Document:

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                                                                    Exhibit 10.6

               AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

         AGREEMENT entered into as of the 27th day of September, 1999, by and
between HF Holdings, Inc., a Delaware corporation (the "COMPANY"), and Credit
Suisse First Boston Corporation, a Massachusetts corporation ("CSFB").

         WHEREAS, the Company and ICON Healthy & Fitness, Inc. ("HEALTH &
FITNESS") have made an exchange offer, pursuant to the Exchange Offer and
Consent Solicitation, dated July 30, 1999, as supplemented (the "EXCHANGE
Offer"), for all outstanding 13% Senior Subordinated Notes due 2002 of Health &
Fitness ("13% NOTES"), 15% Senior Secured Discount Notes due 2004 of IHF
Holdings, Inc. ("15% NOTES"), and 14% Senior Discount Notes due 2006 of ICON
Fitness Corporation ("14% NOTES");

         WHEREAS, pursuant to that certain term sheet, dated July 8, 1999, as
amended and attached to the Exchange Offer as Annex C (the "TERM SHEET"), CSFB
wishes to purchase from the Company, and the Company wishes to sell and issue to
CSFB, (i) shares of the Company's common stock, par value $.001 per share
("COMMON STOCK"), and (ii) convertible promissory notes of the Company, in each
case upon the terms and conditions herein set forth;

         NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement,
intending to be legally bound, mutually agree as follows:

                                   ARTICLE I.

                         PURCHASE AND SALE OF SECURITIES

         1.1. SALE AND ISSUANCE OF SHARES. Subject to the terms and conditions
of this Agreement, CSFB does hereby subscribe for and agrees to purchase at the
Closing (as defined below), and the Company does hereby agree to sell to CSFB at
the Closing, 643,754 shares (the "SHARES") of Common Stock.

         1.2. PURCHASE OF CONVERTIBLE NOTES. Subject to the terms and conditions
of this Agreement, CSFB does hereby agree to purchase at the Closing (as defined
below), and the Company does hereby agree to sell to CSFB at the Closing,
$7,500,000 principal amount of the Company's 0% Convertible Subordinated Notes
Due September 27, 2011 (the "NOTES"). The Notes shall have the terms and
provisions prescribed by the Amended and Restated Note Agreement ("NOTE
AGREEMENT"), the form of which is attached to this Agreement as Exhibit A.

         1.3. PURCHASE PRICE. In consideration for the sale of the Shares and
the Notes by the Company to CSFB hereunder, CSFB shall pay to the Company an
amount (the "PURCHASE PRICE") equal to ten million dollars ($10,000,000).
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         1.4. CLOSING. The purchase, sale and issuance of the Shares and the
Notes shall occur at a closing (the "CLOSING") to be held simultaneously with
the closing of the transactions contemplated by the Term Sheet (the "ICON
RESTRUCTURING"). At the Closing, and upon payment of the Purchase Price, the
Company shall issue and deliver to CSFB, or its nominee, one or more
certificates representing the Shares and one or more Notes in the form
prescribed by the Note Agreement. Payment of the Purchase Price shall be made at
the Closing by wire transfer of same day funds denominated in U.S. dollars,
unless otherwise mutually agreed in writing with the Company.

                                   ARTICLE II.

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         2.1. ORGANIZATION AND STANDING. The Company represents and warrants
that it is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and as proposed to be
conducted.

         2.2. AUTHORIZATION. The Company represents and warrants that all
corporate action on the part of the Company necessary for the authorization,
execution, delivery and performance of this Agreement by the Company, and for
the authorization, issuance and delivery of the Shares and Notes being sold
under this Agreement, has been taken. This Agreement, when executed and
delivered by all parties hereto, shall constitute the valid and legally binding
obligation of the Company, except to the extent the enforceability thereof may
be limited by bankruptcy laws, insolvency laws, reorganization laws, moratorium
laws or other laws affecting creditors' rights generally or by general equitable
principles.

         2.3. VALIDITY OF SHARES. The Company represents and warrants that the
Shares, when sold, issued and delivered in accordance with the terms of this
Agreement, shall be duly and validly issued, fully paid and nonassessable, and
free and clear of all liens, encumbrances and restrictions of any kind, except
as contemplated hereunder and under the Stockholders Agreement ("STOCKHOLDERS
AGREEMENT"), attached as Annex C to the Exchange Offer.

         2.4. ENFORCEABILITY OF NOTES. The Note Agreement and the Notes, when
executed and delivered by the parties thereto, shall constitute the valid and
legally binding obligations of the Company, except to the extent the
enforceability thereof may be limited by bankruptcy laws, insolvency laws,
reorganization laws, moratorium laws or other laws affecting creditors' rights
generally or by general equitable principles.

                                  ARTICLE III.

               REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF CSFB

         3.1. ORGANIZATION AND STANDING. CSFB represents and warrants that it is
a corporation duly organized, validly existing and in good standing under the
laws of

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the Commonwealth of Massachusetts and has all requisite power and authority to
carry on its business as now conducted and as proposed to be conducted.

         3.2. AUTHORIZATION. CSFB represents and warrants that all action on the
part of CSFB necessary for the authorization, execution, delivery and
performance of this Agreement by CSFB has been taken, and that this Agreement,
when executed and delivered by all parties hereto, shall constitute the valid
and legally binding obligation of CSFB, except to the extent the enforceability
thereof may be limited by bankruptcy laws, insolvency laws, reorganization laws,
moratorium laws or other laws affecting creditors' rights generally or by
general equitable principles.

         3.3. INVESTMENT REPRESENTATIONS AND UNDERTAKINGS.

                  (a) CSFB hereby represents that (i) the Shares and the Notes
         will be acquired by it for investment for its own account, not as a
         nominee or agent, and not with a view to the sale or distribution of
         any part thereof in violation of applicable federal and state
         securities laws, and (ii) it has no current intention of selling or
         otherwise distributing the same in violation of applicable federal and
         state securities laws. By executing this Agreement, CSFB further
         represents that it does not have any contract, undertaking, agreement
         or arrangement with any person to sell or otherwise transfer to such
         person, or to any other person, any of the Shares or the Notes in
         violation of applicable federal and state securities laws;

                  (b) CSFB understands that the Shares and the Notes have not
         been registered under the Securities Act of 1933, as amended (the "1933
         ACT") on the basis that the sale provided for in this Agreement and the
         issuance of securities hereunder is exempt from registration under the
         1933 Act pursuant to Section 4(2) thereof and regulations issued
         thereunder, and that the Company's reliance on such exemption is in
         part predicated on representations of CSFB set forth in this Agreement;

                  (c) CSFB represents that it has such knowledge in financial
         and business matters as to be capable of evaluating the merits and
         risks of its investment and that it is an "ACCREDITED INVESTOR" as such
         term is defined in Regulation D promulgated pursuant to Section 4(2) of
         the 1933 Act. CSFB further represents that it has had access, during
         the course of the transactions contemplated hereby and prior to its
         purchase of Shares and the Notes, to the same kind of information that
         is specified in Part I of a registration statement under the 1933 Act
         and that it has had, during the course of the transactions contemplated
         hereby and prior to its purchase of the Shares and the Notes, the
         opportunity to ask questions of, and receive answers from, the Company
         (and Health & Fitness) concerning the terms and conditions of the
         Exchange Offer and to obtain additional information (to the extent the
         Company (and Health & Fitness) possessed such information or could
         acquire it without unreasonable effort or expense) necessary to verify
         the accuracy of any information furnished to it or to

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         which it had access. CSFB understands that no federal or state agency
         has passed upon this investment or upon the Company, no has any such
         agency made any finding or determination as to the fairness of this
         investment;

                  (d) CSFB understands that the Shares and the Notes may not be
         sold, transferred or otherwise disposed of without registration under
         the 1933 Act or an exemption therefrom and, in the absence of an
         effective registration statement covering the Shares and the Notes or
         an available exemption from registration under the 1933 Act, that the
         Shares and the Notes may have to be held indefinitely and, as a
         consequence, that CSFB must be prepared to bear the economic risk of
         this investment for an indefinite period of time. In that regard, CSFB
         understands and acknowledges that, except as may be provided in the
         Stockholders Agreement, the Company is under no duty or obligation,
         contractual or otherwise, to register the Shares or the Notes under the
         1933 Act or to comply with the terms of any exemption thereunder. In
         particular, CSFB acknowledges that it is aware that the Shares and the
         Notes may not be sold pursuant to Rule 144 promulgated under the 1933
         Act unless all of the conditions of that Rule are met. Among the
         current conditions for use of Rule 144 by certain holders is the
         availability to the public of current information about the Company.
         Such information is not now available, and the Company has no current
         plans to make such information available. CSFB represents that, in the
         absence of an effective registration statement covering the Shares, it
         will sell, transfer or otherwise dispose of the Shares and the Notes
         only in a manner consistent with its representations set forth herein
         and then only in accordance with the Stockholders Agreement; and

                  (e) CSFB also understands and acknowledges that the
         Stockholders Agreement imposes certain obligations with respect to, and
         additional restrictions on transferability of, the Shares and that as a
         party to the Stockholders Agreement the certificates issued to it
         evidencing the Shares will bear certain legends restricting
         transferability of the Shares, all as required by the Stockholders'
         Agreement.

                                   ARTICLE IV.

                  CONDITIONS TO OBLIGATIONS OF CSFB AT CLOSING

         The obligations of the CSFB under Article I of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions:

         4.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Article II hereof shall be true and correct on and
as of the Closing with the same force and effect as if they had been made at the
Closing.

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         4.2. PERFORMANCE. The Company shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by it on or before the Closing.

         4.3. RESTRUCTURING CONDITIONS. All conditions to the obligation of CSFB
to consummate the ICON Restructuring under the Term Sheet shall have been
satisfied or waived.

                                   ARTICLE V.

             CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AT CLOSING

         The obligations of the Company under Article I of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions:

         5.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of CSFB contained in Article III hereof shall be true and correct on and as of
the Closing Date with the same force and effect as if they had been made at the
Closing.

         5.2. PERFORMANCE. CSFB shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it on or before the Closing.

         5.3. RESTRUCTURING CONDITIONS. CSFB shall have executed and delivered a
counterpart copy of the Stockholders Agreement, and all other conditions to the
obligation of the Company to consummate the Icon Restructuring under the Term
Sheet shall have been satisfied or waived.

                                   ARTICLE VI.

                           MUTUAL CONDITIONS PRECEDENT

         The obligations of the Company and CSFB under Article I of this
Agreement are subject to the fulfillment on or before the closing of each of the
following conditions:

         6.1. QUALIFICATIONS. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Shares and the Notes pursuant to this Agreement shall have been duly obtained
and shall be effective.

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                                  ARTICLE VII.

                                  MISCELLANEOUS

         7.1. PAYMENT OF FEES. The Company hereby agrees to:

                  (a) pay to CSFB (or an affiliate of CSFB designated by it) a
         fee in the amount of $881,000 in connection with the structuring of the
         ICON Restructuring, such fee being payable by the Company at the
         Closing of the ICON Restructuring or, if the ICON Restructuring is not
         consummated, promptly after the time the Company has abandoned the ICON
         Restructuring;

                  (b) subject to the terms of the Senior Credit Facility (as
         defined in the Note Agreement) from time to time in effect, during the
         Term (as defined in the Management Agreement (the "MANAGEMENT
         AGREEMENT"), dated as of September 27, 1999, entered into among Health
         & Fitness, the Company, Bain Capital Partners IV, L.P., IHF Holdings,
         Inc. and IHF Capital, Inc.), pay to CSFB (or an affiliate of CSFB
         designated by it) a management fee in an amount not to exceed $366,500
         per annum in exchange for strategic advisory services to be provided to
         the Company by CSFB, such fee being payable by the Company quarterly in
         arrears, with each payment being made sixty (60) days after the end of
         each fiscal quarter of the Company; provided, however, that the
         management fees payable with respect to fiscal year 2000 of the Company
         shall be payable in one installment of $274,875 on April 30, 2000 and
         one installment of $91,625 on July 31, 2000; and

                  (c) during the Term, allow CSFB to participate in the
         negotiation and consummation of any Liquidity Event (as defined in the
         Stockholders Agreement) by the Company, and pay (or cause to be paid)
         to CSFB (or an affiliate of CSFB designated by it) a fee in connection
         therewith equal to one half of one percent (0.5%) of the gross purchase
         price of the transaction (including all liabilities assumed or
         otherwise included in the transaction), such fee to be due and payable
         for the foregoing services at the closing of such transaction. This fee
         is the same fee contemplated to be paid to CSFB pursuant to Section
         2(c) of the Management Agreement, and is not intended to be in addition
         thereto.

