Document:

MISSISSIPPI CHEMICAL CORPORATION

                      EXECUTIVE DEFERRED COMPENSATION PLAN

                            AS AMENDED AND RESTATED

                           EFFECTIVE JANUARY 1, 2000

                               TABLE OF CONTENTS

     SECTION                                                             PAGE

      1.    Introduction...................................................1
            1.1   Plan.....................................................1
            1.2   Effective Date...........................................1
            1.3   Purpose..................................................1

      2.    Participation and Supplemental Benefits........................1
            2.1   Eligibility..............................................1
            2.2   Election to Defer........................................2
            2.3   Amount of Deferral.......................................2
            2.4   Time of Election.........................................2
            2.5   Establishment and Adjustment of Deferred Stock Accounts..2

      3.    Payment of Deferred Compensation...............................3
            3.1   Payment of Deferred Compensation.........................3
            3.2   Installment Election; Further Deferrals..................3
            3.3   Death....................................................3
            3.4   Hardship Distribution....................................4
            3.5   Source of Payment........................................4
            3.6   Limitations on Issuance of Stock.........................4

      4.    Plan Administration............................................4
      4.1   Committee......................................................4
            4.2   Indemnification..........................................5

      5.    General........................................................5
            5.1   Interests not Transferable; Taxes........................5
            5.2   Facility of Payment......................................5
            5.3   Gender and Number........................................5
            5.4   Controlling Law..........................................5
            5.5   Successors...............................................5
            5.6   Not a Contract...........................................6

      6.    Amendment, Termination and Cessation of Trading................6
            6.1   Amendment and Termination................................6
            6.2   Cessation of Trading in Employer Stock...................6

      7.    Execution of Plan..............................................6

<PAGE>

                                   SECTION 1

                                  INTRODUCTION

      1.1   Plan.  This plan has been established by Mississippi Chemical
Corporation for the benefit of eligible employees of Mississippi Chemical
Corporation, Mississippi Chemical Management Company and Mississippi Chemical
Company, L.P. (hereinafter collectively referred to as the "Employer"), and
shall be known as the Mississippi Chemical Corporation Executive Deferred
Compensation Plan (the "Plan").  Other subsidiaries and affiliates of
Mississippi Chemical may adopt this Plan for the benefit of any of their
employees, subject to the approval of the Committee (as defined in Section 4.1
below).

      1.2   Effective Date.  The Plan was originally adopted effective
August 26, 1997, subject to shareholder approval of the material terms of the
Plan in accordance with Section 162(m)(4)(C) of the Internal Revenue Code of
1986, as amended (the "Code"), which occurred on November 11, 1997.  The Plan
is hereby amended and restated, effective January 1, 2000.

      1.3   Purpose.  This Plan has been established to provide incentives to a
select group of the Employer's executive officers and key employees to more
closely align their interests with those of the shareholders of Mississippi
Chemical Corporation and to work towards growth in the Employer's shareholder
value, by risking certain payments otherwise payable to them for deferred
compensation based on the value of Mississippi Chemical Corporation common
stock ("Stock").  This Plan is intended to permit such executive officers and
key employees to elect to defer certain incentive payments that would otherwise
be payable pursuant to the Employer's Officer and Key Employee Incentive Plan,
any payment that would otherwise be made under any "all-employee"
profit-sharing plan of the Employer or of a subsidiary or affiliate of
Mississippi Chemical Corporation which has adopted this Plan with the approval
of the Committee, and under any other bonus, profit-sharing or incentive plan
of the Employer or of a subsidiary or affiliate of Mississippi Chemical
Corporation which has adopted this Plan with the approval of the Committee
(hereinafter collectively referred to as "Incentive Payments") and to elect to
defer a portion of their salary. This Plan is intended to provide additional
incentives to such executive officers and key employees to more closely align
their interests with those of the shareholders of Mississippi Chemical
Corporation and work towards growth in the Employer's shareholder value by
risking compensation otherwise payable to them for deferred compensation
based on future growth in the value of Stock. This Plan is intended to be
unfunded for purposes of the Code and the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").  Amounts deferred under this Plan that
would otherwise be payable under the Officer and Key Employee Incentive Plan
are intended to qualify as qualified performance-based compensation under
Code Section 162(m)(4)(C) and related Treasury regulations, and this Plan
shall be interpreted accordingly.

                                   SECTION 2

                    PARTICIPATION AND SUPPLEMENTAL BENEFITS

      2.1   Eligibility.  Each executive officer and key employee of the
Employer who is named in writing by the Committee ("Executive") will be
eligible to become a Participant under this Plan.  Eligibility shall be
limited to a select group of management or highly compensated employees in
accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

     2.2  Election to Defer.  An Executive may elect to defer (a) all or a
portion of his Incentive Payments or (b) any percentage or dollar amount, up to
10 percent of the salary that would otherwise be payable to him, by filing a
written election with the Committee on forms to be prescribed by the Committee
at the time prescribed in Section 2.4 below.  Such election must include a
designation of beneficiary.  Upon making such election, the Executive shall
become a "Participant" in this Plan.

     2.3  Amount of Deferral.  The amount of Incentive Payments and the amount
of salary to be deferred in any calendar year shall be designated by the
Participant in dollar or percentage terms on forms to be prescribed by the
Committee.

      2.4   Time of Election.  A separate election to defer must be filed for
each calendar year in which a Participant desires to defer any Incentive
Payments and/or salary, and must be received by the end of the calendar year
preceding the calendar year in which the Incentive Payments and/or salary would
otherwise be paid.  Any election by a Participant with respect to a given
calendar year will not preclude a different action with respect to any
subsequent calendar year. Notwithstanding the foregoing, any eligible Executive
may, within 30 days of first becoming eligible to participate in this Plan,
elect to defer any Incentive Payments and/or salary earned subsequent to such
election for the balance of the calendar year in which he first becomes
eligible.

      2.5     Establishment and Adjustment of Deferred Stock Accounts.  The
Committee shall cause a "Deferred Stock Account" to be created for each
Participant.  The Deferred Stock Account shall be a mere bookkeeping account
reflecting the Employer's future obligation to make payments under this Plan,
and shall not confer on any Participant any of the rights of a stockholder of
Mississippi Chemical Corporation.  A Participant's Deferred Stock Account shall
be credited with "deferred shares" effective as of the date payment of a cash
Incentive Payment and/or salary would have been made, absent the Participant's
election to defer such amount pursuant to this Plan.  The number of "deferred
shares" to be credited shall be determined by dividing (a) 150 percent of the
dollar amount of the Incentive Payment and/or salary that otherwise would have
been payable to the Participant by (b) the fair market value of one share of
Stock as of the July 1 immediately prior to the calendar year in which payment
of the Incentive Payment and/or salary would otherwise have occurred.
Notwithstanding the foregoing, in no event shall the number of deferred shares
credited be less than (i) 150 percent of the dollar amount of the cash
Incentive Payment and/or salary the Participant has elected to defer, divided
by (ii) the fair market value of one share of Stock as of the date such
Incentive Payment and/or salary would otherwise have been paid in cash.  The
result of such division shall be rounded up to the nearest whole share.
A Participant's Deferred Stock Account shall be credited, effective as of the
payment date of any dividend on the Stock, with additional shares of deferred
stock, calculated by dividing (x) the dollar amount of the dividend per share
times the number of deferred shares then credited to the Participant's
Deferred Stock Account by (y) the fair market value of one share of Stock.
The Committee shall cause each Participant's Deferred Stock Account to be
adjusted to reflect stock splits, stock dividends, exchange of stock in
connection with a merger, and similar transactions to produce the same
number of deferred shares as the holder of an equal number of shares of
Stock would have following such a transaction.  Whenever payment of all or any
portion of a Participant's Deferred Stock Account is to be made in cash
hereunder, the amount of cash to be paid to the Participant is to be
determined by multiplying the number of deferred shares to be distributed by
the fair market value of such shares.  For purposes of this Section 2.5,
"fair market value" of a share of Stock shall equal the average of the
closing prices of a share as reported on the New York Stock Exchange for the
last 20 trading days prior to the date in question.

                                   SECTION 3

                        PAYMENT OF DEFERRED COMPENSATION

     3.1  Payment of Deferred Compensation.  Subject to the provisions of
Section 3.2, a Participant shall be entitled to receive shares of Stock equal
to the number of deferred shares then credited to the Participant's Deferred
Stock Account, computed in accordance with Section 2.5 above, on the first to
occur of (a) 30 days following the end of the calendar year in which such
Participant ceases to be an employee of the Employer due to separation of
employment, retirement, Total Disability (as defined below), or death or
(b) the payment date that he elected at the time of his deferral election,
which date shall be equal to or more than 18 months after the date of the
deferral election.  The shares issued to the Participant may be authorized and
previously unissued shares or Treasury shares.  For purposes of this Plan, the
term "Total Disability" shall mean inability to perform the normal functions
of his current position with the Company due to a physical or mental condition,
disease, or injury that is anticipated to last at least 12 months.  The
Committee shall determine whether Total Disability has occurred based on such
evidence as it deems satisfactory.

     3.2  Installment Election; Further Deferrals.  Subject to the approval of
the Committee, in lieu of receiving the lump-sum issuance of Stock to which the
Participant may be entitled pursuant to the provisions of Section 3.1 above at
the time specified therein, a Participant may elect to receive installment
payments by delivering to the Committee at any time prior to December 31 of the
calendar year preceding the calendar year in which payment would otherwise
occur hereunder, written notice of the Participant's election to receive the
amount credited to his Deferred Stock Account in such number of annual
installments (not to exceed installments extending over 10 years) and
commencing on such date (which date shall be no earlier than the date on which
the balance in the Participant's Deferred Stock Account would otherwise be
paid to the Participant) as is specified in the written notice.  Subject to
the approval of the Committee, a Participant may also elect, no later than
December 31 of the calendar year preceding the calendar year in which issuance
of shares of Stock would otherwise occur under Section 3.1 above, to defer
issuance of such shares of Stock until a later date specified in such election.
A Participant may modify or rescind an installment election or further deferral
election in its entirety at any time prior to the December 31 date referred to
in this Section 3.2, but on such December 31 the election shall become
irrevocable.

     3.3  Death.  If a Participant dies before receiving all amounts credited
to his Deferred Stock Account, the entire unpaid amount shall be paid in one
(1) lump sum in accordance with Section 3.1 above to the beneficiary designated
by such Participant.  No beneficiary designation shall be valid unless it is in
writing, signed by the Participant, dated and filed with the Committee prior to
death.  Any beneficiary designation may be revoked and a new designation may be
made, as long as the new designation is in writing, signed by the Participant,
dated and filed with the Committee prior to death.  If no beneficiary has been
designated, or no designated beneficiary survives the Participant, any unpaid
amounts will be paid to the Participant's surviving spouse, or if the
Participant does not have a surviving spouse, to the Participant's estate as
soon as administratively possible.

     3.4  Hardship Distribution.  A Participant or beneficiary may request
acceleration of the payment terms hereunder only in the event of severe
financial hardship resulting from an Unforeseeable Emergency (as defined
below).  The amount of the hardship distribution is limited to the amount
necessary to meet the emergency.  Such request shall specify in detail the
grounds for the requested modification and shall be referred to the Committee.
The decision of the Committee with respect to the requested modification shall
be solely at the discretion of the Committee and in accordance with its
evaluation of the exigencies of the situation.  Such decision shall be binding
on the Employer and Participant.  For purposes of this Plan, the term
"Unforeseeable Emergency" means an unanticipated emergency that is caused by
an event beyond the control of the Participant or beneficiary that would result
in severe financial hardship to the individual if early withdrawal were not
permitted and that otherwise meets the requirements of such term in any
applicable statute or regulation.

     3.5  Source of Payment.  All payments under this Plan in cash pursuant to
Section 3.6 below shall be paid from the general funds of the Employer or from
such other funding vehicle as the Committee shall provide, and all
distributions of Stock under this Plan shall be made from authorized but
unissued shares, Treasury shares or shares purchased with general funds of the
Employer, or from such other funding vehicle as the Committee shall provide,
provided that all assets paid into any funding vehicle shall, at all times
prior to payment to a Participant or beneficiary, be subject to the general
creditors of the Employer.  The Employer shall be under no obligation to
segregate any assets in connection with the maintenance of any Deferred Stock
Account, nor shall anything contained in this Plan or any action taken
pursuant to this Plan create or be construed to create a trust of any kind or
a fiduciary relationship between the Employer and Participant.  Title to the
beneficial ownership of any assets, whether cash or investments, which the
Employer may designate to pay the amounts credited to the Deferred Stock
Accounts shall at all times remain in the Employer, and Participants shall not
have any property interest whatsoever in any specific assets of the Employer.
Each Participant's interest in his Deferred Stock Account shall be limited to
the Employer's promise to make payment of such Account in the future pursuant
to terms of this Plan, and such right to receive future payment shall be no
greater than the right of any other unsecured general creditor of the
Employer.

     3.6  Limitations on Issuance of Stock.  Notwithstanding anything to the
contrary in this Plan, in lieu of issuing Stock of the Employer to a
Participant, the Employer reserves the right to pay a Participant in cash equal
to the fair market value (determined in accordance with Section 2.5 above) of
the deferred shares credited to his Deferred Stock Account, if the Employer, in
its sole discretion, determines that it is necessary or desirable to do so to
comply with any provision of federal or state law, stock exchange listing
rules, or its articles or bylaws.

                                   SECTION 4

                              PLAN ADMINISTRATION

     4.1  Committee.  The terms "Committee" and "Compensation Committee" mean
the Compensation Committee established by Mississippi Chemical Corporation's
Board of Directors.  The Committee shall have complete authority to control and
manage the operation and administration of this Plan.  The Committee shall
interpret this Plan and shall determine all questions arising in the
administration and interpretation of this Plan; however, all such
interpretations and decisions shall be applied in a uniform manner to all
similarly situated Participants.  All decisions and interpretations of the
Committee made in good faith pursuant to this Plan shall be final, conclusive
and binding on all persons, subject only to the claims review procedures
required by ERISA.

    4.2     Indemnification.  In the event and to the extent not insured under
any contract of insurance with an insurance company, the Employer shall
indemnify and hold harmless each Indemnified Person, as defined below, against
any and all claims, demands, suits, proceedings, losses, damages, interest,
penalties, fines, expenses (specifically including, but not limited to, counsel
fees to the extent approved by the Board of Directors of Mississippi Chemical
Corporation or otherwise provided by law, court costs and other reasonable
expenses of litigation), and liability of every kind, including amounts paid in
settlement with the approval of the Board of Directors, arising from any action
or cause of action related to the Indemnified Person's act or acts or failure
to act.  Such indemnity shall apply regardless of whether such claims, demands,
suits, proceedings, losses, damages, interest, penalties, fines, expenses, and
liability arise in whole or in part from (a) the negligence or other fault of
the Indemnified Person or (b) from the imposition on such Indemnified Person of
any civil penalties or excise tax pursuant to ERISA or the Code; except when
the same is judicially determined to be due to gross negligence, fraud,
recklessness, or willful or intentional misconduct of such Indemnified Person.
The indemnification provided in this Section 4.2 shall not be construed to
limit or supersede any other indemnity provided by the Employer.  "Indemnified
Person" shall mean the Committee and each employee, officer, or director of
the Employer acting in a decision-making or administrative role with respect
to this Plan.

                                   SECTION 5

                                    GENERAL

      5.1   Interests Not Transferable; Taxes.  Except as to any withholding of
federal, state or local tax and except with respect to assignment of amounts
currently due and payable hereunder to an alternate payee pursuant to a
"qualified domestic relations order" as defined in ERISA, the interest of any
Participant or his spouse or his beneficiary under this Plan is not subject to
the claims of creditors and may not be voluntarily or involuntarily sold,
transferred, assigned, alienated or encumbered.  The Committee shall have the
discretion and sole authority to determine the amount and timing of any
withholding or employment taxes with respect to amounts accrued or paid under
this Plan.

      5.2   Facility of Payment.  Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Committee, is unable to
properly manage his financial affairs may be paid to the legal representative
of such person or may be applied for the benefit of such person in any manner
which the Committee may select.

      5.3   Gender and Number.  Where the context admits, words in the
masculine gender shall include the feminine gender, the plural shall include
the singular and the singular shall include the plural.

      5.4   Controlling Law.  To the extent not superseded by the laws of the
United States, the laws of Mississippi shall be controlling in all matters
relating to this Plan.

      5.5   Successors.  This Plan is binding on the Employer and will be
binding on, and inure to the benefit of, any successor of the Employer, whether
by way of purchase, merger, consolidation or otherwise.

      5.6   Not a Contract.  This Plan does not constitute a contract of
employment and shall not be construed to give any Participant the right to be
retained in the Employer's service.

                                   SECTION 6

                             AMENDMENT, TERMINATION
                            AND CESSATION OF TRADING

      6.1   Amendment and Termination.  While the Employer expects to continue
this Plan indefinitely, the Compensation Committee must necessarily reserve,
and hereby reserves, the right to terminate this Plan at any time and to amend
this Plan at any time, but no more than once in any six-month period, except to
comport with changes in the Code, provided that in no event shall any
Participant's Deferred Stock Account accrued to the date of such amendment or
termination be reduced by such action without the specific written agreement of
the Participant to such modification or reduction.  In the event the Committee
elects to terminate this Plan, the Employer reserves the right to settle all
liabilities under this Plan by paying each Participant a lump-sum payment in
cash or in Stock, determined at the Committee's sole election, in full
satisfaction of his benefits hereunder.  Such lump sum shall equal the value of
his Deferred Stock Account valued through the date of Plan termination pursuant
to Section 2.5 above.

      6.2   Cessation of Trading in Employer Stock.  Notwithstanding anything
to the contrary in this Plan, in the event the Stock permanently ceases to be
traded on a national stock exchange or over the counter for any reason other
than a merger with another publicly traded entity, or ceases to exist for any
reason other than a merger (whether due to liquidation or other event), within
sixty (60) days of such event, the Employer (or its successor) shall distribute
to each Participant (or beneficiary) the value of the entire balance of his
Deferred Stock Account in cash, based on the fair market value as calculated
under Section 2.5 above, as of the last date the Stock was traded.

                                   SECTION 7

                               EXECUTION OF PLAN

      To record the amendment and restatement of this Plan, the undersigned,
being duly authorized to act on behalf of the Compensation Committee of the
Board of Directors of Mississippi Chemical Corporation, have executed this
document at Yazoo City, Mississippi.

Dated:  November 23, 1999                MISSISSIPPI CHEMICAL CORPORATION

                                         By:________________________________
                                             John Sharp Howie
                                             Chairman, Compensation Committee

                                         By:________________________________
                                             Ethel Truly
                                             Vice President - AdministrationSUNRISE MEDICAL, INC.

Note Purchase Agreement

Dated as of October 1, 1997

$50,000,000 7.09% Series A Senior Notes Due October 28, 2004

$50,000,000 7.25% Series B Senior Notes Due October 28, 2007

  1. AUTHORIZATION OF NOTES

  
  
2. SALE AND PURCHASE OF NOTES  

  
  3. CLOSING  

  
  4. CONDITIONS TO CLOSING  

 4.1 Representations and Warranties 

      4.2 Performance; No Default 

      4.3 Compliance Certificates 

      4.4 Opinions of Counsel 

      4.5 Purchase Permitted By Applicable Law, etc. 

      4.6 Sale of Other Notes 

      4.7 Payment of Special Counsel Fees 

      4.8 Private Placement Numbers 

      4.9 Changes in Structure 

      4.10 Reduction of Credit Agreement Availability 

      4.11 Proceedings and Documents 

    
  
  
  5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS  

  5.1 Organization; Power and Authority 

      5.2 Authorization, etc. 

      5.3 Disclosure 

      5.4 Organization and Ownership of Shares of Material
      Subsidiaries; Affiliates 

      5.5 Financial Statements 

      5.6 Compliance with Laws, Other Instruments, etc. 

      5.7 Governmental Authorizations, etc. 

      5.8 Litigation; Observance of Agreements, Statutes and
      Orders 

      5.9 Taxes 

      5.10 Title to Property; Leases 

      5.11 Licenses, Permits, etc. 

      5.12 Pension Plans 

      5.13 Private Offering by the Company 

      5.14 Use of Proceeds; Margin Regulations 

      5.15 Existing Debt; Future Liens 

      5.16 Foreign Assets Control Regulations, etc. 

      5.17 Status under Certain Statutes 

      5.18 Environmental Matters 

      5.19 Obligors Interdependent 

    
  
  
  6. REPRESENTATIONS OF THE PURCHASER  

  6.1 Purchase for Investment 

      6.2 Source of Funds 

    
  
  
  7. INFORMATION AS TO COMPANY  

  7.1 Financial and Business Information 

      7.2 Officer's Certificate 

      7.3 Inspection 

    
  
  
  8. PREPAYMENT OF THE NOTES  

  8.1 Required Prepayments 

      8.2 Optional Prepayments of Notes with Make-Whole
      Amount 

      8.3 Allocation of Note Partial Prepayments 

      8.4 Notes; Maturity; Surrender, etc. 

      8.5 Purchase of Notes 

      8.6 Make-Whole Amount 

    
  
  
  9. INTEREST ON THE NOTES  

  9.1 Series A Notes' Semi-Annual Interest Payments. 

      9.2 Series B Notes' Semi-Annual Interest Payments. 

    
  
  
  10. AFFIRMATIVE COVENANTS  

  10.1 Compliance with Law 

      10.2 Insurance 

      10.3 Maintenance of Properties 

      10.4 Payment of Taxes and Claims 

      10.5 Corporate Existence, etc. 

      10.6 Pari Passu Obligations 

      10.7 Maintenance of Guaranties of Subsidiaries. 

    
  
  
  11. NEGATIVE COVENANTS  

  11.1 Transactions with Affiliates 

      11.2 Merger, Consolidation, etc 

      11.3 Incurrence of Debt 

      11.4 Incurrence of Priority Debt 

      11.5 Consolidated Net Worth; Restricted Payments 

      11.6 Liens 

      11.7 Sale of Assets, etc 

      11.8 Line of Business 

    
  
  
  12. EVENTS OF DEFAULT  

  
  13. REMEDIES ON DEFAULT, ETC.  

  13.1 Acceleration 

      13.2 Other Remedies 

      13.3 Rescission 

      13.4 No Waivers or Election of Remedies, Expenses, etc. 

    
  
  
  14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES  

  14.1 Registration of Notes 

      14.2 Transfer and Exchange of Notes 

      14.3 Replacement of Notes 

    
  
  
  15. PAYMENTS ON NOTES  

  15.1 Place of Payment 

      15.2 Home Office Payment 

    
  
  
  16. EXPENSES, ETC.  

  16.1 Transaction Expenses 

      16.2 Survival 

    
  
  
  17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
  AGREEMENT  

  
  18. AMENDMENT AND WAIVER  

  18.1 Requirements 

      18.2 Solicitation of Holders of Notes 

      18.3 Binding Effect, etc. 

      18.4 Notes held by Company, etc. 

    
  
  
  19. NOTICES  

  
  20. REPRODUCTION OF DOCUMENTS  

  
  21. CONFIDENTIAL INFORMATION  

  
  22. SUBSTITUTION OF PURCHASER  

  
  23. GUARANTEE.  

  23.1 Guaranteed Obligations 

      23.2 Performance under this Agreement and the Other
      Agreements 

      23.3 Waivers 

      23.4 Certain Waivers of Subrogation, Reimbursement and
      Indemnity. 

      23.5 Releases 

      23.6 Marshaling 

      23.7 Liability 

      23.8 Character of Obligation 

      23.9 Election to Perform Obligations 

      23.10 No Election 

      23.11 Severability 

      23.12 Other Enforcement Rights 

      23.13 Delay or Omission; No Waiver 

      23.14 Restoration of Rights and Remedies 

      23.15 Cumulative Remedies 

      23.16 Survival 

      23.17 Miscellaneous 

    
  
  
  24. MISCELLANEOUS  

  24.1 Successors and Assigns 

      24.2 Payments Due on Non-Business Days 

      24.3 Severability 

      24.4 Construction 

      24.5 Counterparts 

      24.6 Governing Law 

    

    
  
  

SCHEDULES:

SCHEDULE A -- Information Relating to Purchasers

SCHEDULE B -- Defined Terms

SCHEDULE C -- Payment Instructions at Closing

SCHEDULE 5.3 -- Disclosure Materials

SCHEDULE 5.4 -- Ownership of the Company;
Affiliates

SCHEDULE 5.5 -- Financial Statements

SCHEDULE 5.8 -- Certain Litigation

SCHEDULE 5.11 -- Patents, etc.

