<PAGE>
 
                                                                   EXHIBIT 10.16

                                PROMISSORY NOTE
                                  (BASE RATE)

================================================================================
Borrower Name   ATL PRODUCTS, INC.
--------------------------------------------------------------------------------
Borrower Address         Office 45061    Loan Number  0535391204   0080-00-0-000
2801 KELVIN AVENUE      
IRVINE, CA 92614-5872   
--------------------------------------------------------------------------------
                         Maturity Date  JANUARY 31, 2000  Amount  $20,000,000.00
================================================================================


$20,000,000.00                                  Date  FEBRUARY 10, 1998
--------------                                        -----------------


FOR VALUE RECEIVED, on JANUARY 31, 2000, the undersigned ("Debtor") promises to
                       ----------------                                       
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below,
the principal sum of TWENTY MILLION AND NO/100 Dollars ($20,000,000.00), or so
                     -------------------------         ----------------       
much thereof as is disbursed, together with interest on the balance of such
principal from time to time outstanding, at the per annum rate or rates and at
the times set forth below.

1.   INTEREST PAYMENTS.  Debtor shall pay interest on the LAST day of each MONTH
                                                          ----             -----
     (commencing FEBRUARY 28, 1998). Should interest not be paid when due, it
                 -----------------  
     shall become part of the principal and bear interest as herein provided.
     All computations of interest under this note shall be made on the basis of
     a year of 360 days, for actual days elapsed.

     a.  BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder
         in minimum amounts of at least $100,000.00 shall bear interest at a
         rate, based on an index selected by Debtor, which is (i) 1.50% per
         annum in excess of Bank's LIBOR-Rate for the Interest Period selected
         by Debtor for such portion of any given advance which, when added to
         the principal amount already outstanding under this note on the date
         such advance is requested, would not exceed $10,000,000.00, and (ii)
         2.00% per annum in excess of Bank's LIBOR-Rate for the period selected
         by Debtor for any remaining portion of such advance. The margin in
         excess of Bank's LIBOR-Rate which is applicable to any given advance or
         portion thereof shall be determined on the date such advance is
         requested, shall remain applicable until the maturity of the Interest
         Period by Debtor for such advance, and shall not be subject to increase
         or reduction even if the aggregate principal amount outstanding under
         this note is thereafter increased by subsequent borrowings or reduced
         by subsequent repayments or prepayments.

         No Base Interest Rate may be changed, altered or otherwise modified
         until the expiration of the Interest Period selected by Debtor. The
         exercise of interest rate options by Debtor shall be as recorded in
         Bank's records, which records shall be prima facie evidence of the
         amount borrowed under either interest option and the interest rate;
         provided, however, that failure of Bank to make any such notation in
         its records shall not discharge Debtor from its obligations to repay in
         full with interest all amounts borrowed. In no event shall any Interest
         Period extend beyond the maturity date of this note.

         To exercise this option, Debtor may, from time to time with respect to
         principal outstanding on which a Base Interest Rate is not accruing,
         and on the expiration of any Interest Period with respect to principal
         outstanding on which a Base Interest Rate has been accruing, select an
         index offered by Bank for a Base Interest Rate Loan and an Interest
         Period by telephoning an authorized lending officer of Bank located at
         the banking office identified below prior to 10:00 a.m., Pacific time,
         on any Business Day and advising that officer of the selected index,
         the Interest Period and the Origination Date selected (which
         Origination Date, for a Base Interest Rate Loan based on the LIBOR-
         Rate, shall follow the date of such selection by no more than two (2)
         Business Days).

                                      -1-
<PAGE>
 
         Bank will mail a written confirmation of the terms of the selection to
         Debtor promptly after the selection is made. Failure to send such
         confirmation shall not affect Bank's rights to collect interest at the
         rate selected. If, on the date of the selection, the index selected is
         unavailable for any reason, the selection shall be void. Bank reserves
         the right to fund the principal from any source of funds
         notwithstanding any Base Interest Rate selected by Debtor.

     b.  VARIABLE INTEREST RATE.  All principal outstanding hereunder which is
         not bearing interest at a Base Interest Rate shall bear interest at a
         rate per annum equal to the Reference Rate, which rate shall vary as
         and when the Reference Rate changes.

         At any time prior to the maturity of this note, subject to the
         provisions of paragraph 4, below, of this note. Debtor may borrow,
         repay and re-borrow hereon so long as the total outstanding at any one
         time does not exceed the principal amount of this note. Debtor shall
         pay all amounts due under this note in lawful money of the United
         States at Bank's ORANGE COUNTY COMMERCIAL BANKING Office, or such other
         office as may be designated by Bank, from time to time.

1.   LATE PAYMENTS.  If any payment required by the terms of this note shall
     remain unpaid ten days, at the option of Bank, Debtor shall pay a fee of
     $100 to Bank.

2.   INTEREST RATE FOLLOWING DEFAULT.  In the event of default, at the option of
     Bank, and, to the extent permitted by law, interest shall be payable on the
     outstanding principal under this note at a per annum rate equal to five
     percent (5%) in excess of the interest rate specified in paragraph 1.b,
     above, calculated from the date of default until all amounts payable under
     this note are paid in full.

3.   PREPAYMENT.

     a.       Amounts outstanding under this note bearing interest at a rate
         based on the Reference Rate may be prepaid in whole or in part at any
         time, without penalty or premium. Debtor may prepay amounts outstanding
         under this note bearing interest at a Base Interest Rate in whole or in
         part provided Debtor has given Bank not less than five (5) Business
         Days prior written notice of Debtor's intention to make such prepayment
         and pays to Bank the liquidated damages due as a result. Liquidated
         Damages shall also be paid, if Bank, for any other reason, including
         acceleration or foreclosure, receives all or any portion of principal
         bearing interest at a Base Interest Rate prior to its scheduled payment
         date. Liquidated Damages shall be an amount equal to the present value
         of the product of: (i) the difference (but not less than zero) between
         (a) the Base Interest Rate applicable to the principal amount which is
         being prepaid, and (b) the return which Bank could obtain if it used
         the amount of such prepayment of principal to purchase at bid price
         regularly quoted securities issued by the United States having a
         maturity date most closely coinciding with the relevant Base Rate
         Maturity Date and such securities were held by Bank until the relevant
         Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator
         of which is the number of days in the period between the date of
         prepayment and the relevant Base Rate Maturity Date and the denominator
         of which is 360; and (iii) the amount of the principal so prepaid
         (except in the event that principal payments are required and have been
         made as scheduled under the terms of the Base Interest Rate Loan being
         prepaid, then an amount equal to the lesser of (A) the amount prepaid
         of (B) 50% of the sum of (1) the amount prepaid and (2) the amount of
         principal scheduled under the terms of the Base Interest Rate Loan
         being prepaid to be outstanding at the relevant Base Rate Maturity
         Date). Present value under this note is determined by discounting the
         above product to present value using the Yield Rate as the annual
         discount factor.

     b.       In no event shall Bank be obligated to make any payment or refund
         to Debtor, nor shall Debtor be entitled to any setoff or other claim
         against Bank, should the return which Bank could obtain under this
         prepayment formula exceed the interest that Bank would have received if
         no prepayment had occurred. All prepayments shall include payment of
         accrued interest on the principal amount so prepaid

                                      -2-
<PAGE>
 
         and shall be applied to payment of interest before application to
         principal. A determination by Bank as to the prepayment fee amount, if
         any, shall be conclusive.

     c.       Bank shall provide Debtor a statement of the amount payable on
         account of prepayment. Debtor acknowledges that (i) Bank establishes a
         Base Interest Rate upon the understanding that it apply to the Base
         Interest Rate Loan for the entire Interest Period, and (ii) any
         prepayment may result in Bank incurring additional costs, expenses or
         liabilities; and Debtor agrees to pay these liquidated damages as a
         reasonable estimate of the costs, expenses and liabilities of Bank
         associated with such prepayment.

