Exhibit A

a. "Board of Directors" means the Board of Directors of Allied Healthcare Products, Inc., a Delaware corporation.

b. "Committee" means the Compensation Committee of Company.

C. "Custodian" means the Custodian designated by the Board of Directors as provided in Section 10.1.

d. "Employee" means a person who is and continues to be employed by a Participating Corporation for not less than thirty-five (35) hours per week, provided, however, that a person on an authorized leave of absence from the Participating Corporation, paid or non-paid, shall not cease to be an Employee nor be deemed to have terminated employment for purposes of the Plan. In computing hours of employment per week for the purpose of determining whether a person is an employee, there shall be included each hour for which a person is directly paid or entitled to payment by the Participating Corporation for the performance of duties and each hour for which a person is paid or entitled to payment by the Participating Corporation on account of a period of time during which no duties are performed, such as vacation, holiday or illness.

e. "Participant" means an eligible Employee who has indicated his acceptances of the provisions of the Plan and authorized an allotment out of his Regular Compensation in accordance with Section 4.1, and whose participation in the Plan has actually commenced.

f. "Participating Corporation" means the Company or any subsidiary of Company and, when required by the context, refers to the particular corporation, whether the Company or a subsidiary, by which a Participant is employed.

g. "Permanent and Total Disability" means inability to engage in a substantial, gainful activity in the employee of a Participating Corporation by reason of any medically determinable physical or mental impairment which can be expected to result in death or which is expected to last for a continuous period of not less than twelve (12) full months. The Committee's determination of Permanent and Total Disability shall be conclusive-

h. "Plan" means the Allied Healthcare Productions, Inc. Employee Stock Purchase Plan, as adopted August , 1992, and as amended from time to time.

i. "Regular Compensation" means the total compensation or remuneration received by or credited to a person, whether on a weekly or semi-monthly basis, for services as an Employee from a Participating Corporation, except any director's fees, living or other allowances, expenses paid or reimbursed, bonuses and contributions by the Participating Corporation to any retirement plan or any other benefit plan of the Participating Corporation now in effect or later established-

j. "Subsidiary" means a corporation, fifty (50%) percent or more of the voting stock of which is owned by the Company, directly or indirectly, whose participation in the Plan has been approved by the Board of Directors.

a. In whole percents of not less than 2% nor more than 10% of the Employee's then current Regular Compensation; or

b. A fixed dollar amount of the Employee's then current Regular Compensation, provided, however, that such allotment shall not exceed Ten Thousand Dollars ($10,000.00) for any Participant in any calendar year.

representative shall receive a certificate for the whole shares of stock which are credited to the Participant's account and an amount in cash equal to any uninvested allotments by and Contributions for the Participant's account. The Participant or his personal representative shall also receive, upon such settlement, cash in lieu of any fractional shares credited to the Participant's account, based upon the closing trade price for the Common Stock on the first Investment Date following the effective date of withdrawal at such prices reported on the NASDAQ NMS or such other system as may supersede it, and such fractional share shall be added to the shares to be credited among the accounts of the Participants on that Investment Date as provided in Section 6.7.

Participant's account. Each Participant, by use of such forms, may then direct the Custodian to vote the shares credited to his account. In the absence of such direction, the shares will not be voted.

class mail to Allied Healthcare Products, Inc., 1720 Sublette Avenue, St. Louis, Missouri 63110, Attention: Vice President, Human Resources, or to such other locations as may be specified by notice to the Participants. Any written directions, notices or other communications will be deemed to have been given when received at such location.

AGREEMENT

Between

HOSPITAL SYSTEMS, INC.

And

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS
LOCAL 2131

[LOGO OF INTERNATIONAL BROTHERHOOD [LOGO OF HOSPITAL
OF ELECTRICAL WORKERS] SYSTEMS, INC.]

May 1, 1998

to

April 30, 2001

FUNERAL LEAVE                    8
GRIEVANCE PROCEDURE             10
HEALTH AND WELFARE               8
HOLIDAYS                         6
HOURS OF WORK AND OVERTIME       4
JURY DUTY                        8
LEAVE OF ABSENCE                 9
LIFE INSURANCE                   9
MANAGEMENT
NO DISCRIMINATION               12
NO STRIKE - NO LOCKOUT          11
PENSION                          8
SAFETY                           9
SAVINGS CLAUSE                  12
SCHEDULE "B"                    l7
SCHEDULE "A"                    14
SENIORITY                        3
SHIFTS                           5
SIDE LETTER                     19
TERM OF AGREEMENT               12
TERMINATION                     10
TRAVEL                          10
UNION RECOGNITION AND"SECURITY   1
VACATIONS                        6
WAGES                            5

1998 - 2001 AGREEMENT

THIS AGREEMENT between tile HOSPITAL SYSTEMS, INC., whose names are affixed to the final sheet of this Agreement, hereinafter called the "Employer", and LOCAL UNION NO. 2131 of the' INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, hereinafter called the "Union".

WITNESSETH

WHEREAS, a majority of the employees of the Employer in the collective bargaining unit to be covered by the terms of this Agreement have designated the Union as the collective bargaining agent, the Employer herewith recognizes the Union as the sole and exclusive collective bargaining representative for all employees in the unit in all matters pertaining to wages, hours and working conditions, and

WHEREAS, the parties hereto desire to establish a standard of conditions and procedure under which employees shall work for the Employer during the term of this Agreement and desire to regulate the mutual employment relations between the parties for the purpose of securing harmonious cooperation and settling of all disputes by peaceful means that may arise in the employee/Employer relationship.

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

SECTION 1. MANAGEMENT

The parties hereto have a mutual interest in securing efficient business operation and desire to cooperate to that end. It is the duty and right of the Employer to manage the business and direct the working forces, subject to the conditions herein set forth. This includes, but is not limited to, the right to hire, reassign, promote, demote, layoff and discharge, but each employee covered by this Agreement shall possess the right of appeal through the grievance procedure as provided by the terms of this Agreement.

SECTION 2. UNION RECOGNITION AND SECURITY

The Employer recognizes the Union as the sole and exclusive bargaining agency for all employees in the unit consisting of classifications as defined in Schedule "A", attached hereto and made a part of this Agreement. All employees shall become members of this bargaining unit upon completion of their probation and remain members of the union, as a condition of their employment, during the life of this Agreement, and the Union shall notify the Employer promptly in writing of the failure of any such employee to become or remain a member of the Union; provided, however, that the Union shall not request the Employer to discriminate against any employee for non-membership in the Union, if such membership is not available to the employee on the same terms and conditions generally applicable to other members, or if membership is denied or terminated for reasons other than the failure of the employee to tender the periodic dues or initiation fee uniformly required by the Union as a condition of acquiring or maintaining membership.

For the duration of this Agreement, the Employer shall deduct from the first pay period of each month, Union dues and remit same to the Local Union within ten
(10) days, upon receipt of a Dues Authorization Card signed by the employee. Initiation fees shall be deducted within the first two (2) paychecks after completion of the probationary period and upon receipt of an authorization card signed by the employee. This authorization shall continue until revoked by the employee giving written notice to the Employer, by registered mail postmarked or

received by the Employer either (a) during the period from the first June 24th to the first July 1st, both inclusive, after the effective date of this authorization, or (b) during the same period of each year thereafter, or (c) after the termination of the Agreement between the Employer and the Union.

Through tile representation of the Union, employees shall have the right to a hearing on any differences of opinion as to the competency of any employee to fill a new position or vacancy of promotion or demotion, or discipline administered, or layoffs, or discharges or of discrimination. Such hearings shall follow the established grievance procedure.

In the matter of suspension, demotion or discharge, if after hearing witnesses the charges are not sustained, the employee may have his record cleared of such charges and in case of loss of wages, may receive reimbursement of such loss. No discipline by temporary suspension shall be administered to any employee which shall permanently impair his seniority rights. The shop steward shall be notified in writing of any of the above action.

The Employer agrees that he will not sublet, assign or transfer any work in connection with electrical work to any other person, firm or corporation if such subletting, assigning or transfer will cause the loss of work opportunities to employees in the individual Employer's establishment covered by this Agreement. Any such subletting, assigning or transfer shall be allowable after a mutual determination has been made by the representatives of the parties that such action is not in conflict with the preceding sentence.

The business of the representatives of the Union, pertaining to this Agreement, is with the office of the Employer but he shall be permitted to enter the plant at any time the plant is operating after obtaining clearance from management, which shall not be unreasonably denied. It is understood that upon entering the plant, the representative of the Union will not interfere with the normal operations of the business.

The Employer will recognize shop stewards, selected in accord with the Union rules and regulations, as representatives of the employees in the respective groups or departments for which they are chosen. There shall be one shop steward for each twenty-five (25) members or fraction thereof in any one building. The Union will notify the Employer as to the identity of stewards and steward groups. Stewards shall be free to conduct their Union duties at any time within their regularly scheduled working hours and for one (1) hour before and after such working hours, within the Employer's grounds. They shall not leave their working station on Union business without the expressed permission of the section supervisor, which shall not be unreasonably denied.

The Employer and employees agree that duly chosen stewards shall not be restricted by-seniority during their term of office and that they shall be given opportunity for employment at any time that three (3) or more employees are working.

The Employer understands that the choice of, and removal from office, of stewards is a function of the Union. The Union will notify the Employer within forty-eight (48) hours of any change in steward status.

Union meetings shall not be held on the Employer's property or the Employer's time without the Employer's permission.

The Union shall hold the Employer harmless for any and all claims, demands, suits or other action that may arise out of this Section.

SECTION 3. SENIORITY

A.- New hires shall have a probationary period of sixty-five (65) worked days. During such probationary period, the employee may be discharged for any reason without recourse to the grievance procedure.

B. Seniority shall commence upon completion of the probationary period and shall be defined as total length of service with the Employer, credited from the date of hire.

With regard to layoffs and recalls, the principle of seniority shall govern and it is understood that no employee who has rendered long and faithful service shall be laid off as long as any work, which he can reasonably be expected to perform satisfactorily, is being performed by a person junior in seniority.

Additionally, shill preference will be by seniority insofar as the needs of the Employer will permit.

Overtime Monday through Friday will be by job continuation. Overtime on Saturdays, Sundays and Holidays will be by seniority provided the employee can properly perform file work required.

Promotions within the unit or to the first stage beyond the unit shall be based upon seniority, ability and qualifications. Ability and qualifications being sufficient, seniority shall prevail.

C. Job Posting When the Employer elects to fill on a permanent basis a vacancy in a classification above Line Assembler then notice of such vacancy shall be posted for a period of three (3) working days.

Employees desiring a promotion who meet the qualifications and have signed the posting shall be given consideration in accordance with the seniority provisions of this Agreement.

Employees who are promoted shall undergo an evaluation period of up to thirty
(30) worked days. should the employee fail to perform to the satisfaction of the Employer during this evaluation period then the employee will be returned to his former classification.

The foregoing shall not apply to the classification of Leadman.

D. Seniority shall be broken for:

1. Discharge for cause.
2. Resignation - A three (3) day unreported absence from work shall be considered a resignation.
3. Illness, accident or layoff in excess of six (6) consecutive months.
4. Failure to return to work from a leave of absence or vacation.
5. Failure to return to work when recalled within four (4) days of the mailing of a registered letter of a notice to report to work to the last known address.

E. Any employee of the Employer covered by this Agreement who is injured while on duty shall continue to accumulate seniority during his absence due to such injury and shall be reinstated upon recovery to his former position with full seniority rights, provided he is physically and mentally qualified to do the work, and provided that his job has not been abolished in the meantime or filled by an employee with greater seniority. If, by reason of the circumstances noted above, such employee cannot be reinstated to his old job, he will be returned to such job as is available and for which he is qualified by reason of fitness and ability, giving full consideration to his seniority, and if the new job is a lower-paid job, he shall be paid the highest rate of pay for that job classification. It is understood that when such a man returns to work, the regular rules of seniority will prevail for those men below him on the seniority list unless otherwise mutually agreed between the Union and the Employer.

SECTION 4. HOURS OF WORK AND OVERTIME

A. A maximum of ten (10) hours between 6:00 a.m. and 5:00 p.m. shall constitute a work day, and maximum of five (5) such days, namely Monday to Friday inclusive, shall be a work week. An employee may clock in up to six (6) minutes late three (3) times per month without pay and without disciplinary action.

Nothing in this Agreement shall prohibit the Employer from establishing staggered starting times for an employee or group of employees.

B. Overtime shall be paid as follows:

1. One and one-half (1 1/2) times the straight time hourly rate for all work in excess of ten (10) hours in a work day.

2. Double (2) time the straight time hourly rate for all work in excess of twelve (12) hours in a work

3. One and one-half (1 1/2) times the straight time hourly rate for the first eight (8) hours on Saturday.

4. Double (2) time the straight time hourly rate for all work in excess of eight (8) on Saturday.

5. Double (2) time the straight time hourly rate for all work performed on Sundays and Holidays.

C. Employees shall not be required to take time off for the purpose of off-setting overtime worked.

D. Regular employees shall be guaranteed four (4) hours' work or four (4) hours' pay in lieu thereof for each day they report to work. Regular employees shall be guaranteed four (4) hours' work or four (4) hours' pay in lieu thereof if required by the Employer to report to work on Saturdays, Sundays or Holidays or if business conditions warrant less hours for all employees.

The above guaranteed hours shall be waived in case of fire, flood or similar causes beyond the Employer's control.

E. The employees shall be granted a ten (10) minute break mid-morning and a ten
(10) minute break at midafternoon.

F. The Employer will provide three (3) minutes at the end of the shift for personnel to clean themselves up.

G. It is agreed that where an employee is required to work at a point other than his assigned reporting place, he shall proceed to the location of the job and return from such job to the reporting place on the Employer's time.

H. Hours worked shall include time actually at work or on duty, including the time required by management to stand by prepared to go to Work at a specific place.

SECTION 5. SHIFTS

A. The Employer may establish additional work shifts other than the shift provided for in Section 4. But no shift shall be established for a period of less than one (1) week, and not less than three (3) men shall be employed on each shift. Otherwise, the time so worked, outside of the hours scheduled in
Section 4, shall be considered and paid as overtime. Employees shall be notified not less than three (3) work days prior to any change in their work schedule.

B. No shift shall be scheduled to work more then .ten (10) hours in any twenty-four (24) hour period or longer than forty (40) hours in any one (1) week. Regular starting and stopping times shall be posted for each shift established' and all time worked outside of the posed hours shall be paid for as overtime.

Where three (3) shifts are worked, each shift shall consist of eight (8) hours (including an unpaid thirty (30) minute lunch period), the first or day shift to start at 8:00 a.m. The second shift shall start immediately after the first shift terminates, and the third shift shall start immediately after the second shift terminates.

Fifty cents ($.50) per hour additional over the day shift shall be paid on the second shift and seventy-five cents ($.75) per hour additional over the day shift shall be paid on the third shift.

The shift which commences Friday at 12 Midnight and ends Saturday at 8:00
a.m. will be considered as a normal third shift and shall therefore be paid for at the rate of seventy-five cents ($.75) per hour additional over the day shift rate, according to the classification involved.

SECTION 6. WAGES

A. The wage rate to be paid under the terms of this Agreement to employees in each occupational classification are those appearing in Schedule "A", attached hereto and made a part hereof.

B. Wages shall be paid weekly on the Employer's time. Not more than three (3) days' pay shall be withheld. Wages shall be computed from shop check-in to shop check-out or its equivalent. Employees being laid off shall receive their wages at time of layoff.

C. Effective May 1, 1997, an additional $0.30 will be added to ail rates and progressions.

SECTION 7. HOLIDAYS

A. Employees covered by this Agreement shall receive with pay at the rate of straight time the following holidays when not worked:

Fourth of July       Christmas Day
Labor Day            Day Before New Year's Day
Thanksgiving Day     2 Float Holidays (*) with 72 hours' advance notice to
                     Employer

*However, no more than ten percent (I0%5 of the employees will take their floating holidays off at any one time. The granting of such requests will be by seniority.

Holidays are paid on the basis of an eight (8) hour day

With regard to the above mentioned float holidays, at the option of the Employer, one (I) float holiday may be observed as a paid holiday for all eligible employees on a date fixed by the Employer, such date to be posted by the Employer no later than May 1st of each year.

B. Holidays falling on Saturday shall be observed the preceding Friday. Holidays falling on Sunday shall be observed on the following Monday.

C. To be eligible for holiday pay, an employee must have completed his probationary period with the Employer and must have worked the scheduled work day before and the scheduled work day after such holiday unless absent because of qualified illness or otherwise excused. For employees hired after May 1, 1979, they must have been employed six months in order to be eligible for the two (2) floating holidays.

D. Ail work performed on any one of the paid holidays shall be paid for at two
(2) times the regular rate of pay ill addition to the holiday pay which an employee would have received had he not worked.

SECTION 8. VACATIONS

A.) Prior to March 15t of each calendar year, or as soon as possible thereafter, Departmental heads will consult with all employees entitled to vacation and from such consultation, the employer shall establish the working schedule for the vacation period.

The Employer in determining vacation schedules will respect the seniority and wishes of the employee as to the time of vacation insofar as the needs of the employer will permit.

B1.) The Employer will grant to each employee that was hired prior to May I, 1997 one (1) week's vacation with pay after one (1) year's service; Two week's vacation with pay after two (2) year's service and three (3) weeks of vacation after four (4) years of service with the following progressions after the fourth
(4) year of service:

SIX  (6)  YEARS  OF  SERVICE    3  WEEKS  &  1  DAY
SEVEN  (7)  YEARS  OF  SERVICE    3  WEEKS  &  2  DAYS
EIGHT  (8)  YEARS  OF  SERVICE'    3  WEEKS  &  3  DAYS
NINE  (9)  YEARS  OF  SERVICE    3  WEEKS  &  4  DAYS
TEN  (10)  YEARS  OF  SERVICE    4  WEEKS

B2.) The employer will grant to each employee that was hired after May 1, 1997 one (1) week's vacation with pay after one (I) year's service; two week's vacation with pay after three (3) year's service; three week's vacation with pay after five (5) year's service and four (4) week's vacation with pay after ten
(I0) year's service.

D.) Thirteen hundred fifty (1350) working hours in the employ of the Employer at the conclusion of a twelve (12) month period shall constitute a year's service and qualify the employee for full vacation pay. If less than thirteen hundred fifty (1350) hours are worked, Section "H" below shall apply.

E.) Vacations must be taken within twelve (12) months next following the date upon which the employee becomes eligible thereto, but shall not be cumulative.

F.) The Employer shall notify each employee by posted announcement ninety (90) days prior to a proposed plant shutdown for vacation.

G.) Where on of the paid holidays (as provided elsewhere in this Agreement) occurs within an employee's vacation period, the employee shall receive holiday pay as provided for in addition to that employee's vacation pay.

H.) Where an employee, eligible for vacation, is laid off because of a curtailment of work or quits, he hail be paid pro rata for that fraction of thirteen hundred fifty (1350) hours, which has accumulated to his credit. Two hundred forty (240) hours shall be the required minimum for a pro rata basis. Such proration shall be based on full years of service at the time of layoff or quit. (paragraph "B" above) Proration of vacation shall not apply unless the employee has completed the first year of service with the Employer.

I.) Vacation shall not take place during the first six months of employment. Accrual shall double during the second six months of the first year of employment.

Page7of 19

SECTION 9. JURY DUTY

Upon completion of six (6) months continuous service when an employee is called for jury duty, said employee shall be reimbursed for the difference paid to the employee for serving on jury duty and the amount shall be equal to the basic scheduled work hours for the period involved times the employee's hourly rate. Such pay to be limited to fifteen (15) days each contract year. Days not used in one contract year shall be available in the next contract year to a maximum of forty-five (45) days.

SECTION 10. FUNERAL LEAVE

A. Upon completion of the probationary period an employee shall be entitled to three (3) days with pay for purposes of attending the funeral for the immediate family, with the last day being the day of the funeral. The immediate family is spouse, parents and/or legal guardians, sister, brother, children, grandparents, mother-in-law, and father-in-law.

Two (2) additional days, the two (2) days after the funeral, without pay will be granted for a funeral outside the State.

B. Should there be no funeral or the employee is unable to attend because of the distance or the cost of travel, then the employee shall be entitled to one
(1) day of Bereavement Leave with pay.

C. The Employer may require reasonable proof of death and/or relation.

SECTION 11. PENSION

A. The IRA Pension Plan instituted effective May 1, 1975 shall be continued for the duration of this Agreement. The Employer contribution effective April 30 1991 will be twenty-five ($0.25) per hour.

In addition to the above and effective May 1, 1997, the Employer will match up to thirty cents ($0.30) per hour contribution made by an individual employee to the IRA account provided that such other contribution is made through payroll deduction.

SECTION 12. HEALTH AND WELFARE

Upon completion of tile probationary period or in accordance with the Plan, whichever is greater, the Employer shall provide and pay for the Kaiser "L" Health and Welfare Program or its equivalent for the employees.

The above Kaiser "L" Health and Welfare Program will be provided to dependents and spouses at the Employer's expense provided the employee has been employed for one (1) year.

Dental coverage for all employees shall be at 80/20 percent of cost.

The dental coverage will be provided to both dependents and/or spouses at the Employer's expense provided the employee has been employed for one (1) year.

Thirty  Dollars  ($30.00).  On April 30, 1999, the employee contribution will be
--------------------------------------------------------------------------------
re-negotiated
-------------

SECTION 13. LIFE INSURANCE

Upon completion of the probationary period the Employer shall provide a life insurance policy, including AD&D, in the amount: of $10,000.00 on the life of each employee, who shall designate the beneficiary.

SECTION 14. LEAVE OF ABSENCE

A. Upon completion of the probationary period employees shall be eligible to request leave of absence as may be provided for in this Section 14.

B. The empI6yee may request one (1) day per quarter of unpaid time off for personal use. During the four (4) quarters per contract year, one (1) of the four (4) days shall be granted provided the employee gives the Employer twenty-four (24) hours advance notice prior to taking time off. No more than ten percent (10%) of the employees will take their day off at any one time. Three
(3) of the four (4) days shall be by mutual agreement between the Employer and the employee. The granting of such requests will be by seniority.

C. In cases where the employee has a prolonged illness or injury, a leave of absence of up to six (6) months will be granted. Requests for a leave of absence for other than the foregoing may be granted by the Employer.

Employees off work for over thirty (30) days due to a leave of absence or extended illness or injury shall not suffer a loss of seniority except as may be provided elsewhere; however, employees shall not accrue any benefits during such period.

D. In all cases where leaves of absence are granted by the Employer, he Union shall be notified in writing of the effective date and the termination date of the leave. Any Union member who does not return or overstays the leave will be considered to have quit his employment, and if rehired, shall be considered a new employee. Timely extensions may be requested by the employee.

SECTION 15. SAFETY

A. It is hereby agreed that the Employer, the Union and the employees recognize the importance of maintaining safety provisions for the protection of the health, life and limb of all employees. Adequate safety and protective devices shall be supplied workmen by the Employer on all hazardous work in accordance with the safety rules of the Industrial Accident Commission, and the Employer shall make every effort to improve conditions when called to his attention. Employees shall wear and use safety devices specified by the Employer. The Employer agrees that such safety equipment shall be maintained in good shape and in accessible positions. The Union

shop steward and tile Leadman shall help the Employer enforce safety and cleanliness about the shop at all times.

The Employer shall hold the Union harmless for any and all claims, demands, suits or other action that may arise out of this Section.

B. Adequate facilities shall be provided by the Employer for hanging employees' clothing and also adequate washstands and toilets, Precautions to secure the health and safety of employees shall, as far as practical, be at all times taken by the Employer, including a supply of "First-aid Cabinets" at convenient locations in the plant.

C. The Employer will furnish all such necessary tools and equipment to employees as may be required or necessary to perform the work in accord with the Employer's specifications. Suitable rain protective equipment is to be furnished by the Employer to the employees required to work out of doors in inclement weather. When tools and equipment are issued and signed for, the employees will be held responsible for their return in good condition, reasonable wear and-tear excepted.

