Document:

<PAGE>

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                        SERIES A CONVERTIBLE PREFERRED

                     STOCK AND WARRANT PURCHASE AGREEMENT

                                     among

                         OUTBOARD MARINE CORPORATION,

                        QUANTUM INDUSTRIAL PARTNERS LDC

                                      and

                           GREENLAKE HOLDINGS II LLC

                        ______________________________

                           Dated:  January 28, 2000
                        ______________________________

================================================================================
<PAGE>

                               Table of Contents
                               -----------------

<TABLE>
<CAPTION>
<S>                                                                                <C>
ARTICLE I   DEFINITIONS..........................................................    1
     1.1        Definitions......................................................    1

ARTICLE II  PURCHASE AND SALE OF PREFERRED STOCK.................................    7
     2.1        Purchase and Sale of Preferred Stock and Warrants................    7
     2.2        Certificate of Designation.......................................    7
     2.3        Use of Proceeds..................................................    7
     2.4        Closing..........................................................    7

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................    8
     3.1        Corporate Existence and Power....................................    8
     3.2        Authorization; No Contravention..................................    8
     3.3        Governmental Authorization; Third Party Consents.................    8
     3.4        Binding Effect...................................................    8
     3.5        Compliance with Laws.............................................    9
     3.6        Capitalization...................................................    9
     3.7        No Default or Breach; Contractual Obligations....................   10
     3.8        Financial Statements.............................................   10
     3.9        No Material Adverse Change; Ordinary Course of Business..........   10
     3.10       Private Offering.................................................   11
     3.11       Intellectual Property............................................   11
     3.12       Broker's, Finder's or Similar Fees...............................   11
     3.13       Litigation; Observance of Statutes and Orders....................   11
     3.14       Taxes............................................................   12
     3.15       Title to Property; Leases........................................   12

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.....................   12
     4.1        Existence and Power..............................................   12
     4.2        Authorization; No Contravention..................................   13
     4.3        Governmental Authorization; Third Party Consents.................   13
     4.4        Binding Effect...................................................   13
     4.5        Purchase for Own Account.........................................   13
     4.6        Restricted Securities............................................   14
     4.7        Broker's, Finder's or Similar Fees...............................   14
     4.8        Accredited Investor..............................................   14
     4.9        Disclosure of Information........................................   15
     4.10       Investment Experience............................................   15

ARTICLE V   CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE..............   15
     5.1        Representations and Warranties...................................   15
     5.2        Secretary's Certificate..........................................   15
</TABLE>
                                       i
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<TABLE>
<S>                                                                                 <C>
     5.3        Filing of Charter Amendment and Certificate of Designation.......   15
     5.4        Purchased Shares.................................................   16
     5.5        Warrants.........................................................   16
     5.6        Registration Rights Agreement....................................   16
     5.7        Stockholders Agreement...........................................   16
     5.8        Opinion of Counsel...............................................   16

ARTICLE VI   CONDITIONS TO THE OBLIGATION  OF THE COMPANY TO CLOSE...............   16
     6.1        Representations and Warranties...................................   16
     6.2        Payment of Purchase Price........................................   17
     6.3        Registration Rights Agreement....................................   17
     6.4        Stockholders Agreement...........................................   17

ARTICLE VII  INDEMNIFICATION.....................................................   17
     7.1        Indemnification..................................................   17
     7.2        Notification.....................................................   18
     7.3        Limitation on Indemnification....................................   19

ARTICLE VIII AFFIRMATIVE COVENANTS...............................................   19
     8.1        Financial Statements and Other Information.......................   19
     8.2        Reservation of Common Stock......................................   20
     8.3        Books and Records................................................   20
     8.4        Inspection.......................................................   20

ARTICLE IX   MISCELLANEOUS.......................................................   20
     9.1        Survival of Representations and Warranties.......................   21
     9.2        Notices..........................................................   21
     9.3        Successors and Assigns; Third Party Beneficiaries................   22
     9.4        Amendment and Waiver.............................................   22
     9.5        Counterparts.....................................................   23
     9.6        Headings.........................................................   23
     9.7        GOVERNING LAW....................................................   23
     9.8        Severability.....................................................   23
     9.9        Rules of Construction............................................   23
     9.10       Right to Conduct Activities......................................   23
     9.11       Entire Agreement.................................................   24
     9.12       Fees.............................................................   24
     9.13       Publicity........................................................   24
     9.14       Further Assurances...............................................   25
</TABLE>

                                      ii
<PAGE>

EXHIBITS

A           Form of Warrant
B           Form of Certificate of Designations
C           Form of Registration Rights Agreement
D           Form of OMC Opinion of Counsel
E           Form of Stockholders Agreement

SCHEDULES

2.1         Purchased Shares, Warrant Shares and Purchase Price
3.3         Authorizations and Consents

                                       v
<PAGE>

                                  EXHIBIT 4.9

                        SERIES A CONVERTIBLE PREFERRED
                     STOCK AND WARRANT PURCHASE AGREEMENT

          SERIES A CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT,
dated January 28, 2000 (this "Agreement"), among Outboard Marine Corporation, a
                              ---------
Delaware corporation (the "Company") Quantum Industrial Partners LDC ("QIP") and
                           -------                                     ---
Greenlake Holdings II LLC ("Greenlake" and together with QIP, the "Purchasers").
                            ---------                              ----------

          WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to each of the Purchasers, for the
aggregate purchase price set forth opposite such Purchaser's name on Schedule
                                                                     --------
2.1 hereto, (i) the aggregate number of shares, par value $.01 per share, of
---
Series A Convertible Preferred Stock of the Company (the "Preferred Stock") set
                                                          ---------------
forth opposite such Purchaser's name on Schedule 2.1 hereto, and (ii) the
                                        ------------
warrant (the "Warrant") to purchase, subject to the terms and conditions
              -------
thereof, the aggregate number of shares (subject to adjustment) of Common Stock,
par value $.01 per share, of the Company (the "Common Stock") set forth opposite
                                               ------------
such Purchaser's name on Schedule 2.1 hereto, at an exercise price of $.01 per
                         ------------
share (subject to adjustment), containing the terms and conditions set forth in
the form of warrant attached hereto as Exhibit A.
                                       ---------

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:

                                  ARTICLE I.

                                  DEFINITIONS
                                  -----------

          A.  Definitions.  As used in this Agreement, and unless the context
              -----------
requires a different meaning, the following terms have the meanings indicated:

          "Affiliate" shall mean any Person who is an "affiliate" (as defined in
           ---------
Rule 12b-2 of the General Rules and Regulations under the Exchange Act) of, and
any Person controlling, controlled by, or under common control with, any
Purchaser.  For the purposes of this Agreement, "control" includes the ability
to have investment discretion through contractual means or by operation of law.
<PAGE>

          "Agreement" means this Agreement as the same may be amended,
           ---------
supplemented or modified in accordance with the terms hereof.

          "Audited Financial Statements" has the meaning set forth in Section
           ----------------------------
3.8 of this Agreement.

          "Board of Directors" means the Board of Directors of the Company.
           ------------------

          "Business Day" means any day other than a Saturday, Sunday or other
           ------------
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.

          "By-laws" means the by-laws of the Company in effect on the Closing
           -------
Date, as the same may be amended from time to time.

          "Certificate of Designation" means the Certificate of Designation with
           --------------------------
respect to the Preferred Stock adopted by the Board of Directors and duly filed
with the Secretary of State of the State of Delaware on or before the Closing
Date substantially in the form attached hereto as Exhibit B.
                                                  ---------

          "Certificate of Incorporation" means the Certificate of Incorporation
           ----------------------------
of the Company, as the same may be amended from time to time.

          "Charter Amendment" means an amendment to the Certificate of
           -----------------
Incorporation increasing the number of authorized shares of Common Stock from
25,000,000 to 36,000,000.

          "Claims" has the meaning set forth in Section 7.1 of this Agreement.
           ------

          "Closing" has the meaning set forth in Section 2.3 of this Agreement.
           -------

          "Closing Date" has the meaning set forth in Section 2.4 of this
           ------------
Agreement.

          "Code" means the Internal Revenue Code of 1986, as amended, or any
           ----
successor statute thereto.

          "Commission" means the United States Securities and Exchange
           ----------
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.

          "Common Stock" has the meaning set forth in the recitals to this
           ------------
Agreement.
<PAGE>

                                                                               3

          "Company" has the meaning set forth in the preamble to this Agreement.
           -------

          "Condition of the Company" means the assets, business, properties,
           ------------------------
prospects, operations or financial condition of the Company.

          "Contingent Obligation" means, as applied to any Person, any direct or
           ---------------------
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
                ------------------                           ---------------
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof.

          "Contractual Obligations" means, as to any Person, any provision of
           -----------------------
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.

          "Copyrights" means any foreign or United States copyright
           ----------
registrations and applications for registration thereof, and any non-registered
copyrights.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
           ------------
and the rules and regulations of the Commission thereunder.

          "GAAP" means United States generally accepted accounting principles in
           ----
effect from time to time.

          "Governmental Authority" means the government of any nation, state,
           ----------------------
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
<PAGE>

                                                                               4

          "Greenlake" has the meaning set forth in the recitals to this
           ---------
Agreement.

          "Indebtedness" means, as to any Person, (a) all obligations of such
           ------------
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business, (d) all interest rate
and currency swaps, caps, collars and similar agreements or hedging devices
under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (e) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (f) all obligations of
such Person under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (g) all indebtedness secured by any Lien (other than
Liens in favor of lessors under leases other than leases included in clause (f))
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is non-
recourse to the credit of that Person, and (h) any Contingent Obligation of such
Person.

          "Indemnified Party" has the meaning set forth in Section 7.1 of this
           -----------------
Agreement.

          "Indemnifying Party" has the meaning set forth in Section 7.1 of this
           ------------------
Agreement.

          "Intellectual Property" has the meaning set forth in Section 3.10 of
           ---------------------
this Agreement.

          "Interim Financial Statements" has the meaning set forth in Section
           ----------------------------
3.8 of this Agreement.

          "Internet Assets" means any Internet domain names and other computer
           ---------------
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.

          "Knowledge" means the knowledge of the Company.
           ---------
<PAGE>

                                                                               5

          "Lien" means any mortgage, deed of trust, pledge, hypothecation,
           ----
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).

          "Losses" has the meaning set forth in Section 7.1 of this Agreement.
           ------

          "Material Adverse Effect" means a material adverse effect on (i) the
           -----------------------
business, operations, financial condition, assets, prospects or properties of
the Company and its subsidiaries taken as a whole, or (ii) the ability of the
Company to perform its obligations under the Transaction Documents, or (iii) the
validity or enforceability of the Transaction Documents.

          "Notes" has the meaning set forth in Section 2.3 of this Agreement.
           -----

          "Orders" has the meaning set forth in Section 3.2 of this Agreement.
           ------

          "Patents" means any foreign or United States patents and patent
           -------
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.

          "Permits" has the meaning set forth in Section 3.5 of this Agreement.
           -------

          "Person" means any individual, firm, corporation, partnership, trust,
           ------
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.

          "Preferred Stock" has the meaning set forth in the recitals to this
           ---------------
Agreement.

          "Purchased Shares" has the meaning set forth in Section 2.1 of this
           ----------------
Agreement.

          "Purchasers" has the meaning set forth in the preamble to this
           ----------
Agreement.

          "QIP" has the meaning set forth in the recitals to this Agreement.
           ---

          "Registration Rights Agreement" means the Registration Rights
           -----------------------------
Agreement substantially in the form attached hereto as Exhibit C.
                                                       ---------
<PAGE>

                                                                               6

          "Requirements of Law" means, as to any Person, any law, statute,
           -------------------
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.

          "Securities" means the Purchased Shares, the shares of Common Stock
           ----------
issuable upon conversion of the Purchased Shares, the Warrants and the Warrant
Shares.