1.   DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
     not be limited to, any of the following: (a) the failure of Debtor to make
     any payment required under this note when due; (b) any breach,
     misrepresentation or other default by Debtor, any guarantor, co-maker,
     endorser, or any person or entity other than Debtor providing security for
     this note (hereinafter individually and collectively referred to as the
     "Obligor") under any security agreement, guaranty or other agreement
     between Bank and any Obligor; (c) the insolvency of any Obligor or the
     failure of any Obligor generally to pay such Obligor's debts as such debts
     become due; (d) the commencement as to any Obligor of any voluntary or
     involuntary proceeding under any laws relating to bankruptcy, insolvency,
     reorganization, arrangement, debt adjustment or debtor relief; (e) the
     assignment by any Obligor for the benefit of such Obligor's creditors; (f)
     the appointment, or commencement of any proceeding for the appointment of a
     receiver, trustee, custodian or similar official for all or substantially
     all of any Obligor's property; (g) the commencement of any proceeding for
     the dissolution of liquidation of any Obligor; (h) the termination of
     existence or death of any Obligor; (i) the revocation of any guaranty or
     subordination agreement given in connection with this note; (j) the failure
     of any Obligor to comply with any order, judgment, injunction, decree, writ
     or demand of any court or other public authority; (k) the filing or
     recording against any Obligor, or the property of any Obligor, of any
     notice of levy, notice to withhold, or other legal process for taxes other
     than property taxes; (l) the default by any Obligor personally liable for
     amounts owed hereunder on any obligation concerning the borrowing of money;
     (m) the issuance against any Obligor, or the property of any Obligor, of
     any writ of attachment, execution, or other judicial lien; or (n) the
     deterioration of the financial condition of any Obligor which results in
     Bank deeming itself, in good faith, insecure. Upon the occurrence of any
     such default, Bank, in its discretion, may cease to advance funds hereunder
     and may declare all obligations under this note immediately due and
     payable; however, upon the occurrence of an event of default under d, e, f,
     or g, all principal and interest shall automatically become immediately due
     and payable.

2.   ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are
     not paid when due, Debtor promises to pay all costs and expenses, including
     reasonable attorneys' fees, incurred by Bank in the collection or
     enforcement of this note. Debtor and any endorsers of this note, for the
     maximum period of time and the full extent permitted by law, (a) waive
     diligence, presentment, demand, notice of nonpayment, protest, notice of
     protest, and notice of every kind; (b) waive the right to assert the
     defense of any statute of limitations to any debt or obligation hereunder;
     and (c) consent to renewals and extensions of time for the payment of any
     amounts due under this note. If this note is signed by more than one party,
     the term "Debtor" includes each of the undersigned and any successors in
     interest thereof; all of whose liability shall be joint and several. Any
     married person who signs this note agrees that recourse may be had against
     the separate property of that person for any obligations hereunder. The
     receipt of any check or other item of payment by Bank, at its option, shall
     not be considered a payment on account until such check or other item of
     payment is honored when presented for payment at the drawee bank. Bank may
     delay the credit of such payment based upon Bank's schedule of funds
     availability, and interest under this note shall accrue until the funds are
     deemed collected. In any action brought under or arising out of this note.
     Debtor and any Obligor, including their successors and assigns, hereby
     consent to the jurisdiction of any competent court within the State of
     California, as provided in any alternative dispute resolution agreement
     executed between Debtor and Bank, and consent to service or process by any
     means authorized by said state's law. The term "Bank" includes, without
     limitation, any holder of this note. This note shall be construed in
     accordance with and governed by the laws of the State of California. This
     note hereby incorporates any alternative dispute resolution agreement
     previously, concurrently or hereafter executed between Debtor and Bank.

                                      -3-
<PAGE>
 
3.   DEFINITIONS.  As used herein, the following terms shall have the meanings
     respectively set forth below: "Base Interest Rate" means a rate of interest
     based on the LIBOR-Rate. "Base Interest Rate Loan" means amounts
     outstanding under this note that bear interest at a Base Interest Rate.
     "Base Rate Maturity Date" means the last day of the Interest Period with
     respect to principal outstanding under a Base Interest Rate Loan. "Business
     Day" means a day on which Bank is open for business for the funding of
     corporate loans, and, with respect to the rate of interest based on the
     LIBOR-Rate, on which dealings in U.S. dollar deposits outside of the United
     States may be carried on by Bank. "Interest Period" means with respect to
     funds bearing interest at a rate based on the LIBOR-Rate, any calendar
     period of two weeks or one, two, three or six months. In determining an
     Interest Period, a month means a period that starts on one Business Day in
     a month and ends on and includes the day preceding the numerically
     corresponding day in the next month. For any month in which there is no
     such numerically corresponding day, then as to that month, such day shall
     be deemed to be the last calendar day of such month. Any Interest Period
     which would otherwise end on a non-Business Day shall end on the next
     succeeding Business Day unless that is the first of the month, in which
     event such Interest Period shall end on the next preceding Business Day.
     "LIBOR-Rate" means a per annum rate of interest (rounded upward, if
     necessary, to the nearest 1/100 of .1%) at which dollar deposits, in
     immediately available funds and in lawful money of the United States would
     be offered to Bank, outside of the United States, for a term coinciding
     with the Interest Period selected by Debtor and for an amount equal to the
     amount of principal covered by Debtor's interest rate selection, plus
     Bank's costs, including the costs, if any of reserve requirements.
     "Origination Date" means the first day of the Interest Period. "Reference
     Rate" means the rate announced by Bank from time to time as its corporate
     headquarters as its Reference Rate. The Reference Rate is an index rate
     determined by Bank from time to time as a means of pricing certain
     extensions of credit and is neither directly tied to any external rate of
     interest or index nor necessarily the lowest rate of interest charged by
     Bank at any given time.


ATL PRODUCTS, INC.
-----------------------------------------
 
By  /s/ Mark de Raad
-----------------------------------------
 
Title    Vice President and CFO
-----------------------------------------

                                      -4-
<PAGE>
 
                                PROMISSORY NOTE
                                  (BASE RATE)

================================================================================
Borrower Name   ATL PRODUCTS, INC.
--------------------------------------------------------------------------------
Borrower Address         Office 45061     Loan Number  0535391204  0081-00-0-000
2801 KELVIN AVENUE
IRVINE, CA 92614-5872
--------------------------------------------------------------------------------
                         Maturity Date  JANUARY 31, 2000   Amount  $6,500,000.00
================================================================================


$6,500,000.00                                      Date  MARCH 19, 1998
-------------                                            --------------

FOR VALUE RECEIVED, on JANUARY 31, 2000, the undersigned ("Debtor") promises to
                       ----------------                                       
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below,
the principal sum of SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars
                     --------------------------------------------        
($6,500,000.00), or so much thereof as is disbursed, together with interest on
---------------                                                               
the balance of such principal from time to time outstanding, at the per annum
rate or rates and at the times set forth below.  Debtor may request only one (1)
advance under this note during each calendar quarter (commencing with the
calendar quarter which began on January 1, 1998), said advance to be in amount
not to exceed Eight Hundred Twelve Thousand Three Hundred Forty Dollars
($812,340) (the "Maximum Quarterly Advance"). The amount available to be
disbursed under this note shall automatically be reduced on the first day of
each calendar quarter (commencing with the calendar quarter which begins on
April 1, 1998) by an amount equal to the difference (if any) between (a) the
Maximum Quarterly Advance, and (b) the amount of such advance under this note
(if any) as was requested by Debtor and funded by Bank during the immediately
preceding calendar quarter. Amounts borrowed and repaid under this note may not
thereafter be reborrowed, and no advances under this note may be requested at
any time on or after January 1, 2000.

