EXHIBIT 10.3

                                                                  EXECUTION COPY

                                8,500,000 SHARES

                           APRIA HEALTHCARE GROUP INC.

                                  COMMON STOCK

                             UNDERWRITING AGREEMENT

                                                                  August 9, 2001



CREDIT SUISSE FIRST BOSTON CORPORATION,
BANC OF AMERICA SECURITIES LLC,
J. P. MORGAN SECURITIES INC.,
UBS WARBURG LLC,
As Representatives of the Several Underwriters
    c/o Credit Suisse First Boston Corporation
        Eleven Madison Avenue,
        New York, NY 10010-3629


Dear Sirs:


    1. Introductory.  Relational Investors LLC ("SELLING  STOCKHOLDER") proposes
to sell an aggregate of 8,500,000  outstanding shares ("FIRM SECURITIES") of the
common  stock   ("SECURITIES")  of  Apria  Healthcare  Group  Inc.,  a  Delaware
corporation  ("COMPANY"),  and also  proposes  to sell to the  Underwriters  (as
defined below), at the option of the Underwriters, an aggregate of not more than
1,275,000 additional outstanding shares ("OPTIONAL SECURITIES") of the Company's
Securities as set forth below.  The Firm Securities and the Optional  Securities
are herein collectively called the "OFFERED SECURITIES". The Selling Stockholder
hereby  agrees  with the  Company  and with the  several  Underwriters  named in
Schedule A hereto ("UNDERWRITERS") as follows:

    2.   Representations   and   Warranties  of  the  Company  and  the  Selling
Stockholder.  (a) The Company  represents  and warrants to, and agrees with, the
several Underwriters that:

        (i) A  registration  statement (No.  333-62556)  relating to the Offered
    Securities,  including  a form  of  prospectus,  has  been  filed  with  the
    Securities and Exchange  Commission  ("COMMISSION")  and either (A) has been
    declared  effective  under the  Securities  Act of 1933  ("ACT")  and is not
    proposed  to be amended or (B) is  proposed  to be amended by  amendment  or
    post-effective  amendment.  If such  registration  statement  (the  "INITIAL
    REGISTRATION  STATEMENT")  has  been  declared  effective,   either  (A)  an
    additional registration statement (the "ADDITIONAL  REGISTRATION STATEMENT")
    relating to the Offered  Securities  may have been filed with the Commission
    pursuant to Rule 462(b) ("RULE 462(B)") under the Act and, if so filed,  has
    become  effective  upon  filing  pursuant  to  such  Rule  and  the  Offered
    Securities  all have been duly  registered  under  the Act  pursuant  to the
    initial   registration   statement  and,  if   applicable,   the  additional
    registration  statement or (B) such an additional  registration statement is
    proposed  to be filed with the  Commission  pursuant to Rule 462(b) and will
    become  effective upon filing pursuant to such Rule and upon such filing the
    Offered Securities will all have been duly registered under the Act pursuant
    to the  initial  registration  statement  and such  additional  registration
    statement. If the Company does not propose to amend the initial registration
    statement or if an additional  registration statement has been filed and the
    Company does not propose to amend it, and if any post-effective amendment to
    either such registration  statement has been filed with the Commission prior
    to the execution and delivery of this Agreement,  the most recent  amendment
    (if any) to each such registration  statement has been declared effective by
    the Commission or has become  effective upon filing  pursuant to Rule 462(c)
    ("RULE 462(C)") under the Act or, in the case of the additional registration
    statement,  Rule 462(b).  For purposes of this Agreement,  "EFFECTIVE  TIME"
    with respect to the initial registration statement or, if filed prior to the
    execution  and  delivery  of this  Agreement,  the  additional  registration
    statement means (A) if the Company has advised the  Representatives  that it
    does not propose to amend such registration statement,  the date and time as
    of which such  registration  statement,  or the most  recent  post-effective
    amendment thereto (if any) filed prior to the execution and delivery of this
    Agreement,  was declared effective by the Commission or has become effective
    upon filing  pursuant to Rule 462(c),  or (B) if the Company has advised the
    Representatives  that it proposes  to file an  amendment  or  post-effective
    amendment to such registration statement, the date and time as of which such
    registration  statement,  as amended  by such  amendment  or  post-effective
    amendment,  as the case may be, is declared effective by the Commission.  If
    an  additional  registration  statement  has not  been  filed  prior  to the
    execution  and  delivery of this  Agreement  but the Company has advised the
    Representatives  that it proposes to file one, "EFFECTIVE TIME" with respect
    to such  additional  registration  statement  means  the date and time as of
    which such registration  statement is filed and become effective pursuant to
    Rule  462(b).  "EFFECTIVE  DATE" with  respect to the  initial  registration
    statement or the additional  registration  statement (if any) means the date
    of the  Effective  Time  thereof.  The initial  registration  statement,  as
    amended at its  Effective  Time,  including  all  material  incorporated  by
    reference  therein,  including all  information  contained in the additional
    registration  statement  (if any)  and  deemed  to be a part of the  initial
    registration   statement  as  of  the  Effective   Time  of  the  additional
    registration  statement pursuant to the General  Instructions of the Form on
    which it is filed and including all information (if any) deemed to be a part
    of the initial  registration  statement as of its Effective Time pursuant to
    Rule 430A(b) ("RULE  430A(B)") under the Act, is hereinafter  referred to as
    the "INITIAL REGISTRATION STATEMENT". The additional registration statement,
    as amended at its  Effective  Time,  including  the  contents of the initial
    registration  statement  incorporated by reference therein and including all
    information  (if any)  deemed  to be a part of the  additional  registration
    statement as of its Effective Time pursuant to Rule 430A(b),  is hereinafter
    referred  to  as  the  "ADDITIONAL  REGISTRATION  STATEMENT".   The  Initial
    Registration  Statement  and  the  Additional   Registration  Statement  are
    hereinafter  referred to collectively as the  "REGISTRATION  STATEMENTS" and
    individually as a "REGISTRATION Statement".  The form of prospectus relating
    to the Offered  Securities,  as first filed with the Commission  pursuant to
    and in accordance  with Rule 424(b) ("RULE  424(B)") under the Act or (if no
    such filing is required) as included in a Registration Statement,  including
    all material  incorporated by reference in such  prospectus,  is hereinafter
    referred to as the "PROSPECTUS". No document has been or will be prepared or
    distributed in reliance on Rule 434 under the Act.

        (ii) If the  Effective  Time of the Initial  Registration  Statement  is
    prior to the execution and delivery of this Agreement:  (A) on the Effective
    Date  of  the  Initial  Registration  Statement,  the  Initial  Registration
    Statement  conformed in all material respects to the requirements of the Act
    and the rules and  regulations of the Commission  ("RULES AND  REGULATIONS")
    and did not include any untrue statement of a material fact or omit to state
    any  material  fact  required to be stated  therein or necessary to make the
    statements  therein  not  misleading,  (B)  on  the  Effective  Date  of the
    Additional  Registration  Statement (if any),  each  Registration  Statement
    conformed,  or will conform, in all material respects to the requirements of
    the Act and the  Rules  and  Regulations  and did not  include,  or will not
    include,  any untrue  statement of a material fact and did not omit, or will
    not omit,  to state any  material  fact  required  to be stated  therein  or
    necessary to make the statements therein not misleading, and (C) on the date
    of this Agreement,  the Initial Registration Statement and, if the Effective
    Time of the Additional  Registration Statement is prior to the execution and
    delivery of this  Agreement,  the  Additional  Registration  Statement  each
    conforms,  and at the time of  filing  of the  Prospectus  pursuant  to Rule
    424(b)  or (if no such  filing is  required)  at the  Effective  Date of the
    Additional  Registration Statement in which the Prospectus is included, each
    Registration  Statement and the  Prospectus  will  conform,  in all material
    respects to the requirements of the Act and the Rules and  Regulations,  and
    neither of such documents includes, or will include, any untrue statement of
    a material fact or omits,  or will omit, to state any material fact required
    to be  stated  therein  or  necessary  to make the  statements  therein  not
    misleading.  If the Effective Time of the Initial Registration  Statement is
    subsequent to the execution and delivery of this Agreement: on the Effective
    Date  of  the  Initial  Registration  Statement,  the  Initial  Registration
    Statement and the  Prospectus  will conform in all material  respects to the
    requirements  of the Act and the  Rules  and  Regulations,  neither  of such
    documents will include any untrue  statement of a material fact or will omit
    to state any  material  fact  required to be stated  therein or necessary to
    make the statements therein not misleading,  and no Additional  Registration
    Statement  has been or will be filed.  The two  preceding  sentences  do not
    apply to statements  in or omissions  from a  Registration  Statement or the
    Prospectus  based upon written  information  furnished to the Company by any
    Underwriter  through the  Representatives  specifically for use therein,  it
    being understood and agreed that the only such information is that described
    as such in Section 7(c) hereof.

