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted  hereunder,
(iv) clause (a) of the foregoing  shall not apply to  restrictions or conditions
imposed by any agreement relating to secured Debt permitted by this Agreement if
such  restrictions  or conditions  apply only to the property or assets securing
such Debt and (v)  clause  (a) of the  foregoing  shall  not apply to  customary
provisions in leases,  licenses and other  contracts  restricting the assignment
thereof.

     SECTION 5.20.  Accounting Changes.  The Borrower will not change its Fiscal
Year from a Fiscal Year ending on December 31. The  Borrower  will not adopt any
non-mandatory  change in GAAP or the application  thereof without 30 days' prior
notice to the  Administrative  Agent,  accompanied,  in the case of any material
change,  by evidence of concurrence in such change by the public accounting firm
regularly employed by the Borrower.


     SECTION 5.21. Modification of Certain Documents. Without the consent of the
Required  Banks,  the  Borrower  will  not,  and  will  not  permit  any  of its
Subsidiaries to, consent to or solicit or enter into any amendment or supplement
to,  or  any  waiver  or  other   modification   of,  (A)  the   certificate  of
incorporation, bylaws or other organizational document of the Borrower or any of
its Subsidiaries,  which amendment,  supplement,  waiver or modification, as the
case may be, could  reasonably be expected to have a material  adverse effect on
the rights of the Banks or the Administrative  Agent under the Loan Documents or
(B) any agreement or instrument governing the terms of the Subordinated Notes or
of any other  Debt  which by its  terms is  expressly  subordinated  in right of
payment to the  Loans,  other than any  amendment,  supplement,  waiver or other
modification  that extends the maturity  thereof  without  payment of additional
consideration  therefor.  

     SECTION 5.22.  Capital  Stock.  None of the Borrower's  Subsidiaries  shall
issue any shares of Capital  Stock except  shares of Capital Stock issued to the
Borrower or a Wholly-Owned Subsidiary. 

     SECTION 5.23.  Further  Assurances.  (a) The Borrower will at its sole cost
and expense, do, execute,  acknowledge and deliver all such further acts, deeds,
conveyances,  mortgages, assignments, notices of assignment and transfers as the
Administrative Agent shall from time to time request,  which may be necessary in
the reasonable judgment of the Administrative Agent from time to time to assure,
perfect,  convey,  assign and transfer to the Administrative  Agent the property
and rights conveyed or assigned pursuant to the Collateral  Documents,  or which
may facilitate the performance of the terms of the Collateral Documents,  or the
filing,  registering or recording of the Collateral Documents. 

     (b) All costs and  expenses in  connection  with the grant of any  security
interests  under  the  Collateral   Documents,   including  without   limitation
reasonable legal fees and other reasonable costs and expenses in connection with
the granting,  perfecting and  maintenance of any security  interests  under the
Collateral  Documents or the preparation,  execution,  delivery,  recordation or
filing  of  documents  and  any  other  acts  as the  Administrative  Agent  may
reasonably request in connection with the grant of such security interests shall
be paid by the Borrower promptly upon demand.

     (c) The  Borrower  will not enter into or become  subject to any  agreement
which would impair its ability to comply,  or which would purport to prohibit it
from complying, with the provisions of this Section.

     (d) The Borrower will:

                  (i) cause each Person which becomes a Subsidiary (other than a
                  Foreign Subsidiary (as defined in the Pledge Agreement)) after
                  the Effective  Date to (x) become a party to a guaranty of the
                  Borrower's  obligations under the Credit Agreement in form and
                  substance  satisfactory  to the  Administrative  Agent and (y)
                  enter  into  a  security  agreement  and a  pledge  agreement,
                  substantially  in the form of the Security  Agreement  and the
                  Pledge  Agreement,  respectively,  with  such  changes  as are
                  necessary or  desirable in the judgment of the  Administrative
                  Agent,  in order to grant  perfected  first priority  security
                  interests upon  substantially  all of its assets to secure its
                  obligations under such guaranty; and

                  (ii) cause each Person  described  in clause (i) above to take
                  such  actions as may be  necessary  or desirable to effect the
                  foregoing   within  30  days  after  such  Person   becomes  a
                  Subsidiary,  including without  limitation causing such Person
                  to (1) execute and  deliver to the  Administrative  Agent such
                  number of copies as the  Administrative  Agent may  specify of
                  such   agreements  and  other  documents   creating   security
                  interests  and (2) deliver  such  certificates,  evidences  of
                  corporate  action and legal opinions or other documents as the
                  Administrative  Agent may reasonably request,  all in form and
                  substance  satisfactory to the Administrative  Agent, relating
                  to the satisfaction of the Borrower's  obligations  under this
                  subsection (d).

     SECTION 5.24. Landlord and Warehouseman Waivers. The Borrower shall use its
best efforts to deliver to the  Administrative  Agent waivers of contractual and
statutory  landlord's,  landlord's  mortgagee's and warehouseman's Liens in form
and substance  reasonably  satisfactory to the  Administrative  Agent under each
existing lease,  warehouse  agreement or similar agreement to which the Borrower
or any  Subsidiary  that is domiciled or organized  under the laws of the United
States or any  political  subdivision  thereof  is a party;  provided  that such
waivers will in any event be  incorporated  when the existing  lease,  warehouse
agreement or similar agreement is amended,  renewed or extended and the Borrower
will obtain waivers of both  contractual  and statutory  landlord's,  landlord's
mortgagee's  and   warehouseman's   Liens  in  form  and  substance   reasonably
satisfactory  to the  Administrative  Agent in  connection  with each new lease,
warehouse  agreement or similar  agreement for a location at which  inventory is
held,  entered  into by the  Borrower or any  Subsidiary  that is  domiciled  or
organized  under  the laws of the  United  States or any  political  subdivision
thereof.


                                    ARTICLE 6

                                    DEFAULTS

     SECTION 6.01.  Events of Default.  If one or more of the  following  events
("Events of Default") shall have occurred and be continuing:

               (a) the Borrower  shall fail to pay when due any principal of any
          Loan, or shall fail to pay within three Domestic  Business Days of the
          due date thereof any interest, fee or other amount payable hereunder;

               (b)  the  Borrower  shall  fail to  observe  or  perform  (i) any
          covenant  contained  in  Article 5,  other  than  those  contained  in
          Sections  5.01 through 5.06 and Section 5.18 and Section 5.23, or (ii)
          any  covenant  contained  in  Section  4(A) or  4(H)  of the  Security
          Agreement or Section 5(B) of the Pledge Agreement;

               (c) the Borrower shall fail to observe or perform any covenant or
          agreement  (other  than  those  covered  by clause  (a) or (b)  above)
          contained in the Loan  Documents for 10 days after the  Administrative
          Agent gives notice thereof to the Borrower at the request of any Bank;

               (d) any representation, warranty, certification or statement made
          by the  Borrower  or any  Subsidiary  in any Loan  Document  or in any
          certificate,  financial statement or other document delivered pursuant
          to any  Loan  Document  shall  prove  to have  been  incorrect  in any
          material respect when made (or deemed made);

               (e) the Borrower or any Subsidiary shall fail to make one or more
          payments  in respect of  Material  Financial  Obligations  when due or
          within any applicable grace period;

               (f) any event or  condition  shall  occur  which  results  in the
          acceleration of the maturity of any Material Debt or enables (or, with
          the  giving  of  notice or lapse of time or both,  would  enable)  the
          holder of such Debt or any Person  acting on such  holder's  behalf to
          accelerate the maturity thereof;

               (g) the  Borrower or any  Subsidiary  shall  commence a voluntary
          case or other proceeding seeking liquidation,  reorganization or other
          relief  with  respect  to itself or its  debts  under any  bankruptcy,
          insolvency  or other similar law now or hereafter in effect or seeking
          the appointment of a trustee, receiver, liquidator, custodian or other
          similar  official of it or any  substantial  part of its property,  or
          shall  consent to any such relief or to the  appointment  of or taking
          possession  by any  such  official  in an  involuntary  case or  other
          proceeding  commenced  against it, or shall make a general  assignment
          for the benefit of creditors, or shall fail generally to pay its debts
          as they become due, or shall take any  corporate  action to  authorize
          any of the foregoing;

               (h) an involuntary  case or other  proceeding  shall be commenced
          against  the   Borrower  or  any   Subsidiary   seeking   liquidation,
          reorganization  or other  relief with respect to it or its debts under
          any  bankruptcy,  insolvency  or other similar law now or hereafter in
          effect or seeking the appointment of a trustee, receiver,  liquidator,
          custodian or other similar  official of it or any substantial  part of
          its property,  and such  involuntary  case or other  proceeding  shall
          remain  undismissed  and unstayed for a period of 60 days; or an order
          for relief  shall be entered  against the  Borrower or any  Subsidiary
          under the federal bankruptcy laws as now or hereafter in effect;

               (i) any member of the ERISA  Group  shall fail to pay when due an
          amount or amounts  aggregating in excess of $5,000,000  which it shall
          have become liable to pay under Title IV of ERISA; or notice of intent
          to terminate a Material Plan shall be filed under Title IV of ERISA by
          any  member  of  the  ERISA  Group,  any  plan  administrator  or  any
          combination of the foregoing;  or the PBGC shall institute proceedings
          under Title IV of ERISA to terminate,  to impose liability (other than
          for premiums under Section 4007 of ERISA) in respect of, or to cause a
          trustee  to be  appointed  to  administer,  any  Material  Plan;  or a
          condition shall exist by reason of which the PBGC would be entitled to
          obtain  a  decree   adjudicating   that  any  Material  Plan  must  be
          terminated;  or there  shall  occur a complete  or partial  withdrawal
          from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
          with respect to, one or more Multiemployer Plans which could cause one
          or  more  members  of the  ERISA  Group  to  incur a  current  payment
          obligation in excess of $5,000,000;

               (j)  judgments  or  orders  for the  payment  of money  exceeding
          $5,000,000 in aggregate  amount shall be rendered against the Borrower
          or  any  Subsidiary  and  such  judgments  or  orders  shall  continue
          unsatisfied and unstayed for a period of 20 days;

               (k) any Lien created by any of the Collateral  Documents shall at
          any time fail to constitute a valid and (to the extent required by the
          Collateral   Documents)  perfected  Lien  on  all  of  the  Collateral
          purported to be subject thereto, securing the obligations purported to
          be secured thereby,  with the priority required by the Loan Documents,
          or the Borrower shall so assert in writing; or

               (l) any person or group of persons (within the meaning of Section
          13 or 14 of the Exchange Act) shall have acquired beneficial ownership
          (within  the meaning of Rule 13d-3  promulgated  by the SEC under said
          Act) of 30% or more of the  outstanding  shares of common stock of the
          Borrower; or, during any period of twelve consecutive calendar months,
          individuals  who were  directors  of the  Borrower on the first day of
          such period  ("Initial  Directors") or who were nominated for election
          by at least 66b% of the Initial  Directors shall cease to constitute a
          majority of the Borrower's board of directors;

then, and in every such event, the  Administrative  Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the Commitments,  by notice
to the Borrower  terminate the Commitments  and they shall thereupon  terminate,
and (ii) if requested by Banks  holding  more than 50% of the  aggregate  unpaid
principal  amount of the  Loans,  by notice to the  Borrower  declare  the Loans
(together  with accrued  interest  thereon) to be, and the Loans  (together with
accrued interest  thereon) shall thereupon  become,  immediately due and payable
without presentment,  demand,  protest or other notice of any kind, all of which
are  hereby  waived by the  Borrower;  provided  that,  if any Event of  Default
specified in clause 6.01(g) or 6.01(h) occurs with respect to the Borrower, then
without any notice to the  Borrower or any other act by the Agents or the Banks,
the Commitments  shall thereupon  terminate and the Loans (together with accrued
interest thereon) shall become immediately due and payable without  presentment,
demand,  protest or other notice of any kind,  all of which are hereby waived by
the Borrower.

     SECTION 6.02. Notice of Default. The Administrative Agent shall give notice
to the Borrower under Section 6.01(c)  promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.


                                    ARTICLE 7

                                   THE AGENTS

     SECTION 7.01. Appointment and Authorization. Each Bank irrevocably appoints
and  authorizes  each Agent and the Security  Agent to enter into and act as its
agent in  connection  with the  Collateral  Documents and to take such action as
agent on its behalf and to exercise such powers under the Loan  Documents as are
delegated to such Agent by the terms hereof or thereof,  together  with all such
powers as are reasonably incidental thereto.

     SECTION  7.02.  Agents and  Affiliates.  Each of Citibank,  N.A. and Morgan
Guaranty  Trust  Company of New York shall have the same rights and powers under
the Loan Documents as any other Bank and may exercise or refrain from exercising
the same as though it were not an Agent,  and each of Citibank,  N.A. and Morgan
Guaranty Trust Company of New York and its affiliates may accept  deposits from,
lend money to and generally  engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not an Agent. SECTION


     SECTION 7.03. Action by Agents. The obligations of the Agents hereunder are
only those  expressly set forth herein.  Without  limiting the generality of the
foregoing,  neither  Agent shall be required to take any action with  respect to
any Default,  except as expressly  provided  with respect to the  Administrative
Agent in Article 6.

     SECTION 7.04.  Consultation with Experts. Each Agent may consult with legal
counsel (who may be counsel for the Borrower),  independent  public  accountants
and other experts selected by it and shall not be liable for any action taken or
omitted  to be taken by it in good faith in  accordance  with the advice of such
counsel, accountants or experts.

     SECTION 7.05. Liability of Agents.  Neither Agent nor any of its affiliates
or any of their  respective  directors,  officers,  agents or employees shall be
liable for any action taken or not taken by it in  connection  herewith (i) with
the consent or at the request of the Required Banks (or such different number of
Banks as any provision hereof expressly requires for such consent or request) or
(ii) in the absence of its own gross negligence or willful  misconduct.  Neither
Agent nor any of its affiliates nor any of their respective directors, officers,
agents or  employees  shall be  responsible  for or have any duty to  ascertain,
inquire into or verify (i) any  statement,  warranty or  representation  made in
connection  with  the  Loan  Documents  or any  borrowing  hereunder;  (ii)  the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the  satisfaction of any condition  specified in Article 3, except receipt
of  items  required  to be  delivered  to  such  Agent;  or (iv)  the  validity,
effectiveness  or genuineness  of the Loan Documents or any other  instrument or
writing  furnished  in  connection  herewith.  Neither  Agent  shall  incur  any
liability by acting in reliance upon any notice, consent, certificate, statement
or other writing (which may be a bank wire, telex, facsimile or similar writing)
believed  by it to be genuine or to be signed by the  proper  party or  parties.
Without limiting the generality of the foregoing, the use of the term "agent" in
this  Agreement  with  reference  to the Agents is not  intended  to connote any
fiduciary  or other  implied  (or  express)  obligations  arising  under  agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market  custom  and is  intended  to create or  reflect  only an  administrative
relationship between independent contracting parties.

     SECTION 7.06.  Indemnification.  The Banks shall,  ratably in proportion to
their  Commitments,  indemnify each Agent,  its affiliates and their  respective
directors,  officers,  agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and  disbursements),
claim,  demand,  action,  loss or  liability  (except  such as result  from such
indemnitees'  gross negligence or willful  misconduct) that such indemnitees may
suffer or incur in  connection  with the Loan  Documents  or any action taken or
omitted by such indemnitees thereunder.

     SECTION  7.07.  Credit  Decision.  Each  Bank  acknowledges  that  it  has,
independently  and without reliance on either Agent or any other Bank, and based
on such  documents and  information as it has deemed  appropriate,  made its own
credit  analysis  and  decision  to enter  into this  Agreement.  Each Bank also
acknowledges that it will, independently and without reliance on either Agent or
any other Bank,  and based on such  documents and  information  as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking any action under the Loan Documents.

     SECTION  7.08.  Successor  Agents.  Either  Agent may resign at any time by
giving notice thereof to the Banks and the Borrower.  Upon any such resignation,
the  Required  Banks  shall have the right to appoint a successor  Agent.  If no
successor  Agent shall have been so appointed by the Required  Banks,  and shall
have accepted such  appointment,  within 30 days after the retiring  Agent gives
notice of  resignation,  then the  retiring  Agent may,  on behalf of the Banks,
appoint a  successor  Agent,  which  shall be a  commercial  bank  organized  or
licensed  under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $100,000,000.  Upon the acceptance of
its  appointment as Agent hereunder by a successor  Agent,  such successor Agent
shall  thereupon  succeed to and become vested with all the rights and duties of
the retiring  Agent,  and the retiring Agent shall be discharged from its duties
and obligations hereunder.  After any retiring Agent resigns as Agent hereunder,
the provisions of this Article shall inure to its benefit as to actions taken or
omitted to be taken by it while it was Agent.

     SECTION 7.09.  Agents' Fees.  The Borrower  shall pay to each Agent for its
own account fees in the amounts and at the times  previously  agreed upon by the
Borrower and such Agent.


                                    ARTICLE 8

                             CHANGE IN CIRCUMSTANCES

     SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . If
on or before the first day of any Interest Period for any Euro-Dollar Loan:

               (a) the  Administrative  Agent is advised by the Reference  Banks
          that  deposits in dollars (in the  applicable  amounts)  are not being
          offered to the Reference Banks in the London interbank market for such
          Interest Period, or

               (b) Banks holding 50% or more of the aggregate  principal  amount
          of the  affected  Loans  advise  the  Administrative  Agent  that  the
          Adjusted   London   Interbank   Offered  Rate  as  determined  by  the
          Administrative  Agent will not  adequately and fairly reflect the cost
          to such Banks of funding  their  Euro-Dollar  Loans for such  Interest
          Period,

the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks,  whereupon until the Administrative  Agent notifies the Borrower that
the  circumstances  giving  rise to such  suspension  no longer  exist,  (i) the
obligations  of the Banks to make  Euro-Dollar  Loans or to  continue or convert
outstanding  Loans as or into Euro-Dollar Loans shall be suspended and (ii) each
outstanding  Euro-Dollar  Loan shall be  converted  into a Base Rate Loan on the
last day of the then current  Interest  Period  applicable  thereto.  Unless the
Borrower notifies the  Administrative  Agent at least two Domestic Business Days
before the date of any affected  Borrowing  for which a Notice of Borrowing  has
previously  been given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing.

     SECTION 8.02. Illegality.  If, on or after the date hereof, the adoption of
any  applicable  law, rule or regulation,  or any change in any applicable  law,
rule or  regulation,  or any  change  in the  interpretation  or  administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Euro-Dollar  Lending  Office) with any request or directive  (whether or not
having  the  force of law) of any such  authority,  central  bank or  comparable
agency,  shall make it unlawful or impossible  for any Bank (or its  Euro-Dollar
Lending Office) to make,  maintain or fund its  Euro-Dollar  Loans and such Bank
shall so  notify  the  Administrative  Agent,  the  Administrative  Agent  shall
forthwith  give notice  thereof to the other Banks and the  Borrower,  whereupon
until such Bank  notifies  the Borrower  and the  Administrative  Agent that the
circumstances  giving rise to such suspension no longer exist, the obligation of
such Bank to make  Euro-Dollar  Loans,  or to  convert  outstanding  Loans  into
Euro-Dollar Loans or continue  outstanding Loans as Euro-Dollar  Loans, shall be
suspended. Before giving any notice to the Administrative Agent pursuant to this
Section,  such Bank shall  designate a different  Euro-Dollar  Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice
is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Base  Rate Loan  either  (a) on the last day of the then  current  Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan as a Euro-Dollar Loan to such day or (b) immediately
if such Bank shall  determine that it may not lawfully  continue to maintain and
fund such Loan as a Euro-Dollar Loan to such day.

     SECTION 8.03.  Increased  Cost and Reduced  Return.  (a) If on or after the
date hereof,  the adoption of any  applicable  law, rule or  regulation,  or any
change  in  any  applicable  law,  rule  or  regulation,  or any  change  in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or compliance by any Bank (or its Applicable  Lending Office) with any
request  or  directive  (whether  or not  having  the  force of law) of any such
authority,  central bank or  comparable  agency,  shall  impose,  modify or deem
applicable any reserve  (including,  without  limitation,  any such  requirement
imposed by the Board of Governors of the Federal Reserve  System,  but excluding
any such requirement included in an applicable  Euro-Dollar Reserve Percentage),
special deposit,  insurance assessment or similar requirement against assets of,
deposits  with or for the  account of, or credit  extended  by, any Bank (or its
Applicable  Lending  Office)  or shall  impose  on any  Bank (or its  Applicable
Lending Office) or the London interbank market any other condition affecting its
Euro-Dollar  Loans, its Note or its obligation to make Euro-Dollar Loans and the
result  of any of the  foregoing  is to  increase  the cost to such Bank (or its
Applicable  Lending Office) of making or maintaining any Euro-Dollar Loan, or to
reduce  the  amount  of any sum  received  or  receivable  by such  Bank (or its
Applicable  Lending  Office) under this Agreement or under its Note with respect
thereto,  by an amount deemed by such Bank to be material,  then, within 15 days
after  demand  by  such  Bank  (with a copy to the  Administrative  Agent),  the
Borrower  shall pay to such  Bank such  additional  amount  or  amounts  as will
compensate such Bank for such increased cost or reduction.

     (b) If any Bank shall have  determined  that,  after the date  hereof,  the
adoption of any applicable law, rule or regulation  regarding  capital adequacy,
or any  change  in any  such  law,  rule or  regulation,  or any  change  in the
interpretation or administration thereof by any governmental authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or any request or directive regarding capital adequacy (whether or not
having  the  force of law) of any such  authority,  central  bank or  comparable
agency,  has or would have the effect of reducing  the rate of return on capital
of such  Bank  (or its  Parent)  as a  consequence  of such  Bank's  obligations
hereunder  to a level  below  that which  such Bank (or its  Parent)  could have
achieved  but for such  adoption,  change,  request or  directive  (taking  into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the  Administrative  Agent), the Borrower shall pay
to such Bank such additional  amount or amounts as will compensate such Bank (or
its Parent) for such reduction.

     (c) Each Bank will  promptly  notify the  Borrower  and the  Administrative
Agent of any event of which it has knowledge,  occurring  after the date hereof,
which will entitle such Bank to  compensation  pursuant to this Section and will
designate a different  Applicable  Lending Office if such designation will avoid
the need for,  or reduce the amount of, such  compensation  and will not, in the
judgment of such Bank, be otherwise  disadvantageous to such Bank. A certificate
of any Bank  claiming  compensation  under this  Section and  setting  forth the
additional  amount or amounts to be paid to it hereunder  shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable  averaging and attribution  methods.  

     SECTION 8.04.  Taxes.  (a) For the purposes of this Section,  the following
terms have the following  meanings:  

     "Taxes" means any and all present or future taxes, duties, levies, imposts,
deductions,  charges or withholdings with respect to any payment by the Borrower
pursuant to this Agreement or under any Note, and all  liabilities  with respect
thereto,  excluding (i) in the case of each Bank and Agent, taxes imposed on its
net income,  and  franchise or similar  taxes  imposed on it, by a  jurisdiction
under the laws of which such Bank or Agent (as the case may be) is  organized or
in which its principal executive office is located or, in the case of each Bank,
in which its  Applicable  Lending Office is located and (ii) in the case of each
Bank,  any United States  withholding  tax imposed on such payment,  but not any
portion of such tax that exceeds the United States  withholding  tax which would
have been  imposed on such a payment to such Bank under the laws and treaties in
effect when such Bank first became a party to this Agreement.

     "Other  Taxes" means any present or future stamp or  documentary  taxes and
any other excise or property taxes,  or similar  charges or levies,  which arise
from any payment made  pursuant to this  Agreement or under any Note or from the
execution,  delivery,  registration or enforcement of, or otherwise with respect
to, any Loan Document.

     (b) All payments by the Borrower to or for the account of any Bank or Agent
hereunder  or under any Note shall be made  without  deduction  for any Taxes or
Other Taxes;  provided  that, if the Borrower shall be required by law to deduct
any Taxes or Other Taxes from any such  payment,  (i) the sum  payable  shall be
increased as necessary so that after making all required  deductions  (including
deductions  applicable to additional  sums payable under this Section) such Bank
or Agent (as the case may be)  receives an amount equal to the sum it would have
received had no such  deductions  been made,  (ii) the Borrower  shall make such
deductions,  (iii)  the  Borrower  shall  pay the full  amount  deducted  to the
relevant taxation authority or other authority in accordance with applicable law
and (iv) the Borrower shall promptly furnish to the Administrative Agent, at its
address  specified in or pursuant to Section  9.01,  the original or a certified
copy of a receipt evidencing payment thereof.

     (c) The  Borrower  agrees  to  indemnify  each  Bank and Agent for the full
amount of Taxes and Other Taxes  (including,  without  limitation,  any Taxes or
Other Taxes imposed or asserted  (whether or not correctly) by any  jurisdiction
on amounts  payable  under this Section) paid by such Bank or Agent (as the case
may be) and any liability (including  penalties,  interest and expenses) arising
therefrom or with respect thereto.  This indemnification shall be paid within 15
days after such Bank or Agent (as the case may be) makes demand therefor.

     (d) Each Bank organized under the laws of a jurisdiction outside the United
States,  before it signs and  delivers  this  Agreement in the case of each Bank
listed on the signature pages hereof and before it becomes a Bank in the case of
each other Bank, and from time to time thereafter if requested in writing by the
Borrower (but only so long as such Bank remains  lawfully able to do so),  shall
provide each of the Borrower and the Administrative  Agent with Internal Revenue
Service form 1001 or 4224, as  appropriate,  or any successor form prescribed by
the Internal Revenue Service,  certifying that such Bank is entitled to benefits
under an income tax treaty to which the United  States is a party which  exempts
the Bank from United States  withholding  tax or reduces the rate of withholding
tax on payments of interest for the account of such Bank or certifying  that the
income receivable  pursuant to this Agreement is effectively  connected with the
conduct of a trade or business in the United States.

     (e) For any period  with  respect to which a Bank has failed to provide the
Borrower or the  Administrative  Agent with the appropriate  form referred to in
Section  8.04(d)  (unless  such  failure  is due to a change in  treaty,  law or
regulation  occurring  after the date on which such form originally was required
to be  provided),  such Bank  shall not be  entitled  to  indemnification  under
Section  8.04(b)  or (c) with  respect to Taxes  imposed  by the United  States;
provided that if a Bank,  that is otherwise  exempt from or subject to a reduced
rate of  withholding  tax,  becomes  subject to Taxes  because of its failure to
deliver a form required  hereunder,  the Borrower  shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Taxes.

     (f) If the  Borrower is required  to pay  additional  amounts to or for the
account of any Bank  pursuant to this  Section as a result of a change in law or
treaty  occurring after such Bank first became a party to this  Agreement,  then
such Bank  will,  at the  Borrower's  request,  change the  jurisdiction  of its
Applicable Lending Office if, in the judgment of such Bank, such change (i) will
eliminate or reduce any such additional  payment which may thereafter accrue and
(ii) is not otherwise disadvantageous to such Bank.

     SECTION 8.05. Base Rate Loans Substituted for Affected  Euro-Dollar  Loans.
If (i) the obligation of any Bank to make, or to continue or convert outstanding
Loans as or to, Euro-Dollar Loans has been suspended pursuant to Section 8.02 or
(ii) any Bank has demanded  compensation under Section 8.03 or 8.04 with respect
to its Euro-Dollar  Loans,  and in any such case the Borrower shall, by at least
five  Euro-Dollar   Business  Days'  prior  notice  to  such  Bank  through  the
Administrative  Agent,  have elected that the  provisions  of this Section shall
apply to such Bank, then,  unless and until such Bank notifies the Borrower that
the  circumstances  giving rise to such suspension or demand for compensation no
longer  exist,  all  Loans  which  would  otherwise  be made by such Bank as (or
continued as or converted to) Euro-Dollar Loans shall instead be Base Rate Loans
(on which  interest and principal  shall be payable  contemporaneously  with the
related  Euro-Dollar  Loans of the  other  Banks).  If such  Bank  notifies  the
Borrower  that the  circumstances  giving rise to such  suspension or demand for
compensation no longer exist,  the principal  amount of each such Base Rate Loan
shall  be  converted  into a  Euro-Dollar  Loan  on the  first  day of the  next
succeeding  Interest Period  applicable to the related  Euro-Dollar Loans of the
other Banks.  

     SECTION 8.06.  Substitution  of Bank. If (i) the  obligation of any Bank to
make Euro-Dollar  Loans has been suspended  pursuant to Section 8.02 or (ii) any
Bank has demanded  compensation  under Section 8.03 or 8.04,  the Borrower shall
have the right,  with the  assistance  of the  Agents,  to require  such Bank to
transfer,  pursuant to an Assignment and Assumption  Agreement  substantially in
the form of Exhibit D hereto,  its Note and  Commitment to a substitute  bank or
banks (which may be one or more of the Banks)  satisfactory  to the Borrower and
the Agents.


                                    ARTICLE 9

                                  MISCELLANEOUS

     SECTION 9.01.  Notices.  Communications  to any party hereunder shall be in
writing (including bank wire, telex,  facsimile or similar writing) and shall be
given to such party:  (a) in the case of the  Borrower or either  Agent,  at its
address,  facsimile  number or telex  number  set forth on the  signature  pages
hereof,  (b) in the case of any Bank, at its address,  facsimile number or telex
number set forth in its  Administrative  Questionnaire or (c) in the case of any
party, at such other address, facsimile number or telex number as such party may
hereafter specify for the purpose by notice to the Agents and the Borrower. Each
such notice,  request or other  communication shall be effective (i) if given by
telex,  when transmitted to the telex number referred to in this Section and the
appropriate answerback is received, (ii) if given by facsimile, when transmitted
to the facsimile  number referred to in this Section and confirmation of receipt
is  received,  (iii) if given by mail,  72 hours  after  such  communication  is
deposited in the mails with first class postage prepaid,  addressed as aforesaid
or (iv) if given by any other means,  when delivered at the address  referred to
in this Section; provided that notices to the Administrative Agent under Article
2 or Article 8 shall not be effective until received.

     SECTION 9.02.  No Waivers.  No failure or delay by either Agent or any Bank
in exercising  any right,  power or privilege  hereunder or under any Note shall
operate as a waiver  thereof  nor shall any single or partial  exercise  thereof
preclude  any other or further  exercise  thereof or the  exercise  of any other
right,  power or privilege.  The rights and remedies  herein  provided  shall be
cumulative and not exclusive of any rights or remedies provided by law. SECTION


     SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall pay (i) all
reasonable  out-of-pocket  expenses  of  the  Agents  and  the  Security  Agent,
including  fees and  disbursements  of  special  counsel  for each Agent and the
Security Agent, in connection  with the  preparation and  administration  of the
Loan Documents, any waiver or consent thereunder or any amendment thereof or any
Default or alleged  Default  thereunder and (ii) if an Event of Default  occurs,
all out-of-pocket expenses incurred by either Agent, the Security Agent and each
Bank,  including  (without  duplication)  the fees and  disbursements of outside
counsel and the allocated cost of inside counsel,  in connection with such Event
of  Default  and  collection,   bankruptcy,  insolvency  and  other  enforcement
proceedings resulting therefrom.