1.   INTEREST PAYMENTS.  Debtor shall pay interest on the LAST day of each MONTH
                                                          ----             -----
     (commencing APRIL 30, 1998). Should interest not be paid when due, it shall
                --------------                                                  
     become part of the principal and bear interest as herein provided. All
     computations of interest under this note shall be made on the basis of a
     year of 360 days, for actual days elapsed.

     a.       BASE INTEREST RATE. At Debtor's option, amounts outstanding
         hereunder in minimum amounts of at least $100,000.00 shall bear
         interest at a rate, based on an index selected by Debtor, which is (i)
         2.25% per annum in excess of Bank's LIBOR-Rate for the Interest Period
         selected by Debtor, acceptable to Bank.

         No Base Interest Rate may be changed, altered or otherwise modified
         until the expiration of the Interest Period selected by Debtor. The
         exercise of interest rate options by Debtor shall be as recorded in
         Bank's records, which records shall be prima facie evidence of the
         amount borrowed under either interest option and the interest rate;
         provided, however, that failure of Bank to make any such notation in
         its records shall not discharge Debtor from its obligations to repay in
         full with interest all amounts borrowed. In no event shall any Interest
         Period extend beyond the maturity date of this note.

         To exercise this option, Debtor may, from time to time with respect to
         principal outstanding on which a Base Interest Rate is not accruing,
         and on the expiration of any Interest Period with respect to principal
         outstanding on which a Base Interest Rate has been accruing, select an
         index offered by Bank for a Base Interest Rate Loan and an Interest
         Period by telephoning an authorized lending officer of Bank located at
         the banking office identified below prior to 10:00 a.m., Pacific time,
         on any Business Day and advising that officer of the selected index,
         the Interest Period and the Origination Date selected (which
         Origination Date, for a Base Interest Rate Loan based on the LIBOR-
         Rate, shall follow the date of such selection by no more than two (2)
         Business Days).

                                      -5-
<PAGE>
 
         Bank will mail a written confirmation of the terms of the selection to
         Debtor promptly after the selection is made. Failure to send such
         confirmation shall not affect Bank's rights to collect interest at the
         rate selected. If, on the date of the selection, the index selected is
         unavailable for any reason, the selection shall be void. Bank reserves
         the right to fund the principal from any source of funds
         notwithstanding any Base Interest Rate selected by Debtor.

     b.       VARIABLE INTEREST RATE.  All principal outstanding hereunder which
         is not bearing interest at a Base Interest Rate shall bear interest at
         a rate per annum equal to the Reference Rate, which rate shall vary as
         and when the Reference Rate changes.

         Debtor shall pay all amounts due under this note in lawful money of the
         United States at Bank's ORANGE COUNTY COMMERCIAL BANKING Office, or
                                 --------------------------------        
         such other office as may be designated by Bank, from time to time.

1.   LATE PAYMENTS.  If any payment required by the terms of this note shall
     remain unpaid ten days, at the option of Bank, Debtor shall pay a fee of
     $100 to Bank.

2.   INTEREST RATE FOLLOWING DEFAULT.  In the event of default, at the option of
     Bank, and, to the extent permitted by law, interest shall be payable on the
     outstanding principal under this note at a per annum rate equal to five
     percent (5%) in excess of the interest rate specified in paragraph 1.b,
     above, calculated from the date of default until all amounts payable under
     this note are paid in full.

3.   PREPAYMENT.

     a.       Amounts outstanding under this note bearing interest at a rate
         based on the Reference Rate may be prepaid in whole or in part at any
         time, without penalty or premium. Debtor may prepay amounts outstanding
         under this note bearing interest at a Base Interest Rate in whole or in
         part provided Debtor has given Bank not less than five (5) Business
         Days prior written notice of Debtor's intention to make such prepayment
         and pays to Bank the liquidated damages due as a result. Liquidated
         Damages shall also be paid, if Bank, for any other reason, including
         acceleration or foreclosure, receives all or any portion of principal
         bearing interest at a Base Interest Rate prior to its scheduled payment
         date. Liquidated Damages shall be an amount equal to the present value
         of the product of: (i) the difference (but not less than zero) between
         (a) the Base Interest Rate applicable to the principal amount which is
         being prepaid, and (b) the return which Bank could obtain if it used
         the amount of such prepayment of principal to purchase at bid price
         regularly quoted securities issued by the United States having a
         maturity date most closely coinciding with the relevant Base Rate
         Maturity Date and such securities were held by Bank until the relevant
         Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator
         of which is the number of days in the period between the date of
         prepayment and the relevant Base Rate Maturity Date and the denominator
         of which is 360; and (iii) the amount of the principal so prepaid
         (except in the event that principal payments are required and have been
         made as scheduled under the terms of the Base Interest Rate Loan being
         prepaid, then an amount equal to the lesser of (A) the amount prepaid
         of (B) 50% of the sum of (1) the amount prepaid and (2) the amount of
         principal scheduled under the terms of the Base Interest Rate Loan
         being prepaid to be outstanding at the relevant Base Rate Maturity
         Date). Present value under this note is determined by discounting the
         above product to present value using the Yield Rate as the annual
         discount factor.

     b.       In no event shall Bank be obligated to make any payment or refund
         to Debtor, nor shall Debtor be entitled to any setoff or other claim
         against Bank, should the return which Bank could obtain under this
         prepayment formula exceed the interest that Bank would have received if
         no prepayment had occurred. All prepayments shall include payment of
         accrued interest on the principal amount so prepaid and shall be
         applied to payment of interest before application to principal. A
         determination by Bank as to the prepayment fee amount, if any, shall be
         conclusive.

                                      -6-
<PAGE>
 
     c.       Bank shall provide Debtor a statement of the amount payable on
         account of prepayment. Debtor acknowledges that (i) Bank establishes a
         Base Interest Rate upon the understanding that it apply to the Base
         Interest Rate Loan for the entire Interest Period, and (ii) any
         prepayment may result in Bank incurring additional costs, expenses or
         liabilities; and Debtor agrees to pay these liquidated damages as a
         reasonable estimate of the costs, expenses and liabilities of Bank
         associated with such prepayment.