          "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------
rules and regulations of the Commission thereunder.

          "Software" means any computer software programs, source code, object
           --------
code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.

          "Stock Equivalents" means any security or obligation which is by its
           -----------------
terms convertible into or exchangeable for shares of common stock or other
capital stock or securities of the Company, and any option, warrant or other
subscription or purchase right with respect to common stock or such other
capital stock or securities.

          "Stockholders Agreement" means the Stockholders Agreement
           ----------------------
substantially in the form attached hereto as Exhibit E.
                                             ---------

          "Trade Secrets" means any trade secrets, research records, processes,
           -------------
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.

          "Trademarks" means any foreign or United States trademarks, service
           ----------
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.

          "Transaction Documents" means, collectively, this Agreement, the
           ---------------------
Warrants, the Stockholders Agreement, the Certificate of Designation and the
Registration Rights Agreement.

          "Warrant" has the meaning set forth in the recitals to this Agreement.
           -------
<PAGE>

                                                                               7

          "Warrant Shares" has the meaning set forth in Section 2.1 of this
           --------------
Agreement.

                                  ARTICLE II.

                     PURCHASE AND SALE OF PREFERRED STOCK
                     ------------------------------------

          A.  Purchase and Sale of Preferred Stock and Warrants.  Subject to the
              -------------------------------------------------
terms and conditions herein set forth, the Company agrees to issue and sell to
each Purchaser, and each Purchaser agrees to purchase from the Company, for the
aggregate purchase price set forth opposite such Purchaser's name on Schedule
2.1 hereto, on the Closing Date (a) the number of shares of Preferred Stock set
forth opposite such Purchaser's name on Schedule 2.1 hereto (all of the shares
                                        ------------
of Preferred Stock being purchased pursuant hereto being referred to herein as
the "Purchased Shares"), and (ii) a Warrant to purchase the aggregate number of
     ----------------
shares of Common Stock set forth opposite such Purchaser's name on Schedule 2.1
                                                                   ------------
hereto (all of the shares of Common Stock issuable upon exercise of the Warrants
being purchased pursuant hereto being referred to herein as the "Warrant
                                                                 -------
Shares").
------

          B.  Certificate of Designation.  The Purchased Shares shall have the
              --------------------------
preferences and rights set forth in the Certificate of Designation, which shall
be filed by the Company prior to the Closing.

          C.  Use of Proceeds.  The Company shall use the proceeds from the sale
              ---------------
of the Purchased Shares and the Warrants to the Purchasers for general corporate
purposes, including to fund the Company's working capital, make capital
expenditures and, to the extent the Subordinated Promissory Notes dated January
19, 2000 and issued by the Company to Quantum Industrial Partners LDC and
Greenlake Holdings II LLC, in the principal sum of $10,424,187.73 and
$4,575,812.27, respectively (the "Notes") are not exchanged for shares of
                                  -----
Preferred Stock pursuant to the terms of the Notes, to redeem the Notes.

          D.  Closing.  The closing of the sale and purchase of the Purchased
              -------
Shares (the "Closing") shall take place at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, at 10:00 a.m., local time, on January 28, 2000 or at such
other time, place and date that the Company and the Purchasers may agree in
writing (the "Closing Date").  On the Closing Date, the Company shall deliver to
              ------------
each Purchaser (a) a certificate representing its Purchased Shares and (b) a
Warrant to purchase Warrant Shares against delivery by such Purchaser to the
Company of the aggregate purchase price therefor by wire transfer of immediately
available funds.
<PAGE>

                                                                               8

                                 ARTICLE III.

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                 ---------------------------------------------

          The Company represents and warrants to each of the Purchasers as
follows:

          A.  Corporate Existence and Power.  The Company (a) is a corporation
              -----------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is proposed to be, engaged;
and (c) is duly qualified as a foreign corporation, licensed and in good
standing under the laws of each jurisdiction in which its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not, individually or
in the aggregate, have a Material Adverse Effect.  The Company has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Transaction Documents.

          B.  Authorization; No Contravention.  The execution, delivery and
              -------------------------------
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby, including,
without limitation, the sale, issuance and delivery of the Securities, (a) have
been duly authorized by all necessary corporate action of the Company; (b) do
not contravene the terms of the Certificate of Incorporation or the By-laws; (c)
do not violate, conflict with or result in any breach or contravention of, or
the creation of any Lien under, any Contractual Obligation of the Company or any
Requirement of Law applicable to the Company, except as would not have a
Material Adverse Effect; and (d) do not violate any judgment, injunction, writ,
award, decree or order of any nature (collectively, "Orders") of any
                                                     ------
Governmental Authority against, or binding upon, the Company.

          C.  Governmental Authorization; Third Party Consents. Except as set
              ------------------------------------------------
forth in Schedule 3.3 or with respect to filings that are required or permitted
         ------------
to be made pursuant to federal or state securities laws, no approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person, and no lapse of a waiting period
under a Requirement of Law, is necessary or required in connection with the
execution, delivery or performance (including, without limitation, the sale,
issuance and delivery of the Securities) by, or enforcement against, the Company
of this Agreement and the other Transaction Documents or the transactions
contemplated hereby and thereby.

          D.  Binding Effect.  This Agreement and each of the other
              --------------
Transaction Documents have been duly executed and delivered by the Company, and
<PAGE>

                                                                               9

constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).

          E.  Compliance with Laws.
              --------------------

              (1) The Company is in compliance with all Requirements of Law and
all Orders issued by any court or Governmental Authority against the Company in
all material respects.

              (2) (i) The Company has all licenses, permits and approvals of any
Governmental Authority (collectively, "Permits") that are necessary for the
                                       -------
conduct of the business of the Company; (ii) such Permits are in full force and
effect; and (iii) no violations are or have been recorded in respect of any
Permit, in each case, except as would not, individually or in the aggregate,
have a Material Adverse Effect.

          F.  Capitalization.  On the Closing Date, after giving effect to the
              --------------
transactions contemplated by this Agreement (including the filing of the Charter
Amendment), the authorized capital stock of the Company shall consist of (i)
36,000,000 shares of Common Stock, of which 20,439,531 shares are issued and
outstanding, (ii) 650,000 shares of Preferred Stock, and (iii) 350,000 shares of
undesignated "blank check" preferred stock.  The Company has reserved an
aggregate of 4,642,857 shares of Common Stock for issuance upon conversion of
the Purchased Shares, 5,750,000 shares of Common Stock for issuance upon
exercise of the Warrants and an aggregate of 2,100,000 shares of Common Stock
for issuance upon the exercise of stock options issued or issuable under the
Outboard Marine Corporation Personal Rewards and Opportunities Plan.  Except as
described in the immediately preceding sentence or as provided in the
Transaction Documents, on the Closing Date, there will be no options, warrants,
conversion privileges, subscription or purchase rights or other rights
outstanding to purchase or otherwise acquire (i) any authorized but unissued,
unauthorized or treasury shares of the Company's capital stock, (ii) any Stock
Equivalents or (iii) other securities of the Company.  The Purchased Shares and
the Warrants are duly authorized, and when issued and sold to the Purchasers
after payment therefor, will be validly issued, fully paid and non-assessable,
and, assuming the accuracy of and compliance with each Purchaser's
representations and warranties in Sections 4.5, 4.6, 4.8, 4.9 and 4.10 hereof,
will be exempt from the registration requirements of the Securities Act.  The
shares of Common Stock issuable upon conversion of the Purchased Shares and
exercise of the Warrants are duly authorized and, when issued in compliance with
the provisions of the Certificate of Designations (in the case of the shares of
Common Stock issuable upon conversion of the Purchased
<PAGE>

                                                                              10

Shares) and the Warrants (in the case of the Warrant Shares), will be validly
issued, fully paid and non-assessable and not subject to any preemptive rights
or similar rights that have not been satisfied. The issued and outstanding
shares of Common Stock are all duly authorized, validly issued, fully paid and
non-assessable.

          G.  No Default or Breach; Contractual Obligations.  The Company has
              ---------------------------------------------
not received notice of a current or pending default and is not in default under,
or with respect to, any Contractual Obligation nor, to the Company's knowledge,
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder, except as would not have a Material Adverse
Effect.  All of the Contractual Obligations are valid, subsisting, in full force
and effect and binding upon the Company and, to the Company's Knowledge, the
other parties thereto. To the Knowledge of the Company, no other party to any
such Contractual Obligation is in material default thereunder, nor does any
condition exist that with notice or lapse of time or both would constitute a
material default by such other party thereunder.

          H.  Financial Statements. The consolidated balance sheet of the
              --------------------
Company and its subsidiaries as of December 31, 1998, and the related
consolidated statements of income, stockholders equity and cash flows for the
year then ended, including the notes and schedules thereto, certified by Arthur
Andersen LLP, independent public accountants, that have been delivered by the
Company to the Purchasers fairly present the consolidated financial position of
the Company and its subsidiaries as at December 31, 1998 and the consolidated
results of operations for the Company and its subsidiaries for the period then
ended, in each case in accordance with generally accepted accounting principles
consistently applied for the period covered thereby (the foregoing consolidated
financial statements at and for the period ending December 31, 1998 are referred
to herein as the "Audited Financial Statements").  The unaudited consolidated
                  ----------------------------
balance sheet of the Company and its subsidiaries as of November 30, 1999 and
the related unaudited consolidated statements of income, stockholders equity and
cash flows for the eleven months then ended, that have been delivered by the
Company to the Purchasers fairly present the consolidated financial position of
the Company and its subsidiaries as at November 30, 1999 and the consolidated
results of operations for the Company and its subsidiaries for the eleven months
then ended, in each case in accordance with generally accepted accounting
principles applied on a basis consistent with the Audited Financials, except for
normal year-end adjustments and the absence of footnotes required by GAAP (the
foregoing unaudited consolidated financial statements at November 30, 1999 and
for the eleven months then ending are referred to herein as the "Interim
                                                                 -------
Financial Statements").
--------------------

          I.  No Material Adverse Change; Ordinary Course of Business.  Since
              -------------------------------------------------------
December 31, 1998, there has been no change in the financial condition,
operations, business or properties of the Company or any of its subsidiaries
except (x) as disclosed in the Company's reports under the Securities Exchange
Act of 1934,
<PAGE>

                                                                              11

as amended, as filed with the Securities and Exchange Commission subsequent to
December 31, 1998 and prior to the date hereof, (y) as disclosed in the Interim
Financial Statements or (y) changes that individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect.

          J.  Private Offering.  No form of general solicitation or general
              ----------------
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares or the Warrants.

          K.  Intellectual Property.
              ---------------------

              (1)  Except as would not, individually or in the aggregate, have a
Material Adverse Effect: (i)  The Company is the owner of all, or has the
license or right to use, sell and license all of, the Copyrights, Patents, Trade
Secrets, Trademarks, Internet Assets, Software and other proprietary rights
(collectively, "Intellectual Property") that are used in connection with its
                ---------------------
business as presently conducted or contemplated in its business plan, free and
clear of all Liens.

                    (ii)   None of the Intellectual Property of the Company is
subject to any outstanding Order, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending or, to the
Knowledge of the Company, threatened, which challenges the validity,
enforceability, use or ownership of the item.

                    (iii)  To the knowledge of the Company, none of the
Intellectual Property currently sold or licensed by the Company to any Person or
used by or licensed to the Company by any Person infringes upon or otherwise
violates any Intellectual Property rights of others.

                    (iv)   No litigation is pending and no Claim has been made
against the Company or, to the Knowledge of the Company, is threatened,
contesting the right of the Company to sell or license to any Person or use the
Intellectual Property presently sold or licensed to such Person or used by the
Company.

              (2)   To the Knowledge of the Company, no Person is infringing
upon or otherwise violating the Intellectual Property rights of the Company.

          L.  Broker's, Finder's or Similar Fees.  There are no brokerage
              ----------------------------------
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by the
Company.