     (b) The Borrower agrees to indemnify each Agent and Bank,  their respective
affiliates   (including,   without  limitation,   the  Security  Agent  and  the
Concentration  Bank (as defined in the Security  Agreement))  and the respective
directors,   officers,   agents  and  employees  of  the   foregoing   (each  an
"Indemnitee")  and hold each  Indemnitee  harmless  from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation,  the reasonable  fees and  disbursements  of counsel  (including the
allocated cost of in-house counsel), which may be incurred by such Indemnitee in
connection  with  any  investigative,   administrative  or  judicial  proceeding
(whether or not such Indemnitee  shall be designated a party thereto) brought or
threatened  relating  to or arising out of the Loan  Documents  or any actual or
proposed use of proceeds of Loans  hereunder;  provided that no Indemnitee shall
have the  right to be  indemnified  hereunder  for such  Indemnitee's  own gross
negligence  or  willful  misconduct  as  determined  by  a  court  of  competent
jurisdiction.

     SECTION 9.04.  Sharing of Set-offs.  Each Bank agrees that if it shall,  by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion  of the  aggregate  amount of principal  and interest then due with
respect to the Loans held by it which is greater than the proportion received by
any other Bank in respect of the aggregate amount of principal and interest then
due with respect to the Loans held by such other Bank,  the Bank  receiving such
proportionately  greater payment shall purchase such  participation in the Loans
held by the other Banks,  and such other  adjustments  shall be made,  as may be
required so that all such payments of principal and interest with respect to the
Loans  held by the Banks  shall be shared by the Banks pro rata;  provided  that
nothing in this Section shall impair the right of any Bank to exercise any right
of set-off or  counterclaim  it may have and to apply the amount subject to such
exercise  to  the  payment  of  indebtedness  of the  Borrower  other  than  its
indebtedness  hereunder.  The  Borrower  agrees,  to the  fullest  extent it may
effectively do so under  applicable law, that any holder of a participation in a
Loan,  whether or not  acquired  pursuant  to the  foregoing  arrangements,  may
exercise rights of set-off or counterclaim and other rights with respect to such
participation  as  fully  as if such  holder  of a  participation  were a direct
creditor of the Borrower in the amount of such participation.

     SECTION 9.05. Amendments and Waivers; Release of Collateral.  Any provision
of this  Agreement  or the Notes may be amended or waived if, but only if,  such
amendment or waiver is in writing and is signed by the Borrower and the Required
Banks (and,  if the rights or duties of either  Agent are affected  thereby,  by
such Agent);  provided that no such amendment or waiver shall,  unless signed by
all the Banks, (i) increase or decrease the Commitment of any Bank (except for a
ratable  decrease  in the  Commitments  of all Banks) or subject any Bank to any
additional  obligation,  (ii) reduce the principal of or rate of interest on any
Loan or any fees  hereunder,  (iii)  postpone  the date fixed for any payment of
principal  of or  interest  on  any  Loan  or any  fees  hereunder  or  for  the
termination of any  Commitment or (iv) change the percentage of the  Commitments
or of the  aggregate  unpaid  principal  amount of the  Loans,  or the number of
Banks,  which shall be required  for the Banks or any of them to take any action
under this Section or any other  provision of this  Agreement.  Any provision of
the  Collateral  Documents  may be  amended  or  waived  if,  but only if,  such
amendment or waiver is in writing and is signed by the Borrower and the Security
Agent with the consent of the Required Banks; provided that no such amendment or
waiver shall,  unless signed by all the Banks, effect or permit a release of all
or  substantially  all  of  the  Collateral.   Notwithstanding   the  foregoing,
Collateral shall be released from the Lien of the Collateral Documents from time
to time as  necessary  to effect any sale or pledge of assets  permitted  by the
Loan  Documents,  and the Security  Agent shall  execute and deliver all release
documents reasonably requested to evidence such release.

     SECTION 9.06. Successors; Participation and Assignments. (a) The provisions
of this Agreement  shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may
not assign or otherwise  transfer any of its rights under this Agreement without
the prior written consent of all Banks.

     (b)  Any  Bank  may at  any  time  grant  to one or  more  banks  or  other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. If a Bank grants any such  participating  interest to a
Participant,  whether or not upon notice to the  Borrower  and the Agents,  such
Bank shall remain responsible for the performance of its obligations  hereunder,
and the Borrower and the Agents shall  continue to deal solely and directly with
such Bank in  connection  with such  Bank's  rights and  obligations  under this
Agreement.   Any  agreement  pursuant  to  which  any  Bank  may  grant  such  a
participating  interest shall provide that such Bank shall retain the sole right
and responsibility to enforce the Borrower's  obligations  hereunder,  including
(without limitation) the right to approve any amendment,  modification or waiver
of any provision of this Agreement;  provided that such participation  agreement
may  provide  that such Bank will not agree to any  modification,  amendment  or
waiver of this  Agreement  described in clause (i),  (ii) or (iii) of, or in the
proviso in the penultimate  sentence of, Section 9.05 without the consent of the
Participant.  The Borrower  agrees that each  Participant  shall,  to the extent
provided in its participation  agreement, be entitled to the benefits of Article
8 with respect to its  participating  interest.  An assignment or other transfer
which is not permitted by subsection  (c) or (d) below shall be given effect for
purposes  of this  Agreement  only to the  extent  of a  participating  interest
granted in accordance with this subsection.

     (c)  Any  Bank  may at any  time  assign  to one or  more  banks  or  other
institutions (each an "Assignee") all, or a proportionate part (equivalent to an
initial  Commitment  of not less than  $10,000,000)  of all,  of its  rights and
obligations  under this  Agreement and its Note,  and such Assignee shall assume
such rights and obligations,  pursuant to an Assignment and Assumption Agreement
substantially  in the form of Exhibit D hereto  signed by such Assignee and such
transferor  Bank, with (and subject to) the subscribed  consent of the Borrower,
which shall not be unreasonably  withheld,  and the Agents;  provided that if an
Assignee  is an  affiliate  of such  transferor  Bank or was a Bank  immediately
before such assignment, no such consent shall be required; provided further that
if an Event of Default shall have occurred and be continuing, no such consent of
the  Borrower  shall be  required.  When such  instrument  has been  signed  and
delivered by the parties  thereto and such Assignee has paid to such  transferor
Bank the purchase price agreed between them, such Assignee shall be a Bank party
to this Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such  instrument of  assumption,  and the  transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no  further  consent  or  action by any party  shall be  required.  Upon the
consummation of any assignment pursuant to this subsection, the transferor Bank,
the Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to the Assignee.  In connection with any
such assignment,  the transferor Bank shall pay to the  Administrative  Agent an
administrative  fee for processing such  assignment in the amount of $3,000.  If
the Assignee is not incorporated  under the laws of the United States or a State
thereof,  it  shall  deliver  to  the  Borrower  and  the  Administrative  Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 8.04.

     (d) Any Bank may at any time assign all or any portion of its rights  under
this Agreement and its Note to a Federal Reserve Bank. No such assignment  shall
release the transferor Bank from its obligations hereunder.

     (e) No Assignee, Participant or other transferee of any Bank's rights shall
be entitled to receive any greater  payment under Section 8.03 or 8.04 than such
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the  Borrower's  prior  written  consent or by
reason of the  provisions of Section 8.02,  8.03 or 8.04  requiring such Bank to
designate a different  Applicable Lending Office under certain  circumstances or
at a time when the  circumstances  giving rise to such  greater  payment did not
exist.

     SECTION 9.07. No Reliance on Margin Stock.  Each of the Banks represents to
the Agents and each of the other Banks that it in good faith is not relying upon
any "margin  stock" (as defined in  Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.

     SECTION 9.08. Governing Law; Submission to Jurisdiction. This Agreement and
each Note shall be governed by and construed in accordance  with the laws of the
State of New York. The Borrower hereby submits to the nonexclusive  jurisdiction
of the United States District Court for the Southern District of New York and of
any New York  State  court  sitting in New York City for  purposes  of all legal
proceedings  arising out of or relating to this  Agreement  or the  transactions
contemplated  hereby.  The Borrower  irrevocably  waives,  to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such  proceeding  brought in such a court and any claim that
any such proceeding  brought in such a court has been brought in an inconvenient
forum.

     SECTION 9.09. Counterparts;  Integration; Effectiveness. This Agreement may
be signed in any number of  counterparts,  each of which  shall be an  original,
with the same effect as if the signatures  thereto and hereto were upon the same
instrument.  This Agreement  constitutes the entire agreement and  understanding
among  the  parties  hereto  and  supersedes  any and all prior  agreements  and
understandings, oral or written, relating to the subject matter hereof. SECTION


     SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH OF THE BORROWER,  THE AGENTS AND
THE BANKS  HEREBY  IRREVOCABLY  WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL  PROCEEDING   ARISING  OUT  OF  OR  RELATING  TO  THIS  AGREEMENT  OR  THE
TRANSACTIONS CONTEMPLATED HEREBY.

     SECTION  9.11.  Confidentiality.  Each Agent,  the Security  Agent and Bank
agrees to keep any  information  delivered  or made  available  by the  Borrower
pursuant to this Agreement  confidential from anyone other than persons employed
or retained by such Bank who are engaged in evaluating,  approving,  structuring
or administering the credit facility contemplated hereby;  provided that nothing
herein shall prevent either Agent or any Bank from disclosing  such  information
(a) to any other Bank or to either Agent,  (b) to any other Person if reasonably
incidental to the administration of the credit facility contemplated hereby, (c)
upon the order of any court or  administrative  agency,  (d) upon the request or
demand of any  regulatory  agency  or  authority,  (e)  which had been  publicly
disclosed  other than as a result of a  disclosure  by either  Agent or any Bank
prohibited by this  Agreement,  (f) in connection  with any  litigation to which
either Agent,  any Bank or its subsidiaries or Parent may be a party, (g) to the
extent necessary in connection with the exercise of any remedy hereunder, (h) to
such Bank's or Agent's legal counsel and independent auditors and (i) subject to
provisions  substantially  similar to those  contained in this  Section,  to any
actual or proposed Participant or Assignee; provided, further, that for purposes
of this  Section,  "information"  does not mean any  information  which  (x) was
already in the possession of such Bank or Agent at the time of its disclosure by
the  Borrower  or (y) is made  available  to such Bank or Agent by a third party
which,   to  the  knowledge  of  such  Bank  or  Agent,   did  not  violate  any
confidentiality obligation by doing so. 

     SECTION  9.12.  Right  of  Set-off.  Upon the  occurrence  and  during  the
continuance of any Event of Default,  each Bank is hereby authorized at any time
and from time to time,  to the fullest  extent  permitted by law, to set-off and
otherwise  apply any and all  deposits  (general  or  special,  time or  demand,
provisional or final) at any time held and other  indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrower against any and
all of the  obligations  of the Borrower now or  hereafter  existing  under this
Agreement  and the Note held by such  Bank,  whether or not such Bank shall have
made any demand under this  Agreement or the Note held by such Bank and although
such  obligations  may be  unmatured.  Such Bank  agrees  promptly to notify the
Borrower  after any such set-off and  application,  provided that the failure to
give such notice shall not affect the validity of such set-off and  application.
The rights of each Bank under this  Section are in addition to other  rights and
remedies  (including,  without  limitation,  other rights of set-off) which such
Bank may have.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.


                                     IOMEGA CORPORATION


                                     By            /s/ Robert J. Simmons
                                         Name:     Robert J. Simmons
                                         Title:    Vice President and Treasurer
                                         Address:  1821 West Iomega Way
                                                   Roy, Utah 84067
                                         Attention:
                                         Facsimile:
<PAGE>

                                         BANKS
                                         ------
                                         CITIBANK, N.A.


                                         By         /s/ Bradley I. Dietz
                                             Name:  Bradley I. Dietz
                                             Title: Managing Director 
                                                    GRB/IRM Dept.


                                         MORGAN GUARANTY TRUST
                                         COMPANY OF NEW YORK


                                         By         /s/ John M. Mikolay
                                             Name:  John M. Mikolay
                                             Title: Vice President


                                         FLEET NATIONAL BANK


                                         By         /s/Frank Benesh
                                             Name:  Frank Benesh
                                             Title: Vice President


                                         BANK OF AMERICA NATIONAL TRUST
                                         AND SAVINGS ASSOCIATION


                                         By         /s/ Kevin McMahon
                                             Name:  Kevin McMahon
                                             Title: Managing Director


                                         FIRST SECURITY BANK OF UTAH, N.A.


                                         By         /s/ Taft G. Meyer
                                             Name:  Taft G. Meyer
                                             Title: Vice President

                                         KEYBANK NATIONAL ASSOCIATION


                                         By         /s/ Mary K. Young
                                             Name:  Mary K. Young
                                             Title: Commercial Banking Officer


                                         ABN AMRO BANK N.V.


                                         By         /s/ Thomas R. Wagner
                                             Name:  Thomas R. Wagner
                                             Title: Group Vice President


                                         By         /s/ Richard R. DaCosta
                                             Name:  Richard R. DaCosta
                                             Title: Vice President


                                         THE SUMITOMO TRUST & BANKING
                                         CO., LTD.


                                         By         /s/ Akifumi Shiozaki
                                             Name:  Akifumi Shiozaki
                                             Title: Deputy General Manager


                                         THE NORTHERN TRUST COMPANY


                                         By         /s/ John E. Burda
                                             Name:  John E. Burda
                                             Title: Second Vice President


                                         ISTITUTO BANCARIO SAN PAOLO DI
                                         TORINO S.P.A.


                                         By
                                             Name:
                                             Title:


                                         By
                                              Name:
                                              Title:


                                         THE SANWA BANK, LIMITED, LOS
                                         ANGELES BRANCH


                                         By         /s/ Steve Yamada
                                             Name:  Steve Yamada
                                             Title: Vice President


                                         UNION BANK OF CALIFORNIA, N.A.


                                         By         /s/ Patrick Clemens
                                             Name:  Patrick Clemens
                                             Title: Assistant Vice President

                                         CITIBANK, N.A., as Administrative Agent


                                         By         /s/ Bradley I. Dietz
                                            Name:  Bradley I. Dietz
                                            Title: Managing Director
                                                   GRB/IRM Dept
                                            Address:       399 Park Avenue
                                                           New York, NY 10043
                                             Facsimile:


                                         MORGAN GUARANTY TRUST
                                         COMPANY OF NEW YORK, as
                                         Documentation Agent


                                         By         /s/ John M. Mikolay
                                             Name:  John M. Mikolay
                                             Title: Vice President
                                             Address:      60 Wall Street
                                                           New York, NY 10260
                                             Facsimile:


                                         ACKNOWLEDGED AND AGREED:

                                         CITICORP USA, INC., as Security Agent


                                         By         /s/ Bradley I. Dietz
                                             Name:  Bradley I. Dietz
                                             Title: Managing Director
                                                   GRB/IRM Dept

<PAGE>

COMMITMENT SCHEDULE
<TABLE>
Bank                                                         Commitment
<S>                                                          <C>

Citibank, N.A.                                                $  18,750,000
Morgan Guaranty Trust Company of New York                     $  18,750,000
Fleet National Bank                                           $  15,000,000
Bank of America National Trust and Savings
   Association                                                $   9,750,000
First Security Bank of Utah, N.A.                             $  15,000,000
KeyBank National Association                                  $  15,000,000
ABN AMRO Bank N.V.                                            $  15,000,000
The Sumitomo Trust & Banking Co., Ltd.                        $   9,750,000
The Northern Trust Company                                    $   9,750,000
Istituto Bancario San Paolo di Torino S.p.A.                  $   7,500,000
The Sanwa Bank, Limited, Los Angeles Branch                   $   7,500,000
Union Bank of California, N.A.                                $   9,750,000

        Total                                                 $ 150,000,000
</TABLE>

<PAGE>

                                PRICING SCHEDULE


Each of  "Euro-Dollar  Margin",  "Base Rate Margin",  "Commitment  Fee Rate" and
"Utilization  Fee Rate" means,  (i) for any date before delivery by the Borrower
of the  financial  statements  required by Section  5.01(b)  with respect to the
Fiscal  Quarter  ending on or closest to June 30, 1999, the rate set forth below
in the row opposite such term in the column  corresponding  to Pricing Level III
(and,  in the case of the  Utilization  Fee Rate, to the Usage on such date) and
(ii) for any date  thereafter,  the  percentage  as set  forth  below in the row
opposite such term and in the column  corresponding to the "Pricing Level" (and,
in the case of the Utilization Fee Rate, the Usage) that applies on such date:
<TABLE>
<S>                                 <C>            <C>             <C>             <C>



                                        Level          Level           Level           Level
                                           I             II              III             IV
----------------------------------- -------------- --------------- --------------- ---------------

Euro-Dollar                                 1.25%           1.50%           2.00%           2.75%
Margin

Base Rate                                      0%           .375%           .875%          1.625%
Margin

Commitment Fee Rate                         .250%           .375%           .500%           .625%

Utilization Fee Rate

Usage > 66%                                 .250%           .500%           .500%           .500%

Usage > 33% # 66%                           .125%           .250%           .250%           .250%
----------------------------------- -------------- --------------- --------------- ---------------
</TABLE>

         For purposes of this Schedule,  the following  terms have the following
meanings:

         Subject  to the first  paragraph  of this  Schedule,  "Level I Pricing"
applies at any date if, as of such date, Consolidated EBITDA for the four Fiscal
Quarters then most recently ended is greater than $200,000,000.

         Subject to the first  paragraph  of this  Schedule,  "Level II Pricing"
applies at any date if, as of such date,  (i)  Consolidated  EBITDA for the four
Fiscal Quarters then most recently ended is greater than  $175,000,000  and (ii)
Level I Pricing does not apply.

         Subject to the first  paragraph of this  Schedule,  "Level III Pricing"
applies at any date if, as of such date,  (i)  Consolidated  EBITDA for the four
Fiscal Quarters then most recently ended is greater than  $150,000,000  and (ii)
neither Level I Pricing nor Level II Pricing applies.

         Subject to the first  paragraph  of this  Schedule,  "Level IV Pricing"
applies at any date if, as of such date, no other Pricing Level applies.

         "Pricing Level" refers to the  determination of which of Level I, Level
II, Level III or Level IV applies at any date.



<PAGE>


SCHEDULE I - Debt



                                 Iomega Corporation
                                      JUNE 1998
                                        DEBT

<TABLE>
                                                              Book Balance
                                                              ------------
<S>                                                           <C>


USL Lease #1
                                                                  44,468.76
USL Lease #2                                                     107,134.19
USL Lease #3                                                     344,634.72
USL Lease #4                                                     657,461.92
                                                               ------------
                                                               1,153,699.59

Oracle                                                         1,283,027.11

Steel Case                                                       472,475.47

Seimens Rolm                                                     261,028.20

Pitney Bowes #1                                                1,456,175.25
Pitney Bowes #2                                                  637,867.01
                                                               ------------
                                                               2,094,042.26
                                                                 
Fleet                                                          1,062,384.74

Clarklift                                                         75,879.65
                                                               ------------

   Total Capital Leases                                        6,402,537.02
                                                               ------------

Convertible Subordinated Notes
                                                              45,683,000.00

                                                              -------------
Total                                                         52,085,537.02
                                                              -------------
</TABLE>

<PAGE>

                                  SCHEDULE II

                                      NONE

<PAGE>


                                                                      EXHIBIT A


                                      Note



                                                             New York, New York
                                                           ___________ __, 1998




         For value received,  Iomega  Corporation,  a Delaware  corporation (the
"Borrower"),  promises  to pay  to  the  order  of  ______________________  (the
"Bank"),  for the account of its Applicable Lending Office, the unpaid principal
amount of each  Loan made by the Bank to the  Borrower  pursuant  to the  Credit
Agreement  referred to below on the  maturity  date  provided  for in the Credit
Agreement.  The Borrower promises to pay interest on the unpaid principal amount
of each  such Loan on the  dates  and at the rate or rates  provided  for in the
Credit  Agreement.  All such payments of principal and interest shall be made in
lawful  money of the United  States in Federal  or other  immediately  available
funds at the office of Citibank, N.A., _________________, New York, New York.

         All Loans  made by the  Bank,  the  respective  types  thereof  and all
repayments  of the  principal  thereof shall be recorded by the Bank and, if the
Bank  so  elects  in  connection  with  any  transfer  or  enforcement   hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule  attached
hereto,  or on a  continuation  of such  schedule  attached  to and  made a part
hereof;  provided that the failure of the Bank to make any such  recordation  or
endorsement shall not affect the Borrower's  obligations  hereunder or under the
Credit Agreement.

         This note is one of the Notes  referred to in the Amended and  Restated
Credit Agreement dated as of July 15, 1998 among Iomega  Corporation,  the Banks
party thereto,  Citibank,  N.A., as  Administrative  Agent,  and Morgan Guaranty
Trust  Company of New York, as  Documentation  Agent (as the same may be amended
from  time to  time,  the  "Credit  Agreement").  Terms  defined  in the  Credit
Agreement  are used  herein  with the same  meanings.  Reference  is made to the
Credit  Agreement for provisions for the prepayment  hereof and the acceleration
of the maturity hereof.

                                                     IOMEGA CORPORATION


                                                     By____________________
                                      Name:
                                     Title:

<PAGE>


                         Loans and Payments of Principal



Date                    Amount of    Type of    Amount of    Notation Made 
                        Loan         Loan       Principal    By
                                                Repaid
---------------------   ----------   --------   ---------    -------------















<PAGE>



                                                                      EXHIBIT B




  

                               Counsellors at Law


                  60 State Street, Boston, Massachusetts 02109
                         617-526-6000 $ fax 617-526-5000




                                                                  July 15, 1998
 


To the Banks and the Agents
Referred to Below
c/o Morgan Guaranty Trust Company
  of New York, as Documentation Agent
60 Wall Street
New York, NY  10260

Ladies and Gentlemen:

         We have acted as counsel for Iomega  Corporation  (the  "Borrower")  in
connection with the Amended and Restated Credit  Agreement of even date herewith
(the "Credit Agreement") among the Borrower, the Banks party thereto,  Citibank,
N.A. as  Administrative  Agent, and Morgan Guaranty Trust Company of New York as
Documentation  Agent.  Capitalized  terms used but not otherwise  defined herein
have the meanings ascribed to such terms in the Credit  Agreement.  This opinion
is furnished to you pursuant to Section 3.01(c) of the Credit Agreement.

         For  purposes of the opinions  expressed  below,  we have  examined the
following:

          1.   the Credit Agreement;

          2.   the  Borrower's  promissory  notes of even date  herewith  in the
               aggregate original principal amount of $150,000,000,  made by the
               Borrower in favor of the Banks (the "Notes");

          3.   the Security Agreement of even date among the Borrower,  Citicorp
               USA, Inc., as security agent, and The Northern Trust Company,  as
               agent for the Secured Parties (the "Security Agreement");

          4.   the  Pledge  Agreement  of even date  between  the  Borrower  and
               Citicorp USA, Inc. (the "Pledge Agreement");

          5.   the Patent  Security  Agreement of even date between the Borrower
               and Citicorp USA, Inc. (the "Patent Agreement"); 

          6.   the  Trademark  Security  Agreement  of  even  date  between  the
               Borrower and Citicorp USA, Inc. (the "Trademark Agreement");

          7.   the  Copyright  Security  Agreement  of  even  date  between  the
               Borrower and Citicorp USA, Inc. (the "Copyright Agreement");

          8.   the  Control  Agreements  of even date  among the  Borrower,  the
               securities   intermediaries   named   therein  (the   "Securities
               Intermediaries")   and   Citicorp   USA,   Inc.   (the   "Control
               Agreements") ;

          9.   those  certain  UCC-1  financing  statements  in the form annexed
               hereto as Exhibit A (the  "Financing  Statements")  for filing in
               the filing offices listed on Schedule I;

          10.  that certain Secretary's Certificate of the Borrower of even date
               herewith (the "Secretary's Certificate");

          11.  those  certain  resolutions  of the  board  of  directors  of the
               Borrower in the form annexed to the  Secretary's  Certificate  as
               Exhibit C (the "Resolutions");

          12.  the Borrower's  Certificate of Incorporation,  as amended, in the
               form attached to the  Secretary's  Certificate  as Exhibit A (the
               "Articles of Organization");

          13.  the  By-Laws  of  the   Borrower  in  the  form  annexed  to  the
               Secretary's Certificate as Exhibit B (the "By-Laws");

          14.  that certain Certificate of Legal Existence and Good Standing for
               the Borrower dated July 9, 1998, issued by the Secretary of State
               of the State of Delaware (the "Good Standing Certificate");

          15.  that  certain  Certificate  of  Foreign   Qualification  for  the
               Borrower dated July 9, 1998, issued by the Secretary of the State
               of the State of Utah (the "Foreign  Qualification  Certificate");
               and

          16.  such other documents,  instruments and  certificates  (including,
               but not limited to, certificates of public officials and officers
               of the Borrower) as we have considered  necessary for purposes of
               this opinion.

     The  Credit  Agreement,  the  Notes,  the  Security  Agreement,  the Pledge
Agreement,   the  Patent  Agreement,  the  Trademark  Agreement,  the  Copyright
Agreement and the Control Agreements shall hereinafter  collectively be referred
to as the "Loan Documents."

         In our  examination of the documents  described  above, we have assumed
the  genuineness  of all  signatures  (other than  signatures of officers of the
Borrower  certified to us),  the  capacity,  power and  authority of all parties
(other than the Borrower) to execute and deliver all applicable  documents,  the
authenticity  of all documents  submitted to us as originals,  the conformity to
original  documents of all copies of  documents  submitted to us as certified or
photostatic  copies,  and the  authenticity  of the  originals  of  such  latter
documents.  As to any  facts  material  to this  opinion,  we have  relied  upon
representations made to us by one or more officers or employees of the Borrower.

         Any  reference  to "our  knowledge"  or  "knowledge"  or any  variation
thereof  shall mean the  conscious  awareness of the  attorneys in this firm who
have rendered substantive attention to this transaction of any facts which would
contradict  our opinions set forth below.  Although we have not  undertaken  any
independent  investigation  to determine the existence or absence of such facts,
and no inference as to our  knowledge of the  existence or absence of such facts
should be drawn from the fact of our representation of the Borrower, nothing has
come to our  attention  leading us to question  the  accuracy  of such  matters.
Without  limiting the generality of the foregoing,  with respect to our opinions
in  paragraphs 8 and 10 below,  we have not conducted a search of the dockets of
any court or administrative or other regulatory agency.

         We have assumed that the Agents, the Security Agent, each Bank and each
of the Securities  Intermediaries  has the power and authority and has taken the
corporate action necessary to execute and deliver the Loan Documents to which it
is a party, and that no consent, approval, authorization,  declaration or filing
by or with any  governmental  commission,  board or agency is  required  for the
valid  execution  and  delivery of such  documents  by the Agents,  the Security
Agent, each such Bank and each of the Securities Intermediaries. We have assumed
the due execution and delivery by the Agents,  the Security Agent, each Bank and
each of the Securities  Intermediaries of such of the Loan Documents to which it
is a party,  and that  such Loan  Documents  constitute  the  valid and  binding
obligations  of the  Agents,  the  Security  Agent,  each  Bank  and each of the
Securities  Intermediaries,  enforceable  against  it in  accordance  with their
terms. We have also assumed that each Bank is subject to control,  regulation or
examination by a state or federal regulatory agency.

         We  have  caused  to  have  searched  the UCC  filing  offices  for the
Secretary of State of the States of Utah, Colorado,  California,  North Carolina
and Texas.  The  results of those  searches,  provided  to us by LEXIS  Document
Services,  are  attached  hereto as Exhibit  B(1).  We have also  caused to have
searched  the United  States  Patent  and  Trademark  Office  and United  States
Copyright Office records maintained by Thompson & Thompson, the results of which
are attached hereto as Exhibit B(2).

         Except as provided in the next  sentence,  we express no opinion herein
with  respect  to  the  laws  of  any  state  or  jurisdiction  other  than  the
Commonwealth of Massachusetts,  the Delaware General Corporation Law statute and
the federal laws of the United States of America.  Our opinions in paragraphs 3,
4, 5, 6 and 9 with  respect to the laws of the States of  California,  Colorado,
Idaho,  Iowa,  New  York,  North  Carolina,  Texas  and  Utah  (the  "Applicable
Jurisdictions") are based solely upon our examination of the descriptions of the
laws of each such state contained in 1 Secured  Transaction  Guide (CCH) & 21 at
1036-37 (1997),  1038-39  (1997),  1048-49  (1996),  1054-55  (1998),  1088-1089
(1997), 1090-91 (1997), 1109-11 (1998) and 1111-3 (1993), respectively.  We note
that the Loan Documents  provide that they are governed by the laws of the State
of New York. With your permission,  we have assumed, without investigation,  for
purposes of the opinions  expressed below,  that the laws of the Commonwealth of
Massachusetts are identical to the laws of the State of New York.

         While  we  have  assumed  that  New  York  law  governs  the  creation,
perfection  and priority of your  interests in the  Subsidiary  Shares under the
Pledge Agreement, and without limiting such assumption, we note that the issuers
of the Subsidiary  Shares are  corporations  organized under the laws of France,
Japan and Switzerland and that the laws of France, Japan and Switzerland, as the
case may be, might affect the  validity and  enforceability  of the terms of the
Pledge  Agreement  and/or the perfection and priority of your rights or remedies
thereunder  or interests  granted  therein.  We express no opinions  herein with
respect to any such foreign  laws and our  opinions in  paragraphs 5 and 6 below
are limited accordingly.

         The opinion  expressed in  paragraph 1 below,  insofar as it relates to
the valid existence and corporate good standing of the Borrower in Delaware,  is
based solely upon the Good Standing  Certificate  and is rendered as of the date
thereof.  Our opinions in  paragraph 1 below,  to the extent  pertaining  to the
qualification  of Borrower  to do business in the State of Utah is based  solely
upon  the  Foreign  Qualification  Certificate  and is  rendered  as of the date
thereof.