SECTION 16. TRAVEL

Where men are sent on jobs away from the shop or other regular place of emplo3nnent where they are regularly employed, they shall receive first-class board and lodging and traveling time at straight time to and from such job. If employees travel on overtime days or are required to work overtime, they shall be paid travel at rates specified in this Agreement. Not more than eight (8) hours' pay for travel time in any one (I) day of twenty-four (24) hours shall be paid. The Employer shall provide covered transportation to such employee or pay the regular fare both ways for employees while traveling.

SECTION 17. TERMINATION

The Employer shall give each employee three (3) days' notice on a layoff for any reason, or three (3) days' pay in lieu thereof, except in an emergency which is beyond the control of the Employer.

SECTION 18. GRIEVANCE PROCEDURE

A. Should differences arise between the Employer and the Union as to the meaning and application or the observance and performance by either party of any provisions of this Agreement, or as to whether the wage or working conditions of any individual employee or group of employees in the unit is not in accordance with the wage rate or conditions that should apply to him or them as noted in this Agreement, the following shall be the procedure for the adjustment and settlement thereof:

Step I. The employee and/or the shop steward shall endeavor to adjust such dispute or grievance with the Employer's representative who has initial responsibility for the matter at hand.

Step 2. If it is not settled, it shall be presented in writing to the management representative within seventy-two (72) hours of the occurrence. The management representative shall respond in writing within seventy-two (72) hours of receipt of the grievance.

Step 3. If it is not thus settled, then within seven (7) days the Business Representative and/or the shop steward and/or the employee shall meet with the management representative and/or labor relations representative and endeavor to adjust such dispute or grievance. An International Representative of the IBEW may be present at this Step in the Grievance Procedure only to assist the Local Union.

Step 4. If such meeting is unable to resolve tile issue, then the grieving party may request a Board of Adjustment provided such request is presented within seven (7) days of such meeting. The Board of Adjustment shall consist of two (2) representatives selected by the Union and two (2) representatives selected by the Employer. The Board shall proceed to hear the matter in question within fourteen (14) days, each party being permitted to produce such evidence as may be relevant.

Tile Board shall have no power to add to, subtract from, or modify any of the terms and conditions of this Agreement. A decision by a majority of the Board shall be final and binding upon the parties.

Step 5. If the Board is unable to resolve the issue, then the grieving party may request arbitration, provided such request is presented in writing within seven (7) days of the meeting of the Board. If the parties are unable to agree upon a neutral arbitrator, then the Federal Mediation and Conciliation Service shall be requested to submit a panel of seven (7) arbitrators. Each side shall have the option to reject one (I) complete panel. The parties shall alternately strike from said list one (1) name after determining the first strike by lot, and the remaining named arbitrator shall promptly conduct a hearing on the grievance.

B. The neutral arbitrator shall have no power to add to, subtract from, or modify any of the terms and conditions of this Agreement. The decision of the neutral arbitrator shall be final and binding upon the parties.

C. The Union and the Employer shall equally share the expense of the arbitration. However, each party shall bear its own expense of representation and witnesses. This latter provision shall also apply to Step 4 in the grievance procedure.

D. Should the time limits above be passed by either party, the grievance shall be forfeited to the other. However, the above time limits may be extended by mutual agreement.

SECTION 19. NO STRIKE - NO LOCKOUT

The Union agrees not to engage in any strikes, slowdowns or Stoppages of work during the term of this Agreement.

Any action by the employees leaving jobs for their own protection in cases of legally declared strike by some other union directly working on the job, if such strike is sanctioned and approved by the labor body or council having jurisdiction, shall not constitute a violation of this Agreement.

The Employer agrees not to engage in any lockout during the term of this Agreement.

SECTION 20. NO DISCRIMINATION

It is tile continuing policy of the Union and the Employer that the provisions of this Agreement shall be applied to all employees without respect to age, sex, race, religion, color, national origin or marital status.

SECTION 21. SAVINGS CLAUSE

Any provision of this Agreement adjudged to be unlawful by a court of competent jurisdiction shall be treated for all purposes as null and void, but all other provisions of this Agreement shall continue to be in full force and effect except as provided herein.

SECTION 22. TERM OF AGREEMENT

Either party desiring to change or terminate this Agreement must notify the other in writing at least sixty (60) days prior to the anniversary date of the present contract. When notice for changes is given, the nature of the changes desired must be specified in the notice and until a satisfactory conclusion is reached in the matter of such changes, the original provisions shall remain ill full force and effect. The negotiation of any proposed amendments by either party shall begin within fifteen (15) days after receipt of the written proposed amendments.

B. This Agreement shall be subject to amendment at any time by mutual consent of the parties hereto. Such amendment shall be reduced to writing, stating the effective date of the amendment, to be executed in the same manner as this Agreement, and be approved by the InternationaI Office of the Union. -

ELECTRICAL WORKERS UNION, LOCAL 2131 HOSPITAL SYSTEMS, INC.
IBEW, LOCAL 2131

BY:  /s/  ROGER  LANGLOIS          BY:  /s/  DAVID  MILLER
-------------------------          -----------------------
          ROGER  LANGLOIS                    DAVID  MILLER
          BUSINESS  MANAGER,                 PRESIDENT
          IBEW,  LOCAL  2131


BY:  /s/  VINH  PHUN
-------------------------
          VINH  PHUN
          COMMITTEEPERSON

DATE June 10, 1998

SCHEDULE"A"

PROGRESSIONS - CLASSIFICATIONS - WAGES

The provisions called for in this Schedule "A" shall become part of the Agreement made May 1, I997 between Hospital Systems, Inc. and Local 213 I, International Brotherhood of Electrical Workers.

Nothing in this Schedule shall serve to reduce any current wage rates of individual employees.

A. PROGRESSIONS

1. Employees hired after May 1, 1997 shall progress from starting rate of $7.50 per hour [or market rate] and shall progress to the top rate in five 18 month steps with a step at the first nine (9) months. To compute the raise from each full step the difference between the employee's current rate and the top rate shall be divided by the number of steps left in the progression.

2. The following are tile progression steps for employees hired before May 1, 1997:

Step  1  -  First  13  calendar  weeks  of  employment
Step  2  -  Second  13  calendar  weeks  of  employment
Step  3  -  Third  13  calendar  weeks  of  employment
Step  4  -  Fourth  13  calendar  weeks  of  employment
Step  5  -  Fifth  13  calendar  weeks  of  empIo3/ment
Step  6  -  Sixth  13  calendar  weeks  of  employment
Step  7  -  Seventh  13  calendar  weeks  of  employment

Step 8 - Thereafter

3. An employee with less than thirty-nine (39) weeks comparable experience in the last two (2) years shall start at Step I.

4. An employee with over thirty-nine (39) weeks comparable experience in the last two (2) years shall start at Step 4.

5. For the purpose of this Section only, a calendar week starts the first Wednesday an employee works within a given job classification.

6. Previous Company experience may be credited in full.

1.  LINE  ASSEMBLERS
                    1  MAY98             1  MAY99
STEP  1               $ 9.37                9.65
STEP  2'              $ 9.56                9.85
STEP  3               $10.03               10.33
STEP  4               $10.21               10.51
STEP  5               $10.77               11.10
STEP  6               $11.08               11.42
STEP  7               $11.72               12.07
STEP  8               $12.07               12.43

                    1  MAY98             1  MAY99
STEP  1               $ 9.62                9.91
STEP  2               $ 9.81               10.10
STEP  3               $10.27               10.58
STEP  4               $10.45               10.77
STEP  5               $11.01               11.34
STEP  6               $11.34               l1.68
STEP  7               $12.00               12.36
STEP  8               $12.33               12.70

                    1  MAY98             1  MAY99
STEP  1               $ 9.62                 9.91
STEP  2               $ 9.81                10.10
STEP  3               $10.27                10.58
STEP  4               $10.45                10.77
STEP  5               $11.01                11.34
STEP  6               $11.34                11.68
STEP  7               $12.00                12.36
STEP  8               $12.33                12.70

                    1  MAY98              1  MAY99
STEP  1               $ 9.37                  9.65
STEP  2               $ 9.56                  9.85
STEP  3               $10.03                 10.33
STEP  4               $10.21                 10.51
STEP  5               $10.77                 11.10
STEP  6               $11.08                 11.42
STEP  7               $11.72                 12.07
STEP  8               $12.07                 12.43

5.  GENERAL  LABORER
                    1  MAY98              1  MAY99
STEP  1                $6.09                  6.27
STEP  2                $6.24                  6.43
STEP  3                $6.41                  6.60
STEP  4                $6.56                  6.76
STEP  5                $6.72                  6.92
STEP  6                $6.88                  7.09
STEP  7                $7.03                  7.25
STEP  8                $7.19                  7.41

6.  SMALL  PARTS  ASSEMBLY  /  ENGRAVING
                    1  MAY98              1  MAY99
STEP  1               $ 9.37                  9.65
STEP  2               $ 9.56                  9.85
STEP  3               $10.03                 10.33
STEP  4               $10.21                 10.51
STEP  5               $10.77                 11.10
STEP  6               $11.08                 11.42
STEP  7               $11.72                 12.07
STEP  8               $12.07                 12.43

7. LEADMAN There may be a Leadman in each classification and the wages shall be sixty-two cents ($.62) per hour over Step 8 in the classification directed.

SCHEDULE "B"

JOB DESCRIPTIONS

A. LINE ASSEMBLERS

Duties shall consist of the assembling of all products manufactured by tile Company such as critical care units, isolated power units, mobile units, nurses stations, etc. Typical parts to be assembled are frames, back pans, convenience mounting straps, end caps, receptacles, outlets, switches, transformers, circuit breakers and supports, nurse call and code one equipment, elapsed time indicators, line isolation monitors, dimmers, timers, sub-face plates, fascias, plastic laminated panels and wiring therefore. Sub-assemblies shall be air grills, panel frames, door assemblies, ground jacks, group plugs, grounding jack assemblies, circuit break assemblies, mobile unit assemblies, etc. Included in the assembly work will be the measuring and cutting of aluminum extrusions, plastic laminated panels, plastic trims and steel supports. Packaging, shipping and receiving. The above is not all inclusive, but lists typical duties to be performed and all like assignments shaIl be performed by Line Assemblers.

B. SPECIAL PRODUCTION WORKERS

Duties shall consist of operating punch press, drill press, welding equipment, brazing equipment and other heavy duty power operated equipment. The assemblies to be handled are gas failure alarms, remote hazard indicators, ground fault indicators, nurses station sub-assemblies and connections, manifolding or medical gas outlets, and welding of aluminum sub-assemblies. The above is not all inclusive, but lists typical duties to be performed and all like assignments shall be performed by Special Production Workers.
Special Production Workers may be assigned duties in the Line Assemblers category and shall perform these duties without any reduction in pay. Line Assemblers may be requested to perform duties in the Special Production Workers category and shall be paid at the Special Production Workers' scale while performing those duties only.

C. TRUCK DRIVER/YARDMAN

Duties shall consist of driving a truck, or any other type of vehicle covered by a Class 3 California Drivers License, for the purpose of delivery and pick-up of materials, stocking and withdrawing such materials, and - daily yard and shop cleanup and other related duties assigned by the Production Manager.

D. RECEIVING & INVENTORY CLERK

Duties shall consist of performing any one or more of the following duties:
receiving and checking incoming shipments of materials, stacking materials and issuing materials to the factory, keeping of stock in order, operating power and/or hand lift trucks and driving the company truck for local pickup and delivery of material.
Receiving duties consists o f verifying correctness of shipments against bills of lading, invoices or other records; checking for shortages and rejecting damaged goods; routing merchandise and materials to proper departments; and maintaining necessary records and files.
The above is not all inclusive, but lists typical duties performed by the Receiving and Inventory Clerk

E. GENERAL LABORER

Duties shall consists of performing any one or more of the following duties; removing turnings and oil from machines, wash and degrease parts, handle material, cleaning, keeps in an orderly condition factory working areas, washrooms, offices and yard. Duties may include sweeping, mopping, polishing, window washing and other housekeeping duties that may be assigned. The above is not all inclusive, but lists typical duties to be performed by the General Laborer.

F. LEADMAN

Duties are to supervise and instruct, lead and guide; allocate work as directed by tile management's representative: as well as perform necessary production work in all job descriptions; enforce safety rules, check working conditions and quality control.

G. SMALL PARTS ASSEMBLY / ENGRAVING

All classifications shall be full or part-time as required.

SIDE LETTER

Between

HOSPITAL SYSTEMS, INC.

and

ELECTRICAL WORKERS UNION, LOCAL 2131

It is agreed and understood by the parties that the following shall only apply to employees who have completed the probationary period as of April 30, 1991.:

After four (4) continuous years of service, all employee shall be entitled to ten cents ($.10) above the rate specified in #1, #2 or #3 in Schedule "A".

After eight (8) continuous years of service, all employee shall be entitled to ten cents ($.10) above his rate.

After ten (10) continuous years of service, all employee shall be entitled to an additional ten cents ($.10) above his rate.

IBEW, LOCAL 2131 HOSPITAL SYSTEMS, INC.

BY:  /s/  ROGER  LANGLOIS          BY:  /s/  DAVID  MILLER
-------------------------          -----------------------
          ROGER  LANGLOIS                    DAVID  MILLER
          BUSINESS  MANAGER,                 PRESIDENT
          IBEW,  LOCAL  2131


BY:  /s/  VINH  PHUN
-------------------------
          VINH  PHUN
          COMMITTEEPERSON

BY:  /s/  OSCAR  RONQUILLO
--------------------------
          OSCAR  RONQUILLO
          COMMITTEEPERSON

DATE June 10, 1998

August 7, 1998

U.S.$5,000,000.00 St. Louis, Missouri

FOR VALUE RECEIVED, the undersigned, Allied Healthcare Products, Inc., a Delaware corporation with its chief executive office located at 1720 Sublette Avenue, St. Louis, Missouri 63110, promises to pay to the order of LaSalle National Bank ("Bank"), at 135 S. LaSalle St., Chicago, IL 60603, or to such other place as Bank or the holder hereof shall designate in writing, in lawful money of the United States of America, in immediately available funds, the principal sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) together with interest at a per annum rate equal to Seven and 75/100 percent (7.75%) ("Fixed Rate"), payable in Fifty-Nine (59) consecutive monthly principal and interest payments of Sixty Thousand Five Dollars and no/100 ($60,005.00) each, commencing on September 1, 1998 with subsequent payments due on the 1st day of each month thereafter and a final payment of all principal and interest then remaining unpaid due at maturity on August 1, 2003. Interest shall be payable on any amounts not paid as provided above at a rate per annum equal to two percent (2.0%) in excess of the Fixed Rate. Said interest rate shall be computed on the basis of a year of 360 days and the actual days elapsed.

All payments hereunder shall be made in immediately available funds by 1:00
p.m. St. Louis, Missouri time on the day when due. If any payment of principal or interest on this Note shall become due on a Saturday, Sunday or any day on which the Bank is legally closed to business, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment.

For purposes of this Note, the following terms shall have the meanings ascribed as follows:

"Affiliate": means, as applied to any Person, any other Person who directly Or indirectly controls, is controlled by, is under common control with or is a director or officer of such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to vote 5 % or more of the securities having ordinary voting power for the election of directors or the direct or indirect power to direct the management and policies of a Person.

"Benefit Plan": means a "defined benefit plan" (as defined in Section 3(35) of ERISA) for which the undersigned or any Subsidiary, or any ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA) within the past six years.

"Change of Control": shall be deemed to have occurred at such time as a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of more than 20% of the total voting power of all classes of stock then outstanding of the undersigned entitled to vote in the election of directors.

"Deed of Trust": the Deed of Trust, Assignment of Rents and Security Agreement of even date herewith made by and between the undersigned, the Bank and the Trustee therein named.

"ERISA Affiliate": means (a) any corporation subject to ERISA whose employees are treated as employed by the same employer as the employees of the undersigned or any of its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of the undersigned or any of its Subsidiaries under IRC Section 414(c), (c) solely for the purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which the undersigned is a member under IRC Section
414(m), or (d) solely for the purpose of Section 302 of ERISA and Section 412 of the IRC, any party subject to ERISA that is a party to an arrangement with the undersigned or any of its Subsidiaries and whose employees are aggregated with the employees of the undersigned or any of its Subsidiaries under IRC Section 414(o).

"Foothill": Foothill Capital Corporation.

"Foothill Credit Facility": the Loan or Security Agreement dated August 7, 1997, by and between the undersigned certain of its Subsidiaries and Foothill, as amended by Amendment Number One to Loan and Security Agreement, and Amendment Number Two to Loan and Security Agreement.

"Indebtedness": means (a) all obligations of a Person for borrowed money,
(b) all obligations of a Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursements or other obligations of a Person in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations of a Person under capital leases, (d) all obligations or liabilities of others secured by a Lien on any property or asset of a Person, irrespective of whether such obligation or liability is assumed, and (e) any obligation of a Person guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or sold with recourse to such Person) any indebtedness, lease, dividend, letter of credit, or other obligation of any other Person.

"IRC": means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

"Lien": means any interest in property securing an obligation owed to, or a claim by, any Person other than the owner of the Property, whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such interest shall be contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, adverse claim or charge, conditional s~.le or trust receipt, or from a lease, consignment or bailment for security purposes.

"Loan Documents": this Note, the Deed of Trust and any other instrument, document, agreement or guaranty delivered heretofore or hereafter in connection with any of the indebtedness evidenced by this Note, all as from time to time amended, modified, renewed, increased or extended.

"Material Adverse Change": means (a) a material adverse change in the business, prospects, operations, results of operations, asg'ets, liabilities or condition (financial or otherwise) of the undersigned, (b) the material impairment of the undersigned's ability to perform its obligations under the Loan Documents to which it is a party or of Bank to enforce the Obligations or realize upon the Properties, (c) a material adverse effect on the value of the Properties or the amount that Bank would be likely to receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation of such Properties, or (d) a material impairment of the priority of Bank's Liens with respect to the Properties.

"Multiemployer Plan": means a "multiemployer plan" (as defined in Section 4001 (a)(3) of ERISA) to which the undersigned, or any of its Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to contribute, within the past six years.

"Obligations": any and all amounts, indebtedness, covenants, promises, liabilities, duties owing, now existing or hereafter arising, due, payable or owing by the undersigned to the Bank under any of the Loan Documents.

"Permitted Protest": means the right of the undersigned or any of its Subsidiaries to protest any Lien (other than any such Lien that secures the Obligations), tax (other than payroll taxes or taxes that are

the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on the books of the undersigned or any of its Subsidiaries in an amount that is reasonably satisfactory to Bank, (b) ar~y such protest is instituted and diligently prosecuted by the undersigned or any of its Subsidiaries in good faith, and (c) Bank is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Liens of Bank.

"Person"' an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

"Properties"' any and all title, rights, interests, assets or properties, including without limitation, contract rights, accounts, tangible and intangible personal property, inventories, goods, facilities, machinery and equipment and real property.

"Subsidiary": as to any Person, a corporation, pannership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Note shall refer to a Subsidiary or Subsidiaries of the undersigned.

"Undersigned": includes each maker and each endorser, and each jointly and severally, agrees to all the provisions hereof.

The undersigned hereby represents and warrants to the Bank that (a) it is a corporation existing and in good standing under the laws of the State of Delaware, (b) it as well as its Subsidiaries are duly qualified, in good standing and authorized to do business in each jurisdiction where failure to do so would have a material adverse affect upon the undersigned or any of its Subsidiaries, (c) that the borrowings hereunder, the execution and delivery of the Loan Documents by the undersigned and the performance by the undersigned of its respective obligations under the Loan Documents are within the undersigned's corporate and all other powers, have been authorized by all necessary respective corporate and all other action, have received all necessary approvals and do not and will not contravene or conflict with any provision of law or of the charter or by-laws of the undersigned or of any agreement binding upon the undersigned, and (d) that there has been no material adverse change in the business, properties, assets, operations or prospects of the undersigned or any Subsidiaries since the date of the last financial statements provided on behalf of the undersigned to the Bank.

The undersigned agrees to deliver to Bank: (a) as soon as available, but within 20 days after the end of each month, accounts receivable aging for the undersigned and each of its Subsidiaries; Co) as soon as available, but in any event within 45 days after the end of the undersigned's fiscal quarter an internally

prepared balance sheet, income statement, and statement of cash flow covering the undersigned and its Subsidiaries' operations during such period; and (c) as soon as available, but in any event within 90 days after the end of the undersigned's fiscal years,financial statements of the undersigned and its Subsidiaries for each such fiscal year, audited by the Borrower's current independent certified public accountants and certified, without any qualifications, by such accountants to have been prepared in accordance with GAAP, together with a certificate of such accountants addressed to Bank stating that such accountants do not have knowledge of the existence of any default or Event of Default hereunder. Such audited financial statements t shall include a balance sheet, income statement, and statement of cash flow and, if prepared, an accountants' letter to management. In addition to the financial statement referred to above, the undersigned agrees to deliver financial statements prepared on a consolidating basis. The undersigned also shall deliver to Bank its Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K Current Reports, and any other filings made by the undersigned with the Securities and Exchange Commission, if any, as soon as the same are filed, or any other information that is provided by the undersigned to its shareholders, and any other report reasonably requested by Bank relating to the undersigned's financial condition.

The undersigned further covenants and agrees that it will not nor will it permit any Subsidiary to, without Bank's prior written approval which may be given in Bank's sole discretion, do any of the following:

(a) Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(i) indebtedness evidenced by the Foothill Credit Facility, together with Indebtedness to issuers of letters of credit that are the subject of letter of credit guarantees therein described;

(ii) indebtedness set forth in the latest financial statements of the undersigned submitted to Bank on or prior to this date;

(iii) indebtedness secured by Permitted Liens; and

(iv) refinancings, renewals, or extensions of Indebtedness permitted under clauses (i) and (ii) above (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) the terms and conditions of such refinancings, renewals, or extensions do not materially impair the prospects of repayment of the Obligations, (ii) the net cash proceeds of such ref'mancings, renewals, or extensions do not result in an increase in the aggregate principal amount of the Indebtedness so refinanced, renewed, or extended, (iii) such refinancings, renewals, refundings, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, and (iv) to the extent that Indebtedness that is refinanced was subordinated in right of payment to the Obligations, then the subordination terms and conditions of the refinancing Indebtedness must be at least as favorable to Bank as those applicable to the refinanced Indebtedness.

(b) Create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with respect to any of its properly or assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.

(c) Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its capital stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its property or assets.

(d) Sell, lease, assign, transfer, or otherwise dispose of any the undersigned's or any of its Subsidiaries' properties or assets other than sales of inventory to buyers in the ordinary course of the undersigned's or any of it Subsidiaries' business as currently conducted.

(e) Guarantee or otherwise become in any way liable with respect to the obligations of any third Person except by endorsement of instruments or items or payment for deposit.

Make any change in the principal nature of the undersigned's or any of its Subsidiaries'

(g) Cause, permit, or suffer, directly or indirectly, any Change of Control.

(h) Make any distribution or declare or pay an dividends (in cash or other property, other than capital stock) on, or purchase, acquire, redeem, or retire any of the undersigned's or any of its Subsidiaries capital stock, of any class, whether now or hereafter outstanding other than dividends of Subsidiaries to the undersigned.

(i) Directly or indirectly make, acquire, or incur any liabilities (including contingent obligations) for or in accordance with (i) the acquisition of the securities (whether debt or equity) of, or other interests in, a Person,
(ii) loans, advances, capital contributions, or transfers of property to a Person, or (iii) the acquisition of all or substantially all of the properties or assets of a Person.

(j) Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of the undersigned or any of its Subsidiaries except for transactions that are in the ordinary course of the undersigned's or any of its Subsidiaries business, upon fair and reasonable terms, that are fully disclosed to Bank, and that are no less favorable to the undersigned or any of its Subsidiaries than would be obtained in an arm's length transaction with a non-Affiliate.

(k) Suspend or go out of a substantial portion of its business.

(1) Use the proceeds of the indebtedness evidenced by this Note for any purpose other than payment of Foothill and for general corporate purposes.

