Exhibit 4(i)





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                              SECURITY AGREEMENT

                            Made as of May 15, 2003
                                    Between
                              BLOUNT CANADA LTD.,
                                  as Grantor
                                      And
                     GENERAL ELECTRIC CAPITAL CANADA INC.
                    as Canadian Agent for Canadian Lenders

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                               TABLE OF CONTENTS

                                                                          PAGE




SECTION 1.     INTERPRETATION................................................1
      1.1   Terms Defined in PPSA............................................1
      1.2   Other Defined Terms..............................................2
      1.3   Terms Defined in Credit Agreement................................2

SECTION 2.     GRANT OF SECURITY.............................................2
      2.1   Grant of Security................................................2
      2.2   Exception Respecting Trademarks..................................4
      2.3   Exception to Last Day............................................4
      2.4   Liability for Deficiency.........................................4

SECTION 3.     AGENT'S AND CANADIAN LENDERS' RIGHTS:  LIMITATIONS ON
               AGENT'S AND CANADIAN LENDERS' OBLIGATIONS.....................4
      3.1   Continued Liability of Grantor under Licenses, etc...............4
      3.2   Notice to Account Debtors........................................4
      3.3   Verification of Accounts.........................................5

SECTION 4.     REPRESENTATIONS AND WARRANTIES OF GRANTOR.....................5
      4.1   Representations and Warranties...................................5

SECTION 5.     COVENANTS OF THE GRANTOR......................................8
      5.1   Covenants........................................................8

SECTION 6.     REMEDIES.....................................................11
      6.1   Appointment of Receiver.........................................11
      6.2   Exercise of Rights by Canadian Agent............................12
      6.3   Taking Possession of Collateral.................................12
      6.4   Rights and Remedies under PPSA..................................12
      6.5   Co-operation of Grantor with respect to Taking Possession.......12
      6.6   Costs...........................................................13
      6.7   Notice of Sale..................................................13
      6.8   Grant of Licence to Use Intellectual Property Collateral........13
      6.9   Limitation on Canadian Agent's and Canadian Lenders' Duty in
            Respect of Collateral...........................................13
      6.10  Waiver by Grantor...............................................14
      6.11  Acknowledgement by Grantor......................................14

SECTION 7.     MISCELLANEOUS................................................15
      7.1   Extensions, etc.................................................15
      7.2   No Waiver.......................................................15
      7.3   Waiver of Protest...............................................15
      7.4   Assignment and Enurement........................................15
      7.5   Amendment.......................................................16
      7.6   Notices.........................................................16


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                               TABLE OF CONTENTS
                                 (CONTINUED)
                                                                          PAGE

      7.7   Remedies Cumulative.............................................16
      7.8   Headings........................................................16
      7.9   Reinstatement...................................................16
      7.10  Number and Gender...............................................16
      7.11  Limitation by Law; Severability.................................17
      7.12  Attachment......................................................17
      7.13  Amalgamation....................................................17
      7.14  Canadian Agent's Appointment as Attorney-In-Fact................17
      7.15  Termination of This Agreement...................................18
      7.16  Further Assurances..............................................18
      7.17  Governing Law...................................................18
      7.18  Counterparts....................................................18
      7.19  No Strict Construction..........................................18
      7.20  Advice of Counsel...............................................19
      7.21  Benefit of Canadian Agent and Canadian Lenders..................19

SECTION 8.     COPY OF AGREEMENT............................................19
      8.1   Copy............................................................19
      8.2   Waiver..........................................................19

SCHEDULE 4.1(4) - FINANCING STATEMENTS

SCHEDULE 4.1(5) - INSTRUMENTS AND CHATTEL PAPER

SCHEDULE 4.1(6) - LOCATIONS

SCHEDULE 4.1(10) - DESIGNS, PATENTS, TRADEMARKS AND COPYRIGHTS

EXHIBIT A - POWER OF ATTORNEY

                                     -ii-


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                              SECURITY AGREEMENT

This Agreement is made as of  May 15, 2003, between


            BLOUNT CANADA LTD., a Canada corporation ("Grantor"),

                  and

            GENERAL ELECTRIC CAPITAL CANADA INC.  a Canada corporation,
            individually and as agent (together with its successors and
            assigns, "CANADIAN AGENT")  for itself  and  the  financial
            institutions and  other entities that are from time to time
            Canadian Lenders under the Credit Agreement (as hereinafter
            defined)

RECITALS

A.   Pursuant to that certain  Credit  Agreement  dated as of the date hereof by
     and among Blount,  Inc., a Delaware  corporation,  the Grantor, as Canadian
     Borrower (as defined in the Credit Agreement), the other Credit Parties (as
     defined  in the  Credit  Agreement)  signatory  thereto,  General  Electric
     Capital  Corporation,  as Agent,  the Canadian Agent, and the other Persons
     signatory  thereto  from time to time as Canadian  Lenders  (including  all
     annexes,  exhibits and  schedules  thereto,  as from time to time  amended,
     restated,  supplemented or otherwise modified, the "CREDIT AGREEMENT"),  US
     Lenders (as defined in the Credit  Agreement) have agreed to make Loans (as
     defined  in the  Credit  Agreement)  to,  and to  incur  Letter  of  Credit
     Obligations (as defined in the Credit Agreement) on behalf of, US Borrowers
     (as defined in the Credit  Agreement),  and Canadian Lenders (as defined in
     the Credit Agreement) have agreed to make Canadian Loans (as defined in the
     Credit Agreement) to Canadian Borrower.

B.   In  connection  with the  making of the  Canadian  Loans  under the  Credit
     Agreement,  and as a condition precedent thereto,  Canadian Lenders require
     that Grantor shall have executed and delivered  this  Agreement as security
     for all its  obligations  arising  under,  by  virtue  of or  otherwise  in
     connection  with the Credit  Agreement,  this Agreement or any of the other
     Loan Documents to which the Grantor is party.

FOR VALUE RECEIVED, the parties agree as follows:

SECTION 1.  INTERPRETATION

1.1   TERMS DEFINED IN PPSA

     The terms  "Chattel  Paper",  "Document of Title",  "Goods",  "Instrument",
"Intangible",   "Security",  "Proceeds",   "inventory",   "Accession",  "Money",
"Account",  "financing statement" and "financing change statement" whenever used
herein shall be interpreted in accordance with their respective  meanings in the
Personal  Property  Security Act (Ontario),  as amended from time to time, which
Act,  including   amendments  thereto  and  any  Act  substituted  therefor  and
amendments  thereto, is herein referred to as the "PPSA" unless expressly stated
or provided


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                                     - 2 -


otherwise herein. Any reference herein to "Collateral" shall, unless the context
otherwise  requires,  be deemed a reference to "Collateral or any part thereof".
The term  "Proceeds",  whenever used herein and interpreted as above,  shall, by
way of example,  include  trade-ins,  equipment,  Money,  bank accounts,  notes,
Chattel Paper, Goods, contracts rights, Accounts and any other personal property
or  obligation  received when such  Collateral or Proceeds are sold,  exchanged,
collected or otherwise disposed of or dealt with.

1.2   OTHER DEFINED TERMS

     Unless otherwise defined or stated,  capitalized terms used herein have the
following meanings:

(1) AGREEMENT means this agreement and all schedules attached hereto as the same
may be amended, restated, supplemented and otherwise modified from time to time.
All uses of the words  "hereto",  "herein",  "hereof ", "hereby" and "hereunder"
and  similar  expressions  refer  to  this  security  agreement  and  not to any
particular section or portion of it.

(2) CREDIT AGREEMENT has the meaning given to it in paragraph A of the Recitals.

(3) COLLATERAL has the meaning given to it in Section .

(4) INVENTORY has the meaning given to it in Section .

(5)  OBLIGATIONS  means the  Grantor's  Obligations  (as  defined  in the Credit
Agreement) including, without limitation, any and all indebtedness,  liabilities
and  obligations,  now or hereafter  existing,  direct or indirect,  absolute or
contingent,  as principal or surety,  of Grantor to Canadian  Agent and Canadian
Lenders or any of them arising  under,  by virtue of or otherwise in  connection
with this Agreement, the Credit Agreement or any other Loan Document.

(6) RECEIVER has the meaning given to it in Section .