         7.2. INDEMNITY AND LIABILITY. In consideration of the execution and
delivery of this Agreement by CSFB, the Company hereby agrees to indemnify,
exonerate and hold each of CSFB, and each of its affiliates, directors,
officers, fiduciaries, employees and agents and each of the partners,
shareholders, affiliates, directors, officers, fiduciaries, employees and
agents, advisors and attorneys of each of the foregoing (collectively, the
"INDEMNITEES") free and harmless from and against any and all actions, causes of
action, suits, liabilities and damages, and expenses in connection therewith,
including without limitation attorneys' fees and disbursements (collectively,
"LIABILITIES"), incurred by the Indemnitees or any of

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them as a result of, or arising out of, or relating to the ICON Restructuring,
the execution, delivery, performance, enforcement or existence of this Agreement
or the transactions contemplated hereby (including but not limited to any
indemnification obligations assumed or incurred by any Indemnitee)
(collectively, the "INDEMNIFIED LIABILITIES"), except for any such Indemnified
Liabilities arising on account of such Indemnitee's willful misconduct, and if
and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Company hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

         7.3. NO WAIVER; MODIFICATIONS IN WRITING. This Agreement sets forth the
entire understanding of the parties, and supersedes all prior agreements,
arrangements and communications, whether oral or written, with respect to the
subject matter hereof. No waiver of or consent to any departure from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof. Except as otherwise provided herein, no
amendment, modification or termination of any provision of this Agreement shall
be effective unless signed in writing by or on behalf of the Company and CSFB.

         7.4. TAXES. The Company shall pay any and all stamp, transfer and other
similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement and the original issuance of the Shares
and the Notes, but excluding all federal, state and local income or similar
taxes, and shall save and hold CSFB harmless from and against any and all
liabilities with respect to or resulting from any delay in paying, or omission
to pay, such taxes.

         7.5. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, but all of which taken together shall constitute one and the same
Agreement.

         7.6. BINDING EFFECT; ASSIGNMENT. The rights and obligations of CSFB
under this Agreement may not be assigned to any other person. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any person other than the parties to this
Agreement, and their respective successor and permitted assigns. This Agreement
shall be binding upon the Company and CSFB, and their respective successors and
permitted assigns.

         7.7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of Delaware as to
all matters including but not limited to matters of validity, construction,
effect, performance and remedies, but without giving effect to any choice or
conflict of laws provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.

         7.8. SEVERABILITY OF PROVISIONS. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be

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ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

         7.9. HEADINGS. The Article and Section headings used or contained in
this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.

         7.10. INJUNCTIVE RELIEF. Each of the parties to this Agreement hereby
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that, in the event of a
breach of any material provision of this Agreement, the aggrieved party may
elect to institute and prosecute proceedings to enforce specific performance or
to enjoin the continuing breach of such provision, as well as to obtain damages
for breach of this Agreement. By seeking or obtaining any such relief, the
aggrieved party will not be precluded from seeking or obtaining any other relief
to which it may be entitled.

         7.11. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES. All
agreements, representations and warranties contained herein or made in writing
by or on behalf of the Company or CSFB, as the case may be, in connection with
the transactions contemplated by this Agreement shall survive the execution and
delivery of this Agreement and the sale and purchase of the Shares and payment
therefor.

 [Remainder of page left intentionally blank; Next page is the signature page.]

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                                            HF HOLDINGS, INC.

                                            By:________________________________
                                               Name:
                                               Title:

                                            CREDIT SUISSE FIRST BOSTON
                                            CORPORATION

                                            By:________________________________
                                               Name:
                                               Title:

              [Signature page to the Securities Purchase Agreement]<PAGE>

                                                                    Exhibit 10.7

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                                  HF HOLDINGS, INC.

                         ----------------------------------
                                AMENDED AND RESTATED
                                   NOTE AGREEMENT
                         ----------------------------------

                           DATED AS OF SEPTEMBER 27, 1999

                                     $7,500,000
              0% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 27, 2011

--------------------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS
                             (NOT PART OF AGREEMENT)

                                                                        PAGE

1.
       PAYMENTS............................................................1
        1.1    INTEREST PAYMENT............................................1
        1.2    REQUIRED PRINCIPAL PAYMENTS.................................1
        1.3    MANNER OF PAYMENTS..........................................1

2.     REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................2
        2.1    REGISTRATION OF NOTES.......................................2
        2.2    EXCHANGE OF NOTES...........................................2
        2.3    REPLACEMENT OF NOTES........................................3
        2.4    ISSUANCE TAXES..............................................3

3.     GENERAL COVENANTS...................................................3
        3.1    PAYMENT OF NOTES AND MAINTENANCE OF OFFICE..................4
        3.2    MERGERS AND CONSOLIDATIONS..................................4
        3.3    FINANCIAL AND BUSINESS INFORMATION..........................4

4.     EVENTS OF DEFAULT...................................................5
        4.1    EVENTS OF DEFAULT...........................................5
        4.2    DEFAULT REMEDIES............................................6
        4.3    ANNULMENT OF ACCELERATION OF NOTES..........................7

5.     SUBORDINATION.......................................................7
        5.1    GENERAL.....................................................7
        5.2    INSOLVENCY..................................................7
        5.3    PROOFS OF CLAIM.............................................8
        5.4    DEFAULT IN RESPECT OF SENIOR DEBT...........................8
        5.5    TURNOVER OF PAYMENTS........................................10
        5.6    SUBORDINATION UNAFFECTED BY CERTAIN EVENTS....  ............10
        5.7    WAIVER AND CONSENT..........................................11
        5.8    REINSTATEMENT OF SUBORDINATION..............................11
        5.9    OBLIGATIONS NOT IMPAIRED....................................12
        5.10   PAYMENT OF SENIOR DEBT; SUBROGATION.........................12
        5.11   RELIANCE OF HOLDERS OF SENIOR DEBT..........................12
        5.12   IDENTITY OF HOLDERS OF SENIOR DEBT..........................13

6.     INTERPRETATION OF THIS AGREEMENT....................................13
        6.1    TERMS DEFINED...............................................13
        6.2    ACCOUNTING PRINCIPLES.......................................24
        6.3    SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.....25
        6.4    GOVERNING LAW...............................................26
<PAGE>

7.     CONVERSION AND EXCHANGE OF NOTES FOR COMMON STOCK...................26
        7.1    NOTICE OF OCCURRENCE OF A TRIGGERING EVENT..................26
        7.2    CONVERSION OF NOTES AT OPTION OF HOLDER.....................26
        7.3    EXCHANGE OF NOTES FOR COMMON STOCK BY THE COMPANY...........28
        7.4    RESERVATION OF SHARES.......................................29
        7.5    ADJUSTMENT OF CONVERSION PRICE IN RESPECT OF STOCK
               DIVIDENDS, STOCK SPLITS, ETC................................30
        7.6    DE MINIMIS CHANGES IN CONVERSION PRICE......................30
        7.7    NOTICE OF CHANGE IN CONVERSION PRICE........................31
        7.8    EFFECT OF CONSOLIDATION, MERGER, SALE OR RECLASSIFICATION...31
        7.9    COMMON STOCK SUBJECT TO STOCKHOLDERS AGREEMENT..............32
        7.10   INTEREST IN EXCESS OF 24.9%.................................32
        7.11   AUTOMATIC CONVERSION UPON INSOLVENCY.... ...................33

8.     MISCELLANEOUS.......................................................34
        8.1    COMMUNICATIONS..............................................34
        8.2    REPRODUCTION OF DOCUMENTS...................................35
        8.3    ENTIRE AGREEMENT............................................35
        8.4    SUCCESSORS AND ASSIGNS......................................35
        8.5    AMENDMENT AND WAIVER........................................36
        8.6    EXPENSES....................................................37
        8.7    WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC..........37
        8.8    EXECUTION IN COUNTERPART....................................39

Annex 1              --  Address of Purchaser; Payment Instructions
Annex 2              --  Addresses for Notices

Attachment A         --  Form of Note

<PAGE>

                       AMENDED AND RESTATED NOTE AGREEMENT

       AMENDED AND RESTATED NOTE AGREEMENT, dated as of September 27, 1999,
among HF HOLDINGS, INC., a Delaware corporation (together with its successors
and assigns, the "COMPANY"), and CREDIT SUISSE FIRST BOSTON CORPORATION, a
Massachusetts corporation (together with its affiliates and their respective
successors and assigns, the "PURCHASER").

                                    RECITALS

       WHEREAS, pursuant to the Securities Purchase Agreement, the Purchaser has
agreed to purchase from the Company, and the Company has agreed to sell to the
Purchasers, Seven Million Five Hundred Thousand Dollars ($7,500,000) in
aggregate principal amount of the Notes; and

       WHEREAS, the Company and the Purchaser wish to enter into this Agreement
to govern the terms of the Notes;

                                    AGREEMENT

       NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties to this Agreement hereby agree as
follows:

1.       PAYMENTS

         1.1      NO INTEREST PAYMENTS.

         No interest shall accrue or be payable on the Notes.

         1.2      PAYMENT UPON MATURITY.

         The entire principal of the Notes outstanding on September 27, 2011
shall become due and payable on such date.

         1.3      MANNER OF PAYMENTS.

                  (a) MANNER OF PAYMENT. The Company shall pay all amounts
         payable with respect to each Note (without any presentment of such
         Notes and without any notation of such payment being made thereon) by
         crediting, by federal funds bank wire transfer, the account of the
         holder thereof in any bank in the United States of America as may be
         designated in writing by such holder, or in such other manner as may be
         reasonably directed or to such other address in the United States of
         America as may be reasonably designated in writing by such holder.
         Annex 1 shall be deemed to constitute notice, direction or designation
         (as appropriate) by the Purchaser to the Company with respect

<PAGE>

         to payments to be made to the Purchaser as aforesaid. In the absence of
         such written direction, all amounts payable with respect to each Note
         shall be paid by check mailed and addressed to the registered holder of
         such Note at the address shown in the register maintained by the
         Company pursuant to Section 2.1.

                  (b) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with
         respect to, any Note shall fall due on a day other than a Business Day,
         then such payment shall be made on the first Business Day following the
         day on which such payment shall have so fallen due.

                  (c) PAYMENTS, WHEN RECEIVED. Any payment to be made to the
         holders of Notes hereunder or under the Notes shall be deemed to have
         been made on the Business Day such payment actually becomes available
         at such holder's bank prior to the close of business of such bank.

2.       REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

         With respect to any transfer of Notes under this Agreement, the
respective rights and obligations of the holders of the Notes and the Company
under this Section 2 are, notwithstanding the provisions of this Section 2,
subject to, and shall be construed consistent with, the terms of the
Stockholders Agreement.

         2.1      REGISTRATION OF NOTES.

         The Company will keep at its office, maintained pursuant to Section
3.1, a register for the registration and transfer of Notes. The name and address
of each holder of one or more Notes, each transfer thereof made in accordance
with Section 2.2 and the name and address of each transferee of one or more
Notes shall be registered in such register. The Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary, other than in accordance with Section 2.2.

         2.2      EXCHANGE OF NOTES.

                  (a) EXCHANGE OF NOTES. Upon surrender of any Note at the
         office of the Company maintained pursuant to Section 3.1, duly endorsed
         or accompanied by a written instrument of transfer duly executed by the
         registered holder of such Note or such holder's attorney duly
         authorized in writing, the Company will execute and deliver, at the
         Company's expense (except as provided in Section 2.2(b)), a new Note or
         Notes in exchange therefor, in an aggregate principal amount equal to
         the unpaid principal amount of the surrendered Note. Each such new Note
         shall be registered in the name of such Person as such holder may
         request and shall be substantially in the form of Attachment A. Each
         such new Note shall be dated the date of

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<PAGE>

         the surrendered Note. Each such new Note shall carry the same rights
         that were carried by the Note so exchanged or transferred. Notes shall
         not be transferred in denominations of less than One Hundred Thousand
         Dollars ($100,000), PROVIDED that a holder of Notes may transfer its
         entire holding of Notes regardless of the principal amount of such
         holder's Notes.

                  (b) COSTS. The Company will pay the cost of delivering to or
         from such holder's home office or custodian bank from or to the
         Company, insured to the reasonable satisfaction of such holder, the
         surrendered Note and any Note issued in substitution or replacement for
         the surrendered Note. The Company may require payment of a sum
         sufficient to cover any stamp tax or governmental charge imposed in
         respect of any such transfer of Notes.

         2.3      REPLACEMENT OF NOTES.

         Upon receipt by the Company from the registered holder of a Note of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Note (which evidence shall be, in the case of an
institutional investor, notice from such institutional investor of such loss,
theft, destruction or mutilation), and:

                  (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to the Company; PROVIDED, HOWEVER, that if the
         holder of such Note is a Purchaser, an institutional investor or a
         nominee of either, the unsecured agreement of indemnity of such
         Purchaser or such institutional investor (but not of any nominee
         therefor) shall be deemed to be satisfactory; or

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

the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated the date of such lost, stolen, destroyed or mutilated
Note.

         2.4      ISSUANCE TAXES.

         The Company will pay all taxes (if any) due in connection with and as
the result of the initial issuance and sale of the Notes.

3.       COVENANTS

         The Company covenants that on and after the Closing Date and so long as
any of the Notes shall be outstanding:

                                       3
<PAGE>

         3.1      PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.

         The Company will punctually pay, or cause to be paid, the principal of
the Notes, as and when the same shall become due according to the terms hereof
and of the Notes, and will maintain an office at the address of the Company as
provided in Section 8.1 where notices, presentations and demands in respect
hereof or the Notes may be made upon it. Such office will be maintained at such
address until such time as the Company notifies the holders of the Notes of any
change of location of such office, which will in any event be located within the
United States of America.

