<PAGE>   1
                                                                  EXHIBIT 10.48


================================================================================





                              SAFESKIN CORPORATION


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

                             NOTE PURCHASE AGREEMENT

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



                            DATED AS OF MARCH 5, 1999










            $40,000,000 6.89% SENIOR SECURED NOTES DUE MARCH 5, 2009




================================================================================


<PAGE>   2

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>            <C>                                                                                             <C>
1.             AUTHORIZATION OF NOTES............................................................................1

2.             SALE AND PURCHASE OF NOTES........................................................................1

3.             CLOSING...........................................................................................1

4.             CONDITIONS TO CLOSING.............................................................................2
               4.1           Representations and Warranties......................................................2
               4.2           Performance; No Default.............................................................2
               4.3           Compliance Certificates.............................................................2
               4.4           Opinions of Counsel ................................................................3
               4.5           Purchase Permitted By Applicable Law, etc...........................................3
               4.6           Sale of Other Notes.................................................................3
               4.7           Bank Loan Agreement.................................................................3
               4.8           Synthetic Lease Documents...........................................................4
               4.9           Intercreditor Agreement.............................................................4
               4.10          Security Agreement..................................................................4
               4.11          Pledge Agreement....................................................................4
               4.12          Perfection of Liens.................................................................4
               4.13          Termination or Assignment of Existing Liens.........................................4
               4.14          Guaranty Agreement..................................................................5
               4.15          Payment of Special Counsel Fees.....................................................5
               4.16          Private Placement Number............................................................5
               4.17          Changes in Corporate Structure......................................................5
               4.18          Proceedings and Documents...........................................................5

5.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................................5
               5.1           Organization; Power and Authority...................................................5
               5.2           Authorization, etc..................................................................6
               5.3           Disclosure..........................................................................6
               5.4           Organization and Ownership of Shares of Subsidiaries; Affiliates....................6
               5.5           Financial Statements................................................................7
               5.6           Compliance with Laws, Other Instruments, etc........................................7
               5.7           Governmental Authorizations, etc....................................................8
               5.8           Litigation; Observance of Agreements, Statutes and Orders...........................8
               5.9           Taxes...............................................................................8
               5.10          Title to Property; Leases...........................................................9
               5.11          Licenses, Permits, etc..............................................................9
               5.12          Compliance with ERISA...............................................................9
               5.13          Private Offering by the Company....................................................10
               5.14          Use of Proceeds; Margin Regulations................................................11
               5.15          Existing Indebtedness; Future Liens................................................11
               5.16          Foreign Assets Control Regulations, etc............................................11
</TABLE>



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                        i

<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>            <C>                                                                                             <C>
               5.17          Status under Certain Statutes......................................................12
               5.18          Environmental Matters..............................................................12
               5.19          Security Documents.................................................................12
               5.20          Solvency...........................................................................13
               5.21          Year 2000 Problem..................................................................13

6.             REPRESENTATIONS OF THE PURCHASER.................................................................13
               6.1           Purchase for Investment............................................................13
               6.2           Source of Funds....................................................................14

7.             INFORMATION AS TO COMPANY........................................................................15
               7.1           Financial and Business Information.................................................15
               7.2           Officer's Certificate..............................................................17
               7.3           Inspection.........................................................................18

8.             PAYMENT OF THE NOTES, ETC........................................................................19
               8.1           Required Prepayments; Payment at Maturity..........................................19
               8.2           Optional Prepayments with Make-Whole Amount........................................19
               8.3           Change in Control..................................................................19
               8.4           Allocation of Partial Prepayments..................................................22
               8.5           Maturity; Surrender, etc...........................................................22
               8.6           No Other Optional Prepayments or Purchase of Notes.................................22
               8.7           Make-Whole Amount..................................................................22

9.             AFFIRMATIVE COVENANTS............................................................................24
               9.1           Compliance with Law................................................................24
               9.2           Insurance..........................................................................24
               9.3           Maintenance of Properties..........................................................24
               9.4           Payment of Taxes and Claims........................................................24
               9.5           Corporate Existence, etc...........................................................25
               9.6           New Subsidiaries...................................................................25
               9.7           Pari Passu.........................................................................26
               9.8           Further Assurances.................................................................26
               9.9           Compliance Regarding Year 2000.....................................................27

10.            NEGATIVE COVENANTS...............................................................................27
               10.1          Transactions with Affiliates.......................................................27
               10.2          Line of Business...................................................................27
               10.3          Maintenance of Consolidated Net Worth..............................................27
               10.4          Consolidated Pro Forma Interest Coverage Ratio.....................................28
               10.5          Limitation on Debt.................................................................28
               10.6          Liens..............................................................................29
               10.7          Merger, Consolidation, etc.........................................................32
               10.8          Sale of Assets, etc................................................................33
</TABLE>


SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT



                                       ii

<PAGE>   4


                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>            <C>                                                                                             <C>
11.            EVENTS OF DEFAULT................................................................................35

12.            REMEDIES ON DEFAULT, ETC.........................................................................38
               12.1          Acceleration.......................................................................38
               12.2          Other Remedies.....................................................................39
               12.3          Rescission.........................................................................39
               12.4          No Waivers or Election of Remedies, Expenses, etc..................................40

13.            REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES....................................................40
               13.1          Registration of Notes..............................................................40
               13.2          Transfer and Exchange of Notes.....................................................40
               13.3          Replacement of Notes...............................................................41

14.            PAYMENTS ON NOTES................................................................................41
               14.1          Place of Payment...................................................................41
               14.2          Home Office Payment................................................................41

15.            EXPENSES, ETC....................................................................................42
               15.1          Transaction Expenses...............................................................42
               15.2          Survival...........................................................................42

16.            SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.....................................42

17.            AMENDMENT AND WAIVER.............................................................................42
               17.1          Requirements.......................................................................42
               17.2          Solicitation of Holders of Notes...................................................43
               17.3          Binding Effect, etc................................................................43
               17.4          Notes held by Company, etc.........................................................43

18.            NOTICES..........................................................................................44

19.            REPRODUCTION OF DOCUMENTS........................................................................44

20.            CONFIDENTIAL INFORMATION.........................................................................44

21.            SUBSTITUTION OF PURCHASER........................................................................46

22.            MISCELLANEOUS....................................................................................46
               22.1          Additional Notes...................................................................46
               22.2          Successors and Assigns.............................................................47
               22.3          Payments Due on Non-Business Days; When Payments Deemed Received...................47
               22.4          Severability.......................................................................47
               22.5          Construction.......................................................................47
               22.6          Counterparts.......................................................................47
               22.7          Governing Law......................................................................48
               22.8          Jurisdiction.......................................................................48
</TABLE>



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT



                                       iv

<PAGE>   5

                              SCHEDULES & EXHIBITS


<TABLE>
<S>                <C>        <C> 
SCHEDULE A          --         Information Relating to Purchasers
SCHEDULE B          --         Defined Terms
SCHEDULE 3          --         Payment Instructions
SCHEDULE 4.17       --         Changes in Corporate Structure
SCHEDULE 5.3        --         Disclosure Materials
SCHEDULE 5.4        --         Subsidiaries of the Company and Ownership of Subsidiary Stock
SCHEDULE 5.5        --         Financial Statements
SCHEDULE 5.8        --         Certain Litigation
SCHEDULE 5.11       --         Patents, etc.
SCHEDULE 5.12       --         ERISA Affiliates
SCHEDULE 5.14       --         Use of Proceeds
SCHEDULE 5.15       --         Existing Indebtedness and Liens
EXHIBIT 1           --         Form of 6.89% Senior Secured Note due March 5, 2009
EXHIBIT 4.4(a)      --         Form of Opinion of Special Counsel for the Company and the
                               Initial Guarantor
EXHIBIT 4.4(b)      --         Form of Opinion of Special Counsel for the Collateral Agent
EXHIBIT 4.4(c)      --         Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 4.9         --         Form of Intercreditor Agreement
EXHIBIT 4.10        --         Form of Security Agreement
EXHIBIT 4.11        --         Form of Pledge Agreement
EXHIBIT 4.14        --         Form of Guaranty Agreement
</TABLE>



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                        v

<PAGE>   6

                              SAFESKIN CORPORATION
                             12671 HIGH BLUFF DRIVE
                           SAN DIEGO, CALIFORNIA 92130


                  6.89% SENIOR SECURED NOTES DUE MARCH 5, 2009



                                                      Dated as of March 5, 1999


To the Purchaser Named on
 the Signature Page Hereto

Ladies and Gentlemen:

         SAFESKIN CORPORATION, a Florida corporation (together with its
successors and assigns, the "COMPANY"), agrees with you as follows:

1.       AUTHORIZATION OF NOTES

         The Company will authorize the issue and sale of $40,000,000 aggregate
principal amount of its 6.89% Senior Secured Notes due March 5, 2009 (such
notes, together with all other notes issued pursuant to either this Agreement or
any of the Other Agreements in exchange or substitution thereof, the "NOTES").
The Notes shall be substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Section," "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Section of, or a Schedule or an Exhibit attached to, this Agreement.

2.       SALE AND PURCHASE OF NOTES

         Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified below your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "OTHER AGREEMENTS")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "OTHER PURCHASERS"), providing for the sale at such Closing to
each of the Other Purchasers of Notes in the principal amount specified below
its name in Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by any Other
Purchaser thereunder.

3.       CLOSING

         The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Sheppard, Mullin, Richter & Hampton,
LLC, 501 West Broadway, San Diego, California 92101, at 10:00 a.m., local time,
at a closing (the "CLOSING") on March 5, 1999. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater

SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT

<PAGE>   7



number of Notes in denominations of at least $100,000 as you may request), dated
the date of the Closing and registered in your name (or in the name of your
nominee), as indicated in Schedule A, against payment by federal funds wire
transfer in immediately available funds of the amount of the purchase price
therefor as directed by the Company in Schedule 3. If at the Closing the Company
shall fail to tender such Notes to you as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.

4.       CONDITIONS TO CLOSING

         Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:

         4.1      REPRESENTATIONS AND WARRANTIES.

         The representations and warranties of the Company and the Initial
Guarantor in the Financing Documents shall be correct when made and at the time
of the Closing.

         4.2      PERFORMANCE; NO DEFAULT.

         The Company and the Initial Guarantor shall have performed and complied
with all agreements and conditions contained in the Financing Documents required
to be performed or complied with by the Company and the Initial Guarantor prior
to or at the Closing and after giving effect to the issue and sale of the Notes
(and the application of the proceeds thereof as contemplated by Schedule 5.14)
no Default or Event of Default shall have occurred and be continuing. Neither
the Company nor any Subsidiary shall have entered into any transaction since the
date of the Memorandum that would have been prohibited by any of Sections 10.1,
10.5, 10.6 or 10.8 had such Sections applied since such date.

         4.3      COMPLIANCE CERTIFICATES.

                  (a) OFFICER'S CERTIFICATE. The Company shall have delivered to
         you an Officer's Certificate, dated the date of the Closing, certifying
         that the conditions specified in Sections 4.1, 4.2 and 4.17 have been
         fulfilled.

                  (b) COMPANY SECRETARY'S CERTIFICATE. The Company shall have
         delivered to you a certificate of its Secretary or one of its Assistant
         Secretaries, dated the date of the Closing, certifying as to the
         resolutions attached thereto and other corporate proceedings relating
         to the authorization, execution and delivery of the Financing Documents
         to which it is a party.

                  (c) INITIAL GUARANTOR SECRETARY'S CERTIFICATE. The Initial
         Guarantor shall have delivered to you a certificate of its Secretary or
         one of its Assistant Secretaries, dated the date of the Closing,
         certifying as to the resolutions attached thereto and other corporate
         proceedings relating to the authorization, execution and delivery of
         the Financing Documents to which it is a party.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT



                                       2

<PAGE>   8

         4.4      OPINIONS OF COUNSEL.



         You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing, from

                  (a) Morgan, Lewis & Bockius LLP, counsel for the Company and
         the Initial Guarantor, substantially in the form set out in Exhibit
         4.4(a) and covering such other matters incident to the transactions
         contemplated hereby as you or your counsel may reasonably request (and
         the Company hereby instructs such counsel to deliver such opinion to
         you),

                  (b) Sheppard, Mullin, Richter & Hampton LLP, counsel for the
         Collateral Agent, substantially in the form set out in Exhibit 4.4(b)
         and covering such other matters incident to the transactions
         contemplated hereby as you or your counsel may reasonably request, and

                  (c) Hebb & Gitlin, your special counsel, substantially in the
         form set out in Exhibit 4.4(c) and covering such other matters incident
         to the transactions contemplated hereby as you may reasonably request.

         4.5      PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

         On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation. If requested by you, you shall have received
an Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.

         4.6      SALE OF OTHER NOTES.

         Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.

         4.7      BANK LOAN AGREEMENT.

         The Company and the Banks shall have entered into the Bank Loan
Agreement, in form and substance satisfactory to you, and the Company shall have
delivered to you copies of the Bank Loan Agreement and each other document
executed in connection therewith requested by you, certified as true and correct
by a Responsible Officer.

         4.8      SYNTHETIC LEASE DOCUMENTS.

         The Company and the Synthetic Lease Lenders shall have entered into the
Synthetic Lease Documents, in form and substance satisfactory to you, and the
Company shall have delivered to you copies of the Synthetic Lease Documents and
each other document executed in connection therewith requested by you, certified
as true and correct by a Responsible Officer.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                       3
<PAGE>   9

         4.9      INTERCREDITOR AGREEMENT.

         The Company, the Initial Guarantor, the Banks, the Synthetic Lease
Lenders, you, the Other Purchasers and the Collateral Agent shall have executed
and delivered the Intercreditor and Collateral Agency Agreement, substantially
in the form of Exhibit 4.9 (as amended or supplemented from time to time, the
"INTERCREDITOR AGREEMENT"), and the Intercreditor Agreement shall be in full
force and effect.

         4.10     SECURITY AGREEMENT.

         The Company, the Initial Guarantor and the Collateral Agent shall have
entered into a Security Agreement, substantially in the form of Exhibit 4.10 (as
amended or supplemented from time to time, the "SECURITY AGREEMENT"), and the
Security Agreement shall be in full force and effect.

         4.11     PLEDGE AGREEMENT.

         The Company and the Collateral Agent shall have entered into a Pledge
Agreement, substantially in the form of Exhibit 4.11 (as amended or supplemented
from time to time, the "PLEDGE AGREEMENT"), and the Pledge Agreement shall be in
full force and effect.

         4.12     PERFECTION OF LIENS.

         All actions necessary to perfect the Liens of the Collateral Agent in
the Collateral to be granted on or prior to the date of the Closing (including,
without limitation, the filing of all appropriate Uniform Commercial Code
financing statements, the recording of all appropriate documents with public
officials and the payment of all fees and taxes) shall have been taken in
accordance with the provisions of the Security Documents and the Company shall
have delivered to the Collateral Agent all appropriate stock certificates
(together with undated stock powers executed in blank to the Collateral Agent)
evidencing the shares of Capital Stock pledged pursuant to the Pledge Agreement.

