Document:

Bombardier Recreational Products Inc - Exhibit 4.3 - Prepared By TNT
Filings Inc.

 

Execution Copy 

 

AMENDED AND RESTATED CANADIAN SECURITY
AGREEMENT 

By 

BOMBARDIER RECREATIONAL PRODUCTS INC., 

as Canadian Borrower and 

THE GUARANTORS PARTY HERETO FROM TIME TO TIME

and 

BANK OF MONTREAL 

as Administrative Agent 

______________________ 

Dated as of December 18, 2003 

and Amended and Restated as of February 9, 2005 

 

	 	 	 
	TABLE OF CONTENTS
	 	 	Page
	 	 	 
	PREAMBLE	 	1
	RECITALS	 	1
	AGREEMENT	 	2
	 	 	 
	ARTICLE I
	 	 	 
	DEFINITIONS AND
    INTERPRETATION
	SECTION 1.1.	DEFINITIONS	3
	SECTION 1.2.	INTERPRETATION	12
	SECTION 1.3.	PERFECTION CERTIFICATE	12
	 
	ARTICLE II
	 	 	 
	GRANT OF SECURITY
    AND SECURED OBLIGATIONS
	SECTION 2.1.	PLEDGE	12
	SECTION 2.2.	OBLIGATIONS	13
	SECTION 2.3.	SECURITY INTEREST	13
	SECTION 2.4.	ATTACHMENT	14
	 	 	 
	ARTICLE III
	 	 	 
	PERFECTION;
    SUPPLEMENTS; FURTHER ASSURANCES;
	USE OF PLEDGED
    COLLATERAL
	 	 	 
	SECTION 3.1.	DELIVERY OF CERTIFICATED SECURITIES	 
	 	COLLATERAL	14
	SECTION 3.2.	PERFECTION OF UNCERTIFICATED SECURITIES	 
	 	COLLATERAL	15
	SECTION 3.3.	MAINTENANCE OF PERFECTED SECURITY INTEREST	15
	SECTION 3.4.	OTHER ACTIONS	16
	SECTION 3.5.	JOINDER OF ADDITIONAL GUARANTORS	19
	SECTION 3.6.	SUPPLEMENTS; FURTHER ASSURANCES	19

	 	 	
    Page
	
    ARTICLE IV
	 	 	 
	
    REPRESENTATIONS, WARRANTIES AND
    COVENANTS
	SECTION 4.1.	TITLE	20
	SECTION 4.2.	VALIDITY OF
    SECURITY INTEREST	20
	SECTION 4.3.	DEFENSE OF
    CLAIMS/TRANSFERABILITY OF	 
	 	PLEDGED
    COLLATERAL	21
	SECTION 4.4.	OTHER FINANCING
    STATEMENTS	21
	SECTION 4.5.	CHIEF EXECUTIVE
    OFFICE; CHANGE OF NAME;	 
	 	JURISDICTION OF
    ORGANIZATION	21
	SECTION 4.6.	LOCATION OF
    INVENTORY AND EQUIPMENT	22
	SECTION 4.7.	CORPORATE NAMES;
    PRIOR TRANSACTIONS	23
	SECTION 4.8.	DUE AUTHORIZATION
    AND ISSUANCE	23
	SECTION 4.9.	NO CONFLICTS,
    CONSENTS, ETC	23
	SECTION 4.10.	PLEDGED
    COLLATERAL	23
	SECTION 4.11.	INSURANCE	24
	SECTION 4.12.	PAYMENT OF TAXES;
    COMPLIANCE WITH LAWS;	 
	 	CONTESTING LIENS;
    CLAIMS	24
	 
	
    ARTICLE V
	 	 	 
	
    CERTAIN PROVISIONS CONCERNING
    SECURITIES COLLATERAL
	SECTION 5.1.	PLEDGE OF
    ADDITIONAL SECURITIES COLLATERAL	24
	SECTION 5.2.	VOTING RIGHTS;
    DISTRIBUTIONS; ETC	25
	SECTION 5.3.	ORGANIZATIONAL
    DOCUMENTS	26
	SECTION 5.4.	DEFAULTS, ETC	26
	SECTION 5.5.	CERTAIN
    AGREEMENTS OF PLEDGORS AS ISSUERS	 
	 	AND HOLDERS OF
    EQUITY INTERESTS	26
	 	 	 
	
    ARTICLE VI
	 	 	 
	
    CERTAIN PROVISIONS CONCERNING
    INTELLECTUAL
	 	PROPERTY
    COLLATERAL	 
	SECTION 6.1.	GRANT OF LICENSE	27
	SECTION 6.2.	PROTECTION OF
    ADMINISTRATIVE AGENT'S	 
	 	SECURITY	27
	SECTION 6.3.	AFTER-ACQUIRED
    PROPERTY	28
	SECTION 6.4.	MODIFICATIONS	29
	SECTION 6.5.	LITIGATION	29

	 	 	Page
	ARTICLE VII
	 	 	 
	CERTAIN
    PROVISIONS CONCERNING ACCOUNTS
	SECTION 7.1.	MAINTENANCE OF RECORDS	29
	SECTION 7.2.	LEGEND	30
	SECTION 7.3.	MODIFICATION OF TERMS, ETC	30
	SECTION 7.4.	COLLECTION	30
	 	 	 
	ARTICLE VIII
	 	 	 
	TRANSFERS
	SECTION 8.1.	TRANSFERS OF PLEDGED COLLATERAL	31
	 	 	 
	ARTICLE IX
	 	 	 
	REMEDIES
	SECTION 9.1.	REMEDIES	31
	SECTION 9.2.	NOTICE OF SALE	33
	SECTION 9.3.	WAIVER OF NOTICE AND CLAIMS	33
	SECTION 9.4.	CERTAIN SALES OF PLEDGED COLLATERAL	33
	SECTION 9.5.	NO WAIVER; CUMULATIVE REMEDIES	34
	SECTION 9.6.	CERTAIN ADDITIONAL ACTIONS REGARDING	 
	 	INTELLECTUAL PROPERTY	35
	 	 	 
	ARTICLE X
	 	 	 
	COLLATERAL
    ACCOUNT/PROCEEDS OF CASUALTY EVENTS AND COLLATERAL
	
    DISPOSITIONS/APPLICATION OF PROCEEDS
	SECTION 10.1.	COLLATERAL ACCOUNT	35
	SECTION 10.2. 	PROCEEDS OF CASUALTY EVENTS AND	 
	 	COLLATERAL DISPOSITIONS	36
	SECTION 10.3.	APPLICATION OF PROCEEDS	36
	 
	ARTICLE XI
	 	 	 
	MISCELLANEOUS
	SECTION 11.1. 	CONCERNING ADMINISTRATIVE AGENT	36
	SECTION 11.2. 	ADMINISTRATIVE AGENT MAY PERFORM;	 
	 	ADMINISTRATIVE AGENT APPOINTED	 
	 	ATTORNEY-IN-FACT	37

	 	
    Page
	SECTION 11.3.
    CONTINUING SECURITY INTEREST; ASSIGNMENT;	 
	                           
    ACKNOWLEDGEMENT	38
	SECTION 11.4.
    TERMINATION; RELEASE	39
	SECTION 11.5.
    MODIFICATION IN WRITING	39
	SECTION 11.6.
    NOTICES	40
	SECTION 11.7.
    GOVERNING LAW	40
	SECTION 11.8.
    CONSENT TO JURISDICTION AND SERVICE OF	 
	                          
    PROCESS; WAIVER OF JURY TRIAL	40
	SECTION 11.9.
    SEVERABILITY OF PROVISIONS	41
	SECTION 11.10.
    EXECUTION IN COUNTERPARTS	41
	SECTION 11.11.
    BUSINESS DAYS	41
	SECTION 11.12. NO
    CREDIT FOR PAYMENT OF TAXES OR	 
	                            
    IMPOSITION	41
	SECTION 11.13. NO
    CLAIMS AGAINST ADMINISTRATIVE AGENT	41
	SECTION 11.14. NO
    RELEASE	41
	SECTION 11.15.
    OBLIGATIONS ABSOLUTE	42

	 	 
	SIGNATURES	 
	 	 
	SCHEDULE 3.4
    Locations for Landlord Lien Waivers/Bailee Letters
	SCHEDULE 4.9
    Required Consents
	 	 
	EXHIBIT 1	Form of Issuers
    Acknowledgment
	EXHIBIT 2	Form of
    Securities Pledge Amendment
	EXHIBIT 3	Form of Joinder
    Agreement
	EXHIBIT 4	Form of Control
    Agreement Concerning Securities Accounts
	EXHIBIT 5	Form of Control
    Agreement Concerning Deposit Accounts

 

AMENDED AND RESTATED CANADIAN SECURITY
AGREEMENT 

        This AMENDED AND
RESTATED CANADIAN SECURITY AGREEMENT dated as of December 18, 2003 (as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with the provisions hereof, the "Agreement") made by Bombardier
Recreational Products Inc., a corporation existing under the federal laws of
Canada (the "Canadian Borrower") and the Guarantors listed on the signature
pages hereto at such date and existing on the date hereof (the "Original
Guarantors") and the Guarantors listed on the signature pages hereto on the date
hereof and the Guarantors from time to time party hereto by execution of a
joinder agreement (collectively, the "Additional Guarantors") and, together with
the Original Guarantors and 4279174 Canada Inc. ("4279174"), (the "Guarantors"),
as pledgors, assignors and debtors (the Canadian Borrower, together with the
Guarantors, in such capacities and in the capacities described below and
together with any successors in such capacities, the "Pledgors," and each, a "Pledgor"),
in favor of Bank of Montreal, in its capacity as administrative agent pursuant
to the Credit Agreement (as hereinafter defined), as pledgee, assignee and
secured party (in such capacities and together with any successors in such
capacities, the "Administrative Agent") is amended and restated as of this
February 9, 2005. 

R E C I T A L S : 

        A. The Canadian
Borrower, as Canadian Borrower, BRP Holding (USA) Inc. (formerly know as BRP
(USA) Inc.), as U.S. Revolving Borrower and BRP Holding LP, as U.S. Term
Borrower (collectively, the "Original U.S. Borrowers"), J.A. Bombardier (J.A.B.)
Inc., the guarantors party thereto from time to time, Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Global Transaction
Coordinator, Royal Bank of Canada, as Canadian Transaction Coordinator, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and UBS
Securities LLC, as Joint Book Runners and Lead Arrangers of the Term Facilities,
BMO Nesbitt Burns Inc. and Royal Bank of Canada, as Joint Book Runners and Lead
Arrangers of the Revolving Facilities, Bank of Montreal, as Administrative
Agent, and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, UBS Securities LLC and Royal Bank of Canada as Co-Syndication
Agents and the lenders party thereto from time to time (the "Lenders") entered
into that certain credit agreement, dated as of December 18, 2003 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Original Credit Agreement"). 

        B. The Canadian
Borrower and BRP Holding LP are prepaying the entire outstanding amount of the
Canadian Term Facility and the U.S. Term Facility under the Original Credit
Agreement (each as defined therein), and in connection with such prepayment and
to make such other amendments as are evidenced thereby, the Lenders, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Royal Bank of
Canada, UBS Securities LLC, BMO Nesbitt Burns Inc., Bank of Montreal, the
Canadian Borrower and BRP US Inc. (the "US Revolving Borrower" and, together
with the Canadian Borrower, the "Borrowers") and the Guarantors on the date
hereof are entering into an amendment and restatement of the Original Credit
Agreement as of February 9, 2005 (the "Credit Agreement"). 

 

-2-

        C. Each Original
Guarantor, pursuant to the Original Credit Agreement, among other things,
guaranteed the obligations of the Canadian Borrower and the Original U.S.
Borrowers under the Original Credit Agreement and the other Credit Documents
and, pursuant to the Credit Agreement, among other things, has reaffirmed its
guarantee or, in the case of 4279174, entered into a guarantee, of the
obligations of the Canadian Borrower under the Credit Agreement and the other
Credit Documents. 

        D. Each Pledgor
has, pursuant to the Original Credit Agreement, among other things,
unconditionally guaranteed the obligations of the Original U.S. Borrowers under
the Credit Agreement and, pursuant to the Credit Agreement, each Pledgor has,
among other things, provided a guarantee (or reaffirmed its guarantee under the
Original Credit Agreement, as applicable) of the obligations of the U.S.
Revolving Borrower under the Credit Agreement and the other Credit Documents.

        E.
The Pledgors have received and will receive substantial benefits from the
execution, delivery and performance of the obligations under the Credit
Agreement and the other Credit Documents and each is, therefore, willing to
enter into this Agreement. 

        F. The Pledgors
have, from time to time entered into, and it is contemplated that one or more of
the Pledgors may enter into one or more Interest Rate Protection Agreements,
foreign currency exchange agreements, commodity price protection agreements or
other interest or currency exchange rate or commodity price hedging arrangements
with one or more of the Lenders or their respective Affiliates designed to alter
the risks arising from the fluctuations in interest rates, currency values or
commodity prices with respect to Loans under the Credit Agreement (any such
agreement or arrangement, a "Hedging Agreement").

        G.
Each Pledgor is or, as to the Pledged Collateral acquired by such Pledgor after
the date hereof will be, the legal and/or beneficial owner of the Pledged
Collateral pledged by it hereunder. 

        H.
This Agreement is given by each Pledgor in favor of the Administrative Agent for
the benefit of the Secured Parties to secure the payment and performance of all
of the Obligations of such Pledgor. 

        I. It is a
condition to the obligations of the Lenders to make the Loans under the Credit
Agreement and a condition to any Lender issuing Letters of Credit under the
Credit Agreement or entering into any Hedging Agreement that each Pledgor
execute and deliver the applicable Credit Documents, including this Agreement.

A G R E E M E N T : 

NOW THEREFORE, in consideration of the
foregoing premises and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Pledgor and the
Administrative Agent hereby agree as follows: 

-3-

ARTICLE I 

DEFINITIONS AND INTERPRETATION 

         SECTION 1.1.
Definitions. 

        (a)
Unless otherwise defined
herein, terms used herein that are defined in the PPSA shall have the meanings
assigned to them in the PPSA. 

        (b)
Capitalized terms used
but not otherwise defined herein that are defined in the Credit Agreement shall
have the meanings given to them in the Credit Agreement. 

        (c) The following
terms shall have the following meanings: 

        "4279174" 
means 4279174 Canada Inc. 

        "Acquisition
Document Rights" shall mean, with respect to each Pledgor, if applicable,
collectively, all of such Pledgor's rights, title and interest in, to and under
the BRP Acquisition Agreement, including, without limitation (i) all rights and
remedies relating to monetary damages, including indemnification rights and
remedies, and claims for damages or other relief pursuant to or in respect of
the BRP Acquisition Agreement, (ii) all rights and remedies relating to monetary
damages, including indemnification rights and remedies, and claims for monetary
damages under or in respect of the agreements, documents and instruments
referred to in the BRP Acquisition Agreement or related thereto and (iii) all
proceeds, collections, recoveries and rights of subrogation with respect to the
foregoing. 

        "Additional
Guarantors" shall have the meaning assigned to such term in the Preamble
hereof. 

        "Additional
Pledged Interests" shall mean, collectively, with respect to each Pledgor, (i)
all options, warrants, rights, agreements, additional membership, partnership or
other equity interests of whatever class of any issuer of Initial Pledged
Interests or any interest in any such issuer, together with all rights,
privileges, authority and powers of such Pledgor relating to such interests in
each such issuer or under the Organizational Document of any such issuer, and
the certificates, instruments and agreements representing such membership,
partnership or other interests and any and all interest of such Pledgor in the
entries on the books of any financial intermediary pertaining to such
membership, partnership or other equity interests from time to time acquired by
such Pledgor in any manner and (ii) all membership, partnership or other equity
interests, as applicable, of each limited liability company, partnership or
other entity (other than a corporation) hereafter acquired or formed by such
Pledgor and all options, warrants, rights, agreements, additional membership,
partnership or other equity interests of whatever class of such limited
liability company, partnership or other entity, together with all rights,
privileges, authority and powers of such Pledgor relating to such interests or
under the Organizational Document of any such issuer, and the certificates,
instruments and agreements representing such membership, partnership or other
equity interests and any and all interest of such Pledgor in the entries on the
books of any financial intermediary pertaining to such membership, partnership
or other interests, from time to time acquired by such Pledgor in any manner.

-4-

        "Additional
Pledged Shares" shall mean, collectively, with respect to each Pledgor, (i)
all options, warrants, rights, agreements, additional shares of capital stock of
whatever class of any issuer of the Initial Pledged Shares or any other equity
interest in any such issuer, together with all rights, privileges, authority and
powers of such Pledgor relating to such interests issued by any such issuer
under the Organizational Document of any such issuer, and the certificates,
instruments and agreements representing such interests and any and all interest
of such Pledgor in the entries on the books of any financial intermediary
pertaining to such interests, from time to time acquired by such Pledgor in any
manner and (ii) all the issued and outstanding shares of capital stock of each
corporation hereafter acquired or formed by such Pledgor and all options,
warrants, rights, agreements or additional shares of capital stock of whatever
class of such corporation, together with all rights, privileges, authority and
powers of such Pledgor relating to such shares or under the Organizational
Document of such corporation, and the certificates, instruments and agreements
representing such shares and any and all interest of such Pledgor in the entries
on the books of any financial intermediary pertaining to such shares, from time
to time acquired by such Pledgor in any manner. 

        "Administrative
Agent" shall have the meaning assigned to such term in the recitals hereof.

        "Agreement"
shall have the meaning assigned to such in the recitals hereof. 

        "Bailee Letter"
shall have the meaning assigned to such term in Section 3.4(f) hereof. 

        "BRP Hungary"
means BRP Holdings (Hungary) Asset Management Limited Liability Company. 

        "Canadian
Borrower" shall have the meaning assigned to such term in the Preamble
hereof. 

        "Claims"
shall mean any and all property and other taxes, assessments and special
assessments, levies, fees and all governmental charges imposed upon or assessed
against, and all claims (including, without limitation, landlords', carriers',
mechanics', workmen's, repairmen's, laborers', materialmen's, suppliers' and
warehousemen's Liens and other claims arising by operation of law) against, all
or any portion of the Pledged Collateral. 

        "Collateral
Accounts" shall mean the collateral accounts established pursuant to Section
10.1 hereof and all property from time to time on deposit therein. 

        "Commodity
Account" shall mean, any account maintained by a Pledgor with any Commodity
Intermediary in which commodity futures contracts, commodity futures options or
other contracts or options traded on or dealt in upon a commodity futures
exchange (as such terms are defined in the 
Commodity Futures Act
(Ontario)) are or may be carried. 

        "Commodity
Account Control Agreement" shall mean, a commodity account control agreement
in a form and substance that is reasonably satisfactory to the Pledgor and the
Administrative Agent. 

-5-

        
"Commodity Intermediary" means any person registered as a dealer under the
commodity futures laws of Ontario or any other jurisdiction, or that in the
ordinary course of its business provides clearance or settlement services for a
commodity futures exchange (as such term is defined in the 
Commodity Futures Act
(Ontario)), and is acting in that capacity. 

        
"Contested Liens" shall mean, collectively, any Liens incurred in respect of
any Claims to the extent that the amounts owing in respect thereof are not yet
delinquent or are being contested and otherwise comply with the provisions of
Section 4.12 hereof; provided, however, that such Liens shall in all respects be
subject and subordinate in priority to the Lien and security interest created
and evidenced by this Agreement, except if and to the extent that the law or
regulation creating, permitting or authorizing such Lien provides that such Lien
must be superior to the Lien and security interest created and evidenced hereby.

        
"Contracts" shall mean, collectively, with respect to each Pledgor, all
sale, service, performance, equipment or property lease contracts, agreements
and grants and all other contracts, agreements or grants (in each case, whether
written or oral, or third party or intercompany), between such Pledgor and third
parties, and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof. 

        
"Control Agreements" shall mean, collectively, the Deposit Account Control
Agreement, the Securities Account Control Agreement and the Commodity Account
Control Agreement. 

        
"Copyrights" shall mean, collectively, with respect to each Pledgor, all
copyrights (whether statutory or common law, whether established or registered
in Canada or any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished) and all
copyright registrations and applications made by such Pledgor, in each case,
whether now owned or hereafter created or acquired by or assigned to such
Pledgor, including, without limitation, the copyright registrations and
applications listed in Schedule 12(b) annexed to the Perfection Certificate,
together with any and all (i) rights and privileges arising under applicable law
with respect to such Pledgor's use of such copyrights, (ii) reissues, renewals,
continuations and extensions thereof, (iii) income, fees, royalties, damages,
claims and payments now or hereafter due and/or payable with respect thereto,
including, without limitation, damages and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to sue for past, present or future infringements thereof. "Credit
Agreement" shall have the meaning assigned to such term in Recital B hereof.

        
"Deposit Account Control Agreement" shall mean an agreement substantially in
the form annexed hereto as Exhibit 5 with such changes as are reasonably
acceptable to the applicable Pledgor and the Administrative Agent, or such other
agreement in form and substance as is reasonably satisfactory to the applicable
Pledgor and the Administrative Agent. 

        
"Deposit Accounts" shall mean, collectively, with respect to each Pledgor, (i)
all demand, time, savings, passbook, deposit, operating or similar accounts
maintained with a bank or other deposit-taking financial institution and in any
event shall include, without limitation, the 

-6-

Collateral Account and all accounts and sub-accounts relating
to any of the foregoing accounts and (ii) all cash, funds, cheques, notes and
instruments from time to time on deposit in any of the accounts or sub-accounts
described in clause (i) of this definition. 

        "Distributions"
shall mean, collectively, with respect to each Pledgor, all dividends, cash,
options, warrants, rights, instruments, distributions, returns of capital or
principal, income, interest, profits and other property, interests (debt or
equity) or proceeds, including as a result of a split, revision,
reclassification or other like change of the Pledged Securities, from time to
time received, receivable or otherwise distributed to such Pledgor in respect of
or in exchange for any or all of the Pledged Securities or Intercompany Notes.

        "Excluded
Property" shall mean Special Property other than, with respect to clauses
(a) through (d) inclusive, of the definition of "Special Property", the
following: 

  (a)
  the right to receive
  any payment of money (including, without limitation, Accounts and General
  Intangibles); and 

  (b)
  any Proceeds,
  substitutions or replacements of any Special Property (unless such Proceeds,
  substitutions or replacements would constitute Special Property). 

        "General
Intangibles" shall mean, collectively, with respect to each Pledgor, all
"intangibles," as such term is defined in the PPSA, of such Pledgor and, in any
event, shall include, without limitation, (i) all of such Pledgor's rights,
title and interest in, to and under all insurance policies and Contracts, (ii)
all know-how and warranties relating to any of the Pledged Collateral or the
Mortgaged Property, (iii) any and all other rights, claims, choses-in-action and
causes of action of such Pledgor against any other person and the benefits of
any and all collateral or other security given by any other person in connection
therewith, (iv) all guarantees, endorsements and indemnifications on, or of, any
of the Pledged Collateral or any of the Mortgaged Property, (v) all lists,
books, records, correspondence, ledgers, print-outs, files (whether in printed
form or stored electronically), tapes and other papers or materials containing
information relating to any of the Pledged Collateral or any of the Mortgaged
Property, including, without limitation, all customer or tenant lists,
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, appraisals, recorded knowledge, surveys, studies, engineering reports,
test reports, manuals, standards, processing standards, performance standards,
catalogs, research data, computer and automatic machinery software and programs
and the like, field repair data, accounting information pertaining to such
Pledgor's operations or any of the Pledged Collateral or any of the Mortgaged
Property and all media in which or on which any of the information or knowledge
or data or records may be recorded or stored and all computer programs used for
the compilation or printout of such information, knowledge, records or data,
(vi) all licenses, consents, permits, variances, certifications, authorizations
and approvals, however characterized, of any Governmental Authority (or any
person acting on behalf of a Governmental Authority) now or hereafter acquired
or held by such Pledgor pertaining to operations now or hereafter conducted by
such Pledgor or any of the Pledged Collateral or any of the Mortgaged Property
including, without limitation, building permits, certificates of occupancy,
environmental certificates, industrial permits or licenses and certificates of
operation and (vii) all rights to reserves, deferred payments, deposits,
refunds, indemnification of claims to the extent the foregoing relate to any
Pledged Collateral or 

-7-

Mortgaged Property and claims for tax or other refunds against
any Governmental Authority relating to any Pledged Collateral or any of the
Mortgaged Property. 