(7)   SECURITY INTEREST has the meaning given to it in Section 2.1

1.3   TERMS DEFINED IN CREDIT AGREEMENT

Other  capitalized terms used herein and not otherwise defined have the meanings
given to them in the Credit Agreement or in Annex "A" thereto.

SECTION 2.  GRANT OF SECURITY

2.1   GRANT OF SECURITY

     As continuing  collateral  security for the due payment and  performance by
Grantor of all of the  Obligations,  Grantor  hereby grants,  assigns,  conveys,
mortgages,  pledges,  hypothecates  and  transfers  to Canadian  Agent,  for its
benefit and for the benefit of Canadian  Lenders,  and grants to Canadian Agent,
for its benefit and for the benefit of  Canadian  Lenders,  a security  interest
(collectively, the "SECURITY INTEREST") in, all of its right, title and interest
in, to and under all of Grantor's  present and after acquired  personal property
and other assets, including,



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                                     - 3 -



without limitation, in all Goods (including all parts, accessories, attachments,
special tools,  additions and accessions thereto),  Chattel Paper,  Documents of
Title (whether negotiable or not),  Instruments,  Money and Securities now owned
or hereafter owned or acquired by or on behalf of Grantor (including such as may
be returned to or  repossessed  by Grantor)  and in all  Proceeds  and  renewals
thereof,  accretions thereto and substitutions  therefor and, further including,
without  limitation,  all of the  following  now  owned  or  hereafter  owned or
acquired by or on behalf of Grantor:

(1) all Accounts and book debts and generally all debts, dues, claims, choses in
action  and  demands  of every  nature and kind  howsoever  arising or  secured,
including  letters of credit and advices of credit,  which are now due, owing or
accruing or growing due to or owned by or which may hereafter  become due, owing
or accruing or growing due to or owned by Grantor ("DEBTS");

(2) all Chattel Paper and Documents of Title;

(3) all inventory of whatever kind and wherever situate,  including, for greater
certainty,  all raw materials,  work in process or materials used or consumed or
to be used or  consumed in the  processing,  production,  packaging,  promotion,
delivery  or  shipping  of the same,  including  other  supplies  (collectively,
"INVENTORY");

(4) all Equipment (other than Inventory) of whatever kind and wherever  situate,
including,   without  limitation,  all  machinery,   tools,  apparatus,   plant,
furniture,  fixtures,  motor vehicles and other vehicles of whatsoever nature or
kind;

(5) all Intangibles;

(6) all present and future contracts, contract rights and insurance claims;

(7) all Intellectual Property;

(8) all present and future Instruments;

(9) all Money and Securities; and

(10) all deeds,  documents,  writings,  papers, books of account and other books
relating to or being records of any of the foregoing or by which such are or may
hereafter be secured, evidenced, acknowledged or made payable.

The  foregoing  property is  collectively  referred to as the  "COLLATERAL".  In
addition, to secure the prompt and complete payment, performance and observation
of the Obligations, Grantor hereby grants to Canadian Agent, for its benefit and
for the benefit of Canadian Lenders,  a right of set-off against  Collateral now
or hereafter in the  possession or custody of or in transit to Canadian Agent or
any Canadian Lender for any purpose.


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                                     - 4 -


2.2   EXCEPTION RESPECTING TRADEMARKS

     Notwithstanding  Section , Grantor's  grant of security in  trademarks  (as
defined in the Trademarks Act (Canada)) under this Agreement shall be limited to
a grant by Grantor of a security  interest in all of Grantor's right,  title and
interest in such trademarks.

2.3   EXCEPTION TO LAST DAY

     The  Security  Interest  granted  hereby  shall not extend or apply to, and
Collateral shall not include, the last day of the term of any lease or agreement
therefor, but upon the enforcement of the Security Interest, Grantor shall stand
possessed  of such last day in trust to assign the same to any person  acquiring
such term.

2.4   LIABILITY FOR DEFICIENCY

     If the  Collateral  is  realized  upon  and the  Security  Interest  in the
Collateral is not sufficient to satisfy all  Obligations,  Grantor  acknowledges
and  agrees  that  Grantor  shall  continue  to be  liable  for any  Obligations
remaining  outstanding  and  Canadian  Agent  shall be  entitled  to pursue full
payment thereof.

SECTION 3.  AGENT'S AND CANADIAN  LENDERS'  RIGHTS:  LIMITATIONS  ON AGENT'S AND
CANADIAN LENDERS' OBLIGATIONS

3.1   CONTINUED LIABILITY OF GRANTOR UNDER LICENSES, ETC.

     It is expressly  agreed by Grantor  that,  anything  herein to the contrary
notwithstanding,  Grantor  shall remain  liable under each of its  Contracts and
each of its Licenses to observe and perform all the conditions  and  obligations
to be observed and performed by it  thereunder.  Neither  Canadian Agent nor any
Canadian  Lender shall have any  obligation  or liability  under any Contract or
License by reason of or arising out of this Agreement or the granting  herein of
a Security  Interest  therein or the receipt by Canadian  Agent or any  Canadian
Lender of any payment  relating  to any  Contract  or License  pursuant  hereto.
Neither Canadian Agent nor any Canadian Lender shall be required or obligated in
any  manner to perform or fulfill  any of the  obligations  of Grantor  under or
pursuant to any  Contracts or License,  or to make any  payment,  or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any  claims,  or to take any  action to  collect or enforce  any
performance  or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.

3.2   NOTICE TO ACCOUNT DEBTORS

     Without  in any  way  limiting  the  provisions  of the  Credit  Agreement,
Canadian  Agent may, at any time after an Event of Default has  occurred  and is
continuing (or if any rights of set-off (other than set-offs  against an Account
arising under the Contracts  giving rise to the same Account) or contra accounts
may be asserted with respect to the following), without prior notice to Grantor,
notify any Account  Debtors and other Persons  obligated on the Collateral  that
Canadian Agent has a security interest therein,  and that payments shall be made
directly to Canadian Agent for its benefit and the benefit of Canadian  Lenders.
Upon the request of



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                                     - 5 -


Canadian  Agent in such  circumstances,  Grantor  shall so notify  such  Account
Debtors and other Persons obligated on the Collateral.  Once any such notice has
been given to any Account  Debtor or other Person  obligated on the  Collateral,
Grantor shall not give any contrary instructions to such Account Debtor or other
Person without Canadian Agent's prior written consent.

3.3   VERIFICATION OF ACCOUNTS

Canadian  Agent may at any time,  in Canadian  Agent's  own name,  the name of a
nominee  of  Canadian  Agent or in the name of  Grantor,  communicate  (by mail,
telephone,  facsimile or otherwise) with Account Debtors,  parties to Contracts,
obligors in respect of  Instruments  and obligors in respect of Chattel Paper to
verify with such  Persons,  to Canadian  Agent's  satisfaction,  the  existence,
amount, terms of and any other matter relating to any such Accounts,  Contracts,
Instruments or Chattel Paper,  provided  that;  prior to any such  communication
Agent shall endeavor to notify Grantor of its intended  communication (unless an
Event of  Default  has  occurred  and is  continuing).  If a Default or Event of
Default  shall have  occurred and be  continuing,  Grantor,  at its own expense,
shall cause the independent  chartered  accountants then engaged by such Grantor
to prepare and deliver to Canadian  Agent and each  Canadian  Lender at any time
and from time to time  promptly  upon  Canadian  Agent's  request the  following
reports with respect to Grantor:  (i) a reconciliation of all Accounts;  (ii) an
aging of all Accounts;  (iii) trial  balances;  and (iv) a test  verification of
such Accounts as Canadian Agent may request.  Grantor, at its own expense, shall
deliver to Canadian  Agent the results of each  physical  verification,  if any,
which  Grantor may in its  discretion  have made,  or caused any other Person to
have made on its behalf, of all or any portion of its Inventory.

