<PAGE>

                        SEVENTH AMENDMENT TO AMENDED AND
                      RESTATED LOAN AND SECURITY AGREEMENT


     THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("Amendment"), dated effective as of October 27, 1999 (the "Amendment Effective
Date"), is executed and entered into by and among OUTBOARD MARINE CORPORATION, a
Delaware corporation ("OMC"), OMC ALUMINUM BOAT GROUP, INC., a Delaware
corporation OMC FISHING BOAT GROUP, INC., a Delaware corporation, OMC LATIN
AMERICA/CARIBBEAN, INC., a Delaware corporation, RECREATIONAL BOAT GROUP LIMITED
PARTNERSHIP, a Delaware limited partnership, OMC RECREATIONAL BOAT GROUP, INC.,
a Delaware corporation (collectively all of the "Loan Parties," as of the
Amendment Effective Date, under the Amended and Restated Loan and Security
Agreement referenced under the Recitals hereinbelow; herein called the "Loan
Parties"), each of the lending institutions signatory hereto (collectively all
of the "Lenders," as of the Amendment Effective Date, under the Amended and
Restated Loan and Security Agreement referenced under the Recitals hereinbelow;
herein called the ("Lenders") and BANK OF AMERICA, N.A., (a national banking
association and successor in interest to Bank of America, N.A., formerly
NationsBank, N.A., successor in interest to NationsBank of Texas, N.A.), in its
capacity as agent for itself and the other Lenders (in such capacity, together
with its successors and assigns in such capacity, herein called "Agent").

                                 RECITALS:
                                 --------

     A.  The Loan Parties, the Lenders and Agent are parties to the certain
Amended and Restated Loan and Security Agreement dated effective as of January
6, 1998, as amended by the certain First Amendment to Loan and Security
Agreement dated effective as of May 21, 1998, the Second Amendment to Amended
and Restated Loan and Security Agreement dated effective as of August 31, 1998,
the Third Amendment to Amended and Restated Loan and Security Agreement dated
effective as of December 21, 1998, the Fourth Amendment to Amended and Restated
Loan and Security Agreement dated effective as of February 1, 1999, the Fifth
Amendment to Amended and Restated Loan and Security Agreement dated effective as
of February 25, 1999 and the Sixth Amendment to Amended and Restated Loan and
Security Agreement dated effective as of July 30, 1999 (hereinafter called the
"Agreement").  Unless otherwise defined in this Amendment, terms defined by the
Agreement, where used in this Amendment, shall have the same meanings as are
prescribed by the Agreement, as amended by this Amendment.

     B.  The Loan Parties, the Lenders and Agent have agreed to amend the
Agreement as provided hereinbelow.

     NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:

<PAGE>

                                   ARTICLE 1

                                  Definitions
                                  -----------

     Section 1.1  Definitions.  Unless otherwise defined in this Amendment,
terms defined by the Agreement, where used in this Agreement, shall have the
same meanings in this Amendment as are prescribed by the Agreement.

                                   ARTICLE 2

                                  Amendments
                                  ----------

     Section 2.1  Amendment to Definitions in Article 1 of the Agreement.
Effective as of the Amendment Effective Date, the following definition in
Article 1 of the Agreement is hereby amended and restated in its entirety to
read as follows:

          "Borrowing Base" means, at any time, an amount equal to the lesser of:

               (a)  the maximum principal amount of the Revolving Credit
                    Facility, minus the sum of
                    (i)    the Letter of Credit Reserve, plus
                    (ii)   the Reserve, or

               (b)  an amount equal to the sum of
                    (i)    85% (or such lesser percentage as Agent may determine
                           pursuant to Section 2.5) of the face value of
                           Eligible Receivables that are determined by Agent in
                           its discretion to be Qualified L/C Supported
                           Receivables at such time, plus
                    (ii)   85% (or such lesser percentage as Agent may determine
                           pursuant to Section 2.5) of the face value of
                           Eligible Receivables that are determined by Agent in
                           its discretion to be Qualified Guaranteed Receivables
                           at such time, plus
                    (iii)  85% (or such lesser percentage as Agent may determine
                           pursuant to Section 2.5) of the face value of
                           Eligible Domestic Receivables (other than Qualified
                           L/C Supported Receivables or Qualified Guaranteed
                           Receivables) at such time, plus
                    (iv)   75% (or such lesser percentage as Agent may determine
                           pursuant to Section 2.5) of the Dollar Equivalent
                           face value of Eligible Foreign Receivables (other
                           than Qualified L/C Supported Receivables or Qualified
                           Guaranteed Receivables) at such time,
<PAGE>