        (iii)  The  Company  has  been  duly  incorporated  and  is an  existing
    corporation in good standing  under the laws of the State of Delaware,  with
    power and authority  (corporate and other) to own its properties and conduct
    its  business  as  described  in the  Prospectus;  and the  Company  is duly
    qualified to do business as a foreign  corporation  in good  standing in all
    other  jurisdictions  in which its  ownership  or lease of  property  or the
    conduct  of its  business  requires  such  qualification,  except  where the
    failure to be so qualified or to be in good standing would not  individually
    or in the  aggregate  have  a  material  adverse  effect  on  the  condition
    (financial or other),  business,  properties or results of operations of the
    Company and its subsidiaries taken as a whole ("MATERIAL ADVERSE EFFECT").

        (iv) Each significant subsidiary (as defined in Rule 1-02 of Regulations
    S-X)  of  the  Company  has  been  duly  incorporated  and  is  an  existing
    corporation  in good  standing  under  the laws of the  jurisdiction  of its
    incorporation,  with power and  authority  (corporate  and other) to own its
    properties and conduct its business as described in the  Prospectus,  except
    where the failure to be in good  standing or to have power and  authority to
    own its properties and conduct its business would not individually or in the
    aggregate have a Material Adverse Effect; and each significant subsidiary of
    the Company is duly  qualified  to do business as a foreign  corporation  in
    good standing in all other  jurisdictions in which its ownership or lease of
    property or the conduct of its business requires such qualification,  except
    where  the  failure  to be so  qualified  would not  individually  or in the
    aggregate have a Material Adverse Effect;  all of the issued and outstanding
    capital stock of each subsidiary of the Company has been duly authorized and
    validly issued and is fully paid and nonassessable; and, except as disclosed
    in the  Prospectus,  the  capital  stock  of each  subsidiary  owned  by the
    Company,  directly  or  through  subsidiaries,  is owned  free  from  liens,
    encumbrances and defects.

        (v) The Offered  Securities and all other outstanding  shares of capital
    stock of the Company have been duly  authorized  and validly  issued,  fully
    paid  and  nonassessable  and  conform  in  all  material  respects  to  the
    description thereof contained in the Prospectus;  and the Offered Securities
    are  free of any  preemptive  rights  under  the  Company's  certificate  of
    incorporation or the Delaware General Corporation Law.

        (vi) Except as  disclosed  in the  Prospectus,  there are no  contracts,
    agreements or  understandings  between the Company and any person that would
    give rise to a valid  claim  against the  Company or any  Underwriter  for a
    brokerage commission,  finder's fee or other like payment in connection with
    the offering contemplated by this Agreement.

        (vii)  Except as disclosed in the  Prospectus,  there are no  contracts,
    agreements  or  understandings  between the Company and any person  granting
    such  person  the  right  to  require  the  Company  to file a  registration
    statement  under the Act with respect to any securities of the Company owned
    or to be owned by such  person or to require  the  Company  to include  such
    securities in the securities registered pursuant to a Registration Statement
    or in any securities  being  registered  pursuant to any other  registration
    statement filed by the Company under the Act.

        (viii) The Securities are listed on The New York Stock Exchange.

        (ix) No consent, approval,  authorization,  or order of, or filing with,
    any  governmental  agency or body or any court is required to be obtained or
    made by the Company for the consummation of the transactions contemplated by
    this Agreement in connection with the sale of the Offered Securities, except
    such as  have  been  obtained  and  made  under  the Act and  such as may be
    required under state securities laws.

        (x) The execution,  delivery and performance of this Agreement,  and the
    consummation of the transactions  herein  contemplated  will not result in a
    breach or violation of any of the terms and  provisions  of, or constitute a
    default  under,  any  statute,   any  rule,   regulation  or  order  of  any
    governmental  agency  or body or any  court,  domestic  or  foreign,  having
    jurisdiction  over the  Company or any  subsidiary  of the Company or any of
    their properties, or any agreement or instrument to which the Company or any
    such subsidiary is a party or by which the Company or any such subsidiary is
    bound  or to  which  any  of  the  properties  of the  Company  or any  such
    subsidiary is subject,  or the charter or by-laws of the Company or any such
    subsidiary, except in all cases as would not have a Material Adverse Effect.

        (xi) This Agreement has been duly authorized,  executed and delivered by
    the Company.

        (xii)  Except  as  disclosed  in the  Prospectus,  the  Company  and its
    subsidiaries  have good and marketable  title to all real properties and all
    other  properties  and assets  owned by them,  in each case free from liens,
    encumbrances and defects that would  materially  affect the value thereof or
    materially  interfere  with the use made or to be made thereof by them;  and
    except as disclosed in the Prospectus, the Company and its subsidiaries hold
    any leased real or personal property under valid and enforceable leases with
    no exceptions  that would  materially  interfere  with the use made or to be
    made thereof by them.

        (xiii) The Company and its subsidiaries  possess adequate  certificates,
    authorities or permits issued by appropriate governmental agencies or bodies
    necessary to conduct the business now operated by them and have not received
    any notice of proceedings  relating to the revocation or modification of any
    such certificate,  authority or permit that, if determined  adversely to the
    Company or any of its subsidiaries,  would  individually or in the aggregate
    have a Material Adverse Effect.

        (xiv)  No  labor  dispute  with  the  employees  of the  Company  or any
    subsidiary  exists or, to the  knowledge  of the Company,  is imminent  that
    might have a Material Adverse Effect.

        (xv) The Company  and its  subsidiaries  own,  possess or can acquire on
    reasonable  terms,  adequate  trademarks,  trade  names and other  rights to
    inventions,  know-how,  patents,  copyrights,  confidential  information and
    other intellectual property  (collectively,  "INTELLECTUAL PROPERTY RIGHTS")
    necessary  to conduct  the  business  now  operated  by them,  or  presently
    employed by them,  and have not  received any notice of  infringement  of or
    conflict  with  asserted  rights of others with respect to any  intellectual
    property  rights that, if determined  adversely to the Company or any of its
    subsidiaries, would individually or in the aggregate have a Material Adverse
    Effect.

        (xvi) Except as disclosed in the Prospectus, neither the Company nor any
    of its  subsidiaries  is in  violation  of any  statute,  rule,  regulation,
    decision or order of any governmental agency or body or any court,  domestic
    or foreign,  relating to the use,  disposal or release of hazardous or toxic
    substances or relating to the protection or  restoration of the  environment
    or  human   exposure  to  hazardous  or  toxic   substances   (collectively,
    "ENVIRONMENTAL  LAWS"), owns or operates any real property contaminated with
    any substance that is subject to any  environmental  laws, is liable for any
    off-site disposal or contamination pursuant to any environmental laws, or is
    subject to any claim relating to any  environmental  laws,  which violation,
    contamination,  liability or claim would  individually  or in the  aggregate
    have a Material Adverse Effect;  and the Company is not aware of any pending
    investigation which might lead to such a claim.

        (xvii)  Except as  disclosed  in the  Prospectus,  there are no  pending
    actions,  suits or proceedings against or affecting the Company,  any of its
    subsidiaries  or any of their  respective  properties  that,  if  determined
    adversely to the Company or any of its subsidiaries,  would  individually or
    in the aggregate have a Material  Adverse  Effect,  or would  materially and
    adversely affect the ability of the Company to perform its obligations under
    this Agreement,  or which are otherwise  material in the context of the sale
    of the Offered Securities; and, to the Company's knowledge, no such actions,
    suits or proceedings are threatened or contemplated.

        (xviii) The financial statements included in each Registration Statement
    and the  Prospectus  present  fairly in all material  respects the financial
    position of the Company and its  consolidated  subsidiaries  as of the dates
    shown and their results of operations  and cash flows for the periods shown,
    and,  except  as  otherwise  disclosed  in the  Prospectus,  such  financial
    statements  have been  prepared in conformity  with the  generally  accepted
    accounting principles in the United States applied on a consistent basis.