        "Goodwill"
shall mean, collectively, with respect to each Pledgor, the goodwill connected
with such Pledgor's business including, without limitation, (i) all goodwill
connected with the use of and symbolized by any of the Trademarks in which such
Pledgor has any interest, (ii) all know-how, trade secrets, customer and
supplier lists, proprietary information, inventions, methods, procedures,
formulae, descriptions, compositions, technical data, drawings, specifications,
name plates, catalogs, confidential information and the right to limit the use
or disclosure thereof by any person, pricing and cost information, business and
marketing plans and proposals, consulting agreements, engineering contracts and
such other assets which relate to such goodwill and (iii) all goodwill
associated with the product lines of such Pledgor's business. 

        "Guarantors"
shall have the meaning assigned to such term in the Preamble hereof. 

        "Hedging
Agreement" shall have the meaning assigned to such term in Recital F hereof.

        "Industrial
Designs" shall mean, collectively, with respect to each Pledgor, all
industrial designs issued or assigned to and all industrial design applications
and registrations made by such Pledgor (whether established or registered or
recorded in Canada or any other country or any political subdivision thereof),
including, without limitation, those industrial design applications and
registrations listed in Schedule 12(a) annexed to the Perfection Certificate,
together with any and all (i) rights and privileges arising under applicable law
with respect to such Pledgor's use of any industrial designs, (ii) inventions
and improvements described and claimed therein, (iii) reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (iv)
income, fees, royalties, damages, claims and payments now or hereafter due
and/or payable thereunder and with respect thereto including, without
limitation, damages and payments for past, present or future infringements
thereof, (v) rights corresponding thereto throughout the world and (vi) rights
to sue for past, present or future infringements thereof. 

        "Initial Pledged
Interests" shall mean, with respect to each Pledgor, all membership,
partnership or other equity interests (other than in a corporation), as
applicable, of each issuer described in Schedule 9 annexed to the Perfection
Certificate, together with all rights, privileges, authority and powers of such
Pledgor in and to each such issuer or under the Organizational Document of each
such issuer, and the certificates, instruments and agreements representing such
membership, partnership or other interests and any and all interest of such
Pledgor in the entries on the books of any financial intermediary pertaining to
such membership, partnership or other interests. 

        "Initial Pledged
Shares" shall mean, collectively, with respect to each Pledgor, the issued
and outstanding shares of capital stock of each issuer described in Schedule 9
annexed to the Perfection Certificate together with all rights, privileges,
authority and powers of such Pledgor relating to such interests in each such
issuer or under the Organizational Document of each such issuer, and the
certificates, instruments and agreements representing such shares of 

-8-

capital stock and any and all interest of such Pledgor in the
entries on the books of any financial intermediary pertaining to the Initial
Pledged Shares. 

        "Instruments"
shall mean, collectively, with respect to each Pledgor, all "instruments," as
such term is defined in the PPSA, and shall include, without limitation, all
promissory notes, drafts, bills of exchange or acceptances. 

        "Intellectual
Property Collateral" shall mean, collectively, with respect to each Pledgor,
its Patents, Industrial Designs, Trademarks, Copyrights, Licenses, and Goodwill.

        "Intercompany
Notes" shall mean, with respect to each Pledgor, all intercompany notes
described in Schedule 10 annexed to the Perfection Certificate and intercompany
notes hereafter acquired by such Pledgor and all certificates, instruments or
agreements evidencing such intercompany notes, and all assignments, amendments,
restatements, supplements, extensions, renewals, replacements or modifications
thereof to the extent permitted pursuant to the terms hereof. 

        "Investment
Property" shall mean a Security, excluding, however, the Securities
Collateral. 

        "Joinder
Agreement" shall mean an agreement substantially in the form annexed hereto
as Exhibit 3. 

        "Lenders"
shall have the meaning assigned to such term in Recital A hereof. 

        "Licenses"
shall mean, collectively, with respect to each Pledgor, all license agreements
with any other party with respect to any Patent, Industrial Design, Trademark or
Copyright or any other patent, industrial design, trademark or copyright, all
distribution agreements (to the extent such agreements grant rights in any of
the foregoing) with, and covenants not to sue, any other party with respect to
any of the foregoing, whether such Pledgor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement,
including, without limitation, the license and distribution agreements listed in
Schedules 12(a) and 12(b) annexed to the Perfection Certificate, together with
any and all (i) renewals, extensions, supplements and continuations thereof,
(ii) income, fees, royalties, damages, claims and payments now and hereafter due
and/or payable thereunder and with respect thereto including, without
limitation, damages and payments for past, present or future infringements or
violations thereof, (iii) rights to sue for past, present and future
infringements or violations thereof, and (iv) other rights to use, exploit or
practice any or all of the Patents, Industrial Designs, Trademarks or Copyrights
or any other patent, industrial design, trademark or copyright. 

        "Mortgaged
Property" shall mean all "Mortgaged Properties" (as defined in each of the
Mortgages) located in Canada. 

        "Obligations"
means all present and future debts, liabilities and obligations (whether direct,
indirect, absolute, contingent or otherwise and whether in respect of principal
or interest thereon or otherwise) of the Pledgors to the Secured Parties under
the Credit Documents 

-9-

and includes, without limitation, the "Obligations", as such
term is defined in the Credit Agreement. 

        "Organizational
Document" shall mean, relative to any Person, its certificate of
incorporation, its by-law, its partnership or membership agreement, its
memorandum and articles of association, articles of incorporation, continuation,
amalgamation and amendment, share designations or similar organizational
documents and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized Equity Interests. 

        "Original
Canadian Security Agreement" shall have the meaning assigned to such term in
the preamble of this Agreement. 

        "Original Credit
Agreement" shall have the meaning assigned to such term in Recital A hereof.

        "Original
Guarantors" shall have the meaning assigned to such term in the preamble of
this Agreement. 

        "Original U.S.
Borrowers" shall have the meaning assigned to such term in Recital A hereof.

        "PPSA" shall
mean the Personal
Property Security Act
(Ontario) as in effect from time to time; provided, however, that if by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of the Administrative Agent's and the Secured Parties' security
interest in any item or portion of the Pledged Collateral is governed by
personal property security legislation of a jurisdiction other than the Province
of Ontario, the term "PPSA" shall mean such personal property security
legislation as in effect from time to time of such other jurisdiction for the
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions relating to such provisions. 

        "Patents"
shall mean, collectively, with respect to each Pledgor, all patents issued or
assigned to and all patent applications and registrations made by such Pledgor
(whether established or registered or recorded in Canada or any other country or
any political subdivision thereof), including, without limitation, those patent
applications and registrations listed in Schedule 12(a) annexed to the
Perfection Certificate, together with any and all (i) rights and privileges
arising under applicable law with respect to such Pledgor's use of any patents,
(ii) inventions and improvements described and claimed therein, (iii) reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (iv) income, fees, royalties, damages, claims and payments now or
hereafter due and/or payable thereunder and with respect thereto including,
without limitation, damages and payments for past, present or future
infringements thereof, (v) rights corresponding thereto throughout the world and
(vi) rights to sue for past, present or future infringements thereof. 

        "Perfection
Certificate" shall mean that certain perfection certificate dated December
18, 2003, executed and delivered by the Canadian Borrower and others in favor of
the Administrative Agent for the benefit of the Secured Parties, and each other
Perfection Certificate (which shall be in form and substance reasonably
acceptable to the Administrative Agent) executed and delivered by the applicable
Guarantor in favor of the Administrative Agent for the 

-10-

benefit of the Secured Parties contemporaneously with the
execution and delivery of each Joinder Agreement executed in accordance with
Section 3.5 hereof, in each case, as the same may be amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the Credit Agreement, including as supplemented in connection with the
amendment and restatement of the Original Credit Agreement on February 9, 2005.

        "Permitted
Priority Liens" shall mean Liens described in paragraphs (a), (b), (c), (j)
and (p) of the definition of "Permitted Liens" in the Credit Agreement. 

        "Pledge
Amendment" shall have the meaning assigned to such term in Section 5.1
hereof. 

        "Pledged
Collateral" shall have the meaning assigned to such term in Section 2.1
hereof. 

        "Pledged
Interests" shall mean, collectively, the Initial Pledged Interests and the
Additional Pledged Interests; 

        "Pledged
Securities" shall mean, collectively, the Pledged Interests, the Pledged
Shares and the Successor Interests. 

        "Pledged Shares"
shall mean, collectively, the Initial Pledged Shares and the Additional Pledged
Shares; 

        "Pledgor"
shall have the meaning assigned to such term in the recitals hereof. 

        "Secured
Parties" shall mean, collectively, the Administrative Agent, each other
Agent, the Lenders and each party to a Hedging Agreement relating to the Loans
if at the date of entering into such Hedging Agreement such person was a Lender
or an Affiliate of a Lender and such person executes and delivers to the
Administrative Agent a letter agreement in form and substance acceptable to the
Administrative Agent pursuant to which such person (i) appoints the
Administrative Agent as its agent under the applicable Credit Documents and (ii)
agrees to be bound by the provisions of Section 8.2 of the Credit Agreement.

        "Securities
Account" shall mean any account of a Pledgor maintained with any Securities
Intermediary in or to which a Security is or may be credited or held. 

        "Securities
Account Control Agreement" shall mean an agreement substantially in the form
annexed hereto as Exhibit 4 with such changes as are reasonably acceptable to
the applicable Pledgor and the Administrative Agent or such other agreement in
form and substance as is reasonably satisfactory to the applicable Pledgor and
the Administrative Agent. 

        "Securities
Collateral" shall mean, collectively, the Pledged Securities, the
Intercompany Notes and the Distributions. 

        
"Securities Intermediary" means a clearing corporation, bank, other
financial institution or other person that in the ordinary course of its
business maintains accounts for others in or to which Securities are credited or
held, and is acting in that capacity. 

-11-

        "Special
Property" shall mean: 

(a)
    any contract,
    instrument, permit, lease or license or other document as to which and for
    so long as the creation of a security interest would constitute a violation
    of a valid and enforceable restriction in favour of a third party on such
    creation unless and until any required consents were obtained; 

    (b) 
    any contract, instrument,
    permit, lease, license or other document as to which and for so long as the
    creation of a security interest would give any other party to such contract,
    instrument, permit, lease, license or other document the right to terminate
    its obligations thereunder; 

    (c) 
    any contract, instrument,
    permit, lease or license or other document to the extent that and for so
    long as any Requirement of Law applicable thereto prohibits the creation of
    a security interest therein; and 

    (d) 
    Equipment owned by any
    Pledgor on the date hereof or hereafter acquired that is subject to a Lien
    securing obligations under or in respect of any Capital Lease, Synthetic
    Lease or Purchase Money Obligations permitted to be incurred under the
    provisions of the Credit Agreement if, and for so long as, the contract or
    other agreement in which such Lien is granted (or the documentation
    providing for such obligations under or in respect of any Capital Lease,
    Synthetic Lease or Purchase Money Obligations) would not permit such
    Equipment to be subject to the security interests and Liens created under
    this Agreement; and 

    (e) 
    Accounts or Chattel Paper
    and related assets in connection with any Permitted Receivables Facility and
    any assets directly related thereto, including all collateral securing such
    Account, Chattel Paper and other assets (including contract rights and all
    guarantees or other obligations in respect of such Accounts or Chattel
    Paper, proceeds of such Accounts or Chattel Paper and other assets) that are
    sold or transferred to, or with respect to which a security interest is
    granted to, any Person (other than a Pledgor) in connection with a Permitted
    Receivables Facility (but in any event excluding proceeds paid or payable
    to, or received or receivable by, a Pledgor in consideration of such sale or
    transfer. 

  

        "Successor
Interests" shall mean, collectively, with respect to each Pledgor, all
Equity Interests of the successor corporation or interests or certificates of
the successor limited liability company, partnership or other entity owned by
such Pledgor (unless such successor is such Pledgor itself) formed by or
resulting from any consolidation or merger in which any person listed in
Schedule 1(a) annexed to the Perfection Certificate is not the surviving entity;

        "Trademarks"
shall mean, collectively, with respect to each Pledgor, all trademarks
(including service marks), slogans, logos, certification marks, trade dress,
uniform resource locations (URL's), domain names, corporate names and trade
names, whether registered or unregistered, owned by or assigned to such Pledgor
and all registrations and applications for the foregoing (whether statutory or
common law and whether established or registered in Canada or any other country
or any political subdivision thereof), including, without limitation, the 

-12-

registrations and applications listed in Schedule 12(a)
annexed to the Perfection Certificate, together with any and all (i) rights and
privileges arising under applicable law with respect to such Pledgor's use of
any trademarks, (ii) reissues, continuations, extensions and renewals thereof,
(iii) income, fees, royalties, damages and payments now and hereafter due and/or
payable thereunder and with respect thereto, including, without limitation,
damages, claims and payments for past, present or future infringements thereof,
(iv) rights corresponding thereto throughout the world and (v) rights to sue for
past, present and future infringements thereof. 

        "UCC" shall
mean the Uniform Commercial Code as in effect from time to time in the State of
New York. 

        SECTION 1.2.
Interpretation. 

The rules of interpretation specified in the Credit Agreement
shall be applicable to this Agreement. 

        SECTION 1.3.
Perfection Certificate.

The Administrative Agent and each Secured Party agree that the
Perfection Certificate and all descriptions of Pledged Collateral, schedules,
amendments and supplements thereto are incorporated herein by reference and are
and shall at all times remain a part of this Agreement. 

ARTICLE II 

GRANT OF SECURITY AND SECURED OBLIGATIONS

        SECTION 2.1.
Pledge. 

As continuing collateral security for the payment and
performance in full of its Obligations, each Pledgor hereby pledges and grants
to the Administrative Agent for the benefit of the Secured Parties, a lien on
and security interest in and to all of the right, title and interest of such
Pledgor in, to and under the following property, wherever located, whether now
existing or hereafter arising or acquired from time to time (collectively, the
"Pledged Collateral"): 

  (i)
  all Accounts; 
  

  (ii)
  all Equipment, Goods
  and Inventory; 

  (iii)
  all Documents of Title, Instruments and Chattel Paper; 

  (iv) all Securities Collateral;
  

  (v) 
  the Collateral Accounts;
  

-13-

  (vi)
  all Investment
  Property; 

  (vii)
  all Intellectual
  Property Collateral; 

  (viii)
  all General
  Intangibles; 

  (ix)
  all Deposit Accounts, Securities
  Accounts and Commodity Accounts; 

  (x)
  all Acquisition Document Rights;
  

  (xi)
  all books and
  records relating to the Pledged Collateral; and 

            
(xii) 
to the extent not covered by
clauses (i) through (xi) of this sentence, all other personal property of such
Pledgor, whether tangible or intangible and all Proceeds and products of each of
the foregoing and all accessions to, substitutions and replacements for, and
rents, profits and products of, each of the foregoing, any and all proceeds of
any insurance, indemnity, warranty or guaranty payable to such Pledgor from time
to time with respect to any of the foregoing. 

       
Notwithstanding anything to the contrary contained in clauses (i) through (xii)
above, the security interest created by this Agreement shall not extend to, and
the term "Pledged Collateral" shall not include, (a) any Excluded Property, (b)
consumer goods (as such term is defined in the PPSA), and (c) the last day of
the term of any lease or sub-lease, oral or written, or any agreement therefor,
now held or hereafter acquired by any Pledgor, but upon the sale of the
leasehold interest or any part thereof the Pledgor shall stand possessed of such
last day in trust to assign the same as the Administrative Agent shall direct.

       
SECTION 2.2. 
Obligations. 

        This
Agreement secures, and the Pledged Collateral is continuing collateral security
for, the payment and performance in full when due of the Obligations. 

       
SECTION 2.3. 
Security Interest. 

        (a)
Each Pledgor hereby
irrevocably authorizes the Administrative Agent at any time and from time to
time to file in any relevant jurisdiction any initial financing statements
(including fixture filings) and amendments thereto that contain the information
required by the PPSA of each applicable jurisdiction, the UCC or the personal
property security legislation of any other jurisdiction, for the filing of any
financing statement, financing change statement or amendment relating to the
Pledged Collateral, including, without limitation, (i) whether such Pledgor is
an organization, the type of organization, (ii) any financing, financing change
or continuation statements or other documents without the signature of such
Pledgor where permitted by law, including, without limitation, the filing of a
financing statement describing the Pledged Collateral as "all assets in which
the Pledgor now owns or hereafter acquires rights" and (iii) in the case of a
financing statement filed as a fixture filing, a sufficient description of the
real property to which such Pledged Collateral relates. Each Pledgor agrees to

-14-

provide all information described in the immediately preceding
sentence to the Administrative Agent promptly upon request. 

        (b)
Each Pledgor hereby
ratifies its authorization for the Administrative Agent to file in any relevant
jurisdiction any initial financing statements, financing change statements or
amendments relating to the Pledged Collateral if filed prior to the date hereof
or prior to the date of such Pledgor's joinder to this Agreement pursuant to
Section 3.5. 

        SECTION 2.4.
Attachment. 

        The Administrative
Agent and each Pledgor acknowledge and agree that value has been given for the
granting of the security interests granted hereby and that they have not agreed
to postpone the time for attachment, except for after-acquired property forming
part of the Pledged Collateral, the attachment to which will occur forthwith
upon the relevant Pledgor acquiring rights thereto. 

ARTICLE III 

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL 

        SECTION 3.1.
Delivery of Certificated
Securities Collateral. 

        Each Pledgor
represents and warrants that (a) all certificates, agreements or instruments
representing or evidencing the Securities Collateral in existence on the date
hereof are set out in Schedule 15(a) annexed to the Perfection Certificate, and
(b) except as indicated on Schedule 15(b) annexed to the Perfection Certificate,
all such certificates, agreements or instruments have been delivered to the
Administrative Agent in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank, and the
Administrative Agent has a perfected first priority security interest in the
Securities Collateral so delivered to the Administrative Agent. Each Pledgor
hereby agrees that all certificates, agreements or instruments representing or
evidencing Securities Collateral that are acquired by such Pledgor after the
date hereof, shall promptly upon receipt thereof by such Pledgor be delivered to
and held by or on behalf of the Administrative Agent pursuant hereto. All
certificated Securities Collateral shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Agent. The Administrative Agent shall have the right, at any time
upon the occurrence and during the continuance of any Event of Default, to
endorse, assign or otherwise transfer to or to register in the name of the
Administrative Agent or any of its nominees or endorse for negotiation any or
all of the Securities Collateral, without any indication that such Securities
Collateral is subject to the security interest hereunder. In addition, upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent shall have the right at any time to exchange 

-15-

certificates representing or evidencing Securities Collateral
for certificates of smaller or larger denominations. 

        SECTION 3.2.
Perfection of
Uncertificated Securities Collateral. 

        Each Pledgor
represents and warrants that the Administrative Agent has a perfected first
priority security interest in all uncertificated Pledged Securities pledged by
it hereunder that are in existence on the date hereof subject to Permitted
Priority Liens. Each Pledgor hereby agrees that if any of the Pledged Securities
are at any time not evidenced by certificates of ownership, then each applicable
Pledgor shall, to the extent permitted by applicable law, cause such pledge to
be recorded on the equity holder register or the books of the issuer, cause the
issuer to execute and deliver to the Administrative Agent an acknowledgment of
the pledge of such Pledged Securities substantially in the form of Exhibit 1
annexed hereto, execute any customary pledge forms or other documents necessary
or appropriate to complete the pledge and give the Administrative Agent the
right to transfer such Pledged Securities upon the occurrence and during the
continuance of an Event of Default, under the terms hereof and, upon request,
provide to the Administrative Agent an opinion of counsel, in form and substance
reasonably satisfactory to the Administrative Agent, confirming such pledge and
perfection thereof. 

        SECTION 3.3.
Maintenance of Perfected
Security Interest. 

        Each Pledgor agrees
that at the sole cost and expense of the Pledgors, (i) such Pledgor will
maintain the security interest created by this Agreement in the Pledged
Collateral as a perfected first priority security interest subject to Permitted
Priority Liens, and shall (subject to the final sentence of this Section) defend
such security interest against the claims and demands of all persons (other than
the holders of Permitted Priority Liens), (ii) such Pledgor shall furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Pledged Collateral and such other reports in
connection with the Pledged Collateral as the Administrative Agent may
reasonably request, all in reasonable detail and (iii) at any time and from time
to time, upon the written request of the Administrative Agent, such Pledgor
shall promptly and duly execute and deliver, and file and have recorded, such
further instruments and documents and take such further action as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and the rights and powers herein
granted, including the filing of any financing statements, financing change
statements, continuation statements and other documents (including the
Agreement) under the PPSA (or other similar laws) in effect in any jurisdiction
with respect to the security interest created hereby and the execution and
delivery of Control Agreements, all in form reasonably satisfactory to the
Administrative Agent and in such offices (including, without limitation, the
offices maintained under the 
Trade Marks Act (Canada) and
the Patent Act 
(Canada)) wherever required by law to perfect, publish notice of, continue and
maintain a valid, enforceable, first priority security interest in the Pledged
Collateral (subject to Permitted Priority Liens) as provided herein and to
preserve the other rights and interests granted to the Administrative Agent
hereunder, as against third parties, with respect to the Pledged Collateral.
Nothing in this Agreement prevents any Pledgor from discontinuing the operation
or maintenance of any of its assets or properties if such Pledgor determines in
good faith that such 

-16-

discontinuance is immaterial in the conduct of its business,
to the extent permitted by the Credit Agreement. 

        SECTION 3.4.
Other Actions. 

In order to further insure the attachment, perfection and
priority of, and the ability of the Administrative Agent to enforce, the
Administrative Agent's security interest in the Pledged Collateral, each Pledgor
represents (as to itself) as follows and agrees, in each case at such Pledgor's
own expense, to take the following actions with respect to the following Pledged
Collateral: 

          (a)
  Instruments and
  Chattel Paper. As of the date hereof (i) no amounts in the aggregate in excess
  of Cdn.$1,000,000, or the equivalent amount in another currency, payable under
  or in connection with any of the Pledged Collateral are evidenced by any
  Instrument or Chattel Paper other than such Instruments and Chattel Paper
  listed in Schedule 10 annexed to the Perfection Certificate and (ii) each
  Instrument and each item of Chattel Paper listed in Schedule 10 annexed to the
  Perfection Certificate has been properly endorsed, assigned and delivered to
  the Administrative Agent, accompanied by instruments of transfer or assignment
  duly executed in blank. If after the date hereof any amounts in the aggregate
  in excess of Cdn.$1,000,000, or the equivalent amount in another currency,
  payable under or in connection with any of the Pledged Collateral shall be
  evidenced by any Instrument or Chattel Paper, the Pledgor acquiring such
  Instrument or Chattel Paper shall either (a) forthwith endorse, assign and
  deliver the same to the Administrative Agent as additional Pledged Collateral,
  accompanied by such instruments of transfer or assignment duly executed in
  blank as the Administrative Agent may from time to time specify, or (b)
  maintain possession of such Chattel Paper in the Province of Quebec at all
  times. 