SCHEDULE 5.12(g) -- Certain Pension Plans

SCHEDULE 5.14 -- Use of Proceeds

SCHEDULE 5.15 -- Existing Indebtedness

SCHEDULE B-C -- Competitors

EXHIBITS:

EXHIBIT 1A -- Form of 7.09% Series A Senior
Note due October 28, 2004

EXHIBIT 1B -- Form of 7.25% Series B Senior
Note due October 28, 2007

EXHIBIT 4.4(a) -- Form of Opinion of
General Counsel of the Company

EXHIBIT 4.4(b) -- Form of Opinion of
Special Counsel for the Company

EXHIBIT 4.4(c) -- Form of Opinion of
Special Counsel for the Purchasers

EXHIBIT 10.7 -- Form of Guarantee Joinder

SUNRISE MEDICAL, INC.

2382 Faraday Avenue, Suite 200

Carlsbad, CA 92008

 

$50,000,000 7.09% Series A Senior Notes Due October 28, 2004

$50,000,000 7.25% Series B Senior Notes Due October 28, 2007

Dated as of October 1, 1997

[Separately addressed to each of

the Purchasers identified on Schedule A]

Ladies and Gentlemen:

SUNRISE MEDICAL, INC., a Delaware corporation (together
with its permitted successors, the "Company"), SUNMED
FINANCE INC., a Delaware corporation (together with its permitted
successors, "Sunmed"), SUNRISE MARIN HOLDINGS INC.,
a California corporation (together with its permitted successors, "SMH"),
SUNRISE MEDICAL CCG INC., a Wisconsin corporation (together with its
permitted successors, "CCG"), SUNRISE MEDICAL HHG
INC., a California corporation (together with its permitted successors, "HHG"
and, together with Sunmed, SMH and CCG, and each other Person becoming a
Guarantor hereunder pursuant to Section 10.7, are referred to herein
individually as a "Guarantor" and collectively as the "Guarantors";
the Company, together with the Guarantors, are referred to herein individually
as an "Obligor" and collectively as the "Obligors"),
hereby agree, jointly and severally, with you as follows:

1. AUTHORIZATION OF
NOTES.

The Company will authorize the issue and sale of

(a) $50,000,000 aggregate principal amount of its 7.09%
    Series A Senior Notes due October 28, 2004 (the "Series A
    Notes"), and

    (b) $50,000,000 aggregate principal amount of its 7.25%
    Series B Senior Notes due October 28, 2007 (the "Series B
    Notes").

  

The term "Series A Notes" as used in
this Agreement shall include each Series A Note delivered pursuant to this
Agreement and the Other Agreements (as hereinafter defined) and any such notes
issued in substitution therefor pursuant to Section 14 of this Agreement or the
Other Agreements; the term "Series B Notes" as used in
this Agreement shall include each Series B Note delivered pursuant to this
Agreement and the Other Agreements and any such notes issued in substitution
therefor pursuant to Section 14 of this Agreement or the Other Agreements. The
term "Notes" as used in this Agreement shall include
each Series A Note and each Series B Note. The Series A Notes and the Series B
Notes shall be substantially in the forms set out in Exhibits 1A and 1B,
respectively, 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 "Schedule" or an "Exhibit"
are, unless otherwise specified, to 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 and of the
Series 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 and of the Series 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 Orrick, Herrington &
Sutcliffe LLP, 666 Fifth Avenue, New York, New York, at 10:00 a.m., local time,
at a closing (the "Closing") on October 28, 1997 or on
such other Business Day thereafter as may be agreed upon by the Company and you
and the Other Purchasers. At the Closing the Company will deliver to you the
Notes of the Series to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $500,000 as you may
request), dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company as
indicated on Schedule C. 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 Obligors in this
Agreement shall be correct when made and at the time of the Closing.

4.2 Performance; No Default.

Each Obligor shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it 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 Section 11.1 had such Section applied since such date.

4.3 Compliance Certificates.

    (a) Obligor's Officer's Certificates. Each
    Obligor shall have delivered to you an Officer's Certificate, dated the date
    of the Closing, certifying that the conditions specified in Section 4.1,
    Section 4.2 and Section 4.9 have been fulfilled.

    
    (b) Obligor Secretary's Certificates. Each
    Obligor 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 proceedings relating to the
    authorization, execution and delivery of the Notes, this Agreement and the
    Other Agreements.

  

4.4 Opinions of Counsel.

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

(a) from Steven Jaye, Esq., General Counsel of the
    Company and the Guarantors, 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 its counsel to deliver such opinion to you),

    (b) from Hebb & Gitlin, special counsel for the
    Company, 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 the Company hereby instructs its
    counsel to deliver such opinion to you) and

    (c) from Orrick, Herrington & Sutcliffe LLP, your
    special counsel in connection with the transactions contemplated hereby.

  

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 G, T 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, which law or regulation was not
in effect on the date of your execution and delivery of this Agreement. 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 Payment of Special Counsel Fees.

Without limiting the provisions of Section 16.1, 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 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.

4.8 Private Placement Numbers.

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
each Series of the Notes.

4.9 Changes in Structure.

The Obligors shall not have changed their jurisdiction of
incorporation or organization 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.

4.10 Reduction of Credit Agreement Availability.

The Company shall have, contemporaneously with the sale of
the Notes (and in conjunction with the application of the proceeds of the Notes
as set forth in Section 5.14), paid all of such proceeds to the agent under the
Credit Agreement for application to the principal amount of the Debt outstanding
thereunder and shall have, contemporaneously therewith, caused the amount of its
commitment availability thereunder to be permanently reduced by $100,000,000,
and you shall have received evidence reasonably satisfactory to you of all such
actions.

4.11 Proceedings and Documents.

All corporate and other proceedings in connection with the
transactions contemplated by this Agreement 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 OBLIGORS.

Each Obligor, jointly and severally, represents and warrants
to you, as of the date of the Closing, that:

5.1 Organization; Power and Authority.

Each Obligor is a corporation, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and each 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. Each Obligor 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 this Agreement, the Other Agreements and the
Notes and to perform the provisions hereof and thereof.

5.2 Authorization, etc.

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

    
    (b) The Guarantors. This Agreement and the Other
    Agreements have been duly authorized by all necessary corporate action on
    the part of each Guarantor, and this Agreement constitutes a legal, valid
    and binding obligation of each such Guarantor, enforceable against each such
    Guarantor in accordance with its terms, except as such enforceability may be
    limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent
    conveyance, moratorium or other similar laws affecting the enforcement of
    creditors' rights generally and (ii) general principles of equity
    (regardless of whether such enforceability is considered in a proceeding in
    equity or at law).

    
    (c) Solvency of Guarantors. None of the
    Guarantors intends to incur any obligations hereunder or otherwise make any
    transfers in connection herewith, with actual intent to hinder, delay or
    defraud either present or future creditors. Before, and after giving effect
    to, the consummation of the transactions contemplated hereby, without
    limitation, the issuance of the Notes and the delivery of the Guarantees:

    (i) the assets of each Guarantor at a fair valuation
        thereof on a going concern basis will not be less than the amount that
        will be required to pay the probable liability with respect to its debts
        (including, without limitation, contingent, subordinated, unmatured and
        unliquidated liabilities on existing debts, as such liabilities may
        become absolute and matured), in each case both prior to and after
        giving effect to the transactions contemplated by this Agreement,

        (ii) no Guarantor is currently engaged in or about to
        engage in a business or transaction for which the property remaining in
        its respective hands is an unreasonably small capital and

        (iii) each Guarantor will be able to pay its
        respective debts as they mature.

      
    
  

5.3 Disclosure.

(a) The Obligors, through the Placement Agents, have
    delivered to you and each Other Purchaser a copy of a Confidential Private
    Placement Memorandum, dated September 1997 (the "Memorandum"),
    relating to the transactions contemplated hereby. The Memorandum 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, this Agreement, the Memorandum, the documents,
    certificates or other writings delivered to you by or on behalf of the
    Obligors in connection with the transactions contemplated hereby 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 (taken as a whole)
    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
    June 27, 1997, there has been no change in the financial condition,
    operations, business, properties or prospects of the Obligors 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 a Senior Financial
    Officer 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 Obligors specifically for use in connection with the transactions
    contemplated hereby, provided that no representation is made as to general
    economic conditions.

    (b) The material assumptions used in the preparation of
    the projected information with respect to the Company and its Subsidiaries
    included in the Memorandum, taken as a whole, were made in good faith, were
    believed to be reasonable when made and the Company believes such
    assumptions continue to be reasonable. All material assumptions and
    principles of accounting on which such projections were based are disclosed
    therein. Such projections were prepared in good faith, have a reasonable
    basis and represent the good faith opinion of the Company as to the
    projected results of the operations of the Company and its Subsidiaries
    after giving effect to the transactions contemplated hereby. The estimates
    of future performance and financial condition set forth in such projections,
    taken as a whole, are, in the Company's opinion, reasonable; however, actual
    events or results may differ materially from such estimates. There is no
    fact known to a Senior Financial Officer that has occurred since the
    preparation of such projections that would materially affect such
    projections, except such facts that the Memorandum or other written
    statements delivered to you disclose have occurred or may occur.

  

5.4 Organization and Ownership of Shares of Material
Subsidiaries; Affiliates.

(a) Schedule 5.4 contains (except as noted therein)
    complete and correct lists (i) of the Company's Subsidiaries, identifying
    the Subsidiaries that are Material Subsidiaries, showing, as to each
    Material Subsidiary, the correct name thereof, the jurisdiction of its
    organization and the percentage of shares of each class of its capital stock
    or similar equity interests outstanding owned by the Company and each other
    Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries, and
    (iii) of the Company's directors and senior officers.

    (b) All of the outstanding shares of capital stock or
    similar equity interests of each Material 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 Material Subsidiary identified in Schedule 5.4
    is a corporation or other legal entity duly organized, validly existing and
    in good standing (to the extent such concept is recognized) 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 Material 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.

    (d) No Material Subsidiary is a party to, or otherwise
    subject to any legal restriction or any agreement (other than this
    Agreement, the agreements listed on Schedule 5.4 and customary limitations
    imposed by corporate law statutes) restricting the ability of such Material
    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 or similar equity interests of such
    Material Subsidiary.

  

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 on
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).

5.6 Compliance with Laws, Other Instruments, etc.

The execution, delivery and performance by the Company of the
Notes and by the Obligors of this Agreement 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 any Obligor or any Subsidiary under, any indenture, mortgage,
    deed of trust, loan, purchase or credit agreement, lease, corporate charter,
    bylaws or other constitutive document, or any other material agreement or
    instrument to which such Obligor or such Subsidiary is bound or by which
    such Obligor or such 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 any Obligor or
    any Subsidiary, or

    (c) violate any provision of any statute or other rule or
    regulation of any Governmental Authority applicable to any Obligor 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 of the Notes by the Company or this
Agreement by any of the Obligors.

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 Obligors,
    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) 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, any other Obligor
or any Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. The Obligors know 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
Subsidiaries have been determined by the Internal Revenue Service and paid for
all fiscal years up to and including the fiscal year ended June 30, 1993.

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.

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 Obligors, 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, which,
    individually or in the aggregate, could reasonably be expected to have a
    Material Adverse Effect; and

    (c) to the best knowledge of the Obligors, there is no
    material violation by any Person of any right of any Obligor or any
    Subsidiary with respect to any patent, copyright, service mark, trademark,
    trade name or other right owned or used by such Person which, individually
    or in the aggregate, could reasonably be expected to have a Material Adverse
    Effect.

  

5.12 Pension Plans.

(a) The Company and each ERISA Affiliate have operated
    and administered each Plan (other than any Multiemployer 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 in the nature of a penalty, excise tax or fine pursuant to Title I
    of ERISA, any liability under Title IV of ERISA or any liability under
    sections 4971 through 4980E of the Code, 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 pursuant to sections 4971 through 4980E of the
    Code or pursuant 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 all of the Plans subject to Title IV of ERISA (other than
    Multiemployer Plans), determined as of the end of each 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 all such Plans
    by an amount that is Material. 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 its 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 unfunded 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 this Agreement 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
    Obligors 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) All Non-US Pension Plans have been established,
    operated, administered and maintained in compliance with all laws,
    regulations and orders applicable thereto, except where any failure to so
    comply would not, individually or in the aggregate, reasonably be expected
    to have a Material Adverse Effect. Except where they would not, individually
    or in the aggregate, reasonably be expected to have a Material Adverse
    Effect, all premiums, contributions and any other amounts required to be
    paid pursuant to applicable Non-US Pension Plan documents or applicable laws
    governing such Non-US Pension Plans have been paid or accrued as required.

    (g) The Multiemployer Plans in respect of which any
    Obligor or any ERISA Affiliate makes contributions or has any liability or
    obligation are set forth on Schedule 5.12(g). The Plans constituting
    "defined benefit plans" (as defined in section (3)(35) of ERISA)
    are set forth on Schedule 5.12(g).

  

5.13 Private Offering by the Company.

Neither the Obligors nor anyone acting on their 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, any Person other than you, the Other Purchasers and not more than
72 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither any of the Obligors nor anyone acting on
their 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.

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 G of the Board of
Governors of the Federal Reserve System (12 CFR 207), 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 1% of the value of the
consolidated assets of the Obligors and the Obligors do not have any present
intention that margin stock will constitute more than 1% of the value of such
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 G.

5.15 Existing Debt; Future Liens.

(a) Except as described therein, Schedule 5.15 sets forth
    a complete and correct list of all outstanding Debt of the Obligors and
    their Subsidiaries as of September 27, 1997 (other than outstanding items of
    Debt that individually do not exceed $1,000,000 and, in the aggregate for
    all such items, do not exceed $5,000,000), since which date there has been
    no Material change in the amounts, interest rates, sinking funds, instalment
    payments or maturities of the Debt of the Obligors and their Subsidiaries
    except as described in Schedule 5.15. Neither any Obligor 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 Debt of any Obligor or such
    Subsidiary, and no event or condition exists with respect to any Debt of any
    Obligor or Subsidiary which event or condition would permit (or that with
    notice or the lapse of time, or both, would permit) one or more Persons to
    cause such Debt 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, no Obligor or
    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 11.6.

  

5.16 Foreign Assets Control Regulations, etc.

Neither the sale of the Notes by the Company hereunder nor
its use of the proceeds thereof 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
	 in a manner contrary to any Environmental Laws and has not
	 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 Obligors Interdependent.

The Company and the Guarantors are directly dependent upon
each other for and in connection with their borrowing activities. Each Guarantor
will receive direct and indirect economic, financial and other benefits from the
indebtedness incurred hereunder and under the Notes by the Company, and under
the Guarantee of each Guarantor, and the incurrence of such indebtedness is in
the best interests of the Company and each Guarantor. The Company and the
Guarantors have explicitly induced the Purchasers to purchase the Notes based on
and in reliance on the consolidated financial condition of the Company and the
Guarantors.

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 (or commingled pension trust
funds) or for the account of one or more "accredited investors" within
the meaning of Regulation D under the Securities Act for whom you are acting as
investment manager, agent or investment adviser, 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.

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 Department of Labor Prohibited Transaction
    Exemption ("PTE") 95-60 (60 FR 35925, July 12, 1995) and in
    respect thereof you represent that 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 exceed 10% of the total reserves
    and liabilities of such general account (exclusive of separate account
    liabilities) plus surplus, as set forth in the NAIC 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 paragraph (c), no employee benefit plan
    or group of plans maintained by the same employer, affiliate of such
    employer or employee organization beneficially owns more than 10% of all
    assets allocated to such pooled separate account or collective investment
    fund; or

    (d) (i) the Source constitutes assets of an
    "investment fund" (within the meaning of Part V of the QPAM
    Exemption) managed by a "qualified professional asset manager" or
    "QPAM" (within the meaning of Part V of the QPAM Exemption), (ii)
    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, (iii) 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 any Obligor and (iv) the identity of such QPAM and 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 paragraph
    (d); or

    (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 paragraph (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", "party
in interest" 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 60 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,
        stockholders' equity and cash flows for 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 of the
    Company, 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
    financial position of the companies being reported on and their 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 120 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,
        stockholders' equity and cash flows of the Company and its Subsidiaries,
        for such year,

      
    
    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

    (A) by 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 financial position of the companies
            being reported upon and the results of their 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) by 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 (together with the Company's annual report to shareholders, if any,
    prepared pursuant to Rule 14a-3 under the Exchange Act) 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 0(b);

    
    (c) SEC and Other Reports -- promptly upon their
    becoming available, one copy of (i) each financial statement, report, 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 5 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 12(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 5 days after a Responsible Officer becoming aware of any of the
    following, a written notice setting forth the 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 of ERISA and the regulations thereunder,
        for which notice thereof has not been waived pursuant to such
        regulations as in effect from time to time; 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) 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 Company
    to perform its obligations under this Agreement, the Other Agreements and
    the Notes as from time to time may be reasonably requested by any such
    holder of Notes.

  

7.2 Officer's Certificate.

Each set of financial statements delivered to a holder of
Notes pursuant to Section 0(a) or Section 0(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:

    (a) Covenant Compliance -- the information
    (including detailed calculations) required in order to establish whether the
    Company was in compliance with the requirements of Section 11.2 through
    Section 11.7, inclusive, during the quarterly or annual period covered by
    the statements then being furnished (including with respect to each such
    Section, where applicable, the 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); and

    
    (b) Event of Default -- a statement that such
    officer has reviewed the relevant terms hereof 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 shall not have 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 reasonable times and as often as may be
    reasonably requested.

  

8. PREPAYMENT OF THE
NOTES.

8.1 Required Prepayments.

    (a) Series A Notes. There shall be no scheduled
    principal prepayments on account of the Series A Notes. The unpaid principal
    amount of each Series A Note, together with accrued unpaid interest thereon,
    shall be due and payable on October 28, 2004.

    
    (b) Series B Notes. There shall be no scheduled
    principal prepayments on account of the Series B Notes. The unpaid principal
    amount of each Series B Note, together with accrued unpaid interest thereon,
    shall be due and payable on October 28, 2007.

  

8.2 Optional Prepayments of Notes 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, any of the
Series A Notes or the Series B Notes in an amount not less than 5% of the
aggregate principal amount of the Notes of such Series then outstanding in the
case of a partial prepayment, at 100% of the principal amount so prepaid and
accrued interest thereon to the date of prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes of any Series to be prepaid under
this Section 8.2 written notice of such optional prepayment not less than 30
days and not more than 60 days prior to the date fixed for such prepayment
(which shall be a Business Day). Each such notice shall specify such date, the
Series of such Note, 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 8.3), 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 a Note to be optionally prepaid under
this Section 8.2 a certificate of a Senior Financial Officer specifying the
calculation of the Make-Whole Amount in respect of such Notes as of the
specified prepayment date. For the purposes of avoidance of doubt, the Company
may effect multiple partial prepayments of the Notes of any Series pursuant to,
and in accordance with the terms of, this Section 8.2.

8.3 Allocation of Note Partial Prepayments.

Except as provided in the second paragraph of Section 8.4
with respect to Debt Offered Prepayment Applications accepted by any holder of
Notes, in the case of each partial prepayment of Notes of any Series, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes of such Series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.

8.4 Notes; Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each such 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 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.

Any Debt Offered Prepayment Application in respect of the
Notes shall be on terms as set forth in Section 8.2 and this Section 8.4, provided
that only those holders who shall have accepted any offer in respect of such
Debt Offered Prepayment Application shall have their Notes prepaid, in whole or
part, in connection therewith.

8.5 Purchase of Notes.

The Company will not and will not permit any Affiliate to
purchase, redeem, 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 (including, without
limitation, any prepayment of the Notes contemplated in connection with a Debt
Offered Prepayment Application accepted by any holder of 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.

8.6 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 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 13.1, as the context requires.

        
        "Discounted Value" means, with respect
        to the Called Principal of any Note, the amount obtained by discounting
        the amount of such Called Principal and interest payable in respect
        thereof from, in the case of the Called Principal, the maturity date in
        respect of such Note to the Settlement Date and, in the case of such
        interest, the scheduled dates of payment hereunder in respect thereof to
        the Settlement Date, 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, the sum of (a) 0.50% per
        annum plus (b) the yield to maturity implied by (i) 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 678" on the Dow
        Jones Market Service (or such other display as may replace Page 678 on
        Dow Jones 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 (ii) if such yields are
        not reported as of such time or the yields reported as of such time are
        not ascertainable (including by interpolation), 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
        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 (1) converting U.S. Treasury bill
        quotations to bond-equivalent yields in accordance with accepted
        financial practice and (2) interpolating linearly between (A) the
        actively traded U.S. Treasury security with the maturity closest to and
        greater than the Remaining Average Life and (B) the actively traded U.S.
        Treasury security with the maturity closest to and less than the
        Remaining Average Life.

        
        "Remaining Average Life" means, with
        respect to the Called Principal of any Note, 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
        maturity date of the Note in respect thereof.

        
        "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 13.1, as the context requires.

      
    
  

9. INTEREST ON THE
NOTES.

9.1 Series A Notes' Semi-Annual Interest Payments.

Interest (computed on the basis of a 360-day year of twelve
30-day months) shall accrue on the unpaid principal balance of the Series A
Notes at 7.09% per annum from the date of each Series A Note, and shall
be payable to the holders thereof semi-annually, on April 28 and October 28 in
each year, commencing with the later of April 28, 1998 and the payment date next
succeeding the date of such Series A Note, until the principal thereof shall
have become due and payable, and to the extent permitted by law in respect of
any Series A Note on any overdue payment of principal, any overdue payment of
interest and any overdue payment of Make-Whole Amount with respect thereto,
payable, on demand, at a rate per annum equal to the Series A Default
Rate.

9.2 Series B Notes' Semi-Annual Interest Payments.

Interest (computed on the basis of a 360-day year of twelve
30-day months) shall accrue on the unpaid principal balance of the Series B
Notes at 7.25% per annum from the date of each Series B Note, and shall
be payable to the holders thereof semi-annually, on April 28 and October 28 in
each year, commencing with the later of April 28, 1998 and the payment date next
succeeding the date of such Series B Note, until the principal thereof shall
have become due and payable, and to the extent permitted by law in respect of
any Series B Note on any overdue payment of principal, any overdue payment of
interest and any overdue payment of Make-Whole Amount with respect thereto,
payable, on demand, at a rate per annum equal to the Series B Default
Rate.