(m) Directly or indirectly:

(i) engage, or permit any Subsidiary to engage, in any prohibited transaction which is reasonably likely to result in a civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;

(ii) permit to exist with respect to any Benefit Plan any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or not waived;

(iii) fail, or permit any Subsidiary to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan;

(iv) terminate, or permit any Subsidiary to terminate, any Benefit Plan where such event would result in any liability of the undersigned, any of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;

(v) fail, or permit any Subsidiary to fail, to make any required contribution or payment to any Multiemployer Plan;

(vi) fail, or permit any Subsidiary to fail, to pay any required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment;

(vii) withdraw, or permit any Subsidiary to withdraw, from any Multiemployer Plan where such withdrawal is reasonably likely to result in any liability of any such entity under Title IV of ERISA;

which, individually or in the aggregate, results in or reasonably would be expected to result in a claim against or liability of the undersigned, any of its Subsidiaries or any ERISA Affiliate in excess of $500,000.

(n) Permit the undersigned's Tangible Net Worth to be, at any time, less than $21,000,000.

(o) The undersigned and any of its Subsidiaries shall not, in the aggregate, make capital expenditures in any fiscal year in excess of $3,000,000.

The undersigned shall be responsible, by prompt payment or reimbursement, for all costs, fees and expenses (including, without limitation, reasonable attorneys' fees) in any way related to, or in connection with, the Loan Documents, incurred by the Bank, including, without limitation, the preparation, negotiation, extension, modification and enforcement of the Loan Documents.

This Note may be prepaid in whole or in part by the undersigned at any time and from time to time upon at least 5 days written notice to the Bank. If the Fixed Rate at the time of prepayment is higher than the Base Rate, then a make-whole amount shall be due and payable at the time of prepayment equal to the difference between the Base Rate and the Fixed Rate, multiplied by the number of years (or pro-rations of same) remaining on this Note, multiplied by the amount of principal being prepaid. In the event the Fixed Rate at the time of prepayment is equal to or less than the Base Rate, then there shall be no prepayment premium due. "Base Rate" shall mean a per annum rate of interest equal to the "ask yield" as published in the Wall Street Journal on the date the Bank has received the prepayment notice in the Treasury Bonds, Notes & Bills "Govt. Bonds & Notes" subsection for such securities that have a maturity in the same month in which this Note is scheduled to mature plus 250 basis points. The undersigned shall

be required to pay the make-whole amount in the event this Note is prepaid out of collateral proceeds or otherwise following the occurrence of an Event of Default.

The proceeds of the loan evidenced of this Note shall not be used directly or indirectly for the purpose of purchasing or carrying, or for the purpose of extending credit to others for the purpose of purchasing or carrying, any "margin stock" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System.

The Obligations are secured by and entitled to the benefits in all respects of the Loan Documents.

Any one of the following occurrences shall constitute an "Event of Default" under this Note:

(a) The undersigned shall fail to make any payment of principal, interest, make-whole amount or other amounts payable under this Note, any of the other Loan Documents or any other obligations of the undersigned to the Bank when and as due, or shall fail to comply with, perform or observe any agreement, provision or undertaking contained in the Loan Documents or in any other obligation of the undersigned to the Bank, or if any representation, warranty or information made or provided by or on behalf of the undersigned in connection herewith or in connection with the loan evidenced hereby is false or misleading in any material respect as of the date made;

(b) There shall occur any default or event of default, or any event which might become such with notice or the passage of time or both, or any similar event, or any event which requires the prepayment of borrowed money or the acceleration of the maturity thereof, under the terms of the Foothill Credit Facility or any other evidence of indebtedness or other material agreement issued or assumed or entered into by the undersigned or any of its Subsidiaries or under the terms of any indenture, agreement or instrument under which any such evidence of indebtedness or other agreement is issued, assumed, secured or guaranteed, and such event shall continue beyond any applicable period of grace;

(c) Any suit, action or other proceeding (judicial or administrative) shall be commenced against the undersigned or any of its Subsidiaries with respect to any assets of the undersigned, or any of its Subsidiaries, a final judgment shall be entered in any such suit, action or proceeding, which proceeding or judgment shall have or threaten to have a material and adverse effect on the future operations of the undersigned or any or any of its Subsidiaries;

(d) The undersigned or any of its Subsidiaries shall file a petition or answer or consent to a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy law or other similar law, or the undersigned or any of its Subsidiaries shall consent to the institution of proceedings thereunder or the filing of any such petition or to the appointment or taking possession of a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official of the undersigned or any of its Subsidiaries;

(e) There shall be entered a decree or order by a court constituting an order for relief in respect of the undersigned or any of its Subsidiaries under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official of the undersigned or any of its Subsidiaries or of any substantial part of their respective

properties, or ordering the winding-up of or liquidation of the affairs of the undersigned or any of its Subsidiaries and any such decree or order shall continue unstayed and in effect for a period of thirty consecutive days;

(f) The undersigned or any of its Subsidiaries shall become insolvent or shall fail or be unable to pay their debts as they mature, or shall admit in writing their inability to pay their debts as they mature, or shall make a general assignment for the benefit of their creditors, call a meeting of its creditors or shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of their usual business;

(g) Any default or Event of Default shall exist or continue under any Loan Document or any such Loan Document shall not be, or shall cease to be, enforceable in accordance with its terms or be contested by any obligor thereunder.

Upon the occurrence of any Event of Default hereunder: (i) the entire unpaid principal balance of, any unpaid interest then accrued on make whole amount, any other amounts owing under or evidenced by this Note and all other obligations, whether contingent or otherwise, of the undersigned to the Bank shall immediately become due and payable at the option of the Bank hereof, and without presentment, notice, demand or protest of any kind all of which are hereby expressly waived by the undersigned; and (ii) the Bank hereof shall have and may exercise any and all rights and remedies available under the Loan Documents or at law or in equity. No delay or omission on the part of the Bank in exercising any power or right under this Note shall impair such right or power or be construed to be a waiver of any Event of Default or any acquiescence therein, nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof, or the exercise of any other power or right.

The Bank is authorized to charge any account of the undersigned maintained with the Bank for any amounts due or payable hereunder and in addition to all rights of set off available to Bank at law, the undersigned hereby grants to the Bank a continuing security interest in such accounts, and in any deposits, monies, securities or other property of the undersigned delivered to, or left in the possession of, the Bank or the Bank's nominee or bailee.

The remedies of the Bank, as provided herein, shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of the holder hereof, and may be exercised as often as occasion therefor shall arise. No act or omission or commission of the Bank, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by the holder and then only to the extent specifically recited therein. A waiver or release with reference to any one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event.

In the event one or more Events of Default shall occur, the undersigned promises to pay all costs of collection of every kind, including but not limited to all reasonable attorneys' fees, court costs, and expenses of every kind incurred by the holder hereof in connection with such collection or the protection or enforcement of any or all of the security for this Note including representation of the Bank in proceedings under the Bankruptcy Code or other insolvency proceedings and whether or not any lawsuit is ever filed with respect thereto.

The undersigned hereby waives presentment, protest, demand, notice of dishonor or default and consents to any and all renewals, extensions, and/or the release of any party directly or indirectly liable for the payment hereof, all without notice to and without affecting the liability of any of the undersigned.

This Note shall be governed by and construed in accordance with the internal laws of the State of Missouri. This Note shall bind the undersigned and shall inure to the benefit of the Bank, any holder hereof, and all of the respective parties' successors and assigns.

THE UNDERSIGNED HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH BANK ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE LOAN DOCUMENTS,COLLATERAL, OR BANK'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

THE UNDERSIGNED HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO THE BANK'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR IN CONNECTION WITH THIS NOTE AND THE LOAN DOCUMENTS SHALL BE SUBJECT TO LITIGATION IN STATE OR FEDERAL COURTS HAVING SITUS WITH THE CITY OR COUNTY OF ST. LOUIS, MISSOURI, AND HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDINGS BROUGHT BY THE BANK IN ACCORDANCE WITH Tills PARAGRAPH.

The following notice is given pursuant to section 432.045 of the Missouri Revised Statutes; nothing contained in such notice shall be otherwise deemed to limit or modify the terms of this agreement: ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT YOU (THE UNDERSIGNED) AND US (THE BANK) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

IN WITNESS WHEREOF, the undersigned has caused this Note to be executed and delivered by its duly authorized representative as of the date first above written.

                                        ALLIED HEALTHCARE PRODUCTS,JNC.
                                         MISSOURI SECRETARY OF STATE:
                                          UCC-11 SEARCHTO JULY1,1998'
                                          -------------   -----------


                                        SECURED           FORM OF            FILING         FILING   FINANCIAL
DEBTOR:                                 PARTY:              UCC             LOCATION         DATE    STATEMENT
Allied Healthcare Products, Inc.  Siemens Credit       UCC- I          Missouri             7/26/91    2026295
1720 Sublette                     Corporation                  (UCC-3  Secretary of State
St. Louis, MO 63110                                    continuation
                                                       filed 6/7/96)
Allied Healthcare Products, Inc.  Computer Sales       UCC-1           Missouri             5/19/95    2543180
1720 Subletle                     International, Inc.          (UCC-3  Secretary of Slate
St. Louis, M 0 63110              Assignee:            amendment
                                  Commerce Bank        filed 8/22/95)
                                  N.A.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1           Missouri             5122/95    2543342
1720 Sublette                     International, Inc.                  Secretary of State
St. Louis, MO 63110               Assignee:
                                  Commerce Bank
                                  N.A.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1           Missouri             9/26/95    2586252
1720 Sublette                     hilernational, Inc.                  Secretary of State
St. Louis, MO 63110               Assignee:
                                  Commerce Bank
                                  N.A.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1           Missouri            10/06/95    2589474
1720 Suble(te                     International, Im.           (UCC-3  Secretary of Stale
St. Louis, MO 63110               Assignee:            amendment
                                  Commerce Batik       filed 5/2/96)
                                  N.A.
Allied Healthcare Products, hic.  Computer Sales       UCC- I          Missouri            12/13/95    2611788
1720 Sublette                     international, hic.          (UCC-3  Secretary of State
St. Louis, MO 63110               Assignee:            amendment
                                  Commerce Bank        filed 4/5/96
                                  N.A.                 and 6/12196)


DEBTOR:                                           COLIATERAL
Allied Healthcare Products, Inc.  Equipment (te lecommunicat ions) lease no.
1720 Sublette                     06200042
St. Louis, MO 63110

Allied Healthcare Products, Inc.  Equipment (computer) lease no. 138575
1720 Subletle                     (Schedule 1)
St. Louis, M 0 63110


Allied Healthcare Products, Inc.  Equipment (UrWa(a RDBMS, DataFlo)
1720 Sublette
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (computer accessories) lease
1720 Sublette                     no. 138575 (Schedule 1A)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (computer) lease no. 138575
1720 Suble(te                     (Schedule 3)
St. Louis, MO 63110               Equipment location. Tech Resource Group


Allied Healthcare Products, hic.  Equipment (computer, printer, adaptor,
1720 Sublette                     monitors) lease no. 138575 (Schedule 5)
St. Louis, MO 63110

                                          ALLIED HEALTHCARE PRODUCTS,JNC.
                                            MISSOURI SECRETARY OF STATE:
                                            UCC-11 SEARCHTO JULY1,1998'
                                            -------------   -----------


                                        SECURED             FORM OF              FILING          FILING   FINANCIAL
DEBTOR:                                 PARTY:                UCC               LOCATION          DATE    STATEMENT
Allied Healthcare Products, Inc.  Computer Sales       UCC-1 (UCC-         Missouri             12/26/95    2616340
1720 Sublette                     International, hic.         3 amendment  Secretary of State
St. Louis, MO 63110               Assignee:            filed 3/7/96)
                                                       Commerce Bank
                                                       N. A.
Allied Healthcare Products, hic.  Computer Sales       UCC- I              Missouri             03/06/96    264W 19
1720 Sublette                     International, Inc.              (UCC-3  Secretary of State
St. Louis, MO 63110               Assignee:            amendment           filed 8/21/96)
                                                       Commerce Bank
                                                       N. A.
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1               Missouri              3/20/96    2644715
1720 Sublette                     Machinery                                Secretary of State
St. Louis, MO 63110               Company
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1               Missouri              3/20/96    2644716
1720 Sublette                     Maclihiery                               Secretary of State
St. Louis, MO 63110               Company
Allied Hpltlicare Products, Inc.  Master Lease Div.    UCC- I              Missouri             04/30/96    2658450
1720 Subleue                      of Tokai Financial                       Secretary of State
St. Louis, MO 63110               Services, Inc.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1               Missouri             05/02/96    2659466
1720 Subleue                      International. Inc.              (UCC-3  Secretary of State
St. Louis, MO 63110               Assignee:            amendment           filed 12/20/96)
                                                       Southwest Bank of
                                                       St. Louis
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1               Missouri             06/13/96    2676176
1720 Sublette                     Machinery                                Secretary of State
St. Louis, MO 63110               Company


DEBTOR:                                           COLIATERAL
Allied Healthcare Products, Inc.  Equipment (computer accessories) lease
1720 Sublette                     no. 138575 (Schedule 6)
St. Louis, MO 63110


Allied Healthcare Products, hic.  Equipment (conipuier and accessores) lease
1720 Sublette                     no. 138575 (Schedule 7)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (Mazak Milling Center &
1720 Sublette                     SMW Spacesaver)
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (Mazak Milling Center &
1720 Sublette                     SMW Spacesaver)
St. Louis, MO 63110
Allied Hpltlicare Products, Inc.  Equipment (mailing system) lease no.
1720 Subleue                      24182826
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (computer) lease no. 138575
1720 Subleue                      (Schedule 9)
St. Louis, MO 63110               Equipment locafion: Riverside, CA


Allied Healthcare Products, Inc.  Equipment (TurnJaig/Milling Center and
1720 Sublette                     accessories)
St. Louis, MO 63110

                                    ALLIED HEALTHCARE PRODUCTS,JNC.
                                      MISSOURI SECRETARY OF STATE:
                                      UCC-11 SEARCHTO JULY1,1998'
                                      -------------   -----------


                                        SECURED        FORM OF        FILING         FILING   FINANCIAL
DEBTOR:                                 PARTY:           UCC         LOCATION         DATE    STATEMENT
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1    Missouri            06/13/96    2676177
1720 Sublette                     Machinery                     Secretary of State
St. Louis, MO 63110               Company
Allied Healthcare Products, Inc.  Master Lease Div.    UCC-1    Missouri            06/14/96    2676510
1720 Sublette                     of Tokai Financial            Secretary of State
St. Louis. MO 63110               Services, Inc.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1    Missouri            07/17/96    2686913
1720 Sublette                     International, Inc.           Secretary of State
St. Louis, MO 63110               Assignee:
                                  Southwest Bank of
                                  St. Louis
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1    Missouri            08/26/96    2700114
1720 Sublette                     Machinery                     Secretary of State
St. Louis, MO 63110               Company
Allied Healthcare Products, Inc.  Computer Sales       UCC-1    Missouri            12/12/96    2734483
1720 Sublette                     International, hic.           Secretary of State
St. Louis, MO 63110               Assignee:
                                  Commerce Bank,
                                  N.A.
Allied Healthcare Products, Inc.  computer Sales       UCC-1    Missouri            12/12/96    2734484
1720 Sublette                     international, Inc.           Secretary of State
St. Louis, Mo 63110
Allied Healthcare Products, Inc.  Mellon US            UCC-1    Missouri            01/06/97    2742092
1720 Sublette                     Leasing, a Div. of            Secretary of State
St. Louis, Mo 63110               Mellon Leasing
                                  ICorp.


DEBTOR:                                           COLIATERAL
Allied Healthcare Products, Inc.  Equipment (Mazak Turning Center and
1720 Sublette                     accessories)
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (Tracer mailing) lease no.
1720 Sublette                     24182826
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Equipment (computer accessories) lease
1720 Sublette                     no. 138575 (Schedule 10)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (Mazak Milling Center and
1720 Sublette                     accessories)
St. Louis, MO 63110               Equipment (computer software) lease no.
Allied Healthcare Products, Inc.  Equipment (computer accessories lease no.
1720 Sublette                     138575 (Schedule 12)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (computer accessories lease no.
1720 Sublette                     138575 1 (Schedule 11)
St. Louis, Mo 63110
Allied Healthcare Products, Inc.  Equipment (Mazak Turning & Milling
1720 Sublette                     Center) lease no. 127372
St. Louis, Mo 63110

                                     ALLIED HEALTHCARE PRODUCTS,JNC.
                                      MISSOURI SECRETARY OF STATE:
                                       UCC-11 SEARCHTO JULY1,1998'
                                       -------------   -----------


                                        SECURED        FORM OF        FILING         FILING    FINANCIAL
DEBTOR:                                 PARTY:           UCC         LOCATION         DATE     STATEMENT
Allied Healthcare Products, Inc.  Mellon us            UCC-1    Missouri            01/10/97-    2744213
1720 Sublette                     Leasing, a Div. of            Secretary of Slate
St. Louis, Mo 63110               Mellon Leasing
                                  Corp.
Allied Healthcare Products, Inc.  Foothill Capital     UCC- I   Missouri             08/06/97    2817984
1720 Sublette                     Corporation                   Secretary of Stale
St. Louis, Mo 63110
Allied Heahlicare Products, Inc.  Foothill Capital     UCC-1    Missouri             08/13/97    2820513
1720 Sublelle                     Corporation                   Secretary of State
St. Louis, Mo 63110
Allied Healthcare Products, hic.  Computer Sales       UCC-1    Missouri             02/04/98    2875778
1720 Sublette                     International, Inc.           Secretary of Slate
St. Louis, Mo 63110
Allied Healthcare Products, Inc.  Siemens Credit       UCC-1    Missouri             06/19/98    2928450
1720 Sublette                     Corp.                         Secretary of State
St. Louis, Mo 63110


DEBTOR:                                           COLIATERAL
Allied Healthcare Products, Inc.  Equipment (injection Moldi~ng and Water
1720 Sublette                     Tower) lease no. 127405
St. Louis, Mo 63110

Allied Healthcare Products, Inc.  Accounts, equipment, general intangibles,
1720 Sublette                     inventory and real property collateral
St. Louis, Mo 63110
Allied Heahlicare Products, Inc.  Property located in St. Louis City and
1720 Sublelle                     improvements thereon
St. Louis, Mo 63110
Allied Healthcare Products, hic.  Equipment (computer and printers) lease
1720 Sublette                     no. 138575 (Schedule 13)
St. Louis, Mo 63110
Allied Healthcare Products, Inc.  Equipment lease 620-0000016-004
1720 Sublette
St. Louis, Mo 63110

                                      ALLIED HEALTHCARE PRODUCTS,JNC.
                                        MISSOURI SECRETARY OF STATE:
                                        UCC-11 SEARCHTO JULY2,1998'
                                        -------------   -----------


                                        SECURED            FORM OF          FILING       FILING   FINANCIAL
DEBTOR:                                 PARTY:               UCC           LOCATION       DATE    STATEMENT
Allied Healthcare Products, Inc.  Computer Sales       UCC-1            St. Louis City   5/18/95       3360
1720 Sublette                     International, Inc.          (UCC-3
St. Louis, MO 63110               Assignee:            amendment
                                  Commerce Bank        filed
                                  N.A.                        8/10/95)
Allied Healthcare Products, Inc.  Computer Sales       UCC-1            St. Louis City   5/22/95       3419
1720 Sublette                     International, Inc.
St. Louis, MO 63110               Assignee:
                                  Commerce Bank
                                  N.A.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1            St. Louis City   9/26/95       6162
1720 Sublette                     International, Inc.
St. Louis, MO 63110               Assignee:
                                  Commerce Bank
                                  N.A.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1            St. Louis City  10/06/95       6453
1720 Stibldte                     International, Inc.          (UCC-3
St. Louis, MO 63110               Assignee:            amendment
                                  Commerce Bank        filed S/ 1 /96)
                                  N.A.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1            St. Louis City  12/13195       7835
1720 Sublette                     International, Inc.          (UCC-3
St. Louis, MO 63110               Assignee:            amendment
                                  Commerce Bank        filed 4/4/96
                                  N.A.                 and 6/11/96)
Allied Healthcare Products, Inc.  Computer Sales       UCC-1            St. Louis City  12/28/95       8133
1720 Sublette                     International, Inc.          (UCC-3
St. Louis, MO 63110               Assignee:            amendment
                                  Commerca BaA         filed 3/7/96)
                                  N.A.


DEBTOR:                                          COLIATERAL
Allied Healthcare Products, Inc.  Equipment (computer) lease no. 138575
1720 Sublette                     (Schedule 1)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (Unidata RDBMS, Dat&Flo)
1720 Sublette
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (computer accessories) lease
1720 Sublette                     no. 138575 (Schedule IA)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (computer) lease no. 138575
1720 Stibldte                     (Schedule 3)
St. Louis, MO 63110               Equipment location: Tech Resource Group


Allied Healthcare Products, Inc.  Equipment (computer, printer, adaptor,
1720 Sublette                     monitors) lease no. 138575 (Schedule 5)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (computer accessories) lease
1720 Sublette                     no. 138575 (Schedule 6)
St. Louis, MO 63110

                                    ALLIED HEALTHCARE PRODUCTS,JNC.
                                     MISSOURI SECRETARY OF STATE:
                                      UCC-11 SEARCHTO JULY2,1998'
                                      -------------   -----------


                                        SECURED         FORM OF        FILING       FILING   FINANCIAL
DEBTOR:                                 PARTY:            UCC         LOCATION       DATE    STATEMENT
Allied Healthcare Products, Inc.  Computer Sales       UCC-1       St. Louis City  03/06/96       1389
1720 Sublette                     International, Inc.     (UCC-3
St. Louis, MO 63110               Assignee:            amendment
                                  Commerce Bank        filed
                                  N.A.                   8/20/96)
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1       St. Louis City   3/19/96       1750
1720 Subletto                     Machinery Company
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1       St. Louis City   3/19/96       1751
1720 Sublette                     Machinery Company
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Master Lease Div.    UCC-1       St. Louis City  04/29/96       2688
1720 Sublette                     of TokAi Financial
St. Louis. MO 63110               Services, Inc.
Allied Healthcare Products, Inc.  Computer Sales       UCC-1       St. Louis City  05/02/96       2742
1720 Spblette                     International, Inc.     (UCC-3
St. Louis, MO 63110               Assignee:            amendment
                                  Southwest Bank of    filed
                                  St. Louis             12/20/96)
Allied He4dthcare Products, Inc.  Municipal Tool &     UCC-1       St. Louis city  06/12/96       3787
1720 Sublette                     Machinery Company
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1       St. Louis City  06/12/96       3788
1720 Sublette                     Machinery Company
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Master Lease Div.    UCC-1       St. Louis City  06/17/96       3902
1720 Sublette                     of Tokai Financial
St. Louis, MO 63110               Services, Inc.