         3.2      MERGERS AND CONSOLIDATIONS.

         The Company will not merge into, consolidate with, or Transfer all or
substantially all of its Property to, any other Person or permit any other
Person to consolidate with or merge into it; PROVIDED, HOWEVER, that the
foregoing restriction does not apply to the merger or consolidation of the
Company with, or the Transfer by the Company of all or substantially all of its
Property to, another corporation, so long as:

                  (a) the Person (the "SUCCESSOR CORPORATION") that results from
         such merger or consolidation or that purchases, leases, or acquires all
         or substantially all of such Property is a corporation duly
         incorporated under the laws of the United States of America or a
         jurisdiction thereof; and

                  (b) if the Company is not the Successor Corporation, the
         Successor Corporation shall expressly assume in writing, pursuant to
         such agreements and instruments as shall be reasonably satisfactory to
         the Required Holders, the due and punctual payment of the principal of
         the Notes, according to their tenor, and the due and punctual
         performance and observance of all the covenants in the Notes, this
         Agreement and the other Financing Documents to be performed or observed
         by the Company.

         3.3      FINANCIAL AND BUSINESS INFORMATION.

         The Company shall deliver to each holder of Notes:

                  (a) SEC AND OTHER REPORTS -- promptly upon their becoming
         available:

                           (i) each financial statement, report, notice or proxy
                  statement sent by the Company or any Subsidiary to
                  stockholders generally;

                           (ii) each regular or periodic report (including,
                  without limitation, each Form 10-K, Form 10-Q and Form 8-K),
                  any registration statement which shall have become effective,
                  and each final prospectus

                                       4
<PAGE>

                  and all amendments thereto filed by the Company or any
                  Subsidiary with the SEC; and

                           (iii) all press releases and other statements made
                  available by the Company or any Subsidiary to the public
                  concerning material developments in the business of the
                  Company or the Subsidiaries;

                  (b) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- within five (5)
         Business Days of becoming aware:

                           (i) of the existence of any condition or event which
                  constitutes a Default or an Event of Default; or

                           (ii) that the holder of any Note, or of any Debt,
                  shall have given notice or taken any other action with respect
                  to a claimed Default, Event of Default or default or event of
                  default;

         a notice specifying the nature of the claimed Default, Event of Default
         or default or event of default and the notice given or action taken (if
         any) by such holder and what action the Company is taking or proposes
         to take with respect thereto;

                  (c) REQUESTED INFORMATION -- with reasonable promptness, such
         other data and information as from time to time may be reasonably
         requested by any holder of Notes.

4.       EVENTS OF DEFAULT

         4.1      EVENTS OF DEFAULT.

         An "EVENT OF DEFAULT" exists at any time if any of the following both
occurs and is continuing thereafter for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):

                  (a) PAYMENTS ON NOTES -- the Company fails to make the
         required payment of principal on any Note on or before the date such
         payment is due; or

                  (b) INSOLVENCY --

                           (i) INVOLUNTARY BANKRUPTCY PROCEEDINGS --

                                    (a) a receiver, liquidator, custodian or
                           trustee of the Company or any Subsidiary, or of all
                           or any substantial part of the Property of any of
                           them, is appointed by court order; or an order for
                           relief is entered with respect the Company or any

                                       5
<PAGE>

                           Subsidiary, or the Company or any Subsidiary is
                           adjudicated a bankrupt or insolvent;

                                    (b) all or any substantial part of the
                           Property of the Company or any Subsidiary is
                           sequestered by court order; or

                                    (C) a petition is filed against the Company
                           or any Subsidiary under any bankruptcy,
                           reorganization, arrangement, insolvency, readjustment
                           of debt, dissolution or liquidation law of any
                           jurisdiction, whether now or hereafter in effect, and
                           is not dismissed within sixty (60) days after such
                           filing;

                           (ii) VOLUNTARY PETITIONS - the Company or any
                  Subsidiary files a petition in voluntary bankruptcy or seeks
                  relief under any provision of any bankruptcy, reorganization,
                  arrangement, insolvency, readjustment of debt, dissolution or
                  liquidation law of any jurisdiction, whether now or hereafter
                  in effect, or consents to the filing of any petition against
                  it under any such law; or

                           (iii) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -
                  the Company or any Subsidiary makes an assignment for the
                  benefit of its creditors, or consents to the appointment of a
                  receiver, liquidator or trustee of an Obligor or Subsidiary or
                  of all or a substantial part of its Property; or

         4.2      DEFAULT REMEDIES.

                  (a) ACCELERATION OF MATURITY OF NOTES.

                           (i) AUTOMATIC. If any Event of Default specified in
                  Section 4.1(b) shall exist, all of the Notes at the time
                  outstanding shall automatically become immediately due and
                  payable, without presentment, demand, protest or notice of any
                  kind, all of which are hereby expressly waived.

                           (ii) BY ACTION OF HOLDERS. Subject to the next
                  succeeding sentence, if any Event of Default (other than an
                  Event of Default specified in Section 4.1(b)) shall exist, the
                  holder or holders of twenty-five percent (25%) or more in
                  principal amount of the Notes at the time outstanding may
                  exercise any right, power or remedy permitted to such holder
                  or holders by law, and shall have, in particular, without
                  limiting the generality of the foregoing, the right to
                  declare, the entire principal of all the Notes then
                  outstanding to be due and payable, and such Notes shall
                  thereupon become forthwith due and payable, without any
                  presentment, demand, protest or other notice of any kind, all
                  of which are hereby expressly waived, and the Company shall
                  forthwith pay to

                                       6
<PAGE>

                  the holder or holders of all the Notes then outstanding the
                  entire principal of the Notes.

                  (b) NONWAIVER; REMEDIES CUMULATIVE. No course of dealing on
         the part of any holder of Notes nor any delay or failure on the part of
         any holder of Notes to exercise any right shall operate as a waiver of
         such right or otherwise prejudice such holder's rights, powers and
         remedies. All rights and remedies of each holder of Notes hereunder and
         under applicable law are cumulative to, and not exclusive of, any other
         rights or remedies any such holder of Notes would otherwise have.

         4.3      ANNULMENT OF ACCELERATION OF NOTES.

         If a declaration is made pursuant to Section 4.2(a)(ii), then and in
every such case, the Required Holders may, in their sole discretion, by written
instrument filed with the Company, rescind and annul such declaration, and the
consequences thereof; PROVIDED, HOWEVER, that at the time such declaration is
annulled and rescinded:

                  (a) no judgment or decree shall have been entered for the
         payment of any moneys due on or pursuant hereto or the Notes;

                  (b) all sums payable hereunder and under the Notes (except any
         principal of the Notes which shall have become due and payable by
         reason of such declaration under Section 4.2(a)(ii)) shall have been
         duly paid; and

                  (C) each and every other Default and Event of Default shall
         have been waived pursuant to Section 8.5 or otherwise made good or
         cured;

and PROVIDED FURTHER that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.

5.       SUBORDINATION

         5.1      GENERAL.

         The Subordinated Debt is subordinate and junior in right of payment to
all Senior Debt to the extent provided in this Section 5.

         5.2      INSOLVENCY.

         In the event of:

                  (a) any insolvency, bankruptcy, receivership, liquidation,
         reorganization, readjustment, composition or other similar proceeding
         relating to the Company, its creditors or its Property;

                                       7
<PAGE>

                  (b) any proceeding for the liquidation, dissolution or other
         winding-up of the Company, voluntary or involuntary, whether or not
         involving insolvency or bankruptcy proceedings;

                  (C) any assignment by the Company for the benefit of
         creditors; or

                  (D) any other marshalling of the assets of the Company;

all Senior Debt shall first be paid in full, in cash or cash equivalents, before
any payment or distribution, whether in cash, Securities or other Property
(other than Reorganization Securities), shall be made to any holder of any
Subordinated Debt on account of any Subordinated Debt. Any payment or
distribution, whether in cash, Securities or other Property (other than
Reorganization Securities), which would otherwise (but for this Section 5) be
payable or deliverable in respect of Subordinated Debt shall be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt shall have
been paid in full, in cash or cash equivalents.

         5.3      PROOFS OF CLAIM.

         If any holder of Subordinated Debt does not file a proper claim or
proof of debt therefor prior to twenty (20) days before the expiration of the
time to file such claim or proof, then each Senior Agent is hereby authorized
and empowered (but not obligated) as the agent and attorney-in-fact for such
holder for the specific and limited purpose set forth in this paragraph, to file
such claim or proof for or on behalf of such holder; PROVIDED, HOWEVER, that
such Senior Agent shall have, prior to taking any such action, given fifteen
(15) days prior written notice (which notice may be given up to sixty (60) days
prior to the expiration of the time to file such claim) to such holder of
Subordinated Debt and each other Senior Agent that they intend to file such
claim or proof of debt. In no event may any Senior Agent or any holder of the
Senior Debt vote any claim on behalf of any holder of the Subordinated Debt, and
such agency and appointment of attorney-in-fact shall not extend to any such
right to vote any such claim.

         5.4      DEFAULT IN RESPECT OF SENIOR DEBT; STANDSTILL.

         In the event that a Senior Debt Default shall occur, then, unless and
until such Senior Debt Default shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, Property or Securities
or by set-off or otherwise) shall be made or agreed to be made on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in respect
of any redemption, retirement, purchase, prepayment or other acquisition or
payment of any Subordinated Debt.

         Notwithstanding anything contained in this Agreement or any other
Financing Document to the contrary, for so long as any Senior Debt is
outstanding, no holder of any Subordinated Debt may take any action (other than
giving the notice of

                                       8
<PAGE>

acceleration referred to herein) to accelerate all or any portion of the
Subordinated Debt (and no acceleration or purported acceleration pursuant to
Section 4.2(a)(ii) shall become effective) or exercise any other remedies in
respect thereof during any period (a "STANDSTILL PERIOD") commencing on the
occurrence of an Event of Default and ending upon the earliest of:

                  (a) the date such Event of Default shall have been cured or
         waived or shall have ceased to exist;

                  (b) the date three hundred sixty-five (365) days after the
         commencement of such Standstill Period;

                  (c) the date upon which any holder or holders of any Debt of
         the Company (other than Subordinated Debt) in an aggregate amount
         exceeding One Million Dollars ($1,000,000), or any holder or holders of
         any Senior Debt, accelerate or declare such Debt to be due and payable
         prior to its stated maturity or prior to the regularly scheduled date
         or dates of payment, commence any action or proceeding to collect any
         such Debt or otherwise commence the exercise of any remedies against
         the Company;

                  (d) the first date upon which any Event of Default described
         in Section 4.1(b) shall have occurred and be continuing beyond any
         period of grace specified therein; and, in such event, the automatic
         acceleration of the Notes contemplated in respect of such Event of
         Default pursuant to Section 4.2(a)(i) shall occur immediately upon the
         termination of the Standstill Period; or

                  (e) the commencement of any foreclosure of any Lien upon
         Property of the Company the proceeds of which are applied, or may be
         applied, to the payment of any Debt of the Company in an aggregate
         amount exceeding One Million Dollars ($1,000,000).

Notwithstanding the foregoing, any holder or holders of Subordinated Debt
seeking to accelerate all or a portion of the Subordinated Debt or exercise any
remedies in respect thereof shall give the Senior Agent at least ten (10) days
advance written notice of its intent to take such action and such action may not
in any event be taken by such holder or holders until the later of the
expiration of the applicable Standstill Period and the expiration of such ten
(10) day period.

         The Company shall, and each Senior Agent may, give prompt written
notice to each holder of Subordinated Debt of its knowledge of facts which would
give rise to any Senior Debt Default.

                                       9
<PAGE>

         5.5      TURNOVER OF PAYMENTS.

         If:

                  (a) any payment or distribution shall be paid to or collected
         or received by any holders of Subordinated Debt in contravention of any
         of the terms of this Section 5; and

                  (b) any Senior Agent shall have notified the holders of
         Subordinated Debt, within thirty (30) days of any such payment or
         distribution, of the facts by reason of which such payment or
         collection or receipt so contravenes this Section 5;

then such holders of Subordinated Debt will deliver such payment or
distribution, to the extent necessary to pay all such Senior Debt in full, in
cash or cash equivalents, to such Senior Agent, on behalf of the holders of the
Senior Debt, and, until so delivered, the same shall be held in trust by such
holders of Subordinated Debt as the property of the holders of such Senior Debt.
If any amount is delivered to such Senior Agent pursuant to this Section 5.5,
whether or not such amounts have been applied to the payment of Senior Debt, and
the outstanding Senior Debt shall thereafter be paid in full, in cash or cash
equivalents, by the Company or otherwise other than pursuant to this Section
5.5, the holders of Senior Debt shall return to such holders of Subordinated
Debt an amount equal to the amount delivered to such holders of Senior Debt
pursuant to this Section 5.5, so long as after the return of such amounts the
Senior Debt shall remain paid in full, in cash or cash equivalents.