          M.  Litigation; Observance of Statutes and Orders.
              ---------------------------------------------
<PAGE>

                                                                              12

               1.  There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
subsidiary or any property of the Company or any subsidiary in any court or
before any arbitrator of any kind or before or by any governmental authority
that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

               2.  Neither the Company nor any subsidiary is in default under
any order, judgment, decree or ruling of any court, arbitrator or governmental
authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation environmental laws) of any governmental
authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

          N.   Taxes.  The Company and its subsidiaries have filed all income
               -----
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (x) the amount of which, or the failure to file with
respect to which, is not individually or in the aggregate material or (y) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Company or a
subsidiary, as the case may be, has established adequate reserves in accordance
with generally accepted accounting principles.

          O.   Title to Property; Leases.  The Company and its subsidiaries
               -------------------------
have good title to their respective properties, including all such properties
reflected in the audited balance sheet as of December 31, 1998 or purported to
have been acquired by the Company or any subsidiary after said date (except as
sold or otherwise disposed of), in each case free and clear of liens, except for
(x) liens securing the Company's obligations under the Company's credit
facilities and in respect of the Company's borrowings, and (y) those defects in
title and liens that, individually or in the aggregate, would not have a
Material Adverse Effect.  All material leases are valid and subsisting and are
in full force and effect in all material respects except to the extent that the
failure to be so would not, individually or in the aggregate, have a Material
Adverse Effect.

                                  ARTICLE IV.

               REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
               ------------------------------------------------
<PAGE>

                                                                              13

          Each of the Purchasers hereby represents and warrants, severally and
not jointly, to the Company as follows:

          A.   Existence and Power.  Such Purchaser (a) is duly organized and
               -------------------
validly existing under the laws of the jurisdiction of its formation and (b) has
the requisite power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Agreements to
which it is a party.

          B.   Authorization; No Contravention.  The execution, delivery and
               -------------------------------
performance by such Purchaser of this Agreement and each of the other
Transaction Agreements to which it is a party and the transactions contemplated
hereby and thereby, (a) have been duly authorized by all necessary action, (b)
do not contravene the terms of such Purchaser's organizational documents, or any
amendment thereof, and (c) do not violate, conflict with or result in any breach
or contravention of, or the creation of any Lien under, any Contractual
Obligation of such Purchaser or any Requirement of Law applicable to such
Purchaser, and (d) do not violate any Orders of any Governmental Authority
against, or binding upon, such Purchaser.

          C.   Governmental Authorization; Third Party Consents.  No approval,
               ------------------------------------------------
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Shares and the Warrants) by, or
enforcement against, such Purchaser of this Agreement and each of the other
Transaction Agreements to which it is a party or the  transactions contemplated
hereby and thereby.

          D.   Binding Effect.  This Agreement and each of the other Transaction
               --------------
Agreements to which it is a party have been duly executed and delivered by such
Purchaser and constitutes the legal, valid and binding obligations of such
Purchaser, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).

          E.   Purchase for Own Account.  The Purchased Shares and the Warrants
               ------------------------
to be acquired by such Purchaser pursuant to this Agreement and any shares of
Common Stock received upon conversion or exercise of the Purchased Shares or the
Warrants or as a result of the ownership thereof are being or will be acquired
for investment for its own account and with no intention of distributing,
transferring, assigning or reselling or otherwise disposing such Purchased
Shares or Warrants or Common Stock or any part thereof in any transaction that
would be in violation of the
<PAGE>

                                                                              14

securities laws of the United States of America, or any state, without
prejudice, however, to the rights of such Purchaser at all times to sell or
otherwise dispose of all or any part of such Purchased Shares or Warrants under
an effective registration statement under the Securities Act, or under an
exemption from such registration available under the Securities Act, and
subject, nevertheless, to the disposition of such Purchaser's property being at
all times within its control. If such Purchaser should in the future decide to
dispose of any of the Securities, such Purchaser understands and agrees that it
may do so only once it reasonably satisfies the Company that such transfer is in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of a legend on certificates representing all of the Securities to the following
effect:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR RECEIVABLE
     UPON THE EXERCISE OR CONVERSION THEREOF OR AS A RESULT OF THE
     OWNERSHIP HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
     ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
     ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT
     TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
     APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
     EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
     LAWS."

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
     STOCKHOLDERS AGREEMENT AMONG THE COMPANY AND THE ORIGINAL
     PURCHASERS OF THE SECURITIES REPRESENTED HEREBY. TRANSFEREES OF
     SUCH SECURITIES SHOULD REVIEW SUCH AGREEMENT TO DETERMINE THEIR
     RIGHTS AND OBLIGATIONS."

          F.   Restricted Securities.  Such Purchaser understands that the
               ---------------------
Securities are "restricted securities" under the Securities Act and will not be
registered at the time of their issuance under the Securities Act for the reason
that the sale provided for in this Agreement is exempt pursuant to Section 4(2)
of the Securities Act and that the reliance of the Company on such exemption is
predicated in part on such Purchaser's representations set forth herein, and
that such Securities may be resold without registration under the Securities Act
only in certain limited circumstances defined therein.  Such Purchaser
represents that it is reasonably familiar with such resale restrictions in the
Securities Act, Rule 144 promulgated thereunder, and the other applicable
federal and state rules and regulations.
<PAGE>

                                                                              15

          G.   Broker's, Finder's or Similar Fees.  There are no brokerage
               ----------------------------------
commissions, finder's fees or similar fees or commissions payable by such
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser or any action taken
by such Purchaser.

          H.   Accredited Investor.  Such Purchaser is an "Accredited Investor"
               -------------------
within the meaning of Rule 501 of Regulation D under the Securities Act, as
presently in effect.

          I.   Disclosure of Information.  Such Purchaser has carefully reviewed
               -------------------------
the representations and warranties concerning the Company contained in this
Agreement and has had adequate opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Securities and the business, assets, prospects and financial condition of the
Company.

          J.   Investment Experience.  Such Purchaser is, or has been, an
               ---------------------
investor in securities of companies similar to the Company and has or is
represented by one who has such knowledge and experience in financial or
business matters that it is capable of evaluation of the merits and risks of an
investment in the Securities.

                                  ARTICLE V.

                         CONDITIONS TO THE OBLIGATION
                          OF THE PURCHASERS TO CLOSE
                          --------------------------

          The obligation of the Purchasers to purchase the Purchased Shares and
the Warrants, to pay the purchase price therefor at the Closing and to perform
any obligations hereunder shall be subject to the satisfaction as determined by,
or waiver by, the Purchasers of the following conditions on or before the
Closing Date.

          A.   Representations and Warranties.  The representations and
               ------------------------------
warranties of the Company contained in Article III hereof shall be true and
correct in all material respects at and on the Closing Date as if made at and on
such date, except to the extent that any representation and warranty expressly
speaks as of an earlier date, in which case such representation and warranty is
true and correct as of such date and except for any activities or transactions
which may have taken place after the date hereof which are contemplated by this
Agreement.

          B.   Secretary's Certificate.  The Purchasers shall have received a
               -----------------------
certificate from the Company, in form and substance satisfactory to the
Purchasers, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company, certifying (a) that the attached copies of the
Certificate of Incorporation
<PAGE>

                                                                              16

(including the Charter Amendment and the Certificate of Designation), the By-
laws, and resolutions of the Board of Directors of the Company approving this
Agreement and each of the other Transaction Documents and the transactions
contemplated hereby and thereby, are all true, complete and correct and remain
unamended and in full force and effect and (b) as to the incumbency and specimen
signature of each officer of the Company executing this Agreement, each other
Transaction Document and any other document delivered in connection herewith on
behalf of the Company.

          C.   Filing of Charter Amendment and Certificate of Designation.
               ----------------------------------------------------------
Each of the Charter Amendment and the Certificate of Designation shall have been
duly filed by the Company with the Secretary of State of the State of Delaware
in accordance with the General Corporation Law of the State of Delaware, and the
Purchasers shall have received evidence of each such filing in form and
substance reasonably satisfactory to the Purchasers.

          D.   Purchased Shares.  The Company shall have delivered to each of
               ----------------
the Purchasers certificates in definitive form representing the number of
Purchased Shares set forth opposite such Purchaser's name on Schedule 2.1
                                                             ------------
hereto, registered in the name of such Purchaser.

          E.   Warrants.  The Company shall have duly executed and delivered to
               --------
each of the Purchasers a Warrant to purchase that number of shares of Common
Stock set forth opposite such Purchaser's name on Schedule 2.1 hereto in
                                                  ------------
substantially the form attached hereto as Exhibit A.
                                          ---------

          F.   Registration Rights Agreement.  The Company shall have duly
               -----------------------------
executed and delivered the Registration Rights Agreement.

          G.   Stockholders Agreement.  The Company shall have duly executed
               ----------------------
and delivered the Stockholders Agreement.

          H.   Opinion of Counsel.  The Purchasers shall have received an
               ------------------
opinion of Senior Counsel for the Company, dated the Closing Date, relating to
the transactions contemplated by or referred to herein, substantially in the
form attached hereto as Exhibit D.
                        ---------

                                  ARTICLE VI.

                         CONDITIONS TO THE OBLIGATION
                            OF THE COMPANY TO CLOSE
                            -----------------------
<PAGE>

                                                                              17

          The obligation of the Company to issue and sell the Purchased Shares
and the Warrants and the obligation of the Company to perform its other
obligations hereunder shall be subject to the satisfaction as determined by, or
waiver by, the Company of the following conditions on or before the Closing
Date:

          A.   Representations and Warranties.  The representations and
               ------------------------------
warranties of the Purchasers contained in Article IV hereof shall be true and
correct on at and on the Closing Date as if made at and on such date, except to
the extent that any representation and warranty expressly speaks as of an
earlier date, in which case such representation and warranty is true and correct
as of such date and except for any activities or transactions which may have
taken place after the date hereof which are contemplated by this Agreement.

          B.   Payment of Purchase Price.  Each Purchaser shall have paid the
               -------------------------
aggregate purchase price for the Purchased Shares and the Warrant to be
purchased by such Purchaser.

          C.   Registration Rights Agreement.  Each Purchaser shall have duly
               -----------------------------
executed and delivered the Registration Rights Agreement.

         D.   Stockholders Agreement.  Each Purchaser have duly executed and
              ----------------------
delivered the Stockholders Agreement.

                                 ARTICLE VII.

                                INDEMNIFICATION
                                ---------------

          A.   Indemnification.  Except as otherwise provided in this Article
               ---------------
VII, the Company (the "Indemnifying Party") agrees to indemnify, defend and hold
                       ------------------
harmless each of the Purchasers and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "Indemnified Party") to the fullest extent
                               -----------------
permitted by law from and against any and all losses, actions, suits,
proceedings, claims, complaints, disputes, arbitrations or investigations
(collectively, "Claims" or written threats thereof (including, without
                ------
limitation, any Claim by a third party), damages, expenses (including reasonable
fees, disbursements and other charges of counsel incurred by the Indemnified
Party in any action between the Indemnifying Party and the Indemnified Party or
between the Indemnified Party and any third party) or other liabilities
(collectively, "Losses") resulting from or arising out of any breach of any
                ------
representation or warranty, covenant or agreement by the Company in this
Agreement or the other Transaction Documents; provided, however, that the
                                              --------  -------
Indemnifying Party shall not be liable under this Article VII to an Indemnified
Party to the extent that it is finally judicially determined
<PAGE>

                                                                              18

that such Losses resulted or arose from the breach by such Indemnified Party of
any representation, warranty, covenant or other agreement of such Indemnified
Party contained in this Agreement or the other Transaction Documents or the
willful misconduct or gross negligence of such Indemnified Party; and provided
                                                                      --------
further, that if and to the extent that such indemnification is unenforceable
-------
for any reason, the Indemnifying Party shall make the maximum contribution to
the payment and satisfaction of such Losses which shall be permissible under
applicable laws. The amount of any payment to any Indemnified Party herewith in
respect of any Loss shall be of sufficient amount to make such Indemnified Party
whole. In connection with the obligation of the Indemnifying Party to indemnify
for expenses as set forth above, the Indemnifying Party shall, upon presentation
of appropriate invoices containing reasonable detail, reimburse each Indemnified
Party for all such expenses (including reasonable fees, disbursements and other
charges of counsel incurred by the Indemnified Party in any action between the
Indemnifying Party and the Indemnified Party or between the Indemnified Party
and any third party) as they are incurred by such Indemnified Party; provided,
                                                                     --------
however, that if an Indemnified Party is reimbursed under this Article VII for
-------
any expenses, such reimbursement of expenses shall be refunded to the extent it
is finally judicially determined that the Losses in question resulted primarily
from the willful misconduct or gross negligence of such Indemnified Party.