10. AFFIRMATIVE
COVENANTS.

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

10.1 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.

10.2 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-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.

10.3 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.

10.4 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 and
assessments 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
(including, without limitation, mechanic's liens or other similar construction
liens), 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 and assessments and claims in the aggregate could not reasonably be
expected to have a Material Adverse Effect.

10.5 Corporate Existence, etc.

The Company will and will cause each Guarantor to at all
times preserve and keep in full force and effect its respective corporate or
other entity existence. Subject to Section 11.2 and Section 11.7, the Company
will at all times preserve and keep in full force and effect the corporate or
other entity existence of each of its other 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.

    
    10.6 Pari Passu Obligations.

    

The Company covenants that its obligations under the Notes
and the Obligors' obligations under this Agreement and the Other Agreements do
and will rank at least pari passu in right of payment with all their
respective other present and future unsecured and unsubordinated Debt.

10.7 Maintenance of Guaranties of Subsidiaries.

    (a) Additional Domestic Subsidiaries as Guarantors.
    If the Company or any Domestic Subsidiary creates or otherwise acquires any
    active Domestic Subsidiary at any time after the date of Closing, the
    Company shall cause such Domestic Subsidiary to become a Guarantor hereunder
    and under the Other Agreements by delivering to each holder of Notes an
    instrument referring to this Agreement and the Other Agreements wherein such
    Domestic Subsidiary agrees to be bound by all of the terms and conditions
    applicable to a "Guarantor" under this Agreement and the Other
    Agreements as of the date thereof, which instrument shall be substantially
    in the form of Exhibit 10.7. In connection with the delivery of such
    instrument, the Company shall also deliver the following to each of the
    holders of Notes:

    (i) a certificate of the secretary or assistant
        secretary of such Domestic Subsidiary certifying the names and true
        signatures of the officers of such Domestic Subsidiary authorized to
        execute such instrument and the proper adoption of a resolution of the
        board of directors or stockholders of such Subsidiary approving the
        execution, delivery and performance of such instrument;

        (ii) a certificate executed by a Senior Financial
        Officer, dated as of the date of such instrument, stating that (i)
        except as to such exceptions as shall be set forth in writing therein,
        the representations and warranties contained in Section 5 are true and
        correct on and as of the date of such instrument to the extent such
        representations and warranties are applicable to such Domestic
        Subsidiary as a "Guarantor" or "Obligor" hereunder
        and (ii) no Default or Event of Default exists as of the date of such
        instrument; and

        (iii) with respect to any such Domestic Subsidiary
        whose total assets constitute at least 10% of Consolidated Total Assets,
        determined as of the last day of the Group Fiscal Quarter then most
        recently ended, an opinion or opinions of counsel (which may be counsel
        employed by the Company or such Domestic Subsidiary as inside counsel)
        confirming that (i) such Domestic Subsidiary's obligations under such
        instrument and the obligations of a "Guarantor" hereunder and
        under the Other Agreements are legal, valid, binding and enforceable
        against such Domestic Subsidiary, (ii) the execution, delivery and
        performance of such instrument and the performance of this Agreement and
        the Other Agreements by such Domestic Subsidiary will not violate any
        law, decree or judgment or violate any material agreement to which such
        Domestic Subsidiary is a party or by which its assets are bound and
        (iii) no government approvals, consents, registrations or filings are
        required by such Domestic Subsidiary in connection with the execution,
        delivery and performance of its obligations under such instrument and
        the performance of this Agreement and the Other Agreements, provided
        that such opinion or opinions shall be subject to customary exceptions
        and qualifications.

      
    
    For the avoidance of doubt, (A) if a Domestic Subsidiary
    is considered to be "active" under any bank credit agreement
    (including, without limitation, the Credit Agreement) or is otherwise
    required to become a guarantor, obligor or co-obligor thereunder, it shall
    be treated as an active Domestic Subsidiary for purposes of this clause (a)
    and (B) if a Domestic Subsidiary has incurred and has outstanding any Debt,
    possesses any material assets or conducts any material business operations,
    it shall be deemed to be an active Domestic Subsidiary hereunder and under
    the Other Agreements.

    
    (b) Foreign Subsidiaries as Guarantors. The
    Company will not permit any Foreign Subsidiary to become a guarantor,
    obligor or co-obligor in respect of any bank credit agreement of the Company
    (including, without limitation, the Credit Agreement) unless the Company
    shall have taken such reasonable action with respect to such Foreign
    Subsidiary such that the holders of Notes under this Agreement and the Other
    Agreements would have contractual rights against such Foreign Subsidiary
    that would be substantially equivalent, in the reasonable judgment of the
    Required Holders, to the contractual rights that the banks under such bank
    credit agreement would have against such Foreign Subsidiary by virtue of its
    becoming a guarantor, obligor or co-obligor.

    
    (c) Release of Guarantees of Domestic or Foreign
    Subsidiaries. If, with respect to any Domestic Subsidiary that is a
    Guarantor or any Foreign Subsidiary that becomes a Guarantor pursuant to
    Section 10.7(b),

    (i) all, or substantially all, of the assets of such
        Guarantor are Transferred in accordance with the requirements of Section
        11.7 and such Guarantor is wound-up and terminated in accordance with
        the requirements of Section 10.5,

        (ii) all of the Company's and any Subsidiary's
        capital stock or other equity ownership interests in such Guarantor is
        Transferred in accordance with the requirements of Section 11.7, or

        (iii) such Guarantor became a Guarantor hereunder and
        under the Other Agreements only pursuant to paragraph (b) of this
        Section 10.7 and such Guarantor has ceased to be a guarantor, obligor or
        co-obligor under or in respect of the bank credit agreement of the
        Company (including, without limitation, the Credit Agreement),

      
    
    then the Company may elect to cause the withdrawal of the
    Guarantee of such Guarantor hereunder and under the Other Agreements. Such
    election shall be exercised by a Senior Financial Officer informing, in
    writing, each holder of Notes of such election, certifying in such writing
    that the requirements of this Section 10.7 have been satisfied and that no
    Default or Event of Default exists. Thereafter, the Guarantee of such
    Guarantor shall be null and void and without effect and such Guarantor shall
    no longer be, or be deemed to be, a party to this Agreement or any of the
    Other Agreements, provided that, if the aforesaid requirements under
    this Section 10.7(c) (including, without limitation, the requirements of
    clause (i), clause (ii) or clause (iii), as the case may be) shall not have
    been satisfied (including, without limitation, the satisfaction of the
    requirements of Section 10.5 or Section 11.7 referred to above), then the
    Guarantee of such Guarantor shall continue in full force and effect and such
    Guarantor shall continue to be a party hereto and to the Other Agreements
    notwithstanding the delivery of such writing by the Company to each of the
    holders of Notes until all of such requirements shall have been satisfied.

  

11. NEGATIVE COVENANTS.

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

11.1 Transactions with Affiliates.

The Company will not and will not permit any Subsidiary to
enter into directly or indirectly any 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 a Subsidiary), except in the ordinary
course and pursuant to the reasonable 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, provided that,
for the avoidance of doubt, nothing in this Section 11.1 shall prohibit the
Company or any Subsidiary from entering into transactions and agreements with,
and making payments to, its senior executive officers or former senior executive
officers in respect of compensation, bonus or incentive plans (including stock
option plans), welfare and benefit plans, employment agreements, consulting
agreements and retirement and/or severance agreements, or the like, on the
condition that such transactions, agreements and payments are made in good faith
and with a bona fide business purpose.

11.2 Merger, Consolidation, etc.

The Company will not and will not permit any of its
Subsidiaries to consolidate, amalgamate or merge with or into any other Person
or convey, transfer or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person (except that (x) any
Subsidiary may consolidate, amalgamate or merge with or into, or convey,
transfer or lease all or substantially all of its assets in a single transaction
or series of transactions to, any Obligor, (y) any Subsidiary that is not an
Obligor may consolidate, amalgamate or merge with or into, or convey, transfer
or lease all or substantially all of its assets in a single transaction or
series of transactions to, any Wholly-Owned Subsidiary and (z) any Subsidiary
may transfer or lease all or substantially all of its assets if permitted
pursuant to Section 11.7(d)), provided that the foregoing restrictions do
not apply to

(a) the consolidation, amalgamation or merger of any
    Obligor with or into, or the conveyance, transfer or lease of all or
    substantially all of the assets of such Obligor in a single transaction or
    series of transactions to, any Person so long as:

    (i) the successor formed by such consolidation or
        amalgamation or the survivor of such merger or the Person that acquires
        by conveyance, transfer or lease all or substantially all of the assets
        of such Obligor as an entirety, as the case may be (as used in this
        Section 11.2(a), the "Successor Company"), shall
        be a solvent corporation organized and existing under the laws of the
        United States of America or any State thereof (including, without
        limitation, the District of Columbia);

        (ii) if such Obligor is not the Successor Company,
        such Successor Company shall have executed and delivered to each holder
        of any Notes its assumption of the due and punctual performance and
        observance of each covenant and condition of this Agreement, the Other
        Agreements and the Notes to which such Obligor is subject and shall have
        caused to be delivered to each holder of any Notes an opinion of
        nationally recognized independent counsel, or other 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;

        (iii) each Guarantor (excluding any Guarantor that
        shall have delivered the assumption referred to in paragraph (ii) above)
        shall have confirmed, in writing, its Guarantee and other obligations
        hereunder and under the Other Agreements;

        (iv) immediately after giving effect to such
        transaction the Successor Company would be permitted by the provisions
        of Section 11.3(c) to incur at least $1 of additional Debt; and

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

      
    
    (b) Except as expressly provided in Section 10.7, no such
    conveyance, transfer or lease of all or substantially all of the assets of
    any Obligor under this Section 11.2 shall have the effect of releasing the
    Company, any Successor Company (as such term is used in Section 11.2(a)) or
    any Guarantor from its liability under this Agreement, the Other Agreement
    or the Notes.

  

11.3 Incurrence of Debt.

The Company will not and will not permit any of its
Subsidiaries to directly or indirectly create, incur, assume, guarantee, or
otherwise become liable with respect to, any Debt, unless

(a) such Debt is the Notes,

    (b) such Debt is outstanding on the date of the Closing
    and is referred to in Schedule 5.15 or is Debt which, directly or
    indirectly, is extending, renewing or refunding any such Debt (provided that
    any such extension, renewal or refunding shall not have the effect of (x)
    increasing the principal amount of such Debt outstanding immediately prior
    to such time or (y) reducing the average life of such Debt from that as
    determined immediately prior to such time), or

    (c) on the date on which the Company or such Subsidiary
    becomes liable with respect to such Debt and immediately after giving effect
    thereto and the concurrent retirement of any other Debt with the proceeds
    thereof,

    (i) no Default or Event of Default exists, and

        (ii) Consolidated Total Debt as of such date does not
        exceed 60% of Consolidated Total Capitalization as of such date.

      
    
  

For the purposes of this Section 11.3, any Person becoming a
member of the Group after the date of the Closing shall be deemed, at the time
it becomes such a member, to have incurred all of its then outstanding Debt.

11.4 Incurrence of Priority Debt.

The Company will not and will not permit any of its
Subsidiaries to directly or indirectly create, incur, assume, guarantee, or
otherwise become liable in respect of

(a) in the case of the Company or any Guarantor, any Debt
    to be incurred after the date of the Closing and secured by Liens permitted
    pursuant to clause (j) of Section 11.6 or

    (b) in the case of any Foreign Subsidiary (other than a
    Guarantor), any Debt (whether secured or unsecured) to be incurred by such
    Foreign Subsidiary after the date of the Closing,

  

unless, after giving effect to the incurrence of such Debt
and the application of the proceeds thereof, the aggregate principal amount
(without duplication) of (i) all Debt previously incurred in respect of clause
(a) above and then outstanding (excluding, in any case, any such Debt owing to
the Company, a Guarantor or a Wholly-Owned Subsidiary) and (ii) all Consolidated
Foreign Subsidiary Debt then outstanding does not exceed the greater of

(A) $45,000,000 and

        (B) 20% of Consolidated Net Worth, determined as of
        the then last day of the most recently ended Group Fiscal Quarter.

      
    
  

11.5 Consolidated Net Worth; Restricted Payments.

(a) The Company will not permit at any time the
    difference of Consolidated Net Worth as of the end of the then most recently
    ended Group Fiscal Quarter minus the aggregate amount of Restricted
    Investments at such time to be less than the sum of

    (i) $215,000,000, plus

        (ii) an aggregate amount equal to 50% of Consolidated
        Net Income (but only if a positive number) for each Group Fiscal Year
        ended on or after June 1998.

      
    
    (b) The Company will not directly or indirectly make any
    Restricted Payment, or permit any Subsidiary to make any Restricted Payment,
    unless

    (i) immediately after giving effect to such
        Restricted Payment, the Company would be permitted by the provisions of
        Section 11.3(c) to incur at least $1 of additional Debt and

        (ii) immediately after giving effect to such
        Restricted Payment, no Default or Event of Default would exist.

      
    
  

11.6 Liens.

The Company will not and will not permit any of its
Subsidiaries to directly or indirectly create, incur, assume or permit 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 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 such income
or profits (unless it makes, or causes to be made, effective provision whereby
the Notes will be equally and ratably secured with any and all other obligations
thereby secured, such security to be pursuant to an agreement reasonably
satisfactory to the Required Holders and, in any such case, the Notes shall have
the benefit, to the fullest extent that, and with such priority as, the holders
of the Notes may be entitled under applicable law, of an equitable Lien on such
property), provided that the foregoing restrictions and limitations shall
not apply to:

(a)
    
       
        
(i) Liens for taxes, assessments or other
        governmental charges the payment of which is not at the time required by
        Section 10.4, and

        (ii) statutory Liens of landlords and Liens of
        carriers, warehousemen, mechanics, materialmen, inventory suppliers and
        other similar Liens, in each case, incurred in the ordinary course of
        business for sums not yet due or the payment of which is not at the time
        required by Section 10.4;

      
    
    (b) Liens

    (i) arising from judicial attachments and judgments,

        (ii) securing appeal bonds or supersedeas bonds, or

        (iii) 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 (1) the execution or other enforcement
    of such Liens is effectively stayed, (2) the claims secured thereby are
    being actively contested in good faith and by appropriate proceedings and
    (3) adequate book reserves shall have been established and maintained with
    respect thereto in accordance with GAAP;

    (c) Liens incurred or deposits made in the ordinary
    course of business (i) in connection with workers' compensation,
    unemployment insurance and other types of social security or retirement
    benefits, or (ii) to secure (or to obtain letters of credit that secure) the
    performance of tenders, statutory obligations, surety bonds, appeal bonds,
    bids, leases (other than Capital Leases), performance bonds, purchase,
    construction or sales contracts, leases 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, and which Liens do not, in the aggregate, materially
    impair the use of the property subject thereto in the operation of the
    business of the Group or the value of such property for the purposes of such
    business;

    (d) leases or subleases granted to others, easements,
    rights-of-way, restrictions, zoning restrictions, governmental restrictions
    in respect of any property or property right or franchise of a member of the
    Group and other similar charges or encumbrances, in each case incidental to,
    and not interfering with, the ordinary conduct of the business of the Group,
    taken as a whole, provided that such charges and encumbrances do not,
    in the aggregate, materially detract from the value of such property;

    (e) Liens existing on the date of the Closing and
    referred to in Schedule 5.15;

    (f) Liens on property or assets of any member of the
    Group securing Debt owing to any other member of the Group;

    (g) Liens created to secure all or any part of the
    purchase price, or to secure Debt incurred or assumed to pay all or any part
    of the purchase price or cost of construction, of property (or any
    improvement thereon) acquired or constructed by any member of the Group, provided
    that all of the following conditions are satisfied:

    (i) any such Lien shall extend solely to the item or
        items of such property (or improvement thereon) or proceeds thereof so
        acquired or constructed and, if required by the terms of the instrument
        originally creating such Lien, other property (or improvement thereon)
        which is an improvement to or is acquired for specific use in connection
        with such acquired or constructed property (or improvement thereon) or
        which is real property being improved by such acquired or constructed
        property (or improvement thereon),

        (ii) the principal amount of the Debt secured by any
        such Lien shall at no time exceed an amount equal to the lesser of (A)
        the cost to such member of the property (or improvement thereon) so
        acquired or constructed and (B) the Fair Market Value (as determined in
        good faith by the Board of Directors of the Company) of such property
        (or improvement thereon) at the time of such acquisition or
        construction,

        (iii) if such Lien secures Debt, the incurrence of
        such Debt shall have been permitted pursuant to Section 11.3(c), and

        (iv) any such Lien shall be created contemporaneously
        with, or within 180 days after, the acquisition or construction of such
        property;

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

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

        (ii) each such Lien shall extend solely to the item
        or items of property so acquired and proceeds thereof 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,

        (iii) if such Lien secures Debt, the incurrence of
        Debt deemed to occur upon the consolidation, amalgamation, merger,
        becoming a Subsidiary or acquisition of property shall have been
        permitted pursuant to Section 11.3(c), and

        (iv) the principal amount of the Debt secured by any
        such Lien shall at no time exceed an amount equal to the Fair Market
        Value (as determined in good faith by the Board of Directors of the
        Company) of such property (or improvement thereon) at the time of such
        consolidation, amalgamation, merger, becoming a Subsidiary or
        acquisition; and

      
    
    (i) Liens renewing, extending or replacing Liens
    permitted by clauses (a) through (h) above, provided that all of the
    following conditions are satisfied:

    (i) no such new Lien shall extend to any property of
        the Group other than property already encumbered by the existing Lien
        being so renewed, extended or replaced,

        (ii) the principal amount of the underlying
        obligation secured by such existing Lien outstanding at the time of such
        renewal, extension or replacement shall not be increased in connection
        with such renewal, extension or replacement and the average life thereof
        shall not be reduced, and

        (iii) immediately after such renewal, extension or
        refunding no Default or Event of Default shall have existed and the
        Company shall have been permitted to incur at least $1 of additional
        Debt under Section 11.3(c);

      
    
    (j) any Lien (other than a Lien permitted under clause
    (a) through clause (i) above) securing any Debt of any member of the Group,

    (i) which Debt was permitted to be incurred pursuant
        to Section 11.3(c), and

        (ii) which Debt, as of the date of the creation of
        such Lien, did not exceed the difference of

        (A) the greater of (A) $45,000,000 and (B) 20% of
            Consolidated Net Worth, determined as of the end of the then most
            recently ended Group Fiscal Quarter, minus

            (B) the sum (without duplication) of (1) the
            aggregate principal amount of all Consolidated Foreign Subsidiary
            Debt outstanding as of the date of creation of such Lien plus
            (2) the total amount of all other secured Debt of the Company and
            the Guarantors outstanding as of the date of creation of such Lien
            (other than Debt owing to the Company, any Guarantor or another
            Subsidiary) and previously incurred under this clause (j) by the
            Company or any Guarantor.

          
        
      
    
  

For the purposes of this Section 11.6, any Person becoming a
member of the Group after the date of the Closing shall be deemed, at the time
it becomes such a member, to have incurred all of its then existing Liens
securing outstanding Debt.

11.7 Sale of Assets, etc.

The Company will not and will not permit any of its
Subsidiaries to make any Transfer, provided that the foregoing
restriction does not apply to a Transfer if:

(a) the property that is the subject of such Transfer
    constitutes either (i) inventory or (ii) equipment, fixtures, supplies or
    materials no longer required in the operation of the business of any member
    of the Group or that is obsolete, and, in each case, such Transfer is in the
    ordinary course of business;

    (b) such Transfer is (i) from a Subsidiary to the
    Company, a Guarantor or a Wholly-Owned Subsidiary, (ii) from the Company to
    a Guarantor or a Wholly-Owned Subsidiary or (iii) from a Guarantor to the
    Company or a Wholly-Owned Subsidiary;

    (c) such Transfer is subject to Section 11.2 and
    satisfies the requirements thereof; or

    (d) such Transfer is not a Transfer described in clause
    (a) through clause (c) above (each such Transfer is referred to as a "Basket
    Transfer"), and all of the following conditions shall have been
    satisfied with respect to such Transfer:

    (i) in the good faith opinion of the Board of
        Directors of the Company, the Transfer is in exchange for consideration
        with a Fair Market Value at least equal to that of the property
        exchanged, and is in the best interests of the Group,

        (ii) immediately after giving effect to such
        transaction no Default or Event of Default would exist and the Company
        would be able to incur at least $1 of additional Debt under Section
        11.3(c), and

        (iii) immediately after giving effect to such
        Transfer,

        (A) the book value of all property that was the
            subject of each Basket Transfer occurring in the then current Group
            Fiscal Year would not exceed 15% of Consolidated Total Assets as of
            the end of the then most recently ended Group Fiscal Quarter, and

            (B) the book value of all property that was the
            subject of each Basket Transfer occurring on or after the date of
            the Closing would not exceed 30% of Consolidated Total Assets as of
            the end of the then most recently ended Group Fiscal Quarter.

          
        
        If the Net Proceeds Amount for any Basket Transfer is
        applied to a Debt Offered Prepayment Application and/or is applied to,
        or committed in writing to, a Property Reinvestment Application, in each
        case within 545 days after the consummation of such Transfer (and, in
        the case of any such commitment, such Property Reinvestment Application
        is actually consummated within 30 days after the expiration of such
        545-day period), then such Basket Transfer shall be excluded from any
        calculations set forth above in subclause (iii) of this clause (d), provided
        that

        (y) if a Debt Offered Prepayment Application
            and/or Property Reinvestment Application in respect of all of such
            Net Proceeds Amount shall not have been effected within 90 days
            after the consummation of such Basket Transfer and such Basket
            Transfer (but for the paragraph to which this proviso is attached)
            would have caused the maximum amounts permitted under subclause
            (iii) of this clause (d) to have been exceeded, the Company shall
            deliver to each holder of Notes a writing stating that

            (I) such Basket Transfer has caused such
                maximum amounts to be exceeded,

                (II) such Basket Transfer is excluded from
                the calculation of such maximum amounts subject to the Net
                Proceeds Amount thereof being applied to a Debt Offered
                Prepayment Application and/or a Property Reinvestment
                Application within 545 days after the consummation of such
                Basket Transfer and

                (III) the Company has decided to apply any
                then remaining unapplied Net Proceeds Amount of such Basket
                Transfer in excess of such maximum amounts to either a Debt
                Offered Prepayment Application or a Property Reinvestment
                Application (but not both; it being the intention of the parties
                hereto that the Company shall choose which application to
                utilize (such application being specified in such writing),
                although the Company shall not be required to specify at the
                time of making such choice the particular utilizations within
                such chosen application) and

              
            
            (z) for the avoidance of doubt, a Basket Transfer
            that would (but for the paragraph to which this proviso is attached)
            have caused the maximum amounts permitted under subclause (iii) of
            this clause (d) to be exceeded shall be excluded from such
            calculations unless and until such time as the Company shall have
            failed to comply with the requirements of such paragraph (including,
            without limitation, the requirements of subparagraph (y) above).