SECTION 4.  REPRESENTATIONS AND WARRANTIES OF GRANTOR

4.1  REPRESENTATIONS AND WARRANTIES

     Grantor represents and warrants that:

(1) Grantor's correct  incorporated name is "Blount Canada Ltd." and there is no
French language version of its incorporated name;

(2)  Grantor  is the sole  owner of each item of the  Collateral  upon  which it
purports to grant a Security  Interest  hereunder,  and has good and  marketable
title  thereto  free  and  clear  of any  and all  Liens  other  than  Permitted
Encumbrances;

(3) no effective security agreement, financing statement, equivalent security or
Lien  instrument  or  continuation  statement  covering  all or any  part of the
Collateral is on file or of record in any public office, except such as may have
been  filed (i) by  Grantor  in  favour  of  Canadian  Agent,  pursuant  to this
Agreement or the other Loan  Documents,  and (ii) in  connection  with any other
Permitted Encumbrances;

(4) this  Agreement  is  effective  to  create a valid and  continuing  Security
Interest on and, upon the filing of the appropriate  financing statements listed
on Schedule hereto, a perfected  Security  Interest in favour of Canadian Agent,
for its  benefit and the benefit of Canadian  Lenders,  on the  Collateral  with
respect to which a security  interest may be perfected by filing pursuant to the
PPSA. Such Security Interest is prior to all other Liens, except Permitted



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                                     - 6 -


Encumbrances  that would be prior to the Security Interest in favour of Canadian
Agent for the benefit of Canadian Agent and Canadian Lenders as a matter of law,
and is  enforceable  as such as against any and all creditors of and  purchasers
from  Grantor  (other than  purchasers  or lessees of  Inventory in the ordinary
course of business). All action by Grantor necessary or desirable to protect and
perfect  such  Security  Interest on each item of the  Collateral  has been duly
taken;

(5) Schedule hereto lists all  Instruments and Chattel Paper of Grantor.  Except
as disclosed on Schedule 4.1(5), all action by Grantor necessary or desirable to
protect  and perfect the  Security  Interest of Canadian  Agent on each item set
forth on Schedule  (including the delivery of all originals  thereof to Canadian
Agent and the legending of all Chattel Paper as required by Section  hereof) has
been duly taken.  The Security  Interest of Canadian  Agent,  for the benefit of
Canadian Agent and Canadian Lenders, on the Collateral listed on Schedule hereto
is prior to all other Liens,  except Permitted  Encumbrances that would be prior
to the Security  Interest in favour of Canadian Agent as a matter of law, and is
enforceable  as such  against  any  and all  creditors  of and  purchasers  from
Grantor;

(6) Grantor's jurisdiction of incorporation,  chief executive office,  principal
place of business,  registered  office  according to its  constating  documents,
corporate  offices,  all warehouses  and premises where  Collateral is stored or
located,  and the  locations  of all of its books  and  records  concerning  the
Collateral and all Account Debtors are set forth on Schedule hereto;

(7) with respect to the Accounts of Grantor, except as specifically disclosed in
the most recent  Collateral  Report  delivered by Grantor to Canadian Agent, (i)
they  represent bona fide sales of Inventory or rendering of services to Account
Debtors in the ordinary course of Grantor's  business and are not evidenced by a
judgment,  Instrument or Chattel Paper;  (ii) there are no set- offs,  claims or
disputes  existing  or  asserted  with  respect  thereto and Grantor has made no
agreement  with any  Account  Debtor for any  extension  of time for the payment
thereof, any compromise or settlement for less than the full amount thereof, any
release  of any  Account  Debtor  from  liability  therefor,  or  any  deduction
therefrom  except a discount  or  allowance  allowed by Grantor in the  ordinary
course of its business for prompt payment and disclosed to Canadian Agent; (iii)
to Grantor's  knowledge,  there are no facts, events or occurrences which in any
way  impair the  validity  or  enforceability  thereof  or could  reasonably  be
expected to reduce the amount payable thereunder as shown on Grantor's books and
records  and any  invoices,  statements  and  Collateral  Reports  delivered  to
Canadian Agent and Canadian  Lenders with respect  thereto;  (iv) Grantor has no
notice of  proceedings  or actions which are pending or  threatened  against any
Account Debtor which might result in any adverse change in such Account Debtor's
financial condition; and (v) Grantor has no knowledge that any Account Debtor is
unable generally to pay its accounts as they become due.  Further,  with respect
to the Accounts (x) the amounts shown on all invoices, statements and collateral
reports  which may be  delivered  to  Canadian  Agent with  respect  thereto are
actually and absolutely owing to Grantor as indicated thereon and are not in any
way  contingent;  (y) no  payments  have  been or shall be made  thereon  except
payments immediately delivered to the applicable Blocked Accounts in the name of
Grantor or Canadian  Agent as  required  pursuant to the terms of Annex C to the
Credit Agreement;  and (z) to Grantor's knowledge,  all Account Debtors have the
capacity to contract;

(8) all  Inventory  purchased by Grantor is purchased  free and clear of any and
all Liens and other  adverse  claims  other  than  unpaid  suppliers'  rights to
repossess goods under Section 81.1 of



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                                     - 7 -


the Bankruptcy and  Insolvency  Act (Canada) and such  suppliers'  substantially
similar rights under the Civil Code of Quebec;

(9) with  respect  to any  Inventory  scheduled  or  listed  on the most  recent
Collateral  Report  delivered by Grantor to Canadian Agent pursuant to the terms
of this Agreement or the Credit Agreement,  (i) such Inventory is located at one
of  Grantor's  locations  or the  location of a customer of Grantor set forth on
Schedule  hereto,  (ii) no  Inventory  is now,  or  shall  at any  time or times
hereafter be stored at any other location without Canadian Agent's prior consent
and if Canadian Agent gives such consent,  Grantor will  concurrently  therewith
obtain,  to the extent required by the Credit  Agreement,  bailee,  landlord and
mortgagee  agreements,  (iii) the Grantor has good title to such  Inventory and,
subject to Section hereof,  such property is not subject to any Lien or security
interest or document  whatsoever  except for the  Security  Interest  granted to
Canadian  Agent,  for the benefit of Canadian  Agent and Canadian  Lenders,  and
except for Permitted Encumbrances,  (iv) except as specifically disclosed in the
most recent  Collateral  Report  delivered  by Grantor to Canadian  Agent,  such
Inventory is Eligible Inventory, of good and merchantable quality, free from any
defects,  (v) such Inventory is not subject to any licensing,  patent,  royalty,
trademark,  trade name, industrial design or copyright agreements with any third
parties  which  would  require  any  consent  of any  third  party  upon sale or
disposition  of that  Inventory  or the  payment of any money to any third party
upon such sale or other  disposition,  and (vi) except as  disclosed in the most
recent  Collateral  Report  delivered to the Canadian  Agent,  the completion of
manufacture,  sale or other  disposition  of such  Inventory by Canadian  Agent,
following  an Event of Default,  shall not require the consent of any Person and
shall not  constitute  a breach or default  under any  contract or  agreement to
which Grantor is a party or to which such property is subject;

(10) Grantor has no interest in, or title to, any Design,  Patent,  Trademark or
Copyright except as set forth in Schedule hereto. This Agreement is effective to
create a valid and  continuing  security  interest  on and,  upon filing of this
Agreement with the Canadian  Intellectual  Property  Office and of the financing
statement  pursuant  to the PPSA and  listed on  Schedule ,  perfected  security
interest in favour of Canadian Agent on Grantor's Designs,  Patents,  Trademarks
and Copyrights,  and such perfected  security interest is enforceable as such as
against any and all creditors of and purchasers from Grantor. Upon completion of
the  filings  referred  to in the  immediately  preceding  sentence,  all action
necessary or desirable to protect and perfect Canadian Agent's Security Interest
on Grantor's  Designs,  Patents,  Trademarks or Copyrights  shall have been duly
taken; and

(11) This Agreement has been duly authorized,  executed and delivered by Grantor
and  constitutes a legal,  valid and binding  obligation of Grantor  enforceable
against  Grantor in  accordance  with its  terms,  except as  enforceability  is
limited by  bankruptcy,  insolvency,  reorganization,  moratorium  or other laws
relating to or affecting  generally the  enforcement  of  creditors'  rights and
except to the extent that availability of the remedy of specific  performance or
injunctive relief and other equitable  remedies are subject to the discretion of
the court before which any proceeding therefor may be brought.