         4.13     TERMINATION OR ASSIGNMENT OF EXISTING LIENS.

         All actions necessary to terminate, release or assign to the Collateral
Agent any and all Liens on the Collateral, other than Liens permitted under
Section 10.6(a), shall have been taken in accordance with the provisions of the
Security Documents, including, without limitation, the filing of all appropriate
Uniform Commercial Code termination statements.

         4.14     GUARANTY AGREEMENT.

         You shall have received a counterpart of the Guaranty Agreement, duly
executed and delivered by the Initial Guarantor, substantially in the form of
Exhibit 4.14 (as amended or supplemented from time to time, the "GUARANTY
AGREEMENT"), and the Guaranty Agreement shall be in full force and effect.

         4.15     PAYMENT OF SPECIAL COUNSEL FEES.

         Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4(c) to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the date of the Closing.

         4.16     PRIVATE PLACEMENT NUMBER.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT





                                       4
<PAGE>   10


         A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.

         4.17     CHANGES IN CORPORATE STRUCTURE.

         Except as specified in Schedule 4.17, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

         4.18     PROCEEDINGS AND DOCUMENTS.

         All corporate and other proceedings in connection with the transactions
contemplated by the Financing Documents and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to you, as of the date of the
Closing, that:

         5.1      ORGANIZATION; POWER AND AUTHORITY.

         The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver the
Financing Documents to which it is or is to be a party and to perform the
provisions thereof.

         5.2      AUTHORIZATION, ETC.

         The Financing Documents have been duly authorized by all necessary
corporate action on the part of the Company and the Initial Guarantor, and each
of this Agreement, the Other Agreements, the Security Agreement, the Pledge
Agreement, the Intercreditor Agreement and the Guaranty Agreement constitutes,
and upon execution and delivery thereof each Note will constitute, a legal,
valid and binding obligation of each Obligor party thereto, enforceable against
each such Obligor in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

         5.3      DISCLOSURE.

         The Company, through its agents, SPP Capital Partners, LLC and Wells
Fargo Bank, N.A., has delivered to you and each Other Purchaser a copy of a
Confidential Direct Placement Memorandum, dated January 1999 (the "MEMORANDUM"),
relating to the transactions contemplated hereby. The Memorandum



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT



                                       5
<PAGE>   11

fairly describes, in all material respects, the general nature of the business
and principal properties of the Company and its Subsidiaries. Except as
disclosed in Schedule 5.3, the Financing Documents, the Memorandum, the
documents, certificates or other writings delivered to you by or on behalf of
the Company in connection with the transactions contemplated by the Financing
Documents and the financial statements listed in Schedule 5.5, taken as a whole,
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or as expressly described in Schedule 5.3, or in one of the
documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 1997, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.

         5.4      ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
                  AFFILIATES.

                  (a) Schedule 5.4 contains (except as noted therein) complete
         and correct lists of (i) the Company's Subsidiaries, showing, as to
         each Subsidiary, the correct name thereof, the jurisdiction of its
         organization, and the percentage of shares of each class of its Capital
         Stock outstanding owned by the Company and each other Subsidiary and
         (ii) the Company's Affiliates, other than Subsidiaries.

                  (b) All of the outstanding shares of Capital Stock of each
         Subsidiary shown in Schedule 5.4 as being owned by the Company and its
         Subsidiaries have been validly issued, are fully paid and nonassessable
         and are owned by the Company or another Subsidiary free and clear of
         any Lien (except as otherwise disclosed in Schedule 5.4).

                  (c) Each Subsidiary identified in Schedule 5.4 is a
         corporation or other legal entity duly organized, validly existing and
         in good standing under the laws of its jurisdiction of organization,
         and is duly qualified as a foreign corporation or other legal entity
         and is in good standing in each jurisdiction in which such
         qualification is required by law, other than those jurisdictions as to
         which the failure to be so qualified or in good standing could not,
         individually or in the aggregate, reasonably be expected to have a
         Material Adverse Effect. Each such Subsidiary has the corporate or
         other power and authority to own or hold under lease the properties it
         purports to own or hold under lease and to transact the business it
         transacts and proposes to transact. The Initial Guarantor has the
         corporate power and authority to execute and deliver the Guaranty
         Agreement and the Security Agreement and to perform the provisions
         thereof. The Company has no Significant Subsidiaries other than the
         Initial Guarantor, Safeskin (B.V.I.), Limited, Safeskin Corporation
         (Thailand) Limited, Safeskin Medical & Scientific (Thailand) Limited,
         Safeskin Latex (Thailand) Limited, and Safeskin Corporation (Malaysia)
         Sdn. Bhd.

                  (d) No Subsidiary is a party to, or otherwise subject to any
         legal restriction or any agreement (other than this Agreement, the
         agreements listed in Schedule 5.4 and customary limitations imposed by
         corporate law statutes) restricting the ability of such Subsidiary to
         pay dividends out of profits or make any other similar distributions of
         profits to the Company or any of its Subsidiaries that owns outstanding
         shares of Capital Stock of such Subsidiary.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT




                                       6
<PAGE>   12

         5.5      FINANCIAL STATEMENTS.

         The Company has delivered to you and each Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed in Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments and the lack of footnotes).

         5.6      COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

         The execution, delivery and performance by the Company and the Initial
Guarantor of the Financing Documents to which such Obligor is a party will not

                  (a) contravene, result in any breach of, or constitute a
         default under, or result in the creation of any Lien in respect of any
         property of the Company or any Subsidiary (other than as contemplated
         by the Security Documents) under, any indenture, mortgage, deed of
         trust, loan, purchase or credit agreement, lease, corporate charter or
         by-laws, or any other agreement or instrument to which the Company or
         any Subsidiary is bound or by which the Company or any Subsidiary or
         any of their respective properties may be bound or affected,

                  (b) conflict with or result in a breach of any of the terms,
         conditions or provisions of any order, judgment, decree, or ruling of
         any court, arbitrator or Governmental Authority applicable to the
         Company or any Subsidiary, or

                  (c) violate any provision of any statute or other rule or
         regulation of any Governmental Authority applicable to the Company or
         any Subsidiary.

         5.7      GOVERNMENTAL AUTHORIZATIONS, ETC.

         No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company or the Initial Guarantor of
the Financing Documents, other than the filing of appropriate financing
statements to perfect the Liens of the Collateral Agent in the Collateral.

         5.8      LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

                  (a) Except as disclosed in Schedule 5.8, there are no actions,
         suits or proceedings pending or, to the knowledge of the Company,
         threatened against or affecting the Company or any Subsidiary or any
         property of the Company or any Subsidiary in any court or before any
         arbitrator of any kind or before or by any Governmental Authority that,
         individually or in the aggregate, could reasonably be expected to have
         a Material Adverse Effect.

                  (b) Neither the Company nor any Subsidiary is in default under
         any term of any agreement or instrument to which it is a party or by
         which it is bound, or any order, judgment, decree or ruling of any
         court, arbitrator or Governmental Authority or is in violation of any
         applicable law, ordinance, rule or regulation (including, without
         limitation, Environmental Laws)



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<PAGE>   13

         of any Governmental Authority, which default or violation, individually
         or in the aggregate, could reasonably be expected to have a Material
         Adverse Effect.

         5.9      TAXES.

         The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) the amount of which is not
individually or in the aggregate Material or (b) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its domestic Subsidiaries have been determined by
the Internal Revenue Service and paid for all fiscal years up to and including
the fiscal year ended December 31, 1994.

         5.10     TITLE TO PROPERTY; LEASES.

         The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects. Neither the Company nor any of its Subsidiaries owns in fee simple
title any real property located within the United States.

         5.11     LICENSES, PERMITS, ETC.

         Except as disclosed in Schedule 5.11,

                  (a) the Company and its Subsidiaries own or possess all
         licenses, permits, franchises, authorizations, patents, copyrights,
         service marks, trademarks and trade names, or rights thereto, that
         individually or in the aggregate are Material, without known conflict
         with the rights of others;

                  (b) to the best knowledge of the Company, no product or
         practice of the Company or any Subsidiary infringes in any material
         respect any license, permit, franchise, authorization, patent,
         copyright, service mark, trademark, trade name or other right owned by
         any other Person; and

                  (c) to the best knowledge of the Company, there is no Material
         violation by any Person of any right of the Company or any of its
         Subsidiaries with respect to any patent, copyright, service mark,
         trademark, trade name or other right owned or used by the Company or
         any of its Subsidiaries.

         5.12     COMPLIANCE WITH ERISA.



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<PAGE>   14


                  (a) The Company and each ERISA Affiliate have operated and
         administered each Plan in compliance with all applicable laws except
         for such instances of noncompliance as have not resulted in and could
         not reasonably be expected to result in a Material Adverse Effect.
         Neither the Company nor any ERISA Affiliate has incurred any liability
         pursuant to Title I or IV of ERISA or the penalty or excise tax
         provisions of the Code relating to employee benefit plans (as defined
         in section 3 of ERISA), and no event, transaction or condition has
         occurred or exists that could reasonably be expected to result in the
         incurrence of any such liability by the Company or any ERISA Affiliate,
         or in the imposition of any Lien on any of the rights, properties or
         assets of the Company or any ERISA Affiliate, in either case pursuant
         to Title I or IV of ERISA or to such penalty or excise tax provisions
         or to section 401(a)(29) or 412 of the Code, other than such
         liabilities or Liens as would not be individually or in the aggregate
         Material.

                  (b) The present value of the aggregate benefit liabilities
         under each of the Plans (other than Multiemployer Plans), determined as
         of the end of such Plan's most recently ended plan year on the basis of
         the actuarial assumptions specified for funding purposes in such Plan's
         most recent actuarial valuation report, did not exceed the aggregate
         current value of the assets of such Plan allocable to such benefit
         liabilities. The term "BENEFIT LIABILITIES" has the meaning specified
         in section 4001 of ERISA and the terms "CURRENT VALUE" and "PRESENT
         VALUE" have the meaning specified in section 3 of ERISA.

                  (c) The Company and the ERISA Affiliates have not incurred
         withdrawal liabilities (and are not subject to contingent withdrawal
         liabilities) under section 4201 or 4204 of ERISA in respect of
         Multiemployer Plans that individually or in the aggregate are Material.

                  (d) The expected postretirement benefit obligation (determined
         as of the last day of the Company's most recently ended fiscal year in
         accordance with Financial Accounting Standards Board Statement No. 106,
         without regard to liabilities attributable to continuation coverage
         mandated by section 4980B of the Code) of the Company and its
         Subsidiaries is not Material.

                  (e) The execution and delivery of the Financing Documents and
         the issuance and sale of the Notes hereunder will not involve any
         transaction that is subject to the prohibitions of section 406 of ERISA
         or in connection with which a tax could be imposed pursuant to section
         4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
         first sentence of this Section 5.12(e) is made in reliance upon and
         subject to the accuracy of your representation in Section 6.2 as to the
         sources of the funds used to pay the purchase price of the Notes to be
         purchased by you.

                  (f) Schedule 5.12 sets forth all ERISA Affiliates and all
         "employee benefit plans" maintained by the Company (or any "affiliate"
         thereof) or in respect of which the Notes could constitute an "employer
         security" ("EMPLOYEE BENEFIT PLAN" has the meaning specified in section
         3 of ERISA, "AFFILIATE" has the meaning specified in section 407(d) of
         ERISA and section V of the Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (60 FR 35925, July 12, 1995) and "EMPLOYER
         SECURITY" has the meaning specified in section 407(d) of ERISA).

                  (g) All Foreign Pension Plans have been established, operated,
         administered and maintained in compliance with all laws, regulations
         and orders applicable thereto except for such failures to comply, in
         the aggregate for all such failures, that could not reasonably be
         expected to have a Material Adverse Effect. All premiums, contributions
         and any other amounts required by



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<PAGE>   15

         applicable Foreign Pension Plan documents or applicable laws have been
         paid or accrued as required, except for premiums, contributions and
         amounts that, in the aggregate for all such obligations, could not
         reasonably be expected to have a Material Adverse Effect.

         5.13     PRIVATE OFFERING BY THE COMPANY.

         Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar Securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
more than 59 Institutional Investors (including you and the Other Purchasers),
each of which has been offered the Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of section 5 of the Securities Act. For purposes of this Section
5.13 only, each reference to the Notes shall be deemed to include a reference to
the Guaranty Agreement.

         5.14     USE OF PROCEEDS; MARGIN REGULATIONS.

         The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any Securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 5% of Consolidated Total
Assets and the Company does not have any present intention that margin stock
will constitute more than 5% of Consolidated Total Assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall have
the meanings assigned to them in said Regulation U.

         5.15     EXISTING INDEBTEDNESS; FUTURE LIENS.

                  (a) Except as described therein, Schedule 5.15 sets forth a
         complete and correct list of all outstanding Indebtedness of the
         Company and its Subsidiaries as of the date of the Closing (indicating
         as to each such Indebtedness, the collateral, if any, securing such
         Indebtedness), since which date there has been no Material change in
         the amounts, interest rates, sinking funds, instalment payments or
         maturities of the Indebtedness of the Company or its Subsidiaries.
         Neither the Company nor any Subsidiary is in default and no waiver of
         default is currently in effect, in the payment of any principal or
         interest on any Indebtedness of the Company or such Subsidiary and no
         event or condition exists with respect to any Indebtedness of the
         Company or any Subsidiary that would permit (or that with notice or the
         lapse of time, or both, would permit) one or more Persons to cause such
         Indebtedness to become due and payable before its stated maturity or
         before its regularly scheduled dates of payment.

                  (b) Except as disclosed in Schedule 5.15, neither the Company
         nor any Subsidiary has agreed or consented to cause or permit in the
         future (upon the happening of a contingency or otherwise) any of its
         property, whether now owned or hereafter acquired, to be subject to a
         Lien not permitted by Section 10.6(a).



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<PAGE>   16

         5.16     FOREIGN ASSETS CONTROL REGULATIONS, ETC.

         Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof, nor any other transaction contemplated by the Financing
Documents, will violate the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.

         5.17     STATUS UNDER CERTAIN STATUTES.

         Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Transportation Acts (49 U.S.C.), as
amended, or the Federal Power Act, as amended.