        (xix)  Except  as  disclosed  in the  Prospectus,  since the date of the
    latest audited  financial  statements  included in the Prospectus  there has
    been no material  adverse  change,  nor any development or event involving a
    prospective  material adverse change, in the condition (financial or other),
    business,  properties  or  results  of  operations  of the  Company  and its
    subsidiaries  taken as a whole,  and, except as disclosed in or contemplated
    by the  Prospectus,  there has been no dividend or  distribution of any kind
    declared, paid or made by the Company on any class of its capital stock.

        (xx) The Company is not and,  after  giving  effect to the  offering and
    sale of the  Offered  Securities,  will not be an  "investment  company"  as
    defined in the Investment Company Act of 1940.

    (b) The Selling Stockholder represents and warrants to, and agrees with, the
several Underwriters that:

        (i) The Selling  Stockholder  has and on each Closing  Date  hereinafter
    mentioned will have valid and unencumbered  title to the Offered  Securities
    to be  delivered  by the Selling  Stockholder  on such Closing Date and full
    right, power and authority to enter into this Agreement and to sell, assign,
    transfer and deliver the Offered  Securities  to be delivered by the Selling
    Stockholder  on such  Closing Date  hereunder;  and upon the delivery of and
    payment  for the Offered  Securities  on each  Closing  Date  hereunder  the
    several  Underwriters  will  acquire  valid  and  unencumbered  title to the
    Offered  Securities  to be  delivered  by the  Selling  Stockholder  on such
    Closing Date.

        (ii) If the  Effective  Time of the Initial  Registration  Statement  is
    prior to the  execution  and  delivery  of this  Agreement:  to the  Selling
    Stockholder's   knowledge,   (A)  on  the  Effective  Date  of  the  Initial
    Registration Statement,  the Initial Registration Statement conformed in all
    material  respects  to the  requirements  of  the  Act  and  the  Rules  and
    Regulations  and did not include any untrue  statement of a material fact or
    omit to state any material fact  required to be stated  therein or necessary
    to make the statements therein not misleading,  (B) on the Effective Date of
    the Additional  Registration Statement (if any), each Registration Statement
    conformed,  or will conform, in all material respects to the requirements of
    the Act and the  Rules  and  Regulations  and did not  include,  or will not
    include,  any untrue  statement of a material fact and did not omit, or will
    not omit,  to state any  material  fact  required  to be stated  therein  or
    necessary to make the statement therein not misleading,  and (C) on the date
    of this Agreement,  the Initial Registration Statement and, if the Effective
    Time of the Additional  Registration Statement is prior to the execution and
    delivery of this  Agreement,  the  Additional  Registration  Statement  each
    conforms,  and at the time of  filing  of the  Prospectus  pursuant  to Rule
    424(b)  or (if no such  filing is  required)  at the  Effective  Date of the
    Additional  Registration Statement in which the Prospectus is included, each
    Registration  Statement and the  Prospectus  will  conform,  in all material
    respects to the requirements of the Act and the Rules and  Regulations,  and
    neither of such documents includes, or will include, any untrue statement of
    a material fact or omits,  or will omit, to state any material fact required
    to be  stated  therein  or  necessary  to make the  statements  therein  not
    misleading.  If the Effective Time of the Initial Registration  Statement is
    subsequent to the execution and delivery of this  Agreement:  to the Selling
    Stockholder's  knowledge,  on the Effective Date of the Initial Registration
    Statement,  the  Initial  Registration  Statement  and the  Prospectus  will
    conform in all  material  respects  to the  requirements  of the Act and the
    Rules and Regulations, and neither of such documents will include any untrue
    statement  of a  material  fact or will  omit to  state  any  material  fact
    required to be stated  therein or necessary to make the  statements  therein
    not misleading. The two preceding sentences do not apply to statements in or
    omissions from a Registration Statement or the Prospectus based upon written
    information  furnished  to  the  Company  by  any  Underwriter  through  the
    Representatives specifically for use therein, it being understood and agreed
    that the only such information is that described as such in Section 7(c).

        (iii)  Except as disclosed in the  Prospectus,  there are no  contracts,
    agreements or understandings  between the Selling Stockholder and any person
    that would give rise to a valid claim against the Selling Stockholder or any
    Underwriter for a brokerage commission, finder's fee or other like payment.

        (iv) The execution,  delivery and performance of this Agreement, and the
    consummation of the transactions  herein  contemplated  will not result in a
    breach or violation of any of the terms and  provisions  of, or constitute a
    default  under,  any  statute,   any  rule,   regulation  or  order  of  any
    governmental  agency  or body or any  court,  domestic  or  foreign,  having
    jurisdiction  over the Selling  Stockholder or any subsidiary of the Selling
    Stockholder  or any of their  properties,  or any agreement or instrument to
    which the Selling  Stockholder or any such subsidiary is a party or by which
    the Selling  Stockholder or any such  subsidiary is bound or to which any of
    the properties of the Selling Stockholder or any such subsidiary is subject,
    or the charter or by-laws of the Selling Stockholder or any such subsidiary.

        (v) This Agreement has been duly  authorized,  executed and delivered by
    the Selling Stockholder.

    3. Purchase,  Sale and Delivery of Offered  Securities.  On the basis of the
representations,  warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Selling Stockholder agrees to sell to
the Underwriters,  and each Underwriter  agrees,  severally and not jointly,  to
purchase from the Selling Stockholder, at a purchase price of $22.758 per share,
the  respective  number of Firm  Securities  set forth opposite the name of such
Underwriter in Schedule A hereto.

    The  Selling   Stockholder   will  deliver  the  Firm   Securities   to  the
Representatives  for the accounts of the  Underwriters,  against  payment of the
purchase  price in Federal  (same day) funds by official bank check or checks or
wire  transfer to an account at a bank  acceptable to Credit Suisse First Boston
Corporation  ("CSFBC")  drawn to the  order of the  Selling  Stockholder  at the
office of Cravath,  Swaine & Moore,  at 10:00 A.M., New York time, on August 15,
2001, or at such other time not later than seven full  business days  thereafter
as CSFBC and the Selling Stockholder determine,  such time being herein referred
to as the "FIRST CLOSING DATE".  The  certificates for the Firm Securities so to
be delivered will be in definitive form, in such denominations and registered in
such  names as  CSFBC  requests  and will be made  available  for  checking  and
packaging at the above office of Cravath, Swaine & Moore at least 24 hours prior
to the First Closing Date.

    In  addition,  upon  written  notice from CSFBC given to the Company and the
Selling  Stockholder  from time to time not more than 30 days  subsequent to the
date of the Prospectus,  the  Underwriters  may purchase all or less than all of
the Optional  Securities  at the purchase  price per Security to be paid for the
Firm Securities.  The Selling Stockholder agrees to sell to the Underwriters the
number of Optional Securities specified in such notice. Such Optional Securities
shall  be  purchased  from  the  Selling  Stockholder  for the  account  of each
Underwriter  in the same  proportion as the number of Firm  Securities set forth
opposite such  Underwriter's  name bears to the total number of Firm  Securities
(subject to adjustment by CSFBC to eliminate  fractions) and may be purchased by
the  Underwriters  only for the  purpose  of  covering  over-allotments  made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold  or  delivered  unless  the  Firm  Securities   previously  have  been,  or
simultaneously  are,  sold and  delivered.  The right to purchase  the  Optional
Securities or any portion  thereof may be exercised from time to time and to the
extent not previously  exercised may be  surrendered  and terminated at any time
upon notice by CSFBC to the Selling Stockholder.

    Each time for the delivery of and payment for the Optional Securities, being
herein referred to as an "OPTIONAL CLOSING DATE", which may be the First Closing
Date (the First  Closing Date and each  Optional  Closing  Date,  if any,  being
sometimes  referred to as a "CLOSING  DATE"),  shall be  determined by CSFBC but
shall be not later than five full business days after written notice of election
to purchase Optional  Securities is given. The Selling  Stockholder will deliver
the Optional  Securities  being  purchased on each Optional  Closing Date to the
Representatives for the accounts of the several  Underwriters,  at the office of
Cravath,  Swaine & Moore, against payment of the purchase price in Federal (same
day) funds by official  bank check or checks or wire transfer to an account at a
bank acceptable to CSFBC drawn to the order of the Selling  Stockholder,  at the
above  office of Cravath,  Swaine & Moore.  The  certificates  for the  Optional
Securities  being purchased on each Optional  Closing Date will be in definitive
form, in such  denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and  packaging at the above office of Cravath,  Swaine & Moore at a
reasonable time in advance of such Optional Closing Date.