          
        
      
    
  

For purposes of determining the book value of any property
that is the subject of a Transfer, such book value shall be the book value of
such property, as determined in accordance with GAAP, at the time of the
consummation of such Transfer, provided that, in the case of a Transfer
of any capital stock or other equity interests of a Subsidiary, the book value
thereof shall be deemed to be an amount equal to

(A) the difference (determined after eliminating all
    intra-Group transactions, assets and liabilities in accordance with GAAP) of

    (1) the book value of the total net assets of such
        Subsidiary less

        (2) the liabilities of such Subsidiary

      
    
  

times

(B) a percentage that is equal to the percentage of total
    equity interests of such Subsidiary attributable to the capital stock or
    other equity interest being so Transferred.

  

11.8 Line of Business.

The Company will not and will not permit any of its
Subsidiaries to engage in any business if, as a result, the general nature of
the business in which the Obligors and their Subsidiaries, taken as a whole,
would then be engaged would be substantially changed from the general nature of
the business in which the Obligors and their Subsidiaries, taken as a whole, are
engaged on the date of the Closing as described in the Memorandum.

12. 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

    (c) any Obligor defaults in the performance of or
    compliance with any term contained in any of Section 11.2 through Section
    11.7, inclusive, or Section 7.1(d); or

    (d) any Obligor defaults in the performance of or
    compliance with any term contained herein or in any Other Agreement
    (other than those referred to in paragraphs (a), (b), (c) or (k) of
    this Section 12) 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 (any such written notice to be identified
    as a "notice of default" and to refer specifically to this
    paragraph (d) of Section 12); or

    (e) any representation or warranty made in writing by or
    on behalf of any Obligor or by any officer of any Obligor in this Agreement,
    any Other Agreement or in any writing furnished in connection with the
    transactions contemplated hereby or thereby (including, without limitation,
    in any instrument delivered pursuant to Section 10.7) 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 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 Debt
        (other than Debt 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 Debt as to which any such
        failure exists has an aggregate outstanding principal amount of at least
        $5,000,000 (or its equivalent in other applicable currencies), or

    
      

    (ii) the Company or any Subsidiary is in default in
        the performance of or compliance with any term of any evidence of any
        Debt (other than indebtedness under this Agreement, the Other Agreements
        and the Notes), that individually or together with such other Debt as to
        which any such failure exists has an aggregate outstanding principal
        amount of at least $5,000,000 (or its equivalent in other applicable
        currencies), or of compliance of any mortgage, indenture or other
        agreement relating thereto or any other condition exists, and as a
        consequence of such default or condition such Debt has become, or has
        been declared, 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 Debt to convert such Debt into equity
        interests),

     
      
            (A) the Company or any Subsidiary has become
                  obligated (other than at its election) to purchase or repay Debt
                  before its regular maturity or before its regularly scheduled dates
                  of payment in an aggregate outstanding principal amount of at least
                  $5,000,000 (or its equivalent in other applicable currencies), or

                  (B) one or more Persons have the right to require
                  the Company or any Subsidiary to purchase or repay Debt in an
                  aggregate outstanding principal amount of at least $5,000,000 (or
                  its equivalent in other applicable currencies) and have exercised
                  such right; or

              
            
      
    
    (g) the Company or any 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 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 Subsidiary, a custodian, receiver, trustee or other officer with similar
    powers with respect to the Company or any Subsidiary or with respect to any
    substantial part of the property of the Company or any 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
    Subsidiary, or any such petition shall be filed against the Company or any
    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 $5,000,000 (or its equivalent in other
    applicable currencies) are rendered against one or more of the Company and
    the Subsidiaries and which judgments are not, within 60 days after entry
    thereof, bonded, discharged or stayed pending appeal, or are not discharged
    within 60 days after the expiration of such stay; or

    (j) if (i) any Plan shall fail to satisfy the minimum
        funding standards of ERISA or section 412 of 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 section 4042 of ERISA
        to terminate or appoint a trustee to administer any Plan or the PBGC
        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 subject to Title IV of ERISA, determined in accordance
        with Title IV of ERISA, shall exceed $5,000,000,

        (iv) the Company or any ERISA Affiliate shall have
        incurred or is reasonably expected to incur any liability in the nature
        of a penalty, excise tax or fine pursuant to Title I of ERISA, any
        liability under Title IV of ERISA or any liability under section 4971
        through section 4980E of the Code,

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

        (vi) the Company or any Domestic 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 such Domestic 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; or

    (k) the Guarantee in respect of any Guarantor or any
    provision thereof shall cease to be in full force or effect except as
    otherwise provided herein, or any Guarantor or any Person acting by or on
    behalf of such Guarantor shall deny or disaffirm such Guarantor's
    obligations under such Guarantee, or any Guarantor shall default in the due
    performance or observance of any term, covenant or agreement on its part to
    be performed pursuant to Section 23.

  

As used in Section 12(j), the terms "employee
benefit plan" and "employee welfare benefit plan"
shall have the respective meanings assigned to such terms in section 3 of ERISA.

13. REMEDIES ON
DEFAULT, ETC.

13.1 Acceleration.

(a) If an Event of Default with respect to the Company
    described in paragraph (g) or paragraph (h) of Section 12 (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 50% 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 12 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 13.1, 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, 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 such Note 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 such Note is prepaid or is accelerated as a result of an Event of Default,
is intended to provide compensation for the deprivation of such right under such
circumstances.

13.2 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 13.1, 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 herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

13.3 Rescission.

At any time after any Notes have been declared due and
payable pursuant to clause (b) or clause (c) of Section 13.1, the holders of
more than 50% 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 due and payable on any Notes other than by reason of such
declaration, and all interest on such overdue principal, if any, and any
Make-Whole Amount that is due and payable in respect of the Notes other than by
reason of such declaration and any interest thereon and (to the extent permitted
by applicable law) any overdue interest in respect of the Notes, at the
applicable 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 18,
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 13.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.

13.4 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 this Agreement or by any Note upon any
holder thereof 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 16,
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 13, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.

14. REGISTRATION;
EXCHANGE; SUBSTITUTION OF NOTES.

14.1 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
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.

14.2 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 and of the same Series as such 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 1A or Exhibit 1B, as the case may be.
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.

14.3 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 another
    holder of a Note with a minimum net worth of at least $250,000,000, 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, of the same Series as such lost, stolen, destroyed or
mutilated 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.

15. PAYMENTS ON NOTES.

15.1 Place of Payment.

Subject to Section 15.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
in Carlsbad, California at the principal office of the Company in such
jurisdiction. The Company may at any time, 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 the United States of America or a
principal office of a bank or trust company in the United States of America.

15.2 Home Office Payment.

So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 15.1 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 15.1. 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 of the same Series as such
surrendered Note pursuant to Section 14.2. The Company will afford the benefits
of this Section 15.2 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 15.2.

16. EXPENSES, ETC.

16.1 Transaction Expenses.

Whether or not the transactions contemplated hereby are
consummated, the Obligors will pay all costs and 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 this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, 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 hereby and by the
Notes. The Obligors 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).

16.2 Survival.

The obligations of the Obligors under this Section 16
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes and the termination of
this Agreement.

17. SURVIVAL OF
REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein 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 Obligors pursuant to this Agreement
shall be deemed representations and warranties of the Obligors under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Obligors and
supersede all prior agreements and understandings relating to the subject matter
hereof.

18. AMENDMENT AND
WAIVER.

18.1 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 22, 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 13 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, 12(a), 12(b), 13, 18, 21 and 23. No
amendment or waiver provided for in this Section 18.1 shall become effective
unless each Guarantor shall have consented to the same in writing and, in
connection therewith, shall have reconfirmed, in writing, its obligations
hereunder.

18.2 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 18 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 or 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 terms, ratably to
    each holder of Notes then outstanding even if such holder did not consent to
    such waiver or amendment.

  

18.3 Binding Effect, etc.

Any amendment or waiver consented to as provided in this
Section 18 applies equally to all holders of Notes and is binding upon them
and upon each future holder of any Note and upon the Obligors 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.

18.4 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 this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes 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.

19. 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,

    (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: (760) 930-1580, or at such other address as the Company
    shall have specified to the holder of each Note in writing, or

    (iv) if to any Guarantor, to such Guarantor in care of
    the Company at its address set forth at the beginning hereof to the
    attention of the Chief Financial Officer, telecopier: (760) 930-1580, or at
    such other address as such Guarantor shall have specified to the holder of
    each Note in writing.

  

Notices under this Section 19 will be deemed given only when
actually received.

20. REPRODUCTION OF
DOCUMENTS.

This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing (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 Obligors agree and stipulate 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 20 shall not prohibit the Obligors 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.

21. CONFIDENTIAL
INFORMATION.

For the purposes of this Section 21, "Confidential
Information" means information delivered to you by or on behalf of
any Obligor and any Subsidiary of any Obligor 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 Obligors and their Subsidiaries, 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 any Obligor or any Subsidiary of an Obligor, 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, trustees, employees,
    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 21,

    (iii) any other holder of any Note other than a
    Competitor,

    (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 21),

    (v) any Person other than a Competitor 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 21),

    (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 your Notes and this
        Agreement.

      
    
  

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 21 as though it were a party to this Agreement. On reasonable request by
any Obligor 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 Obligors
embodying the provisions of this Section 21.

22. 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 22), 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 22), 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.

23. GUARANTEE.

23.1 Guaranteed Obligations.

Each of the Guarantors hereby irrevocably, unconditionally,
absolutely, jointly and severally guarantees to each holder of Notes, as and for
each such Guarantor's own debt, until final and indefeasible payment has been
made:

(a) the due and punctual payment by the Company of the
    principal of, and interest (including default interest and post-petition
    interest), and the Make-Whole Amount (if any) on, the Notes at any time
    outstanding and the due and punctual payment of all other amounts payable,
    and all other indebtedness owing, by the Company to the holders of the Notes
    under this Agreement, the Other Agreements and the Notes (all such
    obligations so guarantied are herein collectively referred to as the "Guaranteed
    Obligations"), in each case when and as the same shall become
    due and payable, whether at maturity, pursuant to mandatory or optional
    prepayment, by acceleration or otherwise, all in accordance with the terms
    and provisions hereof and thereof; it being the intent of each of the
    Guarantors that the guarantee set forth in this Section 23 (the "Guarantee")
    shall be a guarantee of payment and not a guarantee of collection; and

    (b) the punctual and faithful performance, keeping,
    observance, and fulfillment by the Company of all duties, agreements,
    covenants and obligations of the Company contained in this Agreement, the
    Other Agreements and the Notes.

  

23.2 Performance under this Agreement and the Other
Agreements.

In the event the Company fails to make, on or before the due
date thereof, any payment of the Guaranteed Obligations, or if the Company shall
fail to perform, keep, observe, or fulfill any other obligation referred to in
clause (a) or clause (b) of Section 23.1 in the manner provided in this
Agreement, the Other Agreements or the Notes after in each case giving effect to
any applicable grace periods or cure provisions or waivers or amendments, the
Guarantors shall cause forthwith to be paid the moneys, or to be performed,
kept, observed, or fulfilled each of such obligations, in respect of which such
failure has occurred in accordance with the terms and provisions of this
Agreement, the Other Agreements and the Notes.

23.3 Waivers.

To the fullest extent permitted by law, each Guarantor does
hereby waive:

(a) notice of acceptance of the Guarantee;

    (b) notice of any purchase of the Notes under this
    Agreement or the Other Agreements, or the creation, existence or acquisition
    of any of the Guaranteed Obligations, subject to such Guarantor's right to
    make inquiry of each holder of Notes to ascertain the amount of the
    Guaranteed Obligations at any reasonable time;

    (c) notice of the amount of the Guaranteed Obligations,
    subject to such Guarantor's right to make inquiry of each holder of Notes to
    ascertain the amount of the Guaranteed Obligations at any reasonable time;

    (d) notice of adverse change in the financial condition
    of the Company, any other Guarantor or any Subsidiary or any other fact that
    might increase or expand such Guarantor's risk hereunder;

    (e) notice of presentment for payment, demand, protest,
    and notice thereof as to the Notes or any other instrument;

    (f) notice of any Default or Event of Default (except if
    such notice or demand is specifically otherwise required to be given to such
    Guarantor pursuant to the terms of this Agreement);

    (g) all other notices and demands to which such Guarantor
    might otherwise be entitled (except if such notice or demand is specifically
    otherwise required to be given to such Guarantor pursuant to the terms of
    this Agreement);

    (h) the defense of the "single action" rule or
    any similar right or protection (including, without limitation, any rights
    or defenses created by the anti-deficiency statutes of the State of
    California), and the right by statute or otherwise to require any holder of
    Notes to institute suit against the Company or any other Guarantor or to
    exhaust its rights and remedies against the Company or any other Guarantor,
    such Guarantor being bound to the payment of each and all Guaranteed
    Obligations, whether now existing or hereafter accruing, as fully as if such
    Guaranteed Obligations were directly owing to the holders of Notes by such
    Guarantor;

    (i) any defense of the Company under this Agreement, the
    Other Agreements and the Notes other than the full and timely performance
    thereof;

    (j) any defense relating to the validity or
    enforceability (or absence or failure thereof) of any term of this
    Agreement, the Other Agreements and the Notes;

    (k) any defense arising by reason of any disability or
    other defense (other than the defense that the Guaranteed Obligations shall
    have been fully and finally performed and indefeasibly paid) of the Company
    or by reason of the cessation from any cause whatsoever of the liability of
    the Company in respect thereof, and any other defense that such Guarantor
    may otherwise have against the Company or any holder of Notes;

    (l) any stay (except in connection with a pending
    appeal), valuation, appraisal, redemption or extension law now or at any
    time hereafter in force which, but for this waiver, might be applicable to
    any sale of property of such Guarantor made under any judgment, order or
    decree based on this Agreement, and such Guarantor covenants that it will
    not at any time insist upon or plead, or in any manner claim or take the
    benefit or advantage of such law; and

    (m) any other defense which a Guarantor may have to the
    full and complete performance of its obligations hereunder (including,
    without limitation, any benefits which might otherwise be available under
    California Civil Code Sections 2809, 2910, 2819, 2839, 2845, 2849, 2850,
    2899 and 3433 and California Code of Civil Procedure Sections 580a, 580b,
    580d and 726).

  

23.4 Certain Waivers of Subrogation, Reimbursement and
Indemnity.

Until all of the Guaranteed Obligations shall have been fully
and finally paid, no Guarantor shall have any right of subrogation,
reimbursement or indemnity whatsoever and no right of recourse to or with
respect to any assets or property of the Company. Nothing shall discharge or
satisfy the liability of any of the Guarantors hereunder except the full and
final performance and indefeasible payment of the Guaranteed Obligations.

23.5 Releases.

Each of the Guarantors consents and agrees that, without
notice to or by such Guarantor and without impairing, releasing, abating,
deferring, suspending, reducing, terminating or otherwise affecting the
obligations of such Guarantor hereunder, each holder of Notes, in the manner
provided herein, by action or inaction, may:

(a) compromise or settle, renew or extend the period of
    duration or the time for the payment, or discharge the performance of, or
    may refuse to, or otherwise not, enforce, or may, by action or inaction,
    release all or any one or more parties to, any one or more of this
    Agreement, the Other Agreements or the Notes;

    (b) assign, sell or transfer, or otherwise dispose of,
    any one or more of the Notes;

    (c) grant waivers, extensions, consents and other
    indulgences to the Company or any other Guarantor in respect of any one or
    more of this Agreement, the Other Agreements or the Notes;

    (d) amend, modify or supplement in any manner and at any
    time (or from time to time) any one or more of this Agreement, the Other
    Agreements and the Notes;

    (e) release or substitute any one or more of the
    endorsers or guarantors of the Guaranteed Obligations whether parties hereto
    or not;

    (f) sell, exchange, release or surrender any property at
    any time pledged or granted as security in respect of the Guaranteed
    Obligations, whether so pledged or granted by such Guarantor or another
    guarantor of the Company's obligations under this Agreement, the Other
    Agreements and the Notes;

    (g) exchange, enforce, waive, or release, by action or
    inaction, any security for the Guaranteed Obligations or any other guarantee
    of any of the Notes; and

    (h) any other act or event which could have the effect of
    releasing a Guarantor from the full and complete performance of its
    obligations hereunder.

  

23.6 Marshaling.

Each Guarantor consents and agrees that:

(a) each holder of Notes shall be under no obligation to
    marshal any assets in favor of such Guarantor or against or in payment of
    any or all of the Guaranteed Obligations; and

    (b) to the extent the Company or another Guarantor makes
    a payment or payments to any holder of Notes, which payment or payments or
    any part thereof are subsequently invalidated, declared to be fraudulent or
    preferential, set aside, or required, for any of the foregoing reasons or
    for any other reason, to be repaid or paid over to a custodian, trustee,
    receiver, or any other party under any bankruptcy law, common law, or
    equitable cause, then to the extent of such payment or repayment, the
    obligation or part thereof intended to be satisfied thereby shall be revived
    and continued in full force and effect as if said payment or payments had
    not been made and such Guarantor shall be primarily liable for such
    obligation.

  

23.7 Liability.

Each Guarantor agrees that the liability of such Guarantor in
respect of this Section 23 shall be immediate and shall not be contingent upon
the exercise or enforcement by any holder of Notes of whatever remedies such
holder may have against the Company or any other Guarantor or the enforcement of
any Lien or realization upon any security such holder may at any time possess.

23.8 Character of Obligation.

The Guarantee set forth in this Section 23 is a primary and
original obligation of each Guarantor and is an absolute, unconditional,
continuing and irrevocable guarantee of payment and performance (and not of
collectibility) and shall remain in full force and effect until the full, final
and indefeasible payment of the Guaranteed Obligations without respect to future
changes in conditions.

The obligations of the Guarantors under this Section 23 are
joint and several. The obligations of each Guarantor under this Guarantee and
the rights of the holders of Notes to enforce such obligations by any
proceedings, whether by action at law, suit in equity or otherwise, shall not be
subject to any reduction, limitation, impairment or termination, whether by
reason of any claim of any character whatsoever or otherwise, including, without
limitation, claims of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense, set-off, counterclaim, recoupment or
termination whatsoever.

Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by:

(a) any default, failure or delay, willful or otherwise,
    in the performance by the Company of any obligations of any kind or
    character whatsoever of the Company (including, without limitation, the
    obligations and undertakings of the Company hereunder or under any of the
    Other Agreements);

    (b) any creditors' rights, bankruptcy, receivership or
    other insolvency proceeding of the Company or any other Person or in respect
    of the property of the Company or any other Person or any merger,
    consolidation, reorganization, dissolution, liquidation or winding up of the
    Company or any other Person;

    (c) impossibility or illegality of performance on the
    part of the Company of its obligations hereunder, under the Other Agreements
    or under the Notes;

    (d) the validity or enforceability of this Agreement, the
    Other Agreements or the Notes;

    (e) in respect of the Company or any other Person, any
    change of circumstances, whether or not foreseen or foreseeable, whether or
    not imputable to the Company or any other Person, or other impossibility of
    performance through fire, explosion, accident, labor disturbance, floods,
    droughts, embargoes, wars (whether or not declared), civil commotions, acts
    of God or the public enemy, delays or failure of suppliers or carriers,
    inability to obtain materials, action of any federal or state regulatory
    body or agency, change of law or any other causes affecting performance, or
    any other force majeure, whether or not beyond the control of the
    Company or any other Person and whether or not of the kind hereinbefore
    specified;

    (f) any attachment, claim, demand, charge, lien, order,
    process, encumbrance or any other happening or event or reason, similar or
    dissimilar to the foregoing, or any withholding or diminution at the source,
    by reason of any taxes, assessments, expenses, indebtedness, obligations or
    liabilities of any character, foreseen or unforeseen, and whether or not
    valid, incurred by or against any Person, or any claims, demands, charges or
    Liens of any nature, foreseen or unforeseen, incurred by any Person, or
    against any sums payable hereunder or under the Other Agreements, so that
    such sums would be rendered inadequate or would be unavailable to make the
    payments herein provided;

    (g) any order, judgment, decree, law, ruling or
    regulation (whether or not valid) of any court of any nation or of any
    political subdivision thereof or any body, agency, department, official or
    administrative or regulatory agency of any thereof or any other action,
    happening, event or reason whatsoever which shall delay, interfere with,
    hinder or prevent, or in any way adversely affect, the performance by any
    party of its respective obligations under any instruments; or

    (h) any other circumstance which might otherwise
    constitute a defense available to, or a discharge of, any Guarantor in
    respect of the obligations of such Guarantor under this Guarantee.

  

23.9 Election to Perform Obligations.

Any election by any Guarantor to pay or otherwise perform any
of the obligations of the Company under this Agreement, the Other Agreements or
the Notes, whether pursuant to this Section 23 or otherwise, shall not release
the Company or any other Guarantor from such obligations or any of such Person's
other obligations under this Agreement, the Other Agreements or the Notes.

23.10 No Election.

Each holder of Notes shall have the right to seek recourse
against each of the Guarantors to the fullest extent provided for in this
Section 23 and elsewhere as provided in this Agreement, the Other Agreements and
the Notes, and against the Company, to the full extent provided for in this
Agreement, the Other Agreements and the Notes. No election to proceed in one
form of action or proceeding, or against any party, or on any obligation, shall
constitute a waiver of the right of such holder of Notes to proceed in any other
form of action or proceeding or against other parties unless such holder of
Notes has expressly waived such right in writing. Specifically, but without
limiting the generality of the foregoing, no action or proceeding by any holder
of Notes against the Company or any Guarantor under any document or instrument
evidencing obligations of the Company or such Guarantor to such holder of Notes
shall serve to diminish the liability of any Guarantor under this Agreement
(including, without limitation, this Section 23) except to the extent that such
holder of Notes finally and unconditionally shall have realized payment by such
action or proceeding, notwithstanding the effect of any such action or
proceeding upon such Guarantor's right of subrogation against the Company.

23.11 Severability.

Subject to Section 13 hereof, each of the rights and remedies
granted under this Section 23 to the holder of Notes in respect of the Notes
held by such holder may be exercised by such holder without notice by such
holder to, or the consent of or any other action by, any other holder of Notes.

23.12 Other Enforcement Rights.

Each holder of Notes may proceed to protect and enforce the
Guarantee under this Section 23 by suit or suits or proceedings in equity, at
law or in bankruptcy, and whether for the specific performance of any covenant
or agreement contained in this Section 23 or in execution or aid of any power
herein granted or for the recovery of judgment for or in respect of the
Guaranteed Obligations or for the enforcement of any other proper, legal or
equitable remedy available under applicable law.

23.13 Delay or Omission; No Waiver.

No course of dealing on the part of any holder of Notes and
no delay or failure on the part of such holder to exercise any right under this
Agreement, the Other Agreements or the Notes (including this Section 23) shall
impair such right or operate as a waiver of such right or otherwise prejudice
such holder's rights, powers and remedies hereunder. Every right and remedy
given in or by this Section 23 or by law to any holder of Notes may be exercised
from time to time as often as may be deemed expedient by such Person.

23.14 Restoration of Rights and Remedies.

If any holder of Notes shall have instituted any proceeding
to enforce any right or remedy in this Section 23, under this Agreement or any
Other Agreement or under any Note held by such holder and such proceeding shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to such holder, then and in every such case each such
holder, the Company and each of the Guarantors shall, except as may be limited
or affected by any determination in such proceeding, be restored severally and
respectively to its respective former positions hereunder and thereunder, and
thereafter the rights and remedies of such holder shall continue as though no
such proceeding had been instituted.