DEBTOR:                                           COLIATERAL
Allied Healthcare Products, Inc.  Equipment (computer and accessores) lease
1720 Sublette                     no. 138575 (Schedule 7)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (Mazak Milling Center and
1720 Subletto                     SMW Spacesaver)
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Equipment (Mazak Milling Center &
1720 Sublette                     SMW Spacesavar)
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Equipment (mailing system) lease no.
1720 Sublette                     24182826
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Equipment (computer) lease no. 138575
1720 Spblette                     (Schedule 9)
St. Louis, MO 63110               Equipment location: Riverside, CA


Allied He4dthcare Products, Inc.  Equipment (Mazak Turning Center and
1720 Sublette                     accessories)
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (Turning/Milag Center and
1720 Sublette                     accessories)
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (Tracer mailing) lease no.
1720 Sublette                     24182926
St. Louis, MO 63110

                                  ALLIED HEALTHCARE PRODUCTS,JNC.
                                    MISSOURI SECRETARY OF STATE:
                                    UCC-11 SEARCHTO JULY2,1998'
                                    -------------   -----------


                                        SECURED        FORM OF      FILING       FILING   FINANCIAL
DEBTOR:                                 PARTY:           UCC       LOCATION       DATE    STATEMENT
Allied Healthcare Products, Inc.  Computer Sales       UCC-1    St. Louis City  07/17/96       4597
1720 Sublette                     International, Inc.
St. Louis, MO 63110               Assignee:
                                  Southwest Bank of
                                  St. Louis
Allied Healthcare Products, Inc.  Municipal Tool &     UCC-1    St. Louis City  08/26/96       5523
1720 Subletto                     Machinery Company
St. Louis. MO 63110
Allied Healthcaro Products, Inc.  Computer Sales       UCC-1    St. Louis City  12/12/96       8103
1720 Subletto                     International, Inc.
St. Louis, MO 63110               Assignee:
                                  Commerce Bank,
                                  N.A.
Affied Healthcare Products, Inc.  Computer Sales       UCC-1    St. Louis City  12/12/96       8104
1720 Subletto                     International, Inc.
St. Louis, MO 63110               f
Allied Healthcare Products, Inc.  Mellon US Leasing,   UCC-1    St. Louis City  01/13/97        288
1720 Subletto                     a Div. of Mellon
St. Louis, MO 63110               Leasing Corp.
Allied Healthcare Products, Inc.  Mellon US Leasing,   UCC-1    St. Louis City  01/14/97        334
1720 Subletto                     a Div. of Mellon
St. Louis. MO 63110               Leasing Corp.
Allied Healthcare Products, Inc.  Foothill Capital     UCC-1    St. Louis City  08/06/97       5378
1720 Sublette                     Corporation
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Foothill Capital     UCC-1    St. Louis City  08112/97       5550
1720 Sublette                     Corporation
St. Louis, Mo 63110


DEBTOR:                                           COLIATERAL
Allied Healthcare Products, Inc.  Equipment (computer accessories) lease
1720 Sublette                     no. 138575 (Schedule 10)
St. Louis, MO 63110


Allied Healthcare Products, Inc.  Equipment (Mazak Milling Center and
1720 Subletto                     accessories)
St. Louis. MO 63110
Allied Healthcaro Products, Inc.  Equipment (computer accessories) lease
1720 Subletto                     no. 138575 (Schedule 11)
St. Louis, MO 63110


Affied Healthcare Products, Inc.  Equipment (computer software) lease no.
1720 Subletto                     138575 (Schedule 12)
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (injection Molding and Water
1720 Subletto                     Tower) lease no. 127405
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment (Mazak Turning & Milling
1720 Subletto                     Centar) lease no. 127372
St. Louis. MO 63110
Allied Healthcare Products, Inc.  Accounts, equipment, general intangibles,
1720 Sublette                     inventory and real property collateral
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Property located in St. Louis City and
1720 Sublette                     improvements thereon
St. Louis, Mo 63110

                                  ALLIED HEALTHCARE PRODUCTS,JNC.
                                    MISSOURI SECRETARY OF STATE:
                                    UCC-11 SEARCHTO JULY2,1998'
                                    -------------   -----------


                                        SECURED        FORM OF      FILING       FILING   FINANCIAL
DEBTOR:                                 PARTY:           UCC       LOCATION       DATE    STATEMENT
Allied Healthcare Products, Inc.  Computer Sales       UCC-1    St. Louis City  02/04/98        843
1720 Sublette                     International, Inc.
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Siemens Credit       UCC-1    St. Louis City  06124/98       4336
1720 Subletto                     Corp.
St. Louis. MO 63110


DEBTOR:                                          COLIATERAL
Allied Healthcare Products, Inc.  Equipment (computer and printers) lease
1720 Sublette                     no. 138575 (Schedule 13)
St. Louis, MO 63110
Allied Healthcare Products, Inc.  Equipment lease 620-0000016-004
1720 Subletto
St. Louis. MO 63110

DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT

THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT SECURES FUTURE
ADVANCES AND FUTURE OBLIGATIONS

AND SHALL BE GOVERNED BY SECTION 443.055 R.S.MO. THE TOTAL PRINCIPAL AMOUNT OF THE FUTURE ADVANCES AND FUTURE OBLIGATIONS WHICH MAY BE SECURED HEREBY IS FIVE MILLION AND NO/100 DOLLARS

($5,000,000.00)

THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (this "Deed of Trust"), is made and entered into as of the 7th day of August, 1998, by and among Allied Healthcare Products, Inc., a Delaware corporation having its chief executive office at 1720 Sublette Avenue, St. Louis, Missouri 63110 (the "Grantor"), Joseph F. Hipskind, Jr., One Metropolitan Square, Suite 2600, St. Louis, Missouri 63102, as Trustee (the "Trustee"), and LASALLE NATIONAL BANK, One Metropolitan Square, Suite 2140, St. Louis, Missouri 63102 as beneficiary (the "Grantee').

WITNESETH:

That for good and valuable consideration, and to secure the payment and performance of the obligations of Grantor pursuant to:

I. The repayment of all amounts due, including but not limited to principal, interest, make-whole amounts, fees and expenses, from time to time (whether at stated maturity, by acceleration or otherwise), including future advances, under the following documents:

(a) each of the following:

(i) the Promissory Note of Grantor, payable to the order of Grantee, of even date herewith, in the original principal amount of $5,000,000.00 (the "Note");

(ii) any and all other agreements and obligations of Grantor from time to time in favor of Grantee;

(b) all additional security agreements, mortgages, deeds of trust, assignments or other security instruments which are executed and delivered of evidence, govern or secure obligations of Grantor under the documents described in clause (a) above;

(1) The observance and performance by Grantor of each and every term, covenant, condition and agreement required by this Deed of Trust to be observed and performed by Grantor; and

(2) Any and all extensions, renewals, amendments, replacements, restatements, re financings, refundings or other modifications (including but not limited to modifications to interest rates or other payment terms) of any of the foregoing; and

(3) advances made by Grantee for the reasonable protection of the Grantors interest in the Property including, but not limited to, amounts for taxes, insurance, repair, maintenance and preservation of the Property, completion of improvements on the Property and expenses of collection, sale, and foreclosure hereunder and that the same will have priority over any intervening or subsequent liens to the extent allowed by law.

The foregoing are herein referred to as the "Obligations".

TOGETHER with (1) all buildings, improvements and structures at any time, now or hereafter, erected, situated or placed thereon; (2) all rights, privileges, easements, hereditaments, appendages and appurtenances thereunto belonging or in anywise appertaining; (3) all right, title, interest and estate of Grantor in and to streets, roads, ways, sidewalks, curbs, alleys, and areas adjoining said real estate and portions thereof, and whether vacated by law or ordinance (conditionally or otherwise); (4) all leases, subleases, rents, lettings and licenses of, and all contracts, bonds and agreements affecting the Premises or any part thereof now or hereafter arising or entered into, and all amendments, modifications, supplements, additions, extensions and renewals thereof, and all right, title and interest of Grantor thereunder, including cash and securities deposited thereunder, the right to receive and collect rents, security deposits, income, proceeds, earnings, royalties, revenues, issues and profits payable thereunder and the rights to enforce, whether at law or in equity or by any other means, all provisions and options thereof or thereunder;
(5) all fixtures, fixed assets and personalty now owned or hereafter acquired by Grantor and now or at any time hereafter annexed, affixed or attached to said real estate and/or said buildings, improvements, or structures thereon and all other personal property now owned or hereafter acquired by Grantor and used or intended to be used in the possession, occupation or enjoyment thereof and specifically but not by way of limitation the following owned by Grantor, all apparatus, appliances, machinery, equipment and articles used to supply or provide or in connection with heat, gas, air conditioning, plumbing, water, lighting, power, elevator, sewerage, cleaning, refrigeration, cooling, ventilation and sprinkler systems, all water heaters, furnishings, carpeting and padding, rugs, lighting fixtures, shades and awnings, screens, drapes and drapery equipment, fire prevention and extinguishing apparatus, security and access control apparatus, all window cleaning apparatus, and all replacements, additions and substitutions thereof or thereto; (6) all construction materials owned by Grantor and placed thereon; (7) all existing and hereafter created or acquired books, records, reports, surveys, plans, specifications, files, tests, plats, engineering reports, government permits, escrow deposits, tenant security deposits, soil reports and documents of any kind or nature relating to the real estate or the development or operation thereof; (8) all of Grantor's contract rights under and all receivables now or hereafter owing to Grantor under all existing and future leases or renting of space in any buildings now or hereafter on said real estate; (9) all of Grantor's rights under any existing and future loan commitments to provide financing for all or any part of said real estate;
(10) all of Grantor's rights under any existing and future sales contracts affecting all or any portion of said real estate; (11) all plants, trees and shrubbery; (12) all products and proceeds of any of the foregoing, including insurance proceeds and all proceeds of any award for

the taking of all or any part of the foregoing pursuant to any governmental action; (13) all of the foregoing whether now existing or hereafter acquired and all replacements, additions, or substitutions thereof or thereto; and (14) all proceeds, products (including insurance proceeds), improvements, replacements, and substitutions of or to any of the foregoing (collectively referred to as the "Improvements") (the Premises and all Improvements are collectively referred to as the "Property").

Grantor represents, covenants and warrants as follows (which representations, covenants and warranties are continuing, will, in all respects, survive foreclosure of this Deed of Trust and shall run with the Property):

Grantor hereby expressly covenants and agrees with Grantee that so long as any of the Obligations are outstanding and in effect and until this Deed of Trust shall be released by the Grantor, it will:

(ii) If the Property includes or is to include steam boilers or other equipment for the generation or transmission of steam, insurance against loss or damage by explosion, rupture or bursting of steam boilers, pipes, turbines, engines and other pressure vessels and equipment, in an amount satisfactory to Grantee.

(iii) If the Property or any part thereof is located in a designated official flood-hazardous area, flood insurance insuring the Improvements now existing or hereafter erected on the Premises in an amount equal to or greater than the principal balance of the Obligations.

(iv) Comprehensive general liability insurance with such limits, coverages, risks insured and with waiver of subrogations clauses protecting against claims arising from any accident or occurrence in or upon the Property in an amount and in such form as shall be acceptable to Grantee.

(b) Policy Provisions. All insurance policies and renewals thereof maintained by Grantor pursuant to this Section 2.,03 (collectively, the "Policies" and individually, "Policy") shall (i) be written by an insurance carrier satisfactory to Grantee, (ii) contain a standard non-contributory mortgagee clause in favor of and in form acceptable to Grantee, (iii) contain an agreement of the insurer in form satisfactory to Grantee that it will not cancel or modify the Policy except after thirty (30) days prior written notice to Grantee, (iv) provide breach of warranty protection to Grantee, and (v) be satisfactory to Grantee in all other respects.

(c) Delivery of Policy. Grantor will deliver to Grantee original Policies or certified copies of Policies in form satisfactory to Grantee evidencing the insurance which is required by this Section, and Grantor shall promptly furnish to Grantee copies of all renewal notices and all receipts of paid premiums received by it. At least thirty (30) days prior to the expiration date of a Policy, Grantor shall deliver to Grantee a renewal Policy in form satisfactory to Grantee. If the Grantor has a blanket Policy in force providing coverage for several properties of the Grantor, including the Property, Grantor will deliver to Grantee a certified copy of such blanket Policy; which original Policy (i) is written by a carrier or carriers acceptable to Grantee, (ii) insures against the risks set forth hereinabove, (iii) cannot be amended, modified or cancelled without thirty (30) days prior written notice to Grantee, and (iv) is in amounts satisfactory to Grantee.

(d) Assignment of Policy. If the Property or any part thereof is sold at a foreclosure sale or if Grantee shall acquire title to the Property or any part thereof, Grantee shall have all of the right, title and interest of Grantor in and to any Policies and the unearned premiums thereon and in and to the proceeds resulting from any damage to the Property prior to such sale or acquisition.

(e) Other Insurance. Grantor shall obtain such other insurance coverage (and in such form) as Grantee shall from time to time reasonably require, including, without limitation, earthquake, and/or hurricane insurance.

(f) Notice of Damage or Destruction; Adjusting Loss. If the Property or any part thereof shall be damaged or destroyed by fire or other casualty, Grantor will promptly give written notice thereof to the insurance carrier and Grantee, and will not adjust any damage or loss unless Grantee shall have joined in such adjustment, Grantee or Trustee, acting jointly or severally, may make proof of loss, adjust and compromise any claim under the Policies and appear in and prosecute any action arising from such Policies. In connection therewith, Grantor does hereby irrevocably authorize, empower and appoint Grantee and Trustee (acting jointly or severally) as attorney-in-fact for Grantor (which appointment is coupled with an interest) to do any and all of the foregoing in the name and on behalf of Grantor.

(g) Amounts of Insurance. Unless specified to the contrary herein, all insurance shall be in such amount or amounts acceptable to Grantee.

part of Grantor to perform or comply with any of the terms of this Deed of Trust; or (e) performance of any labor or services or the furbishing of any materials or other property in respect of the Property or any part thereof, provided, however, and notwithstanding the foregoing, Grantor shall not be required to indemnify Grantee for any loss, cost or expense if said loss, cost or expenses arises from or relates to Grantor's or Trustee's gross negligence or willful misconductAny amounts payable to Grantee by reason of the application of this Section shall become immediately due and payable and shall bear interest at a per annum rate of interest equal to the highest rate of interest provided for after a default under the terms of the Obligations (the "Default Rate"). The obligations of Grantor under this Section shall survive any termination or satisfaction of this Deed of Trust.

2.05 Hazardous Waste.

Grantor represents and warrants to Grantee that except as otherwise set forth in that certain Phase I Environmental Site Assessment Update dated as of June 12, 1998, prepared by ATC Associates, Inc., together with all attachments thereto (the "Phase I Report"):

(a) The Premises are free from any Hazardous Materials (as defined below) and that the Premises are not in material violation of any laws, regulations or orders concerning Hazardous Materials.

(b) The Premises are not listed or proposed for listing or, to our knowledge, threatened to be listed on the National Priorities List by the Environmental Protection Agency or on any registry or list maintained by any state or local agency, department or entity regarding Hazardous Materials, and that there have been no discussions between Grantor or its agents, employees or attorneys and state, federal or local officials concerning the possibility of such listings.

(c) Except as otherwise set forth in the Phase I Report, there has been no storage, disposal, discharge, deposit, injection, dumping, leaking, spilling, placing or escape of any Hazardous Materials on, in, under or from the Premises. Grantor agrees that it will not permit the illegal storage, disposal, discharge, deposit, injection, dumping, leaking, spilling, placing or escape of any Hazardous Material on, in or around the Premises now or at any future time so long as any portion of the Obligations remains unpaid or unsatisfied.

(d) Grantor shall materially comply with any and all laws, regulations or orders with respect to the discharge and removal of Hazardous Material, shall pay when due the cost of removal of any such Hazardous Material, and shall keep the Premises free of any lien imposed pursuant to such laws, regulations or orders. In the event Grantor fails to do so, after written notice to Grantor and opportunity to cure in compliance with Section 4.01, Grantee may either declare this Deed of Trust to be in default and/or cause the Premises to be freed from the Hazardous Materials. Grantor shall give to Grantee and its agents and its employees access to the Premises and hereby specifically grants to Grantee a license to remove the Hazardous Materials if Grantor shall so choose but Grantee shall not be obligated to do so. Except where caused the gross negligence or willful misconduct of Grantee, Grantor (jointly and severally if there is more than one party constituting Grantor) shall indemnify Grantee and hold it harmless from and against all loss, cost, damage and expense (including, without limitation, reasonable attorneys' fees and costs incurred in the investigation, defense and settlement of claims) that Grantee may incur as a result of or in connection with the assertion against Grantor or Trustee of any claim relating to the presence or removal of any Hazardous Material or contaminant referred to in this Section 2.05, or compliance with any federal, state or local regulations relating thereto.

(e) As used herein, the term "Hazardous Material" shall mean any asbestos, asbestos containing material (as defined in 29 C.F.R. 1910.1001
(b)). flammable substances, explosives, radioactive materials, PCB-laden oil, hazardous materials, pollutants, contaminates, toxic substances, pollution or related materials from time to time specified as such in, or regulated under any federal, state or local laws, ordinances, rules, regulations or policies governing use, spillage, leakage, dumping, storage, treatment, transportation, manufacturer, refinement, handling, production or disposal of any hazardous substance (as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601(14) as amended from time to time, and the regulations promulgated thereunder), or any hazardous waste (as defined in the Resource Conservation and Recovery Act of 1976 42 U.S.C. 6903(5), as amended from time to time, and the regulations promulgated thereunder), petroleum (including crude oil or any fraction thereof), and natural gas or synthetic gas, including mixtures thereof and whether liquified or not.

obligated, to pay such tax, assessment, lien, rent or other charge, or to redeem such Property from any sale or foreclosure for taxes or assessments or liens, and may effect and pay such insurance, pay any such obligations and make such other disbursements as are necessary or advisable in the opinion of Trustee, or Grantee, to cure any such default of Grantor hereunder, or to protect the lien or the rights of Trustee and Grantee hereunder; any and all such sums of money advanced for such purposes, or any of them, by Trustee, or Grantee, shall be deemed an additional principal sum secured by this Deed of Trust and shall be payable on demand with interest at the Default Rate from the time so advanced; provided, however, nothing herein contained shall be construed as requiring Trustee, or Grantee, to advance or expend money for any of the purposes aforesaid. Nothing contained herein shall prevent Grantor from contesting any tax, assessment, lien or other charge against the Property if Grantor in good faith believes that such tax, assessment, lien or other charge is inaccurate.

without first obtaining the written consent of Grantee on each occasion, which consent shall not be unreasonably withheld or delayed. No such lease shall be allowed by Grantor to be merged into the fee simple estate of Grantor. Grantor will perform all of its obligations as lessor under all of the leases

(a) If default shall be made in the payment of any of the Obligations as and when the same shall become due and payable;

(b) If an "Event of Default" or default shall occur as defined or pursuant to any agreement evidencing or securing the Obligations including the Note shall occur and any applicable cure period has expired, or;

(c) With respect to Sections 1.01, 1.02, 1.03, 1.04, 1.05, 1.06, 1.07, 1.08, 2.02, and 2.05 (a)-(c), if any warranty of Grantor contained herein shall prove to be in any material respect incorrect or if there shall be any breach of any representation, covenant, agreement or terms hereof, or;

(d) If any other warranty of Grantor contained herein shall prove to be in any material respect incorrect or if there shall be any breach of any other representation, covenant, agreement or terms hereof and Grantee has not cured the same within thirty (30) days after receipt of written notice thereof, or if said cure cannot reasonably be completed within said thirty (30) day period then such additional time as is necessary provided Grantor diligently pursues such cure to completion.

Upon the happening of any Event of Default, Grantee may declare the entire unpaid balance of principal and the accrued interest on the Obligations, and all other sums secured by this Deed of Trust, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, to be forthwith due and payable, whereupon the same shall become immediately due and payable, and Grantee may enforce payment of all obligations owed to Grantee, and exercise any and all other rights and remedies granted to it and the Trustee under any agreements evidencing the Obligations and/or under any applicable law, including any one or more of the following:

operate, manage and control the same, either personally or by managers, agents, servants or attorneys, for the benefit of Grantee, to the fullest extent authorized by law; and upon every such entry, the Trustee may, from time to time, at the expense of the Property and every part thereof, make all necessary and proper repairs and replacements thereto and thereon, as the Trustee may deem judicious.

(b) Upon such sale or sales made by Trustee under the power herein granted, or upon any sale or sales under or by virtue of any judicial proceedings: (i) the whole of the Property, real, personal and mixed, may be sold in one parcel as an entirety, or the Property may be sold in separate parcels as may be determined by Trustee in his discretion; (ii) any deed or other instrument of conveyance, assignment or transfer made and delivered by Trustee in pursuance of the powers granted and conferred herein, and all recitals therein contained shall be prima facie evidence of the facts therein set forth; (iii) any such sale or sales shall operate to divest Grantor of all right, title, interest, claim and demand, either at law or in equity, under statute or otherwise, in and to the Property and every part thereof so sold and shall be a perpetual bar, both in law or equity, against Grantor and any and all persons claiming or to claim from, through or under Grantor; and (iv) at any such sale or sales Grantee may bid for and purchase the Property or any part thereof and may make payment therefor by credits against the Obligations.

other powers necessary or incidental for the protection, possession, control, management and operation of the Property.

(b) Upon any foreclosure or sale of the Property, or any part thereof, the proceeds of such sale or sales shall be applied as follows: First, to the cost and expense of executing this trust, including reasonable compensation of Trustee and reasonable attorney's fees, outlays for documentary stamps, cost of procuring title certificates, continuing abstracts, title searches or examinations reasonably necessary or proper; Second, to the payment of any and all advances made by Trustee or Grantee, with interest thereon as hereinabove provided; Third, to the payment of the balance of the Obligations, with interest thereon as therein provided and in such order as Grantee shall elect; and Fourth, any surplus thereafter shall be paid to Grantor or to whomever shall be lawfully entitled thereto; provided that in the event the net proceeds of such sale or sales shall not be sufficient to pay in full the indebtedness hereby secured, Grantor hereby promises and agrees to pay any deficiency thereon on demand.

(c) Each time it shall become necessary to insert an advertisement of foreclosure, and sale is not had, Trustee shall be entitled to receive the sum of One Hundred Dollars ($100.00) for services and the amount of all advertising charges from Grantor, all of which shall be further secured hereby.

instrument duly executed, acknowledged and recorded in the manner and form for conveyances of real estate as provided by applicable law, and any such successor trustee shall thereupon succeed as trustee hereunder and to all of the rights, powers, duties, obligations, and estate of Trustee as if specifically named herein, provided no defect or irregularity in the resignation or removal of Trustee or in the appointment of a successor trustee or in the execution and recording of such instrument shall affect the validity of said resignation, removal, or appointment or any act or thing done by such successor trustee pursuant thereto. It is agreed that Trustee and any successor trustee shall not be disqualified from acting as Trustee hereunder or from performing any of the duties of Trustee, or from exercising the rights, powers and remedies herein granted, by reason of the fact that Trustee is an officer, employee or stockholder of or attorney for the Grantee, or is interested, directly or indirectly, as the holder of the Obligations hereby secured, Grantor hereby expressly consenting to Trustee and any successor trustee acting as Trustee irrespective of the fact that Trustee might be otherwise disqualified for any of the foregoing reasons, and that any interest which Trustee or any successor shall have or may acquire in the obligation hereby secured, or the premises and property hereby conveyed, shall neither interfere with nor prevent his acting as Trustee or from purchasing the Property at said sale or sales, and all parties waive any objection to Trustee having or acquiring any such interest in the obligations or property aforesaid and continuing to act as Trustee. Trustee covenants faithfully to perform and fulfill the trust herein created, being liable, however, only for willful misconduct.

become null void and the Property hereinbefore conveyed shall be released without recourse or warranty at the cost of Grantor.

(b) If the Taking involves a taking of any building or other Improvement now or hereafter located on the Premises, Grantor shall promptly proceed, with reasonable diligence, to demolish and remove any ruins and complete repair, replacement, rebuilding or restoration of the Property to its respective size, type, value and character immediately prior to the Taking, whether or not the condemnation awards are available or adequate to complete such repair, replacement, rebuilding or restoration; provided, however, that if Trustee shall apply the entire condemnation award to payment of the debt secured hereby, Grantor shall have the option, in lieu of completing such repair, replacement, rebuilding or restoration, to pay in full the Obligations according to the terms thereof and this Deed of Trust. Grantor shall promptly reimburse Trustee upon demand for all of Trustee's expenses (including reasonable attorney's fees) incurred in the collection of awards and their disbursement in accordance with this Section, and all such expenses, together with interest from the date of disbursement at the Default Rate, shall be additional amounts secured by this Deed of Trust. Grantor shall certify to Trustee and shall provide adequate evidence satisfactory to Trustee that the Property has been put in a state of repair and equivalent to or better than that existing prior to such Taking.

included in any decree foreclosing this Deed of Trust and shall be paid out of the proceeds of sale of the Property. It shall not be obligatory upon Grantee to inquire into the validity of any such tax deed, or of sale or of forfeitures therefor, or claims of liens or claims affecting the Property before advancing money in that behalf, as herein authorized, but nothing herein contained shall be construed as requiring the Grantee to advance or expend any moneys for any purpose aforesaid nor shall any such payments or advancements be construed so as to in any way limit or impair the right of Grantee to avail itself of such default by taking such action at law or in equity as it may deem necessary or advisable to enforce the security hereby given it.

that, upon the reasonable advance written request of Grantor pursuant to a Grantor's refinancing of outstanding debt with Foothill Capital Corporation, it shall execute an Intercreditor Agreement, which shall be mutually acceptable in form to the parties thereto and which shall contain such terms as are customary with respect to real estate and other assets.