    4. Offering by Underwriters.  It is understood that the several Underwriters
propose to offer the Offered  Securities  for sale to the public as set forth in
the Prospectus.

    5. Certain  Agreements of the Company and the Selling  Stockholder.  (a) The
Company agrees with the several Underwriters and the Selling Stockholder that:

        (i) If the Effective Time of the Initial Registration Statement is prior
    to the execution and delivery of this  Agreement,  the Company will file the
    Prospectus   with  the  Commission   pursuant  to  and  in  accordance  with
    subparagraph   (1)  (or,  if  applicable  and  if  consented  to  by  CSFBC,
    subparagraph  (4)) of Rule  424(b)  not later  than the  earlier  of (A) the
    second  business day following the execution and delivery of this  Agreement
    or (B) the fifteenth  business day after the  Effective  Date of the Initial
    Registration  Statement.  The Company will advise CSFBC promptly of any such
    filing  pursuant  to Rule  424(b).  If the  Effective  Time  of the  Initial
    Registration  Statement  is  prior to the  execution  and  delivery  of this
    Agreement and an additional  registration statement is necessary to register
    a portion of the Offered  Securities  under the Act but the  Effective  Time
    thereof has not occurred as of such execution and delivery, the Company will
    file the  additional  registration  statement  or,  if  filed,  will  file a
    post-effective  amendment  thereto  with the  Commission  pursuant to and in
    accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on the
    date of  this  Agreement  or,  if  earlier,  on or  prior  to the  time  the
    Prospectus is printed and distributed to any Underwriter,  or will make such
    filing at such later date as shall have been consented to by CSFBC.

        (ii) The Company will advise CSFBC  promptly of any proposal to amend or
    supplement the initial or any additional  registration statement as filed or
    the related prospectus or the Initial Registration Statement, the Additional
    Registration  Statement (if any) or the  Prospectus and will not effect such
    amendment or  supplementation  without CSFBC's  consent,  which shall not be
    unreasonably  withheld;  and the Company will also advise CSFBC  promptly of
    the effectiveness of each  Registration  Statement (if its Effective Time is
    subsequent  to the  execution  and  delivery of this  Agreement)  and of any
    amendment or supplementation  of a Registration  Statement or the Prospectus
    and of the  institution by the  Commission of any stop order  proceedings in
    respect of a Registration Statement and will use its best efforts to prevent
    the  issuance of any such stop order and to obtain as soon as  possible  its
    lifting, if issued.

        (iii)  If,  at  any  time  when a  prospectus  relating  to the  Offered
    Securities  is required to be  delivered  under the Act in  connection  with
    sales by any  Underwriter  or dealer,  any event occurs as a result of which
    the  Prospectus  as then  amended or  supplemented  would  include an untrue
    statement of a material fact or omit to state any material fact necessary to
    make the statements  therein,  in the light of the circumstances under which
    they were made, not  misleading,  or if it is necessary at any time to amend
    the  Prospectus  to comply with the Act,  the Company will  promptly  notify
    CSFBC of such event and will promptly  prepare and file with the Commission,
    at its own  expense,  an  amendment  or  supplement  which will correct such
    statement  or omission or an  amendment  which will effect such  compliance.
    Neither  CSFBC's  consent to, nor the  Underwriters'  delivery  of, any such
    amendment or supplement  shall  constitute a waiver of any of the conditions
    set forth in Section 6.

        (iv) As soon as practicable,  but not later than the  Availability  Date
    (as  defined  below),  the  Company  will make  generally  available  to its
    securityholders  an  earnings  statement  covering  a period  of at least 12
    months  beginning  after  the  Effective  Date of the  Initial  Registration
    Statement (or, if later,  the Effective Date of the Additional  Registration
    Statement)  which will satisfy the  provisions  of Section 11(a) of the Act.
    For the purpose of the  preceding  sentence,  "Availability  Date" means the
    45th day after the end of the fourth  fiscal  quarter  following  the fiscal
    quarter that  includes  such  Effective  Date,  except that,  if such fourth
    fiscal   quarter  is  the  last  quarter  of  the  Company's   fiscal  year,
    "Availability  Date" means the 90th day after the end of such fourth  fiscal
    quarter.

        (v) The  Company  will  furnish  to the  Representatives  copies of each
    Registration  Statement  (two of which will be signed and will  include  all
    exhibits), each related preliminary prospectus, and, so long as a prospectus
    relating to the Offered Securities is required to be delivered under the Act
    in connection  with sales by any  Underwriter or dealer,  the Prospectus and
    all  amendments  and  supplements  to such  documents,  in each case in such
    quantities as CSFBC  requests.  The  Prospectus  shall be so furnished on or
    prior to 3:00 P.M.,  New York time,  on the business day following the later
    of the execution and delivery of this Agreement or the Effective Time of the
    Initial  Registration  Statement.  All  other  such  documents  shall  be so
    furnished as soon as available.  The Selling  Stockholder  will pay, or will
    reimburse the Company for, the expenses of printing and  distributing to the
    Underwriters all such documents.

        (vi) The  Company  will  arrange  for the  qualification  of the Offered
    Securities for sale under the laws of such jurisdictions as CSFBC reasonably
    designates  and will  continue  such  qualifications  in  effect  so long as
    required for the distribution; provided, however, that the Company shall not
    be required to qualify as a foreign corporation or to file a general consent
    to service of process  or  subject  itself to  taxation  in respect of doing
    business in any jurisdiction where it is not then so qualified or subject to
    service of process or taxation.

        (vii) For a period of 90 days after the date of the offering of the Firm
    Securities,  the Company will not offer,  sell,  contract to sell, pledge or
    otherwise dispose of, directly or indirectly,  or file with the Commission a
    registration  statement under the Act relating to, any additional  shares of
    its Securities or securities convertible into or exchangeable or exercisable
    for any shares of its Securities, or publicly disclose the intention to make
    any such  offer,  sale,  pledge,  disposition  or filing,  without the prior
    written  consent of CSFBC,  except  issuances of Securities  pursuant to the
    exercise of warrants or options  outstanding  on the date hereof,  grants of
    employee stock options pursuant to the terms of a plan in effect on the date
    hereof, issuances of Securities pursuant to the exercise of such warrants or
    options or issuances pursuant to the Company's dividend reinvestment plan or
    issuances of  Securities  pursuant to the  Company's  other benefit plans in
    effect on the date hereof.

    (b) The Selling  Stockholder  agrees with the several  Underwriters  and the
Company that:  the Selling  Stockholder  will pay, or reimburse the Company for,
all expenses  incident to the  performance  of the  obligations  of such Selling
Stockholder  and the  obligations of the Company under this  Agreement,  for any
filing fees and other expenses  (including  fees and  disbursements  of counsel)
incurred in connection  with  qualification  of the Offered  Securities for sale
under the laws of such  jurisdictions  as CSFBC  reasonably  designates  and the
printing  of  memoranda  relating  thereto,  for the filing fee  incident to the
review by the National  Association of Securities  Dealers,  Inc. of the Offered
Securities,  for any travel expenses of the Company's officers and employees and
any other  expenses  of the  Company in  connection  with  attending  or hosting
meetings with prospective purchasers of the Offered Securities, for any transfer
taxes on the sale of the Offered Securities to the Underwriters and for expenses
incurred in distributing  preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters.