          B0   Notification.  Each Indemnified Party under this Article VII
               ------------
shall, promptly after the receipt of notice of the commencement of any Claim
against such Indemnified Party in respect of which indemnity may be sought from
the Indemnifying Party under this Article VII, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article VII or (b) under this Article VII
unless, and only to the extent that, such omission results in the Indemnifying
Party's forfeiture of substantive rights or defenses. In case any such Claim
shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
                                                                   --------
however, that any Indemnified Party may, at its own expense, retain separate
-------
counsel to participate in such defense at its own expense.  Notwithstanding the
foregoing, in any Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ separate
counsel and to control its own defense of such Claim if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable; provided, however, that the Indemnifying Party (i) shall not be
           --------  -------
liable for the fees and expenses of more than one counsel to all Indemnified
Parties and (ii) shall
<PAGE>

                                                                              19

reimburse the Indemnified Parties for all of such fees and expenses of such
counsel incurred in any action between the Indemnifying Party and the
Indemnified Parties or between the Indemnified Parties and any third party, as
such expenses are incurred. The Indemnifying Party agrees that it will not,
without the prior written consent of the Purchasers, settle, compromise or
consent to the entry of any judgment in any pending or threatened Claim relating
to the matters contemplated hereby (if any Indemnified Party is a party thereto
or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising or that may arise out of such
Claim. The Indemnifying Party shall not be liable for any settlement of any
Claim effected against an Indemnified Party without its written consent, which
consent shall not be unreasonably withheld. The rights accorded to an
Indemnified Party hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise;
provided, however, that notwithstanding the foregoing or anything to the
--------  -------
contrary contained in this Agreement, nothing in this Article VII shall restrict
or limit any rights that any Indemnified Party may have to seek equitable
relief.

          C0   Limitation on Indemnification.  Anything in this Agreement to
               -----------------------------
the contrary notwithstanding, no payment shall be made to an Indemnified Party
pursuant to Section 7.1 of this Agreement until the amounts which the Purchasers
would otherwise be entitled to receive as indemnification under this Agreement
aggregate at least $500,000, at which time the Purchaser shall be entitled to
receive any such payments and any subsequent payments in full.  Anything in this
Agreement to the contrary notwithstanding, the liability of the Company under
this Article shall in no event exceed the total purchase price paid for the
Purchased Shares and the Warrants received by the Company pursuant to this
Agreement.

                                 ARTICLE VIII.

                             AFFIRMATIVE COVENANTS
                             ---------------------

          The Company hereby covenants and agrees with each Purchaser that so
long as such Purchaser holds any Purchased Shares or Warrant:

          A0   Financial Statements and Other Information.  The Company shall
               ------------------------------------------
deliver to such Purchaser, in form and substance reasonably satisfactory to such
Purchaser:

               1   as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such fiscal year and the related
statements of operations and
<PAGE>

                                                                              20

cash flows for such fiscal year, setting forth in each case in comparative form
the figures for the previous year, all in reasonable detail and accompanied by a
management summary and analysis of the operations of the Company for such fiscal
year and by the opinion of a nationally recognized independent certified public
accounting firm which report shall state without qualification that such
financial statements present fairly the financial condition as of such date and
results of operations and cash flows for the periods indicated in conformity
with GAAP applied on a consistent basis;

               2   commencing with the quarterly fiscal period ending on March
31, 2000, as soon as available, but in any event not later than forty-five (45)
days after the end of each of the first three fiscal quarters of each fiscal
year, the unaudited balance sheet of the Company, and the related statements of
operations and cash flows for such quarter and for the period commencing on the
first day of the fiscal year and ending on the last day of such quarter, all
certified by an appropriate officer of the Company as presenting fairly the
financial condition as of such date and results of operations and cash flows for
the periods indicated in conformity with GAAP applied on a consistent basis,
subject to normal year-end adjustments and the absence of footnotes required by
GAAP; and

               3   commencing with the month ending on January 31, 2000, as soon
as available, but in any event not later than thirty (30) days after the end of
the first eleven months of each fiscal year, the unaudited balance sheet of the
Company, and the related statements of operations and cash flows for such month
and for the period commencing on the first day of the fiscal year and ending on
the last day of such month, all certified by an appropriate officer of the
Company as presenting fairly the financial condition as of such date and results
of operations and cash flows for the periods indicated in conformity with GAAP
applied on a consistent basis, subject to normal year-end adjustments and the
absence of footnotes required by GAAP.

          B0   Reservation of Common Stock.  The Company shall at all times
               ---------------------------
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issue or delivery upon conversion of the Purchased Shares, as
provided in the Certificate of Designations, and the exercise of the Warrants
the maximum number of shares of Common Stock that may be issuable or deliverable
upon such conversion.  Such shares of Common Stock are duly authorized and, when
issued or delivered in accordance with the Certificate of Designations, shall be
validly issued, fully paid and non-assessable.  The Company shall issue such
shares of Common Stock, in accordance with the terms of the Certificate of
Designations, and otherwise comply with the terms hereof and thereof.

          C0   Books and Records.  The Company shall keep proper books of record
               -----------------
and account, in which full and correct entries shall be made of all financial
<PAGE>

                                                                              21

transactions and the assets and business of the Company in accordance with GAAP
consistently applied.

          D0   Inspection.  The Company shall permit representatives of the
               ----------
Purchasers to visit and inspect any of its properties, to examine its corporate,
financial and operating records and make copies thereof or abstracts therefrom,
to discuss its affairs, finances and accounts with their respective directors,
officers and independent public accountants, and shall provide the Purchasers
and their representatives with reasonable access to its officers and employees,
all at such reasonable times during normal business hours and as often as may be
reasonably requested upon reasonable advance notice to the Company.

                                  ARTICLE IX.

                                 MISCELLANEOUS
                                 -------------

          A0   Survival of Representations and Warranties.  All of the
               ------------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the first anniversary of the Closing Date.

          B0   Notices.  All notices, demands and other communications provided
               -------
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:

               if to the Company:

               Outboard Marine Corporation
               100 Sea Horse Drive
               Waukegan, IL 60085
               Telecopy: (847) 689-6200
               Attention: General Counsel

               with a copy to:

               Davis Polk & Wardwell
               450 Lexington Avenue
               New York, NY 10017
               Telecopy: (212) 450-4800
               Attention: Julia K. Cowles, Esq.

               (i) if to Quantum Industrial Partners LDC.:
<PAGE>

                                                                              22

                  Kaya Flamboyan 9,
                  Villemstad
                  Curacao
                  Netherlands-Antilles
                  with a copy to:

                  Soros Fund Management LLC
                  888 Seventh Avenue
                  New York, NY 10016
                  Telecopy:  (212) 664-0544
                  Attention:  Michael Neus, Esq.

                  and a copy to:

                  Paul, Weiss, Rifkind, Wharton & Garrison
                  1285 Avenue of the Americas
                  New York, New York 10019-6064
                  Telecopy:(212) 757-3990
                  Attention:  Richard S. Borisoff, Esq.

            (ii)  If to Greenlake:

                  Greenlake Holdings II LLC
                  c/o Greenway Partners, L.P.
                  277 Park Avenue
                  New York, NY 10016
                  Telecopy: (212) 350-5253
                  Attention: Gary Duberstein

                  with a copy to:

                  Weil, Gotshal & Manges
                  767 Fifth Avenue
                  New York, New York 10153
                  Telecopy: (212) 310-8007
                  Attention: David Blittner, Esq.

          All such notices, demands and other communications shall be deemed to
have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied.
<PAGE>

                                                                              23

          C0   Successors and Assigns; Third Party Beneficiaries.  This
               -------------------------------------------------
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to applicable securities laws
and the terms and conditions thereof, the Purchasers may assign any of their
rights under this Agreement or the other Transaction Documents to any of their
respective Affiliates. The Company may not assign any of its rights under this
Agreement without the written consent of the Purchasers. Except as provided in
Article VII, no Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.

          D0   Amendment and Waiver.
               --------------------

               1   No failure or delay on the part of the Company or the
Purchasers 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 preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.

               2   Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchasers purchasing 75% of
the Purchased Shares, and (ii) only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances.

          E0   Counterparts.  This Agreement may be executed in any number of
               ------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          F0   Headings.  The headings in this Agreement are for convenience of
               --------
reference only and shall not limit or otherwise affect the meaning hereof.

          G0   GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
               -------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
<PAGE>

                                                                              24

          H0   Severability.  If any one or more of the provisions contained
               ------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

          I0   Rules of Construction.  Unless the context otherwise requires,
               ---------------------
"or" is not exclusive and references to sections or subsections refer to
sections or subsections of this Agreement.

          J0   Right to Conduct Activities.  The Company and each Purchaser
               ---------------------------
hereby acknowledges that some or all of the Purchasers are professional
investment funds, and as such, invest in numerous portfolio companies, some of
which may be competitive with the Company's business.  No Purchaser shall be
liable to the Company or to any other Purchaser for any claim arising out of, or
based upon, the investment activities of such Purchaser, including without
limitation, any claim arising out of, or based upon, (i) the investment by
Purchaser in an entity competitive to the Company, or (ii) actions taken by any
partner, officer or other representative of any Purchaser to assist any such
competitive company, or otherwise, and whether or not such action has a
detrimental effect of the Company.

          K0   Entire Agreement.  This Agreement, together with the exhibits
               ----------------
and schedules hereto, and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein.  There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein.  This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter.

          L0   Fees.  Upon the Closing, the Company shall reimburse each of the
               ----
Purchasers for all expenses incurred by each such Purchaser in the course of
conducting such Purchaser's due diligence investigation of the Company
(including any fees and expenses of outside consultants to such Purchaser) and
for the fees, disbursements and other charges of counsel incurred in connection
with the transactions contemplated by this Agreement.

          M0   Publicity.
               ---------
<PAGE>

                                                                              25

               (a)  Except as may be required by applicable Requirements of Law,
none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement and the
transactions contemplated hereby without prior approval by the other parties
hereto. If any announcement is required by law or the rules of any securities
exchange or market on which shares of Common Stock are traded to be made by any
party hereto, prior to making such announcement such party will deliver a draft
of such announcement to the other parties and shall give the other parties
reasonable opportunity to comment thereon.

               (b)  For so long as QIP or any of its Affiliates owns any shares
of Preferred Stock or Common Stock into which it is converted, QIP shall have
the opportunity to review and modify any provision of any public release, public
announcement or government filing which is to be released to the public, which
provision mentions QIP or any of its Affiliates, prior to the release of such
document to the public, it being understood and agreed that Soros Private Equity
Partners LLC will be identified as making investments on behalf of QIP.

          N0   Further Assurances.  Each of the parties shall execute such
               ------------------
documents and use reasonable efforts to perform such further acts (including,
without limitation, obtaining any consents, exemptions, authorizations or other
actions by, or giving any notices to, or making any filings with, any
Governmental Authority or any other Person) as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

          IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Series A Convertible Preferred Stock and Warrant Purchase
Agreement on the date first written above.