1.   DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
     not be limited to, any of the following: (a) the failure of Debtor to make
     any payment required under this note when due; (b) any breach,
     misrepresentation or other default by Debtor, any guarantor, co-maker,
     endorser, or any person or entity other than Debtor providing security for
     this note (hereinafter individually and collectively referred to as the
     "Obligor") under any security agreement, guaranty or other agreement
     between Bank and any Obligor; (c) the insolvency of any Obligor or the
     failure of any Obligor generally to pay such Obligor's debts as such debts
     become due; (d) the commencement as to any Obligor of any voluntary or
     involuntary proceeding under any laws relating to bankruptcy, insolvency,
     reorganization, arrangement, debt adjustment or debtor relief; (e) the
     assignment by any Obligor for the benefit of such Obligor's creditors; (f)
     the appointment, or commencement of any proceeding for the appointment of a
     receiver, trustee, custodian or similar official for all or substantially
     all of any Obligor's property; (g) the commencement of any proceeding for
     the dissolution of liquidation of any Obligor; (h) the termination of
     existence or death of any Obligor; (i) the revocation of any guaranty or
     subordination agreement given in connection with this note; (j) the failure
     of any Obligor to comply with any order, judgment, injunction, decree, writ
     or demand of any court or other public authority; (k) the filing or
     recording against any Obligor, or the property of any Obligor, of any
     notice of levy, notice to withhold, or other legal process for taxes other
     than property taxes; (l) the default by any Obligor personally liable for
     amounts owed hereunder on any obligation concerning the borrowing of money;
     (m) the issuance against any Obligor, or the property of any Obligor, of
     any writ of attachment, execution, or other judicial lien; or (n) the
     deterioration of the financial condition of any Obligor which results in
     Bank deeming itself, in good faith, insecure. Upon the occurrence of any
     such default, Bank, in its discretion, may cease to advance funds hereunder
     and may declare all obligations under this note immediately due and
     payable; however, upon the occurrence of an event of default under d, e, f,
     or g, all principal and interest shall automatically become immediately due
     and payable.

2.   ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are
     not paid when due, Debtor promises to pay all costs and expenses, including
     reasonable attorneys' fees, incurred by Bank in the collection or
     enforcement of this note. Debtor and any endorsers of this note, for the
     maximum period of time and the full extent permitted by law, (a) waive
     diligence, presentment, demand, notice of nonpayment, protest, notice of
     protest, and notice of every kind; (b) waive the right to assert the
     defense of any statute of limitations to any debt or obligation hereunder;
     and (c) consent to renewals and extensions of time for the payment of any
     amounts due under this note. If this note is signed by more than one party,
     the term "Debtor" includes each of the undersigned and any successors in
     interest thereof; all of whose liability shall be joint and several. Any
     married person who signs this note agrees that recourse may be had against
     the separate property of that person for any obligations hereunder. The
     receipt of any check or other item of payment by Bank, at its option, shall
     not be considered a payment on account until such check or other item of
     payment is honored when presented for payment at the drawee bank. Bank may
     delay the credit of such payment based upon Bank's schedule of funds
     availability, and interest under this note shall accrue until the funds are
     deemed collected. In any action brought under or arising out of this note.
     Debtor and any Obligor, including their successors and assigns, hereby
     consent to the jurisdiction of any competent court within the State of
     California, as provided in any alternative dispute resolution agreement
     executed between Debtor and Bank, and consent to service or process by any
     means authorized by said state's law. The term "Bank" includes, without
     limitation, any holder of this note. This note shall be construed in
     accordance with and governed by the laws of the State of California. This
     note hereby incorporates any alternative dispute resolution agreement
     previously, concurrently or hereafter executed between Debtor and Bank.

3.   DEFINITIONS. As used herein, the following terms shall have the meanings
     respectively set forth below: "Base Interest Rate" means a rate of interest
     based on the LIBOR-Rate. "Base Interest Rate Loan" means amounts
     outstanding under this note that bear interest at a Base Interest Rate.
     "Base Rate Maturity Date"

                                      -7-
<PAGE>
 
     means the last day of the Interest Period with respect to principal
     outstanding under a Base Interest Rate Loan. "Business Day" means a day on
     which Bank is open for business for the funding of corporate loans, and,
     with respect to the rate of interest based on the LIBOR-Rate, on which
     dealings in U.S. dollar deposits outside of the United States may be
     carried on by Bank. "Interest Period" means with respect to funds bearing
     interest at a rate based on the LIBOR-Rate, any calendar period of two
     weeks or one, two, three or six months. In determining an Interest Period,
     a month means a period that starts on one Business Day in a month and ends
     on and includes the day preceding the numerically corresponding day in the
     next month. For any month in which there is no such numerically
     corresponding day, then as to that month, such day shall be deemed to be
     the last calendar day of such month. Any Interest Period which would
     otherwise end on a non-Business Day shall end on the next succeeding
     Business Day unless that is the first of the month, in which event such
     Interest Period shall end on the next preceding Business Day. "LIBOR-Rate"
     means a per annum rate of interest (rounded upward, if necessary, to the
     nearest 1/100 of .1%) at which dollar deposits, in immediately available
     funds and in lawful money of the United States would be offered to Bank,
     outside of the United States, for a term coinciding with the Interest
     Period selected by Debtor and for an amount equal to the amount of
     principal covered by Debtor's interest rate selection, plus Bank's costs,
     including the costs, if any of reserve requirements. "Origination Date"
     means the first day of the Interest Period. "Reference Rate" means the rate
     announced by Bank from time to time as its corporate headquarters as its
     Reference Rate. The Reference Rate is an index rate determined by Bank from
     time to time as a means of pricing certain extensions of credit and is
     neither directly tied to any external rate of interest or index nor
     necessarily the lowest rate of interest charged by Bank at any given time.


ATL PRODUCTS, INC.
-----------------------------------------
 
By  /s/ Mark de Raad
-----------------------------------------
 
Title    Vice President and CFO
-----------------------------------------

                                      -8-
<PAGE>
 
                                LOAN AGREEMENT


     THIS LOAN AGREEMENT ("Agreement") is made and entered into as of February
9, 1998 by and between ATL Products, Inc., a Delaware corporation ("Borrower")
and UNION BANK OF CALIFORNIA, N.A. ("Bank").

     SECTION 1.   THE LOAN

          1.1.1  The Revolving Loan. Bank will loan to Borrower an amount not to
exceed Twenty Million Dollars ($20,000,000) outstanding in the aggregate at any
one time (the "Revolving Loan").  Borrower may borrow, repay and reborrow all or
part of the Revolving Loan in accordance with the terms of the Revolving Note in
amounts of not less than One Hundred Thousand Dollars ($100,000) in accordance
with the terms of the Note. All borrowings of the Revolving Loan must be made
before January 31, 2000 at which time all unpaid principal and interest of the
Revolving Loan shall be due and payable.  The Revolving Loan shall be evidenced
by a promissory note (the "Revolving Note") on the standard form used by Bank
for commercial loans.  Bank shall enter each amount borrowed and repaid in
Bank's records and such entries shall be deemed to be the amount of the
Revolving Loan outstanding.  Omission of Bank to make any such entries shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed.

     1.2  Terminology.

          As used herein the word "Loan" shall mean, collectively, all the 
credit facilities described above.

          As used herein the word "Note" shall mean, collectively, all the
promissory notes described above.

          As used herein, the words "Loan Documents" shall mean all documents
executed in connection with this Agreement.

     1.3  Borrowing Base.  Notwithstanding any other provision of this
Agreement, Bank shall not be obligated to advance funds under the Revolving
Loan, if at any time the aggregate of Borrower's obligations to Bank thereunder
shall exceed eighty percent (80%) of Borrower's Eligible Accounts. If at any
time Borrower's obligations to Bank under the above facilities exceed the sum so
permitted, Borrower shall immediately repay to Bank such excess.

          1.3.1  Eligible Accounts.  The term "Accounts" means all presently
existing and hereafter arising accounts receivable, contract rights, chattel
paper, and all other forms of obligations owing to Borrower, payable in United
States Dollars, arising out of the sale or lease of goods, or the rendition of
services by Borrower, whether or not earned by performance, and any and all
credit insurance, guaranties and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower's books and
records relating to any of the foregoing.