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                                     - 8 -


SECTION 5.  COVENANTS OF THE GRANTOR

5.1   COVENANTS

     Grantor  covenants  and agrees  with  Canadian  Agent,  for the  benefit of
Canadian  Agent  and  Canadian  Lenders,  that  from and  after the date of this
Agreement and until the Termination Date:

(1) LIMITATION ON LIENS ON COLLATERAL. Grantor will not create, permit or suffer
to exist,  and Grantor will defend the Collateral  against,  and take such other
action as is necessary to remove,  any Lien on the Collateral  except  Permitted
Encumbrances,  and will defend the right,  title and interest of Canadian  Agent
and  Canadian  Lenders  in and to any of  Grantor's  rights  in  respect  of the
Collateral against the claims and demands of all Persons whomsoever.

(2)  LIMITATIONS  ON  DISPOSITION.  Grantor  will not sell,  lease,  transfer or
otherwise  dispose of any of the  Collateral,  or attempt or  contract  to do so
except as permitted by the Credit Agreement.

(3) NOTICE TO CANADIAN AGENT.  Grantor will advise  Canadian Agent promptly,  in
reasonable detail, (i) of any Lien (other than Permitted  Encumbrances) or claim
made or asserted  against any of the  Collateral,  and (ii) of the occurrence of
any other  event  which would have a Material  Adverse  Effect on the  aggregate
value of the  Collateral  or on the Liens  created  hereunder or under any other
Loan Document.

(4) NO  ACCESSIONS.  Grantor shall  prevent  Collateral,  except for  Collateral
disposed of as  permitted  hereby or under the Credit  Agreement,  from being or
becoming an Accession not covered by this Agreement.

(5) MAINTENANCE OF RECORDS. Grantor shall keep and maintain, at its own cost and
expense, satisfactory and complete records of the Collateral, including a record
of any and all payments received and any and all credits granted with respect to
the Collateral and all other  dealings with the  Collateral.  Grantor shall mark
its books and records  pertaining to the  Collateral to evidence this  Agreement
and the Security  Interests granted hereby. If Grantor retains possession of any
Chattel Paper or Instrument with Canadian  Agent's  consent,  such Chattel Paper
and Instruments shall be marked with the following legend: "This writing and the
obligations  evidenced or secured hereby are subject to the security interest of
General  Electric  Capital  Canada Inc., as Canadian  Agent,  for the benefit of
Canadian Agent and certain Canadian Lenders."

(6) FURTHER  ASSURANCES;  PLEDGE OF INSTRUMENTS;  CHATTEL PAPER. At any time and
from time to time,  upon the written  request of Canadian  Agent and at the sole
expense of Grantor,  Grantor shall promptly and duly execute and deliver any and
all such further  instruments  and documents  (including  deeds of hypothec with
respect to  Collateral  located in the Province of Quebec) and take such further
actions as Canadian Agent may deem desirable to obtain the full benefits of this
Agreement  and the other Loan  Documents to which  Grantor is a party and of the
rights  and  powers  herein  and  therein  granted,   including  (i)  using  its
commercially  reasonable efforts to secure all consents and approvals  necessary
or appropriate for the assignment to or for the benefit of Canadian Agent of any
License or Contract held by such Grantor or in which such Grantor has any rights
not heretofore assigned, (ii) filing any financing or financing change


<PAGE>


                                     - 9 -


statements (or applicable similar instruments) under applicable law with respect
to the Security  Interest granted hereunder or any Liens granted under any other
Loan Document to which  Grantor is a party,  (iii) unless  Canadian  Agent shall
otherwise  consent in writing  (which  consent may be  revoked),  delivering  to
Canadian  Agent all  Collateral  consisting  of  negotiable  Documents of Title,
certificated   Securities,   Chattel  Paper  and   Instruments  (in  each  case,
accompanied by share transfer powers,  allonges or other instruments of transfer
executed in blank)  promptly after Grantor  receives same;  notwithstanding  the
foregoing, so long as no Event of Default shall have occurred and be continuing,
Grantor may retain for collection in the ordinary course of business all Chattel
Paper or  Instruments  received by Grantor in the  ordinary  course of business,
(iv) Grantor shall, in accordance with the Credit  Agreement,  obtain or use its
commercially  reasonable  efforts to obtain,  waivers or subordinations of Liens
from landlords and  mortgagees and Grantor shall in all instances  obtain signed
acknowledgements of Canadian Agent's Liens from bailees having possession of any
Grantor's  Goods  that they  hold for the  benefit  of  Canadian  Agent,  (v) in
accordance with Annex C to the Credit Agreement,  Grantor shall obtain a blocked
account,  lockbox or similar  agreement with each bank or financial  institution
holding a Deposit Account for Grantor,  and (vi) upon request by Canadian Agent,
if Grantor is or becomes a beneficiary of a letter of credit,  it shall promptly
and, in any event,  within two (2) Business Days after  becoming a  beneficiary,
notify  Canadian  Agent  thereof  and,  enter into a  tri-party  agreement  with
Canadian  Agent  and  the  issuer  and/or  confirmation  bank  with  respect  to
letter-of-credit rights assigning such letter-of-credit rights to Canadian Agent
and  directing  all  payments  thereunder  to the Canadian  Collection  Account.
Grantor also hereby authorizes Canadian Agent, for the benefit of Canadian Agent
and Canadian Lenders, to file any such financing  statements or financing change
statements (or applicable similar  instruments) without the signature of Grantor
to the extent  permitted by  applicable  law. If any amount  payable under or in
connection  with any of the  Collateral  is or  shall  become  evidenced  by any
Instrument,  such  Instrument,  other than  cheques  and notes  received  in the
ordinary course of business,  shall be duly endorsed in a manner satisfactory to
Canadian Agent immediately upon Grantor's receipt thereof.

(7) INDEMNIFICATION. In any suit, proceeding or action brought by Canadian Agent
or any Canadian Lender relating to any Collateral for any sum owing with respect
thereto or to enforce any rights or claims with  respect  thereto,  Grantor will
save,  indemnify and keep Canadian Agent and Canadian  Lenders harmless from and
against all expense  (including  reasonable  legal fees and  expenses),  loss or
damage suffered by reason of any defence, set-off,  counterclaim,  recoupment or
reduction  of  liability  whatsoever  of the  Account  Debtor  or  other  Person
obligated  on  the  Collateral,  arising  out  of a  breach  by  Grantor  of any
obligation  thereunder or arising out of any other  agreement,  indebtedness  or
liability at any time owing to, or in favour of, such obligor or its  successors
from Grantor,  except in the case of Canadian Agent or any Canadian  Lender,  to
the extent such  expense,  loss, or damage is  attributable  solely to the gross
negligence  or wilful  misconduct of Canadian  Agent or such Canadian  Lender as
finally determined by a court of competent jurisdiction. All such obligations of
Grantor  shall be and remain  enforceable  against and only against  Grantor and
shall not be enforceable  against  Canadian Agent or any Canadian  Lender.  This
indemnification  provision  shall survive the  termination of this Agreement and
the repayment of the Secured Obligations.


<PAGE>


                                     - 10 -


(8) COMPLIANCE WITH TERMS OF ACCOUNTS,  ETC. In all material  respects,  Grantor
will perform and comply with all  obligations  in respect of the  Collateral and
all other  agreements to which it is a party or by which it is bound relating to
the Collateral.

(9)  INTELLECTUAL PROPERTY COLLATERAL.

     (a)  Grantor shall notify  Canadian  Agent  immediately  if it knows or has
          reason to know that any application or registration relating to any of
          Grantor's Designs, Patents, Trademarks or Copyrights (now or hereafter
          existing)  may become  abandoned  or of any adverse  determination  or
          development  (including the institution of, or any such  determination
          or  development  in,  any  proceeding  in  the  Canadian  Intellectual
          Property  Office or the United States  Patent and Trademark  Office or
          the United States Copyright  Office or any court) regarding  Grantor's
          ownership of any Design, Patent, Trademark or Copyright, its rights to
          register the same, or to keep and maintain the same.