         5.18     ENVIRONMENTAL MATTERS.

         Neither the Company nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,

                  (a) neither the Company nor any Subsidiary has knowledge of
         any facts which would give rise to any claim, public or private, of
         violation of Environmental Laws or damage to the environment emanating
         from, occurring on or in any way related to real properties now or
         formerly owned, leased or operated by any of them or to other assets or
         their use, except, in each case, such as could not reasonably be
         expected to result in a Material Adverse Effect;

                  (b) neither the Company nor any of its Subsidiaries has stored
         any Hazardous Materials on real properties now or formerly owned,
         leased or operated by any of them or disposed of any Hazardous
         Materials in a manner contrary to any Environmental Laws, in each case
         in any manner that could reasonably be expected to result in a Material
         Adverse Effect; and

                  (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its Subsidiaries are in compliance
         with applicable Environmental Laws, except where failure to comply
         could not reasonably be expected to result in a Material Adverse
         Effect.

         5.19     SECURITY DOCUMENTS.

                  (a) SECURITY AGREEMENT. The Security Agreement creates (after
         filing UCC-1 financing statements as therein provided) a valid and
         perfected first priority Lien in and to the Collateral (as defined in
         the Security Agreement) in favor of the Collateral Agent subject to no
         Liens, except to the extent permitted by Section 10.6(a). All UCC-1
         financing statements required by the Security Agreement to be filed
         with public recording offices have been delivered to the Collateral
         Agent for filing, and all taxes, recording fees and other fees and
         charges required by applicable law to be paid in connection therewith
         have been duly paid in full or will be paid concurrently with such
         filing.

                  (b) PLEDGE AGREEMENT. The Pledge Agreement creates (upon
         delivery of the Collateral (as defined in the Pledge Agreement) to the
         Collateral Agent) a valid and perfected first priority



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<PAGE>   17

         Lien in and to the Pledged Collateral (as defined in the Pledge
         Agreement) in favor of the Collateral Agent subject to no Liens, except
         to the extent permitted by Section 10.6(a). All certificates and
         documents evidencing the Pledged Securities (as defined in the Pledge
         Agreement) have been delivered to the Collateral Agent, together with
         all related blank bond powers and stock powers.

                  (c) WARRANTIES AND REPRESENTATIONS TRUE. All warranties and
         representations of the Company and the Initial Guarantor made in the
         Security Documents are true and correct as of the date of the Closing.

         5.20     SOLVENCY.

         The fair value of the business and assets of each of the Company and
the Initial Guarantor exceeds the amount that will be required to pay its
liabilities (including, without limitation, contingent, subordinated, unmatured
and unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by the Financing Documents. After giving effect to the transactions
contemplated by the Financing Documents, neither the Company nor the Initial
Guarantor will be insolvent or be engaged in any business or transaction, or
about to engage in any business or transaction, for which it has unreasonably
small assets or capital (within the meaning of the Uniform Fraudulent Transfer
Act, the Uniform Fraudulent Conveyance Act and Section 548 of Title 11 of the
United States Code), and neither the Company nor the Initial Guarantor has any
intent to hinder, delay or defraud any entity to which it is, or will become, on
or after the date of the Closing, indebted or incur debts that would be beyond
its ability to pay as they mature.

         5.21     YEAR 2000 PROBLEM.

         The Company has reviewed the areas within the business and operations
of the Company and its Subsidiaries which could be adversely affected by the
risk (such risk herein being referred to as the "YEAR 2000 PROBLEM") that
computer applications, as well as embedded microchips in non-computing devices,
used by the Company and its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates after December 31,
1999. Since September 30, 1998, there have been no changes or developments with
respect to the matters set forth in either the disclosures made in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998,
or in the Memorandum, which would cause the Company to reasonably believe that
its Year 2000 Problem will have a Material Adverse Effect.

6.       REPRESENTATIONS OF THE PURCHASER

         6.1      PURCHASE FOR INVESTMENT.

         You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.



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                                       12
<PAGE>   18

         6.2      SOURCE OF FUNDS.

         You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

                  (a) the Source is an "insurance company general account" as
         defined in PTE 95-60 (60 FR 35925, July 12, 1995) and there is no
         "employee benefit plan" (as defined in section 3(3) of ERISA and
         section 4975(e)(1) of the Code (treating as a single plan all plans
         maintained by the same employer or employee organization or affiliate
         thereof)) with respect to which the amount of the general account
         reserves and liabilities of all contracts held by or on behalf of such
         plan exceeds 10% of the total reserves and liabilities of such general
         account (exclusive of separate account liabilities) plus surplus, as
         set forth in the National Association of Insurance Commissioners'
         Annual Statement filed with your state of domicile; or

                  (b) if you are an insurance company, the Source does not
         include assets allocated to any separate account maintained by you in
         which any employee benefit plan (or its related trust) has any
         interest, other than a separate account that is maintained solely in
         connection with your fixed contractual obligations under which the
         amounts payable, or credited, to such plan and to any participant or
         beneficiary of such plan (including any annuitant) are not affected in
         any manner by the investment performance of the separate account; or

                  (c) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
         to the Company in writing pursuant to this clause (c), no employee
         benefit plan or group of plans maintained by the same employer or
         employee organization beneficially owns more than 10% of all assets
         allocated to such pooled separate account or collective investment
         fund; or

                  (d) the Source constitutes assets of an "investment fund"
         (within the meaning of part V of PTE 84-14 (the "QPAM EXEMPTION"))
         managed by a "qualified professional asset manager" or "QPAM" (within
         the meaning of part V of the QPAM Exemption), no employee benefit
         plan's assets that are included in such investment fund, when combined
         with the assets of all other employee benefit plans established or
         maintained by the same employer or by an affiliate (within the meaning
         of section V(c)(1) of the QPAM Exemption) of such employer or by the
         same employee organization and managed by such QPAM, exceed 20% of the
         total client assets managed by such QPAM, the conditions of part I(c)
         and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
         person controlling or controlled by the QPAM (applying the definition
         of "control" in section V(e) of the QPAM Exemption) owns a 5% or more
         interest in the Company and

                      (i) the identity of such QPAM and

                      (ii) the names of all employee benefit plans whose assets
                  are included in such investment fund

         have been disclosed to the Company in writing pursuant to this clause
         (d); or



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<PAGE>   19

                  (e) the Source is a governmental plan; or

                  (f) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this clause (f); or

                  (g) the Source does not include assets of any employee benefit
         plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such
terms in section 3 of ERISA.

7.       INFORMATION AS TO COMPANY

         7.1      FINANCIAL AND BUSINESS INFORMATION.

         The Company shall deliver to each holder of Notes that is an
Institutional Investor:

                  (a) QUARTERLY STATEMENTS -- within 45 days after the end of
         each quarterly fiscal period in each fiscal year of the Company (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of,

                      (i) a consolidated balance sheet of the Company and its
                  Subsidiaries as at the end of such quarter, and

                      (ii) consolidated statements of operations and cash flows
                  of the Company and its Subsidiaries, for such quarter and (in
                  the case of the second and third quarters) for the portion of
                  the fiscal year ending with such quarter,

         setting forth in each case in comparative form the figures for the
         corresponding periods in the previous fiscal year, all in reasonable
         detail, prepared in accordance with GAAP applicable to quarterly
         financial statements generally, and certified by a Senior Financial
         Officer as fairly presenting, in all material respects, the
         consolidated financial position of the companies being reported on and
         their consolidated results of operations and cash flows, subject to
         changes resulting from year-end adjustments, provided that delivery
         within the time period specified above of copies of the Company's
         Quarterly Report on Form 10-Q prepared in compliance with the
         requirements therefor and filed with the Securities and Exchange
         Commission shall be deemed to satisfy the requirements of this Section
         7.1(a);

                  (b) ANNUAL STATEMENTS -- within 90 days after the end of each
         fiscal year of the Company, duplicate copies of,

                      (i) a consolidated balance sheet of the Company and its
                  Subsidiaries, as at the end of such year, and

                      (ii) consolidated statements of operations, shareholders'
                  equity and cash flows of the Company and its Subsidiaries, for
                  such year,



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<PAGE>   20


         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by

                           (A) an opinion thereon of independent certified
                  public accountants of recognized national standing, which
                  opinion shall state that such financial statements present
                  fairly, in all material respects, the consolidated financial
                  position of the companies being reported upon and their
                  consolidated results of operations and cash flows and have
                  been prepared in conformity with GAAP, and that the
                  examination of such accountants in connection with such
                  financial statements has been made in accordance with
                  generally accepted auditing standards, and that such audit
                  provides a reasonable basis for such opinion in the
                  circumstances, and

                           (B) a certificate of such accountants stating that
                  they have reviewed this Agreement and stating further whether,
                  in making their audit, they have become aware of any condition
                  or event that then constitutes a Default or an Event of
                  Default, and, if they are aware that any such condition or
                  event then exists, specifying the nature and period of the
                  existence thereof (it being understood that such accountants
                  shall not be liable, directly or indirectly, for any failure
                  to obtain knowledge of any Default or Event of Default unless
                  such accountants should have obtained knowledge thereof in
                  making an audit in accordance with generally accepted auditing
                  standards or did not make such an audit),

         provided that the delivery within the time period specified above of
         the Company's Annual Report on Form 10-K for such fiscal year prepared
         in accordance with the requirements therefor and filed with the
         Securities and Exchange Commission, together with the accountant's
         certificate described in clause (B) above, shall be deemed to satisfy
         the requirements of this Section 7.1(b);

                  (c) SEC AND OTHER REPORTS -- promptly upon their becoming
         available, one copy of (i) each financial statement, report (including,
         without limitation, the Company's annual report to shareholders, if
         any, prepared pursuant to Rule 14a-3 under the Exchange Act), notice or
         proxy statement sent by the Company or any Subsidiary to public
         securities holders generally, and (ii) each regular or periodic report,
         each registration statement (without exhibits except as expressly
         requested by such holder), and each prospectus and all amendments
         thereto filed by the Company or any Subsidiary with the Securities and
         Exchange Commission and of all press releases and other statements made
         available generally by the Company or any Subsidiary to the public
         concerning developments that are Material;

                  (d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in
         any event within five days after a Responsible Officer becoming aware
         of the existence of any Default or Event of Default or that any Person
         has given any notice or taken any action with respect to a claimed
         default hereunder or that any Person has given any notice or taken any
         action with respect to a claimed default of the type referred to in
         Section 11(f), a written notice specifying the nature and period of
         existence thereof and what action the Company is taking or proposes to
         take with respect thereto;

                  (e) ERISA MATTERS -- promptly, and in any event within 10
         Business Days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the



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                                       15
<PAGE>   21


         nature thereof and the action, if any, that the Company or an ERISA
         Affiliate proposes to take with respect thereto:

                      (i) with respect to any Plan, any reportable event, as
                  defined in section 4043(c) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date of the
                  Closing; or

                      (ii) the taking by the PBGC of steps to institute, or the
                  threatening by the PBGC of the institution of, proceedings
                  under section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by the Company or any ERISA Affiliate of a notice from
                  a Multiemployer Plan that such action has been taken by the
                  PBGC with respect to such Multiemployer Plan; or

                      (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by the Company or
                  any ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to
                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties or assets of the Company or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or such
                  penalty or excise tax provisions, if such liability or Lien,
                  taken together with any other such liabilities or Liens then
                  existing, could reasonably be expected to have a Material
                  Adverse Effect;

                  (f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Company or any Subsidiary from any Federal or state Governmental
         Authority relating to any order, ruling, statute or other law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect;

                  (g) ACTIONS, PROCEEDINGS -- promptly after a Responsible
         Officer becomes aware of the commencement thereof, notice of any action
         or proceeding relating to the Company or any Subsidiary in any court or
         before any Governmental Authority or arbitration board or tribunal as
         to which there is a reasonable possibility of an adverse determination
         and that, if adversely determined, could reasonably be expected to have
         a Material Adverse Effect; and

                  (h) REQUESTED INFORMATION -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the Obligors to
         perform their respective obligations under the Financing Documents as
         from time to time may be reasonably requested by any such holder of
         Notes, or such information regarding the Company required to satisfy
         the requirements of 17 C.F.R. Section 230.144A, as amended from time to
         time, in connection with any contemplated transfer of the Notes.

         7.2      OFFICER'S CERTIFICATE.

         Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:

                  (a) COVENANT COMPLIANCE -- (i) the information (including
         detailed calculations) required in order to establish whether the
         Company was in compliance with the requirements of Sections 10.3
         through 10.8, inclusive, during the quarterly or annual period covered
         by the statements then being furnished (including with respect to each
         such Section, where applicable, the



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                                       16
<PAGE>   22


         calculations of the maximum or minimum amount, ratio or percentage, as
         the case may be, permissible under the terms of such Sections, and the
         calculation of the amount, ratio or percentage then in existence), (ii)
         a description of all sales of accounts receivable of the Company and
         its Subsidiaries during such period and (iii) a schedule of the
         transactions under or relating to the Hedge Facility entered into
         during such period; and

                  (b) EVENT OF DEFAULT -- a statement that such officer has
         reviewed the relevant terms of the Financing Documents and has made, or
         caused to be made, under his or her supervision, a review of the
         transactions and conditions of the Company and its Subsidiaries from
         the beginning of the quarterly or annual period covered by the
         statements then being furnished to the date of the certificate and that
         such review has not disclosed the existence during such period of any
         condition or event that constitutes a Default or an Event of Default
         or, if any such condition or event existed or exists (including,
         without limitation, any such event or condition resulting from the
         failure of the Company or any Subsidiary to comply with any
         Environmental Law), specifying the nature and period of existence
         thereof and what action the Company shall have taken or proposes to
         take with respect thereto.

         7.3      INSPECTION.

         The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:

                  (a) NO DEFAULT -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company,
         to discuss the affairs, finances and accounts of the Company and its
         Subsidiaries with the Company's officers, and (with the consent of the
         Company, which consent will not be unreasonably withheld) its
         independent public accountants, and (with the consent of the Company,
         which consent will not be unreasonably withheld) to visit the other
         offices and properties of the Company and each Subsidiary, all at such
         reasonable times and as often as may be reasonably requested in
         writing; and

                  (b) DEFAULT -- if a Default or Event of Default then exists,
         at the expense of the Company, to visit and inspect any of the offices
         or properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers and independent
         public accountants (and by this provision the Company authorizes said
         accountants to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.

8.       PAYMENT OF THE NOTES, ETC.

         8.1      REQUIRED PREPAYMENTS; PAYMENT AT MATURITY.

         On March 5, 2003 and on each March 5 thereafter to and including March
5, 2008, the Company will prepay $5,714,300 principal amount (or such lesser
principal amount as shall then be outstanding) of the Notes at par and without
payment of the Make-Whole Amount or any premium, and the Company will pay all of
the principal amount of the Notes remaining outstanding, if any, on March 5,
2009.


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         8.2      OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

         The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes (but if in part, in
an amount not less than $2,000,000 or such lesser amount as shall then be
outstanding), at 100% of the principal amount so prepaid, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 15 Business Days and not more
than 60 days prior to the date fixed for such prepayment. Each such notice shall
specify such prepayment date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.4), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.