IN WITNESS WHEREOF, the parties hereto have executed this Deed of Trust as of the day and year first above written.

Grantor:

ALLIED HEALTH PRODUCTS, INC.

By:  /S/  Uma  Nandan  Aggarwal
-------------------------------
          Uma  Nandan  Aggarwal
          Chief  Executive  Officer  and  President

Trustee:

By:  /S/  Joseph  F.  Hipskind  Jr.
-----------------------------------
          Joseph  F.  Hipskind  Jr.,  as  Trustee

Grantee:

LASALLE NATIONAL BANK

By:  /S/  Andrew  K.  Dawson
----------------------------
          Andrew  K.  Dawson
          Vice  President

STATE  OF  MISSOURI     )
                        )  SS.
                        )

/s/  Anne  Taylor  Proffer
--------------------------
Notary  Public

My  term  expires  3-30-2002
                   ---------

(Seal)

STATE  OF  MISSOURI     )
                        )  SS.
                        )

/s/  Anne  Taylor  Proffer
--------------------------
Notary  Public

STATE  OF  MISSOURI     )
                        )  SS.
                        )

On this 6th day of August, 1998, before me appeared Andrew K. Dawson, to me personally known, who, being by me duly sworn did say that he is a Vice President of LaSalle National Bank and acknowledged this instrument to be signed on behalf of said Bank as the free act and deed of said Bank.

/s/  Anne  Taylor  Proffer
--------------------------
Notary  Public

(Seal)

EXHIBIT A

A tract of land being part of Blocks 1, 2, 5, 6 and 11 of Mount St. Louis in Blocks 4029 and 4033 of the City of St. Louis, Missouri, and including that part of Northrup Avenue, 50.00 feet wide, vacated per Ordinance No. 47198, League Avenue, 50.00 feet wide, vacated per Ordinance No 47198 and Lilly Avenue, 50.00 feet wide, vacated per Ordinance No. 56033, No. 39950 and No. 54762 and all being more particularly described as follows;

Beginning at the intersection of the East line of Sublette Avenue, 50.00 feet wide, with the North line of Missouri Interstate Highway 1-44 as established by deed recorded in Book 8501 page 576 of the City of St. Louis Records; thence along said East line, North 00 degrees 00 minutes 00 seconds East a distance of 579.75 feet to the Southwest corner of a tract of land conveyed to Kaminski as recorded in Deed Book MI 061 page 179 of the City of St. Louis Records, said Southwest comer being distant South 196.40 feet from the South line of River Des Peres Drainage Works; thence along the South Line of said property, North 72 degrees 20 minutes 17 seconds East a distance of t 3.15 feet; thence continuing along said South line, South 89 degrees 57 minutes 17 seconds East a distance of 237.47 feet to the Southeast corner of said property; thence along the East line of said property, North 00 degrees 00 minutes 00 seconds East a distance of 75.80 feet; thence continuing along said line, North 72 degrees 20 minutes 17 seconds East a distance of 43.87 feet to the centerline of League Avenue, as vacated per City of St. Louis Ordinance No. 47198; thence along said centerline, North 00 degrees 00 minutes 00 seconds East a distance of 165.56 feet to a point in the South line of said River Des Peres Drainage Works, 150.00 feet wide; thence along said South line, North 77 degrees 59 minutes 29 seconds East, a distance of 543.11 feet; thence South 00 degrees 06 minutes 17 seconds West a distance of 238.69 feet to a point in the North line of Northrup Avenue, 50.00 feet wide; thence along said North line, South 89 degrees 45 minutes 31 seconds West a distance of 114.52 feet to the centerline of Lilly Avenue, as vacated per City of St. Louis Ordinance No. 56033; thence along said centerline, South 00 degrees 05 minutes 40 seconds West a distance of 621.58 feet to a point in said North line of Missouri Interstate Highway 1-44; thence along said North line, South 82 degrees 42 minutes 31 seconds West a distance of 712.81 feet to the Point of Beginning, according to survey made by Massmann Surveying, Project No. 298242 dated July 29, 1998.

EXHIBIT "B"

All assessments and taxes for the year 1998 and all subsequent years for the City of St. Louis.
Relinquishment of direct access to Interstate Highway 1-44, according to instrument recorded in Book 8501 page 576.
Easements for utilities reserved by the City of St. Louis under the provisions of its Ordinance Number 56033, and Ordinance No. 47198.

Rights of the City of St. Louis to construct, reconstruct, replace and repair and maintain the existing sewers, sewer pipes, manholes and inlets, and appurtenances thereto, under provisions of Ordinance No. 47198, Section Two. Easement granted to Union Electric Company, according to instrument recorded in Book 8620 page 195.
Subject property lies within an area designated as blighted by the St. Louis City Ordinance No. 63234.

Encroachment of a wood fence, located on the Northwest part just East of Sublette, onto the adjoining property, encroachment of a fence, located in the Northwest corner into River Des Peres Drainage Works and encroachment of the concrete curb and concrete sign base over and onto Northrup Avenue as shown on Survey made by Massmann Surveying being project No. 298242 dated July 29, 1998.

INDEMNITY AGREEMENT

THIS INDEMNITY AGREEMENT (the "Agreement") is made as of the 7th day of August, 1998, by Allied Healthcare Products, Inc., (the "Borrower") for the benefit of LaSalle National Bank, ("Lender").

WITNESSETH:

WHEREAS, Borrower has requested and Lender has agreed to make a loan to Borrower in the amount of Five Million and No/00 Dollars ($5,000,000) (the "Loan"), which Loan is evidenced by that certain Promissory Note in the original principal amount of Five Million and No/00 Dollars ($5,000,000) of even date herewith, as from time to time renewed, modified, amended or extended (the "Note"), executed by Borrower and payable to the order or Lender;

WHEREAS, Borrower's obligations under the Note are secured in pan by a Deed of Trust, Assignment of Rents and Security Agreement as from time to time renewed, modified, amended or extended (the "Deed of Trust") from Borrower to Joseph F. Hipskind, Jr., Trustee, for the benefit of the Lender dated of even date with the Note, covering certain real property (including without limitation, the real property described in Exhibit A, attached hereto and incorporated herein) and personal property described therein (hereinafter collectively referred to as the "Property") (the foregoing documents and all other documents executed by Borrower in connection with or securing or evidencing the Loan are hereinafter collectively called the "Loan Documents"); and

WHEREAS, as a condition to making the Loan, Lender requires Borrower to provide certain indemnities;

WHEREAS, to induce Lender to make the Loan to Borrower, Borrower has agreed to provide this Agreement for Lender's benefit.

NOW, THEREFORE, for and in consideration of the Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender, by its acceptance of delivery hereof, and Borrower hereby agree as follow:

1. Recitals. The foregoing recitals are incorporated into this Agreement by this reference.

2. Definitions. The following definitions shall apply for purposes of this Agreement:

(a) "Accessibility Laws" means any and all present and future applicable (i) federal, state and municipal laws, ordinances, rules and regulations and guidelines currently in existence or hereinafter enacted or rendered governing accessibility for the disabled or handicapped, including but not limited to The Architectural Barriers Act of 1968, The Rehabilitation Act of 1973, The Fair Housing Act of 1988 and The Americans With Disabilities Act of 1990, (ii) judicial or administrative interpretations thereof, including any judicial or administrative orders or judgments, and (iii) including but not limited to ordinances, codes, plans, injunctions, decrees, permits, demand letters, concessions, grants, franchises,

licenses, agreements, notices, or other governmental restrictions, relating to the protection of the disabled or handicapped.

(b) "Environmental Law" shall mean any federal, state or local statute, regulation or ordinance or any judicial or administrative decree or decision, whether now existing or hereinafter enacted, promulgated or issued, with respect to any Hazardous Materials, drinking water, groundwater, wetlands, landfills, open dumps, storage tanks, underground storage tanks, solid waste, waste water, storm water, run-off, waste emissions or wells. Without limiting the generality of the foregoing, the term shall encompass each of the following statutes, and regulations promulgated thereunder, and amendments and successors to such statutes and regulations, as may be enacted and promulgated from time to time: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified in scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 9601 et seq.) ("CERCLA"); (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901 et seq.); (iii) the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.) (iv) the Toxic Substances Control Act (15 U.S.C. 2601 et seq.); (v) the Clean Water Act (33 U.S.C. 1251 et seq.; (vi) the Clean Air Act 42 U.S.C. 7401 et seq.); (vii) the Safe Drinking Water Act (21 U.S.C. 349; 42 U.S.C. 201 and 300f et seq.); (viii) the National Environmental Policy Act of 1969 (42 (U.S.C. 4321); (ix) the Superfund Amendments and Reauthorization Act of 1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.) ("SARA"); (x) Title III of the Superfund Amendments and Reauthorization Act (42 U.S.C. 11001 et seq.); (xi) the Missouri Hazardous Waste Management Law (Mo. Rev. Stat 260.350-260.434);
(xii) Missouri Abandoned or Uncontrolled Sites Law (Mo. Rev. Stat. 260.435-260.546); (xiii) Missouri Air Conversation Law (Mo. Rev. Stat. Chapter 643); (xiv) Missouri Clean Water Law (Mo. Rev. Stat. Chapter 644); and (xv) Missouri Underground Storage Tank Regulation (Mo. Rev. Stat. 319.100-319.137).

(c) "Clean-Up" shall mean removal, containment, or remediation of any Environmental Activity which constitutes a violation of Environmental Laws in accordance with Environmental Laws and good commercial practices from the Property or surrounding areas.

(d) "Hazardous Materials" shall mean each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined, determined or identified as hazardous or toxic under any Environmental Law.

(f) "Environmental Activity" means any actual, proposed, or threatened storage, spilling, leaking, pouring, pumping, dumping, holding, existence, release, emission, discharge, generation. injection, discarding, burying, abandoning, processing, abatement, treatment, removal, disposition. handling, transportation or other management of any Hazardous Material or any other activity or occurrence that causes or would cause any such event to exist.

(g) "Indemnified Parties" shall mean Lender, Lender's successors and assigns, Lender's trustee under the Deed of Trust, if any, and Lender's parents, subsidiaries, and affiliates, each of their respective shareholders, directors, officers, employees and agents, and any financial institution that is the successor or assign of Lender and "Indemnified Party" shall mean any one of the Indemnified Parties.

(h) "Regulatory Actions" mean any claim, action, proceeding brought or instigated by any governmental authority in connection with any Environmental Law or any Accessibility Law.

(a) The Property is not and has not been a site for the use, generation, manufacture, storage, treatment, Release, threatened Release, discharge, disposal, transportation, or presence of Hazardous Materials.

(b) The Property is in material compliance with all Environmental Laws and all Accessibility Laws.

(c) There are no Regulatory Actions or any claims by any person or entity due to any violation of any Environmental Laws or based on a violation of any Accessibility Laws pending or threatened against Borrower or the Property.

(d) There is no Environmental Activity in violation of any Environmental Law upon, under, or within the Property or any material violation of any Accessibility Law.

(e) Borrower has not received any notice, order, directive, complaint or other communication, written or oral, has been made or issued by any governmental agency or other person, entity or agency alleging the occurrence of any Environmental Activity with respect to the Property or the use thereof or of any violations of Accessibility Laws.

(f) Neither Borrower nor any other party has been or is involved in operations at or near the Property which operations could lead to (i) the imposition of liability on Borrower, or on any subsequent or former owner of the Property as a result of a violation of any Environmental Law or any Accessibility Law, or (ii) the creation of a lien on the Property under any Environmental Laws or any Accessibility Laws.

(g) Neither Borrower nor any other party has engaged in any activity that could impose liability under any Environmental Laws or Accessibility Laws on Borrower or on any other person.

(h) The use of the Property for its intended purpose will not result in any Environmental Activity in violation of any Environmental Laws or of any violations of any Accessibility Law.

(a) Borrower shall substantially comply and in all respects with the requirements of all Environmental Laws relating to the Property or the use thereof and shall not engage in or otherwise permit the occurrence of any Environmental Activity that constitutes a violation of any Environmental Laws at, upon, under or within the Property.

(b) Borrower shall at all times maintain the Property in substantial compliance with the requirements of all Accessibility Laws.

(c) In the event of any Environmental Activity in violation of any applicable Environmental Laws relating to the Property, Borrower shall notify Lender within forty eight (48) hours of becoming aware of said violation.

(d) Borrower shall promptly forward to Lender copies of all orders, notices, permits, applications or other communications and reports in connection with any Environmental Activity or any other matters relating to any Environmental Laws or any Accessibility Laws as they may affect the Property.

(e) Borrower will notify Lender, in writing, within forty eight (48) hours of becoming aware of any existing, pending, or threatened (a) Regulatory Actions, (b) any claims by any person or entity due to any violation of any Environmental Laws or based on a violation of any Accessibility Laws, or (c) any Environmental Activity which constitutes a violation of Environmental Laws, or
(d) of any event that would render any representation or warranty contained herein incorrect in any respect as if said representations and warranties were made at the time of such discovery.

(f) Borrower will Clean-Up any Environmental Activity which constitutes a violation of Environmental Laws (a) in accordance with a schedule required by such Environmental Laws or (b) in accordance with a schedule acceptable to any regulatory authority enforcing such Environmental Laws.

(g) If Lender has reasonable cause to believe that there has been any Environmental Activity in violation of any applicable Environmental Laws or any violation of any Accessibility Laws at, upon, under or within the Property, then promptly upon the written request of Lender, Borrower shall provide Lender, at Borrower's expense, an environmental site assessment or environmental audit or accessibility audit, as the case may be, in each case in form and substance reasonably acceptable to Lender.

In the event that any of the forgoing covenants are breached, Lender after first providing Borrower with notice of the alleged breach and allowing Borrower thirty (30) days in which to cure said alleged breach, may declare the Loan to be in default and pursue its remedies for default under the Note or any of the Loan Documents.

(a) the occurrence of any Environmental Activity in violation of any Environmental Law affecting the Property, whether or not the same originates or emanates from the Property or any contiguous real estate, including without limitation, any loss of value of the Property as a result of any of the foregoing regardless of whether or not caused by or within the control of Borrower;

(b) a Clean-Up;

(c) the violation of any Environmental Laws in connection with other real property of Borrower which gives or may give rise to any rights whatsoever in any party with respect to the Property by virtue of any Environmental Laws;

(d) any Regulatory Actions related to the Property;

(e) any costs of modifications or alterations to the Property required by a regulatory authority so that it is in compliance with Accessibility Laws;

(f) any representation or warranty of Borrower set forth herein shall prove to be false at any time hereunder or any failure of Borrower to perform any covenant set forth herein or any other failure of Borrower to comply fully with the terms and conditions of this Agreement;

(g) the enforcement of this Agreement or the assertion by Borrower of any defense to its obligations hereunder (except the successful defense of actual performance not subject to further appeal).

Lender's and the other Indemnified Parties' rights under this Agreement shall be in addition to all rights of Lender under the Deed of Trust, the Notes, the Loan Documents, and under any other documents or instruments evidencing, securing or relating to the Loan, and payments by Borrower under this Agreement shall not reduce Borrower's obligations and liabilities under any of the Loan Documents.

Notwithstanding anything in this Agreement to the contrary, Borrower shall not indemnify any Indemnified Party for any liens, damages, losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings (administrative or otherwise), costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, reasonable attorneys,' consultants,' and experts' fees and expenses and disbursements incurred in investigating, defending against, settling or prosecuting any claim, litigation or proceeding) which may at any time be imposed upon, incurred by or asserted or awarded against such Indemnified Party whether as beneficiary of the Deed of Trust, Mortgagee in possession, or as successor in interest to Borrower by foreclosure or deed in lieu of foreclosure on the Property, and arising directly or indirectly under or on account of the gross negligence or willful misconduct of such Indemnified Party, its officers, directors, employees, agents, contractors or representatives.

Borrower's obligations under this Agreement as to Environmental Laws shall arise upon the discovery of the presence of any Hazardous Materials that constitutes a violation of any Environmental Laws at, upon, under or within the Property, whether or not the Environmental Protection Agency, any other federal agency or any state or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Materials.

This Indemnity shall apply to violations of the Accessibility Laws after the Transfer Date (hereinafter defined) due to conditions or events occurring or existing at the Property on or before the Transfer Date, even though such conditions or events which caused the violations of the Accessibility Laws did not constitute violations when the Property was owned by Borrower due to the fact that compliance with respect to such conditions or events was not "readily achievable" (as such term is defined in the Accessibility Laws) for the Borrower but is "readily achievable" for the Lender.

Subject to the provisions of Paragraph 7 below, in the event of any Environmental Activity affecting the Property, whether or not the same originates or emanates from the Property or any contiguous real estate, or if Borrower shall fail to comply with any of the requirements of any Environmental Laws or Accessibility Laws, Lender may at its election, but without the obligation to do so, give such notices or cause such work to be performed at the Property or take any and all other actions as Lender shall deem necessary or advisable in order to abate the discharge of any Hazardous Materials, remove the Hazardous Materials, or cure Borrower's noncompliance with any Environmental Laws or any Accessibility Laws; provided, however, that as long as (i) Borrower is in possession, custody and control of the Property, and (ii) no uncured default exists under any of the Loan Documents or under this Agreement, Lender shall not exercise its right to cause work to be performed at the Property if, within thirty (30) days after Borrower has received notice of any violation of the representations, warranties or covenants set forth herein, Borrower shall have commenced and thereafter shall diligently prosecute to completion the cure of any such violation in accordance with the terms of this Agreement.

action any investigation or monitoring of site conditions or any Clean-Up, containment, restoration, removal, modification, alteration, or other remedial work (collectively the "Remedial Work") required under any applicable Environmental Law or any Accessibility Law, and Lender shall not perform any such Remedial Work on Borrower's behalf, so long as (i) no uncured default exists under this Agreement, the Deed of Trust, or any other Loan Document and
(ii) Borrower has given Lender written notice that Borrower is contesting the same and Borrower actually contests the application, interpretation or validity of such Environmental Law or any Accessibility Laws pertaining to the Remedial Work by appropriate proceedings conducted in good faith with due diligence; provided, such contest shall not subject Lender or any assignee of its interest (including any person having a beneficial interest) in the Loan Documents to civil or other liability and shall not jeopardize any such party's lien upon or interest in the Property or affect in any way the payment of any sums to be paid under the terms of the Loan Documents. Borrower shall give such security or assurances as may be reasonably required by Lender to insure compliance with the Environmental Laws or any Accessibility Laws pertaining to the Remedial Work (and payment of all costs, expenses, interest and penalties in connection therewith) and to prevent any sale, forfeiture or loss by reason of such nonpayment or noncompliance.

the Deed of Trust in reliance upon the representations, warranties and covenants in this Agreement. For this reason, it is the intention of Borrower and Lender that the provisions of this Agreement shall supersede any provisions in any of the Loan Documents, including, without limitation, the Deed of Trust, which in any way limit the personal liability of Borrower and that Borrower shall be personally liable for any obligations arising under this Agreement even if the amount of liability exceeds Borrower's obligations under the Loan Documents. All of the representations, warranties, covenants and indemnities of this Agreement shall survive the repayment and satisfaction of the Loan except as set forth in paragraph 6 hereof.

If to Lender:

LaSalle National Bank
One Metropolitan Square
211 N. Broadway, Suite 2140
St. Louis, Missouri 63102
Attn: Andrew K. Dawson

If to Borrower:

Allied Healthcare Products, Inc. 1720 Sublette Avenue
St. Louis, Missouri 63110
Attn: Uma Nandan Aggarwal

Each Notice shall be effective upon being personally delivered or upon being sent by overnight courier or upon being deposited in the United States Mail as aforesaid. The time period in which a response to such Notice must be given or any action taken with respect thereto (if any), however, shall commence to run from the date of receipt if personally delivered or sent by overnight courier or, if so deposited in the United States Mail, the earlier of (i) three (3) business clays following such deposit or (ii) the date of receipt as disclosed on the return receipt. Rejection or other refusal to accept or the inability to deliver because of changed address for which no Notice was given shall be deemed to be receipt of the Notice sent. By giving at least thirty (30) days prior Notice thereof, Lender or Borrower shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed under seal as of the day and year first written above.

ALLIED HEALTH PRODUCTS, INC.

By:  /S/  Uma  Nandan  Aggarwal
-------------------------------
          Uma  Nandan  Aggarwal
          Chief  Executive  Officer  and  President

EXHIBIT A

A tract of land being part of Blocks 1, 2, 5, 6 and 11 of Mount St. Louis in Blocks 4029 and 4033 of the City of St. Louis, Missouri, and including that part of Northrup Avenue, 50.00 feet wide, vacated per Ordinance No. 47198, League Avenue, 50.00 feet wide, vacated per Ordinance No. 47198 and Lilly Avenue, 50.00 feet wide, vacated per Ordinance No. 56033, No. 39950 and No. 54762 and all being more particularly described as follows:

Beginning at the intersection of the East line of Sublette Avenue, 50.00 feet wide, with the North line of Missouri Interstate Highway 1-44 as established by deed recorded in Book 8501 page 576 of the City of St. Louis Records; thence along said East line, North 00 degrees 00 minutes 00 seconds East a distance of 579.75 feet to the Southwest comer of a tract of land conveyed to Kaminski as recorded in Deed Book M1061 page 179 of the City of St. Louis Records, said Southwest comer being distant South 196.40 feet from the South line of River Des Peres Drainage Works; thence along the South Line of said property, North 72 degrees 20 minutes 17 seconds East a distance of 13.15 feet; thence continuing along said South line, South 89 degrees 57 minutes 17 seconds East a distance of 237.47 feet to the Southeast comer of said property; thence along the East line of said property, North 00 degrees 00 minutes 00 seconds East a distance of 75.80 feet; thence continuing along said line, North 72 degrees 20 minutes 17 seconds East a distance of 43.87 feet to the centerline of League Avenue, as vacated per City of St. Louis Ordinance No. 47198; thence along said centerline, North 00 degrees 00 minutes 00 seconds East a distance of 165.56 feet to a point in the South line of said River Des Peres Drainage Works, 150.00 feet wide; thence along said South line, North 77 degrees 59 minutes 29 seconds East, a distance of 543.11 feet; thence South 00 degrees 06 minutes 17 seconds West a distance of 238.69 feet to a point in the North line of Northrup Avenue, 50.00 feet wide; thence along said North line, South 89 degrees 45 minutes 31 seconds West a distance of 114.52 feet to the centerline of Lilly Avenue, as vacated per City of St. Louis Ordinance No. 56033; thence along said centerline, South 00 degrees 05 minutes 40 seconds West a distance of 621.58 feet to a point in said North line of Missouri Interstate Highway 1-44; thence along said North line, South 82 degrees 42 minutes 31 seconds West a distance of 712.81 feet to the Point of Beginning, according to survey made by Massmann Surveying, Project No. 298242 dated July 29, 1998.