     (b)  In no event  shall  Grantor,  either  itself  or  through  any  agent,
          employee,   licensee  or  designee,   file  an  application   for  the
          registration  of any Design,  Patent,  Trademark or Copyright with any
          Canadian  Intellectual Property Office or the United States Patent and
          Trademark  Office or the United States Copyright Office or any similar
          office or agency without giving  Canadian Agent written notice thereof
          on or before  the  immediately  following  date with  respect to which
          quarterly financial statements of Holdings are due pursuant to Annex E
          to the Credit Agreement,  and, upon request of Canadian Agent, Grantor
          shall execute and deliver any and all intellectual  property  security
          agreements,  as  Canadian  Agent may  reasonably  request to  evidence
          Canadian Agent's Lien on such Design, Patent,  Trademark or Copyright,
          and  the  Intangibles  of  Grantor  relating  thereto  or  represented
          thereby.

     (c)  Grantor shall take all actions  necessary or  reasonably  requested by
          Canadian Agent to maintain and pursue each application,  to obtain the
          relevant  registration  and to maintain  the  registration  of each of
          Grantor's  Designs,   Patents,   Trademarks  and  Copyrights  (now  or
          hereafter existing), including the filing of applications for renewal,
          affidavits or declarations of use,  affidavits of non-  contestability
          and opposition and interference and cancellation proceedings.

     (d)  In the  event  that any of  Grantor's  Design,  Patent,  Trademark  or
          Copyright  Collateral is infringed upon, or misappropriated or diluted
          by a third party,  Grantor shall notify  Canadian Agent promptly after
          Grantor learns thereof. Grantor shall, unless Grantor shall reasonably
          determine that such Design, Patent,  Trademark or Copyright Collateral
          is in no way  material to the conduct of its  business or  operations,
          promptly sue for infringement,  if such Grantor reasonably  determines
          that  such  suit  would  have a  reasonable  probability  of  success,
          misappropriation  or  dilution  and to recover any and all damages for
          such infringement,  misappropriation or dilution,  and shall take such
          other  actions as Canadian  Agent shall  reasonably  deem  appropriate
          under the circumstances to protect such Design,  Patent,  Trademark or
          Copyright Collateral.



<PAGE>


                                     - 11 -



(10) FURTHER  IDENTIFICATION  OF  COLLATERAL.  Grantor  will, if so requested by
Canadian Agent,  furnish to Canadian Agent, as often as Canadian Agent requests,
statements and schedules  further  identifying and describing the Collateral and
such other  reports in  connection  with the  Collateral  as Canadian  Agent may
reasonably  request,  all in such detail as Canadian Agent may specify.  Grantor
shall  promptly,  and in any  event by the end of each  fiscal  quarter,  notify
Canadian Agent in writing upon acquiring any interest hereafter in property that
is of a type where a  security  interest  or lien must be or may be  registered,
recorded or filed under,  or notice thereof given under,  any federal statute or
regulation.

(11) CERTIFICATES OF STATUS.  Not less frequently than once during each calendar
quarter,  Grantor shall, unless Canadian Agent shall otherwise consent,  provide
to Canadian Agent a certificate of compliance or status from its jurisdiction of
incorporation.

(12) NO  REINCORPORATION.  Grantor  shall provide  Canadian  Agent with at least
thirty (30) days prior written notice of any change in the information contained
in Schedule 4.1(6) hereto, as applicable to keep said Schedule 4.1(6) up to date
and accurate.  Without  limiting the  prohibitions  on mergers or  amalgamations
involving  Grantor  contained  in  the  Credit  Agreement,   Grantor  shall  not
reincorporate,  reorganize or continue itself under the laws of any jurisdiction
outside the federal law of Canada without the prior written  consent of Canadian
Agent.

(13) AMENDMENTS NOT AUTHORIZED.  Grantor  acknowledges that it is not authorized
to file any financing change  statement with respect to any financing  statement
that has been filed in  respect of any  Collateral  Document  without  the prior
written consent of Canadian Agent.

(14) WITHHOLDING TAX. Without limiting any of Grantor's other  obligations under
any other Loan Document,  and for greater  certainty,  Grantor agrees to pay and
remit  to the  Canada  Customs  and  Revenue  Agency  and any  other  applicable
Governmental  Authority  when due all  Canadian  withholding  taxes  exigible in
respect  of any  transfers  from the  Blocked  Accounts  (or any other  accounts
pledged in favour of the Canadian Agent) to any Collection Account. Upon request
from Canadian  Agent,  Grantor shall provide to Canadian Agent the original or a
certified  copy of a receipt  evidencing  such payment or, if such taxes are not
exigible on any such transfer, a reasonably detailed explanation (with reference
to the type of intercompany  transaction to which the transfer/payment  relates)
therefor.



SECTION 6.  REMEDIES

6.1  APPOINTMENT OF RECEIVER

     Upon the occurrence of and during the  continuance of any Event of Default,
Canadian Agent may appoint or reappoint by instrument in writing,  any Person or
Persons,  whether an officer or officers or an employee or employees of Canadian
Agent or not,  to be an interim  receiver,  receiver or  receivers  (hereinafter
called a  "RECEIVER",  which term when used herein shall  include a receiver and
manager) of Collateral (including any interest, income or profits therefrom) and
may remove any Receiver so appointed and appoint  another in his/her/its  stead.
Any such Receiver shall, so far as concerns responsibility for his/her/its acts,
be  deemed  the  agent of  Grantor  and not  Canadian  Agent or any of  Canadian
Lenders, and neither Canadian


<PAGE>


                                     - 12 -


Agent  nor any of  Canadian  Lenders  shall  be in any way  responsible  for any
misconduct,  negligence  or  non-feasance  on the part of any such  Receiver  or
his/her/its  servants,  agents or  employees.  Subject to the  provisions of the
instrument  appointing  him/her/it,  any such Receiver  shall have power to take
possession of Collateral,  to preserve  Collateral or its value,  to carry on or
concur in  carrying  on all or any part of the  business of Grantor and to sell,
lease, license or otherwise dispose of or concur in selling, leasing,  licensing
or otherwise  disposing of Collateral.  To facilitate the foregoing powers,  any
such  Receiver  may, to the exclusion of all others,  including  Grantor,  enter
upon,  use and  occupy  all  premises  owned  or  occupied  by  Grantor  wherein
Collateral may be situate,  maintain Collateral upon such premises, borrow money
on a secured or  unsecured  basis and use  Collateral  directly  in  carrying on
Grantor's  business or as security  for loans or advances to enable the Receiver
to carry on Grantor's  business or  otherwise,  as such Receiver  shall,  in its
discretion,  determine.  Except as may be otherwise  directed by Canadian Agent,
all  Money  received  from  time  to  time  by such  Receiver  in  carrying  out
his/her/its  appointment  shall be  received  in trust  for and be paid  over to
Canadian Agent. Every such Receiver may, in the discretion of Canadian Agent, be
vested with all or any of the rights and powers of Canadian Agent.

6.2  EXERCISE OF RIGHTS BY CANADIAN AGENT

     Upon and during the  continuance  of any Event of Default,  Canadian  Agent
may, either  directly or through its agents or nominees,  exercise any or all of
the powers and rights given to a Receiver by virtue of Section .

6.3  TAKING POSSESSION OF COLLATERAL

     Upon the  occurrence  and during the  continuance  of an Event of  Default,
Canadian Agent may take possession of, collect, demand, sue on, enforce, recover
and  receive  Collateral  and give valid and  binding  receipts  and  discharges
therefor and in respect thereof and Canadian Agent also may sell, license, lease
or otherwise  dispose of  Collateral  in such manner,  at such time or times and
place or places, for such consideration and upon such terms and conditions as to
Canadian Agent may seem reasonable and in compliance with applicable law.

6.4  RIGHTS AND REMEDIES UNDER PPSA

     In addition to those rights granted  herein and in any other  agreement now
or  hereafter  in effect  between  Grantor and  Canadian  Agent and any Canadian
Lender,  and in addition to any other rights Canadian Agent or Canadian  Lenders
may have at law or in equity,  Canadian Agent shall have,  both before and after
the  occurrence  of any Event of Default,  all rights and  remedies of a secured
party under the PPSA. However, Canadian Agent shall not be liable or accountable
for any failure to exercise its remedies, take possession of, collect,  enforce,
realize, sell, lease, license or otherwise dispose of Collateral or to institute
any  proceedings  for such  purposes.  Furthermore,  none of  Canadian  Agent or
Canadian  Lenders shall have any obligation to take any steps to preserve rights
against prior parties to any Instrument or Chattel Paper,  whether Collateral or
proceeds  and  whether  or not in  Canadian  Agent's  or any  Canadian  Lender's
possession, and shall not be liable or accountable for failure to do so.