    6. Conditions of the Obligations of the Underwriters. The obligations of the
several  Underwriters  to purchase and pay for the Firm  Securities on the First
Closing  Date and the  Optional  Securities  to be  purchased  on each  Optional
Closing  Date  will  be  subject  to the  accuracy  of the  representations  and
warranties on the part of the Company and the Selling Stockholder herein, to the
accuracy of the written  statements  of Company  officers  made  pursuant to the
provisions hereof, to the performance by the Company and the Selling Stockholder
of  their  obligations  hereunder  and to the  following  additional  conditions
precedent:

    (a) The  Representatives  shall have  received  a letter,  dated the date of
delivery  thereof  (which,  if the  Effective  Time of the Initial  Registration
Statement is prior to the execution and delivery of this Agreement,  shall be on
or prior to the date of this  Agreement or, if the Effective Time of the Initial
Registration  Statement  is  subsequent  to the  execution  and delivery of this
Agreement,  shall be prior to the  filing  of the  amendment  or  post-effective
amendment  to the  registration  statement  to be  filed  shortly  prior to such
Effective  Time),  of Deloitte & Touche LLP confirming that they are independent
public  accountants  within the meaning of the Act and the applicable  published
Rules and Regulations thereunder and stating to the effect that:

        (i) in their  opinion  the  financial  statements  examined  by them and
    included in the  Registration  Statements  comply as to form in all material
    respects  with the  applicable  accounting  requirements  of the Act and the
    related published Rules and Regulations;

        (ii) on the basis of a reading of the latest available interim financial
    statements  of the  Company,  inquiries of officials of the Company who have
    responsibility  for financial  and  accounting  matters and other  specified
    procedures, nothing came to their attention that caused them to believe that
    at the date of the latest available  balance sheet read by such accountants,
    or at a subsequent specified date not more than three business days prior to
    the date of such  letter,  there was any change in the capital  stock or any
    increase in short-term indebtedness or long-term debt of the Company and its
    consolidated  subsidiaries or, at the date of the latest  available  balance
    sheet read by such  accountants,  there was any decrease in consolidated net
    current  assets or net assets,  as compared with amounts shown on the latest
    balance sheet included in the  Prospectus;  except in all cases set forth in
    this clause (ii) for changes,  increases or decreases which are described in
    such letter; and

        (iii)  they have  compared  specified  dollar  amounts  (or  percentages
    derived from such dollar amounts) and other financial  information contained
    in the Registration  Statements (in each case to the extent that such dollar
    amounts,  percentages and other  financial  information are derived from the
    general  accounting  records of the Company and its subsidiaries  subject to
    the  internal  controls of the  Company's  accounting  system or are derived
    directly  from such  records by  analysis or  computation)  with the results
    obtained from inquiries,  a reading of such general  accounting  records and
    other  procedures  specified  in such  letter  and have  found  such  dollar
    amounts, percentages and other financial information to be in agreement with
    such results, except as otherwise specified in such letter.

For  purposes  of this  subsection,  (i) if the  Effective  Time of the  Initial
Registration  Statement  is  subsequent  to the  execution  and delivery of this
Agreement,   "REGISTRATION  STATEMENTS"  shall  mean  the  initial  registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective  Time,  (ii) if the Effective Time of
the Initial  Registration  Statement is prior to the  execution  and delivery of
this Agreement but the Effective Time of the Additional  Registration  Statement
is subsequent to such execution and delivery,  "REGISTRATION  STATEMENTS"  shall
mean  the  Initial  Registration  Statement  and  the  additional   registration
statement  as  proposed  to  be  filed  or as  proposed  to be  amended  by  the
post-effective  amendment to be filed shortly prior to its Effective  Time,  and
(iii)  "PROSPECTUS"  shall  mean the  prospectus  included  in the  Registration
Statements.  All  financial  statements  included  in material  incorporated  by
reference  into the  Prospectus  shall be deemed  included  in the  Registration
Statements for purposes of this subsection.

    (b) If the Effective Time of the Initial Registration Statement is not prior
to the execution and delivery of this Agreement,  such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date of this Agreement
or such later date as shall have been  consented to by CSFBC.  If the  Effective
Time of the  Additional  Registration  Statement  (if  any) is not  prior to the
execution  and  delivery  of this  Agreement,  such  Effective  Time  shall have
occurred not later that 10:00 P.M., New York time, on the date of this Agreement
or, if  earlier,  the time the  Prospectus  is printed  and  distributed  to any
Underwriter,  or shall  have  occurred  at such  later  date as shall  have been
consented  to by  CSFBC.  If the  Effective  Time  of the  Initial  Registration
Statement  is  prior  to the  execution  and  delivery  of this  Agreement,  the
Prospectus  shall have been filed with the  Commission  in  accordance  with the
Rules and  Regulations  and  Section  5(a)(i) of this  Agreement.  Prior to such
Closing Date,  no stop order  suspending  the  effectiveness  of a  Registration
Statement  shall have been issued and no proceedings for that purpose shall have
been instituted or, to the knowledge of the Selling Stockholder,  the Company or
the Representatives, shall be contemplated by the Commission.

    (c) Subsequent to the execution and delivery of this Agreement,  there shall
not have  occurred  (i) any  change,  or any  development  or event  involving a
prospective change, in the condition (financial or other), business,  properties
or results of  operations  of the Company or its  subsidiaries  taken as a whole
which, in the judgment of a majority in interest of the  Underwriters  including
CSFBC,  is material  and  adverse and makes it  impractical  or  inadvisable  to
proceed with  completion  of the public  offering or the sale of and payment for
the  Offered  Securities;  (ii)  any  downgrading  in the  rating  of  any  debt
securities  or  preferred  stock of the  Company by any  "nationally  recognized
statistical  rating  organization" (as defined for purposes of Rule 436(g) under
the  Act),  or any  public  announcement  that any such  organization  has under
surveillance  or review its rating of any debt  securities or preferred stock of
the Company (other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading,  of such rating); (iii)
any  material  suspension  or  material  limitation  of  trading  in  securities
generally on the New York Stock  Exchange,  or any setting of minimum prices for
trading on such exchange,  or any suspension of trading of any securities of the
Company on any  exchange  or in the  over-the-counter  market;  (iv) any banking
moratorium declared by U.S. Federal or New York authorities; or (v) any outbreak
or escalation of major  hostilities in which the United States is involved,  any
declaration   of  war  by  Congress  or  any  other   substantial   national  or
international  calamity  or  emergency  if, in the  judgment  of a  majority  in
interest of the  Underwriters  including CSFBC, the effect of any such outbreak,
escalation,   declaration,   calamity  or  emergency  makes  it  impractical  or
inadvisable to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.

    (d) The Representatives  shall have received an opinion,  dated such Closing
Date,  of Robert  S.  Holcombe,  Senior  Vice  President,  General  Counsel  and
Secretary of the Company, to the effect that:

        (i)  The  Company  has  been  duly   incorporated  and  is  an  existing
    corporation in good standing  under the laws of the State of Delaware,  with
    corporate power and authority to own its properties and conduct its business
    as  described  in the  Prospectus;  and the Company is duly  qualified to do
    business  as  a  foreign   corporation   in  good   standing  in  all  other
    jurisdictions  in which its ownership or lease of property or the conduct of
    its business requires such qualification,  except where the failure to be so
    qualified would not individually or in the aggregate have a Material Adverse
    Effect;

        (ii) The Offered Securities delivered on such Closing Date and all other
    outstanding  shares  of the  Common  Stock of the  Company  have  been  duly
    authorized and validly issued,  are fully paid and nonassessable and conform
    in  all  material  respects  to the  description  thereof  contained  in the
    Prospectus;

        (iii) There are no contracts, agreements or understandings known to such
    counsel between the Company and any person granting such person the right to
    require  the  Company to file a  registration  statement  under the Act with
    respect to any securities of the Company owned or to be owned by such person
    or to require  the  Company to include  such  securities  in the  securities
    registered pursuant to the Registration Statement or in any securities being
    registered pursuant to any other registration statement filed by the Company
    under the Act;

        (iv) The execution,  delivery and  performance of this Agreement and the
    consummation of the transactions  herein  contemplated  will not result in a
    breach or violation of (a) to such counsel's knowledge, any of the terms and
    provisions  of,  or  constitute  a default  under,  any  statute,  any rule,
    regulation or order of any  governmental  agency or body or any court having
    jurisdiction  over the  Company or any  subsidiary  of the Company or any of
    their properties, or any agreement or instrument to which the Company or any
    such subsidiary is a party or by which the Company or any such subsidiary is
    bound  or to  which  any  of  the  properties  of the  Company  or any  such
    subsidiary is subject that is material to the Company, or (b) the charter or
    by-laws of the Company or any such subsidiary; and

        (v)  Such  counsel  has  no  reason  to  believe  that  any  part  of  a
    Registration  Statement or any  amendment  thereto or the  Prospectus or any
    amendment or supplement  thereto, as of its effective date (in the case of a
    Registration  Statement) or issue date (in the case of the Prospectus) or as
    of such Closing Date,  contained any untrue  statement of a material fact or
    omitted to state any material fact necessary to make the statements therein,
    in the light of  circumstances  under which they were made, not  misleading,
    except  that such  counsel  shall  express  no belief  with  respect  to the
    financial  statements or other financial data contained in or omitted from a
    Registration Statement or the Prospectus.