     The term "Eligible Accounts" means those Accounts, net of finance charges,
which are due and payable within thirty (30) days, or less, from the date of the
invoice, have been validly assigned to Bank and strictly comply with all of
Borrower's warranties and representations to Bank, but Eligible Accounts shall
not include the following:

          (a)    Any Account with respect to which the account debtor is an
officer, shareholder, director, employee or agent of Borrower;

          (b)    Any Account with respect to which the account debtor is a
subsidiary of, related to, or affiliated or has common officers or directors
with Borrower;

                                      -9-
<PAGE>
 
          (c)    Any Account relating to goods placed on consignment, guaranteed
sale or other terms by reason of which the payment by the account debtor may be
conditional;

          (d)    Any Account with respect to which the account debtor is not a
resident of the United States or Canada; provided, however, Accounts due from
wholly owned foreign subsidiaries of Sun Microsystems, Incorporated and Digital
Equipment Corporation shall be deemed Eligible Accounts;

          (e)    Any Account with respect to which the account debtor is the
United States or any department, agency or instrumentality of the United States;

          (f)    Any Account with respect to which Borrower is or may become
liable to the account debtor for goods sold or services rendered by the account
debtor to Borrower;

          (g)    Any Account with respect to which there is asserted a defense,
counterclaim, discount or setoff, whether well-founded or otherwise, except for
those discounts, allowances and returns arising in the ordinary course of
Borrower's business;

          (h)    Any Account with respect to which the account debtor becomes
insolvent, fails to pay its debts as they mature or goes out of business or is
owed by an account debtor which has become the subject of a proceeding under any
provision of the United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including, but not limited to, assignments for the
benefit of creditors, formal or informal moratoriums, compositions or extensions
with all or substantially all of its creditors;

          (i)    Any Account owed by any account debtor with respect to which
twenty-five percent (25%) or more of the aggregate dollar amount of its Accounts
are not paid within ninety (90) days from the due date of the invoice;

          (j)    Any Account that is not paid by the account debtor within
ninety (90) days of its date of invoice;

          (k)    Any Account that is not paid by the account debtor and for
which a credit memo has been issued which is over 90 days old;

          (l)    That portion of the Accounts owed by Sun Microsystems,
Incorporated, Digital Equipment Corporation, and EMC Corporation which exceeds
twenty percent (20%) of all of the Accounts; and that portion of the Accounts
owed by any other single account debtor which exceeds fifteen percent (15%) of
all of the Accounts; and

          (m)    Any Account which Bank deems not to be an Eligible Account.
 
     1.4  Purpose of Loan.  The proceeds of the Revolving Loan shall be used for
general working capital and general corporate purposes.
 
     1.5  Interest.  The unpaid principal balance of the Revolving Loan shall
bear interest at the rate or rates provided in the Note and selected by
Borrower. The Revolving Loan may be prepaid in full or in part only in
accordance with the terms of the Note and any such prepayment shall be subject
to the prepayment fee provided for therein.

     1.6  Loan Commitment Fee. Borrower shall pay in advance a commitment fee of
two-tenths of one percent (.20%) on or before the date of execution of this
Agreement.  No portion of this fee shall be reimbursable.

     1.7  Unused Commitment Fee.  On the last calendar day of the third month
following the execution of this Agreement and on the last calendar day of each
three-month period thereafter until January 31, 2000, or the earlier termination
of the Loan, Borrower shall pay to Bank a fee which shall be determined based on
the average

                                      -10-
<PAGE>
 
unused portion of the Revolving Loan for the preceding quarter computed on the
basis of a 30 day month of a year of 360 days. If the average unused portion of
the Revolving Loan is (a) less than Ten Million Dollars ($10,000,000), the
quarterly fee shall be the sum of (i) Five Thousand Dollars ($5,000) and (ii)
twenty five percent (25%) of the product of one-tenth of one percent (.10%) and
multiplied by the result of (x)Ten Million Dollars ($10,000,000) less (y) the
average outstanding portion of the Revolving Loan; or (b) greater than Ten
Million Dollars ($10,000,000), the quarterly fee shall be twenty five percent
(25%) of the product of two-tenths of one percent (.20%) and Twenty Million
Dollars ($20,000,000) from which the average outstanding portion of the
Revolving Loan is subtracted.

     1.8  Balances.  Borrower shall maintain its major depository accounts with
Bank until the Note and all sums payable pursuant to this Agreement have been
paid in full.

     1.9  Disbursement.  Upon execution hereof, Bank shall disburse the proceeds
of the Loan as provided in Bank's standard form Authorization executed by
Borrower.

     1.10 Security.  Prior to any disbursement of the Loan, Borrower shall have
executed a security agreement, on Bank's standard form, and a financing
statement, suitable for filing in the office of the Secretary of State of the
State of California and any other state designated by Bank, granting to Bank a
first priority security interest in such of Borrower's property as is described
in said security agreement.  Exceptions to Bank's first priority, if any, are
permitted only as otherwise provided in this Agreement.   At Bank's request,
Borrower will also obtain executed landlord's and mortgagee's waivers on Bank's
form covering all of Borrower's property located on leased or encumbered real
property.

     1.11 Controlling Document.  In the event of any inconsistency between the
terms of this Agreement and any Note or any of the other Loan Documents, the
terms of such Note or other Loan Documents will prevail over the terms of this
Agreement.

SECTION 2.  CONDITIONS PRECEDENT

     Bank shall not be obligated to disburse all or any portion of the proceeds
of the Loan unless at or prior to the time for the making of such disbursement,
the following conditions have been fulfilled to Bank's satisfaction:

     2.1  Compliance.  Borrower shall have performed and complied with all terms
and conditions required by this Agreement to be performed or complied with by it
prior to or at the date of the making of such disbursement and shall have
executed and delivered to Bank the Note and other documents deemed necessary by
Bank.

     2.2  Guaranties. ATL Products Limited ("Guarantor") shall have executed and
delivered to Bank a continuing guaranty in form and amount satisfactory to Bank.

     2.3  Borrowing Resolution.  Borrower shall have provided Bank with
certified copies of resolutions duly adopted by the Board of Directors of
Borrower, authorizing this Agreement and the Loan Documents. Such resolutions
shall also designate the persons who are authorized to act on Borrower's behalf
in connection with this Agreement and to do the things required of Borrower
pursuant to this Agreement.

     2.4  Termination Statements.  Borrower shall have provided Bank with UCC-2
termination statements executed by such secured creditors as may be required by
Bank suitable for filing with the Secretary of State in each state designated by
Bank.

     2.5  Continuing Compliance.  At the time any disbursement is to be made,
there shall not exist any event, condition or act which constitutes an event of
default under Section 6 hereof or any event, condition or act which with notice,
lapse of time or both would constitute such event of default; nor shall there be
any such event, condition, or act immediately after the disbursement were it to
be made.

                                      -11-
<PAGE>
 
SECTION 3.  REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants that:

     3.1  Business Activity.  The principal business of Borrower is the
manufacture and distribution of automated storage products for the computer
industry.

     3.2  Affiliates and Subsidiaries.  Borrower's affiliates and subsidiaries
(those entities in which Borrower has either a controlling interest or at least
a 25% ownership interest) and their addresses, and the names of Borrower's
principal shareholders, are as provided on a schedule delivered to Bank on or
before the date of this Agreement.

     3.3  Authority to Borrow.  The execution, delivery and performance of this
Agreement, the Note and all other agreements and instruments required by Bank in
connection with the Loan are not in contravention of any of the terms of any
indenture, agreement or undertaking to which Borrower is a party or by which it
or any of its property is bound or affected.