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

among

ALLIED HEALTHCARE PRODUCTS, INC.,
B&F MEDICAL PRODUCTS, INC.,
HOSPITAL SYSTEMS, INC.,

and

LIFE SUPPORT PRODUCTS, INC.,
as Borrowers, on the one hand,

and

FOOTHILL CAPITAL CORPORATION,
on the other hand

Dated as of September 10, 1998

                                             TABLE OF CONTENTS
                                             -----------------

                                                                                                   Page(s)
                                                                                                   -------
1.           DEFINITIONS AND CONSTRUCTION                                                                1
             1.1    Definitions                                                                          1
             1.2    Accounting Terms                                                                    17
             1.3    Code                                                                                17
             1.4    Construction                                                                        17
             1.5    Schedules and Exhibits                                                              17

2.           LOAN AND TERMS OF PAYMENT                                                                  18
             2.1    Revolving Advances                                                                  18
             2.2    Letters of Credit                                                                   18
             2.3    [Intentionally Omitted]                                                             21
             2.4    [Intentionally Omitted                                                              21
             2.5    Overadvances                                                                        21
             2.6    Interest and Letter of Credit Fees: Rates, Payments, and Calculations               21
             2.7    Collection of Accounts                                                              22
             2.8    Crediting Payments; Application of Collections                                      23
             2.9    Designated Account                                                                  23
            2.10    Maintenance of Loan Account; Statements of Obligations                              24
            2.11    Fees                                                                                24
            2.12    Eurodollar Rate Loans                                                               25
            2.13    Illegality                                                                          26
            2.14    Requirements of Law                                                                 27
            2.15    Indemnity                                                                           28

3.           CONDITIONS; TERM OF AGREEMENT                                                              29
             3.1    Conditions Precedent to the Initial Advance                                         29
             3.2    Conditions Precedent to all Advances and all Letters of Credit                      29
             3.3    Condition Subsequent                                                                30
             3.4    Term                                                                                30
             3.5    Effect of Termination                                                               30
             3.6    Early Termination by Borrowers                                                      30
             3.7    Termination Upon Event of Default                                                   31

4.           CREATION OF SECURITY INTEREST                                                              31
             4.1    Grant of Security Interest                                                          31
             4.2    Negotiable Collateral                                                               31
             4.3    Collection of Accounts, General Intangibles, and Negotiable Collateral              31
             4.4    Delivery of Additional Documentation Required                                       31
             4.5    Power of Attorney                                                                   32

             4.6    Right to Inspect                                                                    32

5.           REPRESENTATIONS AND WARRANTIES                                                             32
             5.1    No Encumbrances                                                                     33
             5.2    Eligible Accounts                                                                   33
             5.3    Eligible Inventory                                                                  33
             5.4    Equipment                                                                           33
             5.5    Location of Inventory and Equipment                                                 33
             5.6    Inventory Records                                                                   33
             5.7    Location of Chief Executive Office; FEIN                                            33
             5.8    Due Organization and Qualification; Subsidiaries                                    34
             5.9    Due Authorization; No Conflict                                                      34
            5.10    Litigation                                                                          35
            5.11    No Material Adverse Change                                                          35
            5.12    Solvency                                                                            35
            5.13    Employee Benefits                                                                   35
            5.14    Environmental Condition                                                             36

6.          AFFIRMATIVE COVENANTS                                                                       36
             6.1    Accounting System                                                                   36
             6.2    Collateral Reporting                                                                36
             6.3    Financial Statements, Reports, Certificates                                         37
             6.4    Tax Returns                                                                         38
             6.5    [Intentionally Omitted]                                                             38
             6.6    Returns                                                                             38
             6.7    Title to Equipment                                                                  38
             6.8    Maintenance of Equipment                                                            39
             6.9    Taxes                                                                               39
            6.10    Insurance                                                                           39
            6.11    No Setoffs or Counterclaims                                                         41
            6.12    Location of Inventory and Equipment                                                 41
            6.13    Compliance with Laws                                                                41
            6.14    Employee Benefits                                                                   41
            6.15    Leases                                                                              42

7.           NEGATIVE COVENANTS                                                                         42
             7.1    Indebtedness                                                                        42
             7.2    Liens                                                                               43
             7.3    Restrictions on Fundamental Changes                                                 43
             7.4    Disposal of Assets                                                                  43
             7.5    Change Name                                                                         43
             7.6    Guarantee                                                                           43
             7.7    Nature of Business                                                                  43
             7.8    Prepayments and Amendments                                                          44
             7.9    Change of Control.                                                                  44

            7.10    Consignments                                                                        44
            7.11    Distributions                                                                       44
            7.12    Accounting Methods                                                                  44
            7.13    Investments                                                                         44
            7.14    Transactions with Affiliates                                                        44
            7.15    Suspension                                                                          45
            7.16    [Intentionally                                                                      45
            7.17    Use of Proceeds                                                                     45
            7.18    Change in Location of Chief Executive Office; Inventory and Equipment with Bailees  45
            7.19    No Prohibited Transactions Under ERISA                                              45
            7.20    Financial Covenants                                                                 46
            7.21    Capital Expenditures                                                                46

8.           EVENTS OF DEFAULT                                                                          46

9.           FOOTHILL'S RIGHTS AND REMEDIES                                                             48
             9.1    Rights and Remedies                                                                 48
             9.2    Remedies Cumulative                                                                 50

10.          TAXES AND EXPENSES                                                                         50

11.          WAIVERS; INDEMNIFICATION                                                                   51
            11.1    Demand; Protest; etc                                                                51
            11.2    Foothill's Liability for Collateral                                                 51
            11.3    Indemnification                                                                     51
            11.4    Joint Borrowers                                                                     52

12.         NOTICES                                                                                     57

13.         CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER                                                  58

14.         DESTRUCTION OF BORROWERS' DOCUMENTS                                                         59

15.         GENERAL PROVISIONS                                                                          59
            15.1    Effectiveness                                                                       59
            15.2    Successors and Assigns                                                              59
            15.3    Section Headings                                                                    60
            15.4    Interpretation                                                                      60
            15.5    Severability of Provisions                                                          60
            15.6    Amendments in Writing                                                               60
            15.7    Counterparts; Telefacsimile Execution                                               60
            15.8    Revival and Reinstatement of Obligations                                            60
            15.9    Integration                                                                         61

Schedule  E-1       Eligible  Inventory  Locations
Schedule  P-1       Permitted  Liens
Schedule  R-1       Real  Property  Collateral
Schedule  5.10      Litigation
Schedule  5.13      ERISA  Benefit  Plans
Schedule  6.12      Location  of  Inventory  and  Equipment

Exhibit C-1 Form of Compliance Certificate

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of September 10, 1998, among FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, on the one hand, and ALLIED HEALTHCARE PRODUCTS, INC., a Delaware corporation ("Parent"), B&F MEDICAL PRODUCTS, INC., a Delaware corporation CB&F"), HOSPITAL SYSTEMS, INC., a California corporation ("Hospital Systems"), and LIFE SUPPORT PRODUCTS, INC., a California corporation ("Life Support"), each with its chief executive office located at 1720 Sublette Avenue, St. Louis, Missouri 63110, on the other hand.

A. WHEREAS, Foothill, on the one hand, and Parent, B&F, Hospital Systems, and Life Support (together with certain other affiliates of Parent) entered into that certain Loan and Security Agreement, dated as of August 7, 1997 (as amended by Amendment Number One thereto dated as of March 3, 1998 and Amendment Number Two dated as of July 24, 1998, the "Original Loan Agreement").

B. WHEREAS, Parent, B&F, Hospital Systems and Life Support have requested and Foothill has agreed, that the Original Loan Agreement be amended and restated as provided herein.

C. NOW, THEREFORE, each of the parties hereto agrees that the Original Loan Agreement is hereby amended and restated as follows:

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, the following terms shall have the following definitions:

Rate for such Interest Period by (b) a percentage equal to (i) 100% minus (ii) the Reserve Percentage. The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage.

Borrower.

Support.

(a) Accounts,

(b) Borrowers' Books,

(c) Equipment,

(d) General Intangibles,:

(e) Inventory,

(f) Investment Property,

(g) Negotiable Collateral,

(h) Real Property Collateral,

(i) any money, or other assets of Borrowers that now or hereafter come into the possession, custody, or control of Foothill, and

(j) the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the Collateral of Borrowers, and any and all Accounts, Borrowers' Books, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real Property, money, deposit accounts, or other tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof.

(a) Accounts with respect to which the Account Debtor is an employee, Affiliate, or agent of a Borrower;

(b) Accounts with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the payment by the Account Debtor may be conditional;

(c) [Intentionally Omitted];

(d) Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which the relevant Borrower has complied, to the satisfaction of Foothill, with the Assignment of Claims Act, 31 U.S.C. 3727), or (ii) any State of the United States (exclusive, however, of Accounts owed by any State that does not have a statutory counterpart to the Assignment of Claims Act);

(e) Accounts with respect to which the Account Debtor is a creditor of any Borrower, has or has asserted a right of setoff, has disputed its liability, or has made any claim with respect to the Account;

(f) Accounts with respect to an Account Debtor whose total obligations owing to the Borrowers exceed 10% of all Eligible Accounts of the Borrowers, to the extent of the obligations owing by such Account Debtor in excess of such percentage;

(g) Accounts with respect to which the Account Debtor is subject to any Insolvency Proceeding, or becomes insolvent, or goes out of business;

(h) Accounts the collection of which Foothill, in its reasonable credit judgment, believes to be doubtful by reason of the Account Debtor's financial condition;

(i) Accounts with respect to which the goods giving rise to such Account have not been shipped and billed to the Account Debtor, the services giving rise to such Account have not been performed and accepted by the Account Debtor, or the Account otherwise does not represent a final sale;

(j) Accounts with respect,to which the Account Debtor is located in the states of New Jersey, Minnesota, or West Virginia (or any other state that requires a creditor to file a Business Activity Report or similar document in order to bring suit or otherwise enforce its remedies against such Account Debtor in the courts or through any judicial process of such state), unless the relevant Borrower has qualified to do business in New Jersey, Minnesota, West Virginia, or such other states, or has filed a Notice of Business Activities Report with the applicable division of taxation, the department of revenue, or with such other state offices, as appropriate, for the then-current year, or is exempt from such filing requirement; and

(k) Accounts that represent progress payments or other advance billings that are due prior to the completion of performance by a Borrower of the subject contract for goods or services.

(a) it is not owned solely by such Borrower or such Borrower does not have good, valid, and marketable title thereto;

(b) it is not located at one of the locations set forth on

(c) it is not located on property owned or leased by a Borrower or in a contract warehouse, in each case, subject to a Collateral Access Agreement executed by the mortgagee, lessor, the warehouseman, or other third party, as the case may be, and segregated or otherwise separately identifiable from goods of others, if any, stored on the premises;

(d) it is not subject to a valid and perfected first priority security interest in favor of Foothill;

(e) it consists of goods returned or rejected by such Borrower's customers, goods held for return to vendor or goods in transit; and

(f) it is obsolete or slow moving, a restrictive or custom item, work-in-process, or constitutes spare parts, samples, field service inventory, floor reject inventory, packaging and shipping materials, supplies used or consumed in such Borrower's business, Inventory subject to a Lien in favor of any third Person, bill and hold goods, defective goods, "seconds," or Inventory acquired on consignment.

next whole multiple of 1/16 of 1% per annum) at which United States dollar deposits are offered to Norwest Bank Minnesota, National Association (or its Affiliates) by major banks in the London interbank market (or other Eurodollar Rate market selected by Foothill) on or about 11:00 a.m. (California time) two Business Days prior to the commencement of such Interest Period in amounts comparable to the amount of the Eurodollar Rate Loans requested by and available to Borrowers in accordance with this Agreement and for a period of three months from the date of such offer.

Agreement.

or in gaining possession of, maintaining, handling', preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Personal Property Collateral or the Real Property Collateral, or any portion thereof, irrespective of whether a sale is consummated; costs and expenses paid or incurred by Foothill in examining Borrowers' Books; costs and expenses of third party claims or any other suit paid or incurred by Foothill in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or Foothill's relationship with Borrowers or any guarantor; and Foothill's reasonable attorneys fees and expenses incurred in advising, structuring, drafting, reviewing, administering, amending, terminating, enforcing, defending, or concerning the Loan Documents, (including attorneys fees and expenses incurred in connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning Borrowers or any guarantor of the Obligations) irrespective of whether suit is brought.

Agreement.

Agreement.

Bankruptcy Code, would have accrued), lease payments, guaranties, covenants, and duties owing by a Borrower to Foothill of any kind and description (whether pursuant to or evidenced by the Loan Documents or pursuant to any other agreement between Foothill and any Borrower, and irrespective of whether for the payment of money), whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including any debt, liability, or obligation owing from a Borrower to others that Foothill may have obtained by assignment or otherwise, and further including all interest not paid when due and all Foothill Expenses that a Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise.

exceptions to the commitments for title insurance issued in connection with the Mortgages, as accepted by Foothill, and (k) with respect to any Real Property that is not part of the Real Property Collateral, easements, rights of way, zoning and similar covenants and restrictions, and similar encumbrances that customarily exist on properties of Persons engaged in similar activities and similarly situated and that in any event do not materially interfere with or impair the use or operation of the Collateral by any Borrower or the value of Foothill's Lien thereon or therein, or materially interfere with the ordinary conduct of the business of a Borrower.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Borrower" is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrowers on a consolidated basis unless the context clearly requires otherwise.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein.

1.4 Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. An Event of Default shall "continue" or be "continuing" until such Event of Default has been waived in writing by Foothill. Section, subsection, clause, schedule, and exhibit references are to this Agreement unless otherwise specified. Any reference in this Agreement or in the Loan Documents to this Agreement or any of the Loan Documents shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, and supplements, thereto and thereof, as applicable.

1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

2. LOAN AND TERMS OF PAYMENT.

2.1 REVOLVING ADVANCES.

(x) the lesser of (i) (a) 85 % of Foreign Eligible Accounts supported by letters of credit, plus (b) 85 % of Foreign Eligible Accounts supported by credit insurance (net of the aggregate amount of all applicable deductibles), and (ii) $8,000,000, plus

(y) the lesser of (i) $10,000,000, and (ii) 45 % of the value of Eligible Inventory, minus

2.2 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, Foothill agrees to issue letters of credit for the account of a Borrower (each, an "L/C") or to issue guarantees of payment (each such guaranty, an "L/C Guaranty") with respect to letters of

credit issued by an issuing bank for the account of a Borrower. Foothill shall have no obligation to issue a Letter of Credit if any of the following would result:

(ii) the aggregate amount of all undrawn or unreimbursed Letters of Credit (including Inventory Letters of Credit) would exceed the lower of: (x) the Maximum Revolving Amount lessthe amount of outstanding Advances lessreserves

                            ----                                    ----
established  under  Section  2.1(b);or  (y)  $3,000,000.
                    ----------------

(b) Each Borrower hereby agrees to indemnify, save, defend, and hold Foothill harmless from any loss, cost, expense, or liability, including payments made by Foothill, expenses, and reasonable attorneys fees incurred by Foothill arising out of or in connection with any Letter of Credit. Each Borrower agrees to be bound by the issuing bank's regulations and interpretations of any letters of credit guarantied by Foothill and opened to or for such Borrower's account or by Foothill's interpretations of any Letter of Credit issued by Foothill to or for such Borrower's account, even though this interpretation may be different from such Borrower's own, and Borrowers understand and agree that Foothill shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following any Borrower's instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Each Borrower understands that the L/C Guarantees may require Foothill to indemnify the issuing bank for certain costs or liabilities arising out of claims by a Borrower against such issuing bank. Each Borrower hereby agrees to indemnify, save, defend, and hold Foothill harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability incurred by Foothill under any L/C Guaranty as a result of Foothill's indemnification of any such issuing bank.

(c) Each Borrower hereby authorizes and directs any bank that issues a letter of credit guaranteed by Foothill to deliver to Foothill all instruments, documents, and other writings and property received by the issuing bank pursuant to such letter of credit, and to accept and rely upon Foothill's instructions and agreements with respect to all matters arising in connection with such letter of credit and the related application. A Borrower may or may not be the "applicant" or "account party" with respect to such letter of credit.

(d) Any and all charges, commissions, fees, and costs incurred by Foothill relating to the letters of credit guaranteed by Foothill shall be considered Foothill Expenses for purposes of this Agreement and immediately shall be reimbursable by Borrowers to Foothill.

(f) If by reason of (i) any change in any applicable law, treaty, rule, or regulation or any change in the interpretation or application by any governmental authority of any such applicable law, treaty, rule, or regulation, or (ii) compliance by the issuing bank or Foothill with any direction, request, or requirement (irrespective of whether having the force of law) of any governmental authority or monetary authority including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect (and any successor thereto):

(A) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letters of Credit issued hereunder, or

(B) there shall be imposed on the issuing bank or Foothill any other condition regarding any letter of credit, or Letter of Credit, as applicable, issued pursuant hereto;

2.3 [Intentionally Omitted]

2.4 [Intentionally Omitted]

2.6 Interest and Letter of Credit Fees: Rates, Payments, and Calculations.

annum times the aggregate undrawn amount of all,Letters of Credit outstanding at the end of each day.

(d) Minimum Interest. In no event shall the rate of interest chargeable hereunder for any day for Advances be less than 7.00% per annum. To the extent that interest accrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate, the interest rate chargeable hereunder for such day automatically shall be deemed increased to the minimum rate.

(f) Computation. The Reference Rate as of the date of this Agreement is 8.50% per annum. In the event the Reference Rate is changed from time to time hereafter, the applicable rate of interest hereunder automatically and immediately shall be increased or decreased by an amount equal to such change in the Reference Rate. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed.

2.7 Collection of Accounts. Borrowers shall at all times maintain lockboxes (the "Lockboxes") and, immediately after the Closing Date, shall instruct all

Account Debtors with respect to the Accounts,,' General Intangibles, and Negotiable Collateral of Borrowers to remit all Collections in respect thereof to such Lockboxes. Borrowers, Foothill, and the Lockbox Banks shall enter into the Lockbox Agreements, which among other things shall provide for the opening of a Lockbox Account for the deposit of Collections at a Lockbox Bank. Each Borrower agrees that all Collections and other amounts received by such Borrower from any Account Debtor or any other source immediately upon receipt shall be deposited into a Lockbox Account. No Lockbox Agreement or arrangement contemplated thereby shall be modified by a Borrower without the prior written consent of Foothill. Upon the terms and subject to the conditions set forth in the Lockbox Agreements, all amounts received in each Lockbox Account shall be wired each Business Day into an account (the "Foothill Account") maintained by Foothill at a depositary selected by Foothill.

agreed by Foothill and Borrowers, any Advance requested by Borrowers and made by Foothill hereunder shall be made to the Designated Account.

2.11 Fees. Borrowers shall pay to Foothill the following fees:

(a) [Intentionally Omitted];

(b) Anniversary Fee. On each August 7 during the term of this Agreement, an anniversary fee in an amount equal to $35,000, which fee is fully earned on each anniversary.

(c) [Intentionally Omitted]

(d) Unused Line Fee. On the first day of each month during the term of this Agreement, an unused line fee in an amount equal to 0.25% per annum times the Average Unused Portion of Maximum Revolving Amount;

that prior to the occurrence and continuation of. an Event of Default or Foothill deeming itself insecure, Borrowers shall not be obligated to pay for more than two audits in any 12 month period; and

(f) Servicing Fee. On the first day of each month during the term of this Agreement, and thereafter so long as any Obligations are outstanding, a servicing fee in an amount equal to $2,000.

2.12 Eurodollar Rate Loans. Any other provisions herein to the contrary notwithstanding, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered:

(v) no Event of Default exists;

(W) no more than five Interest Periods may be in effect at any one time;

(x) the amount of each Eurodollar Rate Loan borrowed, converted, or continued must be in an amount not less than $500,000 and integral multiples of $100,000 in excess thereof;

(y) Foothill shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to it and can be readily determined as of the date of the request for such Eurodollar Rate Loan by Borrowers; and

(z) Foothill shall have received such request at least two Business Days prior to the proposed funding date therefor.

Any request by Borrowers to borrow Eurodollar Rate Loans, to convert Reference Rate Loans to Eurodollar Rate Loans, or to continue any existing Eurodollar Rate Loans shall be irrevocable, except to the extent that Foothill shall determine

(A) in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires;

(C) if any Interest Period begins on the last Business Day of a month, or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, then the Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(D) Borrowers may not select an Interest Period which expires later than the Renewal Date.

2.13 Illegality. Any other provision herein to the contrary notwithstanding, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by a Governmental Authority made subsequent to the Closing Date shall make it unlawful for Foothill to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (a) the obligation of Foothill hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such, and convert Reference Rate Loans to Eurodollar Rate Loans shall forthwith be suspended and (b) Foothill's then outstanding Eurodollar Rate Loans, if any, shall be converted automatically to Reference Rate Loans on the respective last days of the then current Interest Periods with respect thereto or within such earlier

2.14 REQUIREMENTS OF LAW.

(a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by a Governmental Authority made subsequent to the Closing Date or compliance by Foothill with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date

(A) shall subject Foothill to any tax, levy, charge, fee, reduction, or withholding of any kind whatsoever with respect to Eurodollar Rate Loans, or change the basis of taxation of payments to Foothill in respect thereof (except for the establishment of a tax based on the net income of Foothill or changes in the rate of tax on the net income of Foothill);

(B) shall in respect of Eurodollar Rate Loans impose, modify or hold applicable any reserve, special deposit, compulsory loan, or similar requirement against assets held by, deposits or other liabilities in or for the account of, Advances or other extensions of credit by, or any other acquisition of funds by, any office of Foothill; or

(C) shall impose on Foothill any other condition with respect to Eurodollar Rate Loans;

and the result of any of the foregoing is to increase the cost to Foothill, by an amount which Foothill deems to be material, of making, converting into, continuing, or maintaining Eurodollar Rate Loans or to increase the cost to Foothill in respect of Eurodollar Rate Loans, by an amount which Foothill deems to be material, or to reduce any amount receivable hereunder in respect of Eurodollar Rate Loans, or to forego any other sum payable thereunder or make any payment on account thereof in respect of Eurodollar Rate Loans, then, in any such case, Borrowers shall promptly pay Foothill, upon its demand, any additional amounts necessary to compensate Foothill for such increased cost or reduced

(b) If Foothill shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof by a Governmental Authority made subsequent to the Closing Date or compliance by Foothill or any Person controlling Foothill with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the Closing Date does or shall have the effect of increasing the amount of capital required to be maintained or reducing the rate of return on Foothill's or such Person's capital as a consequence of its obligations hereunder to a level below that which Foothill or such Person could have achieved but for such change or compliance (taking into consideration Foothill's or such Person's policies with respect to capital adequacy) by an amount deemed by Foothill to be material, then from time to time, after submission by Foothill to Borrowers of a prompt written request therefor, Borrowers shall pay to Foothill such additional amount or amounts as will compensate Foothill or such Person for such reduction. This covenant shall survive the termination of this Agreement and the payment of the Advances and all other amounts payable hereunder for nine months following such termination and repayment.

2.15 Indemnity. Borrowers agree to indemnify Foothill and to hold Foothill harmless from any loss or expense which Foothill may sustain or incur as a consequence of (a) default by Borrowers in payment when due of the principal amount of or interest on any Eurodollar Rate Loan, (b) default by Borrowers in making a Borrowing of, conversion into, or continuation of Eurodollar Rate Loans after Borrowers have given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by Borrowers in making any prepayment of a Eurodollar Rate Loan after Borrowers have given a notice thereof in accordance with the provisions of this Agreement, or (d) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an

3. CONDITIONS; TERM OF AGREEMENT.

3.1 CONDITIONS PRECEDENT TO the Initial Advance. The obligation of Foothill to make the initial Advance hereunder, is subject to the fulfillment, to the satisfaction of Foothill and its counsel, of each of the following conditions on or before the Closing Date:

(a) Foothill shall have received a fully executed counterpart of this

Agreement;

(b) the outstanding principal balance, and any accrued and unpaid interest or fees in respect of, the Term Loans (as defined in the Original Loan Agreement) have been paid in full; and

(c) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Foothill and its counsel.

3.2 Conditions Precedent to all Advances and all Letters of Credit. The following shall be conditions precedent to all Advances and all Letters of Credit hereunder:

(a) the representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date);

(b) no Default or Event Of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; and

(c) no injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any governmental authority against any Borrower, Foothill, or any of their Affiliates.

3.3 Condition Subsequent. As a condition subsequent to initial closing hereunder, Borrowers shall perform or cause to be performed the following (the failure by Borrowers to so perform or cause to be performed constituting an Event of Default):

3.4 Term. This Agreement shall become effective upon the execution and delivery hereof by Borrowers and Foothill and shall continue in full force and effect for a term ending on August 6, 2001 (the "Maturity Date"), unless sooner terminated pursuant to the terms hereof. The foregoing notwithstanding, Foothill shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default.

3.5 Effect of Termination. On the date of termination of this Agreement, all Obligations (including contingent reimbursement obligations of Borrowers with respect to any outstanding Letters of Credit) immediately shall become due and payable without notice or demand. No termination of this Agreement, however, shall relieve or discharge Borrowers of Borrowers' duties, Obligations, or covenants hereunder, and Foothill's continuing security interests in the Collateral shall remain in effect until all Obligations have been fully and finally discharged and Foothill's obligation to provide additional credit hereunder is terminated.