         Our  opinions  below are  qualified  to the extent that the validity or
enforceability  of the documents  referred to or of any of the rights granted to
any party  pursuant  thereto  may be subject to or  affected  by (i)  applicable
bankruptcy,  insolvency,  reorganization,  moratorium,  fraudulent conveyance or
transfer or similar  laws  affecting  the rights of  creditors  generally,  (ii)
statutory or decisional law concerning  recourse by creditors to security in the
absence  of notice or  hearing,  and  (iii)  duties  and  standards  imposed  on
creditors and parties to contracts, including, without limitation,  requirements
of good  faith,  reasonableness  and fair  dealing.  Furthermore,  we express no
opinion as to the  availability  of any  equitable  or specific  remedy upon any
breach of such  documents or any of the  agreements,  documents  or  obligations
referred to therein,  as the availability of such remedies may be subject to the
discretion  of a court.  We express no  opinion  as to the  enforceability  of a
waiver of rights granted by the Constitution of the United States of America, or
any state or political  subdivision  thereof, or the vesting of jurisdiction in,
or the consent to the exercise of jurisdiction by, any court.

         We note that Section 9.12 of the Credit Agreement limits the ability of
each Bank to exercise set-off or similar rights to the extent such is prohibited
by law. However,  we bring to your attention that such laws may limit the rights
of the Banks or any person  claiming  through  the Bank to set-off  against  the
accounts  of the  Borrower,  to the extent that (i) the funds on deposit in such
accounts are subjected to trustee process or any other valid claim or right of a
third  party,  (ii) the  accounts are special  accounts  created  solely for the
benefit of another  party,  such as  payroll or tax escrow  accounts,  (iii) the
funds on deposit are contained in a separate account  containing the proceeds of
collateral securing the obligation of the Borrower to a secured party other than
the Banks or the Security Agent under Article 9 of the Uniform  Commercial  Code
(the "Code") as enacted in the Applicable Jurisdictions, (iv) the Banks' set-off
is directed  against  uncollected  checks or drafts naming the Borrower as payee
and held by any Bank solely as collecting agent (and not as depository),  or (v)
the  obligations  against  which any deposit  account is set-off are not due and
payable.

         Based upon and subject to the  foregoing,  and  further  subject to the
qualifications set forth below, it is our opinion that:

          1.   The Borrower is a corporation  duly organized,  validly  existing
               and in good standing  under the laws of the State of Delaware and
               is qualified to do business as a foreign corporation in the State
               of Utah, with all requisite corporate power and authority to own,
               operate  or lease its  properties  and assets and to carry on its
               business as, to our knowledge, it is now being conducted.

          2.   The  execution,  delivery and  performance by the Borrower of the
               Loan  Documents are within the  Borrower's  corporate  powers and
               have been duly  authorized by all necessary  corporate  action on
               the part of the Borrower.

          3.   The Security Agreement creates, in favor of the Security Agent, a
               valid and  enforceable  security  interest under Article 9 of the
               Code as  enacted  in the State of New York (the "New York  Code")
               with  respect to the  Collateral  (as such term is defined in the
               Security Agreement).  The Security Agent's security interest will
               be  perfected  (i) under  Article 9 of the Code as enacted in the
               Applicable  Jurisdictions  with respect to the  Collateral  as to
               which the law of the Applicable  Jurisdictions governs perfection
               by virtue  of the  location  of the  Borrower's  chief  executive
               office in the State of Utah or the location of any  Collateral in
               the  Applicable  Jurisdiction,  by the  filing  of the  Financing
               Statements in the offices listed in Schedule I hereto and (ii) to
               the extent such Collateral is comprised of "investment  property"
               (as  defined in the New York  Code) to the  extent  the  Security
               Agent has  "control"  (as  defined  in the New York Code) of such
               Collateral.  To the extent that such  Collateral  is comprised of
               (x) a  "securities  account"  (as  defined  in the New York Code)
               maintained by a "securities  intermediary" (as defined in the New
               York Code) for the Borrower and such "securities intermediary" is
               acting  in such  capacity  as a party to the  respective  Control
               Agreement or (y) a  "securities  entitlement"  (as defined in the
               New York Code) of the Borrower in a "financial asset" (as defined
               in the New York Code)  credited  to a  "securities  account"  (as
               defined  in the  New  York  Code)  which  is the  subject  of the
               respective   Control  Agreement  and  for  which  the  respective
               "securities  intermediary"  is acting in such capacity as a party
               thereto,  the Security  Agent will have  "control" (as defined in
               the New York  Code)  over such  Collateral  pursuant  to  Section
               8-106(d)  of the New York  Code by virtue  of the  execution  and
               delivery of the Control  Agreements by the parties  thereto.  For
               purposes of our  opinions in clause (ii) above,  we have  assumed
               that (i) the  Investment  Accounts  which are the  subject of the
               Control Agreements  constitute  "securities  accounts" as defined
               under the New York Code, and (ii) that the parties to the Control
               Agreements, other then the Borrower and the Security Agent, which
               maintain the Investment  Accounts which are the subject  thereof,
               are "securities  intermediaries"  as defined in the New York Code
               and are  acting in such  capacity  under the  respective  Control
               Agreement.

          4.   The Security  Interests  (as defined in the  Security  Agreement)
               validly  secure the payment of all future Loans made by the Banks
               to the  Borrower,  whether or not at the time such Loans are made
               after an Event of Default or other  event not within the  control
               of the  Banks  has  relieved  or may  relieve  the Banks of their
               obligations  to make such Loans,  and are perfected to the extent
               set forth in paragraph 3 above with respect to such future Loans.

          5.   The Pledge Agreement  creates valid security  interests under the
               New York Code in favor of the  Security  Agent in the  Subsidiary
               Shares (as defined therein).

          6.   Under the New York Code, by virtue of the taking of possession of
               stock  certificates  evidencing the Subsidiary Shares (other than
               the shares of Nomai,  S.A. which are not  certificated)  together
               with the related duly executed  stock powers as  contemplated  by
               the Pledge Agreement,  assuming that (a) the Agents, the Security
               Agent  and the Banks  have no  knowledge  of any  other  security
               interest,  lien or encumbrance or adverse claim in, on or to such
               Pledged  Stock and (b) the Security  Agent  maintains  continuous
               possession of such stock  certificates  in the State of New York,
               the  Security  Agent has a  perfected  security  interest  in the
               Borrower's  right,  title and interest in and to such  Subsidiary
               Shares (other than the shares of Nomai, S.A.).

          7.   The Loan  Documents  have been duly executed and delivered by the
               Borrower,  and constitute the legal, valid and binding obligation
               of the Borrower  enforceable in accordance with their  respective
               terms.

          8.   The execution and delivery by the Borrower of the Loan Documents,
               the  performance  by the  Borrower  of the  respective  terms and
               provisions  thereof  and  the  consummation  of the  transactions
               contemplated thereby, will not violate,  conflict with, result in
               a breach  or  termination  of,  or a  default  under (or an event
               which,  with or  without  due  notice or lapse of time,  or both,
               would  constitute a default under) or accelerate the  performance
               required  by,  or result in the  creation  of any lien,  security
               interest,  charge or other encumbrance upon any of the properties
               or assets of the  Borrower  (except  for the  security  interests
               created  pursuant to the Loan Documents)  under any of the terms,
               conditions or provisions of (i) the Articles of  Organization  or
               By-Laws,  (ii) any laws applicable to the Borrower,  (iii) to our
               knowledge,  any  judgment,  order,  decree,  ruling or injunction
               specifically  naming the Borrower or  specifically  applicable to
               its properties,  of any court or governmental  authority, or (iv)
               any of the agreements to which the Borrower is a party which have
               been  filed  as  exhibits  to the  Borrower's  filings  with  the
               Securities  and  Exchange  Commission,  and which will  remain in
               effect following consummation of the Credit Agreement.

          9.   Except for the filings  described in paragraph 3 above,  no other
               recording,   filing  or  other  action  under  the  laws  of  the
               Applicable  Jurisdictions  is  required  in order to perfect  the
               security  interest in the Collateral,  as defined in the Security
               Agreement,   under  the  Code  as  enacted   in  the   Applicable
               Jurisdictions to the extent a security interest in the Collateral
               can be  perfected by the filing of  financing  statements  in the
               Applicable Jurisdictions.

          10.  To our knowledge, without independent investigation or inquiry of
               any kind,  except as disclosed in the  Borrower's  public filings
               with the Securities and Exchange Commission,  there is no action,
               suit,  proceeding or investigation  pending or threatened against
               the Borrower before any court or governmental  department,  which
               could prevent the consummation of the  transactions  contemplated
               by the Loan  Documents or purports by its terms to challenge  the
               validity or  enforceability  of the Loan  Documents or any action
               taken  or  to  be  taken  in  connection  with  the  transactions
               contemplated  thereby, or which, if adversely  determined,  could
               have  a  material  adverse  effect  on the  business,  condition,
               affairs or operations of the Borrower or any material  impairment
               of  the  right  or  ability  of  the  Borrower  to  carry  on its
               operations as now conducted.

         The  foregoing  opinions  are  subject to the  following  comments  and
qualifications:

          1.   We express no opinion as to the existence of, or the right, title
               or  interest of the  Borrower  in, to or under,  any  property in
               which the Borrower has granted a security interest to you.

          2.   We express no opinion as to the creation of security interests in
               property  (including  intellectual  property) in which a security
               interest  cannot  be  created  under  the  New  York  Code or the
               perfection   of  security   interests   in  property   (including
               intellectual property) (i) excluding the Pledge Stock, in which a
               security  interest  cannot be  perfected  by the  filing of UCC-1
               financing statements pursuant to Article 9 of the Code as enacted
               in the Applicable Jurisdictions or (ii) which is not described in
               both the Security Agreement and the Financing Statements. We call
               your  attention to the decision of the United  States  Bankruptcy
               Court for the  District of Arizona in In re Avalon,  209 B.R. 517
               (Bankr.  D. Ariz.  1997)  regarding the  perfection of a security
               interest in proceeds of certain intellectual property, but advise
               you that there have been no similar  decisions by courts  sitting
               in the Commonwealth of Massachusetts.

          3.   Under  certain  circumstances,  described in Section 9-306 of the
               Code as enacted in the Applicable  Jurisdictions and the New York
               Code,  the  right of a  secured  party  to  enforce  a  perfected
               security interest in the proceeds of Collateral may be limited.

          4.   The  grant of,  or any  realization  on,  security  interests  in
               governmental licenses, permits,  authorizations and other rights,
               in contracts with government or  governmental  instrumentalities,
               commissions,  boards or agencies and in the proceeds  thereof are
               or may be  subject  to  restrictions  or  limitations  set  forth
               therein or in applicable  statutes,  laws,  rules or regulations,
               and we express no opinion as to the  creation  or  perfection  of
               security interest in such rights, contracts or proceeds.

          5.   We  express  no  opinion  as to  the  priority  of  any  security
               interests  granted by the  Borrower to the Banks under any of the
               Loan Documents.

          6.   The perfection of the Security  Interests may be terminated as to
               any Collateral  acquired more than four months after the Borrower
               changes its name,  identity or corporate  structure so as to make
               the  Financing  Statements  seriously  misleading  (within in the
               meaning  of  Section  9-402(7)  of the  Code  as  enacted  in the
               Applicable   Jurisdictions)  unless  new,  appropriate  financing
               statements   indicating  the  new  name,  identity  or  corporate
               structure  of  the   Borrower  are  properly   filed  before  the
               expiration of such  four-month  period and all fees in connection
               therewith  are paid.  The  perfection  of security  interests  in
               accounts, including receivables,  general intangibles and certain
               other  Collateral  may be terminated if the Borrower  changes the
               location of its chief  executive  offices outside of the State of
               Utah.

          7.   Pursuant to the Code as enacted in the Applicable  Jurisdictions,
               continuation  statements  are  required  from  time to time to be
               filed in order to preserve valid, perfected security interests.

          8.   We have assumed that the  Collateral  (other than the  Subsidiary
               Shares) is located at the  locations  described  on  Schedule  II
               hereto and that the chief  executive  office of the  Borrower  is
               located in Roy, Utah.

          9.   We express no opinion as to the  adequacy of the  description  of
               the  Collateral as defined in the Security  Documents  insofar as
               such  description  includes  terms  which are not  defined  under
               Article 9 of the Code as enacted in the Applicable  Jurisdictions
               and the New York Code.

         This  opinion  is  based  upon  currently  existing  statutes,   rules,
regulations and judicial decisions, and we disclaim any obligation to advise you
of any  change in any of these  sources  of law or  subsequent  legal or factual
developments which might affect any matters or opinions set forth herein.

         Please note that we are opining  only as to the matters  expressly  set
forth herein,  and no opinion should be inferred as to any other  matters.  This
opinion  is  solely  for your  benefit,  and the  benefit  of your  counsel,  in
connection with the  consummation of the  transactions  contemplated by the Loan
Documents,  and may not be quoted or relied upon by any other person without our
prior written consent.


                                                           Very truly yours,

                                                           /s/ HALE AND DORR LLP

                                                           HALE AND DORR LLP
<PAGE>

                                   Schedule I
                               (Financing Offices)


1.       Utah Secretary of State

2.       North Carolina Secretary of State

3.       _____________, North Carolina Clerk

4.       California Secretary of State

5.       Colorado Secretary of State

6.       Texas Secretary of State

7.       Idaho Secretary of State

8.       Iowa Secretary of State


<PAGE>

                                   Schedule II
                            (Location of Collateral)


                              1821 West Iomega Way
                                 Roy, Utah 84067

                                [North Carolina]

                                  [California]

                                   [Colorado]

                                     [Texas]
<PAGE>

                                    Exhibit A
                             (Financing Statements)

                                  See attached.
<PAGE>

                                  Exhibit B(1)
                              (UCC Search Results)


                                  See attached.
<PAGE>
                                  Exhibit B(2)
                (Patent, Trademark and Copyright Search Results)


                                  See attached.

<PAGE>
                                                                      EXHIBIT C



                                   Opinion of
                     Davis Polk & Wardwell, Special Counsel
                           for the Documentation Agent




                                                        July 15,  1998


To the Banks and the Agents
  Referred to Below
c/o Morgan Guaranty Trust Company
  of New York, as Documentation Agent
60 Wall Street
New York, New York  10260

Dear Sirs:

         We have  participated  in the  preparation  of the Amended and Restated
Credit Agreement dated as of July 15, 1998 (the "Credit Agreement") among Iomega
Corporation,  a Delaware corporation (the "Borrower"),  the Banks party thereto,
Citibank,  N.A., as  Administrative  Agent, and Morgan Guaranty Trust Company of
New York,  as  Documentation  Agent,  and have acted as special  counsel for the
Documentation  Agent for the  purpose of  rendering  this  opinion  pursuant  to
Section 3.01(d) of the Credit  Agreement.  Terms defined in the Credit Agreement
are used herein as therein defined.

         We have examined originals or copies, certified or otherwise identified
to our  satisfaction,  of such  documents,  corporate  records,  certificates of
public   officials  and  other   instruments   and  have  conducted  such  other
investigations  of fact and law as we have deemed  necessary  or  advisable  for
purposes of this opinion.

         Upon the basis of the foregoing, we are of the opinion that:

         1. The  execution,  delivery  and  performance  by the  Borrower of the
Credit  Agreement and the Notes are within the Borrower's  corporate  powers and
have been duly authorized by all necessary corporate action.

         2. The Credit  Agreement  constitutes a valid and binding  agreement of
the  Borrower  and each Note issued  thereunder  today  constitutes  a valid and
binding obligation of the Borrower,  in each case enforceable in accordance with
its  terms,  subject  to  applicable  bankruptcy,  insolvency  or  similar  laws
affecting creditors' rights generally and general principles of equity.

         We are  members  of the Bar of the State of New York and the  foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United  States  of  America  and the  General  Corporation  Law of the  State of
Delaware.  In giving  the  foregoing  opinion,  we  express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located  which limits the rate of interest  that such Bank may
charge or collect.

         This  opinion is rendered  solely to you in  connection  with the above
matter.  This  opinion  may not be relied  upon by you for any other  purpose or
relied upon by any other Person without our prior written consent.

                                                     Very truly yours,

                                                     

<PAGE>


                                                                      EXHIBIT D



                       Assignment and Assumption Agreement


         AGREEMENT  dated as of  _________,  19__ among (NAME OF ASSIGNOR)  (the
"Assignor"),  (NAME OF ASSIGNEE)  (the  "Assignee")[,  IOMEGA  CORPORATION  (the
"Borrower"),  CITIBANK, N.A., as Administrative Agent, and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Documentation Agent (collectively, the "Agents").]

         WHEREAS,  this  Assignment and Assumption  Agreement (the  "Agreement")
relates to the Amended and Restated  Credit  Agreement dated as of July 15, 1998
among the Borrower, the Assignor and the other Banks party thereto and the Agent
(as amended from time to time, the "Credit Agreement");

         WHEREAS,  as provided  under the Credit  Agreement,  the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed
$__________;

         WHEREAS,  Loans made to the Borrower by the  Assignor  under the Credit
Agreement in the aggregate  principal  amount of $__________  are outstanding at
the date hereof; and

         WHEREAS,  the  Assignor  proposes to assign to the  Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding  portion of each of its outstanding Loans, and the
Assignee   proposes  to  accept   assignment  of  such  rights  and  assume  the
corresponding obligations from the Assignor on such terms;

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
agreements contained herein, the parties hereto agree as follows:

     SECTION 1. Definitions.  All capitalized terms not otherwise defined herein
have the respective meanings set forth in the Credit Agreement.

     SECTION  2.  Assignment.  The  Assignor  hereby  assigns  and  sells to the
Assignee  all of the rights of the  Assignor  under the Credit  Agreement to the
extent of the Assigned  Amount,  and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the  obligations  of the Assignor under the
Credit  Agreement to the extent of the Assigned  Amount,  including the purchase
from the Assignor of the  corresponding  portion of the principal amount of each
of the Loans  made by the  Assignor  outstanding  at the date  hereof.  Upon the
execution and delivery hereof by the Assignor,  the Assignee,  [the Borrower and
the Agent] and the payment of the amounts  specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall,  as of the date hereof,  succeed
to the rights and be  obligated to perform the  obligations  of a Bank under the
Credit  Agreement  with a Commitment in an amount equal to the Assigned  Amount,
and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced
by a like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee.  The
assignment provided for herein shall be without recourse to the Assignor.

     SECTION  3.  Payments.   As  consideration  for  the  assignment  and  sale
contemplated in Section 2 hereof,  the Assignee shall pay to the Assignor on the
date  hereof in  Federal  funds the  amount  heretofore  agreed  between  them.*
Commitment  and/or  facility  fees  accrued  before the date  hereof are for the
account of the Assignor and such fees accruing on and after the date hereof with
respect to the Assigned Amount are for the account of the Assignee.  Each of the
Assignor and the Assignee agrees that if it receives any amount under the Credit
Agreement  which is for the account of the other party hereto,  it shall receive
the same for the account of such other party to the extent of such other party's
interest therein and promptly pay the same to such other party.

     SECTION 4.  Consent of the  Borrower  and the  Agents.  This  Agreement  is
conditioned  upon the consent of the Borrower and the Agents pursuant to Section
9.06(c) of the Credit Agreement. The execution of this Agreement by the Borrower
and the Agents is evidence of their consent.  Pursuant to Section  9.06(c),  the
Borrower  agrees  to  execute  and  deliver a Note  payable  to the order of the
Assignee to evidence the assignment and assumption provided for herein.]

     SECTION 5.  Non-Reliance on Assignor.  The Assignor makes no representation
or warranty in connection  with, and shall have no  responsibility  with respect
to, the solvency,  financial  condition or  statements  of the Borrower,  or the
validity  and  enforceability  of the  Borrower's  obligations  under the Credit
Agreement or any Note. The Assignee acknowledges that it has,  independently and
without reliance on the Assignor, and based on such documents and information as
it has deemed  appropriate,  made its own credit  analysis and decision to enter
into this  Agreement  and will  continue  to be  responsible  for making its own
independent  appraisal of the business,  affairs and financial  condition of the
Borrower.

     SECTION 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

     SECTION  7.  Counterparts.  This  Agreement  may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and  delivered by their duly  authorized  officers as of the date first
above written.

                                           (NAME OF ASSIGNOR)


                                           By
                                                 Name:
                                                 Title:


                                           (NAME OF ASSIGNEE)


                                           By
                                                 Name:
                                                 Title:

                                           [IOMEGA CORPORATION


                                           By
                                                 Name:
                                                 Title:]



<PAGE>


                                                                      EXHIBIT E


                               SECURITY AGREEMENT


         AGREEMENT dated as of July 15, 1998 among IOMEGA  CORPORATION (with its
successors,  the  "Borrower"),  CITICORP USA,  INC., as Security Agent (with its
successors in such  capacity,  the  "Security  Agent"),  and THE NORTHERN  TRUST
COMPANY,  as agent of the  Secured  Parties  referred  to below for  purposes of
administering  the Collateral  Account referred to below (with its successors in
such capacity, the "Concentration Bank").

                              W I T N E S S E T H :

         WHEREAS, the Borrower, certain banks (the "Banks"),  Citibank, N.A., as
Administrative  Agent (the  "Administrative  Agent") and Morgan  Guaranty  Trust
Company of New York, as  Documentation  Agent (together with the  Administrative
Agent,  the "Bank  Agents"),  are  parties  to a Credit  Agreement  of even date
herewith (as the same may be amended from time to time, the "Credit Agreement");

         WHEREAS,  in order to induce  said Banks and Bank  Agents to enter into
the Credit  Agreement,  the Borrower  has agreed to grant a continuing  security
interest  in and  to  the  Collateral  (as  hereafter  defined)  to  secure  its
obligations  under the Credit  Agreement and the Notes issued pursuant  thereto;
and

         WHEREAS,  the Banks and the Bank Agents have  appointed  Citicorp  USA,
Inc., their Security Agent hereunder;

         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

SECTION 1.  Definitions.

     Terms  defined in the Credit  Agreement and not  otherwise  defined  herein
have,  as used  herein,  the  respective  meanings  provided  for  therein.  The
following  additional  terms,  as used  herein,  have the  following  respective
meanings:

     "Collateral" has the meaning set forth in Section 3.

     "Collateral Account" has the meaning set forth in Section 5.

     "Control  Agreements" means the Securities Account Control Agreements dated
as of the date hereof among the Borrower,  the securities  intermediaries  named
therein and the Security Agent.

     "Copyright  License"  means any  agreement  now or  hereafter  in existence
granting to the  Borrower,  or pursuant to which the Borrower has granted to any
other Person, any right to use, copy, reproduce,  distribute, prepare derivative
works, display or publish any records or other materials on which a Copyright is
in existence or may come into existence.

     "Copyrights" means all the following:  (i) all copyrights under the laws of
the United States  (whether or not the underlying  works of authorship have been
published),  all registrations and recordings thereof, all intellectual property
rights to works of authorship  (whether or not published),  and all applications
for  copyrights  under  the  laws  of  the  United  States,  including,  without
limitation,  registrations,  recordings  and  applications  in the United States
Copyright  Office or in any similar office or agency of the United  States,  any
State thereof,  (ii) all reissues,  renewals and extensions  thereof,  (iii) all
claims for, and rights to sue for,  past or future  infringements  of any of the
foregoing, and (iv) all income, royalties, damages and payments now or hereafter
due  or  payable  with  respect  to any of  the  foregoing,  including,  without
limitation, damages and payments for past or future infringements thereof.

     "Copyright   Security  Agreement"  means  a  Copyright  Security  Agreement
executed and delivered by the Borrower in favor of the Collateral Agent, for the
benefit of the Secured Parties,  substantially in the form of Annex E hereto, as
the same may be amended from time to time.

     "Documents" means all "documents" (as defined in the UCC) or other receipts
covering,  evidencing or representing  goods, now owned or hereafter acquired by
the Borrower.

     "Equipment"  means all  "equipment"  (as  defined  in the UCC) now owned or
hereafter  acquired  by the  Borrower  located in the United  States,  including
without limitation all motor vehicles,  trucks,  trailers,  railcars and barges,
and all accessions thereto.

     "Financial  Asset" shall mean any "financial  asset", as defined in Section
8-102(a)(9) of the UCC.

     "General  Intangibles"  means all "general  intangibles" (as defined in the
UCC)  now  owned or  hereafter  acquired  by the  Borrower,  including,  without
limitation,  (i) all  obligations or  indebtedness  owing to the Borrower (other
than  Receivables)  from whatever  source  arising,  (ii) all domestic  patents,
patent  licenses,   trademarks,   trademark  licenses,  rights  in  intellectual
property,  goodwill,  trade names,  service marks,  trade  secrets,  copyrights,
permits and licenses, (iii) all rights or claims in respect of refunds for taxes
paid and (iv) all rights in respect of any pension  plan or similar  arrangement
maintained for employees of any member of the ERISA Group.

     "Instruments"  means all  "instruments",  "chattel  paper" or  "letters  of
credit" (each as defined in the UCC) evidencing,  representing,  arising from or
existing in respect  of,  relating  to,  securing or  otherwise  supporting  the
payment of, any of the  Receivables,  including  (but not limited to) promissory
notes, drafts,  bills of exchange and trade acceptances,  now owned or hereafter
acquired by the Borrower.

     "Inventory"  means all  "inventory"  (as defined in the UCC),  now owned or
hereafter acquired by the Borrower, located in the United States, and shall also
mean and include, without limitation,  all raw materials and other materials and
supplies,  work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto.

     "Investment  Accounts"  means the  investment  accounts  referred to in the
ControlAgreements.

     "Liquid Investments" has the meaning set forth in Section 5(D).

     "Lockbox  Banks"  means  each  bank  which  has  signed  a  Lockbox  Letter
substantially  in the form of  Annex B  hereto  or has  entered  into the  other
arrangements described in Section 5(B).

     "Patent License" means any agreement now or hereafter in existence granting
to the  Borrower,  or  pursuant to which the  Borrower  has granted to any other
person,  any right with respect to any Patent or any  invention now or hereafter
in existence,  whether  patentable or not,  whether a patent or application  for
patent  is in  existence  on such  invention  or not,  and  whether  a patent or
application for patent on such invention may come into existence.

     "Patents"  means all of the  following:  (i) all letters  patent and design
letters patent of the United States and all  applications for letters patent and
design  letters  patent of the United  States,  including,  without  limitation,
applications in the United States Patent and Trademark  Office or in any similar
office or agency of the  United  States,  any State  thereof,  the  District  of
Columbia,  including,  without  limitation,  those  described in the  Perfection
Certificate, (ii) all reissues, divisions, continuations, continuations-in-part,
renewals  and  extensions  of any of the  foregoing,  (iii) all claims for,  and
rights to sue for, past or future infringements of any of the foregoing and (iv)
all income, royalties, damages and payments now or hereafter due or payable with
respect to any of the  foregoing,  including,  without  limitation,  damages and
payments for past or future infringements thereof.

     "Patent Security  Agreement" means the Patent Security  Agreement  executed
and delivered by the Borrower in favor of the Security Agent, for the benefit of
the Secured Parties,  substantially  in the form of Annex C hereto,  as the same
may be amended from time to time.

     "Perfection  Certificate" means a certificate  substantially in the form of
Annex  A,  completed  and  supplemented   with  the  schedules  and  attachments
contemplated  thereby  to the  satisfaction  of the  Security  Agent,  and  duly
executed  by the chief  financial  officer  and the chief  legal  officer of the
Borrower.

     "Permitted  Liens"  means Liens  referred to in Section  5.09 of the Credit
Agreement.

     "Proceeds"  means all cash and other  proceeds  of, and all other  profits,
products,  rents or receipts,  in whatever  form,  arising from the  collection,
sale, lease, exchange,  assignment,  licensing or other disposition of, or other
realization upon, Collateral,  including,  without limitation, all claims of the
Borrower  against third parties for loss of, damage to or destruction of, or for
proceeds  payable  under,  or unearned  premiums  with  respect to,  policies of
insurance in respect of, any  Collateral,  and any  condemnation  or requisition
payments  with respect to any  Collateral,  in each case whether now existing or
hereafter arising.

     "Receivables"  means,  whether  now  owned  or  hereafter  acquired  by the
Borrower,  (i) all "accounts" (as defined in Article 9-106 of the UCC) and shall
also mean and include all  accounts  receivable,  contract  rights,  book debts,
notes drafts and other obligations or indebtedness owing to the Borrower arising
from the sale,  lease or  exchange  of goods or other  property by it and/or the
performance of services by it (including without limitation, any such obligation
which might be characterized as an account, contract right or general intangible
under the UCC) and all of the  Borrower's  rights in, to and under all  purchase
orders for goods, services or other property represented by any of the foregoing
(including   returned  or  repossessed  goods  and  unpaid  sellers'  rights  of
rescission,  replevin,  reclamation  and rights to stoppage in transit)  and all
monies due to or to become due to the Borrower under all contracts for the sale,
lease or exchange of goods or other property  and/or the performance of services
by it (whether or not yet earned by performance on the part of the Borrower), in
each case whether now in existence or hereafter  arising or acquired  including,
without  limitation,  the right to receive the proceeds of said purchase  orders
and contacts and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.

     "Secured  Obligations"  means the obligations  secured under this Agreement
including  (a) all  principal  of and  interest on any Loan  under,  or any Note
issued pursuant to, the Credit  Agreement,  (b) all other amounts payable by the
Borrower  hereunder  or under the  Credit  Agreement,  (c) all  Letter of Credit
Exposure  relating to letters of credit issued by one or more Banks  aggregating
not more than  $20,000,000  which have been designated as "Secured  Obligations"
under this Agreement by the Borrower by written notice to the Security Agent and
(d) any renewals or extensions of any of the foregoing.  The Secured Obligations
shall include, without limitation,  any interest, costs, fees and expenses which
accrue on or with respect to any of the  foregoing,  whether before or after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower; provided that, for the purposes of
payments and  allocations  pursuant to Section 10 after the  commencement of any
case,  action or other  proceeding  relating to the  bankruptcy,  insolvency  or
reorganization  of the  Borrower,  each  Secured  Obligation  shall be deemed to
include  interest accrued thereon after the commencement of such proceeding only
to the extent that such  interest  is allowed in such  proceeding  (pursuant  to
Section 506(b) of the United States Bankruptcy Code or otherwise).

     "Secured  Parties" means the Security Agent,  the  Concentration  Bank, the
Bank Agents and the Banks.

     "Security  Entitlement"  means (i) a "security  entitlement"  as defined in
Section  8-102(a)(17)  of the UCC and  (ii) to the  extent  not  covered  by the
foregoing a "Security Entitlement" as defined in 31 CFR ' 357.2.

     "Securities  Intermediaries"  means the securities  intermediaries party to
the Control Agreements and "Securities Intermediary" means any of the foregoing.