         Notwithstanding the foregoing, in the event that the holders of the
Subordinated Debt reasonably believe that there is more than one holder of
Senior Debt and the holders of the Subordinated Debt shall not have received
reasonably satisfactory evidence that such Senior Agent is both entitled to
accept such payment on behalf of all holders of Senior Debt and required to
deliver payment to the other holders of the Senior Debt in the respective
amounts, if any, due such holders of Senior Debt, then the holders of the
Subordinated Debt may turn over such payment or distribution, rather than to the
Senior Agent, to a court of competent jurisdiction in an appropriate
interpleader proceeding pending determination by such court of the holders of
Senior Debt entitled to receive all or any portion of such payment or
distribution, and, from and after the date of such payment into court, the
holders of the Subordinated Debt shall have no further liability therefor.

         5.6      SUBORDINATION UNAFFECTED BY CERTAIN EVENTS.

         The rights set forth in this Section 5 of the holders of the Senior
Debt as against each holder of Subordinated Debt shall remain in full force and
effect without regard to, and shall not be impaired by:

                  (a) any act or failure to act on the part of the Company;

                                       10
<PAGE>

                  (b) any extension or indulgence in respect of any payment or
         prepayment of the Senior Debt or any part therefor in respect of any
         other amount payable to any holder of Senior Debt;

                  (c) any amendment, modification, restatement, refinancing or
         waiver of, or addition or supplement to, or deletion from, or
         compromise, release, consent or other action in respect of, any of the
         terms of any Senior Debt or any other agreement which may be relating
         to any Senior Debt, other than such as would cause all or any portion
         of such Debt to fail to meet the definition of "Senior Debt;"

                  (d) any exercise or non-exercise by any holder of Senior Debt
         of any right, power, privilege or remedy under or in respect of any
         Senior Debt or Subordinated Debt or any waiver of any such right,
         power, privilege or remedy or any default in respect of any Senior Debt
         or the Subordinated Debt, any dealing with or action against any
         collateral security therefor or any receipt by any holder of Senior
         Debt of any security, or any failure by any holder of Senior Debt to
         perfect a security interest in, or any release by any such of Senior
         Debt of, any security for the payment of any Senior Debt;

                  (e) any merger or consolidation of the Company or any of its
         Subsidiaries into or with any of its Subsidiaries or into or with any
         Person, or any Transfer of any or all of the Property of the Company or
         any of its Subsidiaries to any other Person; or

                  (f) the absence of any notice to, or knowledge by, any holder
         of Subordinated Debt of the existence or occurrence of any of the
         matters or events set forth in the foregoing clauses (a) through (e).

         5.7      WAIVER AND CONSENT.

         Each holder of Subordinated Debt waives any and all notices of the
acceptance of the provisions of this Section 5 or of the creation, renewal,
extension or accrual, now or at any time in the future, of any Senior Debt.

         5.8      REINSTATEMENT OF SUBORDINATION.

         The obligations of each holder of Subordinated Debt under the
provisions set forth in this Section 5 shall continue to be effective, or be
reinstated, as the case may be, as to any payment in respect of any Senior Debt
that is rescinded or must otherwise be returned by the holder of such Senior
Debt upon the occurrence or as a result of any bankruptcy or judicial
proceeding, all as though such payment had not been made.

                                       11
<PAGE>

         5.9      OBLIGATIONS NOT IMPAIRED.

         Nothing contained in this Section 5 shall impair, as between the
Company and any holder of Subordinated Debt, the obligation of the Company to
pay to such holder the principal thereof as and when the same shall become due
and payable in accordance with the terms thereof and to comply with each and
every provision of the Notes and this Agreement or prevent any holder of any
Subordinated Debt from exercising all rights, powers and remedies otherwise
permitted by applicable law or under this Agreement, all subject to the rights
of the holders of the Senior Debt to receive cash, Securities or other Property
otherwise payable or deliverable to the holders of Subordinated Debt.

         5.10     PAYMENT OF SENIOR DEBT; SUBROGATION.

         Upon the payment in full of all Senior Debt, the holders of
Subordinated Debt shall be subrogated to all rights of any holder of Senior Debt
to receive any further payments or distributions applicable to the Senior Debt
until the Subordinated Debt shall have been paid in full, and such payments or
distributions received by the holders of Subordinated Debt by reason of such
subrogation, of cash, Securities or other Property which otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and the
holders of Subordinated Debt, on the other hand, be deemed to be a payment by
the Company on account of Senior Debt and not on account of Subordinated Debt.

         5.11     RELIANCE OF HOLDERS OF SENIOR DEBT.

         Each holder of Subordinated Debt by its acceptance thereof shall be
deemed to acknowledge and agree that the foregoing subordination provisions are,
and are intended to be, an inducement to and a consideration of each holder of
any Senior Debt, whether such Senior Debt was created or acquired before or
after the creation of Subordinated Debt, to acquire and hold, or to continue to
hold, such Senior Debt, and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding, or in continuing to hold, such Senior Debt. Each such holder of Senior
Debt is intended to be, and is, a third party beneficiary of this Section 5.
Each holder of Subordinated Debt acknowledges and agrees that the provisions set
forth in this Section 5 shall be enforceable against such Persons by the holders
of the Senior Debt. Notwithstanding anything contained in this Agreement or any
other Financing Document to the contrary, no amendment, modification or
supplement of the provisions of this Section 5 (including, without limitation,
this Section 5.11) shall be effective as to any holder of Senior Debt without
the consent of such holder.

                                       12
<PAGE>

         5.12     IDENTITY OF HOLDERS OF SENIOR DEBT.

         Upon the request of any holder of Subordinated Debt, the Company shall
deliver to such holder a list of all holders of Senior Debt outstanding at such
time, providing the name and address of each such holder of Senior Debt and the
principal amount of Senior Debt held by each such holder; PROVIDED, HOWEVER,
that, if any holder of Senior Debt shall have appointed an agent or other
representative with respect to the Senior Debt held by it, the Company may
provide the name and address of such agent or representative in lieu of the name
and address of such holder of Senior Debt.

6.       INTERPRETATION OF THIS AGREEMENT

         6.1      TERMS DEFINED.

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

         AFFILIATE -- means and includes, at any time, each Person (other than a
Subsidiary):

                  (a) that directly or indirectly through one or more
         intermediaries controls, or is controlled by, or is under common
         control with, the Company;

                  (b) that beneficially owns or holds five percent (5%) or more
         of any class of the Voting Stock of the Company;

                  (c) five percent (5%) or more of the Voting Stock (or in the
         case of a Person that is not a corporation, five percent (5%) or more
         of the equity interest) of which is beneficially owned or held by the
         Company; or

                  (d) that is an officer or director of the Company;

at such time; PROVIDED, HOWEVER, that none of the Purchasers nor any affiliate
of any Purchaser shall be deemed to be an "Affiliate," and no Person holding any
one or more of the Notes shall be deemed to be an "Affiliate" solely by virtue
of the ownership of such securities. As used in this definition:

                   CONTROL -- means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

         AGREEMENT, THIS -- and references thereto shall mean this Amended and
Restated Note Agreement as it may from time to time be amended or supplemented.

         BANKING LAWS - means and includes the BHCA and the IBA.

                                       13
<PAGE>

         BANKRUPTCY CODE -- means Title 11, United States Code, sections 1 ET
SEQ., as amended from time to time, and all rules promulgated thereunder.

         BHCA - the Bank Holding Company Act of 1956, as amended, and the rules,
regulations and official or staff interpretations promulgated thereunder, all as
from time to time in effect.

         BUSINESS DAY -- means a day other than a Saturday, a Sunday or a day on
which banks in the State of New York are required or permitted by law (other
than a general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.

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

         CAPITAL STOCK -- means any class of preferred, common or other capital
stock, share capital or similar equity interest of a Person including, without
limitation, any partnership interest in any partnership or limited partnership
and any membership interest in any limited liability company.

         CLOSING DATE -- means the date any Notes are first sold.

         COMMON STOCK -- means the Common Stock, par value $0.001 per share, of
the Company.

         COMPANY -- the introductory paragraph.

         CONVERSION PRICE - means, per share of Common Stock, Three and
Eighty-Eight Thousand Three Hundred Forty Seven Hundred-Thousandths Dollars
($3.88347), as adjusted and readjusted from time to time in accordance with
Section 7.

         CONVERTIBLE NOTE SHARES - Section 6.1 (in the definition of Tentative
Purchaser Ownership Level.

         DEBT -- with respect to any Person, means, without duplication, the
liabilities of such Person with respect to:

                  (a) BORROWED MONEY -- borrowed money;

                  (b) DEFERRED PURCHASE PRICE OF PROPERTY -- the deferred
         purchase price of Property acquired by such Person (excluding accounts
         payable arising in the ordinary course of business but including all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to any such Property);

                                       14
<PAGE>

                  (c) SECURED LIABILITIES -- borrowed money secured by any Lien
         existing on Property owned by such Person (whether or not such
         liabilities have been assumed);

                  (d) CAPITAL LEASES -- Capital Leases of such Person;

                  (e) LETTERS OF CREDIT -- letters of credit, bankers'
         acceptances or instruments serving a similar function issued or
         accepted by banks and other financial institutions for the account of
         such Person, other than undrawn trade letters of credit in the ordinary
         course of business;

                  (e) SWAPS -- Swaps of such Person; and

                  (g) GUARANTEES -- any Guaranty of such Person of any
         obligation or liability of another Person of obligations of the type
         listed in clause (a) through clause (f) of this definition of Debt.

As used in this definition,

                  SWAPS -- means, with respect to any Person, obligations with
         respect to interest rate swaps and currency swaps and similar
         obligations obligating such Person to make payments, whether
         periodically or upon the happening of a contingency, except that if any
         agreement relating to such obligation provides for the netting of
         amounts payable by and to such Person thereunder or if any such
         agreement provides for the simultaneous payment of amounts by and to
         such Person, then in each such case, the amount of such obligations
         shall be the net amount thereof. The aggregate net obligation of Swaps
         at any time shall be the aggregate amount of the obligations of such
         Person under all Swaps assuming all such Swaps had been terminated by
         such Person as of the end of the then most recently ended fiscal
         quarter of such Person. If such net aggregate obligation shall be an
         amount owing to such Person, then the amount shall be deemed to be Zero
         Dollars ($0).

Unless the context otherwise requires, "Debt" means Debt of the Company or of a
Subsidiary.

         DEFAULT -- means any event which, with the giving of notice or the
passage of time, or both, would become an Event of Default.

         EVENT OF DEFAULT -- Section 4.1.

         EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations of the SEC thereunder.

         EXCESS SHARES - means, at any time:

                                       15
<PAGE>

                  (a) for purposes of Section 7.10(a)(i), a number of LLC Shares
         equal to the lesser of (a) all LLC Shares and (b) the minimum number of
         LLC Shares, Convertible Note Shares and Option Shares that, when
         subtracted from both the numerator and denominator of the Tentative
         Purchaser Ownership Level, will cause the Tentative Purchaser Ownership
         Level not to exceed the Permissible Purchaser Ownership Level;

                  (b) for purposes of Section 7.10(a)(ii) and Section 7.10(b), a
         number of Convertible Note Shares equal to the lesser of (a) all
         Convertible Note Shares and (b) the minimum number of LLC Shares,
         Convertible Note Shares and Option Shares that, when subtracted from
         both the numerator and denominator of the Tentative Purchaser Ownership
         Level, will cause the Tentative Purchaser Ownership Level not to exceed
         the Permissible Purchaser Ownership Level; and

                  (c) for purposes of Section 7.10(a)(iii), a number of Option
         Shares equal to the lesser of (a) all Option Shares and (b) the minimum
         number of LLC Shares, Convertible Note Shares and Option Shares that,
         when subtracted from both the numerator and denominator of the
         Tentative Purchaser Ownership Level, will cause the Tentative Purchaser
         Ownership Level not to exceed the Permissible Purchaser Ownership
         Level.

         EXCHANGE DATE -- Section 7.3(b).

         EXEMPT TRANSFEREE - Section 6.1 (in the definition of "Purchaser
Transferee").

         FINANCING DOCUMENTS -- means and includes this Agreement, the
Securities Purchase Agreement, the Notes, the Stockholders Agreement and the
other agreements, certificates and instruments to be executed pursuant to the
terms of each of the foregoing, as each may be amended, restated or otherwise
modified from time to time.

         GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States of
America.

         GUARANTY -- means with respect to any Person (for the purposes of this
definition, the "Guarantor") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person (the "Primary Obligor") in any manner,
whether directly or

                                       16
<PAGE>

indirectly, including, without limitation, obligations incurred through an
agreement, contingent or otherwise, by the Guarantor:

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

                  (b) to advance or supply funds

                           (i) for the purchase or payment of such indebtedness,
                  dividend or obligation; or

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

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

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

For purposes of computing the amount of any Guaranty, in connection with any
computation of indebtedness or other liability:

                  (i) in each case where the obligation that is the subject of
         such Guaranty is in the nature of indebtedness for money borrowed it
         shall be assumed that the amount of the Guaranty is the amount of the
         direct obligation then outstanding; and

                  (ii) in each case where the obligation that is the subject of
         such Guaranty is not in the nature of indebtedness for money borrowed
         it shall be assumed that the amount of the Guaranty is the amount (if
         any) of the direct obligation that is then due.

         IBA - the International Banking Act of 1978, as amended, and the rules,
regulations and official or staff interpretations promulgated thereunder, all as
from time to time in effect.