<PAGE>


                                     - 13 -


6.5  CO-OPERATION OF GRANTOR WITH RESPECT TO TAKING POSSESSION

     Grantor  acknowledges that, after and during the continuance of an Event of
Default,  Canadian Agent or any Receiver  appointed by it may take possession of
Collateral  wherever  it may be located and by any method  permitted  by law and
Grantor agrees upon request from Canadian Agent or any such Receiver to assemble
and deliver possession of Collateral at such place or places as directed.

6.6  COSTS

     Grantor agrees to be liable for and to pay all costs,  charges and expenses
reasonably  incurred by Canadian  Agent,  any  Canadian  Lender or any  Receiver
appointed  by  Canadian  Agent,   whether  directly  or  for  services  rendered
(including  reasonable  legal and  auditors'  costs and  expenses  and  Receiver
remuneration),  in operating Grantor's accounts,  in preparing or enforcing this
Agreement, taking and maintaining custody of, preserving, repairing, processing,
preparing  for  disposition  and  disposing  of  Collateral  and in enforcing or
collecting indebtedness and all such costs, charges and expenses,  together with
any amounts owing as a result of any borrowing by Canadian  Agent,  any Canadian
Lender or any Receiver  appointed by Canadian Agent, as permitted hereby,  shall
be a first priority Security Interest on the proceeds of realization, collection
or disposition of Collateral and shall be secured hereby.

6.7  NOTICE OF SALE

     The Canadian Agent will give Grantor such notice, if any, of the date, time
and place of any public sale or of the date after which any private  disposition
of Collateral is to be made as may be required by the PPSA.

6.8  GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY COLLATERAL

     For the purpose of enabling  Canadian Agent to exercise rights and remedies
under  Section 6 hereof  (including,  without  limiting  the terms of  Section 6
hereof,  in order to take  possession  of, hold,  preserve,  process,  assemble,
prepare for sale,  market for sale, sell or otherwise  dispose of Collateral) at
such time as Canadian  Agent shall be lawfully  entitled to exercise such rights
and  remedies,  Grantor  hereby  grants to  Canadian  Agent,  for the benefit of
Canadian Agent and Canadian  Lenders,  an  irrevocable,  non- exclusive  licence
(exercisable  without  payment of royalty or other  compensation  to Grantor) to
use,  license or  sublicense  any  Intellectual  Property now owned or hereafter
acquired by Grantor, and wherever the same may be located, and including in such
license  access to all media in which any of the licensed  items may be recorded
or stored and to all computer  software and programs used for the compilation or
printout thereof.

6.9  LIMITATION ON  CANADIAN AGENT'S AND  CANADIAN LENDERS'  DUTY IN  RESPECT OF
     COLLATERAL

     Canadian  Agent and each  Canadian  Lender shall use  reasonable  care with
respect to the  Collateral in its  possession  or under its control.  Beyond the
safe custody thereof,  neither Canadian Agent nor any Canadian Lender shall have
any other  duty as to any  Collateral  in its  possession  or  control or in the
possession or control of any agent or nominee of Canadian Agent


<PAGE>


                                     - 14 -


or such Canadian  Lender,  or any income  thereon or as to the  preservation  of
rights against prior parties or any other rights pertaining thereto.

6.10 WAIVER BY GRANTOR

     To the maximum  extent  permitted by  applicable  law,  Grantor  waives all
claims, damages and demands against Canadian Agent or any Canadian Lender or any
Receiver appointed by Canadian Agent arising out of the repossession,  retention
or  sale  of the  Collateral  except  such  as  arise  solely  out of the  gross
negligence or wilful  misconduct of Canadian Agent or any Canadian Lender or any
Receiver  appointed  by  Canadian  Agent  as  finally  determined  by a court of
competent jurisdiction.

6.11 ACKNOWLEDGEMENT BY GRANTOR

     To the extent  that  applicable  law imposes  duties on  Canadian  Agent to
exercise remedies in a commercially  reasonable manner, Grantor acknowledges and
agrees that it is not  commercially  unreasonable for Canadian Agent (i) to fail
to incur expenses reasonably deemed significant by Canadian Agent to prepare the
Collateral  for  disposition  or  otherwise  to complete raw material or work in
process into finished goods or other finished products for disposition,  (ii) to
fail to obtain third party  consents for access to the Collateral to be disposed
of,  or to  obtain  or,  if not  required  by  other  law,  to  fail  to  obtain
governmental  or third party  consents for the  collection or disposition of the
Collateral to be collected or disposed of, (iii) to fail to exercise  collection
remedies against Account Debtors or other Persons obligated on the Collateral or
to  remove  Liens on or any  adverse  claims  against  the  Collateral,  (iv) to
exercise collection remedies against Account Debtors and other Persons obligated
on the Collateral  directly or through the use of collection  agencies and other
collection specialists,  (v) to advertise dispositions of the Collateral through
publications or media of general  circulation,  whether or not the Collateral is
of a specialized  nature,  (vi) to contact other Persons,  whether or not in the
same business of Grantor,  for  expressions  of interest in acquiring all or any
portion of such Collateral,  (vii) to hire one or more professional  auctioneers
to assist in the disposition of the Collateral, whether or not the Collateral is
of a  specialized  nature,  (viii) to dispose  of the  Collateral  by  utilizing
internet  sites that provide for the auction of assets of the types  included in
the Collateral or that have the  reasonable  capacity of doing so, or that match
buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than
retail  markets,  (x)  to  disclaim  disposition  warranties,   such  as  title,
possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements
to insure Canadian Agent and Canadian Lenders against risks of loss,  collection
or  disposition  of the  Collateral or to provide to Canadian Agent and Canadian
Lenders  a  guaranteed   return  from  the  collection  or  disposition  of  the
Collateral,  or (xii) to the extent deemed  appropriate  by Canadian  Agent,  to
obtain the services of other brokers, investment bankers,  consultants and other
professionals  to assist  Canadian Agent in the collection or disposition of any
of the Collateral.  Grantor  acknowledges that the purpose of this Section is to
provide  non-exhaustive  indications  of what  actions or  omissions by Canadian
Agent would not be commercially unreasonable in the Canadian Agent's exercise of
remedies  against the Collateral and that other actions or omissions by Canadian
Agent  shall not be deemed  commercially  unreasonable  solely on account of not
being  indicated in this Section 6.11.  Without  limitation  upon the foregoing,
nothing  contained  in this  Section  shall be  construed to grant any rights to
Grantor or to


<PAGE>


                                     - 15 -


impose  duties on Canadian  Agent that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this Section 6.11.

SECTION 7.  MISCELLANEOUS

7.1  EXTENSIONS, ETC.

     Canadian Agent may grant extensions of time and other indulgences, take and
give up security,  accept  compositions,  compound,  compromise,  settle,  grant
releases and discharges and otherwise deal with Grantor, debtors of Grantor, any
other Credit Party,  sureties and others and with  Collateral and other security
as Canadian  Agent may see fit without  prejudice to the liability of Grantor or
Canadian Agent's right to hold and realize the Security  Interest.  Furthermore,
without limiting any other provision hereof, after and during the continuance of
an Event of Default, Canadian Agent may demand, collect and sue on Collateral in
either Grantor's or Canadian  Agent's name, at Canadian Agent's option,  and may
endorse  Grantor's name on any and all cheques,  commercial paper, and any other
Instruments pertaining to or constituting  Collateral.  Nothing herein contained
shall in any way obligate Canadian Agent to grant, continue,  renew, extend time
for  payment  of or  accept  anything  which  constitutes  or  would  constitute
Obligations.

7.2  NO WAIVER

     No delay or omission by Canadian  Agent in  exercising  any right or remedy
hereunder or with respect to any of the  Obligations  shall  operate as a waiver
thereof  or of any other  right or  remedy,  and no single or  partial  exercise
thereof shall preclude any other or further  exercise thereof or the exercise of
any other right or remedy. Furthermore, Canadian Agent may remedy any default by
Grantor  hereunder or with respect to any  Obligations in any reasonable  manner
without  waiving the  default  remedied  and without  waiving any other prior or
subsequent default by Grantor. All rights and remedies of Canadian Agent granted
or recognized  herein are  cumulative  and may be exercised at any time and from
time to time independently or in combination.