     "Security Interests" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.

     "Trademark  License"  means any  agreement  now or  hereafter  in existence
granting to the  Borrower,  or pursuant to which the  Borrower has granted to an
other Person, any right to use any Trademark,  including without limitation, the
agreements identified on Schedule 1 to Annex D hereto.

     "Trademarks" means all of the following:  (i) all trademarks,  trade names,
corporate names, company names, business names, fictitious business names, trade
styles,  service marks,  logos, brand names,  trade dress,  prints and labels on
which any of the foregoing  have appeared or appear,  package and other designs,
and any other source of business  identifiers,  and general  intangibles of like
nature, and the rights in any of the foregoing which arise under the laws of the
United  States,  (ii)  the  goodwill  of  the  business  symbolized  thereby  or
associated  with  each of them,  (iii) all  registrations  and  applications  in
connection   therewith,   including,   without  limitation,   registrations  and
applications in the United States Patent and Trademark  Office or in any similar
office or agency of the United  States,  any State  thereof,  (iv) all reissues,
extensions and renewals thereof, (v) all claims for, and rights to sue for, past
or future infringements of any of the foregoing and (vi) all income,  royalties,
damages and payments now or hereafter  due or payable with respect to any of the
foregoing,  including,  without  limitation,  damages and  payments  for past or
future infringements thereof.

     "Trademark  Security  Agreement"  means the  Trademark  Security  Agreement
executed and delivered by the Borrower in favor of the Security  Agent,  for the
benefit of the Secured Parties,  substantially in the form of Annex D hereto, as
the same may be amended from time to time.

     "UCC" means the Uniform  Commercial Code as in effect on the date hereof in
the State of New York;  provided  that if by reason of mandatory  provisions  of
law, the perfection or the effect of perfection or  non-perfection of any of the
Security  Interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a  jurisdiction  other than New York,  "UCC"  means the  Uniform
Commercial  Code as in effect in such other  jurisdiction  for  purposes  of the
provisions  hereof  relating  to such  perfection  or  effect of  perfection  or
non-perfection.

SECTION 2.  Representations, Warranties and Covenants.

         The Borrower represents, warrants and covenants as follows:

         (A)  The  Borrower  has  good  and  marketable  title  to  all  of  the
Collateral,  free and clear of any Liens,  except  Permitted Liens. The Borrower
has taken all actions  necessary  under the UCC to perfect  its  interest in any
Receivables  purchased or otherwise acquired by it, as against its assignors and
creditors of its assignors.

         (B) The Borrower  has not  performed  any acts which might  prevent the
Security  Agent from enforcing any of the terms of this Agreement or which would
limit the Security Agent in any such enforcement.  No registration,  recordation
or  filing  with any  governmental  body,  agency or  official  is  required  in
connection  with  the  execution  or  delivery  of this  Agreement.  Other  than
financing  statements or other similar or  equivalent  documents or  instruments
with respect to the Permitted Liens, no financing statement,  mortgage, security
agreement or similar or equivalent  document or  instrument  covering all or any
part of the Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such Collateral.  No
Collateral  is in the  possession  of  any  Person  (other  than  the  Borrower)
asserting  any claim  thereto or  security  interest  therein,  except  that the
Security Agent, the Concentration Bank or any designee of the Security Agent may
have possession of Collateral as contemplated hereby and warehousemen,  carriers
or other bailees may from time to time assert claims to or security interests in
Inventory in their  possession.  The Borrower  has not  consented  (and will not
consent,  or attempt to consent)  to any other  person  other than the  Security
Agent having "control" (within the meaning of Section 8-106 of the UCC) over any
of the Collateral constituting Investment Property.

         (C) On or before the  Effective  Date,  the  Borrower  will deliver the
Perfection  Certificate to the Security Agent. The information set forth therein
will be correct and complete as of the dates referred to therein. Not later than
60 days following the date of the first Borrowing,  the Borrower will furnish to
the Security  Agent file search reports from each UCC filing office set forth in
Schedule 7 to the Perfection  Certificate  confirming the filing information set
forth in such Schedule.

         (D) The Security  Interests  constitute valid security  interests under
the UCC securing the Secured  Obligations.  When UCC financing statements in the
form specified in Schedule 6(A) to the Perfection Certificate have been filed in
the offices specified in the Perfection Certificate, the Security Interests will
constitute  perfected  security interests in the Collateral (except Inventory in
transit) to the extent that a security  interest  therein  may be  perfected  by
filing pursuant to the UCC, prior to all other Liens except  Permitted Liens and
rights of others therein.  When the Patent Security  Agreement and the Trademark
Security  Agreement  have been filed with the United States Patent and Trademark
Office, the Security Interests shall constitute  perfected (to the extent that a
security interest therein may be perfected by such filing) security interests in
all right,  title and interest of the Borrower in Patents and Trademarks  listed
in such agreements, prior to all other Liens (except Permitted Liens) and rights
of others therein.  When a Copyright  Security Agreement has been filed with the
United  States  Copyright  Office,   the  Security  Interests  shall  constitute
perfected  (to the extent that a security  interest  therein may be perfected by
such filing) security interests in all right, title and interest of the Borrower
in Copyrights listed therein,  prior to all other Liens (except Permitted Liens)
and right of others therein.

         (E) The Inventory  and  Equipment  are insured in  accordance  with the
requirements of the Credit Agreement.

         (F) All  activities  of the  Borrower  with  respect to  Inventory  are
conducted by the Borrower in compliance with the applicable  requirements of the
Fair Labor Standards Act, as amended.

SECTION 3.  The Security Interests.

         (A) In order to secure the full and  punctual  payment  of the  Secured
Obligations in accordance with the terms thereof,  and to secure the performance
of all of the  obligations  of the  Borrower  hereunder  and  under  the  Credit
Agreement,  the Borrower  hereby grants to the Security  Agent,  for the ratable
benefit of the Secured Parties, a continuing  security interest in and to all of
the  following  property  of the  Borrower,  whether  now owned or  existing  or
hereafter  acquired  or  arising  and  regardless  of where  located  (all being
collectively referred to as the "Collateral"):

                  (1)      Receivables;

                  (2)      Inventory;

                  (3)      General Intangibles;

                  (4)      Documents;

                  (5)      Instruments;

                  (6)      Equipment;

                  (7)      The Collateral  Account,  all cash deposited  therein
                           from  time  to  time,  the  Liquid  Investments  made
                           pursuant  to  Section   5(D)  and  other  monies  and
                           property   of  any  kind  of  the   Borrower  in  the
                           possession  or  under  the  control  of the  Security
                           Agent;

                  (8)      The  Investment  Accounts and all successor  accounts
                           that are  subject to this  Agreement  or the  Control
                           Agreements and all property credited thereto, whether
                           investment property,  Financial Assets, securities or
                           cash;

                  (9)      All of the  Security  Entitlements  with  respect  to
                           Financial Assets (i) that are or may in the future be
                           credited to any  Investment  Account,  (ii) that have
                           been  received  and  accepted or may in the future be
                           received and  accepted for credit to such  Investment
                           Account by the relevant  Securities  Intermediary and
                           (iii) as to which such Securities Intermediary is, or
                           may  in  the  future   become,   obligated   by  law,
                           regulation,  rule  or  agreement  to  credit  to such
                           Investment Account;

                  (10)     All of the cash (i) that is or may in the  future  be
                           credited  to any  Investment  Account,  (ii) that has
                           been  received  and  accepted or may in the future be
                           received and  accepted for credit to such  Investment
                           Account by the relevant  Securities  Intermediary and
                           (iii) as to which such Securities  Intermediary is or
                           may  in  the   future   become   obligated   by  law,
                           regulation,  rule  or  agreement  to  credit  to  the
                           Investment Account;

                  (11)     All Proceeds  with respect to such  Financial  Assets
                           (i) that are or may in the future be  credited to any
                           Investment Account,  (ii) that have been received and
                           accepted  or  may  in  the  future  be  received  and
                           accepted for credit to such Investment Account by the
                           relevant  Securities  intermediary  and  (iii)  as to
                           which such  Securities  Intermediary is or may in the
                           future become obligated by law,  regulation,  rule or
                           agreement to credit to such Investment Account;

                  (12)     All successor accounts substitutions and replacements
                           for any or all of the foregoing  Collateral described
                           in clauses 8 through 11;

                  (13)     All books and records (including, without limitation,
                           customer  lists,  credit  files,  computer  programs,
                           printouts and other  computer  materials and records)
                           of the Borrower  pertaining to any of the Collateral;
                           and

                  (14)     All  Proceeds  of  all  or  any  of  the   Collateral
                           described  in  Clauses  1  through  13  hereof to the
                           extent, if any not otherwise covered above.

          Notwithstanding the foregoing, the Collateral shall not include and no
     Security Interest shall be granted or deemed to be granted in any contracts
     or agreements, including, without limitation, any Copyright License, Patent
     License or Trademark  License,  to the extent that inclusion thereof or the
     granting of a Security  Interest  therein would  violate a  prohibition  on
     assignment or similar restriction that is effective under applicable law.

         (B) The Security  Interests  are granted as security only and shall not
subject the Security  Agent or any other Secured Party to, or transfer or in any
way affect or modify,  any  obligation or liability of the Borrower with respect
to any of the Collateral or any transaction in connection therewith.

SECTION 4.  Further Assurances; Covenants.

         (A) (I) The  Borrower  will not  change (i) the  location  of its chief
executive office or chief place of business or (ii) the locations where it keeps
or holds any  Collateral  or any  records  relating to any  Collateral  from the
applicable location described in the Perfection Certificate unless it shall have
(a) given the  Security  Agent at least 30 days'  prior  notice  thereof and (b)
delivered an opinion of counsel with respect  thereto in accordance with Section
4(M).  The Borrower shall not in any event change the location of any Collateral
if such change would cause the Security Interests in such Collateral to lapse or
cease to be perfected.

     (II) The Borrower will not change its name, identity or corporate structure
in any  manner  unless it shall  have (i) given the  Security  Agent at least 30
days' prior notice thereof and (ii) delivered an opinion of counsel with respect
thereto in accordance with Section 4(M).

         (B) The Borrower  will,  from time to time,  at its  expense,  execute,
deliver,  file and  record  any  statement,  assignment,  instrument,  document,
agreement  or  other  paper  and  take  any  other  action  (including,  without
limitation,  any filings of financing or continuation  statements under the UCC,
any filings with the United States  Patent and Trademark  Office and any filings
with the United  States  Copyright  Office,  provided  that,  unless an Event of
Default has occurred and is  continuing,  filings with the United  States Patent
and Trademark  Office and the United States  Copyright  Office need only be made
with respect to Material Patents,  Material Trademarks and Material  Copyrights)
that from time to time may be necessary or desirable, or that the Security Agent
may  request,  under the laws of the  United  States of America or Canada or any
State,  provincial or local  jurisdiction  located therein,  in order to create,
preserve,  perfect,  confirm or validate the Security Interests or to enable the
Secured Parties to obtain the full benefits of this Agreement,  or to enable the
Security  Agent to exercise  and enforce any of its rights,  powers and remedies
hereunder  with  respect to any of the  Collateral.  To the extent  permitted by
applicable law, the Borrower hereby authorizes the Security Agent to execute and
file  financing  statements or  continuation  statements  without the Borrower's
signature  appearing thereon.  The Borrower agrees that a carbon,  photographic,
photostatic or other reproduction of this Agreement or of a financing  statement
is sufficient as a financing statement.  The Borrower shall pay the costs of, or
incidental  to,  any  recording  or  filing  of any  financing  or  continuation
statements concerning the Collateral.

         (C) If any  Collateral  is at any time in the  possession or control of
any  warehouseman,  bailee or any of the Borrower's  agents or  processors,  the
Borrower  shall  upon  the  occurrence  of  an  Event  of  Default  notify  such
warehouseman,  bailee,  agent or  processor of the  Security  Interests  created
hereby and to hold all such Collateral for the Security  Agent's account subject
to the Security Agent's instructions.

         (D) The  Borrower  shall  keep  full and  accurate  books  and  records
consistent  with GAAP relating to the  Collateral,  and stamp or otherwise  mark
such books and  records in such  manner as the  Security  Agent or the  Required
Banks may reasonably require in order to reflect the Security Interests.

         (E) The Borrower will immediately deliver and pledge each Instrument to
the Security Agent,  appropriately endorsed to the Security Agent; provided that
so long as no Event of  Default  shall  have  occurred  and be  continuing,  the
Borrower may retain for collection in the ordinary course any Instruments (other
than checks and drafts  constituting  payments in respect of Receivables,  as to
which the provisions of Section 5(B) shall apply) received by it in the ordinary
course of business and the Security  Agent shall,  promptly  upon request of the
Borrower, make appropriate  arrangements for making any other Instrument pledged
by the  Borrower  available to it for purposes of  presentation,  collection  or
renewal (any such arrangement to be effected,  to the extent deemed  appropriate
to the Security Agent, against trust receipt or like document).

         (F) The  Borrower  shall use its best  efforts to cause to be collected
from its account debtors, as and when due, any and all amounts owing under or on
account  of each  Receivable  and  Instrument  (including,  without  limitation,
Receivables  or  Instruments  which  are  delinquent,  such  Receivables  to  be
collected  in  accordance  with lawful  collection  procedures)  and shall apply
forthwith  upon  receipt  thereof all such  amounts as are so  collected  to the
outstanding  balance  of the  related  Receivable.  Subject to the rights of the
Security  Agent and the other Secured  Parties  hereunder if an Event of Default
shall have  occurred and be  continuing,  the Borrower may allow in the ordinary
course of business as  adjustments  to amounts  owing under its  Receivables  or
Instruments  (i) an  extension  or renewal of the time or times of  payment,  or
settlement  for less than the total unpaid  balance,  which the  Borrower  finds
appropriate  in  accordance  with sound  business  judgment and (ii) a refund or
credit due as a result of returned  or damaged  merchandise,  all in  accordance
with the Borrower's  ordinary course of business  consistent with its historical
collection  practices.  The costs and expenses  (including,  without limitation,
attorney's fees) of collection, whether incurred by the Borrower or the Security
Agent, shall be borne by the Borrower.

         (G) Upon the  occurrence  and  during the  continuance  of any Event of
Default,  upon request of the Required  Banks  through the Security  Agent,  the
Borrower will promptly notify (and the Borrower  hereby  authorizes the Security
Agent so to  notify)  each  account  debtor  in  respect  of any  Receivable  or
Instrument  that  such  Collateral  has  been  assigned  to the  Security  Agent
hereunder,  and  that any  payments  due or to  become  due in  respect  of such
Collateral are to be made directly to the Security Agent or its designee.

         (H) The  Borrower  shall,  (i) as soon as  practicable  after  the date
hereof,,  in the case of any piece of  Equipment in excess of $100,000 now owned
constituting  goods in which a security  interest is  perfected by a notation on
the certificate of title or similar evidence of the ownership of such goods, and
(ii) except as  otherwise  provided in the Credit  Agreement,  within 10 days of
acquiring any other  similar  Equipment (x) having a value in excess of $100,000
or (y) having a value in excess of $50,000,  if the aggregate  value of all such
items owned by the Borrower at any time is greater than $250,000  deliver to the
Security  Agent any and all  certificates  of title,  applications  for title or
similar  evidence of  ownership of such  Equipment  and shall cause the Security
Agent to be  named  as  lienholder  on any  such  certificate  of title or other
evidence of ownership.  The Borrower shall promptly inform the Security Agent of
any material  additions to or deletions  from the Equipment and shall not permit
any such  items to become a fixture  to real  estate  or an  accession  to other
personal property.

         (I)  Without  the prior  written  consent of the  Security  Agent,  the
Borrower  will not sell,  lease,  exchange,  assign or otherwise  dispose of, or
grant any option with respect to, any  Collateral  except  that,  subject to the
rights of the  Security  Agent and the Banks  hereunder  if an Event of  Default
shall have occurred and be  continuing,  the Borrower may (a) sell or dispose of
Inventory and obsolete or no longer useful  Equipment in the ordinary  course of
business,  (b) sell production equipment to the extent the proceeds of such sale
do not exceed  $5,000,000  in any fiscal year and  $7,000,000  during the period
from and including the Effective Date to but excluding the Termination  Date and
(c) grant licenses in the ordinary course of business whereupon,  in the case of
such a sale, disposition or grant, the Security Interests created hereby in such
item (but not in any  Proceeds  arising  from such sale,  disposition  or grant)
shall cease  immediately  without any further action on the part of the Security
Agent.

         (J)  Prior  to the  date  of  the  first  Borrowing  under  the  Credit
Agreement,  the Borrower will cause the Security Agent to be named as an insured
party and loss payee on each insurance  policy covering risks relating to any of
its Inventory and  Equipment.  The Borrower will deliver to the Security  Agent,
upon request of the Security Agent, the insurance policies for such insurance or
certificates of insurance  evidencing such coverage.  Each such insurance policy
shall  include  effective  waivers by the  insurer  of all claims for  insurance
premiums  against the  Security  Agent or any Bank,  provide for coverage to the
Security  Agent  regardless  of the breach by the  Borrower  of any  warranty or
representation made therein, not be subject to co-insurance, and provide that no
cancellation,  termination or material  modification  thereof shall be effective
until at least 10 days after receipt by the Security Agent of notice thereof, in
the case of cancellation for non-payment of premium,  and at least 30 days after
receipt  by the  Security  Agent of  notice  thereof,  in all other  cases.  The
Borrower  hereby  appoints the Security  Agent as its  attorney-in-fact  to make
proof of loss, claim for insurance and adjustments with insurers, and to execute
or endorse all documents, checks or drafts in connection with payments made as a
result  of  any  insurance  policies  upon  the  occurrence  of and  during  the
continuance of an Event of Default.

         (K) The Borrower will,  promptly upon request,  provide to the Security
Agent all  information  and evidence it may  reasonably  request  concerning the
Collateral  to enable the  Security  Agent to  enforce  the  provisions  of this
Agreement. The Borrower will permit the representatives of the Security Agent to
call at its  places of  business  from time to time and at any  reasonable  time
during  business  hours (such  visits to be  conducted  so as not to disrupt the
business and affairs of the Borrower),  and, without hindrance or delay but with
prior notice,  to inspect the Collateral and, no more than once each Fiscal Year
unless an Event of Default has occurred and is  continuing,  to inspect,  audit,
check and make extracts from and copies of the books, records, journals, orders,
receipts and  correspondence  which relate to the  Collateral at the  Borrower's
cost and expense without undue interference with the Borrower's operations.  The
Borrower  will  provide  each  Secured  Party  with such  information  as to the
Collateral as such Secured Party may reasonably request.

         (L) The Borrower  shall notify the Security Agent promptly if it knows,
or has reason to know,  that any  application  or  registration  relating to any
Material  Copyright,  Material Patent or Material Trademark may become abandoned
or  dedicated,   or  of  any  material  adverse   determination  or  development
(including,  without  limitation,  any such determination or development in, any
proceeding  in the United  States  Copyright  Office,  United  States Patent and
Trademark  Office or any  federal,  state or local  court in the United  States)
regarding the Borrower's ownership of any Material Copyright, Material Patent or
Material  Trademark,  its right to register  or patent the same,  or to keep and
maintain the same;  provided that no notice is required for United States Patent
and Trademark  Office  office  actions  (including  denials of claims) which are
routinely received as a Patent or Trademark is prosecuted.  For purposes of this
subsection  (L) of  Section  4,  "Material  Copyright",  "Material  Patent"  and
"Material  Trademark" shall mean one or more Copyrights,  Patents or Trademarks,
respectively,  which individually has a fair market value in excess of $250,000.
In the event that any right to any Copyright,  Copyright License, Patent, Patent
License, Trademark or Trademark License is infringed, misappropriated or diluted
by a third  party and such  infringement,  misappropriation  or  dilution  could
reasonably be expected to have a Material  Adverse  Effect,  the Borrower  shall
notify the Security  Agent  promptly  after it learns thereof and shall promptly
take any and all action that would be prudent and in the best  interests  of the
Borrower  as  reasonably  determined  by the  Borrower  to be  appropriate.  The
Borrower shall provide the Security  Agent,  on an annual basis,  with a list of
any applications for the registration of any Material  Copyright with the United
States  Copyright  Office Material Patent or Material  Trademark with the United
States  Patent and  Trademark  Office filed by the Borrower and, upon request of
the  Security  Agent,   shall  execute  and  deliver  any  and  all  agreements,
instruments, documents and papers the Security Agent may request to evidence the
Security  Interests  in such  Material  Patent  or  Material  Trademark  and the
goodwill and general intangibles of the Borrower relating thereto or represented
thereby.

         (M) Not more than six  months  nor less than 30 days prior to each date
on which the  Borrower  proposes  to take any  action  contemplated  by  Section
4(A)(I)  or (II)  and not  more  than 30 days  after  written  request  from the
Security  Agent to the Borrower with respect to each  anniversary of the date of
the first Borrowing during the term of the Credit Agreement, the Borrower shall,
at its cost and expense, cause to be delivered to the Secured Parties an opinion
of counsel  satisfactory  to the Security Agent to the effect that all financing
statements and amendments or supplements  thereto,  continuation  statements and
other documents required to be recorded or filed in order to perfect and protect
the Security  Interests,  for a period,  specified in such  opinion,  continuing
until a date not earlier  than  eighteen  months from the date of such  opinion,
against all  creditors of and  purchasers  from the Borrower  have been filed in
each filing  office  necessary  for such  purpose.  Each such  opinion  shall be
accompanied  by a certificate of the Borrower to the effect that all filing fees
and taxes,  if any,  payable in  connection  with such filings have been paid in
full.

SECTION 5.  Collateral Account.

         (A)  There is hereby  established  with the  Concentration  Bank a cash
collateral  account  designated  "Collateral  Account No. 89079 of Citicorp USA,
Inc., as Security Agent under the Security  Agreement  dated as of July 15, 1998
among Iomega  Corporation,  Citicorp USA, Inc. and The Northern  Trust  Company"
(the  "Collateral  Account")  in the name and under the control of the  Security
Agent into which there shall be  deposited  from time to time and as they become
available  the cash proceeds of the  Collateral  required to be delivered to the
Concentration  Bank or the Security  Agent  pursuant to  subsection  (B) of this
Section or any other  provision of this  Agreement.  Any income  received by the
Concentration  Bank or the Security  Agent with respect to the balance from time
to time standing to the credit of the Collateral Account, including any interest
or capital gains on Liquid Investments,  shall remain, subject to subsection (C)
of this Section, or be deposited,  in the Collateral  Account.  All right, title
and  interest  in and to the cash  amounts on  deposit  from time to time in the
Collateral  Account  shall vest in the  Security  Agent and,  together  with any
Liquid  Investments  from time to time made pursuant to  subsection  (D) of this
Section,  shall  constitute  part of the  Collateral  hereunder  and  shall  not
constitute  payment  of  the  Secured   Obligations  until  applied  thereto  as
hereinafter provided.

         (B) The Borrower shall  instruct all account  debtors and other Persons
obligated in respect of all  Receivables  to make all payments in respect of the
Receivables  either  (i)  directly  to the  Concentration  Bank  (by  electronic
transfer to the  Collateral  Account or by remittance to a post office box which
shall be in the name and under the control of the Concentration Bank) or (ii) to
one or more other banks in any state (other than Louisiana) in the United States
(by  remittance  to a post  office box which  shall be in the name and under the
control of such bank) under a Lockbox Letter  substantially in the form of Annex
B  hereto  duly   executed  by  the  Borrower  and  such  bank  or  under  other
arrangements, in form and substance satisfactory to the Security Agent, pursuant
to which the Borrower  shall have  irrevocably  instructed  such other bank (and
such  other  bank shall have  agreed)  to remit all  proceeds  of such  payments
directly to the Concentration Bank for deposit into the Collateral Account or as
the Security Agent may otherwise  instruct such bank (it being  understood  that
the  Security  Agent may not  otherwise  instruct  such bank  unless an Event of
Default  has  occurred  and is  continuing  or  the  Concentration  Bank  or the
Collateral Account changes). All such payments made to the Concentration Bank or
the Security Agent shall be deposited in the Collateral  Account. In addition to
the  foregoing,  the  Borrower  agrees that if the  proceeds  of any  Collateral
hereunder  (including  the  payments  made in respect of  Receivables)  shall be
received by it, the Borrower shall as promptly as possible deposit such proceeds
into the Collateral Account. Until so deposited, all such proceeds shall be held
in trust by the  Borrower  for and as the  property of the  Secured  Parties and
shall not be commingled with any other funds or property of the Borrower.

         (C) The  balance  from  time  to time  standing  to the  credit  of the
Collateral  Account shall,  except upon the occurrence  and  continuation  of an
Event of Default,  be distributed  without  set-off  (except for any set-off for
amounts owed under this Agreement or the Credit  Agreement) to the Borrower upon
the order of the  Borrower.  If  immediately  available  cash on  deposit in the
Collateral  Account is not sufficient to make any  distribution  to the Borrower
referred to in the previous  sentence of this Section 5(C),  the Security  Agent
shall  liquidate as promptly as  practicable  Liquid  Investments as required to
obtain sufficient cash to make such distribution and,  notwithstanding any other
provision  of this  Section  5, such  distribution  shall not be made until such
liquidation has taken place. Upon the occurrence and continuation of an Event of
Default, the Security Agent shall, if so instructed by the Required Banks, apply
or cause to be applied  (subject to  collection)  any or all of the balance from
time to time  standing  to the  credit of the  Collateral  Account in the manner
specified in Section 10.

         (D) Amounts on deposit in the Collateral  Account shall be invested and
re-invested  from time to time in such Liquid  Investments as the Borrower shall
from time to time determine,  which Liquid Investments shall be held in the name
and be under the control of the Security  Agent;  provided  that, if an Event of
Default  has  occurred  and is  continuing,  the  Security  Agent  shall,  if so
instructed  by the Required  Banks,  liquidate any such Liquid  Investments  and
apply or cause to be applied the proceeds  thereof to the payment of the Secured
Obligations  in the manner  specified  in Section 10. For the  purposes  hereof,
"Liquid  Investments"  means any  investment  in (i) direct  obligations  of the
United States or any agency  thereof,  or  obligations  guaranteed by the United
States or any agency thereof,  (ii) commercial  paper rated in the highest grade
or, in the case of  commercial  paper  issued by the  Agent,  in any  investment
grade,  by a nationally  recognized  credit rating agency or (iii) time deposits
with,  including  certificates  of deposit  issued by, the Security Agent or any
office  located  in the  United  States  of any bank or trust  company  which is
organized or licensed  under the laws of the United  States or any state thereof
and  has  capital,   surplus  and  undivided   profits   aggregating   at  least
$1,000,000,000;  provided that (i) each Liquid Investment shall mature within 30
days after it is acquired by the Security Agent and (ii) in order to provide the
Security  Agent,  for the  benefit  of the  Secured  Parties,  with a  perfected
security interest therein, each Liquid Investment shall be either:

                  (a) evidenced by negotiable certificates or instruments, or if
         non-negotiable  then issued in the name of the  Security  Agent,  which
         (together with any  appropriate  instruments of transfer) are delivered
         to, and held by, the Security  Agent or an agent  thereof  (which shall
         not be the Borrower or any of its Affiliates) in the State of New York;
         or

                  (b) in  book-entry  form and issued by the  United  States and
         subject to pledge under applicable  state law and Treasury  regulations
         and as to which (in the  opinion  of  counsel  to the  Security  Agent)
         appropriate  measures  shall  have  been  taken for  perfection  of the
         Security Interests.

SECTION 6.  Investment Account.

         (A) The Borrower  has  established  the  Investment  Accounts  with the
Securities Intermediaries. All Temporary Cash Investments shall be maintained by
the Borrower in the Investment Accounts.

         (B) The Borrower,  each Securities  Intermediary and the Security Agent
have  entered  into the Control  Agreements,  pursuant  to which the  Securities
Intermediaries  agree to comply,  upon receipt of notice from the Security Agent
(which notice the Security  Agent shall give only upon the occurrence and during
the continuation of an Event of Default),  with any orders directing transfer or
redemption  of any  Collateral  originated  by the  Security  Agent  without any
further consent by the Borrower.

         (C) All items of  income,  gain,  expense  and loss  recognized  in the
Investment  Account  shall be reported to the Internal  Revenue  Service and all
state and local taxing  authorities  under the name and taxpayer  identification
number of the Borrower.

         (D) Each of the  parties  hereby  agrees  that each  item of  property,
including Proceeds and cash, (i) that is or may in the future be standing to the
credit of any  Investment  Account,  (ii) that has been received and accepted or
may in the future be received and accepted for credit to any Investment  Account
by the  relevant  Securities  Intermediary  or (iii) as to  which  the  relevant
Securities  Intermediary  is or may in  the  future  become  obligated  by  law,
regulation,  rule or agreement to credit to the Investment Account shall in each
case be treated as a "financial asset" for purposes of Section  8-102(a)(9)(iii)
of the UCC, this Agreement and the Control Agreements.

SECTION 7.  General Authority.

         The Borrower  hereby  irrevocably  appoints the Security Agent its true
and  lawful  attorney,  with  full  power  of  substitution,  in the name of the
Borrower,  the Security Agent, the Bank Agents, the Banks or otherwise,  for the
sole use and benefit of the Secured Parties,  but at the Borrower's  expense, to
the extent permitted by law to exercise, at any time and from time to time while
an Event of Default has occurred and is continuing,  all or any of the following
powers with respect to all or any of the Collateral:

                   (i) to demand, sue for, collect, receive and give acquittance
          for any and all  monies  due or to  become  due  thereon  or by virtue
          thereof;

                   (ii) to settle, compromise, compound, prosecute or defend any
          action or proceeding with respect thereto;

                   (iii) to sell, transfer,  assign or otherwise deal in or with
          the same or the proceeds or avails  thereof,  as fully and effectually
          as if the Security Agent were the absolute owner thereof; and

                   (iv) to extend the time of payment of any or all  thereof and
          to make any allowance and other adjustments with reference thereto;

provided that the Security Agent shall give the Borrower not less than ten days'
prior notice of the time and place of any sale or other intended  disposition of
any of the Collateral  except any Collateral which threatens to decline speedily
in value or is of a type customarily sold on a recognized  market.  The Security
Agent  and  the  Borrower  agree  that  such  notice   constitutes   "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.

SECTION 8.  Remedies upon Event of Default.