         Each partial prepayment of the Notes pursuant to this Section 8.2 will
be applied first, to the amount due on the maturity date of the Notes and
second, to the mandatory prepayments applicable to the Notes, as set forth in
Section 8.1, in the inverse order of the maturity thereof.

         8.3      CHANGE IN CONTROL.

                  (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company
         will, within 5 Business Days after any Responsible Officer has
         knowledge of the occurrence of any Change in Control or Control Event
         (except to the extent that the Company shall have received an opinion
         of its independent counsel that disclosure relating to such Control
         Event would violate applicable securities laws, rules or regulations or
         the rules or regulations of any exchange or market on which any of the
         Company's Capital Stock is listed) , give written notice of such Change
         in Control or Control Event to each holder of Notes, unless notice in
         respect of such Change in Control (or the Change in Control
         contemplated by such Control Event) shall have been given pursuant to
         Section 8.3(b). If a Change in Control has occurred, such notice shall
         contain and constitute an offer to prepay Notes as described in Section
         8.3(c) and shall be accompanied by the certificate described in Section
         8.3(g).

                  (b) CONDITION TO COMPANY ACTION. The Company will not take any
         action that consummates or finalizes a Change in Control unless

                      (i) at least 15 Business Days prior to such action it
                  shall have given to each holder of Notes written notice
                  containing and constituting an offer to prepay Notes as
                  described in Section 8.3(c), accompanied by the certificate
                  described in Section 8.3(g), and


                      (ii) contemporaneously with such action, it prepays all
                  Notes required to be prepaid in accordance with this Section
                  8.3.

                  (c) OFFER TO PREPAY NOTES. The offer to prepay Notes
         contemplated by Section 8.3(a) and Section 8.3(b) shall be an offer to
         prepay, in accordance with and subject to this Section 8.3, all, but
         not less than all, the Notes held by each holder (in this case only,
         "holder" in respect of any Note registered in the name of a nominee for
         a disclosed beneficial owner shall mean such



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<PAGE>   24

         beneficial owner) on a date specified in such offer (the "PROPOSED
         PREPAYMENT DATE"). If such Proposed Prepayment Date is in connection
         with an offer contemplated by Section 8.3(a), such date shall be not
         less than 15 Business Days and not more than 20 Business Days after the
         date of such offer (if the Proposed Prepayment Date shall not be
         specified in such offer, the Proposed Prepayment Date shall be the 20th
         Business Day after the date of such offer).

                  (d) ACCEPTANCE; REJECTION. A holder of Notes may accept or
         reject the offer to prepay made pursuant to this Section 8.3 by causing
         a notice of such acceptance or rejection to be delivered to the Company
         at least two Business Days prior to the Proposed Prepayment Date. A
         failure by a holder of Notes to respond to an offer to prepay made
         pursuant to this Section 8.3 shall be deemed to constitute a rejection
         of such offer by such holder.

                  (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant
         to this Section 8.3 shall be at 100% of the principal amount of such
         Notes, together with interest on such Notes accrued to the date of
         prepayment, but without any Make-Whole Amount. The prepayment shall be
         made on the Proposed Prepayment Date except as provided in Section
         8.3(f).

                  (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the
         Company to prepay Notes pursuant to the offers accepted in accordance
         with Section 8.3(d) is subject to the occurrence of the Change in
         Control in respect of which such offers and acceptances shall have been
         made. In the event that such Change in Control does not occur on the
         Proposed Prepayment Date in respect thereof, the prepayment shall be
         deferred until and shall be made on the date on which such Change in
         Control occurs. The Company shall keep each holder of Notes reasonably
         and timely informed of

                      (i) any such deferral of the date of prepayment,

                      (ii) the date on which such Change in Control and the
                  prepayment are expected to occur, and

                      (iii) any determination by the Company that efforts to
                  effect such Change in Control have ceased or been abandoned
                  (in which case the offers and acceptances made pursuant to
                  this Section 8.3 in respect of such Change in Control shall be
                  deemed rescinded).

                  (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
         pursuant to this Section 8.3 shall be accompanied by a certificate,
         executed by a Senior Financial Officer and dated the date of such
         offer, specifying:

                      (i) that such offer is made pursuant to this Section 8.3;

                      (ii) the Proposed Prepayment Date;

                      (iii) the last date upon which the offer can be accepted
                  or rejected, and setting forth the consequences of failing to
                  provide an acceptance or rejection, as provided in Section
                  8.3(d);

                      (iv) the principal amount of each Note offered to be
                  prepaid;



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                      (v) the interest that would be due on each Note offered to
                  be prepaid, accrued to the Proposed Prepayment Date;

                      (vi) that the conditions of this Section 8.3 have been
                  fulfilled; and

                      (vii) in reasonable detail, the nature and date or
                  proposed date of the Change in Control.

                  (h) EFFECT ON REQUIRED PAYMENTS. The amount of each payment of
         the principal of the Notes made pursuant to this Section 8.3 shall be
         applied against and reduce each of the then remaining principal
         payments due pursuant to Section 8.1 by a percentage equal to the
         aggregate principal amount of the Notes so paid divided by the
         aggregate principal amount of the Notes outstanding immediately prior
         to such payment.

                  (i) "CHANGE IN CONTROL" DEFINED. "CHANGE IN CONTROL" means the
         acquisition, directly or indirectly, by any Person or Persons (other
         than members of the Management Group) acting in concert of control or
         ownership (beneficially or otherwise) of more than 50% (by number of
         shares) of the issued and outstanding Voting Stock of the Company.

                  (j) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:

                      (i) the execution by the Company or any of its
                  Subsidiaries or Affiliates of any agreement or letter of
                  intent with respect to any proposed transaction or event or
                  series of transactions or events which, individually or in the
                  aggregate, may reasonably be expected to result in a Change in
                  Control,

                      (ii) the execution of any written agreement which, when
                  fully performed by the parties thereto, would result in a
                  Change in Control, or

                      (iii) the making of any written offer by any person (as
                  such term is used in section 13(d) and section 14(d)(2) of the
                  Exchange Act as in effect on the date of the Closing) or
                  related persons constituting a group (as such term is used in
                  Rule 13d-5 under the Exchange Act as in effect on the date of
                  the Closing) to the holders of the common stock of the
                  Company, which offer, if accepted by the requisite number of
                  holders, would result in a Change in Control.

                  (k) "MANAGEMENT GROUP" DEFINED. "MANAGEMENT GROUP" means each
         director of the Company and each of the individuals holding the offices
         of President, Chief Executive Officer, Chief Financial Officer and
         Chief Operating Officer of the Company, together with Affiliates
         thereof.

         8.4      ALLOCATION OF PARTIAL PREPAYMENTS.

         In the case of each partial prepayment of the Notes pursuant to Section
8.1 or Section 8.2, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.



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         8.5      MATURITY; SURRENDER, ETC.

         In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and the
applicable Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

         8.6      NO OTHER OPTIONAL PREPAYMENTS OR PURCHASE OF NOTES.

         The Company will not, and will not permit any Affiliate to, purchase,
redeem, pay, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.

         8.7      MAKE-WHOLE AMOUNT.

         The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:

                  "CALLED PRINCIPAL" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.2,
         or has become or is declared to be immediately due and payable pursuant
         to Section 12.1, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on such Note is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, 0.50% over the yield to maturity implied by (a)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as "Page PX1" on the
         Bloomberg Financial Market Service (or such other display as may
         replace Page PX1 on the Bloomberg Financial Market Service) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (b) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal



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         Reserve Statistical Release H.15 (519) (or any comparable successor
         publication) for actively traded U.S. Treasury securities having a
         constant maturity equal to the Remaining Average Life of such Called
         Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (i) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (ii) interpolating linearly between (1) the
         actively traded U.S. Treasury security with the duration closest to and
         greater than the Remaining Average Life and (2) the actively traded
         U.S. Treasury security with the duration closest to and less than the
         Remaining Average Life.

                  "REMAINING AVERAGE LIFE" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (a) such Called Principal into (b) the sum
         of the products obtained by multiplying (i) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (ii) the number of years (calculated to the nearest one-twelfth
         year) that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, provided that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of such Note, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.2 or Section 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2, or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

9.       AFFIRMATIVE COVENANTS

         The Company covenants that so long as any of the Notes are outstanding:

         9.1      COMPLIANCE WITH LAW.

         The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

         9.2      INSURANCE.

         The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-



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insurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.

         9.3      MAINTENANCE OF PROPERTIES.

         The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

         9.4      PAYMENT OF TAXES AND CLAIMS.

         The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes, assessments,
charges or levies have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of the Company or any Subsidiary,
provided that neither the Company nor any Subsidiary need pay any such tax or
assessment or claims if (a) the amount, applicability or validity thereof is
contested by the Company or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Company or such Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (b) the nonpayment of all such taxes, assessments, charges
and levies in the aggregate could not reasonably be expected to have a Material
Adverse Effect.

         9.5      CORPORATE EXISTENCE, ETC.

         The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.7 and 10.8, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.

         9.6      NEW SUBSIDIARIES.

                  (a) GUARANTY AGREEMENT. The Company will cause each Person
         that, after the date of the Closing, becomes a direct or indirect
         Domestic Significant Subsidiary of the Company, to become, promptly and
         in any event within 30 days of becoming a Domestic Significant
         Subsidiary, a Guarantor under the Guaranty Agreement by executing and
         delivering to each holder of Notes a Joinder Agreement in the form
         attached to the Guaranty Agreement as Annex 2.

                  (b) SECURITY AGREEMENT. The Company will cause each Person
         that, after the date of the Closing, becomes a direct or indirect
         Domestic Significant Subsidiary of the Company, to become, promptly and
         in any event within 30 days of becoming a Domestic Significant
         Subsidiary,



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         a Grantor under (and as defined in) the Security Agreement by executing
         and delivering to the Collateral Agent and to each holder of Notes an
         Instrument of Joinder in the form attached to the Security Agreement as
         Exhibit A, and to take all other actions necessary to perfect the Liens
         of the Collateral Agent in the Collateral to be granted by such Person
         (including, without limitation, the filing of all appropriate Uniform
         Commercial Code financing statements, the recording of all appropriate
         documents with public officials and the payment of all fees and taxes)
         in accordance with the provisions of the Security Agreement.

                  (c) PLEDGE AGREEMENTS. The Company will execute, and will
         cause each Person that, after the date of the Closing, becomes a direct
         or indirect Subsidiary of the Company, to execute, promptly and in any
         event within 30 days of such Person becoming a Subsidiary, and deliver
         to each holder of Notes and the Collateral Agent, a new pledge
         agreement (if such Person shall own any Capital Stock of any
         Significant Subsidiary), and concurrently therewith the Company and
         such Person shall deliver to the Collateral Agent all certificates and
         documents constituting Pledged Collateral (as defined in the Pledge
         Agreement or such new pledge agreement, as the case may be), together
         with all related blank bond powers and stock powers, that in the
         opinion of the Collateral Agent are necessary to create and preserve
         the Liens with respect to all of the Capital Stock of each Domestic
         Significant Subsidiary and at least 65% of the Capital Stock of each
         Foreign Significant Subsidiary (other than Safeskin Corporation
         (Malaysia) Sdn. Bhd.).

                  (d) CERTIFICATES REGARDING AUTHORIZATION, ETC. Each Joinder
         Agreement and each Security Document or modification thereof delivered
         by the Company or any Subsidiary pursuant to this Section 9.6 shall be
         accompanied by copies of the constitutive documents and corporate
         resolutions (or equivalent) of the Company and such Subsidiary
         authorizing the respective transactions contemplated thereby, in each
         case certified as true and correct by a Responsible Officer of the
         Company and an officer of such Subsidiary.

                  (e) "DOMESTIC SIGNIFICANT SUBSIDIARY" DEFINED. "DOMESTIC
         SIGNIFICANT SUBSIDIARY" means any Significant Subsidiary that is
         organized under the laws of the United States or any state thereof.

                  (f) "FOREIGN SIGNIFICANT SUBSIDIARY" DEFINED. "FOREIGN
         SIGNIFICANT SUBSIDIARY" means any Significant Subsidiary that is not a
         Domestic Significant Subsidiary.

                  (g) "SIGNIFICANT SUBSIDIARY" DEFINED. "SIGNIFICANT SUBSIDIARY"
         means any Subsidiary that

                      (i) (A) had net earnings for the fiscal year of the
                  Company then most recently ended in excess of 5% of
                  Consolidated Net Earnings for such period, or (B) has assets
                  in excess of 5% of Consolidated Total Assets as at the end of
                  the fiscal year of the Company then most recently ended, or

                      (ii) shall have become liable in respect of any Guaranty
                  of any of the obligations under the Bank Loan Agreement.



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         9.7      PARI PASSU.

         The Company covenants that its obligations under the Notes and under
this Agreement and the Other Agreements do and will rank at least pari passu
with all its other present and future Bank Debt and all other Debt, if any,
secured by the Liens granted under the Security Documents; provided that the
Synthetic Lease Debt shall be secured by both the Collateral and the Synthetic
Lease Collateral.

         9.8      FURTHER ASSURANCES.

                  (a) GENERALLY. The Company will, and will cause each
         Subsidiary to, execute and deliver, within 30 days after any request
         therefor by the Required Holders or the Collateral Agent, all further
         instruments and documents and take all further action that may be
         necessary, in order to give effect to, and to aid in the exercise and
         enforcement of the Liens, rights and remedies of the Collateral Agent
         under, the Security Documents.

                  (b) FUTURE REAL PROPERTY. The Company will, and will cause
         each Subsidiary to, promptly following the acquisition by the Company
         or any such Subsidiary of any fee simple property located within the
         United States, provide written notice thereof to the holders of the
         Notes and execute and deliver to the Collateral Agent a deed of trust
         or mortgage in form and substance acceptable to the Collateral Agent,
         creating a first priority Lien on such property (including fixtures) in
         favor of the Collateral Agent subject to no Liens, except to the extent
         permitted by Section 10.6(a), and provide to the Collateral Agent such
         customary lender's title insurance policies, appraisals, environmental
         reports and other related documents as the Collateral Agent or the
         Required Holders may reasonably request.

                  (c) LIENS. The Company will, and will cause each Subsidiary
         to, execute and deliver, within 30 days after any request therefor by
         the Required Holders, all further instruments and documents and take
         all further action that may be necessary, in order to create and
         perfect Liens in favor of the Collateral Agent in any property of the
         Company or its Subsidiaries that is or is intended to be Collateral and
         is not then subject to a Lien or to a perfected Lien.

         9.9      COMPLIANCE REGARDING YEAR 2000.

         The Company will, and will cause each of its Subsidiaries to, use its
commercially reasonable efforts to assure that, not later than June 30, 1999,
the computer-based and other systems of the Company and its Subsidiaries will be
able to effectively process data, including dates after December 31, 1999,
without experiencing any Year 2000 Problem that could have a Material Adverse
Effect.