         ICON -- means ICON Health & Fitness, Inc., a Delaware corporation and
Subsidiary of the Company, together with its successors and assigns.

         ICON RESTRUCTURING -- means the closing of the issuance and sale of the
Notes and the other transactions contemplated by the Term Sheet.

                                       17
<PAGE>

         INITIAL PUBLIC OFFERING - means "Initial Public Offering" as defined in
the Stockholders Agreement.

         LENDER -- means "Lender" as defined in the Senior Credit Agreement.

         LIEN -- means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property (for purposes of
this definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to:

                  (a) the security interest lien arising from a mortgage,
         encumbrance, pledge, conditional sale or trust receipt or a lease,
         consignment or bailment for security purposes, and the filing of any
         financing statement under the Uniform Commercial Code of any
         jurisdiction, or an agreement to give any of the foregoing;

                  (b) reservations, exceptions, encroachments, easements,
         rights-of-way, covenants, conditions, restrictions, leases and other
         title exceptions and encumbrances affecting real Property;

                  (c) stockholder agreements, voting trust agreements, buy-back
         agreements and all similar arrangements affecting the Owner's rights in
         stock owned by the Owner; and

                  (d) any interest in any Property held by the Owner evidenced
         by a conditional sale agreement, Capital Lease or other arrangement
         pursuant to which title to such Property has been retained by or vested
         in some other Person for security purposes.

The term "Lien" does not include negative pledge clauses in loan agreements and
equal and ratable security clauses in loan agreements.

         LIQUIDITY EVENT - means "Liquidity Event" as defined in the
Stockholders Agreement.

         LLC - means HF Investment Holdings, LLC, a Delaware limited liability
company.

         LLC AGREEMENT - means the Amended and Restated Limited Liability
Company Agreement of the LLC, dated as of September 27, 1999, by and among Bain
Capital Fund IV, L.P., Bain Capital Fund IV-B, L.P., BCIP Associates and BCIP
Trust Associates, L.P., each a Delaware limited partnership, Gary Stevenson, an
individual residing in Riverheight, Utah, Scott Watterson, an individual
residing in Providence, Utah, and such other Persons as may from time to time be
admitted as Members (as defined therein), as amended, restated or otherwise
modified from time to time.

                                       18
<PAGE>

         LLC SHARES - Section 6.1 (in the definition of Tentative Purchaser
Ownership Level).

         NOTE -- means and includes each 0% Convertible Subordinated Note due
September 27, 2011 issued pursuant to this Agreement.

         OPTION SHARES - Section 6.1 (in the definition of Tentative Purchaser
Ownership Level).

         OWNERSHIP BASE - Section 6.1 (in the definition of Tentative Purchaser
Ownership Level).

         PERMISSIBLE PURCHASER OWNERSHIP LEVEL - means at any time the greater
of (a) twenty-four and nine-tenths percent (24.9%) of the Shares, and (b) the
amount of Shares in a portfolio company that the Purchaser is allowed to own or
control under the Banking Laws and other applicable law.

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

         PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.

         PURCHASER -- the introductory paragraph.

         PURCHASER TRANSFEREE - means any direct or indirect purchaser from, or
transferee or assignee of, the Purchaser OTHER THAN: (a) a purchaser, transferee
or assignee to which Shares or any portion of this Note representing the right
to receive Shares is sold, transferred or assigned from the Purchaser either (i)
in a widely dispersed public distribution, or (ii) in one or more private
transactions that do not result in one purchaser, transferee or assignee
obtaining more than four and nine-tenths percent (4.9%) of the Shares, or that
portion of this NOTE representing the right to receive more than four and
nine-tenths percent (4.9%) of the Shares, which purchaser, transferee or
assignee purchases such Shares or such portion of this NOTE in the normal course
of its business for investment purposes only, and with no intention of
influencing control over the Company; and (b) any other purchaser, transferee or
assignee to which the Company (in the case of this clause (b) only) consents, in
the Company's sole discretion. A purchaser, transferee or assignee referred to
in either clause (a) or clause (b) above is referred to herein as an "EXEMPT
TRANSFEREE".

         REORGANIZATION SECURITIES -- means Securities of the Company or any
other Person provided for by a plan of reorganization or readjustment the
payment of which is subordinated, at least to the extent provided in Section 5
with respect to Subordinated Debt, to the payment of all Senior Debt at the time
outstanding and to

                                       19
<PAGE>

any Securities issued in respect thereof under any such plan of reorganization
or readjustment.

         REQUIRED HOLDERS -- means, at any time, the holders of fifty-one
percent (51%) in principal amount of the Notes at the time outstanding
(exclusive of Notes then owned by any one or more of the Company, any Subsidiary
or any Affiliate).

         SEC -- means, at any time, the Securities and Exchange Commission or
any other federal agency at such time administering the Securities Act.

         SECURITIES ACT -- means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

         SECURITIES PURCHASE AGREEMENT -- means the Amended and Restated
Securities Purchase Agreement, dated as of the date hereof, between the Company
and the Purchaser, relating to the offering and sale of the Notes and shares of
the Common Stock.

         SECURITY -- means "security" as defined by section 2(1) of the
Securities Act.

         SENIOR AGENT -- means and includes:

                  (d) for so long as the Senior Credit Agreement remains
         outstanding, General Electric Capital Corporation, as agent under the
         Senior Credit Agreement; and

                  (e) thereafter, any one agent or lender in respect of a
         successor revolving credit or similar agreement which is designated as
         a Senior Credit Facility, or representative of either, designated in
         writing to each holder of Notes by both the predecessor Senior Agent
         and the Company as being a "Senior Agent."

         SENIOR CREDIT AGREEMENT -- means the Credit Agreement, dated as of
September 24, 1999, among ICON, the other "Credit Parties" signatory thereto,
General Electric Capital Corporation, a New York corporation, for itself, as
"Lender," and as Agent for "Lenders," Fleet National Bank, as "Lender" and as
Syndication Agent, and the other "Lenders" signatory thereto from time to time,
as such agreement is from time to time amended, restated or otherwise modified.

         SENIOR CREDIT FACILITY -- means and includes:

                  (a) the Senior Credit Agreement; or

                  (b) any one revolving credit agreement or similar agreement
         permitting the Company, subject to the conditions therein, to obtain
         loans or advances of cash, trade credits (including without limitation,
         letters of credit or

                                       20
<PAGE>

         bankers acceptances) or both, which agreement has refinanced, renewed,
         replaced or extended the Senior Debt governed by the terms of a Senior
         Credit Facility which both the Company and the Senior Agent under the
         predecessor Senior Credit Facility (or, if no such other agreement is
         then in effect, by the Company) have designated in writing to each
         holder of Notes as being a "Senior Credit Facility;" PROVIDED, HOWEVER,
         that, by making such designation, the predecessor Senior Credit
         Facility shall cease to be the Senior Credit Facility (but any Debt
         outstanding or incurred thereunder shall continue to be Senior Debt for
         so long as such Debt meets the definition thereof).

         SENIOR DEBT -- means and includes all obligations, liabilities and
indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, interest (including interest accruing
after the filing of a petition under the Bankruptcy Code, whether or not
allowed), fees, expenses, indemnification or otherwise, in respect of Debt for
borrowed money of the Company or any Subsidiary, whether currently existing or
hereinafter incurred; PROVIDED, HOWEVER, that "Senior Debt" shall not include
any Debt that, by its terms or the terms of any ancillary agreement with the
holders of such Debt, is expressed to be subordinated in right of payment to, or
PARI PASSU with, the Subordinated Debt. For the avoidance of doubt, trade
indebtedness, the deferred purchase price of Property (including accounts
payable arising in the ordinary course of business and all liabilities created
or arising under any conditional sale or other title retention agreement with
respect to any such Property) and all other Debt other than Debt for borrowed
money of the Company or any Subsidiary (whether or not secured by any Lien or
Guarantied by the Company) shall not be "Senior Debt" hereunder.

         SENIOR DEBT DEFAULT -- means any default by the Company in the payment
of the principal of or any sinking fund installments, if any, due with respect
to, fees in respect of or interest on, any Senior Debt, or any default, or any
event which, with notice or lapse of time or both, would constitute a default,
in any other agreement, term or condition contained in any agreement under which
any Senior Debt is issued or secured, which, in any such case, would cause, or
would permit the holder thereof to cause, the acceleration of such Senior Debt .

         SENIOR OFFICER -- means any one or more of the chairman of the board of
directors, the chief executive officer, the chief operating officer, the chief
financial officer, and the president, of the Company.

         SHARES - means shares of the Common Stock.

         STANDSTILL PERIOD - Section 5.4.

         STOCKHOLDERS AGREEMENT -- means the Stockholders Agreement, dated as of
the Closing Date, among the Company, ICON, HF Investment Holdings, LLC, each

                                       21
<PAGE>

Person listed on the signature pages thereto as a "Junior Management Initial
Investor," Scott Watterson, Gary Stevenson and the Purchaser.

         SUBSIDIARY -- means, at any time, each corporation, association,
limited liability company or other business entity which qualifies as a
subsidiary of the Company that is properly included in a consolidated financial
statement of the Company and its subsidiaries in accordance with GAAP at such
time.

         SUBORDINATED DEBT -- means and includes all obligations, liabilities
and indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, interest (including interest accruing
after the filing of a petition under the Bankruptcy Code, to the extent
allowed), fees, expenses, indemnification or otherwise, in respect of this
Agreement and the Notes.

         SUCCESSOR CORPORATION -- Section 4.1.

         SUCCESSOR PROPERTY --means, in the case of any consolidation, merger,
sale, conveyance or reclassification described in Section 7.8, the shares of
Capital Stock, other securities, cash, Property or rights, warrants or options
receivable upon such consolidation, merger, sale, conveyance or reclassification
in respect of the shares of Common Stock held by a holder thereof.

         TENTATIVE PURCHASER OWNERSHIP LEVEL - means, at any time, a fraction
(expressed as a percentage):

                           (i) the NUMERATOR of which shall be the sum of: (a)
                  the aggregate amount of Shares then held by the Purchaser and
                  any Purchaser Transferees (which, for purposes of this
                  definition, shall be deemed to include all Shares then
                  outstanding and held by or for the benefit of the Purchaser or
                  any Purchaser Transferees PLUS, those Shares that are not then
                  outstanding, which are subject to options, warrants or other
                  conversion privileges that are held by or for the benefit of
                  the Purchaser or any Purchaser Transferee and that are then
                  exercisable (but shall be deemed not to include any Shares
                  that are not outstanding, which are subject to options,
                  warrants or other conversion privileges that are held by or
                  for the benefit of any other Person)), (b) the aggregate
                  number of Shares to which the Purchaser and any Purchaser
                  Transferee would otherwise then be entitled or required to own
                  pursuant to Section 7.2(a) or Section 7.3(a) (the "CONVERTIBLE
                  NOTE SHARES"), (c) the aggregate number of Shares to which the
                  Purchaser and any Purchaser Transferee would otherwise then be
                  entitled or required to own pursuant to the LLC Agreement and
                  the Warrant (the "LLC SHARES"), and (d) any Shares to which
                  the Purchaser and any Purchaser Transferee would otherwise
                  then be entitled or required to own upon exercise of the CSFB
                  Option (as such

                                       22
<PAGE>

                  term is defined in Section 5.2 of the Stockholders Agreement)
                  (the "OPTION SHARES"); and

                           (ii) the DENOMINATOR of which shall be the sum of:
                  (a) the aggregate number of Shares then outstanding (which,
                  for purposes of this definition, shall be deemed to include
                  all Shares then outstanding PLUS, those Shares that are not
                  then outstanding, which are subject to options, warrants or
                  other conversion privileges that are held by or for the
                  benefit of the Purchaser or any Purchaser Transferee and that
                  are then exercisable (but shall be deemed not to include any
                  Shares that are not outstanding, which are subject to options,
                  warrants or other conversion privileges that are held by or
                  for the benefit of any other Person)), (b) the Convertible
                  Note Shares, (c) the LLC Shares, and (d) the Option Shares
                  (such sum, the "OWNERSHIP BASE");

PROVIDED, that no specific Shares (including the LLC Shares, the Convertible
Note Shares and the Option Shares) shall be counted more than once in
calculating either the numerator or the denominator set forth in clause (i) or
clause (ii) above.

         TERM SHEET --means the term sheet, dated July 8, 1999, as amended and
attached to the Exchange Offer and Consent Solicitation, dated July 30, 1999, as
supplemented, for all outstanding 13% Senior Subordinated Notes due 2002 of
ICON, 15% Senior Secured Discount Notes due 2004 of IHF Holdings, Inc., and 14%
Senior Discount Notes due 2006 of ICON Fitness Corporation.

         TRANSFERS -- means and includes, with respect to any Property, any
sales, leases, transfers or other dispositions of such Property; the term
"TRANSFER," when used as a verb with respect to any Property, means to sell,
lease as lessor, transfer or otherwise dispose of such Property; and the term
"TRANSFERRED" has a correlative meaning.