7.3  WAIVER OF PROTEST

     Grantor  waives protest of any  Instrument  constituting  Collateral at any
time held by Canadian  Agent on which Grantor is in any way liable and,  subject
to Section hereof,  notice of any other action taken by Canadian Agent,  each to
the extent permitted by applicable law.

7.4  ASSIGNMENT AND ENUREMENT

     This Agreement and all  obligations of Grantor  hereunder  shall be binding
upon the successors and assigns of Grantor  (including any  debtor-in-possession
on behalf of  Grantor)  and shall,  together  with the rights  and  remedies  of
Canadian  Agent,  for the  benefit  of  Canadian  Agent  and  Canadian  Lenders,
hereunder,  enure to the benefit of Canadian  Agent and  Canadian  Lenders,  all
future holders of any instrument  evidencing any of the obligations of any other
Credit  Party  and  their  respective   successors  and  assigns.  No  sales  of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the obligations of any other Credit
Party or any portion thereof or interest therein shall in any


<PAGE>


                                     - 16 -


manner affect the Security  Interest  granted to Canadian Agent, for the benefit
of Canadian Agent and Canadian Lenders, hereunder. Grantor may not assign, sell,
hypothecate  or  otherwise  transfer any  interest in or  obligation  under this
Agreement.

7.5  AMENDMENT

     Save for any schedules which may be added hereto pursuant to the provisions
hereof,  no  modification,  variation  or  amendment  of any  provision  of this
Agreement shall be made except by a written  agreement,  executed by the parties
hereto  and no waiver  of any  provision  hereof  shall be  effective  unless in
writing.

7.6  NOTICES

     Except as otherwise  provided  herein,  whenever it is provided herein that
any  notice,  demand,   request,   consent,   approval,   declaration  or  other
communication  shall or may be given to or  served  upon one  party by the other
party,  or whenever one party  desires to give or serve upon the other party any
communication with respect to this Agreement, each such notice, demand, request,
consent,  approval,  declaration or other communication shall be validly served,
given or delivered if served,  given or delivered in accordance  with the Credit
Agreement.

7.7  REMEDIES CUMULATIVE

     This Agreement and the security  afforded  hereby is in addition to and not
in  substitution  for any other security now or hereafter held by Canadian Agent
and is intended to be a continuing  security  agreement and shall remain in full
force and effect until all  Obligations  and any extensions or renewals  thereof
together with interest accruing thereon shall be paid in full.

7.8  HEADINGS

     The headings used in this Agreement are for convenience only and are not to
be  considered a part of this  Agreement  and do not in any way limit or amplify
the terms and provisions of this Agreement.

7.9  REINSTATEMENT

     This  Agreement  shall  remain in full force and effect and  continue to be
effective  should any petition be filed by or against Grantor for liquidation or
reorganization,  should Grantor  become  insolvent or make an assignment for the
benefit of any  creditor or creditors or should a receiver or trustee or similar
Person be appointed for all or any  significant  part of Grantor's  assets,  and
shall continue to be effective or be  reinstated,  as the case may be, if at any
time  payment and  performance  of the  Obligations,  or any part  thereof,  is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the  Obligations,  whether as a "voidable
preference",  "fraudulent conveyance",  or otherwise, all as though such payment
or  performance  had not been made.  In the event that any payment,  or any part
thereof, is rescinded,  reduced,  restored or returned, the Obligations shall be
reinstated  and deemed  reduced  only by such amount paid and not so  rescinded,
reduced, restored or returned.


<PAGE>


                                     - 17 -

7.10 NUMBER AND GENDER

     When the context so requires,  the singular  number shall be read as if the
plural  were  expressed  and  the  provisions  hereof  shall  be read  with  all
grammatical  changes  necessary  dependent  upon the person  referred to being a
male, female, firm or corporation.

7.11 LIMITATION BY LAW; SEVERABILITY

     All rights, remedies and powers provided in this Agreement may be exercised
only to the extent that the  exercise  thereof  does not violate any  applicable
provision of law, and all the  provisions  of this  Agreement are intended to be
subject to all  applicable  mandatory  provisions of law that may be controlling
and to be  limited to the extent  necessary  so that they shall not render  this
Agreement  invalid,  unenforceable,  in whole or in part,  or not entitled to be
recorded, registered or filed under the provisions of any applicable law. In the
event any provisions of this Agreement,  as amended from time to time,  shall be
deemed  invalid  or  void,  in  whole or in  part,  by any  Court  of  competent
jurisdiction,  the remaining terms and provisions of this Agreement shall remain
in full force and effect.

7.12 ATTACHMENT

     The  Security  Interest  created  hereby is  intended  to attach  when this
Agreement is signed by Grantor and delivered to Canadian Agent.

7.13 AMALGAMATION

     Grantor  acknowledges and agrees that, in the event it amalgamates with any
other company or companies,  it is the intention of the parties  hereto that the
term  "Grantor",  when  used  herein,  shall  apply to each of the  amalgamating
companies  and to the  amalgamated  company,  such  that the  Security  Interest
granted hereby:

(1)  shall extend to "Collateral" (as that term is herein defined) owned by each
of the  amalgamating  companies  and  the  amalgamated  company  at the  time of
amalgamation  and  to any  "Collateral"  thereafter  owned  or  acquired  by the
amalgamated company, and

(2)  shall secure all  "Obligations" (as that term is herein defined) of each of
the  amalgamating  companies and the  amalgamated  company to Canadian Agent and
Canadian  Lenders  at the  time of  amalgamation  and all  "Obligations"  of the
amalgamated  company to Canadian Agent and Canadian Lenders thereafter  arising.
The Security  Interest  shall attach to all  "Collateral"  owned by each company
amalgamating with Grantor,  and by the amalgamated  company,  at the time of the
amalgamation,  and shall attach to all "Collateral" thereafter owned or acquired
by the amalgamated company when such becomes owned or is acquired.

7.14  CANADIAN AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT

On the Closing Date, Grantor shall execute and deliver to Canadian Agent a power
of attorney (the "POWER OF ATTORNEY")  substantially in the form attached hereto
as Exhibit A. The power of attorney granted pursuant to the Power of Attorney is
a power coupled with an interest and shall be irrevocable  until the Termination
Date. The powers conferred on Canadian Agent, for the


<PAGE>


                                     - 18 -



benefit of Canadian Agent and Canadian Lenders,  under the Power of Attorney are
solely to protect Canadian Agent's  interests (for the benefit of Canadian Agent
and  Canadian  Lenders)  in the  Collateral  and shall not  impose any duty upon
Canadian  Agent or any Canadian  Lender to exercise  any such  powers.  Canadian
Agent  agrees that (a) it shall not  exercise any power of attorney or authority
granted under the Power of Attorney  unless an Event of Default has occurred and
is  continuing,  and (b) Canadian  Agent shall account for any money received by
Canadian  Agent in respect of any  foreclosure  on or  disposition of Collateral
pursuant  to the  Power of  Attorney  provided  that none of  Canadian  Agent or
Canadian  Lenders shall have any duty as to any  Collateral,  and Canadian Agent
and Canadian  Lenders shall be  accountable  only for amounts that they actually
receive as a result of the  exercise  of such  powers.  NONE OF AGENT,  CANADIAN
LENDERS OR THEIR RESPECTIVE AFFILIATES,  OFFICERS, DIRECTORS,  EMPLOYEES, AGENTS
OR REPRESENTATIVES SHALL BE RESPONSIBLE TO GRANTOR FOR ANY ACT OR FAILURE TO ACT
UNDER  ANY  POWER OF  ATTORNEY  OR  OTHERWISE,  EXCEPT  IN  RESPECT  OF  DAMAGES
ATTRIBUTABLE  SOLELY TO THEIR OWN GROSS  NEGLIGENCE  OR  WILLFUL  MISCONDUCT  AS
FINALLY DETERMINED BY A COURT OF COMPETENT  JURISDICTION,  NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

7.15  TERMINATION OF THIS AGREEMENT

     Subject  to  Section  hereof,  this  Agreement  shall  terminate  upon  the
Termination Date.