     3.4  Financial Statements.  The financial statements of Borrower, including
both a balance sheet at December 31, 1997, together with supporting schedules,
and an income statement for the nine (9) months ended December 31, 1997, have
heretofore been furnished to Bank, and are true and complete and fairly
represent the financial condition of Borrower during the period covered thereby.
Since December 31, 1997, there has been no material adverse change in the
financial condition or operations of Borrower.

     3.5  Title.  Except for assets which may have been disposed of in the
ordinary course of business, Borrower has good and marketable title to all of
the property reflected in its financial statements delivered to Bank and to all
property acquired by Borrower since the date of said financial statements, free
and clear of all liens, encumbrances, security interests and adverse claims
except those specifically referred to in said financial statements.

     3.6  Litigation.  There is no litigation or proceeding pending or
threatened against Borrower or any of its property which is reasonably likely to
affect the financial condition, property or business of Borrower in a materially
adverse manner or result in liability in excess of Borrower's insurance
coverage.

     3.7  Default.  Borrower is not now in default in the payment of any of its
material obligations, and there exists no event, condition or act which
constitutes an event of default under Section 6 hereof and no condition, event
or act which with notice or lapse of time, or both, would constitute an event of
default.

     3.8  Organization.  Borrower is duly organized and existing under the laws
of the state of its organization, and has the power and authority to carry on
the business in which it is engaged and/or proposes to engage.
 
     3.9  Power.  Borrower has the power and authority to enter into this
Agreement and to execute and deliver the Note and all of the other Loan
Documents.

     3.10 Authorization. This Agreement and all things required by this
Agreement have been duly authorized by all requisite action of Borrower.

     3.11 Qualification.  Borrower is duly qualified and in good standing in any
jurisdiction where such qualification is required.

     3.12 Compliance With Laws.  Borrower is not in violation with respect to
any applicable laws, rules, ordinances or regulations which materially affect
the operations or financial condition of Borrower.

                                      -12-
<PAGE>
 
     3.13 ERISA.  Any defined benefit pension plans as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of Borrower meet,
as of the date hereof, the minimum funding standards of Section 302 of ERISA,
and no Reportable Event or Prohibited Transaction as defined in ERISA has
occurred with respect to any such plan.

     3.14 Regulation U.  No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect.  Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and none of the proceeds of the Loan will be used directly or
indirectly for such purpose.

     3.15 Continuing Representations.  These representations shall be considered
to have been made again at and as of the date of each disbursement of the Loan
and shall be true and correct as of such date or dates.

SECTION 4.  AFFIRMATIVE COVENANTS

     Until the Note and all sums payable pursuant to this Agreement or any other
of the Loan Documents have been paid in full, unless Bank waives compliance in
writing, Borrower agrees that:

     4.1  Use of Proceeds.  Borrower will use the proceeds of the Loan only as
provided in subsection 1.4 above.

     4.2  Payment of Obligations.  Borrower will pay and discharge promptly all
taxes, assessments and other governmental charges and claims levied or imposed
upon it or its property, or any part thereof, provided, however, that Borrower
shall have the right in good faith to contest any such taxes, assessments,
charges or claims and, pending the outcome of such contest, to delay or refuse
payment thereof provided that adequately funded reserves are established by it
to pay and discharge any such taxes, assessments, charges and claims.

     4.3  Maintenance of Existence.  Borrower will maintain and preserve its
existence and assets and all rights, franchises, licenses and other authority
necessary for the conduct of its business and will maintain and preserve its
property, equipment and facilities in good order, condition and repair.  Bank
may, at reasonable times, visit and inspect any of the properties of Borrower.

     4.4  Records.  Borrower will keep and maintain full and accurate accounts
and records of its operations according to generally accepted accounting
principles and will permit Bank to have access thereto, to make examination and
photocopies thereof, and to make audits during regular business hours. Costs for
such audits shall be paid by Borrower.

     4.5  Information Furnished.  Borrower will furnish to Bank:

          (a) Within forty-five (45) days after the close of each fiscal
quarter, except for the final quarter of each fiscal year, its 10-Q report as
filed with the Securities Exchange Commission ("SEC") as of the close of such
fiscal quarter, prepared in accordance with generally accepted accounting
principles;

          (b) Within ninety (90) days after the close of each fiscal year, a
copy of its 10-K report as filed with the SEC, in accordance with generally
accepted accounting principles applied on a basis consistent with that of the
previous year.

          (c) As soon as filed, copies of all other reports as Borrower may file
with the SEC.

          (d) Such other financial statements and information as Bank may
reasonably request from time to time;

                                      -13-
<PAGE>
 
          (e) In connection with each financial statement provided hereunder, a
statement executed by the president or chief financial officer of Borrower,
certifying that no default has occurred and no event exists which with notice or
the lapse of time, or both, would result in a default hereunder;

          (f) In connection with each fiscal year-end statement required
hereunder, any management letter of Borrower's certified public accountants;

          (g) All press releases made by Borrower, or on Borrower's behalf, upon
such release.

          (h) Prompt written notice to Bank of all events of default under any
of the terms or provisions of this Agreement or of any other agreement,
contract, document or instrument entered, or to be entered into with Bank; and
of any litigation which, if decided adversely to Borrower, would have a material
adverse effect on Borrower's financial condition; and of any other matter which
has resulted in, or is likely to result in, a material adverse change in its
financial condition or operations; and
 
          (i) Within fifteen (15) days after each calendar month end, a copy of
Borrower's monthly aging of accounts receivable and accounts payable and a
certification of compliance with the Borrowing Base described above, executed by
Borrower's chief financial officer or other duly authorized officer of Borrower,
in form acceptable to Bank, which certificate shall accurately report Borrower's
accounts receivable and Eligible Accounts.  Borrower will permit Bank to audit,
at Borrower's expense, Bank's collateral upon reasonable notice and during
regular business hours.

     4.6  Quick Ratio.  Borrower shall maintain at the end of each fiscal
quarter a ratio of cash, accounts receivable and marketable securities to
current liabilities of not less than .90:1.0 at December 31, 1997 and 1.00:1.00
thereafter, as such terms are defined by generally accepted accounting
principles.

     4.7  Tangible Net Worth.  Until March 31, 1997, Borrower will maintain
Tangible Net Worth of not less than Eight Million Eight Hundred Sixty Five
Thousand Dollars ($8,865,000).  Thereafter, Borrower will at all times maintain
a minimum Tangible Net Worth that increases from said amount as of  the end of
Borrower's fiscal year by one hundred percent (100%) of Borrower's net profit
after taxes.  "Tangible Net Worth" shall mean net worth increased by
indebtedness of Borrower subordinated to Bank and decreased by patents,
licenses, trademarks, trade names, goodwill and other similar intangible assets,
organizational expenses,  and monies due from affiliates (including officers,
shareholders and directors).

     4.9  Debt to Tangible Net Worth.  Borrower will maintain a ratio of total
liabilities to tangible net worth of not greater than 2.25:1.00 through the
fiscal quarter ending December 31, 1998 and 1.55:1.00 thereafter.