         TRIGGERING EVENT -- means and includes:

                  (a) the occurrence of an event which would constitute a
         "Liquidity Event" under the definition of "Liquidity Event" set forth
         in the Stockholders Agreement;

                  (b) the liquidation, dissolution or winding-up of the Company
         or ICON; the commencement by the Company, ICON or any Subsidiary of any
         proceedings therefor; the commencement of any proceedings therefor by
         any other Person which the Company or ICON does not oppose; or the
         commencement of any proceedings therefor by any other Person which the
         Company and ICON oppose in which either any order for relief is granted
         to such other Person or which remains unstayed for a period of sixty
         (60) days; and

                                       23
<PAGE>

                  (c) the occurrence of an Event of Default referred to in
         Section 4.1(b).

         TRIGGERING EVENT NOTICE DATE -- Section 7.1(b).

         TRIGGERING EVENT NOTICE EVENT -- means any event which, with the giving
of notice or the passage of time, or both, would become, or result in, a
Triggering Event, including, without limitation, the execution of any written
agreement which, when fully performed by the parties thereto, would result in a
Triggering Event.

         VALUATION AGENT -- means a firm of independent certified public
accountants, an investment banking firm or appraisal firm (which firm shall own
no Securities of, and shall not be an Affiliate, Subsidiary or a related Person
of, the Company) of recognized national standing retained by the Company and
reasonably acceptable to the Required Holders.

         VOTING STOCK -- means, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time any stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency), and, in the case of the Company, shall include the Common Stock.

         WARRANT - means the HF Class C Units Purchase Warrant, dated September
27, 1999, issued by HF Investment Holdings, LLC, a Delaware limited liability
company, to the Purchaser, as amended, restated or otherwise modified from time
to time.

         6.2      ACCOUNTING PRINCIPLES.

                  (a) GENERALLY. Unless otherwise provided herein, all financial
         statements delivered in connection herewith will be prepared in
         accordance with GAAP. Where the character or amount of any asset or
         liability or item of income or expense, or any consolidation or other
         accounting computation is required to be made for any purpose
         hereunder, it shall be done in accordance with GAAP; PROVIDED, HOWEVER,
         that if any term defined herein includes or excludes amounts, items or
         concepts that would not be included in or excluded from such term if
         such term were defined with reference solely to GAAP, such term will be
         deemed to include or exclude such amounts, items or concepts as set
         forth herein.

                  (b) CONSOLIDATION. Whenever accounting amounts of a group of
         Persons are to be determined "on a consolidated basis" it shall mean
         that, as to balance sheet amounts to be determined as of a specific
         time, the amount that would appear on a consolidated balance sheet of
         such Persons prepared as of such time, and as to income statement
         amounts to be determined for a specific

                                       24
<PAGE>

         period, the amount that would appear on a consolidated income statement
         of such Persons prepared in respect of such period, in each case with
         all transactions among such Persons eliminated, and prepared in
         accordance with GAAP except as otherwise required hereby.

                  (c) CURRENCY. With respect to any determination, consolidation
         or accounting computation required hereby, any amounts not denominated
         in the currency in which this Agreement specifies shall be converted to
         such currency in accordance with the requirements of GAAP (as such
         requirements relate to such determination, consolidation or
         computation) and, if no such requirements shall exist, converted to
         such currency in accordance with normal banking procedures, at the
         closing rate as reported in THE WALL STREET JOURNAL published most
         recently as of the date of such determination, consolidation or
         computation or, if no such quotation shall then be available, as quoted
         on such date by any bank or trust company reasonably acceptable to the
         Required Holders.

         6.3      SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.

                  (a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of
         the Sections of this Agreement and the Table of Contents of this
         Agreement appear as a matter of convenience only, do not constitute a
         part hereof and shall not affect the construction hereof. The words
         "herein," "hereof," "hereunder" and "hereto" refer to this Agreement as
         a whole and not to any particular Section or other subdivision.
         References to Sections are, unless otherwise specified, references to
         Sections of this Agreement. References to Annexes and Exhibits are,
         unless otherwise specified, references to Annexes and Exhibits attached
         to this Agreement.

                  (b) CONSTRUCTION. Each covenant contained herein shall be
         construed (absent an express contrary provision herein) as being
         independent of each other covenant contained herein, and compliance
         with any one covenant shall not (absent such an express contrary
         provision) be deemed to excuse compliance with one or more other
         covenants.

         6.4      GOVERNING LAW.

         THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                       25
<PAGE>

7.       CONVERSION AND EXCHANGE OF NOTES FOR COMMON STOCK

         7.1      NOTICE OF OCCURRENCE OF A TRIGGERING EVENT.

                  (a) NOTICE OF TRIGGERING EVENT NOTICE EVENT. In the event of
         the obtaining of knowledge of a Triggering Event Notice Event by any
         Senior Officer, the Company will, within five (5) Business Days after
         the occurrence of such event, give notice of such Triggering Event
         Notice Event to each holder of Notes. Each such notice shall:

                           (i) be dated the date of the sending of such notice;

                           (ii) be executed by a Senior Officer;

                           (iii) refer to this Section 7.1(a); and

                           (iv) specify, in reasonable detail, the nature and
                  date of the Triggering Event Notice Event and the Triggering
                  Event which would result therefrom.

                  (b) TRIGGERING EVENT NOTICE. In the event of a Triggering
         Event, the Company will, within five (5) Business Days after the
         occurrence of such event, or in the case of any Triggering Event the
         consummation or finalization of which would involve any action of the
         Company, at least ten (10) Business Days prior to such Triggering Event
         (the "TRIGGERING EVENT NOTICE DATE"), give notice of such Triggering
         Event to each holder of Notes. Each such notice shall:

                           (i) be dated the date of the sending of such notice;

                           (ii) be executed by a Senior Officer;

                           (iii) refer to this Section 7.1(b);

                           (iv) specify, in reasonable detail, the nature and
                  date (or anticipated date) of the Triggering Event; and (V)
                  describe in detail the right of the holder of Notes described
                  in Section 7.2 hereof and the right of such holder pursuant to
                  Section 7.2(c) to specify the date that any conversion of the
                  Notes elected by such holder shall be deemed to be effected.

         7.2      CONVERSION OF NOTES AT OPTION OF HOLDER.

                  (a) CONVERSION RIGHT. Subject to Section 7.10 and Section
         7.11, each holder of a Note may, not later than fifteen (15) days
         following the occurrence of a Triggering Event, at its option and
         election, convert the

                                       26
<PAGE>

         unpaid principal amount of such Note or any portion thereof, at the
         Conversion Price, into that number of fully paid and nonassessable
         shares of Common Stock which equals the quotient of:

                           (i) the principal amount to be so converted; DIVIDED
                  BY

                           (ii) the Conversion Price in effect at the time of
                  such conversion.

         At the time of such conversion, the holder shall elect the time at
         which such conversion shall become effective in accordance with Section
         7.2(c) and, if no such election is made, such holder shall be deemed to
         have elected the earliest date upon which such conversion could have
         become effective in accordance with Section 7.2(c).

                  (b) MANNER OF CONVERSION; PARTIAL CONVERSION, ETC. Any Note
         may be converted in full or in part by the holder thereof by surrender
         of such Note, with a notice of conversion (a form of which is attached
         to each Note) attached thereto duly executed by such holder (specifying
         the portion of the principal amount thereof to be converted in the case
         of a partial conversion), to the Company on any Business Day following
         the Triggering Event Notice Date (but not later than fifteen (15) days
         following the occurrence of the related Triggering Event) at its
         principal office maintained in accordance with Section 3.1 of this
         Agreement; PROVIDED, HOWEVER, that in no case shall any conversion of
         Notes become effective unless the Triggering Event giving rise thereto
         shall have occurred. Upon any partial conversion of a Note, the Company
         at its expense will forthwith issue and deliver to or upon the order of
         the holder thereof a new Note or Notes in an aggregate principal amount
         equal to the unpaid and unconverted principal amount of such
         surrendered Note.

                  (c) WHEN CONVERSION EFFECTIVE. Each conversion shall be deemed
         to have been effected, at the option of the holder of Notes making such
         election, upon either:

                           (i) the date of, and at the time immediately
                  preceding, the occurrence of the Triggering Event giving rise
                  to such conversion right; and

                           (ii) if such Business Day follows the date of such
                  Triggering Event, the Business Day on which such Note shall
                  have been surrendered to the Company as provided in Section
                  7.2(b) of this Agreement;

         PROVIDED, HOWEVER, that in no case shall any conversion of Notes become
         effective unless the Triggering Event giving rise thereto shall have
         occurred.

                                       27
<PAGE>

         In either the case of clause (i) or clause (ii) above, at such time the
         Person or Persons in whose name or names any certificate or
         certificates for shares of Common Stock (or Successor Property) shall
         be issuable upon such conversion shall be deemed to have become the
         holder or holders of record thereof.

                  (d) DELIVERY OF STOCK CERTIFICATES, ETC. As soon as
         practicable after the conversion of any Note, in whole or in part, and
         in any event within five (5) days thereafter, the Company at its
         expense (including the payment by it of any applicable issue taxes)
         will cause to be issued in the name of and delivered to the holder of
         such Note or as such holder (upon payment by such holder of any
         applicable transfer taxes) may direct:

                           (i) a certificate or certificates for the number of
                  duly authorized, validly issued, fully paid and nonassessable
                  shares of Common Stock (or Successor Property) to which such
                  holder shall be entitled upon such conversion, rounded up to
                  the nearest whole share; and

                           (ii) in case such conversion is in part only, a new
                  Note or Notes in an aggregate principal amount equal to the
                  unpaid and unconverted principal amount of such converted
                  Note.

         7.3      EXCHANGE OF NOTES FOR COMMON STOCK BY THE COMPANY.

                  (a) EXCHANGE RIGHT. Subject to Section 7.10 and Section 7.11,
         the Company may, not later than fifteen (15) days following the
         occurrence of a Triggering Event, at its option and election, convert
         all, but not less than all, the unpaid principal amount of all Notes,
         at the Conversion Price, into that number of fully paid and
         nonassessable shares of Common Stock which equals the quotient of:

                           (i) the principal amount to be so converted; DIVIDED
                  BY

                           (ii) the Conversion Price in effect at the time of
                  such conversion.

                  (b) NOTICE OF EXCHANGE. In order to exercise its option
         pursuant to Section 7.3(a), the Company shall furnish, not later than
         fifteen (15) days after the occurrence of any Triggering Event, written
         notice to each holder of Notes. Such notice shall:

                           (i) be dated the date of the sending of such notice;

                           (ii) be executed by a Senior Officer;

                                       28
<PAGE>

                           (iii) refer to the right of the Company pursuant to
                  this Section 7.3;

                           (iv) state that the Company has exercised such right;

                           (v) state the date (the "EXCHANGE DATE") on which
                  such exchange shall become effective (which date shall be not
                  earlier than the date of, and immediately preceding, the
                  occurrence of the Triggering Event and not later than fifteen
                  (15) days following the date of the occurrence of the
                  Triggering Event; PROVIDED, HOWEVER, that in no case shall any
                  exchange of Notes pursuant to this Section 7.3 become
                  effective unless the Triggering Event giving rise thereto
                  shall have occurred);

                           (vi) state that, on the Exchange Date and after
                  giving effect to the occurrence of the relevant Triggering
                  Event and the effectiveness of the exchange, all rights of the
                  holders of the Notes (other than the right to receive shares
                  of Common Stock in accordance with this Section 7.3),
                  including the right to receive the principal amount of the
                  Notes at maturity, shall cease; and

                           (vii) state that the holder may receive certificates
                  for the shares of Common Stock into which the Notes held by
                  such holder were exchanged pursuant to Section 7.3(c) by
                  surrender of such Note to the Company on any Business Day
                  following the effective date of such exchange at its principal
                  office maintained in accordance with Section 3.1 of this
                  Agreement.

                  (c) DELIVERY OF SHARE CERTIFICATES. As soon as practicable
         after the surrender of any Note following the exchange thereof pursuant
         to this Section 7.3, and in any event within five (5) days thereafter,
         the Company at its expense (including the payment by it of any
         applicable issue taxes) will cause to be issued in the name of and
         delivered to the holder of such Note or as such holder (upon payment by
         such holder of any applicable transfer taxes) may direct, a certificate
         or certificates for the number of duly authorized, validly issued,
         fully paid and nonassessable shares of Common Stock (or Successor
         Property) to which such holder shall be entitled upon such conversion,
         rounded up to the nearest whole share.

                  (d) In the case of exercises under both Section 7.2 and
         Section 7.3, Section 7.3 shall control.

         7.4      RESERVATION OF SHARES.

         The Company shall at all times reserve and keep available out of its
authorized but unissued Common Stock, solely for the purpose of effecting the

                                       29
<PAGE>

conversion or exchange of the Notes, such number of its duly authorized shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding Notes. The Company covenants that all shares of
Common Stock which may be issued upon conversion or exchange of the Notes will
upon issue be fully paid and non-assessable by the Company and free from all
taxes, liens, and charges with respect to the issue thereof, and free of
preemptive rights in favor of other Persons. At and after the effective time of
any conversion or exchange, the Notes subject thereto shall evidence only the
shares of Common Stock issuable in respect thereof.