                                   OUTBOARD MARINE CORPORATION

                                   By: /S/ Eric T. Martinez
                                       -------------------------------
                                       Name:  Eric T. Martinez
                                       Title: Vice President and Treasurer

                                   QUANTUM INDUSTRIAL PARTNERS LDC

                                   By: /S/ Michael C. Neus
                                       -------------------------------
                                       Name:  Michael C. Neus
                                       Title: Attorney-In-Fact

                                   GREENLAKE HOLDINGS II LLC

                                   By: /S/ Gary K. Duberstein
                                       ---------------------
                                       Name:  Gary K. Duberstein
                                       Title: Vice President
<PAGE>

                                                                       Exhibit A
                                                                       ---------
                              PURCHASE AGREEMENT
                              ------------------

                                               Date:____________________

TO:

          The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby agrees to purchase_______ shares of Common Stock covered by such
Warrant, makes payment herewith in full therefor at the price per share provided
by this Warrant.

                                   Signature:__________________________

                                   Address:  __________________________
                                             __________________________
                                             __________________________

                                   *   *   *

                                  ASSIGNMENT
                                  ----------

          For Value Received, _______________________________________________
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Warrant, with respect to the number of shares of Common Stock covered
by such Warrant, to:

NAME OF ASSIGNEE                   ADDRESS                       NO. OF SHARES
----------------                   -------                       -------------

Dated:___________________          Signature:_________________________

___

___                                Witness:___________________________

                                       1<PAGE>

===============================================================================

                            STOCKHOLDERS AGREEMENT

                                     among

                          OUTBOARD MARINE CORPORATION

                        QUANTUM INDUSTRIAL PARTNERS LDC

                                      and

                           GREENLAKE HOLDINGS II LLC

                            Dated: January 28, 2000
<PAGE>

                               Table of Contents
                               -----------------

<TABLE>
<S>                                                                                       <C>
1.   Definitions........................................................................    1

2.   Restrictions on Transfer of Shares.................................................    5
     2.1  Limitation on Transfer........................................................    5
     2.2  Permitted Transfers...........................................................    5
     2.3  Permitted Transfer Procedures.................................................    6
     2.4  Transfers in Compliance with Law; Substitution of Transferee..................    6

3.   Right of First Offer and Tag-Along Rights..........................................    6
     3.1  Proposed Voluntary Transfers..................................................    6
     3.2  Involuntary Transfers.........................................................   10

4.   Future Issuance of Shares; Preemptive Rights.......................................   12
     4.1  Offering Notice...............................................................   12
     4.2  Preemptive Rights; Exercise...................................................   13
     4.3  Closing.......................................................................   13
     4.4  Sale to Subject Purchaser.....................................................   14

5.   After-Acquired Securities; Agreement to be Bound...................................   14
     5.1  After-Acquired Securities.....................................................   14
     5.2  Agreement to be Bound.........................................................   14

6.   Miscellaneous......................................................................   15
      6.1  Notices......................................................................   15
      6.2  Successors and Assigns.......................................................   17
      6.3  Amendment and Waiver.........................................................   17
      6.4  Board Representation.........................................................   17
      6.5  Counterparts.................................................................   17
      6.6  Specific Performance.........................................................   17
      6.7  Headings.....................................................................   18
      6.8  GOVERNING LAW................................................................   18
      6.9  Severability.................................................................   18
      6.10 Entire Agreement.............................................................   18
      6.11 Term of Agreement............................................................   18
      6.12 Further Assurances...........................................................   18
</TABLE>

EXHIBITS
<PAGE>

A-1       Form of Transfer Agreement (Previously issued shares)
A-2       Form of Transfer Agreement (Newly issued shares)
<PAGE>

                                 EXHIBIT 4.10

                            STOCKHOLDERS AGREEMENT

          STOCKHOLDERS AGREEMENT (this "Agreement") dated January 28, 2000,
                                        ---------
among Outboard Marine Corporation, a Delaware corporation (the "Company"),
                                                                -------
Quantum Industrial Partners LDC, a Cayman Islands limited duration company
("QIP"), and Greenlake Holdings II LLC, a Delaware limited liability company
  ---
("Greenlake").
  ---------

          WHEREAS, pursuant to the Series A Convertible Preferred Stock and
Warrant Purchase Agreement, dated the date hereof (the "Stock Purchase
                                                        --------------
Agreement"), among the Company, QIP and Greenlake, the Company has agreed to
issue and sell to QIP and Greenlake (a) an aggregate of 650,000 shares of the
Company's Series A Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock"), and (b) warrants (the "Warrants") to purchase, subject to
----------------                           --------
the terms and conditions thereof, 5,750,000 shares of Common Stock; and

          WHEREAS, the parties hereto wish to restrict the transfer of the
Shares (as hereinafter defined) and the Warrants and to provide for, among other
things, first offer, tag-along and preemptive rights and certain other rights
under certain conditions.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:

          1.  Definitions.  As used in this Agreement, the following terms
              -----------
shall have the meanings set forth below:

              "Affiliate" shall mean any Person who is an "affiliate" (as
               ---------
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act) of, and any Person controlling, controlled by or under common control with,
any Stockholder. For the purposes of this Agreement, "control" includes the
ability to have investment discretion through contractual means or by operation
of law.

              "Agreement" means this Agreement as the same may be amended,
               ---------
supplemented or modified in accordance with the terms hereof.

              "Board of Directors" means the Board of Directors of the Company.
               ------------------

              "Business Day" means any day other than a Saturday, Sunday or
               ------------
other day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
<PAGE>

                                                                               2

              "Code" means the Internal Revenue Code of 1986, as amended, or
               ----
any successor statute thereto.

              "Commission" means the Securities and Exchange Commission or any
               ----------
similar agency then having jurisdiction to enforce the Securities Act.

              "Common Stock" means the Common Stock, par value $.01 per share,
               ------------
of the Company or any other capital stock of the Company into which such stock
is reclassified or reconstituted and any other common stock of the Company.

              "Common Stock Equivalents" means any security or obligation which
               ------------------------
is by its terms convertible into or exercisable for shares of Common Stock,
including, without limitation, the Preferred Stock, and any option, warrant or
other subscription or purchase right with respect to Common Stock.

              "Company" has the meaning set forth in the recitals to this
               -------
Agreement.

              "Company Option" has the meaning set forth in Section 3.1(b) of
               --------------
this Agreement.

              "Company Option Period" has the meaning set forth in Section
               ---------------------
3.1(b) of this Agreement.

              "Contract Date" has the meaning set forth in Section 3.1(e) of
               -------------
this Agreement.

              "Excess New Securities" has the meaning set forth in Section
               ---------------------
4.2(a) of this Agreement.

              "Excess Offered Securities" has the meaning set forth in Section
               -------------------------
3.1(c) of this Agreement.

              "Exchange Act" means the Securities Exchange Act of 1934, as
               ------------
amended, and the rules and regulations of the Commission thereunder.

              "Fair Value" has the meaning set forth in Section 3.2(b) of this
               ----------
Agreement.

              "Governmental Authority" means the government of any nation,
               ----------------------
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to
<PAGE>

                                                                               3

government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

              "Initial Public Offering" means the initial public offering of the
               -----------------------
shares of Common Stock of the Company pursuant to an effective registration
statement filed under the Securities Act.

              "Involuntary Transfer" means any transfer, proceeding or action
               --------------------
by or in which a Stockholder shall be deprived or divested of any right, title
or interest in or to any of the Shares, including, without limitation, (i) any
seizure under levy of attachment or execution, (ii) any transfer in connection
with bankruptcy (whether pursuant to the filing of a voluntary or an involuntary
petition under the United States Bankruptcy Code of 1978, or any modifications
or revisions thereto) or other court proceeding to a debtor in possession,
trustee in bankruptcy or receiver or other officer or agency, (iii) any transfer
to a state or to a public officer or agency pursuant to any statute pertaining
to escheat or abandoned property and (iv) any transfer pursuant to a divorce or
separation agreement or a final decree of a court in a divorce action.

              "Involuntary Transferee" has the meaning set forth in Section
               ----------------------
3.2(a) of this Agreement.

              "IPO Effectiveness Date" means the date upon which the Company
               ----------------------
closes its Initial Public Offering.

              "Liens" means any mortgage, deed of trust, pledge, hypothecation,
               -----
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).

              "New Issuance Notice" has the meaning set forth in Section 4.1 of
               -------------------
this Agreement.

              "New Securities" has the meaning set forth in Section 4.1 of this
               --------------
Agreement.

              "Offer Price" has the meaning set forth in Section 3.1(a) of this
               -----------
Agreement.

              "Offered Securities" has the meaning set forth in Section 3.1(a)
               ------------------
of this Agreement.

              "Offering Notice" has the meaning set forth in Section 3.1(a) of
               ---------------
this Agreement.
<PAGE>

                                                                               4

               "Other Stockholder" means (a) any transferee of a Stockholder
                -----------------
(other than a Permitted Transferee thereof), who has agreed to be bound by the
terms and conditions of this Agreement in accordance with Section 2.4 or to whom
Shares have been transferred in accordance with Section 3.1(e) and (b) any
Person other than a Stockholder who has agreed to be bound by the terms and
conditions of this Agreement in accordance with Section 5.2(a).

               "Permitted Transferee" has the meaning set forth in Section 2.2
                --------------------
of this Agreement.

               "Person" means any individual, firm, corporation, partnership,
                ------
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.

               "Preemptive Rightholder(s)" has the meaning set forth in Section
                -------------------------
4.1 of this Agreement.

               "Preferred Stock" has the meaning set forth in the recitals to
                ---------------
this Agreement.

               "Proportionate Percentage" has the meaning set forth in Section
                ------------------------
4.2(a) of this Agreement.

               "Proposed Price" has the meaning set forth in Section 4.1 of this
                --------------
Agreement.

               "Rightholder(s)" has the respective meanings set forth in
                --------------
Sections 3.1(c) and 3.2(a) of this Agreement.

               "Rightholder Option Period" has the meaning set forth in Section
                -------------------------
3.1(c) of this Agreement.

               "Securities Act" means the Securities Act of 1933, as amended,
                --------------
and the rules and regulations of the Commission promulgated thereunder.

               "Selling Stockholder" has the meaning set forth in Section 3.1(a)
                -------------------
of this Agreement.

               "Shares" means, with respect to each Stockholder, all shares,
                ------
whether now owned or hereafter acquired, of Common Stock and Preferred Stock,
owned thereby; provided, however, for the purposes of any computation of the
               --------  -------
number
<PAGE>

                                                                               5

of Shares pursuant to Sections 2, 3, 4.1, 4.2 and 6.3, all outstanding Common
Stock Equivalents shall be deemed converted, exercised or exchanged as
applicable and the shares of Common Stock issuable upon such conversion,
exercise or exchange shall be deemed outstanding, whether or not such
conversion, exercise or exchange has actually been effected.

               "Stock Purchase Agreement" has the meaning set forth in the
                ------------------------
recitals to this Agreement.

               "Stockholders" means (a) QIP and Greenlake and any transferee
                ------------
thereof who has agreed to be bound by the terms and conditions of this Agreement
in accordance with Section 2.4 and (b) any Person who has agreed to be bound by
the terms and conditions of this Agreement in accordance with Section 5.2(a),
and the term "Stockholder" shall mean any such Person.
              -----------

               "Subject Purchaser" has the meaning set forth in Section 4.1 of
                -----------------
this Agreement.

               "Tag-Along Rightholder" has the meaning set forth in Section
                ---------------------
3.1(f)(i) of this Agreement.

               "Third Party Purchaser" has the meaning set forth in Section
                ---------------------
3.1(a) of this Agreement.

               "transfer" has the meaning set forth in Section 2.1 of this
                --------
Agreement.

               "Transferred Shares" has the meaning set forth in Section 3.2(a)
                ------------------
of this Agreement.