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Each Borrower hereby grants to Foothill a continuing security interest in all of such Borrower's currently existing and hereafter acquired or arising Personal Property Collateral in order to secure prompt repayment of any and all Obligations and in order to secure prompt performance by such Borrower of each of its covenants and duties under the Loan Documents. Foothill's security interests in the Personal Property Collateral shall attach to all Personal Property Collateral without further act on the part of Foothill or Borrowers. Anything contained in this Agreement or any other Loan Document to the contrary notwithstanding, except for the sale of Inventory to buyers in the ordinary course of business, no Borrower has any authority, express or implied, to dispose of any item or portion of the Personal Property Collateral or the Real Property Collateral.

4.2 Negotiable Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, Borrowers, immediately upon the request of Foothill, shall endorse and deliver physical possession of such Negotiable Collateral to Foothill.

4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral. At any time, Foothill or Foothill's designee may (a)notify customers or Account Debtors of any Borrower that the Accounts, General Intangibles, or Negotiable Collateral of such Borrower have been assigned to Foothill or that Foothill has a security interest therein, and (b) after an Event of Default, collect the Accounts, General Intangibles, and Negotiable Collateral of such Borrower directly and charge the collection costs and expenses to the Loan Account. Each Borrower agrees that it will hold in trust for Foothill, as Foothill's trustee, any Collections that it receives and immediately will deliver said Collections to Foothill in their original form as received by Borrower.

4.4 Delivery of Additional Documentation Required. At any time upon the request of Foothill, Borrowers shall execute and deliver to Foothill all financing statements, continuation financing statements, continuation filings, security agreements, pledges, assignments, control agreements, endorsements of certificates of title, applications for title, affidavits, reports, notices, schedules of accounts, letters of authority, and all other

documents that Foothill reasonably may request, in "form satisfactory to Foothill, to perfect and continue perfected Foothill's security interests in the Collateral, and in order to fully consummate all of the transactions contemplated hereby and under the other the Loan Documents.

4.6 Right to Inspect. Foothill (through any of its officers, employees, or agents) shall have the right, from time to time hereafter to inspect Borrowers' Books and to check, test, and appraise the Collateral in order to verify Borrowers' financial condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral.

5. REPRESENTATIONS AND WARRANTIES.

In order to induce Foothill to enter into this Agreement, each Borrower makes the following representations and warranties which shall be true, correct, and complete in all respects as of the date hereof, and shall be true, correct, and complete in all respects as of the Closing Date, and at and as of the date of the making of each Advance and each Letter of Credit as though made on and as of the date of such Advance or Letter of Credit

(except to the extent that such representations and Warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

5.1 No Encumbrances. Each Borrower has good and indefeasible title to its Collateral, free and clear of Liens except for Permitted Liens.

5.2 Eligible Accounts. The Eligible Accounts of each Borrower are bona fide existing obligations created by the sale and delivery of Inventory or the rendition of services to Account Debtors in the ordinary course of such Borrower's business, unconditionally owed to such Borrower without (to the best of such Borrower's knowledge) defenses, disputes, offsets, counterclaims, or rights of return or cancellation. The property giving rise to such Eligible Accounts has been delivered to the Account Debtor, or to the Account Debtor's agent for immediate shipment to and unconditional acceptance by the Account Debtor. Borrowers have not received notice of actual or imminent bankruptcy, insolvency, or material impairment of the financial condition of any Account Debtor regarding any Eligible Account.

5.3 Eligible Inventory. All Eligible Inventory of Borrowers is of good and merchantable quality, free from known defects.

5.4 Equipment. All of the Equipment of Borrowers is used or held for use in Borrowers' business and is fit for such purposes.

5.6 Inventory Records. Each Borrower keeps correct and accurate records itemizing and describing the kind, type, quality, and quantity of its Inventory, and such Borrower's cost therefor.

5.7 Location of Chief Executive Office; FEIN. The chief executive office of each Borrower is located at 1720 Sublette Avenue, St. Louis, Missouri 63110, and each Borrower's FEIN is set forth below:

Borrower          FEIN
--------          ----

Parent            25-1370721
B&F               34-1792342
Hospital Systems  94-3218390
Life  Support     95-3560739

5.8 DUE Organization and Qualification; Subsidiaries.

(a) Each Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its incorporation and qualified and licensed to do business in, and in good standing in, any state where the failure to be so licensed or qualified reasonably could be expected to cause a Material Adverse Change.

5.9 DUE AUTHORIZATION; NO CONFLICT.

(a) The execution, delivery, and performance by each Borrower of this Agreement and the Loan Documents to which it is a party have been duly authorized by all necessary corporate action.

(b) The execution, delivery, and performance by each Borrower of this Agreement and the Loan Documents to which it is a party do not and will not (i) violate any provision of federal, state, or local law or regulation (including Regulations T, U, and X of the Federal Reserve Board) applicable to such Borrower, the Governing Documents of such Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on such Borrower,
(ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation or material lease of such Borrower, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of such Borrower, other than Permitted Liens, or (iv)require any approval of stockholders or any approval or consent of any Person under any material contractual obligation of such Borrower.

(c) Other than the filing of appropriate financing statements, fixture filings, and mortgages, the execution, delivery, and performance by each Borrower of this Agreement and the Loan Documents to which such Borrower is a party do not and

will not require any registration with, consent, or approval of, or notice to, or other action with or by, any federal, state, foreign, or other Governmental Authority or other Person.

(d) This Agreement and the Loan Documents to which any Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by such Borrower will be the legally valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally.

(e) The Liens granted by each Borrower to Foothill in and to its properties and assets pursuant to this Agreement and the other Loan Documents are validly created, perfected, and first priority Liens, subject only to Permitted Liens.

5.11 No Material Adverse Change. All financial statements relating to any Borrower or any guarantor of the Obligations that have been delivered by any Borrower to Foothill have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and fairly present such Borrower's (or such guarantor's, as applicable) financial condition as of the date thereof and such Borrower's results of operations for the period then ended. There has not been a Material Adverse Change with respect to any Borrower (or such guarantor, as applicable) since the date of the latest financial statements submitted to Foothill on or before the Closing Date.

5.12 Solvency. Each Borrower is Solvent. No transfer of property is being made by any Borrower and no obligation is being incurred by any Borrower in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Borrower.

nor has any other event occurred that may result in' an ERISA Event that reasonably could be expected to result in a Material Adverse Change. None of Borrowers or their Subsidiaries, any ERISA Affiliate, or any fiduciary of any Plan is subject to any direct or indirect liability with respect to any Plan under any applicable law, treaty, rule, regulation, or agreement. None of Borrowers or their Subsidiaries or any ERISA Affiliate is required to provide security to any Plan under Section 401(a)(29) of the IRC.

5.14 Environmental Condition. None of Borrowers' properties or assets has ever been used by any Borrower or, to the best of each Borrower's knowledge, by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials. None of Borrowers' properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, or a candidate for closure pursuant to any environmental protection statute. No Lien arising under any environmental protection statute has attached to any revenues or to any real or personal property owned or operated by any Borrower. No Borrower has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal or state governmental agency concerning any action or omission by any Borrower resulting in the releasing or disposing of Hazardous Materials into the environment.

6. AFFIRMATIVE COVENANTS.

Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations, and unless Foothill shall otherwise consent in writing, such Borrower shall do all of the following:

6.1 Accounting System. Maintain a standard and modern system of accounting that enables such Borrower to produce financial statements in accordance with GAAP, and maintain records pertaining to its Collateral that contain information as from time to time may be requested by Foothill. Such Borrower also shall keep a modern inventory reporting system that shows all additions, sales, claims, returns, and allowances with respect to its Inventory.

6.2 Collateral Reporting. Provide Foothill with the following documents at the following times in form satisfactory to Foothill: (a) on a weekly basis, the summary page of each such Borrower's Accounts aging report, (b) on a monthly basis, a sales journal, collection journal, and credit register since the last such schedule and a calculation of the Borrowing Base as of such date using the amount of ineligible Accounts as determined based upon the prior month's aging of Accounts, (c) on a monthly basis and, in any event, by no later than the 10th Business Day of each month during the term of this Agreement, (i) a detailed calculation of the Borrowing Base, and (ii) a detailed aging, by total, of such Borrower's Accounts, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided to Foothill, (d) on a monthly basis and, in any event, by no later than the 10th Business Day of each month during the term of this Agreement, a summary aging, by vendor, of such Borrower's accounts payable and any

book overdraft, (e) on a monthly basis, Inventory reports specifying such Borrower's cost, (f) upon Foothill's request, notice of all returns, disputes, or claims, (g) upon Foothill's request, copies of invoices in connection with its Accounts, customer statements, credit memos, remittance advices and reports, deposit slips, shipping and delivery documents in connection with its Accounts and for Inventory and Equipment acquired by such Borrower, purchase orders and invoices, (h) on a quarterly basis, a detailed list of such Borrower's customers, (i) on a monthly basis, a calculation of the Dilution for the prior month; and (j) such other reports as to the Collateral or the financial condition of such Borrower as Foothill may request from time to time. Original sales invoices evidencing daily sales shall be mailed by such Borrower to each Account Debtor and, at Foothill's direction, the invoices shall indicate on their face that such Borrower's Account has been assigned to Foothill and that all payments are to be made directly to Foothill. In the event that, at any time, Borrowers' excess borrowing availability under Section 2.1 shall be less than $3,000,000, then Borrower agrees that Foothill may, in the exercise of its reasonable credit judgment, require changes in the frequency and type of reports required under this Section 6.2.

6.3 Financial Statements, Reports, Certificates. Deliver to Foothill: (a) as soon as available, but in any event within 45 days after the end of each month during each of Parent's fiscal years, a company prepared balance sheet, income statement, and statement of cash flow covering Parent's operations during such period; and (b) as soon as available, but in any event within 90 days after the end of each of such Parent's fiscal years, financial statements of Parent for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Foothill and certified, without any qualifications, by such accountants to have been prepared in accordance with GAAP, together with a certificate of such accountants addressed to Foothill stating that such accountants do not have knowledge of the existence of any Default or Event of Default. Such audited financial statements shall include a balance sheet, profit and loss statement, and statement of cash flow and, if prepared, such accountants' letter to management. In addition to the financial statements referred to above, Parent agrees to deliver financial statements prepared on a consolidating basis so as to present such Parent and each such related entity separately, and on a consolidated basis.

Together with the above, Parent also shall deliver to Foothill such Parent's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K Current Reports, and any other filings made by Parent with the Securities and Exchange Commission, if any, as soon as the same are filed, or any other information that is provided by Parent to its shareholders, and any other report reasonably requested by Foothill relating to the financial condition of such Parent.

Each Borrower shall have issued written instructions to its independent certified public accountants authorizing them to communicate with Foothill and to release to Foothill whatever financial information concerning such Borrower that Foothill may request. Each Borrower hereby irrevocably authorizes and directs all auditors, accountants, or other third parties to deliver to Foothill, at such Borrower's expense, copies of such Borrower's financial statements, papers related thereto, and other accounting records of any nature in their possession, and to disclose to Foothill any information they may have regarding such Borrower's business affairs and financial conditions.

6.4 Tax Returns. Deliver to Foothill copies of each of such Parent's future federal income tax returns, and any amendments thereto, within 45 days of the filing thereof with the Internal Revenue Service.

6.5 [Intentionally Omitted].

6.6 Returns. Cause returns and allowances, if any, as between such Borrower and its Account Debtors to be on the same basis and in accordance with the usual customary practices of such Borrower, as they exist at the time of the execution and delivery of this Agreement. If, at a time when no Event of Default has occurred and is continuing, any Account Debtor returns any Inventory to such Borrower, such Borrower shall determine the reason for such return as soon as reasonably practicable and, if such Borrower accepts such return, issue a credit memorandum (with a copy to be sent to Foothill) in the appropriate amount to such Account Debtor. If, at a time when an Event of Default has occurred and is continuing, any Account Debtor returns any Inventory to such Borrower, such Borrower promptly shall determine the reason for such return and, if Foothill consents (which consent shall not be unreasonably withheld), issue a credit memorandum (with a copy to be sent to Foothill) in the appropriate amount to such Account Debtor.

6.7 Title to Equipment. Upon Foothill's request, such Borrower immediately shall deliver to Foothill, properly endorsed,any and all evidences of ownership of, certificates of title, or applications for title to any items of its Equipment.

6.8 Maintenance of Equipment. Maintain its Equipment in good operating condition and repair (ordinary wear and tear excepted), and make all necessary replacements thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved. Other than those items of Equipment that constitute fixtures on the Closing Date, such Borrower shall not permit any item of its Equipment to become a fixture to real estate or an accession to other property, and such Equipment shall at all times remain personal property.

6.9 Taxes. Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or imposed, levied, or assessed against such Borrower or any of its property to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Such Borrower shall make due and timely payment or deposit of all such federal, state, and local taxes, assessments, or contributions required of it by law, and will execute and deliver to Foothill, on demand, appropriate certificates attesting to the payment thereof or deposit with respect thereto. Such Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Foothill with proof satisfactory to Foothill indicating that such Borrower has made such payments or deposits.

6.10 Insurance.

(a) At its expense, keep its Personal Property Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as are ordinarily insured against by other owners in similar businesses. Such Borrower also shall maintain business interruption, public liability, product liability, and property damage insurance relating to such Borrower's ownership and use of its Personal Property Collateral, as well as insurance against larceny, embezzlement, and criminal misappropriation.

(b) At its expense, obtain and maintain (i) insurance of the type necessary to insure the Improvements and Chattels (as such terms are defined in the Mortgages), for the full replacement cost thereof, against any loss by fire, lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle damage, earthquakes, elevator collision, and other risks from time to time included under "extended coverage" policies, in such amounts as Foothill may require, but in any event in amounts sufficient to prevent such Borrower from becoming a co-insurer under such policies, (ii) combined single limit bodily injury and property damages insurance against any loss, liability, or damages on, about, or relating to each parcel of Real Property Collateral, in an amount of not less than $1,000,000; and (iii) insurance for such other risks as Foothill may require. Replacement costs, at Foothill's option, may be redetermined by an insurance appraiser, satisfactory to Foothill, not more frequently than once every 12 months at such Borrower's cost.

(d) Original policies or certificates thereof satisfactory to Foothill evidencing such insurance shall be delivered to Foothill prior to the expiration of the existing or preceding policies. Such Borrower shall give Foothill prompt notice of any loss covered by such insurance, and Foothill shall have the right to adjust any loss. Foothill shall have the exclusive right to adjust all losses payable under any such insurance policies without any liability to such Borrower whatsoever in respect of such adjustments. Any monies received as payment for any loss under any insurance policy including the insurance policies mentioned above, shall be paid over to Foothill to be applied at the option of Foothill either to the prepayment of the Obligations without premium, in such order or manner as Foothill may elect, or shall be disbursed to such Borrower under stage payment terms satisfactory to Foothill for application to the cost of repairs, replacements, or restorations. Ail repairs, replacements, or restorations shall be effected with reasonable promptness and shall be of a value at least equal to the value of the items or property destroyed prior to such damage or destruction. Upon the occurrence of an Event of Default, Foothill shall have the right to apply all prepaid premiums to the payment of the Obligations in such order or form as Foothill shall determine.

6.11 No Setoffs or Counterclaims. Make payments hereunder and under the other Loan Documents by or on behalf of such Borrower without setoff or counterclaim and free and clear of, and without deduction or withholding for or on account of, any federal, state, or local taxes.

6.13 Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any governmental authority, including the Fair Labor Standards Act and the Americans With Disabilities Act, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, would not have and could not reasonably be expected to cause a Material Adverse Change.

6.14 Employee Benefits.

(a) Deliver to Foothill: (i) promptly, and in any event within 10 Business Days after such Borrower or any of its Subsidiaries knows or has reason to know that an ERISA Event has occurred that reasonably could be expected to result in a Material Adverse Change, a written statement of the chief financial officer of such Borrower describing such ERISA Event and any action that is being taken with respect thereto by such Borrower, any such Subsidiary or ERISA Affiliate, and any action taken or threatened by the IRS, Department of Labor, or PBGC. Such Borrower or such Subsidiary, as applicable, shall be deemed to know all facts known by the administrator of any Benefit Plan of which it is the plan sponsor, (ii) promptly, and in any event within 3 Business Days after the filing thereof with the IRS, a copy of each funding waiver request fried with respect to any Benefit Plan and all communications received by such Borrower, any of its Subsidiaries or, to the knowledge of such Borrower, any ERISA Affiliate with respect to such request, and (iii) promptly, and in any event within 3 Business Days after receipt by such Borrower, any of its Subsidiaries or, to the knowledge of such Borrower, any ERISA Affiliate, of the PBGC's intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such notice.

(b) Cause to be delivered to Foothill, upon Foothill's request, each of the following: (i) a copy of each Plan (or, where any such plan is not in writing, complete description thereof) (and if applicable, related trust agreements or other funding instruments) and all amendments thereto, all written interpretations thereof and written descriptions thereof that have been distributed to employees or former employees of such

Borrower or its Subsidiaries; (ii) the most recent determination letter issued by the IRS with respect to each Benefit Plan; (iii) for the three most recent plan years, annual reports on Form 5500 Series required to be filed with any governmental agency for each Benefit Plan; (iv) all actuarial reports prepared for the last three plan years for each Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate amount of the most recent annual contributions required to be made by such Borrower or any ERISA Affiliate to each such plan and copies of the collective bargaining agreements requiring such contributions; (vi) any information that has been provided to such Borrower or any ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual payments made to former employees of such Borrower or its Subsidiaries under any Retiree Health Plan.

6.15 Leases. Pay when due all rents and other amounts payable under any leases to which such Borrower is a party or by which such Borrower's properties and assets are bound, unless such payments are the subject of a Permitted Protest. To the extent that such Borrower fails timely to make payment of such rents and other amounts payable when due under its leases, Foothill shall be entitled, in its discretion, to reserve an amount equal to such unpaid amounts against the Borrowing Base.

7. NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations, such Borrower will not, without Foothill's prior written approval which may be given in Foothill's sole discretion, do any of the following:

7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except:

(a) Indebtedness evidenced by this Agreement, together with Indebtedness to issuers of letters of credit that are the subject of L/C Guarantees;

(b) Indebtedness set forth in the latest financial statements of Borrowers submitted to Foothill on or prior to the Closing Date;

(c) Indebtedness secured by Permitted Liens;

(d) Indebtedness evidenced by the Junior Notes and by that certain $5,000,000 Promissory Note in favor of LaSalle National Bank, dated August 7, 1998;

(e) The private placement of subordinate debt on terms and conditions consistent in all material respects with the A.G. Edwards draft Private Placement Memorandum dated July 24, 1997, with subordination provisions no less favorable than those set forth in those certain Subordination Agreements entered into by Foothill in connection with the Junior Notes; and

7.3 Restrictions on Fundamental Changes. Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its capital stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its property or assets.

7.4 Disposal of Assets. Sell, lease, assign, transfer, or otherwise dispose of any of such Borrower's properties or assets other than sales of Inventory to buyers in the ordinary course of such Borrower's business as currently conducted.

7.5 Change Name. Change such Borrower's name, FEIN, corporate structure (within the meaning of Section 9402(7) of the Code), or identity, or add any new fictitious name.

7.6 Guarantee. Guarantee or otherwise become in any way liable with respect to the obligations of any third Person except by endorsement of instruments or items of payment for deposit to the account of such Borrower or which are transmitted or turned over to Foothill.

7.7 Nature of Business. Make any change in the principal nature of such Borrower's business.

7.8 Prepayments and Amendments.

7.9 Change of Control. Cause, permit, or suffer, directly or indirectly, any Change of Control.

7.10 Consignments. Consign any Inventory or sell any of its Inventory on bill and hold, sale or return, sale on approval, or other conditional terms of sale.

7.11 Distributions. Make any distribution or declare or pay any dividends (in cash or other property, other than capital stock) on, or purchase, acquire, redeem, or retire any of such Borrower's capital stock, of any class, whether now or hereafter outstanding.

7.12 Accounting Methods. Modify or change its method of accounting or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of such Borrower's accounting records without said accounting firm or service bureau agreeing to provide Foothill information regarding the Collateral or such Borrower's financial condition. Such Borrower waives the right to assert a confidential relationship, if any, it may have with any accounting firm or service bureau in connection with any information requested by Foothill pursuant to or in accordance with this Agreement, and agrees that Foothill may contact directly any such accounting firm or service bureau in order to obtain such information.

7.13 Investments. Directly or indirectly make, acquire, or incur any liabilities (including contingent obligations) for or in connection with (a) the acquisition of the securities (whether debt or equity) of, or other interests in, a Person, (b)loans, advances, capital contributions, or transfers of property to a Person, or (c) the acquisition of all or substantially all of the properties or assets of a Person.

7.14 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of such Borrower except for transactions that are in the ordinary course of such Borrower's business, upon fair and

reasonable terms, that are fully disclosed to Foothill, and that are no less favorable to such Borrower than would be obtained in an arm's length transaction with a non-Affiliate.

7.15 Suspension. Suspend or go out of a substantial portion of its business.

7.16 [Intentionally Omitted].

7.17 Use of Proceeds. Use (a)the proceeds of the Advances made hereunder for any purpose other than (i) on the Closing Date, (y) to repay in full the outstanding principal, accrued interest, and accrued fees and expenses owing to Existing Lender, and (z) to pay transactional costs and expenses incurred in connection with this Agreement, and (ii) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted corporate purposes.

7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees. Relocate its chief executive office to a new location without providing 30 days prior written notification thereof to Foothill and so long as, at the time of such written notification, such Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected Foothill's security interests and also provides to Foothill a Collateral Access Agreement with respect to such new location. The Inventory and Equipment of such Borrower shall not at any time now or hereafter be stored with a bailee, warehouseman, or similar party without Foothill's prior written consent.

7.19 No Prohibited Transactions Under ERISA. Directly or indirectly:

(a) engage, or permit any Subsidiary of such Borrower to engage, in any prohibited transaction which is reasonably likely to result in a civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the Department of Labor;

(b) permit to exist with respect to any Benefit Plan any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or not waived;

(c) fail, or perm- it any Subsidiary of such Borrower to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan;

(d) terminate, or permit any Subsidiary of such Borrower to terminate, any Benefit Plan where such event would result in any liability of such Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;

(e) fail, or permit any Subsidiary of such Borrower to fail, to make any required contribution or payment to any Multiemployer Plan;

(f) fail, or permit any Subsidiary of such Borrower to fail, to pay any required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment;

(g) amend, or permit any Subsidiary of such Borrower to amend, a Plan resulting in an increase in current liability for the plan year such that either of such Borrower, any Subsidiary of such Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the IRC; or

(h) withdraw, or permit any Subsidiary of such Borrower to Multiemployer Plan where such withdrawal is reasonably likely to of any such withdraw, from any result in any liability entity under Title IV of ERISA;

which, individually or in the aggregate, results in or reasonably would be expected to result in a claim against or liability of such Borrower, any of its Subsidiaries or any ERISA Affiliate in excess of $500,000.

7.20 Financial Covenants. Have Parent fail to maintain:

(a) Minimum Tangible Net Worth. Minimum Tangible Net Worth of not less than: (i) $20,000,000, measured as of any month end during Parent's fiscal year 1999, and (ii) $21,000,000, measured as of any month end thereafter.

(b) [Intentionally Omitted]

(c) [Intentionally Omitted]

7.21 Capital Expenditures. Borrowers shall, in the aggregate, make capital expenditures in any fiscal year in excess of $3,000,000.

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an "Event of Default") under this Agreement:

8.1 If Borrowers fail to pay when due and payable or when declared due and payable, any portion of the Obligations (whether of principal, interest (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due Foothill, reimbursement of Foothill Expenses, or other amounts constituting Obligations);

8.3 If there is a Material Adverse Change;

8.4 If any material portion of any Borrower's properties or assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any third Person;

8.5 If an Insolvency Proceeding is commenced by any Borrower;

8.7 If any Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

8.9 If judgments or other claims, in excess of $250,000 in the aggregate, become Liens or encumbrances upon any material portion of any Borrower's properties or

assets, and such Liens or encumbrances are not discharged within 30 days of the date thereof or stayed pending appeal;

8.10 If there is a default in any material agreement to which any Borrower is a party with one or more third Persons (including LaSalle National Bank) and such default (a) occurs at the final maturity of the obligations thereunder, or
(b) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of such Borrower's obligations thereunder;

8.11 If any Borrower makes any payment on account of Indebtedness that has been contractually subordinated in right of payment to the payment of the Obligations, except to the extent such payment is permitted by the terms of the subordination provisions applicable to such Indebtedness; or

8.12 If any material misstatement or misrepresentation exists now or hereafter in any warranty, representation, statement, or report made to Foothill by any Borrower or any officer, employee, agent, or director of any Borrower, or if any such warranty or representation is withdrawn.