               plus
               ----
                    (v)    the lesser of
                           (A)  60% with respect to Eligible Domestic Inventory
                                and 50% with respect to Eligible Foreign
                                Inventory (or such lesser percentage as Agent
                                may determine pursuant to Section 2.5) of the
                                lesser of cost determined on a FIFO (or
                                first-in-first-out) accounting basis or fair
                                market value of such Eligible Inventory, as
                                applicable, net of the Loan Parties' reserve for
                                obsolescence (if any), at such time, plus, the
                                following percentage, as applicable (or such
                                lesser percentage as Agent may in its discretion
                                determine from time to time) of the lesser of
                                cost determined on a FIFO (or first-in-first-
                                out) accounting basis or fair market value of
                                Eligible Work-In-Process Inventory, net of the
                                Loan Parties' reserve for obsolescence (if any):
                                (i) 35% during the period of January 1, 1998
                                through April 30, 1998, (ii) 35% during the
                                period of January 1, 1999 through June 30, 1999,
                                (iii) 35% during the period July 30, 1999
                                through August 31, 1999, (iv) 17.5% during the
                                period September 1, 1999 through September 30,
                                1999 and (v) 35% during the period of January 1
                                through April 30 of any calendar year
                                thereafter, or

                           (B)  $75,000,000, minus

                    (vi)   the Letter of Credit Reserve; plus

                    (vii)  provided that the representations of Borrowers under
                           Section 7.1(z) are and remain true and correct, with
                           respect to any period commencing during any calendar
                           year, determined as provided hereinbelow (each such
                           period herein called a "Designated" Period") (i)
                           $30,000,000 at any time during any portion of any
                           single Designated Period that occurs from the
                           Agreement Date through December 30, 1998, (ii)
                           $20,000,000 at any time during any portion of any
                           single Designated Period that occurs during the
                           period from December 31, 1998 through January 31,
                           1999, (iii) $30,000,000 at any time during any
                           portion of any two Designated Periods that occur
                           during the period February 1, 1999 through December
                           31, 1999, (iv) $10,000,000 at any time during any
                           portion of any single Designated Period that occurs
                           during the period from December 31, 1999 through
                           December

                                       3
<PAGE>

                         and (iv) $0.00 on and at all times after December 31,
                         2000; provided, that any such Designated Period for any
                         calendar year shall begin on the first Business Day, if
                         any, occurring during such year (or, with respect to
                         the second of the Designated Periods referenced in
                         clause (iii), on the first Business Day, if any,
                         occurring after expiration of the first of such
                         Designated Periods) on which the aggregate outstanding
                         balance of Loans first exceeds an amount equal to the
                         aggregate amount determined under paragraph (b) of this
                         definition without regard to this subparagraph (vii),
                         and shall terminate on the earlier of (x) the
                         expiration of one hundred eighty (180) days thereafter
                         or (y) December 31, 1999 with respect to the calendar
                         year 1999 or any calendar year thereafter,

               provided, that with respect to clause (b) preceding, Agent may
               deduct any Reserve prior to application of the relevant
               percentages used to calculate the Borrowing Base as set forth
               herein.

                                 ARTICLE 3

                                 Miscellaneous
                                 -------------

     Section 3.1  Conditions Precedent.  The effectiveness of this Amendment is
subject to the satisfaction of each of the following conditions precedent:

          (a) Agent shall have received all of the following, each dated the
     date of this Amendment (unless otherwise indicated), in form and substance
     satisfactory to Agent:

               (i) Amendment Documents.  This Amendment and any other
          instrument, document or certificate required by Agent to be executed
          or delivered by any of the Loan Parties, Agent or the Lenders in
          connection with this Amendment, in each case duly executed (the
          "Amendment Documents");

               (ii) Fees and Expenses. Evidence that the costs and expenses
          (including, without limitation, reasonable attorneys' fees and
          expenses) incurred by Agent incident to this Amendment or otherwise
          required to be paid in accordance with Section 16.2 of the Agreement,
          to the extent incurred and submitted to the Loan Parties, shall have
          been paid in full;

               (iii)  Additional Information.  Agent shall have received such
          additional documents, instruments and information as Agent may
          reasonably request to effect the transactions contemplated hereby; and

                                       4
<PAGE>

               (iv) Consents.  All consents required by Section 16.9 of the
          Agreement shall have been obtained (it being understood that, pursuant
          to Section 16.9 of the Agreement, consent of Agent and all Lenders
          shall be required as a condition for effectiveness of this Amendment).