     4.10 Profitability.  Borrower will maintain a minimum net profit measured
on a quarterly basis, after provision for income taxes, which shall include the
net profit for each of the immediately preceding four (4) quarters, according to
the following schedule:

          a)  $6,500,000 for the period ending June 30, 1998, and thereafter
          b)  $7,000,000 for the period ending September 30, 1998, and
              thereafter
          c)  $7,500,000 for the period ending December 31, 1998, and
              thereafter
          d)  $8,000,000 for the period ending March 31, 1999, and thereafter
          e)  $8,500,000 for the period ending June  30, 1999, and thereafter
          f)  $9,500,000 for the period ending September 30, 1999, and 
              thereafter

     4.11 Insurance.  Borrower will keep all of its insurable property, real,
personal or mixed, insured by good and responsible companies against fire and
such other risks as are customarily insured against by companies conducting
similar business with respect to like properties.  Borrower will furnish to Bank
statements of its insurance coverage, will promptly furnish other or additional
insurance deemed necessary by and upon request of Bank to the extent that such
insurance may be available and hereby assigns to Bank, as security for
Borrower's obligations to Bank, the proceeds of any such insurance.  Prior to
any disbursement of the Loan, Bank will be

                                      -14-
<PAGE>
 
named loss payee on all policies insuring collateral and such policies shall
require at least ten (10) days' written notice to Bank before any policy may be
altered or cancelled. Borrower will maintain adequate worker's compensation
insurance and adequate insurance against liability for damages to persons and
property.
 
     4.12 Additional Requirements.  Borrower will promptly, upon demand by Bank,
take such further action and execute all such additional documents and
instruments in connection with this Agreement as Bank in its reasonable
discretion deems necessary, and promptly supply Bank with such other information
concerning its affairs as Bank may request from time to time.

     4.13 Litigation and Attorneys' Fees.  Borrower will pay promptly to Bank
upon demand, reasonable attorneys' fees (including but not limited to the
reasonable estimate of the allocated costs and expenses of in-house legal
counsel and legal staff) and all costs and other expenses paid or incurred by
Bank in collecting, modifying or compromising the Loan or in enforcing or
exercising its rights or remedies created by, connected with or provided for in
this Agreement or any of the Loan Documents, whether or not an arbitration,
judicial action or other proceeding is commenced. If such proceeding is
commenced, only the prevailing party shall be entitled to attorneys' fees and
court costs.

     4.14 Bank Expenses.  Borrower will pay or reimburse Bank for all costs,
expenses and fees incurred by Bank in preparing and documenting this Agreement
and the Loan, and all amendments and modifications thereof, including but not
limited to all filing and recording fees, costs of appraisals, insurance and
attorneys' fees, including the reasonable estimate of the allocated costs and
expenses of in-house legal counsel and legal staff.

     4.15 Reports Under Pension Plans.  Borrower will furnish to Bank, as soon
as possible and in any event within 15 days after Borrower knows or has reason
to know that any event or condition with respect to any defined benefit pension
plans of Borrower described in Section 3 above has occurred, a statement of an
authorized officer of Borrower describing such event or condition and the
action, if any, which Borrower proposes to take with respect thereto.

SECTION 5.  NEGATIVE COVENANTS

     Until the Notes and all other sums payable pursuant to this Agreement or
any other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:

     5.1  Encumbrances and Liens.  Borrower will not create, assume or suffer to
exist any mortgage, pledge, security interest, encumbrance, or lien (other than
for taxes not delinquent and for taxes and other items being contested in good
faith) on property of any kind, whether real, personal or mixed, now owned or
hereafter acquired, or upon the income or profits thereof, except to Bank and
except for minor encumbrances and easements on real property which do not affect
its market value, and except for existing liens on Borrower's personal property
and future purchase money security interests encumbering only the personal
property purchased.  All of such permitted personal property liens shall not
exceed, in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000) at any
time.

     5.2  Borrowings. Borrower will not sell, discount or otherwise transfer any
account receivable or any note, draft or other evidence of indebtedness, except
to Bank or except to a financial institution at face value for deposit or
collection purposes only and without any fee other than fees normally charged by
the financial institution for deposit or collection services.  Borrower will not
borrow any money, become contingently liable to borrow money, nor enter any
agreement to directly or indirectly obtain borrowed money, except pursuant to
agreements made with Bank and existing indebtedness due Odetics, Inc.

     5.3  Sale of Assets, Liquidation or Merger. Borrower will neither liquidate
nor dissolve nor enter into any consolidation, merger, partnership or other
combination, nor convey, nor sell, nor lease all or the greater part of its
assets or business, nor purchase or lease all or the greater part of the assets
or business of another.

                                      -15-
<PAGE>
 
     5.4  Loans, Advances and Guaranties.  Borrower will not, except in the
ordinary course of business as currently conducted, make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any manner or
extend credit.

     5.5  Investments.  Borrower will not purchase the debt or equity of another
person or entity except for savings accounts and certificates of deposit of
Bank, direct U.S.  Government obligations and commercial paper issued by
corporations with the top ratings of Moody's or Standard & Poor's, provided all
such permitted investments shall mature within one year of purchase.

     5.6  Payment of Dividends.  Borrower will not declare or pay any dividends,
other than a dividend payable in its own common stock, or authorize or make any
other distribution with respect to any of its stock now or hereafter
outstanding.

     5.7  Retirement of Stock.  Borrower will not acquire or retire any share of
its capital stock for value.

     5.8  Capital Expenditures.  Borrower will not make capital expenditures in
excess of Three Million Dollars ($3,000,000) for the fiscal year ending March
31, 1998 and Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) for
the fiscal year ending March 31, 1999; and shall only make such expenditures as
are necessary for Borrower in the conduct of its ordinary course of business.
Each said expenditure shall be needed by Borrower in the ordinary course of its
business.  Expenditures as used in this subsection shall include the current
expense portion of all leases whether or not capitalized and shall also include
the current portion of any debt used to finance capital expenditures.

     5.9  Business and Management. Borrower will not make any substantive change
in the character of its business or make changes in its executive management.

SECTION 6.  EVENTS OF DEFAULT

     The occurrence of any of the following events ("Events of Default") shall
terminate any obligation on the part of Bank to make or continue the Loan and
automatically, unless otherwise provided under the Note, shall make all sums of
interest and principal and any other amounts owing under the Loan immediately
due and payable, without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or any other notices or demands:

     6.1  Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan Documents; or

     6.2  Any default shall occur under the Note; or

     6.3  Borrower shall default in the due performance or observance of any
covenant or condition of the Loan Documents; or

     6.4  Any guaranty or subordination agreement required hereunder is breached
or becomes ineffective, or any Guarantor or subordinating creditor dies,
disavows or attempts to revoke or terminate such guaranty or subordination
agreement; or
 
SECTION 7.  MISCELLANEOUS PROVISIONS

     7.1  Additional Remedies.  The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or banker's
lien.

                                      -16-
<PAGE>
 
     7.2  Nonwaiver.  Any forbearance or failure or delay by Bank in exercising
any right, power or remedy hereunder shall not be deemed a waiver thereof and
any single or partial exercise of any right, power or remedy shall not preclude
the further exercise thereof. No waiver shall be effective unless it is in
writing and signed by an officer of Bank.

     7.3  Inurement.  The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assignees of
Borrower, and any assignment by Borrower without Bank's consent shall be null
and void.

     7.4  Applicable Law.  This Agreement and all other agreements and
instruments required by Bank in connection therewith shall be governed by and
construed according to the laws of the State of California.

     7.5  Severability.  Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.  In the event of any conflict between the provisions of this
Agreement and the provisions of any note or reimbursement agreement evidencing
any indebtedness hereunder, the provisions of such note or reimbursement
agreement shall prevail.

     7.6  Integration Clause.  Except for documents and instruments specifically
referenced herein, this Agreement constitutes the entire agreement between Bank
and Borrower regarding the Loan and all prior communications verbal or written
between Borrower and Bank shall be of no further effect or evidentiary value.

     7.7  Construction.  The section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

     7.8  Amendments.  This Agreement may be amended only in writing signed by
all parties hereto.

     7.9  Counterparts.  Borrower and Bank may execute one or more counterparts
to this Agreement, each of which shall be deemed an original, but when together
shall be one and the same instrument.