10.      NEGATIVE COVENANTS

         The Company covenants that so long as any of the Notes are outstanding:

         10.1     TRANSACTIONS WITH AFFILIATES.

         The Company will not, and will not permit any Subsidiary to, enter into
directly or indirectly any Material transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Subsidiary), except in the ordinary
course and pursuant to the reasonable



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requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
be obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.

         10.2     LINE OF BUSINESS.

         The Company will not, and will not permit any of its Subsidiaries to,
engage to any substantial extent in any business other than the businesses in
which the Company and its Subsidiaries are engaged on the date of this Agreement
as described in the Memorandum and businesses reasonably related thereto
(including the manufacture and sale of disposable protective products) or in
furtherance thereof.

         10.3     MAINTENANCE OF CONSOLIDATED NET WORTH.

         The Company will not, at any time, permit Consolidated Net Worth to be
less than the sum of

                  (a) $75,000,000 plus

                  (b) an aggregate amount equal to 25% of Consolidated Net
         Earnings (but, in each case, only if a positive number) for each
         completed fiscal year of the Company beginning with the fiscal year
         ending December 31, 1999.

         10.4     CONSOLIDATED PRO FORMA INTEREST COVERAGE RATIO.

         The Company will not at any time permit the Consolidated Pro Forma
Interest Coverage Ratio to be less than 2.50 to 1.00.

         10.5     LIMITATION ON DEBT.

                  (a) MAINTENANCE OF FUNDED DEBT. The Company will not at any
         time permit Consolidated Funded Debt to exceed 300% of Consolidated
         Cash Flow for the then most recently ended period of four consecutive
         fiscal quarters of the Company.

                  (b) LIMITATION ON SUBSIDIARY DEBT. The Company will not permit
         any of its Subsidiaries to create, assume, incur, guaranty or otherwise
         become obligated in respect of any Debt, except:

                      (i) Debt of any Subsidiary in existence on the date of the
                  Closing (after giving effect to the application of the
                  proceeds of the Notes pursuant to Section 5.14) and described
                  in Schedule 5.15);

                      (ii) Debt of any Subsidiary owing to the Company or
                  another Subsidiary;

                      (iii) Debt evidenced by the Notes and the Guaranty
                  Agreement;

                      (iv) Debt of any Subsidiary under such Subsidiary's
                  guaranty of the obligations under the Bank Loan Agreement or
                  in respect of the Synthetic Lease Debt or Additional Debt, so
                  long as such obligations of such Subsidiary are subject to the
                  sharing provisions of the Intercreditor Agreement;



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                      (v) Debt of the Specified Subsidiaries under the Hedge
                  Facility, provided that (A) such Debt by its terms matures on
                  demand or within one year from the date of the creation
                  thereof and such Debt is not directly or indirectly renewable
                  or extendible at the option of the obligor in respect thereof
                  to a date one year or more from such date, and (B) on the date
                  such Debt is incurred and after giving effect thereto and to
                  the concurrent retirement of any other Debt under the Hedge
                  Facility, the total amount of all Debt outstanding under the
                  Hedge Facility would not exceed $10,000,000 (or its equivalent
                  in any other currency);

                      (vi) Capital Lease Obligations of any Subsidiary; and

                      (vii) Debt of any Subsidiary secured by a Lien permitted
                  by Section 10.6(a)(vi) or Section 10.6(a)(vii).

                  (c) LIMITATION ON PRIORITY DEBT. The Company will not permit
         Priority Debt at any time to exceed 15% of Consolidated Net Worth at
         such time.

                  (d) DEBT OF ACQUIRED SUBSIDIARIES. Any Person becoming a
         Subsidiary after the date hereof shall be deemed to have incurred all
         of its then outstanding Debt at the time it becomes a Subsidiary.

         10.6     LIENS.

                  (a) NEGATIVE PLEDGE. The Company will not, and will not permit
         any of its Subsidiaries to, directly or indirectly create, assume,
         incur or suffer to be created, assumed or incurred or to exist (upon
         the happening of a contingency or otherwise), any Lien on or with
         respect to any property or asset (including, without limitation, any
         document or instrument in respect of goods or accounts receivable) of
         the Company or any such Subsidiary, whether now owned or held or
         hereafter acquired, or any income or profits therefrom, or assign or
         otherwise convey any right to receive income or profits, except:

                      (i) TAXES, ETC. -- Liens for taxes, assessments or other
                  governmental charges that are not yet due and payable or the
                  payment of which is not at the time required by Section 9.4;

                      (ii) LEGAL PROCEEDINGS -- Liens

                           (a) arising from judicial attachments and judgments,

                           (b) securing appeal bonds, supersedeas bonds, and

                           (c) arising in connection with court proceedings
                      (including, without limitation, surety bonds and letters 
                      of credit or any other instrument serving a similar 
                      purpose),

         provided that the execution or other enforcement of such Liens is
         effectively stayed and the claims secured thereby are being actively
         contested in good faith and by appropriate proceedings, and provided
         further that the aggregate amount so secured will not at any time
         exceed $3,000,000;



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                  (iii) ORDINARY COURSE LIENS -- Liens (other than any Lien
         imposed by ERISA) incurred or deposits made in the ordinary course of
         business

                           (a) in connection with workers' compensation,
                      unemployment insurance, social security and other like
                      laws,

                           (b) to secure (or to obtain letters of credit that
                      secure) the performance of tenders, statutory obligations,
                      surety and performance bonds (of a type other than set
                      forth in Section 10.6(a)(ii)), bids, leases (other than
                      Capital Leases), purchase, construction or sales contracts
                      and other similar obligations, in each case not incurred
                      or made in connection with the borrowing of money, the
                      obtaining of advances or credit or the payment of the
                      deferred purchase price of property,

                           (c) to secure the claims or demands of materialmen,
                      mechanics, carriers, warehousemen, vendors, repairmen,
                      landlords, lessors and other like Persons, arising in the
                      ordinary course of business, and

                           (d) in the nature of reservations, zoning laws and
                      ordinances, exceptions, encroachments, easements,
                      rights-of-way, covenants, conditions, restrictions, leases
                      and other similar title exceptions or encumbrances
                      affecting real property,

         provided that (1) any amounts secured by such Liens are not overdue and
         (2) such Liens do not, in the aggregate, materially detract from the
         value of such property or materially impair the use of such property in
         the conduct of the business of the Company, or the conduct of the
         business of the Company and its Subsidiaries taken as a whole;

                           (iv) (a) EXISTING LIENS -- Liens in existence as of
                      the date of the Closing securing Debt and listed in
                      Schedule 5.15, and

                                (b) RENEWALS -- Liens securing renewals,
                      extensions (as to time) , replacements and refinancings of
                      Debt secured by the Liens listed in Schedule 5.15,
                      provided that the amount of Debt secured by each such Lien
                      is not increased in excess of the amount of Debt
                      outstanding on the date of such renewal, extension or
                      refinancing, and none of such Liens is extended to include
                      any additional property of the Company or any Subsidiary;

                      (V) INTRA-GROUP LIENS -- Liens on property of the Company
                  or any of its Subsidiaries securing Debt owing to the Company
                  or to any of its Subsidiaries;

                      (VI) PURCHASE MONEY LIENS -- Liens on tangible property
                  (or any improvement thereon) acquired or constructed by the
                  Company or any Subsidiary after the date of the Closing to
                  secure Debt of the Company or such Subsidiary incurred in
                  connection with such acquisition or construction, provided
                  that

                           (a) no such Lien shall extend to or cover any
                      property other than the property (or improvement thereon)
                      being acquired or constructed,



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                           (b) the amount of Debt secured by any such Lien shall
                      not exceed an amount equal to the lesser of (I) the cost
                      to the Company or such Subsidiary of the property (or
                      improvement thereon) so acquired or constructed and (II)
                      the Fair Market Value (as determined in good faith by the
                      Company) of such property (or improvement thereon),
                      determined at the time of such acquisition or at the time
                      of substantial completion of such construction, and

                           (c) such Lien shall be created concurrently with or
                      within 180 days after such acquisition or the substantial
                      completion of such construction;

                      (vii) ACQUISITION LIENS -- Liens existing on property of a
                  Person immediately prior to its being consolidated with or
                  merged into the Company or a Subsidiary or its becoming a
                  Subsidiary, or any Lien existing on any property acquired by
                  the Company or any Subsidiary at the time such property is so
                  acquired (whether or not the Debt secured thereby shall have
                  been assumed), provided that

                           (a) no such Lien shall have been created or assumed
                      in contemplation of such consolidation or merger or such
                      Person's becoming a Subsidiary or such acquisition of
                      property,

                           (b) each such Lien shall extend solely to the item or
                      items of property so acquired and, if required by the
                      terms of the instrument originally creating such Lien,
                      other property which is an improvement to or is acquired
                      for specific use in connection with such acquired
                      property, and

                           (c) the principal amount of the Debt secured by any
                      such Lien shall at no time exceed an amount equal to the
                      lesser of (1) the cost to the Company or such Subsidiary
                      of the property (or improvement thereon) so acquired and
                      (2) the Fair Market Value (as determined in good faith by
                      the board of directors of the Company or such Subsidiary)
                      of such property (or improvement thereon), determined at
                      the time of such transaction;

                      (viii) COLLATERAL LIENS -- Liens in respect of the
                  Collateral permitted under the Security Documents, including

                           (a) Liens not incurred or made in connection with the
                      borrowing of money, the obtaining of advances or credit or
                      the payment of the deferred purchase price of property;
                      and

                           (b) Liens securing the Notes, the Bank Debt, the
                      Synthetic Lease Debt and other Debt ("ADDITIONAL DEBT") of
                      the Company, provided that in the case of Additional Debt,
                      (I) such Additional Debt is permitted to be incurred at
                      such time under the applicable provisions of the
                      Intercreditor Agreement and (II) at the time of the
                      incurrence thereof and immediately after giving effect
                      thereto and to the concurrent retirement of any other
                      Debt, no Default or Event of Default would exist;

                      (ix) NON-CONSENSUAL LIENS -- Non-consensual Liens securing
                  Debt, provided that each such Lien is discharged within 30
                  days after a Responsible Officer obtaining



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                  knowledge of such Lien and the aggregate amount of Debt
                  secured by all such Liens will not at any time exceed
                  $1,000,000;

                      (x) ACCOUNTS RECEIVABLE SALES - Liens securing the
                  obligations of the Company to purchasers of accounts
                  receivable in connection with any Permitted Accounts
                  Receivable Transfer; and

                      (xi) PRIORITY DEBT -- Liens securing Debt (other than any
                  Bank Debt) of the Company and not otherwise permitted by
                  clauses (i) through (x), inclusive, of this Section 10.6(a),
                  provided that at the time of the incurrence thereof and
                  immediately after giving effect thereto and to the concurrent
                  retirement of any other Debt, no Default or Event of Default
                  would exist.

                  (b) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any
         property shall be subjected to a Lien in violation of Section 10.6(a),
         the Company will forthwith make or cause to be made, to the fullest
         extent permitted by applicable law, provision whereby the Notes will be
         secured equally and ratably with all other obligations secured thereby
         pursuant to such agreements and instruments as shall be approved by the
         Required Holders, and the Company will cause to be delivered to each
         holder of a Note an opinion of independent counsel to the effect that
         such agreements and instruments are enforceable in accordance with
         their terms, and in any such case the Notes shall have the benefit, to
         the full extent that, and with such priority as, the holders of Notes
         may be entitled under applicable law, of an equitable Lien on such
         property securing the Notes. Such violation of Section 10.6(a) will
         constitute an Event of Default hereunder, whether or not any such
         provision is made pursuant to this Section 10.6(b).

                  (c) FINANCING STATEMENTS. The Company will not, and will not
         permit any of its Subsidiaries to, sign or file a financing statement
         under the Uniform Commercial Code of any jurisdiction that names the
         Company or such Subsidiary as debtor, or sign any security agreement
         authorizing any secured party thereunder to file any such financing
         statement, except, in any such case, a financing statement filed or to
         be filed to perfect or protect a security interest that the Company or
         such Subsidiary is entitled to create, assume or incur, or permit to
         exist, under the foregoing provisions of this Section 10.6 or to
         evidence for informational purposes a lessor's interest in property
         leased to the Company or any such Subsidiary.

                  (d) LIENS OF SUBSIDIARIES. Each Person that becomes a
         Subsidiary after the date of the Closing will be deemed to have granted
         on the date such Person becomes a Subsidiary all the Liens in existence
         on its property on such date.

         10.7     MERGER, CONSOLIDATION, ETC.

         The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, consolidate with, or merge into, any other Person or
permit any other Person to consolidate with, or merge into, it, or Transfer
substantially all of its assets in a single transaction or series of
transactions to any Person, except that

                  (a) any Subsidiary (other than a Guarantor) may consolidate
         with or merge into, or Transfer substantially all of its assets in a
         single transaction or series of transactions to, the Company (with the
         Company being the survivor thereof) or another Subsidiary if,
         immediately after, and after giving effect to, such transaction, no
         Default or Event of Default shall exist;



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                  (b) any Subsidiary (other than a Guarantor) may consolidate
         with or merge into any other Person, or Transfer substantially all of
         its assets in a single transaction or series of transactions to any
         Person, or allow any other Person to consolidate with or merge into it,
         if

                      (i) in the case of any consolidation or merger in which
                  the successor or surviving corporation is a Subsidiary,
                  immediately after, and after giving effect to, such
                  transaction, no Default or Event of Default would exist, and

                      (ii) in the case of any Transfer, or any consolidation or
                  merger in which the successor or surviving corporation is not
                  a Subsidiary, such transaction would be permitted under the
                  provisions of Section 10.8 (deeming such consolidation or
                  merger to be a Transfer of all of the assets and liabilities
                  of such Subsidiary) and immediately after, and after giving
                  effect to, such transaction, no Default or Event of Default
                  would exist; and

                  (c) the Company or any Guarantor may consolidate with or merge
         into any other Person, or Transfer substantially all of its assets in a
         single transaction or series of transactions to any Person, or permit
         any other Person to consolidate with or merge into it, if

                      (i) the successor formed by such consolidation or the
                  survivor of such merger or the Person that acquires by
                  Transfer substantially all of the assets of the Company or
                  such Guarantor as an entirety, as the case may be (the
                  "SUCCESSOR CORPORATION"), shall be a solvent corporation
                  organized and existing under the laws of the United States of
                  America, any state thereof or the District of Columbia;

                      (ii) the Successor Corporation, if not the Company or such
                  Guarantor, shall have executed and delivered to each holder of
                  any Notes its assumption of the due and punctual performance
                  and observance of the obligations of the Company under this
                  Agreement, the Notes and the Security Documents, or of such
                  Guarantor under the Guaranty Agreement, as the case may be,
                  including, without limitation, all covenants herein and
                  therein contained, pursuant to documents in form and substance
                  satisfactory to the Required Holders, and the Company shall
                  have caused to be delivered to each holder an opinion, in form
                  and substance satisfactory to the Required Holders, of
                  independent counsel reasonably satisfactory to the Required
                  Holders, to the effect that all agreements or instruments
                  effecting such assumption are enforceable in accordance with
                  their terms and comply with the terms hereof; and

                      (iii) immediately after, and after giving effect to, such
                  transaction, no Default or Event of Default would exist.