23.15 Cumulative Remedies.

No remedy under this Agreement (including, without
limitation, this Section 23), the Other Agreements or the Notes is intended to
be exclusive of any other remedy, but each and every remedy shall be cumulative
and in addition to any and every other remedy given pursuant to this Agreement
(including, without limitation, this Section 23) or the Other Agreements, or
pursuant to the Notes.

23.16 Survival.

So long as the Guaranteed Obligations shall not have been
fully and finally performed and indefeasibly paid, the obligations of each
Guarantor under this Section 23 shall survive the transfer and payment of any
Note and the payment in full of all the Notes.

    23.17 Miscellaneous.

  

If an Event of Default exists, then the holders of Notes (as
provided in Section 13) shall have the right to declare all of the Guaranteed
Obligations to be, and such Guaranteed Obligations shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which have been expressly waived by the Company and
the Guarantors, and notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such Guaranteed Obligations from becoming
automatically due and payable) as against the Company. In any such event, the
holders of Notes shall have immediate recourse to each of the Guarantors to the
fullest extent set forth herein.

Notwithstanding any other provision of this Section 23, the
Guaranteed Obligations of each Guarantor under this Section 23 shall be limited
to the extent, if any, required so that its obligations under this Section 23
shall not be subject to avoidance under Section 548 of the Bankruptcy Code or to
being set aside or annulled under any applicable state law relating to fraud on
creditors. In determining the limitations, if any, on the amount of any
Guarantor's obligations under this Section 23 pursuant to the preceding
sentence, any rights of subrogation or contribution which such Guarantor may
have under this Section 23 or applicable law shall be taken into account.

Notwithstanding any provision in this Agreement or the Other
Agreements to the contrary, each Obligor agrees that any indebtedness of a
Guarantor owing to the Company or another Obligor shall be subordinated in right
of payment to the Guaranteed Obligations of such Guarantor under this Section 23
owing to the holders of Notes.

24. MISCELLANEOUS.

24.1 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 assigns (including, without
limitation, any subsequent holder of a Note) whether so expressed or not.

24.2 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.

24.3 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.

24.4 Construction.

(a) 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.

    (b) This Agreement and the wording contained herein have
    been arrived at by mutual negotiation of the parties hereto, and no
    provision hereof shall be interpreted or construed against one party in
    favor of the other party by reason of draftsmanship.

  

24.5 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.

24.6 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.

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 Obligors.

  
    
      
        

SUNRISE MEDICAL, INC.

                  

 
                  

          By: /s/ Ted N.
          Tarbet            

          Senior vice president

          Chief financial officer

          

SUNMED FINANCE INC.

SUNRISE MARIN HOLDINGS INC.

SUNRISE MEDICAL CCG INC.

SUNRISE MEDICAL HHG INC.

 

By: /s/ Ted N.
Tarbet            

Senior vice president

Chief financial officer

        

      

    

  

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          PROVIDENT MUTUAL LIFE INSURANCE COMPANY

By: /s/ James D. Kestner          

James D. Kestner

Vice President

        

      

    

  

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF AMERICA

By: /s/ James D. Kestner          

James D. Kestner

Vice President

      

    

  

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          THE CANADA LIFE ASSURANCE COMPANY

By: /s/ Brian J.
Lynch          

Brian J. Lynch

Associate Treasurer

      

    

  

 

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          THE CANADA LIFE INSURANCE COMPANY OF AMERICA

By: /s/ Brian J.
Lynch          

Brian J. Lynch

Assistant Treasurer

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          MORGAN GUARANTY TRUST COMPANY OF NEW YORK AS TRUSTEE
          OF A COMMINGLED PENSION TRUST

By: /s/ E. Clifford
Cole          

E. Clifford Cole

Vice President

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          J. P. MORGAN INVESTMENT MANAGEMENT INC. AS INVESTMENT
          MANAGER

By: /s/ E. Clifford
Cole          

E. Clifford Cole

Vice President

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          MORGAN GUARANTY TRUST COMPANY OF NEW YORK AS
          INVESTMENT MANAGER FOR AN INSTITUTIONAL INVESTOR

By: /s/ E. Clifford
Cole          

E. Clifford Cole

Vice President

      

    

  

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY

By: /s/ John M. Casparian           

John M. Casparian

Investment Officer

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

By: /s/  Raymond J.
Henry          

Raymond J. Henry

Second Vice President

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          FORT DEARBORN LIFE INSURANCE COMPANY

          By:  Guardian Asset management Corp.

By: /s/ Frank J.
Jones          

Frank J. Jones

President

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          TRAVELERS INSURANCE COMPANY

By: /s/ Pamela
Westmoreland          

Pamela Westmoreland

Investment Officer

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          TRAVELERS LIFE AND ANNUITY COMPANY

By: /s/ Pamela
Westmoreland          

Pamela Westmoreland

Investment Officer

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          UNITED SERVICES AUTOMOBILE ASSOCIATION

By: /s/ C. W.
Shirley          

C. W. Shirley

Senior Vice President

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

By: /s/ Daniel J. Franzese          

Daniel J. Franzese

Director Private Placements

      

    

  

 

The foregoing is hereby

agreed to as of the

date thereof.

  
    
      
        
          TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY

By: /s/ John M. Casparian          

John M. Casparian

Investment Officer

      

    

  

 

SCHEDULE A

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      UNITED SERVICES AUTOMOBILE ASSOCIATION

      (Note to be registered in the name of "Salkeld & Co.")
	
       
	
      $17,000,000

  	Payments by wire transfer of immediately available funds
    (identifying 

    each payment as "Sunrise Medical, Inc., 7.25% Series B Notes, due

    October 28, 2007, PPN 867910 A@ 0, principal or interest") to:

  
    Bankers Trust Company/USAA

    (ABA #021001033)

    Private Placement Processing

    AC #99 911 145

    for credit to: USAA

    Account Number 99715
  

  
  

  	All notices of payments and written confirmations of such wire transfers:

  
    USAA

    c/o Asset Accounting

    USAA Building, B-1-W

    9800 Fredericksburg Road

    San Antonio, Texas 78288

    Fax: 210-498-8678
  

  
  	All other communications:

  
    Insurance Company Portfolios

    USAA IMCO

    USAA Building, BK DO4N

    9800 Fredericksburg Road

    San Antonio, Texas 78288

    Attention: Bill Shirley

    Telephone: 210-498-7751
  

  
  	Taxpayer I.D. Number: 74-0959140

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      PROVIDENT MUTUAL LIFE INSURANCE COMPANY
	
      $4,000,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    PNC Bank

    Broad and Chestnut Streets

    Philadelphia, PA 19101

    ABA #031-000-053

    

    for credit to Provident Mutual Life Insurance Company

    Account #85-4084-2176
  

  
  	All communications by U.S. mail or facsimile:

  
    P.O. Box 1717

    Valley Forge, PA 19482-1717

    Attention: Securities Investment Department

    Fax: 610-407-1322
  

  
  	All communications by overnight courier:

  
    1205 Westlakes Drive

    Berwyn, PA 193125-2405

    Attention:  Treasurer
  

  
  	Taxpayer I.D. Number: 23-099-045-0

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
	
      $1,000,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    PNC Bank

    Broad and Chestnut Streets

    Philadelphia, PA  19101

    ABA # 031-000-053

    

    for credit to

    Provident Mutual Life and Annuity

    Company of America

    Account #85-5074-4911
  

  
  

  	All communications by U.S. mail or facsimile:

  
    Provident Mutual Life and Annuity

    Company of America

    P.O. Box 1717

    Valley Forge, PA  19482-1717

    Attention:  Securities Investment

    Department

    Fax No.:  610-407-1322
  

  
  

  	All communications by overnight courier:

  
    Provident Mutual Life and Annuity

    Company of America

    1205 Westlakes Drive

    Berwyn, PA  19312-2405

    Attention:  Treasurer
  

  
  

  	Taxpayer I.D. Number:  23-161-908-2

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      THE CANADA LIFE ASSURANCE COMPANY

      (Note to be registered in the name of "Cummings & Co.")
	
      $3,500,000
	
       

  	All payments by wire transfer of immediately available funds to:

  For scheduled payments of principal and interest

  Chase Manhattan Bank

  ABA 021-000-021

  A/C #544-755-102

  Trust Account No. AR78-63909

  The Canada Life Assurance Company

  Attention:  Mr. Richard Boxer

  Refer to:  Name of issuer, rate, maturity date, type

  of security whether principal and/or interest and due date

  For unscheduled prepayments and payment at maturity

  Chase Manhattan Bank

  ABA 021-000-021

  A/C# 400-452-073

  Trust Account No. AR78-63909,

  The Canada Life Assurance Company

  Attention:  Mr. Richard Boxer

  Refer to:  name of issuer, rate, maturity date, whether

  principal and/or interest and effective date of call or

  maturity.

  	All notices of payments and written confirmations 

    of such wire transfers:

  
    Chase Manhattan Bank

    North America Insurance

    3 Chase Metro Tech Center, 6th Fl.

    Brooklyn, NY  11245

    Attention:  Mr. Richard Boxer

    Fax:  718-242-2015
  

  
    copy to:
  

  
    The Canada Life Assurance Company

    330 University Avenue, SlP-12

    Toronto, Ontario

    Canada M5G 1R8

    Attention:  Supervisor, Securities Accounting

    Fax:  416-597-2690
  

  
  

  	All other communications:

  
    The Canada Life Assurance Company

    U.S. Private Placements, SP-11

    330 University Avenue

    Toronto, Ontario

    Canada M5G 1R8

    Attention:  Brian Lynch, Associate Treasurer

    Fax:  416-597-9678
  

  
  

  	Taxpayer I.D. Number:  38-0397420

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      CANADA LIFE INSURANCE COMPANY OF AMERICA

      (Note to be registered in the name of "Cummings & Co.")
	
      $2,500,000
	
       

  	All payments by wire transfer of immediately available funds to:

    

    For Scheduled payments of principal and interest

  
    Chase Manhattan Bank

    ABA 021-000-021

    A/C #544-755-102

    Trust Account No. AR78-64004

    Canada Life Insurance Company of America

    Attention:  Mr. Richard Boxer
  

  
    Refer to:  name of issuer, rate, maturity date, type of security,

    whether principal and/or interest and due date.

    

    For unscheduled prepayments and payment at maturity
    

  
  
    Chase Manhattan Bank

    ABA 021-000-021

    A/C #400-452-073

    Trust Account No. AR78-64004

    Canada Life Insurance Company of America

    Attention;  Mr. Richard Boxer
  

  
    Refer to:  Name of issuer, rate, maturity date, type of 

    security, whether principal and/or interest and

    effective date of call or maturity.
  

  
  
    All notices of payments and written confirmations of such wire transfers:
  

  
    Chase Manhattan Bank

    North America Insurance

    3 Chase MetroTech Center, 6th Fl.

    Brooklyn, NY  11245

    Attention;  Mr. Richard Boxer

    Fax:  718-242-2015
  

  
    copy to:
  

  
    The Canada Life Assurance Company

    330 University Avenue, SlP-12

    Toronto, Ontario

    Canada  M5G 1R8

    Attention:  Supervisor, Securities Accounting

    Fax:  416-597-2690
  

  
  

  	Taxpayer I.D. Number:  38-2816473

 

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      MORGAN GUARANTY TRUST COMPANY OF NEW YORK

      AS TRUSTEE OF A COMMINGLED PENSION TRUST

      (Note to be registered in the name of "Whiting  & Co.")
	
      $16,000,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    BK of NYC/CTR/BBK

    ABA #021-000-018

    IOC 566-Custody

    JPMIN Incoming Wire Account

    Re:  Sunrise Medical, Inc.
  

  
  

  	All communications:

  
    J.P. Morgan Investment Management Inc.

    522 Fifth Avenue

    New York, NY  10036

    Attention:  Securities Administration

    Fax:  212-837-9046
  

  
  

  	Taxpayer I.D. Number:  13-6020929

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      J.P. MORGAN INVESTMENT MANAGEMENT INC. AS INVESTMENT MANAGER

      (Note to be registered in the name of "Kane & Co.")
	
      $500,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    BK of NYC/CTR/BBK

    ABA #021-000-021

    A/C #900090000127

    FFC:  P81858

    Re:  Sunrise Medical, Inc.
  

  
  

  	All communications:

  
    Chase Manhattan Bank N.A.

    3 Chase Metro Tech Center, 6th Fl.

    Brooklyn, NY  11245

    Attention:  Frank Cobello

    Fax:  718-242-8314
  

  
  

  	Taxpayer I.D. Number:  13-6022144

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      MORGAN GUARANTY TRUST COMPANY OF NEW YORK

      AS INVESTMENT MANAGER FOR AN INSTITUTIONAL INVESTOR

      (Note to be registered in the name of "Wheelmotor & Co.")
	
      $500,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    State Street Bank and Trust Co.

    Boston,  MA

    ABA #011-000-028

    A/C #EF4A

    A/C Name:  Global Strategic Income

    (Corporate) Portfolio

    Re:  Sunrise Medical Inc.
  

  
  

  	All communications:

  
    State Street Bank and Trust Co.

    One Heritage Drive

    North Quincy, MA  02171

    Attn:  Phil Cummings

    Fax:  617-985-8848
  

  
  

  	Taxpayer I.D. Number:  04-3301328

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
	 	
       $25,000,000

  	All payments by wire transfer of immediately available funds to:

  
    Chase Manhattan Bank

    ABA #021-000-021

    Account No. 9000-9-000200

    For Further Credit to the TIAA 

    Account Number:  G07040

    on order of Sunrise Medical, Inc.

    Reference:  PPN#/Issuer/Mat. Date/Coupon

    Rate/P&I Breakdown
  

  
  

  	All notices of payments and written confirmations of such wire transfers:

  
    Teachers Insurance and Annuity

    Association of America

    730 Third Avenue

    New York, New York  10017

    Telephone:  212-490-9000

    Fax:  212-916-6955
  

  
  

  	All other communications:

  
    Teachers Insurance and Annuity

    Association of America

    730 Third Avenue

    New York, New York  10017

    Attention;  Dan Franzese

    Telephone:  212-916-6210

    Fax:  212-916-6667
  

  
  

  	Taxpayer I.D. Number:  13-1624203

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
	 	
      $5,000,000

  	All payments by wire transfer of immediately available funds to:

  
    Federal Reserve Bank of Boston

    Boston Safe Deposit & Trust

    Boston, MA
  

  
    ABA:  011-001-234

    DDA:  12-526-1

    FFC:  Cost Center 1253

    Re:  Mellon Securities

    Transamerica Life Insurance and Annuity Company

    Account Segment:  IMS

    Acct.:  TRAF 1506402

    Ref:  Cusip and Description
  

  
  

  	All communications:

  
    Mellon Securities Trust Co.

    120 Broadway, 13th Fl.

    New York, NY  10271

    Attn:  Tony Bello (212) 364-0124

    Ref:  Transamerica Life Insurance and Annuity Company

    Account Segment:  IMS

    Acct.:  TRAF  1506402

    Ref:  Cusip and Description

    Fax:  212-791-8453
  

  
  

  	Taxpayer I.D. Number:  95-6140222

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
	
      $5,000,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    Federal Reserve Bank of Boston

    Boston Safe Deposit & Trust

    Boston, MA

    ABA:  011-001-234

    DDA:  122-526-1

    FFC:  Cost Center 1253

    Transamerica Occidental Life Insurance Company

    Account Segment:  UNI

    ACCT.:  TRAF 1505102

    Ref:  Cusip and Description
  

  
  

  	All communications:

  
    Mellon Securities Trust Co.

    120 Broadway, 13th Fl.

    New York, NY  10271

    Attn:  Tony Bello (212)364-0124

    Ref:  Transamerica Life Insurance and Annuity Company

    Account Segment:  IMS

    Acct.:  TRAF  1506402

    Ref:  Cusip and Description

    Fax:  212-791-8453
  

  
  

  	Taxpayer I.D. Number:  95-1060502

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

      (Note to be registered in the name of "Cudd & Co.")
	
      $6,000,000
	
       $3,000,000

  	All payments by wire transfer of immediately available funds to:

  
    The Chase Manhattan Bank

    FED ABA #021000021

    CHASE/NYC/CTR/BNF

    A/C 900-9-000200

    Reference The Guardian A/C #G05978

    and the name and CUSIP for which payment is being made
  

  
  

  	All notices of payments and written confirmations of such wire transfers:

  
    The Guardian Life Insurance Company of America

    Attention:  Investment Accounting M-1A

    201 Park Avenue South

    New York, NY  10003

    Fax:  212-677-9023
  

  
  

  	All other communications:

  
    The Guardian Life Insurance Company of America

    201 Park Avenue South

    New York, NY  10003

    Fax:  212-777-6715

    Attention:  Raymond J. Henry

    Investment Department 7B

    Fax:  212-777-6715
  

  
  

  	Taxpayer I.D. Number:  13-6022143

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      FORT DEARBORN LIFE INSURANCE COMPANY

      (Note to be registered in the name of "Var & Co.")
	
      $1,000,000
	 

  	All payments by wire transfer of immediately available funds to;

  
    First Bank Minneapolis

    ABA #091000022

    For further credit to First Trust Illinois

    Account 1-801-21167365

    Wire Clearing Account 47300098

    Att:  A/C #78693302 Fort Dearborn Life
  

  
  

  	All notices for confirmations and all other communications to:

  
    Fort Dearborn Life Insurance Company

    c/o Guardian Asset Management Corp.

    Fixed Income Securities

    201 Park Avenue South - 8B

    New York, NY  10003

    Attention:  Michael Wheat

    Fax:  212-420-8719
  

  
  

  	Taxpayer I.D. number:  41-6026203

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      THE TRAVELERS INSURANCE COMPANY

      (Note to be registered in the name of "TRAL & CO.")
	
      $7,000,000
	
       

  	All payments by wire transfer of immediately available funds to:

  
    The Travelers Insurance Company -

    Consolidated Private Placement Account

    No. 910-2-587434

    The Chase Manhattan Bank, N.A.

    One Chase Plaza

    New York, NY  10081

    ABA #021000021
  

  
    Refer to;  the source and application of such funds

    (including interest rate and maturity) and PPN:

    867810 A* 2
  

  
  

  	All notices in respect to payment to:

  
    One Tower Square

    Hartford Connecticut 06183-2030

    Attention:  Securities Department - Cashier

    Fax:  860-277-2299
  

  
  

  	All other communications:

  
    One Tower Square

    Hartford Connecticut 06283-2030

    Attention:  Securities Department - 

    Private Placements
  

  
  

  	Taxpayer I.D. Number:  06-0566090

 

 

	
       
	
      Principal Amount of

      Notes to be Purchased

	
       
	
      Series A
	
      Series B

	
      Name and Address of Purchaser
	
       
	
       

	
      THE TRAVELERS LIFE AND ANNUITY COMPANY

      (Note to be registered in the name of "TRAL & CO.")
	
      $3,000,000
	 

  	All payments by wire transfer of immediately available funds to:

  
    The Travelers Insurance Company -

    Consolidated Private Placement Account

    No. 910-2-587434

    The Chase Manhattan Bank, N.A.

    One Chase Plaza

    New York, NY  10081

    ABA # 021000021
  

  
    Refer to:  the source and application of such funds

    (including interest rate and maturity) and PPN:

    867810A* 2
  

  
  

  	All notices in respect to payment to:

  
    One Tower Square

    Hartford Connecticut 06183-2030

    Attention:  Securities Department - Cashier

    Fax:  860-277-2299
  

  
  

  	All other communications:

  
    One Tower Square

    Hartford Connecticut 06283-2030

    Attention:  Securities Department -

    Private placements
  

  
  

  	Taxpayer I.D. Number:  06-0904249

 

 

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:

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 corporation, company, partnership or other
    entity 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 18.3.

Bankruptcy Code -- means the Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Sec. 101 et
seq.

Basket Transfer -- is defined in Section 11.7.

Board of Directors -- means, the board of directors
of the Company or any committee thereof which, in the instance, shall have the
lawful power to exercise the power and authority of such board of directors.

Business Day -- means any day other than a Saturday,
Sunday or other day on which commercial banks in New York, New York or Los
Angeles, California are authorized or required to close under the laws of the
State of New York or the State of California (other than a general banking
moratorium or holiday for a period exceeding 4 consecutive days).

Capital Lease -- means, with respect to any member of
the Group, a lease with respect to which such member is required concurrently to
recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP (whether pursuant to an entry or entries on the balance
sheet of such member or in a footnote to its financial statements).

Capital Lease Obligation -- means, with respect to
any member of the Group and a Capital Lease, the amount of the obligation of
such member as the lessee under such Capital Lease which would, in accordance
with GAAP, appear as a liability on a balance sheet of such member.

CCG -- is defined in the introductory sentence of
this Agreement.

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.

Company -- is defined in the introductory sentence of
this Agreement.

Competitor -- means

(a) each Person identified as a "Competitor" on
    Schedule B-C and the successors and assigns thereof;

    (b) each Person identified by the Company as a
    "Competitor" in a certification delivered to the holders of the
    Notes from time to time, which Person so identified is consented to by the
    Required Holders (which consent shall not be unreasonably withheld);

    (c) any Person legally or beneficially owning, directly
    or indirectly, more than 25% of the issued and outstanding Voting Stock of
    any Person which would qualify as a "Competitor" under clause (a)
    or clause (b) of this definition;

    (d) any Person more than 25% of the issued and
    outstanding Voting Stock of which is legally or beneficially owned by any
    Person which would qualify as a "Competitor" under clause (a) or
    clause (b) of this definition; and

    (e) any officer or director of any Person referred to in
    either clause (a) through clause (d) of this definition,

  

provided that

(i) none of the Purchasers or their affiliates, and

        (ii) no Person that is primarily a bank, trust
        company, savings and loan association or other financial institution, a
        pension plan, an investment company, an insurance company, a broker or
        dealer, or any other similar financial institution or entity (regardless
        of legal form),

      
    
    shall be considered or deemed to be a
    "Competitor."

  

Confidential Information -- is defined in
Section 21.

Consolidated Foreign Subsidiary Debt -- means, as of
any date of determination, the total of all Debt of all Foreign Subsidiaries
(other than Guarantors) outstanding on such date, after eliminating any such
Debt owing by any Foreign Subsidiary (other than a Guarantor) to the Company,
any Guarantor or any other Subsidiary, provided that any Debt of any
Foreign Subsidiary permitted to be incurred under Section 10.7(b) shall be
excluded from this definition of "Consolidated Foreign Subsidiary
Debt."

Consolidated Net Income -- means, with respect to any
period, the net income (or loss) of the Group for such period, as determined on
a consolidated basis in accordance with GAAP.

Consolidated Net Worth -- means, at any time, the
remainder of

(a) Consolidated Total Assets at such time, minus

    

    (b) Consolidated Total Liabilities at such time,

  

excluding from the aforesaid determination the cumulative
currency translation adjustment reported for each Group Fiscal Quarter after the
Group Fiscal Quarter ended June 27, 1997.

Consolidated Total Assets -- means, at any time, the
total assets of the Group determined on a consolidated basis at such time in
accordance with GAAP.

Consolidated Total Capitalization -- means, at any
time, the sum of Consolidated Total Debt at such time plus
Consolidated Net Worth at such time.

Consolidated Total Debt -- means, as of any date of
determination, the total of all Debt of the Group outstanding on such date,
determined on a consolidated basis at such time in accordance with GAAP.

Consolidated Total Liabilities -- means, at any time,
the total liabilities of the Group determined on a consolidated basis at such
time in accordance with GAAP.