               "Warrants" has the meaning set forth in the recitals to this
                --------
Agreement.

          2.   Restrictions on Transfer of Shares.
               ----------------------------------

               2.1  Limitation on Transfer.   No Stockholder shall sell, give,
                    ----------------------
assign, hypothecate, pledge, encumber, grant a security interest in or otherwise
dispose of (whether by operation of law or otherwise) (each a "transfer") any
                                                               --------
Shares or any right, title or interest therein or thereto (including any Common
Stock Equivalents), except in accordance with the provisions of this Agreement,
including, without limitation, Section 2.4.  Any attempt to transfer any Shares
or any rights thereunder or therein in violation of the preceding sentence shall
be null and void ab initio.
<PAGE>

                                                                               6

               2.2  Permitted Transfers.  Notwithstanding anything to the
                    -------------------
contained in this Agreement, but subject to Sections 2.1, 2.3 and 2.4, at any
time, each of the Stockholders may transfer all or a portion of its Shares to
any of its Affiliates (each, a "Permitted Transferee").  A Permitted Transferee
                                --------------------
of Shares pursuant to this Section 2.2 may transfer its Shares pursuant to this
Section 2.2 only to the transferor Stockholder or to a Person that is a
Permitted Transferee of such transferor Stockholder.

               2.3  Permitted Transfer Procedures.  If any Stockholder wishes to
                    -----------------------------
transfer Shares to a Permitted Transferee under Section 2.2, such Stockholder
shall give notice to the Company of its intention to make any transfer permitted
under Section 2.2 not less than ten (10) days prior to effecting such transfer,
which notice shall state the name and address of each Permitted Transferee to
whom such transfer is proposed, the relationship of such Permitted Transferee to
such Stockholder, and the number of Shares proposed to be transferred to such
Permitted Transferee.

               2.4  Transfers in Compliance with Law; Substitution of
                    -------------------------------------------------
Transferee. Notwithstanding any other provision of this Agreement, no transfer
----------
may be made pursuant to this Section 2 or Section 3 unless (a) the transferee
has agreed in writing to be bound by the terms and conditions of this Agreement
pursuant to an instrument substantially in the form attached hereto as Exhibit
                                                                       -------
C-1, (b) the transfer complies in all respects with the applicable provisions of
---
this Agreement and (c) the transfer complies in all respects with applicable
federal and state securities laws, including, without limitation, the Securities
Act. If requested by the Company, an opinion of counsel to such transferring
Stockholder shall be supplied to the Company at such transferring Stockholder's
expense, to the effect that such transfer complies with the applicable federal
and state securities laws. Upon becoming a party to this Agreement, (i) the
Permitted Transferee of a Stockholder shall be substituted for, and shall enjoy
the same rights and be subject to the same obligations as, a Stockholder
hereunder with respect to the Shares transferred to such Permitted Transferee,
(ii) an Other Stockholder shall be subject to the same obligations as, but none
of the rights of, the transferring Stockholder and (iii) the transferee of an
Other Stockholder shall be substituted for, and shall be subject to the same
obligations as, the transferring Other Stockholder hereunder with respect to the
Shares transferred to such transferee.

          3.   Right of First Offer and Tag-Along Rights.
               -----------------------------------------

               3.1  Proposed Voluntary Transfers.
                    ----------------------------

                    (a) Offering Notice.  Subject to Section 2, if any
                        ---------------
Stockholder (a "Selling Stockholder") wishes to transfer all or any portion of
                -------------------
its or his Shares to any Person (other than to a Permitted Transferee) (a "Third
                                                                           -----
Party Purchaser"), such Selling Stockholder shall offer such Shares first to the
---------------
Company, by
<PAGE>

                                                                               7

sending written notice (an "Offering Notice") to the Company, which shall state
                            ---------------
(a) the number of Shares proposed to be transferred (the "Offered Securities");
                                                          ------------------
(b) the proposed purchase price per Share for the Offered Securities (the "Offer
                                                                           -----
Price"); and (c) the terms and conditions of such sale. Upon delivery of the
-----
Offering Notice, such offer shall be irrevocable unless and until the rights of
first offer provided for herein shall have been waived or shall have expired.
The Company shall promptly deliver a copy of the Offering Notice to each of the
Stockholders.

               (b)  Company Option; Exercise.  For a period of thirty (30) days
                    ------------------------
after the giving of the Offering Notice pursuant to Section 3.1(a) (the "Company
                                                                         -------
Option Period"), the Company shall have the right (the "Company Option") but not
-------------                                           --------------
the obligation to purchase any or all of the Offered Securities at a purchase
price equal to the Offer Price and upon the terms and conditions set forth in
the Offering Notice.  The right of the Company to purchase any or all of the
Offered Securities under this Section 3.1(b) shall be exercisable by delivering
written notice of the exercise thereof, prior to the expiration of the Company
Option Period, to the Selling Stockholder, with a copy to the Stockholders
(other than the Selling Stockholder), which notice shall state the number of
Offered Securities proposed to be purchased by the Company.  The failure of the
Company to respond within the Company Option Period shall be deemed to be a
waiver of the Company Option, provided that the Company may waive its rights
                              --------
under this Section 3.1(b) prior to the expiration of the Company Option Period
by giving written notice to the Selling Stockholder, with a copy to the
Stockholders (other than the Selling Stockholder).

               (c)  Rightholder Option; Exercise.
                    ----------------------------

                    (i)  If the Company does not elect to purchase all of the
Offered Securities, then for a period of thirty (30) days after the earlier to
occur of (a) the expiration of the Company Option Period and (b) the date upon
which the Selling Stockholder shall have received written notice from the
Company of its exercise of the Company Option pursuant to Section 3.1(b) or its
waiver thereof (the "Rightholder Option Period"), each of the Stockholders
(other than a Selling Stockholder) (for the purpose of Section 3.1, each, a
"Rightholder" and collectively, the "Rightholders") shall have the right to
 -----------                         ------------
purchase all, but not less than all, of the remaining Offered Securities at a
purchase price equal to the Offer Price and upon the terms and conditions set
forth in the Offering Notice. Each such Rightholder shall have the right to
purchase that percentage of the Offered Securities determined by dividing (i)
the total number of Shares then owned by such Rightholder by (ii) the total
number of Shares then owned by all such Rightholders. If any Rightholder does
not fully subscribe for the number or amount of Offered Securities it or he is
entitled to purchase, then each other participating Rightholder shall have the
right to purchase that percentage of the Offered Securities not so subscribed
for (for the purposes of this Section 3.1(c), the "Excess Offered Securities")
                                                   -------------------------
determined by dividing (x) the total
<PAGE>

                                                                               8

number of Shares then owned by such fully participating Rightholder by (y) the
total number of Shares then owned by all fully participating Rightholders who
elected to purchase Offered Securities. The procedure described in the preceding
sentence shall be repeated until there are no remaining Excess Offered
Securities. If the Company and/or the Rightholders do not purchase all of the
Offered Securities pursuant to Section 3.1(b) and/or Section 3.1(c), then the
Selling Stockholder may, subject to Section 3.1(f), sell the Offered Securities
to a Third Party Purchaser in accordance with Section 3.1(e).

                    (ii) The right of each Rightholder to purchase all of the
remaining Offered Securities under subsection (i) above shall be exercisable by
delivering written notice of the exercise thereof, prior to the expiration of
the Rightholder Option Period, to the Selling Stockholder with a copy to the
Company. Each such notice shall state (a) the number of Shares held by such
Rightholder and (b) the number of Shares that such Rightholder is willing to
purchase pursuant to this Section 3.1(c). The failure of a Rightholder to
respond within the Rightholder Option Period to the Selling Stockholder shall be
deemed to be a waiver of such Rightholder's rights under subsection (i) above,
provided that each Rightholder may waive its rights under subsection (ii) above
--------
prior to the expiration of the Rightholder Option Period by giving written
notice to the Selling Stockholder, with a copy to the Company.

          (d)  Closing.  The closing of the purchases of Offered Securities
               -------
subscribed for by the Company under Section 3.1(b) and/or the Rightholders under
Section 3.1(c) shall be held at the executive office of the Company at 11:00
a.m., local time, on the 60th day after the giving of the Offering Notice
pursuant to Section 3.1(a) or at such other time and place as the parties to the
transaction may agree.  At such closing, the Selling Stockholder shall deliver
certificates representing the Offered Securities, duly endorsed for transfer and
accompanied by all requisite transfer taxes, if any, and such Offered Securities
shall be free and clear of any Liens (other than those arising hereunder and
those attributable to actions by the purchasers thereof) and the Selling
Stockholder shall so represent and warrant, and shall further represent and
warrant that it is the sole beneficial and record owner of such Offered
Securities.  The Company and/or each Rightholder, as the case may be, purchasing
Offered Securities shall deliver at the closing payment in full in immediately
available funds for the Offered Securities purchased by it or him.  At such
closing, all of the parties to the transaction shall execute such additional
documents as are otherwise necessary or appropriate.

          (e)  Sale to a Third Party Purchaser.  Unless the Company and/or the
               -------------------------------
Rightholders elect to purchase all, but not less than all, of the Offered
Securities under Sections 3.1(b) and 3.1(c), the Selling Stockholder may,
subject to Section 3.1(f), sell all, but not less than all, the Offered
Securities to a Third Party Purchaser on the terms and conditions set forth in
the Offering Notice; provided,
                     --------
<PAGE>

                                                                               9

however, that such sale is bona fide and made pursuant to a contract entered
-------
into within sixty (60) days after the earlier to occur of (i) the waiver by the
Company and all of the Rightholders of their options to purchase the Offered
Securities and (ii) the expiration of the Rightholder Option Period (the
"Contract Date"); and provided further, that such sale shall not be consummated
 -------------        -------- -------
unless and until (x) such Third Party Purchaser shall represent in writing to
the Company and each Rightholder that it is aware of the rights of the Company,
the Stockholders contained in this Agreement and (y) prior to the purchase by
such Third Party Purchaser of any of such Offered Securities, such Third Party
Purchaser shall become a party to this Agreement as an Other Stockholder and
shall agree to be bound by the terms and conditions hereof in accordance with
Section 2.4 hereof. If such sale is not consummated within 30 days after the
Contract Date for any reason, then the restrictions provided for herein shall
again become effective, and no transfer of such Offered Securities may be made
thereafter by the Selling Stockholder without again offering the same to the
Company and the Rightholders in accordance with this Section 3.1.

                    (f)  Tag-Along Rights.
                         ----------------

                         (i)  If a Stockholder is transferring Offered
Securities to a Third Party Purchaser pursuant to Section 3.1(e), then each of
the Stockholders (other than the Selling Stockholder) (each, a "Tag-Along
                                                                ---------
Rightholder") shall have the right to sell to such Third Party Purchaser, upon
-----------
the terms set forth in the Offering Notice, that number of Shares held by such
Tag-Along Rightholder equal to that percentage of the Offered Securities
determined by dividing (A) the total number of Shares then owned by such
Tag-Along Rightholder by (B) the sum of (x) the total number of Shares then
owned by all such Tag-Along Rightholders exercising their rights pursuant to
this Section 3.1(f) and (y) the total number of Shares then owned by the Selling
Stockholder. The Selling Stockholder and the Tag-Along Rightholder(s) exercising
their rights pursuant to this Section 3.1(f) shall effect the sale of the
Offered Securities and such Tag-Along Rightholder(s) shall sell the number of
Offered Securities required to be sold by such Tag-Along Rightholder(s) pursuant
to this Section 3.1(f)(i), and the number of Offered Securities to be sold to
such Third Party Purchaser by the Selling Stockholder shall be reduced
accordingly.