          (b)
  Deposit Accounts. (i)
  Each Pledgor has neither opened nor maintains as of the date hereof any
  Deposit Accounts other than the accounts listed in Schedule 13(a) annexed to
  the Perfection Certificate, and (ii) the Administrative Agent has a perfected
  first priority security interest in each Deposit Account listed in Schedule
  13(a) annexed to the Perfection Certificate. No Pledgor shall hereafter
  establish and maintain any Deposit Account unless the applicable bank or other
  financial institution with which such Deposit Account is maintained and such
  Pledgor shall have duly executed and delivered to the Administrative Agent a
  Deposit Account Control Agreement with respect to such Deposit Account. Each
  Pledgor agrees that at the time it establishes any additional Deposit Accounts
  it shall enter into a duly authorized, executed and delivered Deposit Account
  Control Agreement with respect to such Deposit Account. The Administrative
  Agent agrees with each Pledgor that the Administrative Agent shall not give
  any instructions directing the disposition of funds from time to time credited
  to any Deposit Account or withhold any withdrawal rights from such Pledgor
  with respect to funds from time to time credited to any Deposit Account unless
  an Event of Default has occurred and is continuing, or, after giving effect to
  any withdrawal, would occur. The provisions of this Section 3.4(b) shall not
  apply to (a) the Collateral Accounts or to any other Deposit Accounts for
  which the Administrative Agent is the depositary bank, (b) any Deposit Account
  for which a Pledgor, the depositary bank or other financial institution and
  the 

-17-

  Administrative Agent have entered into a cash collateral
  agreement specifically negotiated among such Pledgor, the depositary bank or
  other financial institution and the Administrative Agent for the specific
  purpose set out therein, (c) any Deposit Account or Deposit Accounts opened or
  maintained by a Pledgor other than the Canadian Borrower with a monthly
  average daily balance over the 12 month period immediately preceding the time
  of determination of less than Cdn.$5,000,000 in the aggregate for all Deposit
  Accounts maintained by such Pledgor with any one Bank or other financial
  institution (or the equivalent amounts thereof in any other currency), and (d)
  Deposit Accounts primarily for payroll purposes or holding restricted cash in
  connection with self-insurance programs. No Pledgor shall grant to any person
  other than the Administrative Agent the right to give instructions without the
  consent of such Pledgor to the bank or other financial institution with which
  a Deposit Account is maintained with respect to the disposition of the funds
  in such account. 

          (c)
  Investment Property. (i)
  As of the date hereof each Pledgor (1) has no Securities Accounts or Commodity
  Accounts other than those listed in Schedule 13(a) annexed to the Perfection
  Certificate, and the Administrative Agent has a perfected first priority
  security interest in such Securities Accounts and Commodity Accounts subject
  in each case to Permitted Priority Liens (other than those which are expressly
  waived pursuant to a Securities Account Control Agreement or a Commodity
  Account Control Agreement, as applicable), (2) does not hold, own or have any
  interest in any certificated securities or uncertificated securities other
  than those constituting Pledged Securities and those maintained in Securities
  Accounts or Commodity Accounts listed in Schedule 13 annexed to the Perfection
  Certificate, and (3) has entered into a duly authorized, executed and
  delivered Securities Account Control Agreement, substantially in the form of
  Exhibit 4 annexed hereto, or a Commodity Account Control Agreement, in a form
  reasonably satisfactory to the Administrative Agent, with respect to each
  Securities Account or Commodity Account listed in Schedule 13 annexed to the
  Perfection Certificate, as applicable. 

  
            (ii) If any
    Pledgor shall at any time hold or acquire any certificated securities
    constituting Investment Property, such Pledgor shall promptly (a) endorse,
    assign and deliver the same to the Administrative Agent, accompanied by such
    instruments of transfer or assignment duly executed in blank, all in form
    and substance reasonably satisfactory to the Administrative Agent or (b)
    deliver such securities into a Securities Account with respect to which a
    Securities Account Control Agreement has been executed and delivered to the
    Administrative Agent. If any securities now or hereafter acquired by any
    Pledgor constituting Investment Property are uncertificated and are issued
    to such Pledgor or its nominee directly by the issuer thereof, such Pledgor
    shall promptly notify the Administrative Agent thereof and arrange for the
    Administrative Agent to become the registered owner of the securities. No
    Pledgor shall hereafter establish and maintain any Securities Account or
    Commodity Account with any Securities Intermediary or Commodity Intermediary
    unless such Securities Intermediary or Commodity Intermediary, as the case
    may be, and such Pledgor shall have duly executed and delivered a Control
    Agreement with respect to such Securities Account or Commodity Account, as
    the case may be. Each Pledgor shall accept any cash and 

  

-18-

  
    Investment Property and shall promptly upon, and in any
    event within one (1) Business Day of, actual receipt thereof, (a) deposit
    any cash or Investment Property and any new securities, instruments,
    documents or other property by reason of ownership of the Investment
    Property received by it into a Control Account, or (b) in the case of
    uncertificated securities, transfer registered ownership of such securities
    to the Administrative Agent. The Administrative Agent agrees with each
    Pledgor that the Administrative Agent shall not give any instructions or
    directions to any issuer of uncertificated securities, Securities
    Intermediary or Commodity Intermediary, and shall not withhold its consent
    to the exercise of any withdrawal or dealing rights by such Pledgor, unless
    an Event of Default has occurred and is continuing, or, after giving effect
    to any such investment and withdrawal rights would occur. The provisions of
    this Section 3.4(c) shall not apply to any Financial Assets credited to a
    Securities Account for which the Administrative Agent is the Securities
    Intermediary. 

            (iii) As
    between the Administrative Agent and the Pledgors, the Pledgors shall bear
    the investment risk with respect to the Investment Property and Pledged
    Securities, and the risk of loss of, damage to, or the destruction of the
    Investment Property and Pledged Securities, whether in the possession of, or
    subject to the control of, or registered in the name of, the Administrative
    Agent, a Securities Intermediary, Commodity Intermediary, any Pledgor or any
    other person or otherwise; provided, however, that nothing contained in this
    Section 3.4(c) shall release or relieve any Securities Intermediary or
    Commodity Intermediary, if any, or the Administrative Agent, of its duties
    and obligations to the Pledgors or any other person under any Control
    Agreement or under applicable law. Each Pledgor shall promptly pay all
    Claims and fees of whatever kind or nature with respect to the Investment
    Property and Pledged Securities pledged by it under this Agreement. In the
    event any Pledgor shall fail to make such payment contemplated in the
    immediately preceding sentence, the Administrative Agent may do so for the
    account of such Pledgor and the Pledgors shall promptly reimburse and
    indemnify the Administrative Agent from all reasonable costs and
    out-of-pocket expenses incurred by the Administrative Agent under this
    Section 3.4(c) in accordance with Section 11.5 of the Credit Agreement.
    

  

          (d)
  Electronic Documents. As of the date hereof no amount in the aggregate in
  excess of Cdn.$1,000,000, or the equivalent amounts in another currency, in
  each case, payable under or in connection with any of the Pledged Collateral
  is evidenced by any electronic documents (within the meaning of the 
  Electronic Commerce Act, 2000 
  (Ontario) other than such electronic documents listed in
  Schedule 10 annexed to the Perfection Certificate. If at any time following
  the occurrence and during the continuance of an Event of Default any amount
  payable to a Pledgor under or in connection with any of the Pledged Collateral
  shall be evidenced by any electronic document record, the Pledgor acquiring
  such electronic document or transferable record shall promptly notify the
  Administrative Agent thereof and shall take such action as the Administrative
  Agent may reasonably request to vest in the Administrative Agent control of
  such electronic document as Pledged Collateral. 

          (e)
  Letter-of-Credit
  Rights. If any Pledgor is at any time a beneficiary under a letter of credit
  now or hereafter issued in favor of such Pledgor, other than a letter of
  

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  credit issued pursuant to the Credit Agreement, in an amount
  individually in excess of Cdn.$2,000,000, or the equivalent amount in another
  currency, such Pledgor shall promptly notify the Administrative Agent thereof
  and such Pledgor shall, at the request of the Administrative Agent, pursuant
  to an agreement in form and substance reasonably satisfactory to the
  Administrative Agent, either (i) arrange for the issuer and any confirmer of
  such letter of credit to consent to an assignment to the Administrative Agent
  of the proceeds of any drawing under the letter of credit or (ii) arrange for
  the Administrative Agent to become the transferee beneficiary of such letter
  of credit, with the Administrative Agent agreeing, in each case, that the
  proceeds of any drawing under the letter of credit are to be applied as
  provided in the Credit Agreement. 

          (f)
  Landlord Lien Waivers/Bailee
  Letters. Each Pledgor shall use its commercially reasonable efforts to obtain
  as soon as practicable after the date hereof with respect to each location set
  forth in Schedule 3.4 annexed hereto, a waiver of bailee's and/or landlord's
  lien, as applicable, and use commercially reasonable efforts to obtain a
  bailee letter and/or landlord lien waiver, as applicable, from all such
  bailees and landlords, as applicable, who from time to time have possession of
  Pledged Collateral having an aggregate value in such location in excess of Cdn.$2,000,000,
  or the equivalent amount thereof in any other currency, in the ordinary course
  of such Pledgor's business upon the request of the Administrative Agent.
  

        SECTION 3.5.
Joinder of Additional
Guarantors. 

        The Pledgors shall
cause each Subsidiary of the Canadian Borrower and any entity that becomes a
Succeeding Holdco, having assets or a chief executive office, registered office,
principal place of business or domicile, as applicable, in Canada and which,
from time to time, after the date hereof shall be required to pledge any assets
to the Administrative Agent for the benefit of the Secured Parties pursuant to
the provisions of the Credit Agreement, to execute and deliver to the
Administrative Agent (i) a Joinder Agreement substantially in the form of
Exhibit 3 annexed hereto and (ii) a Perfection Certificate, in each case, within
thirty (30) days of the date on which such Subsidiary was acquired or created
(or ten (10) days in the case of a Succeeding Holdco) and, upon such execution
and delivery, such Subsidiary shall constitute a "Guarantor" and a "Pledgor" for
all purposes hereunder with the same force and effect as if originally named as
a Guarantor and Pledgor herein. The execution and delivery of such Joinder
Agreement shall not require the consent of any Pledgor hereunder. The rights and
obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor and Pledgor as a party to this
Agreement. 

        SECTION 3.6.
Supplements; Further
Assurances 

        Each Pledgor shall
take such further actions, and to execute and deliver to the Administrative
Agent such additional assignments, agreements, supplements, powers and
instruments, as the Administrative Agent may in its reasonable judgment deem
necessary or appropriate, wherever required by law, in order to perfect,
preserve and protect the security interest in the Pledged Collateral as provided
herein and the rights and interests granted to the Administrative Agent
hereunder, to carry into effect the purposes hereof or better to assure and
confirm unto the Administrative Agent or permit the Administrative Agent to
exercise and 

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enforce its rights, powers and remedies hereunder with respect
to any Pledged Collateral. Without limiting the generality of the foregoing,
each Pledgor shall make, execute, endorse, acknowledge, file or refile and/or
deliver to the Administrative Agent from time to time upon reasonable request
lists, descriptions and designations of the Pledged Collateral, copies of
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, supplements, additional security agreements, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments. If an Event of Default has occurred and is
continuing, the Administrative Agent may institute and maintain, in its own name
or in the name of any Pledgor, such suits and proceedings as the Administrative
Agent may be advised by counsel shall be necessary or expedient to prevent any
impairment of the security interest in or the perfection thereof in the Pledged
Collateral. All of the foregoing shall be at the sole cost and expense of the
Pledgors. The Pledgors and the Administrative Agent acknowledge that this
Agreement is intended to and does grant to the Administrative Agent for the
benefit of the Secured Parties a security interest in and Lien upon the Pledged
Collateral and shall not constitute or create a present assignment of any of the
Pledged Collateral. 

ARTICLE IV 

REPRESENTATIONS, WARRANTIES AND COVENANTS

        Each Pledgor
represents, warrants and covenants as follows: 

        SECTION 4.1.
Title. 

        Except for
Permitted Liens and the security interest granted to the Administrative Agent
for the ratable benefit of the Secured Parties pursuant to this Agreement, each
Pledgor owns and, as to Pledged Collateral acquired by it from time to time
after the date hereof, will own the rights in each item of Pledged Collateral
pledged by it hereunder free and clear of any and all Liens or claims of others.
No person other than the Administrative Agent and the relevant Pledgor has
control or possession of all or any part of the Pledged Collateral, except as
permitted by the Credit Agreement or hereunder. 

        SECTION 4.2.
Validity of Security
Interest. 

        The security
interest in and Lien on the Pledged Collateral granted to the Administrative
Agent for the benefit of the Secured Parties hereunder constitutes (a) a legal
and valid security interest in all the Pledged Collateral securing the payment
and performance of the Obligations, and (b) subject to the completion of the
registrations necessary to perfect such security interest, a perfected security
interest in all the Pledged Collateral in which a security interest may be
perfected by such registration. The security interest and Lien granted to the
Administrative Agent for the benefit of the Secured Parties pursuant to this
Agreement in and on the Pledged Collateral will at all times constitute a
perfected, continuing first priority security interest therein, superior and
prior to the rights of all other persons therein subject to (1) 

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Permitted Priority Liens, and (2) the automatic release of
such security interest pursuant to Section 11.4 hereof. 

        SECTION 4.3.
Defense of
Claims/Transferability of Pledged Collateral. 

        Each Pledgor shall,
at its own cost and expense, subject to the last sentence of this Section 4.3,
defend title to the Pledged Collateral pledged by it hereunder and the security
interest therein and Lien thereon granted to the Administrative Agent and the
priority thereof against all claims and demands of all persons, at its own cost
and expense, at any time claiming any interest therein materially adverse to the
Administrative Agent or any other Secured Party other than Permitted Priority
Liens. Nothing in this Agreement prevents any Pledgor from discontinuing the
operation or maintenance of any of its assets or properties if such
discontinuance is, in the judgment of the board of directors of such Pledgor,
desirable in the conduct of its business, to the extent permitted by the Credit
Agreement. 

        SECTION 4.4.
Other Financing
Statements. 

        There is no (nor
will there be any) valid or effective financing statement (or other public
notice or similar statement or instrument of registration under the law of any
jurisdiction) on file or of record in any public office covering or purporting
to cover any interest of any kind in the Pledged Collateral other than financing
statements relating to Permitted Liens or financing statements as are to be
terminated in connection with the closing of the transactions contemplated by
the Credit Agreement (or pursuant to any financing change statement or the
equivalent thereof delivered to the Administrative Agent on the Closing Date).
So long as any of the Obligations remain unpaid or unperformed, no Pledgor shall
execute, authorize or permit to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to any Pledged Collateral, except
financing statements filed or to be filed in respect of Permitted Liens or
financing statements as are to be terminated in connection with the closing of
the transactions contemplated by the Credit Agreement (or pursuant to any
financing change statement or the equivalent thereof delivered to the
Administrative Agent on the Closing Date). 

        SECTION 4.5.
Chief Executive Office;
Change of Name; Jurisdiction of Organization. 

          (a) The exact
  legal name (in French, English, and French and English, where applicable),
  type of organization, jurisdiction of organization, and chief executive office
  and domicile, as applicable, of such Pledgor is indicated next to its name in
  Schedules 1(a) and 2(a) annexed to the Perfection Certificate. Such Pledgor
  shall not change (i) its corporate name, (ii) the location of its chief
  executive office, its principal place of business, its domicile, any office in
  which it maintains books or records relating to Pledged Collateral owned by it
  or any office or facility at which Pledged Collateral owned by it is located
  (including the establishment of any such new office or facility), except to a
  jurisdiction in which the Collateral Agent has registered a security interest
  against such Pledgor, (iii) its identity or type of organization or corporate
  structure, or (iv) its jurisdiction of organization (in each case, including,
  without limitation, by merging or amalgamating with or into any other entity,
  reorganizing, dissolving, liquidating, reincorporating or incorporating in any
  other jurisdiction) until (A) it shall have given the 

-22-

  Administrative Agent prior written notice of its intention
  to do so promptly upon the formation of such intention (but in no event less
  than 15 days prior to such change), clearly describing such change and
  providing such other information in connection therewith as the Administrative
  Agent may reasonably request and (B) with respect to such change, such Pledgor
  shall have taken all action reasonably satisfactory to the Administrative
  Agent to maintain the perfection and priority of the security interest of the
  Administrative Agent for the benefit of the Secured Parties in the Pledged
  Collateral intended to be granted hereunder, including, without limitation,
  using commercially reasonable efforts to obtain waivers of landlord's or
  warehousemen's liens with respect to such new location, if applicable who,
  from time to time have possession of Pledged Collateral having an aggregate
  value in such new location in excess of Cdn.$2,000,000 or the equivalent
  amount thereof in any other currency, except that any Pledgor having aggregate
  consolidated net assets of less than Cdn. $2,000,000 (either alone or taken
  together with all Pledgors relying on this exception) need not notify the
  Administrative Agent of any such intention or take such actions until the next
  date the Canadian Borrower is required to deliver information to the
  Administrative Agent pursuant to Section 6.1 of the Credit Agreement (at which
  time such Pledgor shall include the notice required by clause (A) above with
  such information, together with evidence of the taking of the actions required
  by clause (B) above). Each Pledgor agrees to promptly provide the
  Administrative Agent with certified organizational documents reflecting any of
  the changes described in the preceding sentence. 

          (b)
  The Administrative
  Agent may rely on opinions of counsel as to whether any or all PPSA or UCC or
  equivalent financing statements of the Pledgors need to be amended as a result
  of any of the changes described in Section 4.5(a). If any Pledgor fails to
  provide information to the Administrative Agent about such changes on a timely
  basis, the Administrative Agent shall not be liable or responsible to any
  party for any failure to maintain a perfected security interest in such
  Pledgor's property constituting Pledged Collateral, for which the
  Administrative Agent needed to have information relating to such changes. The
  Administrative Agent shall have no duty to inquire about such changes if any
  Pledgor does not inform the Administrative Agent of such changes, the parties
  acknowledging and agreeing that it would not be feasible or practical for the
  Administrative Agent to search for information on such changes if such
  information is not provided by any Pledgor. 

        SECTION 4.6.
Location of Inventory
and Equipment. 

        All Equipment and
Inventory of such Pledgor is located at its chief executive office or such other
location listed in Schedules 2(a), 2(b), 2(c), 2(d) or 2(e) annexed to the
Perfection Certificate. Subject to the provisions of Section 4.13 hereof, such
Pledgor shall not move any Equipment or Inventory to any location other than one
that is listed in such Schedules of the Perfection Certificate, except for
Inventory in transit, with respect to such Pledgor until (i) it shall have given
the Administrative Agent not less than 30 days' prior written notice (in the
form of an Officers' Certificate) of its intention so to do, clearly describing
such new location and providing such other information in connection therewith
as the Administrative Agent may request and (ii) with respect to such new
location, such Pledgor shall have taken all action reasonably satisfactory to
the Administrative Agent to maintain the perfection and priority of the security
interest of the Administrative Agent for the benefit of the Secured Parties in
the Pledged Collateral intended to be granted hereby, including, without
limitation, where the value of the Collateral owned by such Pledgor and located
at such new location, together with the value of 

-23-

Collateral owned by any other Pledgor and located at such new
location, exceeds or may exceed Cdn.$2,000,000, using commercially reasonable
efforts to obtain waivers of landlord's or warehousemen's and/or bailee's liens
with respect to such new location, if applicable. 

        SECTION 4.7.
Corporate Names; Prior
Transactions. 

        Such Pledgor has
not, during the past five years, been known by or used any other corporate or
fictitious name or been a party to any amalgamation, merger or consolidation, or
acquired all or substantially all of the assets of any person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth in Schedules 1(a), 1(b), 1(c) and 4 annexed to the Perfection Certificate.

        SECTION 4.8.
Due Authorization and
Issuance. 

        All of the Initial
Pledged Shares have been, and to the extent any Pledged Shares are hereafter
issued, such shares will be, upon such issuance, duly authorized, validly issued
and fully paid and non-assessable. All of the Initial Pledged Interests have
been fully paid for, and there is no amount or other obligation owing by any
Pledgor to any issuer of the Initial Pledged Interests in exchange for or in
connection with the issuance of the Initial Pledged Interests or any Pledgor's
status as a partner or a member of any issuer of the Initial Pledged Interests.

        SECTION 4.9.
No Conflicts, Consents,
etc. 

        No consent of any
party (including, without limitation, equity holders or creditors of such
Pledgor) and no consent, authorization, approval, license or other action by,
and no notice to or filing with, any Governmental Authority or regulatory body
or other person is required (A) for the pledge by such Pledgor of the Pledged
Collateral pledged by it as of the date hereof pursuant to this Agreement or for
the execution, delivery or performance hereof by such Pledgor, (B) for the
exercise by the Administrative Agent of the voting or other rights provided for
in this Agreement or (C) for the exercise by the Administrative Agent of the
remedies in respect of the Pledged Collateral pledged by such Pledgor as of the
Amendment Effective Date, except in each case, for those consents,
authorizations, approval, licenses, other actions, notices or filings, the
failure of which to obtain or complete could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. In the
event that the Administrative Agent desires to exercise any remedies, voting or
consensual rights or attorney-in-fact powers set forth in this Agreement and
determines it necessary to obtain any approvals or consents of any Governmental
Authority or any other person therefor, then, upon the reasonable request of the
Administrative Agent, such Pledgor agrees to use its commercially reasonable
efforts to assist and aid the Administrative Agent to obtain as soon as
practicable any necessary approvals or consents for the exercise of any such
remedies, rights and powers. 

        SECTION 4.10.
Pledged Collateral.

        All information set
forth herein, including the schedules annexed hereto, and all information
contained in any documents, schedules and lists heretofore delivered to any
Secured Party in connection with this Agreement, in each case, relating to the
Pledged Collateral, is accurate and complete in all material respects. The
Pledged Collateral described on the schedules annexed to the Perfection
Certificate constitutes all of the property of such type of 

-24-

Pledged Collateral (other than Intellectual Property
Collateral) owned or held by the Pledgors. The Intellectual Property Collateral
described in Schedule 12 annexed to the Perfection Certificate constitutes all
of the registered Intellectual Property (and all applications therefor) owned or
held by the Pledgors, other than Intellectual Property Collateral acquired from
Outboard Marine Corporation and that has been abandoned or which the relevant
Pledgor does not intend to maintain, none of which is material to the business
or operations of such Pledgor. 

        SECTION 4.11.
Insurance. 

        In the event that
the proceeds of any insurance claim are paid after the Administrative Agent has
exercised its right to foreclose after an Event of Default such
proceeds shall be
paid to the Administrative Agent to satisfy any deficiency remaining after such
foreclosure. The Administrative Agent shall retain its interest in the insurance
policies required to be maintained pursuant to this Agreement during any
redemption period. 

        SECTION 4.12.
Payment of Taxes;
Compliance with Laws; Contesting Liens; Claims. 

        Each Pledgor
represents and warrants that all Claims imposed upon or assessed against the
Pledged Collateral have been paid and discharged except to the extent such
Claims constitute a Lien not yet due and payable or are Permitted Liens. Each
Pledgor shall comply with all Requirements of Law applicable to the Pledged
Collateral the failure to comply with which would, individually or in the
aggregate, have a Material Adverse Effect. Each Pledgor may at its own expense
contest the validity, amount or applicability of any Claims so long as the
contest thereof shall be conducted in accordance with, and permitted pursuant to
the provisions of, the Credit Agreement. Notwithstanding the foregoing
provisions of this Section 4.12, (i) no contest of any such obligation may be
pursued by such Pledgor if such contest would reasonably be expected to expose
the Administrative Agent or any other Secured Party to (A) any possible criminal
liability or (B) any additional civil liability for failure to comply with such
obligations unless such Pledgor shall have furnished a bond or other security
therefor satisfactory to the Administrative Agent, or such Secured Party, as the
case may be and (ii) if at any time payment or performance of any obligation
contested by such Pledgor pursuant to this Section 4.12 shall become necessary
to prevent the imposition of remedies because of non-payment, such Pledgor shall
pay or perform the same, in sufficient time to prevent the imposition of
remedies in respect of such default or prospective default. 

ARTICLE V 

CERTAIN PROVISIONS CONCERNING SECURITIES
COLLATERAL 

       
SECTION 5.1. 
Pledge of Additional Securities
Collateral. 

       
Each Pledgor shall, upon obtaining any Pledged Securities or Intercompany Notes
of any person, accept the same in trust for the benefit of the Administrative
Agent and forthwith deliver to the Administrative Agent a pledge amendment, duly
executed by such Pledgor, in 

-25-

substantially the form of Exhibit 2 annexed hereto (each, a
"Pledge Amendment"), and the certificates and other documents required under
Section 3.1 and Section 3.2 hereof in respect of the additional Pledged
Securities or Intercompany Notes which are to be pledged pursuant to this
Agreement, and confirming the attachment of the Lien hereby created on and in
respect of such additional Pledged Securities or Intercompany Notes. Each
Pledgor hereby authorizes the Administrative Agent to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Securities or
Intercompany Notes listed on any Pledge Amendment delivered to the
Administrative Agent shall for all purposes hereunder be considered Pledged
Collateral. 