Credit Agreement -- means the Third Amended and
Restated Credit Agreement dated as of August 28, 1997 among the Company, certain
of the Company's Subsidiaries, Bank of America National Trust and Savings
Association, as Agent and certain other financial institutions party thereto, as
amended from time to time.

Debt -- means, with respect to any member of the
Group, without duplication,

(a) its liabilities for borrowed money;

    (b) its liabilities for the deferred purchase price of
    property acquired by such Person (excluding (i) 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 and (ii) any such
    liability to be satisfied by the Transfer of capital stock or other similar
    equity interests in any member of the Group);

    (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);

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

    (f) any reimbursement obligation in respect of any letter
    of credit issued for the account of such Person other than (i) commercial
    letters of credit issued in the ordinary course of such Person's business
    (and not as a substitute for direct borrowing or Guaranties thereof) and
    (ii) letters of credit issued in the ordinary course of such Person's
    business that act as the functional equivalent of a surety bond or
    performance bond for such Person; and

    (g) Swaps of such Person.

  

Debt Offered Prepayment Application -- means, with
respect to any Transfer of property, (a) the offering, in writing, by an Obligor
of cash in an amount not exceeding the Net Proceeds Amount with respect to such
Transfer to pay any Senior Debt (other than Senior Debt owing to any Affiliate
and other than Senior Debt in respect of any revolving credit or similar credit
facility providing a member of the Group 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 Senior 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 Senior Debt) and any interest and
premium in respect thereof and (b) if no offer of prepayment (as provided in
clause (a) of this definition) shall have been made to the holders of Notes, and
if one or more holders of Senior Debt to which such offer of prepayment shall
have been made elect not to accept such offer (such holders being referred to in
this definition as "declining holders"), then such Obligor shall offer
to each holder of Notes its Ratable Portion of such Net Proceeds Amount that
would have been paid to such declining holders as a prepayment of its Notes
together with interest and Make-Whole Amount in respect thereof. For purposes of
Section 11.7, a Net Proceeds Amount shall be deemed applied to a Debt Offered
Prepayment Application upon the extension of the offer in respect of such Debt
Offered Prepayment Application, provided that if the actual prepayments
in respect thereof are not made in accordance with the requirements of such
offer, such application of such Net Proceeds Amount will be deemed not to have
been made.

As used in this definition, "Ratable
    Portion" for any Note means an amount equal to the product of
    (x) the Net Proceeds Amount being so offered to the payment of Senior Debt multiplied
    by (y) a fraction the numerator of which is the outstanding
    principal amount of such Note and the denominator of which is the aggregate
    principal amount of all Notes outstanding at such time.

  

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, with respect to the Series A
Notes, the Series A Default Rate and, with respect to the Series B Notes, the
Series B Default Rate.

Domestic Subsidiary -- means any Subsidiary that (a)
is incorporated or otherwise formed under the laws of any state of the United
States of America and (b) is engaged in business primarily in the United States
of America. Anything contained in the immediately preceding sentence
notwithstanding, "Domestic Subsidiary" shall not include any
Subsidiary otherwise satisfying the criteria set forth above which is a
Subsidiary, directly or indirectly, owned by any one or more Foreign
Subsidiaries, provided, however, if a Subsidiary is treated as a
"domestic subsidiary" under any bank credit agreement of the Company
(including, without limitation, the Credit Agreement), it shall be deemed to be
a "Domestic Subsidiary" hereunder and under the Other Agreements.

EC Country -- means Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands,
Portugal, Spain, Sweden and the United Kingdom.

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 12.

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).

Foreign Subsidiary -- means any Subsidiary other than
a Domestic Subsidiary.

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

Group -- means the Obligors and their Subsidiaries.
References to any "member" of the Group in this Agreement shall be
deemed to refer to any of the Obligors and their Subsidiaries.

Group Fiscal Quarter -- means the fiscal
period in respect of which the Group's consolidated quarterly financial
statements are prepared.

Group Fiscal Year -- means the fiscal period
in respect of which the Group's consolidated annual financial statements are
prepared.

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 any member of the
        Group conducts all or any part of its business, or that asserts
        jurisdiction over any properties of any such member, or

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

  

Guarantee -- is defined in Section 23.1.

Guaranteed Obligations -- is defined in Section 23.1.

Guarantor -- is defined in the introductory sentence
of this Agreement, and shall include each such other Person that shall have
become a party to this Agreement as provided for in Section 10.7.

Guaranty -- means, with respect to any Person (for
the purposes of this definition, the "guarantor"), 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 (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, obligations incurred
through an agreement, contingent or otherwise, by the guarantor:

(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,
        dividend or obligation, or

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

      
    
    (c) to lease property or to purchase securities or other
    property or services primarily for the purpose of assuring the owner of such
    indebtedness or obligation of the ability of the primary obligor to make
    payment of the indebtedness or obligation; or

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

  

For purposes of computing the amount of any guaranty in
connection with any computation of indebtedness or other liability, it shall be
assumed that the indebtedness or other liabilities that are the subject of such
Guaranty are direct obligations of the issuer of such Guaranty.

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).

HHG -- is defined in the introductory sentence of
this Agreement.

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 14.1.

Institutional Investor -- means (a) any original
purchaser of a Note, (b) any holder of a Note (other than a Competitor)
holding more than 10% 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 fund, any foundation, 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.

Investment -- means any investment, made in cash or
by delivery of property by any member of the Group (a) in any Person, whether by
acquisition of stock, partnership interest, indebtedness or other obligation or
security, or by loan, Guaranty, advance, capital contribution or otherwise or
(b) in any property.

Lien -- means, with respect to any member of the
Group, 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. The term "Lien" shall not include any so-called
"negative pledge" provisions in agreements covering the incurrence of
Debt.

Make-Whole Amount -- is defined in Section 8.6.

Material -- means material in relation to the
business, operations, affairs, financial condition, assets, properties, or
prospects of the Group taken as a whole.

Material Adverse Effect -- means a material adverse
effect on (a) the business, operations, affairs, financial condition, assets or
properties of the Group taken as a whole, or (b) the ability of any of the
Obligors to perform its obligations under this Agreement, the Other Agreements
and the Notes, or (c) the validity or enforceability of this Agreement, the
Other Agreements or the Notes.

Material Subsidiary -- means, as of the Closing Date,
any Subsidiary the amount of whose assets exceed 2.5% of Consolidated Total
Assets.

Memorandum -- is defined in Section 5.3.

Moody's -- means Moody's Investors Service, Inc.

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 member of the Group, 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 as determined by the Board of Directors of the Company in
    good faith) paid by the transferee in respect of such Transfer, minus

    

    (b) all ordinary and reasonable out-of-pocket costs and
    expenses actually incurred by the transferor in connection with such
    Transfer and all Debt secured by such property and required by its terms to
    be paid in connection with the consummation of such Transfer.

  

Non-US Pension Plan -- means any plan, fund or other
similar program established or maintained outside of the United States of
America by any one or more of the Company or the Subsidiaries primarily for the
benefit of the employees of the Company or such Subsidiaries substantially all
of whom are non-resident aliens, 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.

Notes -- is defined in Section 1.

Obligor -- is defined in the introductory sentence of
this Agreement.

Officer's Certificate -- means a certificate of a
Senior Financial Officer or of any other officer of an Obligor 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.

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

Placement Agents -- means SBC Warburg Dillon Read,
Inc. and NationsBanc Capital Markets, Inc. and any of their respective
affiliates.

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.

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.

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 not exceeding
the Net Proceeds Amount with respect to such Transfer to the acquisition by a
Group member of property of a similar utility or a business reasonably related
to the business of the Group and, in either case, of at least an equivalent
value in respect of the property that was so Transferred.

PTE -- is defined in Section 6.2.

QPAM Exemption -- means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.

Required Holders -- means, at any time, the holders
of more than 50% in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any member of the Group or any Affiliates
thereof).

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.

Restricted Investments -- means, at any time, all
Investments except the following:

(a) Investments in commercial paper rated on the date of
    acquisition thereof "A-1"(or higher) by Standard & Poor's or
    "P-1" (or higher) by Moody's (or any future comparable ratings
    issued by Standard & Poor's or Moody's) and issued by a corporation
    (other than an Affiliate of the Company) organized under the laws of the
    United States of America, Canada, any EC Country or Japan, provided
    that such obligations mature within two hundred seventy (270) days from the
    date of creation thereof;

    (b) Investments in Acceptable Governmental Securities (as
    defined below in this definition);

    (c) Investments in certificates of deposit or other bank
    instruments maturing within one year from the date of issuance thereof,
    issued by Acceptable Banks (as defined below in this definition);

    (d) Investments in master note or deposit arrangements
    with securities of the types described in (a) through (c) above;

    (e) Investments in money market programs of investment
    companies registered with the Securities and Exchange Commission which (i)
    at the time of acquisition by the Company or a Subsidiary, are rated
    "A-1" (or higher) by Standard & Poor's or "P-1" (or
    higher) by Moody's or (ii) if such money market programs are not rated, then
    (A) the substantial majority of the underlying investments of such program
    are rated "A-1" (or higher) by Standard & Poor's or
    "P-1" (or higher) by Moody's or (B) such programs invest only in
    Investments of the types described in (a) through (c) above;

    (f) Investments in repurchase agreements having terms of
    not more than 365 days with Acceptable Banks;

    (g) Investments in interest rate swaps, currency swaps
    and similar Investments entered into and used by the Company or a Subsidiary
    in the ordinary course of its business to hedge an existing or future risk
    or exposure of such Person in respect of its liabilities or assets;

    (h) Investments in property to be used in the ordinary
    course of business of the Company and its Subsidiaries;

    (i) Investments in current and non-current assets arising
    from the sales of goods and services in the ordinary course of business of
    the Company and its Subsidiaries;

    (j) Investments in one or more Wholly-Owned Subsidiaries
    or one or more Guarantors or any Person that concurrently with such
    Investment becomes a Wholly-Owned Subsidiary or a Guarantor;

    (k) Investments of any member of the Group in existence
    on the date of Closing;

    (l) Investments in joint ventures, Subsidiaries (other
    than Wholly-Owned Subsidiaries or Guarantors), or minority equity positions
    of companies engaged in the same businesses as the Company and its
    Subsidiaries but in the aggregate not to exceed $20,000,000;

    (m) travel advances in the ordinary course of business to
    officers and employees of the Company or its Subsidiaries; and

    (n) loans and advances to employees of the Company or its
    Subsidiaries.

  

Investments, for purposes of this Agreement, shall be valued
at the original cost thereof provided, however, that loans and advances
shall be valued at the principal amount thereof then outstanding and a Guaranty
will be valued at the outstanding principal amount of the obligation guarantied
by such Guaranty. As used in this definition:

    Acceptable Bank -- means a bank, trust company or
    other financial institution:

    (a) that (i) is organized under the laws of the
        United States of America or any state thereof, (ii) has capital, surplus
        and undivided profits aggregating in excess of $1,000,000,000 and (iii)
        whose certificates of deposit or long-term senior unsecured indebtedness
        (or, if it shall have no long-term senior unsecured indebtedness, the
        long-term senior unsecured indebtedness of its holding company) are (at
        the time of the Group's acquisition of the instruments of such
        Acceptable Bank) rated "A" (or higher) by Standard &
        Poor's, Duff and Phelps Inc. or Fitch Investors' Service Incorporated or
        "A2" (or higher) by Moody's (or any future comparable ratings
        issued by any of such Persons), or

        (b) that (i) is organized under the laws of Canada,
        any EC Country, Japan or any other country, (ii) has capital, surplus
        and undivided profits aggregating in excess of $1,000,000,000 (or the
        equivalent in another currency) and (iii) whose commercial paper (at the
        time of the Group's acquisition of the instruments of such Acceptable
        Bank) is rated "A-1" (or higher) by Standard & Poor's or
        "P-1" (or higher) by Moody's or whose long-term senior
        unsecured indebtedness (or, if it shall have no long-term senior
        unsecured indebtedness, the long-term senior unsecured indebtedness of
        its holding company) is (at the time of the Group's acquisition of the
        instruments of such Acceptable Bank) rated "AA" (or higher) by
        Standard & Poor's or "Aa2" (or higher) by Moody's;

      
    
    
    Acceptable Governmental Security -- means any direct
    obligation of, or obligation guaranteed by, the United States of America or
    any agency controlled or supervised by or acting as an instrumentality of
    the United States of America in respect of the payment of which obligation
    or guarantee the full faith and credit of the United States of America shall
    have been pledged, but excluding therefrom speculative derivative securities
    such as mortgage-backed interest or principal "strips", mortgage
    pass-through certificates and other Investments of a similar speculative
    nature.

  

Restricted Payment -- means

(a) any dividend or other distribution, direct or
    indirect, on account of any shares of stock of the Company now or hereafter
    outstanding, except a dividend payable solely in shares of stock of the
    Company, and

    (b) any redemption, retirement, purchase or other
    acquisition, direct or indirect, of any shares of stock of the Company now
    or hereafter outstanding, or of any warrants, rights, or options to acquire
    any shares of such stock.

  

Securities Act -- means the Securities Act of 1933,
as amended from time to time.

Senior Debt -- any unsecured Debt of any one or more
of the Obligors that is not in any manner subordinated in right of payment to
the Notes or to any other Debt of such Persons.

Senior Financial Officer -- means the chief financial
officer, principal accounting officer, treasurer or comptroller of the Company,
or any other officer of the Company with responsibility for the administration
of the relevant portion of this Agreement.

Series -- means either the Series A Notes or the
Series B Notes issued hereunder.

Series A Default Rate -- means, with respect to the
Series A Notes, the lesser of

(a) the maximum rate of interest allowed by applicable
    law, and

    (b) the greater of (i) 9.09% per annum and (ii) 2%
    per annum over the rate of interest publicly announced from time to
    time by Morgan Guaranty Trust Company of New York (or its successors) in New
    York, New York as its "base" or "prime" rate.

  

Series A Notes -- is defined in Section 1(b).

Series B Default Rate -- means, with respect to the
Series B Notes, the lesser of

(a) the maximum rate of interest allowed by applicable
    law, and

    (b) the greater of (i) 9.25% per annum and (ii) 2%
    per annum over the rate of interest publicly announced from time to
    time by Morgan Guaranty Trust Company of New York (or its successors) in New
    York, New York as its "base" or "prime" rate.

  

Series B Notes -- is defined in Section 1(b).

SMH -- is defined in the introductory sentence of
this Agreement.

Source -- is defined in Section 6.2.

Standard & Poor's -- means Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc.

Subsidiary -- means, as to any Person, any
corporation, association, limited liability company or other similar 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, 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 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 or another Obligor.

Sunmed -- is defined in the introductory sentence of
this Agreement.

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. For purposes of this
Agreement, any such interest rate swap, currency swap or other similar
obligation which was entered into and is being used by such Person in the
ordinary course of its business to hedge an existing or future risk or exposure
of such Person in respect of its liabilities or assets shall not be deemed a
"Swap."

Successor Company -- Section 11.2.

Transfer -- means, with respect to any member of the
Group, any transaction in which such Person sells, conveys, transfers or leases
(as lessor) any of its assets. The verb "Transfer" has the
meaning correlative to the meaning of the noun.

Voting Stock -- means capital stock or other equity
interests or capital of any class or classes of a corporation, partnership,
association or other business entity, the holders of which are ordinarily, in
the absence of contingencies, entitled to elect the directors (or Persons
performing similar functions) of such entity.

Wholly-Owned Subsidiary -- means, at any time, any
Subsidiary 100% of all of the equity interests (except directors' qualifying
shares and other equity holdings (not in excess of 1% of such equity interests)
required to comply with foreign local ownership requirements and the like) and
voting interests of which are owned by any one or more of the Obligors and the
Obligors' other Wholly-Owned Subsidiaries at such time.

SCHEDULE C

Wiring Instructions at Closing

Bank: Bank of America NT & SA

ABA#: 121 000 358

Account Name: Agency Administrative Services #5596

Account No.: 12339-15444

Reference: Sunrise Medical, Inc.

SCHEDULE 5.3

Disclosure Materials

Projected performance of the Company and the Subsidiaries in
fiscal year 1998 is expected to be below levels that were anticipated or assumed
in the Memorandum due to lower than anticipated performance during the first
quarter of fiscal year 1998, as disclosed and explained in that certain
memorandum dated October 23, 1997 circulated to you and the Other Purchasers and
the draft press release attached to such memorandum.

SCHEDULE 5.4

Ownership of Company; Affiliates

	
      Name
	Jurisdiction	
      Ownership

	
      (a) Caremate Inc. (I) 2
	
      Delaware
	
      100%

	
      (b) SunMed Finance Inc. *
	
      Delaware
	
      100%

	
      (c) SunMed Service Inc. (I)
	
      Delaware
	
      100%

	
      (d) Sunrise Marin Holdings Inc.
	
      California
	
      100%

	
      (e) Sunrise Medical CCG Inc. *
	
      Wisconsin
	
      100%

	
      (f) Sunrise Medical HHG Inc. *
	
      California
	
      100%

	
            (1) Motion Designs Virgin Islands, Inc.
    
	
      US Virgin Island
	
      100%

	
            (2) Sunrise Medical Ltd.

    	
      United Kingdom
	
      14%

	
            (3) Nihon Sunrise Medical Kabushiki Kaisha (I)

    	
      Japan
	
      100%

	
            (4) Homecare (Deutschland) GMBH

    	
      Germany
	
      100%

	
              (i) DeVilbiss Medizinische Produkte GMBH
	
      Germany
	
      100%

	
              (ii)DeVilbiss Healthcare (Europa) GMBH
	
      Germany
	
      100%

	
      (g) Sunrise Shelf Sub I Inc. (I)
	
      Delaware
	
      100%

	
      (h) Sunrise Medical Ltd. *
	
      United Kingdom
	
      86%

	
          (1) Coopers-Healthcare PLC (I)
	
      United Kingdom
	
      100%

	
              (i) F.H. Bye Ltd. (I)
	
      United Kingdom
	
      100%

	
              (ii)Coopers & Sons Co. Ltd. (I)
	
      United Kingdom
	
      100%

	
          (2) Minivator Ltd. (I)
	
      United Kingdom
	
      100%

	
          (3) BEC Mobility Ltd. (I)
	
      United Kingdom
	
      100%

	
          (4) Parker Bath Company Ltd. (I)
	
      United Kingdom
	
      100%

	
              (i) Oxford Hoist Compnay Ltd. (I)
	
      United Kingdom
	
      100%

	
              (ii)FJ Payne (Manufacturing) Ltd. (I)
	
      United Kingdom
	
      100%

	
          (5) DeVilbiss Healthcare (UK) Ltd. (I)
	
      United Kingdom
	
      100%

	
          (6) DeVilbiss H/C (UK) Holdings Ltd. (I)
	
      United Kingdom
	
      100%

	
          (7) Homecare Health Products (UK) Ltd. (I)
	
      United Kingdom
	
      100%

	
      (i) Sunrise Medical A.G.
	
      Switzerland
	
      100%

	
      (j) Sunrise DeVilbiss Polska SP Z.O.O.
	
      Poland
	
      100%

	
      (k) Vitactiv AB
	
      Sweden
	
      100%

	
          (1) Livskvalitets-produckter Goran Sjoden
	
      Sweden
	
      100%

	
      (l) Sunrise Medical Pty Ltd.
	
      Australia
	
      100%

	
      (m) Sunrise Medical Canada Inc.
	
      Canada
	
      100%

	
      (n) Sunrise Medical Technologias S.A. de C.V.
	
      Mexico
	
      100%

	
      (o) Sunrise Medical Holdings B.V. *
	
      Netherlands
	
      100%

	
          (1) Sunrise Medical SA *
	
      France
	
      100%

	
              (i) SCI La Planche SA
	
      France
	
      100%

	
              (ii)DeVilbiss Medical France, SA
	
      France
	
      100%

	
          (2) Norsk Rehab AS
	
      Norway
	
      100%

	
          (3) Sunrise Medical B.V.
	
      Netherlands
	
      100%

	
          (4) Sunrise Medical S.R.L.
	
      Italy
	
      100%

	
          (5) Talleres Uribarri S.L.
	
      Spain
	
      100%

	
          (6) Sopur Medizintechnik GMBH *
	
      Germany
	
      100%

	
              (i) Sopur Forschung and Entwicklung
	
      Germany
	
      100%

	
              (ii)Sopur CSFR
	
      Czechoslovakia
	
      100%

	
       

    	
       

    	
       

    
	
       

    	
       

    	
       

    
	
      1. Exclusive of directors qualifying shares
	
       

    	
       

    
	
      2. (I) - inactive
	
       

    	
       

    
	
       

    	
       

    	
       

    
	
      * Material Subsidiary
	
       

    	
       

    

 

SCHEDULE 5.5

Financial Statements

Audited consolidated financial statements for fiscal years
1997 and 1996 as contained in the Company's Form 10-K filing with the Securities
Exchange Commission

SECTION 5.8

Certain Litigation

None.

 

SECTION 5.11

Patents, Inc.

None.

 

SECTION 5.12(g)

Certain Pension Plans

None.

 

SECTION 5.14

Use of Proceeds

Proceeds from the sale of the Notes will be used to repay a
portion of the Company's existing revolving bank credit agreement. The
commitment under the revolving bank credit agreement will be reduced in the
amount of the repayment.