                         (ii) The Selling Stockholder shall give notice to each
Tag-Along Rightholder of each proposed sale by it of Offered Securities which
gives rise to the rights of the Tag-Along Rightholders set forth in this Section
3.1(f), at least fifteen (15) days prior to the proposed consummation of such
sale, setting forth the name of such Selling Stockholder, the number of Offered
Securities, the name and address of the proposed Third Party Purchaser, the
proposed amount and form of consideration and terms and conditions of payment
offered by such Third Party Purchaser, the percentage of Shares that such Tag-
Along Rightholder may sell to such Third Party Purchaser (determined in
accordance with Section 3.1(f)(i)), and a
<PAGE>

                                                                              10

representation that such Third Party Purchaser has been informed of the "tag-
along" rights provided for in this Section 3.1(f) and has agreed to purchase
Shares in accordance with the terms hereof. The tag-along rights provided by
this Section 3.1(f) must be exercised by any Tag-Along Rightholder wishing to
sell its Shares within ten (10) days following receipt of the notice required by
the preceding sentence, by delivery of a written notice to the Selling
Stockholder indicating such Tag-Along Rightholder's wish to exercise its rights
and specifying the number of Shares (up to the maximum number of Shares owned by
such Tag-Along Rightholder required to be purchased by such Third Party
Purchaser) it wishes to sell, provided that any Tag-Along Rightholder may waive
                              --------
its rights under this Section 3.1(f) prior to the expiration of such 10-day
period by giving written notice to the Selling Stockholder, with a copy to the
Company. The failure of a Tag-Along Rightholder to respond within such 10-day
period shall be deemed to be a waiver of such Tag-Along Rightholder's rights
under this Section 3.1(f). If a Third Party Purchaser fails to purchase Shares
from any Tag-Along Rightholder that has properly exercised its tag-along rights
pursuant to this Section 3.1(f)(ii), then the Selling Stockholder shall not be
permitted to consummate the proposed sale of the Offered Securities, and any
such attempted sale shall be null and void ab initio.

               3.2  Involuntary Transfers.
                    ---------------------

                    (a)  Rights of First Offer upon Involuntary Transfer.  If an
                         -----------------------------------------------
Involuntary Transfer of any Shares (the "Transferred Shares") owned by any
                                         ------------------
Stockholder shall occur, then the Company and the Stockholders (unless such
Stockholder is the Stockholder transferring the Transferred Shares) (for the
purpose of Section 3.2, each, a "Rightholder" and collectively, the
                                 -----------
"Rightholders") shall have the same rights as specified in Sections 3.1(b) and
-------------
3.1(c), respectively, with respect to such Transferred Shares as if the
Involuntary Transfer had been a proposed voluntary transfer by a Selling
Stockholder and shall be governed by Section 3.1 except that (i) the time
periods shall run from the date of receipt by the Company of actual notice of
the Involuntary Transfer (and the Company shall immediately give notice to the
Rightholders of the date of receipt of such notice), (ii) such rights shall be
exercised by notice to the transferee of such Transferred Shares (the
"Involuntary Transferee") rather than to the Stockholder who suffered or will
 ----------------------
suffer the Involuntary Transfer and (iii) the purchase price per Transferred
Share shall be agreed upon by the Involuntary Transferee and the Company and/or
the purchasing Rightholders purchasing a majority of the Transferred Shares, as
the case may be; provided, however, that if such parties fail to agree as to
                 --------  -------
such purchase price, the purchase price shall be the Fair Value thereof as
determined in accordance with Section 3.2(b).  Notwithstanding anything to the
contrary set forth in this Agreement, an Involuntary Transferee that has not
agreed to be bound to the terms and conditions hereunder, in accordance with
Section 5.2(a) hereof, shall not be deemed to have any rights of a Stockholder
under this Agreement.
<PAGE>

                                                                              11

               (b)  Fair Value.  If the parties fail to agree upon the
                    ----------
purchase price of the Transferred Shares in accordance with Section 3.2(a)
hereof, then the Company or the Rightholders, as the case may be, shall purchase
the Transferred Shares at a purchase price equal to the Fair Value (as
hereinafter defined) thereof. The Fair Value of the Transferred Shares shall be
determined by a panel of three independent appraisers, which shall be nationally
recognized investment banking firms or nationally recognized experts experienced
in the valuation of corporations engaged in the business conducted by the
Company. Within five (5) Business Days after the date the applicable parties
determine that they cannot agree as to the purchase price, the Involuntary
Transferee and the Board of Directors (in the case of a purchase by the
Company), or the purchasing Rightholders purchasing a majority of the
Transferred Shares being purchased by the purchasing Rightholders (if the
Company is not purchasing any Transferred Shares), or the Board of Directors and
such purchasing Rightholders jointly (in the case of a purchase by the Company
and Rightholders), as the case may be, shall each designate one such appraiser
that is willing and able to conduct such determination. If either the
Involuntary Transferee or the Board of Directors or the purchasing Rightholders
or both, as the case may be, fails to make such designation within such period,
then the other party that has made the designation shall have the right to make
the designation on its behalf. The two appraisers designated shall, within a
period of five (5) Business Days after the designation of the second appraiser,
designate a mutually acceptable third appraiser. The three appraisers shall
conduct their determination as promptly as practicable, and the Fair Value of
the Transferred Shares shall be the average of the determination of the two
appraisers that are closer to each other than to the determination of the third
appraiser, which third determination shall be discarded; provided, however, that
                                                         --------  -------
if the determination of two appraisers are equally close to the determination of
the third appraiser, then the Fair Value of the Transferred Shares shall be the
average of the determination of all three appraisers. Such determination shall
be final and binding on the Involuntary Transferee, the Company and the
Rightholders. The Involuntary Transferee shall be responsible for the fees and
expenses of the appraiser designated by or on behalf of it, and the Company or
the purchasing Rightholders (if both the Company and the Purchasing
Rightholders), or the Purchasing Rightholders (if the Company is not purchasing
any Transferred Shares) for the fees and expenses of the appraiser designated by
or on behalf of the Board of Directors or the purchasing Rightholders (if the
Company is not purchasing any Transferred Shares), as the case may be. The
Involuntary Transferee and the Company or the purchasing Rightholders, as the
case may be, shall each share half the fees and expenses of the appraiser
designated by the appraisers. For purposes of this Section 3.2(b), the "Fair
                                                                        ----
Value" of the Transferred Shares means the fair market value of such Transferred
-----
Shares determined in accordance with this Section 3.2(b) based upon all
considerations that the appraisers determine to be relevant. All expenses to be
shared by the Company and the purchasing Rightholders, or among the purchasing
Rightholders (if the Company is not
<PAGE>

                                                                              12

purchasing any Transferred Shares), shall be shared in proportion to the number
of Shares purchased.

               (c)  Closing.  The closing of any purchase under this
                    -------
Section 3.2 shall be held at the executive office of the Company at 11:00 a.m.,
local time, on the earlier to occur of (a) the fifth Business Day after the
purchase price per Transferred Share shall have been agreed upon by the
Involuntary Transferee and the Company or the purchasing Rightholders, as the
case may be, in accordance with Section 3.2(a)(iii), or (b) the fifth Business
Day after the determination of the Fair Value of the Transferred Shares in
accordance with Section 3.2(b), or at such other time and place as the parties
to the transaction may agree. At such closing, the Involuntary Transferee shall
deliver certificates, if applicable, or other instruments or documents
representing the Transferred Shares being purchased under this Section 3.2, duly
endorsed with a signature guarantee for transfer and accompanied by all
requisite transfer taxes, if any, and such Transferred Shares shall be free and
clear of any Liens (other than those arising hereunder) arising through the
action or inaction of the Involuntary Transferee and the Involuntary Transferee
shall so represent and warrant, and further represent and warrant that it is the
beneficial owner of such Transferred Shares. The Company or each Rightholder, as
the case may be, purchasing such Transferred Shares shall deliver at closing
payment in full in immediately available funds for such Transferred Shares. At
such closing, all parties to the transaction shall execute such additional
documents as are otherwise necessary or appropriate.

               (d)  General.  In the event that the provisions of this
                    -------
Section 3.2 shall be held to be unenforceable with respect to any particular
Involuntary Transfer, the Company and the Rightholders shall have the rights
specified in Sections 3.1(b) and 3.1(c), respectively, with respect to any
transfer by an Involuntary Transferee of such Shares, and each Rightholder
agrees that any Involuntary Transfer shall be subject to such rights, in which
case the Involuntary Transferee shall be deemed to be the Selling Stockholder
for purposes of Section 3.1 of this Agreement and shall be bound by the
provisions of Section 3.1 and other related provisions of this Agreement.

          4.   Future Issuance of Shares; Preemptive Rights.
               --------------------------------------------

               4.1  Offering Notice. Except for (a) capital stock of the Company
                    ---------------
that may be issued to employees, consultants, officers  or directors of the
Company pursuant to a stock incentive plan or other employee benefit arrangement
approved by the Board of Directors, (b) a subdivision of the outstanding shares
of Common Stock into a larger number of shares of Common Stock, (c) capital
stock issued upon exercise, conversion or exchange of any Common Stock
Equivalent and (d) capital stock of the Company issued in consideration of an
acquisition, approved by
<PAGE>

                                                                              13

the Board of Directors, by the Company of another Person, if the Company wishes
to issue any capital stock or any other securities convertible into or
exchangeable for capital stock of the Company (collectively, "New Securities" to
                                                              --------------
any Person (the "Subject Purchaser"), then the Company shall offer such New
                 -----------------
Securities first to each of the Stockholders (each, a "Preemptive Rightholder"
                                                       ----------------------
and collectively, the "Preemptive Rightholders") by sending written notice (the
                       -----------------------
"New Issuance Notice") to the Preemptive Rightholders, which New Issuance Notice
 -------------------
shall state (x) the number of New Securities proposed to be issued and (y) the
proposed purchase price per security of the New Securities (the "Proposed
                                                                 --------
Price"). Upon delivery of the New Issuance Notice, such offer shall be
-----
irrevocable unless and until the rights provided for in Section 4.2 shall have
been waived or shall have expired.

               4.2  Preemptive Rights; Exercise.
                    ---------------------------

                    (a)  For a period of twenty (20) days after the giving of
the New Issuance Notice pursuant to Section 4.1, each of the Preemptive
Rightholders shall have the right to purchase its Proportionate Percentage (as
hereinafter defined) of the New Securities at a purchase price equal to the
Proposed Price and upon the terms and conditions set forth in the New Issuance
Notice. Each such Preemptive Rightholder shall have the right to purchase that
percentage of the New Securities determined by dividing (x) the total number of
Shares then owned by such Preemptive Rightholder exercising its rights under
this Section 4.2 by (y) the total number of Shares (the "Proportionate
                                                         -------------
Percentage"). If any Preemptive Rightholder does not fully subscribe for the
----------
number or amount of New Securities that it or he is entitled to purchase
pursuant to the preceding sentence, then each Preemptive Rightholder which
elected to purchase New Securities shall have the right to purchase that
percentage of the remaining New Securities not so subscribed for (for the
purposes of this Section 4.2(a), the "Excess New Securities") determined by
                                      ---------------------
dividing (x) the total number of Shares then owned by such fully participating
Preemptive Rightholder by (y) the total number of Shares then owned by all fully
participating Preemptive Rightholders who elected to purchase Excess New
Securities.