         (A) If any  Event  of  Default  has  occurred  and is  continuing,  the
Security  Agent may  exercise on behalf of the  Secured  Parties all rights of a
secured party under the UCC (whether or not in effect in the jurisdiction  where
such rights are exercised)  and, in addition,  the Security  Agent may,  without
being  required  to give any  notice,  except  as herein  provided  or as may be
required  by  mandatory  provisions  of law,  (i)  withdraw  all cash and Liquid
Investments in the Collateral Account and apply such monies,  Liquid Investments
and other cash, if any, then held by it as Collateral as specified in Section 10
and (ii) if there shall be no such monies, Liquid Investments or cash or if such
monies,  Liquid Investments or cash shall be insufficient to pay all the Secured
Obligations  in full,  sell the  Collateral  or any part  thereof  at  public or
private sale, for cash, upon credit or for future delivery, and at such price or
prices as the Security  Agent may deem  satisfactory.  The Security Agent or any
other Secured Party may be the purchaser of any or all of the Collateral so sold
and thereafter hold the same, absolutely and free from any right or claim of any
kind  whatsoever.  The Borrower will execute and deliver such documents and take
such other  action as the Security  Agent deems  necessary or advisable in order
that any such sale may be made in  compliance  with law.  Upon any such sale the
Security  Agent  shall have the right to  deliver,  assign and  transfer  to the
purchaser  thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely and free from any claim or right of
any kind whatsoever, including any equity or right of redemption of the Borrower
which may be waived,  and the Borrower,  to the extent  permitted by law, hereby
specifically waives all rights of redemption,  stay or appraisal which it has or
may have under any law now existing or hereafter adopted. The notice (if any) of
such sale  required by Section 7 shall (1) in the case of a public  sale,  state
the time and place fixed for such sale,  and (2) in the case of a private  sale,
state the day after  which such sale may be  consummated.  Any such  public sale
shall be held at such time or times within  ordinary  business hours and at such
place or places as the Security Agent may fix in the notice of such sale. At any
such sale,  the  Collateral may be sold in one lot as an entirety or in separate
parcels,  as the Security Agent may  determine.  The Security Agent shall not be
obligated to make any such sale pursuant to any such notice.  The Security Agent
may, without notice or publication,  adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for the sale,  and such sale may be made at any time or place to which the
same  may be so  adjourned.  In the  case of any  sale of all or any part of the
Collateral  on credit or for  future  delivery,  the  Collateral  so sold may be
retained by the Security  Agent until the selling price is paid by the purchaser
thereof, but the Security Agent shall not incur any liability in the case of the
failure of such  purchaser to take up and pay for the Collateral so sold and, in
the case of any such  failure,  such  Collateral  may  again be sold  upon  like
notice.  The  Security  Agent,  instead of  exercising  the power of sale herein
conferred  upon  it,  may  proceed  by a suit or suits  at law or in  equity  to
foreclose  the  Security  Interests  and sell  the  Collateral,  or any  portion
thereof,  under  a  judgment  or  decree  of a  court  or  courts  of  competent
jurisdiction.

         (B) For the purpose of enforcing any and all rights and remedies  under
this  Agreement  the  Security  Agent may (i) require the  Borrower  to, and the
Borrower  agrees  that it will,  at its  expense  and upon  the  request  of the
Security Agent, forthwith assemble all or any part of the Collateral as directed
by the  Security  Agent  and  make it  available  at a place  designated  by the
Security Agent which is, in its opinion,  reasonably  convenient to the Security
Agent and the Borrower or otherwise,  (ii) to the extent permitted by applicable
law, enter,  with or without process of law and without breach of the peace, any
premise where any of the Collateral is or may be located,  and without charge or
liability to it seize and remove such  Collateral  from such  premises and (iii)
have  access  to and  use the  Borrower's  books  and  records  relating  to the
Collateral.  The  Security  Agent may also  render any or all of the  Collateral
unusable at the Borrower's  premises and may dispose of such  Collateral on such
premises without liability for rent or costs.

         (C) Without  limiting the  generality of the forgoing,  if any Event of
Default has occurred  and is  continuing,  and the  Security  Agent has given at
least 60 days'  notice to the  Borrower of its intent to exercise  its  remedies
under this subsection (C),

                  (i) the Security  Agent may license,  or  sublicense,  whether
                  general,  special or otherwise, and whether on an exclusive or
                  non-exclusive  basis,  any  Copyrights,  Patents or Trademarks
                  included in the Collateral  throughout the world for such term
                  or  terms,  on  such  conditions  and in  such  manner  as the
                  Security Agent shall in its sole discretion determine;

                  (ii) the Security Agent may (without  assuming any obligations
                  or liability  thereunder),  at any time and from time to time,
                  in its sole discretion,  enforce (and shall have the exclusive
                  right to enforce)  against any  licensee  or  sublicensee  all
                  rights  and  remedies  of the  Borrower  in,  to and under any
                  Copyright Licenses,  Patent Licenses or Trademark Licenses and
                  take or refrain from taking any action under any thereof,  and
                  the Borrower  hereby  releases the Security  Agent and each of
                  the  other  Secured  Parties  from,  and  agrees  to hold  the
                  Security Agent and each of the other Secured  Parties free and
                  harmless from and against any claims and expenses  arising out
                  of,  any  lawful  action so taken or  omitted to be taken with
                  respect thereto; and

                  (iii) upon request by the Security  Agent,  the Borrower  will
                  execute and deliver to the Security Agent a power of attorney,
                  in form and substance  satisfactory to the Security Agent, for
                  the   implementation  of  any  lease,   assignment,   license,
                  sublicense,  grant of option,  sale or other  disposition of a
                  Copyright,  Patent or Trademark or any action related thereto.
                  In the event of any such disposition pursuant to this Section,
                  the Borrower shall supply its know-how and expertise  relating
                  to the manufacture and sale of the products bearing Trademarks
                  or the  products  or services  made or rendered in  connection
                  with  Patents,  and  its  customer  lists  and  other  records
                  relating to such patents or Trademarks and to the distribution
                  of said products, to the Security Agent.

SECTION 9.  Limitation on Duty of Security Agent in Respect of Collateral.

         Beyond the  exercise of  reasonable  care in the custody  thereof,  the
Security  Agent shall have no duty as to any  Collateral  in its  possession  or
control  or in the  possession  or  control of any agent or nominee of it or any
income thereon or as to the  preservation of rights against prior parties or any
other rights  pertaining  thereto.  The  Security  Agent shall be deemed to have
exercised  reasonable care in the custody and  preservation of the Collateral in
its possession if the Collateral is accorded  treatment  substantially  equal to
that which it accords its own  property  and shall not be liable or  responsible
for any loss or damage to any of the  Collateral,  or for any  diminution in the
value thereof,  by reason of the act or omission of any agent or bailee selected
by the Security Agent in good faith.

SECTION 10.  Application of Proceeds.

         (A) Upon the  occurrence  and  during  the  continuance  of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held in the Collateral  Account or otherwise held
by the Security  Agent shall be applied by the Security  Agent in the  following
order of priorities:

                  first,  to  payment  of the  expenses  of such  sale or  other
         realization, including reasonable compensation to agents of (including,
         but not  limited  to,  the  Concentration  Bank)  and  counsel  for the
         Security Agent, and all expenses,  liabilities and advances incurred or
         made by the Security Agent in connection therewith;

                  second,  to payment  of any other  unreimbursed  expenses  for
         which the Security  Agent or any Bank Agent or Bank is to be reimbursed
         pursuant to Section  9.03 of the Credit  Agreement or Section 12 hereof
         and unpaid fees owing to the  Security  Agent  hereunder or to the Bank
         Agents under the Credit Agreement;

                  third,  to  the ratable  payment of  unpaid  principal of  the
         Secured Obligations;

                  fourth, to the  ratable payment of accrued but unpaid interest
         on the Secured  Obligations in  accordance  with the  provisions of the
         Credit Agreement;

                  fifth,   to  the   ratable   payment  of  all  other   Secured
         Obligations,  until all  Secured  Obligations  shall  have been paid in
         full; and

                  finally,  to  payment to the  Borrower  or its  successors  or
         assigns,  or as a court of competent  jurisdiction  may direct,  of any
         surplus then remaining from such proceeds.

         (B) The Security Agent may make  distributions  hereunder in cash or in
kind or, on a ratable  basis,  in any  combination  thereof.  If at any time any
monies collected or received by the Security Agent are distributable pursuant to
this Section in respect of any Letter of Credit  Exposure  which is a contingent
obligation  at such time,  then the Security  Agent shall invest such amounts in
Liquid  Investments   selected  by  it  and  shall  hold  all  such  amounts  so
distributable  and all such Liquid  Investments and the net proceeds  thereof in
trust for  application  to the payment of any Letter of Credit  Exposure at such
time as such Letter of Credit Exposure is no longer a contingent obligation.  If
the Security Agent holds any amounts which were  distributable in respect of any
Letter of Credit  Exposure  after all  letters of credit  have  expired  and all
amounts  payable with  respect  thereto  have been paid,  such amounts  shall be
applied in the order set forth in subsection (A) above.

         (C) In making  the  determinations  and  allocations  required  by this
Section,  the Security  Agent shall have no  liability to any Secured  Party for
actions taken in reliance on information  supplied by the Secured  Parties as to
the amounts of the Secured  Obligations held by them. All distributions  made by
the Security  Agent  pursuant to this Section  shall be final,  and the Security
Agent shall have no duty to inquire as to the application by the Secured Parties
of any amount  distributed to them.  However,  if at any time the Security Agent
determines that an allocation or  distribution  previously made pursuant to this
Section  was  based  on a  mistake  of fact  (including,  without  limiting  the
generality of the foregoing,  mistakes based on any assumption that principal or
interest has been paid by payments  which are  subsequently  recovered  from the
recipient  thereof  through the  operation  of any  bankruptcy,  reorganization,
insolvency  or  other  laws  or  otherwise),  the  Security  Agent  may  in  its
discretion,  but shall not be obligated to, adjust  subsequent  allocations  and
distributions  hereunder so that, on a cumulative  basis, the Security Agent and
the other Secured  Parties  receive the  distributions  to which they would have
been entitled if such mistake of fact had not been made.

SECTION 11.  Concerning the Security Agent and the Concentration Bank.

         (A) The  Security  Agent is  authorized  to take all such  action as is
provided  to be taken by it as Security  Agent  hereunder  and all other  action
reasonably  incidental  thereto.  As to any matters not  expressly  provided for
herein  (including,  without  limitation,  the timing and methods of realization
upon the  Collateral)  the  Security  Agent shall act or refrain  from acting in
accordance with written  instructions from the Required Banks or, in the absence
of such instructions, in accordance with its discretion.

         (B) Citicorp USA, Inc. and its  affiliates  may accept  deposits  from,
lend money to, and generally engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not the Security Agent
hereunder.

         (C) The  obligations  of the Security  Agent  hereunder  are only those
expressly set forth herein.  Without  limiting the  generality of the foregoing,
the Security  Agent shall not be required to take any action with respect to any
Default or Event of Default, except as expressly provided herein.

         (D) The  Security  Agent may consult  with legal  counsel,  independent
public  accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in  accordance  with
the advice of such counsel, accountants or experts.

         (E) Neither the Security  Agent nor any director,  officer,  agent,  or
employee of the Security Agent shall be liable for any action taken or not taken
by it in  connection  herewith  (i) with the  consent  or at the  request of the
Required  Banks or (ii) in the  absence of its own gross  negligence  or willful
misconduct.  Neither the Security Agent,  nor any of its affiliates,  nor any of
their respective directors,  officers, agents or employees, shall be responsible
for or have any duty to  ascertain,  inquire  into or verify (i) any  statement,
warranty or  representation  made in connection  with this  Agreement;  (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
or (iii) the validity,  effectiveness  or  genuineness  of this Agreement or any
instrument or writing furnished in connection herewith. The Security Agent shall
not  incur  any  liability  by  acting in  reliance  upon any  notice,  consent,
certificate,  statement,  or other writing  (which may be a bank wire,  telex or
similar  writing)  believed  by it to be  genuine  or to be signed by the proper
party or parties The Security Agent shall not be responsible  for the existence,
genuineness or value of any of the  Collateral or for the validity,  perfection,
priority or enforceability  of the Security  Interests in any of the Collateral,
whether  impaired by  operation of law or by reason of any action or omission to
act on its part hereunder. The Security Agent shall have no duty to ascertain or
inquire  as to the  performance  or  observance  of any of  the  terms  of  this
Agreement by the Borrower.

         (F) Each Bank  shall,  ratably  in  accordance  with the  amount of its
Secured  Obligations,  indemnify the Security  Agent,  its  affiliates and their
respective  directors,  officers,  agents  and  employees  (to  the  extent  not
reimbursed by the Borrower) against any cost,  expense  (including  counsel fees
and  disbursements),  claim,  demand,  action, loss or liability (except such as
result from the indemnitees'  gross negligence or willful  misconduct) that such
indemnitees  may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder or thereunder.

         (G) The Security  Agent may resign at any time by giving written notice
of its resignation to the other Secured Parties and the Borrower.  Upon any such
resignation,  the  Required  Banks  shall have the right to appoint a  successor
Security Agent (a "Successor  Agent").  If no Successor Agent shall have been so
appointed by the  Required  Banks,  and shall have  accepted  such  appointment,
within  30 days  after  the  retiring  Security  Agent's  giving  of  notice  of
resignation,  then the  retiring  Security  Agent  may,  on  behalf of the other
Secured  Parties,  appoint a Successor  Agent,  which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined  capital  and surplus of at least  $100,000,000.  Upon the
acceptance of its appointment as Security Agent hereunder by a Successor  Agent,
such Successor Agent shall  thereupon  succeed to and become vested with all the
rights and duties of the retiring  Security  Agent,  and the  retiring  Security
Agent shall be discharged from its duties and obligations  hereunder.  After any
retiring  Security  Agent's   resignation   hereunder  as  Security  Agent,  the
provisions of this Section shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Security Agent.

         (H) The  Concentration  Bank is  acting  hereunder  as the agent of the
Secured  Parties,  and is entitled to the  benefits of Sections 9 and 11 of this
Agreement in respect of its  activities  under this Agreement to the same extent
as if it were the Security Agent.

         (I) The Concentration Bank may at any time, by giving written notice to
the Security  Agent and the  Borrower,  and shall,  if requested to do so by the
Security  Agent,  resign  its  position  as the  Secured  Parties'  agent and be
discharged of its responsibilities  hereunder,  such resignation to be effective
upon the appointment by the Security Agent, with the consent of the Borrower, of
a successor  Concentration  Bank.  If no successor  Concentration  Bank shall be
appointed  and shall have  accepted  such  appointment  within 30 days after the
Concentration Bank gives the aforesaid notice of resignation, the Security Agent
may appoint a successor  Concentration  Bank or apply to any court of  competent
jurisdiction   to  appoint  a  successor   Concentration   Bank.  Any  successor
Concentration  Bank shall be a commercial  bank organized  under the laws of the
United States of America or of any state  thereof and having a combined  capital
and surplus of at least $100,000,000.  Upon the acceptance of its appointment as
Concentration Bank hereunder by a successor  Concentration  Bank, such successor
Concentration  Bank shall  thereupon  succeed to and become  vested with all the
rights and duties of the retiring  Concentration  Bank, the  Collateral  Account
shall be  transferred  to such  successor  Concentration  Bank, and the retiring
Concentration   Bank  shall  be  discharged  from  its  duties  and  obligations
hereunder.  After any retiring  Concentration  Bank's resignation  hereunder the
provisions  of  Sections 9 and 11 shall  inure to its  benefit as to any actions
taken or omitted to be taken by it while it was Concentration Bank.

         (J) In order to comply with any legal  requirement in any jurisdiction,
the Security Agent may at any time appoint  another bank or trust company or one
or more other persons, either to act as co-agent or co-agents,  jointly with the
Security  Agent,  or to act as separate agent or agents on behalf of the Secured
Parties  with such power and  authority as may be  necessary  for the  effectual
operation of the  provisions  hereof and may be specified in the  instrument  of
appointment  (which  may,  in the  discretion  of the  Security  Agent,  include
provisions  for the protection of such co-agent or separate agent similar to the
provisions of this Section 11).

SECTION 12.  Fees and Expenses.

         If the  Borrower  fails to comply  with the  provisions  of the  Credit
Agreement  or  this  Agreement,  and  as a  result  thereof,  the  value  of any
Collateral  or the  validity,  perfection,  rank  or  value  of any  part of the
Security  Interests is thereby  diminished or  potentially  diminished or put at
risk, the Security Agent, if requested by the Required Banks, may, but shall not
be  required  to,  effect such  compliance  on behalf of the  Borrower,  and the
Borrower shall reimburse the Security Agent for the costs thereof on demand. All
insurance  expenses  and  all  expenses  of  protecting,  storing,  warehousing,
appraising,  insuring,  handling,  maintaining, and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral,  or in respect of periodic  appraisals
and inspections of the Collateral to the extent the same may be requested by the
Requested Banks during the continuance of an Event of Default,  or in respect of
the sale or other disposition thereof,  shall be borne and paid by the Borrower;
and if the  Borrower  fails to promptly  pay any portion  thereof  when due, the
Security Agent or any Bank may, at its option, but shall not be required to, pay
the same and charge the Borrower's account therefor,  and the Borrower agrees to
reimburse the Security  Agent or such Bank therefor on demand.  All sums so paid
or  incurred by the  Security  Agent or any other  Secured  Party for any of the
foregoing  and any and all other sums for which the Borrower  may become  liable
hereunder and all costs and expenses (including  reasonable  attorneys' fees and
expenses and court costs) reasonably incurred by the Security Agent in enforcing
or protecting  the Security  Interests or any of their rights or remedies  under
this  Agreement,  shall,  together with interest  thereon until paid at the rate
applicable to Base Rate  Borrowings plus 2%, be additional  Secured  Obligations
hereunder.

SECTION 13.  Termination of Security Interests; Release of Collateral.

         Upon  the  repayment  in  full  of  all  Secured  Obligations  and  the
termination  of  the  Commitments  under  the  Credit  Agreement,  the  Security
Interests shall  terminate and all rights to the Collateral  shall revert to the
Borrower.  At any time and from time to time  prior to such  termination  of the
Security  Interests,  the Security Agent may release any of the Collateral  with
the prior  written  consent of the Required  Banks;  provided that prior to such
termination,  the  Security  Agent may release all or  substantially  all of the
Collateral  (as  defined in the Credit  Agreement)  only with the consent of all
Banks.  Upon any such  termination  of the  Security  Interests  or  release  of
Collateral, the Security Agent will, at the expense of the Borrower, execute and
deliver to the Borrower such documents as the Borrower shall reasonably  request
to evidence the  termination  of the  Security  Interests or the release of such
Collateral, as the case may be.

SECTION 14.  Notices.

         All notices hereunder shall be in writing  (including telex,  facsimile
or similar writing) and shall be given to the parties hereto at their respective
addresses,  facsimile  numbers or telex numbers set forth on the signature pages
hereof or at such other  addresses,  facsimile  numbers or telex  numbers as the
addressees may hereafter specify for such purpose by notice to the other parties
hereto. Each such notice,  request or other communication shall be effective (i)
if given by telex,  when  transmitted  to the telex  number  referred to in this
Section and the appropriate answerback is received,  (ii) if given by facsimile,
when  transmitted  to the  facsimile  number  referred  to in this  Section  and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication  is  deposited  in the mails with  first  class  postage  prepaid,
addressed as aforesaid  or (iv) if given by any other means,  when  delivered at
the address referred to in this Section.

SECTION 15.  Waivers, Non-Exclusive Remedies.

         No failure on the part of any Secured  Party to exercise,  and no delay
in  exercising  and no course of dealing  with  respect to, any right under this
Agreement  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise by such party of any right under any other Loan  Document  preclude any
other or further exercise thereof or the exercise of any other right. The rights
in this  Agreement  and the other  Loan  Documents  are  cumulative  and are not
exclusive of any other remedies provided by law.

SECTION 16.  Successors and Assigns.

         This  Agreement  is for the  benefit of the  Secured  Parties and their
successors  and assigns,  and in the event of an assignment of all or any of the
Secured  Obligations,  the rights  hereunder,  to the extent  applicable  to the
indebtedness  so  assigned,  may be  transferred  with such  indebtedness.  This
Agreement shall be binding on the Borrower and its successors and assigns.

SECTION 17.  Changes in Writing.

         Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated  orally, but only in writing signed by the Borrower and
the Security Agent with the consent of the Required Banks (and, if the rights or
duties of the  Concentration  Bank are affected  thereby,  by the  Concentration
Bank).

SECTION 18.  New York Law.

         This  Agreement  shall be construed in accordance  with and governed by
the laws of the State of New York,  except as  otherwise  required by  mandatory
provisions of law and except to the extent that remedies provided by the laws of
any  jurisdiction  other  than  New  York  are  governed  by the  laws  of  such
jurisdiction.

SECTION 19.  Severability.

         If  any   provision   hereof  is  invalid  or   unenforceable   in  any
jurisdiction,  then,  to the  fullest  extent  permitted  by law,  (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be  liberally  construed  in favor of the  Security  Agent  and the  other
Secured  Parties in order to carry out the  intentions of the parties  hereto as
nearly as may be possible;  and (ii) the invalidity or  unenforceability  of any
provision  hereof  in  any  jurisdiction   shall  not  affect  the  validity  or
enforceability of such provision in any other jurisdiction.
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.


                                         IOMEGA CORPORATION


                                         By             /s/ Robert J. Simmons
                                             Name:      Robert J. Simmons
                                             Title:     Vice President Treasurer
                                             Address:   1821 West Iomega Way
                                                           Roy, Utah 84067
                                             Facsimile: 


                                         CITICORP USA, INC., as Security Agent


                                         By             /s/ Bradley I. Dietz
                                             Name:      Bradley I. Dietz  
                                             Title:     Managing Director
                                                        GRB/IRM Dept.
                                             Address:   399 Park Avenue
                                                        New York, NY 10043
                                             Facsimile:


                                         THE NORTHERN TRUST COMPANY., as
                                         Concentration Bank


                                         By              /s/ John E. Burda
                                               Name:     John E. Burda
                                               Title:    Second Vice President
                                               Address:  50 S. Lasalle St.
                                                         Chicago, IL 60675
                                               Facsimile:312-444-5055
<PAGE>

                                                                        ANNEX A



                             PERFECTION CERTIFICATE

     The  undersigned,  the chief  financial  officer and chief legal officer of
IOMEGA CORPORATION, a Delaware corporation (the "Borrower"), hereby certify with
reference  to the  Security  Agreement  dated  as of July  15,  1998  among  the
Borrower, Citicorp USA, Inc., as Security Agent, and The Northern Trust Company,
as  Concentration  Bank  (terms  defined  therein  being used  herein as therein
defined), to the Secured Parties as follows:

     1. Names. (a) The exact corporate name of the Borrower as it appears in its
certificate of incorporation is as follows:



     (b) Set forth below is each other corporate name the Borrower has had since
its organization, together with the date of the relevant change:



     (c) Except as set forth in  Schedule  1, the  Borrower  has not changed its
identity or corporate structure in any way within the past five years.1



     (d) The  following is a list of all other names  (including  trade names or
similar  appellations)  used by the  Borrower or any of its  divisions  or other
business units at any time during the past five years:



     2. Current  Locations.  (a) The chief  executive  office of the Borrower is
located at the following address:

         Mailing Address            County      State





     (b) The following are all the  locations  where the Borrower  maintains any
books or records  relating to any  Receivables  with an aggregate face amount in
excess of $50,000:

                           Mailing
Name                       Address                   County       State




     (c) The  following  are all the  places of  business  of the  Borrower  not
identified above (excluding any sales offices):

                           Mailing
Name                       Address                   County       State


     (d) The following are all the  locations  where the Borrower  maintains any
Inventory  with an  aggregate  book  value in excess of $50,000  not  identified
above:

                           Mailing
Name                       Address                   County       State



     (e) The following are the names and addresses of all Persons other than the
Borrower  which  have  possession  of any of the  Borrower's  Inventory  with an
aggregate book value in excess of $50,000:

                           Mailing
Name                       Address                   County       State




     3. Prior  Locations.  (a) Set forth  below is the  information  required by
subparagraphs  (a), (b) and (c) of paragraph 2 with respect to each  location or
place of business  maintained  by the  Borrower at any time during the past five
years:

     (b) Set forth below is the information  required by  subparagraphs  (d) and
(e) of  paragraph 2 with  respect to each  location or bailee where or with whom
Inventory has been lodged at any time during the past four months:



     4.  Unusual  Transactions.  [Except  as  set  forth  in  Schedule  4,]  all
Receivables  have been  originated by the Borrower in the ordinary course of its
business.



     5. File Search Reports.  Attached hereto as Schedule 5(A) is a true copy of
a file search  report from the Uniform  Commercial  Code filing  officer in each
jurisdiction  identified in paragraph 2 or 3 above with respect to each name set
forth in paragraph 1 above.  Attached  hereto as Schedule 5(B) is a true copy of
each financing statement or other filing identified in such file search reports.

     6. UCC Filings. We have delivered duly signed financing  statements on Form
UCC-1 in  substantially  the form of  Schedule  6(A)  hereto  for  filing in the
Uniform  Commercial  Code  filing  office  in each  jurisdiction  identified  in
paragraph 2 hereof.

     7. Schedule of Filings. Within 45 days of the date hereof we will deliver a
schedule  in the  form of  Schedule  7  attached  hereto  setting  forth  filing
information with respect to the filings described in paragraph 6 above.

     8. Filing Fees.  All filing fees and taxes payable in  connection  with the
filings described in paragraph 6 above have been or will be paid.

     9. Patents.  All material  patents issued in the United States owned by the
Borrower as of the date  hereof are listed on Schedule 1 to the Patent  Security
Agreement.

     10. Trademarks. All trademarks registered in the United States owned by the
Borrower and all trademark  applications applied for in the United States by the
Borrower  as of the date  hereof  are  listed  on  Schedule  1 to the  Trademark
Security Agreement.

     11.  Copyrights.  All material  copyrights  registered in the United States
owned by the  Borrower  as of the date  hereof are  listed on  Schedule 1 to the
Copyright Security Agreement.


<PAGE>

-
         IN WITNESS  WHEREOF,  we have  hereunto set our hands this day of July,
1998.


                                            ----------------------------
                                            Name:
                                            Title:


                                            ----------------------------
                                            Name:
                                            Title:
<PAGE>

                                                                  SCHEDULE 6(A)


Description of Collateral

         All accounts,  chattel paper,  contract  rights,  general  intangibles,
inventory,  investment property, equipment and documents, now owned or hereafter
acquired, wherever located, and all proceeds thereof.



<PAGE>

                                                                    SCHEDULE 7



                                          SCHEDULE OF FILINGS



Debtor        Filing Officer       File Number    Date of Filing1
------        --------------       -----------    ---------------




________________
1 Indicate lapse date, if other than fifth aniversary

<PAGE>
                                                                    ANNEX B


                            [FORM OF LOCKBOX LETTER]



                                  July 15, 1998



                                  [Name and Address of Lockbox Bank]

         Re: Iomega Corporation

Gentlemen:

         We hereby notify you that effective July 15, 1998, we have  transferred
exclusive   ownership   and   control   of  our   lock-box   account[s]   No[s].
_________________  (the  "Lockbox  Account[s]")  [maintained  with you under the
terms of the [Lockbox  Agreement] attached hereto as Exhibit A] to Citicorp USA,
Inc., as Security Agent (the "Security Agent").

         We hereby  irrevocably  instruct you to make all payments to be made by
you out of or in  connection  with the Lockbox  Account[s]  (i) to the  Security
Agent for credit to Account No.  ___________  maintained  by The Northern  Trust
Company,  at the  latter's  office  at  ________________,  or  (ii)  as you  may
otherwise be instructed by the Security Agent.

         We also hereby notify you that the Security  Agent shall be irrevocably
entitled to exercise any and all rights in respect of or in connection  with the
Lockbox Account[s],  including,  without  limitation,  the right to specify when
payments are to be made out of or in connection with the Lockbox Account[s].

         No funds  deposited  into the  Lockbox  Account[s]  will be  subject to
deductions,  set-off,  banker's  lien or any  other  right in favor of any other
person than the Security Agent,  except that you may set-off against the Lockbox
Account[s]  the face  amount  of any check  deposited  in and  credited  to such
Lockbox  Account[s] which is subsequently  returned for any reason and fees owed
with respect to the Lockbox  Account[s].  Your  compensation  for  providing the
services contemplated herein shall be as mutually agreed between you and us from
time to time and we will continue to pay such compensation.

         Please  confirm your  acknowledgment  of and agreement to the foregoing
instructions by signing in the space provided below.

                                            Very truly yours,

                                            IOMEGA CORPORATION


                          By___________________________
                                     Title:


Acknowledged and agreed
to as of this ____ day of
July __, 1998

[LOCKBOX BANK]



By_________________________
  Title:

<PAGE>
                                                                      ANNEX C



                            PATENT SECURITY AGREEMENT

               (PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)

                  WHEREAS,  Iomega Corporation,  a Delaware  corporation (herein
referred to as "Grantor"), owns the Patents listed on Schedule 1 annexed hereto,
and is a party to certain Patent Licenses;

                  WHEREAS, the Grantor,  certain banks (the "Banks"),  Citibank,
N.A., as Administrative Agent (the  "Administrative  Agent") and Morgan Guaranty
Trust  Company  of  New  York,  as   Documentation   Agent  (together  with  the
Administrative  Agent, the "Bank Agents"),  are parties to a Credit Agreement of
even date  herewith (as the same may be amended  from time to time,  the "Credit
Agreement");

                  WHEREAS,  pursuant to the terms of the  Security  Agreement of
even date herewith (as said  Agreement may be amended and in effect from time to
time, the "Security Agreement") between Grantor, Citicorp USA, Inc., as Security
Agent (in such capacity,  together with its successors in such capacity pursuant
to the terms of such Security  Agreement,  the "Grantee") and The Northern Trust
Company,  Grantor has granted to Grantee for the ratable benefit of such secured
parties a security  interest  in  substantially  all the  assets of the  Grantor
including  all  right,  title  and  interest  of  Grantor  in,  to and under all
Grantor's  Patents (as defined in the  Security  Agreement),  together  with any
reissue, continuation,  continuation-in-part or extension thereof, all Grantor's
Patent  applications  and all  Grantor's  Patent  Licenses  (as  defined  in the
Security  Agreement),   whether  presently  existing  or  hereafter  arising  or
acquired, and all products and proceeds thereof, including any and all causes of
action  which may exist by reason of  infringement  thereof for the full term of
the Patents, to secure the payment of all amounts owing by the Grantor under the
Credit Agreement and the other Loan Document;

                  NOW,  THEREFORE,  for good  and  valuable  consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  Grantor does hereby
grant to Grantee a continuing security interest in all of Grantor's right, title
and interest in, to and under the following (all of the following items or types
of property being herein collectively  referred to as the "Patent  Collateral"),
whether presently existing or hereafter arising or acquired:

                  (i) each Patent and Patent application,  including each Patent
         referred to in Schedule 1 annexed hereto;
                  (ii)  each Patent License; and

                  (iii) all products and  proceeds of the  foregoing,  including
         any claim by Grantor against third parties for past,  present or future
         infringement  of  any  Patent,  including  any  Patent  referred  to in
         Schedule 1 annexed  hereto,  and any Patent  licensed  under any Patent
         License.