         No such Transfer of substantially all of the assets of the Company
shall have the effect of releasing the Company or any Successor Corporation from
its liability under the Financing Documents.

         10.8     SALE OF ASSETS, ETC.

                  (a) SALE OF ASSETS, ETC. The Company will not, and will not
         permit any of its Subsidiaries to, make any Asset Disposition, unless:




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                      (i) in the good faith opinion of the Company, such Asset
                  Disposition is in exchange for consideration having a Fair
                  Market Value at least equal to that of the property exchanged;
                  and

                      (ii) immediately after giving effect to such Asset
                  Disposition:

                           (a) no Default or Event of Default would exist; and

                           (b) the Disposition Value of all property that was
                      the subject of any Asset Disposition occurring on or after
                      the date of the Closing up to and including the date of
                      such Asset Disposition would not exceed 25% of
                      Consolidated Total Assets determined as of the end of the
                      then most recently ended fiscal quarter of the Company.

         Notwithstanding the foregoing, if the Net Proceeds Amount for any
         Transfer is applied by the Company to a Debt Prepayment Application (as
         more particularly provided in subsection (b) of this Section 10.8)
         substantially concurrently with such Transfer (whether or not the offer
         of prepayment within such Debt Prepayment Application is accepted by
         one or more holders of Notes), or a Property Reinvestment Application
         within 12 months after such Transfer, then such Transfer, only for the
         purpose of determining compliance with clause (a)(ii)(B) of this
         Section 10.8 as of any date, shall be deemed not to be an Asset
         Disposition.

                  If the Net Proceeds amount in respect of any Transfer are
         intended to be applied to a Property Reinvestment Application, and the
         Company shall fail to apply an amount equal to the entire Net Proceeds
         Amount in respect of such Transfer to a Property Reinvestment
         Application within 12 months after such Transfer, the Company shall be
         deemed to have consummated an Asset Disposition to which the
         immediately preceding paragraph does not apply in an amount equal to
         the unapplied portion of the Net Proceeds Amount in respect of such
         Transfer. Such deemed Asset Disposition shall be deemed to have
         occurred on the date of the original Asset Disposition and the
         Company's compliance with this Section 10.8 shall be determined, as of
         such date, as if such unapplied portion of the Net Proceeds Amount had
         not been excluded for purposes of determining compliance with clause
         (a)(ii)(B) of this Section 10.8.

                  (b) DEBT PREPAYMENT OFFER. In connection with any Transfer
         consummated after the date of the Closing and any Debt Prepayment
         Application by the Company pursuant to subsection (a) of this Section
         10.8 with respect thereto, the following procedure will apply:

                      (i) The Company shall provide written notice to each
                  holder of Notes of, and such written notice shall constitute,
                  an offer by the Company to prepay a principal amount of the
                  Notes of each such holder equal to such holder's Ratable
                  Portion (as defined in the definition of "Debt Prepayment
                  Application") of the Net Proceeds Amount with respect to such
                  Transfer, together with accrued interest with respect to such
                  principal amount being prepaid, but without any Make-Whole
                  Amount. Such written notice shall be given to each holder of
                  Notes not less than 30 days and not more than 60 days prior to
                  the actual date of prepayment (the "DEBT PREPAYMENT
                  APPLICATION DATE"), and shall set forth:

                           (a) the Debt Prepayment Application Date,



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                           (B) the principal amount of the Notes to be so
                      prepaid, and the amount of accrued interest thereon being
                      paid, and

                           (C) a statement describing, in reasonable detail, the
                      Transfer in respect of such prepayment and a calculation
                      of the Net Proceeds Amount in respect thereof.

                      (ii) Each holder of a Note that fails to respond to such
                  offer in writing at least 10 days prior to the Debt Prepayment
                  Application Date shall be deemed to have rejected such offer.
                  The Company may retain for its own purposes the Ratable
                  Portion of any rejecting holder.

                      (iii) The obligation of the Company to prepay Notes on any
                  Debt Prepayment Application Date is subject to the occurrence
                  of the Transfer in respect of which notice by the Company
                  shall have been made pursuant to subsection (b)(i). In the
                  event that such Transfer does not occur on the Debt Prepayment
                  Application Date in respect thereof, the prepayment shall be
                  deferred until and shall be made on the date on which such
                  Transfer occurs. The Company shall keep each holder of Notes
                  reasonably and timely informed of

                           (A) any such deferral of the date of prepayment,

                           (B) the date on which such Transfer and the
                      prepayment are expected to occur, and

                           (C) any determination by the Company that efforts to
                      effect such Transfer have ceased or been abandoned (in
                      which case the offer to make a Debt Prepayment Application
                      pursuant to this Section 10.8(b) shall be deemed
                      rescinded).

                      (iv) Any partial prepayment of the Notes pursuant to this
                  Section 10.8(b) shall reduce the principal amount of each
                  required prepayment of the Notes becoming due under Section
                  8.1 on and after the date of such prepayment and the principal
                  amount of the required payment due on the maturity date of the
                  Notes in the same proportion as the aggregate unpaid principal
                  amount of the Notes is reduced as a result of such partial
                  prepayment.

11.      EVENTS OF DEFAULT

         An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:

                  (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                  (b) the Company defaults in the payment of any interest on any
         Note for more than 5 Business Days after the same becomes due and
         payable; or



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                  (c) the Company defaults in the performance of or compliance
         with any term contained in any of Sections 10.1 through 10.8,
         inclusive, or Section 7.1(d); or

                  (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default from any holder of a Note, or

                  (e) any representation or warranty made in writing by or on
         behalf of any Obligor or by any officer of any Obligor in any Financing
         Document or in any writing furnished in connection with the
         transactions contemplated by any Financing Document proves to have been
         false or incorrect in any material respect on the date as of which
         made; or

                      (f) (i) the Company or any Significant Subsidiary is in
                  default (as principal or as guarantor or other surety) in the
                  payment of any principal of or premium or make-whole amount or
                  interest on any Indebtedness (other than Indebtedness under
                  this Agreement, the Other Agreements and the Notes) beyond any
                  period of grace provided with respect thereto, that
                  individually or together with such other Indebtedness as to
                  which any such failure exists has an aggregate outstanding
                  principal amount of at least $3,000,000, or

                      (ii) the Company or any Significant Subsidiary is in
                  default in the performance of or compliance with any term of
                  any evidence of any Indebtedness (other than Indebtedness
                  under this Agreement, the Other Agreements and the Notes),
                  that individually or together with such other Indebtedness as
                  to which any such failure exists has an aggregate outstanding
                  principal amount of at least $3,000,000, or of any mortgage,
                  indenture or other agreement relating thereto or any other
                  condition exists, and as a consequence of such default or
                  condition such Indebtedness has become, or has been declared
                  (or, if such default or condition shall have existed for more
                  than 60 days, one or more Persons are entitled to declare such
                  Indebtedness to be), due and payable before its stated
                  maturity or before its regularly scheduled dates of payment,
                  or

                      (iii) as a consequence of the occurrence or continuation
                  of any event or condition (other than the passage of time or
                  the right of the holder of Indebtedness to convert such
                  Indebtedness into equity interests),

                           (a) the Company or any Significant Subsidiary has
                      become obligated to purchase or repay Indebtedness (other
                      than Indebtedness under this Agreement, the Other
                      Agreements and the Notes) before its regular maturity or
                      before its regularly scheduled dates of payment in an
                      aggregate outstanding principal amount of at least
                      $3,000,000 (unless the Company or such Significant
                      Subsidiary shall have become so obligated as a result of a
                      voluntary Transfer of property or a mandatory prepayment
                      under the Bank Loan Agreement in connection with the
                      incurrence of Debt or the issuance of Capital Stock), or

                           (b) if such default or condition shall have existed
                      for more than 60 days, one or more Persons have the right
                      to require the Company or any Significant Subsidiary so to
                      purchase or repay such Indebtedness; or



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                  (g) the Company or any Significant Subsidiary (i) is generally
         not paying, or admits in writing its inability to pay, its debts as
         they become due, (ii) files, or consents by answer or otherwise to the
         filing against it of, a petition for relief or reorganization or
         arrangement or any other petition in bankruptcy, for liquidation or to
         take advantage of any bankruptcy, insolvency, reorganization,
         moratorium or other similar law of any jurisdiction, (iii) makes an
         assignment of all or substantially all of its assets for the benefit of
         its creditors, (iv) consents to the appointment of a custodian,
         receiver, trustee or other officer with similar powers with respect to
         it or with respect to any substantial part of its property, (v) is
         adjudicated as insolvent or to be liquidated, or (vi) takes corporate
         action for the purpose of any of the foregoing; or

                  (h) a court or governmental authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any Significant Subsidiary, a custodian, receiver, trustee or other
         officer with similar powers with respect to the Company or any
         Significant Subsidiary or with respect to any substantial part of the
         property of the Company or any Significant Subsidiary, or constituting
         an order for relief or approving a petition for relief or
         reorganization or any other petition in bankruptcy or for liquidation
         or to take advantage of any bankruptcy or insolvency law of any
         jurisdiction, or ordering the dissolution, winding-up or liquidation of
         the Company or any Significant Subsidiary, or any such petition shall
         be filed against the Company or any Significant Subsidiary and such
         petition shall not be dismissed within 60 days; or

                  (i) a final judgment or judgments for the payment of money
         aggregating in excess of $3,000,000 are rendered against one or more of
         the Company and its Significant Subsidiaries and which judgments are
         not, within 45 days after entry thereof, bonded, discharged or stayed
         pending appeal, or are not discharged within 45 days after the
         expiration of such stay; or

                  (j) any Obligor defaults in the performance of or compliance
         with any term contained in any Security Document and such default is
         not remedied within (A) 30 days after the earlier of (i) a Responsible
         Officer obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default from the Collateral Agent or
         any holder of a Note or (B) such shorter period of time, if any,
         provided in such Security Document to cure such default; or

                      (k) (i) the Guaranty Agreement shall cease to be in full
                  force and effect or shall be declared by a court or
                  governmental authority of competent jurisdiction to be void,
                  voidable or unenforceable against any Guarantor,

                      (ii) the validity or enforceability of the Guaranty
                  Agreement against any Guarantor shall be contested by such
                  Guarantor, the Company or any Affiliate, or

                      (iii) any Guarantor, the Company or any Affiliate shall
                  deny that such Guarantor has any further liability or
                  obligation under the Guaranty Agreement; or

                      (l) if (i) any Plan shall fail to satisfy the minimum
                  funding standards of ERISA or the Code for any plan year or
                  part thereof or a waiver of such standards or extension of any
                  amortization period is sought or granted under section 412 of
                  the Code,

                      (ii) a notice of intent to terminate any Plan shall have
                  been or is reasonably expected to be filed with the PBGC or
                  the PBGC shall have instituted proceedings under ERISA section
                  4042 to terminate or appoint a trustee to administer any Plan
                  or the PBGC



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                  shall have notified the Company or any ERISA Affiliate that a
                  Plan may become a subject of any such proceedings,

                      (iii) the aggregate "amount of unfunded benefit
                  liabilities" (within the meaning of section 4001(a)(18) of
                  ERISA) under all Plans, determined in accordance with Title IV
                  of ERISA, shall exceed $1,000,000,

                      (iv) the Company or any ERISA Affiliate shall have
                  incurred or is reasonably expected to incur any liability
                  pursuant to Title I or IV of ERISA or the penalty or excise
                  tax provisions of the Code relating to employee benefit plans,

                      (v) the Company or any ERISA Affiliate withdraws from any
                  Multiemployer Plan, or

                      (vi) the Company or any Subsidiary establishes or amends
                  any employee welfare benefit plan that provides
                  post-employment welfare benefits in a manner that would
                  increase the liability of the Company or any Subsidiary
                  thereunder;

         and any such event or events described in clauses (i) through (vi)
         above, either individually or together with any other such event or
         events, could reasonably be expected to have a Material Adverse Effect.

As used in Section 11(l), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in section 3 of ERISA.

12.      REMEDIES ON DEFAULT, ETC.

         12.1     ACCELERATION.

                  (a) If an Event of Default with respect to the Company
         described in paragraph (g) or paragraph (h) of Section 11 (other than
         an Event of Default described in clause (i) of paragraph (g) or
         described in clause (vi) of paragraph (g) by virtue of the fact that
         such clause encompasses clause (i) of paragraph (g)) has occurred, all
         the Notes then outstanding shall automatically become immediately due
         and payable.

                  (b) If any other Event of Default has occurred and is
         continuing, any holder or holders of more than 66-2/3% in principal
         amount of the Notes at the time outstanding may at any time at its or
         their option, by notice or notices to the Company, declare all the
         Notes then outstanding to be immediately due and payable.

                  (c) If any Event of Default described in paragraph (a) or (b)
         of Section 11 has occurred and is continuing, any holder or holders of
         Notes at the time outstanding affected by such Event of Default may at
         any time, at its or their option, by notice or notices to the Company,
         declare all the Notes held by it or them to be immediately due and
         payable.

         Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable,



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in each and every case without presentment, demand, protest or further notice,
all of which are hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its investment in
the Notes free from repayment by the Company (except as herein specifically
provided for) and that the provision for payment of a Make-Whole Amount by the
Company in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, is intended to provide compensation for the deprivation
of such right under such circumstances.

         12.2     OTHER REMEDIES.

         If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained in any Financing Document, or
for an injunction against a violation of any of the terms thereof, or in aid of
the exercise of any power granted thereby or by law or otherwise.

         12.3     RESCISSION.

         At any time after any Notes have been declared due and payable pursuant
to clause (b) or clause (c) of Section 12.1, the holders of not less than a
majority in principal amount of the Notes then outstanding, by written notice to
the Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, due and payable on any Notes other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of Default
and Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.

         12.4     NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

         No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by any Financing Document upon any holder of any Note shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 15, the Company will pay
to the holder of each Note on demand such further amount as shall be sufficient
to cover all costs and expenses of such holder incurred in any enforcement or
collection under this Section 12, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.

13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

         13.1     REGISTRATION OF NOTES.

         The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in



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                                       37
<PAGE>   43


such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

         13.2     TRANSFER AND EXCHANGE OF NOTES.

         Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.