        SECTION 5.2.
Voting Rights;
Distributions; etc. 

        (i)
Unless and until an
Event of Default has occurred and is continuing: 

          (A)
  Each Pledgor shall be
  entitled to exercise any and all voting and other consensual rights and powers
  inuring to an owner of the Securities Collateral or any part thereof for any
  purpose not inconsistent with the terms or purposes hereof, the Credit
  Agreement or any other document evidencing the Obligations; provided, however,
  that no Pledgor shall in any event exercise such rights in any manner which
  could reasonably be expected to have a Material Adverse Effect. 

          (B)
  Each Pledgor shall be
  entitled to receive and retain any and all Distributions, but only if and to
  the extent made in accordance with the provisions of the Credit Agreement;
  provided, however, that any and all such Distributions consisting of rights or
  interests in the form of securities shall be forthwith delivered to the
  Administrative Agent to hold as Pledged Collateral and shall, if received by
  any Pledgor, be segregated from the other property or funds of such Pledgor
  and be forthwith delivered to the Administrative Agent as Pledged Collateral
  in the same form as so received (with any necessary endorsement). 

          (C)
  The Administrative
  Agent shall be deemed without further action or formality to have granted to
  each Pledgor all necessary consents relating to voting rights and shall, if
  necessary, upon written request of any Pledgor and at the sole cost and
  expense of the Pledgors, from time to time execute and deliver (or cause to be
  executed and delivered) to such Pledgor all such instruments as such Pledgor
  may reasonably request in order to permit such Pledgor to exercise the voting
  and other rights which it is entitled to exercise pursuant to Section
  5.2(i)(A) hereof and to receive the Distributions which it is authorized to
  receive and retain pursuant to Section 5.2(i)(B) hereof. 

        (ii)
Upon the occurrence and
during the continuance of any Event of Default: 

          (A)
  All rights of each
  Pledgor to exercise the voting and other consensual rights it would otherwise
  be entitled to exercise pursuant to Section 5.2(i)(A) hereof without any
  action, other than, in the case of any Securities Collateral, or the giving of
  any notice shall cease, and all such rights shall thereupon become vested in
  the Administrative Agent, which shall thereupon have the sole right to
  exercise such voting and other consensual rights. 

-26-

          (B)
  All rights of each
  Pledgor to receive Distributions which it would otherwise be authorized to
  receive and retain pursuant to Section 5.2(i)(B) hereof shall cease and all
  such rights shall thereupon become vested in the Administrative Agent, which
  shall thereupon have the sole right to receive and hold as Pledged Collateral
  such Distributions. 

          (iii)
  Each Pledgor shall, at
  its sole cost and expense, from time to time execute and deliver to the
  Administrative Agent appropriate instruments as the Administrative Agent may
  request in order to permit the Administrative Agent to exercise the voting and
  other rights which it may be entitled to exercise pursuant to Section
  5.2(i)(A) hereof and to receive all Distributions which it may be entitled to
  receive under Section 5.2(i)(B) hereof. 

          (iv)
  All Distributions
  which are received by any Pledgor contrary to the provisions of Section
  5.2(i)(B) hereof shall be received subject to the security interest of the
  Administrative Agent created hereby, shall be segregated from other funds of
  such Pledgor and shall promptly be paid over to the Administrative Agent as
  Pledged Collateral in the same form as so received (with any necessary
  endorsement). 

        SECTION 5.3.
Organizational
Documents. 

        Each Pledgor shall
deliver to the Administrative Agent a copy of any notice of default given or
received by it under any Organizational Document within fifteen (15) days after
such Pledgor gives or receives such notice. No Pledgor will terminate or agree
to terminate any Organizational Document or make any amendment or modification
to any Organizational Document which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. 

        SECTION 5.4.
Defaults, etc. 

        Such Pledgor is not
in default in the payment of any portion of any mandatory capital contribution,
if any, required to be made under any agreement to which such Pledgor is a party
relating to the Pledged Securities pledged by it, and such Pledgor is not in
violation of any other material provisions of any such agreement to which such
Pledgor is a party, or otherwise in default or violation thereunder. No
Securities Collateral pledged by such Pledgor is subject to any defense, offset
or counterclaim, nor have any of the foregoing been asserted or alleged against
such Pledgor by any person with respect thereto, and as of the date hereof,
after giving effect to the transactions contemplated by the BRP Acquisition
Agreement and both before and after the Amalgamation, there are no certificates,
instruments, documents or other writings (other than the Organizational
Documents and certificates, if any, delivered to the Administrative Agent) which
evidence any Pledged Securities of such Pledgor. 

        SECTION 5.5.
Certain Agreements of
Pledgors as Issuers and Holders of Equity Interests. 

          (i)
  In the case of each
  Pledgor which is an issuer of Securities Collateral, such Pledgor agrees to be
  bound by the terms of this Agreement relating to the Securities Collateral
  issued by it and will comply with such terms insofar as such terms are
  applicable to it. 

-27-

          (ii)
  In the case of each
  Pledgor which is a partner in a partnership, limited liability company or
  other entity, such Pledgor hereby consents to the extent required by the
  applicable Organizational Document to the pledge by each other Pledgor,
  pursuant to the terms hereof, of the Pledged Interests in such partnership,
  limited liability company or other entity and, upon the occurrence and during
  the continuance of an Event of Default, to the transfer of such Pledged
  Interests to the Administrative Agent or its nominee and to the substitution
  of the Administrative Agent or its nominee as a substituted partner or member
  in such partnership, limited liability company or other entity with all the
  rights, powers and duties of a general partner or a limited partner or member,
  as the case may be. 

        ARTICLE VI 

        CERTAIN PROVISIONS
CONCERNING INTELLECTUAL PROPERTY COLLATERAL 

        SECTION 6.1.
Grant of License. 

        For the purpose of
enabling the Administrative Agent to exercise rights and remedies under Article
IX hereof at such time as the Administrative Agent shall be lawfully entitled to
exercise such rights and remedies, and for no other purpose, each Pledgor hereby
grants to the Administrative Agent, exercisable upon the occurrence and during
the continuation of an Event of Default, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to such Pledgor) to use, assign, license or sublicense any of
the Intellectual Property Collateral now owned or hereafter acquired by such
Pledgor, wherever the same may be located, including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout hereof. 

        SECTION 6.2.
Protection of
Administrative Agent's Security. 

        On a continuing
basis, each Pledgor shall, at its sole cost and expense, (i) promptly following
its becoming aware thereof, notify the Administrative Agent of (A) any
materially adverse determination in any proceeding in the offices maintained
under the Trade
Marks Act (Canada) and the Patent Act 
(Canada), or any equivalent
offices maintained under the laws of any other jurisdiction, with respect to any
Patent, Industrial Design, Trademark or Copyright material to the conduct of
such Pledgor's business or (B) the institution of any proceeding or any
materially adverse determination in any federal, provincial, state or local
court or administrative body regarding such Pledgor's claim of ownership in or
right to use any of the Intellectual Property Collateral material to the conduct
of such Pledgor's business, its right to register such Intellectual Property
Collateral or its right to keep and maintain such registration in full force and
effect, (ii) use reasonable efforts to maintain and protect the Intellectual
Property Collateral material to the conduct of such Pledgor's business (iii) not
permit to lapse or become abandoned any Intellectual Property Collateral
material to the conduct of such Pledgor's business, and not settle or compromise
any pending or future litigation or administrative proceeding with respect to
such Intellectual Property Collateral, in each case except as shall be 

-28-

consistent with commercially reasonable business judgment
(provided that such Pledgor shall have exercised reasonable business judgment
if, among other things, it deems in good faith that such Intellectual Property
Collateral is not material to the conduct of its business), (iv) upon such
Pledgor obtaining knowledge thereof, promptly notify the Administrative Agent of
any event which may be reasonably expected to materially and adversely affect
the value or utility of the Intellectual Property Collateral or any portion
thereof material to the conduct of such Pledgor's business, the ability of such
Pledgor or the Administrative Agent to dispose of such Intellectual Property
Collateral or any portion thereof or the rights and remedies of the
Administrative Agent in relation thereto including, without limitation, a levy
or threat of levy or any legal process against such Intellectual Property
Collateral or any portion thereof, (v) not license the Intellectual Property
Collateral other than licenses entered into by such Pledgor in, or incidental
to, the ordinary course of business, or amend or permit the amendment of any of
the licenses in a manner that materially and adversely affects the right to
receive payments thereunder, or in any manner that would materially impair the
value of any Intellectual Property Collateral material to the conduct of such
Pledgor's business or the Lien on and security interest in any such Intellectual
Property Collateral intended to be granted to the Administrative Agent for the
benefit of the Secured Parties, without the consent of the Administrative Agent
(such consent not to be unreasonably withheld), (vi) until the Administrative
Agent exercises its rights to make collection, use commercially reasonable
efforts to keep adequate records respecting the Intellectual Property Collateral
and (vii) furnish to the Administrative Agent from time to time upon the
Administrative Agent's reasonable request therefor detailed statements and
amended schedules further identifying and describing the material Intellectual
Property Collateral and such other materials evidencing or reports pertaining to
such Intellectual Property Collateral as the Administrative Agent may from time
to time request. Nothing in this Agreement prevents any Pledgor from
discontinuing the use or maintenance of its Intellectual Property Collateral if
such Pledgor determines in good faith that such discontinuance is desirable in
the conduct of its business, to the extent permitted by the Credit Agreement.

        SECTION 6.3.
After-Acquired Property.

        If any Pledgor
shall, at any time before the Obligations have been fulfilled and paid in full
(other than contingent indemnification obligations which, pursuant to the
provisions of the Credit Agreement or the Security Documents, survive the
termination thereof), (i) obtain any rights to any additional Intellectual
Property Collateral or (ii) become entitled to the benefit of any additional
Intellectual Property Collateral or any renewal or extension thereof, including
any reissue, division, continuation, or continuation-in-part of any Intellectual
Property Collateral, or any improvement on any Intellectual Property Collateral,
the provisions hereof shall automatically apply thereto and any such item
enumerated in clause (i) or (ii) of this Section 6.3 with respect to such
Pledgor shall automatically constitute Intellectual Property Collateral if such
would have constituted Intellectual Property Collateral at the time of execution
hereof and be subject to the Lien and security interest created by this
Agreement without further action by any party. Each Pledgor shall, as promptly
as reasonably practicable but in no event later than the next date on which the
Canadian Borrower is required to deliver information to the Administrative Agent
under Section 6.1 of the Credit Agreement, (i) provide to the Administrative
Agent written notice of any of the foregoing and (ii) confirm the attachment of
the Lien and security interest created by this Agreement to any rights described
in clauses (i) and 

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(ii) of the immediately preceding sentence of this Section 6.3
by execution of an instrument in form reasonably acceptable to the
Administrative Agent. 

        SECTION 6.4.
Modifications. 

        Each Pledgor
authorizes the Administrative Agent to modify this Agreement by amending
Schedules 12(a) and 12(b) annexed to the Perfection Certificate solely to
include any Intellectual Property Collateral acquired or arising after the date
hereof of such Pledgor including, without limitation, any of the items listed in
Section 6.3 hereof. 

        SECTION 6.5.
Litigation. 

        Unless there shall
occur and be continuing any Event of Default, each Pledgor shall have the right
to commence and prosecute in its own name, as the party in interest, for its own
benefit and at the sole cost and expense of the Pledgors, such applications for
protection of the Intellectual Property Collateral and suits, proceedings or
other actions to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value or other damage as are necessary to protect the
Intellectual Property Collateral. Upon the occurrence and during the continuance
of any Event of Default, the Administrative Agent shall have the right but shall
in no way be obligated to file applications for protection of the Intellectual
Property Collateral and/or bring suit in the name of any Pledgor, the
Administrative Agent or the other Secured Parties to enforce the Intellectual
Property Collateral material to the conduct of a Pledgor's business and any
license thereunder. In the event of such suit, each Pledgor shall, at the
reasonable request of the Administrative Agent, do any and all lawful acts and
execute any and all documents requested by the Administrative Agent in aid of
such enforcement and the Pledgors shall promptly reimburse and indemnify the
Administrative Agent, as the case may be, for all reasonable costs and
out-of-pocket expenses incurred by the Administrative Agent in the exercise of
its rights under this Section 6.5 in accordance with Section 11.5 of the Credit
Agreement. In the event that the Administrative Agent shall elect not to bring
suit to enforce the Intellectual Property Collateral, each Pledgor agrees, at
the reasonable request of the Administrative Agent, to take all commercially
reasonable actions necessary, whether by suit, proceeding or other action, to
prevent the infringement, counterfeiting, unfair competition, dilution,
diminution in value of or other damage to any of the Intellectual Property
Collateral by others and for that purpose agrees to diligently maintain any
suit, proceeding or other action against any person so infringing necessary to
prevent such infringement. 

ARTICLE VII 

CERTAIN PROVISIONS CONCERNING ACCOUNTS 

        SECTION 7.1.
Maintenance of Records.

       
Each Pledgor shall keep and maintain at its own cost and expense complete
records of each Account, in a manner consistent with standard business practice,
including, without limitation, records of all payments received, all credits
granted thereon, all merchandise 

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returned and all other documentation relating thereto. Each
Pledgor shall, at such Pledgor's sole cost and expense, upon the Administrative
Agent's demand made at any time after the occurrence and during the continuance
of any Event of Default, deliver all tangible evidence of Accounts, including,
without limitation, all documents evidencing Accounts and any books and records
relating thereto to the Administrative Agent or to its representatives (copies
of which evidence and books and records may be retained by such Pledgor). Upon
the occurrence and during the continuance of any Event of Default, the
Administrative Agent may transfer a full and complete copy of any Pledgor's
books, records, credit information, reports, memoranda and all other writings
relating to the Accounts to and for the use by any person that has acquired or
is contemplating acquisition of an interest in the Accounts or the
Administrative Agent's security interest therein without the consent of any
Pledgor. 

        SECTION 7.2.
Legend. 

        Each Pledgor shall
legend, at the request of the Administrative Agent made at any time after the
occurrence of any Event of Default and in form and manner reasonably
satisfactory to the Administrative Agent, the Accounts and the other books,
records and documents of such Pledgor evidencing or pertaining to the Accounts
with an appropriate reference to the fact that the Accounts have been assigned
to the Administrative Agent for the benefit of the Secured Parties and that the
Administrative Agent has a security interest therein. 

        SECTION 7.3.
Modification of Terms,
etc. 

        No Pledgor shall
rescind or cancel any indebtedness evidenced by any Account or modify any term
thereof or make any adjustment with respect thereto except in the ordinary
course of business, or extend or renew any such indebtedness except in the
ordinary course of business or compromise or settle any dispute, claim, suit or
legal proceeding relating thereto or sell any Account or interest therein except
in the ordinary course of business without the prior written consent of the
Administrative Agent (not to be unreasonably withheld). Each Pledgor shall
timely fulfill all obligations on its part to be fulfilled under or in
connection with the Accounts. 

        SECTION 7.4.
Collection. 

        Each Pledgor shall
cause to be collected from the account debtor of each of the Accounts, as and
when due in the ordinary course of business (including, without limitation,
Accounts that are delinquent, such Accounts to be collected in accordance with
generally accepted commercial collection procedures), any and all amounts owing
under or on account of such Account (other than the collection of Accounts which
the Pledgor determines in good faith for valid business reasons should not be
collected), and apply forthwith upon receipt thereof all such amounts as are so
collected to the outstanding balance of such Account, except that any Pledgor
may, with respect to an Account, allow in the ordinary course of business (i) a
refund or credit due as a result of returned or damaged or defective merchandise
and (ii) such extensions of time to pay amounts due in respect of Accounts and
such other modifications of payment terms or settlements in respect of Accounts
as shall be commercially reasonable in the circumstances, all in accordance with
such Pledgor's ordinary course of business. The reasonable costs and
out-of-pocket expenses (including, without limitation, reasonable attorneys'
fees) of collection, in 

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any case, whether incurred by any Pledgor, the Administrative
Agent or any other Secured Party, shall be paid by the Pledgors. 

ARTICLE VIII 

TRANSFERS 

        SECTION 8.1.
Transfers of Pledged
Collateral. 

        No
Pledgor shall sell, convey, assign or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral pledged by it hereunder except as
permitted by the Credit Agreement.

ARTICLE IX 

REMEDIES 

       
SECTION 9.1. 
Remedies. 

       
Upon the occurrence and during the continuance of any Event of Default the
Administrative Agent may from time to time exercise in respect of the Pledged
Collateral, in addition to the other rights and remedies provided for herein or
otherwise available to it: 

          (i)
  Personally, or by
  agents or attorneys, immediately take possession of the Pledged Collateral or
  any part thereof, from any Pledgor or any other person who then has possession
  of any part thereof with or without notice or process of law, and for that
  purpose may, to the extent permitted under applicable law, enter upon any
  Pledgor's premises where any of the Pledged Collateral is located, remove such
  Pledged Collateral, remain present at such premises to receive copies of all
  communications and remittances relating to the Pledged Collateral and use in
  connection with such removal and possession any and all services, supplies,
  aids and other facilities of any Pledgor; 

          (ii)
  Demand, sue for,
  collect or receive any money or property at any time payable or receivable in
  respect of the Pledged Collateral including, without limitation, instructing
  the obligor or obligors on any agreement, instrument or other obligation
  constituting part of the Pledged Collateral to make any payment required by
  the terms of such agreement, instrument or other obligation directly to the
  Administrative Agent, and in connection with any of the foregoing, compromise,
  settle, extend the time for payment and make other modifications with respect
  thereto; provided, however, that in the event that any such payments are made
  directly to any Pledgor, prior to receipt by any such obligor of such
  instruction, such Pledgor shall segregate all amounts received pursuant
  thereto in trust for the benefit of the Administrative Agent and shall
  promptly (but in no event later than two (2) Business Days after receipt
  thereof) pay such amounts to the Administrative Agent; 

-32-

          (iii)
  Sell, assign, grant a
  license to use or otherwise liquidate, or direct any Pledgor to sell, assign,
  grant a license to use or otherwise liquidate, any and all investments made in
  whole or in part with the Pledged Collateral or any part thereof, and take
  possession of the proceeds of any such sale, assignment, license or
  liquidation; 

          (iv)
  Take possession of the
  Pledged Collateral or any part thereof, by directing any Pledgor in writing to
  deliver the same to the Administrative Agent at any place or places so
  designated by the Administrative Agent, in which event such Pledgor shall at
  its own expense: (A) forthwith cause the same to be moved to the place or
  places designated by the Administrative Agent and there delivered to the
  Administrative Agent, (B) store and keep any Pledged Collateral so delivered
  to the Administrative Agent at such place or places pending further action by
  the Administrative Agent and (C) while the Pledged Collateral shall be so
  stored and kept, provide such security and maintenance services as shall be
  necessary to protect the same and to preserve and maintain them in good
  condition. Each Pledgor's obligation to deliver the Pledged Collateral as
  contemplated in this Section 9.1(iv) is of the essence hereof. Upon
  application to a court of equity having jurisdiction, the Administrative Agent
  shall be entitled to seek a decree requiring specific performance by any
  Pledgor of such obligation; 

          (v)
  Withdraw all moneys,
  instruments, securities and other property in any bank, financial securities,
  deposit or other account of any Pledgor, including, without limitation, in the
  Collateral Account, constituting Pledged Collateral for application to the
  Obligations as provided in Article X hereof; 

          (vi)
  Retain and apply the
  Distributions to the Obligations as provided in Article X hereof; 

          (vii)
  Exercise any and all
  rights as beneficial and legal owner of the Pledged Collateral, including,
  without limitation, perfecting assignment of and exercising any and all
  voting, consensual and other rights and powers with respect to any Pledged
  Collateral; and 

          (viii)
  Exercise all the
  rights and remedies of a secured party under the PPSA or otherwise arising at
  law or in equity, and the Administrative Agent may also in its sole
  discretion, without notice except as specified in Section 9.2 hereof, sell,
  assign or grant a license to use the Pledged Collateral or any part thereof in
  one or more parcels at public or private sale, at any exchange, broker's board
  or at any of the Administrative Agent's offices or elsewhere, for cash, on
  credit or for future delivery, and at such price or prices and upon such other
  terms as are commercially reasonable. The Administrative Agent or any other
  Secured Party or any of their respective Affiliates may be the purchaser,
  licensee, assignee or recipient of any or all of the Pledged Collateral at any
  such sale and shall be entitled, for the purpose of bidding and making
  settlement or payment of the purchase price for all or any portion of the
  Pledged Collateral sold, assigned or licensed at such sale, to use and apply
  any of the Obligations owed to such person as a credit on account of the
  purchase price of any Pledged Collateral payable by such person at such sale.
  Each purchaser, assignee, licensee or recipient at any such sale shall acquire
  the property sold, assigned or licensed absolutely free from any claim or
  right on the part of any Pledgor, and each Pledgor hereby waives, to the
  fullest extent permitted by law, all rights of redemption, stay and/or
  appraisal which it now has or may at any time in the future have under any
  rule of law or statute now existing or hereafter enacted. The Administrative
  Agent shall not 

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be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Each Pledgor hereby waives, to the
fullest extent permitted by law, any claims against the Administrative Agent
arising by reason of the fact that the price at which any Pledged Collateral may
have been sold, assigned or licensed at such a private sale was less than the
price which might have been obtained at a public sale, even if the
Administrative Agent accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree. 

        SECTION 9.2.
Notice of Sale. 

        Each Pledgor
acknowledges and agrees that, upon the occurrence and during the continuance of
any Event of Default, to the extent notice of sale or other disposition of
Pledged Collateral shall be required by law, fifteen (15) days' prior notice to
such Pledgor of the time and place of any public sale or of the time after which
any private sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters. 

        SECTION 9.3.
Waiver of Notice and
Claims. 

        Each Pledgor hereby
waives, upon the occurrence and during the continuance of any Event of Default,
to the fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Administrative Agent's taking possession or the
Administrative Agent's disposition of any of the Pledged Collateral, including,
without limitation, any and all prior notice and hearing for any prejudgment
remedy or remedies and any such right which such Pledgor would otherwise have
under law, and each Pledgor hereby further waives, to the fullest extent
permitted by applicable law: (i) all damages occasioned by such taking of
possession, except to the extent caused by the gross negligence, bad faith or
willful misconduct of the Administrative Agent, (ii) all other requirements as
to the time, place and terms of sale or other requirements with respect to the
enforcement of the Administrative Agent's rights hereunder and (iii) all rights
of redemption, appraisal, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law. The Administrative Agent shall not
be liable for any incorrect or improper payment made pursuant to this Article IX
in the absence of gross negligence, bad faith or willful misconduct. Any sale
of, or the grant of options to purchase, or any other realization upon, any
Pledged Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the applicable Pledgor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Pledgor and against any and all persons claiming or attempting to claim the
Pledged Collateral so sold, optioned or realized upon, or any part thereof,
from, through or under such Pledgor. 

        SECTION 9.4.
Certain Sales of Pledged
Collateral. 

          (i)
  Each Pledgor
  recognizes that, by reason of certain prohibitions contained in law, rules,
  regulations or orders of any Governmental Authority, the Administrative Agent
  may be compelled, with respect to any sale of all or any part of the Pledged
  Collateral under this Article IX, to limit purchasers to those who meet the
  requirements of such Governmental Authority. Each Pledgor acknowledges that
  any such sales may be at prices and on terms less 

-34-

  favorable to the Administrative Agent than those obtainable
  through a public sale without such restrictions, and, notwithstanding such
  circumstances, agrees that any such restricted sale shall be deemed to have
  been made in a commercially reasonable manner and that, except as may be
  required by applicable law, the Administrative Agent shall have no obligation
  to engage in public sales. 