          (c) The representations and warranties contained herein, in the
     Agreement and in all other Loan Documents, as amended hereby, shall be true
     and correct as of the date hereof as if made on the date hereof (except
     those, if any, which by their terms specifically relate only to a different
     date).

          (d) All corporate proceedings taken in connection with the
     transactions contemplated by this Amendment and all other agreements,
     documents and instruments executed and/or delivered pursuant hereto, and
     all legal matters incident thereto, shall be satisfactory to Agent.

          (e) No Default or Event of Default shall have occurred and be
     continuing.

     Section 3.2  Representations and Warranties.  The Loan Parties hereby
represent and warrant to, and agree with, Agent, for the benefit of the Lenders,
that, as of the date of and after giving effect to this Amendment, (a) the
execution, delivery and performance of this Amendment and any and all other
Amendment Documents executed and/or delivered in connection herewith have been
authorized by all requisite corporate action on the part of each of the Loan
Parties (as applicable) and will not violate any of such Loan Party's
certificate of incorporation or bylaws (or, in the case of Recreational Boat
Group Limited Partnership, its certificate of limited partnership or its limited
partnership agreement), (b) all representations and warranties set forth in the
Agreement and in any other Loan Document are true and correct as if made again
on and as of such date (except those, if any, which by their terms specifically
relate only to a different date) in the Agreement), (d) no Default or Event of
Default has occurred and is continuing, (e) the Agreement (as amended by this
Amendment), and all other Loan Documents are and remain legal, valid, binding
and enforceable obligations in accordance with the terms thereof, and (f) the
certifications delivered to Agent under clause (i), clause (ii) and clause (iii)
of Section 6.1(c) of the Agreement (in the case of the certification required by
such clause (iii), as subsequently modified pursuant to Section 6.2(b) of the
Agreement) remain true, correct and complete as of the Amendment Effective Date.

     Section 3.3  Survival of Representations and Warranties.  All
representations and warranties made in this Amendment or any other Loan Document
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Agent or any Lender, or any closing, shall
affect the representations and warranties or the right of Agent and the Lenders
to rely upon them.

     Section 3.4  Reference to Agreement.  Each of the Loan Documents, including
the Agreement, the Amendment Documents and any and all other agreements,
documents or instruments now or hereafter executed and/or delivered pursuant to
the terms hereof or pursuant to the terms of the Agreement as amended hereby,
are hereby amended so that any reference in such Loan Documents to the
Agreement, whether direct or indirect, shall mean a reference to the Agreement
as amended hereby.

                                       5
<PAGE>

     Section 3.5  Severability.  Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

     Section 3.6  Successors and Assigns.  This Amendment is binding upon and
shall inure to the benefit of the Credit Parties and the Loan Parties and their
respective successors and assigns, except each of the Loan Parties may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of Agent and the Lenders.

     Section 3.7  General.  This Amendment, when signed by each signatory as
provided hereinbelow (i) shall be deemed effective prospectively as of the
Amendment Effective Date, (ii) contains the entire agreement among the parties
and may not be amended or modified except in writing signed by all parties,
(iii) shall be governed and construed according to the laws of the State of
Texas, and (iv) may be executed in any number of counterparts, each of which
shall be valid as an original and all of which shall be one and the same
agreement.  A telecopy or other electronic transmission of any executed
counterpart shall be deemed valid as an original.

     THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
     AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
     SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO ORAL AGREEMENTS
     BETWEEN THE PARTIES.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers in several counterparts effective
as of the date specified in the preamble hereof.

                                    BORROWERS:

                                    OUTBOARD MARINE CORPORATION


                                    By: /s/ Eric T. Martinez
                                        -----------------------------
                                    Name: Eric T. Martinez
                                          ---------------------------
                                    Title: Vice President & Treasurer
                                           --------------------------


                                    By:  /s/ Gordon G. Repp
                                         ----------------------------
                                    Name: Gordon G. Repp
                                          ---------------------------
                                    Title: Assistant Secretary
                                           --------------------------

                                       6
<PAGE>

                                    OMC ALUMINUM BOAT GROUP, INC.


                                    By: /s/ Eric T. Martinez
                                        --------------------------
                                    Name: Eric T. Martinez
                                          ------------------------
                                    Title: Treasurer
                                           -----------------------


                                    By:  /s/ Gordon G. Repp
                                         -------------------------
                                    Name: Gordon G. Repp
                                          ------------------------
                                    Title: Asst. Secretary
                                           -----------------------

                                       7
<PAGE>

                                    OMC FISHING BOAT GROUP, INC.