         13.3     REPLACEMENT OF NOTES.

         Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and

                  (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original purchaser or an Institutional
         Investor, such Person's own unsecured agreement of indemnity shall be
         deemed to be satisfactory), or

                  (b) in the case of mutilation, upon surrender and cancellation
         thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

14.      PAYMENTS ON NOTES

         14.1     PLACE OF PAYMENT.



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         Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the principal office of Morgan Guaranty Trust Company of New
York or its successor. The Company may at any time thereafter, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either a principal office of the Company in such
jurisdiction or a principal office of a bank or trust company in such
jurisdiction.

         14.2     HOME OFFICE PAYMENT.

         So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.

15.      EXPENSES, ETC.

         15.1     TRANSACTION EXPENSES.

         Whether or not the transactions contemplated by the Financing Documents
are consummated, the Company will pay all reasonable costs and reasonable
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of the
Financing Documents (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the reasonable costs and
reasonable expenses incurred in enforcing or defending (or determining whether
or how to enforce or defend) any rights under the Financing Documents or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with the Financing Documents, or by reason of being
a holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of
the transactions contemplated by the Financing Documents. The Company will pay,
and will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).




                                       39
<PAGE>   45


         15.2     SURVIVAL.

         The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of any Financing Document, and the termination of any Financing
Document.

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

         All representations and warranties contained in any Financing Document
shall survive the execution and delivery of this Agreement and the Notes, the
purchase or transfer by you of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to any
Financing Document shall be deemed representations and warranties of the Company
under this Agreement. Subject to the preceding sentence, the Financing Documents
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.

17.      AMENDMENT AND WAIVER

         17.1     REQUIREMENTS.

         This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of any of Sections 1, 2, 3, 4, 5, 6 and 21, or any defined term (as
it is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 and
20.

         17.2     SOLICITATION OF HOLDERS OF NOTES.

                  (a) SOLICITATION. The Company will provide each holder of the
         Notes (irrespective of the amount of Notes then owned by it) with
         sufficient information, sufficiently far in advance of the date a
         decision is required, to enable such holder to make an informed and
         considered decision with respect to any proposed amendment, waiver or
         consent in respect of any of the provisions hereof or of the Notes. The
         Company will deliver executed or true and correct copies of each
         amendment, waiver or consent effected pursuant to the provisions of
         this Section 17 to each holder of outstanding Notes promptly following
         the date on which it is executed and delivered by, or receives the
         consent or approval of, the requisite holders of Notes.

                  (b) PAYMENT. The Company will not directly or indirectly pay
         or cause to be paid any remuneration, whether by way of supplemental or
         additional interest, fee or otherwise, or grant any security, to any
         holder of Notes as consideration for or as an inducement to the
         entering into by any holder of Notes of any waiver or amendment of any
         of the terms and provisions hereof unless such remuneration is
         concurrently paid, or security is concurrently granted, on the same



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                                       40
<PAGE>   46

         terms, ratably to each holder of Notes then outstanding even if such
         holder did not consent to such waiver or amendment.

         17.3     BINDING EFFECT, ETC.

         Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.

         17.4     NOTES HELD BY COMPANY, ETC.

         Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under any
of the Financing Documents, or have directed the taking of any action provided
in any of the Financing Documents to be taken upon the direction of the holders
of a specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.

18.      NOTICES

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                      (i) if to you or your nominee, to you or it at the address
                  specified for such communications in Schedule A, or at such
                  other address as you or it shall have specified to the Company
                  in writing,

                      (ii) if to any other holder of any Note, to such holder at
                  such address as such other holder shall have specified to the
                  Company in writing, or

                      (iii) if to the Company, to the Company at its address set
                  forth at the beginning hereof to the attention of the Chief
                  Financial Officer, telecopier: 619-350-2380, or at such other
                  address as the Company shall have specified to the holder of
                  each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

19.      REPRODUCTION OF DOCUMENTS

         This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing



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(except the Notes themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original document
so reproduced. The Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.

20.      CONFIDENTIAL INFORMATION

         For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that

                  (a) was publicly known or otherwise known to you prior to the
         time of such disclosure,

                  (b) subsequently becomes publicly known through no act or
         omission by you or any person acting on your behalf,

                  (c) otherwise becomes known to you other than through
         disclosure by the Company or any Subsidiary, or

                  (d) constitutes financial statements delivered to you under
         Section 7.1 that are otherwise publicly available.

You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to:

                      (i) your directors, officers, employees, trustees, agents,
                  attorneys and affiliates (to the extent such disclosure
                  reasonably relates to the administration of the investment
                  represented by your Notes),

                      (ii) your financial advisors and other professional
                  advisors who agree to hold confidential the Confidential
                  Information substantially in accordance with the terms of this
                  Section 20,

                      (iii) any other holder of any Note,

                      (iv) any Institutional Investor to which you sell or offer
                  to sell such Note or any part thereof or any participation
                  therein (if such Person has agreed in writing prior to its
                  receipt of such Confidential Information to be bound by the
                  provisions of this Section 20),



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                      (v) any Person from which you offer to purchase any
                  Security of the Company (if such Person has agreed in writing
                  prior to its receipt of such Confidential Information to be
                  bound by the provisions of this Section 20),

                      (vi) any federal or state regulatory authority having
                  jurisdiction over you,

                      (vii) the National Association of Insurance Commissioners
                  or any similar organization, or any nationally recognized
                  rating agency that requires access to information about your
                  investment portfolio or

                      (viii) any other Person to which such delivery or
                  disclosure may be necessary or appropriate

                           (a) to effect compliance with any law, rule,
                      regulation or order applicable to you,

                           (b) in response to any subpoena or other legal
                      process,

                           (c) in connection with any litigation to which you
                      are a party, or

                           (d) if an Event of Default has occurred and is
                      continuing, to the extent you may reasonably determine
                      such delivery and disclosure to be necessary or
                      appropriate in the enforcement or for the protection of
                      the rights and remedies under the Financing Documents.

Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.

21.      SUBSTITUTION OF PURCHASER

         You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.


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22.      MISCELLANEOUS

         22.1     ADDITIONAL NOTES.

         Subject to the terms and provisions hereof (including, but not limited
to, Section 10.5), the Company may, from time to time, issue and sell additional
promissory notes pursuant to agreements which may incorporate by reference all
or certain of the provisions of this Agreement and the Other Agreements. Such
incorporation by reference shall not have the effect of constituting such
promissory notes as Notes for any purpose, whether for acceleration of the
Notes, rescission of such acceleration, or the exercise of any other amendments
or waivers of the provisions hereof or of the Other Agreements, or otherwise.

         22.2     SUCCESSORS AND ASSIGNS.

         All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and permitted assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.

         22.3     PAYMENTS DUE ON NON-BUSINESS DAYS; WHEN PAYMENTS DEEMED
                  RECEIVED.

                  (a) PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
         Agreement or the Notes to the contrary notwithstanding, any payment of
         principal of or Make-Whole Amount or interest on any Note that is due
         on a date other than a Business Day shall be made on the next
         succeeding Business Day without including the additional days elapsed
         in the computation of the interest payable on such next succeeding
         Business Day.

                  (b) PAYMENTS, WHEN RECEIVED. Any payment to be made to the
         holders of Notes hereunder or under the Notes shall be deemed to have
         been made on the Business Day such payment actually becomes available
         to such holder at such holder's bank prior to 12:00 noon (local time of
         such bank).

         22.4     SEVERABILITY.

         Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

         22.5     CONSTRUCTION.

         Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.




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         22.6     COUNTERPARTS.

         This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

         22.7     GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

         22.8     JURISDICTION.

         EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW
YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS AND INSTRUMENTS CONTEMPLATED HEREBY AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH
OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY SUCH PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 22.8.




      [Remainder of page intentionally blank. Next page is signature page.]



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         If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.



                                                  Very truly yours,

                                                  SAFESKIN CORPORATION


                                                  By:_________________________
                                                     Name:
                                                     Title:



The foregoing is hereby
agreed to as of the
date thereof.

[PURCHASER]


By:_________________________
Name:
Title:


SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


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<PAGE>   52

                                   SCHEDULE B

                                  DEFINED TERMS



         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

         "ACQUISITION" means any acquisition, directly or indirectly, by the
Company or any Subsidiary, after the date of the Closing, of

                  (a) any Capital Stock of a Person that concurrently with such
         acquisition becomes a Subsidiary, or

                  (b) all or substantially all of the assets of an ongoing
         business.

         "ADDITIONAL DEBT" is defined in Section 10.6(a)(viii)(B).

         "AFFILIATE" means, at any time, and with respect to any Person,

                  (a) any other Person that at such time directly or indirectly
         through one or more intermediaries Controls, or is Controlled by, or is
         under common Control with, such first Person, and

                  (b) any Person beneficially owning or holding, directly or
         indirectly, 10% or more of any class of voting or equity interests of
         the Company or any Subsidiary or any Person of which the Company and
         its Subsidiaries beneficially own or hold, in the aggregate, directly
         or indirectly, 10% or more of any class of voting or equity interests.

As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.

                  "AGREEMENT, THIS" is defined in Section 17.3.

                  "ASSET DISPOSITION" means any Transfer except:

                  (a) any Transfer from a Subsidiary to the Company or a
         Wholly-Owned Subsidiary;

                  (b) any Permitted Accounts Receivable Transfer; or

                  (c) any Transfer made in the ordinary course of business and
         involving only property that is either (i) inventory held for sale or
         (ii) equipment, fixtures, supplies or materials no longer required in
         the operation of the business of the Company or any of its Subsidiaries
         or that is obsolete.

         "BANK DEBT" means any Debt of the Company or any of its Subsidiaries
owed to any of the Banks under the Bank Loan Agreement or any related agreement,
instrument or other document.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-1

<PAGE>   53


         "BANK LOAN AGREEMENT" means the Amended and Restated Revolving/Term
Loan Agreement, dated as of March 5, 1999, among the Company, the Banks and
Union Bank of California, N.A., as agent, as may be amended, restated, otherwise
modified or replaced from time to time; provided that if any such new agreement
shall at any time be entered into by the Company, then concurrently therewith
the Company shall, unless otherwise agreed by the Required Holders, cause the
Banks under such new agreement to enter into a new intercreditor agreement with
the holders of the Notes substantially in the form of the Intercreditor
Agreement.

         "BANKS" means the banks initially party to the Bank Loan Agreement
(namely, Union Bank of California, N.A., Comerica Bank, The First National Bank
of Chicago, Sanwa Bank California, U.S. Bank, National Association and Wells
Fargo Bank, National Association) and each other bank or other Person from time
to time acting as a lender or other provider of financial accommodations to the
Company or any Subsidiary under the Bank Loan Agreement.

         "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.

         "CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease that would, in accordance with GAAP, appear as a liability on
a balance sheet of such Person.

         "CAPITAL STOCK" means any class of capital stock, share capital or
similar equity interest of a Person.

         "CHANGE IN CONTROL" is defined in Section 8.3(i).

         "CLOSING" is defined in Section 3.

         "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

         "COLLATERAL" has, at any time, the meaning specified in the
Intercreditor Agreement at such time.

         "COLLATERAL AGENT" means Union Bank of California, N.A., as collateral
agent under the Security Documents and the Intercreditor Agreement, and any
successor or assign appointed in accordance with the provisions of the
Intercreditor Agreement.

         "COLLATERAL RELEASE EVENT" means, at any time, the written consent by
all of the holders of the Notes and the holders of all of the other obligations
that are secured by the Collateral at such time, to release all of the
Collateral from the lien of the Security Documents.

         "COMPANY" is defined in the introductory sentence of this Agreement.

         "CONFIDENTIAL INFORMATION" is defined in Section 20.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-2

<PAGE>   54

         "CONSOLIDATED CASH FLOW" means, with respect to any period,
Consolidated Net Earnings for such period plus all amounts deducted in the
computation thereof on account of (a) Consolidated Interest Expense, (b) taxes
imposed on or measured by income or excess profits and (c) depreciation and
amortization. For purposes of determining "Consolidated Cash Flow" for any
period, any Acquisition or Major Asset Disposition that is consummated during
such period shall be deemed to have been consummated as of the first day of such
period (and the earnings and other results of operations during such period in
respect of the property acquired or disposed of shall be included in the case of
an Acquisition or excluded in the case of a Major Asset Disposition, in each
case for purposes of such determination) and any incurrence of Debt in
connection with any such Acquisition or repayment of Debt in connection with any
such Major Asset Disposition shall be deemed to have occurred as of such first
day.

         "CONSOLIDATED FUNDED DEBT" means, as of any date of determination, the
total of all Funded Debt of the Company and its Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and its Subsidiaries and all other items required to be eliminated in the course
of the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.

         "CONSOLIDATED INTEREST EXPENSE" means, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP): (a) all interest expense in respect of Debt of the
Company and its Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Earnings for such period,
plus (b) all debt discount and expense amortized or required to be amortized in
the determination of Consolidated Net Earnings for such period, plus (c) all
lease payments paid or required to be paid under the lease of the Synthetic
Lease Collateral during such period.

         "CONSOLIDATED NET EARNINGS" means, with reference to any period, the
net income (or loss) of the Company and its Subsidiaries for such period (taken
as a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP, provided that there shall be excluded:

                  (a) the income (or loss) of any Person (other than a
         Subsidiary) in which the Company or any Subsidiary has an ownership
         interest, except to the extent that any such income has been actually
         received by the Company or such Subsidiary in the form of cash
         dividends or similar cash distributions, and

                  (b) any net income or gain, or net loss, during such period
         from any extraordinary items.

         "CONSOLIDATED NET WORTH" means, at any time, the total stockholders'
equity of the Company and its Subsidiaries as would be shown on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP.

         "CONSOLIDATED PRO FORMA INTEREST COVERAGE RATIO" means, at any time,
the ratio of (a) Consolidated Cash Flow for the period of four consecutive
fiscal quarters of the Company then most recently ended (for purposes of this
definition, a "ONE YEAR RETROSPECTIVE PERIOD"), after giving effect to



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-3

<PAGE>   55

the assumptions set forth below, to (b) Consolidated Interest Expense for such
One Year Retrospective Period, after giving effect to the assumptions set forth
below.

         For purposes of determining "Consolidated Cash Flow" and "Consolidated
Interest Expense" in this definition, any Acquisition or Major Asset Disposition
that is consummated during the One Year Retrospective Period then most recently
ended shall be deemed to have been consummated as of the first day of such One
Year Retrospective Period (and the earnings and other results of operations
during such period in respect of the property acquired or disposed of shall
accordingly be included in the case of an Acquisition, or excluded in the case
of a Major Asset Disposition, for purposes of such determination) and any
incurrence of Debt in connection with any such Acquisition or repayment of Debt
in connection with any such Major Asset Disposition shall be deemed to have
occurred as of such first day.