    (e) The Representatives  shall have received an opinion,  dated such Closing
Date,  of Gibson,  Dunn & Crutcher LLP,  counsel for the Company,  to the effect
that:

        (i) The Offered Securities delivered on such Closing Date have been duly
    authorized and validly issued,  are fully paid and nonassessable and conform
    in  all  material  respects  to the  description  thereof  contained  in the
    Prospectus;  and the  stockholders of the Company have no preemptive  rights
    arising under applicable law with respect to the Securities;

        (ii) To such counsel's knowledge, no consent, approval, authorization or
    order of, or filing with,  any  governmental  agency or body or any court is
    required to be obtained or made by the Company  under the laws of the United
    States of America or the State of California  or under the Delaware  General
    Corporation Law in connection with the sale of the Offered Securities to the
    Underwriters in the manner  contemplated  in this Agreement,  except such as
    have been obtained and made under the Act and such as may be required  under
    the  blue  sky  laws of any  jurisdiction  (including,  without  limitation,
    California,  Delaware  and New York) in  connection  with the  purchase  and
    distribution  of the Offered  Securities by the  Underwriters  in the manner
    contemplated  by this Agreement and the Prospectus (as to which such counsel
    need express no opinion);

        (iii) The Initial  Registration  Statement was declared  effective under
    the Act as of the date and time  specified in such opinion,  the  Additional
    Registration Statement (if any) was filed and became effective under the Act
    as of the date and time (if  determinable)  specified in such  opinion,  the
    Prospectus either was filed with the Commission pursuant to the subparagraph
    of Rule 424(b)  specified in such opinion on the date  specified  therein or
    was  included  in the  Initial  Registration  Statement  or  the  Additional
    Registration  Statement  (as the  case  may  be),  and,  to the  best of the
    knowledge of such counsel,  no stop order suspending the  effectiveness of a
    Registration   Statement  or  any  part  thereof  has  been  issued  and  no
    proceedings  for  that  purpose  have  been  instituted  or are  pending  or
    contemplated under the Act;

        (iv) Such counsel has  participated  in  conferences  with  officers and
    other  representatives  of the Company,  representatives  of the independent
    auditors of the Company and the Underwriters' representatives and counsel at
    which  the  contents  of the  Registration  Statement  and  Prospectus  were
    discussed. Because the purpose of such counsel's professional engagement was
    not to  establish or confirm  factual  matters and because the scope of such
    counsel's  examination  of the  affairs of the  Company  did not permit such
    counsel to verify the accuracy,  completeness  or fairness of the statements
    contained in the Registration  Statement or the Prospectus,  such counsel is
    not passing upon and does not assume any  responsibility  for the  accuracy,
    completeness  or fairness of the  statements  contained in the  Registration
    Statement or the Prospectus.  On the basis of the foregoing,  except for the
    financial  statements  and  schedules  and  other  financial  data  included
    therein,  as to which such  counsel  expresses no opinion or belief (a) such
    counsel is of the opinion  that the  Registration  Statement  at the time it
    became  effective  appeared on its face to comply as to form in all material
    respects  with  the  applicable  requirements  of  the  Act  and  the  rules
    thereunder, and (b) no facts have come to such counsel's attention that lead
    such counsel to believe that (i) the  Registration  Statement at the time it
    became effective contained an untrue statement of a material fact or omitted
    to state a material fact required to be stated  therein or necessary to make
    the statements therein not misleading, or (ii) the Prospectus as of the date
    thereof and as of the Closing Date contained or contains an untrue statement
    of a material fact or omitted or omits to state a material fact necessary to
    make the statement  therein,  in the light of the circumstances  under which
    they were made, not misleading. On the basis of the foregoing, no facts have
    come to such  counsel's  attention  that lead such  counsel to believe  that
    there is any  contract  or other  document  of a  character  required  to be
    described or  incorporated  by reference  in the  Registration  Statement or
    Prospectus,  or to be filed as an exhibit  thereto,  which is not described,
    incorporated by reference or filed as required.

        (v) This Agreement has been duly  authorized,  executed and delivered by
    the Company.

    (f) The Representatives  shall have received an opinion,  dated such Closing
Date, of Gibson,  Dunn & Crutcher LLP, counsel for the Selling  Stockholder,  to
the effect that:

        (i) On such Closing Date, the Selling  Stockholder had full right, power
    and authority to sell,  assign,  transfer and deliver the Offered Securities
    delivered by the Selling Stockholder on such Closing Date hereunder;

        (ii) Assuming that the Underwriters purchase the Offered Securities sold
    by the  Selling  Stockholder  for value and  without  notice of any  adverse
    claim,  as such  term is  defined  in  Section  8-102(a)(1)  of the New York
    Commercial Code,  delivery to the Underwriters of certificates  representing
    such Offered Securities either registered in the name of the Underwriters or
    effectively  endorsed  to the  Underwriters  in blank will  transfer  to the
    Underwriters  all rights that the transferor has in such Offered  Securities
    free of adverse claims.

        (iii) To such counsel's knowledge, no consent,  approval,  authorization
    or order of, or filing with, any governmental agency or body or any court is
    required to be obtained or made by the Selling Stockholder under the laws of
    the  United  States  of  America  or the  State of  California  or under the
    Delaware  Limited  Liability  Company Act in connection with the sale of the
    Offered  Securities to the  Underwriters in the manner  contemplated in this
    Agreement, except such as have been obtained and made under the Act and such
    as may be required under state securities laws;

        (iv)  To  such  counsel's   knowledge,   the  execution,   delivery  and
    performance  of this  Agreement  and the  consummation  of the  transactions
    herein  contemplated  will not result in a breach or violation of any of the
    terms and  provisions of, or constitute a default  under,  any statute,  any
    rule,  regulation or order of any  governmental  agency or body or any court
    having jurisdiction over the Selling Stockholder or any of its properties or
    any  agreement  or  instrument  identified  to such  counsel by the  Selling
    Stockholder  to which  the  Selling  Stockholder  is a party or by which the
    Selling  Stockholder  is  bound  or to which  any of the  properties  of the
    Selling Stockholder is subject; and

        (v) This Agreement has been duly  authorized,  executed and delivered by
    the Selling Stockholder.

    (g) The  Representatives  shall have received from Cravath,  Swaine & Moore,
counsel for the Underwriters, such opinion or opinions, dated such Closing Date,
with respect to the  incorporation  of the Company,  the validity of the Offered
Securities  delivered on such Closing Date,  the  Registration  Statements,  the
Prospectus and other related matters as the Representatives may require, and the
Selling  Stockholder  and the Company shall have  furnished to such counsel such
documents as they  reasonably  request for the purpose of enabling  them to pass
upon such matters.

    (h) The  Representatives  shall  have  received  a  certificate,  dated such
Closing  Date,  of the Chief  Executive  Officer  and a principal  financial  or
accounting  officer of the Company in which such officers,  to the best of their
knowledge after reasonable investigation,  shall state that: the representations
and  warranties  of the  Company in this  Agreement  are true and correct in all
material  respects;  the Company has complied in all material  respects with all
agreements and satisfied in all material  respects all conditions on its part to
be performed or satisfied  hereunder at or prior to such Closing  Date;  no stop
order suspending the effectiveness of any Registration Statement has been issued
and no proceedings for that purpose have been instituted or are  contemplated by
the Commission;  the Additional  Registration  Statement (if any) satisfying the
requirements of  subparagraphs  (1) and (3) or Rule 462(b) was filed pursuant to
Rule 462(b),  including  payment of the applicable filing fee in accordance with
Rule 111(a) or (b) under the Act,  prior to the time the  Prospectus was printed
and  distributed to any  Underwriter;  and,  subsequent to the dates of the most
recent  financial  statements  in the  Prospectus,  there  has been no  material
adverse change,  nor any  development or event involving a prospective  material
adverse change, in the condition (financial or other),  business,  properties or
results of  operations  of the  Company  and its  subsidiaries  taken as a whole
except as set forth in or contemplated by the Prospectus or as described in such
certificate.