SECTION 8.  SERVICE OF NOTICES

     8.1  Any notices or other communications provided for or allowed hereunder
shall be effective only when given by one of the following methods and addressed
to the respective party at its address given with the signatures at the end of
this Agreement and shall be considered to have been validly given:  (a) upon
delivery, if delivered personally; (b) upon receipt, if mailed, first class
postage prepaid, with the United States Postal Service; (c) on the next business
day, if sent by overnight courier service of recognized standing; and (d) upon
telephoned confirmation of receipt, if telecopied.

     8.2  The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.

                                      -17-
<PAGE>
 
THIS AGREEMENT is executed on behalf of the parties by duly authorized officers
as of the date first above written.


UNION BANK OF CALIFORNIA, N.A.
("Bank")


By:     /s/ Jim Heim
    ----------------------------
        Jim Heim
Title:  Vice President


By:     /s/ Douglas S. Lambell
    ----------------------------
        Douglas S. Lambell
Title:  Vice President

Address: 500 South Main Street #201
         Orange, CA 92868
Telecopier: (714) 565-5770
Telephone:  (714) 565-5752


ATL PRODUCTS, INC.
("Borrower")


By:     /s/ Mark P. de Raad
    ----------------------------
        Mark de Raad
Title:  Chief Financial Officer


By:     /s/ Kevin C. Daly
    ----------------------------
        Kevin C. Daly
Title:  Chief Executive Officer

Address: 2801 Kelvin Avenue
         Irvine, CA 92614-5872
Telecopier: (714) 477-7799
Telephone:  (714) 477-7750

                                      -18-
<PAGE>
 
                                FIRST AMENDMENT
                               TO LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT ("First Amendment"), dated as a February
9, 1998, is made and entered into by and between ATL Products, Inc., a Delaware
corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A. ("Bank").

                                   RECITALS:
                                   ---------
                                        
A.  Borrower and Bank are parties to that certain Loan Agreement, dated February
9, 1998 (the "Agreement"), pursuant to which Bank agreed to extend credit to
Borrower.

B.  Borrower and Bank desire to amend the Agreement subject to the terms and
conditions of this First Amendment.

                                   AGREEMENT:
                                   ----------
                                        
In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Borrower and Bank agree as follows:

1.   Defined Terms. Initially capitalized terms used herein which are not
     otherwise defined shall have the meanings assigned thereto in the
     Agreement.

2.   Amendments to the Agreement.

     (a)  Section 1.1.2 of the Agreement is hereby added in its entirety as
          follows:

          The Non-Revolving Loan. Bank will loan to Borrower an amount not to
     exceed Six Million Five Hundred Thousand Dollars ($6,500,000) outstanding
     in the aggregate at any one time (the "Non-Revolving Loan"); provided,
     however, that (a) Borrower may request only one (1) advance under the Non-
     Revolving Loan during each calendar quarter (commencing with the calendar
     quarter which began on January 1, 1998), said advance to be in an amount
     not to exceed Eight Hundred Twelve Thousand Three Hundred Forty Dollars
     ($812,340) (the "Maximum Quarterly Advance"), (b) availability under the
     Non-Revolving Loan shall automatically be reduced on the first day of each
     calendar quarter (commencing with the calendar quarter which begins on
     April 1, 1998) by an amount equal to the difference (if any) between (i)
     the Maximum Quarterly Advance, and (ii) the amount of such advance under
     the Non-Revolving Loan (if any) as was requested by Borrower and funded by
     Bank during the immediately preceding calendar quarter, (c) amounts
     borrowed and repaid under the Non-Revolving Loan may not thereafter be re-
     borrowed, and (d) Borrower may not request an advance under the Non-
     Revolving Loan at any time on or after January 1, 2000. All unpaid
     principal and accrued but unpaid interest under the Non-Revolving Loan
     shall be due and payable on January 31, 2000. The Non-Revolving Loan shall
     be evidenced by a promissory note (the "Non-Revolving Loan Note") on the
     standard form used by Bank for commercial loans. Bank shall enter each
     amount borrowed and repaid in Bank's records and such entries shall be
     deemed to be the amount of the Non-Revolving Loan outstanding. Omission of
     Bank to make any such entries shall not discharge Borrower of its
     obligation to repay in full with interest all amounts borrowed.

     (b)  Section 1.4 of the Agreement is hereby amended in its entirety as 
          follows:

          The proceeds of the Revolving Loan shall be used for general working
     capital and general corporate purposes. The proceeds of the Non-Revolving
     Loan shall be used to reimburse Borrower for debt service expenditures on
     the Odetics note.

                                      -19-
<PAGE>
 
     (c)  Section 1.5 of the Agreement is hereby amended in its entirety as
          follows:

          The unpaid principal balances of the Revolving Loan and the Non-
     Revolving Loan shall bear interest at the rate or rates provided in the
     Revolving Note or the Non-Revolving Loan Note, as the case may be, and
     selected by the Borrower.

     The Revolving Loan or the Non-Revolving Loan may be prepaid in full or in
     part only in accordance with the terms of the Revolving Note or the Non-
     Revolving Loan Note, as the case may be, and any such prepayment shall be
     subject to the prepayment fee provided for therein.

     (d)  Section 4.6 of the Agreement is hereby amended by substituting the
          phrase "through September 30, 1998," for the phrase "at December 30,
          1997."

1.   Effectiveness of the First Amendment.  The First Amendment shall become
     effective as of the date hereof when, and only when, Bank shall have
     received all of the following, in form and substance satisfactory to Bank:

     (a)  A counterpart of the First Amendment, duly executed by Borrower;

     (b)  The Non-Revolving Loan Note, duly executed by Borrower; and

1.   Ratification.  Except as specifically amended hereinabove, the Agreement
     shall remain in full force and effect and is hereby ratified and confirmed.

2.   Representations and Warranties.  Borrower represents and warrants as
     follows:

     (a)  Each of the representation and warranties contained in the Agreement,
     as the same may be amended hereby, is hereby reaffirmed as of the date
     hereof, each as if set forth herein;

     (b)  The execution, delivery and performance of this First Amendment and
     any other instruments or document in connection herewith are within
     Borrower's power, have been duly authorized, are legal, valid and binding
     obligations of Borrower, and are not in conflict with the terms of any
     charter, bylaw, or other organization papers of Borrower or with any law,
     indenture, agreement or undertaking to which Borrower is a party or by
     which Borrower is bound or affected;

     (c)  No event has occurred and is continuing or would result from the First
     Amendment which constitutes or constitute an Event of Default under the
     Agreement.

1.   Governing Law.  This First Amendment and all other instruments or documents
executed or to be executed in connection herewith shall be governed by an
construed according to the laws of the State of California.

2.   Counterparts. This First Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

                                      -20-
<PAGE>
 
     WITNESS the due execution hereof as of the date first above written.

 
            ATL Products, Inc.                  UNION BANK OF CALIFORNIA, N.A.
----------------------------------------      ----------------------------------
             
     By:      /s/ Kevin Daly                       By:      /s/ Jim Heim
        --------------------------------              --------------------------
     Title:       President                        Title:       Vice President
           -----------------------------                 -----------------------
     By:      /s/ Mark de Raad                     By:      /s/ Kim Ha
        --------------------------------              --------------------------
     Title:       Vice President and CFO           Title:       Vice President
           -----------------------------                 -----------------------

GUARANTORS
 
           ATL Products Limited
----------------------------------------
 
     By:      /s/ Kevin Daly
        --------------------------------
     Title:       President
           -----------------------------

                                      -21-