         "CONSOLIDATED TOTAL ASSETS" means, at any time, the total assets of the
Company and its Subsidiaries that would be shown as assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP.

         "CONTROL EVENT" is defined in Section 8.3(j).

         "DEBT" means, with respect to any Person, without duplication,

                  (a) its liabilities for borrowed money and its redemption
         obligations in respect of mandatorily redeemable Preferred Stock;

                  (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including, without limitation, all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to any such property);

                  (c) its Capital Lease Obligations;

                  (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities); and

                  (e) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (d) hereof;

provided that, with respect to the Company, Debt shall not include any unfunded
obligations which may now or hereafter exist with respect to Company's Plans.

                  "DEBT PREPAYMENT APPLICATION" means, with respect to any
         Transfer of property by the Company or any Subsidiary, the application
         by the Company or such Subsidiary of cash in an amount equal to the Net
         Proceeds Amount with respect to such Transfer to pay Qualified Debt,
         provided that in the course of making such application the Company
         shall offer to prepay each outstanding Note in accordance with Section
         10.8(b) in a principal amount that equals the Ratable Portion for such
         Note. If any holder of a Note fails to accept such offer of prepayment,
         then, for purposes of the preceding sentence only, the Company
         nevertheless will be deemed to have paid Qualified Debt in an amount
         equal to the Ratable Portion for such Note.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-4

<PAGE>   56

         As used in this definition,

                  "Ratable Portion" means, for any Note, an amount equal to the
         product of

                  (a) the Net Proceeds Amount being so offered to the payment of
         Qualified Debt, multiplied by

                  (b) a fraction the numerator of which is the outstanding
         principal amount of such Note and the denominator of which is the
         aggregate outstanding principal amount of Qualified Debt.

                  "Qualified Debt" means (a) at all times prior to the
         Collateral Release Event, the Notes and any secured Debt of the Company
         or its Subsidiaries that by its terms is not subordinated in right of
         payment to any other Debt of the Company or any Subsidiary and (b) at
         all times after the Collateral Release Event, the Notes and any Debt of
         the Company or its Subsidiaries that by its terms is not subordinated
         in right of payment to any unsecured Debt of the Company or any
         Subsidiary; provided that in no event shall Qualified Debt include (i)
         any Debt owing to any of the Subsidiaries or any Affiliate, or (ii) any
         Debt in respect of any revolving credit or similar facility providing
         the Company or such Subsidiary with the right to obtain loans or other
         extensions of credit from time to time, except to the extent that in
         connection with such payment of Debt the availability of credit under
         such credit facility is permanently reduced by an amount not less than
         the amount of such proceeds applied to the payment of such Debt.

         "DEBT PREPAYMENT APPLICATION DATE" is defined in Section 10.8(b).

         "DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         "DEFAULT RATE" means that rate of interest that is the greater of (i)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
from time to time by Morgan Guaranty Trust Company of New York in New York, New
York (or its successor) as its "base" or "prime" rate.

         "DISPOSITION VALUE" means, at any time, with respect to any property

                  (a) in the case of property that does not constitute
         Subsidiary Stock, the book value thereof, valued at the time of such
         disposition in good faith by the Company, and

                  (b) in the case of property that constitutes Subsidiary Stock,
         an amount equal to that percentage of book value of the assets of the
         Subsidiary that issued such stock as is equal to the percentage that
         the book value of such Subsidiary Stock represents of the book value of
         all of the outstanding Capital Stock of such Subsidiary (assuming, in
         making such calculations, that all Securities convertible into such
         Capital Stock are so converted and giving full effect to all
         transactions that would occur or be required in connection with such
         conversion) determined at the time of the disposition thereof, in good
         faith by the Company.

                  "DOMESTIC SIGNIFICANT SUBSIDIARY" is defined in Section
         9.6(e).



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-5

<PAGE>   57

         "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

         "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

         "EVENT OF DEFAULT" is defined in Section 11.

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

         "FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).

         "FINANCING DOCUMENTS" means, collectively, this Agreement, the Other
Agreements, the Notes, the Guaranty Agreement, the Intercreditor Agreement, the
Security Agreement, the Pledge Agreement and any other Security Document
executed from time to time.

         "FOREIGN PENSION PLAN" means any plan, fund or other similar program

                  (a) established or maintained outside of the United States of
         America by any one or more of the Company or any of its Subsidiaries
         primarily for the benefit of the employees (substantially all of whom
         are aliens not residing in the United States of America) of the Company
         or its Subsidiaries which plan, fund or other similar program provides
         for retirement income for such employees or results in a deferral of
         income for such employees in contemplation of retirement and

                  (b) not otherwise subject to ERISA.

         "FOREIGN SIGNIFICANT SUBSIDIARY" is defined in Section 9.6(f).

         "FUNDED DEBT" means, at any time and with respect to any Person, all
Debt of such Person which by its terms or by the terms of any instrument or
agreement relating thereto matures, or which is otherwise payable or unpaid, one
year or more from, or is directly or indirectly renewable or extendible at the
option of such Person to a date one year or more (including, without limitation,
an option of such Person under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more) from, the date of the creation thereof, and includes, without duplication,
Current Maturities of Funded Debt, provided that any Debt under a revolving
credit or similar agreement that has been utilized for working capital purposes
and that would at such time otherwise be classified as "Funded Debt" shall be
excluded from "Funded Debt" if there shall have been during the then immediately
preceding 365 days a period of at least 30 consecutive days on each of which
there shall have been no such Debt outstanding.

         As used in this definition,



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-6

<PAGE>   58

         "Current Maturities of Funded Debt" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at such
time which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or one year or less from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date more than one year from such time.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "GOVERNMENTAL AUTHORITY" means

                  (a) the government of

                      (i) the United States of America or any state or other
                  political subdivision thereof, or

                      (ii) any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or that
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                  (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

         "GUARANTOR" means, at any time, each Person (including, without
limitation, the Initial Guarantor) that at such time is a guarantor under the
Guaranty Agreement.

         "GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including, without limitation, obligations
incurred through an agreement, contingent or otherwise, by such Person:

                  (a) to purchase such indebtedness or obligation or any
         property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such indebtedness or obligation, or (ii) to maintain any working
         capital or other balance sheet condition or any income statement
         condition of any other Person or otherwise to advance or make available
         funds for the purchase or payment of such indebtedness or obligation;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such indebtedness or
         obligation of the ability of any other Person to make payment of the
         indebtedness or obligation; or

                  (d) otherwise to assure the owner of such indebtedness or
         obligation against loss in respect thereof.



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-7

<PAGE>   59

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

         "GUARANTY AGREEMENT" is defined in Section 4.14.

         "HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

         "HEDGE FACILITY" means, collectively, one or more credit facilities
entered into by one or both of the Specified Subsidiaries which are utilized
solely for the purpose of mitigating foreign exchange risk associated with the
ordinary course of business by the Specified Subsidiaries.

         "HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.

         "INDEBTEDNESS" means, with respect to any Person, without duplication,

                  (a) its liabilities for borrowed money and its redemption
         obligations in respect of mandatorily redeemable Preferred Stock;

                  (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all liabilities created
         or arising under any conditional sale or other title retention
         agreement with respect to any such property);

                  (c) Capital Lease Obligations of such Person;

                  (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                  (e) all its liabilities in respect of letters of credit or
         instruments serving a similar function issued or accepted for its
         account by banks and other financial institutions (whether or not
         representing obligations for borrowed money);

                  (f) Swaps of such Person; and

                  (g) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (f) hereof.

Without limitation of the foregoing, Indebtedness of any Person shall include
all obligations of such Person of the character described in clauses (a) through
(g) to the extent such Person or its property remains legally liable in respect
thereof notwithstanding that any such obligation is deemed to be extinguished
under GAAP.


SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-8

<PAGE>   60

         "INITIAL GUARANTOR" means Safeskin Scientific Corporation, a California
corporation.

         "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

         "INTERCREDITOR AGREEMENT" is defined in Section 4.9.

         "LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

         "MAJOR ASSET DISPOSITION" means any Asset Disposition, directly or
indirectly, by the Company or any Subsidiary, after the date of the Closing, of

                  (a) all or substantially all of the Capital Stock or assets of
         a Subsidiary; or

                  (b) any line of business of the Company and its Subsidiaries.

         "MAKE-WHOLE AMOUNT" is defined in Section 8.7.

         "MANAGEMENT GROUP" is defined in Section 8.3(k).

         "MATERIAL" means material in relation to the business, operations,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.

         "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of any Obligor to
perform its obligations under any of the Financing Documents to which it is a
party, or (c) the validity or enforceability of any of the Financing Documents.

         "MEMORANDUM" is defined in Section 5.3.

         "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).

         "NET PROCEEDS AMOUNT" means, with respect to any Transfer of any
property by any Person, an amount equal to the difference of

                  (a) the aggregate amount of the consideration (valued at the
         Fair Market Value of such consideration at the time of the consummation
         of such Transfer) received by such Person in respect of such Transfer,
         minus

                  (b) all ordinary and reasonable out-of-pocket costs and
         expenses actually incurred by such Person in connection with such
         Transfer.




SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-9

<PAGE>   61


         "NOTES" is defined in Section 1.

         "OBLIGORS" means the Company and each Guarantor.

         "OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.

         "OTHER AGREEMENTS" is defined in Section 2.

         "OTHER PURCHASERS" is defined in Section 2.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

         "PERMITTED ACCOUNTS RECEIVABLE TRANSFER" means any Transfer, during any
fiscal quarter of the Company, of accounts receivable (without recourse) to any
Person (other than an Affiliate) in connection with the compromise or collection
thereof, provided that (i) the sale price for such Transfer would not be less
than 95% of the amount of such accounts receivable, (ii) after giving effect
thereto, the amount of such accounts receivable together with the aggregate
amount of all other accounts receivable Transferred by the Company and its
Subsidiaries during such fiscal quarter would not exceed $10,000,000, and (iii)
immediately after, and after giving effect to such Transfer, no Default or Event
of Default would exist.

         "PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

         "PLEDGE AGREEMENT" is defined in Section 4.11.

         "PREFERRED STOCK" means any class of Capital Stock of a Person that is
preferred over any other class of Capital Stock of such Person as to the payment
of dividends or other equity distributions or the payment of any amount upon
liquidation or dissolution of such Person.

         "PRIORITY DEBT" means, at any time, without duplication, the sum of

                  (a) all Debt of the Company secured by any Lien on any
         property of the Company or any Subsidiary, other than any such Debt
         secured by Liens permitted by any one or more of clauses (a)(i) through
         (a)(x), inclusive, of Section 10.6, plus

                  (b) all Debt of Subsidiaries,

provided that there shall be excluded from Priority Debt (i) Debt of any
Guarantor under the Guaranty Agreement, (ii) Debt of any Guarantor referred to
in the foregoing clause (i) under such Guarantor's guaranty of the obligations
under the Bank Loan Agreement or in respect of the Synthetic Lease Debt or the
Additional Debt, so long as such obligations of such Guarantor are subject to
the sharing provisions of the Intercreditor Agreement, (iii) Debt of any
Subsidiary with respect to which the holder thereof has a



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-10

<PAGE>   62

claim on the assets of such Subsidiary which is pari passu with, or junior to,
the claim of the holders of the Notes (either directly or through the Collateral
Agent) against such assets, and (iv) Debt of any Subsidiary under clause (b)
above owing solely to the Company or any Wholly-Owned Subsidiary.

         "PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

         "PROPERTY REINVESTMENT APPLICATION" means, with respect to any Transfer
of property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer to the acquisition by the Company or any Subsidiary of
operating assets of the Company or any Subsidiary of a nature similar, and a
value at least equivalent, to the property subject to such Transfer.

         "PROPOSED PREPAYMENT DATE" is defined in Section 8.3(c).

         "PTE" is defined in Section 5.12(f).

         "QPAM EXEMPTION" is defined in Section 6.2(d).

         "REQUIRED HOLDERS" means, at any time, the holder or holders of at
least 66-2/3% in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).

         "RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

         "SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.

         "SECURITY" has the meaning set forth in section 2(1) of the Securities
Act.

         "SECURITY AGREEMENT" is defined in Section 4.10.

         "SECURITY DOCUMENTS" means, collectively, the Security Agreement, the
Pledge Agreement and each other agreement, document or other instrument relating
to the Collateral executed from time to time, all as amended or supplemented
from time to time.

         "SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

         "SIGNIFICANT SUBSIDIARY" is defined in Section 9.6(g).

         "SOURCE" is defined in Section 6.2.

         "SPECIFIED SUBSIDIARIES" means and includes each of Safeskin
Corporation (Thailand) Limited and Safeskin Medical & Scientific (Thailand)
Limited, each of which is a Thailand corporation.

         "SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity,




SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-11

<PAGE>   63

and any partnership or joint venture if more than a 50% interest in the profits
or capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership or
joint venture can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.

         "SUBSIDIARY STOCK" means, with respect to any Person, the Capital Stock
(or any options or warrants to purchase stock or other Securities exchangeable
for or convertible into any Capital Stock) of any Subsidiary of such Person.

         "SUCCESSOR CORPORATION" is defined in 10.7(c)(i).

         "SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.

         "SYNTHETIC LEASE COLLATERAL" means the real property and related
improvements, together with any leases, rents or other assets associated
therewith or proceeds thereof in which a security interest has been granted to
secure the Synthetic Lease Debt pursuant to the Synthetic Lease Documents.

         "SYNTHETIC LEASE DEBT" means, at any time, the Synthetic Lease
Outstandings (as defined in the Intercreditor Agreement) at such time .

         "SYNTHETIC LEASE DOCUMENTS" means, collectively, the Participation
Agreement, dated as of March 5, 1999, entered into by the Company with the
Synthetic Lease Lenders, Union Bank California, N.A., in its capacities as
trustee and as agent for the Synthetic Lease Lenders, and the other parties
identified on the signature pages thereof, and each of the other "Operative
Agreements" (as defined in Annex A to such Participation Agreement), in each
case as may be amended, restated, otherwise modified or replaced from time to
time.

         "SYNTHETIC LEASE LENDERS" means the Banks and their respective
successors and assigns under the Synthetic Lease Documents.

         "TRANSFER" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock.

         "VOTING STOCK" means Capital Stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions), irrespective of whether or not at the
time stock of any of the class or classes shall have or might have special
voting power or rights by reason of the happening of any contingency.

         "WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary 100% of
all of the equity interests (except directors' qualifying shares) and voting
interests of which are owned by any one or more of the Company and the
Company's other Wholly-Owned Subsidiaries at such time.

         "YEAR 2000 PROBLEM" is defined in Section 5.21



SAFESKIN CORPORATION                                   NOTE PURCHASE AGREEMENT


                                  Schedule B-12