               (b)  The right of each Preemptive Rightholder to purchase the New
Securities under subsection (a) above shall be exercisable by delivering written
notice of the exercise thereof, prior to the expiration of the 20-day period
referred to in subsection (a) above, to the Company, which notice shall state
the amount of New Securities that such Preemptive Rightholder elects to purchase
pursuant to Section 4.2(a).  The failure of a Preemptive Rightholder to respond
within such 20-day period shall be deemed to be a waiver of such Preemptive
Rightholder's rights under Section 4.2(a), provided that each Preemptive
                                           --------
Rightholder may waive its rights under Section 4.2(a) prior to the expiration of
such 20-day period by giving written notice to the Company.
<PAGE>

                                                                              14

               4.3  Closing.  The closing of the purchase of New Securities
                    -------
subscribed for by the Preemptive Rightholders under Section 4.2 shall be held at
the executive office of the Company at 11:00 a.m., local time, on (a) the 45th
day after the giving of the New Issuance Notice pursuant to Section 4.1, if the
Preemptive Rightholders elect to purchase all of the New Securities under
Section 4.2, (b) the date of the closing of the sale to the Subject Purchaser
made pursuant to Section 4.4 if the Preemptive Rightholders elect to purchase
some, but not all, of the New Securities under Section 4.2 or (c) at such other
time and place as the parties to the transaction may agree.  At such closing,
the Company shall deliver certificates representing the New Securities, and such
New Securities shall be issued free and clear of all Liens (other than those
arising hereunder and those attributable to actions by the purchasers thereof)
and the Company shall so represent and warrant, and further represent and
warrant that such New Securities shall be, upon issuance thereof to the
Preemptive Rightholders and after payment therefor, duly authorized, validly
issued, fully paid and non-assessable.  Each Preemptive Rightholder purchasing
the New Securities shall deliver at the closing payment in full in immediately
available funds for the New Securities purchased by him or it.  At such closing,
all of the parties to the transaction shall execute such additional documents as
are otherwise necessary or appropriate.

               4.4  Sale to Subject Purchaser.  The Company may sell to the
                    -------------------------
Subject Purchaser all of the New Securities not purchased by the Preemptive
Rightholders pursuant to Section 4.2 on terms and conditions that are no more
favorable to the Subject Purchaser than those set forth in the New Issuance
Notice; provided, however, that such sale is bona fide and made pursuant to a
        --------  -------
contract entered into within ninety (90) days following the earlier to occur of
(i) the waiver by the Preemptive Rightholders of their option to purchase New
Securities pursuant to Section 4.2, and (ii) the expiration of the 20-day period
referred to in Section 4.2. If such sale is not consummated within such 90-day
period for any reason, then the restrictions provided for herein shall again
become effective, and no issuance and sale of New Securities may be made
thereafter by the Company without again offering the same in accordance with
this Section 4. The closing of any issuance and purchase pursuant to this
Section 4.4 shall be held at a time and place as the parties to the transaction
may agree.

          5.   After-Acquired Securities; Agreement to be Bound.
               ------------------------------------------------

          5.1  After-Acquired Securities.  All of the provisions of this
               -------------------------
Agreement shall apply to all of the Shares and Common Stock Equivalents issued
pursuant to the Stock Purchase Agreement.

          5.2  Agreement to be Bound.  The Company shall not issue any shares
               ---------------------
of capital stock or any Common Stock Equivalents to any Person not a party to
this Agreement, other than to directors, officers, employees or consultants of
the
<PAGE>

                                                                              15

Company (or their heirs or beneficiaries) pursuant to a stock incentive plan or
other employee benefit arrangement approved by the Board of Directors, unless
either (a) such Person has agreed in writing to be bound by the terms and
conditions of this Agreement pursuant to an instrument substantially in the
form attached hereto as Exhibit C-2, or (b) such Person has entered into an
                        -----------
agreement with the Company restricting the transfer of its or his Shares in form
and substance reasonably satisfactory to QIP, as representative of the
Stockholders (or such other representative as shall be designated by QIP or by
the holder(s) of a majority of the Shares held by the Stockholders). Upon
becoming a party to this Agreement, such Person shall be deemed to be, and shall
be subject to the same obligations as, an Other Stockholder hereunder. Any
issuance of Shares or any Common Stock Equivalents by the Company in violation
of this Section 5.2 shall be null and void ab initio.

          6.   Miscellaneous.
               -------------

               6.1  Notices.  All notices, demands or other communications
                    -------
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first class mail, return receipt requested, telecopier,
courier service, overnight mail or personal delivery:

                    (a)  if to the Company to the attention of each of its
                         Treasurer and General Counsel at:

                         Outboard Marine Corporation
                         100 Sea-Horse Drive
                         Waukegan, IL 60085
                         Telecopy: (847) 689-6246

                         with a copy to:

                         David, Polk & Wardwell
                         450 Lexington Avenue
                         New York, NY 10017
                         Telecopy: (212) 450-4800
                         Attention: Julia K. Cowles, Esq.

                    (b)  if to QIP:

                         Quantum Industrial Partners LDC
                         Kaya Flamboyan 9,
                         Villemstad
                         Curacao
                         Netherlands-Antilles
<PAGE>

                                                                              16

                         with a copy to:

                         Soros Fund Management LLC
                         888 Seventh Avenue
                         New York, NY 10016
                         Telecopy:  (212) 664-0544
                         Attention: Michael Neus, Esq.

                         and a copy to:

                         Paul, Weiss, Rifkind, Wharton & Garrison
                         1285 Avenue of the Americas
                         New York, New York 10019-6064
                         Telecopy:  (212) 757-3990
                         Attention:  Richard S. Borisoff, Esq.

                    (c)  If to Greenlake:

                         Greenlake Holdings II LLC
                         c/o Greenway Partners, L.P.
                         277 Park Avenue
                         New York, NY 10016
                         Telecopy: (212) 350-5253
                         Attention: Gary Duberstein

                         with a copy to:

                         Weil, Gotshal & Manges
                         767 Fifth Avenue
                         New York, New York 10153
                         Telecopy: (212) 310-8007
                         Attention: David Blittner, Esq.

                    (d)  if to any other Stockholder, at its address as it
                         appears on the record books of the Company.

Any party may by notice given in accordance with this Section 6.1 designate
another address or Person for receipt of notices hereunder. All such notices,
demands and other communications shall be deemed to have been duly given when
delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial courier service; five (5) Business Days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
mechanically acknowledged, if telecopied.
<PAGE>

                                                                              17

               6.2  Successors and Assigns.  This Agreement shall be binding
                    ----------------------
upon and inure to the benefit of the parties and their respective successors,
heirs, legatees and legal representatives. This Agreement is not assignable
except in connection with a transfer of Shares in accordance with this
Agreement.

               6.3  Amendment and Waiver.
                    --------------------

                    (a)  Except as specifically set forth in this Agreement, no
failure or delay on the part of any party hereto 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 preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the parties hereto at law, in equity or
otherwise.

                    (b)  Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective only if it is made or given in writing and
signed by (i) the Company and the Stockholders holding 75% of the voting power
of the Shares held by Stockholders. Any such amendment, supplement,
modification, waiver or consent shall be binding upon the Company and all of the
Stockholders.

               6.4  Board Representation.  For so long as QIP and Greenlake or
                    --------------------
Affiliates thereof collectively own at least 50% of the outstanding shares of
Preferred Stock, the Company's Board of Directors shall be expanded to add one
additional director (the "Additional Director") who shall be selected by the
                          -------------------
holders of a majority of the outstanding shares of Preferred Stock. The Company
will use its best efforts to cause the Additional Director to be nominated and
to solicit proxies for his or her election.

               6.5  Counterparts.  This Agreement may be executed in one or more
                    ------------
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.

               6.6  Specific Performance.  The parties hereto intend that each
                    --------------------
of the parties have the right to seek damages or specific performance in the
event that any other party hereto fails to perform such party's obligations
hereunder. Therefore, if any party shall institute any action or proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.
<PAGE>

                                                                              18

               6.7  Headings.  The headings in this Agreement are for
                    --------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

               6.8  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED AND
                    -------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.

               6.9  Severability.  If any one or more of the provisions
                    ------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.

               6.10 Entire Agreement.  This Agreement, together with the
                    ----------------
exhibits hereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits hereto, supersede all prior agreements and
understandings among the parties with respect to such subject matter.

               6.11 Term of Agreement.  This Agreement shall become effective
                    -----------------
upon the execution hereof and shall terminate upon the earlier of (a) the IPO
Effectiveness Date or (b) the date on which less than two Stockholders own any
Shares.

               6.12 Further Assurances.  Each of the parties shall, and shall
                    ------------------
cause their respective Affiliates to, execute such instruments and take such
action as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.

                 [Remainder of Page Intentionally Left Blank]
<PAGE>

          IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Stockholders Agreement on the date first written above.

                            OUTBOARD MARINE CORPORATION

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

                            QUANTUM INDUSTRIAL PARTNERS LDC

                            By:  /s/ Micheal C. Neus
                               ------------------------------------
                               Name:  Micheal C. Neus
                               Title: Attorney-In-Fact

                            GREENLAKE HOLDINGS II LLC

                            By:  /s/ Gary K. Dubertein
                               ------------------------------------
                               Name:  Gary K. Duberstein
                               Title: Vice President
<PAGE>

                                                                     Exhibit A-1
                                                                     -----------

                         ACKNOWLEDGMENT AND AGREEMENT

          The undersigned wishes to receive from __________ ("Transferor")
                                                              ----------
certain shares or certain options, warrants or other rights to purchase _____
shares, par value $.01 per share, of Common Stock (the "Shares") of Outboard
                                                        ------
Marine Corporation, a Delaware corporation (the "Company");
                                                 -------

          The Shares are subject to the Stockholders Agreement, dated January
___, 2000 (the "Agreement"), among the Company and the other parties listed on
                ---------
the signature pages thereto;

          The undersigned has been given a copy of the Agreement and afforded
ample opportunity to read and to have counsel review it, and the undersigned is
thoroughly familiar with its terms;

          Pursuant to the terms of the Agreement, the Transferor is prohibited
from transferring such Shares and the Company is prohibited from registering the
transfer of the Shares unless and until a transfer is made in accordance with
the terms and conditions of the Agreement and the recipient of such Shares
acknowledges the terms and conditions of the Agreement and agrees to be bound
thereby; and

          The undersigned wishes to receive such Shares and have the Company
register the transfer of such Shares.

          In consideration of the mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Transferor to transfer such Shares to the
undersigned and the Company to register such transfer, the undersigned does
hereby acknowledge and agree that (i) he[/she] has been given a copy of the
Agreement and afforded ample opportunity to read and to have counsel review it,
and the undersigned is thoroughly familiar with its terms, (ii) the Shares are
subject to the terms and conditions set forth in the Agreement, and (iii) the
undersigned does hereby agree fully to be bound thereby as a ["Stockholder"] [an
                                                               -----------
"Other Stockholder"] (as therein defined).
 -----------------

          This ________ day of ________, 20__.

____________________________________
<PAGE>

                                                                     Exhibit A-2
                                                                     -----------

                         ACKNOWLEDGMENT AND AGREEMENT

          The undersigned wishes to receive from Outboard Marine Corporation, a
Delaware corporation (the "Company"), _______ shares, par value $.01 per share,
                           -------
of Common Stock, or certain newly issued options, warrants or other rights to
purchase _______ shares of Common Stock (the "Shares"), of the Company;
                                              ------

          The Shares are subject to the Stockholders Agreement, dated January
__, 2000 (the "Agreement"), among the Company and the other parties listed on
               ---------
the signature pages thereto;

          The undersigned has been given a copy of the Agreement and afforded
ample opportunity to read and to have counsel review it, and the undersigned is
thoroughly familiar with its terms;

          Pursuant to the terms of the Agreement, the Company is prohibited from
issuing the Shares unless and until a transfer is made in accordance with the
terms and conditions of the Agreement and the recipient of such Shares
acknowledges the terms and conditions of the Agreement and agrees to be bound
thereby; and

          The undersigned wishes to receive such Shares.

          In consideration of the mutual promises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Company to issue such Shares, the undersigned
does hereby acknowledge and agree that (i) he[/she] has been given a copy of the
Agreement and afforded ample opportunity to read and to have counsel review it,
and the undersigned is thoroughly familiar with its terms, (ii) the Shares are
subject to terms and conditions set forth in the Agreement, and (iii) the
undersigned does hereby agree fully to be bound thereby as an "Other
Stockholder" (as therein defined).

          This ________ day of ________, 20__.

                                              __________________________________

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