          (ii)
  Each Pledgor
  recognizes that, by reason of certain prohibitions contained in the applicable
  law, the Administrative Agent may be compelled, with respect to any sale of
  all or any part of the Securities Collateral and Investment Property under
  this Article IX, to limit purchasers to persons who will agree, among other
  things, to acquire such Securities Collateral or Investment Property for their
  own account, for investment and not with a view to the distribution or resale
  thereof. Each Pledgor acknowledges that any such private sales may be at
  prices and on terms less favorable to the Administrative Agent than those
  obtainable through a public sale without such restrictions (including, without
  limitation, a public offering made pursuant to a prospectus filed under
  applicable securities law), and, notwithstanding such circumstances, agrees
  that any such private sale shall be deemed to have been made in a commercially
  reasonable manner and that the Administrative Agent shall have no obligation
  to engage in public sales and no obligation to delay the sale of any
  Securities Collateral or Investment Property for the period of time necessary
  to permit the issuer thereof to register it for a form of public sale
  requiring registration under the Securities Act or under applicable state
  securities laws, even if such issuer would agree to do so. 

          (iii)
  If the Administrative
  Agent determines to exercise its right to sell any or all of the Securities
  Collateral or Investment Property under this Article IX, upon written request,
  the applicable Pledgor shall from time to time furnish to the Administrative
  Agent all such information as the Administrative Agent may request in order to
  determine the number of securities included in the Securities Collateral or
  Investment Property which may be sold by the Administrative Agent as exempt
  transactions under applicable law, as the same are from time to time in
  effect. 

          (iv)
  Each Pledgor further
  agrees that a breach of any of the covenants contained in this Section 9.4
  could cause irreparable injury to the Administrative Agent and other Secured
  Parties, that the Administrative Agent and the other Secured Parties have no
  adequate remedy at law in respect of such breach and, as a consequence, that
  the Administrative Agent may seek specific enforcement of each and every
  covenant contained in this Section 9.4. 

        SECTION 9.5.
No Waiver; Cumulative
Remedies. 

          (i)
  No failure on the part
  of the Administrative Agent to exercise, no course of dealing with respect to,
  and no delay on the part of the Administrative Agent in exercising, any right,
  power or remedy hereunder shall operate as a waiver thereof; nor shall any
  single or partial exercise of any such right, power or remedy hereunder
  preclude any other or further exercise thereof or the exercise of any other
  right, power or remedy; nor shall the Administrative Agent be required to look
  first to, enforce or exhaust any other security, collateral or guaranties. The
  remedies herein provided are cumulative and are not exclusive of any remedies
  provided by law. 

- 35 - 

           
(ii) 
In the event that the Administrative
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Administrative Agent, then and in every
such case, the Pledgors, the Administrative Agent and each other Secured Party
shall be restored to their respective former positions and rights hereunder with
respect to the Pledged Collateral (except for determinations made in such
proceedings), and all rights, remedies and powers of the Administrative Agent
and the other Secured Parties shall continue as if no such proceeding had been
instituted (except for determinations made in such proceedings). 

           
SECTION 9.6. 
Certain Additional Actions
Regarding Intellectual Property. 

           
Upon the occurrence and during the continuance of an Event of Default: 

           
(a) 
upon the written demand of the
Administrative Agent, each Pledgor shall execute and deliver to the
Administrative Agent an assignment or assignments of the registered Patents,
Industrial Designs, Trademarks and/or Copyrights and such other documents as are
necessary or appropriate to carry out the intent and purposes hereof; 

           
(b) 
each Pledgor will, at the request of
the Administrative Agent, use its commercially reasonable efforts to obtain all
requisite consents or approvals by the licensor of each License owned by a third
party to effect the assignment of all such Pledgor's right, title and interest
thereunder to the Administrative Agent; and 

           
(c) 
within five (5) Business Days of
written notice thereafter from the Administrative Agent, each Pledgor shall make
available to the Administrative Agent, to the extent within such Pledgor's power
and authority, such personnel in such Pledgor's employ on the date of the Event
of Default as the Administrative Agent may reasonably designate to permit such
Pledgor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold by such Pledgor under the registered Patents,
Trademarks and/or Copyrights owned by such Pledgor or licensed and validly
assigned to the Administrative Agent, and such persons shall be available to
perform their prior functions on the Administrative Agent's behalf. 

ARTICLE X 

COLLATERAL ACCOUNT/PROCEEDS OF CASUALTY EVENTS
AND COLLATERAL 

DISPOSITIONS/APPLICATION OF PROCEEDS 

           
SECTION 10.1. 
Collateral Account 

           
The Canadian Borrower shall establish and maintain a U.S. dollar, Canadian
dollar and Euro interest-bearing cash collateral account (collectively, the
"Collateral Account") at the Relevant Payment Branch of the Canadian Borrower.
Amounts on deposit in the Collateral Accounts from time to time shall only be
withdrawn by the Canadian Borrower or 

- 36 - 

           
released or applied by the Administrative Agent as provided in the Credit
Agreement or herein, as applicable. 

           
SECTION 10.2. 
Proceeds of Casualty Events and
Collateral Dispositions. 

           
The Pledgors shall take all actions required by the Credit Agreement with
respect to any Net Available Proceeds of any Casualty Event or from the sale or
disposition of any Pledged Collateral. 

           
SECTION 10.3. 
Application of Proceeds. 

           
The proceeds received by the Administrative Agent in respect of any sale of,
collection from or other realization upon all or any part of the Pledged
Collateral pursuant to the exercise by the Administrative Agent of its remedies
shall be applied, together with any other sums then held by the Administrative
Agent pursuant to this Agreement, in accordance with the Credit Agreement.

ARTICLE XI 

MISCELLANEOUS 

           
SECTION 11.1. 
Concerning Administrative Agent.

           
(i) 
The Administrative Agent has been
appointed as administrative agent pursuant to the Credit Agreement. The actions
of the Administrative Agent hereunder are subject to the provisions of the
Credit Agreement. The Administrative Agent shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of the Pledged Collateral), in
accordance with this Agreement and the Credit Agreement. The Administrative
Agent may employ agents and attorneys-in-fact in connection herewith and shall
not be liable for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent may
resign and a successor Administrative Agent may be appointed in the manner
provided in the Credit Agreement. Upon the acceptance of any appointment as the
Administrative Agent by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent under
this Agreement, and the retiring Administrative Agent shall thereupon be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation, the provisions hereof shall inure
to its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Administrative Agent. 

           
(ii) 
The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equivalent to that which the Administrative Agent, in
its individual capacity, accords its own property consisting of similar
instruments or interests, 

- 37 - 

           
it being understood that neither the Administrative Agent nor any of the other
Secured Parties shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Securities Collateral, whether or not the Administrative
Agent or any other Secured Party has or is deemed to have knowledge of such
matters or (ii) taking any necessary steps to preserve rights against any person
with respect to any Pledged Collateral. 

           
(iii) 
The Administrative Agent shall be
entitled to rely upon any written notice, statement, certificate, order or other
document or any telephone message believed by it to be genuine and correct and
to have been signed, sent or made by the proper person, and, with respect to all
matters pertaining to this Agreement and its duties hereunder, upon advice of
counsel selected by it. 

           
(iv) 
If any item of Pledged Collateral
also constitutes collateral granted to the Administrative Agent under any other
deed of trust, mortgage, security agreement, pledge or instrument of any type,
in the event of any conflict between the provisions hereof and the provisions of
such other deed of trust, mortgage, security agreement, pledge or instrument of
any type in respect of such collateral, the Administrative Agent, in its sole
discretion, shall select which provision or provisions shall control. 

           
(v) 
The Administrative Agent may grant
extensions of time for the execution of any agreement or other document
hereunder or the creation or perfection of security interests with respect to
Collateral, if it determines that execution, creation or perfection cannot be
accomplished without undue effort or expense by the time or times at which it
would otherwise be required by this Agreement. 

               
(vi) 
Notwithstanding anything contained
in this Agreement or any other Credit Document to the contrary, the
Administrative Agent hereby acknowledges and agrees that none of the following
actions shall be taken without the prior written consent of the Lenders: (A)
exercise any rights with respect to any pledge agreement or any stock pledged
thereunder; or (B) purchase or otherwise acquire any direct ownership interest
in any real property owned by any Obligor or any subsidiary thereof, whether
through purchase upon foreclosure of any lien granted to the Administrative
Agent for the benefit of the Secured Parties under this Agreement or any other
Security Document or any Mortgage or otherwise. The foregoing shall in no way
limit the ability of the Administrative Agent to perform its duties thereunder.

           
SECTION 11.2. 
Administrative Agent May Perform;
Administrative Agent Appointed Attorney-in-Fact. 

           
If any Pledgor shall fail to perform any covenants contained in this Agreement
(including, without limitation, such Pledgor's covenants to (i) pay the premiums
in respect of all required insurance policies hereunder, (ii) pay Claims, (iii)
make repairs, (iv) discharge Liens or (v) pay or perform any obligations of such
Pledgor under any Pledged Collateral) or if any warranty on the part of any
Pledgor contained herein shall be breached, the Administrative Agent may (but
shall not be obligated to) do the same or cause it to be done or remedy any such
breach, and may expend funds for such purpose; provided, however, that the
Administrative Agent shall in no event be bound to inquire into the validity of
any tax, lien, imposition or other obligation 

- 38 - 

which such Pledgor fails to pay or perform as and when
required hereby and which such Pledgor does not contest in accordance in
accordance with the provision of Section 4.12 hereof. Any and all amounts so
expended by the Administrative Agent shall be paid by the Pledgors in accordance
with the provisions of Section 11.5 of the Credit Agreement. Neither the
provisions of this Section 11.2 nor any action taken by the Administrative Agent
pursuant to the provisions of this Section 11.2 shall prevent any such failure
to observe any covenant contained in this Agreement nor any breach of warranty
from constituting an Event of Default. Each Pledgor hereby appoints the
Administrative Agent its attorney-in-fact upon the occurrence and during the
continuance of an Event of Default, with full authority in the place and stead
of such Pledgor and in the name of such Pledgor, or otherwise, from time to time
in the Administrative Agent's discretion to take any action and to execute any
instrument consistent with the terms of the Credit Agreement, this Agreement and
the other Security Documents which the Administrative Agent may deem necessary
to accomplish the purposes hereof. The foregoing grant of authority is a power
of attorney coupled with an interest and such appointment shall be irrevocable
for the term hereof. Each Pledgor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof. 

           
SECTION 11.3. 
Continuing Security Interest;
Assignment; Acknowledgement. 

           
(a) 
This Agreement shall create a
continuing security interest in the Pledged Collateral and shall (i) be binding
upon the Pledgors, their respective successors and assigns and (ii) inure,
together with the rights and remedies of the Administrative Agent hereunder, to
the benefit of the Administrative Agent and the other Secured Parties and each
of their respective successors, transferees and assigns. No other persons
(including, without limitation, any other creditor of any Pledgor) shall have
any interest herein or any right or benefit with respect hereto. Without
limiting the generality of the foregoing clause (ii), any Secured Party may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other person, and such other person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Credit Agreement
and any Hedging Agreement. Each Pledgor acknowledges receipt of (i) a true copy
of this Agreement, and (ii) a true copy of a financing statement registered
under the PPSA evidencing the security interest created hereby. 

           
(b) 
Each Pledgor hereby acknowledges and
agrees to the pledge of shares, quotas, units or other equity interests, as
applicable, by its shareholder, quotaholder, unitholder, partner or other equity
holder, as applicable, contained in this Agreement. Each Pledgor hereby affirms
its prior grant of security interests under this Agreement as of December 18,
2003 (or such later date on which it became party to this Agreement) in favour
of the Administrative Agent and the other Secured Parties. Without limiting the
foregoing, it is expressly understood and agreed that all security interests,
assignments and liens granted by the Pledgors in favour of the Administrative
Agent for the benefit of itself and the other Secured Parties in this Agreement
in connection with the Original Credit Agreement are not terminated hereby, but
continue and remain in full force and effect, subject to the terms and
provisions hereof. With respect to the pledge of the quotas of BRP Hungary held
by the Canadian Borrower, 4279174 Canada Inc., and any other Pledgor from time
to time, each of the Canadian Borrower, 4279174 Canada Inc. 

- 39 - 

and each such other Pledgor agrees that it shall provide
notice to BRP Hungary of the pledge pursuant to this agreement and shall, or
shall cause BRP Hungary to (a) make a notation on the list of quotaholders
referring to such pledge, (b) submit the notated list of quotaholders to the
Court of Registration in Hungary, and (c) retain or deliver to BRP Hungary, as
applicable, a copy of the submitted list of quotaholders. 

           
SECTION 11.4. 
Termination; Release. 

           
(a) 
This Agreement and the Liens and
security interests granted hereby shall terminate when all the Obligations
(other than wholly contingent indemnification obligations) then due and owing
have been indefeasibly paid in full and the Lenders have no further commitment
to lend under the Credit Agreement. 

           
(b) 
A Pledgor shall automatically be
released from its obligations hereunder and the Liens on and security interests
granted in the Pledged Collateral of such Pledgor under this Agreement shall be
automatically released upon the consummation of any transaction permitted by the
Credit Agreement as a result of which such Pledgor ceases to be an Obligor.

           
(c) 
Upon any sale or other transfer by
any Pledgor of any Pledged Collateral that is permitted under the Credit
Agreement to any person that is not a Pledgor, or upon the effectiveness of any
written consent to the release of the Liens on and security interests granted in
the Pledged Collateral of such Pledgor under this Agreement in any Pledged
Collateral pursuant to Section 11.6 of the Credit Agreement, the Liens and
security interests granted in such Pledged Collateral under this Agreement shall
be automatically released. 

           
(d) 
In connection with any termination
or release pursuant to paragraphs (a) through (c) above, the Administrative
Agent shall, at the sole cost and expense of the Pledgors, execute and deliver
to any Pledgor all documents that such Pledgor shall reasonably request to
evidence such termination or release, and assign, transfer and deliver to such
Pledgor, against receipt and without recourse to or warranty by the
Administrative Agent except as to the fact that the Administrative Agent has not
encumbered the released assets, such of the Pledged Collateral to be released
(in the case of a release) as may be in possession of (or, in the case of
uncertificated securities, registered in the name of) the Administrative Agent
and as shall not have been sold or otherwise applied pursuant to the terms
hereof. 

           
SECTION 11.5. 
Modification in Writing. 

           
No amendment, modification, supplement, termination or waiver of or to any
provision hereof, nor consent to any departure by any Pledgor therefrom, shall
be effective unless the same shall be made in accordance with the terms of the
Credit Agreement. Any amendment, modification or supplement of or to any
provision hereof, any waiver of any provision hereof and any consent to any
departure by any Pledgor from the terms of any provision hereof shall be
effective only in the specific instance and for the specific purpose for which
made or given. Except where notice is specifically required by this Agreement or
any 

- 40 - 

other document evidencing the Obligations, no notice to or
demand on any Pledgor in any case shall entitle any Pledgor to any other or
further notice or demand in similar or other circumstances. 

           
SECTION 11.6. 
Notices. 

           
Unless otherwise provided herein or in the Credit Agreement, any notice or other
communication herein required or permitted to be given shall be given in the
manner and become effective as set forth in the Credit Agreement, as to any
Pledgor, addressed to it at the address of such Pledgor set forth in the Credit
Agreement and as to the Administrative Agent, addressed to it at the address set
forth in the Credit Agreement, or in each case at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 11.6. 

           
SECTION 11.7. 
GOVERNING LAW. 

           
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF
CANADA APPLICABLE THEREIN. 

           
SECTION 11.8. 
CONSENT TO JURISDICTION AND
SERVICE OF PROCESS; WAIVER OF JURY TRIAL. 

           
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE PROVINCE OF ONTARIO AND ALL COURTS
COMPETENT TO HEAR APPEALS THEREFROM AND BY EXECUTION AND DELIVERY HEREOF, EACH
PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. EACH PLEDGOR AGREES THAT SERVICE OF PROCESS IN ANY
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE
CANADIAN BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT AGREEMENT OR AT SUCH
OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO. IF ANY AGENT APPOINTED BY ANY PLEDGOR REFUSES TO ACCEPT
SERVICE, SUCH PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST ANY PLEDGOR IN THE COURTS OF
ANY OTHER JURISDICTION. 

           
THE PLEDGORS HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, 

- 41 - 

           
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. 

           
SECTION 11.9. 
Severability of Provisions.

           
Any provision hereof which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. 

           
SECTION 11.10. 
Execution in Counterparts. 

           
This Agreement and any amendments, waivers, consents or supplements hereto may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original, but all such counterparts together shall constitute
one and the same agreement. 

           
SECTION 11.11. 
Business Days. 

           
In the event any time period or any date provided in this Agreement ends or
falls on a day other than a Business Day, then such time period shall be deemed
to end and such date shall be deemed to fall on the next succeeding Business
Day, and performance herein may be made on such Business Day, with the same
force and effect as if made on such other day. 

           
SECTION 11.12. 
No Credit for Payment of Taxes or
Imposition. 

           
No Pledgor shall be entitled to any credit against the principal, premium, if
any, or interest payable under the Credit Agreement, and such Pledgor shall not
be entitled to any credit against any other sums which may become payable under
the terms thereof or hereof, by reason of the payment of any Taxes on the
Pledged Collateral or any part thereof. 

           
SECTION 11.13. 
No Claims Against Administrative
Agent. 

           
Nothing contained in this Agreement shall constitute any consent or request by
the Administrative Agent, express or implied, for the performance of any labor
or services or the furnishing of any materials or other property in respect of
the Pledged Collateral or any part thereof, nor as giving any Pledgor any right,
power or authority to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Administrative Agent in respect
thereof or any claim that any Lien based on the performance of such labor or
services or the furnishing of any such materials or other property is prior to
the Lien hereof. 

           
SECTION 11.14. 
No Release. 

           
Nothing set forth in this Agreement shall relieve any Pledgor from the
performance of any term, covenant, condition or agreement on such Pledgor's part
to be performed or observed under or in respect of any of the Pledged Collateral
or from any liability to any person under or in respect of any of the Pledged
Collateral or shall impose any obligation 

- 42 - 

on the Administrative Agent or any other Secured Party to
perform or observe any such term, covenant, condition or agreement on such
Pledgor's part to be so performed or observed or shall impose any liability on
the Administrative Agent or any other Secured Party for any act or omission on
the part of such Pledgor relating thereto or for any breach of any
representation or warranty on the part of such Pledgor contained in this
Agreement, the Credit Agreement or the other Credit Documents, or under or in
respect of the Pledged Collateral or made in connection herewith or therewith.
The obligations of each Pledgor contained in this Section 11.14 shall survive
the termination hereof and the discharge of such Pledgor's other obligations
under this Agreement, the Credit Agreement and the other Credit Documents.

           
SECTION 11.15. 
Obligations Absolute. 

           
All obligations of each Pledgor hereunder shall be absolute and unconditional
irrespective of: 

           
(i) 
any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or the like
of any Pledgor; 

           
(ii) 
any lack of validity or
enforceability of the Credit Agreement, any Hedging Agreement or any other
Credit Document, or any other agreement or instrument relating thereto; 

           
(iii) 
any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations, or
any other amendment or waiver of or any consent to any departure from the Credit
Agreement, any Hedging Agreement or any other Credit Document or any other
agreement or instrument relating thereto; 

           
(iv) 
any pledge, exchange, release or
non-perfection of any other collateral, or any release or amendment or waiver of
or consent to any departure from any guarantee, for all or any of the
Obligations; 

           
(v) 
any exercise, non-exercise or waiver
of any right, remedy, power or privilege under or in respect hereof, the Credit
Agreement, any Hedging Agreement or any other Credit Document except as
specifically set forth in a waiver granted pursuant to the provisions of Section
11.5 hereof; or 

(vi)
any other circumstances which
might otherwise constitute a defense available to, or a discharge of, any
Pledgor. 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK.] 

 

IN WITNESS WHEREOF, the Pledgors and the Administrative Agent have caused
this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written. 

  	 
	 
	BOMBARDIER RECREATIONAL
	PRODUCTS INC., as Pledgor
	 
	By: _________________
	Name:
	Title:
	 
	 
	J.A. BOMBARDIER (J.A.B.)
      INC., as
	Pledgor
	 
	By: ________________
	Name:
	Title:
	 
	 
	4186524 CANADA INC., as
      Pledgor
	 
	By: _________________
	Name:
	Title:
	 
	 
	4279174 CANADA INC., as
      Pledgor
	 
	By: _________________
	Name:
	Title:

Signature Page to Amended and Restated Canadian Security
Agreement 

  	BRP NOVA SCOTIA ULC, as
      Pledgor
	 
	By: __________________
	Name:
	Title:

Amended and Restated Canadian Security Agreement

 

  	 
	 
	BANK OF MONTREAL
	as Administrative Agent
	 
	By: _________________
	Name:
	Title:
	 

S- 1 

 

Acknowledgement to this Agreement: 

Without limiting the generality of any other
provision of this Agreement, and, subject to applicable law, each of the
undersigned hereby acknowledges and agrees to the pledge of shares, quotas or
units, as applicable, by its shareholder, quotaholder or partner, as applicable,
contained in this Agreement. Subject to applicable law, each of the undersigned
hereby confirms and, to the extent necessary agrees that the sureties, documents
and agreements to which the undersigned is a party listed in the attached
Schedule A are and will remain in full force and effect, unamended and continue
to secure the Obligations under the Credit Agreement, and each undertakes to
perform, to the extent necessary, any and all formalities necessary or useful in
relation thereto. 

[signature blocks to Acknowledgement to this Agreement on next
page]

 

          
        
      
    
  

Acknowledged and agreed to the above: 

	
    BRP JAPAN LTD.	 	 
	 	 	 	 
	By:	 ______________	 	 
	 	Name:	 	 
	 	Title:	 	 
	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 
	
    BRP (BARBADOS) INC.	 	 
	 	 	 	 
	 	 	 	 
	By:	 ________________	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 
	 	 	 	 
	BRP	
    HOLDINGS (HUNGARY) ASSET
	
    MANAGEMENT LIMITED	 LIABILITY
	
    COMPANY	 	 
	 	 	 	 
	By:	 _________________	 	 
	 	Name:	 	 
	 	Title:	 	 
	By:	 _________________	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

Signature page to Amended and Restated Canadian Security
Agreement - Acknowledgement 

	 
	 
	BRP (LUXEMBOURG) 1 S.à.r.l.
	 
	 
	By:
	Name:
	Title:
	 
	BRP (LUXEMBOURG) 2 S.à.r.l.
	 
	 
	By:
	Name:
	Title:
	 
	BRP (LUXEMBOURG) 3 S.à.r.l.
	 
	 
	By:
	Name:
	Title:
	 
	BRP (LUXEMBOURG) 4 S.à.r.l.
	 
	 
	By:
	Name:
	Title:
	 
	BRP (LUXEMBOURG) 5 S.à.r.l.
	 
	 
	By:
	Name:
	Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature page to Amended and Restated Canadian Security
Agreement - Acknowledgement 

SCHEDULE A 

DOCUMENTS 

	Agreement on Pledge of Intercompany Receivables, dated as
  of December 18, 2003, between BRP (Luxembourg) 5 S.à r.l. and Bank of
  Montreal, as Administrative Agent. 

 
	
  Pledge Agreement, dated as of December 18,
  2003, between Bombardier Recreational Products Inc., Bank of Montreal, as
  Administrative Agent, and BRP (Luxembourg) 1 S.à r.l. 

 

	Pledge Agreement, dated as of December 18, 2003, between
  BRP (Luxembourg) 1 S.à r.l., Bank of Montreal, as Administrative Agent, and
  BRP (Luxembourg) 2 S.à r.l. 

 
	Pledge Agreement, dated as of December 18, 2003, between
  BRP (Luxembourg) 2 S.à r.l., Bank of Montreal, as Administrative Agent, and
  BRP (Luxembourg) 3 S.à r.l. 

 
	Pledge Agreement, dated as of December 18, 2003, between
  BRP (Luxembourg) 3 S.à r.l., Bank of Montreal, as Administrative Agent, and
  BRP (Luxembourg) 4 S.à r.l. 