                                    By: /s/ Eric T. Martinez
                                       -------------------------------------
                                    Name:   Eric T. Martinez
                                         -----------------------------------
                                    Title:  Treasurer
                                          ----------------------------------

                                    By: /s/ Gordon G. Repp
                                       -------------------------------------
                                    Name:   Gordon G. Repp
                                         -----------------------------------
                                    Title:  Assistant Secretary
                                          ----------------------------------



                                    OMC LATIN AMERICA/CARIBBEAN, INC.



                                    By: /s/ Eric T. Martinez
                                       -------------------------------------
                                    Name:   Eric T. Martinez
                                         -----------------------------------
                                    Title:  Vice President
                                          ----------------------------------

                                    By: /s/ Gordon G. Repp
                                       -------------------------------------
                                    Name:   Gordon G. Repp
                                         -----------------------------------
                                    Title:  Assistant Secretary
                                          ----------------------------------



                                    RECREATIONAL BOAT GROUP
                                         LIMITED PARTNERSHIP

                                    By:  OMC Recreational Boat Group, Inc.,
                                           General Partner



                                         By: /s/ Eric T. Martinez
                                            -----------------------------------
                                         Name:   Eric T. Martinez
                                              ---------------------------------
                                         Title:  Treasurer
                                               --------------------------------


                                         By: /s/ Gordon G. Repp
                                            -----------------------------------
                                         Name:   Gordon G. Repp
                                              ---------------------------------
                                         Title:  Assistant Secretary
                                               --------------------------------


                                       8
<PAGE>

                                    GUARANTOR:

                                    OMC RECREATIONAL BOAT GROUP, INC.


                                    By:  /s/ Eric T. Martinez
                                       -------------------------------------
                                    Name:    Eric T. Martinez
                                         -----------------------------------
                                    Title:   Treasurer
                                          ----------------------------------

                                    By:  /s/ Gordon G. Repp
                                       -------------------------------------
                                    Name:    Gordon G. Repp
                                         -----------------------------------
                                    Title:   Assistant Secretary
                                          ----------------------------------



                                       9
<PAGE>

                                    AGENT:

                                    BANK OF AMERICA, N.A.
                                    In its capacity as Agent


                                    By:  /s/ Stacy Wills
                                       -------------------------------------
                                    Name:    Stacy Wills
                                         -----------------------------------
                                    Title:   Vice President
                                          ----------------------------------



                                      10
<PAGE>

                                    LENDERS:

                                    BANK OF AMERICA, N.A.
                                    In its capacity as Agent


                                    By:  /s/ Stacy Wills
                                       -------------------------------------
                                    Name:    Stacy Wills
                                         -----------------------------------
                                    Title:   Vice President
                                          ----------------------------------



                                      11
<PAGE>

                                       AMERICAN NATIONAL BANK AND
                                       TRUST COMPANY OF CHICAGO


                                       By:  /s/ Donna H. Evans
                                          ----------------------------------
                                       Name:    Donna H. Evans
                                             -------------------------------
                                       Title:   Vice President
                                             -------------------------------




                                      12
<PAGE>

                                       FLEET CAPITAL CORPORATION


                                       By: /s/ Thomas Maiale
                                          ----------------------------------
                                       Name:   Thomas Maiale
                                            --------------------------------
                                       Title:  Vice President
                                             -------------------------------


                                      13
<PAGE>

                                       THE CIT GROUP/BUSINESS CREDIT, INC.


                                       By:  /s/ Alan Schnacke
                                          ----------------------------------
                                       Name:    Alan Schnacke
                                             -------------------------------
                                       Title: Assistant Vice President
                                             -------------------------------


                                      14
<PAGE>

                                       TRANSAMERICA BUSINESS CREDIT
                                       CORPORATION


                                       By:  /s/ Robert L. Heinz
                                          ----------------------------------
                                       Name:    Robert L. Heinz
                                             -------------------------------
                                       Title:   Senior Vice President
                                             -------------------------------


                                      15
<PAGE>

                                       FLEET BUSINESS CREDIT CORPORATION


                                       By: /s/ Thomas Maiale
                                          ---------------------------------
                                       Name:   Thomas Maiale
                                            -------------------------------
                                       Title:  Vice President
                                            -------------------------------


                                      16