                  Notwithstanding  the  foregoing,   the  Collateral  shall  not
include and no security interest shall be granted or deemed to be granted in any
contracts or agreements,  including,  without limitation, any Copyright License,
Patent License or Trademark License, to the extent that inclusion thereof or the
granting  of  a  security  interest  therein  would  violate  a  prohibition  on
assignment or similar restriction that is effective under applicable law.

                  This  security  interest  is granted in  conjunction  with the
security  interests  granted to the Grantee pursuant to the Security  Agreement.
Grantor does hereby further  acknowledge and affirm that the rights and remedies
of Grantee with respect to the security  interest in the Patent  Collateral made
and granted hereby are more fully set forth in the Security Agreement, the terms
and  provisions of which are  incorporated  by reference  herein as if fully set
forth herein.
<PAGE>


          IN WITNESS WHEROF,Grantor has caused this Patent Security Agreement to
     be duly executed by it officer thereunto duly authorized as of the 15th day
     of July, 1998.



                                                     IOMEGA CORPORATION

                                                     By: ________________
                                                         Name:
                                                         Title:

Acknowledged:

CITICORP USA, INC.,
  as Security Agent


By:_______________
   Name:
   Title:





<PAGE>

STATE OF           )
COUNTY OF          )


     I,  _______________________,  Notary Public in and for said County,  in the
foresaid,  DO HEREBY CERTIFY,  that  _________________,  of IOMEGA  CORPORATION,
personally  known to me to be the same person  whose name is  subscribed  to the
foregoing  instrument as such ____________,  this day in person and acknowledged
that (s)he signed,  executed and  delivered  the said  instrument as her/his own
free and volutary act and as the free and voluntary act of said company, for the
uses and purposes therein set forth being duly authorized so to do.





                                                __________________________
                                                Signature of Notary Public      

                                                My Commission expires:










<PAGE>
                                                                Schedule 1 to
                                                    Patent Security Agreement


                                                PATENTS

                                              Reg. No.            Reg. Date
                    Name                     (App. No.)          (App. Date)
---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------

---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------

---------------------------------------      ------------        ----------


---------------------------------------      ------------        ----------

<PAGE>

                                                                       ANNEX D


                          TRADEMARK SECURITY AGREEMENT


                 (TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
                      APPLICATIONS AND TRADEMARK LICENSES)



                WHEREAS,  Iomega  Corporation,  a Delaware  corporation  (herein
referred to as  "Grantor"),  owns the  Trademarks  (as  defined in the  Security
Agreement referred to below) listed on Schedule 1 annexed hereto, and is a party
to the  Trademark  Licenses  (as defined in the Security  Agreement  referred to
below) identified in Schedule 1 annexed hereto;

                WHEREAS,  the Grantor,  certain banks (the  "Banks"),  Citibank,
N.A., as Administrative Agent (the  "Administrative  Agent") and Morgan Guaranty
Trust  Company  of  New  York,  as   Documentation   Agent  (together  with  the
Administrative  Agent, the "Bank Agents"),  are parties to a Credit Agreement of
even date  herewith (as the same may be amended  from time to time,  the "Credit
Agreement"); and

                WHEREAS, pursuant to the terms of the Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor, Citicorp USA, Inc., as Security Agent
(in such capacity, together with its successors in such capacity pursuant to the
terms of such Security Agreement, the "Grantee") and The Northern Trust Company,
Grantor has granted to Grantee for the ratable benefit of such secured parties a
security  interest in substantially  all the assets of the Grantor including all
right,  title and interest of Grantor in, to and under the Trademark  Collateral
(as defined  herein),  whether now owned or  existing or  hereafter  acquired or
arising,  to  secure  the  Secured  Obligations  (as  defined  in  the  Security
Agreement);

                NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby  acknowledged,  Grantor does hereby grant to
Grantee a  continuing  security  interest in all of Grantor's  right,  title and
interest in, to and under the following (all of the following  items or types of
property being herein collectively  referred to as the "Trademark  Collateral"),
whether now owned or existing or hereafter acquired or arising:

                (i)  each  Trademark,   including,   without  limitation,   each
                Trademark  application referred to in Schedule 1 annexed hereto,
                and all of the goodwill of the business  connected  with the use
                of, or symbolized by, each such Trademark; and

                (ii) all proceeds of and revenues from the foregoing, including,
                without limitation,  all proceeds of and revenues from any claim
                by Grantor  against  third  parties for past,  present or future
                unfair  competition with, or violation of intellectual  property
                rights in  connection  with or injury  to,  or  infringement  or
                dilution of, any Trademark,  including,  without limitation, any
                Trademark  referred to in Schedule 1 hereto,  and all rights and
                benefits  of Grantor  under any  Trademark  License,  including,
                without limitation, any Trademark License identified in Schedule
                1 hereto,  or for injury to the goodwill  associated with any of
                the foregoing.

                Notwithstanding the foregoing,  the Collateral shall not include
and no  security  interest  shall be  granted  or  deemed to be  granted  in any
contracts or agreements,  including,  without limitation, any Copyright License,
Patent License or Trademark License, to the extent that inclusion thereof or the
granting  of  a  security  interest  therein  would  violate  a  prohibition  on
assignment or similar restriction that is effective under applicable law.

                Grantor hereby irrevocably  constitutes and appoints Grantee and
any officer or agent thereof,  with full power of substitution,  as its true and
lawful  attorney-in-fact with full power and authority in the name of Grantor or
in its name, from time to time, in Grantee's discretion, so long as any Event of
Default has occurred and is  continuing,  to take with respect to the  Trademark
Collateral any and all appropriate  action which Grantor might take with respect
to the Trademark Collateral and to execute any and all documents and instruments
which may be necessary  or  desirable  to carry out the terms of this  Trademark
Security Agreement and to accomplish the purposes hereof.

                Except to the extent not  prohibited in the Security  Agreement,
Grantor agrees not to sell, license,  exchange,  assign or otherwise transfer or
dispose  of, or grant any rights  with  respect  to, or  mortgage  or  otherwise
encumber, any of the foregoing Trademark Collateral.

                This  security  interest  is  granted  in  conjunction  with the
security  interests  granted  to Grantee  pursuant  to the  Security  Agreement.
Grantor does hereby further  acknowledge and affirm that the rights and remedies
of Grantee  with respect to the security  interest in the  Trademark  Collateral
made and granted hereby are more fully set forth in the Security Agreement,  the
terms and provisions of which are  incorporated by reference  herein as if fully
set forth herein.

                IN WITNESS WHEREOF,  Grantor has caused this Trademark  Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of July, 1998.


                                                   IOMEGA CORPORATION


                                                    By: _______________________
                                                        Name:
                                                        Title:

Acknowledged:

CITICORP USA, INC.,
as Security Agent


By: ________________________
    Name:
    Title:

<PAGE>


                                                            Schedule 1
                                                            to Trademark
                                                            Security Agreement





                   U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS

A.  U.S. Trademarks and Trademark Registrations   Reg. No.    Reg. Date    Mark






B.  U.S. Trademark Applications                   Serial No.  Date Filed   Mark








<PAGE>


                                                                      ANNEX E

                          COPYRIGHT SECURITY AGREEMENT

                    (COPYRIGHTS AND COPYRIGHT REGISTRATIONS)


                WHEREAS,  Iomega  Corporation,  a Delaware  corporation  (herein
referred to as  "Grantor"),  owns the  Copyrights  (as  defined in the  Security
Agreement referred to below) listed on Schedule 1 annexed hereto;

                WHEREAS,  the Grantor,  certain banks (the  "Banks"),  Citibank,
N.A., as Administrative Agent (the  "Administrative  Agent") and Morgan Guaranty
Trust  Company  of  New  York,  as   Documentation   Agent  (together  with  the
Administrative  Agent, the "Bank Agents"),  are parties to a Credit Agreement of
even date  herewith (as the same may be amended  from time to time,  the "Credit
Agreement"); and

                WHEREAS, pursuant to the terms of the Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor, Citicorp USA, Inc., as Security Agent
(in such capacity, together with its successors in such capacity pursuant to the
terms of such Security Agreement, the "Grantee") and The Northern Trust Company,
Grantor has granted to Grantee for the ratable benefit of such secured parties a
security  interest in substantially  all the assets of the Grantor including all
right,  title and interest of Grantor in, to and under the Copyright  Collateral
(as defined  herein),  whether now owned or  existing or  hereafter  acquired or
arising,  to  secure  the  Secured  Obligations  (as  defined  in  the  Security
Agreement);

                NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby  acknowledged,  Grantor does hereby grant to
Grantee a  continuing  security  interest in all of Grantor's  right,  title and
interest in, to and under the following (all of the following  items or types of
property being herein collectively  referred to as the "Copyright  Collateral"),
whether now owned or existing or hereafter acquired or arising:

                (i) each Copyright  registered in the United States,  including,
                without  limitation,  each  Copyright  registered  in the United
                States referred to in Schedule 1 annexed hereto; and

                (ii) all proceeds of and revenues from the foregoing, including,
                without limitation,  all proceeds of and revenues from any claim
                by Grantor  against  third  parties for past,  present or future
                infringement of any Copyright,  including,  without  limitation,
                any Copyright  registered  in the United  States  referred to in
                Schedule  1 annexed  hereto,  and all  rights  and  benefits  of
                Grantor under any Copyright License.

                Notwithstanding the foregoing,  the Collateral shall not include
and no  security  interest  shall be  granted  or  deemed to be  granted  in any
contracts or agreements,  including,  without limitation, any Copyright License,
Patent License or Trademark License, to the extent that inclusion thereof or the
granting  of  a  security  interest  therein  would  violate  a  prohibition  on
assignment or similar restriction that is effective under applicable law.

                Grantor hereby irrevocably  constitutes and appoints Grantee and
any officer or agent thereof,  with full power of substitution,  as its true and
lawful  attorney-in-fact with full power and authority in the name of Grantor or
in its name, from time to time, in Grantee's discretion, so long as any Event of
Default has occurred and is  continuing,  to take with respect to the  Copyright
Collateral any and all appropriate  action which Grantor might take with respect
to the Copyright Collateral and to execute any and all documents and instruments
which may be necessary  or  desirable  to carry out the terms of this  Copyright
Security Agreement and to accomplish the purposes hereof.

                Except to the extent not  prohibited in the Security  Agreement,
Grantor agrees not to sell, license,  exchange,  assign or otherwise transfer or
dispose  of, or grant any rights  with  respect  to, or  mortgage  or  otherwise
encumber, any of the foregoing Copyright Collateral.

                This  security  interest  is  granted  in  conjunction  with the
security  interests  granted  to Grantee  pursuant  to the  Security  Agreement.
Grantor does hereby further  acknowledge and affirm that the rights and remedies
of Grantee  with respect to the security  interest in the  Copyright  Collateral
made and granted hereby are more fully set forth in the Security Agreement,  the
terms and provisions of which are  incorporated by reference  herein as if fully
set forth herein.
                IN WITNESS WHEREOF,  Grantor has caused this Copyright  Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of July, 1998.



                                                     IOMEGA CORPORATION


                                                     By: ______________________
                                                         Name:
                                                         Title:



Acknowledged:

CITICORP USA, INC.,
as Security Agent


By: ________________________
    Name:
    Title:



<PAGE>

                                                              Schedule 1
                                                              to Copyright
                                                              Security Agreement



                     COPYRIGHTS AND COPYRIGHT REGISTRATIONS


Registration No.                     Reg. Date               Title














<PAGE>




                                                                     EXHIBIT F



                                PLEDGE AGREEMENT


         AGREEMENT  dated as of July 15, 1998 between IOMEGA  CORPORATION  (with
its  successors,  the  "Borrower",  and,  together  with any other  Person which
becomes  a  Grantor  pursuant  to  Section  3(B),  the  "Grantors"  and  each  a
"Grantor"),  and CITICORP USA,  INC., as Security  Agent (with its successors in
such capacity, the "Security Agent").


                              W I T N E S S E T H :


         WHEREAS, the Borrower, certain banks (the "Banks"),  Citibank, N.A., as
Administrative  Agent (the  "Administrative  Agent") and Morgan  Guaranty  Trust
Company of New York, as  Documentation  Agent (together with the  Administrative
Agent,  the "Bank  Agents"),  are  parties  to a Credit  Agreement  of even date
herewith (as the same may be amended from time to time, the "Credit Agreement");

         WHEREAS,  in order to induce  said Banks and Bank  Agents to enter into
the Credit  Agreement,  each Grantor has agreed to grant a  continuing  security
interest  in and  to  the  Collateral  (as  hereafter  defined)  to  secure  the
obligations  of the  Borrower  under the Credit  Agreement  and the Notes issued
pursuant thereto; and

         WHEREAS,  the Banks and the Bank Agents have  appointed  Citicorp  USA,
Inc., their Security Agent hereunder;

         NOW,  THEREFORE,  in  consideration  of the premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

SECTION 1.  Definitions.

         Terms defined in the Credit Agreement and not otherwise  defined herein
have,  as used  herein,  the  respective  meanings  provided  for  therein.  The
following  additional  terms,  as used  herein,  have the  following  respective
meanings:

          "Collateral" has the meaning assigned to such term in Section 3(A).

         "Declaration   of  Pledge"   means   Declaration   de  Gage  de  Compte
d'Instrument  Financiers Soumise Aux Dispositions de la Loi du 3 Janvier 1983 as
signed by the Borrower and the Security Agent on the date hereof.

         "Domestic Subsidiary" means any Subsidiary which is either incorporated
under the laws of, or has a principal place of business in, the United States or
any State, the District of Columbia or any territory or possession of the United
States.

          "Foreign  Subsidiary"  means any  Subsidiary  which is not a  Domestic
Subsidiary.

         "Issuer" means Iomega  International  S.A., Nomai, Iomega Japan and any
other  Subsidiary of the Borrower;  provided that the Borrower may, by notice to
the Security Agent, exclude from this definition any Subsidiary other than those
named herein so long as such Subsidiary, together with all other Subsidiaries so
excluded,  at no time  accounts for more than 5% of the  consolidated  revenues,
Consolidated EBITDA, consolidated assets or consolidated trade receivables, less
allowance  for  doubtful   accounts,   of  the  Borrower  and  its  Consolidated
Subsidiaries.

         "Pledged  Stock"  means (i) the  Subsidiary  Shares  and (ii) any other
capital stock  required to be pledged to the Security  Agent pursuant to Section
3(B).

         "Secured   Obligations"  means  the  obligations   secured  under  this
Agreement  including (a) all principal of and interest on any Loan under, or any
Note issued pursuant to, the Credit Agreement,  (b) all other amounts payable by
the Borrower  hereunder or under the Credit Agreement,  (c) all Letter of Credit
Exposure  relating to letters of credit issued by one or more Banks  aggregating
not more than  $20,000,000  which have been designated as "Secured  Obligations"
under this Agreement by the Borrower by written notice to the Security Agent and
(d) any renewals or extensions of any of the foregoing.  The Secured Obligations
shall include, without limitation,  any interest, costs, fees and expenses which
accrue on or with respect to any of the  foregoing,  whether before or after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower; provided that, for the purposes of
payments and  allocations  pursuant to Section 13 after the  commencement of any
case,  action or other  proceeding  relating to the  bankruptcy,  insolvency  or
reorganization  of the  Borrower,  each  Secured  Obligation  shall be deemed to
include  interest accrued thereon after the commencement of such proceeding only
to the extent that such  interest  is allowed in such  proceeding  (pursuant  to
Section 506(b) of the United States Bankruptcy Code or otherwise).

          "Secured  Parties" means the Security  Agent,  the Bank Agents and the
Banks.

         "Security  Interests"  means the security  interests in the  Collateral
granted hereunder securing the Secured Obligations.

         "Special Account" means the special account in the shareholder registry
of  Nomai  established  by  Credit  Agricole  following  receipt  by it  of  the
Declaration of Pledge.

          "Subsidiary  Shares" means the capital stock of the Issuers  listed in
Schedule I.

         Unless  otherwise  defined  herein,  or unless  the  context  otherwise
requires,  all terms  used  herein  which are  defined  in the New York  Uniform
Commercial Code as in effect on the date hereof shall have the meanings  therein
stated.

SECTION 2.  Representations and Warranties.

         Each Grantor represents and warrants as follows:

         (A) Title to Pledged Stock.  The Grantors own all of the Pledged Stock,
free and clear of any Liens other than the Security Interests. The Pledged Stock
includes all of the issued and outstanding capital stock of each Issuer which is
a Domestic  Subsidiary  and at least 65% of the issued and  outstanding  capital
stock of each Issuer which is a Foreign  Subsidiary  (provided  that the Pledged
Stock shall  include the lesser of all issued and  outstanding  capital stock of
Nomai  owned by the  Grantors  or 65% of all  issued  and  outstanding  stock of
Nomai).  All of the Pledged Stock has been duly  authorized and validly  issued,
and is fully paid and  non-assessable,  and is subject to no options to purchase
or similar  rights of any  Person.  No  Grantor is or will  become a party to or
otherwise bound by any agreement,  other than this Agreement, which restricts in
any  manner the rights of any  present  or future  holder of any of the  Pledged
Stock with respect thereto.

         (B) Validity, Perfection and Priority of Security Interests. Subject to
any  applicable  foreign  laws,  (i)  upon  the  delivery  of  the  certificates
representing  the Pledged Stock to the Security Agent in accordance with Section
4 hereof, the Security Agent will have valid and perfected security interests in
the Collateral subject to no prior Lien and (ii) no registration, recordation or
filing with any governmental  body, agency or official is required in connection
with the  execution or delivery of this  Agreement or necessary for the validity
or  enforceability  hereof or for the  perfection or enforcement of the Security
Interests.  Neither the Borrower nor any of its  Subsidiaries  has  performed or
will perform any acts which might prevent the Security  Agent from enforcing any
of the terms and  conditions of this Agreement or which would limit the Security
Agent in any such enforcement.

         (C) UCC Filing Locations. The chief executive office of the Borrower is
located at its address set forth on the signature pages of the Credit Agreement.
Under the Uniform Commercial Code as in effect in the State in which such office
is  located,  no local  filing is  required  to perfect a security  interest  in
collateral consisting of general intangibles.

SECTION 3.  The Security Interests.

         In  order  to  secure  the full and  punctual  payment  of the  Secured
Obligations in accordance with the terms thereof,  and to secure the performance
of all the obligations of the Grantors hereunder:

         (A) Each  Grantor  hereby  assigns and pledges to and with the Security
Agent for the benefit of the Secured  Parties and grants to the  Security  Agent
for the benefit of the Secured Parties security  interests in the Pledged Stock,
and all of its rights and privileges with respect to the Pledged Stock,  and all
dividends and other payments and  distributions  with respect  thereto,  and all
proceeds  of  the  foregoing  (the  "Collateral").  Contemporaneously  with  the
execution  and delivery  hereof,  the Borrower is  delivering  the  certificates
representing the Iomega International S.A. Subsidiary Shares in pledge hereunder
and the Declaration of Pledge. As promptly as practicable after the date hereof,
the Borrower shall deliver (i) the  certificates  representing  the Iomega Japan
Subsidiary  Shares and (ii) a certificate of Credit Agricole that it has created
the Special Account, and as promptly as practicable after the acquisition of any
additional  shares of Nomai,  the Borrower shall deliver a certificate of Credit
Agricole  that the balance of the capital  shares of Nomai (up to a total of 65%
of the  issued  and  outstanding  shares  of the  capital  stock of  Nomai)  are
reflected in the Special Account.

         (B) Subject,  in the case of Nomai,  to Section 3(A), in the event that
any Subsidiary becomes an Issuer, or any Issuer at any time issues any shares of
capital  stock of any class to a Grantor  or any  other  Subsidiary,  including,
without  limitation,  any additional or substitute shares, such Grantor will, or
will  cause  such  Subsidiary  to take  appropriate  steps to  become a  Grantor
hereunder (including,  in connection therewith,  the delivery by such Subsidiary
Grantor of appropriate limited recourse guaranties of the Borrower's obligations
under the Credit  Agreement  and legal  opinions  and the making of  appropriate
representations  and warranties) and to, immediately pledge and deposit with the
Security Agent  certificates  representing  all (or, if such Issuer is a Foreign
Subsidiary,  at least 65% of) such shares as additional security for the Secured
Obligations.  All such shares  constitute  Pledged  Stock and are subject to all
provisions of this Agreement.

         (C) The Security  Interests  are granted as security only and shall not
subject  any Secured  Party to, or transfer or in any way affect or modify,  any
obligation or liability of the Borrower or any of its Subsidiaries  with respect
to any of the Collateral or any transaction in connection therewith.

SECTION 4.  Delivery of Pledged Stock.

           All certificates representing Pledged Stock delivered to the Security
Agent by the Grantors  pursuant hereto shall be in suitable form for transfer by
delivery,  or shall be accompanied  by duly executed  instruments of transfer or
assignment in blank and accompanied by any required transfer tax stamps,  all in
form and substance satisfactory to the Security Agent.

SECTION 5.  Further Assurances.

         (A) Each Grantor agrees that it will, at its expense and in such manner
and form as the Security Agent may require,  execute,  deliver,  file and record
any financing  statement,  specific assignment or other paper and take any other
action  that may be  necessary  or  desirable,  or that the  Security  Agent may
request, in order to create, preserve, perfect or validate any Security Interest
or to enable the  Security  Agent to exercise  and enforce its rights  hereunder
with respect to any of the  Collateral.  To the extent  permitted by  applicable
law, each Grantor  hereby  authorizes the Security Agent to execute and file, in
the  name of the  Borrower  or  otherwise,  Uniform  Commercial  Code  financing
statements   (which  may  be   carbon,   photographic,   photostatic   or  other
reproductions  of this  Agreement or of a financing  statement  relating to this
Agreement) which the Security Agent in its sole discretion may deem necessary or
appropriate to further perfect the Security Interests.

                  (B) Each Grantor  agrees that it will not change (i) its name,
identity or corporate  structure in any manner or (ii) the location of its chief
executive  office unless it shall have given the Security Agent not less than 30
days' prior notice thereof.

SECTION 6.  Record Ownership of Pledged Stock.

         The Security Agent may at any time during the continuance of a Default,
in its sole discretion,  cause any or all of the Pledged Stock to be transferred
of record into the name of the Security Agent or its nominee.  Each Grantor will
promptly   give  to  the   Security   Agent  copies  of  any  notices  or  other
communications  received by it with respect to Pledged  Stock  registered in its
name and the Security  Agent will  promptly  give to the Borrower  copies of any
notices  and  communications  received  by the  Security  Agent with  respect to
Pledged Stock registered in the name of the Security Agent or its nominee.

SECTION 7.  Right to Receive Distributions on Collateral.

         The  Security  Agent  shall have the right to receive  and,  during the
continuance of any Default, to retain as Collateral  hereunder all dividends and
other payments and  distributions  made upon or with respect to the  Collateral,
and each  Grantor  shall  take all such  action as the  Security  Agent may deem
necessary or  appropriate  to give effect to such right.  All such dividends and
other  payments  and  distributions  which are  received  by a Grantor  shall be
received in trust for the benefit of the Secured  Parties  and, if the  Security
Agent so directs during the  continuance of a Default,  shall be segregated from
other funds of such  Grantor and shall,  forthwith  upon demand by the  Security
Agent during the continuance of a Default, be paid over to the Security Agent as
Collateral in the same form as received (with any necessary endorsement).  After
all Defaults have been cured, the Security Agent's right to retain dividends and
other  payments  and  distributions  under  this  Section 7 shall  cease and the
Security Agent shall pay over to such Grantor any such Collateral retained by it
during  the  continuance  of a  Default.  It is  understood  that  prior  to the
occurrence of a Default, all dividends and other payments and distributions made
upon or with respect to the Collateral shall be distributable to the Grantors.

SECTION 8.  Right to Vote Pledged Stock.

         Unless a Default  shall have occurred and be  continuing,  each Grantor
shall  have  the  right,  from  time  to  time,  to vote  and to give  consents,
ratifications  and waivers with respect to its Pledged  Stock,  and the Security
Agent shall, upon receiving a written request from such Grantor accompanied by a
certificate  signed by the principal  financial  officer of the Borrower stating
that no Default has  occurred and is  continuing,  deliver to such Grantor or as
specified  in  such  request  such  proxies,   powers  of  attorney,   consents,
ratifications  and  waivers  in  respect of any of the  Pledged  Stock  which is
registered  in the  name of the  Security  Agent  or its  nominee  as  shall  be
specified  in such  request  and be in form and  substance  satisfactory  to the
Security Agent.

         If a Default shall have occurred and be continuing,  the Security Agent
shall have the right to the extent  permitted by law and each Grantor shall take
all such action as may be necessary or appropriate to give effect to such right,
to vote and to give  consents,  ratifications  and  waivers,  and take any other
action with  respect to any or all of the Pledged  Stock with the same force and
effect as if the Security Agent were the absolute and sole owner thereof.

SECTION 9.  General Authority.

         Each Grantor  hereby  irrevocably  appoints the Security Agent its true
and  lawful  attorney,  with  full  power  of  substitution,  in the name of the
Grantors,  the Security Agent, the Bank Agents, the Banks or otherwise,  for the
sole use and benefit of the Secured Parties, but at the expense of such Grantor,
to the extent  permitted by law to  exercise,  at any time and from time to time
while an Event of Default  has  occurred  and is  continuing,  all or any of the
following powers with respect to all or any of the Collateral:

              (i) to demand, sue for, collect,  receive and give acquittance for
         any and all monies due or to become due upon or by virtue thereof,

             (ii) to  settle,  compromise,  compound,  prosecute  or defend  any
         action or proceeding with respect thereto,

            (iii) to sell,  transfer,  assign or  otherwise  deal in or with the
         same or the proceeds or avails thereof,  as fully and effectually as if
         the Security Agent were the absolute owner thereof, and

             (iv) to extend  the time of payment  of any or all  thereof  and to
         make any allowance and other adjustments with reference thereto;

provided that the Security  Agent shall give the relevant  Grantor not less than
ten  days'  prior  notice  of the time and  place of any sale or other  intended
disposition of any of the Collateral  except any Collateral  which  threatens to
decline  speedily  in value  or is of a type  customarily  sold on a  recognized
market.  The Security Agent and the Grantors agree that such notice  constitutes
"reasonable  notification" within the meaning of Section 9-504(3) of the Uniform
Commercial Code.

SECTION 10.  Remedies upon Event of Default.

         If any Event of Default  shall have  occurred  and be  continuing,  the
Security Agent may exercise on behalf of the Secured Parties all the rights of a
secured party under the Uniform Commercial Code (whether or not in effect in the
jurisdiction  where such rights are  exercised)  and, in addition,  the Security
Agent may, without being required to give any notice,  except as herein provided
or as may be required by mandatory  provisions  of law,  (i) apply the cash,  if
any,  then held by it as Collateral as specified in Section 13 and (ii) if there
shall  be no such  cash or if such  cash  shall be  insufficient  to pay all the
Secured  Obligations in full,  sell the Collateral or any part thereof at public
or private  sale or at any broker's  board or on any  securities  exchange,  for
cash,  upon  credit or for future  delivery,  and at such price or prices as the
Security  Agent may deem  satisfactory.  Any Bank may be the purchaser of any or
all of the  Collateral so sold at any public sale (or, if the Collateral is of a
type  customarily  sold in a  recognized  market  or is of a type  which  is the
subject of widely distributed  standard price quotations,  at any private sale).
The Security Agent is authorized,  in connection with any such sale, if it deems
it advisable so to do, (i) to restrict the prospective  bidders on or purchasers
of any of the Pledged Stock to a limited number of  sophisticated  investors who
will  represent  and agree that they are  purchasing  for their own  account for
investment  and  not  with a view  to the  distribution  or  sale of any of such
Pledged Stock,  (ii) to cause to be placed on certificates for any or all of the
Pledged  Stock or on any  other  securities  pledged  hereunder  a legend to the
effect that such security has not been  registered  under the  Securities Act of
1933 and may not be disposed of in violation  of the  provision of said Act, and
(iii) to impose such other limitations or conditions in connection with any such
sale as the Security Agent deems  necessary or advisable in order to comply with
said Act or any other law. Each Grantor will execute and deliver such  documents
and take such other action as the Security Agent deems necessary or advisable in
order that any such sale may be made in compliance  with law. Upon any such sale
the Security  Agent shall have the right to deliver,  assign and transfer to the
purchaser  thereof the Collateral so sold. Each purchaser at any such sale shall
hold the  Collateral  so sold  absolutely  and free  from any  claim or right of
whatsoever  kind,  including  any equity or right of  redemption of the Grantors
which may be waived,  and each Grantor,  to the extent  permitted by law, hereby
specifically waives all rights of redemption,  stay or appraisal which it has or
may have under any law now existing or hereafter adopted. The notice (if any) of
such sale  required by Section 9 shall (1) in the case of a public  sale,  state
the time and place fixed for such sale,  (2) in the case of a sale at a broker's
board or on a  securities  exchange,  state the board or  exchange at which such
sale is to be made and the day on which the  Collateral,  or the portion thereof
so being sold, will first be offered for sale at such board or exchange, and (3)
in the case of a  private  sale,  state  the day  after  which  such sale may be
consummated.  Any such  public  sale shall be held at such time or times  within
ordinary  business  hours and at such place or places as the Security  Agent may
fix in the notice of such sale. At any such sale the  Collateral  may be sold in
one lot as an  entirety  or in  separate  parcels,  as the  Security  Agent  may
determine.  The  Security  Agent  shall not be  obligated  to make any such sale
pursuant  to any  such  notice.  The  Security  Agent  may,  without  notice  or
publication,  adjourn  any  public  or  private  sale or  cause  the  same to be
adjourned from time to time by  announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned.  In the  case of any  sale of all or any  part of the  Collateral  on
credit or for future  delivery,  the  Collateral  so sold may be retained by the
Security Agent until the selling price is paid by the purchaser thereof, but the
Security  Agent shall not incur any liability in the case of the failure of such
purchaser to take up and pay for the  Collateral so sold and, in the case of any
such failure,  such Collateral may again be sold upon like notice.  The Security
Agent,  instead of exercising  the power of sale herein  conferred  upon it, may
proceed  by a suit or  suits  at law or in  equity  to  foreclose  the  Security
Interests and sell the Collateral,  or any portion thereof,  under a judgment or
decree of a court or courts of competent jurisdiction.