 
	Pledge Agreement, dated as of December 18, 2003, between
  BRP (Luxembourg) 4 S.à r.l., Bank of Montreal, as Administrative Agent, and
  BRP (Luxembourg) 5 S.à r.l. 

 
	Pledge Agreement, dated as of December 18, 2003, between
  BRP (Barbados) Inc., Bank of Montreal, as Administrative Agent, and BRP
  (Luxembourg) 5 S.à r.l. 

 
	Pledge Agreement, dated as of December 18, 2003, between
  BRP (Barbados) Inc. and Bank of Montreal, as Administrative Agent. 

 
	Belgian Share Pledge Agreement, dated as of December 18,
  2003, between BRP (Luxembourg) 5 S.à r.l., Bank of Montreal, as Administrative
  Agent, and Bombardier Recreational Products Europe NV. 

 
	Austrian Share Pledge Agreement, dated as of December 18,
  2003, by and between BRP (Luxembourg) 5 S.à r.l. and Bank of Montreal, as
  Administrative Agent. 

 
	Agreement on Pledge of Shares, dated as of December 18,
  2003, between BRP (Luxembourg) 5 S.à r.l. and Bank of Montreal, as
  Administrative Agent. 

 
	Share Charge Agreement, dated as of March 12, 2004, between
  Bombardier Recreational Products Japan Co. Ltd. and Bank of Montreal as
  Administrative Agent. 

 
	Share Pledge Agreement, dated as of February 16, 2004,
  between Bombardier Recreational Products Inc. and Bank of Montreal, as
  Administrative Agent. 

SCHEDULE 3.4 

Locations for Landlord Lien Waivers/Bailee
Letters 

	615 Georges Cros, Granby, Québec, Canada J2J 1B4 

 
	1061 Parent Street, St. Bruno, Québec, Canada J3V 6P1 

 
	6815A 40th Street Southeast, Calgary, Alberta, Canada T2C
  2W7 

EXHIBIT 1 

[Form of] 

ISSUER'S ACKNOWLEDGMENT 

The undersigned hereby (i) acknowledges receipt of a copy of
that certain security agreement (as amended, amended and restated, supplemented
or otherwise modified from time to time, the "Security Agreement;" capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Security Agreement), dated as of December 18, 2003, as amended
and restated as of February 9, 2005, made by Bombardier Recreational Products
Inc., a corporation existing under the Canada Business Corporations Act
(the "Canadian Borrower"), the Guarantors party thereto and Bank of Montreal, as
Administrative Agent (in such capacity and together with any successors in such
capacity, the "Administrative Agent"), (ii) agrees promptly to note on its books
the security interests granted to the Administrative Agent and confirmed under
the Security Agreement, (iii) agrees that in accordance with and subject to the
terms of the Security Agreement it will comply with instructions of the
Administrative Agent with respect to the applicable Securities Collateral
without further consent by the applicable Pledgor, (iv) agrees to notify the
Administrative Agent upon obtaining knowledge of any interest in favor of any
person in the applicable Securities Collateral that is adverse to the interest
of the Administrative Agent therein and (v) waives any right or requirement at
any time hereafter to receive a copy of the Security Agreement in connection
with the registration of any Securities Collateral thereunder in the name of the
Administrative Agent or its nominee or the exercise of voting rights by the
Administrative Agent or its nominee. 

	By:	__________________________
	 	Name:
	 	Title:

 

 

EXHIBIT 2 

[Form of] 

SECURITIES PLEDGE AMENDMENT 

This Securities Pledge Amendment, dated as of [ ], is
delivered pursuant to Section 5.1 of that certain security agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Security Agreement;" capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Security
Agreement), dated as of December 18, 2003, as amended and restated as of
February 9, 2005, made by Bombardier Recreational Products Inc., a corporation
existing under the Canada Business Corporations Act (the "Canadian
Borrower"), the Guarantors party thereto and Bank of Montreal, as Administrative
Agent (in such capacity and together with any successors in such capacity, the
"Administrative Agent"). The undersigned hereby agrees that this Pledge
Amendment may be attached to the Security Agreement and that the Pledged
Securities and/or Intercompany Notes listed on this Pledge Amendment shall be
deemed to be and shall become part of the Pledged Collateral and shall secure
all Obligations. 

PLEDGED SECURITIES 

	 	CLASS	 	 	NUMBER OF	PERCENTAGE OF
	 	OF STOCK	 	 	SHARES	ALL ISSUED CAPITAL
	 	OR	PAR	CERTIFICATE	OR	OR OTHER EQUITY
	ISSUER	INTERESTS	VALUE	NO(S).	INTERESTS	INTERESTS OF ISSUER
	 	 	 	 	 	 

-2- 

INTERCOMPANY NOTES 

	 	PRINCIPAL	DATE OF	INTEREST	MATURITY
	ISSUER	AMOUNT	ISSUANCE	RATE	DATE

 

	[	 	 	],
	 	 	as Pledgor	 
	 	 	 	 
	By:	 	 	 
	 	Name:	 	 
	 	Title:	 	 

 

 

 

AGREED TO AND ACCEPTED: 

BANK OF MONTREAL, as Administrative Agent 

By: _______________________

        Name: 

        Title: 

By:  _____________________

         Name: 

         Title: 

EXHIBIT 3 

[Form of] 

JOINDER AGREEMENT 

[Name of New Pledgor] 

[Address of New Pledgor] 

[Date] 

____________________

Ladies and Gentlemen: 

Reference is made to that certain security agreement (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Security Agreement;" capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Security
Agreement), dated as of December 18, 2003, as amended and restated as of
February 9, 2005, made by Bombardier Recreational Products Inc., a corporation
existing under the Canada Business Corporations Act (the "Canadian
Borrower"), the Guarantors party thereto and Bank of Montreal, as Administrative
Agent (in such capacity and together with any successors in such capacity, the
"Administrative Agent"). 

This letter supplements the Security Agreement and is
delivered by the undersigned, [     ] (the "New Pledgor"),
pursuant to Section 3.5 of the Security Agreement. The New Pledgor hereby agrees
to be bound as a Guarantor and as a Pledgor by all of the terms, covenants and
conditions set forth in the Security Agreement to the same extent that it would
have been bound if it had been a signatory to the Security Agreement on the
execution date of the Security Agreement. The New Pledgor also hereby agrees to
be bound as a party by all of the terms, covenants and conditions applicable to
it set forth in Articles 6, 7 and 9 of the Credit Agreement to the same extent
that it would have been bound if it had been a signatory to the Credit Agreement
(as to Articles 6, 7 and 9 only) on the execution date of the Credit Agreement.
Without limiting the generality of the foregoing, the New Pledgor hereby grants
and pledges to the Administrative Agent, as collateral security for the full,
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, a Lien on and
security interest in, all of its right, title and interest in, to and under the
Pledged Collateral and expressly assumes all obligations and liabilities of a
Guarantor and Pledgor under the Credit Agreement and the Security Agreement. The
New Pledgor hereby makes each of the representations and 

-2- 

warranties and agrees to each of the covenants applicable to
the Pledgors contained in the Security Agreement and Article 5 of the Credit
Agreement. 

Annexed hereto are supplements to each of the schedules to the
Security Agreement and the Credit Agreement, as applicable, with respect to the
New Pledgor. Such supplements shall be deemed to be part of the Security
Agreement or the Credit Agreement, as applicable. 

This agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same agreement. 

THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE PROVINCE OF ONTARIO AND THE
FEDERAL LAWS OF CANADA APPLICABLE THEREIN. 

-3- 

IN WITNESS WHEREOF, the New Pledgor has caused this letter
agreement to be executed and delivered by its duly authorized officer as of the
date first above written. 

	 	[NEW PLEDGOR]
	 	 
	 	By: _____________________
	 	 
	 	       Name:
	 	       
    Title:
	AGREED TO AND ACCEPTED:	 
	BANK OF MONTREAL,	 
	as Administrative Agent	 
	 	 
	By: ______________________	 
	       
    Name:	 
	       
    Title:	 
	 	 
	 	 
	By: ______________________	 
	       Name:	 
	        
    Title:	 

[Schedules to be attached] 

EXHIBIT 4 

[Form of] 

CONTROL AGREEMENT CONCERNING SECURITIES
ACCOUNTS 

                               
This Control Agreement Concerning Securities Accounts (this "Control
Agreement"), dated as of [ ], by and among Bombardier Recreational Products Inc.
(the "Canadian Borrower"), Bank of Montreal (the "Administrative Agent") and [ ]
(the "Securities Intermediary"), is delivered pursuant to Section 3.4(c) of that
certain security agreement (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), dated as of
December 18, 2003, as amended and restated as of February 9, 2005, made by and
among the Borrower, each of the Guarantors listed on the signature pages thereto
(together with the Borrower, the "Pledgors"), in favor of the Administrative
Agent, as pledgee, assignee and secured party. This Control Agreement is entered
into in connection with the security interests of the Secured Parties granted by
the Pledgor in the Designated Securities Accounts described below. Capitalized
terms used but not defined herein shall have the meanings assigned to such terms
in the Security Agreement. 

                               
Section 1. Confirmation of Establishment and Maintenance of Designated
Accounts. The Securities Intermediary hereby confirms that (i) the
Securities Intermediary has established for the Pledgor and maintains the
securities account(s) listed in Schedule I annexed hereto (such account(s),
together with each such other securities account maintained by the Pledgor with
the Securities Intermediary collectively, the "Designated Accounts" and each a
"Designated Account"), (ii) the Securities Intermediary shall, subject to the
terms of this Control Agreement and the Security Agreement, treat the Pledgor as
entitled to exercise the rights related to Investment Property which is credited
to a Designated Account and (iii) all securities or other property which
constitute Investment Property and which are credited to any Designated Account
shall be registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary and in no case will any
item of Investment Property credited to any Designated Account be registered in
the name of the Pledgor, payable to the order of the Pledgor or specially
endorsed to the Pledgor, except to the extent the foregoing have been specially
endorsed to the Securities Intermediary or in blank. For avoidance of doubt, it
is noted that the term "Designated Accounts" as used in any security agreement
or collateral agreement means both the Designated Accounts hereunder and the
"Designated Accounts" in the comparable agreement entered into with respect to
any other Pledgor. 

                               
Section 2. Subordination of Lien; Waiver of Set-Off. In the event that
the Securities Intermediary has or subsequently obtains by agreement, operation
of law or otherwise a security interest in any Designated Account or any
Investment Property, the Securities Intermediary hereby agrees that such
security interest shall be subordinate to the security interest of the
Administrative Agent. The financial assets and other items deposited 

-2- 

to any Designated Account will not be subject to deduction,
set-off, banker's lien, or any other right in favor of any Person other than the
Secured Parties (except that the Securities Intermediary may set off (i) all
amounts due to the Securities Intermediary in respect of its customary fees and
expenses for the routine maintenance and operation of the Designated Accounts,
including overdraft fees and amounts advanced to settle authorized transactions,
and (ii) the face amount of any cheques or other items which have been credited
to any Designated Account but are subsequently returned unpaid because of
uncollected or insufficient funds). 

                               
Section 3. Choice of Law. Both this Control Agreement and the 

                               
Designated Accounts shall be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable therein. 

                               
Section 4. Conflict with Other Agreements; Amendments. As of the date
hereof, there are no other agreements entered into between the Securities
Intermediary and the Pledgor with respect to any Designated Account or any
Securities credited thereto (other than standard and customary documentation
with respect to the establishment and maintenance of such Designated Accounts).
The Securities Intermediary and the Pledgor will not enter into any other
agreement with respect to any Designated Account unless the Administrative Agent
shall have received prior written notice thereof. The Securities Intermediary
and the Pledgor will not enter into any other agreement with respect to creation
or perfection of any security interest in, or control of Securities maintained
in any of the Designated Accounts without the prior written consent of the
Administrative Agent acting in its sole discretion. No amendment or modification
of this Control Agreement or waiver of any rights hereunder shall be binding on
any party hereto unless it is in writing and is signed by all the parties
hereto. 

                               
Section 5. Certain Agreements. 

                               
(i) 
The Securities Intermediary
acknowledges receipt of a copy of the Security Agreement. 

                               
(ii) 
The Securities Intermediary has
furnished to the Administrative Agent and the Pledgor the most recent account
statement issued by the Securities Intermediary with respect to each of the
Designated Accounts and the Investment Property and cash balances held therein.
The account statement for each Designated Account identifies the Investment
Collateral held therein in the manner set forth on Schedule II annexed hereto.
The Securities Intermediary represents and warrants to the Administrative Agent
that each such statement accurately reflects the assets held in such Designated
Account as of the date thereof. 

                               
(iii) 
The Securities Intermediary will,
upon its receipt of each supplement to the Security Agreement signed by the
Pledgor and identifying one or more security entitlements or other financial
assets as "Investment Collateral," enter into its records, including computer
records, with respect to each Designated Account a notation with respect to
Investment Collateral so that such records and reports generated with respect
thereto identify the Investment Collateral as "Pledged." 

-3- 

                               
(iv) The Administrative
Agent has delivered to the Securities Intermediary a list, signed by an
authorized representative (the "Authorized Representative"), of the officers of
the Administrative Agent authorized to give approvals or instructions under this
Control Agreement (including notices and other instructions under Section 12
hereof) and the Securities Intermediary shall be entitled to rely on
communications from such authorized officers until the earlier of (A) the
termination of this Control Agreement in accordance with the terms hereof, with
notification by the Authorized Representative of such termination and (B) the
assignment of the rights of the Secured Parties in accordance with Section 12
hereof. 

                               
Section 6. Notice of Adverse Claims. Except for the claims and interest
of the Administrative Agent and of the Pledgor in the Investment Collateral and
other Investment Property, the Securities Intermediary on the date hereof has
not received notice of any claim to, or security interest in, any Designated
Account or any item of Investment Property credited thereto and has not received
notice of any claim that any Person other than the Administrative Agent has been
given "control" of any Designated Account. If any Person asserts any lien,
encumbrance or adverse claim (including any writ, garnishment, judgment, warrant
of attachment, execution or similar process and any claim of "control") against
any of the Investment Collateral or in any Investment Property carried in any
Designated Account constituting Investment Property, the Securities Intermediary
will promptly notify the Administrative Agent and the Pledgor thereof. 

                               
Section 7. Maintenance of Designated Accounts. The Securities
Intermediary agrees to maintain the Designated Accounts as follows: 

                                 
  (i) 
  Notice of Sole Control. If
  at any time the Administrative Agent delivers to the Securities Intermediary a
  notice of sole control in substantially the form set forth in Exhibit A
  attached hereto (the "Notice of Sole Control") with respect to any Designated
  Account, the Securities Intermediary agrees that, after receipt of the Notice
  of Sole Control, it will take all instructions with respect to such Designated
  Account solely from the Administrative Agent. Permitting settlement of trades
  pending at the time of receipt of such Notice of Sole Control shall not
  constitute a violation of the immediately preceding sentence. Without limiting
  the generality of the first sentence of this paragraph, upon receipt of a
  Notice of Sole Control, the Securities Intermediary shall (x) no longer permit
  any trading with respect to the applicable Investment Collateral to be
  initiated by the Pledgor or any representative of, or investment manager
  appointed by, the Pledgor and the Securities Intermediary shall follow all
  instructions given by an authorized officer of the Administrative Agent,
  including without limitation instructions for distribution or transfer of any
  Investment Collateral or other Investment Property in any Designated Account
  to be made to the Administrative Agent and (y) follow all instructions given
  by an authorized officer of the Administrative Agent, including, without
  limitation, instructions for distribution or transfer of any funds in any
  Designated Account to be made to the Administrative Agent. 

-4- 

                               
(ii) 
Voting Rights. Until such
time as the Securities Intermediary receives a Notice of Sole Control pursuant
to clause (i) of this Section 7, the Pledgor, or an investment manager on behalf
of the Pledgor, shall direct the Securities Intermediary with respect to the
voting of any Investment Collateral or other financial assets constituting
Investment Property credited to any Designated Account. 

                               
(iii) 
Permitted Dispositions. Until
such time as the Securities Intermediary receives either a Notice of Sole
Control signed by the Administrative Agent with respect to some or all of the
Investment Collateral and other Investment Property or a notice signed by the
Administrative Agent that a proposed sale, exchange or transfer of certain
Investment Collateral by or on behalf of the Pledgor will violate the Security
Agreement, a Pledgor, or any representative of, or investment manager appointed
by, a Pledgor, shall direct the Securities Intermediary with respect to the
sale, exchange or transfer of such Investment Collateral held in a Designated
Account. 

                               
(iv) 
Statements and Confirmations.
The Securities Intermediary will send copies of all statements and other
correspondence (excluding routine confirmations) concerning any Designated
Account or any financial assets constituting Investment Property credited
thereto simultaneously to each of the Pledgor and the Administrative Agent at
the address set forth in Section 10 hereof. The Securities Intermediary will
provide to the Administrative Agent and to the Pledgor, upon the Administrative
Agent's reasonable request therefor from time to time (which may be as frequent
as daily and is expected to be at least as frequent as weekly) and, in any event
as of the last business day of each calendar month, a statement of the market
value of each item of the Investment Collateral in each Designated Account.

                               
(v) 
Bailee for Perfection. The
Securities Intermediary acknowledges that, in the event that it should come into
possession of any certificate representing any security or other assets held as
Investment Collateral in any of the Designated Accounts, the Securities
Intermediary shall retain possession of the same for the benefit of the
Administrative Agent (and such act shall cause the Securities Intermediary to be
deemed a bailee for the Administrative Agent, if necessary) to perfect the
Administrative Agent's security interest in such securities or assets. The
Securities Intermediary hereby acknowledges its receipt of a copy of the
Security Agreement as notice to the Securities Intermediary regarding notice of
a security interest in collateral held by a bailee. 

                               
(vi) 
Certain Matters Relating to
Interest, Dividends, etc. Until receipt of a Notice of Sole Control with
respect to some or all of the Investment Collateral, the Securities Intermediary
shall have no responsibility to furnish reports to the Administrative Agent with
respect to, or to segregate or otherwise account to the Administrative Agent
for, dividends, interest or other amounts received in Designated Accounts with
respect to Investment Collateral. 

-5- 

                               
Section 8. Representations, Warranties and Covenants of the Securities
Intermediary. The Securities Intermediary hereby makes the following
representations, warranties and covenants: 

                               
(i) 
The Designated Accounts have been
established as set forth in Section 1 hereof and each Designated Account will be
maintained in the manner set forth herein until termination of this Control
Agreement. The Securities Intermediary shall not change the name or account
number of any Designated Account without the prior written consent of the
Administrative Agent. 

                               
(ii) 
No item constituting Investment
Collateral is or will be registered in the name of the Pledgor, payable to its
order or specially endorsed to it, except to the extent such item has been
endorsed to the Securities Intermediary or in blank. 

                               
(iii) 
This Control Agreement is the valid
and legally binding obligation of the Securities Intermediary. 

                               
(iv) 
The Securities Intermediary has not
entered into any agreement with any other Person pursuant to which it has agreed
to comply with instructions with respect to items credited to any Designated
Account. Until the termination of this Control Agreement the Securities
Intermediary will not, without the written approval of the Administrative Agent,
enter into any agreement with any Person pursuant to which it agrees to comply
with instructions with respect to Investment Collateral. Until the termination
of this Control Agreement, the Securities Intermediary will not, without the
written approval of the Administrative Agent (which shall not be unreasonably
withheld), enter into any agreement with any Person relating to any Designated
Account or any Investment Property credited thereto pursuant to which it agrees
to comply with instructions of such Person. 

                               
The Securities Intermediary has not entered into any other agreement with the
Pledgor or Administrative Agent purporting to limit or condition the obligation
of the Securities Intermediary to comply with instructions with respect to
Investment Property credited to any Designated Account as set forth in Section 3
hereof. 

                               
Section 9. Successors; Assignment. The terms of this Control Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective corporate successors and permitted assignees. 

                               
Section 10. Notices. Any notice, request or other communication required
or permitted to be given under this Control Agreement shall be in writing and
deemed to have been properly given when delivered in person, or when sent by
telecopy or other electronic means and electronic confirmation of error free
receipt is received or two (2) days after being sent by certified or registered
Canadian mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below. 

-6- 

	Pledgors:	[	]
	 	Address:	 
	 	 	 
	 	1061 Parent Street	 
	 	St. Bruno, Quebec	 
	 	J3V 6P1	 
	 	Attention:	Chief Financial
    Officer
	 	Telecopy:	(450) 532-6303
	 	Telephone:	(450) 461-7700
	 	with copy to:	 
	 	 	 
	 	Address:	 
	 	Osler
    Hoskin & Harcourt LLP
	 	Suite 6600, Box 50	 
	 	1 First
    Canadian Place
	 	Toronto,
    ON M5X 1B8
	 	Attention:	Laurie E. Barrett
	 	Telecopy:	(416) 862-6666
	 	Telephone:	(416) 362-2111
	Securities	 	 
	Intermediary:	[	]
	 	 	 
	 	[Address]	 
	 	Attention:	 
	 	Telecopy:	 
	 	Telephone:	 
	 	 	 
	
    Administrative	 
	Agent:	Bank of Montreal	 
	 	 	 
	 	Address:	 
	 	100 King
    Street West
	 	First
    Canadian Place, 4th Floor
	 	Toronto, Ontario	 
	 	M5X 1A1	 
	 	Attention:
    Manager, Loan Agency Canada
	 	Telecopy:
    (416) 867-5938

-7- 

  
  	with a
      copy to:	 
	 	 	 
	Cahill
      Gordon & Reindel LLP
	80 Pine Street	 	 
	New
      York, New York  10005	 
	Attention:	[	]
	Telecopy:	(212)
      269-5420
	Telephone:	(212)
      701-3000

  

                               
Any party may change its address for notices in the manner set forth above.

                               
Section 11. Termination. The rights and powers granted herein to the
Administrative Agent have been granted in connection with the security interests
of the Secured Parties in the Investment Collateral and other Investment
Property maintained in the Designated Accounts, are powers coupled with an
interest and will be affected neither by the bankruptcy of the Pledgor nor by
the lapse of time. The obligations of the Securities Intermediary hereunder
shall continue in effect until the security interests of the Secured Parties
(including, without limitation, by virtue of the notice pursuant to Section 10
hereof) with respect to the Investment Collateral and other Investment Property
have been terminated and an Authorized Representative has notified the
Securities Intermediary of such termination in writing. 

                               
Section 12. Definitions. The following terms shall have the following
meanings: 

                               
"Investment Collateral" shall mean, all Investment Property of the Pledgor and,
in any event, shall include, without limitation, (i) the Designated Account,
(ii) all Investment Property, cash, cheques, drafts, securities and instruments
deposited or held or required to be deposited or held in the Designated Account,
(iii) all investments and all certificates and instruments, if any, from time to
time representing or evidencing any other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the foregoing items listed in clauses (i) and (ii) of this definition and
(iv) each consent, control or other agreement, including, without limitation,
this Control Agreement, entered into by the Pledgor with the Securities
Intermediary and all rights, if any, and interests of the Pledgor in, to and
under each such consent, control or other agreement; provided, however, that
Investment Collateral shall in no event include the Investment Property. 

                               
Section 13. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.

                               
Section 14. Counterparts. This Control Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any 

-8- 

party hereto may execute this Control Agreement by signing and
delivering one or more counterparts.

 

S-1

  
  	 	 	 
	 	 	 
	[	 	],
	 	as Pledgor	 
	 	 	 
	By: ____________	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	 	 	 
	BANK OF
      MONTREAL,	 
	as
      Administrative Agent	 
	By: _____________	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	By: _____________	 	 
	Name:	 	 
	Title:	 	 
	 	 	 
	 	 	 
	 	 	 
	[	 	],
	as
      Securities Intermediary	 
	 	 	 
	 	 	 
	By: _____________	 	 
	Name:	 	 
	Title:	 	 

  

SCHEDULE I 

Designated Account(s) 

SCHEDULE II 

 

EXHIBIT A 

[Letterhead of Bank of Montreal] 

 

[Date] 

[Securities Intermediary] [Address] 

Attention: 

Re: Notice of Sole Control 

Ladies and Gentlemen: 

As referenced in Section 7(i) of the Control Agreement
Concerning Designated Accounts dated as of [ ], by and among [ ], us and you
(the "Control Agreement;" capitalized terms used but not defined herein shall
have the meanings assigned to such terms in the Control Agreement) (a copy of
which is attached) we hereby give you notice of our sole control over the
Investment Collateral and other items constituting Investment Property
maintained in the securities accounts, account numbers: ________________ (the
"Specified Designated Accounts"). You are hereby instructed not to accept any
direction, instruction or entitlement order with respect to Investment
Collateral maintained in the Specified Designated Accounts or the financial
assets constituting Investment Property credited thereto from any person other
than the undersigned, unless otherwise ordered by a court of competent
jurisdiction. 