9. FOOTHILL'S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an Event of Default Foothill may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrowers:

(a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable;

(b) Cease advancing money or extending credit to or for the benefit of Borrowers under this Agreement, under any of the Loan Documents, or under any other agreement between Borrowers and Foothill;

(c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of Foothill, but without affecting Foothill's rights and security interests in the Personal Property Collateral or the Real Property Collateral and without affecting the Obligations;

(d) Settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which Foothill considers advisable, and in such cases, Foothill will credit Borrowers' Loan Account with only the net amounts received by Foothill in payment of such disputed Accounts after deducting all Foothill Expenses incurred or expended in connection therewith;

(e) Cause Borrowers to hold all of their returned Inventory in trust for Foothill, segregate all such returned Inventory from all other property of any Borrower or in any Borrower's possession and conspicuously label said returned Inventory as the property of Foothill;

(f) Without notice to or demand upon any Borrower or any guarantor, make such payments and do such acts as Foothill considers necessary or reasonable to protect its security interests in the Collateral. Borrowers agree to assemble the Personal Property Collateral if Foothill so requires, and to make the Personal Property Collateral available to Foothill as Foothill may designate. Each Borrower authorizes Foothill to enter the premises where the Personal Property Collateral is located, to take and maintain possession of the Personal Property Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or Lien that in Foothill's determination appears to conflict with its security interests and to pay all expenses incurred in connection therewith. With respect to any of Borrowers' owned or leased premises, each Borrower hereby grants Foothill a license to enter into possession of such premises and to occupy the same, without charge, for up to 120 days in order to exercise any of Foothill's rights or remedies provided herein, at law, in equity, or otherwise;

(g) Without notice to any Borrower (such notice being expressly waived), and without constituting a retention of any collateral in satisfaction of an obligation (within the meaning of Section 9505 of the Code), set off and apply to the Obligations any and all (i) balances and deposits of any Borrower held by Foothill (including any amounts received in the Lockbox Accounts), or (ii) indebtedness at any time owing to or for the credit or the account of any Borrower held by Foothill;

(h) Hold, as cash collateral, any and all balances and deposits of any Borrower held by Foothill, and any amounts received in the Lockbox Accounts, to secure the full and final repayment of all of the Obligations;

(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Personal Property Collateral. Foothill is hereby granted a license or other right to use, without charge, any Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Personal Property Collateral, in completing production of, advertising for sale, and selling any Personal Property Collateral and each Borrower's rights under all licenses and all franchise agreements shall inure to Foothill's benefit;

(j) Sell the Personal Property Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including any Borrower's premises) as Foothill determines is commercially reasonable. It is not necessary that the Personal Property Collateral be present at any such sale;

(k) Foothill shall give notice of the disposition of the Personal Property Collateral as follows:

(1) Foothill shall give Borrowers and each holder of a security interest in the Personal Property Collateral who has filed with Foothill a written request for notice, a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Personal Property Collateral, then the time on or after which the private sale or other disposition is to be made;

(3) If the sale is to be a public sale, Foothill also shall give notice of the time and place by publishing a notice one time at least 5 days before the date of the sale in a newspaper of general circulation in the county in which the sale is to be held;

(1) Foothill may credit bid and purchase at any public sale; and

(m) Any deficiency that exists after disposition of the Personal Property Collateral as provided above will be paid immediately by Borrowers. Any excess will be returned, without interest and subject to the rights of third Persons, by Foothill to Borrowers.

9.2 Remedies Cumulative. Foothill's rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Foothill shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Foothill of one right or remedy shall be deemed an election, and no waiver by Foothill of any Event of Default shall be deemed a continuing waiver. No delay by Foothill shall constitute a waiver, election, or acquiescence by it.

10. TAXES AND EXPENSES.

If any Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, to the extent that Foothill determines that such failure by such Borrower could result

11. WAIVERS; INDEMNIFICATION.

11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Foothill on which such Borrower may in any way be liable.

11.2 Foothill's Liability for Collateral. So long as Foothill complies with its obligations, if any, under Section 9207 of the Code, Foothill shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person. All risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers.

that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations.

11.4 Joint Borrowers.

(a) Each Borrower agrees that it is jointly and severally, directly and primarily liable to Foothill for payment in full of all Obligations, whether for principal, interest or otherwise and that such liability is independent of the duties, obligations, and liabilities of the other Borrowers. Foothill may bring a separate action or actions on each, any, or all of the Obligations against any Borrower, whether action is brought against the other Borrowers or whether the other Borrowers are joined in such action. In the event that any Borrower fails to make any payment of any Obligations on or before the due date thereof, the other Borrowers immediately shall cause such payment to be made or each of such Obligations to be performed, kept, observed, or fulfilled.

(b) The Loan Documents are a primary and original obligation of each Borrower, are not the creation of a surety relationship, and are an absolute, unconditional, and continuing promise of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to the Loan Documents. Each Borrower agrees that its liability under the Loan Documents shall be immediate and shall not be contingent upon the exercise or enforcement by Foothill of whatever remedies it may have against the other Borrowers, or the enforcement of any lien or realization upon any security Foothill may at any time possess. Each Borrower consents and agrees that Foothill shall be under no obligation (under Section 2899 or 3433 of the California Civil Code or otherwise) to marshal any assets of any Borrower against or in payment of any or all of the Obligations.

(c) Each Borrower acknowledges that it is presently informed as to the financial condition of the other Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower hereby covenants that it will continue to keep informed as to the financial condition of the other Borrowers, the status of the other Borrowers and of all circumstances which bear upon the risk of nonpayment of the Obligations. Absent a written request from any Borrower to Foothill for information, such Borrower hereby waives any and all rights it may have to require Foothill to disclose to such Borrower any information which Foothill may now or hereafter acquire concerning the condition or circumstances of the other Borrowers.

(d) The liability of each Borrower under the Loan Documents includes Obligations arising under successive transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing the Obligations, changing the interest rate, payment terms, or other terms and conditions thereof, or creating new or additional Obligations after prior Obligations have been satisfied in whole or in part. To

the maximum extent permitted by law, each Borrower hereby waives any right to revoke its liability under the Loan Documents as to future indebtedness, and in connection therewith, each Borrower hereby waives any rights it may have under
Section 2815 of the California Civil Code. If such a revocation is effective notwithstanding the foregoing waiver, each Borrower acknowledges and agrees that
(a)no such revocation shall be effective until written notice thereof has been received by Foothill, (b) no such revocation shall apply to any Obligations in existence on such date (including, any subsequent continuation, extension, or renewal thereof, or change in the interest rate, payment terms, or other terms and conditions thereof), (c) no such revocation shall apply to any Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Foothill in existence on the date of such revocation, (d) no payment by such Borrower or from any other source prior to the date of such revocation shall reduce the maximum obligation of the other Borrowers hereunder, and (e) any payment by such Borrower or from any source other than Borrowers, subsequent to the date of such revocation, shall first be applied to that portion of the Obligations as to which the revocation is effective and which are not, therefore, guaranteed hereunder, and to the extent so applied shall not reduce the maximum obligation of each Borrower hereunder.

(e) (i) Each Borrower absolutely, unconditionally, knowingly, and expressly waives:

(1) (A) notice of acceptance hereof; (B) notice of any loans or other financial accommodations made or extended under the Loan Documents or the creation or existence of any Obligations; (C) notice of the amount of the Obligations, subject, however, to each Borrower's right to make inquiry of Foothill to ascertain the amount of the Obligations at any reasonable time; (D) notice of any adverse change in the financial condition of the other Borrowers or of any other fact that might increase such Borrower's risk hereunder; (E)notice of presentment for payment, demand, protest, and notice thereof as to any instruments among the Loan Documents; and (F) all notices (except if such notice is specifically required to be given to Borrowers hereunder or under the Loan Documents) and demands to which such Borrower might otherwise be entitled.

(2) its right, under Sections 2845 or 2850 of the California Civil Code, or otherwise, to require Foothill to institute suit against, or to exhaust any rights and remedies which Foothill has or may have against, the other Borrowers or any third party, or against any Collateral provided by the other Borrowers, or any third party. In this regard, each Borrower agrees that it is bound to the payment of all Obligations, whether now existing or hereafter accruing, as fully as if such Obligations were directly owing to Foothill by such Borrower. Each Borrower further waives any defense arising by reason of any disability or other defense (other than the defense that the Obligations shall have been fully and finally performed and indefeasibly paid) of the other Borrowers or by reason of the cessation from any cause whatsoever of the liability of the other Borrowers in respect thereof.

(3) (A) any rights to assert against Foothill any defense (legal or equitable), set-off, counterclaim, or claim which such Borrower may now or at any time hereafter have against the other Borrowers or any other party liable to Foothill; (B) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor; (C) any defense such Borrower has to performance hereunder, and any right such Borrower has to be exonerated, provided by Sections 2819, 2822, or 2825 of the California Civil Code, or otherwise, arising by reason of:
the impairment or suspension of Foothill's rights or remedies against the other Borrowers; the alteration by Foothill of the Obligations; any discharge of the other Borrowers' obligations to Foothill by operation of law as a result of Foothill's intervention or omission; or the acceptance by Foothill of anything in partial satisfaction of the Obligations; (D) the benefit of any statute of limitations affecting such Borrower's liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to such Borrower's liability hereunder.

(ii) Each Borrower absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of or deriving from (i) any claim or defense based upon an election of remedies by Foothill including any defense based upon an election of remedies by Foothill under the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of California or any other jurisdiction; or (ii) any election by Foothill under Bankruptcy Code Section 111 l(b) to limit the amount of, or any collateral securing, its claim against the Borrowers. Pursuant to California Civil Code Section 2856(b):

"Each Borrower waives all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed such Borrower's rights of subrogation and reimbursement against the other Borrowers by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise.

"Each Borrower waives all rights and defenses that such Borrower may have because another Borrower's Obligations are secured by real property. This means, among other things:

"(1) Foothill may collect from such Borrower without first foreclosing on any real or personal property collateral pledged by another Borrower.

"(2) If Foothill forecloses on any collateral pledged by another Borrower:
real property

(A) The amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

(B) Foothill may collect from such Borrower even if Foothill, by foreclosing on the real property collateral, has destroyed any right such Borrower may have to collect from another Borrower.

"This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have because the Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure."

If any of the Obligations at any time is secured by a mortgage or deed of trust upon real property, Foothill may elect, in its sole discretion, upon a default with respect to the Obligations, to foreclose such mortgage or deed of trust judicially or nonjudicially in any manner permitted by law, before or after enforcing the Loan Documents, without diminishing or affecting the liability of any Borrower hereunder except to the extent the Obligations are repaid with the proceeds of such foreclosure. Each Borrower understands that (a) by virtue of the operation of California's antideficiency law applicable to nonjudicial foreclosures, an election by Foothill nonjudicially to foreclose such a mortgage or deed of trust probably would have the effect of impairing or destroying rights of subrogation, reimbursement, contribution, or indemnity of such Borrower against the other Borrowers or other guarantors or sureties, and (b) absent the waiver given by such Borrower, such an election would prevent Foothill from enforcing the Loan Documents against such Borrower. Understanding the foregoing, and understanding that such Borrower is hereby relinquishing a defense to the enforceability of the Loan Documents, such Borrower hereby waives any right to assert against Foothill any defense to the enforcement of the Loan Documents, whether denominated "estoppel" or otherwise, based on or arising from an election by Foothill nonjudicially to foreclose any such mortgage or deed of trust. Each Borrower understands that the effect of the foregoing waiver may be that each Borrower may have liability hereunder for amounts with respect to which such Borrower may be left without rights of subrogation, reimbursement, contribution, or indemnity against the other Borrower or other guarantors or sureties. Each Borrower also agrees that the "fair market value" provisions of
Section 580a of the California Code of Civil Procedure shall have no applicability with respect to the determination of such Borrower's liability under the Loan Documents.

(iii) Until such time as all Obligations have been fully, finally, and indefeasibly paid in full, in cash, each Borrower hereby absolutely, unconditionally, knowingly, and expressly postpones: (1) any right of subrogation such Borrower has or may have as against the other Borrowers with respect to the Obligations; (2) any right to proceed against the other Borrowers or any other Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims, whether direct or indirect, liquidated or contingent, whether arising under express or implied contract or by operation of law, which such Borrower may now have or hereafter have as against the other Borrowers with respect to the Obligations; and (3) any right to proceed or seek recourse against or with respect to any property or asset of the other Borrowers.

(iv) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS SECTION 11.4, EACH BORROWER HEREBY ABSOLUTELY, KNOWINGLY, UNCONDITIONALLY, AND EXPRESSLY WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2825, 2839, 2845, 2848, 2849, AND 2850, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 580a, 580b, 580c, 580d, AND 726, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.

(f) Each Borrower consents and agrees that, without notice to or by such Borrower, and without affecting or impairing the liability of such Borrower hereunder, Foothill may, by action or inaction:

                    (i)     compromise,  settle, extend the duration or the time
for  the                         payment of, or discharge the performance of, or
may  refuse                         to  or  otherwise  not  enforce  the  Loan
Documents,  or  any  part                         thereof,  with  respect to the
other  Borrowers;

                    (ii)     release  the  other  Borrowers  or  grant  other
indulgences  to                         the  other Borrowers in respect thereof;
or

                    (iii)     release  or  substitute  any guarantor, if any, of
the                                   Obligations,  or  enforce,  exchange,
release,  or waive any                              security for the Obligations
or  any guaranty of the                              Obligations, or any portion
thereof.

(g) Foothill shall have the right to seek recourse against each Borrower to the fullest extent provided for herein, and no election by Foothill to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Foothill's right to proceed in any other form of action or proceeding

or against other parties unless Foothill has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Foothill under the Loan Documents shall serve to diminish the liability of any Borrower thereunder except to the extent that Foothill finally and unconditionally shall have realized indefeasible payment by such action or proceeding.

Borrowers and each of them warrant and agree that each of the waivers and consents set forth herein are made after consultation with legal counsel and with full knowledge of their significance and consequences, with the understanding that events giving rise to any defense or fight waived may diminish, destroy or otherwise adversely affect rights which Borrowers otherwise may have against other Borrowers, the Lender Group or others, or against Collateral. If any of the waivers or consents herein are determined to be contrary to any applicable law or public policy, such waivers and consents shall be effective to the maximum extent permitted by law.

If  to  Borrowers:     c/o ALLIED HEALTHCARE PRODUCTS, INC.
                       1720 Sublette Avenue
                       St.  Louis,  Missouri  63110
                       Attn:  Vice  President  Finance
                       Fax  No.  314.771.0650

                                       57

with  copies  TO:      GREENSFELDER,  HEMKER  &  GALE  P.C.
                       2000  Equitable  Building
                       10  South  Broadway
                       St.  Louis,  Missouri  63102
                       ATTN:  Vincent  J.  Garozzo,  Esq.
                       Fax  No.  314.241.3237

IF  TO  FOOTHILL:      FOOTHILL  CAPITAL  CORPORATION
                       11111  Santa  Monica  Boulevard
                       Suite  1500
                       Los  Angeles,  California  90025-3333
                       Attn:  Business  Finance  Division  Manager
                       Fax  No.  310.478.9788

with  copies  TO:      BUCHALTER,  NEMER,  FIELDS  &  YOUNGER
                       601  South  Figueroa,  Suite  2400
                       Los  Angeles,  California  90017
                       Attn:  Robert  C.  Colton,  Esq.
                       Fax  No.  213.896.0400

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN AN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF-FOOTI4ffLL, IN ANY OTHER

14. DESTRUCTION OF BORROWERS' DOCUMENTS.

All documents, schedules, invoices, agings, or other papers delivered to Foothill may be destroyed or otherwise disposed of by Foothill four months after they are delivered to or received by Foothill, unless Borrowers request, in writing, the return of said documents, schedules, or other papers and makes arrangements, at Borrowers' expense, for their return.

15. GENERAL PROVISIONS.

15.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective when executed by Borrowers and Foothill.

Borrowers and such assignment shall effect a novation between Borrowers and such third Person.

15.3 SECTION HEADINGS. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each section applies equally to this entire Agreement.

15.4 INTERPRETATION. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Foothill or Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

15.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

15.6 AMENDMENTS IN WRITING. This Agreement can only be amended by a writing signed by both Foothill and Borrowers.

15.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

15.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment of the Obligations by any Borrower or any guarantor of the Obligations or the transfer by either or both of such parties to Foothill of any property of either or both of such parties should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, and other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfers), and if Foothill is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Foothill is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Foothill related thereto, the liability of Borrowers or such guarantor automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

15.9 INTEGRATION. This Agreement, certain supplemental letters delivered concurrently herewith, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in Los Angeles, California.

ALLIED HEALTHCARE PRODUCTS, INC.,
a Delaware corporation

By Uma Nandan Aggarwal
Title: President and Chief Executive Officer

B&F MEDICAL PRODUCTS, INC.,
a Delaware corporation

By Uma Nandan Aggarwal
Title: President and Chief Executive Officer

HOSPITAL SYSTEMS, INC.,
a California corporation

By Uma Nandan Aggarwal
Title: President and Chief Executive Officer

LIFE SUPPORT PRODUCTS, INC.,
a California corporation

By Uma Nandan Aggarwal
Title: President and Chief Executive Officer

FOOTHILL," CAPITAL CORPORATION,
a California corporation

By Christopher J Coutu
Title: Vice President

SCHEDULE E-I

See Schedule 6.12

Schedule P-!

Liens on the Sublette real property and related fixtures as evidenced by that certain (i) Deed of Trust between Parent, Joseph Hipskind, as Trustee and LaSalle National Bank dated August 7, 1998 and (ii) UCC fixture filing attached hereto, securing that certain $5,000,000 Promissory Note made by Parent in favor of LaSalle National Bank.

Schedule P-I

Kinderhook Road
Stuyvesant Falls, NY 12174

1421 North Expressway Drive
Toledo, OH 43608

52 Gradolph Street
Toledo, OH 43608

Schedule 5.8
DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES

Allied Healthcare Products, Inc., a Delaware corporation, owns 100% of the issued and outstanding stock of the following corporations:

B&F Medical Products, Inc., a Delaware corporation with 100,000 shares of common stock, par value $. 01 (the "Common Stock"), authorized and 1,000 shares of Common Stock issued and outstanding.

Hospital Systems, Inc., a California corporation with 100,000 shares of common stock, no par value (the "Common Stock"), authorized and 100 shares of Common Stock issued and outstanding.

Life Support Products, Inc., a California corporation with 3,000,000 shares of stock authorized consisting of 2,571,367 shares of common stock, no par value (the "Common Stock"), with 934,403 shares of Common Stock issued and outstanding and 428,633 shares of Series A preferred stock, no par value (the "Preferred Stock") with no shares of Preferred Stock issued and outstanding.

Omni-Tech Medical, Inc., a Kansas corporation ("Omni-Tech") with 100,000 shares of common stock, par value of $1.00 (the "Common Stock") authorized and 100,000 shares of Common Stock issued and outstanding. Omni-Tech has no material assets and is a dormant corporation.

SCHEDULE 5.10,
MATERIAL PROCEEDINGS

Product liability claims are asserted against the Borrowers from time to time for various injuries alleged to have resulted from defects in the manufacture and/or design of a Borrower's products. Product liability claims are covered by the Borrowers comprehensive general liability insurance policies, subject to certain deductible amounts. The Borrowers establish reserves for such deductible amounts, which they believe to be adequate based on their previous claims experience.

From time to time, the Borrowers are the subject of legal proceedings, including proceedings other than product liability claims, such as claims involving employee matters and similar claims. There are no material claims currently pending which could have a material adverse affect.

The following is a list of pending and potential litigation:

A.     Hammer  v.  Allied.  Mist-O-Gen
       -------------------------------

      Jurisdiction:           Circuit  Court  of  Illinois,  Will  Co.
      Date  of  incident:     October  20,  1995
      Case  file  date:       October  15,  1996
      Product  involved:      Mist-O-Gen  TAB  25  Tubing  Dryer
      Case  type:             Personal  injury

Jurisdiction:           Ontario  (Canada)  General  Division
Date  of  incident:     April  23,  1996
Case  file  date:       April  21,  1997
Date  of  service:      June  12,  1997
Product  involved:      Extractor
Case  type:             Wrongful  Death

D     Dubkoff.  et  al.  v.  Northcoast  Rehabilitation  Hospital.  et  al.
-     ---------------------------------------------------------------------

      Jurisdiction:           Superior  Court  for  State of California,
                              Contra Costa County

      Date  of  incident:     June  15,  1996  .
      Date  of  service:      November  3,  1997
      Product  involved:      Bear  3  Adult  Volume  Ventilator
      Case  type:             Wrongful  Death

Jurisdiction:           District Court of Travis County, Texas
Date  of  incident:     June  14,  1996
Date  of  service:      July  3,  1998
Product  involved:      Oxygen  Regulator
Case  type:             Personal  Injury

Jurisdiction:           District Court of Travis County, Texas
Date  of  incident:     June  14,  1996
Date  of  service:      July  3,  1998
Product  involved:      Oxygen  Regulator
Case  type:             Personal  Injury

Jurisdiction:           Court of Common Pleas,
                        Allegheny County Pennsylvania
Date  of  incident:     April  4,  1997
Date  of  service:      April  9,  1998
Product  involved:      Oxygen  Regulator
Case  type:             Personal  Injury

A.    Betty Ellis
       -------

      Date  of  incident:     March  22,  1997
      Product  involved:      BEAR  2
      Case  type:             Wrongful  Death

B.     Laurano
       -------

       Date  of  incident:    December  22,  1993
       Product  involved:     Unknown  Bear  product
       Case  type:            Personal  Injury

C.     Mary-  Lou  Demerly
       -------------------

       Date of incident:     November 8, 1996
       Case type:            Wrongful Termination

     A.     JWP  Bankruptcy.This  case  involves an insolvent installer alleging
            ----------------
Allied  owes               approximately  $94,000.00 arising out of an equipment
transaction around the Fall of          1996. We are in the process of gathering
the  necessary  documentation  to  show  we          have  paid  these  bills by
credits.

The items set forth on this Schedule 5.10 would not, if adversely decided, individually or collectively cause a Material Adverse Change to Borrower.

SCHEDULE 5.13 EMPLOYEE BENEFITS

None.

SCHEDULE 6.12
LOCATION OF INVENTORY AND EQUIPMENT

52 Gradolph Street
Toledo, OH 43608

Deroyal Industries
1601 Hwy 33, South
New Tazwell, TN 37825

COMPLIANCE CERTIFICATE
(Amended and Restated Loan and Security Agreement Section 6.3)

Date ___________, 199__

Foothill Capital Corporation
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, CA 90025-3333
Attention:___________________

RE: Amended and Restated Loan and Security Agreement, dated as of September 1, 1998 (the "Agreement") by and between FOOT!~L CAPITAL CORPORATION
("Lender") on the one hand and ALLIED E[EALTI{CARE PRODUCTS, INC. ("Parent")
and certain of its subsidiaries (jointly "Borrowers") on the other hand.

Dear___________:

In accordance with Section 6.3 of the Agreement, this letter shall serve as certification to Lender that to the best of my knowledge: (i) all financial statements have been prepared in accordance with GAAP and fairly represent the financial condition of Parent (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments), (ii) the representations and warranties of Borrowers set forth in the Agreement and other Loan Documents are tree and correct in all material respects on and as of the date of this certification (except to the extent that such representations and warranties relate solely to an earlier date), (iii) Parent is in compliance with the financial covenants set forth in Section 7.20 of the Agreement, and (iv) on the date of delivery of this certificate to Lender there does not exist any condition or event that constitutes a Default or Event of Default. Such certification is made as of the fiscal month ending____________,199_.

Sincerely,

ALLIED HEALTHCARE PRODUCTS, INC.

By:_____________________

Vice-President Finance