SECTION 11.  Expenses.

         The Grantors  jointly and severally agree that they will forthwith upon
demand pay to the Security Agent:

              (i) the amount of any taxes which the Security Agent may have been
         required to pay by reason of the  Security  Interests or to free any of
         the Collateral from any Lien thereon, and

             (ii) the amount of any and all  out-of-pocket  expenses,  including
         the fees and  disbursements of counsel and of any other experts,  which
         the Security Agent may incur in connection with (w) the  administration
         or  enforcement  of this  Agreement,  including  such  expenses  as are
         incurred  to preserve  the value of the  Collateral  and the  validity,
         perfection,   rank  and  value  of  any  Security  Interest,   (x)  the
         collection, sale or other disposition of any of the Collateral, (y) the
         exercise by the Security  Agent of any of the rights  conferred upon it
         hereunder or (z) any Default or Event of Default.

Any such amount not paid on demand shall bear interest at the rate applicable to
Base Rate  Borrowings  plus 2% and  shall be an  additional  Secured  Obligation
hereunder.

SECTION 12.  Limitation on Duty of Security Agent in Respect of Collateral.

         Beyond the  exercise of  reasonable  care in the custody  thereof,  the
Security  Agent  all  have no duty as to any  Collateral  in its  possession  or
control or in the  possession or control of any agent or as to the  preservation
of rights  against prior  parties or any other rights  pertaining  thereto.  The
Security Agent shall be deemed to have exercised  reasonable care in the custody
and  preservation  of the  Collateral  in its  possession  if the  Collateral is
accorded  treatment  substantially  equal  to  that  which  it  accords  its own
property,  and shall not be liable or responsible  for any loss or damage to any
of the Collateral,  or for any diminution in the value thereof, by reason of the
act or omission of any agent selected by the Security Agent in good faith.

SECTION 13.  Application of Proceeds.

         Upon the occurrence and during the  continuance of an Event of Default,
the proceeds of any sale of, or other  realization  upon, all or any part of the
Collateral  and any cash held  shall be  applied  by the  Security  Agent in the
following order of priorities:

               first,  to  payment  of  the  expenses  of  such  sale  or  other
          realization,  including reasonable  compensation to agents and counsel
          for the Security  Agent,  and all expenses,  liabilities  and advances
          incurred or made by the Security  Agent in connection  therewith,  and
          any other  unreimbursed  expenses for which any Secured Party is to be
          reimbursed pursuant to Section 9.03 of the Credit Agreement or Section
          11 hereof and unpaid  fees owing to the Bank  Agents  under the Credit
          Agreement;

               second, to the ratable payment of unpaid principal of the Secured
          Obligations;

               third,  to the ratable  payment of accrued but unpaid interest on
          the Secured  Obligations  in  accordance  with the  provisions  of the
          Credit Agreement;

               fourth, to the ratable payment of all other Secured  Obligations,
          until all Secured Obligations shall have been paid in full; and

               finally,  to  payment  to the  Grantors  or their  successors  or
          assigns,  or as a court of competent  jurisdiction may direct,  of any
          surplus then remaining from such proceeds.

The Security Agent may make distributions  hereunder in cash or in kind or, on a
ratable basis, in any combination thereof.

SECTION 14.  Concerning the Security Agent.

         (A) The  Security  Agent is  authorized  to take all such  action as is
provided  to be taken by it as Security  Agent  hereunder  and all other  action
reasonably  incidental  thereto.  As to any matters not  expressly  provided for
herein  (including,  without  limitation,  the timing and methods of realization
upon the  Collateral)  the  Security  Agent shall act or refrain  from acting in
accordance with written  instructions from the Required Banks or, in the absence
of such instructions, in accordance with its discretion.

         (B) Citicorp USA, Inc. and its  affiliates  may accept  deposits  from,
lend money to, and generally engage in any kind of business with the Borrower or
any Subsidiary or affiliate of the Borrower as if it were not the Security Agent
hereunder.

         (C) The  obligations  of the Security  Agent  hereunder  are only those
expressly set forth herein.  Without  limiting the  generality of the foregoing,
the Security  Agent shall not be required to take any action with respect to any
Default or Event of Default, except as expressly provided herein.

         (D) The  Security  Agent may consult  with legal  counsel,  independent
public  accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in  accordance  with
the advice of such counsel, accountants or experts.

         (E) Neither the Security  Agent nor any director,  officer,  agent,  or
employee of the Security Agent shall be liable for any action taken or not taken
by it in  connection  herewith  (i) with the  consent  or at the  request of the
Required  Banks or (ii) in the  absence of its own gross  negligence  or willful
misconduct.  Neither the Security Agent,  nor any of its affiliates,  nor any of
their respective directors,  officers, agents or employees, shall be responsible
for or have any duty to  ascertain,  inquire  into or verify (i) any  statement,
warranty or  representation  made in connection  with this  Agreement;  (ii) the
performance or observance of any of the covenants or agreements of the Grantors,
or (iii) the validity,  effectiveness  or  genuineness  of this Agreement or any
instrument or writing furnished in connection herewith. The Security Agent shall
not  incur  any  liability  by  acting in  reliance  upon any  notice,  consent,
certificate,  statement,  or other writing  (which may be a bank wire,  telex or
similar  writing)  believed  by it to be  genuine  or to be signed by the proper
party or parties. The Security Agent shall not be responsible for the existence,
genuineness or value of any of the  Collateral or for the validity,  perfection,
priority or enforceability  of the Security  Interests in any of the Collateral,
whether  impaired by  operation of law or by reason of any action or omission to
act on its part hereunder. The Security Agent shall have no duty to ascertain or
inquire  as to the  performance  or  observance  of any of  the  terms  of  this
Agreement by the Grantors.

         (F) Each Bank  shall,  ratably  in  accordance  with the  amount of its
Secured  Obligations,  indemnify the Security  Agent,  its  affiliates and their
respective  directors,  officers,  agents  and  employees  (to  the  extent  not
reimbursed by the Grantors) against any cost,  expense  (including  counsel fees
and  disbursements),  claim,  demand,  action, loss or liability (except such as
result from the indemnitees'  gross negligence or willful  misconduct) that such
indemnitees  may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder or thereunder.

         (G) The Security  Agent may resign at any time by giving written notice
of its resignation to the other Secured Parties and the Borrower.  Upon any such
resignation,  the  Required  Banks  shall have the right to appoint a  successor
Security Agent (a "Successor  Agent").  If no Successor Agent shall have been so
appointed by the  Required  Banks,  and shall have  accepted  such  appointment,
within  30 days  after  the  retiring  Security  Agent's  giving  of  notice  of
resignation,  then the  retiring  Security  Agent  may,  on  behalf of the other
Secured  Parties,  appoint a Successor  Agent,  which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined  capital  and surplus of at least  $100,000,000.  Upon the
acceptance of its appointment as Security Agent hereunder by a Successor  Agent,
such Successor Agent shall  thereupon  succeed to and become vested with all the
rights and duties of the retiring  Security  Agent,  and the  retiring  Security
Agent shall be discharged from its duties and obligations  hereunder.  After any
retiring  Security  Agent's   resignation   hereunder  as  Security  Agent,  the
provisions of this Section shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Security Agent.

SECTION 15.  Appointment of Co-Agents.

         At any time or times, in order to comply with any legal  requirement in
any  jurisdiction,  the Security Agent may appoint another bank or trust company
or one or more other  persons,  either to act as co-agent or co-agents,  jointly
with the Security  Agent, or to act as separate agent or agents on behalf of the
Secured  Parties  with such  power and  authority  as may be  necessary  for the
effectual  operation  of the  provisions  hereof  and  may be  specified  in the
instrument of appointment  (which may, in the discretion of the Security  Agent,
include provisions for the protection of such co-agent or separate agent similar
to the provisions of Section 14).

SECTION 16.  Termination of Security Interests; Release of Collateral.

         Upon  the  repayment  in  full  of  all  Secured  Obligations  and  the
termination  of  the  Commitments  under  the  Credit  Agreement,  the  Security
Interests shall  terminate and all rights to the Collateral  shall revert to the
Grantors.  At any time and from time to time  prior to such  termination  of the
Security  Interests,  the Security Agent may release any of the Collateral  with
the prior  written  consent of the Required  Banks;  provided that prior to such
termination,  the  Security  Agent may release all or  substantially  all of the
Collateral  (as  defined in the Credit  Agreement)  only with the consent of all
Banks.  Upon any such  termination  of the  Security  Interests  or  release  of
Collateral, the Security Agent will, at the expense of the Grantors, execute and
deliver to the Grantors such documents as the Grantors shall reasonably  request
to evidence the  termination  of the  Security  Interests or the release of such
Collateral, as the case may be.

SECTION 17.  Notices.

         All notices hereunder shall be in writing  (including telex,  facsimile
or similar writing) and shall be given to the parties hereto at their respective
addresses,  facsimile  numbers or telex numbers set forth on the signature pages
hereof or at such other  addresses,  facsimile  numbers or telex  numbers as the
addressees may hereafter specify for such purpose by notice to the other parties
hereto. Each such notice,  request or other communication shall be effective (i)
if given by telex,  when  transmitted  to the telex  number  referred to in this
Section and the appropriate answerback is received,  (ii) if given by facsimile,
when  transmitted  to the  facsimile  number  referred  to in this  Section  and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication  is  deposited  in the mails with  first  class  postage  prepaid,
addressed as aforesaid  or (iv) if given by any other means,  when  delivered at
the address referred to in this Section.

SECTION 18.  Waivers, Non-Exclusive Remedies.

         No failure on the part of any Secured  Party to exercise,  and no delay
in  exercising  and no course of dealing  with  respect to, any right under this
Agreement  shall  operate as a waiver  thereof;  nor shall any single or partial
exercise by such party of any right under the Credit Agreement or this Agreement
preclude  any other or further  exercise  thereof or the  exercise  of any other
right.  The rights in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other remedies provided by law.

SECTION 19.  Successors and Assigns.

         This  Agreement  is for the  benefit of the  Secured  Parties and their
successors  and assigns,  and in the event of an assignment of all or any of the
Secured  Obligations,  the rights  hereunder,  to the extent  applicable  to the
indebtedness  so  assigned,  may be  transferred  with such  indebtedness.  This
Agreement shall be binding on the Grantors and their successors and assigns.

SECTION 20.  Changes in Writing.
         Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated  orally, but only in writing signed by the Grantors and
the Security Agent with the consent of the Required Banks.

SECTION 21.  New York Law.

         This  Agreement  shall be construed in accordance  with and governed by
the laws of the State of New York,  except as  otherwise  required by  mandatory
provisions of law and except to the extent that remedies provided by the laws of
any  jurisdiction  other  than  New  York  are  governed  by the  laws  of  such
jurisdiction.

SECTION 22.  Severability.

         If  any   provision   hereof  is  invalid  or   unenforceable   in  any
jurisdiction,  then,  to the  fullest  extent  permitted  by law,  (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be  liberally  construed  in favor of the  Security  Agent  and the  other
Secured  Parties in order to carry out the  intentions of the parties  hereto as
nearly as may be possible;  and (ii) the invalidity or  unenforceability  of any
provision  hereof  in  any  jurisdiction   shall  not  affect  the  validity  or
enforceability of such provision in any other jurisdiction.

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.

                                       IOMEGA CORPORATION


                                       By           /s/ Robert J. Simmons
                                             Name:  Robert J. Simmons
                                             Title: Vice President and Treasurer
                                             Address:   1821 West Iomega Way
                                                           Roy, Utah 84067
                                             Facsimile:


                                       CITICORP USA, INC., as Security Agent


                                       By            /s/ Bradley I. Dietz
                                             Name:   Bradley I. Dietz
                                             Title:  Managing Director
                                                     GRB/IRM Dept.
                                             Address:   399 Park Avenue
                                                           New York, NY 10043
                                             Facsimile:

<PAGE>

                                   Schedule I

                                Subsidiary Shares



         Issuer                                Shares of Capital Stock
         ------                                -----------------------
Iomega International S.A.                                  1,181,400
Nomai S.A.                                                   679,967
Iomega Japan                                                     132*



*to be delivered as promptly as practicable after the Effective Date.





<PAGE>



                                                                      EXHIBIT G


THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD,  TRANSFERRED  OR ASSIGNED  UNLESS SO  REGISTERED  OR AN EXEMPTION  FROM
REGISTRATION UNDER SAID ACT IS AVAILABLE.



                               IOMEGA CORPORATION

                       Senior Subordinated Promissory Note


$20,000,000                                                           Roy, Utah
                                                                   July 1, 1998


                              ---------------------

         Iomega Corporation,  a Delaware corporation (the "Company"),  for value
received,  hereby promises to pay to Idanta Partners,  or assigns, the principal
sum of $20,000,000 (Twenty Million Dollars), together with interest (computed on
the basis of a 365-day year) from the date hereof on the unpaid  balance of such
principal amount from time to time outstanding at the following rates:

         1.       from the date hereof  through  September 30, 1998, the greater
                  of (i) the  weighted-average  interest  rate charged under the
                  Credit  Agreement (as defined  below) at the beginning of such
                  period plus 2% per annum and (ii) 8.6875%;

         2.       from October 1, 1998 through December 31, 1998, the greater of
                  (i) the  weighted-average  interest  rate  charged  under  the
                  Credit  Agreement at the  beginning of such period plus 2% per
                  annum and (ii) 10.6875%; and

         3.       from January 1, 1999 until paid in full the greater of (i) the
                  weighted-average   interest  rate  charged  under  the  Credit
                  Agreement  at the  beginning  of such period plus 2% per annum
                  and (ii) 12.6875%.

All principal and interest shall be due and payable on March 31, 1999.

1.   Subordination.

     (a)  Subordination to Senior  Indebtedness.  The indebtedness  evidenced by
this Note, and the payment of the principal hereof,  and any interest hereon, is
wholly  subordinated,  junior and subject in right of payment, to the extent and
in  the  manner  hereinafter  provided,  to the  prior  payment  of  all  Senior
Indebtedness  of the Company now  outstanding  or  hereinafter  incurred  but is
senior to the Company's 6-3/4% Convertible  Subordinated Notes due 2001. "Senior
Indebtedness"  means  all  principal,  premium  (if any),  interest  (including,
without  limitation,  interest  accruing on or after,  or which would accrue but
for, the filing of any petition in bankruptcy or for reorganization  relating to
the  Company,  whether or not a claim for  post-petition  interest is allowed in
such  proceeding),  bank fees and other amounts  (including  attorneys' fees and
other costs of  collection)  owed by the Company with respect to the Amended and
Restated  Credit  Agreement And Collateral  Release dated as of January 23, 1998
among the Company,  the Banks named therein,  Citibank,  N.A., as Administrative
Agent,  and Morgan  Guaranty Trust Company of New York, as  Documentation  Agent
(the "Credit  Agreement"),  as the Credit  Agreement  may be amended or extended
from time to time, and any related documents.

     (b) (b1) No  Payment  if  Default  in Senior  Indebtedness.  No  payment on
account of  principal  of or interest on this Note shall be made,  and this Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries),  if at the time of such payment or purchase or immediately
after giving effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default  (other  than a default  in the  payment of amounts  due  thereon)  with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is  outstanding,  permitting the holders thereof to accelerate the maturity
thereof,  and such event of default shall not have been cured or waived or shall
not have ceased to exist.

     (b2) No Payment if Loans Outstanding Under Senior Indebtedness.  Except for
payments permitted by Section 2 of this Note, no payment on account of principal
of or interest  on this Note shall be made,  and this Note shall not be redeemed
or purchased directly or indirectly by the Company (or any of its subsidiaries),
if at the time of such payment or purchase or  immediately  after giving  effect
thereto loans would be outstanding under the Credit Agreement.

         (c)   Payment upon Dissolution, Etc.

                  (i)In the event of any bankruptcy, insolvency, reorganization,
receivership,  composition, assignment for benefit of creditors or other similar
proceeding  initiated by or against the Company or any dissolution or winding up
or  total  or  partial  liquidation  or  reorganization  of the  Company  (being
hereinafter  referred  to as a  "Proceeding"),  all claims of the holder of this
Note with respect to this Note in such Proceeding shall be deemed assigned,  pro
rata,  to the  then  holders  of the  Senior  Indebtedness  on the  basis of the
respective  amounts of such Senior  Indebtedness  held by such  holder,  and the
holder of this Note hereby  agrees to execute all  documents  that such  holders
request in order to  evidence  such  assignment,  provided,  however,  that such
assignment  shall  terminate  upon receipt by such holders of payment in full of
all of the Senior  Indebtedness.  While such  assignment is in effect,  the then
holders of the Senior  Indebtedness  shall have the exclusive  right to exercise
all rights of the holder of this Note  arising from their claims with respect to
this Note in the Proceeding,  including but not limited to the right to vote for
a  trustee  and to  accept  or  reject  a  proposed  plan of  reorganization  or
composition,  and the holder of this Note hereby agrees to execute all documents
reasonably  requested by the then holders of the Senior Indebtedness in order to
exercise any such rights whether (at the sole discretion of such holders) in the
holder's  own  name  or in the  name of the  holder  of this  Note.  While  such
assignment is in effect, the holder of this Note also agrees that it shall, upon
request  of a holder of Senior  Indebtedness,  and at its own  expense  take all
reasonable  actions  (including  but not limited to the  execution and filing of
documents  and the giving of  testimony in any  Proceeding,  whether or not such
testimony  could have been  compelled  by process)  necessary  to prove the full
amount of all its  claims in any  Proceeding,  and the holder of this Note shall
not  expressly,  by implication or by inaction waive any claim in any Proceeding
with respect to this Note without the written consent of such holder.

                  (ii)Upon  payment or distribution to creditors in a Proceeding
of assets of the Company of any kind or character,  whether in cash, property or
securities,  all principal and interest due upon any Senior  Indebtedness  shall
first be paid in full, or payment  thereof in full duly provided for, before the
holder of this Note shall be entitled to receive or, if received,  to retain any
payment or distribution  on account of this Note; and upon any such  Proceeding,
any payment or  distribution  of assets of the Company of any kind or character,
whether in cash, property or securities,  to which the holder of this Note would
be entitled  except for the  provisions  of this  Section 1 shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other person making such payment or distribution,  or by the holder of this Note
who shall have received such payment or distribution, directly to the holders of
the  Senior  Indebtedness  (pro  rata to each  such  holder  on the basis of the
respective  amounts of such Senior  Indebtedness  held by such  holder) or their
representatives  to the extent necessary to pay all such Senior  Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness,  before any payment or distribution is made
to the holder of this Note. In the event of any  Proceeding,  the holder of this
Notes shall be entitled to be paid one hundred  percent  (100%) of the principal
amount thereof and accrued  interest  thereon before any  distribution of assets
shall be made among the holders of any class of shares of the  capital  stock of
the Company in their capacities as holders of such shares.

                  (iii)For purposes of this Section 1(c), the words "assets" and
"cash,  property or securities"  shall not be deemed to include shares of Common
Stock of the Company as reorganized or readjusted,  or securities of the Company
or any other person provided for by a plan of  reorganization  or  readjustment,
the  payment of which is  subordinated  at least to the extent  provided in this
Section 1 with  respect to this Note to the  payment of all Senior  Indebtedness
which may at the time be outstanding,  if (x) the Senior Indebtedness is assumed
by  the  new  person,  if  any,  resulting  from  any  such   reorganization  or
readjustment,  and (y) the rights of the holders of Senior Indebtedness are not,
without  the  consent  of  such  holders,  altered  by  such  reorganization  or
readjustment.

     (d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
holder of this Note shall be  subrogated  to the rights of the holders of Senior
Indebtedness to receive  payments or  distributions of the assets of the Company
made on such Senior  Indebtedness  until all principal and interest on this Note
shall be paid in full;  and for  purposes  of such  subrogation,  no payments or
distributions  to the holders of Senior  Indebtedness  of any cash,  property or
securities  to which any  holder of this Note would be  entitled  except for the
subordination  provisions of this Section 1 shall, as between the holder of this
Note and the Company  and/or its creditors  other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.

     (e) Rights of Holders Unimpaired.  The provisions of this Section 1 are and
are intended  solely for the  purposes of defining  the  relative  rights of the
holder of this Note and the holders of Senior  Indebtedness  and nothing in this
Section 1 shall impair,  as between the Company and the holder of this Note, the
obligation of the Company,  which is unconditional  and absolute,  to pay to the
holder of this Note the principal  thereof and interest  thereon,  in accordance
with the terms of this Note,  nor shall  anything  herein  prevent the holder of
this Note from exercising all remedies otherwise  permitted by applicable law or
hereunder  upon  default,  subject to the  rights set forth  above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holder of this Note.

     (f) Payments on  Subordinated  Notes.  Subject to Section 1(c), the Company
may make  payments  of the  principal  of, and any  interest or premium on, this
Note, if at the time of payment,  and  immediately  after giving effect thereto,
(i)  there  exists  no  default  in any  payment  with  respect  to  any  Senior
Indebtedness  and (ii) there shall not have occurred an event of default  (other
than a default in the payment of amounts due thereon) with respect to any Senior
Indebtedness,  as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, other than an
event of default  which  shall have been cured or waived or shall have ceased to
exist.

2.  Repayment  and  Prepayment  of  Principal.   Subject  to  the  subordination
provisions of Sections 1(a),  1(b1) and 1(c) (but, for purposes of clarity,  not
Section 1(b2)) and the following  sentence,  all amounts due under this Note may
be prepaid in whole or in part,  without the prior written consent of the holder
of this  Note.  This Note may not be  repaid  at any time  that  there are loans
outstanding  under the  Credit  Agreement  or prepaid  at any time  without  the
written consent of the holders of Senior  Indebtedness  unless such repayment or
prepayment  is made  solely  out of the  proceeds  from the  issuance  of equity
interests  in  the  Company  or  notes   containing   subordination   provisions
subordinating  the  notes to the  Senior  Indebtedness  at  least to the  extent
provided  in Section 1 (other than  Section  1(b2)).  Notwithstanding  any other
provision  hereof,  the  Company  shall  repay or prepay to the holder  promptly
following the  expiration of the tender offer to be conducted by the Company for
shares of Nomai S.A. any amount not used to acquire  shares of capital  stock of
Nomai S.A. in such tender offer.]

3.  Default.  Subject to the  subordination  provisions of Section 1, the entire
unpaid  principal of this Note and the interest  then accrued on this Note shall
become and be  immediately  due and payable upon written demand of the holder of
this Note,  without any other notice or demand of any kind or any presentment or
protest,  and the holder shall have all of the rights and  remedies  afforded by
applicable law, if any one of the following events shall occur and be continuing
at the time of such demand,  whether  voluntarily or involuntarily,  or, without
limitation,  occurring or brought about by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any governmental body:

     (a) If default  shall be made in the  payment of  principal  or interest on
this Note, and such default shall remain unremedied for thirty (30) days; or

     (b) If the Company (i) makes a composition or an assignment for the benefit
of creditors or trust mortgage,  (ii) applies for,  consents to,  acquiesces in,
files a petition  seeking  or admits  (by  answer,  default  or  otherwise)  the
material allegations of a petition filed against it seeking the appointment of a
trustee, receiver or liquidator, in bankruptcy or otherwise, of itself or of all
or a substantial  portion of its assets, or a  reorganization,  arrangement with
creditors  or other  remedy,  relief or  adjudication  available to or against a
bankrupt,  insolvent or debtor under any bankruptcy or insolvency law or any law
affecting  the rights of  creditors  generally,  or (iii)  admits in writing its
inability to pay its debts generally as they become due; or

     (c) If the Company  shall not have granted to the holder hereof a valid and
enforceable  security  interest in all of the  Company's  now owned or hereafter
acquired material intellectual property and a perfected security interest in the
Company's  issued and pending United States  patents,  United States  registered
trademarks and intellectual  property  constituting  general intangibles (within
the meaning of the  Uniform  Commercial  Code,  as adopted in the State of Utah)
which is deemed located in the United States, which is junior and subordinate to
a security  interest in the same  property in favor of the holders of the Senior
Indebtedness  within  the  earlier  of  forty-five  (45) days from the date that
written demand for the security interest described herein is made in writing and
ten (10) days of the granting and  perfecting  of a security  interest in any of
the  property  described  herein to secure  payment of amounts  owing  under the
Credit Agreement; or

     (d) If the indebtedness represented by the Credit Agreement becomes due and
payable prior to the stated maturity thereof; or

     (e) If an order for relief shall have been entered by a bankruptcy court or
if a decree,  order or judgment  shall have been entered  adjudging  the Company
insolvent,  or  appointing  a receiver,  liquidator,  custodian  or trustee,  in
bankruptcy  or  otherwise,  for it or for all or a  substantial  portion  of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief,  decree,  order
or judgment  shall  remain  undischarged  or unstayed for a period of sixty (60)
days; or if any  substantial  part of the property of the Company is sequestered
or attached and shall not be returned to the  possession  of the Company or such
subsidiary or released from such attachment within sixty (60) days.

4.   General.

     (a) Successors and Assigns.  This Note, and the  obligations  and rights of
the  Company  hereunder,  shall be binding  upon and inure to the benefit of the
Company,  the holder of this Note, and their  respective  heirs,  successors and
assigns;  provided  however,  that the  original  holder of this Note  shall not
transfer or assign any  interest  herein to any other  person or entity prior to
the  time,  if  any,  that  a  default  has  occurred   hereunder,   except  for
distributions by the holder to its partners or by its partners to their estates,
heirs or partners.

     (b) Recourse.  Recourse  under this Note shall be to the general  unsecured
assets  of the  Company  only  and in no  event to the  officers,  directors  or
stockholders of the Company.

     (c) Changes. Changes in or additions to this Note may be made or compliance
with any term, covenant, agreement,  condition or provision set forth herein may
be omitted or waived  (either  generally or in a particular  instance and either
retroactively  or  prospectively),  upon written  consent of the Company and the
holder of this Note.

     (d)  Currency.  All payments  shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.

     (e)  Set-off.  All  payments by the  Company  under this Note shall be made
without set-off or counterclaim  and be free and clear and without any deduction
or  withholding  for any  taxes  or  fees of any  nature  whatever,  unless  the
obligation to make such deduction or withholding is imposed by law.

     (f) Costs of  Collection.  The Company agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, incurred by the holder of this
Note in enforcing the obligations of the Company under this Note.

     (g) Waivers. No delay or omission on the part of the holder of this Note in
exercising  any right under this Note shall operate as a waiver of such right or
of any other right of such  holder,  nor shall any delay,  omission or waiver on
any one  occasion be deemed a bar to or waiver of the same or any other right on
any future occasion.

     (h) Notices. All notices,  requests,  consents and demands shall be made in
writing  and shall be mailed  postage  prepaid,  or  delivered  by hand,  to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:

                  If to the holder:

                  Idanta Partners
                  4660 La Jolla Village Drive
                  San Diego, CA 92122
                  Attention: Controller

                  If to the Company:

                  Iomega Corporation
                  1821 West Iomega Way
                  Roy, UT 84067
                  Attention: General Counsel

     (i)  Saturdays,  Sundays,  Holidays.  If any  date  that may at any time be
specified  in this Note as a date for the making of any payment of  principal or
interest  under this Note shall  fall on  Saturday,  Sunday or on a day which in
Roy, Utah shall be a legal holiday, then the date for the making of that payment
shall be the  next  subsequent  day  which is not a  Saturday,  Sunday  or legal
holiday.  

<PAGE>
     (j) Governing  Law. This Note shall be construed and enforced in accordance
with,  and the rights of the parties shall be governed by, the laws of the State
of Delaware.


         IN WITNESS  WHEREOF,  this Note has been  executed  and  delivered as a
sealed  instrument  on the date  first  above  written  by the  duly  authorized
representative of the Company.

                                               IOMEGA CORPORATION


                                                           
                                                By:/s/ Robert J. Simmons
                                                   Robert J. Simmons
                                                   Vice President and Treasurer

        /s/ Laurie B. Keating
ATTEST:________________________
                  Secretary




<PAGE>


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO
REGISTERED OR AN EXEMPTIONFROM REGISTRATION UNDER SAID ACT IS
AVAILABLE.



                               IOMEGA CORPORATION

                       Senior Subordinated Promissory Note


$7,500,000                                                            Roy, Utah
                                                                   July 8, 1998


                              ---------------------

         Iomega Corporation,  a Delaware corporation (the "Company"),  for value
received,  hereby promises to pay to Idanta Partners,  or assigns, the principal
sum of $7,500,000 (Seven Million Five Hundred Thousand  Dollars),  together with
interest  (computed on the basis of a 365-day  year) from the date hereof on the
unpaid  balance of such  principal  amount from time to time  outstanding at the
following rates:

         a.       from the date hereof  through  September 30, 1998, the greater
                  of (i) the  weighted-average  interest  rate charged under the
                  Credit  Agreement (as defined  below) at the beginning of such
                  period plus 2% per annum and (ii) 8.6875%;

         b.       from October 1, 1998 through December 31, 1998, the greater of
                  (i) the  weighted-average  interest  rate  charged  under  the
                  Credit  Agreement at the  beginning of such period plus 2% per
                  annum and (ii) 10.6875%; and

         c.       from January 1, 1999 until paid in full the greater of (i) the
                  weighted-average   interest  rate  charged  under  the  Credit
                  Agreement  at the  beginning  of such period plus 2% per annum
                  and (ii) 12.6875%.

All principal and interest shall be due and payable on March 31, 1999.

1.     Subordination.

     (a)  Subordination to Senior  Indebtedness.  The indebtedness  evidenced by
this Note, and the payment of the principal hereof,  and any interest hereon, is
wholly  subordinated,  junior and subject in right of payment, to the extent and
in  the  manner  hereinafter  provided,  to the  prior  payment  of  all  Senior
Indebtedness  of the Company now  outstanding  or  hereinafter  incurred  but is
senior to the Company's 6-3/4% Convertible  Subordinated Notes due 2001. "Senior
Indebtedness"  means  all  principal,  premium  (if any),  interest  (including,
without  limitation,  interest  accruing on or after,  or which would accrue but
for, the filing of any petition in bankruptcy or for reorganization  relating to
the  Company,  whether or not a claim for  post-petition  interest is allowed in
such  proceeding),  bank fees and other amounts  (including  attorneys' fees and
other costs of  collection)  owed by the Company with respect to the Amended and
Restated  Credit  Agreement And Collateral  Release dated as of January 23, 1998
among the Company,  the Banks named therein,  Citibank,  N.A., as Administrative
Agent,  and Morgan  Guaranty Trust Company of New York, as  Documentation  Agent
(the "Credit  Agreement"),  as the Credit  Agreement  may be amended or extended
from time to time, and any related documents.