7.16  FURTHER ASSURANCES

     Grantor hereby authorizes Canadian Agent to file such financing statements,
financing  change  statements and other documents and do such acts,  matters and
things (including completing and adding schedules hereto identifying  Collateral
or any Permitted  Encumbrances affecting Collateral or identifying the locations
at which  Grantor's  business is carried on and Collateral and records  relating
thereto are  situate) as  Canadian  Agent may  reasonably  deem  appropriate  to
perfect on an ongoing basis and continue the Security  Interest,  to protect and
preserve  Collateral  and,  following  an Event of Default,  to realize upon the
Security Interest.

7.17  GOVERNING LAW

     This Agreement and the  transactions  evidenced hereby shall be governed by
and  construed  in  accordance  with the laws of the province of Ontario and the
federal laws of Canada applicable  therein, as the same may from time to time be
in effect, including, where applicable, the PPSA.

7.18  COUNTERPARTS

     This Agreement may be executed in any number of  counterparts  which shall,
collectively and separately constitute one agreement.


<PAGE>


                                     - 19 -


7.19  NO STRICT CONSTRUCTION

     The  parties  hereto  have  participated  jointly  in the  negotiation  and
drafting of this  Agreement.  In the event an ambiguity or question of intent or
interpretation  arises,  this Agreement shall be construed as if drafted jointly
by the  parties  hereto  and no  presumption  or  burden  of proof  shall  arise
favouring  or  disfavouring  any  party  by  virtue  of  the  authorship  of any
provisions of this Agreement.

7.20  ADVICE OF COUNSEL

     Each of the  parties  represents  to each other  party  hereto  that it has
discussed this Agreement with its counsel.

7.21  BENEFIT OF CANADIAN AGENT AND CANADIAN LENDERS

     All Liens  granted  or  contemplated  hereby  shall be for the  benefit  of
Canadian Agent and Canadian Lenders,  and all proceeds or payments realized from
Collateral  in  accordance  herewith  shall be  applied  to the  Obligations  in
accordance with the terms of the Credit Agreement.

SECTION 8.  COPY OF AGREEMENT

8.1  COPY

     Grantor hereby acknowledges receipt of a copy of this Agreement.

8.2  WAIVER

     To the extent  permitted by applicable law,  Grantor waives Grantor's right
to receive a copy of any  financing  statement  or  financing  change  statement
registered by Canadian Agent, or of any  verification  statement with respect to
any financing  statement or financing  change  statement  registered by Canadian
Agent.

                           [INTENTIONALLY LEFT BLANK]




<PAGE>



                                     - 20 -



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


                                        BLOUNT CANADA LTD.

                                                               c/s
                                        By: -----------------------
                                            Name: Calvin E. Jenness
                                            Title:Treasurer



                                        GENERAL ELECTRIC CAPITAL
                                        CANADA INC., AS CANADIAN AGENT

                                                               c/s
                                        By: -----------------------
                                            Name:
                                            Title:


<PAGE>


                          EXHIBIT A - POWER OF ATTORNEY

This Power of Attorney is executed and delivered by Blount Canada Ltd., a Canada
corporation  ("GRANTOR"),  to General  Electric  Capital  Canada  Inc., a Canada
corporation  (hereinafter referred to as "Attorney"),  as Canadian Agent for the
benefit of Canadian  Agent and  Canadian  Lenders,  under a Security  Agreement,
dated as of May 15, 2003, and other related documents (the "LOAN DOCUMENTS"). No
person to whom this Power of Attorney is presented, as authority for Attorney to
take any action or actions  contemplated  hereby,  shall be  required to inquire
into or seek  confirmation  from Grantor as to the authority of Attorney to take
any action  described  below,  or as to the  existence of or  fulfilment  of any
condition  to this Power of  Attorney,  which is  intended  to grant to Attorney
unconditionally  the  authority  to take and perform  the  actions  contemplated
herein, and Grantor irrevocably waives any right to commence any suit or action,
in law or equity,  against any person or entity  which acts in reliance  upon or
acknowledges  the authority  granted under this Power of Attorney.  The power of
attorney  granted  hereby is coupled  with an interest and may not be revoked or
cancelled by Grantor without Attorney's written consent.  Capitalized terms used
herein and not defined  herein shall have the  meanings  ascribed to them in the
Security Agreement.

Grantor hereby irrevocably  constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution, as
Grantor's  true and  lawful  attorney-in-fact  with full  irrevocable  power and
authority in the place and stead of Grantor and in the name of Grantor or in its
own  name,  from  time to time in  Attorney's  discretion,  to take  any and all
appropriate  action  and to  execute  and  deliver  any  and all  documents  and
instruments  which may be necessary or desirable to  accomplish  the purposes of
the Loan  Documents  and,  without  limiting the  generality  of the  foregoing,
Grantor  hereby  grants to Attorney  the power and right,  on behalf of Grantor,
without  notice to or assent by Grantor,  and at any time, to do the  following:
(a) change the mailing  address of Grantor,  open a post office box on behalf of
Grantor, open mail for Grantor, and ask, demand,  collect, give acquittances and
receipts  for, take  possession  of,  endorse any  invoices,  freight or express
bills, bills of lading,  storage or warehouse receipts,  drafts against debtors,
assignments,  verifications,  and  notices in  connection  with any  property of
Grantor;  (b) effect any  repairs to any asset of Grantor or  continue or obtain
any  insurance  and  pay all or any  part of the  premiums  therefor  and  costs
thereof,  and make,  settle  and  adjust  all  claims  under  such  policies  of
insurance,  and make all  determinations  and  decisions  with  respect  to such
policies;  (c) pay or discharge any taxes,  liens,  security  interests or other
encumbrances  levied or placed on or threatened against Grantor or its property;
(d) defend any suit,  action or proceeding  brought  against  Grantor if Grantor
does not defend such suit,  action or  proceeding  or if Attorney  believes that
Grantor is not pursuing such defense in a manner that will maximize the recovery
to Attorney,  and settle,  compromise or adjust any suit,  action, or proceeding
described above and in connection therewith, give such discharges or releases as
Attorney may deem appropriate; (e) file or prosecute any claim, litigation, suit
or proceeding in any court of competent  jurisdiction  or before any arbitrator,
or take any other  action  otherwise  deemed  appropriate  by  Attorney  for the
purpose of collecting any and all such money due to Grantor whenever payable and
to  enforce  any other  right in respect of  Grantor's  property;  (f) cause the
certified charted  accountants then engaged by Grantor to prepare and deliver to
Attorney at any time and from time to time,  promptly upon  Attorney's  request,
the following reports: (1) a reconciliation of all accounts, (2) an aging of all
accounts,  (3)  trial  balances,  (4) test  verifications  of such  accounts  as
Attorney  may  request,  and (5) the results of each  physical  verification  of
inventory,  (g) communicate in its own name with any party to any Contracts with
regard to the assignment of the right, title and interest of such Grantor in and
under the Contracts and other matters relating thereto; and (h) execute, in



<PAGE>



connection  with any sale provided for in any Loan Document,  any  endorsements,
assignments  or other  instruments of conveyance or transfer with respect to the
Collateral and to otherwise  direct such sale or resale,  all as though Attorney
were the absolute owner of the property of Grantor for all purposes,  and to do,
at Attorney's  option and Grantor's  expense,  at any time or from time to time,
all acts and other things that Attorney  reasonably  deems necessary to perfect,
preserve,  or realize upon Grantor's property or assets and Attorney's  Security
Interest  thereon,  all as fully and  effectively  as Grantor might do.  Grantor
hereby  ratifies,  to the extent  permitted by law, all that said Attorney shall
lawfully do or cause to be done by virtue hereof.

     THIS POWER OF ATTORNEY  SHALL BE GOVERNED BY AND  CONSTRUED  IN  ACCORDANCE
WITH THE LAWS OF THE  PROVINCE  OF  ONTARIO  APPLICABLE  TO  CONTRACTS  MADE AND
PERFORMED IN THAT PROVINCE.

IN WITNESS  WHEREOF,  this Power of Attorney is executed by Grantor  pursuant to
the authority of its board of directors this _________ day of May, 2003.



                                        BLOUNT CANADA LTD.


                                        By: -----------------------
                                            Name: Calvin E. Jenness
                                            Title:Treasurer