SECTION 5.15

Existing Indebtedness

     

     Summary of Debt
Outstanding                                        
                                       
Date:  September 27, 1997

(000's)

    
    	
         

      	
         

      	
      Origination

	
   

	
      Maturity

	
   

	
      Short

	
   

	
      Long

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
      DESCRIPTION

	
   

	
      Date

	
   

	
      Date

	
   

	
      Term

	
   

	
      Term

	
   

	
      TOTAL

	
   

	
      INTEREST
      RATES

	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
  Basic

	
   

	
   

	
   

	
   

	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
     

  	
  Rate

	
   

	
  Spread

	
   

	
  TOTAL

  	
      A. Credit Agreement

	
   

	
   

	
   

	
      Jan-01

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
      LIBOR

	
  
	
   

	
   

	
   

	
   

	
      0

	
   

	
      33,000

	
   

	
      33,000

	
   

	
      5.63%

	
   

	
      1.00%

	
   

	
      6.63%

	
      LIBOR

	
  
	
   

	
   

	
   

	
   

	
      0

	
   

	
      15,000

	
   

	
      15,000

	
   

	
      5.69%

	
   

	
      1.38%

	
   

	
      7.06%

	
      LIBOR

	
  
	
   

	
   

	
   

	
   

	
      0

	
   

	
      10,000

	
   

	
      10,000

	
   

	
      5.63%

	
   

	
      1.38%

	
   

	
      7.01%

	
      LIBOR

	
  
	
   

	
   

	
   

	
   

	
      0

	
   

	
      10,000

	
   

	
      10,000

	
   

	
      5.63%

	
   

	
      1.38%

	
   

	
      7.01%

	
      LIBOR

	
  
	
   

	
   

	
   

	
   

	
      0

	
   

	
      5,000

	
   

	
      5,000

	
   

	
      5.69%

	
   

	
      1.38%

	
   

	
      7.06%

	
     

  	
    
	
     

  	
     

  	
     

  	
     

  	
  0

	
   

	
  8,000

	
   

	
  8,000

	
   

	
  5.69%

	
   

	
  1.38%

	
   

	
  7.06%

	
      Total domestic/weighted
      avg. rate of borrowing
    

    

	
   

	
      0

	
   

	
      81,000

	
   

	
      81,000

	
   

	
   

	
   

	
   

	
   

	
      5.74%

  	
      DM Borrowing (35,000 DM) on
      Credit Agreement
    

    

	
   

	
      0

	
   

	
      19,909

	
   

	
      19,909
	
      (A)
	
      3.19%

	
   

	
      1.00%

	
   

	
      4.19%

	
      DM Borrowing (10,000 DM) on
      Credit Agreement
    

    

	
   

	
      0

	
   

	
      5,678

	
   

	
      5,678

	
   

	
      3.19%

	
   

	
      1.00%

	
   

	
      4.19%

  	
      FRF Borrowing (175,000 FRF)
      on Credit Agreement
    

    

	
   

	
      0

	
   

	
      29,627

	
   

	
      29,627
	
      (B)
	
      3.44%

	
   

	
      1.00%

	
   

	
      4.44%

	
      FRF Borrowing ( 62,000 FRF)
      on Credit Agreement
    

    

	
   

	
      0

	
   

	
      10,497

	
   

	
      10,497

	
   

	
      3.38%

	
   

	
      1.00%

	
   

	
      4.38%

  	
      EPS Borrowing (7682,000
      EPS) on Credit Agreement
    

    

	
   

	
      0

	
   

	
      5,176

	
   

	
      5,176

	
   

	
      5.28%

	
   

	
      1.00%

	
   

	
      6.28%

  	
      GBP Borrowing (45,000 GBP)
      on Credit Agreement
    

    

	
   

	
      0

	
   

	
      24,120

	
   

	
      24,120

	
   

	
      7.13%

	
   

	
      1.00%

	
   

	
      8.13%

	
      Total Credit
      Agreements/weighted avg. rate of borrowings
    

    

	
   

	
      0

	
   

	
      176,007

	
   

	
      176,007

	
   

	
   

	
   

	
   

	
   

	
      5.56%

	
      B. Unsecured Notes

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
      Quickie Designs Non-Compete
      Agreements
    

    

	
   

	
      Oct-97

	
   

	
      10

	
   

	
      0

	
   

	
      10

	
   

	
   

	
   

	
   

	
   

	
   

	
      Corporate Guardian/Hoyer

	
   

	
   

	
   

	
      Jan-99

	
   

	
      100

	
   

	
      100

	
   

	
      200

	
   

	
      8.00%

	
   

	
   

	
   

	
   

	
      Ambler

	
   

	
   

	
   

	
      Apr-98

	
   

	
      60
	
   

	
      0

	
   

	
      60

	
   

	
      7.00%

	
   

	
   

	
   

	
   

	
      Innovative

	
   

	
   

	
   

	
      Mar-98

	
   

	
      120
	
   

	
      0

	
   

	
      120

	
   

	
      7.00%

	
   

	
   

	
   

	
   

	
         

      	
         

      	
         

      	
         

      	
         

      	
         

      	
      280

	
   

	
      100

	
   

	
      380

	
   

	
   

	
   

	
   

	
   

	
   

	
      HHG Patent ACON Note

	
   

	
   

	
   

	
      Aug-98

	
   

	
      1,200

	
   

	
      0

	
   

	
      1,200

	
   

	
      7.00%

	
   

	
   

	
   

	
   

	
      Jay Medical Acquisition
      Debt

	
   

	
   

	
   

	
      Aug-99

	
   

	
      1,000

	
   

	
      2,750

	
   

	
      3,750

	
   

	
      7.50%

	
   

	
   

	
   

	
   

	
         

      	
         

      	
         

      	
         

      	
         

      	
         

      	
      2,200

	
   

	
      2,750

	
   

	
      4,950

	
   

	
   

	
   

	
   

	
   

	
   

	
      Sunrise UK Ltd Barclays
      ESCS Loan
    

    

	
   

	
      May-02

	
   

	
      0

	
   

	
      4,020

	
   

	
      4,020

	
   

	
      LIBOR+1%

	
   

	
   

	
   

	
   

	
      Parker Bath ACON Dect

	
   

	
   

	
   

	
      Oct-98

	
   

	
      1,605

	
   

	
      1,602

	
   

	
      3,207

	
   

	
      8.00%

	
   

	
   

	
   

	
   

	
      Parker Bath ACON Dect

	
   

	
   

	
   

	
      Oct-00

	
   

	
      -

	
   

	
      3,203

	
   

	
      3,203

	
   

	
      8.00%

	
   

	
   

	
   

	
   

	
      Ward

	
   

	
   

	
   

	
      2001

	
   

	
      14

	
   

	
      42

	
   

	
      56

	
   

	
      8.00%

	
   

	
   

	
   

	
   

	
         

      	
         

      	
         

      	
         

      	
         

      	
         

      	
      1,619

	
   

	
      8,867

	
   

	
      10,486

	
   

	
   

	
   

	
   

	
   

	
   

	
      NORSK Acquisition

	
   

	
   

	
   

	
      Mar-98

	
   

	
      21

	
   

	
      -

	
   

	
      21

	
   

	
      10.00%

	
   

	
   

	
   

	
   

	
           SUBTOTAL

	
   

	
   

	
   

	
   

	
   

	
      4,130

	
   

	
      11,717

	
   

	
      15,847

	
   

	
   

	
   

	
   

	
   

	
   

	
      C. Secured Notes/Mortgages

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
      Jay Medical (KidKart) City
      of Belgrade
    

    

	
   

	
      Feb-00

	
   

	
      -

	
   

	
      110

	
   

	
      110

	
   

	
      0.06

	
   

	
   

	
   

	
   

	
      SOPUR Mortgages

	
   

	
   

	
   

	
      1996-2013

	
   

	
      115

	
   

	
      3,168

	
   

	
      3,283

	
   

	
      6%-9.10%

	
   

	
   

	
   

	
   

	
            

        SUBTOTAL

      

      	
         

      	
         

      	
         

      	
         

      	
         

      	
      115

	
   

	
      3,278

	
   

	
      3,393

	
   

	
   

	
   

	
   

	
   

	
   

	
      D. Capital Leases

	
   

	
   

	
   

	
   

	
   

	
      655

	
   

	
      965

	
   

	
      1,620

	
   

	
   

	
   

	
   

	
   

	
   

	
      Other secured and unsecured
      Debt not exceeding an aggregate principal amount
      of $5,000,000
    

    

    

  	
      (A) Net of DM Swap
      Agreement

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
      (B) Net of FRF Swap
      Agreement

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

SECTION B-C

Competitors

Invacare Corporation

Nellcor Puritan-Bennett

Graham Field Health Products Inc.

Kinetic Concepts

Stryker Corporation

Respironics Inc.

Meyra GmbH

Hillenbrand Industries Inc.

Scandinavian Mobility

Huntleigh Nesbitt-Evans Ltd.

Getinge/Arjo

Fuqua Enterprises Inc.

Kiamura KK

EXHIBIT 1A

[FORM OF SERIES A SENIOR NOTE]

SUNRISE MEDICAL, INC.

7.09% Series A Senior Note Due October 28, 2004

No. RA-___

PPN: 867910 A* 2

$________ ________ __, ____

FOR VALUE RECEIVED, the undersigned, SUNRISE MEDICAL,
INC., a Delaware corporation (herein called the "Company"),
hereby promises to pay to ________ or registered assigns, the principal
sum of ________ DOLLARS ($________) on October 28, 2004, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on
the unpaid balance thereof at a rate equal to 7.09% per annum from the
date hereof, payable semiannually on April 28 and October 28 in each year,
commencing with the later of April 28, 1998 and the payment date next succeeding
the date hereof, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including
any overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to
time equal to the Series A Default Rate (as defined in the Note Purchase
Agreements).

Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at Carlsbad, California or at such other place as the Company
shall have designated by written notice to the holder of this Note as provided
in the Note Purchase Agreements referred to below.

This Note is one of a series of Series A Senior Notes (herein
called the "Notes") issued pursuant to separate Note
Purchase Agreements, each dated as of October 1, 1997 (as from time to time
amended, the "Note Purchase Agreements"), among the
Company, the Guarantors (as defined in the Note Purchase Agreements) and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 21 of the Note
Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.

This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Series A Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

This Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreements, but not otherwise.

The payment by the Company of the principal of, Make Whole
Amount, if any, and interest on this Note is guaranteed by the Guarantors as
provided in the Note Purchase Agreements.

If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
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.

  
    
      
        
          
SUNRISE MEDICAL, INC.

By

Name:

Title:

        

      

    

  

EXHIBIT 1B

[FORM OF SERIES B SENIOR NOTE]

SUNRISE MEDICAL, INC.

7.25% Series B Senior Note Due October 28, 2007

No. RB-___

PPN: 867910 A@ 0

$________ ________ __, ____

FOR VALUE RECEIVED, the undersigned, SUNRISE MEDICAL,
INC., a Delaware corporation (herein called the "Company"),
hereby promises to pay to ________ or registered assigns, the principal
sum of ________ DOLLARS ($________) on October 28, 2007, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on
the unpaid balance thereof at a rate equal to 7.25% per annum from the
date hereof, payable semiannually on April 28 and October 28 in each year,
commencing with the later of April 28, 1998 and the payment date next succeeding
the date hereof, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law on any overdue payment (including
any overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreements), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to
time equal to the Series B Default Rate (as defined in the Note Purchase
Agreements).

Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at Carlsbad, California or at such other place as the Company
shall have designated by written notice to the holder of this Note as provided
in the Note Purchase Agreements referred to below.

This Note is one of a series of Series B Senior Notes (herein
called the "Notes") issued pursuant to separate Note
Purchase Agreements, each dated as of October 1, 1997 (as from time to time
amended, the "Note Purchase Agreements"), among the
Company, the Guarantors (as defined in the Note Purchase Agreements) and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 21 of the Note
Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.

This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Series B Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

This Note is subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in the Note
Purchase Agreements, but not otherwise.

The payment by the Company of the principal of, Make Whole
Amount, if any, and interest on this Note is guaranteed by the Guarantors as
provided in the Note Purchase Agreements.

If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
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.

  
    
      
        
          
SUNRISE MEDICAL, INC.

By

Name:

Title:

        

      

    

  

EXHIBIT 4.4(a)

[Form of Closing Opinion of Counsel for the Company]

[Letterhead of Company's Counsel]

[Closing Date]

To Each of the Persons

listed on Annex 1 hereto

Re: Sunrise Medical, Inc.

Ladies and Gentlemen:

Reference is made to the separate Note Purchase Agreements,
each dated as of October 1, 1997 (collectively, the "Note Purchase
Agreements"), among Sunrise Medical, Inc., a Delaware corporation
(the "Company"), Sunmed Finance Inc., a Delaware
corporation (together with its permitted successors, "Sunmed"),
Sunrise Marin Holdings Inc., a California corporation (together with its
permitted successors, "SMH"), Sunrise Medical CCG Inc.,
a Wisconsin corporation (together with its permitted successors, "CCG"),
Sunrise Medical HHG Inc., a California corporation (together with its permitted
successors, "HHG" and, together with Sunmed, SMH and
CCG, referred to herein individually as a "Guarantor"
and collectively as the "Guarantors"; the Company and
the Guarantors are referred to herein individually as an "Obligor"
and collectively as the "Obligors"), and each of the
purchasers listed on Schedule A to the Note Purchase Agreements (the "Purchasers"),
which provide, among other things, for (a) the issuance and sale by the Company
of (i) its 7.09% Series A Senior Notes due October 28, 2004 in the aggregate
principal amount of $50,000,000 and (ii) its 7.25% Series B Senior Notes due
October 28, 2007 in the aggregate principal amount of $50,000,000 and (b) the
guarantee by the Guarantors of the obligations of the Company in respect of the
Note Purchase Agreements and the Notes. The capitalized terms used herein and
not defined herein have the meanings specified in the Note Purchase Agreements.

I am General Counsel to each of the Obligors and have
represented them in connection with the transactions contemplated by the Note
Purchase Agreements. This opinion is being delivered pursuant to Section 4.4(a)
of the Note Purchase Agreements. In acting as General Counsel to the Obligors, I
have examined:

(a) the Note Purchase Agreements;

    (b) the Company's 7.09% Series A Senior Notes due October
    28, 2004, dated the date hereof, in the form of Exhibit 1A to the Note
    Purchase Agreements and registered in the names, in the principal amounts
    and with the registration numbers set forth on Schedule A to the Note
    Purchase Agreements (the "Series A Notes");

    (c) the Company's 7.25% Series B Senior Notes due October
    28, 2007, dated the date hereof, in the form of Exhibit 1B to the Note
    Purchase Agreements and registered in the names, in the principal amounts
    and with the registration numbers set forth on Schedule A to the Note
    Purchase Agreements (together with the Series A Notes, the "Notes");

    (d) the certificate or articles of incorporation and
    bylaws of each Obligor, as in effect on the date hereof;

    (e) a good standing certificate from the state of
    incorporation of each Obligor, and foreign good standing certificates for
    each of such corporations from each of the states set forth on Annex 2
    hereto;

    (f) one or more letters, dated the date hereof, to Hebb
    & Gitlin, the Obligors, Orrick, Herrington & Sutcliffe LLP and me
    from SBC Warburg Dillon Read, Inc. and NationsBanc Capital Markets, Inc.,
    regarding the manner of the offering of the Notes (collectively, the
    "Offeree Letter"); and

    (g) originals, or copies certified or otherwise
    identified to my satisfaction, of such other documents, records, instruments
    and certificates of public officials or officers of the Obligors as I have
    deemed necessary or appropriate to enable me to render this opinion.

  

In rendering my opinion, I have relied, to the extent I deem
necessary and proper, on:

(a) warranties and representations as to certain factual
    matters contained in the Note Purchase Agreements; and

  

(b) the Offeree Letter.

  

I have no actual personal knowledge of any inaccuracies in
any of the facts contained in the documents listed in item (a) or item (b).

The opinions which follow are subject to the following
assumptions, limitations and qualifications:

(a) I have assumed the genuineness of all signatures,
    other than signatures of the Obligors, the authenticity of all documents
    submitted to me as originals, and the conformity with the original documents
    of all documents submitted to me as reproduced copies, and the authenticity
    of all such latter documents.

    (b) I have assumed (to the extent relevant to the
    opinions expressed herein) the organization, existence, good standing and
    capacity of all persons and entities other than the Obligors, compliance by
    such persons and entities other than the Obligors with the California
    Franchise Tax Law, to the extent applicable, and that such persons and
    entities, other than the Obligors, have the right, power and authority to
    execute and deliver the Note Purchase Agreements and to perform their
    respective obligations thereunder.

    (c) I have assumed (to the extent relevant to the
    opinions expressed herein) that the Purchasers' obligations under the Note
    Purchase Agreements are within the powers of the Purchasers and that the
    Note Purchase Agreements have (if and to the extent required) been duly
    executed and validly delivered by the Purchasers.

    (d) As to various questions of fact material to this
    opinion, I have made such factual inquiries of the Obligors, and have
    examined such other documents and made such examinations of applicable laws,
    as I have deemed necessary for purposes of the opinions expressed herein.
    However, where I state that a matter is to the best of my knowledge, I have,
    to the extent that such matter is not known to my personal knowledge, and,
    after reasonable investigation on my part, relied upon the written
    statements of the Obligors and the officers of the Obligors (as the case may
    be), with no inquiry as to the facts other than as necessary to establish
    that such reliance was reasonable on my part. In all such instances of
    reliance by me, I have no reason to believe that the factual matters assumed
    by me are not true and correct.

  

My opinion is based upon the corporation laws of the State of
California, the corporation laws of the State of Wisconsin, the corporation laws
of the State of Delaware and the internal laws of the State of California and
the United States of America.

Based on the foregoing, I am of the following opinions:

1. The Company is a corporation, duly incorporated and
validly existing under the laws of the State of Delaware.

2. Each of the Guarantors is a corporation, duly incorporated
and validly existing under the laws of its jurisdiction of incorporation.

3. Except as disclosed in Schedule 5.4 to the Note Purchase
Agreements, each of the Obligors 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.

4. There are no actions, suits or proceedings pending or
threatened against or affecting any Obligor or any property of any Obligor 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.

5. No Obligor is in default under any order, judgment, decree
or ruling of any court, arbitrator or Governmental Authority or under any term
of any agreement or instrument to which it is a party or by which it is bound,
or is in violation of any applicable law, ordinance, rule or regulation of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

6. The Company has the requisite corporate power and
authority to execute and deliver the Note Purchase Agreements, to issue and sell
the Notes, and to perform its obligations set forth in each of the Note Purchase
Agreements and the Notes.

7. Each of the Guarantors has the requisite corporate power
and authority to execute and deliver the Note Purchase Agreements and to perform
its obligations set forth therein (including, without limitation, its
obligations set forth in the Guarantee contained in Section 23 of the Note
Purchase Agreements).

8. Each of the Note Purchase Agreements and the Notes has
been duly authorized by all necessary corporate action on the part of the
Company (no action of stockholders of the Company being required) and has been
executed and delivered by a duly authorized officer of the Company.

9. The Note Purchase Agreements (including, without
limitation, the Guarantees contained in Section 23 of the Note Purchase
Agreements) have been duly authorized by all necessary corporate action on the
part of each of the Guarantors and have been executed and delivered by a duly
authorized officer of each of the Guarantors.

10. The execution and delivery of the Note Purchase
Agreements by the Company, the execution, issuance, sale and delivery of the
Notes by the Company and the performance by the Company of its obligations
thereunder do not conflict with, constitute a violation of, result in a breach
of any provision of, constitute a default under, or result in the creation or
imposition of any Lien or encumbrance upon any of its properties pursuant to the
certificate of incorporation or bylaws of the Company, any applicable statute,
rule or regulation of the State of California, the State of Delaware or the
United States of America to which the Company is subject or, to the best of my
knowledge after due inquiry, any agreement or instrument material to the Company
to which the Company is a party or by which its property may be bound. No
opinion is expressed as to any fraudulent conveyance or antifraud laws.

11. The execution and delivery of the Note Purchase
Agreements by each of the Guarantors and the performance by each of the
Guarantors of its obligations thereunder do not conflict with, constitute a
violation of, result in a breach of any provision of, constitute a default
under, or result in the creation or imposition of any Lien or encumbrance upon
any of its properties pursuant to the certificate or articles of incorporation
or bylaws of such Guarantor, any applicable statute, rule or regulation of the
State of California, the State of Delaware, the State of Wisconsin or the United
States of America to which such Guarantor is subject or, to the best of my
knowledge after due inquiry, any agreement or instrument material to such
Guarantor to which any such Guarantor is a party or by which its property may be
bound. No opinion is expressed as to any fraudulent conveyance or antifraud
laws.

12. No consents, approvals or authorizations of Governmental
Authorities required under California law or Delaware corporation law are
required on the part of the Company in connection with the execution and
delivery of the Note Purchase Agreements and the Notes.

13. No consents, approvals or authorizations of Governmental
Authorities required under California law, Wisconsin corporation law or Delaware
corporation law, as the case may be, are required on the part of any of the
Guarantors in connection with the execution and delivery of the Note Purchase
Agreements.

14. No Obligor

(a) is an "investment company" or an
    "affiliated person" of an "investment company" or a
    company "controlled" by an "investment company" within
    the meaning of the Investment Company Act of 1940, as amended, or

    (b) is a "holding company" or an
    "affiliate" of a "holding company," or a
    "subsidiary company" of a "holding company," within the
    meaning of the Public Utility Holding Company Act of 1935, as amended, or of
    a "public utility," within the meaning of the Federal Power Act,
    as amended.

  

15. Under existing law, the registration of the Notes under
the "blue sky" laws of the State of California is not required in
connection with the offering, issuance, sale and delivery of the Notes by the
Company under the circumstances contemplated by the Note Purchase Agreements.

16. If the Note Purchase Agreements and the Notes were
governed by the laws of the State of California, they would constitute legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms and the Note Purchase Agreements would constitute a
legal, valid and binding obligation of each Guarantor enforceable against each
such Guarantor in accordance with their terms.

Each of the opinions set forth above is subject to the
following qualifications, assumptions, limitations and exceptions:

1. Any opinion contained herein with respect to the
    enforceability of the Note Purchase Agreements and the Notes is qualified to
    the extent that:

    (a) the enforceability of the Note Purchase
        Agreements and the Notes is subject to the effect of general principles
        of equity, including, without limitation, concepts of materiality,
        reasonableness, good faith and fair dealing and the possible
        unavailability of specific performance or injunctive relief regardless
        of whether considered in a proceeding in equity or at law;

        (b) the enforceability of certain terms provided in
        the Note Purchase Agreements and the Notes may be limited by applicable
        bankruptcy, administration, reorganization, arrangement, insolvency,
        fraudulent conveyance, moratorium or similar laws affecting the
        enforcement of creditors' rights generally as at the time in effect; and

        (c) certain rights, remedies and waivers contained in
        the Note Purchase Agreements and the Notes may be limited or rendered
        ineffective by applicable California laws or judicial decisions
        governing such provisions, but such laws or judicial decisions do not
        render the Note Purchase Agreements or the Notes invalid or
        unenforceable as a whole.

      
    
    2. I express no opinion as to:

    (a) under certain circumstances, provisions to the
        effect that rights or remedies are not exclusive, that every right or
        remedy is cumulative and may be exercised in addition to or with any
        other right or remedy, that the election or some particular remedy or
        remedies does not preclude recourse to one or another remedy or that
        failure to exercise or delay in exercising rights or remedies will not
        operate as a waiver of any such right or remedy;

        (b) provisions prohibiting waivers of any terms or
        provisions of the Note Purchase Agreements or the Notes other than in
        writing, or prohibiting oral modifications thereof or modification by
        course of dealing;

        (c) the enforceability of the Note Purchase
        Agreements against any party other than the Obligors;

        (d) provisions purporting to waive statutory rights,
        including the right to receive notice or to be allowed to cure,
        reinstate or redeem in the event of default; and

        (e) unenforceability under certain circumstances of
        provisions indemnifying a party against liability for its wrongful or
        negligent acts or where indemnification is contrary to public policy or
        prohibited by law.

      
    
    3. The enforceability of provisions imposing penalties,
    forfeitures, late payment charges or an increase in interest rate upon
    delinquency in payment or the occurrence of a default may be limited.

    4. My opinion is subject to the effect of judicial
    decisions which may permit the introduction of extrinsic evidence to
    interpret the terms of written contracts.

    5. I advise you of California statutory provisions and
    case law to the effect that, in certain circumstances, a surety may be
    exonerated if the creditor materially alters the original obligation of the
    principal without the consent of the guarantor, elects remedies for default
    that impair the subrogation rights of the guarantor against the principal,
    or otherwise takes any action without notifying the guarantor that
    materially prejudices the guarantor. However, there is also authority to the
    effect that a guarantor may validly waive such rights if the waivers are
    expressly set forth in the guaranty. While I believe that a California court
    should hold that the explicit language contained in the Note Purchase
    Agreement waiving such rights is enforceable, I express no opinion with
    respect to the effect of: (a) any modification to or amendment of the
    obligations of the principal that materially increases such obligations; (b)
    any election of remedies by the holders of Notes following the occurrence of
    any Event of Default under the Note Purchase Agreements; or (c) any other
    action by the holders of the Notes that materially prejudices the guarantor,
    if, in any such instance, such modification, election or action occurs
    without notice to the guarantor and without granting to the guarantor an
    opportunity to cure any default by the principal.