         7.5      ADJUSTMENT OF CONVERSION PRICE IN RESPECT OF STOCK DIVIDENDS,
                  STOCK SPLITS, ETC.

         In the event that the Company shall, on or after the date hereof:

                  (a) PAY a dividend in shares of additional Common Stock or
         make a distribution in shares of additional Common Stock in respect of
         shares of Common Stock;

                  (a) reclassify by subdivision its outstanding shares of Common
         Stock into a greater number of shares; or

                  (b) reclassify by combination its outstanding shares of Common
         Stock into a smaller number of shares;

then, and in each such case, the Conversion Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision or
combination shall be adjusted to that price determined by multiplying the
Conversion Price in effect immediately prior to such event by the quotient of:

                           (i) the total number of outstanding shares of Common
                  Stock immediately prior to such event; DIVIDED BY

                           (ii) the total number of outstanding shares of Common
                  Stock immediately after such event.

         7.6      DE MINIMIS CHANGES IN CONVERSION PRICE.

         No adjustment in the Conversion Price shall be required pursuant to
Section 7.5 unless such adjustment would require an increase or decrease of at
least one cent (1(cent)); PROVIDED that any adjustments that, at the time of the
calculation thereof, are less than one cent (1(cent)) at such time and by reason
of this Section 7.6 are not required to be made at such time shall be carried
forward and added to any subsequent adjustment or adjustments for purposes of
determining whether such subsequent adjustment or adjustments, as so
supplemented, exceed one cent (1(cent)) and, if any such subsequent adjustment,
as so supplemented or otherwise, should

                                       30
<PAGE>

exceed one cent (1(cent)), all adjustments deferred prior thereto and not
previously made shall then be made. In any case, all such adjustments being
carried forward pursuant to this Section 7.6 shall be given effect upon the
conversion or exchange of the Notes for purposes of determining the Conversion
Price applicable thereto. All calculations shall be made to the nearest cent.

         7.7      NOTICE OF CHANGE IN CONVERSION PRICE.

         The Company shall give prompt written notice of any change in the
Conversion Price to each holder of Notes. Each such notice shall set forth:

                  (a) the Conversion Price both before and after the event;

                  (b) a brief statement of the facts requiring such adjustments;
         and

                  (c) the computation by which such adjustments were made.

         7.8      EFFECT OF CONSOLIDATION, MERGER, SALE OR RECLASSIFICATION.

         In the event that there shall be:

                  (a) any consolidation of the Company with, or merger of the
         Company with or into, another Person (other than a merger in which the
         Company is the surviving corporation and that does not result in any
         reclassification or change of shares of Common Stock outstanding
         immediately prior to such merger);

                  (b) any sale or conveyance to another Person of the Property
         of the Company or ICON substantially as an entirety; or

                  (c) any reclassification of the Common Stock that results in
         the issuance of Successor Property to the holders thereof;

then, in each such case, lawful provision shall be made as a part of the terms
of such transaction so that the holders of the Notes shall thereafter have the
right to purchase the amount and kind of Successor Property receivable upon such
consolidation, merger, sale, conveyance or reclassification by a holder of such
number of shares of Common Stock as the holder of such Notes would have had the
right to acquire upon the conversion or exchange thereof immediately prior to
such consolidation, merger, sale, conveyance or reclassification, at the
Conversion Price then in effect; and, without further action on the part of any
Person, each Note will thereafter represent the right to receive, upon
conversion or exchange thereof, such Successor Property as is so receivable. At
the time of each such consolidation, merger or sale, the Person surviving such
merger or consolidation or the Person to whom such sale or conveyance is made,
as the case may be, shall expressly assume the due and punctual observance and
performance of each and every provision of

                                       31
<PAGE>

this Section 7 and all obligations and liabilities of the Company hereunder
(subject to the foregoing sentence).

         7.9      COMMON STOCK SUBJECT TO STOCKHOLDERS AGREEMENT.

         Subject to Section 7.10, the Notes, and all Common Stock issued upon
conversion or exchange of the Notes pursuant to this Section 7, and the rights
and obligations of the Company and the holders of the Notes and the Common Stock
issued upon conversion or exchange of the Notes pursuant to this Section 7,
shall be subject to the provisions of the Stockholders Agreement and the holders
of the Notes and such Common Stock shall be entitled to all of the benefits
thereof.

         7.10     INTEREST IN EXCESS OF 24.9%.

         Notwithstanding any other provision of this Agreement (other than
Section 7.11), any other Financing Document, the LLC Agreement or the Warrant,
in the event and to the extent that the Tentative Purchaser Ownership Level
would at any time at or after the occurrence of a Triggering Event that this
Note is owned by or for the benefit of the Purchaser or any Purchaser Transferee
thereof, exceed the Permissible Purchaser Ownership Level, the following
provisions shall apply:

                  (a) GENERAL.

                           (i) FIRST, that portion of the Warrant which would
                  otherwise represent Excess Shares will not be exercisable, in
                  which event the number of Excess Shares will be recomputed
                  such that the LLC Shares which are not issuable as a result of
                  this Section 7.10(a)(i) are subtracted from both the numerator
                  and the denominator of the Tentative Purchaser Ownership Level
                  definition;

                           (ii) SECOND, that portion of the conversion right and
                  the exchange right in Section 7.2(a) and Section 7.3(a) of
                  this Agreement, which would otherwise result in the issuance
                  of Excess Shares, will not be exercisable and, accordingly,
                  shall not permit or require (as applicable) the Purchaser or
                  any Purchaser Transferee to acquire any Excess Shares, in
                  which event the number of Excess Shares will be recomputed by
                  subtracting the Convertible Note Shares which are not issuable
                  as a result of this Section 7.10(a)(ii) from both the
                  numerator and denominator of the Tentative Purchaser Ownership
                  Level definition (as previously recalculated pursuant to
                  Section 7.10(a)(i)); and

                           (iii) THIRD, that portion of the Option Shares which
                  would otherwise represent Excess Shares will not be
                  exercisable, in which event the number of Excess Shares will
                  be recomputed such that the Option Shares which are not
                  issuable as a result of this Section

                                       32
<PAGE>

                  7.10(a)(iii) are subtracted from both the numerator and the
                  denominator of the Tentative Purchaser Ownership Level
                  definition (as previously recalculated pursuant to Sections
                  7.10(a)(i) and 7.10(a)(ii)).

                  EXCESS SHARE TRANSFER RIGHTS. At the request of the Purchaser,
         to the extent there has been a change in law or enforcement of the
         Banking Laws, the Company shall (i) use its best efforts to assist the
         Purchaser in locating one or more Exempt Transferees for that portion
         of the Note representing the right to receive Excess Shares
         (determined, solely, for this purpose, (x) immediately after giving
         effect to any transfer of the LLC Shares to an Exempt Transferee (as
         defined in Section 11 of the Warrant) pursuant to and in accordance
         with Section 1.5(b) of the Warrant, to the extent such transfer occurs
         prior to or simultaneously with any transfer pursuant to this Section
         7.10(b), and (y) without giving effect to the recomputation of the
         number of Excess Shares as contemplated by Section 7.10(a)(i), Section
         7.10(a)(ii) and Section 7.10(a)(iii) of this Agreement), and (ii)
         consent to the Purchaser effecting such transfer(s); PROVIDED, HOWEVER,
         that no such transfer shall be effective until the transferee has
         delivered to the Company a written acknowledgement and agreement in
         form and substance reasonably satisfactory to the Company that any
         shares of stock of the Company to be distributed by the Company to such
         transferee, following exercise by such transferee of the Note, shall be
         subject to all the provisions of the Stockholders Agreement and that
         such transferee is bound thereby and a party thereto to the same extent
         as the holder from whom the transfer was made.

                  (b) In the event that any portion of the Warrant, of the
         conversion and exchange rights under Section 7.2(a) or 7.3(a) of this
         Agreement, or of the CSFB Option becomes not exercisable by virtue of
         clause (a) above (or in the case of the Warrant, by virtue of Section
         1.5(a) thereof), the right to exercise (or in the case of the Company,
         the right to cause the exercise of) such unexercisable portion shall be
         suspended until, and become effective upon, the earliest time and to
         the maximum extent consistent with the Tentative Purchaser Ownership
         Level not exceeding, at the time of the effectiveness of any right to
         exercise (or to cause an exercise), the Permissible Ownership Level,
         such effectiveness to be allocated among the Option Shares, the Note
         and the Warrant in the reverse order of clauses (iii), (ii) and (i) of
         clause (a) of this Section 7.10.

         7.11     AUTOMATIC CONVERSION UPON INSOLVENCY.

         Notwithstanding any other provision of this Agreement, any other
Financing Document, the LLC Agreement or the Warrant, upon the occurrence of an
Event of Default referred to in Section 4.1(b), the entire unpaid principal
amount of the

                                       33
<PAGE>

Notes shall automatically convert, at the Conversion Price, into that number of
fully paid and nonassessable shares of Common Stock which equals the quotient
of:

                           (i) the principal amount so converted; DIVIDED BY

                           (ii) the Conversion Price in effect at the time of
                  such conversion.

As soon as practicable after the surrender of any Note following the occurrence
of such conversion pursuant to this Section 7.11, and in any event within five
(5) days thereafter, the Company at its expense (including the payment by it of
any applicable issue taxes) will cause to be issued in the name of and delivered
to the holder of such Note or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, a certificate or certificates for the
number of duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock (or Successor Property) to which such holder shall be entitled
upon such conversion, rounded up to the nearest whole share.

8.       MISCELLANEOUS

         8.1      COMMUNICATIONS.

                  (a) METHOD; ADDRESS. All communications hereunder or under the
         Notes shall be in writing and shall be delivered either by nationwide
         overnight courier or by facsimile transmission (confirmed by delivery
         by nationwide overnight courier sent on the day of the sending of such
         facsimile transmission). Communications to the Company shall be
         addressed as set forth on Annex 2, or at such other address of which
         the Company shall have notified each holder of Notes. Communications to
         the Senior Agent shall be addressed as set forth on Annex 2, or at such
         other one address of which the Senior Agent and the Company both shall
         have notified each holder of Notes. Communications to the holders of
         the Notes shall be addressed as set forth on Annex 1 by such holder, or
         at such other address of which such holder shall have notified the
         Company (and the Company shall record such address in the register for
         the registration and transfer of Notes maintained pursuant to Section
         3.1.

                  (b) WHEN GIVEN. Any communication addressed and delivered as
         herein provided shall be deemed to be received when actually delivered
         to the address of the addressee (whether or not delivery is accepted)
         or received by the telecopy machine of the recipient. Any communication
         not so addressed and delivered shall be ineffective.

                  (c) SERVICE OF PROCESS. Notwithstanding the foregoing
         provisions of this Section 8.1, service of process in any suit, action
         or proceeding arising out of or relating to this agreement or any
         document, agreement or transaction

                                       34
<PAGE>

         contemplated hereby, or any action or proceeding to execute or
         otherwise enforce any judgment in respect of any breach hereunder or
         under any document or agreement contemplated hereby, shall be delivered
         in the manner provided in Section 8.7(c).

         8.2      REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating hereto, including, without
limitation, consents, waivers and modifications that may hereafter be executed,
documents received by you at the closing of your purchase of the Notes (except
the Notes themselves), and financial statements, certificates and other
information previously or hereafter furnished to any holder of Notes, may be
reproduced by the Company or any holder of Notes by any photographic,
photostatic, microfilm, micro-card, miniature photographic, digital or other
similar process and each holder of Notes may destroy any original document so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by the
Company or such holder of Notes in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. Nothing in this Section 8.2 shall prohibit
the Company or any holder of Notes from contesting the accuracy or validity of
any such reproduction.

         8.3      ENTIRE AGREEMENT.

         This Agreement, the Notes and the other Financing Documents embody the
entire agreement and understanding among the Company and the Purchasers, and
supersede all prior agreements and understandings, relating to the subject
matter hereof.

         8.4      SUCCESSORS AND ASSIGNS.

         This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder whether or not an express assignment to
such holder of rights hereunder shall have been made by you or your successor or
assign. Anything contained in this Section 8.4 notwithstanding, the Company may
not assign any of its respective rights, duties or obligations hereunder or
under any of the other Financing Documents without the prior written consent of
all holders of Notes. For purposes of the avoidance of doubt, any holder of a
Note shall be permitted to pledge or otherwise grant a Lien in and to such Note
(including, without limitation, pledging such Note to a trustee for the benefit
of certain secured noteholders pursuant to documents relating to the financing
of such holder or to one or more banks or other institutions providing financing
in connection with the purchase by such holder of

                                       35
<PAGE>

such Note); PROVIDED, HOWEVER, that any such pledgee or holder of a Lien shall
not be considered a holder hereunder until it shall have foreclosed upon such
Note in accordance with applicable law and informed the Company, in writing, of
the same. Notwithstanding the foregoing, if any conflict exists between the
terms of this Section 8.4 and the terms of the Stockholders Agreement, the terms
of the Stockholders Agreement shall control.