     (b) (b1) No  Payment  if  Default  in Senior  Indebtedness.  No  payment on
account of  principal  of or interest on this Note shall be made,  and this Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries),  if at the time of such payment or purchase or immediately
after giving effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default  (other  than a default  in the  payment of amounts  due  thereon)  with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is  outstanding,  permitting the holders thereof to accelerate the maturity
thereof,  and such event of default shall not have been cured or waived or shall
not have ceased to exist.

     (b2) No Payment if Loans Outstanding Under Senior Indebtedness.  Except for
payments permitted by Section 2 of this Note, no payment on account of principal
of or interest  on this Note shall be made,  and this Note shall not be redeemed
or purchased directly or indirectly by the Company (or any of its subsidiaries),
if at the time of such payment or purchase or  immediately  after giving  effect
thereto loans would be outstanding under the Credit Agreement.

     (c) Payment upon Dissolution, Etc.

     (i)In   the   event   of  any   bankruptcy,   insolvency,   reorganization,
receivership,  composition, assignment for benefit of creditors or other similar
proceeding  initiated by or against the Company or any dissolution or winding up
or  total  or  partial  liquidation  or  reorganization  of the  Company  (being
hereinafter  referred  to as a  "Proceeding"),  all claims of the holder of this
Note with respect to this Note in such Proceeding shall be deemed assigned,  pro
rata,  to the  then  holders  of the  Senior  Indebtedness  on the  basis of the
respective  amounts of such Senior  Indebtedness  held by such  holder,  and the
holder of this Note hereby  agrees to execute all  documents  that such  holders
request in order to  evidence  such  assignment,  provided,  however,  that such
assignment  shall  terminate  upon receipt by such holders of payment in full of
all of the Senior  Indebtedness.  While such  assignment is in effect,  the then
holders of the Senior  Indebtedness  shall have the exclusive  right to exercise
all rights of the holder of this Note  arising from their claims with respect to
this Note in the Proceeding,  including but not limited to the right to vote for
a  trustee  and to  accept  or  reject  a  proposed  plan of  reorganization  or
composition,  and the holder of this Note hereby agrees to execute all documents
reasonably  requested by the then holders of the Senior Indebtedness in order to
exercise any such rights whether (at the sole discretion of such holders) in the
holder's  own  name  or in the  name of the  holder  of this  Note.  While  such
assignment is in effect, the holder of this Note also agrees that it shall, upon
request  of a holder of Senior  Indebtedness,  and at its own  expense  take all
reasonable  actions  (including  but not limited to the  execution and filing of
documents  and the giving of  testimony in any  Proceeding,  whether or not such
testimony  could have been  compelled  by process)  necessary  to prove the full
amount of all its  claims in any  Proceeding,  and the holder of this Note shall
not  expressly,  by implication or by inaction waive any claim in any Proceeding
with respect to this Note without the written consent of such holder.

     (ii)Upon  payment or distribution to creditors in a Proceeding of assets of
the Company of any kind or character,  whether in cash,  property or securities,
all principal and interest due upon any Senior  Indebtedness shall first be paid
in full, or payment thereof in full duly provided for, before the holder of this
Note shall be  entitled  to receive  or, if  received,  to retain any payment or
distribution on account of this Note; and upon any such Proceeding,  any payment
or  distribution  of assets of the Company of any kind or character,  whether in
cash, property or securities, to which the holder of this Note would be entitled
except for the  provisions  of this Section 1 shall be paid by the Company or by
any receiver, trustee in bankruptcy,  liquidating trustee, agent or other person
making  such  payment or  distribution,  or by the holder of this Note who shall
have  received  such  payment or  distribution,  directly  to the holders of the
Senior Indebtedness (pro rata to each such holder on the basis of the respective
amounts   of  such   Senior   Indebtedness   held  by  such   holder)  or  their
representatives  to the extent necessary to pay all such Senior  Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness,  before any payment or distribution is made
to the holder of this Note. In the event of any  Proceeding,  the holder of this
Notes shall be entitled to be paid one hundred  percent  (100%) of the principal
amount thereof and accrued  interest  thereon before any  distribution of assets
shall be made among the holders of any class of shares of the  capital  stock of
the Company in their capacities as holders of such shares.

     (iii) For  purposes of this  Section  1(c),  the words  "assets" and "cash,
property or securities" shall not be deemed to include shares of Common Stock of
the Company as reorganized  or  readjusted,  or securities of the Company or any
other  person  provided for by a plan of  reorganization  or  readjustment,  the
payment of which is subordinated at least to the extent provided in this Section
1 with respect to this Note to the payment of all Senior  Indebtedness which may
at the time be outstanding, if (x) the Senior Indebtedness is assumed by the new
person, if any, resulting from any such reorganization or readjustment,  and (y)
the rights of the holders of Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment.

     (d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
holder of this Note shall be  subrogated  to the rights of the holders of Senior
Indebtedness to receive  payments or  distributions of the assets of the Company
made on such Senior  Indebtedness  until all principal and interest on this Note
shall be paid in full;  and for  purposes  of such  subrogation,  no payments or
distributions  to the holders of Senior  Indebtedness  of any cash,  property or
securities  to which any  holder of this Note would be  entitled  except for the
subordination  provisions of this Section 1 shall, as between the holder of this
Note and the Company  and/or its creditors  other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.

     (e) Rights of Holders Unimpaired.  The provisions of this Section 1 are and
are intended  solely for the  purposes of defining  the  relative  rights of the
holder of this Note and the holders of Senior  Indebtedness  and nothing in this
Section 1 shall impair,  as between the Company and the holder of this Note, the
obligation of the Company,  which is unconditional  and absolute,  to pay to the
holder of this Note the principal  thereof and interest  thereon,  in accordance
with the terms of this Note,  nor shall  anything  herein  prevent the holder of
this Note from exercising all remedies otherwise  permitted by applicable law or
hereunder  upon  default,  subject to the  rights set forth  above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holder of this Note.

     (f) Payments on  Subordinated  Notes.  Subject to Section 1(c), the Company
may make  payments  of the  principal  of, and any  interest or premium on, this
Note, if at the time of payment,  and  immediately  after giving effect thereto,
(i)  there  exists  no  default  in any  payment  with  respect  to  any  Senior
Indebtedness  and (ii) there shall not have occurred an event of default  (other
than a default in the payment of amounts due thereon) with respect to any Senior
Indebtedness,  as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, other than an
event of default  which  shall have been cured or waived or shall have ceased to
exist.

2.  Repayment  and  Prepayment  of  Principal.   Subject  to  the  subordination
provisions of Sections 1(a),  1(b1) and 1(c) (but, for purposes of clarity,  not
Section 1(b2)) and the following  sentence,  all amounts due under this Note may
be prepaid in whole or in part,  without the prior written consent of the holder
of this  Note.  This Note may not be  repaid  at any time  that  there are loans
outstanding  under the  Credit  Agreement  or prepaid  at any time  without  the
written consent of the holders of Senior  Indebtedness  unless such repayment or
prepayment  is made  solely  out of the  proceeds  from the  issuance  of equity
interests  in  the  Company  or  notes   containing   subordination   provisions
subordinating  the  notes to the  Senior  Indebtedness  at  least to the  extent
provided  in Section 1 (other than  Section  1(b2)).  Notwithstanding  any other
provision  hereof,  the  Company  shall  repay or prepay to the holder  promptly
following the  expiration of the tender offer to be conducted by the Company for
shares of Nomai S.A. any amount not used to acquire  shares of capital  stock of
Nomai S.A. in such tender offer.]

3.  Default.  Subject to the  subordination  provisions of Section 1, the entire
unpaid  principal of this Note and the interest  then accrued on this Note shall
become and be  immediately  due and payable upon written demand of the holder of
this Note,  without any other notice or demand of any kind or any presentment or
protest,  and the holder shall have all of the rights and  remedies  afforded by
applicable law, if any one of the following events shall occur and be continuing
at the time of such demand,  whether  voluntarily or involuntarily,  or, without
limitation,  occurring or brought about by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any governmental body:

     (a) If default  shall be made in the  payment of  principal  or interest on
this Note, and such default shall remain unremedied for thirty (30) days; or

     (b) If the Company (i) makes a composition or an assignment for the benefit
of creditors or trust mortgage,  (ii) applies for,  consents to,  acquiesces in,
files a petition  seeking  or admits  (by  answer,  default  or  otherwise)  the
material allegations of a petition filed against it seeking the appointment of a
trustee, receiver or liquidator, in bankruptcy or otherwise, of itself or of all
or a substantial  portion of its assets, or a  reorganization,  arrangement with
creditors  or other  remedy,  relief or  adjudication  available to or against a
bankrupt,  insolvent or debtor under any bankruptcy or insolvency law or any law
affecting  the rights of  creditors  generally,  or (iii)  admits in writing its
inability to pay its debts generally as they become due; or

     (c) If the Company  shall not have granted to the holder hereof a valid and
enforceable  security  interest in all of the  Company's  now owned or hereafter
acquired material intellectual property and a perfected security interest in the
Company's  issued and pending United States  patents,  United States  registered
trademarks and intellectual  property  constituting  general intangibles (within
the meaning of the  Uniform  Commercial  Code,  as adopted in the State of Utah)
which is deemed located in the United States, which is junior and subordinate to
a security  interest in the same  property in favor of the holders of the Senior
Indebtedness  within  the  earlier  of  forty-five  (45) days from the date that
written demand for the security interest described herein is made in writing and
ten (10) days of the granting and  perfecting  of a security  interest in any of
the  property  described  herein to secure  payment of amounts  owing  under the
Credit Agreement; or

     (d) If the indebtedness represented by the Credit Agreement becomes due and
payable prior to the stated maturity thereof; or

     (e) If an order for relief shall have been entered by a bankruptcy court or
if a decree,  order or judgment  shall have been entered  adjudging  the Company
insolvent,  or  appointing  a receiver,  liquidator,  custodian  or trustee,  in
bankruptcy  or  otherwise,  for it or for all or a  substantial  portion  of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief,  decree,  order
or judgment  shall  remain  undischarged  or unstayed for a period of sixty (60)
days; or if any  substantial  part of the property of the Company is sequestered
or attached and shall not be returned to the  possession  of the Company or such
subsidiary or released from such attachment within sixty (60) days.

4. General.

     (a) Successors and Assigns.  This Note, and the  obligations  and rights of
the  Company  hereunder,  shall be binding  upon and inure to the benefit of the
Company,  the holder of this Note, and their  respective  heirs,  successors and
assigns;  provided  however,  that the  original  holder of this Note  shall not
transfer or assign any  interest  herein to any other  person or entity prior to
the  time,  if  any,  that  a  default  has  occurred   hereunder,   except  for
distributions by the holder to its partners or by its partners to their estates,
heirs or partners.

     (b) Recourse.  Recourse  under this Note shall be to the general  unsecured
assets  of the  Company  only  and in no  event to the  officers,  directors  or
stockholders of the Company.

     (c) Changes. Changes in or additions to this Note may be made or compliance
with any term, covenant, agreement,  condition or provision set forth herein may
be omitted or waived  (either  generally or in a particular  instance and either
retroactively  or  prospectively),  upon written  consent of the Company and the
holder of this Note.

     (d)  Currency.  All payments  shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.

     (e)  Set-off.  All  payments by the  Company  under this Note shall be made
without set-off or counterclaim  and be free and clear and without any deduction
or  withholding  for any  taxes  or  fees of any  nature  whatever,  unless  the
obligation to make such deduction or withholding is imposed by law.

     (f) Costs of  Collection.  The Company agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, incurred by the holder of this
Note in enforcing the obligations of the Company under this Note.

     (g) Waivers. No delay or omission on the part of the holder of this Note in
exercising  any right under this Note shall operate as a waiver of such right or
of any other right of such  holder,  nor shall any delay,  omission or waiver on
any one  occasion be deemed a bar to or waiver of the same or any other right on
any future occasion.

     (h) Notices. All notices,  requests,  consents and demands shall be made in
writing  and shall be mailed  postage  prepaid,  or  delivered  by hand,  to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:

                  If to the holder:

                  Idanta Partners
                  4660 La Jolla Village Drive
                  San Diego, CA 92122
                  Attention: Controller

                  If to the Company:

                  Iomega Corporation
                  1821 West Iomega Way
                  Roy, UT 84067
                  Attention: General Counsel

     (i)  Saturdays,  Sundays,  Holidays.  If any  date  that may at any time be
specified  in this Note as a date for the making of any payment of  principal or
interest  under this Note shall  fall on  Saturday,  Sunday or on a day which in
Roy, Utah shall be a legal holiday, then the date for the making of that payment
shall be the  next  subsequent  day  which is not a  Saturday,  Sunday  or legal
holiday.  

     (j) Governing  Law. This Note shall be construed and enforced in accordance
with,  and the rights of the parties shall be governed by, the laws of the State
of Delaware.
<PAGE>

         IN WITNESS  WHEREOF,  this Note has been  executed  and  delivered as a
sealed  instrument  on the date  first  above  written  by the  duly  authorized
representative of the Company.

                                                     IOMEGA CORPORATION

                                                                 
                                     
                                                 By:/s/ Robert J. Simmons
                                                    Robert J. Simmons
                                                    Vice President and Treasurer

          
ATTEST:  /s/ Laurie B. Keating
         Secretary



<PAGE>


 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO
REGISTERED OR AN EXEMPTIONFROM REGISTRATION UNDER SAID ACT IS
AVAILABLE.



                               IOMEGA CORPORATION

                       Senior Subordinated Promissory Note


$12,500,000                                                          Roy, Utah
                                                                  July 8, 1998


                              ---------------------

         Iomega Corporation,  a Delaware corporation (the "Company"),  for value
received,  hereby promises to pay to Idanta Partners,  or assigns, the principal
sum of $12,500,000 (Twelve Million Five Hundred Thousand Dollars), together with
interest  (computed on the basis of a 365-day  year) from the date hereof on the
unpaid  balance of such  principal  amount from time to time  outstanding at the
following rates:

        a.       from the date hereof  through  September 30, 1998, the greater
                  of (i) the  weighted-average  interest  rate charged under the
                  Credit  Agreement (as defined  below) at the beginning of such
                  period plus 2% per annum and (ii) 8.6875%;

         b.       from October 1, 1998 through December 31, 1998, the greater of
                  (i) the  weighted-average  interest  rate  charged  under  the
                  Credit  Agreement at the  beginning of such period plus 2% per
                  annum and (ii) 10.6875%; and

         c.       from January 1, 1999 until paid in full the greater of (i) the
                  weighted-average   interest  rate  charged  under  the  Credit
                  Agreement  at the  beginning  of such period plus 2% per annum
                  and (ii) 12.6875%.

All principal and interest shall be due and payable on March 31, 1999.

1.     Subordination.

     (a)  Subordination to Senior  Indebtedness.  The indebtedness  evidenced by
this Note, and the payment of the principal hereof,  and any interest hereon, is
wholly  subordinated,  junior and subject in right of payment, to the extent and
in  the  manner  hereinafter  provided,  to the  prior  payment  of  all  Senior
Indebtedness  of the Company now  outstanding  or  hereinafter  incurred  but is
senior to the Company's 6-3/4% Convertible  Subordinated Notes due 2001. "Senior
Indebtedness"  means  all  principal,  premium  (if any),  interest  (including,
without  limitation,  interest  accruing on or after,  or which would accrue but
for, the filing of any petition in bankruptcy or for reorganization  relating to
the  Company,  whether or not a claim for  post-petition  interest is allowed in
such  proceeding),  bank fees and other amounts  (including  attorneys' fees and
other costs of  collection)  owed by the Company with respect to the Amended and
Restated  Credit  Agreement And Collateral  Release dated as of January 23, 1998
among the Company,  the Banks named therein,  Citibank,  N.A., as Administrative
Agent,  and Morgan  Guaranty Trust Company of New York, as  Documentation  Agent
(the "Credit  Agreement"),  as the Credit  Agreement  may be amended or extended
from time to time, and any related documents.

     (b) (b1) No  Payment  if  Default  in Senior  Indebtedness.  No  payment on
account of  principal  of or interest on this Note shall be made,  and this Note
shall not be redeemed or purchased directly or indirectly by the Company (or any
of its subsidiaries),  if at the time of such payment or purchase or immediately
after giving effect thereto, (i) there shall exist a default in any payment with
respect to any Senior Indebtedness or (ii) there shall have occurred an event of
default  (other  than a default  in the  payment of amounts  due  thereon)  with
respect to any Senior Indebtedness, as defined in the instrument under which the
same is  outstanding,  permitting the holders thereof to accelerate the maturity
thereof,  and such event of default shall not have been cured or waived or shall
not have ceased to exist.

     (b2) No Payment if Loans Outstanding Under Senior Indebtedness.  Except for
payments permitted by Section 2 of this Note, no payment on account of principal
of or interest  on this Note shall be made,  and this Note shall not be redeemed
or purchased directly or indirectly by the Company (or any of its subsidiaries),
if at the time of such payment or purchase or  immediately  after giving  effect
thereto loans would be outstanding under the Credit Agreement.

     (c) Payment upon Dissolution, Etc.

     (i)In   the   event   of  any   bankruptcy,   insolvency,   reorganization,
receivership,  composition, assignment for benefit of creditors or other similar
proceeding  initiated by or against the Company or any dissolution or winding up
or  total  or  partial  liquidation  or  reorganization  of the  Company  (being
hereinafter  referred  to as a  "Proceeding"),  all claims of the holder of this
Note with respect to this Note in such Proceeding shall be deemed assigned,  pro
rata,  to the  then  holders  of the  Senior  Indebtedness  on the  basis of the
respective  amounts of such Senior  Indebtedness  held by such  holder,  and the
holder of this Note hereby  agrees to execute all  documents  that such  holders
request in order to  evidence  such  assignment,  provided,  however,  that such
assignment  shall  terminate  upon receipt by such holders of payment in full of
all of the Senior  Indebtedness.  While such  assignment is in effect,  the then
holders of the Senior  Indebtedness  shall have the exclusive  right to exercise
all rights of the holder of this Note  arising from their claims with respect to
this Note in the Proceeding,  including but not limited to the right to vote for
a  trustee  and to  accept  or  reject  a  proposed  plan of  reorganization  or
composition,  and the holder of this Note hereby agrees to execute all documents
reasonably  requested by the then holders of the Senior Indebtedness in order to
exercise any such rights whether (at the sole discretion of such holders) in the
holder's  own  name  or in the  name of the  holder  of this  Note.  While  such
assignment is in effect, the holder of this Note also agrees that it shall, upon
request  of a holder of Senior  Indebtedness,  and at its own  expense  take all
reasonable  actions  (including  but not limited to the  execution and filing of
documents  and the giving of  testimony in any  Proceeding,  whether or not such
testimony  could have been  compelled  by process)  necessary  to prove the full
amount of all its  claims in any  Proceeding,  and the holder of this Note shall
not  expressly,  by implication or by inaction waive any claim in any Proceeding
with respect to this Note without the written consent of such holder.

     (ii)Upon  payment or distribution to creditors in a Proceeding of assets of
the Company of any kind or character,  whether in cash,  property or securities,
all principal and interest due upon any Senior  Indebtedness shall first be paid
in full, or payment thereof in full duly provided for, before the holder of this
Note shall be  entitled  to receive  or, if  received,  to retain any payment or
distribution on account of this Note; and upon any such Proceeding,  any payment
or  distribution  of assets of the Company of any kind or character,  whether in
cash, property or securities, to which the holder of this Note would be entitled
except for the  provisions  of this Section 1 shall be paid by the Company or by
any receiver, trustee in bankruptcy,  liquidating trustee, agent or other person
making  such  payment or  distribution,  or by the holder of this Note who shall
have  received  such  payment or  distribution,  directly  to the holders of the
Senior Indebtedness (pro rata to each such holder on the basis of the respective
amounts   of  such   Senior   Indebtedness   held  by  such   holder)  or  their
representatives  to the extent necessary to pay all such Senior  Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness,  before any payment or distribution is made
to the holder of this Note. In the event of any  Proceeding,  the holder of this
Notes shall be entitled to be paid one hundred  percent  (100%) of the principal
amount thereof and accrued  interest  thereon before any  distribution of assets
shall be made among the holders of any class of shares of the  capital  stock of
the Company in their capacities as holders of such shares.

     (iii) For  purposes of this  Section  1(c),  the words  "assets" and "cash,
property or securities" shall not be deemed to include shares of Common Stock of
the Company as reorganized  or  readjusted,  or securities of the Company or any
other  person  provided for by a plan of  reorganization  or  readjustment,  the
payment of which is subordinated at least to the extent provided in this Section
1 with respect to this Note to the payment of all Senior  Indebtedness which may
at the time be outstanding, if (x) the Senior Indebtedness is assumed by the new
person, if any, resulting from any such reorganization or readjustment,  and (y)
the rights of the holders of Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment.

     (d) Subrogation. Subject to payment in full of all Senior Indebtedness, the
holder of this Note shall be  subrogated  to the rights of the holders of Senior
Indebtedness to receive  payments or  distributions of the assets of the Company
made on such Senior  Indebtedness  until all principal and interest on this Note
shall be paid in full;  and for  purposes  of such  subrogation,  no payments or
distributions  to the holders of Senior  Indebtedness  of any cash,  property or
securities  to which any  holder of this Note would be  entitled  except for the
subordination  provisions of this Section 1 shall, as between the holder of this
Note and the Company  and/or its creditors  other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.

     (e) Rights of Holders Unimpaired.  The provisions of this Section 1 are and
are intended  solely for the  purposes of defining  the  relative  rights of the
holder of this Note and the holders of Senior  Indebtedness  and nothing in this
Section 1 shall impair,  as between the Company and the holder of this Note, the
obligation of the Company,  which is unconditional  and absolute,  to pay to the
holder of this Note the principal  thereof and interest  thereon,  in accordance
with the terms of this Note,  nor shall  anything  herein  prevent the holder of
this Note from exercising all remedies otherwise  permitted by applicable law or
hereunder  upon  default,  subject to the  rights set forth  above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holder of this Note.

     (f) Payments on  Subordinated  Notes.  Subject to Section 1(c), the Company
may make  payments  of the  principal  of, and any  interest or premium on, this
Note, if at the time of payment,  and  immediately  after giving effect thereto,
(i)  there  exists  no  default  in any  payment  with  respect  to  any  Senior
Indebtedness  and (ii) there shall not have occurred an event of default  (other
than a default in the payment of amounts due thereon) with respect to any Senior
Indebtedness,  as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, other than an
event of default  which  shall have been cured or waived or shall have ceased to
exist.

2.  Repayment  and  Prepayment  of  Principal.   Subject  to  the  subordination
provisions of Sections 1(a),  1(b1) and 1(c) (but, for purposes of clarity,  not
Section 1(b2)) and the following  sentence,  all amounts due under this Note may
be prepaid in whole or in part,  without the prior written consent of the holder
of this  Note.  This Note may not be  repaid  at any time  that  there are loans
outstanding  under the  Credit  Agreement  or prepaid  at any time  without  the
written consent of the holders of Senior  Indebtedness  unless such repayment or
prepayment  is made  solely  out of the  proceeds  from the  issuance  of equity
interests  in  the  Company  or  notes   containing   subordination   provisions
subordinating  the  notes to the  Senior  Indebtedness  at  least to the  extent
provided  in Section 1 (other than  Section  1(b2)).  Notwithstanding  any other
provision  hereof,  the  Company  shall  repay or prepay to the holder  promptly
following the  expiration of the tender offer to be conducted by the Company for
shares of Nomai S.A. any amount not used to acquire  shares of capital  stock of
Nomai S.A. in such tender offer.]

3.  Default.  Subject to the  subordination  provisions of Section 1, the entire
unpaid  principal of this Note and the interest  then accrued on this Note shall
become and be  immediately  due and payable upon written demand of the holder of
this Note,  without any other notice or demand of any kind or any presentment or
protest,  and the holder shall have all of the rights and  remedies  afforded by
applicable law, if any one of the following events shall occur and be continuing
at the time of such demand,  whether  voluntarily or involuntarily,  or, without
limitation,  occurring or brought about by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any governmental body:

     (a) If default  shall be made in the  payment of  principal  or interest on
this Note, and such default shall remain unremedied for thirty (30) days; or

     (b) If the Company (i) makes a composition or an assignment for the benefit
of creditors or trust mortgage,  (ii) applies for,  consents to,  acquiesces in,
files a petition  seeking  or admits  (by  answer,  default  or  otherwise)  the
material allegations of a petition filed against it seeking the appointment of a
trustee, receiver or liquidator, in bankruptcy or otherwise, of itself or of all
or a substantial  portion of its assets, or a  reorganization,  arrangement with
creditors  or other  remedy,  relief or  adjudication  available to or against a
bankrupt,  insolvent or debtor under any bankruptcy or insolvency law or any law
affecting  the rights of  creditors  generally,  or (iii)  admits in writing its
inability to pay its debts generally as they become due; or

     (c) If the Company  shall not have granted to the holder hereof a valid and
enforceable  security  interest in all of the  Company's  now owned or hereafter
acquired material intellectual property and a perfected security interest in the
Company's  issued and pending United States  patents,  United States  registered
trademarks and intellectual  property  constituting  general intangibles (within
the meaning of the  Uniform  Commercial  Code,  as adopted in the State of Utah)
which is deemed located in the United States, which is junior and subordinate to
a security  interest in the same  property in favor of the holders of the Senior
Indebtedness  within  the  earlier  of  forty-five  (45) days from the date that
written demand for the security interest described herein is made in writing and
ten (10) days of the granting and  perfecting  of a security  interest in any of
the  property  described  herein to secure  payment of amounts  owing  under the
Credit Agreement; or

     (d) If the indebtedness represented by the Credit Agreement becomes due and
payable prior to the stated maturity thereof; or

     (e) If an order for relief shall have been entered by a bankruptcy court or
if a decree,  order or judgment  shall have been entered  adjudging  the Company
insolvent,  or  appointing  a receiver,  liquidator,  custodian  or trustee,  in
bankruptcy  or  otherwise,  for it or for all or a  substantial  portion  of its
assets, or approving the winding-up or liquidation of its affairs on the grounds
of insolvency or nonpayment of debts, and such order for relief,  decree,  order
or judgment  shall  remain  undischarged  or unstayed for a period of sixty (60)
days; or if any  substantial  part of the property of the Company is sequestered
or attached and shall not be returned to the  possession  of the Company or such
subsidiary or released from such attachment within sixty (60) days.

4. General.

     (a) Successors and Assigns.  This Note, and the  obligations  and rights of
the  Company  hereunder,  shall be binding  upon and inure to the benefit of the
Company,  the holder of this Note, and their  respective  heirs,  successors and
assigns;  provided  however,  that the  original  holder of this Note  shall not
transfer or assign any  interest  herein to any other  person or entity prior to
the  time,  if  any,  that  a  default  has  occurred   hereunder,   except  for
distributions by the holder to its partners or by its partners to their estates,
heirs or partners.

     (b) Recourse.  Recourse  under this Note shall be to the general  unsecured
assets  of the  Company  only  and in no  event to the  officers,  directors  or
stockholders of the Company.

     (c) Changes. Changes in or additions to this Note may be made or compliance
with any term, covenant, agreement,  condition or provision set forth herein may
be omitted or waived  (either  generally or in a particular  instance and either
retroactively  or  prospectively),  upon written  consent of the Company and the
holder of this Note.

     (d)  Currency.  All payments  shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.

     (e)  Set-off.  All  payments by the  Company  under this Note shall be made
without set-off or counterclaim  and be free and clear and without any deduction
or  withholding  for any  taxes  or  fees of any  nature  whatever,  unless  the
obligation to make such deduction or withholding is imposed by law.

     (f) Costs of  Collection.  The Company agrees to pay on demand all costs of
collection, including reasonable attorneys' fees, incurred by the holder of this
Note in enforcing the obligations of the Company under this Note.

     (g) Waivers. No delay or omission on the part of the holder of this Note in
exercising  any right under this Note shall operate as a waiver of such right or
of any other right of such  holder,  nor shall any delay,  omission or waiver on
any one  occasion be deemed a bar to or waiver of the same or any other right on
any future occasion.

     (h) Notices. All notices,  requests,  consents and demands shall be made in
writing  and shall be mailed  postage  prepaid,  or  delivered  by hand,  to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:

                  If to the holder:

                  Idanta Partners
                  4660 La Jolla Village Drive
                  San Diego, CA 92122
                  Attention: Controller

                  If to the Company:

                  Iomega Corporation
                  1821 West Iomega Way
                  Roy, UT 84067
                  Attention: General Counsel

     (i)  Saturdays,  Sundays,  Holidays.  If any  date  that may at any time be
specified  in this Note as a date for the making of any payment of  principal or
interest  under this Note shall  fall on  Saturday,  Sunday or on a day which in
Roy, Utah shall be a legal holiday, then the date for the making of that payment
shall be the  next  subsequent  day  which is not a  Saturday,  Sunday  or legal
holiday.  

     (j) Governing  Law. This Note shall be construed and enforced in accordance
with,  and the rights of the parties shall be governed by, the laws of the State
of Delaware.
<PAGE>

         IN WITNESS  WHEREOF,  this Note has been  executed  and  delivered as a
sealed  instrument  on the date  first  above  written  by the  duly  authorized
representative of the Company.

                                                     IOMEGA CORPORATION

                                                                 
                                     
                                                 By:/s/ Robert J. Simmons
                                                    Robert J. Simmons
                                                    Vice President and Treasurer

          
ATTEST:  /s/ Laurie B. Keating
         Secretary



<PAGE>
--------
         * Amount should combine  principal  together with accrued  interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than  as a fixed  sum.  If this  Agreement  is  prepared  in  connection  with a
substitution  pursuant  to Section  8.06 of the Credit  Agreement,  amount  must
combine principal, accrued interest and fees and breakage compensation,  if any,
and  the  administrative  fee  referred  to in  Section  9.06(c)  of the  Credit
Agreement must be paid to the Administrative Agent.

     1Changes  in  identity  or  corporate   structure  would  include  mergers,
consolidations  and  acquisitions,  as well as any change in the form, nature or
jurisdiction of corporate organization. If any such change has occurred, include
in  Schedule  1 the  information  required  by  paragraphs  1,  2 and 3 of  this
certificate  as  to  each  acquiree  or   constituent   party  to  a  merger  or
consolidation.

     2Indicate lapse date, if other than fifth anniversary.