    (i) The  Representatives  shall  have  received  a  certificate,  dated such
Closing  Date,  of a Managing  Member of the Selling  Stockholder  in which such
Member, to the best of his knowledge after reasonable investigation, shall state
that:  the  representations  and  warranties of the Selling  Stockholder in this
Agreement are true and correct in all material respects; the Selling Stockholder
has complied in all material  respects with all  agreements and satisfied in all
material  respects  all  conditions  on its part to be  performed  or  satisfied
hereunder at or prior to such Closing  Date;  and,  subsequent  to the Effective
Date,  there has been no material  adverse change,  nor any development or event
involving a prospective  material adverse change, in the condition (financial or
other),  business,  properties  or results of  operations of the Company and its
subsidiaries  taken as a whole  except  as set forth in or  contemplated  by the
Prospectus or as described in such certificate.

    (j) The  Representatives  shall have  received a letter,  dated such Closing
Date, of Deloitte & Touche LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection will
be a date not more than three days prior to such  Closing  Date for the purposes
of this subsection.

    (k) The Selling Stockholder and the Company will furnish the Representatives
with such conformed copies of such opinions, certificates, letters and documents
as CSFBC reasonably  requests.  CSFBC may in its sole discretion waive on behalf
of the  Underwriters  compliance  with any conditions to the  obligations of the
Underwriters  hereunder,  whether  in  respect of an  Optional  Closing  Date or
otherwise.

    7. Indemnification and Contribution. (a) The Company will indemnify and hold
harmless each Underwriter, its partners, directors and officers and each person,
if any, who controls  such  Underwriter  within the meaning of Section 15 of the
Act, against any losses,  claims,  damages or liabilities,  joint or several, to
which such Underwriter may become subject,  under the Act or otherwise,  insofar
as such losses,  claims,  damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue  statement or alleged untrue statement
of any material fact contained in any Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary  prospectus,  or
arise out of or are based upon the omission or alleged omission to state therein
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein  in light of the  circumstances  in which they were made not
misleading,  and will reimburse each Underwriter for any legal or other expenses
reasonably  incurred by such  Underwriter in connection  with  investigating  or
defending any such loss, claim, damage, liability or action as such expenses are
incurred;  provided,  however,  that the Company  will not be liable in any such
case to the extent that any such loss, claim,  damage or liability arises out of
or is based upon an untrue  statement or alleged untrue statement in or omission
or  alleged  omission  from  any of  such  documents  in  reliance  upon  and in
conformity with written information  furnished to the Company by any Underwriter
through the  Representatives  specifically for use therein,  it being understood
and agreed that the only such information  furnished by any Underwriter consists
of the  information  described as such in  subsection  (c) below;  and provided,
further,  that with respect to any untrue  statement or alleged untrue statement
in or  omission  of  alleged  omission  from  any  preliminary  prospectus,  the
indemnity  agreement  contained  in this  Section  7(a)  shall  not inure to the
benefit of any  Underwriter  from whom the  person  asserting  any such  losses,
claims,  damages or liabilities purchased the Offered Securities  concerned,  to
the extent that a prospectus  relating to such Offered Securities  concerned was
required to be delivered by such  Underwriter  under the Act in connection  with
such purchase and any such loss, claim,  damage or liability of such Underwriter
results  from the fact that  there was not sent or given to such  person,  at or
prior to the written confirmation of the sale of such Offered Securities to such
person,  a  copy  of the  Prospectus  (exclusive  of  material  incorporated  by
reference)  if the  Company  had  previously  furnished  copies  thereof to such
Underwriter.

    (b)  The  Selling   Stockholder   will  indemnify  and  hold  harmless  each
Underwriter,  its partners,  directors and officers and each person, if any, who
controls such  Underwriter  within the meaning of Section 15 of the Act, against
any losses,  claims,  damages or  liabilities,  joint or several,  to which such
Underwriter  may become  subject,  under the Act or  otherwise,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue  statement  or alleged  untrue  statement of any
material fact contained in any Registration  Statement,  the Prospectus,  or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the  omission or alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such  untrue  statement  or alleged  untrue  statement  or  omission  or alleged
omission  was  made  in  any  Registration  Statement,  the  Prospectus,  or any
amendment or  supplement  thereto,  or any related  preliminary  prospectus,  in
reliance upon and in conformity with information furnished to the Company by the
Selling  Stockholder  specifically  for use  therein,  and will  reimburse  each
Underwriter  for  any  legal  or  other  expenses  reasonably  incurred  by such
Underwriter in connection with  investigating or defending any such loss, claim,
damage,  liability or action as such expenses are incurred;  provided,  however,
that the Selling  Stockholder  will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue  statement or alleged untrue statement in or omission or alleged omission
from any of such  documents  in reliance  upon and in  conformity  with  written
information   furnished   to  the   Company  by  an   Underwriter   through  the
Representatives  specifically  for use therein,  it being  understood and agreed
that the only such  information  furnished  by any  Underwriter  consists of the
information described as such in subsection (c) below.

    (c) Each  Underwriter  will  severally  and not jointly  indemnify  and hold
harmless the Company,  its  directors  and  officers,  each person,  if any, who
controls  the Company  within the meaning of Section 15 of the Act,  the Selling
Stockholder and each person, if any, who controls the Selling Stockholder within
the  meaning of Section 15 of the Act against  any  losses,  claims,  damages or
liabilities to which the Company or such Selling Stockholder may become subject,
under  the  Act or  otherwise,  insofar  as  such  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof) arise out of or are based upon any
untrue  statement or alleged untrue  statement of any material fact contained in
any  Registration  Statement,  the  Prospectus,  or any  amendment or supplement
thereto,  or any related  preliminary  prospectus,  or arise out of or are based
upon the  omission or the  alleged  omission  to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue  statement or omission or alleged  omission was made
in reliance upon and in  conformity  with written  information  furnished to the
Company by such  Underwriter  through the  Representatives  specifically for use
therein,  and will reimburse each of the Company and the Selling Stockholder any
legal or other  expenses  reasonably  incurred  by the  Company  and the Selling
Stockholder in connection with  investigating or defending any such loss, claim,
damage,  liability or action as such expenses are incurred,  it being understood
and agreed that the only such information  furnished by any Underwriter consists
of (i) the following  information in the Prospectus  furnished on behalf of each
Underwriter:  the concession  and  reallowance  figures  appearing in the fourth
paragraph,  and the information contained in the ninth and tenth paragraphs,  in
each case under the caption "Underwriting".

    (d) Promptly  after  receipt by an  indemnified  party under this Section of
notice of the  commencement  of any action,  such  indemnified  party will, if a
claim in respect  thereof  is to be made  against an  indemnifying  party  under
subsection  (a),  (b)  or  (c)  above,  notify  the  indemnifying  party  of the
commencement  thereof; but the omission so to notify the indemnifying party will
not relieve it from any  liability  which it may have to any  indemnified  party
otherwise than under  subsection  (a), (b) or (c) above. In case any such action
is brought against any indemnified  party and it notifies an indemnifying  party
of the  commencement  thereof,  the  indemnifying  party  will  be  entitled  to
participate  therein and, to the extent that it may wish, jointly with any other
indemnifying  party  similarly  notified,  to assume the defense  thereof,  with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the  consent of the  indemnified  party,  be  counsel  to the  indemnifying
party),  and after notice from the indemnifying  party to such indemnified party
of its election so to assume the defense thereof,  the  indemnifying  party will
not be liable to such  indemnified  party  under this  Section  for any legal or
other expenses  subsequently  incurred by such  indemnified  party in connection
with the  defense  thereof  other than  reasonable  costs of  investigation.  No
indemnifying  party shall,  without the prior written consent of the indemnified
party,  effect any settlement of any pending or threatened  action in respect of
which any  indemnified  party is or could have been a party and indemnity  could
have been sought hereunder by such indemnified  party unless such settlement (i)
includes an unconditional  release of such indemnified  party from all liability
on any  claims  that are the  subject  matter of such  action  and (ii) does not
include a statement as to, or an admission of, fault,  culpability  or a failure
to act by or on behalf of an indemnified party.