  

I acknowledge that this opinion is being issued at the
request of the Obligors pursuant to Section 4.4(a) of the Note Purchase
Agreements and I agree that the parties listed on Annex 1 hereto may rely hereon
in connection with the consummation of the transactions contemplated by the Note
Purchase Agreements. Hebb & Gitlin and Orrick, Herrington & Sutcliffe
LLP, special counsel to the Purchasers, may rely on this opinion for the sole
purpose of rendering their opinions to be rendered pursuant to Section 4.4(b)
and Section 4.4(c), respectively, of the Note Purchase Agreements.

This opinion speaks only as of the date of its issue and may
not be relied upon to the extent subsequent legislative actions or judicial
decisions cause changes in the law which would affect the validity of the
opinion if given at that time. This opinion is being issued and delivered solely
for the and benefit of the addressees hereof and transferees of the Notes and
may not be relied upon by any other party. I assume no responsibility to revise
or amend the opinion in the event of such actions or decisions. I am qualified
to practice law in the State of California and do not purport to be an expert
on, or to express any opinion herein concerning, any law other than the internal
laws of the State of California, the general corporate laws of the State of
Delaware, the general corporate laws of the State of Wisconsin and the federal
law of the United State of America.

  
    
      
        
          
Very truly yours,

          

        

      

    

  

ANNEX 1

Addressees

United Services Automobile Association

c/o Insurance Company Portfolios

USAA IMCO

USAA Building, BK D04N

9800 Fredericksburg Road

San Antonio, TX 78288

Provident Mutual Life Insurance Company

1205 Westlakes Drive

Berwyn, PA 19312-2405

Provident Mutual Life and Annuity

Company of America

1205 Westlakes Drive

Berwyn, PA 19312-2405

The Canada Life Assurance Company

330 University Avenue

Toronto, Ontario

Canada M5G 1R8

Canada Life Insurance Company of America

330 University Avenue

Toronto, Ontario

Canada M5G 1R8

Morgan Guaranty Trust Company of New

York as Trustee of a Commingled Pension Trust

c/o J.P. Morgan Investment Management Inc.

522 Fifth Avenue

New York, NY 10036

J.P. Morgan Investment Management Inc.

as Investment Manager

c/o Chase Manhattan Bank N.A.

3 Chase MetroTech Center

Brooklyn, NY 11245

Morgan Guaranty Trust Company of New York as

Investment Manager for an Institutional Investor

c/o State Street Bank and Trust Co.

One Heritage Drive

North Quincy, MA 02171

Teachers Insurance and Annuity Association of America

730 Third Avenue

New York, NY 10017

Transamerica Life Insurance and Annuity Company

c/o Mellon Securities Trust Co.

120 Broadway

New York, NY 10271

Transamerica Occidental Life Insurance Company

c/o Mellon Securities Trust Co.

120 Broadway

New York, NY 10271

The Guardian Life Insurance Company

of America

201 Park Avenue South

New York, NY 10003

Fort Dearborn Life Insurance Company

c/o Guardian Asset Management Corp.

201 Park Avenue South - 8B

New York, NY 10003

The Travelers Insurance Company

One Tower Square

Hartford, CT 06283-2030

The Travelers Life and Annuity Company

One Tower Square

Hartford, CT 06283-2030

Orrick, Herrington & Sutcliffe LLP

666 Fifth Avenue

New York, NY 10103

Sunrise Medical, Inc.

2382 Faraday Avenue, Suite 200

Carlsbad, CA 92008

Hebb & Gitlin

One State Street

Hartford, CT 06103

 

ANNEX 2

Foreign Good Standing Certificates

Corporation                     
State

Sunrise Medical, Inc.        
California

Sunmed Finance Inc.         California

EXHIBIT 4.4(b)

[Form of Closing Opinion of Special Counsel for the Company]

[Letterhead of Company's Special Counsel]

[Closing Date]

To each of the Persons

listed on Annex 1 hereto

Re: Sunrise Medical, Inc.

Ladies and Gentlemen:

Reference is made to the separate Note Purchase Agreements,
each dated as of October 1, 1997 (collectively, the "Note Purchase
Agreements"), among Sunrise Medical, Inc., a Delaware corporation
(the "Company"), Sunmed Finance Inc., a Delaware
corporation (together with its permitted successors, "Sunmed"),
Sunrise Marin Holdings Inc., a California corporation (together with its
permitted successors, "SMH"), Sunrise Medical CCG Inc.,
a Wisconsin corporation (together with its permitted successors, "CCG"),
Sunrise Medical HHG Inc., a California corporation (together with its permitted
successors, "HHG" and, together with Sunmed, SMH and
CCG, referred to herein individually as a "Guarantor"
and collectively as the "Guarantors"; the Company and
the Guarantors are referred to herein individually as an "Obligor"
and collectively as the "Obligors"), and each of the
purchasers listed on Schedule A to the Note Purchase Agreements (the "Purchasers"),
which provide, among other things, for (a) the issuance and sale by the Company
of (i) its 7.09% Series A Senior Notes due October 28, 2004 in the aggregate
principal amount of $50,000,000 and (ii) its 7.25% Series B Senior Notes due
October 28, 2007 in the aggregate principal amount of $50,000,000 and (b) the
guarantee by the Guarantors of the obligations of the Company in respect of the
Note Purchase Agreements and the Notes. The capitalized terms used herein and
not defined herein have the meanings specified in the Note Purchase Agreements.

We have acted as special New York counsel to the Obligors in
connection with the transactions contemplated by the Note Purchase Agreements.
This opinion is being delivered pursuant to Section 4.4(b) of the Note Purchase
Agreements.

In acting as such counsel, we have examined:

(a) the Note Purchase Agreements;

    (b) the Company's 7.09% Series A Senior Notes due October
    28, 2004, dated the date hereof, in the form of Exhibit 1A to the Note
    Purchase Agreements and registered in the names, in the principal amounts
    and with the registration numbers set forth on Schedule A to the Note
    Purchase Agreements (the "Series A Notes");

    (c) the Company's 7.25% Series B Senior Notes due October
    28, 2007, dated the date hereof, in the form of Exhibit 1B to the Note
    Purchase Agreements and registered in the names, in the principal amounts
    and with the registration numbers set forth on Schedule A to the Note
    Purchase Agreements (together with the Series A Notes, the "Notes");

    (d) the documents executed and delivered by the Obligors
    in connection with the transactions contemplated by the Note Purchase
    Agreements, including, without limitation, the certificates of certain
    officers of the Obligors delivered pursuant to Section 4.3 of the Note
    Purchase Agreements and the documents attached thereto;

    (e) one or more letters, dated the date hereof, to Hebb
    & Gitlin, Steven Jaye, the Obligors and Orrick, Herrington &
    Sutcliffe LLP from SBC Warburg Dillon Read, Inc. and NationsBanc Capital
    Markets, Inc., regarding the manner of the offering of the Notes
    (collectively, the "Offeree Letter");

    (f) the opinion of Steven Jaye, general counsel for the
    Obligors, dated the date hereof, delivered to you pursuant to Section 4.4(a)
    of the Note Purchase Agreements; and

    (g) originals, or copies certified or otherwise
    identified to our satisfaction, of such other documents, records,
    instruments and certificates of public officials as we have deemed necessary
    or appropriate to enable us to render this opinion.

  

In rendering our opinion, we have assumed the genuineness of
all signatures and documents submitted to us as originals, that all copies
submitted to us conform to the originals, the legal capacity of all natural
Persons, and that each Person executing documents had the power to enter into
and perform its obligations under such documents, and that such documents have
been duly authorized, executed and delivered by, and are binding upon and
enforceable against, such Persons.

In rendering our opinion, we have relied, to the extent we
deem necessary and proper, on:

(A) warranties and representations as to certain factual
    matters contained in the Note Purchase Agreements;

  

(B) the Offeree Letter; and

    (C) such opinion of Steven Jaye with respect to all
    matters (i) governed by the laws of the California and (ii) concerning the
    due incorporation and corporate power and authority of, and the
    authorization, execution and delivery of documents by, the Company and the
    Guarantors; based on such investigation as we have deemed appropriate, such
    opinion is satisfactory in form and scope to us, it being understood in
    connection with the foregoing statement that we have not reviewed, nor do we
    hold ourselves out as having knowledge of, the laws of the California, and
    that such investigation into the matters covered by such opinion was not
    sufficient to enable us independently to render opinions on such matters;
    nothing, however, has come to our attention that has caused us to question
    the legal conclusions expressed in such opinion and in our opinion the
    Purchasers and we are justified in relying thereon.

  

Based on the foregoing, we are of the following opinions:

1. Each of the Note Purchase Agreements and the Notes
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

2. The Note Purchase Agreements constitute a legal, valid and
binding obligation of each Guarantor, enforceable against such Guarantor in
accordance with their terms.

3. No consents, approvals or authorizations of Governmental
Authorities in respect of the Company or the Guarantors are required under the
laws of the United States of America or the State of New York in connection with
the execution and delivery by the Company of each of the Note Purchase
Agreements and the Notes, the execution and delivery by the Guarantors of the
Note Purchase Agreements, and the offer, issuance, sale and delivery by the
Company of the Notes. Our opinion in this paragraph 3 is based solely on a
review of generally applicable laws of the United States of America and New
York, and not on any search with respect to, or review of, any orders, decrees,
judgments or other determinations specifically applicable to the Company or any
Guarantor.

4. The execution and delivery of the Note Purchase Agreements
by the Company, the execution, issuance, sale and delivery of the Notes by the
Company and the performance by the Company of its obligations thereunder do not
conflict with, constitute a violation of, result in a breach of any provision
of, constitute a default under, or result in the creation or imposition of any
Lien or encumbrance upon any of its properties pursuant to the certificate of
incorporation or bylaws of the Company.

5. The execution and delivery of the Note Purchase Agreements
by Sunmed and the performance by Sunmed of its obligations thereunder do not
conflict with, constitute a violation of, result in a breach of any provision
of, constitute a default under, or result in the creation or imposition of any
Lien or encumbrance upon any of its properties pursuant to the certificate of
incorporation or bylaws of Sunmed.

6. Under existing law, neither the registration of the Notes
or the Guarantees under the Securities Act or the "blue sky" laws of
the State of New York, nor the qualification of an indenture with respect
thereto under the Trust Indenture Act of 1939, as amended, is required in
connection with the offering, issuance, sale and delivery of the Notes by the
Company or the Guarantees by the Guarantors on the date hereof under the
circumstances contemplated by the Note Purchase Agreements.

7. Neither the issuance of the Notes nor the intended use of
the proceeds thereof (as set forth in Section 5.14 of the Note Purchase
Agreements) will violate Regulations G, T, X or U of the Federal Reserve Board.

All opinions contained herein with respect to the
enforceability of the Note Purchase Agreements and the Notes are qualified to
the extent that:

(a) the availability of equitable remedies, including,
    without limitation, specific enforcement and injunctive relief, is subject
    to the discretion of the court before which any proceedings therefor may be
    brought; and

    (b) the enforceability of certain terms provided in the
    Note Purchase Agreements and the Notes may be limited by applicable
    bankruptcy, administration, reorganization, arrangement, insolvency,
    fraudulent conveyance, moratorium or similar laws affecting the enforcement
    of creditors' rights generally as at the time in effect.

  

We express no opinion as to the law of any jurisdiction other
than the law of the State of New York and the federal law of the United States
of America.

Future holders of the Notes may rely on this opinion as if it
were addressed to them. This opinion speaks only as of the date hereof.

  
    
      
        
Very truly yours,

        

      

    

  

 

 

ANNEX 1

Addressees

United Services Automobile Association

c/o Insurance Company Portfolios

USAA IMCO

USAA Building, BK D04N

9800 Fredericksburg Road

San Antonio, TX 78288

Provident Mutual Life Insurance Company

1205 Westlakes Drive

Berwyn, PA 19312-2405

Provident Mutual Life and Annuity

Company of America

1205 Westlakes Drive

Berwyn, PA 19312-2405

The Canada Life Assurance Company

330 University Avenue

Toronto, Ontario

Canada M5G 1R8

Canada Life Insurance Company of America

330 University Avenue

Toronto, Ontario

Canada M5G 1R8

Morgan Guaranty Trust Company of New

York as Trustee of a Commingled Pension Trust

c/o J.P. Morgan Investment Management Inc.

522 Fifth Avenue

New York, NY 10036

J.P. Morgan Investment Management Inc.

as Investment Manager

c/o Chase Manhattan Bank N.A.

3 Chase MetroTech Center

Brooklyn, NY 11245

Morgan Guaranty Trust Company of New York as

Investment Manager for an Institutional Investor

c/o State Street Bank and Trust Co.

One Heritage Drive

North Quincy, MA 02171

Teachers Insurance and Annuity Association of America

730 Third Avenue

New York, NY 10017

Transamerica Life Insurance and Annuity Company

c/o Mellon Securities Trust Co.

120 Broadway

New York, NY 10271

Transamerica Occidental Life Insurance Company

c/o Mellon Securities Trust Co.

120 Broadway

New York, NY 10271

The Guardian Life Insurance Company

of America

201 Park Avenue South

New York, NY 10003

Fort Dearborn Life Insurance Company

c/o Guardian Asset Management Corp.

201 Park Avenue South - 8B

New York, NY 10003

The Travelers Insurance Company

One Tower Square

Hartford, CT 06283-2030

The Travelers Life and Annuity Company

One Tower Square

Hartford, CT 06283-2030

Orrick, Herrington & Sutcliffe LLP

666 Fifth Avenue

New York, NY 10103

Sunrise Medical, Inc.

2382 Faraday Avenue, Suite 200

Carlsbad, CA 92008

EXHIBIT 4.4(c)

          
[Form of Opinion of Special Counsel for the Purchasers]

              [Letterhead of Purchaser's Special Counsel]

                                  [Closing Date]

To the Purchasers

Listed on Schedule A to the

Note Purchase Agreements

Referred to Below
          

 

Re:     Sunrise Medical, Inc.

$50,000,000 in Aggregate Principal Amount of 7.09% Series A Senior

Notes due October 28, 2004 and $50,000,000 in Aggregate Principal

Amount
      of 7.25% Series B Senior Notes due October 28, 2007

Ladies and Gentlemen:

We have acted as your special counsel in connection with your purchase today
of $50,000,000 in aggregate principal amount of 7.09% Series A Senior Notes due
October 28, 2004 and $50,000,000 in aggregate principal amount of 7.25% Series B
Senior Notes are due October 28, 2007 (collectively, the "Notes")
issued by Sunrise Medical, Inc., a Delaware corporation (the
"Company"), pursuant to the Note Purchase Agreements dated as of
October 1,1997 (collectively, the "Agreements") between the Company,
Sunmed Finance Inc., a Delaware corporation ("Sunmed"), Sunrise Marin
Holdings Inc., a California corporation, Sunrise Medical CCG Inc., A Wisconsin
corporation, and Sunrise Medical HHG Inc., a California corporation
(collectively, the "Guarantors"; the Guarantors and the Company, each
an "Obligor" and collectively the "Obligors") and each of
the purchasers listed on Schedule A thereto (the "Purchasers"). All
capitalized terms used herein without definition have the meanings assigned
thereto, directly or by cross-reference, in the Agreements.

In this regard, we have examined executed counterparts of the Agreements. We
also have examined the executed Notes being issued and delivered on the date
hereof. In addition, we have examined originals (or copies certified or
otherwise identified to our satisfaction) of such other instruments,
certificates, records and documents as we have deemed necessary or appropriate
for the purpose of rendering this opinion.

Based upon the foregoing and subject to the qualifications and exclusions set
forth below, we are of the opinion that:

1. Each of the Agreements constitutes the legal, valid and binding obligation
of each Obligor, enforceable against each Obligor in accordance with its terms.

2. The Notes constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.

3. Neither the execution, delivery or performance by the Obligors of the
Agreements, nor the execution, delivery or performance of the Notes by the
Company, will violate the provisions of the certificate of incorporation or the
by-laws, as presently in effect, of the Company or Sunmed.

4. It is not necessary, in connection with the issuance and delivery of the
Notes to you under the circumstances contemplated by the Agreements, to register
the Notes under the Securities Act of 1933, as amended, or to qualify an
indenture with respect thereto under the Trust Indenture Act of 1939, as
amended.

We have reviewed the opinion of Hebb & Gitlin, special counsel to the
Company, dated the Closing Date and delivered to you pursuant to Section 4.4(b)
of the Agreements, and Steven Jaye, Esq., General Counsel of the Company, dated
the Closing Date and delivered to you pursuant to Section 4.4(a) of the
Agreements. Such opinions are satisfactory in form and scope to us and we
believe that you are justified in relying thereon.

With your permission we have assumed the following: (a) the authenticity of
original documents and genuineness of all signatures; (b) the conformity to the
originals of all documents submitted to us as copies; (c) the truth, accuracy
and completeness of the information, representations and warranties contained in
the records, documents, instruments and certificates we have reviewed; (d) the
due authorization, execution and delivery on behalf of the respective parties
thereto of the Agreements and the issuance of the Notes and, except as
specifically covered in the opinions set forth above, the legal, valid and
binding effect thereof on such parties; and (e) the absence of any evidence
extrinsic to the provisions of the written agreements between the parties that
the parties intended a meaning contrary to that expressed by those provisions.

Our opinion that any document is valid, binding or enforceable in accordance
with its terms is qualified as to:

(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance or transfer, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights generally;

(b) the unenforceability under certain circumstances of provisions imposing
penalties; and

(c) general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, and the possible
unavailability of specific performance or injunctive relief, regardless of
whether enforceability is considered in the proceeding in equity or at law.

We are not opining on law other than the law of the State of New York and the
federal law of the United States of America.

This opinion letter is solely for your benefit in connection with the
transaction referred to in the first paragraph hereof and may not be relied
upon, or used by, circulated, quoted or referred to, nor copies hereof delivered
to, any other person without our prior written approval, except that copies of
this opinion letter may be provided to an insurance commissioner of any state or
the National Association of Insurance Commissioners or any successor thereto as
required by law or applicable regulation or a prospective or future transferee
of the Notes and any transferee of the Notes may rely on this opinion letter. We
disclaim any obligation to update this opinion letter for events occurring or
coming to our attention after the date hereof.

                        
                          
                            
                              
                                

                        Very truly yours,

                                

                              

                            

                          

                        

                         

                                             

  
                      EXHIBIT 10.7

 

GUARANTEE JOINDER AGREEMENT

 

[To be addressed to all of the holders of Notes]

    
Date: ____________

  

Reference is made to

  

(a) the separate Note Purchase Agreements, each dated as
    of October 1, 1997 (as amended from time to time, collectively, the "Note
    Purchase Agreements"), among Sunrise Medical, Inc., a Delaware
    corporation (the "Company"), Sunmed Finance Inc., a
    Delaware corporation ("Sunmed"), Sunrise Marin
    Holdings Inc., a California corporation ("SMH"),
    Sunrise Medical CCG Inc., a Wisconsin corporation ("CCG"),
    Sunrise Medical HHG Inc., a California corporation ("HHG"
    and, together with Sunmed, SMH and CCG, referred to herein individually as
    an "Original Guarantor" and collectively as the "Original
    Guarantors") and each of the purchasers listed on Annex 1
    attached thereto (the "Purchasers"), pursuant to
    which the Company sold, and the Purchasers bought, (i) the Company's 7.09%
    Series A Senior Notes due October 28, 2004, in the original aggregate
    principal amount of $50,000,000 (as amended, restated or otherwise modified
    from time to time, collectively, the "Series A Notes")
    and (ii) the Company's 7.25% Series B Senior Notes due October 28, 2007, in
    the original aggregate principal amount of $50,000,000 (as amended, restated
    or otherwise modified from time to time, collectively, the "Series
    B Notes"; the Series A Notes and Series B Notes are referred
    to, collectively, herein as the "Notes"); and

(b) the joinder agreements identified on Annex 1 hereto,
    pursuant to which the persons identified on said Annex 1, prior to the
    execution and delivery of this Joinder Agreement, joined and were made joint
    and several Guarantors under the Note Purchase Agreements (such persons and
    the Original Guarantors are herein referred to, collectively, as the "Guarantors").
  

Capitalized terms used herein and not otherwise defined
herein have the meanings specified in the Note Purchase Agreements.

1. JOINDER OF
ADDITIONAL DOMESTIC SUBSIDIARY GUARANTOR.

In accordance with the terms of Section 10.7 of the Note
Purchase Agreements, ________, a ________ corporation (the "Additional
Domestic Subsidiary Guarantor"), by the execution and delivery of
this Joinder Agreement, does hereby agree to become, and does hereby become, a
"Guarantor" under and as defined in the Note Purchase Agreements.
Without limiting the foregoing or any of the terms and provisions of the Note
Purchase Agreements, the Additional Domestic Subsidiary Guarantor, by the
execution and delivery of this Joinder Agreement, does hereby agree to become,
and does hereby become, jointly and severally liable with the Guarantors for (a)
the Guaranteed Obligations and (b) for the due and punctual performance and
observance of all the covenants in the Notes and the Note Purchase Agreements to
be performed or observed by the Company, all as more particularly provided for
in Section 23 of the Note Purchase Agreements.

As provided in Section 10.7 of the Note Purchase Agreements,
the Note Purchase Agreements are hereby, without any further action, amended to
add the Additional Domestic Subsidiary Guarantor as a "Guarantor" and
signatory to the Note Purchase Agreements.

2. REPRESENTATIONS
    AND WARRANTIES OF THE ADDITIONAL DOMESTIC SUBSIDIARY GUARANTOR.
 

  
  The Additional Domestic Subsidiary Guarantor hereby makes
  and restates, as of the date hereof and only as to itself in its capacity as a
  Guarantor under the Note Purchase Agreements, each of the representations and
  warranties set forth in Section 5 to the Note Purchase Agreements that are
  applicable to a Guarantor, subject only to the exceptions in respect thereof
  set forth on Annex 2 hereto.

  3. MISCELLANEOUS

3.1 Effective Date.

This Joinder Agreement shall become effective on the date on
which all of the conditions set forth in Section 10.7(a) with respect to such
Additional Domestic Subsidiary Obligor are satisfied, provided that,
unless the Required Holders shall have otherwise informed the Company, the
effective date of this Joinder Agreement shall be the date first stated above.

3.2 Expenses.

Without limiting the generality of Section 16 of the Note
Purchase Agreements, the Additional Domestic Subsidiary Guarantor agrees that it
will pay, on the date this Joinder Agreement becomes effective, the statement
for the reasonable fees and the disbursements of a single special counsel of the
holders of Notes presented on or about such date.

3.3 Section Headings, etc.

The titles of the Sections appear as a matter of convenience
only, do not constitute a part hereof and shall not affect the construction
hereof. The words "herein," "hereof," "hereunder"
and "hereto" refer to this Joinder Agreement as a whole and not to any
particular Section or other subdivision.

3.4 Governing Law.

This Joinder 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.

3.5 Successors and Assigns.

This Joinder Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Additional Domestic Subsidiary
Guarantor.

IN WITNESS WHEREOF, the Additional Domestic Subsidiary
Guarantor has caused this Joinder Agreement to be executed on its behalf by a
duly authorized officer or agent thereof as of the date first above written.

  
    
      

                        Very truly yours,

                        
                        [ADDITIONAL SUBSIDIARY OBLIGOR]

                        

                        By________________________________

                        Name:

                        Title:

      

    

  

Annex 1

Annex 2

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