         8.5      AMENDMENT AND WAIVER.

                  (a) REQUIREMENTS. This Agreement may be amended, and the
         observance of any term hereof may be waived, with (and only with) the
         written consent of the Company and the Required Holders; PROVIDED,
         HOWEVER, that no such amendment or waiver shall, without the written
         consent of the holders of all Notes (exclusive of Notes held by the
         Company, any Subsidiary or any Affiliate) at the time outstanding;

                           (i) change the amount or time of the required payment
                  of principal;

                           (ii) amend or waive the provisions of Section 5, or
                  amend or waive any defined term to the extent used therein;

                           (iii) amend or waive the definition of "Required
                  Holders;" or

                           (iv) amend or waive this Section 8.5 or amend or
                  waive any defined term to the extent used herein.

         The holder of any Note may specify that any such written consent
         executed by it shall be effective only with respect to a portion of the
         Notes held by it (in which case it shall specify, by dollar amount, the
         aggregate principal amount of Notes with respect to which such consent
         shall be effective) and in the event of any such specification such
         holder shall be deemed to have executed such written consent only with
         respect to the portion of the Notes so specified.

                  No amendment, supplement or modification of the provisions of
         Section 5, or any defined term to the extent used therein, shall be
         effective as to any holder of Senior Debt who has not consented to such
         amendment, supplement or modification.

                  (b) BINDING EFFECT. Any amendment or waiver consented to as
         provided in this Section 8.5 shall apply equally to all holders of
         Notes and shall be binding upon them and upon each future holder of any
         Note and upon the Company whether or not such Note shall have been
         marked to indicate such amendment or waiver. No such amendment or
         waiver shall extend to or affect any obligation, covenant, agreement,
         Default or Event of Default not expressly amended or waived or impair
         any right consequent thereon.

                                       36
<PAGE>

         8.6      EXPENSES.

                  (a) AMENDMENTS AND WAIVERS. The Company shall pay when billed
         the reasonable costs and expenses (including reasonable attorneys'
         fees) incurred by the holders of the Notes in connection with the
         consideration, negotiation, preparation or execution of any amendments,
         waivers, consents, standstill agreements and other similar agreements
         with respect to this Agreement or any other Financing Document (whether
         or not any such amendments, waivers, consents, standstill agreements or
         other similar agreements are executed).

                  (b) RESTRUCTURING AND WORKOUT, INSPECTIONS. At any time when
         the Company and the holders of Notes are conducting restructuring or
         workout negotiations in respect hereof, or a Default or Event of
         Default exists, the Company shall pay when billed the reasonable costs
         and expenses (including reasonable attorneys' fees and the fees of
         professional advisors) incurred by the holders of the Notes in
         connection with the assessment, analysis or enforcement of any rights
         or remedies that are or may be available to the holders of Notes,
         including, without limitation, in connection with inspections of any of
         the Properties, books of account, records, reports and other papers of
         the Company or any of the Subsidiaries; PROVIDED, HOWEVER, that at all
         times during which no restructuring or workout negotiations are
         continuing and no Default or Event of Default exists, inspections will
         be at the expense of the inspecting holder of Notes.

                  (c) COLLECTION. If the Company shall fail to pay when due the
         principal of any Note, the Company shall pay to each holder of Notes,
         to the extent permitted by law, such amounts as shall be sufficient to
         cover the costs and expenses, including but not limited to reasonable
         attorneys' fees, incurred by such holder in collecting any sums due on
         such Note.

         8.7      WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC.

                  (a) WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
         APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES
         AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
         OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
         ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR
         OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR
         BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY
         CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS
         CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
         ARISING. EACH

                                       37
<PAGE>

         PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER
         PARTIES HERETO THAT THIS SECTION 8.7(A) CONSTITUTES A MATERIAL
         INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO
         THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
         COPY OF THIS SECTION 8.7(A) WITH ANY COURT AS WRITTEN EVIDENCE OF THE
         CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

                  (b) CONSENT TO JURISDICTION. Each party to this Agreement, by
         its execution hereof, (a) hereby irrevocably submits to the exclusive
         jurisdiction of the state courts of the State of New York sitting in
         the County of New York or the United States District Court for the
         Southern District of New York for the purpose of any action, claim,
         cause of action or suit (in contract, tort or otherwise), inquiry,
         proceeding or investigation arising out of or based upon this Agreement
         or relating to the subject matter hereof, (b) hereby waives to the
         extent not prohibited by applicable law, and agrees not to assert, and
         agrees not to allow any of its subsidiaries to assert, by way of
         motion, as a defense or otherwise, in any such action, any claim that
         it is not subject personally to the jurisdiction of the above-named
         courts, that its property is exempt or immune from attachment or
         execution, that any such proceeding brought in one of the above-named
         courts is improper, or that this Agreement or the subject matter hereof
         or thereof may not be enforced in or by such court and (c) hereby
         agrees not to commence or maintain any action, claim, cause of action
         or suit (in contract, tort or otherwise), inquiry, proceeding or
         investigation arising out of or based upon this Agreement or relating
         to the subject matter hereof or thereof other than before one of the
         above-named courts nor to make any motion or take any other action
         seeking or intending to cause the transfer or removal of any such
         action, claim, cause of action or suit (in contract, tort or
         otherwise), inquiry, proceeding or investigation to any court other
         than one of the above-named courts whether on the grounds of
         inconvenient forum or otherwise. Notwithstanding the foregoing, to the
         extent that any party hereto is or becomes a party in any litigation in
         connection with which it may assert indemnification rights, the court
         in which such litigation is being heard shall be deemed to be included
         in clause (a) above.

                  (c) SERVICE OF PROCESS. Each party hereto hereby consents to
         service of process in any such proceeding in any manner permitted by
         New York law, and agrees that service of process by registered or
         certified mail, return receipt requested, at its address specified
         pursuant to Section 8.1 is reasonably calculated to give actual notice.
         The provisions of this Section 8.7(c) shall not restrict the ability of
         any party to enforce in any court any judgment obtained in the federal
         or state courts of the State of New York.

                                       38
<PAGE>

         8.8      EXECUTION IN COUNTERPART.

         This Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by each party
hereto, and each set of counterparts that, collectively, show execution by each
party hereto shall constitute one duplicate original.

 [Remainder of page left intentionally blank; Next page is the signature page.]

                                       39
<PAGE>

         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by one of its duly authorized
officers or representatives.

                                          HF HOLDINGS, INC.

                                          By:_________________________________
                                             Name:
                                             Title:

                                          CREDIT SUISSE FIRST BOSTON CORPORATION

                                          By:_________________________________
                                             Name:
                                             Title:

                     [Signature page to the Note Agreement]
<PAGE>

                                     ANNEX 1
                   ADDRESS OF PURCHASER; PAYMENT INSTRUCTIONS

<TABLE>
<CAPTION>
================================================================================
PURCHASER NAME                           CREDIT SUISSE FIRST BOSTON CORPORATION
--------------------------------------------------------------------------------
<S>                                      <C>
Name in which Note is Registered         CREDIT SUISSE FIRST BOSTON CORPORATION

================================================================================
Note Registration Number; Principal      R-1; $7,500,000
Amount of Note

--------------------------------------------------------------------------------
Payments on Account of Note
         Method
                                         Federal Funds Wire Transfer
         Account Information
                                         Citibank
                                         New York, NY
                                         ABA No.:  021-000-089
                                         Acct. Name: Credit Suisse First
                                                     Boston-Distressed
                                         Acct. No.: 4080-4716
                                         Re:  HF Holdings, Inc.
                                         Attn.:  Demetri Catis
--------------------------------------------------------------------------------
Accompanying Information                 Name of Company:  HF HOLDINGS, INC.
                                         Description of
                                         Security: 0% Convertible Subordinated
                                                   Notes due September 27, 2011

                                         Due Date and Application (as among
                                         principal) of the payment being made:
================================================================================
<PAGE>

================================================================================
Address for Notices Related              Credit Suisse First Boston Corporation
to Payments                              Eleven Madison Avenue
                                         New York, NY 10010-3629
                                         Attn:  Christopher Pechock
                                         Fax:  212.325.8290
--------------------------------------------------------------------------------
Address for All Other Notices            Credit Suisse First Boston Corporation
                                         Eleven Madison Avenue
                                         New York, NY 10010-3629
                                         Attn:  Christopher Pechock
                                         Fax:  212.325.8290

                                         WITH A COPY TO:

                                         Bingham Dana LLP
                                         One State Street
                                         Hartford, CT 06103-3178
                                         Attn:  Evan D. Flaschen
                                         Fax :  860.240.2800

--------------------------------------------------------------------------------
Other Instructions                       Signature Page Format:

                                         CREDIT SUISSE FIRST BOSTON CORPORATION

                                         By___________________________
                                           Name:
                                           Title:

--------------------------------------------------------------------------------
Tax Identification Number                13-5659485
================================================================================
</TABLE>

                                   Annex 1-2
<PAGE>

                                     ANNEX 2
                              ADDRESSES FOR NOTICES

ADDRESS OF COMPANY FOR NOTICES:
HF Holdings, Inc.
c/o ICON Health & Fitness, Inc.
875 South Main Street
Logan, Utah 84321
Telephone:  435 750-4000
Facsimile:  435 753-3665
Attn:  President

ADDRESS OF SENIOR AGENT FOR NOTICES:
General Electric Capital Corporation
10 South LaSalle Street, Suite 2700
Chicago, Illinois 60603
Attention:  ICON Health & Fitness, Account Manager
Telephone:  312 419-0985
Facsimile:  312 419-5992

                                   Annex 2-1
<PAGE>

                                                                    ATTACHMENT A

                                 [FORM OF NOTE]

   THIS NOTE WAS ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
    ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
   REGISTRATION UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL,
  SATISFACTORY TO THE ISSUER, THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
         IN ADDITION, THIS NOTE IS SUBJECT TO RESTRICTIONS ON VOTING AND
   TRANSFER AND REQUIREMENTS OF SALE AND OTHER PROVISIONS AS SET FORTH IN THE
    STOCKHOLDERS AGREEMENT DATED AS OF SEPTEMBER 27, 1999, AS AMENDED AND IN
     EFFECT FROM TIME TO TIME, AND CONSTITUTES A CSFB SECURITY AS DEFINED IN
      SUCH STOCKHOLDERS AGREEMENT. THE COMPANY WILL FURNISH A COPY OF SUCH
                  AGREEMENT TO THE HOLDER OF THIS NOTE WITHOUT
                          CHARGE UPON WRITTEN REQUEST.

                                HF HOLDINGS, INC.

             0% CONVERTIBLE SUBORDINATED NOTE DUE SEPTEMBER 27, 2011

No. R-__
$_______                                                     __________ __, ____

         HF HOLDINGS, INC. (together with its successors, the "Company"), a
Delaware corporation, for value received, hereby promises to pay to ______ or
registered assigns the principal sum of ______ DOLLARS ($______) on September
27, 2011.

         Payment of principal shall be made in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts to the registered holder hereof at the
address shown in the register maintained by the Company for such purpose, in the
manner provided in the Note Agreement (defined below).

         This Note is one of an issue of Notes of the Company issued in an
aggregate principal amount limited to Seven Million Five Hundred Thousand
Dollars ($7,500,000) pursuant to the Amended and Restated Note Agreement (as may
be amended, restated or otherwise modified from time to time, the "Note
Agreement"), dated as of September 27, 1999, between the Company and the
purchaser listed on Annex 1 thereto. The holder of this Note is entitled to the
benefits of the Note Agreement. This Note is subject to the terms of the Note
Agreement, and such terms are incorporated herein by reference. Capitalized
terms used herein and not defined herein have the meanings specified in the Note
Agreement.

         All of the principal of this Note may, under certain circumstances, be
declared due and payable in the manner and with the effect provided in the Note
Agreement.

                                       -1-
<PAGE>

         This Note is a registered Note and is transferable only by surrender at
the principal office of the Company as specified in the Note Agreement, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.

         The obligations evidenced by this Note are subordinated to the Senior
Debt on the terms provided in the Note Agreement.

         THIS NOTE AND THE NOTE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                                HF HOLDINGS, INC.

                                                By:_________________________
                                                   Name:
                                                   Title:

                                      -2-
<PAGE>

                         [FORM OF NOTICE OF CONVERSION]

To HF HOLDINGS, INC.

         The undersigned elects to convert $______________________ in principal
amount of the accompanying Note into the number of shares of Common Stock of HF
Holdings, Inc. issuable upon the conversion of such principal amount of such
Note, and requests that the certificates for such shares be issued in the name
of:

------------------------------------------------------------------------
(Please print or type name, address and zip code.)

------------------------------------------------------------------------
(Please insert social security number or tax ID number
If such principal amount of the accompanying Note shall not be the entire
principal amount of the accompanying Note, a new Note or Notes for the balance
remaining of such Note shall be registered in the name of and delivered to:

------------------------------------------------------------------------
(Please print or type name, address and zip code.)

------------------------------------------------------------------------
(Please insert social security number or tax ID number

The undersigned elects that the conversion of the accompanying Note shall be
deemed to have been effected upon:

         |_| the date of, and at the time immediately preceding, the occurrence
of the "Triggering Event" giving rise to such conversion right; or

         |_| the Business day on which the accompanying Note shall have been
surrendered to the Company.

Dated: ____________________, _________

                                                 [HOLDER]

                                                 By:_________________________

                                     NOTICE

         The signature to the foregoing Notice of Conversion must correspond to
the name as written upon the face of the accompanying Note or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.

                                      -3-

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