    (e) If the  indemnification  provided for in this Section is  unavailable or
insufficient to hold harmless an indemnified  party under subsection (a), (b) or
(c) above, then each  indemnifying  party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses,  claims, damages or
liabilities  referred  to in  subsection  (a),  (b) or  (c)  above  (i) in  such
proportion as is  appropriate to reflect the relative  benefits  received by the
Company and the Selling  Stockholder on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation  provided by
clause (i) above is not  permitted by applicable  law, in such  proportion as is
appropriate to reflect not only the relative  benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling  Stockholder on
the one hand and the Underwriters on the other in connection with the statements
or omissions  which resulted in such losses,  claims,  damages or liabilities as
well as any other  relevant  equitable  considerations.  The  relative  benefits
received  by the Company  and the  Selling  Stockholder  on the one hand and the
Underwriters  on the other shall be deemed to be in the same  proportion  as the
total net proceeds from the offering (before deducting expenses) received by the
Selling  Stockholder  bear to the total  underwriting  discounts and commissions
received  by the  Underwriters.  The  relative  fault  shall  be  determined  by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged  omission to state a material fact
relates to information  supplied by the Company,  the Selling Stockholder or the
Underwriters and the parties' relative intent, knowledge,  access to information
and  opportunity  to correct or prevent such untrue  statement or omission.  The
amount paid by an indemnified party as a result of the losses,  claims,  damages
or liabilities referred to in the first sentence of this subsection (e) shall be
deemed  to  include  any legal or other  expenses  reasonably  incurred  by such
indemnified  party in connection with  investigating  or defending any action or
claim  which  is  the  subject  of  this  subsection  (e).  Notwithstanding  the
provisions  of  this  subsection  (e),  no  Underwriter  shall  be  required  to
contribute  any amount in excess of the amount by which the total price at which
the Securities  underwritten by it and distributed to the public were offered to
the  public  exceeds  the  amount of any  damages  which  such  Underwriter  has
otherwise  been  required  to pay by reason of such  untrue  or  alleged  untrue
statement  or  omission  or alleged  omission.  No person  guilty of  fraudulent
misrepresentation  (within  the  meaning of  Section  11(f) of the Act) shall be
entitled to  contribution  from any person who was not guilty of such fraudulent
misrepresentation.  The  Underwriters'  obligations  in this  subsection  (e) to
contribute   are  several  in  proportion  to  their   respective   underwriting
obligations and not joint.

    (f) The  obligations of the Company and the Selling  Stockholder  under this
Section shall be in addition to any liability  which the Company and the Selling
Stockholder  may  otherwise  have and  shall  extend,  upon the same  terms  and
conditions,  to each person,  if any, who  controls any  Underwriter  within the
meaning of the Act; and the obligations of the  Underwriters  under this Section
shall be in addition to any  liability  which the  respective  Underwriters  may
otherwise  have and shall extend,  upon the same terms and  conditions,  to each
director  of the  Company,  to each  officer  of the  Company  who has  signed a
Registration  Statement, to each person, if any, who controls the Company within
the meaning of the Act, to the Selling  Stockholder and to each person,  if any,
who controls the Selling Stockholder within the meaning of the Act.

    8. Default of  Underwriters.  If any Underwriter or Underwriters  default in
their obligations to purchase Offered  Securities  hereunder on either the First
or any  Optional  Closing  Date and the  aggregate  number of shares of  Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the  Underwriters are obligated to purchase on such Closing Date, CSFBC may
make  arrangements  satisfactory to the Selling  Stockholder and the Company for
the purchase of such Offered  Securities by other persons,  including any of the
Underwriters,  but if no such  arrangements  are made by such Closing Date,  the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments  hereunder,  to purchase the Offered Securities that such
defaulting  Underwriters  agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered  Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered  Securities  that the  Underwriters
are obligated to purchase on such Closing Date and arrangements  satisfactory to
CSFBC, the Selling  Stockholder and the Company for the purchase of such Offered
Securities  by other  persons are not made  within 36 hours after such  default,
this   Agreement  will   terminate   without   liability  on  the  part  of  any
non-defaulting  Underwriter,  the Company or the Selling Stockholder,  except as
provided in Section 9,  (provided  that if such  default  occurs with respect to
Optional  Securities  after the First  Closing  Date,  this  Agreement  will not
terminate as to the Firm Securities or any Optional  Securities  purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person  substituted  for an Underwriter  under this Section.  Nothing herein
will relieve a defaulting Underwriter from liability for its default.

    9.  Survival of Certain  Representations  and  Obligations.  The  respective
indemnities, agreements, representations, warranties and other statements of the
Selling  Stockholder,  of the  Company  or  its  officers  and  of  the  several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and  effect,  regardless  of any  investigation,  or  statement  as to the
results  thereof,  made  by  or  on  behalf  of  any  Underwriter,  the  Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling  person,  and will survive  delivery of and payment
for the Offered Securities.  If this Agreement is terminated pursuant to Section
8 or  if  for  any  reason  the  purchase  of  the  Offered  Securities  by  the
Underwriters  is  not  consummated,   the  Selling   Stockholder   shall  remain
responsible  for the  expenses  to be paid or  reimbursed  by them  pursuant  to
Section  5  and  the  respective   obligations  of  the  Company,   the  Selling
Stockholder,  and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased  hereunder the representations
and  warranties  in  Section 2 and all  obligations  under  Section 5 shall also
remain in effect. If the purchase of the Offered  Securities by the Underwriters
is not  consummated  for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause  (iii),  (iv) or (v) of Section  6(c),  the Selling  Stockholder  will
reimburse the Underwriters for all  out-of-pocket  expenses  (including fees and
disbursements  of counsel)  reasonably  incurred by them in connection  with the
offering of the Offered Securities.

    10. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters,  will be mailed, delivered or telegraphed and confirmed to the
Representatives  at Eleven Madison Avenue,  New York, NY 10010-3629,  Attention:
Transactions  Advisory  Group,  or,  if sent  to the  Company,  will be  mailed,
delivered or telegraphed and confirmed to it at 3560 Hyland Avenue,  Costa Mesa,
CA  92626,  Attention:  Robert S.  Holcombe,  Esq.,  or, if sent to the  Selling
Stockholder,  will be mailed,  delivered or telegraphed and confirmed to Michael
W. Griffin at 11975 El Camino Real,  Suite 300, San Diego,  CA 92130;  provided,
however, that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.

    11.  Successors.  This Agreement will inure to the benefit of and be binding
upon the parties  hereto and their  respective  successors  and the officers and
directors and controlling  persons referred to in Section 7, and no other person
will have any right or obligation hereunder.

    12.   Representation.   The   Representatives   will  act  for  the  several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the  Representatives  jointly or by
CSFBC will be binding upon all the Underwriters.

    13.  Counterparts.   This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which  shall be  deemed to be an  original,  but all such
counterparts shall together constitute one and the same Agreement.
<PAGE>


    14.  APPLICABLE  LAW. THIS AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

    The Company hereby submits to the non-exclusive  jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding  arising out of or relating to this Agreement or the  transactions
contemplated hereby.


<PAGE>


    If the foregoing is in accordance with the Representatives' understanding of
our  agreement,  kindly sign and return to the  Company one of the  counterparts
hereof,  whereupon  it  will  become  a  binding  agreement  among  the  Selling
Stockholder,  the Company and the several  Underwriters  in accordance  with its
terms.

                                 Very truly yours,

                                     RELATIONAL INVESTORS LLC

                                     By:
                                        ----------------------------------------
                                        Name:  Ralph V. Whitworth
                                        Title: Principal and Managing Director

                                     APRIA HEALTHCARE GROUP INC.

                                     By:
                                        ----------------------------------------
                                        Name:  John C. Maney
                                        Title: Executive Vice President and
                                               Chief Financial Officer

The foregoing  Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.

         CREDIT SUISSE FIRST BOSTON CORPORATION
         BANC OF AMERICA SECURITIES LLC
         J. P. MORGAN SECURITIES INC.
         UBS WARBURG LLC

         Acting on behalf of themselves and as the
         Representatives of the several Underwriters

         By: CREDIT SUISSE FIRST BOSTON CORPORATION

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

<PAGE>


                                   SCHEDULE A

                                                                    NUMBER OF
                                                                 FIRM SECURITIES
                  UNDERWRITER                                    TO BE PURCHASED
                  -----------                                    ---------------
Credit Suisse First Boston Corporation...................           2,717,000
Banc of America Securities Inc...........................           2,317,000
J.P. Morgan Securities Inc...............................           1,478,000
UBS Warburg LLC..........................................           1,478,000
Jefferies & Company, Inc.................................             170,000
Morgan Stanley & Co. Incorporated........................             170,000
Tucker Anthony Incorporated..............................             170,000
                                                                    ---------
                           Total.........................           8,500,000
                                                                    =========