-2- 

You are instructed to deliver a copy of this notice by
facsimile transmission to [Borrower]. 

	Very truly yours,
	 
	BANK OF MONTREAL
	as Administrative Agent
	 
	By: _______________
	Name:
	Title:
	 
	By: _______________
	Name:
	Title:

 

 

 

 

 

cc: [Borrower] 

EXHIBIT 5 

[Form of] 

CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS

                               
This CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS (this "Control Agreement"),
dated as of [ ], by and among [ ] (the "Pledgor"), BANK OF MONTREAL (the
"Administrative Agent") and [    ] (the "Bank"), is delivered
pursuant to Section 3.4(b) of that certain security agreement (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement"), dated as of December 18, 2003, as amended and restated as
of February 9, 2005, made by Bombardier Recreational Products Inc., each of the
Guarantors party thereto from time to time (together with the Borrower, the "Pledgors"),
in favor of the Administrative Agent, as pledgee, assignee and secured party.
This Control Agreement is entered into in connection with the security interests
of the Secured Parties granted by the Pledgor in the Designated Accounts
described below. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Security Agreement. 

                               
Section 1. Confirmation of Establishment and Maintenance of Designated
Accounts. The Bank hereby confirms that the Bank has established for the
Pledgor and maintains the deposit account(s) listed in Schedule 1 annexed hereto
(such deposit account(s), together with each such other deposit account
maintained by the Pledgor with the Bank collectively, the "Designated Accounts"
and each a "Designated Account"). For avoidance of doubt, it is noted that the
term "Designated Accounts" as used in any security agreement means both the
Designated Accounts hereunder and the "Designated Accounts" in the comparable
agreement entered into with respect to any other Pledgor. 

                               
Section 2. Control. The Administrative Agent shall upon delivery of a
Notice of Sole Control (as defined below) be solely authorized to direct the
Bank to comply without further consent of the Pledgor or any person acting or
purporting to act for the Pledgor being required, with all instructions
originated by the Administrative Agent directing disposition of the funds in the
Designated Account. The Bank shall comply with instructions directing the
disposition of funds in the Designated Account(s) originated by the Pledgor or
its authorized representatives until such time as the Administrative Agent
delivers a Notice of Sole Control pursuant to Section 8(i) hereof to the Bank,
at which time the Bank will comply with instructions originated by the
Administrative Agent directing the disposition of the funds in the Designated
Account without further consent by the Pledgor. . 

                               
Section 3. Subordination of Lien; Waiver of Set-Off. In the event that
the Bank has or subsequently obtains by agreement, operation of law or otherwise
a security interest in any Designated Account, the Bank hereby agrees that such
security interest shall be subordinate to that of the Secured Parties. The funds
deposited into any Designated Account will not be subject to deduction, set-off,
banker's lien, or any other right in favor of any 

-2- 

Person other than the Secured Parties (except that the Bank
may set off (i) all amounts due to the Bank in respect of its customary fees and
expenses for the routine maintenance and operation of the Designated Accounts,
including overdraft fees, and (ii) the face amount of any cheques or other items
which have been credited to any Designated Account but are subsequently returned
unpaid because of uncollected or insufficient funds). 

                               
Section 4. Choice of Law. Both this Control Agreement and the Designated
Account(s) shall be governed by the laws of the Province of Ontario and the
federal laws of Canada applicable therein. 

                               
Section 5. Conflict with Other Agreements; Amendments. As of the date
hereof, there are no other agreements entered into between the Bank and the
Pledgor with respect to any Designated Account or any funds credited thereto
(other than standard and customary documentation with respect to the
establishment and maintenance of such Designated Accounts). The Bank and the
Pledgor will not enter into any other agreement with respect to any Designated
Account unless the Administrative Agent shall have received prior written notice
thereof. The Bank and the Pledgor will not enter into any other agreement with
respect to control of the Designated Accounts without the prior written consent
of the Administrative Agent acting in its sole discretion. In the event of any
conflict with respect to "control" over any Designated Account between this
Control Agreement (or any portion hereof) and any other agreement now existing
or hereafter entered into, the terms of this Control Agreement shall prevail. No
amendment or modification of this Control Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is
signed by all the parties hereto. 

                               
Section 6. Certain Agreements. 

                                 
  (i) 
  The Bank has furnished to the
  Administrative Agent and the Pledgor the most recent account statement issued
  by the Bank with respect to each of the Designated Accounts and the cash
  balances held therein. The Bank represents and warrants to the Administrative
  Agent that each such statement accurately reflects the assets held in such
  Designated Account as of the date thereof. 

                                 
  (ii) 
  The Administrative Agent has
  delivered to the Bank a list, signed by an authorized representative (the
  "Authorized Representative"), of the officers of the Administrative Agent
  authorized to give approvals or instructions under this Control Agreement
  (including notices and other instructions under Section 11 hereof) and the
  Bank shall be entitled to rely on communications from such authorized officers
  until the earlier of the termination of this Control Agreement in accordance
  with the terms hereof, the notification by the Authorized Representative of a
  change and the assignment of the rights of the Secured Parties in accordance
  with Section 11 hereof. 

                               
Section 7. Notice of Adverse Claims. Except for the claims and interest
of the Secured Parties and of the Pledgor in the Designated Account(s), the Bank
on the date hereof has not received notice of any claim to, or security interest
in, any Designated Account 

-3- 

or in any funds credited thereto and has not received notice
of any claim that any Person other than the Administrative Agent has been given
"control" of any Designated Account or any such funds. If any Person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process and any claim of "control")
against any funds in any Designated Account, the Bank will promptly notify the
Administrative Agent and the Pledgor thereof. 

                               
Section 8. Maintenance of Designated Accounts. In addition to, and not in
lieu of, the obligation of the Bank agreed in Section 2 hereof, the Bank agrees
to maintain the Designated Accounts as follows: 

                                 
  (i) 
  Notice of Sole Control. If at any
  time the Administrative Agent delivers to the Bank a notice of sole control in
  substantially the form set forth in Exhibit A attached hereto (the "Notice of
  Sole Control") with respect to any Designated Account, the Bank agrees that,
  after receipt of the Notice of Sole Control, it will take all instruction with
  respect to such Designated Account solely from the Administrative Agent.
  Without limiting the generality of the first sentence of this paragraph, upon
  receipt of a Notice of Sole Control, the Bank shall follow all instructions
  given by an authorized officer of the Administrative Agent, including, without
  limitation, instructions for distribution or transfer of any funds in any
  Designated Account to be made to the Administrative Agent. 

                                 
  (ii) 
  Permitted Dispositions. Until such
  time as the Bank receives a Notice of Sole Control signed by the
  Administrative Agent with respect to a Designated Account, a Pledgor, or any
  representative of a Pledgor, shall direct the Bank with respect to the
  transfer of the funds held in such Designated Account. Until such time as the
  Bank receives a Notice of Sole Control, the Pledgor shall be entitled to write
  checks against amounts in each Designated Account, and make withdrawals,
  transfers, and other dispositions of the funds in each Designated Account.
  

                                 
  (iii) 
  Statements and Confirmations. The
  Bank will promptly send copies of all statements and other correspondence
  (excluding routine confirmations) concerning any Designated Account to each of
  the Pledgor and the Administrative Agent at the address set forth in Section
  11 hereof. The Bank will promptly provide to the Administrative Agent and to
  the Pledgor, upon the Administrative Agent's request therefor from time to
  time and, in any event as of the last business day of each calendar month, a
  statement of the cash balance in each Designated Account. 

                               
Section 9. Representations, Warranties and Covenants of the Bank. The
Bank hereby makes the following representations, warranties and covenants:

                                 
  (i) 
  The Designated Accounts have been
  established as set forth in Section 1 hereof and each Designated Account will
  be maintained in the manner set forth herein until termination of this Control
  Agreement. The Bank shall not change 

-4- 

  the name or account number of any Designated Account without
  the prior written consent of the Administrative Agent. 

                                 
  (ii) 
  This Control Agreement is the
  valid and legally binding obligation of the Bank. 

                                 
  (iii) 
  The Bank has not entered into any
  agreement with any other Person pursuant to which it has agreed to comply with
  any orders or instructions with respect to any Designated Account. Until the
  termination of this Control Agreement, the Bank will not, without the written
  approval of the Administrative Agent, enter into any agreement with any Person
  pursuant to which it agrees to comply with any orders or instructions of such
  Person with respect to any Designated Account. 

                                 
  (iv) 
  The Bank has not entered into any
  other agreement with the Pledgor or the Administrative Agent purporting to
  limit or condition the obligation of the Bank to comply with any orders or
  instructions with respect to any Designated Account as set forth in Section 2
  hereof. 

                               
Section 10. Successors; Assignment. The terms of this Control Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective corporate successors and permitted assignees. 

                               
Section 11. Notices. Any notice, request or other communication required
or permitted to be given under this Control Agreement shall be in writing and
deemed to have been properly given when delivered in person, or when sent by
telecopy or other electronic means and electronic confirmation of error free
receipt is received or two (2) days after being sent by certified or registered
Canadian mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below. 

  
  	Pledgors:	[	]
	 	Address:	 
	 	 	 
	 	1061 Parent Street	 
	 	St. Bruno, Quebec	 
	 	J3V 6P1	 
	 	Attention:	Chief Financial
      Officer
	 	Telecopy:	(450) 532-6303
	 	Telephone:	(450) 461-7700
	 	with copy to:	 
	 	 	 
	 	Address:	 

  

-5- 

  
  	 	 	 
	 	Osler Hoskin & Harcourt LLP
	 	Suite 6600, Box 50
	 	1 First Canadian Place
	 	Toronto, ON M5X 1B8
	 	Attention:	Laurie E. Barrett
	 	Telecopy:	(416) 862-6666
	 	Telephone:	(416) 362-2111
	Bank:	[	]
	 	[	]
	 	[	]
	 	Attention:	 
	 	Telecopy:	 
	 	Telephone:	 
	Administrative	 
	Agent:	Bank of Montreal
	 	 	 
	 	Address:	 
	 	100 King Street West
	 	First Canadian Place, 4th Floor
	 	Toronto, Ontario
	 	M5X 1A1	 
	 	Attention: Manager, Loan Agency
      Canada
	 	Telecopy: (416) 867-5938
	 	with a copy to:
	 	 	 
	 	Cahill Gordon & Reindel LLP
	 	80 Pine Street	 
	 	New York, New York 10005
	 	Attention:	Michael E. Micchetti
	 	Telecopy:	(212) 269-5420
	 	Telephone:	(212) 701-3000

  

                               
Any party may change its address for notices in the manner set forth above.

                               
Section 12. Termination. The rights and powers granted herein to the
Administrative Agent have been granted in order to perfect the security
interests of the Secured Parties in the Designated Accounts, are powers coupled
with an interest and will be affected neither by the bankruptcy of the Pledgor
nor by the lapse of time. The obligations of the Bank hereunder shall continue
in effect until the termination of the security interests of the Secured Parties
(including, without limitation, by virtue of the notice pursuant to Section 11
hereof) with respect to the Designated Account(s) have been terminated and an
Authorized Representative has notified the Bank of such termination in writing.

-6- 

                               
Section 13. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.

                               
Section 14. Counterparts. This Control Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Control Agreement by signing
and delivering one or more counterparts. 

  	 	 
	S-1	 
	 	 
	[	]
	 	 
	By:	 
	Name:	 
	Title:	 
	 	 
	BANK OF MONTREAL,	 
	as Administrative Agent	 
	 	 
	By:	 
	Name:	 
	Title:	 
	 	 
	By:	 
	Name:	 
	Title:	 
	 	 
	[	],
	as Bank	 
	 	 
	By:	 
	Name:	 
	Title:	 

SCHEDULE 1 

Designated Account(s) 

 

 

EXHIBIT A 

[Letterhead of Bank of Montreal] 

[Date] 

[Bank] 

[Address] 

Attention: _______________ 

Re: Notice of Sole Control 

Ladies and Gentlemen: 

As referenced in Section 8(i) of the Control Agreement
Concerning Deposit Accounts dated as of [ ], by and among [ ], us and you (the
"Control Agreement;" capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Control Agreement) (a copy of which
is attached) we hereby give you notice of our sole control over the Designated
Account(s), account number(s): ___________________________________ (the
"Specified Designated Accounts"). You are hereby instructed not to accept any
direction or instructions with respect to the Specified Designated Accounts or
any funds credited thereto from any Person other than the undersigned, unless
otherwise ordered by a court of competent jurisdiction. 

-2- 

You are instructed to deliver a copy of this notice by
facsimile transmission to [Borrower] 

  	Very truly yours,
	 
	BANK OF MONTREAL,
	as Administrative Agent
	 
	By: _______________
	     Name:
	     Title:
	 
	By: _______________
	     
      Name:
	     
      Title:

cc: [Borrower]Bombardier Recreational Products Inc - Exhibit 4.8 - Prepared By TNT
Filings Inc.

 

 

J.A. Bombardier (J.A.B.) Inc. 

Management Option Plan

March 31, 2004

J.A. Bombardier (J.A.B.) Inc. 

Management Option Plan

ARTICLE 1

PURPOSE

1.1

Purpose

The purpose of this Plan is to advance the interests of J.A. Bombardier (J.A.B.) Inc. (the “Corporation”) and its subsidiaries by enhancing their ability to attract and retain employees, managers and directors, to reward such individuals for their contributions and to encourage such individuals to take into account the long-term interests of the Corporation and its subsidiaries through their participation in the Corporation's share capital by receiving Class B Shares.

ARTICLE 2

INTERPRETATION

2.1

Definitions

When used herein the following terms have the following meanings, respectively:

“Adverse Claim” means any pledge, charge, lien, security interest, mortgage, adverse claim or other encumbrance of any kind or character;

“Affiliate” or “Affiliated” means:

(a)

with respect to any specified Person other than a natural Person, any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person other than a natural Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); and
 

(b)

with respect to any natural Person, any natural Person who is a Member of the Immediate Family of such natural Person.  

 “Board” means the board of directors of the Corporation;

“Call Notice” has the meaning set forth in Section 4.7 (b) of this Plan.

“Call Option” has the meaning set forth in Section 4.7 (a) of this Plan.

“Canadian Securities Authorities” means any of The British Columbia Securities Commission, Alberta Securities Commission, Saskatchewan Securities Commission, The Manitoba Securities Commission, Ontario Securities Commission, Commission des valeurs mobilières du Québec, Justice Securities Administration (New Brunswick), Nova Scotia Securities Commission, Registrar of Securities (Prince Edward Island), Director of Securities (Government of Newfoundland and Labrador), Registrar of Securities (Northwest Territories Justice Securities Registry), Registrar of Securities (Yukon Justice), Nunavut Legal Registries, and any of their successors.
 

 

“Canadian Securities Laws” means the securities legislation of each of the provinces and territories of Canada, as amended from time to time, and the rules, regulations, blanket orders and orders having application to the Corporation and forms made or promulgated under that legislation and the policies, instruments, bulletins and notices of one or more of the Canadian Securities Authorities.
 

 “Cause” means, with respect to any Participant, the following events or conditions, (i) (other than by reason of Disability) the willful failure to perform, or gross negligence in the performance of, the Participant's material duties and responsibilities to the Corporation or any of its subsidiaries, or willful failure to follow or carry out any reasonable material direction of the Board, and the continuance of such failure or gross negligence for a period of thirty days after written notice to such Participant; (ii) the material breach by such Participant of any agreement to which such Participant and the Corporation or any of its subsidiaries are party, which breach continues for thirty days after written notice to Participant; (iii) the commission of fraud, embezzlement, theft, sexual harassment or other material dishonesty by Participant; (iv) the conviction of Participant of, or plea by Participant of nolo contendere to, any felony or any other crime involving dishonesty or moral turpitude; and (v) any other intentional action or intentional omission that involves a material breach of fiduciary obligation on the part of such Participant or otherwise could reasonably be expected to have a material adverse effect upon the business, interests, or reputation of the Corporation or any of its subsidiaries.

 “Change of Control” means the first Transfer resulting in 50% or more of the then outstanding Class A Shares of the Corporation being held by any Person or group of Persons acting in concert (other than the Investors and their Affiliates and other than an underwriter in connection with a Public Offering);

“Class A Shares” means the Class A Common Shares in the capital of the Corporation;

“Class B Shares” means the Class B Common Shares in the capital of the Corporation;

“Committee” has the meaning set forth in Section  of this Plan;

“Common Shares” means the common shares of the Corporation (including the Class A Shares and the Class B Shares);

“Corporation” has the meaning set forth in Section  of this Plan;

“Date of Grant” means, for any Option, the date specified by the Board at the time it grants the Option or, if no such date is specified, the date upon which the Option was granted;

 

“Director” means a member of the Board or of the board of directors of an Affiliated company;

“Disabled” or “Disability” means, for purposes of the Plan only, the inability of an Optionee to perform substantially all of such Optionee's duties and responsibilities to the Corporation and its Affiliates as a result of any illness, injury, accident or condition of either a physical or psychological nature suffered by such Optionee, with or without reasonable accommodation, for 180 consecutive days, as determined by a physician selected by the Corporation to whom the Optionee has no reasonable objection.

“Electing Purchaser” has the meaning set forth in Section 4.7(c) of this Plan;

“Exercise Notice” means a notice in writing, in the form set out in Schedule A, signed by an Optionee and stating the Optionee's intention to exercise a particular Option;

“Exercise Price” means the price at which a Class B Share may be purchased pursuant to the exercise of an Option;

“Exercise Period” means the period of time during which an Option granted under this Plan may be exercised (provided however that the Exercise Period may not exceed 10 years from the relevant Date of Grant);

“Initial Public Offering” means the first sale of Common Shares (whether in a primary offering of new shares or a secondary offering of issued and outstanding shares) to an underwriter for reoffering to the public in a Public Offering pursuant to (i) an effective registration statement filed with the SEC on Form S-1 (or any successor form), (ii) a preliminary and final prospectus filed with any Canadian Securities Authority under Canadian Securities Laws or (iii) comparable mechanics under the securities laws of any other jurisdiction;

“Investors” has the meaning set forth in the Shareholders Agreement;

“Member of the Immediate Family” means, with respect to any individual, each spouse (whether by marriage or civil union) or common law partner (as defined in the Income Tax Act (Canada)) or child or other descendants (whether by birth or adoption) of such individual, each spouse (whether by marriage or civil union) or common law partner (as defined in the Income Tax Act (Canada)) of any of the aforementioned individuals, each trust created solely for the benefit of one or more of the aforementioned Persons and their spouses and each custodian or guardian of any property of one or more of the aforementioned Persons in his capacity as such custodian or guardian.

“Option” means a non-assignable, non-transferable right to purchase Class B Shares under this Plan;

“Optionee” means a Participant who has been granted one or more Options;

“Option Agreement” means a signed, written agreement between an Optionee and the Corporation evidencing the terms and conditions on which an Option has been granted.

 

“Participant” means a Director or an officer of the Corporation or of an Affiliated company, a current full-time or part-time employee or contract employee of the Corporation or of an Affiliated company.  “Participant” includes Registered Retirement Savings Plans or Registered Retirement Income Funds established by or for the Director, officer or individual employee (or under which such individual is the beneficiary) and a subsidiary entity of such individual;
 

“Person” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof;

“Plan” means this Management Option Plan;

“Public Offering” a public offering and sale of Common Shares for cash pursuant to (i) an effective registration statement under the United States Securities Act of 1933, as in effect from time to time, (ii) a preliminary and final prospectus filed with any Canadian Securities Authority under Canadian Securities Laws or (iii) comparable mechanics under the securities laws of any other jurisdiction.

“Retirement” means retirement from active employment with the Corporation and an Affiliated company at or after age 65 or at or after such earlier age and upon the completion of such years of service as the Board may specify;

“Remaining Shares” has the meaning set forth in Section 4.7(c) of this Plan;

“Shareholder Call Group” has the meaning set forth in Section 4.7(a) of this Plan;

“Shareholders Agreement” means the Unanimous Shareholders Agreement dated as of December 18, 2003 among the Corporation, Bombardier Recreational Products Inc. and the shareholders of the Corporation;
 

“Subject Shares” has the meaning set forth in Section 4.7 of this Plan; and

“Termination Date” means in the case of a Participant whose employment or term of office with the Corporation or an Affiliated company terminates in the circumstances set out in Section  or , the date that is designated by the Corporation or an Affiliated company, as the case may be, as the last day of the Optionee's employment or term of office with the Corporation or the Affiliated company, as the case may be, provided that in the case of termination of employment by voluntary resignation by the Optionee, such date shall not be earlier than the date notice of resignation was given, and “Termination Date” specifically does not mean the date on which any period of reasonable notice that the Corporation or the Affiliated company (as the case may be) may be required at law to provide to the Optionee, would expire.

2.2

Interpretation

(a)

Whenever the Board or, where applicable, the Committee is to exercise discretion in the administration of the terms and conditions of this Plan, the term “discretion” means the sole and absolute discretion of the Board or the Committee, as the case may be.

 

(b)

As used herein, the terms “Article”, “Section”, “Subsection” and “clause” mean and refer to the specified Article, Section, Subsection and clause of this Plan, respectively.

(c)

Words importing the singular include the plural and vice versa and words importing any gender include any other gender.

(d)

In this Plan, a Person is considered to be a “subsidiary entity” of another Person if:

(i)

it is controlled by,

(A)

that other, or

(B)

that other and one or more Persons, each of which is controlled by that other, or

(C)

two or more Persons, each of which is controlled by that other; or

(ii)

it is a subsidiary entity of a Person that is that other's subsidiary entity.

(e)

In this Plan, a Person is considered to be “controlled” by a Person if:

(i)

in the case of a Person,

(A)

voting securities of the first-mentioned Person carrying more than 50% of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other Person, and

(B)

the votes carried by the securities are entitled, if exercised, to elect a majority of the directors of the first-mentioned Person;

(ii)

in the case of a partnership that does not have directors, other than a limited partnership, the second-mentioned Person holds more than 50% of the interests in the partnership; or

(iii)

in the case of a limited partnership, the general partner is the second-mentioned Person.

(f)

Unless otherwise specified, all references to money amounts are to Canadian currency.

 

ARTICLE 3

ADMINISTRATION

3.1

Administration

Subject to Section , this Plan will be administered by the Board and the Board has sole and complete authority, in its discretion, to:

(a)

determine the individuals (from among the Participants) to whom Options may be granted;

(b)

grant Options in such amounts and, subject to the provisions of this Plan, on such terms and conditions as it determines including:

(i)

the time or times at which Options may be granted;

(ii)

the Exercise Price;

(iii)

the time or times when each Option vests and becomes exercisable and, subject to Section , the duration of the Exercise Period;

(iv)

whether restrictions or limitations are to be imposed on the Class B Shares and the nature of such restrictions or limitations (including, without limitation, the conditions of exercise set forth in Section ); and

(v)

any acceleration of exercisability or waiver of termination regarding any Option, based on such factors as the Board may determine;

(c)

interpret this Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to this Plan; and

(d)

make all other determinations, settle all controversies and disputes that may arise under this Plan and take all other actions necessary or advisable for the implementation and administration of this Plan.

The Board's determinations and actions under this Plan are conclusive and binding on the Corporation and all other Persons.  The day-to-day administration of the Plan may be delegated to such officers and employees of the Corporation or of an Affiliated company as the Board determines.

3.2

Delegation to Committee

To the extent permitted by applicable law, the Board may, from time to time, delegate to a committee (the “Committee”) of the Board all or any of the powers conferred on the Board under the Plan.  In such event, the Committee will exercise the powers delegated to it by the Board in the manner and on the terms authorized by the Board.  Any decision made or action taken by the Committee arising out of or in connection with the administration or interpretation of this Plan in this context is final and conclusive.

 

3.3

Eligibility

All Participants are eligible to participate in the Plan, subject to Sections  and . Eligibility to participate does not confer upon any Participant any right to be granted Options pursuant to the Plan. The extent to which any Participant is entitled to be granted Options pursuant to the Plan will be determined in the sole and absolute discretion of the Board.

3.4

Total Class B Shares Subject to Options

(a)

The aggregate number of Class B Shares that may be issued pursuant to the exercise of Options must not exceed 23,900,000.

(b)

No Option may be granted if such grant would have the effect of causing the total number of Class B Shares subject to Options to exceed any of the total numbers of Class B Shares reserved for issuance pursuant to the exercise of Options and set forth in Section . Subject to applicable law and the provisions of the Shareholders Agreement, the Board may, in its discretion, amend the Plan to increase such numbers of Class B Shares without notice to any Optionees.

(c)

To the extent Options terminate for any reason prior to exercise in full or are cancelled (with the consent of the Optionee), the Class B Shares subject to such Options shall be added back to the applicable number of Class B Shares reserved for issuance under the Plan and such Class B Shares will again become available for grant under this Plan as set forth in Section .

3.5

Option Agreements

All grants of Options under Section  of this Plan will be evidenced by Option Agreements.  Such Option Agreements will be subject to the applicable provisions of this Plan and contain such provisions as are required by this Plan and any other provisions that the Board may, in its discretion, direct. Any one officer of the Corporation is authorized and empowered to execute and deliver, for and on behalf of the Corporation, an Option Agreement to each Optionee.

3.6

Non-transferability

Subject to Section  and except as specifically provided in an Option Agreement approved by the Board, Options granted under this Plan may only be exercised during the lifetime of the Optionee by such Optionee personally.  No assignment or transfer of Options, whether voluntary, involuntary, by operation of law or otherwise, vests any interest or right in such Options whatsoever in any assignee or transferee (except that an Optionee may transfer Options to a corporation in respect of which the Optionee is the sole shareholder) and immediately upon any assignment or transfer, or any attempt to make the same, such Options will terminate and be of no further force or effect.  If any Optionee (the “Original Optionee”) has transferred Options to a corporation pursuant to this Section , such Options will terminate and be of no further force or effect if at any time the Original Optionee should cease to own all of the issued shares of such corporation other than by reason of death.

 

ARTICLE 4

GRANT OF OPTIONS

4.1

Grant of Options

The Board may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Board may prescribe, grant Options to any Participant.
 

4.2

Expiration of Options

Subject to any accelerated termination as set forth in this Plan (including, without limitation, as provided in Sections ,  and ), each Option expires on the 10th anniversary of the Date of Grant.

4.3

Vesting, Conditions of Exercise and Exercise Period

The Board may determine the time or times at which an Option will vest and become exercisable.  Once an instalment has vested and become exercisable, it remains exercisable until expiration or termination of the Option, unless otherwise specified by the Board in the Option Agreement entered into in connection with the grant of such Option.  Each Option or instalment may be exercised at any time or from time to time, in whole or in part, for up to the total number of Class B Shares with respect to which it is then exercisable.  The Board has the right to accelerate the date upon which any instalment of any Option becomes exercisable notwithstanding the vesting schedule set forth in such Option, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration.

Subject to the provisions of this Plan and any Option Agreement, Options shall be exercised by means of a fully completed Exercise Notice delivered to the Corporation.

4.4

Payment of Exercise Price

The Exercise Notice must be accompanied by payment in full of the purchase price for the Class B Shares to be purchased.  The Exercise Price must be fully paid in cash or by certified cheque, bank draft or money order payable to the Corporation or by such other means as might be specified from time to time by the Board.  No Class B Shares will be issued or transferred until full payment therefor has been received by the Corporation.  As soon as practicable after receipt of any Exercise Notice and full payment, the Corporation will deliver to the Optionee a certificate or certificates representing the acquired Class B Shares.

4.5

Exercise upon Retirement, Death or Disability of Optionee

If a Participant dies or becomes Disabled while an employee, director or officer of the Corporation or an Affiliated company or if the employment or term of office of the Optionee with the Corporation or an Affiliated company terminates due to Retirement:

(a)

the executor or administrator of the Optionee's estate or the Optionee, as the case may be, may exercise any Options of the Optionee to the extent that the Options were exercisable at the date of such death, Disability or Retirement and the right to exercise such Options terminates on the earlier of: (i) in the case of the Optionee's death,  the date that is 365 days from the date of the Optionee's death,  and in the case of Optionee's Disability or Retirement, the date that is 90 days from the date of the Optionee's Disability or Retirement; and (ii) the date on which the Exercise Period of the particular Option expires.  Any Options held by the Optionee that were not exercisable at the date of death, Disability or Retirement immediately expire and are cancelled on such date; and

 

(b)

such Optionee's eligibility to receive further grants of Options under the Plan ceases as of the date of the Optionee's death, Disability or Retirement, as the case may be.

4.6

Exercise upon Termination of Employment or Services

(a)

Where, in the case of a Participant, an Optionee's employment or term of office with the Corporation or an Affiliated company ceases by reason of the Optionee's death, Disability or Retirement, then the provisions of Section  will apply.

(b)

Where, in the case of a Participant, an Optionee's employment or term of office terminates by reason of  termination by the Corporation or an Affiliated company without Cause (whether such termination occurs with or without any or adequate reasonable notice, or with or without any or adequate compensation in lieu of such reasonable notice), then any Options held by the Optionee that are exercisable at the Termination Date continue to be exercisable by the Optionee until the  earlier of: (A) the date that is 60 days after the Termination Date; and (B) the date on which the Exercise Period of the particular Option expires.  Any Options held by the Optionee that are not exercisable at the Termination Date immediately expire and are cancelled on the Termination Date.

(c)

Where, in the case of a Participant, an Optionee's employment or term of office terminates by reason of (i) termination by the Corporation or an Affiliated company for Cause or (ii) voluntarily resignation by the Optionee, then any Options held by the Optionee, whether or not exercisable at the Termination Date, immediately expire and are cancelled on such date or at a time as may be determined by the Board, in its sole discretion.

(d)

An Optionee's eligibility to receive further grants of Options under the Plan ceases as of the date that the Corporation or an Affiliated company, as the case may be, provides the Optionee with written notification that the Optionee's employment or term of office, as the case may be, is terminated, notwithstanding that such date may be prior to the Termination Date.

(e)

Unless the Board, in its discretion, otherwise determines, at any time and from time to time, Options are not affected by a change of employment within or among the Corporation or an Affiliated company for so long as the Participant continues to be an employee, director or officer of the Corporation or an Affiliated company, as the case may be.

 

4.7

Call on Optionee Stock

(a)

Except as otherwise set forth in any Option Agreement, upon any Participant's termination of employment with the Corporation and its subsidiaries for any reason, the Corporation shall have the right to purchase (a “Call Option”) all or any portion of the securities which is obtained by such Participant through the exercise of an option (the “Subject Shares”) or originally issued to such Participant but held by one or more permitted transferees under the Shareholders Agreement (collectively, the “Shareholder Call Group”).  The repurchase price shall be paid in cash; provided, however, that at the election of the Corporation the Corporation may pay the repurchase price in part in cash and in part in notes as follows:  

(i)

the Corporation will pay a portion of the repurchase price in cash in an amount not less than the amount of tax required to be paid by the Seller in respect to the year of repurchase in connection with the repurchase, such amount to be reasonably determined in good faith by the Corporation on the basis of the highest income tax rate applicable to taxpayers of the applicable type in the jurisdiction in question,

(ii)

the Corporation will issue a promissory note in the aggregate principal amount equal to the balance of the repurchase price, the principal amount of which note will be due and payable in three equal annual installments, the first such installment becoming due and payable on the first anniversary of the issuance of such note, and interest will accrue thereon at a rate 8% per annum and be payable in cash annually in arrears, in each case subject to the provisions of clause (iii) below, and

(iii)

notwithstanding any of the provisions of any promissory note issued under Section 4.7(a)(ii), including without limitation, the stated maturity of such note and the stated date on which interest payments are due, cash payments in respect of such promissory note will not become due and payable until such time as such payment can be made without violating any debt financing agreement to which the Corporation or any of its subsidiaries is, from time to time, a party.
 

Except as otherwise provided herein or the Option Agreement, the repurchase price per share pursuant to the Call Option shall be the fair market value of such share at the time of repurchase pursuant to the Call Option. Except as otherwise provided in the Option Agreement, if a Participant's employment is terminated by the Corporation for Cause, the repurchase price per share will be equal to the lesser of: (A) the original purchase price of such shares as reduced (but not below $.01 per share) to account for any amounts paid by the Corporation in respect of dividends or distributions relating to the Subject Shares and (B) the fair market value of such share at the time of repurchase pursuant to the Call Option.  For purposes of this Section 4.7, fair market value of the shares shall be determined by the Board in good faith, taking into account all material facts then actually known to the Board.

 

(b)

The Corporation may exercise the Call Option by providing written notice of such exercise (the “Call Notice”) to the applicable Shareholder Call Group within 60 days after the later of (i) the effectiveness of the termination of employment and (ii) the 180th day after any stock option held by the applicable Participant could  have been exercised.  The Call Notice shall state that the Corporation has elected to exercise the Call Option, and the number and expected repurchase price of the Subject Shares with respect to which the Call Option is being exercised.  In such event, closing of the share sale pursuant to the Call Option shall take place at such time and place as the Corporation shall specify by notice to the Participant which will be no later than 30 days after the date of the Corporation's notice of exercise of the Call Option.  At the closing of such sale, the holder of Subject Shares to be sold shall deliver the certificates evidencing the shares to be purchased by the Corporation duly endorsed, or with stock (or equivalent) powers duly endorsed, for transfer with signature guaranteed, free and clear of any liens or encumbrances, with any stock (or equivalent) transfer tax stamps affixed, against payment of the repurchase price required by this Section 4.7.  In the event that such holder of Subject Shares fail to deliver such certificates to the Corporation on the date specified by the Corporation for the closing, the Corporation may cancel such Subject Shares on the books and records of the Corporation and deposit such repurchase price in a separate bank account for the benefit of such holders, which the Corporation shall release to such holders upon receipt of such share certificates.  The delivery of a certificate or certificates for Subject Shares by any Person selling Subject Shares pursuant to any Call Option shall be deemed a representation and warranty by such Person that:  (i) such Person has full right, title and interest in and to such Subject Shares; (ii) such Person has all necessary power and authority and has taken all necessary action to sell such Subject Shares as contemplated; (iii) such Subject Shares are free and clear of any and all liens or encumbrances and (iv) there is no Adverse Claim with respect to such Subject Shares.   

(c)

If the Corporation elects not to exercise its Call Option or does not elect to purchase all of the Subject Shares, the Corporation shall deliver a notice to the Investors notifying the Investors of its election within 60 days after the later of (i) the effectiveness of the termination of employment and (ii) the 180th day after any stock option held by the applicable Participant could have been exercised.  The Investors shall have a second option to purchase any of the Subject Shares which are not purchased by the Corporation or its assignee (the “Remaining Shares”) on the same term and conditions described above.  Each Investor may elect to purchase (each, an “Electing Purchaser”) any number of the Remaining Shares by providing a written notice thereof to the applicable Participant within 90 days after the later of (i) the effectiveness of the termination of employment and (ii) the 180th day after any stock option held by the applicable Participant shall have been exercised; provided however, the number of Remaining Shares to be purchased by each Electing Purchaser shall be determined as follows:

(i)

First, each Electing Purchaser shall be allocated a number of Remaining Shares equal to the lesser of (A) the number of Remaining Shares as to which the Electing Purchaser elected to purchase or (B) such Electing Purchaser's pro rata share of such Remaining Shares based on the number of Class A Shares owned by such Electing Purchaser as of immediately prior to the expiration of the period for submitting election notices, and

 

(ii)

the balance, if any, shall be offered and allocated to Electing Purchasers to the extent they express (or in the election notice expressed) a willingness to purchase additional Remaining Shares (and, in the case of over-subscription for such additional Remaining Shares, shall be allocated among Electing Purchasers in such manner as they may agree, or absent agreement pro rated in accordance with their respective ownership of Class A Shares as of immediately prior to the expiration of the period for submitting election notices).

(d)

Neither the Corporation nor any Person directly or indirectly affiliated with the Corporation (in each case whether as a shareholder, director, officer, manager, employee, agent or otherwise) shall have any duty or obligation to affirmatively disclose to any Participant or other Person, and none of the Participants or other Persons shall have any right to be advised of, any material information regarding the Corporation or otherwise at any time prior to, upon, or in connection with any termination of his/her employment by the Corporation and its subsidiaries upon the exercise of any Call Option or any purchase of the Subject Shares in accordance with the terms hereof.
 

(e)

The provisions of this Section 4.7 shall expire on the occurrence of an Initial Public Offering or Change of Control.

4.8

Discretion to Permit Exercise

Notwithstanding the provisions of Sections  and , the Board may, in its discretion, at any time prior to or following the events contemplated in such sections and in any Option Agreement, permit the exercise of any or all Options held by the Optionee in the manner and on the terms authorized by the Board, provided that the Board will not, in any case, authorize the exercise of an Option pursuant to this section beyond the expiration of the Exercise Period of the particular Option.

4.9

Change of Control  

Except as otherwise set forth in any Option Agreement, in the event of any Change of Control transaction in which there is an acquiring or surviving entity, the Board may provide for substitute or replacement options of similar value from, or the assumption of outstanding Options by, the acquiring or surviving entity or one or more of its subsidiaries, any such substitution, replacement or assumption to be on such terms as the Board in good faith determines; provided, however, that in the event of a Change of Control transaction the Board may take, as to any outstanding Option, any one or more of the following actions:
 

(a)

provide that any or all Option shall thereupon terminate; provided that any such outstanding Options that have vested shall remain exercisable until consummation of such Change of Control;
 

 

(b)

make any outstanding Option exercisable in full.

4.10

Shareholders Agreement

Each Optionee must, at the time of exercising an Option, sign and deliver a counterpart and acknowledgement to the Shareholders Agreement (if such Optionee is not already a party thereto and if such Shareholders Agreement is still in effect) in the form attached as Schedule B to this Plan.  Each Optionee acknowledges that the Shareholders Agreement restricts transfers of Class B Shares.

4.11

Conditions of Exercise

Each Optionee will, when requested by the Corporation, sign and deliver all such documents relating to the granting or exercise of Options which the Corporation deems necessary or desirable.

ARTICLE 5

SHARE CAPITAL ADJUSTMENTS

5.1

General

The existence of any Options does not affect in any way the right or power of the Corporation or its shareholders to make, authorize or determine any adjustment, recapitalization, reorganization or any other change in the Corporation's capital structure or its business, or any amalgamation, combination, merger or consolidation involving the Corporation, to create or issue any bonds, debentures, Common Shares or other securities of the Corporation or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of the Corporation or any sale or transfer of all or any part of its assets or business, or to effect any other corporate act or proceeding, whether of a  similar character or otherwise, whether or not any such action referred to in this section would have an adverse effect on this Plan or any Option granted hereunder.

5.2

Reorganization of Corporation's Capital

Should the Corporation effect a subdivision or consolidation of Common Shares or any similar capital reorganization or a payment of a stock dividend (other than a stock dividend that is in lieu of a cash dividend), or should any other change be made in the capitalization of the Corporation that, in the opinion of the Board, would warrant the replacement of any existing Options in order to adjust: (a) the number of Common Shares that may be acquired on the exercise of any outstanding Options; and/or (b) the Exercise Price of any outstanding Options in order to preserve proportionately the rights and obligations of the Optionees, the Board will authorize such steps to be taken as may be equitable and appropriate to that end.

5.3

Other Events Affecting the Corporation

In the event of an amalgamation, combination, merger or other reorganization involving the Corporation by exchange of Class B Shares, by sale or lease of assets or otherwise, that, in the opinion of the Board, warrants the replacement of any existing Options in order to adjust: (a)  the number of Class B Shares that may be acquired on the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options in order to preserve proportionately the rights and obligations of the Optionees, the Board will authorize such steps to be taken as may be equitable and appropriate to that end.

 

5.4

Immediate Exercise of Awards

Where the Board determines that the steps provided in Sections 5.2 and 5.3 would not preserve proportionately the rights and obligations of the Optionees in the circumstances or otherwise determines that it is appropriate, the Board may permit the immediate exercise of any outstanding Options that are not otherwise exercisable.

5.5

Issue by Corporation of Additional Shares

Except as expressly provided in this Article 5, neither the issue by the Corporation of shares of any class or securities convertible into or exchangeable for shares of any class, nor the conversion or exchange of such shares or securities, affects, and no adjustment by reason thereof is to be made with respect to: (a) the number of Class B Shares that may be acquired on the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options.

5.6

Fractions

No fractional Class B Shares will be issued on the exercise of an Option.  Accordingly, if, as a result of any adjustment under Sections 5.2 to 5.4 inclusive, an Optionee would become entitled to a fractional Common Share, the Optionee has the right to acquire only the adjusted number of full Class B Shares and no payment or other adjustment will be made with respect to the fractional Class B Shares so disregarded.

5.7

Conditions of Exercise

The Plan and each Option are subject to the requirement that if at any time the Board determines that the listing, registration or qualification of the Class B Shares subject to such Option upon any stock exchange or under any provincial, state or federal law, or the consent or approval of any governmental body, stock exchange or of the holders of the Class B Shares generally, is necessary or desirable, as a condition of, or in connection with, the granting of such Option or the issue or purchase of Class B Shares thereunder, no such Option may be granted or exercised in whole or in part unless such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Board.  The Optionees shall, to the extent applicable, cooperate with the Corporation in relation to such listing, registration, qualification, consent or other approval and shall have no claim or cause of action against the Corporation or any of its officers or directors as a result of any failure by the Corporation to obtain or to take any steps to obtain any such registration, qualification or approval.

ARTICLE 6

MISCELLANEOUS PROVISIONS

6.1

Legal Requirement

The Corporation is not obligated to grant any Options, issue any Class B Shares or other securities, make any payments or take any other action if, in the opinion of the Board, in its sole discretion, such action would constitute a violation by an Optionee or the Corporation of any provision of any applicable statutory or regulatory enactment of any government or government agency.

 

6.2

Optionee's Entitlement

Except as otherwise provided in this Plan, Options previously granted under this Plan, whether or not then exercisable, are not affected by any change in the relationship between, or ownership of, the Corporation and an Affiliated company.  For greater certainty, all Options remain valid and exercisable in accordance with the terms and conditions of this Plan and are not affected by reason only that, at any time, an Affiliated company ceases to be an Affiliated company.  

6.3

Withholding Taxes

The exercise of each Option granted under this Plan is subject to the condition that if at any time the Corporation determines, in its discretion, that the satisfaction of withholding tax or other withholding liabilities is necessary or desirable in respect of such exercise, such exercise is not effective unless such withholding has been effected to the satisfaction of the Corporation.  In such circumstances, the Corporation may require that an Optionee pay to the Corporation, in addition to and in the same manner as the Exercise Price for the Class B Shares, such amount as the Corporation is obliged to remit to the relevant taxing authority in respect of the exercise of the Option.  Any such additional payment is due no later than the date as of which any amount with respect to the Option exercised first becomes includable in the gross income of the Optionee for tax purposes.

6.4

Rights of Participant/Optionee

No Participant has any claim or right to be granted an Option (including, without limitation, an Option granted in substitution for any Option that has expired pursuant to the terms of this Plan), and the granting of any Option is not to be construed as giving an Optionee a right to remain in the employ of the Corporation or an Affiliated company.  No Optionee has any rights as a shareholder of the Corporation in respect of Common Shares issuable on the exercise of rights to acquire Common Shares under any Option (including, without limitation, the payment of dividends or other distributions) until the allotment and issuance to the Optionee of certificates representing such Common Shares.  The loss of existing or potential profit in Options granted under this Plan shall not constitute an element of damages in the event of termination of an Optionee's employment or service in any office or otherwise.

6.5

Termination; Amendment  

(a)

The Plan will terminate and, for greater certainty, all unexercised Options shall terminate and expire on the date upon which no further Class B Shares remain available for issuance pursuant to Options which may be granted under the Plan and no Options remain outstanding unless renewed for such further period and upon such terms and conditions as the Board may determine.

(b)

The Board may, without notice, at any time or from time to time, amend, suspend or terminate this Plan or any provisions hereof in such respects as it, in its sole discretion, determines appropriate.  No such amendment, suspension or termination of this Plan, without the consent of any Optionee or the representatives of his or her estate, as applicable, alters or impairs any rights or obligations arising from any Option previously granted to an Optionee under this Plan.

 

6.6

Indemnification

Every Director will at all times be indemnified and saved harmless by the Corporation from and against all costs, charges and expenses whatsoever including any income tax liability arising from any such indemnification, that such Director may sustain or incur by reason of any action, suit or proceeding, taken or threatened against the Director, otherwise than by the Corporation, for or in respect of any act done or omitted by the Director in respect of this Plan, such costs, charges and expenses to include any amount paid to settle such action, suit or proceeding or in satisfaction of any judgement rendered therein.

6.7

Participation in the Plan

The participation of any Participant in the Plan is entirely voluntary and not obligatory and shall not be interpreted as conferring upon such Participant any rights or privileges other than those rights and privileges expressly provided in the Plan. In particular, participation in the Plan does not constitute a condition of employment nor a commitment on the part of the Corporation to ensure the continued employment of such Participant. The Plan does not provide any guarantee against any loss which may result from fluctuations in the market value of the Class B Shares. The Corporation does not assume responsibility for the income or other tax consequences for the Participants and they are advised to consult with their own tax advisors.

6.8

Effective Date

This Plan becomes effective on a date to be determined by the Board.

6.9

Language

The parties have expressly requested that this Plan and all related documents be drafted in English only.  Les parties ont expressément requis que ce regime et tous les documents qui s'y rattachent soient rédigés en anglais seulement.

6.10

Governing Law

This Plan is created under and is to be governed, construed and administered in accordance with the laws of the Province of Quebec and the laws of Canada applicable therein.

SCHEDULE A 

Stock Option Plan Exercise Notice Form -
Options 

I, , ___________hereby exercise the option 
(print name) to purchase
_______________Class B Shares of 
z
(the "Corporation") at a purchase price of $_________ per Common Share. This
Exercise Notice is delivered in respect of the option to purchase
_______________Class B Shares of the Corporation that was granted to me on
pursuant to the Option Agreement entered into between the Corporation and me. In
connection with the foregoing, I enclose cash, a certified cheque, bank draft or
money order payable to the Corporation in the amount of $____________ as full
payment for the Class B Shares to be received upon exercise of the Option.

	____________________	_____________________
	Date	Optionee's Signature

 

SCHEDULE B

Form of Counterpart and Acknowledgement

Acknowledgement and Counterpart to the Shareholders Agreement between  dated as of December 18, 2003, among J.A. Bombardier (J.A.B.) Inc. (the “Corporation”),  Bombardier Recreational Products Inc., and shareholders of the Corporation, as the same may be amended, restated or replaced (the “Agreement”).

The undersigned agrees to be bound, at the time he or she acquires shares of the Corporation, by all the provisions of the Agreement including, without limitation, all covenants, agreements, obligations, representations and warranties made by a Manager in the Agreement and will be entitled to all the benefits and entitlements of a Manager under the Agreement, except as otherwise set out therein, and the Agreement will apply to the undersigned mutatis mutandis without further action by the undersigned or any party thereto.  This Option and any securities issued upon exercise of this Option constitute Management Shares as defined in the Agreement. The undersigned confirms that he or she has received a copy of the Agreement or have been given the opportunity to review the Agreement, and has obtained, or has had the opportunity to obtain, independent legal advice prior to entering into this agreement and acknowledgement.  (DATED this __________ day of _________________, _______.

	 	 	 
	
  
  Witness:

	 	
  
  Optionee:

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